HomeMy WebLinkAboutEconomic Impact StudyEconomic Impact Analysis
Subm+tted to:
City of Miami
Prepared For:
URBAN BUILDERS, LLC.
Prepared by:
SHARPTON, BRUNSON & COMPANY, P.A.
One Southeast Third Avenue
Suite 2100
Miami, Florida 33131
(305) 374-1574
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TABLE OF CONTENTS
THE PROJECT OVERVIEW
EXECUTIVE SUMMARY
Introduction
Summary of Benefits
PAGE(S)
1
2
3
OBJECTIVES AND DEFINITIONS
Objectives 5
Definition of Economic and Tax Impact 5
Direct and Indirect Effects 5
Measures of Economic Impact 6
Description of Results 7
DISCUSSION OF THE RESULTS BY ECONOMIC INDICATORS
Impact Indicators 8
Results of Indicators 8
Impact of Construction 8
Impact of Ongoing Operations 9
Impact on Local Tax Revenues 9
Analysis by Economic Indicators 9
Employment 9
Wages 10
Output 10
Local Taxes 11
Public Sector Cost 12
Impact Fees 12
EXHIBITS
Exhibit I: Summary of Economic Impact 13
Exhibit II: Impact and Other Fees 14
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Project Overview
Breeze is located on the south
side of NW 36th Street, west of
NW 3rd Avenue in the City of
Miami, Florida (the Project). The
Project consists of 112 residential
units, approximately 9,456
square feet of ground level retail
and 250 parking spaces all
contained within one 10 story
building. The gross lot area is
64,997 square feet (1.49 acres)
and the net lot area contains
48,413 square feet (1.11 acres).
The Project incorporates
innovative urban design features
including provision of a
continuous colonnade along NW
36 Street, the inclusion of retail
and lobby spaces at ground floor
level on NW 36 Street, the
minimal width and number of
vehicular curb cuts, and the
containment of the required
loading bays internally within the
parking garage. The garage
elevation becomes integrated into
the frame work of the design
through the continuation of the
pattern of window and balcony
openings from the rest of the
facade.
The Project is also buffered from
the R-3 residential District to the
rear of the Property providing a
landscaped buffer in excess of
the Ordinance's requirement and
by shifting the residential tower
towards the front of the Property,
which is NW 36 Street, away
from the R-3 District.
The Project also contains such
amenities as a swimming pool
and a fitness center. The
Development exceeds the
Ordinance's landscape open
space requirements by almost
30% and will provide shade trees
all along NW 36 Street.
Once completed, the project will
be a significant asset to the City
of Miami and will be a catalyst for
the much needed re -development
of this area.
The Project is blocks from
Interstate 95, providing quick
access to downtown, the airport
or Miami Beach. This location
creates a convenient and
desirable address.
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Introduction
This document represents an in-depth
economic and tax benefits analysis of
the developmental and operation of a
first class condominium building and
retail facilities.
The Project currently contemplated is
comprised of the following
components:
❑ 112 units of high -quality
residential
❑ 9,456 square feet of
retail
❑ 250 parking spaces
This analysis encompasses th:.
entire Project and estimates the
economic and tax benefits for
both its developmental and
operational phases.
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Summary of Benefits
The Project will bring significant
economic benefits to the city of
Miami (the City). This section
summarizes the impact of the
project on employment, public sector
revenues and other economic
benefits as a result of the
development.
Employment
Employment considerations include
the direct employment resulting from
the Project. Average developmental
construction phase employment will
be for approximately 74 employees
and the Project management is
expected to employ 10 people for
on -going maintenance and
operations of the facilities.
Wages
To compute the wages associated
with the new employment we started
with budgeted data directly related to
the developmental and operational
phases of the Project, and we
incorporated data from our research
on retail sales. Total direct and
indirect impacts expected from
wages associated with the new
development approximate the
following:
One Time $ 7,704,720
Annual $ 563,760
Tax Revenue
The estimate of the public sector
revenues associated with the
development includes taxes and
other revenues generated directly
by the Project. Although public
sector costs are important
elements in measuring fiscal
impact, these benefits have not
been quantified in this document.
This analysis only measures the
benefits derived from the
development. Annual tax revenue
expected to be created totals
$439,011.
Output
The estimate of total economic
impact is measured by total
output. This analysis measures
the economic impact of
developmental costs and ongoing,
operational expenditures. To
determine the effect of respending
within the City, we utilized a
multiplier to compute total direct
and indirect benefits. Total output
expected to be generated, as a
result of the developmental and
operational phases of the Project
will approximate the following:
One Time $ 23,319,387
Annual $ 1,315,440
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Summary of Benefits
Significant Community Benefits:
• Jobs
• Wages
• Taxes
• Economic Activity
Residents' Spending Impacting Local
Businesses:
r Food
• Recreation/Entertainment
• Transportation
• Retail
The following table and charts summarize the economic impact of the Breeze.
CONSTRUCTION
PERIOD ANNUAL
IMPACT RECURRING
Economic Activity Stimulated
Output $ 23,319,387 $ 1,315,440
Wages 7,704,720 563,760
Taxes 439,011
Jobs Created
$ 31,024,107
74
$ 2,318,211
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110 Objectives And Definitions
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Objectives
The objective of this analysis is to provide
information on the various benefits
created by the Project and to prepare an
estimate of such benefits to the City.
Our analysis is based on an economic
model, which estimates economic and tax
impacts of various projects on a
designated area. The model is
specifically tailored to the City of Miami
(the City).
Definition of Economic and Tax Impact
The construction and subsequent
operation of the Project will create
important benefits within the City. These
benefits include new income, new jobs,
new tax revenue and new economic
activity impacting upon every sector of
the local economy. Moreover, through
the multiplier effect of respending and
reinvesting, indirect economic benefits
are added to the direct benefits brought
about by initial construction expenditures,
the expenditures from ongoing operations
and new spending at the retail
enterprises.
Direct and Indirect Effects
The total economic impact of public and
private projects and policies on a region
does not end with the impact from the
initial construction expenditures; the
continued benefits to the local economy
must also be considered. Income to firms
furnishing construction materials and
services is subsequently converted into
employee salaries, material purchases,
investment in plant and equipment,
savings, profits, purchases of services,
and a variety of other economic activities.
Income to laborers is subsequently
respent for purchasing of food,
housing, transportation, education,
entertainment, medical and dental
services, clothing, personal services,
and a wide variety of other goods
and services.
Furthermore, income to the
governmental unit is respent as
salaries, purchases, and support of
a variety of programs, including
education, transportation, and social
services. In turn, individuals, firms,
and governments furnishing these
goods and services again spend
their income for more purchases,
salaries, investments, and savings.
In this manner, indirect benefits
result each time the initial sum is
respent, and the additional sum
available in the local economy
induces further job creation,
business development and savings.
Quantification of these indirect
benefits has been the object of
considerable economic study.
Because economic relationships are
so complex in our modern society,
no single area or political unit is a
completely self-contained economic
unit. Therefore, purchases from
other areas and political units are
necessary, and goods services are
exported in return.
As purchases are made from other
units, some of the benefits of
economic respending are lost to the
local economy. Ultimately, a smaller
and smaller portion of the initial sum
would remain, until, after several
rounds of respending, an
insignificant sum is left.
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Objectives And Definitions
The indirect effects can be viewed as
a set of `ripples' in the economy.
Indirect, like direct, resources require
labor, materials, equipment and
services for their production to induce
further job creation and spending of
wages.
The "ripple" of the indirect effect
multiplies the original impact of the
purchase. The common measure of
the magnitude of the "ripple" effect is
called a multiplier. A multiplier
measures the total magnitude of the
impact on each particular economic
indicator as a multiple of the initial,
direct effect, For instance, a
multiplier of "1" would signify no
"ripple" effects as the total impact is 1
times the initial impact, while a
multiplier of "2" would imply that the
total impact is 2 times the direct
effect.
The actual magnitude of a multiplier
depends on the likelihood the goods
and services purchased in a region
would be produced in, or provided
from the region.
The model we used to estimate the
total economic impact incorporates a
multiplier developed by utilizing past
consumption and production patterns
in the City.
There will be significant economic
benefit derived from the expenditures
of the residents of the Project on
eating, drinking, grocery, recreation,
retail etc. This report does not include
the economic impact of such
expend itures.
Measures of Economic Impact
Various measures can be used to
indicate the impact of a policy or
project on a region. Specifically,
for this study, they are the
increases in local employment,
wages, tax revenue and output that
result. Definitions of these
measures are as follows:
Employment is measured full-time
equivalent jobs.
Wages include wages, salaries,
and proprietor's income only. They
may include non -wage
compensation, such as pensions,
insurance, and other fringe
benefits. Wages are assumed to
be expended by households in the
area at which the wage-earner
works.
Local taxes include additional
revenues from both ad valorem and
non ad valorem assessments.
Direct expenditures include those
sums expended for land
acquisition, site preparation and all
hard and soft costs associated with
a project.
Indirect expenditures are those
sums expended within the local
economy as a result of the "ripple"
effect described earlier.
Output describes total economic
activity, and is essentially
equivalent to the sum of direct and
indirect expenditures (exclusive of
wages and taxes).
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Objectives And Definitions
Description of Results
For the purpose of describing the
total economic benefits of the
Project, the related expenditures
and economic activity stimulated
have been broken into two
categories:
r Developmental
Annual Recurring
Developmental expenditures
include those expenditures
related to the design and
construction phase of the Project
and related amenities.
Annual recurring activities
stimulated are those
expenditures incurred in
connection with the ongoing
operation of the Project, and the
sales and expenditures of the
retail enterprises leasing space at
the Project.
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Discussion Of The Results By Economic
Indicators
Impact of Ongoing Operations
As a result of the on -going operation and
maintenance of the Project, Miami will
gain approximately 10 new, permanent,
full-time equivalent jobs. The wages of the
workers who obtain these positions will
provide an impact of approximately $564
thousand annually.
The total expenditures for the Project's
operations, will provide a new, permanent
impact of $1.3 million annually to the
City's economy. This impact consists of
the effects of the direct expenditures from
the maintenance, security and day-to-day
operation of the Project, and the multiplied
effects of such spending thus creating
indirect benefits.
Impact on Local Tax Revenues
As a result of the construction and
operation of the Project, various state, city
and city governments and agencies would
gain an estimated annual tax benefit of
$439 thousand.
Analysis by Economic Indicators
Our analysis of the economic and tax
benefits of the Project was done by each
major phase of the Project. We identified
the major phases to be developmental
and operational.
This analysis determines the economic
benefits to the City by identifying such
benefits for each of the phases.
The effects on economic indicators
used to measure benefits
(employment, wages, output and
taxes) were computed for each
phase.
Employment
Employment is one of the most
important economic benefits of the
Project. it is one of the most
accessible and direct benefits for the
City's residents and it's residents and
is a primary means by which
developmental, operational and
maintenance expenditures generate
indirect economic benefits. A portion
of this employment occurs on -site as
a result of new spending at the retail
enterprises, and a portion is derived
from on -going operations of the
Project. Further employment is
generated off -site by the expenditures
of employees of the Project and
businesses located in the Project, at
area businesses.
As can be seen in Exhibit I, total
short-term (developmental)
employment will average 74
employees over an eighteen month
period and a total on -going
employment will average 10.
The total on -going positions can be
summarized as follows:
• Management
• Security
• Parking
Maintenance/Facilities
• Retail
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Discussion Of The Results By Economic
Indicators
Wages
The analysis deemed wages are a direct
by-product of employment. As discussed
in the above section, both on -site and off -
site jobs are created. There were both
temporary and permanent in nature.
To compute the wages associated with
the new employment we started with
budgeted data directly related to the
developmental and operational phases of
the Project.
Employment, such as construction related
employment, was obtained directly from
construction estimates. These numbers
were tested for reasonableness.
Output
The output generated, as a result of the
development and operations of the
Project, is caused by the following type of
expenditures:
Development costs expended in the
City (100%)
Annual operational expenditures of
management company
New spending in the locality by
employees of businesses
located in the Project
To incorporate the impact of dollars
being respent and/or reinvested in the
City, a multiplier was applied to total
direct output. A multiplier of 1.8792
was used to determine total direct
and indirect output created by the
Project. This multiplier indicates that
for every $100 spent in Miami,
another $187.92 will be respent or
reinvested in Miami. This multiplier
was obtained from the Dade City
Planning Department.
Direct output from the developmental
phase of the Project is primarily a
result of developer costs. These
costs include land acquisition, site
preparation and soft and hard costs
relating to the Project's construction.
To determine the total output we
determined what development costs
were expected to be or had been
spent in Miami.
Total direct output during the
development phase is $12 million.
Total indirect output created by the
direct respending in Miami is $11
million. Thus total Miami Output from
the development of the Project is $23
million.
The final component of output results
from the direct operating expenditures
of the Project, and the indirect
benefits created as a result of the
multiplier effect on direct output.
The Developer provided us with an
annual operating budget for the
Project. An overall assumption was
made that all expenditures would be
spent initially in the City.
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Discussion Of The Results By Economic
Indicators
Local Taxes (Contd.)
Although not quantified, the City, through
its receipt of allocated state sales taxes will
receive an additional benefit as a result of
the development and operation of the
Project, and from the retail enterprises.
Public Sector Costs
Impact fees
Very significant factors in measuring the
economic impact on a specific region of a
project are impact and other required
development fees. A summary of these
fees are listed below:
• City of Miami Developmental Impact
Fee
• City of Miami Developmental Admin
Fee
• Miami -Dade County Roadway Impact
Fee
Miami -Dade County School Impact
Fee
• Building Permit Fee
Installation Energy Fee
• Other Fees
For the purpose of this economic impact
analysis, fees are included as a part of the
direct development cost (output). Impact
fees total approximately $388 thousand
and other fees total approximately $271
thousand. These fees are shown in detail in
Exhibit II.
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Exhibit List
Exhibit I
Exhibit II
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Summary of Economic Impact
Impact and Other Fees
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Exhibit -
OUTPUT WAGES EMPLOYMENT TAXES
DIRECT
DEVELOPMENTAL $ 12,409,210 S 4,100,000 74
OPERATIONAL 700,000 300,000 10 $ 439,011
TOTAL DIRECT 13,109,210 4,400,000 84 439,011
INDIRECT
DEVELOPMENTAL 10,910,177 3,604,720
OPERATIONAL 615,440 263,760
TOTAL INDIRECT 11,525,617 3,868,480
TOTAL BENEFITS $ 24,634,827 $ 8,268,480 84 $ 439,011
TOTAL DEVELOPMENTAL $ 23,319,387 $ 7 704,720 74
TOTAL OPERATIONAL 1.315,440 563,760 10 $ 439,011
TOTAL BENEFITS $ 24,634,827 $ 8,268,480 84 $ 439.011
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Exhibit - II
MPACT AND OTHER FEES:
A. Development Square Footages: Square Footage
1) Total gross building area (with parking)
2) Maximum development area (FAR)
3) Gross parking area
270,539
134,154
106,025
B. lmpact Fees: Amount
1) City of Miami Developmental Impact Fee $ 97,983
2) Developmental Impact Administration Fee 2,939
3) Miami -Dade County Roadway Impact Fee 104,832
4) Miami -Dade County School Impact Fee 182,214
Total of all Impact Fees $ 387,968
C. Non -Impact Fees:
1) Miami Dade W.A.S.A. "connection fees" $ 156,576
2) Building Permit Fee 45,970
3) Installation Energy Fee 27,054
4) Major Use Special Permit Application Fee 30,000
5) Miami -Dade County Code Compliance 6,500
6) Radon Gas Fee 1 ,353
7) Fire Plan Review Fee 2,570
8) Ground Cover Fee 390
9) Land Use/Zoning 484
10) Zoning Review for Building Permit Fee 60
11) Certificate of Occupancy Fee 250
12) Application Fee 35
Total of all Non -Impact Fees $ 271,242
Total of all Fees for Project $ 659,210
Source: City of Miami Planning, Building and Zoning Department.
Miami Dade County Impact Fees
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