Updated Version September 24, 2011

1 Economic Impact of Constructing and Operating a Luxury Hotel at 550 Seabreeze Ave., Ft. Lauderdale, FL, as part of an Existing EB-5 Regional Center Prepared for: Florida Overseas Investment Center Prepared by: Michael K. Evans Evans, Carroll & Associates, Inc. 2785 NW 26 th St. Boca Raton, FL 33434 561-470-9035 mevans@evanscarrollecon.com Updated Version September 24, 2011

2 Table of Contents 1. Executive Summary 3 2. Tabulation of Principal Results 4 3. Introduction and Scope of Work 8 4. Brief Guide to RIMS II Input/Output Model 9 5. Key Economic Parameters for Broward and Miami/Dade Counties 13 6. Location of Seabreeze Hotel and Choice of Counties in County Groups 18 7. Economic Impact of Construction Jobs 21 8. Economic Impact of Hotel Revenues 26 9. Economic Impact of Restaurant Revenues 31 10. Summary Statistics for Phase I 33 11. Economic Impact of Phase II Operations 35 Appendix A. Resume of Dr. Michael K. Evans 39

3 1. Executive Summary The Florida Overseas Regional Center plans to develop the Seabreeze Hotel at 550 Seabreeze Ave. in Ft. Lauderdale FL on the Atlantic Ocean. 550 Seabreeze is currently a vacant piece of land which boasts 34,299 square feet of prime Atlantic Ocean frontage on Seabreeze Blvd. and S. Atlantic Avenue in Fort Lauderdale. The project will be developed in two phases. Phase I is expected to have a hard construction cost budget of $29.12 million. The hotel will have 136 rooms at an ADR of $225 for total annual revenue of $11.17 million adjusted for occupancy rates and sales of ancillary goods and services. It will also have a 9,000 square foot restaurant with estimated annual sales of about $5 million. All construction jobs can be counted because the project will last more than two years. The number of permanent new jobs is calculated using the final demand multipliers for the RIMS II input/output model for Broward and Miami/Dade counties. These multipliers are 18.96 for construction, 18.57 for hotels, and 26.75 for restaurants. As a result, there will be 552 jobs from construction, 207 jobs from hotels, and 134 jobs from restaurants for a total of 893 total jobs in Phase 1. Phase II has estimated construction costs of $12 million. The hotel will have 60 rooms at an ADR of $225 for total annual revenue of $4.93 million, adjusted for occupancy rates and sales of ancillary goods and services. It will also have an 8,000 square foot restaurant with estimated annual sales of about $4 million. Hence Phase II will generate 228 construction jobs, 91 hotel jobs, and 118 restaurant jobs, for a total of 437 permanent new jobs. Summing both phases, there will be a total of 893 permanent new jobs in Phase I and 426 new jobs in Phase II, for a total of 1,330 permanent new jobs. Further details are given in Table A. The increase in output in the second year of operation will be $91.8 million for Phase I and $42.8 million for Phase II. The increase in earnings in the second year of operation will be $29.0 million for Phase I and $13.5 million for Phase II. The hotel will be located in Census Tract (CT) 421 in Broward County. That CT had an unemployment rate of 11.5% in 2010; however, when combined with contiguous CTs with higher unemployment rates, a TEA can be formed with an overall unemployment rate of 16.1%, according to figures prepared by the Agency for Workforce Innovation of the State of Florida.

4 2. Tabulation of Principal Results Table A summarizes the annual revenues and the total permanent new jobs for both phases of the construction and operation of the hotel and restaurants. These figures assume that the construction of Phase I is completed and the hotel and restaurant are operating at normal occupancy rates in two years after the approval of this application. The figures for Phase II assume that the construction is completed and the hotel and restaurant are operating at normal occupancy rates two years after the initiation of that phase of the project. Table A. Summary of Employment and Revenue Estimates Activity Revenue/ RIMS II Final Number of NAICS Expenditures Demand Mult New Jobs Code Phase I Construction 29.1 18.96 551.7 23 Hotels 11.17 18.57 207.4 721 Restaurants 5.0 26.75 133.8 722 Total Phase I 45.3 892.9 Phase II Construction 12.0 18.96 227.5 23 Hotels 4.93 18.57 91.6 721 Restaurants 4.4 26.75 117.7 722 Total Phase II 21.3 436.8 Total Project 66.6 1330 In an RFE, The USCIS asked for the NAICS codes for the following industries. The lines in normal type are the USCIS requests; the lines in boldface are taken from the NAICS website listing. Construction 2362 Nonresidential Building Construction Accommodations 721 Accommodation Food Service and Drinking Places 722 Food Services and Drinking Places

5 Retail 44 Retail Trade 442 Furniture and Home Furnishings Stores 443 Electronics and Appliance Stores 445 Food and Beverage Stores 446 Health and Personal Care Stores 448 Clothing and Clothing Accessories Stores 451 Sporting Goods, Hobby, Book, and Music Stores 452 General Merchandise Stores 453 Miscellaneous Store Retailers Office Buildings 5411 Legal Services 5412 Accounting, Tax Preparation, Bookkeeping, and Payroll Services 5413 Architectural, Engineering, and Related Services 5415 Computer Systems Design and Related Services Hospitals/Health Care 621 Ambulatory Health Care Services 622 Hospitals Senior Care Facilities 623 Nursing and Residential Care Facilities Agriculture 1112 Vegetable and Melon Farming Sports and Entertainment 7139 Other Amusement and Recreation Industries Energy 2211 Electric Power Generation, Transmission and Distribution Mixed Use 2372 Land Subdivision 531 Real Estate When the hotel and restaurant in Phases I and II are operating at normal rates, the economic impact as measured by household earnings, demand for business services, utilities, maintenance and repair, and new supplier and vendor relationships is summarized in Table B.

6 Table B. Summary Measures of Economic Impact for Phase I and Phase II of Hotel and Restaurant Operation Category Phase I Phase II Total Household income from: Construction $19,704,000 $8,125,000 $27,829,000 Hotel operation $6,345,000 $2,800,000 $9,145,000 Restaurant Operation $2,928,000 $2,576,000 $5,504,000 Total $28,977,000 $13,501,000 $42,478,000 Demand for professional and business support services $6,930,000 $3,230,000 $10,160,000 Demand for utility services: electric, natural gas, and water $761,000 $372,000 $1,133,000 Maintenance and repair construction $223,000 $92,000 $315,000 New supplier/vendor relationships with manufacturers $5,343,000 $2,424,000 $7,767,000 Total of above categories $13,257,000 $6,118,000 $19,375,000 Household Earnings (Labor Income) The jobs created by the various components of the regional center will subsequently create new sources of household income. In Phase I, household income is about $19.7 million from construction activity, $6.3 million from the operation of the hotel, and $2.9 million from the operation of the restaurant. In Phase II, household income is about $8.1 million from construction activity, $2.8 million from the operation of the hotel, and $2.6 million from the operation of the restaurant. Hence the total annual increase in household income is about $42.5 million. This income calculation comes from the RIMS II input/output model, which measures the average income per job by industry. The model calculations are based on the types of jobs that will be created within the regional center, with indirect/induced impacts allocated based on the types of commodity inputs required by the businesses that would potentially locate in the regional center.

7 Demand for Business Services, Utilities, Maintenance and Construction, and New Supplier/Vendor Relationships Created with Manufacturers The total economic impact of the regional center from the supplier purchases and business relationships for the regional center will create approximately $19.4 million in additional economic activity across the region. These supplier purchases are calculated from the indirect increase in output generated by the RIMS II model. It should be noted that some of these supplier industries might potentially locate within the regional center, and their economic output is included in this total. The estimate of supplier purchases is based on the commodity data in the RIMS II input-output model. This data specifies the amount and type of commodity input needed to maintain specific types of business operations. The model estimates the supplier purchases based on the types of jobs and number of jobs that will be created within the regional center. In addition, the model allocates the supplier purchases to businesses within the region, based on trade flow data from the U.S. Bureau of Economic Analysis. The regional center will create demand for business services including, professional services, and business services and support services. The impact of this activity totals about $10.2 million annually. Utilities include services such as electricity, natural gas, and water and sewer facilities. The economic impact on utility services totals about $1.1 million. This figure includes the energy produced by solar power. Maintenance and repair services include some building and construction activity on existing buildings. The regional center would create an economic impact of about $0.31 million within these sectors in the region. Because most of the construction activity is either upfront during building construction or integrated into repair and maintenance services, the economic impact for construction sectors is minimal on an ongoing basis. New supplier/vendor relationships with manufacturers would create an economic impact of about $7.8 million. These activities include purchases of locally manufactured goods plus purchased materials for construction, plus any locally produced materials used in the various facilities in the hotels and restaurants.

8 3. Introduction and Scope of Work The Florida Overseas Investment Center plans to fund the construction of a new hotel project located at 550 Seabreeze Avenue, in Ft. Lauderdale. This project will consist of two hotels. The first phase will have a hard construction cost budget of $29.1 million, and will have 136 keys, a 9,000 foot restaurant, and other amenities suitable to a full-service hotel in Florida. The second phase, to be started at a later date, will be built across the street from the first hotel. It has an estimated hard construction cost budget of $12 million, and will have 60 keys, an 8,000 square foot restaurant, and associated amenities. This report is organized as follows. Section (4) contains a brief description of the RIMS II Input/Output model and a discussion of the final demand multipliers. Section (5) contains key economic statistics for Broward County, where the hotels are to be located, and Miami/Dade County, which will also be included in the multiplier analysis. Section (6) maps the location of the hotel, discusses the inclusion of Miami/Dade County in the multiplier analysis, and shows how a TEA can be formed that includes the Census Tract where the hotels are located. Section (7) describes the assumptions used to estimate the construction jobs, and also contains detailed tables showing the increase in employment, output, and earnings, and the level of output and earnings per new employee for the 20 major industrial classifications contained in the RIMS II model. Since the project will take longer than two years, all construction jobs can be included in the EB-5 job count. Section (8) describes the calculations used to determine the annual revenues for hotel facilities in the second year of operation. These revenue estimates are then multiplied by the appropriate RIMS II final demand multipliers to determine the total number of permanent new jobs. Section (9) contains tables showing the increase in employment, output, and earnings, and the level of output and earnings per new worker for the 20 major industrial classifications for the restaurant operations. The overall economic impact of Phase I is summarized in Section (10). Section (11) contains similar tables for Phase II, which is the second hotel and restaurant.

9 4. Brief Guide to RIMS II Input/Output Model The following material has been condensed from the RIMS II User Handbook. Introduction and General Comments Effective planning for public- and private-sector projects and programs at the State and local levels requires a systematic analysis of the economic impacts of these projects and programs on affected regions. In turn, systematic analysis of economic impacts must account for the inter-industry relationships within regions because these relationships largely determine how regional economies are likely to respond to project and program changes. Thus, regional input-output (I-O) multipliers, which account for inter-industry relationships within regions, are useful tools for conducting regional economic impact analysis. In the 1970s, the Bureau of Economic Analysis (BEA) developed a method for estimating regional I-O multipliers known as RIMS (Regional Industrial Multiplier System), which was based on the work of Garnick and Drake. In the 1980s, BEA completed an enhancement of RIMS, known as RIMS II (Regional Input-Output Modeling System), and published a handbook for RIMS II users. In 1992, BEA published a second edition of the handbook in which the multipliers were based on more recent data and improved methodology. In 1997, BEA published a third edition of the handbook that provides more detail on the use of the multipliers and the data sources and methods for estimating them. RIMS II is based on an accounting framework called an I-O table. For each industry, an I-O table shows the industrial distribution of inputs purchased and outputs sold. A typical I-O table in RIMS II is derived mainly from two data sources: BEA's national I-O table, which shows the input and output structure of nearly 500 U.S. industries, and BEA's regional economic accounts, which are used to adjust the national I-O table to show a region's industrial structure and trading patterns. Using RIMS II for impact analysis has several advantages. RIMS II multipliers can be estimated for any region composed of one or more counties and for any industry, or group of industries, in the national I-O table. The accessibility of the main data sources for RIMS II keeps the cost of estimating regional multipliers relatively low. Empirical tests show that estimates based on relatively expensive surveys and RIMS IIbased estimates are similar in magnitude. BEA's RIMS multipliers can be a cost-effective way for analysts to estimate the economic impacts of changes in a regional economy. However, it is important to keep in mind that, like all economic impact models, RIMS provides approximate order-ofmagnitude estimates of impacts. RIMS multipliers are best suited for estimating the impacts of small changes on a regional economy. For some applications, users may want to supplement RIMS estimates with information they gather from the region

10 undergoing the potential change. To use the multipliers for impact analysis effectively, users must provide geographically and industrially detailed information on the initial changes in output, earnings, or employment that are associated with the project or program under study. The multipliers can then be used to estimate the total impact of the project or program on regional output, earnings, and employment. RIMS II is widely used in both the public and private sector. In the public sector, for example, the Department of Defense uses RIMS II to estimate the regional impacts of military base closings. State transportation departments use RIMS II to estimate the regional impacts of airport construction and expansion. In the private-sector, analysts and consultants use RIMS II to estimate the regional impacts of a variety of projects, such as the development of shopping malls and sports stadiums. RIMS II Methodology RIMS II uses BEA's benchmark and annual I-O tables for the nation. Since a particular region may not contain all the industries found at the national level, some direct input requirements cannot be supplied by that region's industries. Input requirements that are not produced in a study region are identified using BEA's regional economic accounts. The RIMS II method for estimating regional I-O multipliers can be viewed as a three-step process. In the first step, the producer portion of the national I-O table is made region-specific by using six-digit NAICS location quotients (LQs). The LQs estimate the extent to which input requirements are supplied by firms within the region. RIMS II uses LQs based on two types of data: BEA's personal income data (by place of residence) are used to calculate LQs in the service industries; and BEA's wage-andsalary data (by place of work) are used to calculate LQs in the non-service industries. In the second step, the household row and the household column from the national I-O table are made region-specific. The household row coefficients, which are derived from the value-added row of the national I-O table, are adjusted to reflect regional earnings leakages resulting from individuals working in the region but residing outside the region. The household column coefficients, which are based on the personal consumption expenditure column of the national I-O table, are adjusted to account for regional consumption leakages stemming from personal taxes and savings. In the last step, the Leontief inversion approach is used to estimate multipliers. This inversion approach produces output, earnings, and employment multipliers, which can be used to trace the impacts of changes in final demand on and indirectly affected industries. Accuracy of RIMS II Empirical evidence suggests that RIMS II commonly yields multipliers that are not substantially different in magnitude from those generated by regional I-O models based on relatively expensive surveys. For example, a comparison of 224 industryspecific multipliers from survey-based tables for Texas, Washington, and West Virginia

11 indicates that the RIMS II average multipliers overestimate the average multipliers from the survey-based tables by approximately 5 percent. For the majority of individual industry-specific multipliers within these states, the difference between RIMS II and survey-based multipliers is less than 10 percent. In addition, RIMS II and survey multipliers show statistically similar distributions of affected industries. Advantages of RIMS II There are numerous advantages to using RIMS II. First, the accessibility of the main data sources makes it possible to estimate regional multipliers without conducting relatively expensive surveys. Second, the level of industrial detail used in RIMS II helps avoid aggregation errors, which often occur when industries are combined. Third, RIMS II multipliers can be compared across areas because they are based on a consistent set of estimating procedures nationwide. Fourth, RIMS II multipliers are updated to reflect the most recent local-area wage-and-salary and personal income data. Overview of Different Multipliers RIMS II provides users with five types of multipliers: final demand multipliers for output, for earnings, and for employment; and direct-effect multipliers for earnings and for employment. These multipliers measure the economic impact of a change in final demand, in earnings, or in employment on a region s economy. The final demand multipliers for output are the basic multipliers from which all other RIMS II multipliers are derived. In this table, each column entry indicates the change in output in each row industry that results from a $1 change in final demand in the column industry. The impact on each row industry is calculated by multiplying the final demand change in the column industry by the multiplier for each row. The total impact on regional output is calculated by multiplying the final demand change in the column industry by the sum of all the multipliers for each row except the household row. RIMS II provides two types of multipliers for estimating the impacts of changes on earnings: final demand multipliers and direct effect multipliers. These multipliers are derived from the table of final demand output multipliers. The final demand multipliers for earnings can be used if data on final demand changes are available. In the final demand earnings multiplier table, each column entry indicates the change in earnings in each row industry that results from a $1 change in final demand in the column industry. The impact on each row industry is calculated by multiplying the final demand change in the column industry by the multipliers for each row. The total impact on regional earnings is calculated by multiplying the final demand change in the column industry by the sum of the multipliers for each row.

12 Employment Multipliers RIMS II provides two types of multipliers for estimating the impacts of changes on employment: final demand multipliers and direct effect multipliers. These multipliers are derived from the table of final demand output multipliers. The final demand multipliers for employment can be used if the data on final demand changes are available. In the final demand employment multiplier table, each column entry indicates the change in employment in each row industry that results from a $1 million change in final demand in the column industry. The impact on each row industry is calculated by multiplying the final demand change in the column industry by the multiplier for each row. The total impact on regional employment is calculated by multiplying the final demand change in the column industry by the sum of the multipliers for each row. The direct effect multipliers for employment can be used if the data on the initial changes in employment by industry are available. In the direct effect employment multiplier table, each entry indicates the total change in employment in the region that results from a change of one job in the row industry. The total impact on regional employment is calculated by multiplying the initial change in employment in the row industry by the multiplier for the row. Choosing a Multiplier The choice of multiplier for estimating the impact of a project on output, earnings, and employment depends on the availability of estimates of the initial changes in final demand, earnings, and employment. If the estimates of the initial changes in all three measures are available, the RIMS II user can select any of the RIMS II multipliers. In theory, all the impact estimates should be consistent. If the available estimates are limited to initial changes in final demand, the user can select a final demand multiplier for impact estimation. If the available estimates are limited to initial changes in earnings or employment, the user can select a direct effect multiplier

13 5. Key Economic Parameters for Broward and Miami/Dade Counties This section contains four tables. Table 1 shows key employment and income distribution statistics for Broward and Miami/Dade counties, and compares them with U.S. levels. Table 2 shows the level and growth rate for population for the State of Florida and these two counties. Table 3 provides the same information for personal income. Table 4 presents figures for the labor force, employment, and unemployment for these areas from 2000 through 2009. Table 1. Employment and Income Distribution Statistics for Broward and Miami/Dade Counties and the Overall U. S. Economy Category Broward % Miami/ % United % EMPLOYMENT STATUS Dade States Population 16 years and over 1,394,683 100.0% 1,928,267 100.0% 238,764,455 100.0% In labor force 936,237 67.1% 1,200,320 62.2% 157,465,113 65.9% Civilian labor force 934,035 67.0% 1,198,761 62.2% 156,225,077 65.4% Employed 862,543 61.8% 1,118,937 58.0% 146,266,253 61.3% Unemployed 71,492 5.1% 79,824 4.1% 9,958,824 4.2% Armed Forces 2,202 0.2% 1,559 0.1% 1,240,036 0.5% Not in labor force 458,446 32.9% 727,947 37.8% 81,299,342 34.1% OCCUPATION Civilian employed population 16 + 862,543 100.0% 1,118,937 100.0% 146,266,253 100.0% Management & professional 295,620 34.3% 342,310 30.6% 51,064,301 34.9% Service occupations 160,532 18.6% 217,483 19.4% 25,084,498 17.1% Sales and office occupations 261,694 30.3% 330,086 29.5% 37,252,708 25.5% Farming, fishing, & forestry 658 0.1% 2,835 0.3% 997,997 0.7% Construction, maintenance, repair 74,963 8.7% 113,813 10.2% 13,612,976 9.3% Production & transportation 69,076 8.0% 112,410 10.0% 18,253,773 12.5% INDUSTRY Civilian employed population 16 + 862,543 100.0% 1,118,937 100.0% 146,266,253 100.0% Agriculture & mining 1,325 0.2% 3,749 0.3% 2,653,081 1.8% Construction 62,254 7.2% 96,834 8.7% 10,777,675 7.4% Manufacturing 52,490 6.1% 58,740 5.2% 16,381,624 11.2% Wholesale trade 35,328 4.1% 49,760 4.4% 4,383,802 3.0% Retail trade 111,563 12.9% 132,194 11.8% 16,994,717 11.6% Transportation & utilities 50,197 5.8% 86,703 7.7% 7,595,843 5.2% Information 29,261 3.4% 25,728 2.3% 3,527,777 2.4% Finance, insurance & real estate 77,490 9.0% 94,058 8.4% 10,112,239 6.9%

14 Professional & administrative 112,222 13.0% 140,117 12.5% 15,242,426 10.4% Educational services & health care 164,378 19.1% 215,408 19.3% 31,757,530 21.7% Arts, entertain, hotel, food svcs 83,710 9.7% 106,083 9.5% 12,904,517 8.8% Other private services 46,915 5.4% 62,820 5.6% 7,092,352 4.8% Public administration 35,410 4.1% 46,743 4.2% 6,842,670 4.7% INCOME AND BENEFITS Total households 667,220 100.0% 825,761 100.0% 113,101,329 100.0% Less than $10,000 44,699 6.7% 87,121 10.6% 8,149,557 7.2% $10,000 to $14,999 33,618 5.0% 61,439 7.4% 6,141,047 5.4% $15,000 to $24,999 76,314 11.4% 99,219 12.0% 12,049,123 10.7% $25,000 to $34,999 72,264 10.8% 91,072 11.0% 11,718,207 10.4% $35,000 to $49,999 94,363 14.1% 111,823 13.5% 16,028,909 14.2% $50,000 to $74,999 122,530 18.4% 138,656 16.8% 21,251,695 18.8% $75,000 to $99,999 78,848 11.8% 86,504 10.5% 14,015,215 12.4% $100,000 to $149,999 80,356 12.0% 81,074 9.8% 13,921,120 12.3% $150,000 to $199,999 34,318 5.1% 32,423 3.9% 4,954,443 4.4% $200,000 or more 29,910 4.5% 36,430 4.4% 4,872,013 4.3% Median household income (dollars) 51,623 99.2% 44,068 84.7% 52,029 Mean household income (dollars) 71,917 100.6% 65,804 92.0% 71,498 Families 412,675 100.0% 562,978 100.0% 75,030,551 100.0% Less than $10,000 15,450 3.7% 27,610 4.9% 3,211,198 4.3% $10,000 to $14,999 11,520 2.8% 32,168 5.7% 2,404,943 3.2% $15,000 to $24,999 35,048 8.5% 66,504 11.8% 6,148,998 8.2% $25,000 to $34,999 40,199 9.7% 67,453 12.0% 6,827,538 9.1% $35,000 to $49,999 55,618 13.5% 76,724 13.6% 10,239,597 13.6% $50,000 to $74,999 82,974 20.1% 103,435 18.4% 15,144,495 20.2% $75,000 to $99,999 57,101 13.8% 67,307 12.0% 11,047,974 14.7% $100,000 to $149,999 62,304 15.1% 65,764 11.7% 11,568,389 15.4% $150,000 to $199,999 28,068 6.8% 26,016 4.6% 4,251,923 5.7% $200,000 or more 24,393 5.9% 29,997 5.3% 4,185,496 5.6% Median family income (dollars) 63,787 100.7% 51,730 81.6% 63,366 Mean family income (dollars) 84,451 101.3% 74,607 89.5% 83,351 Per capita income (dollars) 28,541 103.5% 23,846 86.4% 27,589 Median earnings for workers 31,055 104.0% 25,970 86.9% 29,868 Median earnings for male full-time 43,637 95.8% 36,197 79.5% 45,556 Median earnings for female fulltime 36,530 103.0% 30,104 84.9% 35,471 PERCENTAGE BELOW POVERTY All families 8.30% 85.6% 13.20% 136.1% 9.70%

15 All people 11.90% 90.2% 16.30% 123.5% 13.20% Please note that in this table, the black figures in the percentage columns relate to the group totals in that column, while the red figures are the proportion of the U.S. averages. In spite of the popular perception that tourism drives the economies of Broward and Miami/Dade, the proportion of workers in that industry, defined here to include all entertainment, hotels, and restaurants, is only slightly higher than the national average. The percent of the workforce engaged in this industry is 9.7% in Broward and 9.5% in Miami/Dade County, compared to 8.8% nationally. The largest differential from the national proportions occurs in manufacturing, where only 6.1% and 5.2% of the workforce are engaged, compared to 11.2% nationally. This shortfall is offset by higher than average proportions of the workforce in information, financial, and professional services. The proportion of workers in education and healthcare is also about 2 percentage points below average, in spite of the higher than usual proportion of elderly residents of these two counties. In terms of income distribution, the mean and median measures for Broward County are almost exactly the same as the U.S. average, while for Miami/Dade County, they are generally 10% to 20% below average. The poverty rate for families in Broward County is 86% of the national average, while for Miami/Dade, the figure is 136%. Table 2. Level and Growth of Population, State of Florida, Broward, and Miami/Dade Counties Florida Miami-Dade Broward July 1,2009 18,537,969 2,500,625 1,766,476 July 1,2008 18,423,878 2,478,745 1,753,262 July 1,2007 18,277,888 2,453,567 1,746,968 July 1,2006 18,088,505 2,438,702 1,762,334 July 1,2005 17,783,868 2,413,583 1,766,620 July 1,2004 17,375,259 2,381,215 1,741,272 July 1,2003 16,981,183 2,352,658 1,719,073 July 1,2002 16,680,309 2,328,122 1,698,735 July 1,2001 16,353,869 2,294,643 1,667,903 July 1,2000 16,047,118 2,258,765 1,631,723 2009/08 0.62% 0.88% 0.75% 2008/07 0.80% 1.03% 0.36% 2007/06 1.05% 0.61% -0.87% 2006/05 1.71% 1.04% -0.24% 2005/04 2.35% 1.36% 1.46% 2004/03 2.32% 1.21% 1.29% 2003/02 1.80% 1.05% 1.20% 2002/01 2.00% 1.46% 1.85% 2001/00 1.91% 1.59% 2.22%

16 2009/00 1.61% 1.14% 0.88% The rapid growth rate in Florida through mid-decade came to a screeching halt when the housing boom imploded. Not only were fewer new homes built in the state, but many people who would ordinarily move down from the North were unable to sell their homes. This pattern was particularly marked in Broward County, which has shown no population growth at all over the past four years. Population growth in Miami remained relatively strong because of the continuing increase of immigrants from Latin America. Table 3. Level and Growth of Personal Income, State of Florida, Broward, and Miami/Dade Counties Florida Miami-Dade Broward 2008 719707709 88954732 73590969 2007 713489866 86778820 73126064 2006 690273244 85192418 71940365 2005 633198348 77374135 67944701 2004 582767302 71915626 62188587 2003 531215779 67003131 58162612 2002 508401577 64648741 56491705 2001 487503637 62050189 53896563 2000 466644105 59154210 50930004 2008/07 0.9% 2.5% 0.6% 2007/06 3.4% 1.9% 1.6% 2006/05 9.0% 10.1% 5.9% 2005/04 8.7% 7.6% 9.3% 2004/03 9.7% 7.3% 6.9% 2003/02 4.5% 3.6% 3.0% 2002/01 4.3% 4.2% 4.8% 2001/00 4.5% 4.9% 5.8% 2008/00 5.6% 5.2% 4.7% The growth rates for personal income show the effect of the building boom and bust more sharply than do the population figures. When housing starts began to decline, the growth of personal income in Miami/Dade County fell from 10% to 2%; in Broward County, the decline started a year earlier, but was similar in magnitude, falling from 9% to 2%. While 2009 personal income figures are not yet available by individual county, but the figures for the Miami Metropolitan Area show an actual decline of 3% in 2009. Preliminary 2010 figures suggest a slight improvement in the first half of the year.

17 Table 4. Labor Market Statistics for State of Florida and Broward and Miami/Dade Counties Labor Force Employment Unemployed Un Rate, % Florida 2000 7869690 7569406 300284 3.8 2001 7998062 7624718 373344 4.7 2002 8124930 7662511 462419 5.7 2003 8218800 7785547 433253 5.3 2004 8388829 7998202 390627 4.7 2005 8635032 8305281 329751 3.8 2006 8886471 8587664 298807 3.4 2007 9078786 8709317 369469 4.1 2008 9206487 8628040 578447 6.3 2009 9197484 8231731 965753 10.5 Broward 2000 855214 824113 31101 3.6 2001 882428 842626 39802 4.5 2002 899193 846696 52497 5.8 2003 904653 855939 48714 5.4 2004 917754 875999 41755 4.5 2005 949838 915444 34394 3.6 2006 973548 943655 29893 3.1 2007 995395 960976 34419 3.5 2008 1005310 951529 53781 5.3 2009 987426 896410 91016 9.2 Miami/Dade 2000 1103485 1046900 56585 5.1 2001 1098226 1031747 66479 6.1 2002 1092613 1021244 71369 6.5 2003 1097565 1032845 64720 5.9 2004 1107431 1046790 60641 5.5 2005 1123472 1071853 51619 4.6 2006 1155492 1108341 47151 4.1 2007 1189398 1135389 54009 4.5 2008 1220130 1140628 79502 6.5 2009 1244493 1111473 133020 10.7

18 As suggested by the personal income figures, Florida in general and South Florida in particular were harder hit by the recent recession than the U.S. average. After being below average for most of the decade, the unemployment rate in Broward County rose to 9.2% in 2009, compared to the U.S. average of 9.3%, and rose more than 1% in the first half of 2010, even though the U.S. average rate stabilized and then declined. The same picture applies to Miami/Dade County, where the unemployment rose to 10.7% in 2009 and is now above 13%. The total number of unemployed people in these two counties in 2009 was over 224,000. The new project will add an estimated 1,328 jobs, only a minuscule proportion of the total number of unemployed people last year. 6. Location of Seabreeze Hotel and Choice of Counties in County Groups 550 Seabreeze Blvd., where the hotel will be built, is currently a vacant piece of land consisting of 34,299 square feet of Atlantic Ocean frontage on Seabreeze Blvd. and S. Atlantic Avenue in Fort Lauderdale, Florida. The project site is just under one acre and is located just two blocks from the main shopping and dining area in Fort Lauderdale - Las Olas Boulevard. It is also strategically located adjacent to the world renowned Bahia-Mar Resort & Yachting Center at 801 Seabreeze which has a 250 slip mega yacht deepwater marina on the Intracoastal Waterway. Figures 1 and 2 show the location of this land in Broward County. Figure 1. Location of Seabreeze Hotel

19 Figure 2. Broward County Area Near Planned Hotel

20 Figure 3. Map of Broward County

21 The hotel is located in Census Tract (CT) 421, which had an unemployment rate of 11.5% in 2010. That is well below the TEA threshold of 14.4%. However, by combining it with contiguous census tracts, as shown in Table 5, a TEA can be formed with a 2010 unemployment rate of 16.1%. Table 5. TEA designation for Hotel Location CT Labor Employ- Unemployment Force ment Level Rate (%) 406 4,390 3,997 393 9.0 411 2,090 1,648 442 21.1 412 2,251 1,613 638 28.3 414 1,570 1,251 319 20.3 415 1,609 1,192 417 25.9 416 2,789 2,151 638 22.9 418 3,872 3,577 295 7.6 421 1,704 1,508 196 11.5 425 1,304 1,157 147 11.3 TOTAL 21579 18094 3485 16.1 The last item in this section is the discussion of commuting patterns for the area in order to determine which counties should be included in the multiplier calculations. In

22 2000, according to the Census figures, the workforce of Broward County totaled 670,242, of which 565,812 lived in Broward County, 60,096 in Miami/Dade County, and 37,685 in Palm Beach County. These three counties are often considered part of the same workforce group. However, we generally select counties that include 90% to 95% of the total workforce. For Broward and Miami/Dade counties, the figure would be 93.4%. The inclusion of Palm Beach County would raise the figure to 99%, which would overstate the multipliers, so it has not been included in our calculations. 7. Economic Impact of Construction Jobs According to the developer, the hotel to be constructed at 550 Seabreeze is designed as a twelve story building comprised of a total 223,275 square feet of buildable space including 118,212 square feet of parking (291 spaces) on the second, third and fourth floors. The hotel will consist of the 105,063 square feet including: 136 hotel rooms with ocean and bay views, 9000 square feet of restaurant space; A private Ocean Club facility for guests and members; 5th Floor oceanfront pool area; and A 700 square feet salon. The total budget for Phase I, based on figures supplied by the developer, is summarized in Table 6. Table 6. Summary of Construction Budget, Phase I Land Costs $14,831,937 Soft Costs for Land Purchase 5,168,083 Site Development 2,558,730 Hard Costs 29,005,973 Less: contingency and profit 2,443,726 Furniture, Fixtures & Equipment 964,000 Other Soft Costs 5,065,319 Tenant Improvements 1,000,000 Contingency 1,405,958 Total Budget Phase I $60,000,000 Of these amounts, the figures included in our calculations are the sum of hard costs less contingency and profit and site development costs, so the construction amount entered into the RIMS II model for Phase I is $29.12 million. Table 7 shows the quarterly timeline of the Phase I construction costs. The actual construction expenditures will begin in the third quarter of 2012 (first half of table)

23 and will end in the third quarter of 2014 (second half of table), for a total elapsed time of 9 quarters, or 27 months. Table 7A. Construction Timeline for Phase I, First Half

24 Table 7B. Construction Time for Phase I, Second Half This report also contains the economic analysis for Phase II. According to current plans, the hard construction cost is estimated to be $12 million. There will be 60 rooms in the hotel 8,000 square feet in the restaurant. The Phase II hotel will be constructed across the street from the Phase I hotel. As mentioned above, the RIMS II input/output model will be used to determine the total number of jobs for construction as well as the hotel and restaurant operations. This model has often been approved by the USCIS for previous EB-5 projects. In an approval letter dated March 24, 2008, the USCIS approved the expenditure method and stated that verification (at the I-829 stage) can be based on total expenditures or revenues, rather than having to verify the direct number of jobs. The USCIS has also stated that the total number of construction jobs may be counted if the project takes at least two years to complete.

25 In keeping with the EB-5 guidelines, the number of construction jobs for all types of buildings is based on hard costs of construction activity and does not include soft costs : architectural and engineering fees, permits and construction fees, contingency allowances, sales commissions, financing, legal, insurance costs associated with the construction activity, overhead, and profits. On the other hand, all employment, which could include architects and engineers as well as construction workers, can be counted if these employees are working locally. Purchases of any furniture, fixtures, equipment, telecommunications, and computers are not included in any of the calculations, because these purchases will generally be made from manufacturers and suppliers outside the area. In many cases, the land on which these buildings will be constructed has previously been purchased and is not part of the cost estimates; however, average land costs are generally included when determining the relative contributions that could be made by EB-5 investors. Based on these regulations, we calculate the total number of construction jobs generated by Phases I and II by (a) using the revenue estimates submitted by the developer for hard construction costs, and (b) multiplying these figures by the RIMS II final demand multiplier for construction in Broward and Miami/Dade counties, which is 18.96. Since the hard construction costs are estimated to be $29.1 and $12 million respectively, that would create 552 total new jobs in Phase I and 228 total new jobs in Phase II. The detailed industry tables incorporating this result are now shown in the next three tables. Table (8) shows the increase in employment, output, and earnings for Phase I, and Table (9) shows the average output and earnings per new worker for construction jobs. Table (10) shows the increase in employment, output, and earnings for Phase II; Table (9) is not repeated because average output and earnings per worker is the same for both phases. Please note that in these and all other similar tables, output and earnings are given in thousands of dollars. Table 8. Increase in Employment, Output, and Earnings for Phase I Construction Industry group Employment Output Earnings Agriculture, forestry, fishing 1.1 73 17 Mining 0.8 227 58 Utilities 1.0 381 81 Construction 290.5 29321 10834 Manufacturing 21.4 4336 899 Wholesale trade 11.7 2104 646 Retail trade 50.0 3568 1196 Transportation and warehousing 8.9 960 355 Information 7.0 1752 364 Finance and insurance 16.2 3026 832 Real estate and rental and leasing 17.7 4551 355 Professional, scientific, services 24.4 2901 1260

26 Management of companies 2.5 492 198 Administrative and waste mgmt 20.5 1027 425 Educational services 4.4 276 111 Health care and social assistance 29.1 2503 1158 Arts, entertainment, and recreation 4.3 274 96 Accommodation 3.7 340 102 Food services and drinking places 17.5 934 294 Other services 16.5 1277 396 Households 2.6 0 26 Total 551.6 60324 19704 Table 9. Output and Earnings Per New Worker for Construction Industry group Employment Output/Empl Earnings/Empl Agriculture, forestry, fishing 1.1 67.4 16.2 Mining 0.8 284.7 73.0 Utilities 1.0 400.6 85.6 Construction 290.5 100.9 37.3 Manufacturing 21.4 202.3 42.0 Wholesale trade 11.7 179.4 55.1 Retail trade 50.0 71.4 23.9 Transportation and warehousing 8.9 108.4 40.1 Information 7.0 250.9 52.1 Finance and insurance 16.2 186.6 51.3 Real estate and rental and leasing 17.7 257.7 20.1 Professional, scientific, services 24.4 119.0 51.7 Management of companies 2.5 197.7 79.5 Administrative and waste mgmt 20.5 50.2 20.8 Educational services 4.4 63.3 25.3 Health care and social assistance 29.1 86.1 39.9 Arts, entertainment, and recreation 4.3 63.0 22.1 Accommodation 3.7 93.2 27.9 Food services and drinking places 17.5 53.2 16.8 Other services 16.5 77.3 24.0 Households 2.6 0.0 10.1 Total 551.6 109.4 35.7 Table 10. Increase in Employment, Output, and Earnings for Phase II Construction

27 Industry group Employment Output Earnings Agriculture, forestry, fishing 0.4 30 7 Mining 0.3 94 24 Utilities 0.4 157 34 Construction 119.8 12091 4468 Manufacturing 8.8 1788 371 Wholesale trade 4.8 868 266 Retail trade 20.6 1471 493 Transportation and warehousing 3.7 396 146 Information 2.9 722 150 Finance and insurance 6.7 1248 343 Real estate and rental and leasing 7.3 1877 146 Professional, scientific, services 10.1 1196 520 Management of companies 1.0 203 82 Administrative and waste mgmt 8.4 424 175 Educational services 1.8 114 46 Health care and social assistance 12.0 1032 478 Arts, entertainment, and recreation 1.8 113 40 Accommodation 1.5 140 42 Food services and drinking places 7.2 385 121 Other services 6.8 527 163 Households 1.1 0 11 Total 227.5 24876 8125 8. Economic Impact of Hotel Revenues According to the developer, the average daily rate for hotel rooms will be $225, and the average occupancy rate will be 75%, which is the national average in nonrecession years. This figure can be used directly in the RIMS II model to calculate the total number of jobs. However, to provide additional authenticity to this number, we also calculate the number of employees per hotel room and show that this figure gives approximately the same result. Our procedure is as follows. First, the hard construction cost per room can be calculated, and that is compared with the average range of costs to determine the classification of the hotel. On this basis, the hotel is classified as a full-service, but not luxury, hotel. Second, we determine the number of employees per room for a fullservice hotel. Third, we calculate the total amount of revenue per room, equal to the ADR adjusted for normal occupancy rates and the sale of ancillary goods and services (mainly food and beverages), and compare that to the average output per employee for hotel rooms in Broward County; that ratio should be approximately equal to the number

28 of employees per room calculated in the previous step. If all these ratios agree, we the number of total jobs calculated by revenues times the final demand multiplier should be approximately equal to the number of total jobs calculated by direct employees times the employment multiplier. Table 11. Construction Costs per Hotel Room Land Bldg Soft FF&E Working Total Budget/Economy Average 13,800 48,800 4,500 8,500 3,000 63,900 Median 13,200 44,400 2,300 8,500 2,900 51,700 Midscale w/o F&B Average 27,500 68,700 11,400 10,000 4,100 96,100 Median 14,400 60,700 8,300 9,700 2,800 80,500 Extended-Stay Hotels Average 14,400 76,000 11,700 13,300 3,300 129,000 Median 12,800 66,000 10,200 13,700 2,400 103,400 Midscale w/f&b Average 16,300 73,800 13,600 12,600 3,800 115,000 Median 12,000 69,000 10,700 11,900 3,000 98,600 Full-Service Average 18,700 120,500 22,700 23,200 6,900 206,000 Median 14,700 109,400 14,300 19,000 5,700 154,700 Luxury Hotels and Resorts Average 96,300 338,900 136,500 56,800 20,800 592,600 Median 98,400 293,600 90,400 60,700 18,700 532,900 Source: HVS HVS Consulting and Valuation Hotel Development Cost Survey 2009 We previously noted that total hard construction costs are $29.1 million. However, over half the square feet in the building will consist of parking space, which has a substantially lower cost per square foot. According to the developer, there will be about 105,000 square feet of hotel space, including common area rooms, and 118,000 square feet of parking space, for a total of 223,000 square feet. Hence the average cost per square foot would be $130.50. We estimate that the parking garage portion has an average cost of $100 per square foot, which means the figure for the hotel portion of the building would be $164.75 per square foot. Of 105,000 square feet for

29 the hotel, approximately 12,000 will be the restaurant and other specified ancillary services, leaving 93,000 square feet for the hotel rooms and common space, or 684 square feet per room. That would be equal to a hard construction cost per hotel room of $112,600, very close to the median figure for full service hotels shown in Table 11. In terms of total annual revenues, the developer expects the average daily rate to be $225, but two further adjustments are necessary: one for occupancy rates, and the other for the sale of ancillary goods and services. First, we have assumed an occupancy rate of 75%, which is the national average in non-recession years. Second, according to a recently completed study of the hotel industry by Convention, Sports & Leisure International (CSLI), the revenue breakdown for an average hotel is 75% from room rates, 20% from food and beverage service including meeting and banquet facilities, and 5% from all other sources (telecom, gift shops, rentals, etc.). Since the average occupancy rate is assumed to be 75%, these two factors offset each other. In other words, the average room rate when occupied is $225, but with an average occupancy rate of 75%, average daily revenue for the hotel room would be $168.75. However, that represents only 75% of total revenue, so the total figure returns to $225 per day per room when purchases of ancillary goods and services are included. When this is multiplied by 365 days, that is $82,125 per room-year, or total revenues of $11.17 million for 136 rooms. Having established this as a full-service hotel based on construction costs, we now turn to the expected number of employees per room. According to various surveys of the hotel industry, the average number of employees for a standard hotel room recently was 0.612. Furthermore, this figure has not changed very much over the years; earlier surveys also estimate it to be in the 0.6 to 0.7 range for U.S. hotels. However, while this survey covers a wide range of hotels, ranging from low-end motels to upscale hotels, and is a good starting point for our analysis, it does not fully apply to luxury resorts, where the ratio is 1.6 employees per room, as shown in a recent survey published in USA Today. Evans, Carroll & Associates has calculated the likely breakdown of the 61 employees per 100 hotel rooms for a standard hotel with a 75% occupancy rate, which is the national average; these figures can then be adjusted upward to reflect hiring practices at luxury hotels. The maid service figure is based on each maid cleaning 12 rooms per day; in some hotels, the figure is as high as 15 rooms per day, but that is unusual. This figure declines as the size of the room increases, and is estimated to be 8.3 rooms per day for luxury establishments. The front desk figure for a standard hotel assumes 4 people for each of 3 shifts; this figure also includes receptionists and people who answer the phone. These results are summarized in Table 12. Table 12. Hotel Employees Per 100 Rooms Category Budget Standard Upscale Semi Luxury True Luxury Maid Service 6 8 10 11 12

30 Front Desk 6 12 15 18 18 Doormen 0 3 3 4 6 Bellhops 1 0 4 6 8 Parking Valets 0 0 3 6 8 Concierge 0 0 3 6 6 Food Service 3 14 20 30 45 Customer relations 3 3 6 7 9 Management 3 6 6 7 9 Security 3 6 6 7 9 Engineering/inside maint 4 6 6 7 9 Janitor/outside maint 3 3 6 7 9 Reservations 0 0 3 6 6 Meeting & Banquet 0 0 0 3 6 Total 32 61 91 120 160 Hence we would expect an average of 0.91 employees per hotel room. Labor costs for hotels are typically about 1/3 of the total revenue, which means labor costs per room would be about $12,000. The 2007 Economic Census figure for Broward County shows average compensation paid to hotel workers of $26,790, which would probably be about $29,500 in 2010 dollars. Total annual room revenues as calculated above are estimated to be $82,125; one-third of that would be about $27,375. On this basis, the number of hotel worker per room would be 27375/29500 = 0.93, very close to the 0.91 figure shown in Table 12. Hence the figures are consistent in all respects, and we can enter the $11.17 million revenue figure in the RIMS II model. Since the multiplier for hotels in the two-county area is 18.57, 207 total new jobs will be created. These results are summarized in Tables 13 and 14. Table 13. Increase in Employment, Output, and Earnings, Phase I Hotel of 136 Rooms Industry group Employment Output Earnings Agriculture, forestry, fishing 0.4 25 6 Mining 0.0 2 1 Utilities 0.7 271 58 Construction 1.4 144 52 Manufacturing 2.9 570 116 Wholesale trade 2.3 405 124 Retail trade 10.1 718 241 Transportation and warehousing 3.7 381 172 Information 3.8 900 211 Finance and insurance 5.8 1083 297 Real estate and rental and leasing 6.9 1598 125