CITY OF KINGSTON INFORMATION REPORT TO COUNCIL. Cynthia Beach, Commissioner, Sustainability & Growth

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CITY OF KINGSTON INFORMATION REPORT TO COUNCIL Report No.: TO: FROM: RESOURCE STAFF: Mayor and Members of Council Gerard Hunt, Chief Administrative Officer Cynthia Beach, Commissioner, Sustainability
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CITY OF KINGSTON INFORMATION REPORT TO COUNCIL Report No.: TO: FROM: RESOURCE STAFF: Mayor and Members of Council Gerard Hunt, Chief Administrative Officer Cynthia Beach, Commissioner, Sustainability & Growth DATE OF MEETING: October 2, 2012 SUBJECT: 2012 KEDCO Economic Impact Projection Proposed Kingston Casino EXECUTIVE SUMMARY: This report transmits information received from Jeff Garrah, CEO of Kingston Economic Development Corporation (KEDCO). The information provides Council with the Economic Impact Projection commissioned by KEDCO as prepared by Enigma Research Corporation. The report was received on September 25, 2012 through the CAO to assist Council in determining the potential economic impacts for locating a gaming facility within the City of Kingston. RECOMMENDATION: This report is for information purposes only. Council Meeting 23 October 2, INFORMATION REPORT TO COUNCIL Report No.: October 2, Page 2 - AUTHORIZING SIGNATURES: Cynthia Beach, Commissioner, Sustainability and Growth Gerard Hunt, Chief Administrative Officer CONSULTATION WITH THE FOLLOWING COMMISSIONERS: Lanie Hurdle, Community Services Denis Leger, Transportation, Properties & Emergency Services Jim Keech, President & CEO, Utilities Kingston N/R N/R N/R (N/R indicates consultation not required) Council Meeting 23 October 2, INFORMATION REPORT TO COUNCIL Report No.: October 2, Page 3 - OPTIONS/DISCUSSION: The report Economic Impact Projection Proposed Kingston Casino is attached as Exhibit A., together with a covering letter addressed to the CAO. EXISTING POLICY/BY LAW: There is no existing policy/bylaw. NOTICE PROVISIONS: There are no notice provisions with this report. ACCESSIBILITY CONSIDERATIONS: There are no accessibility considerations with this report. FINANCIAL CONSIDERATIONS: Not applicable. CONTACTS: Jeff Garrah, Chief Executive Officer, KEDCO ext OTHER CITY OF KINGSTON STAFF CONSULTED: Not applicable. EXHIBITS ATTACHED: Exhibit A Economic Impact Projection Proposed Kingston Casino and covering letter Council Meeting 23 October 2, September 25, 2012 Gerard Hunt Chief Administrative Officer City of Kingston 216 Ontario St., Kingston, ON Sent Electronically to: Dear Gerard: Please accept the attached Casino Economic Impact Projection prepared by Enigma Research Corporation as an information document to accompany City Staff resources for Council s review. As with any economic impact study, it is important to clarify the context in which the research and analysis was executed. The firm was selected based on the company s knowledge of the tourism industry and related economic impact modeling; familiarity with the city of Kingston (previously having been commissioned to undertake economic impact studies of the Kingston Buskers Rendezvous and Limestone City Blues Festival); availability and cost parameters. Enigma Research Corporation prepared a number of potential scenarios which provide a projection (conservative to maximum) of the economic impact a casino may have on the city of Kingston. Unlike an analysis of a tangible event or facility already in existence, these projections are based on the best data and estimates available on typical standalone and resort-casinos which are currently operating in the Province of Ontario. These projections of economic impact are a snapshot of economic benefits of new investment (direct, indirect and induced) and job creation. The study is not a costbenefit analysis and does not attempt to quantify or qualify social or physical (infrastructure) impacts that a casino may have on a community. It is also important to recognize that the study addresses new investment and jobs for the City of Kingston and does not take into consideration existing impact or leakage that Kingston realizes from the Thousand Islands Charity Casino operating in Gananoque. If you have any questions or comments regarding the attached, please do not hesitate to contact our office. Yours, Jeff Garrah Chief Executive Officer Cc: Cynthia Beach, Commissioner - Sustainability & Growth file attach. Council Meeting 23 October 2, ECONOMIC IMPACT PROJECTION Proposed Kingston Casino September 2012 Council Meeting 23 October 2, Proposed Kingston Casino Economic Impact Projection Contents ECONOMIC IMPACT ESTIMATES vs. ECONOMIC IMPACT PROJECTIONS 2 METHODOLOGY AND DATA SOURCES 3 HIGHLIGHTS 4 SECTION 1: TOTAL ECONOMIC IMPACT OF PROPOSED CASINO 6 SECTION 2: CONSTRUCTION AND OPERATIONS IMPACT 7 SECTION 3: TOURISM IMPACT 11 SECTION 4: TOURIST DEMAND AND SPENDING 13 SECTION 5: TOURIST PREFERENCES 17 SECTION 6: COMMENTS FROM FORMER KINGSTON TOURISTS Enigma Research Corporation Page 1 Council Meeting 23 October 2, Proposed Kingston Casino Economic Impact Projection Economic Impact Estimates vs. Economic Impact Projections The economic impact of an existing or past attraction is measured by collecting spending information and performing economic modeling exercises. This is called an economic impact estimate and accuracy is largely based upon the quality of the primary data collected. A proposed attraction is hypothetical. Therefore, precise spending estimates are impossible to obtain and any data is based upon extrapolations from similar projects or other calculations. The measurement of a proposed event or attraction is called an economic impact projection and is considerably less accurate than an estimate. When projecting economic impact, it is often helpful to include multiple modeling exercises to calculate an estimated range of impact. This allows decision-makers to consider various opportunities and examine probable versus best case scenarios. Additionally, many projected impact studies estimate multiple year impacts rather than single year impacts. This approach is especially helpful when measuring consumer demand, as it is much easier to measure consumer intentions within a multi-year period rather than shortterm, particularly for major expenditures such as vacation travel. Multi-year impacts also allow for projections of growth beyond start-up years. The Kingston Casino Economic Impact Projection utilizes a five-year impact model with four possible scenarios. The four scenarios involve conservative and best-case possibilities for both stand alone casinos and resort casinos Enigma Research Corporation Page 2 Council Meeting 23 October 2, Methodology and Data Sources CONSTRUCTION AND OPERATIONS IMPACT Construction impact Kathy Wood, consultant Stand alone casino operational impact OLG Community Benefit Summaries Resort casino operational impact OLG Resort Casinos Consolidated Figures TOURISM IMPACT AND SPENDING Attendance projections National survey of 1000 Canadians Spending projections Survey of 2800 visitors to 6 Ontario casinos Economic modeling Ontario TREIM model TOURIST PREFERENCES Demand for attractions Online survey sent to 900 Kingston visitors Location preferences National survey of 1000 Canadians Comments from recent Kingston tourists Online survey sent to 900 Kingston visitors About Enigma Research Corporation Headquartered in Toronto with branch offices in the United States, Enigma Research Corporation is a leading full-service market research firm with expertise in tourism, attractions, and events. Specialties include economic impact assessments, environmental impact, sponsorship, marketing, and operations. Since 1993, Enigma has conducted surveys at more than 500 attractions, events, and venues. The firm supports major industry associations through membership, speaking engagements, and sponsorships at annual conferences, including Festivals and Events Ontario (FEO), the Ontario BIA Association (OBIAA), the Canadian Association of Fairs and Exhibitions (CAFE), the International Festivals and Events Association (IFEA), the International Association of Fairs and Exhibitions (IAFE), and the National Association of Sports Commissions (NASC) Enigma Research Corporation Page 3 Council Meeting 23 October 2, Highlights 1. Economic impact of stand-alone Kingston casino estimated at $151.2M in first five years Conservative estimate indicates that the proposed stand-alone facility would generate $151.2M within first five years Best-case scenario indicated a total impact of $296.5M Estimates include one-time construction impact, operational impact, and tourism impact 2. Resort-style casino could bring $653.7M within the first five years Separate modeling exercise estimated impact of resort-style casino featuring upscale hotel and attractions Resort-style casino likely to bring $653.7M within first five years Best-case scenario of resort designed to compete with larger Ontario casinos could have $1.26B impact in five years 3. Hotel, restaurant, and retail spending would be shared between casino facilities and local operators Potential patrons were questioned regarding their likely spending patterns at a resort-style casino Most indicated that they would stay at an on-site hotel if available; yet most would shop off-site Survey also determined dining would be nearly evenly split between on-site and off-site 2012 Enigma Research Corporation Page 4 Council Meeting 23 October 2, 4. Similar facility in nearby city would likely reduce tourism impact of Kingston casino Non-local casino patrons were asked which they would visit if similar facilities existed in both Kingston and Belleville Overall, 47% would go to Belleville and 39% would visit Kingston; 14% had no preference Any casino built in Kingston should include unique attributes which differentiate the facility from nearby competitors 5. Most potential casino patrons would prefer location along Highway 401 Potential patrons were also questioned regarding their location preference for the proposed casino 42% would prefer the casino along the Highway 401 while 17% would prefer downtown; 42% had no preference Results indicate that a highway location should be seriously considered 6. Other types of attractions would draw more tourists to Kingston Survey of former Kingston visitors listed new potential attractions and gauged interest for each Overall, approximately one in five former visitors likely to visit Kingston primarily for new casino By comparison, other types of attractions could draw more tourism 2012 Enigma Research Corporation Page 5 Council Meeting 23 October 2, Proposed Kingston Casino Economic Impact Projection Section 1: Total Economic Impact of Proposed Casino The proposed Kingston casino would bring three types of economic benefits. The first benefit would be a one-time construction impact. Once built, the casino would deliver operational-based impacts such as revenue sharing, wages and benefits to local employees, and purchases from local and regional vendors. Additionally, non-locals visiting the proposed facility would result in tourism impact. The most conservative estimate of a stand-alone casino in Kingston would be a total impact of $151.2M over the first five years. This estimate includes construction impact of $8.5M, operational impact of $129.2M, and $13.5M in tourism impact. The maximum total impact of a stand-alone casino in Kingston is estimated at $296.5M within the first five years. This estimate assumes a high demand and performance matching the top stand-alone casino in Ontario. A resort casino featuring an upscale hotel, restaurants, and retail (or a resort-like casino packaged with the same offerings within close proximity) would bring a substantially higher impact. A conservative estimate of a resort casino in Kingston suggests $653.7M in economic impact over five years. The maximum total impact of a resort casino in Kingston is estimated at $1.26B within the first five years. This scenario assumes a resort casino similar in size and facilities to Ontario s largest commercial casinos Enigma Research Corporation Page 6 Council Meeting 23 October 2, ESTIMATED TOTAL ECONOMIC IMPACT (5 years) Stand-alone casino Resort casino Conservative Maximum Conservative Maximum Construction impact $8.5M $12.2M $46.3M $55.5M Operations impact $129.2M $203.4M $499.3M $979.4M Tourism impact $13.5M $80.9M $108.1M $228.4M Total impact $151.2M $296.5M $653.7M $1.26B ESTIMATED TOTAL EMPLOYMENT SUPPORTED: FULL-YEAR JOB EQUIVALENTS (annually for first five years) Construction employment* Operations employment ,500 3,000 Tourism employment 208 1,245 1,666 2,638 Total employment 628 2,010 3,491 6,023 *construction period only 2012 Enigma Research Corporation Page 7 Council Meeting 23 October 2, Proposed Kingston Casino Economic Impact Projection Section 2: Construction and Operations Impact A new casino facility in Kingston would bring a one-time construction-related economic impact of $8.5M to $55.5M, depending upon the size of the facility built. Construction-related spending would result in the equivalent of 60 to 385 full-year jobs, again depending upon the type of facility. Once built, the casino would bring operational-related economic benefits in the form of revenue sharing with the host municipality, wages and benefits to gaming employees, and purchases from local and regional vendors. A conservative estimate of total operational benefits from a stand alone casino is $129.2M within the first five years. This includes $13.2M in revenue sharing, $108.6M in wages and benefits to employees, and $7.4M in purchases from local and regional vendors. This estimate is derived from the average of benefits received from five stand alone casinos across Ontario. The maximum operational impact which could be achieved from a stand-alone casino is estimated at $203.4M. This best-case scenario is based on the best performing stand-alone casino in Ontario. A resort-like casino featuring an upscale hotel, restaurants, and shopping could bring an estimated $499.3M to $979.4M within the next five years. These estimates are primarily based upon employment levels at Ontario s largest casino facilities. Regarding employment supported, conservative estimates indicate that a stand alone casino would support the equivalent of 360 full-year jobs, while a resort casino would support 1500 full-year jobs Enigma Research Corporation Page 8 Council Meeting 23 October 2, ESTIMATED CONSTRUCTION ECONOMIC IMPACT Stand-alone casino Resort casino Conservative Maximum Conservative Maximum Expenditure impact $8.5M $12.2M $46.3M $55.5M Employment income (included within expenditure impact $4.0M $6.7M $17.2M $20.6M Full-year jobs supported Modeling assumptions: Based on information provided by developers supplemented by data extracted from other economic impact analysis (casinos) Sources: Kathy Wood, consultant 2012 Enigma Research Corporation Page 9 Council Meeting 23 October 2, ESTIMATED OPERATIONS ECONOMIC IMPACT (5 years) Stand-alone casino Resort casino Conservative Maximum Conservative Maximum Host municipality s share of revenue* $13.2M $17.8M $17.8M $17.8M Wages and benefits to gaming employees $108.6M $176.8M $450.1M $900.2M Purchases from local and regional vendors $7.4M $8.9M $30.7M $61.4M Total impact (5 years) $129.2M $203.4M $499.3M $979.4M Full-year jobs supported *excludes commercial taxes paid by casino Modeling assumptions: Stand-alone conservative: based upon average benefits reported for five Ontario stand-alone casinos Stand-alone maximum: based upon highest benefits reported for an Ontario stand-alone casino Resort conservative: extrapolated from employment levels at Ontario resort casinos Resort maximum: extrapolated from employment levels at Ontario resort casinos Sources: OLG Community Benefit Summaries OLG Resort Casinos Consolidated Figures 2012 Enigma Research Corporation Page 10 Council Meeting 23 October 2, Proposed Kingston Casino Economic Impact Projection Section 3: Tourism Impact A stand alone casino in Kingston would result in, conservatively estimated, a total of $22.9M in visitor spending in the first five years. The maximum estimated spending would be $137.1M over five years. This tourism spending related to a stand alone facility would result in an economic impact (GDP) of approximately $13.5M to $80.9M over five years, according to the Ontario TREIM model. It would also support an estimated 208 to 1,245 full-year jobs annually and support $6.8M to $41.0M in tax revenue over a five-year period. A resort-like casino featuring an upscale hotel, restaurants, and shopping would bring, conservatively estimated, a total of $183.6M in tourism spending over the first five years. The maximum estimated spending related to a resort casino would be $387.3M. Spending related to a resort-like casino would result in an estimated $108.1M to $228.4M economic impact over five years, supporting the equivalent of 1,666 to 2,638 full-year jobs in each of those years Enigma Research Corporation Page 11 Council Meeting 23 October 2, ESTIMATED TOURISM ECONOMIC IMPACT (5 years) Stand-alone casino Resort casino Conservative Maximum Conservative Maximum Initial spending $22.9M $137.1M $183.6M $387.3M Total economic impact (GDP) $13.5M $80.9M $108.1M $228.4M Direct $8.8M $52.5M $70.2M $148.3M Indirect $2.6M $15.5M $20.7M $43.8M Induced $2.1M $12.8M $17.2M $36.3M Full-year jobs supported (5 years) 1,040 (208 per year) 6,225 (1,245 per year) 8,330 (1,666 per year) 13,190 (2,638 per year) Total taxes supported (5 years) $6.8M $41.0M $54.8M $115.7M Federal $3.7M $22.3M $29.8M $63.0M Provincial $3.0M $18.4M $24.6M $52.0M Local $0.1M $0.3M $0.3M $0.7M Source: Ontario TREIM Economic Impact Model (Ontario Ministry of Tourism, Culture, and Sport) 2012 Enigma Research Corporation Page 12 Council Meeting 23 October 2, Proposed Kingston Casino Economic Impact Projection Section 4: Tourist Demand and Spending A national telephone survey determined that 1% of Canadian adults would be very likely to travel to Kingston, Ontario primarily to visit a new proposed casino over the next five years. This represents a total of 260,000 Canadian adults. This figure is used in conservative estimates of tourism demand at stand-alone casinos. An additional 5% of Canadian adults would be somewhat likely to visit the proposed casino within the next five years. Combining these with the very likely group, an estimated 6% of Canadian adults could be interested in the casino. This represents a total market size of 1,540,000 Canadian adults and is used in the maximum estimate for a stand-alone casino. A separate, in-depth survey of former Kingston tourists indicated that many respondents would have an increased likelihood to visit the proposed casino if it included resort-like features such as big-name entertainment, a luxury hotel, fine dining, and upscale shopping. Using these results, it was estimated that a greater percentage of Canadians would visit the proposed casino if resort-like features were offered. These results were used to estimate the tourism demand for a resort casino. The vast majority of Canadians who were interested in visiting the proposed Kingston casino resided in either Ontario or Quebec. In this modeling exercise, no data was collected to measure interest among U.S. residents or International tourists. Using spending estimates adapted from visitor surveys conducted at other Ontario casinos, it was conservatively estimated that visiting tourists at a proposed stand-alone Kingston casino would spend approximately $22.9M on non-casino expenditures within the first five years. A best-case scenario indicated an approximate total spending of $137.1M over five years. Separate modeling exercises were undertaken for a proposed resort-like casino. Using spending data adapted from Ontario s three largest casino destinations, a conservative estimate suggested that a resort casino would bring $183.6M in non-casino tourism spending over five years. A best-case scenario for a resort casino was $387.3M over five years. Respondents to the in-depth survey were asked to indicate their accommodation, restaurant, and retail shopping preferences when visiting resort casinos. These preferences were used to estimate the proportion of non-casi
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