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ICA's Local Economic Impact Is In The Millions

FARMVILLE — Town council asked the question:

How much economic impact does the ICA-Farmville immigration detention facility have on the community?

ICA-Farmville has now answered:

A lot.

Town council was told during its work session last week that 103 of the facility’s 230 employees have 23901 zip codes. So they “live right in this community,” ICA-Farmville’s Chief Financial Officer, Warren Coleman, said.

Those 103 full-time equivalent jobs pay approximately $4.5 million in annual salary and wages, according to Coleman.

An analysis of the facility’s impact was requested by town council last fall and Coleman presented the highlights from a 16-page report prepared by the Richmond firm Mangum Economic Consulting, LLC, as ICA-Farmville’s CEO, Russell Harper, listened.

The Farmville facility is designed to house adult male and adult female non-criminal immigration detainees, as contracted by Immigration Customs and Enforcement (ICE) with the Town of Farmville, while those non-violent illegal aliens are being processed through immigration court.

The facility accounts for 61 percent of the community’s administrative support services jobs and, Coleman noted from the report, ICA-Farmville pays average weekly wages that are 30 percent above the average for the local economy as a whole.

The facility also provides $8.4 million in economic output to the town and county, Coleman said, when one looks at the secondary impact the facility has throughout the local economy.

“Hopefully that will make it (the positive impact) come home to rest…the ripple effect of expenditures,” Coleman said regarding the way the economic multiplier effect works.

“So when ICA purchases goods and services, when ICA employees use their salaries and wages to make household purchases, they generate income for somebody else,” Coleman explained, “and that income goes down the line and on and on.

“And when ICA goes and purchases things from other businesses in town, it’s a ripple effect,” he said.

“How do you get $8.4 million? It’s the ripple effect…generated outside the facility,” Coleman explained, including 78 additional non-ICA-Farmville jobs nonetheless attributable to the facility’s economic impact.

The ripple, or multiplier, effect is a well-known economic fact of life. An investment in projects or facilities will generate additional monetary returns in a region or community.

Sheri McGuire, Director of Economic Development, and Executive Director of the Longwood University Small Business Development Center Network, was asked by The Herald to explain this economic principle.

McGuire, not speaking about ICA-Farmville or the study given town council, gave the illustration of a particular industry within a community having a direct impact through its purchasing power in the local economy and its own employment of individuals.

“As the industry purchases goods and services in a community, there is a chain reaction of ‘indirect effects’ as local businesses may then have the resources to expand and hire more employees,” she told the newspaper.

There is also a third “consumption effect,” McGuire explained, “when employees within industry impact the local economy through their own local spending. Multipliers typically vary by industry, but the greater the amount of local purchasing by the industry and the employees, the greater the multiplier.”

Coleman told town council that “in this area, if you look at the whole community, it’s 182 fulltime jobs, $7 million in labor income (wages) and $15.9 in economic output and $1.2 million in local, state, and federal taxes” generated by ICA-Farmville.

“These are not exact dollars that we pay out,” he stressed regarding the wider economic multiplier impact. “It’s the ripple effect of things that happen after an employee goes and buys his food at a restaurant and that restaurant buys food from somebody else on down the line, that ripple effect.”

The ripple effect extends beyond Farmville and Prince Edward, Coleman noted, into the region and the state, as well.

The impact statewide, according to the study, is 399 full-time-equivalent jobs, $19 million in labor income and $43.7 million in economic output and $3.6 million in local, state and federal tax revenue.

Coleman noted the ICA-Farmville project began just when the national economy was sliding into its downturn, the Great Recession creating greater job losses locally than across the state, on average, and so ICA-Farmville’s jobs and economic impact came at a crucial time.

“Fortunately we were able to come into the town with your help and, again, we credit this whole process to the Town of Farmville allowing us to be here in a partnership with you,” Coleman said.

“We appreciate the opportunity, we appreciate the partnership so much that we started in 2008 and this impact is the result of your partnership with us,” he continued. “It’s a big impact on the state and we appreciate the role you play to impact the state, especially during the economic downturn and recovery phase of it.”

Town Manager Gerald Spates, in turn, praised CEO Harper for his “confidence in our community” and said it was “very much appreciated,” noting the multiple projects Harper and his company have done in the community.

“We couldn’t thank you enough and I think the ICA facility’s a prime example of that,” Spates said. “He invested a lot of money in that…We just want to thank you very much for everything you’ve done.”

Farmville, Harper replied, is “a great place to be.”