The Economic and Societal Impact of Hampton Roads Transit

Transcription

1 The Economic and Societal Impact of Hampton Roads Transit Prepared for: Hampton Roads Transit 509 East 18th Street, Norfolk, VA Prepared by: Economic Development Research Group, Inc. 155 Federal Street, Suite 600, Boston, MA June 23, 2016

2 TABLE OF CONTENTS EXECUTIVE SUMMARY... 1 Chapter 1: Introduction Objectives and Scope Study Approach Methods for Assessing Impacts and Benefits Measures of Economic Value Economic Modeling and Multiplier Effects Data Sources and Analytical Tools Using this report Chapter 2: Regional Effects of Today s Transit Services The Hampton Roads Transportation Economy Regional Economy Overview Transit s Place in Regional Context The HRT System and Ridership Profile The Role of Transit Stimulus Effects of HRT Operations and Capital Spending Workforce Participation The Transit Consumer Economy Performance Benefits and Impacts of Transit Methodology Results Chapter 3: Critical Perspectives: Transit and the Economy Place Making Background Transit-Oriented Place making in Hampton Roads Call Centers and Contact Centers Industry Background Call Centers and Transit in the Hampton Roads Economy Shipbuilding and Repair Industry Background The Role of Transit at the Shipyard Health Care Services Industry Background Transit and the Health Care Industry in Hampton Roads... 51

3 3.5 Higher Education Industry Background Transit and the Hampton Roads Higher Education Sector Hospitality and Tourism Industry Background Transit and the Hampton Roads Hospitality and Tourism Economy Conclusions... 66

4 EXECUTIVE SUMMARY Hampton Roads Transit (HRT) provides bus, light rail, ferry, Transportation Demand Management, and paratransit services in six of Virginia s ten most populous cities. This includes Hampton and Newport News on the Peninsula, and Norfolk, Portsmouth, Chesapeake, and Virginia Beach on the Southside. There are currently approximately 3,200 bus stops, 11 light rail stations, and ferry landings in downtown Norfolk and Portsmouth. Approximately 71% percent of jobs in the HRT service area are located within a quarter mile of a transit stop, and 44% of working residents live within the same distance of HRT service. 1 In fiscal year 2015, HRT facilitated 16 million transit trips. 2 Objectives and Scope Within the overall scope of describing and quantifying the societal and economic value of public transportation in Hampton Roads, this study is structured to achieve the following specific objectives: Characterize the sectors of the Hampton Roads economy currently supported by transit in the region. Quantify the performance benefits and impacts of the HRT system. Assess the likely impact of enhanced public transportation investment. Bring the story of transit to life. The results provide a multi-faceted and meaningful view of the economic role of public transportation in the Hampton Roads region. This study explores the economic role and impact of transit through a comprehensive approach. Overall, this approach is taken to (1) describe the transit market, (2) consider its existing and potential economic impacts and (3) interpret these findings with respect to issues of strategic significance for the regional economy and Hampton Roads competitiveness. HRT Transit Market and Ridership Profile The current level of transit activity in the region highlights how transit can, does and may support current and emerging business and industry needs. Evaluating the ridership profile of the Hampton Roads Transit (HRT) system provides insights into the demographics of users and the ways in which transit enables economic and social participation within the region. These insights help to better understand the role that transit plays in the regional economy. The HRT system served over 16 million trips in fiscal year 2015 (July 2014 through June 2015) 3. Over 88% of these trips used the bus system, 9% used light rail, and the remaining 4% used either the ferry or 1 EDRG Group analysis using 2013 LEHD data from the U.S. Census. 2 Hampton Roads Transit. Ridership Trends as of June 30, Available at: Documents/Ridership/2015/June-2015-Presentation-Ridership.pdf. 3 Hampton Roads Transit. Ridership Trends as of June 30, The Economic and Societal Impact of Hampton Roads Transit 1

5 paratransit services. HRT invested $100.4 million in operations and maintenance expenditures in 2015 to provide a network of multimodal services. These investments directly support employment and operations at HRT itself, and also enable a broad range of users to participate in the broader Hampton Roads economy. Stimulus Effects of HRT Operations and Capital Spending In 2015, $100.4 million was invested in operating and maintaining the regional transit system. This was total spending, and includes everything from employee wages and benefits to fuel, tires and other materials, utilities, and contracted services. As is the case with most industry activities, some of HRT s goods and service needs can be met locally while others require sourcing from outside the region. Dollars spent on imported goods are not recycled through the regional economy. This phenomenon is called economic leakage. Economic modelling for this study sought to accurately reflect local purchasing patterns and economic leakage. For example, model inputs were adjusted for expenditures on fuel, utilities and some contracted services, like paratransit customer service, to account for economic leakage. Overall, spending of $100.4 million in 2015 resulted in a total within-region economic impact of $155.5 million in output, over 1,800 jobs, and $89.1 million in labor income within the Hampton Roads region Table 1: Economic stimulus of HRT O&M spending (2015) Impact Type Employment Labor Income Value Added Output Direct Effect 1,264 $64,143,000 $16,270,000 $77,976,000 Indirect Effect 157 $8,894,000 $13,655,000 $26,271,000 Induced Effect 387 $16,026,000 $29,642,000 $51,243,000 Total Effect 1,809 $89,063,000 $59,567,000 $155,490,000 Source: EDR Group analysis using the IMPLAN economic modelling system. (Dollars rounded to the nearest thousands, columns may not sum exactly due to rounding). From FY13-15, HRT spent an average of $7.8 million annually on capital investments, resulting in a within-region economic impact of approximately $2.0 million in output, 12 jobs, and $665,000 in labor income within the Hampton Roads region as outlined in Table 2. These investments included bus and other vehicle purchases, spending on supporting equipment used in HRT maintenance shops and garages, and facility improvement projects. Table 2: Economic stimulus of average annual HRT capital expenditures (FY13-FY15) Impact Type Employment Labor Income Value Added Output Direct Effect 7 $423,000 $562,000 $1,325,000 Indirect Effect 3 $122,000 $195,000 $351,000 Induced Effect 3 $120,000 $221,000 $383,000 Total Effect 12 $665,000 $978,000 $2,059,000 Source: EDR Group analysis using the IMPLAN economic modelling system. (Dollars rounded to the nearest thousands, columns may not sum exactly due to rounding). The Economic and Societal Impact of Hampton Roads Transit 2

6 With this level of projected capital investment, HRT would support $88.9 million in within-region output, 71 jobs, and $31.6 million in labor income annually from FY2017-FY2022 (Table 3). Table 3: Economic stimulus of average annual HRT capital spending (FY17-FY2022) Impact Type Employment Labor Income Value Added Output Direct Effect 38 $20,055,000 $24,118,000 $53,535,000 Indirect Effect 16 $5,852,000 $9,684,000 $17,168,000 Induced Effect 18 $5,679,000 $10,501,000 $18,156,000 Total Effect 71 $31,587,000 $44,302,000 $88,859,000 Source: EDR Group analysis using the IMPLAN economic modelling system. (Dollars rounded to the nearest thousands, columns may not sum exactly due to rounding). Workforce Participation In addition to the stimulus effects described above, Hampton Roads Transit connects employers throughout the region with their transit-using workforce. The value of this effect can be described by assessing the magnitude of employment in the region involving transit trips. In total, transit supports 20,351 jobs, $548.1 million in labor income, and over $1.5 billion in output in the 2015 Hampton Roads regional economy by enabling transit commuters to gain access to meaningful employment and providing employers with access to their workforce. This overall figure includes the jobs held by transit commuters and the $947.8 million in industry output (sales) produced directly as a result of labor provided by transit commuters. It also includes $277 million in additional sales at firms who provide input goods and services to those businesses that employ transit commuters (e.g. indirect impacts), along with $312.8 million in sales associated with spending by employees (e.g. induced impact). Table 4: Economic role of transit commuters Impact Type Employment Labor Income Value Added Output Direct Effect 14,764 $358,621,000 $548,388,000 $947,810,000 Indirect Effect 2,835 $83,933,000 $159,816,000 $277,031,000 Induced Effect 2,752 $105,572,000 $187,982,000 $312,807,000 Total Effect 20,351 $548,127,000 $896,186,000 $1,537,648,000 Source: EDR Group analysis using the IMPLAN economic modelling system. (Dollars rounded to the nearest thousands, columns may not sum exactly due to rounding). The Transit Consumer Economy In addition to directly supporting companies by providing employees a means of travelling to work, HRT also supports the regional economy by facilitating other forms of economic participation, including consumption of various goods and services. Dollars spent by those who use transit can be traced to associated sales and employment at businesses that serve the consumer market for example: grocery stores, shops, restaurants, doctor s offices, and others. The Economic and Societal Impact of Hampton Roads Transit 3

7 Overall, HRT enables approximately $149.9 million in business sales in the region and supports 1,200 jobs and $71.6 million in labor income by facilitating connections between transit riders and opportunities for participation within the consumer economy (Table 5). Table 5: Economic impact of consumer spending enabled by Hampton Roads Transit Impact Type Employment Labor Income Value Added Output Direct Effect 727 $50,286,000 $56,612,000 $85,181,000 Indirect Effect 147 $7,290,000 $13,881,000 $23,412,000 Induced Effect 323 $14,038,000 $25,140,000 $41,235,000 Total Effect 1,197 $71,614,000 $95,632,000 $149,828,000 Source: EDR Group analysis using the IMPLAN economic modelling system. Performance Benefits and Impacts of Transit Beyond enabling a certain set of economic activities, transit services are valuable for their relative efficiency compared to other transportation alternatives. Because of transit s existence, society as a whole benefits in a number of ways, including: Avoiding extra vehicle mileage on the roads and associated operating, safety, and environmental costs; Avoiding extra time and costs associated with less efficient ride-sharing; and Enabling workforce participation by those who do not have another means of transportation. A performance analysis of transit quantifies the savings and increased social benefits that businesses, households, and society as a whole enjoy as the result of current levels of transit service in contrast to the costs that would be incurred if that transit service were not present. For example, if a transit trip costs less and requires fewer people to spend time traveling (in contrast for example to a worker relying on a friend or neighbor to provide a ride to work), the relative cost savings of using transit compared to other reasonable alternatives is included in this category. The performance benefits and impacts of transit are naturally derived from the overall size of the transit market, but with an additional set of assumptions regarding the next-best alternative for travelers and the costs associated with that option. Phrased in another way, the purpose of a performance analysis is to describe the unique value offered by transit services, by quantitatively investigating the additional costs imposed if transit were not there. 1. Hampton Roads Transit supports ongoing economic activity in its role as a regional employer. As previously estimated, the operations and maintenance of the HRT transit system supports approximately 1,800 jobs annually in the Greater Hampton Roads region. This transit industry activity would be removed from the economy in a scenario in which transit did not exist. While the region would save on HRT operating cost expenditures ($100.4 million in 2015, of which $36.4 million was derived from local municipal sources), this would come at the expense of both the economic activity associated with HRT as an employer, as well as the economic participation and efficiency gains discussed below. The Economic and Societal Impact of Hampton Roads Transit 4

8 2. Hampton Roads Transit enables economic activity associated with those who have no other means of traveling to work. For the approximately 26% of the current transit-using workforce that is 100% dependent on regional transit service (with no backup options), transit enables economic participation and associated wider economic effects that would not be possible without HRT. Based on the total workforce participation impacts previously estimated, the economic activity associated with those who would stop working without transit access is equal to approximately 5,360 jobs, $144.5 million in labor income, and $405.3 million in output in the 2015 Hampton Roads regional economy (including indirect and induced effects). While these transit users would save on fares and travel time in a scenario where they no longer go to work (in the amount of approximately $1.9 million in fares and $40.6 million in time savings annually 4 ), they would accrue this savings at the expense of the ability to maintain a job and an income. 3. Hampton Roads Transit enables travelers and society as a whole to benefit from improved travel efficiency enabled by transit. For those who have some alternative to transit, HRT enables a more efficient mode of travel within the region. This results in fewer miles put on the road, less time spent traveling on the aggregate, and lower out-of-pocket costs associated with personal vehicle operations. In performance terms, HRT services in 2015 allow the region to avoid: 26.7 million vehicle-miles and $8.0 million in associated vehicle operating costs that would be imposed on the system from more circuitous carpooling routes; 18.3 million vehicle-miles and $5.5 million in vehicle operating costs associated with those who would drive to work in the absence of transit; $38.4 million in total travelling and waiting time costs associated with inconvenient routings and slower travel speeds for those who walk or bike; and $8.8 million in safety and environmental costs. Over the period from 2015 to 2040, transit services will enable a cumulative societal benefit of $1.18 billion, based on a summation of passenger car operating cost savings for travelers, time savings, and safety and environmental effects (see Table 6). 4 EDR Group Analysis using TREDIS. The Economic and Societal Impact of Hampton Roads Transit 5

9 Table 6: Cumulative Benefits, (Discounted at 3% to 2015 Present Value, in $M) Savings Type Value ($M) Vehicle Operating Costs $ Time Savings $ Safety & Environmental $ Total $1, Source: EDR Group analysis, using TREDIS. Some costs savings in turn drive associated changes in the regional level of economic activity. These derive from time and operating cost savings for on-the-clock travelers, commute time savings that help businesses by reducing wage premiums associated with higher worker commute costs, and changes in the pattern of household expenditures associated with mode switching and out-of-pocket cost savings. The efficiency effect of transit (associated with those who would be forced to use alternate modes) supports an average of 123 additional jobs annually in the Hampton Roads regional economy, along with a cumulative impact of $577 million in output (Table 7). Table 7: Economic Impact of Transit Service Efficiency Employment Labor Income ($M) Value Added ($M) Output ($M) average annual 203 cumulative 460 cumulative 577 cumulative Source: EDR Group analysis, using TREDIS. Place Making The emergence of Downtown Norfolk as a live/work/play environment has been supported by the introduction of light rail service. Expansion of light rail will further enhance Downtown as an attractive place to live, work and visit and will generate connectivity among significant activity nodes. Peninsula Town Center and Virginia Beach Town Center are also working toward creating similarly multimodal activity nodes that can attract residents, employment and recreational opportunities. Developers and businesses in Downtown Norfolk have found that they need to rely on fewer parking spaces; there is a mix of uses within a short distance of each other in a relatively safe and pedestrian-friendly environment that has convenient high-quality transit options. Further expanding the availability of high-quality transit across the region will help support place making efforts. Call Centers and Contact Centers The call/customer contact center industry depends on a labor supply that may not have access to a personal automobile. Many call center employees rely on transit or friends and relatives to get to work. When transit is not available, absenteeism, tardiness, and employee turnover all increase, resulting in a real business cost to employers. Good transit access, on the other hand, can increase the labor market area from which firms can attract workers, thus increasing the pool of potential qualified workers. Two major call centers in particular (Faneuil, Inc. and IBEX Global) have indicated transit ridership by employees on the order of 10% when transit was relatively inconvenient, but 25-30% when bus stops The Economic and Societal Impact of Hampton Roads Transit 6

10 were close by. These firms specific experiences point to the value of a moving towards a vision of high quality transit in the region, such as that outlined in the preliminary Connect Hampton Roads plan. ShipBuilding and Repair Newport News Shipyard is a telling example of the power of targeted policies aimed at supporting transit ridership. As a result of parking limitations, the GoPass 365 program, a culture of transit support among Shipyard management, and efforts by HRT to match service to the Shipyard s operational needs, Newport News Shipyard has achieved transit usage by employees at all levels. The provision of transit not only improves worker quality of life and saves employees money, it also supports the Shipyard avoiding costly investments in structure parking. Health Care Services The health care industry in Hampton Roads is an important growth sector in the region, supporting overall quality of life and employing just over 10% of the region s workforce. The health care industry relies on regional transit services provided by HRT for access to both patients and workers particularly for those who cannot afford to drive. The level of reliance on transit at individual locations and institutions reflects, in part, the disparate levels of transit service available. Health care employers report that the largest number of workers using transit at hospitals are nursing assistants, food service workers, and janitorial staff. Certain locations also see usage of HRT by choice riders who take advantage of high-quality services such as the light rail or ferry. Higher Education Higher education institutions support regional economic development through a variety of mechanisms, from acting as regional employers themselves, to training a competitive workforce, to investing in local neighborhoods and infrastructure. In the Hampton Roads region, higher education institutions rely on HRT-provided services that enable commuting by largely by staff in housekeeping, landscaping, food service, and lower level administrative positions. Transit also plays a role in facilitating access by students to a diverse range of educational opportunities. Tidewater Community College, in particular, benefits from its access to quality bus and light rail services and views transit as a vital form of support for lower-income students pursuing a college education. Hospitality and Tourism The hospitality and tourism industry is one of the core sectors within the Hampton Roads regional economy. By serving visitors, the industry brings outside money into the region, thus stimulating additional economic activity. The hospitality industry depends heavily on a workforce that is largely dependent on transit services to reach work. Thus, HRT services are instrumental in supporting the economic value created by the industry as a whole. Looking forward, representatives of the tourism industry see light rail service as a way of supporting efforts to sell the region as a whole to visitors, and to become more competitive in the constantly evolving tourism market. The Economic and Societal Impact of Hampton Roads Transit 7

11 CHAPTER 1: INTRODUCTION Hampton Roads Transit (HRT) provides bus, light rail, ferry, Transportation Demand Management, and paratransit services in six of Virginia s ten most populous cities. This includes Hampton and Newport News on the Peninsula, and Norfolk, Portsmouth, Chesapeake, and Virginia Beach on the Southside. There are currently approximately 3,200 bus stops, 11 light rail stations, and ferry landings in downtown Norfolk and Portsmouth. Approximately 71% percent of jobs in the HRT service area are located within a quarter mile of a transit stop, and 44% of working residents live within the same distance of HRT service. 5 In fiscal year 2015, HRT facilitated 16 million transit trips. 6 Like the transportation system as a whole, public transportation enables residents and visitors to engage in the economy and society, as they travel for work and personal reasons. Moreover, transit is unique in providing access to those who either choose not to or cannot achieve independent mobility by alternate means. Transit offers an affordable and environmentally conscious mode of transportation, providing a service to the Hampton Roads economy and an important lifeline of economic opportunity. The basic research question - what is the value of public transportation in Hampton Roads in economic terms? This report presents the results of a study commissioned to evaluate and report on the economic impacts and benefits of public transportation in the HRT service area. It considers both current impacts and benefits and it forecasts potential future impacts supported by increased investments in transit facilities and services connecting the region. The basic research question of this study is: what is the value of public transportation in Hampton Roads in economic terms? This report addresses this question through several distinct but complementary analytical perspectives. It combines both quantitative and qualitative methods to measure and portray the role of public transportation operations and services within the broader regional economy. The report synthesizes findings from economic modelling, research, and a series of discussions with stakeholders in key business sectors. While many individuals, businesses, and institutions are aware of the value provided by public transportation to the lives of people and competiveness of businesses in the region, this is the first comprehensive assessment of the economic value of the region s main transit system. The study was made possible by local funding through Hampton Roads Transit and a state grant through the Virginia Department of Rail and Public Transportation. Full technical documentation of all sources and methods as well as response to comments arising in technical reviews can be found in the document: The Economic and Societal Impact of Hampton Roads Transit: Technical Appendices dated June 23, EDRG Group analysis using 2013 LEHD data from the U.S. Census. 6 Hampton Roads Transit. Ridership Trends as of June 30, Available at: Documents/Ridership/2015/June-2015-Presentation-Ridership.pdf. The Economic and Societal Impact of Hampton Roads Transit 8

12 1.1 OBJECTIVES AND SCOPE Within the overall scope of describing and quantifying the societal and economic value of public transportation in Hampton Roads, this study is structured to achieve the following specific objectives: Characterize the sectors of the Hampton Roads economy currently supported by transit in the region. This first element of the analysis describes the ways in which transit service supports economic activity in the region both for transit users as well as non-users. This entails describing (a) the jobs and business activity associated with transit operations and capital spending, (b) the businesses and regional activity supported by employees who commute using the transit system, and (c) the regional business activity supported by consumer expenditures facilitated by transit access. This element of analysis presents a snapshot of different portions of the regional economy directly enabled by ongoing transit service, including multiplier effects associated with the re-spending of worker income in the region, as well as upstream effects on supplier industries. 7 Quantify the performance benefits and impacts of the HRT system. The second element of the study entails assessing how transit makes the transportation system more economically efficient. This is done in comparison to alternatives that would be needed if transit was not available. While the analysis outlined in the first bullet point seeks to describe the role of transit in the Hampton Roads economy, this subsequent analysis specifically answers the questions: What transportation-based economic savings or efficiencies do The results of these analytical approaches provide a multi-faceted and meaning-rich view of the economic role of public transportation in the Hampton Roads region. people and businesses in the Hampton Roads region realize that could not otherwise be possible? Also, what broader implications do these savings and efficiencies have on regional economic competitiveness and viability? This analysis contrasts HRT s performance with second-best alternatives on which the region would depend in the absence of transit. In addition to enabling most users to travel more affordably and efficiently, in a small but critical set of cases transit is the only viable option for users. This means that transit service actually enables employment that otherwise would not occur. Assess the likely impact of enhanced public transportation investment. This element of the analysis explores how additional investments could significantly add to the economic benefit and impact for the region. The potential role of future investment is considered through the following investment scenarios: (a) extension of light rail to the Virginia Beach Town Center area, (b) the extension of light rail to the Oceanfront (c) extension of light rail to Naval Station Norfolk, and (d) development of high-capacity transit corridors for Bus Rapid Transit (BRT) on the Peninsula. These scenarios represent investment strategies currently under discussion within the region. Each would result in higher levels of transit service (in terms of access, speed, reliability, frequency, 7 In economics terminology, all report impacts include direct, indirect, and induced effects. The Economic and Societal Impact of Hampton Roads Transit 9

13 comfort, etc.) for high-priority corridors in the region. The scenarios are compared in performance and economic terms to a business as usual basis of service delivery and investment. Bring the story of transit to life. This final element of the analysis interprets the other elements of the study within the context of six case studies. These cases illustrate how public transit relates to key economic issues, opportunities and needs of the Hampton Roads region. Using a mix of quantitative data and information gathered from stakeholder interviews and roundtable discussions, this element of the analysis centers around critical issues of: place-making, higher education, health care, the call center industry, shipbuilding and repair, and the hospitality and tourism industry. The case studies focus on the current role of transit as well as the potential for transit service improvements. The results of these analytical approaches provide a multi-faceted and meaning-rich view of the economic role of public transportation in the Hampton Roads region. Rather than presenting a single economic impact number, the case study component incorporates a series of analyses revealing diverse ways in which transit affects Hampton Roads, as well as the opportunity for future improvements in regional competitiveness and livability that would be supported by continued and enhanced investments in public transportation. 1.2 STUDY APPROACH As indicated above, this study explores the economic role and impact of transit through a comprehensive approach. Overall, this approach is taken to (1) describe the transit market, (2) consider its existing and potential economic impacts and (3) interpret these findings with respect to issues of strategic significance for the regional economy and Hampton Roads competitiveness. In all cases this approach reflects a belief that transportation investments are made to support important outcomes for society. This includes maintaining and growing local and regional economies by improving business competitiveness and supporting policy objectives like environmental sustainability and improving quality of life for citizens. In Hampton Roads, this also aligns with the regional transit agency s vision to be the most efficient and customer-driven transit agency in Virginia and its mission to serve the community through high quality, safe, efficient, and sustainable regional transportation services. 8 As introduced above, this study approaches the value of public transportation services provided by HRT from a number of different angles. Each one requires the appropriate set of measures, data, assumptions, and tools. Achieving economic outcomes and policy objectives can often be quantified directly in terms of dollars moving through a regional economy and associated jobs. Other goals are best measured simply in dollar terms using values that reflect society s willingness to pay for certain benefits such as clean air or reduced fatalities. 8 Hampton Roads Transit. About. The Economic and Societal Impact of Hampton Roads Transit 10

14 Again, in this study the value of public transportation services provided by Hampton Roads Transit is evaluated from several different angles. It is important to define how each angle requires the use of appropriate sets of measures, data, assumptions, and tools. Methods for Assessing Impacts and Benefits The first and most basic method for assessing the relationship between transit and the economy is to assess the effects of capital and operating outlays. This includes the effects of the actual money spent in the regional economy by the transit agency, and the stimulus it provides on an ongoing basis. For example, the wages earned by bus drivers and mechanics and the impacts of these wages being spent in the regional economy are included in this category. The second approach to characterizing the economic role of transit is to focus on the jobs and other types of consumer economic participation the transit system supports on an ongoing basis. This includes the effects of goods or services produced by and sold to individuals who access employment and consumer goods using the transit system. Some of this activity might occur without transit, but would be compromised in terms of its price, competitiveness and efficiency if transit service were lacking. For example, the wages earned by employees who use transit to get to work are included in this category. The stimulus effects of investments in transit and the economic participation the transit system supports for transit users together represent the size of the transit market and its position within the regional economy. The market supported by transit is characterized using economic impact measures such as jobs and gross regional product (these are defined in the following section). The next method for assessing the value of public transportation is in terms of its performance effects or efficiency, relative to alternatives. What if transit service did not exist? This aspect describes the monetary savings or social benefits that businesses and households enjoy as a result of the availability of current levels of transit service. This is in contrast to the costs that would be incurred if this transit service were unavailable. For example, if a transit trip costs less and requires fewer people to spend time traveling (in contrast, for example, to a worker relying on a friend or neighbor to provide a ride to work), the relative cost savings of using transit compared to other reasonable alternatives is included in this category. The efficiency of transit is naturally derived from the overall size of the transit market, but with an additional set of conclusions regarding available alternatives for users if transit services are unavailable. A performance analysis serves to document the savings that transit represents to the region relative to a situation without transit. In addition, a performance-based perspective can also be employed to compare alternative future investments scenarios against a business-as-usual outlook for transit. The performance effects of transit can be characterized in terms of both economic impact (i.e. transactions in the economy) and benefit measures (dollars), as described below. Measures of Economic Value This study uses two widely adopted types of economic outcome measures to quantify the effects of existing and potential future transit services: Benefit measures quantify the dollar value of an outcome for society. Benefits generally include both dollars of savings or other efficiencies that accrue both to users and non-users. Benefit measures place a dollar value on things like mileage of vehicle travel, time spent traveling, crashes avoided, or the value of clean air resulting from reduced emissions. As a general rule, these values The Economic and Societal Impact of Hampton Roads Transit 11

15 reflect some representation of either (1) a user s willingness to pay (such as valuing time based on what a worker charges for an hour of work), or (2) the actual accrued value of something that occurs in society such as the property damage or injury cost of a crash, or (3) in some cases a broader societal value (such as FHWA s approximation of the societal cost of carbon emissions). Benefits are presented as a present value of the stream of benefits likely to accrue of a long-term planning horizon (in this study, to 2040) so that decision makers can understand economic benefits in relation to comparable goods that may be purchased with a stream of revenue. Economic impact measures represent actual activity and monetary flows in the economy. While benefit measures simply place a dollar value on outcomes, impact measures explore what these dollars do in the economy (such as creating jobs or wages or enabling businesses to make and sell goods). Economists assess economic impacts using four common metrics: Business Sales (Output), Gross Regional Product (GRP), Wage Income, and Jobs. While the first three metrics are reported in dollar terms, they are different ways of describing the same economic activity and therefore can never be added together. For example, if transit enables an individual to work in a job where he or she earns $60,000 enabling the employer to make and sell $100,000 worth of goods by adding $80,000 of value on the raw materials and input services used to produce the goods, it can be said that transit is supporting: o One Job o $60,000 in wage income o $100,000 in business sales (or output) o $80,000 in value-added (or gross domestic product) However, all four of the above measures are representing the same activity. The $80,000 of valueadded is a sub-set of the $100,000 value of the sales, and the $60,000 wage income paid to the worker is a subset of the $80,000. For this reason, it is never appropriate to add together these numbers, but instead to understand them as different ways to describe an economic activity supported by transit. Economic impact measures capture both productivity improvements that affect the scale of business operations relative to costs, as well as economic geography effects whereby a region grows due to increased competitiveness and attraction of activity from outside. Because transportation investments are intended to improve both the overall well-being of society, and to support the economy, both economic impact and benefit measures are used in this study. Economic Modeling and Multiplier Effects Total impacts on the economy represent a combination of what economists refer to as direct, indirect, and induced effects: Direct economic effects are the activities directly supported by an investment program or set of industry activities. The Economic and Societal Impact of Hampton Roads Transit 12

16 Indirect economic effects are the sales (and related jobs, wages, etc.) by locally-based off-site suppliers to the directly-affected businesses. These suppliers may be providing either goods or services. Induced economic effects are measures of the effects of spending by employees of directly and indirectly affected businesses. Figure 1 illustrates an example of the relationship between these three types of effects. Figure 1: Direct, indirect, and induced Impacts, an illustrated example Data Sources and Analytical Tools To estimate the indirect and induced ( multiplier ) economic effects of transit services provided by Hampton Roads Transit, this study utilizes the IMPLAN economic modeling system 9 within the context of the Transportation Regional Economic Development Information System (TREDIS). 10 TREDIS translates transportation performance measures (such as vehicle miles, vehicle hours, trips, and other measures) into economic benefits and industry-specific responses to cost savings such that the IMPLAN system can further assess and report wider impacts. These systems use industry- and regionspecific economic data (derived from the Bureau of Economic Analysis data and other sources) to translate direct effects into spinoff or multiplier effects. IMPLAN is the most widely used input-output economic modeling system in the United States, with a client list that includes over 500 public and private agencies including the Federal Reserve, the Environmental Protection Agency (EPA) and the American Recovery and Reinvestment Act (ARRA) program. 11 TREDIS is the most widely used system for economic analysis of transportation projects in the United States and Canada and is now also being used in Australia. The TREDIS economics suite was used for this study because it enables impacts and benefit assessments of transportation projects and systems within a single integrated framework. In addition, the TREDIS cost- 9 More information available at: 10 More information available at: 11 For more information on IMPLAN and its history, visit and click on the About Us tab. The Economic and Societal Impact of Hampton Roads Transit 13

17 response methodology traces the ways in which individual businesses and households respond to changes in transportation costs. For example, reducing reliance on the automobile can saves households money on vehicle operating costs money which can then be spent on other non-transportation expenditures. Improved transportation performance, therefore, leads to an increase in economic activity within industries supported by consumer spending. Similarly, when a business saves costs by reducing money spent on vehicles, fuel, or on-the-clock worker time or by improving their overall supply chain efficiency they have an opportunity to do a number of things with the money: retain savings as profit, improve competitiveness by reducing prices, or invest in workers, new equipment, and research and development efforts. Each choice by a business results, one way or another, in a change in economic activity. Table 8 presents the key data sources and analytical tools employed for each component of the study. The Appendix to this report includes a set of detailed diagrams relating data elements, processes, and tools within an analytical workflow. The IMPLAN and TREDIS modelling systems used for this study include 2013 and 2014 data for the Virginia Beach Norfolk Newport News, VA NC Metropolitan Statistical Area (MSA). Table 8: Key Data Sources and Analytical Tools, by Analysis Component Component of the Analysis Ongoing Role of Transit: Transit Spending Ongoing Role of Transit: Transit Use by Workforce Ongoing Role of Transit: Consumer Spending Key Data and Analytical Elements - HRT annual capital outlays, by spending type (FY13-15 historical, FY17-22 planned) 12 - HRT staffing and annual operations and maintenance expenditures, by spending type (2015) 13 - Adjusted regional purchase coefficient (% of materials and services sourced locally), and IMPLAN - IMPLAN regional economic data, based on BEA and other federal sources: relationship between direct sales, jobs, and value added, by industry. - IMPLAN model: indirect and induced impacts - HRT 2014 Origin and Destination (O-D) Survey: daily trips with workplace as a destination American Community Survey Public Use Microdata Sample (ACS PUMS), 2013: mean earning for transit commuters, by industry - IMPLAN regional economic data, based on BEA and other federal sources: relationship between direct sales, jobs, and value added, by industry - IMPLAN model: indirect and induced impacts - HRT 2014 O-D Survey: daily trips with destinations related to participation in the consumer economy, ridership by income bracket - Literature review: average annual trip frequency 12 Historical capital expenditures were provided by HRT and expected future expenditures were extracted from the FY16-FY22 Capital Improvement Program (CIP) adopted by the TDCHR governing board in December Operations and maintenance data collected from HRT staff, based on submissions to the National Transit Database and 2014 surveys gathered statistically valid system-wide travel behavior data from transit users in HRT service area on all available modes. Reports accessible at The Economic and Societal Impact of Hampton Roads Transit 14

18 Performance Benefits and Impacts of the HRT System Performance Benefits and Impacts of Investment Scenarios Critical Perspectives in the Economic Role of Transit - IMPLAN regional economic data, based on BEA and other federal sources: consumer spending patterns, by income bracket; relationship between direct sales, jobs, and value added, by industry. - IMPLAN model: indirect and induced impacts. - HRT 2012 and 2014 O-D Surveys: transit ridership by trip purpose, means of transportation in case transit unavailable, origindestination pattern. - Hampton Roads Regional Travel Model: average travel characteristics (distance, time) by mode and origin-destination within the region. - TREDIS economics suite: societal benefits, impacts on the economy. - HRT current route performance data: ridership, travel times. - Planning reports (Connect Hampton Roads, Virginia Beach Transit Extension DEIS; Naval Station Norfolk Transit Extension Study, Corridor Analyses): service characteristics and anticipated ridership of investment scenarios. - TREDIS economics suite: societal benefits, impacts on the economy. - Interviews/discussions with representatives of regional organizations, business, and institutions (full list included in the Appendix). - Relevant news and other published literature. 1.3 USING THIS REPORT This report should be used to describe the current and anticipated economic value of public transportation in the Hampton Roads Transit service area from a number of different perspectives. Findings can be useful as a source of public information, to raise awareness among the region s residents about the broad value of services provided by public transit in the region. Findings can inform elected boards and legislators about the return on investment from funding public transportation Findings can inform future investment prioritization and planning processes by showing regional transportation planners and policy makers how and where the benefits of public transit occur. In keeping with best practices for economic analysis, the following principles should be considered when interpreting the findings of the study: The analysis of (a) markets supported by transit, and (b) performance benefits and impacts of transit are conceptually distinct and should not be added or in any way combined into a single impact number. While the first analysis seeks to describe in economic terms the markets supported by transit, without making assumptions regarding the effect to the region were transit not available, the subsequent analysis specifically asks the question: what additional costs would be imposed on society, were transit service absent, and what broader implications would these costs have on regional economic competitiveness and viability? The Economic and Societal Impact of Hampton Roads Transit 15

19 Economic impact metrics represent different ways of describing the same economic activity and as such can never be added together (see Figure 2). Similarly, benefits and impacts represent district approaches to describing the value of transportation that cannot be combined. For example, while both benefits and business sales are described in dollar terms, these metrics are fundamentally different, with benefits representing a societal willingness to-pay and business sales representing actual revenues generated in the economy in terms of dollars moving between consumers and producers. When reporting economic impacts, this report focuses on aggregate changes or growth in the regional economy. It does not quantify or describe the reallocation of jobs and economic activity within the region as a result of current or future transit service (e.g., the clustering activity around a light rail station rather than at an alternative location within the region. This clustering does not change the net level of economic activity in the region). While this study adopts a relatively comprehensive approach to quantifying and describing the economic value of transit, there are some additional effects that are beyond the scope of this analysis. These include transportation system efficiencies from long-term support of denser development patterns and public cost avoidance associated with economic participation and health care access (e.g., avoided public assistance expenditures). Figure 2: Relationship between economic impact measures The Economic and Societal Impact of Hampton Roads Transit 16

20 CHAPTER 2: REGIONAL EFFECTS OF TODAY S TRANSIT SERVICES This chapter describes the effects of today s Hampton Roads Transit services on the regional economy. It addresses questions such as: (1) What aspects of the Hampton Roads economy indicate how and why transit is an important service? (2) How big of a slice of the regional economy actually depends on transit? (3) How does the existence of transit have economic consequences even for non-transit users? (4) How is the region s economy stronger as a result of the investment already made in transit? The chapter is organized into three sections. The first section describes the overall Hampton Roads economy and the characteristics of the ridership profile supported by HRT. The second section quantifies the ongoing economic activity currently supported by transit. This includes the economic activity (a) associated with HRT operations and capital spending, (b) supported by employees who commute using the transit system, and (c) supported by consumer expenditures facilitated by transit access. Finally, the third section takes another analytical step and describes the performance benefits and impact of the region s transit system compared to a counterfactual world with these services being unavailable. 2.1 THE HAMPTON ROADS TRANSPORTATION ECONOMY This section provides an overview of the Hampton Roads economy and public transportation s place within it. The industry composition, occupational mix and overall trends in the economy point to the significance of several sectors that are served by public transportation and are later addressed in case studies. Transit in the Hampton Roads region is integral to enabling the region s workforce to participate and compete in the regional economy as well as participate in the economy s various consumer markets. Regional Economy Overview The economic data presented below identify the general composition of the Hampton Roads region 15 as well as key industries that are further described through case studies in subsequent chapters. These sectors include call centers, shipbuilding, health care, education, and tourism. Table 9 presents location quotients (measures of industry concentration) for the top ten industries at the three-digit NAICS level. The table shows that the highest concentration of employment within Hampton Roads relative to the state is for transportation equipment manufacturing. This includes the ship building and repair activities located, for example, in Newport News and Portsmouth (the specific role of transit in directly supporting the shipbuilding industry is the subject of one of the case studies in this report). The data also demonstrate the expected concentration of military personnel. The Hampton Roads region includes a large number of military and federal facilities. Clothing stores, accommodations and food 15 Defined as the Virginia Beach Norfolk Newport News, VA NC Metropolitan Statistical Area (MSA) The Economic and Societal Impact of Hampton Roads Transit 17

21 services, and entertainment reflect, in part, the tourism-focused economy located in the vicinity of Virginia Beach and other activity nodes throughout the region. Table 9: Location Quotient for Industry Sector Detail (3 Digit NAICS) Industry Transportation Equipment Manufacturing Military Personnel Broadcasting (except Internet) Repair and Maintenance Personal and Laundry Services Total Federal Government - Civilian Real Estate and Rental and Leasing Clothing & Clothing Accessories Stores Arts, Entertainment, and Recreation Accommodation and Food Services Source: Moody s Economy.com It is also helpful to understand the scale of different sectors within the Hampton Roads economy. Table 10 below presents the levels of employment for industry sectors at the three-digit NAICS level, sorted by percentage of total employment in The top 12 industries listed below comprise 66% of total employment and there were nearly 848,000 jobs within the Hampton Roads region in Many of the same industries with high industry concentration levels relative to the state are also important in magnitude terms, including the military, accommodations and food services (associated with hospitality), administration and other services (which includes call centers, also featured in the critical perspectives section of this report), and transportation equipment manufacturing. Significant future growth is expected in the accommodations and food services; administration and other services; finance and insurance; and arts, entertainment, and recreation sectors. Finally, the occupational mix of employment in the region provides yet another perspective on the Hampton Roads economy. As illustrated in Figure 3, the top seven occupation categories represent 60% of all jobs. The primary occupations include office and administration support, sales, food preparation/serving (e.g. within the restaurant and hospitality industry), education (including at universities and community colleges), transportation and material moving, health care, and business/finance operations. The Economic and Societal Impact of Hampton Roads Transit 18

22 Table 10: Industry employment and growth rates and Industry Employment (In 000's) CAGR* CAGR 2015 % of Total Emp. Military Personnel % -1.3% 10% Local Government % 0.8% 10% Accommodation and Food Services % 1.9% 9% Federal Government - Civilian % 0.1% 6% Admin., Support, Waste Mgmt., & Services % 2.4% 6% Transportation Equipment Manufacturing % -0.2% 3% Finance and Insurance % 1.20% 3% State Government % 0.3% 3% General Merchandise Stores % 0.8% 2% Food and Beverage Stores % 0.7% 2% Personal and Laundry Services % 0.4% 2% Repair and Maintenance % -0.1% 2% Arts, Entertainment, & Recreation % 1.10% 1% All Others % 0.6% 42% Total % 0.6% 100% Source: Moody s Economy.com; *CAGR = Compound Annual Growth Rate. Transit s Place in Regional Context Hampton Roads Transit (HRT) is the region s primary provider of public transportation. HRT serves the Virginia Beach Norfolk Newport News, VA NC Metropolitan Statistical Area (MSA) as defined by the U.S. Census. 16 This market area comprises 527 square miles and has a population of 1.7 million. Within this footprint, HRT s service area extends to the localities of Chesapeake, Hampton, Newport News, Norfolk, Portsmouth, and Virginia Beach. This is obviously smaller than the region as a whole and the entire MSA. However, businesses throughout the MSA make, use and trade goods and services with areas served by the system. The Hampton Roads economic profile points to the importance of workforce access to places like shipyards, hospitality and tourism sites, high-value manufacturing establishments, and the educational resources needed to support and participate in these industries. Many of the service-oriented occupations include employees with higher-than-average reliance on transit services. 16 The MSA includes five counties and nine independent cities in Virginia and two counties in North Carolina. The Economic and Societal Impact of Hampton Roads Transit 19

23 Figure 3: Occupational Mix, 2014 Source: Bureau of Labor Statistics The HRT System and Ridership Profile HRT Trips 16 million in % use buses, 9% light rail Traveling to work, school, for shopping, and to access medical care 15% Full-Time Students 58% Employed Full-Time The current level of transit activity in the region highlights how transit can, does and may support current and emerging business and industry needs. Evaluating the ridership profile of the Hampton Roads Transit (HRT) system provides insights into the demographics of users and the ways in which transit enables economic and social participation within the region. These insights help to better understand the role that transit plays in the regional economy. The HRT system served over 16 million trips in fiscal year 2015 (July 2014 through June 2015) 17. Over 88% of these trips used the bus system, 9% used light rail, and the remaining 4% used either the ferry or paratransit services. HRT invested $100.4 million in operations and maintenance expenditures in 2015 to provide a network of multimodal services. These investments directly support employment and operations at HRT itself, and also enable a broad range of users to participate in the broader Hampton Roads economy. As shown in Figure 4, the most common destinations reported by transit riders are their home, workplace, and colleges/universities. Home is most frequently either the origin or destination of a transit trip, which accounts for its prominence in origin-destination survey results. Transit is also used for personal purposes including personal business, social visits, shopping, and to reach medical appointments. Within the sixcity service area of HRT, transit captures approximately 2% of the overall commuting mode share. Not 17 Hampton Roads Transit. Ridership Trends as of June 30, The Economic and Societal Impact of Hampton Roads Transit 20

24 surprisingly (Table 11), higher shares of commuting by transit are in cities were more transit service is accessible (i.e., Hampton, Newport News, and Norfolk) 18. Figure 5 presents a map of HRT bus service frequencies (as of July 2015). Higher frequency routes serve a number of high-demand transit corridors. This includes, for example, Route 20 along Virginia Beach Boulevard between Downtown Norfolk and the Virginia Beach Oceanfront. Figure 4: Most Common Trip Destinations, HRT System-wide Source: Hampton Roads Transit Origin and Destination Study, Table 11: Transit Commute Mode Share, Hampton Roads Transit Service Area Percent of Workforce Using Transit Chesapeake 0.7% Hampton 3.2% Newport 3.8% News Norfolk 3.9% Portsmouth 2.1% Virginia 0.9% Beach Six-City Total 2.1% Source: 2014 American Community Survey, U.S. Census Note that the ACS and the HRT O-D Survey have slightly different control totals for transit commuters. They survey identifies 13,683 trips from workplaces and 14,764 trips to workplaces, after expansion. 19 Note: American Community Survey data represents self-reported mode of travel for commuting. ACS data may in some cases not reflect the reality of those who commute using a mix of transit and driving. The Economic and Societal Impact of Hampton Roads Transit 21

25 Figure 5: HRT Bus Network by Service Frequency Source: Hampton Roads Transit spatial and service data. Mapping by EDR Group. The Hampton Roads area is characterized by a unique geography of multiple jurisdictions with major and minor waterways throughout. Hampton Roads Transit provides a mix of transit services to meet the needs of the region. Varying types (i.e., bus, light rail, etc.) and levels of service (i.e., frequency, amenities, etc.) are available across the area. There is significant variation in the amount of coverage that transit provides to meet commuting and connectivity needs of transit riders. Reliance on different transit modes varies by city of residence (Table 12). Bus users primarily reside in Norfolk (37%), Newport News (19%), Virginia Beach (14%), and Hampton (13%). Ferry users live mostly in Portsmouth (46%), Norfolk (26%), and Virginia Beach (13%). MAX users reside in Virginia Beach (39%), Norfolk (25%), Newport News (12%), and Chesapeake (10%), while rail users are mostly in Norfolk (54%) and Virginia Beach (33%). The Economic and Societal Impact of Hampton Roads Transit 22

26 Table 12: Respondents home city by mode Source: Hampton Roads Transit Origin and Destination Study, Transit users include many residents of the region who are either workers or students. A total of 58% of all transit riders are employed full time and over 20% are employed part time. The MAX express bus service has the highest percentage of full-time riders (76.9%) followed by the ferry (75.7%) and the light rail (60.7%). Table 13 presents the distribution of reported household income by mode. Approximately 88% of all bus, rail, and ferry users have annual household income below $50,000. Of all transit users, 7.6% have household incomes greater than $50,000. Table 13: Total Annual Household Income 2012 (before taxes) Source: Hampton Roads Transit Origin and Destination Study, An estimated 15% of transit riders are full time students at a college or university. Students make up over 24% of all rail riders compared to 8%-14% of other modes. Light rail is particularly important to students at Tidewater Community College in Downtown Norfolk. An estimated 5.2% of all transit riders are part time students, with 7.5% of all rail riders reporting that they go to school part time, compared to 3-5% for other transit modes. Many transit users rely on HRT as their primary or only form of regional accessibility. A majority of bus riders (58%) and approximately one-third of rail riders do not have access to a working vehicle. Access to at least one vehicle is much higher for ferry (75%) and MAX (77%) riders compared to bus (42%) and rail The Economic and Societal Impact of Hampton Roads Transit 23

27 (66%) users. This points to the considerable importance of transit to those who are considered transit dependent but also highlights the role of HRT in supporting choice riders who have other alternatives available. Table 14: Working Vehicles Available per Household Source: Hampton Roads Transit Origin and Destination Study, One other interesting aspect of regional transit ridership relates to recurring seasonal demand for services. Both bus and light rail ridership are affected within the year by the seasonal visitor/tourism cycle with higher levels of use initiating in April, peaking in August, and then declining into the fall and winter months. Ferry ridership follows a similar seasonal cycle, but with a more pronounced growth in the summer months of May, June, and July. As evidenced in seasonal ridership reflected in recurring peaks and valleys, there is a relationship between transit and hospitality, tourism and special events markets. 2.2 THE ROLE OF TRANSIT Investment levels, ridership numbers, and demographic data begin to paint a picture of the importance of Hampton Roads Transit to the Hampton Roads economy. The question arises: how much economic activity does today s transit service support in the regional economy? Given the industries and occupations comprising the regional economy and the size and scope of the transit service, it is clear there are jobs created in the provision of transit service. There are also jobs and economic activity supported by individuals riding transit to work or to activities in which they spend money on goods or services in the economy. However, the economic importance of these activities extends beyond the transit provider (Hampton Roads Transit) and users of the system; up the value chain to suppliers of the businesses in which transit system users work, and down the value chain to businesses where they spend the proceeds of transit-supported labor and transactions. The full measure of economic activity in the region supported by transit can be described by translating expenditures and ridership information into a quantitative assessment of the economic activity supported by Hampton Roads Transit on an ongoing basis (in terms of jobs, wages, business output, and value added). Moving beyond a simple characterization of activities, this analysis traces the relationship between HRT outlays and services and direct industry activity supported within the region, as well as multiplier effects from the re-spending of worker income and upstream effects on supplier industries. The Economic and Societal Impact of Hampton Roads Transit 24

28 Stimulus Effects of HRT Operations and Capital Spending In 2015, $100.4 million was invested in operating and maintaining the regional transit system. This was total spending, and includes everything from employee wages and benefits to fuel, tires and other materials, utilities, and contracted services. As is the case with most industry activities, some of HRT s goods and service needs can be met locally while others require sourcing from outside the region. Dollars spent on imported goods are not recycled through the regional economy. This phenomenon is called economic leakage. Economic modelling for this study sought to accurately reflect local purchasing patterns and economic leakage. For example, model inputs were adjusted for expenditures on fuel, utilities and some contracted services, like paratransit customer service, to account for economic leakage. Overall, spending of $100.4 million in 2015 resulted in a total withinregion economic impact of $155.5 million in output, over 1,800 jobs, and $89.1 million in labor income within the Hampton Roads region (Table 15). Note that due to economic leakage, some fraction of HRT expenditures is directed outside the Hampton Roads region and therefore do not result in direct effects within the study area. Indirect effects reported are those broader effects on business activity for off-site goods and services supplied to the directly-affected businesses. Industries affected Total Operations and Maintenance Investment in 2015 $100.4 million in 2015 supported over $150 million in Output (Sales) and 1,800 jobs. include wholesale trade and architectural and engineering services, representing 16% and 11% of the indirect jobs, respectively. Induced effects are further shifts in spending on food, clothing, shelter and other consumer goods and services associated with consumption by HRT employees, as well as employees at HRT suppliers within the region. These types of consumer expenditure affect a wide variety of industries including restaurants, the health care sector, real estate, and retail. Table 15: Economic stimulus of HRT O&M spending (2015) Impact Type Employment Labor Income Value Added Output Direct Effect 1,264 $64,143,000 $16,270,000 $77,976,000 Indirect Effect 157 $8,894,000 $13,655,000 $26,271,000 Induced Effect 387 $16,026,000 $29,642,000 $51,243,000 Total Effect 1,809 $89,063,000 $59,567,000 $155,490,000 Source: EDR Group analysis using the IMPLAN economic modelling system. (Dollars rounded to the nearest thousands, columns may not sum exactly due to rounding). In addition to ongoing investments in transit system operations and maintenance, HRT also spends on capital projects that support and enhance the ability of the system to serve the Hampton Roads community. These investments vary over time due to the cyclical nature of investment needs, as well as in response to major expansion or equipment replacement initiatives. The quantity and spending profile of HRT on capital projects for the previous three years (FY ) differs significantly from the Capital Improvement Plan (CIP) for the upcoming fiscal years To acknowledge this variation, an economic analysis was conducted for both past and expected future purchases within a fiscally contained The Economic and Societal Impact of Hampton Roads Transit 25

29 budget. As before, differentiation was made between in-region and out-of-region expenditures to conduct this analysis. For example: investments in new vehicles or vehicle parts, communications and other electronic equipment, and software range between 0-20% local. Non-local spending is still important to ensuring the ongoing performance of the region s transit system, but does not result in stimulus effects on the local economy. Recent Capital Investments $7.8 million annually (FY13-15) supporting an average of $2.0 million in regional output and 12 jobs. From FY13-15, HRT spent an average of $7.8 million on capital investments, resulting in a within-region economic impact of approximately $2.0 million in output, 12 jobs, and $665,000 in labor income within the Hampton Roads region as outlined in Table 16. These investments included bus and other vehicle purchases, spending on supporting equipment used in HRT maintenance shops and garages, and facility improvement projects. Table 16: Economic stimulus of average annual HRT capital expenditures (FY13-FY15) Impact Type Employment Labor Income Value Added Output Direct Effect 7 $423,000 $562,000 $1,325,000 Indirect Effect 3 $122,000 $195,000 $351,000 Induced Effect 3 $120,000 $221,000 $383,000 Total Effect 12 $665,000 $978,000 $2,059,000 Source: EDR Group analysis using the IMPLAN economic modelling system. (Dollars rounded to the nearest thousands, columns may not sum exactly due to rounding). Based on its current, fiscally constrained Six Year Capital Improvement Program (FY17-FY22) approved in December 2015, going forward HRT anticipates capital spending to average $84 million annually. This represents the current best estimate of future projects, based on available funding and the status of project planning in the region. The large magnitude of the expenditures reflects a number of major initiatives in the region. These include: construction and vehicle purchases for the light rail extension to Virginia Beach Town Center, the purchase of new ferries for the Elizabeth River service, additional transit bus replacements, and financing of regional fixed guideway transit planning studies. With this level of projected capital investment, HRT would support $88.9 million in within-region output, 71 jobs, and $31.6 million in labor income annually from FY2017-FY2022 (Table 17). Anticipated Capital Program $84 million annually (FY17-22) supporting an average of $88.9 million in regional output and 71 jobs. The Economic and Societal Impact of Hampton Roads Transit 26

30 Table 17: Economic stimulus of average annual HRT capital spending (FY17-FY2022) Impact Type Employment Labor Income Value Added Output Direct Effect 38 $20,055,000 $24,118,000 $53,535,000 Indirect Effect 16 $5,852,000 $9,684,000 $17,168,000 Induced Effect 18 $5,679,000 $10,501,000 $18,156,000 Total Effect 71 $31,587,000 $44,302,000 $88,859,000 Source: EDR Group analysis using the IMPLAN economic modelling system. (Dollars rounded to the nearest thousands, columns may not sum exactly due to rounding). Workforce Participation In addition to the stimulus effects described above, Hampton Roads Transit connects employers throughout the region with their transit-using workforce. The value of this effect can be described by linking individual transit commuters with the regional economic activity they support. The analysis follows a three step process: (1) Identify the number of transit commuters by trip purpose, based on the statistically valid 2014 HRT Origin-Destination Survey and data from the National Transit Database (NTD). (2) Identify the industry employment mix and levels of earnings (wages, salaries, and benefits) for transit commuters, using information from the Public Use Microdata Sample (PUMS) of the U.S. Census Bureau s American Community Survey (ACS). (3) Use the IMPLAN system to identify the direct industry activity supported by transit commuters, as well as additional multiplier effects associated with upstream effects at industry suppliers and consumer spending effects. Transit commuters represent people employed in a variety of industry sectors, with the majority working in arts, entertainment, accommodations, and food services (22%); education and health (19%); and retail (17%) (Figure 6). The Economic and Societal Impact of Hampton Roads Transit 27

31 Figure 6: HRT Transit Commuters by Industry of Employment Source: EDR Group analysis based on PUMS data. Workforce Supports $1.5 billion in regional output and a total of 20,351 jobs including multiplier effects. In total, transit supports 20,351 jobs, $548.1 million in labor income, and over $1.5 billion in output in the 2015 Hampton Roads regional economy by enabling transit commuters to gain access to meaningful employment and providing employers with access to their workforce. This overall figure includes the jobs held by transit commuters and the $947.8 billion in industry output (sales) produced directly as a result of labor provided by transit commuters. It also includes $277 million in additional sales at firms who provide input goods and services to those businesses that employ transit commuters (e.g. indirect impacts), along with $312.8 million in sales associated with spending by employees (e.g. induced impact). Table 18: Economic role of transit commuters Impact Type Employment Labor Income Value Added Output Direct Effect 14,764 $358,621,000 $548,388,000 $947,810,000 Indirect Effect 2,835 $83,933,000 $159,816,000 $277,031,000 Induced Effect 2,752 $105,572,000 $187,982,000 $312,807,000 Total Effect 20,351 $548,127,000 $896,186,000 $1,537,648,000 Source: EDR Group analysis using the IMPLAN economic modelling system. (Dollars rounded to the nearest thousands, columns may not sum exactly due to rounding). The Economic and Societal Impact of Hampton Roads Transit 28

32 The Transit Consumer Economy In addition to directly supporting companies by providing employees a means of travelling to work, HRT also supports the regional economy by facilitating other forms of economic participation, including consumption of various goods and services. Dollars spent by those who use transit can be traced to associated sales and employment at businesses that serve the consumer market for example: grocery stores, shops, restaurants, doctor s offices, and others. These companies are then related to further effects within the economy in the form of indirect and induced impacts. Consumption by Transit Users 1.6 million trips in FY2015: shopping, recreation, eating out, and access to health services. $93 million of spending, resulting in a total of $149.9 million in output and 1,200 jobs. This analysis examines the scope of the transit-enabled consumer economy starting with all reported transit trips made for the purpose of accessing goods and services, and building out to estimates of economic activity associated with those trips. The analysis follows a four step process: (1) Identify the proportion of trips reported in the HRT 2014 Origin-Destination survey that are associated with participation in the consumer economy. Apply this proportion to total HRT FY15 ridership to estimate the number of total annual trips associated with consumer spending activities of some sort. (2) Convert trips into persons by estimating the number of annual trips an average person makes for each spending purpose. This analysis assumes that people using transit in the instances captured in the O-D survey will also use transit for other similar trips throughout the year and that therefore their spending patterns are in general facilitated by HRT services. (3) Stratify the population of people using transit to participate in the consumer economy by income level. Income levels are related directly to consumer spending patterns within the IMPLAN model. (4) Estimate consumer spending associated within HRT trips, along with the associated broader economic impacts within the region. The HRT Origin-Destination (O-D) survey identifies the following trip types that correspond to some form of consumer expenditure: shopping, sporting event, recreation/sightseeing, eating/dining, and medical appointment. Together, travel for these ends represents 9.7% of all trips made on the HRT system, meaning that 1.6 million of the 16.4 million trips made in FY2015 were associated in some way with participation in the consumer economy. The analysis then assumes that the average person makes 144 shopping trips per year, trips associated with recreation and dining out (including going to sporting events), 21 and 6.1 trips to access 20 Nielsen. The Global Shift in Shopping Behavior: Fewer Shopping Trips, More Interactions Saad, Lydia. Most U.S. Families Still Routinely Dine Together at Home. Gallup The Economic and Societal Impact of Hampton Roads Transit 29

33 health care services, 22 based on relevant research literature. The O-D survey further enables stratification of transit users by income level, which allows for a more accurate estimation of annual consumer expenditures within the Hampton Roads economy. In total, it is estimated that HRT facilitated consumer expenditures on the order of $93.4 million in FY2015. Table 19 breaks out this lump sum by type and presents the average amount spent per transit trip by each type of purchase across all levels of income. The amount spent on health services includes all spending on health services including insurance premiums, co-pays, and deductibles. As such, the spending represents the value spent in the economy as result of a transit trip, regardless of whether not an expenditure is made out-of-pocket by the participating individual. Table 19: HRT Facilitated consumer expenditures by type Type of Consumer Expenditure Total* Avg. Spending per Trip Shopping (Retail) $8,897,000 $10 Arts, Entertainment, Recreation, & Food/Beverage $6,793,000 $23 Health Services $77,758,000 $189 Total $93,448, Source: EDR Group analysis using the IMPLAN economic modelling system. *Dollars rounded to the nearest thousands. Overall, HRT enables approximately $149.9 million in business sales in the region and supports 1,200 jobs and $71.6 million in labor income by facilitating connections between transit riders and opportunities for participation within the consumer economy (Table 20). Note: The reported scale of the transit consumer economy does partially overlap with the induced effects of the workforce participation analysis presented in Table 18. The workforce participation analysis focused specifically on the segment of the economy associated with people who are able to maintain gainful employment through use of the transit system. The analysis included a quantification of induced effects derived from spending of earned wages on consumer goods in the Hampton Roads economy. These consumer spending effects are traced either to transit commuters themselves, or to employers at businesses that serve as suppliers to the industries where transit commuters work (regardless of whether this second tier of employees ever uses HRT directly). The consumer economy analysis, on the other hand, focuses on anyone who uses transit to go shopping, regardless of employment status. Because some of the people who use transit to go shopping are also those who earn their income in jobs they access by means of HRT services, there is some overlap between the two populations. 22 Center for Disease Control and Prevention. Health, United States Table (408 visits per 100 persons, adjusted upwards to allow for one additional dentist and misc. health visit). The Economic and Societal Impact of Hampton Roads Transit 30

34 Table 20: Economic impact of consumer spending enabled by Hampton Roads Transit Impact Type Employment Labor Income Value Added Output Direct Effect 727 $50,286,000 $56,612,000 $85,181,000 Indirect Effect 147 $7,290,000 $13,881,000 $23,412,000 Induced Effect 323 $14,038,000 $25,140,000 $41,235,000 Total Effect 1,197 $71,614,000 $95,632,000 $149,828,000 Source: EDR Group analysis using the IMPLAN economic modelling system. 2.3 PERFORMANCE BENEFITS AND IMPACTS OF TRANSIT Beyond enabling a certain set of economic activities, transit services are valuable for their relative efficiency compared to other transportation alternatives. Because of transit s existence, society as a whole benefits in a number of ways, including: Avoiding extra vehicle mileage on the roads and associated operating, safety, and environmental costs; Avoiding extra time and costs associated with less efficient ride-sharing; and Enabling workforce participation by those who do not have another means of transportation. The purpose of a performance analysis is to describe the unique value offered by transit services, by quantitatively investigating the additional costs imposed if transit were not there. A performance analysis of transit quantifies the savings and increased social benefits that businesses, households, and society as a whole enjoy as the result of current levels of transit service in contrast to the costs that would be incurred if that transit service were not present. For example, if a transit trip costs less and requires fewer people to spend time traveling (in contrast for example to a worker relying on a friend or neighbor to provide a ride to work), the relative cost savings of using transit compared to other reasonable alternatives is included in this category. The performance benefits and impacts of transit are naturally derived from the overall size of the transit market, but with an additional set of assumptions regarding the next-best alternative for travelers and the costs associated with that option. Phrased in another way, the purpose of a performance analysis is to describe the unique value offered by transit services, by quantitatively investigating the additional costs imposed if transit were not there. Methodology To estimate the performance benefits and impacts of transit, the 2012 and 2014 O-D surveys were used in tandem with information on trip making patterns from the Hampton Roads Regional Travel Model to estimate the costs that would be borne by users if forced to use alternate methods of travel. The surveys describe the distribution of transit trip purposes in the region, as well as a transit users self-reported response to loss of transit service (Table 21). Trip purposes dictate the value of travel time, as well as the response of the economy to any savings in travel time: personal travel time savings are valued at a lower rate and are counted as societal benefit but do not affect industry activity in the economy. Business on- The Economic and Societal Impact of Hampton Roads Transit 31

35 Income Level the-clock travel time savings directly affect the cost of operations for businesses and therefore their productivity within the regional economy. Improved efficiency of commute travel is counted as both a benefit to households and as a cost savings to industries, as businesses are able to more effectively access their workforce and avoid wage premiums associated with high worker commute costs. From the HRT user surveys it was estimated that some 27% of transit riders would cease their trip making activities, should service be halted (26% of commuters). Of the remaining 73%, the bulk of users would attempt to carpool with other passengers (56%), while 17% and 27% of those still traveling would drive to work or either bike or walk, respectively. Table 21: Response of Transit Riders to Loss of Transit Service Income x Response Response to Transit Loss Drive alone Carpool Walk or Bike Trip Not Made Low 17.2% 23.5% 34.2% 25.1% Medium 21.1% 22.7% 28.8% 27.3% High 42.6% 18.0% 17.5% 21.9% Not Reported 23.3% 23.0% 26.5% 27.3% Source: EDR Group Analysis of HRT O-D Survey Data In addition to the above characteristics of transit users, the following assumptions were made to define a scenario in which transit is unavailable: Transit riders who switch to carpooling are transported by drivers already on the system. It is further assumed that carpool vehicles must travel twice the previous distance to access the additional carpool passenger destinations, thus raising the average vehicle trip distance from approximately 6.7 miles per trip to approximately 13.4 miles. Transit riders who switch to carpooling are subject to a trip buffer time (the extra time built into their schedule to avoid being late) that is equivalent to the out-of-vehicle waiting time they previously experienced when riding transit. This assumption ensures that the inconvenience of coordinating schedules for carpooling is at least equal to the inconvenience of coordinating one s own schedule to match transit services. Average passenger expenditures per transit trip are estimated based on the ratio of total farebox revenue in FY2015 to total annual ridership on the system. Travel demand is assumed to increase annually by 0.46%, based on forecast population growth rates. 23 Results Based on the above data and assumptions, the benefits and impacts of transit services compared to a case where transit is absent can be described as follows: 23 From Moody s Economy.com The Economic and Societal Impact of Hampton Roads Transit 32

36 1. Hampton Roads Transit supports ongoing economic activity in its role as a regional employer. As previously estimated, the operations and maintenance of the HRT transit system supports approximately 1,800 jobs annually. This transit industry activity would be removed from the economy in a scenario in which transit did not exist. While the region would save on HRT operating cost expenditures ($100.4 million in 2015, of which $36.4 million was derived from local municipal sources), this would come at the expense of both the economic activity associated with HRT as an employer, as well as the economic participation and efficiency gains discussed below. 2. Hampton Roads Transit enables economic activity associated with those who have no other means of traveling to work. For the approximately 26% of the current transit-using workforce that is 100% dependent on regional transit service (with no backup options), transit enables economic participation and associated wider economic effects that would not be possible without HRT. Based on the total workforce participation impacts previously estimated, the economic activity associated with those who would stop working without transit access is equal to approximately 5,360 jobs, $144.5 million in labor income, and $405.3 million in output in the 2015 Hampton Roads regional economy (including indirect and induced effects). While these transit users would save on fares and travel time in a scenario where they no longer go to work (in the amount of approximately $1.9 million in fares and $40.6 million in time savings annually 24 ), they would accrue this savings at the expense of the ability to maintain a job and an income. 3. Hampton Roads Transit enables travelers and society as a whole to benefit from improved travel efficiency enabled by transit. For those who have some alternative to transit, HRT enables a more efficient mode of travel within the region. This results in fewer miles put on the road, less time spent traveling on the aggregate, and lower out-of-pocket costs associated with personal vehicle operations. In performance terms, HRT services in 2015 allow the region to avoid: 26.7 million vehicle-miles and $8.0 million in associated vehicle operating costs that would be imposed on the system from longer carpooling routes; 18.3 million vehicle-miles and $5.5 million in vehicle operating costs associated with those who would drive to work in the absence of transit; $38.4 million in total travelling and waiting time costs associated with inconvenient routings and slower travel speeds for those who walk or bike; and $8.8 million in safety and environmental costs. Over the period from 2015 to 2040, transit services will enable a cumulative societal benefit of $1.18 billion, based on a summation of passenger car operating cost savings for travelers, time savings, and safety and environmental effects (Table 22). 24 EDR Group Analysis using TREDIS. The Economic and Societal Impact of Hampton Roads Transit 33

37 Table 22: Cumulative Benefits, (Discounted at 3% to 2015 Present Value, in $M) Savings Type Value ($M) Vehicle Operating Costs $ Time Savings $ Safety & Environmental $ Total $1, Source: EDR Group analysis, using TREDIS. Some costs saving in turn drive associated changes in the regional level of economic activity. These derive from time and operating cost savings for on-the-clock travelers, commute time savings that help businesses by reducing wage premiums associated with higher worker commute costs, and changes in the pattern of household expenditures associated with mode switching and out-of-pocket cost savings. The efficiency effect of transit (associated with those who would be forced to use alternate modes) supports an average of 123 additional jobs annually in the Hampton Roads regional economy, along with a cumulative impact of $577 million in output (Table 23). Table 23: Economic Impact of Transit Service Efficiency Employment Labor Income ($M) Value Added ($M) Output ($M) average annual 203 cumulative 460 cumulative 577 cumulative Source: EDR Group analysis, using TREDIS. The Economic and Societal Impact of Hampton Roads Transit 34

38 CHAPTER 3: CRITICAL PERSPECTIVES: TRANSIT AND THE ECONOMY While the economic impacts of transportation can be modeled and described in quantitative terms, there are aspects to the role of transit that can never be fully captured or brought to life through numbers alone. Moreover, aggregate estimates of impact obscure particularly salient relationships between specific key industries or issues within the Hampton Roads region and the role Hampton Roads Transit plays in supporting them. This chapter presents case studies built around six perspectives on the economic role of transit. These include place-making, higher education, ship building, the call center industry, health care, and the hospitality and tourism economy. These focus areas were selected based on an initial round of discussions with regional economic development professionals and industry representatives. Two basic criteria were considered in initial screening: (a) the relative importance of public transportation to the industry or issue in question, and b) the relative importance of the industry or issue to the competitiveness of the Hampton Roads economy as a whole. Following the selection of specific critical perspectives, the consultant team facilitated a process of outreach and engagement with business sector representatives and other regional experts. These conversations occurred within small semi-structured interview settings and at several larger roundtable discussions facilitated at locations around the Hampton Roads region in February Interview questions and discussion guides were developed based on literature review and content relevancy to each focus area (included in the Appendix). Research participants were asked to discuss current business and transit-related activities as well as potential future scenarios. The research team s objective was to capture as much rich and in-depth qualitative data as possible to explore the connections between the focus area and transit. In total, the research team spoke to representatives of 43 regional organizations, companies, and institutions (listed in the Appendix) through either in-person or phone interviews, as well as at facilitated roundtable discussions. The Economic and Societal Impact of Hampton Roads Transit 35

39 3.1 PLACE MAKING Background Place making is the process of creating an activity node with economic vitality and a quality environment. The most economically vibrant activity nodes incorporate a density and diversity of activities and amenities including office, retail, and residential uses, public spaces, arts and culture, public transportation, building density, and walkability. They attract people both during the daytime and at night. These centers often represent the pulse of an urban area. 54% of adults aged 18 to 24 would consider relocating to another city if it offered a wider and better range of transportation options. 25 "Strategic Place making... aims to create Quality Places that are uniquely attractive to talented workers so that they want to be there and live there, and by so doing, they create the circumstances for substantial job creation and income growth by attracting businesses that are looking for concentrations of talented workers. This adaptation of Place making especially targets knowledge workers in the global New Economy who because of their skills, can live anywhere in the world they want, and tend to pick Quality Places with many amenities and other talented workers. Strategic Place making embraces a range of targeted projects and activities and are pursued collaboratively by the public, non-profit and private sectors over 5-15 years... DEFINITION OF PLACE MAKING: Four Different Types. Mark A. Wyckoff, FAICP, Professor, MSU Land Policy Institute. The United States, like other parts of the world, has evolved towards greater emphasis on the creation of dynamic urban activity nodes. In particular, cities and regions are looking to create these types of spaces in order to attract and retain young technology workers, many of whom are looking for high-quality environments that provide a variety of amenities. High quality public transportation is one of these important amenities. According to a 2014 survey by Global Strategy Group, 54% of adults aged 18 to 34 would consider relocating to another city if it offered a wider range of mobility options such as public transportation, car- and bike-sharing services, and pedestrian friendly streets. Affordability is one key part of this perspective, with 64% of surveyed Millennials indicating that the expense of owning a car is a major reason they want to be less reliant on one. 25 Transit-oriented development strategies fall within broader Place making efforts, with a specific focus on denser and more efficient development. Such development can reduce the public infrastructure costs of growth as well the carbon footprint of development. They can also support healthy, affordable, and active lifestyles. Connect Hampton Roads, an ongoing regional planning effort that supports transit-supported place making, suggests that transit will play a role in diversifying the Hampton Roads region and attracting the workforce needed for a strong knowledge-based economy. 26 Place making does not happen overnight. Experiences in communities across the United States suggest that public, private and non-profit entities must come together in partnerships that support place making 25 The Rockefeller Foundation. Access to Public Transportation a Top Criterion for Millennials When Deciding Where to Live, New Survey Shows Connect Hampton Roads. The Economic and Societal Impact of Hampton Roads Transit 36

40 efforts over several years. It often requires changes to planning and zoning regulations, investment in infrastructure such as transit, bicycle lanes and pedestrian amenities, and private development. Transit-Oriented Place making in Hampton Roads Several cities within the Hampton Roads region are actively engaged in some level of place making as a way of enhancing the competitiveness of the region. This includes areas such as Downtown Norfolk, Virginia Beach Town Center, Peninsula Town Center, City Center at Oyster Point, and the Greenbrier area of Chesapeake. This case study examines Place making efforts in Downtown Norfolk, Virginia Beach Town Center, and Peninsula Town Center, as examples of this critical issue. Downtown Norfolk, the traditional downtown of the region, is the most mature among the region s activity nodes. It benefits from the density of the built environment, the existence of several major employers in the core, its location along the river, and its traditional role as the center of the region. Downtown is home to the Virginia Symphony Orchestra, several museums, Chrysler Hall (a performing arts venue), Harbor Park Baseball Stadium, the Macarthur Center shopping mall, and several other attractions. Restaurants and entertainment venues line Granby Street and Monticello Avenue. The buildout of office, retail and entertainment establishments preceded the development of housing, which has accelerated in the past three years. Transit service in the downtown includes buses, light rail, and ferry and Amtrak connections. The New Downtown Norfolk Transit Center (DNTC) links fourteen different bus routes and is within walking distance of the Monticello Tide station. 27 The Tide light rail system runs 7.4 miles from Newtown Road at the Virginia Beach border through Downtown to Fort Norfolk, home of Eastern Virginia Medical School and the Sentara medical complex. The employees of downtown restaurants and retail establishments rely on transit to commute to work. Parking is not free in downtown, which also encourages use of transit even by employees who have access to a vehicle. New housing construction and the redevelopment of vacant buildings and Class B offices into apartments has created a critical mass of approximately 5,600 people living in the downtown area. 28 More units are currently under I usually use the light rail 4 to 5 times a week to get to work. I only use my car if I have an appointment after work. That was another factor in choosing the Belmont Freemason apartments since the rail was right there for me. I have enjoyed using it. So I don't have to pay for parking downtown where I work. It is very convenient for me. --Belmont at Freemason Tenant 27 The New Downtown Norfolk Transit Center Fenner, Jennifer. Is Downtown Norfolk Having Its Moment? Distinction Magazine. November The Economic and Societal Impact of Hampton Roads Transit 37

41 development. These units have attracted young, educated students and workers to the urban core, with new units designed to appeal to empty nesters. At the Belmont at Freemason, a 239-unit apartment complex located on either side of the York Street/Freemason light rail station, 81 percent of the residents are 35 years of age or younger. Thirty-three of the 306 residents do not own cars. Kotarides Development, the developers of the project, noted that even after building fewer parking spaces than the industry standard for an apartment complex, two floors of their parking garage remain unoccupied at night indicating demand for vehicle ownership that is even lower than was anticipated. The developer estimates that 31% of the tenants commute by transit. Residents have specifically selected the location because it provided transit access to jobs in Downtown and Fort Norfolk, allowing them to get by without an automobile. Another downtown project the recently announced Bank of America building redevelopment will offer larger units likely to appeal to empty nesters and others who may have preferences for more space. Like the younger 18 to 34 demographic, empty nesters represent a key market for less auto-oriented urban living. The Bank of America project will fill a need currently not met by the smaller units that appeal to millennials. 29 Downtown has also seen focused and ongoing interest in nonresidential development. At the time of writing this study, The Main, a new Hilton hotel, is under construction adjacent to the new Slover Library. The hotel will include 300 guest rooms, 42,000 square feet of meeting space, 20,000 square feet of conference space, and two restaurants. Just outside the core of downtown is the developing Neon District. This area offers lower rents that attract artists and startup firms. Tech firms are making Norfolk home, including, for example, Grow (a web advertising firm with 40 employees). Grow founder Drew Ungvarsky reported that he encourages his employees to use alternatives to the automobile for commuting to work. The company provides monetary incentives to employees if they use transit, walk or bike to work. Currently, only a few employees use transit, but he believes improvements to the system, including expanding the Tide to reach more destinations, would be transformative to downtown and serve to help attract more talent. 29 Kleiner, Sarah. Major apartment project planned for downtown Norfolk tower. The Virginian Pilot The Economic and Societal Impact of Hampton Roads Transit 38

42 Perhaps the biggest confirmation that Place making in downtown Norfolk is succeeding is the recent announcement that ADP (Automatic Data Processing), a Fortune 500 company, will be opening an office in the heart of the downtown. ADP like[s] the fact that we have light rail, we have the ability to walk around, they like the feel of a downtown environment. John Padgett, chairman of the Hampton Roads Economic Alliance. largest job announcement in a generation. Paul Fraim, Mayor of Norfolk (Quoted by The Virginian-Pilot, March 15, 2016). ADP has traditionally sought typical suburban office park locations. However, in recognition that today s young professional generation is interested in urban living with opportunities for work, entertainment and shopping within walking distance of their homes, ADP specifically looked for an urban location in a city center with good rail transit access. The ADP office in downtown Norfolk will occupy 300,000 square feet at 2 Commercial Place, adjacent to the planned Bank of America tower apartments. Both the office space and apartments are part of a larger development project called City Walk. ADP will employ approximately 1,800 people in a customer service operation. Approximately 1,750 of the jobs will pay an average salary of $36,000, while the remaining will pay $50,700 or more. 30 The company expects to fill most positions from within the region, with the express goal of hiring retired military personnel and retaining graduates of colleges and universities in the region. Overall, transit availability helps support the emergence of Downtown Norfolk as a live-work-play environment. Transit is emerging as a key component of the downtown as it seeks to attract businesses, workers and residents. Existing transit already plays a role in supporting downtown restaurants and retail establishments by enabling access to workers. Transit has also guided both individual and corporate decisions to choose downtown. Transit will likely remain a piece of the place making puzzle as Downtown Norfolk continues to redevelop and grow. Virginia Beach Town Center represents a concerted, 25-year effort by the City of Virginia Beach to establish an urban core in a city that has grown up without one. The Pembroke Area, which includes 1,200 acres of land with Town Center as its center, represents one of eight strategic growth areas targeted by the City to absorb the majority of future growth in Virginia Beach. Town Center has grown into a mixed-use urban center with offices, retail, entertainment and residential development all within a 17-block/25-acre area. 31 Only one development parcel remains in this core area, with development of this parcel imminent. Developers and the City have worked together to put in place infrastructure to support Town Center s growth and build at a density that can create a critical mass of activity to support transit. While automobile is still the The vision for the Pembroke SGA is a central urban core with a vertical mix of urban uses; great streets, mobility and transit alternatives; urban gathering places; environmental and neighborhood preservation and enhancement; green buildings; and infrastructure opportunities providing a variety of civic, commercial, artistic and ethnically diverse areas. City of Virginia Beach: Pembroke SGA Website. 30 Hartley, Eric and Elisha Sauers. ADP says it will hire mostly locals for 1,800 jobs in downtown Norfolk. The Virginian Pilot e5c-aaf0-a343778c05b0.html 31 Virginia Beach Economic Development. Town Center. The Economic and Societal Impact of Hampton Roads Transit 39

43 dominant mode of travel for Town Center and the Pembroke Strategic Growth Area as a whole, the city and area developers envision a gradual process of densification, encouraging less auto-dependence (starting first by creating walkable and bike-able environments that provide key amenities) and ultimately building a transit-oriented place. The expansion of light rail through Town Center and on to Virginia Beach is a key element of the City s strategic growth plan for Pembroke, and is enthusiastically supported by businesses within Town Center. Stakeholders believe that the area will develop more quickly and in a more compact pattern with the addition of light rail. This will help boost the tax base of Virginia Beach through increased property values, increased rents, business license fees, and sales taxes. Businesses and developers believe that expansion to the beach will enhance the tourist experience by providing access to the shopping and dining opportunities at Town Center. Currently, 62% of visitors to the beach make a trip to Town Center. Stakeholders active in the Town Center conjecture that this number could be increased to over 80% with light rail transit as an alternative to driving to Town Center. The mix of shopping and dining options in Town Center compliments rather than duplicates those found at the beach, which could lead to additional spending that would circulate throughout the regional economy. In addition to providing access to the beach, light rail would strengthen the link between Town Center and Downtown Norfolk; in the view of one current resident of Town Center, the ability to use light rail to get to Downtown for business meetings would enhance Town Center as both a business and residential center. City planners and Pembroke area businesses also view the light rail as a means of further burnishing Virginia Beach s image as a progressive city looking toward the future, an image that Town Center has already begun to create. For example: Clark Nexson, an architectural firm and anchor tenant in the largest office building in Town Center, moved to the site because of its status as an emerging activity center. The company is focused on attracting young talent that appreciates the live/work/play vision of Town Center. Image is a piece of ongoing efforts to attract and retain young professionals, as well as firms interested in vibrant urban areas. The business and economic development community is very conscious of this need, given that Hampton Roads ranked in the bottom fifth of US metro areas for attracting young well-educated adults. 32 The City of Hampton is working to create its own urban core at Peninsula Town Center (PTC). PTC, located within the 1,900-acre Coliseum Central Business Improvement District (CCBID), is the transformation of an old, indoor shopping mall into an updated outdoor shopping and office center. PTC includes many of the typical shops found at an indoor mall, but has also attracted Faneuil s call center and Bryant and Stratton College. Within the CCBID, several new apartment buildings have been built, aimed at attracting young professionals and retirees. Activity generators nearby include the Coliseum events arena, the Hampton Roads Convention Center, and the Boo Williams Sportsplex. Buses provide transit service to and within the PTC. Four bus stops directly serve the shopping center. Many employees of the retail shops and at Faneuil rely on transit for commuting to work. Faneuil reports that 25-30% of its workers commute by transit. The manager of PTC reports that retailers often ask about transit service when considering leasing space. Many of the employees at these establishments do not own vehicles and rely on transit, or rides from friends and relatives to get to work. The introduction of Bryant and Stratton College to PTC has increased the importance of transit to PTC, as many students rely on transit to get to and from classes. 32 City Observatory: Young and Restless. Cited by Connect Hampton Roads. The Economic and Societal Impact of Hampton Roads Transit 40

44 While HRT already supports the retail cluster at PTC by facilitating employee access to businesses, the area has not yet matured as a truly walkable or transit-friendly place. Most shoppers drive to PTC. There is ample free parking and bus stops are located farther from the mall than is the parking. Those shoppers who do take transit to the area primarily shop at Walmart and Target. 33 Few if any residents of the new apartments in the area use transit. Developers provide 1.5 parking spaces per unit, and most tenants own a vehicle. Choice riders do not yet see transit as advantage mode serving the area. Stakeholders in the area note challenges such as large parking lots separating sidewalks from destinations, and the need for pedestrians to cross multi-lane, busy streets to get between destinations, without ample walk signals and traffic calming measures to protect them. The area therefore raises the opportunity of a gradual transition towards transit-oriented place making, predicated on further efforts at densification and improvements to the pedestrian-friendliness of the urban environment. Conclusions. The emergence of Downtown Norfolk as a live/work/play environment has been supported by the introduction of light rail service. Downtown benefits from a historically denser development pattern than other centers in the region and as such is the first center to begin making the transit-oriented Place making vision a reality. Expansion of light rail will further enhance Downtown as an attractive place to live, work and visit and will generate connectivity among significant activity nodes. Peninsula Town Center and Virginia Beach Town Center are both working toward creating similarly multimodal activity nodes that can attract residents, employment and recreational opportunities. The role that transit plays in supporting these efforts will be somewhat dependent on the continued alignment of other transitoriented policies, including creating more density, encouraging mixed use developments, and managing parking supply and pricing. However, the potential and template are clearly there: Developers and businesses in Downtown Norfolk have found that they need fewer parking space; there is a mix of uses within a short distance of each other in a relatively safe and pedestrian-friendly environment that has convenient high-quality transit options. Downtown Norfolk has also been able to capitalize on its urban environment and transit accessibility, successfully attracting the largest new employer to the region in a decade. Further expanding the availability of high-quality transit across the region will help support Place making efforts. 33 Representatives of the CCBID reported silent feedback about who takes transit based on the shopping carts form Target and Walmart left at the transit stops. Walmart shoppers are walking to transit with carts form Pine Chapel to a Stop at Power Parkway. The Economic and Societal Impact of Hampton Roads Transit 41

45 3.2 CALL CENTERS AND CONTACT CENTERS Industry Background Call centers and contact centers are the central point in an organization where customer contact occurs. Call centers handle voice calls only, while contact centers handle customer contact through a range of telephone and electronic media. These centers may focus on sales, customer service, or technical assistance and represent a core business function for many business sectors. Call center location decisions are typically driven by workforce accessibility. The single biggest investment...a contact center makes is in human resources needed to operate and run the contact center. 34 The call center sector also experiences one of the highest employee attrition rates among business categories. 35 Therefore, access to a large labor force with the skills necessary to operate a center is a key consideration in a firm s location decision. Call centers generally look for reasonably priced real estate with space for workers 36 and favor large urban areas with populations of 500,000 or more. 37 For years, many corporations chose to locate call centers off-shore due in large part to lower labor costs. Recently, however, many companies have chosen to bring call centers back to the United States due to increasing labor costs overseas, concern about corporate reputation (such as working in areas with good environmental regulations and labor laws), and the quality communications skills of US workers. 38 According to a spokesperson for Site Selection Group speaking in the third quarter of 2015, The Southwest and Southeast are the hottest market for big [call center] projects 39 in the United States. Call Centers and Transit in the Hampton Roads Economy Call centers in Hampton Roads are located throughout the region. Some are operated by discreet businesses, such as the Xerox, USAA (insurance), and Chub Insurance (all in Chesapeake). Others, such as Faneuil, Inc., Crescent Recovery, and IBEX Global, contract with geographically dispersed businesses and organizations to conduct call/contact center activities. The Hampton Roads Economic Development Alliance estimates that there are upwards of forty locations in the region servicing as call centers in some capacity Digital Gov. Getting Started with your Contact Center The US Contact Center Decision-Makers Guide McEnroe, Kate When it comes to Call Centers, Size Matters Dec. 1, size_matters 37 Buss, Dale D. Call Centers: reshoring Instead of Offshoring Q Stavriotis, Eric. Many Factors Drive U.S. Firms to Buck Outsourcing Trend, Consider Onshoring March Onshoring Buss, Dale D. Call Centers: reshoring Instead of Offshoring Q Information provided by Thomas Clemens, Hampton Roads Economic Development Alliance. The Economic and Societal Impact of Hampton Roads Transit 42

46 Call centers and customer contact centers fall under the industry group of administration and other services, a sector that has grown faster than average in the region: 2.4% annually in the Virginia Beach Norfolk Newport News MSA over the period , compared to total employment growth of 0.3% annually (Table 10). Moreover, the employment profile of call centers is representative of a significant portion of the Hampton Roads regional workforce in terms of occupation and educational attainment. Nationally, 60% of call center employees fall within the occupational group office and administrative support, 41 which constitutes 15% of the overall Hampton Roads MSA workforce (Figure 3). Call centers typically hire high school graduates and, to a lesser extent, recent college graduates. In the Hampton Roads region, wages for call center employees fall in the range of $10-15/hour. Some centers rely on parttime workers while others focus on full-time workers. Typically, workers range between 18 and 35 years of age, although older workers are not uncommon. In the Virginia Beach Norfolk Newport News MSA, 90% of the population possesses a high school degree or higher, while only 29% possess a bachelor s degree or higher. 42 HRT services enable call centers to access their employment base and allow call center employees to hold these jobs, thus enabling broader economic participation. Call centers provide employment opportunities to the significant number of regional residents who do not have a bachelor s degree. The large number of military spouses in the Hampton Roads area, many of whom look for full or part-time work, also provide a ready labor pool for call centers. The wage rate and age of call center employees mean that many do not own or have access to an automobile. Center employees are frequently dependent on either transit or a ride from a friend or relatives. Transit availability has been a consideration in the location decisions of area call centers. HRT services enable call centers to access their employment base and allow call center employees to hold these jobs, thus enabling broader economic participation. Recognizing this link between transit and competitiveness, one firm, Portfolio Recovery Associates (PRA), participates in the employer-subsidized HRT GoPass365 program. For PRA this currently supports an average daily ridership of nearly 200 trips. 43 Experiences of two call center/contact center firms are profiled below. Faneuil, Inc. Faneuil, Inc., a customer care business, provides business processing solutions and manages customer service for both private and government sector entities. The company relocated its headquarters to Hampton in 2007 and currently operates a customer-service center in Peninsula Town Center (PTC). This site employs approximately 250 people, with plans to expand operations to add 170 more positions. 44 The firm chose to move to PTC from a prior location near the NASA Langley Research Center on Research Drive. The relocation represents a move to a more accessible location. The firm has witnessed increased 41 Bureau of Labor Statistics. Occupational Employment Statistics: May 2015 National Industry-Specific Occupational Employment and Wage Estimates. NAICS Telephone Call Centers American Community Survey 5-Year estimate: S1501: EDUCATIONAL ATTAINMENT. 43 Hampton Roads Transit usage statistics, based on an average monthly ridership of 5,097 in the period July-December Brauchle, Robert. Faneuil announces Peninsula Town Center expansion. Daily Press. January The Economic and Societal Impact of Hampton Roads Transit 43

47 transit ridership by employees and the location move has alleviated some issues at the firm associated with employee access, thus demonstrating the value of quality transit service. About 98% of Faneuil s employees live on the Peninsula, and most come from northern Newport News and Hampton. They have found the population to provide a great labor pool for both skilled and unskilled employees. Faneuil s agents are 70% high school grads and 30% college grads. Wages range from $10 to $15 per hour. Key employee characteristics are communications skills, energy, and excitement. Employees stay an average of 18 months. When interviewing new employees, Faneuil will inquire about transportation constraints, recognizing good access as an indicator of an employee s success at the firm. Although the company won t discount hiring someone from the Southside of the region, they will tell the candidate that the distance imposes additional transportation costs. Some candidates report having already examined transit options as part of their job search process. Faneuil s prior location on Research Drive in Hampton was served by one bus stop at considerable distance from the facility, and the firm estimates that only 10% of employees used transit to get to work at the site. Many others relied on friends and relatives for rides to work, and tardiness and absenteeism were problems that resulted from rides falling through. Faneuil s move to Peninsula Town Center represented a significant increase in transit accessibility. This location is served by four bus routes: the 102, 105, 114, and the 118. The facility operates from 7 am to 11 pm, although hours will vary depending on where their clients are located. Currently, approximately 25-30% of employees use transit to get to work. Mike Mannen, the manager of the facility, noted that the transit service helps make this site the perfect location at the center of the Peninsula. IBEX Global IBEX Global, a company that contracts with businesses to handle customer management, operates a call center at a building formerly occupied by Gateway, Inc., in Hampton. The center employs approximately 600 people. The center was previously located at a smaller office space at the Net Center on Newmarket Drive North in Newport News, with approximately 235 employees. IBEX chose to relocate in 2011 to be in a stand-alone building with room for expansion. IBEX views transit service as one component of their site selection process, but have struggled with maintaining adequate employee access over time. In some ways, the IBEX story mirrors that of Faneuil, demonstrating the downsides of losing high-quality transit service, rather than the value of gaining it. The Net Center was served by two bus stops located within a three-minute walk of the building. In this location, IBEX estimates that approximately 30% of IBEX employees used transit to get to work. 45 When investigating the new Gateway building, IBEX was specifically looking for a site where bus service was available and knew that a bus stop has served Gateway, located directly in front of the building. After moving into the Gateway Building, IBEX learned that the bus service on Enterprise Parkway had been discontinued. The closest stop is now located across Magruder Boulevard, approximately ½ mile from the Gateway Building. 45 Interview with Eric Green, Site Director and Terry Cooper, Recruiting Manager/Operations at IBEX Global The Economic and Societal Impact of Hampton Roads Transit 44

48 Workers using transit must walk ½ mile along Enterprise Parkway (where there are no sidewalks) and cross the six-lane Magruder Boulevard. The walk is through a suburban style office park with vast parking lots, forested areas between building and limited street lighting. The pedestrian environment is uninviting and can feel unsafe. Managers related the story of one female employee who got detained on a customer call. She missed her bus on Magruder Boulevard and had to walk even farther, from Magruder down Hardy Cash Drive to Executive Boulevard, to catch a bus at 11 pm. Since moving to the Gateway Building, IBEX management estimates that employee transit ridership has fallen to about 10%. Many more employees (30-40%) now rely on friends and relatives to drive them to work. The firm estimates that it also lost about 10% of its prior workforce who had depended on transit because they had no way to get to the new location. The constraints of transit service have had real economic impacts on the company, leading to cost increases in terms of attrition, training costs, and absenteeism, and tardiness. IBEX, like every business in this sector, depends on employees being at their desks when the phone rings. Tardiness and absenteeism due to rides falling through and cars breaking down affects the company s bottom-line. In some case, employees who begin the job with a mode of transportation other than transit have to quit because they subsequently lost their transportation and transit does not serve the site sufficiently. IBEX also points to a mismatch between transit hours of service and shift hours at the center; training can start as early as 6 am and late night shifts serving the Pacific Coast do not end until 11pm. IBEX feels strongly about the value of transit to its continued competitiveness and knows from experience the value of accessible bus service to its employee base. IBEX values the Hampton location because of its available workforces. The firm feels that improved transit services would enable the company to access a broader and deeper labor market, improving the match between candidates and IBEX s skill requirements. Improvements in transit service might facilitate further expansion at a level not feasible with lower levels of accessibility. Conclusions. The call/customer contact center industry depends on a labor supply that may not have access to a personal automobile. Many call center employees rely on transit or friends and relatives to get to work. When transit is not available, absenteeism, tardiness, and employee turnover all increase, resulting in a real business cost to employers. Good transit access, on the other hand, can increase the labor market area from which firms can attract workers, thus increasing the pool of potential qualified workers. Labor market access helps the industry remain competitive by keeping training costs and turnover manageable, while increasing customer satisfaction through a better matching of available labor and desired skills. The experiences of two centers in particular, Faneuil and IBEX, reveal the strong relationship between transit service availability, the friendliness of the built environment to pedestrians, and transit s ability to meet business needs. Both Faneuil and IBEX experienced transit ridership by employees on the order of 10% when transit was relatively inconvenient, but 25-30% when bus stops were close by. The firms specific experiences point to the value of a moving towards a vision of high quality transit in the region, such as that outlined in the preliminary Connect Hampton Roads plan. The Economic and Societal Impact of Hampton Roads Transit 45

49 3.3 SHIPBUILDING AND REPAIR Industry Background Founded in 1886 as Chesapeake Dry Dock and Construction Company, Newport News Shipbuilding has been manufacturing naval vessels in Virginia for 130 years. It is the sole designer, builder and refueler of U.S. Navy aircraft carriers and one of two providers of U.S. Navy submarines. 46 The Newport News Shipyard occupies 550 acres along 2.5 miles of waterfront on the James River at the mouth of the Chesapeake Bay. Newport News Shipyard is the largest industrial employer in Virginia and the largest shipbuilding company in the United States. 47 While employment has decreased somewhat over the past few years to approximately 19,000, new contracts are expected to boost employment back over 20,000 starting in Workers come from throughout the Hampton Roads region, areas of Virginia outside the region, and parts of North Carolina. The economic impact of the Shipyard on the regional economy extends well beyond the jobs at the facility itself. Jobs at the shipyard filter through the economy in terms of indirect and induced jobs and economic output. In total, the Shipyard supports 41,000 jobs and $8.4 billion of output in the region. 48 The Role of Transit at the Shipyard Shipyard workers are about 50% salaried and 50% hourly workers, with a diversity of job types including engineers, electricians, and welders. Most jobs require specific skills and the Shipyard provides extensive training. The Shipyard has a vested interest in maintain workers longterm. The incomes of Shipyard employees are high enough that most workers have multiple options for transportation to work, and will select that which is most convenient and comfortable. The Shipyard has approximately 15,000 parking spaces available for employees; managers are assigned spaces while laborers vie for spots on a first-come first-serve basis. In some cases, the size and shape of the shipyard and the locations of jobs relative to parking, can mean that employees must park more than a mile from their work site. The company does provide shuttles to move people from remote parking to their work location. Some employees pay private companies up to $11 per day to rent spaces closer to their work location. The Shipyard 46 Newport News Shipbuilding. Who we are Newport News Shipbuilding. Who we are. 48 EDR Group estimates using the IMPLAN economic modelling system, with a direct effect of 19,000 jobs. The Economic and Societal Impact of Hampton Roads Transit 46

50 has no plan to increase parking at the site, which would require the construction of a costly garage. Due to the relative inconvenience of parking, supply constraints on parking, and a culture of encouraging transit user, transit and other forms of ride-sharing have for several years been a part of the accessibility equation at the Shipyard. Over time, employees have tried out different approaches. At one time, workers organized their own bus network to serve employees. A park and ride lot in Gloucester attracted Shipyard workers in the past, with buses carrying workers from the lot to the facility. Other strategies for ridesharing have included carpooling and van pooling. Currently, about 50 private vans (organized by the workers) operate carrying people from as far as North Carolina. Three years ago, when operating at fuller capacity, the Shipyard began to anticipate significant pressure on its parking. Management started to actively work with HRT to explore opportunities to boost workers transit ridership. HRT has aligned bus schedules to better synchronize service with the shifts at the Shipyard, and has moved bus stops to make them more convenient for workers. HRT provides several stops along the Shipyard, dropping workers off close to work sites. In turn, the Shipyard has worked to better schedule meetings to ensure that workers can make their bus connections. The Shipyard advertises the availability of transit in its monthly newsletter. While parking issues have abated slightly with the interim staff cutbacks, the Shipyard expects parking pressure to increase again as work ramps up under new contracts. Therefore, efforts to work with HRT on improved service continue. The cooperation between the Shipyard and HRT has paid off in terms of bus ridership. An estimated 1,200 to 1,500 employees use transit at least occasionally. The Shipyard participates in HRT s GoPass365 program, and began fiscal year 2016 with a purchase of 1,250 passes for $200 each in order to provide unlimited HRT use to Shipbuilding employees. These passes are provided free-of-charge to employees; new passes are provided on a lottery basis, while high-use passes from previous years are automatically renewed. Employees are expected to use passes at least ten time per month. 49 Recent ridership statistics show average monthly ridership at the Shipyard of 23, GoPasses are used by all levels of employees, although workers without designated parking spots are the most apt to use transit. The Shipyard management report concentrations of HRT demand in their first shift (7-3:30) with some usages in the second shift (3:30-11:00). The commitment of the Shipyard to encouraging transit is highlighted by its recent decision to allow workers to carry personal camera-enabled cell phones onto the shipyard property. For security reasons, 49 Currents. A weekly publication of Newport News Shipbuilding. 22 June Hampton Roads Transit usage statistics in the period July-December The Economic and Societal Impact of Hampton Roads Transit 47

51 personal camera-enabled cell phones have been prohibited on the property. In the past, some workers arrived at work an hour early to secure a desirable parking space, and then spent an hour in their vehicle using cell phones before heading to work. The new policy allows workers to bring personal phones on site, but still prohibits unauthorized photography, and requires compliance training. 51 Management views to the decision to allow cell phones on site as an ancillary to making transit more competitive, because workers will now be able to use their cell phones while commuting on the bus and then simply bring their phones on premises at the workplace. The Shipyard acknowledges that, without transit, workers would likely still find a way to get to work. However, transit is viewed as a significant contributor to the quality of life of the workers; when commuting by transit employees can rest and relax, read a book, or do work on a mobile device. Transit reduces the stress that comes with trying to find a parking space. From a business perspective, transit allows the Shipyard to avoid expensive investments in parking garages. Transit also helps the Shipyard reduce its carbon footprint by reducing worker-associated vehicle travel and auto emissions. The Shipyard and HRT continue work together to encourage Shipyard workers to use transit. For example, management and HRT are exploring sites for new park-and-ride lots where employees can drive, park their vehicle, and take am express regional commuter bus from places such as Gloucester or other outlying areas to the Shipyard. Many workers live beyond a 25-mile radius of the facility. The Shipyard stands as a successful example of the value of cooperation between HRT and an individual business that recognizes the bottom-line value of transit services. Wayne s Story Wayne, a 14-year Shipyard veteran and current shift manager, commutes 35 miles to work every day. Until 2009, he drove. As a manager, Wayne has a reserved parking spot at the Shipyard. When gas prices increased substantially, he switched to transit, driving 5 miles to a park-and-ride lot where he catches a MAX bus that lets him off right in front of his work site. Wayne went back to driving when gas prices fell, but he discovered that transit still beat the price of driving if he also considered wear and tear on his vehicle. Furthermore, he could work or read on the bus, eliminating productive time lost driving in traffic congestion. This more productive use of time is particularly important to Wayne since he commutes through the tunnels, which are subject to congestion and delays. Overall, Wayne is a transit believer. It s a pretty enjoyable experience. It s convenient. Wayne believes with a few additional tweaks to the bus schedule, even more workers can be enticed to commute by transit. Form his point of view, If it helps my workers get to work easier and safer, I m all for it. Conclusions. The Newport News Shipyard is a telling example of the power of targeted policies aimed at supporting transit ridership. As a result of parking limitations, the GoPass 365 program, a culture of transit support among Shipyard management, and efforts by HRT to match service to the Shipyard s operational needs, the Newport News Shipyard has achieved transit usage by employees at all levels. The provision of transit not only improves worker quality of life and saves employees money, it also has helped the Shipyard avoid costly investments in structure parking. 51 Currents. A weekly publication of Newport News Shipbuilding. 29 February The Economic and Societal Impact of Hampton Roads Transit 48

52 3.4 HEALTH CARE SERVICES Industry Background The health care industry supports the wellbeing of the Hampton Roads economy, both as a major employer and as a contributor to the health and wellbeing of the regional population. Health care is growing faster than overall employment in Hampton Roads and the nation as a whole. Between 2010 and 2015, employment at health-related businesses increased by 2% annually in the Hampton Roads region, compared to only 0.3% overall (Table 24). Looking forward to 2025, growth in this sector is expected to continue to outpace employment growth overall, within the Hampton Roads region, and in Virginia and the United States as a whole. Table 24: Growth Trends in the Healthcare and Social Assistance Industry Sector % Annual Employment (Thousands) Growth Geography Measure Health Care & SA* Employment % 1.7% Hampton Total Payroll Employment % 0.6% Roads** %Total in Health Care & SA 9.4% 10.2% 11.3% - - Health Care & SA* Employment % 1.8% Virginia Total Payroll Employment 3,863 4,021 4, % 1.0% %Total in Healthcare & SA 9.7% 10.3% 11.2% - - Health Care & SA* Employment 17,675 22,050 25, % 1.5% National Total Payroll Employment 139, , , % 1.0% %Total in Healthcare & SA 12.7% 15.0% 15.8% - - *SA = Social Assistance ** Defined as the Virginia Beach Norfolk Newport News, VA NC Metropolitan Statistical Area (MSA) Source: Moody s Economy.com Job growth of individual sub-sectors of the health care industry is also expected to outpace other industries through Table 25 shows the 20 industries forecasted by the Bureau of Labor Statistics to experience the greatest percentage job growth between 2014 and 2024, nationally. The top 5 are in the health care industry, and 8 of the top twenty are health care-related. The Economic and Societal Impact of Hampton Roads Transit 49

53 Table 25: Industries with the fastest growing employment nationally Industry Description Sector % Annual Growth Home health care services Health care and social assistance Outpatient care centers Health care and social assistance Offices of other health practitioners Health care and social assistance Other ambulatory health care services Health care and social assistance Medical and diagnostic laboratories Health care and social assistance Management, scientific, and technical consulting services Professional and business services Software publishers Information Facilities support services Professional and business services Computer systems design and related services Professional and business services Nursing and residential care facilities Health care and social assistance Securities, commodity contracts, and other financial investments and related activities Financial activities Offices of physicians Health care and social assistance Offices of dentists Health care and social assistance Funds, trusts, and other financial vehicles Financial activities Local government passenger transit State and local government Other information services Information Office administrative services Professional and business services Support activities for mining Mining Individual and family services Health care and social assistance Wireless telecommunications carriers (except satellite) Information 1.3 Source: Bureau of Labor Statistics. Industries with the fastest growing and most rapidly declining wage and salary employment. The health care sector is dependent on the transportation system for access to both employees and patients. A significant number of employees and patients do not have access to personal automobiles and are therefore rely on public transportation. In the Hampton Roads Region, approximately 19% of all transit commuters are employed in either education of the health care sector. 52 Median earnings for the health care and social assistance industry in the Hampton Roads region are $39,538 annually, compared to $43,358 overall (for full-time employees). 53 The health care industry is characterized by a mix of jobs, from doctors and nurses, to technicians and support occupations, to janitorial and food services staff. This 52 EDR Group analysis based on the Public Use Microdata Sample (PUMS) of the U.S. Census Bureau s American Community Survey (ACS). 53 U.S. Census Bureau, American Community Survey 5-Year Estimates. Industry By Sex And Median Earnings In The Past 12 Months (In 2014 Inflation-Adjusted Dollars) For The Full-Time, Year-Round Civilian Employed Population 16 Years And Over. Virginia Beach-Norfolk-Newport News, VA-NC Metro Area. The Economic and Societal Impact of Hampton Roads Transit 50

54 diversity of occupations means that average wages within the industry obscure the true picture of income for some of the support roles in health care. Seventy-eight percent of non-managers in the health care industry nationally earn less than $40,000 annually and 41% earn less than $25,000, compared to 47% and 24%, respectively, for the overall workforce. 54 Lower wages often means that workers do not have access to an automobile and must rely on transit, taxis, or rides from friends and relatives to get to work. Similarly, patients who do not own automobiles must rely on alternative travel modes to access health care facilities. Given disparities in health among people who live and work in low socioeconomic circumstances, access to health care is disproportionate for these populations. Both sets of travelers (health care employees, patients) face challenges related to the 24-hour nature of health care services and needs. Transit and the Health Care Industry in Hampton Roads The health care industry in Hampton Roads comprises a wide variety of providers ranging from large hospitals that attract patients from throughout the United States, to more regional hospitals, specialty health care providers, community health centers, military hospitals and clinics, medical labs, medical imaging facilities, and doctors offices and clinics. Figure 7 shows the regional distribution of some of the largest health care providers in the region as well as a close-up map of the Norfolk medical cluster, including Sentara Norfolk General Hospital, the Children s Hospital of the King s Daughters (CHKD), and Eastern Virginia Medical School (EVMS). This cluster is served by bus and light rail. Figure 7: Hampton Roads Regional Health Care Providers and the Norfolk Medical Cluster Source: EDR Group analysis using GoogleMaps and addresses from respective health care provider online directories. (Note: this map depicts major facilities to present the regional distribution of facilities and is not intended to be comprehensive in nature). 54 Galinsky, Ellen and Kelly Sakai, Workforce flexibility and the Health Services Industry, Families and Work Institute, The Economic and Societal Impact of Hampton Roads Transit 51

55 Employees and Transit. Health care employers report that the largest number of workers using transit at hospitals are nursing assistants, food service workers, and janitorial staff. The use of transit by health care workers at the area s major facilities is a function of the level of transit service available at each location. Some areas are served better than others by current transit services. At Sentara Norfolk General Hospital and Sentara Heart Hospital which are served by both buses and light rail (the EVMC/Fort Norfolk station), management estimates that approximately one-third of workers commute using transit. Sentara Norfolk General would like to increase transit commuting, and is currently studying how best to encourage workers to use transit. The hospital pays approximately $1,000 per year per employee for parking. Parking is becoming scarce on site and the hospital is looking at the cost of providing subsidized transit passes for employees versus the cost of constructing another garage. The hospital believes it may be more economical to provide transit passes within the HRT GoPass365 program. [The Tide] gives me time to read, relax and avoid the traffic. Diane, nurse and practice manager at CHKD. Children s Hospital of the King s Daughter (CHKD) management estimates that 5-10% of workers use transit across the CHKD regional network. Diane is a nurse who has worked for over 25 years to deliver nursing care to children at CHKD. Today, she s a practice manager and her work requires travel throughout the region. If I could ride transit every day, I would. I save money of gas. And traffic is getting worse all the time, reports Diane. She also notes it s kind of nice when I can ride the light rail because I have to walk to the station so I get some exercise in. When her job required regular trips between offices on Kempsville Road (near the Newtown Road Station) and the Fort Norfolk/EVMS area (just west of downtown), Diane commuted two to three times a week using The Tide light rail. Riding The Tide gives me time to read, relax and avoid the traffic. Chesapeake Regional Medical Group reports some transit use by laboratory, housekeeping, and food services staff. However, because of lower levels of transit availability near their facilities there is overall less reliance on transit compared to Sentara Norfolk General or CHKD. Reflecting an appreciation of some cases of employee use of transit, Chesapeake Regional has revised the work and training schedule of some employees to facilitate bus commutes. However, there are complications that arise from this, for example how to manage these types of decisions in a manner that is fair to other employees. The Economic and Societal Impact of Hampton Roads Transit 52

56 At Portsmouth Naval Hospital (Navy Medical Center Portsmouth), both location and unique security needs make riding the bus to work challenging. However, the hospital does have a number of employees riding transit, including some who live across the Elizabeth River and use HRT s Elizabeth River ferry service to commute. These employees ride bicycles to the ferry on the north side of the river, commute with their bicycles by ferry, and then ride to their employment site when they reach Portsmouth. The tolling of the Midtown and Downtown Tunnels increases the attractiveness of HRT services. Employees commute by ferry less during the winter months. The Naval Hospital is also working with TRAFFIX, HRT s travel demand management team, to set up carpools and vanpools for employees. The hospital faces significant constraints on parking during peak use periods. Patients and Transit. Based on the 2012 HRT Origin- Destination survey, 2.5% of all HRT trips are made for the purpose of a medical appointment/doctor s visit. 55 Patients use a combination of HRT fixed-route and paratransit services to access medical care. HRT services are supplemented by other special programs including LogistiCare, a non-emergency Medicaid transportation program in Virginia, and I-Ride, which offers transportation services to seniors in Southeastern Virginia. Regional health care providers report that transit and paratransit are most useful for scheduled appointments. Staff working in care coordination and management provide information on transit options to patients when they make appointments. Unplanned visits (urgent and emergent care) and subsequent discharges are harder to serve with transit, given their unpredictability. Some patients arrive at emergency care facilities without wallets or money, and have no way to pay for transportation home. Sentara and Chesapeake Regional report providing bus vouchers in some instances to patients who have no transportation to facilitate the discharge process. When transit service is not available, in some instances cab fare has been provided. This practice carries within it significant expenses. Regional hospitals would like to see enhanced transit services. 55 EDR Group analysis using data from the HRT 2012 Origin-Destination survey. The Economic and Societal Impact of Hampton Roads Transit 53

57 Unique Needs of Community Clinics: Hampton Roads Community Health Center The Hampton Roads Community Health Center provides health services to underserved, underinsured, and uninsured residents of the Hampton Roads region, including low income and homeless individuals. 56 Many clients have no access to automobiles and rely on transit to get to and from appointments and for other essential trips like grocery shopping. The role that transit plays in relation to our business is a great example of the fact that, though we may not all be riding public transportation, chances are we or someone we care about relies on people who do use it, says Dr. Jose Rodriguez, of the Hampton Roads Community Health Center. The Center estimates that approximately 30% of its patients use transit to get to appointments. The center identifies a number of challenges affecting its patients including: missed appointments due to missed bus trips and limited frequency of bus service, unfriendliness of the pedestrian environment, a lack of bus shelters to protect against inclement weather, the cost of transitpasses, and the difficulty of understanding and navigating the system particularly for those affected by mental health conditions. At the Center s Norfolk branch on Ocean View Avenue, for example, the bus stop is across four lanes of traffic and does not have a shelter. Visitors, including mothers with small children in tow, find crossing the busy road difficult. They also must wait unprotected from inclement weather at the bus stop. Many of the Center s clients are single mothers with small children. The transit-dependent nature of this population offers opportunities for the Center and HRT to work together to improve transit service. In particular, the Center is interested in improved shelters and bus schedules, opportunities for subsidized fare, and enhanced ride services to help transport the elderly and disabled to the Center. Conclusions. The health care industry in Hampton Roads is an important growth sector in the region, supporting overall quality of life and employing just over 10% of the region s workforce. The health care industry relies on regional transit services provided by HRT for access to both patients and workers particularly for those who cannot afford to drive. The level of reliance on transit at individual locations and institutions reflects, in part, the disparate levels of transit service available. Health care employers report that the largest number of workers using transit at hospitals are nursing assistants, food service workers, and janitorial staff. Certain locations also see usage of HRT by choice riders who take advantage of high-quality services such as the light rail or ferry. 56 Hampton Roads Community Health Center. The Economic and Societal Impact of Hampton Roads Transit 54

58 3.5 HIGHER EDUCATION Industry Background For many reasons, colleges and universities are widely regarded as central institutions to the regions in which they are located. They provide significant direct employment, spur broader economic development, and play key roles in workforce training and the attraction and retention of young people. These institutions also often depend on transit accessibility for employees, students and visitors. Hampton Roads is home to a number of colleges and universities, community colleges, and private post-secondary institutions. According to the Hampton Roads Economic Development Alliance, more than 100,000 students attend these schools on either a full- or part-time basis. Six of the schools currently participate in the HRT GoPass365 program. These include Bryant & Stratton College, Centura College, Eastern Virginia Medical School, Old Dominion University, Tidewater Community College, and Tidewater Tech-Trade School. This case study explores the importance of the higher Higher Education and Economic Development education sector to regional economic development in general, and the importance of transit in supporting this sector. Colleges and universities play several roles in the economic growth of a region. Fundamentally, colleges and universities provide opportunities for residents of the region, as well as transplants from other places, to attain post-secondary education. This positions graduates to become higher earners and contributors to the regional economy through employment and spending. Higher education is particularly significant given the growing importance of technology and knowledge-based jobs in the world economy. During the site selection process, a major factor affecting business decisions is the quality of the local labor force. Higher education institutions build a workforce that can attract employers like ADP that require an educated workforce. Building a broader set of employment opportunities can in turn increase a region s ability to maintain its younger population when they reach working age. Secondary and post-secondary educational institutions also serve as significant employers. Like the health care sector, higher-education supports a broader range of jobs types: roughly two-thirds of jobs at colleges and universities... represent non-faculty administrative and support staff, 57 providing employment and job training opportunities for residents of a variety of education and experience levels. In addition to their roles as educators and employers, colleges and universities stimulate the economy through purchasing goods and services from businesses within the region. Nearly half of the operating budget of colleges and universities is spent on procurement of goods and services. 58 While not all of a university s procurements benefit local businesses, many institutions purchase office supplies, janitorial services, food services, landscaping services, and other products from local providers. These purchases Talent development and business attraction Regional employment Attraction of new residents Entrepreneurial activity Neighborhood investment 57 Porter, Michael, Colleges and Universities and Regional Economic Development: A Strategic Perspective. Forum Futures Porter, Michael, Colleges and Universities and Regional Economic Development: A Strategic Perspective. The Economic and Societal Impact of Hampton Roads Transit 55

59 support jobs throughout the economy and lead to additional spending by workers that support local establishments. Other economic development roles that universities and colleges fill include attraction of new people to the region, serving as centers of entrepreneurial activity, research and development, and providing investment in real estate and infrastructure that can anchor and stimulate additional investment. For example, Tidewater Community College (TCC), Old Dominion University (ODU), and Eastern Virginia Medical School (EVMS) each have influenced the development trajectory and revitalization of Norfolk. Figure 8: Major Public and Private Nonprofit Higher Education Institutions in the Hampton Roads Region Source: EDR Group analysis using GoogleMaps. The higher education sector has a complex range of transportation needs. These include providing access to the campus for students, faculty, and researchers, transportation options for support staff and contractors such as landscapers and food service providers, access for suppliers of goods and services, transportation options for special events, options for students to get to other venues within the region, and options for visitors and students arriving by air to access their campuses. In a region as geographically dispersed as Hampton Roads, these transportation needs require a variety of modal options including automobiles, public transportation transit, bicycles, and walking. Safety, reliability and ease of use all factor into the transportation decisions of the higher education community. The Economic and Societal Impact of Hampton Roads Transit 56

60 Transit and the Hampton Roads Higher Education Sector To investigate the role of transit in supporting Hampton Roads higher education institutions, HRT and its consultants conducted a roundtable discussion with representatives of several of colleges and universities, and phone interviews with others involved in regional economic development. Based on this, it is clear that transit plays a role in supporting some of these institutions, but that the level of transit use for so-called choice riders depends on the quality of services available across the region. An estimated 20% of HRT riders are full or part-time students at a college or university and they make up nearly 32% of all rail riders. The roundtable discussion focused on the use of transit by students and employees working in higher education. An estimated 20% of HRT riders are full- or part-time students at a college or university. They make up nearly 32% of all light rail riders. 59 HRT works with many of the colleges and universities to promote transit use, and partners with several to provide transit passes. These GoPasses are distributed by school administrators to employees and students. Table 26 shows the number of GoPass initially purchased by participating colleges and universities for fiscal year 2016 (July 2015-June 2016). Most institutions opt to pay HRT on a per-swipe basis for pass usage and simply buy a set of passes for a nominal fee ($5) at the beginning of the year. Tidewater Community College, with its primary campus located in downtown Norfolk along The Tide light rail, pays $200 each for unlimited use passes and provides them to students for a reduced rate that can be covered with student financial aid. Overall, 2,700 passes were distributed to higher education institutions at the start of fiscal year Table 26: GoPass365 usage among higher education institutions Current Customer # Passes at the start of FY 16 Average monthly ridership (over the period July-Dec 15) Eastern Virginia Medical School Centura College Newport News Centura College-Chesapeake Centura College Virginia Beach Bryant & Stratton 250 7,145 Old Dominion University ,002 Tidewater Community College 1,250 31,600 Tidewater Tech Trade School 100 1,917 Source: Hampton Roads Transit GoPass 365 usage statistics. Most of the colleges and universities that participated in the roundtable discussion for this study noted that transit is used by lower paid staff in housekeeping, landscaping, food service, and lower level administrative positions. Many of these workers do not own a car and rely on transit to get to work. Without transit, they are dependent on friends and relatives to drive them to and from their jobs. While representatives of colleges and universities note challenges with service reliability, span of service, and 59 HRT Origin and Destination Study (2014). 60 Tidewater Community College. Hampton Roads Transit GoPass365 program for students. The Economic and Societal Impact of Hampton Roads Transit 57

61 frequencies, transit service is nevertheless an important form of access for workers who keep universities up and running through a variety of support functions. For centrally located institutions with higher levels of transit service, such as Tidewater Community College (TCC) and Eastern Virginia Medical School (EVMS), transit is also used by choice riders. EVMS reported that 79 of its faculty use GoPasses on a regular basis. EVMS also noted that new younger hires from larger urban areas are starting to change perceptions of transit and to perhaps lead by example. EVMS employees primarily use The Tide light rail. TCC has a number of staff that are socially conscious and have chosen to trade in their parking pass for an annual GoPass. Old Dominion University (ODU) reports usage of 45 GoPasses by faculty and staff, and 10 by independent contractors on an annual basis. The use of transit by students also varies by institution. The Tidewater Community College student body relies heavily on HRT services. The college is a one-hundred percent commuter college. TCC participates in the GoPass365 program to ensure students with limited resources are able to make the most of the school s educational opportunities. The college records approximately of 31,600 swipes each month, on both the bus and light rail. Some students get dropped off at light rail stations outside of the downtown area, and then ride The Tide to the station stop nearest to TCC. TCC s central location, limited (and priced) parking downtown, and location on the light rail alignment all help encourage transit use by its student population. TCC noted that the two biggest barriers its students face in pursuing a college education are financial limitations and lack of transportation. Transit access is key to addressing its students transportation needs, providing access to education and to improved opportunities for employment thereafter. Thomas Nelson Community College (TNCC), located on the Peninsula, is also a 100% commuter school with a student population that is often both working and going to school. Some students do use HRT, however TNCC has not chosen to participate in the GoPass365 program based on current student residential and commuting patterns. Rather, TNCC sells approximately five hundred 30-day transit passes to students over the course of an academic year. Transit usage by TNCC students is comparatively less than at TCC because fewer buses serve this institution and there is no light rail serving the campus. TNCC has expressed great interest in working with HRT to improve transit access to the campus. EVMS students for the most part own vehicles and commute from off-campus. The university reports issuing 32 GoPass365 passes to students who live off-campus in the fall of The developer of the Belmont at Freemason apartment complex in downtown Norfolk noted that several tenants are EVMS students who selected that residential location because there are light rail stations both directly outside the apartment building and at the medical school. One student who resides at this complex noted that he does not have a car and did not look at any other potential apartments because he wanted access to The Tide light rail to get to and from school. ODU reports 481 GoPass365 passes issued to students in the last year. The university has approximately 1,200 international students, many of whom arrive in this country without a vehicle. These students are transit dependent when they arrive, but many eventually obtain driver s licenses and cars. The Economic and Societal Impact of Hampton Roads Transit 58

62 Factors Limiting Transit Use and Potential Improvements Those colleges and universities who have transit access noted that scheduling and frequency of service can limit its utilization, even by staff and students who do not own vehicles. Both community colleges have large numbers of part-time students, many of whom are single parents and/or working part-time jobs. Relying on transit schedules that are too infrequent or do not make enough connections can make it difficult to travel between school, work and child care, all of which are located in different places and which require prompt arrival. Norfolk State University (NSU) noted that transit use can be problematic for workers on evening shifts which may extend beyond the span of service. The University has made adjustments to shifts so that workers can get to bus stops on time. Similarly, some ODU housekeeping shifts begin at 4:30 a.m. before buses start running in the morning. Groundskeepers, whose shifts start at 7:00 a.m., have more options depending on where they are commuting from. The uneven operating hours in the different communities served by HRT can make it impossible for some workers to utilize transit. Workers need to be confident that transit will get them to work on time and be available when they need it across municipal boundaries. TNCC noted that the scheduling of bus routes and required transfers can mean that it takes an hour to get across Hampton by bus. For those who rely on transit, this limits opportunities to effectively access higher education and employment opportunities. The ample availability of parking at Thomas Nelson Community College, Christopher Newport University, Norfolk State University, and Old Dominion University serves to make transit less attractive by comparison. Research participants noted that many students at ODU and NSU own cars or have friends who own cars, and they choose to drive over taking transit. ODU and NSU provide campus bus services that transport students to various destinations including shopping centers and downtown Norfolk. These shuttles only carry students from the sponsoring institution, are viewed by students as safer than public transit, and often run at times more convenient than transit does currently (i.e., on weekends and late at night). ODU s campus shuttle carries 70,000 riders per year. Two roundtable participants noted that transit ridership would be increased if HRT provided a smart phone application that gave real time information about bus schedules and delays. This would allow students to stay in the library or grab a bite to eat while waiting for a bus instead of waiting at the bus stop. Similarly, TCC suggested improving management of the GoPass365 pass activation and deactivation processes for students who do not attend school for consecutive semesters. Another technology-oriented suggestion was to avoid the problem of students carrying two passes by integrating fare card technology into student ID cards as has been done in other cities. Roundtable participants largely agreed that with the exception of few locations along the existing light rail alignment, development and transit service in Hampton Roads has not yet reached maturity in a way that is truly transit-oriented. Several pointed to the more positive attitude of people towards light rail compared to the traditional view of bus service in the region. Some suggested that if light rail extended to ODU and Naval Station Norfolk perhaps more people would use it. ODU has joint programs with EVMS and both schools would benefit from high quality transit connections between them. Roundtable participants also suggest that congestion and the price of driving have not yet reached levels that will push significantly more people towards transit. While colleges and universities are starting to see more interest in issues of sustainability, these perspectives have to date focused primarily on issues of building design, recycling and food services. However, transit may begin to enter into this discussion over time. The Economic and Societal Impact of Hampton Roads Transit 59

63 Conclusions. Higher education institutions support regional economic development through a variety of mechanisms, from acting as regional employers themselves, to training a competitive workforce, to investing in local neighborhoods and infrastructure. In the Hampton Roads region, higher education institutions rely on HRT-provided services that enable commuting by staff in housekeeping, landscaping, food service, and lower level administrative positions. Transit also plays a role in facilitating access by students to a diverse range of educational opportunities. Tidewater Community College, in particular, benefits from its access to quality bus and light rail services and views transit as a vital form of support for lower-income students pursuing a college education. The Economic and Societal Impact of Hampton Roads Transit 60

64 3.6 HOSPITALITY AND TOURISM Industry Background The leisure and hospitality industry supersector is a service-providing industry comprised of two major industries: arts, entertainment and recreation and accommodations and foods services. The industry generally serves a mix of clientele including regional residents as well as visitors from outside the area. When serving visitors, the industry can be understood as a traded industry that brings in dollars to the regional economy, thus serving as an engine of the regional economy. The Hampton Roads region, including in particular the Virginia Beach oceanfront area, is a tourism destination of national importance, attracting visitors traveling for both personal and business reasons (e.g., family vacations and business workshops or conferences). The leisure and hospitality sector in Hampton Roads directly employs approximately 87,500 people, representing 10.3% of the regional employment base. 61 A portion of that direct activity is associated with new dollars brought into the economy by tourists from elsewhere. Tourists also spend locally on shopping and transportation, thus stimulating additional industry sectors. According to estimates by the U.S. Travel Association developed for the Virginia Tourism Corporation, $3 billion in spending by domestic visitors to the HRT service area directly supported 28,500 jobs in 2014 (Table 27). This estimate does not include further multiplier effects associated with demand at suppliers and spending of worker income. Virginia Beach by itself accounted for 6.1% of the total amount spent by domestic travelers in Virginia in Table 27: Jobs Supported by Domestic Visitors to the HRT Service Area County Jobs Expenditures ($M) Virginia Beach 12,568 $1, Norfolk 6,925 $ Chesapeake 3,111 $ Newport News 2,836 $ Hampton 2,293 $ Portsmouth 779 $79.33 Total 28,512 $3, Source: Prepared by the U.S. Travel Association for the Virginia Tourism Corporation. 63 The hospitality and tourism industry depends on lower wage workers covering a wide range of occupations, such as cooks, wait staff and bartenders, rental car agents, housekeeping staff, and landscapers. Median earnings for leisure and hospitality industry in the Hampton Roads region are 61 Moody s Economy.com data for the Virginia Beach Norfolk Newport News, VA NC MSA. 62 U.S. Travel Association. The Economic Impact of Domestic Travel on Virginia Counties Data accessible at: The Economic and Societal Impact of Hampton Roads Transit 61

65 $25,889 annually, compared to $43,358 overall (for full-time employees). 64 The industry is staffed by a mix of full-time and part-time or seasonal workers. Nationally, the average wage for hospitality industry workers in February 2016 was $14.59 per hour. The average wage for production and non-supervisory workers in the industry was $12.64 per hour, with an average work week of 24.9 hours. 65 Support and service staff are vital to the functioning of the hospitality industry and thus to the broader Hampton Roads economy. Many hospitality workers cannot afford to own cars and depend on transit or rides from friends and relatives to get to work. Thus, the continued success of the hospitality and tourism economy in Hampton Roads depends in part on the availability of HRT services. Transit and the Hampton Roads Hospitality and Tourism Economy To gain insight into the hospitality and tourism industry s reliance on transit, HRT facilitated a round table discussion and conducted subsequent phone interviews with representatives of the industry, focusing specifically on hotels and motel proprietors as representatives of the broader service-oriented industry. These discussions focused primarily on the importance of public transit services in providing industry access to workers, but also considered the potential for transit use by visitors to the Hampton Roads region. Employees and Transit. Hotel and motel workers are primarily lower-wage earners. Jobs include housekeeping, cooks, wait staff, landscapers, valets, and desk staff. These jobs generally pay between $8 and $10 per hour, with hotels at the Virginia Beach waterfront paying a premium to attract the best workers. Many of these employees cannot afford to own and operate a private vehicle and are transit dependent. Moreover, as the Virginia Beach area develops, many of these workers are being pushed farther out to suburban locations with more affordable housing. One of the research participants, Gold Key PHR Hotels and Resorts (operators of the Cavalier, Hilton, Ramada, and Hilton Garden Inn hotels at the Virginia oceanfront), described HRT services as very important to their staff. According to estimates by hotel management, as much as 90% of support staff particularly housekeeping staff rely on transit to get to work. Transit is so important to the employment base of the hotels that management believes the company would need to contract with a third party to provide private transit service if the current bus service was not available. 64 U.S. Census Bureau, American Community Survey 5-Year Estimates. Industry By Sex And Median Earnings In The Past 12 Months (In 2014 Inflation-Adjusted Dollars) For The Full-Time, Year-Round Civilian Employed Population 16 Years And Over. Virginia Beach-Norfolk-Newport News, VA-NC Metro Area The Economic and Societal Impact of Hampton Roads Transit 62

66 While noting the criticality of current transit services, research participants also highlighted a number of challenges that constrain staff use of transit. In particular, certain groups of staff might otherwise use transit but cannot at this point because of the system s hours of service. These include late-shift food and beverage workers, such as stewards, line cooks, prep cooks and wait staff who end work at 11 pm or later, after buses stop running. Employees who work on weekends also face considerable difficulties because of the reduced levels of transit service on those days. Mismatch between peak demand periods for hospitality industry workers and the availability of transit services can lead to long transit commutes. Research participants expressed concern about the effects such commutes can have effects in terms of fatigue and, ultimately, employee retention. Overall, participant s indicated a belief that improved transit services (in terms of frequency, span of service, and reduced need for transfers) would improve the competitiveness of the industry by enabling hotels to attract and keep the most qualified workers. At the Days Inn at the Beach, an estimated 20% of employees use transit. These workers have no other means of getting to work. Housekeeping staff, who work from 9 am to 4 or 5 pm are the most likely to use transit. All transit users at the Days Inn are daytime employees. At the Breakers Resort Inn, also at the oceanfront, approximately 10% of employees use transit. This facility has plenty of parking for staff. Only those without access to a car take transit, in part because staff find that bus service is not always reliable and because bus schedules do not match the commuting times of weekend and evening workers. Lena s s story. Lena, a six-year veteran of working at oceanfront hotels, depends on transit to travel from Portsmouth to her job. While she commutes 3 hours in each direction, leaving home at 5:00 am each day to ensure she will arrive at work on time, Lena says she prefers to work at the oceanfront because of better compensation she gets there. For her, transit is a necessity. It gets me to work. Lena also views HRT as a safe transportation option: We have good drivers. We ve never been in an accident. She, her niece, and her sister all use transit to get to their jobs at oceanfront hotels. Currently Lena makes three transfers and has to wait at bus stops along her route. Lena says she would love to see light rail come to the Beach, as she could then make a single transfer from bus to light rail. Hotels and other hospitality industry establishments in downtown Norfolk benefit from both light rail and more frequent bus access as part of the regional bus hub at the Downtown Norfolk Transit Center. According to one research participant, transit accessibility is key to providing downtown restaurants and hotels with access to their workforce. Employees use both bus and light rail for commuting. Moreover, the cost of parking downtown serves to encourage mode switching from driving to transit. Visitors and Transit. Currently, visitors to Virginia Beach do not use buses, with the exception of the VB Wave seasonal serving the beachfront. Hospitality industry representatives in the region believe that visitors would be more likely to use light rail than buses. The Economic and Societal Impact of Hampton Roads Transit 63