1st Amendment 04/19/1995
Jeannp I.. Itolbagt
BRANCH OFFICE
3117 OVERSEAS HIGHWAY
MARATHON, FLORIDA 33050
TEL. (305) 289-6027
CLERK OF THE CIRCUIT COURT
MONROE COUNTY
500 WHITEHEAD STREET
KEY WEST, FLORIDA 33040
TEL. (305) 292-3550
BRANCH OFFICE
88820 OVERSEAS HIGHWAY
PLANTATION KEY, FLORIDA 33070
TEL. (305) 852-7145
M E M 0 RAN DUM
To:
James L. ROberts, County Administrator
Attn: Sam Malinowski,
Project Manager
From:
Date:
May 15, 1995
Isabel C. DeSantis, Deputy Cle~kA ..
"'-I. C.IoI.
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At the April 19, 1995 meeting, the Board granted approval and
authorized execution of two Base Closure Consulting Contract
Amendments. One with Commonwealth Consulting Corporation and the
other with Fishkind & Associates, Inc.
Attached hereto are two fully executed duplicate originals of the
Contracts for return to the Consultants.
Should you have any questions concerning the above, please do not
hesitate to contact me.
cc: County Attorney
Finance
Risk Management w/o document
~File
BASE F~~~SOU~E,~~;O~?~:11~G CONTRACT AMENDMENT
THIS CONTRACT A~D~K~T15 eJ\,r$ into by and the Monroe County, a political
subdivision of the State of Florida, Public Service Building. 5100 College Road, Stock Island. Key
,J t\ ~~N
West. FL 33040. hereafter refe~~.a",td, 't':a~v"MQ\UNTY", and COMMONWEALTH CONSULTING
1'1tN~rn \ ,nUN; "
CORPORATION. 9507 Beach Mill Road. Great Falls. VA 22066, hereafter referred to as
"CONSULTANT",
1, The COUNTY and the CONSULTANT agree to amend their Base Closure Consulting
Contract (effective on December 14, 1994). hereafter original contract. as follows:
A. In addition to the financial record keeping and record inspection requirements
of Sec. 8 of the original contract, the CONSULTANT must also abide by the audit and financial
record keeping requirements of Sec. 5.0(d) of the grant agreement between the State of
Florida and the COUNTY, That grant provides the funds for the CONSULTANT's compensation.
A copy of the grant agreement, marked Exhibit A. is attached and made a part of this
Amendment,
2, This Amendment does not modify any term or obligation of the original contract
other than those described in Section 1,
3, This Amendment takes effect on the date of the signature of the last party to
sign,
(SEAL)
Attest: DANNY L. KOLHAGE, CLERK
BOARD OF COUNTY COMMISSIONERS
OF MONROE COUNTY. FLORIDA
~I J'"''''l>
. / I
~7~
By
, Mayor/C Irman
B~~L-t.L~. ~~
Deputy Clerk
Date O,",-"..q $'
(SEAL)
Attest:
COMMONWEALTH CONSULTING
~ATlO~ .... ~
~
Bd.M , e~~---
Secretary /
Date 5" ~ is - '}!::?
jconbase
APPROVED AS. r" ",
C 'A!'iD l.t;fMLSq,=,F..>' '
'---, . , ..:;J".--. ",'., :",
By ~.::::-_..~<:~,~;)~/~C
l /' .~_v
STATE OF FLORIDA
DEPARTMENT OF COMMERCE
DIVISION OF ECONOMIC DEVELOPMENT
THIS GRANT AGREEMENT, entered into this
day of
, 1995, by and between the State of Florida,
Department of Commerce, Division of Economic Development, hereinafter
referred to as.the II Grantor II , and the Board of County Commissioners,
Monroe County, Florida, hereinafter referred to as the "Grantee".
WITNESSETH
WHEREAS, the Grantor is empowered by provisions of section
288.980, Florida Statutes, as contained in Chapter 94-323, Laws of
Florida, to make grants of funds in accordance with legislative
appropriations for same; and
WHEREAS, the Legislature of the State of Florida has made an
appropriation for such grant in line 2068 B, in the General
Appropriation Act and Summary Statement of Intent (copy of the
pertinent portion of such act is attached and designated as II Exhibit
A II ); and
WHEREAS, the Grantee has submitted an application (the
IIApplicationll) setting forth its proposal for the use of $100,000
Base Closure or Realignment Funds to be provided by the Grantor,
attached as IIExhibit BII; and
WHEREAS, the Grantee, in its application, has clearly identified
a concrete public purpose as the objective of its proposal; i.e., to
develop a program to preserve affected military installations and to
initiate a coordinated program of response and plan of action in
advance of future actions of the federal Base Realignment and Closure
Commission; and
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WHEREAS, the Grantor has approved the project, as described in
the Application, under Chapter 8E-9, Florida Administrative Code.
IT IS, in consideration of the mutual undertakings and
agreements hereinafter set forth, agreed between the Grantor and
the Grantee as follows:
1.0 PARTIES:
The parties and their respective addresses for the
purposes of this Agreement are:
STATE OF FLORIDA
DEPARTMENT OF COMMERCE
DIVISION OF ECONOMIC DEVELOPMENT
SUITE 524, COLLINS BUILDING
TALLAHASSEE, FLORIDA 32399-2000
and BOARD OF COUNTY COMMISSIONERS
MONROE COUNTY, FLORIDA
OFFICE OF THE COUNTY ADMINISTRATOR
5100 COLLEGE ROAD
KEY WEST, FLORIDA 33040
2.0 TERM:
The term of this Agreement shall commence on the date first
written above and continue until completion of the expenditure of
grant funds for the legislatively appropriated purpose and until
there has been complete compliance by the Grantee of all the terms
and provisions hereof.
3.0 NOTICES:
All notices between the parties, provided for herein, shall
be by either confirmed fax, confirmed telex or certified mail, return
receipt requested, delivered to the address of the parties as set
forth in section 1.0 above.
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4.0 SCOPE OF WORK:
The Grantee will expend grant funds in accordance with:
section 288.980, Florida statutes; proviso language and summary
statement of intent language in "Exhibit A"; Chapter 8E-9 Florida
Administrative Code; and the project description and plan of
action contained in the Application, "Exhibit B," solely for the
purpose of the project pursuant to the legislat.~:vely appropriated
purpose.
5.0 GRANT REQUIREMENTS:
The Grantee Agrees:
(a) To expend local matching funds in an amount at
least equal to 100 percent of the Grant Award. Said local match
will comply with Chapter SE-9.000S, Florida Administrative Code.
(b) To amend the program description and plan of
action contained in the Application only upon prior approval of
the Grantor.
(c) Reports:
(1) Quarterly, until the transferred funds are
totally expended, the Grantee shall provide the Grantor a written
report which shall include:
a. Total funds transferred to the Grantee by
the Grantor pursuant to this Grant Agreement;
b. Total income, interest and other revenues
obtained from the investment of said funds;
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c. Total project expenditures paid from
funds made available by the Grantor pursuant to this Grant
Agreement;
d. Total project expenditures from local
match; and
e. A narrative summary of the program
activities and accomplishments.
(2) A final program and expenditure report which
documents compliance with all terms and conditions of the grant
program and the grant agreement shall be submitted at the
conclusion of the grant period and prior to the final payment of
state grant funds.
(d) Audit and Records:
(1) To retain and maintain all records, including
records of all payments made by Grantee in connection with the
Program and make such records available for financial audit.
Records shall include books, records, documents and other
evidence, including, but not limited to, vouchers, bills,
invoices, requests for payment and other supporting
documentation, which, according to generally accepted
governmental accounting principles, procedures and practices,
sufficiently and properly reflect all program costs expended in
the performance of this Grant Agreement. Such records shall be
retained for a minimum period of three (3) years after
termination of this Agreement. The aforesaid records, books,
documents, and other evidence shall be subject at all times to
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inspection, review, or audit by state personnel of the Office of
the Auditor General, Office of Comptroller, or other state
personnel authorized by the Grantor and copies of same shall be
delivered to the Grantor upon Division request.
(2) All bills for fees or other compensation for
services or expenses shall be submitted in detail sufficient for
a proper preaudit and postaudit thereof.
(3) To maintain financial records and reports
related to funds paid to any parties for work on the matters
which are the subject of this Agreement and submit to the Grantor
a grant specific independent audit report covering the period of
grant fund expenditures, in accordance with sections 11.45 and
216.349, Florida statutes, and The Rules of the Auditor General,
Chapter 10.600, Florida Administrative Code.
~ (4) To include the aforementioned audit and
record keeping requirements in contracts and subcontracts thereto
entered into by the Grantee with any party for work required
under terms of this Grant Agreement.
(5) To comply with Office of the Comptroller
audit requirements regarding state grants and aids, as required
in Chapter BE-9.010, Florida Administrative Code.
(e) Indemnification: To act as an independent
contractor and not as an employee of the Grantor in the
performance of the tasks and duties which are the subject of this
Grant Agreement. The Grantee shall be liable, and agrees to be
liable for, and to the extent allowed by law, shall indemnify,
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defend, and hold the Grantor harmless form all claims, suits,
judgments, or damages arising from the Grantee's performance of
the tasks and duties which are the subject of this Grant
Agreement.
(f) Investment of state Funds: Grantee shall deposit
and invest the funds advanced under this Grant Agreement in a
separate interest bearin~ account until totally_expended for the
purposes provided herein; and to return all interest income on
said account to the Grantor quarterly, based on fiscal year
quarters. Checks shall be made payable to the Florida Department
of Commerce and mailed to Post Office Box 11010, Tallahassee,
Florida 32302-11010, with a statement that identifies the grant,
the Grantee, and the interest quarter.
(g) Unapproved Uses of Grant Funds: No bills for
traveling expenses, salaries, per diem or entertainment will be
paid from the funds which are the subject of this Grant
Agreement. All expenditures will comply with the authorized uses
of funds as contained in Chapter 288.980, Florida statutes. Any
state grant funds determined to have been used for unapproved or
unauthorized expenditures will be reimbursed in full to the
Grantor.
6.0 TERMINATION:
(a) Breach: The Agreement may be terminated by the
Department for breach upon failure of the Contractor to perform
any requirement or provisions of this Agreement upon no less than
6
24 hours notice delivered in the manner set forth in Section 3.0
herein.
(b) Refusal to Grant Public Access: This Agreement
may be terminated by the Department for refusal by the Contractor
to allow public access to all documents, papers, letters, or
other material subject to the provisions of Chapter 119, Florida
Statutes, and made or received by the Contracto~ in conjunction
with this Agreement. (Section 287.058, Florida statutes)
7.0 PAYMENTS:
(a) Availabilitv of Funds: The Grantor's liability
under this Grant Agreement is contingent upon the continued
availability of legislatively appropriated funds. In the event
this Grant Agreement extends beyond the Grantor's current fiscal
year that begins on July 1 of each year and ends on June 30 of
each succeeding year, the Grantor and the Grantee mutually agree
that performance and payment during subsequent fiscal periods is
contingent upon funds being appropriated, allocated, or otherwise
made available. The Grantor shall be the final determiner of the
availability of such funds.
(b) Transfer of Funds: Funds in the amount of One
Hundred Thousand Dollars ($100,000) subject to paragraph 7.0(a)
of this Agreement, and upon approval and continued approval of
advance payment of the State Comptroller, will be made available
to the Grantee as follows:
(1) $90,000 upon execution of this Grant
Agreement.
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(2) The remainder upon receipt of the required
final program report and the demonstration of both expenditure of
funds equal to the total grant award and expenditure of local
matching funds in an equal amount, in compliance with this
Agreement and with Chapter 8E-9.008, Florida Administrative Code.
(3) Subsequent payment schedules to be determined
by the availability of any additional funds and by advance
authority from the Comptroller.
(4) Reversion: All unexpended funds transferred
herein shall revert to the Grantor on June 30, 1995, unless
contracted or committed to be expended and certified by the
Secretary of Commerce to and approved by the Executive Office of
the Governor under the provisions of Section 216.301(2) F.S. All
unexpended funds not contracted prior to February 1, 1996, shall
revert to the Grantor under the provisions of Section 216.301(3),
Florida Statutes.
8.0 LEGAL REOUIREMENTS:
(a) With respect to its interpretation, construction,
effect, performance, enforcement, and all other matters, this
Grant Agreement shall be governed by, and be consistent with, the
whole law of the State of Florida, both procedural and
substantive. Any and all litigation arising under this Grant
Agreement shall be brought in the appropriate State of Florida
court in Leon County, Florida.
(b) No provision for automatic renewal or extension of
this Grant Agreement shall be effective. Any renewal or
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extension shall be in writing and executed by both parties as set
forth in paragraph 9.0.
9.0 MODIFICATION: This writing contains the entire Grant
Agreement of the parties. No representations were made or relied
upon by either party, other than those that are expressly set
forth. No agent, employee, or other representative of either
party is empowered to alter any of the terms of~this Grant
Agreement, unless done in writing and signed by an executive
officer of the Grantee and the Division Director or his/her
designee for the Grantor.
10.0 GENERAL CONDITIONS:
(a) Grantee agrees to comply with all applicable
federal, state and local laws related to the execution of the
program described in "Exhibit B."
(b) Limitations on the recovery of damages which are
specifically provided by Florida statute or general law or
established by rulings of Florida courts shall apply to this
Agreement. Such limitations include, but are not limited to, the
following:
(1) As an agency of the government of the State
of Florida, the Grantor is liable for damages only to the extent
provided by section 768.28, Florida Statutes, and any other
applicable Florida Statutes;
(2) The Grantor is not bound by any agreements to
indemnify, hold harmless, or for liquidated damages or
cancellation charges; and
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(3) No provision of this Agreement shall be
construed as a waiver by the Department of any right, defense or
claim which the Grantor may have in any litigation arising under
the Agreement~ Nor shall any Agreement provision be construed as
a waiver by the state of Florida of any right to initiate
litigation.
(c) Anything, by whatsoever designation it may be
known, that is produced or developed in connection with this
Agreement shall be the exclusive property of the Grantor and may
be copyrighted, patented or otherwise restricted by the Grantor
as provided by Florida statutes. Neither the Grantee nor any
approved subcontractor shall have any proprietary interest in the
products and materials developed under this Agreement.
(d) The Florida Department of Commerce, Division of
Economic Development, is covered by a "General and Federal civil
Rights Liability Coverage" provided pursuant to Chapter 284, Part
II, Section 768.28, Florida statutes, and any rules promulgated
thereunder.
(e) Grantee is encouraged to utilize "minority
business enterprises", as defined in Section 288.703, Florida
statutes, as subcontractors or subvendors when permitted under
this Agreement and to report to the Department all such usage.
(f) Lobbving: Funds may not be used for the purpose
of lobbying the legislature or a state agency per Section
216.347, Florida Statutes.
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(g) Vendor's Riqhts: Vendors providing goods and
services to an agency should be aware of the following time
frames. Upon receipt, an agency has five (5) working days to
inspect and approve the goods and services, unless the bid
specifications, purchase order or contract specifies otherwise.
An agency has 20 days to deliver a request for payment (voucher)
to the Department of Banking and Finance. The .~O days are
measured from the latter of the date the invoice is received or
the goods or services are received, inspected and approved. With
the exception of payments to health care providers for hospital,
medical, or other health care services, if a payment is not
available within 40 days, measured from the latter of the date
the invoice is received or the goods and services are received,
inspected, and approved, a separate interest penalty, set by the
Comptroller pursuant to Section 55.03, Florida Statutes, will be
due and payable in addition to the invoice amount. To obtain the
applicable interest rate, please contact the Agency's Fiscal
Section at (904) 488-8477 or the Purchasing Office at (904) 488-
0225. The interest penalty provision applies after a 35 day time
period to health care providers for hospital, medical, or other
health care services from the date payment eligibility is
determined, and the daily interest rate is .03333%. Interest
penalties of less than one (1) dollar will not be enforced unless
the vendor requests payment. Invoices which have to be returned
to a vendor because of vendor preparation errors will result in a
delay in the payment. The invoice payment requirements do not
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start until a properly completed invoice is provided to the
agency. A Vendor Ombudsman has been established within the
Department of Banking and Finance. The duties of this individual
include acting as an advocate for vendors who may be experiencing
problems in obtaining timely payment(s) from a state agency. The
Vendor Ombudsman may be contacted at (904) 488-2924 or by calling
the state Comptroller's Hotline, 1-800-848-3792~_
(h) Duplicate Originals: This Grant Agreement is
executed in duplicate originals.
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IN WITNESS WHEREOF, the parties have caused their hand to be set
to this Base Closure or Realignment Grant Program Award Agreement
written by their respective duly authorized officials.
STATE OF FLORIDA
DEPARTMENT OF COMMERCE
DIVISION OF ECONOMIC DEVELOPMENT
BOARD OF COUNTY COMMISSIONERS
OF MONROE COUNTY, FLORIDA
DIRECTOR
March 15, 1995
(SEAL)
ATTEST: DANNY L. KOLHAGE, CLERK
BY: ~ o. lk~
DEPUTY CLERK /
WITNESSES:
WITNESSES:
f<". ~' "'~,c-,'~~.'"
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. ...~'." ...
13
1
LIST OF EXHIBITS
BASE CLOSURE OR REALIGNMENT GRANT PROGRAM AWARD AGREEMENT
EXHIBIT A
General Appropriation Act and
Summary Statement of Intent for
Line Item 2068 B
EXHIBIT B
Application for Base Closure or
Realignment Grant Funding
defense\contract\contract.mon
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I
FLORIDA DEPARTMENT OF COMMERCE
BASE CLOSURE AND REALIGNMENT GRANT PROGRAM
. NAME OF AGENCY:
MONROE COUNTY
.
CONTACT PERSON: - .
ROSEMARY MALINOWSKI
PROJECT MANAGER
5100 COLLEGE ROAD
KEY WEST, FL 33040
(305) 292-4741
GEOGRAPHI C AREA:
Monroe County is located at the southernmost tip of the State of
Florida (Appendix I).
The Naval Air Station Key West is located within Monroe County.
The military facility is comprised of several properties includ-
ing the Boca Chica Air Base, Truman Annex, Trumbo Point, Fleming
Key, the Naval Hospital, Sigsbee Park, the poinciana Naval Hous-
ing proj ect, Saddlebunch Communications Station and Cudj oe Air
Force Station (Appendix I) .
AMOUNT OF GRANT REQUEST:
$100,000.00
AMOUNT OF LOCAL MATCH:
At a regular meeting on September 22, 1994, the Monroe County
Board of Commissioners approved a resolution authorizing the
County Administrator to submit an application to the Florida
Department of Commerce Base Closure and Realignment Grant Program
for $100,000 and to match the Departments funding on a 50% basis
with $100,000.
EXHIBIT B
I
FLORIDA DEPARTMENT OF COMMERCE
BASE CLOSURE AND REALIGNMENT GRANT PROGRAM
APPLICATION
Prepared by:
Monroe County
Office of the County Administrator
September 22, ~994
I
FLORIDA DEPARTMENT OF COMMERCE
BASE CLOSURE AND REALIGNMENT GRANT PROGRAM
Application
Prepared by .
Monroe County :
Office of the County Administrator
September 22, 1994
PLAN OF ACTION:
Monroe County will establish a local community-based commission
to oversee the potential realignment or closure of the Naval Air
Station Key West. The commission will be comprised of citizens
of both Monroe County and the City of Key West and staff members
of each governmental entity. Members of the committee will be
chosen for their involvement in, and knowledge of, the local
economy of Monroe County, the State economy and the industries
and technologies which locally service Naval Air Station Key West
and will inclupe members from the Military Affairs Committee, the
Tourist Development Council, the Key West Chamber of Commerce and
the Veterans' Affairs Commission.
The commission will guide Monroe County staff in requesting pro-
posals of qualified consul tants to prepare an action plan that
will guide Monroe County in a coordinated, well-planned and time-
ly response to the actions of the Base Closure and Realignment
Commission.
The request for proposals will require the consultant to address
the following issues at a level sufficient to ensure that Monroe
County can respond to the impacts of defense downsizing or clo-
sure in a coordinated, well-planned and timely manner:
*
Identify the course of action that Monroe County should take
to maintain its share of defense spending and employment and
to enhance Monroe County's ability to keep defense operations;
*
Develop a list of "political" actions the County should take
to support its community;
*
Analyze all facets of defense downsizing and the impacts of
closure on the local community;
List policy recommendations addressing such issues as how to
implement the action plan;
Identify the local industries most affected by the loss of
contracts;
*
*
*
Identify defense conversion funding sources and business
incentives for affected businesses;
*
Prepare recommendations for the conversion of defense compa-
nies to civilian production;
Address the potent ial of base conversions for each property
comprising the Naval Air Station Key West.
*
Page 2
The selected consultant will determine the activity (study, pre-
sentation, analysis, plan or model) that is best suited to achiev-
ing the goal of the grant - the development of a plan of action
in advance of future actions of the Federal Base Realignment and
Closure Commission.
Monroe County will then contract with the chosen consultant to
perform the selected activity. Monroe County staff will serve as
liaison between the consultant and the commission.
When completed, the consultant will present the plan of action
for approval to the appointed Base Closure and Realignment Commis-
sion, the Monroe County Board of Commissioners and the Key West
City Commission:
Page 3
I
VALUE OF NAS KEY WEST TO THE LOCAL AND STATE ECONOMY:
The Navy has contributed the following figures related t
economic impact on the local economy:
Estimated Salary,
Military Personnel:
$39,559,596
Estimated Salary,
. Civilian Personnel:
Electricity:
$21,915,000
$ 2,025,954
$ 1,696,766
$ 765,608
$ 5,231,668
S 3.001.000
$74,195,592
Water:
Solid Waste:
Contracts:
Open Purchase Actions:
TOTAL:
This figure does not include contracts for the forty-odd
of NAS Key West such as the Coast Guard, NOAA, FAA ar
Marti, MILCON (Military Projects), Special Projects such
construction of Peary Court, Open Purchase Actions such as
tional supplies, childcare and the Exchange :and Transient
(visitors to the Base) .
Nor does it include economic impacts related to the 1, 5~
off jobs associated with NAS Key West.
Page 4
!n Fiscal Impact of Growth Manaqement Kev West. Florida
(1991), Hammer, Siler, George Associates described the attribu-
tion of municipal revenues to the. presence of the military in the
City of Key West as follows:
Type
Revenue
Share
Sales Tax Revenues:
.
$275,450
$ 88,032
4%
Real property taxes:
5%
.
Parking and Property
Lease Revenues:
$ 39,658
$ 28,789
3%
Building Permit Revenues
4%
Business Licenses
(Military Spin-off) :
$ 34,768
7%
Property Taxes
(Military Spin-off) :
$ 43,324
7%
Cigarette Tax Revenue
(Military Spin-off) :
$ 52,852
8%
Gasoline Tax Revenues:
$ 10,804
5%
Miscellaneous Revenues
(Military Spin-off) :
$188,224
5%
TOTAL:
$761,901
Hammer, Siler, George Associates also estimated that direct and
indirect military household retail sales in the City of Key West
total $16.6 million per year (page 22) .
Similar figures are unavailable for Monroe County.
Page 5
i
1
POTENTIAL FOR JOB DISPLACEMENT, SHOULD NAB KEY WEST BE CLOSED:
Over the years, the scale of the military presence in Monroe
County has remained fairly stable. According to the Navy, NAS
Key West employs 949 civilians and 1,991 military personnel. On
average, there are an additional 31 troops temporarily stationed
or visiting on the base on any given day. The U. S. Coast Guard
also maintains a station at Key West, employing approximately 650
persons.
.
Together, these operation~ employ 3,621 persons~
For the purposes of analysis, it is estimated that 80 percent, or
2,897 of these jobs, generate economic activity beyond the con-
fines of the military base. Using a 1.8 jobs multiplier (0.8'
ancillary job supported by one military job), a total of 5,215
jobs in Monroe County are attributable to the military's pres-
ence. Subtracting the 3,621 direct military employees in Monroe
County "from the 5,215 total military-related jobs results in
1,594 "spin-off" jobs in the county's economy.
The total employment market in Monroe County in 1989 was 32,928.
Just under sixteen percent of the total market can be attributed
to the presence of the military in Monroe County, either directly
or indirectly.
This figure does not include employment generated by retired
residents. At . this time, it is estimated that eighteen percent
of the county's employment is attributable to retired residents.
Although figures are unavailable at this time, it must be remem-
bered that many military retirees choose to live in Monroe County
and Key West because of the benefits derived from living in close
proximity to a military facilityafforded them on a military base
- access to the commissary, to medical services, to the PX.
BRAC/TXTGERLISeptember 22, 1994
Page 6
LIST OF APPENDICES
APPENDIX I:
Location Map
Map of Military Facilities
in Monroe County and Key West
APPENDIX II:
Memo from NAS Key West -
Potential Military Economic
Impact on Key West
APPENDIX III:
Fiscal Impact of Growth Management -
Key West
Hammer, Siler, George Associates (1991)
APPENDIX I
LOCATION MAP
MAP OF MILITARY FACILITIES
IN MONROE COUNTY AND KEY WEST
t
f
LEE I
, HENDRY
I
!--------,
1---' i I
. . I
_..J I }______
COLLIER L______-1
I
,-------------
I
I
DADE
GULF OF MEXIC'O
. .
;1:#~,t~::,.~ ~..,:,;: .\.
o
ATLANTIC OCEAN
o 10 20
I 1 I
MILES
REGIONAL
LOCATION MAP
::it:;',.? \;/;' .:; 7i :f';,::~1fj;:~ ::,':'
~
~~
.
, .'
i ,
~~4>' .. .~ .
J..l , ~' 0
r;/~ ..
....a,.
~ -..... .,. It
,./- . ~
i ' .'
I . . .' ..~ ~
. ~
#
en
w
\ (l)E
>-..J
w-
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o:Lf
w>
3=0:
g~
-
..J
, -
,. ::E
~ ~
z
..= ~=z
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~~ ......
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~ ..~
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~~= '"
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=ZrIJ .
.
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..
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=
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we:
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:E
APPENDIX II
MEMO _ FROM NAS KEY WEST -
POTENTIAL MILITARY ECONOMIC
IMPACT ON KEY WEST
I
POTSNTIAL MIL!TARY ECONOMIC
JMPACX ON KEY WEST
M111ta4Y Pe~sonnell
Authot'12ed
Est Salary
Authorized
Eat Salary
C1Vi114n Personnel.
Electric.
Water,
So11d Waste,
Contracts.
Open Purchase Actlons,
Does not 1ncludel
Contracts for Tenants
MILCON I Special Projects
NAFI Open Purchase Act10ne
Transient Impact
C'!.'Qri"l. F~p.l " :7.10)
~94-S-0l1
~i', 7~ -OI_~!1.i"JO' SOt,-:C!
~
1,991
$39,559,595
949
921,915,000
s 2,025,954
$ 1,696,7$6
.9
765,608
9 5,231,668
$ 3,001,000
I
APPENDIX III
FISCAL IMPACT OF GROWTH MANAGEMENT"..,.
KEY WEST
Hammer, Siler, George Associates (1991)
P. O. BOX. 14U~ V
KEY WEST. EtA 33041J
-
..:.....~
FISCAL IMPACT OF GROWTH MANAGEMENT
KEY WEST. FLORIDA
Prepared for the
City of Key West
July 1992
Prepared by
H A H MER, S I L E R, G E 0 R G E ASS 0 C I ATE S
Atlanta/Denver/Silver Spring/Washington
1111 Bonifant Street
Silver Spring, Maryland 20910
FOREWORD
The City of Key West entered into a contract with Harrrner, Siler,
George Associate-s on December 17,1990 to conduct this economic impact
analysis of the City's growth management plan. The plaQ was approved by
the Key West Planning Corrrnission in November 1991. The contract contained
four major tasks which are included in this report:
1. Real estate market overview and economic base analysis.
2. Soc i o-economi c impacts of growth management and 1 and use
options.
3. Fiscal impact analysis.
4. land development regulation and policy recommendations.
This report is organized in four sections. Section I describes the
behavi or of Key West's economy in terms of pri nc i pa 1 industry groups.
Sources and amounts of municipal revenues and expenditures are quantified
in Section II. In Section III relationships of the economy to housing
affordability are discussed. A comparative cost-revenue analysis of
apartments and hotels and ways of responding to the affordable housing
financing gap are analyzed in Section IV. Supplementary tables used in
support of the analysis are included in the ,appendix.
Personal interviews were conducted with a broad variety of persons
recommended by the Key West Planning Department. Interviewees represented
the tourism, real estate. retail, military, and government industries.
Data was collected between December 1990 and March 1991. Drafts of the
sections of this report were reviewed by the Planning Department staff and
their comments were incorporated herein. Data in this report is
consistent with comparable data provided in the City's November 1991 draft
comprehensive plan and development regulations.
HAMMER, SILER, GEORGE ASSOCIATES
Silver Spring, Maryland
July 16, 1992
1
TABLE OF CONTENTS
FOREWORD
EXECUTIVE SUMMARY
Section I. BEHAVloR OF THE ECONOMY
Employment
Principal Industry Groups
Military
Retired Residents
Fishing
Other Industries
Tourism
SUlmlary
~
i
ii
1
2
5
5
6
8
8
9
10
11
11
11
13
18
18
20
23
24
25
25
26
27
28
29
29
32
35
37
41
41
43
43
44
46
Section II. MUNICIPAL REVENUES AND EXPENDITURE~
Socioeconomic Factors
Permanent and Seasonal Population
Tourists
Revenue Attribution
Real Property Tax
Retail Sales Tax
Parking and Property leases
Building Permits
Business licenses
Personal Property Taxes
Cigarette Tax
Gasoline Tax
Miscellaneous Revenues
SUll'ITIary
Expenditure Attribution
Direct Expenditures
Allocation By Economic Sector
Surrrnary
Section III. HOUSING AFFORDABILITY
Costs
Occupancy
Impact on the Housing Consumer
Impact on the Business Community
Recent Developments
I'
!
f:
i
TABLE OF CONTENTS (Cont'd)
Future Prospects
Time Limitations
Conversion to Transient Use
Second Home Demand
Land Supply
SUl'lI1la ry
Section IV. COMPARATIVE COST-REVENUE ANALYSIS
Project-Specific Fiscal Impacts
Prototype Hotels
Prototype Apartments
Net Fiscal Impact
Affordable Housing Financing Gap Analysis
Development Costs Of Market-Sized Units
Potential Operating Income Of Market-Sized
Development Costs Of Small Units
Potential Operating Income Of Small Units
Impact Fee Implications
Alternative Financing Approaches
Surrvnary
APPENDIX TABLES
~
47
47
47
48
48
49
51
51
55
57
61
62
62
Units 63
67
67
70
72
73
A-I
I
Table 1.
Table 2.
Table 3.
Table 4.
Table 5.
Table 6.
Table 7.
Table 8.
Table 9.
Table 10.
Table 11.
Table 12.
Table 13.
Table 14.
Table 15.
Table 16.
Table 17.
Table 18.
Table 19.
Table 20.
Table 21.
Table 22.
Table 23.
Table 24.
EMPLOYMENT TRENDS, MONROE COUNTY, 1981-1989
ESTIMATED AT-PLACE EMPLOYMENT AS A SHARE
OF MONROE COUNTY, CITY OF KEY WEST, 1989
SHARES OF EMPLOYMENT ATTRIBUTABLE TO DEMAND FOR
PRODUCTS AND SERVICES BY RETIRED RESIDENTS,
CITY OF KEY WEST, 1989
EMPLOY-MENT BY INDUSTRY, CITY OF KEY WEST, 1989
OVERNIGHT TOURIST ACCOMMODATIONS USED
ACCORDING TO WAVE TWO, FLORIDA KEYS, 1990
ESTIMATED USE OF OVERNIGHT TOURIST
ACCOMMODATIONS, FLORIDA KEYS, 1991 14
AVERAGE DAILY POPULATION AND HOUSEHOLDS, KEY WEST, 1991 17
CITY OF KEY WEST REVENUES BY MAJOR CATEGORY, 1991 18
KEY WEST FY 1991 REAL PROPERTY TAX REVENUES BY INDUSTRY 20
KEY WEST FY 1991 SALES TAX REVENUES BY INDUSTRY 23
KEY WEST FY 1991 PARKING AND PROPERTY LEASE REVENUES
BY INDUSTRY
KEY WEST FY 1991
KEY WEST FY 1991
KEY WEST FY 1991
BY INDUSTRY
KEY WEST FY 1991 CIGARETTE TAX REVENUE BY INDUSTRY
KEY WEST FY 1991 GASOLINE TAX REVENUES BY INDUSTRY
KEY WEST FY 1991 MISCELLANEOUS REVENUES BY INDUSTRY
TOTAL.REVENUES ATTRIBUTED TO INDUSTRY GROUPS,
CITY OF KEY WEST, FISCAL YEAR 1991
PERCENTAGE ALLOCATION OF MUNICIPAL EXPENDITURES
BASED ON SERVICES DIRECTLY PROVIDED TO EACH INDUSTRY
ALLOCATION OF MUNICIPAL EXPENDITURES BASED ON
SERVICES DIRECTLY PROVIDED TO EACH INDUSTRY, 1991
ALLOCATION OF MUNICIPAL EXPENDITURES BASED ON SERVICES
PROVIDED DIRECTLY AND INDIRECTLY TO EACH INDUSTRY, 1991 36
KEY WEST REVENUES AND EXPENDITURES ATTRIBUTABLE
TO ECONOMIC SECTORS, FISCAL YEAR 1991
PROJECT-SPECIFIC FISCAL ANALYSIS INPUTS AND
ASSUMPTIONS, KEY WEST, 1991
ANNUAL FISCAL IMPACT OF A 200-ROOM MID-PRICED HOTEL,
KEY WEST, 1991
TABLE OF TABLES
BUILDING PERMIT REVENUE BY INDUSTRY
BUSINESS LICENSE REVENUES BY INDUSTRY
PERSONAL PROPERTY TAX REVENUE
2
4
7
9
13
24
24
25
26
27
28
28
29
31
33
40
53
56
I
JABLE OF TABLES (Cont'd)
Table 25. ANNUAL FISCAL IMPACT OF A 200-ROOM RESORT HOTEL,
KEY WEST, 1991 57
Table 26. ANNUAL FISCAL IMPACT OF A 200-UNIT MARKET-SIZED
APARTMENT COMPLEX, KEY WEST, 1991 59
Table 27. ANNUAL FISCAL IMPACT OF A 400-UNIT SMALL-UNIT
A~ARTMENT COMPLEX, KEY WEST, 1991 61
Table 28. FISCAL IMPACTS OF PROTOTYPICAL HOTEL ANQ APARTMENT
OPERATIONS, CITY OF KEY WEST, 1991 62
Table 29. AFFORDABLE HOUSING FINANCIAL PRO FORMA ANALYSIS
FOR MARKET-SIZED UNITS, KEY WEST, 1992 65
Table 30. AFFORDABLE HOUSING OPERATING CASH FLOW ANALYSIS,
KEY WEST, 1993-2002 66
Table 3l. AFFORDABLE HOUSING FINANCIAL PRO FORMA ANALYSIS
FOR -SMALL APARTMENT UNITS, KEY WEST, 1992 68
Table 32. AFFORDABLE HOUSING DEVELOPMENT WITH SMALL UNITS,
OPERATING CASH FLOW ANALYSIS, KEY WEST, 1993-2002 69
Table 33. REQUIRED HOUSING SUBSIDY IF DEVELOPMENT MEETS THE
TOTAL FINANCIAL GAP WITHOUT ANY PUBLIC SUBSIDY 71
I
EXECUTIVE SUMMARY
Both the private and local public sectors of the Key West economy are
overwhelmingly depe~dent on tourism. An estimated 71 percent of the jobs
located in Key West. are attributable to this industry and 80 percent of
the revenue supporting the non-enterprise portion of muni~;pal services
come from tourism-related activity. Because only 56 percent of municipal
expenditures are supported by tourism, tourists contribute 24 percent more
to local government than they cost. While retirees and the Navy make
significant contributions to the economy, they clearly demand more
services than they support with revenue. Therefore, tourists subsidize
municipal services provided to other major segments of the economy.
The limited supply of improved land and infrastructure capacity
constraints result in a very tight housing market. It undermines the
Island's economic well-being by limiting the labor supply, requiring
disproportinately high shares of household income to be spent on housing,
and increasing costs of operating businesses and households alike. Rapid
growth, the limited supply of vacant developable land, and residential
density controls have contributed to increased housing prices and
occupancy rates. Because of the size of the gap between the cost of new
multifamily housing units and average incomes, some combination of public
policies is required to increase the supply of affordable housing on the
Island.
Comoarative Cost-Revenue Analysis
Maintaining the imp,act fee approach to respond to the affordable
housing financing gap will require S40,800 per employee. Using employee
densities, this translates into $24,500 to $40,800 per hotel room, $81,600
to S163,200 per 1,000 square feet of corrrnercial space, and S4,100 per
market rate residential unit of new construction. These dollar
requirements could be decreased if any of a number of policy options were
undertaken:
o Discounting the price of public or private land.
o lease land Development Authority land.
o Establish trust fund from land transfer tax.
i i
o Increase taxes directed at tourists in support of a
trust fund, such as the room tax.
o Increase property taxes.
Fiscal impacts of developing a market-sized 200-unit apartment
project and a 400-unit single room occupancy apartment project were
compared to developing a 200-room mid-priced hotel and a 200-room resort
hotel. From a. net municipal tax yield perspective. the resort hotel would
be the most cost effective. The apartTrt€nt projects' :net cost to the city
would be S237.400 to S238,800 over a one-year period. The mid-priced
hotel would have an annual small net positive fiscal effect of $41,300
while the resort hotel.s annual net positive fiscal impact would reach
S139.400. Development of a hotel would create 120 to 200 direct jobs and
exacerbate the city.s affordable housing problem.
Hotel and Apartment Net Annual Fiscal Impacts
350
300
z: 250
tt
~ 200
'0
loll
1 150
~
:=I
0
~ 100
50
0
I e:J Expenditures g) Rt"el:1DeI I
MkI.P'rIcc Bold
Resort Bol&1 Marbl.SbIG A.p&l1JDCD11 SmaJ.1.SbH Ap.aJ'UD~D1a
~I Estate ProjecU
i;i
I
,
Behavior of the Economv
Key West's unique geographic setting and cultural traditions have
resulted in it being highly competitive for tourism, retiree, and military
investments. They have dominated job growth and real estate development
and are expected to do so in the future. This assumes U.S. military
missions and investment strategies will not change in relationship to Key
West and that Cuba's type of government and economy will not be radically
altered and result in renewed competitiveness with Key West in the near-
term future. -
During the 1980's, Monroe County's economy grew by more than ane-
th; rd when measured in terms of jobs created. Over 40 percent of the
8,382-job increase occurred in the services sector of the economy and over
one-third of them in retial trade. Within Key West are located 14,672
jobs -- nearly 45 percent of the County's 32,928 jobs. Nearly one-third
of these Jobs are in servi ces, another one-th i rd in retail trade, and
another 19 percent in state and local government.
An estimated 71 percent of jobs located in Key West are attributable
to the tourist industry. The attraction of overnight and day visitors
drives most of the city's economic activity. Because of its favorable
climate,most of this business occurs when the climate in other parts of
the country is less favorable, the winter months. The second most
impo.r~ant part of the economy is retired residents to whom are attributed
nearly 17 percent of the city's jobs. The military has been a relatively
stable portion of the economy for many years, currently estimated at over
seven percent of the city's employment.
iv
Employment Attribution by Industry
Tourism
71~
Municioal Revenues and Exoenditures
When shares of expenditures attri butabl e to major categori es of
demand are compared to shares of revenues. the greatest disparity is in
the tourist/seasonal category: 42 percent more revenue than expenditures.
Therefore, these visitors more than pay their way and they subsidize all
other industries. The principal reasons being their indirect payment of
real property taxes through the places they stay and their direct payment
of sales taxes.
v
Municipal Expenditures and Revenues by Economic Sector
,
14 o.
12
10
Z'!
.!!!
~ 8
....
0
III
= 6
.S!
-
-
~
4
%
0
Toarlam
I 0 ExpendJtureJ &3 Revenue. ]
Mm1.uy RaUnd
Economic Sector
Other
Some 65 percent of municipal expenditures are attributable to
tourists of which 53 percent is spent on public safety. General
government expendi tures represent another 32 percent of expenditures
attributable to tourists. After tourists, retirees place the next
greatest burden on municipal expenditures -- 19 percent. Some 46 percent
of the cost of their services are for general government functions while
public safety accounts for another 37 percent. The remaining 16 percent
of expenditures support the military and other miscellaneous sectors of
the city's economy.
vi
Revenues which support the non-enterprise fund portion of municipal
services were analyzed. Other revenues are generated by enterprises such
as solid waste and sewerage. To tourists is attributed about SO percent
of the revenue raised while retirees appear to raise about 11 percent of
revenues, the military five percent, and other industries four percent.
The City's tourism base is composed of several parts, the most
important of which being the 6,S68 people who stay overnight in hotels and
motel s because they spend more money than any ,other component part.
Another 4,391 tourists stay overnight in campgrounds, with friends, and
elsewhere. The 3,312 day trippers are also important to the economy and
contri bute to congest i on because they nearly all arri ve by automobil e.
Another 407 seasonal residents stay in town for less than three months,
annually. The average daily arrival and departure of 348 cruise ship
passengers has the least effect on the economy and the housing market of
any of the five components of tourism.
,Retirees represent 18 percent of the population, or about 4,400
residents. Some 236 military employees live in the City outside military
reservations, a number expected to increase upon completion of Peary Court
and other affordable housing projects. Of the spin-off employment
attributable to the military's presence, an estimated 2,036 employees
reside in Key West.
HousinqAffordabilitv
At SO.82 to Sl.37 per square foot for rental units and even higher
prices for some sales units, Key West's housing prices tend to be high.
They result in doubling-up, occupancy of unsound units, and spending too
high a proportion of household income, for housing. Monroe County
households spend 29 percent more for housing than the average Florida
household. The City's high degree of dependence on tourism, service, and
military jobs which often pay less than SS per hour (S16,640 annually upon
full-time employment) results in high demand for affordable housing.
Rapid growth, the limited supply of vacant developable residential
land, and density controls related to the carrying capacity of the city's
infrastructure and ambiance have contributed to increased housing prices
and occupancy rates. During the winter season, housing occupancy rates
reach 98 percent and reduce turnover.
Behavior of the housing market impacts the business community in a
variety of ways. There is pressure to raise wages and therefore operating
costs. Service industries report high employee turnover rates and the
vii
tight labor market, having an unemployment rate less than one-half the
nation's, makes it difficult to find qualified employees. Good quality
loyal employees are at a premium.
As the economy has grown the supply of developable housing sites has
decl ined to a point where less than 30 acres which can accommodate 260
units remain available for new housing projects. Even approved affordable
housing projects n.eed not remain affordable for more than five years.
Many sound housing ~nits have been converted to transient ,facilities and
others converted to seasonal use and not made available fo~ rent.
viii
Section I. BEHAVIOR OF THE ECONOMY
~.
Section I. BEHAVIOR OF THE ECONOM~
Key West is a unique city in America with respect to the combination
of its physical setting, cultural background, architectural scale, and
economic base. As an island located at an extremity of-_the country and
in the Caribbean, its climate is unusually attractive. located only 90
miles north of Cuba, it has been the destination or stopping-off point of
many Hispanic people and businesses. The city has a natural port which
has accommodated waterborne trade, tourism, and military activities. With
a small land area and fragile ecology, it can support only a limited
amount of residents and visitors and has relatively small buildings. The
warm climate and Hispanic heritage have influenced bUilding designs and
densities. As a result of these factors, the economy is almost entirely
based on jobs in tourism and the U.S. military and retiree expenditures.
Although the military activities have changed in function, their
scale has remained somewhat stable over the past several years. The more
important industry tourism, on the other hand, has increased in
importance. While many military people are eligible for and are provided
housing, few tourism employees receive this fringe benefit. The limited
supply of land and modest densities of development in the City constrain
the number of housing units and increase their prices and rents.
Therefore, the economy has not been able to accommodate development of the
number of affordable housing units required of its labor force.
,
This section describes and quantifies the principal components of
the economi c base of the Ci ty of Key West. Resul ts will be used in
subsequent sections to quantify the fiscal impacts of these components and
1
to recommend policies which could potentially help increase the supply of
affordabl e hous i ng. Emp 1 oyment trends are presented, and the total
economy is allocated among major industry groups. This assessment
provides the basis for a fiscal impact analysis which calculates the
shares of City revenues and expenditures attributable to the major
industry groups.
Emolovrnent
Monroe County employment trends are shown in Table 1 for the 1981-
1989 peri od. The data show jobs located in the county by 10 types of
industries.
Table 1. EMPLOYMENT TRENDS. MONROE COUNTY. 1981-1989
1981-1989 ChanQe
Number Percent
180 102.9%
218 13.5%
(133) -18.4%
382 31.8%
(248) -29.7%
2,888 46.4%
78 5.9%
3,434 69.0%
904 23.9%
679 18.4%
Industry
Agriculture, Forestry & Fishing
Construction
Manufacturing
Trans., Comm., & Utilities
Wholesale Trade
Retail Trade
Finance, Insurance & Real Estate
Services
Federal Government
State and local Government
Tota 1
.1m
175
1,620
723
1,203
834
6,226
1,313
4,974
3,786
3.692
24,546
1989
355
1,838
590
1,585
586
9,114
1,391
8,408
4,690
4.371
32,928
8,382
34.1%
Notes: Federal Government employment held constant at 1988 level.
State and local government employment increased by 75
employees from 1988 to 1989, based on 1981-1988 trend.
Sources: U.S. Department of Commerce, Bureau of the Census;
Florida Department of labor and Employment Security,
Bureau of labor Market Information; and
Hammer, Siler, George Associates.
2
Retail trade is the largest component of the Monroe County economy.
In 1989, the 9,114 retail jobs represented 28 percent of the 32,928 total
jobs. This sector grew by 2,888 jobs in the 1981-1989 period, or 5.8
percent per year. Service jobs increased at an even faster rate of 8.6
percent per year. ',By 1989, the. services sector represented 26 percent of
the county's jobs. The 6,322-job increase in these two industries is
primarily attributable to growth of tourism throughout the Keys. Of the
904 new Federal Government jobs created duri ng the seven-year peri od,
approximately 85 percent were within the military. This reflected growth
in the Key West Naval Air Station and Coast Guard Station. The greatest
relative 'increase was in agriculture, forestry and fishing as tourists
increased. demand for sport fishing services. The small scale of the
manufacturing sector and major presence of the military contribute to the
county's uniqueness.
The 32,928 jobs located in Monroe County in 1989 are divided among
Key West/non-Key W~st locations in Table 2 on the following page. For
each industry in the county, the estimated percentage of jobs located in
Key West is shown, based on the economi c functions of the ci ty and
development patterns in other parts of the county. According to this
estimate, approximately 14,672 jobs, or 45 percent of the county total,
are located in Key West. The remaining 18,256 jobs are located elsewhere
in Monroe County.
3
Table 2. ESTIMATED AT-PLACE EMPLOYMENT AS A SHARE
OF MONROE COUNTY. CITY OF KEY WEST. 1989
Total
Monroe Key West
Industry County Share Emoloyment
Agriculture, Forestry &. Fi shi ng 355 10.0% 36
Construction 1 , 838~~. 50.0% 919
Manufacturing 590 15.0% 89
Transportation, Communication, & Util. 1,585 40.0% 634
Wholesale Trade 586 35.0% 205
Retail Trade 9,114 50.0% 4,557'
Finance, Insurance, & Real Estate 1,391 45.0% 626
Services
Hotel 4,399 55.0% 2,419
, Health 1,227 60.0% 736
Personal 187 45.0% 84
Business 415 50.0% 208
Amusement & Recreation 587 60.0% 352
Motion Pictures 92 80. 0% 74
Soc 1 a 1 159 50.0% 80
Museum 45 70.0% 32
Auto Repair 159 30.0% 48
Miscellaneous Repair 80 40.0% 32
legal Services 218 70.0% 153
Engineer/Accountant/Management 295 50.0% 148
Membership Organizations 474 60 . 0% 284
Private Household Services 71 60.0% 43
Federal Civilian 1/ 1,307 5.0% 65
Mil i tary 1/ 3,383 0.3% 10
State and Local Government 4.371 65.0% 2.841
Tota 1 32,928 44.6% 14,672
1I Located off-base.
Sources: Florida Department of labor and Employment Security;
U.S. Department of Commerce, Bureau .of Economic
Analysis; and Hammer, Siler, George Associates.
The highest Key West shares are for Motion Picture Services, with an
estimated 80 percent of the county's 92 jobs, and Museum and legal
4
~
'I
t:
I'
Services, each with 70 percent of the county totals. Of the 14,672 jobs
in the city, 31 percent are retail jobs and 19 percent are state and local
government jobs. These data reflect the importance of tourism in the city
and the city's roles as the County seat and as its economic hub.
Pr1ncioal Industry GrouDs
The three primary economic generators in Key West are tourism, the
.military, and retired residents. In this analysis, the share of the
economy attributable to tourism is the share of jobs not attributable to
the military, retired residents, fishing, and other industries.
Mil itarv
The Key West Naval Air Station employs approximately 1,100 civilians
and 2,900 military personnel. There are, on average, an additional 31
troops temporarily stationed or visiting on the base on any given day.
The U.S. Coast Guar~ also maintains a station at Key West, employing
approximately 650 persons. Together, these operations employ 4,681
persons.
For the purposes of this analysis, it is estimated that 80 percent,
or 3,744 of these jobs, generate economic activity beyond the confines of
the military base. Using a 1.8 jobs multiplier {0.8 ancillary job
supported by one military job}, a total of 6,750 jobs in Monroe County are
attributable to the military's presence. Subtracting the 4,681 direct
military employees in Monroe County from the 6,750 total military-related
jobs results in 2,069 "spin-off" jobs in the county's economy. If 50
percent of these jobs are located in Key West, the city can attribute
1,050 employees in various industries to the military's presence.
5
Retired Residents
The share of Key West employment attributable to retired residents
is shown by. industry in Table 3. As a basis for this analysis, 16 percent
of the City"s residents were over age 60 in 1980, ~s reported in the U.S.
Census. The real share of retirees is estimated to~be -two percent higher,
however, due to the young military and other retirees who may be
independently wealthy. Thus, the age range of Key West's retirees is
wider than in the typical American community.
6
I
I,
f;
Table 3. SHARES OF EMPLOYMENT ATTRIBUTABLE TO DEMAND FOR PRODUCTS
AND SERVICES BY RETIRED RESIDENTS. CITY OF KEY WEST. 1989
Industry
Agriculture, Fore?try & Fishing
Construction
Manufacturing
Transportation, Communication, & Util.
Wholesale Trade
Reta 11 Trade
Finance, Insurance, & Real Estate
Services
Hotel
Health
Personal
Business
Amusement & Recreation
Motion Pictures
Social
Museum
Auto Repair
Miscellaneous Repair
Legal Services
Engineer/Accountant/Management
Membership Organizations
Private Household Services
Federal Civil fan
Military
State and .loca 1 Government
Total
Key West
Emolovrnent
36
919
89
634
205
4,557
626
2,419
736
84
208
352
74
80
32
48
32
153
148
284
43
65
10
2.841
14,672
Retiree Retiree-
Demand Generated
Share Emolovment
0%
20%
-,.. 10%
15%
15%
10%
20%
20%
35%
20%
5%
5%
0%
30%
5%
15%
15%
25%
10%
25%
20%
25%
100%
20%
16.7%
o
184
9
95
31
456
125
484
258
17
10
18
o
24
2
7
5
38
15
71
9
16
10
568
2,450
Note: Share of total Key West population over age 60 in 1980 was
16 percent, but the number of retired persons is assumed
to be two percent higher due to the under 60-year-old
military retirees and independently wealthy.
Sources: Florida Department of labor and Employment Security;
U.S. Department of Commerce, Bureau of Economic
Analysis; and Hammer, Siler, George Associates.
7
On an aggregate basis, retired residents demand goods and services
which support an estimated 16.7 percent of all jobs in the city. Of the
2,450 jobs attributable to retired residents, 568 jobs, or 23 percent, are
within state and local government. The industry with.the largest share
of employees attributable to retired residents is health services. Of the
est imated 7'36 health servi ces jobs in Key West, 35 percent coul d be
attributed to retired residents. This rate is approximately double the
18-percent share for the retired among the city's population.
Fisnina
The fishing industry, which was once an important factor in the Key
West economy, now plays a significantly diminished role. Based on the
seven fishing boats which now operate out of Key West, the share of the
local economy which is attributable to this industry is approximately 0.5
percent. This assumes four employees per boat, including on-land serving.
Agriculture and forestry are not practiced in Key West. The sport fishing
portion of' this industry may employ another 35 full-time equivalent
employees in the city.
Other Industries
Other jobs, including writing, crafts, telecommuting, and independent
artists, represent another small, but measurable segment of the economy.
We have estimated the contri but i on from these sectors represents fi ve
percent of the local economy.
8
Tourism
A summary of major industries and their respective impacts on the Key
West economy is shown in Table 4. After quantifying the shares of total
emp 1 oyment attri butabl e to the four i ndustri es descri bed above, the
tourist industry .represents 71 percent of the Key West economy. Thi s
includes jobs dire'ctly supported by the tourist such as -a motel maid as
well as jobs indirectly supported such as an automobile dealer who sells
cars to tourist industry workers.
Table 4. EMPLOYMENT BY INDUSTRY. CITY OF KEY WEST. 1989
Share of
Kev West
Emolovment
Total
Emolovment
Industry
Agriculture, Forestry & Fishing
Seasonal & Tourist
Military
Retired.
Other
Total
73
10,365
1,050
2.-450 -
734
14,672
0.5%
70.6
7.2
16~1
5.0
100.0%
Note: "Other" includes leakage from export services such as writing
as writing and crafts, telecommuting, and independent artists.
Sources: Florida Department of labor and Employment Security;
u.S. Department of Commerce, Bureau of Economic
Analysis; and Hammer, Siler, George Associates.
These data quantify the overwhelming importance of tourism to the
city's economy. As the city's tourism economy has grown, it has been
primarily responsi bl e for convers i on of some buil di ngs to use by touri sts
and for absorbing the limited supply of land, thereby driving-up its price
for all uses. The city's unique character and the supply of tourist-
oriented facilities and services have driven growth of the economy.
9
Summary
Key West's unique geographic setting and cultural traditions have
resulted in it being highly competitive for tourism, retiree, and military
investments. They have dominated job growth and real estate development
and are expected to do so in the future. Thi s assumes U. S. mi 1 i tary
missions and investment strategies will not change in relationship to Key
West and that Cuba's type of government and economy will not be radically
altered and result in renewed competitiveness with Key West in the near-"
term future.
During the 1980's, Monroe County's economy grew by more than one-
third when measured in terms of jobs created. Over 40 percent of the
8,382-job increase occurred in the services sector of the economy and over
one-third of them in retail trade. Within Key West are located 14,672
jobs -- nearly 45 percent of the county's 32,928 jobs. Roughly one-third
of these jobs are in services, another one-third in retail trade, and
another 19. percent in state and local government.
An estimated 71 percent of jobs located in Key West are attributable
to the touri st industry. The at tract i on of overnight and day vi s itors
drives most of the city's economic activity. Because of its favorable
climate much of this business occurs when the climate in other parts of
the country is less favorable, the winter months. The second most
important part of the economy is retired residents to whom are attributed
nearly 17 percent of the city's jobs. The military has been a relatively
stable portion of the economy for many years, currently estimated at over
seven percent of the city's employment outside of the city's military
reservations. The remaining five percent of employment is attributable
to miscellaneous minor sectors of the local eC0nomy.
10
Section II. MUNICIPAL REVENUES AND EXPENDITURE~
Section II. MUNICIPAL REVENUES AND EXPENDITURES
A principal component of this assignment is attributing city revenues
to tourism, the military, retired residents, and other segments of the
local economy. City expenditures are then disaggregat-~daccording to
servi ces provi ded to touri sts, retired res i dents, and other permanent
residents, including the military. Results of this analysis are used in
the models described in Section IV, the comparative cost-revenue analysis.
Socioeconomic Factors
In order to attribute municipal revenues and expenditures to the
industry groups identified above, a series of socioeconomic factors must
be calculated. The purpose of doing so is to disaggregate the factors in
order that they may be assigned to major revenue and expenditure
categories, summed up, and net costs calculated.
Permanent and Seasonal Pooulation
According to the 1990 Census, there were 24,652 permanent residents
in Key West. As stated in the City's November 1991 Comprehensive Plan,
the seasonal population represents 8.73 percent of the permanent civilian
population of 18,652, or approximately 1,628 persons. Approximately 6,000
military personnel reside permanently within Key West, most of whom are
in the Navy. However, only 236 Navy personnel reside off-base in Key West
with the remainder on military reservations.
11
II
The number of retired residents is estimated at 18 percent of the
permanent population, or two percent more than the 16 percent share of
residents over age 60 in 1980. The additional two percent recognizes the
presence of military and other young retirees in Key West. Given the 18
percent share, there are more than 4,400 permanently retired residents in
Key West. !,
According to data provided by the U.S. Navy, 236 civil ian and
military employees at the Key West Naval Air Station reside in the City-
of Key West. Based on the size of the uni ts to be constructed for
military personnel in the City (Peary Court's 800 square feet), a
relatively small average household size of 2.2 persons is assumed for
these employees. After reducing the 236 employees by five percent to
account for dual-Navy-employee househol ds, approximately 102 mil itary
households reside in Key West.
The 1,100 civilian employees of the Department of Defense (000) are
estimated to represent 1,045 households, once a five-percent adjustment
is made to account for two 000 employees in one household. An estimated
40 percent of these employees live in Key West, representing 418
households and 1,087 residents.
Of the 2,069 spin-off jobs attributable to the military's presence
in Monroe County (see page 5), an estimated 1,030 jobs are located in the
City of Key West. If 70 percent of the Key West jobs and ten percent of
the remaining 1,019 military-related jobs located elsewhere in the county
are filled by Key West residents and five percent are eliminated to
account for two-earner households, then 783 military-related households
reside in Key West. Assuming an average household size of 2.6 persons,
these households include approximately 2,036 residents. These
12
. ..,...
calculations indicate a total of 1,303 Key West households are either
directly or indirectly supported by the military's presence.
Tourists
During the height of the winter season, Key West is inundated by
overnight and day tourists. Lodging types used by overnight visitors to
the Keys, as reported by the Monroe County Tourist Development Council in
the Wave Two Report publi shed in 1990, are shown in Tabl e 5. These
numbers are based on a direct survey of visitors who placed calls to a
toll-free tourist information line.
Table 5. OVERNIGHT TOURIST ACCOMMODATIONS USEQ
ACCORDING TO WAVE TWO. FLORIDA KEYS. 1990
Accorrrnodation
Hotel/Motel
RV/Campground
Rented 'a Residence
Guest House
Stayed with Friends/Relatives
Private 'Charter Boat/Yacht
Other
Total
Percen~
of Total
65.3%
9.3
8.0
4.0
4.9
1.8
1.3
94.6%
Note: Numbers do not total 100 percent due to multiple answers.
Source: Monroe County Tourist Development Council.
.
The shares do not add to 100 percent due to mul t i pl e responses.
Because the -guest house~ and ~stayed with a relative/friend- categories
are probably undercounted (these persons may be 1 ess 11 kely to calla
tourist information line because they or their hosts are already familiar
13
with the city), and most of the campgrounds are located on other Keys, a
more reasonable approximation of tourist accommodation patterns in Key
West is shown in Table 6. These data represent an adjustment of Table 5
data.
Table 6. ESTIMATED USE OF OVERNIGHT TOURIST
ACCOMMODATIONS. FLORIDA KE-YS.- 1991
Accommodation
Percent
of Total
Hotel/Motel
RV/Campground
Rented a Residence
Guest House
Stayed with Friends/Relatives
Private Charter Boat/Yacht
Other
Tota 1
61. 0%
5.0
7.0
10.0
15.0
1.0
1.0
100.0%
Sources: Monroe County Tourist Development Council
and Hammer, Siler, George Associates.
Based on these estimates, 61 percent of overnight tourists stay in
motels, 10 percent stay in guest houses, and IS percent stay with friends
and relatives. Only five percent of overnight visitors stay in Recreation
Vehicles (RVs) and campgrounds.
According to the City's Comprehensive Plan, there were 3,568 hotel
rooms in Key West in 1991 with an average annual hotel occupancy rate of
77 percent as reported by Pannell, Kerr, Forster. According to the Wave
Two report, the average tourist party in the Keys includes 2.7 visitors.
14
I
Reflecting the smaller size of parties arriving by air, the average
tourist party to Key West includes 2.5 visitors per party for the hotel
visitation part of this analysis.
Based on the factors described above, an average of 6,868 tourists
stay in hotels in .Key West per night. Assuming that hotels capture 61
, .
percent of the tourist accommodation market (from Table-_.6), there are
another 4,391 tourists staying in campgrounds, private residences, guest
. houses, or with friends or family. Therefore, on the average evening,
some 11,259 visitors stay in the various types of accommodations offered
in Key West.
In 1990, a total of 2,170,767 cars carried tourists over the Cow Key
Bridge. This estimate is based on 1985 and 1986 traffic counts and
indications of the Florida Department of Transportation (DOT) that traffic
increased 3.3 percent annually to 1990. By dividing the number of cars
by two for two-way traffic and by 365 days and then multiplying by 2.7
persons per party (for tourists arriving by car according to the Wave Two
report), 8,029 tourists cross the bridge by automobile every day.
Of this average daily auto traffic, 4,629 trips are attributed to
overnight tourists arriving in Key West or making day trips out to other
Keys and attractions. This estimate is based on an average stay of five
days and an estimated average of 2.2 trips across the bridge per party.
Seasonal residents are estimated to account for 88 average daily trips
across Cow Key Bridge.
According to the Key West Port and Transportation Authority, a total
of 198 cruise ships having 127,012 passengers docked in the City in 1990.
Therefore, on an average day, 348 passengers di sembarked 1 n Key West.
15
This number represents only an average, acknowledging that there are days
when no cruise ships arrive.
Combining the 24,652 permanent residents, 407 average daily seasonal
residents, 11,259 overnight tourists (6,868 staying in hotels and 4,391
staying elsewhere), 3,312 day trip tourists, and 348 cruise ship
passengers produces a Key West average daily populati~h of 39,978 persons.
This number represents a 62 percent increase over the permanent population
of 24,652, as shown in Table 7. The sum of overnight tourists (11,259), _
day trippers (3,312), and cruise ship visitors (348) multiplied by 365
days per year equals 5,445,435 tourist-days annually.
16
~
Table 7. AVERAGE DAILY POPULATION AND HOUSEHOLDS. KEY WEST. 1990
Population Households
AveraQ~
Householq
lli.e.
Permanent Residents
Military Employees &
Dependents
Li vi ng On-Base
living Off-Base
Civilian DOD Employees
Retired Residents
Military-Related II
Other Residents
Subtotal
Seasonal Residents II
OverniQht Tourists
Staying in Hotels
Staying in Guest Houses,
Campgrounds or with Friends
or Relatives
Subtotal
5,764 NA NA
236 102 2.2
1,087 418 2.6
4,437 2,773 1.6
2,036 783 2.6
11.092 5.234 2.6
24,652 9,310 2.6
407 185 2.2
6,868 NA
NA
4.391
11,259 NA
3,312 NA
348 NA
Day-Trip Tourists
Cruise Ship Passengers
Total Daily Average
39,978
.,
Notes: NA means not applicable.
II Employed in jobs supported by military spin-off.
ZJ Winter season residents divided by four to yield
annual average daily seasonal residents.
Sources: U.S. Census of Population and Housing;
Solin and Associates; hotel managers;
Key West Port and Transportation Authority;
and Hammer, Siler, George Associates.
17
Revenue Attribution
The following paragraphs describe the attribution of municipal
revenues to the city's major economic components. Nine major revenue
categories are identified. Table 8 shows revenue by these major
categories. ',Appendix A details the breakdown of revenues by category.
Enterprise accounts from which revenues are derived are excluded from this
discussion because they are separately funded services.
Table 8. CITY OF KEY WEST REVENUES BY MAJOR CATEGORY. 1991
Cateaorv
Real Property Taxes
Sales Taxes
Parking, Property Leases
Building Permits
Business Licenses
Personal Property Taxes
Cigarette Taxes
Gasoline Taxes
. Hi scell aneous
Amount
Total Revenues
$6,886,255
1,760,648
1,321,943
719,733
695,367
619,174
660,652
220,510
3.764.480
$16,648,762
Sources: City of Key West and Hammer, Siler, George Associates.
Real Prooertv Tax
Real property taxes are primarily assessed on three building
categories within the City of Key West: residential (single-family and
multi-family units), hotels and motels (transient housing), commercial
(retail and offices), and mixed-use structures. We have estimated
18
property assessments by three categories (residential, hotel/motel and
commercial/office) by dividing mixed-use properties among these three
categories. Key West property assessments in 1991 had the following
distribution:
Percent
CateQorv Amount of Total
Residential $533,888,799 42%
Hotel/Motel 303,819,544 24
Commercial/Office 439.878.619 ~
Total $1,277,586,962 100%
Residential. The portion of the residential tax base attributable
to retired residents is estimated at 20 percent, or two percent higher
than the 18 percent share of the jobs attributable to retired residents.
The higher tax base share for the retired results from their higher
average net worth and housi ng values when compared to other Key West
residents. It is assumed that retirees coming to Key West from elsewhere
tend to be wealth~er than long-time resident retirees. Hany retired
Conchs have moved north to other parts of Florida and to other states.
The tour; st industry represents 68 percent' of the res ident ia 1 tax
base, slightly lower than its 71 percent share of the economy due to the
lower wages which prevail in the tourism industry. The military share is
seven percent, cons i stent wi th its share of the overall economy. The
share for other industries remains at five percent, based on its share of
th~ overall economy.
19
Hotel/Motel. The hotel/motel tax base is 95 percent attributable to
tourists, with the remaining five percent attributable to a combination
of business traffic and visitors to retired residents and the military.
Commercial/Office, The commercial tax base is disaggregated on the
basis of the retail sales shares for each industry group. The tourist
'. -
share is then increased five percent, and the retired and military shares
are lowered three percent and two percent, respectively, to acknowledge
the propensity of tourists to spend money downtown. This area of the City _
has greater land values than the areas containing strip retail centers and
office bUildings.
Table 9. KEY WEST FY 1991 REAL PROPERTY TAX REVENUES BY INDUSTRY
Tourist- Amount Per
.Q.uL Tourist-Dav
Industrv Revenues Shar~ Households. or Household
Tourism $5,577,867 81% 5,445,435 $1. 02
Retired Households 757,488 11% 2,773 $273.17
Mil itary 275,450 4% 1,303 S211. 44
Other 275.450 ~
Total Real
Property Taxes S6,886,255 100%
Sources: City of Key West and Hammer, Siler, George Associates.
Retail Sales Ta~
. The 4,437 retired residents represent 2,773 households, based on an
average household size of 1.6 persons. In 1980, the 'average size of Key
West households headed by persons 65-years-old and over was approximately
1.5 persons. The 1990 number is seven percent higher due to greater
average longevity.
20
:j
II
;(
I
For the 418 civilian 000 employee households and the 783 households
supported i nd i rectly by the mil itaryJ s presence J the average household
income reflects the estimated citywide average of $28JOOO in 1990. With
45 percent of their income spent on retail purchases and 70 percent of
their purchases made in Key WestJ they represent S8.3 million in Key West
retail sales.',TogetherJ the direct and indirect milit.ary household retail
sales total S16.6 million per year.
The 1J670 seasonal residents of Key West equate to 760 householdsJ
assuming an average household size of 2.2 persons. It is reasonable to
assume that the average seasonal household earns 15 percent more per year
than the typical Key West householdJ recognizing that Key West is
influenced greatly by the military and self-employed craftsmen and
artisans whose income potential is constrained. Thus, the average annual
seasonal household income is estimated at S32J200. If the average
seasonal household resides in Key West for three months every yearJ the
net contribution to retail sales is apprOXimately $2.7 million.
According to the Florida Department of Commerce Visitor Profile for
Monroe County, the average tourist arriving by plane spends $68 per day,
excluding sales tax, while the average tourist arriving by car spends $45
per day. Adding 20 percent to the automobile estimate to account for the
higher costs of goods and services in Key West and a higher propensity to
fly there than elsewhere in the county results in an average of $55 of
sales per day. Based on 11,259 daily overnight tourists, a total of
$226.0 million in retail sales is attributable to these visitors.
According to the Key West Chamber of CommerceJ cruise ship passengers
spend an average of $25 per day in Key West. Multiplying this number by
the 127J012 passengers in 1990 produces approximately $3.2 million in
22
retail sales. The 3,312 day trip tourists are estimated to spend $22 per
day, or 50 percent of the average 544.76 spent by the average touri st
arrlvlng by car. Therefore, 527.1 million of expenditures are
attributable to them.
The estimated retail expenditures of Key West residents is $45.2
million annually. It is based on multiplying the average household income
of 528,000 by 5,234 non-military, non-retired households and by an average
expenditure of 45 percent of income for retail sales with 30 percent of
their expenditures made outside of Key West. These expenditures are then
attributed to the tourist industry, retired residents and other industries
based on their relative shares of the Key West economy.
Table 10. KEY WEST FY 1991 SALES TAX REVENUES BY INDUSTRY
Tourist- Amount Per
.D.i:iL. Tourist-Day
Industry Revenues Share Household or Household
Tourism S1,451,338 83% 5,445,435 $0.27
Retired Households' 140,852 8% 2,.773 $49.59
Mili tary 88,032 5% 1,303 S63.70
Other Industry 70.426 ~
Total Sales Taxes $1,760,648 100%
Sources: City of Key West and Hammer, Siler, George Associates.
Park1nQ and Prooerty leases
The City collects $1.32 million 1n annual parking revenues and
property leases. The detailed breakdown of this revenue category is shown
in Appendix A. Much of the property lease income comes from leases at
Mallory Square and is largely attributable to the city's tourist activity.
23
We estimate that the 85 percent of these revenues are attributable to the
tourist income with the balance divided among retirees, military-related
households, and other industries based on their relative shares of the
city economy.
Tabl e 1 L KEY WEST FY 1991 PARKING AND
PROPERTY LEASE REVENUES.,.gy INDUSTRY
Tourist- Amount Per
D.W. Tourist-Day
Industry Revenues Share Household or Household
Tourism S1,123,652 85% 5,445,435 SO.21
Retired Households 118,975 9% 2,773 $42.90
Military Spin-Off 39,658 3% 1,303 $30.44
Other Industry 39.658 ~
Total lease Revenues $1,321,943 100%
Sources: City of Key West and Hammer, Siler, George Associates.
Buildino Per:mits
Because building permit revenue is based on the value of
construction, it reflects the distribution of real property tax revenues
by industry which was summarized in Table 9.
24
Table 17. KEY WEST FY 1991 MISCELLANEOUS REVENUES BY INDUSTRY
Tourist- Amount Per
Dill Tourist-Day
Industry Revenues Share Household or Household
Tourism S3, 011,584 80% 5,445,435 SO.55
Retired Households 414,093 11% 2,773 S155.64
Military Spin-Off 188,224 5% 1,303 $130.66
Other Industry 150.579 ~
Total Miscellaneous
Revenues $3,764,480 100%
Note: Includes Prior Year's Balance.
Sources: City of Key West and Hammer, Siler, George Associates.
Summary
Table 18 summarizes. the relative incidence of the nine different
categori es of taxes and fees 1 evi ed by Key West. It shows that to
.
tourists is attributable approximately 80.percent of revenues, to retirees
about 11 percent,.to the military five percent, and to other industries
about four percent.
29
wi thout regard to where they work. These factors are important in
calculating the marginal fiscal efforts of building apartments rather than
hotels on remaining developable sites located within the city. In the
second analysis, we attribute both direct and indirect expenditure demands
so as to parallel the preceding revenue analysis.
The analysis begins with Key West Fiscal Year 1991 expenditures by
major budget category. Based on discussions with the Key West Treasurer,
representatives of the Police Department, and Fire Chief, these,
expenditures are allocated among the categories of:
: 0 tourists and seasonal reside.nts;
o retirees;
o military-related households;
o permanent year-round residents; and
o other businesses.
Table 19 shows the estimated distribution of expenditures by these
five economic sectors.
31
~
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Direct Exoenditures
Table 20 takes the expenditure allocations from the preceding
discussion and translates them into direct expenditures by category and
expend; tures per household or touri st-day (one touri st for one day).
These are direct expend1tures to the specific economic sector. Results
indicate that 56 percent of expenditures are attributable to residents who
are not retired or in the mi 1 i tary, 23 percent are attri butabl e to
tourists and nine percent are attributable each to retired residents and -
to military-related households.
33
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Allocation By Economic Sector
Based on the distribution of the City's economic activity and
population by major sector, the expenditures for services to the City's
year-round residents are allocated as follows:
Economic ComDonent
Share of
Economv and
PODulation
Tourist/Seasonal Residents
Retirees
Mil i tary
Other Businesses
Total
60%
14
22
--L
100%
Table 21 summarizes the distribution of municipal expenditures by
economi c sector. For exampl e, from Tabl e 19 residents account, for 43
percent of pol ice expenditures in Key West, of which 60 percent are
attributable to tourists and seasonal residents. To this 36 percent is
added 35 percent of police expenditures directly attributable to tourists
for a total of 61 percent, as shown in Table 21. These calculations were
made for each of the four major economic sectors.
36
r-
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ex: >- C,l~ ~~~';lot~~~ ';lot
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jl
Table 22 summarizes the net revenues/costs attributable to each of
the city's four major economic sectors. The tourist sector gen.erates 80
percent of the City's revenues while requiring only 56 percent of its
expenditures, generating a net surplus of $3,957,086. The surplus
generated from tourism enables the City to charge lower taxes to retirees,
military-related households, and other businesses which yield less revenue
than the costs imposed by these sectors. Retirees generate an annual
deficit of $887,718. The military-related households require $2,731,543
more in expendi tures than they generate in taxes. Other i ndustri es -
generate $337,825 less in taxes than they require in expenditures.
Table 22. KEY WEST REVENUES AND EXPENDITURES ATTRIBUTABLE
TO ECONOMIC SECTORS. FISCAL YEAR 1991
Tota 1
Surolus/
Revenues Exoenditures (Deficit)
$13,317,937 $9,368,501 $3,957,086
1,894,636 2,782,354 (887,718)
775,827 3,507,370 (2,731,543)
660.362 998.187 {337.825}
S16,648,752 $16,648,762 SO
Industry
Tourism
Retired Households
Military .
Other Industries
Note: See Table 18 for the detailed revenue categories and
Table 21 for the detailed expenditures categories.
Source: Hammer, Siler, George Associates.
Sumary
When shares of expendi tures attri butabl e to major categori es of
demand are compared to shares of revenues, the greatest disparity is in
the tourist/seasonal category: 24 percent more revenue than expenditures.
39
-
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."
Therefore, these visitors more than pay their way. The principal reasons
being their indirect payment of real property taxes through the places
they stay and their direct payment of sales taxes. The typical tourist
experience is expenditure intensive.
Some 56 percent of municipal expenditures ~re attributable to
tourists of which 52 percent is spent on publtc safety. General
government expendi tures represent another 33 percent of expenditures
at t ri butab 1 e to touri sts. After touri sts, mili tary-re 1 ated househo 1 ds
place the next greatest burden on municipal expenditures -- 21 percent.
Some 31 percent of the cost of their services are for general government
functions while public safety accounts for another 55 percent. Retirees
require 17 percent of municipal expenditures. Of that total, 49 percent
is for general government services and 36 percent is for public safety.
The remaining six percent of expenditures support other miscellaneous
sectors of the city's economy.
A series of nine major categories of taxes and fees support the non-
enterprise fund portion of municipal services. Other revenues are
generated by enterprises such as sol id waste and sewerage, personal
property taxes levied on equipment used by businesses, and
intergovernmental transfers. To tourists is attributed about 80 percent
of the revenue raised while retirees appear to raise about 11 percent of
revenues. Because so many off-market products and services are provided
to military personnel and their families, they are not taxed in proportion
to their presence in the economy. Other miscellaneous industries raise
about four percent of the city's revenues.
40
Section III. HOUSING AFFOROABIlITY
-:.:- .'~ ......
Section III. HOUSING AFFORDABILITY
The Key West housing market is characterized by high costs and low
vacancy rates. !t is a very tight market which undermiDes the island's
economic well-being by limiting the labor supply, inc~asing business
costs of operation, and affecting the economic health of many Key West
households. Results of. these factors include long corrrnutes to jobs
located in Key West, higher housing rents and prices, and disproportionate
shares of household incomes being allocated to housing.
!:osts
In 1987, a detailed study for the Monroe County Affordable Housing
Study Corrrnittee indicated average contract rents of $492 per month for Key
West and Stocl< Island apartments. Early in 1991 real estate leasing
agents reported that Key West apartments are being leased at the following
rent levels:
Unit Tyoe Rent Per
Rent RanQe Sauare Feet Sa. Ft.
Efficiency $400-$550 400 Sl.00-Sl.37
One-Bedroom $450-S600 550 $0.82-$1.09
Two-Bedroom S700-$900 800 SO.87-$1.12
An employee survey was conducted at the Ocean Key House, Holiday Inn-
La ~oncha, Cas a Marina, Hyatt, and Pier House in 1989. It indicated that
72 percent of-the employees were paying more than S350 per month in rent
or mortgage payments, 38 percent were payi ng more than S550, and 14
percent more than S750.
41
For-sale housing is priced from $90,000 to $390,000, including
condominiums priced from $68,500 to S160,OOO. Analysis of selected 1990
sales and listings through the Multiple Listing Service indicates that
some 55 percent sold at prices above $150,000.
The rents and mortgage payments are only part-bf the overall housing
costs. Utilities are costly in Key West, and the new sewer and solid
waste fee schedules levied to bring the City's systems into compliance -
with environmental regulations are significant additional expenses.
The U.S. Bureau of Labor Statistics reports that the cost of living
in Monroe County was 14 percent above the Florida average in 1989, and its
cost of housing was 29 percent above the state average.
When compared to typical incomes of Key West residents, these rent
levels are quite burdensome. The island's economic dependence on the
tourism industry means that many Key West workers are in relatively low-
wage industries. While Key West hotels and retailers pay wages 12 to 20
percent in excess of mainland wages for the same jobs, the average non-
tip hotel worker is paid only $6.00 to S8.00 per hour. To rent an average
one-bedroom apartment at S550 per month plus $125 for utilities, he or she
woul d have to spend 58 percent of hi s or her income on hous i ng. Thi s
compares with a national standard of affordability in which the tenant
pays 30 percent of income for housing. Few can afford to spend so much,
therefore doubling- and tripling-up is corrmon. ,The hotel employees
surveyed reported that less than 20 percent lived alone, 35 percent had
one roorrrnate, 15 percent had two roorrmates, and 10 percent had three
roorrrnates. The hous i ng problem for newcomers is compounded by the
landlords' requirement of two to three months' rent due before move-in.
42.
Occupancy
Early 1991 occupancies were estimated at 9S to 98 percent during the
wi nter season wi t.h somewhat lower occupancy in the surrrner. A typi ca 1
housing market requires a minimum five percent vacancy ~ate overall to
accommodate normal turnover. The 1991 occupancy rate is-Teported to be
much improved over the last two to three years when occupancy was closer
to 98 percent. At that time, it was very difficult to find appropriate
housing to meet one's needs. People were reported to be sleeping in their
cars, in houseboats which lack modern conveniences, or in substandard
mobll e homes.
_ Housing conditions are generally acceptable among the multi-family
rental stock. However, the lack of competition inherent in any tight
housing market provides little pressure for upgrading of existing housing
units. Most landlords recognize the need for on-going maintenance and
improvements to preserve the value of their investment, but some postpone
such expenses until forced to do so by the market. Because the City does
not undertake initiative code enforcement programs, this legal "stick" i~
not available to help improve the quality of existing units which are not
well maintained.
Imoact on the HousinQ Consumer
To the housing consumer, the high cost of ho~sing can mean major
hardships. Doubling-up is not without emotional and other problems. The
individual is left with much less income to cover the other necessities
43
I
of 1 ife and to save. Roughly 20 to 25 percent of the island's hotel
workers hold a second job in order to make ends meet.
In part, Key West's relatively high transiency is attributable to the
difficult nousing market. As newcomers find out how much of their income
is required' for lower-quality housing than they had on the mainland, Key
West seems much 1 ess of a paradi se and they move on. Long-time 1 oca 1
residents find the costs too high to continue living on the island. Young
adul ts starting out cannot afford to stay. Retirees 1 eave to fi nd a -
retirement home with a lower cost of living more in line with their
re;s~urces .
The high cost of for-sale units has blocked many first-time buyers
from buying a home. Monthly mortgage payments, large downpayment
requirements, and monthly maintenance fees are a major barriers to
homeownership. Would-be homebuyers are forced to continue renting while
missing the opportunity to start building equity and future assets.
fmoact on the Business Community
The effects are equally burdensome for local businesses and the
overall economy. The island's high cost of living puts significant
pressure on wages. If workers cannot afford to live on the typical wages
a company might pay on the mainland, the business must pay higher wages
to attract qualified workers. At times, these higher labor costs can be
offset by higher prices, but not in all businesses or industries. In Key
West's important tourism industry, hotel managers report that their wage
and salary costs are roughly 12 to 20 percent above those in comparable
resorts located on the mainland.
44
The city's high labor force transiency rate imposes high costs on
local businesses. Leading hotels report turnover rates up to 300 percent
per year with 100 percent turnover being fairly common. The 1989 hotel
employee survey indicated that roughly 40 percent of the employees had
1; ved in Key West 1 ess than one year. That means that the hotel sand
other businesses, are importing and training new workers constantly. The
city's unemployment rate is less than three percent, indicating a very
tight labor market when compared with seven percent nationally. Vacancies
go unfilled at times and, managers are forced to hire workers with less
skills or experience than is desirable. While some of the lower quality
can be overcome through more intensive training, it inevitably affects the
quality of service provided by some employees. In the tourism industry
where service is so critical, an image of poor service could damage the
island's appeal to potential tourists. In non-tourist industries, poor
service affects the quality of life of all Key Westers.
The housing shortage was so severe and the consequences so damaging
that the Pier House entered into a master lease agreement with a developer
to build 29 units of housing for its employees. Under this agreement, the
Pier House is responsible for running the facility. It subsidizes roughly
one-third of the employees' housing costs during their first few months
in Key West. Thereafter, they are expected to pay fair market rents for
housing.
The island's labor shortage reaches into almost all segments of the
economy, not just the hotel industry. However, its effects are felt most
severely in retail, hotel, and other service industries which rely on low-
cost labor. Higher labor costs ripple through the whole economy leading
45
to higher prices for goods and services sold locally, exacerbating the
impacts of higher transportation and utility costs, and reinforcing Key
West's image as a high-cost remote location.
Recent Develooments
Over the last two years, the Key West housing market has improved to
the extent that realtors report fewer people do not have a roof over their
heads. The Growth Management Ordinance enacted in 1987 requires that 40 .
percent of new housing units be affordable. For purposes of the
ordinance, affordable units are defined as having: 1} rental rates,
;
including sewer and solid waste charges, which are less than or equal to
30 percent of median household income in Key West, or 2) a sale price less
than or equal to three times the median household income in Key West.
These units are required to meet those standards for five .years.
The new affordable units built at the Truman Annex, Ocean Walk, Las
Sal inas, arid Duck Avenue added 825 new units to the Key West housing
inventory over the past two to three years. Leasing agents report that
the introduction of these new units helpep to bring the market back into
a better balance by increasing the supply of vacant units and competition
among landlords. That competition has led to rents stabilizing or even
declining somewhat. Landlords are being forced by the market to improve
and upgrade their units as tenants with other choices available leave or
bypass less desirable units. Hotel managers and other business owners
report that employee problems and dissatisfactio~ with their housing
situations have improved somewhat during 1990 as a result.
46
~
{~
r~
Future Prosoects
Some of the benefits from the introduction of new affordable units
may be short-lived. As the economy grows and the supply of appropriate
sites declines, housing prices tend to increase. In addition, applicable
ordinances do not have unlimited enforcement periods.
Time Limitations
The agreements requiring that affordable unit rents and prices be
maintained at affordable levels are limited in duration. At Truman Annex,
the units are required to remain affordable for five years only. Realtors
report that some of the units sold'at affordable prices are now being
rented at market rents well in excess of the rent levels established in
the Growth Management Ordinance. In other projects, the developers have
agreed to abide by the rent/price guidelines for a period of seven years.
These time limits contrast with the practices of some other communities
which require 15- to 20-year periods at affordable prices. Thus, the new
units may not stay within the affordable market indefinitely.
Conversion to Transient Use
Other pressures continue to threaten the overall housing supply and
affordab111ty of Key West housing. The high rental rates achieved by
good-quality units rented on a weekly or monthly basis during the peak
tourist season have persuaded many homeowners to convert their units to
transient use. The removal of sound housing units from the year-round
market constrains the available supply and contributes to higher rents and
sales prices. The actual number of units being used for transient
purposes is not known. A total of 460 units have the occupational license
47
I
required of all transient units, but they may represent a small share of
the total number of units rented on a transient basis. The conversion of
several boarding houses into guest houses also has reduced the supply of
available housing, particularly among low-rent units.
Second Home'Demand
Beyond the issue of conversion of transient units, the demand for
second homes is resulting in a conversion from year-round occupancy to
intermittent use by non-locals. While such use brings additional tourists
to, the is1 and who then spend some money in the 1 oca 1 economy, it removes
need~d.hous1ng from the available supply.
land Suoolv
The extreme limitations on land available for new housing
construction contribute to the city's overall housing problems. The city
has only six vacant tracts of 1 and 1 arger than four acres potentially
available for new development. The Fairways, Bayview, and Peary Court
sites are committed to housing and will probably start development in the
next two years. Additional units are planned at Truman Annex and Ocean
Walk. Of the proposed units, only the 160 units at Peary Court and 533
units at the Fairways are proposed to be affordable units. Fifty units
of affordable housing were recently completed at the old Douglass School
site. Among the remaining properties are Searstown, the old Navy
Corrmissary on Whitehead Street, and the City Electric Plant -- all
redevelopment opportunities found housing is just one possible use. Solin
&. Associ ates est im~tes that roughly 30 addi t i ona 1 acres of 1 and are
available in Key West which could accommodate 254 additional housing units
48
r
I
at an average planned density of 12.5 units per acre. Additional
information on these sites is provided in the November 1991 Comprehensive
Pl an.
The relatively small supply of land relative to the strong demand has
forced prices to very high levels -- $350,000 to $450,000 per acre and
even higher in certain locations. With a maximum density~bf 16 units per
acre, that implies a land cost of S22,000 to $28,000 per unit,
substantially higher than the S5,000 to S15,000 per-unit land costs
enjoyed by multi-famlly housing developers in many mainland corrmunities.
The "land supply limitations are exacerbated by public opposition to
new development. The development approval process is quite lengthy and
creates additional financing costs for the developer as he or she holds
the land with no return during that process. When neighborhood opposition
prevents new housi ng construction, the market is unabl e to respond to
demand and the housing supply is further constrained.
Surrrnarv
At $0.82 to $1.37 per square foot for rental units, Key West's
housing prices tend to be high. They result in doubling-up, occupancy of
unsound units, and spending too high a proportion of household income for
housing. Monroe County households spend 29 percent more for housing than
the average Florida household. The City's high degree of dependance on
tourism, service, and military jobs which often pay less than $8 per hour
results in high demand for affordable housing.
Rapid growth, the limited supply of vacant developable residential
land, and density controls related to the carrying capacity of the city's
49
infrastructure have contributed to increased housing prices and occupancy
rates. During the winter season, housing occupancy rates reach 98 percent
and reduce turnover.
Behavior of the housing market impacts the business community in a
variety of'ways. There is pressure to raise wages ~nd therefore operating
costs. Services industries report high employe~.turnover rates and a
tight labor market. Having an unemployment rate less than one-half the
nation's makes it difficult to find qualified employees. Good quality.
loyal employees are at a premium.
As the economy has grown, the supply of developable housing sites has
declined to a point where less than 30 acres, which can accommodate 254
units, remain available for new housing projects. Even approved
affordable housing projects need not remain affordable for more than five
years. Many sound housing units have been converted to transient
facilities and others converted to seasonal use and not made available for
rent.
50
J
rl
I!
Section IV. COMPARATIVE COST-REVENUE ANALYSIS
Section IV. COMPARATIVE COST-REVENUE ANALYSIS
In considering requests for development approvals, the City of Key
West faces a ser~es of decisions with significant fiscal implications.
For these decisions what matters is the marginal effect ot.new development
rather than the average effect. The marginal effects model quantifies the
impact of a decision to add a project to the existing inventory.
To test the marginal impacts of new multi-family rental and hotel
developments, the potential revenues to be generated annually by each
project are estimated for real property, personal property, sales, hotel,
gasoline, and cigarette taxes, and water/sewer and solid waste fees. The
incremental operating costs will include police, fire, general government,
transportation, recreation, water/sewer and solid waste. Though the model
ts focused on City costs and revenues, note is also made of the
implications for Monroe County school and social welfare system costs.
Proiect-Specific Fiscal Imoacts
Some of the City's major land use decisions involve choosing between
hotel versus apartment development. To provide insight into the relative
fiscal impacts from each type of development, we have estimated the direct
tax revenues and direct municipal expenditures which would be required by
the development of:
o a 200-room mid-priced hotel;
o a 200-room resort hotel;
o a 200-unit apartment building; and
o a 400-unit small-unit apartment building.
51
The basic model inputs are surrrnarized in Table 23. Factors for
revenues and expenditures per tourist-day and per household are derived
from the fiscal impact analysis described in Section II.
52
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Prototvoe Hotels
During the past 45 years, many types of hotel properties have been
developed in Key West. For purposes of this analysis, two hypothetical
contemporary new construction projects have been prescribed. One is a
200-room mfd-pri ced property. The other is a 200-room resort hotel.
Neither project is site specific. -
Mid-Priced Hotel. The following estimate of Key West taxes and
.
municipal costs associated with operation of a 200-room mid-priced hotel
indicates potential revenues of 5144,700 per year. With annual related
costs'of $103,400, a 200-room mid-priced hotel is estimated to generate
$41,300 in net revenues for the City of Key West. In addition, the hotel
would generate an estimated $25,400 per year in hotel taxes for the Monroe
County land Authority. No public school pupils would be generated and the
County would incur no school costs due to the new hotel.
55
Table 24. ANNUAL FISCAL IMPACT OF A 200-ROOM
MID-PRICED HOTEL. KEY WEST. 1991
Revenue/Exoenditure Amount
Direct Revenue $60,500
Real Property
Personal Property 13 , 000
Sales Tax 4},200
Cigarette Tax 1~,000
Gasoline Tax 4,500
Business License Fees 13.500
Total Revenue $144,700
Direct Exoenditures (
General Government $24,000
Police 47,900
Fire Control 13,500
Code Enforcement 7,500
Facilities Maintenance 9,000
Recreation 1,500
Cemetery 0
Total Expenditures $103,400
Fiscal Surplusj(Deficit) $41,300
Note: Data in constant 1991 dollars.
Source: Hammer, Siler, George Associates.
Resort Hotel. A resort hotel with significantly higher room rates
is estimated to generate annual revenues of S246,500 for the City of Key
West. Its associated cost impacts of S107,100 per year leave a net annual
revenue of $139,400 for a 200-room resort hotel. The hotel would generate
S62,100 in annual taxes for the Monroe County Land Authority.
56
Table 25. ANNUAL FISCAL IMPACT OF A 200-
ROOM RESORT HOTEL. KEY WEST. 1991
Total Revenue
Amount
$155,400
17,300
42,700
-- ,. 12,400
4,700
14.000
$246,500
$24,800
49,600
14,000
7,800
9,300
1,600
0
$107,100
$139,400
Revenue/Exoenditure
Direct Revenue
Real Property
Personal Property
Sales Tax
Cigarette Tax
Gasoline Tax
Business License Fees
Direct Exoenditures
General Government
Police
Fire Control
Code Enforcement
Fa,ilities Maintenance
Recreation
Cemetery
Total Expenditures
Fiscal Surplus/(Deficit)
Note: Data in constant 1991 dollars.
Source: Hammer, Siler, George Associates.
Prototvoe Aoartments
Key West's housing crisis has resulted in a vast array of multi-
family projects except high rise due to density constraints. Two types
of multi-family rental projects are hypothesized here. One would include
200 units each having 825 square feet, typical of products currently on
the market. The second prototype would be 435 square feet per unit
designed for single people. Many migrants to Key West and many tourist
57
industry employees are single. Apartment project cost factors are
provided in appendix tables E and F.
Aoartment Buildinq Of Market-Sized Units. Key West apartments built
for the year-round population are achieving average rents of S900 per
month with 40 p'ercent or roughly $4.00 per net square foot going for
operating expenses. Capitalizing the net income indicate~_a current value
of S80,000 per unit with the assessment set at 85 percent of that amount.
Annual revenues to Key West are estimated at S461 per household or S96,600
in total annual revenues. However, direct municipal costs required to
serve that population are estimated at S335,400 per year. Thus, a 200-
unit apartment complex built for the resident population would have a net
cost of S238,800 per year for the City of Key West. In addition, these
200 units would be expected to generate 72 new school-aged children to be
educated in the Monroe County schools at a total annual cost of $364,300.
To the extent that occupants of new units leave overcrowded units,
the incremental municipal costs may be lower. The net costs imposed by
new households would be covered by the excess tax revenues generated by
hotels and other businesses.
58
Table 26. ANNUAL FISCAL IMPACT OF A 200-UNIT MARKET-
SIZED APARTMENT COMPLEX. KEY WEST. 1991
Revenue/Exoenditure
Direct Revenue
Real Property
Personal Property
Sales Tax
Cigarette Tax
Gasoline Tax
Business License Fees
Amount
Total Revenue
$69,100
o
8,400
8,600
2,400
8. 100
$96,600
Direct Exoenditures
General Government
Police
Fire Control
Code Enforcement
Facilities Maintenance
Recreation
Cemetery
Total Expenditures
Fiscal Surplus/(Deficit)
$129,800
78,500
80,200
12,500
26,600
7,200
600
$335,400
($238,800)
Note: Data in constant 1991 dollars.
Source: Hammer, Siler, George Associates.
Aoartment Buildinq Of Small Units. One- alternative approach to
meeting affordable housing needs would be to build an apartment complex
with smaller units averaging 350 net square feet per unit at a density of
32 units per acre. Renting at an average of $450 per month with operating
59
expenses of S4.00 per net square foot, the complex would have an estimated
market value of $40,000 per unit. The assessment for real property taxes
is set at 85 percent of that amount.
The City of Key West would receive an estimated $98,600 in annual
revenues from the apartment building and its residents. With associated
municipal costs of $336,000 per year, the building woul~_generate a net
operating deficit of $237,000 per year. Because these units would be
designed for single people, there would be no cost impact on the Monroe
County schools. The operating deficit would be overstated if this
apattment building attracted existing residents out of over crowded units.
60
Table 27. ANNUAL FISCAL IMPACT OF A 400-UNIT SMALL-
UNIT APARTMENT COMPLEX. KEY WEST. 1991
Revenue/Exoenditure
Direct Revenue
Real Property
Personal Property
Sales Tax
Cigarette Tax
Gasoline Tax
Business License Fees
Amount
Total Revenue
$69,100
o
9,600
8,600
3,200
8.100
$98,600
Direct Exoenditures
General Government
Police
Fire Control
Code Enforcement
Facilities Maintenance
Recreation
Cemetery
Total Expenditures
Fiscal Surplus/(Deficit)
$130,000
78,700
80,200
12,500
26,600
7,200
. 800
$336,000
($237,400)
Hote: Data in constant 1991 dollars.
Source: Hammer, Siler, George Associates.
Net Fiscal Imoact
Table 28 summaries the net fiscal surplus/deficit generated by each
of the three prototypt i ca 1 projects. There is a net positive annual
impact by both of the hotel projects and a net negative 'impact of the
apartment project.
61
Table 28. FISCAL IMPACTS OF PROTOTYPICAL HOTEL AND
APARTMENT OPERATIONS. CITY OF KEY WEST. 1991
Revenue/ExDenditure
200-Room 200-Room
Mid-Priced Resort
Hotel Hotel
200-Unit
ADartment
Comolex
400 Small-
Unit Aoartment
Comolex
Annual Revenues
Annual Expenditu~~s
$144,700 $246,500
103.400 107.100
$96,600
335.400
$98,600
335.000
Net Surplus/{Deficit)
$41,300 S139,400 (S238,800) ~{$237,400)
Note: Data in constant 1991 dollars.
Source: Hammer, Siler, George Associates.
Affordable Housino Financ;no GaD Analysis
The analysis of the economics of affordable housing must begin with
a determination of the gap between the cost of building such housing and
the funds available for investment in housing. The available investment
relates to the likely income from leasing the apartments. We use a Q!Q
forma financial a~alysis to quantify this affordable housing financing
gap. Two potential developments are evaluated: 1) a 200-unit apartment
building with market-sized units; and 2) a 400-unit apartment building
with small units.
DeveloDment Costs Of Market-Sized Units
A 200-unit apartment building with market-sized units could be
developed at a total cost of $21.1 million (measur~d in 1992 dollars),
including $13.0 million for hard construction costs, $3.5 million for
other development "soft costs" for land. land is a significant cost
factor in housing development. Major Key West sites are reported to be
valued at S350,000 or more per acre. The City's zoning code allows for
62
a maximum density of 16 dwell ing units per acre. The apartments are
assumed to average 700 of "livable" square feet and 825 gross square feet
of space.
Potential Ooeratino Income Of Market-Sized Units
The median income of Key West households was estimated by the City
to be S26,664 in 1991. Typical housing affordability guidelines suggest
that a household can afford to pay up to 30 percent of its gross income
or S667 per month for total housing costs. This is equivalent to S700
per month in 1992 dollars. Typically, the tenant would pay $60 per month
for sewer and solid waste collection. Thus, the median income Key West
household could afford to pay $640 per month for rent (1992 dollars).
Thi s compares wi th market rents of S650 to S800 per month for a 700
square-foot unit.
Allowing five percent for typical vacancy and collection losses, the
project would have a gross income of $1,459,200. The landlord would be
respons i bl e for ma i ntenance, real estate taxes, corrrnon area, and other
expenses estimated at S588,OOO per year ~ Thi s 1 eaves a net ope rat ; ng
income of S871,200 available to pay the project mortgage and to compensate
the developer.
To fi nance the development cost, the developer woul d corrrni t the
building's rental income to repay funds borrowed from a lending
institution or other investor. The projected rental income would support
a mortgage of $6.78 million at a 10 percent interest rate. The developer
would also need to commit S14.35 million in non-debt equity dollars either
from the developer's own resources, from a joint venture equity partner,
or from public sources such as a housing trust fund.
63
Developers and real estate 1 nvestors requi re a return on thei r
investment which compensates them for both the cost of money and for the
risks they incur in developing housing. Real estate development entails
a whole series of risks which could substantially reduce the anticipated
profits or even ~ankrupt the project. To incur those risks, developers
and real estate investors need to see the opportunity for a much higher
return th'an they coul d achi eve in a 1 O'I,,-ri sk investment fuch as Treasury
bonds or Certificates of Deposit. In today's market, real estate
developers and investors are demanding returns of 13 to 15 percent. That
required return effectively limits the amount of private equity a
developer can raise for the project.,
Under the affordable housing rent guidelines, the project could
support a $6.78 million mortgage and the developer or investor could
justify an equity investment of up to S2.93 million. Compared with
development costs of S21.13 million, this leaves a financing gap of S11.42
million or $57,100 per unit. The gap would be even higher for a smaller
development without the construction cost savings of a large project's
economies of scale. This analysis is summarized for 1992 construction in
Table 29.
.'
64
Table 29. AFFORDABLE HOUSING FINANCIAL PRO FORMA ANALYSIS
FOR MARKET-SIZED UNITS. KEY WEST. 1992
Factor
Development Costs
land (12.5 acres at
, $370,000 per acre)
Construction Costs (165,000
gross sq. ft. at S79 per sq. ft.)
Soft Costs (165,000 gross sq. ft.
at $21 per sq. ft.)
Total Development Costs
Potential Income
Rent (200 units at S640 per month)
less Vacancy and Collection Loss
(at five percent)
less Operating Expenses (140,000
net sq. ft. at $4.20 per sq. ft.)
Net Operating Income
Capitalization Rate
Project Value
loan-to-Value Ratio
Supportable Mortgage
Annual Mortgage Payment (at
10-Percent Interest)
Required Return on Equity (Overall
Internal Rate of Return)
Supportable Equity
Financing Gap Not Covered by
Debt or Equity
Financing Gap per Unit
Amount
$4,625,000
-
~. 13,035,000
3.465.000
$21,125,000
$1,536,000
(76,800)
(588,000)
$871,200
9.0%
$9,680,000
70%
$6,776,000
$713,000
14%
$2,932,000
$11,417,000
$57,100
Notes: Data in constant 1992 dollars.
sq. ft. means square feet.
Source: Hammer, Siler, George Associates.
Table 30'provides a 10-year operating cash flow analysis from after
a prototypical 200-unit affordable housing project is built to 2002. Upon
95 percent rentup in 1994 the project would have a net positive cash flow.
65
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Develooment Costs Of Small Units
A 400-unit apartment building with small units averaging 350 net
square feet could be developed at a density of 32 units per acre at a cost
of S22.9 million. These costs are somewhat higher than for market-sized
units due t~ lower building efficiency and the greater amount of plumbing
and kitchen fixtures required.
Potential Ooerat1nQ Income Of Small Units
Potent i a 1 res idents are assumed to have annual incomes averagi ng
S16,000. Spending 30 percent of their gross income or S400 per month for
housing (S420 per month in 1992 dollars), the tenant could afford to pay
$340 per month ($360 in 1992 dollars) after paying for sewer and solid
waste collection.
With a five percent allowance for vacancy and collection losses, the
gross incom~ would be S1,641,600. From that income, the landlord would
need to pay S588,000 for maintenance, real estate taxes, common area and
other expenses. Net operating income is estimated at S1,053,600 per year.
The forecasted rental income would support a mortgage of S8,195,000.
The project's income would justify an equity investment of $4,522,000.
That would leave a financing gap of S10,178,000 or $25,400 per unit, as
shown in Table 31.
67
Table 31. AFFORDABLE HOUSING FINANCIAL PRO FORMA ANALYSIS
FOR SMALL APARTMENT UNITS. KEY WEST. 1992
Oevelooment Costs
land (12.5 acres at $370,000 per acre)
Construction Costs (174,000 gross
sq. ft. at $84 per sq. ft.)
Soft Costs (174,000 gross sq. ft.
at $21 per'sq. ft.)
Total Oevel~pment Costs-
Potential Income
Rent (400 units at $360 per month)
Less Vacancy and Collection Loss
(at five percent)
Less Operating Expenses (140,000
net sq. ft. at S4.20 per sq. ft.)
Net Operating Income
Capitalization Rate
Project Value
loan-to-Value Ratio
Supportable Mortgage
Annual Mortgage Payment (at
10-Percent Interest)
Required Return on Equity (Overall
Internal Rate of Return)
Supportable Equity
Financing Gap Not Covered by Debt or Equity
Financing Gap per Unit
$4,625,000
14,616,000
3.654.000
S22,895,000
Sl,728,000
(86,400)
(588,000)
Sl,053,600
9.0%
Sl1, 707,000
70%
S8,195,OOO
$863,000
14%
S4,522,OOO
S10,178,OOO
$25,400
Notes: Data in constant 1992 dollars.
Sq. ft. means square feet.
Source: Hammer, Siler, George Associates.
A 10-year operating cash flow analysis for the project is shown in
Table 32.
68
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Imoact Fee Imolications
If impact fees were imposed on the developers of new hotels, retail
space, offices, and condominiums, the fees should vary with the employee
density, that is, the number of employees per room, unit or 1,000 square
feet. Key West ~otel mangers i ndi cate that 0.6 person is employed' for
everyone room in mid-priced hotels. In resort hotels, the employee count
increases to one employee for everyone room. Offices typically
accommodate at least four employees per 1,000 gross square feet. Typical
retail and service developments employ up to two persons per 1,000 gross
square feet of space. Condominium and high-rent apartment developments
require roughly one employee per 10 units for management, maintenance, and
service, depending on their size and amenities.
The following analysis assumes that the developers of new projects
are required to pay 100 percent of the required affordable housing subsidy
associated with the new jobs to be. created in the projects. Combining the
employee densities. with the required per unit subsidy of $57,100 and an
average of 1.4 employees per household yields a range of required fees.
Table 33 summarizes the required fees for hotel, office, retail/service,
condomi ni urn, and high-rent apartment developmerits if the developer is
required to meet the total financial gap.
70
Table 33. REQUIRED HOUSING SUBSIDY IF DEVELOPMENT MEETS THE
TOTAL FINANCIAL GAP WITHOUT ANY PUBLIC SUBSIDY
land Use
Hotel
Mid-Prices
Resort '
Retail /Service
Office
Condominiums
High Rent Apartments
Fee Per
Emoloyee
Fee Per Unit
$40,800
$40,800
$40,000
$40,800
$40,800
$40,800
S24,SOO/room
S4Q,800/room
S81~,600/1,000 g.s.f.
S163,200/1,000 g.s.f.
S4,100/unit
S4,~00/unit
Notes: Fees in constant 1992 dollars.
g.s.f. means gross square feet.
Source: Hammer, Siler, George Associates.
There is an economic limit to the amount of impact fees that a new
development can afford, which is determined by the rents or sales prices
which can be achieved for space in the competitive market. Above that
limit, the project does not make sense economically and cannot be
financed. At the $24,500 per hotel room impact fee, which would be
required if ~ew development were to bear all of the costs of creating
affordable housing, the fee would add ~bout 30 percent to hotel
development costs. To afford such an increase, hotel rates for new hotels
would. need to increase by a similar amount. In competition with existing
hotels, such as increase would not be possible and probably the hotel
would not be constructed.
The cost of developing retail space would almost double, requiring
a substantial increase in rent of at least $10 per square foot of new
space. Such'a sign i fi cant increase coul d not be supported in the near
term in the face of competition from existing retail space available at
lower rents. There are only a limited number of retailers who could
71
... . ~ .' .
afford rent increases of such a magnitude. Office development impact fees
of S163 per square foot would substantially exceed current development
costs, requiring that office rents more than double. Such a fee would
virtually prohibit the construction of new office space in Key West.
In addition to the extreme burden which such impact fees would place
, .
on new development, they would be unlikely to generate'..substantial new
funding for affordable housing. The Comprehensive Plan documents only 135
acres of vacant land potentially available for new development. Much of
that land will be developed under existing development agreements or would
be developed for low-density housing. Major sites which may be still
available for new development are Paradise Cove, the Fairways, the Bight,
and redevelopment of Searstown. In total, these lands might accommodate
as many as 1,810 housing units, of which only 260 might be high-end units
subject to affordable housing impact fees. An additional 300 hotel rooms
and 40,000 square feet of commercial space might also be accommodated.
If all of that land could be developed in spite of the impact fees, this
total new developm~nt would generate at most $11.5 million for affordable
housing over the next 10 years, supporting construction and financing of
an estimated 202 units. If the developers were required to meet the total
financial gap, it is unlikely that much of thi's potential development
would ever be built.
Alternative F1nanc1nQ Aooroaches
Other affordable housing alternatives are available which could be
combined with impact fee financing to construct affo;dable housing. Some
are in place already. The Monroe County Land Authority was created to
acquire land for environmental protection and affordable housing. It has
the power to assemble sites, to finance the costs of land holding during
72
. ...: .~~
. .
the development approval and construct i on peri ods, to 1 ease 1 and for
affordable housing, and possibly to write-down a portion of the land cost.
Other options identified by Key West's recent affordable housing task
forces and committees include the use of documentary stamp fees collected
on property transfers to fund a hous i ng trust fund, contri but i on of
publicly owned h.nd, and an increase in the hotel room tax to fund
affordable housing. Broad-based taxes which include both new and existing
development share the burden of housing subsidy costs more equitably than
do impact fees alone. This is because of the substantial unmet affordable
housing need accumulated over the past several years.
Because the publ ie/private partnerships required to provide
affordable housing do not permit reservation of the new. units for
employees of new hotels, the individual hotel would receive ~imited direct
benefi t from the hous i ng funded by impact fees. The benefi ts woul d be
much more diffuse and would accrue to businesses and individuals
throughout the economy, improving the overall labor market and reducing
city-wide housing costs by introducing new competition.
Surrrnarv
Ma i ntai ni ng the impact fee approach to respond to the affordabl e
housing financing gap will require $40,800 per employee. Using employee
densities, this translates into $24,500 to $40,800 per hotel room, S81,600
to $163,200 per 1,000 square feet of conrnercial space, and $4,100 per
market rate residential unit of new construction. These dollar
requirement could be decreased if any of a number of policy options were
undertaken:
73
o Discounting the price of public or private land.
o Lease Land Development Authority land.
o Establish a trust fund from land transfer tax.
o Increase tax directed at tourists in support of a trust fund such
as the room tax
o Increa~e property tax
Fiscal impacts of developing a 200-unit apartment project were
compared to developing a 200-room mid-priced hotel and a 200-room resort
hotel were calculated. From a net municipal tax yield perspective, the
resort hotel woul d be the most cost effect i ve wi th a net surpl us of
$139,400. The apartment project would cost the city $238,800 more in
expenditures over a one-year period that it would realize in revenues.
A 400-unit apartment building of small units would have a negative fiscal
impact of $237,400. The mid-priced hotel would have a small net positive
fiscal effect of $41,300. However, development of a hotel would create
120 to 200 di rect jobs and exacerbate the city's affordabl e hous i ng
problem.
74
. ....'~
APPENDIX TABLES
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Table C. CRUISE SHIP UTILIZATION TRENDS. PORT OF KEY WEST,
FISCAL YEARS, 1987-1991
1m ~ ~ 1lli lm.1/
Number of
Passe,ngers 59,368 67,813 100,992 127,012 40,645
Number of Trips 55 82 147 198 66
Passenger 64,53oV 6_9,262
Capacity 112,839 142,376 49,178
Occupancy ~. :
Rate 92% 98% 89% 89% 83%
Notes: 1/ October through January data only,
ZJ Assumes fiscal year 1987 occupancy rate of
92 percent, the 1988-1991 average.
Sources: Cruise Ship Guide; Key West Port and Transportation
Authority; and Hammer, Siler, George Associates.
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Table E. AFFORDABLE HOUSING DEVELOPMENT COSTS FOR
HARKET-SIZED UNITS. KEY WEST. 1991-1992
Factor
Number of Units
Unit Size
1991 Dollars
Total Building Size
200
700
825
165,000
140,.000
16
12.50
$350,000
$75
$20
Units per Acre
Land
Land Cost
Construction Costs
Soft Costs
Potential Income
Median Household Income $26,664
Share to 'Housing Expense S667
Affordable Housing Expenses 30%
Less Sewer, Solid Waste Fees S60
Rents $607
Operating Expenses $4.00
Total Operating Expenses $560,000
First-Year Occupancy 50%
Average Occupancy Rate 95%
Capitalization Rate 9.0%
Loan-to-Value Ratio 70%
Mortgage Interest Rate 10%
Mortgage Constant 10.53%
Inflation Rate 5.0%
Cost Sale 2.0%
net sq. ft.
gross sq. ft.
gross sq. ft.
net sq. ft.
acres
per acre
per gross sq. ft.
per gross sq. ft.
per month
per month
average per month
per net sq. ft.
per year
1992 Dollars
$370,000
$79
$21
$27,997
$700
$60
$640
$4.20
$588,000
Source: Hammer, Siler, George Associates.
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Table G. REVENUE CATEGORY ALLOCATION. KEY WEST. 1991
For purposes of analysis the city's 67 general fund budget revenue
categories have b~en grouped into nine types of revenue. Each of these
nine types is al10cated among the four principal com~?nents of the
economy: touri sts/seasona 1, ret i rees, mil i tary, and other. Because
permanent residents are located in the city in response to one or more of
these economi c components, res; dents are not separately categori zed.
Discussion of the nine revenues and the methodologies deployed to allocate
their impacts is found on pages 20 through 28.
Real Property Tax
Current Ad Valorem Tax-Real Property
Delinquent Ad Valorem Tax-Real Property
Tota 1
$6,871 ,255
15.000
$6,886,255
Personal ProDerty Tax
Current Ad Valorem Tax-Personal Property
Delinquent Ad Valorem Tax-Personal Property
Total
$600,000
19.174
$619,174
M1 seen aneous
Telephone & Telegraph Franchise Tax
CATV Franchise Tax
Amusement Franchise Tax
Mobile Home Licenses.
Key West Housing Authority
City Electric System
Certification, Copying, Record Search
Election Qualifying Fees
Returned Check Charges
Police Services
$28,779
125,000
167,985
4,423
17,886
193,370
1,568
6,500
100
6,665
I
i
1
Table G. REVENUE CATETORY ALLOCATION. KEY WEST. 1991(Cont.)
Other Pubic Safety
Cemetery Fees
Cemetery Fees
Other Parks & Recreation
Court Fines
FinesiRestitution
Violations of Local Ordinances
Miscellaneous Revenue
Interest & Profit on Investments
Cemetery Vaults
Insurance Proceeds
Reimbursement From Sewer
Reimbursement from Solid Waste
Reimbursement from Garrison Bight
Reimbursement from Transit System
Reimbursement from Mallory Square
Transfer From Sewer
Prior Year's Balance
Total
395
8,375
255
6,371
89,136
1,763
23,626
25,000
200,000
20,625
233
454,500
557,000
25,155
50,910
33,544
320,000
1.385.316
$~t764,480
Sales Tax
Sales Tax-Ordinary Distribution
Sales Tax Commission
Total
$1,760,000
648
$1,760,648
Parkinq and PrODertv leases
Parking Meters
Parking Ticket Fines
lease-Island Tennis
lease-Key West Players
lease-Tropical Shell & Gift
lease-Steadman's
lease-Delphinid Research
lease-Island Renovations
lease-Reynolds Aluminum
lease-Garrison Bight Marina
lease-TCI Microwave Tower
lease-ISl. Windsurf/Sun. Water Sports
lease-Tropical Sailboats
lease-KW Golf Course
306,177
65,155
3,952
500
261,948
6,300
4,224
19,776
3,591
6,800
10,837
12,944
6,484
42,000
Table G. REVENUE CATEGORY ALLOCATION. KEY WEST. 1991
(Cant.)
13,468
14,545
543.243
Sl,321,943
Other Rents & Royalties
Transfer From Garrison Bight
Transfer From Mallory Square
Total
Buildino Permission
Building Permits
Protective Inspection Fees
Zoning & Subdivisional Fees
Sales of Maps & Publications
Total
$700tOOO
2,665
12,000
5.068
S719,733
Li censes
Professional & Occupational Licenses
Alcoholic Beverage Licenses
Share of County Occupational Licenses
Public Service OPC/Taxi Permit
Total
$577,500
55,000
55t867
7.000
$695,367
Cioarette Taxes
Cigarette Tax (.02 Additional)
State Revenue Sharing-Cigarette Tax
Tota 1
$200t925
459.727
$660t652
Gasoline Taxes
Municipal Gas Tax (.08).
Motor Fuel Tax Rebate
Total
Grand Total
$216,350
4.160
$220,510
116.648.762
Source: City of Key West.
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-
OKYv~ET.Y ~O~!;!~~E
(305) 294.4641
James L. Roberts
Monroe County Administrator
5100 College Road
Wing II, Room 212
Key West, Florida 33040
,.. ... ..---.-
I
BOARD OF COUNTY COMMISSIONERS
MA YOR Shirley Freeman, District 3
Mayor Pro tern Jack London. District 2
Wilhelmina Harvey, District I
Keith Douglass, District 4
Mal')' Kay Reich, District 5
December 16, 1994
Debra Corkhill
Defense Liaison
State of Florida Department of Commerce
Division of Economic Development
Collins Building
Tallahassee, Florida 32399-2000
Dear Ms. Corkhill,
In accordance with your letter, the following information is provided to
supplement our application for a State of Florida Base Closure and Realignment
Grant:
1. Section BE-9.00S Application Contents, subsection (3).
Exhibit A - Resolution No. 94-451, from the City of Key West, designating
Monroe County as the lead agency in our base retention efforts.
Exhibit B - Letters from Key West community organizations lending support
to Naval Air Station Key West, and Monroe County as the lead agency in
base retention efforts.
2. Section BE-9.00S Application Contents, subsection (5).
Exhibit C - Resolution No. 312-1994, executed on September 22, 1994, by the
Monroe County Board of County Commissioners, authorized the submission
of the grant application to the State of Florida for base retention efforts and
approving dollar for dollar match funding.
3. Section BE-9.00S Application Contents, subsection (6).
Exhibit D - A preliminary budget is submitted as outlined in our plan of
action provided in our grant application.
1
~
Debra Corkhill
State of Florida Department of Commerce
Supplemental Grant Information
December 16, 1994
4. Section BE-9.00S Application Contents, subsection (B).
As the cold war threat has diminished, the realignment and closure of
military bases has been a fundamental element in efforts to reduce that
portion of n~tional funding related to the support of armed forces. Three
BRAC rounds (19B8, 1991, 1993) resulted in the decision t~ close 70 of 495
major U.s. bases. BRAC '95 is anticipated to be more severe in numbers and
impact.. According to the Department of Defense, reductions in the BRAC '95
process are projected to equal the 1988, 1991 and 1993 rounds combined. The
Governor's Office has advised Monroe County that the year 1995 will be the
most severe BRAC process under current law. Our community realizes that
the Naval Air Station Key West may be considered in this action, hence
economic fallout for Monroe County is of grave concern.
If the decision was made to close NAS Key West, our school system would be
severely affected by the loss of 853 military dependent students. Monroe
County schools would lose 5831,000 in federal funding annually based on the
military students, constituting 1.7% of the school budget. Our schools are
very progressive in pursuing the most advanced programs, encouraging
those students desiring a higher education an opportunity to compete for the
top colleges. Recognizing that students must also have an alternative choice,
our schools have sought to provide our children with vocational training to
develop skills and become productive members in our community. If NAS
Key West was closed and our community lost the federal funding, that loss
would significantly impact the quality of our educational process and cause
the County's tax base to increase.
Florida Keys Community College, located in Key West, provides higher level
education to the citizens of Monroe County. Out of the total student
enrollment of 4,162 for Fiscal Year 1993/1994,432 of those students were
milltary and their dependents, constituting over 10% of the student
population. The loss of tuition created by the closing of NAS Key West
would be $44,452 ($33,339 paid by the Armed Forces) would negatively
impacting the civilian community with higher tuition costs.
2
,
i
~;
f1
I'
~
Debra Corkhill
State of Florida Department of Commerce
Supplemental Grant Information
December 16, 1994
Public utilities would be affected by the loss of revenue from the base itself
and from those families who occupy private dwellings throughout the island
community. This adverse impact will add a significant financial burden on
the cjtizens of Monroe County due to the increased costs levied on them by
the utility companies.
The Naval Medical Clinic refers a significant number of patients for specialty
care to medical practitioners and for local hospital services. The loss of our
military personnel would produce a major detrimental effect on our local
hospital and the practices of specialists, eventually causing the relocation of
specialized personnel. The citizens of Monroe County would be without
specialized medical care, causing them to travel long distances for these
medical services.
Monroe County works diligently at providing its citizens with the most
efficient life-saving methods in the event of a medical emergency. The
County has a Mutual Aid Agreement with the Fire Department at NAS Key
West which provides assistance to the civilian community in the event of a
major fire. Continuing in that cooperative spirit, the Naval Medical Clinic,
located at NAS Boca Chica, and Monroe County Emergency Medical Services
are currently drafting a Memorandum of Understanding between the two
agencies. This shared effort will not only offer education and training
opportunities for both military and Monroe County personnel, but also
facilitate the use of military emergency equipment and personnel in the
civili.~n community in the event of a medical crisis, exceeding the capability of
our local resources. The Memorandum of Understanding, once in place, and
the Mutual Aid Agreement, both terminated by the loss of NAS Key West
could create higher costs to the citizens of Monroe County, and reduce the
County's capability to respond to a major incident.
The estimated annual salary of military personnel in the Key West area is
approximately $40,000,000. The loss of a significant part of these funds,
normally spent daily in our local businesses, would severely impact the
merchants of our economic community. Though civilian personnel employed
at the base might find other employment, the potential for the loss of
$22,000,000 of their salaries would compound the effect on the businesses in
Key West and the Lower Keys.
3
I
Debra Corkhill
State of Florida Department of Commerce
Supplemental Grant Information
December 16, 1994
Volunteers from the Naval Air Station Key West render invaluable expertise
and support to our community's many charitable, civic and beneficial non-
profit programs. Sixty percent of our area's blood supply comes from our
active duty personnel. Adopt-A-School and Saturday Scholars are two
examples o(~he neighborly gestures NAS Key West prov~des our community.
Their loss would have a severe adverse impact on these organizations,
hindering their operations.
Surrounded by water, the Florida Keys are home to avid fishermen, divers
and pleasure boaters. The Naval Air Station Key West's Search And Rescue
(SAR), in coordination with the Coast Guard, has saved 19 civilian lives in the
past three years. This life-saving resource, if closed by the BRAC
Commission, would put Monroe County citizens and our visitors to the Keys
at serious risk.
5. Section 8E-9.005 Application Contents, subsection (10).
Monroe County has few industries and no agriculture. The major areas of
employment are the Naval Air Station Key West and tourism. The labor force
at NAS Key West utilizes skills which are not conducive to the tourist
industry. If the Naval Air Station were to close, many of those employed at
the base would need to leave the area to find job opportunities related to their
skill specialization. Given the environmental restrictions imposed on Monroe
County as an Area of Critical State Concern, it would not be possible to
establish industrial or agricultural activities to absorb those individuals who
would be unemployed by the Naval Air Station's closing.
6. Section 8E-9.005 Application Contents, subsection (11).
The Naval Air Station Key West executes $8~OOO,OOO in contracts and open
purchase actions, which would no longer be spent in the support of our
community if NAS Key West was closed. One hundred and twelve
businesses in Key West, and nine businesses in the Lower and Middle Keys
have contracts with NAS Key West. The loss of revenue would be
irreplaceable if these contracts were forfeited due to the closure of the Naval
Air Station.
In the event of an emergency, the military personnel at NAs Key West have
always been quick to respond with assistance in many instances. The Florida
Keys are vulnerable to hurricanes. The imminent danger of Key West losing
4
Debra Corkhill
State of Florida Department of Commerce
Supplemental Grant Information
December 16, 1994
the National Weather Service makes NAS Key West's meteorological services
imperative to the safe evacuation and survival of our community in the event
of an approaching hurricane. During Hurricane Andrew, NAS Key West's
advanced tec.1mological IMMERSA T telephone system linked our community
with the mainland when all Df the Keys' communications :were destroyed. If
future hurricanes should bring the kind of devastation to our community
such as the Miami area suffered in Hurricane Andrew, NAS Key West's
communication abilities could save thousands of lives. The loss of the Naval
Air Station Key West would put our isolated community in a vulnerable
position in the event of such a catastrophe.
I look forward to hearing from you in regards to the awarding of grant
moneys to Monroe County for the base retention efforts. If you should need
additional information, please do not hesitate to contact me.
Very truly yours,
_.------r-. ."&) b
.............f---1~.r/ '.'~-"":
. 'J '-_
James L. Roberts
County Administrator
5
RESOLUTION NO. 94-451
A RESOLUTION OF THE CITY COMMISSION OF THE
CITY OF KEY WEST DESIGNATING MONROE COUNTY AS
THE LEAD ORGANIZATION IN THE RETENTION EFFORTS
OF OUR MILITARY FACILITIES IN THE FLORIDA
KEYS; PROVIDING AN EFFECTIVE DATE.
WHEREAS, the Legislature enacted S 288.980, Florida statutes,
which provides funding to assist communities with military
installations "that would- be adversely affected by federal base
realignment or closure actions, to initiate procedures in support
of maintaining current military installations; and
WHEREAS, all military installations in Florida are vulnerable
to closure or realignment, including Boca Chica Naval Air station,
which would have an adverse economic impact on Monroe County and
Key West; and
WHEREAS, Monroe County has offered to be the lead agency and,
in coordination with the City of Key West, has made a preliminary
application to the Department of Commerce for grant funding to
prepare
a
coordinated
action
plan
for
conversion
and
closure/realignment prevention
NOW, THEREFORE, BE IT RESOLVED by the City commission of the
city of Key West as follows:
Section 1.
That Monroe County is recognized as the lead
organization in retention efforts of the Boca Chica Naval Air
Station, Key West, and all related military facilities in the area.
Section 2.
That this resolution shall become effective
immediately upon adoption by the Commission and the execution by
the Presiding Officer and Clerk.
EXHIBIT A
Passed and adopted by the City Commission at a meeting held
this
1st
day of November
, 1994.
Authenticated by the presiding officer and the Clerk of the
Commission on the
1st
day of
November
1994.
Filed with the Clerk
November 3, 1994
---;;~~--
./ -
./".
v
81' I~ TE OE' FLCiU.0A)
COUNTY OF MONTIOE)
CITY OF KEY ~EST)
fl'~::~ s
copy of the
By
+ American Red Cross
Mr. Charles Dusseau
Secretary of Florida Department of Commerce
Tallahassee, FL
Lower Keys Branch
3200 Flagler Ave., 2nd Floor
Key West, FL 33040
(305) 296-4033
1-800-287-4033
December 13, 1994
Dear Mr. Dusseau:
The American Red Cr'ess, Lower Keys Branch, is very concerned that Monroe County be
considered the negotiating agent regarding the Base Realignment and Ciosure (BRAC) activities
in the Florida Keys.
Locally, many active duty military donate time, blood and money in support of our organization.
Recently, a young man in the Air Force assisted v,.;th the bilingual notification oflocal families
that messages had been received here from their loved ones in Panama and Guantanamo.
Refugees had no other means to communicate VYith concerned families once they left Cuba.
Through the help of this young man, our mission was able to be accomplished and the important
link with these families was reestablished.
Regularly, disaster training for 24 hour response to single family fires, water spouts and other
larger disasters includes members assigned to the base. Our community readiness in disaster
preparedness is closely linked to involvement with military members. Not only human resources
but communication technology has been made available via our local anned services community.
Lessons learned after Hurricane Andrew indicated a strong need for the expertise that a military
base affords a small isolated community such as ours in a major disaster.
Please consider the negative impact that a base closing will have on our community and this
organization. I urge you to accept Monroe County as our agent in BRAe negotiations.
Sincerely,
';1~
Branch Manager
e One of Ihe United Way family 0' eoeneie..
- Serving Conch Key to Key West
EXHIBIT B
~.
+ American Red Cross
Blood Services
South Florida Region
December 13, 1994
Mr. Charles Dusseau
Secretary of Florida
Department of~.Cornmerce
Tallahassee, FL
Dear Mr. Dusseau:
American Red Cross Blood Services would like to go on
record in protest to the consideration of closing military
activities in the Florida Keys.
Traditionally, Blood Services has collected 60% of our
blood supply from active duty military in Monroe County. In
other words, of 5,000 pints of blood, 3,000 corne from military
donors.
Please, also consider Monroe County as the negotiating
agent regarding base realignment and closure in the Florida
Keys.
Sincerely yours,
a!utf!J.~
Cheryl A. Radcliffe, R.N.
Area Manager, Blood Services
car
Dade Center: 1675 N.W: Ninth Ave., Miami, FI.. 33136 (305) 326-8888
Broward Center: 2855 S. University Dr., Davie, FL 33328 (305) 472-8888
Monroe Center: 3200 Flagler Ave., 2nd Floor, Key West, FL 33040 (305) 293-0001
11~~tKEYS
..:ey Largo. Islamorada, Marathon. Lower l<:eys Key West
December 8, 1994
Charles Dusseau~ Secretary
Florida Department of Commerce
Collins Building
Tallahassee, Florida 32399-2000
Dear Secretary Dusseau:
The Monroe County Tourist Development Council recognizes the immense
value of the Naval Air Station, Key West to our community, and in our
national security. Our close proximity to Cuba, other Caribbean countries,
South America, and the entrances to the Gulf of Mexico have made NAS
Key West an invaluable base due to its strategic geographic location.
Another major asset of NAS Key West is the excellent weather that allows
for year round flight training for our nation's armed services.
NAS Key ''''est is a good neighbor to our community, giving it economic
stability, employees for its work force, students for its public schools, and
volunteers for its many charitable non-profit organizations. To realign or
close NAS Key West would not only have an extremely negative impact on
our community, but in the defense of our nation.
The Monroe County Tourist Development Council not only supports, but is
playing an active role in our local BRAC Commission. \Ve endorse Monroe
County as the lead agency in our base retention efforts.
~
Mayor Samuel ]. FeIner
Chairman
Monroe County Tourist Development Council
:lms
3406 N. Roosevelt Blvd. Suite #201 P.O. Box 866 Key West, FL 33041 U.S.A. (305)296-1552 . Fax: (305)296-0788
~
NAVY LEAGUE OF THE UNITED STATES
',.Ou.....~(O ' 90,1'
Key West Coul/cll
Memorandum
MR. CHARLES DUSSEAU
I am-pleased to confirm that the Navy League - Key West Council is represented, in a
official capacity, on the Monroe County Base Realignment a.nd -810sure Commission.
As with the other organizations represented on the BRAC, we believe that our collective
efforts will prove more effective if we work collaboratively under the direction and
leadership of the County group chaired by Commissioner Wilhelmina Harvey and
staffed by the County Administrator's office. Hence, we acknowledge and welcome the
Monroe County BRAC as the lead agency in the community's efforts to retain NAS Key
West.
There is absolutely no question that this community overvvhelmingly supports the
presence of the U.S. Navy and the other military services whose tenant commands are
located here. And the Navy League - Key West Council is prepared to contribute all
available time, talent and resources to assist in the effort to retain them.
Pd~ 8.L~
Chair
Base Retention Committee
December 7, 1994
P.o Rox .Q(}4 . ^('Il ~\'('.:;I. FL 3.:W4 7 . Of6((' (305j 2.'14-9575 . rIa (305) 293-9654
~
Keys f~g~r~
Wednesday, 7 December 1994
~
Mr. Charles Dusseau, Secretary
Florida Department of Commerce
536 Collins Building
107 West Gaines Street
Tallahassee, FL 32399-2000
Dear Mr. Dusseau,
I represent the Key West Chamber of Commerce on the local BRAC committee. I am writing
this letter to document our vigorous support for Monroe County as the lead agency in our base
retention efforts.
The military is a vital part of our economy and the national defense. It is strategically located
close to Cuba and Haiti and played a crucial role in the recent rescue and interdiction efforts.
JIA TF East, the DOD drug interdiction coordinating agency for the entire Caribbean is located
in NAS Key West.
To keep our local economy viable and to keep our nation's military engaged in the Caribbean
the Key West Chamber of Commerce strongly supports Monroe County as the lead agency to
keep our base open.
John Dolan-Heitlinger
305) 294-6622 · FAX (305) 292-8685
553 Peory Court Rood · P.O. Box 1898 . Key West, Florida 33041.1898
I
KEY WEST
HOTE
Charles Dusseau, Secretary
Florida Department of Commerce
Collins Building
Tallahassee, Florida 32399-2000
3152 Northside Drive, Suite 101
Key West, FL 33040
(305) 296-4959 . FAX 296.1408
Dear Secretary Dusseau,
The Key West Hotel & Motel Association considers NAS Key West a vital part of our
community, not only to the economy of Key West and Monroe County, but as an ally in
the betterment of the quality of life in our locale.
Recent unrest in our neighboring areas make us again aware of the strategic value of
the base in our national defense.
The Key West Hotel & Motel Association supports NAS Key West and the military
presence in Key West and Monroe County. We endorse Monroe County as the lead
agency and pledge our Association's support in the base retention efforts.
For the Board of Directors
Sincerely;
flMfo~<<
:1i~~~ Smith, MSA
Executive Vice President
RESOLUTION NO. 312-1994
A RESOLUTION OF THE BOARD OF COUNTY
COMMISSIONERS OF MONROE COUNTY,
FLORIDA, AUTHORIZING THE SUBMISSION"?"
OF A GRANT APPLICATION TO TH~ :.
FLORIDA DEPARTMENT OF COMMERC~0:;:
BASE CLOSURE AND REALIGNMENT~'~
GRANT PROGRAM ~C
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~
\-VHEREAS, the Florida Department of Commerce has announced
f1.!nding for the Base Closure and Realignment Grant Program, which wiIJ
provide up to 5250,000 (5100,000 anticipated) to a community to study the effects
of closure or realignment of the Boca Chica Naval Air Station, Key Wes~ and
related military facilities, and prepare a plan of action; and
\-VHEREAS, meetings betvveen the Administrations of Monroe County
and the City of Key West have indicated the City's interest and commitment to
participate in this project; and
\-VHEREAS, the grant program requires a dollar for dollar match,' which
will be provided by in-kind services of Monroe County and the City of Key West
and funds from the Monroe County Board of County Commissioners; and
VVH:EREAS, Monroe County, as the lead agency, desires to initiate a
coordinated response and develop a plan of action to federal base closure
actions; and
VVH:EREAS, both Monroe County and the City of Key West recognize the
nece~sity. of including as many sectors of the County and City communities as
pOSSible In the ultimate development of a plan of action; NOW THEREFORE
EXHIBIT C
I
BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS
OF MONROE COUNTY, FLORIDA THAT:
1. The Board hereby authorizes the County Administrator with signature
authority to submit a proposal to the Florida Department of
Commerce for the Base Closure and Realignment Grant Program and
any other relevant grant documents pertaining to said grant
2. The Board hereby authorizes the County Administrator to prepare, in
coordination with the City of Key West and other sectors of the
County and City communities and upon approval of the grant from
the FloFida Deparhnent of Commerce, a study of the economic impact
a proposed closure or -realignment of the Boca Chi~ft Naval Air Station
would have on the local and state economy.
PASSED AND ADOPTED by the Board of County Commissioners of
Monroe County, Florida, at a regular meeting of said Board held on the 22nd
day of Septenher A.D., 1994.
Mayor London
Mayor Pro Tern Cheal
Commissioner Freeman
Commissioner Harvey
Commissioner Reich
yes
yes
yes
not present
yes
BOARD OF COUNTY COMMISSIONERS
OF MONRO OUNTY, FLORIDA
By
(SEAL)
A TrEST: DANNY L. KOLHAGE, CLERK
BY: /9././TA'<-tr~~4" )
DE U1Y RK '-'
~ l""r::.
Affii~ J~
6y
D.,. -1 t> . .t"~~'2!.{,co
-
-
!
t,
PROPOSED BUDGET
Grant
Match
Cash I In-kind
Total
~
Consultant 100,000.00 61,500.00 161,500.00
Salaries 26,391.00 26,391.00
wi Benefits
Travel 5,873.00 4,633.00 10,506.00
Office Splies 315.00 200.00 515.00
phone 210.00 46.00 256.00
postage 40.00 27.00 67.00
Advertising 765.00 765.00
--------- --------- --------- ----------
Totals 100,000.00 67,938.00 32,062.00 200,000.00
---------- --------- --------- ----------
---------- --------- --------- ----------
EXHIBIT D
l