Read the study for yourself:
Economic and Fiscal Impacts of the Proposed Harrison Square Project (PDF)
Study touts project’s job creation
City Council also introduces funding proposals for Harrison Square
http://www.fortwayne.com/mld/newssentinel/17060928.htm
From the article:
"The $12,000 study from Crowe Chizek and Co., LLC, a public accounting and consulting firm with an office in Fort Wayne, concluded Harrison Square will provide the city with new jobs and an impact on household earnings by those employed there. It also will offer the opportunity for revenue from sales and various taxes."
"City Council President Don Schmidt, R-2nd District, said council would discuss Harrison Square next week. The earliest council could take a final vote on the proposal is April 24. Schmidt, however, believes an April 24 vote is unrealistic given the amount of debate he’s expecting."
Study touts benefits of development
$70 million over 10 years tied to Harrison Square
http://www.fortwayne.com/mld/fortwayne/news/local/17060041.htm
From the article:
"While the city has not received a final bill for the report, Controller Pat Roller said its cost was capped at $12,500 and was paid from county economic development tax revenues. Roller said the city ordered the study as a way to quantify the benefit of the project as well as establish some benchmarks should it be constructed."
"The report said the project would help generate more than $1.8 million in new tax revenue for state and local government in 2010, the first year the project is anticipated to be operational. Over a 10-year period, the project could generate $28 million in taxes."
"City Councilman Don Schmidt, R-2nd, has been an outspoken critic of the Harrison Square proposal. He said he wasn’t surprised by the numbers associated with the project, saying the city paid a consultant and got the answers it wanted."
City Council Gets Harrison Square Funding Specifics
http://www.wane.com/Global/story.asp?S=6351506&nav=0RYb
Wednesday, April 11, 2007
Impact Study Update
Posted by scott spaulding at 4/11/2007 07:55:00 AM
Labels: City Development, Harrison Square
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12 comments:
What a misleading title to this article - Where are the costs listed for council to discuss ? - there are none yet - only verbiage (or is it "garbage") from our city employees who are still trying to work out any details with White/ Acquest on the hotel and with Hardball on the proposed stadium. We have been told that council members will be personally informed of these details prior to the discussion - I guess, as usual, that leaves those that will be paying for this boondoggle without this information until it is a done deal (which it appears more and more like it is already every day). Left out in the cold - John K.
Is this "boondoggle" word a Fort Wayne favorite? It's not my favorite word. I think this article is awesome and gives a great picture of the jobs/revenue created. How could anyone say no?
Anonymous - Boondoggle - a useless or wasteful activity - the word was coined in the 1930's by Robert H. Link. an American Boyscoutmaster who died in 1959 (See Wikipedia - Boondoggle(project) As used in relationship to a new downtown baseball stadium:
Useless - We already have a Memorial Baseball Stadium
Wasteful - Probably will end up like MicroStandard, Midtowne Crossing, Burlington Air Freight, et al
John K.
John K., you are the poster child for the "Status Quo". If this project does not go through, they should erect a statue of you as a symbol of Fort Wayne falling behind the times. Years from now, our children and grandchildren can come back to visit Fort Wayne and visit your statue and talk about what could have been.
MicroStandard, Midtowne Crossing, Burlington Air Freight, et al.... My god John K., should we just never take another risk again because we have had a failure in the past. I literally feel like I need antidepressants every time I read one of your post. You and your posts are like a black cloud that hovers above everything good.
Ed.
If a statute were erected of John, how many jobs would it create?
Also, before we erect a statute of him, let's erect one of the people who criticized the highway through Fort Wayne and the downtown stadium.
Shree
Ed,
Here are some other things to add to your list: the original city/SBA loan that helped Sweetwater Sound buy its first "real" location; building a gigantic water line for GM; the tax abatements, low-interest loans and training grants made in 2006 that leveraged $176 million in new investment and supported businesses creating 1,100 new jobs (retaining another 10,000); the significant public investment in Southtown which has turned blight into an area that provides shopping for a quadrant of the city that previously had very few retail options; the public investment in Headwaters Park.....
If you're going to make lists of what happens when the public sector takes risks, don't forget that there are success stories, too.
Anon, why are you going after me. You are singing to the choir. I am on your side.
Ed
My mistake, Ed. Serves me right for reading too fast. Please accept my apologies.
How could anyone say no? Anyone with experience reading this kind of analysis would no that these are pretty dismal projections, with the exception of the hotel.
I will not have time to look through this carefully for another couple of days; however, I did glance through it
I have several comments about this study and I would be interested in hearing your thoughts:
1. The study in no way, shape, or form discusses any of the negative financial impacts the proposed project will cause. For example, if we build a new hotel it is likely that nearby hotels will see their occupancy rates decrease, which means less tax revenue will be generated from nearby hotels. This is NOT accounted for at all and it certainly should be accounted for.
2. The report refers to another report called the "City of Fort Wayne, Indiana, Downtown Community Revitalization Enhancement District, Consultant's Report." I do not know what this report is. I have sent out an email asking Pat Roller where I can find the report. Does anyone who reads this blog know what this report is and where I can find it?
3. This report uses the report mentioned in "2" above to estimate revenues from the InnKeepers tax. Until I read the above report I will not be able to determine what hotel occupancy rate Crowe is using for their revenue projections; however, I can make a guess and here it goes.
Lets assume that the hotel opens Jan 1, 2010. Lets assume that the average room rate charged is $110 per night (Realize they will use several different rates, I am just estimating an average rate). The innkeeper tax is 6% and each retailer is allowed to keep .83% of the total tax collected as a collectors fee.
The Crowe report estimates that the new 250 room hotel will generate $368,450 in revenue from the InnKeeper tax. This would equate to 56,295 rooms rented. This would result in a hotel occupancy rate of 61.7% for 2010 for the new hotel.
Realize that the current hotel occupancy rate for Allen County is between 44% and 48% per the last statistics I have seen.
Realize that there are already three new hotels that are "in the pipeline" to be built in Fort Wayne. These three hotels "in the pipeline" will be built prior to any hotel associated with Harrison Square. There is one going up next to IPFW, one up on Lima Road near the Spiece Fieldhouse, and one up near Parkview North.
Logic would dictate that when four new hotels are built in Fort Wayne the hotel occupancy rates in Fort Wayne will decrease unless four hotels of similar size are closed during the same time period unless Fort Wayne experiences a massive surge in tourism...
Maybe tens of thousands of people will descend on Fort Wayne to watch single A baseball and they will all stay and spend the night in Fort Wayne?
4. Crowe's revenue projection for the income expected to be generated from taxes levied by a brand new 900 space parking garage is very interesting. Crowe is projecting $951 in tax revenue from the new parking garage. $735 of this comes from State Income Tax (Personal) and $216 from County Income Tax.
Editor's note: These figures do not include parking fees, nor do they include parking expenses.
In other words this project would cost at least ten million dollars plus interest and the project will generate $951 in tax revenue the first full year of operation.
5. Another item in this report is the revenue that Crowe is projecting that will be generated by the baseball stadium. Crowe is estimating that the baseball stadium will generate $41,729 due to State Sales tax from its employees in 2010.
Lets get a couple of things straight. The people who currently work for the baseball stadium are already getting paid and this revenue from State income tax is already being generated. This is ex isting income. Please keep this in mind.
6. Talking about the baseball stadium they are projecting $8000 will be generated by the Allen County Food and Beverage Tax (That temporary tax we are all still paying) in 2010. This equates to $800,000 in food sales at the baseball park. I can believe that; however, we are already generating this revenue at Memorial Stadium today.
7. The Construction Impact is typical for this kind of report. It bascially says that we will be spending a ton of money on the construction and this will create temporary jobs.
8. The new hotel is estimated to employ 145 people with average earnings of $21,303 each. Note that if two parents with two children were employed at the motel in 2010 at the average wage they would be below the Federal Poverty level... Not exactly the high paying jobs we have heard about....
9. They are actually projecting that 30,000 square feet of retail will create 157 jobs. This seems extremely high to me. The average retail employee would get $6017 in earnings each. They must all be part time students earning minimum wage. This is not impressive.
10. The baseball park will employ 65 people at an average wage of $23,962 each. These jobs already exist!
11. The parking garage will employ one person at $21,632 per year. They must be projecting a lot of automation...
12. So in total this project is expected to move 368 jobs from one part of the City to another (Economic Re-arrangement at its finest). These jobs will pay an average wage of $15,252. This is below the Federal poverty level. These jobs on average pay significantly less then jobs at WalMart...
I would think that anyone who is "on the fence" would oppose the project after reading this report. It does not paint a pretty economic picture.
Mike Sylvester
1. The study in no way, shape, or form discusses any of the negative financial impacts the proposed project will cause. For example, if we build a new hotel it is likely that nearby hotels will see their occupancy rates decrease, which means less tax revenue will be generated from nearby hotels. This is NOT accounted for at all and it certainly should be accounted for. THE MOTIVATION BEHIND THE HOTEL IS BECAUSE THE GRAND WAYNE CENTER IS LOSING BUSINESS BECAUSE THERE ARE NOT ENOUGH HOTEL ROOMS. THUS, THE SUPPOSITION IS THAT THE BASIC LAWS OF SUPPLY AND DEMAND WILL NOT BE AT WORK HERE -- MORE ROOMS WILL MAKE THE GRAND WAYNE CENTER A MORE VIABLE OPTION WHICH WILL LEAD TO HIGHER OCCUPANCY RATES. THIS IS THE ENTIRE REASON BEHIND THE HOTEL PROJECT. NO ONE WOULD BE LOOKING TO BUILD ANOTHER HOTEL JUST TO SATISFY THE CURRENT LEVEL OF DEMAND.
Sly says:
Lets assume that the hotel opens Jan 1, 2010. Lets assume that the average room rate charged is $110 per night (Realize they will use several different rates, I am just estimating an average rate). The innkeeper tax is 6% and each retailer is allowed to keep .83% of the total tax collected as a collectors fee.
The Crowe report estimates that the new 250 room hotel will generate $368,450 in revenue from the InnKeeper tax. This would equate to 56,295 rooms rented. This would result in a hotel occupancy rate of 61.7% for 2010 for the new hotel.
Realize that the current hotel occupancy rate for Allen County is between 44% and 48% per the last statistics I have seen.
Realize that there are already three new hotels that are "in the pipeline" to be built in Fort Wayne. These three hotels "in the pipeline" will be built prior to any hotel associated with Harrison Square. There is one going up next to IPFW, one up on Lima Road near the Spiece Fieldhouse, and one up near Parkview North.
Logic would dictate that when four new hotels are built in Fort Wayne the hotel occupancy rates in Fort Wayne will decrease unless four hotels of similar size are closed during the same time period unless Fort Wayne experiences a massive surge in tourism...
Maybe tens of thousands of people will descend on Fort Wayne to watch single A baseball and they will all stay and spend the night in Fort Wayne? See response to #1 above. THE HOTELS YOU REFERENCE ARE ESSENTIALLY IN DIFFERENT MARKETS -- THERE WOULD LIKELY BE MINIMAL IMPACT ONE WAY OR ANOTHER. PEOPLE GOING TO TOURNAMENTS AT SPIECE WILL BE HIGHLY UNLIKELY TO STAY DOWNTOWN AS OPPOSED TO UP THERE AND GROUPS GOING TO EVENTS AT THE GRAND WAYNE WOULD NOT BE STAYING OUT ON LIMA ROAD IF THE NEW HOTEL IS NOT BUILT.
4. Crowe's revenue projection for the income expected to be generated from taxes levied by a brand new 900 space parking garage is very interesting. Crowe is projecting $951 in tax revenue from the new parking garage. $735 of this comes from State Income Tax (Personal) and $216 from County Income Tax.
Sly note: These figures do not include parking fees, nor do they include parking expenses.
In other words this project would cost at least ten million dollars plus interest and the project will generate $951 in tax revenue the first full year of operation. OBVIOUSLY A CITY OWNED PROPERTY DOES NOT GENERATE PROPERTY TAXES AND A GARAAGE DOESNT GENERATE MUCH INCOME TAX REVENUE BECAUSE IT IS NOT, ITSELF, AN EMPLOYMENT VEHICLE. THE GARAGE SHOULD MAKE MONEY RENTING SPACES AND IT ENABLES THE OVERALL DEVELOPMENT, WHICH DOES PRODUCE TAX REVENUE.
5. Another item in this report is the revenue that Crowe is projecting that will be generated by the baseball stadium. Crowe is estimating that the baseball stadium will generate $41,729 due to State Sales tax from its employees in 2010.
Lets get a couple of things straight. The people who currently work for the baseball stadium are already getting paid and this revenue from State income tax is already being generated. This is ex isting income. Please keep this in mind. HARDBALL PROJECTS THAT THE PAYROLL WILL DOUBLE GOING INTO A NEW FACILITY. THEY WILL BOTH BE HIRING MORE PEOPLE (both full time and gameday) TO DEAL WITH WHAT THEY HOPE WILL BE INCREASED DEMAND AND ATTENDANCE AND WILL BE (HOPEFULLY) PAYING MUCH LARGER COMMISSIONS.
6. Talking about the baseball stadium they are projecting $8000 will be generated by the Allen County Food and Beverage Tax (That temporary tax we are all still paying) in 2010. This equates to $800,000 in food sales at the baseball park. I can believe that; however, we are already generating this revenue at Memorial Stadium today. HARDBALL EXPECTS TO ESSENTIALLY DOUBLE THE IN-PARK ATTENDANCE FOR BASEBALL, PLUS THEY EXPECT TO HAVE MANY OTHER EVENTS AT WHICH FOODSERVICE WILL BE A SIGNIFICANT COMPONENT. THE GROSS FOOD SALES AT THE CURRENT MEMORIAL STADIUM ARE WELL IN EXCESS OF 800k.
12. So in total this project is expected to move 368 jobs from one part of the City to another (Economic Re-arrangement at its finest (term copyrighted by Mike Sylvester)). These jobs will pay an average wage of $15,252. This is below the Federal poverty level. These jobs on average pay significantly less then jobs at WalMart... WHILE THERE IS A CERTAIN ELEMENT OF RELOCATION THERE IS MORE IMPORTANT AN ELEMENT OF GROWTH -- IF HARDBALL DOES NOT GROW THEIR BUSINESS SIGNFICANTLY, THEY WILL LOSE A LOT OF MONEY ON THIS. IF THE HOTEL DOES NOT DO WHAT IT IS SUPPOSED TO -- DRAW MORE PEOOPLE TO THE GRAND WAYNE CENTER, THE HOTEL DEVELOPER WILL LOSE MONEY. WE ARE ALL BETTING ON A SIGNIFICAN ELEMENT OF GROWTH TO GO ALONG WITH WHAT IS CERTAINLY SOME RELOCATION (OR REARRANGEMENT AS YOU SO LOVE TO CALL IT MIKE). BUT, THE RELOCATION ITSELF HAS VALUE. IF YOU RECOGNIZE THE IMPORTANCE OF THE CITY'S CORE (which you may not), YOU UNDERSTAND THAT A DOLLAR SPENT OR EARNED THERE IS NOT THE SAME AS ONE IN A STRIP MALL IN THE SUBURBS. LOCATION DOES MATTER!
I would think that anyone who is "on the fence" would oppose the project after reading this report. It does not paint a pretty economic picture. MIKE, IN MY MIND, MANY OF THE ASPECTS OF THIS REPORT ARE PRETTY CONSERVATIVE. THE CITY IS IN A NO WIN WITH A REPORT LIKE THIS. IF THEY ARE TOO CONSERVATIVE, THEN PEOPLE LIKE YOURSELF, SAY "I don't see enough economic impact." IF THE REPORT WAS TOO AGGRESSIVE, THEN YOU WOULD BE COMPLAINING ABOUT HOW UNREASONABLE THE ASSUMPTIONS WERE
MIKE, I COULD NOT BEGIN TO RESPOND TO ALL ASPECT OF YOUR LETTER BECAUSE IT WOULD HAVE TAKEN ME ALL NIGHT. HOW IN THE HECK ARE YOU GETTING YOUR TAX RETURNS DONE!
SAM T.
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