Impact Studies

Tax Revenue – Mixed Use vs. Big Box


Sarasota County, Florida
– (Conducted by Public Interest Projects using 2008 data) Study analyzed annual property tax yield per acre for different types of development (high-rise downtown buildings to strip malls and big box stores) and determined that the mixed-use urban development brought in more revenue than the sprawling big box strip shopping centers.
  • Big box stores generate @ $8,350 per acre (which a city official was quoted saying that was roughly $200 more per acre than his single-family house in the city).
  • Town Center/Lifestyle Center developments generate $70,000 to $90,000 annually.
  • Westfield Southgate Mall generates @ $22,000 per acre.
  • A 17-story mixed-use building on .75 acres on downtown Sarasota’s Main Street generates $1.01 million in city and county taxes.
  • Mid-rise downtown buildings (2-3 stories) generates between $500,000 to $800,000 in property tax revenue.
Ashville County, NC - (Conducted by Public Interest Projects - not sure of the year)
  • Big Box store generates $3,300 in property taxes.
  • Asheville Mall in suburbs generates $7,995 in tax revenues per acre.
  • Two- to four-story downtown apartment buildings generate $18,109 per acre.
  • Three- to four-story downtown mixed-use buildings (retail and condos) generate $44,887 annually.
  • Six+ story downtown mixed use buildings (with condos) generate $250,000+ per acre in county taxes.
What’s more, when they estimated that Walmart sells $77 million of merchandise annually, it would generate $1.6 million in sales tax to Asheville, which they calculated to be about $47,500 of sales tax monies per acre. Add that to the paltry $3,300 in property taxes and you get a much less efficient use of land than in the downtown environment.
In 1989, the Florida Department of Community Affairs compared the infrastructure cost per “compact” housing unit in downtown ($9,252) to suburban housing ($15,316 - $23,960). The analysts conclude that suburban multifamily housing will take 42 years to pay off the infrastructure investments but mixed-used downtown development could pay off those costs in three years.

Downtown Salisbury, N.C. The local Main Street program – Downtown Salisbury, Inc., analyzed the tax revenue for development types in and around downtown Salisbury. Tax value per acre yield:

  • Salisbury Mall – (on 38 acres) $65,700
  • Suburban home - $122,000 per acre
  • Waterfront lake house - $404,00 per acre
  • Big box retail - $580,000
  • Historic home near downtown - $1 million
  • Downtown historic mixed-use building (three story) - $5.3 million
Big Box Retail creates 13.3 jobs per acre (320 employees divided by 24 acres) vs. downtown development creates 155 jobs per acre (7 employees/.045 acre)

The tax value of vacant land is $45,000 and generates $635 in property taxes Vs. the tax value of new mixed use buildings ($3.2 million) that generates $46,000 property taxes.

The program also shows that the municipality’s $100,000 appropriation from the general fund 24-block special tax district has increased the tax base 169% since 1989. The Bottom Line: Preservation and good infill are the most effective ways to build a community’s tax base.

Reports and Studies on the Economic Impact of Shopping with Local Businesses versus Chains

We tell people all the time that shopping locally is good for our local economies. This phenomena is called "Multiplier Effect" (fancy jargon!) but basically puts a value on each dollar spent in an independent business in relation to the local economy. I created some of the content in this section for the National Trust Main Street Center website a few years ago, but have reposted it with permission and added to it so you have all the latest studies in one place.

The Indie Impact Series by Civics Economics with ABA (Nov. 2011 - Oct. 2012) compared major retail and restaurant chains (Target, Barnes & Noble, Home Depot, Office Max, Darden (Olive Garden, etc), McDonald's, and PF Chang's) with 106 indie retailers and 28 indie restaurants to see how much money was recirculated into the community (in the case of chains, most of the recirculated money was in the form of wages). Chains recirculated 15.8% of revenues into the local community compared to 52.3% of independent businesses (which included charitable giving, wages, and procurement). You can get the percentage breakdown according to business category (sit-down establishment, fast food, music shop, home furnishings store.)

The American Express OPEN Independent Retail Index by Civics Economics (Oct. 2011) studied independent businesses (retail as well as eating & drinking establishments) over 20 years in 15 major American cities and found the indies in cities like San Francisco, Washington, DC, and Chicago had high retail market share losses, while other cities like Boston lost less retail market share. There were some upticks – San Fran had a small gain in eating and drinking establishments. Another bright side, residential areas served by a business district with independent businesses saw a 50% rise in home values over the rest of the city.

The 2011 Independent Business Survey by Institute for Local Self Reliance (Jan 2011) studied 2,768 locally owned businesses in places with buy local campaigns and places without them during an 8-day period. They found that businesses in places with a buy local campaign reported a 5.6% increase in revenue over businesses not benefiting from such campaigns, which saw only a 2.1% gain in revenue.

Thinking Outside the Box: A Report on Independent Merchants and the Local Economy, by Civic Economics, commissioned by The Urban Conservancy, 2009. This report shows that local businesses generate two to three times more local economic activity than chain businesses. Analysts compared the locally owned businesses on Magazine Street in New Orleans, which recycled 32 percent of their revenue back into the local economy, with an average SuperTarget, which recirculates only about 16 percent of their sales revenue into the local economies where they are located. The report suggests that if just 10 percent of retail purchases in Orleans Parish were to shift from chains to local merchants, the effect could translate to $60 million for the local economy.

Local Works: Examining the Impact of Local Business on the West Michigan Economy, by Civic Economics, commissioned by Local First Grand Rapids, 2008. This study calculated the economic impact of local and chain pharmacies, groceries, restaurants, and banks in Grand Rapids and the surrounding Kent County, Michigan. Local restaurants were shown to circulate 56.1% of their revenue into the local economy in the form of paychecks, products and services purchased locally, profits, and charitable giving. In contrast, chain restaurants only recirculated 36.8%. The study determines that $1 million spent at local restaurants generates $900,000 in local economic activity and support 15 jobs, while chain restaurants only bring $600,000 to the local economy and 10 jobs. Similar findings were true for the other categories (with the exception of banks, which researchers were unable to analyze necessary data sets). The study suggests that if consumers were to shift 10% of their spending from chains to locally owned businesses in the Grand Rapids area, it could generate $140 million in new economic activity, and add 1,600 new jobs and $53 million in payroll.

The San Francisco Retail Diversity Study, by Civic Economics, commissioned by the San Francisco Locally Owned Merchants Alliance, 2007. This study calculated the market share in San Francisco and adjacent communities for independent and chain bookstores, sporting goods stores, toy stores, and casual dining restaurants. In each category, independent businesses capture more than half of the sales within the city. The data demonstrates that independent businesses have a greater economic impact than chains across each category. For example, every $1 million spent at a local bookshop, creates $321,000 in additional economic activity in the city, including $119,000 in wages paid to local workers. A chain bookstore, on the other hand, generates only $188,000 in economic activity and $71,000 in local wages. Another example: For every $1 million in sales, independent toy stores create 2.22 local jobs, while chains create just 1.31. The study concludes that if consumers shifted 10% of their spending from chains to independents that it could generate more than $191 million in economic activity for San Francisco, provide $71.8 million in new income for workers, and create 1,295 jobs. http://www.civiceconomics.com/SF/

The Andersonville Study of Retail Economics by Civic Economics, commissioned by the Andersonville Chamber of Commerce and the Andersonville Development Corp., 2004. The study examined the economic impact of 10 local businesses in the Andersonville commercial district in Chicago against that of chain businesses. The study concluded that for every $100 spent with local businesses, $68 remains in the Chicago economy; $100 spent with a chain, $43 remains in the Chicago economy; for every square foot occupied by a local firm, local economic impact is $179; for every square foot occupied by a chain firm, local economic impact is $105; 70% of consumers surveyed prefer shopping with locally owned businesses; and over 80% of consumers surveyed prefer shopping in traditional urban business districts.

The Economic Impact of Locally Owned Businesses vs. Chains: A Case Study in Midcoast Maine, by the Institute for Local Self-Reliance with the Friends of Midcoast Maine, 2003. Eight local businesses in Rockland, Camden, and Belfast shared their revenue and sales data to prove that three times as much money circulates into the local economy of Midcoast Maine when spent on products and services from locally owned businesses. The combined total sales in 2002 for the eight businesses was $5.7 million, of which 44.6% was spending in the surrounding two counties and 8.7% was spent elsewhere in Maine. The businesses, which employed 62 people all together, funneled their local dollars toward paying employees' wages and benefits; on products and services from other local businesses; and on taxes. In contrast, a big-box retailer in the region circulates only 14.1% of its revenue into the local economy, mostly in the form of wages, while the bulk of revenue earnings returns to the corporation's headquarters or suppliers outside of Maine. This shows that when Midcoast Maine shoppers spend $100 at a local business, it generates $45 in local spending, while $100 spent with a big-box store only generates $14 in local spending by the retailer.

Economic Impact Analysis: A Case Study: Local Merchants vs. Chain Retailers, by Civic Economics, commissioned by Livable City, 2002. The study compared revenue and expenditures of two local businesses against Borders, which was slated to occupy an adjacent storefront and was publicly subsidized. Researchers determined that for every $100 in consumer spending at Borders, the total local economic impact is only $13. The same amount spent with a local merchant yields more than three times the local economic impact. They suggested that if each household in Travis County redirected $100 of planned holiday spending from chain stores to locally owned merchants, the local economic impact would reach approximately $10 million.

This study concludes that if residents of Grand Rapids and surrounding Kent County, Michigan, were to redirect 10 percent of their total spending from chains to locally owned businesses, the result would be $140 million in new economic activity for the region, including 1,600 new jobs and $53 million in additional payroll. The study calculates the market share of independent businesses in four categories: pharmacy (41%), grocery (52%), restaurants (50%), and banks (6%). It analyzes how much of the money spent at these businesses stays in the area compared to national chains. Local restaurants, for example, return more than 56% of their revenue to the local economy in the form of wages, goods and services purchased locally, profits, and donations. Chain restaurants return only 37%. Measuring the total economic impact of this difference, including indirect and induced activity, the study estimates that $1 million spent at chain restaurants produces about $600,000 in additional local economic activity and supports 10 jobs. Spending $1 million at local restaurants, meanwhile, generates over $900,000 in added local economic activity and supports 15 jobs.

Farmers Markets as Economic Development

The Economic Impact of Farmers Markets: A Study of 9 Markets in 3 Major U.S. Cities (Sept 2012) by Market Umbrella found through its study of farmer markets in Baltimore, Cleveland, and LA: Annual Economic Impact on Vendors: $52,000–$40,594,000 per market; Annual Economic Impact on Nearby Businesses: $19,900–$15,765,700 per market; and Annual Economic Impact on the Community: $72,000–$56,360,000 per market. See the website for economic impact reports on several individual farmers markets.

Arts as Economic Development

The Americans for the Arts periodically releases the "Arts & Economic Prosperity" study that measures economic impact of the arts. It's 2012 version, "Arts & Economic Prosperity IV," studied 2010 data. It found: "of the $135.2 billion of economic activity generated by America's arts industry, $61.1 billion comes from the nation's nonprofit arts and culture organizations and $74.1 billion from event-related expenditures by their audiences. This economic activity supports 4.1 million full-time jobs and produces $22.3 billion in revenue to local, state, and federal governments every year -- a yield well beyond their collective $4 billion in arts allocations. Typical arts attendee spends $24.60 per person, per event, beyond the cost of admission. 32 percent of attendees live outside the county in which the arts event took place, and their event-related spending is more than twice that of their local counterparts (nonlocal: $39.96 vs. local: $17.42)."

ArtsUnion Economic Impact Evaluation 2007-2008 was conducted by the Center for Policy Analysis for the Somerville Arts Council to gauge the economic impact of the ArtsUnion project for 2007 and 2008. ArtsUnion is the arts-based economic development program in Somerville, Mass., Between 2005 and 2010, 12,000 square feet of vacant commercial space and buildings once used for industrial endeavors in the core of the Union Square district were redeveloped to house creative economy businesses. The program’s total economic impact of was $296,000 for 2008, leveraging $7.4 for every $1 spent by the state.


Historic Preservation as Economic Development

The Annual Report on the Economic Impact of the Federal Historic Tax Credit for FY 2012 analyzes the economic impact of the HTC program since its inception and concludes that it is a highly efficient job creator—accounting for the creation of over 2.3 million new jobs over the life of the program; 57,783 of which were generated in FY 2012. The study was conducted by researchers at the Rutgers University Edward J. Bloustein School of Planning and Public Policy, in collaboration with the NPS.The study utilizes the Preservation Economic Impact Model (PEIM) and some of the data I find to be geared a bit too much towards researchers than the average person... but check out the report summary since there are more goodies than these cumulative findings below:
  • An inflation-adjusted (2012 dollars) $20.5 billion in HTC cost encouraged a five times greater amount of historic rehabilitation ($106.1 billion).
  • This rehabilitation investment generated about 2.4 million new jobs and billions of dollars of total (direct and secondary) economic gains.
  • The cumulative positive impacts on the national economy included $245.2 billion in output, $121.2 billion in GDP, $89.1 billion in income, and $35.5 billion in taxes, including $25.9 billion in federal tax receipts.

Mixed-use Areas Safer than Commercial-only

Reducing Crime by Shaping the Built Environment with Zoning - An Empirical Study of Los Angeles by the University of Pennsylvania Law Review looked at high-crime neighborhoods that were residential-only, commercial-only, and mixed-use. The commercial-only areas had the highest crime rates – 45 % higher – when compared to similar blocks that included residences. The researchers also found that neighborhoods experiencing a change in zoning, typically to add residences to a commercial area, saw a 7 % drop in crime thanks mostly to a decline in automobile theft and break-ins. The study provides food for thought when considering how we might use land-use, zoning, and community design for safety.

Events as Economic Development

Bristol, Va/Tenn (conducted by Chmura Economics & Analytics in 2012) - Measured the economic impact of a major day-long music festival on visitor spending. The Mumford & Sons Gentlemen of the Road event attracted 17,000 attendees and generated $5.1 million in tax revenue for the city and $6.7 million in the state of Virginia.

Ocean Springs, Miss - The Economic Impact of the 32nd Annual Peter Anderson Arts and Crafts Festival (2012) by the Southern Agricultural Economics Association determined that the 119,000 attendees at this weekend-long festival had an economic impact of $22 million.

Infrastructure Investments Impacting Consumer Behavior

Consumer Behavior and Travel Mode Choices, Nov. 2012: The Oregon Transportation Research and Education Consortium (OTREC) performed a series of intercept surveys of customers of 89 different businesses (supermarkets, bars, restaurants, etc) in Portland and uncovered that cyclists and pedestrians visited establishments more frequently over the course of a month and ultimately spend more each month. (In the case of supermarkets, pedestrians shopped more frequently and spent more per month, with drivers and cyclists visiting less frequently and spending less each month. Drivers spent more money on individual shopping trips, but making fewer supermarket visits.) Another interesting fact: individual cyclists who biked to restaurants outspent individual drivers by about 20% each month.

Trails as Economic Impact

Headwaters Economics compiled 120 studies on the impact of trails. This database is searchable by type of benefit, use, and region. 


What should I add to this page? Please leave suggestions a comment below. 

2 comments:

Joy Shasteen said...

Totally enjoy the loads of information you have on the financial ends of things. Have not seen this elsewhere

Andrea Dono said...

Wow, thanks, Joy! I appreciate the feedback. I will keep adding the studies as I find them.