Orestimba Creek Feasibility Study - Stanislaus County

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Economics Appendix – Draft Report - Orestimba Creek Feasibility Study, Stanislaus County, California – September 2012 Table 1. Regional Output, Labor Income, Gross Regional Product, and Employment for Modesto Statistical Metropolitan Area (SMA), 2008. Section Output (millions) Labor Income (millions) GRP (millions) Employment Accomodations and Food Service $190 $62 $94 3,507 Administrative and Waste Management Services $179 $80 $109 2,682 Agriculture, Forestry, Fishing and Hunting $698 $176 $326 6,260 Arts, Entertainment, and Recreation $49 $14 $21 753 Construction $539 $222 $243 3,686 Education $262 $222 $250 4,491 Finance, Insurance, Real Estate, Rental and Leasing $503 $111 $350 3,523 Government $1,203 $859 $1,077 11,767 Health Care and Social Assistance $594 $335 $385 6,389 Imputed Rents $678 $89 $431 3,901 Information $342 $37 $75 603 Management of Companies and Enterprises $37 $14 $19 233 Manufacturing $1,115 $152 $233 2,698 Mining $243 $56 $147 555 Professional, Scientific, and Technical Services $258 $118 $144 2,421 Retail Trade $574 $240 $390 7,058 Transportation and Warehousing $268 $101 $141 2,476 Utilities $166 $28 $77 201 Wholesale Trade $315 $120 $206 1,639 Total $8,214 $3,036 $4,718 64,844 Note: Data in Table 1 is in millions of dollars except for employment measured per person. Table 2 is based on the average annual regional expenditures that are expected over the remaining construction period from FY 2015 through FY 2017. Over these two years a total of 43,532,000 is anticipated to be spent to complete the construction effort and place the project beneficial status. The average annual construction expenditure is $ 21,766,000 ($43,532,000/ 2 years). 12 However, two cost categories included in the $21,766,000 are not considered in the RED. Interest during construction, normally determined by the long term bond interest rate that the 12 The cost estimate$43,532,000 was provided by the Cost Estimation Section of the Sacramento District, USACE. It is currently undergoing review by the Cost Estimators in Walla Walla District. In an effort to expedite this analysis, the $43,532,000 estimate is used. This estimate is deemed sufficient for purposes of regional economic development analysis. Should the costs from Walla Walla District change significantly (more than 3%) from this estimate the analysis will be redone to reflect those changes. 80
Economics Appendix – Draft Report - Orestimba Creek Feasibility Study, Stanislaus County, California – September 2012 federal government must repay its bond holders, is not considered as a direct regional expenditure. Additionally, the transfer payment for land (the actual price the land) is not considered as having any multiplier effect on the regional economy and therefore subtracted from the total remaining costs of the project. Together these costs total $1,645,000. The annual expenditures for the remaining on-the-ground project costs of $20,943,500 is assumed to be spent over the construction period of 2 years (2015-2017). The average annual expenditure of $20,943,500 is provided below to indicate the number of jobs, income, and output which can be expected within the Modesto MSA, the State of California, and the Nation. Direct expenditures expected for construction of earthen levees are spent primarily in two sectors of the economy, construction labor, accounting for 54% of the project expenditures, equipment which accounts for 35% of the project expenditures. Local capture rates are computed with RECONS to show where the output from expenditures are realized. As shown in Table 2, over 89% of the output from construction labor and equipment are expected to be obtained from the Modesto SMA. Virtually all labor and other materials will be obtained within the State of California. Table 2: Input Assumptions (Spending and LPCs) Category Spending (%) Spending Amount Local LPC (%) State LPC (%) Aggregate Materials 10% $2,052,463 38% 74% 98% Other Materials 1% $251,322 76% 99% 100% Equipment 35% $7,330,225 60% 96% 100% Construction Labor 54% $11,309,490 76% 99% 100% National LPC (%) Total 100% $20,943,500 - - - The project is expected to annually expend $20,943,500 on the construction of the project. Of this total project expenditure 76% of the labor expenditures will be captured within the regional impact area. The rest will leak out to the state or the nation. The expenditures made by the USACE for various services and products are expected to generate additional economic activity in that can be measured in jobs, income, sales and gross regional product as summarized in the following table and includes impacts to the region, the State impact area, and the Nation. Table 3 is the overall economic impacts for this analysis. It should be noted that the number of jobs is significant to the Modesto SMA that is currently faced with high unemployment. The number of jobs gained within the region (325) and within the State of California (530) demonstrates the multiplier effect of this infusion of construction funds for this project. Statewide, the gross regional product ($33,725,999) is 83 percent greater than the gross regional product within the Modesto SMA. 81
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Orestimba Creek Feasibility Study - Stanislaus County

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