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Murley Interview
Featured Interview with Sarah Murley of Applied Economics
Impact Analysis — the truth is in the numbers
[July 3, 2013] Many clients are surprised by the results they get with the Impact Analysis tool from Applied Economics says founding partner, Sarah Murley.
“Often, these people have been dealing with economic impacts in a back-of-the-envelope way,” says Murley. “When put to the test, it turns out either something they thought was valuable isn’t, or a project they hadn’t placed much emphasis on turns out to have a significant impact.”
Proving your worth
The tool uses a customized database application to determine the economic impact a business or a whole program has on a community. Data is customized at the community level, and clients can generate their own reports whenever they need them.
“This gives them a way to justify their programs,” says Murley. It provides a ready source of hard data to present to the city council or board members. The Impact Analysis is also used to evaluate the value of prospects, prioritize incentives, develop data for fundraising and grant applications, and show ROI for different activities.  
Sarah Murley
Sarah Murley
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The true value of incentives
Incentives are one area where Murley’s clients are often surprised. “When you ask, ‘Is this a high value prospect for us?’ It may not be obvious up front,” says Murley.
Simply put, the Impact Analysis shows, “We’re giving up this much, but we’re also taking in this much.” For this reason, the impact analysis tool is useful when negotiating with companies over tax abatements or, in the case of tiered incentive policies, to determine what level of incentive the company qualifies for.
There are less sophisticated models on the market that merely look at state or regional multipliers, but Applied Economics’ tool incorporates local data. On the revenue side, it is customized to the tax structure of the host state and uses detailed local tax rates, for example. “So we’re not overestimating a company’s value to you as a community,” explains Murley.
Finding your community’s sweet spot
Applied Economics has adapted their model to communities in about 30 U.S. states so far. Working in that many places, Murley has seen how a state’s revenue structure affects the value of different types of projects to the community.
For example, some states have no property tax on equipment. If an industry is capital intensive, those states that tax equipment will likely have greater difficulty competing in terms of tax costs. Similar issues arise for heavy utility users locating in areas with high local utility taxes. And in locations that have no local sales tax, retail attraction will have no significant impacts on municipal revenue, whereas in states with local sales tax, retail is a major revenue generator for local governments. 
Interestingly, the types of industries that create economic impacts are not always the same industries that create large revenue impacts.
“In general, the more diverse your economic base, the greater impacts you’ll get because there are more opportunities for local supplier purchases and local employee spending,” says Murley. However, smaller communities with a more limited economic base will also see greater impacts in specific industries if they have a well developed supplier base for that industry.
Training and Customization
Because the Impact Analysis adapts to so many uses — from showing impacts of a single project to showing ROI for all projects assisted by an ED organization over a certain time period — Applied Economics has a wide variety of built-in report formats, as well as customized solutions to meet each client’s need.
It’s more than a plug-and-play computer application. Think of it like a James Bond car that’s tricked out with the latest gadgetry for your particular mission. You are in the driver’s seat, but Applied Economics is ready to provide roadside assistance when needed.
“Sometimes a customer will say, ‘Hey I want to show it this way,’ and we can usually set that up for them.” Murley says. They can do a lot in terms of customization, including formatting, local incentives and specific approaches for calculating return on investment.
“The thing I hear about most is the customer support. It makes a big difference to clients to know they don’t have to go it alone when they are trying to run the model and interpret results. We always provide training up front, but sometimes they just have a big project they are evaluating and they don’t know how to account for something.”
See it in Action
Murley will happily provide a demonstration and some sample reports. To schedule an appointment contact Applied Economics: (602) 765-2400 or info@appliedeconomics.net.
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Chabin Concepts - Delivering Strategic Solutions, Tactics & Tools