An Economic Analysis of I-73 and the Expressway (GSX) Alternative

Upgrading SC 38/US 501 provides a realistic alternative to I-73 that improves access and facilitates tourism in the Grand Strand, creates thousands of jobs at one-tenth the cost, does not harm existing businesses along SC 38/US 501 and can be built in our lifetime.

Prepared by Columbia, SC

for the Coastal Conservation League

A p r i l 2 0 1 2 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

Table of Contents

Executive Summary l Page 2

1. Introduction l Page 8

2. Transportation Analysis of SC 38/US 501 l Page 10

3. Economic Impacts of SC 38/US 501 l Page 15

4. Funding Issues Related to the Proposed I-73 l Page 20

5. Conclusions and Summary l Page 21

Endnotes l Page 23 Methodology l Page 24 Miley & Associates l Page 27 General Limiting Conditions l Page 28

April 1 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

Executive Summary

pgrading SC 38/ US 501, an existing proposed I-73 interstate. The analysis focuses on major highway corridor between I-95 the most important economic factors needed to and SC 22, provides a realistic and make an informed decision on a transportation Upreferable alternative to the proposed investment that will not only affect those in the I-73 interstate. This existing corridor, referred to region, but all South Carolinians. by proponents as the Grand Strand Expressway This report reaches three key conclusions: at one-tenth of I-73’s estimated $1.3 billion cost(GSX), and offers would substantial result in improvedeconomic accessbenefits to 1. The GSX is a more cost effective use of the Myrtle Beach tourism market. Upgrading state transportation resources. The GSX the GSX would create thousands of jobs and save businesses along the existing routes. does not Furthermore, upgrades to SC 38/US 501 could 2. hasThe aGSX positive provides benefit/cost potential ratio economic while I-73 be undertaken as funds are available, providing ongoing transportation utility and other displacing local businesses 3. benefitsSouth Carolina to rural can counties improve without access to the I-73. Myrtle Beach area, without spending $1 economic benefits sooner than the proposed billion that could go to other transporta- This report is intended to help policy makers tion infrastructure projects with greater

the proposed GSX alternative versus those of the interstate and citizens compare the economic benefits of economic benefits than the proposed I-73

April 2 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

Executive Summary (continued)

1. The Grand Strand Expressway (GSX) has a positive benefit/cost (B/C) ratio, I-73 does not.

Benefit Cost Analysis

• B/C Ratio of GSX = 1.4. • B/C Ratio of I-73 = 0.26. • The GSX alternative has significant travel cost savings at one-tenth the cost of I-73.

Upgrading the GSX between GSX is 1.4 while the B/C ratio of modeling system.3 IMPLAN I-95 and SC 22 has been shown I-73 is 0.26 (well below 1.0). is appropriate for estimating to be a viable transportation some impact scenarios, but it alternative to the proposed I-73 It is important to note that is a simplistic methodology interstate. It is estimated that traditional public finance for evaluating transportation the GSX alternative will cost decision criteria recom- systems. TREDIS incorporates approximately $150 million.1 mend that if a project’s B/C the IMPLAN model, but builds Like the construction of I-73, ratio is less than 1.0, the and expands on it to make it the GSX alternative creates jobs project is not in the public’s more appropriate for transpor- in its construction phase and best interest. In business tation applications. TREDIS is facilitates tourism along the and government, invest- an integrated framework for Grand Strand at one-tenth the ing in a project with B/C transportation planning and cost of the proposed I-73. ratio less than 1.0 would be project assessment designed to analogous to investing in cover a wide range of applica- This report utilizes the TREDIS a project knowing that the tions – from looking at the modeling system, the premier project would lose money. transportation/economic mod- transportation investment to eling system widely used by analyzingbenefit/cost the impact macroeconomic of a single state departments of transpor- to estimate transportation impacts of alternative long- tation throughout the country.2 impacts.TREDIS is In specifically comparison, designed the range plans such as the I-73 TREDIS clearly demonstrates report by Chmura Economics proposal. & Analytics titled, “Economic of the GSX is far better than that Impact of I-73 in South Caro- ofthat I-73. the Thebenefit/cost B/C ratio (B/C) of the ratio lina,” utilized the IMPLAN

April 3 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

Executive Summary (continued)

2. GSX provides potential economic benefits to rural counties without displacing local businesses

• The GSX is estimated to create and maintain 22,000 jobs (3,200 construction and 18,800 other --- and sooner than I-73). • The GSX will not displace jobs – I-73 will displace jobs along existing routes. • New interstates often do not help rural areas -- the I-95 corridor is an example.

The assertion that I-73 will and the rural counties along communities along its route. have widespread economic the proposed route. This report For example, of the 13 South concludes that the GSX alterna- Carolina counties adjacent to based on the report by Chmura tive is also a substantial job I-95 only Dorchester and Jasper Economicsdevelopment which benefits estimated is largely creator. And these jobs could be had unemployment rates lower there would be thousands of created much sooner due to the than the state average of 9.5 jobs created as a result of the smaller investment required. percent in January 2012. The road’s construction as of the unemployment rate in the year 2030. These jobs would It has been suggested that other 11 counties averaged be generated primarily from 14.0 percent, 4.5 percentage two sources: the physical areas along the road’s route points higher than the state’s construction of the road and the duringI-73 will and benefit after thecompletion. rural average. improved access to the Grand However, this conclusion is not Strand area from the proposed substantiated in the Chmura With fully controlled access highway. Most of these jobs are report or other existing highways, such as the proposed projected to be 20 years in the empirical research. The areas I-73, business opportuni- future. Chmura estimates that along the proposed routes ties are limited to major approximately 30 percent more rank relatively low in terms of interchanges. Due to the jobs will be created by I-73 than economic development and sudden increase in the value those estimated in this study for per capita income. Historically, of land at these interchanges, the GSX. These jobs, however, interstate construction in South the majority of businesses come at 10 times the cost of Carolina has not resulted in are large, national operations GSX. It is also important to note rural economic prosperity. – not small or locally owned that the additional jobs relate One only has to look at the businesses. The upgrading to construction rather than counties along I-95, from Dillon of GSX would maintain the adding permanent economic to Jasper, to see how little viability of businesses adjacent to the current SC 38/US 501. benefits to the Grand Strand an interstate benefits rural April 4 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

Executive Summary (continued)

This report also raises and elsewhere – the decline in the businesses along the GSX questions regarding the validity jobs and establishments along route are small and locally of the Chmura assumption that Highway 301 and other routes owned businesses that would the jobs created will be net when I-95 was constructed. be negatively impacted with new jobs. That is, many of the jobs estimated by the Chmura Even if all the jobs lost due It is unlikely that many of study may just replace jobs that to the construction of I-73 thesetraffic small being businesses re-routed to would I-73. could be lost if I-73 were to be were to be replaced with new completed. There is precedent jobs along the interstate, the resources to relocate to an I-73 for this job replacement displacement would hurt interchange.survive or have the financial phenomenon in local communities. Many of

April 5 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

Executive Summary (continued)

3. South Carolina can improve access to the Myrtle Beach area, without spending $1 billion that could go to other transportation infrastructure projects with greater economic benefits than the proposed I-73 interstate.

• South Carolina does not have the funds available for I-73 and will not for the foreseeable future. • Other critical infrastructure needs exist in South Carolina that could provide greater economic benefits. • The construction of I-73 could divert funds away from critical infrastructure needs east of Conway and SC 22. • SC DOT would need to spend an additional $130 million to maintain the proposed I-73 over a 30-year period.

In the current environment to I-26 and I-85 would most maintenance costs of a new of scarce highway construc- likely provide greater economic interstate. The current costs tion funds, South Carolina to maintain SC 38/US 501 needs to carefully consider the I-73. Road improvements to would continue if I-73 were to construction of I-73 in relation manufacturingbenefits to the Stateareas than have been be completed; requiring the to all of the state’s highway state to fund maintenance costs infrastructure needs. While than non-manufacturing areas. for both routes. Based on SC the $1.3 billion for I-73 has Theshown construction to have more jobs benefits that DOT data, it is estimated that not been secured, if it was, would be created by building maintenance costs of the new it could supplant other state I-73 would be generated in interstate would be more than transportation infrastruc- the state no matter where $1.3 $4.3 million annually. Over a ture needs that are a higher billion worth of road construc- 30-year period I-73 mainte- priority – especially since tion occurs. nance costs would exceed $130 improved access to the Grand million.4 Strand could be achieved by the GSX at one-tenth the cost. in the Chmura report do For example, improvements notFinally, address the benefits the increased outlined

April 6 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

Executive Summary (continued)

Summary and Conclusions

In summary, this report reaches three key conclusions:

• The GSX is a more cost effective use of state transportation resources. The GSX has a positive benefit/cost ratio while I-73 does not. • The GSX provides potential economic benefits to rural counties without displacing local businesses. • South Carolina can improve access to the Myrtle Beach area, without spending $1 billion that could go to other transportation infrastructure projects with greater economic benefits than the proposed I-73 interstate.

As a result of these findings, we conclude that the GSX (upgrading SC 38/US 501 from I-95 to SC 22) alternative is clearly superior to the I-73 proposal for South Carolina taxpayers.

April 7 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

1. Introduction

ransportation infra- what course of action provides structure networks are an integral part of vs. costs) for those who use Tany economic system. the transportationbest value (i.e., facility,benefits and Without them we could not eas- those who pay for it. ily move goods and/or people -- and commerce would be The South Carolina Depart- restricted largely to local trade. ment of Transportation (SCDOT) and Federal expand internal and external Highway Administra- tradeEfficient opportunities, transportation increase systems tion (FHWA) propose labor mobility and enhance the building I-73 on economy’s production capacity new alignment in and, in general, improve the northeastern South economic welfare of residents. Carolina. This study They also provide social and analyzes the transpor- economic opportunities. tation and economic impact study of the The economy is affected by the proposed I-73 inter- - state commissioned by tion corridors, such as SC 38/ the Northeastern Strategic upgrade, or a no-build option USefficiency 501 and of SC these 22 intransporta the Pee Alliance (NESA), expanding the is selected, the Myrtle Beach Dee region. To analyze the analysis to include interchange area will see equal non-trans- economic impact of a trans- clustering and transportation portation related economic portation improvement, such impacts. as upgrading South Carolina additional information and Highway 38/US Highway 501, insightefficiency, to policywhich makers.will provide The South Carolina Department referred to by proponents as of Transportation (SCDOT), in the Grand Strand Expressway This study also looks at the association with the Federal (GSX), to the new alignment one-time impact of highway Highway Administration I-73, the examination depends (FHWA), proposes to build productivity gains over the life I-73 on new alignment in ofconstruction the highway. and Our efficiency/ overall goal northeastern South Carolina. informationlargely on traffic to determine information. the is to determine which alterna- This analysis uses the traffic tive, GSX, I-73 or no-build, as extending “southeast from compared with the costs of generates the most value (i.e., I-95,SCDOT bounded defines to the the study north area- newbenefits construction of reduced and/or travel roadtime east by the / improvements. These compari- cost to taxpayers. We note South Carolina state line, to sons are an important way to thattravel whether efficiency) the forproposed the least the southeast by U.S. Route help policy makers determine I-73 project, the SC 38/US 501 17, and to the southwest by

April 8 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

1. Introduction (continued) the eastern edge of the Great “Land use is highly speculative and development is unlikely In this study, we did Route 378, and U.S. Route 501. without additional incentives not analyze or include Pee Dee River floodplain, U.S. 5 The project would extend from or expenses to the region.” impacts from changes I-95 in Dillon County, through Marion County and into Horry Because the proposed I-73 in land use in the year County. It would terminate at corridor and GSX both termi- 2030, such as the devel- S.C. Route 22 in Horry County, nate at SC 22, well northwest opment of distribution which would be made part of the Grand Strand area, this of I-73.”(FEDERAL HIGHWAY leads us to conclude there centers. As the Chmura ADMINISTRATION, 2009) will be no substantive varia- study states, “Land use tion in tourism impacts in is highly speculative and We analyzed two studies the Myrtle Beach area among development is unlikely of the proposed I-73; the the alternatives. It is very Chmura Economics & Analytics doubtful that the proposed without additional Economic Impact of I-73 in I-73 will be a primary factor in incentives or expenses to South Carolina and the Inter- future Myrtle Beach tourism. the region.”5 state 73 Final Environmental Rather, demographics, the Impact Statement from I-95 national economy, affordable to the Myrtle Beach Region housing, and the environment (FEIS).(FEDERAL HIGHWAY – including beach quality (Klein ADMINISTRATION, 2009). & Osleeb, 2010), sea level rise Five primary highway impacts and tropical storms – will more are generally considered in likely shape the future of most this kind of analysis: land use, coastal economies, including tourism, spillover effects (inter- the Grand Strand. Finally, tax change clustering), taxation, analysis is greatly dependent impacts. In this study, we did However, since the sources notand analyzetransportation or include efficiency impacts on the sources of financing. from changes in land use in the determined at this time, no year 2030, such as the develop- taxof financing analysis ishave included not been in this ment of distribution centers. study. As the Chmura study states,

April 9 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

2. Transportation Analysis of South Carolina 38/US Highway 501

Travel Efficiency: TREDIS

ransportation T a b le 1 Average Annual Daily Traffic is estimated using Ttheefficiency Transportation in this study Station Number 2009 2030 Projected* Economic Development Impact 193 9300 19,530 195 6900 14,490 System (TREDIS) rather than 199 5800 12,180 the “analogy” approach used by 167 9900 20,790 Chmura. 169 8100 17,010 191 16100 33,810 195 16200 34,020 149 17600 36,960 to estimate transportation Aynor** 17600 36,960 impacts.TREDIS is In specifically comparison, designed the 151 24200 50,820 * ** report by Chmura Economics & Multiplier 2.1 Aynor estimated Analytics, “Economic Impact of I-73 in South Carolina,” utilized the IMPLAN modeling system.6 IMPLAN is appropriate for estimating some impact scenarios, but it is a simplistic methodology for evaluating transportation systems. In fact, the TREDIS model incorpo- rates the IMPLAN model, but builds and expands on that model to make it more appropriate for transporta- tion applications. TREDIS is an integrated framework for transportation planning and project assessment designed to cover a wide range of applica- For each segment of the input into TREDIS. Segment tions – from looking at the proposed I-73, inputs including data is based on average annual trips, vehicle miles traveled transportation investment (VMT), and vehicle hours for passenger (personal/ tobenefit/cost analyzing theimpact macroeco of a single- traveled (VHT) are sourced recreational)daily traffic (AADT) vehicles. for (See 2030 nomic impacts of alternative from the FEIS, calculated using Table 1) long-range plans such as the standard Highway Capacity I-73 proposal. Manual methodology and then

April 10 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

2. Transportation Analysis of South Carolina 38/US Highway 501 (continued)

Benefit/Cost Analysis Our analysis clearly n this section, we compare The SC 38/US 501 upgrade demonstrates that the the proposed I-73 Build on the other hand, has a net GSX project provides a with the SC 38/US 501 present value (NPV) of a $51 significant benefit for IBuild (Upgrade) and a No Build scenario. The I-73 Build project results in a ($704 mil- dollars invested, while million benefit while the I-73 the I-73 project falls 0.26, while the SC 38/US 501 provides a 32 percent higher woefully short because Buildreturned ratio a benefit/cost was 1.4.7 ratio of travellion) deficit cost savings, to the public. $29.5 I-73 million versus $22 million, but of its high construc- It is important to note that at ten times the cost. Based tion price. It has only a traditional public finance small incremental value decision criteria recommend savings, SC 38/US 501 has that if a project’s B/C ratio is aon projected transportation payback efficiency in year compared with a no-build less than 1.0, the project is not 2029, while I-73 has no pro- scenario. in the public’s best interest. jected payback period at all. In business and government, investing in a project with B/C ratio less than 1.0 would be analogous to investing in a project knowing that the project would lose money.

Our analysis clearly demon- strates that the GSX project

for dollars invested, while the I-73provides project a significant falls woefully benefit short because of its high construc- tion price. It has only a small incremental value compared with a no-build scenario.

The Chmura report suggests that a payback for the proposed I-73 project is four years. The TREDIS analysis shows no evidence of a payback period at all – the opposite conclusion.

April 11 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

2. Transportation Analysis of South Carolina 38/US Highway 501 (continued)

Sensitivity Analysis of Benefit/Cost Analysis

I-95/SC 38 junction, the City of of FEIS scenarios or more Aynor intersections, and the US extreme conditions that could inenefit/cost this model analysis by con is- 501/SC 22 merger, we evaluated be applied and modeled to a no Bstructionsignificantly cost influenced and time build scenario for SC 38/US 501. saving. The high cost of con- cost relationship. struction requires an increased the speed impact on the benefit/ The City of Aynor intersections using the standard Highway and US 501/SC 22 interchange CapacityTraffic inputs Manual are (HCM) calculated method greaterbenefit tothan the one. public Because in order of the (merge from two lanes to one) for each segment (See Method- projectedto result in high a cost/benefit speeds of SC ratio 38/ ology Section for more detail US 501, even without building on HCM). Total for trips, VMT new infrastructure (using Final Vehiclehave the Miles greatest Traveled influence (VMT) on and and VHT are then totaled for Environmental Impact Statement Vehiclethe system Hours traffic Traveled speed (VHT), based on each alternative. The no-build (FEIS) inputs), the difference and the peak travel multiplier alternative includes intersection between build and no-build from the FEIS.8 Our sensitivity and bottleneck penalties. They analysis adjusted speed inputs are removed in the improved SC 38/US 501 and the I-73 options. publicefficiency based is minimal. on increased Thus speed. it (AADT) over these segments. A Reviewing the 42-mile segment, Thedoes FEIS not providestates: a benefit to the and Annual Average Daily Traffic no build is estimated to yield an the SC 38/US 501 alternative average speed of 36 miles per Therefore, while all Build positive benefit/cost ratio for hour.9 Improved SC 38/US 501 Alternatives are projected a four-mile segment for 90 days, speed is 54 mph and I-73 speed to have a considerable withincreases an average as the trafficspeed ofslows below over is 65 mph for the three peak positive economic impact on 39 mph and additional intersec- travel months, June-August 2030. the region, the magnitude tion delays of 12 minutes. These It is important to keep in mind of that impact between are in line with projected FEIS that during non-peak travel, alternatives is too similar case scenarios for 2030. Because for economic development of the high cost of building I-73, to be the deciding factor in the project will not have a posi- aautomobiles no build scenario are expected for 2030. to flowSee determining which alterna- Tableat free 2. flow speeds (FFS), even in tive is preferred. (FEDERAL tive benefit/cost ratio regardless HIGHWAY ADMINISTRA- T a b le 2 Traffic Inputs TION, 2009). Average Alternative Trips VMT VHT Speed MPH Further analysis reveals three No-Build 2030 25,728,300 106,133,355 2,946,372 36 critical bottlenecks in the SC 38/ Improve 38/501 2030 25,728,300 106,133,355 1,969,448 54 US 501 alternative. By adjusting I-73 Build 2030 25,728,300 106,133,355 1,632,821 65 the intersection delay at the

April 12 2012 3. Transportation Analysis South Carolina 38 / US Highway 501

An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

2. Transportation Analysis of South Carolina 38/US Highway 501 (continued)

Travel Efficiency: Myrtle Beach

was not used in this project’s removed because of the dif- the proposed I-73 is research, primarily because ferent roadway capacities comparedravel efficiency with forthe SC both the proposed I-73 and T38/US 501 upgrade GSX terminate at SC 22. The used in the GSATS model. alternative. Neither project FEIS states: Theand dailyroadway traffic capacities criterion are alternative affects the Myrtle not set equivalent to the Beach area or other economic Reducing existing traf- actual roadway capacity, development analysis - completed for the region. The accessing the Myrtle Beach rion is for peak daily, not Grand Strand Area Transpor- regionfic congestion is a secondary on roads need and the daily traffic crite tation Study (GSATS) data of the project. As a meas- (FEDERAL HIGHWAY ure of the effectiveness ADMINISTRATION,average annual daily 2009) traffic. of the proposed facility The fact that all Myrtle The fact that all Myrtle Beach Beach traffic congestion congestion, the vehicle hoursto relieve traveled local traffic(VHT) for from the analysis and the is excluded from the the average annual daily previoustraffic congestion studies is is important. excluded analysis and the previous Neither the I-73 nor SC 38/US studies is important. project study area roadway 501 alternative affect the coastal traffic (AADT) on the Neither the I-73 nor SC network, minus the Grand Strand Area Transportation 38/US 501 alternative Study (GSATS) area, was traffic issues east of SC 22. As the affect the coastal traffic determined for each alter- (indicatedfollowing figure by the indicates, yellow and the red issues east of SC 22. As native. The GSATS area was areas)areas of are severe all east traffic of SC congestion 22. the following figure indi- cates, the areas of severe traffic congestion (indi- cated by the yellow and red areas) are all east of SC 22.

April 13 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

2. Transportation Analysis of South Carolina 38/US Highway 501 (continued)

April 14 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

3. Economic Impacts of South Carolina 38/US Highway 501

Construction Impacts

onstruction projects The total economic impact, over the life of the project is provide relatively including direct, indirect, and expected at 2,142, a 30 percent large economic induced spending is estimated lower number but achieved C at $1.945 billion, or a multiplier at one-tenth the cost. These Most construction projects of 1.5 above the initial project impacts also are in line with the benefits to any region. local region, and in the case of the project, employment is to the local taxpayer. However, largereturn highway those benefits projects, to tothe the projectedcost. Over atthe 3,160 five-year per year. life of therepositive is anbenefits opportunity they provide with state, unless contractors are These employment impacts, SC 38/US 501 to target con- locally based. This would apply unfortunately, provide little struction spending on critical to construction of I-73 or the bottlenecks providing an upgrading of SC 38/US 501. immediate economic impact benefit to the community when while allowing this highway As with any construction activ- Alternatively,the project is finished.the SC 38/US 501 to continue to be used and to ity, the more dollars spent, upgrade costs are estimated to continue to serve the commu- the larger the impacts on the be $147 million.11 Total direct, nity now, as opposed to waiting economy will be. In the case indirect, and induced impacts until 2030. of the proposed I-73, we have are estimated to be more than assumed an estimated $1.3 $219 million -- also a multi- billion in construction impacts.10 plier of 1.5. Total employment Total direct, indirect, and induced impacts are estimated to be more than $219 million -- also a multiplier of 1.5. Total employment over the life of the project is expected at 2,142, a 30 percent lower number but achieved at one-tenth the cost.

April 15 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

3. Economic Impacts of South Carolina 38/US Highway 501 (continued)

Spillover Impacts of the Proposed I-73

pillover effects are negative spillovers in local analyzed by evaluating economies (Baird, 2005). A prime example of these current and empiri- negative spillover effects S cal transportation Spillover effects are important research. The literature search to transportation analysis in South Carolina are was narrowed to a meta-analy- since they can negatively the negative impacts of sis of documents that provided affect local communities. New I-95 on the communi- empirical research about the infrastructure added in an adja- ties along US 301 in economic impacts of transporta- cent region creates negative tion infrastructure projects. This spillovers, most notably in the Allendale, Bamberg analysis provides the foundation service industry sectors. The and Hampton counties. of transportation economic net result is that new highway These communities and development research into both interchanges outside a local region see an increase in retail, businesses once thrived in this study is measured with while the local community sees due to continuous traffic, TREDIStransportation and transportation efficiency, which a decrease because the new but lost commerce when 12 spillover effects. infrastructure draws business traffic was shifted from away from the older highway. Spillover effects are economic US 301 to I-95. activities uncaptured in core A prime example of these activities and frequently have negative spillover effects unintended consequences in South Carolina are the Chmura report or other existing beyond the primary event. negative impacts of I-95 on empirical research. The Chmura Spillover effects can be the communities along US study suggests that, “the most measured using the spillover 301 in Allendale, Bamberg direct and visible new jobs and Hampton counties. These created by I-73 will be in the Harris, 2009) and can be both communities and businesses businesses along I-73 serving positivecoefficient and (Goetz, negative. Deller,13 Early & once thrived due to continuous motorists.” Chmura states that studies suggested that larger- they use a “model-by-analogy” than-average inter-regional approach to determine this (non-local) positive spillover totraffic, I-95. but lost commerce when impact. However, empirical traffic was shifted from US 301 research states that these either in the transportation or It has been suggested that the new jobs actually replace utilitycoefficients sectors tended (Goetz, to Deller,be & existing jobs from adjacent Harris, 2009). However, more rural areas along the road’s areas “leaving the net level of recent studies have shown routeproposed during I-73 and will after benefit comple the - economic activity unchanged in that transportation and other tion. However, this conclusion non-metropolitan areas” (Baird, public capital can and do have is not substantiated in the 2005).

April 16 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

3. Economic Impacts of South Carolina 38/US Highway 501 (continued)

T a b le 3 Labor Force and Unemployment - I-95 Corridor

Unemployment County Labor Force Employment Unemployed Rate Bamberg County 6,063 5,157 906 14.9% Clarendon County 12,313 10,485 1,828 14.8% Colleton County 16,944 14,818 2,126 12.5% Darlington County 30,337 27,194 3,143 10.4% Dillon County 12,973 11,095 1,878 14.5% Dorchester County 67,533 62,605 4,928 7.3% Florence County 62,659 56,131 6,528 10.4% Hampton County 7,578 6,611 967 12.8% Jasper County 10,218 9,344 874 8.6% Lee County 8,113 7,063 1,050 12.9% Marlboro County 11,362 9,496 1,866 16.4% Orangeburg County 40,280 34,705 5,575 13.8% Sumter County 44,164 39,454 4,710 10.7% South Carolina 2,119,571 1,917,507 202,064 9.5% Source: South Carolina Department of Employment and Workforce, March 2012

Further compromising the allowing them to invest new state average of 9.5 percent Chmura study is the fact that money (because they are more in January 2012. The unem- those spillover effects are ployment rate in the other 11 newly created non-local infra- counties averaged 14.0 percent, new highway network itself. structureproductive in than adjacent local localities.firms) in 4.5 percentage points higher Therefore,larger than the the new benefit jobs of and the Although this is a win for larger than the state’s average. related impacts for interchange business chains (primarily clustering are, in fact, a transfer With limited access highways, of services and jobs from the clear loss for the local com- such as the proposed I-73, local community to the new munity.service related firms) it is a business opportunities are infrastructure. However the limited to major interchanges. result is that slightly fewer jobs One only has to look at the Due to the sudden increase exist because the businesses counties along I-95, from Dillon in land values along these that relocate are generally more to Jasper, to see how little an interchanges, the majority of modern and more productive. - businesses are large, national This phenomenon is reported munities along its route. As operations – not owned in a number of studies, most interstateseen in Table benefits 3, of therural 13 com South by small, local businesses. recently by (Chandra, 2000). Carolina counties adjacent Upgrading the GSX would Finally, new non-local highway to I-95 only two (Dorchester maintain the viability of busi- infrastructure actually exports and Jasper) had unemploy- nesses adjacent to the current ment rates lower than the SC 38/US 501. local dollars to national firms, April 17 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

3. Economic Impacts of South Carolina 38/US Highway 501 (continued)

In addition, this report raises construction of I-73 were to be Many of the businesses questions regarding the validity replaced with new jobs along along the GSX route are of the Chmura assumption that the interstate, the displacement the jobs created will be net would hurt local communities. locally owned small new jobs. That is, many of the Many of the businesses along businesses that would be jobs estimated by the Chmura the GSX route are locally owned negatively impacted by study may simply replace jobs small businesses that would the loss of traffic being that could be lost if I-73 were be negatively impacted by the built elsewhere. There is prec- re-routed to I-73 and edent for this job replacement to I-73 and away from the away from the GSX. It phenomenon in South Carolina. GSX.loss ofIt trafficis unlikely being that re-routed many of is unlikely that many of There was a decline in jobs and these small businesses would establishments along Highway these small businesses 301 and other routes when resources to relocate to an I-73 would survive or have I-95 was constructed. Even interchange.survive or have the financial the financial resources if all the jobs lost due to the to relocate to an I-73 interchange.

April 18 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

3. Economic Impacts of South Carolina 38/US Highway 501 (continued)

Spillover Effects SC 38/US 501

pillover effects are local communities also capture ongoing economic impacts minimized when economic impacts of both the existing infrastructure construction phase, which the new infrastructure (espe- S is upgraded rather gives an immediate boost to the ciallyfrom increasedfor manufacturing), efficiency ofand than replaced. Local compa- economy, and the operational 3) capturing locally owned nies are able to stay put and impacts when the highway is and operated businesses and compete when upgrades are up and running. The advan- proprietary income (value built with new investment tages of upgrading SC 38/US added), which would result developing an appropriate 501 would be delivered to in maintaining the local tax level of increased demand the local community in three structure. near local interchanges. With ways: 1) maintaining local local infrastructure upgrades, employment, 2) capturing

The advantages of upgrading SC 38/US 501 would be delivered to the local community in three ways: 1) main- taining local employment, 2) capturing ongoing economic impacts from increased efficiency of the new infrastructure (espe- cially for manufacturing), and 3) capturing locally owned and operated busi- nesses and proprietary income (value added), which would result in maintaining the local tax structure.

April 19 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

4. Funding Issues Related to the Proposed I-73

s scarce as highway mates that the state needs an million to increase the capacity construction funds are additional $40 billion to fund of the secondary road system today, the state needs its long-term needs. However, to “good”. When bridge main- A to carefully consider only $11 billion in funding is tenance and other needs are the construction of I-73 in available, according to SCDOT.14 included the SCDOT estimates relation to all of South Caro- the cost at $1.5 billion per year lina’s highway infrastructure More recently, SCDOT has in additional funds. It would needs. While the funds for I-73 stated publically that there are require $500 million annually have not been secured, to raise the capacity to if the State were able to “fair”. secure the $1.3 billion or more of funding, there Finally, the current are other transportation discussion of I-73 has not infrastructure needs adequately addressed the that are likely to provide increased maintenance costs of a new interstate – especially since the highway. The current Grandgreater Strand’s economic needs benefit costs to maintain SC 38/ could be met by the GSX US 501 would continue at one-tenth the cost. and not stop once I-73 The safety and conges- is completed. The state tion issues on I-26 are would have to fund main- one such priority. In tenance costs for both addition, the need for routes. Based on SCDOT improvements to I-26 is data, it is estimated that expected to increase once annual maintenance costs the Port of Charleston is of the new interstate deepened. The construc- would be more than $4.3 tion jobs that would be million. Over the next 30 created by building I-73 years this would exceed would be generated no matter critical needs in South Caro- more than $130 million, add- where in South Carolina the lina that are currently going ing millions to the statewide $1.3 billion worth of new roads unmet. For example, the SCDOT were built. estimates that the state needs an additional $340 million system preservation deficit. According to the SCDOT long today to increase the interstate range plan, there are current system’s capacity to “good”, and future needs in South $440 million to increase the Carolina that will not be met. primary road system capacity For example, the SCDOT esti- to “good” and another $540

April 20 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

5. Conclusions and Summary

his report evaluates (NPV). Stated another way, summer months, the SC 38/ alternatives to the only the SC 38/US 501 alterna- US 501 alternative provides proposed I-73, a new tive would provide a positive Tfour-lane expressway return to the taxpayers on their the proposed I-73 corridor for proposed from the southern infrastructure investment. passengerfive significant (personal/recrea benefits over- terminus of I-73 in North tion) vehicles: Carolina near Rockingham, and continuing through South Carolina, ending at SC 22 (an existing four lane • ofGSX 1.4 offers compared a significantly with highway). Operation analysis higher benefit/cost ratio ratio of .26. (The general is estimated in the year 2030. decisionthe I-73 benefit/costrule is that for an updated traffic system projects with B/C ratios focuses on the I-73 corridor greater than 1.0 should andThis SC analysis 38/US specifically 501 from I-95 be undertaken, while to SC 22. those with B/C ratios of less than 1.0 are not In this study we looked at the undertaken). one-time impact of highway The GSX alternative would productivity gains resulting produce a net $51 million savings is $29.5 million inconstruction improved infrastructure and efficiency/ • comparedThe I-73 travel to the cost SC over the life of the highway. project would produce a $704 38/US 501 travel cost The goal of this analysis is to traveler benefit, while the I-73 saving of $22 million. determine which alternative 38/US 501 project could also However, the SC 38/US generates the most value (i.e., million travel deficit. The SC 501 savings comes at both I-73 and the SC 38/US 501 one-tenth the cost of cost to taxpayers. We note that upgradebenefit local would businesses, provide travelbut building I-73. whethertravel efficiency) the I-73 forproject, the least the SC 38/US 501 upgrade, or a SC 38/US 501 allows targeted no-build option is selected, constructionefficiency gains. spending Upgrading on maintains the viability the Myrtle Beach area will critical bottlenecks to happen • ofUpgrading current businesses SC 38/US 501 see equal non-transportation sooner which would provide near and adjacent to the related economic impacts. corridor, eliminating the earlier than the proposed I-73. need for relocations or While each build scenario gains benefits to the community lost business due to the Although speeds are slightly SC 38/US 501 upgrade results lower with the SC 38/US 501 I-73. in atraffic positive efficiencies, net present only value the alternative during the three diversion of traffic to

April 21 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

5. Conclusions and Summary (continued)

SC 38/US 501, the GSX alter- savings, the SC 38/ native, is a more effective By upgrading the SC 38/ • USBased 501 on upgrade travel efficiency has a • use of state transportation US 501, South Carolina projected payback in year resources. The GSX has a can improve access to the 2029, while I-73 has no projected payback period. while I-73 does not. Myrtle Beach area without positive benefit/cost ratio spending $1 billion that could go to other trans- impacts will enhance provides potential • productivitySC 38/US 501’s for economiclocal • The GSX alternative portation infrastructure manufacturers and counties without displacing needs that provide greater distributors while having localeconomic businesses. benefits to rural economic benefits. no effect on the Grand Stand’s tourism economy as reported in other US 501, South Carolina As a result of these findings, economic analyses, since • canBy upgrading improve access the SC to 38/ the we conclude that the GSX it would terminate, like Myrtle Beach area without (upgrading SC 38/US 501 I-73, at SC 22, well north spending $1 billion that from I-95 to SC 22) alterna- and west of Myrtle Beach. could go to other trans- tive is clearly superior to portation infrastructure the I-73 proposal for South In summary, this report needs that provide greater Carolina taxpayers. reaches three key conclusions:

economicBibliography benefits.

Chmura Economics & Analytics. (2011). Economic Impact Goetz, S. J., Deller, S. C., & Harris, T. R. (2009). Targeting of I-73 in South Carolina. Florence: Northeastern Strategic Regional Economic Development. New York: Routledge. Alliance (Chmura). Klein, Y. L., & Osleeb, J. (2010). Determinants of Coastal Baird, B. A. (2005). Public Infrastructure and Economic Tourism: A Case Study of Florida. Journal of Coastal Productivity: A Transportation-Focused Review. Research, 1149-1156. Transportation Research Record: Journal of the Transportation Research Board , 54-60. Smart Mobility. (2011). The Grand Strand Expressway: An Alternative to the Proposed I-73 to Myrtle Beach, South Chandra, A. A. (2000). Does Public Infrastructure Affect Carolina. Norwich: Smart Mobility. Economic Activity? Evidence from the Rural Interstate Highway System. Regional Science and Urban Economics, Transportation Research Board. (2010). HCM2010 Highway 457–490. Capacity Manual. Washington: Transportation Research Board. FEDERAL HIGHWAY ADMINISTRATION. (2009). FINAL ENVIRONMENTAL IMPACT STATEMENT (F.E.I.S.) Interstate 73: I-95 to the Myrtle Beach Region. Washington: U.S. Department of Transportation: Federal Highway Administration.

April 22 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

Endnotes

1 The Grand Strand Expressway: An Alternative to 10 “The Grand Strand Expressway”, Smart Mobility, March the Proposed I-73 to Myrtle Beach, South Carolina 2011. Norwich:Smart Mobility, March 2011 11 “The Grand Strand Expressway”, Smart Mobility, March 2 TREDIS is the Transportation Economic Development 2011. Impact System, 2010 12 TREDIS is the Transportation Economic Development 3 Chmura Economics & Analytics, Economic Impact of Impact System (TREDIS, 2010). It is an integrated I-73 in South Carolina. Florence: Northeastern Strategic framework for transportation planning and project Alliance, May 2011. assessment designed to cover a wide range of 4 SC DOT data based on Maintenance costs of I-185 extrapolated for 43.5 miles and 30 years. of a single transportation investment to analyzing the 5 Economic Impact of I-73 in South Carolina, Chruma macroeconomicapplications – from impacts looking of alternativeat the benefit/cost long-range impact plans Economics, May 2011. such as the I-73 and GSX systems. 6 Chmura Economics & Analytics, Economic Impact of 13 “the ratio of indirect economic effect in the region I-73 in South Carolina. Florence: Northeastern Strategic where the direct impact does not originate divided Alliance, May 2011. by total indirect effect in SC DOT data based on Maintenance costs of I-185 extrapolated for 43.5 miles a community cost. and 30 years. 87 MultiplierRatios >1 are of 2.1 a benefit * AADT to the community. Ratio’s <1 are 14 Recent Power Point presentation “Getting to Good”, by South Carolina Secretary of Transportation, Robert J. St. Onge, Jr. 9 Speed effects transportation efficiency. Speeds lower than posted limits, decreases economic efficiency.

April 23 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

Methodology

Transportation Economic Construction Impacts: Geography: Impacts: Construction impacts are calculated Study area includes the South Carolina TREDIS calculates the transportation using the total construction costs for counties of Dillon, Marion, and Horry. economic impacts of I-73 and the alterna- the years 2013 through 2015 for SC Linked counties are not included in tive SC 38/US 501. TREDIS model inputs 38/US 501 and 2015 through 2020 for any of the scenarios. include the travel demand characteristics I-73. The source for construction cost for each build and a no-build scenario. and miles for I-73 in South Carolina, Time Period: Those characteristics include period south segment, and the SC 38/US 501 Transportation estimates are for the vehicle trips, period vehicle miles traveled, alternatives are from Smart Mobility year 2030. Estimates are based on period vehicle hours traveled, fraction (Smart Mobility, 2011). Construction congested, buffer time, average crew impact calculations are carried out members, and average vehicle occupancy. by TREDIS, which uses standard data.2009 EconomicAADT traffic estimates data and are 2005 in 2030 Travel savings are calculated for passenger IMPLAN® methodology for a period dollars.Travel Demand Model (TDM) traffic (personal/recreational) vehicles as a of 20 years with analysis for each result of other studies being focused on alternative done in the year 2030. tourism impacts of the project. See Table 2.

Road Transportation Data and Estimation Method

Data measured and others that can’t. This estimated using the Transportation Proposed road project graphics are estimation process uses 2009 SCDOT Research Board’s Highway Capacity included in the Smart Mobility Report Manual (HCM)(Transportation (Smart Mobility, 2011). A detailed Research Board, 2010).2 Each segment analysis of the SC 38 and US 501 improvementstraffic count data, to createand industry alternative is measured, and then summed to a highways is accomplished using scenariosstandard travel that lead efficiency to economic gains fromgains. total3 highway length. Eleven sections Earth®1 and South Carolina Depart- are measured using this method. ment of Transportation (SCDOT) 2009 counting stations based on informa- tionWe estimate provided the by locationSCDOT. Eachof the station traffic is assigned to a relevant highway traffic count data. 1. A request was made to the SCDOT for travel Transportation projects within segment and its characteristics, such as demand model data. Data was not available to a transportation network create number of lanes, width and bottle- the public at the time of this report. 2. Chapters: 14, 18, 31 complex outcomes that affect the necks are recorded. Highway levels of 3. Total road length is consistent with the network in some ways that can be service (LOS) characteristics are then

finding from Smart Mobility. April 24 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

Methodology (continued)

Estimation Intersection “penalties” are applied to the context of planning and preliminary Each road segment is individually appropriate segments, then combined engineering analysis and not used for analyzed, using standard multilane with the multilane highway segment highway segment methodology for the data, and totaled for the highway inputs. automobile mode.4 There are six steps to being analyzed, creating three 2030 operational or final highway design calculating the level of service (LOS): scenarios: no build, build SC 38/US TREDIS 501, and build I-73. Final calculations TREDIS is the Transportation are exported to TREDIS for analysis, Economic Development Impact • Define basic traffic volume (AADT) System (TREDIS, 2010). It is an • Calculate free flow speed (FFS) integrated framework for transporta- • Select FFS curve impactssensitivity are evaluation, calculated andseparately final estimate as tion planning and project assessment, • Calculate peak hour factor (PHF) arereports. construction Network impacts. efficiency Both economic impacts designed to cover a wide range of • Estimate speed and density represent total transportation-related applications – from looking at the The• primaryCalculate inputs LOS for the analysis economic impact from road improve- - are average annual daily trips (AADT), ments for the build scenarios. portation investment to analyzing the miles, and speed (HCM). From those macroeconomicbenefit/cost impact impacts of a single of alternative trans data, 2030 AADT volume is calculated. Benefit/Cost Analysis long-range plans. This is estimated with a multiplier of 2.1. We convert demand to peak Budget revised Circular A-94 (1992) TREDIS operates as four separate but volume, or Vp5, which includes adjust- toWe estimate used the the Office discount of Management rate for the and interconnected modules: ments such as peak hour factor (PHF). project. Over the last 33 years the rate A multiplier of 1.7 is used to estimate has averaged slightly over 7 percent. the peak volume, the variable fHV. The 2011 rate is 4.2 percent. We chose • Travel cost, 6 a rate of 5 percent for future estimates.7 • Market access, allowing for an estimate of automobiles • Economic adjustment Finally,per lane free per flow mile. speed With isthis estimated, informa- Report Accuracy and Precision • Benefit/cost, and tion we are able to estimate the LOS for Accuracy and precision are independent Highway• Finance data is imported into TREDIS peak demand in the year 2030. but complementary concepts. Accuracy for analysis. Impacts are forecast relates to achieving a correct answer, using CRIO-IMPLAN multiregional In addition to these calculations we also while precision relates to the size of the forecasting model. The result is encountered three bottlenecks, two of estimation range of the parameter in projected economic impacts for trans- which included intersections. We chose question. This report does not contain portation infrastructure construction not to analyze these intersections, but projects and changes in travel demand. instead estimated the LOS to be “C” instead relies on estimates from other A number of assumptions are required during non-peak with an LOS of “F” (most thirdfield data parties collect with by which the authors we use butto make as part of the transportation analysis. extreme) during peak times for the year capacity calculations. In most cases, Some estimates are derived from TDM 2030. To estimate intersection LOS, the and others from empirical research. HCM standard is available. Unfortunately, analyses are based, can only be expected accurately estimating intersection LOS tofield be data, accurate in general, to within on 5%which or 10%the of impact requires more than 100 inputs the true value. Thus, the computation per intersection. Although the analysis is performed with these inputs cannot be 4. Chapter 14 (Transportation Research detailed, it is not accurate because it does expected to be extremely accurate, and Board, 2010) 5. data. We therefore applied industry best estimates that are accurate and precise not contain specific traffic intersection the final results must be considered as 6. HCM Exhibit 14-5 LOS on Base Speed-Flow estimates and assumed peak LOS “F” only with the limits of the inputs used. Curves where appropriate. Our estimates should be considered in 7. OMB Revised Circular A-94

April 25 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

Methodology (continued)

G l o s s a r y

Average Annual Daily Traffic (AADT) — Used to calculate Peak Hour Factor (PHF) — The hourly volume during the toll costs and buffer time costs.

Buffer Time — Variable used to capture the cost of travel withinanalysis the hour analysis dived hour. by the peak 15-min flow rate within time changeability. Unreliable travel times cause travelers the analysis hour; a measure of traffic demand fluctuation to make early departures to “buffer” against potential delay. Travel Demand Model (TDM) — Model that includes elements such as roadway and transit networks, population Density — The number of vehicles occupying a given length and employment data. The data are used to estimate the of lane or roadway at a particular instant. demand for transportation based on highway characteristic assumptions. Free-Flow Speed (FFS) — 1) Theoretical speed in miles Vehicle Hours Traveled (VHT) — Variable is used to segment are both zero. 2) The prevailing speed in miles calculate passenger, crew, and freight time cost. per hour when the density and flow rate on a study passenger cars per hour per lane (pc/h/ln). Vehicle Miles Traveled (VMT) — Variable is used to per hour on freeways at flow rates between 0 and 1,000 calculate accident costs, vehicle operating costs, and Level of Service (LOS) — A numerical output from a environmental costs. VMT should be annualized so that for traveler perception model that typically indicates the a single study region, all periods sum to annual VMT. average rating travelers would give a transportation facility or service under a given set of conditions.

Net Present Value — Present value of future cash returns, discounted at the appropriate market interest rate, minus the present value of the cost of the investment (Ross,

Westterfield, & Jaffe, 1996).

April 26 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

Miley & Associates

iley & Associates is one night, and we excel at providing Dr. Miley was originally appointed of the Southeast’s leading advice and counsel along the way. We as Chairman by Governor Carroll represent our clients. Our business Campbell and continued to serve as plan is simple: we focus on exceeding Chairman for Governor David Beasley. Meconomic and financial our client’s expectations and building consulting firms. The long-term relationships. Dr. Miley was the Senior Executive firm specializes in economic impact feasibility reports, impact fee studies Assistant for Economic Development to analyses, fiscal impact analyses, Miley & Associates, Inc. was founded in Governor Campbell from 1987 to 1989. include national and prominent local 1993 by Harry W. Miley, Jr. Ph.D. The Dr. Miley served as principal advisor and benefit/cost modeling. Our clients real estate developers, school districts, - to Governor Carroll Campbell on the local governments, regional develop- state’s policies for economic develop- Company is an economic and finan ment agencies, and other private sector of analytical services to public and ment, employment and training, work cial consulting firm providing a range private sector clients. Miley & Associ- force and adult illiteracy, technical partners appear regularly before deci- education and transportation issues. development firms. Miley & Associates sion-makers at all levels of government impact analyses of proposed new ates conducts fiscal and economic and understand the values, needs and developments and has extensive expe- Prior to joining the Governor’s desires of the clients they represent. rience in assisting clients with their economic development and commu- of the Moore School of Business at Office, Dr. Miley was on the faculty nity revitalization projects. the University of South Carolina and With offices located in Columbia, South provide clients with hands-on service Associate Director of the Division of Carolina, the firm is well positioned to for projects throughout the entire Dr. Miley served as Chairman of the Research at the School. Southeast region. South Carolina Board of Economic Advisors (BEA) under two Governors. Miley & Associates appreciates that The BEA is responsible for estimating every research project is unique and the State’s revenues for the Governor deserves a custom solution. Public and the General Assembly to use in policy decisions are not made over- formulating the State’s annual budget.

April 27 2012 An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative

General Limiting Conditions

his economic impact actual results because events and Inc. No abstracting, excerpting or analysis is not a budget or circumstances frequently do not occur summarization of this study may be forecasting document and as expected, and those differences Tis not intended to depict a may be material. No responsibility is written consent of Miley & Associ- made without first obtaining the prior assumed for inaccuracies in reporting ates, Inc. This report is not to be used economic impact analysis is not by the client, the client’s agent and in conjunction with any public or definitive course of action. Moreover, designed as a space or facility-plan- representatives or any other data private offering of securities or other ning document. Many assumptions source used in preparing this study. similar purpose. This study may not underlying economic impact analyses be used for purposes other than that are based on policy decisions which, This report is based on information for which it is prepared or for which that was current as of April 2012 and results. Miley & Associates, Inc. has not under- obtained from Miley & Associates, Inc. if modified, would affect the overall prior written consent has first been taken any update of its research effort This study is based on estimates, since that date. We have no obliga- assumptions and other information tion, unless subsequently engaged, by, and should be considered in light This study is qualified in its entirety developed by Miley & Associates, Inc. to update this report or revise this of, these limitations, conditions and from its independent research effort, analysis as presented due to events or considerations. consultations with the client and its conditions occurring after the date of representatives, and primary and this report. secondary sources. We have utilized sources that are deemed to be reliable Possession of this study does not but cannot guarantee their accuracy. carry with it the right of publication Moreover, estimates and analysis are thereof or to use the name of “Miley based on trends and assumptions & Associates, Inc.” in any manner and, therefore, there will usually be differences between projected and written consent of Miley & Associates, without first obtaining the prior

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