From the Director: AWC Estimates Fiscal
Impacts of I-933 (Property Rights Initiative)

A state law passed in 2004 requires the Office of Financial Management (OFM) to provide citizens with a fiscal analysis of the potential state and local government revenue and expenditure implications of Initiatives on the ballot.

The analysis is to be summarized in the Voter’s Pamphlet and posted on the Secretary of State’s website. OFM asked AWC for city and town fiscal impact estimates for the additional requirements and compensation that could be required to implement Initiative 933.

Statewide Estimates of Impacts on Cities

AWC provided to OFM a Compensation estimate of between $3.5 and $4.5 billion, and an Administrative Costs estimate of between $60 and $76 million per year. These are statewide estimates – AWC does not have estimates for individual cities.

We encourage individual cities and towns to consider the potential fiscal impacts of I-933 on their own budgets. If the Initiative passes, it becomes law on December 7, 2006 – 30 days after the election. We can provide more information to interested cities and towns about the methodology we used to calculate our estimates, as well as sample methodologies used by some of those who responded to our survey. Contact Dave Williams at davew@awcnet.org or Tim Gugerty at timg@awcnet.org.

How Did We Estimate Impacts?

We sent surveys to a number of cities that reflected diversity of geographic region and population size.

The survey asked cities to estimate the impact of I-933 in four possible categories:

• Compensation resulting from actions/conditions impacting land in cities between 1996 and 2006;
• Costs to analyze claims under current, previous or proposed regulations;
• Potential appraisal costs (for determining compensation values); and
• Potential additional litigation costs for claims and appeals.

The information request AWC sent to cities did not include direction on how to calculate impacts. At the direction of and in consultation with OFM, AWC did ask cities to consider the following assumptions: assume current state requirements and regulations would remain in place, reflect costs for past city regulatory actions, and assume cities may only "waive" regulations if expressly authorized to do so in statute.

City responses reflected a variety of methods for arriving at an impact estimate, including consideration of developed and undeveloped parcels, building permit activity levels, valuation of land under critical areas or shorelines regulations, and calculations of assessed values.

AWC projected a statewide estimate by determining population growth rates in cities over the last 10 years, grouping them into five impact categories by growth rates and applying a different average assessed value impact factor to each grouping for an estimated compensation liability for regulations in place between 1996 and the present.

What Did We Find?

Our Compensation estimate for all cities and towns is between $3.5 and $4.5 billion. This estimate is expressed in a range because responding cities identified a wide array of potential impacts. Our Compensation estimate may be conservative in that it only totals approximately 1% of overall statewide city assessed value and does not take into account such factors as:

• The estimate is provided for current liability since 1996 only.
• This estimate is based on current city regulations and state mandates and current levels of population growth.
• The estimate does not reflect potential claims resulting from impacts to value of land for property adjacent to parcels on which reduced enforcement of regulations may be deemed to damage the rights or values of such parcels.
• The estimate is not adjusted for inflation.

Our Administrative Costs estimate for all cities and towns is between $60 and $76 million per year. This takes into account the estimated costs to analyze current and future land use plans and regulations to evaluate impacts from I-933 compensation claims, the costs to conduct appraisals based on OFM’s estimate of appraisal costs, and the costs for associated litigation. A further break-down of these costs is available at www.awcnet.org/initiatives, click on I-933 Advisory.

Unlike the Compensation estimate, which is a cumulative total for years 1996-2006, the estimated Administrative Costs are projected annually into the future beginning after December 2006.

Now What?

OFM will determine how they will include and characterize our estimates in what they submit to the Secretary of State. They will also submit an estimate for state and county fiscal impacts.

We have heard that an independent fiscal analysis is being developed, but have not had contact with those conducting it. Clearly, that analysis won’t be included in anything provided in the Voter’s Pamphlet but is likely to be available during public consideration and debate about I-933 prior to the November 7^th election.

Again, we encourage cities and towns to conduct their own impact estimates to be better prepared if Initiative 933 passes, and to help educate citizens about potential impacts.

While local governments can not use public funds to advance or oppose ballot propositions, cities are able to share factual information with their citizens. More information about what cities may or may not do regarding ballot initiatives can be found in the Land Use section of this Bulletin or online at www.awcnet.org/initiatives. Please also see the Land Use section for more information about I-933.

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