HATCHER PASS SKI RESORT PHASE 1 ECONOMIC SIGNIFICANCE

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1 HATCHER PASS SKI RESORT PHASE 1 ECONOMIC SIGNIFICANCE by Scott Goldsmith Professor of Economics Institute of Social and Economic Research University of Alaska Anchorage 3211 Providence Drive Anchorage Alaska prepared for Hatcher Pass Development Company, Inc. April 30, 1998

2 Hatcher Pass Ski Resort Phase 1 Economic Significance HATCHER PASS RESORT PHASE I ECONOMIC SIGNIFICANCE EXECUTIVE SUMMARY This report describes four separate components of economic significance likely to result from the initial development phase of the Hatcher Pass Ski Resort. The analysis is based on estimates of construction cost, operating revenues and visitors provided to ISER by Hatcher Pass Development Corporation. Phase 1 Resort Construction Total construction expenditure, exclusive of utility costs is estimated to be $13,124,180. The bulk of construction activity is estimated to occur during the summer and fall of 1999 with an anticipated opening that winter season. About $2.863 million will be spent outside Alaska to purchase specialized equipment not locally available. The remaining $ million will be spent within the Matanuska-Susitna Borough on construction, transporting equipment and supplies, wholesaling, and business services. The number of jobs during the peak of construction are estimated to be 120 with a payroll of $ million. Procurement of goods and services will also create off site jobs. Expenditures generated by the procurement of goods and services and construction payroll will also create off site jobs. About half of these jobs will be concentrated in business and retail services with the remainder scattered across other service sectors. The 56 estimated year round offsite jobs will result in an additional payroll of $1.424 million. Phase 1 Infrastructure Construction The initial phase will include upgrading the Hatcher Pass Road, extension of electric power, communications, and natural gas, as well as construction of on-site water and sewage disposal systems. The total cost is estimated to be $6.5 million. Funds for upgrading Hatcher Pass Road have been allocated in the amount of $4 million. The remaining infrastructure expenditures are estimated to be $ million. Of the $2.478 million for infrastructure, $ million is estimated in payroll. An estimated 28 jobs in construction and utilities would be created during the construction peak. These projects will also result in offsite business services, retail trade, and other service sectors employment. An estimated 13 year round jobs with a payroll of $.324 million would be created off site. (hatcherpass. wpd) April 30, 1998

3 Hatcher Pass Ski Resort Phase 1 Economic Significance Phase 1 Operation 104,369 visitors are anticipated during the initial year of operation increasing to 146,256 by the sixth year. If the number of visitors increases as anticipated, both onsite and offsite spending will grow and the economic significance will increase. Initial year revenues are estimated to be $4,009,179 and operating expenditures for the first year of operation are estimated to be $3,042,915. The initial year of operation will result in the following economic activity: Seasonal Employment Goods And Employees Man-years Payroll Services Onsite Spending $1.241 million $1.802 million Additional Offsite Payroll $1.000 million Additional Non-Resident Spending in the Borough 19 $.373 million The total economic significance during the initial year of operations includes consumer spending of $4.009 million at the resort and $.947 million offsite. A total of 126 man-years of employment for the Matanuska Borough is generated. The total onsite and offsite payroll is $2.615 million. Phase 1 Fiscal Effect - Tax Revenues Property Taxes Sales Taxes Bed Tax The annual operating cost of the resort includes a $100,000 property tax payment to the Matanuska-Susitna Borough. Sales taxes are levied by the cities of Wasilla and Palmer at the rates of 2 and 3 percent respectively. The total sales tax revenues to these communities from off site spending is estimated to be $23. 7 thousand. The Borough imposes a bed tax at the rate of 5 percent. Bed tax revenues from non-resident spending is estimated to be $14.8 thousand. (hatcherpass. wpd) April 30, 1998

4 Hatcher Pass Ski Resort Phase 1 Economic Significance HATCHER PASS SKI RESORT PHASE 1 ECONOMIC SIGNIFICANCE INTRODUCTION ECONOMIC SIGNIFICANCE OF PHASE 1 CONSTRUCTION a. Resort Construction b. Infrastructure Construction c. Total Construction ECONOMIC SIGNIFICANCE OF PHASE 1 OPERATION... 3 APPENDICES 3.a. Onsite Spending b. Offsite Non-Resident Spending c. Total Spending d. Seasonal Employment Effect e. Fiscal Effect -- Tax Revenues RESORT CONSTRUCTION INFRASTRUCTURE OPERATIONS EXPENDITURES OFFSITE NON-RESIDENT VISITOR EXPENDITURES METHODOLOGY (hatcherpass. wpd) April 30, 1998

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7 Hatcher Pass Ski Resort Phase 1 Economic Significance HATCHER PASS SKI RESORT PHASE 1 ECONOMIC SIGNIFICANCE 1. INTRODUCTION The Hatcher Pass Development Corporation has proposed development of Hatcher Pass Ski Resort at approximately mile 11 of the Hatcher Pass road in the Matanuska Susitna Borough. The initial phase of the project would target the South Central Alaska market. Phase 1 development would include a day lodge at the base, two detachable quad chairlifts, a beginner lift, a tubing lift, maintenance facilities, a snow making system, and a lighting for night skiing. The facility is scheduled to begin operations in the fall of The forecasted number of visitors in the first year of operation is 104,368. Subsequent development of Phase 2 would take place on the south facing slopes of Government, Peak. Concepts under consideration include an alpine village, hotel site, combined golf course/nordic training center, expanded alpine opportunities, and recreational home sites. Hatcher Pass Development Corporation (HPDC) asked the Institute of Social and Economic Research (ISER) to calculate the economic significance of Phase 1 resort development on the economy of the Matanuska Borough. The analysis is based on estimates of construction cost, operating revenues, and visitors provided to ISER by HPDC. Four separate components of economic significance are estimated in the following sections of the report--resort construction, utilities construction, resort operations, and non-resident off site spending. Detailed supporting tables and methodology description are contained in the report appendix. 2. ECONOMIC SIGNIFICANCE OF PHASE 1 CONSTRUCTION 2.a. Resort Construction Phase 1 of the Hatcher Pass Ski Resort includes a day lodge at the base, two detachable quad chairlifts, a surface beginner lift, a night lighting system, a snow making system, and maintenance facilities. Total construction expenditures is estimated to be $13,124,180 which also includes construction of the trails and parking facilities. This figure excludes the cost of utilities which is considered in the next section. The bulk of construction activity is scheduled to occur during the summer and fall of 1999 with an anticipated opening for that winter season. C:\TEXT\REPORT\hatcherpass. wpd April 30, 1998 Page 1

8 Hatcher Pass Ski Resort Phase 1 Economic Significance We estimate that about $2.863 million of the construction budget will be spent outside of Alaska for the purchase of chairlifts, lighting equipment, snow making equipment, and specialized service equipment that is not available within Alaska. The remaining construction budget of $ million will be spent primarily within the Matanuska-Susitna Borough on construction, transportation of equipment and supplies to the construction site, wholesaling, and business services. Much of the equipment purchased through Alaska wholesalers will originate outside the state and consequently have little effect on the Alaska economy. Site preparation, building construction, and installation of equipment will have the largest economic effect as measured by direct employment and payroll generated by Phase 1 construction. 68 man-years of employment and $2.750 million in payroll will be directly associated with Phase 1 construction. About 3/4 of the jobs and 4/5 of the payroll will be in construction with the remainder in business services, transportation, and wholesaling. Since most of the construction will occur during a 4 to 6 month period during the summer of 1999, the number of jobs at the peak of construction during that period could be about 120. Expenditures generated by procurement of goods and services during construction and expenditures generated by the construction payroll will create offsite jobs. Although we anticipate the construction jobs will be filled by Alaska residents we cannot estimate what portion will be residents of the Matanuska Susitna Borough and what portion will come from Anchorage. The distribution will depend upon the construction demand for labor in the summer of About half of these offsite jobs (indirect and induced employment) will be concentrated in business services and retail trade with the remainder scattered across other service sectors, and to a lesser extent, other industries. The total of these other jobs represents 56 man years of employment, and an additional payroll of $1.424 million. These offsite jobs are likely to be year round rather than seasonal since they are supported by the construction payroll that will be spent over the course of the year rather than entirely when earned during the summer months. The total economic significance of the construction of Phase 1, including the multiplier effect which generates the offsite jobs and payroll, is 125 man years of employment and a payroll of $4.175 million. The actual number of people employed during the summer of 1999 would be somewhat greater because of the short construction schedule. 2.b. Infrastructure Construction Phase 1 construction will also require upgrading the Hatcher Pass road, extension of power, communications, and natural gas, and construction of on-site water and sewage disposal systems. The total cost for infrastructure development is estimated to be approximately $6.5 million. Since funds have already been allocated to upgrade the Hatcher Pass road at a cost of about $4 million, the remaining infrastructure expenditures are estimated to be $2.478 million. We estimate that expenditure of $2.478 million on infrastructure development for Phase 1 of the Hatcher Pass Ski Resort would directly result in 14 man-years of employment and $.630 million in payroll. These jobs will be concentrated in construction and utilities. Since most of the C:\TEXT\REPORT\hatcherpass.wpd April 30, 1998 Pagel

9 Hatcher Pass Ski Resort Phase 1 Economic Significance construction will occur during the summer of 1999, the number of jobs at the peak of construction during that period could approach 28. Expenditures generated by procurement of goods and services during construction and expenditures generated by the construction payroll will create offsite jobs. Although we anticipate the construction jobs will be filled by Alaska residents we cannot estimate what portion will be residents of the Matanuska Susitna Borough and what portion will come from Anchorage. The distribution will depend upon the construction demand for labor in the summer of About half of these off site jobs (indirect and induced employment) will be concentrated in business services and retail trade with the remainder scattered across other service sectors, and to a lesser extent, other industries. The total of these other jobs represents 13 man years of employment, and an additional payroll of $.334 million. These offsite jobs are likely to be year round rather than seasonal. This is because the construction payroll supporting them will be spent throughout the year rather than entirely during the summer months. The total economic significance of the construction of infrastructure for Phase 1, including the multiplier effect which generates the offsite jobs and payroll, is 27 man years of employment and a payroll of $.964 million. The actual number of people employed during the summer of 1999 would be somewhat greater because of the short construction schedule. 2.c. Total Construction Table 1. summarizes the economic significance of total Phase 1 construction spending of $ million on resort facilities and $2.478 million on infrastructure. Construction generates a total of 82 man-years of employment on site and an additional 69 man-years of employment offsite through the economic multiplier. A total of 152 man-years of employment is generated by construction. The total payroll, both onsite and offsite, is $5.139 million. 3. ECONOMIC SIGNIFICANCE OF PHASE 1 OPERATION 104,369 visitors are anticipated during the initial year of operation and $4,009,179 in revenues. These revenues include lift tickets, lessons, food and beverages, ski equipment, rentals, and miscellaneous expenditures. The number of visitors is expected to increase in the Base Case projection to 148,256 in the sixth year of operation All visitors are assumed to be residents of South Central Alaska. We estimate the economic significance of Phase 1 operations based on the number of visitors and the operating budget for the first year of operation in This budget is estimated to be $2,898,014 plus a 5% contingency for a total of $3,042,915. If the number of visitors increases as anticipated onsite resort spending and offsite spending will grow and the economic significance will increase. C:\ TEXT\REPORT\hatcherpass. wpd April 30, 1998 Page3

10 Hatcher Pass Ski Resort Phase 1 Economic Significance TABLE 1. HATCHER PASS SKI RESORT--INITIAL PHASE FACILITY AND PUBLIC INFRASTRUCTURE CONSTRUCTION ECONOMIC SIGNIFICANCE ON SITE OFFSITE TOTAL TOTAL EFFECTS EFFECTS EFFECTS CONSTRUCTION SPENDING ANNUAL ANNUAL ANNUAL AVERAGE PAYROLL AVERAGE PAYROLL AVERAGE PAYROLL EMPLOYMENT EMPLOYMENT EMPLOYMENT RESORT FACILITY $13,124, $2,750, $1,424, $4,174,532 PUBLIC $2,477, $629, $334, $964,133 INFRASTRUCTURE TOTAL $15,601, $3,380, $1,758, $5,138,665 C:\TEXT\REPORT\hatcherpass.wpd April 30, 1998 Page4

11 Hatcher Pass Ski Resort Phase 1 Economic Significance We measure the economic significance of this visitor spending only for the economy of the Matanuska Susitna Borough. We make no estimate of any reduction in economic activity associated with any potential reduction in visits to other South Central Alaska ski resorts or associated with reductions in expenditures on other activities for which Hatcher Pass Ski Resort visits substitute. Furthermore our estimates of economic significance do not include any expenditures by resort visitors for the purchase of ski equipment or specialized clothing off site or the allocation of a portion of the cost of owned motor vehicles used to travel to the resort. Finally we make no estimate of the economic effects of any vacation home construction which might occur in the area immediately surrounding the Hatcher Pass Ski Resort. 3.a. Onsite Spending The initial year operating budget of $ million is about half labor, including overhead, with business services, utilities and property taxes comprising the largest other categories of spending. This operating budget supports 70 man years of employment with a payroll of$1.241 million. Employment can be divided into the categories of mountain operations, rentals, ski school, administration, restaurant, retail, and summer operations. We estimate employment during the winter season of approximately 13 8, consisting of 87 full time seasonal employees, 3 8 part time seasonal employees, and 13 full time year round employees. During the off season, employment would be 20, consisting of the year round full time employees as well as 7 full time seasonal employees. Expenditures generated by procurement of goods and services and expenditures generated by the operations payroll will create offsite jobs. We anticipate that procurement will occur in the Matanuska Susitna Borough and that onsite jobs will be filled by residents of the Matanuska Susitna Borough. Consequently most of the off site jobs will be created in the Matanuska Susitna Borough. About 40 percent of these offsite jobs (indirect and induced employment) will be concentrated in services and retail trade with the remainder scattered across other industries. The total of these other jobs represents 3 7 man years of employment, and an additional payroll of $1.000 million. These offsite jobs are likely to be year round rather than seasonal since they are supported primarily by the operations payroll that will be spent over the course of the year rather than entirely when earned during the winter months. The total economic significance of the operating expenditures for Phase 1, including the multiplier effect which generates the off site jobs and payroll, is 107 man years of employment and a payroll of $2.241 million. The actual number of people employed during the winter of 1999 would be somewhat greater because of the seasonal nature of operations. 3.b. Offsite Non-Resident Spending Of the total expected first year visitors, 57 percent are projected to come from either C:\TEXT\REPORT\hatcherpass.wpd April 30, 1998 Page5

12 Hatcher Pass Ski Resort Phase 1 Economic Significance Anchorage or Eagle River. We expect these visitors to have offsite expenditures for food, lodging, transportation, and retail goods while visiting the Matanuska Susitna Borough. Using information from past studies of resident visitor spending while on fishing trips away from home, we estimate about $.947 million in offsite visitor spending by non-residents of the Matanuska Susitna Borough during the first year of operations of the Hatcher Pass Ski Resort. Table 2. shows the breakdown of these expenditures by category. The largest components are expected to be food and lodging. We assume 50 percent of all visitors have offsite food expenditures--either in restaurants or grocery stores--averaging $10 per person. We assume 10 percent of visitors spend the night before or after skiing in the Borough at an average cost of $50. Lesser amounts are spent on transportation and miscellaneous retail. These offsite expenditures directly create a modest number of offsite jobs (14 man years) mostly in hotels, restaurants, and shops. The payroll associated with these jobs is about $.235 million. The business generated for these establishments will in turn generate a few additional jobs in other sectors of the economy. About 40 percent of these additional off site jobs (indirect and induced employment) will be concentrated in services and retail trade with the remainder scattered across other industries. The total of these other jobs represents 5 man years of employment, and an additional payroll of $.139 million. These offsite jobs are likely to be year round rather than seasonal. This is because the hotel, restaurant, and shop payroll supporting them will be spent throughout the year rather than entirely during the winter months. The total economic significance of the non-resident off site expenditures for Phase 1, including the multiplier effect which generates the additional offsite jobs and payroll, is 19 man years of employment and a payroll of $.373 million. The actual number of people employed during the winter of 1999 would be somewhat greater because of the seasonal nature of employment in hotels, restaurants, and shops. 3.c. Total Spending Table 3. summarizes the economic significance of total annual Phase 1 operations spending of $4.009 million at the resort and $.947 million offsite. This spending generates a total of70 man-years of employment on site and an additional 56 man-years of employment offsite through non-resident spending and the economic multiplier. A total of 126 man-years of employment for the Matanuska Susitna Borough is generated by operations. The total payroll, both onsite and off site, is $ million. 3.d. Seasonal Employment Effect Figure 1. shows the seasonal distribution of jobs associated with operations spending at the resort and off site non-resident visitor spending. Of the 55 year round jobs created, 13 are directly associated with the resort while the others are off site as a result of the multiplier effects of resort spending and non-resident visitor spending. Seven jobs are full time seasonal during C:\TEXT\REPORT\hatcherpass.wpd April 30, 1998 Page6

13 Hatcher Pass Ski Resort Phase 1 Economic Significance TABLE 2. HATCHER PASS SKI RESORT --INITIAL PHASE OFFSITE VISITOR SPENDING IN MATSU BOROUGH SPENDING CATEGORY % OF AVG TOTAL VISITORS SPENDING SPENDING SALES TAX REVENUES FOOD LODGING TRANSPORT MISC RETAIL 50% $10 $296,000 10% $50 $296,000 20% $20 $236,800 20% $10 $118,400 $7,400 $22,200 $5,920 $2,960 TOTAL $947,200 $38, AVERAGE SALES TAX RA TE 2.5% BED TAX RATE 5.0% NON-MATSU VISITORS 59,200 C:\TEXT\REPORT\hatcherpass.wpd April 30, 1998 Page7

14 Hatcher Pass Ski Resort Phase 1 Economic Significance TABLE 3. HATCHER PASS SKI RESORT --INITIAL PHASE OPERATIONS AND OFFSITE VISITOR SPENDING ECONOMIC SIGNIFICANCE FIRST YEAR OF OPERATION IN 1999 ONSITE OFFSITE TOTAL TOTAL EFFECTS EFFECTS EFFECTS VISITOR SPENDING ANNUAL ANNUAL ANNUAL AVERAGE PAYROLL AVERAGE PAYROLL AVERAGE PAYROLL EMPLOYMENT EMPLOYMENT EMPLOYMENT SKI RESORT $4,009, $1,241, $1,000, $2,241,265 OFFSITE VISITOR SPENDING $947, $373, $373,466 TOTAL $4,956, $1,241, $1,373, $2,614,731 REVENUES PER SKIER INCLUDES LIFTS, RENTALS, EQUIPMENT PURCHASE, FOOD, AND SKI SCHOOL TOTAL VISITORS REVENUES PER SKIER DAYS OF OPERATION 104,368 $ C:\TEXT\REPORT\hatcherpass. wpd April 30, 1998 Page8

15 Hatcher Pass Ski Resort Phase 1 Economic Significance Figure 1. SEASONAL PROFILE OF JOBS HATCHER PASS SKI RESORT PHASE RESORT SEASONAL 50 'RESORT:JPE JSEASON' OFFSITE YEAR AROUND O--t-~~-,--~---,-~~,--~-;-~~,--~-,-~~,--~-;-~--,~~-,--~----1 RESORT YEAR AROUND July August September October November December January February March April March June C:\TEXT\REPORT\hatcherpass. wpd April 30, 1998 Page9

16 Hatcher Pass Ski Resort Phase 1 Economic Significance the summer season. During the winter season there would be 152 seasonal jobs, of which 125 would be located at the resort. These are a combination of full time and part time positions. The remaining 27 jobs would be off site in hotels, restaurants, and shops. The total number of jobs during the winter season, including the year round jobs, is 207. This seasonal pattern of employment matches the employment situation in the Matanuska Susitna Borough. Table 4. shows the seasonal decline in employment in the Borough during the winter months of , a typical year. The reduction in employment in the private sector from August to January was thousand, concentrated in construction, services, and retail trade. Although there is an increase in employment in the public sector during the winter months associated with education, the overall decline from August to January was still.901 thousand jobs. This decline in jobs is reflected by a strong seasonal pattern in the unemployment rate in the Borough. Figure 2. contains several graphs which demonstrate the persistence of a high unemployment rate with strong seasonality in the Matanuska Susitna Borough. The unemployment rate is consistently twice that of Anchorage. The seasonal pattern has persisted since at least In the most recent winter season the number of unemployed was about thousand greater than in the summer, and about.6 thousand greater than the average for the year. The decline in employment in the winter in construction, services, and trade, and the rise in unemployment over the same time interval (an increase in the number of residents wanting to work but unable to find a job) suggests that most of the employment generated by the Hatcher Pass Ski Resort Phase 1 could be filled by the existing Borough labor force without generating inmigration of new workers. Furthermore this development would contribute to a reduction in the seasonality of employment and enhance the stability of income for the Borough economy. 3.e. Fiscal Effect -- Tax Revenues The annual operating cost of the resort includes a $100 thousand property tax payment to the Matanuska Susitna Borough. Sales at the resort are not subject to a sales tax since there is no Borough wide tax. Sales taxes are levied by the cities of Wasilla and Palmer at the rates of 2 and 3 percent respectively. We assume that offsite spending by non-residents is evenly distributed between these two communities. Total sales tax revenues to these communities from off site spending is estimated to be $23. 7 thousand. The Borough does impose a bed tax at the rate of 5 percent. We estimate bed tax revenues from non-resident spending to be $14.8 thousand. Total annual revenues to the Matanuska Susitna Borough is estimated to be $114.8 thousand while the cities ofwasilla and Palmer are estimated to share $23.6 thousand (Table 5.). C:\TEXT\REPORT\hatcherpass.wpd April 30, 1998 Page 10

17 ('j ~ ~ ~ "ti 0 ~ ~ ~ I') = ~.a = Cll Cll ~ "'O Q. Sep Oct TABLE 4. MATANUSKA SUSITNA BOROUGH SEASONAL EMPLOYMENT DEFICIT (CHANGE IN JOBS FROM AUGUST 1995) Nov Dec Jan Feb Mar Apr May Jun Jul I ::i:: = I')... ~ =- "'l "ti = Cll Cll r:n Q. ~ ~ Cll 0 "'l... "'C =- = Cll ~,... TOTAL WAGE AND SALARY TOTAL PRIVATE WAGE AND SALARY > "'O 2: f..h 0 ~,... 1,1:) 1,1:) QO Construction Services Retail Trade Trans., Comm., & Utilities Wholesale Trade Agriculture, Forestry & Fishing Manufacturing Mining 5 1 Finance, Ins., & Real Estate TOTAL PUBLIC WAGE AND SALARY "ti =,... ~ Federal Government 2 3 State Government Local Government Source: Alaska Department of Labor, Employment and Earnings Summary Report, for 1996 and trj I') 0 = 0 3 ; r:n IJQ. = Si I') = = I') ~

18 Hatcher Pass Ski Resort Phase 1 Economic Significance FIGURE 2. MONTHLY UNEMPLOYMENT RATES RATE BY MONTH IN 1996 August OctOOer December February Apri Jme September November January Mardi May JUI)' I Cl MATSU ~ ANCHORAGE I MATANUSKA SUSITNA BOROUGH MONTHLY UNEMPLOYMENT RATE Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul I Ill 1990 ~ 1991,k 1992 B 1993 "' t, * ,800 ~ , MATANUSKA SUSITNA BOROUGH MONTHLY UNEMPLOYMENT ( ) 3, ,400 I \ ,000 ~-----~ \ j 2,400 2,200 ~-~-~-~-~-~ ~-~-~ Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul C:\TEXT\REPORT\hatcherpass.wpd April 30, 1998 Page 12

19 Hatcher Pass Ski Resort Phase 1 Economic Significance TABLE 5. HATCHER PASS SKI RESORT--INITIAL PHASE LOCAL GOVERNMENT REVENUES FROM OPERATIONS REVENUES TAX PALMER WASILLA MS TAX CATEGORY BASE BOROUGH TOTAL TAX REVENUES GENERAL SALES TAX $947,200 $9,472 $14,208 $23,680 BED TAX $296,000 $14,800 $14,800 PROPERTY TAX $100,000 $100,000 TOTAL $9,472 $14,208 $114,800 $138,480 AVERAGE SALES TAX RATE 2.5% BED TAX RATE 5.0% C:\TEXT\REPORT\hatcherpass.wpd April 30, 1998 Page 13

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21 Hatcher Pass Ski Resort Phase 1 Economic Significance HATCHER PASS SKI RESORT PHASE 1 ECONOMIC SIGNIFICANCE APPENDIX A

22 HATCHER PASS SKI RESORT - INITIAL PHASE ISER l-0 MODEL HATCHER PASS SKI RESORT- INITlAL PHASE RESORT CONSTRUCTION ALLOCATION FROM COMMODITTES TO INPUT OUTPUT CATEGORIES TOTAL REPORTED EXPENDITURES SHARE OF EX MADE OUTSIDE EXPENDITURES MADE OUTSIDE ALASKA EXPENDITURES POTENTIALLY IMPACTING AK SUM $13,124,180 $2,862,650 $10,261,530 1 IDMINISTRATIO~ AND MANAGEMENT $704,000 " $704,000 2 LIFT SYSTEMS - $5,090,000 $2,281,050 $2,787, TRAIL SERVICE AND MAINTENANCE IMPROVEMENT RESTAURANT FACILITIES FACILITIES $1,540,000 $3,743,990 ~, 'l' $300,000 $1,240,000 $3,743,960 $468,200 " " 6 PARKING ACCESS LANDSCAPE $479,020 " $476, SERVICE AREA EQUIPMENT MAINTENANCE FURNISHINGS EQUIPMENT - " $352,000 $771,000 $281,600 $70,400 sn,.ooo 9 UTILITIES " SUM OF ALLOCATED PERCENTS 100% 100% 100% 100% 100% 100% 100% 100% 100% SUM IMPACTING ALASKA EXPENDITURE DIRECTLY LEAKING INPUT OUTPUT CATEGORY $10,261,530 $192,750 " " " " " " " :111% " Agriculture and AFF Services 1 Forestry 2 Fishing 3 Crude Petroleum and Natural Gas 4 Other Mining 5 Now Conotruetion 6 Mziintonanee and Repair 7 Food and Kindred Products 8 Paper and Allied Products 9 Chemicals and Petroleum Proceoslng 10 Lumber and Wood Products 11 Other Manufacturing 12 Railroads 13 Local and lnterurb8n Transit 14 Motor Freight and Warehousing 15 Water Transportation 16 Air Treneportntion 17 Pipelines 16 Transportation Services 19 Communication 20 Eleetrlc, Gas, Water, and Sanitary 21 Wholesa.lo Trade 22 Retail Trade 23 Finance 24 Insurance 25 Reol Esmte 26 Hotels, Lodging, Amusements 27 Personal Services 28 Buoinese Services 29 Eeiting and Drinking 30 Health Services 31 Miscellaneous Services 32 Federal Government Ent 33 St8to & Local Government Ent 34 Households 35 State and Local Government 36 X2 37 X3 38 X4 39 XS 40 $9,015,585 $313,995 $35,200 $704, % - 10% 100% 100% 100% 100% 50% 50% 75% 100% direct effects-jobs direct effects-payroll direct effect- sales direct effect- VA NA NA 0 average wage OUTPUT10.WK4 01/09/98 10:53 AM APPENDIX A.

23 HATCHER PASS SKI RESORT - INITIAL PHASE ISER 1-0 MODEL FINAL DEMAND VECTOR SALES BY INDUSTRY ECONOMIC EFFECT RESORT CONSTRUCTION STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST I II Ill IV TOTAL CHANGE IN FINAL DEMAND $10,068,780 $10,068,780 AgrlcuHura and AFF Services 1 Foral1ry 2 Fishing 3 Crude Petroleum and Natural Gas 4 other Mining 5 New Conl1ructlon 6 $9,015,565 $9,015,585 Malntenanca and Repair 7 Food and Kindred Products 8 CHANGE IN Paper and Allied Products 9 FINAL DEMAND Chemlcala and Petroleum ProcaHlng 10 SALES BY Lumber and Wood Products 11 other Manufacturing 12 Rallroads 13 Local and Interurban Transit 14 Motor Freight and Warehousing 15 $313,995 $313,995 Water Transporlatlon 16 Air Transporlatlon 17 Plpellnes 18 Transporlatlon Servlcaa 19 Communication 20 Electrlc, Gas, Water, and Sanitary 21 Wholesale Trade 22 $36,200 $35,200 Retall Trade 23 Flnanca 24 lnsuranca 25 Real El1ate 26 Hotels, Lodging, Amusements 27 Personal Servlcas 28 Bualne11 Servlcas 29 $704,000 $704,000 Eating and Drinking 30 Health Servlcas 31 Mlacallaneous Servlcas 32 Federal Govemment Ent 33 state a Local Government Ent 34 Households 35 state and Local Government 36 X2 37 X3 38 X4 39 X5 40 JOBS PAYROLL $2,750,326 $2,750,326 SALES $10,066,760 $10,068,780 VALUE ADDED na Method A. OUTPUT10.WK4 01/09/98 10:52 AM APPENDIX A.

24 HATCHER PASS SKI RESORT -- INITIAL PHASE ISER 1-0 MODEL ECONOMIC EFFECT SUMMARY RESORT CONSTRUCTION TOTAL EFFECT STATE SOUTH SOUTH SOUTH NORTH EAST CENTRAL WEST I II Ill IV OUTPUT $15,004,990 $15,004,990 PAYROLL $4,174,532 $4,174,532 EMPLOYMENT DIRECT EFFECT OUTPUT $10,068,780 $10,068,780 PAYROLL $2,750,326 $2,750,326 EMPLOYMENT INDIRECT/INDUCED EFFECT OUTPUT $4,936,210 $4,936,210 PAYROLL $1,424,205 $1,424,205 EMPLOYMENT DIRECT EFFECT MULTIPLIERS (BEA DEF.) OUTPUT PAYROLL EMPLOYMENT FINAL DEMAND MULTIPLIERS (BEA DEF.) OUTPUT (million $) $ $ PAYROLL (million$) EMPLOYMENT DIRECT EFFECT MULTIPLIERS are the ratio of the total to direct change in output, payroll, or employment. FINAL DEMAND MULTIPLIERS are the total dollar or job change for each additional million$ of final demand. If the direct effect is confined to a single region the regional multipliers are the portion of the total effect occurring in that region. If the direct effect occurs in more than one region the regional multipliers do not have the normal interpretation and only the statewide multipliers should be used. method A. OUTPUT10.WK4 01/09/98 10:52 AM APPENDIX A.

25 HATCHER PASS SKI RESORT-- INITIAL PHASE ISER 1-0 MODEL ECONOMIC EFFECT SUMMARY BY INDUSTRY RESORT CONSTRUCTION EMPLOYMENT PAYROLL OUTPUT TOTAL EFFECT $4,174,532 $15,004,990 Agriculture and AFF Services $1,878 $6,838 Forestry 2 $214 $1,021 Fishing 3 $612 $2,923 Crude Petroleum and Natural Gas $19,701 $212,421 other Mining $6,064 $18,550 New Construction $2,296,994 $9,036,321 Maintenance and Repair $34,095 $79,755 Food and Kindred Products $4,615 $31,552 Paper and Allied Products 9 $323 $2,020 Chemicals and Petroleum Processing $16,338 $404,748 Lumber and Wood Products $2,883 $18,630 other Manufacturing $39,704 $161,256 Railroads $6,851 $26,661 Local and Interurban Transit 14 $1,436 $5,590 Motor Freight and Warehousing $133,266 $518,617 Water Transportation $4,492 $17,479 Air Transportation $30,272 $117,805 Pipelines $2,441 $9,499 Transportation Services $3,082 $11,993 Communication $49,881 $178,874 Electric, Gas, Water, and Sanitary $20,094 $252,011 Wholesale Trade $122,786 $316,532 Retail Trade $218,147 $464,530 Finance $44,644 $113,570 Insurance $17,711 $42,208 Real Estate $8,746 $650,396 Hotels, Lodging, Amusements $23,923 $78,686 Personal Services $20,081 $42,740 Business Services $747,702 $1,445,061 Eating and Drinking $70,714 $239,770 Health Services $106,414 $188,499 Miscellaneous Services $99,415 $278,269 Federal Government Ent $9,495 $26,577 State & Local Government Ent 34 $1,283 $3,592 Households 35 $8,237 xxxxxxxxxx State and Local Government 36 X2 37 X3 38 X4 39 XS 40 Method A. OUTPUT10.WK4 01/09/98 10:52 AM APPENDIX A.

26 HATCHER PASS SKI RESORT - INITIAL PHASE ISER 1-0 MODEL OUTPUT TOTAL OUTPUT ECONOMIC EFFECT RESORT CONSTRUCTION DIRECT OUTPUT STATE SOUTH SOUTH SOUTH NORTH STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST TOTAL EAST CENTRAL WEST I II Ill IV I II Ill IV TOTAL $15,004,990 $15,004,990 $10,068,780 $10,068,780 Agriculture and AFF Services 1 $6,838 $6,838 Forestry 2 $1,021 $1,021 Fishing 3 $2,923 $2,923 Crude Petroleum and Natural Gas 4 $212,421 $212,421 Other Mining 5 $18,550 $18,550 New Construction 6 $9,036,321 $9,036,321 $9,015,585 $9,015,585 Maintenance and Repair 7 $79,755 $79,755 Food and Kindred Products 8 $31,552 $31,552 Paper and Allied Products 9 $2,020 $2,020 Chemicals and Petroleum Processing 10 $404,748 $404,748 Lumber and Wood Products 11 $18,630 $18,630 Other Manufacturing 12 $161,256 $161,256 Railroads 13 $26,661 $26,661 Local and Interurban Transit 14 $5,590 $5,590 Motor Freight and Warehousing 15 $518,617 $518,617 $313,995 $313,995 Water Transportation 16 $17,479 $17,479 Air Transportation 17 $117,805 $117,805 Pipelines 18 $9,499 $9,499 Transportation Services 19 $11,993 $11,993 Communication 20 $178,874 $178,874 Electric, Gas, Water, and Sanitary 21 $252,011 $252,011 Wholesale Trade 22 $316,532 $316,532 $35,200 $35,200 Retail Trade 23 $464,530 $464,530 Finance 24 $113,570 $113,570 Insurance 25 $42,208 $42,208 Real Estate 26 $650,396 $650,396 Hotels, Lodging, Amusements 27 $78,686 $78,686 Personal Services 28 $42,740 $42,740 Business Services 29 $1,445,061 $1,445,061 $704,000 $704,000 Eating and Drinking 30 $239,770 $239,770 Health Services 31 $188,499 $188,499 Miscellaneous Services 32 $278,269 $278,269 Federal Government Ent 33 $26,577 $26,577 State & Local Government Ent 34 $3,592 $3,592 Households 35 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxx xxxxxxxxxx xxxxxxxxxx xxxxxxxxxx State & Local Government 36 x2 37 x3 38 x4 39 x5 40 Method A. OUTPUT10.WK4 01/09/98 10:52 AM APPENDIX A.

27 HATCHER PASS SKI RESORT - INITIAL PHASE ISER 1-0 MODEL PAYROLL AT 1994 LEVEL TOTAL PAYROLL ECONOMIC EFFECT RESORT CONSTRUCTION DIRECT PAYROLL STATE SOUTH SOUTH SOUTH NORTH STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST TOTAL EAST CENTRAL WEST I II Ill IV I II Ill IV TOTAL $4,174,532 $4,174,532 $2,750,326 $2,750,326 Agriculture and AFF Services 1 $1,878 $1,878 Forestry 2 $214 $214 Fishing 3 $612 $612 Crude Petroleum and Natural Gas 4 $19,701 $19,701 Other Mining 5 $6,064 $6,064 New Construction 6 $2,296,994 $2,296,994 $2,291,723 $2,291,723 Maintenance and Repair 7 $34,095 $34,095 Food and Kindred Products 8 $4,615 $4,615 Paper and Allied Products 9 $323 $323 Chemicals and Petroleum Processing 10 $16,338 $16,338 Lumber and Wood Products 11 $2,883 $2,883 other Manufacturing 12 $39,704 $39,704 Railroads 13 $6,851 $6,851 Local and Interurban Transit 14 $1,436 $1,436 Motor Freight and Warehousing 15 $133,266 $133,266 $80,685 $80,685 Water Transportation 16 $4,492 $4,492 Air Transportation 17 $30,272 $30,272 Pipelines 18 $2,441 $2,441 Transportation Services 19 $3,082 $3,082 Communication 20 $49,881 $49,881 Electric, Gas, Water, and Sanitary 21 $20,094 $20,094 Wholesale Trade 22 $122,786 $122,786 $13,654 $13,654 Retail Trade 23 $218,147 $218,147 Finance 24 $44,644 $44,644 Insurance 25 $17,711 $17,711 Real Estate 26 $8,746 $8,746 Hotels, Lodging, Amusements 27 $23,923 $23,923 Personal Services 28 $20,081 $20,081 Business Services 29 $747,702 $747,702 $364,263 $364,263 Eating and Drinking 30 $70,714 $70,714 Health Services 31 $106,414 $106,414 Miscellaneous Services 32 $99,415 $99,415 Federal Government Ent 33 $9,495 $9,495 state & Local Government Ent 34 $1,283 $1,283 Households 35 $8,237 $8,237 State and Local Government 36 X2 37 X3 38 X4 39 X5 40 Method A. OUTPUT10.WK4 01/09/98 10:52 AM APPENDIX A.

28 HATCHER PASS SKI RESORT - INITIAL PHASE ISER 1-0 MODEL EMPLOYMENT ANNUAL AVERAGE JOBS TOTAL EMPLOYMENT ECONOMIC EFFECT RESORT CONSTRUCTION DIRECT EMPLOYMENT STATE SOUTH SOUTH SOUTH NORTH STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST TOTAL EAST CENTRAL WEST I II Ill IV I II Ill IV TOTAL Agriculture and AFF Services Forestry 2 Fishing 3 Crude Petroleum and Natural Gas Other Mining New Construction Maintenance and Repair Food and Kindred Products Paper and Allied Products 9 Chemicals and Petroleum Processing Lumber and Wood Products Other Manufacturing Railroads Local and Interurban Transit 14 Motor Freight and Warehousing Water Transportation Air Transportation Pipelines Transportation Services Communication Electric, Gas, Water, and Sanitary Wholesale Trade Retail Trade Finance Insurance Real Estate Hotels, Lodging, Amusements Personal Services Business Services Eating and Drinking Health Services Miscellaneous Services Federal Government Ent state & Local Government Ent 34 Households 35 state and Local Government 36 X2 37 X3 38 X4 39 X5 40 Method A. OUTPUT10.WK4 01/09/98 10:52 AM APPENDIX A.

29 Hatcher Pass Ski Resort Phase 1 Economic Significance HATCHER PASS SKI RESORT 1 ECONOMIC SIGNIFICANCE APPENDIX B

30 HATCHER PASS SKI RESORT INITIAL PHASE ISER 1-0 MODEL HATCHER PASS SKI RESORT- INfTIAL PHASE PUBLIC INFRASTRUCTURE CONSTRUCTION ALLOCATION FROM COMMODfTIES TO INPUT OUTPUT CATEGORIES SUM 1 ROAD ACCESS 2 ELECTRIC POWER 3 COMMUN ICATIONS 4 NATURAL GAS 5 WATER 6 WASTE WATER DISPOSAL TOTAL REPORTED EXPENDITURES SHARE OF EX MADE OUTSIDE EXPENDITURES MADE OUTSIDE ALASKA $2,477,500 so o,r. $750,000 o,r. $211,250 " $251,250 " $265,000 o,r. $1,000,000 o,r. EXPENDITURES POTENTIALLY IMPACTING AK SUM OF ALLOCATED PERCENTS $2,477, % $750, % $211, % $251, % $265, % $1,000, % SUM IMPACTING ALASKA EXPENDITURE DIRECTLY LEAKING INPUT - OUTPUT CATEGORY $2,477,500 o,r. o,r. " o,r. o,r. o,r. Agrla.ilture and AFF Services Faes try Fishing Crude Petroleum and Natural Gas Other Mining New Coostructlon Maintenance and Repair Food and Kindred Products Paper and Allied Products Chemicals and Petroleum Processing Lumber and Wood Products Other Manufacturing Railroads Local and Interurban Transit Motor Freight and Warehousing Water Transportatloo Air Transportatloo Pipelines Transportatloo Services Communicatloo Electric, Gas, Water, and Sanitary Wholesale Trade Retail Trade Rnance Insurance Real Estate Hotels, Lodging, Amusements Personal Services Business Services Eating and Drinking Health Services Miscellaneous Services Federal Government Ent State & Local Government Ent Households State and Local Government X2 X3 X4 XS $2,477, ,r. 100,r. 100,r. 100,r. 100,r. 100,r. direct effects-jobs direct effects.payroll direct effect sales d'trect effect- VA NA NA 0 average wage OUTPUT10.WK /97 09:19 AM

31 HATCHER PASS SKI RESORT- INITIAL PHASE ISER 1-0 MODEL FINAL DEMAND VECTOR SALES BY INDUSTRY ECONOMIC EFFECT PUBLIC INFRASTRUCTURE CONSTRUCTION STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST I II Ill IV TOTAL CHANGE IN FINAL DEMAND $2,477,500 $2,477,500 Agrlculture and AFF Services 1 Forestry 2 Fishing 3 Crude Petroleum and Natural Gas 4 Other Mining 5 New ConB1ructlon 6 $2,477,500 $2,477,500 Maintenance and Repair 7 Food and Kindred Products 8 CHANGE IN Paper and Allied Products 9 FINAL DEMAND Chemicals and Petroleum Processing 10 SALES BY Lumber and Wood Products 11 other Manufacturing 12 Railroads 13 Local and Interurban Transit 14 Motor Freight and Warehousing 15 Water Transportation 16 Air Transportation 17 Pipelines 18 Transportation Services 19 Communication 20 Electric, Gas, Water, and Sanitary 21 Wholeaale Trade 22 Retail Trade 23 Finance 24 Insurance 25 Real Estate 26 Hotels, Lodging, Amuaements 27 Personal Services 28 Business Services 29 Eating and Drinking 30 Health Services 31 Miscellaneous Services 32 Federal Government Ent 33 state & Local Government Ent 34 Houaeholds 35 state and Local Government 36 X2 37 X3 38 X4 39 XS 40 JOBS PAYROLL $629,770 $629,770 SALES $2,477,500 $2,477,500 VALUE ADDED na Method A. OUTPUT10.WK4 12/22/97 09:22 AM

32 HATCHER PASS SKI RESORT-- INITIAL PHASE ISER 1-0 MODEL ECONOMIC EFFECT SUMMARY PUBLIC INFRASTRUCTURE CONSTRUCTION SOUTH SOUTH Ill NORTH IV TOT AL EFFECT OUTPUT $3,634,564 $3,634,564 PAYROLL $964,133 $964,133 EMPLOYMENT DIRECT EFFECT OUTPUT $2,477,500 $2,477,500 PAYROLL $629,770 $629,770 EMPLOYMENT INDIRECT/INDUCED EFFECT OUTPUT $1,157,064 $1,157,064 PAYROLL $334,363 $334,363 EMPLOYMENT DIRECT EFFECT MUL Tl PLIERS (BEA DEF.) OUTPUT PAYROLL EMPLOYMENT FINAL DEMAND MUL Tl PLIERS (BEA DEF.) OUTPUT (million $) $ $ PAYROLL (million$) EMPLOYMENT DIRECT EFFECT MULTIPLIERS are the ratio of the total to direct change in output, payroll, or employment. FINAL DEMAND MULTIPLIERS are the total dollar or job change for each additional million $ of final demand. If the direct effect is confined to a single region the regional multipliers are the portion of the total effect occurring in that region. If the direct effect occurs in more than one region the regional multipliers do not have the normal interpretation and only the statewide multipliers should be used. method A. OUTPUT10.WK4 12/22/97 09:22 AM

33 HATCHER PASS SKI RESORT-- INITIAL PHASE ISER 1-0 MODEL ECONOMIC EFFECT SUMMARY BY INDUSTRY PUBLIC INFRASTRUCTURE CONSTRUC INDUSTRY EMPLOYMENT OUTPUT TOTAL EFFECT 26.9 $964,133 $3,634,564 Agriculture and AFF Services Forestry Fishing Crude Petroleum and Natural Gas Other Mining New Construction Maintenance and Repair Food and Kindred Products Paper and Allied Products Chemicals and Petroleum Processing Lumber and Wood Products other Manufacturing Railroads Local and Interurban Transit Motor Freight and Warehousing Water Transportation Air Transportation Pipelines Transportation Services Communication Electric, Gas, Water, and Sanitary Wholesale Trade Retail Trade Finance Insurance Real Estate Hotels, Lodging, Amusements Personal Services Business Services Eating and Drinking Health Services Miscellaneous Services Federal Government Ent State & Local Government Ent Households State and Local Government X2 X3 X4 X $431 $55 $138 $4,773 $1,499 $631,218 $7,594 $1,053 $66 $3,974 $775 $10,413 $1,668 $300 $10,850 $1,112 $6,804 $579 $561 $10,933 $4,649 $27,432 $50,997 $9,963 $4,061 $2,032 $5,054 $4,588 $93,569 $15,942 $24,584 $22,409 $1,875 $277 $1,902 $1,570 $264 $658 $51,461 $4,587 $2,483,198 $17,765 $7,197 $414 $98,455 $5,010 $42,293 $6,493 $1,166 $42,225 $4,327 $26,479 $2,255 $2,184 $39,205 $58,303 $70,718 $108,594 $25,345 $9,677 $151,146 $16,625 $9,765 $180,839 $54,053 $43,548 $62,724 $5,248 $776 xxxxxxxxxx Method A. OUTPUT10.WK4 12/22/97 09:22 AM

34 HATCHER PASS SKI RESORT -- INITIAL PHASE ISER 1-0 MODEL OUTPUT ECONOMIC EFFECT TOTAL OUTPUT DIRECT OUTPUT STATE SOUTH SOUTH SOUTH NORTH STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST TOTAL EAST CENTRAL WEST I II Ill IV I II Ill IV TOTAL $3,634,564 $3,634,564 $2,477,500 $2,477,500 Agriculture and AFF Services 1 $1,570 $1,570 Forestry 2 $264 $264 Fishing 3 $658 $658 Crude Petroleum and Natural Gas 4 $51,461 $51,461 Other Mining 5 $4,587 $4,587 New Construction 6 $2,483,198 $2,483,198 $2,477,500 $2,477,500 Maintenance and Repair 7 $17,765 $17,765 Food and Kindred Products 8 $7,197 $7,197 Paper and Allied Products 9 $414 $414 Chemicals and Petroleum Processing 10 $98,455 $98,455 Lumber and Wood Products 11 $5,010 $5,010 Other Manufacturing 12 $42,293 $42,293 Railroads 13 $6,493 $6,493 Local and Interurban Transit 14 $1,166 $1,166 Motor Freight and Warehousing 15 $42,225 $42,225 Water Transportation 16 $4,327 $4,327 Air Transportation 17 $26,479 $26,479 Pipelines 18 $2,255 $2,255 Transportation Services 19 $2,184 $2,184 Communication 20 $39,205 $39,205 Electric, Gas, Water, and Sanitary 21 $58,303 $58,303 Wholesale Trade 22 $70,718 $70,718 Retail Trade 23 $108,594 $108,594 Finance 24 $25,345 $25,345 Insurance 25 $9,677 $9,677 Real Estate 26 $151,146 $151,146 Hotels, Lodging, Amusements 27 $16,625 $16,625 Personal Services 28 $9,765 $9,765 Business Services 29 $180,839 $180,839 Eating and Drinking 30 $54,053 $54,053 Health Services 31 $43,548 $43,548 Miscellaneous Services 32 $62,724 $62,724 Federal Government Ent 33 $5,248 $5,248 State & Local Government Ent 34 $776 $776 Households 35 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxx xxxxxxxxxx xxxxxxxxxx xxxxxxxxxx State & Local Government 36 x2 37 x3 38 x4 39 xs 40 Method A. OUTPUT10.WK4 12/22/97 09:22AM

35 HATCHER PASS SKI RESORT - INITIAL PHASE ISER 1-0 MODEL PAYROLL AT 1994 LEVEL TOTAL PAYROLL ECONOMIC EFFECT DIRECT PAYROLL STATE SOUTH SOUTH SOUTH NORTH STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST TOTAL EAST CENTRAL WEST I II Ill IV I Ill IV TOTAL $964,133 $964,133 $629,770 $629,770 Agriculture and AFF Services 1 $431 $431 Forestry 2 $55 $55 Fishing 3 $138 $138 Crude Petroleum and Natural Gas 4 $4,773 $4,773 Other Mining 5 $1,499 $1,499 New Construction 6 $631,218 $631,218 $629,770 $629,770 Maintenance and Repair 7 $7,594 $7,594 Food and Kindred Products 8 $1,053 $1,053 Paper and Allied Products 9 $66 $66 Chemicals and Petroleum Processing 10 $3,974 $3,974 Lumber and Wood Products 11 $775 $775 Other Manufacturing 12 $10,413 $10,413 Railroads 13 $1,668 $1,668 Local and Interurban Transit 14 $300 $300 Motor Freight and Warehousing 15 $10,850 $10,850 Water Transportation 16 $1,112 $1,112 Air Transportation 17 $6,804 $6,804 Pipelines 18 $579 $579 Transportation Services 19 $561 $561 Communication 20 $10,933 $10,933 Electric, Gas, Water, and Sanitary 21 $4,649 $4,649 Wholesale Trade 22 $27,432 $27,432 Retail Trade 23 $50,997 $50,997 Finance 24 $9,963 $9,963 Insurance 25 $4,061 $4,061 Real Estate 26 $2,032 $2,032 Hotels, Lodging, Amusements 27 $5,054 $5,054 Personal Services 28 $4,588 $4,588 Business Services 29 $93,569 $93,569 Eating and Drinking 30 $15,942 $15,942 Health Services 31 $24,584 $24,584 Miscellaneous Services 32 $22,409 $22,409 Federal Government Ent 33 $1,875 $1,875 state & Local Government Ent 34 $277 $277 Households 35 $1,902. $1,902 State and Local Government 36 X2 37 X3 38 X4 39 X5 40 Method A. OUTPUT10.WK4 12/22/97 09:22AM

36 HATCHER PASS SKI RESORT - INITIAL PHASE ISER 1-0 MODEL EMPLOYMENT ANNUAL AVERAGE JOBS TOTAL EMPLOYMENT ECONOMIC EFFECT DIRECT EMPLOYMENT STATE SOUTH SOUTH SOUTH NORTH STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST TOTAL EAST CENTRAL WEST I II Ill IV I II Ill IV TOTAL Agriculture and AFF Services 1 Forestry 2 Fishing 3 Crude Petroleum and Natural Gas Other Mining 5 New Construction Maintenance and Repair Food and Kindred Products 8 Paper and Allied Products 9 Chemicals and Petroleum Processing Lumber and Wood Products 11 other Manufacturing Railroads 13 Local and Interurban Transit 14 Motor Freight and Warehousing Water Transportation 16 Air Transportation Pipelines 18 Transportation Services 19 Communication Electric, Gas, Water, and Sanitary Wholesale Trade Retail Trade Finance Insurance Real Estate Hotels, Lodging, Amusements Personal Services Business Services Eating and Drinking Health Services Miscellaneous Services Federal Government Ent 33 State & Local Government Ent 34 Households 35 State and Local Government 36 X2 37 X3 38 X4 39 X5 40 Method A. OUTPUT10.WK4 12/22/97 09:22AM

37 Hatcher Pass Ski Resort Phase 1 Economic Significance IIA TCHER PASS SKI RESORT PHASE 1 ECONOMIC SIGNIFICANCE APPENDIX C

38 HATCHER PASS SKI RESORT INITIAi. PHASE ISER 1-0 MODa HATCHER PASS SKI RESORT- INITIAL PHASE OPERATIONS ALLOCATION FROM COMMODITIES TO INPtrr OtrrPtrr CATEGORIES SUM 1 MOUNTAIN OPERATIONS 2 RENTAi. 3 SKI SCHOOL 4 RESTAURANT BAR 5 RETAIL 6 SUMMER OPERATIONS 7 GENERAL ADMIN 8 CONTIN GENCY 9 xxxxxxx TOTAi. REPORTED EXPENDITURES $3,042,914 SHARE OF EX MADE OUTSIDE EXPENDITURES MADE OUTSIDE ALASKA $1,095,188 0% $122,874 0% $116,579 0% $377,035 0% $71,805 " $71,835 0% $1,043,117 0% $144,ll01 0% 0% EXPENDITURES POTENTIAI.L Y IMPACTING AK $3,042,914 SUM UP OF AI.LOCATED AMOUNTS $3,042,914 $1,095,168 $122,674 $116,579 $377,035 $71,805 $71,635 $1,043, h $1,095,168 $122,674 $116,579 $377,035 $71,805 $71,635 $1,043,117 $ $144,901 SUM IMPACTING ALASKA $2,599,064 EXPENDITURE DIRECTLY LEAKING $443,85-0 $1,038,918 $90,174 $116,579 $217,877 $26,814 $71,635 $964,617 $ $58,250 $32,500 $159,158 $44,991 $78,500 $72,451 INPUT OUTPUT CATEGORY Agriculture and AFF Services 1 Faestry 2 Fishing 3 Crude Petroleum and Natural Gas 4 Other Mining 5 New Construction 6 Maintenance and Repair 7 $10,000 Food and Kindred Products 8 Paper and Allied Products g Chemicals and Petroleum Processing 10 $20,000 Lumber and Wood Products 11 Other Manufacturing 12 $69,500 Railroads 13 Local and Interurban Transit 14 $5,000 Motor Freight and Warehoosing 15 $30,237 Water Transportation 16 Air Transportatioo 17 Pipelines 18 Transportation Services 19 $5,000 Communicatioo 20 $69,500 8ectric, Gas, Water, and Sanitary 21 $270,000 Wholesale Trade 22 $82,224 Retail Trade 23 $51,225 Finance 24 $15,000 Insurance 25 $7,500 Real Estate 26 Hotels, Lodging, Amusements 27 Persooal Services 28 Business Services 29 $377,911 Eating and Drinking 30 Health Services 31 $79,093 Miscellaneous Services 32 $15,000 Federal Government Ent 33 $79,093 State & Local Government Ent 34 $171,650 Households 35 $1,241,132 State and local Government 36 X2 37 X3 38 X4 39 XS 40 $20,000 $10,000 $20,000 $49,500 $7,500 $22,737 $5,000 $89,500 $280,000 $10,000 $28,750 $45,474 $8,000 $12,500 $2,500 $36,225 $15,000 $7,500 $84,528 $8,197 $10,900 $13,993 $2,507 $6,898 $234,884 $36,225 $5,000 $32,284 $4,099 $5,450 $6,997 $1,254 $3,349 $25,882 $15,000 $32,284 $4,099 $5,450 $6,997 $1,254 $3,349 $25,882 $171,650 $561,112 $71,280 $94,780 $121,680 $21,800 $58,240 $312,240 direct effects~-jobs 70 direct effects-payr<il $1,241,132 direct effect - sales NA direct effect - VA NA average annual wage $17, ~------~-~ ~ ~ OUTPUT10.WK :19AM

39 HATCHER PASS SKI RESORT - INITIAL PHASE ISER 1-0 MODEL FINAL DEMAND VECTOR ECONOMIC EFFECT PROCUREMENT BY BUSINESS OPERATIONS INCLUDING PAYMENTS FOR PAYROLL AND OTHER FLOWS TO HOUSEHOLDS STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST I II Ill IV TOTAL INSTATE CHANGE IN PURCHASES $2,599,064 $2,599,064 Agrlculture and AFF Services 1 Forestry 2 Fishing 3 Crude Petroleum and Natural Gas 4 PROCUREMENT PURCHASES BY Maintenance and Repair 7 $10,000 $10,000 FIRMS 01her Mining New Construction 5 6 Food and Kindred Products 8 EXPERIENCING Paper and Allied Products 9 CHANGE IN FINAL Chemicals and Petroleum ProceBBlng 10 $20,000 $20,000 Lumber and Wood Products 11 01her Manufacturing 12 $69,500 $69,500 DEMAND Railroads 13 Local and Interurban Transit 14 $5,000 $5,000 Motor Freight and Warehousing 15 $30,237 $30,237 Water Transporlatlon 16 Air Transporlatlon 17 Plpellnea 18 Transportation Services 19 $5,000 $5,000 Communication 20 $69,500 $69,500 Electrlc, Gas, Water, and Sanitary 21 $270,000 $270,000 Wholesale Trade 22 $82,224 $82,224 Retail Trade 23 $51,225 $51,225 Finance 24 $15,000 $15,000 Insurance 25 $7,500 $7,500 Real Estate 26 Hotels, Lodging, Amusements 27 Personal Services 28 Business services 29 $377,911 $377,9t1 Eating and Drinking 30 Health Services 31 $79,093 $79,093 Miscellaneous Services 32 $15,000 $15,000 Federal Government Ent 33 $79,093 $79,093 state & Local Government Ent 34 $171,650 $171,650 PAYROLL AND Households 35 $1,241,132 $1,241,132 OTHER state and Local Government 36 X2 37 PAYMENTS TO X3 38 HOUSEHOLDS X4 39 X5 40 SUMMARY OF JOBS 7 7 CHANGE IN PAYROLL $1,241,132 $1,241,132 FINAL DEMAND INSTATE CHANGE IN FINAL DEMAND NA VALUE ADDED na MethodC. OUTPUT10.WK /97 09: 35 AM

40 HATCHER PASS SKI RESORT -INITIAL PHASE!SER 1-0 MODEL ECONOMIC EFFECT SUMMARY OPERATIONS STATE SOUTH EAST I SOUTH CENTRAL II SOUTH WEST Ill NORTH IV TOTAL EFFECT OUTPUT $3,375,202 $3,375,202 PAYROLL $2,241,265 $2,241,265 EMPLOYMENT DIRECT EFFECT TOTAL CHANGE IN FINAL DEMAND TOTAL$$ IMPACTING ECONOMY $2,599,064 NA $2,599,064 PAYROLL PROCUREMENT $1,241,132 $1,357,932 $1,241,132 $1,357,932 EMPLOYMENT 7 7 TOTAL INDIRECT AND INDUCED EFFECT OUTPUT $3,375,202 $3,375,202 PAYROLL $1,000,133 $1,000,133 EMPLOYMENT ITEM : FIRST ROUND EFFECT OF PROCUREMENT AND PAYROLL SPENDING OUTPUT $1,357,932 $1,357,932 PAYROLL $476,015 $476,015 EMPLOYMENT DIRECT EFFECT MULTIPLIERS (BEA DEF.) OUTPUT ERR ERR ERR ERR PAYROLL EMPLOYMENT ERR 0 0 FINAL DEMAND MULTIPLIERS (BEA DEF.) OUTPUT (million $) ERR ERR ERR ERR PAYROLL (million$) ERR ERR ERR ERR EMPLOYMENT ERR ERR ERR ERR ERR ERR ERR DIRECT EFFECT MULTIPLIERS are the ratio of the total to direct change In output. payroll, or employment. FINAL DEMAND MULTIPLIERS are the total dollar or job change for each additional million $ of final demand. If the direct effect is confined to a single region the regional multipliers are the portion of the total effect occurring In that region. If the direct effect occurs In more than one region the regional multipliers do not have the normal Interpretation and only the statewide multipliers should be used. method C. OUTPUT10.WK4 12/22/97 09: 35 AM

41 HATCHER PASS SKI RESORT-- INITIAL PHASE ISER 1-0 MODEL ECONOMIC EFFECT SUMMARY BY INDUSTRY OPERATIONS INDUSTRY EMPLOYMENT PAYROLL OUTPUT TOTAL EFFECT $2,241,265 $3,375,202 DIRECT EFFECT 7 $1,241,132 INDIRECT & INDUCED EFFECTS 37.1 $1,000,133 $3,375,202 Agriculture and AFF Services Forestry Fishing Crude Petroleum and Natural Gas Other Mining New Construction Maintenance and Repair Food and Kindred Products Paper and Allied Products Chemicals and Petroleum Processing Lumber and Wood Products Other Manufacturing Railroads Local and Interurban Transit Motor Freight and Warehousing Water Transportation Air Transportation Pipelines Transportation Services Communication Electric, Gas, Water, and Sanitary Wholesale Trade Retail Trade Finance Insurance Real Estate Hotels, Lodging, Amusements Personal Services Business Services Eating and Drinking Health Services Miscellaneous Services Federal Government Ent State & Local Government Ent Households State and Local Government X2 X3 X4 XS $1,255 $45 $426 $11,556 $8,526 $40,987 $2,902 $165 $5,836 $249 $22,280 $3,056 $1,956 $12,397 $1,392 $14,886 $807 $2,416 $39,693 $38,979 $57,568 $128,551 $28,388 $13,051 $4,217 $11,735 $10,537 $249,339 $36,509 $102,049 $49,038 $33,167 $61,751 $4,422 $4,568 $216 $2,034 $124,596 $26,083 $95,876 $19,839 $1,034 $144,574 $1,609 $90,490 $11,893 $7,612 $48,244 $5,419 $57,931 $3,142 $9,402 $142,341 $488,845 $148,404 $273,741 $72,218 $31,103 $313,569 $38,598 $22,427 $481,890 $123,793 $180,767 $137,260 $92,836 $172,846 xxxxxxxxxx Method C. OUTPUT10.WK4 12/22/97 09:35 AM

42 HATCHER PASS SKI RESORT - INITIAL PHASE ISER 1-0 MODEL OUTPUT ECONOMIC EFFECT TOTAL INDIRECT & INDUCED FIRST ROUND INDIRECT & INDUCED: PROCUREMENT STATE SOUTH SOUTH SOUTH NORTH STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST TOTAL EAST CENTRAL WEST I II Ill IV I II Ill IV INDIRECT AND INDUCED OUTPUT $3,375,202 $3,375,202 $1,357,932 $1,357,932 Agriculture and AFF Services 1 $4,568 $4,568 Forestry 2 $216 $216 Fishing 3 $2,034 $2,034 Crude Petroleum and Natural Gas 4 $124,596 $124,596 Other Mining 5 $26,083 $26,083 New Construction 6 Maintenance and Repair 7 $95,876 $95,876 $10,000 $10,000 Food and Kindred Products 8 $19,839 $19,839 Paper and Allied Products 9 $1,034 $1,034 Chemicals and Petroleum Processing 10 $144,574 $144,574 $20,000 $20,000 Lumber and Wood Products 11 $1,609 $1,609 Other Manufacturing 12 $90,490 $90,490 $69,500 $69,500 Railroads 13 $11,893 $11,893 Local and Interurban Transit 14 $7,612 $7,612 $5,000 $5,000 Motor Freight and Warehousing 15 $48,244 $48,244 $30,237 $30,237 Water Transportation 16 $5,419 $5,419 Air Transportation 17 $57,931 $57,931 Pipelines 18 $3,142 $3,142 Transportation Sarvices 19 $9,402 $9,402 $5,000 $5,000 Communication 20 $142,341 $142,341 $69,500 $69,500 Electric, Gas, Water, and Sanitary 21 $488,845 $488,845 $270,000 $270,000 Wholesale Trade 22 $148,404 $148,404 $82,224 $82,224 Retail Trade 23 $273,741 $273,741 $51,225 $51,225 Finance 24 $72,218 $72,218 $15,000 $15,000 Insurance 25 $31,103 $31,103 $7,500 $7,500 Real Estate 26 Hotels, Lodging, Amusements 27 Paraonal Services 28 Business Services 29 $313,569 $313,569 $38,598 $38,598 $22,427 $22,427 $481,690 $481,890 $3n,911 $377,911 Eating and Drinking 30 $123,793 $123,793 Health Sarvices 31 $180,767 $180,767 $79,093 $79,093 Miscellaneous Services 32 $137,260 $137,260 $15,000 $15,000 Federal Government Ent 33 $92,836 $92,836 $79,093 $79,093 State & Local Government Ent 34 $172,846 $172,846 $171,650 $171,650 Households 35 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxx xxxxxxxxxx xxxxxxxxxx xxxxxxxxxx State & Local Government 36 x2 37 x3 38 x4 39 x5 40 DIRECT OUTPUT NA TOTAL OUTPUT $3,375,202 $3,375,202 TOTAL/DIRECT ERR Method C. OUTPUT10.WK4 12/ :35 AM

43 HATCHER PASS SKI RESORT - INITIAL PHASE ISER 1-0 MODEL PAYROLL AT 1994 LEVEL ECONOMIC EFFECT TOTAL INDIRECT & INDUCED FIRST ROUND INDIRECT & INDUCED: PROCUREMENT STATE SOUTH SOUTH SOUTH NORTH STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST TOTAL EAST CENTRAL WEST I II Ill IV I II Ill IV INDIRECT AND INDUCED PAYROLL $1,000,133 $1,000,133 $476,015 $476,015 Agriculture and AFF Services 1 $1,255 $1,255 Forestry 2 $45 $45 Fishing 3 $426 $426 Crude Petroleum and Natural Gas 4 $11,556 $11,556 Other Mining 5 $8,526 $8,526 New Construction 6 Maintenance and Repair 7 $40,987 $40,987 $4,275 $4,275 Food and Kindred Products 8 $2,902 $2,902 Paper and Allied Products 9 $165 $165 Chemicals and Petroleum Processing 10 $5,836 $5,836 $807 $807 Lumber and Wood Products 11 $249 $249 Other Manufacturing 12 $22,280 $22,280 $17,112 $17,112 Railroads 13 $3,056 $3,056 Local and Interurban Transit 14 $1,956 $1,956 $1.285 $1,285 Motor Freight and Warehousing 15 $12,397 $12,397 $7,nO $7,770 Water Transportation 16 $1,392 $1,392 Air Transportation 17 $14,886 $14,886 Pipelines 18 $807 $807 Transportation Services 19 $2,416 $2,416 $1,285 $1,285 Communication 20 $39,693 $39,693 $19,381 $19,381 Electric, Gas, Water, and Sanitary 21 $38,979 $38,979 $21,529 $21,529 Wholesale Trade 22 $57,568 $57,568 $31,895 $31,895 Retail Trade 23 $128,551 $128,551 $24,056 $24,056 Finance 24 $28,388 $28,388 $5,896 $5,896 Insurance 25 $13,051 $13,051 $3,147 $3,147 Real Estate 26 $4,217 $4,217 Hotels, Lodging, Amusements 27 $11,735 $11,735 Personal Services 28 $10,537 $10,537 Business Services 29 $249,339 $249,339 $195,538 $195,538 Eating and Drinking 30 $36,509 $36,509 Health Services 31 $102,049 $102,049 $44,651 $44,651 Miscellaneous Services 32 $49,038 $49,038 $5,359 $5,359 Federal Government Ent 33 $33,167 $33,167 $28,257 $28,257 State & Local Government Ent 34 $61,751 $61,751 $61,324 $61,324 Households 35 $4,422 $4,422 $2,449 $2,449 State and Local Government 36 X2 37 X3 38 X4 39 XS 40 DIRECT PAYROLL $1,241,132 $1,241,132 TOTAL PAYROLL $2,241,265 $2,241,265 TOTAL/ DIRECT 1.81 Method C. OUTPUT10.WK4 12/Z2/97 09:35 AM

44 HATCHER PASS SKI RESORT - INITIAL PHASE ISER 1-0 MODEL EMPLOYMENT ECONOMIC EFFECT TOTAL INDIRECT & INDUCED FIRST ROUND INDIRECT & INDUCED: PROCUREMEI STATE SOUTH SOUTH SOUTH NORTH STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST TOTAL EAST CENTRAL WEST I II Ill IV I II Ill IV INDIRECT AND INDUCED JOBS Agriculture and AFF Services Forestry 2 Fishing 3 Crude Petroleum and Natural Gas Other Mining New Construction 6 Maintenance and Repair Food and Kindred Products Paper and Allied Products 9 Chemicals and Petroleum Processing Lumber and Wood Products 11 Other Manufacturing Railroads Local and Interurban Transit Motor Freight and Warehousing Water Transportation 16 Air Transportation Pipelines 18 Transportation Services Communication Electric, Gu, Water, and Sanitary Wholesale Trade Retail Trade Finance Insurance Real Estate Hotels, Lodging, Amusements Personal Services Business Services Eating and Drinking Health Services Miscellaneous Services Federal Government Ent State & Local Government Ent Households 35 State and Local Government 36 X2 37 X3 38 X4 39 XS 40 DIRECT JOBS 7 7 TOTAL JOBS TOTAL I DIRECT 1.53 Method C. OUTPUT10.WK /97 09:35AM

45 Hatcher Pass Ski Resort Phase 1 Economic Significance HATCHER PASS SKI RESORT PHASE 1 ECONOMIC SIGNIFICANCE APPENDIX D

46 HATCHER PASS SKI RESORT -- INITIAL PHASE ISER 1-0 MODEL HATCHER PASS SKI RESORT- INITIAL PHASE OFFSITE VISITOR SPENDING ALLOCATION FROM COMMODITIES TO INPUT OUTPUT CATEGORIES SUM EXPENSE FOOD LODGING TRANSPORT MISC RETAIL EXPENDITURES PER SKIER MAKING PURCHASE $10 $50 $20 $10 NON-MATSU SKIERS--INITIAL FULL YEAR OF OPERATION 59,200 59,200 59,200 59,200 % OF SKIERS MAKING EXPENDITURE so,r, 10,r, 20,r, 20,r, TOTAL EXPENDITURES $947,200 $296,000 $296,000 $236,800 $118,400 SUM UP OF ALLOCATED AMOUNTS $947,200 SUM IMPACTING ALASKA $876,160 EXPENDITURE DIRECTLY LEAKING $71,040 so,r, INPUT OUTPUT CATEGORY Agriculture and AFF Services Forestry Fishing Crude Petroleum and Natural Gas Other Mining New Constructioo Maintenance and Repair Food and Kindred Pr<Xlucts Paper and Allied Products Chemicals and Petroleum Processing Lumber and Wood Products Other Manufacturing Railroads Local and Interurban Transit Motor Freight and Warehoosing Water Transportatloo Air Transportatioo Pipelines Transportation Services Communicatloo Electric, Gas, Water, and Sanitary Wholesale Trade Retail Trade Finance Insurance Real Estate Hotels, lodging, Amusements Personal Services Business Services Eating and Drinking Health Services Miscellaneous Services Federal Government Ent State & Local Government Ent Households State and Local Government X2 X3 X4 XS $177,600 $106,560 $296,000 $296, ,r, 100,r, 75,r, 2s,r, 40,r, direct effects jobs direct effects payroll direct effect sales direct effect. VA NA NA 0 average annual wage OUTPUT10.WK4 12/ :19AM

47 HATCHER PASS SKI RESORT-INITIAL PHASE ISER 1-0 MODEL FINAL DEMAND VECTOR ECONOMIC EFFECT EXPENDITURES HOUSEHOLDS OFFSITE VISITOR EXPENDITURES STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST I II Ill IV TOTAL INSTATE SPENDING INFLUENCING FINAL DEMAND $876,160 $876,160 Agrlculture and AFF Services 1 Forestry 2 Fishing 3 Crude Petroleum and Natural Gas 4 Other Mining 5 New Construction 6 Maintenance and Repair 7 Food and Kindred Products 8 Paper and Aliled Products 9 Chamlcals and Petroleum Processing 10 $177,600 $177,600 Lumbar and Wood Products 11 01har Manufacturing 12 Railroads 13 Local and Interurban Transit 14 Motor Freight and Warehousing 15 Water Transporlatlon 16 Air Transportation 17 Plpailnas 18 Transportation Services 19 Communication 20 CHANGE IN Electrlc, Gaa, Water, and Sanitary 21 FINAL DEMAND Wholesale Trade 22 Retail Trade 23 $106,560 $106,560 HOUSEHOLD Finance 24 PURCHASES Insurance 25 Real Estate 26 Hotels, Lodging, Amusements 27 $296,000 $296,000 Personal Services 28 Business services 29 Eating and Drinking 30 $296,000 $296,000 Health Services 31 Mlsceilanaous Services 32 Federal Government Ent 33 state & Locel Government Ent 34 Households 35 CHANGE IN state and Local Government 36 PURCHASES X2 37 X3 38 BYHH'S FROM X4 39 HH XS 40 JOBS PAYROLL INSTATE CHANGE IN FINAL DEMAND NA VALUE ADDED na Method B. OUTPUT10.WK4 12/22/97 09:21 AM

48 HATCHER PASS SKI RESORT -- INITIAL PHASE ISER 1-0 MODEL ECONOMIC EFFECT SUMMARY HOUSEHOLD EXPENDITURES OFFSITE VISITOR EXPENDITURES SOUTH SOUTH II SOUTH WEST Ill NORTH IV TOTAL EFFECT OUTPUT $1,478,224 $1,478,224 PAYROLL $373,466 $373,466 EMPLOYMENT FIRST ROUND EFFECT OF HH SPENDING * OUTPUT $876,160 $876,160 PAYROLL $234,499 $234,499 EMPLOYMENT SUBSEQUENT INDIRECT AND INDUCED EFFECT OUTPUT $602,064 $602,064 PAYROLL $138,967 $138,967 EMPLOYMENT DIRECT EFFECT MULTIPLIERS (BEA DEF.) OUTPUT 1.69 ERR 1.69 ERR ERR PAYROLL 1.59 ERR 1.59 ERR ERR EMPLOYMENT 1.37 ERR 1.37 ERR ERR FINAL DEMAND MULTIPLIERS (BEA DEF.) OUTPUT (million$) $ $ PAYROLL (million$) EMPLOYMENT $ $ DIRECT EFFECT MULTIPLIERS are the ratio of the total to direct change In output, payroll, or employment. FINAL DEMAND MULTIPLIERS are the total dollar or job change for each addltional million $ of final demand. If the direct effect is confined to a single region the regional multipliers are the portion of the total effect occurring In that region. If the direct effect occurs in more than one region the regional multipliers do not have the normal Interpretation and only the statewide multipliers should be used. method B. Includes the Direct to Household Effect of payroll, Jobs, and output to the household sector as a separate Industry. OUTPUT10.WK4 12/22/97 09:21 AM

49 HATCHER PASS SKI RESORT -- INITIAL PHASE ISER 1-0 MODEL ECONOMIC EFFECT SUMMARY BY INDUSTRY OFFSITE VISITOR EXPENDITURES INDUSTRY EMPLOYMENT PAYROLL OUTPUT TOTAL EFFECT 18.8 DIRECT TO HOUSEHOLDS EFFECT INDIRECT AND INDUCED EFFECT 18.8 $373,466 $1,478,224 $373,466 $1,478,224 Agriculture and AFF Services Forestry Fishing Crude Petroleum and Natural Gas Other Mining New Construction Maintenance and Repair Food and Kindred Products Paper and Allied Products Chemicals and Petroleum Processing Lumber and Wood Products Other Manufacturing Railroads Local and Interurban Transit Motor Freight and Warehousing Water Transportation Air Transportation Pipelines Transportation Services Communication Electric, Gas, Water, and Sanitary Wholesale Trade Retail Trade Finance Insurance Real Estate Hotels, Lodging, Amusements Personal Services Business Services Eating and Drinking Health Services Miscellaneous Services Federal Government Ent State & Local Government Ent Households State and Local Government X2 X3 X4 X $401 $1,459 $16 $74 $601 $2,868 $9,317 $100,456 $833 $2,549 $8,792 $20,566 $1,862 $12,732 $27 $166 $8,826 $218,660 $51 $328 $2,202 $8,943 $728 $2,833 $371 $1,444 $1,996 $7,769 $654 $2,546 $2,725 $10,606 $926 $3,602 $313 $1,219 $7,142 $25,612 $4,603 $57,732 $9,240 $23,820 $67,655 $144,066 $8,036 $20,444 $1,662 $3,962 $1,089 $80,955 $92,640 $304,715 $2,999 $6,384 $21,315 $41,195 $95,182 $322,734 $9,401 $16,652 $8,914 $24,950 $1,808 $5,061 $401 $1,121 $737 xxxxxxxxxx Method B. OUTPUT10.WK4 12/22/97 09:21 AM

50 HATCHER PASS SKI RESORT - INITIAL PHASE ISER 1-0 MODEL OUTPUT ECONOMIC EFFECT TOTAL ROUND ONE STATE SOUTH SOUTH SOUTH NORTH STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST TOTAL EAST CENTRAL WEST I II Ill IV I II Ill IV INDIRECT AND INDUCED $1,478,224 $1,478,224 $876,160 $876,160 Agrlculture and AFF Services 1 $1,459 $1,459 Forestry 2 $74 $74 Fishing 3 $2,868 $2,868 Crude Petroleum and Natural Gas 4 $100,456 $100,456 other Mining 5 $2,549 $2,549 New Construction 6 Maintenance and Repair 7 $20,566 $20,566 Food and Kindred Products 8 $12,732 $12,732 Paper and Allied Products 9 $166 $166 Chemicals and Petroleum Processing 10 $218,680 $218,660 $177,600 $177,600 Lumber and Wood Products 11 $328 $328 other Manufacturing 12 $8,943 $8,943 Rallroeds 13 $2,833 $2,833 Local and Interurban Transit 14 $1,444 $1,444 Motor Freight and Warehousing 15 $7,769 $7,769 Water Transportation 16 $2,546 $2,546 Air Transportation 17 $10,606 $10,606 Pipelines 18 $3,602 $3,602 Transportation Services 19 $1,219 $1,219 Communication 20 $25,612 $25,612 Electric, Gas, Water, and Sanitary 21 $57,732 $57,732 Wholesale Trade 22 $23,820 $23,820 Retail Trade 23 $144,066 $144,066 $106,560 $106,560 Finance 24 $20,444 $20,444 Insurance 25 $3,962 $3,962 Real Estate 26 $80,955 $80,955 Hotels, Lodging, Amusements 27 $304,715 $304,715 $296,000 $296,000 Personal Services 28 $6,384 $6,384 Business Services 29 $41,195 $41,195 Eating and Drinking 30 $322,734 $322,734 $296,000 $296,000 Health Services 31 $16,652 $16,652 Miscellaneous Services 32 $24,950 $24,950 Federal Government Ent 33 $5,061 $5,061 state & Local Government Ent 34 $1,121 $1.121 Households 35 xxxx.xxxxxx xxxx.xxxxxx xxxx.xxxxxx xxxx.xxxxxx xxxxxxxxxx state & Local Government 36 x2 37 x3 38 x4 39 xs 40 DIRECT TO HOUSEHOLDS NA TOTAL $1,478,224 $1,478,224 Method B. ERR OUTPUT10.WK4 12/22/97 09:21 AM

51 HATCHER PASS SKI RESORT - INITIAL PHASE ISER 1-0 MODEL PAYROLL AT 1994 LEVEL TOTAL ECONOMIC EFFECT ROUND ONE STATE SOUTH SOUTH SOUTH NORTH STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST TOTAL EAST CENTRAL WEST I II Ill IV I II Ill IV INDIRECT AND INDUCED $373,466 $373,466 $234,499 $234,499 Agriculture and AFF Services 1 $401 $401 Forestry 2 $16 $16 Fishing 3 $601 $601 Crude Petroleum and Natural Gas 4 $9,317 $9,317 Other Mining 5 $833 $833 New Construction 6 Maintenance and Repair 7 $8,792 $8,792 Food and Kindred Products 8 $1,862 $1,862 Paper and Allied Products 9 $27 $27 Chemicals and Petroleum Processing 10 $8,826 $8,826 $7,169 $7.169 Lumber and Wood Products 11 $51 $51 Other Manufacturing 12 $2,202 $2,202 Railroads 13 $728 $728 Local and Interurban Transit 14 $371 $371 Motor Freight and Warehousing 15 $1,996 $1,996 Water Transportation 16 $654 $654 Air Transportation 17 $2,725 $2,725 Pipelines 18 $926 $926 Transportation Services 19 $313 $313 Communication 20 $7,142 $7,142 Electric, Gas, Water, and Sanitary 21 $4,603 $4,603 Wholesale Trade 22 $9,240 $9,240 Retail Trade 23 $67,655 $67,655 $50,041 $50,041 Finance 24 $8,036 $8,036 Insurance 25 $1,662 $1,662 Real Estate 26 $1,089 $1,089 Hotels. Lodging, Amusements 27 $92,640 $92,640 $89,991 $89,991 Personal Services 28 $2,999 $2,999 Business Services 29 $21,315 $21,315 Eating and Drinking 30 $95,182 $95,182 $87,297 $87,297 Health Services 31 $9,401 $9,401 Miscellaneous Services 32 $8,914 $8,914 Federal Government Ent 33 $1,808 $1,808 State & Local Government Ent 34 $401 $401 Households 35 $737 $737 State and Local Government 36 X2 37 X3 38 X4 39 XS 40 DIRECT TO HOUSEHOLDS TOTAL $373,466 $373,466 Method B. ERR OUTPUT10.WK :21 AM

52 HATCHER PASS SKI RESORT -- INITIAL PHASE ISER 1-0 MODEL EMPLOYMENT ANNUAL AVERAGE JOBS ECONOMIC EFFECT TOTAL ROUND 1 STATE SOUTH SOUTH SOUTH NORTH STATE SOUTH SOUTH SOUTH NORTH TOTAL EAST CENTRAL WEST TOTAL EAST CENTRAL WEST I II Ill IV I II Ill IV INDIRECT AND INDUCED Agriculture and AFF Services 1 Forestry 2 Fishing 3 Crude Petroleum and Natural Gas Other Mining 5 N- Construction 6 Maintenance and Repair Food and Kindred Products Paper and Allied Products 9 Chemicals and Petroleum Processing Lumber and Wood Products 11 Other Manufacturing Railroads 13 Local and Interurban Transit 14 Motor Freight and Warehousing WaterTransporllltion 16 Air Transportation Pipelines 18 Transportation Services 19 Communication Electric, Gas, Water, and Sanitary Wholesale Trade Retail Trade Finance Insurance 25 Real Estate 26 Hotels, Lodging, Amusements Personal Services Business Services Eating and Drinking Health Services Miscellaneous Services Federal Government Ent 33 State & Local Government Ent 34 Households 35 State and Local Government 36 X2 37 X3 38 X4 39 XS 40 DIRECT TO HOUSEHOLDS TOTAL Method B. ERR OUTPUT10.WK /97 09:21 AM

53 Hatcher Pass Ski Resort Phase 1 Economic Significance HATCHER PASS SKI RESORT PHASE 1 ECONOMIC SIGNIFICANCE APPENDIX E

54

55 Hatcher Pass Ski Resort Phase 1 Economic Significance The is analysis was conducted using the ISER input-output model of the Alaska economy. The primary purposes of the ISER Alaska input-output model are to measure the economic impact and economic importance of selected activities on the Alaska economy and to measure the economic impact of changes in the level of these activities. A related purpose is to study the structure of the Alaska economy. Output The output measures that the model include compensation, and value added for 40 industries in 4 regions of the state. As currently configured the model generates output, employment, and payroll by industry and geographic region as well as aggregates across industries and regions. Additional measures, such as tax revenues generated by industry, may be added as data becomes available. Out1mt represents all the sales revenues of firms except for the trade sector where output is a measure of the trade margin (the difference between revenues and the cost of goods sold). For this reason employment and payroll are generally more useful indicators of economic activity than output or sales. EmJ>loyment is annual average employment based on the average annual wage of workers in each industry. Payroll is the total wages received by workers. EmJ)loyee ComJ)ensation is all payments to workers including payments in kind and payments made on behalf of the worker such as for health insurance. Value Added includes not only employee compensation, but also indirect business taxes and profits. It is the best measure of the income earned within the region and comparable to Gross Product. Each output measure is presented in total and also allocated among the Direct, Indirect, and Induced effects. The Direct Effect measures the direct effects produced in Alaska industries by the changes in Final Demand contained in the Final Demand Vector. For example an increase in export sales of Alaskan coal (measured at the mine mouth net of transportation costs) would generate an increase in output, employment, and payroll of the coal mining industry to satisfy the higher level of industry demand. This is the direct effect of the change in final demand for export coal sales. The Indirect Effect measures the changes in output, employment, and payroll for Alaska businesses that results from local businesses supplying goods and services to the coal mining industry. For example an increase in coal production would require more fuel, and Alaska fuel producers and distributors would increase their production to meet the increased demand indirectly created for them by the increase in coal exports. Furthermore firms selling to the fuel suppliers would experience increases in their businesses and this would be included in the indirect effect. The indirect effect is a measure of the interdependency of industrial sectors within the economy. The Induced Effect further measures the changes in output, employment, and payroll for all Alaska businesses resulting from consumer purchases by households witl1 workers whose incomes increase due to the rise in economic activity in the region. For example, new workers in the fuel distribution business will make personal consumption expenditures that would not otherwise have occurred. These purchases increase demands in trade, services, and other sectors of the economy. Businesses in these sectors in turn hire additional workers who spend tl1eir new wages in the economy, further stimulating economic activity across a broad spectrum of industries. This process continues until spending within the economy stops. Leakages which stop this process of re-spending within the region consist primarily of the purchase of goods and services outside the region, and savings. Multipliers The process by which purchases by businesses and households further stimulate purchases by other businesses and households is known as the MultiJ)lier Effect. Several types of Economic MultiJ>liers can be derived from the input-output model that summarize the amount of total economic activity stimulated by a change in final demand. C:\TEXT\REPORT\hatcherpass.wpd April 30, 1998 Page i

56 Hatcher Pass Ski Resort Phase 1 Economic Significance The US Department of Commerce uses two different categories of economic multipliers: Direct Effect Multipliers and Final Demand Multi11liers. A direct effect multiplier is defined as the ratio of the total to the direct change in a measure of economic activity such as sales, employment, or payroll. A final demand multiplier is defined as the ratio of the total economic effect to the change in final demand measured in dollars, and can be interpreted as a "bang per buck" measure. An additional measure known as a Response Coefficient is also occasionally used. This is a measure of the change in some economic variable in response to a 1 unit change in the physical output of some good or service. ' Direct effect multipliers are also defined as Type I, Type II, Type III, etc. based upon the categories of spending that arc included in the calculation. The I includes direct indirect the II multiplier includes direct, indirect and induced effects. The multipliers generated as output of the Alaska inputoutput model are Type II multipliers because the model is closed to households meaning that the change in household purchases in response to a change in final demand is included in the calculation. A Type III multiplier is sometimes defined as differing from a Type II multiplier in the treatment of household expenditures. For example, in the Forest Service IMPLAN model the Type III multiplier includes a household expenditure response based on spending by new households that move into the region rather than additional spending by existing households in the region. Type II multipliers will be larger than Type I multipliers because they include the household spending response. Generally regional models are not closed to investment or government spending. The response of new capital investment spending and government spending both tend to occur with a time lag and the link between changes in current output levels and changes in investment spending and government spending tends to be less direct than changes in current business activity and household spending. Because these responses are not included in the Alaska input-output model, it is characterized as an impact model and its multipliers as Im11act Multipliers. Some input-output models however are closed to state and local government spending. These may also be called Type III models. A model that is also closed to investment is sometimes called a Type IV model. Since it is an impact model the Alaska input-output model has multipliers that are generally smaller than those of a dynamic simulation model such as the ISER MAP econometric model for Alaska which incorporates an investment spending response as well as a government spending response to changes in current economic activity. In a simulation model the size of the multiplier will generally vary over time as the effects of these responses work through the economy. In addition a simulation model can reflect the process of structural change over time which is not captured in a static input-output model. Import substitution is one form of structural change that could reduce leakage over time for a given level of final demand. In particular the introduction of an new industry selling to final demand in a region can alter the pattern of trade coefficients in many industries if new types of firms move into the region to supply inputs to the new industry. The size of the multiplier depends not only on the variable being measured and whether the model is closed to the household sector. For a given change in final demand the multiplier varies by industry as well as by location. Industries that have relatively large purchases of supplies produced by Alaska businesses (most services and supplies like fuels), industries that are labor intensive, and industries with a large ratio of value added to sales will tend to have larger multipliers. This is because the local purchase of supplies leads to a larger indirect effect, a large share of expenses devoted to payroll leads to a large induced effect (The economic effect of $1 of payroll is the same for all industries, but the multiplier will be larger if there are more payroll dollars.), and a large share of sales consisting of value added potentially results in large increases in public and private income within the region. The role of payroll in determining the size of the multiplier is particularly important in Alaska since interindustry purchases (backward links) are less important here than in more mature economies. The absence of a developed manufacturing sector means that most goods must be purchased outside the state, resulting in large leaks of spending and small indirect multiplier effects. Most of the backward links occur as the result of the purchase of services and the purchase of raw materials by natural resource processors (which may be supply constrained). Smaller regions tend to have a narrower range of businesses represented in the local economy and consequently the leaks out (purchases from other regions) will tend to be higher and the multipliers lower. C:\TEXT\REPORT\hatcherpass. wpd April 30, 1998 Page ii

57 Hatcher Pass Ski Resort Phase 1 Economic Significance The size of the multiplier depends upon the structure of the economy at the time of the change in final demand. For example the availability of supplies and labor is important. If resident labor is available the induced effects will be larger than if non-resident and transient labor fills the jobs created by the change in final demand. In this case much of the household income will leak out of the region and generate economic activity where these temporary workers permanently reside. In addition the size of tl1e economy will influence its structure and consequently the share of supplies that a business or household is likely to purchase locally. The size of the multiplier also depends upon the size of tl1e area within which the effects are being measured. Generally the larger the area the smaller the leakage of transactions and the larger the multipliers. In the Alaska model the for each in each be calculated based the effects occurring either within the region of direct effect, or throughout the state. Finally, the size of the multiplier depends upon the characterization of the change in final demand. An increase of coal exports of $1 million measured at the mine mouth will have effects on the economy over and above the direct, indirect, and induced effects we have discussed. The most obvious additional effect will be to increase the output of the Alaska businesses transporting the coal to tidewater. This is a forward link that should be included as an additional component of the change in final demand when conducting the economic impact or significance analysis. Often however it is incorrectly included with the indirect and induced effects in the numerator of the multiplier formula. The result is an inappropriate multiplier value. Types of Analysis The input-output model can be used to conduct both economic imj>act analysis and economic significance analysis. These are different methods of assessing the economic importance of an activity within a region. Economic impact is the traditional analysis done using input-output. A final demand vector, representing a change in export sales, or income flowing into a region, is used to calculate the resulting total change in economic activity. The assumption of this type of analysis is that all the economic activity thus measured is attributable to the change in final demand, and would not occur absent the change in final demand. An economic significance analysis is a description of the level of activity associated with an industry or sector but it does not presume that the activity would not take place if the industry or sector were absent. In this case the vector used to generate the result is not a final demand vector. Rather it represents the activity whose importance is being measured. For example, the model could be used to estimate the economic importance of a new ski resort in South Central Alaska. The change in final demand represented by the new resort would determine its economic impact on the region. The change in final demand would come primarily from non-resident visitors who would be attracted to Alaska to use the new resort. The components of the change in final demand would not only be spending at the resort, but also travel, and spending on other visitor activities while in Alaska. In contrast the economic significance of the resort would be based on its total sales to both residents and non-residents. The economic significance would include but be greater than the impact because resident spending at the resort would be largely offset by reduced spending elsewhere in the region. The net economic effect of the shift in the pattern of resident expenditures would be small even though it might be difficult to determine what spending was eliminated by the presence of the resort. Implementation The model resides in a Lotus V file (OUTPUTn) which consists of several sheets for formulating the Final Demand Vector, storing the Total Requirements Table and other data vectors necessary to run the model, and displaying the model output (n designates the version of the file). A separate set of files contains the data necessary for the creation of the Total Requirements Table. These files are arranged sequentially so that the model C:\TEXT\REPORT\hatcherpass. wpd April 30, 1998 Page iii

58 Hatcher Pass Ski Resort Phase 1 Economic Significance can be easily updated and revised as conditions warrant. Use of the model requires the creation of a final demand vector describing the change in final demand resulting from the activity under study broken down by the 40 industries and 4 regions represented in the model. Examples of final demand vectors include the expenditures associated with an increase in the number of tourists visiting the state or the opening of a new mine which exports it output to other states or countries. Correctly structuring the final demand vector is the most important and often the most difficult task involved in using the model. There are three different forms of final demand vector that the model can accept. Each is constructed and The of vector are follows: 1. Sales to final demand of one or more firms represented among the columns of the Direct Requirements Table. [ FINAL DEMAND CHANGE] An example of this would be an increase of$1 million in export sales of the mining industry. In this case the final demand vector would have a single entry of$1 million in the Other Mining Industry row in the appropriate region. (Depending on the analysis it might also have an entry in the Railroad Transportation row representing the cost of transportation from the mine mouth to tidewater.) This is the easiest type of final demand vector to create and use, and the type most commonly presented as an example in descriptions of the input-output model methodology, but it is rarely used with the Alaska inputoutput model. This is because most analysis involves activities that are not well represented by the 40 industries included in tl1e model. For example we might want to calculate the impact of an increase in sales of the bush air carriers to tourist visitors. Although the model has an Air Transport Industry, it includes large domestic and international passenger and freight carriers as well as bush carriers. Bush carriers are only a small part of the industry and they may well have structural characteristics very different from the larger carriers. Estimation of the impact of bush carrier expansion based on industry averages would be possible, but a better estimate could be made using more specific information about the bush carriers. This can be done using the second method of constructing a final demand vector. 2. Total local 1mrchases by a firm including payroll. [PROCUREMENT] This alternative allows us to "fine tune" the final demand vector using locally available information to better represent the activity under analysis rather than relying on the aggregate industry average structural information embedded in the direct requirements table. For example the bush air carrier sector of the Air Transport industry in Alaska may be more labor intensive than the industry average, pay a lower average wage, and have a higher percentage of resident employees than the industry average. This information is important for determining the total economic effect of a change in final demand for bush carrier services, but this information is not imbedded in the input-output model where Air Transport represents the average structure for the industry. Because information on industry purchases may not be available for the categories into which the inputoutput model divides economic activity, it may be necessary to use a matrix that converts finn purchases by commodity into purchases by industry prior to creation of the final demand vector. 3. Personal Consumption Ex1>enditures [HOUSEHOLD EXPENDITURES] This alternative allows us to estimate the economic effects of a change in personal income or personal consumption expenditures. Examples of activities subject to this type of analysis would be the Permanent Fund Dividend or an increase in non-resident tourist visitor expenditures. A change in personal income would be easily represented in the model by a change in the Household row of the final demand vector. If this income comes in the form of a transfer payment there will be no direct output, payroll, or employment associated with it so there are no multipliers in the usual sense. If it is possible to specify the personal consumption expenditures that households would make in response to a change in income, or if a change in personal consumption expenditures itself is the activity of interest, then the final demand vector would represent those specific expenditures. Since the personal consumption expenditures are generally reported by commodity, whereas the input-output model is designed around industries, it is necessary to C:\ TEXT\REPORT\hatcherpass. wpd April 30, 1998 Page iv

59 Hatcher Pass Ski Resort Phase 1 Economic Significance convert expenditures by commodity into expenditures by industry in order to create the final demand vector for household expenditures. Conversion tables for personal consumption expenditures are available from the National Income and Product Accounts to accomplish this. For example a tourist purchase of a souvenir cannot be directly represented in a final demand vector because there is no industry classification entitled Souvenirs. The commodity-industry matrix would allocate this tourist purchase among the appropriate manufacturing industry and the transportation and trade margins represented by the purchase price. Model Construction The starting point for the creation of the Alaska model is the RIMS II model for Alaska published by the US Department of Commerce, Bureau of Economic Analysis, a 39 industry input-output model constructed from the national input-output model. (See Regional Input-Output Modeling System <RIMS II): Estimation, Evaluation, and Application of a Disaggregated Regional Impact Model and Regional Multipliers; A User Handbook for the Regional Input-Output Modeling System <RIMS II) both from the Bureau of Economic Analysis. The current version of the model uses the tables published in 1993.) The regionalization of the RIMSII model uses a disaggregated "mixed location quotient" technique to generate regional trade coefficients directly from the national technical coefficients without the necessity of creating a regional transactions table. Earnings based location quotients are used for industries that sell predominately to intermediate demand, while personal income based location quotients are used for industries that sell predominately to final demand. The use of personal income based location quotients in service industries is intended to account for all sources of output demand in these industries. Furthermore, RIMSII estimates regional Household row and column coefficients based on national I-0 household payment and expenditures coefficients. The resulting coefficients are then aggregated from the 496 industry level into a more manageable sized table of technical coefficients. Although the RIMSII model is non-survey based, it has been shown to closely approximate the results of very expensive survey based models for some states. However a number of further adjustments have been done to the RIMS II model so that it more closely represents the structure of the Alaska economy and the regions within Alaska. 1. Disaggregate Im1>0rtant Alaska Industries. We disaggregated three RIMSII industries--forestry and Fishing, Transportation, and Miscellaneous Services--using data from the detailed national input-output tables of the US Department of Commerce, Bureau of Economic Analysis. For each of these three RIMSII industries the appropriate set of industries from the national table was substituted into the RIMSII direct requirements table. For example 7 separate industries--railroads, Local Transportation, Motor Transportation, Water Transportation, Air Transportation, Pipelines, and Transportation Services-were inserted into the direct requirements table in place of tl1e single Transportation industry. The national coefficients were adjusted to reflect Alaska conditions using location quotients constructed from Alaska and US earnings data. The result of this procedure was a hybrid direct requirements table containing of 48 industries. 2. Combine Industries with Minimum Alaska Presence. We combined several industries from this hybrid direct requirements table which are unimportant in the Alaska economy to form a smaller and more manageable table of industries. For example, a number of manufacturing industries that have very little Alaska presence such as apparel, printing and publishing, rubber and leather products were combined into a single category of Other Manufacturing. This aggregation was done using employment and wage shares for each of the combined industries in calculating each aggregated industry trade coefficients. 3. Regionalize the Model. Earnings based location quotients were next used to regionalize the Alaska I O model into 4 regions which are aggregates of Alaska census areas. (These regions can be redefined by the user but 4 is the maximum number into which the state can be divided.) The 4 region direct requirements table includes inter-regional purchases to reflect the fact that economic activity in the regional centers such as Anchorage is influenced by changes in final demand in outlying regions of the state such as the Southwest. The C:\TEXT\REPORT\hatcherpass.wpd April 30, 1998 Pagev

60 Hatcher Pass Ski Resort Phase 1 Economic Significance inter-regional purchase coefficients were calculated so that the statewide total economic effect of a change in final demand occurring in any region would be the same. The location by region of the economic effects differs depending upon the region of final demand change. The current version of the model assumes that purchases flow from outlying regions to South Central Alaska but that no purchases flow out from South Central to the other regions. 4. Adjust Alaska Wage Rates and Value Added. After regionalization the direct requirements table, a 160 by 160 matrix, was inverted to create a total requirements table. Premultiplication of this total requirements table by a 160 by 1 final demand vector generates a vector of total change in output for 40 industries in 4 regions of the state. From this output vector employment, payroll, value added, and other variables by and can be generated using output ratios. The ratio of payroll to output by industry is used to calculate the total payroll effect of a change in final demand. At this point the residence adjustment for non-resident payroll paid by industry is adjusted based on judgement by the authors. The average annual wage by industry by region is used to calculate the total employment effect of a change in final demand. The ratio of value added to output is used to calculate the total value added effect of a change in final demand. 5. Construct Commodity by Industry Matrix. Since many applications of the input-output model are based on changes in final demand described by commodity rather than industry, a commodity by industry matrix is required to convert expenditures by commodity into expenditures by industry. The commodity by industry matrix not only allocates manufactured good expenditures to the appropriate manufacturing industry, but also splits out the transportation and trade margins. Model Accuracy The model is constructed using both national and Alaska sources. The national data includes the National Income and Product Accounts, the National Input-Output Model including supplementary tables, and the RIMSII models for Alaska. The data from these sources is in the form of coefficients and ratios describing the structure of the economy and particular industries. This structure tends to be relatively stable over time. The technical coefficients reflect the average production process for each industry and relative input prices. These coefficients will change over time if the average technology in the industry changes, the mix of firms in the industry changes, or if relative prices change. In using national data from former years we assume that these changes, to the extent they do occur, happen gradually and have little effect on the results generated by the model. The process of converting the national input output direct requirements table into a set of regional trade coefficients introduces some potential errors, These include aggregation bias, bias due to the existence of crosshauling, and differences in production functions between Alaska and the US average. Aggregation bias occurs when firms with different production functions are assigned to the same industry. The result is an industry that does not exactly reflect the characteristics of either firm. This problem is minimized in RIMSII by conducting the regionalization procedure on the most disaggregated level that the data will allow. The disaggregation process assumes that intermediate output in the region is sold within the region to meet local firm demands before any is exported to other regions. In reality sometimes inputs are imported even when local industry output is sufficient to meet local demand. Because the regionalization procedure cannot estimate the extent of this cross hauling the regional trade coefficients may have some upward bias. The amount of cross hauling between the Alaska economy and the rest of the world has not been documented, but it is probably relatively small so that we disregard this as a factor influencing the quality of the regional model. Differences in the industry production functions between Alaska and the rest of the US are potentially more significant, and it is here that adjustments to the Alaska I-0 model are made based on judgement and knowledge of the local economy. These differences are likely to be in industries like Petroleum and Construction where the production function is influenced by local geography and climate. In addition the RIMS II trade coefficients will change if there are changes in the locally supplied shares of industry inputs. In using RIMSII we assume that changes in the locally provided shares of inputs to Alaskan industries occur very slowly and that these changes do not have an appreciable effect on the results of the model. C:\TEXT\REPORT\hatcherpass.wpd April 30, 1998 Page vi

61 Hatcher Pass Ski Resort Phase 1 Economic Significance Of course change can be rapid for individual industries due to the small size of the economy. The introduction of a new firm or the loss of an existing firm within an industry, or a change in the source of supply for an important input to an industry can change the trade coefficients for that industry in the direct requirements table. Because of this the model results for individual industries are less robust than the aggregate results across all industries or broad categories of industries. In general a change in the trade coefficients for one industry will have a very small effect on the aggregate results of any analysis using the input-output model. More important than the size of any particular trade coefficient is their sum which represents the share of industry inputs that is supplied from within the economy. As long as the leakage out of the economy does not due to a in one trade the aggregate economic impact will not vary much with variation in the individual trade coefficients. In Alaska the sum of the trade coefficients for most industries is relatively small since many industrial inputs, particularly intermediate manufactured goods, are not produced locally. The indirect economic effect of any change in final demand will be relatively small. The induced economic effect due to household spending of income may be larger because household purchases tend to have a higher local component. As a result the most important variables for determining the total economic effect of a change in final demand within Alaska are generally the proportions of the direct effect that are paid to Alaskan suppliers and Alaskan households. (It is also important to properly identify what share of any change in final demand should be allocated to Alaska. For example, the groceries provided to non-resident visitors at a wilderness resort may be purchased by the resort in Seattle even though the visitors consume the groceries in Alaska. That particular visitor purchase does not have an indirect or induced effect on the Alaska economy.) The Alaska data includes payroll and employment information from the Alaska Department of Labor, earnings and income data from the US Department of Commerce, value added developed by ISER, and incidental data from a variety of Alaska sources which is used to adjust model coefficients to better reflect current Alaska conditions. Accuracy of model estimates also depends upon proper model application. This in turn requires knowledge of the structure of the economy and judgement about how it is likely to change in response to a change in final demand. Two important considerations are whether supply constraints will influence the response and whether the change should be treated as an average or marginal change. The output of most industries can increase in response to an increase in demand, although sometimes only with a lag. The natural resource industries are generally supply constrained such that an increase in final demand for the output of the seafood, wood products, mining, petroleum, and perhaps the tourism industries might be unsatisfied from local sources of supply. In those instances an increase in final demand could only be satisfied through an increase in imports of the supply constrained commodity. The locally supplied commodity for which a potential supply constraint is most important is petroleum since fuel is used as an important input in a broad range of industries. The supply of labor might be another instance where a short term shortage results in the importation of workers. The potential for supply constraints is handled on a case by case basis in the application of the model. An important assumption of the input-output model is that the composition of purchases by each industry in the economy in response to a change in final demand will be similar to the average for the industry. There are two reasons why this assumption might not be valid. First the firms within the industry that are effected by the change in final demand might not be representative of the average for the industry. For example the Air Transportation industry aggregates together national and international passenger and freight carriers with bush airlines. Although both are engaged in Air Transportation the structure of purchases for a typical international freight carrier could be quite different from that of the typical Alaska bush carrier. A change in final demand that specifically effects Alaska bush air carriers may then not be properly modeled by the Air Transportation industry which includes the international freight carriers. Second, a change in final demand could stimulate the establishment of new businesses rather than expansion of existing businesses in the region. If the structure of the new businesses is significantly different from existing businesses the average coefficients in the direct requirements C:\TEXT\REPORT\hatcherpass.wpd April 30, 1998 Page vii