7. Small Business Impact Analysis

As directed by the Regulatory Flexibility Act of 1980, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), as well as Executive Order 13,272, the Department is required to consider the potential impact of the Final Rules on small entities, including small businesses, small nonprofit organizations and small governmental jurisdictions. This process helps to determine whether to certify a rule for regulatory flexibility purposes for those entities that are more likely to be adversely impacted by the Final Rules. This analysis of impacts is intended to support appropriate regulatory alternatives that minimize economic burden for small businesses.

Number of Facilities by Group: Small Entity Facilities Versus Facilities of All Sizes

First, to estimate the cost impact relative to sales to small businesses and small nonprofit organizations [hereinafter referred to as “small private entities”], the total number of small entities and the total sales receipts of these entities are estimated for each facility group.[1] These figures are calculated using publicly-available data from the Office of Advocacy of the Small Business Administration (SBA) which, in turn, is based on data collected in the 2002 U.S. Economic Census. SBA data for 2002 is estimated forward to 2007 using rates of new construction based on the May 2007 Dodge Construction Potentials Bulletin. Since new data on the number of small businesses by receipt size are not available with the 2007 Economic Census data, the 2007 estimated numbers are estimated forward to 2010.  See Appendix 5.

For a few facility groups, however, some additional assumptions were required to estimate the number of facilities and sales by small private entities. Data for several facility groups was estimated in the main Regulatory Impact Analysis using information gathered from sources other than the 2002 U.S. Economic Census; analytical consistency required the use of these same data sources for this handful of facility groups in the small business impact analysis, adjusted by data from SBA.[2] In addition, estimates of the total number of inns, hotels and motels came from a U.S. Economic Census report on numbers of guestrooms for all types of accommodation. The data in this report presents the number of inns (defined as having less than 75 guestrooms), hotels (more than 150 rooms), and motels (between 75 and 150 rooms). Since these details are outside the SBA definitions of a small business, an assumption is made that 98% of all inns and motels are small businesses. The remaining number of small private entities in the Accommodation category, as tabulated by SBA, is used to estimate the number of hotels that are small entities.

Second, to estimate the cost impact relative to sales on small governmental jurisdictions (defined as governments of counties, cities, and towns with populations less than 50,000) [hereinafter “small governments”], it was necessary to use data from the 2002 Census of Governments on county and municipal governments to estimate the number of public facilities in these jurisdictions, since government entities are not covered by the U.S. Economic Census.[3] This Census of Governments also includes data on expenditures by broad category (education, hospitals, parks, etc.) broken down by size of jurisdiction. This Census of Government data is used in this analysis in place of sales data (as used for small private entities). However, in one area – outlays for educational expenditures – data from the Census of Governments was not sufficiently broken down to permit allocation among specific facility groups (i.e., elementary schools, secondary schools, etc.). Thus, with respect to educational expenditures, funds are allocated equally to elementary and secondary facilities (since elementary schools are likely to be greater in number but smaller in size than secondary schools). Data from the Census of Governments for 2002 is brought forward to 2007 using rates of new construction estimated from the May 2007 Dodge Construction Potentials Bulletin. Since a new Census of Governments has not yet been published, these estimates are brought forward to 2010 by applying the percentage of small facilities and receipts of the total to the estimated 2010 facilities and sales receipts done for the regulatory analysis.

Table 21 summarizes the data on the number of small entities and estimated sales (or expenditures) for small private entities and small governments, as compared to the “typical” facility in each group. Table 21 also includes data concerning the percentage of total facilities of each type that are owned or operated by small private entities or are under small governmental jurisdictions (for instance, nearly all Inns, or 98%, are small businesses).  Table 21 also includes information on the estimated sales (or expenditures) of typical-sized facilities and of small entities only for each facility group, and a comparison of the two (for example, average sales for Inns are expected to be the same, i.e. 100% of, average sales for all Inns irrespective of size).In Table 21, data for facilities owned or operated by small private entities is listed first; data for small governments follows thereafter in the second half of the table.[4]

Table 21 : Number of Facilities and Total Sales for Small vs. Facilities of All Sizes, and Ratio of Average Sales per Facility, by Facility Group

Facility Group	Total Number of Facilities (2010)	Number of Small Entity Facilities (2010)	% of Total Facilities that are Small Entity Facilities	Sales (or Expenditures)  per Typical Facility (All sizes) ($)	Estimated Sales (or Expenditures)  per Small Entity Facility 2007 ($)	Average Sales (or Expenditures)  per Small Entity as Percent of Average Sales for All Sizes
Private Facilities (Owned or Operated by Small Businesses or Small Nonprofit Organizations)
Inns	16,953	16,614	98%	$276,669	$276,669	100%
Hotels	15,165	4,095	27%	$11,453,808	$1,259,919	11%
Motels	21,092	20,670	98%	$504,294	$504,294	100%
Restaurants	566,856	442,148	78%	$880,642	$308,225	35%
Motion Picture House	4,971	2,287	46%	$2,419,713	$314,563	13%
Theatre / Concert Hall	9,348	8,974	96%	$1,454,100	$348,984	24%
Auditoriums	2,676	1,980	74%	$5,994,548	$659,400	11%
Single Level Stores	812,456	552,470	68%	$3,526,173	$352,617	10%
Shopping Malls[5]	10,092	8,881	88%	$3,880,720	$3,880,720	100%
Indoor Service Establishments	3,857,022	1,465,669	38%	$1,620,570	$372,731	23%
Offices of Health Care Providers	549,803	483,826	88%	$1,403,290	$435,020	31%
Hospitals	3,915	1,057	27%	$164,921,961	$1,649,220	1%
Nursing Homes	15,014	6,306	42%	$11,515,088	$1,381,811	12%
Museums, Historical Sites & Libraries	4,766	4,337	91%	$1,912,720	$401,671	21%
Parks or zoos	1,327	1,115	84%	$2,910,019	$582,004	20%
Amusement Parks	543	434	80%	$29,606,564	$2,368,525	8%
Nursery schools - Daycare	76,398	65,702	86%	$420,833	$164,125	39%
Elementary Private Schools	18,275	15,168	83%	$1,616,245	$468,711	29%
Secondary Private Schools	2,841	2,358	83%	$3,024,170	$877,009	29%
Ski Facilities	403	310	77%	$5,830,410	$641,345	11%
Homeless Shelter	8,715	7,757	89%	$1,629,925	$342,284	21%
Food Banks	4,357	3,181	73%	$1,480,257	$370,064	25%
Social Service Establishments	66,236	49,015	74%	$1,242,276	$347,837	28%
Exercise Facilities	32,609	29,674	91%	$839,372	$268,599	32%
Aquatic Centers /Swimming Pools	12,368	11,997	97%	$420,073	$189,033	45%
Bowling Alleys	4,688	4,125	88%	$687,018	$295,418	43%
Golf Courses (private public access)	9,485	8,441	89%	$2,335,087	$863,982	37%
Golf Courses (private only)	4,645	4,134	89%	$1,452,612	$537,467	37%
Miniature golf courses	9,475	9,096	96%	$293,107	$111,381	38%
Recreational Boating Facilities	5,198	4,990	96%	$826,080	$710,429	86%
Shooting Facilities	5,095	4,891	96%	$828,387	$712,413	86%
Parking Garages	13,377	3,077	23%	$694,211	$270,742	39%
Self Service Storage Facilities	14,418	10,814	75%	$647,296	$608,458	94%
Public Facilities (Owned or Operated by Small Governmental Jurisdictions)
Elementary Public Schools	68,781	19,946	29%	$2,871,139	$344,537	12%
Secondary Public Schools	23,388	6,549	28%	$11,109,976	$999,898	9%
Public Housing	27,767	7,219	26%	$540,120	$442,899	82%
State and Local Judicial Facilities (courthouses)	9,458	2,554	27%	$528,720	$269,647	51%
State and Local Correctional Facilities (prisons)	1,244	336	27%	$12,170,556	$4,746,517	39%
Hospitals (public)	1,113	300	27%	$33,947,412	$33,947,412	100%
Parks or zoos (public)	120,224	32,461	27%	$218,530	$209,788	96%
Office Buildings (public)	74,846	19,460	26%	$112,487	$112,487	100%

Net Costs Per Facility Group: Small Entity Facilities Versus “Typical” Facilities

Once the number of facilities that are small entities and their receipts had been estimated, net costs (incorporating both costs savings from less stringent requirements and added costs of more stringent requirements) of the rule for small entities were then calculated. As with the cost model used in the “main” regulatory impact analysis, net costs in the small business analysis are based (with one exception as described below) on unit cost estimates (Appendix 3H), the number and mix of elements in facilities of each type (Appendix 3E), the likelihoods for change (Appendices 3F & 3G), and other applicable cost considerations (such as operation & maintenance costs, productive space costs, and assumptions concerning years before replacement of particular required element or equipment) (Appendices 3I through 3L). In addition, as with the “main” regulatory analysis, this small business analysis also generally took into account, as applicable. exemptions and exceptions in the Final Rules that are specifically directed at smaller facilities or entities, including exemptions for certain existing small recreational facilities (i.e., play areas, swimming pools, and saunas or steam rooms) under Titles II and III. Lastly, overall calculations of the net cost impact of the Final Rules on small entities (versus “typical” facilities) were modeled in the same manner as in the “main” regulatory impact analysis, using a 7% discount rate and the following scenario: a safe harbor provision applying to elements in existing facilities that comply with the 1991 Standards (SH); barrier removal readily achievable for 50% of elements (RA50); and a baseline of the 1991 Standards (B1991).   

In only one respect did the underlying “main” cost model need to be modified for purposes of this small business analysis. Since smaller facilities (in which small entities are frequently located) often have a different number and/or mix of elements as compared to larger facilities, adjustments were made to element counts in certain facilities to account for this differentiating consideration between facilities of different sizes. Specifically, for purposes of the small business analysis, it was assumed that if an element occurs twice or less within a typical facility, then that element also would occur with the same frequency in a facility owned or operated by a small entity. Such elements include: entrances; sales and service counters; and some bathrooms. By contrast, if an element occurs more than twice in a typical facility, then it is assumed for facilities owned or operated by small entities that that element occurs at a rate equal to the ratio of sales per small facility to sales per typical facility (as shown above in Table 17). It is assumed that this ratio cannot be greater than 1; for public hospitals and office buildings, this ratio is fixed at 1. Elements which vary between small and typical-sized facilities include: side reach; bathroom elements in dwelling facilities; stairs; and handrails. A complete listing of the frequency of occurrence for elements in typical facilities, as used for these calculations, can be found in Appendix 3E.

Table 22, which follows below, illustrates the relative impact of the rules on small entities (i.e., small businesses, small nonprofit organizations, and small governments) versus entities of all sizes for each facility group in the analysis. A ratio of 1.0 (as for Inns) indicates that net costs for small entities are essentially the same for Inns as a whole; a ratio below one indicates that net costs per small entity on average are less than for entities of all sizes for that facility group. 

As indicated above, “net costs” are the total costs to facilities – “net” of any cost savings from less stringent requirements.  The costs are noted as “net” because some requirements have a cost savings (less stringent requirements) and the costs listed by facility type are net of all cost savings. All types of costs (unit price, operation and maintenance, and space costs) are included in the cost increases or decreases. 

Note that costs are actually positive – as in cost savings to facilities – for a few facilities for which the benefits resulting from less stringent requirements outweigh the costs of the more stringent requirements for that facility type and size. The cost impact on hospitals is one example, as the net impact of the rule is to lower overall compliance costs, primarily due to the less stringent requirement no longer requiring canopies at passenger loading zones (requirement #26).

Cost savings may also vary with size, i.e. small entities may have cost savings, while typical facilities do not, due to the differing composition of the number and type of elements.

Table 22 presents net costs for all facilities and per facility, for each facility group.

Table 22 : Net Cost Comparison: Small vs. Facilities of All Sizes, by Facility Group, (Under Safe Harbor, 50% Readily Achievable Barrier Removal, 1991 Standards for Baseline)

Facility Group	Total Net Costs  (Millions $)		Net Costs Per Facility ($)
	Typical Facilities (All Sizes)	Small Entity Facilities	Typical Facilities (All Sizes)	Small Entity Facilities	Ratio of Net Cost per Small Entity Facility to Typical Facility [6]
Private Facilities (Owned or Operated by Small Businesses or Small Nonprofit Organizations)
Inns	$19.7	$19.3	$1,159.3	$1,159.3	1.00
Hotels	$478.6	$81.7	$31,560.2	$19,942.3	0.63
Motels	$431.4	$422.8	$20,453.1	$20,453.1	1.00
Restaurants	$328.8	$240.3	$580.0	$543.5	0.96
Motion Picture House	$178.3	$14.3	$35,859.3	$6,237.0	0.17
Theatre / Concert Hall	$170.9	$67.6	$18,281.7	$7,535.7	0.57
Auditoriums	$25.5	$8.3	$9,514.0	$4,205.2	0.44
Single Level Stores	$416.3	$282.4	$512.4	$511.1	1.00
Shopping Malls	$47.9	$42.1	$4,742.9	$4,742.9	1.00
Indoor Service Establishments	$2,169.2	$698.4	$562.4	$476.5	0.85
Offices of Health Care Providers	$305.8	$113.7	$556.1	$235.0	0.42
Hospitals	$24.7	-$1.0	$6,315.3	-$968.3	-0.15
Nursing Homes	$131.5	$9.0	$8,756.0	$1,422.4	0.16
Museums, Historical Sites & Libraries	$6.0	-$0.6	$1,260.9	-$149.8	-0.12
Parks or zoos	$3.5	$2.9	$2,600.4	$2,569.4	0.99
Amusement Parks	$92.3	$8.1	$169,996.8	$18,698.8	0.11
Nursery schools - Daycare	$129.3	$100.8	$1,692.8	$1,533.6	0.91
Elementary Private Schools	$97.1	$63.9	$5,312.9	$4,215.8	0.79
Secondary Private Schools	$19.9	$6.6	$6,994.3	$2,779.1	0.40
Ski Facilities	$0.1	$0.1	$231.7	$199.2	0.86
Homeless Shelter	$2.6	$2.3	$297.7	$297.7	1.00
Food Banks	$1.2	$0.7	$279.0	$222.8	0.80
Social Service Establishments	$34.7	$22.4	$523.9	$457.0	0.87
Exercise Facilities	$683.7	$334.2	$20,967.3	$11,260.8	0.54
Aquatic Centers /Swimming Pools	$1,391.1	$1,343.3	$112,476.6	$111,976.0	1.00
Bowling Alleys	$1.4	$0.9	$293.2	$219.0	0.75
Golf Courses (private public access)	$37.4	$31.0	$3,947.3	$3,676.4	0.93
Golf Courses (private only)	$20.7	$14.7	$4,453.7	$3,558.6	0.80
Miniature golf courses	$94.3	$90.2	$10,780.4	$9,914.9	1.00
Recreational Boating Facilities	$17.6	$15.4	$3,386.0	$3,089.9	0.91
Shooting Facilities	-$0.5	-$0.5	-$105.2	-$105.2	1.00
Parking Garages	$5.2	$0.5	$385.0	$170.5	0.44
Self Service Storage Facilities	$6.3	$4.5	$436.8	$413.6	0.95
Public Facilities (Owned or Operated by Small Governments)
Elementary Public Schools	$248.3	$44.9	$3,610.6	$2,251.5	0.62
Secondary Public Schools	$116.1	$4.2	$4,964.5	$636.5	0.13
Public Housing	$172.7	$40.2	$6,218.4	$5,567.8	0.90
State and Local Judicial Facilities (courthouses)	$157.7	$23.5	$16,671.2	$9,188.2	0.55
State and Local Correctional Facilities (prisons)	-$47.2	-$5.0	-$37,973.5	-$14,974.9	0.39
Hospitals (public)	$1.3	$0.4	$1,199.7	$1,199.7	1.00
Parks or zoos (public)	$183.0	$49.4	$1,522.5	$1,520.8	1.00
Office Buildings (public)	$103.1	$26.8	$1,377.3	$1,377.3	1.00

Note: Negative Net Costs are net savings.

The final table below (Table 23) presents estimates of annualized costs and annualized costs as a percent of sales for both typical and small facilities. Net costs are the total costs over the course of the rule, while the annualized costs represent those total costs, annualized of the life of the rule. 

For facilities owned or operated by small private entities, annualized costs are less than 0.5% of sales for all but Aquatic Centers/Swimming Pools (4.4%) and Miniature Golf Courses (0.67%). Annual costs are between 0.10% and 0.50% for five facility types: Exercise Facilities (0.31%); motels (0.3%), Theatre / Concert Halls (0.16%), Motion Picture Houses (0.15%) and Hotels (0.12%). For the rest of the facility groups, annual costs for small entities are less than 0.10% of sales.

For small governmental jurisdictions, Table 23 shows that annual costs are less than 0.5% of expenditures for all facility types. Indeed, with the exception of a single facility group (state and Local Judicial Facilities (courthouses) (0.26%), annual costs are below 0.1% for all facilities owned or operated by small governments.

Another measure of comparison between typical facilities and facilities owned or operated by small entities is the ratio of annual costs as a percentage of sales. The higher the ratio, the larger the cost burden relative to sales or expenditures for small entities in comparison to facilities of all sizes. For small private entity facilities, this ratio is largest for Single Level Stores (9.97), Ski Facilities (7.82), and Hotels (5.74) because of the significant difference in sales for typical and small facilities of these types, which was much greater than the difference in costs. This ratio is the lowest, 1.0, for inns and motels, which are typically owned or operated almost entirely by small businesses.

For small governments, the ratio of annual costs as a percentage of expenditures for typical facilities versus small facilities is largest for Elementary Public Schools (5.20), Secondary Public Schools (1.42), Public Housing (1.09), and State and Local Judicial Facilities (courthouses) (1.08).

23 : Annual Cost Comparison: Small vs. Facilities of All Sizes, by Facility Group

Facility Group	Annualized Cost Per Typical Facility (All Sizes) ($)	Annualized Cost Per Small Entity Facility ($)	Annual Costs as a Percent of Annual Sales Per Typical Facility (All Sizes)	Annual Costs as a Percent of Annual Estimated Sales Per Small Entity Facility	Ratio of Annual Cost as a Percentage of Sales for Typical to Small Entity Facilities [7]
Private Facilities (Owned or Operated by Small Businesses or Small Nonprofit Organizations)
Inns	$87	$87	0.03%	0.03%	1.00
Hotels	$2,367	$1,496	0.02%	0.12%	5.74
Motels	$1,534	$1,534	0.30%	0.30%	1.00
Restaurants	$44	$41	0.00%	0.01%	2.68
Motion Picture House	$2,690	$468	0.11%	0.15%	1.34
Theatre / Concert Hall	$1,371	$565	0.09%	0.16%	1.72
Auditoriums	$714	$315	0.01%	0.05%	4.02
Single Level Stores	$38	$38	0.00%	0.01%	9.97
Shopping Malls	$356	$356	0.01%	0.01%	1.00
Indoor Service Establishments	$42	$36	0.00%	0.01%	3.68
Offices of Health Care Providers	$42	$18	0.00%	0.00%	1.36
Hospitals	$474	-$73	0.00%	0.00%	-15.33
Nursing Homes	$657	$107	0.01%	0.01%	1.35
Museums, Historical Sites & Libraries	$95	-$11	0.00%	0.00%	-0.57
Parks or zoos	$195	$193	0.01%	0.03%	4.94
Amusement Parks	$12,751	$1,403	0.04%	0.06%	1.37
Nursery schools - Daycare	$127	$115	0.03%	0.07%	2.32
Elementary Private Schools	$399	$316	0.02%	0.07%	2.74
Secondary Private Schools	$525	$208	0.02%	0.02%	1.37
Ski Facilities	$17	$15	0.00%	0.00%	7.82
Homeless Shelter	$22	$22	0.00%	0.01%	4.76
Food Banks	$21	$17	0.00%	0.00%	3.19
Social Service Establishments	$39	$34	0.00%	0.01%	3.12
Exercise Facilities	$1,573	$845	0.19%	0.31%	1.68
Aquatic Centers / Swimming pools	$8,437	$8,399	2.01%	4.44%	2.21
Bowling Alleys	$22	$16	0.00%	0.01%	1.74
Golf Courses (private public access)	$296	$276	0.01%	0.03%	2.52
Golf Courses (private only)	$334	$267	0.02%	0.05%	2.16
Miniature golf courses	$809	$744	0.28%	0.67%	2.42
Recreational Boating Facilities	$254	$232	0.03%	0.03%	1.06
Shooting Facilities	-$8	-$8	0.00%	0.00%	1.16
Parking Garages	$29	$13	0.00%	0.00%	1.14
Self Service Storage Facilities	$33	$31	0.01%	0.01%	1.01
Public Facilities (Owned or Operated by Small Governments)
Elementary Public Schools	$271	$169	0.01%	0.05%	5.20
Secondary Public Schools	$372	$48	0.00%	0.00%	1.42
Public Housing	$466	$418	0.09%	0.09%	1.09
State and Local Judicial Facilities (courthouses)	$1,250	$689	0.24%	0.26%	1.08
State and Local Correctional Facilities (prisons)	-$2,848	-$1,123	-0.02%	-0.02%	1.01
Hospitals (public)	$90	$90	0.00%	0.00%	1.00
Parks or zoos (public)	$114	$114	0.05%	0.05%	1.04
Office Buildings (public)	$103	$103	0.09%	0.09%	1.03

The foregoing analysis indicates that the Final Rules will not have a significant economic impact on a substantial number of small entities. For small government jurisdictions, annualized costs are not expected to be greater than 0.5% of sales for any type of facility. Similarly, for all but a handful of small private entities, annualized costs are not expected to be greater than 0.5% of sales. (Only with respect to two types of facilities owned or operated by small private entities – Aquatic Centers/Swimming Pools and Miniature Golf Courses – are annualized costs estimated to exceed 0.5% of sales.)

 

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March 9, 2010