WTL+ a. Economic & Fiscal Impact Analysis Pineland Prairie Martin County, FL. WTL +a. Prepared for: Marcela Camblor & Associates, Inc.

Transcription

1 Economic & Fiscal Impact Analysis Pineland Prairie Martin County, FL Prepared for: Marcela Camblor & Associates, Inc. Stuart, FL On behalf of: Shadow Lake Groves, Inc. Stuart, FL Revised October

2 Table of Contents Table of Contents... 2 Tables & Figures... 3 General & Limiting Conditions Introduction... 5 Project Overview... 5 Development Program... 6 Assumptions, Methodology & Data Sources Key Findings... 9 Executive Summary... 9 One-time/Temporary Impacts... 9 Permanent Impacts: Ongoing Operations Annual Tax Revenues: Ongoing Operations Economic Impacts During Construction/Sales & Ongoing Operations Direct, Indirect & Induced Impacts Development Impacts on Employment Development Impacts on Martin County Revenues Estimated Construction Costs One-time Impacts: Construction Permanent Impacts: Ongoing Operations Annual Tax Revenues: Ongoing Operations Market Considerations Martin County Housing Potentials ( ) Scenario # Scenario # Workforce Region #20 Office Potentials ( ) Allocation to Martin County Workforce Region #20 Industrial Potentials ( )

3 Allocation to Martin County Tables & Figures Table 1: Proposed Development Program (At Buildout) Pineland Prairie 7 Table 2: Estimated Construction Costs (2017 Dollars) 14 Table 3: Economic Impacts of Construction 15 Table 4: Annual Impacts at Buildout/Stabilized Year Ongoing Operations 17 Table 5: Annual Property Tax Revenues at Buildout Martin County (General Operations Only) 19 Table 6: Scenario #1 Housing Demand Potentials Martin County, Table 7: Scenario #2 Housing Demand Potentials Martin County, Table 8: Office Market Potentials, Table 9: General Industrial Market Potentials, Table 10: Demographics Trends & Forecasts Martin County, Table 11: Employment Trends Martin & St. Lucie Counties, Table 12: Business Mix Martin County, Table 13: DEO Employment Forecasts Workforce Region #20, Table 14: Annual Housing Starts Martin County, (15 Years) 37 Table 15: Comparison of 2010 Housing Data Martin County 38 Table 16: Housing Profile Martin County, Table 17: Office Real Estate Metrics Martin County, Table 18: Industrial Real Estate Metrics Martin County, Table 19: Retail Real Estate Metrics Martin County, Table 20: Comparison of Household Growth to Housing Starts Martin County,

4 General & Limiting Conditions WTL+ a Every reasonable effort has been made to ensure that the data contained in this study reflect the most accurate and timely information possible. These data are believed to be reliable at the time the study was conducted. This study is based on estimates, assumptions, and other information developed by WTL +Associates (referred hereinafter as WTL+a ) from its independent research effort, general knowledge of the market and the industry, and consultations with the client and its representatives. No responsibility is assumed for inaccuracies in reporting by the client, its agent and/or representatives, or any other data source used in preparing or presenting this study. No warranty or representation is made by WTL+a that any of the projected values or results contained in this study will be achieved. Possession of this study does not carry with it the right of publication thereof or to use the name of "WTL+a" in any manner without first obtaining the prior written consent of WTL+a. No abstracting, excerpting or summarizing of this study may be made without first obtaining the prior written consent of WTL+a. This report is not to be used in conjunction with any public or private offering of securities or other similar purpose where it may be relied upon to any degree by any person, other than the client, without first obtaining the prior written consent of WTL+a. This study may not be used for purposes other than that for which it is prepared or for which prior written consent has first been obtained from WTL+a. This study is qualified in its entirety by, and should be considered in light of, these limitations, conditions and considerations

5 1 Introduction Project Overview WTL+a, a national real estate and economic development consulting firm based in Washington, D.C., with extensive experience in public and private projects across Florida, was retained by Marcela Camblor & Associates, Inc., on behalf of Shadow Lake Groves, Inc., to prepare an economic and fiscal impact analysis of a proposed mixed-use project, Pineland Prairie, in Martin County, FL. We also prepared a demographic and economic profile, reviewed growth forecasts, and evaluated real estate market conditions in Martin County as the basis for understanding preliminary market potentials for the project s residential, commercial and industrial land uses. Pineland Prairie comprises approximately 3,400 acres of land in north central Martin County. The site is surrounded by development of various scales, intensities, and uses: North bounded by the C-23 canal and the City of Port St. Lucie; South bounded by Citrus Grove Elementary, County playing fields, the Canopy Creek subdivision, and the equestrian ranchettes of Palm City Farms along Martin Highway (714); East bounded by Florida s Turnpike and Martin Downs; and West (inside I-95) bounded by Martin County s Waste Transfer Station and shooting range, the Seven J s industrial park, and the equestrian and golf communities of Stuart West and Cobblestone. Pineland Prairie is also bisected on a diagonal by Citrus Boulevard, which extends from Martin Highway to Port St. Lucie across the C-23. The eastern portion of the site (approximately 600 acres alongside Florida s Turnpike) is located inside the Primary Urban Service District (PUSD), and has a land use designation of Industrial (I) with a zoning designation of Light Industrial (LI). Public sewer and water are readily available at the property line. The remainder of the site has a land use designation of AG Ranchette with a zoning designation of A

6 The applicant, Shadow Grove Lakes, Inc., is seeking to create a new land use category Compact Mixed Use (CMU) as well as a new zoning category Planned Mixed Use Village (PMUV) to guide implementation of a new, mixed-use community that will be developed according to the best practices of Traditional Neighborhood Design (TND). As a result, an amendment to Martin County s Comprehensive Plan is required. The applicant and its planner, Marcela Camblor & Associates, Inc., requested that WTL+a prepare an economic and fiscal impact analysis of the proposed development program. This memorandum summarizes the results of that analysis. Development Program The proposed development program is focused on balancing key land uses residential, workplace (office and industrial) and supporting retail in a mix necessary to support a self-contained, walkable community. A key objective of the plan is to reduce dependency on vehicles and enhance public access to an extensive network of undeveloped parcels/open space that will be preserved in perpetuity. In fact, development rights will be removed in perpetuity on approximately 65% (over 2,200 acres) of the site. The proposed development is illustrated in Table 1 below. Uses are distributed across nine neighborhoods, and include the following: Residential 4,200 housing units across a range of product types, including compounds and estate houses, large and small houses, cottages, duplexes, rowhouses, mansion apartments, multi-family units and live/work units in small, medium and large mixed-use buildings Workplace includes approximately 139,500 sq. ft. of professional office space; 1.5 million sq. ft. of logistics and general industrial space and almost 500,000 sq. ft. of flex-tech industrial uses, and Commercial Retail includes approximately 154,270 sq. ft. of various retail uses as identified in the analysis prepared by Gibbs Planning Group (GPG). WTL+a notes that the program for both the workplace (office and logistics/general industrial) and commercial retail uses fall within the site s previously approved entitlements totaling 2,290,000 sq. ft

7 Table 1: Proposed Development Program (At Buildout) Pineland Prairie Average Gross No. of Unit Size Building Area Land Use Units (SF) (SF) Residential (Revised Program) Large Mixed-Use 160 1, ,720 Medium Mixed-Use 183 1, ,561 Small-Mixed Use 56 1,167 65,352 Apartment House ,712 Mansion Apartment 206 1, ,432 Rowhouse 900 2,188 1,969,200 Duplex 62 2, ,350 Small Lot House (Cottage) 896 1,625 1,456,000 House 674 3,413 2,300,362 Large House 252 6,075 1,530,900 Estate House 123 7, ,524 House Compound 14 3,125 43,750 Subtotal - Residential: 4,200 2,464 9,634,863 Workplace Professional Office 139,490 Logistics/General Industrial (1) 1,497,180 Flex-tech (1) 499,060 Subtotal - Workplace: 2,135,730 Commercial Retail 154,270 TOTAL: Workplace/Commercial Entitlements 2,290,000 Residential 9,634,863 Total - Gross Building Area (SF): 11,924,863 (1) Assumed 75% split for logistics and 25% for flex-tech uses. Source: Shadow Lake Groves, Inc.; Marcela Camblor & Associates, Inc.; WTL+a, revised October

8 Assumptions, Methodology & Data Sources The economic impact analysis evaluates how the development program for Pineland Prairie could be expected to impact Martin County through the creation of new jobs as well as new tax revenues accruing to the County and potential other taxing districts/entities. For purposes of this study, WTL+a utilized IMPLAN (a national software and data provider) that calculates impact multipliers and generates a model that applies inputs from Pineland Prairie s development program to estimate corresponding impacts on job growth and fiscal revenues. To strengthen and validate these multipliers, WTL+a also incorporated data from ESRI (a national analytics and data provider) on average business revenues, number of employees by business type, and average household size and income. In addition, current tax rates were collected from Martin County. At this stage of planning, we note that the following key inputs to fully complete the economic impact analysis were not available: Hard and soft construction costs for the project s residential, commercial and workplace uses. We have used inputs from general comparables in/surrounding Martin County and industry standards as placeholders; and Hard and soft construction costs for the project s infrastructure, public realm and transportationrelated improvements. At this time, economic and fiscal impacts associated with the project s infrastructure and public realm improvements cannot be determined

9 2 Key Findings Executive Summary At buildout, Pineland Prairie will be a walkable community with a mix of land uses, including: 4,200 residential units in a variety of products and price points; community amenities; almost 154,300 sq. ft. of supporting community retail; and a significant amount of workplace uses, such as 139,500 sq. ft. of professional office space and approximately 1.9 million sq. ft. of jobs-producing logistics and flex-tech industrial space. Based on the current development program, Pineland Prairie is expected to cost almost $1.075 billion (in current/2017 dollars). WTL+a notes, however, that this excludes costs associated with land acquisition as well as infrastructure, public realm and transportation-related costs. These costs were not available for this analysis, but could be expected to enhance the project s overall economic impacts beyond those identified in this analysis. One-time/Temporary Impacts Pineland Prairie will create a significant number of temporary (or one-time ) construction jobs generated by the project s 11.9 million sq. ft. of total development. As illustrated in Table 3, this includes: o o o 6,509 direct construction job years (i.e., the amount of labor needed for one year s work) over the entire construction period (which is unknown at this time) Another 1,281 direct construction job years in architecture, engineering, design and other professional services Income from one-time construction jobs will be spent on a variety of goods and services, which will support an additional 2,650 indirect and 2,000+ induced job years in various industry sectors o Over 12,400 total construction job years over the construction period, approximately $791 million in value-added business revenues, and over $520 million in total labor income

10 Permanent Impacts: Ongoing Operations Once development of Pineland Prairie is complete, there will be significant annual impacts from ongoing operations of the project. These impacts will be generated throughout Martin County and beyond; however, we have examined only those impacts generated by ongoing operations on Martin County itself. These impacts, which are illustrated in Table 4, are highlighted below: o o o o o At buildout, the project will create a total of 4,245 direct jobs plus an additional 2,184 indirect and over 3,700 induced jobs for a total of 10,200 jobs in a stabilized year; Because of the project s significant amount of logistics and general industrial uses, fully 74% of the direct jobs (over 3,100 jobs) will be generated in these sectors, which may include warehousing, distribution, logistics/freight movement, light assembly/device manufacturing, research and development, etc.; At buildout and stabilized occupancies (i.e., generally considered to be 95% across all uses), the project will generate over $424 million in annual labor income based on current annual salaries among various industry sectors used by IMPLAN in the analysis; The project could be expected to create almost $629 million in annual (net) business revenues (i.e., gross sales less costs) irrespective of location generated by direct, indirect and induced economic activity. However, over $272 million in direct (i.e., on-site) annual net business revenues could be expected at buildout; and In summary, the IMPLAN economic impact model estimates that Pineland Prairie will generate over $1.22 billion in annual economic output because of direct, indirect and induced economic activity in ongoing operations when buildout is complete and stabilized occupancies are achieved. Annual Tax Revenues: Ongoing Operations WTL+a has estimated those property tax revenues accruing only to the Martin County General Fund based on the preliminary 2017 millage rate of $ per $1,000 of assessed value. Other taxing entities, such as the Martin County School Board (Local and State), Children Services, South Florida Water Management District, Florida Inland Navigation District (FIND) and District 5 MSTU have not been estimated at this time. Key results are summarized below and illustrated in Table 5:

11 The project s residential uses are expected to command the largest share of new General Fund revenues approximately $10.2 million per year based on estimated assessed values of $1.068 billion at buildout; The project s workplace (office) and supporting retail uses, with an estimated assessed value of $38.5 million at buildout, could be expected to generate approximately $367,700 per year in annual ad valorem; and Due to the low assessed values (despite a sizable gross building area of more than 1.99 million sq. ft.), the project s logistics/general industrial uses will generate annual ad valorem of less than $200,000 per year based on estimated assessed values of $19.8 million. However, this is a preliminary estimate that does not consider the types of logistics users that could be located at Pineland Prairie. High-value logistics users (such as an Amazon Logistics/Freight facility) typically command much higher values due to fixtures/equipment necessary for operations. In summary, Pineland Prairie s 11.9 million sq. ft. of proposed land uses are expected to create over $1.12 billion in gross assessed value at buildout (in current/2017 dollars). At current General Fund mil rates, this has the potential to generate over $10.7 million in annual property tax revenues for Martin County at buildout. Pineland Prairie: $1.12 Billion in Value = $10.7 Million in Annual Ad Valorem to Martin County

12 3 Economic Impacts During Construction/Sales & Ongoing Operations Pineland Prairie s economic impacts can be classified into two primary categories that affect job growth, tax revenues and County expenditures: Temporary/One-time Impacts during site construction and sales/lease-up of each land use before the project is fully occupied. For example, construction of infrastructure, public realm improvements and each of the land uses generates temporary construction jobs and associated taxes. Initial home sales of Pineland Prairie s residential uses generate sizeable property transfer tax revenues.; and Ongoing Operations ongoing annual impacts once the project is built out and achieves stabilized and/or full occupancy. Once Pineland Prairie is built out and achieves stabilized and/or full occupancy, the primary sources of County revenues include property taxes from residents and corporate and sales tax receipts from businesses expenditures that, in turn, fund municipal services such as fire protection, police protection, EMS, and public-school costs. Moreover, as fiscal revenues and expenses are so different before and after a project has stabilized, the analysis considers these two periods separately. As such, the results of these analyses are presented in separate tables for (1) the time during construction/sales/lease-up, and (2) the ongoing period after stabilized occupancies have been achieved. Direct, Indirect & Induced Impacts The analysis considers not only direct (i.e., on-site) job growth and fiscal revenues, but also indirect and induced fiscal impacts. Indirect impacts reflect the trickle-down nature of money. For example, when a new job is created, an employee generates economic activity through the purchase of goods and services with that income (and income tax revenues in those states with income taxes). That spending is taxed via various taxing categories, such as retail sales and business taxes. Not only does this employee generate additional indirect tax revenues, but this spending generates induced impacts, such as another business hiring additional employees and the resultant spending that occurs with that new employee. These additional economic impacts are incorporated into the analysis

13 Development Impacts on Employment The analysis utilizes the findings of retail demand prepared by Gibbs Planning Group that identifies potentially supportable types of retail at Pineland Prairie. In addition, other key inputs and assumptions pertain to types of workplace/industry sectors and tenants that would locate at Pineland Prairie, including the potential types of businesses; the amount of commercial office, logistics and/or retail space each could be expected to occupy; reasonable annual sales estimates for each business enterprise; and order-of-magnitude hard and soft construction costs for the project. These are critical inputs required in the IMPLAN model to generate total estimated jobs and tax revenues for each type of job, by industry sector. Development Impacts on Martin County Revenues WTL+a has estimated property tax revenues accruing to Martin County s General Fund and School District if Pineland Prairie is developed as proposed in its entirety. While there are multiple other tax revenues that would be created by new development at this stage of the analysis these other tax revenues such as communications and utility taxes, retail sales tax receipts, business licensing and the like cannot be determined because of uncertainties associated with types of businesses phasing/annual unit absorption, annual retail sales, etc. Estimated Construction Costs As illustrated in Table 2 below, Pineland Prairie is expected to cost almost $1.075 billion (in current/2017 dollars). WTL+a notes, however, that this excludes costs associated with land acquisition as well as infrastructure, public realm and transportation-related costs. These costs were not available for this analysis, but could be expected to enhance the project s overall economic impacts beyond those identified in this analysis. Estimated construction costs will also sustain a significant number of jobs in construction, engineering, design and other related fields during Pineland Prairie s buildout. Estimated construction costs for each use are as follows: Residential the project s 4,200 housing units, comprising over 9.6 million sq. ft. of gross building area, are estimated to cost $844.9 million (almost 79% of total) Commercial the project s 293,760 sq. ft. of supporting retail and workplace/office uses is estimated to cost over $55 million, or only 5% of total construction costs

14 Table 2: Estimated Construction Costs (2017 Dollars) Average Total Hard Costs Estimated Soft Costs Estimated Land & Infra- TOTAL Units SF / Unit SF Per SF (1) Hard Costs Per SF (2) Soft Costs structure (3) COSTS Residential (Revised Program) Large Mixed-Use 160 1, ,720 $ (140.00) $ (26,140,800) $ (35.00) $ (6,535,200) N/A $ (32,676,000) Medium Mixed-Use 183 1, ,561 (140.00) (29,898,540) (35.00) (7,474,635) (37,373,175) Small-Mixed Use 56 1,167 65,352 (140.00) (9,149,280) (35.00) (2,287,320) (11,436,600) Apartment House ,712 (68.95) (31,972,942) (14.31) (6,635,719) (38,608,661) Mansion Apartment 206 1, ,432 (68.95) (16,646,736) (14.31) (3,454,892) (20,101,628) Rowhouse 900 2,188 1,969,200 (68.95) (135,776,340) (14.31) (28,179,252) (163,955,592) Duplex 62 2, ,350 (68.95) (12,504,083) (14.31) (2,595,119) (15,099,201) Small Lot House (Cottage) 896 1,625 1,456,000 (68.95) (100,391,200) (14.31) (20,835,360) (121,226,560) House 674 3,413 2,300,362 (68.95) (158,609,960) (14.31) (32,918,180) (191,528,140) Large House 252 6,075 1,530,900 (68.95) (105,555,555) (14.31) (21,907,179) (127,462,734) Estate House 123 7, ,524 (68.95) (67,745,030) (14.31) (14,059,918) (81,804,948) House Compound 14 3,125 43,750 (68.95) (3,016,563) (14.31) (626,063) (3,642,625) Total - Units: 4,200 2,464 9,634,863 $ (697,407,029) $ (147,508,836) $ (844,915,865) Commercial Retail 154,270 $ (150.00) $ (23,140,500) $ (37.50) $ (5,785,125) N/A $ (28,925,625) Workplace/Office 139,490 (150.00) (20,923,500) (37.50) (5,230,875) (26,154,375) Total - SF: 293,760 $ (44,064,000) $ (11,016,000) $ (55,080,000) Logistics/General Industrial Logistics/Warehousing & Distribution 1,497,180 $ (70.00) $ (104,802,600) $ (17.50) $ (26,200,650) N/A $ (131,003,250) Flex-tech 499,060 (70.00) (34,934,200) (17.50) (8,733,550) (43,667,750) Total - SF: 1,996,240 $ (139,736,800) $ (34,934,200) $ (174,671,000) TOTAL PROGRAM & COSTS: 11,924,863 $ (881,207,829) $ (193,459,036) $ (1,074,666,865) (1) Residential hard costs based on comparable projects, as available. Commercial and logistics hard costs based on national industry standards. (2) Residential soft costs based on comparable projects, as available. Commercial and logistics soft costs assumed at 25% of hard costs. (3) Land acquisition, infrastructure and public realm costs are unknown at this time and therefore excluded from analysis. (4) All mixed-use, Apartment House, and Mansion Apartment units considered "multifamily", for purposes of IMPLAN input Source: IMPLAN; Hilltop Property Advisors; Jon Stover & Associates, Inc.; Marcela Camblor & Associates, Inc.;, revised October

15 Logistics/General Industrial the project s 1.99 million sq. ft. of logistics and general industrial uses are expected to cost almost $174.7 million in 2017 dollars (19% of total) One-time Impacts: Construction The analysis estimates that Pineland Prairie will create a significant number of temporary (or onetime ) construction jobs generated by the project s 11.9 million sq. ft. of total development. As illustrated in Table 3, this includes: o A total of 6,509 direct construction job years (i.e., the amount of labor needed for one year s work) over the entire construction period (which is unknown at this time), plus another 1,281 direct construction job years in architecture, engineering, design and other professional services. Income from these jobs will be spent on a variety of goods and services, which will support an additional 2,650 indirect and 2,008 induced job years in various industry sectors; and Table 3: Economic Impacts of Construction Labor Value Added Output Impact Type Employment (1) Income (2) (Sales - Costs) (Total Sales) Construction Hard Costs Direct Effect 6,509 $ 251,338,428 $ 423,142,450 $ 881,207,829 Indirect Effect 1,884 75,783, ,286, ,021,812 Induced Effect 1,466 52,945,522 93,673, ,535,385 Subtotal - Hard Costs: 9,858 $ 380,067,448 $ 626,103,071 $ 1,245,765,026 Construction Soft Costs Direct Effect 1,281 $ 92,145,697 $ 93,205,762 $ 193,459,036 Indirect Effect ,921,028 37,332,362 69,229,192 Induced Effect ,593,683 34,666,450 62,000,412 Subtotal - Soft Costs: 2,590 $ 140,660,408 $ 165,204,574 $ 324,688,640 Total Construction Impacts Direct Effect 7,790 $ 343,484,125 $ 516,348,212 $ 1,074,666,865 Indirect Effect 2, ,704, ,618, ,251,004 Induced Effect 2,008 72,539, ,340, ,535,797 TOTAL: 12,448 $ 520,727,856 $ 791,307,645 $ 1,570,453,666 (1) Direct effect employment estimated by IMPLAN based on total sales. Employment, labor income and sales are provided for the entire construction period. To understand annual impacts, these estimates must be divided by the total number of years of construction. (2) Labor Income includes both employee compensation and proprietor income. Source: IMPLAN; Jon Stover & Associates, Inc.; WTL+a, revised October

16 o In summary, the construction period will generate o o o Over 12,400 total construction job years Approximately $791 million in value-added business revenues, and Over $520 million in total labor income. Permanent Impacts: Ongoing Operations Once development of Pineland Prairie is complete, there will be significant annual impacts from ongoing operations of the project. These impacts will be generated throughout Martin County and beyond; however, we have examined only those impacts generated by ongoing operations on Martin County itself. These impacts, which are illustrated in Table 4, are highlighted below: o o o o o At buildout, the project will create a total of 4,245 direct jobs plus an additional 2,184 indirect and over 3,760 induced jobs for a total of almost 10,200 jobs in a stabilized year; Because of the project s significant amount of logistics and general industrial uses, fully 74% of the direct jobs (3,150 jobs) will be generated in these sectors, which may include warehousing, distribution, logistics/freight movement, light assembly/device manufacturing, research and development, etc.; At buildout and stabilized occupancies (i.e., generally considered to be 95% across all uses), the project will generate over $424 million in annual labor income based on current annual salaries among various industry sectors used by IMPLAN in the analysis; The project could be expected to create almost $629 million in annual (net) business revenues (i.e., gross sales less costs) irrespective of location generated by direct, indirect and induced economic activity. Fully $272 million of that amount could be generated in direct (i.e., on-site) annual net business revenues at buildout; and In summary, the IMPLAN economic impact model estimates that Pineland Prairie will generate over $1.22 billion in annual economic output because of direct, indirect and induced economic activity in ongoing operations when buildout is complete and stabilized occupancies are achieved

17 Table 4: Annual Impacts at Buildout/Stabilized Year Ongoing Operations Labor Value Added Output Impact Type Employment (1) Income (2) (Sales - Costs) (Total Sales) Residential (Revised Program) Direct Effect - $ - $ - $ - Indirect Effect Induced Effect 2,475 89,794, ,259, ,833,950 Total - Residential: 2,475 $ 89,794,518 $ 159,259,798 $ 284,833,950 Retail Direct Effect 359 $ 9,911,015 $ 13,782,929 $ 22,322,187 Indirect Effect 44 1,348,324 2,428,279 4,749,666 Induced Effect 51 1,827,440 3,232,088 5,781,889 Total - Retail: 453 $ 13,086,779 $ 19,443,296 $ 32,853,742 Office Direct Effect 735 $ 36,709,276 $ 41,621,457 $ 80,628,678 Indirect Effect 277 9,452,314 13,749,434 25,993,004 Induced Effect 205 7,416,247 13,133,290 23,474,522 Total - Office: 1,217 $ 53,577,837 $ 68,504,181 $ 130,096,204 Logistics/General Industrial Direct Effect 3,151 $ 168,737,314 $ 217,034,467 $ 470,169,731 Indirect Effect 1,864 62,011,846 98,552, ,522,098 Induced Effect 1,036 37,416,057 66,183, ,386,425 Total - Logistics/General Ind'l: 6,051 $ 268,165,217 $ 381,770,471 $ 777,078,254 TOTAL Direct Effect 4,245 $ 215,357,605 $ 272,438,853 $ 573,120,596 Indirect Effect 2,184 72,812, ,730, ,264,768 Induced Effect 3, ,454, ,808, ,476,786 Total - Stabilized Annual Impacts: 10,196 $ 424,624,351 $ 628,977,746 $ 1,224,862,150 (1) Direct effect employment provided through IMPLAN based on anticipated business-related revenues in various sectors. (2) Labor Income includes both employee compensation and proprietor income. Source: IMPLAN; Jon Stover & Associates, Inc.; WTL+a, revised October

18 Annual Tax Revenues: Ongoing Operations Once development of Pineland Prairie is complete, there will be significant annual revenues accruing to Martin County (as well as other taxing entities) in the form of net new property taxes created by new housing, supporting retail and workplace uses. For purposes of this analysis, WTL+a has estimated only those property tax revenues accruing to the Martin County General Fund based on the preliminary 2017 millage rate of $ per $1,000 of assessed value. Other taxing entities, such as the Martin County School Board (Local and State), Children Services, South Florida Water Management District, Florida Inland Navigation District (FIND) and District 5 MSTU have not been estimated at this time. Key results are summarized below and illustrated in Table 5: The project s residential uses (4,200 units at buildout) are expected to command the largest share of new General Fund revenues approximately $10.2 million per year based on estimated assessed values of $1.068 billion at buildout; The project s workplace (office) and supporting retail uses, with an estimated assessed value of $38.5 million at buildout, could be expected to generate approximately $367,700 per year in annual ad valorem; and Due to the low assessed values (despite a sizable gross building area of more than 1.99 million sq. ft.), the project s logistics/general industrial uses will generate annual ad valorem of less than $200,000 per year based on estimated assessed values of $19.8 million. However, this is a preliminary estimate that does not consider the types of logistics users that could be located at Pineland Prairie. High-value logistics users (such as an Amazon Logistics/Freight facility) typically command much higher values due to fixtures/equipment necessary for operations. In summary, Pineland Prairie s 11.9 million sq. ft. of proposed land uses are expected to create over $1.12 billion in gross assessed value at buildout (in current/2017 dollars). At current General Fund mil rates, this has the potential to generate over $10.7 million in annual property tax revenues for Martin County at buildout

19 Table 5: Annual Property Tax Revenues at Buildout Martin County (General Operations Only) Gross Estimates (2017 Dollars) District 5 Total Housing Avg. Unit Gross Bldg. Assessed Assessed Total Gen'l Operations Annual Units Size (SF) Area (SF) Value/SF (1) Value/Unit Assessed Value Millage Rate (2) Property Tax Residential (Revised Program) Large Mixed-Use 160 1, ,720 $ $ 162,260 $ 25,961,549 $ $ 248,250 Medium Mixed-Use 183 1, , ,260 29,693, ,935 Small-Mixed Use 56 1,167 65, ,260 9,086, ,887 Apartment House , ,632 64,455, ,341 Mansion Apartment 206 1, , ,908 33,559, ,898 Rowhouse 900 2,188 1,969, , ,600, ,870,372 Duplex 62 2, , ,624 19,382, ,341 Small Lot House (Cottage) 896 1,625 1,456, , ,967, ,252,335 House 674 3,413 2,300, , ,098, ,267,181 Large House 252 6,075 1,530, , ,115, ,741,428 Estate House 123 7, , ,081, ,053, ,272,283 House Compound 14 3,125 43, ,219 7,101, ,902 Total - Residential: 4,200 2,464 9,634,863 $ 1,068,075,790 $ $ 10,213,154 Workplace Commercial Retail 154,270 $ $ 20,820,194 $ $ 199,087 Office 139, ,634, ,623 Total - Workplace: 293,760 $ 38,454,520 $ 367,710 Logistics/General Industrial Warehouse/Distribution 1,497,180 $ $ 14,971,800 $ $ 143,163 Flex/Tech Industrial 499, ,830, ,194 Total - Industrial: 1,996,240 $ 19,802,701 $ 189,357 TOTAL ANNUAL IMPACTS: 11,924,863 $ 1,126,333,011 $ 10,770,222 (1) Assessed property values (per SF) are based on generally comparable or proximate building types in Martin County. (2) The preliminary 2017 millage rate in District 5 is $ per $1,000 of taxable value, and includes only the Martin County-General Operations rate as provided by the Martin County Property Appraiser-Property Tax Estimator. It excludes other taxing entities, such as Martin County School Board; FIND; South Florida Water Management District; Children Services; MSTU, etc. Source: IMPLAN; Martin County Property Appraiser;, revised October

20 4 Market Considerations As detailed above, the primary objective of this study is to estimate the potential economic impacts generated by construction and ongoing operations at buildout of Pineland Prairie. As project planning moves forward, more detailed feasibility studies will be required. These include two critical initiatives: Market Analysis designed to measure supportable market potentials of each land use to inform phasing, development strategies, rents and sales prices, land disposition, etc., and Financial Feasibility which will evaluate the project s overall economic viability, inform investment decisions, rates of return, investment partnerships, third-party financing, land disposition strategies, etc. As an additional task outside of our core scope of services, WTL+a prepared a demographic and economic profile and examined real estate market conditions to inform preliminary market-supportable opportunities for the land uses envisioned at Pineland Prairie. This section of our report summarizes these findings, and focuses on market potentials for market-rate housing, general industrial and professional office uses. Supporting data are contained in the Appendix Tables 10 through 20. Martin County Housing Potentials ( ) The preliminary demand analysis measures market potentials for new housing countywide for a planning horizon between 2016 and The primary objective of this analysis is to understand the capture (or penetration) rate that the 4,200 proposed housing units at Pineland Prairie would require of all future housing demand in Martin County through Two growth scenarios have been evaluated. WTL+a notes that Martin County s Comprehensive Growth Management Plan requires the County to produce a residential capacity assessment every two years (the Residential Capacity & Vacant Land Analysis, August 2013). This report defines available residential development options that can accommodate demand from future population growth. For this analysis, WTL+a utilized key inputs from that report (such as vacant housing units less seasonal units) and netted out population in the four incorporated municipalities (Jupiter Island, Ocean Breeze Park, Sewell s Point and Stuart) for a relevant

21 comparison to understand housing demand opportunities in unincorporated parts of Martin County. This ensures consistency with County policies. These two scenarios include: Countywide Scenario #1 Utilizes an annual ( straight-line ) growth rate of 1.2% per year consistent with actual population growth rates in Martin County between 2000 and 2015 Countywide Scenario #2 Utilizes an annual countywide growth rate of 0.90% per year based on five-year ( ) population growth forecasts prepared by ESRI Business Analyst, and extrapolated through 2040 Scenario #1 This methodology is illustrated in Table 6 and explained below: The population of Martin County increased by 26,700 new residents in 11,500+ new households over the past 15 years (see Appendix Table 10). If the County s pace of growth continues at this historic rate (1.20% per year), it would yield an additional 50,960 new residents and 22,600+ new housing units countywide (if average household size of 2.25 remains unchanged). Notably, this growth rate would yield a 2040 population of almost 204,400 residents, which falls above the Moderate Growth forecast prepared by the University of Florida/BEBR (179,800) but below its High Growth forecast (214,000); If the four incorporated municipalities share of the County s total population remains at 13% in 2040, netting out future growth attributable to these cities results in 44,300 new residents and 19,700 new housing units, or 177,700 total residents in unincorporated parts of Martin County by 2040; According to the County s 2013 study, there were 5,228 truly vacant housing units in Martin County (as of the 2010 Census). Truly vacant is defined as all vacant units less seasonal units. The analysis assumes that fully 50% of these existing vacant units are habitable and available for occupancy (i.e., from a financing perspective, financing new housing construction is more attainable at lower vacancy rates). This leaves roughly 2,600 existing units available to accommodate part of the demand generated by future growth; According to the County s Active Residential Development Inventory (ARDI) report from March 2016, there are approximately 4,672 approved but unbuilt units across Martin County. To ensure that the analysis is consistent for the unincorporated County, we netted out unbuilt units in Stuart

22 (19) and Indiantown (2,003 units) (to reflect Indiantown s Urban Service District/future incorporation); Scenario #1 yields net new housing demand of more than 14,400 units by 2040 or roughly 600 units per year (notably, this is below historic annual housing starts in Martin County, which averaged 741 units per year in the 15-year period between 2002 and 2016; see Appendix Table 14); Therefore, in Scenario #1 the 4,200 housing units proposed for Pineland Prairie would necessitate a project capture of approximately 29% of all future housing demand in unincorporated Martin County between now and That is, over 70% of all future demand for new housing in unincorporated Martin County generated by new population growth could be accommodated in other projects elsewhere in the County. Scenario #1: 29% = Pineland Prairie s Capture of Future County Housing Demand Scenario #2 A similar methodology was applied in a second scenario, as illustrated in Table 7. However, in this scenario, a more conservative growth rate was applied, utilizing the growth forecast prepared by ESRI Business Analyst (a national demographic data and forecasting service). ESRI estimates that Martin County will grow at a compound annual rate of 0.90% per year over the next five years. This annual rate was extrapolated through 2040, and suggests: After netting out a 13% factor for the four incorporated municipalities, this rate of growth will yield over 29,900 new residents in 13,300+ new housing units in the unincorporated areas, for a 2040 population of more than 163,300 residents; Scenario #2 also assumes that fully 50% of the 5,228 vacant units are habitable and available for occupancy, leaving roughly 2,600 existing units available to accommodate demand generated by future growth. We also netted out approved, unbuilt units from the ARDI list as noted above;

23 Table 6: Scenario #1 Housing Demand Potentials Martin County, Forecasts (1) Average 2040 Population Household Housing Change Size (2) Units Scenario #1 Martin County Annual Growth Rate ( ) 1.20% Countywide Growth Forecast: 153, ,386 50, ,647 Less Incorporated Municipalities 20,061 26,724 % Share of County 13% Unincorporated County Growth Forecast: 133, ,663 44, ,686 Allocation to True Vacant Units 2010 Vacant Units (Less Seasonal) 5,228 Assumed Habitable & Available for 50% Net Available/Vacant Units: 2,614 Allocation to Active Unbuilt Units (Approved Residential Development Inventory/ARDI 03/16) (3) 2,650 Scenario #1 Demand: 14,422 Per Year ( ) 601 REQUIRED PROJECT CAPTURE - 4,200 Units: 29% (1) Scenario #1 assumes that Martin County continues to grow at the same pace between 2016 and 2040 as it did between 2000 and 2015 (also known as a "straight-line" forecast). (2) In order to convert 2040 population into housing units, the analysis assumes that average household size remains the same as it was in 2016 (2.25 persons per household). (3) Based on Active Residential Development Inventory/ARDI data provided by Martin County (4,672 units) less unbuilt units in incorporated areas of the County (Stuart = 19 units; Indiantown/future incorporation = 2,003 units). (4) Scenario #2 utilizes the population growth forecasts prepared by ESRI Business Analyst and applies them through It also assumes no change in average household size. Source: University of Florida Bureau of Business & Economic Research; ESRI Business Analyst; WTL+a, revised October As such, Scenario #2 yields net new housing demand for 11,000 units by 2040, or roughly 460 units per year, and would necessitate a higher project capture in the range of 38% of all future housing demand in unincorporated Martin County through Scenario #2: 38% = Pineland Prairie s Capture of Future County Housing Demand

24 Table 7: Scenario #2 Housing Demand Potentials Martin County, Forecasts (1) Average 2040 Population Household Housing Change Size (2) Units Scenario #2 ESRI Forecasts ( ) Thru % (4) Countywide Growth Forecast: 153, ,041 36, ,271 Less Incorporated Municipalities 20,061 26,724 % Share of County 13% Unincorporated County Growth Forecast: 133, ,317 29, ,310 Allocation to True Vacant Units 2010 Vacant Units (Less Seasonal) 5,228 Assumed Habitable & Available for 50% Net Available/Vacant Units: 2,614 Allocation to Active Unbuilt Units (Approved Residential Development Inventory/ARDI 03/16) (3) 2,650 Scenario #2 Demand: 11,007 Per Year ( ) 459 REQUIRED PROJECT CAPTURE - 4,200 Units: 38% (1) Scenario #1 assumes that Martin County continues to grow at the same pace between 2016 and 2040 as it did between 2000 and 2015 (also known as a "straight-line" forecast). (2) In order to convert 2040 population into housing units, the analysis assumes that average household size remains the same as it was in 2016 (2.25 persons per household). (3) Based on Active Residential Development Inventory/ARDI data provided by Martin County (4,672 units) less unbuilt units in incorporated areas of the County (Stuart = 19 units; Indiantown/future incorporation = 2,003 units). (4) Scenario #2 utilizes the population growth forecasts prepared by ESRI Business Analyst and applies them through It also assumes no change in average household size. Source: University of Florida Bureau of Business & Economic Research; ESRI Business Analyst; WTL+a, revised October Workforce Region #20 Office Potentials ( ) As noted in the Introduction to this report, a key objective in the development of Pineland Prairie is the provision of a fully walkable, mixed-use community that provides open space and recreation, new housing and job opportunities to enhance the County s economic development potentials. To that end, WTL+a examined preliminary market potentials for workplace uses that include professional office and business services, and logistics and general industrial uses. As more specific project planning moves forward, more detailed market and financial feasibility studies will be required. This analysis is presented below

25 The first step in measuring support for new office space at Pineland Prairie examines market potentials for office use in Martin County and allocates demand to the project. The analysis translates employment forecasts (for ) among specific industry sectors (for purposes of analysis, the Florida Department of Economic Opportunity/DEO combines both Martin and St. Lucie Counties into one area known as Workforce Region #20 ). DEO forecasts that more than 25,100 new jobs will be created in Workforce Region #20 by The analysis estimates demand for office space by applying an occupancy factor (of occupied space per employee), and estimates the proportion of employees in each sector who are office workers (in a typical suburban economy this is in the range of 35%). We note that DEO employment forecasts are issued only in eight-year periods; therefore, this analysis is illustrated only through DEO Forecasts: 25,100 New Jobs in Martin & St. Lucie Counties, The analysis also considers demand generated by other market factors, such as vacancy adjustments, part-time/self-employed individuals (who may or may not occupy multi-tenant office space), and cumulative replacement; these estimates either increase or reduce future demand for office space. Cumulative replacement, for example, considers tenants that move when a building is removed from the inventory due to physical and/or functional obsolescence. The office analysis is illustrated in Table 8, and summarized below: Allocation to Martin County The analysis indicates gross demand for more than 1.8 million sq. ft. of office space across Workforce Region #20 (both counties) between 2016 and 2024, generated by growth in office-using jobs and inclusive of adjustments related to vacancy, cumulative (building) replacements, tenant churn, etc.; As employment forecasts are prepared only for the combined two counties, the next step is to allocate growth to Martin County. As illustrated in Appendix Table 12, in 2016 Martin County comprised a 40.3% share of all jobs in Workforce Region #20. The analysis assumes that the County s 40.3% share will remain level through If so, this translates into demand for approximately 755,800 sq. ft. of gross demand for office space generated by new jobs in officeusing sectors by 2024; and

26 Table 8: Office Market Potentials, SF 2024 New Jobs % Office- Occupancy Demand Industry Sector Using Factor (In SF) Workforce Region #20 Agriculture & Mining (270) 10% 175 (4,725) Construction 2,232 20% ,120 Manufacturing Durable Goods % ,200 Non-Durable Goods (88) 20% 200 (3,520) Transportation & Warehousing Transportation % ,920 Warehousing & Storage % 200 8,720 Wholesale & Retail Trade Wholesale Trade % ,325 Retail Trade 3,609 20% ,315 Information & Finance/Real Estate Information (64) 85% 200 (10,880) Finance & Insurance % ,286 Real Estate Rental & Leasing % ,758 Services Professional, Scientific & Technical Services 1,598 90% ,550 Management of Companies & Enterprises 83 60% ,450 Administrative & Waste Management 1,686 35% ,268 Educational Services % ,990 Health Care & Social Assistance 6,038 35% ,660 Arts, Entertainment & Recreation % ,985 Accommodation & Food Services 3,014 20% ,490 Other Services (Except Government) % ,338 Government 2,025 60% ,250 Self-Employed 1,619 10% ,380 Data Reconciliation (Additional Jobs) 78 0% - - Total/Weighted Average: 25,134 34% 189 1,667,879 + Vacancy 5% (1) 83,400 + Cumulative Replacement Demand 7.5% (2) 125, Gross Demand - Workforce Region #20 (Rounded): 1,876,400 Martin County Allocation to Martin 40.3% Gross Demand - Martin County (2024): 755,848 Existing Vacant Office Space (Table 7) 249,401 - Lease-up 50% (124,700) (124,700) Remaining Vacant Space: 124,701 % Vacant 3.2% Net Demand - Martin County (2024): 631,100 Supportable Annual (In SF): 78,900 Average Annual Absorption-Past 5 Years (Table 7) 46,009 Pineland Prairie Potential Project 15% SUPPORTABLE OFFICE SPACE (2024): 94,665 (1) This allows for a 5% "frictional" vacancy rate in new office space delivered to the market (i.e., this accounts for tenant movement to new space). (2) This represents new space required by existing businesses to replace obsolete or otherwise unusable office space. This is assumed to represent 7.5% of total demand. (3) From a financing perspective, some portion of existing vacant office space in Martin County will need to be leased before financing of new construction is viable. The analysis assumes that 50% of existing vacant office space is leased, thereby reducing the overall countywide office vacancy rate to approximately 3% (i.e., stabilized). Source: Florida Dept. of Economic Opportunity (DEO); CoStar, Inc.; WTL+a, May