Economic Impact of Phase I of Erie's Investment Playbook by Parker Strategy Group

Economic Impact of Phase I of Erie’s Investment Playbook

EXECUTIVE SUMMARY

The combined economic impact of the initial phase of 22 selected projects in Erie’s Investment Playbook total an estimated $504.7 million. These projects will support and sustain 3,571 jobs, and generate $21 million in local and state taxes.

Combined Economic Impact

ECONOMIC IMPACT

$504.7 M 3,571 jobs $21 M

When broken out by project and investment type, this initial phase of investment will yield impacts across the Investment Playbook continuum in three project portfolios.

•Projects in the Neighborhoods and Main Streets portfolio will create $148.9 million in impact, support and sustain 1,140 jobs, and generate $5.9 million in local and state taxes.

•Projects in the Anchor Investments in the Greater Core portfolio will create $226.7 million in impact, support and sustain 1,843 jobs, and generate $8.3 million in local and state taxes.

•Projects in the Industry Clusters and Infrastructure portfolio will create $129.1 million in impact, support and sustain 588 jobs, and generate $6.9 million in local and state taxes.

Combined Economic Impact of Neighborhoods and Main Streets

• $148.9 million in economic impact

• 1,140 jobs supported and sustained

• $5.9 million in local and state taxes

Projects Included:

• Burton School Revitalization

• Cornerstone Community Land Trust

• Construction Trades Training Program Expansion

• The Anchor Project in Erie’s Neighborhoods`

• Erie County Main Streets Redevelopment

• Corry Rails + Trails

• Presque Isle Gateway Redevelopment

• Permanent Supportive Housing

Combined Economic Impact of Anchor Investments in the Greater Core

• $226.7 million in economic impact

• 1,843 jobs supported and sustained

• $8.3 million in local and state taxes

Projects Included:

• Ironworks Square (former EMI)

• Bayfront Market House

• 1001 State St. Redevelopment

• Flagship Commons

• Harbor Place II (Office Building + Residential)

• Harbor Place III (Hotel)

Combined Economic Impact of Industry Clusters and Infrastructure

• $129.1 million in economic impact

• 588 jobs supported and sustained

• $6.9 million in local and state taxes

Projects Included:

• Grow Erie (Savocchio Park)

• Corry CATCH

• Gannon I-HACK Phase IV - Medical Laboratory & Business Development

• Project RESOLVE

• Center for Manufacturing Competitiveness

• Heavy Industrial Battery Test Center

Beyond the numbers, these transformational projects and investments into Erie County will work to advance equity, change lives, and are integral to the continued growth and sustainability of the region.

about infinite erie

Infinite Erie is a community and economic development strategy designed to harness funding opportunities, unify diverse public, private, and civic stakeholders around a common vision, and advance equitable economic development across Erie County, Pennsylvania. Coordinating inclusive growth strategies for transformative change, Infinite Erie brings together a cross-sector coalition with shared goals to:

• Foster economic growth

• Promote vibrant neighborhoods

• Build a diversified economy that benefits everyone

At the heart of Infinite Erie’s strategy is Erie’s Investment Playbook, a dynamic, living roadmap informed by input from more than 50 community stakeholders and a range of community-informed strategic plans. The Playbook outlines a pipeline of projects that align with community needs and transformative goals and guides stakeholders to align around priority projects that enhance community equity, drive market momentum, and contribute to Erie’s economic vitality.

Through projects that tackle homelessness and create safe and affordable housing to revitalizing main street corridors and advancing equity, Infinite Erie is supporting inclusive growth strategies from ideation to implementation and every stage in between. Utilizing its “Project Portfolio” framework for tracking progress and a providing a platform for evaluating new projects to add to the portfolios as community needs evolve. Each portfolio addresses key community priorities in the following areas: Neighborhoods and Main Streets; Anchor Investments in the Greater Core; Industry Clusters and Infrastructure; and Inclusive Entrepreneurship.

This effort is empowered by the Erie Action Team that includes cross-sector leaders and dedicated practitioners who are on the ground driving Erie’s economic growth efforts.

Infinite Erie is committed to coordinating solutions of excellence to overcome complex challenges and to putting plans into action - ultimately catalyzing transformational growth and driving Erie County toward a more vibrant, equitable future.

about the study

In January 2024, Infinite Erie engaged Parker Strategy Group to measure the economic contribution of selected projects in Erie’s Investment Playbook. The goal of this analysis is to provide a complete assessment of the total economic, employment, and state and local tax impact of selected projects in the initial construction of conception phase within Erie County and Pennsylvania.

The methodology in this study uses the input-output model and dataset developed by IMPLAN Group LLC. Primary financial data used in this study was obtained from Infinite Erie and projects included in Erie’s Investment Playbook. Infinite Erie provided the baseline financial data from projects in Erie’s Investment playbook to complete the economic analysis.

Parker Strategy Group conducted 10 key informant interviews with key leaders and stakeholders.

The study approach and economic-impact findings are a conservative estimate of impact and are based on actual financial information provided by Infinite Erie. The study is a snapshot in time of economic impact for the construction or initial phase of key projects in Erie’s Investment Playbook. It does not include ongoing operations of the projects.

INFINITE ERIE STUDY

Data Sources: Infinite Erie Study type: Economic Impact

Geography:

Infinite Erie Study type: Economic Impact

Study Year: 2024

Methodology: IMPLAN

Data Year: 2022

The impact presented in this analysis is broken down into three categories: direct impact, indirect impact and induced impact. The indirect and induced impacts are commonly referred to as the “multiplier effect.” The graphic below provides an overview of the types of impact detailed in this report.

Impacts generated because of spending by projects in Erie’s Investment Playbook on Phase I of their projects

The increase in demand for goods and services in industry sectors that supply or support projects in Erie’s Investment Playbook, often referred to as the supply chain.

The third wave of impact created because of spending by employees. Induced impacts estimate the effect of increased household income, including housing, household goods, entertainment, food, clothing, transportation and other categories of personal spending.

IMPACT OF ERIE’S INVESTMENT PLAYBOOK ON THE ERIE COUNTY ECONOMY

ECONOMIC IMPACT

$504.7 M 3,571

$21 M

The projected impact of these 22 projects included in Erie’s Investment Playbook will contribute to the local and statewide economies through expenditures to get their projects launched into the Erie County economy.

The research clearly showed that

• The impact of the initial phase of these projects is strong and for an initial investment of $315 million to all projects, $504.7 million is generated. Simply stated for every $1 invested $1.60 is returned.

• Optimism for Erie County’s future is strong.

• Individual project leadership are working to achieve their goals and fulfill the promise of the projects. Some project leaders need assistance in making their project pitch and in defining their individual role in the investment playbook and understanding the role that Infinite Erie plays.

The projected economic impact of the 22 projects to Erie County economy shown in this report is a point-in-time snapshot depicting how the initial investment into Erie County’s transformation will make an impact. In reality, the impacts of ongoing operations will generate additional impact as the projects are actualized and brought online.

Creating and Sustaining jobs

Investment Playbook projects support a combined total of 3,571 full-time and part-time jobs throughout Erie County during the initial phase of the projects.

INFINITE ERIE EMPLOYMENT IMPACT (JOBS)

Source: Parker Strategy Group using IMPLAN with data provided by Infinite Erie

Generating local and state tax revenues

The organizations and projects included in this analysis, their suppliers and related constituencies are projected to contribute significantly to the local and statewide tax bases. Based on 2023 dollars, the combined local and state tax impact of projects analyzed from Erie’s Investment Playbook will generate an estimated $21 million ($9.9 million direct, $4.3 million indirect and $6.7 million induced) through local spending (operational, capital, students and visitors) as well as direct and indirect support of jobs.

At the state and local levels, Investment Playbook projects contribute to the tax base through its purchasing and as employers. Specific taxes include employee and employer contributions to state and local social insurance funds, sales taxes, personal property taxes, taxes paid on motor vehicle licenses, and payments of fines and fees.

• Subcounty, general: Estimated $2.2 million in subcounty general taxes (city taxes) — $1.1 million direct, $414,712 indirect and $642,337 induced.

• Subcounty, special districts: Estimated total of $4.1 million in subcounty special districts taxes (fire, EMS and school districts) — $1.8 million direct, $923,403 indirect and $1.4 million induced.

• County: Estimated total of $1.4 million in county tax revenue — $546,252 direct, $334,790 indirect and $510,840 induced.

• State: Estimated total of $13.4 million in state tax revenue — $6.5 million direct, $2.7 million indirect and $4.2 million induced.

PROJECTED IMPACT OF NEIGHBORHOODS AND MAIN STREETS Portfolio

ECONOMIC IMPACT

$148.9 M 1,140 jobs $5.9 M

Projects Included:

• Burton School Revitalization

• Cornerstone Community Land Trust

• Construction Trades Training Program

• Expansion

• The Anchor Project in Erie’s Neighborhoods

• Erie County Main Streets Redevelopment

• Corry Rails + Trails

• Presque Isle Gateway Redevelopment

• Permanent Supportive Housing

The combined impact of projects in the neighborhoods and main streets category is estimated to be $148.9 million in economic impact, 1,140 jobs supported and sustained, and $5.9 million in local and state taxes

PROJECTED IMPACT OF ANCHOR INVESTMENTS

IN THE GREATER CORE Portfolio

Economic Impact of Anchor Investments in the Greater Core

ECONOMIC IMPACT

$226.7 M 1,843 jobs $8.3 M

Projects Included:

• Ironworks Square (former EMI)

• Bayfront Market House

• 1001 State St. Redevelopment

• Flagship Commons

• Harbor Place II (Office Building + Residential)

• Harbor Place III (Hotel)

The combined impact of projects in the anchor investments in the greater core is estimated to be $226.7 million in economic impact, 1,843 jobs supported and sustained, and $8.3 million in local and state taxes.

PROJECTED IMPACT OF INDUSTRY CLUSTERS AND INFRASTRUCTURE portfolio

Economic Impact of Industry Clusters and Infrastructure

ECONOMIC IMPACT

$129.1 M 588 jobs $6.9 M

Projects Included:

• Grow Erie (Savocchio Park)

• Corry CATCH

• Gannon I-HACK Phase IV - Medical Laboratory & Business Development

• Project NePTWNE’s Great Lakes Testing and Remediation Lab

• Project RESOLVE

• Center for Manufacturing Competitiveness

• Heavy Industrial Battery Test Center

The combined impact of projects in the industry clusters and infrastructure category is estimated to be $129.1 million in economic impact, 588 jobs supported and sustained, and $6.9 million in local and state taxes.

Conclusion

The projected impact of the initial phase of selected projects included in Erie’s Investment Playbook is significant. These impacts are of the initial phase only and do not include ongoing operations or future impacts that transform Erie County’s workforce or community. It is noteworthy that these impacts are predicated on the fact that the projects utilize Erie County and Pennsylvania based forms to prevent economic leakage from the local and statewide economy. Additionally, the impacts do not cover the potential impacts of using MWVBE firms to complete the work when available. Over the course of the initial phase of these projects, the combined economic impact of Phase 1 of selected projects in Erie’s Investment Playbook are projected to generate $504.7 million in economic impact, support and sustain 3,571 jobs, and generate $21 million in local and state taxes.

Source: Parker Strategy Group using IMPLAN with data provided by Infinite Erie

Appendix A: Terms and definitions

Direct economic impact: All direct expenditures made the organization on construction or implementation of the initial phase of the project. These include operating expenditures, capital expenditures, and pay and benefits expenditures.

Direct employment: Total number of employees, both full-time and part-time jobs.

Dollar year: Presented in 2023 dollars.

Government revenue/state and local tax impact: Government revenue or tax revenue that is collected by governmental units at the state and local levels in addition to those revenues paid directly by the project. This impact includes taxes paid directly by the project itself, by employees of suppliers or vendors who sell products and services — and also taxes paid at the household level.

Indirect economic impact: Includes the impact of local industries buying goods and services from other local industries. The cycle of spending works its way backward through the supply chain until all money is spent outside of the local economy, either through imports or by payments to value added (multiplier effect).

Indirect employment: Additional jobs created as a result of the economic impact. Local companies or vendors that provide goods and services to projects in the investment playbook increase their number of employees as purchasing increases, thus creating an employment multiplier.

Induced economic impact: The response by an economy to an initial change (direct effect) that occurs through respending of income received by a component of value added. IMPLAN’s default multiplier recognizes that labor income (employee compensation and proprietor income components of value added) is not lost to the regional economy. This money is recirculated through household-spending patterns, causing further local economic activity (multiplier effect).

Induced employment: Additional jobs created as a result of household spending by employees of Infinite Erie and employees of vendors. This is another wave of the employment multiplier. Multiplier effect: The additional economic impact created as a result of Infinite Erie’s direct spending. Local companies that provide goods and services to Infinite Erie increase their purchasing by creating a multiplier (indirect/supply-chain impacts). Household spending generated by employees of Infinite Erie and Infinite Erie’s suppliers creates a third wave of multiplier impact (induced/household-spending impacts). The multipliers in this study are derived by IMPLAN.

Study year: 2024

Subcounty, general taxes: Includes city and township taxes.

Subcounty, special districts taxes: Includes city, fire, police, emergency medical services and other special taxes levied at the local level.

Total economic impact: Includes spending on operations, capital expenditures, labor income expenditures and value added to the economy as a result of expenditures made by Infinite Erie. It is the combined impact of direct, indirect and induced impacts.

Value added: The total market value of all final goods and services produced within a region in a given period of time (usually a quarter or year). It is the sum of the intermediate stages of production.

Appendix B: Data and methods

Data used to complete the study was obtained from Infinite Erie and projects in Erie’s Investment Playbook. Data supplied total project budgets and costs. Primary and secondary data were used to complete the input-output models in IMPLAN. The study approach and economic impact findings are a conservative estimate of impact and are based on actual financial information. These findings represent a snapshot of projects contained in Erie’s Investment Playbook and can be higher or lower based upon project costs.

Overview and the IMPLAN Model

The most common and widely accepted methodology for measuring the economic impacts of economic sectors is input-output (I-O) analysis. At its core, an I-O analysis is a table that records the flow of resources to and from companies/organizations and individuals within a region at a given time. For a specified region like a state or the nation, the input-output table accounts for all dollar flows between different sectors of the economy in a given time period. With this information, a model can then follow how a dollar added into one sector is spent and respent in other sectors of the economy, generating outgoing ripples of subsequent economic activity. This chain of economic activity generated by one event is called the “economic multiplier” effect.

The primary tool used in the performance of this study is the I-O model and dataset developed and maintained by IMPLAN Group LLC (formerly Minnesota IMPLAN Group Inc.). IMPLAN is a widely accepted and used software model first developed by the U.S. Forest Service in 1972. The data used in the baseline IMPLAN model and dataset comes largely from federal government databases. The input-output tables themselves come from the Bureau of Economic Analysis. Much of the annual data on labor, wages, final demand and other market variables comes from the Bureau of Labor Statistics, the Census Bureau and other government sources.

Government agencies, companies and researchers use IMPLAN to estimate the economic activities associated with spending in a particular industry or on a particular project. The IMPLAN model extends conventional I-O modeling to include the economic relationships between government, industry and household sectors, allowing IMPLAN to model transfer payments such as taxes.

As explained above, the model works by tracking the flow of resources to and from companies/organizations and individuals within a region. Producers of goods and services must secure labor, raw materials and other services to produce their product. The resources transferred to the owners of that labor or those raw materials and services are then spent to secure additional goods and services or inputs to the products they sell. For example, an organization in a region may develop a company that produces trains with a value of $1 million. However, to produce that product, they may be required to spend $500,000 in wages and benefits, $200,000 to suppliers of parts, $100,000 for electricity, $50,000 for transportation of goods and raw materials to and from the plant, and $50,000 in various professional services associated with operating a business (e.g., attorneys and accountants). The suppliers will, in turn, spend those resources on labor and raw materials necessary to produce the trains. Workers and the owners of the company will buy goods and services from other firms in the area (e.g., restaurants and gas stations). The suppliers, employees and owners of this second tier will, in turn, spend those resources on other goods and services, either within the study region or elsewhere. The cycle continues until all the money leaves the region.

IMPLAN Methodology

The model uses national production functions for over 450 industries to determine how an industry spends its operating receipts to produce its commodities. These production functions are derived from U.S. Census Bureau data. IMPLAN couples the national production functions with a variety of county-level economic data to determine the impacts at a state and congressional district level. To estimate these regional impacts, IMPLAN combines national industry production functions with county-level economic data. IMPLAN collects data from a variety of economic data sources to generate average output, employment and productivity for each industry in a given county. IMPLAN combines this data to generate a series of economic multipliers for the study area. The multiplier measures the amount of total economic activity generated by a specific industry spending an additional dollar in the study area. Based on these multipliers, IMPLAN generates a series of tables to show the economic event’s direct, indirect and induced impacts to gross receipts, or output, within each of the model’s more than 450 industries.

The model calculates three types of effects: direct, indirect and induced. The economic impact of selected projects in Erie’s Investment Playbook is the sum of these three effects.

DIRECT INDIRECT INDUCED

Impacts generated because of spending by projects in Erie’s Investment Playbook on Phase I of their projects

The increase in demand for goods and services in industry sectors that supply or support projects in Erie’s Investment Playbook, often referred to as the supply chain.

Considerations concerning IMPLAN

There are three important points about the use of IMPLAN (or any other input-output model):

1. It is a fixed price model. The model assumes that changes in consumption are not limited by capacity and do not affect prices. This simplifying assumption does not cause a problem for the analysis presented here because we are taking a snapshot of these projects in a specific year.

2. As in many studies using this type of model, the model does not calculate the direct impacts; the direct impacts reflect projected spending levels and patterns due to the nature and type of projects being measured. Changing the level of direct spending allows us to calculate the magnitude of the indirect and induced effects associated with the initial level of spending.

3. Because the model continues to calculate additional spending until all the money leaves the region (i.e., “leakage”), the larger and more economically diverse the region, the longer it will take for spending to leave the region and the larger the impact is likely to be. For example, employees of an organization or company may spend some amount of their income on buying a car. If no car manufacturers are in their state or county, this spending will leave the region and the multiplier effect will stop. At the national level, some portion of that same spending by that same individual may go to a national auto producer. Therefore, that spending would lead to more spending at the national level than would be captured by a more regional model. The national impact will be larger than the sum of the individual states, and the individual state impact will be larger than the sum of the impacts in its congressional districts.

APPENDIX C: FAQs

What Is

an Economic Impact Analysis?

The study quantifies the projected economic impact of 22 projects in Erie’s Investment Playbook in terms of economic impact, jobs, and local and state tax revenue. The study was commissioned by Infinite Erie — the organization dedicated to championing and ensuring the implementation of Erie’s Investment Playbook. The study calculates how spending and investment into core areas of Erie County’s economy will contribute to the growth and vitality of Erie County and Pennsylvania. It examines how expenditures create additional impact in the economy both directly and through the multiplier.

An economic impact analysis quantifies how economic activity cycles through an existing economy. For the purposes of this study, an economic impact is defined as the gross changes in Erie County and Pennsylvania’s existing economy that can be attributed to the selected projects in their initial phase of development. This descriptive analysis tracks gross economic activity: how spending on each project cycle dollars through the economy. The economic analysis does not consider how spending on these projects could potentially crowd out spending on other projects in Erie County.

What Should I Remember About the Study When I Read It?

• It is a point-in-time calculation of impact in 2023 dollars.

• It quantifies the projected amount of impact that the projects will produce during their inception phase – this is not an impact of ongoing operations.

• The economic numbers can fluctuate based on project cost changes and budgeting.

• These are conservative numbers and adhere to industry-respected protocols.

What Methodology Was Used To Complete This Study?

IMPLAN data and software were utilized to conduct this economic contribution analysis. The IMPLAN database is built using county, state, ZIP code and federal economic statistics that are specialized by region — not estimated from national averages — to measure the contribution or impact of an organization’s economic activity.

What Were the Multipliers for This Study?

The multipliers used in this study range from 1.8 to 2.1. The multipliers are derived through the input-output models created using the IMPLAN software based upon industries selected during the modeling process.

What Data Does This Study Use To Calculate the Economic Impact?

Primary data used in this analysis were obtained from each individual project through Infinite Erie. Data address the following subjects:

• Project costs

• Project descriptions and industry segment impacted