HomeMy WebLinkAboutEconomic Impact StudyPLATINUM ON
THE BAY
economic [impact Analysis
Sub►nitted to:
City of Miami
Prepared For:
STRATEGIC PARTNERS
Prepared by:
SHARPTON, BRUNSON & COMPANY, P.A.
One Southeast Third Avenue
Suite 2100
Miami, Florida 33131
(305) 374-1574
•
•
•
PLATINUM ON THE BAY
TABLE OF CONTENTS
THE PROJECT OVERVIEW
EXECUTIVE SUMMARY
Introduction
Summary of Benefits
PAGE(S)
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
•
•
•
Project Overview
Platinum on the Bay (the Project) is
bounded by NE 29th Street on the
south, and NE 30th Street on the north.
The lot is "T" shaped and stretches
from bay frontage half way back to NE
4th Avenue to the west. The Project
contains 320 units of high -quality
residential, 2,475 square feet of retail
space and 565 parking spaces. The
aggregate site is approximately
116,305 square feet (2.67 acres).
Targeted for completion in 2009,
Platinum on the Bay is located in the
area north of downtown Miami, called
Edgewater. Excellent area demo-
graphics and a booming local economy
enhances the Projects status as one of
the future premier multi -family
opportunities.
The Project may be accessed by 1-95,
1-395 and Biscayne Boulevard (US-1)
from all directions. The property has an
excellent location within the urban
fabric of Miami and is located only 10
minutes from downtown Miami, 15
minutes from Miami International
Airport, and 10 minutes from Miami
Beach. In addition, the property is in
close proximity to new area
developments such as the new Center
for Performing Arts, Parrot Jungle
Island, Miami Children's Museum,
American Airlines Arena and the Island
Gardens. There is a definite demand
for quality residential product in this
part of Miami.
1
•
•
Introduction
This document represents an in-
depth economic and tax benefits
analysis of the developmental and
operation of a first class condo-
minium building and retail facilities.
The Project currently contemplated
is comprised of the following com-
ponents:
❑ 320 units of high -quality
residential.
❑ 2,475 square feet of retail.
❑ 565 parking spaces.
This analysis encompasses the
entire Project and estimates the
economic and tax benefits for
both its developmental and oper-
ational phases.
2
•
•
Summary of Benefits
The Project will bring significant
economic benefits to the city of
Miami (the City). This section sum-
marizes 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 292 employees
and the Project management is
expected to employ 9 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 in-
direct impacts expected from wages
associated with the new develop-
ment approximate the following:
One Time $64,625,688
Annual $ 817,452
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 ele-
ments in measuring fiscal impact,
these benefits have not been
quantified in this document. This
analysis only measures the bene-
fits derived from the development.
Annual tax revenue expected to
be created totals $4,422,234.
Output
The estimate of total economic
impact is measured by total
output. This analysis measures
the economic impact of develop-
mental costs and ongoing,
operational expenditures. To de-
termine 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 $ 257,444,753
Annual $ 5,233,572
3
•
•
•
Su nary of Benefits
Significant Community Benefits:
Jobs
Wages
y Taxes
Economic Activity
Residents' Spending Impacting Local
Businesses:
r Food
Recreation/Entertainment
Transportation
Retail
The following table and charts summarize the economic impact of Platinum
on the Bay development.
CONSTRUCTION
PERIOD ANNUAL
IMPACT RECURRING
Economic Activity Stimulated
Output $ 257,444,753 $ 5,233,572
Wages 64,625,688 817,452
Taxes 4,422,234
Jobs Created
$ 322,070,441 $ 10,473,258
292 9
4
•
•
•
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 an an economic
model, which estimates economic and tax
impacts of various projects on a desig-
nated 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 govern-
mental 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 insignifi-
cant sum is left.
5
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).
6
•
•
•
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.
7
•
•
•
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:
Jobs
Wages
Total output
Local taxes
Results of Indicators
Exhibit l details the Project's direct and
indirect impact on the above economic
indicators for Miami. A summary of
such impact follows:
DEVELOPMENT
,LOne Time) OUTPUT
Direct
Indirect
ANNUAL
Operational:
Direct
Indirect
$ 136,996,995
120,447,758
$ 257.444.753
$ 2,785,000
-..Z4.4.`,..R.572
$ 5.233.572
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 projects economic impact.
Impact of Construction
The site preparation and construction
expenditures, including soft costs and
impact fees are estimated at $169
million. Such activity will create
approximately 292 new full time
equivalent jobs and employ a maximum
of 372 workers during peak periods.
The workers will earn approximately
$34 million in direct wages.
WAGES TAXES EMPLOYMENT
$ 34,390,000 292
30,235,688
$ 64.625.688 292
$ 435,000 $4,422,234 9
382.2
$ 817,452 $4,422,234 9
8
•
•
•
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 9 new, permanent full-
time equivalent jobs. The wages of the
workers who obtain these positions will
provide an impact of approximately $817
thousand annually.
The total expenditures for the Project's
operations, will provide a new, permanent
impact of $5.2 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
$4.4 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 I, total
short-term (developmental) employ-
ment will average 292 employees
over an thirty month period and a
total on -going employment will
average 9.
The total on -going positions can be
summarized as follows:
y Management
Security
Parking
y Maintenance/Facilities
y Retail
9
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 $137 million.
Total indirect output created by the
direct respending in Miami is $120
million. Thus total Miami Output from
the development of the Project is
$257million.
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.
10
Discussion Of The Resu
Indicators
s By Economic
Output (Contd.)
The total operating expenditures
incorporate all estimated 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
respending 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 enter-
prises, we determined total output
(direct and indirect) from on -going
operating expenditures and retail
sales.
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 property 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 $4.4 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
School Operating
County Operating
Debt Service - City
Debt Service -County
South Florida Water
Library Operating
School Debt Service
Florida Inland Navigation
Environmental Projects
Children's Trust
TOTAL
$ 1,469,010
1,363,464
1,000,267
160,110
48,033
100,617
81,909
100,617
6,489
16,854
74,864
$ 4,422,234
11
•
•
•
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
y 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 $1.2 million and other
fees total approximately $756 thousand.
These fees are shown in detail in Exhibit II.
12
• Exhibit List
Exhibit
Exhibit II
•
Summary of Economic Impact
Impact and Other Fees
Exhibit
Summary of Economic Impact
OUTPUT WAGES EMPLOYMENT TAXES
DIRECT
DEVELOPMENTAL $ 136,996,995 $ 34,390,000
OPERATIONAL 2,785,000 435,000
TOTAL DIRECT
292
9 $ 4,422,234
139,781,995 34,825,000 301 4,422,234
INDIRECT
DEVELOPMENTAL 120,447,758 30,235,688
OPERATIONAL 2,448, 572 382,452
TOTAL INDIRECT
122,896,330 30,618,140
TOTAL BENEFITS $ 262,678,325
65,443,140 301 $ 4,422,234
TOTAL DEVELOPMENTAL $ 257,444,753 $ 64,625,888 292
TOTAL OPERATIONAL 5,233,572 817,452 9 $ 4,422,234
TOTAL BENEFITS $ 262,678,325 $ 65,443,140 301 $ 4,422,234
13
. Exhibit - II
•
•
Impact and Other Fees
A. Development Square Footages: Square Footage
1) Total gross building area (with parking) 948,500
2) Maximum development area (FAR) 419,400
3) Gross parking area 203,910
B. Impact Fees: Amount
1) City of Miami Developmental Impact Fee $ 318,831
2) Developmental Impact Administration Fee 9,565
3) Miami -Dade County Roadway Impact Fee 299,520
4) Miami -Dade County School impact Fee 540,323
Total of all Impact Fees $ 1,168,239
C. Non -Impact Fees:
1) Miami Dade W,A.S.A. "connection fees" $ 447,360
2) Building Permit Fee 115,833
3) Installation Energy Fee 94,850
4) Major Use Special Permit Application Fee 30,000
5) Miami -Dade County Code Compliance 51,691
6) Radon Gas Fee 4,743
7) Fire Plan Review Fee 9,011
8) Ground Cover Fee 653
9) Land Use/Zoning 1,162
10) Zoning Review for Building Permit Fee 60
11) Certificate of Occupancy Fee 250
12) Application Fee 35
Total of all Non -Impact Fees $ 755,648
Total of all Fees for Project $ 1,923,887
Source: City of Miami Planning, Building and Zoning Department,
Miami Dade County Impact Fees
14