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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 technology-
based 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 technology-
based 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 The University of Victoria’s Vancouver Island Technology Park


(VITP), facilitates the growth of technology on Vancouver
sustainable Island by providing physical infrastructure that links local,
provincial, national, and international resources with emerging
Economic or growing tech companies. The park provides a facility to
accelerate technology from research labs to the marketplace,
Development by
combining UVic’s capacity for innovation, IDC’s technology
promoting transfer office, with VITP and its associated businesses’ ability
to commercialize new ideas and discoveries. The University
Academic, purchased the VITP from the provincial government in 2005.

Industry & Strategically placed in Victoria, British Columbia’s second


largest and high-tech sector, the park is a major centre for
Government technology activity, and is easily accessible from Vancouver,
Seattle, Portland, San Francisco and other Pacific Rim locations.
Collaboration, It is a LEEDTM Gold facility (Leadership in Energy and
Environmental Design) that concentrates synergistic
as well as
organizations such as the UVic’s Innovation and Development
Corporation (IDC), a tech-transfer office; Co-op office; VIATeC;
Community
National Research Council Canada – Industrial Research
Involvement, Assistant Program (NRC/IRAP), which supports high-tech
business development; and a business centre that can be used
leading to the by high-tech company personnel for meetings and networking.

establishment VITP’s 35 acres house a modern research and technology


centre that enhances the creativity and productivity of its
and maintenance public and private tenants by clustering fuel cell, new media,
wireless, life science/biotech, ocean technology and information
of and communications technologies (ICT) companies and
providing amenities such as a fitness studio. At present, VITP
World-Class
has a 97 per cent occupancy rate; it has embarked on a master
Research and planning exercise to accommodate further growth, seeking to
expand by an additional 250,000 square feet.
Technology

Facilities in

British

Columbia

Page 6
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
Our EIS has found that the tenants at the Vancouver Island
located at VITP
Technology Park contributed over $279.9 million to the
had a economy of British Columbia. $279.5 million of this amount
significant was VITP sales revenue, which included $23.3 million in tax
impact on the revenue, and $12.1 million in construction impact. The
economy of additional $395,632 can be attributed to business visitor
British impact. VITP had a total employment impact of 2023 jobs –
Columbia in 2,017 from VITP tenants (which includes 102 from
2005. 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

Total Economic Impact


Dollar Impact $279.9 million
Includes:
$4.2 million in municipal tax, $19.1 million in provincial tax,
$12.1 million in construction impact
Employment 2023 jobs
Impact

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


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

ƒ Direct jobs and direct sales revenue from VITP companies


ƒ Indirect and induced jobs
ƒ Indirect and induced sales revenue
ƒ Direct, indirect and induced municipal, provincial, and federal tax revenues
ƒ One time direct, indirect, and induced sales revenue and jobs resulting from
construction that took place in 2005
ƒ 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

3
Table 5, page 22, British Columbia Provincial Economic Multipliers and How to Use Them,
1999
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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

Page 23
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

Page 26
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 Number of jobs generated

Direct Jobs 995


Indirect Jobs 659
Induced Jobs 363
Business visitor generated jobs (direct, 6
indirect and induced)
Total 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

Page 27
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

Page 30
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.

VITP employees British Columbia


Bachelor’s Degree 37.5% 17.6%
Master’s Degree 6.3% 3.2%
Ph.D 2.0% 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 19% YES 81% NO


or recreation property in the
past 12 months?
Have you done any significant 27% YES 73% NO
home improvements in the
past 12 months?
Have you purchased a vehicle 32% YES 68% NO
in the past 12 months?
Compare your current salary 70% Higher 18% Lower 12%
& benefits to the wages you Same
earned prior to working at
VITP – is your current salary
higher/lower/same?
Do you feel that the quality of 77% Higher 20% Lower 3% Same
your job at VITP is higher than
your previous job?
Do you feel your quality of life 76% Higher 22% Lower 2% Same
is higher now than it was prior
to working at VITP?

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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VITP Economic Impact Study

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 15-
20 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 Percent of respondents


live
Saanich 26%
Victoria/Downtown 12%
Oak Bay 10%
Esquimalt 5%
Colwood 4%
Langford 4%
Sooke 3%
Vancouver/USA 2%
Other municipalities 34%
(less than 2% of respondents each)

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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.

5
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.
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VITP Economic Impact Study

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.

9
Scheel, C. (2002). Knowledge clusters of technological innovation systems. Journal of
Knowledge Management, 6 (4) p356-367
Page 37
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
The impact of VITP companies expect to grow with respect to number of
employees and total sales.
VITP on the
The survey given to tenants asked each company to predict
province of figures for the fiscal year 2008. This information was
British Columbia, collected to give an estimate of the future impact VITP
companies may have on the economy of British Columbia.
in terms of Figure 4 illustrates the total employment impact of VITP and
shows that the number of jobs created by economic activity
employment, tax 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
revenue, and and municipal tax revenues generated by activity at VITP
will increase from $23.3 million in 2005 to nearly $65.1
sales revenue, is million in 2008. Figure 6 compares the total economic
expected to be impact of VITP in British Columbia in 2005 to predicted
figures for 2008. It is expected that VITP tenants’
significantly contribution to the local economy will grow from $279.9
million in 2005 to $750 million dollars to in 2008.
greater in 2008.

Page 38
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 3,891
2,500
2,000
2,023
1,500
1,000
500
0
2005 2008

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
$23,293,544
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$0
2005 2008

Page 39
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 $279,938,514
$400,000,000
$300,000,000
$200,000,000
$100,000,000
$0
2005 2008

Total Sales Revenue Impact Total Business Visitor 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.

10
Canadian Economic Observer, May 2006. www.statcan.ca/english/ads/11-010-
XPB/pdf/may06.pdf
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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

Total Economic Impact


Dollar Impact $279.9 million
Includes:
$4.2 million in municipal tax, $19.1 million in provincial tax,
$12.1 million in construction impact
Employment 2023
Impact

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/prog-
ofc/rept-961.htm.

Link, Albert N. (2003). University-Related Research Parks. Issues in Science &


Technology, Vol. 20 Issue 1, p 79-81

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.
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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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VITP Economic Impact Study

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.

Page 46
VITP Economic Impact Study

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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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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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 2005 Forecast 2008


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 2005 Forecast 2008


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 2005 Forecast 2008


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)

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Scientific Research and Experimental Development Grant
(SR&ED) credits/rebates received in fiscal year

Research Grants 2005 Forecast 2008


Total value of grants received in fiscal year
Expenditures (Goods and Services Purchased by Your 2005 Forecast 2008
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 Manufactured in Manufactured in Manufactured


Services Purchased by Your British Columbia rest of Canada Outside of
Company) Canada
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:

Sales Revenues 2005 Forecast 2008


Please give your sales (revenues) for the fiscal year

Sales (Goods and Services Sold to Sold to Sold to


Sold by Your Company) Customers in Customers in the Customers
British Columbia rest Canada 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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Visitors 2005 Forecast 2008
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

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APPENDIX IV

Anonymous Employee Survey

1) Have you purchased a home or recreation property in the past 12 months? Y or N


(optional) cost: $_________________

2) Have you done any significant home improvements in the past 12 months? Y or N

3) Have you purchased a vehicle in the past 12 months? 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 Y or N
your previous job?
6) Do you feel your quality of life is higher now than it was prior to working Y or N
at the Tech Park?
7) Have you earned a degree from a university in BC? Y or N

Thank you for your help!

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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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