Fifth-Forbes Economic Review Presentation to Downtown Planning Collaborative Fifth-Forbes Economic...

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


Key Findings

Public costs magnify the risk of the URP scenario

The CDC scenario will require significant, unidentified resources to succeed


Our Assignment Scrub the Assumptions Review Market Dynamics Estimate Fiscal Benefits Review Cost:Benefit Relationships Identify Areas for Further Review

by the Community


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


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


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


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


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


Characteristics: CDC Plan The approach has broad applicability

downtown: benefits could extend well beyond project area


ERA’s Evaluation

Melds Fiscal and Economic Impact Analysis

Melds Marginal and Average Approaches

Emphasizes Net New Activity


ERA’s Evaluation

Ignores Indirect “Multiplier” Effects– Treats Them as Proportional

Addressed Future Market Parameters Informed by Scenario Projections

Revenue Side Only


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


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


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


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


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


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


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


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


MainStreet

No Action


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


$-

$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


Key Decision Factors

Fiscal and Economic Impacts Timing of Costs and Benefits Public Opportunity Costs Sustainability and Adaptability

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