RECREATION AS ECONOMIC DEVELOPMENT IN TAOS, NEW MEXICO

Transcription

1 RECREATION AS ECONOMIC DEVELOPMENT IN TAOS, NEW MEXICO photo from early 1900s, courtesy of Taos Historic Museum Collections EXECUTIVE SUMMARY March 31, 2008 Prepared For Town of Taos Parks & Recreation by Jean Thompson dba Business Transitions

2 As a result of hosting the UUSA [softball] Championships, Salt Lake City County Parks & Recreation contributed an estimated 2,172,625 to the local economy. Contact Desiree Beaudry, Without hockey, I d probably be in jail. But my hunger to play is so big and I have to keep my grades at least at 2.0 GPA to play. My coach got me a tutor, he stands up for me; I owe it back to him. I m a junior; I got a 3.0 GPA now, first time ever. Ryan 2

3 1. ARGUMENTS 1.1 ECONOMIC ENGINE Recreational programs support Taos goals for economic development 1 and are ready to become a powerful and steady economic workhorse for Taos. The engine is started by inviting visitors and their families to play in tournaments and perform in exhibitions in Taos. 1.2 A PLACE TO PLAY The only prerequisite for regional or national tournaments and exhibitions -- besides an invitation and an existing hospitality industry -- is a place to play. Talented individuals will always step up to run special programs. But it takes the whole community to provide safe and attractive facilities, such as playing fields, bike paths, parks and trails, or performance space. The goals of the Taos Vision 2020 Master Plan include developing this infrastructure RETURN ON INVESTMENT Invitational tournaments and exhibitions do more than make communities healthier and stronger. They offer an attractive financial return on investment as well. 3 financial benefits environmental protections local traditions and cultural diversity community well being and quality of life 1.4 JOINING FORCES WITH THE HOSPITALITY INDUSTRY The sports-family is a largely untapped source of tourism and a source of economic diversification for Taos. This family comes to Taos for a specific event and not just because they re taking a vacation. They are taken care of by the hospitality industry which is currently underutilized at under 50% occupancy. Marketing that reaches this target audience will offer piggy-back benefits to other tourist attractions and programs. 1 Taos Vision 2020, Section 3, Page 59, as completed Taos Vision 2020, Section 8, Page 112, as completed Investing in the Future, 2006, page 18 3

4 1.5 SOCIAL SAVINGS The adventure and discipline of sports and other creative activities provide joy, rigor, pride and a reason to live and love. This acts as a connecting web that keeps more kids healthy, fit and in school. It can also repair lives for people who are having a rough go of things. For every life saved from drugs, relationship violence, vandalism and crime, Taos saves money. 1.6 POLICY TOOLS Policy makers can measure the financial and social potentials of individual sports or recreation programs by building financial models and benchmarks using a standardized interview and cost benefit analysis for all recreation programs in Taos. 4

5 2. BUSINESS DEVELOPMENT 2.1 Recreation is a source of economic development and diversification for Taos Team Sports Individual Sports Hi-Altitude Field Rentals Team Sports The typical team tournament stimulates 800,000 in local business. This translates to 40,000 in local tax revenues. Put together all the team sports and all the facilities throughout the community (including the future Eco-Park and the and the existing ball fields and Youth and Family Center) and it would be reasonable to project 27 team tournaments a year, maybe more. This represents more than The annual line up might look like this: 1 million in local tax revenues per year revenue potential for tournaments - current team sports -- one each division Soccer 6 Softball 6 Little league baseball 3 Ice hockey 2 Volleyball 2 Swimming 2 Battle of the bands 2 Field hockey 1 Senior Men's Baseball 1 Special / Senior Olympics 1 Other

6 2.1.2 Individual Sports Bike races and foot races are included in this category but also non-athletic creative events and performances such as car shows, poetry slams, bridge and circus offer enticements to young and old. They also should be added to the business mix when studying the business potentials of recreation. If we take the car show as typical, we can add 25,000 in tax revenues per event. 15 events per year would represent an additional: 375,000 in local tax revenues per year Hi-Altitude Field Rentals Good local sports facilities can be rented to professional sports teams for high altitude practice and are the third business opportunity that Taos can develop. The scenario described in Section 7.5 brings in: 200,000 in local tax revenues per year 6

7 2.2 Recreation supports the hospitality industry that already exists in Taos. The sports-family is a largely untapped source of tourism and a source of economic development and diversification for Taos. The sports family adds diversity to the Taos economy by bringing a completely different type of visitor. They come mostly from the 4 state region and they often reflect the same hard-working values of the teams they compete with here, even if their culture or ethnicity is different. Regional family tourism often bypasses the ups and downs of national tourism and, like all visitors, they need places to sleep, to eat, to play and to shop. Taos has the resources in place. Tournaments and festivals utilize pre-existing hospitality businesses and visitor facilities that are overbuilt for today s conventional tourist traffic. Tourism peaked in the mid 90s but the businesses they spawned are still the best developed economic engine Taos has. We have more reasons to be attractive as a destination when there are structured recreational activities to participate in and friends to make. The City of Reno, NV opened a 47.5 million National Bowling Stadium early in 1995 and in the first six months generated 238 million as a result of this facility. USA Today, 12/8/95, p. 5D 7

8 2.3 A successful business development strategy for recreation needs community facilities and community support 4. Public facilities and programs will always seem like a drain on the wealth of a community until they are seen as an investment instead of an expense. Investments in recreation have the capacity to offer an attractive return on investment, just as other business ventures do. They can and should pass the same due diligence as all potential investments. 2.4 Recreation should be approached as Economic Development. It is possible and desirable to use a business model to evaluate community programs and determine whether the benefits outweigh the costs. A comprehensive cost benefit analysis has to include both tangible and intangible impacts and convert them into the same language. A comprehensive business development strategy for recreation would promote collaboration and amplification by all the exciting and diverse creative programs offered in Taos and encourage spin-offs and expansion into new areas. 4 Taos Vision 2020, Community Policy #5, page 113: The Town of Taos will research, seek, and secure funding to finance expansion, improvements, and new construction of community facilities and programs through grants, lodgers and gross receipts taxes, bond issues, donations from the public, matching funds, and inkind commitments 8

9 Master plans, business models and financial forecasts always miss the mark when the rubber hits the road and implementation begins. But this imperfection does not negate the usefulness of pro-forma financial models. The most common culprit in an inaccurate forecast is the investment needed and the time required for building and marketing. The Master Plan and Financial Model, however, act as a measurement tool that allows policymakers and project supervisors to evaluate and adjust the project quickly and precisely. The models are ready to be updated and the strategies reviewed as often as the details change. 3. Revenue Model The typical tournament in team-sports generates 850,000 in local economic activity, including local circulation or turnovers of revenue. The typical tournament revenue model will be used as a benchmark for measuring the actual results of team tournaments in Taos going forward. There will be a second revenue model for individual sports. Increased business revenues are used to determine the impact on revenues coming into the town and county. Of the total gross receipts tax charged a customer at an in-town business, 2.788% comes directly to the town government and 1.375% comes to the county. 5 The current lodger s tax rate is 5%. 5 Tax rates obtained from Marietta Fambro, Town of Taos. 9

10 Imagine 16 teams (non-local) come to play in a 3 day tournament in Taos; Each team has 15 players who each bring 2.5 family members with them. The tournament will bring an average of 1,000 non-local visitors to town Visitors stay 4 or more hotel days. They are likely to spend 90 per day to sleep, eat, play and shop. Cost per Person Per Day - Moderate Spenders Lodging 30 Food 30 Entertainment 5 Entry Fees/Admissions 5 Concessions 5 Gas & Parking 5 Shopping The typical tournament, then, creates economic activity of: direct visitor spending of 375,000 indirect Ripple Effect / Multiplier 6 of 440,000 in-town visitor spending 815,000 and generates 40,000 in local taxes (gross receipts = 34,000 and 6,000 in lodgers tax) 6 using a multiplier of 1.2 times for indirect benefit from circulation of revenue 10

11 4. COST BENEFIT ANALYSIS The cost-benefit analysis template developed for Taos brings together all the information from a recreational event, including program revenues, increased business revenues in the town and from tax revenues on those sales. It subtracts the costs and shows the net financial profit or loss from the event. Then it adds in the intangible impacts for a final snapshot. All programs and events coordinators who fill out an interview form will have a results page that looks like this. The example below comes from an individual adult sport, the Autumn Run Car Show. TAOS PARKS & RECREATION 27-Feb-08 RECREATION AS ECONOMIC DEVELOPMENT Taos Autumn Run Car Show COST BENEFIT ANALYSIS - Snapshot Tournaments & Exhibitions # per year 1 Annual Cash Impact (Tangible) Tax Revenues Revenues - Other Expenses Replacement Reserve Net Cash Surplus Impact (Deficit) 27,203 Public Sector Taxpayer Results 27, ,650 Private Sector Program Results - 19,650 (10,000) Combined Totals 36,853 Annual Social Benefits (Intangible) (converted to future dollars saved) score Impact on Health & Fitness 40% Impact on Community Well-Being (Vision 2020 goals) 60% Social Savings Less Opportunity Costs Total Intangible Benefits PER YEAR 10,881 16, ,600 (29,075) 104,846 NET ECONOMIC IMPACT (annual) Tangible and Intangible Impacts 141,699 PER YEAR REVENUES GENERATED BY LOCAL BUSINESSES (non-local visitors eat, sleep, play, shop) 558,918 multiplier 2.2 includes local turnovers PER YEAR 11

12 "Coaching is demanding, challenging work but it is incredibly rewarding and keeps me young and fit myself. Last year I was lucky enough to coach a team of year old boys from the Taos Pueblo at the Indigenous Soccer Cup in Albuquerque. We had a guest player from Manitoba join the Taos team and they embraced him and became instant friends. Besides enjoying the game of soccer, there was team building and leadership training and cultural exchange. Incidentally, they won the gold medal but the relationship building is more impressive to me than discovering future soccer stars. Soccer provided the structure for all that to happen and it works for every age group. Imagine coaching some Saturday and watching an 8 year old girl who makes her first goal, cracking up with her team, and she looks forward to the next time and there she is starting to blossom in front your eyes from shyness to confidence, playing, staying healthy and feeling good." Ezra Bayles 3. INTANGIBLE BENFITS How much is an event or program worth to the community of Taos? When money changes hands during an event, this is considered a TANGIBLE IMPACT in business jargon. We know whether an event makes money or loses money once we add up the revenue and subtract what it costs to make it happen. Programs and events can make the community stronger or weaker and this also has a financial impact but it is more indirect. This impact is harder to measure or convert the effect into dollars spent or dollars saved, so it is called an INTANGIBLE IMPACT. A cost benefit analysis has to calculate both tangible and intangible impacts in order to decide how much an event or program is worth. The standard program interview developed in cooperation with the Taos Parks & Rec Advisory Board uses one of many possible logical formulas to measure health, fitness, well being and social savings. There is no right or wrong formula when it comes to measuring the immeasurables. It is a subjective and imperfect exercise. What makes it useful is using the same formula for all programs. 12

13 We are going to recreate or we are going to incarcerate. James Sharp, former president National League of Cities One of Taos highest priorities 7 is to support the welfare of local children and youth. Family recreation and sports is a strong contributor, of course, and inviting teams and their families to Taos from other communities gives everyone a chance to have fun together and build pride in their own cultures and accomplishments. Always leave enough time in your life for something that makes you happy, satisfied, even joyous That has more of an effect on economic well-being than any other single factor. Paul Hawkens 3.1 Socio-Cultural Benefits A sports tournaments or creative festival gives everyone in the family, from the tiny tots to the grannies, a chance to enjoy life-long quality education and recreation and show off. 8 It respects and maintains cultural diversity and builds upon history and traditions. 9 Each person that gets excited about a performance (physical or nonphysical) is learning teamwork, discipline and local pride, all while they are enjoying themselves. It is a perfect format for coaches and families to help youth develop fine moral character. Opportunities for adventure and stimulation make it more fun to stay in Taos or come back after studying far away. Kids that leave home to study and come back to raise their own 7 Investing in the Future, page 22 8 Taos Vision 2020, Goal Seven, page 112, as completed 1999; 9 Taos Vision 2020, Goal Three, page 78, as completed

14 families (reversing the brain-drain) keep the extended family strong and that makes the many cultures in the community more vibrant and resilient. The fondest memories people have of their past tend to involve family outings and vacations. Csikszentmihalyi and Kleiber, 1991 Leisure and Self-Actualization 3.2 Quality of Life Benefits Businesses appreciate communities with a high quality of life and strong family cultures because it is easier to recruit excellent employees who want to stay a long time. Bringing Taos graduates back home, (reversing the brain drain) is also good for the Taos economy. A well-trained and educated work force is attractive to businesses and why import them when there s so many clever, smart and strong folk that started out right here in Taos. The Joint Economic Development Committee of Congress reported that cities quality of life is more important than purely business factors when it comes to attracting new business. Benefits of Recreation Research Update, Parks p. 3,

15 3.3 Environmental Benefits Sports tournaments and festivals are a non-polluting, non-consuming clean industry. Sports facilities provide for a diversity of parks and open spaces for its residents. 10 Sports development protects and enhances visual and natural resources 11 as it preserves and enhances Taos cherished open spaces. 12 Vision 2020, Page 47, Agricultural Lands and Open Space Preservation Taos quality of life is maintained by preserving and enhancing our cherished open spaces and agricultural lands., Vision 2020, Page 112, Community Goal One: The Town of Taos provides a diversity of parks and open places for its residents from large open spaces, parks and recreational areas to smaller pocket parks and open areas, linked by a trail system generally separated from Town streets. Goal Two: A network of multi-use trails is developed as an independent infrastructure system for recreation and as an alternative to existing transportation systems. Three: The Town of Taos provides adequate facilities to all residents for passive and active educational and recreational opportunities. 10 Taos Vision 2020, Goal One, page 112, as completed Taos Vision 2020, Goal One, page 29 and page 87, as completed Taos Vision 2020, Goal Two, page 47, as completed