EDGEMONT VILLAGE: DEMOGRAPHIC AND FINANCIAL Q&A
Q: Who is undertaking the financial research and what have you been researching?
A: The EIC Finance Team, composed of finance professionals from the Edgemont community, is led by a municipal finance banker with over 20 years of experience working with local governments. Our team stayed out of the sun and spent the summer of 2016:
- Analyzing the Town of Greenburgh’s financial statements, budgets, and bond documents. Key to understanding the financial aspects of Edgemont’s potential incorporation is having a clear picture of how the Town currently spends our tax dollars.
- Reviewing “peer village” financial data. Working with our consultant, we are breaking down the revenues and expenditures of the six existing Greenburgh villages and other comparable villages in lower Westchester. We have also read the feasibility studies, and examined the experiences, of newly incorporated local governments in other parts of the country. This work will allow for the building of a revenue and expenditure model for the proposed Village of Edgemont.
- Meeting with experts. We have discussed Edgemont’s potential incorporation with municipal finance bankers and consultants; Westchester village and city mayors, managers, treasurers, and department heads; leaders of incorporation movements in other states; and municipal outsourcing experts
Q: Can you share your source information?
A: Yes, please click here.
Q: That’s a lot of information and a bit overwhelming. Could you please start with some basics—like some demographics and tax base information for Edgemont/Greenburgh?
A: The Town has close to 90,000 residents, of which about half live in the existing six villages. The U.S. Census recognizes Edgemont as a “census designated place” because it is a “settled concentration of population identifiable by name but not legally incorporated.” The Edgemont area represents 8% of the town-wide population and 16.7% of Greenburgh’s unincorporated area.
Edgemont’s land area ratios are similar to its population ratios:
But Edgemont’s property valuation ratios are much higher:
On a per capita basis, Edgemont’s property valuations are significantly higher than those of the other six Greenburgh villages:
Q: Where do my taxes go?
A: One important fact about incorporation is that only about 16% of your overall tax bill is relevant to the analysis. For math simplicity, let’s use an example: Mr. and Mrs. Candlelight own a home assessed at $1 million. Their total property tax bill is approximately $36,000, broken down by component roughly as follows:
Only the Greenburgh unincorporated “B” tax, about $5,800 of the bill on the hypothetical $1 million home in this example, is relevant. Upon incorporation, that portion of the tax bill would be paid to the Village of Edgemont instead of to the Town. The elected Village government (rather than the Town) would, in turn, be responsible for appropriating funds for Edgemont services.
Post-incorporation, Edgemont Village residents would still pay a small tax—the “A” tax shown above—to Greenburgh for certain town-wide services such as assessment, animal control, and police SWAT. That tax is only about 1.5% of the overall bill.
Q: What’s the total amount of “B” taxes that would become revenue of the Village upon incorporation? How much total revenue would the Village receive?
A: The EIC is preliminarily estimating $14 million in property taxes and about $2 million in other revenues, plus or minus. Please see Preliminary Revenue Estimate for some detail. The EIC is working with its consultant and will release a full revenue analysis when it is ready.
Q: The 2005 EVEC Report indicated that incorporation could result in a material tax increase under certain scenarios. What is different in 2016 that leads you to believe that incorporation would be tax neutral or favorable?
A: To be as conservative as possible, EVEC assumed a new village of Edgemont would buy land and build a pool, village hall, and police station. Therefore, the EVEC tax-increase scenarios were largely driven by the assumption that the Village would issue $20 - $26 million debt immediately upon incorporation to build infrastructure, including a $12 million pool within Edgemont’s borders and a village hall. The EIC believes that such an approach is neither practical nor necessary. Most U.S. municipalities that have incorporated in the past 10-15 years initially acquired their major services through contracts. The EIC’s models assume a similar approach for the early years of Edgemont’s incorporation.
Q: The revenue information is helpful, but obviously the community needs to see a ground-up budget that includes expenditures and addresses overall feasibility. Why is that taking so long?
A: Preparing a detailed report on the potential operating and capital/start-up costs associated with incorporation is (and should be) time-consuming. We have done a significant amount of research and data analysis but to do it properly and thoroughly takes time. The results will be shared when the EIC and its consultant believe they are ready for wide distribution.
Q: Clearly the EIC thinks that incorporation is financially feasible, or you wouldn’t be spending this much time on the effort. What are the main reasons you think so?
A: There are several reasons we continue to believe that Edgemont would be financially self-sufficient at or near the current tax effort:
- Edgemont’s tax base is sizeable. One of the key metrics in analyzing the long-term financial viability and creditworthiness of any U.S. local government is the magnitude of its taxable property valuation relative to its population. As shown in Table 3, Edgemont’s ratio is high compared to the six existing Greenburgh villages. In fact Edgemont’s valuation of over $300,000 per capita is actually among Westchester’s highest. Moody’s Investors Service has noted that “full value per capita…shows property tax wealth. The amount of taxable real estate per person indicates the relative capacity of the tax base to pay property taxes and fund the issuer’s spending needs.”
- Edgemont’s $16 million of estimated revenues, when adjusted for population, would be comparable to, and in many cases higher than, other villages. We will provide more financial detail on comparable villages in the feasibility study.
- Although unincorporated Greenburgh is larger than its villages, it does not appear to offer material scale benefits or efficiency. We will provide cost details on all services in the feasibility study, but one important example is the Town’s delivery of parks and recreation services via two separate departments with their own commissioners and administrative staff. Edgemont, as a village, would establish its own budgets accountable only to Edgemont residents.
- Edgemont’s share of Town taxable assessed valuation (TAV) continues to increase, indicating that Edgemont taxpayers are shouldering a growing burden of Town spending. These tax payments represent funds that could support a viable Village of Edgemont.
- Greenburgh’s “B” budget, which is increasingly funded by Edgemont taxpayers as shown Chart 2, above, is not Edgemont-focused in terms of spending. Examples include some $8 million annually on parks and recreation and nearly $5 million on the Town library and associated debt service. Those two items alone cost the sample $1 million home close to $1,000 per year.
Q: Will your expenditure analysis consider legacy debt obligations?
A: Yes. The Village will have to cover a “proportionate share” of certain Town bond obligations; the feasibility study will address those payments.
It is important to note that, while incorporation won’t turn back the clock on Town debt, it will afford Edgemont residents the legal independence and authority to direct our own capital planning process and make responsible borrowing decisions going forward. Our neighbors in Hastings, Ardsley, Irvington, and Dobbs Ferry, among many others throughout Westchester, have earned “Aa” bond ratings and proved more than capable of issuing debt autonomously and managing their own village infrastructure. The EIC believes that Edgemont can, and should, be doing the same as a village.
Q: Will your expenditure analysis consider level of services?
A: Yes. From our research, we’ve learned a lot about service delivery, and our findings absolutely will be part of the feasibility analysis.
Q: When can we expect to see the feasibility study?
We recognize that a complete, third-party study is critical and therefore we have committed the resources (time and money) toward a feasibility report. It should be available in the first half of November.
Q: Once that’s delivered, will we have adequate time to review it and ask questions?