SD32 - Study by the Committee on the Economic Impact of Public Beaches on Tourism and Economic Development Within the Commonwealth of Virginia


Executive Summary:
Virginians from all regions of the state benefit from the stewardship of shoreline resources that are available to all its citizens. The tidal, public beaches of Virginia are a valuable natural resource that yield substantial positive economic impacts, mitigate storm damage, and provide a pleasurable, recreational experience to its users. Since 1980, the Board on Conservation and Development of Public Beaches (Board) has provided for the conservation and development of Virginia's public beaches through the allocation of nearly $7 million in grants of state funds to local governments for conserving, protecting, improving, maintaining, and developing public beaches on tidal shorelines. In this report, tidal public beaches under the Board's purview are defined as a sandy strip of shoreline owned by a locality and accessible to the general public. At present, localities have identified 24 miles of shoreline as public beaches. Other public, accessible beaches in Virginia generally are owned by the state or federal governments.

The purpose of this report is to present the Board's efforts in assessing those fundamental questions relating to the tourism and economic development impacts of Virginia's public beaches. Senate Joint Resolution No. 338 (SJR 338) was adopted during the 1997 General Assembly session and charged the Board, in cooperation with Old Dominion University, The College of William and Mary, the Virginia Institute of Marine Science, and the Virginia Economic Development Partnership, to determine: i.) the economic impact of Virginia's public beaches on tourism in the localities in which such beaches are located, and the jobs created by tourism, and ii.) the amount of public investment in Virginia's public beaches needed to generate the optimal economic return. In response, the Board created a Study Committee (Committee) that is composed of several Board members as well as representatives from beach localities and interested agencies.

Travel and tourism are among America's leading industries, employers, and producers of new jobs, and earners of foreign exchange with beaches being the leading factor. In 1994, tourism in Virginia supported more than 162,000 jobs. Travelers spent about $9.3 billion, of which $7.7 billion was from out of state. These expenditures resulted in about $650 million in state and local taxes. Estimates are that roughly 2.2 million out-of-town visitors arrived in Virginia Beach alone iii 1996. These visitors spent roughly $500 million and created over 1 1,000 jobs within the City of Virginia Beach. In addition, this tourist destination creates an estimated additional 5,500 jobs in the Hampton Roads region and an additional $500 million in regional economic activity. Unfortunately, comparable data are not readily available for other Virginia communities.

Public revenues are equally impressive even considering that data from the City of Virginia Beach are the only current information available. In 1996, tourism in the City generated $38.7 million in direct city revenue -- $25.1 million from sales tax, $7.7 million from property tax, and the balance from a range of municipal revenue streams. That same year, the average "rate of return" on the City's investment in tourism was reported at 69%. This same municipality sent about $88 million in sales tax revenue to Richmond as a result of 1996 sales tax receipts.

Beaches are big businesses which require large budgets and sophisticated management but which also return significant revenues to their host communities and states. Along the East Coast, Virginia's competitors in beach-orientated tourism include New Jersey, Maryland, North Carolina, South Carolina, and Florida; these states appear to be heavily involved in developing long-term strategies for management, improvement, and marketing of their shoreline and tourist resources.

Virginia's future in the same arena may not be as optimistic. Constant dollar travel expenditures in the fifteen cities and counties of Hampton Roads have declined from more than $1.9 billion in 1988 to less than $1.8 billion in 1995. Employment in the tourist industry in Hampton Roads has fallen from 39,000 in 1988 to 35,000 in 1995. Statistics are not available to allocate specific figures to beach-related tourism. One observation may be that the competition is simply outperforming Virginia. In the early 1980's, Florida was investing $50 million per year; New Jersey currently provides $15 million per year toward beach projects.

Storm damage mitigation also plays an important role in calculating the economic impact of beaches to the Commonwealth. Beaches serve as a physical barrier to the ravages of storm-driven waves, particularly along the Chesapeake Bay and Atlantic Ocean waterfronts. However, the Committee's research points out that the billions of dollars of public and private property and improvements that are protected by beaches have not been catalogued. For example the City of Hampton estimates that its beaches protect $8 1 million in assessed value of real estate. Note that public infrastructure is not included in this value. Similar data for Norfolk and Virginia Beach were not available but will be equally if not more significant.

Historically, the federal government has been the primary source of funds for hurricane and storm protection projects. In January of 1995, the federal government stopped all new studies for beach restoration projects. Many coastal states with large investments at the beach and beach-driven tourist economies will be forced to rely on their own means to finance and manage beach resources. These states are working to ensure that the storm damage mitigation benefits of beaches as well as all the other tangible economic and aesthetic benefits of beaches continue to be enjoyed by citizens of their states. SJR 338 appears to be Virginia's first step in accepting the challenge.

SJR 338 requires a report to the General Assembly at the 1998 session. Because of the time limitations, (the $25,000 appropriation was not available until July 1, 1997) this study responds to the questions of SJR 338 prior to the 1998 session with the readily available data and information (or lack thereof). However, this Board, by unanimous vote, provides the following observations:

• Data collection from the various municipalities as well as from regional and statewide organizations is a formidable task;

• In order for the study results to be of substantive value to the General Assembly a more rigorous economic analysis is required;

• Beaches create significant tax revenue for the Commonwealth.

• As a tool in economic development strategic plans, beaches have in the past and will continue in the future to play an important role;

• Since the federal government is divesting itself from further investment in future beach-related projects, Virginia would be prudent to complete the analysis contemplated in SJR 338 in order to protect its share of the tourism market it now holds;

• Virginia should study the creative methods other coastal states have used to fund their investments in beaches and beach economies;

• The Governor's Commission on Tourism recently set a goal for Virginia -- to become fifth among the states in the U.S. in tourism. Data for Hampton Roads suggest that tourist-related expenditures, of which beaches play an important role, have declined between 1988 and 1995.

In conclusion, the study of the impact of public beaches on tourism and economic development within the Commonwealth of Virginia appears not only to be desirable but also, in some respects, essential as an overall economic development strategic plan. Early indications are that public investments in prudent beach management plans combined with appropriate local resource plans can serve to stimulate economic development and, in turn, generate significant economic returns to both the public and private sectors of the Commonwealth.