Year of Publication

2006

College

Martin School of Public Policy and Administration

Executive Summary

When requesting funds, planning activities or soliciting input from the public or elected officials, the Lexington-Fayette Urban County Division of Parks and Recreation needs to be able to document the economic impact of its activities. The challenge is a lack of data to illustrate that impact. Considering this information gap, it would be even more difficult to gain support for a consistent funding source based on the economic impact of Lexington Parks and Recreation programs.

The intention of this capstone is to answer the following questions:

  • Does Lexington Parks and Recreation have an impact on money being brought into Fayette County from the outside of the county?
  • What tool can be used to show the effect that Lexington Parks and Recreation has on the economy of Fayette County?
  • What are the impacts, if any, that Lexington Parks and Recreation has on the economy of Fayette County?

This report provides a projected estimate impact of some of the primary events and services provided by Lexington Parks and Recreation that attract people from outside of Fayette County. The events and services included in this study are: Ballet Under the Stars, Woodland Arts Fair, Keeneland Arts Fair, Rental Facilities, Kentucky Senior Games, Bluegrass 10,000, Family Fun Fish Fest, and the Bluegrass Classic Stockdog Trials.

The economic impacts include the direct expenditures of guests from outside of Fayette County to the events and services on admission fees, food and beverages, lounges and bars, retail shopping, lodging expenses, and transportation.

Impacts also include indirect and induced economic activity.

  • Indirect activity results from subsequent rounds of economic activity reflecting spending by local interindustry purchases and local government revenues. This is done through the increased purchases of goods and services sold or produced in Fayette County as a result of the direct expenditures.
  • Induced economic activity results from the increase in economic activity generated by local consumption due to increases in employee compensation, proprietary income and other property income. This is done through increased expenditures by Fayette County residents receiving income as a result of the direct and indirect expenditures.

Indirect and induced economic activity are typically referred to as “multiplier” effects. Multipliers recognize that when visitors to an event spend money in a community, their initial direct expenditure stimulates economic activity and creates additional business turnover, personal income, employment, and government revenue in the host community.

The economic model used to estimate the multiplier effect in this study is IMPLAN. Using the IMPLAN model the average multiplier was found to be on the order of 1.46 - meaning that each dollar of direct expenditures leads to an additional 46 cents of indirect and induced expenditures in Fayette County.

Using the IMPLAN model, an estimate of direct expenditures by out-of-town visitors to the previously defined Lexington Parks and Recreation events and services was $934,265. Total new spending, the direct spending by visitors and indirect and induced spending is estimated to be $1,374,643, with new jobs estimated to be 23.8, and new annual wages of $469,495.

Additional benefits such as quality of life enhancement and indirect benefits attributable to living near Lexington Parks and Recreation facilities must also be taken into consideration. Many of the services and facilities that are provided by Lexington Parks and Recreation were not taken into account in this study. However, there are numerous services such as Natural Areas, Senior Adult Programs, Community Center, Extended School Programs, the Equestrian Program, Summer Camps, and Athletics which increase the quality of life for Fayette County residents. It must also be taken into consideration that the desirability of living near such a facility instead of near a less attractive use, such as industrial or residential development tends to enhance property values. However, this study does not attempt to estimate any calculations for these additional benefits which are attributable to Lexington Parks and Recreation.

This study will only examine expenditures of visitors from outside of Fayette County to events, due to the fact that an economic impact study should only relate to new money that is injected into an economy from people outside of the local area. It should not be dismissed that locals or those residing within Fayette County do have an effect on the economy of Fayette County. When locals choose to spend money within Fayette County instead of outside of the county, they are increasing induced spending in the area. However, one of the steps that was taken in this study in an attempt to remain as objective as possible was exclusion of local residents, so as not to include revenue that would have already been circulated in the local economy. With this aside, at the conclusion of this report in the appendix, there is a chart included that breaks down the total money generated from youth franchised baseball and softball leagues within Fayette County. These numbers merely take into consideration the fees that leagues and players pay, equipment costs, field upkeep costs, uniforms costs, trophy and banquet costs, and personnel costs. The numbers presented do not factor in any tournament play costs that may or may not be associated with each specific league. From a glance at these numbers, it is clear that local economic activity is a completely separate category of its own and therefore, this study will not attempt to measure the local economic activity that occurs as a result of Lexington Parks and Recreation.

This report along with other data should be collected and used by Lexington Parks and Recreation to document the economic impact of the various programs that they host. This information will be essential in gaining the necessary support needed for a consistent funding source for Lexington Parks and Recreation.

Through this economic impact study and the use of IMPLAN, it is clear that Lexington Parks and Recreation does have an impact on money being brought into Fayette County from the outside. The average multiplier of the events surveyed in this study is 1.46.

The next step for Lexington Parks and Recreation is to attempt to measure the economic impact they have as a whole on the economy of Fayette County. Therefore, attempting to determine the economic impact for all of the events and services that they provide. It could also be useful to conduct a complete quality of life analysis and a cost and benefit study.

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