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    Cost of Community Services Studies

Oldham Ahead supports the use of empirical data as a basis to rationally discuss land use and tax revenue issues within Oldham County.  

Many communities around the country have used a "Cost of Community Services (COCS)" study to determine the overall fiscal contribution of current land uses to assist county officials and citizens in policy development and decision making.

Studies typically provide objective baseline data to make informed decisions.  Land use policies and planning decisions have important consequences for the future environment and quality of life for residents.  Reliable information about how current land uses affect local finances can help guide these decisions.

To that end, Oldham Ahead commissioned the American Farmland Trust in 2003 to conduct a COCS study for Oldham County, with the cooperation and support of Oldham County government leaders and officials.

According to the American Farmland Trust which conducts a number of studies around the country, findings of a COCS studies are a snapshot in time of costs versus revenues based on existing land patterns.  Unlike traditional fiscal impact analyses, COCS studies do not predict the future impact of decisions.  Rather, they assess current conditions based on existing budgets and real dollars. 

While COCS studies do not judge the intrinsic value of one land use over another, they do specifically evaluate the fiscal contribution of privately owned farm, forest and open land.  These productive land uses are generally ignored in other types of fiscal analysis.

The COCS process is straightforward and findings are easy to understand.  Local budgetary information is allocated to land use categories, and then revenues and expenditures are compared.  The studies rely on recent financial records and interviews with local officials to determine how revenues were generated and how appropriations were spent for a given year.  The Executive Summary of the Oldham County Cost of Community Services Study report is below:

The Cost of Community Services

Oldham County , Kentucky

Commissioned by Oldham Ahead

December 2003

Click here to read and download the complete report

At the request of Oldham Ahead, Inc., American Farmland Trust completed a Cost of Community Services (COCS) study to develop a current understanding of the net fiscal impact of existing land uses in Oldham County , Kentucky.  The study analyzed revenues and expenditures on a land use basis for fiscal year 2003 (July 2002 to June 2003).  It examined revenues by land use and the financial demands of public services (e.g. public safety, government administration, schools, courts, etc.) and shows the cost of providing these services to residential, commercial, and farmland properties.  The study reviewed the Oldham County budget including general and special funds, the Oldham County Education District, as well as other services including library, fire, ambulance, and health.  Town services were not included in the study.  The revenue and expenditures represent the majority of the government services provided to residents living in Oldham County .

 The COCS study found that in Oldham County :

·        92 percent of revenue in fiscal year 2003 was generated by residential land uses, 7 percent was generated by commercial land uses, and 1 percent by farmland

·        97 percent of county expenditures went to provide services for residential land use compared with 2 percent for commercial/industrial and .5 percent for farmland.

In other words, for each $1 of revenue received from residential properties in Oldham County in fiscal year 2003, $1.05 was spent providing services for those lands.  For each $1 from commercial and industrial land uses, 29 cents was spent providing services, and for each $1 received from farmland, 44 cents was spent providing services.

Residential land uses created a deficit of $3,944,170 that was offset by the other two land use categories:  $4,158,177 from commercial and the balance from a $492,606 surplus paid by farmland.  The Oldham County COCS findings demonstrated that a balance of land uses is necessary to ensure fiscal stability.  While residential development contributes the largest amount of revenue, its net fiscal impact is negative because the total expenditures for that land use exceed the revenues.  Commercial development’s net revenues offset the shortfall while farmland’s net revenues contribute the balance.

 Study Findings

             *Cost for each $1 of revenue generated

Conclusion

COCS studies are case studies, and while their findings follow an overall pattern, each community is unique. Individual findings vary depending on numerous factors, including:  geography, size of the budget, tax structure, amount of state aid and grants, value and density of residential development, amount of second home or retirement housing, and extent of public services provided to different land use sectors. Because data protocols and institutional arrangements for funding and providing public services are so different from state to state, COCS findings can be compared to discern an overall trend or pattern but should not be averaged to suggest a national cost of development or used as a proxy to predict future costs of new development in a specific community.

  The results of this study provide reliable financial information that demonstrates the importance of agricultural lands to the fiscal stability of Oldham County . It suggests that the development of strategies to retain this land base for future agriculture would be a good long-term investment and that:

¨      Taxes and other revenues from residential land use do not cover all the public services residents receive from the county. A balance of land uses, including farmland, is needed to provide adequate revenue to pay for these services. As more residential development occurs, an imbalance may grow creating the need for tax increases.

¨      Farmland pays more in local tax revenues than it receives in services.  Differential property tax programs are justified as a way to provide an incentive to keep land open and in active agricultural use. Even with a reduced assessed value, agricultural properties contribute a surplus of revenue to pay for public services for residents of Oldham County .

  The findings of this study show the fiscal benefits that result from farmland and provide factual information to help residents understand the delicate fiscal balance between the costs of public services and the revenues generated for them. This information should be useful for county leaders and residents when faced with land use decisions now and in the future. In addition to helping maintain fiscal balance, agricultural lands help sustain Oldham County ’s economy and rural character, and help shape the overall quality of life in the region.

Please contact us at OldhamAhead@aol.com if you would like to receive the full 27-page report in .pdf format.

According to the American Farmland Trust, the results of more than 60 COCS studies conducted by the Trust and other organizations across the country refute the following misconceptions or "myths" about growth:

• Residential development lowers property tax bills by increasing the tax base

 Residential development does contribute revenue to the tax base through property taxes, but it also increases the amount of expenditures necessary for public services such as public safety and education.  When these costs are taken into account, COCS findings consistently show that, overall, residential development does not necessarily pay for itself.

• Farm and forestland receive an unfair tax break when they are assessed at their current use instead of at their potential use for development. 

Current Use, of Differential Property Tax programs, tax land that is actively used for farm or forestry at their use value rather than their market value.  Because of the modest demand of farm and forestland for public services, COCS findings show that most of these programs tax open land at a fair value based not only on the land's current use, but also on its modest cost to the community.

• Open land, including productive agricultural and forestland, is an interim use awaiting conversion to its "highest and best" form.

Findings consistently prove that keeping farm and forestland productive is a viable economic use of the land.  Studies show that farm, forest, and open land have a modest demand for services, and therefore require a low level of expenditures from local government.  Additionally, agriculture and forestry provide numerous economic and environmental benefits.  Therefore, keeping land open is often the best use from a fiscal, economic and environmental perspective. 

Why a COCS study is important for Oldham County:  Oldham County is among the fastest growing counties in Kentucky.  The county needs COCS baseline data and other emperical data to make important strategic decisions that will determine the future look, quality of life, and level of services of the county.  Oldham Ahead believes an objective report is essential for citizens and officials to make informed decisions concerning the future of the county.