Investment in Downtown Norfolk: Economic and Fiscal Impact Presented to City Council



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Investment in Downtown Norfolk: Economic and Fiscal Impact

  • Presented to City Council

  • February 12, 2008


Purpose of the Study

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



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.


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 Virginia’s government.



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.


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.



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


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.



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.


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.


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.



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.


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


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 City’s tax revenue increased from 8% in 1996 to 19% in 2006, easing the tax burden on the rest of the City.


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 City’s 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.



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