Loading...
HomeMy WebLinkAboutArticle III. Tab D. Economic StudyTAB D Economic Study Miami Economic Associates, Inc. April 12, 2010 Carlisle Development Group, LLC c/o Ryan D. Bailine, Esq. Shutts & Bowen LLP Miami, Florida Re: MUSP Impact Analysis — City Center Dear Mr. Bailine: Miami Economic Associates, Inc. (MEAT) has performed an analysis to estimate the fiscal and economic benefits that the City Center project, will generate for the City of Miami. City Center is proposed for development on the block bounded by N.W. 1st Avenue on the east, N.W. 11th Terrace on the south, N.W. 1st Court on the west and N.W. 12th Street in the portion of the City of Miami that has been designated the Southeast Overtown Park West (SEOPW) Redevelopment District. This letter, which is organized as shown below, provides the findings of our analysis and their bases: Section Page Project Description 2 Summary of Findings 2 Impact on the Housing Market 2 Fiscal Benefits 2 Economic Benefits 4 Bases of Estimates 4 Closing 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 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (3051 669-0229 Fax: (8661 496-6107 Email: meainkObellsouth.net Carlisle Development Group, LLC Ryan D. Bailine, Esq. Shutts & Bowen April 15, 2010 Page 2 and cost parameters at the time development actually occurs and the changes may be significant. Project Description City Center will be developed by the Carlisle Development Group, one of the leading providers of affordable housing based in Miami -Dade County, on the site identified above. It will be comprised of 340 affordable rental units at rents averaging $810 per month in 2010 Constant Dollars. The units include 204 two -bedroom units and 136 three -bedroom units ranging in size from 1,005 to 1,160 square feet. The project will also include 3,130 square feet of retail space and provide 422 parking spaces, a number that exceeds the code requirement. Construction of City Center is expected to cost $46.1 million in hard costs. An additional $7.2 million will be expended for soft costs inclusive architectural and engineering fees, marketing, sales commissions, project overhead, etc. Accordingly, the project will cost $53.3 million to develop exclusive of land cost, financing expenses and developer fees. Summary of Findings Development of City Center will be highly beneficial to the City of Miami and its SEOPW Redevelopment District in important ways, as summarized below: Impact on the Housing Market • It is well-known that the Downtown Area of the City of Miami, inclusive of the SEOPW Redevelopment District, has an oversupply of new market rate residential units. However, the Downtown area is severely underserved in terms of good quality units appropriately priced for households of very low, low and moderate income as defined by the U.S. Department of Housing and Urban Development. Given the high level of demand for such housing in the SEOPW Redevelopment District, the Community Redevelopment Agency which administers the District is committing substantial resources to the development of new affordable housing units and the rehabilitation of existing ones. It is further anticipated that the development order authorizing the third increment of the SEOPW DRI will require the development of approximately 400 new affordable housing units. Development of City Center would substantially enable this obligation to be met. Fiscal Benefits • Fiscal Benefits refers to the positive impact that the proposed project 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, which are based on the current millage and fee rates, are 2010 Constant Dollars. Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Carlisle Development Group, LLC Ryan D. Bailine, Esq. Shutts & Bowen April 15, 2010 Page 3 o Non -recurring Benefits' • $ 136,861 in City building permit fees • $ 10,000 in City solid waste surcharge fees • $ 34,651 in City police impact fees • $ 140,005 in City fire -rescue impact fees • $ 81,654 in City general services impact fees • $ 1,346,060 in City park impact fees • $ 244,190 in Downtown DRI supplemental impact fees o Recurring Benefits • $ 235,029 annually in SEOPW Redevelopment District increment revenue • $ 24,801 annually in City General Fund ad valorem taxes • $ 14,509 annually in City Debt Service ad valorem taxes • $ 11,000 annually in Downtown Development Authority ad valorem taxes o 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) • Increased revenue sharing funds (recurring) • Other • While the focus of MEAI's fiscal analysis was on the City of Miami, City Center will, as shown below, provide significant fiscal benefits to other non - municipal governmental jurisdictions that impact the lives of City residents: o $ 535,806 in School impact fees (non -recurring) o $ 15,432 in County General Fund ad valorem taxes (recurring) o $ 6,270 in County Debt Service ad valorem taxes(recurring) o $ 8,408 in County Library ad valorem taxes (recurring) o $ 11,000 in Children's Trust ad valorem taxes (recurring) o $ 169,356 in School Operating ad valorem taxes (recurring) o $ 6,534 in School Debt Service ad valorem taxes (recurring) o Increased County occupational license fees (recurring) 1 The City of Miami has a program that allows for the deferral of impact fees in the case of affordable housing projects but it needs to be applied for and is approved on a case by case basis. Accordingly, the potential fees have been calculated and are shown. The deferral program does not apply to the supplemental DRI impact fees. Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Carlisle Development Group, LLC Ryan D. Bailine, Esq. Shutts & Bowen April 15, 2010 Page 4 o Increased revenue sharing funds Economic Benefits • Economic Benefits relates to the positive impact that the proposed 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 $53.3 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 $74.5 million when the multiplier effect is considered. • Project expenditures within the City of Miami will include an estimated $21.0 million for construction labor, an amount sufficient to pay approximately 350 construction workers, some of whom may be City residents, their average annual wage of $60,000. o Recurring • A total of $1.68 million will be spent annually within the City of Miami by residents of City Center in retail and food and beverage establishments. Additionally, $502,339 in ad valorem taxes and increment revenues will be paid to the City of Miami and its SEOPW Redevelopment District, 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 $4.1 million annually when the multiplier effect is considered. Bases of Estimates The materials that follow provide the assumptions used to estimate the fiscal and economic benefits that development of City Center will provide to the City of Miami. All monetary values are stated in 2010 Constant Dollars. Project Characteristics • City Center will be located within the City of Miami as well as the jurisdictions of the City's SEOPW Redevelopment District, the District's DRI and the Downtown Development Authority. 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 625,330 gross square feet of building area. Of this amount, 389,482 square feet will pertain to the residential portion of the Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Carlisle Development Group, LLC Ryan D. Bailine, Esq. Shutts & Bowen April 15, 2010 Page 5 project, which will be comprised of the 340 condominium units as well amenity and circulation areas. The remaining 235,858 square feet will be comprised of the 3,130 square feet of retail space and parking. Development of City Center will cost approximately $46.1 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 additional $7.2 million. Therefore, $53.2 million will be spent to develop the project exclusive of land acquisition costs, financing expenses and developer's fees. • Based on review of the assessments of comparable affordable housing projects, it is anticipated that City Center will be initially assessed for $22.0 million. • It is estimated that households residing at City Center will have average incomes approximating $35,000 per year.. Based on this estimate of average household income, it is projected that the people living at the proposed project will spend $2.4 million annually in retail and restaurant establishments. This projection assumes that they spend approximately 20 percent of their income for that purpose. 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 $136,861 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 high-rise units, fees will be paid on a per unit basis in the amounts of $95 for police, $409 for fire -rescue, $239 for general services and $3,959 for parks. The rates for retail space in the quality proposed are paid on a per square foot basis in the amounts of $0.751 for police, $0.302 for fire -rescue and $0.126 for general services. Impact fees totaling $1,602,237 will be paid on the City Center project, of which $34,651 will be for police, $140,005 for fire -rescue, $81,654 for general services and $1,346,060 for parks. Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Carlisle Development Group, LLC Ryan D. Bailine, Esq. Shutts & Bowen April 15, 2010 J Page 6 • 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 rate for residential units approximates $695.10 per residential unit. The rate for retail space is $2.51 per square foot. Based on these rates it is estimated that a total of $244,190 in SEOPW DRI supplemental impact fees will be paid. • New construction projects located in SEOPW DRI area of the City of Miami also need to. pay impact fees to Miami -Dade County for schools. The base fee per unit for school impact fees is $612. An additional amount of $0.918 per square foot is then applied. Based on the fee schedule described, it is estimated that $535,.806 will be paid. 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 millage rates shown to proposed project's estimated taxable value of $22.0 million. . Entity Rate/$1000 Taxable Value Taxes City of Miami General Fund 7.6740 $ 168,828 Debt Service Fund 0.6595 $ 14,509 Downtown Development Authority 0.5000 . $ 11,000 Miami -Dade County General Fund 4.8379 $ 106,434 Debt Service Fund 0.2850 $ 6,270 Library 0.3822 $ 8,408 Children's Trust 0.5000 $ 11,000 Miami -Dade County Public Schools Operating 7.6980 $ 169,356 Debt Service 0.2970 $ 6,534 Source: Miami -Dade County Property Appraiser; Miami Economic Associates, Inc. • City Center will be located in the SEOPW Redevelopment District. Accordingly, both the City of Miami and Miami -Dade County will be required to annually fund the District Trust Fund with an amount equivalent to 95 percent of the funds they collect for their general funds on the difference between the current taxable value of the property on which the project will be constructed and the taxable value of the project when completed. For the purpose of this analysis, it is assumed that the "incremental" value will be 90 percent of the proposed project's estimated taxable value. The general funds of the two jurisdictions will retain 100 percent of the taxes generated on the current value of the property and 5 percent of those generated on the incremental value. Accordingly, the District Trust Fund will receive $235,029 Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Carlisle Development Group, LLC Ryan D. Bailine, Esq. Shutts & Bowen April 15, 2010 Page 7 annually while the general funds of the City and the County will retain $24,801 and $15,432 annually, respectively. • The City of Miami collects utility taxes and franchise fees from the providers of telephone, electric and other such services based on their revenues. The amount collected as a result of the development of the proposed project will be dependent on the amount of these services used by the project's residents and commercial tenants; hence, it can not be quantified at this time. • Both the City of Miami and Miami -Dade County will collect occupational license fees from the occupants of the proposed 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 office and retail space. • The City of Miami and Miami -Dade County participate in a number of 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 $53.3 million that will be spent on the hard and soft costs to develop the City Center 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 $74.5 million based on application of a 1.554 multiplier. • MIG's input-output model further estimates that approximately $21.0 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 $60,000 per year according to the Florida Agency for Workforce Innovation. Therefore, the project's expenditure on construction labor would support 350 approximately workers, some of whom may be City residents, on an annual basis at their average wage rate. Recurring Economic Benefits • The residents of City Center will spend $2.4 million annually in retail establishments and restaurants, approximately 70 percent of which, or $1.68, will be spent within the City of Miami. Finally, the project will generate approximately $502,339 million in ad valorem taxes and increment revenues for the City of Miami and its SEOPW Redevelopment District, Miami -Dade County and the School Board, all of which maintain their principal offices within the City. According to the MIG input-output Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Carlisle Development Group, LLC Ryan D. Bailine, Esq. Shutts & Bowen April 15, 2010 Page 8 model, the total economic impact of these expenditures will be $4.1 million annually based on the application of a 1.5 multiplier. Closing The analysis performed by MEAI demonstrates that the mixed -use project proposed for development at City Center will be highly beneficial to the City of Miami both fiscally and economically. It will also re -enforce the City's efforts to re-establish its core areas as residential communities. Sincerely, Miami Economic Associates, Inc. Andrew Dolkart President Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net