Date:
Tuesday, March 31, 2009 - 3:00pm
Location:
School of Government, Wicker Classroom
On Tuesday evening, March 31, at 7 :00 p.m. the consultants who prepared the fiscal impact analysis for Carolina North will present their final report. You can see the report at http://research.unc.edu/cn/specifics.php .
The meeting will be held in the Wicker Classroom (Room 2603) of the School of Government. You can park after 5:00 p.m. in the SOG parking deck or at metered spaces on South Road. The paid parking in the NC 54 visitor's lot and the Rams Head deck. The SOG is served by CH transit routes RU, G, S and V.
Comments
Recorded?
Unfortunately, the way work is piling up right now I may not be able to make it. Aside from the PDF of the actual report, will materials from tonight's presentation be on the CN website soon? Slides, perhaps, or even better, an audio and/or video recording to accompany the slides?
Yes, slides on website
The slides will be posted on the CN website tomorrow, possibly earlier. Linda Convissor
Presentation, Report and Appendix Posted on Web
The link for the March 31 presentation is at the top of the page at http://cn.unc.edu. If you want to see the consultant's report and appendix, click on Reports, and they are the first two items on that page. Linda Convissor
Tweets from CN Study presentation
Here are my tweets from The CN Fiscal Impact Study Presentation (copied here from Twitter):MarkChilton: At Carolina North Fiscal Impact Analysis briefing. Will tweet a bit.orangepolitics: Cool. Watch for more from Carrboro Mayor tonight... Rtwt @MarkChilton: At Carolina North Fiscal Impact Analysis briefing. Will tweet a bit.MarkChilton: CN analysis assumes no new city streets.MarkChilton: Study assumed 7 students in local schools per 100 dwellings @ CN.MarkChilton: Study does not include cost of reduced air quality or increased traffic congestion.MarkChilton: Study does not include jobs moving from main campus.
Just asking,
Mark, did you (and Dan Coleman and Bill Strom) storm out in disgust, or simply leave b/c you had other things to do?
no
I thought I skulked out, rather than storming out. ;)I think all of us had budgeted more like an hour and a half, rather than two hours. I had agreed to another meeting at 8:45.
Indirect Benefits to Chapel Hill & Carrboro
Mark, I think this discussion might have occurred after you left. The consultants estimated a large indirect benefit to Chapel Hill (and presumably to Carrboro and OC as well) based on some 1200 dwelling units to be built there. But the consultants did not consider that those units would potentially be built there anyway nor did they consider what the capacity was for new units in CH and Carrboro. Since their estimate of indirect benefits is tied to those new dwellings, and those new dwellings might not be built in CH and Carrboro if there is no capacity, it would seem that their final estimates are based on an erroneous assumption. Would you agree?
Interesting meeting
It was an interesting meeting. By the consultants calculations, there is a net positive financial benefit to Chapel Hill, Carrboro, and Orange County after 15 years, but both Chapel Hill and Carrboro will face an initial deficit. Chapel Hill's deficit will come as a result of having to build a new fire station, and Carrboro's will come as a result of transit. The big disagreement between the elected officials and the consultants was on some of the assumptions of the study. For example, Tishler assumed that over 5,000 faculty/staff will work on CN but only 3,519 *new* jobs will be created. The other 1,500 faculty/staff will come from relocation of existing positions. Several of the elected officials felt the study should calculate impact based on the 5,000+ positions, but the study assumption was that only the 3,500 could be calculated as a direct impact of CN. Since the model being built was to calculate the effect of CN versus the effect of the university, I tend to agree with the consultants on that issue. But the elected officials had a good argument in that growth at the university as a whole will have an impact that they need to consider as well.
Best vs Worst Case
Terri,My take was that the consultant has assumed a 'best case' scenario in their calculations (they were hired by the University, after all) and the elected officials are looking at what happens under a 'worst case' scenario. I think it would have been helpful if the consultants had generated both scenarios so that we might look for a 'middle ground' solution in which risk is shared and that everyone could live with.
Depends what you mean by "worst"
George, trying to get realistic about the assumptions is not worst case. Worst case for us would be to buy a pig in a poke based on this report and saddle tax payers with millions to off-set impacts of CN. I pointed out the flaw in the assumption that when CN workers live in CH or Carrboro that it is an economic plus. My point was that developers are able to sell all the homes we permit, with or without CN, so those revenues are there in any case. For example, my home has been continually owned with Carrboro taxes paid since it was built in 1990. If I moved some day and a CN worker bought it, would the tax paid now be an impact of CN? Of course not. And, what of the non-CN worker who might have bought the house but is instead forced to find housing in Chatham? Will that count as a negative impact of CN. Under the report's logic, it ought to. But it does not.Mark and Bill made strong arguments on the issue of office space. For local government, when we permit commercial space, we look at the impacts of that project. It doesn't matter where the tenants will come from (whether from some other in town space or elsewhere). UNC thinks that if the Law School moves to CN that those jobs do not create a new impact despite the fact that x # of jobs can now be created at the old law school.The flaw in Tischler-Bise's perspective is implicit in its treatment of the school impact fee. They do not attempt to say that X% of the new residences will be occupied by people already living in the community and therefore there is no school impact. It is understood that the impact comes with the creation of a new unit. The same is true with office/research space. The impact comes with the creation of new space. BTW, I'm pretty sure I strolled out although I was a little frustrated with the consultant's inability to address my question (on indirect benefit of housing). My question was emailed to Jack Evans on March 5 and the consultant should have been prepared with a reply.
The purpose of the exercise
George,As I understood the exercise, it was to develop a generic model of what could happen based on a set of assumptions. Those assumptions were checked and cross checked by town and county staff. The next step would be to apply those basic assumptions to various what-if scenarios (as Evans explained at the beginning of the presentation).I'd like to see the elected officials checking with their staff to see why/where their support for the assumptions came from. Getting to the point where we can make some data-driven decisions is the point of the exercise. If the calculations were flawed by having inaccurate assumptions approved by the staff or misinterpreted by the consultants, then let's get the assumptions corrected and move on with speculating on what might happen given various different scenarios.
shortcomings
My point was that there are lots of costs (and benefits, I suppose) that the model did not (can not?) measure.
Modeling
Mark,With other modeling exercises that I've worked on, you get the generic model in place and then you can change the assumptions to determine the impact of the modifications on the bottom line (fiscal impact on each goveernmental entity). For example, the consultants used a per taxpayer, per annum unit cost based on current expenditures for all road improvements in town to create their model. But if the towns say that road maintenance costs per taxpayer increases
by 10% every 5 years, you should be able to calculate those costs into
the model and see how that affects the overall fiscal impact. Models don't solve all problems, but if we spend sufficient time and effort to develop the baseline model that everyone is willing to accept as a default, the model can then be used to estimate what would happen if any of the factors are changed.
I Think You're Right
Terri,I think that the program designed by the consultants is supposed to be available to provide the results of different scenarios resulting from changes in the various assumptions. The problem is, as I see it, that Jack Evans says that the University will license the program and then the consultants will train the University people in how to use it. That sounds like something that is going to occur over a much longer timeframe than the timeframe that is currently in process for developing a zone and a development agreement for CN. So if we don't yet know for sure that the fiscal impact modeling program works and we don't know what the results will be if we plug in various assumptions (other than those the consultants used) how easy is it to move forward now if we can't really say what we think the fiscal impact of CN will be on the municipalities?
where we go from here
George,I'm assuming the towns think there is value in creating a model, since this study was done at their request or in an attempt to provide them with more detail. So if the model isn't accurate, then change it. If decisions that needed the info from the model can't be made until those changes are made, then delay the decisions. Seems to me any delay based on insufficient information will be motivating to UNC.
It's In UNC's Interest To Prove the Model
Terri,I agree that a potential delay in approval should be motivating to UNC so I would expect that they will try to work with the Town plugging various assumptions and various scenarios into the model to see whether it seems to work. Of course we won't ever know how good a model is until we are years down the road and can look back at its prediction (s). I would be interested in knowing whether the consultants have tried applying their model to historical data to see whether it would have been an accurate predictor of eventual results. In any case I think this model needs to be "test driven" around the block a few times by the folks involved before they are going to be willing to base their approvals on a modeled prediction.
Assumptions
The biggest head-scratcher (for me) is assumption-related. Outside consultants naturally make assumptions and rely on "generic models" to describe their clients' concerns. Square peg meets round hole. How is it that one University and two town governments can't find enough brain power right here to conduct a pertinent analysis?
I was proud of our elected officials last night
I don't think the consultants were prepared for the reaction of the elected officials at the meeting. This is understandable, for they said they were usually hired by local governments to analyze local govt financial issues. In those cases, they presented to the people who hired them and who were, I presume, sympathetic to their results. I was proud of our elected officials last night for their questions. I'm not at this morning's meeting where the issues will be further discussed. I am always suspicious of economic reports that show direct net negative costs to a town and that depend upon later indirect impacts for the town to reap benefits. The direct costs are much more predictable than the indirect future benefits. Who can accurately predict what will happen to the area that surrounds CN in the next 15 years? The assumption of "no new town streets" is confusing. A month ago at the CN meeting on Elliot Road, I asked UNC's presenter Mary Jane Nirdlinger who would own and maintain the streets at CN and she replied that this decision has not yet been made. This is a big fiscal deal, because CN is a 50-year construction project with heavy construction vehicles and buses that will destroy the streets, both those on-site and those that surround CN. The destruction will be greater than that on the main campus, because there will be more heavy construction on CN than on the main campus. The basic infrastructure (e.g. roads, utility distribution lines of all types, stormwater channels) must still be built at CN, whereas they already exist on the main campus. The town needs a fiscal impact statement on long-term road maintenance, or it will assume great financial risks. As for the surrounding, DOT-owned roads, who believes that NCDOT will maintain them well? The consultants ignored construction jobs, indicating that they were charged with evaluating only "permanent positions". Again, CN will be a permanent construction project with a constant flow of construction workers, who, like the main campus construction workers, will park remotely and use CH Transit to get to work every day.The towns need an estimate on the number of construction workers and their impact. It is a fallacious assumption that one can back out from the calculations the 1500 of the 5100 jobs that are moved to CN from other locations throughout CH and Carrboro. Sally Greene addressed this, but Jack Evans did not agree. I would add that a worker's impact is greatest near where he/she works. If 300 UNC employees are moved from the Bank of American building to CN, their impact on northern Chapel Hill increases. And of course, when the bank building refills with employees, the impact on downtown is not decreased commensurately.
How many CN construction workers' kids will be in the schools?
From the last eight years of major construction on the main campus, I wonder how many workers there are, where they live, and how many insert kids into our two school systems. Is there any data?
Citizen story
Here's the link for our story on the briefing. I was able to track down the school generation rate information, which should explain how the number got to be the number.It's pretty interesting that the multi-family rate is so much lower than the single family attached.
Chronicle article
The March 13, 2009 issue of the Chronicle of Higher Education has an article entitled "13 Reasons Colleges Are in This Mess." Reason #5 is Overbuilt
"For more than a decade, colleges have had a tremendous appetite for
building. According to Sightlines, a company that analyzes space
utilization on more than 200 campuses, 14 percent of those colleges'
buildings have been built in the past 10 years. Among research
institutions, the proportion is even higher.
<snip> What kind of future have these colleges built for themselves? A
burdened one. The bulk of the cost of any building comes after it is
built — in the energy needed to run it and the maintenance needed to
keep it functioning. Those happen to be costs that well-heeled donors
are unlikely to support, whether their names are on the buildings or
not.
Deferred maintenance is already a problem in higher education,
running into the hundreds of millions of dollars at many institutions.
In the building boom, many colleges have merely added to infrastructure
they already cannot support." Reason #11. Built Duplicative Centers
"Universities love nanotechnology laboratories. Biotech ones, too.
And while some of those labs may reap benefits for the institutions and
for society as a whole, it's a safe bet that the country has many more
nanotech and biotech facilities than it can support.
So, too, with a host of other research ventures, many of which
quickly prove redundant or unproductive. With fewer federal grants
available, these centers are often a drain on a university's finances,
drawing resources that could be used for student financial aid or
faculty raises."