CEDBR Fiscal Benefit – Cost Model
Pattie Bradley, Senior Research Economist
Center for Economic Development and Business Research
September 2016
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History of Model Development
• Court of Tax Appeals (COTA) requires analysis
for tax abatements and IRBs
• State model developed and funded by Kansas
Inc. and Kansas League of Municipalities in
1993, but not kept up-to-date
• Greater Wichita Economic Development
Coalition provided funding for the development
of the CEDBR model in 2005
• The CEDBR model has been expanded to
provide customized analysis across the state of
Kansas
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Model Components
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Data Elements Included in the
Calculations
• Tax rates
• Mill levy rates
• Budget information
• Number of residents
• Number of employed
residents
• Avg. market value of
new residential
property
• Avg. wage all jobs
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• LOB (local option
budget) mill levy rate
• LOB percentage of
general budget
• Capital outlay mill
levy rate
• Number of students
• General Fund Budget
Multipliers
• Calculated by the U.S. Department of
Commerce, Bureau of Economic Analysis
• Measure the impact of business operations on
other businesses in the community
• Measure the impact of payroll expenditures on
other businesses in the community
• Accounts for the indirect and induced impacts of
the original economic event
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Worker Spending Patterns
• A major source of revenue for taxing jurisdictions
is retail sales taxes
• These revenues are estimated from:
– percentage of a company’s sales and purchases subject to sales tax
– Percentage of an employee’s payroll likely to be spent on taxable
goods in a given area
• The model also includes retail sales tax
generated from construction and construction
worker spending patterns
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Substitution
• Individual industries have a predetermined
substitution rate
• Substitution rates are based on the nature of the
industry:
• Base – brings outside dollars in
• Support – reshuffles existing dollars
• Although substitution rates are predetermined
for an industry, they can be customized given
the unique nature of each project
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Firm Data
• Company Information
• Site Location
• Real Property Construction and Improvements
• Firm Operations
• Firm Employment
• Visitors
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Incentives
• Sales Tax Exemption on Construction Materials
• Sales Tax Exemption for Operations
• Property Tax Abatement
• Forgivable Loans
• State Training Dollars
• Infrastructure Improvements
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Impact Report
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Impact Report
• Project summary
• Incentive summary by taxing jurisdiction
• Tax abatement parameters
• Construction impacts
• Substitution
• Multipliers
• Economic impact of firm operations
• Fiscal impact
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– Present value of net benefits
– Return on investment
– Benefit-cost ratio
Impact Report
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Contact Information
Questions or Pricing Information
Please Contact
Pattie Bradley
(316) 978-5036
[email protected]
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