Loading...
HomeMy WebLinkAboutEconomic Impact Study• ambert Advisory ECONOMIC IMPACT ANALYSIS 700 BISCAYNE BOULEVARD • - Prepared by - Lambert Advisory, LC - Prepared for - Royal Palm Diversified Real Estate Companies March 3, 2005 • • • • Economic Impact Analysis — 700 Biscayne Economic Impact Analysis Royal Palm Communities Lambert Advisory has completed an economic impact analysis for the development of 700 Biscayne, a mixed -use residential, hotel and commercial project located at the intersection of Biscayne Boulevard and N.E. 7th Street 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 700 Biscayne development, and can supplement the major use special permit application to be submitted to the City of Miami. The 700 Biscayne property is situated in the SD-6 zoning district of downtown Miami, and is adequately accessible to major thoroughfares, including I-95. The residential, hotel, and commercial 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 Royal Palm Diversified Real Estate Companies. We have not independently verified this information or data. A profile of the project follows. Royal Palm Communities (700 Biscayne) Economic Impact Analysis Building Features & Profile General Features Site Size (Net) Building Height Number of Residential Units Number of Hotel Rooms Retail Space (rentable area) Restaurant Space Number of Parking Spaces Detailed Building Profile Gross Building Area (w/parking) Residential FAR Commercial FAR Gross Parking Area 1.75 acres 68 stories 467 units 120 rooms 5,650 sq.ft. 7,797 sq.ft. 818 spaces 1,182,6448 sq.ft. 1,115,478 sq.ft. 12,947 sq.ft. 54,223 sq.ft, Note: Estimates are based upon data provided by Royal Palm, andlor calculations made by Lambert Advisory, and may be subject to change. Source: Royal Palm, Lambert Advisory, 2005. 2 • Economic Impact Analysis — 700 Biscayne Development of the 700 Biscayne property is expected to commence in May of 2006. The duration of construction is anticipated to be 26 months, with occupancy planned for July of 2008. Based upon the information provided, construction and subsequent operations of 700 Biscayne 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, hotel guest, and shopper expenditure 3. Long-term building, hotel, and retail 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 Royal Palm. Royal Palm Communities (700 Biscayne) Economic Impact Analysis Development Costs Item Cost Hard Costs $205,750,000 Soft Costs $78,887,500 Total $284,637,500 • • • Economic Impact Analysis — 700 Biscayne Source: Royal Palm, 2004. The majority of development -related expenditures will be made in Miami -Dade County, and the City of Miami will capture a significant share of these expenditures. Labor will account for approximately 60 percent ($123 million) of hard costs, and materials will account for 40 percent ($82 million). Over an estimated 26-month construction period, at an average annual construction wage of $37,440 1 in Miami -Dade County, with a benefit/overhead multiplier of 1.4, there will be nearly 1,300 Full Time Equivalent (FTE) jobs created. Additionally, $6.5 million in professional fees are expected to be paid to Miami area firms (e.g., architecture, engineering, legal). Assuming an average profit margin of 15% and overhead of 30°A°, approximately $3.5 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 $4.5 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 700 Biscayne is included in the following table. State of Florida ES-202, first quarter 2004 • • • Economic Impact Analysis — 700 Biscayne Royal Palm Communities (700 Biscayne) 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 OtherlNon-Impact Fees: Miami Dade W.A.S.A. Connection Fee City of Miami Building Permit Fee Energy Installation Fee M.U.S.P Application Fee Dade County Code Compliance Radon Gas Fee Fire Plan Review Fee Ground Cover Fee Land Use/Zoning, Review for Building Permit Certificate of Occupancy Application Fee TOTAL OTHER FEES TOTAL PROJECT FEES Total $1,216, 382 $36,505 $631,244 $1,309,813 $3,194, 394 $808,621 $208,548 $118,265 $45, 000 $161,319 $11,826 $10,644 $1,525 $2,000 $250 $35 $ 1,368,032 $4,562,427 Source: City of Miami Planning, Building & Zoning; Miami Dade County; Royal Palm; 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 700 Biscayne resident base is expected to consist primarily of younger working professionals. Considering the proposed average sale price of $700,000, it is assumed that the residents will be mostly upper income individuals/households with incomes of at least $180,000. Therefore, with a total of 46 households in the building, total personal income for the building is estimated to be $84 million. Estimating that approximately half of the owners will relocate from outside the City, over $42 million of marginal personal income will flow into Miami. We have estimated the marginal impact of $42 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-2008. • • • Economic Impact Analysis — 700 Biscayne Royal Palm Communities (700 Biscayne) Area Expenditure Potential (from New -to -Miami Residents), 2008 Type of Good 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 Building Materials Est. Marginal Growth Sales/ Expenditure SF $938,800 $903,200 $374,400 $358,100 $341,500 $520,900 $227 $290 $227 $200 $250 $420 $258 $3, 436, 900 $4,796,400 $2,967,200 $1,541,700 $102,900 SF Demanded 4,135 3,115 1,650 1,790 1,370 1,240 $422 $375 $407 $280 13,300 11,370 7,900 3,790 370 $11,348,920 $401 23,430 $925,000 $115 8,050 Total $15,710,820 $308 44,780 Source: Lambert Advisory, 2005. Retail: In addition to the net new expenditures attributable to 700 Biscayne residents, the 5,650 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 700 Biscayne retail comes from outside the City, and based upon sales per square foot (for Shopper Goods) of $308, over $347,000 will be expended within the City per year which is now going to other areas. Restaurant: Based on sales per square foot (for Eating & Drinking Establishments) of $375, the 7,300 square foot restaurant will attract over $2.7 million in food and beverage sales. Again, assuming that 20 percent of this expenditure comes from outside the City, over $550,000 of net new expenditure will be made in the City. Hotel: With an average daily rate of $175, and an occupancy of 70 percent, the hotel will attract $5.3 million in lodging expenditure. Assuming that 50 percent of these hotel guests would not have otherwise visited Miami, $2.65 in net new expenditure will be made in the city. • • • • Economic Impact Analysis — 700 Biscayne 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, hotel, restaurant, and stores; • Property tax revenue to the City of Miami and Miami -Dade County; • Increased sales tax revenue from the hotel, stores, and restaurant to State and County; and • Purchase of goods and services. We estimate that 16 FTE workers will be needed to operate the residential building — positions such as building managers, parking garage attendants, maintenance staff, and security personnel will need to be filled. Approximately 11 FTE workers will be employed in the retail stores; 40 FTE will staff the hotel; and 21 FTE will work in the restaurant. At an average Miami -Dade County wage of $37,856 2 the operation of the building and stores will create approximately $33 million 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 700 Biscayne retail space. Assuming the net new retail expenditure in stores totals $347,000, approximately $21,000 in additional sales tax will be collected from retail sales. Assuming the new food and beverage expenditure in the restaurant is $550,000, approximately $33,000 in sales tax will be collected. An additional $350,000 in sales and tourist bed taxes will be collected on the hotel rooms. Additionally, an estimated $1.1 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 700 Biscayne 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 (2004) millage rate of 26.23895 (per thousand dollars of value), broken down as follows, 2 State of Florida ES-202, first quarter 2004 • • • Economic Impact Analysis — 700 Biscayne Royal Palm Communities (700 Biscayne) Economic Impact Analysis Ad Valorem Tax Breakdown Annual item Mileage Tax, City of Miami Operating 8.7163 $2,766,110 City of Miami Debt 0.950 $301,483 School Operations 8.09 $2,567,369 School Debt 0.597 $189,459 Environmental Projects 0.100 $31,735 S. Florida Water Management 0.597 $189,459 FIND 0.0385 $12,218 County Mileage 5.935 $1,883,478 County Debt 0,285 $90,445 Children's Trust 0.444 $140,967 Library 0.486 $154,233 TOTAL 26.23895 $8,326,956 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 the purposes of this analysis, we calculate ad valorem taxes for 700 Biscayne based on a market value of $320 million, or 85 percent of the estimated value of the residential, retail, hotel, and restaurant uses. Accordingly, the development should generate approximately $8.4 million in real property taxes by 2007/8. This represents an estimated net marginal increase of roughly $8 million over the ad valorem tax collection the City would receive if the property were valued at current use. 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 88 FTE jobs created as a result of building and retail operations are assumed to have a 1.2 multiplier impact of 106 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 ---- 700 Biscayne Royal Palm Communities (700 Biscayne) Economic Impact Analysis Summary, Economic Impacts (Rounded) Short Term Construction Employment & Expenditure Full Time Jobs Direct Wages Professional Wages (Miami -Dade County) Impact Fees Toward Public Expenditure Total Impact, Short Term Const. Employment & Expend. Long -Term (On -Going) Resident, Shopper & Hotel Expenditure Marginal Expenditure Growth — Residents (2008) Marginal Expenditure — Retail (2008) Marginal Expenditure — Restaurant (2008) Marginal Expenditure — Hotel (2008) Marginal Impact from On -Going Resident and Shopper Expend. Long -Term (On -Going) Building Employment and Operating Expenditure Full Time Jobs Total Direct Wages Created Sales and Accommodations Tax from Additional Hotel Visitors Sales Tax from Additional Retail/Rest, Sales (2008) Goods & Service Purchased in Miami -Dade County Ad Valorem Taxes (2008) Total Impact from On -Going Operations of the Building/Retail Indirect Flow Through Benefits Full Time Jobs (Indirect) — Miami Dade County Total Indirect Wages Created Total Flow Through Indirect Benefits Source: Lambert Advisory, 2005, Impact 1,285 $48,100,000 $3,500,000 $4,000,000 $55,600,000 $15, 700, 000 $350,000 $550,000 $2,650,000 $19,250,000 88 $3,300,000 $350,000 $50, 000 $1,100,000 $8,400, 000 $13,200,000 106 $4,000,000 $4,000,000 Based upon the analysis set forth herein, the 700 Biscayne 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 1,285, with on- going annual employment of 194 FTE jobs. Accordingly, there is an estimated $56 million impact from short-term construction employment and expenditures, and a stabilized $30 million annual revenue stream from resident/shopper expenditures and building operations (including real property taxes).