HomeMy WebLinkAboutIII - Tab 4 Econimic Impact Study•
ECONOMIC IMPACT ANALYSIS
OMNI DEVELOPMENT
- Prepared by -
Lambert Advisory, LLC
- Prepared for -
Downtown Miami Hotel LLC/Downtown Miami Mail LLC
June 30, 2006
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Economic Impact Analysis — Omni Development
Economic Impact Analysis
Omni Development
Lambert Advisory has completed an economic impact analysis for the development of
Omni Development, a mixed -use residential and commercial project located at
approximately 1501 to 1701 Biscayne Boulevard in the City of Miami. The analysis
provides a measurement of the tangible direct and indirect economic impacts that will
be derived from the construction and operation of the development. This report
identifies certain benefits created by the proposed Omni Development, and can
supplement the major use special permit application to be submitted to the City of
Miami.
The Omni Development property is situated in the SD-6 High Density Residential zoning
district of downtown Miami, and is adequately accessible to major thoroughfares,
including I-95. The residential and commercial 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. This
development will help maintain economic stability within the area and attract on -going
investment during the next several years.
We have completed this analysis on the basis of development and performance
information (i.e., price, absorption, timing, costs) that has been provided by Downtown
Miami Hotel LLC/Downtown Miami Mall LLC (herein referred to as Developer) and/or its
professional representatives. However, there are certain cost, timing and/or operating
performance assumptions which have not been provided to Lambert Advisory. Lambert
has prepared generalized estimates for certain cost and operating assumptions as
necessary and noted as such. Notably, Lambert Advisory was not provided a
development timeline; therefore, for purposes of this analysis, we assume a minimum
eight year development timeline at which point the entire development program will be
completed. Considering this, our analysis has been prepared to reflect the economic
impact upon completion of the total project assumed to be 2015, for which residential
and commercial valuation and related fees stated herein are presented in current (2006)
dollars. Importantly, the assumptions set forth herein are subject to change and,
furthermore, Lambert does not attest to the accuracy of these estimates and as such
should not be relied upon beyond the scope of this analysis. We have not independently
verified this information or data.
The Omni Development represents a large scale master plan including 4,208 residential
units and 350,200 square feet of commercial (retail) space. Specific to the residential
component, we were not provided a breakdown of (for -sale) condominium and rental
units. As such, Lambert Advisory assumes that 80 percent of the units (or 3,336 units)
will be for sale, and 842 units will be rental. Overall, the development plan contemplates
six high-rise buildings, with townhouse and loft units on the lower levels, and ground
floor and second level commercial space integrated into select towers. The high-rise
buildings range from 58 floors to a maximum 65 floors.
A profile of the project follows.
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Econwnic Impact Analysis — Otani Development
Omni Development
Economic Impact Analysis
Building Features & Profile
General Features
Site Size (Net)
Building Height (maximum)
Number of Residential Units
Commercial Retail Space
Number of Parking Spaces
Detailed Building Profile
Gross Building Area (wlparking)
Residential FAR
Commercial FAR
Gross Parking Area
11.53 acres
65 stories
4,208 units
350,200 sq.ft.
6,154 spaces
7,817,598 sq.ft.
5,171,378 sq.ft.
350,200 sq.ft.
2,646,220 sq.ft.
Note: Estimates are based upon data provided by Developer,' however,
gross parking area was estimated by Lambert Advisory, as well as gross
building area. These estimates are subject to change.
As noted, Lambert was not provided a development timeline. Therefore, we assume
development of the Omni property is expected to commence January 2007. The Omni
Development is anticipated to be completed in phases during the next eight year period,
with an assumed total build by 2015.
Based upon the information provided and/or estimates derived, construction and
subsequent operations of Omni Development 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 and shopper expenditure
3. Long-term building and retail 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
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Economic Impact Analysis — Omni 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. Lambert Advisory was not provided with any
construction cost estimates. Therefore, the residential and commercial development
cost and timeline assumptions are based upon our general experience and knowledge of
industry standards and do not reflect actual development costs. The table below shows
a summary of estimated development costs:
Omni Development
Economic Impact Analysis
Develo • ment Costs
Item Cost
Hard Costs
Soft Costs
Total
Source: Estimated
$1,100,000,000
$190,000,000
$1,290,000,000
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 ($645 million) of hard costs, and
materials will account for 40 percent ($455 million). Over an estimated 96-month
construction period, at an average annual construction wage of $41,964 1 in Miami -Dade
County, with a benefit/overhead multiplier of 1.4, there will be nearly 1,374 Full Time
Equivalent (FTE) jobs created.
Additionally, $25.0 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%
and overhead of 30%, approximately $14.0 million in professional wages will be paid out
by these firms.
Impact and other fees payable to the City and County during the construction and
development period will amount to approximately $26.3 million, which will be available
for public expenditures associated with the project including developmental,
State of Florida ES-202, third quarter 2005
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Economic Impact Analysis — Omni Development
administrative, permitting, schools, and other costs2. Note, this does not assume any
bonus fees paid to the City for Affordable Housing, PUD, or Retail Bonuses.
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 Omni Development is included in the
following table.
Omni Development
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
$5,276,514
$158,295
$4,533,698
$7,322,621
$17, 291,128
Other/Non-lmpact Fees:
City of Miami Bonus Fees $0
Miami Dade W.A.S.A. Connection Fee $6,005,179
City of Miami Building Permit Fee $1,412,910
Energy Installation Fee $816,780
M.U.S.P Application Fee $45,000
Dade County Code Compliance $633,902
Radon Gas Fee $81,678
Fire Plan Review Fee $73,510
Ground Cover Fee $10,047
Land Use/Zoning, Review for Building Permit $2,000
Certificate of Occupancy $250
Application Fee $35
TOTAL OTHER FEES $ 9,081,291
TOTAL PROJECT FEES $26,372,419
Source: City of Miami Planning, Building & Zoning; Miami Dade County; Developer;
Lambert Advisory. Fees above are subject to change.
2. Long -Term (On -Going) Resident and Shopper Expenditure
As noted above, we assume the residential component to the Omni Development will
consist of both rental and for -sale housing. For this analysis, we assume that the rental
housing units will predominately comprise young, primary working professional
individuals and households paying an estimated average rental rate of $1,700±, with an
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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 he collected by the City/County (eg. Tree Trust) andlor 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 — Omni Development
average household income between $60,000 and $70,000. For the for -sale
development, the Omni Development resident base is expected to consist primarily of a
mix of younger working professionals and second home residents paying an estimated
average sale price of at least $450,000, which would indicate mostly middle to middle -
upper income individuals/households with incomes of at least $120,000.
Assuming a stabilized occupancy for the rental units at 90 percent, and that an average
80 percent of the condominium units will be occupied year-round, there will be a total of
3,450± households in the building, with total personal income for the development
estimated to be in the range of $360 million. Presuming that approximately half of the
owners and renters will relocate from outside the City, over $180 million of marginal
personal income will flow into Miami.
We have estimated the marginal impact of $180 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 and sale/rent of the units by 2015, and indicates
potentially net new demand for retail space of approximately 195,000 square feet.
Omni Development
Area Expenditure Potential (from New -to -Miami Omni Residents)
2015
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
Building Materials
Estimated Marginal
Expenditure Growth Sales per
2015 Square Foo
$4,085,540
$3,930,684
$1,629,243
$1,558,278
$1,486,327
$2,266,944
$227
$290
$227
$200
$250
$420
Square Feet
Demanded
17,998
13,554
7,177
7,791
5,945
5,397
$14, 957, 016
$20,874,524
$12,913,410
$6,709,505
$447,833
$258 57,864
$422
$375
$407
$280
49,466
34,436
16,485
1,599
$40, 945, 273
$4,025,663
$401 101,986
$115 35,006
Total $59,927,951
$308 '194,855
Source: Lambert Advisory, 2005
Retail: In addition to the net new expenditures attributable to Omni Development
residents, the 350,200 square feet of ground -level retail planned will also attract retail
expenditure — the largest share of which will come from persons within central Miami
Dade County area. Assuming that at least 50 percent of the expenditure in Omni
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Economic impact Analysis — Ornni Development
Development retail comes from outside the City, and based upon an average sales per
square foot (for Shopper Goods and Eating and Drinking Establishments) of $320, over
$56.0 million 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 and retail space. These include:
• Additional employment from operation of the condominium community, hotel,
restaurant, and stores;
• Property tax revenue to the City of Miami and Miami -Dade County;
▪ Increased sales tax revenue from the hotel, stores, and restaurant to State and
County; and
• Purchase of goods and services.
We estimate that 140 FTE workers (an average one employee per 30 units) will be
needed to operate the residential building — positions such as building managers,
parking garage attendants, maintenance staff, and security personnel will need to be
filled. Approximately 350 FTE workers will be employed in the retail stores (an average
one employee per 1,000 square feet). At an average Miami -Dade County wage of
$40,556 3 the operation of the building and stores will create approximately $20.0
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 Omni retail space.
Assuming the net new retail expenditure in stores totals $56.0 million, approximately
$4.0 million in additional sales tax will be collected from retail and restaurant sales.
Additionally, an estimated $5.5 million in goods and services related to building
maintenance will be purchased annually within Miami -Dade. This includes cleaning
services, maintenance supplies, utilities, etc.
The City will benefit from Occupational License fees and Certificate of Use from the
businesses occupying the retail development. The City has a somewhat comprehensive
fee schedule for determining Occupational License rates. Although it is difficult at this
point to determine the precise composition of the tenant mix that will determine
Occupational License fees to the City, we assume for purposes of this analysis that there
will be an average of 25 total retail tenants occupying the building, which assumes that
there will be one or two larger format stores greater than 50,000 square feet.
Accordingly, we assume 50 percent are estimated to be net new businesses to Miami.
Assuming that the average Occupational License fee per company is $1,000, the City will
generate $25,000 per year in fees.
3 State of Florida ES-202, third quarter 2005
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Economic Impact Analvsis — Omni Development
Certificate of Use permits are charged to each business and comprise Fire/Safety fee
which is fixed at $50 for each business, and Supplemental Waste fees which
approximates $0.25 to $0.30 per square foot of space. Considering this, Certificate of
Use fees are estimated to generate roughly $300,000 per year to the City.
Finally, the Omni Development 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 25.473 (per thousand
dollars of value), broken down as follows.
Omni Development
Economic Impact Analysis
Ad Valorem Tax Breakdown
Item
Millage Annual Tax
City of Miami Operating 8.4995 $8,854,155
City of Miami Debt 0.765 $796,921
School Operations 7.947 $8,278,601
School Debt 0.491 $511,488
Environmental Projects 0.100 $104,173
South Florida Water Management 0.597 $621,911
FIND 0.0385 $40,106
County Millage 5.835 $6,078,474
County Debt 0.285 $296,892
Children's Trust 0.429 $446,901
Library 0.486 $506,279
TOTAL 25.473 $26,535,900
Source: Miami Dade County Property Appraiser, Lambert Advisory, 2005.
Note: Assessment at 85% of Estimated Value.
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 Omni Development
based on a market value of $1.25+ billion, or 85 percent of the estimated value of the
residential (for -sale and rental) and retail uses. Accordingly, the development should
generate approximately $26.5 million in real property taxes by 2015.
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 increase in retail and operations employment.
The 490 FTE jobs created as a result of building and retail operations are assumed to
have a 1.2 multiplier impact of 588 additional jobs. This multiplier is derived from the
U.S. Department of Commerce's 1999 RIMS II model, and identifies indirect secondary
and tertiary impacts created throughout the region due to the "ripple effect" of the
primary employment.
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Economic Impact Analysis — Omni Development
Omni Development
Economic impact Analysis
Summary, Economic Impacts
impact
Short Term Construction Employment & Expenditure
Full Tirne Jobs 1,374
Direct Wages $461,300,000
Professional Wages (Miami -Dade County) $13,900,000
Impact Fees Toward Public Expenditure $26,400,000
Total Impact, Short Term Const. Employment & Expenditure $501,600,000
Long -Term (On -Going) Resident Expenditure
Marginal Expenditure Growth — Residents (2015) $60,000,000
Marginal Impact from On -Going Resident Expenditure $60,000,000
Long -Term (On -Going) Building Employment and Operating Expenditure
Full Time Jobs 490
Total Direct Wages Created $19,870,000
Sales Tax from Additional Retail Sales (2015) $4,000,000
Goods & Service Purchased in Miami -Dade County $5,520,000
Certificate of Use/Occupational License (City and County - 2015) $330,000
Ad Valorem Taxes (2015) $26,500,000
Total Impact from On -Going Operations of the Building/Retail $56,300,000
Indirect Flow Through Benefits
Full Time Jobs (Indirect) — Miami Dade County 588
Total Indirect Wages Created $23,800,000
Total Flow Through Indirect Benefits $23,800,000
Source: Lambert Advisory; Figures above stated in 2006 $'s.
Based upon the analysis set forth herein, the Omni Development 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 1,374, with on-
going annual employment of 588 FTE jobs. Accordingly, there is an estimated $500
million impact from short-term construction employment and expenditures, and a
stabilized $115± million annual revenue stream from resident/shopper expenditures and
building operations (including real property taxes).
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