Cost of Community Services (COCS) studies are most helpful in the planning process for they offer a new perspective on land-use data. By organizing financial data around land-use categories, they illuminate how different types of land-uses fare in relation to one another in regards to revenues and expenditures. This comparison allows planners and citizens to look at various uses of land on their own merit and with a common economic lens. For towns, Cost of Community Services (COCS) studies help to demonstrate which types of growth have been the most expensive and by how much.
COCS studies are performed by closely analyzing a community's budget and allocating all revenues and expenditures by land-use category. They categorize land-uses into three areas: Residential, Commercial / Industrial, and Open Space. These uses differ from one another and when viewed separately they show that each one requires different kinds and levels of services and that each provides varying degrees of revenue.
Few towns isolate revenues and expenses of their different types of land-use; even fewer track Open Space as a separate category. Most undeveloped lands are simply not considered a viable economic resource in their own right. [1]
American Farmland Trust wrote of this planning tool, [2]
"For example, farmland requires very different types of resources and services than motels, McDonalds', or malls. It also has very different effects on traffic, land use patterns and community character. Particularly in rural areas, separating farm and open lands from other commercial properties is a more reflective measure of their unique contribution. Seen in their own light, they can be evaluated as resource-based industries with specific needs and opportunities."
Viewing Open Space on its own economic merit (how expensive or lucrative it is) allows it to be judged on the same playing field as Residential and Commercial / Industrial land-uses. COCS studies are unique in their identification of Open Space as a land-use category. In this sense alone, they can be very helpful as a planning tool for they can enable a town to more efficiently consider conservation options in their long-term planning process.
COCS studies give a snapshot of time of a community's demand for services by land-use. In doing so, they provide a unique insight into a town's evolution in regards to its land-use. They help show the fiscal implications of past decisions and give valuable information in considering future options.
Scarborough's COCS study entailed contacts and interviews with town officials and extensive investigative work to determine allocations. The study required going through budget items and determining their land-use basis. Some areas were relatively easy to categorize while others were much harder. For example, Education is a service demanded by residents. Therefore, all educational revenues and expenditures could be attributed to Residential land-use. Public works, on the other hand, is a very difficult department to categorize. In this case, the department's budget line-items were looked at individually and allocated accordingly ("Beach Maintenance" is an Open Space expense, whereas "School Bus Repairs" are Residential). Some are even more difficult to quantify such as "Personnel Benefits" or "Utilities". In these cases, a default percentage was applied based on the property tax revenues generated by each land-use category. These revenues were transformed into percentages and then used as a default mechanism for unallocatable items.
An important note to consider is that Scarborough's Open Space has been defined differently here from other COCS efforts. This study has viewed Open Space as only those areas officially designated and recognized by federal, state, and local laws and statutes. Other studies included certain Residential and Commercial / Industrial areas as Open Space. For example, other studies classified a 100 acre Residential parcel (with house / grounds on 1 acre and the rest undeveloped) as equaling 99 acres of Open Space. Unless that property owner took advantage of special Open Space-related tax benefits, this study classified that land as all Residential. For a more complete description of this study's definition of Open Space, please go to Appendix B - Scarborough's Open Space Inventory.
This study chose to use a different definition for two reasons. Separating the true uses of each land parcel is an extremely time-consuming procedure and requires researching every large plot to determine its category. This study was not able to provide such detail. Secondly, land that is not officially recognized as a form of Open Space (i.e.: tax codes) does not have a sense of permanence. To clarify, these lands can be developed / altered tomorrow whereas officially recognized Open Space will remain as such in perpetuity (or will incur substantial financial penalty to change). This difference in definition means that other COCS studies have counted more land as Open Space than this one. They, therefore, have far more (property tax) revenues attributable to Open Space. This different interpretation and categorization of Open Space has a significant impact on COCS figures.
This COCS study has used financial data from Scarborough's 1994 fiscal year which ran from July 1, 1993 - June 30, 1994.
On the revenue side, Scarborough's property taxes ($17,201,615) account for 71% and 73% of General Fund Revenues and Expenditures, respectively. They similarly account for 67% and 58% of Total Revenues and Expenditures. Broken down by land-use category, property taxes equal:
Land-use Category Amount % of Total ------------------------------------------------ Residential $13,678,036 79.516% Commercial/Industrial $3,514,634 20.432% Open Space $8,945 0.052%
As the above table shows, Residential land-use is clearly the largest property tax revenue generator. As Scarborough, like most New England towns, relies heavily on its property tax to fund local operations, this is an important figure to track. Open Space, at less than 1% of revenue, basically consists of taxes paid on lands under use-assessment programs. This amount is insignificant compared to Residential and Commercial / Industrial. As stated previously, however, other COCS studies showed much higher Open Space property tax revenues due to their less limited and different land-use definition.
Below is a summary of (General Fund) revenues:
Land-use Category
Revenue Type Residential % Comm/Ind. % Open Space % Total
-------------------------------------------------------------------------------
Property Taxes $13,678,036 80% $3,514,634 20% $8,945 <1% $17,201,615
Local Receipts $113,290 62% $48,022 26% $22,517 12% $183,129
Federal/State Aid $3,326,833 95% $177,308 5% $7,231 <1% $3,511,372
Interest Earned $58,035 80% $14,912 20% $38 <1% $72,985
Other $2,391,312 75% $660,019 21% $127,468 4% $3,178,798
Total $19,567,506 $4,414,895 $166,199 $24,148,599
% of Total 81% 18% 1%
As you can see, the proportions of General Fund revenues by land-use are fairly similar to that of property taxes. At 95%, Scarborough's Residential land-use accounts for almost all the Federal / State aid. This is primarily due to educational aid. In regards to Open Space, Local Receipts (at 12%) are higher than the average of 1% as they account for Open Space-related licenses (hunting, fishing, clamming, etc.) and excise taxes (boats).
Revenues from other funds:
Land-use Category
Fund Type Residential % Comm/Ind. % Open Space % Total
----------------------------------------------------------------------------
Special Revenue $1,054,592 94% $42,392 4% $30,032 2% $1,127,016
Capital Projects $92,633 85% $16,463 15% $42 <1% $109,138
Trusts $269,452 100% $0 0% $0 0% $269,452
Total $1,419,677 $58,855 $30,074 $1,508,606
% of Total 94% 4% 2%
These three funds indicate that Residential land-use accounts for the vast majority of revenues at 94%. This is mostly attributable to sewer and school-related fees which are heavily Residential in nature.
The proportions of Scarborough's combined revenues are relatively similar to the land-use proportions generated by property taxes:
Land-use Category Total % of Total --------------------------------------------------- Residential $20,984,184 82% Commercial / Industrial $4,473,750 17% Open Space $196,273 1%
On the expenditure side, education was the biggest budget item and its $12,391,845 total accounted for 53% of General Fund expenditures and 42% of Total expenses. By land-use categories, Scarborough's expenses broke down the following way:
Land-use Category
Expenditure Type Residential % Comm./Ind. % Open Space % Total
-----------------------------------------------------------------------------------
Education (& Ed. Debt) $12,391,845 100% $0 0% $0 0% $12,391,845
General Government $1,862,749 78% $513,988 22% $6,832 <1% $2,383,571
Public Safety $1,900,294 84% $337,240 15% $17,115 1% $2,254,649
Public/Comm. Services $794,719 74% $77,288 7% $200,348 19% $1,072,355
Public Works $1,768,424 79% $412,944 19% $55,472 2% $2,236,837
County Tax $524,742 80% $134,835 20% $343 <1% $659,920
Tax Abatements $153,657 80% $39,483 20% $100 <1% $193,240
Debt Service(excl.Ed.) $1,925,392 76% $583,832 23% $11,748 1% $2,520,971
Total $21,321,822 $2,099,609 $291,959 $23,713,388
% of Total 90% 9% 1%
In addition to Education, an item that stands out from the above table is Public / Community Services. These expenditures show a larger Open Space percentage (19%) and a smaller Residential percentage (74%) when compared to the total averages of 1% and 90%, respectively. This is primarily because a good deal of that department's budget revolves around mowing of (recreational) school fields, park and beach maintenance, outdoor-oriented children programs, and other Open Space-related items. As stated before, this was a difficult item to classify as Open Space (and is one that other COCS studies categorized as Residential) - field mowing and beach maintenance are technically Open Space-related but their need exists to serve Scarborough residents.
Expenditures from other funds:
Land-use Category
Fund Type Residential % Comm/Ind. % Open Space % Total
---------------------------------------------------------------------------
Special Revenue $962,352 98% $12,835 1% $5,358 1% $980,545
Capital Projects $4,305,341 91% $423,931 9% $23,954 <1% $4,753,226
Trusts $281,478 100% $0 0% $0 0% $281,478
Total $5,549,171 $436,766 $29,312 $6,015,249
% of Total 92% 7% 1%
These three funds show a slightly higher Residential proportion at 92%, compared to the General Fund expenditure Residential percentage of 90%. This is primarily due to school related expansion and improvement projects (which are entirely Residential) and general town improvements which are more heavily Residential.
Scarborough's combined expenditures:
Land-use Category Total % of Total ------------------------------------------------- Residential $26,870,993 90% Commercial / Industrial $2,536,375 9% Open Space $321,271 1%
This table is most revealing when compared with its counterpart, Combined Revenues. Residential land-use generates 82% of all revenue but accounts for 90% of all expenditures. Commercial / Industrial land-use, on the other hand, brings in 17% of total revenue but accounts for only 9% of expenditures. Open Space remains relatively constant in this comparison at 1%. Taking this comparison one step further, one can come up with a land-use expense ratio - for every dollar that gets spent (by land-use), how much does it bring in?
The table below shows this ratio and according balances attributable to each land-use. The significance of the table is discussed in greater detail in the following Findings section.
Land-use Category Revenues Expenditures Balance Exp.to Rev.Ratio(1:1) --------------------------------------------------------------------------------- Residential $20,984,184 $26,870,993 ($5,886,809) $0.78 Commercial/Industrial $4,473,750 $2,536,375 $1,937,375 $1.76 Open Space $196,273 $321,271 ($124,998) $0.61
Findings
Scarborough's Commercial / Industrial land-use categories are the most lucrative and show a positive balance of $1.76 in revenues for every dollar spent. Residential areas incur a deficit of $0.22 as they return $0.78 for every dollar they require. Open Space has the biggest deficit of $0.39 as it brings in only $0.61 for every dollar expended on it.
The Open Space deficit is a surprise as other COCS studies have shown this land-use category to
be the most lucrative. The deficit is due to this study's limited definition of Open Space - revenues
counted as Open Space in other COCS studies were counted as Residential here. Additionally,
certain budget line-items were allocated conservatively in favor of
Residential. For example, Beach Maintenance was categorized as an Open Space expense but the
duties of trash collection, seaweed removal, and parking concerns exist because of the demands of
users. Similarly, Community Services spends significant amounts of its budget mowing and
maintaining recreational fields. These fields are maintained for the benefit of residents. In both
cases, expenses were allocated accordingly to Open Space.
If Community Service's revenues and expenditures, large line-items, were classified as Residential, the Open Space deficit would shrink to $0.19. This recalculation is listed below:
If Community Services were classified as all Residential:
Land-use Category Expenditures Revenues Exp. to Rev. Ratio (1:1) ------------------------------------------------------------------------ Residential $27,009,860 $21,033,288 $0.78 Open Space $182,404 $147,169 $0.81 Comm. / Ind. Unchanged Unchanged Unchanged
With Residential at such high amounts to begin with, this change does not affect its Expense Ratio. Open Space, much smaller, is significantly affected. Community Services in other COCS were categorized as Residential as it is residents who demand the services. This study has shown this alteration because it involves significant line-item amounts.
Undoubtedly, many allocations can be debated and this study's Open Space definition is a significant difference. However, there are important conclusions that the original COCS data reveal about Scarborough.
The most obvious issue is the difference in scale between Residential and Open Space. Scarborough spends eighty-four times more money on Residential ($26,870,993) areas than it does Open Space ($321,271). On the revenue side, this difference is even more pronounced at 106 times. Breaking these figures down further into per capita data uncovers interesting information. Dividing each land-use category's negative balance by the number of Town residents (1990 Census = 12,518) reveals that Scarborough incurs the following deficits per resident:
Land-use Category Balance Deficit Per Resident -------------------------------------------------------- Residential ($5,886,809) $470 Open Space ($124,998) $10
Another area to look at is how much the Town spends per resident on Land-use categories:
Land-use Category Expenditure Expenditure Per Resident ------------------------------------------------------------ Residential $26,870,993 $2,147 Open Space $321,271 $26
Breaking this down on a different level we can compare Scarborough's deficits in (land-use) acreage:
Land-use Category Revenues Expenditures Acreage Deficit Per Acre ----------------------------------------------------------------------- Residential $20,984,184 $26,870,993 21,193 $277 Open Space $196,273 $321,271 6,390 $20
Summarizing the above expenditures and deficits, the COCS reveals:
Land-use Category Expenditure & Deficit Exp. & Deficit Per Acre
Per Resident
------------------------------------------------------------------
Residential $2,147 & $470 $1065 & $277
Open Space $26 & $10 $51 & $20
Although Open Space shows the largest negative balance overall in Scarborough's COCS study, when looked at more closely in terms of deficits per acre and resident, Residential land-use becomes the most costly to the Town.
In other COCS studies, all have all displayed a similar trend of Residential land-use expenditures outstripping revenues. Open Space and Commercial / Industrial land-uses showed approximately identical positive balances. Open Space, in fact, paid an average of 3.5 times as much as it costed. [5]
Below is a list of these other towns and the COCS findings: [6]
COCS Services-to-Costs Ratios in Dollars
Town Residential Comm./Ind. Open Space
------------------------------------------------------------
Hebron, CT 1:1.06 1:0.42 1:0.36
Agawam, MA 1:1.05 1:0.42 1:0.30
Deerfield, MA 1:1.16 1:0.38 1:0.29
Gill, MA 1:1.15 1:0.41 1:0.29
Amenia, NY 1:1.23 1:0.25 1:0.17
Beekman, NY 1:1.12 1:0.18 1:0.48
Fishkill, NY 1:1.23 1:0.31 1:0.74
Northeast, NY 1:1.36 1:0.29 1:0.21
Red Hook, NY 1:1.11 1:0.21 1:0.22
Clarke County, VA 1:1.26 1:0.21 1:0.15
Median Ratios 1:1.16 1:0.30 1:0.29
It is important to remember that these studies used a different definition of Open Space than the more limited one used for Scarborough. Despite this, however, the trends are revealing and can be viewed for comparison. Scarborough's Residential and Commercial / Industrial ratios are strikingly close to the above median ratios:
Services-to-Costs Residential Comm./Ind. Open Space ----------------------------------------------------------- Median Ratios 1:1.16 1:0.30 1:0.29 Scarborough Ratios 1:1.22 1:0.24 1:1.31 Difference 0.06 0.06 1.02
There is another way to compare Scarborough's findings with other towns. The three Massachusetts towns of Agawam, Deerfield, and Gill have combined Open Space property tax revenues of $494,487. By dividing that figure into their combined property tax revenues ($20,314,077), the percentage of property taxes generated from Open Space becomes 2.434%. Scarborough's COCS differed mostly in its Open Space definition. If the average from the three other towns is substituted for Scarborough's percentage (0.052%), then Scarborough's COCS could be recalculated (for more details, please see Appendix D) to look at Open Space revenues.
This methodology offers a way (albeit imperfect) to hypothetically estimate Scarborough's Open Space property tax revenues using a similar Open Space definition. In doing so, Scarborough's Service-to-Cost Ratio (1:0.20) becomes more similar to the median ratio for the ten aforementioned towns (1:0.29).
Scarborough, like most towns, only keeps (property tax) revenue records on Residential and Commercial / Industrial land-uses. For this study, Open Space had to be tracked and "backed out" of Residential. By distinguishing between the three land-use categories, COCS studies help demonstrate each one's costs and benefits. Open Space, as people say, does not send kids to school nor does it require the same amount of police protection as other land-uses. All COCS studies show that Open Space derives and requires a fraction of the amount of revenues and costs that other land-uses do.
For rapidly growing towns, a COCS study helps to demonstrate the most lucrative and expensive types of growth. In Scarborough's case, Open Space has the worst expense ratio but when viewed in terms of per capita and per acre, Residential land-use becomes the loss leader. In all COCS studies, Commercial / Industrial land-uses have subsidized other uses with their excess revenues. However, towns must deal with this carefully as this growth attracts new residents and thus eventually new infrastructure costs. Additionally, towns faced with dwindling fiscal resources and threatened by relocating companies have begun to embrace unwise financial sacrifices in the form of lower taxes, waived zoning laws, etc. to attract or keep Commercial / Industrial uses. This can lead to a pattern of subsidization that is hard to break once established.
Rapidly growing towns such as Scarborough often face infrastructure challenges involving such areas as public works, police and fire coverage, and education. As a town's population grows and becomes increasingly dispersed, pressures to provide public services become greater. Scarborough's large rural land area west of the Turnpike and areas to the east blocked by marsh expanses make efficient public service provision difficult and costly. Faced with this dilemma, towns often look to new developments as a way to bring in more tax revenues. On a short-term basis, this works but costs eventually accumulate. If developments are not properly planned, they will often end up costing much more than they bring in. In addition to unplanned growth straining town budgets, there are other costs of development that include traffic congestion, noise, crime, pollution, and change in community character. [7]
COCS studies are best applied in long-term planning and, as stated previously, they provide a snapshot of time for planners and citizens. They can also help see the dangers in today's common tendency of taxing lands at their "highest and best use." While this policy brings in revenues in the short-term, it can also have significant and unwanted long-term consequences. COCS studies are not about whether to develop but are about where and how and when to develop. [8] The need is not to prevent growth but to protect a working balance between open lands and urbanized uses. [9]
As COCS studies aim to present the three land-use categories in the same economic light in terms of presenting their revenues and expenditures, there is another way to view Open Space. There are other specific economic (and social) benefits of Open Space that can be quantified and brought to the planning process.
[1] Does Farmland Protection Pay? The Cost of Community Services in Three Massachusetts Towns, American Farmland Trust, p.2.
[2] Ibid.
[3]The Complete Cost of Community Services Study for Scarborough is included in Appendix C.
[4] Using 1996 Residential acreage figures and 1994 Open Space acreage figures. See Section II. C) for Open Space acreage totals.
[5] Economic Benefits of Open Space, Stephen Miller, p.1.
[6] Ibid, p.2.
[7] Ibid, p.22.
[8] Ibid, p.23.
[9] Ibid.