HomeMy WebLinkAboutTAB P - Economic Impact Study'` Lambert
A dvisory
ECONOMIC IMPACT ANALYSIS
BRISAS DEL RIO
- Prepared by -
Lambert Advisory, LC
- Prepared for -
The Merco Group
March 3, 2005
Economic Impact Analysis Brisas del Rio
Economic Impact Analysis
Brisas del Rio
Lambert Advisory has completed an economic impact analysis for the development of
Brisas del Rio, a condominium development located along the Miami River at the
intersection of N.W. 15th Street and N.W. 24th Avenue 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 Brisas del Rio development, and can supplement the major use
special permit application to be submitted to the City of Miami.
The Brisas del Rio property is situated in the C-1 zoning district of Miami. The site is
adequately accessible to major thoroughfares, including I-95. The residential
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 (i.e., price, absorption, timing, costs) that has been provided by The Merco
Group. We have not independently verified this information or data.
A profile of the project follows.
Brisas del Rio
Economic Impact Analysis
Building Features & Profile
General Features
Site Size (Upland Acreage - Net)
Building Height
Number of Residential Units
Gatehouse/Marina Store
Common Area
Number of Parking Spaces
Detailed Building Profile
Gross Building Area (w/parking)
Residential FAR
Common Area/Other FAR
Est. Gross Parking Area
5.8 acres
20 stories
698 units
2,100 sq.ft.
154,341 sq.ft.
1,119 spaces
1,206,51 sq.ft.
723,240 sq.ft.
156,441 sq.ft.
481,170 sq.ft.
Note: Estimates are based upon data provided by The Merco Group,
and/or calculations made by Lambert Advisory, and may be subject to
change.
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Economic Impact Analysis Brisas del Rio
Development of the Brisas del Rio property is expected to commence in the First Quarter
2006. The duration of construction is anticipated to be 18 months, with occupancy
planned for Third Quarter 2007.
Based upon the information provided, construction and subsequent operations of Brisas
del Rio 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 expenditure;
3. Long-term building operating expenditure
4. Indirect flow -through benefits (real estate)
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 The Merco Group.
Brisas del Rio
Economic Impact Analysis
Development Costs
Item
Hard Costs
Soft Costs
Total
Cost
$88,152,000
$22,039,000
$110,191,000
Source: The Merco Group (Note: Allocation of Hard
and Soft Costs estimated by Lambert Advisory).
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Economic Impact Analysis Brisas del Rio
The majority of development -related expenditures will be made in Miami -Dade County,
and the City of Miami will capture a significant share of these expenditures.
Labor will account for approximately 60 percent ($52.9 million) of hard costs, and
materials will account for 40 percent ($35.2 million). Over an estimated 18-month
construction period, at an average annual construction wage of $37,440 1 in Miami -Dade
County, with a benefit/overhead multiplier of 1.4, there will be nearly 550 Full Time
Equivalent (FTE) jobs created.
Additionally, $2.2 million in professional fees are expected to be paid to Miami area firms
(e.g., architecture, engineering, legal). Assuming an average profit margin of 15% and
overhead of 30%, approximately $1.2 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 $5.0 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 Brisas del Rio is included in
the following table.
State of Florida ES-202, first quarter 2004
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Economic Impact Analysis Brisas del Rio
Brisas del Rio
Economic Impact Analysis
Impact and Other Fees
Impact Fees:
City of Miami Development Impact Fee (Ord. 10426)
City of Miami Development Impact Admin. Fee
Miami Dade County Roadway
Miami Dade County Schools
TOTAL IMPACT FEES
Total
$681,644
$20,449
$617,203
$1,091,110
$2,410,407
Other/Non-Impact Fees:
City of Miami Bonus Fees (PUD Adjustment) $1,228,221
Miami Dade W.A.S.A. Connection Fee $976,538
City of Miami Building Permit Fee $161,940
Energy Installation Fee $120,651
M.U.S.P Application Fee $45,000
Dade County Code Compliance $55,096
Radon Gas Fee $12,065
Fire Plan Review Fee $10,859
Ground Cover Fee $5,053
Land Use/Zoning, Review for Building Permit $2,000
Certificate of Occupancy $250
Application Fee $35
TOTAL OTHER FEES $2, 677, 706
TOTAL PROJECT FEES $5,088,113
Source: City of Miami Planning, Building & Zoning; Miami Dade County; The Merco
Group; Lambert Advisory. Fees included above may be subject to change.
2. Long -Term (On -Going) Resident Expenditure
Based on demographic and rental housing trends in the area, the Brisas del Rio resident
base is expected to consist primarily of younger working professionals. Considering the
proposed average sale price of roughly $550,000, it is assumed that the residents will be
mostly upper income individuals/households with incomes of at least $150,000.
Therefore, with a total of 698 households in the building, total personal income for the
building is estimated to exceed $104 million. Estimating that approximately half of the
owners will relocate from outside the City, roughly $52 million of marginal personal
income will flow into Miami.
We have estimated the marginal impact of $52 million in household income on retail
sales and space demanded, using the Lambert Advisory Retail Trade Model. The
following table provides a summary of additional retail expenditure and demand for
space as a result of development and sale of the units by 2008.
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Economic Impact Analysis Brisas del Rio
Brisas del Rio
Area Expenditure Potential (from New -to -Miami Residents), 2008
Type of Good
General Merchandise
Apparel and Accessories
Furniture and Home Equipment
Electronic and Appliance Stores
Sporting Goods, Books and Music Stores
Miscellaneous Shoppers Goods
Shoppers Goods - Sub -Total
Est.
Marginal
Growth Sales/
Expenditure SF
$1,169,300
$1,124,900
$466,300
$446,000
$425,400
$648,800
$227
$290
$227
$200
$250
$420
SF
Demanded
5,150
3,880
2,050
2,230
1,700
1,550
$4,280,700 $258 16,560
Food Stores $5,974,100 $422 14,160
Eating & Drinking Establishments $3,695,700 $375 9,860
Health & Personal Care Stores $1,920,200 $407 4,720
Liquor $128,200 $280 460
Convenience Goods - Sub -Total $11,718,200 $401 29,200
Building Materials
Total
$1,152,100 $115 9,400
$17,151,000 $308 55,160
Source: Lambert Advisory, 2004.
Although the property includes a marina component with slips available for boat
dockage, we assume that for this analysis use of the marina will be primarily from
building residents/unit owners; therefore, there will be no additional revenue generated
(or corresponding economic impact) from the marina operations. Accordingly, there is a
small marina/supply store that will be part of the common area grounds (included as
part of the gatehouse); similarly, this area is assumed to provide marginal support to
building residents, with nominal impact to the surrounding community.
3. Long -Term (On -Going) Building Employment and Operating Expenses
There are a number of areas where positive public benefits or economic impacts will
result from the on -going operation of the residential building (and marina area). These
include:
• Additional employment from operation of the condominium community;
• Property tax revenue to the City of Miami and Miami -Dade County;
• Purchase of goods and services.
We estimate that 25 FTE workers will be needed to operate the building (and common
area) — positions such as building managers, parking garage attendants, maintenance
staff, and security personnel will need to be filled. At an average Miami -Dade County
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Economic Impact Analysis Brisas del Rio
wage of $37,856 2 the operation of the building will create approximately $950,000 in
wages each year. Positions at various skill levels will be made available to area
residents.
Additionally, an estimated $500,000 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 Brisas del Rio 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 26.23895 (per
thousand dollars of value), broken down as follows.
Brisas del Rio
Economic Impact Analysis
Ad Valorem Tax Breakdown
Item
Annual
Millage Taxi
City of Miami Operating 8.7163 $2,357,674
City of Miami Debt 0.950 $256,967
School Operations 8.09 $2,188,278
School Debt 0.597 $161,484
Environmental Projects 0.100 $27,049
S. Florida Water Management 0.597 $161,484
FIND 0.0385 $10,414
County Millage 5.935 $1,605,369
County Debt 0.285 $77,090
Children's Trust 0.444 $120,152
Library 0.486 $131,459
TOTAL 26.23895 $7,097,420
Source: Miami Dade County Property Appraiser, Lambert Advisory, 2004.
Real property is typically assessed at between 80 and 90 percent of Fair Market Value.
For the purposes of this analysis, we calculate ad valorem taxes for Brisas del Rio based
on a market value of $270 million, or 85 percent of the estimated value of the
residential building. Accordingly, the development should generate approximately $7.0
million in real property taxes by 2008. This represents an estimated net marginal
increase of roughly $6.9 million over the ad valorem tax collection the City would receive
if the property were valued at current use.
2 State of Florida ES-202, first quarter 2004
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Economic Impact Analysis Brisas del Rio
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 25 FTE jobs created as a result of building and retail operations are assumed to
have a 1.2 multiplier impact of 30 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.
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Economic Impact Analysis — Brisas del Rio
Brisas del Rio
Economic Impact Analysis
Summary, Economic Impacts (Rounded)
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 (2008)
Marginal Expenditure — Other
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
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
Impact
550
$52,900,000
$2,200,000
$5,000,000
$60,100,000
$17,000,000
$0
$17,000,000
25
$950,000
$500,000
$7,100,000
$8,550,000
30
$1,400,000
$1,400,000
Source: Lambert Advisory, 2005.
Based upon the analysis set forth herein, the Brisas del Rio 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 550, with on -going
annual employment of 30 FTE jobs. Accordingly, there is an estimated $60 million
impact from short-term construction employment and expenditures, and a stabilized
$25.5 million annual revenue stream from resident expenditures and building operations
(including real property taxes).
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