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ECONOMIC IMPACT ANALYSIS
Portico
- Prepared by -
Lambert Advisory, LC
- Prepared for -
Portico
May 4, 2005
Economic Impact Analysis — Portico
Economic Impact Analysis
Portico
Lambert Advisory has completed an economic impact analysis for the development of
Portico, a luxury condominium project located at the intersection of Biscayne Boulevard,
18th Street, and N.E. 4th Avenue 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 Portico development, and can supplement the major use special permit
application to be submitted to the City of Miami.
The Portico property is situated in the SD-6 zoning district of downtown Miami, and is
adequately accessible to major thoroughfares, including 1-395 and I-95. The residential
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
representatives of Portico. We have not independently verified this information or data.
A profile of the project follows.
Portico
Economic Impact Analysis
Building Features & Profile
General Features
Site Size (Net)
Building Height
Number of Residential Units
Number of Parking Spaces
Detailed Building Profile
Gross Building Area (w/parking)
Maximum Development Area (FAR)
Residential FAR
Gross Parking Area
0.65 acres
42 stories
324 units
425 spaces
696,974 sq.ft.
385,308 sq.ft.
385,308 sq.ft.
182,750 sq.ft.
Note: Estimates are based upon data provided by Portico and Arquitectonica,
and/or calculations made by Lambert Advisory, and may be subject to change.
Source: Portico, Lambert Advisory, 2005.
Development of Portico is expected to commence in 2006. The duration of construction
is anticipated to be 18-24 months, with occupancy planned for 2008.
2
Lconoinic Impact Analysts — Portico
Based upon the information provided, construction and subsequent operations of Portico
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 expenditure
3. Long-term building employment and operating expenditure
4. Indirect flow -through benefits
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 Portico.
Portico
Economic Impact Analysis
Development Costs
Item Cost
Hard Costs $58,675,000
Soft Costs $16,506,000
Total $75,181,000
Source: Portico, 2005.
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.
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Economic Impact Analysis -- Portico
Labor will account for approximately 60 percent ($35 million) of hard costs, and
materials will account for 40 percent ($23 million). Over an estimated 21-month
construction period, at an average annual construction wage of $39,260 1 in Miami -Dade
County, with a benefit/overhead multiplier of 1.4, there will be 366 Full Time Equivalent
(FTE) jobs created.
Additionally, $1.5 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%, over $800,000 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 $3 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 Portico is included in the
following table.
State of Florida ES-202, second quarter 2004
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Economic Impact Analysis — Portico
Portico
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
$361,804
$10, 854
$284,148
$552,001
$1, 208, 807
Other/Non-Impact Fees:
City of Miami Bonus Fees $1,194,455
Miami Dade W.A.S.A. Connection Fee $452,952
City of Miami Building Permit Fee $77,899
Energy Installation Fee $56,806
M.U.S.P Application Fee $45,000
Dade County Code Compliance $37,591
Radon Gas Fee $5,681
Fire Plan Review Fee $5,113
Ground Cover Fee $564
Land Use/Zoning, Review for BIdg.Permit $2,000
Certicate of Occupancy $250
Application Fee $35
TOTAL OTHER FEES $1,878,344
TOTAL PROJECT FEES $3,087,151
Source: City of Miami Planning, Building & Zoning; Miami Dade County; Portico;
Lambert Advisory. Fees included above may be subject to change.
2. Long -Term (On -Going) Resident Expenditure
Based on demographic and rental housing trends in the area, the Portico resident base
is expected to consist primarily of younger working professionals. Considering the
proposed average sale price of $390,000, it is assumed that the residents will be mostly
upper income individuals/households with incomes of at least $150,000. Therefore,
with a total of 324 households in the building, total personal income for the building is
estimated to be nearly $50 million. Estimating that approximately half of the owners will
relocate from outside the City, over $24 million of marginal personal income will flow
into Miami.
We have estimated the marginal impact of $24 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.
5
Economic! Impact Analysis — Portico
Portico
Area Expenditure Potential (from New -to -Miami Residents), 2008
Type of Good
Est.
Marginal
Growth Sales/
Expenditure SF
SF
Demanded
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
$542,748
$522,176
$216,439
$207,011
$197,453
$301,155
$227
$290
$227
$200
$250
$420
2,391
1,801
953
1,035
790
717
$258 7,687
Food Stores $422 6,571
Eating & Drinking Establishments $375 4,575
Health & Personal Care Stores $407 2,190
Liquor $280 212
$1, 986, 982
$2,773,101
$1,715,497
$891,332
$59,493
Convenience Goods - Sub -Total $5,439,423 $401 13,548
Building Materials
Total
$534,794
$115 4,650
$7,961,200
$308 25,886
Source: Lambert Advisory, 2005.
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 development. These include:
• Additional employment from operation of the condominium community;
• Property tax revenue to the City of Miami and Miami -Dade County; and
• Purchase of goods and services.
We estimate that 11 FTE workers will be needed to operate the building — positions such
as building managers, parking garage attendants, maintenance staff, and security
personnel will need to be filled. At an average Miami -Dade County wage of $37,284 2
the operation of the building will generate approximately $400,000 in wages each year.
Positions at various skill levels will be made available to area residents.
Additionally, an estimated $385,000 in goods and services related to building
maintenance will be purchased annually within Miami -Dade. This includes cleaning
services, maintenance supplies, utilities, etc.
2 State of Florida ES-202, second quarter 2004
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Economic .Impact Analysis — Portico
Finally, the development of Portico 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.
Portico
Economic Impact Analysis
Ad Valorem Tax Breakdown
Item
Annual
Millage Taxi
City of Miami Operating 8.7163 $930,732
City of Miami Debt 0.950 $101,442
School Operations 8.09 $863,860
School Debt 0.597 $63,748
Environmental Projects 0.100 $10,678
S. Florida Water Management 0.597 $63,748
FIND 0.0385 $4,111
County Millage 5.935 $633,747
County Debt 0.285 $30,433
Children's Trust 0.444 $47,432
Library 0.486 $51,896
TOTAL 26.23895 $2,801,828
Source: Miami Dade County Property Appraiser, Lambert Advisory, 2005.
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 Portico based on a
market value of $107 million, or 85 percent of the estimated value of the residential use.
Accordingly, the development should generate approximately $2.8 million in real
property taxes by 2007/8. This represents an estimated net marginal increase of
roughly $2.7 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 building operations employment. The 11 FTE
jobs created as a result of building operations are assumed to have a 1.2 multiplier
impact of 13 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.
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Economic Impact Analysis — Portico
Portico
Economic Impact Analysis
Summary, Economic Impacts
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 & Expenditure
Long -Term (On -Going) Resident Expenditure
Marginal Expenditure Growth — Residents (2008)
Marginal Impact from On -Going Resident Expenditure
Long -Term (On -Going) Building Employment and Operating Expenditure
Full Time Jobs
Total Direct Wages Created
Goods & Service Purchased in Miami -Dade County
Ad Valorem Taxes (2008)
Total Impact from On -Going Operations of the Building/Retail
Impact
366
$25,100,000
$800,000
$3,100,000
$29,100,000
$8,000,000
$8,000,000
11
$400,000
$390,000
$2,800,000
$3,600,000
Indirect Flow Through Benefits
Full Time Jobs (Indirect) — Miami Dade County 13
Total Indirect Wages Created $500,000
Total Flow Through Indirect Benefits $500,000
Source: Lambert Advisory, 2005.
Based upon the analysis set forth herein, the Portico 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 366, with on -going annual
employment of 24 FTE jobs. Accordingly, there is an estimated $29 million impact from
short-term construction employment and expenditures, and a stabilized $11.6 million
annual revenue stream from resident expenditures and building operations (including
real property taxes).
8
b4/05/26W5 11;02 3054444986
i
tiaS
March 15, 2005
DAVID PLUMMERANDASSO
Ms. LAIa I. Medina, AICP
Assistant Transportation Coordinator
City of Miami, Office of the City Manager/Transportation
444 SW 2'd Avenue (104' Floor)
Miami, Florida 33130
R. Portico (WO 0 97)
Sufficiency Letter
PAGE 64
MERS-and US.Mai
Delilir Me. Medina:
Subsequent to our February 3, 2005 review comments for the subject project, we have received
a response letter dated March 14th 2005, prepared by David Plummer and Associettes Inc.
(DPA). Photocopy of the response letter is attached herewith.
At this time, we conclude that the traffic report along with the subsequent submittal meet all the
traffic requirements and the report is found to be sufficient.
Should you have any questions, please call Quay Masood or me at 954,739.1881.
Since
u
Ion Southern
Raj Shan E.
Se for Traffic Engineer
Attachm.nt
DM Mr. Kevin Wilford, Planner I, City of Miami (Fax: 305.416.1443)
Ma, Sonia Shr f lar6Aogart, DPA, (Fate 305.444.4986)
tnts Corporation
(Amine* Con'tplex
5100 NW 33re Avenue, Sult* 160
Fart !eu[lardara, FL 333056316
Teh MM./90.188i
Fax: 454.739.17n