Economic Impact Study of a Municipal Waterpark in Kentucky
Paradise Cove 2016
Economic Impact Study
Stephen M Sims,
Ed.D.
Graduate Student,
EKU
James N. Maples,
PhD.
Associate
Professor, EKU
Michael J. Bradley, PhD.
Red Dirt LLC
Report
submitted to
City
of Richmond Parks & Recreation
Richmond,
KY
September
17, 2017
Executive Summary of Study
Paradise Cove is located in Madison County, Kentucky.
Paradise Cove attracted 56,699 visitors for 2016
season.
Based on the economic impact estimates, we find:
Participants spent
an estimate of $982,892 within Madison County’s boarders for 2016.
Paradise Cove generated an estimated total
direct effect of $717,806 in Madison County.
Paradise Cove
generated an estimated $516,506 in local taxes and $250,758 federal taxes
Methodological Summary
Purpose
The purpose of this study was to examine
the economic impact Paradise Cove has on the economy within Madison County, KY. This study included examining the overall
economic impact of Paradise Cove by examining the direct impact, indirect
impact, and induced impact.
Data
Collection
Data was collected at Paradise Cove for a
total of five times though out the 2016 waterpark season. The survey included questions examining the
local economic impact across twelve sectors.
During the five visits, the researchers collected a total of 164
completed surveys out of a possible 207.
Analysis
The research team entered the raw data
into Excel to prepare data for analysis.
Mean values were generated for each of the twelve economic categories
based on the number of responses. The
mean values were then multiplied by the number of participants to estimate the
expenditures for each sector. Once
expenditures for each sector were determined the data was entered into IMPLAN
software, an industry-standard economic impact calculation platform, to
generate economic impact estimates and descriptive statistics for the study
area.
Economic
Impact Terminology
Three
important terms associated with an economic impact study include the following:
direct effect, indirect effect, and induced effect. Direct effect would be the initial phase or
activity that affects the economy (begins when money first changes hands from
the consumer to the local business or establishment). The second wave or round
of spending that effects the economy is the indirect effect (e.g. local
businesses turn around and pay their employees or purchase other products or
goods). Lastly, the third wave or round
of spending is the induced effect. The induced
effect is where local employees (labor) spend their wages locally. Overall, this impact creates an economic
effect that trickles-down and impacts the local community or region.
Study
Region
Madison County, KY was the study region
examined for this project. A summary of
the region’s economic indicators are located in Table 1. The region’s Gross Regional Product (GRP) was
greater than $2.9 billion dollars. Over
half of the GRP in this study was a result of employee compensation at approximately
$1.7 billion. The remaining $1.2 billion
dollars of the GRP was comprised of property income, other properties (such as
rentals and various interests), and taxes on production and imports. The region has a total personal income of
approximately $2.9 billion. The 202
industries across the region produced approximately 45,911 jobs. A total of 35,581 households have an average household
income of $81,836.
Table
1: Economic indicator summary of Madison
County, KY, 2016
Indicator | Value |
Gross Regional Product | $2,946,536,402 |
Total Personal Income | $2,911,807,488 |
Total Employment | 45,911 |
Number of Industries | 202 |
Land Area (Square Miles) | 441 |
Population | 87,824 |
Total Households | 35,581 |
Average Household Income | $81,836 |
Table
2 lists the top 10 industries in the study region; as well as, the total number
of jobs associated with each, job income, and economic output for each
sector. Employment and payroll of state
government (education), employment services, employment and payroll of local
government (education), limited-service restaurants (fast food restaurants),
full-service restaurants (dine-in restaurants),
retail-general merchandise stores, real estate, motor vehicle steering,
suspension component, (except spring), and break systems manufacturing, junior colleges, colleges, university, and
professional schools, and employment and payroll of federal government
(non-military) are the region’s top employers.
Table
2: Descriptive statistics for largest employment
sectors in Madison County, Kentucky
Description | Jobs | Job Income | Economic Output |
Employment and payroll | 4,218 | $213,518,265 | $249,424,591 |
Employee services | 3,293 | $68,528,314 | $145,995,392 |
Employment and payroll | 1,771 | $100,143,410 | $117,161,804 |
Limited-service | 1,701 | $26,570,812 | $114,949,326 |
Full-service restaurants | 1,506 | $25,506,827 | $61,074,791 |
Retail- general | 1,338 | $33,267,082 | $86,446,136 |
Real estate | 1,283 | $9,529,801 | $158,427,917 |
Motor vehicle steering, | 1,122 | $84,837,316 | $560,447,815 |
Junior colleges, | 937 | $46,199,906 | $94,055,252 |
Employment and payroll | 924 | $85,506,592 | $117,462,906 |
Economic
Impact Categories
Table
3 lists the economic impact sectors and categories included in this study;
along with participants’ estimated economic expenditures during their visit to
Paradise Cove while in Madison County, KY.
Lodging (499), concessions (503), restaurants (502), gas station (402),
grocery (400), gas (402), entry (494), parking (512), park rental (494), retail
(405), entertainment (496), and services (509) are the twelve economic impact
sectors (and the categories) used. Restaurants
were the largest expenditure amongst participants with an estimated $5.24 spent
per person. Grocery was the second
largest expenditure with an estimated $4.79 per person. Those were followed by gas ($4.45),
concession ($4.27), and entry ($4.23).
Overall, each participant spent an estimated total of $29.47 in Madison
County, Kentucky while visiting Paradise Cove.
Table
3: Economic activity per participant in
Madison County, KY
Sector | Category | Average Sales Per Participant |
Lodging | 499 | $0.55 |
Concessions | 503 | $4.27 |
Restaurant | 502 | $5.24 |
Gas Station | 402 | $1.39 |
Grocery | 400 | $4.79 |
Gas | 402 | $4.45 |
Entry | 494 | $4.23 |
Parking | 512 | $0.11 |
Park Rental | 494 | $0.00 |
Retail | 405 | $2.04 |
Entertainment | 496 | $1.49 |
Services | 509 | $0.91 |
Economic
Impact Modeling
Table
4 shows the economic impact Paradise Cove has on Madison Co., KY. Paradise Cove had an attendance of
approximately 56,699 during the 2016 season.
It is estimated that Paradise Cove contributes a total economic effect
of approximately $1,070,505 to Madison County’s economy because it is located
in Madison County, KY. The estimated
direct economic effect of Paradise Cove $763,819. Also, Paradise Cove contributes an estimated
indirect economic effect of $127,726.
Lastly, there is an estimated induced economic effect of $178,959 to the
local region. Paradise Cove also impacts
the local job market in Madison County by producing an estimated 16 full-time
jobs directly and another 2 jobs either indirectly or induced.
Table
4: Economic impact summary for Madison County, KY
Total Impact | Employment | Labor Income | Value Added | Output |
Direct Effect | 16.74 | $315,113 | $385,889 | $763,819 |
Indirect Effect | 1.23 | $35,499 | $63,888 | $127,726 |
Induced Effect | 1.71 | $51,679 | $97,118 | $178,959 |
Total Effect | 19.68 | $402,290 | $546,895 | $1,070,505 |
Federal, State, and Local Taxes
Table
5 lists the estimated tax impact of Paradise Cove. Taxation is separated into the two following
categories: local/state taxes and federal taxes. These estimates are generated
by examining employee compensation, property compensation, property income, tax
on production and imports, households, and corporations. It is estimated that Paradise Cove impacts
the local and state economy by providing an estimated $110,044 in taxes. It is estimated that at the federal level
Paradise Cove produces as estimated $282,186 in taxes.
Table 5: Taxation for Madison County, KY
Impact Type | Local & State Taxes | Federal Taxes |
Employee Compensation | $1,218 | $41,653 |
Property Income | $0.00 | $2,129 |
Tax on Production & | $70,414 | $8,273 |
Households | $10,608 | $20,943 |
Corporations | $1,075 | $5,195 |
Total | $83,315 | $78,193 |
Once again, it is important to remember these figures
located in this report are solely an estimate of the economic impact Paradise
Cove has on the region of Madison County, Kentucky.
Contact
Information for Future Studies
Our research team regularly conducts economic impact
studies, community resource inventories, customer surveys, customer and
community member need assessments, cultural/historical/natural resource
interpretation studies, and other kinds of community-driven studies throughout
Eastern Kentucky and the surrounding region.
If you or your organization is interested in conducting a study, please
contact Dr. James Maples at james.maples@eku.edu for
further information.
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