Pennsylvania I-99 Summary Report

July, 2003 - produced by The Louis Berger Group with Wilbur Smith Associates and AECOM Consulting

Project Type: Connectivity and access improvements

Project Objectives: Promote and accommodate existing employers, encourage commercial development, and provide greater access for residents and visitors

Outcomes Metric: Expected gains in output, employment, and earnings

Economic Environment: Rural, relatively isolated counties with a history of manufacturing and mining employment

Economic History: Below state and US average population and employment growth, and high unemployment

Distinguishing Features: Penn State University, over 50 industrial parks, and strong local and regional commitment to preserving and increasing tourism,

manufacturing, high-tech industry, and distribution centers Source: TransCAD

EXISTING CONDITIONS

The study area encompasses 13 counties in the heart of Pennsylvania, from the Maryland to the New York borders. The 13 counties enjoy some similarities, but face different challenges, particularly related to the transportation infrastructure and the completion status of I-99, and thus have been divided into three sub-regions: north, central and southern. For the sake of brevity, the sub-regions will henceforth be discussed as a whole, but it is important to note that the sub-regional averages to a certain extent mask differences in individual counties. For example, Centre County in the Central sub-region is a county with relatively strong employment and growth (compared with the rest of the region), fueled by Penn State in State College and spin-off industries. Its size and strength masks the high unemployment in both Clearfield and Mifflin Counties and also skew population and industry characteristics of the central region.

Pennsylvania is the 6^th most populated state in the country. The I-99 corridor study area, while occupying over 24 percent of the state's land, holds less than eight percent of the state's population. The region includes four metropolitan areas, Johnstown, Altoona, State College, and Williamsport, but is primarily rural, with average population density of 90 persons per square mile, compared with the Pennsylvania average of 274 persons per square mile. As shown in Exhibit 2, between 1990 and 2000 the Central Sub-region, influenced by the State College area, experienced the largest population growth of the three sub-regions, with a growth rate of 6.7 percent. This was approximately double the State's growth rate of 3.4 percent, but significantly less than the national growth rate of 13.1 percent. The Northern Sub-region had a growth rate of 3.3 percent, on par with the State's growth rate. The Southern Sub-region experienced practically no population growth in the same period.

Exhibit 2: Demographic Profile 2000

I-99 Corridor Sub-regions

Demographic Profile 2000	Northern	Central	Southern	PA	USA
Population	240,955	265,626	471,596	12,281,054	281,421,906
Population, percent change, 1990 to 2000	3.33%	6.65%	0.13%	3.40%	13.10%
Persons under 5 years old	5.35%	5.18%	5.38%	5.90%	6.80%
Persons under 18 years old	22.53%	20.63%	22.14%	23.80%	25.70%
Persons 65 years old and over	15.68%	13.60%	17.81%	15.60%	12.40%

Source: Census Bureau

With the exception of the State College area, the counties in the corridor expressed concern about "brain drain" and the difficulties in keeping young people in the area, especially the "best and brightest" in professional fields. Many young people leave the area to find work, many others who are skilled workers may remain because of family ties and love for the area, but are underemployed or working multiple low-skilled jobs to make ends meet when the higher-paying skilled manufacturing jobs leave. Major firms are often reluctant to position their headquarters or manufacturing facilities in the region, despite favorable labor costs and an experienced work force, because their professional staff is accustomed to the access and amenities of large cities.

Recent unemployment rate trends vary between the three sub-regions of the I-99 Corridor (Exhibit 3). Between 1990 and 2001, the unemployment rate in the Central Sub-region has tracked fairly closely with the State and national average (noting that this is characteristic of Centre County, not Clearfield and Mifflin Counties). Between 1998 and 2000, the unemployment rate of the Northern Sub-region appears to briefly converge with the State and national averages, but then shoots up dramatically from 4.4 to 5.8 percent between 2000 and 2001. During the 1990s and the early part of 2000, the unemployment rate of the Southern Sub-region appears to roughly follow State and national trends, though it consistently remains well above the state and national average.

The unemployment trends reflect cyclical forces, as well as structural changes within the local, regional and national economies. This area has been more reliant on manufacturing than most parts of the country for its income and growth, and as such has been hit hard by downturns. Interviews have identified dozens of major manufacturing entities that have either laid off substantial numbers of employees or closed down entirely- from textile plants in the northern sub-region to a major manufacturer of scissor-lifts in the southern sub-region.

Exhibit 4 brings the longer range perspective to the employment situation in the corridor. Percentage changes in growth across the decades are provided for major employment sectors. The highlighted values represent cases where growth in a sector was less than the US average. With a few exceptions, and with most of those in the central sub-region and Centre County, growth rates in the I-99 corridor have lagged behind the US as a whole, in some cases dramatically, for a long period of time. Where a lag in growth, or a real decline in jobs, coincides with a major base industry sector, such as mining or manufacturing, the resulting disruption to the structure of the economy is significant.

Exhibit 4: Growth Across Major Sectors Compared to Pennsylvania and the US

2 Digit SIC Sectors	Period	I-99 Corridor Regions			PA	US
		Northern	Central	Southern
Mining	'70-'80	-2.7	81.5	54.1	27.6	71.7
	'80-'90	-30.5	-40.8	-58.6	-33.6	-18.3
	'90-'00	-42.0	-57.4	-66.5	-27.3	-23.8
Construction	'70-'80	14.5	2.4	8.8	3.1	28.5
	'80-'90	51.3	56.9	22.7	32.5	28.4
	'90-'00	2.1	14.0	26.6	12.9	32.3
Manufacturing	'70-'80	-8.8	2.8	-20.7	-12.7	5.6
	'80-'90	-2.7	-7.0	-16.1	-22.1	-5.2
	'90-'00	-5.4	3.1	2.2	-9.1	-3.0
Transport & Utilities	'70-'80	24.7	7.9	-3.5	0.1	16.6
	'80-'90	-17.8	16.4	-11.7	2.7	15.8
	'90-'00	12.9	14.5	8.5	17.3	25.6
Retail Trade	'70-'80	27.8	34.1	14.5	15.9	30.6
	'80-'90	18.8	40.5	20.3	18.1	28.2
	'90-'00	17.2	14.3	11.9	10.2	19.3
Services	'70-'80	40.0	44.4	27.1	30.1	46.8
	'80-'90	36.1	67.2	39.9	48.9	54.8
	'90-'00	27.6	27.5	21.8	24.3	37.6
Total Private Employment Growth	'70-'80	13.6	23.5	7.4	8.2	28.7
	'80-'90	13.3	27.3	9.3	14.9	25.5
	'90-'00	12.9	15.8	11.8	11.6	23.1

Source: Pennsylvania Labor Market Information Database System (PALMIDS)

HIGHWAY PROJECTS

Major sections of I-99 remain to be completed in the central and northern sub-regions, with much of the roadway planned, under design, or under construction; however, significant links are not yet funded in the TIPs and Long Range Plans. The highest priority in the central and northern sub-regions is to complete I-99. In addition to the completion of I-99, the central sub-region also seeks improved east-west access, while the northern sub-region seeks the completion of interchanges associated with I-99 and maintenance upgrades to its access roads. I-99 has been completed in the southern sub-region; the primary need is for additional access from contiguous counties to connect to growing employment centers along I-99, and connecting major municipalities such as Johnstown to I-99. Exhibit 5 provides a summary map of the major access projects proposed for the regions and a description of the projects.

Exhibit 5: I-99 Highway Access Projects

NORTHERN SUB-REGION ACCESS PROJECTS

Route	FHWA Typology	Access Description	Desired Improvements
I-99	1	Completing I-99 from I-80 Exit 178 through Williamsport to the New York line requires major upgrades to U.S. Route 220(Clinton and Lycoming Counties) U.S. Route 15 (Lycoming County), U.S. Route 6015 Tioga County	Complete entire section as planned to 4-lane interstate standards to increase access to jobs, improve regional competitiveness in terms of access, and increase employment opportunities.
I-180	4	Airport access project	New two-lane road with RR bridge
I-180 Market Street Bridge Replacement	4	Bridge replacement with new interchange with US 15 and I-180	High priority access project, partially funded

CENTRAL SUB-REGION ACCESS PROJECTS

Route	FHWA Typology	Access Description	Desired Improvements
U.S. Route 220/ I-99	3	From Bald Eagle in Blair Co. to I-80.	Completes I-99 in Central sub-region- from 2-lane to 4-lane limited access
U.S. Route 22/522	3	Mifflin County between Lewiston and Mount Union.- this route is virtually the only link between Lewistown, Mount Union, Huntingdon and Hollidaysburg.	Develop Lewistown bypass; provide better travel times, access for business and industry.
State Route 64	2	Between Lamar (exit 173 on I-80) and Pleasant Gap	Laying sewer lines, expecting big growth, industrial development
U.S. Route 322 east of I-99	3	From State College east to Lewistown and Juniata County border towards Harrisburg	Complete to four-lane standards from I-99 in State College to Juniata County - major central connector to Harrisburg
U.S. Route 322: Corridor O	1	Will connect with I-99 at State College west toward I-80 in Clearfield County- Port Matilda to I-80 Exit 111	Two-lane to a four-lane road improves access to jobs, better commercial access to I-80, especially for west-bound traffic from Centre, Clearfield Counties
U.S. Route 219	2	DuBois to State Route 830 (at I-80 exit 97)	Two lanes to four lanes- connections and interstate access
State Route 150	2	Dale Summit NE of State College to Bellefonte	Connects growing communities to improved road network

SOUTHERN SUB-REGION ACCESS PROJECTS

Route	FHWA Typology	Access Description	Desired Improvements
U.S. Route 22: Appalachian Corridor M	3	See also U.S. 22 Central Sub-Region. This is the main east-west route between Harrisburg and Pittsburgh across the northern counties of the southern Allegheny region. It connects Huntingdon and Blair Counties to I-99 at Hollidaysburg.	Bridge improvements and replacements; and full 4-lane development, as identified in Appalachian Corridor M. This is one of the last sections of the Appalachian Development Highway System - Corridor M. A big gap in the system starts at Lewistown; there is no high speed access between Lewistown and Altoona.
State Route 26	1	Runs parallel to I-99 from the PA Turnpike, past Raystown Lake in Huntingdon County and connecting with US 22 near Huntingdon, and continues north to State College.	This is the major tourist route to Raystown Lake, as well as a significant commuter route to State College. Intersection improvements, curvature improvements and truck climbing lanes would increase safety and accessibility.
State Route 56	3	Connects I-99 near the town of Bedford to Johnstown; also connects to the Pittsburgh area. The most direct route east from Johnstown to I-76 and points south and east.	This route has 2 lanes from Johnstown to Bedford, improvements are gradually being made. A study is underway to determine additional improvements and upgrades.
U.S. Route 219 Appalachian Corridor N	3	From I-68 in Maryland to Ebensburg in Cambria County and north to I-80.	South of I-70 U.S. Route 219 is 2 lane most of the way to Meyersdale; recommended improvements would bring it to 4 lane and improve access to western Maryland as well as to Pennsylvania communities.
U.S. Route 220	3	South from I-99 in Bedford and connecting with I-68 just east of Cumberland, MD	Provides a direct connection between I-68 in Maryland and I-99, for direct north-south access. 4 lanes proposed, will ease congestion on I-70 between Hancock and Breezewood and bring jobs to Bedford County.
U.S. Route 422	3	Connects with U.S. Route 22 at Ebensburg in Cambria County and proceeds west into Indiana County.	The existing 2-lane road is proposed to be converted to a 4 lane bypass.
State Route 453	3	Connects with I-99 at Tyrone in northern Blair County and runs southeast to U.S. Route 22, connecting in Huntingdon County.	This eastbound connector is used as a truck route between I-99 and US 27. When I-99 is complete to I-80, this route will provide a vital link. Truck climbing lanes and geometric improvements are proposed.
State Route 2004	6	PA 36 to PA 866 (Blair County Airport Access)	Will improve access from I-99 to the Blair County airport.
State Route 4013	6	I-99 access to north Altoona using Pinecroft exit	Will provide increased access and development to northern Altoona.

Source: Advisory Committee and Interview

COORDINATION OF PROJECTS AND OTHER ECONOMIC DEVELOPMENT STRATEGIES

The major economic development strategies in the corridors include efforts to increase tourism, attract and retain manufacturing and high-tech industries, and, in the southern sub-region, efforts to build on the transportation advantages of the Pennsylvania Turnpike and I-99 to attract additional distribution facilities.

Tourism

The Northern Region's tourism is quite strong thanks to the region's heavy forests and nature based attractions supporting outdoor recreation such as camping, hunting, fishing/ice fishing, hiking, biking, cross-country skiing, kayaking and other water sport activities. Tourists in the Central Region enjoy a number of attractions including parks, which offer fishing, hiking and skiing activities (Tussy Mountain Ski Resort), the Penn State Campus with its widely popular football games, museums, Penn's Cave, and a weeklong annual arts festival. In the southern sub-region, the main tourist events are centered on the region's rich history, outdoor activities, sporting events, and the new convention center in Altoona. Tourism is an important industry in the I-99 Corridor, but a problem is that there are few activities or facilities to attract multi-day tourist trips. Perhaps the greatest benefit of I-99 to the tourist industry is the potential to expand the market for day trips to the study area and for longer trips to the state. By reducing the travel times to the region, more visitors will be able to make day trips to enjoy the outdoor recreational opportunities, in some cases leading to multi-day stays. Another benefit is that an interstate will make the region more accessible for cross-country skiing and ice fishing in winter when other roads might be dangerous or impassable.

Manufacturing and Distribution

More than 30 public and private agencies in the corridor, from economic development agencies, to associations of manufacturers, and chambers of commerce, are working to encourage responsible industrial and high-tech investment in the sub-region, in large part to replace manufacturing and mining jobs that have been lost over the past decades. Among the tools used to attract businesses to the region are established infrastructure, such as business parks; an educated labor force; favorable loan terms; and, in many cases, substantial tax breaks or incentives. Over 50 public and private industrial parks have been identified in the region; some are in early development stages while others are fully supported with utilities, roads, railroads and buildings. Many of the parks are within Enterprise Zones, with limited, graduated tax relief, or are in Keystone Opportunity Zones (KOZs). Pennsylvania has established the KOZ program to assist areas with high unemployment to attract new businesses. A KOZ is a parcel-specific area with exceptional tax benefits, whereby certain state and local taxes are waived, abated, or exempted for property owners, residents, and businesses, until 2010 or 2013, depending on the parcel. In addition, the Pennsylvania Industrial Development Authority (PIDA) guarantees loans of up to 40% for land and buildings for businesses.

Educational facilities have also proven to be effective business incubators. Penn State, with over 40,000 students, located in State College, Centre County, is noted to have been a substantial contributor to the regional growth, and particularly to that of the service and high-tech sectors, spinning off dozens of high-tech businesses. Two areas targeted for growth in the northern sub-region are plastics manufacturing and food processing. Plastics manufacturing is attractive due to the qualified labor pool and the existence of plastics manufacturers in the area already. Food processing would draw strength from the availability of raw materials from farms in the sub-region, and the presence of Kellogg's (Pop Tarts). Both plastics and food processing are desirable since they require skilled labor, offer good wages, and are somewhat resilient to economic downturns. In the southern sub-region, the DeVorris business center in Altoona, in Blair County, is in operation as a business incubator for light manufacturing and small technology. Distribution has generated significant employment in the southern sub-region. For example, Walmart, Sheetz and Smith Transport have all established major distribution facilities along I-99; other parks with good I-99 access have been developed for smaller distribution requirements.

High-technology and more traditional manufacturing and distribution industries are clearly reliant on good, interconnected highway systems. Many industrial parks and distribution facilities are located directly on I-99, at key interchanges. The employees needed to work in these centers are often drawn from surrounding counties. For example, Centre County has a higher cost of living than Clearfield, Mifflin or Huntingdon Counties; proposed access projects support commuter access as well as commercial travel.

ANALYSIS METHODOLOGY AND RESULTS

The I-99 Corridor methodology and analysis employed a three-step process:

• Step 1: Develop a forecast that takes into account the completion of I-99. Woods & Poole (W&P) develops long-range forecasts at a county level, including characteristics such as employment and earnings by major economic sector. However, these forecasts are based on prior local trend data and forecasts of national activity, and therefore do not take into account changes that may impact the forecast at a local level. Therefore, W&P data for the period from 1970 to 1990 were used as the basis for the forecast with adjustments calculated at a county level to factor the likely impact of the completion of I-99. The adjustments are based on the difference in growth between otherwise similar counties in the region, comparing counties that experienced significant transportation improvements during the period and counties that did not have significant transportation improvements.
• Step 2: Identify specific industries that are likely to benefit from the additional access projects in the region. Extensive stakeholder interviews were conducted throughout the region. Local professionals from specific industries and economic development agencies were queried as to how much the particular industry was likely to grow, given the stated transportation improvements.
• Step 3: Develop an economic input-output analysis for the region accounting for the likely benefits to specific industries. An economic impact study involves the assessment of three distinct but related effects arising from a project, investment, or the operation of a business entity. These impacts are categorized as direct impacts, indirect impacts and induced impacts. In this case, direct impacts include the economic value of travel time savings, the construction spending on highway improvements, and the additional activity within particular industries due to increased competitiveness. Indirect impacts are the "ripple effect" due to, for example, additional activity in industries involved in providing raw materials, energy, and transportation for the material and machinery production, which in turn provides stimulus to the industries supplying those industries. The induced impact is the effect of increased consumer spending by wage earners in the study industry and other supporting industries. The ripple effect from this spending can also be followed through the economy. Together, the indirect and induced impacts constitute the multiplier effect, the extent to which the direct impact results in other economic activity. The multiplier effect is derived by employing the input-output modeling methodology and the effects are evaluated according to economic base theory.

Economic Impacts of Highway Construction

This study identified two broad categories of economic "inputs" that will occur due to highway access improvements. The first broad category of inputs is termed the Regional Direct Economic Impacts, and encompasses the travel time savings of business and individual traffic, the extra roadside services, and the construction and ongoing maintenance spending. The second broad category of inputs is related to the increased competitiveness of local industries as a result of highway improvements. The different sources of spending are input into the regionalized input/output model to predict impacts on output, earnings, and employment. The summary of the direct economic impacts are presented in Exhibit 6 for the entire region.

Exhibit 6: Direct Economic Impacts due to Roadway Improvements - Total Region

Year	Direct Investment (million $)	Output (million $)	Earnings (million $)	Employment
2003	-38.6	31.6	7.9	241
2004	-73.9	61.6	15.3	469
2005	-78.1	69.4	17.3	527
2006	-62.0	64.0	16.1	483
2007	-579.7	573.2	145.1	4,406
2008	-719.9	714.8	180.5	5,499
2009	-756.3	743.7	187.8	5,740
2010	-756.3	750.4	189.6	5,813
2011	-641.2	665.6	168.6	5,190
2012	-491.2	531.0	135.2	4,184
2013	-435.7	498.7	127.2	3,951
2014	-435.7	502.9	128.3	3,995
2015		67.9	17.8	643
2016		68.3	17.9	647
2017		68.3	17.9	647
2018		68.3	17.9	647
2019		68.3	17.9	647
2020		68.3	17.9	647
2021		68.3	17.9	647
2022		68.3	17.9	647

Source: Louis Berger Group

The impacts that occur in the local economy due to increased industry competitiveness are less tangible, and consequently more difficult to quantify. Nevertheless, these impacts will often dwarf the impacts that occur due to the direct "immediate" sources discussed above. Improved regional accessibility for local industry in the I-99 corridor is seen as beneficial due to:

• Shorter, and more direct haul distances for material inputs, and exported finished goods. In the case of the I-99 corridor, access to large east coast markets and ports is of critical importance;
• Reduced commute. Workers in select industries will be able to reside further from I-99 itself. Consequently, those industries located along the main highway spine will be able to draw from a greater labor pool due to side corridor accessibility;
• Decreased travel times for business travel. The more convenient routes to large commercial centers to the east and west will greatly facilitate general business travel. Executive staff, clients, and skilled employees will be more willing to re-locate and visit the region if the trip is quick and direct;
• More direct travel for tourist traffic. Tourist traffic is likely to be impacted due to easier and quicker access for day trips, more pass through overnight traffic, and easier access to more remote areas for those traveling from outside the region.

As a result of these impacts, the existing local presence in particular industries is likely to increase, and new businesses are likely to re-locate to the area. The operations of some local industries are more sensitive to highway improvements than others, depending upon their reliance on the factors listed above. The formal interview process was used to attempt to quantify the effect on local businesses. Local representatives of tourism, industry, and economic development agencies were asked to estimate the potential impact the program of highway improvements could have upon a particular industry within their field of expertise. In this manner, a comprehensive collection of potential scenarios was developed. Again, any increased activity in one particular sector of the economy will be magnified due to the economic multiplier effect as the flow-on effect of re-spending transmits through the economy.

Exhibit 7: Total Economic Output Due to Roadway Improvements - Total Region [1]

Year	Direct Investment (million $)	Output (million $)	Output (Increased Industry Competitiveness) (million $)
2003	-38.6	31.6	0
2004	-73.9	61.6	0
2005	-78.1	69.4	0
2006	-62.0	64.0	0
2007	-579.7	573.2	84.9
2008	-719.9	714.8	212.3
2009	-756.3	743.7	424.7
2010	-756.3	750.4	637.0
2011	-641.1	665.5	849.3
2012	-491.1	531.0	1,061.7
2013	-435.7	498.7	1,274.0
2014	-435.7	502.9	1,486.3
2015	0	67.9	1,698.6
2016	0	68.3	1,791.5
2017	0	68.3	1,791.5
2018	0	68.3	1,791.5
2019	0	68.3	1,791.5
2020	0	68.3	1,791.5
2021	0	68.3	1,791.5
2022	0	68.3	1,791.5

Source: Louis Berger Group

The pattern of construction expenditure, and immediate and future economic benefits, are distributed over many years. In all regions, the proposed construction spending is not scheduled to be complete until at least 2014. In many cases, the bulk of highway investment will not commence for at least 4 years due to the need to secure approval and funding. As stated, elements of the corresponding economic impacts will follow immediately, while others will take time to develop. This distribution of investment spending and impacts over time complicates the direct comparison of costs to benefits. In order to account for the opportunity cost of capital, a Net Present Value analysis was conducted. Direct comparison of cost and impacts was developed and is summarized on Exhibit 10. This table represents the benefits that individual regions would experience if improvements were made in their particular region.

Exhibit 10: Net Present Value Comparison of Roadway Improvement Investments and Economic Impacts [2]

	NPV Direct Construction Investment ($millions)	NPV Immediate Benefits of Highway Investment ($millions)	MPV Increased Industry Competitiveness ($millions)	Permanent Employment Due to Immediate Benefits of Highway Investment ($millions)	Permanent Employment (Related to Increased Industry Competitiveness)
Northern Sub-region	$201.2	$339.3	$2,260	$163	3,389
Central Sub-region	$1,028.8	$948.8	$1,668	$153	3,582
Southern Sub-region	$1,784.7	$1,958.7	$4,236	$330	7,149
Total Corridor	$3,014.7	$3,246.8	$8,164	$646	14,120

Source: Louis Berger Group

In conclusion, it is clear that strategic investments in highway access improvements, completing I-99 and improving access to I-99, will benefit a region that is already investing heavily in its future. The economic partnerships, tourism efforts, industrial parks working with educational institutions, enterprise zones and other efforts demonstrate the commitment of the region to preserving and increasing the vitality of the region. These local efforts will be enhanced through the planned completion of I-99 (including key segments and interchanges that are currently unfunded) and through the completion of key east-west access routes.

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[1] It is important to note that unlike the economic benefits that are immediately related to travel time savings and construction expenditure, the increased competitiveness of local industries will occur gradually, generally coming into effect after improvements are made. It may take a number of years after construction is complete before the full impact of this growth is felt in the local economy.

[2] In addition to the region by region analysis, a corridor-wide analysis results in slightly higher total output, earnings, and employment. The marginal increases in total impacts in this analysis are the due to lower leakage values than those that occur at the regional level; a greater proportion of the re-spending is captured in the larger area.