HomeMy WebLinkAboutEconomic Impact Analysis•
January 4, 2006
Patricia Baloyra, Esq.
Tew Cardenas
MarnL Ronda
Re: MUSP impact Analysis — Marqus West
Dear Ms, Baioyrai
Mrn ECOrtOOTiC Associates., inc, (MEAT) has performed analysis to estim,ate the fiscal
and economic benefits that the Marquis \Nest project, which is proposed for
development at N,E, rj- Avenue and N.E. 1,17. Street, will provide to the. City of Miami,
This ietter, which is organized as shown below„ provides the fin -dings of our -analysis and
their bases:
i P.age
ection ,
P7rroteof Description 1
rnrnari 6 f Find;inp ,
impact on thet1pusin.2 Market j,
Fiscal Benefits . 4-
,-,
EGO:nark EiebefitS !
._., -
bases of Estimates .
t,
gjosina_ . 8
The analysis presented below is. based on preliminary estimates of pricing and
construction costs, These est mates are subject to change based on market conditions
and cost parameters at the time deVelopment. actually Occurs and the changes rnay be
significant.
Project Description
The Marquis West project will be comprised of 430 :condominium units and 29„.232
square feet of retail- space, which wu Cie offered to me market on a forsae as opposed
toiease basis. Based on the anticipated sales prices .per square foot for both the
6864 6.W‘ 89th Terrace Mami, Florida 33156
Tel: ( 9-0229 Fax: (3051 669-8534 Email: meainlaribe8southrtet
•
Patricia Baicyra., Esc',
Taw Cardenas
january 4, 2006
Page 2
residential units and the retail space, dross sales proceeds totalinia pproxm6rg
$200..0 rniltion will be generated.
Construction of ivlariquis West iis exp.ected to cost $135-,0 million in bard costs An
additional $40,-0 ni4tion vi/W be expended for soft costs inclusive architectural and
engineering fees, marketing, saes CQ'M msscns project overhead, etc, .Acicordingly, the
projeot will cost $175..0 mon to develop exclusive of lard cost and developer fees,
Summary of Findings
Development of the Marquis West project wit be highly beneficial to the City of Miami in
important ways, as summarized below:
impact on the• Housing Market
City offidais have tong sought to attract new iesiaentiai development to the .varicus
neighborhoods of Mia:mi to provide .better market suppont for the retailers and feed
and beverage establishments :operating within them as wet! as to enhance the .City's
tax base. Toward this end, thie.City Commission has recently approved a number of
new residential projects .r). the DuPont Plaza, :River, Brickell and Ornni-E.dgewater
areas of the City, Approvat of the proposed project which will be faceted in the
Southeast Overtown Park West Community Redeveiopment 'Districist, is consistent
with the above -stated -objectives.,
Fiscal Benefits
Fiscai Benefits refersto the positive 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
wiit be both non -:recurring and recurring ln nature as enumerated below: The
estimates shown, when are based on the current miIiage and fee rates, are 2006
Constant Doiiars,
Non -recurring Benefits
• 3 221.461 in City :building permit fees
• $ 10,000 in City solid waSte surcharge fees
• • S • -61•951t City pdticeititnPact :fees
183,470 in City fire-resbt,ie impact fees
• $ 105,.927 in City.gerieral.services impact fees
• $ 1,702,370 in: City park impact fees
• $ 338,844 in Downtown DR i supplemental impact fees
Recurring Benefits
• $ 1,654,832 annually in Southeast Over -town Park VVest Community
Miami Economic Associatos, Inc, 6861 LW, 89/h Terrace Miami, Ftcricia
Tel: (305) 669.0229 Fax (305) 669-8534 Errtaitt rneainkabelfseothmet
Patricia Balcyra. Esg,
Tew Cardenas;
January 4, 2006
Page 3
Redevelopment District increment revenues
309,857 annually in -City General Fund ad valorem taxes
1162.04 annually in City Debt Service ad valorem taxes
▪ 79,9.5C) annually in Downtown Development Authority ad vatorem
taxes
NonQuantfiabie
Trade-reiated fees for roofing, electrical, plumbin.g, mechan)cat pot and
elevator work performed during construction (non -recurring)
4 increased City utility taxes and franchise fees (recurring)
• Increased occupational kcense 'fees (recurring)
• Increased parking surcharge fees (recurring)
• increased revenue -sharing funds (recurring)
Pt:her
While the focus of MEAlls fiscal analysis was on the- C--ity of Miami,
Marquis West wilt, as shown below, provide significant fiscal benefits to
other non-m-uniclpal •governmental juris.dictions that impact the lives of
City residents:
o $ 413,796 n County road -impact fees (non -recurring)
o $ 718778 in 'School irnpa.ct fees .(n0-n-recurring)
$ 212,.819 County Genera: Fund ad valorem taxes (recurring)
0 $ 43,292 in County Debt Setvioe ad valorem tax-es(resurring)
• 65,013 in: Children's Trust ad valorem taxes (irecerting)
73,823. in County Library ad valorem taxes (recurring)
1,207,149 in. School :Operating ad vaiorem taxes (recurring)
74,583 in School Debt Service ad -valorem taxes (recurring)
g. increased County occupaticrial license fees (recurring)
c, increased revenue sharing funds
ECOnOrniC Benefits
• Economic nefits relates to the pose 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
--reourfing
Approximately 90 percent of the $175.0 million that will be spent on hard
and soft costs to develop the proposed mixed -use pro:letot will be spent
within the City. of lAia.rni, :producing an overali economic impact
approximating $24.4,7 million When the multiplier effect is considered:
Miami Economic Associates, Inc, 6861 S.YL 89th Terrace Miami, Florida 33156
Tel: (30S) 669-0229 Fax (305) 669-8534 Email: meainkellsouth,net
•
•
•
Patricia Baioyra, Esq.
Tew C.ardenas
January 4, 2006
Page 4
Project e-xpenditureswithin the City of .Miami wi/I include a-n estimated
$6.0.8 ..mon for .construction labor, an amount sufficient to pay
approximately 1,169 construction wok, some of whom may be C-ity
residents, their average annual wage of .$52,0-00.
.RecuiTring
A total of $10,0 mUon will be spent annualiv in within the City of Miami by
residents of and workers at the proposed project in retali and food and
beverage establishments_ A.dditionally, $3..8 miiiion in. ad valorem taxes
and increment revenues will be paid to the City .of Miami and its
Southeast Overtown Park West Community R.edeveloptrient District,
Miami -Dade County and the School Board, ail of which maintain their
principal offices within the City. These expenditures will have an overall
economic impact on the City of $20,7 million annually when the multiplier
effect is considered.
A total .of 90 people will be employed at the proposed project, inclusive of
people involved in project operations, maintenance and parking. These
workers, who may Jnoiude City residents, will earn approximately $2,2.5
mitbon annually.
Bases of Estimates
The rnateria;s that follow provide the assumptions used to estimate the fiscal and
economic benefits that development :of the proposed rnixed-iis-e project wiil ;provide to
the City of Miami, Ali monetary values are stated in 2036 ConstantDoar
Project Characteristics
Marquis West will be located within the City of Miami 8$ wei as the jurisdictions of
the City's Southeast ,Overtown Park West Redevelopment Districts and Downtown
Development Authority as well as within the boundaries of the Downtown DM..
also be located within the jurisdictions of Miami -Dade County and the Mani -Dade
County Public School District,
The project will entail the construction of 993,3.37 gross square feet of building area
Of this amount, 537,458 square feet will pertain to the residential portion of the
project, which will be comprised of the 430 condominium units as well amenity and
circulation areas. The remaining 455,869 square feet will be comprised of the retail
space and parking.
Development of Marquis West will co-st approximately $.135,-0 million to constru
terms of hard construction. Soft costs including these relating to professional fees,
marketing, sales commissions, permit fees, developer overhead, adm. ihistration,. etc.
Miami Economic Associates, inc, 6861 89th Terrace Miami, Florida 33156
Tel: (3(J5) 669-0229 Fax (305) 669-8534 Email: mealrikgbeilsouth.net
•
Patricia 6abyre. Esq.
Tt:w Cardenas
January 4, 2006
Page 5
an addition l $40.0 n?!'i arz. Therefore,
refore,
.p the project excl sine cf land acquisition wo
Sale of Marquis West's 430 condominium units and
-pace is expected to generate approximately $200.0 in
�. on \mill be
rid developer's fees,
2g?232 square .feet
sales proceeds.
According to the Constitution of the State of Florida, real ,property is supposed to o
assessed at 100 percent of its market value. As a practical matter, condominum
units and commercial space are initially placed on the tax rolls at approximately 80
percent of their market value, or in this case $160,0 million, Assuming that
approximately 75 percent of the residential units qualify for the Homestead
Exemption, the taxable value of the project be $151,9 million.
Residents of the proposed 1d0MilliUM units w[Il t average redo., ral
income approximating $160,000 to qualify for o‘ Based on this estimate of
average household income-, it is projected that the pe°pie living at the proposed
project will .sped $ g3,0 minion annually in retail and restaurant establishments. This
projection ass r es that they opens approximately 20 percent of their income for that
purpose.
Based on industry standards; it is r t rdp ted that
occupied by 73 workers. This estn°iate scum.
When project operations, maintenar e and parking
total number employed at the proposed project will
spend an average of $10 per day for food and
expenditures would total $328,500.
Non -recurring Fiscal impacts
the proposed retail spat w4Cl be
rkers per 1, 0 square feet_.
personnel are accounted for, the
be 0 people. Assuming that they
ct.her items while working, their
The City of Miami charges ballotspermit 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
parking garage space is charged for at the commercial rate, Based on the
distribution of space by usa previously discussed, building permit fees totaling
$221,461 will be paid. A solid waste surcharge fee in the amount of $10,000, the
maxrrnun amount, will be applied.
The various trades involved in completing the 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 projects final engineering drawings be completed, whch has not yet
occurred. Accordingly, the fees that 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 cti cts. On .high-rise
units, fees will be paid on a per unit basis in the amounts of : a for police, 5409 for
ami Economic Ass rcF , t on . 6 t Terrace Miami, Florida 33156
Tit: t3O5} 669.0229 Fax: (305) 66€9• 4 Email: mes:ink0.bellsc uth.,net
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Patricia Baloyra, Esq.
Tevv Cardenas
January 4, 2006
Page 6
fire -rescue, $239 for general serilces and $3,959 for parks. The rates for retail space
in the quality proposed are paid an a per square foot basis in the amounts of $0 396
for police, $0,26 for fire -rescue and $0.10$ for general services, impact fees totaling
$2,052.962 will be paid on the Marquis West project, of which S.61,195 win be for
police $183,470 for fire-resoue: $105,927 for general services and $1,702,370 for
parks,
In addition to the impact fees discussed in the preceding paraqraph that are charge-d
to projects anywhere within the City of Miami, supplemental impact fees .are charged
on projects located in the area covered by the Downtown DRI, According to the
current table of fee coefficients, the rate for residential units is .$0..558 per gross
square foot. The rate for retail space is $1.332 per square foot. Based on these rates
it is estimated that a total of $3.38,844 in Downtown DR -suppIemental impact fees
Wril he paid.
New construction projects located in the City of Miami also need to pay impact foes
to Miami -Dade 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
retail space in the eastern portion of Miami -Dade County is $1,255 per square foot
for projects with the quantities of space proposed at Marquis West. The base fee per
unit for school impact fees is $612..2\n additional amount of $0,918 per square foot is
then applied. Accordingly. impact fees totaling $1,132,574 will need to be paid at the
time the building permit for the proposed project is issued. Of this amount, $413,796
vvill be applied to roads and $718,778 to schools.
Recurring Fiscal Impacts
The mittage 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 w,ere calculated by applying he mage rates .shown to proposed projects
estimated taxable value of $1$1.9
Rate/SWOT)
En't4y Taxable Value 1 Taxes
: Ci&y bf Miami i
5.49950.
Genei Fund $1,291,07
ca.
.
Debt Service Fund 0..76500 ..__J.. $ 116,204
._..,
...._, _........ ....._
0,50000 $ 75,950 ewntawn Deve;op.ntent Atith4rity,
Mierri-Dade County_
General Fond 5 83500 $ 586,336
Deb& Senke 5und 0.28500 5.
0 42380 : 64.5.3:290132
! 0-Oaten's Trust ,
0 45600 ',.
$ 73,82.3
MiamD3de CountysPeblic Schools f
.4-
$ 7,9400 r 1,207,14e
--..?perating. 1 .
Debt 5eMhe , 0.4W 00 $ 74,58.3
,
Source: Mfami-E.lade Conn&y Property Appraiser. I'vliami Echnomlc- Ante, ft.
Miami Ece MiC Associates, Inc. 6861 S.W. 89P, Terrace Miami, Florida 331 6
Tel: (305) 669-0229 Fax (305) 669-8534 Emafl mealnkgbellsotith.rtet
Patricia ". a:oyra, msg.
Tew Cardenas
January 4i, 2005
age 7
Marquis V,`e:st will be iodated in the Southe-ast Overtow n Park West Redevelopme-nt
District, Accordingly, both th the City of Miami and Ma. .i-Dade County via be required
to annually fund the District Trust Fund with an amount equivalent to 95 percent of
the funds -they collect for their general funds on th,e. difference betwee-n the current
taxable value of the property on which Marquis West will be constructed and th-e
taxable value of the protect when :completed, For the purpose of this analysis, it is
assumed that the Incremental"
val,ue will be 80 percent of the propo-sed projects
estimated taxable value The general funds of the two jurisdictions `vill retain 100
percent of the taxes generated Oil the current value of the property and 5 percent of
those generated ors the incremental value. Accordingly, the District 'Trust Fund will
receive 1,554;832 annually while the aerieral funds of the City and the County will
retain $309 557 and $212,819 annually, respectively.
The City of:Miami collects utf;lt` tars and franchise fees from the providers of
telephone, electric and other such services based on the r revenues. The amount
collected as a result of the d.evelnpment of the proposed project will be dependent on
the amount of these services used by the projects residents and commercial
tenants: hence, it can not be quantified al this tir'rie..
Both the City of Miami and Miami -Dade County will i; oiiei t ocoupational Ei eo•se fees
from the occupants of the proposed retail space, The amount coiled ted can not be
estimated at this tine since it will be dependent on the nature of the businesses
housed in the office and retail space.
The City of Miami charges a 20 percent surcharge on parking fees, Patrons of the
proposed projects retail space as well as visitors would pay this surcharge. it i ;got
possible at this time to estimate the amount that will be generated.
The City of Miami and Miasni-Dade County participate in a number of revenue
sharing programs that are based on population -based for ulas,. The amounts of
revenue sharing revenues that will accrue to the City as a result of the proposed
project can not be estimated et this times
Non -recurring Ecvrlc mic Benefits
It is estimated that approximately 90 percent of the $175.0 itlior that will e spent
on the hard and soft costs to develop the proposed nixed -use project will i itially be
spent in the City of Miami, This estimate is based on an anticipation of the specific
firms that wilt be involved in impiernentation of the project_ According to the input-
output model of Minnesota lMP..LAN Group (MfG). which is one of the .nation's
foremost econometric firms; the overall economic impactof these expenditures will.
approximate $244,7 million based on application of 31.554 multiplier,
MIG`s nputioutput •model further estimates that approximately 60. rn"ill on cf the
moneys spent on hard costs within the City of •Miami wil;€ be spent for .labor, The
average construction worker in. Miami -Dade County currently earns approximately
ma Economic .Associates, Inc
Tel; (305) 669-0229 i= .x;
68 1 SW 49'th Terrace Miaerti# i ri"da:33156
5) 669.85341 Email me 'inkftb it ►cathatel
Patricia Baloyra, Esq,
Tf-w Carden -as
January 4, 200
Page 8
$52,000 per year according to the Florida Agency for Workforce Innovation.
Therefore, the projects expenditure on construction tabor would support
approximately 1,169 workiers, $Drne of whom may be City residents., on an annual
basis at their average wage rate.
Re urring Economic Benefits
The residents of Marquis West spend $13.8 miNton annually in retail
establishments and restaurants, approximately 70 percent of which, $9.7, MI be
spent within the City of Miami. Additionally, he on -site workforce will 5pend $328,500
for food and other items while working. Finally, the project wII generate
approximately $3,8 million annually in ad valorem taxes and increment revenues for
the City of Miami and its Southeast Overtown Park West Community 'Redevelopment
District, Man Dace County and. the School Board, aU of which maintain their
principal offices within the City According to the MG input-output model, the total
economic impact of these expenditures Mil be $20 7 million :annually based an the
application of a 1,5 muitiptier.
Based on wage data compiled by the Florida Agency on Workforce Innovation, it is
that. the annual earrings of the 90 people- who 'will be employed at the proposed
project on a fug -time ,equivalent basis, some of whom may be City residents, would
average $25,000, or $2.25 mon in total.
Closing
The analysis performed by MEAI demonstrates that the mixed -wise project proposed for
development at 600 Brickell Avenue wit! be high' beneficial to the City of Miami both
fiscally and econ:cmicatty It wii1 also re -enforce the City's efforts to re-estaWlsh its core
areas as residential communities,
Sfr)oerely,
Miami Economic Associates, inc
Andrew Doikart
President
Miami economic Associates, Inc, 6861 S.VC 89th Terrace Miami, Florida 33156
Tel; (305) 669-0229 Fax:1305) 669-8534 Errwalif triealnkgbellsouthaiet