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Economic Dynamics: Foothill "GoldLine"
By: Brenda Trainor

With the economic downturn, it is obvious that one of the industries most impacted has been construction - a significant portion of jobs have been lost in this sector with the downturn.  So, it is with great pride that the Gold Line Construction Authority recently released a report about the economic impact of the next phase of construction for the Metro Gold Line as it proceeds eastward in the San Gabriel Valley.

Conducted by the Los Angeles Economic Development Corporation, the economic impact study analyzes the importance of the first of two phases planned for the Gold Line
extension.  This first phase takes the Gold Line from East Pasadena’s Sierra Madre Villa station and proceeds east for six more stations going through Arcadia, Monrovia, Duarte, Irwindale and Azusa.  This phase of construction is to be complete in December 2013.

The cost of this next phase of construction is estimated to be $490 Million, and $200 Million of that is for a proposed rail maintenance facility - a necessary component to the extension and a component currently being studied for possible placement in Monrovia.  The total impact of this construction budget according to this study is $930 Million.

The impact is almost twice the cost as a result of the methodology used in the impact study.  It is a methodology that multiplies the project estimates and extrapolates them to assess impact based on a system developed by the Bureau of Economic Analysis of the US Department of Commerce.

The methodology measures total economic output of the project by measuring direct, indirect and induced effects.  Direct revenues are those obtained by businesses hired to do the work, primarily construction, architecture, and engineering firms.  The indirect and induced revenue are gained primarily by the vendors who sell products and services used by the construction authority’s contractors who are doing the work.

“The study highlights the importance of moving forward as soon as possible with the Foothill Extension to Azusa,” said Habib F. Balian, CEO of the Construction Authority responsible for building the line. “The impact will be felt throughout the county and will have an even more significant impact than it would have a few years ago, because of where we are in the economic cycle.”

Included in the $930 Million total impact are a total estimate of 6,900 jobs, $308 Million in earnings, and $39 Million in taxes and fees.

A wide range of industry sectors will benefit from this phase of construction, with obvious bulk being in the creation of construction jobs, but other sectors will benefit substantially as well according to this study:  look for new jobs in manufacturing, retail, transportation, administration and waste management, health care and social assistance, finance and insurance as well as accommodations and food services.

The manner in which these indirect jobs and benefits accrue is based on the tried and true methodology used for the study - multipliers are factored in based on the actual jobs scheduled directed and combined for a total impact statement.  In short, one construction supervisor position may also require additional support from food service workers and health care providers.

“We are proposing a Design-Build-Finance Plan which allows us to use private financing to expedite the construction timing,” said Mr. Balian.  “This will allow us to start construction in June and be completed in December 2013, just 30-months later.”

The impact of this project will be a major contribution to the San Gabriel Valley, though technically the study assesses the impact on the five county regional environment:  Los Angeles, San Bernardino, Ventura, Orange and Riverside.  The region has seen a rise in unemployment over the last two years from 5.2% to 12.5% according to the study, with an estimate of 15 percent of these job losses being in construction.

This study shows that more than 1/3 of the new jobs being created will be related to construction, making up for some 8% of the construction jobs that have been lost over the last two years.  This should demonstrate slow but steady progress along the line of recovery, and presents good evidence of the value of this construction project.

Brenda J. Trainor, Frontier Trail, Inc., Box 935, Monrovia, CA 91017, 323.229.2397