This report was prepared by UVic MBA students Marian de Monye and Amanda Wright under the supervision

of Dr. Anthony Goerzen at the University of Victoria in 2006. The authors gratefully acknowledge guidance and assistance received from: The management staff at VITP; Dale Gann, Vice President – Technology Parks and Greg Sikora, Sr. Manager, Real Estate Lillian Hallin, BC Statistics Cam Gray, UVic Business Michael Rankin, UVic Business We would also like to thank the companies at the Vancouver Island Technology Park and their employees for participating in this study.

Table of Contents

Vision Statement .................................................................................................................. 4 Mission Statement ............................................................................................................... 4 Executive Summary ............................................................................................................ 6 Introduction .......................................................................................................................... 15 The Role of Technology Parks in Economic Development......................... 15 Scope of the Analysis....................................................................................................... 20 Methodology and Data .................................................................................................... 21 Results: Tenant Survey .................................................................................................. 26 Results: Education and Origin of VITP Employees ........................................ 32 Results: Employee Survey ............................................................................................ 33 Qualitative Analysis.......................................................................................................... 36 Planning for the Future .................................................................................................. 38 Summary and Conclusions ........................................................................................... 42
APPENDIX I ..................................................................................................................................... 46 APPENDIX II................................................................................................................................... 47 APPENDIX III................................................................................................................................. 49 APPENDIX IV .................................................................................................................................. 52 APPENDIX V .................................................................................................................................... 53

Vision Statement

To develop a "knowledge community" that supports a highly productive and satisfying work environment that fosters the growth of its people, technology and commercial success. In doing so, we will be able to create a better life for all British Columbians through sustainable knowledge and technologybased development that effectively balances human needs and humanities with economic opportunities.

Mission Statement

To create economic development by promoting academic, industry and government collaboration leading to the establishment and maintenance of research and technologybased facilities in British Columbia. By remaining committed to our role as an environmental leader, we will continue to produce quality jobs and opportunities for our community and our province.

VITP Economic Impact Study

Executive Summary

Executive Summary
Create sustainable Economic Development by promoting Academic, Industry & Government Collaboration, as well as Community Involvement, leading to the establishment and maintenance of World-Class Research and Technology Facilities in British Columbia The University of Victoria’s Vancouver Island Technology Park (VITP), facilitates the growth of technology on Vancouver Island by providing physical infrastructure that links local, provincial, national, and international resources with emerging or growing tech companies. The park provides a facility to accelerate technology from research labs to the marketplace, combining UVic’s capacity for innovation, IDC’s technology transfer office, with VITP and its associated businesses’ ability to commercialize new ideas and discoveries. The University purchased the VITP from the provincial government in 2005. Strategically placed in Victoria, British Columbia’s second largest and high-tech sector, the park is a major centre for technology activity, and is easily accessible from Vancouver, Seattle, Portland, San Francisco and other Pacific Rim locations. It is a LEEDTM Gold facility (Leadership in Energy and Environmental Design) that concentrates synergistic organizations such as the UVic’s Innovation and Development Corporation (IDC), a tech-transfer office; Co-op office; VIATeC; National Research Council Canada – Industrial Research Assistant Program (NRC/IRAP), which supports high-tech business development; and a business centre that can be used by high-tech company personnel for meetings and networking. VITP’s 35 acres house a modern research and technology centre that enhances the creativity and productivity of its public and private tenants by clustering fuel cell, new media, wireless, life science/biotech, ocean technology and information and communications technologies (ICT) companies and providing amenities such as a fitness studio. At present, VITP has a 97 per cent occupancy rate; it has embarked on a master planning exercise to accommodate further growth, seeking to expand by an additional 250,000 square feet.

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VITP Economic Impact Study

Executive Summary
The mandate of the Park is to act as a regional hub, providing services, physical infrastructure and a province-wide network to accelerate the profitable and sustainable commercialization of technology.1 UVic also sees VITP as an integral part of the continuum of technology transfer in the region, with UVic as the research engine, the University’s Innovation and Development Corporation (IDC) as the bridge and incubator, and VITP as the receptor facility, promoting partnerships with allied agencies such as VIATeC, BC Technology Industry Association, BC Biotech, NRC/IRAP and Western Economic Diversification (WED). Many stakeholders in government and communities are interested in how VITP and its tenants contribute to the local economy as a whole. An Economic Impact Study (EIS) provides a scientific estimate of the economic impact of a project, organization or development on a specific geographical area, including dollar impact, jobs created, and tax revenue generated at the municipal, provincial and federal level. The EIS we performed was undertaken to give a greater understanding of the many ways in which VITP contributes to the economy of Greater Victoria and the province of British Columbia. VITP had 28 tenants for the full fiscal year (FY) in 2005. Data for this study was collected using a comprehensive survey filled out by all but three of the applicable companies at VITP. Employee numbers and sales revenue for each individual company were gathered, as were overall construction costs for 2005 for the technology park. This data was then used to estimate indirect and induced employment, sales revenue, tax revenue, business visitor impact, and construction impact using the British Columbia Input-Output Model produced by BC Statistics. The sales revenue and business visitor impact figures were then added as appropriate to provide an overall picture of the impact of VITP on the economy of British Columbia. Our final figures represent a conservative estimate of the total impact because of the methodology we used and some assumptions that we made. A description of the conservative nature of our study may be found in the Methodology section of this report.

The findings of this report demonstrate that the tenants at the Vancouver Island Technology Park had a total dollar impact of $279.9 million on the economy of British Columbia. A total of 2,023 full time jobs in British Columbia could be attributed to VITP and its companies.

1

Dr. S. Martin Taylor, VP Research, University of Victoria; speech at Association of University Research Parks conference, May 4th, 2006.

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VITP Economic Impact Study

Executive Summary

Employment Impact
In the 2005 FY, 995 people were directly employed by the companies located at VITP (Exhibit 1). Additional jobs were created in British Columbia as these companies purchased supplies and services from other local companies, and as the tenants’ employees spent their wages on groceries, clothing, furniture, and other goods. These “multiplier effects” are known as indirect impact and induced impact respectively. VITP generated an additional 659 indirect jobs and 363 induced jobs in the province. As part of this impact, construction completed at the technology park in 2005 generated 102 direct, indirect, and induced jobs. An additional six jobs were created in the economy as a result of business visitors to VITP spending money in Victoria on accommodation, food and beverages, and transportation. Therefore, the total employment impact that companies at VITP had in British Columbia was 2,023 jobs.
Exhibit 1.

Employment Impact FY 2005
6

363

995

659

Direct Jobs

Indirect Jobs

Induced Jobs

Business Visitor Jobs

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VITP Economic Impact Study

Executive Summary
Total Dollar Impact
The economic impact of VITP’s tenants in British Columbia based on 2005 FY data was $279.9 million. This figure was calculated from sales revenue, and therefore implicitly includes municipal and provincial tax revenue, as well as construction impact, as these amounts are all generated from the sales revenues of the businesses at VITP. We excluded federal tax revenues generated by VITP from the total impact because this EIS is only concerned with VITP’s impact on the province of British Columbia. Business visitors are funded by sources external to VITP, so associated revenues were added on to VITP’s sales revenue impact to give the total dollar impact.

Total Sales Revenue Impact
Our results indicate that the tenants at VITP produced $160.2 million in direct sales revenue in FY 2005 (Exhibit 2). Due to a multiplier effect, an additional $86.5 million in indirect sales and $32.8 million in induced sales were generated in the economy. These figures are net of federal tax revenue, but do include provincial and municipal tax revenues. The figures also include construction sales revenue resulting from capital projects completed in 2005. Consequently, the tenants of VITP contributed a total of $279.5 million in sales revenue to the BC economy. Clearly, the companies at VITP are generating significant sales and creating wealth in the province.

Exhibit 2.

Total VITP sales revenue impact FY 2005
$32,815,692

$86,539,276

$160,187,914

Direct Sales Revenue

Indirect Sales Revenue

Induced Sales Revenue

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VITP Economic Impact Study

Executive Summary
Tax Revenue Impact
In FY 2005, activities at VITP contributed a total of $42.1 million in tax revenues to the Canadian economy (Exhibit 3). We calculated that $18.8 million in federal taxes, $19.1 million in provincial taxes, and $4.2 million in municipal taxes were generated. These tax dollars are then allocated by government in support of social services, education, infrastructure, and community development. Clearly, VITP tenants provide the various levels of government with a considerable amount of tax revenue - money which is then spent to improve the lives of people living in Victoria and the rest of the country. It is important to note that the focus of this economic impact study is the effect of VITP on the British Columbia economy. Therefore, the amount of federal tax revenue generated has been excluded from the final figure calculated for the total dollar impact of VITP’s tenants on the provincial economy.

Exhibit 3.

Total Tax Revenue Impact FY 2005
$4,182,038

$18,807,351

$19,111,507

Federal Tax Impact

Provincial Tax Impact

Municipal Tax Impact

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VITP Economic Impact Study

Executive Summary
Construction Impact
Part of the overall economic impact of VITP in 2005 was construction spending by VITP itself and some companies within VITP. This construction impact is included in the sales revenue impact calculated earlier, but we have broken out the figures for illustrative purposes. In 2005, $7.2 million in direct sales revenue was generated by construction activity as existing facilities were renovated or upgraded to better serve the needs of tenants. Due to a multiplier effect, an additional $3.6 million in indirect sales revenue and $1.2 million in induced sales revenue was generated. Therefore, the total construction impact was $12.1 million (Exhibit 4). As part of this economic impact, construction projects at VITP directly employed 61 workers, and created 29 indirect jobs and 12 induced jobs due to spin-off effects in the economy. Overall, construction at VITP generated a total of 102 jobs in British Columbia. Again, these jobs have been included in the total jobs calculated in a previous section. We have shown that construction at VITP not only injected money into the local economy but also created a significant number of jobs in the province.
Exhibit 4.

Construction Sales Impact FY 2005
$1,229,698

$3,616,758 $7,233,516

Direct Impact

Indirect Impact

Induced Impact

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VITP Economic Impact Study

Executive Summary
Business Visitor Impact
We collected information from each tenant about the number of visitors to VITP in FY 2005 and the average length of stay in order to estimate the economic impact of these visitors on the province. Visitors included out-of-town consultants (not employed by VITP companies), individuals attending conferences, investors, and researchers from other universities or businesses. These visitors would typically be funded by sources external to VITP, and therefore revenues generated by these visitors have been added to VITP sales revenues to give the total dollar impact. There were a total of 1,991 days spent in Victoria by business visitors, who on average spent $156.85 per day. As a result, $312,288 was spent on accommodation, food and beverages, local transportation, recreation, and retail by VITP visitors in 2005. This direct spending also generated indirect and induced effects in the economy with respect to sales revenue and jobs. Therefore, business visitors to VITP generated a total of $395,632 in sales and six jobs in British Columbia. Our results demonstrate that there is a great deal of interest in VITP’s operations from outside Victoria and outside the province, and a significant number of visitors traveled here for a variety of purposes, contributing a considerable amount to the local tourism industry.

Summary of VITP tenants’ Impact on the Economy

The companies located at VITP had a significant impact on the economy of British Columbia in 2005.

Our EIS has found that the tenants at the Vancouver Island Technology Park contributed over $279.9 million to the economy of British Columbia. $279.5 million of this amount was VITP sales revenue, which included $23.3 million in tax revenue, and $12.1 million in construction impact. The additional $395,632 can be attributed to business visitor impact. VITP had a total employment impact of 2023 jobs – 2,017 from VITP tenants (which includes 102 from construction), and six additional jobs created by business visitors (Exhibit 5).

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VITP Economic Impact Study

Summary and Conclusions
Exhibit 5: Summary of VITP’s impact on the BC Economy, FY 2005

Dollar Impact

Includes: $4.2 million in municipal tax, $19.1 million in provincial tax, $12.1 million in construction impact

Total Economic Impact $279.9 million

Employment Impact

2023 jobs

In addition to contributing to the province financially, VITP also offers qualitative benefits to local residents and the community. Our research has determined that VITP tenants play a significant and important role in the B.C economy. In addition to fostering collaboration and promoting the transfer of knowledge between universities and industry, the technology park also creates wealth and generates jobs in the province. VITP’s tenants provide quality employment opportunities for graduates of the University of Victoria, Royal Roads University, and Camosun College, and it also attracts talented workers from other areas of Canada and other countries. Our research has determined that the companies at VITP play significant and important role in the BC economy. In addition to fostering collaboration and promoting the transfer of knowledge between universities and industry, the technology park also creates wealth and generates jobs in the province.

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VITP Economic Impact Study

Introduction Introduction

The Role of Technology Parks in Economic Development

The Role of Technology Parks in Economic Development
The Association of University Research Parks defines university research/technology parks as developments that have formal or contractual ties with a university, thus fostering a public/private research relationship that is beneficial to both sectors2. These parks are established for the purpose of fostering innovation through improved university-industry relations and more efficient transfer of new technology from academia to the private sector. Technology parks also aid regional economic development by attracting technologically advanced companies that provide attractive wages and job opportunities for university graduates (Pavlakovich-Kochi & Charney, 2002). Technology parks offer high quality facilities, competitive rents, the opportunity to collaborate with university faculties, and a supply of well-trained students and graduates to work for the businesses. Empirical evidence in the form of economic impact studies continues to support our understanding of the growing roles that universities and technology parks play in the economic vitality of their communities and surrounding regions (Pavlakovich-Kochi & Charney, 2005).

VITP Supports a Highly Productive and Satisfying Work Environment that Fosters the Growth of the Park’s People, Technology, and Commercial Success

2

www.aurp.net

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VITP Economic Impact Study

Introduction
Typical economic impact studies focus on measurable contributions of technology parks to the local economy in terms of jobs, tax revenues, and sales, which are generated through purchases of goods and services in association with the parks’ operations, and through employee spending. However, these studies capture only a portion of the overall role of university technology parks in the community. It is important to consider other intangible effects for example; technology parks provide job opportunities for local university graduates, who might otherwise leave the region in search of suitable employment. Parks also offer incubator space for start-up companies and encourage the transfer of technology from universities to the private sector. Additionally, technology parks serve as a compelling attraction for prospective high-tech companies relocating to the area.

The Vancouver Island Technology Park
The Vancouver Island Technology Park (VITP) was purchased by the University of Victoria (UVic) in April 2005, fostering a close relationship between academic research and commercial technology-based ventures. The park connects UVic’s capacity for innovation with VITP and its associated businesses’ ability to commercialize new ideas and discoveries. VITP is located in Victoria, the capital of British Columbia. Strategically located within the Pacific Rim, the park is a major centre for technology activity, and is easily accessible from Vancouver, Seattle, Portland, San Francisco and other Pacific Rim locations. The technology park can draw on a highly-educated, technologically capable population for employment opportunities, coming from three local post secondary institutions: University of Victoria, Camosun College, and Royal Roads University. With over 191,000 square feet of rentable area, VITP has the ability to develop an additional 250,000 square feet, and provides an ideal environment for growing technology companies. The space is flexible, efficient, and versatile making it suitable for laboratory, high-tech manufacturing or information technology purposes. VITP housed 28 tenants during FY 2005. These companies were concentrated in high technology sectors such as software development, biotechnology, pharmaceuticals and information technology. The companies represent a combination of research, private, and public organizations. VITP tenants employ approximately 1,000 people, many of whom are graduates of local universities and colleges.

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VITP Economic Impact Study

Introduction
VITP Tenants
COMPANY NAME Advanced Economic Research Systems Inc. Air Ambulance Aspreva Pharmaceutical BC Ambulance Cantest Ltd. Cisco/Doug Pelton Inc. Compugen Corps Commissionaires EDS Advanced Solutions Inc. E-traffic Solutions Ltd. Geffen Gourmet Catering Genologics Life Sciences Software HRGI Solutions Immunoprecise Antibodies Interatomics Jasco Research Ltd. MAD Ventures Inc. MDS Metro Laboratory Services Ministry of Agriculture and Land Reprographics Lab Municipal Software Corporation National Education Consulting Inc. National Research Council Omega Biotech Corporation UVic Genome BC Proteomics Centre VIATeC Vigil Health Solutions Vancouver Island Technology Park WSI ACTIVITY On-line web interface services, database management for organizations using eBay Regional BC Air Ambulance dispatch Pharmaceutical development and sales 911 Dispatch Environmental testing Internet networking solutions Information technology solutions Building security and access management Business process, IT outsourcing services Educational software, solutions and technology for industry, government and non-profit organizations Catering, operation of on-site Hard Drive Café Life sciences software High quality custom monoclonal antibodies Oceanographic instrumentation, scientific data analysis, environmental acoustics Start-up investment model development Diagnostic testing, community laboratory network Integrated Crown land and resource management/ information services Software and integrated systems for municipalities Business strategy training services Technical and business oriented advisor Develop and extract phyto-nutrients from botanicals Protein analytical services, custom peptide synthesis Vancouver Island Advanced Technology Centre Innovative nurse call and dementia monitoring technology Administration Property management of VITP facility

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VITP Economic Impact Study

Introduction
VITP offers reasonably priced office-operating costs compared to other cities in Canada and the United States, with lower rental rates than those found in downtown Victoria. VITP’s healthy “Quality of Life” approach to workspace includes such amenities as an on-site Hard Drive Café and Lounge, Fitness Facilities, Wellness Centre, Outdoor basketball courts, walking and cycling trails that connect with regional trail systems, and direct access to public transit.

Economic Impact Studies
Many stakeholders in developments and projects often are interested in how the project contributes to the local economy as a whole. Stakeholders such as government are concerned with the amount of taxes generated by an entity such as VITP, and local residents are interested in the number of jobs created directly by VITP and the number of spin-off jobs created by those who work at VITP through spending their disposable income in the local community. An Economic Impact Study (EIS) provides a scientific estimate of the economic impact of a project, organization or development on a specific geographical area, including dollar impact, jobs created, and tax revenue generated at the municipal, provincial and federal level. A detailed explanation of Economic Impact Studies is provided in Appendix I. The EIS we performed was undertaken to give a greater understanding of the many ways in which VITP and its tenants contribute to the economy of Greater Victoria and the province of British Columbia. VITP is a UVic property that has created many sustainable, clean and high-quality jobs; it also contributes hundreds of millions of dollars to the provincial economy, and it has generated in excess of $42 million in tax revenue for Canada. Although government funding was required to launch the VITP project, this EIS gives a clear numerical picture of how VITP has built on that initial investment to become a sustainable and valuable asset to the province of BC.

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VITP Economic Impact Study

Scope of the Analysis Scope of the Analysis
The time frame of this study is FY 2005, and the geographical focus of this study is the province of British Columbia, with some qualitative benefits for the Greater Victoria area discussed in the Qualitative Analysis section. This EIS measured the following information: Direct jobs and direct sales revenue from VITP companies Indirect and induced jobs Indirect and induced sales revenue Direct, indirect and induced municipal, provincial, and federal tax revenues One time direct, indirect, and induced sales revenue and jobs resulting from construction that took place in 2005 Direct, indirect, and induced impact of out-of-town business visitors to VITP A detailed explanation of these different measurements may be found in Appendix II of this report. The spin-off economic impact results from the businesses at VITP purchasing goods and services from local supplier businesses (indirect impact) and from employees at both VITP and VITP-supported local businesses spending their wages in the community on food, housing, entertainment, and other expenditures (induced impact). Construction spending also generates similar spin-off effects in the local economy. This study also examines some key data obtained from VITP employees themselves through an employee survey, such as home purchases, job satisfaction, and wage comparisons between employees’ current jobs at VITP and their former jobs. The employee survey data provides some compelling conclusions about the quality of jobs provided by VITP and the high level of job satisfaction enjoyed by VITP employees.

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VITP Economic Impact Study

Methodology

Methodology and Data
Our data was obtained from the companies located at VITP. We used a detailed survey to collect information about the number of jobs provided at each firm, payroll, sales revenue, and the number of out-of-town visitors for each company in VITP. We also asked about the education levels of VITP workers, and about the number of employees at each company who had lived outside of British Columbia or outside of Canada prior to working at VITP. A copy of our tenant survey may be found in Appendix III. Of the 28 companies located at VITP in 2005, 25 responded to our survey and provided complete information. Three companies chose not to participate in the study and did not provide responses to our survey. The companies that did not respond were all quite small and represent only a minimal proportion of the overall number, and excluding them should not have had a large effect on our final results. Our findings represent a conservative estimate of the true impact of VITP on the economy of the province because our figures do not include employment and sales revenue data for these three companies. The survey provides direct data for use with industry specific multipliers generated by the 1999 British Columbia Input-Output (I-O) Model. The model’s multipliers then give the indirect and induced impact for each of the three categories examined: employment, sales, and taxes. The I-O Model has been produced by BC Statistics (BC Stats) using data from Statistics Canada (StatCan). StatCan examines the usage of 727 commodities and provides data about the inputs and outputs of over 300 industries within the country and province. This data is then utilized by BC Stats for their I-O Model, which determines the overall economic impact per $1 of increased sales of a company, including new companies. The I-O Model breaks the provincial economy into 66 sectors (medium aggregation), and provides sector-specific multipliers based on provincial spending trends for each sector.

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VITP Economic Impact Study

Methodology
The direct data from VITP was analyzed using multipliers for the “Professional, Scientific and Technical Services” sector, as all companies at VITP fit in that industry classification. The total sales for all companies at VITP for fiscal year 2005 was used, as this figure includes what each company spent to make their product, plus their profit margin. The total sales figure was multiplied by the appropriate multipliers provided in the I-O Model to give the indirect and induced sales. To calculate the number of direct, indirect and induced jobs created by activity at VITP, the direct sales figure was multiplied by the corresponding “Professional, Scientific and Technical Services” multipliers and divided by one million, as the data are expressed as person years generated per $1,000,000 in revenue. Person years are roughly equivalent to full time equivalent (FTE) positions. The number of direct jobs calculated by the multipliers was substantially higher than the number of employees actually directly employed at VITP, as given in our survey results. We were advised by BC Stats to use the employment numbers collected in our survey as the direct employment impact, instead of the data generated by the multiplier. The number calculated using the multiplier was high because the ratio of total revenue per employee is much higher at VITP than average within the professional, scientific and technical services industry. To calculate taxes, direct sales from VITP companies were used with the I-O Model government revenue multipliers. This provides an estimate of the amount of taxes generated by the economic activity at VITP at the Municipal, Provincial, and Federal level. The economic impact of out-of-town visitors to VITP was calculated according to BC Stats recommendations, which includes dividing up the amount spent by these visitors according to the “Distribution of Total Expenditures by BC Resident Tourists” table3, subtracting out the front end taxes, and using the appropriate multipliers for each industry to calculate industry-specific impact. Average spending per visitor per day was obtained from Tourism Victoria Exit Survey data. The construction impact was calculated using the direct amount spent on construction; this number was used with the specific multipliers for the construction industry (given in the I-O Model) to determine the indirect and induced construction impact. Taxes generated from construction were also calculated using construction industry tax revenue multipliers. Because sales revenue from VITP companies is used with the multipliers, all tax revenue and construction impact is already included; this is due to taxes being paid out of sales revenue, and construction being funded, more or less, by rents, which also come from sales revenue. Additionally, in order to avoid counting the same dollar of sales revenue twice, we have excluded the VITP office, WSI property
Table 5, page 22, British Columbia Provincial Economic Multipliers and How to Use Them, 1999
3

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VITP Economic Impact Study

Methodology
management, and Corps Commissionaires sales revenue amounts, as all of their sales revenue comes from the sales revenue of VITP companies. Essentially, VITP management and facilities management are suppliers of VITP businesses and therefore are already counted as part of the indirect impact. If their revenue was counted in the sales revenue total for VITP, those dollars would have been counted twice. Because all taxes (municipal, provincial and federal) are automatically included in the economic impact when the sales revenue is run through the sector-specific multipliers, we need to subtract out the federal tax revenue to isolate the provincial economic impact. Most of our figures and information are presented as provincial economic impact, so the federal tax has been subtracted from the total economic impact to get the numbers presented. It is important to mention that some federal tax dollars will in fact be returned to BC and re-invested in this province; however, it would be impossible to determine what proportion of federal tax has an impact provincially. By excluding federal tax entirely, we avoid any possibility of including inappropriate tax revenues in our final figures, but it means that the total dollar impact we have calculated is very conservative. Business visitors to VITP are generally funded by sources external to VITP, for instance, executives from other tech parks may visit VITP for a conference, or potential investors may visit VITP companies. As these visitors usually pay for their own expenses, rather than VITP companies paying for the visitors’ expenses from their sales revenues, we count the revenue the visitors inject into the local economy as an additional impact. The out-of-town visitors’ economic impact is added to the total sales revenue impact to create the total economic impact of VITP on BC’s economy. In an effort to be both conservative and accurate in our results, the safety net multiplier for induced effects was used. “Double counting”, which is counting direct effects from one company as indirect effects from another company, may also complicate our results slightly. An example of double counting would be if one company at VITP purchased products from another company at VITP. The purchase would be reflected in the direct sales of the first company and in the indirect sales of the second. We have made every effort to avoid any instances of double counting in our survey and data calculations; however, double counting is difficult to eliminate completely. It is also important to note that economic impact studies based on sales revenues collected from companies may underestimate the actual impact an organization if firms are in a state of rapid growth. For example, many young start-up companies may not yet have significant revenues but may be receiving funds in the form of venture capital or debt financing. A portion of these funds would be spent locally and would have an impact on the economy. Many of the firms in our study are experiencing rapid growth and therefore we have likely underestimated the total

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VITP Economic Impact Study

Methodology
economic impact that the companies at VITP have on the province. This is further evidence that our results are conservative. In addition to the tenant survey completed by companies at VITP, we also implemented an employee survey to gather information about employee purchases over the past 12 months, salary levels, quality of employment, quality of life, and location of residence. The survey was completed by a random sample of 142 VITP employees. A copy of the employee survey may be found in Appendix IV. In the event that VITP’s owners and managers decide to implement another EIS in 2006, we have provided some suggestions on how to streamline the study in the future in Appendix V.

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VITP Economic Impact Study

Results Results: Tenant Survey
The tenant survey was undertaken to give a numerical picture of VITP’s role in the provincial economy. The results below provide important information about VITP’s contribution to the province. University technology parks such as VITP play a major role in enabling the transfer of technology and innovation between academia and the business world. This economic development function offers important benefits to the local community. We have endeavored to measure the economic impact of VITP by completing an Economic Impact Study (EIS) for the fiscal year 2005. We collected information from each company located at the technology park using a comprehensive tenant survey. The combined total sales revenue of all tenants in 2005 was used to calculate the indirect and induced sales revenue generated locally, and to estimate the direct, indirect, and induced tax revenue impact. Information about the number of employees working at VITP as well as total sales revenue, were used to estimate the number of indirect and induced jobs created in the economy. We also collected construction data which was used to estimate the indirect and induced sales revenue, tax revenue, and employment impacts resulting from construction. Finally, survey data about the number of visitors to VITP in 2005 was used to estimate the indirect and induced business visitor impact on the local economy.

VITP Employment Impact
Our survey results indicate that 995 people were employed by the companies at VITP in the 2005 fiscal year (Table 1). The majority of these jobs are high technology positions requiring advanced skills and education. In addition to these direct jobs, VITP tenants also generate indirect and induced jobs in the local economy. As the park’s tenants purchase goods and services from other local businesses, additional jobs are supported in those businesses. VITP generated 659 indirect jobs in British Columbia. When the park’s employees and those in related business spend their salaries in the economy, they too support additional jobs in retail, services, government, and other sectors. VITP generated 363 such induced jobs. As part of this impact, construction completed at the technology park in 2005 generated 102 direct, indirect, and induced jobs. Six additional direct, indirect, and induced jobs were also generated by the spending of out-of-town business visitors. Therefore, the total employment impact that VITP tenants had in the province was 2,023 jobs. Obviously, the tenants of VITP have a significant impact in British Columbia with respect to creating high quality employment opportunities in Victoria and supporting additional service-sector jobs in the province. The types of jobs offered at VITP play a critical role in attracting highly educated, talented workers to Victoria

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VITP Economic Impact Study

Results
and keeping graduates of local universities and colleges from moving elsewhere in search of employment.
Table 1: Employment impact of VITP in British Columbia, FY 2005.

Type of Employment Impact Direct Jobs Indirect Jobs Induced Jobs Business visitor generated jobs (direct, indirect and induced) Total

Number of jobs generated 995 659 363 6 2023

Total Dollar Impact
The economic impact of VITP tenants in British Columbia based on 2005 FY data was $279.9 million. This figure was calculated from sales revenue, and therefore implicitly includes municipal and provincial tax revenue, as well as construction impact, as these amounts are all generated from the sales revenues of the businesses at VITP. We excluded federal tax revenues generated by VITP from the total impact because this EIS is only concerned with VITP’s impact on the province of British Columbia. Business visitor impact is not directly generated by the sales revenue of the VITP companies, so it was added on to the sales revenue impact to give the total impact. A comprehensive description of how these different impacts contributed to the total dollar impact is presented below.

VITP Sales Revenue Impact
Includes: Provincial and Municipal Taxes, Construction Impact Excludes: Federal Taxes

+
Business Visitor Impact

=
VITP’s Total Dollar Impact

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VITP Economic Impact Study

Results
VITP Sales Revenue Impact
Our results indicate that the tenants at VITP produced $160.2 million in direct sales revenue in FY 2005, net of federal taxes. Due to a multiplier effect, an additional $86.5 million in indirect sales and $32.8 million in induced sales were generated in the economy. Consequently, the tenants of VITP contributed a total of $279.5 million in sales revenue to the BC economy. This amount includes the provincial and municipal taxes generated in 2005, as well as the impact resulting from construction projects that year. Clearly, the companies at VITP are generating significant sales and creating wealth in the province. These sales revenues support the wages paid to VITP employees and create a foundation for re-investment by companies in research and development.
Figure 1.

Total VITP sales revenue impact FY 2005
$32,815,692

$86,539,276

$160,187,914

Direct Sales Revenue

Indirect Sales Revenue

Induced Sales Revenue

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VITP Economic Impact Study

Results
Tax Revenue Impact
VITP companies generate significant tax revenues at the municipal, provincial and federal level. Direct tax revenues to government were amounts paid as a result of VITP tenant expenditures, and included taxes paid on equipment and supply purchases. Indirect and induced tax revenues are associated with spending by the companies that supply VITP, as well as employee spending. Business visitors also contributed tax revenues, as did construction activity. In FY 2005, activities at VITP contributed a total of $42.1 million in tax revenues to the Canadian economy, including $18.8 million in federal taxes, $19.1 million in provincial taxes, and $4.2 million in municipal taxes. These amounts are implicitly included in the total sales revenue impact presented earlier, but we have broken them out here to demonstrate that VITP tenants provide the various levels of government with a considerable amount of tax revenue. The focus of this economic impact study is the effect of VITP on the British Columbia economy. Therefore, the amount of federal tax revenue generated has been excluded from the final figure calculated for the total dollar impact of VITP on the provincial economy.
Figure 2.

Total Tax Revenue Impact FY 2005
$4,182,038

$18,807,351

$19,111,507

Federal Tax Impact

Provincial Tax Impact

Municipal Tax Impact

Construction Impact

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VITP Economic Impact Study

Results
Part of the overall economic impact of VITP in 2005 is construction spending by VITP itself and some companies within VITP. This construction impact is included in the sales revenue impact calculated earlier, but we have broken out the figures for illustrative purposes. In 2005, $7.2 million in direct sales revenue was generated by construction activity as existing facilities were renovated or upgraded to better serve the needs of tenants. Due to a multiplier effect, an additional $3.6 million in indirect sales revenue and $1.2 million in induced sales revenue was generated. Therefore, the total construction impact was $12.1 million (Figure 3). As part of this economic impact, construction projects at VITP directly employed 61 workers, and created 29 indirect jobs and 12 induced jobs due to spin-off effects in the economy. Overall, construction at VITP generated a total of 102 jobs in British Columbia. Again, these jobs have been included in the total jobs calculated in a previous section. We have shown that construction at VITP not only injected money into the local economy but also created a significant number of jobs in the province.
Figure 3.

Construction Sales Impact FY 2005
$1,229,698

$3,616,758 $7,233,516

Direct Impact

Indirect Impact

Induced Impact

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VITP Economic Impact Study

Results
Business Visitor Impact
We collected information from each tenant about the number of visitors to VITP in FY 2005 and the average length of stay in order to estimate the economic impact of these visitors on the province. Visitors included out-of-town consultants, individuals attending conferences, investors, and researchers from other universities or businesses. These visitors would typically be funded by sources external to VITP, and therefore revenues generated by these visitors have been added to VITP sales revenues to give the total dollar impact. There were a total of 1991 days spent in Victoria by business visitors, who on average spent $156.85 per day. As a result, $312,288 was spent on accommodation, food and beverages, local transportation, recreation, and retail by VITP visitors. This direct spending also generated indirect and induced effects in the economy, with respect to sales revenue and jobs. Therefore, business visitors to VITP generated a total of $395,632 in sales and six jobs in British Columbia. Our results demonstrate that there is a great deal of interest in VITP’s operations from outside Victoria and outside the province, and a significant number of visitors traveled here for a variety of purposes, contributing a considerable amount to the local tourism industry.

Summary of Tenant Results
Our research has shown that VITP and its tenants had a significant positive impact on the economy of British Columbia, creating large amounts of sales revenue, increased activity at local businesses, and substantial municipal and provincial tax revenues. We have also shown that VITP generated a considerable number of jobs in the province.

Based on 2005 data, the companies at the Vancouver Island Technology Park contributed over $279 million to the economy of British Columbia.

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VITP Economic Impact Study

Results Results: Education and Origin of VITP Employees
When administering our tenant survey we also collected data on the number of VITP-based employees holding a bachelor’s degree, master’s degree, or PhD. In addition, we asked about the number of people who moved from outside of BC to accept a job at VITP, and how many moved from outside of Canada. We were interested in finding out how the level of education attained by VITP employees compares to the education level of the general population in British Columbia, and we also wanted to determine whether or not the type of employment offered at VITP is attracting skilled workers from other areas of the country and around the world. In FY 2005, 37.5 per cent of VITP employees held at least a Bachelor’s degree (Table 2). Of these, 6.3 per cent of individuals held a Master’s degree and 2 per cent held a PhD. For illustrative purposes it is interesting to compare these figures to the education levels of the general population in British Columbia. The most recent Census taken by Statistics Canada in 2001 indicated that just 17.63 per cent of individuals aged 20 and older held at least a bachelor’s degree4. Only 3.16 per cent of British Columbians held a master’s degree, and just 0.63 per cent held a PhD. Clearly, the level of education attained by VITP employees is significantly higher than that of the general population. This demonstrates that the type of employment offered at VITP is attracting highly educated individuals. It further confirms that the companies located at VITP are engaged in a knowledge economy where it is essential to employ talented, skilled, and educated workers.
Table 2: Percentage of VITP employees who have obtained higher education degrees compared to the general population of British Columbia.

Bachelor’s Degree Master’s Degree Ph.D

VITP employees 37.5% 6.3% 2.0%

British Columbia 17.6% 3.2% 0.6%

Our tenant survey results also indicate that 5 per cent of employees had lived outside of British Columbia but within the rest of Canada prior to accepting a job at VITP. An additional 3 per cent of employees lived outside of Canada prior to working at VITP. This shows that while the majority of workers were from within British Columbia, at least 80 employees moved here from elsewhere to work at VITP. Clearly, the type of employment available at VITP is attracting skilled workers with advanced degrees from other areas of the country and around the world.

4

http://www40.statcan.ca/l01/cst01/educ41c.htm

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VITP Economic Impact Study

Results Results: Employee Survey
In addition to employing a tenant survey to collect data for our Economic Impact Study, we also collected information from 142 individual workers at the Vancouver Island Technology Park. An employee survey was used to gain insight about employee purchases over the past 12 months, salary levels, quality of employment, quality of life, and location of residence. Based on the sample size and using a 95 per cent confidence level, the results are considered accurate within +/- 7.5 per cent. Results of the employee survey are shown in Table 3.
Table 3: VITP Employee Survey Results.

Have you purchased a home or recreation property in the past 12 months? Have you done any significant home improvements in the past 12 months? Have you purchased a vehicle in the past 12 months? Compare your current salary & benefits to the wages you earned prior to working at VITP – is your current salary higher/lower/same? Do you feel that the quality of your job at VITP is higher than your previous job? Do you feel your quality of life is higher now than it was prior to working at VITP?

19% YES 27% YES 32% YES 70% Higher

81% NO 73% NO 68% NO 18% Lower 12% Same

77% Higher 76% Higher

20% Lower 22% Lower

3% Same 2% Same

We found that 19 per cent of VITP employees purchased a home in the past 12 months, and 27 per cent did significant renovations on their home. We also found that 32 per cent of employees purchased a vehicle. Evidently, these individuals are making significant purchases that contribute a great deal to the local economy. VITP workers are earning a living that allows them to make investments in property and vehicles and to make improvements to existing properties. Seventy per cent of employees indicated their salary is higher at VITP than at the job they held prior to coming to VITP. We believe that the high-tech nature of employment at the companies located at VITP requires higher education levels and highly skilled workers. As a result, these jobs tend to pay high salaries. Clearly, workers are earning competitive wages and they are earning more at VITP than they earned in previous jobs. High salaries could be another feature that is

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Results
attracting talented workers to VITP from other areas of British Columbia, Canada, and the rest of the world. With respect to employment quality and quality of life, 77 per cent responded that the quality of their job is higher at VITP than in their previous employment, and 76 per cent indicated the quality of their life is higher. We think that workers are happy at VITP because their jobs are more challenging and enjoyable, and because the environment and services offered at VITP are beneficial. During our data collection we had a chance to talk with many employees, and we were told consistently that people love having access to a fully-equipped gym at the workplace, and they really enjoy the food services offered in the Hard Drive Café. People also appreciate the walking/jogging trails that surround VITP and the outdoor basketball courts. Undoubtedly, VITP offers a pleasant working environment that promotes well-being and health, which improves the quality of employment and quality of life of its employees. As shown in Table 4, our survey found that 26 per cent of individuals live in Saanich, 12 per cent live in Victoria or the downtown core, and 10 per cent live in Oak Bay. Smaller percentages of workers live in Esquimalt, Colwood, Langford, and Sooke. A few individuals even live permanently in Vancouver and Seattle but work at VITP during the week. Therefore, the majority of VITP workers live within a 1520 minute drive, but many people are willing to have longer commutes in order to work at VITP. This suggests that the figures we have presented are relevant not only to BC and Vancouver Island generally, but more specifically to the communities of Saanich, Victoria, and Oak Bay.

Table 4: Location of residence of VITP employees in 2005.

Municipality in which employees live Saanich Victoria/Downtown Oak Bay Esquimalt Colwood Langford Sooke Vancouver/USA Other municipalities (less than 2% of respondents each)

Percent of respondents 26% 12% 10% 5% 4% 4% 3% 2% 34%

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VITP Economic Impact Study

Qualitative Analysis Qualitative Analysis
The tech park model is not a new concept; however, there is an increased focus on clean, sustainable jobs as a desirable cornerstone of any local economy, resulting in renewed interest in tech parks and other clusters of clean industries. VITP has developed according to principles of sustainable development, environmental stewardship, and clean construction. These principles are evidenced by its Leadership in Energy and Environmental Design (LEEDTM) 2.0 Gold rating from the U.S. Green Building Council. For potential tenants, part of the draw of university research parks, such as VITP, is the interactive community of like-minded individuals and companies. Relationships develop and ideas are exchanged among the various firms, partially due to regular interaction with each other in common physical areas, such as workout facilities, high-tech meeting rooms, and the on-site café. Marti (2004) observes that sustainable competitive advantages in the knowledge economy are built by both a company’s internal intellectual capital and the intellectual capital of other companies, and organizations, especially those within technology clusters.5 Research parks such as VITP become knowledge collectives where synergies and cross-functional knowledge sharing between companies can foster greater creativity and discovery, and therefore these parks become very effective in drawing tech companies of many sizes to Victoria. Carrie (1999) suggested regional clusters will compete for business success over the next few decades, rather than the traditional competition among individual firms. Furthermore, success will be closely linked with the knowledge management and knowledge assets of the organization.6 VITP is following this regional cluster model with considerable success. High tech companies’ assets are the employees that they can attract and keep, and the knowledge, skills and abilities that these highly educated employees bring to work each day. Lucas (1988) argues the clustering of talented people or human capital provides increased productivity, which drives the development of cities and regions.7 Glaeser’s (2000) research provides evidence of the linkage between levels of talent and regional economic development.8 These academic papers serve as additional reinforcement of the value of the technology cluster concept embraced by VITP.

Marti, J (2004). Social capital benchmarking system: Profiting from social capital when building network organizations. Journal of Intellectual Capital, 5(3) pp426-442 6 Carrie, A (1999. Integrated cluster: the future basis of competition. International Journal of Agile Management Systems 1 (1) pp45-50 7 Lucas, R. (1998). On the mechanics of economic development. Journal of Monetary Economics, vol. 22 pp1-42 8 Glaeser, E. (2000). The new economics of urban and regional growth. Oxford Handbook of Economic Geography, pp83-98. Oxford University Press.

5

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Qualitative Analysis
"Municipal Software Corporation has grown from two employees at its inception in 1982 to more than 40 people locally. We wanted to ensure that our new corporate facility would accommodate our steady growth, as well as provide a pleasing and dynamic working environment for our employees and our customers. We believe our new location will help us continue to attract and retain the high-calibre employees that are so important to our business. It's essential to provide a healthy productive environment for our employees. And VITP's LEED Gold rated facility delivers that. We will also need to bring our government customers from all over North America to a world-class facility, and it was clear that the Tech Park provided the best flexibility and opportunity for us."
~ Rob Bennett, President & CEO. Municipal Software

Part of the positive impact of VITP is providing challenging, rewarding and lucrative work opportunities to the many local graduates leaving post-secondary institutions in Victoria and the rest of the province. The above quote from Rob Bennett also articulates the importance of a creative work environment and comfortable physical surroundings in keeping employees contented and interested in a long term work commitment. The high level of job satisfaction found through our employee survey indicates VITP is succeeding in creating a positive, creative work environment for its tenants’ employees. VITP has a partnership on many levels with UVic; this partnership includes facilitating student cooperative placements, employing recent graduates of UVic, joint research initiatives and special educational programs. These joint initiatives aid in retaining skilled young workers in the provincial economy. In addition to offering high quality employment opportunities to the local population, VITP’s development strategy emphasizes construction of sustainable facilities and responsible stewardship of the land, water and air of the VITP grounds. There are abundant trails, green space and recreation areas on the VITP grounds, as well as an environmentally sensitive parking area and public displays of biofiltration. The ability to convert technological innovation into high levels of local industrial productivity and global competitiveness is one of the main producers of wealth in industrialized and developed countries.9 VITP’s innovation network ties together the research and innovation of academia and the commercialization of new ideas, resulting in an increased ability for BC to compete in the global technology market. Greater competitiveness from our local companies leads to long term success and growth in BC’s research and technology sector.

Scheel, C. (2002). Knowledge clusters of technological innovation systems. Journal of Knowledge Management, 6 (4) p356-367

9

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VITP Economic Impact Study

Planning for the Future Planning for the Future
Economic Impact in 2008
In addition to measuring VITP’s economic impact in 2005, we were also interested in estimating the potential impact three years from now. As part of our Tenant Survey, we asked each tenant to forecast employment numbers and sales revenues for 2008. We also received projected construction costs for the technology park from the property’s management. Many stakeholders such as taxpayers and government are interested in whether or not VITP companies expect to grow with respect to number of employees and total sales. The survey given to tenants asked each company to predict figures for the fiscal year 2008. This information was collected to give an estimate of the future impact VITP companies may have on the economy of British Columbia. Figure 4 illustrates the total employment impact of VITP and shows that the number of jobs created by economic activity at VITP will increase from 2,023 jobs in 2005 to 3,891 jobs in 2008. As shown in Figure 5, it is expected that provincial and municipal tax revenues generated by activity at VITP will increase from $23.3 million in 2005 to nearly $65.1 million in 2008. Figure 6 compares the total economic impact of VITP in British Columbia in 2005 to predicted figures for 2008. It is expected that VITP tenants’ contribution to the local economy will grow from $279.9 million in 2005 to $750 million dollars to in 2008.

The impact of VITP on the province of British Columbia, in terms of employment, tax revenue, and sales revenue, is expected to be significantly greater in 2008.

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VITP Economic Impact Study

Planning for the Future
Figure 4.

Total Employment Impact of VITP in British Columbia: FY 2005 and projected FY 2008

4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2005 2008 2,023 3,891

Figure 5.

Total Tax Revenue Impact of VITP in British Columbia: FY 2005 and projected FY 2008
$65,083,066 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 2005 2008 $23,293,544

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VITP Economic Impact Study

Planning for the Future
Figure 6.

Total Economic Impact of VITP in British Columbia: FY 2005 and projected FY 2008
$750,022,230 $800,000,000 $700,000,000 $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $0 2005 2008 Total Business Visitor Impact $279,938,514

Total Sales Revenue Impact

The high level of growth forecasted by the companies at VITP is not typical of the most recent annual economic growth rate in BC of 3.5 per cent10; however, it is not surprising as many VITP companies are in the start-up phase of their business, and they are bringing new ideas and technology to market. Although the scale of growth is interesting, these results are only for existing tenants; the increases shown in figures 4-6 do not give any information about new tenants who are interested in renting space in VITP now or within the next three years, which will result in additional sales revenue and employment growth. Our best source of information about the expansion of existing tenants and possible new tenants at VITP is the construction estimates for 2008 from the VITP facilities department. VITP is following a “70/30” expansion plan, where 70 per cent of expansion will result from existing tenants and 30 per cent of expansion will result from new local or international companies. Their estimated expenditure range for construction in FY 2008 is $17 million to $34 million, which will create between 50,000 and 200,000 square feet of additional space. VITP’s low present vacancy rate of 3 per cent and the planned expansion clearly show VITP is a desirable place to do business. Additionally, although companies at VITP are already experiencing success, they will grow considerably over the next three years, providing additional high quality jobs and creating more wealth in the province of BC.

Canadian Economic Observer, May 2006. www.statcan.ca/english/ads/11-010XPB/pdf/may06.pdf

10

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VITP Economic Impact Study

Summary and Conclusions

Summary and Conclusions
Our 2005 EIS has found that the companies at the Vancouver Island Technology Park contributed over $279.9 million to the economy of British Columbia. $279.5 million of this amount was VITP sales revenue, which includes $23.3 million in tax revenue, and $12.1 million in construction impact. The additional $396,000 can be attributed to business visitor impact. VITP had a total employment impact of 2023 jobs – 2,017 from VITP tenants (which includes 102 from construction), and six additional jobs created by business visitors (Table 5).
Table 5: Summary of VITP’s impact on the BC Economy, FY 2005

Dollar Impact

Includes: $4.2 million in municipal tax, $19.1 million in provincial tax, $12.1 million in construction impact

Total Economic Impact $279.9 million

Employment Impact

2023

In addition to contributing to the province financially, VITP also offers qualitative benefits to local residents and the community. Our research has determined that VITP tenants play a significant and important role in the BC economy. In addition to fostering collaboration and promoting the transfer of knowledge between universities and industry, the technology park also creates wealth and generates jobs in the province. VITP’s tenants provide quality employment opportunities for graduates of the University of Victoria, Royal Roads University, and Camosun College, and it also attracts talented workers from other areas of Canada and other countries. Our results demonstrate that VITP companies contribute a substantial amount of sales revenue in the province, and generate considerable tax revenues for municipal, provincial, and federal governments. We have also illustrated that, on average, VITP employees are earning higher salaries, enjoy a higher quality of life, and higher quality jobs than they did prior to working at VITP. Based on 2005 figures, we have clearly shown that the companies at VITP have a significant impact on the economy of British Columbia.

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VITP Economic Impact Study

Works Consulted

Works Consulted
Bongiorno, Steven J. (1994) States innovate programs to grow high-tech industry. Industry Week/IW, Vol. 243 Issue 17, pg 53. Broomhall, D. The use of multipliers in economic impact estimates. Agricultural Economics, Purdue University Cooperative Extension Service. West Lafayette, Indiana. Charney, A. and Pavlakovich-Kochi, V. (2003). University of Arizona Research Expenditures: Generating jobs, wages, and tax revenues in the local economy. An economic and tax revenue analysis for FY 2002. University of Arizona Office of Economic Development, USA. Cross, P. and Ghanem, Z. (2006). Multipliers and Outsourcing: How industries interact with each other and affect GDP. Canadian Economic Observer, January 2006. Statistics Canada – catalogue no. 11-010. Greater Victoria Economic Development Commission: www.bizvic.com Horne, Garry (2003). British Columbia Provincial Economic Multipliers and how to use them. BC Stats, British Columbia Ministry of Management Services. Link, Albert N. (1996). Economic Impact Assessments: Guidelines for conducting and interpreting assessment studies. Publication from the University of North Carolina at Greensboro. Accessed online at http://www.nist.gov/director/progofc/rept-961.htm. Link, Albert N. (2003). University-Related Research Parks. Technology, Vol. 20 Issue 1, p 79-81 Issues in Science &

Pavlakovich-Kochi, V., and Charney, A. (2000). Impact of the University of Arizona Science and Technology Park on the Economy of Tuscon and Pima County: An Economic and Revenue Impact Analysis 1999. University of Arizona, USA. Pavlakovich-Kochi, V., and Charney, A. (2002). Impact of the University of Arizona Science and Technology Park on the Economy of Tuscon and Pima County: An Economic and Revenue Impact Analysis for FY 2000-2001. University of Arizona, USA. Pavlakovich-Kochi, V., and Charney, A. (2005). Economic and Tax Revenue Impacts of the University of Arizona Science and Technology Park during FY 2003-2004. University of Arizona, USA. Regional Economic Profile: www.city.victoria.bc.ca/business/profiles.shtml

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VITP Economic Impact Study

Works Consulted
Schumacher, C., Lysnar, P., McLaren, E., Arin, P., and Spoonley, P. (2004). Smales Farm Technology Office Park: A Social and Economic Impact Study. Massey University, Auckland. National Association of State Universities and Land-Grant Colleges (2001). Shaping the Future: The economic impact of public universities. Washington DC, USA. Walcott, Susan M. (2002). Chinese Industrial and Science Parks: Bridging the Gap. Professional Geographer, Vol. 54 Issue 3, p349-364 Westhead, P and Batstone, S. (1998). Independent Technology-based Firms: The Perceived Benefits of a Science Park Location. Urban Studies, Vol. 35 Issue 12, p2197-2219

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Appendices

APPENDIX I
What is an Economic Impact Study? Economic impacts are those that affect the level of economic activity in an area. An economic impact study (EIS) traces spending through an economy and measures the cumulative effect of that spending. An EIS can estimate the economic consequences of a particular project, organization, or entity on the local economy. There are several classic measures of economic impacts, and various studies have used one or more of the following measures: 1) employment levels 2) value added (or gross regional product) 3) aggregate wages and salaries 4) wealth (including property values) 5) business output (sales volume or spending) Economic impact with respect to total business sales, wealth, or personal income can affect municipal revenues by expanding or contracting the tax base. Direct impacts are the initial, immediate economic activities (jobs and income) generated by the technology park. Indirect impacts are the production, employment and income changes occurring in other businesses/industries in the community that supply inputs to the technology park. Induced impacts are the effects of spending by the households in the local economy as the result of direct and indirect effects from the technology park. The induced effects arise when employees who work for the technology park spend their new income in the community. The sum of the direct, indirect, and induced effects is the total economic impact. The relationship between one form of economic activity and the total additional activity it generates is called the multiplier effect. An EIS is based on the concept of the multiplier, as it is an estimate of how much additional economic activity arises as a result of the technology park. There are sophisticated Input-Output models that calculate multipliers separately for each sector of the economy and for different geographic regions.

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Appendices

APPENDIX II
DEFINITIONS The British Columbia Input-Output Model was developed by BC Statistics and is based on data collected in 1999 by Statistics Canada. This model structures the business sector of the entire British Columbia economy in terms of who makes what and who uses what. It is used to estimate how an increase in output in one industry will impact on other industries and therefore on the entire economy. Multipliers estimate how much additional economic activity will result from an increase in output in an industry. The relationship between one form of economic activity and the total additional activity it generates is called the multiplier effect. For example, an aggregate economic multiplier of 2.50 would mean that for each dollar of output produced in an industry, $2.50 is generated in the economy. Multipliers are used to calculate indirect and induced effects in the economy. Direct jobs refer to the number of jobs in the organizations involved in the study. They include regular and contract jobs. Associated with direct jobs are direct wages and salaries paid to employees. Indirect jobs are generated through purchases of supplies and services from other companies, resulting in an increased demand for products and services in other industries and their increased demand for labour input. These new jobs in supporting industries are referred to as indirect jobs. Accordingly, wages and salaries paid to those employees are called indirect wages. The more a company buys from other firms in the area, the larger the number of indirect jobs will be in that area. Otherwise, these jobs will be generated outside the region. Induced jobs result as employees in both the companies involved in the study and their supplying businesses spend their incomes in the community; this generates additional jobs and associated induced wages. Typically, most induced jobs are generated in retail and services sectors, reflecting household expenditure patterns. Sales correspond to “output”, defined in the input-output model as the value of production. For construction sectors, output is equal to sales of construction companies; but the value of the construction project equals the construction output (sales) plus the cost of materials and outside subcontractors required for the project. Direct tax revenue impacts are generated by expenditures by the firm or business itself. The company makes purchases and expenditures that generate tax revenue dollars to the municipality of Saanich, the province of British Columbia, and Canada.

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Appendices
Induced tax revenues are those revenues that are generated when income or wages are spent in the local economy. When a new industry hires workers, their payroll represents an increase in income to the area. As this money is re-spent, taxes are paid in the form of sales taxes, property taxes, and fuel taxes. In addition, when a basic industry expands, the output and work force of other industries that sell to the basic industry also expand. Workers in these linked industries also re-spend their money in the community, thus generating tax revenues. Assumptions in this study 1) Any companies which had offices/operations outside of the tech park were allocated a representative amount of the total sales revenue of the global company. As this only applied in one case and the type of work done in each location was similar, the percentage of the company’s employees that worked in the province was used to allocate sales revenue (i.e. if 73 per cent of employees of the global company were employed in BC, then 73 per cent of the global revenue was allocated to that operation). 2) For any company not registered in BC (so therefore the company would only pay provincial or federal income tax on a small amount of the profit it generated) we only used 70 per cent of their sales revenue for the study, to conservatively allow for profits that would leave the province and therefore not have an economic impact on the provincial economy. 3) When calculating the provincial economic impact of the sales revenue (direct, indirect and induced impact), federal tax had to be subtracted for each category, yet there is only one multiplier for both direct and indirect federal tax. We allocated 66 per cent of the direct/indirect federal tax total to “direct federal tax” and 33 per cent of the direct/indirect federal tax total to “indirect federal tax”, then we subtracted those amounts from the total sales revenue impact for their respective categories.

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Appendices

APPENDIX III
Vancouver Island Technology Park ECONOMIC IMPACT STUDY
Fiscal Year 2005 Please answer each question as accurately as possible. Where exact numbers are unavailable, you may use your best estimate. If your fiscal year ends on March 31 2006, please do your best to predict your year-end figures. We would also like you to forecast where you expect your company to be in three years.
Company contact person: ______________________________________ Phone number or e-mail address: ________________________________ Employees Total number of employees (FTE’s) for the fiscal year (average) Please list the number of contract employees (including out of town contractors, consultants, etc) not accounted for above Number of employees with Bachelors Degrees Number of employees with Masters Degrees Number of employees with Ph.D’s Number of employees who lived out of province prior to being hired by your company Number of employees who lived outside of Canada prior to being hired by your company Payroll Total payroll (including benefits and source deductions) for the fiscal year If the above total does not include any payments to contract employees, please list those payments here Taxes Is your business exempt from any taxes? (i.e property tax) If so, please list: Amount of GST paid in fiscal year Amount of PST paid in fiscal year Amount of Corporate Income Taxes for fiscal year Amount of Corporate Capital Gains Tax (price over depreciated value of equipment sold) 2005 Forecast 2008

2005

Forecast 2008

2005

Forecast 2008

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Appendices
Scientific Research and Experimental Development Grant (SR&ED) credits/rebates received in fiscal year Research Grants Total value of grants received in fiscal year Expenditures (Goods and Services Purchased by Your Company) Equipment / Office Supplies / Hardware / Software Communications Hotels Restaurants Services (Accounting, Banking etc…) Auto Repairs / Service Entertainment Construction (including renovations or expansion) Transportation (including airfare) Education / Professional Development Expenditures (Goods and Services Purchased by Your Company) Of goods and services purchased in 2005, please estimate the percentage: Of the goods and services you expect to purchase in 2008, please forecast the percentage: Manufactured in British Columbia 2005 2005 Forecast 2008 Forecast 2008

Manufactured in rest of Canada

Manufactured Outside of Canada

Sales Revenues Please give your sales (revenues) for the fiscal year

2005

Forecast 2008

Sales (Goods and Services Sold by Your Company)

Sold to Customers in British Columbia

Sold to Customers in the rest Canada

Sold to Customers Outside of Canada

Of the goods and services sold by your company in 2005, please estimate the percentage: Of the goods and services you expect to sell in 2008, please forecast the percentage:

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Appendices
Visitors Out-of-town visitors/consultants connected with VITP can inject significant revenue into the local economy. Please estimate the total number of out-of-town visitors your company had in the fiscal year: Average number of days per visitor 2005 Forecast 2008

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Appendices

APPENDIX IV
Anonymous Employee Survey 1) Have you purchased a home or recreation property in the past 12 months? (optional) cost: $_________________ 2) Have you done any significant home improvements in the past 12 months? 3) Have you purchased a vehicle in the past 12 months? Y or N

Y or N Y or N

4) Compare your current salary & benefits to the wages you earned prior to working at VITP – is your current salary/benefits: Higher or Lower 5) Do you feel that the quality of your job at the Tech Park is higher than your previous job? 6) Do you feel your quality of life is higher now than it was prior to working at the Tech Park? 7) Have you earned a degree from a university in BC? Thank you for your help! Y or N Y or N Y or N

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Appendices

APPENDIX V
Our recommendations to any consulting team that conducts an economic impact study at VITP in the future are as follows: 1) Shorten the tenant survey The survey that we developed asked for extraneous information that was never needed to complete our analysis. The length of the survey also impeded timely collection of information from each company. Therefore, it is recommended that the survey be shortened to include only the questions about employees and sales revenues. 2) Eliminate business visitor impact from the study While the business visitor impact may be interesting to some stakeholders, the calculations are onerous and time-consuming, and the impact itself is negligible compared to the total impact of the technology park. Therefore, to save time and effort it is recommended this impact be ignored in future studies.

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