Loading...
Agenda 01/12/2021 Item #14B1 (P6NT, LLC Economic Incentives)01/12/2021 EXECUTIVE SUMMARY Recommendation that the Board of County Commissioners, acting as the Community Redevelopment Agency Board, consider providing an economic incentive to P6NT, LLC for the redevelopment of two parcels located in the Bayshore Gateway Triangle Community Redevelopment Area. OBJECTIVE: To determine if an economic incentive is warranted for the redevelopment of two parcels (1705 and 1807 Tamiami Trail East) located in the Bayshore Gateway Triangle Community Redevelopment Area (BGTCRA) as presented by P6NT, the contract purchaser. CONSIDERATIONS: On September 16, 2020, the CRA received a letter from Richard Yovanovich, legal counsel to the P6NT, LLC, the contract purchaser for 1705 and 1807 Tamiami Trail East, requesting a 50% tax increment rebate based on the future redevelopment of these two parcels. The proposed project will consist of 120-unit hotel and 24 condominium units, and a restaurant. Per the letter, the tax rebate is necessary for the project to succeed financially. On October 13, 2020, this item was presented to the Board as a Public Petition. The petitioner requested the Board allow them to prepare a Feasibility Study for staff to review and suggested an item on a future Board agenda to discuss the project. The Board voted to allow the P6NT to present their analysis of the project at a future meeting. On December 8, 2020, the petitioner presented an overview of the economic impact of the proposed project and their commitment to complete the project by July 2023. The analysis estimated $16.4 million in taxes and fees and 1,040 total new jobs would be generated from the development. The board directed staff to draft an incentive for consideration based on 50% of the tax increment generated from the hotel portion of the development over a ten-year period. Staff estimates that value at $714,113, but it will depend on final assessment on the property when it hits the tax roll and any value increase over the ten - year period. Pursuant to Ordinance 2000-42 which established the Collier County Redevelopment Trust Fund, the increment is based on the collection from two taxing authorities: Fund 001 - General Fund (3.5645) and Fund 111 Unincorporated General Fund (.8069) - totaling 4.3714 mils. Per Section 163.387 F.S., funds allocated to this fund shall be used by the Agency to finance or refinance any community redevelopment it undertakes pursuant to the approved community redevelopment plan. In April 2019, the Board approved the first amendment to the Community Redevelopment Plan updating the long-term vision and approach to redeveloping the Bayshore Gateway Triangle Community Redevelopment Area. The Plan provides the following guidance related to economic incentives: • Objective 3: Incentivize desired types of development • Strategy 2: Identify incentives and targeted assistance for a range of development and redevelopment, including consideration of large catalyst development projects. • Examples of Development Assistance and Incentives include density/intensity increases, Impact fee offsets or payment over time, TIF Rebates and TIF money for infrastructure; land acquisition for targeted needs; tenant attraction and relocation support, and micro-enterprise incubator and technical assistance support. • Short-term Non-Capital Expenditures - The plan identifies the Gateway Property Development and the funding for potential incentive in support of the project at the apex of Davis and US41. 14.B.1 Packet Pg. 381 01/12/2021 Options available to provide economic incentives to this project include the payment of Collier County Impact Fees and Building Permit Fees on behalf of the developer. Impact Fees for the commercial portion of this project (125-rooom hotel) are estimated at $200,100, which includes reductions for previous structure credits and reductions for Road Impact Fees paid prior related to the concurrency program. This amount does not include the City of Naples Water Impact Fees or the Greater Naples Fire District Impact, as they are payments to separate governmental entities. Impact Fees for the residential portion of this project are estimated at $170,000. Collier County Building Permit Fees (including Inspection Fees, etc.) are paid by the developer at various stages of the building permit review process and are estimated at $714,166 by the Economic Impact Study. Based on the capital investment for the commercial portion of the project and estimates of the future tax increment that will be generated by the new development, a total maximum incentive of $714,113 is proposed for the payment of applicable impact fees and other building permit-related fees. Should the Board elect to provide this incentive package, the following structure is recommended to be included in a future Capital Investment Agreement: • Performance Standards: o Certificate of Occupancy (CO) for the entire project will be received prior to July 31, 2023 and any delay in obtaining CO, except due to force majeure causes of delay, would reduce the incentive by 20% for each 30-day extension; and, o Incentive is contingent on the mix of uses proposed and architectural renderings as presented and approved in the final Site Plan and any substantial deviation may terminate the incentive; and, o The Developer agrees to no annexation into the City of Naples. • Following receipt of the Certificate of Occupancy, Impact Fees and/or Building Permit Fees will be reimbursed by the CRA to the Developer in a total amount not to exceed $714,113. • Impact Fees are due prior to Certificate of Occupancy and will be paid, in accordance with the performance standards, to the applicable Impact Fee Trust Funds by the Developer and reimbursed by the CRA. • Building Permit Fees will be paid by the Developer and reimbursed by the CRA. • City of Naples Utility Fees, Greater Naples Fire Impact Fees, and any other fees required by other governmental agencies are the responsibility of the Developer. FISCAL IMPACT: The maximum recommended incentive package is $714,113. The incentive will be paid to the developer on a reimbursement basis upon issuance of the Certificate of Occupancy. The source of funding for the reimbursement will be Bayshore CRA Fund (187). The Bayshore CRA budget will include an annual set aside to ensure funding is in place for the incentive payment. Estimated impact fees due total $370,100 with $200,100 applicable to the hotel and $170,000 applicable to the residential component. The Developer estimated building permit fees to be $714,166. GROWTH MANAGEMENT IMPACT: Not Applicable. LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney, is approved as to 14.B.1 Packet Pg. 382 01/12/2021 form and legality, and requires majority vote for approval. -JAK RECOMMENDATION: 1. That the Board deny the incentive because the project has not demonstrated a financial need or public benefit: or 2. Approve the incentive and direct staff to facilitate the payment through the appropriate mechanism (Capital Investment Agreement) consistent with the terms outlined in this Executive Summary. Prepared by: Debrah Forester, CRA Director ATTACHMENT(S) 1. Site Map Mini Triangle (PDF) 2. P6NT Economic Impact Report 11-09-2012 (PDF) 14.B.1 Packet Pg. 383 01/12/2021 COLLIER COUNTY Board of County Commissioners Item Number: 14.B.1 Doc ID: 14602 Item Summary: Recommendation that the Board of County Commissioners, acting as the Community Redevelopment Agency Board, consider providing an economic incentive to P6NT, LLC for the redevelopment of two parcels located in the Bayshore Gateway Triangle Community Redevelopment Area. Meeting Date: 01/12/2021 Prepared by: Title: – County Manager's Office Name: Debrah Forester 12/28/2020 5:14 PM Submitted by: Title: – County Manager's Office Name: Debrah Forester 12/28/2020 5:14 PM Approved By: Review: County Manager's Office Debrah Forester Director - CRAs Completed 12/28/2020 5:14 PM Corporate Business Operations Sean Callahan Executive Director- Corp Business Ops Completed 12/30/2020 9:58 AM Capital Project Planning, Impact Fees, and Program Management Amy Patterson Additional Reviewer Completed 12/30/2020 1:47 PM County Attorney's Office Jeffrey A. Klatzkow Level 2 Attorney Review Completed 12/31/2020 9:03 AM Office of Management and Budget Debra Windsor Level 3 OMB Gatekeeper Review Completed 12/30/2020 1:51 PM Budget and Management Office Ed Finn Additional Reviewer Completed 12/30/2020 2:38 PM County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 01/04/2021 10:37 AM County Manager's Office Sean Callahan Level 4 County Manager Review Completed 01/04/2021 2:28 PM Board of County Commissioners MaryJo Brock Meeting Pending 01/12/2021 9:00 AM 14.B.1 Packet Pg. 384 Mini Triangle: CRA Boundary Metropolitan Naples P6NT 14.B.1.a Packet Pg. 385 Attachment: Site Map Mini Triangle (14602 : BGTCRA Incentive P6NT) 1 Economic Impact of Construction, Sales Commissions, and Operation of a Hotel and Condominium in Naples, FL Prepared for: P6NT, LLC Prepared by: David R. Evans Evans, Carroll & Associates, Inc. 2785 NW 26th St. Boca Raton, FL 33434 703-835-6978 www.evanscarrollecon.com devans@evanscarrollecon.com November 9, 2020 14.B.1.b Packet Pg. 386 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 2 Table of Contents 1. Executive Summary 3 2. Tabulation of Principal Results 5 3. Construction Costs, Hotel Revenue, and Condominium Sales Projections 8 4. Collier County Taxes and Fees 12 5. Jobs, Output, and Earnings 16 Appendix: About Evans, Carroll & Associates 25 14.B.1.b Packet Pg. 387 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 3 1. Executive Summary This report provides the economic impact of the construction, sales commissions, and hotel operations of a project with 125 hotel rooms and 24 condominiums. It will be located at 1705 and 1807 Tamiami Trail East, Naples, FL 34112, in Collier County. As will be described in the rem ainder of this report, based on projected property taxes, construction costs, sales commissions, hotel revenue, and RIMS II multipliers for Collier County, the project will generate about $16.4 million in taxes and fees from 2020 through 2032, 1,040 total new jobs, $137.5 million in new output (GDP)1, and about $46.3 million in new earnings. Summary results are shown in Table 1-1. Table 1-1. Summary, Economic Impact of the Project Hotel Condos TOTAL Taxes and Fees, 2020-32 (million $) $11.946 $4.406 $16.351 Total New Jobs 723.1 316.7 1,039.8 Increase in Output (million $) $94.815 $42.651 $137.466 Increase in Earnings (million $) $31.981 $14.333 $46.314 All figures calculated from unrounded numbers Collier County Taxes and Fees As described in detail in Section (4), about $16.4 million in taxes and fees will be generated for Collier County in 2020 through 2032, from the following: • $7.4 million in ad valorem tax – hotel ($3.6 million) and condos ($3.8 million): o Property taxes for the site have been assessed at $49,270 in 2020; it is assumed these will rise 3% per year during the construction phase. o Once the hotel is open, property taxes have been estimated at $340,000 in 2024, and are also expected to rise 3% per year thereafter. o Once the condos have been sold and occupied, property taxes have been estimated at about $370,000 in 2024 (and rising 3% per year thereafter). • $5.3 million in tourist development taxes, based on 5% of room revenue: o Room revenue is projected to total about $8.3 million in Year 1 (May 1, 2023 through April 30, 2024), rising to about $12.7 million in Year 10. o Total room revenue in calendar years 2023 through 2032 is projected to total about $105.1 million – 5% of which is about $5.3 million. • $2.3 million in sales tax, based on 1% of total hotel revenue (Collier County sales tax is 7%; 6% goes to the state of Florida and 1% goes to the county): o Total revenue is projected to total about $16.6 million in Year 1, rising to about $28.9 million in Year 10. o Total room revenue from 2023 through 2032 is projected to total about $233.5 million – 1% of which is about $2.3 million. 1 Gross Domestic Product (GDP), or output, is the total market value of goods and services produced. Note that GDP for all of Collier County was $17.9 billion (in 2018), per the Bureau of Economic Analysis. 14.B.1.b Packet Pg. 388 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 4 • $1.3 million in impact and building permit fees on the hotel and condos: o About $761,000 for the hotel – $275,000 in impact fees (which includes water and sewer fees) and $486,000 in building permit fees. o About $583,000 for the condominiums – $355,000 in impact fees and $228,000 in building permit fees. Jobs, Output, and Earnings As described in Section (5), about 1,040 total new jobs, $137.5 million in total new output, and $46.3 million in total new earnings would be generated by the project. The latest available RIMS II multipliers (2018) for Collier County are shown in Table 2-4. Final demand multipliers represent the increase in total 2 employment, output, or income for each $1 million in job-creating expenditures or revenue. For example, a final demand employment multiplier of 10 would mean that for every $1 million spent, there would be an increase of 10 total jobs. As the RIMS II data are from 2018, all figures are deflated to 2018 dollars before applying the multipliers. Hotel Jobs, Output, and Earnings Construction and operation of the hotel would create about 723 new jobs, $94.8 million in new output, and $32.0 million in new earnings: • Hard Costs for the hotel are projected to total about $44.7 million, or $41.9 million in 2018 dollars. The RIMS II final demand multipliers for nonresidential structures in Collier County for employment, output, and earnings are 11.5438, 1.4588, and 0.5483, respectively. Thus the Hard Construction activity would create 484 new jobs, $61.1 million in output, and $23.0 million in earnings. • Architectural & Engineering (A&E) costs for the hotel are projected to total $2.2 million in 2018 dollars. Based on the multipliers for A&E, A&E Services would create 22 new jobs, $3.2 million in output, and $1.2 million in earnings. • FF&E Purchases for the hotel are projected to total about $3.5 million in 2018 dollars. As described in Section (5), only indirect and induced effects are included for FF&E Purchases. Based on the wholesale trade multipliers (excluding direct effects), FF&E Purchases will create 10 new jobs, $1.2 million in output, and $0.3 million in earnings. • For hotel operations, the economic impact is based on an annual revenue figure. Revenue from the first stabilized year (Year 6) is used here – $25.7 million, which equates to about $21.5 million in 2018 dollars. Based on the multipliers for accommodations, Hotel Operations will create 208 new jobs, $29.3 million in output, and $7.5 million in earnings. 2 “Total”, when referring to employment, output, or income, is the sum of direct, indirect, and induced effects. Direct effects are the results of the money initially spent or received. Indirect effects are the subsequent rounds of business activity in the supporting industries. Induced effects are the results of increased personal income caused by the direct and indirect effects – i.e., a business with increased revenue would increase its payroll; households would then increase spending at local businesses. 14.B.1.b Packet Pg. 389 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 5 Condominium Jobs, Output, and Earnings Construction and sales commissions of the condos would create about 317 new jobs, $42.7 million in new output, and $14.3 million in new earnings: • Hard Construction Costs for the condos are projected to total about $26.7 million, or $25.1 million in 2018 dollars. Based on the RIMS II final demand multipliers for residential structures, the Hard Construction activity would create 282 new jobs, $38.1 million in output, and $13.3 million in earnings. • A&E Services for the condos are projected to total about $1.0 million in 2018 dollars. Based on the A&E multipliers, A&E Services would create 10 new jobs, $1.5 million in output, and $0.6 million in earnings. • Sales Commissions are projected to be 4.5% of the sales prices of the condos ($55.2 million), which equates to about $2.5 million, or $2.3 million in 2018 dollars. Based on the multipliers for real estate, Sales Commissions would create 25 new jobs, $3.0 million in output, and $0.5 million in earnings. 2. Tabulation of Principal Results Table 2-1 shows the annual taxes and fees that would be received by Collier County as a result of the project from 2020 through 2032, as will further be described in Section (4). These include an ad valorem tax (property tax), a 5% tourist development tax on hotel rooms, 1% of the sales tax going to the county, and fees associated with construction of the project. Table 2-1. Summary of Collier County Taxes and Fees, 2020 through 2032 HOTEL CONDOMINIUMS PROJECT Ad Valorem Tourist tax Sales tax Fees Total Ad Valorem Fees Total TOTAL 2020 33,531 33,531 15,740 15,740 49,270 2021 34,536 761,097 795,634 16,212 582,692 598,904 1,394,538 2022 35,573 35,573 16,698 16,698 52,271 2023 36,640 276,510 110,927 424,076 17,199 17,199 441,276 2024 340,000 460,918 188,542 989,459 369,827 369,827 1,359,287 2025 350,200 503,527 211,929 1,065,656 380,922 380,922 1,446,578 2026 360,706 523,559 228,463 1,112,728 392,350 392,350 1,505,078 2027 371,527 539,266 244,105 1,154,898 404,120 404,120 1,559,018 2028 382,673 556,468 254,534 1,193,675 416,244 416,244 1,609,919 2029 394,153 572,619 262,055 1,228,828 428,731 428,731 1,657,559 2030 405,978 589,270 269,805 1,265,054 441,593 441,593 1,706,647 2031 418,157 606,949 277,900 1,303,005 454,841 454,841 1,757,846 2032 430,702 626,310 286,480 1,343,492 468,486 468,486 1,811,978 Total 3,594,375 5,255,396 2,334,738 761,097 11,945,607 3,822,965 582,692 4,405,657 16,351,264 14.B.1.b Packet Pg. 390 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 6 Table 2-2 shows (a) the developer’s projections for Hard Construction Costs, A&E Services, FF&E Purchases, Sales Commissions, and stabilized annual revenue from Hotel Operations; (b) the RIMS II final demand employment multipliers; and (c) the number of jobs that would be created by the project. All figures are calculated from unrounded numbers. Table 2-2. Summary of Expenditure/Revenue Projections and New Jobs Created Hotel Exp / Rev Exp / Rev Final Demand Total Activity (mill curr $) (mill 2018 $) Multiplier New Jobs Hard Construction Costs 44.745 41.921 11.5438 483.9 Architectural & Engineering Services 2.207 2.156 10.1621 21.9 FF&E Purchases * 3.700 3.548 2.7209 9.7 Hotel Operations 25.713 21.468 9.6687 207.6 Total, Hotel 723.1 Condominiums Exp / Rev Exp / Rev Final Demand Total Activity (mill curr $) (mill 2018 $) Multiplier New Jobs Hard Construction Costs 26.747 25.059 11.2462 281.8 Architectural & Engineering Services 1.036 1.012 10.1621 10.3 Sales Commissions 2.484 2.318 10.6061 24.6 Total, Condominiums 316.7 Project Total 1,039.8 * Indirect and Induced effects only All figures calculated from unrounded numbers Table 2-3 shows the NAICS codes for each type of economic activity. The descriptions are taken from: www.census.gov/cgi-bin/sssd/naics/naicsrch?chart=2017 Table 2-3. NAICS Codes for Each Type of Activity 2361 Residential Building Construction 2362 Nonresidential Building Construction 4232 Furniture and Home Furnishing Merchant Wholesalers 4234 Professional and Commercial Equipment and Supplies Merchant Wholesalers 4236 Household Appliances and Electrical and Electronic Goods Merchant Wholesalers 5312 Offices of Real Estate Agents and Brokers 5413 Architectural, Engineering, and Related Services 7211 Traveler Accommodation 14.B.1.b Packet Pg. 391 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 7 Table 2-4 shows the latest available (2018) RIMS II multipliers for Collier County, Florida. Table 2-4. RIMS II Multipliers for Collier County 14.B.1.b Packet Pg. 392 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 8 3. Construction Costs, Hotel Revenue, and Condominium Sales Projections This section provides the developer’s projections for construction expenditures, hotel revenue, and sales of the condominiums. Table 3-1. Construction and Development Budget Land Costs Land $8,600,000 RE Fee $86,000 Closing Costs $23,000 Land Cost Total $8,709,000 Finance Loan Value $75,000,000 Lender Fee ( Origination Fee) $2,250,000 Finder's Fee $250,000 Loan Closing Costs $300,000 Mezzanine Interest N/A Prepaid Construction Loan Interest $2,250,000 Title and Recording Fees $80,000 Sponsor Equity Interest / Pref $1,108,550 Property Taxes $156,858 Finance Cost Total $6,395,408 Soft Costs Architectural $1,321,000 MEP and FP $387,725 Low Voltage In MEP / FP $0 Structural $145,000 Interior Design Inc Restaurant $635,000 Civil $76,500 Land Planning In Civil $0 Acoustic $69,300 Lighting $96,000 Landscape Architect $207,300 Geotech $17,500 Waterproofing $79,200 Pools and Water Features $82,536 Construction Inspections $67,500 Wind Analysis $0 Kitchen Design $8,000 Life Safety and Smoke Analysis $51,000 14.B.1.b Packet Pg. 393 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 9 Hotel Pre-Opening $350,000 Marketing $1,000,000 Procurement $500,000 Operational Accounting $35,000 Loan Administrator $15,000 Legal $10,000 Soft Costs Subtotal $5,153,561 Soft Cost Contingency 10% $515,356 Total Soft Costs $5,668,917 Development Fees Development Fees $2,572,336 Development Fee Total $2,572,336 Owner Insurances Builder's Risk & Gen Liability 1.50% $1,071,249 Insurance Cost Total $1,071,249 Impact, Utility and Permit Fees Impact Fees incl Water and Sewer $629,623 FPL $125,000 Naples and County Bldg Permit Fees 1% $714,166 FDOT Improvements $75,000 Utility and Permit Total $1,543,790 Hard Costs Vertical Construction $71,416,625 FF&E $2,750,000 OSE $650,000 IT $250,000 Signage $50,000 Hard Cost Subtotal $75,116,624 Owner Contingency 3% $1,877,916 Hard Cost plus Contingency $76,994,541 GRAND TOTAL DEVELOPMENT COSTS $102,955,242 As shown in the Hard Costs section above, vertical construction costs are projected to total about $71.417 million. Table 3-2, below, shows these costs for the site, the hotel, the condominiums (residences), and parking. 14.B.1.b Packet Pg. 394 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 10 Table 3-2. Vertical Construction Costs by Project Component As will be discussed in Sections (4) and (5), many figures are only available for the overall project. Thus, as shown in Table 3-3, we have reallocated the gross square footage (gsf) of the parking areas into hotel and condominium gsf, based on number of parking spaces designated for each. Each of the 24 residences will be allocated 2 parking spaces (48); the remainder of the 225 spaces will be for hotel guests (177). Table 3-3. Gross Square Footage, Hotel and Condominiums Gross Building Area gsf Hotel 148,409 Condominiums 86,217 Parking + Below Grade Parking 106,139 Total 340,765 Parking Spaces Allocated for # % Hotel 177 78.7% Condominiums 48 21.3% Total 225 Parking gsf Allocated to gsf Hotel 83,496 Condominiums 22,643 Total gsf gsf % Hotel 231,905 68.1% Condominiums 108,860 31.9% Total 340,765 Table 3-4, as provided by Indigo Road Hospitality Group, shows the projected hotel revenue for the first 10 operating periods, each starting May 1 and ending the following April 30. For example, total hotel revenue is projected at $16.639 million in Year 1 (May 1, 2023 through April 30, 2024). This is the sum of: (a) room revenue of $8.295 million (125 rooms * 66.1% occupancy * $275 ADR * 365 nights), (b) F&B revenue of $6.531 million, and (c) other and minor operated department revenue of $1.812 million. 14.B.1.b Packet Pg. 395 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 11 Table 3-4. Hotel Revenue by Operating Period (May - April) Table 3-5, below, shows the projected total sales price for the 24 condominiums, expected to be located on the 7th through 10th floors. Table 3-5. Condominium Sales # Units Total Sales Price Condominiums 24 $55,198,115 14.B.1.b Packet Pg. 396 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 12 4. Collier County Taxes and Fees This section shows the calculations used to project the taxes and fees that would be received by Collier County as a result of the project. These include an ad valorem tax, a tourist development tax (5% on hotel rooms), a sales tax es (whereby 1% goes to the county), as well as impact and building permit fees associated with the construction. A. Hotel Taxes and Fees Ad Valorem Taxes The ad valorem tax for the overall project in 2020 is based on the Notice of Proposed Property Taxes from the Collier County Taxing Authorities (mailed August 17, 2020). Per this notice, if the proposed budget is approved, property taxes would be $9,229.91 on 1705 Tamiami Trail East and $40,040.40 on 1807 Tamiami Trail East – for a total of $49,270. • As shown in Table 3-3, 68.1% of the project gsf is for the hotel; thus 68.1% of the ad valorem tax – $33,531 – would be collected for the hotel in 2020. • Ad valorem taxes are assumed to increase 3% per year during the construction phase (2021 through 2023). The client spoke to a Collier County tax appraiser, who suggested assuming an assessed value for the hotel at $30 million with a millage rate of 11.3084 – which equates to about $340,000 for property tax. • Thus, as shown in Table 2-1, ad valorem taxes for the hotel are projected to be $340,000 in 2024. • Once again, ad valorem taxes are assumed to increase 3% per year. Hence, for 2020 through 2032, ad valorem taxes for the hotel are projected to total about $3.594 million – primarily after the hotel is open ($3.454 million from 2024 through 2032). Tourist Development Taxes The Tourist Development Tax rate for Collier County is 5% of hotel room revenue. Projected room revenue is shown on the Hotel Rooms line item in Table 3 -4, for each operating period ending April 30. Table 4-1, below, converts the hotel revenue projections to a calendar year basis. For example: • Hotel revenue for Year 1 (May 1, 2023 through April 30, 2024) is projected to total $8,295,295. • As two-thirds of the months (8 of 12) in Year 1 are in 2023, two-thirds of this amount is expected to be accrued in 2023, $5,530,197. • Thus the remaining one-third is expected to be accrued in 2024, $2,765,098. 14.B.1.b Packet Pg. 397 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 13 Table 4-1. Room Revenue and Tourist Development Taxes by Calendar Year As shown above, Tourist Development Taxes are projected to total about $5.255 million from 2023 through 2032. County Sales Taxes While the sales tax rate in Collier County is 7%, 6% goes to the state of Florida and 1% goes to Collier County. Projected hotel revenue (which includes F&B as well as Other and Minor Operated Departments) is shown on the Total Revenue line item in Table 3-4, for each operating period ending April 30. Table 4 -2, below, converts the revenue projections to a calendar year basis. Table 4-2. Hotel Revenue and Sales Taxes by Calendar Year As shown above, from 2023 through 2032, Collier County Sales Tax Revenue is projected to be 1% of revenue – which equates to about $2.335 million. Fees Per Table 3-1, in the Impact, Utility and Permit Fees section, the following two line items are fees that will be due to Collier County – Impact Fees ($629,623) and Building Permit Fees ($714,166). As these figures are for the total project, they need to be split into fees associated with the hotel and condominiums. 14.B.1.b Packet Pg. 398 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 14 Starting with impact fees, the developer provided projections for impact fees separately for the hotel and the condominiums. However, the credits associated with some of these fees were for the overall project – so we allocated the net impact fees for each category based on the percentages of the gross impact fees. For example: • For Emergency Medical Services (EMS), gross fees are projected to total $9,250: $7,630 for the hotel and $1,620 for the condos. • There is a credit available of $3,293 – thus net EMS fees are $5,957. • 82.5% of gross EMS fees ($7,630 out of $9,250) are projected for the hotel. • Thus 82.5% of the net EMS fees ($4,913) are allocated to the hotel. Table 4-3. Net Impact Fees, Hotel and Condominiums As shown above, net impact fees for the hotel are projected to total $275,077. Turning to the building permit fees, the projected fees of $714,166 are allocated to the hotel and condos based on gsf (as shown in Table 3-3). As the hotel (including parking spaces designated for hotel guests) will comprise 68.1% of the gsf, that percentage of permit fees is allocated to the hotel, which equals $486,020. Combining these two, fees are projected to total about $0.761 millio n for the hotel, in the first year of construction (2021). Further combining the fees with the ad valorem, tourist development, and sales taxes, tax and fee revenue to Collier County from the hotel is projected to total about $11.946 million from 2020 through 2032. 14.B.1.b Packet Pg. 399 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 15 B. Condominium Taxes and Fees For the condos, there is only one tax revenue source (ad valorem), in addition to the impact and permit fees. Ad Valorem Taxes As described earlier in this section, the ad valorem tax for the overall project in 2020 is $49,270. • As shown in Table 3-3, 31.9% of the project gsf is for the condos; thus 31.9% of the ad valorem tax, $15,740, is projected to be collected for the condos in 2020. • Ad valorem taxes are assumed to increase 3% per year during the construction phase (2021 through 2023). Per the client, “The County will receive property taxes from each condo owner, independently of the hotel – which will be assessed and paid separately in the first year of ownership after the sale and then thereafter. The average county property tax rate is 0.67% of assessed value.” • As shown in Table 3-5, the condos are expected to be sold for a total of about $55.198 million; 0.67% of that figure equals $369,827. • Once again, ad valorem taxes are assumed to increase 3% per year. Hence, for 2020 through 2032, ad valorem taxes for the condos are projected to total about $3.823 million – primarily after the condos are sold and occupied ($3.757 million from 2024 through 2032). Fees As shown in Table 4-3, net impact fees for the condos (including water/sewer) are projected to total $354,546. The projected building permit fees of $714,166 are allocated to the hotel and condos based on gsf (as shown in Table 3-3). As the condos (including parking spaces designated for condo residents) will comprise 31.9% of the gsf, that percentage of the permit fees are allocated to the condos, which equals $228,146. Combining these two, fees are projected to total about $0.583 million for the condos, in the first year of construction (2021). Further combining the fees with the ad valorem taxes, tax and fee revenue to Collier County from the condos is projected to total about $4.406 million from 2020 through 2032. When combining the fees and taxes for the hotel and condos, tax and fee revenue to Collier County is projected to total about $16.351 million from 2020-32. 14.B.1.b Packet Pg. 400 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 16 5. Jobs, Output, and Earnings In this section, the increase in jobs, output, and earnings resulting from the project is shown for the 21 RIMS II industry categories for each activity. Note that in these tables, output and earnings are in thousands of dollars. As the RIMS II data are from 2018, all figures are deflated to a 2018 -dollars basis before applying the multipliers. A. Hotel Jobs, Output, and Earnings Hard Construction Costs Hard Costs for the hotel and condos combined include $71,416,625 in Vertical Construction and $75,000 in FDOT Improvements (as shown in Table 3 -1), for a total of about $71.492 million. As described below, $44.745 million is allocated to the hotel. • Per Table 3-2, $36,998,707 of the Vertical Construction costs are for the hotel. • Further, per Table 3-2, Parking and Below Grade Parking are projected to total $7,686,456; this gets reallocated based on number of parking spaces. Of the 225 parking spaces, 177 (78.7%) will be for hotel guests – so 78.7% of the parking costs are allocated to the hotel, which equals $6,046,679. • Site Costs are projected to be $2,421,965; these costs are reallocated based on gsf. As the hotel will comprise 68.1% of the gsf (per Table 3 -3), hotel Site Costs are projected at $1,648,250. • The $75,000 in FDOT Improvements is also allocated based on gsf. 68.1% of $75,000 equals $51,041. Since construction costs are in 2020 dollars and the multipliers are from 2018, this figure must be deflated to a 2018-dollars basis. The Producer Price Index (PPI) for construction is expected to increase about 6.73% from 2018 to 2020, so the Hard Cost figure is deflated by a factor of 1.0673 – which equates to about $41.921 million. As construction will take longer than 24 months to complete, it is an industry standard to include direct (as well as indirect and induced) effects for Hard Costs and A&E Services. Table 5-1. Increase in Employment, Output, and Earnings, $41.921 Million in Nonresidential Hard Construction Costs (2018 Dollars) Industry Group Employment Output Earnings Agriculture, forestry, fishing, and hunting 1.0 80 25 Mining 0.1 29 4 Utilities 0.2 176 25 Construction 340.8 42,194 17,976 Durable goods manufacturing 9.7 2,209 470 Nondurable goods manufacturing 1.1 423 67 Wholesale trade 4.2 1,471 319 14.B.1.b Packet Pg. 401 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 17 Retail trade 24.9 2,398 755 Transportation and warehousing 3.3 293 96 Information 0.9 293 50 Finance and insurance 7.0 1,191 319 Real estate and rental and leasing 34.8 4,414 658 Professional, scientific, and technical services 7.8 981 482 Management of companies and enterprises 0.4 92 34 Administrative and waste management services 4.9 461 147 Educational services 1.3 80 38 Health care and social assistance 15.9 2,058 813 Arts, entertainment, and recreation 2.9 218 59 Accommodation 2.1 319 80 Food services and drinking places 9.5 721 214 Other services 9.5 1,040 340 Households 1.6 21 Total 483.9 61,142 22,990 Table 5-1 shows that 483.9 new jobs would be created by the Hard Construction activity for the hotel. Total output would increase about $61.1 million, with household earnings up by about $23.0 million. Output per new worker would be about $126,300, with average annual earnings of about $47,500. Architectural & Engineering Services A&E Services for the hotel and condos are projected to total $3,243,561; this is the sum of the first 17 line items under Soft Costs in Table 3-1 (Architectural through Life Safety and Smoke Analysis). The costs are reallocated to the hotel and condos, based on gsf. As described above, the hotel is expected to comprise 68.1% of the gsf – so hotel A&E costs are projected to be about $2.207 million. This figure must be deflated to a 2018-dollars basis before applying the multipliers. The PPI for A&E services is expected to increase 2.40% from 2018 to 2020, so the A&E Services equate to about $2.156 million, in 2018 dollars. Table 5-2. Increase in Employment, Output, and Earnings, $2.156 Million in A&E Services (2018 Dollars) Industry Group Employment Output Earnings Agriculture, forestry, fishing, and hunting 0.1 4 1 Mining 0.0 0 0 Utilities 0.0 10 2 Construction 0.1 17 4 14.B.1.b Packet Pg. 402 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 18 Durable goods manufacturing 0.1 20 4 Nondurable goods manufacturing 0.1 19 3 Wholesale trade 0.1 39 8 Retail trade 1.0 95 30 Transportation and warehousing 0.2 18 6 Information 0.1 17 3 Finance and insurance 0.4 69 18 Real estate and rental and leasing 2.1 258 37 Professional, scientific, and technical services 14.4 2,270 962 Management of companies and enterprises 0.0 9 4 Administrative and waste management services 0.6 57 22 Educational services 0.1 4 2 Health care and social assistance 0.8 107 42 Arts, entertainment, and recreation 0.2 14 4 Accommodation 0.2 27 7 Food services and drinking places 0.8 59 18 Other services 0.5 56 18 Households 0.1 1 Total 21.9 3,170 1,195 Table 5-2 shows that 21.9 new jobs would be created by the A&E activity for the hotel. Total output would increase about $3.2 million, with household earnings up by about $1.2 million. Output per new worker would be about $144,700, with average annual earnings of about $54,600. FF&E Purchases FF&E Purchases are projected to total $3.700 million; this is the sum of the following 4 line items from Table 3 -1: FF&E, OSE, IT, and Signage. All FF&E is primarily for hotel guests; thus no reallocation is necessary. The deflator for FF&E Purchases is an average the PPIs for (a) household & institutional furniture & kitchen cabinet manufacturing and (b) audio & video equipment manufacturing. These are expected to increase 4.29% from 2018 to 2010; this the FF&E Purchases equate to about $3.548 million in 2018 dollars. It is also an industry standard to only include indirect and induced effects for FF&E Purchases; for one, furniture is typically manufactured outside of the county. Nevertheless, there is still indirect (subsequent business activity) and induced (additional spending) economic activity. 14.B.1.b Packet Pg. 403 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 19 Table 5-3. Increase in Employment, Output, and Earnings, $3.548 Million in FF&E Services (2018 Dollars) Industry Group Employment Output Earnings Agriculture, forestry, fishing, and hunting 0.1 4 1 Mining 0.0 0 0 Utilities 0.0 16 2 Construction 0.1 24 6 Durable goods manufacturing 0.0 11 2 Nondurable goods manufacturing 0.1 27 5 Wholesale trade 0.2 73 16 Retail trade 1.0 97 31 Transportation and warehousing 0.7 80 31 Information 0.1 31 6 Finance and insurance 0.5 89 24 Real estate and rental and leasing 2.6 330 48 Professional, scientific, and technical services 0.9 99 49 Management of companies and enterprises 0.1 31 12 Administrative and waste management services 0.6 59 20 Educational services 0.1 4 2 Health care and social assistance 0.8 100 39 Arts, entertainment, and recreation 0.2 16 5 Accommodation 0.1 20 5 Food services and drinking places 0.6 44 13 Other services 0.6 70 23 Households 0.1 1 Total 9.7 1,225 342 Table 5-3 shows that 9.7 new jobs would be created by the FF&E activity. Total output would increase about $1.2 million, with household earnings up by about $342,000. Output per new worker would be about $126,900, with average annual earnings of about $35,500. Hotel Operations For hotel operations, the increase in employment, output, and earnings is based on an annual revenue figure. For the purposes of our calculations, revenue from the first stabilized year (Year 6) is used, $25.713 million, as shown in Table 3-4. As this figure is in 2028-29 dollars and the multipliers are from 2018, it must be deflated to a 2018-dollars basis. While the PPI for accommodations is expected to decrease 6.37% from 2018 to 2020, we assume it will increase 3 .00% per year going forward. Thus the hotel revenue figure is deflated by a factor of 1.1978, which equates to about $21.468 million in 2018 dollars. 14.B.1.b Packet Pg. 404 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 20 Table 5-4. Increase in Employment, Output, and Earnings, $21.468 Million in Hotel Revenue (2018 Dollars) Industry Group Employment Output Earnings Agriculture, forestry, fishing, and hunting 0.4 32 9 Mining 0.0 0 0 Utilities 0.2 189 28 Construction 0.9 198 47 Durable goods manufacturing 0.3 58 13 Nondurable goods manufacturing 0.6 152 28 Wholesale trade 0.9 309 67 Retail trade 7.5 700 221 Transportation and warehousing 1.9 195 79 Information 0.6 191 39 Finance and insurance 4.3 635 191 Real estate and rental and leasing 14.7 1,846 266 Professional, scientific, and technical services 4.2 511 258 Management of companies and enterprises 1.3 288 112 Administrative and waste management services 5.1 459 146 Educational services 0.5 30 13 Health care and social assistance 5.1 665 262 Arts, entertainment, and recreation 1.6 116 32 Accommodation 145.3 21,729 5,322 Food services and drinking places 7.5 494 167 Other services 4.0 479 148 Households 0.5 6 Total 207.6 29,277 7,454 Table 5-4 shows that 207.6 new jobs would be created by the Hotel Operations activity. Total output would increase about $29.3 million, with household earnings up by about $7.5 million. Output per new worker would be about $141,100, with average annual earnings of about $35,900. Combining the construction and operations of the hotel, a total of 723.1 new jobs would be created from the 4 activities. Total output would increase about $94.8 million, with household earnings up by about $32.0 million. 14.B.1.b Packet Pg. 405 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 21 B. Condominium Jobs, Output, and Earnings Hard Construction Costs As described earlier in this section, Hard Costs for the hotel and condos combined are projected to total about $71.492 million. As described below, $26.747 million is allocated to construction of the condos. • Per Table 3-2, $24,309,497 of the Vertical Construction costs are for the condos. • Parking and Below Grade Parking are projected to total $7,686,456; this is allocated based on number of parking spaces. Of the 225 parking spaces, 48 (21.3%) will be for condo residents – so 21.3% of the parking costs are allocated to the hotel, which equals $1,639,777. • Site Costs are projected to be $2,421,965; these costs are reallocated based on gsf. As the condos will comprise 31.9% of the gsf (per Table 3-3), condo Site Costs are projected at $773,715. • The $75,000 in FDOT Improvements is also allocated based on gsf ; 31.9% of $75,000 equals $23,959. Since construction costs are in 2020 dollars and the multipliers are from 2018, this figure must be deflated to a 2018-dollars basis. The PPI for construction is expected to increase about 6.73% from 2018 to 2020, so the Hard Cost figure is deflated by a factor of 1.0673 – which equates to about $25.059 million. Table 5-5. Increase in Employment, Output, and Earnings, $25.059 Million in Residential Hard Construction Costs (2018 Dollars) Industry Group Employment Output Earnings Agriculture, forestry, fishing, and hunting 0.8 65 20 Mining 0.0 25 3 Utilities 0.1 115 18 Construction 180.0 25,227 9,771 Durable goods manufacturing 5.2 1,140 256 Nondurable goods manufacturing 0.8 316 48 Wholesale trade 2.2 762 165 Retail trade 32.5 3,330 1,047 Transportation and warehousing 2.0 178 58 Information 0.5 175 30 Finance and insurance 4.2 719 190 Real estate and rental and leasing 20.9 2,619 383 Professional, scientific, and technical services 4.0 514 251 Management of companies and enterprises 0.3 68 28 Administrative and waste management services 3.2 293 93 Educational services 0.7 48 20 Health care and social assistance 9.2 1,188 469 14.B.1.b Packet Pg. 406 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 22 Arts, entertainment, and recreation 1.7 128 35 Accommodation 1.2 185 45 Food services and drinking places 5.6 421 123 Other services 5.5 609 198 Households 0.9 13 Total 281.8 38,125 13,261 Table 5-5 shows that 281.8 new jobs would be created by the Hard Construction activity for the hotel. Total output would increase about $38.1 million, with household earnings up by about $13.3 million. Output per new worker would be about $135,300, with average annual earnings of about $47,100. Architectural & Engineering Services A&E Services for the hotel and condos are projected to total $3,243,561; this is the sum of the first 17 line items under Soft Costs in Table 3 -1 (Architectural through Life Safety and Smoke Analysis). The costs are reallocated to the hotel and condos, based on gsf. As described above, the condos are expected to comprise 31.9% of the gsf – so condo A&E costs are projected to be about $1.036 million. This figure must be deflated to a 2018-dollars basis before applying the multipliers. The PPI for A&E services is expected to increase 2.40% from 2018 to 2020, so the A&E Services equate to about $1.012 million in 2018 dollars. Table 5-6. Increase in Employment, Output, and Earnings, $1.012 Million in A&E Services (2018 Dollars) Industry Group Employment Output Earnings Agriculture, forestry, fishing, and hunting 0.0 2 1 Mining 0.0 0 0 Utilities 0.0 5 1 Construction 0.0 8 2 Durable goods manufacturing 0.0 10 2 Nondurable goods manufacturing 0.0 9 2 Wholesale trade 0.1 18 4 Retail trade 0.5 44 14 Transportation and warehousing 0.1 8 3 Information 0.0 8 1 Finance and insurance 0.2 33 8 Real estate and rental and leasing 1.0 121 18 Professional, scientific, and technical services 6.8 1,066 451 Management of companies and enterprises 0.0 4 2 14.B.1.b Packet Pg. 407 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 23 Administrative and waste management services 0.3 27 10 Educational services 0.0 2 1 Health care and social assistance 0.4 50 20 Arts, entertainment, and recreation 0.1 6 2 Accommodation 0.1 13 3 Food services and drinking places 0.4 28 8 Other services 0.2 26 9 Households 0.0 1 Total 10.3 1,488 561 Table 5-6 shows that 10.3 new jobs would be created by the A&E activity for the condos. Total output would increase about $1.5 million, with household earnings up by about $561,000. Output per new worker would be about $144,700, with average annual earnings of about $54,600. Sales Commissions As shown in Table 3-5, the condos are expected to sell for a total of about $55.198 million. Commissions are expected to be 4.5% of the sales price, thus sales commissions on the condos equate to about $2.484 million. This figure must be deflated to a 2018-dollars basis as well. The PPI for offices of real estate agents and brokers is expected to increase 7.14% from 2018 to 2020, so this figure is deflated by a factor of 1.0714 – which equals $2.318 million in 2018 dollars. Table 5-7. Increase in Employment, Output, and Earnings, $2.318 Million in Sales Commissions (2018 Dollars) Industry Group Employment Output Earnings Agriculture, forestry, fishing, and hunting 0.0 2 1 Mining 0.0 0 0 Utilities 0.0 14 2 Construction 0.5 109 26 Durable goods manufacturing 0.1 11 3 Nondurable goods manufacturing 0.0 8 1 Wholesale trade 0.0 16 3 Retail trade 0.6 59 19 Transportation and warehousing 0.1 7 2 Information 0.0 9 2 Finance and insurance 0.4 85 22 Real estate and rental and leasing 20.7 2,505 354 Professional, scientific, and technical services 0.3 33 16 Management of companies and enterprises 0.0 2 1 Administrative and waste management services 0.6 53 16 14.B.1.b Packet Pg. 408 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 24 Educational services 0.0 2 1 Health care and social assistance 0.4 46 18 Arts, entertainment, and recreation 0.1 8 2 Accommodation 0.1 11 3 Food services and drinking places 0.4 29 9 Other services 0.2 28 9 Households 0.0 0 Total 24.6 3,037 510 Table 5-7 shows that 24.6 new jobs would be created by the Sales Commissions activity. Total output would increase about $3.0 million, with household earnings up by about $510,000. Output per new worker would be about $123,500, with average annual earnings of about $20,700. Combining the construction and sales commissions of the condos, a total of 316.7 new jobs would be created from the 3 activities. Total output would increase about $42.7 million, with household earnings up by about $14.3 million. When further combining the job creation from the construction, operations, and sales commissions of the project, a total of 1,039.8 new jobs would be created. Total output would increase about $137.5 million, with household earnings up by about $46.3 million. Output per new worker would be about $132,200, with average annual earnings of about $44,500. 14.B.1.b Packet Pg. 409 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT) 25 Appendix: About Evans, Carroll & Associates Evans, Carroll & Associates (ECA) has been providing economic forecasting and consulting to clients since 1981. The firm specializes in economic impact studies and the development of custom econometric models for individual industries and companies. ECA has successfully submitted hundreds of economic impact reports for the EB-5 program that have been carefully scrutinized and approved by USCIS. Dr. Michael K. Evans is the founder and chairman of ECA. Previously, Dr. Evans was founder and president of Chase Econometrics (1970-1980), and served as Clinical Professor of Economics at Kellogg Graduate School of Management, Northwestern University (1996-99) and Assistant and Associate Professor of Economics, Wharton School, University of Pennsylvania (1964 -69). Dr. Evans has published over a dozen books and hundreds of articles. Since early 2016, the firm’s economic impact practice has been led by David R. Evans; the two have worked together on economic impact studies since 2012. Prior to joining ECA, Mr. Evans served as the Chief Scoring Officer for Capital One Bank (1999 - 2011). He started his career in economic consulting (1989 -99), most notably at PriceWaterhouseCoopers. Mr. Evans received his degree in Economics from Brown University in 1989. For more information, please see our website, www.evanscarrollecon.com. 14.B.1.b Packet Pg. 410 Attachment: P6NT Economic Impact Report 11-09-2012 (14602 : BGTCRA Incentive P6NT)