A study required in order for Indiana to finance its portion of the Ohio River Bridges Project was released Monday and offered that the economic impact will include nearly 18,000 jobs annually, result in $27.3 billion in personal income and $78 billion in economic output for the region.
The study was conducted by the Boston-based Economic Development Research Group in about seven weeks.
Jim McGoff, general counsel for the Indiana Finance Authority, said during a public hearing that an economic impact and preliminary feasibility study are required by Indiana statute in order to enter into a public-private agreement, which the state identified as its preferred financing structure for the project.
Although the state is only responsible for financing the $1.3 billion east-end portion of the bridges project, the study included a regional impact of the five counties — Clark and Floyd in Indiana, as well as Bullitt County, Jefferson County and Oldham County in Kentucky — modeled in the environmental documentation.
The economic impact focus, however, was limited to Clark and Floyd counties.
The study
The economic impact study was required to analyze specific criteria: Economic impacts on existing commercial and industrial development; potential impacts on employment; potential for future development near the project area, including consideration of locations for interchanges that will maximize opportunities for development; fiscal impacts on revenues to local units of government and demands on government services, such as public safety, public works, education, zoning and building, and local airports.
The study, which would normally take about eight weeks, was initially requested to be returned in four to six weeks. However, the results were delayed to allow Economic Development Research Group more time and the study was returned in about seven weeks.
Indiana Department of Transportation Spokesman Will Wingfield said in an email, the additional time was provided to enable the research to be more complete.
“The project has been studied extensively for years, and Indiana believes the Economic Impact Study reinforces what has been previously known about the project,” Wingfield said.
Economic Development Research group began the survey in February, interviewing 29 “key individuals” and an online business survey provided input from 81 respondents. The findings were based on the results of the regional travel demand model in combination with the findings of site visits to the two Indiana counties.
In addition, there was a Feb. 29 public meeting seeking public comment and a survey notice was sent to more than 2,000 members of the business community, Wingfield said.
Despite a paltry turnout, which included only three speakers at the public meeting, Wingfield said the overall study went beyond what was required.
“We believe a good sampling was used and have been informed that the number surveyed was more than needed for the scope of this study.” he said.
The results
Overall, from 2012 to 2042, the project is expected to generate an average of 17,796 jobs per year, and a cumulative total of $27.3 billion in personal income and $78 billion in economic output in the regional economy, according to the report.
The key factors that will impact the region are construction, market access, transportation efficiency, tolls and land use, according to the report.
Construction impacts are limited to the time in which the bridges are being built, up through 2019. The anticipated completion date for the bridges project, however is 2018.
Market access includes improved accessibility of the region to nearby markets like, Indianapolis, Frankfort, Ky., and Columbus and Cincinnati, Ohio.
“Easier access to the interstate system enhances access to the surrounding trade centers,” according to the report.
In addition, the project is expected to directly result in an estimated 9,342 Indiana jobs over a 30-year period.
“These jobs are the ‘direct’ jobs that are expected to be attracted to the Indiana portion of the study area over a 30-year period,” according to the report. “As a result of these 9,342 ‘direct’ jobs, by 2030 an additional 10,548 jobs will result from the increase in population and the increased consumption of local goods and services associated with the establishments and people that these 9,342 ‘direct’ jobs bring to the region.”
Various industry representatives said even with tolling, the benefits the bridges will provide will outweigh the additional costs of doing business. The businesses most concerned about negative impacts of tolls are retailers and restaurants.
The impact of tolls and taxes
Tolling has been a long-standing contention for the Ohio River Bridges Project.
“The analysis assumes that without tolling, the project — and its associated positive impacts — will not occur,” according to the report.
Tolls are expected to negatively impact employment by 1,578 jobs over the 30-year time period, negatively affect personal income by $2.2 billion over the 30-year time frame and negatively affect business output by $5.58 billion over the same period.
However, the report claimed the negative impact of tolling was outweighed by the benefits completing the project will provide.
“The adverse impact of tolling can be seen as the ‘price paid’ for the positive impacts of the project,” according to the report.
In the same categories, over the same period, the study showed the aforementioned positive employment, personal income and business output figures.
In addition, project operation and maintenance, and economic activity occurring as a result of improved market access is expected to generate about $1.3 million per year in local tax revenues, according to the report.
Taxes from businesses are expected to total about $10.7 million, an additional $911,800 in residential property taxes from new population and generate nearly $2.5 million in other tax revenues due to increased business activity, and $99,000 from new residents.
With the growth, expenses for local governments are expected to increase by $11.6 million for business activity and nearly $970,000 to serve new population, but the net impact is expected to total an additional $2.9 million to county and sub-county budget units, according to the report.
Local business impact
Co-owners of Rocky’s Sub Pub and Buckhead Mountain Grill, Mike Kapfhammer and Wes Johnson, have been outspoken opponents of tolling the downtown portion of the bridges project.
They previously said the project will be “devastating” to the community. Their concerns were especially focused on the area near their businesses in downtown Jeffersonville, along Riverside Drive.
The respondents in the study agreed that downtown Jeffersonville will feel the greatest impact.
“Through both in-person interviews and the business survey, several businesses in downtown Jeffersonville expressed concern that the project will have negative impacts on their businesses,” according to the report. “Of the nine survey respondents that provided comments that the project would negatively impact their businesses, five were located in Jeffersonville. It is possible that some more marginal businesses in downtown Jeffersonville may lose enough sales in the short term, as a result of the tolls, to cause them to close. Many of the businesses may suffer a short-term loss in sales, but will recover over time. Negative impacts can be reduced through good signage and a marketing campaign that reminds people that these areas are accessible from the Sherman Minton and Clark Bridges.”
Not only is there concern that businesses will be impacted during the construction of a new downtown bridge and the Indiana approach, but changes in the approaches to the bridge have caused concerns for some.
“This will have the greatest effect on pass-through traffic that might visit the area, but who miss the exit and choose to forego the trip,” according to the report. “Residents likely will adjust to the change over time.”
The more prevalent concern is the loss of business as a result of tolling on the I-65 corridor, a concern that the study admits is genuine.
“An adverse impact from tolling could occur in the first several months after the bridges are built, as some patrons from Kentucky avoid the bridges because of the tolls,” according to the report. “This impact likely will dissipate over time for several reasons.”
Among the reasons listed were that the Clark Memorial Bridge will remain free of tolls, many patrons of the waterfront restaurants in Jeffersonville are attracted because of the views and will continue to go and people will get used to the tolls.
In addition, the study explained the impact to hotels will be mitigated because most visitors will not be aware of the toll when they reserve a hotel, so tolls will not factor into the decision of where to stay.
Another portion of businesses that may be impacted is retail stores in Clarksville.
In 2010, the area — cited at I-65 exit 5 — brought in an estimated $316 million in retail sales, or 3.4 percent of the total sales in the five-county project region, and $73 million, or 3.4 percent, in restaurant sales.
“There may be some loss of retail sales in this area as retail competition locates in eastern Clark County along [Ind.] 62, 3 and 403 in response to project-induced new population and employment growth in Clark County, as well as improved access to the eastern suburbs of Louisville,” according to the report.
The area that stands to benefit from the project the most is along Indiana’s east-end corridor.
River Ridge
River Ridge Executive Director Jerry Acy said the former Indiana Army Ammunition Plant is poised for tremendous growth with the development of the new bridges.
“It has been an impediment to us; we have missed a lot of projects over the years because of transportation issues,” he said. “This option with the east-end ... allows us a lot more visibility and I think some certainty to a company that if one bridge is blocked they can go to the other bridge to get across.”
A major piece in the development of the site fell into play when Amazon.com Inc. announced its plans to build a 1 million square foot distribution center in River Ridge. According to the report, the new bridge figured prominently in the business’ decision to locate at the site.
The River Ridge Commerce Center’s location is among the biggest draws to the site as it is located near the Port of Indiana-Jeffersonville, near the Clark Regional and Louisville International Airports and with the construction of the east-end bridge, will have additional highway access.
“On a regional basis the reality is there are no huge tracts of land available in close proximity to downtown Louisville,” Acy said. “It’s just a given that we get a lot more looks from a lot more [businesses].”
He said the commerce center has been in discussions with industries interested in locating at the site including, food production, fabricated metals, machinery manufacturing, automotive suppliers and delivery and warehouse-based businesses.
The River Ridge Development Authority believes that the Ohio River Bridges Project will lead to the development of an additional 2 million square feet of new space per year, according to the report.
Speculation about growth at River Ridge and the planned bridge has already had an impact nearby communities, especially Charlestown, according to the report.
Floyd County
It is anticipated that a tremendous impact will be felt in Clark County — where both bridges will be built — but that the impact on Floyd County will be minimal.
“Most existing businesses use the Sherman Minton Bridge to go to Kentucky, and will use the new planned bridges on a limited basis,” according to the report. “Tolling will have a limited impact on existing businesses.”
The study suggested that some residential growth may occur in Floyd County as a result of the bridges project and that in New Albany some new businesses will be a result of the population increase.
In addition, “downtown businesses likely will benefit from the project as some traffic is diverted to the Sherman Minton Bridge to avoid tolls,” according to the report. “This will funnel new traffic into the downtown area, creating more awareness of the opportunities for shopping and eating in the area. Downtown New Albany should benefit from the additional traffic that uses the Sherman Minton Bridge. This will help with the continued redevelopment of the downtown, potentially supporting additional shops and restaurants.”
Along with the expectation of some minimal growth the report anticipated that businesses along Charlestown Road and Grant Line Road may see losses if business shifts east.
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