HomeMy WebLinkAboutSubmittal-Keisen Kasdin-Economic Study and Public BenefitsSubmitted into the public
record for item(s) PZ.10
on 04-22-2021, City Clerk
November 12, 2020
Miami City Commission
City Hall
3500 Pan American Drive
Miami, FL 33133
Re: Miami Design District
Dear Commissioners:
Miami Economic Associates, Inc. (MEAT) has performed an analysis to estimate the key
economic, fiscal and public benefits that have been generated by the subject project to
date for the City of Miami as well as Miami -Dade County and the Miami -Dade County
Public School District. The analysis we performed was commissioned by Miami Design
District Associates (Del), LLC (MDDA) to provide context for the City as it considers
proposed amendments to the project's special area plan (DD SAP) and modifications to
its Regulating Plan and Concept Book and the Development Agreement between the
City and MDDA (Development Agreement).
The materials that follow provide our estimates of the key economic, fiscal and public
benefits that Miami Design District has generated to date. The remainder of this letter is
organized as shown below:
Section
Key Findings
Economic Benefits
Fiscal Benefits
Public Benefits _
Closing
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6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (3051 669-0229 Fax: (8661 496-6107 Email: meaink(a�bellsouth.net
Miami City Commission
November 12, 2020
Page 2
Key Findings
Submitted into the public
record for item(s) PZ.10
on 04-22-2021, City Clerk
The key findings of the analysis performed by MEAI are follows:
• The Miami Design District to data has generated a total of 4,612 gobs including 3,100
jobs on -site (direct workers) and 1,512 jobs either in businesses related to the on -site
economic activity (indirect workers) or in businesses where the direct and indirect
workers spend their earnings. The annual income of all these workers exceeds
$202.0 million.
• The Miami Design District project will pay approximately $9.14 million in ad valorem
taxes this fiscal year including nearly $3.6 million to the City of Miami.
• Miami -Dade County annually collects 1-cent local option sales taxes on more than
$357 million in transactions at the Miami Design District project.
• As shown in the table below, the Miami Design District project has already funded
more than $119.0 million in public benefits within the DD SAP and is expected to
fund at least $3.0 million more in the future.
Public Benefits to Dade
Miami Design District Project
Public Benefit Developer Costs Total _Benefit
Public Right of Way Investment_ $ 13,765,732 $ 24,015,732
Public Art Investment $ 6,908,000 $ 6,908,000
Artistic Garage Facades $ 8,744,475 $ 8,744,475
Contribution towards ICA** $ 23,600,000 j $ 75,000,000***
On -going Maintenance Costs** $ 4,900,000 $ 4,900,000
Public Benefits Provided in_DD SAP $ 57,918,207 $ 119,568,207
Donation of the lots underlying the Institute for Contemporary Art (ICA)
This amount has been raised to fund the ICA for 10 years
Estimate of the net present value of maintenance costs over 20 years
Source: Miami Design District Associates (Del) LLC, Miami Economic Associates, Inc.
Economic Benefits
The term "economic benefits" refers to the positive impact that the Miami Design District
project has had on the economy of the City of Miami and/or Miami -Dade County in terms
of jobs and labor income. To estimate that impacts that the completed portions of the
project are currently generating on an annual basis, MEAI utilized the Minnesota
IMPLAN Input -Output Model. A description of the model may be found in the Appendix
to tis letter on page 7
According to information provided to MEAI by MDDA, there are currently 981,792 square
feet of operating space within the Miami Design District. Of that amount 392,718 square
feet are occupied retail establishments, 264,354 square feet occupied by showrooms
(generally displaying furniture and home furnishings and equipment) and art galleries,
25,329 square feet operated by health/wellness businesses and personal service
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (866) 496-6107 Email: meaink@bellsouth.net
Miami City Commission
November 12, 2020
Page 3
establishments. 101,604 square feet occupied by restaurants and 186,195 square feet of
office space. In conducting its analysis, MEAI considered all the space just enumerated;
however, we did not consider the remaining 68,565 square feet of space that houses
other diverse uses.
The table below provides MEAI's estimate of the economic benefits currently being
generated the Miami Design District project an annual basis in terms of jobs and labor
income.
Economic Benefits
Miami Design District Project
2020 Constant Dollars
Benefits
Jobs Created
Direct _ 3,100
Indirect _ 686
Induced 826
Total —-----------------T---------- 4,612
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Labor Income (All workers) $ 202,273,400
Source: Miami Design District Associates (Del), LLC; IMPLANT Miami Economic Associates, Inc.
With respect to the above table. the following points are noted:
The term "direct jobs" refers to jobs on -site. "Indirect jobs" are jobs in industries
related to the on -site economic activity while "induced jobs" are jobs in economic
sectors across the entirety of the economy in which the direct and indirect workers
spend their earnings.
The estimates of indirect and induced jobs as well as labor income and value-added
were estimated based on the assumption that there would be 2,959 direct workers
on -site on a full-time equivalent (FTE) basis. The figure was, in turn, arrived at by
assuming that: 1) the 682,401 square feet of retail. showroom and gallery space and
wellness/health and personal service space would be occupied by 2.5 workers per
1,000 square feet on a FTE basis; 2) the 101,604 square feet of restaurant space
would be occupied space would be occupied by 5 workers per 1,000 square feet on
a FTE basis; and 3) the 186,195 square feet of office space would be occupied by 4
workers per 1,000 square feet on a FTE basis. The number of FTE's on -site also
includes the 141 people employed by the project to deal with leasing, security,
parking operations and maintenance.
• The number of workers employed on site is likely to substantially exceed the number
of FTE's because the workforces in the retail, personal service and restaurant
sectors includes high percentages of part-time workers.
The IMPLAN model estimates the number of workers employed countywide rather
than the City of Miami; however.. MEAI believes that City residents will hold a
substantial percentage of the countywide jobs.
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (866) 496-6107 Email: meaink@bellsouth.net
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Miami City Commission
November 12, 2020
Page 4
Fiscal Benefits
The term "fiscal benefits" refers to the positive impact that the Design District project has
on the finances of the City of Miami as well as Miami -Dade County and Miami -Dade
County Public School District. The primary fiscal benefit that the project generates for
each is the ad valorem taxes it pays to them. The City also collects a significant amount
of revenue each year in the form of utility taxes and franchise fees; however, MEAI did
not have sufficient information available to it to estimate the amount of these revenues
collected on an annual basis. The project generates a significant amount of revenue for
the County each year from the 1 percent local option sales tax levied on retail and
restaurant sales, rents and parking receipts.
Ad valorem Taxes
The table below shows the amounts of annual ad valorem taxes that will be collected by
the properties that comprise the already developed portions of the Design District'. It
should be noted that figures shown reflect only the amount of taxes paid on the real
property, i.e. land and buildings. Additional ad valorem taxes will be paid by the entities
occupying the buildings with respect to their personal property, i.e. furniture, fixtures and
equipment.
November 2020 Ad valorem Taxes _
City of Miami, Miami -Dade County and Miami -Dade Public School District
Already Completed Portions of the Miami Design District Project
Jurisdiction/Fund Amount
City of Miami
$ 3,507,802
General Fund
$ 88,307
Debt Service Fund
$ 3,596,109
Total
Miami -Dade County
—General Fund _ _
Debt Service Fund
$ 2,135,337
$ 218,708
Library Fund
$ 129,944
Total $ 2,483,989
C Miami -Dade Public School District
Operating Fund $ 2,918,705
Debt Service Fund 148,016
Total
_$
$ 3,066,721
Total for All 3 Jurisdictions $ 9,146,819
Source: Miami Design District (Del), LLC, Miami -Dade County Property Appraiser: Miami Economic
Associates, Inc.
Sales Taxes
' If those taxes are paid before the end of this month, they qualify for a 4 percent discount.
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (866) 496-6107 Email: meaink@bellsouth.net
Miami City Commission
November 12, 2020
Page 5
The State of Florida collects a 6 percent sales tax on all retail sales of non-exempt items
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and restaurant charges as well as on rents paid and parking fees collected on other than
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on -street parking. The State retains approximately 91 percent of the sales taxes it
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collects and rebates approximately 9 percent to the County in which the sales taxes
were originally collected. The rebated amount is then divided between the County and
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the municipalities within the County. The amount rebated by any individual municipality
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from a single source such as the Miami Design Project is generally fairly small,
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Additionally, Miami -Dade County charges a 1 percent local option sales tax on the same
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transactions, with the proceeds from that tax being split evenly between transit and the
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Miami -Dade Health Trust.
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Information provided to provided to MEAT by MDDA identifies approximately $357.0
million worth of transactions on which the 1 percent local option sales tax was levied in
2019. This figure included all rents paid and parking fees charged in the Design District's
parking garages that year. It also included the sales that occurred in approximately
355,000 square feet of retail space. It did not, however, include sales in the nearly
265,000 square feet of space occupied by furniture and art galleries, the approximately
100,000 square feet of restaurant space and 68,656 square feet occupied by
miscellaneous uses within the Miami Design District. The amount of local option sales
taxes collected in 2019 on the known amount of tax eligible transactions was $3.57
million.
Public Benefits
The table below summarizes the public benefits that have already been provided by
MDDA in the DD SAP even though it has been unnecessary to date to obtain "bonus"
development capacity.
Public Benefits to Dade
Miami Design District Project
Public Benefit _ Developer Costs
Public Right of Way Investment $ 13,765,732
_Public Art Investment _ $ 6,908,000
Artistic Garage Facades $ 8,744,475 _
Contribution towards ICA** __ _ $ 23,600,000
On -.going Maintenance Costs**** — $ 4,900.000
Public Benefits Provided in DD SAP_ $ 57,918,207
Donation of the lots underlying the Institute for Contemporary Art (ICA)
This amount has been raised to fund the ICA for 10 years
**** Estimate of the net present value of maintenance costs over 20 years
Source: Miami Design District Associates (Del) LLC, Miami Economic Associates
Inc.
Total Benefit
$ 24,015,732 _
$ 61908,000
$ 8,744,475
$ 75,000,000***
$ 4,900,000
$ 119,568,207
MDDA has already installed much of the infrastructure needed to support future
development of the district. However, an additional $2 - 5 million in public infrastructure
and $1 — 3 million in public art spending are estimated in conjunction with the future DD
SAP projects. Together with this future spending, the total value of the .public benefits
will exceed $122.0 million.
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (866) 496-6107 Email: meaink@bellsouth.net
Miami City Commission
November 12, 2020
Page 6
Closing
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MEAT believes that the information presented above demonstrates that the Miami Design
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District project has been highly beneficial to the City of Miami as well as Miami -Dade
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County and the Miami -Dade Public School District. Approval of the proposed
amendments will enable the project to continue to be so. Future development within the
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Miami Design District will result in significant numbers of new jobs being created, and
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the amount ad valorem taxes collected from the district will rise substantially.
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Accordingly, MEAI encourages you to approve the proposed amendment described
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above.
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Sincerely,
Miami Economic Associates, Inc.
Andrew Dolkart
President
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (866) 496-6107 Email: meaink@bellsouth.net
Miami City Commission
November 12, 2020
Page 7
Appendix
Minnesota IMPLAN Input -Output Model
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The Minnesota IMPLAN Input -Output Model relies on multiplier analysis which quantifies
the cumulative effect of dollars inserted into the regional economy. As a dollar moves
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through the region, it creates additional revenue for linked businesses and/or their
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who also spend that money. More simply,expenditures dispersed by one
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entity become revenue to another, continuing an economic cycle which ultimately
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dissipates, bleeding into other regions or areas. Although several economic models are
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available, they work in fundamentally similar ways and center on the same indicators.
The Minnesota IMPLAN model was initially created over 35 years ago at the University
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of Minnesota and has been upgraded on a continuing basis in the ensuing years.
The multiplier impacts calculated by the Minnesota IMPLAN model are based on input-
output methodology, which explicitly considers the inter -industry linkages that exist
within an economy. Each industry needs labor and inputs from other industries to
produce economic output. Whenever an industry experiences an increase in the demand
for its output, many other industries within that economy indirectly experience an
increase in demand as well because of these inter -industry linkages. This increase in
demand that results from the need for material inputs is called the indirect effects. In
addition, an increase in production within a region also leads to an increase in household
income through the hiring of workers, which in turn generates further demands for goods
and services within the region. Firms also need to expand their base of physical capital
to meet higher levels of demand, and this too stimulates regional economic growth. The
latter effects are referred to as induced effects. The inter -industry linkages and the
induced effects on consumer and capital spending lead to successive rounds of
production, and this process results in an increase in output that exceeds the initial
change in demand, or a multiplier effect. Similarly, the increase in household income will
exceed the initial payroll increase encountered in the industry that experienced the
original increase in demand. The total change in employment in the regional economy is
a multiple of the direct change in employment.
In addition to estimating employment, MEAI also used the Minnesota IMPLAN model to
quantify the total earnings or labor income of the direct, indirect and induced workers as
well as the total gross domestic product, or value added. that would result from the
efforts of the direct, indirect and induced employees. Labor income consists of all forms
of employment income including wages and salaries and proprietor income. Gross
domestic product (GDP), also known as value-added, is the increased value of a product
or service as the result of the economic inputs (labor and capital) expended at a given
stage, GDP is the sum of wages and salaries, proprietor income, interest and indirect
business taxes.
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (866) 496.6107 Email: meaink@bellsouth.net