’s : Economic Impact, Importance, and Opportunities for Investment October 31, 2013

Flickr: Randy Pertiet Executive Summary: Baltimore’s Inner Harbor drives substantial economic and fiscal impacts through tourism visitation and local business activity. 2012 INNER HARBOR TOURISM* + BUSINESS ACTIVITY • $2.3 B in Overall Economic Activity

• 21,000 Jobs in the City and State

• $790 M in Employee Compensation

• $102 M in Annual Tax Revenue to the City and State

Source: Longwoods, 2012; Tourism Economics, 2013; ESRI BAO; IMPLAN; HR&A Analysis. *Does not include local visitors HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 1 Introduction About HR&A

. HR&A Advisors, Inc. is an industry leading real estate, economic development, and public policy consulting firm based in New York City, with offices in Washington, DC, and Los Angeles.

. The firm has worked with numerous local public agencies, civic organizations, and private sector organizations to support the revitalization of iconic urban waterfronts and public open spaces, ranging from Brooklyn Bridge Park and the High Line to the Toronto Waterfront and Boston’s Rose Kennedy Greenway.

. In 2005 HR&A produced a report for Baltimore Waterfront Promenade Committee, “The Baltimore Waterfront Promenade – Parks and Public Spaces,” that helped galvanize increased local attention to the Inner Harbor’s importance and lead to the creation of the Waterfront Partnership of Baltimore (WPB).

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 3 About this Project

. HR&A was engaged by the Economic Development Corporation, with the support of the Waterfront Partnership of Baltimore (WPB), to assess the impact and importance of Baltimore’s Inner Harbor and the high-level potential of improvements to one of its signature areas, Rash Field.

. The purpose of the study is to assist the WPB in describing the impact of the Inner Harbor in compelling, quantifiable terms and in making the case for increased public, private, and philanthropic investment in the Harbor to ensure it remains a strong driver Baltimore and Maryland’s economy.

. The primary basis for the study area and potential Rash Field improvements are concepts contained in the “Inner Harbor 2.0” Master Plan developed by Ayers Saint Gross for the WPB and the Greater Baltimore Committee.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 4

The Study, like Inner Harbor 2.0, focuses on the “original Inner Harbor.”

The area is bounded by President St. to the East, E Pratt St. in the North, Light St. to the West, and the Key Highway to the South: an area of 0.2 square miles.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 5 The Inner Harbor has set a global standard for urban waterfront redevelopment.

Heritage Award, 2009 Industrial Excellence and Substantial Contributions to the Greater Community’s Well Being for at Least 25 Years

Prix d’Excellence, 1997 “providing society with the optimal solution to its property needs’”

Top Ten Waterfront Places Honor Award for Excellence on the Waterfront, 1991

Citation, 1984 “one of the supreme achievements of large-scale urban design and development in U.S. history”

Honor Award, 1973

Source: Wallace Roberts & Todd, American Institute of Architects, and the International Real Estate Foundation

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 6 However, the Inner Harbor is beginning to show its age and has suffered from a lack of reinvestment.

Limited activity on the promenade.

Repairs needed to the promenade and surrounding areas. Outdated way finding and branding signs.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 7 Other cities meanwhile have re-invested in recent years in their waterfronts and downtowns, and a similar investment in the Inner Harbor could restore the Inner Harbor’s iconic park status.

Flickr: HBarrison Hudson River Park, New York City, NY. Brooklyn Bridge Park, New York City, NY

Flickr: AndyNash Rose Kennedy Greenway, Boston, MA. Millennium Park, Chicago, IL.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 8 These cities have been willing and able to make the public-private investments to keep their public parks vibrant and competitive.

Capital Investment $600

$500

$400

$300 Millions $200

$100

$- Hudson River Park, Brooklyn Bridge Rose Kennedy Millennium Park, NYC Park, NYC * Greenway, Boston Chicago Source: HR&A Advisors * Projected

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 9 The Inner Harbor 2.0 Master Plan sets the stage for a new wave of investment in the Inner Harbor’s future.

Source: Ayers Saint Gross Master Plan

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 10 Concepts in the Plan for Rash Field have potential to serve as initial, catalytic investments.

Vision for Rash Field

Source: Ayers Saint Gross Master Plan

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 11 The Impact and Importance of the Inner Harbor The Inner Harbor remains a major reason people are interested in and visit Baltimore and Maryland. Frequency of Google Searches in 2012

1200

1000

800

600

400

200 Relative Frequency ofRelative Searches

0 Pimlico Inner Harbor Navy Football National St. Michaels Aquarium Popular Maryland Attractions Google Trends analyzes a portion of Google web searches to compute how many searches have been Source: Google Trends done for the terms one has entered, relative to the total number of searches done on Google over time.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 13 Tourism is important to the State of Maryland’s economy. 2011MARYLAND TOURISM

34.4 M $14.3 B VISITORS IN SPENDING

SUPPORTS 130,000 DIRECT JOBS

Source: Maryland Tourism, 2012.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 14 Tourism is an especially important part of Baltimore’s overall economy. 2012 BALTIMORE TOURISM

23.3 M $5.05 B VISITORS IN SPENDING

SUPPORTS 78,000 DIRECT AND INDIRECT JOBS Source: Longwoods International, 2012. and Tourism Economics, 2013.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 15 Roughly 60% of all visitors to Baltimore visit the Inner Harbor – and generate economic activity throughout the City. 2012 INNER HARBOR TOURISM*

23.3 M 14 M BALTIMORE INNER VISITORS HARBOR VISITORS

*Does not include local visitors Source: Longwoods, 2012. & Visit Baltimore Study

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 16 Economic activity in the Inner Harbor is driven by this tourism visitation, as well as business activity in the area. 2012 INNER HARBOR TOURISM * + BUSINESS ACTIVITY 14 M & 3,000

INNER WORKERS AT INNER HARBOR HARBOR BUSINESSES VISITORS

*Does not include local visitors Source: Longwoods, 2012 & ESRI BAO

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 17 Of those 14 million visitors, the average visitor spends $207 per trip, with $202 spent locally.

Air Transport, Gas Stations, 8% 3% Local Transport, 9%

Food & Beverage, 28%

Retail, 14%

Lodging, 23% Recreation, $207 15% HR&A’s analysis of “local spending” in the Inner Harbor excluded Air Transport,

Source: Tourism Economics, 2013 & HR&A Analysis. bringing the average to $202 per trip.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 18 Summary: Baltimore’s Inner Harbor drives substantial economic and fiscal impacts through tourism visitation and local business activity. 2012 INNER HARBOR TOURISM* + BUSINESS ACTIVITY • $2.3 B in Overall Economic Activity

• 21,000 Jobs in the City and State

• $790 M in Employee Compensation

• $102 M in Annual Tax Revenue to the City and State

*Does not include local visitors Source: Longwoods, 2012; Tourism Economics, 2013; ESRI BAO; IMPLAN; HR&A Analysis. HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 19 IMPLAN Methodology: Estimate of Economic Impacts

The IMPLAN model is used to conduct economic impact analyses by leading public and private sector organizations across the United States, including a number of federal and state agencies. IMPLAN traces the pattern of commodity purchases and sales between industries that are associated with each dollar’s worth of a product or service sold to a customer, analyzing interactions among 440 industrial sectors for a specific location, with assumptions about spending that takes place outside of the location. HR&A conducted its analysis with 2011 multipliers for the economy of Baltimore City and the State of Maryland. Multipliers are the total production requirements in the local economy for all goods and services consumed by final users in 2011. This is the most recent data available.

The figure below illustrates the structure of economic impacts produced by the model. Multiplier or spinoff activity is comprised of two components: 1) indirect economic impacts caused by additional business spending stimulated by direct economic spending during construction and operating activities (e.g., supplier business operations) and 2) induced economic impacts stimulated by additional household spending due to wagesThree from levels the direct of benefits and indirect activity. Overview of Economic Impacts, Direct, and Spinoff Effects In addition to overall economic spending, the IMPLAN input-output model also produces estimates of the number of jobs supported and employee compensation. Indirect Compensation generated by the IMPLAN input-output Effects from spending immediately model is based on a nationally recognized econometric associated with Direct project/industry/event model, customized for local economic conditions. It includes wage and salary income plus benefits and employer paid Effects from business taxes. spending resulting from Indirect direct activities Spinoff Effects from household effects Induced spending resulting from Source: HR&A Advisors, Inc. direct activities

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 20 IMPLAN Methodology

HR&A estimated the economics impacts of Tourism spending and Inner Harbor employment on Baltimore City and the State of Maryland based on findings regarding visitor spending and motivations documented in previous studies and surveys:

1. A 2013 study by Tourism Economics for The Economic Impact of Tourism in Baltimore, estimates that the typical Baltimore visitor spends $207 per trip on lodging, local transportation, food & beverage, retail, gas stations, air transportation and recreation. This study combines spending across day-trippers and overnight visitors. HR&A counted $202 in local spending (excluding air travel) as inputs in IMPLAN.

2. A recent survey conducted for Visit Baltimore reveals that 60% of all visitors to Baltimore City spend time in the Inner Harbor, and 64% of visitors to Baltimore were motivated to come to Baltimore for discretionary leisure purposes such as a weekend getaway or vacation. The Visit Baltimore study is ongoing, and additional data could result in a different percentage of Baltimore visitors being credited with visiting the Inner Harbor.

3. A separate survey conducted for the National Aquarium in 2012, a major tourist draw in the Inner Harbor, revealed that 88% of Aquarium visitors chose to visit Baltimore primarily to visit to the Aquarium.

4. Based on these factors combined with our discussions with Baltimore tourism professionals and Inner Harbor venue operators, HR&A estimates that approximately 55% (88% of 64%) of the visitor spending by the 14 million visitors to the Inner Harbor is directly attributable to the presence of the Inner Harbor.

In addition to visitor spending, HR&A included non-tourism related employment based in the Inner Harbor based on 2012 Dun & Bradstreet & ESRI data. HR&A included all NAICS employment categories except, Agriculture, Forestry, Fishing and Hunting; Mining; Utilities; and those related to tourism, Retail Trade; Arts, Entertainment and Recreation; and Accommodation and Food Services.

All spending and employment categories were modeled in IMPLAN using their corresponding industry codes. A multi-regional analysis was conducted within IMPLAN to connect the spending directly in Baltimore City to the larger statewide economy and trace the economic impacts of tourism spending and local employment throughout the statewide economy.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 21 Methodology: Approach to Overall Economic Output Attributable to the Inner Harbor.

Tourists: Tourists: 60% of all visitors to Visitor spending for Baltimore visit the Inner 55% of the Inner Harbor.* Harbor tourists can be Average visitor primarily attributed to spending of Inner The IMPLAN the Inner Harbor. ** Harbor tourists, modeling along with all calculates the non-tourism Direct, Indirect related jobs in the and Induced Employees: Employees: study area were impacts of the Businesses directly in 54% of employees the basis of the related economic the Inner Harbor work in non-tourism IMPLAN activity. employ 3,000 related fields, such as approach. people.*** Accounting, Real Estate, and Manufacturing***

*Forthcoming study for Visit Baltimore ** HR&A estimate based on studies for Visit Baltimore and Sage Policy Group *** ESRI Business Analyst Online

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 22 The Economic Strength of the Inner Harbor As Baltimore’s primary leisure, entertainment, and recreation destination, the Inner Harbor drives Baltimore tourism.

Power Plant Live!

U.S.S. Constellation Harbor Place National Aquarium

Pier 6 Pavilion

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 24 The Inner Harbor is home to many institutions at the core of Baltimore Tourism.

Image: Yelp, Rain D. Flickr: WallyG The Maryland Science Center. The National Aquarium brings thousands of visitors to the Inner Harbor.

Image: Yelp, Water Taxi

Harbor Place provides a blend of food and retail shopping. Water taxis ferry users around the Inner Harbor.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 25 Inner Harbor-generated tourism spending and on-site business activity drives economic activity throughout Baltimore City and Maryland. $2.3 B OVERALL ECONOMIC ACTIVITY

$1.5 B $520 M DIRECT ECONOMIC SECONDARY ECONOMIC ACTIVITY ACTIVITY IN BALTIMORE CITY IN BALTIMORE CITY

$250 M SECONDARY ECONOMIC ACTIVITY Source: IMPLAN; HR&A Analysis. IN MARYLAND HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 26

It also supports jobs throughout Baltimore’s and the State’s economies. 21,000 JOBS SUPPORTED BY THE INNER HARBOR

16,000 3,500 DIRECT JOBS SECONDARY JOBS IN BALTIMORE CITY IN BALTIMORE CITY

1,500 SECONDARY JOBS IN MARYLAND

Source: IMPLAN; HR&A Analysis.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 27

These jobs generate significant compensation. $790 M EMPLOYEE COMPENSATION

$540 M $180 M DIRECT SECONDARY COMPENSATION COMPENSATION IN BALTIMORE CITY IN BALTIMORE CITY $70 M SECONDARY COMPENSATION IN MARYLAND Source: IMPLAN; HR&A Analysis.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 28

And Inner Harbor-generated spending generates revenue for the City and State. $102 M TOTAL REVENUE TO THE CITY AND STATE

$43.3 M TO BALTIMORE CITY $58.7 M TO MARYLAND Admissions Inner 1% Harbor Rentals 3% Hotel Tax Income Tax Sales Tax Individual 2% 22% 32% Income Real Tax Sales & Property 60% Service 60% Corporate 8% Income Personal Tax Property 8% 4% Source: Baltimore City Budget & Maryland Budget; HR&A Analysis.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 29 Employees who work in the Inner Harbor are not limited to tourism- related jobs.

Commercial Companies located in the Inner Harbor The Inner Harbor Supports: Office: 31 % employ about 3,000 people. Tourism: 46% 54% Human Retail, 5% Other, 2% Services, 5% NON-TOURISM Entertainment & Commercial Office, Manufacturing & Trade, Human Recreation, 10% Services, & Other

And

Hospitality, 31%

Manufacturing 46% & Trade, 22% TOURISM Commercial Hospitality, Entertainment & Recreation, and Retail Office, 26%

Source: ESRI BAO

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 30 Over a third of employees working in the Inner Harbor live in Baltimore City.

Inner Harbor Employees County of Residency

Carroll County, 1%

Other, 18% Harford County, 3% BaltimoreBaltimore City, city, 37%37% Howard County, 6%

Anne Arundel County, Baltimore County, 8% 27%

Source: US Census, On The Map

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 31 Over 1,700 residential units have been completed or are planned near the Inner Harbor since 2007.

114 E. Lexington 102 Units: 2013 Mechanic Center :P1 306 Units: 2015 10 Light Street 313 W. Baltimore St. 445 Units: 2014 205 Units: 2016

Mechanic Center :P2 170 Units: 2017 The Vue Condos 112 Units: 2007 Calvert & Water St. 140 Units: 2014

The Ritz-Carlton Residences Completed Development 190 Units: 2008 Proposed Development 1111 Light St 93 Units: 2012 *Not all units shown on map; buildings Source: Market Research Of 75 units or more. HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 32 Proximity to the Inner Harbor may have attracted residents to downtown Baltimore, even while the rest of the City’s population has declined. The population within ½ of a mile of the Inner Harbor has increased by 25% between 1990 and 2010 while the same period of time saw a general population loss of 16% in the City of Baltimore.

760,000 6000 740,000

720,000 5000 700,000 4000 680,000 660,000 25% 3000 640,000 2000 620,000 16% Baltimore'sPopulation 600,000 1000 580,000

560,000 0 Population Harbor Inner Downtown 1990 2000 2010

Source: ESRI BAO Population: Baltimore 1/2½ Mile Mile from Inner Harbor

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 33 Residents of the Inner Harbor area have higher incomes than Baltimore City as a whole. While the average Household Income in Baltimore City has increased between 1990 and 2012, household incomes closer to the Inner Harbor have remained higher than households further away. $120,000

$100,000

$80,000

$60,000 Baltimore, $53,000 $40,000 Baltimore, $42,000 Baltimore, $31,000

Average Household Income Household Average $20,000

$- 1990 2000 2012 ¼ Mile Radius from Inner0.25 Harbor 0.5 ½ Mile Radius from Inner Harbor Source: ESRI BAO Or 5 Minute Walk Or 10 Minute Walk

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 34 Challenges Facing the Inner Harbor The concepts in Inner Harbor 2.0 should make the Inner Harbor more appealing to local residents, as well as out of town visitors.

Source: Ayers Saint Gross Master Plan

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 36 An increase in Inner Harbor tourism, within variations seen in past attendance records, could generate additional economic benefits. Inner Harbor attendance fluctuated between 4 – 8% during the Great Recession(2006- 2009). + 8% VISITORS

1,400 $48 M $3.5 M MORE JOBS ANNUAL ANNUAL CITY & EMPLOYEE STATE REVENUE COMPENSATION

Source: ESRI BAO; Tourism Economics 2013; Inner Harbor Coordinator Report; IMPLAN; HR&A Analysis.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 37 Alternatively, a failure to invest in the Inner Harbor could lead to a decrease in Inner Harbor tourism, which could have negative economic impacts. Inner Harbor attendance fluctuated between 4 – 8% during the Great Recession(2006- 2009). - 8% VISITORS

-1,400 -$48 M -$3.5 M FEWER JOBS LOSS IN ANNUAL LOSS IN ANNUAL EMPLOYEE CITY & STATE COMPENSATION REVENUE

Source: ESRI BAO; Tourism Economics 2013; Inner Harbor Coordinator Report; IMPLAN; HR&A Analysis.

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 38 Works Cited

. Ayers Saint Gross, Master Plan for Baltimore’s Inner Harbor. (Ayers Saint Gross) . Baltimore Development Corporation, Inner Harbor Coordinator Annual Report, 2008. (Inner Harbor Coordinator Report) . Bureau of the Budget and Management Research, Baltimore City, Summary of the Adopted Budget, FY 2014. (Baltimore City Budget) . Department of Budget and Management, State of Maryland, Maryland Budget Highlights, FY 2014. (Maryland Budget) . Longwoods International, Baltimore, 2012 Visitor Report (Longwoods, 2012) . Maryland Tourism Development Board and the Department of Business and Economic Development, Fiscal Year 2012 Tourism Development Annual Report. (Maryland Tourism, 2012) . Sage Policy Group, The Economic Contributions of the National Aquarium, October 2012. (Sage Policy Group) . Visit Baltimore, Study on Baltimore Visitation, ongoing. (Visit Baltimore Study). . Tourism Economics, The Economic Impact of Tourism in Baltimore, June 2013. (Tourism Economics, 2013) . U.S. Census – ESRI’s Business Analyst Online. (ESRI BAO); and – On The Map. (US Census, On The Map)

HR&A Advisors, Inc. Baltimore Inner Harbor Economic Impact Study | 39