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HomeMy WebLinkAboutEconomic Impact Studyr mEcn� Associates, nc February 20, 2005 Mr. Nelson Fernandez Vista Biscayne, LLC Cooper City, Florida Re: MUSP Impact Analysis — Vista Biscayne Dear Mr. Fernandez: Miami Economic Associates, Inc. (MEAT) has performed analysis to estimate the impacts that the proposed Vista Biscayne project will have on the housing market in the City of Miami as well as on the City's fiscal and economic condition. The purpose of the letter, which is organized as shown below, is to provide the results of our analysis and their bases. 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 7 Project Description Vista Biscayne will be located at 452 N.E. 29th Street within the City of Miami. The project will contain 41 condominium averaging 1,050 square feet in size. Total sales proceeds will approximate $17.0 million. The project will also provide parking in an amount in excess of code. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (3051 669-0229 Fax: (3051 669-8534 Email: meainkebeltsouth.net Mr. Nelson Fernandez Vista Biscayne, LLC February 20, 2005 Page 2 Development of Vista Biscayne will require the expenditure of approximately $9.4 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 approximate $1.8 million (2005 Dollars). Therefore, $11.2 million will be spent to complete the project exclusive of land acquisition, financing costs and developer's profit. Summary of Findings Development of Vista Biscayne 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 Vista Biscayne will be consistent with the above -stated objectives. Fiscal Impact • Fiscal impact refers to the impact that Vista Biscayne 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 • $ 28,625 in City building permit fees • $ 10,000 in City solid waste surcharge fees • $ 29,102 in City impact fees • $ 119,970 in Affordable Housing FAR Bonus fees o Recurring Benefits • $ 111,568 annually in City General Fund ad valorem taxes • $ 12,160 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. Nelson Fernandez Vista Biscayne, LLC February 20, 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) o Other • While the focus of MEAI's fiscal analysis was on the City of Miami, Vista Biscayne will, as shown below, provide significant fiscal benefits to other non -municipal governmental jurisdictions that impact the lives of City residents: o $ 35,957 in County road impact fees (non -recurring) o $ 64,612 in School impact fees (non -recurring) o $ 75,968 in County General Fund ad valorem taxes (recurring) o $ 3,648 in County Debt Service ad valorem taxes(recurring) o $ 5,686 in Children's Trust ad valorem taxes (recurring) o $ 6,221 in County Library ad valorem taxes (recurring) o $ 103,552 in School Operating ad valorem taxes (recurring) o $ 7,642 in School Debt Service ad valorem taxes (recurring) Economic Impact • Economic impact relates to the impact that Vista Biscayne 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 near $11.2 million spent on hard and soft costs to develop Vista Biscayne will be spent within the City of Miami, producing an overall economic impact of $15.7 million when the multiplier effect is considered. • Project expenditures within the City of Miami will include an estimated $4.5 million for construction labor, an amount sufficient to pay approximately 101 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. Nelson Fernandez Vista Biscayne, LLC February 20, 2005 Page 4 o Recurring • A total of $1.0 million will be spent annually by Vista Biscayne residents in retail and restaurant establishments within the City of Miami. An additional $326,445 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 $2.0 million annually when the multiplier effect is considered. Bases of Estimates The materials that follow provide the assumptions used to estimate the fiscal and economic benefits that development of Vista Biscayne will provide to the City of Miami. All monetary amounts are stated in 2005 Constant Dollars. Project Characteristics • Vista Biscayne will be located at 452 N.E. 29t" Street within the City of Miami. It will also be within the jurisdictions of Miami -Dade County and the Miami -Dade County Public School District. • Vista Biscayne will entail the construction of 124,173 gross square feet of building area. Of this amount, 48,370 square feet will pertain to the residential portion of the project inclusive of the livable space contained in the 41 units as well as amenity, core, service and circulation areas. The remaining square footage will be comprised of parking. • To build Vista Biscayne as proposed will require density bonuses provided for under the Planned Unit Development and Affordable Housing provisions of the City of Miami's zoning code. The latter bonus, which is accessed though the payment of a fee, will provide the entitlement for 9,675 square feet. • Development of Vista Biscayne will cost approximately $9.4 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 approximate $1.8 million. Therefore, $11.2 million will be spent to complete the project exclusive of land acquisition, financing costs and developer's profit. • Vista Biscayne' 41 units will generate approximate $17.0 million in gross sales proceeds. The average unit will be priced at approximately $415,000. 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 this case of the proposed condominium units would equate to $13.6 million. Assuming that 80 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. Nelson Fernandez Vista Biscayne, LLC February 20, 2005 Page 5 percent of the units are eligible for the Homestead Exemption, the taxable value of Vista Biscayne will be $12.8 million. • Residents of the proposed condominium units will on average require an annual income of approximating $166,000 to qualify for ownership. Based on this estimate of average household income, it is projected that the people living at Vista Biscayne will spend $1.4 million in retail and restaurant establishments annually. This projection assumes that they spend 20 percent of their income for that purpose. 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 parking garage space is charged for at the commercial rate. Based on the distribution of space by use discussed previously, building permit fees totaling $28,625 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 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 rate paid for projects constructed in the area of the City in which Vista Biscayne will be developed is $0.676 per square foot of residential use. The saleable residential space within Vista Biscayne totals 43,050 square feet, resulting in the payment of impact fees totaling $29,102. • 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 the 9,675 square feet for which entitlements are being sought, or a total of $119,970. • 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 base fee per unit for school impact fees is $612. An additional amount of $0.918 per square foot is then applied. Vista Biscayne will contain a total of 43,050 square feet in its 41 residential units. Accordingly, impact fees totaling $100,569 will need to be paid at the time the project's building permit is issued. Of this amount, $35,957 will be applied to roads and $64,612 to schools. 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. Nelson Fernandez Vista Biscayne, LLC February 20, 2005 Page 6 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 Vista Biscayne's estimated taxable value of $12.8 million. Entity Rate/$1000 Taxable Value Taxes City of Miami General Fund 8.71625 $ 111,568 Debt Service Fund 0,95000 $ 12,160 Miami -Dade County General Fund 5.93500 $ 75,968 Debt Service Fund 0.28500 $ 3,648 Children's Trust 0.44420 $ 5,686 Library 0.48600 $ 6,221 Miami -Dade County Pubic Schools Operating 8.09000 $ 103,552 Debt Service 0.59700 $ 7,642 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 the development of Vista Biscayne will be dependent on the amount of these services used by the project's residents and business establishments; hence, it can not be quantified at this time. Non -recurring Economic Benefits • It is estimated that approximately 90 percent of the $11.2 million that will be spent on the hard and soft costs associated with development of Vista Biscayne 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 $15.7 million based on application of a 1.554 multiplier. • MIG's input-output model further estimates that approximately $4.5 million of the moneys spent on hard costs within the City of Miami to construct Vista Biscayne 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 101 workers on an annual basis at their average wage rate. 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. Nelson Fernandez Vista Biscayne, LLC February 20, 2005 Page 7 Recurring Economic Benefits • The residents of Vista Biscayne will spend $1.4 million annually in retail establishments and restaurants. It is estimated that approximately 70 percent of this amount, $1.0 million, will be spent within the City of Miami. Additionally, the project will generate $326,445 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 $2.0 million based on the application of a 1.5 multiplier. Closing The analysis performed by MEAL demonstrates that development of Vista Biscayne 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