Economic Impact Study, 2019

UNIVERSITY OF HOUSTON AT SUGAR LAND

STUDY

ECONOMIC

FALL 2019

STUDY

ECONOMIC

UNIVERSITY OF HOUSTON AT SUGAR LAND

PRODUCED BY

TXP, INC. 1310 SOUTH 1ST STREET, SUITE 105 AUSTIN, TEXAS 78704 WWW.TXP.COM

ECONOMIC IMPACT STUDY

FALL 2019

SUMMARY

1927 FOUNDED IN

Founded in 1927, the University of Houston (UH) has grown into a substantial higher education presence in Texas and across the nation. The University of Houston-Victoria began offering for-credit classes in 1994 in leased facilities in Sugar Land. By 2002 the University of Houston System at Fort Bend became the University of Houston at Sugar Land. In 2012, under the administration of the University of Houston central campus, University of Houston System at Sugar Land was renamed University of Houston Sugar Land to reflect its connection to the faculty, research and programs of the main campus. In 2016, the UH System Board of Regents approves a master plan for UH at Sugar Land.

College operations and student spending form the core of UH at Sugar Land’s annual economic impact, directly injecting $25.9 million into the local economy in 2019. Construction spending also provided a shortterm stimulus to the regional economy. The table below outlines the total impact, including ripple effects, of this spending. Additionally, UH at Sugar Land and related activities generated roughly $1 million in tax revenue for the state of Texas.

The impact of UH at Sugar Land manifests itself in many ways, including attraction of research dollars into the community, potential commercialization of intellectual property, and preparation of a professional labor force to meet the needs of the private sector. This aligns directly with the needs of the modern economy as the

UNIVERSITY OF HOUSTON AT SUGAR LAND

principal determinant of modern economic success is the ability to acquire, process and apply knowledge. UH at Sugar Land is a laboratory where this key element of the region’s (and state’s) comparative advantage is incubated, both in terms of preparing the future labor force and via research that ultimately leads to new or improved products and services.

TOTAL ANNUAL

$46,613,457

OUTPUT

VALUE ADDED

$27,931,127 $15,582,451 LABOR INCOME

405 EMPLOYMENT

OPERATIONS SPENDING STUDENT SPENDING TOTAL ANNUAL CONSTRUCTION

OUTPUT

VALUE ADDED

LABOR INCOME

EMPLOYMENT

$30,593,882 $16,019,575 $46,613,457 $111,787,600

$18,396,106 $9,535,021 $27,931,127 $60,950,000

$10,824,185 $4,758,267 $15,582,451 $37,237,800

277 128 405 716

Source: TXP, Inc.

ECONOMIC IMPACT STUDY

FALL 2019

OVERVIEW

1994 OFFERING CLASSES

In 1998, the State of Texas transferred 248 acres to the University of Houston System for the creation of a teaching center that would serve the academic institutions with the System, as well as the local school district and community colleges. Through shared resources with the City of Sugar Land, Fort Bend County and Wharton County Junior College, UH would open its first permanent building in 2002. This joint-use facility would be followed by two additional buildings to serve the growing student population. In 2012, the Sugar Land location was officially moved under the University of Houston main campus umbrella to better reflect the needs of the community and better align the efforts of faculty, research and programs.

UNIVERSITY OF HOUSTON AT SUGAR LAND

SPRING ENROLLMENT 1,817 1,681

2,106

2,253

939

2015

2016

2017

2018

2019

FIGURE 1

Source: TXP, Inc.

ECONOMIC IMPACT STUDY

FALL 2019

ECONOMIC AND TAX REVENUE IMPACT OF UH AT SUGAR LAND UH at Sugar Land has a strong impact on the economy, as construction spending provides short-term stimulus and ongoing operations support hundreds of direct and indirect jobs. Beyond these impacts, higher education plays an important role in regional economic development. There are opportunities for faculty and staff, for example, to provide business support and other technical services to existing firms. Students, faculty and staff also provide hours of community service each year, enhancing overall quality of life.

Model Inputs & Assumptions The structure of this economic impact analysis is concentrated on operations spending at UH at Sugar Land and the recent construction spending by the UH System at UH at Sugar Land.

Construction Spending at UH at Sugar Land Recent construction spending totals $53 million on the UH at Sugar Land instructional site.

University Operations and Student Spending Associated with UH at Sugar Land During 2019, UH at Sugar Land operations spending (including grant funding) totaled $14.3 million, the bulk of which was for payroll/labor compensation expenses.

In addition, enrolled students have a positive impact on the local economy by supporting businesses such as restaurants, music venues, rental housing, and other retail establishments, since currently 100% live offcampus. Relying on data from the National Center for Education Statistics on UH presented in Table 1, along with data from How America Pays for College (Sallie Mae) and information from UH at Sugar Land, it was assumed 50 percent live off-campus on their own, while 50 percent live off-campus with family. As a result, the per capita student annual spending by students is $9,626; with a fall 2019 student headcount

of 2,146, generating 12,400 semester credit hours, the total for student spending is $11.6 million.1

Economic Impact Methodology

Economists use a number of statistics to describe regional economic activity. Four common measures are “Output,” which describes total economic activity and is generally equivalent to an organization’s gross sales or top-line; “Value Added,” which equals gross output of an industry or a sector less its intermediate inputs or purchases from other organizations used in the production process; “Labor Income,” which corresponds to wages and benefits; and “Employment,” which refers to jobs that have been created in the local economy.

In an input-output analysis of new economic activity, it is useful to distinguish three types of expenditure effects: direct, indirect, and induced.

Direct effects are changes associated with the immediate effects or final demand changes. Spending by students for entertainment, clothing, food, etc. off campus while they attend UH are examples of direct effects.

Indirect effects are changes in backward-linked industries caused by the changing input needs of directly affected industries – typically, additional purchases to produce additional output. Satisfying the demand from students means that restaurants must purchase food, supplies, and other services. These downstream purchases affect the economic output of other local merchants.

Induced effects are the changes in regional household spending patterns caused by changes in household income generated from the direct and indirect effects.

1. While official enrollment figures for UH at Sugar Land, a number of students take classes at more than one UH location. The estimate is for those who attend UH at Sugar Land only.

UNIVERSITY OF HOUSTON AT SUGAR LAND

The restaurant owner experiences increased income from student spending, as does the cleaning supplies outlet. Induced effects capture the way in which increased income is spent in the economy.

A multiplier reflects the interaction between different sectors of the economy. An output multiplier of 1.4, for example, means that for every $1,000 injected into the economy, all other sectors produce an additional $400 in output. The larger the multiplier, the greater the economic impact. Since the University is located in the Houston area, TXP used the RIMS II input-output multipliers produced by the U.S. Bureau of Economic Analysis for the Houston MSA.

DIRECT

+

+

INDIRECT

INDUCED

=

THE FLOW OF ECONOMIC IMPACTS ECONOMIC IMPACT STUDY

TOTAL FIGURE 2

FALL 2019

ECONOMIC AND TAX REVENUE IMPACT OF UH AT SUGAR LAND Economic Impact Results UH at Sugar Land Construction Spending The $53 million in construction spending yields a total economic output of approximately $111.8 million, with $61.0 million in value-added. The increase in regional economic activity supported 716 total jobs while the projects were active, with labor income of slightly more than $32.7 million. See Table 1 for more detail.

INDUSTRY SECTOR AGRICULTURE MINING UTILITIES CONSTRUCTION DURABLE MFG. NON-DURABLE MFG. WHOLESALE TRADE RETAIL TRADE TRANS./ WAREHOUSE INFORMATION FINANCE/INSURANCE REAL ESTATE PROF./ TECH. SERVICES MGMT. OF COMPANIES ADMIN. SERVICES EDUCATIONAL SERVICES HEALTH CARE, ETC. ARTS/RECREATION ACCOMMODATION EATING/DRINKING OTHER SERVICES HOUSEHOLDS

TOTAL

OUTPUT

VALUE ADDED

LABOR INCOME

EMPLOYMENT

$47,700 $1,309,100 $1,510,500 $53,545,900 $7,785,700 $5,766,400 $4,462,600 $5,602,100 $2,846,100 $1,436,300 $4,218,800 $7,965,900 $3,365,500 $1,102,400 $1,743,700 $604,200 $4,282,400 $376,300 $360,400 $1,611,200 $1,844,400 N.A. $111,787,600

$21,200 $890,400 $805,600 $28,800,200 $2,973,300 $1,749,000 $3,026,300 $3,688,800 $1,367,400 $837,400 $2,077,600 $5,527,900 $2,109,400 $662,500 $1,123,600 $371,000 $2,549,300 $217,300 $227,900 $848,000 $1,022,900 N.A. $60,950,000

$15,900 $222,600 $227,900 $20,786,600 $1,595,300 $895,700 $1,399,200 $1,982,200 $821,500 $302,100 $1,150,100 $1,277,300 $1,484,000 $461,100 $789,700 $280,900 $1,950,400 $148,400 $100,700 $535,300 $757,900 $53,000 $37,237,800

1 2 2 333 29 11 19 68 18 4 26 44 21 6 23 9 40 6 3 25 22 5 716

Source: TXP, Inc.

UNIVERSITY OF HOUSTON AT SUGAR LAND

TOTAL $111,787,600

OUTPUT VALUE ADDED

$60,950,000 $37,237,800 LABOR INCOME

716 TABLE 1

EMPLOYMENT

CONSTRUCTION SPENDING ECONOMIC IMPACT STUDY

FALL 2019

ECONOMIC AND TAX REVENUE IMPACT OF UH AT SUGAR LAND Economic Impact Results UH at Sugar Land Operations Spending In 2018/19, UH at Sugar Land had direct operating expenditures of $14.3 million. The estimated total economic output impact related to operations that year was approximately $30.6 million, with $18.4 million in value-added. The increase in regional economic activity supported 277 total jobs with labor income of slightly more than $10.8 million. See Table 2 for more detail.

INDUSTRY SECTOR AGRICULTURE MINING UTILITIES CONSTRUCTION DURABLE MFG. NON-DURABLE MFG. WHOLESALE TRADE RETAIL TRADE TRANS./ WAREHOUSE INFORMATION FINANCE/INSURANCE REAL ESTATE PROF./ TECH. SERVICES MGMT. OF COMPANIES ADMIN. SERVICES EDUCATIONAL SERVICES HEALTH CARE, ETC. ARTS/RECREATION ACCOMMODATION EATING/DRINKING OTHER SERVICES HOUSEHOLDS

TOTAL

OUTPUT

VALUE ADDED

LABOR INCOME

EMPLOYMENT

$11,447 $263,272 $892,834 $287,596 $268,995 $1,041,640 $776,938 $1,077,411 $645,302 $506,512 $1,334,959 $4,286,749 $889,973 $303,335 $663,902 $14,537,174 $1,236,232 $141,652 $133,067 $530,836 $764,060 N.A. $30,593,882

$5,723 $184,576 $463,587 $161,683 $100,158 $319,074 $526,543 $719,705 $320,505 $287,596 $666,764 $3,000,438 $576,622 $181,715 $427,816 $8,838,201 $735,444 $87,280 $84,419 $280,442 $412,077 N.A. $18,396,106

$2,862 $44,356 $137,359 $93,004 $55,802 $168,837 $243,240 $387,753 $194,592 $101,589 $356,275 $671,057 $396,338 $127,343 $283,303 $6,425,831 $562,314 $58,664 $37,201 $177,422 $283,303 $15,739 $10,824,185

0 0 1 2 1 3 3 13 4 2 8 24 6 2 9 167 11 2 1 8 7 1 277

Source: TXP, Inc.

UNIVERSITY OF HOUSTON AT SUGAR LAND

TOTAL $30,593,882

OUTPUT VALUE ADDED

$18,396,106 $10,824,185 LABOR INCOME

277 TABLE 2

EMPLOYMENT

OPERATIONS SPENDING ECONOMIC IMPACT STUDY

FALL 2019

ECONOMIC AND TAX REVENUE IMPACT OF UH AT SUGAR LAND Economic Impact Results UH at Sugar Land Student Spending In 2019, UH at Sugar Land-related off-campus student spending was $11.6 million. The estimated total economic output impact of student spending that year was approximately $16.0 million, with $9.5 million in value-added. The increase in regional economic activity supported 128 total jobs, with labor income of about $4.8 million. See Table 3 for more detail.

INDUSTRY SECTOR AGRICULTURE MINING UTILITIES CONSTRUCTION DURABLE MFG. NON-DURABLE MFG. WHOLESALE TRADE RETAIL TRADE TRANS./ WAREHOUSE INFORMATION FINANCE/INSURANCE REAL ESTATE PROF./ TECH. SERVICES MGMT. OF COMPANIES ADMIN. SERVICES EDUCATIONAL SERVICES HEALTH CARE, ETC. ARTS/RECREATION ACCOMMODATION EATING/DRINKING OTHER SERVICES HOUSEHOLDS

TOTAL

OUTPUT

VALUE ADDED

LABOR INCOME

EMPLOYMENT

$36,975 $10,399 $311,980 $173,322 $335,089 $784,571 $804,214 $1,677,757 $524,588 $740,663 $1,945,828 $2,968,428 $637,825 $273,849 $489,924 $259,983 $2,151,504 $192,965 $242,651 $662,090 $794,970 N.A. $16,019,575

$17,332 $5,777 $172,167 $97,060 $115,548 $269,227 $545,387 $1,115,038 $264,605 $426,372 $993,713 $2,084,486 $420,595 $165,234 $322,379 $159,456 $1,284,894 $110,926 $153,679 $348,955 $439,082 N.A. $9,535,021

$9,244 $1,155 $47,375 $54,308 $61,240 $131,725 $249,584 $583,517 $169,856 $143,280 $486,457 $463,347 $278,471 $113,237 $216,075 $120,170 $946,338 $69,329 $67,018 $213,764 $309,669 $23,110 $4,758,267

0 0 0 1 1 3 4 20 4 3 10 17 5 2 8 4 19 3 2 11 10 2 128

Source: TXP, Inc.

UNIVERSITY OF HOUSTON AT SUGAR LAND

TOTAL $16,019,575

OUTPUT VALUE ADDED

$9,535,021 $4,758,267 LABOR INCOME

128 TABLE 3

EMPLOYMENT

STUDENT SPENDING ECONOMIC IMPACT STUDY

FALL 2019

ECONOMIC AND TAX REVENUE IMPACT OF UH AT SUGAR LAND Economic Impact Results UH at Sugar Land Annual Ongoing Economic Impact For 2018/19, the aggregate economic impact of UH at Sugar Land was approximately $46.6 million in economic activity, with $27.9 million in value-added.

This increase in regional economic activity supported over 400 total jobs with labor income of approximately $15.6 million. See Table 4 for more detail.

INDUSTRY SECTOR AGRICULTURE MINING UTILITIES CONSTRUCTION DURABLE MFG. NON-DURABLE MFG. WHOLESALE TRADE RETAIL TRADE TRANS./ WAREHOUSE INFORMATION FINANCE/INSURANCE REAL ESTATE PROF./ TECH. SERVICES MGMT. OF COMPANIES ADMIN. SERVICES EDUCATIONAL SERVICES HEALTH CARE, ETC. ARTS/RECREATION ACCOMMODATION EATING/DRINKING OTHER SERVICES HOUSEHOLDS

TOTAL

OUTPUT

VALUE ADDED

LABOR INCOME

EMPLOYMENT

$48,422 $273,671 $1,204,814 $460,918 $604,084 $1,826,211 $1,581,152 $2,755,168 $1,169,890 $1,247,174 $3,280,787 $7,255,177 $1,527,798 $577,183 $1,153,826 $14,797,157 $3,387,736 $334,617 $375,717 $1,192,926 $1,559,030 N.A. $46,613,457

$23,055 $190,354 $635,754 $258,743 $215,706 $588,301 $1,071,930 $1,834,743 $585,110 $713,968 $1,660,477 $5,084,924 $997,217 $346,948 $750,195 $8,997,657 $2,020,337 $198,206 $238,097 $629,396 $851,160 N.A. $27,931,127

$12,105 $45,511 $184,734 $147,311 $117,043 $300,562 $492,824 $971,271 $364,448 $244,868 $842,732 $1,134,404 $674,809 $240,580 $499,378 $6,546,001 $1,508,652 $127,993 $104,219 $391,186 $592,972 $38,849 $15,582,451

1 0 2 3 2 5 7 33 8 4 17 41 10 3 17 172 30 5 3 20 17 3 405

Source: TXP, Inc.

UNIVERSITY OF HOUSTON AT SUGAR LAND

TOTAL ANNUAL $46,613,457

OUTPUT

VALUE ADDED

$27,931,127 $15,582,451 LABOR INCOME

405 TABLE 4

EMPLOYMENT

ONGOING ECONOMIC IMPACT ECONOMIC IMPACT STUDY

FALL 2019

ECONOMIC AND TAX REVENUE IMPACT OF UH AT SUGAR LAND State of Texas Tax Revenue Impact As a public university, UH at Sugar Land is not subject to state and local taxes. However, tax revenue does accrue from activity associated with the indirect and induced economic effects described and measured above. To provide an “order of magnitude” estimate for state tax revenue attributable to UH at Sugar Land, this analysis uses the ratio of State of Texas tax collections to Texas GSP, or value-added. Two datasets were used to derive the ratio: 1) U.S. Department of Commerce Bureau of Economic Analysis GSP estimates by state; and 2) the U.S. Census Bureau State Government Tax Collections (STC) report. A brief description of the STC data collection methodology follows: In this survey, “taxes” are defined as all compulsory contributions exacted by a government for public purposes, except employer and employee assessments for retirement and social insurance purposes, which are classified as insurance trust revenue. Outside the scope of this collection are data on the unemployment compensation “taxes” imposed by each of the state governments. However, all receipts from licenses and compulsory fees, including those that are imposed for regulatory purposes, as well as those designated to provide revenue are included.

Over the past five years, the average state tax revenue as a percent of state GDP was 3.3 percent. Applying this percentage to total value added (or GDP) attributable to the total annual economic impact associated with UH at Sugar Land, the State of Texas received just under $1.0 million in tax revenue for FY 2019.

UNIVERSITY OF HOUSTON AT SUGAR LAND

TEXAS TAX REVENUE AS A PERCENT OF STATE GSP ($BILLIONS) 2014 2015 2016 2017 2018 TABLE 5

3.4% 3.4% 3.3% 3.2% 3.4%

TABLE 5

TEXAS TEXAS TAX TEXAS GSP TAX REVENUE AS %

2014

2015

2016

2017

2018

$55.15 $1,612.97 3.4%

$55.09 $1,611.96 3.4%

$52.13 $1,601.52 3.3%

$53.61 $1,696.21 3.2%

$60.33 $1,775.8 3.4%

Sources: U.S. Department of Commerce Bureau of Economic Analysis/U.S. Census Bureau, TXP

CONCLUSIONS UH at Sugar Land contributes to the local and state economy, accounting for about 400 jobs in the Houston area, directly or indirectly. Seen broadly, UH at Sugar Land makes a significant impact to the state and regional economy. This impact manifests itself through operations and student spending, attraction of research dollars into the community, and preparation of a labor force to meet the needs of the private sector.

Legal Disclaimer TXP reserves the right to make changes, corrections, and/or improvements at any time and without notice.

In addition, TXP disclaims any and all liability for damages incurred directly or indirectly as a result of errors, omissions, or discrepancies. TXP disclaims any liability due to errors, omissions, or discrepancies made by third parties whose material TXP relied on in good faith to produce the report.

Traditional economic development focuses on attracting and retaining new production facilities or company headquarters. While these elements remain a crucial piece of the puzzle, other factors play an increasing role in the mix. Specifically, growing regions require a highly capable workforce, innovation and entrepreneurship, clusters in knowledge industries, and superior quality of life. UH at Sugar Land makes contributions to each of these factors, and the impact is growing. The forecast is for unique student enrollment to grow 3% per year, which, with inflation and some new construction to accommodate the growth, could contribute to the overall operational impact of UH at Sugar Land doubling over the next decade.

Any statements involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that such opinions or estimates will be realized. The information and expressions of opinion contained herein are subject to change without notice, and shall not, under any circumstances, create any implications that there has been no change or updates.

ECONOMIC IMPACT STUDY

FALL 2019

PROJECTION OF TWENTY PERCENT INCREASE IN OUR STUDENT POPULATION OVER THE NEXT THREE YEARS UH at Sugar Land Student Spending

INDUSTRY SECTOR AGRICULTURE MINING UTILITIES CONSTRUCTION DURABLE MFG. NON-DURABLE MFG. WHOLESALE TRADE RETAIL TRADE TRANS./ WAREHOUSE INFORMATION FINANCE/INSURANCE REAL ESTATE PROF./ TECH. SERVICES MGMT. OF COMPANIES ADMIN. SERVICES EDUCATIONAL SERVICES HEALTH CARE, ETC. ARTS/RECREATION ACCOMMODATION EATING/DRINKING OTHER SERVICES HOUSEHOLDS

TOTAL

OUTPUT

VALUE ADDED

LABOR INCOME

EMPLOYMENT

$44,370 $12,479 $374,376 $207,986 $402,107 $941,485 $965,057 $2,013,308 $629,506 $888,795 $2,334,994 $3,562,114 $765,390 $328,619 $587,908 $311,980 $2,581,805 $231,558 $291,181 $794,508 $953,964 NA $19,223,490

$20,799 $6,933 $206,600 $116,472 $138,658 $323,072 $654,464 $1,338,046 $317,526 $511,647 $1,192,455 $2,501,383 $504,714 $198,280 $386,855 $191,347 $1,541,873 $133,111 $184,415 $418,746 $526,899 NA $11,442,025

$11,093 $1,387 $56,850 $65,169 $73,489 $158,070 $299,500 $700,221 $203,827 $171,935 $583,748 $556,017 $334,165 $135,884 $259,290 $144,204 $1,135,606 $83,195 $80,421 $256,517 $371,602 $27,732 $5,709,920

0 0 1 1 2 3 5 24 4 3 12 20 6 2 9 5 23 3 3 14 12 2 154

Source: TXP, Inc.

UNIVERSITY OF HOUSTON AT SUGAR LAND

UH at Sugar Land Economic Impact Total

INDUSTRY SECTOR AGRICULTURE MINING UTILITIES CONSTRUCTION DURABLE MFG. NON-DURABLE MFG. WHOLESALE TRADE RETAIL TRADE TRANS./ WAREHOUSE INFORMATION FINANCE/INSURANCE REAL ESTATE PROF./ TECH. SERVICES MGMT. OF COMPANIES ADMIN. SERVICES EDUCATIONAL SERVICES HEALTH CARE, ETC. ARTS/RECREATION ACCOMMODATION EATING/DRINKING OTHER SERVICES HOUSEHOLDS

TOTAL

OUTPUT

VALUE ADDED

LABOR INCOME

EMPLOYMENT

$55,817 $275,751 $1,267,210 $495,582 $671,102 $1,983,125 $1,741,994 $3,090,719 $1,274,807 $1,395,307 $3,669,953 $7,848,863 $1,655,363 $631,953 $1,251,811 $14,849,153 $3,818,037 $373,210 $424,248 $1,325,344 $1,718,024 NA $49,817,372

$26,522 $191,509 $670,187 $278,156 $238,815 $642,146 $1,181,007 $2,057,750 $638,031 $799,242 $1,859,219 $5,501,821 $1,081,336 $379,995 $814,671 $9,029,548 $2,277,316 $220,392 $268,833 $699,187 $938,976 NA $29,838,131

$13,954 $45,742 $194,209 $158,173 $129,291 $326,907 $542,741 $1,087,974 $398,419 $273,524 $940,024 $1,227,074 $730,503 $263,228 $542,593 $6,570,035 $1,697,920 $141,858 $117,623 $433,939 $654,906 $43,471 $16,534,105

1 0 2 3 3 6 8 37 9 5 19 45 11 3 19 173 34 5 4 22 19 4 431

Source: TXP, Inc.

ECONOMIC IMPACT STUDY

FALL 2019

UNIVERSITY OF HOUSTON AT SUGAR LAND 14000 University Boulevard Sugar Land, Texas 77479 uh.edu/sugarland