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HomeMy WebLinkAboutNorth Park Economic Impact and LMI Analysis - NRMEDD2013 North Park Economic Impact Study and Job Benefit Analysis ':a► LIMA = .L" C � � a r,.. '� '� � . . 11 t pop lit Rob Gilmore, Executive Director Northern Rocky Mountain EDD 2/10/2013 / /ice Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT Contents GeneralProject Description .......................................................................................... ..............................3 Definitionsand Methods .............................................................................................. ............................... 3 ExecutiveSummary: ............................................................................................................ ......................... 5 Backgroundand Methodology: ................................................................................................................... 6 Table 9.3 Mandeville Land Use Demand Summary ........................................................ ..............................7 Calculation of Moderate Income Benefit ........................................................................ ..............................8 Table 1— Calculation of Direct and Indirect Benefits ...................................................... ..............................9 Findings and Conclusions of Moderate Income Benefits ............................................... .............................10 City of Bozeman, North Park Phase 1 Economic Impact Analysis .................................. .............................11 Appendix 1 Montana 2013 HUD Income Limits ............................................................. .............................18 Appendix 2 Job Service Report on Employment Benefits and Wage Breakout ............. .............................18 "Serving Gallatin and Park Counties of Southwest Montana" _"O�ZZA,91,k Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT General Project Description This analysis pertains to the North Park industrial property owned by the City of Bozeman, Montana. The City has recently undertaken studies that forecast infrastructure costs and anticipate tenant square footage across multiple phases of the Park's development. This study seeks to estimate the economic benefits of Phase I and the Moderate Income Job benefits; specifically related to the following activities: 1. Park infrastructure development 2. Construction costs related to tenant(s) build -outs 3. Operational revenues related to tenant(s) first -year earnings Definitions and Methodsl The Project's analysis is summarized in the following six categories: 1. Gross Economic Output: The aggregated market value of goods and services produced by businesses and government enterprises in the economy. It is essentially equal to the revenue collected by businesses (including indirect taxes) within the County or impact area. Gross State Product: The total of value added created by the production of goods and services in the economy. It represents the sum of labor compensation, capital type income and indirect business taxes. Gross State Product is best described as new money added as a result of the combined activities of this project. 3. Total Labor Income: The compensation to employees and self - employed proprietors including both wages and indirect payments such as retirement benefits, health insurance and other similar fringe benefits. 4. Total Employment: The number of jobs generated within the impact area including full - time and part -time positions, salaried workers and sole proprietors. ' The data sets used in this report are provided by Minnesota IMPLAN Group, Inc (MIG, Inc), the developers of the IMPLAN® economic impact modeling system. IMPLAN® is used to create complete, extremely detailed Social Accounting Matrices and multiplier models of local economies. Implan enables users to make in -depth examinations of state, multi - county, county or sub -county and metropolitan regional economies. Implan is used by more than 1,000 public and private institutions. MIG, Inc. has been developing complex localized databases and serving public and private organizations since 1993. "Serving Gallatin and Park Counties of Southwest Montana" .o�ZZ,Aik Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT S. Capital Income: The sum of income such as business profits, interest and rental income. Capital Income is best described as non -labor benefits. 6. Indirect Business Tax: Taxes and fees not based in the businesses' income. It may represent sales taxes (if any) levied by the state and county and also property taxes levied against businesses as well as federal, state and local fees. "Serving Gallatin and Park Counties of Southwest Montana" / /ice Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT Executive Summary: This findings of this analysis have been produced through the combined result of three studies and related reference materials. The first report was conducted by CTA MXD. A portion of the report included an estimate that 941,000 square feet of light industrial space that would be constructed at Phase I of the North Park project (then called Mandeville Farms). The CTA MXD report also estimated the Phase I infrastructure development at $5,481,311. The second report was conducted by the Northern Rocky Mountain Economic Development District ( NRMEDD). This study used IMPLAN based datasets and other tools combined with real -world experiences in the Bozeman market. The analysis began with CTA's estimated square footage of industrial space and also the projected infrastructure costs. The focus of the analysis was to predict the economic impact and job creation for 1) the infrastructure construction phase, 2) the build -out of the individual industrial space and 3) the benefits of one -year of manufacturing operations. The NRMEDD report predicted that the three Phase I activities listed above would impact 2,436 jobs. The methods for these studies are described later in this report. Next the Bozeman Job Service was provided the NRMEDD analysis. Job Service analyzed the `Total Employment' findings for the 2,436 jobs listed in the NRMEDD report. Specifically, Job Service broke out the wage rates for each of the reported industry sectors shown in Table 1 below. Finally, the Job Service findings were compared with the HUD Income Limits for Gallatin County (attached as Appendix 1 to this report). This review showed that 1,868 jobs (of the 2,436 total job impacts) would benefit Moderate Income workers. All of the wages estimated were above the threshold for Low Income jobs as a result there were no benefits reported in this category. The findings of this report were then presented to the Montana Department of Commerce (via phone conference) for a review and approval of methods. "Serving Gallatin and Park Counties of Southwest Montana" Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT Background and Methodology: This analysis seeks to forecast the economic impacts of the Bozeman North Park industrial property. Currently the property is raw land. There are no significant improvements and no tenants in the Park. It is impossible to predict with certainty the economic impacts of this project. As an aid, IMPLAN datasets, and the real experience of a recent development have been used and melded together to best reflect the impacts. As presented, the report shows a broader view than simply the Project's direct expenditures or employment. For example the analysis measures the economic "footprint" as dollars multiply inside and outside of the market area and includes both direct and indirect impacts. The results of this report are not scientific but are historically - representative of the economic impacts. This report is supported by several inputs and assumptions as follows: 1) The projected infrastructure development cost of $5,481,311 has been independently prepared by CTA. 2) Assumptions have been made to derive the projected revenues for a hypothetical tenant(s). No tenants have been identified at this time, however; to calculate the projected revenues the study used CTA's projected 941,000 square feet of light industrial space scheduled in Phase 1 (see Table 9.3 Land Use Development Strategy below). "Serving Gallatin and Park Counties of Southwest Montana" /�� Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT Table 9.3 Mandeville Land Use Demand Summary2 Table 9.3 Mandeville Land Use Demand Summary Land Use Phase 1 PHASE 2 PHASE 3 = d TOTAL Phases 1 - Segment 4 Retail 63.000 sI 207.000 270.000 g Office 27.000 Af 45.000 &,[ 72.000 g Light !ps(ySV1al 941,000 sf 317.500 sl 1.258.500 of Hotel 90 rooms 90 rooms 'and Use Segment PHASE 1 PHASE 2 PHASE 3 PHASE 4 Retail c.5 acres 19.0 acres 25.5 acres Office 1.5 acres 2.5 acres 4.0 acres Light Industrial 44.5 acres 19.5 acres 64.0 acres Hotel 2.0 acres 2.0 acres 44.5 acres 21.0 acres 11.0 acres 19.0 acres 95.5 acres Note Total Gross ParcefAreas as measured/basedon CTA �jqadftgrt;Jut y 2012 Concept & Phasing P;an Next the study calculated the number of jobs related to square feet of production facility. The following link shows the number of jobs for a given number of square feet by industry sector. http://www.rctlma.org/genpIan./content/apDendix/appendixe.htmi In this study light industry is reported at 1,030 square feet per job. As applied to this project this equals 913 jobs. (Note: A second analysis using IMPLAN datasets calculated 891 jobs for the manufacturing sector based on the projected revenues. The lesser amount was used in reporting job benefits). The next step in this calculation was to estimate the gross sales for the business operations. Using IMPLAN tables and a wood manufacturing industry the results are 11 jobs per million dollars in a Note: The table number of 9.3 was left unchanged to provide easy reference to the CTA report. "Serving Gallatin and Park Counties of Southwest Montana" Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT sales3. Dividing the 913 jobs by 11 jobs per million in sales X $1 million equals $83,053,839 in calculated sales. 3) The next step was to estimate the business - related construction costs. Comparables were used that reflect actual industrial studies for the City of Bozeman. Comparable showed an average of $106 per square foot which included construction, design /A &E, equipment, legal finance, computer systems. Multiplying $106 x 941,000 square feet = $99,746,000. When the same percentages are applied for major construction elements the resulting numbers are produced: $34,220,184.59 Building construction $6,736,256.81 Other Design $47,378,339.56 Equipment $11,074,406.20 Architectural and Design $ 336,812.84 Data /computer $99,746,000.00 Total estimated costs for Tenant build -outs Summary of Direct Project costs: This methodology produced the following direct costs for infrastructure development, business development and business operating revenue: Infrastructure Development Costs: $ 5,481,311 Business Development Costs: $ 99,746,000 Business Operating Revenue (1 yr) $ 83,053,839 Total Direct Project $188,281,150 Calculation of Moderate Income Benefit Following completion of the IMPLAN analysis research was conducted to gather HUD income limits. Appendix 1 Montana 2013 HUD Income Limits is attached. In related research, data was gathered for the number of persons per household in Gallatin County.4 The findings were 2.5 persons per household. The results of this research shows that the average moderate income household of 2.5 persons earns less than $39,325. The Bozeman job Service was then asked to evaluate each of the industry sectors and provide a report that estimated the total direct and indirect jobs and then further adjust the number to report on the number of jobs by wage category. The result of the Job Service report (Appendix 2) is summarized below. The schedule provides a break out of all the jobs projected in the North Park Phase I development. 3 The analysis was conducted using 2007 /2008 IMPLAN Datasets. 4 http: / /www. city- data. com /county/Gallatin_ County- MT.html "Serving Gallatin and Park Counties of Southwest Montana" /�� Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT Table 1- Calculation of Direct and Indirect Benefits $15- $20- $15- $20- >$3 < $15 $20 $30 >$30 Jobs < $15 $20 $30 0 Heavy and Civil Engineering Construction 13% 39% 45% 3% 73 9 28 33 2 Miscellaneous Manufacturing 79% 10% 9% 2% 891 704 89 80 18 Fabricated Metal Product Manufacturing 28% 61% 11% 0% 0 0 0 0 Machinery Manufacturing 32% 49% 8% 10% 608 195 298 49 61 Construction of Buildings 8% 73% 20% 0% 568 45 415 114 0 urn ure and'Wbi afeT roduct manufacturing 0 0 0 0 1 50 12 1125 892 326 93 TABLE PREPARED BY MARK ALBEE, BOZEMAN JOB SERVICE, MARCH 2013, SOURCES: 1. MONTANA DEPARTMENT OF LABOR AND INDUSTRY, RESEARCH AND ANALYSIS BUREAU, 2011 -2013, DATA TABLES FOR PERCENT OCCUPATION BY INDUSTRY. 2. US DEPARTMENT OF LABOR STATISTICS, 2011 OCCUPAT109NAL EMPLOYMENT AND WAGE ESTIMATES. "Serving Gallatin and Park Counties of Southwest Montana" 'O�ZZ'Ahk Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT Findings and Conclusions of Moderate Income Benefits The employment benefits of the proposed North Park Phase I development total 2,436 jobs. The tables show that 1,125 of the benefited jobs will earn less than $15.00 per hour. This rate is above low income and within the moderate income group. The tables show that 892 of the jobs will earn $15 to $20 dollars per hour. The pay rates of $15.00 to $19.00 per hour are defensibly within the moderate income range. Assuming that the rate scale of 15 to 20 dollars per hour has six segments and assuming the 892 jobs are roughly divided in this group (there is an argument that most of the jobs could be weighted among the lower income scale) then five of the six segments, or 743 of the jobs would be categorized as moderate income. In summary, 1125 plus 743 or a total of 1868 of the jobs benefited by the project are moderate income workers. The remaining jobs earning more than $20 per hour are not moderate income. Further, the hiring of construction workers needed to build out North Park plus the long -term employment of management and manufacturing workers is not expected to directly benefit low income persons except as they might be hired into moderate income or higher wage positions. "Serving Gallatin and Park Counties of Southwest Montana" "O�ZZ'Alak Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT City of Bozeman, North Park Phase 1 Economic Impact Analysis Prepared by The Northern Rocky Mountain Economic Development District February 2013 "Serving Gallatin and Park Counties of Southwest Montana" /�� Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT Gross Economic Output The aggregated market value of goods and services produced by firms and government enterprises in the County's economy. Implan Industry Frequency Direct Impact Indirect Total Impact Landscaping and professional and One Time technical services related to infrastructure development Architectural and engineering services One Time related to infrastructure development Sign manufacturing related to One Time infrastructure development Utilities and other construction related One Time to infrastructure development Road and bridge construction related One Time to infrastructure development Total Infrastructure Related Benefits Miscellaneous manufacturing related On Going to individual business development Manufacturing and industrial buildings One Time related to individual business development Architectural and engineering services One Time related to individual business development Computer systems design services One Time related to individual business development Equipment acquisition related to One Time individual business development Total Business Related Benefits Totals Impact $602,385 $236,175 $734,547 $53,058 $2,378,468 $1,712,853 $83,053,839 $34,220,184 $427,530 $19,881 $1,017,872 $666,849 $838,560 $1,162,077 $72,939 $3,396,340 $2,379,702 $7,849,618 $32,885,759 $115,939,598 $15,411,830 $49,632,014 $17,810,000 $10,365,998 $28,175,998 $336,812 $197,685 $47,378,339 $20,225,793 $ 188,280,485 "Serving Gallatin and Park Counties of Southwest Montana" $534,497 $67,604,132 $ 261,886,239 $269,735,856 //ice Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT Gross County Product The total value added created by the production of goods and services in the local economy. It is analogous to the concept of Gross Domestic Product at the national level. It represents the sum of labor compensation, capital type income (profits, interests and rents), and indirect business taxes (which are mainly sales taxes, but also include property taxes and government mandated fees). Implan Industry Landscaping and professional and technical services related to infrastructure development Architectural and engineering services related to infrastructure development Road and bridge construction related to infrastructure development Sign manufacturing related to infrastructure development Utilities and other construction related to infrastructure development Total Infrastructure Related Benefits Miscellaneous manufacturing related to individual business development Manufacturing and industrial buildings related to individual business development Architectural and engineering services related to individual business development Computer systems design services related to individual business development Equipment acquisition related to individual business development Total Business Related Benefits Totals: Frequency Initial Purchase Total Impact One Time $602,385 $371,276 One Time One Time One Time One Time On Going One Time One Time One Time One Time $734,547 $567,927 $1,712,853 $1,204,266 $53,058 $34,201 $2,378,468 $1,575,452 $3,753,122 $83,053,839 $53,405,767 $34,220,184 $26,119,714 $17,810,000 $13,770,096 $336,812 $395,349 $47,378,339 $41,904,519 $135,595,445 $188,280,485 $139,348,566 "Serving Gallatin and Park Counties of Southwest Montana" /�� Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT Total Labor Income The compensation to employees and self - employed proprietors including both wages and indirect payments such as retirement benefits, health insurance and other similar fringe benefits. Implan Industry Frequency Initial Purchase Total Impact Landscaping and professional and technical One Time $602,385 $131,492 services related to infrastructure development $344,877 Architectural and engineering services related to One Time $734,547 $453,530 infrastructure development $83,779,499 Road and bridge construction related to One Time $1,712,853 $887,978 infrastructure development Sign manufacturing related to infrastructure One Time $53,058 $27,347 development Utilities and other construction related to One Time $2,378,468 $1,167,120 infrastructure development Total Infrastructure Related Benefits $2,667,467 Miscellaneous manufacturing related to On Going individual business development $20,996,012 Manufacturing and industrial buildings related to One Time individual business development $344,877 Architectural and engineering services related to One Time individual business development $83,779,499 Computer systems design services related to One Time individual business development Equipment acquisition related to individual One Time business development Total Business Related Benefits Totals: $83,053,839 $27,970,564 $34,220,184 $20,996,012 $17,810,000 $10,996,386 $336,812 $344,877 $47,378,339 $23,471,660 $83,779,499 $188,280,485 $86,446,966 "Serving Gallatin and Park Counties of Southwest Montana" /�� Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT Total Employment The number of jobs generated within the County, and includes: * full -time and part-time positions salary workers *sole proprietors. Implan Industry Frequency Initial Purchase Total Impact Landscaping and professional and technical One Time $602,385 4 services related to infrastructure development Architectural and engineering services related to One Time $734,547 12 infrastructure development Road and bridge construction related to One Time $1,712,853 24 infrastructure development Sign manufacturing related to infrastructure One Time $53,058 1 development Utilities and other construction related to One Time $2,378,468 32 infrastructure development Total Infrastructure Related Benefits 73 Miscellaneous manufacturing related to On Going $83,053,839 891 individual business development Manufacturing and industrial buildings related to One Time $34,220,184 568 individual business development Architectural and engineering services related to One Time $17,810,000 289 individual business development Computer systems design services related to One Time $336,812 7 individual business development Equipment acquisition related to individual One Time $47,378,339 608 business development Total Business Related Benefits 2,363 Totals: $188,280,485 2,435 "Serving Gallatin and Park Counties of Southwest Montana" Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT Capital Income The sum of all property type income (such as business profits, interest income and rental income) generated within the County. individual business development $4,004,817 Implan Industry Frequency Initial Purchase Total Impact Landscaping and professional and technical One Time $602,385 $222,291 services related to infrastructure development $40,102,677 Computer systems design services related to Architectural and engineering services related to One Time $734,547 $88,007 infrastructure development One Time business development Road and bridge construction related to One Time $1,712,853 $265,343 infrastructure development Sign manufacturing related to infrastructure One Time $53,058 $5,311 development Utilities and other construction related to One Time $2,378,468 $336,251 infrastructure development Total Infrastructure Related Benefits $917,203 Miscellaneous manufacturing related to On Going individual business development $4,004,817 Manufacturing and industrial buildings related to One Time individual business development $30,900 Architectural and engineering services related to One Time individual business development $40,102,677 Computer systems design services related to One Time individual business development Equipment acquisition related to individual One Time business development Total Business Related Benefits Totals: $83,053,839 $23,143,084 $34,220,184 $4,004,817 $17,810,000 $2,133,847 $336,812 $30,900 $47,378,339 $10,790,029 $40,102,677 $188,280,485 $41,019,881 "Serving Gallatin and Park Counties of Southwest Montana" Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT Indirect Business Tax Are taxes and fees that are not based in the businesses' income. For the most part they represent sales taxes levied by the State and the county, but also include property taxes levied against businesses as well as fees imposed by federal, state and local governments. Implan Industry Landscaping and professional and technical services related to infrastructure development Architectural and engineering services related to infrastructure development Road and bridge construction related to infrastructure development Sign manufacturing related to infrastructure development Utilities and other construction related to infrastructure development Total Infrastructure Benefits Miscellaneous manufacturing related to individual business development Manufacturing and industrial buildings related to individual business development Architectural and engineering services related to individual business development Computer systems design services related to individual business development Equipment acquisition related to individual business development Total business Related Benefits Totals: Frequency Initial Purchase Total Impact One Time $602,385 $17,493 One Time $734,547 $26,397 One Time $1,712,853 $50,945 One Time $53,058 $1,543 One Time $2,378,468 $72,081 $168,459 On Going $83,053,839 $2,292,882 One Time $34,220,184 $1,118,885 One Time $17,810,000 $640,024 One Time $336,812 $19,571 One Time $47,378,339 $7,642,829 $11,714,191 $188,280,485 $11,882,650 "Serving Gallatin and Park Counties of Southwest Montana" �J�ZZ,A�, Northern Rocky Mountain ECONOMIC DEVELOPMENT DISTRICT Appendix 1 Montana 2013 HUD Income Limits Appendix 2 job Service Report on Employment Benefits and Wage Breakout "Serving Gallatin and Park Counties of Southwest Montana" co i4z M�z ayt ef LLj T7 77 LL- r'D � 00 o 4 o o m _ c 41 A � q 2 ° § ° UD 0 § / - § 6 ci { o _ 5 IL K °§ 0 E q° 2 ii C14 C14 « - I k E 2 m �2 0) zt o L Ln o � �� / \ a u f % r, \ \ \ ° , \ a 0 { LL i m § \ co /I\�/'\!0 [ o - / a Ln § § e K K\ / 0 00 / ~ 2 0 2 ® 2 \ ( M \ j a % 3 c - © , ® .\ m K d/\ 0 0/ m_ m« E . $ 2 = U 3 4 _ $ a 0 / . f « a $ a a & & q q ui S L a 2\� - ® \ ~ CL E ) 5 - k k : ® � / g % JJo ' c ® E G u £ \ - ° .0 E # k k k pia § k 0 rk \ //k < m,� . c2 2 r e & 2 m \ k * u 5 S 2® 2 c & 0 N /cam § _ 5 ® 0 $ -0 m 2 _ m & ® -0 § U 0 k ® 0 I CL Qj 7 r 2'f £ E E .. / k o E /U / k2 / In 2 \ 2 k / ! 0 / § _ m# g g g q 4 & 3� 3 Q R@ 2 Q II-q O M N 1 00 O 1 r-4 LD O N m c-1 O 1 0 M O r� M ri 00 O ,tD O to O n1: m o n ri ri Ol a-i M Lr1 N _ m oA° �t t/? 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