Investment in Downtown Norfolk : Economic and Fiscal Impact

1. Investment in Downtown Norfolk: Economic and Fiscal Impact Presented to City Council February 12, 2008

2. Purpose of the Study • To examine the economic and fiscal benefits of investment in Downtown Norfolk

3. 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.

4. 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.

5. 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. *Other infrastructure investment of $119 million included $86 million for user supported infrastructure and $33 million for jail and court improvements.

6. 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.

7. 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

8. 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.

9. 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.

10. 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.

11. 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.

12. 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.

13. 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

14. 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.

15. 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.