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HomeMy WebLinkAboutEconomic Impact Analysis• ambert Advisory ECONOMIC IMPACT ANALYSIS U RBAN EA (Condominium and Retail Development) • - Prepared by - Lambert Advisory, LC - Prepared for - Strategic Properties June 4, 2004 • • • • Economic Impact Analysis — Urbanea Economic Impact Analysis Urbanea Lambert Advisory has completed an Economic Impact Analysis for the development of Urbanea, a mixed -use residential and commercial project located at 1600 Douglas Road 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 report identifies and quantifies the benefits created by the development of Urbanea, and can supplement the major use special permit application to be submitted to the City of Miami. The Urbanea property is situated slightly more than one mile west of Miami' central business district, and borders the northeast boundary of Coral Gables. The property is accessible to major thoroughfares including SR 826, 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 (Le,, price, absorption, timing, costs) that has been provided by Strategic Partners. We have not independently verified this information or data. A profile of the project follows. Urbanea Economic Impact Analysis Building Features & Profile General Features Site Size (Net) 0.76 acres Building Height 14 stories Number of Residential Units 100 units Retail Space (rentable area) 6,516 sq.ft. Number of Parking Spaces 202 spaces Detailed Building Profile Gross Building Area (w/parking) 219,101 Residential FAR 104,827 sq.ft. Retail FAR 7,552 sq.ft. Restaurant FAR sq.ft. Lobby ("Core")/Admin. Area 9,933 sq.ft. Gross Parking Area 95,276 sq.ft. Note: Estimates are based upon data provided by Strategic Partners, and/or calculations made by Lambert Advisory, and may be subject to change. Source: Strategic Partners, Lambert Advisory, 2004. 2 • • • Economic Impact Analysis — Urbanea Development of the Urbanea property is expected to commence approximately six months after the City of Miami issues its approval. The duration of construction is anticipated to be 12 months, with occupancy planned for Mid-2006, at the latest. Based upon the information provided, construction and subsequent operations of Urbanea 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 Strategic Properties. • o • Economic Impact Analysis — Urbanea Urbanea Economic Impact Analysis Development Costs 1 Item Cost Hard Costs $12,600,000 Soft Costs 2 $4,300,000 Total $16,900,000 1 Land costs are not included. 2 Soft costs include cost of sales (e.g., commissions, marketing). Source: Strategic Properties, 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 ($7.5 million) of hard costs, and materials will account for 40 percent ($5.1 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 147 Full Time Equivalent (FTE) jobs created. Additionally, more than $1.75 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 150/© and overhead of 30%, nearly $1.1 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 Urbanea is included in the following table. 1 State of Florida ES-202, third quarter 2003 • • • Economic Impact Analysis — Urbanea Urbanea 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 $106,258 $3,188 $103,391 $157,431 $370,268 Other/Non-Impact Fees: City of Miami Bonus Fees t $275,291 Miami Dade W.A.S.A. Connection Fee $142,077 City of Miami Building Permit Fee $27,833 Energy Installation Fee $20,662 M.U.S.P Application Fee $45,000 Dade County Code Compliance $8,417 Radon Gas Fee $2,066 Fire Plan Review Fee $1,860 Ground Cover Fee $662 Land Use/Zoning, Review for Bldg.Permit $2,000 Certicate of Occupancy $250 Application Fee $35 TOTAL OTHER FEES $ 526,153 TOTAL PROJECT FEES $896,421 1 Represents Affordable Housing and P.U.D. and assumes payment after 9/1/2004. Source: City of Miami Planning, Building & Zoning: Miami Dade County; Strategic Properties, 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 Urbanea resident base is expected to consist primarily of younger working professionals. Considering the proposed average sale price of $226,000, it is assumed that the residents will be mostly middle and upper income individuals/households with household incomes of at least $75,000. Therefore, with a total of 100 households in the building, total personal income for the building is estimated to exceed $7.5 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 $3.75 million. We have estimated the marginal impact of $3.75 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. • • • Economic Impact Analysis — Urbanea Urbanea Area Expenditure Potential (from New -to -Miami Residents) 2007 Type of Good Est. Marginal Growth Expenditure 2007 Genera 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 $82,928 $79,785 $33,070 $31,630 $30,169 $46,014 $303,597 $423,711 $262,116 $136,189 $9,090 $831,106 Building Materials $81,713 Total $1,216,416 Sales Per Square Feet Square Foot Demanded $227 365 $290 275 $227 146 $200 158 $250 121 $420 110 $258 1,175 $422 $375 $407 $280 $401 1,004 699 335 32 2,070 $308 3,955 Source: Lambert Advisory, 2004. In addition to the net new expenditures attributable to Urbanea residents, the 6,516 square feet of ground -level retail planned will also attract retail expenditure — primarily from the area immediately surrounding the property, with limited additional support from visitors from outside of the area. Assuming that 20 percent of the expenditure in Urbanea retail comes from outside the City, and based upon sales per square foot (for Shopper Goods) of $308, over $400,000 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 6 FTE workers will be employed in the retail stores. Positions such as building managers, parking garage attendants, maintenance staff, retail workers, and security personnel wi11 • • • Economic Impact Analysis — Urbanea need to be filled. At an average Miami -Dade County wage of $35,8202 the operation of the building and stores will create more than $350,000 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 6,516 square feet of retail space. Assuming the net new retail expenditure in stores totals $400,000, approximately $30,000 in additional sales tax will be collected from retail sales. Additionally, an estimated $75,000 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 Urbanea 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. Urbanea Economic Impact Analysis Ad Valorem Tax Breakdown item City of Miami Operating City of Miami Debt School Operations School Debt Environmental Projects S. Florida Water Management FIND County Miliege County Debt Children's Trust Library Annual lllage Tax 1 8.7625 1.080 8.418 0.682 0.100 0.597 0.0385 5.969 0.285 0.500 0.486 $174,151 $21,465 $167,305 $13,554 $1,987 $11,865 $765 $118,632 $5,664 $9,937 $9,659 TOTAL 26.918 $534,98 Source: Miami Dade County Property Appraiser, Lambert 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 Urbanea based on a market value of just over $23 million, or 85 percent of the estimated value of the residential, and retail uses. Accordingly, the development should generate approximately $530,000 in real property taxes by 2007/8. This represents an estimated net marginal increase of roughly $475,000 over the ad valorem tax collection the City would receive if the property were valued at an estimated market value of $2.8 million. 2 State of Florida ES-202, third quarter 2003 • • o Economic Impact Analysis — Urbanea 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 9 FTE jobs created as a result of building and retail operations are assumed to have a 1.2 multiplier impact of 11 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. • • Economic Impact Analysis — Urbanea Urbanea Economic Impact Analysis Summary, Economic Impacts Impact Short Term Construction Employment & Expenditure Full Tirne Jobs 147 Direct Wages, Benefits $7,500,000 Professional Wages (Miami -Dade County) $1,100,000 Impact Fees Toward Public Expenditure $900,000 Total Impact, Short Term Const. Employment & Expend. $9,500,000 Long -Term (On -Going) Resident and Shopper Expenditure Marginal Expenditure Growth — Residents (2007/8) $1,220,000 Marginal Expenditure — Urbanea Shoppers (2007/8) $400,000 Marginal Impact from On -Going Resident and Shopper Expend. 61,620,000 Long -Term (On -Going) Building Employment and Operating Expenditure Full Time Jobs 10 Total Direct Wages Created $350,000 Sales Tax from Additional Retail Sales (2007/8) $30,000 Goods & Service Purchased in Miami -Dade County $80,000 Ad Valorem Taxes (2007/8) $535,000 Total Impact from On -Going Operations of the BuildinglRetail $995,000 Indirect Flow Through Benefits Full Time Jobs (indirect) — Miami Dade County 12 Total Indirect Wages Created $420,000 Total Flow Through Indirect Benefits $420,000 Source: Lambert Advisory, 2004. Based upon the analysis set forth herein, the Urbanea project will clearly have a positive economic impact on both the City of Miami and Miami -Dade County. Total employment created during the development phase is approximately 147, with on -going annual employment of 22 FTE jobs. Accordingly, there is an estimated $9.5 million impact from short-term construction employment and expenditures, and a stabilized $2.6 million annual revenue stream from resident/shopper expenditures and building operations (including real property taxes).