Loading...
HomeMy WebLinkAboutEconomic Impact StudyE. ECONOMIC IMPACT STUDY M[ADOCS 888978 I Mt Associates February 28, 2008 Maria Graha, Esq. Shutts & Bowen LLP Miami, Florida Re: MUSP'Impact Afalysls -- Tiziano ll Dear Ms. Grata: Miami Economic Associates, tt o (MEM) has performed analysis to estimate the fiscal and economic bents that the Tiziano 11 mixed -use project; which is proposed for development at N.E. 49' Avenue and N.E. 23`d Street, will provide to the City of Miar i. This letter, which is organized as shown below, provides the findings of our analysis and their bases. Section Project Description Summary of Findings Impact on the Haus Fiscal Be Econornic Benefits ases of Estimates using The analysis presented below is based on preliminary estimates of pricing 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 The Tiziano It mixed -use project will be comprised of 54 condominium units. It will also include 2,024 square feet of retail space and 6,025 square feet of office space which will be offered to the market on a for -sale as opposed to lease basis. Based on the anticipated sales prices per square foot ft ro both the residential units and the commercial space, gross sales proceeds totaling approximating $25.3 million will be generated. 635l B.W. 59t To a� ilAsa�rnt; Florida 33158. Tab 131)51 669.0229 Fax: 13O51859-8534 Emmar#: rneerfnk8rbaifsouth.net Mane Gralia, Esq. Shutts. 8 ;Bowen LIP February 28, 2006 Page 2 Construction of Tiziano 11 is expected to cost $8.3 million in hard costs, An additional $1.,4 m#iott will be expended for soft costs inclusive architectural and engineering fees, marketing, sales commissions, projectoverhead, etc. Accordingly, the project will cost $9.7 million to develop exclusive of land cost and developer fees, Summary of Findings Development of the Tiziano 11 mixed -use project will be highly beneficial to the City of Miami in important ways, as summarized below Impact on the Housing Market • 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, Wicket' and Omni -Edgewater areas of the City. Approval of the proposed project, which will be located in the Edgewater area, is consistent with the above -stated objectives. Fiscal Benefits • Fiscal Benefits refers to 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 will be both non-recurri g and recurring in nature as enumerated below. The estimates shown, which are based on the current mileage and fee rates, are 2008 Constant Dollars. o Non-reeurrino Benefits • $ 36,452 in City building permit fees • $ 10,000 in City solid waste surcharge fees • $ 8,108 in City police irnpact tees • $ 24,836 in City fire -rescue impart fees • $ 14.052 in City general services impact fees • $ 213,786 in City park impact fees • $ 83,452 in Downtown DRl supplemental impact fees 0 Recurring Benefits • $ 162,340 annually in City General Fund ad valorem taxes • $ 14,612 annually iri City Debt Service ad valorem taxes • $ 9,550 annually in Downtown Development Authority ad valorem taxes Wane Eca is A es, Inc. 6061 3.W. 60Terra Mtam1, Morlds 33156 Tel; (305) 669-0229 Fax: (305) 5694534 Entaliz sauth.n+rt Maria Gralia, Esq. Shutts & Bowen LLP February 28, 2006 Page 3 t on-QuanttfiapI • Trade-relatedfees for roofing, electrical, plumbing, mechanical, pool and elevator work perfoinmed-during construction (nonrecurring) • Increased City utility taxes and franchise fees (recurring) • Increased occupational license fees (recurring) • Increased parking surcharge fees (recurring) • Increased revenue sharing funds (recurring) Other • White the focus of ►MIEAI's fiscal analysis was on the City of Miami, Tiziano it will, as shown below, provide significant fiscal benefits to other non -municipal governmental jurisdictions that impact the lives of City residents: c. $ 64,864 in Countyroad/impact fees (non -recurring) f.� $ 82,235 in Schoolr impactfees (non -recurring) r� $ 111,448 in County General Fund ad valorem taxes (recurring) o $ 5,443 in County. Debt Service' ad valorem taxes(recurring) o $ 8,175 in Children:'s Trust ad valorem taxes (recurring) o $ t9 2Q82 inyCounty�yjLibrary yad via[ l'orreyrn taxes (recurring) $ 151,788 in School Operating ad valorem tallies (recurring) o $ 9,378 in School Debt Service ad valorem taxes (recurring) o . Increased County occupational license fees (recurring) o Increased revenue sharing funds Economic Benefits Economic Benefits relates to the positive 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. a Non -recurring • Approximately 90 percent of the $9.7 million that will be spent on hard and soft costs to develop the proposed mixed -use project will be spent within the City of Miami, producing an overall economic impact approximating $13.6 million when the multiplier effect is considered. Project expenditures within the City of Miami will include an estimated $3,7 million for construction labor, en amount sufficient to pay approximately 71 construction workers, some of whom may be City residents, their average annual wage of $52,000. am i Economic A11soc16tes, in Tel (305) 609-0229 Fix. 6861 S.W. 89th Terrace Miami, Florida 33166 05) 86941534 Email: meaink(beilsouth.net Maria Gralia, Esq, Shutts & Bowen LLP February 28, 2008 Page 4 o Recurring A total of $1.7 million will be spent annually in within the City .of Miami by residents of and workers at the proposed project in retail and food and beverage establishments. Additionally, $482,000 million in ad valorem taxes will be paid to the City of Miami and its Downtown Development Authority, Miami -Dade County and the School Board, all of which maintain their principal offices within the City. These expenditures will have an overall economic impact on the City of $4,7 million annually when the multiplier effect is considered. A total of 37 people will ;be err►ployed at the proposed project, inclusive of people involved in project operations, maintenance and parking, These workers, who may include City residents, will earn approximately $1.2 rrrillion annually, Bases of Estimated The materials that follow provide the assumptions used to estimate the fiscal and economic • benefits that development of the Tiziano It mixed -use project will provide to the City of .Miami. All monetary values are stated in 2006 Constant Dollars, Project Characteristics Tiziano ll will be located within the City of Miami as well as the jurisdictions of its Downtown Development Authority, Miami -Dade County and the Miami -Dade County Public School District. The project will entail the construction of 165,223 gross square feet of tiling area. Of this amount, 97,071 square feet will pertain to the residential portion of the project, which will be comprised of the 54 condominium units as well arnenity and circulation areas.. The remaining f38,152 square feet will be comprised of the commercial space and patle;ing. Development of Tiziano 11 will cost approximate y $8.3 million to construct in terms of hard construction. Soft costs including those relating to professional fees„ marketing, sales commissions, permit fees, developer overhead, administration, eto will total an additional $1,4 million. Therefore, $9.7 million will be spent to develop the project exclusive of land acquisition costs and developer's fees. Sale of the projects 54 condominium units and 8,049 square feet of commercial space is expected to generate approximately $25.3 million 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 and commercial space are initially placed on the tax rolls at approximately 80 Miami Econos tic •Associates, loc. 6861 $.W. 89th To e Miami, Florida 33156 Tell (305) 6694229 Fax: (303) 669.553 4 Email: msetnfcObefisoufimnat Maria Gratia, Esq. SI utts Bowen •LOP Febrtaary 28, 2006 Page b percent; of their market value, or in this case $20.2 million. Assuming that approximately 75 percent of the residential urr►fs qualify for the Homestead Exemption, the taxable value of the project will be $191 million. • Residents of the proposed condominium units will on average require an annual income approximating $150,000 to qualify for ownership: Based on this estimate of average household income, it is projected that the people living at the proposed project will spend $1;6 million annually In retail and restaurant establishments: This projection assumes that they spend approximately 20 percent of their income for that purpose. Based on industry standards for employment in retail and office uses. it is anticipated that the proposed commeroial space at Tiziano II will be occupied by 30 workers, This estimate assumes 2.5 workers per 1,000 square feet of retail space and 4 worker per 1,000 square feet of office space;. When project operations, maintenance and parking personnel are accounted for, the total number employed at the proposed project will be 7 people. Assuming that they sperm an average of $10 per day for food and other items while working, their expenditures would total $103,800, 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 $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 use previously discussed, building permit fees totaling $36,452 wilt be paid. A solid waste surcharge fee in the amount of $10,000, the maximum 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 project's final engineering drawings be completed, which has not yet occurred. Accordingly, the fees that will be paid can not be quantified at this time. A solid waste surcharge is applied to these fees. The City of Miami charges impaet fees on new construction projects, On high-rise units, fees wilt be paid on a per unit basis in the amounts of $95 for police, $409 for fire -rescue, $239 for general services and $3:959 for parks. The rates for retailspace in the quality proposed are paid on a per square foot basis in the amounts of '$0.751 for police, $0.302 for fire -rescue and $0.126 for general services. The rates for office space in the quality proposed are paid on a per square foot basis in the amounts of $0,242 for police, $0.355 for fire -rescue and $0.148 for general services. Impact fees totaling $260 2 will be paid on the Tiziano 11 mixed -use project, of which $8,108 will be for police, $24,836 for fire -rescue, $14,052 for general services and $213,785 for parks. Miami Economic Associates, Inc. 6861 8.W. 89u► Te race Miami, Florida 33156 Tell (305) 669-0229 rra le (305) 6684534 Entail meeinkebeliaouth.net Maria Gralia;Esq. Shutts & 8owen•.LLP February 28, 20 Page 6 In addition to the impact fees discussed in the preceding paragraph that are charged 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 rates for retail space and office space are $1.332 and $1,094 per gross square foot, respectively. Based on these rates it is estimated that a total of $63,452 in Downtown DRI supplemental impact fees will be path, • New construction projects ,located in the City of Miami alsoneed to pay impact fees to Miami -Dade County for roads and schools. In the eastern portion of the county, the mud for roads for condominiums is $877 per unit. The road impact fee rates for retail end office space in the eastern portion of ;Miami -Dade. County are "$1.255 and $2.484 per square foot, respectively, for projects with the quantities of space proposed at Tiziano 1l. The base fee per unit for school impact fees is $612. An additional amount of $0.918 per square foot is then applied. Accordingly, impact fees totaling $147,099 will need to be paid at the time the building permit for the proposed project is issued. Of this amount, $64,864 will be applied to roads and $82,235 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 table immediately following. The ad valorem tax revenues projected in the Summary of Findings were calculated by applying the millage rates shown to proposed project's estimated taxable value of'$19.1 million. Entity -City of Miami m General Fund Debt, Semite artt Downtown De arm -lade County General Fund Debt Service Fund Childreri's Trust Libra.iy Miami -.Dade County .Pubp ra chools Rate/41000 Taxable Value Taxes 8.49950 0,76500 0.50000 $ 162,340 $ 14,612 $ 111,448 $ . 5,443 $ 8,175 $ 9,282 7.94700 S 151,788 enri 0,49100 $ 9,378 Source::tviiarnt Dade CauntY PropertyAppreiser, ARla,'m Economic Associates, 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 asa result of the developn lent of the proposed project will be dependent on the amount of these services used by the project's residents and commercial tenants; hence, tt can not be quantified at this time. Miami °Economic Teti (305) 668 tee. ins. 6861 LW. Ted Miami; Florida 33156 ax: (305) 669-8"534 Small: meainkCbeltsauth.nst Maria Gratia, Esq. Shuns &• Bowen LLP February 28., 2006 Page 7 • Both the City of Mini and Miami -Dade County will collect occupational license fees from the occupants of the proposed retail space. The amount collected can not be estimated at this time 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 can parking fees. Patrons of the proposed project's retail space as well as visitors would pay this surcharge. tt is not possible at this time to estimate the amount that will be generated. The City of tvliarni and Miami -Dade County participate in a number of revenue sharing programs that are based on population -based formulas, The amounts of revenue sharing revenues that will accrue to the City a. s a result of the proposed project can not be estimated at this time. Non -recurring Economic Benefits • it is estimated that approximately 90 percent of the $$.7 million 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 Miami. 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 model of Pvlinnesota IMPlA N Group (MKC), which is one of the nation's foremost econometric firms, the overall economic impact of these expenditures will approximate $13.6 million based on application of a t.554 rraultiplier, • MSG's input-output model further estimates that approximately $.3.7 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 currently earns approximately $52,000 per year according to (he Florida Agency for Workforce Innovation. Therefore, the project➢s expenditure on construction labor would support approximately 71 workers, some of whom may be City residents, on an annual basis at their average wage rate, Recurring Econot'nie Benefits The residents of Tiziano II will spend $1 .8 million annually in retail estabtisliments and restaurants, approximately 70 percent of which, $9.7, will be spent within the City of Miami. Additionally, the on -site workforce will spend $103,800 for food and other items while working. Finally, the protect will generate approximately $482,000 annually in ad valorem taxes for the City of Miami and its Downtown Development Authority, Miami -Dade County and the School Boards all of which maintain their principal offices within the City. According to the MIG input-output model, the total economic impact of these expenditures will be $4.7 million annually based on the application of a 1.5 multiplier. Miami' Economic Associates, tt+c. 68Bi S. C`i. Sam T.rtace Miami, Florida 33156 Tel; (306) 660-022e f j 6684534 Beall: ma k1belisouth n t Maria Gralia, Esq. Shutts & BowenLIP February 28, 2008 Page 8 Based on wage data compite# by the Florida Agency on Workforce trinovation, it is that the annual earnings of the 37 people who will be employed at the proposed project on a full-time equivalent basis, some of whom may be City residents, would average $32,000, or $$1 2 million in total. Closing The analysis performed by MEAT demonstrates that the development of the Tiziano II mixed -use project will be beneficial to the City of lvtiarni both fiscally and economically.. It will also re-enforcis the City's efforts to re-establish its core areas as residential communities, Sincerely, Miarni Economic Associates, Inc. Andrew Dolkart President anti . as # ite , 8861 LW. Sim T Mls rti, Florida 33156 Tarr (305) 688 t text (3Ol5) 6664534 Email; errb *ini beItsouth.net