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					The Sandusky, Ohio Development Initiative August 14, 2008

Project Information
Project Name:
The Sandusky Development Initiative Project Developer: The City of Sandusky, Ohio

Study Sponsor:
The CEDAR SHORES Foundation Sandusky, OH 44870 Telephone: 419.627.0381

Economic Impact Study Consulting Team:
Jon P. Morrow and Associates. Sandusky, OH Project Manager/Principal Investigator: Jon P. Morrow The CEDAR SHORES Foundation The use of any or all partsof this report is pre-approved in writing by the CEDAR SHORES Foundation.

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Table of Contents

I. II. III. IV. V. VI.

Highlights…………………………………………………………………………………..3 Study Purpose and Background………..…………………………………………………..8 SDI Project Description……………....……………………………………………………9 Research Methodology, Data and Assumptions…………………………………………..11 Understanding Economic Impact Analysis……………………………………………….16 Area Demographic and Economic Analysis……………………………………………....22 …………………………………..31

VII. Project Economic Impact Analysis(Major Findings)

VIII. Conclusions and Recommendations to Achieve Economic Impact………………………40

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I. Highlights
A. Project Overview This initiative focuses on the proposed Development District which consist of a Marina District, a Safety District, a Low Power Vehicle and Health District, a Drug Control District, a Crime Prevention District, an Environmental District, A Garden District, a Historical District, an Educational Incentive District, Recreational Health District,and a Young Adult Chaperone District. The Sandusky Development Initiative (Various District Projects) in Sandusky, Ohio. The study was conducted for The CEDAR SHORES Foundation (A Community Foundation) By Jon Morrow An economic and political strategistliving in Sandusky, Ohio. Four types of economic impacts are estimated, using best available dataand reasonable assumptions: 1) spending impacts; 2) employment impacts; 3) income impacts; and 4) tax impacts. The Development Initiativeis a mixed-use Specialized Districts project being proposed for the City of Sandusky. The project is best seen as one aspect of the CityofSandusky’s overall strategy to revitalize Sandusky and its Downtown area. Over the past twenty years, Sanduskyhas experienced a significantdeclinein its population, housing stock, employmentand tax base. These trends are discussed in Section VI of this report. This decline underscores the importance of a new self initiated investment in the City to become a national tourist destination and manufacturing center in the future without the use of any taxpayer funds. The Development Initiative project consists of 10 parts:           Marina District Recreational Health District Low Power Vehicle (LPV) and Health District Drug Control District Crime Prevention District Environmental District Beautification District Historical District Educational Incentive District Young Adult Chaperone District

The Development Initiative is designed to attract businesses, families, and single adults to the Sandusky area, which will in turn spur private sector development and growth. The public sector development component is merely establishing and maintaining the various Districts after the State has granted its legislative approval. The Development Initiative is a loose private-public association between private Sandusky businesses and the City of Sandusky.

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The CEDAR SHORES Foundation’s reason for commissioning theinitiative was to help the Sandusky/Erie County communities understand the possible ramifications that the proposed Initiative mighthave on the economy of the City of Sandusky and Erie County. TheCEDAR SHORES Foundation believes this information is important to community residents, especially in light of the fact that this project will use little to no taxpayer funds. . The Initiative’s sole purpose is toprovide an estimate of the economic impacts of the project on the Sandusky/Erie Countyarea. This project report and any of its contents may be construed as an endorsement of this Initiative by Jon P Morrow and his Associates B. Main Project Components After various surveys and analysis we have found the City of Sandusky’s economic blight is due to artificially inflated rental premiums that are supported by various government entities. The primary federally administered program that has caused the weakened Sandusky economy is The Department of Housing and Urban Development (HUD) Section 8 housing assistance program. This is not to say that there is not a need for such a program. It has a place and a purpose and no person in need should feel ashamed to take advantage of this program. When there is a high concentration of low-income families in an area then it is hard to start any economic development. By creating districts within the initiative it should kick-start the development process and create hundreds of ancillary jobs that will help to move low-income families into the middle-income bracket. This program will displace a high concentration of low-income wage earners that refuse to take good paying jobs or do not wish to educate themselves in order to obtain one of these jobs. It is only through this dispersal that a mix of low, middle, and upper income diversity may be achieved and allow for natural development of the area unfettered from taxpayer funds. Section 8 housing is awell-intentioned program that has depressed home values in the Sandusky area in two ways. Entrepreneurs may purchase poorly maintained houses and with a minimum amount of investment be able to rent them for a high price to section 8 qualified low-income families. Landlords seeking to maximize their profit then perform very little maintenance on these properties and the resulting deterioration devalues the surrounding property. Landlords may be well intentioned but the section 8 program does little to instill any pride of ownership or any responsibility of the property because renters are not paying the rent with funds they earned. There is a direct correlation between the care of a dwelling and the amount of rent that is charged and the amount of that rent the renter has actually earned. It is more advantageous for entrepreneurs to rent poorly maintained houses because of the high-subsidized rent premium that HUD is willing to pay and the destruction that uncaring renters inflict upon the property. The HUD program depresses land values by maintaining a system of poorly maintained homes and actually attracts poorly educated, low-income families. The HUD program also discourages investment of any large home developers to the blighted district that would build new homes or renovate old homes because it is not advantageous to do so because of the artificially depressed housing market property values. New development in the private sector for other than low-income housing is present primarily only upon Sandusky’s waterfront corridor. Because of the added value the waterfront affords, it is economically advantageous for private developers to build other than low income

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housing there as the relatively low income from the HUD subsidy is far outpaced by the profit potential of an upper income waterfront development. Sandusky may be able to reduce the number of low income families taking advantage of the HUD program by increasing the property values of poorly maintained housing through unique districts and programs designed to entice developers and renovators rather than government subsidized landlords. In this fashion the whole community is developed and improved rather than having a divided community consisting of a highly developed waterfront and a very undeveloped inner city. The goal of the Sandusky Development Initiative (SDI) is to reduce government subsidies by 67% within the City of Sandusky by adding value to blighted property in order to spur economic growth through development of said property. By reducing the amount of government aid by two thirds to section 8 families this will spur development by initially decreasing property values (a large amount of rental property and fewer renters) so a switch can be made to property owners (transforming rental property into owner lived in property) so that sweat equity in these properties may be realized by the city in the form of higher property values.

There are easier ways to reduce low-income housing assistance.   Greatly increase property tax on residential rental properties Reject HUD’s assistance and grants for a minimum of a 5 year period

Embracing these two concepts is tantamount to political suicide in Sandusky’s current political climate. Property values are depressed because of a number of factors. Tangible factors are:     There aremany poorly maintained properties in Sandusky There is a large supply and low demand for housing in Sandusky HUD policy maintains blighted property The current economy does not lend itself well to the real estate markets

Intangible factors were arrived at by conducting a study of middle-income residents in surrounding communities and interviewing them upon the reasons why they did not reside inthe Sandusky area. The twelve top reasons for not locating to Sandusky or moving out of Sandusky were:        Crime Illegal Drugs Exposure of crime and drugs to children while in or after school. Fear of discrimination of children on school sports teams Fear of bad neighbors Fear that the neighborhoods will never improve Fear of reverse racism

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     Parking Fear of skateboarders and gothic (Columbine like) juveniles Fear of gang violence Word of mouth Dealing with local government

Most of these fears whether well founded or not are typical of a community with a high ratio of low income residents as compared to middle and upper income residents. CEDAR SHORES goal is to:  Increase property values so landlords are enticed to sell to renovators or developers.  Attract high paying low skill manufacturing jobs that move low-income families into the middle income demographic.  Reduce crime by seriously increasing the police presence.  Reduce the supply of low income housing by incentives for converting multi family units back into large single-family dwellings.  Give parents an incentive to educate their children  Use unique and specialized districts to maintain a ratio of low income to middle income to upper income residents in order to attract and spur continuous economic growth.  Turn Sandusky, OH into a top 10 national tourist destination.

Public Development Component (City of Sandusky): The public component of the project will include three parts: 1) Petitioning the Ohio State Legislature to amend State Liquor Control Laws 2) Petitioning the Ohio State Legislature to create a new classification of Vehicle ; and 3) Repeal and amend various city ordinances to allow for the inclusion of the many specified districts.

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Overall Study Results and Recommendations Measurable Economic Impactsof the SDI About two-thirds of the total local economic impact of the SDI Project is expected to occur in the City of Sandusky and the otherone-third in other parts of Erie County outside Sandusky.1On an overall basis, the SDI consulting team concludes that the SDI project will generate these estimated overall local economic impacts: 1.Local Spending Impact: Across all project phases, the project’s local spending impact will total $45.5 million over the 2009-2014

2. Local Employment Impact: The combined total local employment impact across all
project phases (2009-2014) is estimated at 750, with 250 of these jobs being captured by Erie County outside Sandusky and 500 jobs captured by the City of Sandusky. This will be primarily from renovation and improvement of the housing market and the resulting development of small businesses. Ancillary employment resulting from the Initiative should top 2500 new jobs created by the end of the five year period 3.Local Income Impact: Across all project phases, the total local income impact is estimated at $45.5 million. 4.Local Tax Impact: Across all project phases, the total local (City, County, other local) tax impact triggered by local project spending is estimated at $30 million over theprojects lifetime (estimated useful life of 10 years).

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Note: Based on population, the City of Sandusky represents 33.5% of Erie County’s total population. The other 66.5% of the County’s population lives outside the City of Sandusky.

Actions to Enhance Long-Term Community Benefits

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From a longer term community development standpoint, the following guidelines should be observed in approaching the development of the SDI Project: 1.Ensure that adequate public access to the lakefront is protected and public space in the Marina District area is preserved. 2.Ensure that development is built and operated in an environmentally sound manner. To the extent possible, appropriate green building techniques and materials should be used in the constructionand operations. 3.Work during the construction and operating phases of the project to provide employment opportunities for City residents. 4.During the operating phases of the project, businesses based inSandusky and Erie County should be utilized wherever feasible by the City of Sandusky to provide goods and services required by the project. Each of these guidelines could help to ensure that the project has positive long termeconomic and community development impacton Sandusky. Positive Gains for Sandusky from the Project While some readers may only look at the economic impact numbers, it is important to bear in mind that the SDI project will provide other qualitative positive impacts to thecommunity, if the project is properly developed and operated. These include: 1.Enhancing the physical appearance of the City’s lakefront by renovating homes and current commercial facilities through residual development (hotel, shopping, and marina support services). 2.Preserving and upgrading parks and public space available for community recreation. 3.Enhancing the City’s marina and recreational boating industry by offering improved amenities to boaters. 4.Providing redevelopment synergy to the entire city by attracting new residents, who may utilize downtown shopping, entertainment and business services. 5.Expanding the City’s currently declining population base by adding new middle and upper income residents, whowould act as workers, taxpayers and shoppers in the community. 6.Raising all real estate property values in the City and in nearby communities, and in so doing help revive the City’s weakenedtax base. 7.Expanding the range of housing choices available to Sandusky/Erie County residents and non-residents looking for new housing opportunities.

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8.Adding positively to the local tourism industry through a new districts and residual and direct improvement of hotels, retail shopping, restaurants, and marina support services. 9.Providing new tax revenues for the local schools, the library system and City Government through the expanded income tax base and improved property values. 10.Providing the community with enhanced law enforcement.

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II.

The SDI Project Description

The SDI Projectis a real estate value development project being proposed for City of Sandusky. The project consists of ten main parts:

 The Marina District
Ohio Revised Code 715.15 Ship canals. Any municipal corporation may construct, open, enlarge, excavate, improve, deepen, straighten, or extend, any canal, ship canal, or watercourse located in whole or in part within such municipal corporation, or lying contiguous thereto.Date: 10-01-1953 Ohio Revised Code 715.31 Wharves and docks. Any municipal corporation may: (A) Regulate public landings, public wharves, public docks, public piers, and public basins; (B) Fix the rates of landing, wharfage, dockage, and the use of such facilities. Effective Date: 10-01-1953 We propose turning Shoreline Park in to a 100% transient Marina. This 180 slip marina complete with fuel docks, power, water, bath house facility, swimming pool, and golf cart and bicycle rental depot would entail building a break wall and removing the landmass that separates the two old ship docks. Marine siding would have to be installed and the resulting dock space would also have to be dredged. We would estimate the cost of $8 to $10 million for construction of a state of the art facility. The marina could pay for it self through transient dockage fees and contributions from the other created fees within the various districts being created within the plan. A Marina Commissary facility and Bathhouse (this could be at the old wave action pool) would need to be built or renovated and water and power to all docks would need to be provided. The City could make this a showcase facility by placing lighted fountains in the middle of the Marina so the water does not become stagnant and it still becomes a focal point of the downtown. Furthermore, an amusement park might be enticed to erect a viewing tower here (or the city may be able to afford one if the Initiative works better than the conservative plan) that is lighted and easy for boaters to recognize and that would be high enough that people would want to pay to ride to the top and view the bay. This structure could be made to adapt to the area it is in and have that distinctly Victorian look of downtown. Turning the old wave action pool facility into an expanded boaters services facility is part of the Transient Marina Plan. Bicycle rentals, golf cart rentals, open the pool back up and provide washers and dryers for visiting boaters. This would also be an excellent place for a tourist center. A large projection screen could be placed on the facility to play old movies at night…This venue holds endless possibilities. But what, pray tell, will bring the boaters to Sandusky? The draw needs to be a fun, safe, and economical place where single adults as well as families can have a good time in a safe atmosphere. It will be the entertainment and the taverns as well as the ambiance and safety that we will provide by seriously upping the concentration of law enforcement personnel. Tourists don’t come to downtown Sandusky because we do not have enough quality entertainment and we do not have enough easily accessible transient dockage that is widely known by boaters. We also do not have a reliable way to move people from place to place downtown cheaply and efficiently.

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The entire transient dockage idea could pay for itself. The city could issue municipal bonds and through the following attractions and benefits the other districts provide the Marina could pay itself off in 5 to 7 years by a very conservative estimate. We estimate the Marina to cost no more than $10 million with a projected contribution over a 5 year period from the combined districts to the Marina district in excess of $17 million. So not only will it pay itself off over a 5 year period but it should be able to do significant upgrades to the marina and provide for some major entertainment like an outdoor amphitheater providing family and adult entertainment like what Cedar Point provides at the Red Garter Saloon. Shows that would draw not just boaters but all tourist (every day every other hour with day and evening shifts).

 The Low Power Vehicle District

Ohio Revised Code 715.22 Vehicles and use of streets. Any municipal corporation may: (A) Regulate the use of carts, drays, wagons, hackney coaches, omnibuses, automobiles, and carriages kept for hire or livery stable purposes; (B) License and regulate the use of the streets by persons who use vehicles, or solicit or transact business thereon; (C) Prevent and punish fast driving or riding of animals, or fast driving or propelling of vehicles through the public highways; (D) Regulate the transportation of articles through such highways and prevent injury to such highways from overloaded vehicles; (E) Regulate the speed of interurban, traction, and street railway cars within such

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municipal corporation. Effective Date: 10-01-1953 We can start to develop the Marina district ourselves by doing what is necessary to attract tourism by providing a safe fun place for tourist to have a good time. We propose implementing a plan to develop a golf cart accessible right of way throughout the city very similar to what Put in Bay and Kelly’s island has. We would suggest that the path run from Margaritaville on Rte 6 to Tofts Dairy then on to W. Monroe St. going by Lyons Park, passing by Sandusky Bay Marina, to E. Monroe Street (and allow side streets 3 blocks south and north to the water to participate), to First street, to Cedar Point Drive to Castaway bay. Then it could later be connected to Pipe Street to Perkins Ave to the Angel Path development, and then down Galloway Rd if (Perkins Township wishes to participate) all the way to Plum Brook Country Club, at some later date. By making separate paths beside major roads such as Rte 6 (no one wants slow moving golf carts on Rte 6 or Monroe Street) and utilizing side streets where the speed limit is 25mph and turning some streets into one way streets, golf carts should be able to move around as safely as regular cars. We suggest something different than what Put in Bay has done. • • • The Safety District The Environmental District LPV’s Low Powered Vehicles

We would suggest that the city petition the State Government to recognize two new municipal districts and a new classification of bicycles and golf carts within a safety district that would be created along this path. An environmental district and a safety district would be created here. The safety District would be streets that the city designates as being safe for golf carts and these streets would be marked with reflective green road paint. Additional lighting would be needed on theses streets and where these streets cross major thoroughfares traffic signals will need to be installed if not already present. Multiple safety aspects will be drawn up by the county engineer and submitted to the city council before submission to the state. What will be unique about a safety district is that bicycles and golf carts operating within the safety district will cease to be classified as motorized vehicles. Golf carts and bicycles will come under a new classification as low powered vehicles. Low Powered Vehicles (LPV) must have the same safety illumination of a car. They must comply with all noise ordinances and must have seat belts and front and rear roll bars. LPV’s must be governed to not exceed 12 mph if powered by a combustion or electric motor. We propose that in this safety district that the new LPV classification be exempt from current DUI laws and districts may designate their own laws pertaining to intoxication. Yes, we are talking about driving golf carts legally under the influence. We advocate that you may even posses an open container while operating a golf cart. The safety district will still be safe even though there will be impaired driving. We advocate using the public intoxication law and expanding it to include the erratic operation of a LPV. A 24-hour suspension of an LPV operator’s license and a $365 fine to be paid to get the license back. Three strikes on an LPV public intox and your LPV license is pulled forever. If you have a driver’s license you can get an LPV license by taking a short written test and paying a small fee. If you do not have a driver’s license then you have to take an LPV drivers test and a written test to get your license. If you choose to drive a golf cart without an LPV license

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then your LPV you drive is then considered to be a motorized vehicle and is subject to all of their laws. Since LPV’s are limited to 12 mph there is not as much chance that some one would hurt himself or herself or someone else by driving one impaired. If somebody is going to drive impaired wouldn’t the public rather them be operating a slow moving golf cart or a bicycle? The thought process is that the current BAC threshold is geared towards vehicles that are much more powerful, much faster, and weigh much more. Golf carts governed to 12mph, are much lighter, need less reaction time to operate and though you can still get hurt driving one impaired, you are much less likely to do so in a golf cart rather than in a full size car. By moving people who would commit a DUI to a lighter and much less powerful vehicle we are actually helping to limit the potential of serious accidents by altering their mode of transportation. Remember, if some one is driving erratic the police can still pull them over and impound their cart for a night and suspend their LPV license. The current BAC for a DUI is .085. For a public intox while operating an LPV we would suggest a BAC limit of .095. This is more realistic for this type of vehicle because of its slow operation a slow reaction time of the operator is not as worrisome as that of someone operating a car that goes 5 times faster. Some will say that drivers of cars are to impatient for these slow moving vehicles and that accidents will result from this sharing of the road. We agree there will be accidents but by marking the streets that are on the designated cart path those that are in a hurry will avoid these streets. We will also have many more police to crack down on impatient drivers. Additionally, the city may find areas to improve traffic flow by turning some streets into one way streets and also eliminate some four way stops, effectively creating thoroughfares. We would suggest that children as young as 13 may apply for an LPV license. Children applying for a license must of maintained a “B” average at school to get a $50 license and an “A” average only pays $25 for their license and adults would normally pay $12 for the written test and $25 for the driving and written test. This gives children an incentive to get good grades. We suggest that golf carts may only operate from April through October and that the city may sell license plates for these carts in two varieties. A cheap license plate of $40 for carts that may operate from 7am to 9pm on designated streets within the safety district or the more expensive plate that cost $365 and is allowed on the streets from 7am to 4am. Proceeds from the plates will be divided 33.33% to the safety district and Marina district, 33.33% to the general fund, and 33.33% to Law Enforcement. Golf cart rental companies authorized to operate in Sandusky must charge a tax of $2.50 per hour or $10 per day that is paid equally to the Safety District, the general fund, and to Law Enforcement. Bicycle rentals will operate the same way but will be $1.25 per hour or $5.00 per day. The city will mandate minimum rental rates for the first five years to entice companies to rent golf carts and bicycles here so that competition is minimized. Bicycles operating on the cart path will not be required to have an LPV license plate but those that do not have the plate are subject to the normally applicable laws whereas, those that have the plate are subject to LPV laws. Those Carts straying outside the path are subject to the normal laws of motor vehicles and a minimum $1200 fine for operating a cart on an unapproved path. Additional police will be added for not only enforcement on the path but slower moving patrols done with 4 wheeled all terrain vehicles, golf carts, and bicycles will help maintain a presence longer in problem areas thereby discouraging crime throughout the pathway. We believe it is reasonable to assume the cost to operate the golf cart path over a 5 year period would be close to $950,000.00 but the revenue generated after cost have been covered

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would be $6.95 million. This means that over the 5 year period $2.32 million would contribute to The Marina and Safety District (improvements and debt), $2.32 million to our local law enforcement, and $2.32 million to our general fund.

 The Drug Control District
Illegal drugs have a major foothold in our community because we do not adequately fund our police department. Some of these drugs lead to other serious crimes such as theft, violence, and murder to support the users habit. We want to win the war on drugs by changing the tactics by which it is fought. We, by no means, condone using an illegal substance but it is not hard to recognize that some drugs are more dangerous than others. We believe if it is possible to save the taxpayer money by the swift and expeditious application of justice then the community should take advantage of such a program. Again we would ask the city council to petition the state legislatures to create a drug control district and use us as the guinea pig. Marijuana has become very pervasive in our society and has become somewhat burgeoningly accepted. At the very least it is not accepted by law enforcement as a hard-core drug even though it is still generally accepted as a gateway drug. Fines for possession of marijuana have become quite minor. No one has ever overdosed by smoking marijuana as far as our research can find. What would a Drug Control District do? It would automatically double all fines and incarceration time for possession of all illegal substances except for marijuana. It would automatically triple all fines and incarceration time for trafficking all illegal substances including marijuana. The Drug Control district would relax some marijuana laws as long as an individual purchased a “Drug Control Permit” All persons wishing to obtain a DCP may do so as long as they are at least 22yrs of age. The DCP would cost $20/week or $40/ month or $100/quarter or $360/year. The personal use amount for DCP holders in the Drug Control district of marijuana would be three times the current limit. When you get your permit it will have your picture but not your name on it. It will have your SSN number on it. In order to get a DCP your state issued drivers license must have your SSN on it. The only list of DCP holders will only reference them by their SSN for privacy. A DCP means that you automatically agree to forgo a trial of any sort and automatically agree to plead guilty to a marijuana charge if the DCP is presented to an officer. This automatically entitles you to a pre arranged plea deal. If you are caught smoking or consuming marijuana and present the DCP to the officer he will write you a citation referencing your DCP number. You will be free to go. You have 3 days to pay a $40 fine. The only thing that appears on the police docket is your DCP number. If you pay the fine then nothing happens to you. If you do not pay the fine then your name is released to the police docket, which the newspapers may then print and you will be prosecuted as normal. If you are caught merely possessing a personal amount of marijuana (which is three times

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the normal amount in the Drug Control district). Then you will be issued a warning and the marijuana will just be confiscated as long as you show the officer your DCP. The benefits of a Drug Control District are many.  Trafficking will most likely occur outside the city.  Use of hardcore and dangerous drugs should decline  Permit fees are collect 50/50 by the county prosecutor and the Sandusky Police Department, which can be used to toughen the enforcement of drug laws. Quite literally, what we are saying is, “If a person is going to do an illegal drug in Sandusky we want that drug to be marijuana” Safety, cost, health, and enforcement are the reasons why. The street value of marijuana is relatively inexpensive. It is a relatively safe drug and only through long-term heavy habitual use does it threaten a person’s health. At 22 years of age you are considered an adult and so you should be smart enough to recognize marijuana for what it is and not let it lead to other more deadly drugs. The police can now get cocaine, crack, heroine, ecstasy, meth, acid, LSD, off the streets with the money collected from DCP’s. Marijuana is still illegal, we are just expediting justice. We believe it is reasonable to assume that over a 5 year period it will cost $436,000 to administer this system using shared facilities and equipment from other districts created within this plan. The revenue created after all cost are covered would be estimated at $7.87 million and that means a contribution to local law enforcement over a 5 year period of $3.7 million and $3.7 million to the county prosecutors office.

 The Young Adult Chaperone District Ohio Revised Code 715.53 Taverns. Any municipal corporation may regulate taverns and other houses for public entertainment.
The Young Adult Chaperone District, we will grant you is a controversial district but we believe that it will make Sandusky, OH and other cities within Ohio a spring break like destination for college kids as well as families. Again, the Chaperone district only applies to the safety district. The Chaperone district applies to young adults that are 17, 18, 19, or 20 years old that have finished or maintained at least a B average in high school and or have a college ID, and or a military ID and whose parents sign a form (if 18yrs old or younger) approving their children be allowed to drink while being chaperoned. A chaperone must be at least 35yrs of age and may chaperone at a minimum of 2 young adults and no more than 8 young adults at a given time. Taverns within the safety district may serve these young adults that have a chaperone license as long as their chaperone is present on the premises. Taverns accepting the chaperone license must have the chaperonees sign a form for entry as well as the chaperone. These documents must be immediately available to Law Enforcement officials at any time and for any reason for the current day in question.

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Chaperones are legally and financially responsible for the young adults they chaperone and any citations against the young adults will be split equally with the chaperone including jail time. Taverns accepting Chaperone licenses will be required to have at least one-security personnel per 75 patrons after 9pm. These security personnel will have to either complete an 80 hr security course administered by local law enforcement or have had completed an Ohio Peace Officers Training course or Military Police course. Chaperone licenses will cost $40 per day, $80 per week, or $360 per year. All proceeds are split equally between Law Enforcement and the Marina District. No tavern employees may be chaperones while at work though the tavern may provide chaperones and off duty employees may be chaperones. Current Ohio liquor control law allows for a minor and underage consumption within the presence of a guardian or their mother and father. This change in the liquor control law will allow the parents to direct that responsibility to another individual. If you are a young adult then this just helps limit your behavior and helps limit impaired judgment. We estimate that %50 of the chaperones will be family members or relatives, %25 will be family friends, %13 will be paid chaperones, the remaining %12 will be casual acquaintances’. This Young Adult Chaperone district will be a major draw to the area and create hundreds of part time and weekend jobs for persons wishing to be a chaperones and should help to turn Sandusky, Ohio in the summer into what Fort Lauderdale, Fl means to Spring Break. Unlike the other district which are expected to reach their top growth over a 5 year period we suspect that it will take 10 years for the Chaperone district to top out on its growth rate. Over a 5 year period once costs have been covered revenues should exceed $30 million and the cost to operate this district should cost about $2.4 million. That is a contribution to local law enforcement of over $15 million over a 5 year period. This is over a $15 million contribution to the Marina and Safety district.

 The Environmental Control District
ORC 715.29 Sanitation. Any municipal corporation may: (A) Regulate by ordinance the use, control, repair, and maintenance of buildings used for human occupancy or habitation, the number of occupants, and the mode and manner of occupancy, for the purpose of insuring the healthful, safe, and sanitary environment of the occupants thereof; (B) Compel the owners of such buildings to alter, reconstruct, or modify them, or any room, store, compartment, or part thereof, for the purpose of insuring the healthful, safe, and sanitary environment of the occupants thereof; (C) Prohibit the use and occupancy of such buildings until such rules, regulations, and provisions have been complied with. Effective Date: 10-01-1953 ORC 715.28 Market places. Any municipal corporation may: (A) Establish, erect, maintain, protect, and regulate public halls, public buildings, and market houses; (B) Establish, maintain, protect, and regulate a market place, by and with the consent of the abutting property owner, or his lessee, on any street, square, or public grounds or part thereof, within such municipal corporation. Effective Date: 10-01-1953

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As golf carts and bicycles are a much cleaner and are a less pollution intensive means of travel, the Environmental Control District will look to further enhance air and water quality. Again we would ask the city to petition the state to create this new district that if successful could be used in many other areas of the state. We are just volunteering to be the guinea pigs. The Environmental District will not recognize carbon dioxide as a pollutant. The Environmental district will not recognize Global Warming as a fact. The district will recognize it as a theory until there is immutable proof that carbon dioxide causes global warming. Since this is still a contentious argument and data to prove each argument’s point exist… on either side …. thusly the Environmental District shall take no sides. We will suggest that the Environmental District make the move to Bio based fuels that are renewable, and compressed natural gas. Yes, it is true that there is a lot of evidence out there that these bio based fuel produce more carbon that fossil based fuels. Since, carbon is not recognized as a pollutant then these bio-based fuels make a lot of sense as they are renewable and help us to produce our own fuel. They help us to become independent of foreign oil which causes a lot of pollution in its transport and increases the likelihood of catastrophic spills. Plus, even if you are a Global Warming believer the plants that are used in the production of bio fuels produce oxygen during their lifetime and eat carbon dioxide. This is still according to all of our research a net gain of oxygen. Plus burning bio fuels or natural gas puts less carcinogenic compounds into the atmosphere. Though some will contend that burning bio fuels raises the price of food the market forces that work will eventually produce more farmland and produce more biofuels and food thereby decreasing the cost by increasing the supply of crops (that produce more oxygen and eat carbon dioxide). Be that as it may, we are looking to use the bio fuels burned and natural gas in combustion engines as a transition to the same fuels used in future fuel cell powered vehicles. Bio fuels such as ethanol and methanol carry more hydrogen chemically than other fossil based fuels. Methanol in particular will probably be the fuel of tomorrow as it is already the fuel of choice for no less than 5 current fuel cell technologies because it stores so much hydrogen chemically. Trying to store hydrogen as a liquid requires overcoming many technical hurdles that will probably not be reached in our lifetime just simply due to the energy needed to produce hydrogen, compress hydrogen, and refrigerate hydrogen. Since Ohio is a large farm state we can leap in front of California’s “Hydrogen Highway” by being prepared to offer a readily available source of hydrogen in bio fuels for the next generation fuel cells. Most powerboats are still carbureted and can easily be converted to Ethanol or Methanol or even compressed natural gas based fuels. A disadvantage of Methanol is that you burn twice as much as compared to gas to get the same mileage but methanol is less than twice the expense of gasoline and ethanol is about 10% to 20% cheaper. Ethanol is commonly referred to as E85 and Methanol is referred to as M3, CNG is Compressed Natural Gas. All fuels require the same thing to operate in powerboats. The jets in the carburetors must be change with larger diameter jets, hotter spark plugs must be installed, the timing on the engine must be advanced. CNG requires special fuel storage tanks. This also holds true for city vehicles or a flex fuel conversion kit must be bought for fuel injected computer controlled vehicles. This conversion would be not an insignificant cost to boaters. We would ask our state representatives to help provide an incentive by offering a tax deduction to help offset the cost of conversion. Conversion will range normally from $300 to $1200. Additionally, we would like to further incentive “tize” boaters by being able to offer them biofuels without state or federal road use tax. This will reduce the price of fuel to make it look extremely attractive to every power boater. We would also ask the same go for bio diesel to be used by the very large diesel powered yachts’. Bio diesel is directly usable in all diesel engines produced today but it does create additional headaches to the owner to switch to bio diesel and

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some minor annoyances for them to contend with using the fuel on an on going basis. By reducing the tax this helps them to make the decision to go BIO. By eliminating the tax in the Environmental District this would also allow us to pay for the cost of the station. Since we would be so much cheaper than our gasoline counterparts we would be able to charge $.10 to $.20 over the cost of the fuel to pay for the station. How else will we generate business besides boaters to keep the station functional all year long? We would suggest purchasing the land across the street from shoreline park (the vacant field) to build the land based fueling station and to bury the storage tanks and then run lines under the road to the transient marina fueling station. We would ask that this trial environmental district include all of Sandusky. The sale of fuel would go to the boats as normal but to generate more business all city vehicles would be converted to bio fuels, discounts for LPV licenses would be given if they burn BIO fuels, All motorcycles, mopeds, and scooters that would be converted may also fuel here. A separate set of pumps will be available for Semi Trucks and Buses but these pumps will sell fuels with the road use tax. All Ethanol and Methanol will be sold with road use tax except to those living within the Environmental District and except for boats, motorcycles, scooters, mopeds, and fuel cell vehicles. This should generate more than enough business to pay for the station. The cheaper boat fuel will generate more business for all of Sandusky by putting more boaters on the lake. How can we offset the more pollution that they will cause. Corn and Soybeans used in creating Bio fuels do not enter the food supply and can use human waste as a fertilizer. By doing like some other third world countries we could treat waste at the sewage station and dilute it to a proper concentration with lake water and put it into tanks and sell it to farmers for a minimal price. This way, the waste, instead of going directly into the water, goes into a leech field distribution tank in the farmers field and provides nutrients to the plants roots and uses the earth and the plant to help use the waste instead of contaminating our water supply. We are certain that incentives such as reduced property taxes for farmers using treated sewage for fertilizer could be found. This district is not estimated to produce any contributions other than offset the pollution caused by more boats being on the lake. An added benefit is if many communities on the lake implement such districts it should produce much cleaner water for everyone to enjoy.

 The Educational Incentive District
Sandusky has a problem with too many parents letting their children just roam the streets at night letting them get into trouble and generally causing not only short term problems but long term ones as well. We believe that by being a responsible parent you and your child become an asset to society and not a detriment. We believe the Sandusky school system should work hand in hand with police to help thwart the problems that children cause. We feel that it should be mandatory that all school children should have a school identification card on them at all times. We believe that after a certain hour that if in the eyes of a police officer that a child has the potential to cause problems that he may ask to see the school ID. The officer could then look up that ID and see if the child is allowed out on the streets un supervised. How would this Educational Curfew incentive work? During the summer when school is not in session children will be limited by their over all final average on their report card. If they got and F they must be in by 8:00pm, a D they must be in by

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9:00pm, a C they must be in by 10:00pm, a B they must be in by 11:00pm, and an A they can stay out till midnight. During school they will be limited the last quarterly report card average. If they have an F they must be in by 7:00pm, a D by 8:00pm, a C by 9:00pm, a B by 10:00pm, and an A would be by 11:00pm. Of course, exceptions could be made for sports and work but we believe this would be the best way to control the unruly juvenile element by letting their own parents deal with the problem.

 The Crime Prevention District
Working in conjunction with the Drug Control District and the Safety District to reduce crime. The Crime Prevention District will add additional deterrents to thwart crime that will further enhance increased police presence and reduced tax burden. The stated goals of the crime prevention district are: Goal #1) Reduce taxpayers burden for incarcerating prisoners so more prisoners may be incarcerated. Goal #2) Reduce crime through the deterrence of public humiliation. Goal #3) Increase tourism and property values through crime reduction. CEDAR SHORES proposes to accomplish this goal through an incarceration work farm. We will suggest the county courts adopt maximum sentencing for all misdemeanors and all juvenile offenders. Low flight risk and non-violent offenders will be eligible to work on the work farm. Juveniles will never have their records expunged unless they perform community service at the work farm. The automatic maximum sentencing takes away any pretense of discrimination and by itself is a great deterrence against crime within Erie County. The only way a judge may reduce the time served in incarceration is through the work farm or by increasing the offenders fines. Qualified prisoners then have a choice to spend their sentence in jail or on the work farm. The work farm will allow a prisoner to cut their incarceration time in half and provide them with better incarceration conditions. The work farm will have private cells, more comfortable beds, more prisoner privacy for personal hygiene, a television and upgraded food compared to the city or county jail. A typical work farm week is six 12 hour days of labor and 1 day of rest. If a maximum sentence of incarceration is 30 days in jail then the sentence is divided by seven and rounded to the nearest whole number. This would be 4 work farm weeks or 28 days. If the prisoner works hard he may reduce the number of weeks in half ( 2 work farm weeks or 144 hours of labor). The least amount a prisoner may get their sentence reduced for working on the farm is 10% of his sentence. Work farm supervisors grades an inmates work performance each day. Inmates are graded on a scale of 1-5 with 1 being the worst and only a 10% reduction in sentencing and 5 being the best with a 50% reduction in sentencing. This gives a prisoner an incentive to be productive. Any city or county department may make use of prison labor free of charge. Departments that would tend to use a significant amount of prison labor would be the streets and parks departments. The use of these prisoners will not cost any city or county employees their jobs but it will reduce the rate at which new employees are hired. When inmates are utilized, department laborers then become supervisors to the inmates.

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The city will maintain an agricultural farm and all food produced on the farm will be used by the prisoners and any extra food will be distributed to schools and local charitable organizations. Plants used in landscaping and in the City’s beautification program will be raised here as well. Labor may be sold to local businesses for the maximum price of minimum wage. All money earned from the sale of labor will go towards maintaining the prison system. All prisoners will be issued hot pink overalls. If a prisoner wishes to work an additional hour per day or pay $20 per day they may upgrade to orange jumpsuits. Inmates may wear their own pants from home with a gray t-shirt that is lettered with “inmate” in black on the front and back for a cost of 2 additional hours of labor per day or $30 per day. Ideally this program should be able to pay for itself through the sale of labor to community businesses but we realize that conditions that are presented may be less than ideal. There is enough community outcry for such a program that there are many private sources from very philanthropic individuals wishing to see such a program come to fruition. Such donations from individuals and businesses could be used as seed money to start this program and we are sure that there are multiple state and federal agencies that will provide assistance to help jump-start this process. In our surveys we have found that overwhelmingly the public wishes to see the convicted pay for their misdeeds through hard labor and not through depravity or solitary confinement. The survey also shows overwhelmingly that the public wishes the convicted to be productive and share most of the cost for their confinement. A work farm helps to push the city in the direction of public expectation. The work farm could eventually be expanded to include hardened criminals working in a guarded facility producing a product for a business that will benefit the entire community. It is this deterrence that will help rid the city of many criminals of which a lot reside in the low-income sector. This will leave the city with only desirable low-income residents and help to even the ratio between low, middle, and upper income brackets. The resulting lower crime rate will spark growth within the community and the deterrence of a crime prevention district will increase property values and become very desirable to middle income families.

 The Beautification District
The Beautification District Board will be comprised of the City’s Economic Director, The City Manager, and the Parks board. This board will be charged with identifying the main routes visitors use while visiting the city. These routes will be deemed as “Beautification Zones”. Within these zones low income and lower middle income families and even rental properties will qualify for The Beautification Maintenance Program. All infrastructure facades will be improved within the Beautification Zones. By utilizing work farm inmate labor properties within the Beautification zone for qualifying residents will receive free lawn care for lawns visible to the public. Free plants and landscape planning, planting, and maintenance. A house painting program will be developed where the home owner would only have to buy the paint and work farm labor would paint the house. All homeowners not qualifying for free programs may pay for these services at a minimal cost with the cost of labor being figured at minimum wage. Homeowners wishing to take full advantage of the beautification program and comply with it rules and the Historical District rules may also qualify for new sidewalks and roofs through Community Block Development Grants or private donations. By voluntarily following the guidelines these homes facades will be beautified without raising any property taxes to the

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homeowner for as long as they own the home. When thehome is sold the owners must donate 15% of the profit of the sale to the beautification district. Failure to make the donation will result in an assessment for the fair market value for labor and materials used to improve the dwelling. If no profit on the sale is made then nothing will be owed but the new owners will automatically be entered into the program. This program will pay for it self through the eventual incremental tax revenue and the participants within the beautification zones. This program will provide for the fundamental transformation of the blighted areas within our community. This program will also add to the property values within the city. Routes such as Hayes Avenue, Monroe Street, Hancock Street, First Street, and Perkins Avenue would all benefit from such a program. Additionally, the city will work with landlords to compile a list of destructive tenants that will be available to all landlords participating in the beautification program. These “bad tenants” will no longer have a home in Sandusky and will put an end to tenants going from property to property and constantly devaluing the property. All landlords participating in the program will be required to get 3 months rent in advance and double the normal security deposit when renting to these individuals. The Sandusky Police Department will run a background check on all tenants free of charge. Any felons with assault, menacing, drug, murder, attempted murder, rape, kidnap, and or pedophiliac will be charged an additional %15 rental fee and all immediate neighbors will be made aware of the citizens former record. Any rental property that perpetuates drugs and violence will be considered a criminal haven. Any property that has more than four citations given to its occupants for crimes ranging from domestic abuse to drug trafficking within one year will have it property taxes assessed an additional 25%. If the property then remains trouble free for an entire year then the additional assessment will be retired. If the property continues to have problems the board may raise the property owners tax an additional 25% bring the property taxes up to an additional amount of %50. In order to entice new businesses to the area and to help reinforce the importance of maintaining commercial property there will be an economic property tax incentive. Commercial property sitting vacant for more than 3 years while not being productive will be assessed an additional 10% in property taxes in the 4th year and an additional 10% every year for the next 4 years. This pressures the property owner to sell the property or make it become productive. The additional property tax collected will be used to maintain the facades of vacant buildings and fund the beautification program. To entice businesses to locate to the city we suggest an alternate means of property tax collection. The city will offer the businesses to pay property taxes as usual or use the employee tax deferral plan. The Employee Tax Deferral Plan operates on the productive employee principle. Businesses employing more than 5 employees may defer their property tax upon the employees. The business will withhold 1hours pay from full time employees and a ½ hour from part time employees per week, which will be paid in place of property tax. Salaried employees will have their yearly salary divided by 2000 hours and this will be the amount of their weekly contribution. No deferral tax is assessed upon holiday, vacation, or sick days nor will bonuses be included in the contribution calculation. To encourage economic development all new hires will not be assessed the deferral tax for 30 months. This will help to stimulate the economy by allowing in essence the flexibility of all businesses to make use of what is essentially small on going tax abatements. This would require County approval for this plan so we would ask the City Commissioners to petition the County commissioners on behalf of this plan.

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The Sandusky, Ohio Development Initiative August 14, 2008  The Historical District
The Historical district will set the look, tone, feel, and atmosphere of the City. Drawing upon the city’s rich heritage and historical architecture the Historical district will seek to find funds from the other various districts to help preserve and restore significant structures as well as help plan the look of new structures built within the city. Structures built or restored to the Historical District standards will have a reduction of 30% in their property tax over a 10 year period and restored structures will have the property tax reduced from before the restoration and frozen for a period of 10 years or until the property and structure is sold. In the short term there will be loss of tax revenue but over an 8 year period the tax base will enjoy a large growth due to the desirable property in Sandusky and the rush to develop here. The historical district will be in charge of the design of landscaping and the color of infrastructure structures that reside within the Beautification District. The Historical District will look at ways to work with property owners to enhance the ambiance of the city. The district will never force any property owner to comply with the wishes of the district as they will only have the power to offer tax reductions.

 The Safety District
The Safety District is a combination of all the districts in this initiative. The Board of this district will be in charge of implementing new initiatives and oversee the cooperation of all other of the district boards. One member from each board will be represented on the Safety District board. Any deadlocked decisions will be broken by the cities Economic Development Director.

 The Recreational Health District
Ohio Revised Code 715.211 Assisting park districts. The legislative authority of any municipal corporation may make contributions of moneys, supplies, equipment, office facilities, or other personal property or services to any board of park commissioners established pursuant to Chapter 1545. of the Revised Code for the expenses of park planning, acquisition, management, and improvement. The board of park commissioners may accept such contributions without the approval of the terms by the probate judge. Effective Date: 09-12-1967 The Recreation health district is really just an extension of the safety district but an added benefit is that it helps promote exercise and improves community morale. What does the recreational health district do? To the areas that want it, it provides recreational facilities to parks that have none currently and local restaurants or companies that share in the cost of maintaining the parks and organizing athletic leagues sponsor those parks. Any park designated, as a Recreational Health District Park will have a fence erected around it for safety purposes. The area of the park may be shrunk to allow for diagonal and golf cart parking, The park will have several Porta John’s installed as well as additional lighting. Picnic tables, shelter houses and grills might also be installed depending upon the agreement with the restaurant or company sponsor. Trash cans will be provided. The sponsor will provide a The Sandusky, Ohio Development Initiative 2 2

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concession stand and if the sponsor is a restaurant they may take orders and have delivery at the concession stand. Beer may be sold at these concession stands in 16oz cups and $.10 per cup is assessed by the city to pay for additional Law Enforcement and to cover the insurance for the park that allows alcohol sales. Alcohol sales are only allowed May 30th to October 31st and only on Thursday till 10pm and on Friday and Saturday until midnight. You may purchase beer only if you have a Recreational Health District Permit (RHDP), which cost $40 per year or a one-day temporary of $5. You may only bring your own beer if you have an RHDP BYOB permit, which cost $80 per year and you must display it when asked to the sponsor’s concession manager when asked. You may only get an RHDP license only if you sign up to compete in a sports league. Qualifying sports and facilities would be. Tennis Sand Volleyball Shuffleboard Horseshoes and Corn hole Basketball Flag Football Softball and baseball Bocce Ball The RHDP permit fees help to cover the cost of insurance and maintenance to the facility. The sponsor makes sure the park is clean, well lit, and provides the recreational facilities, as well as organizing the leagues. The parks department would still set the tone and look of the park by still maintaining the landscape.

IV. Research Methodology, Data and Assumptions
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A. Research Steps
This study was undertaken using recognized research methods and data sources employed in economic impact studies. Five research steps were followed. 1. Project and Community Interviews: Interviews were conducted with representatives of Sandusky’s Business Community and community development stakeholder groups from theSandusky/Erie County community. Information and views related to the proposed development project and the community were gathered and assessed. These informal interviews weredesigned to gain the inputs and views of a broad range of communitystakeholdersand help shape assumptions used in the study. 2. District Project Information: Data was collected and relevant project information was gathered for use at the front end of the study process, especially for use as inputs to theIMPLAN economic model used in the study, which is described below. 3. Sandusky/Erie County Economic Base Research: The initiative examined the majorlocal area economic, demographic and housing real estate market trends relevant to the wholecommunity. Data sources consulted and used inthis study included: U.S. Census Bureau, U.S. Bureau of Economic Analysis, The National Rifle Association, The Heritage Foundation, Mortgage.com, National Association of Realtors, Colliers International, National Association of Home Builders, American Hotel and Lodging Association, International Shopping Center Association. 4. IMPLAN Economic Impact Estimation Model: IMPLAN proprietary informationwas used for industry input-output data for Erie County and the United States for use in estimating the economic impact of the SDI project on the Sandusky/Erie County community. The IMPLAN data used in this study are for 2006, which is the most current data available. a.IMPLAN Professional® is an economic impact assessment software systemused in economic impact analysis. It is one of the most widely used systems of its type with several thousand users nationwide, including many cities and counties in Ohio. IMPLAN Professional combined with IMPLAN® Data Files, allows the researcher to develop local level input-output models that can estimate the economic impact of a wide range of economic development projects, including new firms moving into an area, real estate development projects, professional sports teams, recreation and tourism, and many more activities. b.IMPLAN input-output (I-O) tables are available for all U.S. counties. Note: City level data are notavailable from IMPLAN and most other economic impact assessment programs. Using a city to county (Sandusky to Erie County) population ratio, the consultants were able to estimate the City of Sandusky’s share of the total economic impact for the SDI project. c.As is true in any economic impact study, where actual data are not available,reasoned

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assumptions were made in calibrating the IMPLAN model to makecertain impact assessment calculations. Conservative assumptions were used throughout the project. d.Twenty (20) runs of the IMPLAN model were conducted to model thevarious individual components of the SDI project to capture economicimpacts (spending, employment, incomeand taxes) by project components. The results of the 20 model runs were then aggregated byyear and by phase to show thecombined effects of the various runs. Thisapproach was followed to isolate the economic impacts of the various project components. 5.Study Report Preparation: With the results from research steps 1-4 in hand, the consulting team interpreted the results and formulated findings, conclusions and recommendations, which were shared with the Cedar Shores Foundation and theSandusky/Erie County community. 6.Study Findings and Conclusions: These relate to the economic base researchand economic impact assessment modeling undertaken by the SDI team. 7. Recommendations: These describe proposed action steps the City of Sandusky and Sandusky/Erie community citizens, and other key stakeholders mightconsider to ensure that the economic impacts estimated in this study are achieved.

B. Data and Assumptions
The primary data used in this study came from the project developer (The Cedar Shores Foundation and various sources within the City of SanduskyGovernment. Best available data wereused from all sources.In those cases where hard data was not available, researchers worked with private businesses to formulate reasoned assumptions for use in the study. Assumptionswereused because many aspects of the plan and the City of Sandusky are uncertainat this point. As a starting technical note, economic impacts aredriven by investment within the community. While this may bemeasured in terms of dollars spent or jobs created, the initial projectscompleted triggers spending, employment, income and tax impacts within a localeconomy. SDI Project Data Project data used in the study included: 1.Estimated time schedule for all private and public construction/build-out and operations:   Phase I: 2009-2010.   Phase II: 2010-2011.

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  Phase III: 2011-2012.

2.Estimated City investments to build the project components           Wave Action Pool Renovation: $800,000.  Fuels and CNG Fueling Station: $2,000,000. Bio  Marina Building at Shoreline Park: $500,000.  Marina Construction (Docks): $6,700,000.  Golf Cart Path Creation: $250,000.  Chaperone License Creation: $1,200,000.  Drug Control Permit Creation: $80,000.  Recreational Health District Creation: $0.  Beautification District Creation: $0.  Historical District Creation: $0.  Work Farm Facility: $2,700,000.



3.Estimated Private investments to build the project components

         

 Wave Action Pool Renovation: $0.  Fuels and CNG Fueling Station: $0. Bio  Marina Building at Shoreline Park: $0.  Marina Construction (Docks): $0.  Golf Cart Path Creation: $125,000.  Chaperone License Creation: $0.  Drug Control Permit Creation: $0.  Recreational Health District Creation: $2,000,000.  Beautification District Creation: $0.  Historical District Creation: $0.  Work Farm Facility: $3,700,000.

Reasoned Assumptions
In consultation with the private businesses and the City, these reasoned assumptions weremade where hard data were not available:3 1.Where high and low dollar investment numbers were provided, lower investment figures or an averageof the high and low investment numbers were used. 2.After reviewing the project data providedby the businesses, the researchers assumed a minimal utilization (only 30%) of local goods and service providers in the project, whichis more likely than a high reliance on local business suppliers.Examples of goods and service providers include: Computer Systems Integrators,Consultants, architects; legal services; general contractors,building and trades subcontractors; construction materials; and equipment and furnishings.

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3.The researchers assumed a somewhat extended project completion and build-outschedule, given the slow growth of Erie County’s economy and the declining economicbase of the City of Sandusky. As a part of this extended schedule, we assumed a conservative sale of license fees of each of the districts . 4.SDIassumed that only 15% of the Low Power Vehicle (LPV) Drivers Licenses would be sold locally. Tourist would account for the other 85% of LPV licenses. Golf Cart and Bicycle License Plates for the safety districts cart paths would make up 30% of golf cart license fees to residents where as Hotel and depot rentals would make up the remaining 70%. Only 6% of rental fees would be collected from local residentsand the other 94% would be collected from tourists. For the Chaperone licenses we assumed that 90% of the daily licenses would be purchased from tourists and 10% from local residents. For the weekly licenses we would expect that 80% of these licenses would be purchased by tourists and 20% by local residents. The yearly passes we expect that 80% would be bought by residents within a 30 mile radius of Sandusky and that only 50% of these would be by city residents. The remaining 50% would be bought outside the city with only 20% being purchased by visitors that live further than 30 miles away. The Drug Control District permits for weekly permits would be 90% tourist sales with 10% bought by local residents. Monthly, Quarterly, and Annual permits would be purchased %50 by residents living within 30miles of Sandusky with and 50% of those living further away than 30 miles. Of the 50% living within 30 miles only 50% of those will live within Sandusky. Of the Recreational Health District Licenses’ sold only 70% of the Daily passes would be purchased by residents of Sandusky and 30% would be purchased by visitors. Yearly licenses’ and BYOB licenses’ would be purchased by 99% of City residents and only 1% by visitors. The Transient Marina we will assume will be full 4 days out of the week and empty 3 days a week with only a 20 week boating season and an average length of boat of 25 feet. We will assume $315,000 in dockage fees, $157,500 profit for the boaters commissary store, the convenience store will make a $100,000 profit, and the fuels sold will break even for the Marina. We expect 100% of Transient Marina Sales profits will come from tourists.. 5.It was assumed that the salesfrom the additional sales traffic created by SDI of retail and consumer services to be included in the project would be 70% local (Erie County) and 30% nonlocal (outside Erie County). 6.It was assumed that 90% of the sales from the hotels would be to visitors from outside Erie County and 10% to local customers residing within Erie County. 7.In consultation with the businessmen, SDI used the following assumptions about how the spending/sales impact in the project would occur.4In order to show how the SDI project’s overall economic impact would unfold over time (by year), it was necessary to define the percent of spending impacts occurring on an annual basis. Phase I Spending Impacts:  Golf Cart Path and Safety District Creation: 33% in 2009; 67% in 2010 ($600,000)  Educational Incentive, Chaperone License, Drug Control, District Creation: 50% in 2009 and 50% in 2010 ($1.3 million) Phase I Sales/Operating Impacts:

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 Golf Cart Path and Safety District Creation: 50% in 2009; 50%% in 2010 ($160,000)  Educational Incentive, Chaperone License, Drug Control, District Creation: 50% in 2009 and 50% in 2010 ($160,000) Phase II Construction Spending Impacts:  Transient Marina (plus Wave Action Pool Renovation) and Fueling Station (Environmental District):10% in 2010; 90% in 2011 ($10 million) Phase II Sales/Operating Impacts:  Transient Marina (plus Wave Action Pool Renovation) and Fueling Station (Environmental District): 0% in 2010; 100% in 2011 ($800,000) Phase III Construction Spending Impacts:  Inmate Work Farm: 10% in 2011; 90% in 2012 ($5.4 million)  Beautification Program: 0% in 2011; 100% in 2012 (2 million)

V. Economic Impact Analysis
Economic impact studies require analysis and the ability to characterize the analyzedproject within the local economy. The technical concepts associated with an economic impact analysis are defined to aid the reader in better understandingthe study’smajor findings, conclusions and recommendations. Economic Base Theory Inthe urban and regional economicsfield, economic base theorydefines a local economy ascomprised of two primary sectors: 1) the basic (or non-local) sector; and 2) the non-basic (orlocal) sector.In essence, the theory says that a local economy grows when its businesses and industries sell their products and services outside the local economy, and in return bring newdollars into the local economy. As an example, the Sandusky/Erie County economy grows whenit attracts visitors from outside Erie County to Cedar Point for entertainment and leisure. Figure 2below shows how the economic base theory is applied to the Sandusky/Erie County economy Figure 2: How the Sandusky-Erie County Economy Grows Basic Economic Sector

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This sector is made up of local businesses that depend almost entirelyupon external markets(e.g., non-local customers)in generating their revenues. Most manufacturing, natural resource-based firms (like logging or mining), and certain tourism activities are usually considered to bebasic sector firms or industries because their revenues dependlargely upon nonlocal markets.

According to a recent economic study by Angelou Economics for the Greater Erie MarketingGroup, Inc. (GEM), three “super-sectors” currently drive growth in the local economy: Leisureand Hospitality (24.2% of local employment); Manufacturing (21.6% of local employment); andTrade, Transportation, and Utilities (21.7% of local employment). The first twosectors (Manufacturing and Leisure/Hospitality), in SDI’s judgment, are currently the area’s most important sectors as economic base growth engines, but the third (Trade, Transportation, and Utilities) is also important.Examples of the Sandusky/Erie County area’s basic sector businessesinclude: Cedar Point; Visteon (Ford); Delphi Automotive; Lear Seating; Tenneco; and theKalahari Resort. Each is a significant basic sector employer stimulating local economic growthand local economic impacts. While the Sandusky/Erie County area has some major economic development strengths, it is also vulnerable to some sizable economic threats. While the area has succeeded in retainingseveral of its older manufacturing employers, these employers remain fragile because of globalcompetitive pressure and corporate restructuring. Historically, the automotive sector has played avitally important role in catalyzing the growth of jobs, income, and taxes in the local area. Downsizing and corporate restructuring have significantly reduced production and employment atlocal auto-related production facilities, which has in turn diminished the local economic impact ofthese operations on the area economy.The area’s leisure and hospitality sector faces two major threats: 1) long-term reductions inpersonal disposable income in the 3-state (Ohio-Michigan-Indiana) tourism market; and 2) overcapacity in the entertainment and amusement sector and corresponding reductions in capacitythrough facility cutbacks and closings.These threats underscore the need fornew developmentprojects in the Sandusky area, especially in the City of Sandusky, which has suffered verysignificant economic losses in recent years. In Section VI, SDI has included an analysis of thenational, state and local economic situations Non-Basic Economic Sector The non-basic sector, in contrastto the basic sector, is composed of those firms and industries that depend largely upon local business conditions, especially local markets. For

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example, a localgrocery store typically sells its goods to local households, businesses and individuals. Its clienteleis locally based and, therefore its products are consumed locally. Almost all local services (likedrycleaners, most restaurants, and drug stores) are identified as non-basic because they depend almost entirely on local factors, unless their primary customers are out-oftown tourists/visitors.While non-basic sector economic activities play much less of acatalytic role in local economic growth and economic impactgeneration, these activities remain important to an area, its businesses, and residents. For one, they provide necessary community amenities that enrich local quality of life. Because of the Sandusky/Erie County area’s very significant reliance on theleisure and hospitality sector, which is a basic economic sector in this case, a good portion of the area’s retail shopping and consumer service sector serves non-local customers, and therefore it isconsidered a part of the area’s basic economic sector. For example, many of Erie County’s restaurants and fast food businesses depend heavily on non-local customers during the vacation season. Economic base theory asserts that the best means of strengthening and growing a localeconomyis to develop and enhance its basic sector, which brings new economic resources intothe local economy from outside, sparking new growth and development within the localeconomy. The basic sector is therefore identified as the "engine" of the local economy.Economicactivities associated with Sandusky/Erie County’s basic economic sector generate a greater localeconomic impact than those activities associated with the area’s nonbasic economic sector. The SDI Project: Basic or Non-Basic Sector Related? An important question is whether the SDI project is a part of the area’s basic ornon-basic economic sector? The answer is that the project straddles both sectors of the Sandusky/Erie County economy.While data is not available to estimate theexact percentage to which each project component is oriented to local and non-local markets, it ispossible to define the “conditions” under which each project component would be classified aslocal and non-local market oriented. These conditions are identified in Table 1 below. Table 1: Marina District Project Components and Their Links to the Local Economy Project Component Golf Cart Licenses Marina Dock Fees Drug Control Permit Chaperone License’s Recreation Health District License’s Bicycle and Golf Cart LPV Licenses’ Bio Fuels and CNG Non-Basic Sector Purchased by Residents Purchased by Residents Purchased by Residents Purchased by Residents Purchased by Residents Purchased by Residents Purchased by Residents Basic Sector Purchased by non Residents Purchased by non Residents Purchased by non Residents Purchased by non Residents Purchased by non Residents Purchased by non Residents Purchased by non Residents 3 0

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Economic Impact Analysis An Economic Impact Analysis is a study tracing private and public sector spending through a local economy, and the estimated immediate and cumulative effects of that spending, using an economic analysis model (the IMPLANmodel in this case). The model is calibrated using project data (in this casedata for the SDI Project). Where data is not available, reasoned assumptions areused in the model to analyze a project. Economic impacts can be assessed on three levels: 1.Direct Effects (Impacts):Equals theincrease in output, employment and income in a local economy caused directly by the spending to develop the SDI Park Project by local Businessmen and City Government. 2.Indirect Effects (Impacts):Equals the jobs and production needed to produce the goodsand services required by the project from within the local economy to support the spending or investment. 3.Induced Effects (Impacts):The jobs and production required to fulfill the householddemands for goods and service generated by the wages of all the additional demand fromthe direct and indirect effects. Economic Leakage Not all economic impact produced by a development project stays within the local economy (Erie County/Sandusky). The portion of the economic impact flowing to other locations outside Erie County is called economic leakage. This means that a portion of this economic impact “leaks” outside the local economy in which the development occurs. The amount of economic impact remaining within the local economy is determinedbytwo major factors:  first is the industry structure of the local economy; that is whether the industries and The businesses capable of producing the goods and services used by the projectare located in the local economy. For example, the computerized identification system included in this project is not manufactured locally. Therefore, this purchase is made outside the local economy, and the economic impact associated with this purchase flows outside the local economy.  second consists of those decisions made about the districts selected to provide thegoods and The services required by the project. For example, a non-local general contractor may be hired to manage and undertake the construction of the Marina in the development project because the city has experience working with aparticular general contractor, or because a known generalcontractor offers certain advantages (lower costs, higher quality) that a local general contractor cannot offer. As a final note, it is important to consider the realities of globalization and how these realities affect the local economic impact of any development. For example, a substantial portion of the value of manufactured products made (or assembled) in the United States containsgoods and services produced and delivered in foreign manufacturing locations. Withthe increased relianceon off-shore outsourcing by manufacturing and service companies alike, a greater share of the local economic impact of development projects in U.S. communities will flow outside (leak) localeconomies.

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The economic impact findings and conclusions in Section VIIidentify the economic impact flowing into the Sandusky/Erie County economy and the amount of that impact flowing outside. Overall, 50% of the SDI project’s total privatespending impact would flow outside the localeconomy if the currently proposed business arrangements are followed. On the other hand, 90% ofthe project’s total publicspending impact would stay within the local economy. While a very sizableeconomic leak occurs relative to the private spending impact, SDI looks at this issue in the following manner. Businesses only invest their money in projects thatwill produce a profit. Increasingly, business profits hinge on tight costmanagement and quality performance by all entities contributing to a business project. In thisrespect, The City and the other businesses involved in this deal will only undertake the Construction Projects if they can source the skills and materials for this project in a competitivemanner, especially in today’s current economic environment, which includes a major housing market slowdown in the vast majority of markets across the country. Every effort will be made to keep all projects as local as possible but it is inevitable that non local businesses will be utilized for this project. Types of Economic Impact Four types of economic impacts are estimated in the Sanduskyproject:  Spending Impacts: Refers to the direct, indirect, and induced impacts of an economic/investment (spending) on a local economy. Spending impacts drive all other types of impacts (employment, income and taxes). (Estimated by the IMPLAN model.)  Employment Impacts: Refers to the direct, indirect, and induced employment impacts of an economic/financial investment (spending) on a local economy.(Estimated by the IMPLAN model.)  Income Impacts: Refers to the direct, indirect, and induced income impacts of an economic/financial investment (spending) on a local economy.(Estimated by the IMPLAN model.)  Impacts: Refers to the direct, indirect, and induced tax impacts of an Tax economic/financial investment (spending) on a local economy.(Manual calculations based upon available dataused in this study.)

VI. Surrounding Area Demographic and Economic Analysis
A. Current Economic Conditions U.S. Economy
While the U.S. economy may fall into recession during the third or fourth quarters of 2008. Economists appear to be evenly split (50-50) whether a recession will occur dependent upon whether or not the US congress approves an energy plan that includes drilling for oil. The latest datareinforce the impression of a national economy in which growth remains minimal and inflationary pressures are likely to continue to subside unless Middle East violence

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flares up again, a natural disaster such as a hurricane temporarily shuts down our oil processing infrastructure, or an energy plan comes before congress for a vote and is resoundingly defeated. A soft landing with a slowconvergence to trend growth is probable, unless uncertainties among households and investorssuddenly trigger a sharp consumption slowdown or the credit crunch spreads beyond the already oozing housingsector. To date, the housing and energy markets remain the biggest drag to the economy, and recent data has suggestedthat they have bottomed out. Both thehousing permits and starts were at the same levels a decade ago. Home sales tumbled in andunsold inventories accumulated rapidly, pointing to further sales deterioration in the near future and fuel prices are at their highest point since the 1970’s. In the wake of the recent financial market turmoil, investor uncertainty has increased significantly. Borrowing costs have risen, inparticular for the short maturities and lower-graded securities, yet lenders are still willing to finance investment-graded securities. Macroeconomic implications of the credit tightening are still quite limited so far, although potentially could bemore severe over the coming quarters if the mortgage credit crunch goes further deeper and spreads even more into other sectors. Consumers continue to spend but at a lethargic pace. Real personal consumption expenditures rose. Consumer confidence has retreated, suggesting that consumers might have adapted a prudent attitude following the recent financial turmoil. Inflationary pressures continue to slowly grow. Recent months have seen a gradual deceleration in the growth of other core consumer price indexes as well. Core Personal Consumption Expenditures edged up 0.3 percent in July, mostly due to the economic stimulus package.

Ohio/Midwest Economy
The Midwest, comprising Illinois, Indiana, Iowa, Michigan, Minnesota, Ohioand Wisconsin,saw moderate year-over-year employment growth in 2007. The Midwest hadnonfarm employment growth, while the U.S. had a gain. Each state in the Midwest posted growth in jobs in the first half of 2008, except for Michigan and Ohio. Most major industry sectors contributed to the Midwest’s sluggish employment growth. The region’s manufacturing employment decreased, in large part due to the auto and housing Industries’ troubles. Midwest employment showed little or no growth in the professional, education and health, and leisure and hospitality sectors, though at a slower pace than in the nation. Rising by at least 1 percent, the professional, education and health, and leisure and hospitalityindustries led employment growth in the region. Because these sectors make up a good portion of the Midwest's industry mix, they help offset declines or slow growth in otherindustries. Indiana, Michigan, Ohio, and Wisconsin all reported declines in manufacturing; these states were heavily weighed down by the declining production activity in the automotive industry. Payroll auto employment in Michigan reported an 11% drop year-over-year for the first half of 2007. Wisconsin also reported an 11% drop; however, the auto industry makes up a very smallshare of Wisconsin’s industry mix. Indiana’s auto employment reported a drop of 4%, and Ohio’sdecreased by 7%. A general pattern of increasing weakness is evident in contrasting the westward states of Iowa, Minnesota, Illinois, and Wisconsin with Michigan, Ohio, andIndiana inthe east. .

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Population Growth Table 2 below identifies major population changes in the City of Sandusky, Erie County and several of the surrounding counties. Table 2: Area Population Changes, 1990-2006 Source: U.S. Census Bureau data

The City of Sandusky’s population base has been in decline since 1990, dropping from 29,764 in 1990 to 27,844 in 2000 and to 26,216 in 2006. Until 2000, Erie County’s population was growingslowly. Over the last 6 years, the County’s population base experienced a loss of 1.8%. Meanwhile, population has grown in 4 of the 5 surrounding counties over the past 16 years. In part, the population losses in Sandusky and Erie County are explained by the pattern ofpopulation decline seen in Ohio and northern Ohio, which have been driven by economic decline, an aging population base, and more robust population and market growth in southern and western states. A more localized explanation of the population drop in Sandusky and Erie County ismanufacturing restructuring and the loss of jobs and income in the local economy. In light of population losses in both Sandusky and Erie County, the Marina District projectis a logical development for increasing the number of attractive housing options for existing residents and as a resource in attracting new residents to the area, especially the central city.

Per Capita Personal Income Growth A prosperous population is a desired outcome of economic development. Tables3 and 4 below describe per capita personal income trends in the area since 1990. Note: Per capita personal income data are not available for cities. Table 3: Actual Changes in Area Per Capita Personal Income, Current Dollars Source: U.S. Bureau of Economic Analysis data

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Table 4: Percent Changes in Area Per Capita Personal Income, Current Dollars Source: U.S. Bureau of Economic Analysis data

While the local area’s population has declined, its per capita personal income (PCPI) levelhas increased on a current dollar basis. When adjusted for inflation, a different picture appears, and these gains disappear and a flat personal income trend. Erie County outperformed itsneighboring counties in 3 of the last 5 years in terms of PCPI growth. A question that has to be asked is what will happen to Erie County’s PCPI once the effects of the early retirements and lowerstarting wages at local auto plants work their way into the local economy. New hires replacing Longtime workers will make substantially less than their predecessors. This change will likelycontribute to some reduction in available local spending dollars and lower local income taxpayments by these workers. Poverty Trends Despite an overall current dollar rise in PCPI for Erie County, poverty has continued to growin the City of Sandusky, as the data in Table 5 below indicate. In 1989, Sandusky had 4,537people living at or below the poverty level. This represented 67% of all poor people in ErieCounty. By comparison, Sandusky has 33.5% of Erie County’s population, which means that the City’s share of the County’s poor people is double its overall population share. In 1999,Sandusky’s impoverished population increased by 1.4% and the City’s share of the County’s poor people grew to 71.5%. More recent city-level poverty data are not available, but given the Citypopulation and job losses in recent years, it is fair to assume that Sandusky’s impoverished population has greatly increased somesince 1999. Table 5: Impoverished Population Trends

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Source: U.S. Census Bureau

These poverty numbers underscore the importance of a stepped up economic development effortin the City and more attention to attracting more good-paying jobs to the City. To the extent the SDIproject can add a greater number of higher income residents, this will add in a positive sense to the City’s economic base. Employment and Labor Force Trends Table 10 below identifies total employment trends for Sandusky, Erie County and surrounding counties. The City’s job total dropped by nearly 1,000 during the last 16 years for an average annual loss of 0.3% during 1990-2000 and 0.6%in 2000-2006. Table 10: Total Employment Trends, 1990-2006 Source: Ohio Dept. Job and Family Services, LMI Division

. Table 11:Area Labor Force Changes, 1990-2006 Source:U.S. Bureau of Labor Statistics
AreaYearAnnual Average

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Table 12: Erie County Industry Profile, 2006 Source: U. S. Bureau of Labor Statistics

The data in Table 12 indicate that almost 86% of Erie County’s total employment is in privatesector industries and the other 14% is in government and public administration. Manufacturingwhich once accountedfor over 30% of total county employment is 17.7% of total jobsnow. While manufacturing has produced the highest paying jobs in the County historically and will likely do so in the future, manufacturing payroll could see a decline due to renegotiated wage rates at the area’s major automotive plants. Leisure and Hospitality is a major economic driver for both Sandusky and Erie County, but asthe payroll numbers in Table 12 show, pay levels for jobs in this sector are much less than thosein Manufacturing. This employment, industry and payroll trend underscores the importance of stepped up economic development efforts in both Sandusky and Erie County to further diversify the area’s economy and develop more good-paying jobs for area residents. Quality housing and community amenities are important assets to economic development success.

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VII. SDI Project Economic Impact Analysis
This section of the report presents the results of the SDI economic impact analysis conducted with the IMPLAN economic model. The research methods, data and assumptionsrelated to this part of the study were described in detail in Sections IV and V. For measurementpurposes in this study, the project’s life is defined as 2009-2014. Obviously, the developmentwillcontinue to operate and generate operating economic impacts beyond this period.

A. Local Spending Impacts(Occurs within Sandusky/Erie County) Year 1 Golf Cart Path Operations
Type Golf Cart License $40 Golf Cart License $365 Bicycle License $40 Bicycle License $365 LPV License $50 LPV License $25 LPV License $12 Rental Golf Carts Rental Bicycles Unit Each Each Each Each Each Each Each Hours Hours Qty 400 150 80 600 200 2000 4000 32000 80000 Revenue $16,000 $54,750 $3,200 $219,000 $10,000 $50,000 $48,000 $80,000 $100,000 Residents 120 45 240 180 30 300 600 1,920 4,800 Non Residents 280 105 160 420 170 1,700 3,400 30,080 75,200

Total Revenue gained by License and rental fees during the first year of operation is estimated at $580,950. We believe an additional $125,000 to be had by Path Sponsorship and Advertising. We would expect to spend $250,000 initially, in marking the path and upgrade crossings and intersections in the first year.

Year 2 Golf Cart Path Operations
Type Golf Cart License $40 Golf Cart License $365 Bicycle License $40 Bicycle Unit Each Each Each Each Qty 600 325 120 800 Revenue $24,000 $118,625 $4,800 $292,000

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License $365 LPV License $50 LPV License $25 LPV License $12 Rental Golf Carts Rental Bicycles Each Each Each Hours Hours 300 2800 5500 58000 120000 $15,000 $70,000 $66,000 $145,000 $150,000

Total Revenue gained by License and rental fees during the second Gas year of operation is estimated at $885,425. We believe an additional $175,000 to be had by Path Sponsorship and Advertising. We would expect to spend $400,000 in marking the path and upgrade crossings and actual construction of paths to join roads and alleys.

Year 3 Golf Cart Path Operations
Type Golf Cart licenses $40 Golf Cart licenses $365 Bicycle licenses $40 Bicycle licenses $365 LPV licenses $50 LPV licenses $25 LPV licenses $12 Rental Golf Carts Bicycle Rentals Unit each each each each each each each hours hours Qty 800 600 160 1200 800 3200 8000 72500 160000 Revenue $32,000.00 $219,000.00 $6,400.00 $438,000.00 $40,000.00 $80,000.00 $96,000.00 $181,250.00 $200,000.00 $1,292,650.00

Path Sponsorship Path Advertising

$10,000.00 $125,000.00 $135,000.00

Total Path Revenue

$1,427,650.00

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Improve and maintenance Profit $80,000.00 $1,347,650.00

Year 4 Golf Cart Path Operations
Type Golf Cart licenses $40 Golf Cart licenses $365 Bicycle licenses $40 Bicycle licenses $365 LPV licenses $50 LPV licenses $25 LPV licenses $12 Rental Golf Carts Bicycle Rentals Unit each each each each each each each hours hours Qty 1200 1200 200 1800 1200 4200 12000 102500 180000 Revenue $48,000.00 $438,000.00 $8,000.00 $657,000.00 $60,000.00 $105,000.00 $144,000.00 $256,250.00 $225,000.00 $1,941,250.00

Path Sponsorship Path Advertising

$125,000.00 $150,000.00 $275,000.00

Total Path Revenue

$2,216,250.00

improvements and maintenance costs

$80,000.00

Profit

$2,136,250.00

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Type Golf Cart licenses $40 Golf Cart licenses $365 Bicycle licenses $40 Bicycle licenses $365 LPV licenses $50 LPV licenses $25 LPV licenses $12 Rental Golf Carts Bicycle Rentals

Unit each each each each each each each hours hours

Qty 1200 1800 200 1800 1600 5200 10000 100000 160000

Revenue $48,000.00 $657,000.00 $8,000.00 $657,000.00 $80,000.00 $130,000.00 $120,000.00 $250,000.00 $200,000.00 $2,150,000.00

Path Sponsorship Path Advertising

$150,000.00 $200,000.00 $350,000.00

Total Path Revenue

$2,500,000.00

Maintenance Cost

$125,000.00

Profit

$2,375,000.00

As mentioned earlier, the economic impact chain begins with new spending or investment in a local economy. Nearly $154,000,000 ($2006) in private and public investment is proposed forinvestment in the SDI Project. Two types of spending impact are captured: 1) construction spending and its multiplier effects; and 2) operating spending and its multiplier effects. Operating spending is largely produced by ongoing sales activities associated withcertain aspects of the project, such as the proposed hotel and retail shops. Phase I Local SpendingImpacts The spending effects of this $154 million investmentare estimated by project phase. The

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spending impactsforPhase I construction and operating/sales activities are shown in Table 13 below.This construction spending will be focused on building 100 condos, 18,000 SF of retail space, a 120-150 room hotel, and installing public infrastructure to support the project.The operating spending impact will be generated by condo sales, early operation of the hotel, and sales from the retail stores. Table 13: Phase I Local Spending Impacts(2006 Constant Dollars)
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The following major findings are associated with the results in Table 13 above: 1.Phase I investments for both construction and sales/operations are expected to produce a total local spending impact of $106 million over the entire project life (2008-2014). Of this total, 66.5 % ($70.5 million) of this spending impact will accrue to Erie County locations outside the City of Sandusky and 33.5% ($35.5million) will accrue to the City of Sandusky. 2.Phase I construction spending will produce local spending impacts of $56.5 million during the Phase I timeframe (2008-2010). Again, roughly 1/3 ($18.9 million) of this spending impact will accrue to the City of Sandusky and 2/3 ($37.6 million) to the rest of Erie County. 3.Phase I sales/operating spending impacts will produce local spending impacts totaling $49.4 million over the entire project lifetime (2008-2014). About $32.9 million of this amount will accrue to Erie County outside Sandusky and $16.6 million will accrue to the City of Sandusky. Phase II Local Spending Impacts Table 14 contains the spending impact data for Phase II of the Marina District project. Phase II construction spending will focus on building 100 condos, 7,500 SF of retail space, a 10,000 SF marina building, installing public infrastructure needed by the project, and constructing the new City Hall.The operating spending will be generated by condo sales, retail sales,and hotel sales. Table 14:Phase IILocal Spending Impacts(2006 Constant Dollars) The following major findings are associated with the Phase II results in Table 14: 1.Phase II investments for both construction and sales/operations are expected to produce a total local spending impact of $60.5 million over the entire project life (2008-2014). Of
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this total, 66.5 % ($40.3 million) of this spending impact will accrue to Erie County locations outside the City of Sandusky and 33.5% ($20.3 million) will accrue to theCity of Sandusky. 2.Phase II construction spending will produce local spending impacts of $53.3 million during the Phase II timeframe (2010-2012). Again, roughly 1/3 ($17.9 million) of this spending impact will accrue to the City of Sandusky and 2/3 ($35.4million) to the rest of Erie County. 3.Phase IIsales/operating spending impacts will produce local spending impacts totaling $7.2million over the 2010-2014-period. About $4.8million of this amount will accrue to Erie County outside Sandusky and $2.4million will accrue to the City of Sandusky. Phase III Local Spending Impacts Table 15 contains the spending impact data for Phase III of the Marina District project. Phase III construction spending is focused on building 100 condo units, installing public infrastructure for the project. These investments will generate the construction spending for Phase III. Operating spending will flow from condo sales, retail sales, and hotel sales. Table 15:Phase IIILocal Spending Impacts(2006 Constant Dollars) The following major findings are associated with the results in Table 15: 1.Phase IIIinvestments for both construction and sales/operations are expected to produce a total local spending impact of $38.3million over the2012-2014-period. Of this total,

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66.5 % ($25.5 million) of this spending impact will accrue to Erie County locations outside the City of Sandusky and 33.5% ($12.8 million) will accrue to the City of Sandusky.
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2.Phase IIIconstruction spending will produce local spending impacts of $37.1 million during the Phase III timeframe (2012-2014). Again, roughly 1/3 ($12.4million) of this spending impact will accrue to the City of Sandusky and 2/3 ($24.7million) to the rest of Erie County. 3.Phase III sales/operating spending impacts will produce local spending impacts totaling $7.2 million over the entire project lifetime (2008-2014). About $4.8 million of this amount will accrue to Erie County outside Sandusky and $2.4 million will accrue to the City of Sandusky. Total Local Spending Impacts across Phases I-III As the data in Table 16 below indicate, it is expected that across all three project phases, project local spending impact will total $204.8 millionover the 2008-2014-period, with $136.2 million of this spending impact accruing to Erie County outside Sandusky and $68.6 million accruing to the City of Sandusky. Table 16: Total Local Spending Impact Summary, Phases I-III(2006 Constant Dollars) With this understanding of the project’s spending impacts in mind, we will now look at the employment, income and tax impacts sparked by this spending. Local employment impacts are of two types: 1) jobs related to construction activities in each of the three project phases; and 2) jobs related to the operational elements of the project, including operation of the hotel, retail stores, marina building, and maintenance of the condos. Local personal income impacts result from the employment generated by the project in its construction and operating activities in each of the three phases. Finally, local tax impacts are generated by the various construction and operating activities associated with the project. These taxes would flow to the City of Sandusky, Erie County Government, local schools, and the library system.
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B. Local Employment Impacts(Occurs within Sandusky/Erie County) Table 17 below identifies local employment impacts of the Marina District project, which are sparked by the local spending impacts identified in Tables 13-16 above. Table 17: Total Local Employment Impact Summary, Phases I-III The following findings flow from the data in Table 17: 1.Local spending impacts from Phase Iare expected to generate a total local employment impact of 1,052 jobs across the project lifetime (2008-2014). Of this 1,052 total, 699 jobs are expected to occur in Erie County outside Sandusky, and 352 in Sandusky. In 20082010, 296 of this 1,052-job impact is expectedto occur in Erie County and Sandusky combined. 2.Local spending impacts from Phase II are expected to generate a total local employment impact of 334 jobs from 2010 through 2014. Erie County outside Sandusky is expected to capture 222 of this 334-job impact, and Sandusky is expected to capture the other 112 jobs from this impact.
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3.Spending impacts from Phase III are expected to generate a total local employment impact of 74 jobs, with 49 of these jobs captured by Erie County outside Sandusky and the other 25 jobs captured by the City of Sandusky. 4.The combined total local employment impact across all three project phases(2008-2014) is estimated at 1,460, with 971 of these jobs being captured by Erie County outside Sandusky and 489 jobs captured by the City of Sandusky.

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Pay levels of the jobs generated by this project will vary, depending upon the nature of the job. Forexample, construction type jobs, especially if unionized, would pay higher wages than a job as a cashier, hotel clerk, or light truck driver. Here are some examples of possible jobs generated by this project and the 2007 average annual wages for these jobs in Erie County:5  Carpenter: $36,212.  Cashier: $16,515.  Restaurant cook: $17,659.  Construction laborer: $32,625.  Food service manager: $40,186.  Host/hostess: $15,538.  Hotel desk clerk: $17,865.  HVAC mechanic: $36,941.  Landscaper/groundskeeper: $19,365.  Maids: $15,652.  Maintenance/repair worker: $33,446.  Painter: $28,891.  Plumber: $52,582.  Real estate sales agent: $65,894.  Recreation workers: $20,176.  Retail clerks: $20,218.  Roofer: $40,019.  Security guards: $26,499.  Truck driver (light): $23,650.  Waiters/waitresses: $15,080. C. Local Income Impacts(Occurs within Sandusky/Erie County) Table 18 below identifies the local income impact flowing from the local spending and employment impacts identified earlier.
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Source: Ohio Department of Job and Family Services, Labor Market Information Division, 2007.
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Table 18: Total Local Income Impact Summary, Phases I-III(2006 Constant Dollars) The following major findings flow from the data in Table 18 above: 1.Across all three project phases, the total local income impact is estimated at $34.1 million, with $22.7 million of this impact in Erie County outside Sandusky and $11.4 million in the City of Sandusky. 2.Phase I local income impacts are expected to contribute $21.9 million of this $34.1 million of total local income impact. Phase I will account for roughly 65% of the project’s total local income impact. 3.Phase II local income impacts are expected to contribute $9.5 million of this $34.1 million of total local income impact. Phase II will account for roughly 27.9% of the project’s total local income impact. 4.Phase III local income impacts are expected to contribute $2.63 million of this $34.1 million of total local income impact. Phase III will account for roughly 7.7% of the project’s total local income impact.
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D. Local Tax Impacts(Occurs within Sandusky/Erie County) Project-related local tax impacts are estimated in Table 19 below. They were estimated

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manually becauseof skewed tax impact results created by the IMPLAN model. The manual calculations offer a more realistic picture of tax impact generation of the project. Table 19: Total Local Tax Impact Summary, Phases I-III The following major findings flow from the data in Table 19 above: 1.Across all three project phases, the total local (City, County, schools, and other local)tax impact triggered by local project spending is estimated at $10 million over the project lifetime (2008-2014). Another $2.9 million in state taxes is generated as part of the project’s tax impact. 2.This includes a total tax impact of $2.1 million on the City of Sanduskyover the project lifetime (2008-2014), which consists of: a.Commercial Property Tax: $214,482. b.Residential Property Tax: $723,240. c.Income Tax: $488,246. d.Bed Tax: $657,398.
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3.This includes a total tax impact of $2.2 million on Erie County Government over the project lifetime (2008-2014), which consists of: a.Commercial Property Tax: $309,488. b.Residential Property Tax: $945,350. c.Sales Tax: $527,611. d.Bed Tax: $438,265. 4.Finally, this includes a total tax impact of $4.02 million on local schools over the project lifetime (2008-2014), which consists of: a.Commercial Property Tax: $27,319. b.Residential Property Tax: $3,993,718.
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VIII. Study Conclusions and Recommendations
A. Measurable Economic Impactsof the Marina District Project About one-third of the total local economic impact of the Marina District Project is expected to occur in the City of Sandusky and the othertwo-thirds in other parts of Erie County outside Sandusky.6On an overall basis, the DTIA consulting team concludes that the Marina District will generate these estimated overall local economic impacts: 1.Local Spending Impact: Acrossall three project phases,the project’s local spending impact will total $204.8 million over the 2008-2014 period, with $136.2 million of this spending impact accruing to Erie County outside Sandusky and $68.6 million accruing to the City of Sandusky. 2.Local Employment Impact: The combined total local employment impact across all three project phases (2008-2014) is estimated at 1,460, with 971 of these jobs being captured by Erie County outside Sandusky and 489 jobs captured by the City of Sandusky. 3.Local Income Impact: Across all three project phases, the total local income impact is estimated at $34.1 million, with $22.7 million of that impact in Erie County outside Sandusky and $11.4 million in the City of Sandusky. 4.Local Tax Impact: Across all three project phases, the totallocal (City, County, other local) tax impact triggered by local project spending is estimated at $10 million over the project lifetime (2008-2014). Another $2.9 million in state taxes are generated as part of the project’s tax impact. Actions to Enhance Long-Term Community Benefits From a longer term community development standpoint, the following guidelines should be

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observed in approaching the development of the Marina DistrictProject: 1.Ensure that adequate public access to the lakefront is protected and public space in the Marina District area is preserved. 2.Ensure that the development is built and operated in an environmentally sound manner. To the extent possible, appropriate green building techniques and materials should be used in the constructionand operations.
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Note: Based on population, the City of Sandusky represents 33.5% of Erie County’s total population.The other 66.5% of the County’s population lives outside the City of Sandusky.
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3.Work during the construction and operating phases of the project to provide employment opportunities for City residents. 4.During the construction and operating phases of the project, businesses based in Sandusky and Erie County should be utilized wherever feasible by the private developer and the City of Sandusky to provide goods and services required by the project. Each of these guidelines could help to ensure that the project has positive longer term economic and community development impactson Sandusky. Positive Gains for Sandusky from the Project While some readers may only look at the economic impact numbers, it is important to bear in mind that the Marina District project could provide other qualitative positive impacts to the community, if the project is properly developed and operated. These include: 1.Enhancing the physical appearance of the City’s lakefront by adding new homes and commercial facilities(hotel, shopping, and marina support services). 2.Preserving and upgrading parks and public space available for community use. 3.Enhancing the City’s marinas and recreational boating industry by offering improved amenities to boaters. 4.Providing redevelopment synergy to the nearby downtown area by attracting new residents, who may utilize downtown shopping, entertainment and business services. 5.Expanding the City’s currently declining population base by adding new residents, who would act as workers, taxpayers and shoppers in the community. 6.Raising real estate property values on the City’s lakefront and in nearby neighborhoods, and in so doing help revive the City’s weakenedtax base. 7.Expanding the range of housing choices available to Sandusky/Erie County residents and non-residents looking for new housing opportunities. 8.Adding positively to the local tourism industry through a new hotel, retail shopping, restaurant, and marina support services. 9.Providing new tax revenues for the local schools, the library system and City Government through the proposed Tax Increment Financing District (TIFDistrict), which
Donald T. Iannone & Associates42

has been proposed by the City to finance a portion of the public investments associated with the project. 10.Providing the community with a new City Hall facility, enhancing public service delivery to residents.

The Future of the Hydrogen Economy:

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The Sandusky, Ohio Development Initiative August 14, 2008 Introduction

Hydrogen is a fascinating carrier of energy. Its conversion to heat or power issimple and clean. When combusted with oxygen hydrogen forms water. No pollutants are generated or emitted. The water is returned to nature where it originally came from. But hydrogen, the most common chemical element on the planet, does not exist in nature in its pure form. It has to be generated or producedby separating it from chemical compounds. Hydrogen can be produced from water by electrolysis, from hydrocarbon fuels by reforming orthermal cracking, or from other hydrogen carriers by chemical processes. Butclean energies such as electricity from solar, wind and hydro must be applied to produce clean hydrogen, i.e. without greenhouse gases or nuclear waste being generated in the production process. Hydrogen may actually be the only meaningful link between renewable energy and chemical energy carriers.

Hydrogen has fascinated generations of people with good intentions. Promoters of hydrogen claim that a "Hydrogen Economy" will be the ultimate solution to all problems of energy and environment. Hydrogen societies have been formed for the promotion of this goal by publications, meetings and exhibitions. But has the physics also been properly considered?

With this article we intent to take a closer look at some of the energy aspects related to the use of hydrogen as energy carrier. The "Hydrogen Economy" involves not only production and use of hydrogen, but also all other ingredients ofan energy market like packaging, storage, delivery and transfer. This market can flourish if the energy consumed within the market itself is small compared to the energy delivered to the customer. Today, the energy lost in power transmission,oil refineries or sea and land transport of fuels usually amounts to less than 10%of the energy traded. Therefore, we would like to present rough estimates of theenergy required to operate a Hydrogen Economy. One important reason for the renewed interest in the hydrogen economy is the problem of global warming. Eighty percent of all commercial energy on earth is provided by fossil fuels. It is almost certain that the use of fossil hydrocarbons andthe resulting emission of greenhouse gases such as carbon dioxide cause globalwarming. It has never been more urgent to find energy resources that do not cause any emissions of green house gases. Renewable energy from the sun, wind, water and biomass are such energy sources, but they have to be convertedto chemical energy for the general energy market. Hydrogen may provide that link.Another possible path is to continue using fossil fuels for The Sandusky, Ohio Development Initiative
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The Sandusky, Ohio Development Initiative August 14, 2008 producing hydrogen butto capture and sequester CO2, before it is emitted into the atmosphere. Without question, technical solutions exist or can be developed for a hydrogeneconomy. In fact, enormous amounts of hydrogen are generated, handled, transported and used in the chemical industry today. But this hydrogen is a chemical substance, not an energy commodity. Hydrogen production and transportation costs are absorbed in the price of the synthesized chemicals. Thecost of hydrogen remains irrelevant as long as the final products find markets. Today, the use of hydrogen is governed by economic arguments and not by energetic considerations. But if hydrogen is used as an energy carrier, energetic argument must also beconsidered. How much high-grade energy is used to make, to package, to handle,to store or to transport hydrogen? The global energy problem cannot be solved ina renewable energy environment, if the energy consumed to make and deliver hydrogen becomes comparable to the energy content of the delivered fuel. It is important to assess and compare the energy balances of different energy pathoptions. Are they as efficient as possible? Will there be only the hydrogen path infuture? In the following presentation we show that the future hydrogen economy isunlikely to be based on pure hydrogen only. It will certainly be based on hydrogen,but most likely, the synthetic fuel gas will be chemically packed in consumer-friendly hydrocarbons.

Properties of Hydrogen

The physical properties of hydrogen are well known [2, 3]. It is the smallest of allatoms. Consequently, hydrogen is the lightest gas, about 8 times lighter than methane (representing natural gas). Hydrogen has a gravimetric heating value(we consider only the higher heating value HHV in this study) of [9]:

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The gravimetric heating value has little relevance for the hydrogen trade. The volume available for fuel tanks is always limited, not only in automotive applications. The diameter of pipelines cannot be increased at will. Therefore, forall practical assessments it is more meaningful to use the volumetric rather thanthe gravimetric energy density. Hydrogen has to be compacted by compression orliquefaction for storage, transport or transfer. In today's energy economy the handling of natural gas and liquid fuels does not pose major problems. But is thisalso true for hydrogen? Figure 1 shows the volumetric HHV energy densities of different energy carrier options. At any pressure, hydrogen gas clearly carries less energy per volumethan methane (representing natural gas), methanol, propane or octane (representing gasoline). At 800 bar pressure gaseous hydrogen reaches the volumetric energy density of liquid hydrogen. But the volumetric energy density of methane at 800 bar is higher by factor 3.2. The common liquid energy carriers methanol, propane and octane (representing gasoline) surpass liquid hydrogen by factors 1.7 to 3.4, respectively. But at 800 bar or in the liquid state hydrogen mustbe contained in hi-tech pressure tanks or in cryogenic containers, while the liquid fuels are kept under atmospheric conditions in unsophisticated containers.

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Energy Cost of Energy in a Hydrogen Economy

Hydrogen is a synthetic energy carrier. High-grade energy must be invested to produce, compress, liquefy, transport, transfer or store hydrogen. In most casesthis energy could also be distributed directly to the end user. Also, instead of gaseous hydrogen, other liquid hydrocarbons such as methanol could serve asthe general energy carrier of the future. Carbon from biomass or CO2 capturedfrom flue gases could become the essential chemical carrier molecule for hydrogen generated with energy derived from renewable or nuclear sources. We want to emphasize that not only the monetary cost of hydrogen is importantand should be as low as possible, but also the energy cost of synthesizinghydrogen and bringing it to the end user. As stated before, the hydrogen economywill be meaningful, only if the energy consumed to produce, package, store and distribute hydrogen should be as low as possible compared to the energy contentof the delivered fuel gas. So far, this aspect has not been properly recognized. Butbecause of the physical properties of the light gas, the hydrogen economy differs significantly from the natural gas economy. The energy invested to extract and clean natural gas is small compared to its energy content. Not so for hydrogen! The transition to a new energy economy will affect the entire energy supply and distribution system. Therefore, we should discuss the prominent options before investing in a hydrogen gas economy.

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The Sandusky, Ohio Development Initiative August 14, 2008 Some of the more important energetic aspects of a hydrogen economy areanalyzed in the following. The aim of this study [1] is to provide a first roughassessment of the amount of energy invested to make, compress, liquefy, transport, transfer or store hydrogen as compared to the amount of energycontained in the delivered fuel and to compare the results with similar analyses forestablished energy carriers. Throughout the study only representative technical solutions will be considered.

Production of Hydrogen

Energy Needed to Produce Hydrogen Hydrogen does not exist in nature in its pure state, but has to be produced from sources like water and natural gas. The synthesis of hydrogen requires energy.This process is always associated with energy losses. Hydrogen production byboth, electrolysis or chemical reforming is a process of energy transformation. Electrical energy or chemical energy of hydrocarbons is transferred to chemical energy of hydrogen. Making hydrogen from water by electrolysis is the most energy-intensive way toproduce the fuel. But it is a clean process as long as the electricity comes from clean source. Less energy is needed to convert a hydrogen-rich energy carrier like methane (CH4) or methanol (CH3OH) into hydrogen by steam reforming, but the energy invested always exceeds the energy contained in the hydrogen. Thermal losses limit the efficiency of hydrogen production by reforming to about 90%. Consequently, more CO2 is released by this "detour" process than by direct use of the hydrocarbon precursors. We assume efficiencies of 75% for electrolysis and 85% for reforming. About 1.2 to 1.4 energy units of valuable electricity, naturalgas, gasoline etc. have to be invested to obtain one energy unit of hydrogen. Butmost of these source energies could be used directly by the consumer at comparable or even higher source-to-service efficiency and lower overall CO2 emission. Upgrading electricity or clean hydrocarbon fuels to hydrogen does not provide auniversal solution to the energy future, although some sectors of the energy market may depend on hydrogen solutions. The transportation sector may be oneof them. It should be mentioned that it is considerably more expensive to producehydrogen with electricity from water than thermally from fossil fuels. According to[10] it costs around $5.6/GJ to produce hydrogen from natural gas, $10.3 /GJ to produce hydrogen from coal, but $20.1/GJ to produce hydrogen through electrolysis. The Sandusky, Ohio Development Initiative
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Packaging of Hydrogen Energy Needed to Compress Hydrogen Energy is needed to compress gases. The compression work depends on the thermodynamic compression process. The ideal isothermal compression cannotbe realized. The adiabatic compression equation [2] is more closely describing thethermodynamic process for ideal gases.

Figure 2 Adiabatic compression work for hydrogen, helium and methane The Sandusky, Ohio Development Initiative
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The Sandusky, Ohio Development Initiative August 14, 2008 The energy invested in the adiabatic compression of ideal monatomic Helium,diatomic hydrogen and five-atomic methane from atmospheric conditions (1 bar = 100,000 Pa) to the final pressure is shown in Figure 2. Clearly, much more energyis required to compress hydrogen than methane.

Figure 3 Energy required for adiabatic and isothermal ideal-gas compression of hydrogen compared to its higher heating value HHV. The isothermal compression energy is determined by the simpleequation:

Figure 3 illustrates the difference between adiabatic and isothermal idealgas compression of hydrogen. Multi-stage compressors with intercoolers operatebetween the two limits. Also, hydrogen readily passes compression heat to coolerwalls, thereby approaching isothermal conditions. Numbers provided by a leadingmanufacturer [5a] of hydrogen compressors show that the energy invested in thecompression of hydrogen is about 7.2% of its higher heating value (HHV). This number relates to a 5-stage compression of 1,000 kg of hydrogen per hour from 1to 200 bar. For a final pressure of 800 bar 10% would perhaps be a realistic value.The analysis does not include losses in the electric motor.

Energy Needed to Liquefy Hydrogen Even more energy is needed to compact hydrogen by liquefaction. Theoreticallyonly about 4MJ/kg have to be removed to cool hydrogen down to 20K (-253C) and to condense the gas at atmospheric pressure. But the cooling process is extremely energy intensive with a Carnot efficiency of 7%. A The Sandusky, Ohio Development Initiative
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The Sandusky, Ohio Development Initiative August 14, 2008 theoretical analysisof the complicated, multi-stage liquefaction processes is difficult. We therefore usethe actual energy requirements of existing hydrogen liquefaction plants as compiled by Linde Kryotechnik AG [5b]. The company is a well-known supplier ofcryogenic equipment and cryogenic liquids. The results of the compilation of the energy consumption of existing hydrogenliquefaction plants have been adapted to make them compatible with the currentstudy. The liquefaction energy requirement depends on the process itself, the process optimization, the plant size, and on other parameters. Figure 4 shows the actual liquefaction energy consumption for plants having a capacity between 1 to 10,000 kg of liquid hydrogen per hour.

Figure 4 Typical energy requirements for the liquefaction of 1 kg hydrogen as a function of plant size and process optimization The energy requirement for liquefaction is substantial. For a plant capacity of 100 kg liquid hydrogen per hour about 60 MJ of electrical energy is consumed to liquefy 1 kg of hydrogen. The specific energy input decreases with plant size, but a theoretical minimum of about 40 MJ per kg H2 remains.

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The Sandusky, Ohio Development Initiative August 14, 2008 In Figure 5 the required energy input is compared to the higher heating value HHVof hydrogen.

For small liquefaction plants the energy needed to liquefy hydrogen may exceedthe HHV of the gas. But even with the largest plants (10,000 kg/h) about 30% of the HHV energy is needed for the liquefaction process. Energy Needed to Store Hydrogen in Hydrides At this time only a generalized assessment can be presented for the physical (e.g.adsorption on metal hydrides) or chemical (e.g. formation of alkali metal hydrides)storage of hydrogen. There are many options for both types of hydrogen storage. This makes it difficult to present numbers. But a few cautious statements may be allowed. The laws of nature certainly apply to this type of hydrogen storage as well. In the chemical case, a substantial amount of energy is needed to combine hydrogenwith alkali metals. This energy is released when the hydrogen is liberated from thecompound. The generated heat has to be removed by cooling and is normally lost.

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For the physical hydride storage, the hydrogen gas must be pressurized. The energy required for compression has been assessed before. The compressionenergy is released as heat during the charging process. Also, external heating is needed to liberate the hydrogen from the hydride storage material. According to Ref. [11], p. 264 metal hydrides store only around 55-60 kg(H2)/m3 compared to 71 kg(H2)/m3 for liquid hydrogen. But 100 kg of hydrogen are contained in one cubic meter of methanol. Hydride storage of hydrogen is by no means a low-energy process, but it may becompared to the compression of hydrogen. Generalized numbers cannot be presented today. Delivery of Hydrogen Energy Needed to Deliver Hydrogen by Road Transport A hydrogen economy would certainly involve some hydrogen transport by trucks. There are other options for a hydrogen infrastructure, but road transport will always play a role, be it to serve remote locations or to provide back-up fuel to filling stations at times of peak demand. The comparative analysis is based on information obtained from the fuel and gas transport companies Messer-Griesheim [6a], Esso (Schweiz) [6b], Jani GmbH [6c]and Hover [6d] some of the leading providers of industrial gases in Germany and Switzerland. The following assumptions are made: Hydrogen (at 200 bar), methane (at 200 bar), methanol, propane and octane (representing The Sandusky, Ohio Development Initiative
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The Sandusky, Ohio Development Initiative August 14, 2008 gasoline) aretrucked from the refinery or hydrogen plant to the consumer. The delivery of liquid hydrogen is not considered at this time. In all cases, trucks with a gross weight of 40 tons are fitted with suitable tanks or pressure vessels. Also, at full load the trucks consume 40 kg of Diesel per 100 km. This is equivalent of 1 kg per ton per 100 km. The fuel consumption is reduced accordingly for the return run with emptied tanks. We assume the same engine efficiency for all transport vehicles. Furthermore, the hydrogen and methane pressure tanks can be emptied only from 200 bar to about 42 bar to accommodate for the 40 bar pressure systems of the receiver. Such pressure cascades are standard praxis today. Otherwise compressors must be used to completely empty the content of the delivery tank into a higher-pressure storage vessel. This would not only make the gas transfer more difficult, but also require additional compression energy. Therefore, pressurized gas carriers deliver only 80% of their freight, while 20% of the load remains in the tanks and is returned to the gas plant. Each 40-ton truck is designed to carry a maximum of fuel. For methanol and octane the tare load it is about 25 tons, for propane about 20 tons because of some degree of pressurization. At 200-bar pressure a 40-ton truck can deliver about 3.2 tons of methane, but only 320 kg of Hydrogen. This is a direct consequence of the low density of hydrogen, as well as the weight of the pressure vessels and safety armatures. In anticipation of technical developments, the analysis was performed for 500 kg of hydrogen, of which 80% or 400 kg are delivered to the consumer. With this assumption, 39.6 tons of dead weight have to be moved on the road to deliver 400 kg of hydrogen. The results of this analysis are presented in Figure 6. The energy needed to transport any of the three liquid fuels is reasonably small. It remains below 5%

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The Sandusky, Ohio Development Initiative August 14, 2008 of the HHV energy content of the delivered commodity for a delivery distance of

500 km. More energy is needed to truck methane. But the relative energy consumption becomes unacceptable for hydrogen at almost any distance. The following note may serve to illustrate the consequences of the scenario. A mid-size filling station on any frequented freeway easily sells 25 tons of fuel each day. This fuel can be delivered by one 40-ton gasoline truck. But it would need 21 hydrogen trucks to deliver the same amount of energy to the station, i.e. to provide fuel for the same number of cars per day. Efficient fuel cell vehicles would change this number somewhat, but not considerably. The transfer of pressurized hydrogen from the truck to the filling station takes much more time than draining gasoline form the tanker into an underground storage tank. The filling station may have to close operations during some hours per day for safety reasons. Today about one in 100 trucks is a gasoline or diesel tanker. For hydrogen distributed by road one may see 120 trucks on the road, 21 or 17% of them transport hydrogen. One out of six accidents involving trucks would involve a hydrogen truck. This scenario is unacceptable for political and social reasons.

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Hydrogen pipelines exist, but they are used to transport a chemical commodity from one to another production site. The energy required to move the gas is irrelevant in this context, because energy costs are part of the production costs. This is not so for energy transport through pipelines. Normally, pumps are installed at regular intervals to keep the natural gas moving. These pumps are energized by energy taken from the delivery stream. About 0.3% of the natural gas is used every 150 km to energize a compressor to keep the gas moving [7]. The assessment of the energy consumed to move hydrogen through pipelines must be based on a rough comparison with natural gas pipeline operating experience. The comparison is done for equal energy flows, i.e. the same amount of energy is delivered to the customer through the same pipeline either in the form of natural gas or hydrogen. But it is well established, though, that existing pipelines cannot be used for hydrogen, because of diffusion losses, brittleness of materials and seals, incompatibility of pump lubrication with hydrogen and other technical issue. The comparison further considers the different viscosities of hydrogen and methane.

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Figure 7 shows the results of this approximate analysis. While the energy consumption for methane (representing natural gas) appears reasonable, the energy needed to move hydrogen through pipelines makes this type of hydrogen distributions difficult. Not 0.3% but almost 1.4% of the hydrogen flow is consumed every 150 km to energize the compressors. Only 60 to 70% of the hydrogen fed into a pipeline in Northern Africa would actually arrive in Europe

Energy Needed to Generate Hydrogen at Filling Stations

One option for providing clean hydrogen at filling stations and dispersed depotswould be to generate the gas on-site by electrolysis. Again, the energy needed togenerate and compress hydrogen by this scheme is compared to the HHV energy content of the hydrogen delivered to local customers. Natural gas reforming is not considered for reasons stated earlier. The analysis is done for hydrogen energy equivalent of conventional fuel necessary to serve 100 to 2,000 conventional road vehicles per day at a singlegas station. On the average, each car or truck is assumed to accept 60 liters of gasoline or diesel. The hydrogen energy equivalent would be about 1,700 to 34,000 kg H2 per day for 100 and 2000 vehicles per day, respectively.

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The efficiency of the electrolysers varies from 70 to 85% for 100 and 2,000 vehicles per day, respectively. Also, losses occur in the AC-DC power conversion. Between 4 and 73 MW of power are needed for making hydrogen by electrolysis. Additional power is needed for the water make-up (0.1 to 2.2 MW) and for the compression of the hydrogen to 200 bar (0.4 to 6.MW). In all, between 5 and 81MW of electric power must be supplied to the station to generate hydrogen for 100 to 2,000 vehicles per day. It may be of interest that between 15 and 305 m3 of water are consumed daily. The higher number corresponds to about 3.5 liters per second. The results of this analysis are presented in Figure 8. The total energy needed togenerate and compress hydrogen at filling stations exceeds the HHV energy of the delivered hydrogen by at least factor 1.5. The availability of electricity maycertainly be questioned. Today, about one sixth of the energy for end-use is supplied by copper wires. The generation of hydrogen at filling stations would make a threefold increase of the electric power generating capacity necessary.

The Limits of a Hydrogen Economy

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The Sandusky, Ohio Development Initiative August 14, 2008 The results of this analysis indicate the weakness of a "Pure-HydrogenOnly-Economy". All problems are directly related to the nature of hydrogen. Most of the problems cannot be solved by additional research and development. We have to accept that hydrogen is the lightest of all gases and, as a consequence, that its physical properties are incompatible with the requirements of the energy market. Production, packaging, storage, transfer and delivery of the gas, in essence all key component of an economy, are so energy consuming that alternatives should be considered. Mankind cannot afford to waste energy for idealistic goals, but it will look for practical solutions and select the most energysaving solutions. The Pure-Hydrogen-Only solution may never be acceptable. But the degree of energy waste depends on the chosen path. Hydrogen generated from rooftop solar electricity and stored at low pressure in stationarytanks may be a viable solution for private buildings. On the other hand, hydrogen generated in the Sahara desert, transported to the Mediterranean Sea through pipelines, then liquefied for sea transport, docked in London and locally distributed by trucks may not provide an acceptable energy solution at all. Too much energy is lost in the process to justify the scheme. But there are solutions between these two extremes, niche applications, special cases or luxury installations. Forinstance, combusting the hydrogen at the same site where it is produced, as the Norwegian company Norsk Hydro suggested some years ago, is probably a workable solution. Simply because there is no transport and storage involved. Norsk Hydro proposed to separate natural gas on shore into hydrogen and carbon dioxide, sequester the carbon dioxide under the North Sea and burn the hydrogen in a power plant to make clean electricity. As stated in the beginning, hydrogen may be the only link between physical energy from renewable sources and chemical energy. It is also the ideal fuel for modern clean energy conversion devices like fuel cells or even hydrogen engines. But hydrogen is not the ideal energy carrier between primary sources and distant end users. New solutions must be considered for the commercial bridge between the hydrogen electrolyser and the hydrogen consumer.

Methanol Energy Economy

The ideal energy carrier would be a liquid with a boiling point of at least 60C anda point of solidification below -40C. Such energy carrier would stay liquid under normal weather conditions and at high altitudes. Gasoline, diesel and methanol are good examples of such fuels. They are in common use not only because oil companies distill them from crude oil or natural gas, but mainly, because they qualify for widespread use because of their physical properties. Even if oil had never been discovered, the world would not use synthetic hydrogen, but a synthetic hydrocarbon fuel. Gasoline, diesel, heating oil etc. The Sandusky, Ohio Development Initiative 6
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The Sandusky, Ohio Development Initiative August 14, 2008 have emerged as the best solutions with respect to handling, storage, transport and energetic use. With high certainty, such liquids will be synthesized from hydrogen and carbon in a distant energy future. Methanol is certainly a serious candidate. It carries four hydrogen atoms per carbon atom. It is liquid under normal conditions. The infrastructure for liquid fuels exists. Also, methanol can either be directly converted to electricity by Direct Methanol Fuel Cells (DMFC), Molten Carbonate Fuel Cells (MCFC) and Solid Oxide Fuel Cells (SOFC). It can also be reformed easily to hydrogen for use in Polymer Electrolyte Fuel Cells (PEFC or PEM). Methanol could become a universal fuel for fuel cells and many other applications. But the synthesis of methanol requires hydrogen and carbon atoms. In a future sustainable energy world carbon could come from plant biomass, from organic waste and from captured CO2. Typically, biomass has a hydrogen-tocarbon ratio of two. In the methanol synthesis two additional hydrogen atoms could be attached to every biomass carbon. Carbon from the biosphere may become the key element for in a sustainable energy future. Instead of converting biomass into hydrogen, hydrogen from renewable sources should be added to biomass to form methanol. Carbon atoms should stay bound in the energy chain as long as possible. They are returned to the atmosphere (or recycled) after the final use of energy. But synthetic methanol is one of a number of options to be seriously considered for the planning of a clean and sustainable energy future. Time has come to shift the attention for a Hydrogen Economy to a Methanol (orelse) Economy and to direct manpower and resources to find technical solutions for a sustainable energy future characterized by two closed natural cycles of water and CO2 or hydrogen and carbon.

References

[1] Ulf Bossel and Baldur Eliasson, Energy Efficiency of a Hydrogen Economy. [2] Handbook of Chemistry and Physics, recent editions [3] G. H. Aylward, T. J. V. Findlay, Datensammlung Chemie in SI-Einheiten, 3. Auflage (German Edition), WILEY-VCH, 1999 [4] E. Schmidt, Technische Thermodynamik. 11th Edition, Vol.1, p287 (1975) The Sandusky, Ohio Development Initiative
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The Sandusky, Ohio Development Initiative August 14, 2008 [5a] Burckhardt Compression AG, Winterthur / Switzerland (private communication) [5b] Linde Kryotechnik AG, Pfungen / Switzerland (private communication) [6a] Messer-Griesheim AG, Krefeld / Germany (hydrogen gas, private communication) [6b] Esso (Schweiz) AG, Zurich / Switzerland (gasoline and diesel, private communication) [6c] Jani GmbH & Co. KG, Seevetal / Germany (propane, private communication) [6d] Hoyer GmbH, Kˆln / Germany (liguid natural gas, private communication) [7] Swissgas Schweiz AG, Zurich, Switzerland (private Communication) [8] VDI W‰rmeatlas, VDI D¸sseldorf, Germany 1977 [9] Synthetic Fuels, R.F.Probstein and R.E.Hicks, Mc-Graw Hill,1982 [10] H. Audus, Olav Kaarstad and Mark Kowal, Decarbonisation of Fossil Fuels: Hydrogen as an Energy Carrier, CO2 Conference, Boston/Cambridge 1997, published in Energy Conversion Management, Vol. 38, Suppl., pp. 431-436. [11] Hydrogen as an Energy Carrier, C. J. Winter and J. Nitsch, Editors, Springer Verlag, 1988

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