By Norm Miller, PhD
I have done a cursory review of the economic impact analysis of the Gin, Murtaza and Allende team just released. (Here's a link to the study.) Overall, most of the assumptions are reasonable and defendable. Reasonable multiplier ratios were assumed in terms of the total number of jobs versus the direct jobs, given the low wages assumed in this study and revealed below.
Perhaps the greatest unknown is whether this convention center facility would compete with and take business away from other hotel conference facilities or the existing convention center, but the authors make it clear that they only considered “additional conventions and meetings”. With a 16.5% hotel tax the total pie might not expand at all, and this remains a speculative assumption.
If anyone did the math on the labor income and number of jobs, you will see that the average per job compensation from the convention center expansion as it is labeled is $22,917 per year when completed and fully operational. This is probably because many of these jobs are part time. If they are full time that is an hourly wage of $11.46 including benefits. The total job impact including football is 4216 direct jobs and 6400 with a multiplier effect. We see the total income assumed for all jobs at just over $176 million implying a per job total compensation of $27,500 or $13.75 per hour if full time work.
If we look at the differential between the convention space and the football space, we can see the net direct employment from football comes in at 1659 jobs and to get to the assumed labor income of $67 million requires an average compensation of $40,386 per job per year excluding player’s salaries. It is not clear how this compensation is derived, but presumably this includes facilities managers and maintenance workers, cleaning, food servers, security guards and so forth.
There are no estimates provided for three items considered fundamental to regional economic impact, property taxes, sales taxes and income taxes generated. In the case of property taxes this may be because none are paid. In the case of income and sales taxes, most such benefits accrue to the state so the study may have ignored those impacts which are less of local interest. Development impact fees were also not calculated or presented.
Below is a table comparing the S. East Village Vision to that of the Charger’s sponsored study. Construction costs are roughly the same in both cases and in the case of a stadium these would be accelerated involving large scale national construction firms while the S. East Village construction would occur over a much longer time period.
Stadium/Convention Center Vision Innovation, Tech
Total Direct Permanent Jobs Created 4216 5591
Total Direct and Indirect Jobs Create 6459 11,000 Est
Average Wages Per Direct Job $27,500 $65,000
Development Fees Est Paid ? $21 to $24 million
Property Taxes Est Per Year ? $14.7 million
Sales Taxes Paid Per Year ? $6 million
State Income Taxes Per Year ? $34.7 million
New Residential Housing Units Provided 0 3100
Affordable Housing Units Potential 0 600
Conclusion: We appreciate the analysis by the Gin, Murtaza and Allende team. They do indirectly reveal the extremely low wage and part time nature reality behind many convention and stadium jobs. They also reveal the low multiplier effects of such low wage jobs. The Quigley team vision is oriented towards the types of jobs San Diego already has in the design, education, drone, robotic, biotech and blue economy sectors that exist here now and might grow if San Diego decides to encourage such growth and provide the right type of environment.
The author is the Ernest Hahn Chair and Professor of Real Estate Finance University of San Diego Burnham-Moores Center for Real Estate