Predicting business economic impact?
IMPLAN turns data into projections for firms, projects
Critics frequently question what economic impact new projects will have on the community. A modeling system acquired by two local nonprofits now allows organizations to estimate that impact, including how many jobs will be created and the dollar amount that will circulate in the economy.
Community Connections Inc., a nonprofit that provides services for individuals with developmental disabilities, had an analysis done on how the organization adds jobs and job income to the local economy. That data later can be used in fundraising to demonstrate the impact the organization has on the community, said Joe Keck, director of Southwest Colorado Small Business Development Center.
The analysis found the 131 people employed by Community Connections require about 21 supporting jobs — such as grocery store clerks and restaurant staff — and they generate about $1 million in additional job income.
The center and the Region 9 Economic Development District of Southwest Colorado bought IMPLAN economic county data for Montezuma, La Plata and Archuleta Counties and trained about eight people to use the system in 2011. The training costs about $1,500 per person, and each data set costs $550. The data always is two years behind, though, so IMPLAN is using economic data from 2010.
The modeling system can be used by companies, but it would have to employ about 25 people for the report to be accurate, Keck said.
The system is best for looking at how many jobs a new business, Colorado Department of Transportation road construction or project, such as a hospice center, will provide and how much revenue the wages will put back into the community, said Roger Zalneraitis, executive director of the La Plata County Economic Development Alliance.
CDOT had Region 9 conduct an analysis of a current safety-improvement project at U.S. Highway 550 and County Road 302. The project is creating a four-lane highway that will have southbound left-turn and northbound right-turn lanes on the highway, along with a wildlife-detection system.
The analysis found the project would provide 18 supporting jobs, which will generate about $2.1 million in additional job income, according to a report provided by Nancy Shanks, spokeswoman for CDOT.
“While we do track jobs and salary data, it was interesting to also see the impacts our projects have on the local economy,” Shanks said.
A city or county could look at the analyses while determining whether to provide a building permit to a company attempting to grow. So far, neither the city nor the county have approached Region 9 about conducting an analysis, said Donna Graves, a consultant with Region 9.
A variety of data is needed to complete an analysis, including payroll, sales revenue, a detailed construction budget and other information about how the company runs. This information first is used to determine the viability of an analysis.
The center and Region 9 will provide the first five hours it takes to conduct and compile an analysis for free. While it has yet to take longer than five hours, Keck said the center probably would charge $50 an hour for every additional hour.