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ECONOMIC IMPACT ANALYSIS
Avant Towers
(Condominium and Retail Development)
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- Prepared by -
Lambert Advisory, LC
- Prepared for -
Avant Towers, LC
May 5, 2004
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Economic Impact Analysis -- Avant Towers
Economic Impact Analysis
Avant Towers
Lambert Advisory has completed an Economic Impact Analysis for the development of
Avant Towers, a mixed -use residential and commercial project located on NE 34th Street
at Biscayne Boulevard in the City of Miami. The analysis estimates the tangible direct
and indirect economic impacts that will be derived from the construction and operation
of the development.
This andncansupplement the major use special permit
identifies
and quantifies the
development of AvantTowers,
application to be submitted to the City of Miami.
The Avant Towers property is situated in the heart of Miami, immediately adjacent to
the Design District and convenient to the Brickell Business District and South Beach.
The property is accessible to major thoroughfares including I-195, US 1, and 1-95. The
residential and retail development will have a positive impact on the surrounding
community in terms of taxes, jobs, and general investment generated, and will also
enhance the area's commercial/retail demand. This development will help maintain
economic stability within the area and attract on -going investment during the next
several years.
We have completed this analysis on the basis of development and performance
information (i.e., price, absorption, timing, costs) that has been provided by Avant
Towers LC. We have not independently verified this information or data.
A profile of the project follows.
Avant Towers
Economic Impact Analysis
Building Features & Profile
General Features
Site Size (Net)
Building Height
Number of Residential Units
Retail Space (rentable area)
Number of Parking Spaces
Detailed Building Profile
Gross Building Area (w/parking)
Residential FAR
Retail FAR
Gross Parking Area
1.19 acres
10 stories
114 units
14,770 sq.ft.
180 spaces
208,907
116,737 sq.ft.
14,770 sq.ft.
77,400 sq.ft.
Note: Estimates are based upon data provided by Avant Toners LC, and/or
calculations made by Lambert Advisory, and maybe subject to change.
Source: Avant Tow ers LC, Lambert Advisory, 2004.
DRAFT: For Discussion Purposes Only 2
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Economic Impact Analysis — Avant Towers
Development of the Avant Towers property is expected to commence approximately six
months after the City of Miami issues its approval. foThe duration
tion2006of conthe latestion is
anticipated to be 12 months, with occupancy plannedMay
Based upon the information provided, construction and subsequent operations of Avant
Towers will generate considerable benefits to the immediate area, the City of Miami, and
the metro -Miami community. There are four key areas in which the project will provide
positive economic impacts:
1. Short-term construction employment and expenditure
2. Long-term residential and shopper expenditure
3. Long-term building employment and operating expenditure
4. Indirect flow -through benefits (real estate and retail)
For both short-term and long-term impacts, which are detailed in the following analysis,
the economic benefit to the area is the result of projected increases in revenue from
primary sources, including employment, wages, and taxes. Accordingly, the impact from
these key sources comes from two distinct measures:
• Direct Expenditures — disbursements for site acquisition and development (hard and
soft costs)
• Indirect Expenditures — net additional expenditures that flow into the local economy
as a result of the new development
Estimates of the tangible impacts from direct and indirect expenditures are captured by
this analysis, However, potential intangible impacts — such as the project's ability to
serve as a catalyst for future development in the immediate area — are not included, as
they are nearly impossible to quantify.
Economic impacts from the four key sources are detailed in the following sections.
1. Short -Term Construction Employment and Expenditure
The impact from short-term construction employment and expenditure is directly
associated with the project's development; the table below shows a summary of
estimated development costs, as provided by Avant Towers, LC.
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Economic Impact Analysis — Avant Towers
Avant Towers
Economic lmpact Analysis
Development Costs'
Cost
Item
Hard Costs $18,400,000
Soft Costs 2 $5,300,000
Total $23,700,000
I Land costs are not included.
2 Soft costs do not include cost of sales (e.g., brokers, marketing).
Source: Avant Tow ers LC, 2004.
The majority of development -related expenditures will be made in Miami -Dade County,
and the City of Miami will capture the lion's share of these expenditures.
Labor will account for approximately 60 percent ($11 million) of hard costs, and
materials will account for 40 percent ($7.4 million). Over an estimated 12-month
construction period, at an average annual construction wage of $36,7321 in Miami -Dade
County, with a benefit/overhead multiplier of 1.4, there will be approximately 215 Full
Time Equivalent (FTE) jobs created.
Additionally, more than $3.3 million in professional fees are expected to be paid to
Miami area firms (e.g., architecture, legal, marketing, brokerage). Assuming an average
profit margin of 15% and overhead of 30%, nearly $2 million in professional wages will
be paid out by these firms.
Impact and other fees payable to the City and County during the construction period will
amount to approximately $1.2 million, which will be available for public expenditures
associated with the project including developmental, administrative, permitting, schools,
and other costs.
A detailed profile of impact fees and other relevant non -impact fees paid to the City
and/or Miami -Dade County as a result of the development of Avant Towers is included in
the following table.
State of Florida ES-202, third quarter 2003
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Economic Impact Analysis — Avant Towers
Avant Towers
Economic Impact Analysis
impact and Other Fees
Impact Fees:
City of Miami Development Impact Fee (Ord. 10426)
City of Miami Development Impact Admin. Fee
Miami Dade County Roads
Miami Dade County Schools
TOTAL IMPACT FEES
Total
$127,355
$3,821
$135,544
$176, 933
$443,652
Other/Non-impact Fees: $506,074
City of Miami Bonus Fees t $164,534
Miami Dade W.A.S.A. Connection Fee
City of Miami Building Permit Fee $29,717$2,891
Energy installation Fee $45,000
M.U.S.P Application Fee $11,887
Dade County Code Compliance $2,089
Radon Gas Fee $1,880
Fire Plan Review Fee $1,036
Ground Cover Fee $2,000
Land Use/Zoning, Review for BIdg.Permit
Certicate of Occupancy $2500
Application Fee $ 7g5, 395
TOTAL OTHER FEES
TOTAL PROJECT FEES $1,229,047
Assuming payment after 9/1/2004,
Source: City of 11/kami Planning, Building & Zoning; Maori Dade County; Avant Towers LC,
Lambert Advisory. Fees included above may be subject to change.
2. Long -Term (On -Going) Resident and Shopper Expenditure
Based on demographic and rental housing trends in the area, the Avant Towers resident
base is expected to consist primarily of younger working professionals. Considering the
proposed average sale price of $250,000, it is assumed that the residents will be mostly
middle and upper income individuals/households with household incomes of at least
$80,000. Therefore, with a total of 114 households in the building, total personal
income for the building is estimated to exceed $9 million, Estimating that approximately
half of the owners will relocate from outside the City, the marginal personal income that
will flow into the Miami area will be nearly $4.6 million.
We have estimated the marginal impact of $4.6 million in household income on retail
sales and space demanded, using the Lambert Advisory Retail Trade Model. The
following table provides a summary of additional retail expenditure and demand for
space as a result of development and sale of the units by mid-2007.
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Economic Impact Analysis — Avant Towers
Type of Gooci
Avant Towers
Area Expenditure Potential (from New -to -Miami Residents)
2007
Est. Marginal
Growth Expenditure
2007
General Merchandise
Apparel and Accessories
Furniture and Home Equipment
Electronic and Appliance Stores
Sporting Goods, Books and Music Stores
Miscellaneous Shoppers Goods
Shoppers Goods - Sub -Total
Food Stores
Eating & Drinking Establishments
Health & Personal Care Stores
Liquor
Convenience Goods - Sub -Total
$100, 841
$97,018
$40, 214
$38,462
$36,686
$55,953
$369,174
$515,232
$318,733
$165,606
$11,054
$1,010,625
Building Materials $99,363
'total $1,479,162
Sales Per Square Feet
Square Foot Demanded
$227 444
$290 335
$227 177
$200 192
$250 147
$420 133
$258 1,428
$422
$375
$407
$280
$401
1,221
850
407
39
2,517
$115 864
$308 4,809
Source: Larrtert Advisory, 2004.
In addition to the net new expenditures attributable to Avant residents, the 14,770
square feet of ground -level retail planned will also attract retail expenditure — primarily
from the area immediately surrounding the property, with limited additional support
frorn visitors from outside of the area. Assuming that 20 percent of the expenditure in
Avant Towers retail comes from outside the City, and based upon sales per square foot
(for Shopper Goods) of $308, over $900,000 will be expended within the City per year
which is now going to other areas,
3. Long -Term (On -Going) Building Employment and Operating Expenditure
There are a number of areas where positive public benefits or economic impacts will
result from the on -going operation of the residential and retail space. These include:
• Additional employment from operation of the condominium community and
stores;
• Property tax revenue to the City of Miami and Miami -Dade County;
• Increased sales tax revenue from stores to State and County; and
• Purchase of goods and services.
We estimate that four FTE workers will be needed to operate the building and 15 FTE
workers will be employed in the retail stores. Positions such as building managers,
parking garage attendants, maintenance staff, retail workers, and security personnel will
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Economic Impact Analysis — Avant Towers
need to be filled. At an average Miami -Dade County wage of $35,8202 the operation of
the building and stores will create approximately $700,000 in wages each year.
Positions at various skill levels will be made available to area residents.
Increased sales tax revenue will result from the operation of the 14,770 square feet of
retail space. Assuming the net new retail expenditure in stores totals $900,000,
approximately $64,000 in additional sales tax will be collected from retail sales.
Additionally, an estimated $100,000 in goods and services related to building
maintenance will be purchased annually within Miami -Dade. This includes cleaning
services, maintenance supplies, utilities, etc.
Finally, the development of Avant Towers will provide significant benefit to the City and
County by way of real property and personal property (ad valorem) taxes. The tax
amount is based upon the County Tax Collector's (2003) millage rate of 26.918 (per
thousand dollars of value), broken down as follows.
Avant Towers
Economic Impact Analysis
Ad Valorem Tax Breakdown
Annual
Item Millage Tax,
City of Miami Operating 8.7625 $299,080
City of Miami Debt 1.080 $36,862
School Operations 8.418 $287,321
School Debt 0.682 $23,278
Environmental Projects 0.100 $3,413
S. Florida Water Management 0.597 $20,377
FIND 0.0385 $1,314
County Millage 5.969 $203,733
County Debt 0.285 $9,728
Children's Trust 0.500 $17,066
Library 0.486 $16,588
TOTAL 26.918 $918,759
Source: Mani Dade County Property Appraiser, Larrt ert Advisory, 2004.
Real property is typically assessed at between 80 and 90 percent of Fair Market Value.
For this analysis, we calculate ad valorem taxes for Avant Towers based on a market
value of just over $34 million, or 85 percent of the estimated value of the residential,
and retail uses. Accordingly, the development should generate approximately $920,000
in real property taxes by 2007/8. This represents an estimated net marginal increase of
roughly $885,000 over the ad valorem tax collection the City would receive if the
property were valued at current use (assessed in 2003 at $1.25+ million).
2 State of Florida ES-202, third quarter 2003
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Economic Impact Analysis — Avant Towers
4. Indirect Flow -Through Benefits
There will be a number of long term indirect flow -through benefits beyond construction
from the project, particularly from the increase in retail and operations employment.
The 19 FTE jobs created as a result of building and retail operations are assumed to
have a 1.2 multiplier impact of 22 additional jobs. This multiplier is derived from the
U.S. Department of Commerce's 1999 RIMS II model, and identifies indirect secondary
and tertiary impacts created throughout the region due to the "ripple effect" of the
primary employment.
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Economic Impact Analysis — Avant Towers
Avant Towers
Economic Impact Analysis
Summary, Economic Impacts
Impact
Short Term Construction Employment & Expenditure
$7
Full Time Jobs ,9DD,2155
Direct Wages $,900,000
Professional Wages (Miami -Dade County) $1,800,000
impact Fees Toward Public Expenditure
Total Impact, Short Term Const. Employment & Expend. $11,000,000
Long -Term (On -Going) Resident and Shopper Expenditure $1 500,D00
Marginal Expenditure Growth — Residents (2007/8) $900,000
Marginal Expenditure — 550 Brickell Shoppers (2007/8)
Marginal Impact from On -Going Resident and Shopper Expend. $2,400,000
Long -Term (On -Going) Building Employment and Operating Expenditure Full Time Jobs 19
$700 019
Total Direct Wages Created $64,000
00
Sales Tax from Additional Retail Sales (2007/8) $,000
Goods & Service Purchased in Miami -Dade County $900,0001
Ad Valorem Taxes (2007/8)
Total Impact from On -Going Operations of the Building/Retail $1,700,000
Indirect Flow Through Benefits 22
Full Time Jobs (Indirect) — Miami Dade County $800,000
Total Indirect Wages Created $800,000
Total Flow Through Indirect Benefits
Source: Lambert Advisory, 2004.
Based upon the analysis set forth herein, the Avant project will dearly have a positive
economic impact on both the City of Miami and Miami -Dade County. Total employment
created during the development phase is approximately 192, with on -going annual
employment of 41 FTE jobs. Accordingly, there is an estimated $11 million impact from
short-term construction employment and expenditures, and a stabilized $4.1 million
annual revenue stream from resident/shopper expenditures and building operations
(including real property taxes).
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