URBAN ECONOMICS

Economic Impact Analysis

I would like to take this opportunity to welcome you as a new employee in our city. I am sure that you will make a strong contribution to the well-being of this city in your position of economic analyst. I understand that, while at the University of San Diego, you studied under one of top people in the field.

Through our economic development efforts, we have been able to convince one of the nation's largest peanut butter manufacturers to locate a plant in our city. The plant will bring 1,000 new export sector jobs to the city and will pump $30,000,000 into the local economy. Because of your expertise, your first assignment will be to determine the impact of the firm locating in our city.

I'd like you to determine the impact by using economic base analysis. Please use the following procedures: First, gather data for employment for the county where this city is located. Employment data is available from the following Websites:

http://censtats.census.gov/cbpnaic/cbpnaic.shtml

http://www.labormarketinfo.edd.ca.gov/Content.asp?pageid=170/ (California)

Enter the data into this spreadsheet template. After the data is entered, use the output to conduct the analysis below:

I. Economic Base Analysis

Calculate the multiplier for the county. Use the multiplier to determine the total number of jobs created and the total increase in income in our city that results from the plant locating here.

II. Demographic Analysis

Determine the impact of the increased economic activity on the variables below, using the given assumptions which were determined by our demographics department:

1. Population - 2.20 people for each additional worker

2. Number of households - 2.54 people in each household

3. Housing units - 1.03 housing units required for each household

4. Automobile ownership - 2.06 cars per household

5. Annual vehicle miles - 11,300 miles per year per vehicle

6. Peak-hour trips - 0.6 peak-hour trips per household

7. Number of students - one school-aged child for every two households

8. Daily water consumption - 150 gallons per person per day

III. Fiscal Analysis

Determine the fiscal impact of the plant, based on the following assumptions:

1. Police - The police department has a standard of maintaining 2 police officers for every 1,000 residents. How many more police officers must be hired to maintain this standard?

2. Fire protection - The fire department has a standard of maintaining 1 firefighter for every 500 housing units. How many more firefighters must be hired to maintain this standard?

3. Schools - For every 600 new students, a new school must be built.  How many new schools will be needed?

4. Water - The city must import any extra required water from outside the region.  Water is measured in acre feet, each of which is 326,000 gallons.  How many extra acre feet must be bought each year?

Please prepare a report on the impact of the peanut butter manufacturing plant. The report should be typed on 8 1/2 by 11 paper. I need a forecast of the economic impact for the city council meeting on Wednesday, March 2, so you'll need to complete the report on or before that date. If you don't, I forecast that unemployment in the city will increase by one.