HomeMy WebLinkAbout02/04/1992, C-9 - UCSB ECONOMIC FORECAST PROJECT MEETING DATE:
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COUNCIL AGENDA REPORT ITEM NUMBER:_
FROM: William C. Statler, Director of Finance
SUBJECT: UCSB ECONOMIC FORECAST PROJECT
CAO RECOMMENDATION
Approve participation in the UCSB Economic Forecast Project at the Advisory Sponsor
level of $2,500 annually.
DISCUSSION
Currently, there is no authoritative, independent source of detailed empirical information
regarding economic, demographic, and regional business trends in the San Luis Obispo area.
The UCSB Economic Forecast Project (EFP) was established in 1981 in order to provide
this kind of information for the Santa Barbara area as well as to develop short-term and
long-term forecast models based on this data.
Affiliated with the University of California at Santa Barbara, the EFP uses sophisticated
econometric models that incorporate the most recent California and national forecasts from
the UCLA Business Forecasting Model in conjunction with data generated from the EFP
on the local economy.
The EFP proposes to expand their current research activities to include a thorough analysis
and investigation of the San Luis Obispo economy. In order to do this, however, the EFP
(which is a non-profit activity of the University of California) needs the support of private
and public sector organizations as sponsors of their research.
What kind of information will the EFP provide?
A comprehensive summary of the proposed project is provided in Attachment A. Products
and services will include an annual databook, quarterly updates, ongoing presentations, and
custom consulting services. As reflected in the attachment, the EFP data base is extensive.
Several staff members from City of San Luis Obispo have previously attended presentations
made by Mark Schiepp, Director of the EFP, and were very impressed with the quality,
type, and detail of information that has already been compiled by the EFP for the San Luis
Obispo area.
Why do we need this kind of information
The financial health of our City is directly related to the health of the local economy. It
will be increasingly difficult to maintain our financial health and independence without a
better understanding of the factors that affect our local economy.
How is this project f coded?
The EFP for San Luis Obispo will be funded on a subscription basis by firms and
organizations who are interested in receiving these services. Sponsorship levels and benefits
are summarized in Attachment B. Organizations that have already committed to this
project include:
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CDUNCII_ AGENDA REPRT
■ Mid State Bank ■ Wilma Pacific
■ Cuesta Title ■ Chevron Land Company
■ Ticor Title ■ Heritage Oaks Bank
■ ARCS Mortgage ■ LKS Group
Although not yet committed, several of the cities in the County have also expressed interest
in sponsoring this project. As reflected in Attachment A, a minimum commitment of
$30,000 is required to begin the project, with annual funding requirements of $58,000.
Based on the costs of the project and the level of benefit to the City, it is recommended
that the City fund its participation at the Advisory Sponsor level of $2,500 annually.
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FISCAL IMPACT
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Funding for this activity is available in the Economic Stability Program which was allocated
$96,000 for 1991-92 (page D-93 of the 1991-93 Financial Plan). To date, $13,000 has been
committed from this program, leaving a balance of $83,000 available to support the
recommended funding level of $2,500 for 1991-92.
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ATTACHMENTS
A. UCSB Economic Forecasting Project Summary
B. Summary of Sponsor Levels and Benefits
ON FILE IN THE COLNCII, OFFICE
■ Comprehensive description of the UCSB Forecast Project.
■ Copy of the 1991 Economic Outlook for Santa Barbara prepared by the UCSB
Economic Forecast Project
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Attachment
The UCSB Economic Forecast Project
Details of the research project for SAN LUIS OBISPO
Principal Objectives of the Forecast Project
The Economic Forecast Project was established in 1981 to provide the Santa Barbara
business and planning community with accurate and detailed information on economic,
demographic, and regional business trends in the tri-counties area. The focus of our work
is to collect ongoing information about the changing business and economic environment
and to monitor the health and welfare of the economy from the assessment of these data.
The Forecast Project also provides projections of local economic activity by sector and
by county, and interprets the results of the projections in terms of the health and welfare
of the region. In understanding the structure and composition of the regional economies
comprising the tri-counties area, we are better equipped to assess the implications on the
'business community of various policies pursued by local, state, or federal governments,
or by uncontrollable events which affect the region.
The Database
In pursuing our objectives, we have had to assemble and maintain a very large and
diverse database of economic and business indicators for the local area. The database
is continually updated and expanded to include information necessary for sound
community planning and investment decisions.
The creation and maintenance of the database has allowed us to monitor historical
business and economic activity over a broad range of industries and geographical
subareas of San Luis Obispo, Santa Barbara, and Ventura counties. Furthermore, the
database can be accessed by sponsoring organizations of the Forecast Project if custom
and updated economic data are needed throughout the year.
The Forecast Models
The Forecast Project has developed forecast models for the Santa Barbara County
economy and is currently developing a similar model for San Luis Obispo. The two Santa
Barbara models enable a short term and long term forecast. Both are econometric
models that consist of a series of mathematical equations representing local economic
relationships. The models incorporate the most recent California and U.S.forecasts from
the UCLA Business Forecasting Model. The state and national forecasts are important
because of their influential relationship on the tri-counties region. Annual projections for
the local economies are made and updated regularly as the state and national forecasts
change. The San Luis Obispo model that is currently underway is a quarterly short term
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forecasting model that projects economic activity quarterly for 3 years hence. 1992 -
1995 projections for employment, income, construction, population, inmigration, retail
sales, and the banking sector will be made for the first forecast.
Current Products and Scope of Services
The current projects for Santa Barbara include an annual databook and forecast for the
Santa Barbara County economy, a quarterly newsletter which updates_ the annual
databook, ongoing special slide presentations that update and expand on the annual
projections and quarterly newsletter reports, and custom consulting services for local
businesses.
San Luis Obispo
The Forecast Project currently and routinely monitors general information on San Luis
Obispo County and cities. Furthermore, we continue to collect a significant amount of
specific economic and business information for the county which is never shared with the
business and planning community of San Luis Obispo county. Many investment and
planning decisions will have to be continuously made concerning growth and no-growth,
population and business expansion, and general economic health. The database and
forecast models we now have underway and wish to extend and expand will be able to
provide private and public decision makers with timely and important economic
information from which better decision making can proceed.
We currently produce a 60 page forecast for the Santa Barbara County economy, entitled
°The Santa Barbara Economic Outlook.' A book with a similar format will be produced
for San Luis Obispo County. We regularly make economic assessment and projection
presentations to the Santa Barbara business community. We also wish to make exclusive
commentary and slide presentations to sponsoring business and planning groups within
San Luis Obispo County. For sponsoring organizations, custom data and information
services and presentations are available from the use of sponsor credits. Regular
updates to our annual presentation i.e., quarterly presentations about the changing
environment may be requested
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Estimated Funding Level
In pursuing this expansion of our research and analysis, it will be necessary for local
organizations to become sponsors of the Economic Forecast Project for the exclusive
purpose of developing the San Luis Obispo economic and business database and
forecast models. The approximate cost associated with each project component is
described briefly as follows:
(1) The compilation of an annual San Luis Obispo databook
will require an approximate funding level of. $30,000
(2) An annual presentation to sponsors of the project $10,000
(3) To upgrade and make available to sponsors our databank
on an ongoing basis with regular updates during the
year as data change or become revised will involve
an additional level of funding to support graduate
student research on a continuous year-round basis.
The approximate cost for 2 graduate students: $15,000
(4) To produce the quarterly newsletter, an small additional
cost is required to compile the data updates into
presentable form. For administration, layout, design,
publication, and mailing of the newsletter,
3 times per year: $3,000
Total annual funding level needed: approximately $58,000
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Sponsorship of the Attachment � ,.
UCSB Economic Forecast Project
The Economic Forecast Project is supported entirely through individual and corpo-
rate sponsors from Santa Barbara and San Luis Obispo Counties. The six "levels" of
sponsorship and their annual fees are described below.
1. Partner (Individuals 5. Leading Sponsor— $5000
and Small Businesses) —$500 Includes ten (10)admissions to the Forecast
Includes one admission to the Forecast Semi- Seminar, fifty (50) copies of the annual Eco-
nar and one copy of the annual Economic nomic Outlook, recognition in all project lit-
Outlook, with recognition in the publication erature, 500 word statement and logo in the
as a Partner Sponsor. annual Economic Outlook and $4,000 in
special services provided by the Economic
2 Corporate (Minimum Forecast Project.*
Corporate Sponsorship) — $750
Includes two (2) admissions to the Forecast 6. Founding Sponsor—$107000
Seminar, four(4)copies of the annual Eco- Includes twenty (20) admissions to the Fore-
nomic Outlook, recognition in all project lit- cast Seminar, one hundred (100)copies of
erature, 500 word statement and logo in the the annual Economic Outlook, recognition in
annual Economic Outlook and $600 in spe- all project literature, full page statement and
cial services provided by the Economic Fore- logo in the annual Economic Outlooly and
cast Project* $9,000 in special services provided by the
Economic Forecast Project*
3. Business Associate —$1500
Includes four(4) admissions to the Forecast All sponsors also receive
Seminar, ten (10) copies of the annual Eco-
nomic Outlook, recognition in all project lit- a a subscription to the quarterly Economic
erature, 500 word statement and logo in the Outlook newsletter throughout the year,
annual Economic Outlook and $1,200 in and
special services provided by the Economic ® exclusive admission to the mid-year local
Forecast Project.* economic update seminar, in November
4. Advisory Sponsor—$2500
Includes six (6) admissions to the Forecast *Special services include.custom reports and stud-
Seminar, twenty-five(25)copies of the an- ies, access to the Forecast Project data bank, special
nual Economic Outlook, recognition in all presentations, other consulting services, eta
project literature, 500 word statement and
logo in the annual Economic Outlook and
$2,000 in special services provided by the
Economic Forecast Project.*
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