Analysis of a Mixed-Use Project

Hello Ernesto, We have pasted your questions below to in-bed answers Question 1) I am measuring the construction impacts separately, but I would like to check if I modeling the operations of this project correctly. I am modeling the four uses as follows: a. Residential: The impacts are modeled as “Household Income Change”. The estimated household income of the new residents is entered as Gross Household Income (that is, it is before taxes are deducted) [i]This method will work as long as you have removed payroll taxes from the entered value. If payroll taxes will be included as well, you will want to use the Labor Income Change instead or manually removed the payroll taxes. One important consideration here, though, is that you do not want to model all of this as 'new' income if the residents of the new mixed use facility will be coming from other residential complexes inside the city, since this will just be a translocation of the same spending from one set of stores within the Study Area to another sub-region in the same geography. Another option for this, is if you know that some of the units will be rentals, you can use Sector 360 to look at the impacts of rental payments. Again, we caution you that unless demand is high enough that vacated regions will be filled by residents needing housing, you would not want to call this 'new' demand.[/i] b. New Hotel: The impact is modeled as an ‘Industry Change’ in IMPLAN sector 411. The projected revenue for the hotel in entered under ‘industry sales’. [i]This would be a perfectly acceptable way to do this. You will want to only include a single year's of sales. You will want to set the Event Year [u]FIRST[/u] to the year of the sales you are modeling. You can then refer to this as the ongoing operational impact of the hotel assuming relatively constant sales over the period you are describing. [/i] c. Retail: The impacts are modeled as an ‘Industry Change’ in IMPLAN sectors 320 through 330. The estimated revenue sales are entered under ‘industry sales’. [i]This is also a fine way to do this. You will want to be sure that you choose the default option of Gross Retail Sales.[/i] d. Office: The impacts are modeled as ‘Labor Income Changes’ in IMPLAN. The estimated salaries and benefits of the new workers are used as the input for ‘Labor Income Value’. [i] For this we would recommend selecting an general office sector that seems to best describe the types of general 'office' business that are anticipated to move into the complex. You can then use the labor dollars as the estimation of Industry Sales for this or these Sectors.[/i] Question 2) Our client also would like to understand how much in new tax revenue (sales, property, and hotel taxes) this project will generate. It is my understanding that taxes are treated as a leakage in IMPLAN , so they are not counted as an impact. I have estimated those revenues without IMPLAN but I just want to make sure that by reporting projected tax revenues (as estimated by us) separately from the impacts estimated with IMPLAN we are not double counting them. [i]The IMPLAN model doesn't re-spend tax dollars, but it does account for them. You will see these in the tax impact report. If you have a method for calculating them outside of the software as well that is certainly fine, but you will want to be sure to remove the Taxes on Production component from the Total Output value, and from the Value Added values before adding your calculated taxes in, as both these factors will include estimates of taxes from IMPLAN. If you have calculations for Direct, Indirect and Induced you can overwrite all of these in IMPLAN, if you only have your Direct, you can simply overwrite the Direct portion of the tax report in IMPLAN.[/i] Please let us know if you have any additional questions.

You (IMPLAN Staff) are great! always providing such detailed answers to all of our questions. Let me follow up your answer with a few additional questions. I have pasted your email with your answers and added my new questions [CAPITALIZED in brackets]: Question 1) I am measuring the construction impacts separately, but I would like to check if I modeling the operations of this project correctly. I am modeling the four uses as follows: a. Residential: The impacts are modeled as “Household Income Change”. The estimated household income of the new residents is entered as Gross Household Income (that is, it is before taxes are deducted) This method will work as long as you have removed payroll taxes from the entered value. If payroll taxes will be included as well, you will want to use the Labor Income Change instead or manually removed the payroll taxes... [MY ESTIMATES OF HOUSEHOLD INCOME ARE BEFORE INCOME TAXES, BUT NOT TAXES PAID BY THE EMPLOYER. IS THIS 'HOUSEHOLD INCOME' OR 'LABOR INCOME' UNDER YOUR DEFINITION. I JUST READ THE PAPER ENTILED "WHY IS PERSONAL INCOME FOR MY REGION SO HIGH? AND IT STILL WASN'T CLEAR.] b. New Hotel: The impact is modeled as an ‘Industry Change’ in IMPLAN sector 411. The projected revenue for the hotel in entered under ‘industry sales’. This would be a perfectly acceptable way to do this. You will want to only include a single year's of sales. You will want to set the Event Year FIRST to the year of the sales you are modeling. You can then refer to this as the ongoing operational impact of the hotel assuming relatively constant sales over the period you are describing. c. Retail: The impacts are modeled as an ‘Industry Change’ in IMPLAN sectors 320 through 330. The estimated revenue sales are entered under ‘industry sales’. This is also a fine way to do this. You will want to be sure that you choose the default option of Gross Retail Sales. [WE ACTUALLY FOUND IT EASIER TO CALCULATE EMPLOYMENT, SO I COULD STILL MODEL IT AS AN 'INDUSTRY CHANGE', BUT ENTER THE EMPLOYMENT CHANGE AND LET IMPLAN CALCULATE THE 'INDUSTRY SALES', EMPLOYEE COMPENSATION, AND PROPRIETOR INCOME. CORRECT?] d. Office: The impacts are modeled as ‘Labor Income Changes’ in IMPLAN. The estimated salaries and benefits of the new workers are used as the input for ‘Labor Income Value’. For this we would recommend selecting an general office sector that seems to best describe the types of general 'office' business that are anticipated to move into the complex. You can then use the labor dollars as the estimation of Industry Sales for this or these Sectors.[IT TURNED OUT TO BE EASIER TO CALCULATE THE AMOUNT OF EMPLOYMENT CREATED BY INDUSTRY, SO I COULD STILL MODEL THIS AS AN 'INDUSTRY CHANGE' AND ENTER MY NEW EMPLOYMENT CALCULATIONS AS 'EMPLOYMENT' IN THE PARTICULAR INDUSTRY. CORRECT?] [ONE MORE QUESTION ABOUT 'EVENT YEAR': MY PROJECT WILL NOT BE COMPLETED UNTIL 2018. MY QUESTION IS DO I NEED TO SET THE EVENT YEAR TO 2018? AND IF SO DO I NEED TO INFLATE MY INPUTS TO 2018, PARTICULARLY HOUSEHOLD INCOME IN QUESTION 1A ABOVE, AS WELL AS HOTEL REVENUES IN QUESTION 1B ABOVE?] [THANKS AGAIN FOR YOUR HELP WITH THIS]

Hi Ernesto, Glad we can be of assistance. In regards to 1a. You will want the Income taxes to be included just not the employer/employee payroll taxes. So if your value includes income taxes and savings you are right correct in selecting the Household Income Change Activity. That paper was meant to address a related but somewhat different issue related to the base data. 1c. Absolutely. If you are entering Employment as a proxy for the remaining factors, IMPLAN will appropriately match the Industry Sales value to reflect that Sectors Margin. 1d. Using Employment as a proxy also works here. Just select the industry or industries of interest and us the Industry Change for that Sector with your known Employment. One thing to keep in mind is that your Employment should be a 'headcount' number rather than an FTE. If you are using FTE's you will want to convert those to [url=https://implan.com/v4/index.php?option=com_glossary&id=231&Itemid=57]IMPLAN jobs[/url], before using those numbers as a proxy. This [url=https://implan.com/V4/index.php?option=com_multicategories&view=article&id=628:628&Itemid=14]brief article [/url]and [url=https://implan.com/V4/index.php?option=com_docman&task=doc_download&gid=206&Itemid=7]spreadsheet[/url] will assist you with this. As regards the Event Year you will want to set that to whatever the dollar year of your estimated Household Income value is. So if your value is based on 2013 dollars you would set Event Year to 2013. You can then set the Dollar Year for View field in the results to 2018 to see what the equivalent 2018 impacts of that spending will be. Please let us know if you have any additional questions.

I am still working on this project and as I was writing the report I got worried about double counting. A recap of what I am modeling: a. Residential: The impacts are modeled as “Household Income Change”. The estimated household income of the new residents is entered as Gross Household Income (that is, it is before taxes are deducted) b. New Hotel: The impact is modeled as an ‘Industry Change’ in IMPLAN sector 411. The projected revenue for the hotel in entered under ‘industry sales’. c. Retail: The impacts are modeled as an ‘Industry Change’ in IMPLAN sectors 330 through 330. d. Office: The impacts are modeled as ‘Industry Change’ in IMPLAN sectors 374 and 376. Ok, so I am wondering if there may be any double counting going on. I already acconted for the fact that some of the residents may be simply relocating from another subregion within my study area. I am also not worried about the direct impacts in terms of jobs, because those are calculated as actual jobs created by each of the uses (hotel, retail, and office) but what about indirect and induced impacts? Also, what about the residential expenditures? Do I need to do some adjustment to avoid double counting of benefits? Thank you for you assistance.

Hi Ernesto, Excellent call. There likely are some sources of double counting in the Induced impact here. These could come from: [ol] [li]Some of the retail revenue coming from households that are residents to the complex.[/li] [li]Some of the retail revenue coming from workers at the retail stores.[/li] [li]Some of the retail revenue coming from office workers or hotel workers.[/li] [li]Residents who are employees at the stores, offices or hotels whose income is accounted for in the Labor Income of those businesses.[/li] [/ol] Of these the ones you will really want to capture is the resident households of the complex spending in the complex (1,4). The others while potential sources of double counting are likely very small. The best way to account for both of these is to switch from using the Household Income Change for your selected Household income ranges to using the Household Spending Pattern method. With this method you will import the spending patterns through Activity Options>Import> Institutional Spending Pattern and use the Activity Level to designate the total Household spending less income taxes and savings. If you need to determine a savings rate, this can be determined for each Household Income Group you are using from the SAM. This data is determined from the Explore>Social Accounts>IxC Social Accounting Matrix. For each Household Income column that you are working with, you will want to solve for the total Household Disposable Income by taking the column Total less the payments to State and Federal government and Capital. This Disposable Income value will then be your Activity Level. The reason for this extra step is that by doing this you can reduce the value that household's pay to retail establishments by reducing the coefficients paid to Sectors 3320-3330. You may also want to reduce the coefficients paid to 3411, 3374 and 3376 if household's make purchases from these Sectors. Unfortunately, as regards the amount of this reduction, we aren't really able to help a lot. A couple of thoughts we have, are: [ul] [li]to look at other studies of mixed use environments and see if these have reported any standards for the amount of Household income of residents spent at the stores in the mixed use complex, or [/li] [li]create a range of possible sales to retail stores based on the potential spending by residents of the complex and workers in the businesses.[/li] [/ul] You should not need to worry about any Indirect double-counting or operational values of offices or hotels as these will not likely see much if any purchases from residents to the complex based on general trends for regional economies. If you happen to know of special circumstances involved in which resident Household's might be making purchases to these Sectors, you can certainly make adjustments on the basis of this knowledge. One other consideration that occurred to us is that you have referred to the retail Sectors as both revenue and sales, our original answer proceeded on the basis that sales were what you were referencing, i.e. the total receipt values of the store, not just the operational costs (i.e. revenues) of the store. We wanted to double check and make sure that this assumption on our part was correct as well. Hope this helps and please let us know if you have any questions.