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011025 Friday Staff ReportCity Manager’s Office 215 E. McKinney St., Denton, TX 76201  (940) 349-8307 OUR CORE VALUES Inclusion  Collaboration  Quality Service  Strategic Focus  Fiscal Responsibility MEMORANDUM DATE: Jan. 10, 2025 TO: The Honorable Mayor Hudspeth and Council Members FROM: Sara Hensley, City Manager SUBJECT: Friday Staff Report Upcoming Meetings A.Public Utilities Board on Monday, Jan. 13, 2025, at 9:00 a.m. in the City Council Work Session Room. B.Historic Landmark Commission on Monday, Jan. 13, 2025, at 5:30 p.m. at theDevelopment Service Center. C.Library Board on Monday, Jan. 13, 2025, at 5:30 p.m. at the South Branch Library. D.Work Session of the City Council on Tuesday, Jan. 14, 2025, at 2:00 p.m. in the City Council Work Session Room followed by a Regular Meeting at 6:30 p.m. in the CouncilChambers. E.Planning and Zoning Commission on Wednesday, Jan. 15, 2025, at 5:30 p.m. in the City Council Work Session Room & Council Chambers. F.Committee on Persons with Disabilities on Thursday, Jan. 16, 2025, at 3:00 p.m. at theDevelopment Service Center. Please check the City of Denton website for final meeting days and times as information is subject to change after the Friday Report is published. Public Meetings & Agendas | Denton, TX (civicplus.com) General Information & Status Updates A.FindHelp Denton County Progress Report – The FindHelp Denton County digital resource directory has completed its first year. The attached report highlights keyfindings: Top Searched Resources: Housing and food remain the most frequently searched services.Primary Search Locations: The majority of searches were made in Denton. Looking ahead to 2025, City and County staff are collaborating to increase usership,both by nonprofit organizations and help seekers. Efforts will focus on quarterly training with county agencies and community-based organizations and community promotion materials placed in locations frequently used by the public to raiseawareness and utilization. Staff contact: Courtney Douangdara, Community Services. B.89th State Legislative Session – The 89th Texas State Legislative Session will start on Tuesday, January 14. The legislative session occurs every other year in odd number years and lasts from January to May. During the session, staff will monitor and tracklegislation that may impact the City of Denton and its residents and will provideupdates on priority legislation in future Friday Reports. The City Council passedthe attached Legislative Program on November 19, 2024, which details the City’s legislative priorities. Staff contact: Kristi Fogle, City Manager’s Office Responses to Council Member Requests for Information A.Duncan Street Construction – On Jan. 7, Mayor Hudspeth inquired about a lane closure on Duncan Street. A portion of Duncan Street has one lane closed south of Kerley Street as part of the construction for a private development. The construction project hasexperienced disruption due to the age of the existing sanitary sewer line and lead timefor materials. Work is scheduled to continue the week of Jan. 13, and the contractor hasbeen instructed to clear the road and have a plate installed over the sewer work by the end of next week. Intermittent closures may occur for waterline connections. Public Work Inspection staff will continue to monitor the project. Staff Contact: WesleyMcBride, Public Works Inspections B.Visibility Improvements – On Jan. 7, Mayor Hudspeth inquired about the tightness of the intersection of E. Prairie Street and Bradshaw Street. Bulb-outs were previously installed at this location as part of the Southeast Denton Package B project to enhancepedestrian safety and improve accessibility. However, some residents expressedconcerns about reduced visibility due to the size of these bulb-outs. Staff completedan alternative design to reduce the bulb-outs, accommodate the needed accessible ramps, and increase the lane width at the intersection. Construction of the new improvements will begin the week of Monday, Jan. 13, and will include the removal ofthe current bulb-outs. Construction is expected to take two weeks. Staff Contact: SethGarcia, Capital Projects 2 C.National Wastewater Surveillance System (NWSS) - On Jan. 7, the City Councilauthorized the execution of a Memorandum of Understanding with the Texas Department of State Health Services (DSHS) for the collection and analysis of wastewater at the Pecan Creek Water Reclamation Plant for various targeted pathogens(ID 24-2347). DSHS will perform wastewater analysis for a variety of targets asadvised by the Centers for Disease Control (CDC), which may include Influenza Avirus (IAV), Influenza B virus (IBV), Mpox virus, norovirus, respiratory syncytial virus (RSV), and severe acute respiratory syndrome-associated coronavirus 2 (SARS- CoV-2). This program identifies and tracks pathogens in wastewater at the community-wide level. The CDC’s National Wastewater Surveillance System tool may beaccessed to see nationwide data. Staff contact: Michael A. Gange, EnvironmentalServices & Sustainability Upcoming Community Events and Public Meetings Please visit the City of Denton website for upcoming community events and details. A.FindHelp Denton County Progress Report ........................................................................4B.Denton State Legislative Program 2025 ............................................................................6 Informal Staff Report A.2025-019 May 2025 General Election Polling Locations ..................................................8 B.2025-020 Hunter and Cole Ranch Fiscal Impact Analysis ..............................................12 C.2025-022 Increasing Denton’s Urban Tree Canopy ......................................................173 Information A.Council Requests for Information ................................................................................176 B.Public Meetings Calendar ............................................................................................178 C.Future Work Session Items ..........................................................................................181 D.Street Closure Report ...................................................................................................182 3 Users Searches Interactions Nov 23Dec 23Jan 24Feb 24Mar 24Apr 24May 24Jun 24Jul 24Aug 24Sept 24Oct 24Nov 240 500 1000 1500 2000 2500 Housing 51% Health 16% Food 13% Money 5% Transit 4% Transit 4% Most Common Search Terms TERM DOMAIN SEARCHES Rent Housing 2,026 Help Pay for Housing Housing 448 Food Pantry Food 442 Food Food 405 Housing Housing 305 Annual Report FindHelp Denton County launched in November 2023 through a collaborative partnership between City of Denton, City of Lewisville, and Denton County. 76201 - Denton1. 76227 - Aubrey2. 76209 - Denton3. 76205 - Denton4. 76208 - Denton5. FindHelp.DentonCounty.gov Launched 11/28/2023 Most commonly searched zip codes: Site Activity Search Activity 4 258 programs added to FindHelp 161 programs claimed on FindHelp 2,360 orgranizations listed on FindHelp ONE YEAR IN... More than 18k users accessed FindHelp Denton County to search for resources Over 23k interactions with program cards on FindHelp Denton County resulting in Searches by City City Searches Denton 8,088 Lewisville 2.153 Aubrey 1,596 Little Elm 934 The Colony 571 average searches per month across FindHelp Denton County users 1,353 Increase community-based organization breadth of usership Prioritize access in asset-limited geographic areas Enhance closed-loop referral networkYEAR 2 FindHelp.DentonCounty.gov5 Community Focus The City of Denton values strong partnerships with key community organizations—including Denton ISD, Denton County, Denton County Transportation Authority (DCTA), North Central Texas College (NCTC), Texas Woman’s University (TWU), and the University of North Texas (UNT). To advance legislation that addresses shared priorities and enhances the well-being of the entire Denton area, the City supports the following initiatives: • Expand access to affordable mental health care through legislation and funding. • Support legislation and funding for community-based services for individuals experiencing homelessness. • Protect the autonomy of local officials to make decisions in the best interest of their communities. • Support legislation that enhances the City’s vibrant community and economy including affordable housing, economic development agreements, environmental sustainability, public and higher education funding, public safety, and tourism. City Services • Support legislation that designates essential city employees, like solid waste, utilities, and animal control officers, as first responders. • Support legislation mandating that retail pet stores only sell animals acquired from animal control agencies, shelters, or rescue organizations, and require stores to maintain records of the animals’ origins. • Support legislation that restores a city’s ability to regulate retail pet stores. • Support legislation and funding for the Texas Parks and Wildlife Department’s Local Parks Grant Program. • Oppose legislation that limits franchise fee authority for solid waste services. • Oppose legislation that restricts libraries' authority to make decisions regarding materials, implements a state-issued rating system for purchases, or prohibits libraries from hosting community events. Land Use & Development • Support legislation that protects and clarifies the City’s role in requests for removal from their extraterritorial jurisdictions (ETJ). • Support legislation that preserves the City’s authority to establish lot sizes, parking requirements, density, and accessory dwelling unit (ADU) requirements within city limits. • Oppose legislation that restricts a city’s authority over development issues, including annexation, eminent domain, zoning, regulatory takings, building codes, tree preservation, short-term rentals, and manufactured housing. • Oppose legislation that diminishes the City’s authority to manage and control its rights-of-way, including limitations on requiring dedications or studies as part of plat submissions. City DENTONState Legislative Program 89th Texas Legislature 6 Municipal Court •Support legislation that amends extended-term protective orders to include offenses against pregnant individuals and those involving strangulation. • Support legislation that creates a nominal court fee to provide need-based funding for court-appointed attorneys in Class C misdemeanor cases. • Support legislation that improves virtual or remote access for defendants in municipal court. • Oppose legislation that eliminates the option of issuing warrants for Class C misdemeanors. Taxation & Financial Strategies • Support legislation allowing municipalities to issue debt and protecting debt issuances. • Support increasing the competitive bidding threshold to reflect rising costs and inflation. • Oppose legislation limiting a city’s ability to issue Certificates of Obligation (COs) and levy necessary fees. Transportation & Aviation • Support legislation that invests in the State’s multimodal transportation systems and increases funding for growing urban areas. • Support legislation that provides cities with greater flexibility to fund local transportation projects. • Support legislation that invests in the State’s aviation program capital improvement. Utilities • Support legislation that increases state grant funding to the Texas Water Development Board, in alignment with the priorities outlined in the State Water Plan. •Support legislation that promotes direct potable reuse water, and other water conservation initiatives. • Support legislation that clearly defines technology resources capable of meeting the goals of the Dispatchable Reliability Reserve Service. • Support legislation that classifies electric power generation units as critical infrastructure, giving them the same priority protections as entities with priority access to natural gas during emergencies. • Oppose any legislation that restricts large load interconnections to the distribution systems of Municipal-Owned Utilities (MOUs). • Oppose legislation that creates unfunded mandates on Municipal-Owned Utilities. City DENTON State Legislative Program 89th Texas Legislature 7 Date: Jan. 10, 2025 Report No. 2025-019 INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: May 3, 2025 General Election and Special Election Polling Locations. BACKGROUND: On Tuesday Jan. 14, 2025, the City Council will consider an ordinance ordering a municipal election to be held on Saturday May 3, 2025, to elect members to City Council Districts 1, 2, 3, and 4, including a runoff election to be held Saturday, June 7, 2025, if needed. The following is the most recent voter turnout information: EARLY VOTING District Location Voter Turnout May 2023 May 2024 1 Denton Civic Center 1608 1419 *Denton County Elections Administration 1155 856 MLK Recreation Center 237 151 Texas Woman's University - Hubbard Hall 174 Not Used 2 North Branch Library 1534 1519 3 North Lakes Recreation Center 712 583 4 Denton Fire Station #7 Not Used 259 Robson Ranch Clubhouse 1308 1389 South Branch Library 2454 1741 *Main Early Voting Location so must be used 8 Date: Jan. 10, 2025 Report No. 2025-019 ELECTION DAY District Location Voter Turnout May 2023 May 2024 1 Denton Civic Center* 271 Not Used MLK Recreation Center 137 178 Texas Women's University* Not Used 120 2 North Branch Library 606 519 Denton ISD Sisk Service Center Annex 177 183 3 Denia Recreation Center 150 254 North Lakes Recreation Center 345 489 UNT - Greek Life Center Not Used 85** 4 Denton Fire Station #7 184 135 Robson Ranch Clubhouse 258 265 South Branch Library 907 649 *Only one of these locations may be utilized as an Election Day polling location. Staffrecommends use of the Denton Civic Center for the 2025 General Election.** UNT Data is for Gateway Center which is unavailable for the May 2025 election In reviewing the historical use of polling locations from 2023 and 2024, the following proposed locations are substantially the same used for general elections and runoff elections, where applicable. Both the University of North Texas (“UNT”) and Texas Woman’s University (“TWU”) indicated an interest in being used as polling locations. While the UNT Gateway Center was unavailable, the Greek Life Center, with adjacent parking, has been offered as an alternative. The City has previously utilized this location with success. The TWU space reservation team is working to confirm a location on campus. Staff is not recommending the continued use of the Serve Denton polling location utilized in the May 4, 2024, General Election (this location is not referenced in the above chart). The 2024 voter turnout at this location was 32 voters. The City of Denton must incur the total cost for the use of this facility as no other agencies are participating in the joint election willing to share in the cost for this polling location. Additionally, there is an authorized polling location within a mile of the Serve Denton polling location for which DISD will share in the cost. The following are the Staff recommended polling locations. These locations have been presented to DISD, who is presently in the process of reviewing for approval. 9 Date: Jan. 10, 2025 Report No. 2025-019 The actual number of polling locations used during an election will vary depending on the number of jurisdictions contracting with Denton County Elections Department. Denton County will assign precincts to specific locations and districts may share a polling location in some instances. If a runoff election is necessary, Staff recommends use of all Election Day locations shown for respective district(s) in the runoff and use of the Denton Civic Center, Denton County Elections Administration, and an additional early voting site as the Early Voting Locations only. Locations proposed for use for any runoff election would be deliberated at the time the runoff election is ordered. This information and an ordinance calling the 2025 General Election will be presented to Council on Tuesday, Jan. 14. Additionally, a map of the proposed locations is included as an attachment. Please provide all questions or requests for additional locations in advance for staff preparation. STAFF CONTACT: Lauren Thoden, City Secretary (940) 349-8309lauren.thoden@cityofdenton.com 10 Inclusion Collaboration Quality ServiceStrategic Focus Fiscal Responsibility Spatial Reference: NAD 1983 StatePlane Texas North Central FIPS 4202 Feet Author: Development Services GIS - 2930105Date: 1/10/2025 1:00 PMThis information is solely for general reference and is not tobe relied upon for legal, engineering, or surveyingpurposes. It does not replace an on-site survey and provides only an approximate location of property boundaries. Whileevery effort has been made to ensure accuracy, noguarantee is implied. The use of this map indicatesacknowledgment that the data may not be entirely accurate. Legend Polling Locations District 1 District 2 District 3 District 4 ETJ 1 ETJ 2FM156NFM 156NW U n iversity Dr Wildhorse Golf Club of Robson Ranch KRUM FM 407 WNORTHLAKE S MayhillRdTe a sl ey Ln FM 1 1 73 W Oak St N Locust St S Loop288W University Dr 77 377 35E 35W 35 University of North Texas CORINTH DENTON F M 407 E FM 2 181 Village PkwyArgyle Isd ARGYLE Denton County Elections Administration 701 Kimberly Dr. North Branch Library 3020 N. Locust St. Denton ISD Sisk Service Center Annex 230 N. Mayhill Rd. Denia Recreation Center 1001 Parvin St. North Lakes Recreation Center 2001 W. Windsor Dr. Denton Fire Station #7 4201 Vintage Blvd South Branch Library 3228 Teasley Ln. University of North Texas - Greek Life Center 621 S. Welch Street MLK Recreation Center 1300 Wilson St. Robson Ranch Clubhouse 9428 Ed Robson Cir. Texas Woman's University TBD Denton Civic Center 621 S. Welch Street DISTRICT 4 DISTRICT 3 DISTRICT 2 DISTRICT 1 Polling Locations 0 4000 Feet Feet : January 2025 11 Jan. 10, 2025 Report No. 2025-020 INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: Provide information regarding a recently completed update to the original Hunter and Cole Ranch developments Fiscal Impact Analysis (FIA). EXECUTIVE SUMMARY: City staff worked with a consultant to update the Fiscal Impact Analysis (FIA) for the Hunter and Cole Ranch developments. The updated study shows that the developments still have an overall net positive fiscal impact for the City of Denton. However, there are some changes compared to the original study (Attachments 1 & 2). Overall, the net impact to the City is positive. BACKGROUND: During the initial assessment of the Hunter and Cole Ranch Developments, City staff hired TischlerBise to conduct a FIA to determine the long-term financial impacts of the developments and ensure an equitable arrangement in the future project and operating agreements with both developers. The original FIA was conducted in 2020 to calculate the net fiscal impact of the proposed Hunter/Cole Ranch development to the City’s General Operating and Debt Service Funds, the Roadway Impact Fee Fund, and the Street Improvement Fund. Additionally, they examined the fiscal impact to the City’s Utility Funds to provide the City with cost and revenue projections for use in its own rate analyses. When the Hunter Ranch development came forward to requests amendments to the operating and project agreements in 2024, staff took the opportunity to engage TischlerBise to update the study based on current development assumptions, costs, and levels of service. This study was completed in September 2024. METHODOLOGY: The study used a case study-marginal methodology to forecast the future fiscal impact of the Hunter and Cole Ranch developments. This process involved evaluating the City’s current costs per unit of service (e.g., cost per resident for police services) and applying these rates to projected service demands from the development. Similarly, current City revenues per unit (e.g., property tax revenue per $100 of assessed value) were used to estimate future revenue generation. By comparing projected costs and revenues, the study determined the net fiscal impact on the City's General Fund, Special Revenue Funds, and Utility Funds. This analysis is based on current service levels and costs which does not account for any future changes in costs, fees, or changes in level of service. KEY FINDINGS: City-Wide Impact The updated fiscal impact study shows the Hunter and Cole Ranch developments still show to be a net positive fiscal impact to the City of Denton. The net impact to the City will vary with time, however, we are confident that this impact will be positive over the 40 years of this study. It is important to keep in mind that individual funds listed in the study will have varying impact over time. This is due to the timing of capital outlays, changes in impact fee rates and utility rates, and inflationary factors. Capital outlays made in relationship to this study benefit the entirety of the utility systems. These outlays are needed to continue the continuity of the utility systems and address 12 Jan. 10, 2025 Report No. 2025-020 growth and increased demand City-wide. In this study, these impacts are reviewed as a part of these projects only, however, they benefit the entire system. The table below describes the overall impact city-wide over a 40-year study timeframe. Key Differences It should be noted that this evaluation considers the follow factors: •No inflationary factors are included. As mentioned by TishlerBise, “The rate of inflation is assumedto be zero throughout the projection period, and cost and revenue projections are in constant 2024dollars. This assumption is in accord with current budget data and avoids the difficulty offorecasting as well as interpreting results expressed in inflated dollars. In general, includinginflation is complicated and unpredictable. This is particularly the case given that some costs,such as salaries, increase at different rates than other operating and capital costs such as contractual and building construction costs. These costs, in turn, almost always increase invariation to the appreciation of real estate. Using constant 2024 dollars reinforces the snapshotapproach and avoids these problems.” •No Retail or Commercial Utility Rate increases to align with no inflationary increases.o As noted by TishlerBise, “In practice, utility funds are self-sufficient; the City of Denton adjusts rates inorder to cover the actual cost of service while also generating a Return onInvestment (“ROI”) as identified from time to time in targeted municipal policies. The City of Denton is in the process of conducting rate analyses in order to forecastthe timing and extent to which utility rates may need to be adjusted to fundpotential growth-related capacity expansion projects. 13 Jan. 10, 2025 Report No. 2025-020 The Utility Fund analysis included in this report presents the fiscal impact of the development to the City’s utility funds, assuming no rate adjustments, per direction from the City’s Finance Department. Costs are therefore projected based solely on the increase in customers and usage for each utility; revenues are projected based on the current cost of water, wastewater, solid waste, and electric service per the appropriate demand factor (e.g., water produced).” City utility and impact fee rates will be evaluated over the projected 40-year time span and adjusted as necessary and within policy limitations. CONCLUSION: The updated study offers valuable insight, showing that the Hunter and Cole Ranch developments continue to provide a net positive impact to the City. It is important to remember that this study reflects a specific point in time and there are opportunities to shape the net fiscal impact in the future (i.e. the current Water and Wastewater Impact Fee Study). City staff will be proactive in monitoring these funds to ensure costs are covered and guarantee the long-term financial stability and health of these resources. ATTACHMENTS: 1.Update FIA Report2.Original FIA Report STAFF CONTACT: Charlie Rosendahl Business Services Manager Charlie.Rosendahl@cityofdenton.com (940)349-8452 REQUESTOR: Staff Initiated STAFF TIME TO COMPLETE REPORT: 2 hours PARTICIPATING DEPARTMENTS: Finance and Development Services Departments 14 Fiscal Impact Analysis of Hunter and Cole Ranch Developments Fiscal Impact Analysis Report City of Denton, Texas Prepared for: The City of Denton September 23, 2024 4701 Sangamore Road, Suite S240 Bethesda, MD 301.320.6900 www.tischlerbise.com 15 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX i [PAGE INTENTIONALLY LEFT BLANK] 16 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX ii TABLE OF CONTENTS I. Executive Summary ....................................................................................................................... 1 Development Program .................................................................................................................. 2 Summary of Fiscal Impact Results ................................................................................................. 3 General Fund and Special Revenue Funds .................................................................................. 3 Utility Funds .............................................................................................................................. 7 Overall Results .........................................................................................................................14 Key Findings & Conclusions ..........................................................................................................15 General, Debt Service, and Special Revenue Funds ...................................................................15 Utility Funds .............................................................................................................................16 II. Major Assumptions & Methodologies ..........................................................................................17 Overview of Methodology ...........................................................................................................17 General Approach ....................................................................................................................17 Key Assumptions ..........................................................................................................................19 Fiscal Year 2024 Budget ............................................................................................................19 Variable versus Fixed Costs and Revenues ................................................................................20 Levels of Service .......................................................................................................................20 Inflation Rate ...........................................................................................................................20 Enterprise Funds ......................................................................................................................21 Non-Fiscal Evaluations ..............................................................................................................21 Development Program .................................................................................................................22 III. Fiscal Impact Analysis Results .....................................................................................................24 General and Special Revenue Funds .............................................................................................25 Annual Net Fiscal Impacts ........................................................................................................25 Capital Impacts ........................................................................................................................28 Cumulative Net Fiscal Impacts ..................................................................................................30 Utility Funds ................................................................................................................................31 Cumulative Fiscal Impact for Utility Funds ................................................................................31 Net Annual Fiscal Impact for Utility Funds ................................................................................33 Key Findings & Conclusions ..........................................................................................................37 17 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX iii General, Debt Service, and Special Revenue Funds ...................................................................37 Utility Funds .............................................................................................................................38 Overall Results .........................................................................................................................38 IV. Revenue and Expenditure Detail .................................................................................................39 Revenue Methodologies ..............................................................................................................39 General Fund Revenues ............................................................................................................39 General Debt Service Fund .......................................................................................................45 Special Revenue Funds .............................................................................................................45 Utility Funds .............................................................................................................................47 Revenue Outputs .........................................................................................................................51 Revenue Projections .................................................................................................................51 Operating Expenditure Methodologies ........................................................................................53 General and Special Revenue Funds .........................................................................................53 Utility Fund Operating Expenditures .........................................................................................56 Capital Expenditure Methodologies .............................................................................................57 General Government Facilities .................................................................................................57 Parks and Recreation ................................................................................................................58 Transportation .........................................................................................................................58 Police .......................................................................................................................................58 Fire and EMS ............................................................................................................................59 Library......................................................................................................................................59 Public Works ............................................................................................................................59 Expenditure Outputs ....................................................................................................................60 Operating and Capital Expenditure Projections ........................................................................60 Appendix A. Demographic & Data Assumptions ...............................................................................62 Base Year Demographic Estimates ................................................................................................62 Population and Job Factors .......................................................................................................63 Vehicle Trips ................................................................................................................................63 Residential Vehicle Trips ...........................................................................................................63 Nonresidential Vehicle Trips .....................................................................................................64 Base Year Vehicle Trip Totals .....................................................................................................65 18 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX iv Functional Population ..................................................................................................................66 Police Calls for Service .................................................................................................................67 Fire Calls for Service.....................................................................................................................68 19 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX i Table of Figures Figure 1. Development Scenario ....................................................................................................... 2 Figure 2. Annual Net Fiscal Impact 2024-2064 (Non-Utility) .............................................................. 3 Figure 3. Summary of 40-Year Cumulative Fiscal Impacts to City of Denton ....................................... 4 Figure 4. Annual Operating & Capital Expenditures Compared to Revenues (Non-Utility) .................. 4 Figure 5. Capital Facilities and Expenditure Inventory (General, Special, and Debt Service Funds) ..... 6 Figure 6. Cumulative 40-Year Net Fiscal Impact by Utility Fund (1,000s) ............................................ 8 Figure 7. Capital Facilities and Expenditure Inventory (Utility Funds) ................................................ 9 Figure 8. Water Fund Operating & Capital Expenses Compared to Revenues ....................................10 Figure 9. Wastewater Fund Operating & Capital Expenses Compared to Revenues ...........................11 Figure 10. Solid Waste Fund Operating & Capital Expenses Compared to Revenues .........................12 Figure 11. Electric Fund Operating & Capital Expenses Compared to Revenue .................................13 Figure 12. Operating and Capital Expenditures Compared to Revenues for All Funds Combined.......14 Figure 13. Development Scenario ....................................................................................................22 Figure 14. Annual Net Fiscal Impact 2024-2064 (Non-Utility) ...........................................................26 Figure 15. Annual Operating & Capital Expenditures Compared to Revenues (Non-Utility) ...............27 Figure 16. Capital Facilities and Expenditure Inventory (General, Special, and Debt Service Funds) ..29 Figure 17. Summary of 40-Year Cumulative Fiscal Impacts to City of Denton ....................................30 Figure 18. Cumulative Revenues and Expenditures: General and Debt Service Funds .......................30 Figure 19. Cumulative 40-Year Net Fiscal Impact by Utility Fund (1,000s) .........................................31 Figure 20. Capital Facilities and Expenditure Inventory (Utility Funds) .............................................32 Figure 21. Water Fund Operating & Capital Expenses Compared to Revenues ..................................33 Figure 22. Wastewater Fund Operating & Capital Expenses Compared to Revenues .........................34 Figure 23. Solid Waste Fund Operating & Capital Expenses Compared to Revenues .........................35 Figure 24. Electric Fund Operating & Capital Expenses Compared to Revenue .................................36 Figure 25. Operating and Capital Expenditures Compared to Revenues for All Funds Combined.......38 Figure 26. General Fund Revenues ...................................................................................................40 Figure 27. Sales Tax per Square Foot ................................................................................................42 Figure 28. Assessed Value by Land Use Type ....................................................................................43 Figure 29. General Debt Service Fund ..............................................................................................45 Figure 30. Street Improvement Fund ...............................................................................................46 Figure 31. Roadway Impact Fee Assumptions ...................................................................................46 Figure 32. Utility Fund Revenue Projection Methodology ................................................................47 Figure 33. Water and Wastewater Billing Assumptions.....................................................................48 Figure 34. Water and Wastewater Impact Fee Assumptions .............................................................49 Figure 35. Utility Fund Revenue Projection Methodology ................................................................50 Figure 36. Solid Waste Fund Revenue Projection Methodology ........................................................50 Figure 37. 40-Year Revenue Totals for all Non-Utility Funds ..............................................................51 Figure 38. 40-Year Revenue Totals and Annual Averages for Utility Funds (x$1,000s) .......................52 20 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX ii Figure 39. General and Special Revenue Operating Expenditures Approach .....................................54 Figure 40. City Maintained Parks and Recreation Facilities for Operating Expense Projections .........55 Figure 41. Utility Funds Operating Expenditures Approach ..............................................................56 Figure 42. Operating Expenditure Projections ..................................................................................60 Figure 43. Summary of Non-Utility Capital Costs ..............................................................................61 Figure 44. Summary of Utility Fund Capital Costs .............................................................................61 Figure 45. Base Year Input Data .......................................................................................................62 Figure 46. Trip Adjustment Factor for Commuters ............................................................................64 Figure 47. Trip Generation Factors ...................................................................................................64 Figure 48. Vehicle Trips ....................................................................................................................65 Figure 49. City of Denton Functional Population ..............................................................................66 Figure 50. Police Service Call Demand Factors .................................................................................67 Figure 51. Fire Department Demand Factors ....................................................................................68 21 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 1 I .EXECUTIVE SUMMARY The purpose of this Fiscal Impact Analysis (“FIA”) is to provide information to the City of Denton related to the fiscal impact of the proposed Hunter Ranch and Cole Ranch Municipal Management Districts (“Hunter/Cole MMD” or “Hunter/Cole Ranch”). An FIA determines whether revenues generated by development are sufficient to cover the costs resulting from that development — specifically, those costs associated with maintaining current levels of service given the additional service and facility demands that growth places on a jurisdiction. The City of Denton has been in discussions with Hillwood and Stratford Land (“the developers” or “development team”) regarding the development of Hunter Ranch and Cole Ranch on a 6,340-acre area to the Southwest of the city’s downtown since 2008. In February 2019 the City passed a resolution of support for the formation and operation of the Hunter Ranch and Cole Ranch Municipal Management Districts. Municipal Management Districts (“MMDs”) are special tax assessment districts and political subdivisions of the State of Texas. MMDs may levy taxes and issue bonds in order to provide the infrastructure needed to serve raw land development. As development progresses, the Management District can then provide supplemental services and improvements. As an MMD, it also has the authority and revenue raising tools to self-fund a portion of the improvement projects needed to serve the development proposed as well as some of the ongoing expenses associated with maintaining those improvements. TischlerBise conducted an FIA in 2020 for the Hunter/Cole Ranch development. TischlerBise’s assignment in 2020 was to calculate the net fiscal impact of the proposed Hunter/Cole Ranch development to the City’s general operating and debt service funds, the Roadway Impact Fee Fund, and the Street Improvement Fund. Additionally, we examined the fiscal impact to the City’s Utility Funds to provide the City with cost and revenue projections for use in its own rate analyses. Updates to the operating agreement and costs have occurred since the original study and the City of Denton has requested an update to the FIA. This document reflects the updated FIA for 2024 and describes the approach and methodology, presents findings from the analysis, and discusses their significance. 22 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 2 D EVELOPMENT P ROGRAM The Hunter Ranch and Cole Ranch developments propose a mix of uses and industries across 6,340 acres of undeveloped land. The City of Denton provided TischlerBise with the developers’ baseline build-out scenario for residential units and commercial and industrial acreage. Estimates were derived for the other key indicators from federal and local governmental sources. Figure 1 below presents the development scenario for Hunter/Cole Ranch in cumulative 10-year increments. Figure 1. Development Scenario Development Scenario Summary Cumulative Growth: 2024-2064, 10-year Increments City of Denton, Texas - Hunter/Cole Ranch FIA EXISTING Year 10 Year 20 Year 30 Year 40 BUILDOUT 2024 2034 2044 2054 2064 at 2064 POPULATION 154,389 11,600 40,800 55,805 55,805 210,194 % growth from existing 8%26%36%36%36% RESIDENTIAL LOTS NA 3,600 9,600 13,000 13,000 SINGLE FAMILY 40,074 3,000 9,000 12,400 12,400 52,474 MULTIFAMILY 25,345 800 4,800 6,450 6,450 31,795 TOTAL UNITS 65,419 3,800 13,800 18,850 18,850 84,269 % growth from existing 6%21%29%29%29% NONRESIDENTIAL ACRES NA 71 486 741 741 RETAIL SF 8,283,948 137,214 1,692,306 2,957,724 2,957,724 11,241,672 OFFICE SF 4,179,500 137,214 1,692,306 2,957,724 2,957,724 7,137,224 INDUSTRIAL SF 9,533,376 585,446 2,536,934 3,122,381 3,122,381 12,655,757 INSTIT SF 7,037,975 0 0 0 0 7,037,975 TOTAL NR DEVELOPMENT (SF)29,034,799 859,874 5,921,546 9,037,829 9,037,829 38,072,628 % growth from existing 3%20%31%31%31% RETAIL JOBS 17,588 291 3,593 6,280 6,280 23,868 OFFICE/INSTITUTIONAL JOBS 35,785 422 4,160 6,978 6,978 42,763 INDUSTRIAL JOBS 11,034 678 2,936 3,614 3,614 14,648 TOTAL JOBS 64,407 1,391 10,689 16,871 16,871 81,278 % growth from existing 2%17%26%26%26% Source: City of Denton; Hillwood Communities; U.S. Census 2018-2022 American Community Survey; Institute of Transportation Engineers; TischlerBise 23 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 3 S UMMARY OF F ISCAL I MPACT R ESULTS GENERAL FUND AND SPECIAL REVENUE FUNDS The fiscal impacts of growth are shown below in the following figures. Net fiscal results are revenues minus costs in each year, reflecting operating and capital costs for all services modeled. Data points above the $0 line represent annual surpluses; points below the $0 line represent annual deficits. Surpluses in any one year are not carried forward to the next year. Figure 2. Annual Net Fiscal Impact 2024-2064 (Non-Utility) 24 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 4 The cumulative totals shown below reflect total revenues and expenditures over the 40-year time frame. As shown, there is a cumulative positive fiscal impact for the funds analyzed, with the exception of the Roadway Impact Fee Fund where deficits are generated. The analysis projects roadway impact fee revenues based on current impact fee rates; costs are projected separately based on the projected increase in transportation demand. Figure 3. Summary of 40-Year Cumulative Fiscal Impacts to City of Denton For further detail, operating and capital impacts are separated in the following figure. Figure 4. Annual Operating & Capital Expenditures Compared to Revenues (Non-Utility) 25 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 5 As a development-finance tool, Municipal Management Districts allow private property owners to access low-interest financing for public infrastructure projects. The development team and the City of Denton have identified improvement projects required to serve the Hunter/Cole Ranch Master Planned Community that will be financed by the MMD or the developer. The table below inventories the infrastructure projects and other capital investments triggered by the proposed development of Hunter/Cole Ranch. Capital costs are categorized as either “City Funded” or “MMD/Developer Funded.” Only those projects required to maintain current levels of service are identified here—planned investments in private amenities for the exclusive use of Hunter/Cole Ranch MMD residents are excluded from this analysis and from the list below. Non-utility capital projects and costs are allocated to the City of Denton and the MMD/Developer in the detailed capital project inventory depicted in Figure 5 on the following page. The methodology underlying these projections and cost assumptions is discussed in detail in the Revenue and Expenditure Methodology Chapter of the report. 26 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 6 Figure 5. Capital Facilities and Expenditure Inventory (General, Special, and Debt Service Funds) Non-Utility Capital Facilities and Allocation of Costs ($1,000s) Fiscal Impact Analysis - Denton, TX DEPARTMENT - Facility Quantity Total Square Footage, Acres, Lane Miles Total City of Denton MMD / Developer Parks and Recreation1 Recreation Center Building [Sq. Ft.]1 32,000 $17,855 $17,855 $0 City Park: Developer Provided (104 acres ttl) [Acres]2 104 $9,459 $0 $9,459 Neighborhood Parks (5 acres ea.) [Acres]4 20 $3,650 $0 $3,650 Pocket Parks (.5 acres ea) / Dog Parks (2 acres ea)32 19 $6,675 $0 $6,675 Regional Trails [Miles]na 23.0 $16,391 $0 $16,391 Community Trails [Miles]na 35.0 $13,841 $0 $13,841 Amenity Centers//DEVELOPER 4 na $40,000 $0 $40,000 Other Amenities//DEVELOPER [portion reimb.]na na $80,818 $0 $80,818 Parks & Rec Department - Vehicles 22 na $2,221 $2,221 $0 Total Parks & Recreation $190,910 $20,076 $170,835 Fleet & Facilities Management West Side Service Center2 1 18,774 $6,383 $5,858 $525 Facilities Management-Storage 1 109,937 $27,484 $27,484 $0 Total Fleet and Facilities Management $33,867 $33,342 $525 General Government - Administrative Space na 30,181 $13,582 $13,582 $0 General Government - Vehicles 38 na $1,330 $1,330 $0 Total General Government $14,912 $14,912 $0 On-Site Roadway Projects3 na 149 $241,158 $0 $241,158 Off-Site Roadway Projects4 na 84 $100,024 $89,363 $10,661 Streets - Vehicles 136 na $8,116 $8,116 $0 Total Transportation $349,298 $97,478 $251,819 Police - Substation 1 44,700 $20,115 $20,115 $0 Police - Patrol Vehicles 99 na $5,268 $5,268 $0 Police - Other Vehicles and Equipment 36 na $241 $241 $0 Total Police $25,625 $25,625 $0 Fire - Fire Station5 2 18,376 $10,180 $0 $10,180 Fire - Fire Engines / Trucks 27 na $17,450 $17,450 $0 Fire - Vehicles / Equipment 19 na $1,035 $1,035 $0 Total Fire $28,665 $18,485 $10,180 Library 1 28,300 $17,095 $17,095 $0 Total Library $17,095 $17,095 $0 345 vehicles / 24 lane miles TOTAL6 $660,372 $227,012 $433,359 ^ Reflects the direct capital cost and not debt service costs. 1. Developer contributions updated June 2024 per revised estimates provided by City of Denton; City contributions projected per Fiscal Impact Analysis. No additional park acres beyond those identified as being provided by Hunter and Cole Developments per the City of Denton are modeled or assumed. 3. City of Denton, Hunter and Cole Developments projected on-site road improvements. 4. City of Denton, Hunter and Cole Developments projected off-site road improvements, City and developer/MMD cost share. 6. Cost estimates represent the initial purchase and, for vehicles and equipment, replacement costs. 5. Two Fire Stations for Hunter and Cole Developments are assumed to be built by developer (contribution estimated at $10.0 million plus $180,000 for land total). Square footage is estimated based on current City average cost per square foot for fire stations ($554). General Government Library Police Transportation Fire and EMS 2. Square footage derived by the fiscal model based on demand from Hunter and Cole developments; cost based on current cost from City of Denton; developer contribution information provided by City of Denton. Capital Costs ($1,000s)^ 27 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 7 UTILITY FUNDS Utility Funds were included in our analysis at the request of the City of Denton to evaluate whether the income generated from new customers and users would cover the costs required to provide service to the MMD while maintaining existing levels of service throughout the city. CUMULATIVE FISCAL IMPACT FOR UTILITY FUNDS As depicted in the figure below, the net fiscal impact of the MMD is negative for all utility funds except the Electric Fund as shown in Figure 6. All City utility costs (operating and capital) and revenues (based on current rates and fees) are reflected. 28 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 8 Figure 6. Cumulative 40-Year Net Fiscal Impact by Utility Fund (1,000s) 29 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 9 Figure 7 summarizes the water, wastewater, and drainage utility infrastructure investment triggered by Hunter/Cole Ranch. Capital costs are categorized as City of Denton (COD) Cost, Developer Cost, or Developer Reimbursement. COD Cost is included throughout this analysis under City costs. Developer Cost and Developer Reimbursement are excluded from the findings as they are assumed to implemented by the developer or reimbursed from MMD funds. Figure 7. Capital Facilities and Expenditure Inventory (Utility Funds) The methodology and approach utilized to arrive at the capital cost projections is detailed in the Revenue and Expenditure Detail chapter of this report. 30 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 10 NET ANNUAL FISCAL IMPACT FOR UTILITY FUNDS The annual net fiscal impact on the utility funds is presented in the figures that follow. Water Fund Water Fund expenditures are expected to exceed revenues throughout the study-period, specifically for capital improvements, as depicted in Figure 8 below. Note that the spikes depicted in Water Fund revenues are the result of impact fees. The analysis reflects City utility collections and expenditures and does not include developer contributions or expenditures. Figure 8. Water Fund Operating & Capital Expenses Compared to Revenues The capital expenditures included in this analysis are City expenditures directly attributable to demand from Hunter/Cole. These projects are debt financed. Water impact fee revenue is assumed over the projection period, which is generally insufficient to cover the capital expenditures projected. ($5,000) $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 2024 20 2 6 2 0 282030 203 2 2 0 342 036203 8 2 0 4 02 042204 4 20 4 62 0 482050 20 5 2 2 0 542056 205 8 2 0 602 062206 4ThousandsWATERFUND ANNUAL OPERATING & CAPITAL EXPENDITURE SUMMARY HUNTER/COLE RANCHFISCALIMPACTANALYSIS Operating Expenditures Capital Expenditures Revenues 31 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 11 Wastewater Fund Wastewater Fund revenues are not expected to meet or exceed operating and capital expenditures over the course of the development, as depicted in Figure 9 below. Figure 9. Wastewater Fund Operating & Capital Expenses Compared to Revenues The spikes in the revenue line represent impact fee payments. New development in the MMD is modeled to be completed by year 29, at which point impact fee revenues cease. Although the timing of impact fee payments does not directly correspond with capital costs, revenues accrued in years where impact fees exceed capital expenses do not cover deficits in other years. The capital expenditures included in this analysis represent planned Wastewater Fund capital infrastructure projects required to serve Hunter/Cole Ranch and reflect City revenues and expenditures only. ($10,000) $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 202420262028203020322034203620382040204220442046204820502052205420562058206020622064ThousandsWASTEWATER FUND ANNUAL OPERATING & CAPITAL EXPENDITURE SUMMARY HUNTER/COLERANCH FISCAL IMPACT ANALYSIS Operating Expenditures Capital Expenditures Revenues 32 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 12 Solid Waste Fund As depicted in the figure below, Hunter/Cole Ranch is projected to generate net deficits to the City of Denton’s Solid Waste Fund. Operating Capital expenses reflect average costs based on City CIP projects applied to demand from Hunter/Cole Ranch. Results reflect City revenues and expenditures only. Figure 10. Solid Waste Fund Operating & Capital Expenses Compared to Revenues ($2,000) $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 202420262028203020322034203620382040204220442046204820502052205420562058206020622064ThousandsSOLID WASTE FUND ANNUALOPERATING & CAPITAL EXPENDITURE SUMMARY HUNTER/COLE RANCH FISCAL IMPACT ANALYSIS Operating Expenditures Capital Expenditures Revenues 33 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 13 Electric Fund Electric revenues and expenses associated with Hunter Cole were provided by the City of Denton and are illustrated in terms of revenues relative to capital and operating expenditures in the figure below. Revenues are projected to exceed expenditures for each year of the study period. Figure 11. Electric Fund Operating & Capital Expenses Compared to Revenue $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 2 0 2 4 20262 0 2 8 2030203 2 2 0 342036 2 0 3 820402 0 4 2 204420 4 6 2 048205 0 2 0 522054 2 0 5 620582 0 6 0 206220 6 4ThousandsELECTRICFUND ANNUALOPERATING& CAPITAL EXPENDITURE SUMMARY HUNTER/COLE RANCHFISCAL IMPACT ANALYSIS Operating Expenditures Capital Expenditures Revenues 34 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 14 OVERALL RESULTS Per direction from City of Denton staff, the figure below compares annual revenues to annual operating and capital expenditures for the funds analyzed, including utility funds. Note that under current City policy, utility fund revenues are restricted and cannot be used toward any other fund’s activities. Figure 12. Operating and Capital Expenditures Compared to Revenues for All Funds Combined ($50,000) $0 $50,000 $100,000 $150,000 $200,000 $250,000 2 0 242 0 262 0 282 0 302 0 322 0 342 0 362 0 382 0 402 0 422 0 442 0 462 0 482 0 502 0 522 0 542 0 562 0 582 0 602 0622 0 64ThousandsANNUAL OPERATING & CAPITAL EXPENDITURES COMPARED TO REVENUES (UTILITIES INCLUDED) HUNTER/COLE RANCHFISCAL IMPACT SUMMARY Operating Expenditures Capital Expenditures Revenues 35 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 15 K EY F INDINGS & C ONCLUSIONS The following conclusions can be drawn from the FIA results presented in this report: GENERAL , DEBT SERVICE, AND SPECIAL REVENUE FUNDS •The proposed Hunter/Cole Ranch development is projected to have a net cumulative positive fiscal impact on the City over the 40-year study period. The net positive impacts are driven primarily by sales and property tax revenue from development. •It should be noted that, on average, the resulting annual net positive impact to the General Fund and Debt Service Fund is approximately $18.0 million, which reflects 5.6 percent of the City of Denton’s Fiscal Year 2024 operating budget. •The Street Improvement Fund is funded through franchise fees from utility fund revenue surpluses (as well as non-growth-related revenues). The Street Improvement Fund’s projected cumulative surplus is partially attributable to the fact that utility fund revenues will increase as a result of Hunter/Cole Ranch. Another reason for the surplus is that although the additional roadways added to the City of Denton’s lane mile inventory increase Street Improvement Fund operating and capital outlay costs, major capital expenditures are generally accounted for in other funds. o Note that the increases in franchise fee revenue could be allocated to another fund at the City’s discretion. As discussed previously, this analysis assumed that the 10-year policy of transferring excess franchise fee revenue to the Street Improvement Fund would continue throughout the 40-year study period. •Demand for fire services will trigger the need to expand two fire stations, which is assumed to be funded by the developer/MMD. The estimated contribution from the developer is used to derive a fire station size, at the latest City cost per square feet for fire station construction. The resulting size per station may be smaller than the City desires, therefore additional costs may be incurred by the City. •Although the projected growth in revenue is relatively significant, the City should continue to plan and be prepared to expand both its facilities and operational capacity—the Hunter/Cole Ranch development is projected to be fiscally balanced in the sense that it is projected to produce enough revenue to cover its costs, but it will not be self-contained. Growth in population, vehicle trips, and police and fire calls, for instance, is projected to increase average annual operating expenditures to the City by approximately $26 million per year. 36 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 16 •Overall, Hunter/Cole Ranch is projected to generate sufficient revenue to cover both the capital and operating costs associated with meeting the additional demand it will place on City services. UTILITY FUNDS •Water and Wastewater Fund revenues are insufficient to cover operating and capital expenditures throughout the 40-year study period. Water and Wastewater impact fee revenue is insufficient to cover the development’s share of water and wastewater capital costs. •Impact fee revenue is a function of the City of Denton’s current fee schedule and projected development—current rates are insufficient to cover City Water and Wastewater capital needs. •Overall, the cumulative fiscal impact on all utility funds is projected to be negative. 37 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 17 II. MAJOR ASSUMPTIONS & METHODOLOGIES O VERVIEW OF M ETHODOLOGY An FIA determines whether revenues generated by new development are sufficient to cover the costs resulting from that development—specifically, those costs associated with maintaining current levels of service given the additional service and facility demands that growth places on a jurisdiction. Levels of Service (“LOS”) reflect public services and infrastructure as currently funded and are typically expressed as a cost per demand unit. For example, maintenance of parks would be expressed as a cost per acre of parks to maintain. For the City of Denton, we analyzed the fiscal impact of the proposed Hunter/Cole Ranch development based on current citywide levels of service and any known infrastructure or service needs. GENERAL APPROACH The Fiscal Impact Analysis for the City of Denton incorporates the case study-marginal cost approach wherever possible. The case study-marginal methodology is the most realistic method for evaluating fiscal impacts. Unique demographic or other characteristics of new development are accounted for, as well as the extent to which a particular infrastructure or service operates under, over, or close to capacity. Available facility capacity determines the need for additional capital facilities and associated operating costs. Certain costs are impacted by general growth, regardless of location; these are projected using a marginal/average cost hybrid methodology that incorporates capacity and thresholds for staffing, but projects non-salary operating costs using an average cost approach. Some costs and revenues are not expected to be impacted by growth and are therefore considered fixed in this analysis. The levels of service and cost assumptions used in this analysis are based on TischlerBise’s previous FIA for Hunter/Cole along with discussions with City of Denton staff, input from the development team, and a detailed analysis of the City of Denton FY23-24 Adopted Budget and Capital Improvements Programs; staff reports, other relevant financial and planning documents. Additionally, our national experience conducting over 1,000 fiscal impact analyses was beneficial. The assumptions outlined in this report are utilized along with the growth projections to calculate the potential fiscal impacts to the City of Denton of the Hunter/Cole Ranch Development over a 40-year time frame. Only citywide impacts are included in this report—for instance, onsite private amenities are excluded from the analysis. 38 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 18 To summarize, our methodological approach included the following steps. 1.Existing demand base and cost and revenue factors such as current population, housing units, employment, and nonresidential square footage were established.1 2.Current Levels of Service were identified. 3.The growth scenario to be analyzed was defined. 4.General assumptions regarding the allocation of capital projects and maintenance responsibilities to the developer versus the City of Denton were established.2 5.The fiscal impact model was designed to account the assumptions established in Steps 1-4. The results presented in this report were calculated using a customized fiscal impact model designed specifically by TischlerBise for this assignment. 1 These are detailed in Appendix A. 2 Through the MMD structure, the development team will finance a portion of the infrastructure required to maintain current levels of service; the MMD will also be responsible for the operations and maintenance of some facilities that would otherwise be publicly owned and maintained. Likewise, certain infrastructure projects funded by Hunter/Cole MMD will, upon completion, transfer to the City of Denton; for instance, with the exception of private roads, the City will ultimately be responsible for roadway maintenance (excluding right-of-way landscaping) for the majority of MMD funded lane miles. 39 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 19 K EY A SSUMPTIONS FISCAL YEAR 2024 BUDGET The Fiscal Year 2024 Budget is used to represent a “snapshot” of the City’s current costs and levels of service. The “snapshot” approach does not attempt to speculate about how services or costs will change over time or whether current levels of service are sufficient or insufficient. Instead, it evaluates the cost implications to the City as it conducts business under the FY2024 budget. The following exceptions and assumptions should be noted: ▪Ad Valorem Property Tax Rate: The FY2024 tax rate of 0.560682 was utilized to project tax revenues. The General Fund portion is 0.354780, and the General Debt Service Obligation Fund portion is 0.205902. ▪Franchise Fees: The City collects franchise fees from utility funds—specifically, the Water Fund, Wastewater Fund, Solid Waste Fund, and Electric Fund—among other smaller funds such as gas and cable, in an amount equal to 5 percent of gross annual revenues. FY2024 was the third year of a 10-year policy to transfer all franchise fee revenue in excess of the FY2016 dollar amount to the Streets Improvement Fund, rather than directly to the General Fund. This analysis assumes that this policy remains intact throughout the study period. ▪Revenue Surpluses and Tax Rates: Positive fiscal impacts are represented as revenue surpluses; as a Fiscal Impact Study, this analysis holds all tax rates constant throughout the 40-year term. In reality, the City of Denton will budget based according to its priorities and policies, and surpluses could translate into a potential decrease in the applicable tax rate, whereas deficits may lead to an increase in that rate. 40 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 20 VARIABLE VERSUS FIXED COSTS AND REVENUES Costs and revenues that are directly attributable to Hunter/Cole Ranch are included in the fiscal analysis of the development. In all cases, some costs and revenues are not impacted by demographic changes and are assumed to be “fixed.” To determine fixed variables, TischlerBise interviewed City staff and reviewed the FY2024 budget and available supporting documentation. Examples of budget items modeled as “fixed,” or non-growth related, include: ▪Staffing for certain leadership positions; this varies by department, but in many cases, the position of Director is held fixed as the staffing structure does not require or support multiple department heads. ▪One-time costs for services unrelated to growth and development. ▪Revenue sources that are not growth-related. LEVELS OF SERVICE The cost projections are based on a “snapshot approach” in which it is assumed the current level of service, as funded in the City budget and as provided in current capital facilities, will continue through the 40-year analysis period. The 2024 existing demand base data was used to calculate unit costs and service level thresholds. Examples of demand base data include population, dwelling units, employment by industry, vehicle trips, etc. The “snapshot” approach does not attempt to speculate about how levels of service or cost factors will change over time. Instead, it evaluates the implications of development to the City as conducted under the FY2024 budget and informed by discussions with staff. INFLATION RATE The rate of inflation is assumed to be zero throughout the projection period, and cost and revenue projections are in constant 2024 dollars. This assumption is in accord with current budget data and avoids the difficulty of forecasting as well as interpreting results expressed in inflated dollars. In general, including inflation is complicated and unpredictable. This is particularly the case given that some costs, such as salaries, increase at different rates than other operating and capital costs such as contractual and building construction costs. These costs, in turn, almost always increase in variation to the appreciation of real estate. Using constant 2024 dollars reinforces the snapshot approach and avoids these problems. 41 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 21 ENTERPRISE FUNDS In practice, utility funds are self-sufficient; the City of Denton adjusts rates in order to cover the actual cost of service while also generating a Return on Investment (“ROI”) as identified from time to time in targeted municipal policies. The City of Denton is in the process of conducting rate analyses in order to forecast the timing and extent to which utility rates may need to be adjusted to fund potential growth-related capacity expansion projects. The Utility Fund analysis included in this report presents the fiscal impact of the development to the City’s utility funds, assuming no rate adjustments, per direction from the City’s Finance Department. Costs are therefore projected based solely on the increase in customers and usage for each utility; revenues are projected based on the current cost of water, wastewater, solid waste, and electric service per the appropriate demand factor (e.g., water produced). NON-FISCAL EVALUATIONS It should be noted that while a Fiscal Impact Analysis is an important consideration in planning decisions, it is only one of several issues that should be considered. Environmental and social issues, for example, should also be considered when making planning and policy decisions. The above notwithstanding, this analysis will enable interested parties to understand the fiscal implications of development in the Hunter/Cole Ranch MMD. 42 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 22 D EVELOPMENT P ROGRAM The Hunter Ranch and Cole Ranch developments propose a mix of uses and industries across 6,340 acres of undeveloped or “raw” land. The City of Denton provided us with the developers’ baseline build-out scenario for residential units and commercial and industrial acreage. We derived estimates for the other key indicators from federal and local governmental sources. Figure 13 below presents the development scenario for Hunter/Cole Ranch in cumulative 10-year increments.3 Figure 13. Development Scenario 3 No change has been made to the development program from the 2020 Fiscal Impact Analysis study. Development Scenario Summary Cumulative Growth: 2024-2064, 10-year Increments City of Denton, Texas - Hunter/Cole Ranch FIA EXISTING Year 10 Year 20 Year 30 Year 40 BUILDOUT 2024 2034 2044 2054 2064 at 2064 POPULATION 154,389 11,600 40,800 55,805 55,805 210,194 % growth from existing 8%26%36%36%36% RESIDENTIAL LOTS NA 3,600 9,600 13,000 13,000 SINGLE FAMILY 40,074 3,000 9,000 12,400 12,400 52,474 MULTIFAMILY 25,345 800 4,800 6,450 6,450 31,795 TOTAL UNITS 65,419 3,800 13,800 18,850 18,850 84,269 % growth from existing 6%21%29%29%29% NONRESIDENTIAL ACRES NA 71 486 741 741 RETAIL SF 8,283,948 137,214 1,692,306 2,957,724 2,957,724 11,241,672 OFFICE SF 4,179,500 137,214 1,692,306 2,957,724 2,957,724 7,137,224 INDUSTRIAL SF 9,533,376 585,446 2,536,934 3,122,381 3,122,381 12,655,757 INSTIT SF 7,037,975 0 0 0 0 7,037,975 TOTAL NR DEVELOPMENT (SF)29,034,799 859,874 5,921,546 9,037,829 9,037,829 38,072,628 % growth from existing 3%20%31%31%31% RETAIL JOBS 17,588 291 3,593 6,280 6,280 23,868 OFFICE/INSTITUTIONAL JOBS 35,785 422 4,160 6,978 6,978 42,763 INDUSTRIAL JOBS 11,034 678 2,936 3,614 3,614 14,648 TOTAL JOBS 64,407 1,391 10,689 16,871 16,871 81,278 % growth from existing 2%17%26%26%26% Source: City of Denton; Hillwood Communities; U.S. Census 2018-2022 American Community Survey; Institute of Transportation Engineers; TischlerBise 43 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 23 The development team’s concept plan categorizes nonresidential acreage as either commercial or industrial. We applied the following assumptions to the Developers’ acreage projections in order to estimate the Retail square footage, Office square footage and Industrial square footage displayed in Figure 13. • To extrapolate square footage from acreage projections, we assumed an average floor-to-area ratio (“FAR”) of 0.28, per input from the development team and based on permitted FAR per zoning.4 • Commercial development is allocated equally between Retail space and Office space. This conforms with the development team’s prototype projects, including the Alliance Town Center, and generally aligns with the land use assumptions utilized in the Travel Demand Model Report and the Hunter/Cole Water and Wastewater Impact studies completed concurrently with this FIA as a part of the City’s decision-making process.5 4 This assumption generally conforms to existing land use patterns while accounting for higher intensity development permitted under the December 2019 zoning amendment for the Hunter/Cole Ranch Master Planned Community. It also aligns with the December 10th, 2019 Draft of the Transportation Demand Management’s average estimated FAR. 5 The development team and City staff instructed TischlerBise to refer to Alliance Town Center as a comparable development in terms of land-use mix assumptions. 44 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 24 III. FISCAL IMPACT ANALYSIS RESULTS The fiscal impacts to the City of Denton of Hunter/Cole Ranch Municipal Management District are analyzed and discussed in this section of the report. Fiscal impact results are presented in several ways: ▪ Annual net fiscal results that include all revenues and costs in the funds analyzed (General Fund, Debt Service Obligation Fund, the Roadway Fee Impact Fund, and the Street Improvement Fund) are shown—non-utility operating and capital impacts from growth are combined. ▪ Annual net fiscal results are then shown for operating and capital separately and compared to revenues. ▪ Cumulative net fiscal results are shown next (for non-utility funds). ▪ Cumulative net results convey the projected grand total revenues minus grand total expenditures over the 40-year period to determine the overall net surplus or deficit. ▪ Utility Fund net fiscal results are show separately from other operating and capital expenditures. ▪ The cumulative net results for each utility fund are depicted. ▪ Annual net fiscal results, shown separately for operating and capital, compared to revenues are presented. 45 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 25 G ENERAL AND S PECIAL R EVENUE F UNDS ANNUAL NET FISCAL IMPACTS The chart below shows the annual net fiscal results to the City over each year of the 40-year development period; the General Fund, Debt Service Obligation Fund, the Roadway Fee Impact Fund, and the Street Improvement Fund are included. By showing the annual results, the magnitude, rate of change, and timeline of deficits and revenues can be observed over time. The “bumpy” nature of the annual results during particular years represents an initial capital impact being “front-loaded” and/or major operating costs being incurred (further explained in the Capital Expenditure Methodologies section of the full report). Net fiscal results shown below are revenues minus costs in each year, including operating and capital costs for all services modeled. Data points above the $0 line represent annual surpluses; points below the $0 line represent annual deficits. Surpluses in any one year are not carried forward to the next year. The scale for the chart is in thousands ($1,000s). 46 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 26 Figure 14. Annual Net Fiscal Impact 2024-2064 (Non-Utility) Development of Hunter/Cole Ranch begins with lot delivery as depicted in Figure 14. The first six years of growth are expected to generate year-over-year growth in net surpluses to the City. Project build- out during this time period results in a relatively steady uptick in property tax revenue. Equipment and personnel, particularly within Public Safety, Public Works (i.e., Fleet Maintenance & Fuel and Facilities Management) and the Street Department, are also added during the first six years of growth. The downward “ticks” in net fiscal impact are the result of growth triggering the need for capital investments simultaneously: 47 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 27 Annual net results are further analyzed in the figure below. Although the City will see an increase in both operating and capital costs as a result of growth, our analysis shows that total revenues to the City exceed total costs projected to be incurred to the City. Figure 15. Annual Operating & Capital Expenditures Compared to Revenues (Non-Utility) 48 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 28 CAPITAL IMPACTS As a development-finance tool, Municipal Management Districts allow private property owners to access low-interest financing for public infrastructure projects. The development team and the City of Denton have identified improvement projects required to serve the Hunter/Cole Ranch Master Planned Community that will be financed by the MMD or the developer. The table below inventories the infrastructure projects and other capital investments triggered by the proposed development of Hunter/Cole Ranch. Capital costs are categorized as either “City Funded” or “MMD/Developer Funded.” Only those projects required to maintain current levels of service are identified here—planned investments in private amenities for the exclusive use of Hunter/Cole Ranch residents are excluded from this analysis and from the list below. Non-utility capital projects and costs are allocated to the City of Denton and the MMD/Developer in the detailed capital project inventory depicted in the figure on the following page. The methodology underlying these projections and cost assumptions is discussed in detail in the Revenue and Expenditure Methodology Chapter of the report. 49 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 29 Figure 16. Capital Facilities and Expenditure Inventory (General, Special, and Debt Service Funds) Non-Utility Capital Facilities and Allocation of Costs ($1,000s) Fiscal Impact Analysis - Denton, TX DEPARTMENT - Facility Quantity Total Square Footage, Acres, Lane Miles Total City of Denton MMD / Developer Parks and Recreation1 Recreation Center Building [Sq. Ft.]1 32,000 $17,855 $17,855 $0 City Park: Developer Provided (104 acres ttl) [Acres]2 104 $9,459 $0 $9,459 Neighborhood Parks (5 acres ea.) [Acres]4 20 $3,650 $0 $3,650 Pocket Parks (.5 acres ea) / Dog Parks (2 acres ea)32 19 $6,675 $0 $6,675 Regional Trails [Miles]na 23.0 $16,391 $0 $16,391 Community Trails [Miles]na 35.0 $13,841 $0 $13,841 Amenity Centers//DEVELOPER 4 na $40,000 $0 $40,000 Other Amenities//DEVELOPER [portion reimb.]na na $80,818 $0 $80,818 Parks & Rec Department - Vehicles 22 na $2,221 $2,221 $0 Total Parks & Recreation $190,910 $20,076 $170,835 Fleet & Facilities Management West Side Service Center2 1 18,774 $6,383 $5,858 $525 Facilities Management-Storage 1 109,937 $27,484 $27,484 $0 Total Fleet and Facilities Management $33,867 $33,342 $525 General Government - Administrative Space na 30,181 $13,582 $13,582 $0 General Government - Vehicles 38 na $1,330 $1,330 $0 Total General Government $14,912 $14,912 $0 On-Site Roadway Projects3 na 149 $241,158 $0 $241,158 Off-Site Roadway Projects4 na 84 $100,024 $89,363 $10,661 Streets - Vehicles 136 na $8,116 $8,116 $0 Total Transportation $349,298 $97,478 $251,819 Police - Substation 1 44,700 $20,115 $20,115 $0 Police - Patrol Vehicles 99 na $5,268 $5,268 $0 Police - Other Vehicles and Equipment 36 na $241 $241 $0 Total Police $25,625 $25,625 $0 Fire - Fire Station5 2 18,376 $10,180 $0 $10,180 Fire - Fire Engines / Trucks 27 na $17,450 $17,450 $0 Fire - Vehicles / Equipment 19 na $1,035 $1,035 $0 Total Fire $28,665 $18,485 $10,180 Library 1 28,300 $17,095 $17,095 $0 Total Library $17,095 $17,095 $0 345 vehicles / 24 lane miles TOTAL6 $660,372 $227,012 $433,359 ^ Reflects the direct capital cost and not debt service costs. 1. Developer contributions updated June 2024 per revised estimates provided by City of Denton; City contributions projected per Fiscal Impact Analysis. No additional park acres beyond those identified as being provided by Hunter and Cole Developments per the City of Denton are modeled or assumed. 3. City of Denton, Hunter and Cole Developments projected on-site road improvements. 4. City of Denton, Hunter and Cole Developments projected off-site road improvements, City and developer/MMD cost share. 6. Cost estimates represent the initial purchase and, for vehicles and equipment, replacement costs. 5. Two Fire Stations for Hunter and Cole Developments are assumed to be built by developer (contribution estimated at $10.0 million plus $180,000 for land total). Square footage is estimated based on current City average cost per square foot for fire stations ($554). General Government Library Police Transportation Fire and EMS 2. Square footage derived by the fiscal model based on demand from Hunter and Cole developments; cost based on current cost from City of Denton; developer contribution information provided by City of Denton. Capital Costs ($1,000s)^ 50 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 30 CUMULATIVE NET FISCAL IMPACTS Cumulative net fiscal impact results convey the projected grand total revenues minus grand total expenditures over the 40-year period from future growth/development. Figure 17 below shows the cumulative fiscal impacts over the 40-year study period for all major growth-related funds. Figure 17. Summary of 40-Year Cumulative Fiscal Impacts to City of Denton The development yields net positive fiscal impacts for both the General Fund and Debt Service Fund (i.e., operating and capital expenditures); and the Street Improvement Fund. The Roadway Impact Fund is projected to incur a $40.4 million cumulative net deficit.6 Cumulative impacts are depicted graphically for the General Fund and Debt Service Fund in Figure 18. Figure 18. Cumulative Revenues and Expenditures: General and Debt Service Funds 6 Reflects current impact fee rates and current road improvement costs per the City. 51 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 31 U TILITY F UNDS Utility Funds were included in our analysis at the request of the City of Denton to evaluate whether the income generated from new customers and users would cover the costs required to provide service to the MMD while maintaining existing levels of service throughout the city. CUMULATIVE FISCAL IMPACT FOR UTILITY FUNDS As depicted in Figure 19, the net fiscal impact of the Hunter/Cole Ranch development is cumulatively negative across all utility funds. Capital Expenditures include utility infrastructure projects, as well as capital equipment and vehicles. A summary of capital expenditures is presented in Figure 20. Figure 19. Cumulative 40-Year Net Fiscal Impact by Utility Fund (1,000s) 52 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 32 The table below summarizes the utility infrastructure investment triggered by Hunter/Cole Ranch. Capital costs are categorized as City of Denton (COD) Cost, Developer Cost, or Developer Reimbursement. COD Cost is included throughout this analysis under City costs. Developer Cost and Developer Reimbursement are excluded from the findings as they are assumed to implemented by the developer or reimbursed from MMD funds. Figure 20. Capital Facilities and Expenditure Inventory (Utility Funds) The methodology and approach utilized to arrive at the capital cost projections is detailed in the Revenue and Expenditure Detail chapter of this report. 53 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 33 NET ANNUAL FISCAL IMPACT FOR UTILITY FUNDS The annual net fiscal impact on the utility funds is presented in the figures that follow. WATER FUND Water Fund expenditures are expected to exceed revenues throughout the study-period, specifically on the capital side, as depicted in Figure 21 below. Note that the spikes depicted in Water Fund revenues are the result of impact fees. The analysis reflects City utility collections and expenditures and does not include developer contributions or expenditures. Figure 21. Water Fund Operating & Capital Expenses Compared to Revenues The capital expenditures included in this analysis are City expenditures directly attributable to demand from Hunter/Cole. These projects are debt financed. Water impact fee revenue is assumed over the projection period at current rates, which is generally insufficient to cover the capital expenditures projected. 54 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 34 WASTEWATER FUND Wastewater Fund revenues are not expected to cover operating and capital expenditures over the course of the development, as depicted in Figure 22 below. Figure 22. Wastewater Fund Operating & Capital Expenses Compared to Revenues The spikes in the revenue line represent impact fee payments. New development in the MMD is modeled to be completed by year 29, at which point impact fee revenues cease. Although the timing of impact fee payments does not directly correspond with capital costs, revenues accrued in years where impact fees exceed capital expenses do not cover deficits in other years. The capital expenditures included in this analysis represent planned Wastewater Fund capital infrastructure projects required to serve Hunter/Cole Ranch and reflect City revenues and expenditures only. 55 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 35 SOLID WASTE FUND As depicted in the figure below, Hunter/Cole Ranch is projected to generate net deficits to the City of Denton’s Solid Waste Fund. Operating and capital expenses reflect average costs based on City CIP projects applied to demand from Hunter/Cole Ranch. Results reflect City revenues and expenditures only. Figure 23. Solid Waste Fund Operating & Capital Expenses Compared to Revenues ($2,000) $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 202420262028203020322034203620382040204220442046204820502052205420562058206020622064ThousandsSOLID WASTE FUND ANNUALOPERATING & CAPITAL EXPENDITURE SUMMARY HUNTER/COLE RANCH FISCAL IMPACT ANALYSIS Operating Expenditures Capital Expenditures Revenues 56 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 36 ELECTRIC FUND Electric revenues and expenses associated with Hunter Cole were provided by the City of Denton and are illustrated in terms of revenues relative to capital and operating expenditures in the figure below. Revenues are projected to exceed expenditures for each year of the study period. Figure 24. Electric Fund Operating & Capital Expenses Compared to Revenue 57 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 37 K EY F INDINGS & C ONCLUSIONS The following conclusions can be drawn from the FIA results presented in this report: GENERAL , DEBT SERVICE, AND SPECIAL REVENUE FUNDS • The proposed Hunter/Cole Ranch development is projected to have a net cumulative positive fiscal impact on the City over the 40-year study period. The net positive impacts are driven primarily by sales and property tax revenue from development. • It should be noted that, on average, the resulting annual net positive impact to the General Fund and Debt Service Fund is approximately $18 million, which reflects 5.6 percent of the City of Denton’s Fiscal Year 2024 operating budget. • The Street Improvement Fund is funded through franchise fees from utility fund revenue surpluses (as well as non-growth-related revenues). The Street Improvement Fund’s projected cumulative surplus is partially attributable to the fact that utility fund revenues will increase as a result of Hunter/Cole Ranch. Another reason for the surplus is that although the additional roadways added to the City of Denton’s lane mile inventory increase Street Improvement Fund operating and capital outlay costs, major capital expenditures are generally accounted for in other funds. o Note that the increases in franchise fee revenue could be allocated to another fund at the City’s discretion. As discussed previously, this analysis assumed that the 10-year policy of transferring excess franchise fee revenue to the Street Improvement Fund would continue throughout the 40-year study period. • Demand for fire services will trigger the need to expand with the construction of two fire stations, which is assumed to be funded by the developer/MMD. The estimated contribution from the developer is used to derive a fire station size, at the latest City cost per square feet for fire station construction. The resulting assumed size per station may be smaller than the City desires, therefore additional costs may be incurred by the City. • Although the projected growth in revenue is relatively significant, the City should continue to plan and be prepared to expand both its facilities and operational capacity—the Hunter/Cole Ranch development is projected to be fiscally balanced in the sense that it is projected to produce enough revenue to cover its costs, but it will not be self-contained. Growth in population, vehicle trips, and police and fire calls, for instance, is projected to increase annual operating expenditures to the City by approximately $42 million per year at buildout. • Overall, Hunter/Cole Ranch is projected to generate sufficient revenue to cover non-utility capital and operating costs associated with meeting the additional demand on City services. 58 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 38 UTILITY FUNDS • Water and Wastewater Fund revenues are insufficient to cover operating and capital expenditures throughout the 40-year study period. Water and Wastewater impact fee revenue is insufficient to cover the development’s share of water and wastewater capital costs. • Impact fee revenue is a function of the City of Denton’s current fee schedule and projected development—current rates are insufficient to cover City Water and Wastewater capital needs. • The Electric Fund is projected to generate sufficient revenues to cover anticipated operating and capital costs over the projection period. • Overall, the cumulative fiscal impact on all utility funds is projected to be negative. OVERALL RESULTS Per direction from City of Denton staff, the figure below compares annual revenues to annual operating and capital expenditures for all funds analyzed, including utility funds. Note that under current City policy, utility fund revenues are restricted and cannot be used toward any other fund’s activities. Figure 25. Operating and Capital Expenditures Compared to Revenues for All Funds Combined 59 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 39 I V. REVENUE AND E XPENDITURE DETAIL R EVENUE M ETHODOLOGIES This chapter provides detail on projection methodologies for revenue included in the analysis. Growth-related revenues are modeled in this analysis in the following funds: ▪ General Fund ▪ General Debt Service Fund ▪ Special Revenue Funds: • Roadway Impact Fee Fund • Street Improvement Fund ▪ Utility Funds • Water Fund • Wastewater Fund • Electric Fund • Solid Waste Fund Other funds that are not included are Internal Service Funds or considered fixed (unaffected by growth). GENERAL FUND REVENUES A snapshot of the City General Fund from the model is shown below by specific category and line item. The table shows the specific revenue category and source, base year (FY2024) budget amount, projection methodology, and the level of service (LOS) standard, or dollar per demand unit. For instance, for those categories projected based on “POPULATION,” the current budget amount is divided by the estimated population for base year 2024. 60 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 40 Figure 26. General Fund Revenues Fines and Fees Warrant Fees $69,817 FIXED $0.00 Juvenile Case Manager Fees $3,972 FIXED $0.00 Truancy Prevention Fees $666 FIXED $0.00 Library Fines & Fees $46,350 POPULATION $0.30 Animal Services Fees $197,431 POPULATION $1.28 Animal Services Fines $6,328 FIXED $0.00 Auto Pound Fees $4,589 FIXED $0.00 Police Escort & Guard Fees $11,615 FIXED $0.00 Civil Fines $12,000 FIXED $0.00 Arrest Fees $44,155 TOTAL POLICE CALLS $0.34 Community Improvement Fines $303 FIXED $0.00 Inspection Fines & Fees $2,827 FIXED $0.00 Fire Department Fines $950 FIXED $0.00 School Crossing Fines $2,166 FIXED $0.00 Denton Municipal Fines $676,636 VEHICLE TRIPS $1.41 UNT Police Fines $69,152 FIXED $0.00 TWU Police Fines $8,080 FIXED $0.00 Parking Fines $87,496 VEHICLE TRIPS $0.18 Uniform Traffic Fees $14,645 VEHICLE TRIPS $0.03 False Alarm Fees $7,010 FIXED $0.00 Court Security $133,447 FIXED $0.00 Court Cost Service Fees $50,746 POP AND JOBS $0.23 $1,893,586 Court Administration Fees $443,205 POP AND JOBS $2.03 61 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 41 Licenses and Permits Food Handler Permits $696 FIXED $0.00 Zoning Permits $968,140 POP AND JOBS $4.42 Moving Permits $11,810 FIXED $0.00 Demolition Permits $20,697 FIXED $0.00 Pool, Spa, Hot Tub Permits $29,628 FIXED $0.00 Building Permits $6,473,527 POP AND JOBS $29.59 Curb Cut Permits $1,106 FIXED $0.00 Mobile Home Park Licenses $43 FIXED $0.00 Sign Permits $87,855 FIXED $0.00 Fence Permits $121,904 SINGLE FAMILY $3.04 Mechanical Permits $51,543 POP AND JOBS $0.24 Certificate of Occupancy Fees $77,003 POP AND JOBS $0.35 Variance Fees $0 FIXED $0.00 Landscape Fees $10,489 FIXED $0.00 Short-Term Rentals $1,133 FIXED $0.00 Miscellaneous Permits $9,766 FIXED $0.00 Park Vendor Fees $17,750 FIXED $0.00 Beer & Wine Permits $50,469 RETAIL SF $0.01 CPR Training $1,114 FIXED $0.00 $7,934,673 Future $0 FIXED $0.00 Miscellaneous RevenuesInterest Income $1,859,354 FIXED $0.00 County Vehicle Registration Fee $202,340 FIXED $0.00 County Contribution - Ambulance Service $128,489 FIXED $0.00 DISD Contribution-School Resource Officer $700,000 FIXED $0.00 State - Signal Reimbursement $16,062 FIXED $0.00 Non-Grant State Reimbursement $3,604 FIXED $0.00 Williams Square Parking Fees $1,756 FIXED $0.00 SAFER Grant $1,701,228 FIXED $0.00 Little Elm Dispatch Service $941,101 FIXED $0.00 Miscellaneous Revenues $28,907 FIXED $0.00 Recovery of Prior-Year Expenditures $1,000 FIXED $0.00 Mowing Admin Fees $16,716 FIXED $0.00 Property Liens $11,817 FIXED $0.00 Police Phone/Fire Training $10,100 FIXED $0.00 DISD Reimbursement - Water Park $859,001 FIXED $0.00 Sale of Surplus Supplies and Fixed Assets $352,719 FIXED $0.00 $6,900,114 Training Facility Burn Fee $65,920 FIXED $0.00 Return on Investment Return on Investment - Water $13,029,417 DIRECT ENTRY Return on Investment - Wastewater $1,624,160 DIRECT ENTRY $15,732,014 Return on Investment - Electric $1,078,437 DIRECT ENTRY Cost of Service Transfer Electric Fund $5,989,845 DME REV $0.02 Water Fund $2,258,155 WATER REV $0.05 Wastewater Fund $1,841,838 WW REV $0.04 Solid Waste Fund $1,830,890 SOLID WASTE REV $0.04 Airport Fund $276,423 FIXED $0.00 Recreation Fund $0 FIXED $0.00 Materials Management Fund $712,638 FIXED $0.00 Fleet Services Fund $400,936 FIXED $0.00 Technology Services Fund $783,793 FIXED $0.00 Facilities Fund $376,110 FIXED $0.00 Street Improvement Fund $485,718 FIXED $0.00 Risk Retention Fund $155,236 FIXED $0.00 Health Insurance Fund $78,644 FIXED $0.00 Engineering Services Fund $1,211,899 FIXED $0.00 Customer Service Fund $571,491 FIXED $0.00 $16,987,310 From Projects $13,694 FIXED $0.00 62 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 42 CUSTOMIZED/MARGINAL CALCULATIONS FOR GENERAL FUND The following details the custom methodology used for certain revenue streams. ▪ City Sales Tax is attributed to nonresidential and residential development. To determine the level of revenue for each nonresidential category, we annualized recent sales tax revenue data allocated to nonresidential development (total sales tax revenue less 15 percent attributed to residential/online purchases) by industry provided by the City of Denton. Dividing sales tax revenue by the estimated floor area of current nonresidential development yields average Sales Tax Revenue per square foot for the land use types projected. Shown in Figure 27, retail development averages $3.42 in annual sales tax per square foot compared to $2.18 per square foot for office and $1.20 per square foot for industrial development. ▪ Sales Tax Attributed to Residential is projected on a per capita basis and totals almost $56 dollars per person. Figure 27. Sales Tax per Square Foot ▪ Property Tax is projected based on the respective cumulative assessed values (see below for additional detail) of the property projected in the scenario. Cumulative assessed values are multiplied by the FY2024 General Fund tax rate of $0.354780 per $100 valuation. As shown, assessed values for residential real property and nonresidential real property were projected separately to allow for comparison by type of development. Sales Tax Revenue / Capita 2024 Estimated Sales Tax Rev $57,545,000 Assume % Attribute to residential (online)^15.0%$8,631,750 $55.91 Assume remainder to nonresid $48,913,250 LAND USE 2024 Sales Tax Revenue Square Feet Sales Tax Revenue / SF RETAIL $28,337,255 8,283,948 $3.42 OFFICE $9,120,910 4,179,500 $2.18 INDUSTRIAL $11,455,085 9,533,376 $1.20 Source: City of Denton Finance Department. Three Year Sales Tax by NAICS; Trip Generation, Institute of Transportation Engineers, 11th Edition (2021). ^ Retail Indicators Branch, U.S. Census Bureau, "Estimated Quarterly U.S. Retail Sales: Bricks and Mortar and E- Commerce," as of Q3 2023, TischlerBise analysis. 63 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 43 Figure 28. Assessed Value by Land Use Type ▪ Return on Investment (“ROI”) revenues were calculated as 3.5 percent of gross revenues from Water, Wastewater, and Electric7 Funds, per the City’s ROI policy and discussions with staff. ▪ Licenses & Permits, Charges for Services, Fines & Fees: Based on discussions with City staff and an analysis of relevant financial documents, several line items’ revenues are likely to increase with growth in Population, Jobs, or Population and Jobs. Certain revenues associated with specific services such as Fire and Police are expected to increase based on Total Police Calls, Total Fire Calls, and Vehicle Trips. FIXED REVENUES ▪ Franchise Fee revenues to the General Fund are fixed; growth in Franchise Fee is instead allocated to the Street Improvement Fund per the City of Denton’s current policy to transfer franchise fee revenue in excess of FY2016 dollar amounts to the Street Improvement Fund. 7 ROI from the Electric Fund has recently increased to 6 percent. However, to be conservative in this update, the ROI percentages have been held constant from the previous analysis at 3.5 percent. Additionally, because the Electric Fund is an Enterprise Fund, any increase in ROI to the General Fund would need to be generated from an increase in costs to Electric customers, therefore essentially reflecting a wash between funds. Assessed Value Summary City of Denton, Texas - Hunter and Cole Ranch Developments FIA LAND USE Assessed Value Residential*Unit Single Family $535,000 Single Family Lot $100,000 Multifamily $110,000 Nonresidential Square Foot Retail $150.00 Office $130.00 Industrial $70.00 Source: Hillwood Communities *Single Family Values shown are prior to homestead exemption of $5,000. 64 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 44 ▪ Cost of Service Transfer revenues are transfers from other funds to the General Fund for general government services; Utility Fund Costs of Service were first modeled on the expenditure side. Cost of Service revenues to the General Fund are set to equal those expenditures. Expenditure projection methodology including the approach to modeling Cost of Service revenues is detailed in the following sections of this chapter. ▪ Miscellaneous revenues were conservatively assumed to be fixed per conversations with City staff. 65 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 45 GENERAL DEBT SERVICE FUND The General Debt Service Fund receives unrestricted revenue from Ad Valorem Property taxes; the adopted FY2024 rate of 0.205902 per $100 of assessed value is used to project property tax revenues in the General Debt Service Fund resulting from Hunter/Cole Ranch. “Transfers In” are fixed. These line items, seen below in Figure 29 reflect restricted revenue funds making debt service payments, which are accounted for within the capital expense analysis presented later in this chapter. Figure 29. General Debt Service Fund SPECIAL REVENUE FUNDS The fiscal impact analysis also includes revenues from Special Revenue Funds, capturing revenues that are anticipated to be generated from growth. STREET IMPROVEMENT FUND The Street Improvement Fund includes all Street Department activities; the Street Department is responsible for street maintenance and repair and is funded primarily through franchise fee revenues. The majority of these franchise fee revenues are paid by major utility funds. Franchise Fee revenue resulting from the Hunter/Cole Ranch development is calculated as 5 percent of projected Water, Wastewater, Electric, and Solid Waste revenue, per City policy. Other franchise fee revenue8 to the Street Improvement Fund is not expected to be affected by the proposed development. 8 Other franchise fees are paid from private electric, cable, telephone, and gas utility providers. 66 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 46 Figure 30. Street Improvement Fund ROADWAY IMPACT FEE FUND The Roadway Impact Fee Fund accounts for Roadway Impact Fees paid to the City of Denton by developers and homebuilders. Development within the Hunter/Cole Ranch MMD is projected to generate revenue to the Roadway Impact Fee Fund based on the impact fees currently in place per Roadway Impact Fee schedule. The majority of the development is located in Roadway Impact Fee Service Area A with the following impact fee rates, which are therefore applied to new development projected in the Hunter/Cole Ranch. Note that the MMD will also contribute Contract Tax revenue per the Operating Agreement to assist with funding impact fee eligible roadway projects. Figure 31. Roadway Impact Fee Assumptions 67 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 47 UTILITY FUNDS The methodology used to project utility fund revenues is summarized for the Water, Wastewater, Solid Waste, and Electric Funds in this section of the report. Note that a customized methodology was used for all growth-related revenues, as indicated by “DIRECT ENTRY”. WATER AND WASTEWATER REVENUE PROJECTION ASSUMPTIONS A customized methodology was used to project operating and impact fee revenues for water and wastewater revenues, per the snapshot from the fiscal model below. Figure 32. Utility Fund Revenue Projection Methodology LOS Std Revenue Revenue Base Year Project Using $ per Category Name Budget Amount Which Demand Base?Demand Unit Water Fund Interest Operating $300,000 FIXED $0.00 Water Sales Residential $23,839,938 DIRECT ENTRY $0.00 Water Sales Commercial $19,858,347 DIRECT ENTRY $0.00 Water for Resale $2,706,299 FIXED $0.00 Other Water $620,908 FIXED $0.00 Cost of Service - GF $226,833 FIXED $0.00 Cost of Service - Electric $620,013 FIXED $0.00 Cost of Service - Wastewater $2,045,596 FIXED $0.00 Cost of Service - Solid Waste $680,241 FIXED $0.0000 Impact Fee Revenues $11,605,000 DIRECT ENTRY $0.00 Tap Fees $652,269 FIXED $0.00 $63,155,444 Use of Reserves $0 FIXED $0.00 Wastewater Fund Interest Operating $399,514 FIXED $0.00 Wastewater Residential $13,726,979 DIRECT ENTRY $0.00 Wastewater Commercial $16,473,258 DIRECT ENTRY $0.00 Wastewater Effluent Irrigation $89,902 FIXED $0.00 Wastewater Wholesale $1,212,248 FIXED $0.00 Other Wastewater $2,032,729 FIXED $0.00 Drainage Fees $4,960,002 DIRECT ENTRY $0.00 Transfers In $631,561 FIXED $0.00 Impact Fee Revenues $4,270,000 FIXED $0.00 Impact Fee Revenues from Hunter/Cole SEE BELOW $0.00 $45,327,259 Use of Reserves $1,531,066 FIXED $0.00 68 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 48 Rate revenue and facility charge revenue were projected separately by land use. Per conversations with City staff, we utilized original data on demand/usage from the January 2020 Hunter-Cole Development Analysis completed by Freese and Nichols (“the FNI report”) as well as current facility charges and rates to project revenue per residential unit and nonresidential acre.9 Figure 33. Water and Wastewater Billing Assumptions 9 Per the FNI report, single-family and multifamily units will require water production of 170 GPD per capita (540 gallons per day per unit, or 16,000 gallons per month per unit), with household sizes averaging 3.2 persons and 2.5 persons respectively. Nonresidential consumption is 120 GPD per employee, assuming 18 employees per acre. Monthly GPDs for each unit type are shown in the first row of the figure. Per the FY23/24 City of Denton Utility Rate Booklet, the Facility Charge for a Single Family Unit is $15.84 per month, and multifamily facility charges vary depending on the meter size. We thus applied the Single Family-to-Multifamily GPD ratio (16:13, or 79 percent), to the Single Family facility charge to estimate the average monthly multifamily facility charge. The same methodology was used to estimate the average nonresidential facility charge. The result of these calculations is average annual water revenue of $951, $748, and $4,182 per Single Family unit, Multifamily unit, and Nonresidential acre, respectively. Average annual wastewater revenue per unit and per acre was calculated utilizing the per capita consumption/production (measured in GPD) from the FNI Report, and the FY23/24 booklet rates and formulas. The Drainage fees utilized are calculated on a per unit per acre basis for residential development and on a per acre basis for nonresidential development, assuming an average impervious surface area of 60 percent for all land uses, which is supported by the Master Planned Community’s zoning. 69 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 49 The average annual revenue per single family unit, multifamily unit, and nonresidential acre was multiplied by the projected residential and nonresidential growth on a cumulative annual basis to arrive at operating revenue projections. Impact Fee Revenue Projections The following impact fee schedule, based on the City of Denton’s 2018 Water and Wastewater Impact Fee Study, was utilized to project Water and Wastewater impact fee revenue attributable to Hunter/Cole Ranch. See footnotes to Figure 34 for detail regarding how the multifamily fee per unit and nonresidential fee per acre were calculated. Figure 34. Water and Wastewater Impact Fee Assumptions By multiplying the fee amounts depicted in Figure 34 by projected growth in residential and nonresidential development, annual water and wastewater impact fee revenue was calculated for each year of the study period. Note that it is assumed that the MMD will contribute revenue from a Contract Tax, as outlined in the Operating Agreement, to help finance impact fee eligible Water and Wastewater capital projects. 70 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 50 ELECTRIC FUND The Electric Fund revenue assumptions depicted in Figure 35 were provided by the City of Denton for the original FIA and applied to the development program to project rate revenues. For the 2024 FIA, projected revenues (and expenditures) were increased by 20 percent, reflecting the increase in the Electric Fund’s budget from the original FIA (FY2019/20 to FY2023/24). Figure 35. Utility Fund Revenue Projection Methodology SOLID WASTE FUND Solid Waste Fund revenue is projected using the revenue per Single Family unit derived as shown to the Single Family units projected under the development plan. Nonresidential rates were projected using nonresidential square footage [“TOTAL NR SF”] as the demand base, since nonresidential rates vary depending on characteristics on nonresidential properties that are unknown at this conceptual phase of the development program. Figure 36. Solid Waste Fund Revenue Projection Methodology LOS Std Revenue Revenue Base Year Project Using $ per Category Name Budget Amount Which Demand Base?Demand Unit Electric Fund Base Rate Revenues $104,394,786 FIXED $1.00 Revenues are direct entry, see below ECA Revenues*$66,916,985 FIXED $0.00 Non-Operating Revenues $27,879,488 FIXED $1.00 Interest Income $650,000 FIXED $0.00 Data Center Revenues $49,786,722 FIXED $0.00 DEC Revenues $40,769,215 FIXED $0.00 $308,153,595 Use of Reserves $17,756,399 FIXED $0.00 Water Fund Interest Operating $300,000 FIXED $0.00 Water Sales Residential $23,839,938 DIRECT ENTRY $0.00 Water Sales Commercial $19,858,347 DIRECT ENTRY $0.00 Water for Resale $2,706,299 FIXED $0.00 Other Water $620,908 FIXED $0.00 Cost of Service - GF $226,833 FIXED $0.00 Cost of Service - Electric $620,013 FIXED $0.00 Cost of Service - Wastewater $2,045,596 FIXED $0.00 Cost of Service - Solid Waste $680,241 FIXED $0.0000 Impact Fee Revenues $11,605,000 DIRECT ENTRY $0.00 Tap Fees $652,269 FIXED $0.00 $63,155,444 Use of Reserves $0 FIXED $0.00 Wastewater Fund Interest Operating $399,514 FIXED $0.00 Wastewater Residential $13,726,979 DIRECT ENTRY $0.00 Wastewater Commercial $16,473,258 DIRECT ENTRY $0.00 Wastewater Effluent Irrigation $89,902 FIXED $0.00 Wastewater Wholesale $1,212,248 FIXED $0.00 Other Wastewater $2,032,729 FIXED $0.00 Drainage Fees $4,960,002 DIRECT ENTRY $0.00 Transfers In $631,561 FIXED $0.00 Impact Fee Revenues $4,270,000 FIXED $0.00 Impact Fee Revenues from Hunter/Cole SEE BELOW $0.00 $45,327,259 Use of Reserves $1,531,066 FIXED $0.00 Solid Waste Fund Interest Operating $89,132 FIXED $0.00 Residential + Residential Recycling $10,481,450 SINGLE FAMILY $261.55 Front /Side Load $9,340,387 TOTAL NR SF $0.32 Roll Off Open Top $5,722,967 TOTAL NR SF $0.20 $41,370,835 Commercial Recycling $1,756,182 TOTAL NR SF $0.06 Landfill Gate + Landfill Wholesale $10,026,633 FIXED $0.00 Other Solid Waste $1,697,660 FIXED $0.00 Transfers In $181,490 FIXED $0.00 $41,370,835 Use of Reserves $2,074,934 FIXED $0.00 71 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 51 R EVENUE O UTPUTS This section details revenue outputs from the Fiscal Impact Analysis. REVENUE PROJECTIONS The following figures illustrate the projected revenues in the City’s General Fund and other non-utility Funds modeled. Results are shown as a cumulative total over the 40-year projection period as well as an average annual figure. As noted in the figures, the listed dollar amounts are in $1,000s. Figure 37. 40-Year Revenue Totals for all Non-Utility Funds 72 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 52 Revenue total and average annual revenue over the 40-year study period is shown for each Utility Fund included in the analysis in Figure 38. Figure 38. 40-Year Revenue Totals and Annual Averages for Utility Funds (x$1,000s) 73 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 53 O PERATING E XPENDITURE M ETHODOLOGIES All variable operating expenditures are projected, including personnel and operating costs. Capital Expenditures are discussed in a separate section. GENERAL AND SPECIAL REVENUE FUNDS For most City departments, operations and personnel costs are projected separately. A summary of the approach is provided below. It should be noted that many departments have some portion of their budget that is considered “fixed” and will not increase with growth. That is, existing operations will be able to absorb a portion of additional impacts from growth in the City. In the figures below, “fixed” is only indicated for those categories that are considered entirely “fixed.” 74 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 54 Figure 39. General and Special Revenue Operating Expenditures Approach Expenditure Category General Fund City Manager x x Economic Development x x Facilities Management Facilities SF x Finance/Accounting x x x Human Resources x x Internal Audit x x Legal Administration x x x Public Affairs x x Non-Departmental x Library x Library SF x Parks And Recreation Parks SF x Development Services x x Public Safety Communications x x x Municipal Court x x Municipal Judge x x Police x x x Animal Services x x Fire x x Transportation Admin x x Traffic Operations x x Special Revenue Funds Streets Improvement Fund NA x x Roadway Impact Fee Fund NA x NA FixedTotal Police Calls Administrative & Community Services Neighborhood Services Department Population Population & Jobs Public Safety Transportation Staff Modeled? Lane Miles Vehicle Trips Total Fire and EMS Calls City FTEs Custom Analysis 75 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 55 CUSTOM METHODOLOGIES All growth-related departments except for Facilities Management, Library, and Parks and Recreation are modeled using basic growth indicators derived from the development scenario (i.e., population, jobs, etc.) as the basis for projecting demand. Further explanation of those metrics is found in Appendix A. Descriptions of the customized methodology used for Facilities Management, Library, Parks and Recreation, and the Roadway Impact Fee Fund are found below. ▪Facilities Management: Facilities Management expenditures are expected to increase over base year expenditures in accordance with the addition or expansion of City owned facilities. Facilities Management is currently responsible for 1.1 million square feet of City-owned facilities.10 As future development triggers the construction of new facilities (discussed below) the Facilities Management department will need to increase its capacity in order to maintain levels of service. Facilities Management expenditures are thus projected utilizing “FACILITIES SF.” The expansion of capital facilities is discussed in detail in the next section of this chapter. ▪Parks & Recreation: Parks and Recreation Operating Expenditures are projected based on demand from population from Hunter/Cole Ranch. All parks and recreation improvements are assumed to be the responsibility of the MMD or an HOA except for a future recreation center, assumed to be built and maintained by the City. Figure 40. City Maintained Parks and Recreation Facilities for Operating Expense Projections 10 Source: City of Denton Facilities Management. 76 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 56 •Library: Library operating expenditure projections are based, in part, on library square footage. One additional library is triggered by growth, as detailed in the next section of this chapter. Using current costs per Library square foot, the fiscal model projects increases in Library operating expenditures. UTILITY FUND OPERATING EXPENDITURES As Enterprise Funds, Utility Funds are self-funding in the sense that rates are adjusted as needed to cover operating and capital expenditures. As requested by the City of Denton, however, this FIA examined the fiscal impact of the proposed development on Utility Funds if utility rates were to be held constant over time. Expenditures were projected utilizing the methodological approaches summarized in Figure 41. Figure 41. Utility Funds Operating Expenditures Approach ^Note: ROI from the Electric Fund has recently increased to 6 percent. However, to be conservative in this update, the ROI percentages have been held constant from the previous analysis at 3.5 percent. Additionally, because the Electric Fund is an Enterprise Fund, any increase in ROI to the General Fund would need to be generated from an increase in costs to Electric customers, therefore essentially reflecting a wash between funds. Expenditure Category Utility Funds Personnel Operations Franchise Fees Return on Investment Cost of Service - Transf.x Capital Outlay Personnel Operations x Franchise Fees Return on Investment Cost of Service - Transf.x Capital Outlay Personnel Operations Franchise Fees Return on Investment Cost of Service - Transf.x Capital Outlay Personnel Operations Franchise Fees Cost of Service - Transf.x Capital Outlay *Production/consumption utilizes the following metrics: Water - thousands of gallons per year; Wastewater - thousands ofof gallons (discharge) per year; Solid Waste - landfilled (tons); recyclin collections (tons) Water Fund Wastewater Fund Electric Fund Solid Waste Fund Name x x x [5% of Gross Rev.] [Single Family Units] / [Nonresidential SF] Estimates from DME [3.5% of Gross Rev.] Quorum Report Projections Estimates from DME [5% of Gross Rev.] [5% of Gross Rev.] [3.5% of Gross Rev.] x Custom Analysis [5% of Gross Rev.] [3.5% of Gross Rev.] x x x x x Revenue Production*Facilities Staff Modeled? ^ 77 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 57 C APITAL E XPENDITURE M ETHODOLOGIES Capital costs and infrastructure improvements to serve new development are modeled based on demand generated by the proposed development. Capital facilities, infrastructure, vehicles, and equipment are projected for General Government, Parks and Recreation, Library, Fire, Police, Public Works, Facilities Management, Fleet Management, Transportation, City of Denton Water Utilities (includes Water and Wastewater), Denton Municipal Electric (DME), and Solid Waste & Recycling. Many of the assumptions on which the analysis is based can be viewed as policy-making decision points, which if modified would affect the overall results. For example, most of the capital expenditures assumed in the analysis, and the resulting costs (assumed in most cases as debt financed), are projected independent of the current capital improvement programs and debt capacity guidelines. Rather, the capital costs projected in this analysis reflect the potential cost to serve new growth, regardless of whether the resources are available to cover the costs. The City will continue to balance its annual budgets considering financial guidelines and policies, applicable operating impacts, and available resources. An important aspect of the capital expenditure methodology is that per direction from the City of Denton’s Finance Department, it is assumed that the funding of new facilities will be debt financed. This is in keeping with the City’s current practices and allows the City to fund necessary infrastructure investments for which it has insufficient cash on hand. From a fiscal impact perspective, it should be noted that debt financing can understate the full cost of a capital project; because the payments are made over a 20-year period, the fiscal model’s 40-year projection period may not capture the full cost of capital facilities constructed or paid for after year 40. GENERAL GOVERNMENT FACILITIES To serve residential and nonresidential development in the scenarios, the population and job growth is multiplied by the current level of service of general government administrative offices. The level of service is found by dividing the current floor area of City Hall (City Hall, City Hall East less Police Department floor area, City Hall West, and Finance) by population and job total in the City (90,863 square feet / 218,796 population and jobs = 0.42 square feet per population and job). As residential and nonresidential growth occurs in the scenarios, the demand factor of 0.42 square feet per population or job is applied to project General Government capital needs. General Government vehicles are also projected using this approach; the base year 2024 vehicle count is 34 as provided by the City of Denton’s FY2024 Fleet Inventory Asset List. Note that General Government city vehicles are assigned an average useful life of eight years, and replacement vehicles are also included in this analysis. 78 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 58 PARKS AND RECREATION Parks and Recreation infrastructure improvement needs resulting from the development of Hunter/Cole Ranch were provided by the City of Denton. The analysis projects when Hunter/Cole Ranch development would trigger the need for the planned capital facilities based on current levels of service for Recreation Facilities, City Parks, Neighborhood Parks, Dog Parks, Pocket Parks, Regional Trails, Community Trails, and Amenity Centers. See Figure 40 for a summary of anticipated Parks & Recreation infrastructure improvements. Cost estimates are from the City of Denton and allocated between the City and the Developer/MMD as directed by the City of Denton. Summary outputs are provided in the next section. TRANSPORTATION To project the impact that growth will have on roadway infrastructure over the 40-year study period, the current level of service was calculated by dividing base year 2024 lane miles (1,512 lane miles) by estimated base year 2024 vehicle trips (478,745 vehicle trips). As citywide vehicle trips increase due to development, the construction of additional lane miles will be required. Vehicle trips are projected utilizing trip generation rates from the Institute of Transportation Engineers (ITE) Trip Generation Manual, 11th Edition (2021). The demand factor of 0.0032 lane miles per vehicle trip is then applied to total vehicle trips to calculate additional lane miles (combined for both residential and arterial/collector streets). Onsite (site access) and offsite (system-level) roadway infrastructure improvements required to provide access to Hunter/Cole Ranch MMD are from the City of Denton and updated for the 2024 analysis. It is assumed that roadway impact fees and MMD Contract Tax revenue contributions will help fund these costs. Vehicle and equipment for transportation and public works purposes are modeled as well. POLICE Police capital facilities impacted by growth include police station square feet and patrol vehicles. The current level of service for police facilities is 1.10 square feet per police call for service (police facility square feet of 127,628 divided by police calls for service (116,296)). Police calls for service are projected over the 40-year study period based on the methodology in Appendix A. The level of service is applied to Police calls for service to project additional police facility square feet needed to serve growth. 79 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 59 Per City staff, one vehicle is needed for every two patrol officers. Sworn Officers added to the force as a result of additional demand for police services is projected based on police calls for service (which will increase due to population and employment growth as described in Appendix B). Vehicle acquisition is triggered by the addition of new sworn officers. The useful life for Police patrol vehicles is an average of five years. The analysis includes the cost for replacement vehicles once the useful life is reached. Average vehicle costs were provided by the City of Denton. FIRE AND EMS Fire and EMS services were projected utilizing an approach similar to that used for police facilities. Current facility levels of service is calculated by dividing total Fire/EMS station square feet by Fire and EMS Calls for Service: 97,888 square feet divided by 22,023 calls for service = 4.4 square feet per call for service. Fire station facility prototype size is derived by dividing the total amount of anticipated developer contribution ($10.18 million) by the recent cost for fire station construction in the City ($554), resulting in a total amount of station square footage of 18,375 square feet. Two stations are needed and assumed at equal size (9,188 square feet each). As noted elsewhere, if a larger station size is desired, additional funding will be necessary. Additional apparatus is projected based on maintaining the city’s level of service and is assumed to be funded by the City. LIBRARY The City of Denton currently has three libraries; total square footage is 78,304 square feet, and libraries range from 21,516 square feet to 33,708 square feet. Demand for additional library capital facilities is projected by applying the current library LOS of 0.51 square feet per population to projected population growth. A library size of 28,300 square feet is used, which reflects the demand for new library space from Hunter/Cole Ranch development. PUBLIC WORKS Public Works facilities are projected to maintain the City’s current level of service. Service Center Facilities Management space are modeled. 80 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 60 E XPENDIT URE O UTPUTS This section details expenditure outputs from the Fiscal Impact Analysis. Regarding capital expenditures, the analysis assumes that all City-funded capital projects will be debt financed; the capital expenditure totals in the figures within this section of the report reflect this assumption. Note that they therefore differ slightly from the capital expenditures listed by item in the inventory of capital costs presented elsewhere in this report, which identifies costs as if they were cash-financed to allow for a straightforward comparison of City and Developer/MMD costs. OPERATING AND CAPITAL EXPENDITURE PROJECTIONS Operating and capital expenditure results are provided in this section based on the expenditure methodologies discussed above. For operating expenditure projections, 40-year cumulative totals are shown. Public Safety expenditures account for the majority of costs. Shown in Figure 42, Transportation costs account for just 1 percent of total General Fund expenses attributable to Hunter/Cole Ranch. The majority of operating and major road maintenance costs resulting from the projected increase in City-maintained lane miles are within the Street Improvement Fund. Figure 42. Operating Expenditure Projections Capital results for General Fund departments are shown below in Figure 43. Note that “Public Works,” as referenced in this FIA, includes Fleet Maintenance & Fuel and Facilities Management. Fleet and Facilities expenditures represent a large share of General Fund-financed capital expenses, in part because the City is responsible for funding these capital improvements, whereas capital expenditures in other departments are at least partially funded by the developer or MMD. Cumulative Operating Expenditures (x$1,000) City of Denton's Fiscal Impact Model Administrative & Community Services $249,525 24% Neighborhood Services $167,275 16% Public Safety $611,438 59% Transportation $14,470 1% SUBTOTAL GENERAL FUND EXPS $1,042,708 100% SUBTOTAL STREET IMPROVEMENT FUND EXPS $92,353 GRAND TOTAL OPERATING EXPS $1,135,061 AVERAGE ANNUAL EXPS $28,377 Cumulative ExpendituresCategory % 81 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 61 Another reason Fleet and Facilities expenditures are heavily impacted by growth is because these departments are already near capacity in terms of both space and staffing. Moreover, Hunter/Cole Ranch is not proximate to the existing service center, which houses Fleet Maintenance and Facilities Management. It is therefore assumed the City will need to develop a service center to accommodate the expansion of these two departments. Figure 43. Summary of Non-Utility Capital Costs Utility capital costs are shown below. Water and Wastewater City capital expenditures are provided by the City through the enterprise fund and reflect system-level improvements necessary to serve Hunter/Cole Ranch developments. Electric and Solid Waste City capital expenditures are based on short-term capital improvement plans for capacity improvements and projected based on growth from Hunter/Cole Ranch. Figure 44. Summary of Utility Fund Capital Costs 82 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 62 B ASE Y EAR D EMOGRAPHIC E STIMATES The table below summarizes estimates of the base year population, housing units, employment, nonresidential space, and facility factors in the City of Denton. These estimated values serve as the basis for the fiscal impact analysis and are used to determine the cost and revenue factors used in the analysis. Figure 45. Base Year Input Data Base Year->2024 Population[1]POPULATION 154,389 POP AND JOBS 218,796 Housing Units by Type [2]SINGLE FAMILY 40,074 MULTIFAMILY 25,345 TOTAL UNITS 65,419 Jobs by Type [1]RETAIL JOBS 17,588 OFFICE JOBS 12,860 INDUSTRIAL JOBS 11,034 INSTITUTIONAL JOBS 22,925 TOTAL JOBS 64,407 NonResidential Floor Area RETAIL SF 8,283,948 (SF = Square Feet)OFFICE SF 4,179,500 INDUSTRIAL SF 9,533,376 INSTITUTIONAL SF 7,037,975 TOTAL NR SF 29,034,799 Vehicle Trips [3]RESIDENTIAL TRIPS 300,708 NONRES TRIPS 178,037 VEHICLE TRIPS 478,745 APPENDIX A . DEMOGRAPHIC & DATA ASSUMPTIONS 83 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 63 POPULATION AND JOB FACTORS Household size is used to project population over the planning horizon; employees per acre of nonresidential space are used to project future employment. Per direction from City of Denton staff, we utilized the following assumptions. ▪ Single Family: 3.2 Persons per Household ▪ Multifamily: 2.5 Persons per Household ▪ Nonresidential Employees per Acre: 18 Employees per Acre V EHICLE T RIPS Vehicle trips are used to project some operating and capital expenditures in the fiscal impact analysis. Average Weekday Vehicle Trip Ends by type of development (or trip generation rates) are from the reference manual, Trip Generation, 11TH Edition, published by the Institute of Transportation Engineers (ITE), in 2021. A “trip end” represents a vehicle either entering or exiting a development (as if a traffic counter were placed across a driveway). Trip rates have been adjusted to avoid overestimating the number of actual trips because one vehicle trip is counted in the trip rates of both the origination and destination points. RESIDENTIAL VEHICLE TRIPS Vehicle trip generation for residential land uses are calculated by using ITE’s average daily trip end rates and a trip adjustment factor customized for the City of Denton. A vehicle trip end is the out-bound or in-bound leg of a vehicle trip. To not double count trips, a standard 50 percent adjustment is applied to trip ends to calculate a vehicle trip. For example, the out-bound trip from a person’s home to work is attributed to the housing unit and the trip from work back home is attributed to the employer. However, an additional adjustment is necessary to capture City residents’ work bound trips that are outside of the City. The trip adjustment factor includes two components. According to the National Household Travel Survey, home-based work trips are typically 31 percent of out-bound trips (which are 50 percent of all trip ends). Also, utilizing the most recent data from the Census Bureau's web application "OnTheMap,” 73 percent of Denton workers travel outside the City for work. In combination, these factors account for 11 percent of additional production trips (0.31 x 0.50 x 0.73 = 0.11). Shown in Figure 46 the total adjustment factor for residential housing units includes attraction trips (50 percent of trip ends) plus the journey-to-work commuting adjustment (11 percent of production trips) for a total of 61 percent. 84 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 64 Figure 46. Trip Adjustment Factor for Commuters NONRESIDENTIAL VEHICLE TRIPS Vehicle trip generation for nonresidential land uses are calculated by using ITE’s average daily trip end rates and adjustment factors found in their recently published 10th edition of Trip Generation. To estimate the trip generation in the City of Denton the weekday trip end per 1,000 square feet factors highlighted in Figure 47 are used. Figure 47. Trip Generation Factors Employed Denton Residents (2021)67,613 Denton Residents Working in the City (2021)18,560 Denton Residents Commuting Outside of the City for Work 49,053 Percent Commuting out of the City 73% Additional Production Trips 11% Standard Trip Adjustment Factor 50% Residential Trip Adjustment Factor 61% Source: U.S. Census, OnTheMap Application, 2021 ITE Demand Wkdy Trip Ends Wkdy Trip Ends Emp Per Sq Ft Code Unit Per Dmd Unit1 Per Employee1 Dmd Unit Per Emp 110 Light Industrial 1,000 Sq Ft 4.87 3.10 1.57 637 130 Industrial Park 1,000 Sq Ft 3.37 2.91 1.16 864 140 Manufacturing 1,000 Sq Ft 4.75 2.51 1.89 528 150 Warehousing 1,000 Sq Ft 1.71 5.05 0.34 2,953 254 Assisted Living bed 2.60 4.24 0.61 na 254 Assisted Living 1,000 Sq Ft 4.19 4.24 0.99 1,012 310 Hotel room 7.99 14.34 0.56 na 320 Motel room 3.35 25.17 0.13 na 520 Elementary School student 2.27 22.50 0.10 na 525 High School student 1.94 21.95 0.09 na 540 Community College student 1.15 14.61 0.08 na 550 University/College student 1.56 8.89 0.18 na 565 Day Care student 4.09 21.38 0.19 na 610 Hospital 1,000 Sq Ft 10.77 3.77 2.86 350 620 Nursing Home bed 3.06 3.31 0.92 na 710 General Office (avg size)1,000 Sq Ft 10.84 3.33 3.26 307 720 Medical-Dental Office 1,000 Sq Ft 36.00 8.71 4.13 242 730 Government Office 1,000 Sq Ft 22.59 7.45 3.03 330 750 Office Park 1,000 Sq Ft 11.07 3.54 3.13 320 760 Research & Dev Center 1,000 Sq Ft 11.08 3.37 3.29 304 770 Business Park 1,000 Sq Ft 12.44 4.04 3.08 325 820 Shopping Center (avg size)1,000 Sq Ft 37.01 17.42 2.12 471 1. Trip Generation, Institute of Transportation Engineers, 11th Edition (2021). Land Use / Size 85 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 65 A simple factor of 50 percent is applied to the Office, Industrial, and Institutional land uses. The Retail category has a trip factor of 33 percent because this type of development attracts vehicles as they pass-by on arterial and collector roads. For example, when someone stops at a convenience store on their way home from work, the convenience store is not their primary destination. BASE YEAR VEHICLE TRIP TOTALS Trip rates and adjustment factors are shown in the figure. Using trips generated from single family units as an example, the formula is as follows: 40,074 units x 9.43 vehicle trips per unit x 61% adjustment = 230,518. As shown in Figure 48, residential development accounts for an estimated 63 percent of total daily trips and nonresidential development accounts for an additional 37 percent. Figure 48. Vehicle Trips VEHICLE TRIPS DATA INPUT AREA Vehicle Trips on an Average Weekday Residential Units Assumptions Single Family 40,074 Multifamily 25,345 Average Weekday Vehicles Trip Ends Per Unit**Wkdy Trip Ends Trip Factors Single Family 9.43 61% Multifamily 4.54 61% Residential Vehicle Trip Ends on an Average Weekday Single Family 230,518 Multifamily 70,190 TOTAL RESIDENTIAL TRIPS 300,708 63% Nonresidential Vehicle Trips on an Average Weekday Nonresidential Gross Floor Area (1,000 sq. ft.)*Assumptions Retail 8,284 Office 4,180 Industrial 9,533 Institutional 7,038 Average Weekday Vehicle Trip Ends per 1,000 Sq. Ft.**Trip Factors Retail 37.01 33% Office 10.84 50% Industrial 3.37 50% Institutional***10.84 50% Nonresidential Vehicle Trips on an Average Weekday Retail 101,174 Office 22,653 Industrial 16,064 Institutional 38,146 TOTAL NONRESIDENTIAL TRIPS 178,037 37% TOTAL TRIPS 478,745 100% *Floor area estimates are derived from employment figures provided by the City of Denton. **Trip rates are from the Institute of Transportation Engineers (ITE) Trip Generation Manual (2021) ***Assumes trip rate of the average office. Wkdy Trip Ends 86 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 66 F UNCTIONAL P OPULATION Both residential and nonresidential developments increase the demand on City services and facilities. To calculate the proportional share between residential and nonresidential demand on service and facilities, a functional population approach is used. The functional population approach allocates the cost of the facilities to residential and nonresidential development based on the activity of residents and workers in the City through the 24 hours in a day. Residents that do not work are assigned 20 hours per day to residential development and 4 hours per day to nonresidential development (annualized averages). Residents that work in the City of Denton are assigned 14 hours to residential development and 10 hours to nonresidential development. Residents that work outside the City are assigned 14 hours to residential development, the remaining hours in the day are assumed to be spent outside of the City working. Inflow commuters are assigned 10 hours to nonresidential development. Based on 2021 functional population data, residential development accounts for 72 percent of the functional population, while nonresidential development accounts for 28 percent, see Figure 49. Figure 49. City of Denton Functional Population Demand Person Proportionate Residential Hours/Day Hours Share Estimated Residents 140,758 Residents Not Working 73,145 20 1,462,900 Workers Living in City 67,613 Residents Working in City 18,560 14 259,840 Residents Working outside of City 49,053 14 686,742 Residential Subtotal 2,409,482 72% Nonresidential Residents Not Working 73,145 Jobs Located in City 65,709 4 262,836 Residents Working in City 18,560 10 185,600 Non-Resident Workers 47,149 10 471,490 Nonresidential Subtotal 919,926 28% TOTAL 3,329,408 100% Source: U.S. Census, OnTheMap Application, 2021 Demand Units in 2021 87 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 67 P OLICE C ALLS FOR S ERVICE A custom methodology is used to allocate police costs based on an analysis of calls for service in the City of Denton. As shown in Figure 49, 72 percent of the functional population in the City is attributed to residential land uses and 28 percent of the functional population is attributed to nonresidential land uses. These factors are used to allocate costs to residential and nonresidential land uses. This percentage split is used to allocate the total police calls. To project future police calls for service from new development, the above data is used to determine a call per person and call per nonresidential trip. This methodology seeks to capture demand for services from both residential and nonresidential development. Since specific records on calls for service by type of nonresidential land use is not available, vehicle trips by type of nonresidential land use are utilized as a realistic proxy. This methodology reflects that the greatest number of calls for service on a per square foot basis. If calls for service were allocated on a per employee basis, office uses would generate the greatest number of calls due to its high employment density, which is contrary to actual experience. Shown in Figure 50, to find the residential police demand factor, City population is applied to residential calls for service to derive a level of service of 0.5424 calls per person. The number of nonresidential vehicle trips is applied to nonresidential calls for service to derive a level of service of 0.1829 calls per nonresidential trip. These factors are then applied to projected population and nonresidential vehicle trips from growth to project new police calls for service. Figure 50. Police Service Call Demand Factors 88 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 68 F IRE C ALLS FOR S ERVICE As shown in Figure 51, in 2023, the Fire Department received an estimated 22,023 calls for service. Of the total, 72 percent are attributed to residential development and 28 percent are attributed to nonresidential development using the functional population approach. To project future Fire calls for service from new development, the data is used to determine a call per person and call per nonresidential trip. This methodology seeks to capture demand for services from both residential and nonresidential development. Since specific records on calls for service by type of nonresidential land use is not available, vehicle trips by type of nonresidential land use are utilized as a realistic proxy. This methodology reflects that the greatest number of calls for service on a per square foot basis. If calls for service were allocated on a per employee basis, office uses would generate the greatest number of calls due to its high employment density, which is contrary to actual experience. Residential level of service of .1027 calls per capita is derived by dividing FY2023 fire/rescue calls for service allocated to residential development (15,857) by the City’s population estimate. The number of nonresidential vehicle trips is applied to the total nonresidential calls for service to derive a level of service of 0.0346 calls per nonresidential trip. These factors are then applied to projected population and nonresidential vehicle trips in each growth scenario to project new fire calls for service. Figure 51. Fire Department Demand Factors 89 Fiscal Impact Analysis of Hunter and Cole Ranch Developments The City of Denton, TX 69 90 Fiscal Impact Analysis of Hunter/Cole Ranch Municipal Management Districts Fiscal Impact Analysis Report City of Denton, Texas Prepared for: The City of Denton Final Report February 14th, 2020 4701 Sangamore Road, Suite S240 Bethesda, MD 301.320.6900 www.tischlerbise.com 91 Fiscal Impact Analysis Report The City of Denton, TX i 92 Fiscal Impact Analysis Report The City of Denton, TX ii TABLE OF CONTENTS I. Executive Summary ....................................................................................................................... 1 Development Program .................................................................................................................. 2 Summary of Fiscal Impact Results ................................................................................................. 3 Utility Funds .............................................................................................................................. 7 Overall Results .........................................................................................................................14 Key Findings & Conclusions ..........................................................................................................15 General, Debt Service, and Special Revenue Funds ...................................................................15 Utility Funds .............................................................................................................................16 II. Major Assumptions & Methodologies ..........................................................................................18 Overview of Methodology ...........................................................................................................18 General Approach ....................................................................................................................18 Key Assumptions ..........................................................................................................................20 Fiscal Year 2019 Budget ............................................................................................................20 Variable versus Fixed Costs and Revenues ................................................................................21 Levels of Service .......................................................................................................................21 Inflation Rate ...........................................................................................................................21 Enterprise Funds ......................................................................................................................22 Non-Fiscal Evaluations ..............................................................................................................22 Development Program .................................................................................................................23 III. Fiscal Impact Analysis Results .....................................................................................................25 Annual Net Fiscal Impacts ............................................................................................................26 Cumulative Net Fiscal Impacts ..................................................................................................30 Utility Funds .............................................................................................................................32 Key Findings & Conclusions ..........................................................................................................39 General, Debt Service, and Special Revenue Funds ...................................................................39 Utility Funds .............................................................................................................................40 Overall Results .........................................................................................................................41 IV. Revenue and Expenditure Detail .................................................................................................42 93 Fiscal Impact Analysis Report The City of Denton, TX iii Revenue Methodologies ..............................................................................................................42 General Fund Revenues ............................................................................................................42 General Debt Service Fund .......................................................................................................47 Special Revenue Funds .............................................................................................................47 Utility Funds .............................................................................................................................49 Revenue Outputs .........................................................................................................................53 Revenue Projections .................................................................................................................53 Operating Expenditure Methodologies ........................................................................................55 General and Special Revenue Funds .........................................................................................55 Utility Fund Operating Expenditures .........................................................................................59 Capital Expenditure Methodologies .............................................................................................60 General Government Facilities .................................................................................................60 Parks and Recreation ................................................................................................................61 Transportation .........................................................................................................................61 Police .......................................................................................................................................62 Fire and EMS ............................................................................................................................62 Library......................................................................................................................................62 Service Station Annex ...............................................................................................................63 Expenditure Outputs ....................................................................................................................64 Operating and Capital Expenditure Projections ........................................................................64 Appendix A. Demographic & Data Assumptions ...............................................................................67 Base Year Demographic Estimates ................................................................................................67 Population and Job Factors .......................................................................................................69 Vehicle Trips ................................................................................................................................70 Residential Vehicle Trips ...........................................................................................................70 Nonresidential Vehicle Trips .....................................................................................................71 Base Year Vehicle Trip Totals .....................................................................................................72 Functional Population ..................................................................................................................73 Police Calls for Service .................................................................................................................74 Fire Calls for Service.....................................................................................................................75 94 Fiscal Impact Analysis Report The City of Denton, TX iv Table of Figures Figure 1. Development Scenario ....................................................................................................... 2 Figure 2. Annual Net Fiscal Impact 2019-2059 .................................................................................. 3 Figure 3. Summary of 40-Year Cumulative Fiscal Impacts to City of Denton ....................................... 4 Figure 4. Annual Operating & Capital Expenditures Compared to Revenues ...................................... 5 Figure 5. Capital Facilities and Expenditure Inventory (General, Special, and Debt Service Funds) ..... 6 Figure 6. Cumulative 40-Year Net Fiscal Impact by Utility Fund (1,000s) ............................................ 7 Figure 7. Capital Facilities and Expenditure Inventory (Utility Funds) ................................................ 9 Figure 8. Water Fund Operating & Capital Expenses Compared to Revenues ....................................10 Figure 9. Wastewater Fund Operating & Capital Expenses Compared to Revenues ...........................11 Figure 10. Solid Waste Fund Operating & Capital Expenses Compared to Revenues .........................12 Figure 11. Electric Fund Operating & Capital Expenses Compared to Revenue .................................13 Figure 12. Operating and Capital Expenditures Compared to Revenues for Funds Analyzed Combined ........................................................................................................................................................14 Figure 13. Development Scenario ....................................................................................................23 Figure 14. Annual Net Fiscal Impact 2019-2059 ...............................................................................26 Figure 15. Annual Operating & Capital Expenditures Compared to Revenues ...................................28 Figure 16. Capital Facilities and Expenditure Inventory (General, Special, and Debt Service Funds) ..29 Figure 17. Summary of 40-Year Cumulative Fiscal Impacts to City of Denton ....................................30 Figure 18. 40-Year Cumulative Revenues and Expenditures: General and Debt Service Funds ..........31 Figure 19. Cumulative 40-Year Net Fiscal Impact by Utility Fund (1,000s) .........................................32 Figure 20. Capital Facilities and Expenditure Inventory (Utility Funds) .............................................34 Figure 21. Water Fund Operating & Capital Expenses Compared to Revenues ..................................35 Figure 22. Wastewater Fund Operating & Capital Expenses Compared to Revenues .........................36 Figure 23. Solid Waste Fund Operating & Capital Expenses Compared to Revenues .........................37 Figure 24. Electric Fund Operating & Capital Expenses Compared to Revenue .................................38 Figure 25. Operating and Capital Expenditures Compared to Revenues for Funds Analyzed Combined ........................................................................................................................................................41 Figure 26. General Fund Revenues ...................................................................................................43 Figure 27. Sales Tax per Square Foot ................................................................................................45 Figure 28. Assessed Value by Land Use Type ....................................................................................45 Figure 29. General Debt Service Fund ..............................................................................................47 Figure 30. Street Improvement Fund ...............................................................................................48 Figure 31. Roadway Impact Fee Assumptions ...................................................................................48 Figure 32. Utility Fund Revenue Projection Methodology ................................................................49 Figure 33. Water and Wastewater Billing Assumptions.....................................................................50 Figure 34. Water and Wastewater Impact Fee Assumptions .............................................................51 Figure 35. Utility Fund Revenue Projection Methodology ................................................................52 95 Fiscal Impact Analysis Report The City of Denton, TX v Figure 36. Solid Waste Fund Revenue Projection Methodology ........................................................52 Figure 37. 40-Year Revenue Totals for all Non-Utility Funds ..............................................................53 Figure 38. Revenue Totals and Annual Average for Utility Funds ......................................................54 Figure 39. General and Special Revenue Operating Expenditures Approach .....................................56 Figure 40. City Maintained Parks and Recreation Facilities for Operating Expense Projections .........57 Figure 41. Utility Funds Operating Expenditures Approach ..............................................................59 Figure 42. Operating Expenditure Projections ..................................................................................64 Figure 43. Summary of Non-Utility Capital Costs ..............................................................................65 Figure 44. Summary of Utility Fund Capital Costs .............................................................................65 Figure 45. Base Year Input Data .......................................................................................................68 Figure 46. Trip Adjustment Factor for Commuters ............................................................................70 Figure 47. Trip Generation Factors ...................................................................................................71 Figure 48. Vehicle Trips ....................................................................................................................72 Figure 49. City of Denton Functional Population ..............................................................................73 Figure 50. Police Service Call Demand Factors .................................................................................74 Figure 51. Fire Department Demand Factors ....................................................................................75 96 Fiscal Impact Analysis Report The City of Denton, TX vi [PAGE INTENTIONALLY LEFT BLANK] 97 Fiscal Impact Analysis Report The City of Denton, TX 1 I . EXECUTIVE SUMMARY The purpose of this Fiscal Impact Analysis (“FIA”) is to provide information to the City of Denton related to the fiscal impact of the proposed Hunter Ranch and Cole Ranch Municipal Management Districts (“Hunter/Cole MMD” or “Hunter/Cole Ranch”). An FIA determines whether revenues generated by development are sufficient to cover the costs resulting from that development — specifically, those costs associated with maintaining current levels of service given the additional service and facility demands that growth places on a jurisdiction. The City of Denton has been in discussions with Hillwood and Stratford Land (“the developers” or “development team”) regarding the development of Hunter Ranch and Cole Ranch on a 6,340-acre area to the Southwest of the city’s downtown since 2008. In February 2019 the City passed a resolution of support for the formation and operation of the Hunter Ranch and Cole Ranch Municipal Management Districts. Municipal Management Districts (“MMDs”) are special tax assessment districts and political subdivisions of the State of Texas. MMDs may levy taxes and issue bonds in order to provide the infrastructure needed to serve raw land development. As development progresses, the Management District can then provide supplemental services and improvements. Hunter/Cole Ranch has the potential to significantly expand the City of Denton’s economic base and municipal tax base. As an MMD, it also has the authority and revenue raising tools to self-fund a portion of the improvement projects needed to serve the development proposed as well as some of the ongoing expenses associated with maintaining those improvements. The City of Denton is currently evaluating the impact of the proposed project and negotiating terms of approval with the development team. TischlerBise is one of several consulting firms working with the City to inform this decision-making process. TischlerBise’s role was to calculate the net fiscal impact of the proposed Hunter/Cole Ranch development to the City’s general operating and debt service funds, the Roadway Impact Fee Fund, and the Street Improvement Fund. Additionally, we examined the fiscal impact to the City’s Utility Funds to provide the City with cost and revenue projections for use in its own rate analyses. The City of Denton owns and operates the electric, water, wastewater, and solid waste utilities that would serve Hunter/Cole Ranch. This report describes our approach and methodology, presents our findings, and discusses their significance. 98 Fiscal Impact Analysis Report The City of Denton, TX 2 D EVELOPMENT P ROGRAM The Hunter Ranch and Cole Ranch developments propose a mix of uses and industries across 6,340 acres of undeveloped land. The City of Denton provided us with the developers’ baseline build-out scenario for residential units and commercial and industrial acreage. We derived estimates for the other key indicators from federal and local governmental sources. Figure 1 below presents the development scenario for Hunter/Cole Ranch in cumulative 10-year increments. Figure 1. Development Scenario Development Scenario Summary Cumulative Growth: 2019 - 2059, 10 year increments City of Denton, Texas - Hunter and Cole Ranch FIA EXISTING Year 10 Year 20 Year 30 Year 40 2019 2029 2039 2049 2059 POPULATION 134,460 11,600 40,800 55,805 55,805 % growth from existing 9%30%42%42% RESIDENTIAL LOTS NA 3,600 9,600 12,400 12,400 SINGLE FAMILY 30,450 3,000 9,000 12,400 12,400 MULTIFAMILY 19,190 800 4,800 6,450 6,450 TOTAL UNITS 49,640 3,800 13,800 18,850 18,850 % growth from existing 7.7% 27.8% 38.0% 38.0% NONRESIDENTIAL ACRES NA 71 486 741 741 RETAIL SF 5,470,258 137,214 1,692,306 2,957,724 2,957,724 OFFICE SF 6,429,066 137,214 1,692,306 2,957,724 2,957,724 INDUSTRIAL SF 13,619,179 585,446 2,536,934 3,122,381 3,122,381 INSTIT SF 4,529,955 0 0 0 0 TOTAL NR DEVELOPMENT (SF)30,048,460 859,874 5,921,546 9,037,829 9,037,829 % growth from existing 3%20%30%30% RETAIL JOBS 12,818 203 2,498 4,365 4,365 OFFICE JOBS 19,782 203 2,498 4,365 4,365 INDUSTRIAL JOBS 15,772 864 3,744 4,608 4,608 TOTAL JOBS 48,372 1,269 8,739 13,338 13,338 % growth from existing 2.6% 18.1% 27.6% 27.6% Source: City of Denton; U.S. Census American Community Survey, 2015 - 2017 estimates; ITE 10th Edition (2017). 99 Fiscal Impact Analysis Report The City of Denton, TX 3 S UMMARY OF F ISCAL I MPACT R ESULTS The fiscal impacts of growth are shown below in the following figures. Net fiscal results are revenues minus costs in each year, reflecting operating and capital costs for all services modeled. Data points above the $0 line represent annual surpluses; points below the $0 line represent annual deficits. Surpluses in any one year are not carried forward to the next year. Figure 2. Annual Net Fiscal Impact 2019-2059 100 Fiscal Impact Analysis Report The City of Denton, TX 4 The cumulative totals shown below reflect total revenues and expenditures over the 40-year time frame. As shown, there is a cumulative positive fiscal impact for the funds analyzed, with the exception of the Roadway Impact Fee Fund for which the fiscal impact is essentially neutral. It should be noted that this analysis projects roadway impact fee revenues based on the conceptual phase development program and impact fee rates from the City of Denton’s 2015 Roadway Impact Fee Study; costs are projected separately based on the projected increase in transportation demand.1 In practice, roadway impact fee rates are likely to be adjusted periodically to reflect changes to growth and the Roadway Capital Improvement Plan. The MMD will also contribute revenue from a Contract Tax as outlined in the Operating Agreement to assist in funding impact fee-eligible projects. Figure 3. Summary of 40-Year Cumulative Fiscal Impacts to City of Denton For further detail, operating and capital impacts are separated in the following figure. 1 The 2015 City of Denton Impact Fee Schedule provides distinct impact fee rates to a detailed inventory of potential land uses. The conceptual phase build-out projections have not yet identified land uses to the level of detail needed to assign applicable impact fee rates to specific land uses. For example—supermarkets and department stores both fall into the “Retail” land use category. Per the 2015 Roadway Impact Fee Schedule, impact fees for “Supermarket” (ITE Land Use Code 850) are collected at the rate of $5,204.04 per 1,000 SF, compared to a collection rate of $1,123.46 per 1,000 SF for “Department Store” (ITE Land Use Code 875). The difference in these rates is related to the level of demand each land use is expected to place on roadway infrastructure. The FIA used the ITE Trip Generation Rate for Land Use Code 810 (“Shopping Center”) for Retail, which reflects travel demand for an average Retail land use. “General Office Building” or ITE Land Use Code 710 was utilized for Office, which is likewise the closest approximation to an average Office land use in terms of trip generation. Cumulative Fiscal Impact (x$1,000s) City of Denton - Fiscal Impact Analysis General Fund $1,148,231 70%$867,704 77%$280,528 Debt Service Fund $335,073 21%$142,035 13%$193,038 Special Revenue: Street Improvement Fund $96,975 6%$69,372 6%$27,603 Special Revenue: Roadway Impact Fee Fund $49,008 3%$51,657 5%($2,648) TOTAL $1,629,288 100%$1,130,768 100%$498,520 Net Fiscal Impact CATEGORY Cumulative Revenues %Cumulative Expenditures % 101 Fiscal Impact Analysis Report The City of Denton, TX 5 Figure 4. Annual Operating & Capital Expenditures Compared to Revenues As a development-finance tool, Municipal Management Districts allow private property owners to access low-interest financing for public infrastructure projects. The development team and the City of Denton have identified improvement projects required to serve the Hunter/Cole Ranch Master Planned Community that will be financed by the MMD or the developer. The table below inventories the infrastructure projects and other capital investments triggered by the proposed development of Hunter/Cole Ranch. Capital costs are categorized as either “City Funded” or “MMD/Developer Funded.” Only those projects required to maintain current levels of service are identified here—planned investments in private amenities for the exclusive use of Hunter/Cole Ranch MMD residents are excluded from this analysis and from the list below. Non-utility capital projects and costs are allocated to the City of Denton and the MMD/Developer in the detailed capital project inventory depicted in Figure 5 on the following page. The methodology underlying these projections and cost assumptions is discussed in detail in the Revenue and Expenditure Methodology Chapter of the report. 102 Fiscal Impact Analysis Report The City of Denton, TX 6 Figure 5. Capital Facilities and Expenditure Inventory (General, Special, and Debt Service Funds) Non-Utility Capital Facilities and Allocation of Costs ($1,000s) Fiscal Impact Analysis - Denton, TX DEPARTMENT - Facility Quantity Total Square Footage Total City of Denton MMD / Developer Parks and Recreation* Recreation Center Building 1 70,000 $11,900 $11,900 $0 Hunter Ranch City Park (54 acres)1 2,352,240 $12,493 $8,534 $3,959 Cole Ranch City Park (50 acres)1 2,178,000 $11,861 $7,902 $3,959 Neighborhood Parks (5 acres ea)4 653,400 $4,214 $0 $4,214 Pocket Parks / Dog Parks (2 acres ea)30 2,613,600 $3,000 $0 $3,000 Regional Trails 23 miles 1,212,275 $11,537 $0 $11,537 Community Trails 35 miles 1,112,958 $13,860 $0 $13,860 Parks & Rec Department - Vehicles 24 -$864 $864 $0 Parks & Rec Department - Service Station Annex 1 10,684 $1,537 $1,537 $41 Parks & Rec Department - Parking 1 10,667 $480 $480 $41 Facilities - Service Station Annex 1 45,652 $8,394 $8,394 $176 Facilities - Vehicles and Equipment 24 -$523 $523 $0 Fleet - Service Station Annex 1 186,474 $13,910 $13,193 $718 Fleet - Vehicles and Equipment 150 -$2,700 $2,700 $0 General Government - Administrative Space -67,913 $11,142 $11,142 $0 General Government - Vehicles 38 -$1,140 $1,140 $0 On-Site and Regional Roadway Projects4 --$241,157 $0 $241,157 Systemwide Improvements5 --$40,116 $40,116 $0 Streets - Vehicles 53 -$3,028 $3,028 $0 Streets - Service Station -61,765 $4,561 $4,324 $238 Lakes / Dams/ Spillways etc. TBD $37,800 $0 $37,800 Police - Substation 20,630 -$5,000 $0 $5,000 Police - Patrol Vehicles 109 -$4,711 $4,711 $0 Fire - Fire Substation*^^2 15,721 $9,670 $4,670 $5,000 Fire - Fire Engines / Ladder Trucks 8 -$6,975 $6,975 $0 Fire - Vehicles 32 -$7,360 $7,360 $0 Library^1 21,516 $4,564 $4,564 $0 345 vehicles / 24 lane miles TOTAL: $500,026 $168,866 $331,593 ^ Library cost estimate includes opening day collection materials. *Developer contribution towards City Parks of $3,950,000 provided by City of Denton 01/16/2020 General Notes: [1] Cost estimates represent the initial purchase and, for vehicles and equipment, replacement costs. [2] Debt financing expenses are not included. [3] 50 percent of Service Station Annex costs identified in Quorum report are attributable to Hunter/Cole Ranch. [4] Costs reflect the specific project cost estimates identified in February 12, 2020 version of Cole and Hunter Ranch Developments Travel Demand Model Report submitted by HDR Engineering, Inc. ^^ Fire Substation is the second of two substations triggered by the development; the first will be funded by the developer. Fleet & Facilities Management General Government Library Police Transportation Fire and EMS [5] Costs reflect projected growth in system-level transportation demand over the analysis' study period. Capital Costs ($1,000s) 103 Fiscal Impact Analysis Report The City of Denton, TX 7 UTILITY FUNDS Utility Funds were included in our analysis at the request of the City of Denton to evaluate whether the income generated from new customers and users would cover the costs required to provide service to the MMD while maintaining existing levels of service throughout the city. CUMULATIVE FISCAL IMPACT FOR UTILITY FUNDS As depicted in the figure below, the net fiscal impact of the MMD is positive across all utility funds. Capital Expenditures include utility infrastructure projects, as well as capital equipment and vehicles. A detailed inventory of capital expenditures is presented in Figure 7. Figure 6. Cumulative 40-Year Net Fiscal Impact by Utility Fund (1,000s) 40-Year Net Cumulative Impact - Utilty Funds City of Denton - Fiscal Impact Analysis Electric Fund* Operating Revenues $966,695 Operating Expenditures $565,517 Capital Expenditures $115,077 NET CUMULATIVE IMPACT $286,102 Water Fund Operating Revenues $389,015 Impact Fee Revenues $153,035 Operating Expenditures $238,853 Capital Expenditures $241,963 NET CUMULATIVE IMPACT $61,235 Wastewater Fund Operating Revenues $279,736 Impact Fee Revenues $144,469 Operating Expenditures $196,973 Capital Expenditures $226,743 NET CUMULATIVE IMPACT $490 Solid Waste Revenues $304,055 Operating Expenditures $246,914 Capital Expenditures $36,378 NET CUMULATIVE IMPACT $20,763 *Electric Fund projections provided by City of Denton. 104 Fiscal Impact Analysis Report The City of Denton, TX 8 The table below inventories the utility infrastructure projects and other capital investments triggered by Hunter/Cole Ranch. Capital costs are categorized as either “City Funded” or “MMD/Developer Funded.” Note that replacement facilities and major maintenance are not included in the capital costs presented below. Facilities needed to serve new growth are reflected. For capital improvements that are purchased—vehicles, equipment, etc., the model and fiscal results include both the initial purchase cost and the cost to replace the item after it reaches its useful life. 105 Fiscal Impact Analysis Report The City of Denton, TX 9 Figure 7. Capital Facilities and Expenditure Inventory (Utility Funds) Utility Funds - Capital Facilities and Expense Allocation ($1,000s) Fiscal Impact Analysis - Denton, TX FUND - Facility Quantity or Square Footage Total City of Denton MMD / Developer Water Fund CIP Projects per FNI Report**19 projects $224,641 $153,035 $71,607 Service Station Annex 17,902 $1,969 $1,900 $69 Vehicles 24 $987 $987 $0 Wastewater Fund CIP Projects per FNI Report***15 projects $232,016 $144,469 $87,547 Service Station Annex 11,264 $1,282 $1,239 $43 Vehicles 21 $924 $924 $0 Solid Waste Fund Materials Recovery Facility 37,500 $3,144 $3,000 $144 Transfer Station 25,000 $6,975 $6,075 $900 Bulk Drop Off Facilities & Weigh Station 4,159 $1,788 $1,772 $16 Administrative Space 2,900 $649 $638 $11 Solid Waste Haulers / Commercial Trucks 38 $5,510 $5,510 $0 Roadway to Transfer Station 25,725 $660 $561 $99 Vehicle Maneuvering 65,000 $705 $455 $250 Electric Fund* Substation 1 $18,077 $18,077 $0 Distribution Lines (Cost to Serve)NA*$38,147 $38,147 $0 Main Feeder Circuits NA*$41,357 $41,357 $0 Vehicles 37 $2,250 $2,250 $0 Lighting NA*$12,177 $0 $12,177 Administrative / Shop Space 40,960 $10,350 $10,192 $158 TOTAL: $603,611 $430,589 $173,022 Source: Quorum; TischlerBise; City of Denton; FNI *Cost estimates for total distribution lines and feeder circuits provided by DME. General Notes: [1] Cost estimates represent the initial purchase and, for vehicles and equipment, replacement costs. [2] Debt financing expenses are not included. [3] 50 percent of Service Station Annex square footage identified in Quorum Analysis (Jan 16, 2020) is attributable to Hunter/Cole Ranch. [4] Per the Hunter-Cole Development Analysis submitted by FNI on Feb 7, 2020, total CIP Projects for Water and Wastewater Funds equal $328,612,700 and $290,441,800 respectively (land excluded). Of these costs, $224,341,400 and $231,836,500, respectively, are a result of projected demand from the Hunter/Cole Ranch developments. The remainder is attributable to projected use by the entire system. **Developer contribution of 10 acres of land for Water Booster Pump Station, valued at $30,0000 per acre per draft Project Agreement included in addition to CIP Costs identified in FNI's Hunter-Cole Development Analysis (Feb 7, 2020) per direction from City of Denton staff. ***Includes Developer contribution of 6 acres of land for Hickory Creek Wastewater Lift Station, valued at $30,000 per acre per draft Project Agreement in addition to CIP Costs identified in FNI's Hunter-Cole Development Analysis (Feb 7, 2020) per direction from City of Denton staff. Capital Costs ($1,000s) 106 Fiscal Impact Analysis Report The City of Denton, TX 10 The methodology and approach utilized to arrive at the capital cost projections is detailed in the Revenue and Expenditure Detail chapter of this report. NET ANNUAL FISCAL IMPACT FOR UTILITY FUNDS The annual net fiscal impact on the utility funds is presented in the figures that follow. Water Fund Water Fund revenues are expected to exceed operating expenditures throughout the study-period. Minor capital deficits in the amounts of approximately $172,000 and $345,000 are incurred in 2022 and 2023, respectively, as design and predevelopment expenditures for the first of three expansions to the Lake Ray Roberts Water Treatment Plant are incurred prior to the delivery of revenue- generating residential and nonresidential development. Revenues are then projected to exceed capital expenditures until 2043, as depicted in the figure below. Note that the spikes depicted in Water Fund revenues are the result of impact fees. Figure 8. Water Fund Operating & Capital Expenses Compared to Revenues 107 Fiscal Impact Analysis Report The City of Denton, TX 11 The capital expenditures included in this analysis are directly attributable to demand from Hunter Cole.2 For the purposes of this analysis, these projects are projected to be debt financed and occur between 2024 and 2039. New development, and thus impact fee revenue begins to peak around 2039, and from 2045-2054 annual deficits are incurred as impact fee revenue declines and then stops while debt payments for the major infrastructure projects projected in the FNI Report and developed from 2024-2039 continue. The impact fee revenue surplus accrued during the first half of the study period is projected to be sufficient to compensate for the capital deficit projected in the second half of the development period. Per conversations with City staff, the MMD will also contribute revenue from a Contract Tax as outlined in the Operating Agreement to assist in funding impact fee eligible Water projects. Wastewater Fund Wastewater Fund revenues are generally expected to meet or exceed operating and capital expenditures over the course of the development, as depicted in Figure 9 below. Figure 9. Wastewater Fund Operating & Capital Expenses Compared to Revenues 2 The January 7th, 2020 FNI report calculated the share of project costs attributable to Hunter Cole (based on projected Hunter/Cole demand relative to demand from the broader service area); these cost estimates were used for the fiscal impact analysis. 108 Fiscal Impact Analysis Report The City of Denton, TX 12 The spikes in the figure above represent impact fee payments. Although the timing of impact fee payments does not directly correspond with capital costs, revenues accrued in years where impact fees exceed capital expenses cover deficits in other years. Impact-fee eligible Wastewater projects will also receive funding from the MMD’s Contract Tax as outlined in the Operating Agreement. Solid Waste Fund As depicted in the figure below, Hunter/Cole Ranch is projected to have a relatively neutral net annual fiscal impact to the City of Denton’s Solid Waste Fund for most of the study period. Deficits occur, however, from 2025-2037. This analysis assumed that construction of the planned Material Recovery Facility and Transfer Station will occur in 2027 (included in the Service Station Annex). The minor deficits projected prior to the delivery of the Service Station Annex are due to projected capital investments in Solid Waste vehicles including haulers and commercial trucks, which are needed to serve new customers. Figure 10. Solid Waste Fund Operating & Capital Expenses Compared to Revenues 109 Fiscal Impact Analysis Report The City of Denton, TX 13 Electric Fund Electric revenues and expenses associated with Hunter Cole were provided by the City of Denton and are illustrated in terms of revenues relative to capital and operating expenditures in the figure below. Revenues are projected to exceed expenditures for each year of the study period. Figure 11. Electric Fund Operating & Capital Expenses Compared to Revenue 110 Fiscal Impact Analysis Report The City of Denton, TX 14 OVERALL RESULTS Per direction from City of Denton staff, the figure below compares annual revenues to annual operating and capital expenditures for the funds analyzed, including utility funds. Note that under current City policy, utility fund revenues are restricted use and cannot be used toward any other fund’s activities. Figure 12. Operating and Capital Expenditures Compared to Revenues for Funds Analyzed Combined 111 Fiscal Impact Analysis Report The City of Denton, TX 15 K EY F INDINGS & C ONCLUSIONS The following conclusions can be drawn from the FIA results presented in this report: GENERAL , DEBT SERVICE, AND SPECIAL REVENUE FUNDS • The proposed Hunter/Cole Ranch development is projected to have a net cumulative positive fiscal impact on the City over the 40-year study period. The net positive impacts are driven primarily by sales and property tax revenue from development. This allows for the City of Denton to benefit fiscally from the development proposed. • It should be noted that, on average, the resulting annual net positive impact to the General Fund and Debt Service Fund is approximately $7.0 million, which reflects approximately 5.4 percent of the City of Denton’s Fiscal Year 2019 operating budget. • The Street Improvement Fund is funded through franchise fees including utility fund revenue surpluses (as well as non-growth-related revenues). The Street Improvement Fund’s projected cumulative surplus is partially attributable to the fact that utility fund revenues will increase as a result of Hunter/Cole Ranch. Another reason for the surplus is that although the additional roadways added to the City of Denton’s lane mile inventory increase Street Improvement Fund operating and capital outlay costs, major capital expenditures are generally accounted for in other funds. Per conversations with City staff, this analysis assumes that roadway construction is either funded by the MMD through adjustments to the District tax rate or by future development through the Roadway Impact Fee Fund. Public works equipment and the Service Station Annex are funded out of the General Debt Service Fund. o Note that the increases in franchise fee revenue could be allocated to another fund at the City’s discretion. As discussed previously, this analysis assumed that the 10-year policy of transferring excess franchise fee revenue to the Street Improvement Fund would continue throughout the 40-year study period. • Demand for fire services will trigger the need to expand capital facilities during the second half of the development’s growth period, beyond the developers’ initial land and financial contributions as identified in the draft Operating Agreement. A new fire substation is triggered in 2028—to be funded up to $5 million from the developer—and a second fire substation is triggered in 2039, which is assumed as a City cost. 112 Fiscal Impact Analysis Report The City of Denton, TX 16 • Although the projected growth in revenue is relatively significant, the City should continue to plan and be prepared to expand both its facilities and operational capacity—the Hunter/Cole Ranch development is projected to be fiscally balanced in the sense that it is projected to produce enough revenue to cover its costs, but it will not be self-contained. Growth in population, vehicle trips, and police and fire calls, for instance, is projected to increase average annual operating expenditures to the City by approximately $21 million per year. • Overall, Hunter/Cole Ranch is projected to generate sufficient revenue to cover both the capital and operating costs associated with meeting the additional demand it will place on City services. UTILITY FUNDS • Water and Wastewater Fund revenues cover operating expenditures throughout the 40-year study period. Water and Wastewater impact fee revenue is sufficient to cover the development’s share of water and wastewater capital costs. • Impact fee revenue is a function of the City of Denton’s current fee schedule and projected development—to the extent that development does not keep pace with projections, impact fee revenue may fall short of projections. Because major Water and Wastewater infrastructure must be constructed prior to full build-out in order to serve new residents and businesses, the City may incur capital deficits for these funds if development does not proceed at the rate or intensity presented in the baseline scenario. To mitigate this risk, the MMD will adjust District tax rates as needed to fund the difference between impact fee revenue and the Water/Wastewater Capital Improvement Plan project costs attributable to the development. • This report assumed that the Solid Waste Service Station Annex including the Materials Recovery Facility and Transfer Station would be “front-loaded” and completed in one phase in 2027 per the Public Facilities report completed by Quorum Architects as a party of this analysis. This results in six years of capital deficits. To the extent possible, direct financing of recurring capital costs such as solid waste haulers, would improve the fiscal results for the Solid Waste fund. • Given the current level of detail available regarding the number and service requirements of commercial Solid Waste customers, however, additional analysis of the net fiscal impact of Hunter/Cole Ranch on the Solid Waste Fund should be completed as property-specific details of the development program are established. • Overall, the cumulative fiscal impact on all utility funds is projected to be positive. 113 Fiscal Impact Analysis Report The City of Denton, TX 17 114 Fiscal Impact Analysis Report The City of Denton, TX 18 II. MAJOR ASSUMPTIONS & METHODOLOGIES O VERVIEW OF M ETHODOLOGY An FIA determines whether revenues generated by new development are sufficient to cover the costs resulting from that development—specifically, those costs associated with maintaining current levels of service given the additional service and facility demands that growth places on a jurisdiction. Levels of Service (“LOS”) reflect public services and infrastructure as currently funded and are typically expressed as a cost per demand unit. For example, maintenance of parks would be expressed as a cost per acre of parks to maintain. For the City of Denton, we analyzed the fiscal impact of the proposed Hunter/Cole Ranch development based on current citywide levels of service and any known infrastructure or service needs. GENERAL APPROACH The Fiscal Impact Analysis for the City of Denton incorporates the case study-marginal cost approach wherever possible. The case study-marginal methodology is the most realistic method for evaluating fiscal impacts. Unique demographic or other characteristics of new development are accounted for, as well as the extent to which a particular infrastructure or service operates under, over, or close to capacity. Available facility capacity determines the need for additional capital facilities and associated operating costs. Certain costs are impacted by general growth, regardless of location; these are projected using a marginal/average cost hybrid methodology that incorporates capacity and thresholds for staffing, but projects non-salary operating costs using an average cost approach. Some costs and revenues are not expected to be impacted by growth and are therefore considered fixed in this analysis. The levels of service and cost assumptions used in this analysis are based on TischlerBise’s discussions with City of Denton staff, input from the development team, and a detailed analysis of the City of Denton FY18-19 Adopted Budget and Capital Improvements Programs; City of Denton’s Roadway Impact Fee Study; the 2019 Water and Wastewater Impact Fee Study, the FY2018 Comprehensive Annual Financial Report, the Parks and Trails Master Plan, staff reports, other relevant financial and planning documents. Additionally, our national experience conducting over 800 fiscal impact analyses was beneficial. 115 Fiscal Impact Analysis Report The City of Denton, TX 19 Our analysis also incorporated known roadway, water and wastewater utility, and public works infrastructure needs, as identified in HDR’s Travel Demand Report (Dec 10, 2019), FNI’s Hunter-Cole Water/Wastewater Impact Analysis (Feb 7, 2020), and Quorum Architects City Facility Needs Assessment Report (Jan 16, 2020). We also completed a thorough evaluation of the draft Operating Agreements between the City and the MMD, convened with City staff, and conducted background research regarding legally reimbursable costs to apportion expenses triggered by growth between the City of Denton and the MMD. The assumptions outlined in this report are utilized along with the growth projections to calculate the potential fiscal impacts to the City of Denton of the Hunter/Cole Ranch Development over a 40-year time frame. Only citywide impacts are included in this report—for instance, onsite private amenities are excluded from the analysis. To summarize, our methodological approach included the following steps. 1.Existing demand base and cost and revenue factors such as current population, housing units, employment, and nonresidential square footage were established.3 2.Current Levels of Service were identified. 3.The growth scenario to be analyzed was defined. 4.General assumptions regarding the allocation of capital projects and maintenance responsibilities to the developer versus the City of Denton were established.4 5.The fiscal impact model was designed to account the assumptions established in Steps 1-4. The results presented in this report were calculated using a customized fiscal impact model designed specifically by TischlerBise for this assignment. 3 These are detailed in Appendix A. 4 Through the MMD structure, the development team will finance a portion of the infrastructure required to maintain current levels of service; the MMD will also be responsible for the operations and maintenance of some facilities that would otherwise be publicly owned and maintained. Likewise, certain infrastructure projects funded by Hunter/Cole MMD will, upon completion, transfer to the City of Denton; for instance, with the exception of private roads, the City will ultimately be responsible for roadway maintenance (excluding right-of-way landscaping) for the majority of MMD funded lane miles. 116 Fiscal Impact Analysis Report The City of Denton, TX 20 K EY A SSUMPTIONS FISCAL YEAR 2019 BUDGET The Fiscal Year 2019 Budget (Oct 1, 2018 – Sep 30, 2019) is used to represent a “snapshot” of the City’s current costs and levels of service. The “snapshot” approach does not attempt to speculate about how services or costs will change over time or whether current levels of service are sufficient or insufficient. Instead, it evaluates the cost implications to the City as it conducts business under the FY2019 budget. The following exceptions and assumptions should be noted: ▪Ad Valorem Property Tax Rate: Under advisement from City of Denton staff, the FY2020 tax rate of 0.590454 was utilized to project tax revenues. The General Fund portion is 0.385364, and the General Debt Service Obligation Fund portion is 0.20509. ▪Police Expenditures: Base year police expenditures were adjusted upwards from the FY2019 budget by 20 percent under direction from City staff. Since adopting the FY2019 budget the City of Denton has increased appropriations for the Police Department; per the City Finance Department, this increase in funding and police levels of service is a permanent shift in policy that reflects the City’ 5-year Strategic Plan. The upward adjustment to base year police expenditures therefore yields projections that more accurately reflect the costs associated with maintaining current levels of service under the proposed growth scenario. ▪Franchise Fees: The City collects franchise fees from utility funds—specifically, the Water Fund, Wastewater Fund, Solid Waste Fund, and Electric Fund—among other smaller funds such as gas and cable, in an amount equal to 5 percent of gross annual revenues. FY2019 was the third year of a 10-year policy to transfer all franchise fee revenue in excess of the FY2016 dollar amount to the Streets Improvement Fund, rather than directly to the General Fund. This analysis assumes that this policy remains intact throughout the study period. ▪Revenue Surpluses and Tax Rates: Positive fiscal impacts are represented as revenue surpluses; as a Fiscal Impact Study, this analysis holds all tax rates constant throughout the 40-year term. In reality, the City of Denton will budget based according to its priorities and policies, and surpluses could translate into a potential decrease in the applicable tax rate, whereas deficits may lead to an increase in that rate. 117 Fiscal Impact Analysis Report The City of Denton, TX 21 VARIABLE VERSUS FIXED COSTS AND REVENUES Costs and revenues that are directly attributable to Hunter/Cole Ranch are included in the fiscal analysis of the development. In all cases, some costs and revenues are not impacted by demographic changes and are assumed to be “fixed.” To determine fixed variables, TischlerBise interviewed City staff and reviewed the FY2019 budget and available supporting documentation. Examples of budget items modeled as “fixed,” or non-growth related, include: ▪Staffing for certain leadership positions; this varies by department, but in many cases, the position of Director is held fixed as the staffing structure does not require or support multiple department heads. ▪One-time costs for services unrelated to growth and development. ▪Revenue sources that are not growth-related. LEVELS OF SERVICE The cost projections are based on a “snapshot approach” in which it is assumed the current level of service, as funded in the City budget and as provided in current capital facilities, will continue through the 40-year analysis period. The 2019 existing demand base data was used to calculate unit costs and service level thresholds. Examples of demand base data include population, dwelling units, employment by industry, vehicle trips, etc. The “snapshot” approach does not attempt to speculate about how levels of service or cost factors will change over time. Instead, it evaluates the implications of development to the City as conducted under the FY2019 budget and informed by discussions with staff. INFLATION RATE The rate of inflation is assumed to be zero throughout the projection period, and cost and revenue projections are in constant 2019 dollars. This assumption is in accord with current budget data and avoids the difficulty of forecasting as well as interpreting results expressed in inflated dollars. In general, including inflation is complicated and unpredictable. This is particularly the case given that some costs, such as salaries, increase at different rates than other operating and capital costs such as contractual and building construction costs. These costs, in turn, almost always increase in variation to the appreciation of real estate. Using constant 2019 dollars reinforces the snapshot approach and avoids these problems. 118 Fiscal Impact Analysis Report The City of Denton, TX 22 ENTERPRISE FUNDS In practice, utility funds are self-sufficient; the City of Denton adjusts rates in order to cover the actual cost of service while also generating a Return on Investment (“ROI”) as identified from time to time in targeted municipal policies. The City of Denton is in the process of conducting rate analyses in order to forecast the timing and extent to which utility rates may need to be adjusted to fund potential growth-related capacity expansion projects. The Utility Fund analysis included in this report presents the fiscal impact of th e development to the City’s utility funds, assuming no rate adjustments, per direction from the City’s Finance Department. Costs are therefore projected based solely on the increase in customers and usage for each utility; revenues are projected based on the current cost of water, wastewater, solid waste, and electric service per the appropriate demand factor (e.g. water produced). NON-FISCAL EVALUATIONS It should be noted that while a Fiscal Impact Analysis is an important consideration in planning decisions, it is only one of several issues that should be considered. Environmental and social issues, for example, should also be considered when making planning and policy decisions. The above notwithstanding, this analysis will enable interested parties to understand the fiscal implications of development in the Hunter/Cole Ranch MMD. 119 Fiscal Impact Analysis Report The City of Denton, TX 23 D EVELOPMENT P ROGRAM The Hunter Ranch and Cole Ranch developments propose a mix of uses and industries across 6,340 acres of undeveloped or “raw” land. The City of Denton provided us with the developers’ baseline build-out scenario for residential units and commercial and industrial acreage. We derived estimates for the other key indicators from federal and local governmental sources. Figure 13 below presents the development scenario for Hunter/Cole Ranch in cumulative 10-year increments. Figure 13. Development Scenario Development Scenario Summary Cumulative Growth: 2019 - 2059, 10 year increments City of Denton, Texas - Hunter and Cole Ranch FIA EXISTING Year 10 Year 20 Year 30 Year 40 2019 2029 2039 2049 2059 POPULATION 134,460 11,600 40,800 55,805 55,805 % growth from existing 9%30%42%42% RESIDENITAL LOTS NA 3,600 9,600 12,400 12,400 SINGLE FAMILY 30,450 3,000 9,000 12,400 12,400 MULTIFAMILY 19,190 800 4,800 6,450 6,450 TOTAL UNITS 49,640 3,800 13,800 18,850 18,850 % growth from existing 7.7% 27.8% 38.0% 38.0% NONRESIDENITAL ACRES NA 71 486 741 741 RETAIL SF 5,470,258 137,214 1,692,306 2,957,724 2,957,724 OFFICE SF 6,429,066 137,214 1,692,306 2,957,724 2,957,724 INDUSTRIAL SF 13,619,179 585,446 2,536,934 3,122,381 3,122,381 INSTIT SF 4,529,955 0 0 0 0 TOTAL NR DEVELOPMENT (SF)30,048,460 859,874 5,921,546 9,037,829 9,037,829 % growth from existing 3%20%30%30% RETAIL JOBS 12,818 203 2,498 4,365 4,365 OFFICE JOBS 19,782 203 2,498 4,365 4,365 INDUSTRIAL JOBS 15,772 864 3,744 4,608 4,608 TOTAL JOBS 48,372 1,269 8,739 13,338 13,338 % growth from existing 2.6% 18.1% 27.6% 27.6% Source: City of Denton; U.S. Census American Community Survey, 2015 - 2017 estimates; ITE 10th Edition (2017). 120 Fiscal Impact Analysis Report The City of Denton, TX 24 The development team’s concept plan categorizes nonresidential acreage as either commercial or industrial. We applied the following assumptions to the Developers’ acreage projections in order to estimate the Retail square footage, Office square footage and Industrial square footage displayed in Figure 13. •To extrapolate square footage from acreage projections, we assumed an average floor-to-area ratio (“FAR”) of 0.28, per input from the development team and based on permitted FAR per zoning.5 •Commercial development is allocated equally between Retail space and Office space. This conforms with the development team’s prototype projects, including the Alliance Town Center, and generally aligns with the land use assumptions utilized in the Travel Demand Model Report and the Hunter/Cole Water and Wastewater Impact studies completed concurrently with this FIA as a part of the City’s decision-making process.6 5 This assumption generally conforms to existing land use patterns while accounting for higher intensity development permitted under the December 2019 zoning amendment for the Hunter/Cole Ranch Master Planned Community. It also aligns with the December 10th, 2019 Draft of the Transportation Demand Management’s average estimated FAR. 6 The development team and City staff instructed TischlerBise to refer to Alliance Town Center as a comparable development in terms of land-use mix assumptions. 121 Fiscal Impact Analysis Report The City of Denton, TX 25 III. FISCAL IMPACT ANALYSIS RESULTS The fiscal impacts to the City of Denton of Hunter/Cole Ranch Municipal Management District are analyzed and discussed in this section of the report. Fiscal impact results are presented in several ways: ▪Annual net fiscal results that include all revenues and costs in the funds analyzed (General Fund, Debt Service Obligation Fund, the Roadway Fee Impact Fund, and the Street Improvement Fund) are shown—non-utility operating and capital impacts from growth are combined. ▪Annual net fiscal results are then shown for operating and capital separately and compared to revenues. ▪Cumulative net fiscal results are shown next (for non-utility funds). ▪Cumulative net results convey the projected grand total revenues minus grand total expenditures over the 40-year period to determine the overall net surplus or deficit. ▪Utility Fund net fiscal results are show separately from other operating and capital expenditures. ▪The cumulative net results for each utility fund are depicted. ▪Annual net fiscal results, shown separately for operating and capital, compared to revenues are presented. 122 Fiscal Impact Analysis Report The City of Denton, TX 26 A NNUAL N ET F ISCAL I MPACTS The chart below shows the annual net fiscal results to the City over each year of the 40-year development period; the General Fund, Debt Service Obligation Fund, the Roadway Fee Impact Fund, and the Street Improvement Fund were analyzed. By showing the annual results, the magnitude, rate of change, and timeline of deficits and revenues can be observed over time. The “bumpy” nature of the annual results during particular years represents an initial capital impact being “front-loaded” and/or major operating costs being incurred (further explained in the Capital Expenditure Methodologies section of the full report). Net fiscal results shown below are revenues minus costs in each year, including operating and capital costs for all services modeled. Data points above the $0 line represent annual surpluses; points below the $0 line represent annual deficits. Surpluses in any one year are not carried forward to the next year. The scale for the chart is in thousands ($1,000s). Figure 14. Annual Net Fiscal Impact 2019-2059 123 Fiscal Impact Analysis Report The City of Denton, TX 27 Development of Hunter/Cole Ranch begins with lot delivery in 2023 as depicted in Figure 14. The first six years of growth are expected to generate year-over-year growth in net surpluses to the City. Project build-out during this time period results in a relatively steady uptick in p roperty tax revenue. Equipment and personnel, particularly within Public Safety, Public Works (i.e., Fleet Maintenance & Fuel and Facilities Management) and the Street Department, are also added during the first six years of growth. The downward “ticks” in net fiscal impact observed in 2027, 2031, and 2035 are the result of growth triggering the need for several significant capital investments simultaneously: ▪ In 2031, growth exceeds available capacity for park facilities and triggers the development of one of two planned City Parks. ▪ Between 2027-2031 over 500,000 square feet of the Service Station Annex7 are developed as a result of the Hunter/Cole Ranch development to serve Fleet Services, Street Improvements Fund, Solid Waste, and Facilities Management. ▪ The second of the two planned 50-acre City Parks is also triggered in 2035. Annual net results are further analyzed in the figure below. Although the City will see an increase in both operating and capital costs as a result of growth, our analysis shows that total revenues to the City exceed total costs projected to be incurred to the City. 7 Expansions of public works facilities will be required to provide space for public works employees and equipment as a result of the development; these were quantified by department in the Facilities Needs report dated December 10, 2019, completed by Quorum. In the FIA, 50 percent of the Service Station Annex capital and operating costs are attributable to the proposed development, per direction from City of Denton staff. 124 Fiscal Impact Analysis Report The City of Denton, TX 28 Figure 15. Annual Operating & Capital Expenditures Compared to Revenues As a development-finance tool, Municipal Management Districts allow private property owners to access low-interest financing for public infrastructure projects. The development team and the City of Denton have identified improvement projects required to serve the Hunter/Cole Ranch Master Planned Community that will be financed by the MMD or the developer. The table below inventories the infrastructure projects and other capital investments triggered by the proposed development of Hunter/Cole Ranch. Capital costs are categorized as either “City Funded” or “MMD/Developer Funded.” Only those projects required to maintain current levels of service are identified here—planned investments in private amenities for the exclusive use of Hunter/Cole Ranch residents are excluded from this analysis and from the list below. Non-utility capital projects and costs are allocated to the City of Denton and the MMD/Developer in the detailed capital project inventory depicted in the figure on the following page. The methodology underlying these projections and cost assumptions is discussed in detail in the Revenue and Expenditure Methodology Chapter of the report. 125 Fiscal Impact Analysis Report The City of Denton, TX 29 Figure 16. Capital Facilities and Expenditure Inventory (General, Special, and Debt Service Funds) Non-Utility Capital Facilities and Allocation of Costs ($1,000s) Fiscal Impact Analysis - Denton, TX DEPARTMENT - Facility Quantity Total Square Footage Total City of Denton MMD / Developer Parks and Recreation* Recreation Center Building 1 70,000 $11,900 $11,900 $0 Hunter Ranch City Park (54 acres)1 2,352,240 $12,493 $8,534 $3,959 Cole Ranch City Park (50 acres)1 2,178,000 $11,861 $7,902 $3,959 Neighborhood Parks (5 acres ea)4 653,400 $4,214 $0 $4,214 Pocket Parks / Dog Parks (2 acres ea)30 2,613,600 $3,000 $0 $3,000 Regional Trails 23 miles 1,212,275 $11,537 $0 $11,537 Community Trails 35 miles 1,112,958 $13,860 $0 $13,860 Parks & Rec Department - Vehicles 24 -$864 $864 $0 Parks & Rec Department - Service Station Annex 1 10,684 $1,537 $1,537 $41 Parks & Rec Department - Parking 1 10,667 $480 $480 $41 Facilities - Service Station Annex 1 45,652 $8,394 $8,394 $176 Facilities - Vehicles and Equipment 24 -$523 $523 $0 Fleet - Service Station Annex 1 186,474 $13,910 $13,193 $718 Fleet - Vehicles and Equipment 150 -$2,700 $2,700 $0 General Government - Administrative Space -67,913 $11,142 $11,142 $0 General Government - Vehicles 38 -$1,140 $1,140 $0 On-Site and Regional Roadway Projects4 --$241,157 $0 $241,157 Systemwide Improvements5 --$40,116 $40,116 $0 Streets - Vehicles 53 -$3,028 $3,028 $0 Streets - Service Station -61,765 $4,561 $4,324 $238 Lakes / Dams/ Spillways etc. TBD $37,800 $0 $37,800 Police - Substation 20,630 -$5,000 $0 $5,000 Police - Patrol Vehicles 109 -$4,711 $4,711 $0 Fire - Fire Substation*^^2 15,721 $9,670 $4,670 $5,000 Fire - Fire Engines / Ladder Trucks 8 -$6,975 $6,975 $0 Fire - Vehicles 32 -$7,360 $7,360 $0 Library^1 21,516 $4,564 $4,564 $0 345 vehicles / 24 lane miles TOTAL: $500,026 $168,866 $331,593 ^ Library cost estimate includes opening day collection materials. *Developer contribution towards City Parks of $3,950,000 provided by City of Denton 01/16/2020 General Notes: [1] Cost estimates represent the initial purchase and, for vehicles and equipment, replacement costs. [2] Debt financing expenses are not included. [3] 50 percent of Service Station Annex costs identified in Quorum report are attributable to Hunter/Cole Ranch. [4] Costs reflect the specific project cost estimates identified in February 12, 2020 version of Cole and Hunter Ranch Developments Travel Demand Model Report submitted by HDR Engineering, Inc. ^^ Fire Substation is the second of two substations triggered by the development; the first will be funded by the developer. Fleet & Facilities Management General Government Library Police Transportation Fire and EMS [5] Costs reflect projected growth in system-level transportation demand over the analysis' study period. Capital Costs ($1,000s) 126 Fiscal Impact Analysis Report The City of Denton, TX 30 CUMULATIVE NET FISCAL IMPACTS Cumulative net fiscal impact results convey the projected grand total revenues minus grand total expenditures over the 40-year period from future growth/development. Figure 17 below shows the cumulative fiscal impacts over the 40-year study period for all major growth-related funds. Figure 17. Summary of 40-Year Cumulative Fiscal Impacts to City of Denton The development yields net positive fiscal impacts for both the General Fund and Debt Service Fund (i.e., operating and capital expenditures); and the Street Improvement Fund. The Roadway Impact Fund is projected to incur a $2.65 million cumulative net deficit, which is the equivalent of $66,206 per year over the 40-year study timeframe.8 Cumulative impacts are depicted graphically for the General Fund and Debt Service Fund in Figure 18 below. 8 It should be noted that this analysis projects roadway impact fee revenues based on the conceptual phase development program and impact fee rates from the City of Denton’s 2015 Roadway Impact Fee Study. In practice, roadway impact fee rates are likely to be adjusted periodically to reflect changes to growth and the Roadway Capital Improvement Plan.8 The MMD will also contribute to revenue from a Contract Tax as outlined in the Operating Agreement to assist in funding impact fee eligible projects, per conversations with City staff. 127 Fiscal Impact Analysis Report The City of Denton, TX 31 Figure 18. 40-Year Cumulative Revenues and Expenditures: General and Debt Service Funds 128 Fiscal Impact Analysis Report The City of Denton, TX 32 UTILITY FUNDS Utility Funds were included in our analysis at the request of the City of Denton to evaluate whether the income generated from new customers and users would cover the costs required to provide service to the MMD while maintaining existing levels of service throughout the city. CUMULATIVE FISCAL IMPACT FOR UTILITY FUNDS As depicted in Figure 19 below, the net fiscal impact of the Hunter/Cole Ranch development is positive across all utility funds. Capital Expenditures include utility infrastructure projects, as well as capital equipment and vehicles. A detailed inventory of capital expenditures is presented in Figure 20. Figure 19. Cumulative 40-Year Net Fiscal Impact by Utility Fund (1,000s) 40-Year Net Cumulative Impact - Utilty Funds City of Denton - Fiscal Impact Analysis Electric Fund* Operating Revenues $966,695 Operating Expenditures $565,517 Capital Expenditures $115,077 NET CUMULATIVE IMPACT $286,102 Water Fund Operating Revenues $389,015 Impact Fee Revenues $153,035 Operating Expenditures $238,853 Capital Expenditures $241,963 NET CUMULATIVE IMPACT $61,235 Wastewater Fund Operating Revenues $279,736 Impact Fee Revenues $144,469 Operating Expenditures $196,973 Capital Expenditures $226,743 NET CUMULATIVE IMPACT $490 Solid Waste Revenues $304,055 Operating Expenditures $246,914 Capital Expenditures $36,378 NET CUMULATIVE IMPACT $20,763 *Electric Fund projections provided by City of Denton. 129 Fiscal Impact Analysis Report The City of Denton, TX 33 The table below inventories the utility infrastructure projects and other capital investments triggered by Hunter/Cole Ranch. Capital costs are categorized as either “City Funded” or “MMD/Developer Funded.” Note that replacement facilities and major maintenance are not included in the capital costs presented below. Facilities needed to serve new growth are reflected. For capital improvements that are purchased—vehicles, equipment, etc., the model and fiscal results include both the initial purchase cost and the cost to replace the item after it reaches its useful life. 130 Fiscal Impact Analysis Report The City of Denton, TX 34 Figure 20. Capital Facilities and Expenditure Inventory (Utility Funds) Utility Funds - Capital Facilities and Expense Allocation ($1,000s) Fiscal Impact Analysis - Denton, TX FUND - Facility Quantity or Square Footage Total City of Denton MMD / Developer Water Fund CIP Projects per FNI Report**19 projects $224,641 $153,035 $71,607 Service Station Annex 17,902 $1,969 $1,900 $69 Vehicles 24 $987 $987 $0 Wastewater Fund CIP Projects per FNI Report***15 projects $232,016 $144,469 $87,547 Service Station Annex 11,264 $1,282 $1,239 $43 Vehicles 21 $924 $924 $0 Solid Waste Fund Materials Recovery Facility 37,500 $3,144 $3,000 $144 Transfer Station 25,000 $6,975 $6,075 $900 Bulk Drop Off Facilities & Weigh Station 4,159 $1,788 $1,772 $16 Administrative Space 2,900 $649 $638 $11 Solid Waste Haulers / Commercial Trucks 38 $5,510 $5,510 $0 Roadway to Transfer Station 25,725 $660 $561 $99 Vehicle Maneuvering 65,000 $705 $455 $250 Electric Fund* Substation 1 $18,077 $18,077 $0 Distribution Lines (Cost to Serve)NA*$38,147 $38,147 $0 Main Feeder Circuits NA*$41,357 $41,357 $0 Vehicles 37 $2,250 $2,250 $0 Lighting NA*$12,177 $0 $12,177 Administrative / Shop Space 40,960 $10,350 $10,192 $158 TOTAL: $603,611 $430,589 $173,022 Source: Quorum; TischlerBise; City of Denton; FNI *Cost estimates for total distribution lines and feeder circuits provided by DME. General Notes: [1] Cost estimates represent the initial purchase and, for vehicles and equipment, replacement costs. [2] Debt financing expenses are not included. [3] 50 percent of Service Station Annex square footage identified in Quorum Analysis (Jan 16, 2020) is attributable to Hunter/Cole Ranch. [4] Per the Hunter-Cole Development Analysis submitted by FNI on Feb 7, 2020, total CIP Projects for Water and Wastewater Funds equal $328,612,700 and $290,441,800 respectively (land excluded). Of these costs, $224,341,400 and $231,836,500, respectively, are a result of projected demand from the Hunter/Cole Ranch developments. The remainder is attributable to projected use by the entire system. **Developer contribution of 10 acres of land for Water Booster Pump Station, valued at $30,0000 per acre per draft Project Agreement included in addition to CIP Costs identified in FNI's Hunter-Cole Development Analysis (Feb 7, 2020) per direction from City of Denton staff. ***Includes Developer contribution of 6 acres of land for Hickory Creek Wastewater Lift Station, valued at $30,000 per acre per draft Project Agreement in addition to CIP Costs identified in FNI's Hunter-Cole Development Analysis (Feb 7, 2020) per direction from City of Denton staff. Capital Costs ($1,000s) 131 Fiscal Impact Analysis Report The City of Denton, TX 35 The methodology and approach utilized to arrive at the capital cost projections is detailed in the Revenue and Expenditure Detail chapter of this report. NET ANNUAL FISCAL IMPACT FOR UTILITY FUNDS The annual net fiscal impact on the utility funds is presented in the figures that follow. Water Fund Water Fund revenues are expected to exceed operating expenditures throughout the study-period. Minor capital deficits in the amounts of approximately $172,000 and $345,000 are incurred in 2022 and 2023, respectively, as design and predevelopment expenditures for the first of three expansions to the Lake Ray Roberts Water Treatment Plant are incurred prior to the delivery of revenue- generating residential and nonresidential development. Revenues are then projected to exceed capital expenditures until 2043, as depicted in Figure 21 below. Note that the spikes depicted in Water Fund revenues are the result of impact fees. This analysis assumes that the MMD will also contribute revenue from a Contract Tax as outlined in the Operating Agreement to assist in funding impact fee eligible Water infrastructure projects. Figure 21. Water Fund Operating & Capital Expenses Compared to Revenues 132 Fiscal Impact Analysis Report The City of Denton, TX 36 The capital expenditures included in this analysis are directly attributable to demand from Hunter Cole.9 These projects are debt financed and occur between 2024 and 2039. New development, and thus impact fee revenue begins to peak around 2039, and from 2045-2054 annual deficits are incurred as impact fee revenue declines and then stops while continued debt payments for the major infrastructure projects projected in the FNI Report and developed from 2024-2039 continue. The impact fee revenue surplus accrued during the first half of the study period is sufficient to compensate for the capital deficit projected in the second half of the development period. A detailed breakdown of year over year water revenues and expenditures resulting from growth is included in Appendix B. Wastewater Fund Wastewater Fund revenues are expected to generally meet or exceed operating and capital expenditures over the course of the development, as depicted in Figure 22 below. Figure 22. Wastewater Fund Operating & Capital Expenses Compared to Revenues 9 The February 7th, 2020 FNI report calculated the share of project costs attributable to Hunter Cole (based on projected Hunter/Cole demand relative to demand from the broader service area); these cost estimates were used for the fiscal impact analysis. 133 Fiscal Impact Analysis Report The City of Denton, TX 37 The spikes in the figure above represent impact fee payments. Again, new development in the MMD is assumed to be completed by 2049, at which point impact fee revenues cease. Although the timing of impact fee payments does not directly correspond with capital costs, revenues accrued in years where impact fees exceed capital expenses cover deficits in other years. Note that per discussions with City of Denton staff, impact-fee eligible Wastewater infrastructure projects will also receive funding from MMD Contract Tax revenue as outlined in the Operating Agreement. The capital expenditures included in this analysis represent all planned Wastewater Fund capital infrastructure projects required to serve Hunter/Cole Ranch, as well as City facilities needed to house staff and equipment. Solid Waste Fund As depicted in the figure below Hunter/Cole Ranch is projected to have a relatively neutral net annual fiscal impact to the City of Denton’s Solid Waste Fund. Deficits occur, however, from 2025-2037. This analysis assumed that construction of the planned Material Recovery Facility and Transfer Station will occur in 2027 (included in the Service Station Annex). Because the facility is debt financed, its costs are spread out over time, but they are nevertheless projected to result in deficits for the first ten years following construction. The other capital cost contributing to these deficits are investments in Solid Waste vehicles including haulers and commercial trucks, which are needed to serve new customers. Figure 23. Solid Waste Fund Operating & Capital Expenses Compared to Revenues 134 Fiscal Impact Analysis Report The City of Denton, TX 38 Electric Fund Electric revenues and expenses associated with Hunter Cole were provided by the City of Denton and are illustrated in terms of revenues relative to capital and operating expenditures in the figure below. Revenues are projected to exceed expenditures for each year of the study period. Figure 24. Electric Fund Operating & Capital Expenses Compared to Revenue 135 Fiscal Impact Analysis Report The City of Denton, TX 39 K EY F INDINGS & C ONCLUSIONS The following conclusions can be drawn from the FIA results presented in this report: GENERAL , DEBT SERVICE, AND SPECIAL REVENUE FUNDS • The proposed Hunter/Cole Ranch development is projected to have a net cumulative positive fiscal impact on the City over the 40-year study period. The net positive impacts are driven primarily by sales and property tax revenue from development. This allows for the City of Denton to benefit fiscally from the development proposed. • It should be noted that, on average, the resulting annual net positive impact to the General Fund and Debt Service Fund is approximately $7.0 million, which reflects 5.4 percent of the City of Denton’s Fiscal Year 2019 operating budget. • The Street Improvement Fund is funded through franchise fees from utility fund revenue surpluses (as well as non-growth-related revenues). The Street Improvement Fund’s projected cumulative surplus is partially attributable to the fact that utility fund revenues will increase as a result of Hunter/Cole Ranch. Another reason for the surplus is that although the additional roadways added to the City of Denton’s lane mile inventory increase Street Improvement Fund operating and capital outlay costs, major capital expenditures are generally accounted for in other funds. Per conversations with City staff, this analysis assumes that roadway construction is either funded by future development through the Roadway Impact Fee Fund or by the MMD through adjustments to the District tax rate as needed. Public works equipment and the Service Station Annex are funded out of the General Debt Service Fund. o Note that the increases in franchise fee revenue could be allocated to another fund at the City’s discretion. As discussed previously, this analysis assumed that the 10-year policy of transferring excess franchise fee revenue to the Street Improvement Fund would continue throughout the 40-year study period. • Demand for fire services will trigger the need to expand capital facilities during the second half of the development’s growth period, beyond the developers’ initial land and financial contributions as identified in the draft Operating Agreement. A new fire substation is triggered in 2028—to be funded up to $5 million from the developer—and a second fire substation is triggered in 2039, which is assumed as a City cost. 136 Fiscal Impact Analysis Report The City of Denton, TX 40 •Although the projected growth in revenue is relatively significant, the City should continue to plan and be prepared to expand both its facilities and operational capacity—the Hunter/Cole Ranch development is projected to be fiscally balanced in the sense that it is projected to produce enough revenue to cover its costs, but it will not be self-contained. Growth in population, vehicle trips, and police and fire calls, for instance, is projected to increase average annual operating expenditures to the City by approximately $21 million per year. •Overall, Hunter/Cole Ranch is projected to generate sufficient revenue to cover both the capital and operating costs associated with meeting the additional demand it will place on City services. UTILITY FUNDS •Water and Wastewater Fund revenues cover operating expenditures throughout the 40-year study period. Water and Wastewater impact fee revenue is sufficient to cover the development’s share of water and wastewater capital costs. •Impact fee revenue is a function of the City of Denton’s current fee schedule and projected development—to the extent that development does not keep pace with projections, impact fee revenue may fall short of projections. Because major Water and Wastewater infrastructure must be constructed prior to full build-out in order to serve new residents and businesses, the City may incur capital deficits for these funds if development does not proceed at the rate or intensity presented in the baseline scenario. To mitigate this risk, the MMD will adjust District tax rates as needed to fund the difference between impact fee revenue and the Water/Wastewater Capital Improvement Plan project costs attributable to the development. •This report assumed that the Solid Waste Service Station Annex including the Materials Recovery Facility and Transfer Station would be “front-loaded” and completed in one phase in 2027. The result is six years of moderate fiscal deficits. To the extent possible, direct financing of recurring capital costs such as solid waste haulers, would improve the fiscal results for the Solid Waste fund. New solid waste customers are projected to trigger the acquisition of 37 solid waste vehicles over the 40-year time frame; with an estimated average useful life of 10 years, this results in a total of 108 solid waste vehicles, including replacement vehicles. •Given the current level of detail available regarding the number and service requirements of commercial Solid Waste customers, however, additional analysis of the net fiscal impact of Hunter/Cole Ranch on the Solid Waste Fund should be completed as property-specific details of the development program are established. •Overall, the cumulative fiscal impact on all utility funds is projected to be positive. 137 Fiscal Impact Analysis Report The City of Denton, TX 41 OVERALL RESULTS Per direction from City of Denton staff, the figure below compares annual revenues to annual operating and capital expenditures for the funds analyzed, including utility funds. Note that under current City policy, utility fund revenues are restricted use and cannot be used toward any other fund’s activities. Figure 25. Operating and Capital Expenditures Compared to Revenues for Funds Analyzed Combined 138 Fiscal Impact Analysis Report The City of Denton, TX 42 I V.REVENUE AND E XPENDITURE DETAIL R EVENUE M ETHODOLOGIES This chapter provides detail on projection methodologies for revenue included in the analysis. Growth-related revenues are modeled in this analysis in the following funds: ▪General Fund ▪General Debt Service Fund ▪Special Revenue Funds: •Street Improvement Fund •Roadway Impact Fee Fund ▪Utility Funds •Water Fund •Wastewater Fund •Electric Fund •Solid Waste Fund Other funds that are not included are Internal Service Funds or considered fixed (unaffected by growth). GENERAL FUND REVENUES A snapshot of the City General Fund from the model is shown below by specific category and line item. The table shows the specific revenue category and source, base year (FY2019) budget amount, projection methodology, and the level of service (LOS) standard, or dollar per demand unit. For instance, for those categories projected based on “POPULATION,” the current budget amount is divided by the estimated population for base year 2019. 139 Fiscal Impact Analysis Report The City of Denton, TX 43 Figure 26. General Fund Revenues LOS Std Revenue Revenue Base Year Project Using $ per Category Name Budget Amount Which Demand Base? Demand Unit Ad Valorem Taxes Current Year Ad Valorem $45,674,373 CUM AV $0.38536 Delinquent Ad Valorem $296,883 FIXED $0.00 Current Year - Penalties and Interest $161,424 FIXED $0.00 Prior Year - Penalties and Interest $96,290 FIXED $0.00 Rendition Penalties $31,013 FIXED $0.00 Sales Tax Sales Tax $41,425,582 DIRECT ENTRY $0.00 Franchise Agreements DMU Electric $2,162,610 FIXED $0.00 DMU Water $463,295 FIXED $0.00 DMU Wastewater $307,640 FIXED $0.00 Solid Waste Fund $413,356 FIXED $0.00 Gas $298,753 FIXED $0.00 Private Electric $105,949 FIXED $0.00 Cable $410,188 FIXED $0.00 Telephone $201,058 FIXED $0.00 Other Taxes Mixed Beverage Tax $484,924 POP AND JOBS $2.47 Bingo Tax $21,012 POP AND JOBS $0.11 Service Fees Community Building Rentals $240,705 FIXED $0.00 Ambulance Service Fees $3,700,000 POP AND JOBS $18.85 Hazardous Materials Billing $6,000 FIXED $0.00 Fire Inspections $200,000 FIXED $0.00 Restaurant Inspections $288,400 FIXED $0.00 Swimming Pool Inspections $32,571 TOTAL UNITS $0.66 Reinspection Fees $47,363 TOTAL UNITS $0.95 Electrical Inspections $57,000 TOTAL UNITS $1.15 Plumbing Inspections $163,838 TOTAL UNITS $3.30 Gas Well Inspections $329,665 FIXED $0.00 Library Non-Resident Fees $54,000 FIXED $0.00 Parks Identification Card Fees $37,000 POPULATION $0.28 Athletic Program Fees $54,000 POPULATION $0.40 Special Events - Parks $8,300 FIXED $0.00 Natatorium Fees $440,312 POPULATION $3.27 Water Works Parks Fees $1,124,640 POPULATION $8.36 Swimming Pool $70,034 POPULATION $0.52 Cemetery Fees $29,000 FIXED $0.00 Development Fees $120,408 POP AND JOBS $0.61 Police Academy Revenue $75,000 FIXED $0.00 Sale of Documents $275,400 FIXED $0.00 Plan Review Fees $600,000 POP AND JOBS $3.06 Parking Meter Receipts $14,171 VEHICLE TRIPS $0.04 Development Postage $13,484 FIXED $0.00 Traffic/Police Reports $38,000 POP AND JOBS $0.19 Copy Charges $94,760 FIXED $0.00 140 Fiscal Impact Analysis Report The City of Denton, TX 44 Fines and Fees Warrant Fees $130,000 FIXED $0.00 Juvenile Case Manager $100,000 FIXED $0.00 Library Fines & Fees $150,000 POPULATION $1.12 Animal Services Fees $199,000 POPULATION $1.48 Animal Services Fines $5,000 FIXED $0.00 Auto Pound Fees $36,000 VEHICLE TRIPS $0.09 Mowing Recovery Fees $10,000 FIXED $0.00 Police Escort & Guard Fees $30,000 FIXED $0.00 Civil Fines $10,000 FIXED $0.00 Arrest Fees $100,000 TOTAL POLICE CALLS $1.18 Inspection Fines & Fees $7,000 FIXED $0.00 Fire Department Fees $6,000 TOTAL FIRE CALLS $0.40 School Crossing Fines $10,000 FIXED $0.00 Denton Municipal Fines $1,300,000 VEHICLE TRIPS $3.31 UNT Police Fines $140,000 FIXED $0.00 TWU Police Fines $22,000 FIXED $0.00 Parking Fines $260,000 VEHICLE TRIPS $0.66 Uniform Traffic Fees $43,000 VEHICLE TRIPS $0.11 False Alarm Fees $65,000 FIXED $0.00 Court Cost Service/Admin Fees $1,080,000 POP AND JOBS $5.50 Truancy Preventon Fees $20,000 FIXED $0.00 Licenses and Permits Food Handler Permits $500 FIXED $0.00 Zoning Permits $116,844 POP AND JOBS $0.60 Moving Permits $380 FIXED $0.00 Demolition Permits $6,500 FIXED $0.00 Pool, Spa, Hot Tub Permits $26,235 FIXED $0.00 Building Permits $3,377,335 POP AND JOBS $17.21 Electrical & Plumbing Licenses $0 POP AND JOBS $0.00 Curb Cut Permits $579 FIXED $0.00 Mobile Home Park Licenses $15,909 FIXED $0.00 Sign Permits $55,335 FIXED $0.00 Fence Permits $45,000 SINGLE FAMILY $1.48 Mechanical Permits $57,915 POP AND JOBS $0.30 Certificate of Occupancy Fees $80,000 POP AND JOBS $0.41 Variance Fees $500 FIXED $0.00 Landscape Fees $2,200 FIXED $0.00 Miscellaneous Permits $5,882 FIXED $0.00 Gas Well Permits $7,800 FIXED $0.00 Park Vendor Fees $23,000 FIXED $0.00 Beer & Wine Permits $36,110 RETAIL SF $0.01 CPR Training $5,500 FIXED $0.00 Misc. Revenues Misc. Revenues $2,286,026 FIXED $0.00 Return on Investment Return on Investment - Water $1,339,555 DIRECT ENTRY $0.00 Return on Investment - Wastewater $882,684 DIRECT ENTRY $0.00 Return on Investment - Electric $6,204,970 DIRECT ENTRY $0.00 Return on Investment - Airport $0 FIXED $0.00 Admin Transfer - Bond Sale $0 FIXED $0.00 Cost of Service Trans.Cost of Service Transfers $8,733,146 FIXED $0.00 Other Use of Fund Balance 1,483,131 FIXED $0.00 TOTAL $129,184,437 141 Fiscal Impact Analysis Report The City of Denton, TX 45 CUSTOMIZED/MARGINAL CALCULATIONS FOR GENERAL FUND The following details the custom methodology used for certain revenue streams. ▪City Sales Tax is attributed to nonresidential development. To determine the level of revenue for each nonresidential category, we annualized recent sales tax revenue data by industry provided by the City of Denton. Dividing sales tax revenue by the estimated floor area of current nonresidential development yields average Sales Tax Revenue per square foot for the land use types projected. Shown in Figure 27, retail development averages $4.26 in annual sales tax per square foot compared to $1.51 per square foot for office and $0.83 per square foot for industrial development. Figure 27. Sales Tax per Square Foot ▪Property Tax is projected based on the respective cumulative assessed values (see below for additional detail) of the property projected in the scenario. Cumulative assessed values are multiplied by the FY2020 General Fund tax rate of $0.38536 per $100 valuation. The FY2020 tax rate was utilized per direction from the City of Denton Finance Department. As shown, assessed values for residential real property and nonresidential real property were projected separately to allow for comparison by type of development. Figure 28. Assessed Value by Land Use Type LAND USE 2019 Sales Tax Revenue Square Feet Sales Tax Revenue / SF RETAIL $21,068,738 4,950,150 $4.26 OFFICE $6,781,393 4,493,658 $1.51 INDUSTRIAL $8,516,851 10,248,796 $0.83 Source: City of Denton Finance Department. Three Year Sales Tax by NAICS; Trip Generation, Institute of Transportation Engineers, 10th Edition (2017). LAND USE Assessed Value Residential*Unit Single Family $350,000 Single Family Lot $70,000 Multifamily $90,000 Nonresidential Square Foot Retail $120.17 Office $120.17 Industrial $70.71 Source: City of Denton *Single Family Values shown are prior to homestead exemption of $5,000. 142 Fiscal Impact Analysis Report The City of Denton, TX 46 ▪Return on Investment (“ROI”) revenues were calculated as 3.5 percent of gross revenues from the Water, Wastewater, and Electric Fund, per the City’s ROI policy and discussions with staff. ▪Licenses & Permits, Charges for Services, Fines & Fees: Based on discussions with City staff and an analysis of relevant financial documents, several line items’ revenues are likely to increase with growth in Population, Jobs, or Population and Jobs. Certain revenues associated with specific services such as Fire and Police are expected to increase based on Total Police Calls, Total Fire Calls, and Vehicle Trips. FIXED REVENUES ▪Franchise Fee revenues to the General Fund are fixed; growth in Franchise Fee is instead allocated to the Street Improvement Fund per the City of Denton’s current policy to transfer franchise fee revenue in excess of FY2016 dollar amounts to the Street Improvement Fund. ▪Cost of Service Transfer revenues are transfers from other funds to the General Fund for general government services; Utility Fund Costs of Service were first modeled on the expenditure side. Cost of Service revenues to the General Fund are set to equal those expenditures. Expenditure projection methodology including the approach to modeling Cost of Service revenues is detailed in the following sections of this chapter. ▪Miscellaneous revenues were conservatively assumed to be fixed per conversations with City staff. 143 Fiscal Impact Analysis Report The City of Denton, TX 47 GENERAL DEBT SERVICE FUND The General Debt Service Fund receives unrestricted revenue from Ad Valorem Property taxes; the FY2020 rate of 0.20509 per $100 of assessed value was used to project property tax revenues resulting from Hunter/Cole Ranch. “Transfers In” are fixed. These line items, seen below in Figure 29 reflect restricted revenue funds making debt service payments, which are accounted for within the capital expense analysis presented later in this chapter. Figure 29. General Debt Service Fund SPECIAL REVENUE FUNDS The fiscal impact analysis also includes revenues from Special Revenue Funds, capturing revenues that are anticipated to be generated from growth. STREET IMPROVEMENT FUND The Street Improvement Fund includes all Street Department activities; the Street Department is responsible for street maintenance and repair and is funded primarily through franchise fee revenues. The majority of these franchise fee revenues are paid by major utility funds. Franchise Fee revenue resulting from the Hunter/Cole Ranch development is calculated as 5 percent of projected Water, Wastewater, Electric, and Solid Waste revenue, per City policy. Other franchise fee revenue10 to the Street Improvement Fund is not expected to be affected by the proposed development. 10 Other franchise fees are paid from private electric, cable, telephone, and gas utility providers. LOS Std Revenue Revenue Base Year Project Using $ per Category Name Budget Amount Which Demand Base?Demand Unit General Debt Service Fund Current Year Ad Valorem $24,293,126 CUM AV $0.20509 Interest Income $200,000 FIXED $0.00 Transfer in - Drainage $0 FIXED $0.00 Transfer in - Solid Waste $8,995,034 FIXED $0.00 Transfer in - Fleet $245,027 FIXED $0.00 Transfer in - Street Improvements $129,250 FIXED $0.00 Transfer in - Materials Mgmt $0 FIXED $0.00 Transfer in - Communication $10,150 FIXED $0.00 Transfer in - Electric $36,314,570 FIXED $0.00 Transfer in - Water $12,700,195 FIXED $0.00 Transfer in - Wastewater $6,858,067 FIXED $0.00 Use of Reserves $533,272 FIXED $0.00 TOTAL $90,278,691 144 Fiscal Impact Analysis Report The City of Denton, TX 48 Figure 30. Street Improvement Fund ROADWAY IMPACT FEE FUND The Roadway Impact Fee Fund accounts for Roadway Impact Fees paid to the City of Denton by developers and homebuilders. Development within the Hunter/Cole Ranch MMD is projected to generate revenue to the Roadway Impact Fee Fund based on the impact fees currently in place per the 2015 Roadway Impact Fee Study. The majority of the development is located in Roadway Impact Fee Service Area A with the following impact fee rates, which are therefore applied to new development projected in the Hunter/Cole Ranch. The City is currently in the process of updating its Roadway Impact Fee Study and potentially adjusting its fee schedule, but per conversations with City staff, the 2015 fees were appropriate for use in this analysis. Note that the MMD will also contribute Contract Tax revenue per the Operating Agreement to assist with funding impact fee eligible roadway projects. Figure 31. Roadway Impact Fee Assumptions LOS Std Revenue Revenue Base Year Project Using $ per Category Name Budget Amount Which Demand Base? Demand Unit Street Improvement Fund Street Cut Reimbursements $364,140 FIXED $0.00 Bond Sale Savings $1,196,404 FIXED $0.00 Check^Misc. Income $10,000 FIXED $0.00 $6,701,633 Franchise Fee - DMU Electric $6,701,633 DIRECT ENTRY $0.00 $1,898,986 Franchise Fee - DMU Water $1,898,986 DIRECT ENTRY $0.00 $1,260,978 Franchise Fee - DMU Wastewater $1,260,978 DIRECT ENTRY $0.00 $1,755,737 Franchise Fee - Solid Waste Fund $1,755,737 DIRECT ENTRY $0.00 $298,753 Other Franchise Fees $1,902,577 FIXED $0.00 $105,949 TOTAL $15,090,455 Development Type Impact Fee (per Unit / 1,000 SF of Nonres. Floor Area) Single-Family Detached $2,000 Multifamily $1,251 Retail*$2,100 Office** $2,737 Industrial $588 *Impact Fee for Shopping Center, ITE Land Use Code 820. **Impact Fee for General Office Building, ITE Land Use Code 710. Source: City of Denton 2015 Roadway Impact Fee Study. Service Area A, Current Collection Rates. 145 Fiscal Impact Analysis Report The City of Denton, TX 49 UTILITY FUNDS The methodology used to project utility fund revenues is summarized for the Water, Wastewater, Solid Waste, and Electric Funds in this section of the report. Note that a customized methodology was used for all growth-related revenues, as indicated by “DIRECT ENTRY”. WATER AND WASTEWATER REVENUE PROJECTION ASSUMPTIONS A customized methodology was used to project operating and impact fee revenues for water and wastewater revenues, per the snapshot from the fiscal model below. Figure 32. Utility Fund Revenue Projection Methodology LOS Std Revenue Revenue Base Year Project Using $ per Category Name Budget Amount Which Demand Base? Demand Unit Water Fund Interest Operating $251,000 FIXED $0.00 Water Sales Residential $19,496,211 DIRECT ENTRY $0.00 Water Sales Commercial $16,841,145 DIRECT ENTRY $0.00 Water for Resale $1,168,296 FIXED $0.00 Other Water $767,349 FIXED $0.00 Cost of Service - GF $436,024 FIXED $0.00 Cost of Service - Electric $474,839 FIXED $0.00 $50,192,034 Cost of Service - Wastewater $447,929 FIXED $0.00 Cost of Service - Solid Waste $128,970 FIXED $0.00 Impact Fee Revenues $5,700,000 DIRECT ENTRY $0.00 Use of Reserves $4,480,271 FIXED $0.00 Wastewater Fund Interest Operating $208,000 FIXED $0.00 Wastewater Residential $10,657,173 DIRECT ENTRY $0.00 Wastewater Commercial $12,168,689 DIRECT ENTRY $0.00 Wastewater Effluent Irrigation $68,576 FIXED $0.00 Wastewater Wholesale $694,234 FIXED $0.00 Other Wastewater $1,674,678 FIXED $0.00 Drainage Fees $4,727,006 DIRECT ENTRY $0.00 Transfers In $551,795 FIXED $0.00 Impact Fee Revenues $2,000,000 DIRECT ENTRY $0.00 Use of Reserves $4,721,103 FIXED $0.00 146 Fiscal Impact Analysis Report The City of Denton, TX 50 Rate revenue and facility charge revenue were projected separately by land use. Per conversations with City staff, we utilized data from the January 2020 Hunter-Cole Development Analysis completed by Freese and Nichols (“the FNI report”) as well as current facility charges and rates to project revenue per residential unit and nonresidential acre.11 Figure 33. Water and Wastewater Billing Assumptions The average annual revenue per single family unit, multifamily unit, and nonresidential acre was multiplied by the projected residential and nonresidential growth on a cumulative annual basis to arrive at operating revenue projections. 11 Per the FNI report, single-family and multifamily units will require water production of 170 GPD per capita, with household sizes averaging 3.2 persons and 2.5 persons respectively. Nonresidential consumption is 120 GPD per employee, assuming 18 employees per acre. Monthly GPDs for each unit type are shown in the first row of the figure.. Per the FY2020 City of Denton Utility Rate Booklet, the Facility Charge for a Single Family Unit is $16.00 per month, and multifamily facility charges vary depending on the meter size. We thus applied the Single Family-to-Multifamily GPD ratio (16:13, or 79 percent), to the Single Family facility charge to estimate the average monthly multifamily facility charge. The same methodology was used to estimate the average nonresidential facility charge. The result of these calculations is average annual water revenue of $1,000, $841, and $4,276 per Single Family unit, Multifamily unit, and Nonresidential acre, respectively. Average annual wastewater revenue per unit and per acre was calculated utilizing the per capita consumption/production (measured in GPD) from the FNI Report, and the 2020 Booklet rates and formulas. The Drainage fees utilized are calculated on a per unit per acre basis for residential development and on a per acre basis for nonresidential development, assuming an average impervious surface area of 60 percent for all land uses, which is supported by the Master Planned Community’s zoning. Water & Wastewater Revenue - Billing & Consumption Assumptions by Land Use City of Denton, Texas - Hunter and Cole Ranch FIA SINGLE FAMILY (PER UNIT) MULTIFAMILY (PER UNIT) NONRESIDENITAL (PER ACRE) WATER Monthly GPD (1,000s)*16 13 66 Facility Charge**$16.00 $12.59 $64.00 Rate per 1,000 gallons**$4.15 $4.45 $4.45 AVERAGE ANNUAL REVENUE $1,010 $841 $4,276 WASTEWATER Facility Charge**$11.00 $26.50 $26.50 Rate per 1,000 gallons***$3.80 $4.85 $4.85 AVERAGE ANNUAL REVENUE $420 $406 $1,839 DRAINAGE FEE Monthly Fee Estimate****$12.00 $1.15 $27.62 AVERAGE ANNUAL REVENUE $144 $14 $331 * Derived from average GPD per City of Denton's Design Criteria and FNI Hunter Cole Development Analysis (Feb 7, 2020). ** City of Denton Utility Brochure and Rate Booklet (FY19/20) *** Billing based on FY2019 Rate Booklet formulas and average GPD per FNI Hunter Cole Development Analysis, (Feb 7, 2020). **** Assumes 24 multifamily dwelling units per acre per HDR's TDM Report Feb 12, 2020). 147 Fiscal Impact Analysis Report The City of Denton, TX 51 Impact Fee Revenue Projections The following impact fee schedule, based on the City of Denton’s 2018 Water and Wastewater Impact Fee Study, was utilized to project Water and Wastewater impact fee revenue attributable to Hunter/Cole Ranch. See the footnote in Figure 34 for detail regarding how the multifamily fee per unit and nonresidential fee per acre were calculated. Figure 34. Water and Wastewater Impact Fee Assumptions By multiplying the fee amounts depicted in Figure 34 by projected growth in residential and nonresidential development, annual water and wastewater impact fee revenue was calculated for each year of the study period. Note that the MMD will contribute revenue from a Contract Tax, as outlined in the Operating Agreement, to help finance impact fee eligible Water and Wastewater capital projects. FUND Single Family (SFE)Multifamily (Unit)*Nonresidential (Acre)** Water $7,638 $6,011 $26,383 Wastewater $4,716 $3,712 $83,739 *Applies 73% W/WW Consuption/Production Rate to SFE Impact Fees. City of Denton - Fiscal Impact Analysis **Calculated by subtracting the total estimated SFE and Multifamily Water/Wastewater from the Impact Fee Revenue projected in the FNI Report, and dividing the result by the total nonresidential acreage projected. Impact Fee Assumptions 148 Fiscal Impact Analysis Report The City of Denton, TX 52 ELECTRIC FUND The Electric Fund revenue assumptions depicted in Figure 35 were provided by the City of Denton. The per unit and per acre annual electric revenues were applied to the development program to project rate revenues. This FIA utilized the City of Denton’s estimated annual lighting revenue per year; the City’s revenue assumptions for lighting are shown in the figure below on a per lot and per mile basis. Figure 35. Utility Fund Revenue Projection Methodology SOLID WASTE FUND Solid Waste Fund revenue was projected by multiplying the annualized FY2020 rate for Single Family refuse and recycling collection (standard cart size) to the Single Family units projected under the development plan on a cumulative annual basis. Rates were confirmed with City of Denton staff. Nonresidential rates were projected using nonresidential square footage [“TOTAL NR SF”] as the demand base, since nonresidential rates vary depending on characteristics on nonresidential properties that are unknown at this conceptual phase of the development program. Figure 36. Solid Waste Fund Revenue Projection Methodology Land Use Category Per Unit / Per Acre Annual Revenue Multi Family Annual Revenue / Unit 775kWH $1,024 Single Family Annual Revenue / Unit /1875 kWH $2,091 Commercial Annual Revenue / Acres $46,395 Industrial Annual Revenue / Acres $26,182 Lighting Category Per Lot / Per Mile Residential Lighting 6.6 Lots /100W $129 Arterial Lighting 250W 21.12 lights per mile $226 Source: City of Denton (DME) - Dec 12, 2019. LOS Std Revenue Revenue Base Year Project Using $ per Category Name Budget Amount Which Demand Base? Demand Unit Solid Waste Fund Refuse & Recycling Fees - Residential $11,125,873 SINGLE FAMILY $256.92 Refuse Fees - Commercial $14,533,461 TOTAL NR SF $0.48 Commercial Recycling $1,505,187 TOTAL NR SF $0.05 $40,208,780 Landfill Gate and Material Sales $5,967,459 FIXED $0.00 Recycled Materials Sales $60,590 FIXED $0.00 Asset Sales & Interest Income $459,217 FIXED $0.00 Other Revenues $871,268 FIXED $0.00 Use of Reserves $348,606 FIXED $0.00 149 Fiscal Impact Analysis Report The City of Denton, TX 53 R EVENUE O UTPUTS This section details revenue outputs from the Fiscal Impact Analysis. REVENUE PROJECTIONS The following figures illustrate the projected revenues in the City’s General Fund and other non-utility Funds modeled. Results are shown as a cumulative total over the 40-year projection period as well as an average annual figure. As noted in the figures, the listed dollar amounts are in $1,000s. Figure 37. 40-Year Revenue Totals for all Non-Utility Funds Revenue total and average annual revenue over the 40-year study period is shown for each Utility Fund included in the analysis in Figure 38. 40-Year Total Revenues (x$1,000) City of Denton's Fiscal Impact Model General Fund Revenues Ad Valorem Taxes $627,009 55%0.00 Sales Tax $374,893 33%0.00 Franchise Agreements $0 0%0.00 Other Taxes $5,981 1%0.00 Service Fees $51,509 4%0.00 Fines and Fees $29,384 3%0.00 Licenses and Permits $2,170 0%0.00 Miscellaneous Revenues $0 0%0.00 Return on Investment $57,241 5%0.00 Cost of Service Transfer $45 0%0.00 Subtotal General Fund Revenues $1,148,231 100%0.00 Subtotal General Debt Service Fund Revenues $335,073 Subtotal Street Improvement Fund Revenues $96,975 Subtotal Roadway Improvement Fund Revenues $49,008 GRAND TOTAL REVENUES $1,629,288 AVERAGE ANNUAL REVENUES $40,732 Category Cumulative Revenues %FTEs 150 Fiscal Impact Analysis Report The City of Denton, TX 54 Figure 38. Revenue Totals and Annual Average for Utility Funds 40-Year Net Cumulative Impact - Utilty Funds City of Denton - Fiscal Impact Analysis Electric Fund* Cumulative Total $966,695 Average Annual Revenue $24,167 Water Fund Operating Revenues $389,015 Impact Fee Revenues $153,035 Cumulative Total $542,050 Average Annual Revenue $13,551 Wastewater Fund Operating Revenues $279,736 Impact Fee Revenues $144,469 Cumulative Total $424,205 Average Annual Revenue $10,605 Solid Waste Cumulative Total $304,055 Average Annual Revenue $7,601 *Electric Fund projections provided by City of Denton. 151 Fiscal Impact Analysis Report The City of Denton, TX 55 O PERATING E XPENDITURE M ETHODOLOGIES All variable operating expenditures are projected, including personnel and operating costs. Capital Expenditures are discussed in a separate section. GENERAL AND SPECIAL REVENUE FUNDS For most City departments, operations and personnel costs are projected separately. A summary of the approach is provided below. It should be noted that many departments have some portion of their budget that is considered “fixed” and will not increase with growth. That is, existing operations will be able to absorb a portion of additional impacts from growth in the City. In the figures below, “fixed” is only indicated for those categories that are considered entirely “fixed.” 152 Fiscal Impact Analysis Report The City of Denton, TX 56 Figure 39. General and Special Revenue Operating Expenditures Approach Expenditure Category General Fund City Manager x x Economic Development x x Facilities Management Facilities SF x Finance/Accounting x x x Human Resources x x Internal Audit x x Legal Administration x x x Public Affairs x x Non-Departmental x Library x Library SF x Parks And Recreation Parks SF x Development Services x x Public Safety Communications x x x Municipal Court x x Municipal Judge x x Police x x x Animal Services x x Fire x x Transportation Admin x x Traffic Operations x x Special Revenue Funds Streets Improvement Fund NA x x Roadway Impact Fee Fund NA x NA FixedTotal Police Calls Administrative & Community Services Neighborhood Services Department Population Population & Jobs Public Safety Transportation Staff Modeled? Lane Miles Vehicle Trips Total Fire and EMS Calls City FTEs Custom Analysis 153 Fiscal Impact Analysis Report The City of Denton, TX 57 CUSTOM METHODOLOGIES All growth-related departments except for Facilities Management, Library, and Parks and Recreation are modeled using basic growth indicators derived from the development scenario (i.e., population, jobs, etc.) as the basis for projecting demand. Further explanation of those metrics is found in Appendix A. Descriptions of the customized methodology used for Facilities Management, Library, Parks and Recreation, and the Roadway Impact Fee Fund are found below. ▪Facilities Management: Facilities Management expenditures are expected to increase over base year expenditures in accordance with the addition or expansion of City owned facilities. Facilities Management is currently responsible for 1,341,696 square feet of City-owned facilities.12 As future development triggers the construction of new facilities (discussed in detail in the following chapter) the Facilities Management department will need to increase its capacity in order to maintain levels of service. Facilities Management expenditures are thus projected utilizing “FACILITIES SF.” The expansion of capital facilities is discussed in detail in the next section of this chapter. ▪Parks & Recreation: Parks and Recreation Operating Expenditures are projected based on square feet of City-maintained parks that will be developed as a result of Hunter/Cole Ranch. The table below summarizes the public park facilities and amenities that will be developed and which entity—the City or the MMD—will be responsible for their maintenance. Figure 40. City Maintained Parks and Recreation Facilities for Operating Expense Projections 12 Source: City of Denton Facilities with Updated Property Values 2019. Provided by City of Denton Finance Department. PARK CATEGORY Number Prototype Size Total Area Developed City Maintained Recreation Center 1 26,000 sf 26,000 sf Hunter Ranch 54-acre City Park 1 54 acres 2,352,240 sf Cole Ranch 50-acre City Park 1 50 acres 2,178,000 sf TOTAL CITY MAINTAINED PARKS (SF): 4,382,000 sf MMD or HOA Maintained Neighborhood Parks 4 5 acres 20 acres Pocket Parks / Dog Parks 30 2 acres 60 acres Regional Trails 23 1 mile 23 miles Community Trails 35 1 mile 35 miles 154 Fiscal Impact Analysis Report The City of Denton, TX 58 •Library: Library operating expenditure projections are based, in part, on library square footage. One additional library is triggered by growth, as detailed in the next section of this chapter. Using current costs per Library SF, the fiscal model projects increases in Library operating expenditures. 155 Fiscal Impact Analysis Report The City of Denton, TX 59 UTILITY FUND OPERATING EXPENDITURES As Enterprise Funds, Utility Funds are self-funding in the sense that rates are adjusted as needed to cover operating and capital expenditures. As requested by the City of Denton, however, this FIA examined the fiscal impact of the proposed development on Utility Funds if utility rates were to be held constant over time. Expenditures were projected utilizing the methodological approaches summarized Figure 41. Figure 41. Utility Funds Operating Expenditures Approach Expenditure Category Utility Funds Personnel Operations Franchise Fees Return on Investment Cost of Service - Transf.x Capital Outlay Personnel Operations x Franchise Fees Return on Investment Cost of Service - Transf.x Capital Outlay Personnel Operations Franchise Fees Return on Investment Cost of Service - Transf.x Capital Outlay Personnel Operations Franchise Fees Cost of Service - Transf.x Capital Outlay *Production/consumption utilizes the following metrics: Water - thousands of gallons per year; Wastewater - thousands ofof gallons (discharge) per year; Solid Waste - landfilled (tons); recyclin collections (tons) Water Fund Wastewater Fund Electric Fund Solid Waste Fund Name x x x [5% of Gross Rev.] [Single Family Units] / [Nonresidential SF] Estimates from DME [3.5% of Gross Rev.] Quorum Report Projections Estimates from DME [5% of Gross Rev.] [5% of Gross Rev.] [3.5% of Gross Rev.] x Custom Analysis [5% of Gross Rev.] [3.5% of Gross Rev.] x x x x x Revenue Production*Facilities Staff Modeled? 156 Fiscal Impact Analysis Report The City of Denton, TX 60 C APITAL E XPENDITURE M ETHODOLOGIES Capital costs and infrastructure improvements to serve new development are modeled based on demand generated by the proposed development. Capital facilities, infrastructure, vehicles, and equipment are projected for General Government, Parks and Recreation, Library, Fire, Police, Public Works, Facilities Management, Fleet Management, Transportation and Street Departments, DMU Water, DMU Wastewater, DMU Electric, and Solid Waste. Many of the assumptions on which the analysis is based can be viewed as policy-making decision points, which if modified would affect the overall results. For example, most of the capital expenditures assumed in the analysis, and the resulting costs (assumed in most cases as debt financed), are projected independent of the current capital improvement programs and debt capacity guidelines. Rather, the capital costs projected in this analysis reflect the potential cost to serve new growth, regardless of whether the resources are available to cover the costs. The City will continue to balance its annual budgets considering financial guidelines and policies, applicable operating impacts, and available resources. An important aspect of the capital expenditure methodology is that per direction from the City of Denton’s Finance Department, it is assumed that the funding of new facilities will be debt financed. This is in keeping with the City’s current practices and allows the City to fund necessary infrastructure investments for which it has insufficient cash on hand. From a fiscal impact perspective, it should be noted that debt financing can understate the full cost of a capital project; because the payments are made over a 20-year period, the fiscal model’s 40-year projection period may not capture the full cost of capital facilities constructed or assets acquired after year 21. GENERAL GOVERNMENT FACILITIES To serve residential and nonresidential development in the scenarios, the population and job growth is multiplied by the current level of service of general government administrative offices. The level of service is found by dividing the current floor area of City Hall (City Hall, City Hall East less Police Department floor area, City Hall West, and Finance) by population and job total in the City (192,782 square feet / 196,274 population and jobs = 0.98 square feet per population and job). As residential and nonresidential growth occurs in the scenarios, the demand factor of 0.98 square feet per population or job is applied to General Government capital costs. General Government vehicles are also projected using this approach; the base year 2019 vehicle count is 33 as provided by the City of Denton’s FY2019 Fleet Inventory Asset List. Note that General Government city vehicles are assigned an average useful life of eight years, and replacement vehicles are also included in this analysis. 157 Fiscal Impact Analysis Report The City of Denton, TX 61 PARKS AND RECREATION Parks and Recreation infrastructure improvement needs resulting from the development of Hunter/Cole Ranch were provided by the City of Denton and are documented in the draft Operating Agreement between the City and the development team and the Developer’s Draft Parks Location Plan. We projected when development would trigger the need for the planned capital facilities based on current levels of service for Recreation Facilities, City Parks, Neighborhood Parks, Pocket Parks, Regional Trails, and Community Trails. See Figure 40 for a summary of anticipated Parks & Recreation infrastructure improvements. Costs were estimated based on recently completed or design-phase park project cost estimates,13 industry standards adjusted for regional cost factors,14 and replacement costs for the City of Denton’s current parks and recreational facilities.15 Capital costs were then allocated between the City and the Developer/MMD as directed by the City of Denton per the December 2019 Draft Operating Agreement and input from City staff. TRANSPORTATION To project the impact growth will have on roadway infrastructure over the 40-year study period on, the current level of service was calculated by dividing base year 2019 lane miles (1,326 lane miles) by estimated base year 2019 vehicle trips (392,167 vehicle trips). As citywide vehicle trips increase due to development, the construction of additional lane miles will be required. Vehicle trips are projected utilizing trip generation rates from the Institute of Transportation Engineers (ITE) Trip Generation Manual 10th Edition (2017). The demand factor of 0.0034 lane miles per vehicle trip is then applied to total vehicle trips to calculate additional lane miles. Roadway infrastructure improvements required to provide access to Hunter/Cole Ranch MMD were projected by HDR and are documented in the January 2020 Draft TDM Plan.16 The roadway infrastructure costs presented in this report represent the difference between the total roadway investment needed to meet the projected transportation demand from Hunter/Cole Ranch over the analysis period and the capital costs associated with the specific projects identified in the Draft TDM Plan. Based on input from City of Denton staff, it is assumed that roadway impact fees and MMD Contract Tax revenue contributions will help fund these costs. 13 City Council Meeting Materials – Agenda ID# 191337, Exhibit 2. June 18th, 2019. Carnegie Park aka Patrick Park Construction Cost Estimates. 14 North Carolina State University. 2015. Cost Analysis for Improving Park Facilities to Promote Park Based Physical Activity. Available:https://content.ces.ncsu.edu/cost-analysis-for-improving-park-facilities-to-promote-park-based-physical- activity 15 City of Denton Facilities with Updated Property Values 2019. Provided by City of Denton Finance Department. 16 HDR. Dec 10, 2019. City of Denton Cole-Hunter 2040 Draft TDM Report. 158 Fiscal Impact Analysis Report The City of Denton, TX 62 POLICE Police capital facilities impacted by growth include patrol vehicles and police facility square feet. The current level of service standard for police facilities is 2019 facility square feet (26,925 SF) per Police Calls for Service (84,666) or 0.32 square feet per call for service. Police Calls for Service were projected over the 40-year study period based on the methodology in Appendix A. This 0.32 level of service standard was applied to Police Calls for Service to project additional police facility square feet needed to serve growth. Square footage was then converted to facilities needed assuming an average facility size of 20,630 square feet, per current substation design plans.17 Per conversations with City staff, one vehicle is needed for every two patrol officers. Sworn Officers added to the force as a result of additional demand for police services was projected based on police calls for service (which will increase due to population and employment growth in the MMD, as described in Appendix B). Vehicle acquisition is triggered by the addition of new sworn officers. The useful life for Police patrol vehicles is an average of five years. Average vehicle costs were provided by the City of Denton. FIRE AND EMS Fire and EMS services were projected utilizing an approach similar to that used for Police services. Current facility levels of service were calculated in terms of base year substation square feet per Fire and EMS Calls for Service (94,500 square feet divided by 15,002 calls for service = 6.53 square feet per call for service. The fire substation facility prototype is equal in square footage to the recently constructed Fire Station #4 (15,721 square feet). Projected facility square feet were converted to facilities, assuming the average new substation size will be 15,721 square feet. LIBRARY The City of Denton currently has three libraries; total square footage is 78,304 square feet, and libraries range from 21,516 square feet to 33,708 square feet. Total collection materials, or library items, equal 281,651. Demand for additional library capital facilities was projected by applying the current library LOS of 0.58 square feet per population to projected population growth. The average library size of 26,101 square feet was used to estimate the number of new facilities that will need to be added to meet demand generated by growth resulting from the Hunter/Cole Ranch MMD. 17 Source: https://www.cityofdenton.com/CoD/files/17/172108de-784b-4c3b-b297-a7c6ef888e4f.pdf 159 Fiscal Impact Analysis Report The City of Denton, TX 63 SERVICE STATION ANNEX Per direction from City of Denton staff, we assumed that 50 percent of the planned “Service Station Annex” detailed in the City of Denton Capital Facilities Needs Assessment completed by Quorum Architects would be attributable to growth from Hunter/Cole Ranch.18 18 Quorum Architects. Jan 16, 2020. City of Denton Facility Needs Assessment. 160 Fiscal Impact Analysis Report The City of Denton, TX 64 E XPENDITURE O UTPUTS This section details expenditure outputs from the Fiscal Impact Analysis. Regarding capital expenditures, the analysis assumes that all capital projects will be debt financed; the capital expenditure totals in the figures within this section of the report reflect this assumption. Note that they therefore differ slightly from the capital expenditures listed by item in the inventory of capital costs presented in Chapter 2 of this report. The capital project and cost inventory presented in Chapter 2 depicts project costs as if they were cash-financed to allow for a straightforward comparison of City and Developer/MMD costs. OPERATING AND CAPITAL EXPENDITURE PROJECTIONS Operating and capital expenditure results are provided in this section based on the expenditure methodologies discussed above. For operating expenditure projections, the 40-year cumulative total is shown. Public Safety expenditures account for the majority of costs. New staffing for the Police Department (89 FTEs) and Fire Department (73 FTEs) are driving the operating expenses. Shown in Figure 42, Transportation costs account for just 1 percent of the total expense increase attributable to Hunter/Cole Ranch. The majority of operating and major road maintenance costs resulting from the projected increase in City- Maintained Lane Miles are within the Street Improvement Fund. Figure 42. Operating Expenditure Projections The capital results for General Fund departments are shown below in Figure 43. Note that “Public Works,” as referenced in this FIA, includes Fleet Maintenance & Fuel and Facilities Management. Fleet and Facilities expenditures represent the majority of General Fund-financed capital expenses, in part because the City is 100 percent responsible for funding the Service Station Annex, whereas capital expenditures in other departments are at least partially funded by the developer or MMD. Cumulative Operating Expenditures (x$1,000) City of Denton's Fiscal Impact Model Administrative & Community Services $186,825 22% Neighborhood Services $114,448 13% Public Safety $554,534 64% Transportation $11,897 1% SUBTOTAL GENERAL FUND EXPS $867,704 100% SUBTOTAL STREET IMPROVEMENT FUND EXPS $69,372 GRAND TOTAL OPERATING EXPS $937,076 AVERAGE ANNUAL EXPS $23,427 Cumulative ExpendituresCategory % 161 Fiscal Impact Analysis Report The City of Denton, TX 65 Another reason Fleet and Facilities expenditures are heavily impacted by growth is because these departments are already near capacity in terms of both space and staffing. Moreover, Hunter/Cole Ranch is not proximate to the existing Service Station, which houses Fleet Maintenance and Facilities Management. It is therefore necessary for the City to develop a Service Station Annex to accommodate the expansion of these two departments. The Service Station Annex will also accommodate the Streets Department and Parks and Recreation, as well as Solid Waste, Water, Wastewater, and a portion of DMU Electric. The capital costs presented in this analysis for the Service Station Annex reflect only those that are the result of growth stemming from Hunter/Cole Ranch. Figure 43. Summary of Non-Utility Capital Costs Figure 44. Summary of Utility Fund Capital Costs Cumulative Capital Expenditures (x$1,000) City of Denton's Fiscal Impact Model Streets $11,519 8% Parks and Recreation $49,659 35% Library $7,018 5% Fire $11,459 8% Police $5,633 4% General Government $18,294 13% Public Works $38,454 27% SUBTOTAL GENERAL DEBT CAP EXPS $142,035 100% SUBTOTAL ROADWAY IMPACT FEE EXPS $51,657 GRAND TOTAL CAPITAL EXPS $193,692 Cumulative ExpendituresCategory % Cumulative Capital Expenditures (x$1,000) - Utility Funds City of Denton's Fiscal Impact Model Electric $115,077 23% Water $241,963 48% Wastewater $226,743 45% Solid Waste $36,378 7% TOTAL $505,084 100% Category Cumulative Expenditures % 162 Fiscal Impact Analysis Report The City of Denton, TX 66 163 Fiscal Impact Analysis Report The City of Denton, TX 67 B ASE Y EAR D EMOGRAPHIC E STIMATES The table below summarizes estimates of the base year population, housing units, employment, nonresidential space, and facility factors in the City of Denton. These estimated values serve as the basis for the fiscal impact analysis and are used to determine the cost and revenue factors used in the analysis. APPENDIX A . DEMOGRAPHIC & DATA ASSUMPTIONS 164 Fiscal Impact Analysis Report The City of Denton, TX 68 Figure 45. Base Year Input Data Base Year->2019 Population[1]POPULATION 134,460 POP AND JOBS 196,274 Housing Units by Type [1]SINGLE FAMILY 30,450 MULTIFAMILY 19,190 TOTAL UNITS 49,640 Jobs by Type [4]RETAIL JOBS 12,818 OFFICE JOBS 19,782 INDUSTRIAL JOBS 15,772 INSTITUTIONAL JOBS 13,442 TOTAL JOBS 61,814 Nonresidential Floor Area RETAIL SF 5,470,258 (SF = Square Feet)OFFICE SF 6,429,066 INDUSTRIAL SF 13,619,179 INSTITUTIONAL SF 4,529,955 TOTAL NR SF 30,048,460 Vehicle Trips [3]RESIDENTIAL TRIPS 239,023 NONRES TRIPS 153,144 VEHICLE TRIPS 392,167 Facility Factors [2][6][7]CITY MAINTAINED LN MILES 1,321 CUM PARK SF_CITY 41,033,520 REC FACILITIES SF 173,036 CITY PARK ACRES 587 CITY VEHICLES 1,225 FACILITY SF 1,341,696 LIBRARY ITEMS 281,651 LIBRARIES 3 RESIDENTIAL LN MILES 843 ARTERIAL LN MILES 225 COLLECTOR LN MILES 253 Police Factors [4][7]RES POLICE CALLS 62,706 NONRES POLICE CALLS 21,960 TOTAL POLICE CALLS 84,666 Fire Factors [4][7]RES FIRE CALLS 11,111 NONRES FIRE CALLS 3,891 TOTAL FIRE CALLS 15,002 Utility Factors [2][5][7]DME VEH 169 WATER VEH 110 WW VEH 105 SW UTILITY VEH 64 WATER PRODUCTION 7.14 Billion Gallons WW DISCHARGE 4.455 Billion Gallons SW LANDFILLED 276,537 Tons RECYCLING COL 105,493 Tons [1] City of Denton Staff (8/29/19 email) [2] City ofDenton FY2018-19 Buget [3] TischlerBise; ITE [4] City of Denton Staff [5] FY2019 Fleet Inventory provided by City of Denton [6] FY2019 City Assets Updated Property Values provided by City of Denton [7] Based on information from City of Denton CAFR 165 Fiscal Impact Analysis Report The City of Denton, TX 69 POPULATION AND JOB FACTORS Household size is used to project population over the planning horizon; employees per acre of nonresidential space are used to project future employment. Per direction from City of Denton staff, we utilized the following assumptions. ▪Single Family: 3.2 Persons per Household ▪Multifamily: 2.5 Persons per Household ▪Nonresidential Employees per Acre: 18 Employees per Acre 166 Fiscal Impact Analysis Report The City of Denton, TX 70 V EHICLE T RIPS Vehicle trips are used to project some operating and capital expenditures in the fiscal impact analysis. Average Weekday Vehicle Trip Ends by type of development (or trip generation rates) are from the reference manual, Trip Generation, 10TH Edition, published by the Institute of Transportation Engineers (ITE), in 2017. A “trip end” represents a vehicle either entering or exiting a development (as if a traffic counter were placed across a driveway). Trip rates have been adjusted to avoid overestimating the number of actual trips because one vehicle trip is counted in the trip rates of both the origination and destination points. RESIDENTIAL VEHICLE TRIPS Vehicle trip generation for residential land uses are calculated by using ITE’s average daily trip end rates and a trip adjustment factor customized for the City of Denton. A vehicle trip end is the out-bound or in-bound leg of a vehicle trip. To not double count trips, a standard 50 percent adjustment is applied to trip ends to calculate a vehicle trip. For example, the out-bound trip from a person’s home to work is attributed to the housing unit and the trip from work back home is attributed to the employer. However, an additional adjustment is necessary to capture City residents’ work bound trips that are outside of the City. The trip adjustment factor includes two components. According to the National Household Travel Survey (2009), home-based work trips are typically 31 percent of out-bound trips (which are 50 percent of all trip ends). Also, utilizing the most recent data from the Census Bureau's web application "OnTheMap,” 72 percent of Denton workers travel outside the City for work. In combination, these factors account for 11 percent of additional production trips (0.31 x 0.50 x 0.72 = 0.11). Shown in Figure 46 the total adjustment factor for residential housing units includes attraction trips (50 percent of trip ends) plus the journey-to-work commuting adjustment (11 percent of production trips) for a total of 61 percent. Figure 46. Trip Adjustment Factor for Commuters Employed Denton Residents (2017)61,129 Denton Residents Working in the City (2017)17,162 Denton Residents Commuting Outside of the City for Work 43,967 Percent Commuting out of the City 72% Additional Production Trips 11% Standard Trip Adjustment Factor 50% Residential Trip Adjustment Factor 61% Source: U.S. Census, OnTheMap Application, 2017 167 Fiscal Impact Analysis Report The City of Denton, TX 71 NONRESIDENTIAL VEHICLE TRIPS Vehicle trip generation for nonresidential land uses are calculated by using ITE’s average daily trip end rates and adjustment factors found in their recently published 10th edition of Trip Generation. To estimate the trip generation in the City of Denton the weekday trip end per 1,000 square feet factors highlighted in Figure 47 are used. Figure 47. Trip Generation Factors A simple factor of 50 percent is applied to the Office, Industrial, and Institutional land uses. The Retail category has a trip factor of less than 50 percent because this type of development attracts vehicles as they pass-by on arterial and collector roads. For example, when someone stops at a convenience store on their way home from work, the convenience store is not their primary destination. ITE Demand Wkdy Trip Ends Wkdy Trip Ends Emp Per Sq Ft Code Land Use Unit Per Dmd Unit Per Employee Dmd Unit Per Emp 110 Light Industrial 1,000 Sq Ft 4.96 3.05 1.63 615 130 Industrial Park 1,000 Sq Ft 3.37 2.91 1.16 864 140 Manufacturing 1,000 Sq Ft 3.93 2.47 1.59 628 150 Warehousing 1,000 Sq Ft 1.74 5.05 0.34 2,902 254 Assisted Living bed 2.60 4.24 0.61 na 530 High School 1,000 Sq Ft 14.07 22.25 0.63 1,581 540 Community College student 1.15 14.61 0.08 na 550 University/College student 1.56 8.89 0.18 na 565 Day Care student 4.09 21.38 0.19 na 610 Hospital 1,000 Sq Ft 10.72 3.79 2.83 354 620 Nursing Home 1,000 Sq Ft 6.64 2.91 2.28 438 710 General Office (avg size)1,000 Sq Ft 9.74 3.28 2.97 337 770 Business Park 1,000 Sq Ft 12.44 4.04 3.08 325 820 Shopping Center (avg size)1,000 Sq Ft 37.75 16.11 2.34 427 310 Hotel Room 8.36 14.34 0.58 1,715 932 Sit-Down Restaurant 1,000 Sq Ft 112.18 21.26 5.28 190 934 Fast-Food Restaurant 1,000 Sq Ft 470.95 45.49 10.35 97 840 Auto Sales (New)1,000 Sq Ft 27.84 11.20 2.49 402 Source: Trip Generation, Institute of Transportation Engineers, 10th Edition (2017). 168 Fiscal Impact Analysis Report The City of Denton, TX 72 BASE YEAR VEHICLE TRIP TOTALS Trip rates and adjustment factors are shown in the figure. Using trips generated from single family units as an example, the formula is as follows: 30,450 units x 9.44 vehicle trips per unit x 61% adjustment = 175,343. As shown in Figure 48, residential development accounts for an estimated 61 percent of total daily trips and nonresidential development accounts for an additional 39 percent. Figure 48. Vehicle Trips Vehicle Trips on an Average Weekday Residential Units Assumptions Single Family 30,450 Multifamily 19,190 Average Weekday Vehicles Trip Ends Per Unit**Wkdy Trip Ends Trip Factors Single Family 9.44 61% Multifamily 5.44 61% Residential Vehicle Trip Ends on an Average Weekday Single Family 175,343 Multifamily 63,680 TOTAL RESIDENTIAL TRIPS 239,023 61% Nonresidential Vehicle Trips on an Average Weekday Nonresidential Gross Floor Area (1,000 sq. ft.)*Assumptions Retail 5,470 Office 6,429 Industrial 13,619 Institutional 4,530 Average Weekday Vehicle Trip Ends per 1,000 Sq. Ft.**Trip Factors Retail 37.75 33% Office 12.44 50% Industrial 3.37 50% Institutional***9.74 50% Nonresidential Vehicle Trips on an Average Weekday Retail 68,146 Office 39,989 Industrial 22,948 Institutional 22,061 TOTAL NONRESIDENTIAL TRIPS 153,144 39% TOTAL TRIPS 392,167 100% *Floor area estimates are derived from employment figures provided by the City of Denton. **Trip rates are from the Institute of Transportation Engineers (ITE) Trip Generation Manual (2017) ***Assumes trip rate of the average office. Wkdy Trip Ends 169 Fiscal Impact Analysis Report The City of Denton, TX 73 F UNCTIONAL P OPULATION Both residential and nonresidential developments increase the demand on City services and facilities. To calculate the proportional share between residential and nonresidential demand on service and facilities, a functional population approach is used. The functional population approach allocates the cost of the facilities to residential and nonresidential development based on the activity of residents and workers in the City through the 24 hours in a day. Residents that do not work are assigned 20 hours per day to residential development and 4 hours per day to nonresidential development (annualized averages). Residents that work in the City of Denton are assigned 14 hours to residential development and 10 hours to nonresidential development. Residents that work outside the City are assigned 14 hours to residential development, the remaining hours in the day are assumed to be spent outside of the City working. Inflow commuters are assigned 10 hours to nonresidential development. Based on 2017 functional population data, residential development accounts for 74 percent of the functional population, while nonresidential development accounts for 26 percent, see Figure 49. Figure 49. City of Denton Functional Population Demand Person Proportionate Residential Hours/Day Hours Share Estimated Residents 131,097 Residents Not Working 69,968 20 1,399,360 Workers Living in City 61,129 Residents Working in City 17,162 14 240,268 Residents Working outside of City 43,967 14 615,538 Residential Subtotal 2,255,166 74% Nonresidential Residents Not Working 69,968 Jobs Located in City 56,412 4 225,648 Residents Working in City 17,162 10 171,620 Non-Resident Workers 39,250 10 392,500 Nonresidential Subtotal 789,768 26% TOTAL 3,044,934 100% Source: U.S. Census Bureau, OnTheMap 6.1.1 Application and LEHD Origin-Destination Employment Statistics Demand Units in 2017 170 Fiscal Impact Analysis Report The City of Denton, TX 74 P OLICE C ALLS FOR S ERVICE A custom methodology is used to allocate police costs based on an analysis of calls for service in the City of Denton. As shown in Figure 49, 74 percent of the functional population in the City is attributed to residential purposes and 26 percent of the functional population is attributed to nonresidential purposes. These factors are used to allocate costs to residential and nonresidential land uses. This percentage split is used to allocate the total police calls. To project future Police calls for service from new development, the above data is used to determine a call per person and call per nonresidential trip. This methodology seeks to capture demand for services from both residential and nonresidential development. Since specific records on calls for service by type of nonresidential land use is not available, vehicle trips by type of nonresidential land use are utilized as a realistic proxy. This methodology reflects that the greatest number of calls for service on a per square foot basis. If calls for service were allocated on a per employee basis, office uses would generate the greatest number of calls due to its high employment density, which is contrary to actual experience. Shown in Figure 50, to find the residential police demand factor, the City’s population is applied to the total residential calls for service to find a level of service of 0.4664 calls per person. The number of nonresidential vehicle trips is applied to the total nonresidential calls for service to find a level of service of 0.1434 calls per nonresidential trip. These factors are then applied to projected population and nonresidential vehicle trips in each growth scenario to project new Police calls for service. Figure 50. Police Service Call Demand Factors POLICE CALLS FOR SERVICE DATA Land Use FY 2019 Est.Percent Residential 62,706 74.1% Nonresidential 21,960 25.9% TOTAL CALLS FOR SERVICE 84,666 100.0% Calls for Service Projection Factors Current Population 134,460 Current Nonresidential Vehicle Trips (Avg Daily)153,144 Current Vehicle Trips (Avg Daily)392,167 Calls per Capita 0.4664 Calls per Nonres. Trip 0.1434 Source: Based on information provided by FY18 CAFR 171 Fiscal Impact Analysis Report The City of Denton, TX 75 F IRE C ALLS FOR S ERVICE As shown in Figure 51, in 2019, the Fire Department received an estimated 15,003 calls for service. Of the total, 74 percent were attributed to residential development and 26 percent were attributed to nonresidential development. To project future Fire calls for service from new development, the above data is used to determine a call per person and call per nonresidential trip. This methodology seeks to capture demand for services from both residential and nonresidential development. Since specific records on calls for service by type of nonresidential land use is not available, vehicle trips by type of nonresidential land use are utilized as a realistic proxy. This methodology reflects that the greatest number of calls for service on a per square foot basis. If calls for service were allocated on a per employee basis, office uses would generate the greatest number of calls due to its high employment density, which is contrary to actual experience. Shown in Figure 51, to find the residential fire demand factor, the City’s population is applied to the total residential calls for service to find a level of service of 0.0826 calls per person. The number of nonresidential vehicle trips is applied to the total nonresidential calls for service to find a level of service of 0.0254 calls per nonresidential trip. These factors are then applied to projected population and nonresidential vehicle trips in each growth scenario to project new Fire calls for service. Figure 51. Fire Department Demand Factors FIRE/RESCUE DATA INPUT AREA Land use FY2019 Est. Percent Residential Land Uses 11,111 74% Nonresidential Land Uses 3,891 26% TOTAL CALLS FOR SERVICE 15,003 100.0% Calls for Service Projection Factors Current Population 134,460 Current Nonresidential Vehicle Trips 153,144 Calls per Capita 0.0826 Calls per Nonres. Trip 0.0254 Source: Based on information provided by FY18 CAFR 172 Date: Jan. 10, 2025 Report No. 2025-022 INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: Increasing Denton’s Tree Canopy EXECUTIVE SUMMARY: On October 9, 2024, Council Member McGee submitted a two-minute pitch to increase Denton’s tree canopy by 5% by 2040 and use the Tree Mitigation Fund for additional staff. On October 15, 2024, the Council provided consensus to require an Informal Staff Report to address feasibility of the pitch. DISCUSSION: The Urban Forest Master Plan adopted in 2020 serves as a guide for managing, enhancing, and growing Denton’s tree canopy. The Master Plan currently includes the primary objective to achieve a 40% canopy cover by 2040 which requires 16% additional canopy cover from the most recent tree canopy data collected in 2023. This objective heavily relies on the planting of trees on private property. Tree canopy cover is the percentage of land covered by tree canopy (leaves branches and stems of trees). Depending on the tree species and growing conditions, a newly planted, large canopy tree will take roughly 20 to 40 years to reach a mature canopy size of 40 feet in diameter. This 40-foot diameter standard is used to calculate potential tree canopy cover for a large canopy tree in the Denton Development Code. The Tree Mitigation Fund currently supports urban forestry and education programs to increase tree plantings on public and private property, including funding for a staff intern. As of December 20, 2024, this fund has a balance of approximately $2.1 million For Fiscal Year 2024-25; $1.0 million is budgeted for city-initiated tree plantings, tree giveaway programs, and prudent land acquisition. The tree giveaway programs are focused on public and private property plantings and aim to increase the City’s overall tree canopy by providing approximately 3,000 trees per year, which is estimated to increase the canopy by 0.14%, once mature. All three tree programs are managed by Keep Denton Beautiful (KDB) with oversight provided by Denton Parks and Recreation. Table 1 below lists how many trees will be planted and provided during the 2024-25 fiscal year by all City programs. Item Program Quantity 2-3 in caliper trees Parks Urban Forestry Tree Planting 350 3-gallon trees Community Tree Giveaway 700 3-gallon trees Community Tree Giveaway 700 3-gallon trees Free Tree Class at the Redbud Festival 150 3-gallon trees Tree Your Block (Neighborhood Giveaways) 200 Redbud seedlings Children’s Arbor Day 1800 Tree rebates Tree Rebate Program 150 173 Date: Jan. 10, 2025 Report No. 2025-022 Table 1 *This does not include trees planted with new property development. Since 2021, staff have worked to implement the Urban Forest Master Plan by planting and distributing approximately 6,155 trees in parks, center medians, and KDB giveaway programs. Planting and outreach were impacted during the COVID-19 pandemic. Current plans include the planting and distribution of approximately 50,250 trees over the next 15 years (pending annual funding availability). If planting continues along the current planned trajectory, overall tree canopy will potentially increase by 2.62%, using the 40-ft diameter mature tree standard. Increasing the tree canopy more substantially, to an increase of 5% by 2040 would require the planting of approximately 164,750 additional trees, without factoring tree loss or gain due to development, natural decline, or tree plantings by others. CONCLUSION: Increasing the tree canopy 5% by 2040 is lower than established goal in the Urban Forest Master Plan adopted in 2020. Additionally, the request to utilize staff out of the Tree Mitigation Fund is allowable. Growing the tree canopy by 5% will require a financial investment of at least $809,000 to $1.7 million annually for 15 years which will exceed the available and projected resources of the Tree Mitigation Fund. In addition, programs and systems are needed for engaging, encouraging, and monitoring private property owners’ participation. Furthermore, staff are exploring alternative metrics to assess progress towards the city’s tree canopy cover goals. Staff recommends providing an update the Urban Forest Master Plan progress to the Committee on the Environment and the Parks and Recreation Board during Q2 of the fiscal year and including a multiyear forecast as part of the budget process to tie how budgeted efforts are impacting the increase the canopy. STAFF CONTACTS: Haywood Morgan Urban Forester, Parks and Recreation Haywood.Morgan@cityofdenton.com Autumn Natalie Parks Program Area Manager, Parks and Recreation Autumn.Natalie@cityofdenton.com Ziad Kharrat Assistant Director, Parks and Recreation Ziad.Kharrat@cityofdenton.com REQUESTOR: Council Member Brandon Chase McGee PARTICIPATING DEPARTMENTS: ANNUAL TOTAL 3,350 174 Date: Jan. 10, 2025 Report No. 2025-022 Parks and Recreation Department STAFF TIME TO COMPLETE REPORT: Parks and Recreation Department 10 hours 175 176 Friday Report - Council RequestsSummary of RequestCouncil Member Requestor Date Received Staff AssignedDepartmentCommentsStatus1Day Laborer RoofMayor Hudspeth01/02/25Gary Packan, TomGramerFacilities/Fleet ParksStaff investigating bestsolution for addressing theroof repair.2Request for Road Safety Audit forUniversity Drive and Malone StreetCouncil Member Beck CouncilMember Byrd Mayor HudspethCouncil Member McGee CouncilMember Holland Mayor Pro TemMeltzer Council Member Jester12/31/24Farhan ButtPublic Works-TrafficStaff will conduct a RoadSafety Audit with acompletion deadline ofJan. 31.3Winter Weather Messaging Signage Council Member Beck01/09/25Gary PackanParksStaff updated CM on theWinter Weathermessaging signage.4Follow-up question on items included intraffic study for University Dr.Mayor Pro Tem Meltzer01/08/25Farhan ButtPublic Works-TrafficStaff update MPT withcriteria for traffic studyincluding pedestrians andcyclists.5Lance closure related construction andstatus of Contractors progressMayor Hudspeth01/07/25Tina FirgensDevelopment ServicesStaff provided the Mayoran update on the laneclosure.6Status of intersection redesign forBradshaw and Prairie StreetMayor Hudspeth01/07/25Tina FirgensDevelopment ServicesStaff updated the Mayoron the intersectionredesign.7Activity in the 3000 block of E. ShermanDrive.Mayor Hudspeth01/07/25jessica.robledo@cityofdenton.com, Tony SalasPoliceStaff provided an updateto the Mayor8Tree Requirement along Sherman Drive Mayor Hudspeth01/07/25Tina FirgensDevelopment ServicesStaff updated the Mayoron the tree requirementson Sherman Drive.9Criteria for Animal Services UrgentPlacement ListCouncil Member Holland01/07/25Jesse Kent, NikkiSassenusAnimal ServicesStaff updated CM on thecriteria10Request for Winter Weather SituationReportsCouncil Member Beck01/06/25Alyssa Owen, BobMartinezFireStaff updated CM on thetimeline of SituationReports.11Warming StationsMayor Hudspeth01/05/25Danielle Shaw, MeganBallCommunity ServicesStaff updated the Mayoron the resources availablefor the unhoused at theWarming Station on Loop288.Page 1 of 1Exported on January 9, 2025 12:10:18 PM PST177 Meeting Calendar City of Denton City Hall 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com Criteria : Begin Date: 1/13/2025, End Date: 4/18/2025 Date Time Meeting LocationMeeting Body January 2025 1/13/2025 9:00 AM Public Utilities Board Council Work Session Room 1/13/2025 5:30 PM Historic Landmark Commission Development Service Center 1/13/2025 5:30 PM Library Board South Branch Library 1/14/2025 2:00 PM City Council Council Work Session Room & Council Chambers 1/15/2025 5:30 PM Planning and Zoning Commission Council Work Session Room & Council Chambers 1/16/2025 3:00 PM Committee on Persons with Disabilities Development Service Center 1/22/2025 12:00 PM Tax Increment Reinvestment Zone Number One Board Development Service Center 1/22/2025 1:00 PM Civil Service Commission City Hall East Human Resources Training Room 1/24/2025 1:00 PM Sustainability Framework Advisory Committee City Council Work Session Room 1/27/2025 3:00 PM Development Code Review Committee Development Services Center 1/27/2025 5:30 PM Zoning Board of Adjustment Development Service Center 1/29/2025 10:00 AM Mobility Committee Council Work Session Room 1/29/2025 5:00 PM Planning and Zoning Commission Council Work Session Room & Council Chambers February 2025 2/3/2025 6:00 PM Parks, Recreation and Beautification Board Civic Center Community Room 2/4/2025 2:00 PM City Council Council Work Session Room & Council Chambers 2/6/2025 8:30 AM Downtown Economic Development Committee Development Service Center 2/10/2025 3:00 PM Development Code Review Committee Development Services Center Page 1City of Denton Printed on 1/9/2025178 Date Time Meeting LocationMeeting Body Meeting Calendar continued... 2/10/2025 5:30 PM Historic Landmark Commission Development Service Center 2/10/2025 5:30 PM Library Board Emily Fowler Central Library 2/12/2025 11:00 AM Economic Development Partnership Board Development Service Center 2/12/2025 3:00 PM Airport Advisory Board Airport Terminal Meeting Room 2/12/2025 5:00 PM Planning and Zoning Commission Council Work Session Room & Council Chambers 2/13/2025 3:00 PM Health & Building Standards Commission Development Service Center 2/18/2025 2:00 PM City Council Council Work Session Room & Council Chambers 2/24/2025 3:00 PM Development Code Review Committee Development Services Center 2/24/2025 5:30 PM Zoning Board of Adjustment Development Service Center 2/26/2025 10:00 AM Mobility Committee Council Work Session Room 2/26/2025 5:00 PM Planning and Zoning Commission Council Work Session Room & Council Chambers March 2025 3/3/2025 5:30 PM Historic Landmark Commission Development Service Center 3/3/2025 6:00 PM Parks, Recreation and Beautification Board Civic Center Community Room 3/4/2025 2:00 PM City Council Council Work Session Room & Council Chambers 3/10/2025 3:00 PM Development Code Review Committee Development Services Center 3/10/2025 5:30 PM Library Board North Branch Library 3/12/2025 11:00 AM Economic Development Partnership Board Development Service Center Training Rooms 3/12/2025 3:00 PM Airport Advisory Board Airport Terminal Meeting Room 3/13/2025 3:00 PM Health & Building Standards Commission Development Service Center 3/19/2025 5:00 PM Planning and Zoning Commission Council Work Session Room & Council Chambers 3/24/2025 3:00 PM Development Code Review Committee Development Services Center 3/24/2025 5:30 PM Zoning Board of Adjustment Development Service Center Page 2City of Denton Printed on 1/9/2025179 Date Time Meeting LocationMeeting Body Meeting Calendar continued... 3/25/2025 2:00 PM City Council Council Work Session Room & Council Chambers 3/26/2025 10:00 AM Mobility Committee Council Work Session Room 3/26/2025 12:00 PM Tax Increment Reinvestment Zone Number One Board Development Service Center April 2025 4/1/2025 11:00 AM City Council Council Work Session Room & Council Chambers 4/1/2025 2:00 PM City Council Council Work Session Room & Council Chambers 4/3/2025 8:30 AM Downtown Economic Development Committee Development Service Center 4/7/2025 6:00 PM Parks, Recreation and Beautification Board Civic Center Community Room 4/9/2025 11:00 AM Economic Development Partnership Board Development Service Center 4/9/2025 3:00 PM Airport Advisory Board Airport Terminal Meeting Room 4/9/2025 5:00 PM Planning and Zoning Commission Council Work Session Room & Council Chambers 4/10/2025 3:00 PM Health & Building Standards Commission Development Service Center 4/14/2025 3:00 PM Development Code Review Committee Development Services Center 4/14/2025 5:30 PM Historic Landmark Commission Development Service Center 4/14/2025 5:30 PM Library Board South Branch Library 4/15/2025 2:00 PM City Council Council Work Session Room & Council Chambers Page 3City of Denton Printed on 1/9/2025180 Meeting Date Item Legistar ID Departments Involved Type Estimated Time A. Airport Rates and Fees 24-2392 Airport City Business 0:45 B. Cole Ranch Amendment 24-2099 Development Services City Business 0:45 C. Police Firearms Purchase 24-2535 Police Department City Business 0:30 D. Two Minute Pitch:24-2583 City Manager's Office Council Request 0:30 Closed Meeting Item(s): Legal (if any)City Business 0:30 Total Est. Time: 3:00 Other Major Items for Meeting: Charter Amendment Election Ordinance A. Ambassador Program Update 24-2478 Community Services City Business 0:30 B. Halloween Update TBD Parks and Rec City Business 0:30 C. End of Year Report 24-2663 City Manager's Office City Business 0:30 D. Use of Evers Property 24-2544 Parks and Rec City Business 0:30 E. Two Minute Pitch:25-019 City Manager's Office Council Request 0:30 Closed Meeting Item(s): Legal (if any)City Business 0:30 Total Est. Time: 3:00 Other Major Items for Meeting: A. Homelessness Initiative Update Part 2 24-2043 City Manager's Office City Business 1:00 B. Financial Policy Discussion TBD City Manager's Office City Business TBD C. Two Minute Pitch:25-020 City Manager's Office Council Request 0:30 Closed Meeting Item(s): Legal (if any)City Business 3:30 Total Est. Time: 4:00 Other Major Items for Meeting: A. Ethics Proposed Amendments TBD Internal Audit City Business TBD B. State Legislative Session Update TBD City Manager's Office City Business 0:30 C. Annual Comprehensive Financial Report TBD City Manager's Office City Business 0:30 D. Two Minute Pitch:25-021 City Manager's Office Council Request 0:30 Closed Meeting Item(s): Legal (if any)City Business 2:30 Total Est. Time: 4:00 Other Major Items for Meeting: A. Community Shelter Update TBD City Manager's Office City Business TBD B. Water & Wastewater Resource Planning TBD Water/City Manager's Office City Business 1:00 C. Two Minute Pitch:25-022 City Manager's Office Council Request 0:30 Closed Meeting Item(s): Legal (if any)City Business 0:30 Total Est. Time: 1:00 Other Major Items for Meeting: Closed Meeting Item(s): Legal (if any)City Business 0:30 Total Est. Time: 0:30 Other Major Items for Meeting: A. Two Minute Pitch:25-023 City Manager's Office Council Request 0:30 Closed Meeting Item(s): Legal (if any)City Business 0:30 Total Est. Time: 1:00 Other Major Items for Meeting: A. Two Minute Pitch:25-024 City Manager's Office Council Request 0:30 Closed Meeting Item(s): Legal (if any)City Business 0:30 Total Est. Time: 1:00 Other Major Items for Meeting: Audit of Park Management & Planning (30 min.)24-255 Internal Audit City Business TBD Denton Renewable Resource Plan 24-1910 Denton Municipal Electric City Business TBD Leak Adjustment Ordinance 24-1632 Water Utilities City Business TBD Item Dates Departments Type Estimated Work Item Date Approved Department Next Step Requestor Vote Centers 10/17/2023 City Secretary's Office Agenda Committee CM McGee Election Day Holiday 6/18/2024 Human Resources Budget Process CM McGee Board of Ethics develop guidance for interactions with external partners 6/18/2024 Internal Audit Work Session CM Beck Campaign Finance 9/17/2024 Internal Audit Budget Process CM McGee Amending master plans to renovate Civic Center Pool 10/15/2024 Parks & Recreation Informal Staff Report CM Beck Increasing tree canopy 10/15/2024 Parks & Recreation Informal Staff Report CM McGee Changes to the building code to make new homes EV and solar ready 11/19/2024 Development Services Informal Staff Report CM McGee Catalyst Fund 11/19/2024 Economic Development Agenda Committee CM Jester Rooftop and wall gardens and solar panels on City buildings 12/3/2024 Facilities Management Informal Staff Report CM Beck February 18 Work Session (@2:00 p.m.) Regular Called Meeting (@6:30 p.m.) Approved Council Pitches to be Scheduled February 4 Work Session (@2:00 p.m.) Regular Called Meeting (@6:30 p.m.) March 4 Work Session (@2:00 p.m.) Regular Called Meeting (@6:30 p.m.) April 1 Joint Meeting with Denton ISD (@11:00 a.m.) April 1 Work Session (@2:00 p.m.) Regular Called Meeting (@6:30 p.m.) April 15 Work Session (@2:00 p.m.) Regular Called Meeting (@6:30 p.m.) January 14 Work Session (@2:00 p.m.) Special Called Meeting (Upon conclusion of the Work Session) Council Priorities and Significant Work Plan Items to be Scheduled March 25 Work Session (@2:00 p.m.) Special Called Meeting (Upon conclusion of the Work Session) Work Session To Be Determined Tentative Work Session Topics and Meeting Information Updated: January 10, 2025 *This is for planning purposes only. Dates are subject to change.181 1 Street Closure Report: Upcoming ClosuresSCR Jan 13th - 19thStreet/ IntersectionFromToClosure StartDateClosure EndDateDescriptionDepartmentDepartment Contact Closure Type1Hidden Path Ln (7808)White Dove LnMontecito Dr01/27/25 03/07/25 Concrete Panel and Sidewalk RepairStreetsRoy San MiguelLane Closure2Precision DrAirport RdUNT Library Annex04/01/25 07/31/25 ReconstrcutionEngineering OtherGio PineiroFull ClosureExported on January 10, 2025 12:20:21 PM CST182 2 Street Closure Report: Current ClosuresStreet/ IntersectionFromToClosure StartDateClosure EndDateDescriptionDepartmentDepartment Contact Closure Type1Aileen StPanhandle StBroadway St09/27/24 02/28/25 Utility installations andpavement replacement.EngineeringScott FettigFull Closure2Audra LnStockton StMockingbird Ln07/29/24 02/06/25 Connection new storm drainageto existing City of Dentondrainage.Private DevelopmentZabdiel MotaLane Closure3Ave ACollins StEagle Dr10/08/24 01/31/25 Utility installations andpavement replacement.EngineeringScott FettigFull Closure4Ave BFannin StMargie St11/22/24 01/31/25 Pavement replacement EngineeringScott FettigFull Closure5Ave CEagle DrHighland St08/26/24 01/31/25 Pavement replacement. EngineeringScott FettigFull Closure6Bernard StLindsey StFannin St08/26/24 04/30/25 Utility installations andpavement replacement.EngineeringScott FettigRolling Closure7Bonnie Brae StFM1515Walt Parker Dr01/06/25 06/30/25 Utility installations andpavement replacement.EngineeringScott FettigFull Closure8Clover LnRobinwood LnGlenwood Ln11/12/24 01/20/25 Full Road Reconstruction EngineeringSheldon GatewoodFull Closure9Collins StAve ABernard St08/26/24 02/28/25 Utility installations andpavement replacement.EngineeringScott FettigFull Closure10Desert Willow DrSilktree Ct@ intersection01/13/25 02/21/25 Sidewalk and ADA Repair StreetsRoy San MiguelLane Closure11Eagle DrBeatty StCentral Ave11/25/24 01/31/25 Utility installations andpavement replacement.EngineeringScott FettigRolling Closure12Evening Wind RdBishop Pine RdDessert Willow01/13/25 03/14/25 Concrete Panels and SideWalkRepairStreetsRoy San MiguelLane Closure13Fannin StAve AAve B12/09/24 01/31/25 Storm Drain being installed Public Works Inspections Collin ColeLane Closure14Harvest Hill DrWaldorf DrHarvest Glen Dr01/06/25 02/07/25 Sidewalk RepairStreetsRoy San MiguelLane Closure15Hickory Creek RdRiverpass DrFM 183003/13/23 12/31/25 Bridge InstallationEngineeringTracy BeckFull Closure16Hickory St WFry StWelch St S12/04/24 01/14/25 Metal flashing and masonryreplacementOtherAlexander CervantesLane Closure17Hillcrest StPanhandle StCrescent St12/27/23 01/31/25 Utility installations andpavement replacement.EngineeringScott FettigFull Closure18Houston PlThomas StBradley St09/27/24 01/31/25 Utility installations andpavement replacement.EngineeringScott FettigFull Closure19Kenwood StWilderness StFox Hollow11/18/24 03/28/25 Reconstruction of the road curband gutter mill subgradestabilizationStreetsJesus RodriguezFull Closure20Margie StAve AAve B11/01/24 01/31/25 Utility installations andpavement replacement.EngineeringScott FettigFull Closure21Marietta StOak St WScripture St09/27/24 01/31/25 Utility installations andpavement replacement.EngineeringScott FettigFull Closure22Mockingbird LnHoward CtLance Ln01/06/25 02/07/25 Sidewalk and ADA repair StreetsRoy San MiguelLane Closure23Morse StLoop 288Mayhill Rd12/02/24 06/27/25 Water Line Replacement andRoad ReconstructionPublic Works InspectionsStreets WaterKristine StewartLane Closure24Mulberry StWelch StBernard St11/29/24 03/31/25 Utility installations andpavement replacement.EngineeringScott FettigFull Closure25Nautical LnHickory Creek RdOcean Dr01/02/25 02/28/25 Water and Storm line tie ins Private DevelopmentGavin PetnerLane Closure26Ocean DrAtlantic DrNautical Ln01/02/25 02/28/25 Sanitary Sewer installPrivate DevelopmentGavin PetnerFull Closure27Panhandle StEctor StAileen St09/27/24 01/31/25 Utility installations andpavement replacement.EngineeringScott FettigFull Closure28Robinwood LnEmerson LnLive Oak St11/12/24 01/20/25 Full Road Reconstruction EngineeringSheldon GatewoodFull Closure29Robinwood LnMistywood LnKayewood Dr01/06/25 01/27/25 RCP Installation WorkEngineeringSheldon GatewoodFull Closure30Smith StHill StDuncan St12/11/24 01/24/25 Manhole Installation in thestreet and water tapsPublic Works Inspections Tasheba JonesLane Closure31Thomas StPanhandle StEmery St10/11/24 01/31/25 Utility installations andpavement replacement.EngineeringScott FettigFull Closure32Unicorn Lake BlvdState School RdWind River Ln12/17/24 02/28/25 Water and Sanitary Sewer tieinsPrivate DevelopmentGavin PetnerLane Closure33Welch StHighland StHickory St08/26/24 04/30/25 Utility installations andpavement replacement.EngineeringScott FettigRolling Closure34Welch St SEagle DrHickory St06/03/24 05/31/25 Utility installations andpavement replacement.EngineeringScott FettigFull Closure35Willowwood StWestwood DrLeslie St01/16/25 02/28/25 Sanitary sewer, water andstorm sewer installPrivate DevelopmentGavin PetnerLane Closure Exported on January 10, 2025 12:20:34 PM CST183 3 Street Closure Report: Completed ClosuresStreet/ IntersectionFromToClosure StartDateClosure EndDateDescriptionDepartmentDepartment Contact Closure Type1Bonnie Brae StWillowwood StWalt Parker Dr12/17/24 12/20/24 Completing SS line connection EngineeringShawn MessickFull Closure2Central AveMaple StHighland St06/03/24 12/20/24 Utility installations andpavement replacement.EngineeringScott FettigFull Closure3Club View DrCreek View CtClub View Ct12/09/24 01/10/25 Street Panel and SidewalkRepairStreetsRoy San MiguelLane Closure4Crescent StEctor StHillcrest St12/27/23 12/31/24 Utility installations andpavement replacement.EngineeringScott FettigFull Closure5Luck Hole DrPine Hills LnPenina Trl11/12/24 01/03/25 Concrete panel Repair StreetsRoy San MiguelLane Closure6Nautical LnHickory Creek RdOcean Dr12/12/24 01/01/25 Water and Storm line tie ins Private DevelopmentGavin PetnerLane Closure Exported on January 10, 2025 12:20:58 PM CST184