study: dramatic negative impact from ocean dr alcohol rollback

Ocean Drive

Susan Askew
Susan Askew

study: dramatic negative impact from ocean dr alcohol rollback:

$341m in revenue, 5,500 jobs estimated lost

A new study says that if a rollback of alcohol sales on Ocean Drive from 5 am to 2 am is approved by voters in November, it will have a dramatic negative impact on Miami Beach’s economy.  Overall, the report indicates there will be a loss of $341m in revenue, a loss of 5,500 jobs, and a reduction in property values and property tax revenue of 5%
Dr. Hank Fishkind, of Fishkind Associates, the study’s author, told RE:MiamiBeach, “I’ve never really quite seen anything of such an important public policy, potentially. This policy goes to the heart of what helps distinguish this venue. It’s not the only thing, but it’s one of the key factors in the functioning of the economy of Ocean Drive and Miami Beach, so to contemplate an action that would impact such a key component of the area I think necessitates a detailed analysis before a decision is made.”
The study commissioned by the Florida Restaurant and Lodging Association uses confidential sales data provided by local restaurants and hotels. Fishkind said the City’s analysis of the impact was too simplistic, noting in the report that it “seems to be based only on the ratio of hours closed under the ban, wrongly presuming that sales of alcoholic beverages are equal during every hour of operation.” The City estimates $10m in lost alcohol sales while Fishkind says it will be $16m.
“Those losses will have cascading and expanding effects, particularly on nearby hotels and on the restaurants on Ocean Drive,” he wrote in the report. He says the 94 small hotels (4,867 rooms) located on or near Ocean Drive will be the hardest hit, though he notes the “large hotels north of 15th Street, including the Loews, Ritz Carlton, Marriott, and Fontainebleau would also be impacted.” He estimates total hotel losses would be $225m.
In addition, he said Ocean Drive restaurants would lose $11m in revenue, while other area restaurants would lose $86m for a total estimated revenue loss of $97m for area restaurants. Total hit to the economy? $341m he says.
That impact will be felt in lower property values, he said, as these businesses would no longer be able to afford the same levels of rent. By his estimate, “The impact of a loss of over $341m in sales reduces property values by over $1.6b.” As a result, he calculates City property taxes will drop about 5%. He notes, lower property values and lost taxes also result in lost school funding of about $8m.
Resort taxes will decline an estimated $11.3m and there will be a loss of 5,500 jobs, most of those in Miami Beach, according to Fishkind.
Fishkind said the City has said there would be a benefit in reduced crime in the area. He asked noted crime expert Ronal Serpas for his opinion based on City crime data. Serpas, who is Professor of Practice, Criminology, and Justice at Loyola University New Orleans, recently retired from a 34-year career in law enforcement, the last 13 as police superintendent for New Orleans. He has also served as police chief in Nashville and chief of the Washington State Patrol.
Serpas looked at calls for service in the Ocean Drive area. “He found that the volume of calls for service has been highest between 11 pm and 2 am in 2017,” the report states. While assaults and robberies occurred more frequently between 2 am and 5 am in the area from June 2015 to June 2016, “the available evidence suggests this is not the same so far along Ocean Drive in 2017”.
According to the analysis, calls for service are highest in the late afternoon and early evening, steadily declining after midnight. “There was a 34% reduction in calls for service activity in the three hour stretch from 2 am to 5 am relative to the three preceding hours in the Ocean Drive area,” the report notes
According to the report, “roughly 17% of all violent crimes in Miami Beach occur in the Ocean Drive target area.” Dr. Serpas’ analysis indicates that while “violent crimes have spiked citywide so far in 2017 during the 2:00 am to 5:00 am timefame … this is not the case in the Ocean Drive areas.” Looking at assaults and robberies in just the Ocean Drive areas, “he found that both crimes have occurred more frequently from 11 pm to 2 am than from 2 am to 5 am.”

Overall, “Serpas concluded that assaults that occurred in the Ocean Drive area between 2 am and 5 am made up 2.3% of overall violent crime incidents citywide and 3.1% of assaults citywide. Robberies in the Ocean Drive area between 2 am and 5 am made up 0.7% of violent crimes incidents citywide and 4% of robberies citywide,” according to the report. “Therefore Dr. Serpas noted that even if a reduction in violent crime in the Ocean Drive area between 2 am and 5 am is achieved by the ban, the overall result on citywide crime is likely to be negligible due to the low initial base rate of violent crime on Ocean Drive.”
Fishkind noted the City provided a one-page handout on the impact of the issue. “The City estimates the ban will cause a reduction in resort tax collections that is more than offset by savings for reduced police costs.” But, he wrote, that “analysis is very incomplete, failing to account for the consequential impacts of the ban on hotels and restaurants. Nor did the City analysis estimate impacts on property values, property taxes, or the area’s economy.”
In an interview with RE:Miami Beach, Fishkind said the lack of analysis is “not acceptable.”
“When, for example, a small change in zoning or land use is under consideration there is very substantial staff analysis, very significant public discussion even for the smallest of land uses. Compare that to the lack of analysis that has surrounded this very important issue that may have – I believe will have – significant negative economic impact if it is to be imposed and yet what the community got was one page. No matter what one’s view of this issue is, this is not acceptable in my view as a professional economist and one who has been involved in public policy for 40 years in this State.”
“I just think it is incumbent upon the government before it turns a matter over to the voters to work to inform them objectively of all of the costs and benefits so the citizens are in a position to make an informed decision,” he said. After spending a month immersed in the issue, he commented, “Until I studied this issue I could not have made an informed decision. I did not realize the key function of these clubs in the overall economy of this area. Until I did a survey of the hoteliers and a survey of the concierges did I learn how important they view the functioning of these clubs and the importance of late night nightlife hours.”
“When I first interviewed some of the owners and managers of the clubs,” he continued,  “I have to tell you I was skeptical. I said you have to show me the data and they agreed on a very confidential basis to give me their sales data by hour … a very substantial amount of business is done at late night.”
“Part of what distinguishes this venue is it’s one of the few places in the world where people can come, enjoy nightlife, sit outside in a tropical environment near the ocean, and have a drink late at night if that’s what they want,” Fishkind said. “That mix of entertainment, call it what you will, is part of what distinguishes this venue just like there’s something special that distinguishes Las Vegas and New Orleans, the late night activity and the excitement of it has always been part of the brand.” He argued a ban will cause people to go elsewhere.
Fishkind admitted there is uncertainty in coming up with a dollar estimate of impact without a history of such bans. But with the club sales data and hotel surveys, he said, “There’s no uncertainty about the direction of the impact or its significance …  no uncertainty about the direction and the scale and it might be a lot higher than I have anticipated.”
“We’re putting at jeopardy the key sector of the area’s tourism economy and we shouldn’t do that lightly.” To put it at its simplest, Fishkind said, “I estimate a 5 percent decline [in property values] so this ban, if people want it, are they willing to pay 5 percent higher property taxes to pay for the ban for a dubious promise of lower crime?”
 Read the full study here.

Image: Shutterstock

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