May 25, 2006

Northwestern boosts Evanston economy by $145 M

Study examines revenue for City and spending by students, faculty, staff at local businesses

Northwestern generates more than $145 million in revenues for the Evanston economy on a yearly basis, according to the first comprehensive economic impact study of its kind.

The study examined revenues paid directly to the city by Northwestern and University-generated purchases at businesses.

The study by Bay Area Economics, a national urban economics consulting firm, analyzed information from the 2004 fiscal years of the University and City of Evanston.

The study found the overall annual economic impact of Northwestern University on Evanston is at least $145 million and could be as much as $175 million. (Ranges reported are based on hard data and estimates of revenue from comprehensive surveys.)

The economic impact is based on:

• University payments to Evanston businesses and the City of Evanston

• Spending in Evanston by students, faculty, staff and visitors to campus

Overall Economic Impact

The overall impact of Northwestern on the local economy includes University expenditures of $17.4 million — $4.87 million in direct payments to the City government and $13.5 million in purchases from 390 businesses — and between $127 million and $155 million spent by faculty, staff, students and visitors on restaurants, entertainment and other retail purchases; housing rentals; and hotel expenditures.

The estimate of spending showed the major impact that undergraduate and graduate students have on the Evanston economy. Based on interviews with students, the study found that they accounted for approximately $28.2 million of restaurant and entertainment spending and for a major share of purchases from retailers — more than $26.8 million.

Out-of-town visitors attended 200 conferences and meetings at Northwestern, resulting in 425,000 “visitor days” in Evanston, and spent an estimated $4.7 million at restaurants, more than $2 million at retail outlets and more than $3 million at hotels.

The study of spending by University students, employees and visitors determined that the City of Evanston received more than $2 million annually in sales tax revenue for its general operating fund.

The study also examined related contributions by Northwestern. Real estate taxes from properties sold by Northwestern to private owners since 1972 now generate more than $4 million annually for Evanston taxing bodies. Northwestern was a partner with the City of Evanston in development of the Northwestern University/Evanston Research Park, contributing seven acres and $4 million in operating funds.

Northwestern employs 1,850 staff members and 1,200 faculty members in Evanston, making the University the largest employer in the city. An estimated additional 1,451 jobs in Evanston businesses are directly related to expenditures generated by the University, faculty, staff, students and visitors.

Northwestern University has supported educational initiatives in both school districts, contributing more than $300,000 to the District 65 Lighthouse Partnership and $500,000 to Project Excite, a District 65-202 program.

Impact on City Government

The study compared revenue generated directly by the University to the City government and the city’s cost of services to Northwestern. It noted that the City pays some of the costs of services it provides to the University, the most costly of which is fire protection. But the study also pointed out that Northwestern pays for many of its own “municipal” services at no cost to the City.

In analyzing the cost-benefit impact, the study reported that in fiscal year 2004 City revenues generated by Northwestern exceeded costs attributable to the University by $2.8 to $4.4 million.

The consulting firm said Northwestern generated about $8 million in revenue to the City government, the largest portion from water and sewer fees ($1.9 million), and these direct taxes: parking ($657,332); athletic event ($531,380); electricity ($348,590); gas ($293,600); and liquor ($33,555).

City costs attributable to the University were estimated at $4 million to $5 million. Northwestern’s share of “costs” for City services included water and sewer service; street and sidewalk maintenance; fire protection and ambulance services; public library expenses; parks, beaches and recreational programs and facilities; and building, food and housing inspection services.

Northwestern operated its own police department at a cost of $5.3 million in 2004.

Northwestern pays for its own infrastructure maintenance. It bore the $88,192 cost of water distribution and sewer lines on campus and paid $42,076 to maintain streets and sidewalks and $844,858 for waste collection.

The city did not pay any costs of Northwestern’s police protection, water and sewer line maintenance, street and sidewalk maintenance and waste collection.

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The study is online at www.northwestern.edu/shared/cms/bin/newscenter/2006/04/economicimpact.pdf. Copies can be obtained by contacting communityrelations@northwestern.edu.