Greensboro, North Carolina Economic Impact Analysis

Transcription

1 Project Report Economic Impacts of Downtown Greensboro Consolidated Campus Prepared for Action Greensboro Greensboro, NC Submitted by AECOM June 6, 2013 Project No N. Washington Street Suite 300 Alexandria, Virginia FAX

2 Table of Contents I. Summary of Key Findings... 4 II. Introduction and Background... 8 General Market Information... 8 University Center Programs... 9 III. Methodology and Key Assumptions RIMS II Multipliers Construction Costs Programs and Employment Students Tax Rates and Methodology IV. Economic Impacts Quantitative Qualitative V. Estimated Fiscal Impacts Construction Ongoing VI. Addendum: Educational Program Visitor Impacts Methodology and Assumptions Economic Impacts Fiscal Impacts AECOM Project No Page 1

3 Index of Tables/Figures Figure 1: Summary of Jobs Supported by Project Component... 6 Figure 2: Summary of University Center Ongoing Impacts... 6 Figure 3: Summary of University Center Economic Impacts... 7 Figure 4: RIMS II Industry Multipliers by Impact Type Figure 5: University Center Employees (Net New to Programs) Figure 6: University Center Students (Net New Residents of Guilford County) Figure 7: University Center Student Visits (Existing Residents or Residents of Other Counties) 19 Figure 8: One-Time Construction Period Economic Impacts Figure 9: Economic Impacts of Campus Operations Figure 10: Computation of Spending by Net New Student Residents Figure 11: Economic Impacts of Spending by Net New Student Residents Figure 12: Economic Impacts of Induced Dining Spending by Existing/Non-Resident Students. 25 Figure 13: Summary of Comparable Campuses Figure 14: One-Time and Ongoing Fiscal Impacts Figure 15: University Center Educational Program Visitors Figure 16: Economic Impacts of Spending by Net New Educational Program Visitors Figure 17: Ongoing Fiscal Impacts for Educational Program Visitor Spending AECOM Project No Page 2

4 General & Limiting Conditions AECOM devoted effort consistent with (i) the level of diligence ordinarily exercised by competent professionals practicing in the area under the same or similar circumstances, and (ii) the time and budget available for its work, to ensure that the data contained in this report is accurate as of the date of its preparation. This study is based on estimates, assumptions and other information developed by AECOM from its independent research effort, general knowledge of the industry, and information provided by and consultations with the client and the client's representatives. No responsibility is assumed for inaccuracies in reporting by the Client, the Client's agents and representatives, or any third-party data source used in preparing or presenting this study. AECOM assumes no duty to update the information contained herein unless it is separately retained to do so pursuant to a written agreement signed by AECOM and the Client. AECOM s findings represent its professional judgment. Neither AECOM nor its parent corporation, nor their respective affiliates, makes any warranty, expressed or implied, with respect to any information or methods disclosed in this document. Any recipient of this document other than the Client, by their acceptance or use of this document, releases AECOM, its parent corporation, and its and their affiliates from any liability for direct, indirect, consequential or special loss or damage whether arising in contract, warranty (express or implied), tort or otherwise, and irrespective of fault, negligence and strict liability. This report may not to be used in conjunction with any public or private offering of securities, debt, equity, or other similar purpose where it may be relied upon to any degree by any person other than the Client. This study may not be used for purposes other than those for which it was prepared or for which prior written consent has been obtained from AECOM. Possession of this study does not carry with it the right of publication or the right to use the name of "AECOM" in any manner without the prior written consent of AECOM. No party may abstract, excerpt or summarize this report without the prior written consent of AECOM. AECOM has served solely in the capacity of consultant and has not rendered any expert opinions in connection with the subject matter hereof. Any changes made to the study, or any use of the study not specifically identified in the agreement between the Client and AECOM or otherwise expressly approved in writing by AECOM, shall be at the sole risk of the party making such changes or adopting such use. This document was prepared solely for the use by the Client. No party may rely on this report except the Client or a party so authorized by AECOM in writing (including, without limitation, in the form of a reliance letter). Any party who is entitled to rely on this document may do so only on the document in its entirety and not on any excerpt or summary. Entitlement to rely upon this document is conditioned upon the entitled party accepting full responsibility and not holding AECOM liable in any way for any impacts on the forecasts or the earnings from (project name) resulting from changes in "external" factors such as changes in government policy, in the pricing of commodities and materials, price levels generally, competitive alternatives to the project, the behaviour of consumers or competitors and changes in the owners policies affecting the operation of their projects. This document may include forward-looking statements. These statements relate to AECOM s expectations, beliefs, intentions or strategies regarding the future. These statements may be identified by the use of words like anticipate, believe, estimate, expect, intend, may, plan, project, will, should, seek, and similar expressions. The forward-looking statements reflect AECOM s views and assumptions with respect to future events as of the date of this study and are subject to future economic conditions, and other risks and uncertainties. Actual and future results and trends could differ materially from those set forth in such statements due to various factors, including, without limitation, those discussed in this study. These factors are beyond AECOM s ability to control or predict. Accordingly, AECOM makes no warranty or representation that any of the projected values or results contained in this study will actually be achieved. This study is qualified in its entirety by, and should be considered in light of, these limitations, conditions and considerations. AECOM Project No Page 3

5 I. Summary of Key Findings The Greensboro Downtown University Campus is proposed as a joint campus, shared by the University of North Carolina Greensboro (UNCG), North Carolina A&T State University (NCA&T), and Guilford Technical Community College (GTCC). Academic programs proposed for the site include Health and Wellness, Global Entrepreneurship, and Degree Completion. Key stakeholders in Health and Wellness programs include UNCG, NCA&T, GTCC, and Cone Health System. Stakeholders in the Global Entrepreneurship and Degree Completion programs include UNCG, NCA&T, GTCC, Guilford College, Greensboro College, Bennett College for Women, and Elon University School of Law. Action Greensboro engaged AECOM to analyze the potential economic impacts of the campus, including one-time impacts from construction and ongoing impacts from new employment and student spending. Some key findings: - The University Center will directly bring 55 new jobs to Guilford County from faculty and staff. - As a result of the new programs, the University Center will add 246 new student residents to Guilford County, generating $1.42 million each year in net new spending to the county on food, retail, restaurants, and household goods. - In addition to spending by the new student residents, other students will make 46,248 student visits to the Downtown because of the University Center. This increased visitation has the potential to bring $69,372 of induced spending that would not have occurred if the downtown campus was not built, since the downtown area has a greater concentration of restaurants and retail than the current class locations. In turn, this will support additional economic activity, earnings, and jobs. - The facility s 105,000-square foot building and 300-space parking structure will cost approximately $40 million to construct, which will support 500 jobs in Guilford County, reflecting earnings of $19 million. - In addition to the jobs, earnings, and other economic activity supported by the construction of the center, it will also support 179 jobs on an annual basis from operations and the student spending explained above. - Similar downtown campus or campus districts that unite multiple institutions have been implemented in other cities, and have created potential for new business development and branding of the area. AECOM Project No Page 4

6 - The facility would bring together institutions currently located outside of the CBD on their own, unique campuses. The move toward uniting academic programs in the CBD could potentially increase the exposure of both Greensboro as a place and of the participating institutions, creating visibility and interest that could extend beyond the immediate activity at the downtown campus. - Investment in the University Center, if strategically planned and coordinated, can energize and spark redevelopment in an area of downtown that is currently underutilized. Educational institutions and health facilities have played major roles in revitalizing entire neighborhoods through key investments because institutional investments are regarded as more stable by the business community. Therefore, a downtown campus can stand as a signal to other potential investors and business owners to consider a downtown location. - The Center s construction is anticipated to generate $1.08 million in state and local sales tax revenues on materials and $673,788 in state income tax revenues. Ongoing annual impacts include $45,306 in state and local sales tax revenues from student spending, $221,401 in state income tax revenues from University Center employees, and $568,197 in property tax revenues AECOM Project No Page 5

7 Figure 1: Summary of Jobs Supported by Project Component Student Induced Dining Spending 1 Student Living Expenses 13 Employee Earnings 165 Construction Soft Costs 143 Construction Hard Costs Figure 2: Summary of University Center Ongoing Impacts $25.00 $19.13 mil Impact ($ millions) $20.00 $15.00 $10.00 $5.00 $1.73 $17.27 $0.13 $5.52 mil $0.28 $0.03 $5.20 $0.00 Output Earnings Employee Earnings Student Living Expenses Student Induced Dining Spending AECOM Project No Page 6

8 Figure 3: Summary of University Center Economic Impacts Economic Impact Output ($ Millions) Earnings ($ Millions) Employment One-Time Impacts Construction Hard Costs $53.99 $ Construction Soft Costs $20.39 $ Total: One-Time Impacts $74.38 $ Ongoing Impacts Employee Earnings $17.27 $ Student Living Expenses $1.73 $ Student Induced Dining Spending $0.13 $ Total: Ongoing Impacts $19.13 $ Source: University of North Carolina at Greensboro; North Carolina A&T State University; Guilford Technical Community College; BEA RIMS II; AECOM, AECOM Project No Page 7

9 II. Introduction and Background Action Greensboro engaged AECOM to analyze the potential economic impacts of the Greensboro Downtown University Campus in Greensboro, North Carolina. The consortium planning the campus has devised preliminary plans along with the relevant program departments from participating schools. The details of the project as of the writing of this report are outlined below. The general program includes a 105,000-square foot university center containing classrooms, laboratories, and student and faculty services. A 300-space parking structure will service the University Center academic space. Additionally, the center may have associated hotel/guest rooms not included in this space. AECOM has been tasked with estimating the potential economic impacts of the proposed development. The analysis quantitatively and qualitatively examines the potential impacts the campus could bring to Greensboro and surrounding Guilford County through its construction and operations. The construction impacts are a one-time impact from the building products and services purchased for construction, while the operating impacts will consider both the spending and employment of the campus activities and the spending students and visitors will bring to Downtown Greensboro. The impacts will be expressed as direct impacts to output, jobs, and earnings as well as indirect and induced impacts as the effect of the spending ripples through the local economy. These are estimated using economic multipliers as provided by the RIMS II model developed by the U.S. Bureau of Economic Analysis. The methodology and definitions of these impacts are explained in the analysis in subsequent sections. In addition to these quantitative data, AECOM uses the experience of similar campuses as well as general knowledge about economic development and real estate development to discuss qualitatively the potential impact such a development could bring to Greensboro. Because of the ongoing planning for this project, it was determined that the conference center and potential guest rooms portion of the plan will be assessed separately. This report addresses the impacts of construction and operations of the University Center, the student spending associated with the development, and visitors driven by educational programs. General Market Information Greensboro is a city of approximately 273,000 residents in central North Carolina, between Winston- Salem and Raleigh. In general, residents enjoy a high quality of life and the city has experienced modest growth and recovery post-recession. Between 2008 and 2011, Greensboro grew by nine percent, adding 22,783 residents. According to the 2013 State of the City report, using 2011 U.S. Census Bureau population estimates, this growth puts Greensboro near the top of growth among its peer cities (Charlotte, Winston-Salem, Raleigh, and Durham in North Carolina; Louisville, KY; AECOM Project No Page 8

10 Greenville and Columbia, SC; Richmond, VA; and Chattanooga, TN). Greensboro is within one of the fastest growing regions in North Carolina, the I-85 Carolina Piedmont corridor. According to the State of the City report, the city grew both in real terms and through annexation. The study also noted that Greensboro has been experiencing sprawl development. While this is a common experience in American cities, investment in the central business district is important to the long-term success of the region. Action Greensboro has taken steps to encourage investment in downtown, including the campus development being examined in this report. University Center Programs The University Center component is proposed as a joint campus shared by the University of North Carolina Greensboro (UNCG), North Carolina A&T State University (NCA&T), and Guilford Technical Community College (GTCC). Academic programs proposed for the site include Health and Wellness, Global Entrepreneurship, and Degree Completion. The University of North Carolina Greensboro, whose main campus is located approximately one mile to the west of downtown, proposes to house the following programs in the University Center: - Degrees Matter: A new program aimed to connect adults to higher education opportunities and careers in key industry sectors. - Global Opportunities Center: A new initiative focused on international business and entrepreneurship, this center will aggregate existing programs with new courses. - Doctor of Nursing Practice (DNP): A new three year graduate degree program offering tracks in nurse anesthesia and adult/gerontological primary care nurse practice. - Registered Nurse to Bachelor of Science in Nursing (RN to BSN): An existing three year undergraduate degree program looking to expand enrollment at the downtown University Center. This program offers a track to a BSN degree for registered nurses. - Accelerated Bachelor of Science in Nursing (Accelerated BSN): A new one year undergraduate program presenting an accelerated track for students already possessing a bachelor s degree. North Carolina A&T, located one mile to the east of downtown, has proposed offering the following programs at the downtown campus: - Accelerated BSN: An existing program with low enrollment, this one year program offers an accelerated track for second career students with a Bachelor s degree. AECOM Project No Page 9

11 - Bachelor of Science in Nursing Completion Option (BSN Completion Option): An existing program with low enrollment, this one-year program is offered to nurses prepared with the Associates degrees. - Nursing Certificate Offerings: Substantial expansion of part-time program for Post- Baccalaureate and Post-Master s students. - Graduate Offerings in Nursing: Expanded offerings are a strategic goal of the A&T Preeminence 2020 long-term strategic plan. - Undergraduate Offerings in Health Fields: Expanded offerings are a strategic goal of the A&T Preeminence 2020 long-term strategic plan. Guilford Technical Community College operates three campuses throughout the county and has proposed to offer their Radiography program in the University Center. This two-year associate s degree program prepares students for certification and careers as radiographers. AECOM Project No Page 10

12 III. Methodology and Key Assumptions RIMS II Multipliers This economic impact analysis looks at both the initial change in the economy by the proposed University Center in other words, the money spent by the center, the people employed at the center, and the students spending in the local economy but also the impacts of those changes on the overall economy of Guilford County, North Carolina. These are known as direct, indirect, and induced effects and are assessed using regional multipliers developed by the Bureau of Economic Analysis (BEA) called the Regional Input-Output Modeling System, or RIMS II. RIMS II defines the impacts described as: Final-Demand Change: The construction expenditures, ongoing employment, and spending of students. Direct: The first level of impacts beyond the initial change in activity by primary affected industries for example, in the case of construction cost, the suppliers of construction materials. Indirect: The value of inputs purchased in subsequent rounds of spending by supporting industries (using the construction cost example, the impacts of manufacturers of construction supplies and raw materials, if applicable). Induced: Value of goods and services purchased by all workers who are affected by the final-demand change. In the construction cost example, the spending of households employed because of the purchases of construction materials. All economic impact studies using multipliers and assumptions have limitations. The quality and detail of inputs is one limitation. Ideally, the analyst would have the exact expenditures of the facility for each and every industry (for example, line by line expenditures on utilities, office products, food, etc.) as well as where the money was spent (in other words, inside or outside of the area of impact, which in this case is Guilford County). This is rarely the case. In most cases, best guess assumptions are made to approximate these expenditures, especially in projects in the planning stages. The impacts can be approached by expenditure by industry in a bill of goods approach, where the effects of expenditures are measured by industry based on a known list of expenditures; by measuring the impact of the final demand change or spending in the industry being examined; or backing into these impacts using known employment and earnings. In this study, a combination of these approaches is used. The methodology for each impact is described later in this report. AECOM Project No Page 11

13 The RIMS II model uses national and regional averages by industry to arrive at the multipliers. It also makes several assumptions that are important and limit the extent of the estimates. No supply constraints this assumes that businesses can increase production without facing higher prices for raw materials. It removes supply/demand from the equation. All businesses in an industry perform in the same way and use the same production process. All expenditures remain the same for example, if sales at a retailer increase, it follows that a job is added. This is of course not the case in reality. In reality, work days may be lengthened, hours may be cut, and other adjustments can be made that affect the economic impacts. Backward linkages, not forward linkages, are considered In other words, how the suppliers for the industry are affected, not how the users of the industry are affected. As an example, in the case of an umbrella factory expansion, the multipliers illustrate how an increase in umbrella production affects the suppliers of the raw materials for umbrellas, not how the retailers purchasing the umbrellas to sell see their sales increase or decrease. Does not account for local supply conditions local supply for expenditures are not always available in one region as they are in another. Though RIMS II is adjusted regionally based on industry concentration, there can be certain goods and services that are both imported into the area from outside and exported. For example, in a construction project purchasing bricks, if there is a brick company within the area, the model assumes those bricks are purchased, when in reality the bricks could be purchased elsewhere. This can inflate the estimates. No regional feedback In reality, while supplies may be purchased outside of the designated area, those industries may purchase goods and services from within the designated area. This is not considered in the model; the model assumes that once the money has left the region, it is permanently gone. No time dimension There is no stated length of time in which the resulting economic impacts occur. In the case of this study, though our inputs are annual expenditures, the full impacts could occur in a month or in several years. Also, there is no defined duration of the initial change in expenditures that is necessary for the impacts to occur. An example of how this might affect impacts is if the impacts are being calculated for a one-day event; it is unlikely that businesses will increase production or hire new workers for a one-day event. The model does not adjust for this. AECOM Project No Page 12

14 This study specifically looks at the following impacts, using the described methodology. The assumptions used for each category and their results are shown in the next section. Economic impacts of construction: The impact of expenditures on construction materials and on earnings of construction workers and professional service providers during the construction period. The study uses total hard construction costs as final demand with multipliers for the Construction industry and total soft costs with multipliers for the professional services industry to estimate impacts. Operations: Operations impacts can be calculated using the multipliers in several ways. One is to take the operating budget of the organization and apply the multipliers for the appropriate industry to it to arrive at the impacts. However, because we have a better estimate of the earnings and jobs than for the overall operating budget by industry, AECOM used the earnings estimates to back into final demand, which uses the multipliers for the Junior Colleges, Colleges, Universities, and Professional Schools industry. Estimates for employment were provided by the various planned programs. Only net new employment in other words, excluding existing employment is considered. Students: Because the University Center will draw students to Downtown Greensboro, it will be responsible for bringing new spending at other businesses. AECOM used estimated students expenditures from the Bureau of Labor Statistics. It was also necessary to estimate what percentage of these were net new (and would not have occurred but for the University Center construction). The final attributable expenditures then have an appropriate retail margin applied depending upon the industry to result in the final demand. This is multiplied by the appropriate industry s multipliers to arrive at the estimated economic impacts. Industry Multipliers To determine the direct/indirect and induced impacts, this study uses multipliers from RIMS II. These vary by industry. The industries used by type of impact are shown in Figure 4 AECOM Project No Page 13

15 Figure 4: RIMS II Industry Multipliers by Impact Type Impact Type Final Demand Direct Effect Type I Type II Type I Type II Ambulatory Health Care Services Output Earnings Employment / Automotive Repair And Maintenance, Except Car Washes Output Earnings Employment Construction Output Earnings Employment Food Services And Drinking Places Output Earnings Employment Junior Colleges, Colleges, Universities, And Professional Schools Output Earnings Employment Performing Arts, Spectator Sports, Museums, Zoos, And Parks Output Earnings Employment Professional, Scientific, And Technical Services Output Earnings Employment Real Estate Output Earnings Employment Retail Trade Output Earnings Employment Transit And Ground Passenger Transportation Output Earnings Employment / Employment multipliers expressed as jobs per $1,000,000 change in final demand. Source: BEA RIMS II; AECOM, AECOM Project No Page 14

16 Construction Costs AECOM received details on the estimated construction costs of the proposed facility from the client. The physical program of the University Center totals 105,000 gross square feet. Hard construction costs for the University Center facility total $21.96 million, equating to $223 per gross square foot. 300 structured parking spaces are allocated to the University Center. At a cost of $24,000 per space, hard costs for University Center parking are estimated at $7.20 million. Soft construction costs are considered separately from hard construction. These include professional services and furniture, fixture, and equipment (FFE). Soft construction costs have been estimated for the entire project at $11.06 million. These have been allocated proportionally to the various components of the project. For purposes of calculating estimated sales and income taxes, the analysis divides hard costs into materials (estimated 60 percent of total) and labor (estimated 40 percent of total). Also, only the share of purchases that occur within Guilford County are counted in the impacts. Seventy percent of all materials are estimated to be purchased within the county. Programs and Employment UNCG, NCA&T, and GTCC plan to participate in the downtown campus s initial phase. UNCG anticipates employing 36.5 new full time equivalent (FTE) employees as part of the Degrees Matter, Global Opportunities Center, and nursing programs. In addition to the new FTE employment, the programs will employ 23 students in research assistantships or other positions. These students are not included in the total FTE employment because they are either not net new and/or are included in student spending calculations. The weighted average annual wages for these FTEs is $68,676. North Carolina A&T State University s programs will employ 16 faculty and staff at weighted annual average wage of $59,024. Guilford Technical Community College will have a radiology technician program which will employ three new faculty members at an average wage of $50,000 annually. In total, there are an anticipated 54.5 net new faculty and staff positions with a weighted annual average wage of $64,814 across all programs in this phase of the campus. AECOM Project No Page 15

17 Figure 5: University Center Employees (Net New to Programs) School, Program & Position Net New FTEs Average Salary University of North Carolina at Greensboro Degrees Matter Executive Director 1.0 $80,000 Assistant Director 1.0 $60,000 Knowledge Management Associate 1.0 $50,000 Lead Academic Coach 1.0 $55,000 Academic Coach #1 1.0 $40,000 Academic Coach #2 1.0 $40,000 Academic Coach #3 1.0 $40,000 Academic Coach #4 1.0 $40,000 Business Services Coordinator 1.0 $37,000 Technology Consultant 1.0 $55,000 Online Faculty Development Specialist 2.0 $100,000 Subtotal: Degrees Matter 12.0 $58,083 Global Opportunities Center Executive Director 1.0 $120,000 Academic Programs Manager 1.0 $70,000 Business Programs Manager 1.0 $70,000 Development Officer 1.0 $80,000 Communications Manager 1.0 $55,000 Program Support Specialist 1.0 $30,000 Evaluator 0.5 $36,000 Budget/finance support 0.5 $36,000 Subtotal: Global Opportunities Center 7.0 $65,857 DNP/RN to BSN/Accelerated BSN Professor 3.0 $100,000 Associate Professor 5.0 $85,000 Assistant Professor 2.0 $75,000 Part-Time Faculty 1.5 $90,000 Health Lab Coordinator 1.0 $50,000 IT Simulation Technician 1.0 $55,000 Computer Support Tech/Library Support 1.0 $60,000 Academic Counselor/Student Affairs 1.0 $65,000 Administrative Assistant 1.0 $40,000 Subtotal: DNP/RN to BSN/Accelerated BSN 16.5 $77,576 Subtotal: UNCG 35.5 $68,676 North Carolina A&T State University All Programs Staff Positions 6.0 $39,759 Faculty Positions 10.0 $70,583 Subtotal: NCA&T 16.0 $59,024 Guilford Technical Community College Rad Tech Faculty Positions 3.0 $50,000 Total: All Schools 54.5 $64,814 Source: University of North Carolina at Greensboro; North Carolina A&T State University; Guilford Technical Community College; AECOM, AECOM Project No Page 16

18 Students In addition to the employment information above, representatives from the various universities planned programs gave AECOM information on the planned number of students in the programs. The details of the programs are shown in Figure 6When stakeholders provided a range of potential enrollment in academic programs, AECOM used the midpoint of the range in this analysis. For purposes of measuring the impacts of spending, students are divided into the following two groups: - New students who do not currently reside in Guilford County but are likely to take up residence ( Net New Student Residents ); and - New students who either already reside in Guilford County or are not likely to take up residence in the county ( Existing/Non-Resident Students ). For net new student residents, impacts are calculated for all living expenses (housing, retail, dining, entertainment, etc.) since this spending would be considered net new to the county. Living expenses of current residents or those not likely to move to the county would not be considered net new and therefore are not analyzed. However, moving academic programs to a downtown area with ample dining options is likely to result in increased spending on dining compared to campus or suburban sites; impacts of this induced marginal spending on dining are calculated on the basis of visits to the downtown campus by existing resident students and non-resident students. UNC Greensboro s programs will serve 556 total students. Of these, it was necessary to determine which would be net new to the county, to adequately estimate the impacts on the county that results directly from the existence of the campus. Of the total number, 143 are estimated to be net new residents to the county. As induced dining expenditures will be estimated on a per trip basis, AECOM also estimated the total number of visits all students will make based on information provided regarding the number of times particular classes meet and the number of classes occurring. For existing/non-resident students, each student would make 76 visits to the campus annually for classes, yielding a total of 31,463 visits. North Carolina A&T State University s programs will have a total of 210 students. Of these, 102 are estimated to be net new residents to the county. Existing/non-resident students of the university s programs will have a total of 8,597 visits, an average of 84 visits per student per year. Because of Guilford Technical Community College s serving primarily county residents, all 36 of its new students are not considered new to the county. These students, however, will make the greatest number of per student visits annually 172 totaling 6,188 annually. AECOM Project No Page 17

19 Figure 6: University Center Students (Net New Residents of Guilford County) School & Program Total Students Pct. New to County /1 Net New Student Residents University of North Carolina at Greensboro Degrees Matter 50 0% 0 Global Opportunities Center 200 0% 0 DNP % 115 RN to BSN 30 52% 16 Accelerated BSN 24 52% 12 Subtotal: UNCG North Carolina A&T State University Accelerated BSN / % 20 BSN Completion Option / % 26 Nursing Certificate Offerings 45 0% 0 Graduate Offerings in Nursing 25 43% 11 Undergraduate Offerings in Health 70 65% 46 Subtotal: NCA&T Guilford Technical Community College Rad Tech 36 0% 0 Total: All Schools / Net new student residents estimated based on percentage of current students at each institution from outside nine local counties (Guilford, Stokes, Forsyth, Davidson, Rockingham, Randolph, Caswell, Alamance, and Chatham), adjusted for undergraduate versus graduate programs. 2/ Programs currently exist with low enrollment. Full estimates of program enrollment assumed to be net new to the school. Source: University of North Carolina at Greensboro; North Carolina A&T State University; Guilford Technical Community College; The University of North Carolina Institutional Research Division; AECOM, AECOM Project No Page 18

20 Figure 7: University Center Student Visits (Existing Residents or Residents of Other Counties) School & Program Total Students Pct. Existing/ Non-Resident Weeks of Class Weekly Visits Existing/Non- Resident Visits University of North Carolina at Greensboro Degrees Matter % ,400 Global Opportunities Center % ,360 DNP % ,013 RN to BSN 30 48% Accelerated BSN 24 48% ,934 Subtotal: UNCG ,463 North Carolina A&T State University Accelerated BSN 30 35% ,745 BSN Completion Option 40 35% ,326 Nursing Certificate Offerings % Graduate Offerings in Nursing 25 57% ,376 Undergraduate Offerings in Health 70 35% ,272 Subtotal: NCA&T 210 8,597 Guilford Technical Community College Rad Tech % ,188 Total: All Schools ,248 Source: University of North Carolina at Greensboro; North Carolina A&T State University; Guilford Technical Community College; The University of North Carolina Institutional Research Division; AECOM, AECOM Project No Page 19

21 Tax Rates and Methodology Sales Tax Sales tax has been calculated for one-time expenditures on construction materials as well as ongoing retail and dining sales attributable to University Center students. The sales tax rate in North Carolina is 4.75 percent plus an additional 2.00 percent collected by Guilford County. Sales tax and hotel room tax revenues from visitors and conference center attendees will be provided in a future addendum. Income Tax Benefits to the state in terms of income tax revenues were calculated for construction employment as well as University Center employees. The average direct earnings of employees are used in the analysis. Income tax computation is based on 2012 tax rates assuming single filing status with standard deduction and one personal exemption. Other factors which may impact taxable income, such as payroll taxes, tax credits, and exemptions for dependents, are not evaluated. Property Tax For the purposes of this analysis, the replacement cost (i.e. construction cost) is used as a proxy for property value. The estimated amount of FF&E expenditures are used as personal property value. The Guilford County tax rate is for both real and personal property. There is also a municipal/fire district tax on property of Presumably, this amount is used for provision of emergency services and is not part of the general fund. AECOM Project No Page 20

22 IV. Economic Impacts Quantitative This section examines the economic impacts of projected spending by the education center. Construction Construction impacts are based on the hard and soft cost expenditures in the construction of the campus s education facility (the proposed conference facility will be addressed in the addendum to be added at a later date). The costs are the initial change in the industry: for the hard costs, it is the Construction industry (RIMS II code 7) and for the soft costs, it is Professional, Scientific and Technical Services (RIMS II code 48). These initial changes are used in conjunction with the appropriate multipliers to project the direct and indirect and induced impacts on the economy in terms of output, earnings, and jobs. This is a one-time impact covering the full duration of the construction of this phase of the campus. As noted in the methodology section, there is no time associated with when the impacts take place (i.e. not all the impacts that initiate in the construction period are felt in the same period of time). The initial construction of the facility will have a total impact of $74.38 million in output, $19.15 million in earnings, and 500 jobs. Figure 8: One-Time Construction Period Economic Impacts Economic Impact Output ($ Millions) Earnings ($ Millions) Employment Direct/Indirect Impacts Hard Construction Costs $42.56 $ Soft Construction Costs $14.92 $ Total Direct/Indirect Impacts $57.47 $ Induced Economic Impact Hard Construction Costs $11.44 $ Soft Construction Costs $5.47 $ Total Induced Impacts $16.91 $ Total Impact Hard Construction Costs $53.99 $ Soft Construction Costs $20.39 $ Total Economic Impact $74.38 $ Source: University of North Carolina at Greensboro; North Carolina A&T State University; Guilford Technical Community College; BEA RIMS II; AECOM, AECOM Project No Page 21

23 Operations Ongoing impacts of the campus are estimated using both employee compensation and student spending. Campus operations are estimated using employee compensation as the initial change. RIMS II multipliers express the relationship between output, jobs, and earnings and thus enable the estimate of initial change in demand using jobs or earnings. According to the employment estimates shown in the assumptions section, there are an estimated 54.5 new jobs with an associated $3.5 million in annual earnings. Using RIMS II multipliers to determine final demand change suggests $9.09 million in final demand. This results in an annual impact of $17.27 million in output, $5.20 million in earnings, and 165 jobs. This is shown in detail in Figure 9 Figure 9: Economic Impacts of Campus Operations Economic Impact Output Earnings Employment ($ Millions) ($ Millions) Direct/Indirect Impacts $12.66 $ Induced Economic Impact $4.61 $ Total Impact $17.27 $ Source: University of North Carolina at Greensboro; North Carolina A&T State University; Guilford Technical Community College; BEA RIMS II; AECOM, Student Spending Bringing students to the downtown area for classes is likely to result in spending, both for net new students living expenses and in incidental expenses on shopping and eating out. Additionally, having convenient nearby restaurants and retail has the potential to induce spending that may not have occurred elsewhere, even if the students are not net new to the county. Annual living expenses are estimated at $11,189 per student based on values reported in the Bureau of Labor Statistics (BLS) Expenditures of College-age Students and Nonstudents, by Geoffrey D. Paulin, adjusted for inflation, cost of living in Guilford County, and academic program schedules. AECOM estimates that 65 percent of these expenditures, or $7,309, is likely to occur at school rather than one s permanent residence; categories excluded consist of vehicle purchases, health insurance, travel, and vacation. Furthermore, on the basis of consumer spending patterns and current supply of retail space, AECOM estimates that 79 percent of living expenses occurring while at school are likely to occur in Guilford County rather than neighboring areas. AECOM Project No Page 22

24 Figure 10: Computation of Spending by Net New Student Residents Industry Share of Total Spending Spending per Student Share of Spending in County Spending per Student in County Total Spending in County Ambulatory Health Care Services 0.5% $ % $15.53 $3,812 Automotive Repair And Maintenance, Except Car Washes 3.8% $ % $ $51,352 Food Services And Drinking Places 4.5% $ % $ $85,234 Performing Arts, Spectator Sports, Museums, Zoos, And Parks 6.5% $ % $ $124,516 Real Estate 22.9% $2, % $2, $626,814 Retail Trade 27.0% $3, % $2, $516,592 Transit And Ground Passenger Transportation 0.3% $ % $30.19 $7,412 Total 65.3% $7, % $5, $1,415,732 Source: University of North Carolina at Greensboro; North Carolina A&T State University; Guilford Technical Community College; BEA RIMS II; BLS; ESRI; InfoUSA; AECOM, Student spending has an initial demand change of $1.42 million, including $626,814 in Real Estate and $516,592 in Retail Trade. For Retail Trade, it is necessary to apply a retail margin, to account for the majority of the economic activity (i.e. the manufacture and transport of the goods to be sold) happening outside of the county. For this area, that margin is 40 percent. Applying this margin and using the multipliers for the appropriate industries yields a total of $1.73 million in output, $284,461 in earnings, and 13 jobs. This is shown in more detail by industry and by direct/indirect and induced impacts in Figure 11. AECOM Project No Page 23

25 Figure 11: Economic Impacts of Spending by Net New Student Residents Economic Impact Output Earnings Employment Direct/Indirect Impacts Ambulatory Health Care Services $5,316 $2,036 0 Automotive Repair And Maintenance, Except Car Washes $72,977 $14,569 0 Food Services And Drinking Places $122,106 $29,517 2 Performing Arts, Spectator Sports, Museums, Zoos, And Parks $171,595 $42,684 2 Real Estate $814,232 $70,955 4 Retail Trade $282,367 $67,710 3 Transit And Ground Passenger Transportation $11,258 $2,599 0 Total Direct/Indirect Impacts $1,479,852 $230, Induced Economic Impact Ambulatory Health Care Services $2,222 $481 0 Automotive Repair And Maintenance, Except Car Washes $15,955 $3,435 0 Food Services And Drinking Places $32,218 $6,981 0 Performing Arts, Spectator Sports, Museums, Zoos, And Parks $46,581 $10,073 0 Real Estate $77,412 $16,799 1 Retail Trade $73,895 $16,008 1 Transit And Ground Passenger Transportation $2,837 $614 0 Total Induced Impacts $251,121 $54,391 2 Total Impact Ambulatory Health Care Services $7,538 $2,517 0 Automotive Repair And Maintenance, Except Car Washes $88,932 $18,004 1 Food Services And Drinking Places $154,325 $36,497 2 Performing Arts, Spectator Sports, Museums, Zoos, And Parks $218,177 $52,757 2 Real Estate $891,644 $87,754 5 Retail Trade $356,263 $83,718 3 Transit And Ground Passenger Transportation $14,095 $3,214 0 Total Economic Impact $1,730,972 $284, Source: University of North Carolina at Greensboro; North Carolina A&T State University; Guilford Technical Community College; BEA RIMS II; BLS; ESRI; InfoUSA; AECOM, Impacts of induced dining spending in the downtown area were estimated on the basis of annual visits to the downtown campus times an incremental spending increase versus current locations, estimated at $1.50 per visit. Total visits to the downtown campus by students who either already reside in Guilford County or are not likely to take up residence in the county are estimated at 46,248 per year. Applying these parameters results in an annual impact of $125,604 in output, $29,705 in earnings, and 1.5 jobs. AECOM Project No Page 24

26 Figure 12: Economic Impacts of Induced Dining Spending by Existing/Non-Resident Students Economic Impact Output Earnings Employment Direct/Indirect Impacts $99,382 $24, Induced Economic Impact $26,222 $5, Total Impact $125,604 $29, Source: University of North Carolina at Greensboro; North Carolina A&T State University; Guilford Technical Community College; BEA RIMS II; AECOM, Qualitative In addition to the impacts that can be quantitatively assessed, facilities such as the proposed campus create synergies in the surrounding community that could create additional impacts, both tangible and intangible. Currently, the institutions participating in the proposed consolidated campus are located on separate, traditional campuses outside of Greensboro s Central Business District (CBD). The campus of UNC Greensboro is currently approximately a five-minute drive from downtown. While not very distant from downtown, the individual campuses have the feeling of being further away. Though AECOM is not familiar with the current habits of students of these universities, the move toward incorporating facilities in the CBD that both unite the different institutions and integrate with the downtown core, is likely to bring additional students and student spending into the downtown. Conveniently-located proximate restaurants, retailers, and entertainment options are likely to be the beneficiaries of this additional traffic, and these impacts are estimated in the previous section. Some of this spending is induced, which is based on the idea that when there is better or more retail conveniently available to a customer, he or she will spend more than if the retail is further away or of lower quality. This is comparable in some ways to the concept of impulse buys of candy in a grocery checkout lane. In the same way that customers add a candy bar or pack of gum to a grocery order because of the convenience, in a downtown, customers may see a coffee shop and, without having intended to, decide to stop and buy a coffee or snack. Beyond retail, having an educational campus and conference facility in the downtown could potentially increase the exposure of both Greensboro as a place and of the participating institutions, creating visibility and interest that could extend beyond the immediate activity at the downtown campus. Whereas traditional campuses can be literally or figuratively walled off from a community, a facility such as this one, particularly with its proposed Global Opportunities Center and Degrees Matter programs, can engage the community beyond just students enrolled in the programs. The attendees at potential conferences or meetings are also given the opportunity to perhaps discover Greensboro, and specifically downtown. AECOM Project No Page 25

27 Additionally, the new center could spur additional investment in the downtown core. Investment in an area, if strategically planned and coordinated, can have a positive impact in establishing an area of downtown that is currently underutilized. Educational institutions and health facilities have played major roles in revitalizing entire neighborhoods through key investments. An institutional investment of money is often well regarded by the development and business community because it is stable, unlike private investments, which can be riskier. Therefore, a downtown campus can stand as a signal to other potential investors and business owners to consider a downtown location. Some examples of this kind of success are illustrated in the comparables below. Many of the larger campuses have developed and evolved over time, but give an idea of the longer-term potential of investment in campuses and educational districts. Comparables To gauge the extent of possible benefits to downtown, AECOM examined the results of development of several comparable locations in other cities. Though most of these locations vary in one way or another from Greensboro s, they all provide lessons that illustrate the economic and social benefits of an integrated campus development. Figure 13shows a summary of general information about each comparable, with a more detailed description of each case study. Some of the key findings from the evaluation of these comparable facilities are: Institutional investment in these districts and centers have in many cases positively impacted the surrounding neighborhoods. The steady influence of an institution created positive signals to the business community. Many of the comparables established as districts or expanded campuses (versus the conference facilities only) instituted a comprehensive approach to planning the development, which had a greater impact on spinoff development than would one building. These districts, however, took several years or decades in some cases to reach full fruition and in many cases are still growing. Ownership and management structures vary from joint development to sole university development, with management entities secured on a fee basis or as fully responsible for operations and revenue. Most conference facilities are dependent on outside groups. Internal use generates a small portion of total business for the conference facilities and for the associated hotel rooms if applicable. AECOM Project No Page 26