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Project Report
An Economic Inventory & Impact Analysis
of the Casco Bay Islands
Presented To: The Island Institute
386 Main Street Rockland, ME 04841‐0648
Presented By:
Planning Decisions, Inc. 22 Cottage Road, P.O. Box 2414 South Portland, ME 04116-2414
October 1, 2008
TABLE OF CONTENTS I. Executive Summary ...................................................................................1 II. The Island Communities of Casco Bay ..............................................4 III. The Household Sector ...........................................................................9 IV. The Enterprise Sector...........................................................................14 V. Impact of the Islands on the Portland Economy ............................17 Appendix A Island Household Spending Estimates ..............................20 Appendix B Business Sales Estimates .......................................................29
Casco Bay Islands Economic Impact 1
I. Executive Summary The islands of Casco Bay play an enormously important role in the social and economic vitality of the Greater Portland Metropolitan Area. Like any municipal neighborhood, the islands are home to thousands of citizens and hundreds of businesses, civic institutions and government agencies. People who live and work on the islands depend on the mainland for many of their basic necessities. At the same time, people from the mainland—both within Maine and from away—come to the islands to work, to visit, to shop and to recreate. The network of commercial and social connections between the islands and the mainland is dense and rich but poorly understood. This lack of understanding coupled with the unavoidable costs of water‐based transportation combine to threaten the island economy. The purpose of this project is twofold:
1. to describe and measure the consumer and business1 transactions that comprise the island economy as well as the network of island‐mainland connections in a way that has not been done before, to provide a stronger empirical base for understanding the significant economic impact the islands of Casco Bay have on the overall economy of the Greater Portland Metropolitan Area; and
2. by more clearly delineating the economic context within which the island
economy operates to identify actions those concerned can take to improve the health of the island economy—both private actions concerned island citizens can undertake on their own and public policy actions for which they can campaign.
The central findings of the report are:
1. Standard sources of socio‐economic data (from the U.S. Census and from state labor and taxation sources) offer inadequate descriptions of the island economy because of its largely sub‐metropolitan geographical nature and its highly seasonal pattern of residency and economic activity; extrapolating
1 For the purposes of this report, business here means for‐profit businesses, non‐profit organizations and government agencies; they will henceforth be called the enterprise sector to distinguish them from the household or consumer sector. They include both island based enterprises and those mainland businesses such as water transport operations, cruise ships and recreation enterprises oriented almost entirely toward the islands.
Casco Bay Islands Economic Impact 2
from municipal tax assessor data and interviews with island residents and business owners provides a better picture than “official” statistics;
2. Analysis of ownership records and commuting patterns combined with
extrapolations from Department of Labor consumer expenditure surveys indicate that
a. the islands’ approximately 2,200 residential units exhibit a highly
seasonal occupancy pattern rising from about 770 households in the January‐March quarter to virtual full occupancy of 2,200 households in the July‐September quarter; and
b. the total annual consumer spending in the Greater Portland region of these occupants amounts to approximately $64 million.
3. Compilation of a list of island based and island dependent businesses, non‐
profit enterprises and government agencies indicates that there are approximately 180 such enterprises on the islands of Casco Bay; based on examination of available published data, interviews with island residents and extrapolation from state average numbers for sales and employment for various categories of business, we estimate that the total “sales” value of the island “enterprise” sector amounts to approximately $68 million, supporting approximately 780 jobs.
4. Combining the island resident consumer spending with the island enterprise
sales not already counted in consumer spending indicates that the total direct economic impact of the Casco Bay islands on the economy of the Greater Portland region amounts to approximately $89 million supporting just over 1,200 jobs.
5. Running this direct impact through the IMPLAN input‐output model for the
economy of Cumberland County indicates that the total impact of the islands on the county economy amounts to:
a. business sales of just under $120 million; b. supporting just over 1,650 jobs; and c. earning incomes of $51 million.
Casco Bay Islands Economic Impact 3
6. At a more fundamental level—beneath the mere compilation of numbers—
this analysis points to the need for those interested in the future health of island communities to:
a. Improve the information available on island economic activity; and b. Develop ways to share that information among residents and
enterprise managers to highlight areas of economic concern and to enhance the efforts of those attempting to address those concerns.
Casco Bay Islands Economic Impact 4
II. The Island Communities of Casco Bay The purpose of this report is to increase public understanding of the impact of the islands of Casco Bay on the economy of the Greater Portland area. The islands considered are those included within the City of Portland—Cushing, Peaks, Little Diamond, Great Diamond, Cliff and Jewell—as well as those included as parts of the independent municipalities of Long Island and Chebeague Island. Figure 1 pictures these islands and codes them by municipality.
Figure 1 The Islands of Casco Bay
Source: Census data as adjusted by Planning Decisions, Inc. based on boundary changes since 2000. Long Island includes the bulk of Little Chebeague Island and Cow Island off the northeastern tip of Great Diamond Island. Chebeague Island includes Hope Island, the northeastern tips of Little Chebeague and Jewell islands as well as several smaller islands east of Chebeague—Bangs, Stockman, Stave and Ministerial islands.
Casco Bay Islands Economic Impact 5
Taken together, these islands encompass approximately 4,700 acres. They have a total assessed property valuation of more than $900 million, equivalent to 11% of the total valuation of the City of Portland and just over 2% of the valuation of Cumberland County.2 Current demographic estimates indicate that the islands have a population of 1,860 residing in 865 households.3 Tax assessing records for the three municipalities, however, indicate that the islands have 2,224 residential housing units. This discrepancy between census reported resident households and tax assessor reported housing units highlights the challenge of describing the island economy. Table 1 presents the dilemma graphically.
Figure 2 Demographic Indicators for the Casco Bay Islands, 2007
1,860
865
2,224
4,782
0
1,000
2,000
3,000
4,000
5,000
6,000
Population Households ResidentialUnits
PossiblePopulation
Sources: Claritas; Municipal Assessors Offices
If the population to household ratio estimated by Claritas for 2007 is applied to the 2,224 residential housing units that municipal assessors say actually exist on the islands of Casco Bay, then the implied island population in 2007 was nearly 4,800. Clearly the economic impact of 4,800 people will be substantially greater than that of 1,860 people. The reason for this discrepancy is the seasonal nature of islands. Many, in some cases most, of the island homes are occupied by their owners only during the summer months. Others units are rented to summer visitors and some are offered as winter rentals. This pattern of seasonal occupancy is even more starkly evident in
2 Maine Revenue Service does not assess Portland’s islands separately from the entire city. Planning Decisions estimated the state valuation of these islands by calculating the islands’ share of Portland’s municipal valuation from data available from the Portland assessor’s office and applying this ratio to the City’s state valuation. 3 Claritas, an information management company that uses proprietary models to estimate current values for most decennial census data...
Casco Bay Islands Economic Impact 6
the ridership figures of the two major sources of transportation to and from the islands—Casco Bay Lines and The Chebeague Transport Company. Figure 3 illustrates this pattern.
Figure 3: Monthly Ridership Patterns of Casco Bay Ferry Lines, 2007 Casco Bay Lines Chebeague Transportation Company Sources: Casco Bay Lines; Chebeague Transportation Company In 2007, Casco Bay Lines (CBL) carried nearly 870,000 passengers, and the Chebeague Transportation Company (CTC) carried nearly 125,000 passengers. But the seasonal pattern of ridership for both lines was highly skewed. For CBL, ridership rose from a low of about 35,000 in February to a high of more than 150,000 in August—more than a four‐fold increase. For CTC, the pattern was much the same though less highly skewed, rising from a low of just over 7,000 passengers in February to a high of over 16,000 in August, more than a two‐fold increase. The point of this emphasis on seasonality is to highlight the problem of relying on the standard, “official” sources of socio‐economic data to describe the economy of the Casco Bay islands. Census demographic data (based on responses to an April 1, 2000 survey), Department of Labor employment data (based on business unemployment tax filings) and state sales tax data (reported only for the Greater Portland area as a whole) are simply not applicable to the sub‐municipal and highly seasonal economy of the Casco Bay islands. They simply cannot capture the essence of the islands’ impact on the Portland economy. That essence is contained not so much in the static measures of magnitude demographic, employment and sales data highlight, but in the dynamic relationships behind these numbers. Island residents are not merely numbers of households; they are workers in Portland businesses and customers for Portland stores. Island businesses are not merely dollars of property value; they are attractions that bring people to Portland and sources of sales for numerous Portland
153,631
35,226
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
To
tal R
iders
hip
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Jan Feb Mar April May June July Aug Sept Oct Nov Dec
To
tal R
iders
hip
7,042
16,133
Casco Bay Islands Economic Impact 7
suppliers. Quite apart from their homes and businesses, the islands serve as an essential element of the quality of life to the City of Portland and its visitors. People who enjoy the island studded vistas from the Eastern Prom and who cruise the ferry and charter boats plying Casco Bay need never set foot on one of these islands to benefit from their presence. In short, the economic significance of the islands of Casco Bay lies in their interactions with the surrounding mainland communities—personal, commercial, recreational. The purpose of this report is to describe these interactions and, through extrapolation from published data and interviews with island residents and business owners, to estimate their economic magnitudes. Figure 4 presents a visual depiction of these interactions and serves as an outline for the balance of the report.
Figure 4 Island‐Mainland Interactions
Casco Bay Islands Economic Impact 8
Any economy is composed of a Household Sector (consumers) who provide labor and spend income and an Enterprise Sector (businesses, government agencies and non‐profit entities) who provide jobs and produce goods and services. Some island households commute to work on the mainland; some work for island enterprises. All spend their incomes, some at island businesses, and some at mainland businesses. Similarly, some island based enterprises employ islanders, some employ mainlanders and all spend their revenues on supply chain vendors both on and off island. The central purpose of this report is to explain these flows of economic activity and to estimate their magnitudes. The reason for undertaking this effort is to make the nature of the island economy and its impact on the larger economy of the Greater Portland area more explicit and thus more clearly understood.
Casco Bay Islands Economic Impact 9
III. The Household Sector The purpose of this section is to answer three questions:
1. How many households live on Casco Bay islands? 2. How much money do they spend, on island and in the Greater Portland
economy? 3. What is the total impact of this spending on the overall economy of the
Greater Portland area? Since, as noted above, the standard sources for information on population and income do not measure the residential reality of the Casco Bay islands very well; Planning Decisions, Inc. used municipal tax assessing data and interviews with island residents to estimate both the number of residential units on the islands and their patterns of occupancy over the year.4 First, we used mailing addresses on municipal tax files to categorize residential units by three ownership categories:
1. year round residents—units whose tax mailing address was the same as its physical location;
2. seasonal local residents—units whose tax mailing address was off island but located in Maine, New Hampshire or Massachusetts; and
3. seasonal non‐local residents—units whose tax mailing address was outside of Maine, New Hampshire and Massachusetts.
Table 1 shows this distribution.
Table 1: Casco Bay Island Residential Units by Tax Address Housing Type Number Share of Total
Year round 783 35% Seasonal Local 956 43% Seasonal Away 485 22% Total 2,224 100%
Sources: Municipal tax records from The City of Portland and the Towns of Long Island and Chebeague Island.
4 See Appendix 1 for an explanation of how we derived the household spending estimates used in this report.
Casco Bay Islands Economic Impact 10
Second, we interviewed local residents and real estate agents to estimate the occupancy of these units by five household categories over the four quarters of the year:
1. year round residents; 2. seasonal local residents; 3. seasonal non‐local residents; 4. winter rentals; and 5. short term rentals.
Table 2 shows this distribution.
Table 2: Estimated Occupancy of Island Residential Units by Household Type Household Type Jan-Mar Apr-June July-Sept Oct-Dec
Year round 626 744 744 744 Seasonal local owner 0 287 239 96 Seasonal away owner 0 97 121 49 Winter Rental 144 108 0 144 Short Term Rental 0 288 1,081 0 Total 771 1,524 2,185 1,032
Sources: Municipal tax records from The City of Portland and the Towns of Long Island and Chebeague Island and Planning Decisions, Inc. estimates. We estimate that in the January‐March quarter, 771 of the islands 2,224 housing units were occupied, 626 by year round residents and 144 by winter renters. We estimate that occupancy grows to 1,524 in the second quarter as year round residents return from winter vacations and seasonal owners and short term renters begin to arrive. Occupancy hits a peak of 2,185 in the third quarter before falling to 1,032 in the fourth quarter. While these estimates were made with no explicit reference to ferry ridership, it is interesting to note that they exhibit a similar pattern of seasonality, as indicated in Figure 5.
Casco Bay Islands Economic Impact 11
Figure 5: Indices of Seasonality CBL Ridership and Island Occupancy Estimates, Quarter 1 = 1.00
1.00
1.33
3.25
1.751.98
1.34
2.83
0.75
1.25
1.75
2.25
2.75
3.25
3.75
Jan.-March April-June July-Sept. Oct.-Dec.
% o
f Q
uart
er
1
Ridership Occupancy Sources: CBL for ridership and Planning Decisions estimates for housing occupancy; it is interesting to note that the greater peak of seasonality of CBL ridership in the third quarter is consistent with a large number of day-trippers during that period.
The next step in estimating the economic impact of the island household sector was to estimate the spending by each of the household types listed in Table 2 for the time period of their occupancy. We did that by reviewing data from the Bureau of Labor Statistics Consumer Expenditure Survey, the Maine Housing Authority and the Longwoods International survey of tourism expenditures in Maine. We then adjusted these data for estimated income and household types and differences in island spending patterns provided by the project Advisory Committee. Based on this analysis, we estimate that the total annual expenditures of households residing on the islands of Casco Bay during their residency that flows into the Greater Portland economy to be approximately $64 million.5 Considered on a quarterly basis, this spending more closely matches the residency pattern reflected in ferry ridership. Figure 6 presents our estimates of island household spending on a quarterly basis.
5 See Appendix A for a more detailed explanation of this estimate. This total refers only to the household spending made during residence in Casco Bay and only that spending made in the Greater Portland area, i.e., it does not include spending made on other residences or in the areas where those other residences are located
Casco Bay Islands Economic Impact 12
Figure 6: Estimated Spending of Casco Bay Island Households by Quarter, 2007 ($ million)
$17.9
$23.1
$13.2
$9.9
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
$20.0
$22.0
$24.0
Jan.-March Apr.-June July-Sept. Oct.-Dec
HH
Sp
en
din
g
Source: Planning Decisions, Inc. estimates based on Bureau of Labor Statistics Consumer Expenditure Survey adjusted for island spending patterns. Finally, Table 3 lists this spending total by the BLS defined spending categories.
Casco Bay Islands Economic Impact 13
Table 3: Estimated Annual Spending of Casco Bay Households by Product Category, 2007
Category of Spending Amount Food at home $4,600,000 Food away from home $3,500,000 Alcohol & Tobacco $600,000 Shelter $15,900,000 Utilities, fuel, public services $3,500,000 Household operations and supplies $1,100,000 Household furnishings & equip. $2,100,000 Apparel and services $2,100,000 Transportation $12,900,000 Healthcare $2,700,000 Entertainment $2,500,000 Personal care products & services $1,100,000 Reading, education, misc. $1,600,000 Contributions $2,100,000 Insurance & Pensions $4,800,000 Personal Taxes $3,000,000 Total $64,100,000
Source: Planning Decisions, Inc. estimates based on Bureau of Labor Statistics Consumer Expenditure Survey adjusted for island spending patterns.
Casco Bay Islands Economic Impact 14
IV. The Enterprise Sector The Enterprise Sector is the jobs providing sector of the economy. It includes everything from the largest corporation to the smallest self‐employed artisan. It includes for‐profit businesses, non‐profit organizations and government agencies. For the economy of the Casco Bay islands, it includes lobstermen, boatyards, general stores, libraries, public works departments, schools, condo associations, inns, restaurants, self‐employed professionals and scores of other enterprises, large and small. An accurate description of the island economy would list these enterprises by type of product or service provided and lists the total sales and employment for each major category, just as is done for the economy of Cumberland County or the State of Maine or even the United States. Unfortunately, as with the island Household Sector, official data sources do not provide the level of detail needed to describe the magnitude of the Enterprise Sector on the islands. Department of Labor employment and wage data are reported only at the municipal level and coverage for small municipalities is spotty because of non‐disclosure rules. Maine Revenue Service sales tax data have much the same problem. Census data are derived from April 1, 2000 returns, and thus do not capture the extreme seasonality of the island economy. To overcome these shortcomings and arrive at an educated judgment regarding the size of the island Enterprise Sector, Planning Decisions, Inc. pursued a three‐step methodology.6
1. We compiled a list of enterprises from: a. municipal tax assessor data; b. yellow pages, web sites and other island business listings; and c. visiting the islands with local residents.
2. We gathered actual enterprise spending data (where available) from:
a. municipal government budgets; b. condo association budgets; c. other non‐profit enterprise data; d. volume and value of lobster landings data from the Maine Department
of Marine Resources. 6 See Appendix B for a more complete description of the methodology used for estimating the size of the Casco Bay island Enterprise Sector.
Casco Bay Islands Economic Impact 15
3. For enterprises for which we did not have actual spending data we estimated business sales by extrapolating from the Maine economic census:
a. We assembled state average sales per employee data for NAICS codes represented on the islands (including island dependent businesses that may not be located on an island, such as the ferry lines, water taxi’s, tour guide outfitters etc.);
b. We multiplied average sales per employee by estimated number of employees to estimate annual sales;
c. We adjusted estimated annual sales for seasonal operation.
4. We organized the list by product/service category using the North American Industrial Classification System (NAICS) Codes
Using this methodology, we estimate that the total “sales” of the Enterprise Sector of the Casco Bay islands to be approximately $68 million and that the business and agencies that comprise the sector employ nearly 800 people. It is important to note here that while government agencies and non‐profit agencies do not have “sales” per se, their budgets do represent income paid to employees and purchases made from vendors and thus serve as the initial starting point for calculations of economic impact just as do sales for a for‐profit business. Table 4 lists the “sales” and employment estimates by major product category.
Casco Bay Islands Economic Impact 16
Table 4 Sales and Employment Estimates for the Job Creating Enterprises of the Casco Bay Islands, 2007
Industry Description Employment Sales/Expenditures Natural Resource Based 110 $2,400,000 Building and Manufacturing 125 $14,000,000 Wholesalers 25 $7,000,000 Specialty food stores 25 $3,500,000 Retail Stores 70 $6,500,000 Transportation 50 $7,400,000 U.S. Postal Service 15 $1,300,000 Publishing 5 $400,000 Real Estate 20 $2,900,000 Professional & Tech. Services 35 $3,400,000 Health Care 20 $800,000 Entertainment 55 $4,900,000 Accommodation 15 $900,000 Restaurant 40 $1,500,000 Personal Services 65 $3,600,000 Civic & Social Organization 35 $1,300,000 Municipal Government 45 $4,100,000 Public Education 30 $2,000,000 Total 785 $68,000,000
Sources: See Appendix B for sources of data and methods for calculating estimates.
Casco Bay Islands Economic Impact 17
V. Impact of the Islands on the Portland Economy The first purpose of this report is to estimate the size of the Casco Bay island economy. The approximately 2,200 households who reside on the islands for some or all of the year account for approximately $64 million in consumer spending. That is one measure. The approximately 180 enterprises—businesses, non‐profit entities and government agencies—that operate on and around the islands employ nearly 800 people and generate “sales” of nearly $70 million. That is another measure.7 However, these direct consumer expenditures and enterprise sales do not account for the entire economic impact of the island economy. The businesses that sell to island consumers (some on‐island and some off) and the enterprises that operate on the islands purchase goods from suppliers and provide incomes to their employees. These vendors and employees, in turn, make their own purchases in the ever widening economic ripples flowing from the initial island based starting point. All of these indirect effects feed into the larger economy of the Greater Portland area. A second purpose of the report, beyond measuring the direct impact of island consumers and island enterprises, is to measure the indirect impacts of these initial activities. This concept of economic impact is often misunderstood and is probably best explained with respect to a single example. According to the Maine Department of Marine Resources, the total value of lobsters landed in Cumberland County in 2007 was $36.7 million. Dividing this by the 8.3 million pounds landed yields an average landed value of $4.39 per pound. In economic terms, the direct impact of a pound of lobster landed in 2007 was $4.39. In order to land that pound of lobster, however, a lobsterman had to purchase bait and fuel, buy and maintain traps and buoys and rope, amortize and repair his/her boat, pay a stern man and hopefully have enough left over to make the enterprise successful. Each of these suppliers, in turn, made similar payments to his/her own workers and suppliers back up the supply chain. Working up the supply chain, the wholesaler who pays $4.39 for the pound of lobster, adds an amount to cover the costs of docking and transport etc., and a restaurant pays for rent, cooks and wait staff, utilities, advertising, etc., etc. In short,
7 These two measures of economic activity cannot be combined into a single impact because sales of island enterprises to island residents are already counted in resident consumer spending. Only those sales derived from non‐island customers—visitor consumer spending and off‐island business customers—can be added to resident consumer spending to constitute a correct measure of the islands’ total direct economic impact.
Casco Bay Islands Economic Impact 18
the total impact of a $25 lobster dinner contains ever smaller portions of the incomes earned by an ever widening circle of enterprises involved in some small way in meeting that final economic demand. In sum, the total impact of any particular final demand is made up of three components:
1. the direct impact, meaning the sales value of the final demand itself, a lobster dinner for example;
2. the indirect impact, meaning the sales made by businesses producing all the goods and services needed to deliver the final demand; and
3. the induced impact, meaning the sales made by all the businesses meeting the consumer demands of all the workers earning incomes from the direct producer and its indirect suppliers.
Total economic impact is a reflection of both the technological/commercial complexity and the geographic extent of an economy. The financial magnitude of an economic impact depends on how wide a geographic area is included in the analysis. Any local or regional economy—a city, a county, a state, a nation, a group of islands—encompasses three types of transactions:
• transactions that take place within the defined area—the flow of money among local households, businesses and government agencies;
• transactions that bring money into a region—payments for goods or services exported outside the region and payments by visitors to the region; and
• transactions that “leak” money out of the region—payment for goods imported from outside and spending by locals visiting other areas.
The relationship between any initial transaction within a region—a direct impact—and its total impact in that region is called its multiplier. If a particular enterprise is deeply connected to many local businesses and consumers, its direct spending generates many indirect and induced transactions, so it may have a multiplier of 2.0 or even 3.0. This means that $1.00 of direct sales generates $2.00 or even $3.00 of total sales within a region. The smaller a region, the lower its multiplier because portions of the original direct dollar soon “leak” out of the region. For this report, we define the Greater Portland region as Cumberland County, and we pose the impact question as, “What is the total impact on the economy of Cumberland County of the direct economic activity attributable to the Casco Bay islands?”
Casco Bay Islands Economic Impact 19
Attempting to measure all the indirect and induced impacts of the island Household and Enterprise sectors noted above would be virtually impossible. The only way to measure total impact—short of conducting extensive survey research on local vendor relationships—is to use an input‐output model explicitly designed to capture those interconnections. For the purposes of this study, Planning Decisions used the IMPLAN input‐output model for Cumberland County Maine.8 This model contains estimates of the pattern of purchases among 509 industrial sectors as well as estimates of what percentage of these purchases go to county‐based businesses and what percentage go to out‐of‐county businesses. By tracing each dollar of sales from the islands through the county economy, the model estimates the indirect and induced impacts and thus the total impact of the island economy. The results of this analysis indicate that the total economic impact on the Greater Portland economy from the island economy amounts to $116 million in business sales supporting over 1,650 jobs earning total income of just over $50 million. These figures indicate a sales multiplier for island economic activity of 1.6, an employment multiplier of 1.4 and an income multiplier of 1.5.
8 IMPLAN (IMpact analysis for PLANing) is a computer input‐output modeling program originally developed by the US Department of Agriculture Forest Service for resource management planning. It contains mathematical replications of the technological relationships and purchasing patterns that occur among sectors of the Maine economy. A sector is a grouping of businesses in an economy and is based on the North American Industry Classification System (NAICS). IMPLAN uses 509 sectors benchmarked to actual Maine employment in 2004.
Casco Bay Islands Economic Impact 20
Appendix A Island Household Spending Estimates
This section of the report outlines the methodology used to estimate island household spending in Cumberland County, not just spending on the islands. Step 1 – Estimate the Number of Households by Type The first step in this process was to identify the number of different household types on each island. Using assessor’s data we placed housing units into three categories:
1. Year Round – households were put into this category if the physical and mailing address in the assessor’s database matched; 2. Seasonal Local – households were put into this category if the mailing address was different than the physical address, but
was within Maine, New Hampshire or Massachusetts. 3. Seasonal Away – households were put into this category if the mailing address was different than the physical address and
was outside of Maine, New Hampshire or Massachusetts. The categorization of different households was done because each household spends different amounts of time in the area, so would have different spending impacts on the Portland area. For example, a year round household would spend more in the local economy than someone who lives out of State and stays in their island home for a few months a year. Table A1 below displays the results of Step 1.
Table A1. Casco Bay Households by Tax Address and Islands
Housing Type Peaks Diamonds Cliff Cushing/ Other Long Chebeague Total
Year round 426 55 40 0 114 148 783 Seasonal Local 303 123 59 33 190 248 956 Seasonal Away 213 66 42 16 64 84 485 Total 942 244 141 49 368 480 2,224
Casco Bay Islands Economic Impact 21
Step 2 – Estimate Occupancy Rates by Season The next step was to apply occupancy rates to each household type for each season (winter, spring, summer and fall), because each household type would have different occupancy rates during different seasons. We also felt that some of the seasonal units would be rented during the winter or as short term rentals during the summer. These two categories were added to the housing type list because they also impact the local economy but do not fit into any of the existing housing type categories we were using. The percentages shown below in Table A2 were generated through feedback from the Island Advisory Committee and from local realtors who do business on the islands. These percentages were then applied to the Total Households by Housing Type generated in Table A1 earlier.
Table A2. Estimated Occupancy Rate by Household Type Jan‐Mar Apr‐June July‐Sept Oct‐Dec
Housing Type Percentage # HH Percentage
# HH Percentage
# HH Percentage
# HH
Year round 80% 626 95% 744 95% 744 95% 744 Seasonal Local ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ % owner occupied 0% 0 30% 287 25% 239 10% 96 % winter rental 10% 96 8% 72 0% 0 10% 96 % short term rental 0% 0 20% 191 75% 717 0% 0 Seasonal Away ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ % owner occupied 0% 0 20% 97 25% 121 10% 49 % winter rental 10% 49 8% 36 0% 0 10% 49 % short term rental 0% 0 20% 97 75% 364 0% 0
For the purposes of this report, there was no differentiation between winter and short term rentals of Seasonal Local and Seasonal Away homeowners. Thusly, Table A3 below displays the number of households by season we estimated for this report.
Casco Bay Islands Economic Impact 22
Table A3. Estimated Occupied Households by Spending Type
Housing Type Jan‐Mar Apr‐June July‐Sept Oct‐Dec
Year round 626 744 744 744 Seasonal local owner 0 287 239 96 Seasonal away owner 0 97 121 49 Winter Rental 144 108 0 144 Short Term Rental 0 288 1,081 0 Total 771 1,524 2,185 1,032
Step 3 –Occupancy Type Distributed by Household Income and Size Not all households are the same; they have different incomes and are made up of a different number of people. Our next step was to estimate the makeup of each household by its income level and size. Table A4 below outlines how we broke down each housing type presented in Table A3 earlier.
Table A4. Distribution of Households by Income Level and Size Income Level Less Than $30,000 $30,000 to $70,000 $70,000 and Over
HH Type
1 Person HH
2 Person HH
3 Person HH
4 Person HH
5 Person HH
1 Person HH
2 Person HH
3 Person HH
4 Person HH
5 Person HH
1 Person HH
2 Person HH
3 Person HH
4 Person HH
5 Person HH
Year round 8% 9% 3% 2% 1% 11% 13% 5% 3% 2% 15% 16% 6% 4% 2% Seasonal Local 5% 10% 0% 0% 0% 0% 20% 10% 10% 0% 0% 25% 10% 10% 0% Seasonal Away 5% 10% 0% 0% 0% 0% 25% 8% 8% 0% 0% 30% 8% 8% 0% Winter Rental 20% 20% 20% 20% 0% 5% 5% 5% 5% 0% 0% 0% 0% 0% 0% Short Term Rental 4% 8% 3% 4% 1% 5% 12% 5% 5% 2% 9% 21% 9% 9% 3%
The data used to breakdown the different housing types by income and size came from various sources. The Year round breakdown above was based on Claritas and US Census Data, the Winter Rental breakdown was based on Maine Housing Authority data (more specifically Portland Rental Housing Facts for 2007), and the Short Term Rental breakdown was based on data from the 2007 study
Casco Bay Islands Economic Impact 23
by Longwoods. The two Seasonal types (Local & Away) was based on our best estimates from feedback and information from the Island Advisory Committee. Step 4 – Household Spending Pattern The next step was estimating the spending patterns of households; that is, what households spend money on and the amount they spend. We used Bureau of Labor Statistics’ Consumer Expenditure Survey data as a basis for estimating household spending for year round, seasonal and winter rental households (different methods and data for estimating short term renters was used and is outlined below). Because this data is an average for all Americans, we had to readjust these figures to reflect expenditure patterns for households on Casco Bay Islands. For example, transportation costs of islanders would be higher on average because of the additional need to pay for ferry travel. We increased the average cost for Food at Home, Shelter costs and Transportation. Conversely, we had to reduce the average payments in some categories. We reduced the average payments for the Food Away from Home, Household Operations, Housekeeping Supplies, Household Furnishings & Equipment, Entertainment and Personal Care Products & Services categories. This was done to ensure that total expenditures were the same between the average US household and an Island household. All other category payments remained the same. Table A5 below displays household spending for Casco Bay Island households by household income and size.
Casco Bay Islands Economic Impact 24
Table A5. Casco Bay Island Household Spending by Household Income and Size Less Than $30,000 $30,000 to $70,000 $70,000 and Over
1 Person HH
2 Person HH
3 Person HH
4 Person HH
5 Person HH
1 Person HH
2 Person HH
3 Person HH
4 Person HH
5 Person HH
1 Person HH
2 Person HH
3 Person HH
4 Person HH
5 Person HH
Food at home $1,529 $2,803 $3,162 $4,305 $4,331 $2,015 $3,145 $3,910 $4,346 $5,013 $2,386 $4,129 $4,888 $5,904 $7,447
Food away from home $732 $1,095 $1,086 $1,239 $987 $1,448 $1,725 $2,026 $2,334 $2,086 $2,468 $3,306 $3,381 $3,733 $3,653
Alcoholic beverages $169 $179 $125 $93 $68 $364 $330 $306 $247 $219 $779 $680 $587 $485 $410
Shelter $6,001 $6,479 $6,990 $7,827 $8,039 $10,619 $9,235 $10,264 $11,103 $12,049 $17,891 $18,566 $18,913 $19,974 $20,544
Utilities, fuels, and public services $1,776 $2,719 $2,817 $2,993 $3,441 $2,460 $3,260 $3,637 $3,789 $3,980 $3,090 $4,133 $4,636 $4,964 $5,284
Household operations $208 $283 $309 $404 $277 $374 $432 $571 $741 $503 $783 $918 $1,533 $1,856 $1,550
Housekeeping supplies $195 $335 $270 $359 $391 $289 $465 $442 $523 $483 $399 $710 $713 $810 $928
Household furnishings & equip. $417 $671 $545 $574 $635 $966 $1,187 $1,057 $1,072 $1,071 $1,907 $2,459 $2,397 $2,642 $2,605
Apparel and services $475 $785 $1,067 $1,333 $1,393 $940 $1,045 $1,586 $1,627 $1,742 $1,719 $2,090 $2,356 $2,708 $2,929
Transportation $3,368 $5,610 $5,681 $7,071 $6,127 $6,935 $9,609 $11,166 $11,139 $11,180 $11,172 $16,732 $17,611 $18,784 $19,472
Healthcare $1,634 $2,792 $1,225 $1,187 $1,020 $1,867 $3,490 $2,624 $2,390 $2,320 $2,624 $4,130 $3,924 $3,707 $3,529
Entertainment $423 $609 $539 $581 $579 $893 $1,015 $1,031 $1,151 $986 $2,040 $2,253 $1,967 $2,306 $2,494
Personal care products & services $192 $242 $228 $295 $275 $323 $387 $420 $434 $413 $495 $698 $716 $743 $691
Reading $51 $55 $26 $28 $28 $94 $96 $63 $57 $46 $160 $178 $146 $156 $131
Education $505 $275 $422 $366 $373 $367 $427 $668 $752 $611 $785 $1,409 $2,294 $2,424 $2,904
Tobacco products $163 $252 $290 $307 $322 $193 $302 $330 $316 $303 $139 $221 $261 $212 $248
Miscellaneous $300 $372 $263 $263 $363 $568 $579 $541 $574 $527 $1,223 $1,092 $1,068 $908 $957
Cash contributions $818 $879 $426 $563 $437 $1,661 $1,521 $1,090 $1,014 $1,136 $5,530 $3,762 $2,955 $2,613 $3,345
Personal insurance and pensions $681 $977 $1,241 $1,461 $1,373 $3,957 $3,678 $4,310 $4,598 $4,196 $10,417 $11,797 $11,883 $12,074 $12,212
Personal taxes $309 $182 ‐$360 ‐$768 ‐$628 $2,448 $1,341 $1,098 $588 $29 $7,119 $7,577 $6,114 $5,621 $5,322
Total $19,944 $27,592 $26,353 $30,483 $29,830 $38,781 $43,269 $47,142 $48,794 $48,893 $73,124 $86,838 $88,341 $92,623 $96,652 The definition for each of the industry sectors in Table A5 is presented below in italics.
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Food at home refers to the total expenditures for food at grocery stores (or other food stores) and food prepared by the consumer unit on trips. It excludes the purchase of nonfood items. Food away from home includes all meals (breakfast and brunch, lunch, dinner and snacks and nonalcoholic beverages) including tips at fast food, take‐out, delivery, concession stands, buffet and cafeteria, at full‐service restaurants, and at vending machines and mobile vendors. Also included are special catered affairs, such as weddings, school lunches, and meals away from home on trips. Alcoholic beverages includes beer and ale, wine, whiskey, gin, vodka, rum, and other alcoholic beverages. Shelter includes owned and rented dwellings, as well as other lodging. It includes interest on mortgages, interest on home equity loans and lines of credit, property taxes and insurance, refinancing and prepayment charges, homeownersʹ insurance, expenses for repairs and maintenance contracted out, expenses of materials for owner‐performed repairs and maintenance for dwellings, rent paid for dwellings, rent received as pay, parking fees, all expenses for vacation homes, school, college, hotels, motels, and other lodging while out of town. Utilities, fuels, and public services includes natural gas; electricity; fuel oil and other fuels, such as wood, kerosene, coal, and bottled gas; water and other public services, such as garbage and trash collection, sewerage maintenance, septic tank cleaning; and telephone charges. Housekeeping supplies includes laundry and cleaning supplies, cleaning and toilet tissues, stationery supplies, postage, delivery services, miscellaneous household products, and lawn and garden supplies. Household furnishings and equipment includes household textiles (for example linens, curtains and drapes), furniture, floor coverings, appliances, and miscellaneous household equipment (which can include typewriters, luggage, lamps and light fixtures, etc.). Apparel and services includes all personal clothes (coats and jackets, sweaters and vests, trousers and slacks, shorts and short sets, shirts, underwear, nightwear, hosiery, and other accessories) and related services (alterations and repairs, clothing rental, clothing storage, dry cleaning and sent‐out laundry) Transportation includes vehicle purchases, vehicle finance charges, gasoline and motor oil purchases, maintenance and repairs, vehicle insurance, public transportation and vehicle rental. Healthcare includes health insurance, medical services, prescription drugs, and medical supplies.
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Entertainment includes fees and admissions to events (sporting and theater events, fairs, etc.), television, radio, and sound equipment, pets, toys, hobbies, and playground equipment, and other entertainment equipment and services (indoor exercise equipment, athletic shoes, bicycles, rental and repair of sports equipment, photographic equipment and supplies, etc.). Personal care products and services includes products for the hair, oral hygiene products, shaving needs, cosmetics and bath products, electric personal care appliances, other personal care products, and personal care services for males and females. Reading includes subscriptions for newspapers and magazines; books through book clubs; and the purchase of single‐copy newspapers, magazines, newsletters, books, and encyclopedias and other reference books. Education includes tuition; fees; and textbooks, supplies for elementary through colleges and other schools. Tobacco products and smoking supplies includes cigarettes, cigars, etc. Miscellaneous includes safety deposit box rental, checking account fees and other bank service charges, credit card memberships, legal fees, accounting fees, funerals, cemetery lots, union dues, occupational expenses, expenses for other properties, and finance charges other than those for mortgages and vehicles. Cash contributions includes cash contributed to persons or organizations outside the consumer unit, including alimony and child support payments; care of students away from home; and contributions to religious, educational, charitable, or political organizations. Personal insurance and pensions includes life, endowment, annuities, and other personal insurance and retirement, pensions, and Social Security. Personal Taxes includes federal income taxes, state and local income taxes, and personal property and other personal taxes paid. To estimate short term rental household spending patterns we used the Longwoods 2006 Visitor Study of Travel and Tourism in Maine. This is a yearly survey completed by Longwoods International of visitors (both in‐state and out of state) to Maine. Part of the data collected is expenditure patterns and amounts made by these visitors. Table A6 below displays the average household
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spending patterns for seasonal visitors to Maine. Please note that due to the limitations in the data, we could not compute the average spending broken down by HH income and size.
Table A6. Short Term Rental Household Spending Longwoods Expenditure
Sectors Per HH
Expenditures Retail $139 Restaurant Food $178 Transportation $118 Accommodations $198 Recreation $79
It is also important to note that we adjusted the transportation sector presented in Table A6 above to account for the cost of ferry travel. Also, because the sectors used in the Longwoods study were not the same as the sectors used in by the US Bureau of Labor Statistics we split up the amounts in the Longwoods data to be properly formatted into the BLS data. Step 5 – Computing Total Island Household Expenditures The final step in this process was to combine the household spending patterns with the estimated number of households by type. Table A7 below displays the total estimated island household spending, by industry, in Cumberland County for one year.
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Table A7. Total Island Household Spending in Cumberland County (in thousands) Less Than $30,000 $30,000 to $70,000 $70,000 and Over
1 Person HH
2 Person HH
3 Person HH
4 Person HH
5 Person HH
1 Person HH
2 Person HH
3 Person HH
4 Person HH
5 Person HH
1 Person HH
2 Person HH
3 Person HH
4 Person HH
5 Person HH
Food at home $158 $393 $174 $205 $46 $205 $585 $282 $243 $101 $322 $942 $404 $376 $150 Food away from home $94 $234 $89 $101 $22 $158 $427 $197 $183 $59 $330 $880 $346 $315 $96 Alcoholic beverages $14 $18 $5 $3 $0 $30 $43 $16 $10 $3 $83 $104 $33 $20 $6 Shelter $594 $949 $386 $397 $90 $969 $1,735 $791 $684 $237 $2,064 $3,898 $1,492 $1,274 $391 Utilities & fuels $156 $289 $116 $102 $25 $206 $475 $223 $178 $57 $331 $716 $294 $244 $76 Household operations $17 $28 $13 $14 $2 $31 $56 $31 $29 $7 $84 $141 $85 $77 $22 Housekeeping supplies $16 $33 $11 $12 $3 $24 $61 $24 $20 $7 $43 $109 $40 $33 $13 Household furn & equip. $50 $127 $45 $50 $12 $100 $245 $94 $80 $30 $239 $537 $202 $178 $60 Apparel and services $55 $138 $67 $76 $18 $97 $227 $123 $102 $40 $218 $481 $199 $180 $65 Transportation $335 $752 $292 $319 $63 $628 $1,631 $780 $620 $199 $1,285 $3,304 $1,291 $1,097 $336 Healthcare $138 $275 $51 $40 $7 $156 $454 $140 $94 $33 $281 $635 $218 $153 $50 Entertainment $62 $164 $61 $72 $17 $107 $288 $120 $110 $40 $277 $620 $227 $212 $75 Personal care $31 $85 $32 $40 $10 $46 $141 $60 $55 $21 $87 $267 $108 $99 $33 Reading $4 $5 $1 $1 $0 $8 $12 $3 $2 $1 $17 $27 $8 $6 $2 Education $43 $27 $17 $12 $3 $31 $56 $36 $29 $9 $84 $217 $128 $100 $41 Tobacco products $14 $25 $12 $10 $2 $16 $39 $18 $12 $4 $15 $34 $15 $9 $4 Miscellaneous $25 $37 $11 $9 $3 $47 $75 $29 $22 $8 $131 $168 $59 $38 $14 Cash contributions $69 $87 $18 $19 $3 $139 $198 $58 $40 $16 $593 $578 $164 $108 $48 Personal ins. $52 $82 $51 $50 $10 $331 $360 $175 $121 $60 $1,116 $1,349 $509 $345 $175 Personal taxes $26 $18 ‐$15 ‐$26 ‐$4 $205 $174 $59 $23 $0 $763 $1,165 $340 $232 $76 Total $1,954 $3,765 $1,438 $1,507 $330 $3,532 $7,282 $3,260 $2,657 $933 $8,363 $16,172 $6,162 $5,097 $1,732
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Appendix B Business Sales Estimates
This section of the report outlines the methodology used to estimate 1) the sales of island businesses, 2) the proportion of island business sales generated by non‐island households, and 3) the sales of mainland businesses which depend on the islands (cruises, etc). 1. Sales of Island Businesses Step 1 – Estimate Number of Businesses by Type The first step in estimating the amount of business sales on the islands was to first count, or estimate, the number of businesses and what sort of business they were. The Island Advisory Committee was given the task of creating a list of all of the businesses on each of their islands consisting of what sort of business each was and the number of full time equivalent employees working at each business. Because of the time and fiscal limitations of this study we were not able to survey each business to estimate their business sales. We thusly had to use the estimated employment figures provided by the committee members to estimate sales numbers. Step 2 – Computing Average Sales per Employee Once we received the lists from each committee member we divided the businesses up by industry sector, using NAICS codes (North American Industry Classification System). So for example, an island hotel was put into the Accommodation sector or laundry‐mat was put into the Dry‐cleaning and Laundry Services sector. To estimate business sales based on employment size we used the 2002 Economic Census for the State of Maine. From that we were able to compute for each industry the average sales per establishment, the average number of employees per establishment, the average sales per employee and what percentage of sales went towards payroll. Step 3 – Estimating Sales Numbers The final step in this process was to match up the estimated number of employees for each industry sector we computed in Step 1 with the average sales per employee by each industry sector computed in Step 2. The resulting numbers for each sector is displayed below in Table B1.
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Table B1. Estimated Business Sales by Industry Sector for Casco Bay Islands
Industry Description Employment Annual Sales/ Expenditures
Natural Resource Based 110 $2,400,000 Building and Manufacturing 125 $14,000,000 Wholesalers 25 $7,000,000 Specialty food stores 25 $3,500,000 Retail Stores 70 $6,500,000 Transportation 50 $7,400,000 U.S. Postal Service 15 $1,300,000 Publishing 5 $400,000 Real Estate 20 $2,900,000 Professional & Tech. Services 35 $3,400,000 Health Care 20 $800,000 Entertainment 55 $4,900,000 Accommodation 15 $900,000 Restaurant 40 $1,500,000 Personal Services 65 $3,600,000 Civic & Social Organization 35 $1,300,000 Municipal Government 45 $4,100,000 Public Education 30 $2,000,000 Total 785 $68,000,000
The industry’s in the above table are combinations of, in some cases, several different four digit NAICS code industries. Combining industries was done simply for presentation purposes, so as to ensure confidentiality for some of the smaller industries. 2. Proportion of Island Business Sales Generated by Non‐Island Households In completing this report we also had to split up the island business sales by their source; that is, whether a business received its revenue from on island households (such as an oil wholesaler) or if a business received its revenue from off island sources (such as an island hotel). To distinguish between the two we took the island business sales, noted above, and estimated as best we could where each industry’s revenue would be coming from. Once we had a total for each they were run through the IMPLAN computer model for Cumberland County.
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3. Sales of Mainland Businesses Dependent on the Islands The final aspect of computing the impact of businesses associated directly with the Casco Bay Islands was to measure the impact of businesses that rely on the existence of the islands, but are not located on them. We inventoried ten of these businesses, which included businesses that offered Casco Bay cruises and travel between the islands. We estimated the revenue of these businesses by multiplying the cost of their services (as stated in ads or websites) by what we felt would be the yearly number of passengers or users of their services. For the Casco Bay Lines these users consisted of only day‐trippers to the islands, not island households. Expenditures made by island households for these services were accounted for in the island household expenditures section.
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