Forecasting Benefits
and Public Returns for
Brownfield Redevelopment
Overview and Case Studies on
Economic and Fiscal Impact Analysis
United States
Environmental Protection
^1 Agency
Office of Brownfields and Land Revitalization
EPA Publication Number: 560-F-24-004
June 2024
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Have you ever wanted to quantify
the potential or observed impact of
a brownfields project?
Economic impact and fiscal impact analyses are two related techniques
used for regional policy and local redevelopment analysis. They can
be used to estimate the impact of potential and planned brownfields
redevelopment or to evaluate impact after development is complete.
Economic Impact Analysis
¦/ Insights on employment, wages,
and business/industry activities.
¦/ Direct impact from
redevelopment activities, such
as construction, operation, and
maintenance.
¦/ Economy-wide ripple effects,
such as increased local spending
in services, resulting from
redevelopment activity.
Fiscal Impact Analysis
¦/ Evaluate changes in public
sector revenues, which includes
costs and taxes resulting from
business-to-business purchases
and household economic
activities.
¦/ Specific to a jurisdiction's
taxation, revenue structure, and
related administrative costs.
Key user groups of economic and fiscal analysis are:
Municipal Leaders and Staff: Those representing public interests across
all levels of government, such as elected officials, planners, economic
developers, finance directors, and redevelopment agencies.
Community Groups: Those representing the community and those likely
to be affected by redevelopment, such as community members, local
advocates, neighborhood coalitions, activists, site owners, and adjacent
property owners.
Private Interests: Those representing private interests that will benefit
from investment in redevelopment, such as private developers, funders,
and potential businesses and tenants.
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Summary
Communities often struggle with how to estimate economic benefits and fiscal
impacts from planned brownfields redevelopment projects. This short guide can
help communities understand what economic and fiscal impact analyses are and how
to use these analyses to support local decisions regarding brownfields assessment,
cleanup, and reuse. This guide is based on technical assistance provided to several
communities under EPA's Land Revitalization Program.
Economic Impact Analysis
Economic impact analyses evaluate economic factors to provide
overall insights on employment, wages, business/industry activities, and
other economy-wide ripple effects of redevelopment activity.
Analyses consider not only the immediate effect of the redevelopment
of a specific property, but also the impact generated from related
follow-on activity, such as when workers spend their wages locally on
everyday items like groceries, doctor visits, and rent.
Overview pg. 4 Case Study pg. 5
Fiscal Impact Analysis
Fiscal impact analyses evaluate economic activities to calculate
projected changes in public sector revenues, including costs and taxes.
Elements analyzed include business-to-business purchase patterns
and household economic activities that generate different sources tax
revenue.
Analyses integrate the jurisdiction's taxation, revenue structure,
and related costs to evaluate the positive or negative impacts on
government revenues generated by redevelopment.
Overview pg. 8 Case Study pg. 9
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V.
Economic
Impact
Analysis
Assessing
economy-wide
ripple effects
S
o
An economic impact analysis can answer these
questions:
• Which regional industries will benefit the most from
project spending associated with the brownfield
redevelopment?
• How many jobs will be created and in which industries?
• How much economic impact is lost to spending and
imports of material and labor outside of the region?
• How much tax revenue can the local and regional
government expect to receive from project-related
activity?
Regional economic impact modeling is founded on the
principle that industry sectors are interdependent: one
business purchases inputs (such as labor, goods, and
services) from other industries and, in turn, sells their own
outputs. Therefore, economic activity in one sector causes
an increased flow of money throughout the economy,
which translates to increased jobs and wages and overall
spending. Regional economic impacts are generally
reported as the total change in economic indicators
across all economic sectors that result from the
project.
Regional economic modeling is typically conducted by a
professional economics consultant, combining inputs from
the community with publicly available data or proprietary
data, as needed. While regional economic modeling is
generally considered a robust and accepted analysis,
many economic models use complex methodologies,
and incorrect inputs or improper calibration can lead
to inflated results. Thus, these models are best run and
interpreted by professionals.
4
Economic Impact Analysis
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Applying Economic Impact Analysis:
Case Study /
Economic Impact of
Biotech Manufacturing
CASE STUDY OVERVIEW1
The Town is looking to conduct an economic impact
analysis for the planned redevelopment of four
brownfield sites containing paper mills. The Town
intends to convert the former mill buildings into a
mixed-used campus with biotech manufacturing,
residential, and commercial uses.
The paper mills are located in a 700-acre historic
industrial area surrounded by densely developed
residential neighborhood, former mill housing, and
downtown. While the industrial history of the area
included agriculture, lumbering, textiles and paper mill
uses, the economic base has broadened in recent years
to include small-scale manufacturing, research, and
service industries. The Town sees this redevelopment
as an opportunity to bring in much needed economic
activity to the region.
The Town and its development partners want
to understand the type of economic impact a
redevelopment of this scale would bring.
As biotech manufacturing is still a relatively new industry
in the area, the community is eager to understand the
expected long-term job prospects to understand if
workforce training is needed.
Project Statistics:
Location:
Town in Massachusetts,
EPA Region 1
Conducted on behalf of:
City Government
Population:
6,000
1 Case studies have been anonymized to protect ongoing projects still undergoing the redevelopment
process.
Economic Impact Analysis
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ANALYSIS-INPUTS
How many regional jobs are created during the site construction
phase and annually during operation for each use type?
What regional industries will benefit from site construction and
ongoing operation for each use type?
What taxes might be generated regionally and nationally because
of site construction and on-going operation.
The analysis will estimate the region-wide impact of the redevelopment. To answer these
questions, data provided by the Town was analyzed and modeled in combination with other
publicly available data sources, with the support of paid economic models.
Town/developer provides
— Cost Inputs —
I 1
Construction Costs
Employment
Maintenance Costs
Assets Procurement
Land Acquisition
Other Project Costs
Consultant provides
Economic
Modeling
Data Processing
Regional
Allocations
Impact
Multipliers
Local Labor
Characteristics
Economic
Impact
6
Economic Impact Analysis
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IMPACT STUDY BENEFITS
Economic impact analysis is a tool for understanding
the region-wide ripple effects of larger redevelopment
projects. While particular projects may have a large
overall impact, these economic benefits may not
occur locally The analysis provided the Town with an
understanding of where new jobs are being created,
what equipment and supply chains are managed
locally, and consequently, the type and magnitude of
economic impact felt locally and within the region.
Using the economic impact analysis, the Town has
identified related industries that are projected to
grow but may need further workforce development
to support biotech redevelopment of the four paper
mills. Equipped with this information, the Town
has begun collaboration with regional economic
development agencies and private developers on
how the paper mill redevelopment can bolster
overall industry growth in the area.
IMPACT ESTIMATES
• Largest growth in the biotech
sector, with an estimate of over
$5 million in direct economic
impacts and 45 jobs per year.
• Indirect and spillover impacts
in other sectors, such as retail,
create additional jobs.
• Import of specialized biotech
equipment may be captured
through longer term economic
development in biotech
manufacturing if the biotech
sector continues to grow in the
region.
Jobs and H Jobs
Industry | (perYear)
Impacts tjQ
40
30
20
10
1
Retail
Sector
Biotech
Sector
Industry Impacts
Yj (in $ millions)
Other
Sectors
Economic Impact Analysis 7
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Fiscal
Impact
Analysis
Assessing
impacts on tax
revenue
A fiscal impact analysis can answer these questions:
• What is the expected increase in property taxes after
redevelopment?
• How many new households will redevelopment
support?
• What is the increase in sales tax generated from new
residential spending?
• What is the increase in sales tax generated from new
business spending?
• How will new tax revenue be allocated depending on
different taxation structures for redevelopment?
• What is an appropriate level of public investment for a
redevelopment project?
Fiscal impact analysis typically measures the impact on
the community that may be supporting or funding the
redevelopment project, which may include different
entities including counties, municipalities, and other
special purpose districts. It enables decision-makers to
evaluate the appropriate level of public investment and
maximize public rates of social and financial return to
ensure development activities align with local vision and
community priorities.
Because of its nature, iscal impact analysis requires
more on-the-ground research into local tax policy, real
estate markets, and existing business sectors.
Fiscal impact analysis is typically conducted by a
professional economics consultant, combining inputs from
the client with other publicly available and sometimes
proprietary data. Analysis is usually conducted on an
annual, multi-year basis over the project lifetime and
uses financial modeling instead of econometric statistical
modeling. This process lends itself well to transparently
reporting assumptions, calculations, and findings.
8 Fiscal Impact Analysis
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Applying Fiscal Impact Analysis:
Case Study /
Fiscal Impact of
Redevelopment
CASE STUDY OVERVIEW1
A small town in western Colorado is looking to revitalize
its core district. Historically, the district was home to
heavy industrial uses. The current comprehensive
plan and community visioning both advocate for
redevelopment of a few brownfield sites located in
the core of downtown into mixed-use developments
including retail, residential, and entertainment uses.
However, the brownfield sites are not shovel ready and
require investment to further address environmental
pollution, demolish derelict buildings, and upgrade
utilities, among other challenges.
A private developer approached the Town proposing
redevelopment that would meet the Town's vision.
However, because of the investment needed to prepare
the site, the developer proposed that the Town partner
on the project by providing financial incentives.
Without the Town's support, redevelopment would
be cost-prohibitive. On the other hand, the Town is
uncertain what magnitude of financial incentives would
be appropriate to maximize public benefits without
providing disproportionate windfall profits for the
developer from the funding.
The Town is looking to conduct a fiscal impact
analysis to estimate amount of public investment
needed to enable development without exceeding a
market-typical profit rate for the developer.
Project Statistics:
Location:
Town in Western Colorado,
EPA Region 8
Conducted on behalf of:
Town Government
Population:
7,000
1 Case studies have been anonymized to protect ongoing projects still undergoing the redevelopment
process.
Fiscal Impact Analysis
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ANALYSIS-INPUTS
What is the local tax rate applied to each proposed use type?
Are there alternative taxation mechanisms such a Tax Increment
Finance (TIF) or Business Improvement District (BID) that could be
employed?
What sales taxes are expected to be generated from retail activity?
What are other sources of local revenue that could be leveraged?
The analysis aims to identify the amount of investment needed for a public-private
partnership. The analysis combines several sources of data as inputs to assess changes in tax
revenue. Inputs include both numeric and process information, such as taxation rates, taxation
policy, and revenue allocations. Data provided by the Town are then analyzed and modeled in
combination with other publicly available and paid data sources.
o
G
©
O
Town provides
Project Context
Government
Town Budgets
Taxation Rates
I
Policies and
Incentives
I
Development
Size (SF)
Uses
Construction
Costs
Consultant provides
Economic
Assumptions
Operations and
Sales Estimates
Occupancy
Estimates
Market
Conditions
Jobs and
Households
Revenue and
Cost Changes
Fiscal Impact
Estimate
10
Fiscal Impact Analysis
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IMPACT STUDY BENEFITS
Fiscal Impact Analysis is a tool for understanding the
impact of redevelopment in terms of municipal revenues
and costs and thus can be used to determine the level of
public investment that creates financial and social benefits.
Throughout the process of the fiscal impact analysis,
interviews were conducted with local supporters and
stakeholders, such as the town manager, finance director, and
planning director to understand the priorities of the town.
The fiscal impact analysis output provided key estimates
such as tax revenue for town entities, pictured below. These
estimates support the Town's evaluation of the project
and provide a basis for developing incentives, negotiation,
and qualifying public investments. Equipped with this
information, the Town is actively working with the
developer on a solid public and private partnership for
the redevelopment.
IMPACT ESTIMATES
• The development will create
408 housing units and 78 short
term rentals.
• The project will generate $1
million in annual town tax and
$589,000 in annual county tax
through property taxes and
sales taxes, as well as $1 million
in school district taxes.
• Total taxes distributed to each
level of government and
districts will inform the ceiling
of investment to maximize
efficiency of public funds.
Expect Annual Tax Revenues by Source:
Total expected annual tax revenues from project operations
will inform the upper limit of public investments.
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
0
5
Sales Tax
Real Property Tax
Personal Property Tax
Town Tax
Revenue
County Tax
Revenue
Other Tax Sources:
School
District
Tax Revenue
County
Lodging Tax
Fire District
Fiscal Impact Analysis 11
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Additional
Informational
Resources
Economic impact analysis and fiscal impact analysis
are Eligible Planning Activities under an EPA
Brownfield Assessment or Multipurpose Grant. For
more information on related programs, please visit
the resources below.
Land Revitalization I U.S. EPA
Brownfields I U.S. EPA
Eligible Planning Activities I U.S. EPA
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