In the preceding sections of this report, we have focused on the direct economic impacts which result for the creation and operation the Hotel and Conference Center. In this analytic section, we consider the total economic impacts by including measures of the indirect impacts which will be generated from the new facilities. These impacts reflect the stimulative effect on the local economy from making the initial investment in the new facilities and their ongoing operation on the regional economy. The measure of indirect economic effects occur as the initial spending recirculates through the local economy through the purchase of goods and services which results from the initial direct spending on the facilities. For example, the purchase of local building materials supports the operation of local businesses and their employees and payroll.
To assess the total economic impact of the Hotel and Conference Center we have used the RIMS II Input-Output Model calibrated for the State of Alabama. RIMS II is a widely
Key Advisors, Inc. and Bleakly Advisory Group _______________________________ 43 used economic model for understanding the operation of local economies and gauging the economic impact of development projects on local economies. The RIMS II model provides regional multipliers which measure the indirect or multiplier effects from initial spending and employment in local economies.
Presented in the exhibit below are the direct and indirect impacts which combined are the total state-wide economic impacts of the Hotel and Conference Center.
During construction the $35 million investment will generate a total of $79 million in economic activity in the State. In terms of construction earnings, the $12.6 million in construction payroll will generate a total economic impact of $26.6 million, (which is a component of the overall impact from construction of $79 million). In terms of construction employment, the 211 construction jobs on site will result in a total of 407 jobs in the state-wide economy over the construction period.
During operations the Hotel and Conference Center will have a significant total economic impact on the regional economy. The economic output from the Hotel and Conference Center of $7.7 million will generate a total economic impact of
$13.9 million in the Alabama economy each year. The permanent payroll of $3 million will generate a total payroll impact in the regional economy of $4.9 million annually. In terms of jobs, the 175 jobs at the Hotel and Conference Center will support a total of 312 jobs state-wide.
Key Advisors, Inc. and Bleakly Advisory Group ________________________________________________________________ 44 5. 20-Year Tax Revenue Projections
Exhibit V illustrates 20-years of the expected combined (City of Pelham, Shelby County, public schools in Shelby County, American Village, and State of Alabama) lodging and sales taxes from Hotel and Conference Center operations and spending.
The exhibit shows that the Hotel and Conference Center will generate a combined:
$ 1.4 million in tax revenues in the first year of operation,
$ 1.9 million tax revenues in the tenth year of operation,
$ 16.6 million cumulatively in tax revenues over first ten years of operation.
Source: Bleakly Advisory Group, Key Advisors, AL Dept. of Revenue
Key Advisors, Inc. and Bleakly Advisory Group _______________________________ 45 6. Summary of Economic Impacts
The economic benefits to the City of Pelham, Shelby County (including public schools in the County and American Village) and the State of Alabama from the construction and operation of the Oak Mountain Hotel and Conference Center will be substantial and sustained over a significant period. The key economic benefits are:
During Construction (one-time benefit):
$35 million in construction value
$7.7 million in supplies & equipment purchased in the City of Pelham or Shelby County
$12.6 million in payroll from construction jobs
211 construction jobs
$969,000 in construction-related public revenues generated from taxes and fees derived from
During Operations (recurring every year):
$11 million in total annual local spending from hotel operations
$3.3 million in annual payroll to employees
$7.38 million in annual local spending through hotel operations, employees, guests and day-users
$18.4 million in total annual general economic benefit
Total annual public revenues of $1.5 million to Pelham, Shelby County, public schools in Shelby County, American Village and the State of Alabama by the third year of operation.
Additional gate fees to the State estimated at $210,000 annually Total Economic Impact (Direct and Indirect)
$79 million in total economic impact from the initial $35 million of investment
$14 million in total state-wide spending each year
$4.9 million in total statewide payroll impacts
312 jobs supported state-wide
Key Advisors, Inc. and Bleakly Advisory Group _______________________________ 46 Terms and Conditions
The market and financial analyses conducted for the proposed Hotel takes into account the operating assumptions and estimates developed in connection with industry contacts and other general knowledge of the industry. Since future events are not subject to precise forecasts, some assumptions will not materialize in the exact form presented by the analysis. In addition, other unanticipated events and circumstances may occur which could influence the future outcome and performance of the project.
Therefore, the results achieved in future operating periods will vary from the analysis of prospective market and financial conditions. Since there is no recourse to predicting these matters with certainty apart from informed and reasoned judgments, future events may lead to variations in project performance which may materially alter the results of the market analysis results.
While changes of this kind may occur, it is expressly understood that Key Advisors, Inc.
has no obligation to revise the report or the analysis of prospective conditions subsequent to the date of this report. The analysis is based on fieldwork completed through December 2014.
Further, it is understood that this study and all reports and work product of Key Advisors, Inc. are prepared and delivered solely for the internal use of the client. The client acknowledges that Key Advisors, Inc. has not been engaged by contract and owes no duty of performance to any person other than the client.
Any use of the reports and work product of Key Advisors, Inc. by the client must include the entire content of such reports in the form delivered to the client. No portion of excerpts thereof may be otherwise quoted or referred to in any statement, prospectus, loan agreement, or other document unless expressly approved by Key Advisors, Inc. in writing.
You have represented that you know of no hidden conditions affecting the subject property, including its subsoil or structure, such as asbestos, radon, toxic or chemical waste, flooding, or any other conditions that would render the property more or less valuable. For purposes of analysis, Key Advisors, Inc. has assumed that there is full compliance with all applicable federal, state, and local environmental laws or regulations as of the date of the report.
Specifically, Key Advisors, Inc. did not determine the legal and regulatory requirements applicable to the project, including zoning, other state and local government regulations, permits, and licenses. In addition, no effort was made to ascertain the effect of present or future federal, state, or local legislation, including rulings on environmental or ecological matters.