Estimates on Grand Canyon University's economic impact in Tucson varied widely over time

2013-08-04T00:00:00Z Estimates on Grand Canyon University's economic impact in Tucson varied widely over timeDarren DaRonco Arizona Daily Star Arizona Daily Star
August 04, 2013 12:00 am  • 

Tucson may have missed out on the pot of gold at the end of the rainbow when Grand Canyon University decided to move to the East Valley.

Or maybe it didn't lose as much as some thought.

While an economic impact analysis commissioned by the city indicates the school would have infused $446 million into the local economy by 2020, a review of city records raises questions about the numbers used to achieve that projection.

According to the analysis, the city would have reaped about $12.7 million in tax revenue while Pima County and other taxing districts would have pulled in about $31 million. In addition, the project would have created about 3,500 direct jobs and 2,000 indirect jobs at businesses that would have benefited from the university and its projected 7,500 students.

While the city conducted an independent audit, the numbers in the analysis came from GCU officials. And records show they were revised frequently, with little explanation and always in ways that made GCU look more desirable.

Sarah Murley, a partner with Applied Economics, which performed the economic analysis for the city, said the figures changed "quite a bit" during the analysis.

In January, initial construction costs were estimated between $75 million and $100 million, city records show. But the next month, GCU's CEO Brian Mueller told a group of investment bankers the university was only planning to spend between $50 million to $60 million over five to six years of construction.

But in a matter of months, construction cost projections ballooned to $179 million, which is the number the city based its analysis on. The analysis was issued in May.

A GCU spokesperson said the university's management team was out of town and would not be able to respond to questions.

Chris Kaselemis, director of the city Economic Initiatives Program, said all the numbers came from GCU via Tucson Regional Economic Opportunities.

He said the figure of $75 million to $100 million figure didn't factor in dorms because the university wasn't going to build them at first. But he said GCU officials reconsidered and added them into the estimates.

Another number that changed was the percentage of the anticipated 7,500 students who would be full time.

In March, Murley pegged the number at 10 percent, since 90 percent of students at GCU's Phoenix campus were part time.

She cautioned that overstating how many full-time students would attend would inflate student spending impacts.

But a few months later, the city instructed her to base the analysis on a student body composed of 80 percent full-time students, 45 percent of whom would be living on campus.

Kaselemis said the city ran only the numbers supplied by GCU.

Unlike other businesses, Murley said, when it comes to analyzing a college or university's impact, you have to rely heavily on the numbers a school provides.

What it means disputed

"I think it's clear that there was a lot of fuzzy math being floated around trying to play us off against the Phoenix East Valley," said Councilman Steve Kozachik. "I could yield similar results for a new Circle K if I'm allowed to insert any number I want."

He said the numbers show the city wasn't getting as good a deal as some critics suggested.

"I'm guessing the people who are critical of the city for not rolling out the red carpet for GCU didn't do much homework on the proposal," he said.

But Joe Snell, TREO's CEO, said the changing numbers don't reflect bad-faith bargaining.

"Typically, these numbers change as the project evolves. As a company narrows the search to a specific site or location, factors such as site characteristics ... often require the company (to) revise its projections," Snell said in an email. "It is not uncommon to have different projected impacts as a project evolves or for different sites."

Anyway you slice it, Snell said, the GCU project would have been a boon for Tucson.

"For me, the real issue is that this project represents a significant future impact to our regional economy," he wrote. "Regardless of which site or jurisdiction the projects lands on, this region must embrace these types of game-changing opportunities."

Kozachik said he doesn't have any problem with GCU wanting to build here. He just wants the facts.

"If they want to come down here and work with us, I'd love to hear how they'd feel about putting a small campus at the west end of the streetcar line," Kozachik said. "Let's set aside the salesmanship, sit down at a table and simply roll out the real needs, the real benefits and costs and see if we can cut a deal without dividing the community over it."

Contact reporter Darren DaRonco at 573-4243 or ddaronco@azstarnet.com.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Activate

Latest Election 2014 video

More

3rd congressional district representative Raul Grijalva

Grijalva explains his position on voting, education, immigration reform, and minimum wage.

Follow the Arizona Daily Star

Featured businesses

View more...

Deals, offers & events

View more...
Get weekly ads via e-mail