2018 Analysis of Arts and Culture-City of Roanoke

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Economic Analysis of the
Arts and Cultural Industry
in the City of Roanoke
May 2018
The economic impact analysis provided in this report was generated
using an economic impact model (IMPLAN) calibrated for a specific study
area using standard regional data sets. The results are to be interpreted
as a best estimate of economic impact based on the assumptions and /or
data provided by the client.
The Roanoke Valley Alleghany Regional Commission does not
guarantee the accuracy of data or assumptions supplied by the client or
of any other source, nor does it advocate or guarantee the success of any
particular policy change, course of action, or any decision that may be
ultimately based on the information in this report
Looking Over the Valley-Bill White-City of Roanoke Collection
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The Roanoke Valley Alleghany Regional Commission is not responsible
for any errors, omissions, the accuracy of data /inputs supplied by its
client(s), or for the ultimate use of this data including any decisions made
or the effects of any decisions made based on the information in this
report.
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Introduction
In 2010, the Roanoke Valley-ooPZvZP]}vo}uu]]}v}uov^}v}u]/u
}(Zvoo/v]vZoZ]PZP]}v}(s]P]v]_vv^}v}u]/u
of the Arts and Culto/v]vZ]}(Z}v}l_X
In 2013, and again in 2017, the City of Roanoke requested that the staff of the Roanoke Valley t
Alleghany Regional Commission provide updated estimates of the economic contribution of arts
and cultural organizations in the Region.
There is a great deal of the discourse regarding the intangible impacts of arts and culture that is
often generated when translating and measuring economic value. This study only measures
the economic impact in terms of dollars spent by the organizations and through visitor
spending.
Methodology
The study area for this analysis includes arts and cultural organizations funded through the City
}(Z}v}l[}uu]]}vand measures the economic impact on the Roanoke Metropolitan
Statistical Area (MSA) as a whole. It is generally the opinion of most analysts and tourism
professionals that visitors disregard jurisdictional boundaries and cultural attractions have a
regional impact.
Staff of the Roanoke Valley t Alleghany
Regional Commission (RVARC) utilized results
from a survey administered in the Fall of 2017
to collect data on budgets and visitation for
arts and cultural organizations located
primarily within the City of Roanoke. Sixteen
organizations responded to the survey. Data
for one organization was estimated based on
their IRS tax filings. Some missing payroll data
from three organizations was also retrieved
from IRS filings.
Most organizations were able to provide
detailed information in expenditures and
revenues as well as visitation figures.
Staff then used specialized software called IMPLAN which was developed by IMPLAN Group
LLC.
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How does IMPLAN Work?
At the heart of the IMPLAN model is a national input-output dollar flow table called the Social
Accounting Matrix (SAM). Unlike other static input-output models, which just measure the
purchasing relationships between industry and household sectors, SAM also measures the
economic relationships between government, industry, and household sectors.
The model uses actual economic and employment data to model 440 industries to determine
how industry dollars are spent to produce commodities. National level and county level
production data sets are then combined to produce a series of multipliers.
Multipliers measure the amount of total economic activity that results from an industry or
household spending money in the local economy. IMPLAN uses the national and county-level
data multipliers to estimate economic impacts of various activities. Once all input data has been
entered into the model, IMPLAN then generates a series of summary output tables to show the
direct, indirect, and induced economic impacts.
x Direct impacts are those that result from the direct infusion of money in the economy
as a result of an economic event. These impacts consist of permanent jobs, wages, and
output of economic events.
x Indirect impacts are the jobs, wages, and output created by businesses, which provide
goods and services essential to an economic activity (construction, tourism, etc.).
Indirect impacts represent a cumulative total of several cycles of spending that work
their way through the local economic supply chain until all remaining money from the
initial stimulus leaks from the study area economy. For example, a series of restaurants
making purchases of goods from local suppliers as a result of participant spending on
meals would be an example of a portion of indirect impacts as defined in this analysis
x Induced impacts are those impacts that result from household spending by those
impacted by the direct and indirect phases of economic activities. The spending of
wages earned by employees working for industries impacted by economic events
represents the largest portion of induced impacts. This spending creates induced
employment, especially in the service sectors.
The summary output tables also show the direct, indirect, and induced effects of labor income,
value added, and output.
x Labor income equals employee compensation plus proprietor income. Employee
compensation in the IMPLAN model is the total payroll cost of the employees paid by
the employer. This includes wage and salary, all benefits, and employers paid payroll
taxes (social security, unemployment, etc.) Proprietor Income consists of payments
received by self-employed individuals and unincorporated business owners.
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x Value added ](]vZ]((vvv]v[}o}vZ
cost of any intermediate inputs. Value added includes employee compensation, taxes,
and operating surplus. Value added is best understood as the contribution made to
gross domestic product or, more simply, as new wealth in the region.
x Output can generally be understood as regional sales activity. Output is more precisely
defined as the value of industry production.
x Employment is reported by the model as all jobs, including part-time and seasonal
workers. Employment numbers can be changed to full-time equivalency (FTE), but the
ratio varies by industry sector.
What Can IMPLAN Analyses Reveal
An IMPLAN analysis seeks to quantify the economic benefit that expenditures for a project
(construction) or an activity (tourism or events.) have on a local or regional economy. For
example, expenditures spent on the construction of a building or the purchase of items on a
trip such as lodging and gasoline create additional purchases in various sectors of the economy.
Money spent on landscaping for a newly constructed building or the purchase of hotel furniture
both create numerous opportunities for those receiving the money to make additional
consumer and business purchases. This process creates jobs and expands the economy.
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Economic Scope of Arts Organizations
The purpose of this section of the report is to identify economic activity in the arts and cultural
industry and to quantify the degree of impact made to the P]}v[ economy. It should be
noted that the activity represented here is not a complete picture of the total impact of the arts
and cultural organizations in the Region. As previously mentioned, this study only measures
the economic impact in terms of organization and visitor spending. One analysis measures the
relative size of the arts and cultural institutions as a sector of the economy. The second
analysis measures the impact of visitors and tourists to the region. No attempt has been made
to measure intangible benefits the organizations and their impact on visitors and the residents
they serve.
Employment
Employment is one of the most direct methods of quantifying economic contribution. The
following table shows that arts and cultural organizations responding to the survey and funded
by the City of Roanoke Arts Commission employ 108 full-time employees and 86 part-time
employees. Additionally, 231 seasonal workers and 293 contract workers were employed. The
length of employment for the seasonal workers and contract workers was not determined.
Volunteers are shown to make an important and valuable contribution to arts and cultural
organizations. The organizations reported that 2,228 volunteers assisted their organizations in
2016, volunteering 30 hours each on average. Eleven of the sixteen organizations were willing
to provide information on payroll. Payroll was estimated for several organizations using their
990 IRS Tax filings which are public records. The total payroll figure is compatible with the
reported full-time and part-time staff figures according to the IMPLAN model for the region.
Funding
Organizations were asked to report revenues for the 2016 tax year and respondents were asked
to itemize their revenues using a set of categories. RVARC staff used this information to try to
identify the proportion of arts and culture organization funding coming from outside the region.
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It is important to note that money attracted from residents and businesses within the local
region is merely a recirculation of wealth already existing within the region. More positive
economic impacts are made when funds are attracted from outside the immediate region.
See the following table for a breakdown of all revenues by category and a breakdown of
revenues attracted from all sources.
The above table includes all revenue from visitors and local residents. One should also note that only
$261,346 was reported as revenue from State and Federal sources. The total revenue was $21,832,925
while total expenditures reported by the organizations was $17,684,927. Of the ten organizations that
could report local vs. non-local income the ratio of local income to non-local income was about 10:1.
Ideally, revenue should be separated by local vs. non-local sources. Eleven of the sixteen organizations
were able to detail their revenue streams in this manner. Because a majority of the revenues could not
be divided by local and non-local sources (mixed column above), no attempt was made to measure
economic impact by revenue source.
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Tourism and Visitation
The project team knew it was of vital importance to quantify to the degree possible the amount
of tourist visitation generated as a result of the arts and culture offerings in the City of
Roanoke. The following table details the visitation estimates of participating organizations.
Because not all organizations are able to distinguish local residents from tourists, the reported
visitation numbers are considered incomplete. However, one could also assume that each
tourist visits more than one museum or venue, thus the count in the table likely represents a
higher number than actual visitors. Without another measure to use for tourist visitation, and
the fact that the number of 114,122 is similar to past visitation estimates, this number was used
to estimate the visitor impact using an IMPLAN model. In the spending model, it was assumed
that half of these visitors spent two days in the region, while the other half spent one day.
Students were not included in the visitor model because their spending patterns would be
much less than the average tourist.
Finally, a tourist profile was compiled of the arts and cultural tourist to the Region. Data was
obtained from the Virginia Tourism Corporation that represents tourist spending to the region
in 2016. The following table shows average spending by party and per-person spending based
on their survey. The average travel party size reported was 2.9 people.
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Estimates of expenditures by tourists were applied to estimated attendance and visitation data
to arrive at a direct expenditure estimate which was used in the model and parsed among
gasoline retail, lodging, food and beverage, entertainment, and retail industry sectors. The data
was obtained from the Virginia Tourism Corporation and represents spending in the Virginia
Mountains Region, which includes Roanoke. It should be noted that only 22% of visitors are
day visitors to the Mountain Region. Of those that spend the night, 30% spend the night in a
private home with friends or family according to the Virginia Tourism Corporation survey for
2016. Thus, we estimate that 62,310 people were overnight guests. Furthermore, we assumed
that half of those visitors spent two nights.
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Economic Impact of Visitor Spending
The true measure of the economic impact can be estimated if the contribution of outside
spending is known. Attributing this entirely to Arts and Cultural attractions is difficult, because
people often travel to the region for multiple reasons. Fifty-one percent of visitors come to see
friends or family, thirty-six percent visit for outdoor recreation, and thirty five percent visit for
sightseeing and entertainment according to the Virginia Tourism Commission travel profile.
Thus, Arts and Culture destinations are often part of a multi-purpose trip, contributing to the
draw of the region to visitors. While the region has many more visitors, only numbers
estimated for Arts and Cultural visitation were used. The following table shows the estimated
regional impact of the 114,122 visitors to attractions in the region:
It is estimated that these visitors help employ 393 people (full or part-part time) and contribute
over $35.8 million to the regional economy. These visitors support hotel, restaurant, gas
station, grocery, and other service sector employment. These are new dollars that are brought
to the region which are partially supported by the attraction of the arts and cultural sector in
the City of Roanoke. Indirect job creation occurs when industries that support these service
sector industries employ people as a result of the increased business. Induced job creation
occurs as a result of spending by employees supported in the indirect and induced phases of
impact. Indirect and induced impacts are responsible for the creation or retention of an
estimated 116 additional jobs for a total job impact of 393 jobs. The Arts and Cultural
Organizations are an integral part of the appeal that draws these visitors to the region.
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Relative Size of Local Arts and Cultural Sector
The arts and culture industry is part of the existing economy within the region. Total
expenditures were used to create an IMPLAN model to measure the relative size of the existing
sector for 2016.1
The following is a summary table of the model output:
The model estimated that 205 jobs (full or part-time) are directly supported per year. This
number corresponds to the full and part time workers as reported by the organizations
surveyed. The direct effect is the related to spending by the arts and cultural organizations.
The remaining indirect and induced effects are related to the spending of support services,
suppliers, and vendors, as well as spending by all their employees. While some portion of this is
supported by visitors, a bulk of the sector measurement is supported by local residents and
businesses and governments.
This type of analysis measures the relative size of the arts and cultural sector in the region.
Since a large portion of dollars used in this analysis come from local sources, they are
considered a part of the existing economy. For example, local governments and residents could
find other ways to spend their dollars, known as economic substitution, that would have a
similar impact on the economy should the arts and cultural organizations cease to exist.
However, one could easily argue that non-tangible impact would be higher and could not be
replaced.
1
Model software and data provided by the Minnesota IMPLAN Group, 0 1 R.
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Summary
The Arts and Cultural Industry of the City of Roanoke impacts the economy in important ways.
The central core of this industry is the group of nonprofit organizations that serves as a support
and stimulus to the entire industry. By holding culturally relevant and exciting events, these
nonprofits contribute to the economy by attracting financial stimulus to the region introduced
by tourists who spend money for traveler services (food, gas, and lodging). By attracting dollars
from visitors and other outside sources, arts and cultural organizations in the City of Roanoke
have a large impact on the region.
There are undoubtedly other ways that the arts and cultural industry of the City of Roanoke
contributes to economic well-being. These other contributions are much more difficult if not
impossible to track. For instance, arts and culture are oP}(Z[}oolP
of quality of life amenities and other positives that make the region unique. For-profit
companies who have located to this region have been undoubtedly influenced by this overall
package of amenities which include the arts and cultural attractions among other amenities.
The degree to which these amenities have played a role in relation to other traditional factors,
including cost of doing business, differs depending upon the individual company and indeed the
individual decision-maker. Quantifying this type of impact is nearly impossible.
The following are the main points of this report, which seeks to quantify aspects of the
economic contribution of the Arts and Cultural Industry to the regional economy.
– The Arts and Cultural Industry of the City of Roanoke helps generates $35.8 million in
new sales activity in the Region as a result of new dollars attracted through
visitation /tourism. While typically not the sole destination, arts and cultural
organizations play an important role to tourism in the region.
– The size and impact of the local industry sector, based on the expenditures of arts and
cultural organizations in the City, is $40.7 million. These are not considered new funds
to the region, but a measure of the relative size of the industry ]Z]vZP]}v[
existing economy.

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