SOUTHWEST LOUISIANA ECONOMIC INDICATORS

SOUTHWEST LOUISIANA ECONOMIC INDICATORS College of Business McNeese State University Dr. Mitchell Adrian, Dean H.C. Drew Center for Economic Development Information Services Dr. Douglas W. McNiel, Director May 15, 2008 http://www.mcneese.edu/drewecon Gaming Activity at Riverboats and Racetrack in Calcasieu Parish Adjusted gross receipts from gaming activities at the Isle of Capri and L auberge du Lac riverboat casinos and from slots at the Delta Downs Racetrack over the last 27 months are shown below. Adjusted gross receipts means the difference between dollars taken in and dollars paid out in winnings. $ Million Monthly Adjusted Gross Receipts From Calcasieu Riverboats and Delta Downs Slots $70 $60 Delta Downs L'auberge Du Lac Isle of Capri (Palais & Crown) 15.3 $50 $40 15.1 14.2 13.9 14.8 14.3 15.4 13.4 13.4 12.3 12.3 13.5 12.2 13.4 15.4 13.4 13.3 13.5 14.8 13.1 13.4 12.4 12.9 14.8 13.0 15.0 15.4 $30 $20 23.1 26.2 30.8 26.9 24.8 24.7 26.7 25.9 23.8 22.2 25.4 29.1 20.9 26.5 27.9 24.5 27.5 28.5 29.1 27.0 25.8 23.4 24.6 29.0 21.6 26.5 29.0 $10 15.6 15.3 16.1 14.7 15.4 14.7 16.0 14.3 14.6 12.4 14.1 16.0 12.4 14.1 15.6 13.1 14.2 14.5 14.6 13.1 13.0 12.0 13.1 13.7 11.9 14.2 14.2 $0 F M A M A S O N D F M A M A S O N D F M 2006 2007 2008 Adjusted gross receipts in March of 2008 were nearly $29 million for the L auberge facility, over $14 million for the two Isle of Capri riverboat casinos combined, and over $15 million for the slots at the Delta Downs racetrack. Admissions during March were over 391,600 at L auberge, over 224,000 at the Isle of Capri, and over 142,400 at Delta Downs. State fees generated from these activities were over $6.2 million from

2 L auberge, over $3 million from the Isle, and over $2.3 million from slots at Delta Downs. The Delta Downs slots also generated revenue for purse supplements at the racetrack and horse breeders association contributions amounting to over $2.7 million in March. In the most recent nine months, total state fee remittances were nearly $51 million from L auberge, nearly $26 million from the Isle, and nearly $19 million from the slots at Delta Downs (which also contributed over $22 million to purse supplements and horse breeders associations over this period). Of the 13 riverboat licenses currently in operation throughout the State of Louisiana, L auberge is the leader in adjusted gross revenues, admissions, and fee remittances. When the AGR from the two Isle of Capri Calcasieu-based licenses are added to the AGR from the L auberge license, the Calcasieu share of statewide total riverboat casino AGR was in March of 2008. The chart that follows shows this share varied between 23% and 29% over the last 27 months. Calcasieu Share of Statewide Riverboat Adjusted Gross Receipts 29% 29% 29% 28% 28% 25% 25% 25% 25% 24% 25% 24% 23% 23% 22% 21% 20% F M A M A S O N D F M A M A S O N D F M 2006 2007 2008 Of the four racetracks currently licensed throughout the State of Louisiana, Delta Downs is the leader in generating AGR from slots at the racetracks. The chart that follows shows Delta Downs produced 44% of the total statewide AGR from slots at racetracks in March of 2008 and this Calcasieu-based share has varied between 41 and 47 percent over the last 27 months. While Delta Downs leads the state in AGR as well as taxes generated and support for the horse racing industry, both the Evangeline Downs racetrack and the Harrah s Louisiana Downs racetrack report higher admissions than Delta Downs.

3 Calcasieu Share of Statewide Racino Adjusted Gross Receipts from Slots at the Tracks 50% 46% 45% 46% 47% 47% 45% 46% 44% 44% 44% 45% 44% 44% 43% 44% 44% 44% 45% 44% 43% 43% 43% 43% 43% 44% 43% 41% 40% 30% 20% F M A M A S O N D F M A M A S O N D F M 2006 2007 2008 To date, there appears to be no evidence that higher gasoline prices have adversely impacted AGR at the Calcasieu riverboat operations or the slots at Delta Downs. Looking toward the future, however, if gasoline prices continue on a sharply upward trend, this could become a concern since the Calcasieu-based riverboat casinos and the racetrack are very dependent on customers traveling from Texas (particularly the Houston metropolitan area). Shipments through the Port of Lake Charles Shipments through facilities owned-by or leased-from the Lake Charles Harbor and Terminal District have grown steadily over the last three years from about 7.8 million tons in 2005 to over 11.1 million tons in 2007 (see chart that follows). The reported tonnage figures include two major categories of cargo breakbulk and bulk. Tonnage figures in the chart for bulk cargo primarily include coke, limestone, barite, coal, and liquefied natural gas. Bulk cargos are mostly handled at facilities on the west side of the ship channel and along the industrial canal. Tonnages for four types of breakbulk cargo are also reported bagged, container, paper products, and other products. Container cargo shipments are currently of no major significance at the Port of Lake Charles. Bagged cargo shipments of most importance include rice, flour, corn soy blend, peas, beans, and lentils. Paper products include lumber as well as paper and pulp. The catch-all other breakbulk products includes mostly rubber and aluminum. For the most part, these breakbulk cargos are

4 handled through the city docks area that most people associate with the Port of Lake Charles. Tons Shipments Through Facilities Owned-by or Leased-from the Port of Lake Charles by Cargo Type* 12,000,000 11,000,000 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 2005 2006 2007 Breakbulk-Other 623,940 594,357 557,595 Breakbulk-Paper 268,512 216,289 186,613 Breakbulk-Container 5,531 5,535 5,213 Breakbulk-Bagged 433,886 417,763 270,120 Bulk 6,485,269 7,441,883 10,095,079 * Does not include shipments through privately-owned facilities. It should be noted that the tonnage figures reported above vastly understate the importance of the port facilities in the Lake Charles Harbor and Terminal District. They only include shipments through facilities owned-by or leased-from the District. The reported figures do not include shipments through privately-owned facilities in the District such as the privately-owned and privately-operated port facilities that are used to import/export crude oil and other products associated with the vast local refining and chemical industries. Tonnage figures for shipments through privately-owned port facilities in the District have not been available since Hurricane Rita hit the area. Prior to the hurricane, tonnage shipped through privately-owned facilities in the District was over ten times greater than tonnage shipped through facilities owned-by or leased-from the District. The chart that follows shows year-to-date comparisons for anuary through April of 2005, 2006, 2007, and 2008. Year-to-date shipments through April of the current year appear to be lagging the record shipments achieved in the same period of 2007. The primary reason for the lag in current year-to-date shipments is a decline in bulk shipments through the Trunkline LNG terminal facility privately operated on property

5 leased-from the Port of Lake Charles. During the first four months of 2007, Trunkline shipments totaled nearly 1.6 million tons. During the same period of 2008 there have been no shipments to this facility. Excluding the Trunkline facility, year-to-date shipments through facilities owned-by or leased-from the Port of Lake Charles are actually up by over 6% compared to the first four months of last year. Year-to-Date Shipments Through Facilities Owned-by or Leased-from the Port of Lake Charles by Cargo Type* (an--april: 2005, 2006, 2007, 2008) Tons 4,000,000 3,000,000 2,000,000 1,000,000 0 an-apr 2005 an-apr 2006 an-apr 2007 an-apr 2008 Breakbulk-Other 232,637 133,455 180,760 203,381 Breakbulk-Paper 88,334 77,815 49,759 80,174 Breakbulk-Container 2,193 2,620 0 1,012 Breakbulk-Bagged 139,187 170,007 104,941 92,028 Bulk 1,973,297 1,843,315 3,024,853 1,534,447 * Does not include shipments through privately-owned facilities. Building Permits Construction activity is expected to be one of the primary drivers of future economic growth in Southwest Louisiana. The new Sugar Cane Bay facility at L auberge, additional LNG terminals, a $1.6 billion synthetic gas manufacturing plant on property owned by the Port of Lake Charles, a package of development projects funded by voter approved bonds in City of Lake Charles, expansion of the Shearman Fine Arts Center at McNeese, and a new airport terminal building are just some of the projects anticipated. The annual dollar value of building permits issued in the City of Lake Charles in 2007 was about $11.5 million. As shown in the chart that follows, the $50.4 million worth of building permits issued in 2006 (the first reconstruction year following Hurricane Rita) set a record that may be a challenge to surpass depending on the timing of the anticipated projects and the fact that many are located beyond the city limits.

6 $ Millions Annual Building Permits - Value of Construction City of Lake Charles $60 $50 $50.4 $40 $30 $25.9 $20 $10 $13.5 $11.5 $4.4 $3.2 $0 2002 2003 2004 2005 2006 2007 The monthly and year-to-date comparisons of the dollar values for building permits issued in the City of Lake Charles shown in the chart that follows also clearly show the impact of immediate post-hurricane rebuilding. Not unexpectedly, the $45.6 million figure for the anuary-through-march period in the current year lags the figures shown for the same periods in 2006 and 2007. Monthly Totals, $ Millions 140 120 100 80 60 40 20 0 Building Permits - Value of Construction City of Lake Charles 2006 Monthly 2007 Monthly 2008 Monthly 2006 Yr to Date 2007 Yr to Date 2008 Yr to Date an Feb Mar Year-to-Date Totals, $ Millions 100 90 80 70 60 50 40 30 20 10 0

7 Real Estate Transactions Statistics provided by the Southwest Louisiana Association of Realtors indicate a gradual slow-down in single family home sales since November of 2007. The chart below compares same month sales of single family homes in 2005, 2006, 2007, and 2008. Sold Listings of Single Family Homes SW LA Association of Realtors 200 180 160 2005 2006 2007 2008 140 120 100 80 60 40 20 0 an Feb Mar Apr May un ul Aug Sep Oct Nov Dec The chart shows single family home sales in September and October of 2005 were skewed sharply downward by disruptions associated with the immediate impact of Hurricane Rita which hit the area in late September of 2005. In November and especially December of 2005, sales in the aftermath of the hurricane rebounded sharply. By anuary and February of 2006 the post-hurricane single family home market appeared to return to more normal conditions. Notice there is relatively little variation in comparisons of same month sales for anuary and February of 2005, 2006, and 2007. While somewhat erratic, single family home sales generally continued strong until November and December of 2007 when sales in both months dropped significantly compared to the same periods in 2005 and 2006. This gap continued, but narrowed considerably in anuary and February of 2008, then grew larger in March and April of 2008 when compared to same month sales for 2007. The nearly 24% drop in single family homes sold, from 173 in April of 2007 to 132 in April of 2008, could be viewed as a shocking statistic comparable to what has occurred in some hard-hit regional markets in California and Florida. However, this would be an overly pessimistic and mistaken view. Year-to-date sales of single family homes from anuary through April were 595 in 2007 and 512 in 2008, a decline of less than 14%. While this is no insignificant variation, it should be noted

8 that in the comparison month of April 2007, sales were remarkably higher than in April of 2005, 2006 and 2008. On the price side of the market for single family homes, monthly comparisons can be seen in the chart that follows. Only post-hurricane price information beginning in anuary of 2006 is available. $200,000 Average Price for Single Family Homes Sold SW LA Association of Realtors $180,000 2006 2007 2008 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 an Feb Mar Apr May un ul Aug Sep Oct Nov Dec A careful examination of this chart shows: The first sign of lagging single family home prices in Southwest Louisiana occurred in November and December of 2007. Continuing from November 2007 to the present (comparing to the same month in the previous year), the percentage change in the average single family home price was -5.8% in November of 2007, -8.2% in December of 2007, -7.7% in anuary of 2008, -1.4% in February of 2008, +0.9% in March 2008, and -5.9% in April of 2008. It should be quickly noted that these percentage changes are not additive. The biggest negative gap in price comparisons occurred in December of 2007 (-8.2%). The negative gap narrowed in anuary and February of 2008. The average price in March 2008 was slightly higher than in March 2007, and in April 2008 (the most recent month for which information is available) the average price of a single family home sold in SW Louisiana was 5.9% below the average price in April of 2007.

9 When the data in the previous chart is re-arranged in a monthly time series (shown in the chart that follows), it is apparent there has been no major melt-down in Southwest Louisiana single family home prices. At worst, one might conclude there has been a modest slowdown in recent months. But taking into account that monthly averages can be skewed by unusual events (such as several very high- or low-price houses selling in a particular month), perhaps the most remarkable characteristic of the regional housing market is its relative stability. Average Sales Price Single Family Homes SW LA Association of Realtors $190,000 $170,000 $150,000 $130,000 $110,000 $127,846 $138,278 $142,256 $150,992 $146,569 $143,913 $145,589 $142,753 $138,373 $134,930 $154,939 $176,336 $152,539 $145,754 $151,582 $148,715 $158,024 $169,416 $146,038 $144,625 $146,946 $144,004 $145,899 $161,908 $140,800 $143,707 $152,873 $139,972 $90,000 $70,000 an Feb Mar Apr May un ul Aug Sep Oct Nov Dec an Feb Mar Apr May un ul Aug Sep Oct Nov Dec an Feb Mar Apr 2006 2007 2008 Taxable Sales Taxable sales are an indication of spending in the parish and one of the most immediate indicators of regional economic activity. Annual taxable sales in Calcasieu Parish from 1990 through 2007 are shown in the chart that follows. The $4.505 billion total taxable sales for 2007 topped the total for the previous year by only $11.8 million or less than 0.3%. But this was no slight achievement given the $754 million or 20% increase in taxable sales that occurred in 2006, the first year of recovery spending after Hurricane Rita hit the parish.

10 $, Billion Annual Taxable Sales, Calcasieu Parish $5 $4 $3 $2 $1 $0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 The chart that follows indicates that the $1.1 billion in taxable sales for the first three months of 2008 closely matches sales in the same period of 2006 and 2007. M onthly Totals $ M illio n s $450 $400 $350 Year-to-D atetotal Taxable Sales (an, Feb, March: 2006, 2007, 2008) C a lc a s ie u P a ris h '06 M onthly '07 M onthly '08 M onthly '06 Y r to D ate '07 Y r to D ate '08 Y r to D ate Y e a r to D a te T o ta l $ B illio n 1.2 1.0 $300 0.8 $250 $200 0.6 $150 0.4 $100 $50 0.2 $0 an Feb M ar 0.0 Includes transactions subject to Calcasieu Parish sales and use taxes.

11 Employment Monthly non-farm employment from anuary 2006 through March 2008 in Calcasieu and Cameron Parishes is shown in the chart that follows. In March of 2008, total nonfarm employment was about 92,400. This represented an increase of 500 jobs from the previous month, and a decrease of 600 jobs from the same month in 2007. As can be seen from the chart, employment has generally trended upward since anuary of 2006. Thousands 100 Nonfarm Employment Calcasieu & Cameron Parishes 95 90 85 80 75 70 65 60 Goods Producing Service Producing 55 50 F M A M A S O N D F M A M A S O N D F M 2006 2007 2008 Sectors registering the largest gains in employment over the last year are tradetransportation-utilities, manufacturing, and government. Sectors showing job losses over the last year include natural resources and mining, construction, and professional and business services. Employment in the leisure and hospitality sector remained the same over the last year. The Southwest Louisiana Economic Indicators report is distributed electronically through the H.C. Drew Center for Economic Development Information Services in the College of Business at McNeese State University in Lake Charles, Louisiana. Visit our webpage for more detailed information depicting recent economic trends in Southwest Louisiana including Calcasieu, Cameron, Allen, Beauregard, and efferson Davis Parishes. http://www.mcneese.edu/drewecon To add or remove your address from our e-mail distribution list, reply to DrewEconDev@McNeese.edu or contact the Center Director and editor, Douglas W. McNiel, at (337) 475-5560. If you received this e-mail from an address other than the one indicated above, you are not currently on our mailing list.