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Commissioned by the Alabama Department of Economic and Community Affairs ALABAMA DEPARTMENT OF ECONOMIC AND COMMUNITY AFFAIRS ECONOMIC DEVELOPMENT ADMINISTRATION Commissioned by the Alabama Department of Economic and Community Affairs March 2007 Center for Business and Economic Research, The University of Alabama University Center for Economic Development, The University of Alabama Economic and Community Development Institute, Auburn University for the Alabama Department of Economic and Community Affairs March 2007 by Center for Business and Economic Research, The University of Alabama University Center for Economic Development, The University of Alabama Economic and Community Development Institute, Auburn University Samuel Addy Nisa Miranda Joe Sumners Center for Business and University Center for Economic and Community and Economic Research Economic Development Development Institute The University of Alabama The University of Alabama Auburn University Box 870221 Box 870138 3354 Haley Center Tuscaloosa, Alabama 35487-0221 Tuscaloosa, Alabama 35487-0138 Auburn University, Alabama 36849 Phone: 205-348-6191 Phone: 205-348-7058 Phone:334-844-4704 Fax: 205-348-2951 Fax: 205-348-6974 Fax: 334-844-4709 [email protected] [email protected] [email protected] Contributors to the Report Center for Business and University Center for Economic and Community and Economic Research Economic Development Development Institute Samuel Addy Nisa Miranda Mike Easterwood Lottie Burleson Karla Jordan Joe Sumners Kathy Banks Martha Whitson Ahmad Ijaz Sherry Lang Carolyn Trent Annette Watters Other contributors in addition to those listed above are Ms. Maureen Neighbors of the Alabama Department of Economic and Community Affairs and Ms. Vickie Locke, Project Director. Acknowledgments Completion of this project was due to the timely contributions of many people. We are very grateful to the officers, staff, members, participants, and affiliates of the Alabama Association of Regional Councils, Alabama Emergency Management Agency, Smart Coast, and Woods Research Inc. Many thanks also to our colleagues and graduate research assistants at the Center for Business and Economic Research, the University Center for Economic Development, and the Economic and Community Development Institute for their help on different phases of this project. Last, but not least, much gratitude is owed to the many Alabamians who are involved in planning, strategy, marketing, hazard mitigation, emergency response, and related issues as well as economic development in general, and whose efforts provide the critical material required in reports of this kind. Contents Executive Summary i Chapter 1. Existing Conditions Analysis 1 Chapter 2. Population Projections and Economic Forecasts 46 Chapter 3. Damage Assessments and Impacts 73 Chapter 4. Hurricane Katrina Strategic Plan for Economic Recovery 80 Chapter 5. Literature Review of Best Practices of Disaster Mitigation Strategies 93 Chapter 6. Capacity Development 100 Chapter 7. Recommendations 116 Appendix – Methodology 119 Appendix – CEDS Summary 125 Appendix – Economic Development Agencies 186 Appendix – Available Buildings and Sites 198 Executive Summary This report, related to U.S. Department of Commerce Economic Development Administration (EDA) project number 04-88-05668, is a strategy document that outlines the current situation, projected resource and policy requirements, measurable goals and objectives, and recommendations for full economic recovery and sustained progress for the 24 Alabama counties that experienced damage from Hurricane Katrina. The counties are Baldwin, Bibb, Choctaw, Clarke, Colbert, Cullman, Dallas, Greene, Hale, Jefferson, Lamar, Lauderdale, Madison, Marengo, Marion, Mobile, Monroe, Perry, Pickens, Sumter, Tuscaloosa, Washington, Wilcox, and Winston. Also presented are the economic and fiscal impacts of Hurricane Katrina damage on Alabama and the 24 counties. Included with this hardcopy of the report is a compact disk (CD) that contains various referenced material, the data and other files used for this report, and an electronic copy of the report itself. Analysis of socioeconomic trends and dynamics for the counties using selected demographic and economic indicators showed that four counties—Baldwin, Jefferson, Madison, and Tuscaloosa— have outperformed the state as a whole. Three others—Cullman, Lauderdale, and Mobile—have more or less kept pace with the state and the remaining 17 have underperformed. Variables considered in the assessment include labor force, employment (persons employed), unemployment, underemployment, population, housing units, per capita income, average wage per job, poverty, educational attainment, real output, wage and salary employment (jobs), and business sales. Trends in these variables were analyzed for the period from 1990 to 2004 or to 2005, depending on data availability. Population projections and forecasts of real economic output and employment were made for the 24 counties in the study in five-year intervals through 2030. Economic forecasts were for industry sectors using the one-digit SIC (Standard Industrial Classifications) codes. Real output (or real economic output) for each county is defined as the total value of goods and services produced and is similar to the concept of gross domestic product (GDP) for the nation. Output is presented in 1996 dollars in order to adjust for inflation or any price changes that can vary across geographical areas. Baldwin County is expected to lead both population and economic growth over the 25-year projection period from 2005 to 2030. Six counties are projected to experience population growth of 20 percent or higher; Baldwin (65 percent), Bibb (39.8 percent), Cullman (32.6 percent), Madison (25 percent), Tuscaloosa (21.2 percent), and Hale (20.5 percent). Counties that will add the most new residents rounded to the nearest 10 are Baldwin, 105,760; Madison, 74,680; Mobile, 47,330; Jefferson 42,450; and Tuscaloosa, 35,790. Only Greene County is expected to lose residents and 14 counties will have population growth below 10 percent. Real output and jobs will increase in all counties over the forecast period. Baldwin County’s real output will be 122 percent higher in 2030 than in 2005, followed by Hale with 118 percent, Cullman and Marion with 110 percent each, Jefferson with about 106 percent, and Tuscaloosa with 97 percent. Lamar County will have the lowest output growth with 30.1 percent. Employment in terms of jobs located in each county will grow from 15 percent for Perry County to 96 percent for Baldwin County. Rounding up the top job growth counties are Cullman (79 percent), Tuscaloosa (78 percent), and Jefferson (70 percent). Economic Recovery Strategy for AL Katrina Impacted Counties AU/UA i The Hurricane Katrina damage assessments total of $139.7 million was less than 0.1 percent of the $151.6 billion Alabama gross state product (GSP) in 2005. Debris clearance totaled $61.4 million, 44 percent of the total. Buildings and equipment damage was $30.7 million, followed by $26.8 million for utilities and $5.8 million in road system damage. By county, Hurricane Katrina damage ranged from $71,250 for Wilcox to $81.3 million for Mobile. About 86 percent of the damage assessed was in Baldwin and Mobile counties; Baldwin’s was $38.3 million and the remaining 22 counties had total damage of $20 million. The distribution of damage varied by county; for example, damage to utility systems was more than a third of the total for Baldwin County, but just about 3 percent for Mobile County. Anecdotal evidence suggests that Mobile County may have built more hazard resistant utility systems in response to past storms. This indicates that Baldwin and other counties in disaster prone areas might consider similar approaches to minimize future damage. Restoration or replacement may not be sufficient to mitigate future hazards—complete redesign and construction may be warranted. Hazard resistant standards may be costly, but they minimize future damage and debris clearance costs. The statewide economic impacts of the damage assessments were 2,972 direct and indirect jobs (0.144 percent of the state total in 2005), $94.5 million in earnings to Alabama households (0.135 percent of total state wage and salary income), and $305.6 million in output (0.202 percent of Alabama GSP).* Accompanying these impacts were $5.4 million in lost state taxes—$3.8 million in income and $1.6 million in sales tax receipts—and between $1.6 million and $2.2 million in lost local sales taxes, which is most likely to be about $2.1 million. The total tax loss of about $7.4 million was 0.143 percent of statewide income and sales taxes in 2005. The economic and fiscal impacts are therefore minor from a statewide perspective, but they are significant for Baldwin and Mobile counties because they bore most of the damage. Dallas County suffered the least impacts and Mobile County had the most. It is important to note that damage impacts can be localized as indicated by reports of how Hurricane Katrina extensively damaged Bayou La Batre in Mobile County. Serious local damage can have far-reaching impacts beyond the economic and fiscal ones highlighted in the preceding paragraph. For example, cultural and community assets such as institutions and relationships can be destroyed. These represent soft and irreplaceable assets whose impacts are nonetheless real, though extremely difficult to place monetary values on or quantify. The impacts presented are therefore not comprehensive and are just the economic and fiscal impacts of identified damage. A summary
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