The Economic Impact of the Catalytic Redevelopment of the May Company Building

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Alvin Jason Park
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1 The Economic Impact of the Catalytic Redevelopment of the May Company Building August 20, 2015 Levin Research Conference Candi Clouse, MSUS Center for Economic Development

2 Center for Economic Development 2

3 History of May Company Opened in 1915 on Cleveland s Public Square 800,000 square feet of floor space with a later expansion to over one million Built by Daniel Burnham reflecting city beautiful movement Center for Economic Development 3

4 History of May Company Dozens of retail departments City s largest soda fountain Auditorium Hair salon Children s area Center for Economic Development 4

5 History of May Company At the height, it employed 2,500 people Placed on the National Register of Historic Places in 1974 Closed in 1992 after being bought out by Kaufman s (now Macy s) Since the closing of the department store, the first floor has had varied occupants and some upper floors housed a data center Center for Economic Development 5

6 Center for Economic Development 6

7 Public Square Today Horseshoe Casino Situated between the East 4 th Street & Warehouse Entertainment Districts $30 million renovation of Public Square $1.6 billion in new and renovated construction surrounding Public Square Center for Economic Development 7

8 Center for Economic Development 8

9 The Pink Elephant in the Room May Company has been called a huge blight on Public Square $128 million renovation and conversion 353 Apartments 387 Parking spaces Project was already awarded a $5 million Ohio Historic Preservation Tax Credit Center for Economic Development 9

10 Catalytic Certificate In June, 2014, Ohio Governor John Kasich signed legislation allowing for one project in each two-year budget to receive a Historic Preservation Tax Credit worth $25 million Cap has been $5 million $25 million would be spread over five years Center for Economic Development 10

11 Economic Impact Defined An analytical approach used to estimate economic benefits from projects or programs on affected regions Economic benefits determined by spending patterns, investments, and job creation Economic benefits are measured in terms of output, value added, jobs, household earnings, and taxes Measured benefits for a specific region and time period Center for Economic Development 11

12 Economic Impact Defined Employment Impact Number of jobs created Labor Income Impact Payroll paid to employees plus proprietors income Output Impact Total value of goods and services produced Value Added Impact Value of goods and services less the intermediary goods and represents a portion of output (GDP) Tax Impact Federal, state, and local tax revenues Center for Economic Development 12

13 Economic Impact Defined Direct Impact The initial value of goods and services the organization purchases locally Indirect Impact Jobs and production needed to produce goods and services required by organization Induced Impact Change in local households spending due to increased earnings Center for Economic Development 13

14 Economic Impact Defined Direct Indirect Total Economic Impact Induced Center for Economic Development 14

15 Economic Impact Data Construction costs over two years at a cost of $128 million Operation of the apartment building over the first five years at a cost of $39 million Apartments First floor retail Catalyzed projects construction and operation Vacant sites and spaces within 2,500 square feet of the project Center for Economic Development 15

16 Center for Economic 16 Development 16

17 Economic Impact Type of Impact Employment Labor Income Output Value Added Taxes Direct 50,427 $2.2 B $5.8 B $8.3 B $572 M Indirect 13,021 $0.7 B $1.2 B $1.8 B $82 M Induced 13,877 $0.7 B $1.2 B $1.8 B $75 M Total 77,325 $3.6 B $8.2 B $12.0 B $730 M Center for Economic Development 17

18 First Round Competition Huntington Building Cleveland Former Goodyear HQ Akron Center for Economic Development 18

19 First Round Competition Music Hall Cincinnati Center for Economic Development 19

20 The Future In 2015, the state of Ohio has decided to hold an early competition for the next biennium award of the Catalytic Certificate which would move the process ahead 6 months The May Company Development team will reapply next month Center for Economic Development 20

21 The Economic Impact of the Catalytic Redevelopment of the May Company Building Candi Clouse, MSUS Program Manager Center for Economic Development Levin College of Urban Affairs Cleveland State University Cleveland, Ohio Center for Economic Development 21

Prepared for: The Northeast Ohio Regional Sewer District. Prepared by: Ziona Austrian, Ph.D. Candice Clouse, M.S. Iryna Lendel, Ph.D.

Prepared for: The Northeast Ohio Regional Sewer District Prepared by: Ziona Austrian, Ph.D. Candice Clouse, M.S. Iryna Lendel, Ph.D. NORTHEAST OHIO REGIONAL SEWER DISTRICT: ECONOMIC IMPACT OF OPERATING