River Campus report

Economic Impact of the Southeast Missouri State University River Campus

A Report Prepared by

Center for Economic & Business Research

Donald L. Harrison College of Business

Southeast Missouri State University

Methodology

Estimates of the economic impact of facilities involve a measure of economic modeling and analyst judgment. Economic impact estimates for facilities that do not yet exist present particular challenges for the analyst. Construction impacts are the easiest to estimate since the dollar value of the construction project is known with some certainty. However, the resulting impacts of the facility, such as the proposed River Campus in Cape Girardeau, are much more difficult to estimate since the ultimate impact will depend upon such events as attendance at River Campus events and any increase in new students due to the enhancement of the Fine Arts programs at Southeast. The approach taken herein is to be conservative and to consider a range of possible outcomes, particularly with respect to the number of new students.

The economic model used to estimate the impacts in this study is called IMPLAN. IMPLAN uses an input-output model of the Cape Girardeau County to trace through the impacts of changes in spending on the region. IMPLAN is by far the most widely used model for estimating economic impacts for regions of the United States. Most centers for business and economic research at universities in the United States use the IMPLAN model. IMPLAN gives both direct and indirect impacts. The direct impact is a result of 'first round' spending due to a change in spending, for example, spending by new students. The indirect impact is the result of later rounds of spending due to what economists call the multiplier effect. As initial spending increases people's incomes, further rounds of spending occur and these constitute the indirect effect.

The estimates given in this report should be interpreted with some degree of caution since they involve future events. The actual impacts could be considerably different from the results reported herein. However, given the conservative approach utilized in preparing the report, it is more likely that the actual impacts will be greater than given here. It should be noted that the estimates are given in 2002 dollars (what economists call current prices). As the impacts move further in the future, they will be affected by such events as inflation, changes in prices due to supply and demand shocks, etc.

Economic Impact of the River Campus

Construction Impact The construction impact is probably the easiest to measure. Assumptions: $35.6 million project plus the $1.5 million of infrastructure improvements. The projects will take two and one-half years to complete and the construction will take place smoothly over the period.

Years 1 and 2 Impact (Amount each year)

Employment

Direct: 136

Indirect: 127

Total: 263

Personal Income

Direct: $5,040,000

Indirect: 4,216,000

Total: $9,256,000

Year 3 Impact

Employment

Direct: 68

Indirect: 64

Total: 132

Personal Income

Direct: $2,520,000

Indirect: 2,108,000

Total: $4,628,000

Increase in local sales tax collections during construction phase: $231,370 Increase in state sales tax collections during construction phase: $391,066

New Students

The new River Campus is likely to result in an increased number of major in the fine arts. If 100 new students were attracted to the University due to the improved facilities, we can estimate the following annual impacts due to the increase.

A. 100 New Students

Employment

Direct: 16

Indirect: 9

Total: 25

Personal Income

Direct: $793,000

Indirect: 218,000

Total: $1,011,000

Annual increase in local sales tax collections: $12,250

Annual increase in state sales tax collections: $20,702

B. 300 New Students

Employment

Direct: 48

Indirect: 27

Total: 75

Personal Income

Direct: $2,379,000

Indirect: 654,000

Total: $3,033,000

Annual increase in local sales tax collections: $36,750

Annual increase in state sales tax collections: $62,107

C. 500 New Students

Employment

Direct: 80

Indirect: 45

Total: 125

Personal Income

Direct: $3,965,000

Indirect: 1,090,000

Total: $5,055,000

Annual increase in local sales tax collections: $61,250

Annual increase in state sales tax collections: $103,513

Attendance at River Campus Events

This is by far the most difficult impact to measure because of the difficulty of estimating potential attendance at River Campus events. Several approaches were considered, but in the end a very conservative approach was taken. Nationally, spending on fine arts performances is roughly 125% of spending on spectator sporting events (National Endowment for the Arts website). If the same holds true for southeast Missouri, we can make a reasonable estimate of attendance at events at the River Campus. The average annual attendance at sporting events at the Show-Me Center has been about 70,000. If the average cost of fine arts events and sporting events is roughly the same (a reasonable supposition), then this would project to an annual attendance of about 87,500 at River Campus events. Depending on the type of events, (for example, jazz festivals held over several days) the actual attendance could be much higher. It would seem that this would likely be a lower bound on attendance. The consultants for the River Campus project estimate that about thirty percent of visitors to the University Museum at the River Campus would be tourists. If we use the same percentage for River Campus events, this would translate to about 26,250 tourists at River Campus events. Figures vary widely on tourist spending. The Cape Girardeau Convention and Tourists Bureau uses $35 for a 'motor coach' visitor. It is likely that most visitors at River Campus events would be of this variety; that is, they do not spend the night. If we multiply 26,250 by $35, we get $918,750 of additional spending (this is beyond the spending for admissions and includes items such as gas and meals).

Employment

Direct: 25

Indirect: 9

Total: 34

Personal Income

Direct: $406,000

Indirect: 28 1,000

Total: $687,000

Increase in local sales tax collections: $30,000

Increase in state sales tax collections: $50,700

Annual Impact: New Students and Attendance at River Campus Events

We can also consider the annual impact of new students and the yearly attendance at River Campus Events.

A. 100 New Students plus Attendance at Events

Employment

Direct: 41

Indirect: 18

Total: 59

Personal Income

Direct: $1,199,000

Indirect: 499,000

Total: $1,698,000

Increase in local sales tax collections: $42,250

Increase in state sales tax collections: $72,750

B. 300 New Students plus Attendance at Events

Employment

Direct: 73

Indirect: 36

Total: 109

Personal Income

Direct: $2,785,000

Indirect: 935,000

Total: $3,720,000

Increase in local sales tax collections: $66,750

Increase in state sales tax collections: $112,807

C. 500 New Students plus Attendance at Events

Employment

Direct: 105

Indirect: 54

Total: 159

Personal Income

Direct: $4,371,000

Indirect: 1,371,000

Total: $5,742,000

Increase in local sales tax collections: $91,250

Increase in state sales tax collections: $154,213

Impact of 1,000 Overnight Guests

The River Campus will be host to a variety of events. Some of these events, e.g., a jazz festival, will likely draw a significant number of overnight guests. It is difficult to forecast how many events and how many overnight tourists may occur during the course of a given year. As an example, we consider the impact of a weekend event in which 1,000 attendees stay for two nights. With meals and lodging, it is anticipated that each guest would spend approximately $ 100 per day. Therefore, we estimate the impact of an additional $200,000 of spending in the community, with the initial spending round concentrated on lodging and meals.

Employment: 5

Personal Income: $165,000

Increase in local sales tax collections: $6,650

Increase in state sales tax collections: $11,239