From:  Emma Penton <emma.penton@e-elgar.co.uk>

To:       Semoon Chang < schang@usouthal.edu>

Date:   1/26/2012  4:49 AM

Subject: Our Ref: EC/BP/CCC- Author Courtesy

Dear Professor,

*
Classics in Port Policy and Management
*

*
*

We are clearing permissions for the volume, *Classics in Port Policy and
Management *, edited by Professor Mary R. Brooks, William A. Black Chair of
Commerce, Dalhouise University, Canada and Professor Athanasois A. Pallis,
Jean Monet Chair in European Port Policy, University of Aegean, Greece.

These collections are designed to improve access to the journal literature,
much of which is not easily available in newly founded libraries. Professor
Brooks and Pallis has chosen each article because they believe it to be one
of the most important and influential previously published English language
works in this particular field.

We have written to *the publishers* for formal permission for us to reprint
the following article / excerpt in our collection:

Semoon Chang (1978), ‘In Defense of Port Impact Studies’, *Transportation
Journal*, *17*, Spring, 79-85 [7]

*Emma Penton*
Project Editor
*Edward Elgar Publishing Ltd*

Please note that I am in the office Mondays, Wednesdays and Thursdays.

The Lypiatts, 15 Lansdown Road, Cheltenham, GL50 2JA | Tel: +44
(0)1242 226934 | www.e-elgar.com | A family business in international
publishing
Edward Elgar Publishing Limited is registered in the UK at the above
address. Registered number: 2041703

Mobile Register

Euro blues?

Sunday, January 15, 2012

By Dan Murtaugh

European companies have been good to southwest Alabama, investing billions of dollars and hiring thousands of workers at steel mills, chemical facilities and refineries.

But does the uncertainty surrounding the eurozone -- the economic and monetary union of 17 European nations -- mean trouble for the Alabama operations of those firms?

Not likely, according to experts.

The fundamental strength of multinational companies isn't tied directly to their nation of origin, said Keivan Deravi, an economist at Auburn University Montgomery.

And while the market for goods in Europe may suffer as a result of the crisis there, most firms opened shop here for access to North American markets, which are relatively stronger.

"In fact, they may be glad that they are here" because of the eurozone crisis, said Semoon Chang, a University of South Alabama economist.

Mobile Register

Cruise Ship Loss Impacts Mobile

Saturday October 22, 2011

By Dan Murtaugh

When Carnival’s Elation leaves the Alabama Cruise Terminal today, on the way to its new home in New Orleans, it will leave in its wake an economic impact in the millions of dollars.

The most obvious victim is the city of Mobile. The city owns the cruise terminal and uses proceeds from passenger parking to pay $2 million a year in debt service.

Hotels will also feel an immediate impact. Cruise passengers booked 15,000 room nights a year, according to tourism officials.

Some passengers and crew members also ate at restaurants, shopped at stores and visited attractions in Mobile, but how much money they spent is harder to know.

Elation will head to New Orleans, where it replaces a sister ship, Ecstasy, that Carnival will move to Port Canaveral on Florida’s Atlantic Coast.

Carnival announced in March that it would leave the Mobile market, saying fuel costs for Gulf of Mexico cruises were more expensive than for Caribbean cruises and that trips from Mobile commanded below-average rates compared to other Gulf ports.

Alabama Real Estate Holdings, an arm of the Retirement Systems of Alabama, borrowed $20 million to build the cruise terminal south of downtown Mobile in 2004 after Carnival announced it would home port a ship here.

In 2008, the city borrowed $18.6 million to buy the terminal, then the next year paid $2.6 million to build a new gangway for the terminal to allow a larger ship to dock there. Last year it paid $970,000 for a pie-shaped parcel of land, about the size of a football field, at the corner of Government and Water streets for overflow parking from cruises.

City spokeswoman Barbara Drummond said the city will slash operating costs at the terminal when the cruise ship leaves, only spending as much as necessary to maintain the facility.

Mobile Mayor Sam Jones has lobbied other cruise companies to use the terminal, but so far has had no success. Drummond said that until another cruise ship comes to Mobile, the city may try to lease parking space to downtown businesses or use it for big events like Mardi Gras.

Parking revenue from the past year will cover the debt payment this fiscal year, she said. But if the city can’t find new revenue streams from the terminal before next October, she said, it will have to dip into its general fund to pay off the building.

"It’s 2013 when we’ll be impacted financially," she said.

The impact will be more sudden for area hotels. David Randel, president of the Mobile Bay Convention & Visitors Bureau, said 15 hotels offer a stay-and-cruise package that lets customers leave their cars at the hotel during the cruise provided they stay the night before. The package gets about 15,000 takers a year, he said, and it was gaining in popularity.

"That’s what personally hurts me the most," he said. "People were coming in a day early and starting to enjoy this great city."

Randel said many of the 900 crew members on board the ship also ventured into the city on the five-hour breaks they had between trips. Most of them took a bus out to Bel Air Mall, he said.

"They’d come back filled with packages," he said.

David Rasp, who owns the Royal Scam, the restaurant closest to the Cruise Terminal, said cruise customers had only a modest impact on his business.

"I’m not saying it’s not going to have an effect," he said of the cruise ship departing, "I just don’t know how measurable it’s going to be."

The impact on other local attractions is similarly murky. According to data from University of South Alabama economics professor Semoon Chang, attendance is up by nearly 3,000 a month at the Gulf Coast Exploreum since Carnival arrived in October 2004, but it has dropped at both the USS Alabama Battleship Park and at Bellingrath Gardens.

Gretchen Faust Jaspering, who took over as executive director at the Exploreum earlier this month, said she hadn’t been there long enough to have a definitive view on the cruise ship’s impact.

She did note, though, that when the Exploreum opened its Kangaroo Kraze exhibit last week, a few of the cruise ship employees decided to check it out.

"A couple of Australian dancers came over to get a taste of their home," she said. 

 

Mobile Register

Study to look at impact

Thursday October 13, 2011

By Guy Busby

GULF SHORES, Alabama -- In addition to sampling seafood, listening to music and looking over art displays, visitors to the National Shrimp Festival may also respond to surveys as part of an effort to determine the economic impact of the annual celebration.

 

The Alabama Gulf Coast Area Chamber of Commerce will conduct the study during the four-day celebration that starts today, Ron Kutter, festival chairman, said.  

"We’re going to do an economic impact study this weekend to see just what kind of effect the festival has," Kutter said.

"The last time we did this was with Auburn University in 2003 and that showed an impact of over $20 million, I’m thinking that it’s going to be more this time."  

Questions for visitors include how far they drove to come to the festival, where they are staying and how much money they think they will spend during the event, Jan Umphrey, chamber special events director, said.  

"The information we collect will help us by giving us a better understanding of our attendance and the impact that the festival has on the economy in this area," she said.  

She said chamber officials hope to have a breakdown of the information by the end of 2011.  

The results of the survey will be used to promote future festivals and to help residents and officials understand the effect that the event has on the region, said Don McPherson of the chamber.

The study will also include crowd counts using aerial photography, Kutter said. The survey forms and other information will be sent to the University of South Alabama where they will be analyzed by Semoon Chang, an economics professor.  

Marie Curren, director of marketing and reservations for Brett Robinson, said the festival has a major impact on the Gulf Coast economy just before the tourist season winds down.  

"The Shrimp Festival has always been that last great weekend for our company at the end of the summer," she said. "Our occupancy rate will hit into the 60 to 70 percent range for the Shrimp Festival, which is good just before we go into the shoulder season."  

At Meyer Real Estate, bookings topped 70 percent earlier this week, Missy Zak, vice president of sales and customer relationship management, said. She said numbers were higher in 2010 at about 90 percent, but last year was not a typical season following the oil spill.  

"Last year was an anomaly with the discounts we had and people had not been down during the summer," she said. "For the festival, they wanted to show their support for the area and there was a lot of pent-up demand to see the beach. We’re expecting a good year this year though and it’s always a big weekend, our last really big weekend until spring break."

 

 

The Business View

An update on the Mobile Area Chamber's Efforts on the I-10 Bridge

October, 2011 Issue, Vol. XLII, No. 9

By Winthrop M. Hallett, III

Closing in on an almost two-decade-long effort to ease traffic congestion on I-10 going through the Wallace Tunnel, the Mobile Area Chamber has not given up on this project. Today there continue to be many discussions among local industry leaders, elected officials and the Alabama Department of Transportation (ALDOT).

The following is an excerpt of a letter sent on behalf of the Chamber and its members to John Cooper, executive director of ALDOT:

As you know, the city of Mobile and Mobile Area Chamber of Commerce have been very vocal in their support of the I-10 Mobile River/Mobile Bay Crossing project. We have been joined in this support by 17 additional organizations.

We continue to experience increases in traffic on the I-10 corridor utilizing the current Wallace Tunnel and I-10 Bayway, and hardly a day passes when we don't experience extensive backups.

We believe the overwhelming majority of the citizens in our community support this project and would welcome the opportunity for local firms to participate in the construction and design of this vital project.

We believe that this project over the Mobile River and Mobile Bay is one of the most important, if not the most important, highway project in Alabama. It is a vital transcontinental freight corridor and a principal east-west link to the southern U.S.

While the need for this bridge has been demonstrated time and again, it will also have a significant economic impact on our region. When the ability to move people and products on I-10 is improved, we will have increased capacity for our citizens for commerce and for tourism.

In order to maximize the benefit of this project to our community and state, we would like to see our local engineers and contractors utilized to the highest degree possible in the design and construction of the I-10 Mobile River/Mobile Bay Crossing project. Every job is important to us.

In a report to Mobile Mayor Sam Jones, Semoon Chang Ph.D, professor of economics and director of the Center for Business & Economic Research at the University of South Alabama, states 'assuming that construction takes five years, the bridge project will create 2,490 construction-related jobs during each of the five years. The project total number of jobs created over the fice-year period is 12,450'.

As significant as these job projections are, the long-term benefit for Mobile will be the dramatic impact of this new infrastructure for our region.

I believe we are working toward consensus and this bridge will be built. I look forward to one day providing our members with a groundbreaking date and a timeline for this to happen.

 

Lagniappe

University of South Alabama a Touchdown for Mobile

Wednesday, September 21, 2011

By Johnny Davis

Now in its third season of play, the University of South Alabama football program is making money and having a positive impact on the city of Mobile, according to city officials and people close to the program.

Dr. Semoon Chang is a professor of economics at USA. In 2000, as the university tossed around the idea of adding a football program, Chang conducted an extensive report on the potential impact of a USA football program. While it’s difficult to summarize a 59-page report in one sentence, Chang predicted USA football could have a positive impact. Today, Chang thinks his predictions were correct.

"We don’t know for sure yet, but it looks like it’s working out like I thought it was going to work,” Chang said. "There’s no question it has a positive impact on the city and on the university.”

USA economics professor Dr. James Swofford agrees with Chang’s assessment.

"To the extent it brings people, opposing teams, referees, fans, etc. in from out of town, it of course has a positive impact on spending on hotels, food, parking, gas, etc. and tax revenue for local governments,” Swofford said. "To the extent it publicizes the university and aids in its growth, it also positively impacts the economy. Also, if football grows more popular and leads to out-of-town alums to come back to visit, it will also have a positive impact on the domestic economy.” We can look closely at all the aspects that go into USA football’s impact.

Game day effect
South Alabama Athletic Director Dr. Joel Erdmann said they have not conducted a formal estimate on the economic impact of the football program. However, when focusing solely on out-of-towners coming in for home games and spending money in the city, Erdmann said, "There’s a pretty substantial number there.”

Chang agreed with Erdmann’s assessment: "Attendance has been good. The football program has been received very well by the community. Paid attendance is at or ahead of where we thought it would be. Some of those people would not have spent money in Mobile without the football program.”

Head football coach Joey Jones thinks the program is "ahead of schedule” on attendance. He pointed out that while USA is not yet an official member of the Sun Belt Conference, its season ticket sales and attendance numbers would rank near the top in the conference. Average attendance for all home games so far has been around 18,000. More than 8,000 season tickets were sold for the 2011 season.

USA’s Director of Athletic Marketing Travis Toth has been heavily involved with the football program over the last few years. "From day one, our goal was to create an atmosphere and a product on and off the field that was not only sustainable, but an exciting and enjoyable family atmosphere,” Toth said. "That would not only help our ticket sales, but it would get new fans to test it out. And I think we’ve done that. Proof of that is opening night of this season when we televised the game and we had gloomy weather, but a tremendous crowd of 21,000 still turned out. Come back to the second game where there are high-profile national games on television, but you had tailgaters out there at 8 a.m. for a 4 p.m. kickoff. The foundation we have to build on is really exciting.”

Effect on the university
In 2010, as the University of North Carolina at Charlotte was in the process of adding a football program, Athletic Director Judy Rose was interviewed by the Chronicle of Higher Education, and she said, "This is a long-term vision for the university. If we’re going to be the university we want to be, if we’re going to be perceived as the university we want to be perceived as, football is the way to get there. People always talk about the cost of football. They ought to look at the cost of not having football.”
Erdmann said there is some legitimacy to that statement.

"You’re going to have people on both sides of the debate about football’s contribution to the strength of an institution, but I think it does add something to the institution, the student life, the unity and the pride of the community,” Erdmann said. "We already have a tremendous academic institution. Football just adds something to it. Football doesn’t make or break USA, but it tremendously enhances it.”

The university’s enrollment is at an all-time high of more than 15,000 students, and Chang thinks football has helped that number rise. He said he can’t place a number on it, but football has definitely had "some effect” on the enrollment increase.

Coach Jones has noticed it, as well. "Enrollment is up, not all because of football, but it’s a factor,” Jones said. "Football creates a buzz around campus. It gives students, alumni and the community a chance to get together that they wouldn’t have without football.”

Mobile City Council President Reggie Copeland spoke on some of the other benefits to the university, emphasizing that jobs have been created and scholarships have increased. "On top of that, you have a renewed spirit for a football-mad community,” Copeland said. "South Alabama has always been a great institution, but ever since football came, it has been really growing. It is amazing. Every time I go out there my mouth falls open thinking, ‘Wow, look what they’ve done now!’ The campus is unbelievable. I love what they’re doing out there. Not all of it is because of football, but some of it is. Football has a magical effect.”

Erdmann agreed there are many intangible benefits of the program, including an increase in the University’s exposure, which ripples into the community’s exposure on a national basis.

"I would venture to say we’ve received as much or more national media attention in the two and a half years of formal football than ever before,” Erdmann said. "It’s hard to put a value on being noticed by a regional and national audience, but if someone was going to try to purchase that kind of exposure, the cost would be astounding.”

Profit
For decades, some Mobilians had been calling for USA to start a football program, but there was always concern about whether or not it would be a sound financial investment. The university explored it in the late 1990s and early 2000s with feasibility studies and ticket sales gauges, but the decision was ultimately made that the timing wasn’t right and the university had bigger needs to attend to. In 2007, USA’s Student Government Association and student newspaper, The Vanguard, led a petition drive that resulted in the Board of Trustees approving the creation of a football program. A student fee of $150 per semester was added to help support the program.

Now, it’s a few years down the road, and the USA football program is not only paying for itself, but turning a profit, according to a budget audit performed by KPMG and filed with collegiate athletics’ governing body, the National Collegiate Athletic Association (NCAA). Chang pointed out that profit for a collegiate football program is unusual.

Most universities lose money on football, but they continue to have a program anyway. Chang believes the USA program can continue to make money if the team goes on the road and plays top teams in away stadiums. He said road games like that can bring in upwards of $1 million per game.

"If we have a couple of those scheduled each year, we can practically maintain the football program,” Chang said. "The football program could easily be self-sustaining. South Alabama may be able to make money if they play enough top teams on the road. That’s what I predicted would happen, and that’s what I think will happen. I’m very happy to see that.”

Erdmann agreed that future road games with programs like Louisiana State (LSU) and Georgia will bring in millions of dollars. He said he is happy with the financial state of the program and expects the positive news to keep coming in.

"We would hope the program would continue to turn a profit, and that’s part of the planning that our revenue sources as we progress will increase,” Erdmann said. "Everything should go up: ticket sales, donations, value of our sponsorships, etc. We have to plan and execute that properly, but our current financial model is pretty solid. I can’t predict what will happen years down the road, but I’m pretty confident in it.”

Future growth
Coach Jones didn’t want to speculate on the program’s current impact, but he did speculate on future growth. "Whatever the program’s impact is on the city, the great thing is that it’s only going to get better over time,” Jones said. "This program is going to continue to grow, and that’s going to be a big positive for the city.” Jones says he has "no doubt” attendance will increase as the competition level increases.

"This town has really embraced us, and that’s going to get better and better,” Jones said. "It’s only going to get better when teams like Mississippi State and North Carolina State come to Mobile to play. We have a solid core of people that come to our games no matter what, but as we play stronger teams, that core will grow stronger.”

Some USA football doubters have scoffed at the level of competition the Jaguars have faced over the first two seasons. In its infancy, USA competed against junior colleges, prep schools and lower division opponents.

"I know the people want to see us play top-level opponents, but it just doesn’t make sense in your first couple of years,” Jones said. "Georgia State did that last year [against Alabama] and lost 63-7. I don’t know what good that does you. We’ve been methodical about how we’re doing it. ... That’s been a big debate: How early do you schedule the big teams? I’ve thought about it a lot, and I wouldn’t go back and do it any differently.”

However, the level of competition is on the rise. This season, the Jags’ schedule includes more quality opponents, including two Football Bowl Subdivision/Division I-A schools: North Carolina State and Kent State. (The Football Bowl Subdivision, or FBS, is college football’s highest level of competition. Formerly known as Division I-A, it is the level the University of Alabama and Auburn University compete on.)

For 2011 and 2012, USA will be in a transitional phase and classified as a Football Championship Subdivision (FCS, formerly Division I-AA) program. In 2013, USA will be a full-fledged FBS/Division I-A member, will be eligible for the Sun Belt Conference championship and will be eligible for a bowl game.

Despite not yet being an official member, the 2012 season will see USA play a full Sun Belt schedule, including home games with Troy and Middle Tennessee. The Jags will also face three tough out-of-conference tests on the road in 2012, with a return trip to North Carolina State, their first Southeastern Conference game against Mississippi State and an unofficial bowl game against Hawaii. Other future schedule highlights: 2013 at Tennessee; 2014 home vs. Mississippi State and at Georgia; 2015 home vs. North Carolina State; 2016 at LSU and home vs. Navy; 2017 home vs. Oklahoma State and at Ole Miss; 2020 at Southern Mississippi; and 2021 home vs. Southern Mississippi.
Councilman Copeland said the city has no solid numbers on how much economic impact USA football has had on the city, but "there’s no question that the program is good for Mobile, and it’s going to be even better down the road.”

Copeland said he has been very impressed with USA’s ability to schedule top teams on future schedules.

"When the big-name teams come in here and play, it will be great financially for the city,” Copeland said. "Teams like Mississippi State and Navy that will be coming in here and attracting a lot of fans and alumni will be a big boost. You’d really see some revenue coming in then. We work on a sales tax revenue to pay for our police, fire and needs in the community, so we need those cash registers to ring for us to have enough money for public safety, infrastructure and things like that. I think you will see that the economic impact is going to rise sharply when top teams come in here.”

Toth agreed with Copeland, pointing out that it’s hard to measure the program’s impact in the short time it’s been around, but he is confident the impact will be positively increasing in the future.

"On game day, the visiting program may only be bringing a few hundred people in right now, but that’s going to increase tenfold once the competition level goes up,” Toth said.
Economics professor Swofford said he thinks the program is about where he expected it to be. "There is certainly room for attendance to grow,” Swofford said. "The program is certainly successful on the field, and there seems to be enthusiasm for the program. The state of Alabama is said to be football country, so it will be interesting to see if that is true or not and whether the community continues to take to this program.”

Erdmann thinks the program is in a great position going forward. "I think we can be proud of where we’re at,” Erdmann said. "There are literally tens of thousands of people that have impacted our ability to get where we are, but we still have substantial growth to experience. As our program matures and our schedule evolves, we’re going to continue to grab the attention of more and more people. We have to continue to do our job. We have to continue to manage the program. We have to achieve a level of success. And we have the people in the right places at the right time to get that done. I don’t know if we’re ahead of schedule. I don’t think we’re behind schedule. I think we’re right where we need to be.”

Jones thinks the program can be "as big as we want it to be and as big as the city of Mobile wants it to be.” Jones spoke of his vision for the program: "One day I want this program to be a top 20 program in the nation. We’re a long way from that right now. We understand that, but we’re working hand in hand with the city and the people in the community to get there. Just look at South Florida. They started their program, and 10 or so years later they were ranked in the top 25. While we haven’t put a timeline on it, that’s a goal of ours.”

Jones closed with what offers insight into the kind of inspiring mid-game speeches he delivers to his players, only this was in the form of an inspiring halftime speech to the USA football family.

"[USA President] Gordon Moulton made the decision to start football based on all the facts he had been presented,” Jones said. "I believe in making your decisions right. The university has done a great job of making that decision right. In other words, it’s not just making the decision to play football, but committing to the football program. We’re committed. The university is committed. The fans are committed. The community is committed. We’re going to get there.”

 

Mobile Register

Town Center fees to rise

Tuesday, September 13, 2011

By Kim Lanier

SPANISH FORT, Alabama -- Lodging and retail sales taxes will be rising at the Spanish Fort Town Center, but no to the levels requested by the bondholder for the ailing development.

Beginning Nov. 1, sales tax rates at the center anchored by Bass Pro Shops will climb from 1.5 to 2.45 percent, to an overall levy of 10.95 percent, according to a Monday vote by the board of the center's special tax district.

A lodging tax on hotel and motel room rentals will increase from 4 percent to 8 percent.

The board also established a monthly fee for apartments at the development. It will be $35 for one-bedroom units and $50 for  multiple bedroom s, according to Preston Bolt, attorney for the district board.

The district issued bonds in the amount of $30.5 million in bonds in 2007 to finance Town Center's infrastructure. But the center hasn’t generated enough revenue to keep up with bond payments, despite its prime location along Interstate 10.

Bolt said the higher fees are an effort by the district to more closely meet its bond obligations.

The increase will generate about $750,000, according to a report by Semoon Chang, a University of South Alabama economist commissionated by the district to study the issue.

Even so, a representative for the bondholder, U.S. Bank National Association, cautioned that the district could be headed for a default on the bonds by March.

The bondholder urged that the special levy be raised from 1.5 percent to 4.1 percent, increasing the total to 12.6 percent. The bank also asked for a 12 percent levy on the Town Center's two hotels.

"We're disappointed that the rates are not going to be increased to the extent that our report shows is necessary in order for this district to meet its obligations," said Anne Stone Sumblin, attorney for the U.S. Bank National Association.

 At the newly adopted rates, she said, a federal lawsuit filed in Mobile seeking the requested rate increases will continue unless another plan emerges to settle the issue.

Shawn Alves, an attorney with Stone, Granade and Crosby, expressed satisfaction with Monday's action by the district board. The law firm is the local representative of Andrew Bolnick.

In April, a Baldwin County judge appointed Florida-based Bolnick to act as receiver and take control of the Town Center after Bank of America filed suit over defaults by developer Cypress Equities.

"I'm just pleased that the board's goal is aimed at protecting the long-term viability of the development for the benefit of all parties, including non-parties like the city of Spanish Fort and the public as a whole," Alves said. "I think it's in everybody's interest to make this work."

Monday's action came after the board received Chang's report last week. In his report, Chang said that raising the sales tax for more than 1 percent point could hurt struggling retailers and make Town Center less attractive to new enterprises.

A tax rate of 10.95 percent is intended to keep Town Center from being branded as one of the nation's top 10 shopping areas for high sales taxes, according to the report.

 

Mobile Register

Experts differ on impact of sales tax increase

Sunday, August 7, 2011

By Brendan Kirby

A looming default on bonds sold by a quasi- government board in Spanish Fort has touched off a dispute over whether to increase fees tacked on to the sales taxes of Bass Pro Shops and nearby retailers.

Under an agreement that financed roads, utilities and other infrastructure to the property that became Spanish Fort Town Center, a cooperative improvement district established by the city in 2007 levied a 1.5 percent fee on all purchases.

That fee is generating too little money to pay the bonds, however, and the bondholder, U.S. National Bank Association, seeks to exercise a clause in the contract compelling the district to boost the fee to 4.1 percent.

That would push the overall tax on sales to 12.6 percent, the highest in the region and, according to one source, perhaps the second-highest in the U.S.

After the district board resisted, U.S. Bank National Association filed a federal lawsuit in Mobile last month.

Keivan Deravi, an Auburn University Montgomery economics professor hired by a court-appointed receiver put in charge of Town Center, said shoppers are extremely sensitive to sales tax rates.

If the bondholder wins a hefty increase, there's potential for diminished collections as the market contracts, he said. "You cannot assume there is not going to be a backlash," Deravi said.

He said his analysis of the impact is based on general economic theory and that he did not examine the cash flow at specific stores in Town Center. But he said shoppers react to even small changes in the tax rate.

"When they have the tax holiday, consumers just embrace it like nothing else," he said. "People are very aware of taxes."

The bank association countered with a study by The Debt Exchange, a Boston-based firm often known as DebtX. It concluded that increasing the fee by 2.6 percentage points would affect sales volume but still generate an additional $1-1.5 million.

According to the firm, Bass Pro, which accounts for more than half of the Town Center's sales, is a destination retailer that draws customers from a 100-mile radius. As a result, the study states, a fee increase is unlikely to influence sales by more than 10 percent.

An increase would have a bigger impact on the Kohl's and JC Penney stores, according to the study.

DebtX maintains that Town Center's smaller retailers would be hurt the most but added that they account for only about 11 percent of total sales.

  

City Attorney David Conner said that the DebtX study failed to consider whether a significant increase would run some retailers out of Town Center, reducing their revenues to zero. "At what point would JC Penney and Kohl's just close?" he said.

Said City Councilman Mike McMillan: "At some point, common sense has got to come into play."

Conner said the cooperative improvement district hired widely published University of South Alabama economist Semoon Chang to review the DebtX study.

Although his review is not complete, Chang said that a 12.6 percent total tax rate on sales would be the highest in the state.

In fact, he said, "As far as I know, there is only one place in the United States" with a rate topping 12.6 percent. That's Tuba City, a Navajo Indian Reservation town in Arizona, where the combined sales tax is 13.725 percent.

Chang said a tax rate above 12 percent would harm sales and cause difficulty in luring new tenants. But he concurred with DebtX about Bass Pro being a destination retailer, and said he expected the store to sit tight because of its prime spot beside Interstate 10.

If an increased tax rate reduces sales dramatically, it will not just hurt the retailers: The city's tax haul from Town Center, about $941,000, also stands to take a hit.

DebtX projects that the increased fee would generate the same amount of money to service the bond debt even if overall sales fell by 62.5 percent.

But as for city sales revenues, Conner said that such a drop would cost Spanish Fort more than $300,000. "On a $6 million budget, that's a pretty good number," he said.

 

Mobile Register

Lawsuit seeking levy hike at center

Saturday, July 30, 2011

By Brendan Kirby

 

Shoppers at Bass Pro Shops and other stores at Spanish Fort Town Center could be paying 26 percent more in taxes on everything they buy if investors win a federal lawsuit filed here last week.

U.S. Bank National Association, which holds the bonds sold by a quasi-government organization set up by Spanish Fort, asked a judge to force an increase in a special levy from 1.5 percent to 4.1 percent. That would bump the overall sales tax from 10 percent to 12.6 percent.

The bondholder also wants a levy on the shopping center’s 2 hotels increased from 4 percent to 12 percent. That would increase the overall lodgings tax from 10 percent to 18 percent.

It is the latest blow to a shopping development that began with grand visions of a million square feet of retail space anchored by Bass Pro, a mecca for outdoorsmen that officials predicted would draw millions of customers to the shopping center each year.

Developers ran into numerous problems, however, and had to scale back. Developers replaced some of the retail space with an apartment complex.

The development failed to generate enough revenue to keep up with the bond payments, and a Baldwin County judge in April appointed a receiver to take control of the Town Center after creditors sued over defaults by developer Cypress Equities.

Last week’s federal lawsuit deals not with the development itself, but with the roads, utilities and other infrastructure paid for by bonds sold to investors. The City Council set up the Cooperative District of the City of Spanish Fort in 2007 under authority from the state Legislature.

Under terms of the contract, the district is obligated to raise the levy in the event that it fails to generate enough revenue to pay the bonds. Neither the City Council nor the district’s board had any discretion, according to the agreement.

MMA Realty Capital, the bond servicer, sent a letter (Read it here) in April instructing the district to raise the levy after the reserve fund dropped below the required $2.287 million threshold, leaving a deficiency of $840,248.

The district’s attorney, Preston Bolt, expressed concerns (Read them here) about the economic impact of such a hike and demanded more information justifying MMA’s calculations.

“We are particularly concerned that any increase over and above that required to meet debt service and ancillary expenses could give rise to an objection by property owners or other interested parties,” he wrote in a letter to MMA.

Anne Sumblin, an attorney for U.S. Bank, said the district board’s obligations are clear under the terms of the contract.

“We have not received any resistance based upon any ambiguity in the document,” she said.

Spanish Fort Mayor Joe Bonner stressed that the city has no role in the cooperative improvement district, but said he backs the board’s actions in seeking a delay in the levy hike to seek an expert opinion on the economic impact. Higher taxes likely would hurt current tenants and make it more difficult to attract new ones, he said.

“I felt like the CID made a good decision,” he said. “The worst thing you can do in the economy now would be to raise any type of tax now.”

Hiking the levies also drew opposition this week from Andrew Bolnick, the receiver appointed to take control of the Town Center development.

“We think that people do not want to pay any more sales tax than they would find necessary,” he said. “If the sales tax is increased, actually, we believe the sales would decline at the retail establishments and we don’t think that’s good for anybody, including the bondholders asking for the increase.”

Semoon Chang, an economist at the University of South Alabama, said the levy hike sought by U.S. Bank would make the effective sales tax rate at the Town Center the highest in Alabama and among the highest in the country.

“That is probably too high,” he said.

Chang said a portion of Arab, Ala., had a 12 percent rate but recently reduced it to 11 percent.

Philip Diamond, another lawyer for U.S. Bank, said he agrees raising the levies would reduce sales volume.

“But you’re also getting more revenue,” he said. “You’d have to have a huge decrease in volume to have the same revenue or less.”

Diamond pointed to an analysis by The Debt Exchange, which concluded that the Town Center district would produce an additional $1 million to $1.5 million in revenues for the debt service. That would be below the $1.6 million projected deficit, but Diamond said it is close enough that the bondholder would be willing to live with it.

 

 

www.seatrade-insider.com

Mobile says new research supports homeport potential

Friday, June 24, 2011

New market research has found strong interest in cruising from Mobile among a sizable number of potential drive-market customers. The Alabama city hopes these findings, on top of hefty marketing incentives, may entice a new operator after Carnival Cruise Lines pulls out in October.

‘People are broken-hearted. They loved having a ship there,’ said Roger Blum, principal of Cruise & Port Advisors, who has been retained by the Alabama Cruise Terminal to help attract a new line.

‘The entire community, public and private sector, understands the economic benefits of the cruise industry,’ Blum told Seatrade Insider. The hotels, for example, were picking up 15,000 room nights a year from one ship.

When Carnival in March announced it was leaving, the line said it was unable to achieve favorable financial results relative to other itineraries although it consistently filled the ship.

City leaders expressed surprise and dismay since Carnival had steadily added capacity, moving from a few test calls in 2002 to year-round homeporting in 2004 with the Holiday, which carried some 120,000 passengers annually, and five years later, upping capacity 42% with Carnival Fantasy.

In 2010 the slightly newer Carnival Elation took over the service, carrying more than 182,000 passengers a year, at an average occupancy of 118%.

Mobile leaders wanted to better understand their market to give a solid business case for attracting a new ship. To assess the drive-market interest in sailings from the Alabama Cruise Terminal, they commissioned an independent study from Dr. Semoon Chang, economics professor and director for the Center for Business and Economic Research at the University of South Alabama.

Chang focused on a geographic area where Mobile would be the closest Gulf port of embarkation.

He honed in on a population of 14.5m people within 300 miles and almost 27m people within 400 miles then looked at income using a base of at least $50,000. That narrowed the pool to 3m people within 300 miles and 4.5m within 400 miles.

In a separate market research study using Chang’s demographic data, 75% of respondents expressed interest in taking a cruise in the next few years and, of those, 58% stated that the proximity and ease of accessing Mobile would be an important consideration.

Atlanta was found to be the largest single metropolitan drive-market base for Mobile, and the top drive markets by state are Alabama, Georgia, Tennessee, Mississippi and Florida. After that came other Southern and central states.

‘We ended up feeling really good about the potential market,’ Blum said of the research.

In addition, the Alabama Cruise Terminal is operated by PCH Hotels and Resorts, a division of Retirement Systems Alabama (RSA), the state pension fund with billions of dollars in assets. Another RSA holding is Raycom Media, which owns or operates 46 television stations in 36 markets in 18 states, and Community Newspaper Holdings, which has TV stations, websites and publications serving 150 communities.

Blum said RSA is able to offer ‘lucrative’ marketing incentives to a cruise line basing a ship in Mobile. He would not specify a number but indicated the funds are substantial.

Completed in 2004, the Alabama Cruise Terminal has covered parking for 525 vehicles and close-in parking for an additional 350 cars, as well as 65,000 square feet of dock space and crew facilities.

In the coming weeks a high-level Mobile delegation will be meeting with key cruise lines to present the research findings and marketing incentives. Blum said: ‘Mobile loves cruise ships and they would do anything to get the business back.’

 

Mobile Register

Outlying counties see smaller population loss than expected

Tuesday, March 8, 2011

By Russ Henderson

During the past 10 years, the six Alabama counties in the region surrounding Mobile and Baldwin suffered a loss of about 6,800 people. Although a drop of nearly 5 percent, it was a cause for relief.

 “Considering unemployment rates in our counties of up to 18 percent, we’re encouraged by the fact that this seems to be a relatively negligible loss,” said Jim Searcy, executive director the Coastal Gateway Regional Economic Development Authority.  

That group promotes economic development in Choctaw, Clarke, Conecuh, Escambia and Monroe counties.  

Since 2009, joblessness in those counties, plus Washington, have hovered between 12 percent and 18 percent, well above the state average of about 9 percent, according to state data.  

“There are no jobs in these areas because companies have a hard time locating there because there aren’t enough workers. It’s a pattern,” said University of South Alabama economist Semoon Chang said.  

The same sort of pattern, he said, has emptied rural counties across the country, while filling cities.  

In some respects, Escambia may be breaking with the pattern.  

Escambia lost just 121 people between 2000 and 2010, the smallest population drop of the counties in southwest Alabama outside of Mobile and Baldwin, according to U.S. Census numbers.  

Leaders in the outlying counties have placed an emphasis in recent years on developing transportation infrastructure and recruiting business.  

“After the loss of the apparel industry, we worked to connect with neighboring urban areas,” Searcy said.  

In 2008, state officials finished widening Ala. 113, making it a four-lane route linking Pensacola and Escambia County, Fla., to Interstate 65 in Escambia County, Ala. That same year, a Walmart Supercenter opened in Brewton.  

Evergreen, the principal city of Conecuh County, gained population between 2000 and 2010, climbing from 3,640 to 3,944 residents, according to Census data. This was mostly due to the annexation of a two-mile area near the local airport, said Daryl Harper, the city’s industrial recruiter.  

The town also scored an economic victory last year, Harper said.  

Guyoung Tech constructed a 55,000-square-foot plant expansion, adding 50 local jobs, Harper said.

Guyoung Tech was founded in South Korea in 1986. The Evergreen plant supplies stamped metal parts to the Hyundai plant at Hope Hull. 

“There’s still a lot to be done. There’s not enough housing, there aren’t enough amenities. We need a better grocery store,” Harper said. “We estimate that 50 percent of our revenue is lost to other counties simply because we don’t have a Walmart.”

 Searcy said that his industrial recruitment efforts have benefited in recent times from Mobile’s decision to develop its port.  

“It seems to be a bunch of separate counties, with lines between rural, urban and suburban,” Searcy said. “But it’s really all just southwest Alabama. It’s all part of the same organism.”  

The U.S. Bureau of Economic Analysis, the primary federal source of domestic economic statistics, has determined that Mobile, Baldwin, Escambia, Conecuh, Monroe, Clarke and Washington counties lie within the same economic area.

 

Chang said the new Census data show the interconnected nature of southwest Alabama’s economy. “It’s not good, it’s not bad, it’s just the way it is,” Chang said. “We’ll see how these trends mature over time.”

 

Mobile Register

Baldwin Growth Slowing? Experts Divided

Tuesday, March 8, 2011

By Russ Henderson

Baldwin County continued to draw the largest number of people relocating to the Mobile area in the past 10 years, according to new U.S. Census data.

Whether the rapid growth will taper off in the years ahead was a matter of disagreement between some local experts interviewed.

University of South Alabama economist Semoon Chang — whose forecasts are widely watched in the region — said that Baldwin is becoming more urban, and its growth may be leveling out as a result. Census data suggest, he said, that suburban sprawl may begin to move eastward into Alabama’s Escambia County.

Don Epley, director of USA’s Center for Real Estate Studies, said the Census data give no reason to believe that Baldwin’s decades of fast growth will end anytime soon.

“You still don’t have to fight with the urban problems that you do somewhere else. Traffic may be a little worse but it’s nothing like urban traffic. Crime remains very low, property is affordable,” Epley said “It’s still going to be a place for people to bring their retirement money. I just don’t see that changing.”

According to 2010 U.S. Census figures released Feb. 24, Baldwin grew by 30 percent since 2000, down from its 43 percent rate during the 1990s. Mobile County grew 3 percent.

But the Baldwin expansion was not even across the decade, according to Census estimates made in 2009. They suggest that Baldwin grew by 16 percent from 2000 to 2005, then slowed to a rate of about 8 percent until 2010.

A similar pattern emerged in Shelby County outside Birmingham, Alabama’s fastest-growing county since 1980. Shelby expanded 19 percent from 2000 to 2005, then at a rate of 9 percent until 2010, according to the estimates.

The slowdown in both places was consistent with national migration trends brought about by the real estate crash in 2007 and its fallout, Epley said.

Robert Ingram, president of the Baldwin County Economic Development Alliance, said that Baldwin’s real estate prices remain low compared to many other places within driving distance to white-sand beaches. But the unavailability of credit has suppressed activity for now.

“The fact is, no one can keep up a 40 percent growth rate every 10 years,” Ingram said. “But we could still add an awful lot of people in Baldwin County and still not affect the quality of life.”

He noted that the new census data don’t seem to show much population movement associated with last year’s BP oil spill.

Some said that, if Baldwin does get more crowded, it might be good news for neighboring counties. “Suddenly the commute from Escambia doesn’t seem that bad,” said Jim Searcy, executive director the Coastal Gateway Regional Economic Development Authority.

Searcy’s group promotes economic development in Choctaw, Clarke, Conecuh, Escambia and Monroe counties. Escambia County has shown signs of suburban growth that counteract its rural shrinkage, he said.

Ingram said that, as Baldwin booms, its prosperity will spill over. “No one who wants progress in south Alabama should be hoping that Baldwin County stops being successful,” Ingram said.

 

Mobile Register

Spill batters tourism miles from beach

Saturday, July 3, 2010

By David Ferrara

Tourism is among the many industries most affected by the oil lapping onto Alabama's shores, and this holiday weekend typically marks one of the busiest for many attractions.

But the beaches are not the only places feeling the pain of the spill. Spots that rely on traffic from Interstate 10 are seeing a decline as well.

Semoon Chang, an economics professor at the University of South Alabama, compiles monthly statistics for attendance at Mobile attractions.

In May, the latest month for which he has figures available, attendance was
down a total of about 7 percent at 11 attractions, including Battleship Memorial Park and the Gulf Coast Exploreum Science Center.

Chang expects figures to continue falling as oil keeps gushing.

"The problem is these attractions don't make much money to begin with, so a 10 to 20 percent decrease, that's tough on them," he said.

At the USS Alabama park on the Causeway, which relies heavily on visitors from outside the state, attendance was only a third of what it normally is in the late spring and summer months, according to executive director Bill Tunnell.

"We certainly believe that it's all related to the oil spill," Tunnell said.

Officials at the battleship were promoting book signings this weekend with war veterans Glenn Frazier and Sid Phillips.

"Anything we can do to get our numbers up, I'd sure like to do," said the park's purchasing agent and property manager, Owen Miller, "because I want to have a job this time next year."

Even at Bellingrath Gardens, where tourism is heavier later in the year, revenue was down about 25 percent last month, said spokeswoman Leslie Schraeder.

"Regardless of where you are on the coast, the attendance is affected," Schraeder said. "Visitors don't see state lines and county lines. They just see the coast as the coast."

Exploreum spokeswoman Hela Sheth said that May and June were "uncharacteristically slow." She expected attendance to pick up this summer, however, as the museum's Reptile Planet exhibit starts Monday and runs through Oct. 24.

Coincidentally, Sheth said, the museum is focused on biodiversity this year, as the United Nations declared 2010 an international year of biodiversity.

"With everything that's taking place in the Gulf, I think that just makes our focus on biodiversity and exploration a lot more relevant," Sheth said.

Closer to the water, attendance at the Dauphin Island Sea Lab was down by 1,326 -- from 6,998 to 5,672 -- in May alone.

There are attendance outliers, however.

May patronage at the Mobile Greyhound Park increased by more than 1,000.

At the Museum of Mobile, Assistant Director Sheila Flanagan said numbers were higher than normal because of an ongoing George Washington Carver exhibit. But, she noted, "We have not reached our projected numbers."

 

Mobile Register

Skinny: Economist supports 1 cent tax

Economist says tax is the best option

Monday, May 3, 2010

By

University of South Alabama Economics Professor Semoon Chang said a temporary 1 percent sales tax increase wouldn’t harm businesses in the city of Mobile.

Fears that businesses would leave the city due to the tax are unfounded, Chang wrote in a letter dated April 26, 2010, and addressed to Mayor Sam Jones’ office.As a temporary solution, Chang wrote, a small sales tax increase is the best option.Jones has been pushing a 1 percent sales tax increase as a means of dealing with deficits in this year’s and next year’s budgets.

The tax failed on a 3-3 vote by the City Council on April 15, though it continues to be debated during public meetings.

The Business View

Mobile Area Chamber of Commerce

April 2010 Vol. XXXXI, No. 3

TK’s Workforce Grows by the Week

Two-and-a-half years since ThyssenKrupp held its groundbreaking and months before the formal grand opening, the company is hiring as many as 30 employee a week. In February, TK Steel USA had 650 employees, while TK Stainless USA had 177.

Of the current workforce, approximately 25 percent were hired through area job fairs, and the company’s employees are located in south Alabama, northwest Florida and Mississippi.

The company began testing operations with steel slabs from Germany in February. Eventually, the facility will receive its slabs from TK’s sister investment in Brazil. With 30,000 construction workers, the Brazil investment is $7.08 billion and significantly larger than Mobile’s project that has increased from the initial $3.7 billion to $5 billion, according to Scott Posey, TK Steel’s director of communications.

TK hired the University of South Alabama’s Semoon Chang to estimate its economic impact. As of November
2009, TK contributed $1 million in sales taxes to the city, $1.2 million in taxes to Mobile County and $1 million to the school system, according Posey. “Those amounts will be much higher, once we are up and running,” he added.

Construction employment has started to decrease as the project nears completion, but at its peak had 5,000 workers on site. “As the mindset changes from construction to operations, our needs will change. We’ll need different suppliers, and there will be even more opportunities for local companies,” said Posey.