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ACR analysis details huge short-term, long-term economic impacts on region

July 28, 2010 by · Leave a Comment 


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By Dan McClelland

Editor’s Note: the following is the second in a series of articles about the fiscal and economic impact study of the Adirondack Club and Resort project completed last month.

The Adirondack Club and Resort project’s revised fiscal and economic impact analysis, filed with the Adirondack Park Agency in June, contains a dozen pages devoted to the potential impact of the four-season development on the regional economy. The study details both long-term and short-term impacts on the region’s economy.

“The short-term economic impacts related to the rehabilitation and expansion of the Big Tupper Ski Area, and the construction of the ACR and associated residential buildings will mainly be the result of increased construction jobs and wages, as well as the purchase of construction materials related to the ski slopes and trails, the reconditioning of the ski lifts and their associated facilities, and the construction of a base lodge and resort amenities,” the report explains.

Of non-residential spending, it is estimated that that reconstruction of the lifts, renovation of trails, the expansion of what is called the West Face and the construction of the new lodge will total $16.025 million, according to an analysis performed by the Delaney Construction Corporation in June.

The resort amenities, including the marina, the restaurant, hotel/inn and associated buildings will cost $10.7 million for a total non-residential portion of $26.78 million.

The updated residential elements of the project will include 198 detached dwelling units and 453 units in attached buildings for a total of 651. The estimated projected sales of residential units is $581.5 million.
The non-residential elements of the project ($26.7 million) is expected to translate into $16.07 million in construction wages (based on an estimate that 60% of construction costs are labor).

With the average wage for construction workers in Franklin County at $30,988 (for the 2009 year), the $16.07 million for labor costs would work out to 519 full-time equivalent jobs needed to complete the non-residential work on the mountain. Over the 15-year period those buildings will be built, the annual employment would be 35 construction jobs for a annual total of $1.08 million.

For the residential components of the project which are expected to sell for $581.5 million, the associated construction costs are estimated at 37% or $215.16 million.

At 60% of total construction costs for labor, construction wages for the housing units would total $129 million. That translates into 4,166 full-time equivalent construction jobs over the build-out period or about 278 jobs per year for total wages paid of $8.6 million per year at the 2009 average wage level.

The total construction jobs would amount to 313 per year with average annual wages totaling $9.68 million.
The New York State Department of Labor estimates there were 2,650 employees who worked in construction in the seven-county region in 2008. The report suggests the majority, if not all those new construction jobs at the ACR, will come from the regional labor pool. The 313 new jobs will represents about 12% of the region’s total construction jobs.
The multiplier effect of those jobs on the region’s economy, as defined by the department of labor, indicates that for every dollar in construction wages paid, 2.24 dollars are earned by those in all other industry sectors that interact with the construction workers.

When the multiplier effect is applied to the $145.17 million in wages paid the construction workers, another $329.54 million in other wages will be earned as the development moves towards build-out or about $22 million per year.
To develop the long-term economic impacts of the project the report writers for the Saratoga Springs consulting firm, the LA Group, used U.S. Department of Labor data.

It is estimated the operation of the expanded ski area will result in employment needs that are consistent with the statewide average of 81 employees for ski areas in this state. The full-time equivalency of those 81 jobs is 36 with an estimated annual payroll of $1.04 million.

In addition to the ski center it is anticipated the resort complex will employ 443 persons within four categories: resort (297), marina (19), restaurant and inn (88) and health club and recreation center (39). Full-time equivalents represent 200.
When all full-time and part-time positions are converted into full-time equivalents the total amounts to 236 with a projected annual payroll of $4.64 million.

The department of labor uses a 1.5 multiplier in the leisure and hospitality industry. That means the $4.64 million in annual wages paid at the ACR would generate secondary wages in the local and regional economies of $6.96 million per year.

The reopening of the ski area is expected to result in over 100,000 skier visits annually to the facility upon completion, according to information furnished by Scott Brandi, president of the New York Ski Area Association. Those visits, plus visits by people who come to enjoy the resort during the other seasons, will have a dramatic effect on the region’s economy. In 2003, according to the report writers, the Northern New York Travel and Tourism Research Center of SUNY Potsdam retained the services of Davidson-Peterson Associates of Kennebunk, Maine to look at the economic effects of tourist visits to the region. The study group found that in 2003 the average visitor spent $226.

That year Franklin County estimated there were 366,000 tourist visits with total expenditures of $82.91 million.
Using the Davidson-Peterson study, the report writers estimated that 100,000 visits to the ski area will mean an additional $22.6 million of spending in local and area businesses on such items as gasoline, lodging, meals and other retail goods and services.

The report also addresses the annual spending by the seasonal residents who will occupy the new houses on Mt. Morris and adjoining Oval Wood Dish Corp. lands. Says the report, “the project’s residential component will aid in sustaining an adequate supply of seasonal housing within the region. Upon build-out of the housing component, seasonal housing in the region will increase by approximately 3.2% over the 2000 levels and more than restore the 246 units lost during the 1990s. Within the town, the project will more than double the number of seasonal housing units when compared with the 2000 data. Once the project is complete, seasonal housing in the town will increase by 127% over the 2000 census figure of 513 seasonal units.”
The analysis used a 1997 study by the U.S. Department of Agriculture to determine the economic impact of the occupants of the 651 second homes in the ACR, if they are all used as seasonal homes. Those units will yield 186,115 “family-related days of use” each year and will produce 22,559 days of visitor use.

“The resulting effect to the local population is an increase of approximately 571 persons.”

Adjusting the federal study for inflation of 3% for 13 years, the analysis showed a daily expenditure of $26.43 for every family-related day of seasonal use and $11.76 for every visitor-related day of use in those 651 units.
Based on that information, the estimated annual expenditures for people using those seasonal homes was estimated at an infusion of $5.18 million into the local economy.

Like the ski visits, the USDA study found that for each new dollar spent here 34 cents went for groceries, 20 cents for restaurants, 15 cents for fuel, 12 cents in purchases of local services and 19 cents went for other miscellaneous purchases.
The annual operating expenses for the 651 housing units, adjusted for inflation, are estimated at $6,338 per housing unit or $4.13 million in total. “Therefore the total economic impact from expenditures made by occupants with the proposed resort is estimated to total $9.29 million annually. When combined with the total expenditures from visits to the ski area, the total annual expenditures are approximately $31.89 million.

That level of commerce will produce a demand for over 84,000 square feet of new business space in the community, according to the report writers.

This article is reprinted courtesy of the Tupper Lake Free Press.

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