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HomeMy WebLinkAboutIII Tab 4 - Economic Impact Study• ambert Advisory ECONOMIC IMPACT ANALYSIS The Boulevard (Condominium and Retail Development) • - Prepared by - Lambert Advisory, LC - Prepared for - Hagler Holding Group June 23, 2005 • • • • Economic Impact Analysis — The Boulevard Economic Impact Analysis The Boulevard Lambert Advisory has completed an Economic Impact Analysis for the development of The Boulevard, a mixed -use residential and commercial project located on NE 34th Street at Biscayne Boulevard 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 development of The Boulevard, and can supplement the major use special permit application to be submitted to the City of Miami. The Boulevard property is situated in the heart of Miami, immediately adjacent to the Design District and convenient to the Brickell Business District and South Beach. The property is accessible to major thoroughfares including I-195, US 1, and 1-95. The residential and retail 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 (Le., price, absorption, timing, costs) that has been provided by Flagler Hudson LLC. We have not independently verified this information or data. A profile of the project follows. The Boulevard Economic Impact Analysis Buildin• Features & Profile General Features Site Size (Net) Building Height Number of Residential Units Retail Space (rentable area) Number of Parking Spaces Detailed Building Profile Gross Building Area (w/parking) Residential FAR Retail FAR Gross Parking Area 0.85 acres 15 stories 127 units 12,970 sq.ft. 193 spaces 288,758 sq.ft. 135,966 sq.ft. 12,970 sq.ft. 41,000 sq.ft. Note: Estimates are based on data provided by Flagler Hudson LLC, and/or calculations made by Lambert Advisory, and may be subject to change. Source: Flagler Hudson LLC, Lambert Advisory. 2005. • • • Economic Impact Analysis —The Boulevard Development of The Boulevard is expected to commence approximately six months after the City of Miami issues its approval. The duration of construction is anticipated to be 12 months, with occupancy planned for 2007. Based upon the information provided, construction and subsequent operations of Boulevard 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 and shopper expenditure 3. Long-term building employment and operating expenditure 4. Indirect flow -through benefits (real estate and retail) 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 Flagler Hudson LLC. • • • Economic Impact Analysis — The Boulevard The Boulevard Economic Impact Analysis Development Costs 1 Item Hard Costs Soft Costs 2 Total ' Land costs are not included. 2 Soft costs do not include costs of sales marketing, commissions). Source: Flagler Hudson LLC, 2005. Cost $28,000,000 $9,200,000 j $37,200,000J (e.g., brokers, The majority of development -related expenditures will be made in Miami -Dade County, and the City of Miami will capture the lion's share of these expenditures. Labor will account for approximately 60 percent ($16.8 million) of hard costs, and materials will account for 40 percent ($11.2 million). Over an estimated 12-month construction period, at an average annual construction wage of $39,5561 in Miami -Dade County, with a benefit/overhead multiplier of 1.4, there will be approximately 303 Full Time Equivalent (FTE) jobs created. Additionally, more than $3.3 million in professional fees are expected to be paid to Miami area firms (e.g., architecture, legal, marketing, brokerage). Assuming an average profit margin of 15% and overhead of 30%, nearly $2 million 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 $1.1 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 Boulevard is included in the following table. " State of Florida ES-202, third quarter 2004 • • • Economic Impact Analysis -- The Boulevard The Boulevard Economic Impact Analysis Impact and Other Fees Impact Fees: City of Miami Development Impact Fee (Ord. 10426) City of Miami Development Impact Administration Fee Miami Dade County Roads Miami Dade County Schools Total $143,249 $4,297 $142,611 $202,541 $492,698 Other/Non-impact Fees: City of Miami Bonus Fees $321,780 Miami Dade W.A.S.A. Connection Fee $182,079 City of Miami Building Permit Fee $28,147 Energy Installation Fee $18,994 M.U.S.P Application Fee $46,000 Dade County Code Compliance $18,600 Radon Gas Fee $1,899 Fire Plan Review Fee $1,709 Ground Cover Fee $740 Land Use/Zoning, Review for Building Permit $2,000 Certificate of Occupancy $260 Application Fee $36 $62 1, 234 $1,113,932 Source: City of Miami Planning, Building & Zoning; Miami Dade County; Flagler Hudson LLC, Lambert Advisory. Fees included above may be subject to change. 2. Long -Term (On -Going) Resident and Shopper Expenditure Based on demographic and rental housing trends in the area, the Boulevard resident base is expected to consist primarily of younger working professionals. Considering the estimated average sale price of $480,000, it is assumed that the residents will be mostly upper income individuals/households with household incomes of at least $150,000. Therefore, with a total of 127 households in the building, total personal income for the building is estimated at $19 million. Estimating that approximately half of the owners will relocate from outside the City, the marginal personal income that will flow into the Miami area will be nearly $9.5 million. We have estimated the marginal impact of $9.5 million in household income on retail sales and space demanded, using the Lambert Advisory Retail Trade Model. The • • • Economic Impact Analysis — The Boulevard 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-2007, The Boulevard Area Expenditure Potential (from New -to -Miami Residents) 2007 Estimated Marginal Growth Expenditure Sales/SF SF Demanded T •eofGood General Merchandise Apparel and Accessories Furniture and Home Equipment Electronic and Appliance Stores Sporting Goods, Books, Music Stores Miscellaneous Shoppers Goods Shoppers Goods - Sub -Total Food Stores Eating & Drinking Establishments Health & Personal Care Stores Liquor Convenience Goods - Sub -Total Building Materials Total Source: Lambert Advisory, 2005. $210,638 $202,654 $83,999 $80,340 $76,630 $116,877 $771,137 $1,076,225 $665,775 $345,921 $23,089 $2,111, 009 $207,551 $227 $290 $227 $200 $250 $420 $258 $422 $375 $407 $280 $401 $115 928 699 370 402 307 278 2, 983 2,550 1,775 850 82 5,258 1,805 $3,089,697 $308 10,046 In addition to the net new expenditures attributable to The Boulevard residents, the 12,970 square feet of ground -level retail planned will also attract retail expenditure — primarily from the area immediately surrounding the property, with limited additional support from visitors from outside of the area. Assuming that 20 percent of the expenditure in Boulevard retail comes from outside the City, and based upon sales per square foot (for Shopper Goods) of $308, nearly $800,000 will be expended within the City per year which is now going to other areas. 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 and retail space. These include: • Additional employment from operation of the condominium community and stores; • Property tax revenue to the City of Miami and Miami -Dade County; • Increased sales tax revenue from stores to State and County; and • Purchase of goods and services. • • • Economic Impact Analysis — The Boulevard We estimate that four FTE workers will be needed to operate the building and 13 FTE workers will be employed in the retail stores. Positions such as building managers, parking garage attendants, maintenance staff, retail workers, and security personnel will need to be filled. At an average Miami -Dade County wage of $37,2522 the operation of the building and stores will create over $600,000 in wages each year. Positions at various skill levels will be made available to area residents. Increased sales tax revenue will result from the operation of the 12,970 square feet of retail space. Assuming the net new retail expenditure in stores totals $800,000, approximately $56,000 in additional sales tax will be collected from retail sales. Additionally, an estimated $112,000 in goods and services related to building maintenance will be purchased annually within Miami -Dade, This includes cleaning services, maintenance supplies, utilities, etc. Finally, the development of Boulevard 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 26.239 (per thousand dollars of value), broken down as follows. The Boulevard Economic Impact Analysis Ad Valorem Tax Breakdown Item Millage Annual Tax City of Miami Operating 8.7163 $466,430 City of Miami Debt 0.950 $50,837 School Operations 8.09 $432,917 School Debt 0.597 $31,947 Environmental Projects 0.100 $5,351 S. Florida Water Management 0.597 $31,947 FIND 0.0385 $2,060 County Millage 5.935 $317,598 County Debt 0.285 $15,251 Children's Trust 0.444 $23,770 Library 0.486 $26,007 TOTAL 26.23895 $1,404,116 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 this analysis, we calculate ad valorem taxes for Boulevard based on a market value of approximately $54 million, or 85 percent of the estimated value of the residential and 2 State of Florida ES-202, third quarter 2004 • • • Economic Impact Analysis —The Boulevard retail uses. Accordingly, the development should generate approximately $1.4 million in real property taxes by 2007/8. This represents an estimated net marginal increase of roughly $1.3 million over the ad valorem tax collection the City would receive if the property were valued at current use (assessed in 2003 at $1.25± million). 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 increase in retail and operations employment. The 17 FTE jobs created as a result of building and retail operations are assumed to have a 1.2 multiplier impact of 21 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. • • • Economic Impact Analysis — The Boulevard The Boulevard 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 & Expend. Long -Term (On -Going) Resident and Shopper Expenditure Marginal Expenditure Growth — Residents (2007/8) Marginal Expenditure — Boulevard Shoppers (2007/8) Marginal Impact from On -Going Resident and Shopper Expend, Long -Term (On -Going) Building Employment and Operating Expenditure Full Time Jobs Total Direct Wages Created Sales Tax from Additional Retail Sales (2007/8) Goods & Service Purchased in Miami -Dade County Ad Valorem Taxes (2007/8) Total Impact from On -Going Operations of the Building/Retail Indirect Flow Through Benefits Full Time Jobs (Indirect) — Miami Dade County Total Indirect Wages Created Total Flow Through Indirect Benefits Source: Lambert Advisory, 2005. Impact 303 $12,000,000 $1,800,000 $1,100, 000 $14,900,000 $3,100, 000 $800,000 $3,800,000 17 $600,000 $56,000 $110,000 $1,400, 000 $2,200,000 21 $800,000 $800,000 Based upon the analysis set forth herein, The Boulevard 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 303, with on -going annual employment of 38 FTE jobs. Accordingly, there is an estimated $14.9 million impact from short-term construction employment and expenditures, and a stabilized $6,1 million annual revenue stream from resident/shopper expenditures and building operations (including real property taxes),