2013

Survey of the Current and Potential Impact of Local Procurement by Philadelphia Anchor Institutions

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The City of Philadelphia is home to numerous world-class universities and health systems. They are significant contributors to the local economy. They are often referred to as “anchor institutions,” in that their identity is inextricably linked to that of their geographic location. They are known for their commitment to and partnership with their immediate neighborhoods and the City as a whole. Procurement represents one facet of their contribution to the local economy, as they procure billions of dollars of goods and services each year, and each procurement decision represents an opportunity to choose a Philadelphia-based vendor and support economic activity and job creation within the City. It is in the City’s interest to know the benefits associated with local spending by anchor institutions.

The purpose of this report, in addition to highlighting some local and national best practices, is to explore the current and potential impact on the Philadelphia economy of local procurement by anchor institutions. It is estimated that anchor institutions in Philadelphia have a total annual operating budget of about $14 billion, of which about 38 percent, or $5.3 billion, is non-payroll spending and therefore represents procurement opportunities for which a local vendor may be used. Of that $5.3 billion in annual procurement opportunities, currently about 52 percent, or $2.7 billion, is with local vendors.

 

Citywide Ferry Study for the New York City Economic Development Corporation

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Econsult Solutions, Inc. (ESI) contributed to The Citywide Ferry Study 2013 report commissioned by New York City Economic Development Corporation (NYCEDC). ESI assessed the real estate and development benefits attributable to the East River Ferry.

ESI’s analysis focused on the real estate and development benefits, the direct user benefits, wider economic benefits, the transit system benefits, and system redundancy.

ESI found that ferry service increased the value of homes that were within a band extending to 1/8 mile away by 8.0%, and 2.5% for all homes within a 1/8 of a mile to 1/4 mile band away. In addition, new residential developments within 1/4 mile to service, increased by nearly 350 additional residential units and 487,238 residential square feet. In several cases, the total user benefits were greater than total operating costs, meaning that the subsidy was basically less than the total net benefit for users after paying the fare. The report found agglomeration effects for worker accessibility with greater service, as well an easing impact on the transit network, as ameliorating overcrowding on New York’s typical public transit system. Finally, as tragically shown by September, 11 and Hurricane Sandy, the ferry service can be established relatively easily and quickly to respond to transit service disruptions.

 

U.S. Kitchen Incubators: An Industry Snapshot

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Econsult Solutions, Inc. (ESI) conducted a State of the Industry Report on Kitchen Incubators, a first of its kind study on national approaches to aiding culinary micro-enterprise. A kitchen incubator serves as a space for culinary entrepreneurs to rent licensed kitchen space and benefit from business assistance services.

Gregory Heller, ESI Senior Advisor, who specializes in food systems and urban economic development spearheaded the report. This report compliments and adds to the breadth of ESI’s extensive research focused nationally on best practices for kitchen incubators.

 

The City of Philadelphia and Its Higher Eds: Shared Goals, Shared Missions, Shared Results

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The City of Philadelphia is home to a diverse array of non-profit institutions that reach every neighborhood. Under the leadership of Mayor Nutter and City Council, the non-profit sector has forged a strong working partnership that allows non-profits to flourish while providing important benefits for Philadelphia’s citizens.

This partnership – this “Philadelphia Model” – differs from relationships in other cities between government and non-profits, where controversy, confrontation, and litigation often follow in the wake of municipal demands for increasing financial support from the non-profit sector. The report describes the Higher Eds in partnership with City government and with community-serving organizations, driven by a shared desire for the collaboration to serve the respective missions of the City, community serving organizations, and higher education in ways that allow each to thrive.

Higher Eds are some of the largest economic engines in Philadelphia. As a sector, they are some of the City’s largest employers, attract students and visitors from around the world, and lead major capital projects. The Higher Eds’ annual economic impact within Philadelphia is estimated to be $10.9 billion, supporting 84,000 jobs and generating $211 million in City tax revenues.

This work is a fulfillment of the Philadelphia Model: colleges and universities serving their missions of higher education and research in ways that lead to innovative partnerships for the purpose of providing necessary services and resources to every neighborhood in Philadelphia. What results is an extraordinary amount of annual in-kind contributions by the Higher Eds – $641 million per year in scholarships, community services, public safety, and other resources – in support of the city and its residents, spanning every neighborhood and every conceivable type of resource and program.

The Impacts of SEPTA Regional Rail Service on Suburban House Prices

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Econsult Solutions, Inc. (ESI) used data on single-family house transactions over the 2005 to 2012 period in Bucks, Chester, Delaware and Montgomery counties to estimate the property value premium that results from being located close to a Regional Rail station. Using a hedonic regression model, we found that proximity, service frequency and commuter parking all contribute strongly to suburban house values.

Annual Philadelphia Disparity Study

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From 2006 to date, Econsult Solutions, Inc. (ESI) has been retained by the City of Philadelphia to conduct an annual disparity study (Milligan and Company partnered with ESI beginning with the FY 2008 study).  The study is designed to analyze the city of Philadelphia’s utilization of Minority Business Enterprises (MBEs), Women Business Enterprises (WBEs) and Disabled Business Enterprises (DSBEs) – collectively known as M/W/DSBEs – relative to the availability of such firms to compete for city business.

The studies help to determine the extent to which disparity exists, as well as provide critical data in the development and formulation of the finance director’s annual participation goals. It is an important component of safeguarding the public interest by identifying and rectifying instances of discrimination and proactively seeking ways to promote the inclusive participation of M/W/DSBEs in economic opportunities.

Disparity is measured as the ratio of M/W/DSBE utilization to M/W/DSBE availability, with “utilization” for each category and industry sector defined as the total dollar value of contracts awarded to for-profit M/W/DSBE prime contractors and sub-contractors certified by the city of Philadelphia’s Office of Economic Opportunity (OEO) divided by the dollar value of all city contracts awarded to for-profit prime contractors and sub-contractors, as recorded in OEO’s Annual Participation Report.

A disparity ratio greater than 1.0 represents over-utilization, whereas a disparity ratio less than 1.0 represents under-utilization.

Each year, ESI makes recommendations for future study methodology and scope, policy and programming, data collection and goal-setting. These recommendations have included streamlining of certification and contract processes, centralizing and automating processes via information technology systems and building redundancy into the process to avoid bottlenecks and provide necessary checks and balance.