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E. ECONOMIC IMPACT STUDY
MIADOCS 725241 1
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December 15, 2004
Judith A. Burke, Esq.
Shutts & Bowen, LLP
Miami, Florida
Re: MUSP Impact Analysis — Byblos
Dear Ms. Burke:
Miami Economic Associates, inc. (MEAT) has performed analysis to estimate the impacts
that the proposed Byblos 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
8
Project Description
The proposed Byblos project will be located at 3851 Bird Road within the City of Miami.
The project will contain 38 condominium units together with 15,092 square feet of office
space and 14,024 square feet of retail space. The project will also parking in an amount
considerably in excess of code.
Development of Byblos will require the expenditure of approximately $15.0 million (2004
Dollars) for "hard" construction. "Soft" costs including those relating to professional fees,
6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (3051 669-8534 Email: meainkmbellsouth.net
Judith A. Burke, Esq.
Shutts & Bowen, LLP
December 15, 2004
Page 2
permits, sales and leasing commissions, marketing, developer overhead, administration,
etc, will approximate $1.0 million (2004 Dollars). Therefore, $16.0 million will be spent to
complete the project exclusive of land acquisition, financing costs and developer's profit.
Summary of Findings
Development of Byblos 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 Byblos will be consistent with the above -stated objectives
while extending new residential development to yet another section of the City.
Fiscal Impact
• Fiscal impact refers to the impact that Byblos 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 2004 Constant Dollars:
a Non -recurring Benefits
• $ 46,853 in City building permit fees
• $ 10,000 in City solid waste surcharge fees
• $ 102,813 in City impact fees
• $ 192,720 in Affordable Housing FAR Bonus fees
o Recurring Benefits
• $ 286,461 annually in City General Fund ad valorem taxes
• $ 29,260 annually in City Debt Service ad valorem taxes
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)
• Increased occupational license fees (recurring)
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meainkabellsouth.net
Judith A. Burke, Esq.
Shutts & Bowen, LLP
December 15, 2004
Page 3
• Increased parking surcharge fees (recurring)
o Other
• While the focus of MEAI's fiscal analysis was on the City of Miami, Byblos
will, as shown below, provide significant fiscal benefits to other non -
municipal governmental jurisdictions that impact the lives of City
residents:
o $ 88,415 in County road impact fees (non -recurring)
o $ 66,327 in School impact fees (non -recurring)
o $ 182,798 in County General Fund ad valorem taxes (recurring)
o $ 8,778 in County Debt Service ad valorem taxes(recurring)
o $ 13,681 in Children's Trust ad valorem taxes (recurring)
o $ 14,969 in County Library ad valorem taxes (recurring)
o $ 249,172in School Operating ad valorem taxes (recurring)
o $ 18,388 in School Debt Service ad valorem taxes (recurring)
o Increased County occupational license fees (recurring)
Economic Impact
• Economic impact relates to the impact that Byblos 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 2004 Constant Dollars.
o Non -recurring
• Approximately 90 percent of the near $16.0 million spent on hard and soft
costs to develop Byblos will be spent within the City of Miami, producing
an overall economic impact of $22.4 million when the multiplier effect is
considered.
Project expenditures within the City of Miami will include an estimated
$7.0 million for construction labor, an amount sufficient to pay
approximately 160 construction workers their average annual wage of
$44,350.
o Recurring
A total of $880,000 million will be spent annually by Byblos residents in
retail and restaurant establishments within the City of Miami. An
additional $562,000 million in ad valorem taxes will be paid to the City of
Miami, Miami -Dade County and the School Board, all of which maintain
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (305) 669-8534 Email: rneaink@belisouth.net
Judith A. Burke, Esq.
Shutts & Bowen, LLP
December 15, 2004
Page 4
their principal offices within the City. These expenditures will have an
overall economic impact on the City of $2.2 million annually when the
multiplier effect is considered.
• A total of 110 people will be employed at Byblos, inclusive of retail and
office workers and people involved in project operations and
maintenance. They will earn approximately $3.3 million annually.
Bases of Estimates
The materials that follow provide the assumptions used to estimate the fiscal and
economic benefits that development of Byblos will provide to the City of Miami. All
monetary amounts are stated in 2004 Constant Dollars.
Project Characteristics
• Byblos will be located at 3851 Bird Road within the City of Miami. It will also be within
the jurisdictions of Miami -Dade County and the Miami -Dade County Public School
District.
• Byblos will entail the construction of 213,038 gross square feet of building area. Of
this amount, 92,134 square feet will pertain to the residential portion of the project
inclusive of the livable space contained in the 38 units as well as amenity, core,
service and circulation areas. The remaining square footage will be comprised of the
commercial portions of the project and parking.
• To build Byblos 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 15,542 square feet of the proposed residential and
commercial space.
• Development of Byblos will cost approximately $15.0 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 $1.0 million. Therefore, $16.0 million will be spent to complete the
project exclusive of land acquisition, financing costs and developer's profit.
• Byblos's 38 units will generate $27.1 million in gross sales proceeds. The average
unit will be priced at approximately $715,000.
• 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 $21.7 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
Judith A. Burke, Esq.
Shutts & Bowen, LLP
December 15, 2004
Page 5
percent of the units are eligible for the Homestead Exemption, the taxable value of
Byblos' residential component will be $20.9 million.
• The 15,092 of office will be sold as commercial condominium units with the sales
proceeds estimated to total $5.7 million. The 14,024 square feet of retail space are
projected to lease at a rate of $50 (net) per square foot, reflecting the proposed
project's proximity to the Village of Merrick Park. Assuming a 95 percent occupancy
rate and a 10 percent capitalization rate, the market value of retail space would be
$6.7 million. In combination, the taxable value of the office and retail space will be
$9.9 million, assuming that they are assessed at 80 percent of market value.
• Based on the two preceding paragraphs, the total taxable of Byblos project will
approximate $30.8 million.
• Residents of the proposed condominium units will on average require an annual
income of approximating $286,000 to qualify for ownership. Based on this estimate
of average household income, it is projected that the people living at Byblos will
spend $2.2 million in retail and restaurant establishments annually. This projection
assumes that they spend 20 percent of their income for that purpose.
• Approximately 110 people will be employed at Byblos on a full-time equivalent basis.
This estimate assumes 2.5 workers per 1,000 square feet in the 14,024 square feet
of retail and 4 workers per 1,000 square feet in the office space. The remainder of
the workers will be involved in project maintenance and operations.
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
$48,653 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 Byblos will be
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net
Judith A. Burke, Esq.
Shutts & Bowen, LLP
December 15, 2004
Page 6
developed are $0.939 per square foot of residential use and $1.201 per square foot
of commercial use. Byblos will contain 72,252 square feet of living area and a total of
29,116 square feet of office and retail space, resulting in the payment of impact fees
totaling $102,813.
• 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 15,542 square
feet for which entitlements are being sought, or a total of $192,720.
• 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 road impact fee rates
for office and retail space in the eastern portion of Miami -Dade County are $2.484
and $1.255 per square foot, respectively, for projects with the quantities of space
proposed. The base fee per unit for school impact fees is $612. An additional amount
of $0.918 per square foot is then applied. Byblos will contain a total of 72,252 square
feet in its 38 residential units. Accordingly, impact fees totaling $154,742 will need to
be paid at the time the project's building permit is issued. Of this amount, $88,415
will be applied to roads and $66,327 to schools.
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 Byblos's estimated
taxable value of $30.8 million.
Entity
Rate/$1000
Taxable Value
Taxes
City of Miami
General Fund
8.71625
$ 268,461
Debt Service Fund
0,95000
$ 29,260
_
Miami -Dade County
General Fund
5.93500
$ 182,798
Debt Service Fund
0.28500
$ 8,778
Children's Trust
0.44420
$ 13,681
Library
0.48600
$ 14,969
Miami -Dade County Public Schools
Operating
8.09000
$ 249,172
Debt Service
0.59700
$ 18,388
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 Byblos 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.
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meainkIbellsouth,net
Judith A. Burke, Esq.
Shutts & Bowen, LLP
December 15, 2004
Page 7
Both the City of Miami and Miami -Dade County will collect occupational license fees
from the occupant(s) of the proposed retail and restaurant space. The amount
collected can not be estimated at this time since it will be dependent on the nature of
the business housed in the space.
• The City of Miami charges a 20 percent surcharge on parking fees. Employees and
patrons of the proposed office and retail space parking in the project would pay this
surcharge. It is not possible at this time to estimate the amount that will be
generated.
Non -recurring Economic Benefits
• It is estimated that approximately 90 percent of the $16.0 million that will be spent on
the hard and soft costs associated with development of Byblos 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 $22.4
million based on application of a 1.554 multiplier.
• MIG's input-output model further estimates that approximately $7.0 million of the
moneys spent on hard costs within the City of Miami to construct Byblos 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 160 workers on an annual basis at their average wage rate.
Recurring Economic Benefits
• The residents of Byblos will spend $2.2 million annually in retail establishments and
restaurants. It is estimated that approximately 40 percent of this amount, $880,000,
will be spent within the City of Miami. Additionally, the project will generate $561,000
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
$2.2 million based on the application of a 1.5 multiplier.
• Based on wage data compiled by the Florida Agency on Workforce Innovation, it is
anticipated that annual earnings of the 110 people who will be employed at Byblos
on a full-time equivalent basis who average $30,000, or $ 3.3 million in total.
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net
Judith A. Burke, Esq.
Shutts & Bowen, LIP
December 15, 2004
Page 8
Closing
The analysis performed by MEAL demonstrates that development of Byblos 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@bellsauth.net