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1.0 INTRODUCTION 1.5. Study Methodology This analysis used the IMPLAN (Impact Analysis for Planning) economic impact modeling software to evaluate the project's one-time construction impacts, along with ongoing impacts resulting from new resident local spending=. This software is classified as an "Input -Output" (IO) model that computes all of the economic impacts of industries in a user -defined region (in this case, the City of Santa Ana and Orange County), including the estimated local expenditures of employees of both project -direct and supplier firms. The current version of the IMPLAN model divides the economy into 526 sectors that correspond to 4 -digit and 5 -digit NAICS codes'. For construction activity, the IMPLAN modeling system relies on data from the compiled U.S. Census Bureau instead of the NAILS system. The report appendix documents all of the assumptions used in this analysis to translate project -specific data into IMPLAN model inputs. As shown in Appendix A, construction -related impacts are based on anticipated construction values provided by the applicant. These construction values were matched to the appropriate IMPLAN construction sector for the impact analysis. Ongoing (permanent) impacts are based on new resident spending (on local retail goods and services), along with expenditures related to management/operation of the apartment complex, as shown in Appendix B. The tables in Appendix B also show the assumptions used to estimate new residents' household income levels and associated local spending on retail goods and services. It should be noted that the analysis treats resident -related spending as "new" spending in the City and in the County. Although some residents at the proposed apartment complex may already reside in another location in the City or County, by moving these residents would create an occupancy that would be filled by new households in the City or County. Thus, the treatment of residents' local spending as net increases in sales in the City and County is a valid assumption for purposes of the analysis. ' This model was developed by researchers at the University of Minnesota and is widely used in economic impact analysis throughout the Country. J As excerpted from the U.S. Census Bureau's website, the North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. The NAICS system is hierarchical in each level of the system provides an aggregation of detail at the next lower level. For example, there are 20 2 -digit industry groups that are further subdivided into 99 3 -digit industry groups. Further disaggregation continues to the 6 -digit level, which includes 1,175 disaggregated industries. THE NATELSON DALE GROUP, INC. Page 4 DRAFT Economic Impact Analysis The Madison (Santa Ana, CA) 75A-101