HomeMy WebLinkAboutEconomic Impact AnalysisICONBrickell
Caromic Impact Analysis
Submitted to:
City of Miami
Prepared For:
The Related Group
Prepared by:
SHARPTON, BRUNSON & COMPANY, P.A.
One Southeast Third Avenue
Suite 2100
Miami, Florida 33131
(305) 374-1574
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ICONBr ckell
TABLE OF CONTENTS
THE PROJECT OVERVIEW
EXECUTIVE SUMMARY
Introduction
Summary of Benefits
PAGE(S)
1
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 16
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
Sheraton at Brickell (now known as
ICONBrickell) is located at the
intersection of Brickell Avenue and
Southeast 5th Street in the city of
Miami, Florida (the Project). The
project consists of 1,800 residential
units, including 100 hotel/ condo-
minium units, 25,000 square feet of
restaurant/retail uses and 2,295
parking spaces. The total lot area is
229,020 square feet (5.26 acres).
The first phase of ICONBrickell is
targeted for completion in 2007-
2008, and phase II and phase III will
be completed in 2009 and 2011,
respectively. Excellent area demo-
graphics and a booming local
economy enhance ICONBrickell as
one of the future premier residential
opportunities. ICONBrickell will set a
new standard of excellence in South
Florida residential living,
ICONBrickell seeks to offer the new
urban lifestyle - a full service building
in a neighborhood where you can
work and live. It is located at the
entrance of the Miami River,
adjacent to the Miami Circle and
Brickell Parks. It is located on one of
the last undeveloped high-rise bay
front parcels.
Brickell Avenue is considered the
hub of Miami's most prestigious
neighborhoods just south of the
Downtown Miami area with easy
access to major expressways
(1-95, 1-395, and SR 836). With the
new Miami -Dade Performing Arts
Center currently under development
a few blocks away, and the master
planned Museum Park, ICONBrickell
will be situated in one of the most
desirable spots in Miami.
As Brickell evolves from an area of
primarily commerce to an exciting
living environment with thriving
businesses and cultural opportuni-
ties, ICONBrickell wants to take the
lead in creating the premier financial
district bay front residential address.
1
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 contemplated is
comprised of the following components:
❑ 1,800 units of high -quality residential.
❑ 25,000 square feet of retail/
restaurant.
❑ 2,295 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
development.
Employment
Employment considerations include
the direct employment resulting from
the Project. Average developmental
construction phase employment will
be for approximately 324 employees
and the Project management is
expected to employ 120 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
indirect impacts expected from
wages associated with the new
development approximate the
following:
One Time $228,510,720
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
elements 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
$17,551,513.
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
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 approximate the following:
One Time $1,022,815,674
Annual $ 12,214,800 Annual $ 12,214,800
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Summary of Benefits
Significant Community Benefits:
Jobs
Wages
Taxes
Economic Activity
Residents', Office Workers' and Retail/Restaurant Employees'
Spending Impacting Local Businesses:
I Food
Recreation/Entertainment
Transportation
r Retail
The following table and charts summarize the economic impact of the
ICONBrickell project.
CONSTRUCTION
PERIOD ANNUAL
IMPACT RECURRING
Economic Activity Stimulated
Output $1,022,815,674 $ 4,134,240
Wages 228,510,720 12,214,800
Taxes 17, 551, 513
$1,251,326,394 $ 33,900,553
Jobs Created 324 120
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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
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 focal 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 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 compensa-
tion, 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).
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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.
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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
• Total output
• Local taxes
Results of Indicators
Exhibit I details the Project's direct and
indirect impact on the above economic
indicators for Miami. A summary of
such impact follows:
DEVELOPMENT
(One Time) OUTPUT
Direct
Indirect
ANNUAL
Operational:
Direct
Indirect
$ 544,282,500
478, 533,174
$1,022,815,674
2,200,000
1,934,240
$ 4,134, 240
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 $343.5
million. Such activity will create
approximately 324 new full time
equivalent jobs and employ a maximum
of 524 workers during peak periods.
The workers will earn approximately
$122 million in direct wages.
WAGES TAXES EMPLOYMENT
$121,600,000 324
106,910,720
$228,510,720
324
$ 6,500,000 $17,551,513 120
5,714,800
$12,214,800 $17,551,513 120
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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 120 new, permanent,
full-time equivalent jobs. The wages of
the workers who obtain these positions
will provide an impact of approximately
$12.2 million annually.
The total expenditures for the Project's
operations, will provide a new,
permanent impact of $4.1 million
annually to the City's economy. This
impact consists of the effects of the
direct expenditures from the mainten-
ance, 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 $17.6 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
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 324 employees
over a ten year period and a total on-
going employment will average 120.
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:
s 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 $544.3 million.
Total indirect output created by the
direct respending in Miami is $478.5
million. Thus total Miami Output from
the development of the Project is
$1,022.8 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 separately as an economic
indicator.
To incorporate the potential respending
and reinvesting in Miami, the multiplier
effect was measured. By applying a
multiplier of 11.8792 to the total direct
output from operating expenditures and
the retail enterprises, 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 $17.6 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
City Miscellaneous
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
$ 5,721,369
328,201
5,310,296
3,895,749
623,582
187,075
391,872
319,012
391,872
25,271
65,640
291,574
$17,551,513
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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
• Downtown Development Supplemental 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 $5.2 million and other fees
total approximately $3.7 million. These fees
are shown in detail in Exhibit II.
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Exhibit List
Exhibit I
Exhibit 11
Summary of Economic Impact
Impact and Other Fees
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Exhibit - I
OUTPUT
WAGES EMPLOYMENT TAXES
DIRECT
DEVELOPMENTAL
OPERATIONAL
TOTAL DIRECT
INDIRECT
DEVELOPMENTAL
OPERATIONAL
TOTAL INDIRECT
TOTAL BENEFITS
TOTAL DEVELOPMENTAL
TOTAL OPERATIONAL
544,282,500
2,200,000
546,482, 500
478, 533,174
1,934,240
480,467,414
1,026,949,914
$ 1,022,815,674
4,134, 240
$ 121,600,000
6,500,000
128,100, 000
106,910, 720
5,714,800
112,625,520
$ 240,725,520
$ 228,510,720
12, 214, 800
324
120 $ 17,551,513
444
17,551,513
444 $ 17,561,513
324
120 $ 17,551,513
TOTAL BENEFITS $ 1,026,949,914 $ 240,725,520 444 $ 17,551,613
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Exhibit - II
IMPACT AND OTHER FEES:
A. Development Square Footages:
1) Total gross building area (with parking)
2) Maximum development area (FAR)
3) Gross parking area
B. Impact Fees:
1) City of Miami Developmental Impact Fee
2) Developmental Impact Administration Fee
3) Downtown Development Supplemental 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) Budding 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
Square Footage
4,322,709
2,442,762
745,920
Amount
$ 1,521,358
45,641
568,088
3,082,981
$ 5,218,068
$ 2,525,150
580,857
290,429
30,000
188,500
14,521
27,591
1,442
3,219
60
250
35
$ 3,662,054
$ 8,880,122
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