Investment in Downtown Norfolk: Economic and Fiscal Impact

1
Investment in Downtown Norfolk Economic and
Fiscal Impact

• Presented to City Council
• February 12, 2008

2
Purpose of the Study

• To examine the economic and fiscal benefits of
  investment in Downtown Norfolk

3
Background

• During the past decade, Downtown Norfolk has
  witnessed a tremendous revival.
• Through this revival, Norfolk has established
  itself as the cultural and economic hub of South
  Hampton Roads.
• The recent momentum in Downtown is easily
  identifiable through new business and new
  residential opportunities.
• During town hall meetings, an issue was raised
  about the prioritization of City investment in
  Downtown.
• Citizens wanted to know how Downtown development
  benefits the entire City.

4
Background Continued

• In order to address the issue of downtown
  development, the City contracted with a
  consulting firm, Chmura Economics Analytics.
• Chmura specializes in applied economic consulting
  and quantitative research.
• The firm has provided studies for the U.S.
  Department of Commerce, as well as research for
  the Executive and Legislative branches of
  Virginias government.

5
Overview

• Key Findings
• Public investment of 134.2 million encouraged a
  private investment of 537.7 million.
• As a result of Downtown investment, the City of
  Norfolk gained new businesses and jobs, new
  residents, increased spending by visitors, and
  increased tax revenue.
• The results revealed that the benefits of
  Downtown investment extended to all areas of the
  City.

Other infrastructure investment of 119 million
included 86 million for user supported
infrastructure and 33 million for jail and court
improvements.
6
Overview Continued

• The consultant indicated that the limited time
  frame of the study does not allow the results to
  demonstrate the full realization of the benefits
  of Downtown investment.
• The Full Impact of the investment is just
  beginning.
• Norfolk should experience even greater growth in
  the economic output which will spread throughout
  the all reaches of the City.
• Evidence of the growth has already begun to show
  itself in the form of new housing initiatives
  outside of Downtown.
• In addition to the quantifiable economic
  benefits, the City has experienced an improvement
  in the image of the City as a tourist destination
  and an economic engine.

7
Presentation Outline

• Geographical Locations
• Downtown
• City of Norfolk outside of Downtown
• Citywide
• One-time Impact
• Impact that lasts only for the duration of
  construction activity
• Sustainable Impact
• The impact that continues after construction is
  complete

8
Geographical Location

• Downtown Norfolk, for the purpose of this study,
  is equivalent to Census Tract 49.
• The area includes Freemason, Waterside, Downtown
  Plaza, Granby, MacArthur Center, and parts of
  Upper Granby and Financial District.

9
The One-Time Economic Impact Exceeded 1 Billion

• The investment resulted in an increase in
  economic output of nearly 1.1 billion.
• The investment also resulted in the creation of
  12,588 new jobs for the City.
• Of the newly created jobs, nearly 3,000 are
  outside of Downtown.
• Downtown experienced the greatest increases from
  one-time impact due to the construction.

One-time Economic Impact as a Result of Downtown investment One-time Economic Impact as a Result of Downtown investment One-time Economic Impact as a Result of Downtown investment One-time Economic Impact as a Result of Downtown investment One-time Economic Impact as a Result of Downtown investment
    Direct Impact Ripple Effect Total Impact
Downtown Spending 791,442,991 24,586,298 816,029,289
Rest of Norfolk Spending   258,851,532 258,851,532
Total City of Norfolk Spending 791,442,991 283,437,830 1,074,880,821
Source City of Norfolk, IMPLAN Pro 2004 Source City of Norfolk, IMPLAN Pro 2004 Source City of Norfolk, IMPLAN Pro 2004 Source City of Norfolk, IMPLAN Pro 2004 Source City of Norfolk, IMPLAN Pro 2004
10
The On-going Economic Impact Exceeds 1.6 Billion

• The City continues to reap the benefits of the
  Downtown investment through 1.6 billion of
  on-going economic activity Citywide.
• The increased economic activity led to widespread
  growth in several sectors, including
  construction, education, and finance.
• The most significant increases were experienced
  by retail trade, professional and business
  services, and transportation and warehousing.
• The new activity lead to 9,780 new sustainable
  jobs throughout the City.
• Retail trade, professional and business service,
  education and health, and leisure experienced the
  greatest job growth.

11
Downtown Investment Encouraged New Businesses
Throughout the City

• Downtown Investment brought 271 new businesses to
  the City.
• As a result of the new businesses, nearly 10,000
  new sustainable jobs were created throughout the
  City.
• New Downtown businesses resulted in 164 million
  in spending outside of Downtown.

12
Visitor Spending has Increased

• The investment resulted in a 153 million
  increase in spending by visitors each year.
• Total spending by visitors Downtown amounted to
  263.5 million, up from 110.6 million in 1996.
• The increase in spending resulted in an increase
  of 185.8 million in economic output in Downtown
  alone, and the creation of 2,085 new sustainable
  jobs.

13
New Residents Downtown

• There is 30.4 million in additional spending by
  new Downtown households.
• There are 765 new residents in downtown that have
  resulted in
• Decreased poverty rates
• Increased average income, and
• An increase in the average education attainment
  level

14
Net Tax Revenue has Increased

• The investment resulted in 18.5 million in new
  net tax revenue for the City.
• As a result of the investment, Downtown tax
  revenue increased by 21.9 million, from 15
  million in 1996 to 37 million in 2006.
• The Downtown contribution to the Citys tax
  revenue increased from 8 in 1996 to 19 in 2006,
  easing the tax burden on the rest of the City.

15
In Conclusion

• Downtown investment has resulted in millions of
  dollars of economic output, thousands of new
  jobs, new residents, increased visitor spending
  and new businesses.
• The initial one-time economic impact of Downtown
  investment resulted in an increase in spending of
  more than 1 billion and jobs for 12,588 people.
• The on-going impact of the new development has
  resulted in nearly 10,000 new jobs and an
  increase in spending exceeding 1.6 billion.
• In addition, the Citys tax revenue from the
  downtown region has more than doubled, with a net
  increase of 18.5 million.
• Although the focus of this study was downtown
  development, the impact of the investment has
  spread to all reaches of the city and will
  continue to do so.