HomeMy WebLinkAboutArticle III. Tab 5 Economic Impact StudyCENTR.
Economic impact Analysis
Submitted to
City of Miami
Prepared For:
1450 SOUTH MIAMI LLG
Prepared by:
SHARPTON, BRUNSON & COMPANY, P.A.
One Southeast Third Avenue
Suite 2100
Miami, Florida 33131
(305) 374-1674
SHARPTON, BRUNSON & COMPANY, P A,
Cenified Public Accountants & Business Consultants
TABLE OF CONTENTS
The Project Overview
Executive Summary
Introduction
Summary of Benefits
PAGE(S)
2
3
Objectives And Definitions
Objectives 5
Definition of Economic and Tax Impact 5
Direct and Indirect Effects 5
Measures of Economic Impact 6
Description of Results 7
Discussion Of The Results By Economic Indicators
Impact Indicators 8
Results of Indicators 8
Impact of Construction 8
Impact of Ongoing Operations 9
Impact on Local Tax Revenues 9
Analysis by Economic Indicators 9
Employment 9
Wages 10
Output 10
Local Taxes 11
Public Sector Cost 12
Impact Fees 12
Exhibits
Exhibit I: Summary of Economic Impact 13
Exhibit II: Impact and Other Fees 14
oject
V
Columbus Centre will be located at
1492 South Miami Avenue in the City
of Miami, Florida (the Project).
Envisioned as a mixed -use project, the
proposed development consists of
approximately 211,449 square feet of
office uses. Furthermore, we plan on
having 6,512 square feet of pedestrian
enhancing ground floor retail and
restaurant uses, and 219 residential
units oriented towards the South end of
the site. The residential units will have
views to the South while the office
space will have views of downtown
Miami and Brickell Avenue. The
residential units will line the entire
height of the parking garage, thereby
shielding view of the garage from 15th
Road and Simpson Park. Along the
residential units there will be a hotel
component with approximately 234
rooms. The parking garage is further
shielded from view of South Miami
Avenue by retail and office liners. The
development's approximately 596
parking spaces will be split into 2
components: there will be a two level
basement garage accessible from 15th
Road and a multilevel parking garage
accessible from SW 14th Terrace. The
net lot is 39,306 sq. ft.
Targeted for completion in 2011,
Columbus Centre will set a new
standard of excellence in South
Florida residential living, office space,
and hotel accommodations, Centrally
located, Columbus Centre will be
minutes from the Metromover and
Mary Brickell Village. Interstate 95 is
less than half a mile to the west, while
South Beach, Coconut Grove, and
Coral Gables are a short drive away.
The property's proximity to 1-95 and
neighboring communities creates a
uniquely convenient and desirable
address.
tro ucti
This document represents an in-depth economic and tax benefits analysis of the
development and operation of a first class condominium/hotel building with office
space and retail facilities.
The Project currently contemplated is comprised of the following components:
LI 219 units of high -quality residential.
LJ 234 hotel rooms.
LI 211,449 square feet of office space.
Li 6,512 square feet of retail.
LI 596 parking spaces.
This analysis encompasses the entire Project and estimates the economic and
tax benefits for both its developmental and operational phases.
- 2 -
efits
The Project will bring significant
economic benefits to the city of Miami
(the City). This section summarizes
the impact of the project on employ-
ment, public sector revenues and
other economic benefits as a result of
the development.
Employment
Employment considerations include
the direct employment resulting from
the Project. Average developmental
construction phase employment will
be for approximately 416 employees
and the Project management is
expected to employ 125 people for
on -going maintenance and operations
of the facilities.
Wages
To compute the wages associated
with the new employment we started
with budgeted data directly related to
the developmental and operational
phases of the Project, and we
incorporated data from our research
on retail sales. Total direct and
indirect impacts expected from wages
associated with the new development
approximate the following:
One Time $114,969,456
Annual $ 9,396,000
Tax Revenue
The estimate of the public sector
revenues associated with the
development includes taxes and other
revenues generated directly by the
Project. Although public sector costs
are important elements in measuring
fiscal impact, these benefits have not
been quantified in this document.
This analysis only measures the
benefits derived from the develop-
ment. Annual tax revenue expected
to be created totals $6,623,4501
Output
The estimate of total economic
impact is measured by total output.
This analysis measures the economic
impact of developmental costs and
ongoing, operational expenditures. To
determine the effect of respending
within the City, we utilized a multiplier
to compute total direct and indirect
benefits. Total output expected to be
generated, as a result of the develop-
mental and operational phases of the
Project will approximate the following:
One Time $ 374,590,060
Annual $ 20,671,200
_3-
e.
Significant Community Benefits:
➢ Jobs
➢ Wages
➢ Taxes
➢ Economic Activity
Residents' Office Workers' and Retail / Restaurant Employees® Spending
Impacting Local Businesses:
➢ Food
➢ Recreation/Entertainment
➢ Transportation
➢ Retail
The following table and charts summarize the economic impact of the Columbus
Centre project.
CONSTRUCTION ANNUAL
PERIOD IMPACT RECURRING
Economic Activity Stimulated
Output $ 374,590,060 $ 20,671,200
Wages 114,969,456 9,396,000
Taxes 6,623,450
$ 489,559,516 $ 36,690,650
Jobs Created 416 125
4®
bjectiv
Objectives
The objective of this analysis is to provide
information on the various benefits
created by the Project and to prepare an
estimate of such benefits to the City.
Our analysis is based on an economic
model, which estimates economic and tax
impacts of various projects on a desig-
nated area. The model is specifically
tailored to the City of Miami (the City).
Definition of Economic and Tax Impact
The construction and subsequent oper-
ation of the Project will create important
benefits within the City. These benefits
include new income, new jobs, new tax
revenue and new economic activity
impacting upon every sector of the local
economy. Moreover, through the multi-
plier effect of respending and reinvesting,
indirect economic benefits are added to
the direct benefits brought about by initial
construction expenditures, the expendi-
tures from ongoing operations and new
spending at the retail enterprises.
Direct and Indirect Effects
The total economic impact of public and
private projects and policies on a region
does not end with the impact from the
initial construction expenditures; the
continued benefits to the local economy
must also be considered. Income to firms
furnishing construction materials and
services is subsequently converted into
employee salaries, material purchases,
investment in plant and equipment,
savings, profits, purchases of services,
and a variety of other economic activities.
Income to laborers is subsequently
respent for purchasing of food,
housing, transportation, education,
entertainment, medical and dental
services, clothing, personal services,
and a wide variety of other goods
and services.
Furthermore, income to the govern-
mental unit is respent as salaries,
purchases, and support of a variety
of programs, including education,
transportation, and social services.
In turn, individuals, firms, and
governments furnishing these goods
and services again spend their
income for more purchases,
salaries, investments, and savings.
In this manner, indirect benefits
result each time the initial sum is
respent, and the additional sum
available in the focal economy
induces further job creation,
business development and savings.
Quantification of these indirect
benefits has been the object of
considerable economic study.
Because economic relationships are
so complex in our modern society,
no single area or political unit is a
completely self-contained economic
unit. Therefore, purchases from
other areas and political units are
necessary, and goods services are
exported in return.
As purchases are made from other
units, some of the benefits of
economic respending are lost to the
local economy. Ultimately, a smaller
and smaller portion of the initial sum
would remain, until, after several
rounds of respending, an insignifi-
cant sum is left.
s-
bjective efi
The indirect effects can be viewed as
a set of "ripples" in the economy.
Indirect, like direct, resources require
labor, materials, equipment and
services for their production to induce
further job creation and spending of
wages.
The "ripple" of the indirect effect
multiplies the original impact of the
purchase. The common measure of
the magnitude of the "ripple" effect is
called a multiplier. A multiplier
measures the total magnitude of the
impact on each particular economic
indicator as a multiple of the initial,
direct effect. For instance, a multiplier
of "1" would signify no "ripple" effects
as the total impact is 1 times the
initial impact, while a multiplier of "2"
would imply that the total impact is 2
times the direct effect.
The actual magnitude of a multiplier
depends on the likelihood the goods
and services purchased in a region
would be produced in, or provided
from the region.
The model we used to estimate the
total economic impact incorporates a
multiplier developed by utilizing past
consumption and production patterns
in the City.
There will be significant economic
benefit derived from the expenditures
of the residents of the Project on
eating, drinking, grocery, recreation,
retail etc. This report does not include
the economic impact of such expendi-
tures.
Measures of Economic Impact
Various measures can be used to
indicate the impact of a policy or
project on a region. Specifically, for
this study, they are the increases in
local employment, wages, tax revenue
and output that result. Definitions of
these measures are as follows:
Employment is measured full-time
equivalent jobs.
Wages include wages, salaries, and
proprietor's income only. They may
include non -wage compensation, such
as pensions, insurance, and other
fringe benefits. Wages are assumed to
be expended by households in the
area at which the wage-earner works.
Local taxes include additional reve-
nues from both ad valorem and non ad
valorem assessments.
Direct expenditures include those
sums expended for land acquisition,
site preparation and all hard and soft
costs associated with a project.
Indirect expenditures are those sums
expended within the local economy as
a result of the "ripple" effect described
earlier.
Output describes total economic
activity, and is essentially equivalent to
the sum of direct and indirect expendi-
tures (exclusive of wages and taxes),
ectives
Description of Results
For the purpose of describing the
total economic benefits of the Project,
the related expenditures and econ-
omic activity stimulated have been
broken into two categories:
Developmental
➢ Annual Recurring
Developmental expenditures include
those expenditures related to the
design and construction phase of the
Project and related amenities.
Annual recurring activities stimulated
are those expenditures incurred in
connection with the ongoing oper-
ation of the Project, and the sales
and expenditures of the retail enter-
prises leasing space at the Project.
MeR
ss e es
con° is In.corn
impact Indicators
We measured the Project's impact on
four commonly used indicators of
economic activity.
Those indicators are:
➢ Jobs
➢ Wages
➢ Total output
➢ Local taxes
Results of Indicators
Exhibit 1 details the Project's direct and
indirect impact on the above economic
indicators for Miami. A summary of
such impact follows:
DEVELOPMENT OUTPUT
One Time:
Direct
Indirect
Annual:
Operational:
Direct
Indirect
The economic indicator most
commonly measured, and publicly
reported on to gauge the economic
impact of a public project is output.
The impact of a project on the
indicator output is often referred to as
the project's economic impact.
Impact of Construction
The site preparation and construction
expenditures, including soft costs and
impact fees are estimated at $255
million. Such activity will create
approximately 416 new full time
equivalent jobs and employ a
maximum of 516 workers during peak
periods. The workers will earn
approximately $61 a2 million in direct
wages.
WAGES TAXES EMPLOYMENT
$ 199,334,855 $ 61,180,000
175,255,205 53,789,456
$ 374,590,060 $ 114,969,456
416
416
$ 11,000,000 $ 5,000,000 $ 6,623,450 125
9,671,200 4,396,000
$ 20,671,200
9,396,000 $ 6,623,450 125
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e es
Indicato
Impact of Ongoing Operations
As a result of the on -going operation
and maintenance of the Project,
Miami will gain approximately 125
new, permanent full-time equivalent
jobs. The wages of the workers who
obtain these positions will provide an
impact of approximately $9.4 million
annually.
The total expenditures for the
Project's operations, will provide a
new, permanent impact of $20.7
million annually to the City's econ-
omy. This impact consists of the
effects of the direct expenditures
from the maintenance, security and
day-to-day operation of the Project,
and the multiplied effects of such
spending thus creating indirect bene-
fits.
Impact on Local Tax Revenues
As a result of the construction and
operation of the Project, various
state, city and city governments and
agencies would gain an estimated
annual tax benefit of $6.6 million.
Analysis by Economic Indicators
Our analysis of the economic and tax
benefits of the Project was done by
each major phase of the Project. We
identified the major phases to be
developmental and operational.
This analysis determines the econ-
omic benefits to the City by identi-
fying such benefits for each of the
phases.
The effects on economic indicators
used to measure benefits (employ-
ment, wages, output and taxes) were
computed for each phase,
Employment
Employment is one of the most
important economic benefits of the
Project. It is one of the most
accessible and direct benefits for the
City's residents and it's residents and
is a primary means by which develop-
mental, operational and maintenance
expenditures generate indirect econ-
omic benefits. A portion of this
employment occurs on -site as a result
of new spending at the retail enter-
prises, and a portion is derived from
on -going operations of the Project.
Further employment is generated off -
site by the expenditures of employees
of the Project and businesses located
in the Project, at area businesses.
As can be seen in Exhibit 1, total short-
term (developmental) employment will
average 416 employees over a thirty-
six month period and the total on -going
employment will average 125.
The total on -going positions can be
summarized as follows:
• Management
• Security
• Parking
• Maintenance/Facilities
• Retail
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con° I d cators
Wages
The analysis deemed wages are a
direct by-product of employment. As
discussed in the above section, both
on -site and off site jobs are created.
There were both temporary and
permanent in nature.
To compute the wages associated
with the new employment we started
with budgeted data directly related to
the developmental and operational
phases of the Project.
Employment, such as construction
related employment, was obtained
directly from construction estimates.
These numbers were tested for
reasonableness.
Output
The output generated, as a result of
the development and operations of
the Project, is caused by the follow-
ing type of expenditures:
➢ Development costs expended in
the City (100%)
➢ Annual operational expenditures
of management company
➢ New spending in the locality by
employees of businesses
located in the Project
To incorporate the impact of dollars
being respent and/or reinvested in
the City, a multiplier was applied to
total direct output.
A multiplier of 1.8792 was used to
determine total direct and indirect
output created by the Project. This
multiplier indicates that for every $100
spent in Miami, another $187.92 will
be respent or reinvested in Miami.
This multiplier was obtained from the
Dade City Planning Department.
Direct output from the developmental
phase of the Project is primarily a
result of developer costs. These costs
include land acquisition, site prep-
aration and soft and hard costs
relating to the Project's construction.
To determine the total output we
determined what development costs
were expected to be or had been
spent in Miami.
Total direct output during the
development phase is $199.3 million.
Total indirect output created by the
direct respending in Miami is $175.2
million, Thus total Miami output from
the development of the Project is
$374.5 million.
The final component of output results
from the direct operating expenditures
of the Project, and the indirect
benefits created as a result of the
multiplier effect on direct output.
The Developer provided us with an
annual operating budget for the
Project. An overall assumption was
made that all expenditures would be
spent initially in the City.
-10
Y
c no I dicato
Output (Contd.)
The total operating expenditures
incorporate all estimated expenses of
the ongoing operation of the Project.
The impact of the retail enterprises
was measured separately as an econ-
omic indicator.
To incorporate the potential respen-
ding and reinvesting in Miami, the
multiplier effect was measured. By
applying a multiplier of 1.8792 to the
total direct output from operating
expenditures and the retail enterprises,
we determined total output (direct and
indirect) from on -going operating
expenditures and retail sales.
Local Taxes
A key and significant benefit generated
from the development and operation of
the Project is taxes. Several types of
tax revenue will be generated from this
project including ad valorem taxes.
Specific ad valorem taxes include real
and personal property taxes. Other
taxes include occupational taxes and
community development taxes.
New real property taxes will be as-
sessed on the Project. The assess-
ment is based on a predetermined
mileage rate being applied to the
taxable value of the real property. We
computed real property taxes for the
developmental phase based on the
cost of the development of the Project.
This assessment base is very conserv-
ative since tax on real property
typically is assessed on appraised
values and not actual cost.
The basis for ongoing taxes is also
overall cost. The mileage rate was
obtained from the City Tax Collectors
office relative to the Project's location.
The projected annual real property
taxes are approximately $6.6 million.
Total ad valorem taxes assessed by
Miami -Dade County are allocated
based on mileage rates to certain
governmental entities. Listed below is
the allocation of projected tax revenue.
City Operating
City Miscellaneous
School Operating
County Operating
Debt Service - City
Debt Service - County
South Florida Water
Library Operating
School Debt Service
Florida Inland Navigation
Environmental Projects
Children's Trust
TOTAL
$ 2,167,501
127,507
2,026,603
1,488,012
195,086
72,679
152,244
123,937
125,212
9,818
25,501
109,350
$ 6,623,450
-11-
es
y Ec.; o is dicato
Local Taxes (Contd.)
Although not quantified, the City, through its
receipt of allocated state sales taxes will receive
an additional benefit as a result of the
development and operation of the Project, and
from the retail enterprises.
Public Sector Costs
Impact fees
Very significant factors in measuring the
economic impact on a specific region of a
project are impact and other required develop-
ment fees. A summary of these fees are listed
below:
➢ City of Miami Developmental Impact Fee
➢ City of Miami Developmental Admin Fee
➢ Downtown Development Supplemental Fee
➢ Miami -Dade County School Impact Fee
➢ Building Permit Fee
➢ Installation Energy Fee
➢ Other Fees
For the purpose of this economic impact
analysis, fees are included as a part of the
direct development cost (output). Impact fees
total approximately $2.1 million and other fees
total approximately $1,0 million. These fees are
shown in detail in Exhibit II.
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x ibi ist
Exhibit 1
Exhibit 11
Summary of Economic Impact
Impact and Other Fees
SUMMARY OF ECONOIVIIC IMPACT
OUTPUT
WAGES EMPLOYMENT TAXES
DIRECT
DEVELOPMENTAL $ 199,334,855 8 61:180.000 416
OPERATIONAL 11,000,000 5,000,000 125 $ 6,623,450
TOTAL DIRECT
210,334,855 66,180,000 541 6,623;460
INDIRECT
DEVELOPMENTAL 175.255.205 53,789,456
OPERATIONAL 9,671,200 4,396,000
TOTAL INDIRECT
TOTAL BENEFITS
TOTAL DEVELOPMENTAL
TOTAL OPERATIONAL
TOTAL BENEFITS
184,926,405 58,185,456
395,261,260 $ 124,365,456 541 $ 6,623,450
$ 374,590,060
20,671,200
$ 114,969,456
9,396,000
416
125 $ 6,623,450
$ 395,261,260 $ 124,365,456 541 $ 6,623,450
m13
ibit
IMPACT AND OTHER FEES:
A. Development Square Footages: Square Footage
1) Total gross building area (with parking)
2) Maximum development area (FAR)
3) Gross parking area
B. Impact Fees:
975,991
711,192
244,714
Amount
1) City of Miami Developmental impact Fee $ 1,194,060
2) Developmental Impact Administration Fee 35,822
3) Downtown Development Supplemental Fee 298,898
4) Miami -Dade County School Impact Fee 605,092
Total of ail Impact Fees $ 2,133,872
C. Non -Impact Fees:
1) Miami Dade W.A.S.A. ''connection fees" $ 646,126
2) Building Permit Fee 151,571
3) Installation Energy Fee 97,599
4) Major Use Special Permit Application Fee 30,000
5) Miami -Dade County Code Compliance 91,410
6) Radon Gas Fee 3,789
7) Fire Plan Review Fee 7,200
8) Ground Cover Fee 275
9) Land Use/Zoning 393
10) Zoning Review for Building Permit Fee 60
11) Certificate of Occupancy Fee 250
12) Application Fee 35
Total of all Non -Impact Fees $ 1,028,708
Total of all Fees for Project
Source: City of Miami Planning, Building and Zoning Department.
Miarni Dade County Impact Fees
$ 3,162,580
- 14 -
•
•
•
Miami EcoriorTiic
Associates, Inc.
October 3, 2006
Mr. Frank Paredes
Fullerton Diaz Architects
Coral Gables, Florida
Re: MUSP impact Analysis — One
Dear Mr. Hassan:
Miami Economic Associates, Inc. (MEAI) has performed analysis to estimate the benefits
that a mixed -use project, to be know as One, will provide to the City of Miami. The
proposed project will be located on S.W. 32nd Avenue between S.W. 23`1 Street and
S.W. 23rd Terrace. This letter, which is organized as shown below, provides the findings
of our analysis and their bases.
Section
Page
Project Description
'1
Summary of Findings
2
Fiscal Benefits
2
Economic Benefits
3
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
and cost parameters at the time development actually occurs and the changes may be
significant.
Project Description
The proposed One mixed -use project will be comprised of the following:
• Ground floor retail space totaling 5,596 F.A.R. square feet
• Condominium office suite totaling 118,288 F.A.R. square feet
• A roof -top ballroom comprised of 23,438 F.A.R. square including 9,434 square feet
that will accommodate up to 629 patrons, 2,366 square feet of kitchen space, 7,491
6861 S.IOC 89tb Terrace Miami, Florida 33156
Tel: (3051669.0229 Fax: i305} 669.8534 Email: meaink&beilsouth,net
Mr. Frank Paredes
Fullerton Diaz Architects
October 3, 2006
Page 2
square feet of restroom and pre -function space and a ballroom mezzanine of 4,147
square feet.
• 4 townhouse villas totaling 13,208 F.A.R. square feet
• 496 parking spaces
Development of One, which will occur on a site with a gross lot area totaling 89,354
square feet, in the manner indicated above will require use of the City's PUD and
Affordable Housing bonus provisions. A fee of $12.40 per square foot will need to be
paid for the 12,434.58 square feet to be developed utilizing the Affordable Housing
bonus.
Ail of the office and retail space within the project as well as the ballroom space and 4
residential units will be offered to the market on a for -sale basis at an average price of
$400 per square foot, Gross sales proceeds will total $52.9 million.
Construction of One is expected to approximate $32.0 million in hard costs. An
additional $8.0 million will be expended for soft costs inclusive architectural and
engineering fees, marketing, sales commissions, project overhead, etc. Accordingly, the
project will cost $40.0 million to develop exclusive of land cost, financing expenses and
developer fees.
Summary of Findings
Development of One will be highly beneficial to the City of Miami in terms of the fiscal
and economic benefits provided, as summarized below:
Fiscal Benefits
• Fiscal Benefits refers to the positive impacts that One 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 below, which
are based on the current mlllage and fee rates, are 2006 Constant Dollars. It should
also be noted that the amount of City and County impact fees actually paid may be
lower than the amounts estimated below because of credits granted for existing
development on the project site.
o Non -recurring Benefits
• $ 81,017 in City building permit fees
• $ 10,000 in City solid waste surcharge fees
• $ 38,608 in City police impact fees
• $ 40,650 in City fire -rescue impact fees
• $ 14,388 in City general services impact fees
• $ 23,992 in City park impact fees
• S154,189 in Affordable Housing Bonus 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
Mr. Frank Paredes
Fullerton Dial Architects
October 3, 2006
Page 3
O Recurring Benefits
$ 358,679 annually in City General Fund ad valorem taxes
• $ 32,283 annually in City Debt Service 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 parking surcharge fees (recurring)
• Increased revenue sharing funds (recurring)
o Other
• While the focus of MEAI's fiscal analysis was on the City of Miami, One
will, as shown below, provide significant fiscal benefits to other non -
municipal governmental jurisdictions that impact the lives of City
residents:
o $ 232,201 in County road impact fees (non -recurring)
o $ 14,570 in School impact fees (non -recurring)
o $ 246,237 in County General Fund ad valorem taxes (recurring)
o $ 12,027 in County Debt Service ad valorem taxes(recurring)
o $ 18,095 in Children's Trust ad valorem taxes (recurring)
o $ 20,509 in County Library ad valorem taxes (recurring)
o $ 335,363 in School Operating ad valorem taxes (recurring)
a $ 20,720 in School Debt Service ad valorem taxes (recurring)
o Increased County occupational license fees (recurring)
o Increased revenue sharing funds
Economic Benefits
Economic Benefits relates to the positive impacts that One 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 $40.0 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 $55.9 million when the multiplier effect is considered.
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@belisauth.net
Mr, Frank Paredes
Fullerton Diaz Architects
October 3, 2006
Page 4
• Project expenditures within the City of Miami will include an estimated
$14.4 million for construction labor, an amount sufficient to pay
approximately 277 construction workers, some of whom may be City
residents; their average annual wage of $52,000.
0 Recurring
• A total of $224,000 will be spent annually in within the Gity of Miami by
residents of One in retail and food and beverage establishments,
Employees at the project will spend an additional $1.1 million during their
work days. Finally, $1.2 million in ad valorem taxes will be paid to the
City of Miami, 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 $3.7 million annually
when the multiplier effect is considered.
• A total of 440 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 $17.6
million annually.
Bases of Estimates
The materials that follow provide the assumptions used to estimate the fiscal and
economic benefits that development of One will provide to the City of Miami. All
monetary values are stated in 2006 Constant Dollars.
Project Characteristics
• One will be located within the Gity of Miami as well as the jurisdictions of Miami -Dade
County and the Miami -Dade County Public School District.
• The project will entail the construction of 326,708 gross square feet of building area.
Of this amount, 13,208 square feet will pertain to the residential portion of the
project, which will be comprised of the 4 townhouse villa units. The remaining
313,500 square feet will be comprised of the retail, office and ballroom space,
service and circulation areas and parking.
® In order for One to be developed with a total of 161,342 square feet for FAR
purposes, 12,434.58 square feet will be developed under the provisions of the City's
Affordable Housing Bonus program.
• Development of One will cost approximately $32.0 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
Miami Economic Associates, Inc. 6861 S.We 89th Terrace Miami, Florida 33156
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Mr. Frank Paredes
Fullerton Diaz Architects
October 3, 2006
Page 5
additional $8.0 million. Therefore, $40.0 million will a spent to develop the project
exclusive of land acquisition costs, financing expenses and developer's fees.
• Sale of the project's retail, office and ballroom space as well as its 4 residential units
will generate $52.9 million in gross sales proceeds,
• According to the Constitution of the State of Florida, real property is supposed to be
assessed at 100 percent of its market value. As a practical matter, condominium
space, inclusive of both commercial and residential offerings, is placed on the tax
rolls at approximately 80 percent of market value, or in this case $42.3 million.
Assuming that all 4 residential units qualify for the Homestead Exemption, the
taxable value of the project will be $42.2 million.
• Residents of the proposed townhouse units will on average require an annual
income approximating $400,000 to qualify for ownership. Based on this estimate of
average household income, it is projected that the people living at the proposed
project will spend $320,000 million annually in retail and restaurant establishments.
This projection assumes that they spend approximately 20 percent of their income
for that purpose.
• Based on industry standards for employment in retail and office uses, it is anticipated
that the proposed retail and office space at One will be occupied by 384 workers,
This estimate assumes 2.5 workers per 1,000 square feet of retail space and 4
workers per 1,000 square feet of office space. The ballroom is expected to employ
40 people. When project operations, maintenance and parking personnel are
accounted for, the total number employed at the proposed project will be 440 people.
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
$81,017 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 townhouse
residential units, fees will be paid on a per unit basis in the amounts of $144 for
Miami Economic Associates, Inca 6861 LW. 89tb Terrace Miami, Florida 33156
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Mr. Frank Paredes
Fullerton Dial Architects
October 3, 2006
Page 6
police, $619 for fire -rescue, $363 for general services and $5,998 for parks. The
rates for commercial space in the quantity proposed (assuming the ballroom is
considered commercial space) are paid on a per square foot basis in the amounts of
$0.696 for police, $0.260 for fire -rescue and $0.108 for general services. The rates
for office space in the quantity proposed are paid on a square foot basis in the
amounts of $.0206 for police, $0.336 for fire -rescue and $0.108 for general services.
Impact fees totaling $134,478 will be paid on the One mixed -use project, of which
$38,606 will be for police, $40,650 for fire -rescue, $14,388 for general services and
$23,992 for parks.
The City of Miami charges a fee of $12.40 per square foot for space permitted under
the provisions of its Affordable Housing Bonus program. A total of $154,189 will be
paid for the 12,434.58 square being proposed for development at One under those
provisions.
New construction projects located in the City of Miarni also need to pay impact fees
to Miami -Dade County for roads and schools. In the eastern portion of the county,
the rate for roads for condominiums is $877 per unit. The road impact fee rates for
retail and office space in the eastern portion of Miami -Dade County are $1.255 and
$2.1 02 per square foot, respectively, for projects with the quantities of space
proposed at One, assuming that the ballroom is considered retail space. The base
fee per unit for school impact fees is $612. An additional amount of $0.918 per
square foot is then applied. Accordingly, impact fees totaling $246,772 will need to
be paid at the time the building permit for the proposed project is issued. Of this
amount, $232,201 will be applied to roads and $14,570 to schools.
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 applyingthe millage rates shown to proposed project's
estimated taxable value of $46.6 million.
Entity
Ratel$1000
Taxable Value
Taxes
City of Miami
General Fund
8.49950
$ 358,679
Debt Service Fund
0.76500
$ 32,283
Miami -Dade County
General Fund
6.83500
$ 246,237
Debt Service Fund
0.28500
$ 12,027
Children's Trust
0.42880
$ 18,095
Library
0.48600
$ 20,509
Miami -Dade County Public Schools
Operating
7.94700
$ 335,363
Debt Service
0.49100
$ 20.720
Source: Miami -Dade County Property Appraiser, Miami Economic Associates, Inc.
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax; (305) 669.8534 Email: mealnk@bellsouth.net
Mr, Frank Paredes
Fullerton Diaz Architects
October 3, 2006
Page 7
▪ 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 One 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 One's proposed office and commercial space, inclusive of the
ballroom. 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.
a The City of Miami charges a 20 percent surcharge on parking fees. Guests at the
building would pay this surcharge. It is not possible at this time to estimate the
amount that will be generated.
• 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 $40.0 million that will be spent on
the hard and soft costs to develop One 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
1MPLAN Group (MIG), which is one of the nation's foremost econometric firms, the
overall economic impact of these expenditures will approximate $55.9 million based
on application of a 1.554 multiplier.
• MIG's input-output model further estimates that approximately $14.4 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
approximately 277 workers, some of whom may be City residents, on an annual
basis at their average wage rate.
Recurring Economic Benefits
® The residents of Loftika will spend $320,000 annually in retail establishments and
restaurants, approximately 70 percent of which, $224,000, will be spent within the
City of Miami. Employees at the project are expected to spend an additional $1.1
million in shops and restaurants while working. Finally, the project will generate
approximately $1.2 million annually in ad valorem taxes for the City of Miami, Miami -
Dade County and the School Board, all of which maintain their principal offices within
Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156
Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net
Mr. Frank Paredes
Fullerton Diaz Architects
October 3, 2006
Page 8
the City. According to the MIG input-output model, the total economic impact of these
expenditures will be $3.7 million annually based on the application of a 1,5 multiplier.
Based on wage data compiled by the Florida Agency on Workforce Innovation, it is
that the annual earnings of the 440 people who will be employed at the proposed
project on a full-time equivalent basis, some of whom may be City residents, would
average $40,000, or $17.6 million in total.
Closing
The analysis performed by MEN demonstrates that the development of One wili be
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. 89th Terrace Miami, Florida 33156
Tel: (306) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net