Economic impact analysis measures the production and spending, earnings, employment, and contribution to gross domestic product that the spending of a company, an event, or a project creates in a defined geographical area.
This analysis recognizes that these impacts extend beyond the spending itself. Purchases made from local suppliers and the hiring of local workers represent additional economic activity elsewhere in the economy. Economic impact analysis is a formalized approach to estimating these additional impacts. These activities also generate local and state tax impacts. Regionomics has developed models to estimate state and local tax impacts as well.
Bill LaFayette, Ph.D., has completed more than 100 economic impact analyses over more than 25 years. These are undertaken for a variety of reasons. Public officials use them to help determine the level of incentives to offer an economic development project. These estimates can also be used to illustrate the far-reaching impact of a company, industry, event, or activity, or advocate for the support of policymakers and the public for the project. These studies can be repeated over time because they use standard methods. They can be undertaken anywhere in the U.S.
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Case Studies
Documenting benefits of economic development. Regionomics has completed numerous economic impact studies for confidential economic development projects. Regionomics was also hired to document the impact of the planned stadium for FC Cincinnati, a Major League Soccer expansion team. This study compared the economic and tax impacts of stadium construction and operation at two alternative Cincinnati sites and one in Newport, Kentucky. The results were used to rally support for construction in the community and among public officials.
Quantifying the benefits of housing development. New housing developments enhance the existing housing stock, bring workers closer to workplaces, and provide new markets for restaurants, retailers, and other businesses providing services to the community. Depending on local ordinances, housing can also provide income tax revenues to the local municipality. In some cases, these developments may also burden schools and other public services. Regionomics has completed numerous housing impact studies, both inside and outside of central Ohio.
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Communicating the impact of small business. The North Market has been a community institution in Columbus since 1876. North Market management needed an estimate of the Market’s economic impact and the resulting tax revenues to the City of Columbus. Retailers and restaurants such as those in the Market are generally considered not to create an economic impact because most of their sales transfer dollars within the economy rather than bringing them in. However, we have argued for years that locally owned, locally serving businesses do create an economic impact by preventing dollars spent at chains from flowing out of the community to remote headquarters and suppliers. The resulting study demonstrated this impact.
Supporting applications for Ohio’s Transformational Mixed-Use Development (TMUD) tax credit. The TMUD program offers a state tax credit for payments made during the development of a mixed-use real estate project. The application for this credit must include an economic impact statement (EIS) documenting that new tax revenues of the project during the first five years will exceed 10% of the eligible development expenditures. Regionomics has provided EISs for TMUD applications in each of the five grant rounds thus far, adapting to the evolving requirements of the Ohio Department of Development (ODOD). The projects have been both inside central Ohio and elsewhere in the state. They have fallen into both geographical categories, “major city” and “general.” While we cannot guarantee that a project will meet the 10% threshold making the project eligible for the program, we work closely with the client to ensure that all eligible expenditures are measured fairly and in accordance with ODOD requirements. We assist the client with deriving credible projections of the operating revenues and employment that underlie the operating period tax revenues.
Supporting EB-5 applications. A specific need for economic impact analysis has been created by the EB-5 (Employment-Based Fifth Preference Category) visa program. This program stimulates foreign direct investment by awarding work visas to foreign national who invest a minimum amount into a designated project that creates at least 10 direct and indirect jobs. Job creation is documented through an economic impact analysis that must meet specific regulatory requirements. Regionomics has completed three of these studies which have been accepted by the U.S. Citizenship and Immigration Services. One of these was for southern Ohio’s Lawrence Economic Development Corporation in their development of The Point industrial park, a facility taking advantage of a location adjacent to both the Ohio River and a major rail line from the Port of Norfolk. Two others were for a mixed-use development in downtown Columbus.