ECONOMIC ANALYSIS

The Employment Anticipation Method

- Another type of Fiscal Impact Analysis - Used to estimate avg. cost of non-residential dev - Based on assumption that a municipality's costs in serving a facilty are related to that facilities total number of employees

The Proportional Valuation Method

- Another type of Fiscal Impact Analysis - Used to estimate avg. cost of non-residential dev. - Assigns a proportion of the municipalities cost to the proposed dev. based on the dev.'s real property valuation in comparison of that of the community as a whole

The Service Standard Method

- Another type of Fiscal Impact Analysis - Used to estimate avg. cost of residential dev. - Focuses manpower requirements needed to service the proposed development using specific service categories

The Case Study Method

- Another type of Fiscal Impact Analysis - Used to estimate avg. cost of residential dev. - Officials estimate a range of possible future costs to serve the development

The Comparable City Method

- Another type of Fiscal Impact Analysis - Used to estimate avg. cost of residential dev. - Rarely used - Estimates the costs of proposed development using information from other municipalities who have experienced similar development

Per Capita Multiplier Method

- Most commonly used Fiscal Impact Analysis - Estimates average costs of proposed residential development - Assumes that the proposed development will not necessitate major infrastructure construction projects

Net Present Value (NPV)

- Type of Impact Analysis - Used to show the net monetary value of a project, discounted to present value - If NPV is greater than zero then the benefits outweigh the cost - NPV = t((B - C) / (1+r)(tpower))....where t = # of years in projects life span, B = benefits, C = Cost, r = interest variable.

Cost Effectiveness Analysis (CEA)

- Used to compare two competing projects that will provide roughly the same benefits. - Discounts to present value - Simple ratio is CEA = e/c....e is composite measure of effectiveness that considers direct, secondary, negative impacts. c is monetary cost

Cost-Benefit Analysis (BCR)

- Used to determine both Net monetary value of a project and to weigh the net values of alternative, competing projects. - Discounts to present value - BCR = NPV / t(C/(1+r)(tpower) - If ratio is greater than 1, then the benefits of project outweigh cost - Can only assess impacts that are quantifiable in terms of money and known impacts. - Tends to ignore secondary impacts

Fiscal Impact Analysis

- Used to estimate the costs and revenues that a proposed development will bring - 6 types of FIA - Most common is the Per Capita Multiplier Method

Economic Analysis

-Economic Base Multiplier -Location Quotient -Shift-Share Analysis -Input-Output Economic Analysis

Economic Base Analysis

-Used for Economic Analysis -Divides regional industries into Basic (export) and Nonbasic (local) sectors -Assumes Basic sector drives economy -Used for both determining impact of a change in the economy and for predicting future growth

Economic Base Multiplier

-Used for Economic Analysis -EBM = Total Economic Activity / Basic Sector Activity -Local economic growth can be expressed in terms of employment, output, or income -Result is an indicator of the ripple effect of a basic (export) industry -For example, A result of 4 means that for every 1 basic (export) unit, there are 4 units created in the overall economy.

Input-Output Economic Analysis

-Used for Economic Analysis -Focuses on intermediate sales between an economy's sectors, or the circular flow of the economy -Based more on accounting methodology than theory

Location Quotient

-Used for Economic Analysis -LQ = % of Local Employment / % of National Employment - Most commonly used in direct method of defining the base sector of a study area - Result of 1 means industry's local share is equal to industry's share nationaly -Less than 1 local industry is less compared to nation -Greater than 1 local industry is greater than nation

Shift Share Analysis

-Used for Economic Analysis -Standard regional analysis method to determine how much regional job growth can be attributed to national trends and how much is due to unique regional factors. -Helps answer why employment is growing or declining in a regional industry, cluster, or occupation