HomeMy WebLinkAbout[05a] SCSU Study: Economic Impact of CSB/SJU on the City of St. Joseph11'�"
My OF ST. 306r rF[
MEETING DATE: March 18, 2010
Council Agenda Item Sa
AGENDA ITEM: SCSU Study: Economic Impact of CSB /SJU on the City of St. Joseph
SUBMITTED BY: EDA
PREVIOUS COUNCIL ACTION: None
BACKGROUND INFORMATION: In early 2009, the EDA authorized a study to be completed, under the
direction of St. Cloud State Economic Development Center Director Dr. Mary Edwards, to determine the
economic impact of CSB /SJU on the City of St. Joseph. On January 27, 2010, the EDA reviewed and made
motion to forward the report to the City Council for acceptance.
ATTACHMENTS:
Request for City Council Action
SCSUStudy .............................................................. ............................... 1 -16
Draft EDA Minutes — January 27, 2010 ............... ............................... 17
REQUESTED COUNCIL ACTION: SCSU Study - Requested Action: Authorize acceptance of the SCSU Study
determining the Economic Impact of CSB /SJU on the City of St. Joseph.
The Economic Impact of
the College of St. Benedict
St. john's University
on the City of St. Joseph
and
Collegeville Township
Prepared by
Mary E. Edwards and Yotiaud Vivien Apoutou,
with assistance from Reeta Ale Magar
St. Cloud State University
27 January 2010
5a:1
Table of Contents
Highlights................................................................................................................ ............................... iv
ExecutiveSummary ................................................................................................. ............................... v
Basicgoals of the study ....................................................................................... ............................... v
Data collection and analysis ................................................................................ ............................... v
Economic impact on local businesses ................................................................. ............................... v
Economic impact on local government .............................................................. ............................... vi
Impact of the College and University over and above spending ........................ ............................... vi
Impact of proposal to require most students to live on- campus ....................... ............................... vi
Is an investment of public funds to help conversion necessary ......................... ............................... vi
Introduction.............................................................................................................. ..............................1
The current impact of the College of St. Benedict and St. John's University on the city of St. Joseph
andCollegeville Township .............................................................................................. ..............................1
Data collection and analysis ................................................................................. ..............................1
College - Related Local Business Volume .............................................................. ............................... 2
College and University purchases .................................................................... ............................... 2
Facultyand staff spending ............................................................................... ............................... 2
Studentexpenditures ...................................................................................... ............................... 2
Visitordisbursements ...................................................................................... ............................... 2
Categorizing the expenditure components ..................................................... ............................... 3
Impact on the Local Government ........................................................................ ............................... 4
Effect on the total number of local jobs and personal income ............................ ..............................4
Impact of the College and University over and above spending .......................... ..............................4
Impact of a decision to have 208 more students live on campus ............................ ..............................5
Changes in local business volume and government revenues due to the change in policy ..............5
Is an investment of public funds to help conversion advisable? .......................... ..............................8
Listof References ..................................................................................................... ..............................9
Appendix A: Expenditures by students, faculty and staff ....................................... .............................10
AppendixB: Surveys ................................................................................................ .............................18
7. Please estimate your off - campus MONTHLY expenditures ONLY WITHIN the city of St. Joseph
or Collegeville Township for the following. (Please use your best estimates) ...... .............................18
B. Please estimate your average ANNUAL expenditures ONLY WITHIN the city of St. Joseph or
Collegeville Township for the following. Please use your best estimates ............. .............................19
5a:2
9. Did you have or do you anticipate any visitors this year in the city of St. Joseph or Collegeville
Township? .............................................................................................................. .............................19
10. The following questions pertain to non -local visitors (they live outside the city of St. Joseph
or Collegeville Township) you anticipate throughout the year ............................. .............................19
11. Below are questions pertaining to the overnight visitors you identified above. Please
estimate the dollar amounts that they spent in the city of St. Joseph or Collegeville Township...... 20
12. Below are questions pertaining to the day visitors you identified above. Please estimate the
dollar amounts that they spent in the city of St. Joseph or Collegeville Township ............................ 20
1. Are you ...................................................................................................... ............................... 21
2. On which campus to you primarily work? ................................................. ...............................
21
3. Do you rent or own? .................................................................................. ...............................
21
4. Do you live in the city of St. Joseph or Collegeville Township? ................. ...............................
21
5. What is the zip code? ................................................................................ ...............................
21
6. How many children from your household attend public school in the city of St. Joseph? ......
21
7. How much do you pay monthly for the following to business in the city of St. Joseph or
Collegeville Township? (Please give your best estimate) .................................... ...............................
21
8. Please estimate your MONTHLY expenditures ONLY WITHIN the city of St. Joseph or
Collegeville Township for the following. (Please use your best estimates) ......... ...............................
21
9. Please estimate your average ANNUAL expenditures ONLY WITHIN the city of St. Joseph or
Collegeville Township for the following. Please use your best estimates ........... ...............................
22
10. Did you have or do you anticipate any visitors this year? ....................... ...............................
22
11. The following questions pertain to non -local visitors (they live outside the city of St. Joseph
or Collegeville Township) you anticipate throughout the year ........................... ...............................
23
12. Below are questions pertaining to the overnight visitors you identified above. Please
estimate the dollar amounts that they spent in the city of St. Joseph or Collegeville Township......
23
13. Below are questions pertaining to the day visitors you identified above. Please estimate the
dollar amounts that they spent in the city of St. Joseph or Collegeville Township ............................
23
1. Did you lease an apartment to one or more CSB /SJU students within the last two years? ....24
2. How many housing units do you own in the City of St. Joseph or Collegeville Township? .....24
3. How many of your units located in St. Joseph or Collegeville Township were rented by
students from the College of St. Benedict or St. John's University last year? ..... ...............................
24
4. Is your home office in the city of St. Joseph or Collegeville Township? ...... .............................24
5. Is your leasing office in the city of St. Joseph or Collegeville Township? .. ............................... 24
6. If you answered "yes" to question 1, please indicate your average ANNUAL expenditures only
within the city of St. Joseph or Collegeville Township for the following ............. ............................... 24
Appendix C: Caffrey Isaac Model for Base Analysis ............................................... ............................... 26
Appendix D: Model using FY 2008 enrollments, assuming 208 more students live on- campus .........36
5a:3
IPA
Highlights
• Study completed by SCSU Economic Development Center by Graduate Program Interns with
oversight by Development Center Director, Dr. Mary Edwards.
• The goal of the Study was to determine how the economies of St. Joseph and Collegeville
Township would change in the event the College of St. Benedict and St. John's University
vanished. We adjust the model to estimate the economic impact after a potential change in
residence policy.
• Two economic models were used to assist with the study: the Caffrey- Isaacs Model and an
input- output analysis program (IMPLAN).
• CSB —SJU students, faculty, and staff were surveyed as were student rental property landlords.
The College and the University disclosed information significant financial information.
• The cumulative local business volume generated by CSB -SJU in the St. Joseph and Collegeville zip
codes is $15.6 million annually. Of that student spending accounts for $6.9 million, faculty/staff
spending $2.5 million, the two institutions $1.1 million, and visitors more than $200,000. The
remaining $5.3 million stems from local businesses purchasing local inputs necessary to provide
the products needed by students and the two institutions as well as local spending by their
employees.
Visitor spending only includes spending by visitors to faculty, staff and students. It ignores
spending by the 75,000 known visitors to the Admissions Departments, fine arts programs, and
sporting events.
The economic impact of CSB -SJU on local government totals $3.7 million received by the City of
St. Joseph, Collegeville Township, and the St. Cloud Public School District 742. The revenue
includes real estate property taxes paid the city /township by the institutions, faculty /staff, and
college - related businesses and state aid to Kennedy Community School. At the same time, local
jurisdictions pay $1.4 million to provide public goods and services to support the two
institutions.
• A total of 1,231 jobs would be lost if CSB -SJU were not present.
• Spending is only one aspect of the influence of an institution of higher education on a local
economy. The College of St. Benedict and St. John's University also add to the intellectual vitality
of the area, students volunteer or add to the local labor force, and spouses of faculty and staff
provide needed services and demand higher quality public schools than might otherwise exist.
• The policy to require 208 more students to live on campus would result in an estimated decline
in business volume by $1.3 million. Landlords' revenues would fall by $0.8 million.
Sa:4
u
Executive Summary
The study was commissioned by both the College of St. Benedict /St. John's University and the St.
Joseph Economic Development Authority. Colleges and universities are vital parts of a community's
economy. It is essential to know what type of impact a college or university has on the local economies
to account for various ways that the colleges and universities can interrelate with the locality. What
follows is an analysis of the economic impact of the College of St. Benedict (CSB) and St. John's
University (SJU) on the economy of the city of St. Joseph and Collegeville Township under various
scenarios.
Basic goals of the study
When one does an impact study one needs to compare the current situation with some type of
baseline scenario. Economic Impact studies generally compare the current impact to a baseline scenario
that the entity under study did not exist —yet nothing else is in place to use the land and labor
resources. Essentially, one must imagine that some type of giant laser gun suddenly eliminates both the
College and University, and all students, faculty and staff are immediately "beamed" elsewhere to
"rematerialize" and continue with their work. By measuring the change in economic activity if this
happened, we come to the impact that these campuses have on the community. Lower revenues for
local businesses and governments are the easiest impact of that scenario to measure, but we also
discuss some impacts not related to expenditures later. Second, we estimate the impact of a residency
requirement on the local community under several different scenarios.
Data collection and analysis
In April 2009, we surveyed students, faculty and staff from the College of St. Benedict, St. John's
University, asking for the amounts that they spent off - campus but in zip codes 56321 and 56374, as well
as local landlords. We also obtained the exact amounts sent to entities within the zip codes 56321 and
56374 from the College and University. A total 10.2% of the on- campus students and 5.4% off - campus
students responded. Faculty response rates for CSB and SJU were 29.5% and 25 %, respectively. In
addition, we mailed surveys to 72 landlords and 28% responded. The responses were weighted by
college and location of housing (on or off campus for students and in St. Joseph or Collegeville Twp for
faculty and staff) to reflect the spending habits of the entire population.
Economic impact on local businesses
The cumulative college - related local business volume generated by the College and University is
$15.6 million: $10.7 million from College and University related local expenditures, $1.2 million in local
purchases by local businesses who provide goods and services to the two institutions and students
(indirect impact) and $4 million from spending by faculty, staff and employees of the businesses that
produce goods for the campuses and students (induced effect) (Model B.1). Student spending
dominates the college - related local expenditure (direct effect) at $6.9 million; the College and University
spend a total of $1.1 million, and visitors to faculty, staff and students spend about $0.2 million. The
estimate of visitor spending is extremely conservative because we did not account for expenditures of
visitors to the Admissions Departments of the College or University (3,466). We also left out visitors to
campuses to attend lectures, fine arts programming (55,300) or sporting events (16,138).
5a:5
vi
Economic impact on local government
Concerning the impact on the local government (Model G -1), the college - related revenues received
by the City of St. Joseph, Collegeville Township and Kennedy Community School total $3.7 million. These
revenues come from both property taxes and state aid to Kennedy Community School. At the same
time, the local jurisdictions pay $1.4 million (Model G -2) to provide public goods and services to support
the two institutions.
Impact of the College and University over and above spending
The College of Saint Benedict, founded in 1913, and Saint John's University, founded in 1857, have
grown to be nationally recognized Catholic, liberal arts colleges adding stature and name recognition to
the community. In addition to revenues generated by expenditures, they add to the intellectual vitality
of the community by hosting plays, lectures and sporting events. These events, plus visitors of
prospective students and their families add an additional 75,000 people annually who may not
otherwise come to the City of St. Joseph. Because we have no data on the spending of these visitors, we
entirely eliminated their contributions from the model.
Impact of proposal to require most students to live on- campus
To attempt to isolate the impact of the residential policy change, we will estimate the impact that
change would have had on our scenario if it were implemented in FY2008 -2009. The first scenario
assumes that the campuses already had their proposed 208 new beds in place and that there will be no
additional building of dorms in the near future.
Under this scenario, but with an additional assumption that 208 students moved from off - campus
housing in the City of St. Joseph or Collegeville Township to on- campus housing, total business volume
will decrease by $1.3 million. Landlords' revenues will fall current estimated revenues from student
spending of $2.3 million down to $1.6 million. Thus over half of the decrease in business volume is with
the student rental industry. Given an estimated local business volume of $253 million, a $1.3 million
drop is small enough that it does not impact local government revenues as this model is estimated.
However, student housing generates more revenues than single unit housing. As revenues to this
industry decline, so does the demand for this type of structure, leading to the decline in property values
as well as the property tax base. To the extent that the property is converted to single family housing,
the tax base again declines because it is in a different tax classification. Enrollment fluctuations will be
felt more by remaining firms providing student housing as fewer students would be allowed to live off -
campus if student housing remains empty.
As the tax base declines, students living on campus will not decrease local government expenses.
Campus security will be more involved in specific incidents they do not have the authority to make
arrests, so the same number of police officers is still necessary.
Is an investment of public funds to help conversion necessary
Leave it to economics to give two opposing suggestions to this question. First, one can suggest from
Keynesian economics that increased government revenues will help to create jobs for the community,
and a conversion of student housing to uses other than single - family would support a potentially sagging
tax base. Second, if one compares federal taxes paid by citizens of the State of Minnesota between 2003
5316
VII
and 2005, the last three years listed on the Tax Foundation Website
(http: / /www.taxfoundation.ore /research /show /22685.htmi) suggests that Minnesotans receive about
$0.69 for every dollar paid to the federal government. On the other hand, Alaska receives about $1.84
for every dollar paid to the federal government.
Contrarily, one can argue against using public funds to support local landlords. First, if another rental
firm built a student housing facility in the area that was more appealing to students, one would probably
argue that the market guarantees no long -run rate of return. Fiscal conservatives would be as unwilling
to bail out landlords from changing market conditions in a locality as they would to bail out large
financial institutions. Taking a risk is part and parcel of the free market.
in addition, one can cite the "principle of subsidiarity" in local public finance. This concept asserts
that only the smallest jurisdiction able to finance a public good that lacks spillovers will do so and
internalize all externalities. This principle would suggest that for even a pure public good, if the those
who would benefit from the property conversion live within 25 miles of the City of St. Joseph, such funds
should come from taxpayers who live within 25 miles of the City. The inherent debate about this idea is
whether the conversion of private property to an alternative use is a public good.
5a:7
Introduction
The goal of this study is twofold: First, we estimate the economic Impact of the College of St.
Benedict and St. John's University on the City of St. Joseph and Collegeville Township. Second, we
estimate the change in this impact once the proposal to increase the number of students housed on
campus is realized. Third, we determine whether the economic analysis supports investing public funds
to help conversion of investment property into another use.
When we calculate the economic impact of a college or university, we need to ask ourselves what
the area would be like if that facility suddenly vanished, possibly with a Star Trek type of laser gun.
Nothing is allowed to use the land or other resources that were used by the facility. All faculty, staff and
students are immediately sent to a teleportation device and beamed elsewhere to continue their work
and study.
The current impact of the College of St. Benedict and St. John's University on the city
of St. Joseph and Collegeville Township
Caffrey- Isaacs (1971) developed a template with which one can estimate the impact of a college or
university on a local community. Theirs is the standard template that most institutions of higher
education use to determine the amount of total economic activity generated because of their presence.
We also use an input- output analysis program (IMPLAN) to estimate the total amount of goods and
services that firms will purchase locally to be able to provide their output to support spending directly
caused by the College and University. IMPLAN also allows us to estimate the amount that employees of
these local firms spend in the community.
The Caffrey- Isaacs template consists of three basic models. The first estimates local business volume
generated by the presence of the college or university. The second calculates the fiscal impact of the
university on local government revenues and expenditures. The third model summarizes the impact in
terms of local jobs and personal income attributed to the presence of the college or university.
The models assume a perfectly elastic demand for individual products, so prices of goods and
services, rents and housing do not change. This assumption translates into a conservative estimate of
the total impact, but the alternative would provide a less reliable estimate than the static model we use
here.
Data collection and analysis
In April 2009, we surveyed the students as well as the faculty and staff from the College of St.
Benedict and St. John's University as to the amount that they spent off - campus but in zip codes 56321
and 56374. These surveys were open on Survey Monkey during the last two weeks in April. (See surveys
in Appendix B). We only dropped one student's survey where the respondent claimed to single - handedly
drop $51,344,556 annually into the local economy. Everyone else seemed to take the survey quite
seriously. We also mailed 72 surveys to individual landlords who rented housing within these two zip
codes. The City of St. Joseph provided us with the contact information.
5a:8
In total, 306 students living on- campus and 59 off - campus students responded, out of 2,998 and
1,100, respectively. The response rate was thus 10.2% and 5.4 %. Faculty response rates for CSB and SJU
were 29.5% and 25 %, respectively. In addition, we mailed surveys to 72 landlords and 28% responded.
College - Related Local Business Volume
To estimate the amount of local business volume that depends on the spending related to CSB and
SJU, we add the amount spent by the institutions themselves, by faculty and staff, by students and by
visitors to the college (Model B -1.1 in Appendix Q. To this we add local purchases of intermediate goods
by local businesses among one another to be able to provide these goods (Model B -1.2). Finally, we
estimate the spending the employees of the local firms (Model B -1.3).
College and University purchases
The Business Office at CSB /SJU provided us with the total amount spent between May 2008 -May
2009 within the two zip codes 56321 and 56374. The total spent by both campuses approximated $1.1
million from the two institutions (Model B- 1.1.1). Add to this spending of faculty and staff equal to $2.5
million, students of $6.9 million (Model B- 1.1.2) and visitors to faculty, staff and students of around $0.2
million (Model B- 1.1.4) we calculate that total expenditures related to the College and University
amount to over $10.7 million (Model B -1.1).
Faculty and staff spending
Faculty and staff expenditures that we account for include the amount of rents and other spending
by faculty and staff who live within the two zip codes as well as expenditures by faculty and staff who
commute to work. Faculty and staff spending totals about $2.5 million. Those who rent housing locally
pay an estimated $81,000 per year in rents (Model B- 1.1.2.1). Those who live within the two zip codes
spend about $1.2 million for goods and services other than housing (Model B- 1.1.2.2) and those who
commute spend an additional $1.2 million to businesses within these two zip codes (Model B- 1.1.2.3).
Student eXDenditures
Likewise, student spending (Model B- 1.1.3) is subdivided into three groups: spending by on- campus
students, spending by students living off - campus for housing and for goods and services other than
housing. The amount spent by the 2,979 students who live on- campus totals $3.2 million over the nine -
month school year (Tables A -A3 and A -A4 in Appendix A.) On the other hand, the estimated 553
students who live off campus but within either zip code 56321 or 56374 spend approximately $2.3
million for rental housing (Model 8- 1.1.3.2), and all off - campus students (including those living outside
the immediate area) report that they spend about $1.4 million for other goods and services. Students
attending the College of St. Benedict, and who live off - campus spend an average of $1,353 annually for
non - housing goods and services, while those living on- campus spend $300 per month (Model B- 1.1.3.3
and Table A -A1). Similarly, students who attend SJU and live off - campus spend an average of $2,397 per
year at local businesses; those who live on- campus report spending $1,764 annually (Model B- 1.1.3.3
and Table A -A2).
Visitor disbursements
Model B -1.1.4 offers a conservative estimate of visitor spending around $0.2 million. The model
accounts for spending by visitors to students as well as faculty and staff. The bottoms of Tables A -A1 and
5a:9
A -A2 list the average amount of spending for on- and off - campus students from each college. These
estimates are conservative for three reasons:
First, we have no idea how much the families spend when they scout out campuses with
their prospective students. Some will make an appointment with an admissions office (3,466
in FY 2008 - 2009) — others may just drive up for a weekend without telling anyone.
Second, we have no idea how much people spend in the City of St. Joseph when they visit
the campuses for cultural events. Fine Arts programming drew in 55,300 visitors during FY
2008 -2009. In addition, Athletic events (basketball, hockey, volleyball and football games)
pulled 16,138 visitors. Since we don't know how much these visitors spent while here —or
whether they purchased something in St. Joseph instead of the Waite Park /St. Cloud Area,
we impose an amount of $0 for these two groups as is standard procedure for this type of
analysis.
Third, one question on faculty /staff and student surveys asked the respondent to estimate
the average amount that their visitors spent in the City of St. Joseph or Collegeville
Township. For one thing, this question is a challenging one to answer for anyone who
receives visitors. Secondly, some responded with estimates of daily expenditures. Others
seemed to give annual estimates. We took each amount given as if it was an annual
estimate, thus again providing a conservative estimate of local visitor spending.
Categorizing the expenditure components
The amount that the College, the University, the students and visitors to students and faculty spend
is called the direct effect. This is the amount that comes to everyone's attention first. Firms notice more
sales and the students and visitors congregate in their establishments. However, this is not the entire
impact. Local businesses must buy goods and services to provide the goods and services demanded from
them. This is called the indirect effect. According to IMPLAN (using the 2007 dataset), businesses would
spend about 15C of every dollar to other local enterprises to purchase the inputs needed to provide the
goods and services to the College and University as well as to students and visitors. The indirect portion
of the local business volume totals $1.2 million (Model B -1.2).
Finally, not only do the faculty and staff of the College and University spend money locally, but
employees of the intermediary firms also spend money locally. This is called the induced effect and it is
estimated in Model B -1.3. Since IMPLAN already accounts for employee spending, we subtract spending
by faculty and staff from all other College and University - related spending to estimate the total amount
of spending by non - university or college employees of about $3.8 million.
As mentioned, an economic impact analysis provides the changes that would occur if the facilities
suddenly vanish. In addition to the loss of $15.6 million in business volume, the locality would realize
changes to the amount of developed real property, inventories, and other business assets totaling $25.7
million (Model B -2). The estimate of the amount of real property required to support the increase in
business volume totals about $2.4 million (Model 8 -2.1). Assuming that inventory-to- business volume
and equipment and software -to- business volume ratios in St. Joseph are similar to the U. S. average,
local businesses have invested in an additional $22.5 million in inventories (Model B -2.2) and almost
$0.8 million in equipment and software (Model B -2.3).
5a:10
4
Impact on the Local Government
The G- Series of models calculate the difference in revenues and expenditures to the city as well as
Kennedy Community School if the College of St. Benedict and St. John's University were to disappear. In
spite of these two entities being essentially non - profit institutions, the City of St. Joseph and Collegeville
Township would realize $3.7 million lower revenue (G -1) and about $1.4 million less in costs (G -2).
The revenue decrease would come from $12,000 less from property taxes paid by the College of St.
Benedict, $0.25 million taxes paid by faculty and staff (Model G- 1.1.2), and about $1.3 million less
collected from commercial taxes (Model G- 1.1.4).
Besides property taxes, Kennedy Community School receives a specific amount of state aid per
student. Approximately 80 children of faculty and staff attend Kennedy Community School.' Because of
these students, the in -state aid to local public schools is about $0.6 million higher (Model G -1.4). In
addition, the College and University paid an additional $0.24 million in licenses and permits to the city
(Model G -1.5).
The government operating costs due to the two campuses total $1.4 million. This is estimated by
apportioning the Budget of the City of St. Joseph to the daytime and the resident populations that are in
the locality only because of the College and University (Model G -2.1). Such an apportionment totals
$0.6. The portion of the school's operating cost due to the presence of the 80 students of the faculty
and staff, $0.8 million, is that share of the budget of District 742 (Model G -2.2).
Effect on the total number of local jobs and personal income
The final set of models estimates the number of local jobs and local income attributable to the
existence of the College and University. In addition to the 1,115 employees of these two institutions,
their presence adds an additional 116 jobs within the city (Model 1.1) thus totaling 1,231 positions and
$10.3 million in total personal income dependent on these two campuses.
Impact of the College and University over and above spending
The College of Saint Benedict was founded in 1913, and Saint John's University, founded in 1857.
From their modest beginnings, the College and the University have grown to be nationally recognized
Catholic, liberal arts colleges and ranked as two of the top three Catholic colleges in the nation. The
College of Saint Benedict and Saint John's University have many significant, positive impacts on the
community of St. Joseph. The College of St. Benedict and St. John's University also add to the intellectual
vitality of a locality by hosting concerts, plays, lectures and sporting events. Students volunteer or add to
the local labor force facilitating firms' abilities to expand production during upturns in the economy. In
addition, spouses of faculty and staff also provide needed services and demand higher quality public
schools than might otherwise exist. While we acknowledge these added benefits to a community, it is
nearly impossible to assess these benefits in monetary terms. If we assume that such activities will not
1 One off - campus students claimed to be the mother of 5 children attending local public school, and another
student claimed one child. We are not willing to attribute 53 children (13% of total enrollment in Kennedy
Community School) to children of CSB students. If the survey results are indeed accurate, our omission will not
drastically change the revenue /cost estimates for the public schools attributable to CSB. Nor would it in any
measureable way affect the impact of the residency requirement as student mothers would assuredly live off -
campus.
-53:1
change once the residence policy is in place, they will not affect our estimation of the cost of that policy
on the local economy.
Impact of a decision to have 208 more students live on campus
The differential impact is calculated in Appendix D. To estimate this impact, we make a few more
assumptions. First, while not all students will be living on- campus, the College and University assume
that about 95% of them will. Since the size of the survey sample is too small to partition further, so we
cannot determine the spending differences of those who will be moving to campus from the few who
probably will not, (students with their own families, students living with their parents, etc.) Thus, this
part of the study assumes that all students will live on- campus.
Second, we assume that the student population will not decline in subsequent years. This
assumption flies in the face of many forecasts of enrollments at private universities during recessions.
However, if we were to impose new enrollment predictions, we would needlessly intensify the
estimates of the impact of this policy change.
Third, while this section notes the changes in spending of students and businesses, it does not
address the obvious changes in spending for construction of dormitories by the campuses. It also
ignores the increases in food purchases by the two campuses that will be needed to feed a greater
number of on- campus students. It also ignores the need for the campuses to hire additional staff to
accommodate the larger number of on- campus students. To the extent that the purchases will take
place in the City of St. Joseph, we can multiply the amount spent locally to build new, on- campus
housing by 2.349 to adjust the total amount of economic activity in terms of both indirect and induced
spending in the community that would be needed to support the local construction project. To the
extent that the campuses purchase food and beverages locally, we can multiply the amount that they
spend by 1.98 to estimate the increase in local economic activity necessary to provide for these
purchases. Finally, additional staff will adopt somewhat the spending habits of the current employees.
Changes in local business volume and government revenues due to the change in policy
Table 1, columns 2, 3 and 4 summarize the changes that the localities will experience when the two
campuses impose their residency policy of increasing the number of beds on campus by 208. Currently,
local business volume attributable to the two campuses is $16.6 million. But we predict this figure to
drop by $1.3 million. Landlords' revenues will fall current estimated revenues from student spending of
$2.3 million down to $1.7 million.
Given an estimated local business volume of $253 million, a $1.3 million drop is small enough that it
does not impact local government revenues perceptibly according to this simplistic model. However,
student housing generates more revenues than single unit housing. As revenues to this industry decline,
so does the demand for this type of structure, leading to the decline in property values as well as the
property tax base. To the extent that the property is converted to single family housing, the tax base
again declines because it is in a different tax classification. Enrollment fluctuations will be felt more by
remaining firms providing student housing as fewer students would be allowed to live off - campus if
student housing remains empty.
In addition, the transfer of 208 students from off - campus housing to living on- campus will not
decrease local expenses. While campus security will be more involved in specific incidents, they do not
5a:12
have the authority to make arrests. According to Judy Weyrens (2009), almost all of the cost to the city
due to students comes through the police officers. There would be no perceptible decrease in city
expenses with any number of students moving on- campus from off - campus.
5x'.13
n
CL
w
0
4i
N
a�
L
O
_C
3
_O
CE
O
O
C
O
C
O
m
u
d
c
O
u
N
en
++
O
CL
_O
U
N
E
O
C
Gl
E
O
C
O1
C
N
0
4.
01
N
f0
u
C
a
N
h
f0
u
v
4-
w
L
L
LA
H
h
CL
7
O
OD
w
L
O
T
C
f0
O
C
G1
O
G
c
u
u
v
_O
c
t0
N
L
m
L
a
c
ro
v
Y
L
N
E
00
O
L
C
GJ
7
H
5a-f4
(U
-4.yulm
4�. o c
c
o
G
0
0
0
c
0
N
a u I
E
E
E
N
p
p 0` 00 00
.N-I
U
N
N C cn
iA
V1
N
V:
ai
LL ri
O
CL
v
w
C
O
� m
C
O
C
O
0
0
C
O
Ln
7
E
acv I
E
E
E
E
E
'O
N— I N
Cl)
N
n
m
Lq
m
O
e-1 O Oml co
N C cn
N
e-1
cri
N
4A'
m
3
=
y
ri
Vi
V}
i/}
E
!E
O
a,
6}L
u
u
u
C
O
cu
0
aj O C
>
aaui�mM
c
o
c
0
G
0
G
0
c
0
O
"
M
°G' u I
o E
E
E
E
ate+
>
V
I w
O C co
v
o
n
m
o
p
rm-I
N
m
r4
O
ai
ai
G
LL
N
E
pp
0
u
0 a=
y,
m
c
O
C
O
G
°
G
O
G
O
C
cu
w"
v U I
E
E
E
E
E
.�
a�
W
p I
00
14 G 00
en
^
N
^
m
Ln
�
LJ
N N
1
m
AA
�
O N
O
�j
C H
70
C
m O
C
N O
O
p
G
Lq O
O
rn
Q
(0
N
0
m
O
00
00 co
p ` CL
N
m
c
C
°
m
a
`O v+ u
_°
-
_°
O
°
-'
c v G
E
E
E
E
E
°
ro
v v v o
E m 'O
�`•
O
m
m
u'i
G
E
aw
v o
01
C
L
N
o
c
o
G
O
c
o
c
O
c
o
SEE
-
_
rp
U
E
N
N
•++
_G
Ln
y
O W
v
(U
y
O N
E a
v
Op
c
—
u Ln
E - a
j E v
—
u c 0
o c
0 v a0o
Y
m e
u y
vii
y 0
a� > G
> v
v y
E
r4 0 3
m A=
N G V
m > OD
4 y
0 m E
N o o in
O mu u
r4 —
'O "C
�' Gl
L C
O r0 O.
0 t0 O u 'n
0 f6 >
O to GJ O
♦+
`1
u
Y
u
L
c 7 '~
0 -0 C
O
Q1
d L
OD
L
I-
CL
w
0
4i
N
a�
L
O
_C
3
_O
CE
O
O
C
O
C
O
m
u
d
c
O
u
N
en
++
O
CL
_O
U
N
E
O
C
Gl
E
O
C
O1
C
N
0
4.
01
N
f0
u
C
a
N
h
f0
u
v
4-
w
L
L
LA
H
h
CL
7
O
OD
w
L
O
T
C
f0
O
C
G1
O
G
c
u
u
v
_O
c
t0
N
L
m
L
a
c
ro
v
Y
L
N
E
00
O
L
C
GJ
7
H
5a-f4
Columns 5 through 8 of Table 1 estimate the impact of the projected enrollments from FY 2009
through FY 2013 on the city.Z These scenarios assume that on- campus housing will continue to be filled
and only students in excess of 3,459 per year will rent off - campus. The numbers of study abroad
students are taken as constant as are the proportions from each campus that live outside of the 56321
and 56764 zip codes. Changing these last two assumptions will not significantly change the impact. The
impact on the forecasted changes in enrollments affects not only the private businesses but also the
operating costs of government because fewer students reside locally. When students merely switch to
living on- campus, government costs are not affected.
Based on the landlord survey and estimates from IMPLAN, the local industries that will be affected
indirectly include banks and lending institutions, firms that specialize in maintaining and repairing
residential properties and state and local government.
Is an investment of public funds to help conversion advisable?
The answer to this question depends on the theory under which the EDA wishes to act.
Keynesian theory proposes public funds be used to create jobs. The estimated difference in nonhousing
revenues due to the proposed creation of on- campus housing approximates $66,500. Landlords will
suffer a decrease in revenues of approximately $99,000. While some individual landlords may be
affected more than others, a handful of jobs will be lost.
Often government will step in if the private sector is suffering a negative externality brought on
by the decisions of another. If the College and University were able to limit the choice of their students
to live fill on- campus housing first, but that also doesn't seem to be the case. * * **
Leave it to economics to give two opposing suggestions to this question. First, one can suggest from
Keynesian economics that increased government revenues will help to create jobs for the community,
and a conversion of student housing to uses other than single - family would support a potentially sagging
tax base. Second, if one compares federal taxes paid by citizens of the State of Minnesota between 2003
and 2005, the last three years listed on the Tax Foundation Website
(http: / /www.taxfoundation.ore /research /show /22685.htmi) suggests that Minnesotans receive about
$0.69 for every dollar paid to the federal government. On the other hand, Alaska receives about $1.84
for every dollar paid to the federal government.
Contrarily, one can argue against using public funds to support local landlords. First, if another rental
firm built a student housing facility in the area that was more appealing to students, one would probably
argue that the market guarantees no long -run rate of return. Fiscal conservatives would be as unwilling
to bail out landlords from changing market conditions in a locality as they would to bail out large
financial institutions. Taking a risk is part and parcel of the free market.
However, as a second argument against using public funds to help landlords convert their property
to another use, one can cite the "principle of subsidiarity" in local public finance discussions that asserts
that only the smallest jurisdiction able to finance a public good that lacks spillovers will do so and
internalize all externalities. This principle would suggest that for even a pure public good, if those who
would benefit from the property conversion live within 25 miles of the City of St. Joseph, such funds
2 Details available upon request.
5a s-
N
should come from taxpayers who live within 25 miles of the City. Alaska obviously does not subscribe to
the principle of subsidiarity. This also begs the question as to the degree of publicness.
The inherent debate about this idea is whether the conversion of private property to an alternative
use is a public good. An appeal to the distinction between public, private and club goods does not
support the question either way. Public goods are goods are nonrival and nonexcludable, but club goods
are neither purely nonrival nor purely nonexcludable because they are subject to congestion. The most
efficient purveyor of these goods is not clear from economic theory. In the extreme, all neighbors
benefit from a well- maintained yard, but does that mean that yard is a public good and should be
subsidized with public funds? Some governments do have stringent codes as to what people must do
with their own property, and some fiscal conservatives argue that property owners have few property
rights left since they cannot do what they please with their own land. Thus, a discussion of whether to
use public funds to help private individuals revitalize their property may also include a discussion
reminiscent of that for the bailouts of financial markets: Is it the job of a government to insure firms
against risk, and if so, how much say does a government have in how private assets are used?
List of References
Bureau of Economic Analysis. Wage and salary disbursements and proprietors' income. CA05N series,
http://www.bea.gov/regional/reis/default.cfm?selTable=CA05.
Caffrey, John, and Herbert H. Isaacs. (1971). Estimating the Impact of College or University on the
Local Economy. Washington, D.C.: American Council on Education. ERIC ED 252100
Minnesota Department of Employment and Economic Development. St. Joseph Community Profile.
http: / /www.mevercommercial.com /listing pdfs /245 St.% 20Joseph %20Community %20Profile.p
df.
St. Louis Federal Reserve Bank Series: ISRATIO, Inventory to Sales Ratio: Total Business;
http: / /research.stiouisfed.oriz/fred2 /series /ISRATIO.
U.S. Census Bureau. Population Estimates, 2007. http: / /www. census .gov /popest /estbygeo.html.
U.S. Department of Commerce. Section 15. Business Enterprise. Table 753. Information and
Communications Technology (ICT) Equipment and Computer Software Expenditures: 2005 and
2006. Statistical Abstract of the U.S. 2009. 128th ed. p. 502,
http://www.census.gov/prod/`2008pubs/09statab/business.pd
Judy. Telephone interview. 20 July, 2009.
Sa:16
Extract of EDA Minutes — January 27, 2010
SCSU Study
Chairperson Wick introduced the agenda topic. Strack noted Dr. Edwards had finalized the study earlier
in the day. Copies of the study narrative were emailed earlier in the day and distributed at the meeting.
The revised study addressed the economic impact of the college /university on the City of St. Joseph and
the impact of 208 students moving back to campus.
Strack also distributed a copy of an email received from a resident regarding existing vacancies at
CSB /SJU at this time. EDA Members reviewed the email.
Motion Skahen, Second Heinen to forward the SCSU Study to the City Council. Motion carried 3:1 with
Rassier voting nay and Jacobson abstaining.
5a:17