School Board’s expert predicts 127-198 new students in district as a result of Chap Xing
October 22, 2010
by Susie Pender
According to a report prepared by Robert Charles Lester & Co., the largest real estate advisory firm in the United States, the construction of Chappaqua Crossing will generate 127 (by a conservative estimate) to 198 (by conventional analysis) additional students to be educated by the Chappaqua Central School District.
At $26,000 per pupil, the estimated additional annual cost to the district will be $3.3 million to $5.1 million. With tax revenue from the Chappaqua Crossing residential units estimated at $930,000 annually, the net fiscal impact on the school district will be negative $2.35 (conservatively) to negative $4.20 million per year.
The school board looks to national expert for demographic clarification
So far, four different analyses of the student generation potential of the construction of Chappaqua Crossing have been prepared, by BOCES, the School District, FACTS (an demographer hired by New Castle this fall) and HR&A (financial advisors hired by New Castle).
This fall, the school district hired Robert Charles Lester & Co. (RCLCO), a nationally recognized real estate advisory firm with extensive experience in analyzing proposed developments like Chappaqua Crossing to perform an analysis of the potential incremental student enrollment and net fiscal impact from the proposed development of Chappaqua Crossing.
RCLCO, in business for over 40 years, was recommended to the district by one of the big four accounting firms. RCLCO has a balanced client base that includes developers as well as municipalities. Their clients include Apollo Real Estate Advisors, LP, a private equity firm specializing in real estate development; and real estate developers Beazer Homes; K Hovnanian Companies; Suncal Companies; and Toll Brothers, Inc.
On the municipal side, they have represented over 40 cities, including Atlanta, Los Angeles, Dallas, Duluth and Milwaukee.
Yesterday, the School Board presented RCLCO’s report to the members of the New Castle Town Board. The advisory firm’s report consisted of five documents, available here in pdf form:
Document One: Cover letter to Town Supervisor Barbara Gerrard
Document Three: An Overview of RCLCO’s work
Document Four: RCLCO’s Client List
Document Five: RCLCO’s Fiscal and Economic Impact Consulting Experience
RCLCO’s analysis
As RCLCO’s eight-page memorandum explains, “In the first phase of the analysis, the objective was to determine the likely number of students generated from the development of the [Chappaqua Crossing] project for the Chappaqua Central School District, as proposed, and the likely net impact of these students on the school district’s budget. RCLCO is in the process of preparing the second phase of its analysis, which will look in more detailed at the long-range impact of the project on the school district.
RCLCO developed two scenarios of the potential number of students generated by the project: “The first and most likely based on the rates associated with comparable area housing developments and a second more conservative analysis using rates from a boarder sample of County housing as derived from U.S. Census American Community Survey 2006-2008 Public Use Microdata Sample (PUMS) data.” From an industry-standard point of view, PUMS-based analyses are considered conservative.
The report makes clear that analysis of student general must consider two sources of students, those from Chappaqua Crossing and those who will move into the district into the houses vacated by empty nesters who will move into Chappaqua Crossing. As the report states, “an important variable of that component is the number of buyers at Chappaqua Crossing expected to come from the local market.”
Under Scenario One, RCLCO looked at comparable multifamily communities in the Chappaqua school district, Byram Hills school district and Briarcliff Manor school district, and found that units in such communities generated 0.39 students per household. So the total 199 units at Chappaqua Crossing multiplied by 0.39 students per household yields 78 new students from Chappaqua Crossing.
Students generated by homes vacated by empty nesters moving to Chappaqua Crossing
RCLCO estimated that 55% of the buyers in Chappaqua Crossing would come from the local market. The basis of this estimation is, according to RCLCO’s memorandum, “U.S. Census data indicating that approximately 55% of people who moved into Westchester County in 2000 moved within the same County.” Assuming that 109 households (55% of 199) were vacated by buyers moving into Chappaqua Crossing, the number of students generated by new families moving into their houses was calculated by looking at the student generation rate of a representative neighborhood, which in this case was Random Farms, which has a rate of 1.27 children per household. This analysis results in another 120 students, for a total of 198 students generated by the construction of Chappaqua Crossing residential units.
In Scenario Two, RCLCO used PUMS data to calculate the rate of students generated from multifamily communities as 0.31 and the rate of students generated by the families moving into houses vacated by buyers moving to Chappaqua Crossing as 0.66. Under this more conservative analysis, the total number of student projected to be generated by the construction of the Chappaqua Crossing residential units would be 127 students.
RCLCO’s memorandum mentioned a third potential source of students based on an emerging phenomenon. They have found some evidence of investors purchasing condominium units in desirable school districts for the purpose of renting them to families wishing to bring their children into the school district. If this were to occur, it would increase the number of students in the district without increasing the tax revenues.
Projected net impact on the school district
RCLCO’s impact analysis is quite straightforward. They used the average cost per student in the Chappaqua Central School District of $26,000. The estimated total cost under Scenario One of 198 students is $5.1 million annually. The estimated total cost under Scenario Two of 127 is $3.3 million annually.
The total tax revenues projected for the new homes in Chappaqua Crossing is $930,000 based on the tax structure proposed in the July FEIS under which all units would be taxed as condominiums. This number will change now that the developer has decided that the 60 townhouses proposed for Chappaqua Crossing will be taxed as “fee simple” like single-family dwellings. This change will be incorporated into RCLCO’s more detailed analysis of the long-range impact of the development on the fiscal health of the school district.
Under the all-condominium tax structure, the net impact of Scenario One would be negative $4.20 million annually; the net impact of Scenario Two would be negative $2.35 million annually.
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To see NCNOW’s archived articles on Chappaqua Crossing, in chronological order from newest to oldest, click HERE.
Multiplying the average cost per student by the number of projected new students is not an accurate way to determine the incremental cost to the community of adding these students. It assumes no economies of scale of a huge existing student body and infrastructures and the current utilization of the classrooms, teachers, administration, etc. If the rest of their study is this sloppy its credibility is completely undermined.
I don’t follow this analysis. In Scenario 1, for example, 78 kids would live in Chapp Xing and 120 would live in houses elsewhere in Chapp. The latter would be covered by taxes calculated at normal fee simple property rates. The 78 would be covered by some mix of condo rates and (given the developer’s townhouse change) fee simple rates. But it appears that the net impact calculation assumed all of the 198 students would be covered by tax revenue at the condo rate, which would significantly understate the total revenue from the 198. If that is correct, this project is still under water (and therefore not acceptable), but by less than the amount presented. If there is an appropriately responsible deal to be negotiated, understanding that the gap may be smaller than represented could be helpful.
Or am I missing something here?
Make all the projections you want on number of students and do all the calculations you want on whether this project is above or under water. Those are besides the point. The point is who is taking the risk of any one of those projections being right or wrong? Right now, as proposed, it is the New Castle taxpayer. And, as far as can be established to date, the benefits all inure to the developer.
This is simple. Fee simple in fact. The developer has just agreed to make 60 units fee simple. That leaves 139 to go. Assuming the stipulation housing should have whatever tax break they can get, take them out and that leaves 119 units. Make those fee simple too and the project starts to make sense. Until that, this project is inappropriately placing the risk of significant tax increases on the tax payer.
@ clittle
Actually the method used by the consultant and by NY State(budget divided by students) for calculating costs per student is probably the best way. It uses an average that smooths out the many cases where a change in 1 or a small number of students has a big effect. For example, this year, if one or two more 2nd graders moved into the Westorchard part of the district without anyone leaving, the district would have had to hire another teacher in order to remain within its class size guidelines even if there was capacity at Grafflin or Roaring Brook. So, one additional student would have cost the district $135,000. It works both ways too. One student moving out could allow the district to reduce the number of teachers. That is why declining enrollment up to a certain point is an asset of the district, not something to be freely given to the developer.
Obviously, this development is in only one of the elementary school’s district, Grafflin. So while the district may have capacity in the other grade schools, the only relevant school to consider is Grafflin. I have not looked at the Grafflin class sizes nor do I know if that is published information, but when the developer tries to talk about district capacity she is distorting the information. The only caveat to that is if you think redistricting is appropriate. If you think the uproar over Reader’s Digest is big, watch the uproar over much longer bus rides, missing out on being with friends, etc.
In scenario 1, the students being added outside of Chappaqua Crossing are moving into existing homes that currently do not have any children in the schools. The tax revenue from those homes, however, is already included in the school district’s budget. They represent a net increase in expense with no increase in revenue.
Following this line of reasoning, whenever empty nesters sell their home to a family with children everyone’s school taxes go up. This would be true regardless of whether or not there is any residential development at Chappaqua Crossing.
For example: If a dozen existing single family homes with no children in the schools are all sold to families with 2 children each, the school district needs to generate $624,000 in additional revenue from taxes (24 x $26,000) to pay for the education of these new students. The assessment of the 12 homes does not change, so the tax rate for everyone goes up to generate the additional $624,000. Of course, this assumes that the incremental cost of adding one student equals the current average cost per pupil (which is likely not true).
Mr. Kaufmann,
I think what you are missing is that the 78 students will be living in CC and paying the condo rate. The 110 or so homes that were vacated into CC were sold to new families with new kids coming into the district. New kids coming in but revenue for those homes staying constant - those homes are most likely being sold by empty-nesters who are paying taxes but have no kids in the schools. So if an empty-sells his or her home and moves into CC, kids will now be moving into the house where the empty-nester was formerly living and not using the schools. The SAME tax dollars are being paid on that house that was vacated, but instead two kids are now there at over $50,000 in new costs. I think this is the dynamic you are missing…Candidly, the 198 seems way low to me. 400 new bedrooms at CC and 110 homes turning over. Who would buy a SFH in this town now without kids in the schools and pay the highest property taxes in the U.S.?
To CLITTLE…what part of these statistics conducted by several experts don’t you understand? There are no economies of scale when class size grows and new teachers must be hired to keep within class size guidelines. These new students will need books, supplies, guidance counselors, remediation etc etc. What economies of scale are you referring to when those of us in houses paying full taxes must subsidize those with school children living in CC paying condo rate taxes which are substantially less. The developer is marketing Chap Crossing as family friendly in a great school district. In effect the developer will entice condo buyers saying they can get all the benefits of CCSD and pay lower taxes than if they bought a house. For some reason you don’t see that this is detrimental to homeowners as our taxes rise to accommodate these new condo students. We can argue over whether there will be 70 students, 100 students, or even 200 students but the result will certainly be more students that the rest of us will pay for - that means even higher taxes. My taxes are too high already and I am adamantly opposed to changing our zoning laws to accommodate a developer that bought a commercial parcel of land who now wants to change the law so he can build residential at my expense. That is the bottom line. It should also show you how manipulative the developer and supporters are that the “EXPERTS” with “years of experience” aren’t even in the same ballpark when it comes to estimating the number of probable students that will live in Chapp Crossing.
We have seen at least 6 estimates of student generation by this project that range from 41 to 282. The developers and Town Board experts report a range from 41-58 and the School Board experts started at 282 and are now at 127. The latest includes an estimate that 55% of the units will be bought by Chappaqua Empty Nesters.
The projected fiscal impact on the district has also narrowed significantly as the number of students generated has decreased and the school tax revenue contribution per unit has increased as a result of SG now agreeing to make the 60 townhouses fee simple. NC Note: the contribution for all units and SFH should include not only taxes paid by the owner but the STAR rebates paid to the district.
What is not clear to me after reading the RCLCO report and the announcement of the fee simple modification is if both of these reports are using the same method regarding tax revenue contribution. The RCLCO seems to leave out the commercial tax revenue while the SG announcement does not specify that the commercial it is included but it seems to be. Neither states whether
they are counting taxes paid or the total revenue contribution.
I would like to see a side by side comparison , then a second one using a 27% empty nester buying pattern from RCLCO. Absent strong supporting data the 55% rate seems unreasonable. My research , previously published in NC-NOW shows that the current Condo/FS student ratio is .27 or approximately 1 student for every 4 condos/FS. I understand that my results don’t include empty nester generated students. Yet, it is difficult to postulate that 55% of empty nesters near or in retirement are going to want to stay in such a high tax area.
In addition to the comparison above I suggest a jointly sponsored survey of existing condo owners to determine their initial motivations to purchasing a condo in Chappaqua. We may find the answers shed a great deal of light on this debate.
Jim, I think you are reading it incorrectly when you made the following statement:
“Yet, it is difficult to postulate that 55% of empty nesters near or in retirement are going to want to stay in such a high tax area.”
Best to show some back of the envelope calculations. Suppose the project is built out over 5 years, which means that the projection of 109 empty nesters from Chappaqua would imply about 22 per year. Let’s just say that there are approximately 400 high school graduates every year and that one quarter of those graduates gives rise to an empty nest (probably a conservatively low estimate). This means that there would be 100 empty nests created every year. Even without taking into account existing empty nesters, all that would be required would be 22% to want to remain in town.
Wouldnt most of the economic impact on our taxes (school budget) be negated if all the condo units were fee simple? If so then make that a condition to getting approval for residential. SG wants to build condos then let the owners pay their fair share so that the rest of us don’t have to subsidize condo dwellers. I am an empty nester. I pay full taxes even though my kids are no longer here. Why should I pay more than a condo owner that has kids in school? FEE SIMPLE for all - no exceptions!
@QUESTION?
Perhaps you should ask the Town Board to reconsider reassessing the entire town with a homestead election which would tax ALL condos in town on the same basis as single family homes. This would apply to both existing condos and any to be built later, anywhere in town.
Although the condos in aggregate may be paying enough in taxes to cover the costs of educating all of the students they currently send to the schools, single family homeowners are still subsidizing condo owners (and artificially inflating the value of condos due to the lower taxes).
I still don’t understand why the developer can’t make all the market rate units fee simple? In addition Summitt should post a bond that covers any estimated future costs (high end of the range of the various reports). After a set period of time 3-4 years the actual costs can be determined. If the costs are lower then the amount posted then the monies can be released to the developer. If the actual expenses do turn out to be on the high end then the towns residents have been protected. These two points would take a lot of the economics off the table. However, it would still leave traffic issues, environmental etc.. to be solved.
To QUESTION?:
Please re-read the last para of my 10/25 post above and previous posts. Condo are not subsidized. there is only one student for every 4 condos contributing $6,100. total to school taxes. or $24,400. 94% of the cost. The district then gets almost 7% in state aid which would result in a 100% coverage ratio per child. The empty nesters are subsidizing those households with one or more children who are not contributing a total of 26m per child. (Total contribution includes taxes paid by owner, STAR payments to CCSD from NYS and State Aid.)
To Concerned Citizen:
A thoughtful concern, however whether the residential is built or not we still have the effect of the empty nesters leaving. If the total project is contributing at the rates mentioned above the district will at least have a larger tax base to contend with the projected increases. If it is rejected we will likely see a declining tax asset as the law suits are fought and the added expense of more students as the empty nesters leave. They have many choices now even before this project is considered.
@Jim McCauley
I agree with much of your analysis regarding the potential net impact of residential development at Chappaqua Crossing on the CCSD, but the simple fact of the matter is that all condos have their property taxes subsidized by single family homeowners.
The property tax is an ad-valorem tax, it is apportioned based on value. If a condo with a market value of $500,000 pays less in property taxes than a single family home with the same $500,000 market value, the condo owner is being subsidized by the single family homeowner.
Of course, the other way of looking at this is that condo values are artificially inflated because of their lower tax burden. Buyers are only willing to pay $500,000 for a condo with no property and less square footage than a $500,000 single family home because the property taxes on the condo are half or less than those on the single family home.
Either way, every condo owner is being subsidized by the single family homeowners, regardless of how many children are sent to the schools from each type of property.
