Economic Value of Multipurpose Facilities in Community and Economic Development by Al Myles Community Resource Development Department Mississippi State University Extension Service Prepared for Southern Community Development Educators Tampa, Florida May 19-21, 2004

What is Economic Impact Analysis? A method of tracing the impact of an economic change or activity through an economy and measuring the cumulative effects of that occurrence.

What Information is Used? Data unique to the project or event under study.

Why Undertake an Economic Impact Analysis? An economic environment is shaped by events in the community.

Who Would Use the Results Business firms Trade associations Governments Planners Economic developers Service organizations Policy-makers Public interest groups

Multipurpose Facilities Create a board-base collection of activities and functions that, when taken together, can produce a significant economic impact in the community. Sometimes multipurpose facilities represent the center piece of civic activity in the community.

Benefits of Multipurpose Facilities Draw: –Commercial –Industrial –Residential customers to the community

Activities and Events Create direct and indirect effects in the form of: –Retail shopping –Tourism

Retail Shopping and Tourism Include: –Eating and drinking –Groceries –Hotel/Motel lodging –Gasoline and service stations –Other retail establishments

Measuring Facilities Impact… Can be difficult because of limited data about the facility. Therefore, must rely on employees at the facility to provide information about the demand/use of the building.

Demand/Use Consist of: –Agricultural –Nonagricultural

Revenue Generators The obvious impact on the community is in the retail sector. Specific revenue generators include: –Food and beverage sales Restaurant Concession –Lodging sales –Building rental fees –Stall fees

Food and Beverages

Restaurant Sales Local visitors spend about $12 per day on food. Non-local visitors spend about $20 per day on food.

Concession Sales Average person attending events at a multipurpose facility would likely spend about $3.00 per day.

Lodging The average motel rate in Mississippi is about $65 per night (excluding taxes). Revenue from an event drawing visitors from outside the community would be derived by multiplying the number of days in the event times the number of overnight guest associated with a particular event times the average motel rate.

Sales Tax Mississippi motel, restaurant, and retail sales taxes generate revenues for municipalities in the state.

Tax Rates Motels/restaurants are taxed an additional 2% on goods and services sold. All other retail sales are taxed at an average of 7%.

Tax Shares Municipalities receive about 18.5% of the total receipts in the counties. The state receives the remaining 81.5%.

Tax Benefits Depending on the frequency and level of activities, sales taxes associated with events held at multipurpose facilities can be SIGNIFICANT! While there are NO direct monetary benefits to the county, it benefits from these funds through PROJECTS and ACTIVITIES started in local municipalities.

Facility Income

Rental Fees Most communities will use one of two methods to charge for facility use. –Flat fee covering the length of the activity. –Two tier fee system where: First day of activity charged one fee Every day thereafter is charged a lesser fee

Stall Fees Livestock requiring overnight housing at multipurpose facilities are usually placed in stalls and must be cleaned everyday. Stall rentals could cost $10/day. Shavings for the stalls cost about $3/bag and sold for $5/bag Labor for cleaning the stalls could cost about $3/hour. These prices result in a net income of $7/stall.

Summary In general, multipurpose facilities provide economic and social benefits to the community. Multipurpose facilities described in this presentation includes auditoriums, civic and convention centers, and general-purpose buildings. The term “general-purpose” suggest that many types of activities could occur at these facilities such as sporting events, seminars, talent shows, livestock shows and others.

Several factors can change the success of multipurpose facilities, including poor marketing and management, poor location, badly designed space, lack of hotels, and a general lack of demand for the facility.

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