HomeMy WebLinkAboutEconomic Impact AnalysisONE MJAM!
Economic Impact Analysis
Submitted to:
City of Miami
Prepared For:
MDM DEVELOPMENT GROUP
Prepared by:
SHARPTON, BRUNSON & COMPANY, P.A.
One Southeast Third Avenue
Suite 2100
Miami, Florida 33131
(305) 374-1574
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CONE MIAMI
TABLE OF CONTENTS
THE PROJECT OVERVIEW
PAGE(S)
1-2
EXECUTIVE SUMMARY
Summary of Benefits 3
OBJECTIVES AND DEFINITIONS
Objectives 4
Definition of Economic and Tax Impact 4
Direct and Indirect Effects 4
Measures of Economic Impact 5
Description of Results 6
DISCUSSION OF THE RESULTS BY ECONOMIC INDICATORS
Impact Indicators 7
Results of Indicators 7
Impact of Construction 7
Impact of Ongoing Operations 8
Impact on Local Tax Revenues 8
Analysis by Economic Indicators 8
Employment 8
Wages 9
Output 9
Local Taxes 10
Public Sector Cost 11
Impact Fees 11
EXHIBITS
Exhibit I: Summary of Economic Impact 12
Exhibit II: Impact and Other Fees 13
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DRAFT
Project Overview
The proposed project consists of a
diversified multi -use development
which will include residential (rental
apartments), retail, parking and
condominium uses. The project is
designed to guide the area's growth
into a living and working community
within the downtown core district.
The cornerstone of our project is the
4-story retail/entertainment complex
with lifestyle retail offerings that
focus on the home, leisure activities,
and neighborhood services. The
uses are intended to create an
attractive new neighborhood offering
a unique city living experience. The
Project is located on the north side
of the Miami River within the heart if
Miami's Central Business District
(CBD). The site consists of
approximately 9.30 gross acres or
5.94 net acres on three city blocks
known as tracts B, C, and D in
downtown Miami's designated Block
2, 3, and 4 of Dupont Plaza
Subdivision. A more detailed
summary of each tract is as follows:
Tract B- is rectangular in shape and
surrounded by Southeast 3rd Street
on the north, Biscayne Boulevard
Way/ Southeast 4th Street on the
South, Biscayne Boulevard on the
east and Southeast 3rd Avenue on
the west. Parcel B has gross lot
area of 163,785 square feet (3.76
acres) and a net lot area of 107,343
square feet (2.46 acres).
Tract C- is rectangular in shape and
surrounded by Southeast 3rd Street
on the north, Biscayne Boulevard
Way/ Southeast 4th Street in the
south, Biscayne Boulevard on the
east and South east 3rd Avenue
on the east and Southeast 2nd
Avenue on the west. Parcel C has
a net lot area of 75,780 square
feet (1.74 acres) and a gross lot
area of 119, 790 square feet (2.75
acres).
Tract D- is rectangular in shape
and surrounded by Southeast 2nd
street on the north, Southeast 3rd
Street on the south, Southeast 3rd
Avenue on the east and
Southeast 2nd Avenue on the west.
Parcel D has a net lot area of
75,777 square feet (1.74 acres)
and a gross lot area of 121,532
square feet (2.79 acres).
Currently, the site is being used
as a surface parking lot facility
without any permanent structures.
The zoning designation for all the
tracts is CBD, Central Business
District.
The proposed development will
consist of a total of more than 3.7
million square feet of commercial
and residential space which will
include 1,500 residential units,
comprising more than 1,880,000
Sq. Ft. of livable space, 207,400
square feet of retail/ entertainment
space, 9,600 square feet of office
space and 1,467 space parking
garage with ground floor retail. A
detailed summary if the proposed
development program is as
follows:
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Project Overview
Tract B
Total Gross Lot Area 3.76 acres or 163,785 Sq. Ft.
Totat Nat Lot Area 2.46 acres or 107,343 Sq. Ft.
Retail Area 81,875 Sq. Ft.
Cinema
68,000 Sq. Ft.
Residential Units (Condos) 400
Parking Spaces (Residential Tower) 926
Total Developable Sq. Ft. 1,096,995 Sq. Ft.
Tract C
Total Gross Lot Area
2.75 acres or 119,790 Sq. Ft.
Total Net Lot Area
1.74 acres or 75,780 Sq. Ft_
Total Retail Area
32,190 Sq. Ft.
Total Office Area
9,600 Sq. Ft
Residential Units (Rental Apts.) 450
Parking Spaces 922
Total Developable Sq. Ft. 948,000 Sq. Ft.
Tract D
Total Gross Lot Area 2.79 acres or 121,532 Sq. Ft.
Total Net Lot Area 1.74 acres or 75,777 Sq. Ft.
Total Retail Area 25,530 Sq. Ft.
Residential Units (Rental Apts.) 650
Parking Spaces (Residential Tower) 969
Parking Garage Facility 1,467 spaces
Total Developable Sq. Ft. 1,695,430 Sq. Ft.
In addition, the project's enhancement will begin with proposed adjustments
to the right of way of the streets and avenues surrounding the sites. The
arteries will be widened to provide boulevard streets with shady tree canopies
along the street edges and throughout the street medians. The project will also
provide covered loggias for circulation under cover from weather conditions,
specialty pavements, and pedestrian friendly plazas.
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■ Summary of Benefits
Significant Community Benefits:
• Jobs
Wages
• Taxes
Economic Activity
Residents' and Retail/Restaurant
Employees' Spending Impacting
Local Businesses:
➢ Food
Recreation/Entertainment
• Transportation
• Retail
The following table and charts
summarize the economic impact of the
Miami One development.
CONSTRUCTION
PERIOD ANNUAL
IMPACT RECURRING
Economic Activity Stimulated
Output $ 428,366,216 $ 62,878,708
Wages 259, 940,342 15,326, 866
Taxes 9,952,832
$ 688,306,558 88,158,406
Jobs Created 915 470
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Objectives And Definitions
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
expenditures.
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:
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 Indicators
We measured the Project's impact on
four commonly used indicators of
economic activity.
Those indicators are:
w Jobs
• Wages
• Total output
> Local taxes
Results of Indicators
Exhibit I details the Project's direct and
indirect impact on the above economic
indicators for Miami. A summary of
such impact follows:
DEVELOPMENT
(One Time)
Direct
Indirect
ANNUAL
Operational:
Direct
Indirect
Retail
The economic indicator most commonly
measured, and publicly reported on to
gauge the economic impact of a public
project is output. The impact of a
project on the indicator output is often
referred to as the project's economic
impact.
Impact of Construction
The site preparation and construction
expenditures, including soft costs and
impact fees are estimated at $504
million. Such activity will create
approximately 915 new full time
equivalent jobs and employ a maximum
of 1,690 workers during peak periods.
The workers will earn approximately
$138 million in direct wages.
OUTPUT WAGES TAXES EMPLOYMENT
$227,951,371 $138,325,001 $
200,414, 845 1211615, 341
$428,366,216 $259,940,342 $
$ 11,740,860
10,322,564
40,815,284
$ 62,878,708
$ 1,140,660 $ 9,952,832
1,002,868
13,183,338
$ 15,326,866 $ 9,952,832
915
915
57
413
470
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Discussion Of The Results By Economic
Indicators
Impact of Ongoing Operations and
Retail Enterprises
As a result of the on -going operation and
maintenance of the Project, Miami will
gain approximately 57 new, permanent,
full-time equivalent jobs. The wages of the
workers who obtain these positions will
provide an impact of approximately $2.1
million annually. The retail enterprises are
estimated to create 413 permanent, full-
time equivalent jobs. The wages of the
retail workers will provide an impact of
approximately $13.2 million annually.
The total expenditures for the Project's
operations, and the retail sales will provide
a new, permanent impact of $78 million
annually to the City's economy. This
impact consists of the effects of new retail
sales and 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
$10 million.
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 1, total
short-term (developmental)
employment will average 915
employees over a one hundred and
eight period and a total on -going
employment will average 470.
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, and we incorporated data
from our research on retail sales.
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 $261 million.
Total indirect output created by the
direct respending in Miami is $230
million. Thus total Miami Output from
the development of the Project is
$491 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
Output (Contd.)
The total operating expenditures
incorporate._alLestimated expenses of the
ongoing operation of the Project. The
impact of the retail enterprises was
measured separately as an economic
indicator.
To incorporate the potential responding
and reinvesting in Miami, the multiplier
effect was measured. By applying a
multiplier of 1.8792 to the total direct
output from operating expenditures and
the retail enterprises, we determined total
output (direct and indirect) from on -going
operating expenditures and retail sales.
Total direct output created from retail
sales and operating expenditures is
$33.4 million. Total indirect output
created from retail sales and operating
expenditures is $29.4 million. Total
output created from ongoing operations
and retail enterprises is approximately
$62.8 million.
Local Taxes
A key and significant benefit generated
from the development and operation of
the Project is taxes. Several types of tax
revenue will be generated from this
project including ad valorem taxes.
Specific ad valorem taxes include real
and personal properly taxes. Other
taxes include occupational taxes and
community development taxes.
New real property taxes will be assessed
on the Project. The assessment is
based on a predetermined mileage rate
being applied to the taxable value of
the real property. We computed real
property taxes for the developmental
phase based on the cost of the
development of the Project. This
assessment base is very conservative
since tax on real property typically is
assessed on appraised values and not
actual cost.
The basis for ongoing taxes is also
overall cost. The mileage rate was
obtained from the City Tax Collectors
office relative to the Project's location.
The projected annual real property
taxes are approximately $10 million.
Total ad valorem taxes assessed by
Miami -Dade County are allocated
based on mileage rates to certain
governmental entities. Listed below is
the allocation of projected tax revenue.
City Operating
City Miscellaneous
School Operating
County Operating
Debt Service - City
Debt Service -County
South Florida Water
Library Operating
School Debt Service
Florida Inland Navigation
Environmental Projects
TOTAL
$ 3,250,694
180,694
3,081,925
2,064,615
440,172
199,487
215,749
162,986
306,458
13,913
36,139
9.952.832
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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
> Downtown Devi, Supplemental 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 $3,604 million and other
fees total approximately $3,581 million.
These fees are shown in detail in Exhibit Il.
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Exhibit List
Exhibit i
Exhibit li
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Summary of Economic impact
Impact and Other Fees
Exhibit - I
OUTPUT
WAGES EMPLOYMENT
TAXES
DIRECT
DEVELOPMENTAL $227.951.371 $ 138,325,001 915
OPERATIONAL ._ 11.740,860 1,140,660 57 $ 9,952,832
1ET4,11, 21.719,500 7,015.399 413
TOTAL DIRECT 261,41 1 ,731 146,481,060 1.385 9,452.832
INDIRECT
DEVELOPMENTAL 200,414,845 121,615,341
OPERA- ONAL 10,322,564 1.002,868
RETAIL 19,095,784 6,187,939
TOTAL INDIRECT 229,833,193 128,786,148
TOTAL BENEFITS $ 491,244,924 $ 275,287,208 1,385 3 9,952,832
TOTAL DEVELOPMENTAL $ 428,366216 $ 259,940,342
TOTAL OPERATIONAL 22,063,424 2,143.528
TOTAL RETAIL 40,815.284 13,183,338
915
57 $ 9,952,832
413
TOTAL BENEFITS $ 491444,924. $ 275,287,208 1,385 S 9,952,832
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Exhibit - II
ONE MIAMI
ECONOMIC BENEFITS STUDY
IMPACT AND OTHER FEES
IMPACT AND OTHER FEES:
A. Development Square Footages:
1) Total gross building area
2) Maximum development area (FAR)
3) Residential F.A.R.
4) Retail F.A.R.
5) Lobby area
6) Gross parking area
B. Impact Fees:
1) City of Miami Development Impact Fee (Ord - 10426)
2) Development Impact Administration Fee (Ord - 10426)
3) Downtown Development Supplemental Fee (Ord. - 10461)
4) Miami -Dade County School Impact Fee
Total of all impact Fees
C. Non -Impact Fees:
1) Miami Dade W.A.S.A. "connection fees"
2) Building Permit Fee
3) Installation Energy Fee
4) Major Use Special Permit Application Fee
5) Miami -Dade County Code Compliance
6) Radon Gas Fee
7) Fire Plan Review Fee
8) Ground Cover Fee
9) Land UseiZoning
10) Zoning Review for Building Permit Fee
11) Certificate of Occupancy Fee
12) Application Fee
Total of all Non -Impact Fees
Total of all Fees for Project
Source: City of Miami Planning, Gilding and zoning Department,
Miami Dade County Impact Fees
EXHIBIT II
Square Footage
3,622,575
2,647,720
1,891,635
217,195
13,040
1,354,540
Amount
$ 1,582,384
47,472
684,668
1,289,888
$ 3,604,412
$ 2,172,910
800,452
400,226
30,000
114,304
20,011
38,021
2,012
2,589
60
250
35
$ 3,580,870
$ 7,185,282
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