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Home My WebLink AboutEconomic Impact AnalysisECONOMIC IMPACT ANALYSIS NORDICA ON 8 DEVELOPMENT - Prepared by - Lambert Advisory, LLC - Prepared for - Astor Development Group December 5, 2805 EcammliL .Impact. Ana Economic Impact Analysis Nordica on 8 e Lambert Advisory has completed an economic impact analysis for the development of Nordica on 8 (herein referred to as Nordica), a mixed -use residential and commercial project located at S,W, S`h Street and S,W. 12th Avenue in the City of Miami. The analysis provides ameasurement 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 Nordica development, and can supplement the major use special permit application to be submitted to the City of Miami. The Nordica development property is situated in the proposed SD-14 and C-1/SD-25 zoning district in the area referred to as the Latin Quarter, which is immediately west of Downtown and is adequately accessible to major thoroughfares, including 1-95. 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 (Le., price, absorption, timing, costs) that has been provided by Astor Development (herein referred to as Developer) and/or its professional representatives. Lambert has not independently verified information or data provided by Developer. Further, for certain cost, timing and/or operating performance assumptions that were not provided to Lambert, we prepared generalized estimates for these specific items as necessary. Our analysis has been prepared to reflect the economic impact upon completion of the total project assumed to be 2010, for which residential and commercial valuation and related impacts stated herein are presented in current (2006) dollars. Importantly, the assumptions set forth herein are subject to change and Lambert does not attest to the accuracy of these estimates, This economic impact assessment is provided as an order -of -magnitude of anticipated economic impacts related from Nordica on 8 and should not be relied upon beyond the scope of this analysis, The Nordica development represents a master plan including 415 residential units and 26,000± square feet of retail and restaurant space. The residential units will be rental apartments, and the development plan contemplates one 15-story high-rise building, with an interior mid -rise parking garage and ground floor commercial space. A profile of the project follows. k,m/oomic/oVmcI ,�Vor&cunmS Nordicwon8Development Economic Impact Analysis Building Features &P,nfiky General Features Site Size (NeV Building Height (mux`mum) Number ofResidential Unite Retail and Restaurant SDace Number ofParking Spaces Detailed Building Profile Gross Building Area inmmctud�nparking) Residential FAR Commercial FAR Gross Parking Area {rwimateu) 21A acres 15 stones 415 units 26.035 oqAt 711 spares ! 482,676 456.641 26,035 305,730 aqjt oq.ft, sq,ft, �le.estimates*m1)ased upon data provided by Developer, gross parking area was estimated by Lambert Advisory. Fhese estimates are subject to change. Development of the Nordica property is expected to commence mid-2007 and is anticipated to be completed within 36 months, with occupancy assumed in mid-2010, Based upon the information provided and/or estimates derived, construction and subsequent operations of Nordica development will generate considerable benefits to the immediate area, the City 0fMiami, and the metro -Miami community. Theme are four key areas in which the project will provide positive economic impacts: 1. Short-term construction employment andex re 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 econorn}c benefit tVthe area is the result ofprojected 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 —disbursementsforsiteGCquisition and development (hard and soft costs) � Indirect Expenditures— net additional expendituresthat flow into the local economy as a result of the new development Estimates of the tangible|mpacts from direct and indirect expenditures are captured by this onahsis. However, potential intangible impacts — such as the ability to serve as catalyst for future development in the immediate area — are not included, as they are nearly impossible toquantify, Ecom`m/c Inn/cuxz4ouhais—Awxdicaon 8 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 pnject's development. Lambert Advisory was not provided with any construction cost estimates, Therefore, the residentiai and commercial development cost and timeline assumptions are based upnn our general experience and knowledge of industry standards and do not reflect actual development costs. The table below shows ssummary ofestimated development costs: Nordica on Development Economic Impact Analysis Development Costs Item Cost Hard Costs $70.00I000 Soft Costs $20.UO0.000 | Total $90,000^000 | novoe Developer (Estimated) The majority of related expenditures will be made in Miami -Dade County, and the City of Miami will capture asignificant share of these expenditures. Labor will account for approximately 60 percent ($42 million) Of hard costs, and materials will account for 4U percent ($28 million), Over an estimated 36-month construction period, at an average annual construction wage of$41,954' in Miami -Dade County, with a benefit/overhead multiplier of 1.4, there will be nearly 89 Full Time Equivalent (FTE) jobs created. Additionally,� $1.8 million in professional fees are expected to be paid to Miami area firms (e.g.,architecture, engineering, legal', Assuming mnaverage profit margin nf15116 and overhead nf3O96, approximately $1.0 million in professional wages will be paid out by these firms. Impact and other foao payable to the City and County during the construction and development period will amount to approximately $4.4 nnU||on, which will be available for public expenditures associated with the project including developmental, administrative, permitting, schools, and other coStSz Note that this does not 8SSunoe any bonus fS8S paid to the City for Affordable Housing, PUD, or Retail Bonuses. 'State ofFlorida s��third quarte, 2005 ^Lambert Aa,imwcnuo/�ites/mpw'^nuother fees baouupon physical characteristics wumdevmnnm**(as pm,med»v ocvu/,re,}utmzinoimn*mmmvrumFactors providedurCh"o�v^ru/uw/,mwv,MiumiDade County. There may »ximoomr ~x/"xnum^nu|u:,mu bexnocxmub�,the cit�xcvoot� T�-,xTr"u)*num,State (eo,Fncr�»cooscTva/on)that have no, been included u*v/^As there will be sonic variauoti be�een tfio irnpart ai,,d other ues provided horein and the actual fccs that m;ty b� paid upon conimenczment of the devdoprnent Process. /�ooum/olinouc/4.*n/xyiY ov8 A detailed profile of impact foes and other relevant non -impact fees paid to the City and/or Miam.i-Dade County as a result of the Nordica development is shown below, Nmrdicmmn8 Economic Impact Analysis Impact Fees.- ___T9��__ City ofMimmiDevelopment impact Fee (0nj|nunce1O420) $48�054 CityofMiami Development impact AdrninietrahveFme $13.802 Miami Dade County Roads $426.647 Miami Dade County Schools $673/176 $1,573,679 Fees., City cfMiami Bonus Fees $1.872.4OO Miami Dade WA.G.A.Connection Fee $589.209 City ofMiami Building Permit Fee $131.467 Energy |nsta8otionFee $78.841 W1,U.S.PApplication Fee $45.000 Dade County Code Compliance $45.000 Radon Gas Fee $7.884 � Fire Plan Review Fee S7.098 Ground Cover Fee S1.910 ! Land UeeDoninQ.Review for Building Permit $2.000 Certificate ofOccupancy $250 | Application Fee $35 TOTAL OTHER FEES $2,781.152 TOTAL PROJECT FEES $4,354,831 snufcn�City wMiami Planning, Building aZoning; Miami Dade County: Developer; Lambert Advisory. Fees above are subject to change. 2. Long -Term (On -Going) Resident and Shopper Expenditure The residential component of the Nondica development will consist of rental housing. For this analysis, we assume that the nantm| tenants will consist predominantly of young professional individuals and households paying an estimated average rental rate of $Z,15U:t,with anaverage household income between $7O,UOOand $1DO,08O. Assuming stabilized occupancy for the rental units at92.S percent, there will beototal of380±households in the building, with total personal income for the development estimated to be in the range of $35 million, Presuming that approximately half o[the renters will relocate from outside the City, over $17 million of marginal personal income Type of Good We have estimated the marginal impact of$Dmillion lnhousehold income on retail ��The following tab|e provides a summary of additional retail expenditure and demand for space as a result of development and sale/rent of the units by 2_010, and indicates potentially net new demand for retail space of approximately 20,000 square feet. Nordkcapo8 Development Area Expenditure Potential (from Novv-to-N|amniNprdioeResidents) 2010 Estimated md Sales per Square Expenditure Growth Square Feet 2010 Foot Demanded General Merchandise $3W649 $227 1.717 Apparel and Accessories $374.880 $290 1.293 Furniture and Home Equipment $155,385 $227 685 Electronic and Appliance Stnpes $148.617 $200 743 Sporting Goods, Books and Music Stores $141.755 $250 587 Miscellaneous Shoppers Goods $210.205 $420 515 Shoppers Goods Sub -Total $1,42840/ $258 5,519 Food Stores $1.090.859 $422 4.718 Eating & Drinking Establishments $1.231.586 $875 3.284 Health & Personal Care Stores $839.903 $407 1.972 Liquor $42.711 $280 153 Building Materials $383.938 $115 1339 � Total a""rcp� Lambert Advisory, znon 1 Retail.' In addition to the net new expenditures attributable to NOrdicd development residents, the 26,000±square feet of restaurant and retail space planned will also attract retail expenditure — the largest share of which will come from persons within central Miami -Dade County. Assuming that at least 50 percent of the expenditure in Nordica 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, nearly $4.2 million will beexpended within the City per year which is now going to other areas. 6 Economic impact ac[An CZfi'.4'Jti -- '1Tt)}°C 7L`e.I faa f 3A 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 residential community, retail, and restaurant; ▪ Property tax revenue to the City of Miami and Miami -Dade County; • Increased sales tax revenue from the stores to State and County; and • Purchase of goods and services. We estimate that 14 FTF 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 30 FTE workers will be employed in the retail stores and restaurant (an average one employee per 1,000 square feet). At an average Miami -Dade County wage of $40,5563 the operation of the building and stores will create approximately $2.0 million in wages each year. Positions at various skill levels will be made available to area residents. Additionally, an estimated $483,000 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 Certificates 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 10 total retail tenants occupying the building, which assumes that there will be one larger store greater than 5,000 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 $10,000 per year in fees. Certificate of Use permits are charged to each business and comprise a 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 $100,000 per year to the City. Occupational and Certificate of Use permits will add additional marginal revenue. Finally, the Nordica 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. State of Florida ES-202, third quarter 2005 7 I�'/n*m/c - oc|�!/u/1vaiS on NordkcaooO Economic Impact Analysis AdValoremTax B�ekdwwnItem Millage Annual Tax City nfMiami Operating 8,4805 $612.353 City ofMiami Debt 0-765 $55.115 School Operations 7,947 $572,547 3uhou\Dobi 0491 $35.374 Envi,onmontaiP*ojmcta _U100 $7.205 South Florida VVmteryNanagement 0,597 $41011 FIND 00385 $2.774 CountyMiHage 5�835 $420.387 County Debt 0285 $20.533 Chi|dnen'aTrust 0,428 $30.908 Library U488 $35.014 TOTAL 25.473 $1,835.221 n"vTc=: Miami Dade County Property Appraiser, Lambert Advisory, 0000L Nots: Assessment at 65% of Estimated Value Real property istypically assessed at between 80and 90 percent of Fair Market Value. For the purposes of this analysis, we calculate ad valorem taxes for Nord|ca development based on a market value of $90±rniUk>n, or 85 percent of the estimated value of the residential and commercial uses. Accordingly, the development should generate approximately $1.8 million in real property taxes by 2010, 4. Indirect Flow -Through Benefits There will be number oflong-term indirect flow -through benefits beyond construction from the project, particularly from the increase in retail and operations employment. The 40 FTE jobs created as a result of building, retail, and restaurant operations are assumed to have n 1.2 multiplier impact nf48 additional jobs. This multiplier is derived from the U.S. Department of Cnrnnnerce's 1999 RIMS II model, and identifies indirect secondary and tertiary impacts created throughout the region due tothe "ripple effect" ofthe primary employment. 8 t.dcon 1.. Not dicy on > Nordica on 8 Economic Impact Analysis Summary, Economic impacts Short Terse Construction Employment & Expenditure Full Time jobs Direct Wages Professional Wages (Miami -Dade County) impact Fees Toward Public Expenditure Total impact, Short Term Const. Employment & Expenditure Long -Term (On -Going) Resident Expenditure Marginal Expenditure Growth — Residents (2010) Marginal Expenditure Growth — Shoppers (2010) Marginal impact from On -Going Resident Expenditure Long -Term (On -Going) Building Employment and Operating Expenditure Full Time Jobs Total Direct Wages Created Sales Tax from Additional Retail Sales (2010) Goods & Services Purchased in Miami -Dade County (2010) Certificate of Use/Occupational License (City and County - 2010) Ad Valorem Taxes (2010) Total Impact from On -Going Operations of the Building/Retail Indirect Flow Through Benefits Full Time Jobs (Indirect) — Miami Dade County Total Indirect VVages Created Total Flow Through Indirect Benefits Note Figures stated in 2006 $s Source: Lambert Advisory Impact 89 $30,000,000 $1,000,000 $4,400,000 $35,300,000 $17.300,000 $4,200.000 $21,400,000 40 $11,620, 000 $292,000 $480,000 $110,000 $1,800,000 $4,300,000 48 $1.900,000 $1,900,000 Based upon the analysis set forth herein, the Nordica on 8 development 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 89 with on -going annual employment of 88 FTE jobs. Accordingly, there is an estimated $35 million impact from short-term construction employment and expenditures, and a stabilized $26± million annual revenue stream from resident/shopper expenditures and building operations (including real property taxes). 9