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30 The Economic Contributions of the Virginia Aquarium Submitted by: Sage Policy Group, Inc. Submitted to: Stakeholders in and around Virginia Beach, VA December 2018

31 Table of Contents Introduction... 4 I. Input Data & Methodology... 5 Budgetary Data... 5 Survey Data... 7 II. How to Interpret Results... 9 IMPLAN Economic Modeling Software... 9 Employment... 9 Labor Income... 9 Output (Business Activity, Economic Activity)... 9 Direct Effects Indirect Effects Induced Effects III. Economic and Fiscal Impacts Ongoing, Annual Impacts Operational & Visitor Spending Fiscal Impacts Capital Spending Impacts Fiscal Impacts Conclusion Appendix A IMPLAN List of Exhibits Exhibit E1: Summary of Findings... 3 Exhibit 1: Virginia Aquarium Expenditures, FY 2013, FY 2017, & FY Exhibit 2: Virginia Aquarium Revenues, FY 2013, FY 2017, & FY Exhibit 3: Visitor Spending Weighting Based on Attribution... 7 Exhibit 4: Survey Responses to The Virginia Aquarium is your primary reason for visiting Virginia Beach Exhibit 5: FY 2018 Visitor Spending Estimates by Peak and Shoulder... 8 Exhibit 6: Virginia Aquarium Annual Visitor Spending... 8 Exhibit 7: Annual Economic Impacts generated by the Virginia Aquarium Exhibit 8: Ongoing Fiscal Impacts, FY Exhibit 9: Capital Expenditures over Time, FY 2013 FY Exhibit 10: One-time Economic Impacts FY 2013 FY Exhibit 11: One-time Economic Impacts by Year, FY 2013 FY Exhibit 12: One-time Fiscal Impacts, FY 2013 FY The Economic Contributions of the Virginia Aquarium 2

32 The Economic Contributions of the Virginia Aquarium Executive Summary The Virginia Aquarium & Marine Science Center hired Sage Policy Group, Inc. to estimate the Aquarium s economic and fiscal contributions to City of Virginia Beach and the Commonwealth of Virginia. Sage used IMPLAN, an industry standard economic modeling software, to produce all economic impact estimates. Fiscal impact estimates were generated using a combination of IMPLAN and proprietary methods based on publicly available budget and tax information. Inputs to our custom multi-regional input/output model were sourced from Aquarium financial data and an intercept survey of Aquarium attendees conducted by Christopher Newport University. Based on our analysis, we conclude that the Virginia Aquarium supports more than 3,300 jobs per annum, virtually all of which are located in or around Virginia Beach. These jobs are supported by a combination of visitor and Aquarium operational-spending and are associated with more than $86 million in annual employee compensation and nearly $277 million in economic activity. These impacts support in excess of $7.6 million in annual tax revenues for the City of Virginia Beach enough to pay base salaries for more than 170 new fire fighters, teachers, or police officers each year and an additional $9+ million in annual tax revenues for the Commonwealth of Virginia. The Aquarium s capital investments, which create one-time impacts, supported an additional 286 jobs statewide between FY13 and FY18. Those jobs were associated with nearly $16 million in employee compensation and more than $43.7 million in economic activity. Over that 5-year period, the Aquarium s capital expenditures supported more than $500,000 in Virginia Beach tax receipts and greater than $800,000 in Commonwealth-level revenues. Exhibit E1: Summary of Findings Inputs FY 2018 Visitors 618,852 Visitor Spending $172,007,793 Operating Expenditures $13,795,265 Operational Impacts (ongoing, annual) Economic Impact Jobs Income Business Sales Virginia Beach 3,261 $79,533,341 $257,004,045 Remainder of State 109 $6,494,505 $19,812,383 Total 3,370 $86,027,846 $276,816,428 Fiscal Impact Property Tax Income Tax Sales Tax Other Taxes Total Virginia Beach $6,256,240 - $126,055 $1,242,225 $7,624,520 Virginia - $2,018,633 $6,565,518 $475,883 $9,060,034 Capital Investment Impacts, FY 2013 FY 2018 (non-repeating) Economic Impact Jobs Income Business Sales Virginia Beach 268 $14,977,540 $40,243,232 Remainder of Virginia 18 $1,020,839 $3,520,625 Total 286 $15,998,379 $43,763,857 Fiscal Impact Property Tax Income Tax Sales Tax Other Taxes Total Virginia Beach $408,667 - $8,234 $105,689 $522,590 Virginia - $382,608 $451,175 $59,830 $893,613 Source: Sage, Virginia Aquarium, IMPLAN The Economic Contributions of the Virginia Aquarium 3

33 Introduction The Virginia Aquarium & Marine Science Center (Aquarium) commissioned Sage Policy Group, Inc. (Sage) to conduct an economic and fiscal impact assessment. To that end, this report estimates the jobs, labor income, output, and tax revenues supported by the Aquarium. The Aquarium is situated in Virginia Beach and represents a collaboration between the City of Virginia Beach and the Virginia Aquarium & Marine Science Center Foundation, a 501 (c)3 nonprofit organization. The Aquarium first opened its doors on June 14, In FY2018, the Aquarium spent more than $14 million on operations, hosted more than 615,000 guests, and rented out facilities supporting approximately 125 events associated with more than 17,400 attendees. While the impacts of visitor and operational spending are relatively straightforward to model, other impacts are more difficult to measure. For instance, the Aquarium also contributes to quality of shared well-being through its educational efforts and environmental pursuits. In 2017 alone, the Aquarium responded to more than 375 cases of marine life stranded on beaches. That year, the Aquarium led nearly 750 educational programs that impacted over 25,000 students. This report does not endeavor to assign dollar values to the qualitative aspects of the Aquarium s contributions, but this should not be interpreted as suggesting that associated impacts are inconsequential. The balance of this report is presented in three sections: I. Input Data & Methodology (page 5) This section discusses the inputs to our economic model and the methodologies the Sage study team utilized to derive its impact estimates. II. How to Interpret Results (page 9) This section provides a brief primer on how to best interpret the study s findings. III. Economic and Fiscal Impacts (page 11) This section presents our findings using a combination of text, charts and tables. The Economic Contributions of the Virginia Aquarium 4

34 I. Input Data & Methodology This section of the report a) presents the data used to drive the analysis; b) details the sources from which they came; and c) discusses relevant analytical techniques. An appendix to this report supplies additional methodological detail. Budget Data The Aquarium s budget data (largely in the form of expenditures, though institutional revenues are also presented below) served as a primary input to our economic model. Note that the Aquarium utilizes a July-June fiscal calendar. Exhibit 1: Virginia Aquarium Expenditures, FY 2013, FY 2017, & FY 2018 Type of Expenditure FY2013 FY2017 FY2018 FY 2013 FY 2018 % Change Payroll $6,249,172 $7,874,664 $7,963, % Advertising, Printing, Publishing $583,980 $923,544 $709, % Leases (if any) $130,581 $155,941 $165, % Maintenance/Repairs $161,669 $155,012 $211, % Capital Expenditures $4,665,891 $6,536,358 $6,604, % Postage/Freight/Shipping $55,333 $23,174 $44, % Professional, Legal and Consulting $156,253 $74,458 $82, % Other Contracted Services $1,072,474 $1,264,797 $1,257, % IT/Tele-Communications $182,824 $186,379 $209, % Contributions $79,784 $89,275 $201, % Retail/Concessions (cost of goods sold) $559,285 $782,598 $729, % Supplies $845,152 $708,110 $789, % Utilities $47,071 $37,383 $34, % Interest/Finance Charges/CC Fees $134,843 $271,470 $218, % Insurance $263,174 $297,078 $278, % Travel/Professional Development/Dues & Memberships $225,603 $237,402 $249, % Vehicle/Vessel Expenses $47,191 $20,338 $35, % Depreciation $674,705 $592,008 $613, % Total $16,134,985 $20,229,989 $20,399, % Source: Virginia Aquarium Virginia Aquarium expenditures increased by more than 25 percent from FY2013 to FY2018. In absolute terms, the largest increase occurred in the category of capital expenditures. Spending in this category expanded by approximately $1.9 million or by more than 40 percent during this period. Note that for the purposes of this economic and fiscal impact assessment, capital expenditures are The Economic Contributions of the Virginia Aquarium 5

35 modeled separately from operating expenditures. Exhibit 1 provides a breakdown of Aquarium expenditures for fiscal years 2013, 2017, and 2018 to allow readers to understand both 1-year and 5- year trends. The high degree of specificity and granularity provided by the Aquarium s financial report allows for a precise and disaggregated assessment of Aquarium impacts. Exhibit 2 indicates that revenues expanded 38.7 percent from FY2013 to FY2018. Over that span, the largest increase occurred in education programs revenues, which expanded from roughly $500,000 in FY2013 to more than $950,000 in FY2018. Facility rentals also increased briskly over this period (by more than 76 percent), a testament to the Aquarium s ability to increasingly leverage its resources into revenues due to a combination of stepped-up marketing and public interest. Exhibit 2: Virginia Aquarium Revenues, FY 2013, FY 2017, & FY 2018 Type of Revenue FY2013 FY2017 FY2018 FY FY2018 % Change Aquarium/Theater Admission Revenue $6,037,893 $7,243,612 $7,453, % Food Service Concession $186,615 $188,992 $227, % Photos Concession $202,830 $323,089 $382, % Adventure Park Concessions - $379,171 $267,164 Total gift shop sales and net receipts $1,313,235 $1,603,613 $1,601, % Facility Rentals $83,032 $144,433 $146, % Education programs $500,502 $970,882 $955, % Memberships $883,751 $1,107,742 $1,059, % Investment income $271,881 $280,731 $305, % Contributions and grants $2,212,666 $4,447,869 $3,789, % Other - Gain on sale of assets - - $25,160 Total Revenues $11,692,405 $16,690,134 $16,213, % Source: Virginia Aquarium The increase in revenues coincides with an increase in visitation. Total attendance rose from just over 520,000 in FY2013 to more than 615,000 in FY2018, an increase exceeding 17 percent. The Economic Contributions of the Virginia Aquarium 6

36 Survey Data One of the major issues in economic impact modeling is what we refer to as the attribution problem. This issue is especially relevant to analyses involving tourist destinations. The analytical question revolves around the extent to which visitor spending outside of the facility being studied can be properly attributed to the facility itself. To study visitor spending patterns and determine the extent to which total visitor spending can be attributed to the Aquarium, the Sage study team hired Christopher Newport University to conduct an intercept survey of Aquarium attendees. The survey asked guests if the Aquarium was their primary reason for visiting Virginia Beach, giving respondents options ranging from Strongly Agree to Strongly Disagree. Visitor spending figures reported in the survey were then scaled by a factor according to their response. See Exhibit 3 for additional detail. Exhibit 3: Visitor Spending Weighting Based on Attribution Response to: The Virginia Aquarium is your primary reason for visiting Virginia Beach. Visitor Spending Weighting Factor Strongly Agree x 1 Somewhat Agree x 0.75 Neither Agree nor Disagree x 0.5 Somewhat Disagree x 0.25 Strongly Disagree x 0.0 Source: Sage For instance, if a survey respondent claimed to spend $1,000 during their time in Virginia Beach and Somewhat Agree that the Virginia Aquarium was their primary reason for visiting Virginia Beach, we attribute $750 ($1,000 x 0.75) of visitor spending to Aquarium-generated impacts. Of the 423 survey responses, 217 either strongly or somewhat agreed with the statement that the Aquarium represented their primary reason for being in Virginia Beach. Exhibit 4 breaks down the responses. Exhibit 4: Survey Responses to The Virginia Aquarium is your primary reason for visiting Virginia Beach. Response to: The Virginia Aquarium is your primary reason for visiting Virginia Beach. Number of Responses Strongly Agree 119 Somewhat Agree 98 Neither Agree nor Disagree 101 Somewhat Disagree 53 Strongly Disagree 52 Total 423 Source: Sage, Virginia Aquarium, Christopher Newport University The Economic Contributions of the Virginia Aquarium 7

37 The University administered the survey at two distinct periods, once during peak season, which corresponds to June, July, and August, and once during shoulder season, which corresponds to the other months of the year. During peak season, approximately 81 percent of visitors come from outside the Virginia Beach area. Those nonlocal visitors spend an average $ dollars in the local economy that is attributable the Aquarium during their stay. Local visitors, who account for about 19 percent of peak season visitation, spend an average $79.83 attributable to the Aquarium during their daytrip. During shoulder season, visitation is more balanced between local and out-of-town visitors. During the nine months of the year that do not form part of peak season, 51 percent of guests come from outside the Virginia Beach area. These nonlocal, shoulder season visitors spend an average $ in the local economy that is attributable to the Aquarium, while local visitors spend an average $58.10 attributable to the Aquarium. Exhibit 5 supplies relevant summary detail. Exhibit 5: FY 2018 Visitor Spending Estimates by Peak and Shoulder Visitors Attributable Visitor Spending Peak Season Local 54,401 $4,342,639 Nonlocal 216,495 $83,740,448 Shoulder Season Local 167,445 $9,727,896 Nonlocal 177,181 $74,196,810 Source: Sage, Virginia Aquarium, Christopher Newport University Based on survey-generated parameters, Sage estimates that Aquarium visitors spend approximately $172 million per annum on lodging, transportation, food, shopping, gas, and recreation. These spending estimates take the aforementioned attribution issue into account. Food and beverage and shopping figures reflect spending on food, concessions, and souvenirs at the Aquarium and recreation figures include Aquarium ticket sales. See Exhibit 6 for relevant statistical detail. Exhibit 6: Virginia Aquarium Annual Visitor Spending Visitor Spending Peak Shoulder Total Lodging $22,620,267 $21,552,370 $44,172,637 Local Transportation $7,118,791 $6,782,715 $13,901,506 Food & Beverage (includes sales in Aquarium) $25,185,628 $23,996,621 $49,182,248 Shopping (includes sales in Aquarium) $13,287,955 $12,660,634 $25,948,589 Fuel $2,370,653 $2,258,735 $4,629,388 Recreation (includes Aquarium admission) $17,498,085 $16,672,004 $34,170,089 Total $88,083,087 $83,924,706 $172,007,793 Source: Sage, Virginia Aquarium, Christopher Newport University The Economic Contributions of the Virginia Aquarium 8

38 II. How to Interpret Results IMPLAN Economic Modeling Software To quantify economic impacts, we used IMPLAN economic modeling software and its embodied multipliers to generate estimates of employment, labor income, and output (also referred to as economic activity or business sales). Below is an abbreviated glossary of terms, presented as simply and efficiently as possible, that you ll need to understand to interpret report findings. 1 Employment As defined by IMPLAN, a job that lasts twelve months equals one job, two jobs that last six months equal one job, three jobs that last four months equal one job, etc. Based on this, job-years represents a useful term. For instance, an endeavor that supports 200 jobs for a six-month period would be considered to support 100 jobs as measured in job-years. For construction or capital investment events (one-time-only), for which the economic or fiscal impacts occur only once, the stated number of jobs is the total number of job-years that will be supported across the duration of the capital project. For operational (ongoing) impacts, job figures are annual and will occur every year so long as operations persist. Note that IMPLAN jobs aren t quite the same thing as full time equivalents (FTEs). Each of IMPLAN s 536 unique industries has a different conversion rate between jobs and FTEs, although for almost every industry one job is equal to less than one FTE. Labor Income Labor income is comprised of wages, benefits, and proprietor income (money accruing to owners of businesses). Labor income = all forms of employee compensation (wages & benefits) + proprietor income Output (Business Activity, Economic Activity) Output equals the value of industry production. It might be easier to conceptualize this as total business sales or economic activity. For retail industries, it is the gross margin (not gross sales). For 1 These definitions are largely attributable to IMPLAN user Phil Cheney, who, as of this writing, has contributed over 300 articles to the IMPLAN Knowledge Base The Economic Contributions of the Virginia Aquarium 9

39 manufacturing, output is the quantity of total sales plus/minus the change in inventories. For the service sector, output is directly equal to sales. This can be visualized by the following equation: Output = (Manufacturing sales +/- change in inventories) + (service sector sales) + (gross margin for wholesale and retail trade) These figures are based on annual production estimates for the year of the dataset. In this instance, the year is 2016, the most recent year for which data are available. Direct Effects Direct effects are impacts tightly aligned with the endeavor being analyzed. In this instance, direct effects are produced by Aquarium operational spending and the visitor spending attributable to the Aquarium. Indirect Effects Indirect effects stem from business-to-business spending activity within the study area that occurs as a result of the direct effects. These can also be considered broader supply chain effects. Induced Effects Induced effects relate to household spending that occurs due to an expanded economy. For instance, if one were modeling a construction project, associated construction worker income spent at local restaurants or gift shops would be included in the induced effects category. The Economic Contributions of the Virginia Aquarium 10

40 III. Economic and Fiscal Impacts Broadly, the Virginia Aquarium s economic impacts are traceable to three sources. First, the Aquarium spends significantly in the local economy in support of its operational requirements. Second, the attributable spending of visitors represents a major source of economic impact. Third is capital spending, including to expand, renovate, maintain, and repair. While operational and visitor spending is ongoing, capital spending is modeled as a one-time economic impact for purposes of this analysis. For this reason, operational and visitor spending-related impact estimates are presented together, while capital expenditure-related impacts are presented on their own. Ongoing, Annual Impacts Operational & Visitor Spending Based on Sage s IMPLAN model, in FY2018, the Virginia Aquarium supported more than $257 million in economic activity throughout Virginia Beach and more than $276 million statewide. Estimated statewide impacts are inclusive of city-specific impacts. These impacts, which stem from visitor spending and the Aquarium s operational budget, repeat on an annual basis but fluctuate based on budgetary changes and the Aquarium s level of visitation. This economic activity supports more than 3,260 jobs in Virginia Beach (this is by place of work as opposed to by place of worker residence). Another 109 positions are supported in other areas of the Commonwealth. Employee compensation approaches $80 million in Virginia Beach and exceeds $86 million across all Virginia communities. All figures are in 2018 dollars. Exhibit 7 supplies summary statistical detail. Exhibit 7: Annual Economic Impacts generated by the Virginia Aquarium Jobs Employee Compensation Business sales Virginia Beach Direct effects 2,533 $48,085,168 $155,559,119 Indirect effects 389 $17,878,604 $57,118,655 Induced effects 340 $13,569,569 $44,326,271 Total 3,261 $79,533,341 $257,004,045 Remainder of Virginia Direct effects Indirect effects 69 $4,405,255 $13,578,922 Induced effects 40 $2,089,250 $6,233,461 Total 109 $6,494,505 $19,812,383 State Total 3,370 $86,027,846 $276,816,428 Source: Sage, IMPLAN, Virginia Aquarium The Economic Contributions of the Virginia Aquarium 11

41 Fiscal Impacts Sage used both IMPLAN-generated estimates and analyst computations based on publicly available budget and tax rate information to produce estimates of fiscal impact. In total, the Virginia Aquarium supported more than $7.6 million in tax revenues for the City of Virginia Beach and more than $9 million in tax revenues for the Commonwealth of Virginia in FY2018. That equates to the base salary of more than 170 new police officers, firefighter, or teachers per year in Virginia Beach. Note that these fiscal impacts are not overlapping they are additive. Exhibit 8 supplies relevant summary detail. Exhibit 8: Ongoing Fiscal Impacts, FY2018 Location and type of impact Value Virginia Beach Property tax $6,256,240 Admissions taxes $771,423 Other taxes 2 $470,802 State Sales Tax: Remittance to City $126,055 Total $7,624,520 Remainder of Virginia Income tax $2,018,633 Sales tax $6,565,518 Other Taxes $475,883 Total $9,060,034 Source: Sage, IMPLAN, Virginia Aquarium Capital Spending Impacts Individual capital outlays take place on a one-time basis. Accordingly, they are modeled separately from ongoing operational expenditures and visitor spending, which take place continuously. From FY2013 to FY2018, the Aquarium generated nearly $26 million in capital expenditures. This includes more than $9 million in building maintenance and in excess of $1.2 million in repairs and renovations. Exhibit 9 indicates how the Aquarium s capital expenditures have shifted from year to year. The last two fiscal years have been associated with especially large-scale capital expenditures. 2 This item consists largely of two separate IMPLAN tax impact categories: other taxes, which includes business licenses and documentary and stamp taxes, and non-taxes, fines, and fees, which includes rents and royalties, special assessments, fines, settlements, and donations. The Economic Contributions of the Virginia Aquarium 12

42 Exhibit 9: Capital Expenditures over Time, FY 2013 FY 2018 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Source: Virginia Aquarium From FY2013 to FY2018, the Aquarium s capital expenditures supported nearly 270 jobs in Virginia Beach. Those jobs were associated with nearly $15 million in employee compensation and more than $40 million in output. Exhibit 10 supplies relevant summary detail. Exhibit 11 supplies total capital spending-related economic impacts by year. Once again, all figures are presented in 2018 dollars $0 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Exhibit 10: One-time Economic Impacts FY 2013 FY 2018 Jobs Employee Compensation Output Virginia Beach Direct effects 162 $10,536,918 $26,477,016 Indirect effects 43 $1,919,063 $5,531,621 Induced effects 63 $2,521,559 $8,234,595 Total 268 $14,977,540 $40,243,232 Remainder of Virginia Direct effects Indirect effects 11 $668,848 $2,474,979 Induced effects 7 $351,992 $1,045,646 Total 18 $1,020,839 $3,520,625 State Total 286 $15,998,379 $43,763,857 Source: Sage, IMPLAN, Virginia Aquarium The Economic Contributions of the Virginia Aquarium 13

43 Exhibit 11: One-time Economic Impacts by Year, FY 2013 FY 2018 Jobs Employee Compensation Output Virginia Beach FY $2,800,152 $7,523,743 FY $1,283,569 $3,448,830 FY $1,619,720 $4,352,033 FY $1,805,285 $4,850,631 FY $3,732,767 $10,029,591 FY $3,736,047 $10,038,404 Total 268 $14,977,540 $40,243,232 Source: Sage, IMPLAN Fiscal Impacts The same methods discussed in the previous section were used to estimate fiscal benefits stemming from capital spending. In total, the Aquarium s capital investments from FY2013 to FY2018 supported more than $520,000 in revenues for the City of Virginia Beach and more than $890,000 in revenues for the Commonwealth of Virginia. Exhibit 12 provides summary statistical detail. Exhibit 12: One-time Fiscal Impacts, FY 2013 FY 2018 Location and type of impact Value Virginia Beach Property Tax $408,667 Other Taxes 3 $105,689 State Sales Tax: Remittance to City $8,234 Total $522,590 Virginia Income Tax $382,608 Sales Tax $451,175 Other Taxes $59,830 Total $893,613 Source: Sage, IMPLAN, The Virginia Aquarium, The U.S. Census Bureau, Virginia Beach 3 This item consists largely of two separate IMPLAN tax impact categories: other taxes, which includes business licenses and documentary and stamp taxes, and non-taxes, fines, and fees, which includes rents and royalties, special assessments, fines, settlements, and donations. The Economic Contributions of the Virginia Aquarium 14

44 Conclusion In FY2018, the Aquarium supported nearly 3,300 jobs, approximately $80 million in worker income, and more than a quarter of a billion dollars in Virginia Beach business sales, much of which were supported by attributable visitor spending. That fiscal year, visitor spending attributable to the Aquarium s presence totaled $172 million. In addition to the impacts generated by operational and visitor spending, the Aquarium supports additional economic impacts via capital spending. From FY2013 through FY2018, the Aquarium generated nearly $26 million in capital spending. This spending supported 268 jobs in Virginia Beach associated with $15 million in worker income. Local business sales were bolstered by more than $40 million once multiplier effects are fully considered. Economic effects beget fiscal ones. In FY2018, the Virginia Aquarium directly and indirectly supported $7.6 million in revenues for the City of Virginia Beach and another $9 million for the Commonwealth of Virginia. The principal source of Commonwealth Revenue took the form of sales tax revenue ($6.57 million). The City of Virginia Beach primarily benefits from enhanced property tax revenues ($6.26 million) The Economic Contributions of the Virginia Aquarium 15

45 Appendix A IMPLAN IMPLAN is an economic impact assessment software system. The system was originally developed and is now maintained by the Minnesota IMPLAN Group (MIG). It combines a set of extensive databases concerning economic factors, multipliers and demographic statistics with a highly refined and detailed system of modeling software. IMPLAN allows the user to develop local-level inputoutput models that can estimate the economic impact of new firms moving into an area as well as the impacts of professional sports teams, recreation and tourism, and residential development. The model accomplishes this by identifying direct impacts by sector, then developing a set of indirect and induced impacts by sector through the use of industry-specific multipliers, local purchase coefficients, income-to-output ratios, and other factors and relationships. There are two major components to IMPLAN: data files and software. An impact analysis using IMPLAN starts by identifying expenditures in terms of the sectoring scheme for the model. Each spending category becomes a "group" of "events" in IMPLAN, where each event specifies the portion of activity allocated to a specific IMPLAN sector. Groups of events can then be used to run impact analysis individually or can be combined into a project consisting of several groups. Once the direct economic impacts have been identified, IMPLAN can calculate the indirect and induced impacts based on a set of multipliers and additional factors. Economic benefits principally take the form of new employment opportunities, associated income and augmented business revenues. These economic benefits include both direct benefits, which are closely associated with the activities that will take place at the Virginia Aquarium and secondary benefits that are associated with foreseeable and calculable multiplier effects. Secondary benefits can be segmented into two types of impacts, indirect and induced. Indirect benefits are related to the business-to-business transactions that take place due to increased demand for goods and services that accompanies augmented investment and business operations. Impacted businesses sell everything from office furniture and copiers to computer and graphic design services. Induced benefits are created when workers directly or indirectly supported by increased economic activity spend their earnings in the local economy. Indirect and induced benefits together comprise total multiplier effects. The hallmark of IMPLAN is the specificity of its economic datasets. The database includes information for five-hundred-and-twenty-eight different industries (generally at the three or four digit Standard Industrial Classification level), and twenty-one different economic variables. Along with these data files, national input-output structural matrices detail the interrelationships between and among these sectors. The database also contains a full schedule of Social Accounting Matrix (SAM) data. All of this data is available at the national, state, and county level. Another strength of the IMPLAN system is its flexibility. It allows the user to augment any of the data or algorithmic relationships within each model in order to more precisely account for regional relationships. This includes inputting different output-to-income ratios for a given industry, different wage rates, and different multipliers where appropriate. IMPLAN also provides the user with a choice of trade-flow assumptions, including the modification of regional purchase coefficients, which determine the mix of goods and services purchased locally with each dollar in each sector. Moreover, the system also allows the user to create custom impact analyses by entering The Economic Contributions of the Virginia Aquarium 16

46 changes in final demand. This flexibility is a critically important feature in terms of the Sage proposed approach. Sage is uniquely qualified to develop data and factors tailored to this project, and, where appropriate, overwrite the default data contained in the IMPLAN database. A final advantage of IMPLAN is its credibility and acceptance within the profession. There are over five hundred active users of IMPLAN databases and software within the federal and state governments, universities, and among private sector consultants. The following list provides a sampling of IMPLAN users. Sample of IMPLAN Users: Academic Institutions Alabama A&M University Albany State University Auburn University Cornell University Duke University Iowa State University Michigan Tech University Ohio State Penn State University Portland State University Purdue University Stanford University Texas A&M University University of California Berkeley University of Wisconsin University of Minnesota Virginia Tech West Virginia University Marshall University/College of Business Federal Government Agencies Argonne National Lab Fed. Emergency Man. Agency (FEMA) US Dep t of Agriculture, Forest Service US Dep t of Ag., Econ Research Service US Dep t of Int., Bureau of Land Mgmt. US Dep t of Int., Fish and Wildlife Serv. US Dep t of Int., National Parks Service US Army Corps of Engineers State Government Agencies MD Dep t of Natural Resources Missouri Department of Economic Development California Energy Commission Florida Division of Forestry Illinois Dep t of Natural Resources New Mexico Department of Tourism South Carolina Employment Security Utah Department of Natural Resources Wisconsin Department of Transportation Private Consulting Firms Coopers & Lybrand Batelle Pacific NW Laboratories Boise Cascade Corporation Charles River Associates CIC Research BTG/Delta Research Division Crestar Bank Deloitte & Touche Ernst & Young Jack Faucett Associates KPMG Peat Marwick Price Waterhouse LLP Sage Policy Group, Inc. Economic Research Associates American Economics Group, Inc. L.E. Peabody Associates, Inc. The Kalorama Consulting Group West Virginia Research League The Economic Contributions of the Virginia Aquarium 17