This article shares the story of how an economic development organization successfully used impact analysis with IMPLAN to land a relocation project which brought an assisted living facility...and all of the regional economic benefits that came with it...to a county in central Virginia.
The Lynchburg Regional Business Alliance (the Alliance) is an economic development organization (EDO) in Virginia that represents the Lynchburg Metropolitan Statistical Area (MSA) in its efforts to promote economic growth throughout the region. Focused on encouraging entrepreneurial start-ups, stimulating business expansions, inspiring the development of small businesses, and more, the Alliance aims to advance the health of the area’s business climate by generating jobs and procuring investments. So, when an assisted living facility expressed interest in moving to Amherst County, Virginia, the Alliance wanted to ensure that it happened.
Featured image: The Lynchburg Metropolitan Statistical Area (MSA) includes Lynchburg City, Bedford City, Bedford, Amherst, Campbell, and Appomattox counties.
The facility expressed that, in addition to the construction of the care center itself, the relocation effort would also include the construction of a collection of patio homes, and would require a series of renovations to existing structures on the proposed property—a project which, in total, was estimated to carry a $13 million price tag.
Furthermore, the effort was expected to contribute 60 jobs (35 full-time jobs and 25 part-time jobs) after completion merely by virtue of the facility’s operations, with wages ranging from $23,000 to $75,000.
Sounds like a perfect opportunity for an EDO to come through for its community, right? The Alliance thought so too.
While the facility’s interest in Amherst County held the potential to bring obvious economic benefits to the area, the fact remained that...it was only that: potential. The facility had not committed to Amherst, but was merely exploring the possibility of making it its new home—no promises. The scary possibility that the facility could a.) find a location it perceived to be a better choice, b.) choose to relocate there instead, and c.) leave Amherst and the surrounding Lynchburg MSA communities to wonder what might have been...still lingered.
That’s precisely what the Alliance hoped to prevent. They had to close the deal.
To do so, they suggested offering a personalized incentive to the facility which would nearly guarantee Amherst County scored the project. Specifically, they proposed offering the facility its desired property as an outright gift.
That’s right; give the facility county land for free.
Fig. 1: Amherst County, VA map and key
With a strategy so bold, the Amherst County Board of Supervisors would undoubtedly need some convincing. It wouldn’t be enough to merely pitch them on the “suspected” economic benefits. The Alliance knew it was going to need to build, and then present, a near-bulletproof case if it expected the deciding parties to take such a brave step. It also knew that to build that near-bulletproof case…it was going to need some metrics.
With its ambitious objective firmly in mind, the Alliance decided to take a data-driven approach and gather some hard numbers that reflected the undeniable economic benefits of its proposed strategy.
To gather those metrics, they turned to IMPLAN to perform an economic impact analysis.
Economic impact analysis is a type of study which allows an analyst to examine the effects of a specific event on a given economy. Moreover, it can also be used to measure the contributions of a specific industry or firm to a given economy. So naturally, the Alliance turned to this method to assess the economic ramifications of both the facility’s initial construction effort and its continued operations after completion.
To initiate the analytical process, the Alliance purchased a collection of economic impact data from IMPLAN, an economic data and analytical software provider, which reflected Amherst County. The data provided them with an economic snapshot of the region (complete with in-depth information regarding its industry spending patterns, employment numbers, and more) which established the basis for their analysis.
Fig. 2: IMPLAN's process of calculating Direct, Indirect, and Induced Effects
The assisted living facility informed the Alliance that the project would require an initial $7.4 million allocation for the construction of the new patio homes, a $5 million allocation for the construction of the central care facility itself, and finally, a $1 million allocation for the renovation of the property’s existing structures. Additionally, they reported that after the completion of the initial construction efforts, the ongoing operations of the facility were expected to contribute 60 jobs (35 full-time and 25 part-time) and pay out nearly $1.5 million dollars in wages, salaries, and benefits each year thereafter.
Having collected the necessary components, the Alliance turned to IMPLAN once more and used its economic modeling tool to perform the actual impact analysis. By doing so, they were able to both assess the potential benefits of the proposed relocation and gain the necessary metrics to strengthen their case to the Board of Supervisors.
Upon completion, the analysis ultimately armed the Alliance with exactly what it needed—multiple sets of impact results which independently addressed the potential benefits of each facet of the overall project. Those sets are presented and discussed below:
The project’s construction effort revealed the potential to stimulate over $16 million in local spending, create nearly 125 jobs, and generate roughly $450,000 in combined state & local taxes. The details of those results are presented and discussed below (see fig. 3):
Fig. 3: Excerpt from the complete estimated economic impact of the construction of the assisted living facility on Amherst County, VA
The Alliance’s study also revealed that the residential and commercial construction, truck transportation, wholesale trade, and retail sales (specifically of building supplies) sectors were likely to experience the highest increase in economic activity as a result of the initial construction effort.
The figures presented in the Direct column of the results table (see fig. 3, above) represent potential dollars of spending and changes in employment attributed directly to the project’s initial construction effort.
The figures presented in the Indirect column of the results table (see fig. 3, above) represent potential dollars of spending and changes in employment throughout additional sectors of the local economy attributed to intermediate business-to-business expenditures which result from the project’s initial construction effort.
The figures presented in the Induced column of the results table (see fig. 3, above) represent potential dollars of household or institutional income spending, and its resulting changes in employment, which result from the project’s initial construction effort.
The facility’s operations (after the completion of the construction effort) revealed the potential to stimulate over $2 million in sustained local spending, to support over 65 long-term jobs, and to generate more than $55,000 in annual local taxes in Amherst County alone. The details of those results are also presented and discussed below (see fig. 4):
Fig. 4: Excerpt from the complete estimated economic impact of the operations of the assisted living facility on Amherst County, VA
The figures presented in the Direct column of the results table (see fig. 4, above) represent potential recurring dollars of spending, and changes in employment, attributed to the facility's operations.
The figures presented in the Indirect column of the results table (see fig. 4, above) represent potential recurring dollars of spending, and changes in employment, throughout additional sectors of the local economy attributed to ongoing intermediate business-to-business expenditures which result from the facility’s operations.
The figures presented in the Induced column of the results table (see fig. 4, above) represent potential recurring dollars of household or institutional income spending, and subsequent changes in employment, which result from the facility’s operations.
Additionally, the project also revealed the potential to generate further annual residential revenue. The Alliance’s study revealed that the inclusion of 40 patio homes on the proposed property, and the effort to renovate existing structures on the property, could potentially total over $80,000 in annual real estate tax, and over $30,000 in annual sales & personal property tax. The details of those results are below (see fig. 5):
Fig. 5: Excerpt from the complete estimated impact on taxes by the assisted living facility on Amherst County, VA
In closing, it’s important to point out that the impacts modeled by the Alliance’s study were restricted to only the economic effects that were expected to occur within Amherst County itself. This is to say that it’s reasonable to assume that the potential economic benefits suggested by their study are actually conservative. The true impact of this project might easily be larger than what the study suggests considering there would undoubtedly be spillover effects from Amherst County to neighboring jurisdictions, and beyond, as economic activity originating from this project could reasonably be expected to “ripple” throughout the rest of the Lynchburg MSA.
Fig. 6: The Amherst Historical Society
The importance of impact analysis is not a secret to economic development organizations across the nation. Ultimately, the method, and more specifically, IMPLAN’s economic impact data and analytical software tool, offered the Alliance the opportunity to formulate a development strategy, model the consequences of that strategy, and then to promote it with strength using data-devised metrics. For decades, IMPLAN has proven instrumental in allowing groups like the Lynchburg Regional Business Alliance to continue promoting economic growth and improving economic health throughout regions by helping organizations of all sizes and/or budgets include impact analysis in their own development strategies.
Economic impact analysis has always been valuable. But now, IMPLAN is making it both easy and accessible to everybody.
Below are some additional resources which spotlight the stories of IMPLAN users just like you! The collection of case studies below features a variety of different groups' efforts to introduce inout-output modeling, economic impact analysis, and IMPLAN into their professional business strategies.
Related to: Economic developers
- Assisted Economy: The Economic Impact of an Assisted Living Facility in One Virginia County
Related to: Nonprofits