HomeMy WebLinkAboutP. Economic Impact Study•
ECONOMIC IMPACT ANALYSIS
MAX MIAMI
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- Prepared by -
Lambert Advisory, LLC
- Prepared for -
Prema, LLC
August 18, 2006
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.Eet»wm ic^ Irn/pact Analys s i
Economic Impact Analysis
Max Miami
Lambert Advisory has completed an economic impact analysis for the development of
Miami Max, a mixed -use residential and commercial project located at Northeast 16`h
Street and Northeast 15' Avenue 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 Max Miami, and can supplement the major use special
permit application to be submitted to the City of Miami,
The Max Miami property is situated in the C-2 zoning district of downtown Miami;
however, there is proposal for a district zoning change to SD-6 High Density Residential.
The property is adequately accessible to major thoroughfares, including I-95 and
Biscayne Boulevard. 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 (Le., price, absorption, timing, costs) that has been provided by Prema, LLC
(herein referred to as Developer) and/or its professional representatives, However,
there are certain design elements, construction 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
40 month (three and one third years) 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 2009/10, for which residential and commercial valuation and related fees stated
herein are presented in current (2006) dollars. Importantly, the assumptions and
estimates 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 Miami Max development represents a mixed use development including 28
condominium units, 180 condominium hotel units, 245,440 square feet of office space,
and 52,435 square feet of retail space. Overall, the development plan contemplates a
30 story high-rise building comprising both residential and commercial components, as
well as 740 parking spaces, building amenities and tenant storage.
A profile of the project follows.
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Max Miami
Economic Impact Analysis
Building Features & Profile
General Features
Site Size (Net)
Building Height (maximum)
Number of Condominium Units
Number of Hotel Condominium Units
Commercial - Office Space
Commercial - Retail Space
Number of Parking Spaces
Detailed Building Profile
Gross Building Area (w/parking)
Residential (Condo & Hotel) FAR
Commercial (Retail & Office) FAR
Gross Parking Area
1,07 acres
30 stories
28 units
180 units
245,440 sq.ft.
52,435 sq.ft.
740 spaces
826,718 sq.ft.
124,290 sq.ft.
297,875 sq.ft.
181,000 sq.ft.
Note: Estimates are based upon data provided by Developer and are
subject to change.
As noted, Lambert was not provided a development timeline. Therefore, we assume
development of the Max Miami property is expected to commence January 2007. The
Max Miami development is anticipated to be completed during the next three year
period, with an assumed total build by late 2009.
Based upon the information provided and/or estimates derived, construction and
subsequent operations of Max Miami 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, visitor, worker 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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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.
I. 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 provided with
preliminary construction cost estimates, for which we have estimated a general
breakdown as follows:
Max Miami
Economic Impact Analysis
Development Costs
Item Cost
Hard Costs
Soft Costs
Total
Source: Estimated
$192,561,000
$53,609,000
$246,170,000
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 ($115 million) of hard costs, and
materials will account for 40 percent ($77 million). Over an estimated 40-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 590 Full Time
Equivalent (FTE) jobs created. Additionally, $5.0 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 $2.7
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 $1.7 million, which will be available
for public expenditures associated with the project including developmental,
administrative, permitting, schools, and other costs. Note, this does not assume any
bonus fees paid to the City for Affordable Housing, PUD, or Retail Bonuses.
I State of Florida ES-202, third quarter 2005
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Lambert. Advisory calculates impact and other fees based upon physical character sties of the develop! sent (as provided by
Developer) utilizing impact/other fee factors provided by the City of Miami and/or Miami Dade County. There may be items ror
which additional fees may be collected by the City/County (eg_ Tree Trust) and/or State (eg. Energy Conservation) that has nut 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 he paid upon commencement of the developmentprocess.
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Economic impact Analysis
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 Max Miami is included in the following table.
Max Miami
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
Other/Non-impact Fees:
City of Miami Bonus Fees
Miami Dade VV.A.S.A. Connection Fee
City of Miami Building Permit Fee
Energy Installation Fee
M.U.S.P Application Fee
Dade County Code Compliance
Radon Gas Fee
Fire Plan Review Fee
Ground Cover Fee
Land Use/Zoning, Review for Building Permit
Certificate of Occupancy
Application Fee
TOTAL OTHER FEES
TOTAL PROJECT FEES
Total
$474,456
$14.234
S308,679
$241, 394
$1.038,764
$0
$309,110
$119,325
$35,853
$45,000
$123,085
$3,585
$3,227
$935
$2,000
$250
$35
$ 642,404
$1,681,167
2, Long -Term (On -Going) Resident, Visitor, Shopper and Office Worker
Expenditure
The Miami Max development will generate long term area -wide expenditure from
residents living in the development, shoppers and hotel guests visiting the property, and
office workers/tenants within the building. Following is a summary of expenditure by
demand component:
Resident: There are 28 condominium units that are assumed to be occupied by primary
residents. For this analysis, we assume the Miami Max resident is expected to be
primarily younger working professionals paying an estimated average sale price of at
least $550,000, which would indicate mostly upper income individuals/households with
incomes of at least $130,000.
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Presuming that approximately half of the owners will relocate from outside the City, over
$1.8 million of marginal personal income will flow into Miami.
Condominium Hotel: For the purposes of evaluating real property assessment of the
condominium hotel units, it is based upon the actual sale price that an individual buyer -
person(s) or corporation(s) — purchases the property. Instead of the unit being
occupied by the owner, in most instances, the unit is contributed back into a hotel/rental
pool to be leased on a short term basis. For this analysis, we assume that all 180 units
will be available and contributed to the hotel. Accordingly, we assume that the hotel
inventory will have an average annual occupancy of 60 percent (or 39,400 occupied
room nights), with an average daily rate of $250, Presuming that each hotel room (with
an average double occupancy) spends an average of $30 per day in retail/restaurant
expenditure within the City, over $11 million in marginal visitor expenditure will flow into
Miami. Additionally, nearly $600,000 in total sales tax will be collected, a portion of
which will flow directly to the City.
Office: Based upon approximately 245,440 total rentable office square feet, including a
10% vacancy factor, and an average 250 square feet per employee, Miami Max will
accommodate approximately 980 workers. We assume that approximately 50 percent of
the Miami Max office workers will be new workers to the area; or, 490 net new office
workers to the district. Based upon data published by the National Retail Association (in
conjunction with a 2002 survey conducted by the International Council of Shopping
Centers), the average office worker spends roughly $3,900 annually on goods and
services during the work day. Therefore, with a total of 490 workers in the building,
and an estimated average expenditure per worker of $3,900, total worker expenditures
are estimated to be more than $1.9 million.
Max Miami
Office Worker Expenditure and Retail Demand Estimates
Stabilized Year — 2009/10
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Net New
Employees
Avg.
Annual
( Expend./
Employee
Total Office
Worker
Expenditure
i Net New Retail
Sales Demand
Per Sq.Ft.2 € (Sq.ft.)
1 GAFO'
490
$1,143
$ 560 070
$247 2,267
j Eating and Drinking
490
$2,150
$1 050 000
375
2,809
Conv./Services
490
$616
$ 300,000
370
816
Total
(
490
53,909
1 910 070
325
5,892
1.) General Merchandise, Apparel and Accessories, Furniture and Appliances, Other Comparison Goods
2,) urban Land Institute: Dollars and Cents of Shopping Centers 2000; Lambert Advisory
To measure the marginal impact of $1.9 million in office worker expenditure on retail
sales and additional space demanded, the table above highlights additional retail
expenditure and the amount of net new retail space in the area that may be supported
as a result of development of the office tower upon stabilization.
BOMA Experience .Exchange Report 2001; Uvi Dollars and Cents of Shopping Centers 2000
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Retail: The 52,435 square feet of ground -level retail planned will also attract
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 Miami Max
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 $8.0 million
will be expended within the City per year which is now going to other areas, with nearly
$600,000 in additional sales tax collections.
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, hotel, office 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 full time equivalent workers (hi E) needed to operate the mixed use
building including management, maintenance staff, parking attendants, security and
general service as follows: 2 FTE workers will be required for the condominium units;
approximately 45 FTE workers will be employed in the hotel (which assumes that this
hotel does house a food and beverage outlet, and provides for limited amenities);
approximately 25 FTE workers for the office (one person per 10,000± square feet); and,
approximately 50 FTE for the retail stores (an average one employee per 1,000± square
feet). With a total of 122 FTE jobs, at an average Miami -Dade County wage of
$40,5564 the operation of the building and stores will create approximately $5.0 million
in wages each year. Positions at various skill levels will be made available to area
residents.
Additionally, an estimated $1.5 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
business occupying the office and retail space. The City has a comprehensive fee
schedule for determining Occupational License rates for various types of professional
businesses. Although it is very difficult at this point to determine the precise
composition of the tenant mix that will determine Occupational License fees to the City,
representatives of the development anticipate that there will be 40 office tenants
(companies) and 10 retail tenants occupying the building of which 50 percent are
estimated to be net new businesses to Miami (or 25 net new companies). Assuming
"' State of Florida ES-202, third quarter 2005
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that the average Occupational License fee per company is $1,000, the City will generate
$25,000 per year in fees.
Certificate of Use permits are charged to each business and comprise Fire/Safety fee
which is fixed at "50 for each business, and Supplement& Waste fees which
approximates 50,25 to $0.30 per square foot of space. Considering this, Certificate of
Use fees are estimated to generate roughly $90,000 per year to the City.
Finally, Miami Max 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.
Max Miami:
Economic impact Analysis
Ad Valorem Tax Breakdown
Item
allege Annual Tax
City of Miami Operating 8.4995 $1,778,474
City of Miami Debt 0.765 $160,072
School Operations 7.947 $1,662,866
School Debt 0.491 $102,739
Environmental Projects 0.100 $20.924
South Fioride Water Management 0.597 $124,919
FIND 0.0385 $8,056
County Millage 5.835 $1,220,942
County Debt 0.285 $59,635
Children's Trust 0.429 $89,766
Library 0.486 $101,693
TOTAL 25.473 $5,330,085
Source Miami Dade County Property Appraiser, Lambert Advisory, 2005.
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 Miami Max based on
a market value of at least $226± million, or 85 percent of the estimated value of the
total development cost, Accordingly, the development should generate approximately
$5.3 million in real property taxes by 2009/10.
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 122 FTE jobs created as a result of building and retail operations are assumed to
have a 1.2 multiplier impact of 146 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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Max Miami
Economic Impact Analysis
Summary, Economic impacts
Impact
Short Term Construction Employment & Expenditure
Full Time Jobs 590
Direct Wages $82,500,000
Professional Wages (Miami -Dade County) $2,700,000
Impact Fees Toward Public Expenditure $1,700,000
Total impact, Short Term Const. Employment & Expenditure $86,900,000
Long -Term (On -Going) Resident, Hotel, Tenant,and Shopper Expenditure
Marginal Expenditure Growth — Residents (2009/10) $1,800,000
Marginal Expenditure Growth — Hotel (2009/10) $11,000,000
Marginal Expenditure Growth — Office (2009/10) $1,900,000
Marginal Expenditure — Paramount Shoppers (2008) $8,000,000
Marginal Impact from On -Going Resident, Tenant, Shopper Expend. $22,700,000
Long -Term (On -Going) Building Employment and Operating Expenditure
Full Time Jobs 122
Total Direct Wages Created $4,950,000
Sales Tax from Retail, Hotel (2009/10) $1,200,000
Goods & Service Purchased in Miami -Dade County $1,500,000
Certificate of Use/Occupational License (City and County - 2009/10) $115,000
Ad Valorem Taxes (2009/10) $5,300,000
Total Impact from On -Going Operations of the Building/Retail $13,100,000
Indirect Flow Through Benefits
Full Time Jobs (Indirect) — Miami Dade County 146
Total Indirect Wages Created $5,900,000
Total Flow Through Indirect Benefits $5,900,000
Source: Lambert Advisory; Figures above stated in 2006 $`s.
Based upon the analysis set forth herein, the Miami Max 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 590, with on -going
annual employment of 268 FTE jobs. Accordingly, there is an estimated $87 million
impact from short-term construction employment and expenditures, and a stabilized
$35+ million annual revenue stream from resident/tenant/shopper expenditures,
building operations (including real property taxes) and occupant license/fees.
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