Texas Municipal League
Houston
October 2014
John L. Crompton
University Distinguished Professor and
Regents Professor
Texas A&M University
Benefits Related to Economic
Prosperity
 Attracting tourists
 Attracting businesses
 Attracting retirees
 Reducing taxes
 Enhancing real estate values
Segments of Travel and their Inter-relationship with Parks
and Recreation
Recreation and
Park Attractions
in a Jurisdiction
Opportunities
for Local
Residents
Pleasure
Travel –
Sphere of
Interest
Tourism
Conference
and
Convention
Travel
Business Travel
Visiting Friends
and Relatives –
Personal
Business
Recreation and park
attractions NOT operated by
a public agency
POPULATION
Ability to Travel
Interest in Travel
INFORMATION AND
PROMOTION
TRANSPORTATION
ATTRACTIONS
POPULATION
Ability to Travel
Interest in Travel
INFORMATION AND
PROMOTION
TRANSPORTATION
ATTRACTIONS

Arts

Heritage Places

Parks

Recreation

Arenas

Other
Theaters, Art Galleries, Museums,
Performing Groups, Music Concerts
Ethnic Cultural Places, Shrines/Churches,
Historical Sites and Structures, Educational
Instructions, Industry Factory Tours
National, State, Regional, Local, Beaches,
Theme Parks
Events and Festivals, Aquatic and Coastal
Areas, Outdoor recreations (e.g. camping,
fishing, hunting), golf, tennis, skiing,
sailing, softball), Fitness and Wellness
Centers
College Sports, Professional Franchises,
Concerts and Exhibitions
Gambling Places, Cruise Ships
POPULATION
Ability to Travel
Interest in Travel
INFORMATION AND
PROMOTION
TRANSPORTATION
ATTRACTIONS
AN ATTRACTION IS NOT, IT BECOMES
IT NEEDS
A TOURIST
A SIGHT
A MARKER which provides
information about a sight
A MARKER could be a guidebook, slide show,
information tablet, travelogue, etc.
Context
1810 players on 133 teams participated in the tournament. All were from out-oftown. Because it was an elimination tournament, the length of time that the teams
stayed in the community varied from 4 to 7 nights. 697 players’ parents were
interviewed.
Financial Data
Income: Entry fees $300 x 133
$39,900
Tournament costs and staff time
$119,617
Net loss
($79,717)
Economic Data
Total expenditures in the local area by
the 1810 players and their family/friends
$2,039,000
Economic impact on sales
$3,731,000
Economic impact on income
$1,162,000
Return on investment
For each dollar invested, residents’ income increased by $14.58
(1,162,000/79,717). Facility cost $12 million; payback period to residents is 10
tournaments of this size.
The Conceptual Rationale For Undertaking Economic
Impact Studies
FINISH
Inflow of
Revenues
For
community
residents who
pay taxes
START
Community
residents &
visitors pay
taxes
Creating income
and jobs in the
community
Outflow of
Funds
To a city
council
Which uses them
to subsidize
development of
recreation
programs and
facilities
Who spend
money in the
local economy
That attract outof-town visitors




“The stadium would generate $238 million a year in
economic impact in Arlington and $416 million a year
in Tarrant County.” (City of Arlington: ERA)
“A new Cowboys Stadium would bring in $346 million
a year to Dallas County.” (A property development
company)
“The City of Irving, if a new stadium were built, would
see an annual economic impact of approximately $51
million.” (City of Irving; Turnkey Sports)
“The best outcome Arlington can expect is that it will
lose $290.5 million as a result of the building of a
new stadium for the Cowboys…The loss for arlington
could be as high as $325.3 million.” (Those opposed
to public funding for the stadium; Rosentraub and
Swindell)

Supporters’ Budget
$10,000,000

Supporters’ Budget
◦ Plus In-Kind Services
$10,000,000

Supporters’ Budget
$10,000,000
◦ Plus In-Kind Services

Opponents’ Budget
$45,000

Supporters’ Budget
$10,000,000
◦ Plus In-Kind Services

Opponents’ Budget
◦ Passed 53% - 47%
$45,000

Consultants protect their reputation by
1. Extensive Caveats
 We have not audited or verified any
information provided to us and as such will
take no responsibility for the accuracy of the
information which was provided by third
parties…Some assumptions inevitably will not
materialize and unanticipated events and
circumstances may occur; therefore actual
results achieved during the analysis period
may vary from those described in the report,
and the variations may be material

Consultants protect their reputation by
2. Using assumptions needed to get the desired
result
 It should be noted that the analysis utilizes
assumptions that were developed based on
our market analysis, surveys with comparable
arenas, hypothetical lease terms, and
conditions and assumptions provided by the
City and the developer.
Park Name
County
Total
missing
Usable
Usable
Local
Usable
non-local
Usable
non-local
day visitor
Usable
non-local
overnight visitor
Balmorhea
Reeves
119
9
110
1
109
19
90
Big Bend Ranch
Presidio & Brewster
230
32
198
4
194
41
153
Brazos Bend
Fort Bend
459
42
417
99
318
194
124
Caprock Canyons
Briscoe
279
17
262
1
261
102
159
Choke Canyon
Live Oak
359
102
257
18
239
125
114
Daingerfield
Morris
514
35
479
89
390
130
260
Davis Mts./Indian Lodge
Jeff Davis
496
117
379
1
378
84
294
Dinosaur Valley
Somervell
531
13
518
2
516
433
83
Eisenhower
Grayson
573
44
529
68
461
71
390
Enchanted Rock
Gillespie & Llano
1,335
109
1,226
16
1,210
967
243
Fort Richardson
Jack
425
12
413
8
405
30
375
Galveston Island
Galveston
322
28
294
16
278
129
149
Garner
Uvalde
1,511
189
1,322
10
1,312
200
1,112
Goliad
Goliad
475
16
459
7
452
310
142
Hueco Tanks
El Paso
333
21
312
149
163
112
51
Inks Lake
Burnet
454
107
347
18
329
46
283
Lake Bob Sandlin
Titus
269
7
262
21
241
39
202
Lake Corpus Christi
San Patricio
493
59
434
36
398
82
316
Lake Livingston
Polk
125
8
117
7
110
13
97
Lake Mineral Wells
Parker
503
61
442
90
352
83
269
Lake Ray Roberts
Cooke & Denton
851
92
759
250
509
227
282
Lake Somerville
Burleson & Lee
363
26
337
26
311
95
216
LBJ
Gillespie
418
75
343
2
341
341
N/A
Martin Dies
Jasper
284
19
265
7
258
8
250
Palo Duro Canyon
Armstrong & Randall
449
25
424
78
346
202
144
Pedernales Falls
Blanco
538
32
506
2
504
135
369
Seminole Canyon
Val Verde
271
17
254
11
243
81
162
Tyler
Smith
607
37
570
115
455
123
332
WOB
Washington
61
12
49
2
47
47
N/A
13,647
1,363
12,284
1,154
11,130
4,469
6,661
Total
Appropriate decisions
Inappropriate decisions
Park name
Per person per day
expenditures
Annual
Expenditures
Per person per day
expenditures
Annual
expenditures
% by which inappropri
ate decisions exceed
appropriate decisions
Daingerfield
$11.24
$332,750
$19.03
$933,897
181%
Dinosaur Valley
$12.61
$1,434,940
$23.70
$2,696,704
88%
Enchanted Rock
$25.13
$6,215,438
$60.73
$15,020,018
142%
Garner
$33.55
$13,339,963
$77.76
$30,923,109
132%
Goliad
$13.37
$593,784
$21.27
$944,367
59%
Lake Corpus Christi
$20.82
$1,344,096
$31.31
$2,021,173
50%
Lake Ray Roberts
$16.98
$11,811,373
$151.19
$105,141,261
790%
Pedernales Falls
$19.66
$2,954,198
$270.83
$40,689,600
1,277%
Tyler
$31.13
$3,486,834
$57.31
$6,419,026
84%
Number of day visitors <69,000
Local ratio of
day visitors
<10.5%
Local ratio of
day visitors
>10.5%
Number of day visitors >69,000
Group (1)
Group (2)
Big Bend Ranch Complex
Caprock Canyon
Choke Canyon
Davis Mountains/Indian Lodge
Goliad
Seminole Canyon
Balmorhea
Dinosaur Valley
Enchanted Rock
Garner
Inks Lake
Pedernales Falls
Ray Roberts complex
Washington on the Brazos
Day visitors : $23.40
Overnight visitors : $15.39
Day visitors : $28.03
Overnight visitors : $12.63
Group (3)
Group (4)
Eisenhower State Park
Daingerfield
Fort Richardson
Hueco Tanks
Lake Bob Sandlin
Lake Livingston
Lake Mineral Wells
Martin Dies, Jr.
Brazos Bend
Galveston Island
Lake Corpus Christi
Lake Somerville
Lyndon B. Johnson
Palo Duro Canyon
Tyler
Day visitors : $16.22
Overnight visitors : $11.88
Day visitors : $35.80
Overnight visitors : $15.74
Table. Classification of 29 parks by local ratio and number of day visitors
Number of day visitors <69,000
Local ratio of
day visitors
<10.5%
Park name
Caprock Canyons & Trailways
Colorado Bend
Devil's River
Devil's Sinkhole
Fort Leaton
Kickapoo Cavern
Lake Tawakoni
Lost Maples
Old Tunnel
Possum Kingdom
Estimated per person per day expe
nditure
Day visitors : $23.40
Overnight visitors : $15.39
Number of day visit
ors >69,000
Day visitors : $28.03
Overnight visitors :
$12.63
Abilene
Local ratio of
day visitors
>10.5%
Park name
Estimated per person per day expenditure
Atlanta
Bastrop
Blanco
Bonham
Caddo Lake
Cleburne
Cooper Lake
Copper Breaks
Fairfield Lake
Falcon
Fort Boggy
Fort Parker
Franklin Mountains
Goose Island
Government Canyon
Hill Country
Lake Arrowhead
Lake Brownwood
Lake Colorado City
Lake Livingston
Lake Whitney
Lockhart
Martin Creek Lake
Meridian
Mission Tejas
Monahans Sandhills
Monument Hill/Kreische Brewery
Mother Neff
Palmetto
Purtis Creek
San Angelo SP
San Jacinto Battleground and Monument
Sea Rim
Sheldon Lake
South Llano River SP
Stephen F. Austin
Village Creek
WBC/Bentsen-Rio Grande
WBC/Estero Llano Grande
WBC/Resaca de la Palma
Wyler Tramway
Day visitors : $16.22
Overnight visitors : $11.88
Battleship Texas
Big Spring
Buescher
Cedar Hill
Guadalupe River/H
oney Creek
Huntsville
Lake Casa Blanca
McKinney Falls
Mustang Island
Day visitors : $35.80
Overnight visitors : $15.7
4



Parks attract non-resident visitors to the area
These visitors spend money in the local area
This new money creates income and jobs for
area residents
Example of a Park as an Economic
Engine
Mustang Island State Park
(145,711 visitor days)
Salaries and operating expenses
$809,500
Revenue
$632,000
Net Loss
$177,500
BUT
49% of visitor days (i.e. 71,566) are from
outside the county and on each visitor day
they spend $9.76 each outside the park but
inside Nueces County i.e. &678,500
BUT
49% of visitor days (i.e. 71,566) are from
outside the county and on each visitor day
they spend $9.76 each outside the park but
inside Nueces County i.e. &678,500
New money into the county:
$809,500 + $698, 500
$1,508,000
Impact on sales (1.71):
$1,384,000 + $1,190,000
$2,574,000
Impact on personal income:
$753,000 + $631,000
$1,384,000
Impact on employement:
25 jobs + 21 jobs
Average pay for each job is $30,088
46 jobs
So
Every $1 of net state funds invested in Mustang Island
State Park yields $7.83 in income for Nueces County
residents ($1,384,000/$177,500)
The cost to the state of each job created is $3,850
($177,500/46 jobs)


Analogous to retail stores
Investment in services and amenities
More Visitors
More Per Capita
Expenditures
More Jobs and Income
to Local Residents
Benefits Related to Economic
Prosperity
 Attracting tourists
 Attracting businesses
 Write down the place you would like to live,
given your druthers (i.e., your preferred place,
ignoring practical concerns such as a job, family,
language, and heritage).
 Write down the place you would like to live,
given your druthers (i.e., your preferred place,
ignoring practical concerns such as a job, family,
language, and heritage).
 Write in one sentence, why you picked that
place.
 Write down the place you would like to live, given your
druthers (i.e., your preferred place, ignoring practical
concerns such as a job, family, language, and heritage).
 Write in one sentence, why you picked that place.
 More than 80% of participants will cite some park,
recreational, cultural, or environmental ambiance
dimension in their responses.
Business Relocation Context
 More than 10,000 economic
development groups are competing to
attract businesses.
 Footloose Industries
 “Information Factories” whose main
asset is highly educated professional
employees.
Drivers
 Beyond a threshold salary level, people
are persuaded to relocate by quality of
life factors rather than money.
Drivers
 Beyond a threshold salary level, people are
persuaded to relocate by quality of life
factors rather than money.
 No matter how “quality of life” is defined,
parks, recreation, and open space are part
of it.
Drivers
 Beyond a threshold salary level, people are
persuaded to relocate by quality of life
factors rather than money.
 No matter how “quality of life” is defined,
parks, recreation, and open space are part
of it.
 There are no great cities in this world that
do no have a great park (recreation and
culture) system.
Drivers
 Beyond a threshold salary level, people are
persuaded to relocate by quality of life factors rather
than money.
 No matter how “quality of life” is defined, parks,
recreation, and open space are part of it.
 There are no great cities in this world that do no
have a great park (recreation and culture) system.
 “Disamenity compensation” – companies located
where there is only mediocre quality of life have to
pay higher wages to attract the same quality work
(and vice-versa).
Comparison of the Perceptions of the Relative
Importance of General Elements in Location
Decisions Between Decision Makes in Large
and Small Companies
Elements
Small Company
Means
(n=38)
Large Company
Means
(n=42)
Government Incentives
3.9
14.2
Quality of Life
33.3
14.7
Labor
10.3
24.0
Proximity to Customers
28.4
11.6
Operating Costs
17.2
24.3
Transportation
6.7
7.7
Comparison of Perceptions of the Relative
Importance of Quality-of-Life Elements in
Location Decisions in Large and Small
Companies
Elements
Small Company
Means
(n=38)
Large Company
Means
(n=42)
Primary/Secondary
Education
19.4
18.0
Recreation/Open Spaces
26.4
12.1
Cost of Living/Housing
23.0
34.5
Personal Safety/Crime
Rate
12.9
13.2
Cultural Opportunities
10.6
9.5
Health/Medical Services
7.1
9.2
Significance
 Most new business growth comes from
small companies.
 90% of businesses in the U.S. employ
10 or fewer people.
 Small business owners often “satisfice”
rather than “optimize” their profit
potential.
People working in high tech companies are used to there
being a high quality of life in the metropolitan areas in
which they live. When we at Dell go and recruit in those
areas, we have to be able to demonstrate to them that
the quality of life in Austin is at least comparable or they
won’t come. It’s not just about salary. It’s about what’s
the community like where I’m going to live.
- Vice President, Dell Corp., Austin
Parks and Recreation: An
Indicator Species
 American Heritage Dictionary:
“The presence, absence,
or relative well-being in a
given environment is
indicative of the health of
its ecosystem as a
whole.”
Benefits Related to Economic
Prosperity
 Attracting tourists
 Attracting businesses
 Attracting retirees
Target Market
Growing number of Retired Active
Monied People In Excellent Shape
Target Market
Growing number of Retired Active
Monied People In Excellent Shape
G.R.A.M.P.I.E.S.
Economic Impact
 Annual inflow of 100 retired households
with $40,000 annual income = a new $4
million annual “payroll”
“You are what you were, yesterday.”
GRAMPIES Are an Appealing
Economic Target Market
Because:
 Social Security and Private Retirement incomes are stable –
not subject to the vicissitudes of economic business cycles
 “Positive” taxpayers i.e., generate more tax revenue than the
cost of serving them (e.g., schools, criminal justice)
 Contribute to development of the health care industry
 Volunteer pool – active in churches, service organizations,
and philanthropic organizations
 Stimulate housing and retail, but do not put pressure on local
job markets or social services
Key Requirement
 Amenity rich community especially
recreation: socialization; active lifestyle
Survey: 270 Recently Relocated
GRAMPIES in the Lower Rio
Grande Valley
 Top 3 out of 40 reasons for moving away
from the previous residence were:



Desire to live in a more recreationally
enjoyable area
Desire to get away from cold weather
Desire to live in a place where recreation
opportunities are plentiful
Benefits Related to Economic
Prosperity
 Attracting tourists
 Attracting businesses
 Attracting retirees
 Reducing taxes


Conventional wisdom is that development is
the “highest and best use” of vacant land for
increasing municipal revenues.
Developers claim their projects “pay for
themselves and then some” BUT



Conventional wisdom is that development is
the “highest and best use” of vacant land for
increasing municipal revenues.
Developers claim their projects “pay for
themselves and then some” BUT
If a private company had a business plan that
looked only at revenues and ignored costs, it
would be quickly out of business. Why should
the public tolerate such one-sided accounting
by local governments?


Fiscal impact analyses frequently
demonstrate that the public costs associated
with new residential development exceed the
public revenues that accrue from it.
BECAUSE
The people who reside in developments
require services. IN CONTRAST
Fiscal impact analyses frequently demonstrate
that the public costs associated with new
residential development exceed the public
revenues that accrue from it. BECAUSE
 The people who reside in developments require
services. IN CONTRAST
 Natural parks and open space require few public
services – no roads, no schools, no sewage, no
solid waste disposal, no water, and minimal fire
and police protection.

1.
Allocate total municipal expenditures into
service categories and assign them to
selected land use categories (Residential,
Commercial/Industrial, Farm/Forestry/Open
Space)
1.
2.
Allocate total municipal expenditures into
service categories and assign them to
selected land use categories (Residential,
Commercial/Industrial, Farm/Forestry/Open
Space)
Categorize municipal revenues by sources
and allocate them to the selected land use
categories
1.
2.
3.
Allocate total municipal expenditures into
service categories and assign them to
selected land use categories (Residential,
Commercial/Industrial, Farm/Forestry/Open
Space)
Categorize municipal revenues by sources
and allocate them to the selected land use
categories
Compare revenues to expenditures for each
land use category
$1.40
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.27
$0.00
Commercial
& Industrial
$1.40
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.27
$0.35
$0.00
Commercial
& Industrial
Farm/Forest
Open Space
$1.40
$1.20
$1.16
$1.00
$0.80
$0.60
$0.40
$0.20
$0.27
$0.35
$0.00
Commercial
& Industrial
Farm/Forest
Open Space
Residential
For years residents have been assured by
growth boosters that the solution to a
community’s tax problems is to increase the tax
base. Most accept this and believe that growth
is the basis of prosperity.
Benefits Related to Economic
Prosperity
 Attracting tourists
 Attracting businesses
 Attracting retirees
 Reducing taxes
 Enhancing real estate values


1,300 acres total
150- acres for a golf course
Cost of golf course development = $4 million





1,300 acres total
150- acres for a golf course
Cost of golf course development = $4 million
College Station sub-division lots = $30,000
Pebble Creek averages 3 lots per acre
Golf course replaced 450 lots
450 lots at $30,000 = 13.5 million


1,300 acres total
150- acres for a golf course
Cost of golf course development =
$4 million

College Station sub-division lots = $30,000
Pebble Creek averages 3 lots per acre
Golf course replaced 450 lots
450 lots at $30,000 =
13.5 million

Total cost of the golf course -


$17.5 million

Pebble Creek lots = $40,000 on average
($10,000 more per lot because of golf
course)



Pebble Creek lots = $40,000 on average
($10,000 more per lot because of golf
course)
1,150 remaining acres X 3 lots per acre =
3,450 lots
3,450 x $10,000 premium = $34.5 million

Nash established as the central principle of
his plan: “that the attraction of open Space,
free air and scenery of Nature, with the
means and invitation of exercise on
horseback, on foot and in Carriages, shall be
preserved in Marylebone Park, as allurements
or motives for the wealthy part of the public
to establish themselves.”

At Regent’s Park, Nash brought to the urban
landscape the principles of picturesque
landscapes that had been developed by
Capability Brown in country estates half a
century earlier, and his erstwhile partner
Humphry Repton