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HomeMy WebLinkAboutEconomic Impact Study• • November 30, 2004 Patricia Baloyra, Esq. Tew Cardenas et al Miami, Florida Re: MUSP Impact Analysis — Soleil Dear Ms. Baloyra: Miami Economic Associates, Inc. (MEAT) has performed analysis to estimate the impacts that development of the proposed Soleil project will have on the housing market in the City of Miami as well as on the City's fiscal and economic condition. Soleil will be located at 3100 Biscayne Boulevard. It will involve new construction of 288 residential units and 12,095 square feet of retail and restaurant space. Off-street parking spaces in excess of code will be provided to accommodate the uses just enumerated as well as an existing office building on the project site. While the office building will be integrated into the project, it is not included in our MUSP impact analysis. This letter is organized as follows: Section Page Project Description 1 Summary of Findings 2 Impact on the Housing Market 2 Fiscal Impact 2 Economic Impact 3 Bases of Estimates 4 Closing 8 Project Description The proposed Soleil project will be constructed on a 3.46 (net) acre site that is located at 3100 Biscayne Boulevard within the City of Miami. The project will contain a total of 288 high-rise condominium and townhouse units, ranging in size from 882 to 2,400 square feet in terms of air conditioned space. The units are projected to sell at an average price per square foot approximating $350, producing $128.5 million in gross sales revenues. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: 0051 669-0229 1=ax: 13051 669-8534 Email: meainkpbellsouth.net Mr. Patricia Bolyra, Esq. Borges + Associates, P.A. November 30, 2004 Page 2 Soleil will also include the development of 12,095 square feet of retail and restaurant space. This space is expected to rent for an average of $30 per square foot net. Development of Soleil will require the expenditure of approximately $80.0 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 $16.0 (2004 Dollars). Therefore, $96.0 million will be spent to complete the project exclusive of land acquisition, financing costs and developer's profit. Summary of Findings Development of Soleil 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. Toward this end, the City Commission has recently approved a number of new residential projects in the DuPont Plaza, River, Brickell and Omni -Edgewater areas of the City. Approval of Soleil will be consistent with the above -stated objectives. Fiscal Impact • Fiscal impact refers to the impact that Soleil 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: a Non -recurring Benefits • $ 232,030 in City building permit fees • $ 10,000 in City solid waste surcharge fees • $ 265,098 in City impact fees • $ 1,099,372 in Affordable Housing FAR Bonus fees o Recurring Benefits • $ 860,294 annually in City General Fund ad valorem taxes • $ 93,765 annually in City Debt Service ad valorem taxes Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax (305) 669-8534 Email: meaink@bellsouth.net Mr. Patricia Bolyra, Esq. Borges + Associates, P.A. November 30, 2004 Page 3 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) • Increased occupational license fees • Increased parking surcharge fees O Other • While the focus of MEAI's fiscal analysis was on the City of Miami, Soleil will, as shown below, provide significant fiscal benefits to other non - municipal governmental jurisdictions that impact the lives of City residents: o $ 267,755 in County road impact fees (non -recurring) o $ 513,294 in School impact fees (non -recurring) o $ 585,785 in County General Fund ad valorem taxes (recurring) o $ 28,129 in County Debt Service ad valorem taxes(recurring) o $ 43,843 in Children's Trust ad valorem taxes (recurring) o $ 47,968 in County Library ad valorem taxes (recurring) o $ 798,483 in School Operating ad valorem taxes (recurring) o $ 58,924 in School Debt Service ad valorem taxes (recurring) o Increased County occupational license fees (recurring) Economic Impact • Economic impact relates to the impact that Soleil 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 projects residents will comprise a recurring benefit. The economic benefits summarized below are stated in 2004 Constant Dollars. o Non -recurring • Approximately 90 percent of the near $96.0 million spent on hard and soft costs to develop Soleil will be spent within the City of Miami, producing an overall economic impact of $149.2 million when the multiplier effect is considered. • Project expenditures within the City of Miami will include an estimated $36.0 million for construction labor, an amount sufficient to pay approximately 812 construction workers their average annual wage of $44,350. Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Patricia Bolyra, Esq. Borges + Associates, P.A. November 30, 2004 Page 4 o Recurring • A total of $7.3 million will be spent annually by Soleil residents in retail and restaurant establishments within the City of Miami. An additional $2.5 million in ad valorem taxes will be paid to the City of Miami, Miami -Dade County and the School Board, all of which maintain their principal offices within the City. These expenditures will have an overall economic impact on the City of $14.7 million annually when the multiplier effect is considered. • A total of 40 people will be employed at Soleil on a full-time equivalent basis, inclusive of retail and restaurant workers and people involved in project operations and maintenance. They will earn approximately $800,000 annually. Bases of Estimates The materials that follow provide the assumptions used to estimate the fiscal and economic benefits that development of Soleil will provide to the City of Miami. All monetary amounts are stated in 2004 Constant Dollars. Project Characteristics • Soleil will be located at 3100 Biscayne Boulevard within the City of Miami. It will also be within the jurisdictions of Miami -Dade County and the Miami -Dade County Public School District. • Soleil will entail the construction of 1,020,204 gross square feet of building area, exclusive of balconies. Of this amount, 442,231 square feet will pertain to the residential portion of the project inclusive of the livable space contained in the 288 units as well as amenity, core, service and circulation areas. The remainder will be comprised the commercial portion of the project and the parking spaces and their associated driveways. • In terms of FAR, the portions of the Soleil project subject to the MUSP application will involve the construction of 427,421 square feet, including square footage the entitlement for which is based on the bonuses allowed under the Planned Unit Development and Affordable Housing provisions. The latter bonus, which is accessed though the payment of a fee, will provide the entitlement for a combined 88,659 square feet of residential and commercial space. • Development of Soleil will cost approximately $80.0 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 $16.0 million. Therefore, $96.0 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. 89*h Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Patricia Bolyra, Esq. Borges + Associates, P.A. November 30, 2004 Page 5 • Solell's 288 units will generate $128.5 million in sales proceeds. The "average" unit will be priced at approximately $446,000. • 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, $102.8 million. Assuming that 80 percent of the units are eligible for the Homestead Exemption, the taxable value at the Soleil will be $95.6 million. • Assuming a net rental rate of $30, an occupancy rate of 95 percent and a capitalization rate of 9 percent, the 12,095 square feet of retail and restaurant space will have a market value of $3.83 million. At 80 percent of market value, the taxable value would approximate $3.1 million. • The total taxable value of the new construction portions of the Soleil project that are covered by the MUSP application will approximate $98.7 million. • Residents of the proposed condominium units will on average require an annual income of approximating $180,000 to qualify for ownership. Based on this estimate of average household income, it is projected that the people living at Soleil will spend $10.4 million annually in retail and restaurant establishments. This projection assumes that they spend 20 percent of this income for that purpose. • Approximately 40 people will be employed at Soleil on a full-time equivalent basis. This estimate assumes 2.5 workers per 1,000 square feet in the 12,095 square feet of retail and restaurant space. The remainder of the workers will be involved in project maintenance and operations. Non -recurring Fiscal Impacts • The City of Miami charges building permit fees at a rate of $0.20 per gross square foot of mufti -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 $232,939 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. Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Patricia Bolyra, Esq. Borges + Associates, P.A. November 30, 2004 Page 6 • 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 the area of the City in which Soleil will be developed is $0.676 per square foot of new residential use and $1.398 per square foot of commercial use. Soleil will contain 367,144 square feet of living area and 12,095 of commercial space, resulting in the payment of impact fees totaling $265,098. • In order to obtain the bonus density allowable under the City's Affordable Housing provisions, a fee of $12.40 per square foot will need to be paid for 88,659 square feet for which entitlements are being sought, or a total of $1,099,372. • New construction projects located in the City of Miami also need to pay impact fees to Miami -Dade County for roads and schools. Residential projects located in the eastern portion of the county pay $877 per unit for roads. The road impact fee rate for retail and restaurant space in the eastern portion of Miami -Dade County is $1.255 per square foot for projects with the quantity of space proposed. The base fee per unit for school impact fees is $612. An additional amount of $0.918 per square foot is then applied. Soleil will contain a total of 367,144 square feet in its 288 residential units. Accordingly, impact fees totaling $781,049 will need to be paid at the time the project's building permit is issued. Of this amount, $267,755 will be applied to roads and $513,294 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 Soleil's estimated taxable value of $98.7 million. Entity ltatel$1000 Taxable Value Taxes City of Miami General Fund 8.71625 $ 860,294 Debt Service Fund 0.95000 $ 93,765 Miami -Dade County General Fund 5.93500 $ 585,785 Debt Service Fund 0.28500 $ 28,129 Children's Trust 0.44420 $ 43,843 Library 0.48600 $ 47,968 Miami -Dade County Public Schools Operating 8.09000 $ 798,483 Debt Service 0.59700 $ 58,924 Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Patricia Bolyra, Esq. Borges + Associates, P.A. November 30, 2004 Page 7 • 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 Soleil 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 and restaurant space. The amount collected can be estimated at this time since it will be dependent on the nature of the business housed in the space. • The City of Miami charges a 20 percent surcharge on parking fees. Patrons of the proposed retail and restaurant space parking in the project would pay this surcharge. It is not possible at this time to estimate the amount that will be generated. Non -recurring Economic Benefits • It is estimated that approximately 90 percent of the nearly $96.0 million that will be spent on the hard and soft costs associated with development of Soleil 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 $149.2 million based on application of a 1.554 multiplier. • MIG's input-output model further estimates that approximately $36.0 million of the moneys spent on hard costs within the City of Miami to construct Soleil will be spent for labor. The average construction worker in Miami -Dade County earns approximately $44,350 per year, according to the Florida Agency for Workforce Innovation. Therefore, the project's expenditure on construction labor would support approximately 812 workers on annual basis at their average wage rate. Recurring Economic Benefits • The residents of Soleil will spend $10.4 million annually in retail establishments and restaurants. It is estimated that approximately 70 percent of this amount, $7.3 million, will be spent within the City of Miami. Additionally, the project will generate $2.5 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 $14.7 million based on the application of a 1.5 multiplier. • Based on wage data compiled by the Florida Agency on Workforce Innovation, it is anticipated that annual earnings of the 40 people who will be employed at Soleil on a full-time equivalent basis who average $20,000, or $800,000 in total. Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Patricia Bolyra, Esq. Borges + Associates, P.A. November 30, 2004 Page 8 Closing The analysis performed by MEAI demonstrates that development of Soleil 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. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net