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Main Office 617 S Olive St., Suite 711 Los Angeles, CA 90014

peter.becronis@inceptionproperty.com www.inceptionproperty.com Company Representitive Peter Becronis

Inception Property Group Medical Village Request for Proposal

presented by:


Overview Inception Property Group is requesting proposals from select jurisdictions for the future home of a hospital-anchored master planned development offering a comprehensive continuum of care, which will include outpatient care, general acute hospital care, post-acute short and long term care, and residential opportunities in independent, assisted living, and memory care housing. This development will herein be referred to as a medical village, and will strive to be a ‘one-stop-shop’ for healthcare services, including live, work, and play experiences that contribute to the wellness of individuals and communities. In addition to the increased access to healthcare and senior living for the area, the long-term economic impacts will be significant. Inception Property Group forecasts that the medical village will create approximately 6,214 new jobs, approximately $35 million in new taxes, and approximately $857 million in overall economic impact, according to an internal IMPLAN report (attached at the end of this RFP). Inception anticipates total project costs to be approximately $300 million, and produce a forecasted economic benefit to the selected jurisdiction of over 2.5 times the total project investment. This request for proposals is the first of multiple stages of a selection process intended to identify city and County partners who have made the procurement of capital investment, healthcare services and jobs for their community a priority, and are prepared to engage with private industry partners to achieve those objectives.


Table of Contents

Project Sponsors

1

Scope

2

Evaluation Criteria for Responses

3

Submittal Instructions and Questions

5

Exceptions

8

RFP Process Timeline and Next Steps

9

Legal Disclaimers

10

Medical Village Coneptual Plan

11

Economic Impact Analysis

13


Project Sponsors

Inception Property Group Inception Property Group is a healthcare real estate development firm led by industry veterans who have expanded access to quality healthcare, created thousands of jobs, and contributed significantly to the economies and the health of communities. Each facility in an Inception Property Group medical village operates independently, and each leverages the advantages of collocation through efficiencies of scale and amenity enhancements which aim to connect each resident, worker, and patient to nature and to a vibrant, healthy community. +More information on Inception's founders can be found at http://www.inceptionproperty.com/company-leadership/

Provider Partners Inception Property Group's healthcare provider partners will remain confidential until land use and permits are approved for the selected site. Responses should anticipate a potential for either for-profit or non-profit ownership and operation of the individual facilities. If the responding entity has a preexisting relationship with an organization which provides some of the types of care identified in this RFP, or if the responder is additionally aware of an organization that is actively searching for new locations, please disclose to the extent possible. It is our intention to expand access to healthcare through collaboration. Preexisting relationships between providers and patients can play an important role in the quality of care for the community. We will evaluate the suitability of incorporating such organizations into the medical village on a case-by-case basis.

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Scope Primary Program

200 + 200 100 100

bed general acute hospital independent living beds

assisted living and memory care beds

bed transitional care and skilled nursing facility

Additional Program + Outpatient medical offices + Retail + Gardens + Athletic fields + Walking trails + Biking trails + Other common area amenities

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Evaluation Criteria for Responses Target Property Parameters The site should consist of 25 to 50 acres of contiguous land zoned (currently or during the entitlement process) and developable for the defined uses. Sites must be of a size and configuration to permit site planning to include adequate open space, circulation, and parking. Sites must contain multiple right and left vehicular ingress and egress in place by the start of construction, such that significant traffic congestion can be mitigated. Sites are required to have sufficient frontage on a paved thoroughfare to allow for adequate visual separation from other adjacent uses, and to be able to accommodate adequate signage, lighting, and landscaping so as to establish a prominent and noticeable presence. The sites must be served by, or the jurisdiction must provide prior to construction, an adequate supply of water, storm and sanitary sewer system, and dry utilities. Storm water detention / retention basins and renewable energy solutions are acceptable considerations for covering potential gaps between the development’s requirements and existing public utility infrastructure. Sites requiring off-site utility extensions or sewage lift stations may also be considered. The surrounding uses, when viewed from the site itself, should be well maintained, aesthetically pleasing and functionally conducive to a state-of-the-art medical campus. Sites may be rejected for proximity to, but not limited to, dumps, auto salvage yards, and heavy industrial uses. The sites must be available for either fee-simple acquisition or by an in-kind contribution, with a sufficient escrow period to complete the entitlements, environmental, and permitting processes described in your response to this RFP, and to complete the necessary design and due diligence scopes to obtain a guaranteed maximum contract price from a qualified, union-signatory general contractor. The sites must not contain environmental hazards or restrictive biological conditions, or alternatively 1) must be presented with a no-further-action determination; or 2) have prefunded environmental insurance in place. Sites must meet government guidelines for Essential Buildings, including but not limited to seismic conditions, flood elevations, geotechnical, and other conditions, without additional costs to Inception Property Group.

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Sites with unusual on-site and off-site improvement requirements may be considered to the extent that the costs to the budget and schedule are mitigated within the proposal.


Responder Profile Responders may consist of any combination of public and private entities which have the authority to represent the proposed site’s current ownership as well as represent the jurisdictions with standing in the medical village’s development and operational approvals. Responders shall provide profiles of the responding entities as well as of the individuals authorized to make commitments on behalf of their respective organization. Sites identified may be either on-market properties, off-market properties, or sites owned by the jurisdiction itself. Economic Package Responses to this RFP should include an economic package which the responders have the authority and capacity to deliver. Please include and detail all proposed public and private financing as well as valuations of cost-avoidances inherent to the site (including but not limited to: workforce profile and cost estimates, favorable site conditions, off-site infrastructure). Examples of public and private financing may include but are not limited to Public-Private Partnerships, co-investment in the development, grants, infrastructure bonds, tax credits and / or abatements, tax-exempt financing, and zero to low interest financing. Additionally, indicate if the site is located within a Medically Underserved Area or similar designation, or within an Enterprise Zone, or which might otherwise qualify for available financing, but which the responders might not have authority to approve. Government Approvals Time is of the essence with regards to project completion. Please describe the planning, permitting, CEQA and environmental process for the site. Provide date-certain government approval commitments, as well as detailing the coordination plan between the various government entities and departments with standing, that will ensure a streamlined approval process without conflicting conditions between government stakeholders. Please highlight any exceptions to standard government processes. Please also detail how the responding jurisdiction ensures staff alignment with appointed and elected officials, as well as how the jurisdiction will provide continued support through subsequent election cycles until the final certificate of occupancy.

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Submittal Instructions and Questions Contact **Provide three physical copies and an electronic copy to the Inception Property Group contact individual below by 4:00 p.m. March 1, 2017. Peter J. Becronis Partner Inception Property Group 617 S. Olive St., Suite 711 Los Angeles, CA, 90014

Contact: (626) 379-3705 Peter.Becronis@InceptionProperty.com

Property Profile The submissions should follow a question and answer format, and at a minimum answer the questions below. If specifically requested information or supporting documentation is not available, respond with ‘not available’. Supporting documentation, appendices, and exhibits should be cited in the answer and added at the end of the submission. Contiguous Size: Zoning and Overlays: Area Parcel Number(s): Address(es): Acquisition or in-kind participation price: Property(s) relationship to respondents: Proximity to public water connections + specifications of those connections, including capacity: Is the property in a Medically Underserved Area or similar designation? Is the property within an Enterprise Zone or similar designation? If not, can an Enterprise Zone be created prior to acquisition?

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Property Profile (con’t.) Proximity to public sewer connections and specifications of those connections, including capacity: Proximity to power connections: Traffic capacity and deferred maintenance of public roads: Parcel(s) current uses(s) and improvements: Current use(s) of adjacent parcel(s) to the north: Current use(s) of adjacent parcel(s) to the south: Current use(s) of adjacent parcel(s) to the east: Current use(s) of adjacent parcel(s) to the west: Geotechnical conditions and supporting report: Biological conditions and supporting reports: Environmental conditions and supporting reports: Natural Hazard Disclosure Report(s): ALTA and topographical surveys: Satellite image with property(s) identified: If property is actively listed for sale, how long has it been on the market (please also provide marketing materials):

Respondent Profile Please complete the following table: Responding Entity

Formation Type (Government, LLC, Etc.)

Points of Contact

Does Respondent have a preexisting relationship with an operator that has previously disclosed to Respondent an interest in a new location within the respondent's jurisdiction?

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Economic Package Public grant sources and maximum amounts: Other public equity sources and maximum amounts: Public bond sources, terms, and maximum amounts: Other public debt sources, terms, and maximum amounts: Private financing sources, terms, and maximum amounts: Tax incentives, terms, and maximum amounts: Property’s proximity to Medically Underserved Areas and other similar federal or state designations: Property’s proximity to Enterprise Zones: Additional economic package comments and incentives:

Government Approvals Land use approval process, including CEQA (identify any expediting or exceptions to the standard process in the jurisdiction): Commitment dates or amount of time of entitlement approval process: Building permit approval process (identify any expediting or exceptions to the standard process in the jurisdiction, including any proposed uses of third -party plan checking): Commitment dates or amount of time of building permit approval process: Explain how government inter and intra-departmental and agency coordination and alignment will be managed for the medical village to have clear entitlement and permitting processes. Please provide a coordination plan which has streamlined entitlements and permitting approval processes: Explain how the jurisdiction will ensure commitments will survive potential changes in elected and appointed officials: Have you provided exceptions to your standard government processes? If, so, please summarize:

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Exceptions This RFP stage is intentionally broad to afford responders flexibility for creative responses. Identifying the appropriate location for a complex healthcare development includes a substantial number of variables. In instances to which any specific criteria cannot be accommodated, please provide an explanation as well as an alternative solution that could fulfill a similar or superior intent. In instances where multiple sites are submitted by a responder or in instances where a site does not meet all of the RFP’s criteria, other relevant criteria not specifically identified in this RFP may be taken into consideration.

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RFP Process Timeline and Next Steps Timeline Due to the nature and complexity of such a significant capital investment into the community’s healthcare, we anticipate the selection and decision process to conclude in 2018. Timing will vary based on the entitlement, CEQA, and permitting processes. Accordingly, we will incorporate traditional due diligence and inspection processes on select viable sites as part of our determination. Below is a rough timetable of the RFP process, which will be further refined at each stage.

Dec.

Jan.

December 2016:

Feb.

Mar.

Apr.

May

June

July

Initial review of RFP

January - February:

Q&A

March 1:

Deadline for receipt of RFP responses

March 2017:

Q&A feedback for RFP responses

April - May 2017:

Evaluate RFP responses

June 2017:

Announce short listed sites and responders

July 2017:

Begin second stage of RFP process

2017

Key:

Hard Deadline Open - Ended

9


Legal Disclaimers Except as provided in this paragraph with respect to the Confidential Information, this RFP is intended as an outline of the major provisions only and shall not create any legal rights or obligations between us. It is intended that all legal rights and obligations of each of us shall only be those which are as set forth in a fully executed definitive development agreement. neither Inception Property Group nor its vendors or consultants make any specific promises about Confidential Information. For example, we don’t make any commitments about the accuracy of the content within this RFP and its supporting documentation, which are for our internal decision-making purposes only and provided as a courtesy. We do not warranty the reliability, availability, or ability of the Confidential Information to meet your needs. we provide the Confidential Information “as is�. The parties hereto shall not be contractually bound unless and until they execute and deliver a formal, definitive development agreement, which must be in form and content satisfactory to each party and its counsel in their sole discretion. Until such time, either party may terminate all negotiations and discussions of the subject matter hereof, without any cause and for any reason, without recourse or liability. Neither party may rely on this RFP or any documents delivered in connection therewith as creating any legal obligation of any kind and responder hereby acknowledges that the execution of this RFP does not in any way prohibit or limit Inception Property Group's right to negotiate and/or consummate development agreements with third parties. Responder further acknowledges and agrees that all correspondence (including this RFP) and all communication between Inception Property Group and responder concerning information which may ultimately become or becomes part of the development agreement is confidential information (collectively, the "Confidential Information"). Whether or not a formal development agreement is ultimately consummated, responder shall keep the Confidential Information strictly confidential and shall not disclose the Confidential Information to any person or entity other than responder's financial, legal, and space planning consultants.

10


Medical Village Conceptual Plan

11


B C D

A

4

2

5

6

1

7 3

H

K

8

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I E

F

J

A skilled nursing

D independent living, low-density

G hospital

J retail

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4 UHFUHDWLRQÀHOG

7 zen garden

B memory care

E independent living, medium-density

H parking garage

K central utility plant

2 walking path

5 playground

8 community garden

C assisted living

F independent living, high-density

I PHGLFDORIÀFHEXLOGLQJV

3 nature trail

6 amphitheater

12


Medical Village Development

South Riverside County, CA Economic Impact Analysis

13

Inception Property Group - 617 S. Olive Street, Suite 711, Los Angeles, CA 90014 www.InceptionProperty.com


2

The Economic Impact of Inception Property Group’s Proposed “Medical Village” in Riverside County, California

DESCRIPTION OF STUDY -

This study estimates the economic impact of the proposed Medical Village in Riverside County. The project would involve the purchase and development of a 25-50 acre site in order to develop:       

200,000 sf. Hospital with 200 beds Skilled Nursing including Post-Acute Care with 81 beds Independent Living with 200 beds Assisted Living with 70 beds Memory Care Unit with 30 beds 80,000 sf. Medical Office Space Parking Structure and Amenities

-

The following analysis considers solely the goods and services provided by businesses within the County of Riverside. Thus, impacts on construction and professional services provided by firms from outside the region are not reflected. It should be noted that while no architecture is included in this study, much of the civil and mechanical engineering may indeed take place in partnership with local firms, adding to the amount of development money spent inside Riverside County.

-

The widely used IMPLAN economic modeling software was used to create the models that generated these estimates. These models allow quantification of the “multiplier” effects that result from dollars circulating and recirculating throughout the local economy (indirect and induced effects).

-

The two major events analyzed are: 1. Site development and building construction 2. Ongoing operation of the proposed new healthcare facilities

-

The development and construction plan for the site is projected to directly produce approximately 2,032 jobs and wages of over $97,141,863 through its two-year span.

-

The operation of a Medical Village and its campus healthcare services will directly account for approximately 1,766 permanent jobs and annual wages estimated at over $138,240,549.

-

In addition to direct job creation, the construction and operation of the proposed Medical Village is estimated to create over 2,400 indirect and induced jobs in service and support industries throughout Riverside County.

-

Not included in this study are the cost savings and intangible benefits of increased availability and access to localized healthcare for Riverside County and its residents.

Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


3

The Economic Impact of Inception Property Group’s Proposed “Medical Village” in Riverside County, California

Contents Description of Study

2

Introduction and Summary of Findings

4

Inputs

5

Impact of Construction Activities

7

Impact of Healthcare Operations

8

Impact on Employment in Other Sectors

9

Other Considerations

10

Definitions

11

Methodology and Sources

12

Disclaimer

13

Exhibits - A: State and Local Tax Data - B: Riverside County Base Economic Statistics

14 15

Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


4 INTRODUCTION As part of our long-term plan to partner with the County of Riverside, its incorporated cities, businesses and residents, Inception Property Group has undertaken a study to measure the projected impact on the area’s jobs, output, wages and taxes. This study was conducted by an independent third party and utilizes the most recent IMPLAN data sets to model economic impact. The results of this study show a significant impact to the area in terms of direct job, wage and tax generation as well as indirect job and wage generation throughout a wide variety of industries. These impacts are generated in both the construction phase of the project and in the ongoing operations of the businesses that will be encompassed by the Medical Village development.

SUMMARY OF FINDINGS

Table 1.1: Economic Impact of Construction Impact Type

DIRECT*

EMPLOYMENT

EST. TOTAL**

2,032

3,031

TOTAL OUTPUT***

$

298,075,324 $

430,655,810

TOTAL VALUE ADDED Labor Income Employee Compensation Proprietors' Income Other Property Type Income Indirect Business Taxes

$ $ $ $ $ $

133,772,597 97,141,863 80,750,630 16,391,233 34,514,706 2,116,028

$ $ $ $ $ $

208,914,567 139,578,555 116,454,623 23,123,933 58,229,133 11,106,878

$

16,427,775

STATE AND LOCAL TAX IMPACT

* Estimates of direct annual impact are b ased on inputs from Inception's development b udget ** Each total impact is the sum of the direct, indirect and induced impacts as estimated b y the IMPLAN model. *** In a manufacturing sense, total output is equal to sales +/- inventory. For an intangib le service, total output is simply the value of the service provided.

Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


5 Table 1.2: Economic Impact of Operations (annual) Impact Type

DIRECT

EMPLOYMENT

EST. TOTAL

1,766

3,183

TOTAL OUTPUT

$

260,147,949 $

426,475,095

TOTAL VALUE ADDED Labor Income Employee Compensation Proprietors' Income Other Property Type Income Indirect Business Taxes

$ $ $ $ $ $

156,684,738 138,240,549 136,489,848 1,750,702 16,475,388 1,968,801

$ $ $ $ $ $

249,753,930 191,627,911 180,595,406 11,032,505 46,595,942 11,530,076

$

18,790,829

STATE AND LOCAL TAX IMPACT

Table 1.3: Economic Impact of Total Project Impact Type

DIRECT

EMPLOYMENT

EST. TOTAL

3,798

6,214

TOTAL OUTPUT

$

558,223,273 $

857,130,905

TOTAL VALUE ADDED Labor Income Employee Compensation Proprietors' Income Other Property Type Income Indirect Business Taxes

$ $ $ $ $ $

290,457,335 235,382,413 217,240,478 18,141,935 50,990,094 4,084,829

$ $ $ $ $ $

458,668,497 331,206,467 297,050,029 34,156,438 104,825,076 22,636,954

$

35,218,604

STATE AND LOCAL TAX IMPACT

INPUTS The inputs used for this modeling are based on the construction budget and financial projections for Inception’s “Medical Village”, a 25-50-acres healthcare campus that houses a hospital, skilled nursing facilities and medical office buildings. The study includes only inputs and transactions that will affect Riverside County, thus omitting architectural costs (those fees may be paid out of state). It should be noted that some of these fees will likely occur within the County, as will a significant purchase of land, both of which may create additional revenues to the area not captured in this study. Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


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FIGURE 2.1 Study Inputs: Construction Costs

The second phase of the Medical Village project will be the ongoing operation of the campus, including a 200-bed hospital, independent and assisted living, memory care, post-acute care centers and medical office buildings. We have used our second-year projections to reflect full ramp-up of these operations and all healthcare units at average capacity. These assumptions about capacity, revenues, staffing and operating expenses are all in line with national benchmarks as well Inception’s financial projections for the project.

FIGURE 2.2 Study Inputs: Operating Projections

The overall impact on the economy of the area substantially exceeds the direct impacts of the activities outlined above. Due to recirculation of funds within the region, dollars are spent and respent many times to create a multiplier effect, which generates additional dollars in the local economy. This study estimates the direct effects of the above activities as well as the multiplier Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


7 effects, both during the construction phase and during subsequent operation. In addition, the study estimates the impacts of these activities on taxes at the state and local levels. IMPACT OF CONSTRUCTION ACTIVITIES

FIGURE 3.1 – IMPACT SUMMARY OF CONSTRUCTION Direct Effect Indirect Effect Induced Effect Total Effect

# Jobs 2,032 395 604 3,031

$ $ $ $

Wages 97,141,863 19,568,112 22,868,580 139,578,555

Total Value Added $ 133,772,597 $ 32,437,179 $ 42,704,791 $ 208,914,567

$ $ $ $

Total Output 298,075,324 58,062,788 74,517,698 430,655,810

Each phase of the proposed Medical Village will impact the economy of Riverside in four areas: Employment, Output, Total Value Added, and State/Local Taxes. The development and construction of the 25-50-acre site are estimated to create over 3,031 jobs, wages of over $139 million and total output of over $430 million over its 2-year span. The impact from development and construction to State and local taxes including payroll, sales tax, etc. will be as follows:

FIGURE 3.2 – TAX IMPACT OF CONSTRUCTION PHASE

Transfer Type 15007 15014 15015 15020 15021 15022 15023 15024 15025 15026 15027 15029 15030 15031 15032 99999

Description Dividends Social Ins Tax- Employee Contribution Social Ins Tax- Employer Contribution Tax on Production and Imports: Sales Tax Tax on Production and Imports: Property Tax Tax on Production and Imports: Motor Vehicle Lic Tax on Production and Imports: Severance Tax Tax on Production and Imports: Other Taxes Tax on Production and Imports: S/L NonTaxes Corporate Profits Tax Personal Tax: Income Tax Personal Tax: NonTaxes (Fines- Fees Personal Tax: Motor Vehicle License Personal Tax: Property Taxes Personal Tax: Other Tax (Fish/Hunt) Total State and Local Tax

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

Payroll Taxes 152,115 307,344 459,459

Commerce Taxes $ $ $ $ 5,189,592 $ 3,752,870 $ 97,855 $ 4,819 $ 627,851 $ 315,421 $ $ $ $ $ $ $ 9,988,408

Household Taxes $ $ $ $ $ $ $ $ $ $ $ 4,184,863 $ 818,957 $ 145,741 $ 54,605 $ 28,185 $ 5,232,351

Corp. Taxes $ 60,858 $ $ $ $ $ $ $ $ $ 686,699 $ $ $ $ $ $ 747,557

Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


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IMPACT OF HEALTHCARE OPERATIONS

FIGURE 4.1 – IMPACT SUMMARY OF HEALTHCARE OPERATIONS

Direct Effect Indirect Effect Induced Effect Total Effect

# Jobs 1,766 587 830 3,183

$ $ $ $

Wages 138,240,549 21,944,674 31,442,688 191,627,911

Total Value Added $ 156,684,738 $ 34,417,117 $ 58,652,074 $ 249,753,930

$ $ $ $

Total Output 260,147,949 63,926,715 102,400,432 426,475,095

Assuming a payroll of 1,766 employees across the healthcare services provided on campus, we arrive at an estimated direct value-added impact of about $138 million per year. As shown in Figure 4.1, IMPLAN estimates that these 1,766 jobs stimulate demand for more than 1,400 additional jobs in the local economy (indirect and induced effects) for a total employment impact of over 3,100 jobs. The wages generated by these additional jobs are estimated to bring the total value-added impact to more than $191 million annually. In addition, economic activities related to the direct, indirect and induced impacts of hospital operations are estimated to add more than $18.7 million to state and local tax revenues (Figure 4.2 below).

FIGURE 4.2 – TAX IMPACT OF HEALTHCARE OPERATIONS

Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


9 Transfer Type 15007 15014 15015 15020 15021 15022 15023 15024 15025 15026 15027 15029 15030 15031 15032 99999

Description Dividends Social Ins Tax- Employee Contribution Social Ins Tax- Employer Contribution Tax on Production and Imports: Sales Tax Tax on Production and Imports: Property Tax Tax on Production and Imports: Motor Vehicle Lic Tax on Production and Imports: Severance Tax Tax on Production and Imports: Other Taxes Tax on Production and Imports: S/L NonTaxes Corporate Profits Tax Personal Tax: Income Tax Personal Tax: NonTaxes (Fines- Fees Personal Tax: Motor Vehicle License Personal Tax: Property Taxes Personal Tax: Other Tax (Fish/Hunt) Total State and Local Tax

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

Payroll Taxes 235,897 476,623 712,520

Commerce Taxes $ $ $ $ 5,387,328 $ 3,895,863 $ 101,584 $ 5,003 $ 651,773 $ 327,439 $ $ $ $ $ $ $ 10,368,990

Household Taxes $ $ $ $ $ $ $ $ $ $ $ 5,687,507 $ 1,113,017 $ 198,072 $ 74,211 $ 38,305 $ 7,111,112

Corp. Taxes $ 48,699 $ $ $ $ $ $ $ $ $ 549,508 $ $ $ $ $ $ 598,207

Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


10 IMPACT ON OTHER EMPLOYMENT SECTORS The addition of these jobs and employees will in turn create the need for services, restaurants, retail and other amenities to grow and accommodate the increased population and incomes. These are the “Indirect” and “Induced” jobs created by a project. The table below shows the top 10 industries affected by the development and construction of the proposed Medical Village, value added and total output that each sector may experience.

FIGURE 5.1 – TOP 10 SECTOR EMPLOYMENT IMPACTS Construction Phase Sector 52 469 395 440 501 502 411 464 485 405

Employment Type Construction of new health care structures Landscape and horticultural services Wholesale trade Real estate Full-service restaurants Limited-service restaurants Truck transportation Employment services Individual and family services Retail - General merchandise stores

# Jobs 1,766 290 73 67 39 37 33 33 28 22

Wages $ 90,493,135 $ 7,209,321 $ 7,357,368 $ 1,440,544 $ 975,535 $ 769,219 $ 1,815,478 $ 915,835 $ 393,095 $ 643,201

Value Added $ 125,728,582 $ 8,740,614 $ 13,961,276 $ 6,024,392 $ 1,046,890 $ 1,884,864 $ 2,067,343 $ 1,334,963 $ 389,719 $ 1,196,528

Total Output $ 284,579,341 $ 14,696,019 $ 20,675,234 $ 9,508,264 $ 1,915,719 $ 3,170,174 $ 5,341,430 $ 1,842,821 $ 685,576 $ 1,753,801

# Jobs 1,486 301 120 89 74 57 50 46 45 38

Wages $ 128,377,204 $ 11,222,661 $ 2,570,299 $ 2,489,443 $ 1,868,570 $ 1,165,791 $ 917,391 $ 275,257 $ 3,839,112 $ 536,642

Value Added $ 146,342,210 $ 12,157,843 $ 10,749,061 $ 3,628,726 $ 2,005,247 $ 2,856,608 $ 996,816 $ 369,276 $ 3,672,564 $ 532,033

Total Output $ 243,374,280 $ 19,944,699 $ 16,965,181 $ 5,009,197 $ 3,669,430 $ 4,804,562 $ 1,724,060 $ 5,531,130 $ 5,756,249 $ 935,929

Ongoing Operations Sector 482 483 440 464 501 502 468 436 475 485

Employment Type Hospitals Nursing and community care facilities Real estate Employment services Full-service restaurants Limited-service restaurants Services to buildings Other financial investment activities Offices of physicians Individual and family services

Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


11

OTHER CONSIDERATIONS

Visitor Spending Based on an estimate provided by a similar study for Wayne County, Indiana, people who visited patients at the Reid Hospital in 2004 spent more than $1.5 million in the region. Inception Property Group’s scope of study did not include an estimate for out-of-County spending. The added spending and impact to the local economy from visitors to a large healthcare campus would certainly add to the results of this study.

Impact on Educational Centers Many of the directly created jobs in healthcare may be filled by persons relocating to the area, but others may create demand for graduates from nearby UC-Riverside, Riverside Career College, Riverside City College, and other career and technical training institutions in the Inland Empire. This favorable job-placement environment may have an additional impact on the enrollment of career and training institutions in the area, further increasing the overall impact of such a major employment center.

Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


13 METHODOLOGY This study was completed using a national input-output (I-O) model. These types of models are often used to estimate the impact on a local economy of a given event or of a particular entity. The model is used to analyze impacts that result from a change in demand for a particular good or service affecting an area. Input-output models measure three distinct effects, and they can be used to measure the impacts of either an increase or a decrease in economic activity. For example, I-O models can be used to measure the impact of a new manufacturing plant in a community or the impact suffered when a military base closes in an area. If we wish to estimate the impact of a new activity (e.g., building and operating Medical Village in the area), we first consider the increase in demand for the goods or services this type of activity produces, which is called the direct effect. The direct effect prompts those satisfying the demand to purchase additional inputs (both labor and material inputs) to meet the increased demand. Some of this demand is satisfied by businesses within the region, and this creates a ripple or multiplier effect in the local economy. Called the indirect effect, this results when local businesses gear up to provide these inputs. To accomplish this, these firms increase their purchases of inputs from other producers, some of whom may be local. In addition, those producers must also increase hiring of workers necessary to produce the desired goods and services. Furthermore, the increase in local employment due to direct and indirect effects will increase the incomes of households in the region. These households, in turn, spend a portion of this additional income in the local area (on groceries, dry cleaning, gasoline, etc.). Their spending stimulates even more demand for output and creates additional employment opportunities in the region. This tertiary increase in economic activity, called the induced effect, is a reflection of the changes in the area’s household incomes. Finally, the total effect of a change in demand is merely the sum the direct, indirect, and induced effects. The model recognizes that a portion of the economic activity generated by changes in demand in an area will occur outside that region. This is called leakage, and these expenditures stimulate activity in regions elsewhere instead of locally and thus must be subtracted out of the local impact. For example, not all of the proceeds from gasoline sales remain in the local area. The crude oil is pumped at the source and refined at facilities throughout the world. Furthermore, transporting the final product (i.e., gasoline as an example) to the local area is often provided by individuals who don’t reside in the subject area and by firms that are not located in the subject area. The local residents and firms only become involved in the final stage where the consumer purchases the final product. Therefore, much of the value of a gallon of gasoline will be used to fund the activities of those entities that produce and transport the gasoline to the local service stations and should not be counted as part of the local impact. Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


14 The specific model used for this study, developed by the Minnesota IMPLAN Group, Inc., is used nationwide for economic impact studies. The IMPLAN model tends to be more conservative than other models, which tend to overestimate the induced impact effects. IMPLAN, which refers to Impact analysis for planning, utilizes a computer program to adapt national input-output tables to county and state tables, thereby allowing for impact estimates to be generated at the local level. The smallest geographic region that IMPLAN uses is the county; therefore, the local region is synonymous with one or more counties. In the case of this analysis, the local region was defined as the County of Riverside, California. Of course, the economic activities outlined here will affect the economies of other counties and even other states; but the focus of this analysis is only the impacts in this specific area.

SOURCES IMPLAN (www.IMPLAN.com), STATS Indiana’s economic impact study for Reid Hospital, 2006 (www.stats.indiana.edu), Indiana Business Research Center (www.iu.edu), Becker’s Hospital Review (industry benchmarks), US Census Bureau, 2014 data

DISCLAIMER A third party consultant has conducted this analysis according to generally accepted input-output modeling practices based on information provided by the IMPLAN model and by Inception Property Group and its planning partners. Data related to projected hospital revenue and operating costs has in most cases been benchmarked to Becker’s Hospital Review, available AHA data and other industry sources. Operation of any business enterprise is subject to numerous variables beyond the scope of this analysis; thusly, the Inception Property Group, its partners, subsidiaries or representatives cannot guarantee that the estimated impacts will, in fact, occur.

Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


15 EXHIBIT A – STATE AND LOCAL TAXES DATA

STATE AND LOCAL TAXES FROM CONSTRUCTION Transfer Type 15007 15014 15015 15020 15021 15022 15023 15024 15025 15026 15027 15029 15030 15031 15032 99999

Description Dividends Social Ins Tax- Employee Contribution Social Ins Tax- Employer Contribution Tax on Production and Imports: Sales Tax Tax on Production and Imports: Property Tax Tax on Production and Imports: Motor Vehicle Lic Tax on Production and Imports: Severance Tax Tax on Production and Imports: Other Taxes Tax on Production and Imports: S/L NonTaxes Corporate Profits Tax Personal Tax: Income Tax Personal Tax: NonTaxes (Fines- Fees Personal Tax: Motor Vehicle License Personal Tax: Property Taxes Personal Tax: Other Tax (Fish/Hunt) Total State and Local Tax

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

Payroll Taxes 152,115 307,344 459,459

Commerce Taxes $ $ $ $ 5,189,592 $ 3,752,870 $ 97,855 $ 4,819 $ 627,851 $ 315,421 $ $ $ $ $ $ $ 9,988,408

Household Taxes $ $ $ $ $ $ $ $ $ $ $ 4,184,863 $ 818,957 $ 145,741 $ 54,605 $ 28,185 $ 5,232,351

Corp. Taxes $ 60,858 $ $ $ $ $ $ $ $ $ 686,699 $ $ $ $ $ $ 747,557

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

Payroll Taxes 235,897 476,623 712,520

Commerce Taxes $ $ $ $ 5,387,328 $ 3,895,863 $ 101,584 $ 5,003 $ 651,773 $ 327,439 $ $ $ $ $ $ $ 10,368,990

Household Taxes $ $ $ $ $ $ $ $ $ $ $ 5,687,507 $ 1,113,017 $ 198,072 $ 74,211 $ 38,305 $ 7,111,112

Corp. Taxes $ 48,699 $ $ $ $ $ $ $ $ $ 549,508 $ $ $ $ $ $ 598,207

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

Payroll Taxes 388,012 783,967 1,171,979

Commerce Taxes $ $ $ $ 10,576,920 $ 7,648,733 $ 199,439 $ 9,822 $ 1,279,624 $ 642,860 $ $ $ $ $ $ $ 20,357,398

Household Taxes $ $ $ $ $ $ $ $ $ $ $ 9,872,370 $ 1,931,974 $ 343,813 $ 128,816 $ 66,490 $ 12,343,463

Corp. Taxes $ 109,557 $ $ $ $ $ $ $ $ $ 1,236,207 $ $ $ $ $ $ 1,345,764

STATE AND LOCAL TAXES FROM OPERATIONS Transfer Type 15007 15014 15015 15020 15021 15022 15023 15024 15025 15026 15027 15029 15030 15031 15032 99999

Description Dividends Social Ins Tax- Employee Contribution Social Ins Tax- Employer Contribution Tax on Production and Imports: Sales Tax Tax on Production and Imports: Property Tax Tax on Production and Imports: Motor Vehicle Lic Tax on Production and Imports: Severance Tax Tax on Production and Imports: Other Taxes Tax on Production and Imports: S/L NonTaxes Corporate Profits Tax Personal Tax: Income Tax Personal Tax: NonTaxes (Fines- Fees Personal Tax: Motor Vehicle License Personal Tax: Property Taxes Personal Tax: Other Tax (Fish/Hunt) Total State and Local Tax

TOTAL IMPACT TO STATE AND LOCAL TAXES Transfer Type 15007 15014 15015 15020 15021 15022 15023 15024 15025 15026 15027 15029 15030 15031 15032 99999

Description Dividends Social Ins Tax- Employee Contribution Social Ins Tax- Employer Contribution Tax on Production and Imports: Sales Tax Tax on Production and Imports: Property Tax Tax on Production and Imports: Motor Vehicle Lic Tax on Production and Imports: Severance Tax Tax on Production and Imports: Other Taxes Tax on Production and Imports: S/L NonTaxes Corporate Profits Tax Personal Tax: Income Tax Personal Tax: NonTaxes (Fines- Fees Personal Tax: Motor Vehicle License Personal Tax: Property Taxes Personal Tax: Other Tax (Fish/Hunt) Total State and Local Tax

Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


16

EXHIBIT B – RIVERSIDE COUNTY, CALIFORNIA BASE ECONOMIC STATISTICS

Riverside County, CA Model Information Model Year GRP Total Personal Income Total Employment

2015 $73,126,550,720 $81,798,090,000 957,997

Number of Industries Land Area (Sq. Miles) Area Count

431 7,208 1

Population Total Households Average Household Income Trade Flows Method Model Status

2,361,026 731,107 $111,883

Trade Flows Model Multipliers

Economic Indicators Shannon-Weaver Index

.7284

Value Added Employee Compensation Proprietor Income Other Property Type Income Tax on Production and Import

$39,569,409,090 $5,849,222,973 $21,948,230,992 $5,759,687,666

Total Value Added

$73,126,550,720

Final Demand Households State/Local Government Federal Government Capital Exports Imports Institutional Sales Total Final Demand:

Top Ten Industries Sector Description Employment 534 * Employment and payroll of local govt, education 59,526 440 Real estate 55,688 502 Limited-service restaurants 33,088 485 Individual and family services 29,062 395 Wholesale trade 28,645 533 * Employment and payroll of local govt, non-education 26,800 501 Full-service restaurants 26,578 526 Other local government enterprises 22,305 416 Warehousing and storage 20,313 405 Retail - General merchandise stores 19,234

Labor Income $4,944,073,000 $1,188,831,000 $676,601,600 $412,662,900 $2,861,113,000 $2,699,486,000 $667,716,900 $1,993,151,000 $885,307,200 $553,080,100

76,086,255,391 $16,046,882,698 $2,311,601,648 $22,546,853,868 $36,648,987,329 -$75,090,403,674 -$5,423,626,319 $73,126,550,942

Output $5,425,909,000 $7,830,350,000 $2,785,269,000 $727,455,000 $8,057,668,000 $2,965,150,000 $1,309,732,000 $5,930,126,000 $1,992,268,000 $1,519,332,000

Areas In the Model Riverside County Source: US Census Bureau, 2015

Inception Property Group – Economic Impact Analysis of Proposed Medical Village in Riverside Co.


presented by:

Riverside County RFP  

Medical Village

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