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HomeMy WebLinkAboutIII. Tab-5 Economic Impact Study.• • • October 3, 200,3 Mr. Frank Paredes Fullerton Diaz Architects Carat Gabies, Fiorida MUSP impact Analysis — One Dar Mr. Hassan: Miami Economic Associates, inc. (MEAI) has performed analysis to estimate the beric4its that a mixed -use project, to be know as One, will provide to the City of t‘iliemi. The proposed project will be located on S.W. 324 Avenue between S.W. 23 Street and S.W. 23m Terrace, This letter, which is organized as shown beicv,,, provides the findings of our analysis and their bases. Section Project Description Summary of Findings Fiscal Benefits i Pa9e ! i 1 2 2 Economic Benefits kpases of Estimates Closing 3 4 8 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 he significant. Project Description The proposed One mixed -use project will be comprised of the following: • Ground floor retail space totaling 5,596 F.A.R. square feet • Condominium office suite totaling 118,288 F.A.R. square feet • A roof -top ballroom comprised of 23,438 F.A.R. square including 9,434 square feet that will accommodate up to 529 patrons, 2.366 square feet of kitchen space, 7,491 6861 SM, 89th Terrace Miami. Florida 33156 Tel: (305l 669-0229 Fax: (305) 669-8534 Erriall: meainkakellsouth.det • vie o Mr. Fra Paredes. Diaz Architect October K 2006 Pace 42.. square feet of restroorr and pre-functson 3 . `e and a ba room mezzanine square feet_ 4 townhouse villas totaling 13,208 FAR_ square feet ▪ 496 parking spaces Development of One, which will occur on a site with a gross lot area totaling 89,354 square feet, in the manner indicated above will require use of the City's PUD and Affordable Housing bonus provisions. A fee of $12.40 per square foot will need to be paid for the 12,434.58 square feet to be developed utilizing the Affordable Housing bonus. AH of the office and retail space within the project as well as the ballroom space and 41 residential units will be offered to the market on a for -sale basis at an average price of $400 per square foot. Gross sales proceeds will total 352.9 million. Construction of One is expected to approximate $32.0 million in hard COSTS. An additional 38.0 million will be expended for soft costs inclusive architectural and engineering fees, marketing, sales commissions, project overhead. etc. Accordinaiy, the project will cost 340.0 million to develop exclusive of land cost, financing expenses and developer tees. Summary of Findings Development of One will be highly beneficial to the City of Miarni in terms of the fiscal and economic benefits provided, as summarized below: Fiscal Benefits Fiscal Benefits refers to the positive impacts that One 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 below, which are based on the current millage and fee rates, are 2006 Constant Dollars. it should also be noted that the amount of City and County impact fees actually paid may be lower than the amounts estimated below because of credits granted for existing development on the protect site. o Non -recurring Benefits • $ 81,017 in City building permit fees • $ 10,000 in City solid waste surcharge fees • $ 38,606 in City police impact fees • 5 40.650 in City fire -rescue impact fees • $ 14,388 in City general services impact fees • $ 23,992 in City park impact fees • $154,189 in Affordable Housing Bonus Fees Miami Economic Associates, Inc, 6861 S.W. 89ah Terrace Miami, Florida 33156 Tei: (305) 669-0229 Fax: (31;i5) 669-8534 Email: sneainKkaellsout .net • Mr. Fra.qkPredes Fullerton aaz Archltects October 3. 2006 Paae cumn Benefts • $ 358,679 annually in City General Fund ad valorem taxes • $ 32,283 annuafly in City Debt Service _ad valorem taxes Non -Quantifiable Trade -related fees for roofing, electrical, plumbing, mechanical, elevator work performed during construction (non -recurring) O Increased City utility taxes and franchise fees (recurring) • increased occupational license fees (recurring) • increased parking surcharge fees (recurring) • Increased revenue sharing funds (recurring) Other anc • While the focus of MEAL fiscal analysis was on the City of Miami, One will. as shown below, provide significant fiscal benefits to other non - municipal governmental jurisdictions that impact the lives of City es tdents : • $ 232,201 in County road impact fees (non -recur -io) c $ 14,570 in School impact fees (non -recurring) e, $ 246,237 in County General Fund ad valorem taxes (recurring) o $ 12,027 in County Debt Service ad valorem taxes(recurring) o $ 18,095 in Children's Trust ad valorem taxes (recurring) o $ 20,509 in County Library ad valorem taxes (recurring) e $ 335,363 in School Operating ad valorem taxes (recurring) O $ 20,720 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 impacts that One 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. o Non -recurring Approximately 90 percent of the $40.0 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 $55.9 million when the multiplier effect is considered_ Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email; meainkebellsouth.net • Mr. Frar4--; Parede sier!on Diaz Architects October 3, 2006 Page 4 Project expenditures within the City of Viiarni lune an es mated $14.4 million for construction eabor, an amour suff dent to pay approximately 277 construction vvorKers. some of whom ray, , residents, their average annua+ wage of $52 000. Recurring A total of $224,000 will be spent annually in, within the City of. Miami by residents of One in retail and food and beverage esrabiishments Employees at the project will spend an additional $1.1 million during their work days. Finally. $1.2 million in ad valorem taxes will be paid to the City of fvliarrai> 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 $3.7 million annually when the multiplier effect is considered, A total of 440 people will be employed at the proposed project, inclusive of people involved in project operations, maintenance and parking. These workers, who may include City residents, will earn approximately S17.6 million annually. Bases of Estimates The materials that follow provide the assumptions used to estimate the fiscal and economic benefits that development of One will provide to the City of Miami All monetary values are stated in 2006 Constant Dollars. Project Characteristics One will be located within the City of Miami as well as the jurisdictions of Miarrti-Dade County and the Miami -Dade County Public School District. The project will entail the construction of 326,708 gross square feet of building area. Of this amount, 13,208 square feet will pertain to the residential portion of the project, which will be comprised of the 4 townhouse villa units_ The remaining 313,500 square feet will be comprised of the retail, office and ballroom space, service and circulation areas and parking. in order for One to be developed with a total of 161,342 square feet for FAR purposes, 12,434.58 square feet will be developed under the provisions of the City's Affordable Housing Bonus program, Development of One will cost approximately $32.0 million to construct 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 Miami Economic Associates, Inc, 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: rneaink@beilsouth,net Mr Frank Paredes Fullerton Diaz Architects October .3. 2006 Pace 5 additio:,ai $S.0 miiliori, Therefore, . sr,iliie�r will be spent tc derreto t� 6Ot exclusive acquisition costs, financing 'Y, enses and developer's fees XviU�,ti� of';and ssCgis s tlfJi SiS, g 2 i;a t- Sale of the project's retail, office and ballroom space as We l as its 4 resEdei ,al units will generate $52.9 million in gross sales proceeds. According to the Constitution of the State of Florida, real property is supposed; to oe assessed at 100 percent of its market value. As a practical matter: condominium space, inclusive of both commercial and residential €offerings, is placed on the tax roils at approximately SO percent of market value, or in this case $42,3 million. Assuming that all 4 residential units qualify for the Homestead Exemption. the taxable value of the project will be $42.2 million. Residents of the proposed townhouse units will on average require an annual income approximating $400,000 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 $320,000 million annually in retail and restaurant establishments. This projection assumes that they spend approximately 20 percent of their nncome for that purpose. Based on industry standards for employment in retail and office uses, it is anticipated that the proposed retail and office space at One will be occupied by 384 workers, This estimate assumes 2.5 workers per 1,000 square feet of retail space and 4 workers per 1,000 square feet of office space. The ballroom is expected to ernpioy 40 people_ When project operations, maintenance and parking personnel are accounted for, the total number employed at the proposed project will be 440 people. 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 $81,017 will 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 impact fees on new construction projects. On townhouse residential units, fees will be paid on a per unit basis in the amounts of $144 for Mums Economic Associates, Inc. 6861 S.W. 89th Terrace Miarr►i, Florida 33156 Tel.'. (305) 669-0229 Fax: (305) 659-8534 Email. meaia kTT.beilsouth-net Mr. Frank Paredes Fullerbr, Diaz Architects October 3 2006 Page 6 police, $619 for fire -rescue, $363 for genera ervices and $5.998 for pars The rates for commercial space in the quantity proposed :assuminc, the bal!mc.Trl considered commercial space) are paid on a per square foot basis in the arnouns of $0.696 for poiice, $0.260 for fire -rescue and $0.108 tor oeneral se.roces. The rat, for office space in the quantity proposed are Qad on a square foot bass t-ie amounts of $.0206 for opiice. $0.336 for fire -rescue and $0.108 for genera i sef-vv;es impact fees totaling $134,478 will be paid on the One mixed -use project., of wrik-...h $38,606 will be for police, $40,650 for fire -rescue, $14,388 for general service.s and $23,992 for parks, The City of Miami charges a fee of $12.40 per square foot for space permitted under the provisions of its Affordable Housing Bonus program_ A total of $154,189 vvU he paid for the 12.434.58 square being proposed for development at One under those provisions_ New construction projects located in the City of Miami also need to pay impact fees to Miami -Dade County for roads and schools. In the eastern portion of the county, the rate for roads for condominiums is $877 per unit. The road impact fee rates for retail and office space in the eastern portion of Miami -Dade County are $1 255 and $2.102 per square foot, respectively, for projects with the quantities of space proposed at One, assuming that the ballroom is considered retail space. 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 $246,772 will need to be paid at the time the building permit for the proposed project is issued. Of this amount, $232,201 will be applied to roads and $14,570 to schools. Recurring Fiscal Impacts The millage rates currently being ievied 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 S46.6 million. Entity City of Miami Genera! Fund Rate/$1000 Taxable Value 8.49950 Taxes $ 358,679 Debi Service Fund iami-Dade County 0.76500 General Fund 5.83500 Debt Service Fund 0 2asoo Children's Trust 0,42880 Library 0,48600 Miami -Dade County Public Schools Operating Debt Service 32,283 $ 246,237 $ 12,027 $ 18,095 $ 20,509 7.94700 $ 335,363 0.49100 $ 20.720 Source: Miami -Dade County Property Appraiser; Miami Economic Associates, nc Miami Economic Associates, inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tet (305) 669-0229 Fax (305) 669'8534 Email; meainkbelisoutli.net • Mr. Fray? Paredes Fulirton Diaz Architects October 3, 2006 Page 7 The City of Miami collects utility taxes and franchise fees from the pro's iaer W . telephone, electric and other such services based on their revenues. The amount collected as a result of the development of the pr000sed project •/Ui use dependent or the aiaio,.ird of these services used by One residents and cornmeerciai tenants i tenon it can not be quantified at this time. • Both the City of Miatm and Miami -Dade County stir collect occupational license fees from the occupants of One's proposed office and commercial space, inclusive of the ballroom. 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 tvliarni charges a 20 percent surcharge on parking fees. Guests at the building would pay this surcharge. it is not possible at this time to estimate the amount that will be generated. • The City of Miami and Miami -Dade County participate in a number oz revenue sharing programs that are based on population -based formulas. The amounts of revenue sharing revenues that will accrue to the City as 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 $40.0 million that will be spent on the hard and soft costs to develop One 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 Minnesota IMPLAN Group (MIG), which is one of the nation's foremost econometric firms, the overall economic impact of these expenditures will approximate $55.9 million based on application of a 1.554 multiplier. ▪ MIG's input-output model further estimates that approximately $14.4 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 the Florida Agency for Workforce innovation. Therefore, the project's expenditure on construction labor would support approximately 277 workers, some of whom may be City residents, on an annual basis at their average wage rate. Recurring Economic Benefits • The residents of Loftika will spend $320,000 annually in retail establishments and restaurants, approximately 70 percent of which, $224,000, will be spent within the City of Miami. Employees at the project are expected to spend an additional $1.1 million in shops and restaurants while working. Finally, the project will generate approximately $1.2 million annually in ad valorem taxes for the City of Miami, Miami - Dade County and the School Board, all of which maintain their principal offices within Ar]iarni Economic Associates, incm 6861 S.W. 8941, Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: aneainkgbellsouthoraet • Frank Paredes lerton Diaz Architects Octonei- 3. 2005 Page 8 the City. According to the MG input-output model the total eo cmo mnact these expenditures vvill be $3.7 million annually based o thie aca c 5multiplier- 0 Based on wage data complied by the Florida Agency on Workforce innovation. it is that the annual earnings of the 440 people who will be employed at the croposeci project on a full-time e,guivalent basis, some of whom may be City f'esicients_vouo average $40000, 07 $17.6 million in total. Closing The analysis performed by MBA! demonstrates that the, de.,ve-lopment of One w be beneficial to the City of Miami both fiscally and economicaiiy. Sincerely_ Miaml Economic Assoclatia-s. Inc, Andrew Doikart President Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Ernai:: ineaink4beilsouth.net