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Fifth-Forbes Fifth-Forbes Economic ReviewEconomic ReviewPresentation to Downtown Presentation to Downtown Planning CollaborativePlanning Collaborative
October 16, 2000
Fifth-Forbes Economic Review: 10/16/2000
Key Findings Without action, likely continued
decline The scenarios are market-supportable Both scenarios:
require sales diverted from elsewhere can potentially enhance the visitor-based
economy, but in very different ways
Fifth-Forbes Economic Review: 10/16/2000
Key Findings
Public costs magnify the risk of the URP scenario
The CDC scenario will require significant, unidentified resources to succeed
Fifth-Forbes Economic Review: 10/16/2000
Our Assignment Scrub the Assumptions Review Market Dynamics Estimate Fiscal Benefits Review Cost:Benefit Relationships Identify Areas for Further Review
by the Community
Fifth-Forbes Economic Review: 10/16/2000
Characteristics: URP Plan Leverages existing public
investment by reinforcing and expanding on the anchored-regional-center approach
Fosters dramatic and rapid change Reinforces downtown’s
attractiveness to core office markets
Fifth-Forbes Economic Review: 10/16/2000
Characteristics : URP Plan Upscale market position will
broaden downtown’s trade area Street-oriented retail scheme should
mean more reasonable occupancy costs, more adaptable leasing and merchandising
Fifth-Forbes Economic Review: 10/16/2000
Characteristics : URP Plan Parking will have long-term value Centralized leasing, ownership,
management will mean higher sales productivity
Public resources, risks are highly focussed Approach depends on a few key decisions
and requires intervention in private property rights
Fifth-Forbes Economic Review: 10/16/2000
Characteristics: CDC Plan Approach is proven in smaller cities—much
less so in larger markets Approach responds well to current national
downtown trends: diverse workplaces surge in housing concentrating culture and entertainment; leveraging historic resources; creating a strong, indigenous sense of place
Fifth-Forbes Economic Review: 10/16/2000
Characteristics: CDC Plan Much about implementation is unknown:
strong development, finance, marketing, and organizational resources will be required
Diverse web of decision-makers mitigates public cost and risk, but at the expense of short-term impacts and immediate action
Fifth-Forbes Economic Review: 10/16/2000
Characteristics: CDC Plan The approach has broad applicability
downtown: benefits could extend well beyond project area
Fifth-Forbes Economic Review: 10/16/2000
ERA’s Evaluation
Melds Fiscal and Economic Impact Analysis
Melds Marginal and Average Approaches
Emphasizes Net New Activity
Fifth-Forbes Economic Review: 10/16/2000
ERA’s Evaluation
Ignores Indirect “Multiplier” Effects– Treats Them as Proportional
Addressed Future Market Parameters Informed by Scenario Projections
Revenue Side Only
Fifth-Forbes Economic Review: 10/16/2000
Future Population & Employment
REGIONAL POPULATION AND CITY EMPLOYMENT REGIONAL POPULATION AND CITY EMPLOYMENT WILL CONTINUE TO GROW OVER NEXT DECADEWILL CONTINUE TO GROW OVER NEXT DECADE
COMPARISON OF GROWTH PROJECTIONS
Population Employment Population EmploymentGolden Triangle 2,386 151,803 2,926 170,077 City of Pittsburgh 344,506 398,560 323,243 474,228 Pittsburgh MSA 2,016,487 888,460 2,273,154 1,055,921
Population Employment Population EmploymentGolden Triangle 540 18,274 1.6% 0.9%City of Pittsburgh (21,263) 75,668 -0.5% 1.3%Pittsburgh MSA 256,667 167,461 0.9% 1.3%
Source: Southwestern Pennsylvania Commission
1997 Estimates 2010 Projections
Total Change Annual % Change
Fifth-Forbes Economic Review: 10/16/2000
Changes in Retail Sales: 1992-97
RETAIL SALES TRENDS IN CITY OF PITTSBURGH RETAIL SALES TRENDS IN CITY OF PITTSBURGH ARE IN LINE WITH REGIONAL TRENDSARE IN LINE WITH REGIONAL TRENDS
PERCENT CHANGE IN RETAIL SALES, 1992-1997
Motor vehicles/parts 50.0% 39.9% 7.5%Furniture/home furnishings/appliances 43.6% 54.7% 58.3%Building materials/garden supplies 110.4% 136.2% 492.0%Food/beverage 7.2% 13.7% 3.2%Health/personal care 55.5% 55.9% 16.1%Gasoline stations 35.9% 24.0% 11.6%Clothing/accessories 20.7% 20.4% 43.4%General merchandise 21.5% 8.3% 30.2%Miscellaneous stores/Nonstore retail -13.1% -12.9% 2.8%Total Retail Businesses 31.1% 28.1% 26.4%
Source: U.S. Census of Retail Trade; Economics Research Associates.
Pittsburgh MSA Allegheny County City of Pittsburgh
Fifth-Forbes Economic Review: 10/16/2000
Regional Earnings Growth
OVERALL REGIONAL EARNINGS WILL GROW AT OVERALL REGIONAL EARNINGS WILL GROW AT 2.0% ANNUALLY THROUGH 20102.0% ANNUALLY THROUGH 2010
PROJECTED CHANGE IN EARNINGS PITTSBURGH MSA
Total Projected Annual Earnings ($millions)2000 2002 2010
Current Year $ 32,169.1$ 36,546.0$ 51,591.0$ Annual CPI Change, 1990-2000 2.7%1999 $ 31,289.9$ 33,630.5$ 38,034.9$
Projected Annual Real Change in Earnings, 2000-2010: 2.0%
Source: U.S. Bureau of Economic Analysis; Economics Research Associates
Fifth-Forbes Economic Review: 10/16/2000
Growth in Retail Spending
NEARLY $1 BILLION IN NEW RETAIL SPENDING IN REGION NEARLY $1 BILLION IN NEW RETAIL SPENDING IN REGION BETWEEN 1999-2010: 16% IN CITY OF PITTSBURGHBETWEEN 1999-2010: 16% IN CITY OF PITTSBURGH
RETAIL SPENDING PROJECTIONS
City of Allegheny PittsburghPittsburgh County MSA
Total Annual Retail Spending, 1999 ($000s) 662,853$ 2,690,323$ 4,143,478$ Total Annual Earnings, 1999 ($000s) 6,532,316$ 29,601,756$ 50,121,584$ % of Total Earnings Spent on Retail 10.1% 9.1% 8.3%
Projected Annual Income Growth, 2000-2010 2.0% 2.0% 2.0%Projected Total Annual Earnings, 2010 ($000s) 8,096,981$ 36,692,169$ 62,127,044$ Projected Change in Earnings, 1999-2010 ($000s) 1,564,665$ 7,090,413$ 12,005,460$
Projected Total Retail Spending, 2010 ($000s) 821,624$ 3,334,727$ 5,135,952$
Projected Change in Retail Spending,1999-2010 ($000s) 158,771$ 644,404$ 992,474$
Source: U.S. Bureau of Economic Analysis; CACI Information Systems, Inc.; Southwestern
Fifth-Forbes Economic Review: 10/16/2000
Total Potential Retail Spending
$0
$1,000,000,000
$2,000,000,000
$3,000,000,000
$4,000,000,000
$5,000,000,000
$6,000,000,000
$7,000,000,000
General Merchandise Convenience Meals & Beverages Total
Overnight Visitors
Day Visitors
Office Workers
SecondaryResidential
PrimaryResidential
Potential Retail Sales$6.8 BILLION IN POTENTIAL RETAIL SALES--MAJORITY $6.8 BILLION IN POTENTIAL RETAIL SALES--MAJORITY
FROM RESIDENT MARKETSFROM RESIDENT MARKETS
Fifth-Forbes Economic Review: 10/16/2000
Required Sales CaptureUrban Retail Scenario requires capturing up to 5.6% of Urban Retail Scenario requires capturing up to 5.6% of total retail demand--other scenarios are less than 2.0%total retail demand--other scenarios are less than 2.0%
Required Capture of Total Potential Sales
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Urban Retail Scenario Main Street Scenario No Action Scenario
High SalesLow Sales
Fifth-Forbes Economic Review: 10/16/2000
Direct Economic Impacts: Operations
Urban Retail Properties Scenario has Greatest Impact--Urban Retail Properties Scenario has Greatest Impact--No Action Scenario Creates Potential LossesNo Action Scenario Creates Potential Losses
Net New Tax Receipts
$(750,000)
$1,250,000
$3,250,000
$5,250,000
$7,250,000
$9,250,000
$11,250,000
$13,250,000
U rb a n R e ta il P ro p e rtie s M a in S tre e t N o A c tio n
High Sales
Low Sales
Urban RetailProperties
Main Street No Action
Net New Employment
(100)
100
300
500
700
900
1,100
1 2 3
Urban RetailProperties
MainStreet
No Action
Net New Wages
-$2,000,000
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
1 2 3
Urban RetailProperties
MainStreet
No Action
Fifth-Forbes Economic Review: 10/16/2000
Net New Construction Impact
Income Tax Revenue from Construction Employment is Income Tax Revenue from Construction Employment is Most Significant FactorMost Significant Factor
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
Pittsburgh Schools Commonwealth
Urban Main Street
Construction Impact by Jurisdiction
Fifth-Forbes Economic Review: 10/16/2000
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
Pittsburgh Schools County Commonwealth
Urban Main Street
Operations Impact by Jurisdiction
Net New Operations Impact
Greatest Impact on School District Largely Due to Real Greatest Impact on School District Largely Due to Real Property Tax RevenueProperty Tax Revenue
Fifth-Forbes Economic Review: 10/16/2000
Key Decision Factors
Fiscal and Economic Impacts Timing of Costs and Benefits Public Opportunity Costs Sustainability and Adaptability