Scenario Planning to Evaluate Cost and Revenue Implication of Different Growth Patterns, Billings, Montana

by Candis Millar, AICP

Billings, Montana is a thriving urban center situated in a rural county.  Past Growth Policies, as comprehensive plans are referred to in Montana, described and evaluated the urban and rural communities in a single document.  For the 2016 update of the Growth Policy, the City of Billings drafted a document separate from the county.  The reasons for separating the documents this time were the differences in population growth, development character, and available infrastructure and financial resources.  Another reason for a stand-alone document was cited by the Billings City Council in its 2014 Strategic Plan.  The council established a goal to promote “comprehensive, cost-effective, orderly growth” and directed staff to prepare a Growth Policy that met that goal.

A Growth Policy is inherently comprehensive and should support orderly growth.  Neither of these objectives, however, considered the fiscal implications of growth and what pattern of growth is most cost-effective.  To accomplish this, the City of Billings planners employed scenario planning to evaluate the cost and revenue effect of different residential growth patterns.

Scenario planning is a data-driven technique that compares multiple outcomes in terms of cost and benefit.  To achieve realistic scenarios that can be readily compared, it was first necessary to establish firm parameters:

  1. The growth rate for the City of Billings will continue at about 1.5 percent annually over the next 20 years resulting in approximately 50,000 more people.
  2. In 2035, the levels of service provided in the new growth areas would be commensurate with the levels of service currently provided in the existing City limits.
  3. The growth indicators measured for costs and revenues must be uniform for all scenarios.
  4. The growth patterns are defined by residential densities that are consistent with all scenarios.

Prior to beginning the scenario planning phase of the Growth Policy update, a thorough public involvement program helped identify areas of preferred growth and valued public services and amenities.  Over 60 public meetings were held, and the participants were asked to answer two questions: In the next 20 years, how do you want Billings to grow?  Where do you want Billings to grow?  The responses to these questions helped planners understand what citizens valued and where growth should be directed.

The preferred growth areas were determined from the public’s response on where future growth should occur.  While the overwhelming response was for infill development within the existing city limits, there was also a strong preference for areas to the north and west of the city.   A suitability analysis was performed on each growth area using ArcGIS[1], removing steep slopes, floodplains and existing development from consideration.  This allowed for a more realistic placement of future land uses and road network. 


Growth Scenario Videos

Go to https://www.facebook.com/westernplanner/ to check out the very cool scenario videos developed for this project!


Oblique view of Billings, Montana showing existing city limits (blue) and adjoining parcels used for Infill scenario, North growth area (magenta), and West growth area (tan).  Grey shading indicates land unsuitable for development.

To create different growth scenarios, hexagonal grids were draped over the north and west growth areas; each grid cell representing approximately 5.7 acres.  A road network derived from existing, proposed and hypothetical roads was added to ensure reasonable access to each scenario[2].  The grid cells were then “painted” with colors representing three different growth patterns: predominantly high density residential development, predominantly low density residential development, and a mix of densities[3].  Each grid cell contained a fixed number of dwelling units based on the residential classification.  The public comments indicated a mix of densities providing a variety of housing choice was preferred.  The scenarios with a mix of densities are referred to as “Public Preferred.”  The Infill scenario utilized existing parcels rather than a grid and the residential densities for vacant or underutilized parcels were determined by the existing zoning.  High Density, Low Density, and Public Preferred scenarios were created in the north and west growth areas and a single scenario was created for the infill area.

 

North growth area comparing three scenarios: High, Low, and Public Preferred.  Different colors represent different land uses and residential densities.  Dark black lines indicate hypothetical road network created to provide connection to existing roads and access to residential areas.

After the growth scenarios were created, growth indicators were selected to approximate the costs of providing preferred services, facilities and infrastructure to the scenarios.  The indicators were based on the public response to “how Billings should grow.”  The extensive list of responses was narrowed down to six key indicators:  Branch Libraries, Walkability, Community Parks, Public Safety, Public Transit, and Arterial and Collector Roads.  City property tax and assessments were also calculated for each of the growth patterns scenarios.

In order to determine the extent the growth scenarios were already served by existing services and facilities, these attributes were mapped in accordance with accepted local standards.  For example, Billings’ Park Planners suggest every residence should be within three miles from a Community Park.  Three-mile radii from existing Community Parks were mapped to determine the existing coverage.  Most of the standards are based on proximity to the facility or infrastructure to dwelling units.  Where gaps occurred in the existing service areas, hypothetical facilities, services or infrastructure were placed in order to ensure full coverage in each scenario[4].

Three-mile radii were created around existing Community Parks (dark green) to identify gaps in coverage.  A hypothetical Community Park was added to complete coverage (light green) in North Low Density scenario.

The number or length of the hypothetical indicators was then calculated and a cost assigned.  The total development cost was calculated for each scenario and the total revenue from taxes and assessments was estimated.  These data were used to compare the fiscal implication of each scenario in two ways: “Total Scenario Development Costs and Revenue” and “Scenario Costs and Revenue per Acre.”  The Low Density scenarios in each growth area demonstrated the highest development cost because of the dispersed pattern of housing units.  However, because this type of housing tends to be of greater value, the revenue generated was also the greatest of the three scenarios.  Conversely, the High Density scenarios in each growth area cost the least to develop but generated the lowest revenue.  This data suggests that low density development would more cost-effective.  If the data are normalized on a per acre basis, the picture changes significantly.  On a per acre basis, the Low Density scenarios result in more development costs but generate more or as much revenue as the High Density scenarios.  The more telling aspect of the comparison, is that the “Public Preferred” scenarios require the least development costs and generate the greatest revenue on a per acre basis.  The Infill scenario, because of its mixed densities and existing infrastructure, resulted in the lowest cost of development and the second highest revenue generated of all scenarios.

Comparison of Costs and Revenue by Scenario

Another way to look at the cost and benefit of each scenario is to consider the return on investment.  In other words, what is the percentage of costs recouped by one year of revenue?  The result is presented as the Return of Investment which calculates the annual revenue divided by the total development costs and presented as a percentage. The Infill scenario resulted in the highest return on investment of all scenarios.

Return on Investment by Scenario

Scenario planning helped demonstrate to the Billings City Council which growth pattern was most cost-effective.  It also helped craft the Growth Policy Statement which is meant to guide the city council and other decision-makers when considering land use applications and infrastructure investments.  The statement incorporates public values as well as data-driven analysis:

“In the next 20 years, Billings will manage its growth by encouraging development within and adjacent to the existing City limits, but preference will be given to areas where City infrastructure exists or can be extended within a fiscally constrained budget and with consideration given to increased tax revenue from development. The City will prosper with strong neighborhoods with their own unique character that are clean, safe, and provide a choice of housing and transportation options.”


Acknowledgements

The 2016 City of Billings Growth Policy – BillingsBeyond was prepared by the staff of the City/County Planning Division.  Technical assistance with the GIS maps and analysis was provided by the City of Billings IT and GIS staff and by GeoData Services, Inc.


Endnotes

  1. ESRI ArcGIS Desktop Basic and Advanced and Spatial Analyst
  2. ESRI Arc GIS Desktop Basic and Advanced and Network Analyst
  3. GeoPlanner for ArcGIS and ArcGIS Online Web App Builder
  4. ArcGIS Desktop and CommunityViz Scenario360

Candi Millar, AICP, retired in July, 2016 as the Director of Planning and Community Services Department in the City of Billings and Yellowstone County, Montana.  One of her last projects as Director was to prepare the City of Billings Growth Policy, an effort that took over 2 years and hundreds of hours of staff time.  She left the department after city council approved the Policy on first reading and before it was officially adopted in August, 2016.  The document represents a culmination of her public involvement, organizational, writing, GIS, and other professional skills she honed over the 42 years of employment both as a geologist and a planner.   She now lives with her husband, Roger and black lab Ouzel, in Olympia, Washington.  Candi is past-president of Western Planning Resources, Inc. and remains on the board as an “at large” director.


Published October 2017

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