Economic Impact Analysis Grand Oaks St. Johns County, Florida

Transcription

1 Economic Impact Analysis Grand Oaks St. Johns County, Florida December 2016 Prepared for Southeast Development Partners, LLC Ponte Vedra Beach, Florida By URBANOMICS, Inc Urban and Real Estate Economics Ponte Vedra Beach, Florida

2 Table of Contents Section and Title Page 1. Introduction and Summary 1 Community Profile 1 Scope and Summary of Findings 3 -- Scope of Study 3 -- Short-Term Construction-Related Impacts 4 -- Long-Term Resident and Commercial Impacts 5 2. Short-Term Construction-Related Impacts 6 Impacts of Residential Development -- Development and Construction Costs -- On-Site Construction Worker Earnings and Jobs Generated -- On-Site Materials and Equipment Costs -- Total Direct and Secondary Impacts Impacts of Commercial Development -- Development and Construction Costs -- On-Site Construction Worker Earnings and Jobs Generated -- On-Site Materials and Equipment Costs -- Total Direct and Secondary Impacts Long-Term Residential and Commercial Impacts 11 Impacts of Resident Spending -- Resident Household Income and Expenditures -- Impacts of Resident Spending Impacts of Commercial Activities -- Employment, Earnings, and Retail Sales -- Impacts of Employee Spending and Retail Sales Economic Impact Analysis, Grand Oaks i

3 1. Introduction and Summary COMMUNITY PROFILE The proposed 523-acre Grand Oaks community of 999 residential units in the rapidly growing Northwest Sector of St. Johns County is the subject of this economic impact analysis. The project is located on the west side of SR16 immediately north of the Encanta PUD/Windward Ranch development and is situated between SR16/International Golf Parkway intersection to the north and the SR16/I-95 interchange to the south (see map below). Grand Oaks will have two entry points on SR16. Another entrance is planned in the future on the proposed CR2209 arterial highway. Now only completed from CR210 to Race Track Road and known as the St. Johns Parkway, CR2209 will eventually connect to the SR9B freeway at the north end of the County and to CR208 to the south. The proposed alignment of CR2209 is shown on the map above. Economic Impact Analysis, Grand Oaks 1

4 Grand Oaks will have three residential products 575 traditional single family homes, a 300-unit age-restricted (age 55+) single-family home community, and 124 townhomes. Plans also include 100,000 square feet of retail space and 50,000 square feet of office space. Development of the residential portion of the project is proposed in three phases, with phase one consisting of approximately 360 traditional single family homes. Phase two will include development of the 300-home age restricted (55+) community, and approximately half of the townhomes. The last phase will include the remaining traditional single family homes and townhomes. The 875 traditional and age-restricted single family homes in Grand Oaks generally will range from 2,200 to 3,400 square feet of living area, and prices will range generally from $285,000 to $460,000, averaging around 2,750 square feet and $370,000. The 124 townhomes will range in size from 1,600 to 2,000 square feet of living area, with prices generally in the $200,000 to $250,000 range, averaging around 1,800 square feet and $225,000. Overall average sizes and prices for all 999 single family homes and townhomes are about 2,600 square feet and $355,000. Grand Oaks features and amenities include a large number of wetland conservation areas and ponds, extensive uplands and wetlands perimeter buffers, gated and landscaped entries, and facilities for recreational activities and social gatherings. Phase one amenity development will include a park, shade pavilion, playground, parking lot, lake dock, and an indoor meeting space. Phase two amenity development will include a larger central amenity area featuring a clubhouse, swimming pool, exercise facilities, and court game areas. This location has a number of large specimen oak trees which provide a distinctive backdrop and canopy for the many recreational and social activities planned. The conceptual master plan for the community also includes the donation of a 30-acre middle school site with an estimated value of $3.3 million. Buildout of the 999-unit residential community is projected over ten (10) years. Although numbers of units built will vary widely year-by-year as different housing products and individual neighborhoods are introduced and become built out, for convenience of this economic impact analysis, it is assumed that the average annual buildout of residential units is 100 units per year over a ten-year period. Development of 150,000 square feet of retail and office space is assumed, for purposes of this report, to occur in equal 50,000 square foot increments over three years. In addition to its many internal community amenities, Grand Oaks will be attractive to entry-level buyers, move-up buyers, empty nesters, and retires for a number of reasons: Grand Oaks is located in the top-rated St. Johns County School District, according to the Florida Department of Education (FDOE) school district grading system. Public schools serving the community are Mill Creek Elementary School on International Golf Parkway, Pacetti Bay Middle School on Pacetti Road, and the Allen D. Nease High School near the intersection of CR210 and US1. These schools all received A grades from FDOE in Economic Impact Analysis, Grand Oaks 2

5 Grand Oaks residents will have access to a range of existing convenience and comparison shopping and service facilities in the area, including the Shoppes at Murabella complex of stores and services a short distance north at the intersection of SR16 and International Golf Parkway and a wide range of commercial facilities in the SR16/I-95 interchange area. The Shoppes at Murabella is anchored by a Publix supermarket. CVS and Walgreens drug stores are also located in this area. Plans for the community also include 100,000 square feet of neighborhood retail space and 50,000 square feet space for business, medical, and professional offices. Grand Oaks residents will have convenient access to major highways serving regional shopping and commuter employment destinations in Northeast Florida by way of several local connecting roads. These include access to I-95 by way of SR16 and International Golf Parkway to the north and a direct connection to I-95 via SR16 to the south. In the future, the community will also have direct access to the proposed CR2209, which will connect to I-95 at the north end of the County. Grand Oaks will also increase and diversify the places to live in Northern St. Johns County. The presence of a strong local workforce, in both numbers and skills, is key to attracting sought after businesses and industries to proposed locations for large-scale economic development in this area, including the World Golf Village/World Commerce Center area. There is an increasing demand for homes in Northern St. Johns County fueled by a growing regional economy, continuing low mortgage interest rates, and top-rated school system. The Jacksonville metro area has regained the thousands of jobs it lost after the national economic downturn that began in 2008 and conditions for home ownership in the region are very positive, particularly in Northern St. Johns County. SCOPE AND SUMMARY OF FINDINGS Scope of Study Economic impacts analyzed in this report include direct (on-site) and secondary (off-site) jobs and earnings generated during construction. Construction-related impacts are short-term in nature (i.e., temporary) and are driven by costs of labor, materials, and equipment. Impacts include direct jobs and wages created on-site by land development and vertical construction and other (i.e., secondary) jobs, wages, and revenues generated off-site by spending by construction workers and purchasing of construction materials and equipment from off-site vendors. Special Note: Construction-related economic impacts will occur both within and outside St. Johns County. Not all construction workers will reside in the County, nor will they spend their Economic Impact Analysis, Grand Oaks 3

6 earnings entirely in the County. Similarly, construction materials and equipment may be purchased in the County, but are just as likely to be purchased from vendors outside the County. The majority of economic impacts will occur in the Jacksonville area, but not all will directly impact St. Johns County. Long-term (i.e., permanent and ongoing) on-site economic impacts will not be significant for Grand Oaks residential development. This development will generate some on-site part-time housekeeping and property maintenance jobs, but most economic impacts generated by community residents will be from their spending for goods and services off-site. This report assesses economic impacts from spending by residents on goods and services. On the other hand, uses in the 150,000 square feet of proposed commercial space will have longterm ongoing economic impacts, both on-site and off-site. On-site impacts include retail and office jobs and worker earnings. Off-site impacts include other (i.e., secondary) jobs and worker earnings generated by on-site retail sales. This report assesses the long-term impacts of on-site retail and office activities. Special Note: Spending by residents and by on-site retail and office workers on goods and services will occur both in and outside St. Johns County. Most jobs and earnings generated by this spending will be in the Jacksonville region, including a portion in St. Johns County. Similarly, on-site retail sales will generate jobs and earnings in various economic sectors off- site in and outside the County. Short-Term Construction-Related Impacts. Residential Development. Grand Oaks site development and construction costs are estimated to total $256 million over a projected ten-year buildout period, including annual averages of $9.0 million per year in labor costs and $11.5 million per year in the cost of construction materials and equipment. Construction wages of $9.0 million per year will support 210 on-site construction jobs per year over ten years. Annual spending by construction workers will generate another 49 jobs and $1.6 million in earnings annually in other economic sectors. Annual spending of $11.5 million on construction materials and equipment will generate another $4.9 million in annual revenues or sales in other sectors and a total of $8.7 million in earnings and 221 jobs off-site in various economic sectors. Total direct (on-site) and secondary (off-site) impacts of construction include $19.3 million in worker earnings and 480 jobs per year over ten years. Economic Impact Analysis, Grand Oaks 4

7 Commercial Development. Development of Grand Oaks retail and office space will cost an estimated total of $19.2 million over a projected three-year buildout. Annual impacts include 52 on-site construction jobs, worker wages of $2.2 million, and $2.9 million in spending on construction equipment and materials. On-site construction activities, in turn, will generate another 67 jobs and $2.6 million in wages off-site. Total annual direct and secondary impacts of construction include $4.8 million in worker earnings and 119 jobs. Long-Term Impacts of Resident Spending and Commercial Uses Resident Spending. When completed and assuming full occupancy, 999 Grand Oaks households will spend an estimated $32.6 million annually on retail goods and business, personal, and professional services. Except for on-site household and property maintenance services, the vast majority of household spending will occur off-site, with the following annual economic impacts: $40.5 million in total sales and revenues $14.8 million in worker earnings 449 jobs Commercial Activities. Long-term annual on-site impacts include 439 retail and office jobs, $16.8 million in earnings, and $26.9 million in retail sales. Average annual wages for all 439 on-site employees are an estimated $38,341 Annual spending by 439 on-site employees will generate another 93 jobs and $3.1 million in earnings off-site. Annual on-site retail sales will generate another 554 jobs and $15.9 million in earnings off-site. Total long-term annual on-site and off-site impacts of proposed Grand Oaks retail and office employment and sales are 1,086 jobs and $35.7 million in working earnings. Economic Impact Analysis, Grand Oaks 5

8 2. Short-Term Construction-Related Impacts IMPACTS OF RESIDENTIAL DEVELOPMENT Development and Construction Costs Construction-related employment is a function of site development and building construction costs for 999 housing units. Construction cost factors used in this analysis for Grand Oaks are based on information from the developer and analysis of housing construction costs in the area. These factors are: Site development: $35,000 per unit Building construction: $85 per square foot Average home size: 2,600 square feet Grand Oaks development and construction costs total an estimated $256 million, as follows: Site development ($35,000 x 999): $ 34,965,000 Building construction (2,600 x $85 x 999): $220,779,000 Total construction costs: $255,744,000 Construction costs include wage and salary costs (i.e., earnings), other labor costs (i.e., benefits), materials, overhead, and profit. Wage and salary costs typically are in the range of percent of total costs. Construction materials and equipment are typically in the range of percent of total costs. For this analysis, wage and salary costs and costs of materials and equipment are assumed to be 35 and 45 percent of total costs, respectively. On-Site Construction Worker Earnings and Jobs Generated Based on these factors and estimates, total construction wages are an estimated $89,510,000 (i.e., $255,744,000 x 0.35) over an estimated ten year buildout period, and averaging $8,951,000 annually. These wages will generate demand for an average of 210 construction workers per year, based on average annual construction worker wages of $42,536 for St. Johns County. The annual wage estimate is based on average weekly construction wages of $818 for St. Johns County in the Second Quarter of 2016 (latest available data) from the Florida Department of Economic Opportunity labor market data information system. The U.S. Bureau of Labor Statistics Consumer Expenditure Survey series indicates that households spend up to 40 percent on their income on retail goods and services, excluding housing, energy, insurance, and certain other items. When applied to average wages in 2016 of $42,536, average annual spending per worker on goods and services is an estimated $17,014, or $3,572,940 for all 210 workers. Economic Impact Analysis, Grand Oaks 6

9 On-Site Materials and Equipment Costs Residential development in Grand Oaks will require an estimated $115,085,000 in materials and equipment costs (i.e., $255,744,000 x 0.45) for all horizontal development and vertical construction, averaging $11,508,500 per year over a projected ten year buildout period. Total Direct and Secondary Impacts Direct and secondary (i.e., indirect) economic impacts are estimated commonly using economic multipliers derived from national and regional inputs-output modeling, including the well known RIMS II program developed by the U.S. Bureau of Economic Analysis (BEA). RIMS II multipliers for the Jacksonville region are used to estimate impacts of construction activities in Grand Oaks. These multipliers, based on 2010 national input-output and regional data, are: Impacts of Spending by Construction Workers Total output multiplier ($sales/revenues): Earnings multiplier (ratio to total output): Employment multiplier (jobs/$million output): Impacts of Expenditures for Materials and Equipment Total output multiplier ($sales/revenues): Earnings multiplier (ratio to total output): Employment multiplier (jobs/$million output): Estimated average annual direct, secondary, and total impacts are shown in Table 1 below. Table 1. Summary of Annual Residential Construction Impacts Type of Impact Sales/Revenues ($) Earnings ($) Employment Impacts of Construction Workers Direct (On-Site Workers) Spending 3,572,940 8,951, Secondary Impacts 4,441,879 1,622, Total Direct and Secondary 4,441,879 10,573, Impacts of Spending on Materials and Equipment Direct Expenditures 11,508,500 6,105, Secondary Impacts 4,853,134 2,574, Total Direct and Secondary 16,361,634 8,679, TOTAL ECONOMIC IMPACTS 20,803,513 19,253, Note: Based on a ten-year buildout. Economic Impact Analysis, Grand Oaks 7

10 Average spending on goods and services by an estimated 210 annual on-site construction workers will generate another 49 jobs and $1,622,174 in worker earnings in other economic sectors per year for ten years. Average spending of $11,508,500 per year on construction materials and equipment will generate an estimated total of 221 jobs and $8,679,847 in worker earnings off-site in various economic sectors per year for ten years. Total on-site and off-site construction-related impacts of Grand Oaks are an estimated 480 jobs and $19,253,021 in worker earnings per year for ten years. IMPACTS OF COMMERCIAL DEVELOPMENT Economic impacts are expressed as the number of jobs and sales generated on-site (direct) and off-site (secondary) for each 50,000 square foot increment of the proposed 150,000 square feet of retail and office space. Different cost factors apply to large anchor stores and smaller stores and to various types of tenants, and the three increments of development are likely to have different mixes of tenants. However, for purposes of this report, the assumption is made that all increments will be identical in terms of anchor store space (e.g., grocery/market, pharmacy), outparcel development (banks, fast-food restaurants), small retail tenants, and office tenants. Development and Construction Costs Assumptions as to basic development and construction costs and tenant buildout costs are based on analysis of these costs from building permits records for dozens individual buildings and tenants in several commercial centers in northern St. Johns County. These centers include Johns Creek Center on CR210, Shoppes at Murabella on SR16 at International Golf Parkway, and the Nocatee Town Center. Total development and construction costs of the proposed Grand Oaks commercial center are an estimated $19,175,000, and are based on the following assumptions: Retail center: $75/sf = $6,900,000, includes site work Fast food outparcels: $150/sf = $525,000 Bank outparcels: $200/sf = $900,000 Office space: $75/sf = $3,750,000, includes site work Tenant buildout (retail and office): $50/sf = $7,100,000 Estimated annual costs of developing the Grand Oaks center average $6,391,700 over three years. Economic Impact Analysis, Grand Oaks 8

11 On-Site Construction Worker Earnings and Jobs Generated Development of the Grand Oaks commercial center will generate an estimated average of 52 onsite construction jobs and $2,237,100 in worker earnings per year for three years. These estimates are based on a 35 percent construction labor cost factor (i.e., $5,141,700 x 0.35) and average annual construction worker wages of $42,536 in St. Johns County. The labor cost factor is consistent with that used in the residential impact analysis. Construction worker wages reflect Second Quarter 2016 data from the Florida Department of Economic Opportunity labor market database, as also used in the residential impact analysis. On-Site Materials and Equipment Costs Development of the Grand Oaks commercial center will generate a total expenditure of $8,628,750 on construction materials and equipment, and an annual average expenditure of $2,876,250. These estimates are based on a construction cost expenditure factor of 45 percent. This factor is consistent with that used in the residential impact analysis. Total Direct and Secondary Impacts Direct (on-site) and secondary (off-site) economic impacts are estimated based on RIMS II 2010 regional input-output multipliers described in the residential impact analysis above. These multipliers are: Impacts of Spending by Construction Workers Total output multiplier ($sales/revenues): Earnings multiplier: Employment multiplier: Impacts of Expenditures on Materials and Equipment Total output multiplier ($sales/revenues): Earnings multiplier (ratio to total output): Employment multiplier (jobs/$million output): Estimated average annual direct, secondary, and total impacts are shown in Table 2 (next page). Impacts of construction worker spending reflect a factor of 40 percent of average annual earnings per worker (i.e., $42,536 x 0.40 = $17,014), as also used in the residential impact analysis Average annual direct economic impacts of Grand Oaks commercial center development, include 52 on-site construction workers, $2.2 million in worker earnings, and $2.9 million in spending on materials and equipment. On-site construction activities, in turn, will generate another 67 jobs and $2.6 million in worker earnings off-site, for a total direct and secondary impact of 119 jobs and $4.8 million in worker earnings per year over a three-year buildout. Economic Impact Analysis, Grand Oaks 9

12 Table 2. Summary of Annual Commercial Construction Impacts Type of Impact Sales/Revenues ($) Earnings ($) Employment Impacts of Construction Worker Spending Direct (on-site workers) Spending 884,728 2,237, Secondary (off-site) 1,099, , Total Direct and Secondary 1,099,894 2,643, Impacts of Spending on Materials and Equipment Direct Expenditures (impacts are off-site) 2,876,250 1,525, Secondary (off-site) Impacts 1,212, , Total Direct and Secondary 4,098,165 2,169, TOTAL ECONOMIC IMPACTS 5,198,059 4,812, Note: Based on buildout over a three-year period Economic Impact Analysis, Grand Oaks 10

13 3. Long-Term Residential and Commercial Impacts IMPACTS OF RESIDENT SPENDING Resident Household Income and Expenditures Impacts of resident spending on goods and services include off-site jobs and worker earnings generated and supported in various economic sectors. Goods and services purchased by Grand Oaks residents include household maintenance, motor vehicle and fuel costs, food/groceries and eating out, apparel, and various entertainment, healthcare, and personal services. Resident spending on goods and services is a function of household income. The estimated July 2016 median household income in Zip Code 32209, in which Grand Oaks is located, is $81,576. This estimate is from florida.hometownlocater.com. Median household income estimates from several other reputable Internet web sites generally are in this range. The U.S. Bureau of Labor Statistics Consumer Expenditure Survey series indicates that households in moderate-to-high income groups spend around 40 percent on their income on retail goods and services, excluding housing, energy, insurance, and certain other items. This results in an average annual goods and services expenditure of $32,630 for households in Zip Code Upon completion and assumed full occupancy of 999 residential units in Grand Oaks, annual household spending on good and services will total an estimated $32,597,370. Impacts of Resident Spending RIMS II multipliers for household spending in the Jacksonville region are as follows: Total output multiplier ($sales/revenues): Earnings (ratio to total output): Employment multiplier (jobs/$million output): An estimated $32.6 million spending per year by 999 Grand Oaks households will generate and support the following largely off-site annual economic impacts in various economic sectors: $40,525,050 in total sales/revenues $14,799,750 in worker earnings 449 jobs Economic Impact Analysis, Grand Oaks 11

14 IMPACTS OF COMMERCIAL ACTIVITIES Employment, Earnings, and Sales Long-term on-site impacts include sales generated annually and the number of full-time and parttime jobs provided in the commercial center. Project impacts reflect completion and full occupancy of the 150,000 square feet of retail and office space. Long-term annual on-site impacts of the proposed Grand Oaks commercial center include 439 employees, $16.8 million in worker earnings, and $26.9 million in retail sales. These estimates are based on the following assumptions and factors. Retail center tenant mix: -- Anchor stores (e.g., grocery/market): 50,000sf -- Other retailers: 31,000sf -- Restaurants/food services: 7,000sf -- Non-retail (e.g., banks, pre-school/day care): 12,000sf. Retail sales factors: -- Anchor stores and restaurants (57,000sf): $350/sf -- Other retailers (31,000sf): $225/sf Employment ratios: -- Anchors and general retail (81,000sf) : 1/500sf -- Restaurants/food services (7,000sf): 1/100sf -- Non-retail, including office space (52,000sf): 1/300sf Annual wages (note: based on second quarter 2016 data from the Florida Department of Economic Opportunity labor market database): -- Retail trade: $27, Restaurants/food services: $18, Banks: $68, Pre school/day care: $33, Offices (mix of business, professional, and medical): $55,328 Average annual wages for all 439 on-site employees are an estimated $38,341. Impacts of Employee Spending and Retail Sales RIMS II 2010 multipliers for the Jacksonville region are used to estimate annual off-site impacts of on-site retail sales and employee spending on goods and services. These multipliers are: Economic Impact Analysis, Grand Oaks 12

15 Impacts of Spending by On-Site Workers Total output multiplier ($sales/revenues): Earnings multiplier: Employment multiplier: Impacts of Retail Sales Total output multiplier ($sales/revenues): Earnings multiplier (ratio to total output): Employment multiplier (jobs/$million output): Annual spending by 439 on-site employees will generate an estimated 93 jobs and $3.1 million in worker earnings in various economic sectors. Annual on-site retail sales will generate another 554 jobs and $15.9 million in earnings off-site, as shown in Table 3 below. Total long-term annual on-site and off-site impacts of proposed Grand Oaks retail and office employment and sales are 1,086 jobs and $35.7 million in working earnings. Table 3. Summary of Annual Impacts of On-Site Employment and Retail Sales Type of Impact Sales/Revenues ($) Earnings ($) Employment Impacts of On-Site Employee Spending On-site employment and earnings 16,831, On-site employee spending (40% earnings) 6,732, Secondary (off-site) impacts 8,370,067 3,056, Impacts of On-Site Retail Sales On-Site Retail Sales 26,925,000 Total off-site impacts 35,861,407 15,861, TOTAL ECONOMIC IMPACTS 35,749,948 1,086 Source: URBANOMICS, Inc. Economic Impact Analysis, Grand Oaks 13