Prepared for: California Investment Regional Center, LLC Los Angeles, CA

Transcription

1 1 Economic Impact of Developing a Hilton Garden Inn With Restaurant and Other Ancillary Features, Located at 9920 Valley Blvd, El Monte, CA, 91731, Los Angeles County Prepared for: California Investment Regional Center, LLC Los Angeles, CA. Prepared by: Michael K. Evans Evans, Carroll & Associates, Inc NW 26 th St. Boca Raton, FL [email protected] March 6, 2013

2 2 Table of Contents 1. Executive Summary 3 2. Tabulation of Principal Results 5 3. Introduction and Scope of Work 9 4. Brief Introduction to the RIMS II Model and its Multipliers Methodology for Calculating Indirect Jobs Economic Parameters for Los Angeles and Orange Counties Location of El Monte Food Center and Maps of the Area Economic Impact of Construction Economic Impact of Hotel and Ancillary Operations Summary Statistics for Entire Project 50 Appendix: Resume of Dr. Michael K. Evans 52

3 3 1. Executive Summary The California Regional Center plans to develop and operate a Hilton Garden Inn hotel with ancillary features located at 9920 Valley Blvd., El Monte, CA 91731, which is in Los Angeles County. The Building will contain three restaurants with a total of 8,900 square feet, a gift shop with 1,000 square feet, a travel and tourist office with 1,600 square feet, and a conference center and banquet room with a total of 6,000 square feet. The hotel, restaurants, and other activities will all be owner-operated, so tenant occupancy issues will not arise for those activities. The total development budget is $32.4 million, of which hard construction costs are $14.77 million, architectural and engineering costs (A&E) are $1.7 million, and purchases of FF&E (indirect and induced jobs only) are $4.0 million; the remaining expenses of $11.93 million, most of which are land costs, are not EB-5 eligible. These figures do not have to be deflated because construction costs have declined since The project is expected to take more than two years to complete, so direct as well as indirect and induced jobs can be counted. The RIMS II final demand multipliers for Los Angeles and Orange County, given below in Table B-2, are for construction, for A&E, and 7.04 for FF&E. Hence a total of 287 jobs would be created from all facets of construction activity. In terms of operating jobs, the hotel will have 152 rooms, with an ADR of $129 and an occupancy rate of 70% in the first year of occupancy. Based on the cost of construction and ADR, the hotel is expected to be an economy hotel, so based on industry surveys it would have an average of 0.31 direct employees per room, or a total of 47 direct employees times the employment multiplier of 1.760, or about 83 jobs. This does not include the ancillary services, which are discussed next. The restaurants, which will also be owned by the developer, are expected to total 8,900 square feet. They will consist of a Chinese restaurant with 4,000 square feet, a Western restaurant with 3,600 square feet, and a café with 1,300 square feet. Based on average sales of $495 per square foot, as explained later in the report, this space would generate about $4.406 million in annual sales. There would also be an additional $1.35 million in sales generated by the 6,000 square foot conference center and banquet hall, for a total of $5.756 million. This figure is deflated to 2007 dollars using an average increase in the CPI for restaurant meals of 3% per year, which equates to $5.19 million in 2007 dollars. When multiplied by the final demand multiplier of 26.15, that would create 135 total jobs. In addition, gift shop sales create 2 direct and 3 total jobs, and travel agency activities create 8 direct and 15 total jobs. Summing these various components, which include 287 jobs from construction, 218 from the owner-operated hotels and restaurants, and 18 jobs from other activities would create a total of 523 new jobs. Since the City of El Monte has been classified by the State of California as a Targeted Employment Area, 52 EB-5 immigrants could each invest $500,000, hence raising a total of $26 million in EB- 5 funds for this project.

4 4 2. Tabulation of Principal Results Table A shows the expenditures or revenue, the final demand multiplier, and the total number of jobs created by the construction, operation, and rental income from the El Monte Hotel project. All figures are permanent jobs. Table A. Summary of Employment and Revenue Estimates Activity Expenditures/ Final Demand Total Revenues Multiplier Jobs ($ million) Hard Construction Costs Purchases of FF&E * Architectural & Engineering Svcs Hotel operations Restaurant operations Gift shop sales Travel agency operations Total * Indirect and induced jobs only All figures calculated from unrounded numbers Table B-1 shows the NAICS codes for each type of economic activity. The descriptions are taken from: Table B-1. NAICS Codes for Each Type of Activity 2362 Nonresidential Building Construction Gift, Novelty, and Souvenir Stores 5413 Architectural, Engineering & Related Services 4232 Furniture and Home Furnishing Merchant Wholesalers 4234 Professional and Commercial Equipment and Supplies Merchant Wholesalers 4236 Household Appliances and Electrical and Electronic Goods Merchant Wholesalers 7211 Traveler Accommodation 7225 Restaurants and Other Eating Places 5311 Lessors of Real Estate 5615 Travel Arrangement and Reservation Services Table B-2 shows the print screen copies of the multipliers used in this study. Please note that for purchases of FF&E, which use the wholesale trade category, only

5 5 indirect and induced jobs are included, so the multiplier is calculated as Col (3)/(Col (6-1)/Col (6) Table B-2. Print Screen Copies of Multipliers (1) (2) (3) (4) (5) (6) Construction Wholesale trade A0000 Retail trade Real estate Architectural, engineering, and related services Travel arrangement and reservation services A0 Hotels and motels, including casino hotels Food services and drinking places Table C shows the annual level of household income, and the output for utilities, maintenance and repair construction, manufacturing output, and professional and business support services for construction, operation, and rental income from the El Monte Hotel Project. Table C. Summary Measures of Economic Impact for Construction and Operation of El Monte Hotel Project All figures in thousands of dollars Hard Construction Costs 9,982 Purchases of FF&E * 1,146 Architectural & Engineering Svcs 1,205 Hotel operations 2,850 Restaurant operations 3,255 Gift shop sales 95 Travel agency operations 521 Total these 7 categories 19,053

6 6 Demand (output) for: Utilities 1,039 Maintenance and repair construction 275 Supplier/vendor links with manufacturers 5,662 Professional and business support services 8,588 Total these 4 categories 15,564 Household Earnings (Labor Income) The jobs created by the project subsequently create new sources of household income. The household income created within the regional center by the construction of the building, income from the operations of the owner-operated restaurants and hotel, gift shop, and travel agency is about $19.1 million. The details used to calculate these figures are given throughout the report. Separate tables are provided for the total number of jobs created, the average earnings per new worker, and the total increase in earnings for each facet of this project. In each case, the RIMS II input/output model has been used to calculate the number of jobs in each major industrial classification, the average earnings per employee, and hence total earnings. The number of jobs by industrial classification is based on calculations imbedded in the RIMS II model for each of the activities as summarized in Table A and documented in detail throughout this report. Further details are given in the tables in Sections (8) and (9). Demand for Business Services, Utilities, Maintenance and Construction, and New Supplier/Vendor Relationships Created with Manufacturers The total economic impact of the regional center from the supplier purchases and business relationships for the construction and operation of the El Monte Hotel project will create approximately $15.6 million in additional economic activity across the region. These supplier purchases are calculated from the indirect increase in output generated by the RIMS II model. It should be noted that some of these supplier industries might potentially locate within the regional center, and their economic output is included in this total. The estimate of supplier purchases is based on the commodity data in the RIMS II input-output model. This data specifies the amount and type of commodity input needed to maintain specific types of business operations. The model estimates the supplier purchases based on the types of jobs and number of jobs that will be created within the regional center. In addition, the model allocates the supplier purchases to

7 7 businesses within the region, based on trade flow data from the U.S. Bureau of Economic Analysis. Utilities include services such as electricity, natural gas, and water and sewer facilities. The economic impacts on utility services total about $1.0 million. Most of this represents the use of utilities in the hotel and restaurants. The figure shown for maintenance and repair construction represents ongoing maintenance on a permanent basis; it does not include the original construction costs. The regional center would create an economic impact of about $0.3 million for ongoing maintenance on the building. New supplier/vendor relationships with manufacturers would create an economic impact of about $5.7 million. Most of this output represents purchases of locally produced materials for the construction of the building. The regional center will also create demand for various types of business services, including professional and scientific services, management of companies, administrative services, and building support and waste management services. The impact of this activity totals about $8.6 million. Most of this represents payments for various professional services associated with construction, such as architects and engineers. It also includes payments for professional services such as legal and accounting that are outsourced by the hotel and restaurants. The figures given in Table C represent only a brief summary of the detailed calculations that have been undertaken and are reported in tabular format throughout the report. The figure for utility output, for example, represents the sum of utility output for each of the categories of economic activity listed in Table A. For repair and maintenance construction office, this figure represents the amount spent times he input/output coefficient showing the total amount of output per $1 million of construction expenditures. The same methodology applies to all the other figures given in Table C. Detailed figures may be found in the tables in Sections (8) and (9), which provide estimates of employment, output, and earnings by 20 major industrial classifications.

8 8 3. Introduction and Scope of Work The California Regional Center plans to develop and operate a Hilton Garden Inn hotel with ancillary features located at 9920 Valley Blvd., El Monte, CA 91731, which is in Los Angeles County. The Building will contain three restaurants with a total of 8,900 square feet, a gift shop with 1,000 square feet, a travel and tourist office with 1,600 square feet, and a conference center and banquet room with a total of 6,000 square feet. This report contains the economic impact analysis for this project, which is based on the RIMS II multipliers for Los Angeles and Orange counties. Section (4) contains a brief description of the RIMS II models and its various multipliers, and Section (5) contains additional information explaining how the indirect jobs are calculated. Section (6) contains and analyzes the key statistics for the twocounty area used to calculate the RIMS II multipliers. Tables 6-1 shows the data for employment by major occupation and industrial classification, income distribution by deciles, mean and median household and family income, and poverty rates for Los Angeles and Orange counties, and compares these figures to the corresponding U.S. statistics. Table 6-2 shows key labor market statistics over the past decade for the State of California, each of these counties, and the two-county total. Tables 6-3 and 6-4 show the level and growth rate of population and personal income for these same areas. Table 6-5 shows the commuting patterns for Los Angeles County, followed by an explanation of how these figures are used to determine the inclusion of Orange County in the multiplier analysis. Section (7) contains maps of the location of the new building and the two counties used in the multiplier analysis. Section (8) presents the economic impact tables for the increase in employment, output, and household earnings, and the average level of output and earnings per new employee, for hard construction costs, EB-5 eligible soft costs, and purchases of FF&E for the 20 major industrial classifications in the RIMS II input/output model. Separate sets of tables are provided for each type of activity. Section (9) presents similar information for the operation of the hotel, food and beverage service, gift shop, and travel agency. Section (10) provides the summary tables for the overall project.

9 9 4. Brief Guide to RIMS II Input/Output Model The following material has been condensed from the RIMS II User Handbook. Introduction and General Comments Effective planning for public- and private-sector projects and programs at the State and local levels requires a systematic analysis of the economic impacts of these projects and programs on affected regions. In turn, systematic analysis of economic impacts must account for the inter-industry relationships within regions because these relationships largely determine how regional economies are likely to respond to project and program changes. Thus, regional input-output (I-O) multipliers, which account for inter-industry relationships within regions, are useful tools for conducting regional economic impact analysis. In the 1970s, the Bureau of Economic Analysis (BEA) developed a method for estimating regional I-O multipliers known as RIMS (Regional Industrial Multiplier System), which was based on the work of Garnick and Drake. In the 1980s, BEA completed an enhancement of RIMS, known as RIMS II (Regional Input-Output Modeling System), and published a handbook for RIMS II users. In 1992, BEA published a second edition of the handbook in which the multipliers were based on more recent data and improved methodology. In 1997, BEA published a third edition of the handbook that provides more detail on the use of the multipliers and the data sources and methods for estimating them. RIMS II is based on an accounting framework called an I-O table. For each industry, an I-O table shows the industrial distribution of inputs purchased and outputs sold. A typical I-O table in RIMS II is derived mainly from two data sources: BEA's national I-O table, which shows the input and output structure of nearly 500 U.S. industries, and BEA's regional economic accounts, which are used to adjust the national I-O table to show a region's industrial structure and trading patterns. Using RIMS II for impact analysis has several advantages. RIMS II multipliers can be estimated for any region composed of one or more counties and for any industry, or group of industries, in the national I-O table. The accessibility of the main data sources for RIMS II keeps the cost of estimating regional multipliers relatively low. Empirical tests show that estimates based on relatively expensive surveys and RIMS IIbased estimates are similar in magnitude. BEA's RIMS multipliers can be a cost-effective way for analysts to estimate the economic impacts of changes in a regional economy. However, it is important to keep in mind that, like all economic impact models, RIMS provides approximate order-ofmagnitude estimates of impacts. RIMS multipliers are best suited for estimating the impacts of small changes on a regional economy. For some applications, users may

10 10 want to supplement RIMS estimates with information they gather from the region undergoing the potential change. To use the multipliers for impact analysis effectively, users must provide geographically and industrially detailed information on the initial changes in output, earnings, or employment that are associated with the project or program under study. The multipliers can then be used to estimate the total impact of the project or program on regional output, earnings, and employment. RIMS II is widely used in both the public and private sector. In the public sector, for example, the Department of Defense uses RIMS II to estimate the regional impacts of military base closings. State transportation departments use RIMS II to estimate the regional impacts of airport construction and expansion. In the private-sector, analysts and consultants use RIMS II to estimate the regional impacts of a variety of projects, such as the development of shopping malls and sports stadiums. RIMS II Methodology RIMS II uses BEA's benchmark and annual I-O tables for the nation. Since a particular region may not contain all the industries found at the national level, some direct input requirements cannot be supplied by that region's industries. Input requirements that are not produced in a study region are identified using BEA's regional economic accounts. The RIMS II method for estimating regional I-O multipliers can be viewed as a three-step process. In the first step, the producer portion of the national I-O table is made region-specific by using six-digit NAICS location quotients (LQs). The LQs estimate the extent to which input requirements are supplied by firms within the region. RIMS II uses LQs based on two types of data: BEA's personal income data (by place of residence) are used to calculate LQs in the service industries; and BEA's wage-andsalary data (by place of work) are used to calculate LQs in the non-service industries. In the second step, the household row and the household column from the national I-O table are made region-specific. The household row coefficients, which are derived from the value-added row of the national I-O table, are adjusted to reflect regional earnings leakages resulting from individuals working in the region but residing outside the region. The household column coefficients, which are based on the personal consumption expenditure column of the national I-O table, are adjusted to account for regional consumption leakages stemming from personal taxes and savings. In the last step, the Leontief inversion approach is used to estimate multipliers. This inversion approach produces output, earnings, and employment multipliers, which can be used to trace the impacts of changes in final demand on and indirectly affected industries. Advantages of RIMS II There are numerous advantages to using RIMS II. First, the accessibility of the main data sources makes it possible to estimate regional multipliers without conducting relatively expensive surveys. Second, the level of industrial detail used in RIMS II helps

11 11 avoid aggregation errors, which often occur when industries are combined. Third, RIMS II multipliers can be compared across areas because they are based on a consistent set of estimating procedures nationwide. Fourth, RIMS II multipliers are updated to reflect the most recent local-area wage-and-salary and personal income data. Overview of Different Multipliers RIMS II provides users with five types of multipliers: final demand multipliers for output, for earnings, and for employment; and direct-effect multipliers for earnings and for employment. These multipliers measure the economic impact of a change in final demand, in earnings, or in employment on a region s economy. The final demand multipliers for output are the basic multipliers from which all other RIMS II multipliers are derived. In this table, each column entry indicates the change in output in each row industry that results from a $1 change in final demand in the column industry. The impact on each row industry is calculated by multiplying the final demand change in the column industry by the multiplier for each row. The total impact on regional output is calculated by multiplying the final demand change in the column industry by the sum of all the multipliers for each row except the household row. RIMS II provides two types of multipliers for estimating the impacts of changes on earnings: final demand multipliers and direct effect multipliers. These multipliers are derived from the table of final demand output multipliers. The final demand multipliers for earnings can be used if data on final demand changes are available. In the final demand earnings multiplier table, each column entry indicates the change in earnings in each row industry that results from a $1 change in final demand in the column industry. The impact on each row industry is calculated by multiplying the final demand change in the column industry by the multipliers for each row. The total impact on regional earnings is calculated by multiplying the final demand change in the column industry by the sum of the multipliers for each row. Employment Multipliers RIMS II provides two types of multipliers for estimating the impacts of changes on employment: final demand multipliers and direct effect multipliers. These multipliers are derived from the table of final demand output multipliers. The final demand multipliers for employment can be used if the data on final demand changes are available. In the final demand employment multiplier table, each column entry indicates the change in employment in each row industry that results from a $1 million change in final demand in the column industry. The impact on each row industry is calculated by multiplying the final demand change in the column industry by the multiplier for each row. The total impact on regional employment is calculated by multiplying the final demand change in the column industry by the sum of the multipliers for each row.

12 12 The direct effect multipliers for employment can be used if the data on the initial changes in employment by industry are available. In the direct effect employment multiplier table, each entry indicates the total change in employment in the region that results from a change of one job in the row industry. The total impact on regional employment is calculated by multiplying the initial change in employment in the row industry by the multiplier for the row. Choosing a Multiplier The choice of multiplier for estimating the impact of a project on output, earnings, and employment depends on the availability of estimates of the initial changes in final demand, earnings, and employment. If the estimates of the initial changes in all three measures are available, the RIMS II user can select any of the RIMS II multipliers. In theory, all the impact estimates should be consistent. If the available estimates are limited to initial changes in final demand, the user can select a final demand multiplier for impact estimation. If the available estimates are limited to initial changes in earnings or employment, the user can select a direct effect multiplier. 5. Methodology for Calculating Indirect Job Gains In spite of the explanation of the RIMS II model given directly above, some USCIS adjudicators have asked for further clarification about how that model is used to determine the increase in the number of indirect jobs. That is an important issue because, unlike the direct job count, which can be verified by USCIS from various payroll and withholding documents, the calculation of indirect jobs cannot be verified directly but depends on mathematical calculations. The general concept is based on the coefficients in the input/output model itself (the same methodology applies to RIMS II, IMPLAN, or any other generally recognized and accepted input/output model). In any given year, the government calculates how much input is used for a given production of output. The detailed figures are taken from the Economic Censuses taken once every five years; the figures are then updated from various annual supplements. Basically the process has two steps, each of which is described next in greater detail. The first is to determine the amount of output, and hence the number of jobs, required to produce a given amount (say $1 million) of the final product or service. These are national coefficients. The second is to determine what proportion of those goods and services are purchased within the local region (the regional purchase coefficients, or RPCs). In the case of a manufacturing process, the national coefficients are based on production functions: how much coke per ton of steel, how much steel per motor vehicle, how much flour for a loaf of bread, and so on. However, most of the jobs are

13 13 created in the service sector, where Commerce Department data are used to determine, for example, how much restaurants spend on laundry services, how much airlines spend for attorneys, and so on. These figures are based on information contained in the various Economic Censuses. The national coefficients would also determine, for example, how many architects and engineers would be hired for a construction project of a given scope and size, and how many new employees at financial institutions would be required to handle the additional cash flow generated by the new business. Both of these are discussed below in greater detail. Even after these coefficients are determined, however, the regional purchase coefficients (RPC) must still be estimated. If, for example, a trucking firm spends 1% of its revenue on accountants, how much of that money is spent on local firms, and how much is spent outside the region? That answer depends on various factors. The most important is the amount of the good or service produced within the region. If a trucking firm, for example, were located in a small county with no accountants, obviously it would not spend any of that money locally. That sets a lower limit but is not generally the case. Instead, a balancing algorithm is used. Suppose, for example, that all the firms producing, distributing, or selling goods and services in a given county spent $10 million on accounting services. Also, suppose that total billings of all accountants in the county were $20 million. In that case, local accountants could handle all the local business, plus business from neighboring counties. If, on the other hand, total accountant billings in the county were only $5 million, local firms could not spend more than half of the money on local accountants. Of course it is possible that there are adequate resources in the county but local firms choose to use companies outside the county; perhaps prices or service is better. No input/output model can account for such anomalies. On the other hand, given transportation costs, it would be highly unusual for a firm to be located in a given location and not serve the nearby businesses, instead choosing only those clients who were farther away. The RIMS II model and other regional input/output models assigns regional purchase coefficients (RPCs) in all cases where the local industry purchases goods and services from local firms. This matrix could have as many as 406 * 406 = 164,836 elements, although in practice many of them are zero. Large counties with a wide variety of businesses have more non-zero elements than small counties with relatively few businesses. In general, the RPCs tend to be close to zero for most manufactured goods, and close to unity for most services. While there are many exceptions to this rule, most firms will use financial, professional, business, and health care services that are located in that county or contiguous areas.

14 14 To take just one example of many, consider the number of new jobs created by architects and engineers for a new construction project of any given size. Most construction cost manuals, such as those published by R. S. Means, indicate that those costs are usually about 5% to 9% of the total job. According to the national input/output file, the figures are 9.2% for commercial construction and 4.5% for industrial construction. These figures can be compared with the proportions of architects and engineers in the specific regional area, based on the RIMS II data that are used to determine the economic multipliers in the specific group. For this 2-county group, the RIMS II model shows proportions of 8.4% for commercial and 4.3% for industrial construction, indicating that 91% of the architects and engineers for commercial jobs and 95% for industrial jobs are hired locally. These figures are fairly typical of other locations and regions; except for signature buildings designed by famous names, most architects and engineers live in the same region as the buildings that are being constructed. To summarize to this point, the number of indirect jobs as a proportion of direct jobs depends on (a) the national relationships, and (b) the regional purchase coefficients. In our presentation for the businesses in this report, we provide further discussion of those industries with the largest number of indirect jobs. However, there are a few industries that produce relatively large numbers of jobs in almost all cases, and these can be generally discussed at this stage in order to avoid repeating this information several times. The industries discussed here include banking, real estate, legal and accounting, architects and engineers, other professional services, employment services, other business services, restaurants, and government. In all of these cases, the vast majority of workers are hired locally. Our comments for the rest of this section are based on the assumption of a $10 million investment; the results are linear. Banking and credit: On an aggregate basis, for every $10 million in deposits, very broadly defined (M3), there is about 1 new banking employee. As a rough rule of thumb, the size of M3 is roughly equal to the size of GDP. Hence we would expect about 1 new banking employee for every $10 million increase in output, as calculated from the RIMS II model. Real estate: Additional real estate employees are based on two factors. One is the leasing activity of the new building, and the other is the increase in residential real estate activity as people get new jobs, either within the area or by moving into the area. On a lease basis, a $10 million investment is likely to result in a building of 80,000 square feet. If it leases for $40/square foot, that would be $3.2 million in annual lease payments, and with a 6% commission would generate $192,000 in revenues, which would account for about 2 new real estate employees (the figure would be less for industrial buildings). The increase in employment would also result in some real estate activity as workers moved into better housing in the same location, or moved in from other areas. In a normal year, there are about 7 million sales of new and existing homes for a labor force of about 140 million, or 5%. Hence if the total increase in employment were 200, that would imply 10 real estate transactions; if they average

15 15 $200,000 at a 6% commission, tha t would be $12,000 per home or a total of $120,000, which would support approximately 3 new real estate jobs. Legal & Accounting: Each of these accounts for about 1% of total employment; so if there were a total increase of 200 jobs, we would expect an average of 4 new employees in this classification. Architects & Engineers: almost all of these jobs stem from the new construction activity. This category has already been discussed above; for a $10 million construction project, which would create about 80 new construction jobs, we would expect about 7 new jobs in architects and engineers for a commercial project and 3 to 4 new jobs for an industrial project. Other professional services: This category includes employees in consulting, scientific research and development, advertising, and management, as well as several other smaller, specialized categories. In general, consulting, management, and the all other category each account for about 1% of total employment, and R&D and advertising account for about ½% of total employment, for a total of about 4% of total employment. This figure will vary widely depending on the degree to which consultants and R&D are used by the new business. Employment services: On a national average basis, 1 out of every 45 people is employed by this industry. Here again, the figures will vary widely depending on (a) the proportion of people who are hired through employment agencies, and (b) the proportion of the work that is outsourced to employment services. Business support services include office management, travel arrangement, security, credit bureaus, telemarketing, and back-office jobs that are outsourced, such as direct mail, copying, and duplicating services. The back-office services would vary widely depending on the type of new business; retail stores, for example, would print and distribute more advertising brochures than a manufacturing operation. On a national average basis, these jobs account for about 2% of total employment. Building support services, which includes janitorial services, lawn maintenance, and waste management. For an office building of 80,000 square feet, the cost would be approximately $2/sq ft per year for maintenance, or $160,000, which would support about 4 new jobs; here again, the figure would be lower for industrial buildings. Restaurants: This category reflects business meals. Of course the number of business meals depends greatly on the type of business; lawyers, accountants, and consultants will have more business meals than manufacturing plants or water treatment facilities. On a national average basis, Commerce Department figures show that total restaurant sales in 2007 were $580 billion, while consumer expenditures at restaurants were $500 billion. However, that figure also includes tips, which are not included in restaurant sales. After subtracting 15% for tips, that indicates about $425 billion in food and beverage purchases by consumers, indicating about $155 billion for business expenses. With a labor force of approximately 140 million, that is equivalent to about $1,100 per employee. Hence if 200 new jobs were created, business meal

16 16 expenses would rise an average of $221,000, which would imply about 4.5 new indirect jobs in the restaurant industry. These figures are likely to be somewhat higher when direct jobs are created for office buildings and hotels. Government: The increase in public sector employees represents the amount funded by increased real estate taxes. For a construction project with $10 million in hard costs, the total value is likely to be between $15 and $20 million when one includes furniture, fixtures, equipment, and land values. Using a national average property tax rate of 1%, that would raise $150,000 to $200,000, which would create 3 to 4 new jobs in the public sector. 6. Key Economic Parameters for Los Angeles and Orange Counties The material in this section is organized as follows. Table 6-1 presents key economic statistics for employment by occupation and industrial classification for both counties, and compares them to the U. S. statistics. Figures for income distribution by decile, mean and median household and family income, and poverty rates are also included in this table. Table 6-2 shows key labor market statistics over the past decade for the state of California, both counties, and the sum of these two counties. Tables 6-3 and 6-4 show the level and growth rate of population and personal income for the same areas. Table 6-5 shows the commuting patterns for Los Angeles and Orange counties. Table 6-1. Key Economic Parameters for Los Angeles and Orange Counties and Comparison With the U.S. Category Los % Orange % U.S. % EMPLOYMENT STATUS Angeles 2011 Population 16 years and over 7,805, % 2,409, % 246,194, % In labor force 5,035, % 1,600, % 157,476, % Civilian labor force 5,032, % 1,598, % 156,460, % Employed 4,420, % 1,444, % 140,399, % Unemployed 612, % 153, % 16,060, % Armed Forces 3, % 2, % 1,016, % Not in labor force 2,769, % 808, % 88,717, % OCCUPATION Civilian employed population ,420, % 1,444, % 140,399, % Management & professional 1,557, % 567, % 50,508, % Service occupations 857, % 245, % 25,739, % Sales and office occupations 1,090, % 389, % 34,447, % Construction, maintenance, repair 351, % 99, % 12,748, % Production & transportation 564, % 141, % 16,954, %

17 17 INDUSTRY Civilian employed population ,420, % 1,444, % 140,399, % Agriculture & mining 23, % 7, % 2,720, % Construction 252, % 77, % 8,563, % Manufacturing 469, % 191, % 14,665, % Wholesale trade 162, % 54, % 3,894, % Retail trade 470, % 165, % 16,335, % Transportation & utilities 226, % 47, % 6,987, % Information 187, % 29, % 2,950, % Finance, insurance & real estate 279, % 124, % 9,233, % Professional & administrative 539, % 202, % 15,079, % Educational services & health care 916, % 272, % 32,601, % Arts, entertain, hotel, food svcs 455, % 145, % 13,210, % Other private services 286, % 82, % 7,056, % Public administration 150, % 44, % 7,098, % INCOME AND BENEFITS Total households 3,201, % 992, % 114,991, % Less than $10, , % 44, % 9,004, % $10,000 to $14, , % 38, % 6,678, % $15,000 to $24, , % 77, % 13,137, % $25,000 to $34, , % 77, % 12,153, % $35,000 to $49, , % 110, % 15,933, % $50,000 to $74, , % 160, % 20,697, % $75,000 to $99, , % 127, % 13,503, % $100,000 to $149, , % 178, % 13,864, % $150,000 to $199, , % 84, % 5,110, % $200,000 or more 185, % 93, % 4,908, % Median household income (dollars) 52, % 72, % 50,502 Mean household income (dollars) 77, % 96, % 69,821 Families 2,140, % 706, % 76,084, % Less than $10, , % 21, % 3,871, % $10,000 to $14,999 91, % 17, % 2,657, % $15,000 to $24, , % 49, % 6,713, % $25,000 to $34, , % 49, % 7,182, % $35,000 to $49, , % 73, % 10,267, % $50,000 to $74, , % 112, % 14,712, % $75,000 to $99, , % 90, % 10,561, % $100,000 to $149, , % 141, % 11,510, % $150,000 to $199, , % 69, % 4,373, % $200,000 or more 148, % 81, % 4,234, % Median family income (dollars) 58, % 81, % 61,455

18 18 Mean family income (dollars) 85, % 107, % 81,375 Per capita income (dollars) 26, % 32, % 26,708 Median earnings for workers 27, % 33, % 29,538 Median earnings for male full-time 41, % 54, % 46,993 Median earnings for female full-time 39, % 44, % 37,133 PERCENTAGE BELOW POVERTY All families 14.6% 124.8% 9.0% 76.9% 11.7% All people 18.3% 115.1% 12.9% 81.1% 15.9% Source: American Fact Finder Please note the red numbers are relati ve to U. S. averages, while the black percentage numbers are relative to the group totals Los Angeles County is large enough that the proportions of employment by industry tend to mirror the overall U.S. economy with only minor exceptions. The major divergence occurs in information services, which includes movie-making; that sector employs 4.4% of the workforce, compared to 2.3% nationally. The proportions of the workforce are about 1% above the national average for professional services; arts, entertainment, and leisure; and other private services. Proportionately fewer workers are found in agriculture, health care, and public administration. In terms of income distribution, the figures are only modestly skewed toward the upper end, with 6.7% of households earning over $200,000 per year, compared to 5.1% nationally. The proportions of households and families in the two lower income brackets are just about the same as the national average. Nonetheless, the poverty rates for all families and all people are 12.8% and 16.1%, compared to 10.5% and 14.3% nationally; the difference is the larger proportion of people in the $15,000 to $25,000 bracket. The mean and median levels of are about the same as the national average, but for households they are about 10% higher, indicating the relatively large proportion of single-people households earning well above average incomes. Turning to Orange County, the biggest bulges relative to the national ratios occurs in manufacturing, where 13.7% of the workforce is engaged, compared to 10.5% nationally, and professional and administrative services, where the ratio is 14.3% compared to 10.6% nationally. Other industries with higher than average proportions include and arts, entertainment, and leisure; and other private services. Similarly to Los Angeles County, there are fewer jobs in health care and public administration. On average, Orange County has a much higher average level of income and lower level of poverty than Los Angeles County. The income distribution statistics show only about half as large a proportion of households and families in the lower two brackets, and twice as large a proportion in the upper two brackets. As a result, average and median income is about 142% of the national average for households, and

19 19 about 131% for families. The poverty rates are only 72% of the national average for families and 75% for all people. Table 6-2. Labor Market Statistics, , for State of California, Los Angeles and Orange Counties, and the 2-County Area Labor Force Employed Unemployed Un Rate, % California ,343,579 16,180,799 1,162, ,390,668 16,200,064 1,190, ,444,436 16,354,779 1,089, ,544,763 16,592, , ,686,689 16,821, , ,921,026 16,960, , ,203,075 16,890,021 1,313, ,208,343 16,144,481 2,063, ,316,411 16,051,513 2,264, ,384,886 16,226,558 2,158, Los Angeles ,770,207 4,447, , ,759,102 4,427, , ,764,553 4,454, , ,771,417 4,516, , ,808,637 4,578, , ,872,503 4,625, , ,934,756 4,565, , ,904,262 4,335, , ,910,534 4,291, , ,924,364 4,318, , Orange ,532,827 1,456,453 76, ,557,014 1,482,577 74, ,575,114 1,508,047 67, ,588,827 1,528,964 59, ,601,757 1,547,349 54, ,608,593 1,546,003 62, ,618,079 1,532,791 85, ,588,848 1,448, , ,591,042 1,440, ,

20 ,603,670 1,464, , counties ,303,034 5,903, , ,316,116 5,909, , ,339,667 5,962, , ,360,244 6,044, , ,410,394 6,126, , ,481,096 6,171, , ,552,835 6,098, , ,493,110 5,783, , ,501,576 5,731, , ,528,034 5,783, , Source: Bureau of Labor Statistics California was much harder hit than the overall economy by the recession, with the unemployment jumping from 6.9% to 10.9% for the two-county region in 2009 and then continuing up to 11.9% in 2010, compared to a much more modest rise from 9.3% to 9.6% nationally. As a result, there were over 768,000 unemployed people in the twocounty region last year. Table 6-3. Level and Growth Rate of Population for the State of California, 2 Counties, and the Total Area California Los Angeles Orange 2 counties ,691,912 9,889,056 3,055,745 12,944, ,338,198 9,826,773 3,017,598 12,844, ,961,229 9,787,400 2,987,177 12,774, ,604,337 9,735,147 2,957,593 12,692, ,250,311 9,700,359 2,931,629 12,631, ,021,202 9,737,955 2,932,261 12,670, ,827,943 9,786,373 2,940,055 12,726, ,574,576 9,793,263 2,941,711 12,734, ,253,159 9,767,145 2,929,376 12,696, ,871,843 9,705,913 2,908,245 12,614, / % 0.63% 1.26% 0.78% 2010/ % 0.40% 1.02% 0.55% 2009/ % 0.54% 1.00% 0.64% 2008/ % 0.36% 0.89% 0.48% 2007/ % -0.39% -0.02% -0.30% 2006/ % -0.49% -0.27% -0.44% 2005/ % -0.07% -0.06% -0.07%

21 / % 0.27% 0.42% 0.30% 2003/ % 0.63% 0.73% 0.65% 2011/ % 0.21% 0.55% 0.29% Source: Bureau of Economic Analysis The housing boom and bust cycle had a reverse impact on the population growth of this region; when housing starts and sales were at their peak levels, people moved out of these counties into more exurban locations; whereas when the housing market collapsed, they could no longer sell their homes and hence had to remain in their previous locations; meanwhile, population growth continued to be boosted by immigrants. Even so, the population growth rate for this two-county area over the decade was less than half the growth rate for the state of California and for the national economy Table 6-4. Level and Growth Rate of Personal Income (Billion $) for the State of California, 2 Counties, and the Total Area California Los Angeles Orange 2 counties / % 4.41% 4.75% 4.50% 2010/ % 2.69% 1.30% 2.32% 2009/ % -5.96% -6.85% -6.20% 2008/ % 4.27% 1.62% 3.53% 2007/ % 3.80% 1.89% 3.26% 2006/ % 7.99% 8.03% 8.00% 2005/ % 5.61% 6.97% 5.99% 2004/ % 4.94% 6.45% 5.36% 2003/ % 3.50% 5.54% 4.05% 2011/ % 3.40% 3.20% 3.35%

22 22 Source: Bureau of Economic Analysis Personal income plunged in this area in 2009, although the drop was just about the same as for the national economy. Growth in the area had been slowing for the previous two years, when it fell below the national average. Over the entire decade, the 3.8% growth rate was virtually identical to the national average. Finally, we turn to the commuting patterns for these two counties, as shown in Table 6-5. Table 6-5. Commuting Patterns for the Los Angeles County Group Los Angeles Orange Total Workforce 4,016,280 1,351,118 Living In: Los Angeles 3,576,406 1,090,763 Orange 185, ,279 These 2 counties 3,761,551 1,251,042 % in 2 counties 93.7% 92.6% Source: 2000 Census Gateway Table 6-5 shows the commuting patterns for Los Angeles and Orange County. This table may be interpreted as follows. In 2000, there were 4,016,280 people who worked in Los Angeles County. Of these, 3,576,406 lived in Los Angeles County and 185,145 lived in Orange County, so the proportion of the workforce living in these two counties was 93.7% of the total workforce. In general, the multipliers are optimized when this proportion is between 90% and 95% of the total workforce.

23 23 7. Location of El Monte Food Center and Maps of Area The property is located at 9920 Valley Blvd, El Monte, CA, as shown in Figure 7-1. The city of El Monte has been designated a Targeted Employment Area by the State of California. Figure 7-1. Location of El Monte Food Center

24 24 Figure 7-2. Location of El Monte Food Center in the Los Angeles Metropolitan Area Figure 7-3. Map of Los Angeles County

25 25 Figure 7-4. Map of Orange County

26 26

27 27 8. Economic Impact of Construction The construction and development budget supplied by the developer is as follows: Table 8-1. Summary of Construction and Development Budget Demolition & rubbish removal $ 0.2 Main building shell $10.27 Foundation $ 1.0 Interior Work $ 3.0 Landscaping $ 0.1 Parking lot $ 0.2 Total Hard Construction Costs $14.77 EB-5 Eligible Soft Costs Architectural drawings $ 0.5 Environmental report $ 0.2 Overhead and administration $ 1.0 Total Eligible Soft Costs $ 1.7 Purchases of FF&E $ 4.0 Non-eligible EB-5 costs Land $ 7.5 Construction permits $ 1.2 Marketing costs $ 0.2 Utility hookup $ 0.2 Application fee for franchise $ 0.08 Interest Charges $ 1.65 Other costs $ 1.1 Total Non-eligible costs $11.93 Total development budget $32.4 The total hard construction cost is $10.27 million for 103,000 square feet, or about $100 per square foot. Also, there are 152 hotel rooms occupying 77,250 square feet, or slightly over 500 square feet per room, including common area space. As will be shown in the next section, these figures are in line with an economy hotel. The input/output model data used in this study are based on 2007 dollars. In many cases, that would require deflation of these figures to that base year. However, construction costs have actually declined since 2007, as shown by the Turner construction cost index, discussed next.

28 28 Turner has prepared the construction cost forecast for more than 80 years. Used widely by the construction industry and Federal and State governments, the building costs and price trends tracked by The Turner Building Cost Index may or may not reflect regional conditions in any given quarter. The Cost Index is determined by several factors considered on a nationwide basis, including labor rates and productivity, material prices and the competitive condition of the marketplace. This index does not necessarily conform to other published indices because others do not generally take all of these factors into account. Further information about this index is available at: Table 8-2. Turner Construction Index The index averaged 830 in Assuming a 2% growth rate for the next two years, which is in line with recent trends, that figure would rise to 847 in 2013 and 864 in

29 , for an average of 854 for these two years. Since most of the construction will take place in 2013 and 2014, the average cost would be no higher than in 2007, so no deflator is required. Table 8-2 and 8-3 show the economic impact of the construction expenditures for the 20 major industrial classifications in the RIMS II input/output model. Tables 8-4 and 8-5 show the same information for the purchases of FF&E, and Tables 8-6 and 8-7 provide the details for architectural and engineering costs. Please note that in these and succeeding tables, output and earnings are given in thousands of dollars. Table 8-3. Increase in Employment, Output, and Earnings for $14.77 Million in Hard Construction Costs Industry Group Employment Output Earnings Agriculture, forestry, fishing, Mining Utilities Construction ,882 5,034 Manufacturing , Wholesale trade 5.5 1, Retail trade , Transportation and warehousing Information Finance and insurance 7.0 1, Real estate and rental and leasing 7.2 2, Professional and scientific services , Management of companies Admin and waste mgmt services Educational services Health care and social assistance , Arts, entertainment, and recreation Accommodation Food services and drinking places Other services Household Total ,080 9,982 Table 8-3 shows there will be a total of 234 direct, indirect and induced jobs created from the hard construction cost budget; direct jobs may be included because the project will take more than two years. Total output will rise about $33.1 million, while indirect and induced household earnings would increase by about $10.0 million.

30 30 Table 8-4 shows that the average output per new worker is about $141,600, while average annual earnings are about $42,700. Table 8-4. Output and Earnings Per New Worker for $14.77 Million in Hard Construction Costs Industry Group Employment Output/Empl Earnings/Empl Agriculture, forestry, fishing, Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation Food services and drinking places Other services Household Total For equipment purchases, USCIS has agreed to count jobs indirectly created outside the geographical boundaries of a Regional Center (RC) in determining whether the RC's business plan complies with EB-5 regulations. The policy change was expressed in a December 3, 2010, letter from USCIS Director Alejandro Mayorkas in response to a letter from Senator Patrick Leahy, Chairman of the Senate Judiciary Committee. Mayorkas wrote: "USCIS interprets the law to require that a regional center focus its EB-5 capital investment activities on a single, contiguous area within the defined geographic jurisdiction requested by the regional center. Nevertheless, we agree that the law does not further mandate that all indirect job creation attributable to a regional

31 31 center take place within that jurisdiction. I will, therefore, ensure that USCIS policy reflects this understanding of the law." It is unlikely that the FF&E are manufactured in the Los Angeles area, and we are not making that claim. One possibility is to use the indirect and induced jobs created by the production of the FF&E outside the regional center. The justification for this approach is as follows: The regulations include the following language: The regulation at 8 CFR (m) provides [that] Each regional center shall submit a proposal, which Contains a detailed prediction regarding the manner in which the regional center will have a positive impact on the regional or national economy in general as reflected by such factors as increased household earnings, greater demand for business services, utilities, maintenance and repair, and construction both within and without the regional center (emphasis added). The manufacturing jobs used to produce the FF&E generally do not occur in the regional center area; however, they are purchased in that area, so the jobs from the wholesale trade margins can be counted. The next two tables show the indirect and induced impacts of purchasing $4.0 million of furniture, fixtures, and equipment. Table 8-5. Increase in Employment, Output, and Earnings for $4.0 Million of FF&E Expenditures, Indirect and Induced Effects Only Industry Group Employment Output Earnings Agriculture, forestry, fishing, Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation Food services and drinking places

32 32 Other services Household Total ,069 1,146 Table 8-5 shows there will be a total of 28 new jobs created from the purchase of FF&E for the hotel and restaurants; these are indirect and induced jobs only. Indirect and induced output will rise about $4.1 million, while indirect and induced household earnings would increase by about $1.1 million. Table 8-6 shows the average output per new worker is about $144,400, while average earnings are about $40,700. Table 8-6. Output and Earnings Per New Worker, $4.0 Million of FF&E Expenditures, Indirect and Induced Effects Only Industry Group Employment Output/Empl Earnings/Empl Agriculture, forestry, fishing, Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation Food services and drinking places Other services Household Total In terms of including some soft costs, those for architectural services, engineering services and developer overhead are eligible for the EB-5 count, based on the following definitions in the NAICS coding manual.

33 Commercial and Institutional Building Construction This industry comprises establishments primarily responsible for the construction (including new work, additions, alterations, maintenance, and repairs) of commercial and institutional buildings and related structures, such as stadiums, grain elevators, and indoor swimming facilities. This industry includes establishments responsible for the onsite assembly of modular or prefabricated commercial and institutional buildings. Included in this industry are commercial and institutional building general contractors, commercial and institutional building for-sale builders, commercial and institutional building design-build firms, and commercial and institutional building project construction management firms Architectural Services This industry comprises establishments primarily engaged in planning and designing residential, institutional, leisure, commercial, and industrial buildings and structures by applying knowledge of design, construction procedures, zoning regulations, building codes, and building materials Engineering Services This industry comprises establishments primarily engaged in applying physical laws and principles of engineering in the design, development, and utilization of machines, materials, instruments, structures, processes, and systems. The assignments undertaken by these establishments may involve any of the following activities: provision of advice, preparation of feasibility studies, preparation of preliminary and final plans and designs, provision of technical services during the construction or installation phase, inspection and evaluation of engineering projects, and related services. The final two tables in this section show the economic impact of $1.7 million of architectural and engineering costs. Table 8-7. Increase in Employment, Output, and Earnings for $1.7 Million of Architectural and Engineering Services Industry Group Employment Output Earnings Agriculture, forestry, fishing, Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance

34 34 Real estate and rental and leasing Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation Food services and drinking places Other services Household Total Table 8-7 shows there will be a total of 25 new jobs created from the expenditures for architectural and engineering services for the El Monte Hotel project. Total output would rise about $3.8 million, while household earnings would increase by about $1.2 million. Table 8-8 shows the average output per new worker is about $149,100, while average earnings are about $47,600. Table 8-8. Output and Earnings Per New Worker, $1.7 Million of Architectural and Engineering Services Industry Group Employment Output/Empl Earnings/Empl Agriculture, forestry, fishing, Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation Food services and drinking places

35 35 Other services Household Total The developer has stated that the project will take longer than two years, based on the following schedule : complete Architectural drawing designs which include Project Planning, Architectural Design, and Structural Design : complete traffic studies and environmental assessment reports , application of Hilton Franchise Management 4. January 2014: formally complete project bidding process. 5. February 2014: apply for construction permits. 6. March 2014: formally start construction. 7. March 2014: demolition of SQ.FT old building April 2014: construction waste recycling and clean-up ship out work. 9. May to July 2014: complete foundation. 10. August 2014 to July 2015: complete main structure construction. 11. August to December 2015: complete indoor and outdoor decoration work. 12. January to February 2016: complete installation equipments and machinery. 13. March 2016: synchronously complete landscape engineering. 14. April 2016: synchronously complete ground parking lots. 15. May 2016: complete supporting project engineering work. 16. June to August 2016: complete employees hiring and training and preparation. 17. September 2016: Hotel opens for business. 9. Economic Impact of Hotel and Ancillary Operations

36 36 This section of the report is divided into four parts, representing the discussion of the economic impact of hotel operations, food and beverage service, the gift shop, and the travel agency. A. Hotel Operations We turn first to the economic impact of the hotel operations. Based on the figures given in the previous section, total hard costs are about $50,000 per room. Based on the figures provided in Table 9-1, that would put this hotel in the budget/economy classification. As shown below, that classification is consistent with a wide range of metrics. Table 9-1. Hotel Costs per Room by Type of Hotel, 2011 Survey Source: HVS Consulting, Hotel Development Cost Survey 2011/12, page 5 The HVS survey shown below indicates 0.31 direct employees per room for an economy hotel. This figure agrees very closely with the Evans, Carroll survey described

37 37 below, and also with the data from the Smith Travel Research compilation. Finally, this is the same figure obtained when the revenue projections are entered into the RIMS I input/output model for Los Angeles area. Figure 9-1, below, shows the results of a survey conducted by HVS Consulting, which shows the average number of employees per room for hotels ranging from economy to full-service. The source is the HVS International survey of hotel rooms. Figure 9-1. Employees Per Room by Hotel Service Category We next consider the survey undertaken by ECA based on actual case studies undertaken by the company for EB-5 economic impact analysis; a complete list of EB-5 projects done by the company is shown in the appendix. We found the following results in our survey. ECA has calculated the likely breakdown of the number of employees per 100 hotel rooms for different classes of hotels, assuming a 75% occupancy rate. For standard hotels, the maid service figure is based on each maid cleaning 12 rooms per day; in some hotels, the figure is as high as 15 rooms per day, but that is unusual. This figure declines as the size of the room increases, and is estimated to be 8.3 rooms per day for luxury establishments. The front desk figure for a standard hotel assumes 3 people for each of 2 shifts and 2 people for the third shift; this figure also includes receptionists and people who answer the phone. It is assumed that at a luxury hotel there are 6 people per shift at the front desk, and the addition of concierge and bellhop personnel throughout the day and night. The food service figures have been expanded to include room service and an extensive trade in meeting and banquet facilities. Three employees are available on each shift for customer relations instead of one. Similarly, three employees instead of two are

38 38 available per shift for management, security, engineering, and inside maintenance, and janitorial services and outside maintenance, In addition, two employees per shift are added for reservations and for meeting and banquet facilities. All these results are summarized in Table 9-2. Table 9-2. Hotel Employees Per 100 Rooms Category Budget Standard Upscale Semi Luxury True Luxury Maid Service Front Desk Doormen Bellhops Parking Valets Concierge Food Service Customer relations Management Security Engineering/inside maint Janitor/outside maint Reservations Meeting & Banquet Total Table 9-3 shows the average room rate, revenue from ancillary services, and payroll expenditures for both full-service and limited-service hotel rooms in 2011; for the purposes of this report, we use the limited service figures. The ancillary services, such as food and beverage, gift shop, and travel agency, are treated separately

39 39 Table 9-3. Revenues for Hotel Rooms By Major Category Source: Smith Travel Research, U.S. Hotel Operating Statistics Study, Report for the Year 2011 We use these figures as an alternative source of information about the number of direct employees per hotel room for limited-service hotels. According to the data given

40 40 in Table 9-3, total revenues per occupied room are about $93 per night, and payroll and related expenses (including fringe benefits) are 24.6% of this amount, or $22.88 per day, which is $8,350 per year. The 2007 Economic Census data for Los Angeles County BEA shows the average annual wages and salaries for hotel workers of $26,114; this figure would be about $29,249 for 2011, assuming a 3% annual wage increase. Hence the ratio of actual expenses to FTE compensation is 8350/29249, or 0.29 employees per room for limited-service hotels. To summarize these findings, the HVS survey would show 0.31 direct employees for an economy hotel, the ECA survey shows 0.32 for a budget hotel, and the STR data would show 0.29 for a limited-service hotel. We use the average of 0.31 direct employees per room, which would mean 47 direct employees and 83 total employees for a 152-room hotel. This figure can now be compared with the calculations from the RIMS II model. The developer estimates that in the first year of operation, the ADR will be $129 per night with a 70% occupancy rate, so for 152 rooms in 2017 dollars, which would be revenue of $5.00 million per year. This figure now has to be deflated from 2017 to 2007 dollars; assuming a 2% annual rate of increase in hotel room rates over this period would reduce the revenue to $4.14 million in 2007 dollars. This figure is entered into the RIMS II model, and the results are shown in the next two tables; the total employee count is the same. Table 9-4. Increase in Employment, Output, and Earnings, 152 Room Economy Hotel Industry Group Employment Output Earnings Agriculture, forestry, fishing, Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance

41 41 Arts, entertainment, and recreation Accommodation ,857 1,423 Food services and drinking places Other services Household Total ,963 2,850 Table 9-4 shows there would be about 83 new employees generated by the operation of the 152-room hotel. Output would rise about $10.0 million, while household earnings would increase by about $2.85 million. Table 9-5 shows that output per new worker would be about $102,200, with average annual earnings of about $34,400. Table 9-5. Output and Earnings Per New Worker, 152 Room Economy Hotel Industry Group Employment Output/Empl Earnings/Empl Agriculture, forestry, fishing, Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation Food services and drinking places Other services Household Total

42 42 B. Food and Beverage Service We now turn to the food and beverage service. According to the developer, food and beverage service will be offered in the following venues: 1. Chinese restaurant, 4,000 square feet 2. Western restaurant, 3,600 square feet 3. Café, 1,300 square feet 4. Conference center and banquet hall, 6,000 square feet The metrics for the first three items are based on figures from the National Restaurant Association for sales per square foot for various types of restaurants. The fourth item is based on the average utilization of the conference center, number of people per square foot, and average daily expenditures. Each of these metrics is now described in greater detail. These data are taken from the Restaurant Industry Operations Report of the National Restaurant Association ad Deloitte, Touche, and may be purchased from that organization (cover page shown below). The figures in this report are divided into four broad classifications: full-service restaurants with an average check of under $15; between $15 and $25; over $25; and limited-service (essentially fast food) restaurants. In each of these classifications, figures are given for lower quartile, median, and upper quartile restaurants. We have reproduced the figures for over $25 (Exhibit C-10) and under $15 (A-10). The latter applies to the café; the former to the Chinese and Western restaurants. For the Chinese restaurant, we use the upper quartile figure, since it will have more seats per square foot and will be open longer hours, particularly in the evening. For the Western restaurant, we use the median quartile figure. The conference center and banquet hall is discussed below.

43 43 Table 9-6. Sales Per Square Foot for Various Classes of Full-Service Restaurants On the basis of these figures, annual sales at the Chinese restaurant would be 4,000 square feet times $638.10; sales at the Western restaurant would be 3,600 square feet times $415.53, and sales at the café would be 1,300 square feet times $275.50, for a total of $4.406 million. These figures are in 2010 dollars, whereas the input/output data are in 2007 dollars, so this figure is deflated by 1.09, to $4.042 million. For the conference center and banquet hall, the key factor is the occupancy rate of the meeting rooms. According to HVS, M ost convention centers generate roughly 100 to 130 days of transient visitation per year In addition, meeting facilities should be adequate to accommodate self-contained, smaller meetings and functions. (Source: Hotel Investments Handbook, Chapter 3; Stephen Rushmore, President and Founder of HVS International, 2002). Using this information, if the meeting rooms would be filled for 100 to 130 days per year by hotel patrons, and we assume that local meetings and functions would fill up

44 44 half that amount, that would be equivalent to 150 to 195 days per year approximately half of the year. The conference center and banquet hall space is 6,000 square feet. According to there are an average of 12 square feet per person in the average meeting facility. Also, according to a search of the website as of March 5, 2013, the average cost per meal at hotels in the El Monte, CA area with meeting room facilities is $ Hence the total food and beverage revenue from this space would be 500 people per day times 180 days per year times $15 per person, or $1.35 million. This figure also has to be deflated to 2007 dollars; since this is a 2013 number, the deflator would be about 1.18, which is $1.144 million. This number is added to the $4.042 million figure given above for a total of $5.186 million. This number is entered into the RIMS II model, and the results are shown in the next two tables. Table 9-7. Increase in Employment, Output, and Earnings, Food and Beverage Service in 3 Restaurants and Conference Center Industry Group Employment Output Earnings Agriculture, forestry, fishing, Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation Food services and drinking places Other services Household Total ,415 3,255 Table 9-7 shows there would be an increase of 135 total jobs generated by the food and beverage service. Total output would rise about $11.4 million, and household

45 45 earnings would increase by about $3.3 million. Table 9-5 shows that output per new worker would be about $84,200, with average annual earnings of about $24,000. Table 9-8. Output and Earnings Per New Worker, Food and Beverage Service in 3 Restaurants and Conference Center Industry Group Employment Output/Empl Earnings/Empl Agriculture, forestry, fishing, Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation Food services and drinking places Other services Household Total

46 46 C. Gift Shop The hotel building will also contain a gift shop of about 1,000 square feet. The standard source for figures for sales per square foot and sales per employee, Retail Sails and Bizminer, do not list gift shops as a separate category. However, a comparison of similar categories including clothing, hobby and crafts, and sporting goods, indicates about 2 direct employees per 1,000 square feet, so we use that number in the RIMS II model and obtain a total of 3 employees. Table 9-9. Increase in Employment, Output, and Earnings, Gift Shop Industry Group Employment Output Earnings Agriculture, forestry, fishing, Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation Food services and drinking places Other services Household Total Table 9-9 shows there would be an increase of 3 total jobs generated by the operations and sales of the gift shop. Total output would rise about $0.32 million, and household earnings would increase by about $0.10 million. Table 9-10 shows that output per new worker would be about $102,600, with average annual earnings of about $30,500.

47 47 Table Output and Earnings Per New Worker, Gift Shop Industry Group Employment Output/Empl Earnings/Empl Agriculture, forestry, fishing, Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation Food services and drinking places Other services Household Total

48 48 D. Travel Agency The hotel building will also contain a travel agency of about 1,600 square feet. Here again no specific figures for square foot per employee are available for a travel agency, so we use the information contained in Figure 9-2. Figure 9-2. Median Square Feet per Worker by Type of Office and Industry Sources: CoStar and IFMA (International Facilities Managers Association), as quoted in Some of the travel agency personnel will be engaged in call center activities; the rest will be engaged in communications, so taking an average of the 150 and 225 square feet figures from the CoStar survey, and 130 and 210 from the IFMA survey yields an average of 179 square feet per employee, which we have rounded up to 200 to be conservative, which indicates 8 direct employees. The detailed industry results are shown in the final two tables in this section. Table Increase in Employment, Output, and Earnings, Travel Agency Industry Group Employment Output Earnings Agriculture, forestry, fishing, Mining

49 49 Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation Food services and drinking places Other services Household Total Table 9-11 shows there would be an increase of 15 total jobs generated by the operations and sales of the travel agency. Total output would rise about $1.7 million, and household earnings would increase by about $0.5 million. Table 9-12 shows that output per new worker would be about $117,000, with average annual earnings of about $35,400. Table Output and Earnings Per New Worker, Travel Agency Industry Group Employment Output/Empl Earnings/Empl Agriculture, forestry, fishing, Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing

50 50 Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation Food services and drinking places Other services Household Total

51 Summary Statistics for the Construction of the El Monte Hotel Project, Including Operating Jobs from the Hotel, Restaurants, Gift Shop, and Travel Agency Tables 10-1 and 10-2 show the combined economic impact of the construction, operation, and rental income of the El Monte Food center. These results are the summation of the data given in Sections (8) and (9), so the individual cells simply represent the sum (or average) of these figures in the previous two sections. Table Increase in Employment, Output, and Earnings for Construction and Operation of the El Monte Hotel Project Industry Group Employment Output Earnings Agriculture, forestry, fishing, Mining Utilities 1.7 1, Construction ,045 5,089 Manufacturing ,662 1,027 Wholesale trade , Retail trade ,092 1,007 Transportation and warehousing , Information 7.2 2, Finance and insurance ,915 1,072 Real estate and rental and leasing , Professional and scientific services ,996 2,028 Management of companies 6.1 1, Admin and waste mgmt services , Educational services Health care and social assistance , Arts, entertainment, and recreation Accommodation ,139 1,505 Food services and drinking place s ,270 1,948 Other services , Household Total ,340 19,053 Table 10-1 shows that 523 total new jobs would be created by the construction of the El Monte Hotel project, operation of the hotels, restaurant, and conference center and banquet hall, and sales of the gift shop and travel agency. Output would rise by

52 52 about $64.3 million, and household earnings would increase by about $19.1 million. Table 10-2 shows that the average output per new worker would be about $122,900, while average annual earnings would be about $36,400. Table Output and Earnings Per New Worker for the Construction and Operation of the El Monte Hotel Project Industry Group Employment Output/Empl Earnings/Empl Agriculture, forestry, fishing, Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional and scientific services Management of companies Admin and waste mgmt services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation Food services and drinking places Other services Household Total

53 53 Appendix: Resume of Dr. Michael K. Evans CURRENT AND PREVIOUS POSITIONS Chairman, Evans, Carroll & Associates, Inc., 1980-present (previously Evans Economics) Economic consulting firm specializing in EB-5 immigration analysis, economic impact studies of development projects and new construction, models of state and local tax receipts, impact of current and proposed government legislation, and construction of econometric models for individual industries and companies. Chief Economist, American Economics Group, Built a comprehensive state modeling system that provides economic analysis for a variety of consulting projects (see below). Clinical Professor of Economics, Department of Managerial Economics and Decision Sciences (MEDS), Kellogg Graduate School of Management, Northwestern University, Taught courses in macroeconomics and business forecasting. Wrote textbooks for both courses. Winner of Blue Chip Economic Indicator Award for most accurate macroeconomic forecasts during the past four years, November 1999 Founder and President, Chase Econometric Associates, Assistant and Associate Professor of Economics, Wharton School, University of Pennsylvania, Co-developer of the original Wharton Model. Visiting Professor, Radford University, (Radford, VA), 1987 Chairman of Institute for International Economic Competitiveness Visiting Lecturer, Hebrew University (Jerusalem), Built econometric model of the Israeli economy Ph. D. in Economics, Brown University. Dissertation, "A Postwar Quarterly Model of the United States Economy, ". A. B. in Mathematical Economics, Brown University

54 54 PREVIOUS ACTIVITIES AND EDUCATION Contributing Editor, Industry Week Wrote a column in each issue on economic and financial trends as they impact the manufacturing sector. Editor, The Evans Report Weekly newsletter discussing economic trends and financial markets. Pioneered the concept of the Monthly Tracking Model to incorporate recent economic releases into the overall economic forecast, including methods to predict these economic data. Consultant, National Printing Equipment and Supply Association Prepared quarterly forecasts of shipments of printing equipment and graphic arts supplies by product line, based on an econometric model constructed for NPES. Also prepares analysis and forecasts of exports and imports by principal product line. Consultant, APICS -- The Educational Society for Resource Management, Designed and developed the APICS Business Outlook Index, which used survey data collected by the Evans Group to measure current production, production plans, shipments, employment, new orders, unfilled orders, inventory stocks, and the comparison of the actual to desired inventory/sales ratio to predict short-term changes in manufacturing sector activity. The results of this survey appeared every month in APICS: The Performance Advantage Consultant, American Hardware Manufacturing Association Wrote a separate weekly edition of the Evans Report analyzing recent trends in the hardware and housing industries, including forecasts of the hardware industry based on an econometric model developed for AHMA. Board of Economists, Los Angeles Times Wrote column every 6 weeks (5 other economists on the Board) Columnist, United Press International Wrote twice-weekly column, "Dollars and Trends"

55 55 Consultant, Senate Finance Committee, Built the first large-scale supply-side model of the U. S. economy Consultant, Environmental Protection Agency and Council on Environmental Quality Estimated inflationary impact of government regulations Consultant, National Aeronautics and Space Administration Estimate impact of R&D spending on productivity growth Consultant, U. S. Treasury Estimated impact of investment tax credit and accelerated depreciation on capital spending by industry Consultant, U. S. Department of Agriculture Built large-scale econometric model of agricultural sector of U. S. economy Consultant, Organization of Economic Cooperation and Development Built econometric model of the French economy SAMPLE OF RECENT CONSULTING PROJECTS For more information on these projects, see Key to symbols: N, new regional center, E, extension of existing center List is current as of April 1, Totals to date are 87 new regional centers, 58 extensions, and 7 new markets tax credits, for a total of 152 projects A. Economic Impact of EB-5 Immigrant Investor Programs and New Markets Tax Credits E? Calculated the economic impact of construction and operation of a new automobile assembly plant in Petersburg, VA N? Calculated the economic impact of operating a call center for the U.S. government in Muskogee, OK N? Calculated the economic impact of developing a mixed-use commercial and residential center in Scottsdale, AZ N? Calculated the economic impact of constructing and operating a Green Box facility in New Jersey to process waste material on a pollution-free basis.

56 56 N? Calculated the econo mic impact of constructing and operating a Green Box facility in Washington State to process waste material on a pollution-free basis. E? Calculated the economic impact of constructing and operating a new hotel in Coral Gables, FL E? Calculated the economic impact of developing a new residential community in Brevard County, and retail stores and restaurants in St. Lucie County, FL N? Calculated the economic impact of a new business to store and process field crops in Madison, MS N? Calculated the economic impact of operating food service establishments and assisted living centers in 40 counties in Texas. E? Calculated the economic impact of developing a mixed-use commercial center in Miami, FL N? Calculated the economic impact of renovating a theater in New York City to show film highlights of previous Broadway hits. N? Calculated the economic impact of renovating and operating distressed buildings in the San Francisco Bay area. E? Calculated the economic impact of a mixed-use commercial center in Montgomery County, TX E? Calculated the economic impact of expanding a manufacturing facility to produce more energy-efficient lighting in Sarasota, FL N? Calculated the economic impact of developing facilities for amateur sporting events in northern GA N? Calculated the economic impact of developing a mixed-use commercial center in Missoula, MT N? Calculated the economic impact of operating call centers in Las Vegas, NV, and other western Nevada counties E? Calculated the economic impact of constructing and operating a proton cancer treatment center in Boca Raton, FL E? Calculated the economic impact of constructing and operating a Green Box facility in Detroit to process waste material on a pollution-free basis. E? Calculated the economic impact of renovating and expanding commercial property in Lower Manhattan

57 57 N? Calculated the economic impact of constructing student housing and retail stores in Davie, FL E? Calculated the economic impact of constructing residential housing near Harvard University E? Calculated the economic impact of developing mixed-use commercial centers in Broward County, FL E? Calculated the economic impact of renovating a Dallas apartment building E? Calculated the economic impact of renovating and operating a nursing home in Las Vegas, NV E? Calculated the economic impact of constructing a hotel and shopping center in Miami, FL E? Calculated the economic impact of developing a design center in Miami/Dade county, FL E? Calculated the economic impact of developing and operating a chain of children s playrooms and party facilities in South Florida E? Calculated the economic impact of developing a new stadium for the Nets basketball team, to be located in Brooklyn, NY E? Calculated the economic impact of developing a Marriott hotel in Washington, D.C. E? Calculated the economic impact of developing and operating a casino for foreign patrons in Las Vegas, NV E? Calculated the economic impact of operating a series of yogurt fast-food restaurants in South Florida E? Calculated the economic impact of constructing steel homes and commercial buildings in South Florida N? Calculated the economic impact of construction and operation of a farm distillery in Vermont N? Calculated the economic impact of purchase and renovation of deeply discounted residential properties in South Florida N? Calculated the economic impact of a hotel to be built near LaGuardia Airport in Queens, NY N? Calculated the economic impact for several mixed-use commercial and residential properties for a regional center covering southern Wisconsin and northern Illinois.

58 58 N? Calculated the economic impact for mixed-use commercial project in Flushing, NY E? Calculated the economic impact for major new hotel near the Washington, D. C. conference center N? Calculated the economic impact of an assisted living center in suburban Atlanta, GA N? Calculated the economic impact of an office tower in mid-town Manhattan for the diamond trade N? Calculated the economic impact of three mixed-use commercial and residential projects in Santa Clara County, CA N? Calculated the economic impact of six mixed-use commercial and residential projects in Los Angeles, Orange, Riverside, and San Bernardino counties N? Calculated the economic impact of operating a chain of pizza restaurants in southern Florida. N? Calculated the economic impact of constructing and operating an assisted living facility in Atlanta, GA E? Calculated the economic impact of constructing and operating an expansion of University Hospital in Cleveland, OH E? Calculated the economic impact of a wastewater treatment plant in Victorville, CA N? Calculated the economic impact of drilling for geothermal energy and constructing and operating power plants in several counties in Nevada E? Calculated the economic impact of a vacation club operation in Orlando, FL E? Calculated the economic impact of constructing and operating an extended-stay hotel in Boston, MA E? Calculated the economic impact of constructing and operating an assisted living facility in Walton County, FL N? Calculated the economic impact of manufacturing and constructing residential and commercial steel modular buildings in Lee County, FL E? Calculated the economic impact of a chain of yogurt and juice stores and restaurants in southern E? Calculated the economic impact of two mixed-use commercial developments in Orange County, CA. E? Calculated a Targeted Employment Area by census tracts for six counties in the Houston, TX metropolitan area

59 59 E? Calculated the expansion of new hybrid car manufacturing facility from Mississippi to Tennessee and Virginia. E? Calculated the economic impact of construction and operation of a skilled nursing facility in Las Vegas, NV. N? Calculated the economic impact of construction and operation of a proton cancer treatment center and medical offices buildings in Los Angeles County, CA. E? Determined the economic impact of improving facilities at the Port of Baltimore in order to attract more shipping from the Panama Canal when the locks are widened. N? Calculated the economic impact of a major hotel and resort area in Ft. Lauderdale, FL. N? Calculated the economic impact of building steel homes in South Florida, including the local manufacture of steel fabricated parts. E? Calculated the economic impact of constructing and operating a hotel at Times Square in New York City. N? Calculated the economic impact of a mixed-used residential and commercial project in Atlanta, GA. E? Calculated the economic impact of expanding and opening new restaurants in Dallas, TX. In a separate project, calculated the economic impact of renovating, refurbishing, and operating a boutique hotel in Dallas, TX. E? Calculated the economic impact of building and operating low-income housing in Boston, MA. N? Calculated the economic impact of constructing and operating assisted living facilities in eight rural Texas counties. N? Calculated the economic impact of a mixed-use commercial project in Riverside County, CA. E? Calculated the economic impact of opening a manufacturing plant for green motor vehicles in the Detroit, MI area. APPROVED E? Calculated the economic impact of constructing and operating hotels and restaurants in Columbus, MS. APPROVED E? Calculated the economic impact of operating restaurants in the Hotel W in Hollywood, CA.

60 60 N? Calculated the economic impact of a mixed-use commercial project in McCook, IL (suburban Chicago). N? Calculated the economic impact of constructing and operating a water-based amusement facility in San Diego, CA. APPROVED N? Calculated the economic impact of a mixed-use commercial facility in suburban Cincinnati, OH (project is in KY). APPROVED E? Calculated the economic impact of constructing and operating a casino, hotel, and restaurant in Las Vegas, NV. N? Calculated the economic impact of a new academic institution for alternative energy in Santa Clarita, CA. N? Calculated the economic impact of several mixed-used projects in San Francisco, Alameda County, Santa Clara County, and Fresno County. N? Calculated the economic impact of a super energy store and solar farm in Riverside County, CA. N? Calculated the economic impact of a prostate cancer treatment center in South Carolina. E? Calculated the economic impact of refurbishing and expanding retail space at the George Washington Bridge in New York City. APPROVED E? Calculated the economic impact of building Atlantic Yards, new stadium for the New York Nets, in Brooklyn, NY APPROVED N? Calculated the economic impact of an assisted living center and several mixed-use commercial facilities in the Reno, NV area. E? Calculated the economic impact of buying residential properties at deep discount prices, refurbishing and selling them, in South Florida. N Calculated the economic impact for a fractional-ownership marina in Port Charlotte, FL, plus office space, retail stores, restaurants, and a home brokerage office. APPROVED N Calculated the economic impact of construction and operation of four retirement homes in Vermont. E Calculated the economic impact of an upscale retail shopping center in Vail, CO. and a medical office building in Edwards, CO (both in Eagle County). APPROVED E Calculated economic impact of a wind turbine manufacturing plant in Larimer County, CO APPROVED

61 61 N Calculated economic impact of a hotel, retail stores, restaurants, office buildings, and bank facilities in Pasadena, CA N Calculated economic impact of a luxury hotel and condominiums in Destin, FL N Calculated economic impact of constructing and operating a mixed-use commercial project in Jupiter, FL APPROVED E Determined whether 17 possible restaurant locations in Miami/Dade and Broward Counties qualified as Targeted Employment Areas. E Determined the economic impact of opening and operating a slot-machine casino in Hanover, MD, as part of a proposed EB-5 regional center for the Baltimore metropolitan area. APPROVED N Calculated the economic impact of renovating and expanding a restaurant on Martha s Vineyard, MA, as part of an EB-5 regional center in that state. N Determined the economic impact of assembling and installing solar panels for residences in the state of LA. E Determined a Targeted Employment Area for Dallas, TX as part of a proposed EB-5 regional center for the Dallas area. APPROVED N Calculated the economic impact for various mixed used projects for a proposed regional center for the entire State of Texas, including shopping centers, office buildings, restaurants, assisted living centers, medical technology facilities, and other personal and business services. APPROVED N Calculated the economic impact for the construction and operation of several fastfood restaurants in 10 counties in central California. N Calculated the economic impact for the renovation and expansion of a shopping mall in Greenville, SC. E Calculated the economic impact of buying existing apartment buildings at deep discount prices, renovating and operating them, in 21 counties in FL. N Calculated the economic impact of building and operating an institute for proton cancer therapy for a proposed EB-5 regional center in Brooklyn, NY. APPROVED N Calculated the economic impact of building and operating a mixed-use facility with medical offices, hotels, and apartments for a proposed EB-5 regional center in Queens, NY. APPROVED E Determined a Targeted Employment Area for Philadelphia, PA as part of a proposed EB-5 regional center for the Philadelphia area. APPROVED

62 62 N Calculated the economic impact of a proposed office building and mixed-use facility for an EB-5 regional center in Dallas, Texas APPROVED N Calculated the economic impact for various mixed-use projects for a proposed EB-5 regional center in the greater New York City area, including an extended stay hotel, urgent care center, financial lending firm for alternative assets, retail stores, apartments, office space, warehouses, industrial flex space, entertainment centers, restaurants, conference and convention centers, nursing home and assisted living facilities, medical offices, medical technology facilities, and high-tech manufacturing. APPROVED N Calculated the economic impact of green hotels in 10 counties in Central California. APPROVED N Calculated the economic impact of generic projects in manufacturing, financial services, health services, hotels, and restaurants for a proposed regional center for the state of Florida. APPROVED E Calculated the economic impact of 12 different types of economic activity for an expansion of the Palm Beach Regional Center to five contiguous counties. APPROVED N Calculated the economic impact of a new auto parts plant in Alabama to supply parts to Kia automobiles. APPROVED N Calculated the economic impact of opening fast-food restaurants in Miami/Dade and Broward counties in FL. APPROVED N Calculated the economic impact of a mixed-use commercial center in Flushing, Queens County, NY. APPROVED E Calculated the economic impact of revitalizing and renovating part of the Brooklyn Navy Yard for green manufacturing facilities. APPROVED E Calculated the economic impact of 12 different types of economic activity for various counties in Charlotte and Sarasota counties, FL APPROVED E Calculated the economic impact of four new manufacturing and distribution companies in Palm Beach County, FL. APPROVED N Calculated the economic impact of developing a resort area and building residences in rural Tennessee. N Calculated the economic impact of developing and operating a resort area in Southern Arizona. APPROVED N Calculated the economic impact of revitalizing the depressed East Side of Cleveland, Ohio, with new commercial and industrial buildings. APPROVED N Determined the nationwide economic impact of a $1 billion investment in Mississippi for a new hybrid motor vehicle plant. APPROVED

63 63 N Determined the economic impact of expanding a shipyard in Southeastern Louisiana. APPROVED N Calculated the economic impact of a new shopping center in Buena Vista, California, and two other generic shopping centers in Los Angeles and San Bernardino counties. APPROVED E Calculated the economic impact of enhancing resort areas in eight rural counties in Colorado. APPROVED N Calculated the economic impact of the rehabilitation of Fitzsimons Village in Aurora, Colorado, by adding an office building with medical labs, hotel, shopping center, and residences. APPROVED E Determined the economic impact of a mixed-use commercial center for the Kansas City metropolitan area. N Calculated the number of jobs created for a film production company in New York City. APPROVED N Calculated economic impact of small-scale rooftop solar panels in various counties in California. N Calculated economic impact of 7 different types of proposed businesses for a proposed regional center in the Bay Area of California. APPROVED N Determined the economic impact of a new biological research park, office building, and logistics center in Wooster, Ohio. APPROVED E Calculated the economic effect of a mixed-use urban renewal project in Cleveland, Ohio. APPROVED N Calculated economic impact of dairy farm and cheese processing plant in Northern California. APPROVED N Determined economic impact of a shipyard, food processing plant, and semiconductor plant for a proposed regional center in Louisiana and Mississippi. APPROVED N Calculated the economic impact of a new gaming casino in Natchez, Mississippi. APPROVED N Developed an Input/output Model for Guam, which was then used to calculate the economic impact of several generic projects. APPROVED

64 64 N Calculated the economic impact of a retail shopping center in suburban Los Angeles County. APPROVED N Prepared an economic impact analysis for the timber to homes project for a proposed regional center in Colorado. APPROVED N Calculated the economic impact for a proposed regional center in Baltimore, Maryland that would include the rebuilding of depressed areas in East Baltimore and along the riverfront. N Prepared the economic analysis for a proposed EB-5 regional center for the entire state of that included impact calculations for 14 different types of industries. APPROVED N Prepared the economic analysis for a proposed EB-5 regional center in the San Francisco Bay area that included calculations for 10 different types of industries. APPROVED N Prepared economic impact calculations for proposed EB-5 regional centers in New York City and Northeastern New Jersey. APPROVED Calculated the economic impact of a rehabilitated office building in Albuquerque, New Mexico, including the increase in high quality jobs. NEW MARKETS Calculated the economic impact of a rehabilitated skilled nursing center in East Los Angeles, California, including the impact on nearby census tracts. NEW MARKETS N Calculated the economic impact of development of warehouse and light industrial manufacturing space in Las Vegas, Nevada. APPROVED N Calculated the economic impact of rehabilitation and expansion of a vacation and health spa in Sharon Springs, New York N Calculated economic impact of revitalizing an old resort hotel and adding new facilities for Lake Geneva, WI. APPROVED Calculated the employment and tax effects for a portfolio of projects undertaken under the New Market capital program. NEW MARKETS E Calculated generic employment changes for proposed EB-5 project for an Inland Port in Palm Beach County, FL APPROVED N Calculated the economic impact of construction of El Monte Village in El Monte, CA. APPROVED

65 65 Calculated the economic impact of moving the Social Security Administration building in Birmingham, AL, and revitalizing the surrounding neighborhood. NEW MARKETS Calculated the economic impact of rehabbing and expanding the Everett Mall in Everett, WA. NEW MARKETS Determined the economic impact of building a new medical center in Charleston, SC NEW MARKETS N Calculated economic impact of expanding Sugarbush resort in VT. Study included expansion of existing facilities and addition of new facilities. APPROVED Calculated economic impact for new market tax credit program in Portsmouth, N.H. Study included both overall economic impact, and the increase in employment and income and the decrease in the unemployment rate and incidence of poverty in individual census tracts. NEW MARKETS N Calculated the economic benefits of EB-5 programs for foreign investors for a mixed-use construction project, including a hotel, retail stores, apartments, and a sports stadium in the Washington, D. C. metropolitan area APPROVED N Calculated the economic benefits of EB-5 programs for a mixed-used retail shopping center in the New York City metropolitan area. APPROVED N Calculated the economic benefits of EB-5 programs for foreign investors for proposed shopping centers in five separate counties in Southern California, including differential impacts of building the shopping centers in different counties. APPROVED B. Projects for State and Local Governments Constructed an econometric model for the State of New York and determined the change in employment, labor income, and tax revenues for 43 different tax changes proposed by the Governor s office. Constructed a detailed econometric model for the State of Pennsylvania to determine the economic impact of the complete panoply of state taxes levied; the model contains over 1,000 equations. In cooperation with American Economics Group, the model was developed to simulate the effect of changes in any state tax rate on households and businesses by income deciles, household status, age of individuals, size of households, and many other demographic variables. The change in business taxes can also be simulated for detailed industry classifications.

66 66 Determined whether the Washington, D.C. water and sewer authority should accept a high bid for a new waste disposal system. Decision to reject has saved the authority over $200 million, as construction prices turned down sharply as predicted. Built an econometric model to determine the tax gap caused by Internet sales for the state of Minnesota. Determined appropriate levels of shelter grants individual counties in New York State, and for utility allowances in New York City. Reviewed and prepared testimony in ongoing court cases in these areas. Calculated the economic impact of the revitalization of downtown Milwaukee, Wisconsin. C. Economic Impact of Casino Gaming Built an econometric model to predict the growth of the gaming industry over the next decade, and the economic impact of that industry on employment and tax revenues at the Federal and state levels. Estimated the economic impact of Indian casino gaming nationally and for the State of Wisconsin. Determined the economic impact of the Oneida Indian gaming casino on the Green Bay metropolitan area. Estimated the negative economic impact on the Milwaukee area if a new Indian gaming casino were to be built in Kenosha, Wisconsin. D. Economic Impact of Smoking Bans and Higher Taxes Testified on economic impact of smoking bans in Canada; certified as an expert witness by the Court. Examined the impact of smoking bans on restaurant sales in several different locations in the U.S. to determine how much sales changed when these bans were imposed, and the differential effects depending on whether these bans were partial or total. Determined the cross-border effects on retail sales from differential rates in cigarette, gasoline, and alcohol excise taxes

67 67 Determined the economic impact of higher cigarette taxes on minority group employment. Estimated the economic impact and loss of Federal and state tax revenues when higher cigarette prices lead to increased smuggling. E. Consulting Projects for Travel and Tourism Built an econometric model to predict tourism trips and revenues for the major regions of the U.S. economy. Constructed econometric models to predict tourism in Las Vegas and Orlando. Using the IMPLAN model, predicted economic impact of tourism and travel expenditures for all counties in Pennsylvania. F. Other Private Sector Consulting Projects Calculated the revenue gain at the Federal, state and local level generated by domestic manufacturing of Airbus parts and equipment. Calculated the economic impact of proposed EPA bans on fluoropolymer production. Estimated the size and economic importance of the fluoropolymer industry, and calculated economic impact of shutting down domestic production. Built an econometric model to examine how U.S. tax and regulatory policies help determine whether the gold mining industry would invest in the U.S. or other countries. Testified before Congress to help defeat legislation inimical to the mining industry. Built an econometric model to predict consumer bankruptcies, based on recent growth in consumer credit outstanding, the overall economic environment, and recent changes in credit regulations Estimated the economic impact of the ethanol subsidy on the U.S. economy and Farm Belt States, including the impact on the balance of payments, employment, and tax receipts. Testified before Congress to help pass legislation to extent subsidies to the ethanol industry. Built an econometric model to determine the impact of updating and improving the system of locks on the Upper Mississippi River on corn prices and exports, farm income, and the overall economy. BOOKS PUBLISHED

68 68 Macroeconomics for Managers, Blackwell, 2003 Practical Business Forecasting, Blackwell, 2002 Economic Impact of the Demand for Ethanol, Diane Publishing Company, 1998 How to Make Your Shrinking Salary Support You in Style for the Rest of Your Life, Random House, 1991 The Truth About Supply-Side Economics. Basic Books, A Supply-Side Model of the U. S. Economy, mimeo (prepared for Senate Finance Committee), An Econometric Model of the French Economy: A Short-Term Forecasting Model. O.E.C.D, March Econometric Gaming (with L. R. Klein and M. J. Hartley). Random House, Macroeconomic Activity: Theory, Forecasting and Control. Harper & Row, The Wharton Econometric Forecasting Model (with L.R. Klein), Economics Research Unit, Wharton School: University of Pennsylvania Press, Enlarged edition, Over 30 articles in major academic journals and publications (list on request).