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EDA CC 1994 04 21CiTY 690 COULTER DRIVE · P.O. BOX 147 · CHANHASSEN, MINNESOTA 55317 '(612) 937-1900 · FAX (612) 937-5739 MEMORANDUM TO: Mayor and City Council Housing and Redevelopment Authority FROM: Don Ashworth, Executive Director DATE: April 15, 1994 SUBJ: le e Joint Work Session, HRA and Ci~::Council, Thursday, April 21, 5:30 p,m_ ~}'...- .-'y. ~. ~RA Go~l~: St~ff wouM ~tidp~c tl~ ti~'i}~t ~ of o~ joint work sc,~o~ ~ bc to discuss 1994 goals of the HRA (.c.~ ~). As staff had presented these to the city council as a part of our overall'goal sc//sions earlier in thc year, we antidpatc Thursday evening's meeting being .o~c of the c~ highlighting those areas tha~ it sees '"':""' ~.".?' ..~,, Senior Housi Afro le ,l~'= : Thc pnn)al'y portion of Thursday evening's rnceting is anticipated to be. ':~nior as well as affoY/hble housing. So as to insure that both the lIRA and city cd."~"cil ~c aware of prcvid~ work efforts and the background presentations. The topic, presenter, and brief dcscri.~p~.~n is ~ follows: seniors who would i6gk:iilly:~ ~&~:~ii~-~:~ject as well as what they could reasonably afford The. study was paid fln-ough Community Development Blocifc~ ~C~' t funds. Mr. McCombs will tashnsht sati nt portions of the report; and ~ Senior Housina Performa: In the spring of 1993, the council allocated dollars from Community Development Block Grant funds to complete a zepm't looking at thc financial feasibility, including typical pefforma of a senior housing complex, using data from thc market report. That document was completed in December Mayor and City Council Housing and Redevelopment Authority April 15, 1994 Page 2 of 1993 and will first be presented to thc HRA/City Council Thursday evening (copy attached). Again, Mr. McCombs will be highlighting that report; and Financin~ Alternatives, Gary Fields, Strrin~sted: Springsted, Inc. acts as the city's financial advisor. Gary specializes in advising cities as to the best nmans by which both senior housing projects as well as affordable housing projects can currently be financed. Gary has reviewed the work completed by Mr. McCombs and will provide a brief overview of current strategies for funding these types of projects. The McCombs report can provide the foundation for a senior housing project in Chanhassen; and DunBar Development Corpor0fion, Frank DunBgr & B~lair B~filc~ers. $in3 Winkels: Todd, Paul, and I have met with no less than ten different groups proposing either senior housing or affordable housing projects for Chanhassen. All of the proposals failed to meet one or more of the following standards which we felt critical if we were to have both a successful senior housing as well as affordable housing program for Chanhassen, i.e: Cash Flow Experience: Although senior housing and affordable housing are two separate projects, in entirely different areas of the community, financing the two can be strengthened if the cash flows from both projects can move between the two during each project's time frame of strength and weakness; and Neighborhood Cgmpa~ibility: Most of the affordable housing projects reviewed were massive-types of projects belonging more so in downtown Minneapolis than Chanhassen. The development team carrying out the affordable project(s) needs to be sensitive to neighborhoods it may abut, provide opportunities to build equity, and recognize that a major deterrent is the initial down payment versus the ability to make monthly payments; and Control: Both the senior and affordable housing projects should be under the control of the city or its agents, i.e. senior housing commission or tenants in the case of senior housing, and potentially, local businessmen as it would deal with affordable housing including eligibility, etc; and F.~uitv: Virtually all of the senior housing proposals reviewed had the long term ownership under the equity owner or managing parmer. This same statement is true as it deals with affordable housing with the Mayor and City Council Housing and Redevelopment Authority April 15, 1994 Page 3 exception that the-concept changes slightly when talking leased premises versus ownership; and Subsidy: Vimmlly none of the concepts presented provided I~ through which rental unit subsi_'d!es could be achieved f~r the senior housing project. Not all of the seniors potentially needing housing are logically going to be able to afford market r~nt and the availability of dollars through programs such as Section 8 are very limited. The proposal should be developed in such a fashion as to inntlr~ monie~ wea'e being gene~'atlsd to provide subsidies at the discretion of the local hon~ing agency, lind Accountability: Estimated budgets for the projects reviewed were just that--estimal~s. Overro_ns are something we would have to deal with. Projects, such as the senior project, should be completed using a technique sin-dlar to a "construction management conmtcc" None of the proposals reviewed brought this t~hnlque to the table. The only proposal which staff felt met the guidelines presenl~l above while brining to the table Winkles. Prank and Jim will provide an overview of their experience as well as how they would see both of these types of projects become a reality in Chanhasse~ Frank has also had extensive experience in working with senior groups in assuring that they are part of the process. One of those was helping the city/seniors reach consensus on where the facility should be built. Before his arriving on the scene, this aspect had been a major hurdle [sound familiarS. I really believe that you will find the ev~ing highly stimulating and ~ your beliefs that projects such as these can in fact become a reality in Chanhassen. 1994 HRA GOALS 1. Develop overall .hmds~pe/beaugflcntilm Dian for the foOowlnn areas: - Highway #101, West 78th Street, and Highway/Pi. - Outlot B Target, Highway #5 and County Road 17 (Powers Boulevard). - Highway #5 and C-rent Plain. - Highway #5 and Market Boulevard, - Red-E-Mix, Taco Shop and Hanus Area. m West 79th Street Continue to market the remaining portion of land owned by the HRA east of the ~cana Bank site. (January- Decem~) m Highway ~ Corridor Project - Completr Corridor Study with the submittal to lIRA in February. 0nnuary- June) m Market Squarg Development Continue to assist in marketing lots 2, 3, 4, and ouflot A (January- December) Incorpo~t_~! t, he rlmdts of the -vi~on z0oz" gady ~ommittee results, into a priority list for the HRA (Jn, n!mry - June). Including the followln_g project: - New Library Location - New Post Office Site - Senior Housing - Other Housing Needs - City Center Park - Community Center - Pony Pauly Pryzmus Area - Redevelopment of Chanhassen Bowling, Frontier Center, Backside of the Dinner Theatre (January- December) · al Hanus Facility _/ Monitor the construction, bf the landscaping, and facade Improvements. (January- December) (~ e Pedestrian Bridge Constriction:/: - Finalize the design for the pedestrian bridge. - Take bids for the construction. - Monitor construction of ~e project. (January - October) ..: 8~ Review Alternatives Fpr Mod~ate Cost Housing for Chanhassen - Continue to work with Hoisington Koegler Group in surveying local business employee needs. (January- Decem~) ~. Demolition of Pony Paui._~_'~_l~rv _.~hus Buildin~ - Leases for these facilities end as of June 1, 1994. .. (June- August) , 10. Review options fgr B~il s_vstem from downtown following railroad ~a~ks to Lake Susan Park ;~ (January- December) McCOMB GROUP,, Ltd. January 26, 1'993 Mr. Paul Kraus8 City of Chanhassen 690 Colter Drive P.O. Box 147 Chanhassen, Minnesota 55317 Dear Mr. Krauss: We are pleased to submit our senior housing market analysis for developing housing for the elderly in Chanhassen. This ~_-alysis was based on a thorough exAmt-_Ation of factors that influenced the market for senior housing. Particular attention was given to the type of senior housing which would be .appropriate for the market, reviewing the impact of area demographics, analyzing competitive product, interviewing persons familiar with the Chanhassen senior market and analyzing the potential for the development of senior housing in light of demographic and market conditions. We have concluded that a need exists within the market for a 72- unit senior housing development fashioned after a congregate facility. Persons ages 65 and over accounted for approYtmAtely eight percent of the population base in the City of Chanhassen in 1990 end the number and percent of elderly both in the City end surrounding communities is estimated to increase through 1995. Senior housing is well established end accepted within the market. This project also has the benefit of support both by the City of ChAnhassen and its Senior Comm4ssion, residents and community organizations. The conclusions end recommendations contained in this report are based on analysis of available data and demographic estimates, a~ with any forecast, our estimates are a combination of many factors which must be based on assum~tions and estimates over which we have no control. Any significant or unforeseen deviation from assumed trends in economic conditions could result in performance that is different from that ~,ticipated. REC~ JAN 2 ? 1993 crr~f... OF 3250 Mul~ T~, ~ ~~~~ ~ ~ · (61.2) 339.7[X]0 Fax: (6i2) 338-~ Paul Krauss January 26, 1993 Page 2 A review of the complete report and introduction is recommended for description of the work tasks conducted for this engagement and a full understanding of the analysis that supports these findings. Furthermore, thorough reading of the report purpose in the introduction ~s strongly advised for ~- understanding of this studies' qualifications. We appreciate the opportunity to have worked with you on the research for this development and look forward to working with you on the second phase. Sincerely, Oayle J. Davidge Senior Associate Report CHANHASS~ SENIOR HOUSIN~ MARKET STUDY Prepared For THE CITY OF CH~/~I~SEN Januar~ 1993 Chapter ~'Jk~_ OF COI~BNT8 ~4ect -- Introduction .................... 1 Report Purpose 2 Market Area ..................... 4 Population and Rouneholds 4 Household Incomes 6 Age Distribution 7 Senior Population 8 Senior Age Distribution 8 Senior Household Type 9 Households by Income and Age of Household Head 10 Housing Units 10 CItY OF C~h~RX~A~BEM 11 Population and Households 12 Household Incomes 12 Age Distribution 13 II Competitive Senior Housina Developments ...... 16 _ -- -- Historical MSA Market Overview Market Area Senior Housing Talheim Waybury at Chaska Sterling Ponds Elim Shores Edendale Retirement Residence Manor House Southshore Communities Planned, Proposed or Approved Projects 16 16 18 18 21 21 22 22 23 23 II I ~arket Area Demand ................ 24 Sources of Demand 24 Housing Demand Analysis 24 IV Recommendations ................ . . 27 Building Features Building Services and Programming Unit Mix Unit Features Estimated Rents 27 28 29 31 31 10 11 12 13 14 15 16 LXBT OF T~BX~B TXtle Population and Households Chanhusen Market Area and MSA 1980 and 1990 Census 1995 Estimated 6 Household Incomes ChanhassenMarket Area and MSA 1990 Census and 1995 Estimated 7 Age Distribution Chanhassen Market Area and MSA, 1990 8 Population age 65 and Over Chanhassen Market Market Area 1980, 1990 Census and 1995 9 Chanhassen Market Area Senior Age Distribution 1990 9 Senior Households by Type, 1990 Chanhassen Market Area 10 Households by Income and Age of Household Head Chanhassen Market Area, 1990 11 Housing Data, 1990 Chanhassen Market Area 11 Population and Households City of Ch~nhassen 1980 and 1990 Census, 1995 Estimated 12 Household Incomes City of Chanhassen 1990 Census and 1995 Estimated 13 Age Distribution City of Chanhassen, 1990 14 Households by Income and Age of Head of Household 1990, City of Ch~nh~ssen 14 Total Senior Units and Occupancy Market Area 17 Comparable Projects Market Area 19 ChA-hassen Senior Household Demand 25 Recommended Unit Mix ~-d Square Footage 30 tt LIST OF MAPS ~itl® Market Area Competitive Projects iii 5 20 With approximately 5.0 percent of its population aged 65 and older in 1990, the Chanhassen market area clearly has a large enough base of older persons to consider a sen/or housing project. Demographic trends indicate that both the number and percentage of seniors will continue to increase. The age cohorts for persons 55 to 64 and 65 to 74 are both larger than the cohorts for persons who currently are aged 75 to 84 and 85 and older. Consequently, the prospect for both short-term and long-term senior housing demand in Chanhassen is excellent. The strongest interest in the proposed housing will come from current Chanhassen residents, previous Chanhassen residents and seniors whose children or grandchildren live in the community or nearby. Persons in adjacent communities who want to live in a senior housing project, but do not have one available in their own community, will also consider moving to Chanhassen. Therefore, the market area has been extended to include communities surrounding Chanhassen and covers the communities of Chaska, Eden Prairie, Excelsior end Chanhassen which should account for most of the draw to the proposed project based on the experience of other senior developments. The boundaries are drawn to configure with natural barriers and neighborhood divisions which relate to the Chanhassen market. Currently, there appears to be unsatisfied demand for one senior housing project in the Ch~-hassen market area with the option of more developments being absorbed beyond 1995. The ability of the proposed project to meet the needs of the population based on their geographic location, services, pricing and design will determine which projects succeed and which have lengthy absorption periods. No rental units specifically for senior citizens exist within the City of Chanhassen, so this development will fill a market void which currently exists. Our research indicates that elderly residents have longstanding ties to the community and, when given a suitable housing option, are likely to stay in Chanhassen. It is recommended that the proposed senior housing be fashioned after the concept of congregate housing. The distinction in premium value of congregate housing over standard apartment buildings lies in the services, programming and extensive common areas provided for residents. The target market would be those aged 62 and above. Uu~ld~n_o Fea~,ures It is recommended that the building be designed along the lines of garden apartments with no more than three levels, elevators, security, extra wide hallways and generous common areas. The main floor would contain a service/common area which is anticipated to be flexible in nature to allow for multiple uses of the space. Important function spaces will be lounges on the main and second levels and the dining area. As gathering places for residents, their design, decor and layout will determine how often residents use these areas both formally and informally which will greatly impact the use of common space and the sense of community within the building. The third level is anticipated to contain larger units and one or two solariums with sun porches to provide additional gathering areas. In planning for these areas, it will be important to provide ample seating in staging areas near the mailboxes, elevator banks, doorways and dining room. Small furniture groupings and conversation nooks foster interaction in lobbies as well as in the lounges. Recreational and community spaces recommended for this type of building include the following: community room, dining room, lobby/lounge area, common laundry room (ideally one per floor with seating and folding tables), woodworking/craft area, an on-site office and a small business office which could be used by a visiting nurse or pastors. BuJ. ldina Services and Proaramm~.na A meal program, emergency call system, transportation and staff to assist with activities and programs are the key service components recommended. These services and programs may be augmented through out-sourcing such as programming in cooperation with the Park and Recreation Department, the senior center, Sojourn and other senior service providers currently active in the area. Incorporating these services and programs will give the proposed project a marketing advantage over existing competitive developments and allow for flexibility of the project as its population ages in place. It ts recommended that 72 units be initially constructed. Approximately two-thirds of the units are recommended as one- bedroom units with one-bedroom-plus-den and two-bedroom units comprising the remaining one-third. Determining unit mix for senior housing is always difficult in that while interest is ii initially high in two-bedroom units, affordability and long-term planning would suggest that one-bedroom units are more viable for most seniors, particularly since many are living alone by the time they move to congregate housing developments. Therefore, the proposed unit mix appears reasonable. Unit square footages will be competitive with-one-bedroom units of 650 to 700 square feet, one-bedroom-plus-dens of 850 to 900 square feet and two-bedroom units of 900 to 1,050 sc/uare feet. It is also recommended that one to four of the one-bedroom units be fitted as handicapped units containing approximately 650 square feet. unit Fe&tu~es Features typical to each unit which will be well received include: large in-unit storage lockers, french or glass doors for first floor walk-out patios and upper floor balconies (if multi-level), linen closets, a kitchen bar or pass-through area~ an eating area in the kitchen would be recommended for two-bedroom units and the option of a walk-in shower or tub/shower combination unit in the bathroom. Bathrooms should be constructed so that grab bars may be added as residents requ/re them. Since the development concept for the proposed project offers a high level of services and amenities, it is neither realistic nor necessary to follow the same rent schedule. However, recognizing that other buildings will be cross-shopped, addressing the differences in this project will be important in marketing. The compelling reason seniors elect to move into a senior project is for the security, services and companionship offered in a community setting. Those distinctions must be drawn upon to establish the perceived value of the development. iii ZN'J~Z?~ODU¢~ ZOZl The purpose of this analysis has been to determine market support for senior housing in the City of Chanhassen. The work program designed to accomplish this assignment included several primary and secondary research tasks. o Market Analysis -- The market area for senior housing in Chanhassen was defined. The demographics of the market area were evaluated, including population characteristics such as tenure (owner/rental occupancy), household type, age distribution and income levels. This market area included not only the City of Chanhassen, but also surrounding communities and areas from which the project would likely attract residents. o Competitive Market -- Elderly facilities ranging from subsidized highrises to market-rate senior housing, both owner and renter-occupied, were inventoried within the market area to determine housing choices currently available to seniors. Potentially competitive upcoming projects were identified through conversations with city officials and developers. Competitive product was reviewed and analyzed for design, services, pricing, locations, sponsorship and other considerations. Market findings based on occupancy and product analysis were tested with several knowledgeable people in the community, including those on site at senior housing developments. This determined the type of product and services that would be received best in the Chanhassen area. o Development ~ecommendationl -- Household projections less the number of senior housing units that exist or are planned was the basis for analyzing how many senior housing units are needed in the market area. This projection is factored further by the percentage of the market likely to consider a move to senior housing. The ability of a senior housing project to capture the necessary market share to be successful is based on: the type of product proposed; anticipated number of units, size and rent levels; services; And programs. Recommendations on each of these areas are made to maximize market position of the proposed project and tailor it to the community of Chanhassen. In conducting this assignment, information was obtained from a variety of sources which, when combined with our experience in similar evaluations, provides a basis for Judgments. Principal attention was given to gathering research data as described above. This report contains primary information needed to support our principal conclusions. However, in a report of this nature, it is impossible to include all of the information that was developed and evaluated. Any additional detailed information that is required will be furnished upon request. ~l_oo:t Pu:p_ OBi This report was prepared in accordance with the proposal dated July 6, 1992 with the understanding that the report will be used by the client to evaluate the development Potential of the proposed senior housing development. This report was prepared for that purpose and is subject to the following qualifications: .O The analysis did not ascertain the legal and regulatory requirements applicable to the proposed project, including zoning, other state and local government regulations, perm4ts and licenses. No effort was made to determine the possible effect of present or future federal, state or local legislation, or any environmental or ecological matters on the proposed project. The report and analysis is based on estimates, assumptions and other information developed from research of the market, knowledge of the industry and discussions with the client. Some assumptions inevitably will not materialize ~nd unanticipated events and circumstances may occur; therefore, actual results achieved will vary from the ~-alysis. o The analysis did not evaluate management's effectiveness and McComb Group, Ltd. is not responsible for future marketing efforts and other management actions upon which actual results are dependent. o The report was prepared with the understanding that the report contents may be used in marketing materiaie. We reserve the right to review these marketing materials for proper use of our work. This report is intended solely for the purpose described above and should not be used for any other purpose without our prior written permission. Permission for other use of the report will be granted only upon meeting company standards for the proposed use. ~hapter I Demographic characteristics of a market area population provide valuable information about current end potential demand for housing. The market area for the proposed Chanhassen senior housing project is shown on Map I and includes the communities of Chanhassen, Eden Prairie, Chaska City, Chaska Township end Excelsior. This market area was delineated based on geography, road networks and interviews with persons knowledgeable about senior housing. This chapter presents and analyzes changes in population, household income, senior age distribution, household type end housing stock data for the market area, the Minneapolis/St. Paul Metropoliten Statistical Area (MSA) end the City of Chanhassen. Population and Households The ChA-hassen senior housing project's market area experienced healthy growth during the 1980s as shown in Table 1. Population increased by over 50 percent from 33,696 in 1980 to 64,923 in 1990. Households grew slightly faster, increasing from 11,570 in 1980 to 23,895 in 1990. The market area population was 64,923 in 1990, enincrease of more then 30,000 people or a 6.8 percent average rate of chenge from 33,696 in 1980. Population of the Min-eapolis/St. Paul MSAgrew at a much slower rate of 1.4 percent annually during the same period. The 1995 market areapopulation is estimated at 76,886 people which represents a 3.4 percent average increase over the 1990 Census. The Minneapolis/St. Paul MSApopulation is enticipated to increase by 1.1 percent annually over the same five-year period reaching 2.6 mtllion in 1995. Market area households increased dramatically from 11,570 in 1980 to 23,895 in 1990, a ?.5 percent average rate of change. Household growth is enticipated to continue through 1995 at a more moderate rate of 3.9 percent annually reaching 28,960 households in 1995. Market area household growth is significently above that of the MSA, which grew from 769,879 households in 1980 to 938,268 in 1990, or 2.0 percent annually. TheM SA is expected to contain 1,022,333 households by 1995. ~Map I ;. .MARKET AREA HASKA POPULAT'rOM AMD HOUSES ClIAMHASSEll MARKET AREA AMD MSA 1980 AMD 1990 CENSUS, 1995 ESTIMATED Maz'ket Area MSA Rate Rate ·eaF Irumbor of Chart_es ll--,heF of Chart_os Population 1980 Census 33,696 2,137,133 1990 Census 64,923 6.8% 2,467,538 1.4% 1995 estimated 76,886 3.4 2,612,703 1.1 Households 1980 Census 11,570 769,879 1990 Census 23,895 7.5% 938,268 2.0% 1995 estimated 28,960 3.9 1,022,333 1.7 Source: U.S. Census, Metropolitan Council and Urban Decision Systems. Household Xncomes Average 1990 household income in the market area was $53,700, which was significantly higher than the $43,942 average reported in the MSA, as shown in Table 2. Almost half, 45.5 percent, of market area households had incomes above $50,000 compared to 29.7 percent. for the MSA. The proportion of market area households with incomes in the $20,000 to $49,999 range is 36.4 percent, 9.0 percent more than the MSA's 27.4 percent. Chanhassen's market area contains only 18.1 percent of households with incomes below $20,000, as compared to 28.0 percent of all MSA households. The relationship between the household incomes found in Chanhassen's market area and those in the Mi--eapolis/St. Paul M SA are anticipated to become more divergent. In 1995, market area average household income is estimated to be $54,260, about $14,500 above the MSA's estimated average household income of $49,748. Households with incomes above $50,000 are .anticipated to represent 56.7 percent of all market area households compared with 40.5 percent of MSA households. Households withincomes in the $20,000 to $49,999 range represent 28.2 percent of the market area and 36.3 percent of all MSA households. The disparity in household income in 1995 between Chanhassen'8 market area and the MSA is again apparent in households with incomes under $20,000 where only 15.0 percent of households in the market area are anticipated to fall into this income range compared to 23.3 percent of all MSA households. ~ablo 2 HOUSEHOLD INCOMES CHA~HASSEN MARKET AREA AND MSA 1990 CENSUS AND X995 ESTIMATED Xncomo Distribution 1990 ConSUl Household Incomes MaFket AFoa $0-$9,999 $10,000-$19,999 $20,000-$29,999 $30,000-$39,999 $40,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000+ 1,652 7.1% 2,563 11.0 2,701 11.5 2,677 11.4 3,148 13.5 6,156 26.3 2,547 10.9 1,937 8.3 11.7% 16.3 14.9 14.3 13.1 19.2 5.9 4.6 Average Income $ 53,700 $ 43,942 1995 Estimated Household Incomes $0-9,999 $10,000-$19,999 $20,000-$29,999 $30,000-$39,999 $40,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000+ 1,635 5.6% 2,769 9.4 2,732 9.4 2,898 9.9 2,608 8.9 8,183 27.9 4,204 14.4 4,217 14.4 8.6% 14.7 12.8 11.9 11.6 23.7 9.2 7.6 Average Income $64,260 $49,748 Source: U.S. Census and Urban Decision Systems. Age Dlltributlpn Age by category for the market area is shown in Table 3. A majority of Chanhassenmarket area population was contained in the two age groups of 25 to 44 (43.9 percent) auld 0 to 17 (29.4 percent) in 1990. These two age categories contained 73.3 percent of total market area population while they accounted for 62.8 percent of MSA population. The 18-to-24 and 45-to-54 age groups contained 8.0 percent and 9.4 percent of market area population, respectively, while they accounted fora bout 10 percent each in the MSA. The remaining age categories, consisting of those 55 or older accounted for 9.9 percent of the market area population and 17.0 percent of MSA population. ~aM.e 3 AGE DXBTRXBUTXC)ll CHMilL~B~I MMtl~ MtgJt JLIlD NBA, 1990 JLae ~ateaorv Area 0-17 18-24 25-44 45-54 55-64 65-74 75-84 85+ 19,098 29.4% 5,259 8.0 28,453 43.9 6,104 9.4 3,290 5.1 1,926 3.0 865 1.3 329 .5 Total population 64,923 100.0% 26.2% 10.1 36.6 10.0 7.1 5.5 3.2 1.2 100.0% Source: u.s. Census and Urban Decision Systems. Bep~gr Populat~on The Chanhassen market area senior population (age 65 or above) grew from 1,591 in 1980 to 3,120 in 1990, almost doubling during this decade, as shown in Table 4. The senior population is expected to continue increasing reaching 3,394 persons in 1995. Ben:l. or Aae D~str~but~on In 1990, 4.8 percent or 3,120 people were aged 65 or over, which is typical of urbanizing areas as indicated in Table 5. The MSA had 9.9 percent of its population aged 65 or over in 1990. an additional 3,290 persons in the market area were aged 55 to 64, which represents 5.1 percent of the total population. The size of the 55 to 64 age group is A, important indicator of long-term demand for senior housing in that. these persons are prospective residents for the proposed project in future years. The 3,290 residents age 55-to-64 in the market area substantiate the strength of the Chanhassen area senior housing market for years to come. Table POPULATION AGE 65 AND OVER CHANHASSEN MARKET AREA 1980, 1990 CENSUS AMD 1995 Year 1980 Census 1990 Census 1995 Estimated Change: 1980-1990 1990-1995 1980-1995 1,591 3,120 3,394 1,529 274 1,803 Percent 7.0% 1.7 5.2 Source: U.S. Census and Urban Decision Systems. Table 5 CHANHASSEN MARKET AREA SENIOR AGE DISTRIBUTION, 1990 Market Area Aae Cateao~v Number ~ -- -- -- 55-64 3,290 5.1% 7.1% 65-74 1,926 3.0 5.5 75-84 865 1.3 3.2 85+ 329 .5 1.2 Total 65 and over 3,120 &.8% 9.9% Total population 64,923 100.0% Source: U.S. Census of Population. 100.0% Senior Household Tvoe Couples aged 65 and over comprise 6.7 percent of all families in the market area as indicated in Table 6. Seniors comprise 13.7 percent of all non-family (one or more unrelated persons living together) household8 in the market area, or 873 households. Almost one in five (18.4 percent) of single persons in the market area are aged 65 or over. Household type is a good indicator of the type, size and mix of units a senior housing project can support to be successful within the market. T~ble 6 S~I*'roR HO~SgBOLD~ B~. '/~PE, 1990 Household TV'De Family Households Non-Family Households One-Person Households SenJ. orm as Percent of )(arket Area 17,485 1,171 6.7% 6,374 873 13.7 4,516 830 18.4 Source: U.S. Census and Urban Decision Systems. RQuseholds bv Zncome and ]tee of Household Head -- -- Table 7 shows market area median household income by age of householder. This data is derived from the 1990 U.S. Census of Population. In general, income increases through the 45-to-54 age bracket where 62.8 percent of these households have incomes above $50,000. Incomes decline in the 55-to-64 age group where less than 50 percent (49.7 percent) of households have incomes above $50,000, and then sharply fall off a8 age 65 is attained where less than 20 percent of households have incomes above $50,000. These income trends are an important consideration when determining market position, pricing and marketing the finished product to seniors. HousJ. nu Units -- The number of housing units within the market area was placed at 25,404 by the U.S. Census as shown An Table 8. Almost 94 percent are occupied and 6 percent vacant. Of the occupiedunits, about 73 percent are owner-occupied and 27 percent renter-occupied. The average house value was $117,498 in 1990 while the average monthly rent was $558. 10 Table 7 HOUSEHOLDS BY INCOME AND A~E OF HOUSEHOLD HEAD CHAFrlASSEM MARKET ARFJt, 1990 Income Cateoo:L-'y Less than $15,000 $15,000-$24,999 $25,000-$94,999 $35,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000+ 65+ 7.0% 3.5% 2.9% 9.1% 34.8% 11.3 5.2 8.2 8.9 20.2 14.9 10.4 10.2 14.1 14.0 29.0 21.8 15.9 18.3 11.3 25.2 30.4 25.9 24.8 12.1 7.3 16.3 19.6 10.2 4.7 5.3 12.4 17.3 14.7 3.0 Source: U.S. Census and Urban Decision Systems. Table 8 HOUSING DATA, 1990 ~{~A~SENMARKET AREA Housin_a T~_pe ~ Number 25,404 Occupied 23,859 Owner 17,441 Renter 6,418 Vacant 1,544 Average Housing Value Average Monthly Rent $ 117,498 $ sss Source: 1990 Census. CZT! OF CHAMHASSKN Demographic trends for the City of Chanhassen are presented below. It ig anticipated that many of the seniors who choose to move into the proposed senior development will come from within the city. These trends provide valuable insights into housing demand. 11 · · PoDulat~on and Households _ The City of ChA~bassenexperiencedhealthygrowthduring the 19808, adding almost 5,400 people to its population and increasing its households by over 1,900, as shown in Table 9. The City's population was 11,732 in 1990, A, average rate of change of 6.3 percent over the 1980 count of 6,351. It is estimated growth will continue at approximately the same pace reaching 15,802 by 1995. Households in the City of Chanhassen increased at a slightly more rapid rate of 6.8 percent A-~ually from 2,073 in 1980 to 4,016 in 1990. It is estimated that there will be 5,516 households in the City of Chanhassen by 1995. Table 9 POPULATION AID HOUSEHOLDS CITY OF CHAHHASSEN 1980 AMD 1990 CENSUS, 1995 BSTXMITED Rate Year Imnbor of Chance -- population 1980 Census 6,351 1990 Census 11,732 6.3% 1995 Estimated 15,269 6.1 Households 1980 Census 2,073 1990 Census 4,016 6.8% 1995 Estimated 5,308 6.6 Source: U.S. Census and Metropolitan Council. Household Incomes Average 1990 household income in the City of Chanhassen was $50,104 in 1990 as shown on Table 10. Almost 43 percent of Chanhassen households had incomes above $50,000 in 1990. Another 40 percent had moderate household incomes in the $20,000 to $49,999 range with the remaining 8.4 percent of households having incomes below $20,000. It is anticipated that household incomes will reach an average of $58,458 in 1995. Households with incomes above $50,000 will represent almost 52 percent of all households in the city. The household income group, $20,000 to $49,999, will drop to 34.4 percent and household8 with income below $20,000 will decline significantly, and representing only 13.Spercent of all households in the City by 1995. 12 · f Table 10 HOUSEHOLD ZNCON~S CITY OF CHAMHASSEN 1990 CENSUS AMD 1995 ESTIMATED Income Dlst:~butLon 1990 Census Household Incomes Less than $10,000 $10,000-$19,999 $20,000-$29,999 $30,000-$39,999 $40,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000+ Average Income 1995 Est/~nated ~ousehold Incomes Less than $10,000 $10,000-$19,999 $20,000-$29,999 $30,000-$39,999 $40,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000+ Average Income 214 5.3% 528 13.1 526 13.0 571 14.2 473 11.7 1,062 26.4 360 8.9 298 7.4 $50,104 228 4.5% 456 9.0 620 12.4 639 12.7 468 9.3 1,352 27.0 646 12.9 603 12.0 $58,458 Source: U.S. Census and Urban Decision Systems. Aaa Distribution Age by category for the City of Chanhassen in 1990 is shown on Table 11. inA significant portion of the City's population is contained two age categories: the 25-to-44 age group which contains 43.1 percent of the population and the under-18 group which accounts for 31.3 percent. These two age groups make up almost 75 percent of the City's population base. The senior population accounts for the next significant group at 5.3 percent for those aged 55 to 64 and 7.8 percent for those aged 65+ or 13.1 percent of the City's total population. 13 ·able 11 JIGIE D'r B'A'rRZBITTZOll (:X~Z OF CZOL#HI~BS~//i, 1990 e ca :ea_ ory lumbe Under 18 3,670 31.3% 18-24 767 6.5 25-44 5,062 43.1 45-54 1,157 9.9 55-64 627 5.3 65-74 758 6.5 75-84 110 1.0 85+ 35 0.3 Total Population 11,732 100.0% Source: U.S. Census. MediA-household income by age of head of household for the City of Chanhassen in 1990 is shown in Table 12. As with the market area, income tends to peak in the 45-to-54 age group where 61.2 percent of all households earned more than $50,000 and then declined to 51.1 percent in the 55-to-64 age group. The percent of households in this income category fell sharply to about 22 percent in the 65+ age group. Particular attention should bepaid to household income of potential residents for the proposed sen/or housing project as more than50 percent of the 65+ household group have incomes in the $15,000 to $34,999 income brackets. ·able 12 HOUSEHOLDS BY XICGME A.IDAOE OF HEAD OF HOUSKHOT_.,D, 1990 CXTYOF CHAIIHA~SEII :l:ncome Caterer7 aAex_3 3s-&& ss-6& 65+ Less than $15,000 $15,000-$24,999 $25,000-$34,999 $35,000--$49,999 $50,000--$74,999 $75,000--$99,9999 $100,000+ 4.5% 1.0% 3.0% 10.9% 13.8% 7.1 6.9 10.9 6.9 21.6 10.2 10.1 9.4 10.9 29.6 26.9 21.6 15.5 20.1 13.1 36.4 31.9 26.2 27.3 14.5 8.4 19.5 19.8 10.4 5.7 6.5 9.0 15.2 13.4 1.7 Source: 1990 U.S. Census of Population. 14 Demographic characteristics for the market area and City are similar. This cohesiveness will provide the City the advantage of being able to communicate effectively'within the market about the proposed senior housing project. 15 C~aptex' XX COMPE2XTX~ SEB'XOit HOUSXiIG DEVBZ~PMEMTS A substantial and growing elderly populationhandirectedattention to the needs of this segment of society. Housing, in particular, has received considerable attention and currently available data indicates that it will rema/n a significant issue for the foreseeable future. Housing designed and developed specifically for seniors has only become a factor in the Twin Cities during the past decade. Prior to the development of congregate housing, seniors requiring services and/or who were no longer able to maintain their existing residences had the choice of living in a subsidized highrise or moving to a board and lodging, board and care or nursing home. Housing for independent seniors is a fairly recent phenomena driven by the dramatic increase in the number of older Americans. The size of this' market is reflected in the number of senior- specific housing units developed or in progress locally. According to the Metropolitan Council the seven-county metropolitan area had 912,720 units of housing in 1988 of which 25,482 were dedicated to older people, or only 2.8 percent of all units. The two most densely populated counties of Hen-spin and Ramsay accounted for 21,841 units of housing for older people, leaving only 3,641 units to be shared by the other five counties. Geographically, the distribution of units is clustered resulting in market areas with multiple options while other areas have virtually no senior housing. Narket AFea Sen:l. or Houn:l.n~r -- Senior housing projects found within the market area are shown on Table 13. There are a total of seven projects developed exclusively for seniors for a total of 447 unite or enough units for about 14 percent of the se-4or population. Almost 84 percent (375 units) are subsidized leaving 51market-tarsus/ts in the Elim Shores project and 21 assisted-living units at Manor House as the sole non-subsidized senior units within the market. Ail of these projects reported full occupancy with a waiting list ranging from three months at Manor House, to six months to two years in the apartment units. 16 0 ! A cost comparison of market area projects is shown in Table 14. Project locations are shown on Map 2 which is keyed to this table. Of the rental properties, Sterling Ponds ie the least expensive at $520 to $595 per month ($.63 to $.82 per square foot) with units at Elim Shores ranging between $685 to $1,269 per month ($1.14 to $1.16 per square foot). The most expensive project in the market is the assisted living project, Manor House, at a coot of $2,007 per month or $? .27 per square foot. Manor House is not comparable to the other projects in that it is a full-service, assisted-living project which offers studio living arrangements with no kitchens and a wide range of amenities and support services. Subsidized senior housing is well established and accepted in the Chanhassen market area. There are, however, very few other alternatives for seniors which could provide an opportunity for the City of Chanhassen to offer an alternative type of housing for its elderly population. Each of these projects are described below: The Talheim is located at 407 Oak street in Chaska. It is a five- story, 58-unit fully subsidized project connected to Auburn Manor nursing home. Each of the un/ts are one bedroom and contain approximately 700 square feet. At the time of our survey, the project reported 100 percent occupancy with a six-month waiting list. Resident incomes are all below $19,200. Project features include an emergency call system utilizing pull cords, an elevator and a co-~unity room. The project is an independent apartment building separate from the nursing home. #avburv at Chaska -- _ The Waybury is located at 110340 Geske road in Chaska. This is a three-story subsidized project for persons aged 62 or older and the disabled. The project contains a total of 120 units of which 109 are one bedroom, six are one-bedroom handicapped and five are two- bedroom units. Square footages .range between 600 and 640 square feet for one-bedroom units and 840 square feet for two-bedroom units. The building is equipped with emergency pull cords. The building reported full occupancy with a short waiting list. Average incomes of residents are between $9,000 And $10,000 annually with the average resident's age being approximately 74 years. The building also contains 24 garages for which there is an additional fee of $30 per month. Residents are also charged $23 per month for utilities. 18 · .. COMPETITIVE. PROJECTS O.. HA 8 KA 20 Unit features include wall-mounted air conditioning, emergency pull system and a balcony or patio. The building has a security system and an elevator. Other features and amenities include garden plots, a community room, billiards, a sun deck, an activities director, walking path, laundry facilities, library and grocery. Pets are allowed in the building. The facility utilizes the services of the county bus for transportation, meals on wheels, a nurse who does blood pressure checks each Tuesday and a foot doctor. St®fling Ponds Sterling Ponds is located at 16355 Wagner Way in Eden Prairie. The project is for persons 55 and over and is fully subsidized. Average age of residents is about 70 with incomes primarily under $24,800 annually. The project is 97 percent occupied with two vacant units which have been vacant for one month. The building contains 56 units, 26 of which are one bedroom, two are one bedroom handicapped, eight are one bedroom with a den and 20 are two- bedroom units. Rents range between $490 for the one bedroom handicapped to $595 for the two-bedroom units. One-bedroom units are 634 square feet. The one bedroom with den is 918 square feet, and the two-bedroom units are between 918 and 935 square feet. Unit features include wall-mounted air conditioning, dishwasher, emergency call system and bay windows. The building itself has an elevator and a security system. Features and amenities include a greenhouse, community room, hobby room, billiards, car wash, an outdoor pool, activities director, laundry on each floor, exercise room, storage lockers and a library. The building does allow cats for an additional fee of $10 per month. Extra storage is located in the two bedroom units and in the hall area for the one-bedroom units. The project was constructed in 1990 and reports it reached full occupancy in less than five months. Elim Shores Elim Shores is located at 7900 Timber Lake Drive in Eden Prairie. The complex is for seniors aged 62 or older. This facility is 20 percent subsidized in that 13 of its 64 units are subsidized with the remaining 51 units rented at market rate. The project is affiliated with North Central Evangelical Free Church. Of the 64 units in the project, 52 are one bedroom and 12 are two bedroom. Rents range between $685 and $884 for one-bedroom units and $1,114 to $1,269 for two-bedroom units. Square restages for the one-bedroomunit8 are between 590 and 763 square feet while the two-bedroom units are 980 to 1,118 square feet. Resident'e income must be below $15,975. In addition to the monthly rent, the project requires an entrance deposit of $1,900. Garages are 21 available for an additional $37 per month. The project reported that it began pre-marketing in August of 1988 an occupancy date of March 1990, and being fully leased in September of 1991. This long fill t{me could be due, at least in part, to the entry deposit. The facility offers six optional meals per week at a cost of $29.50, and provides emergency pull cords. Unit features include air conditioning and balconies. Dishwashers may be installed for an additional fee. The building amenities and features include an elevator, security system, greenhouse, community room, billiards, hobby room, dining room, activities director, transportation, housekeeping services, common laundry A-d a hair salon. Udendale Ret.:l. Femont Ros:Lden=e Edendale Retirement Residence is located at 16700 Main Street in Eden Prairie and is targeted at seniors aged 62 or older and the hA-dicapped. The building is fully subsidized and contains a total 61 units. Sixty units are one bedroom and one is a two-bedroom unit. One-bedroom units are 540 square feet and the two-bedroom is 680 square feet. Maximum rents for the one-bedroom unit are $574 and $680 for the two-bedroom unit. Rental rates are based on 30 percent of income. The average resident income is approx4mAtely $17,850 An-ually with average resident age reported at 75. The project is full with a one-year wa/ting list. Unit features include air conditioning in each unit and an emergency call system. The building contains an elevator, security system, community room, atrium, common laundry, storage lockers and a library. There is an activity director and nurse available. There are no garages, but there is a parking lot for the facility. Manor Houoe Manor House is located at 615 Prairie Center Drive in Eden Prairie. This is a fully assisted living project containing 21 studio units of 276 square feet with no kitchen. The cost is $2,007 permonth, or $7.27 per square foot And is not subsidized. Resident's average age is 87.8 years with average length of stay approx4mAtely 1.66 years. The facility provides central air, emergency pull cords, community room, hobby room, meals, activities, transportation, housekeeping, laundry service, personal care services. The facility caters to a specific population base. The facility is fully occupied and reports a three-month waiting list. 22 Sou~hshore Conunun~t~es ' 8outhshore Communities is located at 225 Mill Street in Excelsior. This project is available to seniors aged 62 or older and the handicapped. The facility is 100 percent subsidized. It contains 67 units all of which are one bedroom containing 535 square feet. Residents' average ages are in the late 70's to early 80'8. The facility provides an emergency-call system, in-unit air conditioning, elevator, security, community room, transportation, exercise room and common laundry. They also allow pets for a $300 deposit. Other charges include a deposit of the first month's rent plus a $15 utility allowance. The facility is full and reports a six-month to two-year waiting list. P18~ned. Proposed or Approved Pro_~ects There were no planned, proposed or approved for construction senior housing projects reported within the market area. There is a project planned in the City of Shorewood which is a market-rate senior cluster housing project with a total of 24 units in two 12- unit clusters located on Just under five acres. These units are estimated to sell in the $120,000 to $130,000 range and are being developed by Pete Boyer Construction. 23 ~a~e~ XXX With approximately 5.0 percent of its population aged 65 and older in 1990, the ChA~hassenmarketarea clearly has a large enough base of older persons to consider a senior housing project. Demographic trends indicate that both the number A-~percentage of seniors will continue to increase. The age cohorts for persons 55 to 64 and 65 to 74 are both larger than the cohorts for persons who currently are aged75 to 84and 85 and older. Consequently, the prospect for both short-term and long-term senior housing demand in Chanhassen is excellent. The strongest interest in the proposed housing will come from current Chanhassen residents, previous Chanhassen residents, and seniors whose children or grandchildren live in the community or nearby. Persons in adjacent communities who want to live in a senior housing project, but do not have one available in their own communities, will also consider moving to ChA-hassen. Therefore, the market area has been extended to include comm~u~ties surrounding Chanhassen and =overs the communities of Chaska, Eden Prairie, Excelsior and Chanhassen which should account for most of the draw to the proposed project based on the experience of other senior developments. The boundaries are drawn to configure with natural barriers and neighborhood divisions which relate to the Chanhassenmarket. Hous:l.n_~ De~aE~d Anal_vsia Table 15 shows the calculations for Chanhassen market area senior housing demand. The base nnmber used for the calculation is the estimate for senior households in1995 totalling 2,218 units. From this number, the subsidized senior housing units are subtracted resulting in 1,843 non-subsidizedsenior households which comprise the potential market for a new senior housing project. Research and surveys conducted by both the Metropolitan Council and our firm indicate that 15 to 20 percent of the total senior Population who are eligible and could afford to live in a senior housing project are potentially interested. 24 Table :1.5 CIfAMHASSEN 8EMZOR HOUSEHOLD DEMAND ~alcula~;Xon Estimated Senior Households, 1995 Less Subsidized Units Remaining Senior Households Interested Households Estimated Long-Term Demand Current Demand (33.3% of Long-Term Demand) Less Existing Market-Rate Units Estimated Current Unsatisfied Demand Future Demand (1992-95) Estimated at 33.3% of Long-Term Demand Add: Current Demand Estimated Long-Term Demand Through 1995 2,218 375 1,843 2O% 369 123 72 51 123 174 Source: McComb Group, Ltd. Since Chanhassen is located in a section of the Twin Cities Where senior housing has been well established, it is reasonable to use a 20 percent factor for potential market share (interested households). In the market area, that translates to 369 households. Surveys have shown that approximately one-third of the persons interested in a senior housing facility are likely to move in the short-term, defined as within a three-year period. From the long- term demand we have allocated one-third of the demand, 123 units, as current demand. Currently, 72 market-rate units of senior housing exist leaving a current unsatisfied demand of approximately 51 units. The current unsatisfied demand of 51 units indicates that opportunity exists for senior housing within the market area provided it is competitive and well located. with a construction start date not yet set, it is anticipated the proposed senior housing project will come on-line by 1995. An additional 123 units of senior housing could potentially be absorbed through the year 1995. However, that level of construction may be aggressive for this market and could result in over-building since the time at which seniors decide to move is unpredictable and usually postponed as long as possible. Smaller 25 projects often ga/n market acceptance more rapidly th~- large ones. This acceptance translates into a shorter lease-up and pre- marketing term. When the project attains full occupancy and a strong consistent waiting list, it would be appropriate to consider development of additional senior housing unite. In absolute numbers, there appears to be current unsatisfied de'and for one senior housing project in the Chanhassen market area with the option of more developments being absorbed beyond 1995. The ability of the proposed project to meet the needs of the population based on their geographic location, services, pricing and design will determine which projects succeed and which have lengthy absorption periods. 26 C:hapt. ez' XV X~COMZ4ZND&~XONB Public attitudes towards senior housing in Chanhassen were assessed through interviews with key persons familiar with seniors in the area. Persons interviewed included managersandmarketing staff of competitive projects, pastors, senior commission and senior club members, city officials and others knowledgeable about both the needs and desires of senior citizens with regard to housing options. For the elderly, as well as for other population groups, housing must compete with other goods and services for a share of the household budget. For both owners and renters, the increased cost of housing can mean difficult choices between housing and other needs. A critical factor when responding to the elderly's household needs is determining what older people want. Market trends over the past few years have shown a shift from development of owner-occupied senior housing to renter-occupied units. Rental units appeal to a broader market both in terms of age and lifestyle than do owner-occupied units. The slowdown in appreciation of real estate prices in general has caused housing to be viewed more as shelter than asaninvestment. Consequently, the desire to own property is now motivated by subjective and personal factors more than by economic considerations. No rental units specifically for senior citizens exist within the City of Chanhassen, so this development will fill a market void which currently exists. Our research indicates that elderly residents have longstanding ties to the community and when given a suitable housing option are likely to stay in Chanhassen. It is recommended that the proposed senior housing be fashioned after the concept of congregate housing. The distinction in premium value of congregate housing over standard apartment buildings lies in the services, programming and extensive common areas provided for residents. The target market would be those aged 62 and above. Bulld~no Features -- It is recommended that the building be designed along the lines of garden apartments with no more than three levels, elevators, security, extra wide hallways and generous common areas. Parking should be attached, well lit, fully secured and offer individual storage for residents of the building. There should be additional 27 surface park/ng available for guests and visitors to the project. Landscaping should provide for adequate walking paths, seating and both common and individual garden plots to 'provide for flower and vegetable gardening enjoyment by residents. The main floor would contain a service/co, on area which is anticipated to be flexible in nature to allow for multiple uses of the space. Important function spaces will be lounges on the main and second levels and the dining area. a. gathering places for residents, their design, decor and layout will determine how often residents use these areas both formally and informally which will greatly impact the use of commnn space and the sense of community within the building. The third level is anticipated to contain the larger units and one or two solariums with sun porches to provide additional gathering areas. In planning for these areas, it will be Important to provide ample seating in staging areas near the mailboxes, elevator banks, doorways and dining room. Small furniture groupings and conversation nooks foster interaction in lobbies as well as in the lounges. Recreational and community spaces recommended for this type of building include the following: community room, dining room, lobby/lounge area, commnn laundry room (ideally one per floor with seating and folding tables), woodworking/craft area, an on-site office and a small business office which could be used by a visiting nurse or pastors. Bu:l. ld_~_no Serv:l.c~ea and Proor---~no -- -- _ A meal program, emergency call system, transportation and staff to assist with activities and programs are the key service components recommended. These services and program- may be augmented through out-sourcing such as programming in cooperation with the Park and Recreation Department, the senior center, Sojourn end other senior service providers currently active in the area. Duplication of local services and facilities should be avoided where possible in that creating a competitive environment may not serve the comm--4 ty. 0 .u._aal PrOoram -- Meal preparation on-site is rarely self-supporting and it is difficult to attain the level of participation necessary to plan consistently for meal service or to keep this type of program going--particularly in the early years of development. Most senior projects bank on the aging of their residents for increased patronage of a meal program and see it as a long-term investment. 28 From a marketing standpoint, however, meals should be available. Making them mandatory is objectionable, 'and many prospective residents will prefer to continue to do their own cooking, to eat out, and/or have the flexibility to choose when and where they dine. We therefore recommend that a meal program be started on a part-time basis and perhaps be catered to the site so residents are not obligated to either eat or pay for meals they do not want. Offering a cafeteria style menu once or twice per'week in the beginning would cut costs for residents and allow for a variety of food types and settings for the meals. How a meal program is handled is important in that it becomes a significant factor in marketing. If properly presented as part of an overall socialization activity, it can be utilized to attract prospective renters. -- -- -- Having a staff person on-site who is trained to respond to medical emergencies--whether a nurse or emergency medical technician or a manager who is qualified to make a determination about when to call in medical assistance--is a benefit many elderly seek when moving from their homes. Therefore, we would encourage an emergency call system be provided with two cords or call stations in each unit, one in the bedroom and one in the bathroom. o Transportation -- Only a minority of residents are likely to retain their automobiles upon moving to this facility. Therefore, having transportation available to residents for shopping, church, medical appointments and other activities is necessary. Incorporating these recommended services and programs will give the proposed project a marketing advantage over existing competitive developments and allow for flexibility of the project as its population ages in place. Table 16 shows the unitmix and square footages recommended for the project. AB can be seen, the total number of units recommended for initial construction are 72, which is approximately 40 percent of the estimated demand through1995. This number of units translates to a 3.8 percent market penetration rate. Market penetration is the percentage figure arrived at bydividing the number of units by the total qualified population in the building's market area. Up 29 to five percent market penetration is usually quite acceptable, while a ten percent or larger share is considered risky. These 72 units should be readily absorbed within the market assuming no other senior projects are constructed in the inter4m. Approximately two-thirds of the units are rec_~ended as one- bedroom units with one-bedroom-plus-den and two-bedroom units comprising the other one-third. Determining unit mix for senior housing is always difficult in that while interest is initially high in two-bedroom units, affordability and long-term would suggest that one-bedroom units are more viable for most seniors, particularly since many are living alone by the t~me they move to a congregate housing development. Therefore, the proposed unit mix appears reasonable. The proposed mix should adequately address both short and long-term demand, offering both a small and a large unit wb4ch will provide for varying needs and preferences within un/t styles, and further expanding the market to accommodate persons who require less space and are price sensitive as well as those who want additional square footage and are willing to pay for a larger unit. Unit square footages will be competitive with one-bedroom units of 650 to 700 square feet, one bedroom plus dens of 850 to 900 square feet and two-bedroom units of 900 to 1,050 square feet. It is also recommended that one to four of the one-bedroom units be fitted as handicapped units containing approximately 650 square feet. ~a~le 16 ILECGJO(~MDKD UffXT MX:I: ][~iO3alE Tv1)o BauaFo Footaae 48 One Bedroom 650 - 700 20-24 One Bedroom & Den 850 - 900 2-4 Two Bedroom 900 - 1,050 Source: NcComb Group, Ltd. 3O Unit Featu~ee Features typical to each unit which will be well received include: large in-unit storage lockers, french or glass doors for first floor walk-out patios and upper floor balconies (if multi-level), linen closets, a kitchen bar or pass-through area~ an eating area in the kitchen would be recommended for two-bedroom units and the option of a walk-in shower or tub/shower combination unit in the bathroom. Bathrooms should be constructed so that grabbars may be added as residents require them. It is also suggested that a traditional layout be utilized with minimal use of jogs or angled walls since elderly have not responded well to units with irregular shapes in other projects. Recessed unit entries might also be considered as they will afford the opportunity to design and personalize entryways for residents. Estimated base rents in the proposed project should not exceed those found within the market, $520 to $884 for one-bedroom units and $570 to $1,269 for two-bedroom units. Rents in the upper range reflect larger unit size and services and amenities not offered in projects renting at the lower end. It is, however, anticipated that rents will be subsidized by the City of Chanhassen. Rents will include 24-hour emergency call, transportation, activities and other programming, but do not cover the cost of underground parking or meals. Since the development concept for the proposed project offers a high level of services and amenities (except for Manor House which is a fully assisted residence), it is neither realistic nor necessary to follow the same rent schedule. However, recognizing that other buildings will be cross-shopped, addressing the differences in this project will be important in marketing. The compelling reason seniors elect to move into a senior project is for the security, services and companionship offered in a community setting. Those distinctions must be drawn upon to establish the perceived value of the development. 91 To:. Prom: C~!ty of Chanhassen Date: December 20, 199~ McComb Group, Ltd. CHA..NHA.~EN 5HNIOR HOUSING D~PMENT The purpose of this anal)sis was to de~ financial feasibility for a proposed senior housing rental building in Oanha.ssen and to explore forms of firancing that would permit affordable monthly rents. While affordability was a key f'~r, the City was also awaze of resident concerns over income reporting requirements associazed with availiable public Financing programs. The work program designed to accomplish ~ engagement included the following tasks: o Finaneimz Pro~ Financing progra~ available for senior housing were identified and reviewed including federal, state, mortgage and tax credit incentives. Resident eligibility criteria and operational objectives were evaluated. o Development Costs - Developmem costs for the proposed rental bu/ld/ng were estimated including both hard and soft costs. o Fin~cial Fe~ibility Financial feasibility analysis was conducied for the proposed building and included preparation of a ten-year cash flow proforma. Akemalive financing approaches were evaluazed and reflected in the ca.sh flow statem~ to demonstrate their impact on project feasibility. o Public Finandal Assistance The amount and type of public fin~m~ ~ssistance required to implement the proposed development under each of the scenarios studied was esfim~t~cl. In connection With this engagement, information was obtained from a variety of sources which when combined with our experience in ~ evaluations, provides a ba~ for the recommendations. The results of analysis msodamcl with these tasks are discussed in the following pages along with recommendations for alternative courses of action for the City of Chanhassen. Market Rcscarch Previous research conducted by McComb Group recommended a proposed senior housing development similar to that of congregate housing. The distinction in premium value of congregate housing over standard aparunent buildings lies in the services, progranm/n.' g and extensive common area provided for resident3. The target market would be those aged 62 and above. The analysis recommended72 units be constructed initially with approximately tv'o-thirds of the units as one-bedrooms ~.ri--th one-bedroom-plus-den and two-bedroom units' comprising the remaining one-third. Unit sizes of 650 to 70--0 square feet for one-bedroom units, ~850 to~..0_0 square feet for one-bedroom- pI~s~en and_,90_0 to 1,050 square feet for two-bedroom units.' It was also recommended that one to four of the one-bedroom units be designed as handicapped units. Recommended rents for the proposed project should fall in the lower range of those available in the market considering the unit size, features and services. Buildings in the market were renting in the range of $520 to $884 for one-bedroom units and $570 to over $1,200 for two-bedroom units. Rents in the upper range reflect larger unit sizes, services and amenities not offered in buildings renting at the lower end of the scale. Services offered at the proposed building would include 24-hour emergency call, tran~ponation, activities and other programming that do not cover.the cost of underground parking or meals. Dcvcloomcnt Conceot The proposed senior building, as outlined in a preliminary plan by Arvid ~llness Architects, is a three-floor garden-style apartment building as shown in Figure 1. The building layout resembles a "U" with guest parking located in front of the entrance between the two wings of the building. An open air outdoor porch marks the main entrance to the building. A small lobby and elevator are located just inside the main entrance on the first floor. The first floor common area is the proposed location of dining and food preparation area. These facilities will be centrally located. A lounge is planned for each wing of the building on each of the three floors to provide opportunity for social interactiom The elderly housing market analysis conducted by McComb Group indicated that 72 new units can be absorbed by the market. A mix of one-bedroom, one-bedroom-plus-den, and two-bedroom units were recommended as shown in Table 1. Forty-eight one-bedroom apartments were recommended for the building with an average size of around 700 square feet. Recommended market rents are about $595 per month. The one-bedroom-plus-den units should be larger with around 900 square feet. These units are priced at $720 a month and 21 units are proposed. Only tttree two-bedroom units are planned. These units will be around 1,000 square feet with market rems of approximately $800 a month. A summary of all three unit options is contained in Table 1. The average monthly rental figures in the table should be taken as guidelines. Once the building is completed, individual unit rents will be scaled according to size, location and perceived attractiveness. PROPOSF_,D RF. SIDEN'rIAL BUILDING Table I PRO. Cr r OUSZNG OFriOZ S, X993 Z UCES Square Aver'age ~ Monthly Rent One Bedroom One Bedroom Plus Den Two Bedroom 48 700 $ 595 21 900 720 ~5 1,000 800 Although three different size apartments are envisioned, some features will be common to all. A traditional aparunent layout which avoids angled walls and jogs is recommended. Residents have not responded well to units with irregular shapes in other projects. Two styles of baffu"ooms will be available: walk-in showers or a mb/shower combination. In addition, bathrooms should be constructed so that grab-bars may be added as residents require chem. The building should have facilities to provide at least three of the recommended in-house programs: an emergency call system, a meal program and a tm~portation service. The emergency call system should include two call stations per apartment, one in the bathroom and one in the bedroom. The meal program will be on a pan-time basis and participation will be voluntary, initially. As the residents age, the level of participation for this program is expected to increase. Therefore, it is important to have common area available for conversion to food preparation and service in the future. Transportation to shopping, church, medical appointments and ocher activities should be available for residents. Dcvclooment Costs -- Development and financing costs of the proposed senior housing building were estimated by McComb Group and based on the plan prepared by Arvid Ellness Associates. The basis for development cost estimates is contained in Appendix A. Construction costs were estimated at $47,500 per unit and land costs were estimated at $5,000 per unit, a price that is typical for buildings of this type. Total development costs are estimated at about $4.5 million as shown in Table 2. Tablc 2 ' CHANHA~ SENIOR HOUSING DEVEI~PMENT AND FINANCING ~ Development Costs I. and Construction Contract Professional Services Insurance Mm-ke~ Finandal Services ContJ_ngency Construct/on Interest TOTAL PRO.~Cr COS~ $ ~60,000 /3,420,OOO 81,000 50,000 67200 8,500 55,000 ~2,000 11_5.000 $ ~,~a,8oo Source: Mc'Comb Group, Ltc~ ~'tnnnrlal ~'c~_qthiliry Financial feasibility for the proposed senior housing building is dependent on the interplay of rental revenues, exp~ and annual debt service costs. Debt service costs are influenced by market conditions, government subsidy programs, taxable or tax exempt interest rates and security ava/lable to lenders. Revenues and expenses for the proposed senior housing buildings were estimated to determine income available for debt service. Revenues for the proposed senior housing building were estimated using the rental ram described previously. In addition, monthly parking revenue was estimated at $30 per month for 54 units or 75 percent of the total The building will undoubtedly have additional revenue sources from laundry and other services. These income items have not been considered in this analysis. If the City of ~ is the building owner, these revenues could be used to finance resident services. Stabil/~ed occupancy is e. gtm~r_,-cl for the second full year of operation when rental income is estimated at $556,818. All rental revenues have been increased at 3 percent annually. --5 Operating expenses include the areas of adminis~ve and managem~ .operations, maintenance, ~ce, property taxes and replacement reserves. In the second full year of operation, operating expenses are estimated at about $204,000 inclu, ding property taxes. Property taxes are based on the provisions of Chapter 469.040 wbAch provides for lower property taxes for public housing..All expenses have bL-en increased at 3 percent annually. Net operating income available for debt serciee is about $353,000. Eirst year operations are estimated to incur a modest cash flow loss caused by vacant units during lease-up. To be co~tive, a six-month lease-up period was estimated and a revenue loss of approximately $67,000. If lease-up should occur faster than anticipated, fi_mt year revenues will be slightly higher. The City of Chanl'assen's objective is to provide quality senior housing and related services at an affordable price for those residents that cannot afford market-rate housing. For similar types of buildings operating costs will also be similar. The difference in rental rates results from differences in mort~ge interest rates and subsidies that are available. The analysis contained in this memorandum assumes financing with essential .service bonds and is based on an interest rote of 5.5 percent based on a general obligation bond. Based on the above operating and Financing assumptions, the proposed senior housing development is estimated to achieve positive cash flow of $39,000 in the second full year of operation. Sensitivity analysis was conducted to determine the impact of interest rates on osh flow as shown in Table 4. Financial feasibility analysis contained in Table 3 assumes a 5.5 percent interest rote. Sensitivity analysis was conducted at rotes of 5.0, 6.0 and 6.5 percent. Income statements for each of these scenarios are contained in Appendix 3. The results of the analysis are shown in Table 4. Cash flow is greatest at the 5.0 percent imerest rate and lowest at 6.5 percent This alternative assumes that the City of Chanba..~m or one of its entities is the owner of the proposed building. This approach appears to meet the City's objectives and provides the opportunity for an assisted rent program without the burdens imposed by Federal and State programs. l~{n~ne'lnll l:~'O__awarn.~ Programs available to provide below-market rent for senior housing are available through the U.S. Department of Housing and Urban Development and the Minnesota Housing Finance Agency. Our research identified four programs designed to provide below-market finance for low-income families and elderly persons. Each of these programs is summarized briefly below: .- 2, 4~ This progr'~m by the U.S. Dep'~'~ment of Housing ~ Urbs_,fDevelopmen~ is designed to provide housing for very low-income elderly persons. Occups_ncy is open to ~ny household with one or more persons, one of whom is 62 years or more of z~e. Income limits ~ $17,850 for a one-person househ61d and $20,400 for ~, two-person household.'-"--'-- Income eligibility for each resident must be established at time of occupancy and recenified every year. This program is designed specifically for Senior housing. Housin~ Trust Fund Prom~m This program of the Minnesota Housing Firmn~g Agency is designed to assist in the development and rehabilitation of affordable rental housing, limited- equity cooperative housing and home for ownership by low-income persons. At least 75 percent of the rental and cooperative units and 100 percent of the homes for ownership must be rented to or cboperatively owned by persons or families whose income does not exceed 30 percent of the median-family income for the Metropolitan Area. This program requires income verification similar to the previous HUD program and housing cannot be exclusively for Senior residence. New Construction Tax Credit Mortlmlze/Federal Loan Prom'am This program of the Minnesota Housing and Finance Agency is designed to provide financing, construction or rehabilitation of rental housing which is eligible to receive Federal subsidies in the form of Federal low-income tax This program requires annual income certification and release of financial information and lease conditior~ Third-party verification of certain aasets nay be necessary. Units constructed under this program must be open to occupancy by all qualified individuals, i.e., residents cannot be exclusively senior. Low or Moderate Income Rental Prom'am This program by the Minnesota Housing Finance Agency is designed to provide financing for housing with rents affordable to Iow- to moderate- income households. ,. Housing construaed under this program requires income verification annually' and occupancy' is open to all low-income households. More detailed summary of these programs is attached in Appendix These programs do not meet the City of Chanha.uen's objective of having exddsively Senior development that does not have annual ceniflc~on of resident incomes. :As a resulg f'u~ncing for the proposed development will need to be accomplished with other means. Minnesota 1aw provides for the issuance of essential service bonds by municipalities or their HRA's. This program is the basis for financing the proposed development. Table IMPACT OF ~ RAT~ ON C~H FLO~ Tfl~ Ii.~AL~_ ~ _A]t_~L?n__ 9~nIC , 5.0 5.5 6.0 6.5 Year Percent Percent Percent _]Miaagg_ 1 ($14,472) ($31,5(::09 ($49,098) ($..67,048) 2 56,626 39,532 21,999 4,050 3 67,214 50,120 32,588 14,638 4 78,121 61,027 43,494 25,545 5 89,354 72,260 54,728 36,778 6 100,924 83,830 66,298 48,348 7 112,842 95,748 78,216 60,266 8 125,117 108,023 90,491 72,541 9 137,760 120,0~ 103,134 85,184 10 150,783 133,689 116,156 98,207 Source: McComb Group, Ltd. A_nm. cmenI Pro~! At the request of the client, McComb Group personnel met with representatives of MSP Real · Estate Setwices, Inc. to discuss a multi-family apartment proposal. The_MSJ~ proposal was evaluated taking into consideration the City of Chanhassen Senior ~ objectives identified during the engag~ These objectives are summarized below: o Those senior residents that cannot afford market rate rents should have access to affordable senior housing, o The proposed building should be limited to seniors only.. o Income verification procedures associated with subsidized programs are not acceptable to City residents. The senior housing concept described in the previous pages meets the above criteria. The MSP proposal is a multi-family apartment proposed for £mancing under the low income tax credit programs. Units financed or constructed under this program cannot legally be limited to exclusively senior residents and federal income verification regulations apply to these buildings. Thus, this proposal does not meet City of Chanhassen objectives. Notwithstanding the above facts, the economics of the MSP proposal were compared with the approach recommended in this report to illustrate how lower interest rates and public ownership can affect rental rates. The two projects are slightly different as shown below: Number of units Resident Qualification- Senior Services City Subsidy Income Verification 72 Senior Only As Recommended None City Rules 60 All Ages None $ 72,000 Federal Rules In addition to the above difference, the financial characteristics of the two approaches vary as shown in Table 5. Since the two proposals have different numbers of units, the comparisons include both per unit and totals. (Financial projections for the MSP proposal are contained in Appendix 4.) These comparisons are based on third-year estimated operating results for each building. Signifi~t Cmancial differences are summazized below: 1. Scheduled rents average $67~9 for the recommended proposal compared to $562 for the MSP proposal. This is a difference of $11.__~7 per month. ~ 2. Operating expenses for the recommended buildings are higher by about $530 per unit There are several reasons for this: The recommended building budget contains a budget of about $33,000 to f'mance senior services. This does not appear to be included in the MSP proposal. b. The MSP proposal contains an asset management fee.' c. FF&E reserves are higher for a multi-family building compared to a senior building. 10 Table Rental Income ]~ ~Tntt -- Avg. Rent per month $ 679 $ 562 $ 679 $ 562 Apartment 8,148 6,747 Parkir~ ~2 ~ 586,635 4O4,839 27,499 20,624 Less: Vacancy ¢474) ~ Subtotal $ 8,056 $ 6,754 ¢~4.119) ~ $ 580,015 $ 405,221 Operat~g P. xp~ blamgement $ 403 Asset Management 0 Other Adminis~ve ~e~d~-.~ ~ "-.~ ~,~'-65 Wa~ & ~~ 155 G~ ~19 ~. U~F 25 B~~g ~c~ 74 O~er Op~o~ ~t~e ~d Rep~ ~ ~0~- ~~e 114 Rep~cem~ R~es O~er( Subto~ Op~~ ~. $ 2,55~ Real Estate Taxes TOTAL EXPENSES Free & Clear Income $ 0 $ 29,001 159 0 63,590 -- 4,710 11,187 '22,963 1,766 5,299 2,944 4,710' ' 21,786 8,243 150 7,658 Lg~o 0 $ 2,219 $ 183,837 $ 2,925 $ 3,704 $ 210,630 $ 0 $133,121 ~ 89.116 $ 222,237 $ 5,130 $ 3,050 $ 369,585 $ 182,984 Debt Service (5.5% intere$O $ 4,353 $ 3,709 $ 313,420 $ 222,559 Cash Flow (Loss) $ 777 $ (660) $ 55,965 $ 09,575) Less: Proposed Subsidy $ O ADJUSTED CASH FLOW $ 777 $L2oo $ 540 $ 0 $ ~.ooo $ 55,965 $ 32,425 Source: McComb Group, Ltd. And MSP. 11 ! Proper%, tm.xes zre higher. However, $72,000 of the estimated $89,116 in taxes zre to be pa.id to the developer for ren~ subsidy. , Cash flow is est~n~ted at SY-/'/ per unit for the recornmcnded building compm~ed to a per unit loss of $660 in the MSP proposal. TI~ loss is oPf-set by a proposed $1,200 ~mu~l subsidy per unit on $72,000 annually. Adiusted c.~sh flow is then $540 positive or $32,425. The recommended senior building is estimated to have a per unit cash flow of $777 or almost $56,000 per year. TNs positive cash flow could be used to provide below market rents to Iow income seniors. For example, if the City wanted to subsidize 30 percent or 21 units, a budget of $50,400 would provide an average subsidy of $200 per month on 21 units. 'Ilgs would reduce the average rent from $679 to $479 for these units. TNs example demonstrates how the City of Chanhassen can use the benefits it enjoys as a governmental entity to create affordable ~enior housing for its residents and meet its operational objectives at the same time. 12 Appendix I CHANHASSF~ SENIOR HOUSING DEVI~.OPMI:-~ BUDGET A~S~ONS Develooment Costs -- o ~ is es~mated at $5,000 per unit or $560,000. o Construction {~.tract is estimated at $47,500 per unit. o Architecture and En~neering is estimated at 2.4 percent of the construction contract.. o Furniture. Fixtures and Equipment (FF&E) is estimated at $50,000. Professional Services expense is estimated at $67,300 and includes the following categories: soil and environmental tests, appraisal and market study, and the impact fee. o Title Insurance expense is estimated at $5,500. o ~ expense is estimated to be $50,000. o Contingency is estimated at 10 percent of the construction contract. o Construction Interest is estimated to be $115,000. o Financial Services are estimated to be $55,000 and include the following categories: the bond trustee fee, legal counsel, and a Financial consultant. Appendix 2 Apartment Rents are estimated it $.85 per square foot for one bedroom units and $.80 for one bedroom plus den and two bedroom units. The 48 one-bedroom ~partment$ will have about 700 square feet. The 21 one-bedroom-plua-d~ units will have about 900 square feet. The three two-bedroom units will have approxima~y 1,000 square feet. Park~n~ Ren_tul,~ are estimated to be $30 per month for the project's 54 occupied spaces. ~ in the first year is estima~ to be 17.4 percent. This figure assumes that 50 percent of the units are pre-leased and that 32 of the remaining units are leased over a six- month period. Vacancy for years two throu~ ten is assumed to be four units. This corresponds to a 5.5 perc~t vacancy raze. O_tmratton,. M~:i, __ten~ l',.~xt-unee ~nd Aelmln[~ expense.s were esKmated from information gathered by IREM, The Income _Expense Analysis of Conventional Apartments. 1990'Edition presented expemses for gazclen-style apartments in Minneapolis on a per square foot basis. Administrative Expenses were increased to account for the higher service levels required in a senior building. This expense is estimated to be $1.08 pe~ square foot Operations _Expenses are estimated at $.83 per square foot and include expenses for the following categories: electricity, water and sewer, gas, building services, mi$ce~us utility and other operations. Maintenance Exp_ eruses is estimated at $.45 per square foot and includes the following categories: building maintenance, grounds maintenance, and repairs. o Insurance Expense is estimated at $.14 a square foot. Munus_~ment Fee is calculated at 5 percent of rental revenues. F.F. & F.. Replacement Reserve is calculated at $100 per unit. Real Estate Taxes are e-.~l~ at 5 ~ of shelter rent~l.~. Shelter mmal is defined as total rentals less any charge for utilities such as heat, water, electric, gas, sewage disposal or garbage removal. Charges for electricity, water, sewer, gas and building servic~ were subtracted from total rentals to obtain the shelter rental figure. Debt Servtee is based on a principal mount of $4,600,000, tm-year term, flzirty-year amortization at 5.5 percent. Sensitivity analysis Was conducted at interest rates of 5.0, 6.0 .. and {5.5 percent. Appendix PROFORMA CASH HOW STAT~aMt2YIS Table 3a at 5.0 Percent Interest Table 3b at 6.0 Percent Interest Table ~c at 6.5 Percent Interest Deta/led Summaxies of Financing Programs I I I 1 1 ;;~.,-; j j! ::: ,-,:illa I l .., . :':i' :,: i ,-:,, ,:, ':'"' iii:::,' -""--- i "' ':'"': '''':: '*-.., :,:,, ,., ,:,---: ,- :,,,-,,, Ill !- U, S, Department of Housin~z and Urban Development Section 202 Supportive Housing for the Elderly Purpose: To pro.vide housing for very low income elderly persons. To enable elderly persons to live with dignity and independence by expanding .the supply of supportive housing that is designed to .accommodate the special needs of elderly persons. Funding: Capital Advances Project Rental Assistance Contracts Resident Occupancy is open to any household composed of one or more persons, one of whom is 62 years of age or more at the time of initial occupancy. Income limits for Section 202 housing are the same for Section 8 housing. A schedule of household income limits have been included below. t:~ Income Limit One $17,850 Two 20,400 Three 22,950 Four 25,500 Rent shall be the highest of the following amounts: a) 30 percent of the person's monthly adjusted income; b) 10 percent of the person's monstzly income; c) If the person is receiving welfare payments, that portion of the payment which is designated for housing costs. Reporting Requirements: Income eligibility for each resident must be established at time of occupancy and recertified every year. Project must submit annual audited financial statements that must be in accordance with two HUD handbooks. This pro.-am is desired to meet the housing needs of seniors exclusively. · Minnesota Housin~ Firmne~ A~enev Housir~ Trust Fur~d Housin .Purpose: To assist in the development, construction, acquisition, prese~on and rehabilitation of afford~le remai housing, lira/ted equity cooperative housing, and homes for ownership by Iow income persons. Resident Eligibility: At least 75 percent of the rental and coopem~ve units and 100 percent of the homes for ownership, must be rented to or cooperatively owned by persons and families whose income does not exceed 30 percent of the median family income for the metro~H~ area. Aa of February 1993, 30 percent of the median family income for the Mirmeapoli~/St. Paul metropolitan zrea is $14,880. The upper limit for rent is set at 30 percent of a person's monthly income. Reportir~ Requirements: To verify that the housing is used by persons of low income, the grantee must annually cet~ that the housing meets the income guidelines of the program. The granm will also be required to supply tenant profile information upon initial occupancy of the project ! Minnesota Housin~ Finance Agengy Low and Moderate Income Rental Program Purpose: To provide financing for housing with rents affordable to low/moderate income households. The program provides for both acquisition- rehab/limtion and new consu'uct/on proposals. Funding: First mortgages 7 1/2 %, 30 year term, plus 1/2 % servicing fee. Minimum loan is $100,000, maximum is $2,500,000. Resident Eligibility: 1) New Construction/Conversion: the rent limits will be those provided under the Federal Low Income Housing Tax Credit Program for households at 6094 of median as adjusted by family size. A schedule of these rent limits and resident income limits are presented below. Household Income Limit One $ 20,150 Two 23,050 Three 25,900 Four 28,800 ~ Rent Limit Zero $ 504 One 540 Two 648 2) Acquisition/Rehabilitation: 75% of the units must not exceed Section 8 Existing Fair Market Rents; the remaining units may not exceed 125% of the Section 8 Existing Fair Market Rents. Reporting Requirements: The Agency actively monitors developments over the life of the mortgage. This includes monitoring tenant incomes, rents, affirmative action and equal opportunity requirements, and regular management and operating accounting/reporting requirements. This program is not designed to meet the housing needs of seniors exclusively. Younger people would be eligible for housing. Minnesota Housing Fin~c~ Agency. New Construction Tax Credit Mortgage/Bridge Lban Program Purpose: To provide financing which allows the construction or substantial rehab~tation of rental housing which is eligible to receive federal s .ubsi~es in the form of federal Low Income Tax Credits, and therefore, halve rents affordable to low..and moderate income households. First mortises ~t mad~ rate of ~ 25 y~ar amo~on, and 17 year term mortgage. The agency may provide, for developments which receive Agency first mortgage ~ an Equi~/Bridge loan where the Agency takes a security interest in the investor's note when Federal Tax Credits are syndicated. These loans have an 8% inter~t rate for six year tem~ of longer, and a 7% interest rate for tm'ms less than six years. Resident Eligibili~y: The Agency anticipates that most or all of the mortgage funds available will be allocated to developments which are selected for Federal Tax Credits. Tax credits are allocated based on income and rent limits for residents and the development. A schedule of income and rent limits are listed below. ~ Income Limit One $ 20,800 Two 23,800 Three 26,750 Four 29,750 ~ Rent Limit Zero $ 434 One 465 Two 558 Reporting Resident income and rent levels must be certified annually. Residents are compelled to rel~m financial information as a condition of the leasing agreement. Third pan), verification of the value of certain assets may be necessa~/. Thl~ program is not dcs~ to meet the housing needs of seniors exclusively. Younger people w~uld be eligible ~or housh~ MSP RFAL ESTATE SF. RVICES, INC. APARTMF-NT PROPOSAL 04/14/94 15:15 FAX ! 612 341 0327 DUNBAR DE"v*L~ ~002 DUNBAR DEVELOPMENT CORPO~TION (DDC) Dunbar Development Corporation, formed in 1985, is a Twin-Cities based corporation which provides develop~ eootdinntion for multi-fiunily housing developments. DDC has worked extensively with many communities to pwvidc quality developments, which include office, retail and residential components. DDC's rcsidentinl experie~ ranges from assisted-~ senior housing to family townhomos. DDC is familisr with the special desi~ ami co--on f-carafes which are necessary for a successful mixed=use development. Areas of Expertise: Desi~ concept Financial modeling Finan~ analy~ Site p~tion, including coordination of: o Ttaffi~ analysis * Envitonmea~ assessment * Soil analy~ Bond ~ · Design and construction with Inspections & Public Works Develo~~ coordination of archi~ attorneys and other project-related Co--on bid negotiations Co--on su~on and mana~mem 04/14/94 15:18 FA.I/ I 612 341 0327 DUNBAR DEYLPIiNT ~003 -- · - . ~ m m m · mm ' m m m . m . ........ "I mm m FRANK C. DUNBAR, PRESIDENT As president of DDC, Frank is actively involved in all aspects of the development process, including project planning, financial analysis, governmental approval, financing, construction, mazketing, and ongoing management. Frank's involvement in real estate spans nearly two ~. Before forming DDC, he was vioe president of a leading Minneapolis development firm. Over the years, he has been involved in many developments ranging from mixed.use urban redevelopments, suburban single-purpose and small neighborhood developments. These developments have become valuable real estate assets, while also meeting the specific goals and objections established by the communities. In addition to his years of hands-on commercial real estate experience, Frank's educational credentials include a master's degree in real estate appraisal and financial analysis from the University of Wisconsin at Madison, and a B.A. degr~ in business administration from St. Mary's College of Winona, Minnesota. CAROLE E. KRON, VICE PRESIDENT Carole concentrates on suburban developments as well as development coordination for community and county housing agencies. In working closely with various agencies to implement their redevelopment objectives, she is havolved in all phases of the development process, including archi~ design, financing, construction, marketing and, ultimately, management. In addition to development management, Cawle is responsible for corporate administration and management for DDC. A graduate of the University of Iowa, Carole came to DDC after several years of administrative experience in the banking and non-profit sectors. - -- - i i , i · IL ' '~ I -- II II -- I 1' · · I -- ' · I ~L · Dunb~ Devclopmcm Corpomion February 18. 1994 04/14/94 15:17 FA/ I 812 341 0327 DI. TNBARDEVLPID~ 0O4 DUNBAR DEVELOPMENT CORPORATION PROJECT LIS*F JANUARY 1994 mmtlv'rlAt, COM ,lZm::IAI, Plt zcoWS'l'at op t rrs so.m*, co ccr os ~ Grove. MN BRIAR POND 196 OO. dlde, MN ANN BODLOVICK APARTMENTS* & SENIOR CENTER COBBLE HILL APARTMENTS* 45 NORTH VIEW MANOR* 60 TRAILS EDGE APARTMENTS LAURENTIAN MANOR* 80 Virsinia, ~ Jnnesville 24 St. Clair 8 Madelia 16 Madelia 24 Madelia* 20 Shcrbum 14 Trimont* 10 Gibbon* 12 whmu~ (3~ylord Henderson 14 ~ GRACE APARTMENTS 19 Aequ~t~n Un~ 72 GARDEN TERRACE ~ ! New UIm, LAKESHORE PLACE* 60 FOREST PARK WEST Orlmd Rip~s, MN ' Elderly hou -- ..1_ · J ~ ..... , - . N/A Openaions Nov=91 6O42 N/A Operations Jun-92 WA ~ N/A ~ons Nov-92 ~ WA NJA Con~ N/A Comm~tm NJA Coemmctlon Dec.-93 Fe.b-94 Mm'-94 Jun-94 Dg~93 Fda-94 F~-94 lun-94 0ct-93 .1'u1-94. ~ iiiIl s~ = . 04/14/94 15:18 F.~ i §12 341 0327 DUNB~ DEVLPa[NT 005 DDC Project List January 1994 Page 2 PROJ'ECT NAME NW M~ MULI~ COUNTY H.R.A. Ada* Crookston Croo~n* Fc~ie* Fisher Shelly Newfolden Orecnbush Fossmn Fos~on* Ersk}ne Warren Warren* Mahnomen Mahnomcn* Clearbrook Clearbrook* Park Rnpids Park Rapids* Red Lake Falls* TOTAL HUTCHINSON H.ILA Hutchinson, H.ILA. ST. CLOUD, H.R.A. SL Cloud, MN RED WING H.R.A zed win~. CHISAGO COUNTY H. ILA. Cent~- City, MN [TASCA COUNTY RI~IDENTIAL UNITS 3! 40 14 14 8 12 12 12 10 8 20 12 i0 36 16 393 74 4~ 100 100 COMMERCIAL, PHASE SQ.FT. 12,~00 N/A 1~,943 N/A N/A N/A Development D~velopme~t D~ve, lopm~t Developm~t Developmaut CONSTRUCTION COMPLETION ! IL TRIBAL DEVELOPIVEENTS Oneida Nation Oneida, W[ Mandan, Htdmt~a & Arlkara Nation New Town, ND 24:i 7:5 N/A N/A D~veiopment Development * Eldcrly houisng Dunbar Dcveiopmcm Corporation March 7. 1~94 04/14/94 15:X9 FAX ! 6X2 34! 0327 DUNBAR DEVLPRNT ~ 008 DDC Project List January 1994 Page 3 --- [_ -- i ii · , IH. CITY DEVELOPMENTS: =: Mampolls Laurel Village This project is a redevelopnm~ of N~pm~Jma~y thre~ city blocks between 1 lth and ISth Struets on the west side of Hennepin Avenue in downtown Minneapolis. Thc ~ Includes 795 rental immin8 units and associated nciahborhoo~ commercial and retail ~ B~low is I list of'projects within the LAUREL VILLAGE deveiopm~l. PROJECT RESIDEJq11AL COMM~qCIAL PHASE CONSTRUCTION NAME ~ SQ. PT. COMPLETION Alden Apartments 68 6,000 ~ ' ' Jun-86 Hennepin Crossing 210 29,$B0 Oporations Jtm-89 Loting Station Post O~u:~ N/A 16.000 Opem~ons Jun-89 DoFor~ ~ts 72 t 5,793 Opemions Apr~ SwJnford Apmlments $~ N/A Operations Ju~l-gl Swlnford Townhomcs I ~ lq/A Opcmions ltm-9 i Thc Mclqair 80 ! 0,000 Operations F~-9 I Wilson Park Tower 200 N/A ~ Jul.-9 I Laurci Curve 89 N/A Opm'ations Stage I - City View - Rehab 144 Sta&e 2 - Hillside 194 8.000 Sts&e 3 - Hillside 106 Stage 4. Hillside 150 12.000 Stage $. Hillside 120 McCormick Apartments i~0 Oa, Thousand Hnrney 200 10.000 LaCrosse, WI 70 N/A ~t *Elderly i-lousing · .... J = . Ekmba~ Oe~:lo~me.m Corpm~tion Match 04/14/94 15:20 FAX 1 612 341 0327 DISBAR DEVLPIIA~ ~007 DUNBAR DEVELOPMENT CORPORATION REFE NCES Mr. Dean Otterson Executive Director St. Cloud HRA 619 Mall C~rmain, Suite 212 St. Cloud, MN 56031 (612)252.0880 Mr. Jim Heitzer Executive Director Washington County HRA 321 Broadway St. Paul Park, MN 55071 (612)458-0936 Mr. Don Borham Executive Director South Central Minnesota HRA 410 Jackson Street Mankato, MN 56001 (507)345-6822 Mr. Mark Uffers Executive Director Dakota County HR.A 2496-145th Street West Rosemount, MN 55068 Mr. Lee Meier Executive Director Northwest Minnesota Multi-County HRA P.O. Box 128 Mentor, MN 56736 (218)637-2431 PROFESSIONAL; Ms. Mary Rlppe Executive Vice President Minnesota Muiti-Housin~ Association 4250 Park Glen Road St. Louis Park, MN 55416 (612)927-8602 Mr. Raymond Waidron President Minnesota Building & Trades Council 312 Central Avenue, Suite 556 Minneapolis, MN 55414 (612)379-4234 04/14/94 15:2! FAX ! 812 341 0327 DU~AR DRVLYMNT ~]008 DDC References Page 2 FINANCIAL: Mr. Paul Ekhohn Senior Vice President Miller & Schroe. de~ Financial, Inc. 220 South Sixth Street, Suite 300 Minneapolis, MN 55440 BANKING: THOMAS M. NAUGHTIN President First Bank Of Edina 4100 West 50th Street Edina, MN 55424 13:48 BELAIR II I I _ ii BELAIR BUILDERS IN(::: P,B2/02 BELAIR BUILDERS James F. Wlnkels Director of Business Development Bel_n~_? Builders, Inc. 2200 Old Highway 8 N,W. New Brighton, Minnesota 55112 (612) 786-1300 Fax: (61:l) 786-0769 Belair Builders, Inc. ts a 45 year old New Brighton, M~N based general conmlctor. Belair has been involved in virtually all phases of construction, from industrial plants and warehouses, to shopping centers and multi-family apartments. In addition to being a full- service design/build contractor, Belair is a leader in the soils management areas, ineAuding excavation arid correction .of contamtn~_t~d soils and landfills. Mr. Wink, s' experl~ in~udes all phs.s~ of development, finance (both public and private) and cco~n. On the private side, Mr. W!.~k,_-!s has been involved irt the development and financing of $e',,e~ oommercial buildings in which he is a partner/owner. During his public career, Mr. Wink, s was responsible for all development and redevelopment efforts of two large Twin City suburbs. Mr. Wlnkels has been involved in all forms of public finance, including tax increment financing and small business loan programs. 2200 OLD HIGHWAY 8 · NEW BRIGHTON, MINNESOTA 65112 o (612) 788-1300 * Fax: (612) 786-0769 EQUAL OPPORTUNITY AND AFFIRMATIVE ACTION EMPLOYER