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HomeMy WebLinkAboutTab 4 - Economic Impact Study• • February 28. 2006 Gilberto Pastorza. Esq Greenberg Traurict iMiarni, Florida Re: MUSP impact Analysis Aja on the Bay Dear Mr. Pastoriza , Miami Economic Associates, Inc (MEAl3 has performed ariaivsis to estimate ihe fiscal and economic benefits that the ,A.ja on the Bay proecl whin is proDose,,:.' for development on a site frontino Biscayne Bay between N E 25 Street and N E 26' Terrace will provide to the City of Miami This letter which is orcanizeol as shown below provides the findings of our analysis and ther bases: : Section Project Description Summary of Finclinas 'L lmp_act on the Housmg Market 2 Fiscal Benefits 2 Economic Benefits -4 , • Bases of Estimates 4 . Closing_ 7 The analysis presented below is based on prelim nary estimates of pricng and construction costs. These estimates are subject to change based on market conditions and cost parameters at the time development actually occurs and the changes may be significant Project Description Aja on the Bay will be comprised of 129 condomin um units Based on the antic:cated sales prices per square foot. gross sales proceeds totaiing appmximatind 39.3 5 million will be generated 6861 S.W. 8911, Terrace Miami, Florida 33156 Tet: .1305) 669-0229 Fax f3051 669-8534 Email: rneainkbellsouth.riet • • Gilberto Pastoriza, Esq Greenberg Traurig February 28. 2006 Page 2 Construction of Aja on the Bay is expected to cost $34 c.) mdkon hafd costs An adriqional million wdl be expended for soft costs flC,;ILASFkie architectural and enQnc,,ering fees. marketingsales cornrwssP3ns oroe‘c overheae etc AcoordIngy the Protect AO cost $47 1 mdllon tocievelop i2n(i CC-S an.c deve.v)per fees Summary of Findings Development of the Ass on the Bay proJec7 ',.%0 he highly be.ne.fJc1.3 to the CAv o Mlami important ways, as summarized below - Impact on the Housing Market 0 City officials have long sought to attract new residential development to the various neighborhoods of Miami to provide better market support for the retailers and food and beverage establishments operating within them as well as to enhance the City's tax base, Toward this end, the City Commission has recently approved a number of new residential projects in the DuPont Plaza, River. Brickell and Omni -Edgewater areas of the City. Approval of the proposed project. which is located in the Edgewater area, is consistent with the above -stated objectives Fiscal Benefits Fiscai Benefits refers to the positrve u-np-act that the proposed project have on the finances of the City of Miami. The benefits that it wit proiitide to the City -win be both non -recurring and recurrino in nature as enumerated bE&o The estimates shown_ which are based on the current millage and fee rates are 2000 Constant Doliars Non-recurrino Benefits ▪ $ 66,914 in City buiding peril -Lit fees • $ 1.0,000 in City solid waste surcharge fees • $ .367,040 in City Affordable Housing Bonus fees • $ 12,255 in City police impact fees • $ 52,761 in City fire -rescue impact fees • $ 30.831 in City general services impact 'fees • $ 510,711 in City park impact fees Recurring Benefits 615,364 annually in City General Fund ad valorem taxes • $ 55,386 annually in City Debt Service ad valorem taxes Non -Quantifiable O Trade -related fees for reciting, electrical, plumbing mecnanical, pool ardi elevator work performed durmo constructon (non-recurnng) Miami Economic Associates, Inc, 6861 SAN, 89 Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax; (305) 669-8534 Ernair: ineaink070elisouth.net • • Gilberto Pastoriza. Esq. Greenberg Traurig February 28.. 2006 Page 3 a Increased 'aty i.,atWty taxes andi franchise tees 11.) ▪ increased revenue sharing funds .recurring) Other ▪ ,Aihiie the focus of MFAls tlscai anaiys.s was an the Orty of Mir.on the Bay ww. as shown beicA% proi,ae s,ghificaht fis7•;:di benefits tc otrler non -municipal ctevernmenta junscictions that :mat the lives o City residents $ 113,133 in County road imp.act fees(non-reci_ir,ring; $ 222,059 in School ift-tpact fees (non -recurring) $ 422_454 in County General Fund ad vaiorem taxes recurring) $ 20..634 in County Debt Service ad valorem taxes(redurring) $ 31.045 Children's Trust ad valorem taxes (JecurTino) 8 35,186 in County Library ad valorem taxes (recurring) $ 575,362 in School Operating ad valorem taxes (recurring) $ 35,548 in School Debt Service ad valorem taxes irecurring Increased revenue scaring funds Economic Benefits cortornic Benefits relates to the positive impact that the proposed project wH have on the economy of the City rather than its finances The economc benefits it will DrovIde will also be non -recurring and recurring in nature. corring • Approxirnatey 9,0 percent of the $47 1 nf-iJlion that will be spr-..int on hard and soft costs to develop the proposed pri.,--fJect will be spent i,y!thiri the City of Miarni producing an overak economic -in);act approximating $65 9 million when the mAiplier effect is considered • Project expenditures within the City of Miami MI include an estimated $15.3 million for construction labor. an amount sufficient to pay approximately 294 construction workers, some of whom may be City resdents, their average annual wage of .$52,000. Recurring • A total of $4.6 million will be spent annually in within the City of Miami by residents at the proposed project in retail and food and beverage establishments. Additionaily, $1,8 millionmilio n ac valorem taxes and increment revenues will he paid to the City of NIJartli, Mi.arrit-Dade County and the School Board, ail of which maThtam their principal offices within Miami Economic Associates, Inc, 6861.SW. 89th Terrace Miami, Florida 33156 Tel:4305) 669-0229 Fax (306) 669-8534 Erna;i: meainlObellsouth.net • • Gilberto Pastoiza, Esq. Greenberg Traung Febiruary 28, 2006 Page 4 the City. These exoenc ture v1 have n overaH economic impact on, the City nf $9 6 rnWion annLiaryventhe r.-nLit.plrer- effect. ft-7, considered Bases of Estimates The materials that follov,' provide the assurnotior.5 used to estimate the fiscal isno economic benefits that developmerit Ot h,,e proposed project will provide to the Club,' of Miam. All monetary values are state in 2006 (3cinstant Dollars Project Characteristics ▪ Aja on the Bay will be located within the City of Miami as well as the jurisdictions cif Nliaml-Dade County and the Miami -Dade County Public School District • The project will entail the construction of 319,794 gross square feet of building area. Of this amount, 272688 square feet will pertain to the residential portion of the project, which will be comprised of the 129 condominium units as weli amenity and circulation areas The remaining 47,106 square feet wW be comprised of parking • Development of Aja on the Bay will cost approximately 634.0 million to cichstt in terms of hard construction Soft costs including those relating to professional fees marketing., sales commissions permit fees ceveiori-e,r overhead, administration etc will total an additional $13 rniiiion Therefore $471 miiiion will he spent to develop the project exclusive of land acquisition casts and deve oper s fees • Sale of 129 condom nlom units n As on the Bay and 29,232 is expected to pi -one -ate approximately $93 5 in sales proceeds. • According to the Constitution of the State of Florida real property is supposed to be assessed at 100 percent of its market value As a practical matter, condominium units are initially placed on the tax roils at approximately 80 percent of their market value, or in this case $74.8 rrifiiion. Assuming that approximately 75 percent of the residential units qualify for the Homestead Exemption the taxable value of the project wi be $72.4 million, ▪ Residents of the proposed condominium units will on average require an annual income approximating $255.,000 to qualify for ownership. Based on this estimate or average household income, it is projected that the people living at the proposed project will spend $6.6 million annually in retail and restaurant establishments. This projection assumes that they spend approximately 20 percent of their income for that purpose, Non -recurring Fiscal Impacts The City of Miami charges building 'permit fees at a rate of $0.20 per gross square foot of multi -family residential construction and 60 25 per dross square foot of Miami Economic Associates, Inc. 6861 S.Vif. 89th Terrace Miami, Florida 33156 Tel: (305) 569-0229 Fax (305) 669-8534 Eirnail: rneaintbellsotithnet • • Gilberto Pastoriz, Esq. Greenberg Traurig Fehruary ?a. 21106 Page 5 camniercial construction. in caicu!aung fees tiriEii square associated .pt•a'rKing ciaracle soace Ls, charge:tit -for at the commerciai rwe Based on -the d-s-tntputAon of sPace by use previosk) disocsseic.. bcnnc oermt tees toahricl 866914 vottfl be pad A solid waste surcharqe tee in the amount of $10.000. the itriaxurnum amount. wH be .apphpb. • The various trades evolved n cotripletIncl the nevv projiect inducitnQ the roofing. eleotrica. plumbing. mecharucal, elevator and swimmIng boci oontfactosts wtii required to pay fees on their work Calculation of the fee that they wol pay requires that the projects final engineering drawings be completed, which has not yet occurred. Actpordngiy, the fees that will be paid can not be quantified at ous time A. soiid waste surcharge s applied to these fees • in order to develop the Aja on the Bay project to its proposed FAR, 26900 square feet will be obtained under the provisions of the City's Affordable Housing Bonus program which requires the payment of 512.40 per square foat, or $367,040 in total. • The City of Miami charges impact fees on new construction projects. On high-rise units, fees will be paid on a per unit basis in the amounts of $95 for potic.e, 34.09 for fire-re.scue, $239 for .general services and 53,959 for parks. impact fees totaling $606.558 will be paid on the Aja on the Bay project. of which $12.255 wL be for poke: :$52.761 for 1;re-rescue: 630 831 tot- ,:renerai senv;ces and $510 711 for p.arks. • New construction projects iocated in the City of Miami also need to pay impact fees to MiameDade County for roads and schcais n the eastern portion of the county the rate for roads for condominiums is $877 per unit. The base fee per unit for school impact fees is $612. An additional amount of $0 '918 per square foot s then appiieL-it Accordingiy, impact fees totaling $335,192 will need mo be paid at t.he time the building permit for the proposed project is issued Of this amount, $113 133 wi.l be applied to roads and $222,059 to schools. Recurring Fiscal impacts • The millage .rates currently being levied: for ad valorem tax purposes by the governmental entities referenced in the Summary of Findings are shown in the tabie immediately following. The ad valorem tax revenues projected in the Summary of Findings were calculated by applying the millage rates shown to proposed projects estimated taxable value of $72.4 million. Miami Econornic Associates, Inc, 6861 S.W. 891i, Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax (305) 669-8534 Email: meainkgbellsouth.net Gilberto Pastoriza, Esq Greenberg Traurig February 28. 2005 Pade 6 Ratei$1000 Taxeb Taxithie Value Entity ' tlit:./ cd Mtard! s .51:'.••:', 364 S 5 f5 386 , Debi Siettv!co Fond '. t&t..---mi-l_ladte Coun1y 8 42'2,4.54 General Fund 5 Debt SeRtio-e F 02850.0 $ 2Ctri34 Children's Tdisl 0428-ao 0.48600 $ 31.04f:i , Libraty $ 35,185i Miami -Dade County Public Schools tirta7 94700 ! Opet•a_ $ 575.382 • Debt :Service 0 4Q100 .•• • . -5 35.548 .„..„ Source Karrrt-Dede County Prrtperty .AKitaiser: Marni Et7OnaniC Associates. inc.. ..... „..„ • The City of Miami collects utility taxes and franchise fees from the providers of telephone. electric and other such -services based on their revenues. The amount collected as a result of the development of the proposed project wit be dependent oh the amount of these services used by the projeb.,t's residents and commercial tenants. hence, -it can not be quantified al this time.. • The City of Miami and Miami -Dade County par icioate in a nuiriber of revenue sharing programs that are based an population -based formulas Tne arrourits of revenue shanno revenues that wifl accrLie o the City as a resuif of the tifiropiosect oroiject can not be estimated at this t!rtruz-, Non -recurring Economic Benefits • lt ts estimated that approximately 90 percent of the $47. 1 mon that will be spent on the hard and soft costs to develop the proposed project w initaily be spent n the City of Miami. This estwnate is based on an anticipation of the specific firms that be involved in implementation of the project. According to the input-output model of I'Vlinnesota IMPLAN Group frillIG), which is one of the nation's foremost econometric. firms, the overall economic impact of these expenditures will approximate $65.9 million based on application of a 1.55.4 multiplier MEG'S input-output model further estimates that approximately $15 3 miition of the moneys spent on hard costs within the City of Miami will be scent for iabor. The average construction worker in Miami -Dade County currently earns approximately $52,000 per year according to the Florida Agency for Workforce innovation. Therefore, the project's expenditure on construction labor would support approximately 294 workers, some of whom may be City residents, on an annual basis at their average wage rate. Miami Economic Associates, inc. 6861 S,W. 89 Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: rneainkgbellsouthnet • i b rto P3stofiza, Greenberg T rauria February 28 2006 Pager Recurring EcanBenefits The residents of A a can t're Bay will spend $6 6' i„i=lion annually r re`ail establishments- and restaurants. approximately 0 percent of which, $4. T, be spent within the City of Miami The project will generate approximately $1 8 million annually in ad valorem taxes and increr e-nt raven es for the City of Miami, Miami - Dade County and the School Board. all of which maintain r e r principal offices within the City According to the MIG input-output model. the total: economic it?Epaci of these E to .tlures will be $9 6 nlH n anrr a li y based on the application of a . 5 multiplier Closing The aflaiy s cerformea by ME.Al demon, t ites that , eyei e ? e of },, _cin the Bay project will be highly beneficial to the City 1 4M ar i both flscailly and ec no ,..Cell it also re -enforce the `it`v''s effcrt5 t, re-establish its core areas tiesidential communites Sincerely. Miami Ecoi Cimic Assoc'ates. ino Andrew Dolkart President Miami Economic Associates, Inc. 6861 S,W. 69th Terrace Miami, Florida 33156 Tel: (305) 669.0229 Fax: (305) 669-8534 Email. meainktbellsout:h.net