Who benefits most when a new courthouse comes to town?
The construction of a regional federal courthouse in downtown Anniston, Alabama, is guaranteed to produce a positive economic impact, and officials with the City of Anniston received their first indication of what this impact may look like earlier this year. (Note: A link to a downloadable PDF of the report is at the end of this story.)
An Economic Impact Study commissioned by the City of Anniston and produced by the Center for Economic Development and Business Research at Jacksonville State University gives a forecast of how construction activity and capital expenditures of the $42.5 million project could economically benefit the City and County. The study focuses on a 25-month period in Calhoun County beginning this August and culminating in September of 2021. Researchers estimate a total economic impact of $45.7 million during this period of time.
The current service area of the federal courthouse includes Calhoun and Cleburne counties. After construction, the service area will expand to Talladega and Clay counties. Currently, regional federal courthouses in Alabama are located in the “big five” cities: Birmingham, Tuscaloosa, Montgomery, Mobile and Huntsville—major hubs of activity throughout the state.
Anniston Mayor Jack Draper says that the General Service Administration’s (GSA) decision to locate a regional federal courthouse in Anniston emphasizes the City’s prominence in the region. “We are the legal, medical and financial hub for a five-county region. Building a regional federal courthouse here puts the stamp of approval on this. I can’t underscore how big a deal it is for Anniston to be in the same league as the big five,” said Draper.
Becoming a regional federal courthouse carries with it increased judicial functions that will require additional personnel. The increase in activity has the potential to attract professionals and businesses associated with legal matters. “People will begin to see cranes in the air. It will be an exciting visual in downtown Anniston you can’t miss. We should be very proud of this. It’s a harbinger of things to come.” explained Draper.
Birmingham-based contractor BL Harbert International will begin work on the 63,000-square-foot courthouse building this August with completion expected by September 2021. Construction expenditures are approximated at $30.8 million. All other capital expenditures are approximated at $11.7 million.
The new courthouse will be located on the 1100 block of Gurnee Avenue, at the site of the City’s current headquarters in downtown Anniston’s historic district, one block west of the federal courthouse’s current location. The downtown area, which also includes the Calhoun County Courthouse, has long been considered the legal and judicial hub of the county and surrounding area.
Toby Bennington, City of Anniston Director of Economic Development and Planning, explained that, whenever a geographic area anticipates a concentrated increase in development activity, economic development groups want to gauge the impact, and a study is a tool that helps these groups, who typically operate as partners, to leverage additional opportunities for growth.
Development activity on the scale of a federal project also attracts the attention of companies and individuals interested in growing or expanding their businesses. The possibility of new businesses, and with them, new jobs, can’t be overlooked, and the study is a tool that may add encouragement.
“An economic impact study shows the whole picture of what happens to the local economy when an investment of this magnitude is made.”
—Jennifer Green, Director, Center for Economic Development and Business Research at Jacksonville State University.
The construction of a federal courthouse brings with it an infusion of new money into the local economy — an aspect of the project that excites people in economic development circles. When existing money is circulated within an economy, the impact is minimal, but when new money enters the picture, the impact is much greater.
The GSA is the federal entity that constructs, manages, and preserves government buildings. The GSA is also the acquisition arm of the government, working with the private sector to supply the government and the military with professional services, equipment, supplies, and technology. It is through the GSA that millions of dollars will flow into the county during the construction and setup phases of the project. (For more information on the GSA’s Anniston project, link here.)
We should be very proud of this. It’s a harbinger of things to come.
— Jack Draper, Mayor, City of Anniston
Bennington says the City of Anniston has worked closely with the GSA to understand how projects of this scope have impacted other cities. As the project progresses, City officials will continue to work with the GSA as well as with the developer, BL Harbert. Residents, downtown businesses, and new developers and businesses will be provided ongoing communications as to how construction activity might affect activity in the downtown area. The relocation of Anniston City Hall will also be communicated to citizens through local media outlets and social media. Recently, the Anniston City Council voted to move all public meetings to be held during August to the Anniston City Meeting Center.
Did you know that the GSA was established by President Harry Truman on July 1, 1949, to streamline the administrative work of the federal government? Link here to learn more about the history of the GSA.
Understanding the Study
JSU’s Economic Impact Study combined direct, indirect and induced spending to develop a comprehensive outcome of what the project could bring to Calhoun County. The total of these equate to the total economic impact:
—Direct impact is direct spending for construction materials, tools, and wages.
—Indirect impact is spending triggered by direct spending. Construction materials purchased will need to be delivered to the construction site over the next two years; therefore, a delivery person’s job is affected or created.
—Induced impact derives from money that is recirculated in the economy as a result of direct and indirect spending. Perhaps the delivery driver’s income increases as a result of the extra hours he’s working. Induced spending occurs when he gives his teenage daughter money to buy new clothes.
The Study analyzed outputs for the top 10 industries most likely to benefit from the construction, their labor impact, and the benefit from capital spending that would occur as the new courthouse is stocked with office equipment, communication systems, and supplies. Five of the top 10 are examined here.
The largest economic impact occurs in the category of construction of new, non-residential structures — construction of the courthouse and site — and includes wages as well as construction supplies and equipment. GSA officials anticipate that between 270 to 280 laborers would need to be hired, which in turn would generate the employment of more than 50 additional people (indirect impact) and from these jobs, another 50-plus jobs would be created (induced impact).
Wholesale trade would also experience an uptick in revenue. Wholesale trade occurs when building supply businesses increase their inventory in anticipation of construction activity. Nine additional jobs would be created to meet the demand in wholesale trade for an outcome of $1,885,514. Only those businesses that sell to governments, institutions and other businesses are considered part of wholesale trade.
Lindsay Frey, Procurement Specialist at the Alabama Procurement Technical Assistance Center (APTAC) at Jacksonville State University says that it’s important that local small businesses prepare themselves to bid on the products and services that the contractor will need in the construction and capital expenditures for the courthouse. Frey works with small businesses in the area that want to sell to the government, helping them with certifications and marketing as well as the twists and turns inherent in doing business with federal, state, and local governments.
Due to the nature and scope of the contract with GSA, BL Harbert is required to submit a subcontracting plan for hiring small businesses. Frey says that a sizable percentage of the project budget must be allocated for small businesses, and she is optimistic that BL Harbert will choose from the many capable local small businesses to satisfy the need. In addition, certain areas of the city and county are zoned in ways that encourage the hiring of sub contractors, and certain businesses are eligible for special considerations when seeking to do business with the federal government.
Most of downtown Anniston as well as West Anniston and McClellan are in a Historically Underutilized Business Zone (HUBZone), which means that the government limits competition for certain contracts and gives preferential consideration to businesses in this zone. Other considerations for preferential treatment or set-asides include small businesses, woman-owned small businesses, small disadvantaged businesses and service-disabled veteran-owned businesses.
Frey’s experience with local businesses has convinced her and her colleagues that local businesses are completely capable of handling government subcontract work, and she is making sure that whenever a local contractor can do the job, that job stays local. “If we have local business that are able to successfully bid on and win contracts, it will add more jobs and money to our community. It can make a big difference,” explained Frey.
Interested in becoming a supplier to the GSA? Link here for details.
APTAC representatives have been working with the City of Anniston to identify and prepare local businesses that are eligible for set-asides. Frey will meet with representatives of BL Harbert soon to determine their needs and how local subcontractors can work with them. She says APTAC is planning to host a networking event that will put local small businesses owners at the table with the decision makers at BLHarbert.
Additional Industries Impacted
Truck transportation (delivering supplies and equipment to the job site), real estate, retail and food service will also be positively impacted. The real estate and service industries will be impacted when certain workers temporarily relocate to the area, involving such resources as rental agents, real estate agents, lenders, home inspectors, and other product and service providers.
County-wide, retail businesses can expect a slight increase in sales. The outcome is predicted at $124,808 with an additional four jobs created. In the downtown historic district of Anniston, the retail business mix includes a number of locally-owned businesses supplying everything from apparel to jewelry to gift wares to garden supplies to home decor. Opportunities to tap into the influx of new money will be the question on their minds, and one of their best resources for those answers is Main Street Anniston, an economic development program for the City of Anniston.
Ultimately, the stomach rules us all, and workers are going to need to eat. Local restaurants will begin to feel the impact when construction begins this fall; and as construction increases, so will appetites. The study includes economic impacts to all types of food services, to include full as well as limited-service restaurants (the difference between Classic on Noble and Jack’s®). Residents may also begin to see an increase in food trucks in the downtown area — an industry that has seen large growth nationwide over the past five years and is expected to continue to grow. Food trucks are a quick, typically inexpensive way to grab a quick bite for lunch. Bennington says the City’s permitting program is ready for this type of business, and he’s already receiving interest from food truck entrepreneurs.
Food establishments faced with feeding 200 to 300 more patrons on average per day translates into greater demand for supplies, service, deliveries, health department inspections, waste removal, water, electricity, food service technology, and possibly infrastructure improvements. Overall, the study predicts an additional 10 jobs would be generated from increased activity in the restaurant industry. The total output for full and limited service restaurants is projected to be $579,150.
Local Anniston restaurateur Kristy Farmer has been co-owner of the Peerless Saloon & Grille, for 28 years. The restaurant is a historic landmark in the City and within walking distance of the construction site. She believes the number cited in the study for additional food service jobs county-wide is conservative, and by nature, economic impact reports err on the side of caution.
Based on the number of new jobs the construction phase would create, Farmer estimates that at her restaurant alone she would need to hire and train an additional eight employees to cover wait service and kitchen jobs. She’s prepared to accommodate the increased flow of customers in terms of seating, but space for cooking, preparation, and inventory storage is limited. She plans to talk with her suppliers about the increased demand as well as ways to expedite deliveries. Farmer says, “We’ve been hearing about this project for two decades. It’s hard to believe it’s finally happening. I suppose it’s time to prepare!”
Download the complete Economic Impact Report here.
© 2019 City of Anniston. For reprint permission, contact Toby Bennington, Director of Economic Development and Planning, City of Anniston.
The City of Anniston, AL 