Having trouble justifying your investment and getting support for your project?

Have you ever worked on an economic development project where you were asked to explain the benefit or impact of the project and you couldn't offer much more than “it will boost local retail spending”?

Convincing public officials to invest large dollar amounts in industrial parks, industrial buildings or expansions is often met with skepticism and a demand for additional information. The public or elected officials often ask what the impact will be on the community. Measuring the exact impact is difficult. Economic Development Professionals encounter the same problem when they study whether or not to support an investment. Too often economic development professionals make this decision based on arbitrary information like “this investment will boost local spending, or attract tourists”. That leaves many wondering how much will retail spending be boosted, or how many tourists will it attract, and how much will the tourists contribute to the local economy? An Economic Impact Analysis (EIA) can answer all of those questions.

Economic Impact Analyses measure the residual impact of any occurrence in an economy. For example, let’s say that an economic development professional is considering supporting a Tax Abatement project for a windmill manufacturing company that will bring 50 jobs to the community. A large percentage of those 50 people and their families will regularly do business in the community that they work, many of them will live where they work, and the added spending will create a few more jobs and some capital investment. Additionally, the windmill factory will require local businesses for services like office supplies, IT support, janitorial, hotel rooms etc. Demands for services will again create additional jobs and capital investment. An EIA will quantify all of these measurements.

Recently, I had a client measure the impact that their industrial park created, and as usual, I was amazed at the benefit it brought to the community. The businesses that located in the industrial park created about 1,100 jobs, and the residual impacts created about $30 million in local expenditures and 831 jobs. That’s about .7 indirect jobs for every direct job and $25,000 in spending for each direct job created. Imagine being able to multiply the stated impact of your project by those numbers!

If you want to know more about how to conduct and Economic Impact Analysis, contact Decklan Group and together we will walk you through quantifying your project with real numbers.

We are excited to start featuring guest blogs on our site. Today’s blog is written by Clay Wilfahrt, current City Administrator of Winsted, MN. He has experience working in economic development for both the public and private sector. Clay's goal is to take difficult concepts, and interpret them into something simple and actionable. He tackles a wide variety of analyses including: impact analysis, cluster analysis, gap analysis, commuter shed and more. Clay enjoys taking nerdy problems (like economic analysis) that nobody else wants to deal with and make them easy to understand and fun, yes, fun to work on.