Year of Publication

2005

College

Martin School of Public Policy and Administration

Executive Summary

Real estate development has effects on the publicly recorded property valuation of a parcel. The extent of the relationship in Lexington-Fayette County demands further analysis. Redevelopment also has unintended social costs the public may be forced to bear. This study presents estimates of the fiscal impact a redevelopment project has on the local tax revenues. The study population used for analysis includes redevelopment projects completed within the last six years in the downtown Lexington area. The research attempts to formalize a relationship among the incremental change in the publicly recorded value, the cost of redevelopment, and the distance the project is from downtown to estimate new property tax revenues. Redevelopment costs and distance from downtown are regressed on the Fayette County Property Valuation Administrator property value change corresponding to redevelopment. Constants derived from previous research approximate the effect redevelopment has on occupational licenses fees. Combining the property tax and occupational license fee streams gives the total estimated incremental tax revenue. Lexington Fayette Urban County Government should examine each project using some sort of analytical tool, such as cost-benefit analysis. The new recurring revenue figures caused by redevelopment must first be used to offset public expenditures and the social costs of each project. If any funds still remain, the incremental revenue may be appropriated for funding other public projects and programs.

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