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Analyzing the Benefits and Costsof Economic Development Projects 9. population out-migration may have underused public services and excess infrastructure capac- ity, which could make the cost of providing additional services lower than the average. Jurisdic- tions with excess capacity can absorb growth without necessarily having to spend money on capital improvements. In the case of either rapid growth or decline, the marginal cost approach will produce esti- mates that more accurately represent the actual costs to local government of new development. Instead of assuming that these costs will be consistent with average costs and existing service levels, marginal costing considers the capacity of a jurisdiction's infrastructure and capital facilities in determining the incremental cost of serving one more unit. Specific methods for estimating the marginal costs of providing additional local government services include the following:16 Case study analysis requires detailed information about the existing capacity of a jurisdiction to meet new public service demands. This method relies on interviews with local government department heads to identify either excess capacity or strain on public services and infrastructure and to collect data on the cost to expand services to accommodate the growth expected from a development project. This method assumes that information about actual local service levels and capacity is more accurate than standards based on average data. The case study method can produce detailed and precise results but can be time-consuming and expensive. Most analysts prefer this method despite the possibility that department heads will overstate projected costs to generate more funding for their units. Comparable city analysis relates local government costs to population trends among communities with similar demographic characteristics. Local government expenditure ratios (multipliers) based on the population sizes and growth rates of comparable communities are used to estimate how changes in population arising from new development will affect the marginal costs of public services. The goal is to account for the varying effects of population changes within communities of different sizes in deriving expenditure patterns to use as the basis for estimating future local government service and capital costs. In practice, the comparable city approach is rarely used. Employment anticipation can be used for nonresidential development to estimate future local government costs based on expected changes in employment. This method examines the relationship between employment and local government costs per capita by applying statistical coefficients generated with multivariate regression to the jobs anticipated to result from new development. These coefficients, or "employment anticipation multipliers," have been calculated for standard expenditure categories and represent the effect of one new industrial or commercial employee on local government service costs. The employment anticipation technique is rarely used. 16. Robert Burchell, David Listokin, and William Dolphin, 71ze New Practitioner's Guide to Fiscal Impact Analysis (New Brunswick, N.J.: Center for Urban Policy Research, Rutgers University, 1985); George Erickcek, "Preparing a Local Fiscal Benefit-Cost Analysis,' ICMA IQ Report 37, no. 3 (2005); L. Carson Bise, "Fiscal Impact Analysis: How Today's Decisions Affect Tomorrow's Budget," ICMA IQ Report 39, no. 5 (2007). 24 ©2010 School of Government. The University of North Carolina at Chapel Hill