1. Investment in Downtown Norfolk: Economic and Fiscal Impact Presented to City Council February 12, 2008

2. 1 Purpose of the Study To examine the economic and fiscal benefits of investment in Downtown Norfolk

3. 2 Background During the past decade, Downtown Norfolk has witnessed a tremendous revival. Through this revival, Norfolk has established itself as the cultural and economic hub of South Hampton Roads. The recent momentum in Downtown is easily identifiable through new business and new residential opportunities. During town hall meetings, an issue was raised about the prioritization of City investment in Downtown.  Citizens wanted to know how Downtown development benefits the entire City.

4. 3 Background Continued In order to address the issue of downtown development, the City contracted with a consulting firm, Chmura Economics & Analytics. Chmura specializes in applied economic consulting and quantitative research. The firm has provided studies for the U.S. Department of Commerce, as well as research for the Executive and Legislative branches of Virginia’s government.

5. 4 Overview Key Findings:  Public investment of $134.2 million encouraged a private investment of $537.7 million*.  As a result of Downtown investment, the City of Norfolk gained new businesses and jobs, new residents, increased spending by visitors, and increased tax revenue.  The results revealed that the benefits of Downtown investment extended to all areas of the City. *Other infrastructure investment of $119 million included $86 million for user supported infrastructure and $33 million for jail and court improvements.

6. 5 Overview Continued The consultant indicated that the limited time frame of the study does not allow the results to demonstrate the full realization of the benefits of Downtown investment. The Full Impact of the investment is just beginning.  Norfolk should experience even greater growth in the economic output which will spread throughout the all reaches of the City.  Evidence of the growth has already begun to show itself in the form of new housing initiatives outside of Downtown. In addition to the quantifiable economic benefits, the City has experienced an improvement in the image of the City as a tourist destination and an economic engine.

7. 6 Presentation Outline Geographical Locations  Downtown  City of Norfolk outside of Downtown  Citywide One-time Impact  Impact that lasts only for the duration of construction activity Sustainable Impact  The impact that continues after construction is complete

8. 7 Geographical Location Downtown Norfolk, for the purpose of this study, is equivalent to Census Tract 49. The area includes Freemason, Waterside, Downtown Plaza, Granby, MacArthur Center, and parts of Upper Granby and Financial District.

9. 8 The One-Time Economic Impact Exceeded $1 Billion The investment resulted in an increase in economic output of nearly $1.1 billion. The investment also resulted in the creation of 12,588 new jobs for the City.  Of the newly created jobs, nearly 3,000 are outside of Downtown.  Downtown experienced the greatest increases from one-time impact due to the construction. One-time Economic Impact as a Result of Downtown investment Direct ImpactRipple EffectTotal Impact DowntownSpending$791,442,991$24,586,298$816,029,289 Rest of NorfolkSpending $258,851,532 Total City of NorfolkSpending$791,442,991$283,437,830$1,074,880,821 Source: City of Norfolk, IMPLAN Pro 2004

10. 9 The On-going Economic Impact Exceeds $1.6 Billion The City continues to reap the benefits of the Downtown investment through $1.6 billion of on-going economic activity Citywide.  The increased economic activity led to widespread growth in several sectors, including construction, education, and finance.  The most significant increases were experienced by retail trade, professional and business services, and transportation and warehousing. The new activity lead to 9,780 new sustainable jobs throughout the City.  Retail trade, professional and business service, education and health, and leisure experienced the greatest job growth.

11. 10 Downtown Investment Encouraged New Businesses Throughout the City Downtown Investment brought 271 new businesses to the City. As a result of the new businesses, nearly 10,000 new sustainable jobs were created throughout the City. New Downtown businesses resulted in $164 million in spending outside of Downtown.

12. 11 Visitor Spending has Increased The investment resulted in a $153 million increase in spending by visitors each year.  Total spending by visitors Downtown amounted to $263.5 million, up from $110.6 million in 1996.  The increase in spending resulted in an increase of $185.8 million in economic output in Downtown alone, and the creation of 2,085 new sustainable jobs.

13. 12 New Residents Downtown There is $30.4 million in additional spending by new Downtown households. There are 765 new residents in downtown that have resulted in:  Decreased poverty rates  Increased average income, and  An increase in the average education attainment level

14. 13 Net Tax Revenue has Increased The investment resulted in $18.5 million in new net tax revenue for the City.  As a result of the investment, Downtown tax revenue increased by $21.9 million, from $15 million in 1996 to $37 million in 2006.  The Downtown contribution to the City’s tax revenue increased from 8% in 1996 to 19% in 2006, easing the tax burden on the rest of the City.

15. 14 In Conclusion… Downtown investment has resulted in millions of dollars of economic output, thousands of new jobs, new residents, increased visitor spending and new businesses. The initial one-time economic impact of Downtown investment resulted in an increase in spending of more than $1 billion and jobs for 12,588 people. The on-going impact of the new development has resulted in nearly 10,000 new jobs and an increase in spending exceeding $1.6 billion. In addition, the City’s tax revenue from the downtown region has more than doubled, with a net increase of $18.5 million. Although the focus of this study was downtown development, the impact of the investment has spread to all reaches of the city and will continue to do so.