Travis County Commissioners Court
Tuesday, October 25, 2011 (Agenda)
Item 30
This morning we indicated we would call up item 30 at 113067:89:30, receive briefing on the Lake Travis economic impact report regarding the fiscal and economic impacts of low lake levels.
Commissioner Huber.
>> we have todd larue who is the lead consultant who did this study for Travis County and a whole group of stakeholders and before he starts I'd like to frame this.
it's been a while since we discussed this at court, but there's been a need in -- well, since the highland lakes were established, the policy -- water policy making related to our water in the highland lakes as rather fragmented across the state.
and particularly lcra, but others as well have never taken into account the economic impacts of some of those decisions that they make related to water in Lake Travis and the other highland lakes.
there's been a need for some time given the volume of growth on those lakes to take a look at the economic impact, and Travis County, for example, has kind of two major dogs in this hunt.
one is our parks and boat ramps on Lake Travis and the other is our financial revenues we realize from the property taxes.
so I took the lead on this last year and pulled together a group of stakeholders and we -- around the lake and I would like to just list those because in addition to Travis County we have the city of Austin, they actually have municipal frontage and -- on the lake.
the city of Lakeway, lago vista, Jonestown chamber of commerce, city of lago vista, Lake Travis chamber of commerce, Lakeway m.u.d., samsung, village of Briarcliff, village of point venture, wcid 17 and the water control and improvement district at point venture.
I hope I didn't miss somebody.
but we had literally every municipality around the lake that front on the lake, and the larger water districts and the chambers of commerce and economic development arms out there participated in this.
and all contributed funds.
Travis County, t.n.r.
found $20,000 for Travis County to contribute.
and we researched and hired a consultant to do this study.
and todd is going to give you the summary of the results of that study.
>> thank you very much.
thank you for having me here this morning.
as Commissioner Huber said I'm going to walk through kind of the highlights of the study we did.
and, you know, first I'm going to talk through some of the objectives and the background and then talk about some of the key baseline findings we have and the impact associated with low water levels and water quality.
so first, you know, what prompted the study.
and it was really concern about low lake levels and potential deteriorating water quality.
and the negative economic impact it has on the region surrounding Lake Travis.
really our first objective was to get a baseline understanding of the revenue impacts associated with development and economic activity within the study area.
so revenue impacts being basically tax revenues to the county and local municipalities.
and then secondly is to quantify the impacts of low lake levels and deteriorating water quality.
and so it's important to point out what we did not study, and what we didn't cover is Lake Travis' role as a municipal water source, an industrial water source.
and this is important because, you know, one could argue that a lot of the growth and development of the Austin region would not have happened without a reliable and consistent supply of water.
and
>> [indiscernible] future economic growth could be constrained without a consistent reliable source of water.
we didn't look at that specifically and that's a big one.
another one is its value as an amenity.
what I mean by that is you can argue that some of the economic growth in Austin occurs because of the quality of life that Lake Travis contributes to the greater region and that employers have opted to come here due to a number of quality of life factors, one of which could be the existence of Lake Travis.
there's a value associated with that.
so we didn't look at those two things.
what we focused on were short-term economic and revenue exacts associated with fluctuating water levels.
the study area as Commissioner Huber outlined and all the municipalities within it, it's bound by highway 1431 to the north, the Travis County line to the west, highway 71 to the south and highway 620 on the east side.
and quickly going through some demographics in the area, there are about 5,000 households back in 1990, and as you can see with the green dots, quite a bit of household growth occurred within the study area which is outlined in black dotted lines.
so it was -- the population more than tripled, nearly quadrupled over that 20-year period, growing at a much faster rate than the Austin region in general.
now let's talk about the top line findings from the study, which we looked at 2010 as a baseline year.
and just revenue impacts, meaning tax revenues associated with development within the study area, contributed $207 million in 2010.
so that's an annual number.
and it's driven by primarily property values, which are valued at over $8.4 billion.
so the study area itself is a sizable contributor to the coffers of the municipalities as well as the county.
now, looking at economic impact, this is looking at spending driven by the lakes.
so this is spending that would not happen if not for the existence of the lake itself.
and we estimated approximately 2.8 million visitors in 2010 which include park visitors, boaters, hotel, vacation ohm renters, second home renters, and this generated -- these visitors spent nearly $170 million on -- on goods and services driven by the lake's existence.
and in addition to that about $45 million of boat sales.
and so this results, all of this spending results in about $113 million economic impact and supporting 1900 jobs.
this is the net economic impact.
these are actually the dollars that stay in the region.
it's not counting dollars that go towards the manufacturing of wholesale goods produced elsewhere, but rather the money that actually stays here.
and this is a pretty significant figure.
now, an additional -- it's not really an economic impact, but it's important to point out the primary households within the study area, and these are the households that call the study area home, their primary home, they accounted for nearly two-thirds of a billion dollars of spending in 2010.
and that spending supported nearly 5200 jobs.
and you could argue that a lot of these people wouldn't live here if not for the existence of Lake Travis, but we couldn't prove that, so we wanted to highlight the spending power of that area.
let's talk about the lake level elevations quickly and what we found is the full elevation of Lake Travis is about 681 feet above sea level.
and as the lake drops below 660 feet, you start seeing some impacts with respect to visitation to the lake.
and once you get below 650 feet, you start seeing severe impacts to vegetation on the lake and to local businesses and industry.
what we found is stable lake elevations ranges between 660 and 681 really produces very positive net fiscal and economic impacts on the region because all the facilities in the area can be utilized.
now, with respect to fiscal impacts, revenue impacts to the local municipalities, when low lake levels are more persistent through the peak season of the summer, you see a 16 to $22 million revenue impact.
and a lot of this is driven by potential also the premium.
the lake itself has a big premium to the study area, about 15% to the households, to land and property values in the area.
so if the lake were to disappear and the premium were to disappear, it's about 1.3 or $4 billion in property value losses, which results in a significant revenue impact.
now, in terms of economic impact, now, this is again spending driven by the lake itself, spending that would not occur if not for the lake, what you see is during the stable lake level period of 660 to 681, you see spending increase 7 to 10%, you see an increase in jobs about 125, and increase in economic value of over 7 million.
now, low lake levels, and we were only able to look at observable times, you know, within the last ten years or so, and during those periods there were about three significant drought periods where we saw 14 to over 20% drop in spending and an impact of 240 jobs.
an economic value of near 13 million.
now, what we haven't observed is when -- if the summer season, the peak season were to start off at lake levels like we're seeing right now and so, you know, a much larger drop, even a 50% drop, it could be more than that, could have a result in over 580 jobs and over $33 million spending.
now, the businesses are also impacted in the area, and really there's -- this is driven by increased demand for goods and services, marinas, restaurants, et cetera, and not only are they having decreased demand and decreased revenues but their costs are going up.
the marinas are spending 10 to $300,000 to move marinas to deeper water to ensure they will stay open albeit to fewer customers.
and low lake levels also impact the local utilities.
as the water levels go down, the utilities must spend more to pump water up a larger elevation.
and water treatment becomes more expensive and the ability to generate electricity can even be compromised.
and so you are having this increase in costs which are ultimately passed on to the consumer at the end of the day.
now, looking at water quality impacts, the nice thing is that, you know, Lake Travis has exceptional water quality and has in its history, but potential impacts associated with deteriorating water quality include increased costs to local industries, the semiconductor industry such as samsung who participated in the study suggested that their costs to purify waters to levels necessary to produce their goods would go up.
utility providers, their costs would go up as we discussed before and ultimately the consumers are paying for it in the long run.
another thing from a previous study is that lake visitation and recreation could actually drop due to deteriorating water quality.
a study was done suggesting concerns with that very notion.
for every 10% drop in boating and visitors we're talking about 120, 125 jobs lost and over 7 million in economic value.
now, property values as well, lake front property values have a large potential to lose value with decreased water clarity.
and studies have been done around the country to suggest that for each one meter drop in water clarity, meaning if you could see down three meters now and tomorrow you could see down two meters, it could be a 5 to 10% drop in that lake front property value, which contributes about 27 to $53 million in property value.
then finally the cleanup costs are prohibitive.
and we looked at a number of lakes around the country where they haven't maintained exceptional water quality and are now stuck with the cleanups costs.
an example is in raleigh-durham, a different market, yes, but a lot of similarities with respect to their economy and the lake that provides flood control, recreational attributes as well as water source.
and they are now stuck with about a bill and a half dollar cleanup as a result of not managing that very well.
those are the final conclusions.
I'll say in closing that, you know, we hope this is a useful tool in identifying and quantifying the importance of Lake Travis and that region as an economic driver.
>> if I made add a couple additional things.
>> certainly.
>> we kind of tailored this presentation for a rollout in the general sense and didn't really tailor it to Travis County particularly, but if you go back and you extrapolate the revenues, the annual tax revenues that Travis County realizes from this area is 32.2 million.
so looking at if we -- we know we've got a population explosion headed our way or at least it's projected and particularly in this area as well, so if we end up with consistently lower water levels, the -- the impact on our own revenues could begin to become significant as appraisals drop and the premiums go down.
also I'd like to point out that even as we speak every single boat ramp in our parks are closed because of the water levels.
so -- and there's policy in the past for lcra, as far as water releases, has not taken into account economic impacts.
the releases for agriculture downstream have been much debated and a report like this that looks at the revenues and the timing of the season and things like that that's thrown into the bigger mix as a tool for that policy making may well indeed influence in the future the timing of those releases as it relates to economic impact.
so this was the first of many tools that I hope to see.
burnet county is look at doing their own study in concert with this so that all of the highland lakes will have this as a reference point.
I believe it was well received.
we had about 70 or 80 people at the rollout event.
many decision-makers from many different bodies.
it's also been a good tool or a good exercise and collective effort to create a tool.
some of the smaller municipalities and jurisdictions around the lake don't really have the resources or the staffing to take on a project like this, but when you can get the big guys and the little guys working together, then you can come up with a really meaningful tool and it has proven itself beyond just this because we were in this process when the floating habitable condominium issue came up, which you remember we debated in court, and the potential impact of that on our own county's regulatory process and enforcement and everything that the cost was likely to be very huge.
and the ability to have this collective effort to disseminate information to hopefully influence policy, I believe, was significant in this respect.
so the awareness of the lake and the economics associated with it and the collective effort I think is a good -- a good thing and I think it's the first tool and hopefully we'll have additional ones in the future that can monitor it like the amenity value I think is a good one and the water value.
but it's been well received and I just want to thank Travis County for stepping up and taking this role in this.
I also want to thank particularly some of the Travis County staff because t.n.r.
found the resources for this, and particularly tom webber was very involved in the water quality -- well, all of it, but especially the water quality component and tom nuckols and julie joe, we couldn't have worked without them.
and purchasing, served as a fiscal agent.
I just want to say a big thank to you everybody and I personally feel it was a highly successful effort.
>> how responsive has -- one thing I'm concerned about is this is tremendous work that definitely needed to happen and I'd love to see the lcra do a apples to apples economic analysis all the way down the colorado.
how has lcra responded to this model and -- and how are they utilizing other economic analyses in the whole river corridor?
do we have any response from -- I don't want to make you speak --
>> I don't think he's --
>> perhaps we've got some indication that their response to this study with regard to how they might be looking at economic impact analysis throughout.
>> I think this was a significant tool along with some others that were -- the dynamics of which were ongoing in their decisions recently on the water management plan.
I think that they are doing pause.
there is a lot of talk out there about the economics.
I think that historically they say by law they cannot take into account economic impacts, so if that indeed is true, and I haven't researched it, it is perhaps the collective effort that can go to the legislature and say hey, you know, we need to change policy here.
>> most of the data that you used to put this together was generated in I guess 2009 or earlier?
>> it was in fiscal 2010.
much of the data that was collected on oh, okay.
I was about to say the situation has gotten worse since 2009 and probably since 2010 too.
>> that's right.
no question.
>> in terms of negative impact, the numbers today are probably greater based on what's happened since 2010.
>> I would argue yes.
>> okay.
>> we got kind of lucky because we had -- in the years of selection because we had a drought in '09 and then in 2010 we had a fairly significant amount of rain, and then we launched into this next dry period.
and when you really started -- one of the challenges, todd, correct me if I am wrong, but when you really started looking at a time frame to study the lake in where you had droughts and full reservoirs, the growth out at the lake is so recent really in terms of ability to study it in the last ten years that there was -- we were really constrained to the most recent period which was good because it was recent, but we picked that 2010 year between '09 and '11 because of the droughts.
>> right, yeah, so we really looked at five to six years of history which included a couple years of drought and a couple years of full stable lake levels and then one of kind of in between.
so it was a good sample of all the different circumstances.
>> one of the recommendations from the consultant after doing this study was that we need all around Lake Travis, I'm not speaking of Travis County parks, but we need better data collection on visitor -- on visitation.
that that would help us have an in more accurate -- this is a very conservative assessment because we didn't want to make assumptions that we didn't have data to back up.
but the ability to get more visitation data would be very useful for future assessments in tracking this.
>> yes, the army corps of engineers manages hundreds of lakes around the country and they track visitation very explicitly on an annual basis.
and we use that as a bench mark, but also the parks department here does -- degrees track visitation to the parks very well and as well as hospitality industry and marina use age and so forth.
so we had some data points, but it is an estimate and it is conservative.
>> well, it's a different world out there without the normal lake levels.
>> yes.
yes.
>> I mean these pictures really dramatically show that.
>> right, yes.
>> if I might say something to anyone who is listening, I gave a speech down in south Austin the other day to about 40 people on water and I asked them how many had been out to see Lake Travis this year.
and not a single one had.
and I just encourage anyone who lives in Austin when you turn on your tap, your water is coming from Lake Travis, that it's worth the effort to go out and take a look at the low level of the lake right now.
it's very, very descriptive.
>> and if you can't go out there, we'll send up a copy of the report that has pictures.
>> the report is available on the website.
>> okay.
anything else?
thank you very much.
also thank you for your patience.
>> thank you.
>> with that I move that we recess until 1:30.
>> second.
>> all in favor?
that passes by unanimous vote.
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