Loading...
HomeMy WebLinkAboutEconomic Impact Study• Mr. Reinaldo Borges Borges a- Associates, P.A. Miami, Florida Re: MUSP Impact Analysis — Lofts at Mayfair • • June 24, 2004 DearMr-Ber-ges: Miami Economic Associates, Inc. (MEAD h ai performedro�ect Sis to will haveton the housing the impacts that development of the proposed LoftsMayfair market in the City of Miami as well as on the Virginia Street St eetlin Coconut Grove,and economic condition. Goral Ways 1 at Mayfair, which will be located at 3339 gfeet of will contain 99 units and their associated amenities as of code as 2,wi92 square o be provided retail space. Parking for the units and retail space Information about MEAI and my personal resume are appended to this letter. The analysis presented in this letter was prepared min ernodef modeling andsimula#ion analysisred by . Dr. Cruz ert Cruz, Ph.©., a specialist in quantitative ern Associate Professor in Economics at Barry University. He received his Ph.D. in is an mics from the University of Pennsylvania. economics This letter is organized as follows: Project Description The proposed Lofts at Mayfair project will be constructed e on 90withinet) City oe f that a is located at 3339 Virginia Street in the Coconut a ���� � size from 787 to 1,585 square The project will contain a total of 99 loft units,and some of the feet in terms of air conditioned space. All ofunits 5 Pro; � amecn`°i#iessinclude a fitness units have direct #wF1�1r'ipoolrooftop ten -a es center swimming pool and 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fa= (305) 669-8534 Email: meaink bellsouth,net Mr. Reinaldo Borges Borges + Associates, P.A. June 24, 2004 Page 2 Unit prices at Lofts at Mayfair range from $252,000 to just under $600,000, depending on the size and location of the unit within the building_ The "average" unit will be priced at $381,000, with the result that $37,338,000 in gross sales proceeds will be realized. Lofts at Mayfair will also include the development of 2,692 square feet of retail space and more parking spaces than are required by code. Each residential unit will be assigned 1 parking space. The developer of the project, The Royal Bay Group, plans to sell the proposed retail space for a total price of $1,000,000. Development of the Lofts at Mayfair in the manner described will require taking advantage of several potential FAR bonuses including those relating to underground parking, Planned Unit Development and Affordable Housing. To access the latter bonus, which will increase the base FAR by 16,864 square feet, a fee in the amount of $6.67 per square foot, or $112,483, will be paid to the City. Development of Lofts at Mayfair will require the expenditure of approximately $13.3 million (2004 Dollars) for "hard" construction. "Soft" costs including those relating to professional fees, permits, sales and leasing commissions, marketing, developer overhead, administration, etc. will total $5.8 million (2004 Dollars). Therefore, $19.1 million will be spent to complete the project exclusive of land acquisition, financing costs and developer's profit. Summary of Findings Development of Lofts at Mayfair will be highly beneficial to the City of Miami in several important ways as summarized below. Impact on the Housing Market • City officials have long sought to attract new residential development to the various neighborhoods of Miami to provide better market support for the retailers and food and beverage establishments operating within them and to enhance the City's tax base. They have also sought to foster more economic diversity within the City, which is currently one of the poorest major metropolitan areas in the nation. Toward this end, the City Commission has recently approved a number of new residential projects in the DuPont Plaza and Omni -Edgewater areas of the City as well as in the Bdckell Avenue area. The Lofts of Mayfair will extend that activity to Coconut Grove at a scale greater than what is currently occurring. Fiscal Impact • Fiscal impact refers to the impact that Lofts at Mayfair will have on the finances of the City of Miami. The benefits that it will provide to the City will be both non- recurring and recurring in nature. Non -recurring benefits will result from the payment of building permit and other fees during the construction period. The primary recurring fiscal benefit will be ad valorem tax receipts. The benefits that will accrue to the City are estimated below in 2004 Constant Dollars: Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669.8534 Email: meaink@bellsouEth.net Mr. Reinaldo Borges Borges + Associates, P.A. June 24, 2004 Page 3 o Non -recurring Benefits • $ 35,730 in City building permit fees • $ 10,000 in City solid waste surcharge fees • $ 90,686 in City impact fees • $ 112,483 in affordable housing bonus fees o Recurring Benefits • $ 254,143 annually in City General Fund ad valorem taxes • $ 31,315 annually in City Debt Service ad valorem taxes o Non -Quantifiable • Trade -related fees for roofing, electrical, plumbing, mechanical, pool and elevator work performed during construction (one-time) • Increased City utility taxes and franchise fees (recurring) • lncreased occupational license fees o Other • While the focus of MEAI's fiscal analysis was on the City of Miami, Lofts at Mayfair will, as shown below, provide significant fiscal benefits to other non -municipal governmental jurisdictions that impact the lives of City residents: o $ 92,998 in County road impact fees (non -recurring) o $ 73,433 in County park impact fees (non -recurring) o $ 146,085 in School impact fees (non -recurring) o $ 173,072 in County General Fund ad valorem taxes (recurring) o $ 8,264 in County Debt Service ad valorem taxes(recurring) o $ 14,498 in Children's Trust ad valorem taxes (recurring) o $ 14,091 in County Library ad valorem taxes (recurring) o $ 244,082 in School Operating ad valorem taxes (recurring) o $ 19,775 in School Debt Service ad valorem taxes (recurring) o lncreased County occupational license fees Economic Impact • Economic impact relates to the impact that Lofts at Mayfair will have on the economy of the City rather than its finances. The economic benefits it will provide will also be non -recurring and recurring in nature. Salaries paid to construction workers will constitute an important non -recurring benefit. The annual retail and restaurant expenditures of the project's residents will comprise a recurring benefit. The economic benefits summarized below are stated in 2004 Constant Dollars. Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel. (305) 669..0229 Fa= (305) 669-8534 Email: meainkbellsouth.net Mr, Reinaldo Borges Borges + Associates, P.A. June 24, 2004 Page 4 o Non -recurring Approximately 90 percent of the near $19.1 million spent on hard and soft costs to develop Lofts at Mayfair will be spent within the City of Miami, producing an overall economic impact of $29.7 million when the multiplier effect is considered. • Project expenditures within the City of Miami will include an estimated $6.7 million for construction labor, an amount sufficient to pay approximately 151 construction workers their average annual wage of $44,350. o Recurring • A total of $2.2 million will be spent annually by Lofts at Mayfair residents in retail and restaurant establishments within the City of Miami. An additional $758,056 million in ad valorem taxes will be paid to the City of Miami, Miami -Dade County and the School Board, ail of which maintain their principal offices within the City. These expenditures will have an overall economic impact on the City of $4.4 million annually when the multiplier effect is considered. Bases of Estimates The materials that follow provide the assumptions used to estimate the fiscal and economic benefits that development of Lofts at Mayfair will provide to the City of Miami. All monetary amounts are stated in 2004 Constant Dollars. Project Characteristics • Lofts at Mayfair will be located at 3339 Virginia Street within Coconut Grove section of the City of Miami. It will also be within the jurisdictions of Miami -Dade County and the Miami -Dade County Public School District. • Lofts at Mayfair will entail the construction of 166,091 gross square feet of building area, exclusive of balconies and roof terraces. Of this amount, 110,846 square feet will pertain to the residential portion of the project inclusive of the livable space contained in the 99 units as well as amenity, core, service and circulation areas. The commercial portion of the project will total 2,692 square feet. The remaining 51,553 square feet, will contain the parking spaces and their associated driveways. • Development of Lofts at Mayfair will cost approximately $13.3 million to construct in terms of hard construction. Soft costs including those relating to professional fees, sales and leasing commissions, marketing developer overhead, administration, etc. will total $5.8 million. Therefore, $19.1 million will be spent to complete the project exclusive of land acquisition, financing costs and developer's profit. Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax (305) 669-8534 Email: meainkabelisouth.net Mr. Reinaldo Borges Borges + Associates, P.A. June 24, 2004 Page 5 • At current pricing, Lofts at Mayfair's 99 units will generate $37,719,000 in sales proceeds. The "average" unit will be priced at approximately $381,000 • The Constitution of the State of Florida mandates that residential real property be assessed for ad valorem tax purposes at 100 percent of market value. However, as practical matter assessed values approximate 80 percent of market value, or in this case, $30,175,200. Assuming that 80 percent of the units are eligible for the Homestead Exemption, the taxable value at the Lofts at Mayfair will be $28,195,200. • The Royal Bay Group plans to sell the retail space at the Lofts at Mayfair for $1,000,000. At 80 percent, the total assessed and taxable value of that component of the project would be $800,000. Therefore, the total taxable value of the project, inclusive of both its residential and retail components, would be $28,995,200. • Residents of the proposed condominium units will on average require an annual income of approximating $152,400 to qualify for ownership. Based on this estimate of average household income, it is projected that the people living at Lofts at Mayfair will spend $3.2 million annually in retail and restaurant establishments. This projection assumes that they spend 20 percent of this income for that purpose. Non -recurring Fiscal Impacts • The City of Miami charges building permit fees at a rate of $0.20 per gross square foot of multi -family residential construction and $0.25 per gross square foot of commercial construction. In calculating fees, the square footage associated with the parking garage space is charged for at the commercial rate. Based on the distribution of space by use discussed previously, building permit fees totaling $35,730 will be paid. A solid waste surcharge fee in the amount of $10,000, the maximum amount, will be applied. • The various trades involved in completing a new project including the roofing, electrical, plumbing, mechanical, elevator and swimming pool contractors are required to pay fees on their work. Calculation of the fees that are paid requires that the project's final engineering drawings be completed, which has not yet occurred. Accordingly, the fees that will be paid can not be quantified at this time. A solid waste surcharge is applied to these fees_ • The City of Miami charges impact fees on new construction projects based on square footage. The fees are used to address the impacts of the project on police, fire, parks, streets, storm sewers, solid waste and general services administration. The rate paid for projects constructed in Coconut Grove is $0.939 per square foot of new residential use and $1.201 per square foot of commercial use. Lofts at Mayfair will contain 93,134 square feet of living area and 2,692 of commercial space, resulting in the payment of impact fees totaling $90,686. Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax (305) 669-8534 Email: meaink©beiisouth.net Mr. Reinaldo Borges Borges + Associates, P.A. June 24, 2004 Page 6 • The City of Miami allows projects to purchase up to a 25 percent F.A.R. bonus by paying moneys into an affordable housing fund. Lofts at Mayfair will pay $112,483 to the fund to purchase development rights for 16,864 square feet of FAR. • New construction projects located in the City of Miami also need to pay impact fees to Miami -Dade County for roads, parks and schools. Residential projects located in the eastern portion of the county pay $877 per unit for roads and $741.75 for parks. The road impact fee rate for retail space in the eastern portion of Miami -Dade County is $2.294 per square foot for projects with the quantity of space proposed. No park impact fees are paid on retail space. The base fee per unit for school impact fees is $612. An additional amount of $0.918 per square foot is then applied. Lofts at Mayfair will contain a total of 92,326 square feet -in its .98... residential .. units, Accordingly, impact fees totaling $312,506 will need to be paid at the time the project's building permit is issued. Of this amount, $92,998 will be applied to roads, $73,433 to parks and $146,085 to schools. Recurring Fiscal Impacts • The millage rates currently being levied for ad valorem tax purposes by the governmental entities referenced in the Summary of Findings are shown in the table immediately following. The ad valorem tax revenues projected in the Summary of Findings were calculated by applying the millage rates shown to Lofts at Mayfair's estimated taxable value of $28,995,200. Entity Ratel$1000 Taxable Value Taxes City of Miami General Fund 8.7650 $ 254,143 Debt Service Fund 1.0800 $ 31,315 Miami -Dade County General Fund 5.9690 $ 173,072 Debt Service Fund 0.2850 $ 8,264 Children's Trust 0.5000 $ 14,498 Library 0.4860 $ 14,091 Miami -Dade County Public Schools Operating 8.4180 $ 244,082 Debt Service 0.6820 $ 19,775 Source: Miami -Dade County Property Appraiser; Miami Economic Associates, inc. • The City of Miami collects utility taxes and franchise fees from the providers of telephone, electric and other such services based on their revenues. The amount collected as a result the development of Lofts at Mayfair will be dependent on the amount of these services used by the project's residents; hence, it can not be quantified at this time. • Both the City of Miami and Miami -Dade County will collect occupational license fees from the occupant(s) of the proposed retail space. The amount collected can be Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax (305) 669-8534 Email: meaink lbellsouth.net Mr. Reinaldo Borges Borges + Associates, P.A. June 24, 2004 Page 7 estimated at this time since it will be dependent on the nature of the business housed in the space. Non -recurring Economic Benefits • It is estimated that approximately 90 percent of the nearly $19.1 million that will be spent on the hard and soft costs associated with development of Lofts at Mayfair will initially be spent in the City of Miami. This estimate is based on an anticipation of the specific firms that will be involved in implementation of the project. According to the input-output model of Minnesota IMPLAN Group (MIG), which is one of the nation's foremost econometric firms, the overall economic impact of these expenditures will be $29.7 million based on application of a 1.554 multiplier. • MIG's input-output model further estimates that approximately $6.0 million of the moneys spent on hard costs within the City of Miami to construct Lofts at Mayfair will be spent for labor. The average construction worker in Miami -Dade County eams approximately $44,350 per year, according to the Florida Agency for Workforce Innovation. Therefore, the project's expenditure on construction labor would support approximately 135 workers on a full-time equivalent (FTE) annual basis at their average wage rate. Recurring Economic • Benefits • The residents of LoftsatMayfair will spend $3.0 annually in retail establishments and restaurants. It is estimated that approximately 70 percent of this amount, $2.2 million, will be spent within the City of Miami. Additionally, the project will generate $758,056 annually in ad valorem taxes for the City of Miami, Miami -Dade County and the School Board, all of which maintain their principal offices within the City. According to the MIG input-output model, the total economic impact of these expenditures will be $4.4 million based on the application of a 1.5 multiplier. Conclusion The analysis performed by MEAI demonstrates that development of Lofts at Mayfair will be highly beneficial to the City of Miami both fiscally and economically. It will also re - enforce the City's efforts to re-establish its core areas as residential communities. Sincerely, Miami Economic Associates, Inc. Andrew Dolkart President Miami Economic Associates, Inc. 6861 S.W. 89t Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax (305) 669-8534 Email: meaink tellsouth.net