Fort Walton Beach Council agenda — 08-20-08 special agenda - budget — reading text

2007 BAE /MTC /MTI /AIC 2007 Ba State Cable Ties 2007 Blackhawk Management Corp 2007 Boeing 2007 Crane Aeros ace /Keltec 2007 DRS Training & Control Systems 2007 Fort Walton Beach Medical Center 2007 Fort Walton Machining 2007 General Dynamics 2007 InD ne, Inc. 2007 J &P Khamken Industries 2007 Jacobs TEAS 2007 L -3 Comm. / Crestview Aerospace 2007 Legendary, Inc. 2007 Lockheed Martin Corp 2007 NEW 2007 North Okaloosa Medical Center 2007 Resort Quest 2007 Sacred Heart 2007 Total Parts Plus 2007 Twin Cities Hosi tal 2007 T brin Corporation 2007 White Wilson Medical Center www.florida -edc.org 1. 800. 995. 7374 6  F, 1 ,? V RSI IN t wcST I -LC> H XIN July 23, 2008 Mr. Larry Sassano, President Economic Development Council of Okaloosa County P. O. Box 4097 Fort Walton Beach, FL 32459 Re: Economic Impact of EDC Partners Dear Larry, I am responding to your email of July 17` to Melissa Neal at the Haas Center. You asked if the Haas Center could take the information that you got from surveying some of your member organizations as to employment and payroll, and use it to make statements about the economic contribution of these organizations to the local economy. You have been able to provide us with payroll data for nine of your member firms. The total payroll associated with these businesses is $209.7 million per year. These businesses listed a total of 4, 261 current employees. They have plans to increase their employment by 248 employees in the near term, for an increase of 5. 8 percent in employment. It is worth noting that the U.S. economy has shed over 400,000 jobs thus far in 2008, and economic forecasts show employment at the national level growing little, if at all, during 2008. The 5. 8 percent projected by EDC member firms represents exceptional growth. The two sectors that are strongly represented among your survey respondents are health care and architectural and engineering services (primarily in defense contracting). These are two of the more important sectors in the Okaloosa County economy. Hospitals alone accounted for 1. 2 percent of total value -added ( the local analogue to GDP) in the Okaloosa economy in 2006, which is the most recent year for which complete estimates of value -added by sector are available. It is important to note that as these value -added figures are updated, this employment share will grow, as providers are making major capital investments and new hires in our economy. Architectural and engineering firms account for 2.3 percent of total value -added in the local economy. These firms, along with others in the defense aviation and aerospace supply chain, are key providers to Eglin AFB, and serve to leverage the more than $ 1 billion annually in Air Force procurement dollars that flow into our local economy. Defense and health care, along with tourism, are the primary drivers of the excellent wage and job creation performance that the Okaloosa economy has enjoyed over the past decade. Okaloosa County in 2006 enjoyed a per capita personal income ( PCPI) that was 102 percent of the State of Florida average. This is a remarkable figure when compared to other Northwest Florida counties; Leon County, Escambia County and Bay County had PCPI' s that were 90, 81, and 87 percent of the Florida average, respectively. Those nine businesses that provided payroll information in their survey response reported that they paid average wages of $49,220 per employee, which is 13. 4 percent higher than the average compensation per employee in Okaloosa County. HAAS CENTER FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT COLLEGE OF BUSINESS 1 1000 !Jniversity Parkway, Pensacola, FL 32514 -5752 850 -474 -2657 FAX 8 5014 74 -31 74 SUNCOM: 680 -2657 www. haas uwf edu An Equal Opportunity /Affirmative Action Institution Economic Development Council of Okaloosa County  Mr. Larry Sassano July 23, 2008 Page 2 In your survey data, relatively more firms ( 17) were able to report total employment numbers. Some 9,493 employees were reported by the responding firms. This represents over 7 percent of total employment in Okaloosa County. Because the survey respondents are a fraction of the organizations that you are actively involved with, it is clearly the case that your membership represents a substantial share of the high -wage and growing businesses in our area. You also asked about the multiplier, or "spin- off," impact of spending in these types of firms. The impact model that we use most often at the Haas Center is IMPLAN, which is one of the most widely used impact modeling softwares in the U.S. IMPLAN tells us that the overall impact of an additional one million dollars in the hospital sector will be $ 1. 36 million in additional local spending, 10. 8 full time equivalent local jobs, and $418 thousand in additional local labor income. For the architectural and engineering firms, the corresponding numbers are: $ 1. 59 million in additional local spending, 13. 5 FTE local jobs, and $719 thousand in additional local labor income. Also of interest is the impact that these businesses have on Okaloosa County revenues. Estimates from the economic impact modeling software suggest that every additional million dollars of spending in the hospital sector generates $ 29,853 in tax revenue to state and local goverment, with about $8,249 of that amount coming in the form of additional property tax revenue. In the architecture and engineering sector relatively more activity is taxable and an additional million dollars in spending in this sector is estimated to generate about $38,866 in additional revenue to state and local government, with about $ 10, 639 of this being attributable to property tax revenue. Please be aware that the numbers presented in this letter are estimates based on average values and further study would be required to generate more detail for particular companies and sectors. In summary, it is clear that many of the firms that participate in the EDC of Okaloosa County are high wage employers and that they are in some ofthe rapidly growing sectors of the local economy. Your membership encompasses a large fraction oftotal employment in the County. Please contact me if I can provide further information on this subject. Sincerely, Rick Harper, Ph. D. Director www.florida -edc. org 1. 800. 995. 7374 8  EDC Budget Standard practice for non -profit economic development organizations is to be funded by membership contributions from the private sector, public sector support and grant awards. Historically the Okaloosa EDC has maintained this budget composition: Private Sector 40% Public Sector 40% State Grants 20% The EDC' s grant funding support is primarily through defense programs awarded by the state to assist communities that house military installations with the intent of assisting both the military and the commu- nity. The military is the primary economic generator for our county and is key to the other successes of our economic structure. County Infrastructure Grants Each year, the DSI compiles and submits applications to the state for their infrastructure grant program. As a continuing service to Okaloosa County, the EDC has sub -managed several of their state defense infrastructure grant awards. The defense infrastructure grant program addresses the infrastructure needs of a military installation on the basis that without such infrastructure enhancements, the installa- tions would be less effective in carrying out their missions and training. This program allows the state to support our defense -related assets and their host communities by investing in important infrastructure improvements. Okaloosa County Defense Infrastructure Grants Grant Awards Managed by the EDC 1999 5, 975, 000 75, 000 2001 500, 000 2003 400, 000 250, 000 2004 540, 000 540, 000 2005 400, 000 2006 225,000 2007 350, 000 350, 000 2008 200,000 200,000 Total 8, 590, 000 1, 415,000 9 OW Economic Development Council of Okaloosa County 9  Business Incentives The Economic Development Council along with Okaloosa County and the State of Florida are committed to providing business incentives that will make it easier for companies to expand and develop within our county. The follow table is a breakdown of those incentives facilitated by the EDC. Business Incentives Awarded throughout Okaloosa County via the EDC 1999 -2007 State Program Okaloosa Grantee Awarded Crestview Aerospace Corp., Aero- Economic Development Trans- space Integration Corp., Manufacturing 10, 100, 144 portation Fund Technology, Inc., Crystal Beach Devel- opment, North American Turbines Tax Refund BAE SYSTEMS 288, 000 Qualified Defense Contractors Bsafe Online, National Electronics Tax Refund Warranty, Crestview Aerospace Corp., 2, 336, 550 Qualified Target Industry Aviation Technology Group, Manufac-