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HomeMy WebLinkAboutTab 4 - Economic Impact StudyM. Scott A. Silver Mr. Aaron J. Butler Grouper UTD; LLC Miami, Florida Re: AlitiSP l aactA Dear Si June 6. 200 222 Biscayne Boulevard Miam€ Economic Associate ,Inc, (�::.Al) has performed anaiysi to o tsmate the fi cap and economic benefits that your proposed project at 2222 Biscayne Boulevard vviH provide to the City of Miarni. This letter, which is organized as shown below, provides the findings of our analysis and their bases: Project L)esc l tg2 u i[mar"y of FTndin Fiscal Benefits economic Benefits Bases of Estimates Closing Section Page The analysis presented b le 3 is based on preliminary estimates of pricino 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 project proposed far development at 2222 Biscayne Bcuie and will be corn rised of a i.gh€€-rise office condominium building containing 417,000 square feet of sa1eabie space, inclusive of 2 501 a- are feet of retail space. Based on the anticipated sale 6861 - Terrace MRarrii, Fiorid9 :3156 'lei. 3O5i 6 --0225 Fawn ,f305. 669-8534 ErnaRT, rraeninkObeit Mr. Scott A. Silver. Mr, Aaron .#_ Butler Grouper LiTD, LLC June 6, 2006 Page 2 prices per square foot for -office and retail space as well as parking and store space, gross sales proceeds totaling approximating $190.0 million i(i be generated. Construction of the proposed office condominium building is expected to cost $87,0 rhilfion in hard costs. An additional $23.9 million will be expended for sofa costs inclusive arch=tectural and engineering fees, marketing, sales commissions, project o rerheed, etc. Accordingly, the project will cost $110.9 minion to develop exclusive- of land and financing costs and developer fees. Summary of t dings Development of the proposed office c r dorrHn ut r project at 2222 Biscayne Boulevard will be highly beneficial to the City of Miami i important ways, as summarized below: 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 -recurring and recurring in nature as enumerated below, The estimates shown, which are based on the current iilage and fee gates, are expressed in 2006 Constant dollars_ Non-recurrirsa Benefits ▪ $ 278,000- in City building permit fees 5 € 8,000in City solid waste surcharge fees • $ 80,5.80 in City police impact fees • $ 132,001 in City fire -rescue impact fees • $ 54,969 in City general services impact fees • $ 459,173 in Downtown DRl supplemental impact fees c Recurring Benefits ▪ $ ? ,291,924 annually in City General' Fund ad valorem taxes • $ 116,280 annually in City Debt Service ad valorem taxes ▪ 5 76,000 annually in Downtown Development Authority ad valorem taxes Non -Quantifiable Trade-reated fees for roofing, electrical, plumbing, recantci; pool and elevator work performed during construction (non -recurring) ▪ increased City utility taxes and franchise fees (recurring • increased occupational license fees (recurring) Asa a date, Anc, 55861 Seed MMus Take Miarrii Fkard& a3156 5 S-022S Eris; ;3 5B-8554 mait rne i P e5@south net • Mr. Scott A. Silver Mr.. AarO ; j. Butler r• :per ATE), LLC June , 2006 Page 3 Oth e While the focus of M l's fiseai analysts was on the proposed project at cayne Boulevard will,, provide significant fiscal m ats to other non-munici urisdiations that impact the lives of City residents: y o Miami:. the shown beio aoNemmental 588,459 in County road impact fees (non -recurring) o $ 886,920 in County Genera: Fund ad valorem taxes fr o $ 43,920 in County Debt Service ad valorem taxes recurring c $ 65,177 in Children's Trust ad valorem taxes (recurring) 73,872 in County Library ad valorem taxes (recurring) $ 1,207,944. in School Operating ad valorem taxes recurring) O $ 74,632i n Schoot Debt Service ad valorem to es re €rrir g o increased County occupational license fees (recurring:. Economic Benefits um ic Benefits relates to the pas, ti e impact that the proposed mixed -use pr eve on the economy of the City rather than its finances. The economic ben provide witi also be non -recurring and recurring in nature. No3 r ecu§ Approximately 90 percent of the $110.9 million that will be spent on hard and soft costs to develop the proposed mixed -use project wit; be spent within the City of Miami, producing an overall economic impact approximating $155,1i million When the mil €plier effect is considered_ Project expenditures within the City of Miami $39.2 million for construction labor, an approximately 754 construction workers, residents, their average annual wage of $52,000. A tota.i caf$4. the workforce establishments phi working. Additionally, 3.8 m taxes and 'increment revenues vain be paid to the Dads County and the Miami -Dade County Schools, all their principal offices within the City. These expen overat9 economic impact on the City o: 612.1 million mrafti Tier effect is considered. elude an estirnat sufficient to p whore may be City i Uon will be spent annually in within the City of Miami by he proposed project in retail and food and beverage a valorem iami, iare?i Non maintain es ai[i have an nnuaiiv when the Miami Ecorttemic Associates, inc.. o 1 LW 89t4 Terrace Miami, i, Florida t3 C) 41.22E Fax..47,3 emaii14 viteainkPbelisoutii„net Mr. ScottA. Sliver Mr, Aaron J. Butler Grouper UTD, LLC Jun e 6, 2006 P e 4 A total of 1 ,700people will be employed at the proposed project, indusive of people involved in project operations, maintenance and parking. These workers, who may include City residents, will earn approximately $73.1 million annually. Bases of Estimates The materials that follow provide the assumptions used to estimate the fiscal and economic benefits that development of the proposed mixed -use project will provide to the City of Miami, Ali monetary values are stated in 2006 Constant Dollars. Project Characteristics The proposed office condominium project at 2222 Biscayne Boulevard will be Iodated within the City of Miami and its. Downtown Development Authority as well as within the boundaries of the Downtown DRI„ It wiii also be located within the jurisdictions of Miami -Dade County and the Miami -Dade County Public School District, The project will entail the construction of 404,492 square feet of office space, 12,501 square feet of retail and 20,400 square feet of saleable storage space. The project will also include a garage comprised of 675,000 square feet, Development of proposed project will cost approximately $87.0 million to oonstruct in terms of hard construction, Soft costs including those relating to professional fees, marketing., sales commissions, permit fees, developer overhead, administration, etc,. will total an additional 23.9 million. Therefore, $11(h9 million will be spent to develop the project exclusive of land acquisition and financing costs and developer's fees, Sale of the office, retail and storage space as we l; as parking within the proposed project will generate approxirn-ately $190.0 in gross 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 e practical matter, condominium commerciai space is initially placed on the tax rolls at an assessed and taxable value that approximates .80 percent of market value, or in this case $152.0 million, Based on industry standards, it is anticipated that the proposed office space wifl be occupied by 1,650 workers, This estimate assumes 4.0 workers per 1,000 square feet of office space and 2.5 employees per 1,000 square feet of retail space. -When project operations, maintenance and parking personnel are accounted for, the total number employed at the proposed project will be 1,7.00 people. Assuming that they spend an average of $10 per day for food and other items while working, their expenditures would total $4.25 million, Wang Eclow4ernic Associatez,-,L. 6861 Z,WA, 69th eraseTrrc MiL Porka 3315C Tet (3-05).9225 F(305) 6,6S-4S34 ErnaHt meaink(fabeH5o4th,.net. • Scott A. Sliver Mr. Aaron J. Butler Grouper UTE), Li„C June 6, 20.6 Pace 5 Non -recurring Fis The City of iar i charges building permit fees at a rate of $0.25 per grass square foot of commercial:onstruction.. In calculating fees, the square footage associated ith parking garage space is included in the calculation. Accordingly, building permit s totaling $278,100 will be paid. A solid waste surcharge fee in the amount of 000, the maximum amount, will be applied. The various trades involved in completing the new project including the roofing, electrical, plumbing, mechanical and elevator contractors will be required to pay fees on their work. Calculation of the fees that they wiii 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 impact sees on new construction protects. The rates for office space in the quality proposed are paid on a per square foot basis in the amounts of $0.176 for police, $0.317 for fire -rescue and $0.132 for general services. The rates for retail space are $G_ 7 51 for police, $0.302 for fire -rescue and $0. 126 for general services, impact fees totaling $267,550 will be paid on the proposed office condominium project, of which $30,.580 will be for police, $132,001 for fire -rescue and $54,969 for general services. In addition to the iimpact fees dicussed 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 rates for office space a:nd retails space are $1.094 and $1.332 per gross square foot, respectively. Based en these rates it is estimated that a total of $459,173 in Downtown DRI supplemental impact fees will be paid. New commercial construction projects located in the City of Miami also need to pay impact fees to Miami -Dade County for roads. n the eastern portion of the county, the road impact fee rates for office and retail space in the quantities being proposed are $1.416 and $1_255 per square foot, respectively, which result in a payment of $588 459 Recurring Fiscal impacts The miliage rues 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 projects estimated taxable value of $152.0 million. aana :Economic Associates-, t_ semi sew`. 89th Terrace Viie 33156, (305) 55 ..0229 Fan: (3 ) 66E-5S3 Emait ine Scott A. Silver Mr. Aaron J. Butler Grouper UTD, LLC June 6, 2006 Page 6 ; Entity City of ,';eneral Fund Debt Servic,e Fund Downtown Develo_p.meniAuthority Miarni-Dade County General Fund Debi Service Fund Children's .Trusi Utorary i-Dade Debt Service Source: Miami -Da v Public Stho ppraiser, Ratet$1000 Taxable Value Taxes 846950 0.76508 1,.291,94 $ 116,250 0 50000 $ 76,000 5,83500 0,28500 0.48600 .4 iarni Economic Associ $ 88.6,920 43,320 0,42880 $ 65,177 73,872 s, inc. ,207,944 74,632 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 will be dependent on the amount of these services used by the project's residents and -commercial tenants; hence, it can not be quantified at this .time. Both the City of Kiliami and Miarni-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 retali space. Non -recurring Economic Benefits It is estimated that approximately 90 percent of the $110,9 million that will be spent on the hard and soft costs to develop the proposed condominium office 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-outout model of Minnesota IMPLAN Group (MIS), which is one of the nation's foremost .econometric firms, the overall economic impact of these expenditures will approximate $155,1 million based on application of a 1,554. multiplier. MIG's input-output model further estimates that approximately $39.2 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 552,009 per year according to the Florida Agency for Workforce Innovation. Therefore, the projects expenditure on construction labor would support approximately 754 workers, some of whom may be City residents, on an annual basis at their average wade rate. Miami Econornkc Associates,hio 6861 SM, 89' Terrace !Can* Fierida 33/56 Teir, (208) 689-0229 Fax; (305) 669-8E34 8me0raeaink@belisouthmat r. Scott A. Silver Mr..Aaron J. Butler Grouper UTD, LLC June 6, 2006 Page 7 Recumn nefits The workforce employed at the proposed project will spend $4,25 milii n nrivally retail establishments and restaurants spent within the City of Miarais while working. Additionally, the project will generate approximately $3.5 million annually in ad valorem taxes and increment revenues for the City of Miami, Miami -Dade County and Miami --Dade County Schools; all of which maintain their principal offices within the City, According to the NG input-output model, the total economic impact of these expenditures will be $12.1 million annually based on the application of a 1.5 rnuitlpii r Based on wage data complied by the Florida Agency on Workforce innovation, it is that the annual earnings of the 1,700 people who will be employed at the proposed project on a fuIi-time equivalent basis, some of whom may be City residents, WOild. average $43,000, or $73,.1 million in total. ctosin€r The analysis performed by MEAN deonstrates that the condominium office project proposed for development at 2222 Biscayne Boulevard will be highly benefiidiai to the ity of Miami both fiscally and economically. Sincerely, Miami Economic Associate Andrew Dolkar t President $iianT [EC Oftlic Associates,6861 S W Bice, Terrace '1irL; FFlorid ° somas (30 C 9 022e xa. (3e5) 6 5 5534 EmaW rroe nk@bensouth.net