HomeMy WebLinkAboutIII. - Tab 4 - Economic Impact Study•
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ambert
Advisory
ECONOMIC IMPACT ANALYSIS
For:
ON THE PARK PROPERTIES at 1770 NORTH BAYSHORE DRIVE
- Prepared by -
Lambert Advisory, LC
- Prepared for -
Brickell City Center, LLC
May 2006
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mpact Analysis — On the Park Properties
Economic Impact Analysis
On the Park Properties
Lambert Advisory has completed an economic impact analysis for the development of
On the Park Properties (herein referred to as On the Park), a condominium project (with
limited retail/commercial space) located at 1770 North Bayshore Drive, in the City of
Miami. The analysis estimates the tangible direct and indirect economic impacts that
wilt be derived from the construction and operation of the development. This report
identifies and quantifies the benefits created by the On the Park development, and can
supplement the major use special permit application to be submitted to the City of
Miami.
The On the Park property is located in downtown Miami, and is accessible to major
thoroughfares, including 1-95 and I-195. 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.
We have completed this analysis on the basis of development and performance
information (Le., price, absorption, timing, costs) that has been provided by On the
Park, LLC ("Developer"; Lambert has not independently verified this information or data.
Importantly, Lambert Advisory was not provided development cost, development
timeline data, and/or revenue (sale price) assumptions; therefore, we have made certain
assumptions related to construction (hard and soft) costs, timing and revenue which
may be subject to change and for which Lambert Advisory does not attest to the
accuracy of these estimates and as such should not be relied upon beyond the scope of
this analysis. Any change development and/or performance assumptions herein may
have a material impact on results.
A profile of the project follows.
On the Park
Economic Impact Analysis
Building Features & Profile
Site Size (Net)
Building Height (Floors)
Number of Residential Units
Total Parking
Residential FAR
Existing Commercial
New Commercial (Retail)
Max. Residential Floor Area
Max Non -Residential Floor Area
Max. Total Floor Area
Source; On the Park, Lambert Advisory,200 6,
1.30 acres
47 Floors
648 units
859 spaces
817,065 sq.ft.
0 sq.ft.
9,400 sq.ft.
847,174 sq.ft.
141,169 sq.ft.
988,369 sq.ft.
Economic Impact Analysis — On the Park Properties
Construction of On the Park is expected to commence in November 2006, with a
duration of 22 months. Occupancy is planned for mid-2008.
Based upon the information provided and estimates made, construction and subsequent
operations of On the Park 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 employment and operating expenditure
4. Indirect flow -through benefits (real estate and retail)
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:
On the Park
Economic Impact Analysis
Development Costs
Item
Hard Costs
Soft Costs
Total
Cost
$163, 500, 000
$20,400,000
$183,930,000
Source/Note: Developmentco sts above represent estimates
by Lambert Advisory based upon limited information from De
Lambert Advisory has not verified the accuracy of this inform
Estimates herein are subject to change.
made
veloper.
ation.
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Economic impact Analysis -- On the Park Properties
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 ($98.0 million) of hard costs, and
materials will account for 40 percent ($65,4 million), Over an estimated 22-month
construction period, at an average annual construction wage of $43,7641 in Miami -Dade
County, with a benefit/overhead multiplier of 1.4, there will be 873 Full Time Equivalent
(I- i t) jobs created.
Additionally, over $3.6 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
percent and overhead of 30 percent, nearly $2.0 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 $4,0 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 On the
Park is included in the following table.
State of Florida ES-202, third quarter 2005
2 Lambert Advisory calculates impact and other fees based upon physical characteristics of the development (as provided by
Developer) utilizing impact/other fee factors provided by the City of Miami and/or Miami Dade County. There may be items for
which additional fees may be collected by the City/County (eg. Tree Trust) and/or State (eg. Energy Conservation) that has not been
included herein. As a result, there will be some variation between the impact and other fees provided herein and the actual fees that
may be paid upon commencement of the development process.
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Economic impact Analysis -- On the Park Properties
On the Park
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 Roads
Miami Dade County Schools
Total
$778,513
$23,355
$590,931
$1,146,642
$2, 539, 442
Other/Non-Impact Fees:
City of Miami Bonus Fees $0
Miami Dade W.A.S.A. Connection Fee $909,189
City of Miami Building Permit Fee $206,394
Energy installation Fee $119,584
M.U.S.P Application Fee $45,000
Dade County Code Compliance $91,920
Radon Gas Fee $11,958
Fire Plan Review Fee $10,763
Ground Cover Fee $1,133
Land Use/Zoning, Review for Building Permit $2,000
Certificate of Occupancy $250
Application Fee $35
TOTAL OTHER FEES $ 1,398,225
TOTAL PROJECT FEES $3,937,666
Source: City of Miami Planning, Building & Zoning; Miami Dade County; Brickell City Center, LLC;
Lambert Advisory. Fees above may be subject to change.
2. Long -Term (On -Going) Resident Expenditure
Based on demographic and for -sale housing trends in the area, the On the Park resident
base is expected to consist primarily of younger working professionals. Considering the
proposed average sale price of roughly $500,000, it is assumed that the residents will be
mostly middle and upper income individuals/households with incomes of at least
$125,000. Therefore, with a total of 648 households in the building, total personal
income for the building is estimated to be nearly $80 million. Estimating that
approximately half of the owners will relocate from outside the City, and accounting for
a slight reduction for second home (non resident buyers), over $40 million of marginal
personal income will flow into Miami.
We have estimated the marginal impact of $40 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 of the apartments by 2009.
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Economic Impact Analysis — On the Park Properties
On the Park
Area Expenditure Potential (from New -Residents)
2009
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
Food Stores
Eating & Drinking Establishments
Health & Personal Care Stores
Liquor
Convenience Goods - Sub -Total
Estimated Marginal
Expenditure Growth
2010
$913,537
$878,911
$364,303
$348,435
$332,346
$506,894
Sales per Square Feet
Square Foot Demanded
$227
$290
$227
$200
$250
$420
4,024
3,031
1,605
1,742
1,329
1,207
$3, 344, 426
$4,667,595
$2, 887,471
$1,500,262
$100,137
$258
$422
$375
$407
$280
12,938
11,061
7,700
3,686
358
$9,155,465
$40
22, 804
Building Materials $900,148 $115 7,827
Total $13,400,03
$308 43,570
Source: Lambert Advisory, 2006
In addition to the net new expenditures attributable to On the Park residents, the 9,400
square feet of new retail planned will also attract retail expenditure — primarily from the
area immediately surrounding the property, with limited additional support from visitors
from outside of the area. Assuming that 20 percent of the expenditure in On the Park
retail comes from outside the City, and based upon sales per square foot of $308,
approximately $580,000 will be expended within the City per year which is now going to
other areas.
3. Long -Term (On -Going) Building Employment and Operating Expenditure
There are a number of areas where positive public benefits or economic impacts will
result from the on -going operation of the residential development. These include:
• Additional employment from operation of the condominium community and
stores;
• Property tax revenue to the City of Miami and Miami -Dade County; and
• Purchase of goods and services.
We estimate that 22 FTE workers will be needed to operate the building and 8 FTE
workers will be employed in the retail stores. Positions such as building managers,
parking garage attendants, maintenance staff, and security personnel will need to be
filled. At an average Miami -Dade County wage of $40,5563 the operation of the building
3 State of Florida ES-202, third quarter 2005
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Economic Impact Analysis — On the Park Properties
will generate approximately $1.2 million in wages each year. Positions at various skill
levels will be made available to area residents.
Increased sales tax revenue will result from the operation of the 9,400 square feet of
new retail space. Assuming the net new retail expenditure in stores totals $580,000,
approximately $40,000 in additional sales tax will be collected from retail sales.
Additionally, an estimated $830,000 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 On the Park 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 (2005) millage rate of 25.4728 (per
thousand dollars of value), broken down as follows,
On the Park
Economic Impact Analysis
Ad Valorem Tax Breakdown
Item
Millage Annual Tax
City of Miami Operating 8.4995 $2,383,816
City of Miami Debt 0.765 $214,556
School Operations 7.947 $2,228,859
School Debt 0.491 $137,709
Environmental Projects 0.100 $28,047
South Florida Water Management 0.597 $167,438
FIND 0.0385 $10,798
County Millage 5.835 $1,636,516
County Debt 0.285 $79,933
Chitdren's Trust 0.429 $120,320
Library 0.486 $136,306
TOTAL. 25.473 $7,144,296
Source: Miami Dade County Property Appraiser 2005; Lambert Advisory.
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 On the Park based
on 85 percent of total sales proceeds (unit sale value). Accordingly, the development
should generate approximately $7.1 million in real property taxes by 2009. This
represents an estimated net marginal increase more than ten times that of the ad
valorem tax collection the City would receive if the property were valued at current use.
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 building operations and retail employment, The
31 FTE jobs created as a result of building and retail operations are assumed to have a
1.2 multiplier impact of 37 additional jobs. This multiplier is derived from the U.S.
Department of Commerce's 1999 RIMS II model, and identifies indirect secondary and
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Economic Impact Analysis — On the Park Properties
tertiary impacts created throughout the region due to the "ripple effect" of the primary
employment.
On the Park
Economic Impact Analysis
Summary, Economic Impacts
Impact
Short Term Construction Employment & Expenditure
Full Time Jobs 873
Direct Wages $70,000,000
Professional Wages (Miami -Dade County) $2,000,000
Impact Fees Toward Public Expenditure $3,900,000
Total Impact, Short Term Const.E mployment & Expenditure $76,000,000
Long -Term (On -Going) Resident Expenditure
Marginal Expenditure Growth — Residents (2009) $5,400,000
Marginal Impact from On -Going Resident Expenditure $5,400,000
Long -Term (On -Going) Building Employment and Operating Expenditure
Full Time Jobs 31
Total Direct Wages Created $1,260,000
Sales Tax from Additional Retail Sales (2009) $23,000
Goods & Service Purchased in Miami -Dade County $830,000
Ad Valorem Taxes (2009) $7,100,000
Total Impact from On -Going Operations of the Building/Retail $9,300,000
Indirect Flow Through Benefits
Full Time Jobs (Indirect) — Miami Dade County 37
Total Indirect Wages Created $1,500,000
Total Flow Through Indirect Benefits $1,600,000
Source: Lambert Advisory, 2006.
Based upon the analysis set forth herein, the On the Park 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 873, with on -going
annual employment of 37 FTE jobs, Accordingly, there is an estimated $76.0+ million
impact from short-term construction employment and expenditures, and a stabilized
$15.7+ million annual revenue stream from resident expenditures and building
operations (including real property taxes).