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MEMORANDUM
To: Nicholas Martinez, MCP, iTIiami DDA
From: Paul Lambert, Lambert Advisory
Date: October 18, 2017
Subject: The Underline — Economic Impact Assessment
Introduction and Summary ofFindings
The Miami DDA procured the services of Lambert Advisory (Lambert), an independent third -parts
consultant, to study the economic impact of the inclusion of the additional park land created by the section of
The Underline project that runs from the Miami River on the north to Southeast 15 Road on the south,
coincident with the Metro Rail right-of-way on property that is owned by the Miami -Dade County
Department of Transit and Public Works, to affirm that it would revitalize and preserve property values in
the Downtown District per § 166.0497, Fla. Stat. (2017). Specifically, Lambert was engaged to utilize The
Underline's methodology promulgated by HR&A Advisors to determine the marginal property value benefits
of expanding the Miami DDA boundaries that include The Underline right-of-way to continue to revitalize
and preserve property values within the existing and expanded Miami DDA boundaries in accordance with its
creation under Florida Chapter 65-1090.
In late 2015, Friends of The Underline' engaged HR&A Advisors (HR&A) to provide an economic analysis
of The Underline in its entirety, which essentially extends from the southern boundary of Miami River (in
Downtown Miami) to the Dadeland South Station (and described in more detail below). The HR&A Study
(Creating Value Through Open Space: The Ecwno vic Impacts of the Underline (December 2015), included as Appendix A
herein, provides an overview of the methodology, research, data and assumptions supporting the analysis of
The Underline's total economic impact and potential value creation. The figures provided in this
memorandum are based upon the same methodology, data and assumptions utilized within the HR&A Study
but rather than being associated with the entire length, are specifically related to the segment of The
Underline that solely borders the Miami DDA.
The methodology, assumptions and analysis undertaken for this assessment is provided in two sections
below: 1.) Brief Overview of the Underline and Study Background Material; and, 2.) Incremental Value Analysis for Miami
DDA Boundag Expansion. In sum, based upon HR&A Advisors methodology as described in the December
2015 study, the marginal benefits to the City of Miami and Miami DDA is derived from enhanced property
assessment values on existing properties, as well as potential new development. As summarized in Figure 1
below, and specific to existing properties, the proposed expanded area of The Underline within the Miami
DDA provides an estimated $1.0 to $1.7 million in annual incremental property tax revenue to the City
of Miami; and, $60,000 to $100,000 to Miami DDA.
1 Friends of 1 he Underline is a SO 10 non-profit organization advocating to transform approximately 10 -miles of underutilized land below
Miami's Metrorail.
6241 Exhibit E -SUB
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Figure 1: Summary of Estimated Incremental Value from Existing Properties - The Underline: City
of Miami and Miami DDA
Additionally, The Underline is estimated to create annual incremental tax revenue from new construction of
$300,000 to the City of Miami; and, $17,000 to Miami DDA.
Figure 2: Summary of Incremental Value from New Construction: The Underline - City of Miami
and Miami DDA
Z) Brief Overview of The Underline and Background to the HR&A Stud
The Underline represents a proposed linear park on underutilized right-of-way beneath Miami's Metrorail and
extends approximately 10 -miles north -to -south. It is public land owned by Miami Dade County, and
currently exempt from ad valorem tax. The Underline will effectively run from its northern boundary located
at the northeast quadrant of S.W. Pt Court and the Miami River (Downtown Miami), and continues south to
its terminus located at Dadeland South Station (in Unincorporated Dade County, between the City of South
Miami and City of Pinecrest).
The Underline passes through several municipalities and has a stated goal of connecting communities;
improve pedestrian and bicyclist safety; create over one hundred acres of open space with restored natural
habitats; encourage a healthy lifestyle and active transportation; create a mobility corridor that integrates
transit, car, biking and walking; connect people to place with engaging art and programming; facilitate
sustainable development along the corridor; and, generate significant economic impact.
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Figure 2: Map of The Underline
As noted above, The Underline currently lies immediately outside of the Miami DDA's western boundary and
runs south from the Miami River to the Miami DDA's southern boundary (S.E. 15th Road). The Miami
DDA is considering expanding its western boundary to include The Underline right-of-way, as illustrated in
Figure 3 below. Miami Dade County will maintain ownership of the right-of-way, and is anticipated to
remain exempt from ad valorem tax.
As noted above, The Underline currently lies immediately outside of the Miami DDA's western boundary and
runs south from the Miami River to the Miami DDA's southern boundary (S.E. 15th Road). The Miami
DDA is considering expanding its western boundary to include The Underline right-of-way, as illustrated in
Figure 3 below. Miami Dade County will maintain ownership of the right-of-way, and is anticipated to
remain exempt from ad valorem tax.
The HR&A study (included herein as Appendix A) concluded that improvements associated with the
Underline will create substantial incremental value for existing and future real estate development. Through
literature review and internal case studies (on a national scale), the HR&A Study establishes a methodology
for estimating incremental value enhancement on properties affected by improvements to open and public
space similar to that proposed for The Underline. Accordingly, the Study's incremental value analysis focuses
intently on three primary uses: residential, office and retail. Accordingly, there are two key variables that drive
the value increment:
1.)
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Area WI#ihacr. HR&A established a dual section 500 -foot and 1,760 -foot study area esta
area of influence for properties impacted by Underline improvements. In effect, all residential
properties within the broader 1,760 -foot distance were included in the incremental value estimation,
while the 500 -foot boundary was established for office and retail incremental valuation; and,
2.) Value Prenliunz: The HR&A study determines a value premium associated with proximity to open
space, which essentially defines broad categories of urban open space within which to contextualize
The Underline's value creation potential, including signature parks, community/neighborhood parks,
linear parks, and natural parks. HR&A indicated that a weighted average range of 3% to 5% across
all value segments modeled from aggressive to conservative for the Underline were consistent with
national averages for value premiums associated with community parks and natural areas. Within the
corridor -wide study area, HR&A then categorized parcels into a variety of segments based on their
physical relationships to The Underline. Factors impacting the potential for The Underline to
positively impact surrounding real estate include: existing infrastructure, and variations in level of
park capital and programming investment.
2.) Incremental Vahre Analysis for Miami DDA Boundary Expansion
Based upon the methodology and incremental value metrics within the HR&A Study, we ran an incremental
value analysis for the residential, office and retail properties within the Miami DDA boundary that are
likewise within 500 and 1,760 feet of The Underline corridor. The following map outlines the Miami DDA
parcels extending one-third mile from The Underline utilizing the Miami Dade County GIS Database and
Miami Dade County Property Appraiser (MDCPA) parcel data. The 1/3 -mile radius sets forth the boundary
for identifying residential parcels impacted by The Underline. The map also includes an identification of the
500 -foot boundary within which the office and retail'- uses are impacted in accordance with the HR&A Study
methodology.
2 The HR&A Study removes large shopping malls such as Dadeland, Shops at Sunset Place, and Shops at Merrick Park from its retail valuation
since these uses are largely dependent upon vehicular access. Therefore, based upon this methodology, the portion of Brickell City Center
within the impacted area has been removed from the analysis herein.
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Figure 3: Map of Proposed Expanded The Underline Right -of -Way, and Parcels in Miar
within 1/3 Mile & 500 feet of The Underline
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The Underline Parcels within 500 Feet of The Underline e
L-11 Existing DDA Boundary Line Parcels Between 600 Feet and 1/3 Mile of The Underline
Proposed Expanded DDA Boundary - including The Underline Right -of -Way
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Based upon applicable residential, office and retail parcel data extrapolated from a current analy:
MDCPA database, the table below provides a summary of the total assessed value of the impacted properties
within the Miami DDA, with a highlight of incremental increase in assessment based upon the 3% (lower)
and 5% (upper) value premium resulting from the proposed Underline improvements. Furthennore, the
table provides a summary of the annual incremental real estate tax from the Miami DDA properties that will
accrue to the City of Miami and the Miami DDA based upon 2017 millage rates:
Figure 4: Miami DDA Property — Estimated Annual Incremental Value and Tax Revenue Analysis
As surmnarized above, the Miami DDA properties impacted by The Underline totals 15± million square feet
of built space, with a total assessed value of $4.3 billion. Based upon the premium value increments detailed
by HR&A resulting from The Underline, the total assessed value of the Miami DDA properties increases by
$130 million to $215 million, resulting in an estimated $1.0 million to $1.7 million in additional annual tax
revenue to the City of Miami; and, $60,000 to $100,000 to the Miami DDA.
In addition to the value enhancement benefits to existing properties, the HR&A Study identifies other
benefits created by the Underline and, namely, new development that may not otherwise occur and provide
additional value to new developments currently in planning. At the time of the HR&A Study, more than 50
projects (comprising more than 20 million square feet, and $3 billion in assessed value) were identified as
proposed, planned and/or pipeline sites either slated or positioned for redevelopment into residential uses
within the entire Underline study area that are likely to be catalyzed by or experience an increment in value
due to proximity to The Underline. Of these projects, the largest share (estimated to be more than 50 percent
of assessed value) is located in the Brickell area (and within the Miami DDA boundary). Though it is quite
difficult to narrowly define how much new development would occur as a result of The Underline in light of
economic, financial, political and regulatory variables that impact new development over an extended period
of time, extrapolating the analysis within the HR&A study for that subsection of The Underline within the
DDA would indicate that development witlin the Miami DDA would represent at least 25 percent of the
total $3 billion estimated within the HR&A Study. Based upon capturing 25 percent of the added Underline
value within the DDA, The Underline will create additional incremental value of up to $37.5 million in the
impacted area of the Miami DDA, through enhanced rents and sale prices and increasing asset value for
future developments. This will, in turn, generate roughly $300,000 in annual incremental tax revenue to
the City of Miami; and, $17,000 for the Miami DDA.
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APPENDIX A
SUBSTITUTED
Exhibit E
Lambert Advisory Study