Its especially true if average household income is low and sales and property taxes are the primary source of local government revenue. Models like LOCI can help in that decision process. My last comment has nothing to do with the core issues, it concerns your assumptions about multipliers. An overall employment multiplier of 1.6 may not be too bad, but its probably high. Small and mid-sized cities just don't have large enough and diverse enough economies to capture very much of the multiplier impact.
Large leakages happen at every round of income circulation.