Loading...
HomeMy WebLinkAboutIII. Tab 4. Economic Impact StudyApril, 19, 2007 Mr, Carlos Melo Contracto Miami, iiafidda Re: iAU P impact AnaiyeisPhaeu Dear Mimi Economic Associates. Inc. {MERE) has performed analysis to estimate the fiscal and economic benefits that development of Phase i i of the Biscayne Park project (the Project'") will provide to the City of Miami. The Project will be located n N.E. 2nd Avenue between N.E. 2e°" and 25``' Streets. This letter, .which is organized as shown below, provides the findinos of our analysis and their bases: roject Description Sutnrna , of r inndin Fiscal Benefits Economic Benefits Bases of Estimates The analysis presented below is € ased on pretlm Binary estimates of pricing and construction costs and current tax and fee rates. These estimates are subject to change 4fld the changes may be significant based on market conditions, cost parameters and . at structures at the time the Projecthe is actuaUv developed, 61561 &.W. 89th Terrace Miarai, Florida 33156 Tel: 13051 669-0229 Fax 13051 66 - 534 Email Yueaink 3elisouth.neC Mr. Carlos Meio fvtelo Contractors Coro. April 19, 2007 Page 2 Project Description The Project will de comprised of 121,1{ square feet of rentable office space and 9,952 square feet of retail space together with 437 parking spaces. It is anticipated the proposed office and retail space will rent for $27 per square fool and $$30 per square foot, respectively. Construction of the Pro;ect is expected to cast $16.5 rniltlon in lard costs..An additional $4.0 million will be expended for soft costs inclusive architectural and engineering fees, marketing, leasing commissions, project overhead, etc. /ccordingly, the Project wilt cost $20.5 million to develop exclusive of land and financing costs and developer fees. Summary of Findings Development of the Project will be highly beneficial to the City of Miami in important ways, as summarized below: Fiscal Benefits Fiscal Benefits refers to the positive impact that the Project will have on the finances of the City of Miami, The benefits that it will provide to the City void be both non- recurring, and recurring in nature as enumerated below. The estimates shown below are expressed in 2007 Constant Dollars. ▪ Non -recurring :Benefits $ 75,310 in City building permit fees • $ 10,000 in City solid waste surcharge fees • $ 28,964 in City police impact fees • $ 41,711 in City fire -rescue impact fees • $ 17.371 in City general services impact fees • $ 243,155 in Downtown DRI supplemental impact fees Recurring Benefits • $ 221,087 annually in City General Fund ad valorem taxes * $ 16,394 annually in City Debt Service ad valorem taxes • $ 13,200 annually in Downtown Development Authority ad valorem taxes Non -Quantifiable Trade -related fees for roofing, electrical, plumbing, mechanical, pool and elevator work performed during construction (non -recurring) • Increased City utility taxes and franchise fees (recurring) • Increased occupational license fees (recurring) ami Economic Associates, loc. 6861 S.W. 89to Terrace Miami, Florida 33156 Tell (305) 66-0229 Fax (305) 669-6534 Email: meaink@beilsoutiLriet Mr. Carlos Meo Melo Contractors Corp. April 19, 2007 Page 3 • Increased parking surcharge revenues Other • While the focus of MEArs -fiscal analysis was on the City of Miami, the Project will, as shown below, pro -vide significant fiscal benefits to other non -municipal governmental jurisdictions that impact the lives of City residents: o $ 239,557 in County road impact fees (non -recurring) 0 $ 148,236 in County General Fund ad valorem taxes (recurring) o $ 7,524 in County Debt Service ad valorem taxes(recurring) O $ 11,148 in Children's Trust ad valorem taxes (recurring) O $ 12,830 in County library ad valorem taxes (recurring) -3 $ 203,042 in School Operating ad valorem taxes (recurring) 0 $ 10,930 in School Debt Service ad valorem taxes (recurring) o increased County occupational license fees (recurring) Economic Benefits EconomicBenefits relates to the positive impact that the Project 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 $20.5 million that will be spent on hard and soft casts to develop the Project will be spent within the City of Miami, producing an overall economic impact approximating $28.7 million when the multiplier effect is considered. Construction expenditures within the City of Miami will include an estimated $7.5 million for construction labor, an amount sufficient to pay approximately 144 construction workers, some of whom may be City residents, their average annual wage of $52,000. 0 Recurring A total of $1.4 million will be spent annually within the City of Miami by the workforce at the Project in retail and food and beverage establishments while working. Additionally, $0.64 million in ad valorem taxes will be paid to the City of Miami, its Downtown Development Authority, Miami -Dade County and the Miami -Dade County Schools, ail of which maintain their principal offices within the City. These expenditures will have an overall economic impact on the City of $3.1 million annually when the multiplier effect is considered. Miami Economic Associates, inc. 6661 SA/L 69°' Teri.ace Miami, Florida 33156 Tel: (305) 669-0229 Fax (305) 669-8534 girriaiL ineairikUbellsouthmet Mr Carlos Melo MelContractors Corp. April 19., 2007 Page 4 A total of 525 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 $23.0 million annually. Bases of Estimates The materials that follow provide the assurnpbons used to estimate the fiscal and economic benefits that development of the Project willprovide to the City of Miami. All monetary values are stated in 2007 Constant Doliars. Project Characteristics • The Project will be located within the boundaries of the City of Miami andits Downtown Development Authority as well as those of the Downtown DM, It will 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 122,100 rentable square feet of office space and 9,952 square feet of retail space. When service and circulation space and the 437 parking spaces are accounted for, the Project will be comprised of 301,240 gross square feet, • Development of the Project will cost approximately $16.5 million to construct in terms of hard construction. Soft costs including those relating to professional fees, marketing, leasing commissions, permit fees, developer overhead, administration, etc. will total an additional $4.0 million. Therefore, $20.5 million will be spent to develop the Project exclusive of land acquisition and financing costs and developer's fees. • Based on a review of assessment data with respect to comparable projects, it is estimated that the assessed and taxable value of the Project for ad valorem tax purposes, will approximate $26.4 million. O Based on industry standards; it is anticipated that the proposed office space will be occupied by 488 workers. This estimate assumes 4.0 workers per 1,000 square feet of office space. At 2.5 employees per 1,000 square feet of retail space, the Project will also house 24 retail workers. When project operations, maintenance and parking personnel are accounted for, a total of 525 people will be employed at the Project. Assuming that they spend an average of $10 per day for food and other items while working, their annual expenditures would approximate $1,4 million. Non -recurring Fiscal Impacts Miami Economic Associates, inc. 6861 S.W. 89th Ten -ace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email; theaink§bellsouth.riet Mr Carlos Meio Melo Contractors Corp. April 19, 2007 Page 5 h City of Miami c`riarges building permit fees at a rate of $OE25 per gross square oot of commercial construction. In calculating fees, the square footage associated with parking garage space is included in the calculation- Accordingly, budding permit fees totaling $75,310 will be paid. A solid waste surcharge fee in the amount of $10,000, the maximum amount, will de applied. The varioustrades involved in completing the 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 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. The rates for office space in the quantity 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 per square foot are $0.751 for police, $0.302 for fire -rescue and $0.126 for general services. Impact fees totaling $88,046 will be paid on the proposed office condominium project, of which $28,964 will be for police, $41,711 for fire -rescue and $17,371 for general services. in addition to the impact fees discussed 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 and retails space are $1.094 and $1.332 per gross square foot, respectively. Based on these rates it is estimated that a total of $243,155 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 Miarni-Dade County for roads_ In the eastern portion of the county, the road impact fee rates for office and retail space in the quantities being proposed are $1.775 and $2.294 per square foot, respectively, which result in a payment of $239, 557, Recurring Fiscal Impacts The millage rates 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 miliege rates shown to proposed project's estimated taxable value of $26.4 million. Miarrri Economic Associates, inc, 6861 S.W. 69t Terrace Miarni, Florida 33156 Tel: (305➢ 669-0229 Fax: (305) 9-8534 Erdmanz n eainkr .'beilsout ,, et Mr.. Carlos Melo Meo Contraetors Corp-. Apr ii 19, 2007 Page 6 1 T ---- 1 RateiS1000 1 it ntity j Taxabie Varue Taxes City of P4am . i -. .. — , General Fund 8_3745 $ 221:087 `--f- .. Deb/ Service Fund , 0.6210 $ 16,394 Dcw,entown Deve3oprrien1 Authority r — 0_5000 $ -13,200 I 1 i 1 Miami -Dade Courq ; , , .,_ . .. General Fund I 5.6150 $ 148:236 i Di--- 1 ebt Service Fund 0.28,50 , 2 Children's Trust 0,4223 $ 11,148 --1 1 Libfary_. 0.4860 $ 12,830 1 1 Miami -Dade CourqPublic Schools , 1910 $ 203,042 Operalin.Q ; 1 Debt Service 0,4140 $ 10,930 Source: Miami -Dade County Properly Appraiser: Milan-0 Economic Associates, Inc. The City of tvliarni collects utility taxes and franchise fees from the providers of communication, electric and other such services based on their revenues. The amount collected as a result of the development of the Project will be dependent on the amount of these services used by the Project's tenants; hence, it can not be quantified at this time. Both the City of Miami and fvliami-Dade County will collect occupational license fees from the occupants of the proposed office and 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 Project. The City of Miami collects a 20 percent surcharge on parking fees. The amount of surcharge revenues that will be collected from the Project will depend on usage; hence, it can not be estimated at this time. Non -recurring Economic Benefits It is estimated that approximately 90 percent of the $20.5 million that will be spent on the hard and soft costs to develop the 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-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 $28.7 million based on application of a 1.554 multiplier. MiG's input-output model further estirnates that approximately $7.5 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 Miami Economic Associates7 irm.. 6861 S.W. 89 Terrace Miami, Florida 33156 Tel: 305) 669-0229 Fax: (305) 66943534 Email: rneainkebelisouth,net Mr Carlos Melo Melo Contractors Corp, April 19, 2007 Pago 7 approxirnarely 144 wormers, basis at their average wage rate. Recurring Economic Benefits y be City residents, on an annual The workforce employed at the proposed project will spend $1.4 rniliion annually in retail establishments and restaurants spend v thin the City of Miami while working, Additionally, the project will generate approximately $0.64 million annually in ad valorem taxes for the City of Miami, the City's Downtown Development Authority, Miami -Dade County and Miami -Dade County Public Schools, all of which maintain their principal offices .within the City, According to the tulle input-output model, the total economic impact of these expenditures will be $3.1 million annually based on the application of a 1.5 multiplier. Based on wage data compiled by the Honda Agency on Workforce innovation►, it is that the annual earnings of the 525 people who will be employed at the proposed project on a full-time equivalent basis, some of whom may be City residents, would average $43:000, or $23.0 million in total. Closing The analysis performed by MEAT demonstrates that the development of Phase Ii of Biscayne Park will be highly beneficial to the City of Miami both fiscally and economically. Sincerely, Miami Economic Associates, Inc. Andrew Dolkart President Miami Economic Associates, inc. 6861 S.W. 89t Terrace Mia 1,florid 33156 Tel: (305) 669-0229 Fax: (3 5) 669-8534 Emaih meaink@bellsoutl het