HomeMy WebLinkAboutTab E - Economic Impact StudyE. ECONOMIC IMPACT STUDY
MIADOCS 838506 1
Miami
~
k������ Economic
Associates, Inc
Maria (3naha.Eaq-
Shutts&Bowen
Miami, Florida
Re: MUSP Impact Analysis — 5220 Biscayne Boulevard
Dear Ms. Gna|iu:
K8}mmi Economic Associates, Inc, (MEA|) has performed analysis to estimate the benefits
that the mixed -use pnq8C1 proposed for development gt 5220 Biscayne Boulevard will
provide to the City of Miami's housing market as well as its fi000| and economic
condition, This letter, which is organized as shown below, provides the findings of our
analysis and their bases:
Section Page
Proiect Description
Fiscal Impact 2
Economic Impact 3
Bases of stimates
Closing 7
Project Description
The mixed -use project proposed for development 5220 Biscayne Boulevard will consist
of 183 condominium units together with 10`300 square feet of retail space, The project
will also provide 322 parking spaces. Proceeds from the sale of the residential units will
total $76.9 million, Rental revenues will total $463,500 in 2005 Constant Dollars.
Development of the proposed project is expected to cost $41 7 million in hard
construction costs. /\n additional $125million will be expended for soft costs including
ao|eo commissions. A000ujing, the project will cost $542 mU!'nn to develop exclusive of
land acquisition costs, financing expenses and developer's profit
6861 Sw�89th Terrace Miami, Florida 33156
Maria Gna|ia.Esq.
Shutts &Bovven
October 4.2OO5
Page
Summary of Findings
Dwadupn`ert of the mixed -use project proposed at 5220 Biscayne Boulevard will be
highly beneficial to the City of Miami in several important ways as summarized below,
Impact onthe Housing Market
w City officials have long sought to attract new residential development to the variousneighborhoods of Miami to provide bettor market support for the retailers and food
and beverage establishments operating within them aswell as toenhance the City's
tax base. Toward this end, the City Commission has recently approved number of
new residential projects in the DuPont P|aza, River. Bnnhe|| and (]nnm'EdQ8wa\gr
areas of the City, Approval of the proposed project will be consistent with the above -
stated objectives vvhi|a extending new residential development into an additional
section of the City.
Fiscal Impact
Fiscal impact nafons to the impact that the proposed mixed -use project will have On
the finances of the City of Miami The benefits that it will provide to the City will be
both nVn'n:cuning and recunmq in nature o enumerated below <2005 Constant
DollarsY
N0n'recurrioqB8nefits
° $ 59.406 in City building permit fees
° $ 10.000in City solid waste surcharge fees
° $ 142,881 in City impact fees
w $43D.5U3inAffordable Housing Bonus fees
Recurrinq Benefits
* $532.1O3annually inCity General Fund edvalorem taxes
° $ 5G.8O5annually inCity Debt Service advalorem taxes
• Trade -related fees for roofing, electrical, plumbing, mechanical, pool and
elevator work performed during construction (non'rocumng)
* Increased City utility taxes and franchise fees (recuninQ)
• Increased occupational license fees (reouning)
* Increased parking surcharge fees (neournng)
* Increased revenue sharing funds (recurring)
Miami Economic Aaspciateo, Inc. 6861 S.W. 89th Terrace Miami, Florida 83156
Twl:(305) 669-0229 Fax: (305)669'8s34 Ennam`nneaimk@bemsmwth.mmm
Maria Gra\ia^Eao,
8huUs &Bowen
October 4.2OU5
Page
� While the focus of hAEA{'S fiscal analysis was on the City of Miami, the
mixed -use project proposed at 5220 Biscayne Boulevard will as shown
be|ow, provide significant fiscal benefits to other non -municipal
governmental jurisdictions that impact the lives of City residents:
o $173'418mCounty road impact fees (non-neouning)
o $268.B30inSchool impact fees (non-recurnnQ)
o $355.SO7mCounty General Fund advalorem taxes (recumng)
o $ 17,872inCounty Debt Service odvalorem taxes(reoumng)
o $ 28608 in Chi|dnrn's Trust ad valorem taxes (recurring)
o $ 29,111 in County Library ad valorem taxes (recurring)
o $484.591 inSchool Operating advalorem taxes (reourring)
o $ 35T80inSchool Debt Service advalorem taxes (recunnng)
o Increased County Occupational license fees (reourriog)
Economic Impact
Economic impact relates tuthe impact that the proposed mixed -use project 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 economic
benefits summarized below are stated in2OO5Constant Dollars.
* Approximately 90 percent of the $542 rniUkzn that will be spent on hard
and soft costs todevelop the proposed mixed -use project will be spent
within the City of Mianni producing*an overall economic impact
approximating $75.8 million when the multiplier effect is considered
� Project expenditures within the City of Miami will include an estimated
$18.8 rnlUiOn for construction labor. an amount sufficient to pay
approximately 424 construction workers their average annual wage of
$44,350,
Recurrinq
* /\ total of $39 rnUUon will be spent annually in shops and restaurants
within the City of Miami by project residents, Additionally, $1,5 million in
ad valorem taxes will be paid to the City of Miami, Miami -Dade County
and the School Boerd, all of which maintain their principal offices within
the City, These expenditures will have an overall economic impact on the
City of$8,1 million annually when the multiplier effect iaconsidered
Miami Economic Associates, Inc. 6861 S.W. 89wTermwce Miami, Florida 33156
Tel: (s05)66g'0229 Fax: (30s)669'8s34 EnnaU,nnemink@bensowth'net
Maria Grdim, Esq.
ShmMs8Bowen
October 4.2O05
Page
° A total of 36 people will be employed at the proposed projexct, inclusive of
people involved in project operations. [nainhynonoa and parking, These
worhens, who will include City residents, will earn in excess of $9.0 million
annually
Bases ofEstimate-
The materials that follow provide the assumptions used to aS\innatm the fiscal and
economic benefits that development of the proposed mixed -use project will provide to
the City of Miami. All monetary amounts are stated in 2005 Constant Dollars,
Project Characteristics
A1S12OBiscayne Boulevard, the proposed projectwill bewithin the City ofMiami oo
well as the jurisdictions of the Miami -Dade County and the Miami -Dade County
Public School District,
° The project will entail the construction of 316.077 gross square feet of building area
Of this amount, 191.050 square feet will pertain to the residential portion, inclusive
170.850 square hae{ of saleable space within the 183 units The remaining 125.017
square feet will be comprised of the retail space and parking,
Development of the proposed mixed -use project will cost approximately $41 7 million
to construct in terms of hard construction, Soh uuahs including those relating to
professional fees, sales and leasing cornnni8siona, nnarkoUnQ, developer overh8ad,
adrnmiotrabnn, etc will total an additional $125 rnU|}VnTherefore, $542 million will
be spent to complete the project exclusive of land acquisition costy. financing
expenses and developer's profit.
The 183 condominium units, with 170.850 saleable square feet, will generate
approximately $76-8million ingross sales proceeds based on anaverage price per
square foot approximating $450. The Constitution of the State of Florida mandates
that real property beassessed for advalorem tax purposes at 100 percent of market
value. Hovvever, as practical matter assessed values for new condominium units
approximate OD percent of market va|ue, in this case $61.5 million Assuming that 80
percent ofthe residential units are eligible for the Homestead Exemption, the K/\a|
taxable value ofthe proposed residential units will be$5G.9million,
Based on a review of comparable office oruhaots, it is anticipated the 10.300 square
feet of retail space will have an assessed. hence taxable value, approximating $30
* The total taxable value of the project, inclusive of the residential units and retail
space, will be $59,9 million.
Miami Economic Associates, Inc. 6861 S.W. 89* Terrace Mmismni, Florida 33156
KAahaGna|ia. Esq.
8hutts &Bowen
Octubex4. 2005
Page
Residents of the proposed condominium units will on average require an annual
income of approximating 8150.000bJ qualify for ownership. Based on this estimate
of average household inoonoe, it is projected that the people living at the proposed
project will spend $5.5 million annually in retail and restaurant establishments, This
projection assumes that they spend approximately 20 percent oftheir income for that
purpose.
� Based on industry sbandards, it is anticipated that the proposed retail space will be
occupied by 28workers This estimate assumes 2.5workers per 1.000 square feet.
When project uperahona, maintenance and parking personnel are accounted/orthe
total number employed atthe proposed project will be36people
Non -recurring Fiscal Impacts
The City of Miami charges building permit fees at a rate of $O20 per gross Square
foot Of rnu|h-fann||y residential construction and $0.25 per gross square hoot of
cnrnnnercim| construction, In calculating haos, the oqwana footage associated with
parking garage space was charged for at the commercial rate Based on the
distribution of space by use previously discuS3ed, building permit fees totaling
$69,466 will be paidA solid waste surcharge fee in the amount of $10.000. the
maximum amount, will be applied.
The v8hOuS trades involved in completing the new project including the nJofinQ,
electrical, p|umbing, nnmchanica|, 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 pro1ect's final engineering drawings be connp|etod, which has not yet
occurred. Accordingly, the fees that will be paid can not be quantified at this time, /\
solid waste surcharge inapplied Aothese fees.
The City of W1ienni charges impact fees on new construction projects based on
square footage. The fees will be used to address the impacts of the project on pohoo,
fire, parks, shee1s, storm sewero, solid waste and general services administration
The rates paid for projects constructed in the area of the City in which the proposed
project will be developed are $0,778 per square foot of new residential use and
$0.967 per square foot of commercial use, Based On the pro]ecf's square feet of
residential living area and square feet of retail opace. City impact fees totaling
$142.881 will be paid,
Development of the proposed project at the scale proposed will require that the
developer take advantage of the Chy's Affordable Housing BonusUnder the
provisions of that program the FAR of the project will be increased by 34.718 at a
cost of $12.4Oper square foot, resulting inatotal payment of$43O.5O3
New construction projects located in the City of Miami also need to pay impact fees
to N1ien1i'[)ado County for roads and schools. In the eastern portion of the county,
the rate for roads for condominiums is $877 per unit. The road impact fee rates for
Miami Economic Associates, Inc. 6861 S.w*.89414 Terrace Miami, Florida 33156
Maria Gra|ia. Esq,
Ghutts&Bowen
Octobar4. 2005
Page
retail space in the eastern portion of K4iami-Dade County are $1,255 per square foot
for projects with the quantities of space proposed. The base tee per unit for school
impact fees is $612 An additional amount ofBOQ18 per square hoot in then applied,
Accordingly, impact fees totaling $442.254 will need to be paid at the time the
building pmnni1 for the proposed project is issued. Of this amount. $173418vvi|| be
applied toroads and $288`835toschools,
Recurring Fiscal Impacts
The rniUage 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 n)i||mge rates shown to proposed pro|ect'o
estimated taxable value of$5S.9million,
Rauy$vouo
| Entity I Taxable Value Taxes
| City vfMiami �
| General Fund 871625 | $ 522.103
� Debt Service Fund 095000 $ 56.305
| Miami-DadeCoumy
General Fund 583500 $355.507 '
Debt Service Fund ! 028500 $ 17D72
Cmm ' T � 0�*�2O $ 2808a
� ,cno 'vs _ i
|
� Miami -Dade ' O�O90UO $*84.591
�- -^ -r
/ Debt Service 0,59700 / S 35780
Source, Miami -Dade County Property Appraiser: Miami Economic Associates, Inc.
The City of Miami collects utility taxes and franchise fees from the providers of
ha|ephone, electric and other such services based on their revenues, The amount
collected as a result of the development of the mixed -use project proposed by
Cardinal will be dependent on the amount of these services used by the p jed's
residents and commercial tenants: hence, it can not be quantified at this time
Both the City Of Mxsnni and Miami -Dade County will collect occupational license fees
from the occupants of the proposed office and retail apace, The amount collected
can not be estimated at this time since it will be dependent on the nature of the
businesses housed inthe office and retail space.
w The City of Miami charges a 20 percent surcharge on parking feesPatrons of and
visitors bJthe proposed p ject^s retail and office space would pay this surcharge. It
is not possible at this time to estimate the amount that will be generated,
� The City of Miami and Miami -Dade County participate in a number o/ revenue
sharing programs including one that relates to the rebate of a portion of the State
sales tax proceeds that are collected in Miami -Dade County The amounts of
Miami Economic Asmociates, Inc. 6861 S.W. 801hTwrrace Miami, FAwrimw33156
MariaGna(ia. Esq.
Shuttn&Bowen
October 4'2OO5
Page 7
revenue sharing revenues that will accrue to the City aoaresult ofthe proposed
project can not be estimated at this time.
Non -recurring Economic Benefits
� It is estimated that approximately 90 percent of the $542 nliUmn that will be spent on
the hard and soft costs to develop the proposed mixed -use project will initially be
spent in the City of K8imnni, 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 nnoUo| of Minnesota |MPU\N Group (WY|G). which is one of the nation's
foremost econometric firms, the overall economic impact of these expenditures will
approximate $75.Omillion based anapplication ofa 1 554nnuhipher
* M|G's input-output model further estimates that approximately $18.8 million of the
moneys spent on hard costs within the City of Miami will be spent for labor. The
average construction worker in Miami -Dade County earns approximately $44,350 per
year according to the Florida Agency for Workforce Innovation. Therefone, the
projeC%'$expendituFe onconstruction labor would support approximately 424workers
onanannual basis ut their average wage rate
Recurring Economic Benefits
� The residents of the proposed mixed -use project will spend $55 million annually in
retail establishments and restaurants. approximately 70 percent of which, $3 Q
million. will be spent within the City of Miami, The project will generate approximately
$1,5 million annually in ad valorem taxes for the City ofMiami, KAiami'DadeCour4y
and the School Boa/d, all of which maintain their principal offices within the Cdy.
According to the K4|G input-output model. the total economic impact of these
expenditures will be $8,1 million based on the application of a 1,5 multiplier
Based on wage data compiled by the Florida Agency on Workforce |nnovetion, it is
anticipated that annual eenlinQa of the 36 people who will be employed at the
proposed project, a portion of whom may be City residents, will exceed $9,0 million,
Closing
The analysis performed by IVIEA| demonstrates that the nnixed-use project proposed for
development ad522OBiscayne Boulevard will behighly beneficial tuthe City ofMiami
both fiscally and econornicaUy. It will also re -enforce the Ci\y'n efforts to re-establish its
core areas as residential communities.
Sincere|y.
Miami Economic Associates, Inc,
AndrewDo|kart
President
Miami Economic Associates, Inc. 6861 S.W.89wTervaoe KMiammi, Florida 33156
Tel: (305)66g-0229 Fmw:(305) 669-8534 EmmaW;mmmoink@bmnlawuth.meu