HomeMy WebLinkAboutEconomic Impact AnalysisCOASTAL ON
THE RIVER
Economic Impact Analysis
Submitted to:
City of Miami
Prepared For:
Riverside 22 Investments, LLC
Prepared by:
SHARPTON, BRUNSON & COMPANY, P.A.
One Southeast Third Avenue
Suite 2100
Miami, Florida 33131
(305) 374-1574
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COASTAL N THE RIVER
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 10
Local Taxes 11
Public Sector Cost 12
Impact Fees 12
EXHIBITS
Exhibit I:
Exhibit II:
Summary of Economic Impact
Impact and Other Fees
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Project OvervOverview
Coastal on the River (the project) is
bounded by the Miami River on the
north, NW 22nd Avenue on the east,
and NW 14th Street on the south in
the city of Miami, Florida. The project
consists of 645 condominium units
and a parking garage with 963
parking spaces. The gross lot area is
235,728 square feet (5.41 aces) and
the net lot area is 178,596 square
feet (4.1 acres).
Coastal on the River will host several
amenities, including an at grade
landscape courtyard, an elevated
courtyard, and landscaped pool deck
above the parking garage. Included
will be indoor recreational facilities
such as lounge and spa, lockers,
bathrooms, and showers. Exterior
facilities will include the pool, sauna,
and jacuzzi.
There are a myriad of employment
centers in proximity to the Project,
including the Civic Center, Jackson
Memorial Hospital, Performing Arts
(currently under construction), Miami
CBD, Brickell Financial District,
Coconut Grove (Mercy Hospital),
Coral Gables CBD, and Miami
International airport.
The project is also close to all major
transportation arteries. Ramps to the
Dolphin Expressway (836) are just
minutes away making for quick
access to Miami Beach, Miami
International Airport, and the Port of
Miami,
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:
❑ 645 units of high -quality residential.
❑ 963 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
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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 247 employees
and the Project management is
expected to employ 20 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 $40,959,225
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
$2,217,342.
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 $121,588,577
Annual $ 1,879,200 Annual $ 4,322,160
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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:
• Food
y Recreation/Entertainment
• Transportation
Retail
The following table and charts summarize the economic impact of the
Coastal on the River project.
CONSTRUCTION
PERIOD ANNUAL
IMPACT RECURRING
Economic Activity Stimulated
Output $121,588,577 $ 4,322,160
Wages 40,959,225 1,879,200
Taxes 2,217,342
$162,547,802 $ 8,418,702
Jobs Created 247 20
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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 desig-
nated 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 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.
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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 acqui-
sition, 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
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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 Econornic
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 1 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
$ 64,702,308
56,886,269
$121, 588, 577
$ 2,300,000
2,022,160
$ 4,322,160
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 Pro-
ject 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 $85
million. Such activity will create approxi-
mately 247 new full time equivalent jobs
and employ a maximum of 312 workers
during peak periods. The workers will
earn approximately $22 million in direct
wages.
WAGES TAXES EMPLOYMENT
$21,796,097 247
19,163,128
$40,959,225
247
$ 1,000,000 $2,217,342 20
879,200
$1,879,200 $2,217,342 20
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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 20 new, permanent,
full-time equivalent jobs. The wages of
the workers who obtain these positions
will provide an impact of approximately
$1.9 million annually.
The total expenditures for the Project's
operations, will provide a new, perma-
nent impact of $4.3 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 $2.2 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.
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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
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 247 employees
over a thirty two month period and a
total on -going employment will aver-
age 20.
The total on -going positions can be
summarized as follows:
Management
v Security
Parking
Maintenance/Facilities
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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
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 develop-
ment phase is $65 million. Total
indirect output created by the direct
respending in Miami is $57 million.
Thus total Miami Output from the
development of the Project is $122
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 0
Indicators
The Results By Economic.
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
ind icator.
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 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 commu-
nity 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 $2.2 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
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
$ 736,575
683,651
501,541
80,280
24,084
50,450
41,070
50,450
3,253
8,451
37,537
$2,217,342
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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 $2.O 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 II
Summary of Economic Impact
Impact and Other Fees
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• Exhibit
SUMMARY OF ECONOMIC IMPACT
OUTPUT WAGES EMPLOYMENT TAXES
DIRECT
DEVELOPMENTAL $ 64,702,308 $ 21,796,097 247
OPERATIONAL 2,300,000 1,000,000 20 $ 2,217,342
TOTAL DIRECT
67,002,308 22,796,097 267 2,217,342
INDIRECT
DEVELOPMENTAL 56,886,269 19,163,128
OPERATIONAL 2,022,160 879,200
TOTAL INDIRECT
TOTAL BENEFITS
TOTAL DEVELOPMENTAL
TOTAL OPERATIONAL
58,908,429 20,042,328
$ 125,910,737 $ 42,838,426 267 $ 2,217,342
121,588,577 $ 40,959,225 247
4,322,160 1,879,200 20 $ 2,217,342
TOTAL BENEFITS $ 125,910,737 $ 42,838,426 267 $ 2,217,342
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Exhibit - N
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
B. Impact Fees:
900,955
616,583
222,714
Amount
1) City of Miami Developmental Impact Fee $ 458,763
2) Developmental Impact Administration Fee 13,763
3) Miami -Dade County Roadway Impact Fee 603,720
4) Miami -Dade County School Impact Fee 905,014
Total of all Impact Fees $ 1,981,260
C. Non -Impact Fees:
1) Miami Dade W.A.S.A. "connection fees" $ 901,710
2) Building Permit Fee 156,714
3) Installation Energy Fee 90,096
4) Major Use Special Permit Application Fee 30,000
5) Miami -Dade County Code Compliance 32,560
6) Radon Gas Fee 4,505
7) Fire Plan Review Fee 8,559
8) Ground Cover Fee 943
9) Land Use/Zoning 1,786
10) Zoning Review for Building Permit Fee 60
11) Certificate of Occupancy Fee 250
12) Application Fee 35
Total of all Non -Impact Fees $ 1,226,218
Total of all Fees for Project $ 3,207,478
Source: City of Miami Planning, Building and Zoning Department.
Miami Dade County Impact Fees
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