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Associates, Inc
March 2, 2005
Lucia A. Dougherty, Esq.
Greenberg Traurig LLP
Miami, Florida
Re: MUSP Impact Analysis — Lynx
Dear Ms. Dougherty:
Miami Economic Associates, Inc. (MEAT) has performed analysis to estimate the impacts
that development of the mixed -use project proposed by Lynx on the block of S.E. 2nd
Street immediately east of South Miami Avenue will have on the City of Miami's housing
market as well as its fiscal and economic condition. This letter, which is organized as
shown below, provides the findings of our analysis and their bases:
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
9
Project Description
The proposed mixed -use project will be comprised of the following elements:
• 521 condominium units
• 207 condominium hotel units
• 194 hotel rooms
• 62,713 square feet of rentable office space
• 46,390 square feet of rentable retail space
• 85,504 square feet of sports club space
• Amenities including 4 pools
• 1,459 parking spaces
6861 S.W. 89th Terrace Miami, Florida 33156
Tel: 13051 669-0229 Fax: f3051 669-8534 Email: meainkObellsouth.net
Lucia A. Dougherty, Esq.
Greenberg Traurig LLP
March 2, 2005
Page 2
Development of the proposed mixed -use project will require the expenditure of
approximately $230.0 million (2005 Dollars) for "hard" construction. "Soft" costs including
those relating to professional fees, permits, sales and leasing commissions, marketing,
developer overhead, administration, etc. will total $98.0 million (2005 Dollars). Therefore,
$328.0 million will be spent to complete the project exclusive of land acquisition and
developer's profit.
Summary of Findings
Development of the mixed -use project proposed by Lynx 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 the project proposed by Lynx will be consistent with the
above -stated objectives.
Fiscal Impact
• Fiscal impact refers to the impact that the mix -use project proposed by Lynx 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 2005 Constant Dollars:
o Non -recurring Benefits
• $ 558,520 in City building permit fees
• $ 10,000 in City solid waste surcharge fees
• $ 1,132,140 in City impact fees
• $ 437,101 in Downtown DRI supplemental impact fees
o Recurring Benefits
• $ 3,062,019 annually in City General Fund ad valorem taxes
• $ 333,735 annually in City Debt Service ad valorem taxes
• $ 175,650 annually in Downtown Development Authority 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
Lucia A. Dougherty, Esq.
Greenberg Traurig LLP
March 2, 2005
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 (recurring)
• Increased parking surcharge fees (recurring)
o Other
• While the focus of MEAI's fiscal analysis was on the City of Miami, the
mixed -use project proposed by Lynx will, as shown below, provide
significant fiscal benefits to other non -municipal governmental
jurisdictions that impact the lives of City residents:
o $ 1,334,072 in County road impact fees (non -recurring)
o $ 893,466 in School impact fees (non -recurring)
o $ 2,084,966 in County General Fund ad valorem taxes (recurring)
o $ 100,121 in County Debt Service ad valorem taxes(recurring)
o $ 156,047 in Children's Trust ad valorem taxes (recurring)
o $ 170,732 in County Library ad valorem taxes (recurring)
o $ 2,842,017 in School Operating ad valorem taxes (recurring)
o $ 209,726 in School Debt Service ad valorem taxes (recurring)
o $ 1,302,000 in County tourist taxes (recurring)
a Increased County occupational license fees (recurring)
Economic impact
• Economic impact relates to the impact that Lynx 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 project's residents will comprise a recurring benefit. The economic benefits
summarized below are stated in 2005 Constant Dollars.
o Non -recurring
• Approximately 90 percent of the $328.0 million that Lynx will spend on
hard and soft costs to develop the proposed mixed -use project will be
spent within the City of Miami, producing an overall economic impact
approximating $458.7 million when the multiplier effect is considered,
• Project expenditures within the City of Miami will include an estimated
$95.0 million for construction labor, an amount sufficient to pay
approximately 2,142 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
Lucia A. Dougherty, Esq.
Greenberg Traurig LLP
March 2, 2005
Page 4
o Recurring
• A total of $62.9 million will be spent annually in the City of Miami by
project residents, hotel and condominium hotel guest and workers for
lodging, retail goods, dining, parking and entertainment. Additionally, $9.1
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 $108.0 million annually when the multiplier effect is
considered.
• A total of 907 people will be employed at the proposed project, inclusive
office, hotel, retail and sports club workers as well people involved in
project operations, maintenance and parking. They will earn
approximately $29.9 annually.
Bases of Estimates
The materials that follow provide the assumptions used to estimate the fiscal and
economic benefits that development of Lynx will provide to the City of Miami. All
monetary amounts are stated in 2005 Constant Dollars.
Project Characteristics
• The mixed -use project proposed by Lynx will be located at within the City of Miami. It
will also be within the jurisdictions of the City's Downtown Development Authority,
Miami -Dade County and the Miami -Dade County Public School District.
• The project will entail the construction of 2,465,689 gross square feet of building
area. Of this amount, 1,158,055 square feet will pertain to the residential portion of
the project including the square feet of livable space contained in the 521 units as
well as a proportional share of amenity, core, service and circulation areas. The
remaining 1,307,634 square feet will comprise the commercial portions of the project
and parking. For the purpose of this analysis, the proposed condominium hotel units
are considered commercial space.
• In terms of saleable or rentable space, Lynx will be configured as follows:
o Residential: 521 units with 625,941 square feet of saleable space
o Condominium hotel: 207 units with 193,928 square feet of saleable space
o Hotel: 194 units comprised of 118,621 square feet of space
o Office: 62,713 square feet of rentable space
o Retail: 46,390 square feet of rentable space
o Sports Club: 85,504 square feet of rentable space
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net
Lucia A. Dougherty, Esq.
Greenberg Traurig LLP
March 2, 2005
Page 5
• Development of the proposed mixed -use project will cost approximately $230.0
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 an additional $98.0 million. Therefore, $328.0 million will
be spent to complete the project exclusive of land acquisition, financing costs and
developer's profit.
• The 521 condominium units will generate $272.0 million in gross sales proceeds
based on an average unit price approximating $522,000. The 207 condominium hotel
units will generate an additional $94.3 million in gross sales proceeds. Accordingly,
total gross sales proceeds of $366.3 million will be realized.
+ The Constitution of the State of Florida mandates that 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, which in the case
of the proposed condominium and condominium units would equate to $293.0
million. Assuming that 70 percent of the 521 condominium units are eligible for the
Homestead Exemption, the taxable value of the condominium and condominium
hotel portions of the proposed mixed -use project will be $283.9 million.
• For the purpose of this analysis, the taxable value of the hotel, office and retail space
as well as the sports club are assumed to be equivalent to their combined hard cost
of construction, $67.4 million.
• Based on the two preceding paragraphs, the total taxable value of the proposed
mixed use project will approximate $351.3 million.
• Residents of the proposed condominium units will on average require an annual
income of approximating $208,000 to qualify for ownership. Based on this estimate
of average household income, it is projected that the people living the Lynx project
will spend $21.7 million annually in retail and restaurant establishments. This
projection assumes that they spend 20 percent of their income for that purpose.
• The proposed 194 unit hotel is expected to achieve a stabilized rate of occupancy of
75 percent and an average daily rate of $160. The 207 condominium hotel units are
expected to be utilized 50 percent of the time, commanding an average daily rate of
$350. As a result, the proposed project will sell approximately 90,885 room -nights
annually and generate $21.7 million annually in room sales revenues. It is also
anticipated that each sold room night will result in $250 in additional expenditures
within the City of Miami for food, entertainment, etc, a total of $22.7 million.
+ Based on industry standards, it anticipated the proposed hotel and condominium
hotel will require 240 workers to properly operate. It is further anticipated that the
workforce in the office space will equate to 4 people per 1,000 square feet --- 461
employees --- while the retail space and sports club will be staffed by 2.5 and 1.0
people, respectively, per 1,000 square feet, 181 people. When project operations,
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net
Lucia A. Dougherty, Esq.
Greenberg Traurig LLP
March 2, 2005
Page 6
maintenance and parking personnel are accounted for, the total number employed at
the proposed project will be 907. Assuming that they spend an average of $10 per
day while working for food and other items, their expenditures would total $3.3
million.
Non -recurring Fiscal Impacts
• The City of Miami charges building permit fees at a rate of $0.20 per gross square
foot of multi -family residential construction and $0.25 per gross square foot of
commercial construction. In calculating fees, the square footage associated with the
condominium hotel and the parking garage space was charged for at the commercial
rate. Based on the distribution of space by use previously discussed, building permit
fees totaling $558,520 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 the new project including the roofing,
electrical, plumbing, mechanical, elevator and swimming pool contractors will be
required to pay fees on their work. Calculation of the fees that they will pay 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.
• The City of Miami charges impact fees on new construction projects based on
square footage. The fees will be used to address the impacts of the project on police,
fire, parks, streets, storm sewers, solid waste and general services administration.
The rates paid for projects constructed in the area of the City in which Lynx will
develop the proposed mixed -use project are $0.676 per square foot of new
residential use and $1.398 per square foot of commercial use. Lynx will contain
625,941 square feet of residential living area and a total of 505,156 square feet of
usable commercial space, resulting in the payment of impact fees totaling
$1,132,140.
• In addition to the impact fees discussed in the preceding paragraph that are charged
to projects anywhere within the City of Miami, supplemental impact fees are charged
on projects located in the area covered by the Downtown DRI. According to the
current table of fee coefficients, the rate for residential units is $0.2821 per square
foot. The rate for hotel units is $0.4661 per square foot while the rates for office,
retail and recreational space are $0.861, $0.76 and $0.2993 per square foot,
respectively. For the purpose of this analysis, the condominium hotel units are
considered hotel units while the sports club is charged at the recreational rate. Based
on these rates and the quantities of space associated with each use previously
stated, it is estimated that a total of $437,101 in Downtown DRI supplemental impact
fees will be paid.
• New construction projects located in the City of Miami also need to pay impact fees
to Miami -Dade County for roads and schools. In the eastern portion of the county,
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net
Lucia A. Dougherty, Esq.
Greenberg Traurig LLP
March 2, 2005
Page 7
the rates for roads for residential and hotel units are $877 and $1,042 per unit,
respectively. The road impact fee rates for office and retail space in the eastern
portion of Miami -Dade County are $2.102 and $2.483 per square foot for projects
with the quantities of space proposed. For the purpose of this calculation, the
condominium hotel is classified as a hotel and the sports club as retail space. The
base fee per unit for school impact fees is $612. An additional amount of $0.918 per
square foot is then applied. Accordingly, impact fees totaling $2,227,538 will need to
be paid at the time the project's building permit is issued. Of this amount, $1,334,072
will be applied to roads and $893,466 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 proposed project's
estimated taxable value of $351.3 million.
Entity
Ratei$1000
Taxable Value
Taxes
City of Miami
General Fund
8.71625
$ 3,062,019
Debt Service Fund
0.95000
$ 333,735
Downtown Development Authority
0.50000
$ 175,650
Miami -Dade County
General Fund
5.93500
$ 2,084,966
Debt Service Fund
0.28500
$ 100,121
Children's Trust
0.44420
$ 156,047
Library
0.48600
$ 170,732
Miami -Dade County Public Schools
Operating
8.09000
$ 2,842,017
Debt Service
0.59700
$ 209,726
Source: Miami -Dade County Property Appraiser; Miami Economic Associates, Inc.
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 of the development of the mixed -use project proposed by Lynx
will be dependent on the amount of these services used by the project's residents,
hotel guest and commercial tenants; 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 hotel and sports club operators as well as the occupants of the proposed
office and retail space. The amount collected can not be estimated at this time since
it will be dependent on the nature of the businesses housed in the office and retail
space.
• The City of Miami charges a 20 percent surcharge on parking fees, Patrons of the
proposed project's hotel, condominium hotel, commercial space and sports club
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (305) 669-8534 Email: mealnk@bellsauth.net
Lucia A. Dougherty, Esq.
Greenberg Traurig LLP
March 2, 2005
Page 8
would pay this surcharge. It is not possible at this time to estimate the amount that
will be generated.
• The City of Miami and Miami -Dade County participate in a number of revenue
sharing programs including one that relates to the rebate of a portion of the State
sales tax proceeds that are collected in Miami -Dade County. The amounts of
revenue sharing revenues that will accrue to the City as a result of the proposed
project can not be estimated at this time.
• Miami -Dade County charges a 6 percent tourist or "bed" tax on moneys spent for
transient lodging. Based on projected room sales revenues totaling $21.7 million, a
total of $1,302,000 will be collected annually.
Non -recurring Economic Benefits
• It is estimated that approximately 90 percent of the $328.0 million that Lynx will
spend on the hard and soft costs to develop the proposed mixed -use project 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
approximate $458,7 million based on application of a 1.554 multiplier.
• MIG's input-output model further estimates that approximately $95.0 million of the
moneys spent on hard costs within the City of Miami 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 2,142
workers on an annual basis at their average wage rate.
Recurring Economic Benefits
• The residents of the proposed mixed -use project will spend $21.7 million annually in
retail establishments and restaurants, approximately 70 percent of which, $15.2
million, will be spent within the City of Miami. Additionally, hotel and condominium
guests will spend a total of $44.4 million in the City while staying at the proposed
project for lodging, food, entertainment, etc. while the on -site workforce will spend
$3.3 for food and other items while working. Finally, the project will generate
approximately $9.1 million 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 $108.0 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 907 people who will be employed at Lynx on
a full-time equivalent basis will average $33,000, or $29.9 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
Lucia A. Dougherty, Esq.
Greenberg Traurig LLP
March 2, 2005
Page 9
Closing
The analysis performed by MEAI demonstrates that mixed -use project proposed by Lynx
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