HomeMy WebLinkAboutEconomic Impact AnalysisURBAN RIVER
Economic Impact Analysis
Submitted to:
City of Miami
Prepared For:
URBAN RIVER PARTNERS, LLC
Prepared by:
SHARPTON, BRUNSON & COMPANY, P.A.
One Southeast Third Avenue
Suite 2100
Miami, Florida 33131
(305) 374-1574
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URBAN RIVER
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
Exhibit II: Impact and Other Fees
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Project Overview
The proposed development consists of
the entire block bound on the east by NW
6 Avenue; on the south by NW 7th Street;
on the west by NW 7th Avenue and NW
8th Street- on the north, in the city of
Miami, Florida (the "Property"). The
Property is designated Industrial in the
City of Miami Future Land Use Map which
is part of the City of Miami Comprehen-
sive Neighborhood Plan (the "Plan"). The
Property is zoned I, Industrial, in the City
of Miami Official Zoning Atlas, and the
City's Zoning Ordinance No. 11000 (the
"Ordinance").
The Property consists of approximately
182,798 square feet (4.196 acres) of net
lot area and 235,122 square feet (5.4
acres) of gross lot area. The Property is
underutilized and prime for redevelop-
ment.
The proposed development consists of
577 residential units, 7,700 square feet of
retail along NW 7th Avenue and 948
parking spaces all contained within 6
towers of varying heights with the
shortest tower abutting NW 7th Avenue
and the tallest tower oriented towards the
downtown side of the Property
(collectively the "Development").
The mixed use nature of the proposed
Development requires an amendment to
the Plan to redesignate the Property
"Restricted Commercial"; an amendment
to the Ordinance to rezone the Property
to C-1, Restricted Commercial, and a
Major Use Special Permit.
The NW 7th Avenue corridor is
experiencing a new rebirth with similar
developments occurring to the south of
the Property. This Property is rundown
and in dire need for redevelopment.
This Development is a logical and
compatible extension of mixed use
development on the east side of NW 7
Avenue.
The Development is a pioneering project
in that it is the first market rate project of
its kind in the area. The developers are
excited about the prospect of beginning
the development of this neighborhood
and hope to attract high quality neighbors
once the public sees the quality of this
Development.
Once completed, the Development will be
a significant asset to the City of Miami
and a major contributor to the rebirth of
the western fringes of the City's down,
town area.
The Development incorporates many
innovative urban design features
including the pedestrian activation of NW
7 Avenue by providing street level retail,
an entrance plaza, and those enumerated
in the attached Planning and Zoning
Department's Pre -Application Design
Review Comments. The provisions of
residential units and retail spaces fronting
all four streets and lining the entire
garage height integrate the Development
into the entire neighborhood.
The Development contains amenities
including an approximate 10,725 square
feet open ground level park, two similar
roof deck recreational centers each with
lavishly landscaped pool area, meeting
room, and a gymnasium.
The Development exceeds the
Ordinance's green space requirements.
The Development also exceeds the
Ordinance's parking requirements by 40
spaces.
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Introduction
This document represents an in-
depth economic and tax benefits
analysis Of the developmental
and operation of a first class
condominium building and retail
facilities.
The Project currently contem-
plated is comprised of the
following components:
❑ 577 units of high -quality
residential.
❑ 7,700 square feet of retail.
❑ 948 parking spaces.
This analysis encompasses the
entire Project and estimates the
economic and tax benefits for both
its developmental and operational
phases.
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Summary of Benefits
The Project will bring significant
economic benefits to the city of
Miami "(the City). This section
summarizes the impact of the
project on employment, public sector
revenues and other economic
benefits as a result of the develop-
ment.
Employment
Employment considerations include
the direct employment resulting from
the Project. Average developmental
construction phase employment will
be for approximately 423 employees
and the Project management is
expected to employ 14 people for
on -going maintenance and opera-
tions 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
indirect impacts expected from
wages associated with the new
development approximate the follow-
ing:
One Time $59,194,800
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 benefits
derived from the development.
Annual tax revenue expected to be
created totals $3,370,418.
Output
The estimate of total economic
impact is measured by total output.
This analysis measures the eco-
nomic impact of developmental
costs and ongoing, operational
expenditures. To determine 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 approx-
imate the following:
One Time $ 187,827,495
Annual $ 1,268,460 Annual $ 8,127,540
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Summary of Benefits
Significant Community Benefits:
Jobs
>. Wages
• Taxes
• Economic Activity
Residents' Spending Impacting Local
Businesses:
Food
Recreation/Entertainment
• Transportation
• Retail
The following table and charts summarize the economic impact of the Urban River
development.
CONSTRUCTION
PERIOD ANNUAL
IMPACT RECURRING
Economic Activity Stimulated
Output $ 187,827,495 $ 8,127,540
Wages 59,194,800 1,268,460
Taxes 3,370,418
$ 247, 022, 295 .. 12,766,418
Jobs Created 423 14
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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 oper-
ation 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.
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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 meas-
ures are as follows:
Employment is measured full-time
equivalent jobs.
Wages include wages, salaries,
and proprietor's income only. They,
may include non -wage compen-
sation, 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 acquisi-
tion, 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 equiva-
lent 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:
Jobs
Wages
r Total output
Local taxes
Results of Indicators
Exhibit 1 details the Project's direct and
indirect impact on the above economic
indicators for Miami. A summary of
such impact follows:
DEVELOPMENT
fOne Time) OUTPUT
Direct
Indirect
ANNUAL
Operational:
Direct
indirect
$ 99,950,774
87,876,721
$ 187.827.495
$ 4,325,000
3, 802.540
S 8.127.54Q
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 $128
million. Such activity will create approxi-
mately 423 new full time equivalent jobs
and employ a maximum of 498 workers
during peak periods. The workers will
earn approximately $31.5 million in
direct wages.
WAGES TAXES EMPLOYMENT
$ 31,500,000
27,694,800
423
$ 59.194.800 423_
$ 675,000 $3,370,418 14
593,460
$ 1 ,268,460 $3,370,418 14
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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 14 new, perma-
nent full-time equivalent jobs. The
wages of the workers who obtain these
positions will provide an impact of
approximately $1.3 million annually.
The total expenditures for the Project's
operations, will provide a new, perma-
nent impact of $8.1 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 $3.4 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 (employ-
ment, 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 develop-
mental, operational and maintenance
expenditures generate indirect eco-
nomic 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 gener-
ated 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) employ-
ment will average 423 employees
over an eighteen month period and a
total on -going employment will
average 14.
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.
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 prep-,
aration 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 $100 million.
Total indirect output created by the
direct respending in Miami is $88
million. Thus total Miami Output from
the development of the Project is
$188 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 all estimated expenses
of the ongoing operation of the
Project. The impact of the retail
enterprises was measured sepa-
rately 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 enterprises, we deter-
mined 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 reve-
nue 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 develop-
mental 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 $3.4 million.
Total ad valorem taxes assessed
by Miami -Dade County are allo-
cated 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
$ 1,119,615
1,039,167
762,355
122,028
36,608
76,685
62,427
76,685
4,945
12,845
57,058
$ 3,370,418
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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
Miami -Dade County Roadway Impact 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 $1.8 million and other
fees total approximately $1.2 million. These
fees are shown in detail in Exhibit II.
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Exhibit List
Exhibit i
Exhibit li
Summary of Economic impact
Impact and Other Fees
Exhibit -
OUTPUT
WAGES EMPLOYMENT TAXES
DIRECT
DEVELOPMENTAL $ 99,950,774 $ 31,500,000
OPERATIONAL 4,325,000 675,000
423
14 $ 3,370,418
TOTAL DIRECT 104,275,774 32,175,000 437 3,370,418
INDIRECT
DEVELOPMENTAL 87,876,721 27,694,800
OPERATIONAL 3,802,540 593,460
TOTAL INDIRECT 91,679,261
TOTAL BENEFITS
28,288,260 -
$ 195,955,035 $ 60,463,260 437 $ 3,370,418
TOTAL DEVELOPMENTAL $ 187,827,495 $ 59,194,800 423
TOTAL OPERATIONAL
TOTAL BENEFITS
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8,127,540 1,268,460
14 $ 3,370,418
$ 195,955,035 $ 60,463,260 437 $ 3,370,418
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Exhibit - 11
IMPACT AND OTHER FEES:
A. Development Square Footages: Square Footage
1) Total gross building area (with parking)
2) Maximum development area (FAR)
3) Gross parking area
1,150,474
606,616
337,922
B. Impact Fees: Amount
1) City of Miami Developmental Impact Fee
2) Developmental Impact Administration Fee
3) Miami -Dade County Roadway Impact Fee
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 Use/Zoning
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, Building and Zoning Department.
Miami Dade County Impact Fees
$
370,083
11,102
540,072
837,040
1,758,297
809,337
173,012
115,047
30,000
45,000
5,752
10,930
1,226
1,828
60
250
35
$ 1,192,477
$ 2,950,774
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