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Economic Impact Analysis - 1700 Biscayne Blvd.
Lambert Advisory has completed an economic impact analysis for the development of 1700
Biscayne, a mixed -use residential, hotel and retail (commercial) project located at 1700 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 1700 Biscayne
development, and can supplement the major use special permit application to be submitted to
the City of Miami.
The 1700 Biscayne property is situated in the 5D-6 High Density Residential zoning district. The
project is on the northern periphery of Miami's central business district and is easily accessible
to 1-95 and other major thoroughfares. The residential, hotel 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 during the
development and through stabilized operations. This development should help to enhance the
area's economic base and attract on -going investment over the long-term.
The analysis herein represents an update to a revised plan for the 1700 Biscayne project.
Accordingly, we have completed this analysis on the basis of development related information
provided by Midgard Management (herein referred to as Developer) and/or its professional
representatives. Lambert Advisory was not provided with detailed development characteristics
(e.g., physical property data), construction cost estimates, and/or operating performance
assumptions for the development plan. Therefore, Lambert has generalized estimates for
certain site/development characteristics, cost and operating assumptions as necessary and
noted as such. Additionally, Lambert Advisory was not provided a development timeline;
therefore, for purposes of this analysis, we assume a 36-month development timeline from
project commencement to completion. Considering this, our analysis has been prepared to
reflect the economic impact — on an order -of -magnitude basis — of the total project upon
completion, assumed to be around 2015. Residential, hotel, and commercial valuation and
related fees stated herein are presented in current (2010) dollars. Importantly, the assumptions
set forth herein are subject to change. Lambert does not attest to the accuracy of these
assumptions and estimates; we have not independently verified this information. As such, the
estimates herein should not be relied upon beyond the scope of this analysis and any changes in
development or operating assumptions may have a material impact on the results stated herein.
The 1700 Biscayne development represents a proposed master plan including: 672 residential
(condominium) units; 505 hotel rooms; 181,183 square feet of commercial/retail space;
100,051 square feet of office space; and, roughly 1,507 total parking spaces. The development
is planned within three high-rise buildings, at a maximum 55 stories.
Economic Impact Analysis —1700 Biscayne April 2010
A profile of the project follows:
Figure 1: Building Features & Profile
Source: Midgard Management/Zyscovich, Inc.
General Features
Site Size (Net)
3.04 Acres
Building Height
55 Stories
Number of Residential Units
672 Units
New Commercial (Office & Retail)
281,234 Sq. Ft.
Hotel Rooms
505 Rooms
Number of Parking Spaces
1,507 Spaces
General Building Profile
Residential FAR
977,850 Sq. Ft.
Hotel
319,203 Sq. Ft.
Residential/Hotel FAR
1,297,053 Sq. Ft.
Office
100,051 Sq. Ft.
Commercial/Retail
181,183 Sq. Ft.
Gross Parking Area
648,010 Sq. Ft.
Gross Building Area (w/o Parking)
1,578,287 Sq. Ft.
Gross Building Area (w/ Parking)
2,226,297 Sq. Ft.
The analysis herein assumes that development of the 1700 Biscayne property is expected to
commence in 2011 and is anticipated to be completed in 36 months.
Based upon the information provided and/or estimates derived, construction and subsequent
operations the 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, visitor and shopper expenditure/fees
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)
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Economic Impact Analysis —1700 Biscayne April 2010
• Indirect Expenditures — net additional expenditures that flow into the local economy as a
result of the new 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 detailed
construction cost estimates. Therefore, the residential and commercial development cost and
timeline assumptions below are based upon estimates by Lambert Advisory. The table below
shows a summary of estimated development costs:
Figure 2: Development Costs
Item Cost
Hard Costs $631,314,800
Soft Costs $94,697,220
Total $726,012,020
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 ($379 million) of hard costs, and materials will
account for 40 percent ($252 million). Over an estimated 36-month construction period, at an
average annual construction wage of $44,9721 in Miami -Dade County, with a benefit/overhead
multiplier of 1.4, there will be nearly 2,005 Full Time Equivalent (FTE) jobs created.
Additionally, $14 million in professional fees are estimated to be paid to Miami area firms (e.g.,
architecture, engineering, legal). Assuming an average profit margin of 15% and overhead of
30%, approximately $8 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 $8.6 million, which will be available for public expenditures
associated with the project including developmental, administrative, permitting, schools, and
other costs2. Note, this does not include additional "impact" fees to the City from Affordable
State of Florida ES-202, annualized wage based upon third quarter 2009 Construction wages
2 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 be collected by the City/County/State (e.g., Tree Trust) that have 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 —1700 Biscayne April 2010
Housing, PUD, and/or Retail Bonuses that may be required to be paid in the future by Developer
to conform to certain regulatory (zoning) requirements.
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 1700 Biscayne is included in the following table.
Figure 3: Impact and Other Fees
Source: City of Miami Planning, Building & Zoning; Miami -Dade County; Developer; Lambert Advisory.
Fees are subject to change.
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
Miami Dade Police
Miami Dade Fire
Total
$1,103,161
$33,095
$3,529,568
$1,308,930
$421,561
$341,086
$6, 737, 401
Other/Non-Impact Fees:
D.C.A. Surcharge Fee $11,131
Miami Dade W.A.S.A. Connection Fee $812,561
City of Miami Building Permit Fee $345,679
Energy Conservation Fee $222,630
M.U.S.P Application Fee $45,000
Dade County Code Compliance $363,006
Solid Waste Department Fee $3,500
Fire Plan Review Fee .$16,019
Building Code Admin. and Inspection Fund Fee $11,131
Land Use/Zoning, Review for Building Permit $2,000
Certificate of Occupancy $250
Application Fee $35
TOTAL OTHER FEES $1,832,943
TOTAL PROJECT FEES $8,570,344
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Economic Impact Analysis —1700 Biscayne April 2010
2. Long -Term (On -Going) Resident, Visitor, Office Worker and Shopper Expenditure/Fees
The 1700 Biscayne development will generate long term area -wide expenditure from residents
living in the development, hotel guests, retail shoppers, retail workers/tenants and office
worker tenants within the building. Following is a summary of expenditure by demand
component:
Residents: There are 672 condominium units assumed to be occupied by a mix of primary and
second home residents. For this analysis, we assume that 50 percent of the 1700 Biscayne
resident will be primary residents such as working professionals and/or empty nesters and 50
percent will be second home residents spending an average of 6+ months in the residence.
Considering the proposed development plan, we estimate an average sale price of at least
$400,000, which would indicate high income individuals/households with incomes of at least
$150,000.
Presuming that approximately half of the primary and second homeowners will relocate from
outside the City, nearly $37.8 million of marginal personal income will flow into Miami. We
have estimated the marginal impact of $37.8 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 of the units by 2010, and indicates potentially net marginal expenditure of $12.5
million, or demand for net new retail space within the City of approximately 41,000 square feet.
Figure 4: Estimated Retail Demand
Source: Lambert Advisory, 2010
Type of Good
Estimated
Marginal
Expenditure
Growth
2010
Sales per
Square
Foot
g Square
Feet
Demanded
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
$852,634
$820,317
$340,016
$325,206
$310,190
$473,101
$227
$290
$227
$200
$250
$420
3,756
2,829
1,498
1,626
1,241
1,126
$3,121,464 $258 12,076
Food Stores $4,356,422 $422 10,323
Eating & Drinking Establishments $2,694,973 $375 7,187
Health & Personal Care Stores $1,400,245 $407 3,440
Liquor $93,461 $280 334
Convenience Goods - Sub -Total $8,545,100 $401 21,284
Building Materials $840,138 $115 7,306
Total $12,506,703 $308 40,665
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Economic Impact Analysis-1700 Biscayne April 2010
Commercial/Retail: The 181,183 square feet of commercial/retail planned within the 1700
Biscayne development 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 1700 Biscayne retail comes from outside the City, and based upon an average
sales per square foot (for Shopper Goods and Eating and Drinking Establishments) of roughly
$308, nearly $24 million will be expended within the City per year which is now going to other
areas, with nearly $1.7 million in additional State sales tax collections.
Hotel: 1700 Biscayne will incorporate a 505-room hotel into the mixed use development. The
property is planned to be a luxury resort with amenities including spa and business center. For
this analysis, all commercial/retail associated with the hotel is included in the above
commercial/retail analysis. Based upon our general understanding of hotel market conditions in
Miami Dade County, and specifically the downtown submarket, we assume that the hotel
inventory will have an average annual occupancy of 70 percent (or 128,000 occupied room
nights), with an average daily rate (ADR) of approximately $225. Therefore, the hotel will
generate roughly $28 million in revenue from which select taxes and fees will be collected by
the City and/or County (discussed further below). Furthermore, based upon a hotel guest
survey Lambert Advisory completed for the Miami Downtown Authority (DDA) in 2003, we
estimate (marking to 2010 $'s) each hotel room (with an average double occupancy) spends an
average of $118 per visit in retail expenditure, $147 per visit in retail (shopping) purchases, $68
per visit in local transportation, and $38 per visit sporting events and entertainment within the
City. Therefore, each occupied hotel room3 spends on average approximately $371 per visit
(outside of hotel room charge), or nearly $12 million in visitor expenditure in the Miami area of
which one-third is estimated to be net new to the area (or $4 million).
Office: Based upon approximately 100,051 total rentable office square feet, including a 10%
vacancy factor, and an average 250 square feet per employee4, the development will
accommodate approximately 400 office workers. We assume that approximately 50 percent of
the office workers will be new workers to the area; or, 200 net new office workers to the
district. Based upon data published by the National Retail Association (in conjunction with a
2002/3 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 200 workers in the building, and an estimated average expenditure per worker of
$3,900, total worker expenditures are estimated to be nearly $780,000, which will be available
to support proposed retail development.
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 residential community, office, hotel, and
commercial/retail;
• Property tax revenue to the City of Miami and Miami -Dade County;
3 Assumes average length of stay of 4 days
4 BOMA Experience Exchange Report 2001; ULI Dollars and Cents of Shopping Centers 2000
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Economic Impact Analysis —1700 Biscayne April 2010
• Increased sales tax and Bed Tax revenue from the hotel, and commercial/retail to State
and County;
• Occupational License/Fees; and,
• Purchase of goods and services.
Employment from Operations: We estimate full time equivalent workers (FTE) needed to
operate the mixed -use building including management, maintenance staff, parking attendants,
security and general service as follows:
Figure 5: Building Employment by Use
Source: International Facility Management Association; Lambert Advisory
Use
FTE Ratio
FTE
Retail, Condominium, Office
1 per +40,000 sq. ft.
31
Hotel
1 per room
505
Total
536
With a total of 536 FTE jobs, at an average Miami -Dade County wage of $43,6125 the operation
of the residential, commercial (office, retail), and hotel components of the building will create
approximately $23.3 million in wages each year. Positions at various skill levels will be made
available to area residents.
Goods and Services from Operations: Additionally, an estimated $3.2 million in net new goods
and services related to building maintenance will be purchased annually within Miami -Dade.
This includes cleaning services, maintenance supplies, utilities, etc.
"Bed Tax": Additionally, the City of Miami and/or Miami Dade County are among the primary
beneficiaries of a 6.0 percent Tourist and Convention Development Tax (or Bed Tax), which is
comprised of the Convention Development Tax (3%), Tourist Development Tax (2%), and
Professional Sports Facilities Franchise Tax. Based upon estimated ADR and occupancy rates,
the total Bed Tax generated from 1700 Biscayne is estimated to be $1.6 million per annum.
Occupational Fees/License: The City will benefit from Occupational License fees and Certificates
of Use from the business occupying the 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, we estimate that there will be 34
commercial/retail tenants occupying the building of which 50 percent are estimated to be net
new businesses to Miami (or 17 net new companies). For office space it is estimated that there
will be 35 office tenants of which 50 percent will be net new businesses (or 18 net new
companies). Assuming that the average Occupational License fee per company is approximately
$1,000, the City will generate $35,000 per year in annual fees.
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
5 State of Florida ES-202, annualized wage based upon third quarter 2009 All Industry wages
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Economic Impact Analysis —1700 Biscayne April 2010
per square foot of space. Considering this, Certificate of Use fees are estimated to generate
roughly $90,000 per year to the City.
Ad Valorem Tax: Finally, the 1700 Biscayne property 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 (2009) millage rate of 22.9921 (per thousand dollars of
value), broken down as follows.
Figure 6: Ad Valorem Tax Breakdown
Source: Miami -Dade County
Item Millage Annual Tax
City of Miami Operating 7.6740 $4,596,418
City of Miami Debt 0.660 $395,014
School Operations 7.698 $4,610,793
School Debt 0.297 $177,891
Environmental Projects 0.089 $53,547
South Florida Water Management 0.5346 $320,204
FIND 0.0345 $20,664
County Millage 4.8379 $2,897,708
County Debt 0.285 $170,704
Children's Trust 0.500 $299,480
Library 0.3822 $228,922
TOTAL 22.9921 $13,771,346
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 1700 Biscayne based on a total value
of $617 million (or 85% of construction cost). Accordingly, the development should generate
approximately $13.8 million in real property taxes by 2010.
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 commercial/retail and operations employment.
The 536 FTE jobs created as a result of building and retail operations are assumed to have a 1.2
multiplier impact of 643 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 —1700 Biscayne
April 2010
Figure 7: Economic Impacts Summary
Short Term 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, Visitor and Shopper Expenditure
Marginal Expenditure Growth — Residents
Marginal Expenditure — Commercial/Retail
Marginal Expenditure — Hotel Guest
Marginal Expenditures - Office
Marginal Impact from On -Going Resident Expenditure
Impact
2,005
$270,600,000
$8,000,000
$8,600,000
$287,100,000
$11,400,000
$24,000,000
$4,000,000
$800,000
$39,400,000
Long -Term (On -Going) Building Employment and Operating
Expenditure
Full Time Jobs 536
Total Direct Wages Created $23,380,000
Sales Tax from Additional Retail Sales $1,700,000
Goods & Service Purchased in Miami -Dade County $3,200,000
Certificate of Use/Occupational License (City and County - 2010) $130,000
Total "Bed Tax" Revenue $1,600,000
Ad Valorem Taxes (2015) $13,800,000
Total Impact from On -Going Operations of the Building/Retail $43,700,000
Indirect Flow Through Benefits
Full Time Jobs (Indirect) — Miami Dade County 643
Total Indirect Wages Created $28,050,000
Total Flow Through Indirect Benefits $28,100,000
Based upon the analysis set forth herein, the 1700 Biscayne 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 more than 2,005, with on -going annual employment of 536
FTE jobs. Accordingly, there is an estimated $287 million impact from short-term construction
employment and expenditures, and a stabilized $83+ million annual revenue stream from
resident/worker/shopper expenditures and building operations (including real property taxes).
There are an additional 643 workers creating $28 million in wages from as a result of indirect
flow -through benefits.
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