10.1. SR 05-01-2017
Request for Action
To Item Number
Mayor and City Council 10.1
Agenda Section Meeting Date Prepared by
Work Session May 1, 2017 Amanda Othoudt, EDD
Item Description Reviewed by
TIF Policy and Scoring Worksheets Cal Portner, City Administrator
Reviewed by
Action Requested
Review the Tax Increment Financing Policy and scoring worksheet and identify goals as it relates to the
city’s housing needs based on recommendations of the Housing and Redevelopment Authority.
Background/Discussion
The Tax Increment Financing policy was approved on February 18, 2014, based on the direction from
the two joint workshops held November 4, 2013, and December 2, 2013.
In 2014, the HRA and the City Council established a separate Housing TIF policy, formalizing a tool to
assist in the development of housing projects that satisfy city goals and require assistance. The Housing
TIF policy is a separate policy to the TIF policy employed for economic development, where factors such
as job growth and wages are a vital consideration. The HRA approved the policy and worksheet on April
6, 2015, with the goal of attracting affordable senior housing to Elk River.
Staff initiated an annual review by the EDA Finance Committee of all financial policies March of 2016.
The TIF policy is the final policy under review.
The EDA Finance Committee reviewed the EDA TIF Policy and the HRA TIF Housing Policy. Updates
include incorporating all eligible TIF districts into one application instead of two separate applications.
No changes were made to the goals initially set by the HRA, EDA, and City Council. Staff is looking for
direction from the HRA and City Council to identify the goals as it relates to the city’s housing needs.
Financial Impact
N/A
Attachments
Housing TIF Policy and Application (April 6, 2015)
Updated Housing TIF Worksheet (April 6, 2015)
TIF Policy and Application (February, 2014)
Updated DRAFT 2017 TIF Policy
Maxfield Housing Study (December, 2015)
Springsted Memo dated February 11, 2014
Joint Workshop Minutes dated Nov 4, 2013
Joint Workshop Minutes dated Dec 2, 2013
Tax Increment Financing
Policy & Application
HOUSING
Amended: April 2015
Amended: February 2014
Amended: May 2006
Amended: March 2000
Adopted: August 1991
City of Elk River
Economic Development Division
13065 Orono Parkway
Elk River, MN 55330
763.635.1040
Table of Contents
I.Policy Purpose 3
II.Objectives of Tax Increment Financing 3
III.Policies for the Use of TIF 4
IV.Project Qualifications 5
V.Subsidy Agreement & Reporting Requirements 6
VI.Application Process for TIF 6
VII.Meeting Schedule 7
VIII.Sample But-For Analysis 9
IX.Application Review Worksheet:
Housing Projects 8
Application 11
City of Elk River Tax Increment Financing Policy & Application- Housing
Amended April 8 2015
Page 2 of 14
I.POLICY PURPOSE
For the purposes of this document, the term “City” shall include the Elk River City Council, Economic
Development Authority, and Housing and Redevelopment Authority.
The purpose of this policy is to establish the City of Elk River’s position relating to the
use of Tax Increment Financing (TIF) for Housing private development above and
beyond the requirements and limitations set forth by State Law. This policy shall be used
as a guide in the processing and review of applications requesting tax increment
assistance. The fundamental purpose of tax increment financing in Elk River is to
encourage desirable development or redevelopment that would not otherwise occur but
for the assistance provided through TIF.
The City of Elk River is granted the power to utilize TIF by the Minnesota Tax
Increment Financing Act, as amended. Itis the intent of the City to provide the
minimum amount of TIF, as well as other incentives, at the shortest term required for
the project to proceed. The City reserves the right to approve or reject projects on a
case by case basis, taking into consideration established policies, project criteria, and
demand on city services in relation to the potential benefits from the project. Meeting
policy criteria does not guarantee the award of TIF to the project. Approval or denial of
one project is not intended to set precedent for approval or denial of another project.
II.OBJECTIVES OF TAX INCREMENT FINANCING
As a matter of adopted policy, the City will consider using TIF for Housing to assist
private development projects to achieve one or more of the following objectives:
To encourage additional unsubsidized private development in the area, either
.
directly or indirectly through “spin off” development
To facilitate the development process and to achieve development on sites
which would not be developed without TIF assistance.
To remove blight and/or encourage redevelopment of residential areas in the
city that result in high quality redevelopment and private reinvestment.
To offset increased costs of redevelopment (i.e. contaminated site clean up)
over and above the costs normally incurred in development.
To create opportunities for affordable housing.
To contribute to the implementation of other public policies, as adopted by the
city from time to time, such as the promotion of quality urban or architectural
design, energy conservation, and decreasing capital and/or operating costs of
.
local government
To enhance and diversify the City of Elk River’s housing stock.
City of Elk River Tax Increment Financing Policy & Application- Housing
Amended April 8 2015
Page 3 of 14
III.POLICIES FOR THE USE OF HOUSING TIF
a.When possible, TIF shall be used to finance public improvements associated
with the project. The priority for the use of TIF funds is:
1.Public improvements, legal, administrative, and engineering costs.
2.Site preparation, site improvement, land purchase, and demolition.
3.Capitalized interest, bonding costs.
b.TIF assistance will be provided to the developer upon receipt of the
increment by the City, otherwise referred to as the pay-as-you-go method.
c.A maximum of ten percent (10%) of any tax increment received from the
district may be retained by the City to reimburse administrative costs.
d.Any developer receiving TIF assistance shall provide a minimum of ten
percent (10%) owner cash equity investment in the project.
e.TIF will not be used in circumstances where land and/or property price is in
excess of fair market value.
f.Developer shall be able to demonstrate a market demand for a proposed
project. TIF shall not be used to support purely speculative projects.
g.TIF will not be utilized in cases where it would create an unfair and
significant competitive financial advantage over other projects in the area.
h.TIF shall not be used for projects that would place extraordinary demands
on city services or for projects that would generate significant environmental
impacts.
i.The developer must provide adequate financial guarantees to ensure
completion of the project, including, but not limited to: minimum assessment
agreements, letters of credit, personal guaranties, etc.
j.The developer shall adequately demonstrate, to the City’s sole satisfaction, an
ability to complete the proposed project based on past development
experience, general reputation, and credit history, among other factors,
including the size and scope of the proposed project.
k.For the purposes of underwriting the proposal, the developer shall provide
any requested market, financial, environmental, or other data requested by
the City or its consultants.
l.All TIF proposals shall optimize the private development potential of a site.
City of Elk River Tax Increment Financing Policy & Application- Housing
Amended April 8 2015
Page 4 of 14
IV.PROJECT QUALIFICATIONS
each
Housing TIF projects considered by the City of Elk River must meet of the
following requirements:
a.To be eligible for TIF, a project shall result in:
i.A minimum increase of $37,500 per yearin property taxes, excluding
the state portion; and
ii.Have a market value of at least $1,250,000 upon completion.
one
b.The project shall meet at least of the objectives set forth in Section II
all
and satisfy the provisions set forth in Section III of this document.
c.The developer shall demonstrate that the project is not financially feasible
but-for the use of TIF.
d.The project shall comply with all provisions set forth in the Tax Increment
Financing Act, Minnesota Statutes469.124 to 469.134, inclusive, as amended,
and Statutes 469.174 to 469.1794, inclusive, as amended.
e.The project must be consistent with the City’s Comprehensive Plan, Land
Use Plan, and Zoning Ordinances.
two
f.The project shall serve at least ofthe following public purposes:
Enhancement or diversification of the city’s housing stock.
Development that will spur additional private investment in the area.
Fulfillment of defined city objectives such as those identified in the
City’s Comprehensive Plan and the City’s Housing and
Redevelopment Strategic Plan, among others.
Removal of blight or the rehabilitation of a high profile or priority
site.
V. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS
All developers/businesses receiving Tax Increment assistance from the City of Elk
River may be subject to the provisions and requirements set forth by the City’s
Business Subsidy Policy as amended and Minnesota Statutes Sections 116J.993 to
116J.995 (the “Minnesota Business Subsidy Law”).
VI. APPLICATION PROCESS FOR TIF
1
. Applicant submits the completed application along with a $10,000 application
deposit, to be refunded for any portions not utilized if the tax increment project
does not proceed. The application deposit will be used toward the cost of
services provided in the evaluation of financial feasibility, establishment or
modification of the TIF district, and preparation of legal documents and
agreements. An additional deposit of $10,000 will be required for projects that
require meeting statutory eminent domain and/or redevelopment substandard
tests. Projects that demand professional services in excess of the initial deposit
shall be required to reimburse the City for the additional expenses.
City of Elk River Tax Increment Financing Policy & Application- Housing
Amended April 8 2015
Page 5 of 14
2.City staff reviews the application and completes the HousingWorksheets.The
Housing Worksheets are primarily designed to score the desirability of the
proposed project. Housing projects will be evaluated on a case-by-case basis
and as the projects meet the city’s desired objectives.
3.Results of the Housing Worksheets are submitted to the appropriate governing
authorities (EDA or HRA) for recommendation to the City Council of approval
or denial of the request.
4.If preliminary approval is granted, the Tax Increment Financing Plan, along
with all necessary notices, resolutions are prepared by City staff and/or
consultants.
5.Notices are published and sent to the county and school board.
6.Public hearing(s) on the proposed request are held.
7.The City Council grants final approval or denial of the request.
City of Elk River Tax Increment Financing Policy & Application- Housing
Amended April 8 2015
Page 6 of 14
VII. MEETING SCHEDULE
2015 Housing and Redevelopment Authority & City Council Meeting
Schedule
For Review of Applications related to Housing assistance
APPLICATION EDA Finance HRACITY
st
DEADLINE Committee(1Monday)COUNCIL
(Lastthst
Monday)(4Tuesday)(1Monday)
Jan 26Feb 24April 6April 6
Feb 23Mar 24May 4May 4
Mar 30April 28Jun 1Jun 1
Apr 27May26July6July6
May 26Jun23Aug 3Aug 3
Jun 29Jul28Sep 8Sep 8
Jul 27Aug25Oct 5Oct 5
Aug 31Sep29Nov 2Nov 2
Sep 28Oct27Dec 7Dec 7
Oct 26Nov24Jan 4 (2016)Jan 4 (2016)
Nov 30Dec22Feb 1(2016)Feb 1(2016)
Dec 28Jan26(2016)Mar 7(2016) Mar 7(2016)
ALL REQUIRED APPLICATION MATERIALS MUST BE SUBMITTED BY
THE DEADLINE OR YOUR APPLICATION WILL BE POSTPONED TO
THE NEXT MONTH
City of Elk River Tax Increment Financing Policy & Application- Housing
Amended April 8 2015
Page 7 of 14
VIII. SAMPLE BUT-FOR ANALYSIS
WITH NO WITH
TAX ABATEMENT TAX ABATEMENT
SOURCES AND USESSOURCES AND USES
SOURCESSOURCES
Mortgage9,600,000 8,667,000
Equity2,400,0002,400,00
Tax Abatement0 933,000
TOTAL SOURCES 12,000,000 12,000,000
USES USES
Land1,500,000 1,500,000
Site Work300,000300,000
Soil Correction468,000 468,000
Demolition100,000 100,000
Relocation65,000 65,000
Subtotal Land Costs2,433,0002,433,000
Construction6,750,000 6,750,000
Finish Manufacturing250,000 250,000
Subtotal Construction Costs7,000,000 7,000,000
Soft Costs350,000 350,000
Taxes35,000 35,000
Finance Fees850,000 850,000
Project Manager542,000 542,000
Developer Fee540,000 540,000
Contingency250,000 250,000
Subtotal Soft Costs2,567,000 2,567,000
TOTAL USES12,000,000 12,000,000
Income StatementIncome Statement
Sq. Ft. Per Sq. Ft. Sq. Ft. Per Sq. Ft.
Rent-Space 1100,000 $8.00 800,000 100,000 $8.00 800,000
Rent-Space 225,000 $8.50 212,500 25,000 $8.50 212,500
Rent-Space 325,000 $9.00 225,000 25,000 $9.00 225,000
Other0$0.00 0 0 $0.00 0
1,237,500 1,237,500
Mortgage 20 Term 1,051,646 20 Term 949,439
9.00% Interest9.00% Interest
9,600,000 Principal 8,667,000 Principal
Net Income185,854 288,061
Total Return on Equity7.74% 12.00%
City of Elk River Tax Increment Financing Policy & Application- Housing
Amended April 8 2015
Page 8 of 14
2015 Financial Incentive
Application
Housing Tax Increment
Financing
1. PROJECT INFORMATION
Property Information
(please print)
Address: _________________________________Parcel Number: 75 - _____ - _________
The project will be:
____ Housing
____ Other
The project will be: ____Owner Occupied ____Leased Space
If Leased Space ____ Percent Occupied 6 months after Certificate of Occupancy
Total Amount of Tax Increment Requested: $ over years.
City Portion: Annual $ Total $
County Portion: Annual $ Total $
ISD 728 Portion: Annual $ Total $
Current Real Estate Taxes on Project Site: $
Estimated Real Estate Taxes upon Completion: Phase I $ Phase II $
Construction Start Date________ Construction Completion Date_________
Percent of project complete on December 31, current year. ___________
II. CONTACT INFORMATION
Public Information Notice
Generally, correspondence to and from Staff is considered public information. Specific data related
to a financial assistance request is deemed not public: Financial Information, Financial Statements,
Net worth Calculations, Business Plans, Income and Expense projections, Balance Sheets, Customer
Lists, Income Tax returns. When public financial assistance is received, only the following remains
not public: Business Plans, Income and Expense projections, Customer lists, Income tax returns,
design, market, and feasibility studies not paid for with public funds. The city does allow an
applicant to submit sensitive financial information directly to the City’s financial consultant, for
additional security.
Property Owner Information
(please print)Name: _______________________________ E-
mail address: ___________________________________
Address: ______________________________ _____________________ ______
City of Elk River Tax Increment Financing Policy & Application- Housing
Amended April 8 2015
Page 9 of 14
________
Street City StateZip Code
Phone : __________________
Legal Name of Business:
Check One:Proprietor CorporationPartnership
Federal ID #State ID #
Agent Information
Same as Property Owner Different, as below
(print) (Check one)
Name: ____________________________ E-mail address: _______________________________
Address: _____________________________ _________________ ______ ________
Street City State Zip Code
Phone (w): _______________________
III. SIGNATURE
I certify that ___________________ is defined as a Small Business, For-Profit and is not a religious,
(Business name)
Political, Casino, Sports Facility, or Pornographic Enterprise. I further certify that all information
provided in this application is true and correct to the best of my knowledge. I authorize the city of
Elk River and the Finance Committee to check credit references and verify financial and other
information. I further agree, if approved, to the loan security and guarantees required by the Subsidy
policy. I agree to provide any additional information as may be requested by the city.
Agreement to Pay Costs of Review
It is the policy of the City of Elk River to require applicants to pay costs incurred by the City in
reviewing and acting upon applications, so that these costs are not borne by the taxpayers of the City.
These costs include all of the City’s out-of-pocket costs for expenses, including the City’s costs for
review of the application by the City’s Financial Consultant and City Attorney, or other consultants,
recording fees, and necessary publication costs.
The application processing fees cover anticipated costs; costs incurred above the application fee will
be invoiced as they are incurred, and payment will be due within thirty (30) days. Application fees
are not refundable, though any unused portion is returned at the request of the applicant. If payment
is not received as required by this agreement, the City may suspend the application review process
and may deny the application for failure to comply with the requirements for processing the
application. Payment for costs will be required whether the application is granted or denied.
The undersigned has received the City’s policy regarding the payment of costs of review, understands
that reimbursement to the City of costs incurred in reviewing the application will be required, agrees
to reimburse the City as required in the policy and make payment when billed by the City, and agrees
that the application may be denied for failure to reimburse the City for costs as provided in the
policy.
Note: All Major shareholders will be required to sign personal guarantees and a minimum
assessment agreement if up front financing of the project is required.
APPLICANT SIGNATURE: _______
TITLE: DATE:
City of Elk River Tax Increment Financing Policy & Application- Housing
Amended April 8 2015
Page 10 of 14
IV. PUBLIC PURPOSE
It is the policy of the City of Elk River that the use of Tax Increment Financing should
result in a benefit to the public. Please indicate how this project will serve a public purpose:
___Job Creation/Retention (Complete table in Section V).
___New industrial development which will result in additional private
investment in the area.
_Enhancement and/or diversification of the City of Elk River’s economic base.
___The project contributes to the fulfillment of the City’s Economic Development
Strategic Plan.
___Removal of blight.
___Rehabilitation of a high profile or priority site.
___Significantly increase the City’s tax base.
V. SOURCES & USES
SOURCESNAMEAMOUNT
$
Bank Loan
$
Other Private Funds
$
Owner Cash Equity
$
Fed Grant/Loan
$
State Grant/Loan
$
EDA Micro Loan
$
Tax Abatement
$
ID Bonds
$
TOTAL
USES AMOUNT
$
Land Acquisition
$
Site Development
$
Construction
Machinery & Equipment $
Architectural & Engineering Fees $
$
Legal Fees
$
Interest During Construction
$
Debt Service Reserve
$
Contingencies
$
TOTAL
VI. ADDITIONAL DOCUMENTATION AND CHECKLIST
Please provide one paper and one electronic copy of following: (Incomplete applications
will delay the review of an application)
_______A) Application deposit of $10,000, with any unused portion to be refunded if
project does not proceed.
_______B) Written Narrative: Please give a brief summary of your business, its products or
service, the project and how this subsidy will impact your project. The narrative
should include a statement demonstrating how the project meets the public
purpose in IV (above).
City of Elk River Tax Increment Financing Policy & Application- Housing
Amended April 8 2015
Page 11 of 14
_______C) Business Plan. The business plan should include the following:
1. Description of Business
2. Ownership
3. Management
4. Date Established
5. Products/Services
6. Future Plans
7. Market for Business
_______ D) Project Proforma
1
1. Sources and uses of funds to finance the project, and
2. Operating cash flow assumptions that include:
a. Projected revenues,
b. Operating expenses,
c. Net operating income, and
d. Annual debt service and loan payments.
_______ E) Financial Statements for previous Two Years and the Current year to date
1
______ Profit & Loss Statement
______ Balance Sheet
_______ F) Financial Projections for Term of abatement, up to 10 Years
1
_______ G) Personal Financial Statements of all Major Shareholders, Partners, Guarantors
_______ H) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Duration
_______ I) Letter of Commitment from the Other Sources of Financing,
Stating Terms and Conditions of their Participation in Project Completion
_______ J) Written statement of contact information (Name, Company, Address, Email,
Phone, Fax) for project team, including: Attorney, Accountant, Financing
Sources (lenders, partners, etc…), Parent Company, Architect
Sensitive financial documents, while not-public information, may be submitted directly to the City’s
1
financial consultant by signing the attached confidentiality agreement, for additional confidentiality.
The attached Confidentiality Agreement may be signed and included with the application.
K) Construction Plans and Itemized Project Construction Statement
L) Attach the following documentation as Exhibits
Exhibit A – Corporation/Partnership Description
Exhibit B – List of Shareholders/Partners
Exhibit C – But-For Analysis
Exhibit D – List of Prospective Lessees (if applicable)
Exhibit E – Legal Description
_______M) Site and Construction Plans
City of Elk River Tax Increment Financing Policy & Application- Housing
Amended April 8 2015
Page 12 of 14
CONFIDENTIALITY AGREEMENT
(Sample Agreement)
This agreement is made this ____ day of ____________, 20__, by and between
________________________, a ___________________ company, hereinafter “Developer,” and
Springsted Incorporated, a Minnesota corporation, hereinafter “Springsted.”
WHEREAS, Developer is _______________ (description of project), hereinafter the “Project,”
pursuant to a _______________________ (form of agreement) with
__________________________ (public entity), hereinafter the “City,” dated _______________;
and
WHEREAS, Springsted has been hired by the City to investigate certain financial aspects of the
Developer and the Project; and
WHEREAS, in conjunction with such investigation, Springsted desires to examine the financial
information of Developer relative to Developer and the Project; and
WHEREAS, Developer is willing to disclose such information only on the condition that such
information be kept confidential.
NOW, THEREFORE, in consideration of the terms and mutual covenants contained herein, the
parties agree as follows:
1.Developer agrees to make its financial information, development pro forma and
projection, budget information, and such other financial information concerning the
Project as Springsted may reasonably request, hereinafterthe “Information,” available
for inspection by Springsted, but solely for the purpose set forth above.
2.Springsted shall accept the Information in strict confidence solely for that purpose
and shall make no other use of the information, or disclose it to any other person or
party, including the City, without the express written consent of Developer.
Notwithstanding the foregoing, Springsted may use the Information in summary form
only to report its findings to the City provided that Springsted first presents its proposed
report to Developer and obtains Developer’s written consent to ensure that no
inadvertent disclosures of confidential information or other inaccurate information are
contained in such report.
3.Inspection of the Information shall take place in such manner and at such place and
time as the parties may agree. The Information shall not be copied, duplicated,
abstracted, summarized or recorded, directly or indirectly, by any means whatsoever,
without the prior consent of Developer.
4.The Information shall remain the property of Developer, and any Information
provided in tangible form shall be returned to Developer upon completion of such
inspection. Any copies, duplications, abstracts, summaries or other recordings of the
Information made with Developer’s consent shall be returned to Developer upon
demand.
5.Springsted agrees that any breach of the obligation of confidentiality imposed hereby
shall constitute irreparable harm to Developer and shall entitle Developer to equitable
relief enjoining any further breaches of this Agreement, together and in conjunction with
any and all such other remedies as may be available to Developer at law or in equity.
IN WITNESS WHEREOF, the parties have hereunto set their hands the day and year first above
written.
DEVELOPER
By_______________________________Its____________________________
SPRINGSTED INC.
By____________________________________Its___________________________
City of Elk River Tax Increment Financing Policy & Application- Housing
Amended April 8 2015
Page 13 of 14
IX.WORKSHEET-HOUSING PROJECTS
TO BE COMPLETED BY CITY STAFF
The project must meet the criteria set forth in Section IV of the City’s Tax Increment
Financing policyto continue.
a) Meets minimum thresholds for size, value, and tax revenue.
b) Meets at least one of the objectives in Section II and satisfies
all of the provisions set forth in Section III.
c) Demonstrates need for TIF with the but-for analysis.
d) Consistent with all city plans and ordinances.
e) Serves at least two public purposes as defined in Section IV (f).
1. Ratio of Private to All Public Investment in Project: Points:_____
Greater than 7:1 10
$ Private investment 6:1 8
$ Public Investment 5:1 6
Ratio Private: Public Financing 4:1 4
3:1 2
Less than 3:1 1
2. Project provides housing that is restrictedPoints:
to persons 55 years and older: 10
3. Market Value/Tax Base Generation: Points:
Project will result in an estimated
market value per unit $135,000/Unit 5
(land and building) of $125,000/Unit 4
$115,000/Unit 3
$105,000/Unit 2
$ 95,000/Unit 1
4. Project proposes rehabilitation of existing
housing, housing stock, and maximizes
utilization of existing infrastructure: Points:
10
5. Project proposes a location near existing
jobs, transportation, recreation, retail services,
social services, and schools: Points:
3
6. Project includes community/ neighborhood: Points:
facility (pool, community center, etc.)
Points based on scale of improvement (1-5)Yes 5
7. Type of Housing Project:Points:_____
100% Owner Occupied 2
Investment Property 1
8. Likelihood that the project will result in Points: _____
unsubsidized, spin-off development. High 5
Moderate 3
Low 1
Sub -Total Points: of a possible 50points.
9. Bonus Points Bonus Points: _
The project will not be 100% Pay-as-you-go TIF. -5points
The project does not require modification to land use plan. 2 points
The project contributes to the goals of Energy City. 2 points
Product promotes sensible use of energy, OR
Project utilizes significant energy efficient design &/or
materials in construction.
Total Points:
Overall project analysis: Rank Points Max eligible
High 45-50 points 100%
Moderate 37-44 points 85%
Low 30-36 points 65%
Not Eligible 0-29 points
Tax Increment Financing
Policy & Application
Amended: February 2014
Amended: May 2006
Amended: March 2000
Adopted: August 1991
City of Elk River
Economic Development Division
13065 Orono Parkway
Elk River, MN 55330
763.635.1040
Table of Contents
I.Policy Purpose 3
II.Objectives of Tax Increment Financing 3
III.City of Elk River Policies for the Use of TIF 4
IV.Project Qualifications 5
V.Subsidy Agreement & Reporting Requirements 6
VI.Application Process for TIF 6
VII.Application for TIF 7
Applicant Information 7
Project Information 8
Public Purpose 8
Sources & Uses 9
Checklist & Additional Information 10
VIII.Sample But-For Analysis 11
IX.Application Review Worksheet:
Commercial-Industrial Projects 12
X.Application Review Worksheet:
Housing Projects 14
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 2 of 15
I.POLICY PURPOSE
Development Authority, and Housing and Redevelopment Authority.
use of Tax Increment Financing (TIF) for private development above and beyond the
requirements and limitations set forth by State Law. This policy shall be used as a guide
in the processing and review of applications requesting tax increment assistance. The
fundamental purpose of tax increment financing in Elk River is to encourage desirable
development or redevelopment that would not otherwise occur but for the assistance
provided through TIF.
The City of Elk River is granted the power to utilize TIF by the Minnesota Tax
Increment Financing Act, as amended. It is the intent of the City to provide the
minimum amount of TIF, as well as other incentives, at the shortest term required for
the project to proceed. The City reserves the right to approve or reject projects on a
case by case basis, taking into consideration established policies, project criteria, and
demand on city services in relation to the potential benefits from the project. Meeting
policy criteria does not guarantee the award of TIF to the project. Approval or denial of
one project is not intended to set precedent for approval or denial of another project.
II.OBJECTIVES OF TAX INCREMENT FINANCING
As a matter of adopted policy, the City will consider using TIF to assist private
development projects to achieve one or more of the following objectives:
To retain local jobs and/or increase the number and diversity of jobs that offer
stable employment and/or attractive wages and benefits
.
Business Subsidy Policy
To encourage additional unsubsidized private development in the area, either
.
To facilitate the development process and to achieve development on sites
which would not be developed without TIF assistance.
To remove blight and/or encourage redevelopment of commercial and
industrial areas in the city that result in high quality redevelopment and private
reinvestment.
To offset increased costs of redevelopment (i.e. contaminated site clean up)
over and above the costs normally incurred in development.
To create opportunities for affordable housing.
To contribute to the implementation of other public policies, as adopted by the
city from time to time, such as the promotion of quality urban or architectural
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 3 of 15
design, energy conservation, and decreasing capital and/or operating costs of
.
local government
To enhance and diversify the City of Elk River
III.POLICIES FOR THE USE OF TIF
a.When possible, TIF shall be used to finance public improvements associated
with the project. The priority for the use of TIF funds is:
1.Public improvements, legal, administrative, and engineering costs.
2.Site preparation, site improvement, land purchase, and demolition.
3.Capitalized interest, bonding costs.
b.
1.Economic Development Districts
It is desired that the project result in a minimum creation of
one full time job per $25,000 of TIF, or
Result in a significant increase in the tax base.
2.Redevelopment Districts
The market value of a redeveloped site shall increase by a
minimum of 50% of the current market value.
3.Housing Districts
May be considered on a case-by-case basis.
Other types of TIF districts, along with specific criteria, may be considered
on a case-by-case basis.
c.TIF assistance will be provided to the developer upon receipt of the
increment by the City, otherwise referred to as the pay-as-you-go method.
Requests for up front financing will be considered on a case-by-case basis.
d.A maximum of ten percent (10%) of any tax increment received from the
district may be retained by the City to reimburse administrative costs.
e.Any developer receiving TIF assistance shall provide a minimum of ten
percent (10%) owner cash equity investment in the project.
f.TIF will not be used in circumstances where land and/or property price is in
excess of fair market value.
g.Developer shall be able to demonstrate a market demand for a proposed
project. TIF shall not be used to support purely speculative projects.
h.TIF will not be utilized in cases where it would create an unfair and
significant competitive financial advantage over other projects in the area.
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 4 of 15
i.TIF shall not be used for projects that would place extraordinary demands
on city services or for projects that would generate significant environmental
impacts.
j.The developer must provide adequate financial guarantees to ensure
completion of the project, including, but not limited to: minimum assessment
agreements, letters of credit, personal guaranties, etc.
k.on, an
ability to complete the proposed project based on past development
experience, general reputation, and credit history, among other factors,
including the size and scope of the proposed project.
l.For the purposes of underwriting the proposal, the developer shall provide
any requested market, financial, environmental, or other data requested by
the City or its consultants.
m.All TIF proposals shall optimize the private development potential of a site.
IV.PROJECT QUALIFICATIONS
each
All TIF projects considered by the City of Elk River must meet of the following
requirements:
a.To be eligible for TIF, a project shall result in:
i.The new construction of a minimum of 25,000 square feet;
ii.A minimum increase of $37,500 per year in property taxes, excluding
the state portion; and
iii.Have a market value of at least $1,250,000 upon completion.
one
b.The project shall meet at least of the objectives set forth in Section II
all
and satisfy the provisions set forth in Section III of this document.
c.The developer shall demonstrate that the project is not financially feasible
but-for the use of TIF.
d.The project shall comply with all provisions set forth in the Tax Increment
Financing Act, Minnesota Statutes 469.124 to 469.134, inclusive, as amended,
and Statutes 469.174 to 469.1794, inclusive, as amended.
e.
Use Plan, and Zoning Ordinances.
two
f.The project shall serve at least of the following public purposes:
Creation of jobs with livable wages and benefits.
Significantly increase tax base.
Industrial development that will spur additional private investment in
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 5 of 15
the area.
Fulfillment of defined city objectives such as those identified in the
Strategic Plan, among others.
Removal of blight or the rehabilitation of a high profile or priority
site.
V. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS
All developers/businesses receiving Tax Increment assistance from the City of Elk
River
Business Subsidy Policy as amended and Minnesota Statutes Sections 116J.993 to
VI. APPLICATION PROCESS FOR TIF
1
. Applicant submits the completed application along with a $10,000 application
deposit, to be refunded for any portions not utilized if the tax increment project
does not proceed. The application deposit will be used toward the cost of
services provided in the evaluation of financial feasibility, establishment or
modification of the TIF district, and preparation of legal documents and
agreements. An additional deposit of $10,000 will be required for projects that
require meeting statutory eminent domain and/or redevelopment substandard
tests. Projects that demand professional services in excess of the initial deposit
shall be required to reimburse the City for the additional expenses.
2.City staff reviews the application and completes the Commercial-Industrial
and/or Housing Worksheets. The Application and Commercial-Industrial
and/or Housing Worksheets are primarily designed to score the desirability of
the proposed project. Industrial, Redevelopment and Housing projects will be
evaluated on a case-by-
objectives.
3.Results of the Commercial-Industrial and/or Housing Worksheets are
submitted to the appropriate governing authorities (EDA or HRA) for
recommendation to the City Council of approval or denial of the request.
4.If preliminary approval is granted, the Tax Increment Financing Plan, along
with all necessary notices, resolutions are prepared by City staff and/or
consultants.
5.Notices are published and sent to the county and school board.
6.Public hearing(s) on the proposed request are held.
7.The City Council grants final approval or denial of the request.
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 6 of 15
VII. APPLICATION FOR TAX INCREMENT FINANCING
A. APPLICANT INFORMATION
Name of Corporation/Partnership
Address
Primary Contact
Address
Phone Fax Email
product or service:
Brief description of the proposed project:
Attorney Name
Address
Phone Fax Email
Accountant Name
Address
Phone Fax Email
Contractor Name
Address
Phone Fax Email
Engineer Name
Address
Phone Fax Email
Architect Name
Address
Phone Fax Email
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 7 of 15
B. PROJECT INFORMATION
1. The project will be:
____Industrial Greenfield:
____New Construction ____ Expansion
____Commercial Redevelopment:
____New Construction ____ Rehabilitation
____Industrial Redevelopment:
____New Construction ____ Rehabilitation
____Other
2. The project will be: ___Owner Occupied ____Leased Space
3. Project Address
Legal Description & Parcel Identification Number(s)
4. Site Plan and Preliminary Construction Plans Attached: ____ Yes ____ No
5. Amount of Tax Increment Requested for:
Land Purchase $
Public Improvement $
Site Improvement $
6. Current Real Estate Taxes on Project Site: $
Estimated Real Estate Taxes upon Completion: Phase I $
Phase II $
7. Construction Start Date:
Construction Completion Date:
If Phased Project: Year ____ % Completed
Year ___ % Completed
C. PUBLIC PURPOSE
It is the policy of the City of Elk River that the use of Tax Increment Financing should
result in a benefit to the public. Please indicate how this project will serve a public
purpose.
___Job Creation/Retention:
Number of existing jobs
Number of jobs created by project
Average hourly wage of jobs created/retained
___New industrial development, which will result in additional private
investment in the area.
___The project contributes to the fulfillment of the CityEconomic Development
Strategic Plan.
___Removal of blight or the rehabilitation of a high profile or priority site.
___Other:
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 8 of 15
D. SOURCES & USES
SOURCES NAME AMOUNT
Bank Loan $
Other Private Funds $
Owner Cash Equity $
Fed Grant/Loan $
State Grant/Loan $
EDA Micro Loan $
Tax Increment $
ID Bonds $
TOTAL $
USES AMOUNT
Land Acquisition $
Site Development $
Construction $
Machinery & Equipment $
Architectural & Engineering Fees $
Legal Fees $
Interest During Construction $
Debt Service Reserve $
Contingencies $
TOTAL $
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 9 of 15
E. ADDITIONAL DOCUMENTATION AND CHECKLIST
Applicants will also be required to provide the following documentation.
A) Written business plan, including a description of the business,
ownership/management, date established, products and services, and
future plans
B) Financial Statements for Past Two Years
Profit & Loss Statement
Balance Sheet
C) Current Financial Statements
Profit & Loss Statement to Date
Balance Sheet to Date
D) Two Year Financial Projections
E) Personal Financial Statements of all Major Shareholders
Profit & Loss
Current Tax Return
F) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Duration
G) Letter of Commitment from the Other Sources of Financing,
Stating Terms and Conditions of their Participation in
Project
H) Application deposit of $10,000, with any unused portion to be
refunded if project does not proceed.
I) Construction Plans and Itemized Project Construction Statement
J) Attach the following documentation as Exhibits
Exhibit A Corporation/Partnership Description
Exhibit B Description of Project
Exhibit C List of Shareholders/Partners
Exhibit D But-For Analysis
Exhibit E List of Prospective Lessees
Exhibit F Legal Description and PID Number(s)
Note: All Major shareholders will be required to sign personal guarantees if up front
financing of the project is required.
The undersigned certifies that all information provided in this application is true and correct to the best of the
ck credit references and
verify financial and other information. The undersigned also agrees to provide any additional information as
may be requested by the City after the filing of this application.
Applicant Name Date
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 10 of 15
SAMPLE BUT-FOR ANALYSIS
.
VIII
WITH NO WITH
TAX INCREMENT TAX INCREMENT
SOURCES AND USES SOURCES AND USES
SOURCES SOURCES
Mortgage 9,600,000 8,667,000
Equity 2,400,000 2,400,00
Tax Increment Financing 0 933,000
TOTAL SOURCES 12,000,000 12,000,000
USES USES
Land 1,500,000 1,500,000
Site Work 300,000 300,000
Soil Correction 468,000 468,000
Demolition 100,000 100,000
Relocation 65,000 65,000
Subtotal Land Costs 2,433,000 2,433,000
Construction 6,750,000 6,750,000
Finish Manufacturing 250,000 250,000
Subtotal Construction Costs 7,000,000 7,000,000
Soft Costs 350,000 350,000
Taxes 35,000 35,000
Finance Fees 850,000 850,000
Project Manager 542,000 542,000
Developer Fee 540,000 540,000
Contingency 250,000 250,000
Subtotal Soft Costs 2,567,000 2,567,000
TOTAL USES 12,000,000 12,000,000
Income Statement Income Statement
Sq. Ft. Per Sq. Ft. Sq. Ft. Per Sq. Ft.
Rent-Space 1 100,000 $8.00 800,000 100,000 $8.00 800,000
Rent-Space 2 25,000 $8.50 212,500 25,000 $8.50 212,500
Rent-Space 3 25,000 $9.00 225,000 25,000 $9.00 225,000
Other 0 $0.00 0 0 $0.00 0
1,237,500 1,237,500
Mortgage 20 Term 1,051,646 20 Term 949,439
9.00% Interest 9.00% Interest
9,600,000 Principal 8,667,000 Principal
Net Income 185,854 288,061
Total Return on Equity 7.74% 12.00%
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 11 of 15
IX. TAX INCREMENT FINANCING APPLICATION REVIEW
WORKSHEET COMMERCIAL/INDUSTRIAL PROJECTS
TO BE COMPLETED BY CITY STAFF
Financing policy.
a) Meets minimum thresholds for size, value, and tax revenue.
b) Meets at least one of the objectives in Section II and satisfies
all of the provisions set forth in Section III.
c) Demonstrates need for TIF with the but-for analysis.
d) Consistent with all city plans and ordinances.
e) Serves at least two public purposes as defined in Section IV (f).
2. Ratio of Private to All Public Investment in Project: Points: _____
$ Private investment 5:1 5
$ Public Investment 4:1 4
Ratio Private: Public Financing 3:1 3
2:1 2
Less than 2:1 1
3. Job Creation in the City of Elk River: Points: _____
Number of new jobs as a result of the project. 40+ 5
Number of existing/retained jobs divided by 2. 30+ 4
Total 20+ 3
10+ 2
Less than 10 1
4. Ratio of Public Investment to Job Creation: Points: _____
$ Public Investment $15,000 or less 5
Number of new jobs created/retained $20,000 or less 4
new
$ Public Investment per job $22,000 or less 3
$25,000 or less 2
Over $25,000 1
5. Wage Level of new jobs created/retained: Points: _____
Minimum hourly wage Over $21/ hour 5
of jobs created/retained: $18-21 / hour 4
$14-17 / hour 3
$10-13 / hour 2
Under $10 / hour 1
6. Project size: Points:
The project will result in the construction 80,000+ 5
of square feet 65,000+ 4
50,000+ 3
35,000+ 2
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 12 of 15
25,000+ 1
7. Market Value/Tax Base Generation: Points:
The project will result in a per square foot Industrial Commercial
estimated market value (land and building) $80/sf+ $110/sf+ 5
of $70/sf+ $100/sf+ 4
$60/sf+ $90/sf+ 3
$50/sf+ $80/sf+ 2
$40/sf+ $70/sf+ 1
8. Type of Project: Points: _____
100% Owner Occupied 5
Mix Owner Occupied & Investment 4
Investment Property 3
9. Use: Points: _____
Manufacturing 5
Research & Development 4
Commercial Redevelopment 3
Warehouse/Distribution 2
Housing 1
10. Likelihood that the project will result in Points: _____
unsubsidized, spin-off development. High 5
Moderate 3
Low 1
Sub - Total Points: of a possible 45 points.
_
11. Bonus Points Bonus Points:
The project will be 100% Pay-as-you-go TIF. 3 points
The project contributes to the goals of Energy City. 2 points
Product promotes sensible use of energy, OR
Project utilizes significant energy efficient design &/or
materials in construction.
Total Points:
Overall project analysis: High 45-38 points
Moderate 37-29 points
Low 28-20 points
Not Eligible 19-0 points
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 13 of 15
X. TAX INCREMENT FINANCING APPLICATION REVIEW
WORKSHEET- HOUSING PROJECTS
TO BE COMPLETED BY CITY STAFF
Financing policy.
a) Meets minimum thresholds for size, value, and tax revenue.
b) Meets at least one of the objectives in Section II and satisfies
all of the provisions set forth in Section III.
c) Demonstrates need for TIF with the but-for analysis.
d) Consistent with all city plans and ordinances.
e) Serves at least two public purposes as defined in Section IV (f).
2. Ratio of Private to All Public Investment in Project: Points: _____
$ Private investment 5:1 5
$ Public Investment 4:1 4
Ratio Private: Public Financing 3:1 3
2:1 2
Less than 2:1 1
3. Job Creation in the City of Elk River: Points: _____
Number of new jobs as a result of the project. 20+ 5
Number of existing/retained jobs divided by 2. 15+ 4
Total 10+ 3
5+ 2
Less than 5 1
4. Wage Level of new jobs created/retained: Points: _____
Minimum hourly wage Over $25/hour 5
of jobs created/retained: $21-25/hour 4
$17-20/hour 3
$14-16/hour 2
Under $14/hour 1
5. Market Value/Tax Base Generation: Points:
Project will result in an estimated
market value per unit $135,000/Unit 5
(land and building) of $125,000/Unit 4
$115,000/Unit 3
$105,000/Unit 2
$ 95,000/Unit 1
6. Project provides housing that is restricted Points:
to persons 55 years and older:
5
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 14 of 15
7. Project proposes rehabilitation of existing
housing, housing stock, and maximizes
utilization of existing infrastructure: Points:
4
8. Project proposes a location near existing
jobs, transportation, recreation, retail services,
social services, and schools: Points:
2
9. Type of Housing Project: Points: _____
100% Owner Occupied 2
Investment Property 1
10. Likelihood that the project will result in Points: _____
unsubsidized, spin-off development. High 5
Moderate 3
Low 1
Sub - Total Points: of a possible 38 points.
_
11. Bonus Points Bonus Points:
The project will be 100% Pay-as-you-go TIF. 3 points
The project contributes to the goals of Energy City. 2 points
Product promotes sensible use of energy, OR
Project utilizes significant energy efficient design &/or
materials in construction.
Total Points:
Overall project analysis: High 38-30 points
Moderate 29-22 points
Low 21-13 points
Not Eligible 12-0 points
City of Elk River Tax Increment Financing Policy & Application
Amended February 2014
Page 15 of 15
Tax Increment Financing
Policy & Application
Amended: March 2017
February 2014
May 2006
March 2000
August 1991
City of Elk River
Economic Development Division
13065 Orono Parkway
Elk River, MN 55330
763.635.1040
TABLE OF CONTENTS
Policy Purpose 3
Objectives of Tax Increment Financing 3
Policies for the Use of TIF 3
Statutory TIF Districts 4
Project Requirements 5
Project Qualifications 6
Subsidy Agreement and Reporting Requirements 7
Public Information Notice 7
Application Process for TIF 8
Signature Page 9
Application 10
But-For
Sample Analysis 17
Application Review Worksheet: 18
Non-Housing Projects
Application Review Worksheet: 20
Housing Projects
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 2 of 15
I.POLICY PURPOSE
For the purposes of this document, the term “city” shall include the Elk River City Council,
Economic Development Authority, and Housing and Redevelopment Authority.
The purpose of this policy is to establish the city of Elk River’s position relating to
the use of Tax Increment Financing (TIF) for private development above and
beyond the requirements and limitations set forth by State Law. This policy shall be
used as a guide in the processing and review of applications requesting tax increment
assistance. The fundamental purpose of tax increment financing in Elk River is to
encourage desirable development or redevelopment that would not otherwise occur
but for the assistance provided through TIF.
The city of Elk River is granted the power to utilize TIF by the Minnesota Tax
Increment Financing Act, as amended. It is the intent of the city to provide the
minimum amount of TIF, at the shortest term required for the project to proceed.
The city reserves the right to approve or reject projects on a case by case basis,
taking into consideration established policies, project criteria, and demand on city
services in relation to the potential benefits from the project. Meeting policy criteria
does not guarantee the award of TIF to the project. Approval or denial of one
project is not intended to set precedent for approval or denial of another project.
II.
OBJECTIVES OF TAX INCREMENT FINANCING
As a matter of adopted policy, the city will consider using TIF to assist private
development projects to achieve one or more of the following objectives:
To retain local jobs and/or increase the number and diversity of jobs that offer
stable employment and/or attractive wages and benefits as defined in the city’s
Business Subsidy Policy.
To encourage additional unsubsidized private development in the area, either
directly or indirectly through “spin off” development.
To facilitate the development process and to achieve development on sites
which would not be developed without TIF assistance.
To remove blight and/or encourage redevelopment of commercial and
industrial areas in the city that result in high quality redevelopment and private
reinvestment.
To offset increased costs of redevelopment (e.g. contaminated site cleanup)
over and above the costs normally incurred in development.
To create opportunities for affordable housing.
To enhance and diversify the city of Elk River’s economic base.
To significantly increase the city of Elk River’s tax base.
III.
POLICIES FOR THE USE OF TIF
a.When possible, TIF shall be used to finance public improvements associated
with the project. The priority for the use of TIF funds is:
1.Public improvements, legal, administrative, and engineering costs.
2.Site preparation, site improvement, land purchase, and demolition.
3.Capitalized Interest and Bonding Costs.
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 3 of 15
IV.
STATUTORY TIF DISTRICTS
\[Minn. State Statutes 469.174, Subd.
Redevelopment District
10; 469.176, Subd. 4j\]
Buildings, streets, other improvements occupy 70% of the area, and,
more than 50% of the main buildings are substandard (substantial
renovation or clearance justified; cost of attaining State building code
exceeds 15% of the cost of a new structure).
At least 90% of the tax increment revenues must be used
to correct the conditions that allow redevelopment district
designation. Such costs include: land acquisition,
demolition, land clearance, utility installation, roads,
sidewalks, and parking facilities.
Maximum term 25 years after receipt of the first increment.
\[Minn. State Statutes 469.174,
Renewal & Renovation District
Subd. 10a; 469.176, Subd. 4j\]
Buildings, street, other improvements occupy 70% of area;
and at least 20% of the main buildings are substandard (as
defined under Redevelopment District); and, 30% of the other
buildings require substantial renovation or clearance to
remove conditions such as inadequate street layout,
incompatible uses, overcrowding, obsolete buildings, or
other identified hazards to community health, safety, and
general welfare. These conditions must be reasonably
distributed throughout the geographic area of the district.
At least 90% of the tax increment revenues must be used to
finance the cost of correcting the conditions (i.e. land
acquisition, demolition, land clearance, utility installation, roads,
sidewalks, and parking facilities).
Maximum term 15 years after receipt of the first increment.
\[Minn. State Statutes
Economic Development District
469.174, Subd. 12, 469.176, Subd. 4c\]
A project found to be in the public interest because:
It will discourage a business from moving operations
to another state or municipality; or,
It will result in increased local employment; or,
It will preserve and enhance the tax base.
At least 85% of the facilities must be used for:
the manufacturing or production of tangible personal
property, including processing resulting in the change
in condition of the property;
warehousing, storage, and distribution of tangible
personal property, excluding retail sales;
research and development related to the activities
listed in clause (1) or (2) of the statutes ;
telemarketing if that activity is the exclusive use of the
property;
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 4 of 15
tourism facilities; or
space necessary for and related to the activities listed
in clauses (1) to (5) of the statutes.
Maximum term 8 years after receipt of the first increment.
\[Minn. State Statutes 469.174, Subd. 11,
Housing District
469.176, Subd. 4d, 469.1761\]
A project for low & moderate income housing
occupancy. A project does not qualify if more than
20% of the square footage of improvements are for
commercial, retail or other non-housing uses.
Tax increment revenue must solely finance
housing project costs, which may include
public infrastructure.
For owner-occupied housing, 95% of the units must
be initially purchased and occupied by individuals
qualifying as low and moderate income under current
Federal schedules. For rental housing, 50% of the
units must be occupied by persons whose income is
80% or less of area median gross income.
Maximum term 25 years after receipt of the first
increment.
\[Minn. State Statutes 469.174,
Soils Condition District
Subd. 19, 469.176, Subd. 4b\]
A project where presence of hazardous substances, pollution,
or contaminants requires removal or remedial action for use;
and, the estimated cost of remediation exceeds the land’s fair
market value, or, exceeds $2 per square foot.
Tax increment may be used only to:
Acquire parcels on which the improvements will
o
occur;
Pay for the cost of removal or remedial action; and
o
Pay for the administrative expenses of the TIF
o
Authority allocable to the district.
Maximum term is 20 years after receipt of the first
increment.
V.
PROJECT REQUIRMENTS
In addition to complying with all statutory guidelines, projects requesting TIF should
meet the following requirements. However, it should not be presumed that a project
meeting this set of criteria will automatically be approved.
a.TIF assistance may be provided to the developer upon receipt of the
increment by the city, otherwise referred to as the pay-as-you-go method.
Requests for up front financing will be considered on a case-by-case basis.
b.A maximum of ten percent (10%) of any tax increment received from the
district will be retained by the city to reimburse administrative costs.
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 5 of 15
c.Any developer receiving TIF assistance shall provide a minimum of ten
percent (10%) owner cash equity investment in the project.
d.TIF will not be used to purchase property where land and/or property price
is in excess of fair market value.
e.Developer shall be able to demonstrate a market demand for a proposed
project. TIF shall not be used to support purely speculative projects.
f.TIF will not be utilized in cases where it would create an unfair and
significant competitive financial advantage over other projects in the area.
g.TIF shall not be used for projects that would place extraordinary demands
on city services or for projects that would generate significant environmental
impacts.
h.The developer must provide adequate financial guarantees to ensure
completion of the project, including, but not limited to: minimum assessment
agreements, letters of credit, personal guaranties, etc.
i.The developer shall adequately demonstrate, to the city’s sole satisfaction, an
ability to complete the proposed project based on past development
experience, general reputation, and credit history, among other factors,
including the size and scope of the proposed project.
j.For the purposes of underwriting the proposal, the developer shall provide
any requested market, financial, environmental, or other data requested by
the city or its consultants.
k.All TIF proposals shall optimize the private development potential of a site.
VI.
PROJECT QUALIFICATIONS
All TIF projects considered by the city of Elk River must meet all of the following
requirements:
a.To be eligible for TIF, a project shall result in:
i.The new construction of a minimum of 25,000 square feet;
ii.A minimum increase of $37,500 per year in property taxes, excluding
the state portion; and
iii.Have a market value of at least $1,250,000 upon completion.
one
b.The project shall meet at least or more of the objectives set forth in
all
Section II and satisfy the provisions set forth in Section III of this
document.
c.The developer shall demonstrate that the project is not financially feasible
but-for the use of TIF.
d.The project shall comply with all provisions set forth in the Tax Increment
Financing Act, Minnesota Statutes 469.124 to 469.134, inclusive, as amended,
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 6 of 15
and Statutes 469.174 to 469.1794, inclusive, as amended.
e.The project must be consistent with the city’s Comprehensive Plan, Land
Use Plan, and Zoning Ordinances.
f.A Non-Housing project shall serve at least two of the following public
purposes:
Creation of jobs with livable wages and benefits.
Significantly increase the city’s tax base.
Enhancement or diversification of the city’s economic base.
Industrial development that will spur additional private investment in
the area.
Fulfillment of defined city objectives such as those identified in the
city’s Comprehensive Plan and the city’s Economic Development
Strategic Plan, among others.
Removal of blight or the rehabilitation of a high profile or priority
site
two
g.A Housing Project shall serve at least of the following public purposes:
Enhancement or diversification of the city’s housing stock.
Development that will spur additional private investment in the area.
Fulfillment of defined city objectives such as those identified in the
city’s Comprehensive Plan and the city’s Housing and
Redevelopment Strategic Plan, among others.
Removal of blight or the rehabilitation of a high profile or priority
site.
VII.
SUBSIDY AGREEMENT & REPORTING REQUIRMENTS
All developers/businesses receiving Tax Increment Financing assistance from the
city of Elk River shall be subject to the provisions and requirements set forth by the
city’s Business Subsidy Policy as amended and Minnesota Statutes Sections 116J.993
to 116J.995 (the “Minnesota Business Subsidy Law”), if applicable.
VIII.
PUBLIC INFORMATION NOTICE
Generally, correspondence to and from Staff is considered public information.
Specific data related to a financial assistance request is deemed not public: (e.g.)
Financial Information, Financial Statements, Net worth Calculations, Business Plans,
Income and Expense projections, Balance Sheets, Customer Lists, Income Tax
returns. When public financial assistance is received, only the following remains not
public: Business Plans, Income and Expense projections, Customer lists, Income tax
returns, design, market, and feasibility studies not paid for with public funds. The
city allows an applicant to submit sensitive financial information directly to the city’s
financial consultant, for additional security.
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 7 of 15
IX.
APPLICATION PROCESS FOR TIF
1.Meet with appropriate EDA and City Staff to discuss the scope of the project, public
participation being requested, and other information as may be necessary.
2.Applicant submits the completed application along with a $10,000 application
deposit. The application deposit will be used toward the cost of services provided in
the evaluation of financial feasibility, establishment or modification of the TIF
district, and preparation of legal documents and agreements. An additional deposit
of $10,000 will be required for projects that require meeting statutory eminent
domain and/or redevelopment substandard tests. Projects that require professional
services in excess of the initial deposit shall reimburse the city for the additional
expenses.
3.Staff reviews the application and completes the Commercial-Industrial and/or
Housing Worksheets. The Application and Commercial-Industrial and/or Housing
Worksheets are primarily designed to score the desirability of the proposed project.
4.The EDA Finance Committee reviews the request
5.Results of the Commercial-Industrial and/or Housing Application and Worksheets
are submitted to the EDA Finance Committee for recommendation to the
appropriate governing authorities (EDA or HRA) and to the City Council for
approval or denial of the request.
6.If preliminary approval is granted, the Tax Increment Financing Plan, along with all
necessary notices and, resolutions are prepared by city staff and/or consultants.
7.If Planning Commission action is required, it will be necessary for the applicant to
make application to the Commission for Concept Review.
8.A development agreement based upon the terms will be prepared in addition to an
economic development plan or redevelopment plan and tax increment financing plan
if required.
9.Notices are published and sent to the county and school board.
10.A public hearing may be set, if required by statutes, at which the EDA or HRA will
consider a final recommendation related to the formal application. Following the
necessary financial analysis and preparation of the detailed plans, the City Council
shall take action on the project as required under the Tax Increment Financing
statutes
11.The City Council grants final approval or denial of the request.
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 8 of 15
X.
SIGNATURE
I certify that __________________________(legal business name)is defined as a Small
Business, For-Profit and is not a religious, Political, Casino, Sports Facility, or Pornographic
Enterprise. I further certify that all information provided in this application is true and
correct to the best of my knowledge. I authorize the city of Elk River and the Finance
Committee to check credit references and verify financial and other information. I further
agree, if approved, to the loan security and guarantees required by the Subsidy policy. I
agree to provide any additional information as may be requested by the city.
Agreement to Pay Costs of Review
It is the policy of the city of Elk River to require applicants to pay costs incurred by the city
in reviewing and acting upon applications, so that these costs are not borne by the taxpayers
of the city. These costs include all of the city’s out-of-pocket costs for expenses, including
the city’s costs for review of the application by the city’s Financial Consultant and City
Attorney, or other consultants, recording fees, and necessary publication costs.
The application deposit covers anticipated costs; costs incurred above the application
deposit will be invoiced as incurred, and payment will be due within thirty (30) days.
Application deposit is not refundable, though any unused portion is returned to the
applicant. If payment is not received as required by this agreement, the city may suspend the
application review process and may deny the application for failure to comply with the
requirements for processing the application. Payment for costs will be required whether the
application is granted or denied.
The undersigned has received the city’s policy regarding the payment of costs of review,
understands that reimbursement to the city of costs incurred in reviewing the application will
be required, agrees to reimburse the city as required in the policy and make payment when
billed by the city, and agrees that the application may be denied for failure to reimburse the
city for costs as provided in the policy.
Note: All owners with ownership interests greater than 20% will be required to sign
personal guarantees and a minimum assessment agreement if up front financing of the
project is required.
APPLICANT SIGNATURE:
TITLE: DATE:
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 9 of 15
ELK RIVER ECONOMIC DEVELOPMENT
TAX INCREMENT APPLICATION
CONTACT INFORMATION
Legal Name of Business:
Project Site Address:
City / State / Zip
Contact Person(s)
Business PhoneFax
Home Phone Email
Check One:Proprietor CorporationPartnership
Federal ID #State ID #
PROJECT INFORMATION
Property Information (please print)
Address: ______________________________Parcel Number: 75 - _____ - _________
Legal Description:
Site Plan and Preliminary Construction Plans Attached: ____ Yes ____ No
The project will be:
Redevelopment District
Renewal & Renovation District
Economic Development
Housing District
Soils Condition District
Amount Requested: $Total Project Cost: $
The project will be: ____Owner Occupied ____Leased Space
If Leased Space ____ Percent Occupied 6 months after Certificate of Occupancy
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 10 of 15
Total Amount of Tax Increment Requested: $ over years.
City Portion: Annual $ Total $
County Portion: Annual $ Total $
ISD 728 Portion: Annual $ Total $
Amount of Tax Increment Requested for:
Land Purchase $
Public Improvement $
Site Improvement $
Current Real Estate Taxes on Project Site: $
Estimated Real Estate Taxes upon Completion: Phase I $
Phase II $
Construction Start Date________ Construction Completion Date_________
If Phased Project: Year % Completed
Year % Completed
Percent of project complete on December 31, current year. ___________
Brief description of the business entities, business, including history, principal product or
service:
Brief description of the proposed project:
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 11 of 15
PUBLIC PURPOSE
It is the policy of the city of Elk River that the use of Tax Increment Financing should result
in a benefit to the public.
A Non-Housing project shall serve at least two of the following public purposes:
Creation of jobs with livable wages and benefits.
Significantly increase the city’s tax base.
Enhancement or diversification of the city’s economic base.
Industrial development that will spur additional private investment in the area.
Fulfillment of defined city objectives such as those identified in the city’s
Comprehensive Plan and the city’s Economic Development Strategic Plan,
among others.
Removal of blight or the rehabilitation of a high profile or priority site
A Housing Project shall serve at least two of the following public purposes:
Enhancement or diversification of the city’s housing stock.
Development that will spur additional private investment in the area.
Fulfillment of defined city objectives such as those identified in the city’s
Comprehensive Plan and the city’s Housing and Redevelopment Strategic Plan,
among others.
Removal of blight or the rehabilitation of a high profile or priority site.
Please indicate how this project will serve a public purpose:
JOB CREATION/RETENTION
Number of existing jobs:
Number of jobs created by project:
Average hourly wage of jobs created/retained:
Job Creation/Retention
Average Expected
Number Hourly Annual Are the Jobs Newly Hiring
Job Title of Jobs Wage Salary Created or Retained Date
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 12 of 15
Project Consultant Contacts
Attorney Name
Address
Phone Fax Email
Accountant Name
Address
Phone Fax Email
Contractor Name
Address
Phone Fax Email
Engineer Name
Address
Phone Fax Email
Architect Name
Address
Phone Fax Email
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 13 of 15
SOURCES & USES
SOURCES NAME AMOUNT
Bank Loan $
Other Private Funds $
Owner Cash Equity $
Fed Grant/Loan $
State Grant/Loan $
EDA Micro Loan $
Tax Increment $
ID Bonds $
TOTAL $
USES AMOUNT
Land Acquisition $
Site Development $
Construction $
Machinery & Equipment $
Architectural & Engineering Fees $
Legal Fees $
Interest During Construction $
Debt Service Reserve $
Contingencies $
TOTAL $
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 14 of 15
ADDITIONAL DOCUMENTATION AND CHECKLIST
Applicant to provide the following documentation:
A) Application deposit of $10,000, application deposit is not refundable,
though any unused portion is returned to the applicant.
_______B) Written Narrative: Please give a brief summary of the project and
how this subsidy will impact your project. The narrative should
include a statement demonstrating how the project meets the public
purpose.
B) Written business plan, including the following:
1. Description of Business
2. Ownership
3. Management
4. Date Established
5. Products/Services
6. Future Plans
7. Market for Business
C) Financial Statements for Past Two Years
Profit & Loss Statement
Balance Sheet
______ Tax Returns
D) Current Financial Statements
Profit & Loss Statement to Date
Balance Sheet to Date
E) Project ProForma:
1.Operating cash flow assumptions that include:
a. Projected revenues,
b. Operating expenses,
c. Net operating income, and
d. Annual debt service and loan payments.
2.Financial Projections for Term of abatement, up to 10 Years
F) Personal Financial Statements of all owners with ownership interest
greater than 20%.
Profit & Loss
Current Tax Return
G) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Duration.
H) Letter of Commitment from the Other Sources of Financing,
Stating Terms and Conditions of their Participation in
Project.
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 15 of 15
I)Site and Construction Plans and Itemized Project Construction
Statement
J) Attach the following documentation as Exhibits
Exhibit A – Corporation/Partnership Description
Exhibit B – Description of Project
Exhibit C – List of Shareholders/Partners
Exhibit D – But-For Analysis
Exhibit E – List of Prospective Lessees
Exhibit F – Legal Description and PID Number(s)
Note: All owners with ownership interest greater than 20% will be required to sign personal
guarantees and a minimum assessment agreement if up front financing of the project is
required.
The undersigned certifies that all information provided in this application is true and correct
to the best of the undersigned’s knowledge. The undersigned authorizes the city of Elk
River to check credit references and verify financial and other information. The undersigned
also agrees to provide any additional information as may be requested by the city after the
filing of this application.
Applicant Name Date
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 16 of 15
SAMPLE BUT-FOR ANALYSIS
WITH NO WITH
TAX INCREMENT TAX INCREMENT
SOURCES AND USES SOURCES AND USES
SOURCES SOURCES
Mortgage 9,600,000 8,667,000
Equity 2,400,000 2,400,00
Tax Increment Financing 0 933,000
TOTAL SOURCES 12,000,000 12,000,000
USES USES
Land 1,500,000 1,500,000
Site Work 300,000 300,000
Soil Correction 468,000 468,000
Demolition 100,000 100,000
Relocation 65,000 65,000
Subtotal Land Costs 2,433,000 2,433,000
Construction 6,750,000 6,750,000
Finish Manufacturing 250,000 250,000
Subtotal Construction Costs 7,000,000 7,000,000
Soft Costs 350,000 350,000
Taxes 35,000 35,000
Finance Fees 850,000 850,000
Project Manager 542,000 542,000
Developer Fee 540,000 540,000
Contingency 250,000 250,000
Subtotal Soft Costs 2,567,000 2,567,000
TOTAL USES 12,000,000 12,000,000
Income Statement Income Statement
Sq. Ft. Per Sq. Ft. Sq. Ft. Per Sq. Ft.
Rent-Space 1 100,000 $8.00 800,000 100,000 $8.00 800,000
Rent-Space 2 25,000 $8.50 212,500 25,000 $8.50 212,500
Rent-Space 3 25,000 $9.00 225,000 25,000 $9.00 225,000
Other 0 $0.00 0 0 $0.00 0
1,237,500 1,237,500
Mortgage 20 Term 1,051,646 20 Term 949,439
9.00% Interest 9.00% Interest
9,600,000 Principal 8,667,000 Principal
Net Income 185,854 288,061
Total Return on Equity 7.74% 12.00%
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 17 of 15
TAX INCREMENT FINANCING APPLICATION REVIEW WORKSHEET FOR
NON-HOUSING PROJECTS
TO BE COMPLETED BY CITY STAFF
1. The project meets the criteria set forth in Section IV of the city’s Tax Increment
Financing policy.
a) Meets minimum thresholds for size, value, and tax revenue.
b) Meets at least one of the objectives in Section II and satisfies
all of the provisions set forth in Section III.
c) Demonstrates need for TIF with the but-for analysis.
d) Consistent with all city plans and ordinances.
e) Serves at least two public purposes as defined in Section IV (f).
______ f) Meets the appropriate statutory TIF district requirements
2. Ratio of Private to All Public Investment in Project: Points:
$ Private investment 5:1 5
$ Public Investment 4:1 4
Ratio Private: Public Financing 3:1 3
2:1 2
Less than 2:1 1
3. Job Creation in the city of Elk River: Points:
Number of new jobs as a result of the project. 40+ 5
Number of existing/retained jobs divided by 2. 30+ 4
Total 20+ 3
10+ 2
Less than 10 1
4. Ratio of Public Investment to Job Creation: Points:
$ Public Investment $15,000 or less 5
Number of new jobs created/retained $20,000 or less 4
new
$ Public Investment per job $22,000 or less 3
$25,000 or less 2
Over $25,000 1
5. Wage Level of new jobs created/retained: Points:
Minimum hourly wage Over $21/ hour 5
of jobs created/retained: $18-21 / hour 4
$14-17 / hour 3
$10-13 / hour 2
Under $10 / hour 1
6. Project size: Points:
The project will result in the construction 80,000+ 5
of square feet 65,000+ 4
50,000+ 3
35,000+ 2
25,000+ 1
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 18 of 15
7. Market Value/Tax Base Generation: Points:
The project will result in a per square foot Industrial Commercial
estimated market value (land and building) $80/sf+ $110/sf+ 5
of $70/sf+ $100/sf+ 4
$60/sf+ $90/sf+ 3
$50/sf+ $80/sf+ 2
$40/sf+ $70/sf+ 1
8. Type of Project: Points:
100% Owner Occupied 5
Mix Owner Occupied & Investment 4
Investment Property 3
9. Use: Points:
Manufacturing 5
Research & Development 4
Commercial Redevelopment 3
Warehouse/Distribution 2
Housing 1
10. Likelihood that the project will result in Points:
unsubsidized, spin-off development. High 5
Moderate 3
Low 1
Sub - Total Points: of a possible 45 points.
11. Bonus Points Bonus Points:
The project will be 100% Pay-as-you-go TIF. 3 points
The project contributes to the goals of Energy City. 2 points
Product promotes sensible use of energy, OR
Project utilizes significant energy efficient design &/or
materials in construction.
Total Points: Project Rating: Points: Max Eligibility:
Overall project analysis: High 50-38 points 100%
Moderate 37-29 points 85%
Low 28-20 points 65%
Not Eligible 19-0 points 0%
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 19 of 15
TAX INCREMENT FINANCING APPLICATION REVIEW WORKSHEET-
HOUSING PROJECTS
TO BE COMPLETED BY CITY STAFF
The project must meet the criteria set forth in Section IV of the city’s Tax Increment
Financing policy to continue.
a) Meets minimum thresholds for size, value, and tax revenue.
b) Meets at least one of the objectives in Section II and satisfies
all of the provisions set forth in Section III.
c) Demonstrates need for TIF with the but-for analysis.
d) Consistent with all city plans and ordinances.
e) Serves at least two public purposes as defined in Section IV (g).
______ f) Meets the appropriate statutory TIF district requirements
1. Ratio of Private to All Public Investment in Project: Points:
Greater than 7:1 10
$ Private investment 6:1 8
$ Public Investment 5:1 6
Ratio Private: Public Financing 4:1 4
3:1 2
Less than 3:1 1
2. Project provides housing that is restricted Points:
to persons 55 years and older: 10
3. Market Value/Tax Base Generation: Points:
Project will result in an estimated
market value per unit $135,000/Unit 5
(land and building) of $125,000/Unit 4
$115,000/Unit 3
$105,000/Unit 2
$ 95,000/Unit 1
4. Project proposes rehabilitation of existing
housing, housing stock, and maximizes
utilization of existing infrastructure: Points:
10
5. Project proposes a location near existing
jobs, transportation, recreation, retail services,
social services, and schools: Points:
5
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 20 of 15
6. Project includes community/ neighborhood: Points:
facility (pool, community center, etc.) 5
7. Type of Housing Project: Points:
100% Owner Occupied 3
Investment Property 2
8. Likelihood that the project will result in Points:
unsubsidized, spin-off development. High 5
Moderate 3
Low 1
Sub - Total Points: of a possible 55 points.
9. Point Adjustments Bonus Points:
The project will be 100% Pay-as-you-go TIF. 5 points
The project does not require modification to land use plan. 2 points
The project contributes to the goals of Energy City. 2 points
Product promotes sensible use of energy, OR
Project utilizes significant energy efficient design &/or materials in construction.
Total Points: Project Rating: Points: Max Eligibility:
Overall project analysis:
High 64-50 points 100%
Moderate 37-49 points 85%
Low 30-36 points 65%
Not Eligible 0-29 points 0%
City of Elk River Tax Increment Financing Policy & Application
Amended March 2017
Page 21 of 15
Comprehensive Housing Needs Analysis
City of Elk River
December 4, 2015
Ms. Amanda Othoudt
Economic Development Director
City of Elk River
13065 Orono Parkway
Elk River, MN 55330
Dear Ms. Othoudt:
Attached is the Comprehensive Housing Needs Analysis for the City of Elk River, Minnesota
conducted by Maxfield Research and Consulting LLC. The study updates the previous housing
study completed in 2012 during the economic downturn and projects housing demand from
2015 through 2025. The updated study provides recommendations on the amount and type of
housing that could be built in Elk River to satisfy demand from current and future residents over
the next decade.
The study identifies a potential demand for over 1,500 new housing units in Elk River over the
remainder of the decade and beyond (2015 to 2025, including a variety of housing options).
Demand will be spread across all product types; including 787 for-sale units, 442 general-
occupancy rental units, and 296 senior units. The existing single-family finished lot supply is
dwindling; thereforenew platted developed lots will be needed soon to meet future housing
demand. Detailed information regarding recommended housing concepts can be found in the
Conclusions and Recommendations section at the end of the report.
We have enjoyed performing this study for you and are available should you have any
questions or need additional information.
Sincerely,
MAXFIELD RESEARCH AND CONSULTING LLC
Matt Mullins Brian Smith
Vice President Research Associate
Attachment
612-338-0012 (fax) 612-904-7979
7575 Golden Valley Road, Suite 385, Golden Valley, MN 55427
www.maxfieldresearch.com
TABLE OF CONTENTS
Page
EXECUTIVE SUMMARY........................................................................................................ 1
DEMOGRAPHIC ANALYSIS ................................................................................................... 6
Introduction.................................................................................................................... 6
Elk River Study Area Definition ....................................................................................... 6
Population and Household Growth Trends and Projections .......................................... 8
Population Age Distribution Trends ................................................................................ 9
Household Income .......................................................................................................... 11
Tenure by Age of Householder ....................................................................................... 14
Household Type .............................................................................................................. 15
Tenure by Income........................................................................................................... 18
Net Worth by Age of Householder ................................................................................. 20
EMPLOYMENT ANALYSIS.................................................................................................... 22
Employment Growth Trends ........................................................................................... 22
Major Employer Interviews............................................................................................. 28
HOUSING CHARACTERISTICS ............................................................................................... 31
Introduction.................................................................................................................... 31
Residential Construction Trends 2000 to Present .......................................................... 31
American Community Survey .......................................................................................... 33
Age of Housing Stock....................................................................................................... 33
Housing Units by Structure and Occupancy or (Housing Stock by Structure Type) ....... 35
Housing Units by Occupancy Status and Tenure ............................................................ 37
Owner Occupied Housing Units by Mortgage Status ..................................................... 38
Owner-Occupied Housing Units by Value ....................................................................... 39
Renter-Occupied Units by Contract Rent........................................................................ 40
RENTAL MARKET ANALYSIS ................................................................................................ 41
Introduction.................................................................................................................... 41
General Occupancy Rental Projects................................................................................ 41
Pending Rental Developments in Elk River ..................................................................... 49
Rental Market Interview Summary ................................................................................. 50
SENIOR HOUSING ANALYSIS ............................................................................................... 51
Senior Housing Defined ................................................................................................... 51
Senior Housing in Elk River .............................................................................................. 52
TABLE OF CONTENTS
(continued)
Page
FOR-SALE MARKET ANALYSIS ............................................................................................. 59
Introduction ..................................................................................................................... 59
Overview of For-Sale Housing Market Conditions.......................................................... 59
Home Resales by Price .................................................................................................... 64
Home Resales per Square Foot (“PSF)............................................................................. 65
Current Supply of Homes on the Market......................................................................... 67
Elk River Lot Supply.......................................................................................................... 73
HOUSING DEMAND ANALYSIS ............................................................................................ 78
Introduction ..................................................................................................................... 78
Demographic Profile and Housing Demand .................................................................... 78
Housing Demand Overview ............................................................................................. 79
Estimated Demand for For-Sale Housing ......................................................................... 83
Estimated Demand for General Occupancy Rental Housing ........................................... 84
Estimated Demand for Independent Adult Few Services Senior Housing ...................... 86
Estimated Demand for Affordable Independent Senior Housing.................................... 88
Estimated Demand for Subsidized Senior Housing ......................................................... 89
Estimated Demand for Congregate Senior Housing ........................................................ 90
Demand Estimate for Assisted Living Housing ................................................................ 92
Estimated Demand for Memory Care Housing ................................................................ 94
RECOMMENDATIONS AND CONCLUSIONS........................................................................ 97
Introduction/Overall Housing Recommendations .......................................................... 97
Recommended Housing Product Types .......................................................................... 100
For-Sale Housing ............................................................................................................. 100
General Occupancy Rental Housing ................................................................................ 105
Senior Housing ................................................................................................................ 107
Challenges and Opportunities
Challenges and Opportunities......................................................................................... 110
APPENDIX -DEFINITIONS.................................................................................................... 113
LIST OF TABLES
Table Number and Title Page
D1.Population and Household Growth Trends and Projections, Elk River, 1990 to 2025.9
D2.Population Age Distribution, Elk River, 2000, 2010, 2015, and 2020 ........................... 10
D3.Household Income by Age of Householder, Elk River, 2015 & 2020 ............................ 13
D4.Tenure by Age of Householder, Elk River, 2000 and 2010 ........................................... 16
D5.Household Type Trends, Elk River, 2000 and 2010 ...................................................... 17
D6.Tenure by Household Income, Elk River, 2000 and 2013* ........................................... 20
D7.Net Worth by Age of Householder, Elk River, 2015 ..................................................... 21
E1.Resident Employment,SherburneCounty, 2000 – 2015*........................................... 24
E2.Covered Employment Trends, Elk River, 2000, 2005, 2010, and 2014 ........................ 25
E3.Major Employers, City of Elk River, June 2012 ............................................................. 32
HC1.Residential Construction, City of Elk River, Annual Building Permits Issued, 2000 to
2015*............................................................................................................................ 32
HC2.Age of Housing Stock, Elk River, 2013*......................................................................... 34
HC3.Housing Stock by Units in Structure, Elk River, 2000 and 2013*.................................. 36
HC4.Housing Stock by Occupancy Status and Tenure, Elk River, 2000 to 2020................... 37
HC5.Housing Units by Mortgage Status, Elk River, 2013* ................................................... 48
HC6.Units by Value,Elk River, 2013* ................................................................................... 39
HC7.Units by Contract Rent, Elk River, 2013*...................................................................... 40
RM1.General Occupancy Rental Housing, City of Elk River, October 2015 ......................... 43
RM2.Common Area Features/Amenities, City of Elk River, October 2015 ........................... 46
SH1.Senior Housing Units By Type, City of Elk River, October 2015 .................................... 52
SH2.Senior Housing, City of Elk River, October 2015 ........................................................... 53
SH3.Unit Features/Building Amenities/Services, Existing Senior Housing, City of
Elk River, October 2015 ................................................................................................ 55
FS1.Home Resales, City of Elk River, 2000 to June 2015..................................................... 60
FS2.Single Family and Multifamily Residential Sales, City of Elk River, 2000 through 2015 62
FS3.Home Resales by Sales Price & Product Type, City of Elk River, 2014 .......................... 64
FS4.Housing Sales Per Square Foot (PSF), Elk River, 2005 to June 2015 ............................. 66
FS5.Homes Currently Listed For-Sale, City of Elk River, August 2015 ................................. 68
FS6.Active Listings by Housing Type, Elk River, August 2015 .............................................. 69
FS7.Active Listings by Housing Type, Elk River, August 2015 .............................................. 70
FS8.Active Listing by Year Built, Elk River, August 2015...................................................... 72
FS9.Subdivision & Lot Inventory – Detached Housing Units, City of Elk River,
nd
2 Quarter 2015 ........................................................................................................... 74
FS10.Subdivisions & Lot Inventory – Attached Housing Units, City of Elk River,
nd
2 Quarter 2015 ........................................................................................................... 75
LIST OF TABLES
(continued)
Table Number and Title Page
FS11.Vacant Lot for Parcels Platted, Sherburne County, 2000 to Present ........................... 76
HD1.For-Sale Housing Demand, Elk River, 2015 to 2025..................................................... 77
HD2.Rental Housing Demand, Elk River, 2015to 2025........................................................ 78
HD3.Market Rate Adult/Few Services Housing Demand, Elk River, 2015 & 2020............... 80
HD4.Affordable Independent Senior Housing Demand, Elk River, 2015 & 2020 ................. 82
HD5.Subsidized Independent Senior Housing Demand, Elk River, 2015 & 2020 ................. 83
HD6.Market Rate Congregate Housing Demand, Elk River, 2015& 20120......................... 84
HD7.Market Rate Assisted Living Demand, Elk River, 2015 & 2020 ..................................... 87
HD8.Memory Care Demand, Elk River, 2015& 2020........................................................... 90
CR1.Summary of Housing Demand, City of Elk River, November 2015 ............................... 97
CR2.Recommended Housing Development, City of Elk River, 2015 to 2025 ...................... 99
HA4. Elk River Area Housing Affordability – Based on Household Income ........................... 110
EXECUTIVE SUMMARY
Purpose and Scope of Study
Maxfield Research and Consulting LLC was engaged by the City of Elk River to update the
Comprehensive Housing Needs Analysis for the City of Elk River that was completed in 2012.
The Housing Needs Analysis provides recommendations on the amount and types of housing
that should be developed in order to meet the needs of current and future households who
choose to reside in the City.
The scope of this study includes: an analysis of the demographic and economic characteristics
of the City; a review of the characteristics of the existing housing stock and building permit
trends; an analysis of the market condition for a variety of rentaland for-sale housing products;
and an assessment of the need for housing by product type in the City. Recommendations on
the number and types of housing products that should be considered in the City are also
supplied.
Demographic Analysis
The City of Elk River is forecast to add an additional 1,602 people and 742 households
between 2010 and 2020.
The population in Elk River is aging and older age cohorts are accounting for a significant
percentage of the total population. Over the next five years, the age 55 to 64 cohort will
continue to have the highest growth numerically (791 people, or 38%), but significant
growth is also forecast in the age 65 to 74 cohort (716 people, or 60%) and 75+ households
(262 people, or 27%). Older adults and younger seniors (those between the ages of 55 and
74) in these high growth age cohorts are the target market for active adult housing
products.
The overall median household income in 2015 in Elk River is estimated at about $78,300.
This is substantially higher than the Twin Cities Metro Area at $67,795.
Between 2000 and 2010, homeownership rates increased from 78.3% to 80.2% in the City
of Elk River
The County’s unemployment rate of 4.2% in 2015 is slightly higher than the State of
Minnesota (3.9%) and lower than the Nation (5.5%).
Housing Characteristics
In total, Elk River is reported to have approximately 8,810 housing units, of which about
6,650 are owner-occupied, 1,602 are renter-occupied, and 457 are vacant as of 2015.
Owner-occupied housing units account for about 78% of the City’s total housing stock.
1
MAXFIELD RESEARCH & CONSULTING, LLC.
EXECUTIVE SUMMARY
The City of Elk River issued permits for the construction of 2,704 new residential units from
2000 to 2010. That equates to 246 units annually. However, 91.5% of development
occurred from 2000to 2006. New residential construction declined significantly from 2006
through 2012. Permits have increased since the recession but not near the levels they were
in the early 2000s.
Approximately 81% of Elk River homeowners have a mortgage. About 24% of homeowners
with mortgages also have a second mortgage or home equity loan. Comparatively, about
66% of homeowners in the United States have a mortgage.
Rental Housing Market Analysis
In order to assess the current market conditions for rental housing in Elk River, Maxfield
Research and Consulting LLC conducted an inventory of subsidized (i.e. housing that is
income-restricted to households earning at or below 30% of the Area Median Income),
affordable (i.e. housing that is income-restricted between 30% and 80% of the Area Median
Income) and market rate (i.e. housing that is not income-restricted) projects located in the
City.
In total, Maxfield Research inventoried 931 general occupancy market rate rental units in
the City of Elk River spread across 22 multifamily developments (16 units and larger). At the
time of the survey, there 49 vacant units (5.3%). Of which 28 vacancies were located in Elk
Park Estates that recently underwent a change in management. Excluding Elk Park Estates,
the market rate vacancy rate totals 2.3%. Typically, a healthy rental market maintains a
vacancy rate of roughly 5%, which promotes competitive rates, ensures adequate consumer
choice, and allows for unit turnover.
Elk River has a total of 54 subsidized units within two buildings and 244 affordable units
across five developments. The buildings feature a variety of unit types that cater to a wide-
spectrum of household types. There were four units vacant at the time of the survey for a
rate of 1.3%. A healthy income based rental market typically maintains roughly a 3.0%
vacancy rate.
Coachman Ridge (Tax-Credit) recently opened in November of 2015 with 52 units. All of the
units were leased prior to opening.
Low vacancy rates in all general occupancy rental products indicate pent-up demand for
additional rental housing in Elk River.
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MAXFIELD RESEARCH & CONSULTING, LLC.
EXECUTIVE SUMMARY
Senior Housing Market Analysis
There are eight senior housing facilities located in Elk River with a total of 412units. There
were three vacant rental units and one ownership unit for sale at the time of the survey.
This equates to a vacancy rate of 1.0%. This indicates a need for additional senior housing
units.
Guardian Angels by the Lake are the only facility that offers senior housing with services.
The development contains 60 assisted living units and 30 memory care units. The recent
expansion absorbed quickly and the units have remained steadily occupied.
For-Sale Housing Market Analysis
The average and median resale price of homes in Elk River was approximately $216,840 and
$209,975respectively as of June 2015. The median sales price over the last decade peaked
in 2005. From 2005 to 2011, median sales prices have declined by 44%. Since 2011, the
median sale price has recovered increasing by 59% through June 2015.
Home sales have remained relatively steady in Elk River with an average of roughly 400
homes annually in Elk River since 2010. Considering that Elk River has a supply of nearly
6,500 owned homes in 2010, this represents turnover of almost 6% of the owned homes
annually.
The median list price of homes for sale in Elk River was about $245,960 in June 2015. Based
on a median list price of $245,960, a household would need an income of about $63,225 in
order to afford to make monthly housing payments of about $1,245 (assuming a 10% down
payment, 3.75% 30-year fixed mortgage). A household with significantly more equity (in an
existing home and/or savings) could put more than 10% down and afford a higher priced
home. About 67.8% of Elk River households have annual incomes at or above $63,225.
As of July 2015, Elk River had a total of nearly 200 vacant lots within 25 subdivisions. All of
the subdivisions were platted between 2000 and 2014. Only 3% of Lots were platted after
2010.
The lot supply benchmark for growing communities is a three- to five-year lot supply. This
supply of lots is appropriate as it provides adequate consumer choice but minimizes
developers’ carrying costs. Given the number of existing platted lots and the annual
absorption of single-family lots over the past few years, we conclude that Elk River is
currently just under a three-year lot supply indicating the need for additional platted lots.
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MAXFIELD RESEARCH & CONSULTING, LLC.
EXECUTIVE SUMMARY
Housing Needs Analysis
Based on our calculations, demand exists for the following general occupancy product types
between 2015 and 2025:
Market rate rental 265 units
o
Affordable rental 133 units
o
Subsidized rental 44 units
o
For-sale single-family 601 units
o
For-sale multifamily 186 units
o
In addition, we find demand for multiple senior housing product types. By 2020, demand
for senior housing is forecast for the following:
Active adult ownership 0 units
o
Active adult market rate rental 77units
o
Active adult affordable 42units
o
Active adult subsidized 0 units
o
Congregate 102 units
o
Assisted living 47units
o
Memory care 28units
o
Recommendations and Conclusions
Based on the finding of our analysis and demand calculations, the chart on the following
page provides a summary of the recommended development concepts by product type for
the City of Elk River through 2025. Detailed findings are described in the Conclusions and
Recommendations section of the report.
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MAXFIELD RESEARCH & CONSULTING, LLC.
EXECUTIVE SUMMARY
RECOMMENDED HOUSING DEVELOPMENT
CITY OF ELK RIVER
2015 to 2025
No. of
Purchase Price/Pct.Development
Units
Monthly Rent Range¹of TotalTiming
Owner-Occupied Homes
Single Family 2
Entry-level>$225,000175-20031%2016+
Move-up$250,000 - $350,000320-35056%2016+
Executive$350,000+75-8013%2017+
Total570-630100%
Townhomes/Detached Townhomes/Twinhomes 2
Entry-level>$200,00050-6031%2018+
Move-up$200,000+110-13069%2016+
Total160-190100%
Total Owner-Occupied730-820
General Occupancy Rental Housing
Market Rate Rental Housing
Apartment-style$950/1BR - $1,450/3BR180-20078%2017+
Townhomes$1,200/2BR - $1,500/3BR50-6022%2016+
Total230-260100%
Affordable Rental Housing
Moderate Income 3
Apartment-style90-10073%2017+
Moderate Income 3
Townhomes30-4027%2016+
Total120-140100%
Total Renter-Occupied350-400
Senior Housing (i.e. Age Restricted)
Moderate Income 3
Active Adult Affordable Rental40-4227%2016+
Active Adult Market Rate Rental 4
$900/1BR - $1,200/2BR+50-6036%2019+
Independent Living (Congregate)$1,750/1BR - $1,950/2BR60-8045%2018+
Assisted Living$2,750/EFF - $4,000/2BR40-5029%2017+
Memory Care$4,000/EFF - $5,000/2BR26-2818%2017+
Total144-164100%
Total - All Units1,224-1,384
¹ Pricing in 2015 dollars. Pricing can be adjusted to account for inflation.
2
Recommendations include the absorption of some existing previously platted lots.
3
Affordablity subject to income guidelines per MHFA. See Table HA-1 for Sherburne County Income limits.
4 Alternative development concept is to combine active adult affordable and market rate active adult into mixed-income senior
community
Note - Recommended development does not coincide with total demand. Elk River may not be able to accommodate all recommended housing
types based on a variety of factors (i.e. development constraints, land availability, etc.)
Source: Maxfield Research & Consulting, LLC
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MAXFIELD RESEARCH & CONSULTING, LLC.
DEMOGRAPHIC ANALYSIS
Introduction
This section of the report examines factors related to the current and future demand for for-
sale and renter-occupied housing in Elk River, Minnesota. It includes an analysis of population
and household growth trends and projections, employment data, projected age distribution,
household income data and household tenure data for Elk River. A review of these
characteristics provides insight into the demand for various types of housing in Elk River over
the next decade.
Elk River Study Area Definition
The draw area for determining current and future housing demand in the City of Elk River is
based on traffic pattern orientation, proximity to other communities, interviews with local
officials and community stakeholders, natural and manmade geographic barriers, and our
knowledge of the draw areas for housing. The Study Area is defined as Elk River proper.
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MAXFIELD RESEARCH & CONSULTING, LLC.
DEMOGRAPHIC ANALYSIS
Elk River is the county seat in Sherburne County. Sherburne County is northwest of the Twin
Cities Metro Area and included in the Greater Metropolitan Statistical Area. The City of Elk
River is about 35 miles northwest of Minneapolis and40 miles southeast of Saint Cloud. The
main routes to Elk River are US Highways 169 and 10, along with State Highway 101
Elk River Location in Relation to Sherburne County and the Twin Cities Metro Area
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MAXFIELD RESEARCH & CONSULTING, LLC.
DEMOGRAPHIC ANALYSIS
Population and Household Growth Trends and Projections
The following graphs show population and household growth trends for the City of Elk River
from 1990 to 2025. Table D-1 presents data from 1990 to 2010 from the U.S. Census with
projections to 2025adjusted by Maxfield Research and Consulting LLCbased on data from local
building permit data, ESRI (a nationally recognized demographics provider), and the Minnesota
Department of Administration/Office of Geographic and Demographic Analysis.
According to the U.S. Census Bureau, the City of Elk River contained 22,974 persons and
8,080 households in 2010. Over the last decade, the Elk River’s population increased
significantly. Through 2010, the population increased by over 6,500 persons (40%), while its
household base grew by over 2,400 households (43%).
Elk River
Population Trends
1990 - 2020
1990
30,000
2000
25,000
Population
2010
25,632
20,000
2020
24,576
22,974
2025
15,000
10,000
16,447
11,143
5,000
0
Based on our review of growth trend projections for Elk River, current economic trends and
building permit history, we project that Elk River will continue to see growth through 2020,
but at a much lesser rate than the past two decadesdue to the Recession and slowdown in
the housing market.Between 2010 and 2020, the City of Elk River is projected to addnearly
2,100 persons (9%) and 850 households (10.5%).
Elk River Study Area
Household Trends
1990
1990 - 2020
10,000
2000
2010
9,253
8,000
8,822
Households
2020
8,080
6,000
2025
5,664
4,000
3,732
2,000
0
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MAXFIELD RESEARCH & CONSULTING, LLC.
DEMOGRAPHIC ANALYSIS
Household growth trends are a more accurate indicator of housing needs than population
growth since a household is, by definition, an occupied housing unit. Mentioned previously, a
comparison of historic and projected population and household growth rates shows that
household growth is projected to continue to outpace population growth in Elk River, due in
large part, to the aging of the baby boom population into their empty-nester years.
TABLE D-1
POPULATION AND HOUSEHOLD GROWTH TRENDS AND PROJECTIONS
ELK RIVER
1990 to 2025
Change
U.S. CensusProjected1990 to 20002000 to 20102010 to 2020
Estimated
199020002010201520202025No.Pct.No.Pct.No.Pct.
Population
Elk River11,14316,44722,97423,54724,57625,6325,30447.66,52739.71,6027.0
Sherburne County41,94564,41788,49999,975106,667111,95822,47253.624,08237.418,16820.5
Wright County68,71089,986124,700143,740155,175163,61021,27631.034,71438.630,47524.4
Households
Elk River3,7325,6648,0808,3538,8229,2531,93251.82,41642.77429.2
Sherburne County13,64321,58130,21234,31036,87439,0417,93858.28,63140.06,66222.1
Wright County23,01331,46544,47351,81556,33059,8508,45236.713,00841.311,85726.7
Sources: U.S. Census; Minnesota Planning; ESRI, Inc; Maxfield Research & Consulting, LLC
Population Age Distribution Trends
The following graphs show the age distribution of the City of Elk River population in 2000 and
2010, as well as estimates and projections for 2015 and 2020, respectively. Data provided in
Table D-2 for the 2000 and 2010 distributions are from the U.S. Census. Maxfield Research and
Consulting LLCcalculated the 2015 estimate and 2020projectionbased off of data obtained
from ESRI Inc., and theMinnesota Department of Administration. The following are key trends
in Elk River’s age distribution:
The majority of age groups in Elk River experienced strong growth in population from 2000
to 2010. The baby boomers ages 55 to 64 experienced the largest rate of growth increasing
by 109% (1,143 people) followed by the 45 to 54 age group increased by 80% (1,572 people,
the largest numerical growth).
Over the current decade, mostage groups are projected to continue to grow in all age
cohorts albeit a much lower rate than during the last decade. The younger age groups
below age 44 are projected to have slight increases as these groups consist mostly of the
baby bust generation.
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MAXFIELD RESEARCH & CONSULTING, LLC.
DEMOGRAPHIC ANALYSIS
Adult Population Age Distribution
Elk River
2000 to 2020
8,000
7,000
20002010
015
788
547
6,000
,
20152020
7
,
011
082
,
6
No. of Persons
578
727
6
5,000
,
,
6
,
,6
5
5
4,000
3,000
012
125
316
524
,
2,000
,
,
3147
3
1
021
865
,
395757
2
,
1,000
,
,
2
2
,
,
1
1
1
0
18-2425-4445-6465+
Age Cohort
The 55 to 64 age cohort is projected to increase by nearly 791 people (36%), while the 45 to
54 age group is projected to decline by 436 people (-12%). These older adults and seniors
may be considering downsizing into low-maintenance or independent living housing.
TABLE D-2
POPULATION AGE DISTRIBUTION
ELK RIVER
2000 - 2020
Number of PersonsChange
2000-20102010-2020
2000201020152020
No.No.No.No.No.Pct.No.Pct.
17 & under5,1466,5556,4446,4891,40927.4-66-1.0
18-241,3951,7572,0211,86536225.91086.2
25-342,4613,2043,2503,52274330.23189.9
35-443,1173,5843,2973,49346715.0-91-2.5
45-541,9633,5353,4293,0991,57280.1-436-12.3
55-641,0492,1922,5822,9831,143109.079136.1
65-746631,1881,5001,90452579.271660.3
75+6539591,0241,22130646.926227.3
Total16,44722,97423,54724,5766,52739.71,6027.0
Sources: U.S. Census Bureau; ESRI, Inc.; Maxfield Research & Consulting, LLC
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MAXFIELD RESEARCH & CONSULTING, LLC.
DEMOGRAPHIC ANALYSIS
Household Income
The estimated distribution of household incomes in Elk River for 2015 and 2020 is shown in the
following graphs. The data in Tables D-3 and D-4 was estimated by ESRI, Inc.The data helps in
ascertaining the demand for different housing products based on the size of the market at
specific cost levels.
The Department of Housing and Urban Development defines affordable housing costs for
families as 30% of a household’s adjusted gross income. Maxfield Research and Consulting LLC
uses a figure of 25% to 30% for younger households and 40% or more for seniors, since seniors
generally have lower living expenses and can often sell their homes and use the proceeds
toward rent payments.
A generally accepted standard for affordable owner-occupied housing is that a typical
household can afford to pay 3.0 to 3.5 times their annual income on a single-family home.
Thus, a $50,000 income would translate to an affordable single-family home of $150,000 to
$175,000. The higher end of this range assumes that the person has adequate funds for down
payment and closing costs, but does not have savings or equity in an existing home which
would allow them to purchase a higher priced home. The following are key points:
The median household income in Elk River in 2015was estimated to be about $78,305. Elk
River has a higher median income compared to the Twin Cities Metro Area at $67,795
Overall, incomes are expected to increase by about 10% between 2015 and 2020, or about
2.0% annually. This will result in the median income in Elk River increasing from $78,305 in
2015 to about $86,198 in 2020.
Between 2015 and 2020, the number of households will increase in all but two age groups
in Elk River. The largest numerical gain will be in the 65 to 74 age group, with a projected
increase of 228 households.
Non-Senior Households
In 2015, roughly 4% of the non-senior households (15 to 64 years of age) in Elk River had
incomes under $15,000 (248 households). All of these households would be eligible for
subsidized rental housing. Another 4% of Elk River’s non-senior households had incomes
between $15,000 and $25,000 (271households). Many of these households would qualify
for subsidized housing, but some could also afford “affordable” or older market-rate
rentals. If housing costs absorb 30% of income, households with incomes of $15,000 to
$25,000 could afford to pay $375 to $625 per month. Average monthly rents for one-
bedroom units in Elk River are about $862 (shown in Table R-1 in the Rental Housing
Analysis section).
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MAXFIELD RESEARCH & CONSULTING, LLC.
DEMOGRAPHIC ANALYSIS
Median incomes for households in Elk River peak at $96,191for the 35 to 44 age group in
2015. Households in this age group are entering or are in their peak earning years. The
majority of households (87%) in this age group are homeowners. By 2020, the median
income for the 45 to 54 age group is projected to increase to $102,476 a 6.5% increase.
The median resale price of homes in Elk River was $209,975throughJune 2015(see Table
FS-1). The income required to afford a home at this price would be about $60,000 to
$70,000, based on the standard of 3.0 to 3.5 times the median income (and assuming these
households do not have a high level of debt). In 2015, 70% (4,696 households) of Elk River’s
non-senior households had incomes greater than $60,000.
Growth and Income Trends by Age of Householder
Elk River
2015 to 2020
2,000$120,000
1,800
$96,191
$100,000
1,600
$90,274
No. of Households
1,400
Median Income
$79,696
$80,000
773
697
666
$75,720
1,200
882
449
,
630
540
$59,863
,
,
1
1
1,000 1$60,000
,
444,
,
,
1
1
1
1
,
$40,056
800
934
1
162
$40,000
2010
600
$45,303
,
693
1
817
2010
2015
400
$20,000
2010 Income
235
255
200
0$0
15-2425-3435-4445-5455-6465 -7475+
Age of Householder
Senior Households
The oldest householders were likely to have lower incomes in 2015. In Elk River, 5% of
households ages 65 to 74 had incomes below $15,000, compared to 10% of households age
75 and over. Many of these low-income older senior households rely solely on Social
Security benefits. Typically, younger seniors have higher incomes because they are still able
to work or are married couples with two pensions or higher Social Security benefits.
Generally, senior households with incomes greater than $30,000 can afford market-rate
senior housing. Based on a 40% allocation of income for housing, this translates to monthly
rents of at least $1,000. About 475 senior households (75+) in Elk River (49% of senior
households) had incomes above $30,000 in 2015. Seniors will often move from rural areas
to cities such as Elk River that provide more medical and other services.
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MAXFIELD RESEARCH & CONSULTING, LLC.
DEMOGRAPHIC ANALYSIS
TABLE D-3
HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER
ELK RIVER
(Number of Households)
2015 and 2020
2015
Total<2525-3435-4445-5455-6465 -7475+
Less than $15,00036425564247784670
$15,000 to $24,999455255643628579105
$25,000 to $34,99949938956662737788
$35,000 to $49,9991,04352213140170155126187
$50,000 to $74,9991,51854291236284254269130
$75,000 to $99,9991,6493126836345531316257
$100,000 or more2,8263046580780249117556
Total8,3532551,4441,6971,8821,449934693
<$25,0008195011285109163125175
$35,000+7,0351671,2371,5461,7111,213732430
Median Income$78,305$45,303$75,720$96,191$90,274$79,696$59,863$40,056
Twin Cities Med. Incom$67,795$34,820$58,146$81,972$88,167$80,649$58,179$37,464
2020
Total<2525-3435-4445-5455-6465 -7475+
Less than $15,00032524473332664777
$15,000 to $24,99933719412930537293
$25,000 to $34,99939731714437547288
$35,000 to $49,99989843175103107133129208
$50,000 to $74,9991,43548267201197239317167
$75,000 to $99,9991,8983432239342839423890
$100,000 or more3,5323661797183769128793
Total8,8222351,5401,7731,6661,6301,162817
<$25,00066243886262119119170
$35,000+7,7631611,3811,6671,5681,457971559
Median Income$86,198$50,168$85,936$102,476$100,124$90,002$68,761$44,478
Twin Cities Med. Incom$78,703$37,641$68,180$92,464$99,756$93,254$69,137$42,675
Change
Total<2525-3435-4445-5455-6465 -7475+
Less than $15,000-39-1-9-9-15-1217
$15,000 to $24,999-118-6-15-14-32-32-7-12
$25,000 to $34,999-102-7-24-22-25-19-50
$35,000 to $49,999-145-9-38-37-63-22321
$50,000 to $74,999-83-6-24-35-87-154837
$75,000 to $99,99924935430-27817633
$100,000 or more70661521643520011237
Total469-209676-216181228124
<$25,000-157-7-24-23-47-44-6-5
$35,000+728-6144121-143244239129
Median Income$7,893$4,865$10,216$6,285$9,850$10,306$8,898$4,422
Twin Cities Med. Incom$10,908$2,821$10,034$10,492$11,589$12,605$10,958$5,211
Sources: ESRI, Inc.; Maxfield Research & Consulting, LLC
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MAXFIELD RESEARCH & CONSULTING, LLC.
DEMOGRAPHIC ANALYSIS
Seniors who are able and willing to pay 80% or more of their income on assisted living
housing would need an annual income of $37,500 to afford monthly rents of $2,500, which
is about the beginning monthly rent for assisted living in rural areas of Minnesota. In Elk
River, there were only an estimated 430 older senior (ages 75 and over) households with
incomes greater than $37,500 in 2015. Seniors age 75 and over are the primary market for
assisted living housing.
Tenure by Age of Householder
The following graphs show the number of owner and renter households in Elk River by age
group as of 2010. The data in Table D-4 on Page 18 shows thepropensity of households to own
or rent their housing based on their age.
In 2010, 80% of the households in Elk River owned their housing. This is up from 78% in
2000. Homeownership rates have slightly declined for those ages 25 to 64 in Elk River due
to the declining housing market and the poor economic climate. Due to the lack of renter
units built over the decade we can assume that many of the single-family homes have been
converted to rental properties.
Elk River
Homeowners by Age of Householder - 2010
100%
87.3%
87.1%
84.6%
83.6%
1,500 Homeownership Rate
72.2%
80%
No. of Homeowners
62.7%
1,544
1,696
60%
40.6%
1,000
1,079
1,029
40%
No. of Homeowners
500
619
20%
Homeownership Rate
405
106
00%
Age of Householder
The proportion of renter households decreases as households age and rises again in the
senior years when rental housing is a more viable option than homeownership. In 2010,
60% of Elk River’s households between the ages of 15 and 24 rented their housing,
compared to householders ages 35 to 64 who were overwhelmingly homeowners, with no
more than 15% of the householders in each 10-year age cohort renting their housing.
Although the propensity for households ages 15 to 24 to rent their housing is higher, the 25
to 44 age groups had, by far, the largest number of renters with the 25 to 34 age group
having 396 renters and the 35 to 44 age group with 281 renters. These two age groups
account for slightly over 40% of all renter households.
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MAXFIELD RESEARCH & CONSULTING, LLC.
DEMOGRAPHIC ANALYSIS
Elk River
Renters by Age of Householder - 2010
500100%
No. of Renters
40080%
396
No. of Renters
Pct. Renters
59.4%
Pct. Renters
30060%
37.3%
27.8%
281
157
251
20040%
15.4%
16.4%
12.9%
12.7%
155
10020%
241
121
00%
Age of Householder
Between 2000 and 2010, the number of renter households increased in most age cohorts.
Over the decade, the number of renters increased at a growth rate 30%. With a limited
number of rental units developed through 2010, it’s clear that the number of single-family
rental homes has also increased due to the economy and decline in homeownership rate.
Household Type
The following graph shows the breakdown of the type of households in Elk River in 2000 and
2010. Table D-5 illustrates the data which is useful in assessing housing demand since the
household composition often dictates the type of housing needed and preferred.
From 2000 to 2010, Elk River observed the largest numerical increase in the number of
families that are married without children (830 households, or 52%). The increase in
households married without children can be attributed to couples waiting longer to have
children, and the baby boomers aging into empty nester years.
Persons Living Alone experienced the second highest numerical increase of 608 households
(highest growth rate of 62.5%) in Elk River during the 2000s. This could indicate an aging
senior population. As the frailty level of these seniors increases, they typically move out of
their homes in pursuit of housing with services. However, the recession has affected many
seniors, and their fears of the market can be affecting their decisions to move out of the
homes and into age-restricted housing.
Elk River also had significant increases in single-parent households (a gain of 378
households, or 51%). With only one income, these families are most likely to need
affordable or modest housing, both rental and for-sale.
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DEMOGRAPHIC ANALYSIS
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& CONSULTING
DEMOGRAPHIC ANALYSIS
MAXFIELD RESEARCH
DEMOGRAPHIC ANALYSIS
Roommate households had the second highest rate of growth in Elk River during the 2000s.
The number of roommates grew by a 55%, or 160 households. This, however, was the
lowest numerical increase of all groups. This reflects the trend in society of couples living
together before marriage and delaying having children until later in life, as well as other
non-family households “rooming up” and sharing housing costs during the Great Recession.
Tenure by Income
The following graph shows the number of renter households in Elk River by income cohort as of
2000 and 2013(5-year American Community Survey estimates). The data provided in Table D-6
is useful in that shows the housing options and preferences for households based on
affordability. The Department of Housing and Urban Development determines affordable
housing as not exceeding 30% of the household’s income. It is important to note however, that
the higher the income, the lower percentage a household typically allocates to housing. Many
lower income households, as well as many young and senior households, spend more than 30%
of their income, while middle-aged households in their prime earning years typically allocate
20% to 25% of their income.
As income increases, so does the rate of homeownership. The 2013 estimates for Elk River
indicates that 89% of those households earning $50,000 or more owned homes compared
to 56% for households with incomes between $35,000 and $49,999, 54% with incomes of
$25,000 to $34,999, and 50% of households with incomes of $24,999 or less owned their
housing. Many of these lower-income homeowners are seniors who live on fixed incomes
but have paid off of their mortgage.
Although, many of the lower-income households rent their housing, the largest number of
renters (397households or roughly 22% of all renters) have incomes between $35,000 and
$49,999followedclosely by those with incomes from $50,000 to $74,999 (374 households
or 21% of all renters). Should these households allocate 25% of their income on housing,
they could afford monthly rents of roughly $730 to $1,550 per month. The incomes near
$35,000 could afford rents offered at most rental developments in Elk River while higher
incomes could afford rents that are significantly higher than the rents at most market-rate
apartment units in Elk River.
Typically, renter households with incomes of $20,000 or less qualify for government-
subsidized housing, where rents are often based on sliding scale (30% of income). Based on
a 30% allocation of income, these households could afford monthly rents of no more than
$500. As of 2013, there were 312 households in Elk River with incomes of $20,000 or less
renting their housing.
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MAXFIELD RESEARCH & CONSULTING, LLC.
19
100%
90%80%70%60%50%40%30%20%10%
0%
$150K+
%
61
2
No. of Renters
$100-$149K
% Renters
51
%
6
$75-$99K
%
10
69
$50-$74K
%
374
22
Propensity to Rent by Household Income
$35-$49K
%
Year ACS)
397
44
$25-$34K
-
%
5
46
(
329
2013
Elk River,
$20-$24K
%
122
53
$15-$19K
116
%
50
$10-14K
%
42
98
.
& CONSULTING, LLC
$5-9K
%
44
22
DEMOGRAPHIC ANALYSIS
MAXFIELD RESEARCH
<$5K
76
%
62
4003503002502001501000
50
Households
DEMOGRAPHIC ANALYSIS
Renter households with incomes of between $20,000 and $35,000 are usually the market
for “affordable” rental projects with a shallow subsidy (housing with income restrictions and
rents slightly below market rents, such as those financed through Minnesota Housing
Finance Agency’s Section 42/Low-Income Housing Tax Credit program). These households
can typically afford housing costs of from $500 to $875 per month. As of 2013, there are an
estimated 451 renter households in Elk River with incomes between $20,000 and $35,000.
It is important to note that seniors are often able and willing, to allocate a larger share of
their income on rental housing that meets their needs since they no longer have to save for
retirement, their children’s education or major purchases (home, car, etc.). This is
particularly true in “senior” rental projects where support services and personal care
assistance are available. In fact, research has shown that, in assisted living projects, up to
50% of residents not only allocated all of their income but spent-down assets in order to
afford monthly housing and service costs.
TABLE D-6
TENURE BY HOUSEHOLD INCOME
ELK RIVER
2000 and 2013*
20002013*
OwnRentOwnRent
No.Pct.No.Pct.No.Pct.No.Pct.
Less than $5,0004659.73140.34637.77662.3
$5,000 to $9,9993325.69674.42856.02244.0
$10,000 to $14,9997323.324076.713658.19841.9
$15,000 to $19,99910045.212154.811549.811650.2
$20,000 to $24,99915958.211441.810947.212252.8
$25,000 to $34,99930153.126646.938253.732946.3
$35,000 to $49,99965183.113216.951356.439743.6
$50,000 to $74,9991,30088.117511.91,32678.037422.0
$75,000 to $99,9991,05995.6494.41,28590.014310.0
$100,000 to $149,99954598.491.61,58793.81046.2
$150,000 or more164100.000.070997.9152.1
Total4,43178.2 1,23321.86,23677.6 1,79622.4
* Data for 2013 is from US Census, American Community Survey (5-Year Estimate)
Source: US Census Bureau; Maxfield Research & Consulting, LLC.
Net Worth by Age of Householder
Table D-7 presents data on the net worth of households by age in Elk River as of 2015.
Information in the table is sourced from ESRI with adjustments for the estimated household
base as calculated by Maxfield Research &Consulting, LLC. Net worth is defined for an
20
MAXFIELD RESEARCH & CONSULTING, LLC.
DEMOGRAPHIC ANALYSIS
individual, the value of aperson's assets, includingcash, minus all liabilities. The amountby
which the individual's assets exceed their liabilities is considered the net worth of that person.
Data in the table is calculated as the total value of a household’s wealth less any debts
(unsecured or secured by assets). Overall, the median net worth of a household in Elk River
is about $215,064 and the average is $632,168.
There is a strong correlation between household age and net worth. Households under the
age of 25 have substantially less net worth (median of $20,584) compared to households
between the ages of 55 and 64 (median of $250,001). Net worthdeclines as adults age into
their senior’syears, which is likely due to these households spending down assets to
support their living costs following retirement?
TABLE D-7
NET WORTH BY AGE OF HOUSEHOLDER
ELK RIVER
(Number of Households)
2015
Age of Householder
TotalUnder 2525-3435-4445-5455-6465 -7475+
Less than $15,0001,0311013062031451335687
$15,000 to $34,999401531258354421626
$35,000 to $49,99926825906535281411
$50,000 to $99,99995740278255157956171
$100,000 to $149,99963814168140122856941
$150,000 to $249,9991,034142232562171618677
$250,000+3,77112106421,095861602359
Total 8,1002471,4011,6441,8261,405905671
Median Net Worth$215,064$20,584$75,767$171,652$250,001$250,001$250,001$250,001
Average Net Worth$632,168$45,783$158,099$445,138$735,457$983,767$1,151,689$578,786
Data Note: Net Worth is total household wealth minus debt, secured and unsecured. Net worth includes home equity, equity
in pension plans, net equity in vehicles, IRAs and Keogh accounts, business equity, interest-earning assets and mutual fund
shares, stocks, etc. Examples of secured debt include home mortgages and vehicle loans; examples of unsecured debt include
credit card debt, certain bank loans, and other outstanding bills. Forecasts of net worth are based on the Survey of Consumer
Finances, Federal Reserve Board. Detail may not sum to totals due to rounding.
Sources: ESRI; Maxfield Research & Consulting, LLC.
With significant residual net worth in later life many seniors will have sufficient funds to
cover the costs of living in senior housing alternatives. The segment of age 75+seniors with
little or no net worth will rely on public subsidies in order to receive housing and services
that meet their needs.
Households often delay purchasing homes and instead choose to rent until they acquire
sufficient net worth to cover the costs of a down payment and closing costs associated with
home ownership. This will be especially true in the short-term as tightening lending
requirements make mortgages with little or no down payments more difficult to obtain.
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MAXFIELD RESEARCH & CONSULTING, LLC.
EMPLOYMENT ANALYSIS
Employment Growth Trends
Since employment growth generally fuels household growth, employment trends are a reliable
indicator of housing demand. Typically, households prefer to live near work for convenience.
However, housing is often less expensive in smaller towns, making longer commutes attractive
for households concerned about housing affordability.
The graphs on the following page depict recent employment growth trends for Sherburne
County and are shown in Tables E-1 and E-2. Table E-1 presents resident employment data for
Sherburne County from 2000 through September2015. Resident employment data is
calculated as an annual average and reveals the work force and number of employed persons
living in the County. It is important to note that not all of these individuals necessarily work in
the County.
Table E-2 presents covered employment in Elk River from 2000 through 2014. Covered
employment data is calculated as an annual average and reveals the number of jobs in the
County, which are covered by unemployment insurance. Most farm jobs, self-employed
persons, and some other types of jobs are not covered by unemployment insurance and are not
included in the table. The data in both tables is from the Minnesota Department of
Employment and Economic Development. The following are key trends derived from the
employment data:
Labor Force/Resident Employment
Between 2000 and 2014, Sherburne County experienced an increase in both its labor force
and the number of employed residents. Between 2000 and 2014, the County’s labor force
increased by 11,855persons (31%), while the number of employed residents increased by
10,898 persons (30%). Since 2010, the labor force has increased by only 346 persons (less
than a 1% increase) compared to the total employed which increased by 1,646 persons
(3.6%). This has resulted in the unemployed person decreasing by 1,300 people (-31.5%)
After the peak year of 2008 however, both the labor force and employed residents declined
until 2014 in which the total employed surpassed 2008 with 47,001. The labor force in 2009
was slightly lower than it was in 2008 but has been steadily increasing from 2012.
The unemployment rate in Sherburne County was lowest (3.0%) at the beginning of the
period in 2000. The unemployment rate fluctuated from 2000 to 2006 but remained
relatively steady. Since 2006, the unemployment rate in Sherburne County has increased
rapidly to a high of 9.1% (2009) and was higher than both the State and the Nation from
2007 through 2009 (slightly less than national average in 2009). As of September 2015, the
unemployment rate has fallen to 4.2%, below the nation which is at 5.5%, yet remains
slightly higher than the State of Minnesota at 3.2%.
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MAXFIELD RESEARCH & CONSULTING, LLC.
EMPLOYMENT ANALYSIS
Up until 2006, the unemployment rate in Sherburne County has been on par with that of
the State of Minnesota. The rate remained roughly a full percentage point higher from
2006 through 2010. Since 2010, the unemployment rate difference compared to the State
of Minnesota has been shrinking and in 2014 was back to earlier figures. Both the County
and the State unemployment rates are below the national average.
LABOR FORCE AND EMPLOYED RESIDENTS
SHERBURNE COUNTY
2000 to 2015*
52,500
49,592
49,759
50,000
47,500
No. of Persons
47,646
46,531
45,000
42,500
40,000
Total Labor Force
37,904
Total Employed
37,500
36,748
35,000
Year
UNEMPLOYMENT RATE
SHERBURNE COUNTY
2000 to 2015*
10.0%
9.6%
9.1%
9.0%
Sherburne
Minnesota
8.0%
Unemployment Rate
U.S.
7.0%
7.8%
6.0%
5.5%
6.0%
5.1%
4.6%
5.0%
4.2%
4.0%
4.9%
4.3%
4.0%
3.2%
4.0%
3.9%
3.0%
3.0%
2.0%
2000200120022003200420052006200720082009201020112012201320142015*
Year
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MAXFIELD RESEARCH & CONSULTING, LLC.
EMPLOYMENT ANALYSIS
TABLE E-1
RESIDENT EMPLOYMENT (ANNUAL AVERAGE)
SHERBURNE COUNTY
2000 to 2015*
TotalMinnesotaU.S.
LaborTotalTotalUnemploymentUnemploymentUnemployment
YearForceEmployedUnemployedRateRateRate
200037,90436,7481,1563.0%3.2%4.0%
200139,49638,0011,4953.8%3.8%4.7%
200241,52439,5521,9724.7%4.5%5.8%
200343,31041,0902,2205.1%4.9%6.0%
200445,02542,7802,2455.0%4.7%5.6%
200546,52944,5132,0164.3%4.1%5.1%
200648,06445,9912,0734.3%4.0%4.6%
200748,73846,2992,4395.0%4.6%4.6%
200849,59246,5313,0616.2%5.4%5.8%
200949,29344,8214,4729.1%7.8%9.3%
201048,99044,8674,1238.4%7.4%9.6%
201148,84045,3553,4857.1%6.5%8.9%
201248,75645,7543,0026.2%5.6%8.1%
201348,90946,3092,6005.3%4.9%7.4%
201449,18647,0012,1854.4%4.1%6.2%
2015*49,75947,6462,1134.2%3.9%5.5%
Change 2000-1011,0868,1192,9675.4%4.2%5.6%
Change 2011-143461,646-1,300-2.7%-2.4%-2.7%
* 2015 data is the average from January through September.
Sources: Minnesota Workforce Center; Maxfield Research & Consulting, LLC
Covered Employment by Industry
Overall, the number of covered jobs in Elk River increased by 44%, or 3,870 jobs since 2000.
Covered jobs have remained relatively stable with few small declines from 2005 through the
economic recession. The City of Elk River is currently at its highest point over the period
with 12,737 jobs in 2014.
Nearly all of the growth has occurred in the Education and Health Services sector (61%).
Without the substantial growth in this industry, the City would still have experienced a gain
in covered employment, however at a much lesser rate over the period.
The Education and Health Services sector has overtaken the Trade, Transportation, and
Utilities sectorsfor the largest portion (29%, or 3,745jobs) of the jobs in Elk RIver as of 2014
The Trade, Transportation, and Utilities sector accounted for 22% (2,765jobs) of covered
jobs in the City.
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MAXFIELD RESEARCH & CONSULTING, LLC.
EMPLOYMENT ANALYSIS
The Education and Health Services industry has morethan doubled in jobs over the period,
adding 2,378jobs (174%). There were nineother sectors that experienced growth which
include by numerical growth: the top four were Public Administration which added 305jobs
(53.5%), Trade, Transportation, and Utilities which added 295 jobs (12%), Manufacturing
which added 232 jobs (319%), and Other Services which added 131 jobs (34.5%).
Of the 11 industry sectors in Elk River, twoof those experienced a loss in covered jobs over
the period (Information Sector and Financial Sector). The Construction industry has
regained its employment increasing to 610 jobs in 2014 from 389 in 2010.
Covered Employment Trends
Elk River
2000 through 2014
13,000
12,737
12,000
No. of Covered Jobs
11,000
10,946
10,000
10,298
9,000
8,867
8,000
200020012002200320042005200620072008200920102011201220132014
Year
TABLE E-2
COVERED EMPLOYMENT TRENDS
ELK RIVER
2000, 2005, 2010, and 2014
North American Industrial Classification System (NAICS)
Change
Average Number of Employees 2000 - 2014% of total
Industry2000200520102014No.Pct.2000200520102014
Natural Resources & Mining6413991912742.20.7%1.3%0.8%0.7%
Construction5447543896106612.16.1%7.3%3.6%4.8%
Manufacturing1,2021,0731,2431,43423219.313.6%10.4%11.4%11.3%
Trade, Transportation, and Utilities2,4703,0042,6022,76529511.927.9%29.2%23.8%21.7%
Information108635563-45-41.71.2%0.6%0.5%0.5%
Financial Services373476394330-43-11.54.2%4.6%3.6%2.6%
Professional and Business Services9007358811,33343348.110.1%7.1%8.0%10.5%
Education and Health Services1,3671,8023,0313,7452,378174.015.4%17.5%27.7%29.4%
Leisure and Hospitality8891,1028429809110.210.0%10.7%7.7%7.7%
Other Services38042454351113134.54.3%4.1%5.0%4.0%
Public Administration57072687587530553.56.4%7.0%8.0%6.9%
Totals8,86710,29810,94612,7373,87043.6100%100%100%100%
Source: Minnesota Workforce Center; Maxfield Research & Consulting, LLC.
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MAXFIELD RESEARCH & CONSULTING, LLC.
26
875
875
20052014
726
570
511
20002010
543
424
380
980
842
102,1
889
745,3
031,3
802,1
367,1
333,1
Covered Employment by Industry Sector
881
735
900
2014
330
394
/
Industry Sector
2010
476
Elk River
373
/
2005
63
55
/
63
2000
108
765,2
602,2
004,3
470,2
434,1
243,1
073,1
202,1
& CONSULTING, LLC.
610
389
754
544
91
ANALYSIS
91
139
MAXFIELD RESEARCH
64
4,0003,5003,0002,5002,0001,5001,0005000
EMPLOYMENT
No. of Covered Jobs
EMPLOYMENT ANALYSIS
Inflow/Outflow
The following graph shows the inflow and outflow of workers in Elk River. Outflow reflects the
number of workers living in the Citybut employed outside of the City while inflow measures the
number of workers that are employed in the City but live outside.
Technically, Elk River can be considered an exporter of workers, as the number of residents
coming into the Elk River (inflow) for employment is less than the number of residents leaving
the city for work (outflow). Elk River however has a significant number of employees coming
into the city for employment (approximately8,334 workers) and thus the city could also be an
importer ofjobs as well. The net difference between the net inflow to net outflow of workers
was that 976 workers left Elk River than commuted to the city.
City of Elk River: Inflow/Outflow
27
MAXFIELD RESEARCH& CONSULTING, LLC.
EMPLOYMENT ANALYSIS
Major Employer Interviews
Maxfield Research and Consulting LLC interviewed representatives of large employers in Elk
River in October2015. The interviews covered topics such as recent trends in job growth,
projected job growth, job types, and average hourly wages or annual salaries. Representatives
were also asked about housing needs of their employees. Interviews with the area’s largest
employers not only provide data regarding commercial job growth, but also reveal employer
attitudes and perceptions regarding housing demand in any given area. Table E-3 on the
following page shows the top employers located in Elk River from 2015, this data was collected
by Sherburne County and the City of Elk River Late 2014 and early 2015.
Employers continue to say that the Elk River housing market is not a hindrance to their
companies and hiring practices. There may be isolated issues with employees, but overall
housing is not an issue. Most production, manufacturing, and retail employees are hired
from the surrounding area and currently reside within the community or nearby area.
Employees typically commute roughly 20 to 30 minutes to Elk River and do not relocate to
Elk River.
Although a lack of transitional rental housing continues to exist due to very low vacancy
rates, any employee looking to relocate will typically commute while looking for a home to
purchase.
None of the companies interviewed had a relocation program in place. A relocation
program is not really neededto attract potential employees according to employers. In
addition, employees’ living choices range from the northwest Twin Cities Metro Area to St.
Cloud.
Although the majority of manufacturing/processing jobs are filled with area residents, most
professional and education jobs are filled by people from throughout Minnesota. The
community perception of Elk River is good. People are attracted to the strong school
district and level of service and retail that the area provides. Most often, housing is not a
deciding factor.
The largest employer in Elk River is the ISD-728, which employs 1,800 people throughout
the district. ISD-728 employment has increased employment over the past few years with
the growth in student enrollment. Although there was some decline in enrollment early
this decade, the district has avoided further cutbacks. Overall, housing has not been an
issue and there has not been much relocation of employees to Elk River.
The majority of employers interviewed noted stable in increasing employment over the past
three years. When asked about growth in the future, many indicated that they expect to
remain stable or experience slow growth over the next few years. Companies are remaining
cautious although the market continues to improve.
28
MAXFIELD RESEARCH& CONSULTING, LLC.
EMPLOYMENT ANALYSIS
TABLE E-3
MAJOR EMPLOYERS
CITY OF ELK RIVER
2015
EmployerProducts/ServicesCount*
ISD #728Education1,800
Sherburne CountyGovernment595
Guardian Angels of Elk River, IncNursing Care/Housing374
Wal-MartRetail Store354
Coborn's Grocery Store265
Elk River Nursing HomeNursing Care240
Great River EnergyElectric Utility210
Sportech, IncPlastics Thermoforming185
MenardsRetail Store173
City of Elk RiverGovernment183
Tescom CorporationPressure Control Devices156
Cornerstone Auto ResourceAutomobile Sales147
First National Financial ServicesFinancial Institution142
Avalon Home CareHome Health Care110
E & O Tool and Plastics, IncInjection Molding110
Cretex Companies, Inc.Precast Concrete Products109
The Bank of Elk RiverFinancial Institution107
Metal Craft Machine & EngineeringPrecision Machining 105
Cub FoodsGrocery Store100
Crystal Distribution, IncCustom Curb Adaptors100
The Home DepotRetail Store100
Morrell CompaniesProfessional Trucking Transport100
Alltool Pinnacle Design & Mfg.Metal Stamping99
Elk River FordAutomobile Dealership94
Acromix MachineryMfg. & Custom Machining90
Fairibault Foods, IncPouch Packaging84
Plaisted CO.Sand & Gravel80
Elk River MachineMachine Shop70
Wolf Material Handling SystemsBelt Conveyor Systems66
Brothers Fire ProtectionSprinklers-Fire Protection65
Select Transcription Inc.Medical Back Office62
Fairview ClinicHealth Care60
Allina HealthHealth Care55
Jim's MarketGrocery Store52
Quality Label , IncLabel Printing42
Total6,684
* Employee counts were provided by employers. Employee counts may also inlcudes jobs for that
company located outside of Elk River Proper.
Sources: Sherburne County; City of Elk River; Maxfield Research & Consulting, LLC
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MAXFIELD RESEARCH& CONSULTING, LLC.
EMPLOYMENT ANALYSIS
Typical wages for those working at large local retail businesses range from $9.00 to $14.00
per hour. These positions are prime candidates for rental housing. These jobs are
employed by residents currently living in the surrounding area of Elk River and commute
from their current place of residence if hired new.
Based on our interviews, professional service jobs typically start from around$35,000 to
$40,000 annually. Households with an income of $35,000 could afford monthly housing
costs of $875, based on spending on 30% of their gross income on housing.
Considering a household with an annual income of $35,000, and using the industry standard
that a household can afford to pay a mortgage that is 30% of their household income for
owner-occupied housing (assuming they have limited debt and not including equity), a
household with this income could afford a home priced at $87,500 to $105,000. Many
households in Elk River have two incomes, however. Using the same affordability standard,
a household with two persons each earning $35,000 annually could afford a home priced
from $175,000 to $210,000.
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MAXFIELD RESEARCH& CONSULTING, LLC.
HOUSING CHARACTERISTICS
Introduction
The variety and condition of the housing stock in a community provides the basis for an
attractive living environment. Housing functions as a building block for neighborhoods and
goods and services. We examined the housing market in Elk River by reviewing data on the age
of the existing housing supply; examining residential building trends since 2000; and reviewing
housing data from the American Community Survey that relates to Elk River.
Residential Construction Trends 2000 to Present
Maxfield Research obtained data from the City of Elk River on the number of building permits
issued for new housing units in Elk River over the past decade and through September2015.
Table HC-1 displays permits issued for single-family homes, townhomes/twin homes, and
multifamily dwellings of three or more units. Multifamily units include both for-sale
(condominium, twinhomes, and townhomes) and rental projects.
The City of Elk River issued permits for the construction of 2,704new residential units from
2000 to 2010. That equates to about 246 units annually since 2000. After 2010, Elk River
has added only 330 units, or 66 per year. Of the 330 units added, 16 of those units were
apartments unit replaced due to fire.
Through 2006, the City of Elk River issued 93% of the overall permitted units over the
decade. Over that period, residential construction averaged over 354 units per year.
However, beginning in 2007, which was the start of the Great Recession, building permits
started declining rapidly, and from 2007 to 2010 the City has averaged only 37 units per
year. Since 2007, 75% of the units (419) have been single-family homes, 137 units (25%) in
three multi-familyapartment buildings and the remaining (19 units) being
rowhomes/townhomes.
Since 2012, the City of Elk River has only issued an average of 71 residential permits (single-
family) and built an additional 52 unit affordable rental building. The City also added three
detached townhomes and replaced 16 apartment units that we destroyed by fire. This
indicates an improving housing market although much more conservative than in the
previous decade.
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MAXFIELD RESEARCH & CONSULTING, LLC..
HOUSING CHARACTERISTICS
Residential New Construction (Total Units)
Elk River
2000-2015*
300
350
285
Single-Family
# of Units from Permits Issued
300
235
228
Town/Twinhomes
250
195
194
Multi-family 3+ Units
172
162
150
145
200
104
150
98
86
82
76
6868
62
100
53
37
36
32
26
25
1818
16
15
1212
11
50
44
3
2
0
Year
(*2015 Data through October 6)
TABLE HC-1
RESIDENTIAL CONSTRUCTION
CITY OF ELK RIVER
ANNUAL BUILDING PERMITS ISSUED
2000 to 2015*
Permits Issued
Single-Family Townhome/Multifamily Total Housing
Twinhome
Homes3+ UnitsUnits
20001722686284
20011621876256
20021941832244
200328537228550
200430012235547
20051954145344
2006150298250
2007104012116
2008250025
2009160420
20101505368
2011110011
2012360036
2013820082
201468368139
2015620062
Total '00 to 101,6181179692,704
Total 11' to 15259368330
* Data through 10/6/15.
Sources: City of Elk River; Maxfield Research & Consulting, LLC
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MAXFIELD RESEARCH & CONSULTING, LLC..
HOUSING CHARACTERISTICS
American Community Survey
The American Community Survey (“ACS”) is an ongoing statistical survey administered by the
U.S. Census Bureau that issent to approximately 3 million addresses annually. The survey
gathers data previously contained only in the long form of the decennial census. As a result,
the survey is ongoing and provides a more “up-to-date” portrait of demographic, economic,
social, and household characteristics every year, not just every ten years. The most recent ACS
highlights data collected between 2009 and 2013. Tables HC-2 to HC-7 show key data for Elk
River Elk River.
Age of Housing Stock
The following graph shows the age distribution of the housing stock in 2000 based on data from
the U.S. Census Bureau and 2013 from the American Community Survey (5-Year). Table HC-2
includes the number of housing units built in Elk River, prior to 1940 and during each decade
since. The following are key points derived from Table HC-2.
In total, Elk River is estimated to have nearly 10,000 housing units, of which about 8,415
are owner-occupied and just over 1,300 are renter-occupied. In total, owner-occupied
housing units account for about 86.5% of Elk River’s total housing stock.
The highest number of homes was built during the period from 2000 to 2009. Overall,
roughly 27% of the total housing units were built during this period. Less than 10% of Elk
River housing stock was built before 1970. Some of these housing units may be dilapidated
and in need of replacement or repair.
AGE OF HOUSING STOCK
Elk River
2013*
2,750
2,500
612
2,250
,
2
2,000
107
039
No. of Units
1,750
,
,
2
1,500
2
1,250
224
1,000
253
,
750
224
1
162
500
624
378
250
0
Before1940s1950s1960s1970s1980s1990s2000sAfter
19402010
Decade Constructed
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HOUSING CHARACTERISTICS
Housing Units by Structure and Occupancy or (Housing Stock by Structure Type)
Table HC-3 shows the housing stock in Elk River by type of structure and tenure as of 2000 and
2013. Data for 2000 is from the U.S. Census and 2013data is from American Community
Survey.
The dominant housing type in Elk River is the single-family detached home, representing
about 73% of all housing units as estimated in 2013.
There are only about an estimated 840total housing units located in buildings of more than
10 units, or about 11% of the housing stock.
According to the data, an estimated 2% of the Elk River’s housing stock was vacant as of
2000. As shown in Table HC-4 on Page 37, vacant units increased to 5% in 2010. ACS data
for units in structure does not account for vacant units.
It is important to note, however, that the Census’ definition of vacant housing units
includes: units that have been rented or sold, but not yet occupied, seasonal housing
(vacation or second homes), housing for migrant workers, and even boarded-up housing.
Thus, the U.S. Census vacancy figures are not always a true indicator of adequate housing
available for new households wishing to move into the area.
Housing Stock By Units In Structure
Elk River
2013*
450
433
400
396
Owner Occupied
350
Renter Occupied
346
300
Vacant
Housing Stock
250
200
150
144144
100
110
363
72
75
25
759
50 17
,
39
5
0
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TABLE HC-3
HOUSING STOCK BY UNITS IN STRUCTURE
ELK RIVER
2000 and 2013*
20002013*
NoPct.NoPct.
Owner occupied:4,431100.06,236100.0
1, detached4,04391.25,36386.0
1, attached3197.275912.2
2 to 4 units400.900.0
5- to 9-plex70.200.0
10 to 19 units00.0250.4
20 to 49 units00.000.0
50 + units00.0721.2
Mobile home220.5170.3
Renter occupied:1,233100.01,687100.0
1, detached1159.339623.5
1, attached675.434620.5
2 to 4 units574.6754.4
5- to 9-plex705.71448.5
10 to 19 units29824.21448.5
20 to 49 units36529.643325.7
50 + units25220.41106.5
Mobile home90.7392.3
Total occupied:5,664100.07,923100.0
1, detached4,15873.45,75972.7
1, attached3866.81,10513.9
2 to 4 units971.7750.9
5- to 9-plex771.41441.8
10 to 19 units2985.31692.1
20 to 49 units3656.44335.5
50 + units2524.41822.3
Mobile home310.5560.7
Vacant/Vac. Rate:1182.0----
1, detached581.4----
1, attached4610.6----
2 to 4 units00.0----
5- to 9-plex33.8----
10 to 19 units00.0----
20 to 49 units112.9----
50 + units00.0----
Mobile home00.0----
* Data for 2013 is from US Census, American Community Survey (5-Year Estimate)
Sources: US Census Bureau, Maxfield Research & Consulting, LLC
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HOUSING CHARACTERISTICS
Housing Units by Occupancy Status & Tenure
Tenure is a key variable that analyzes the propensity for householders to rent or own their
housing unit. Tenure is an integral statistic used by numerous governmental agencies and
private sector industriesto assess neighborhood stability. TableHC-4 shows historic tenure
trends for 2000 andwithestimates for 2015 andprojections for 2020(ESRI, with adjustment by
Maxfield Research).
Even though both owner- and renter-occupied housing units increased substantially over
the decade, their percentage of total housing units decreased slightly due to an increased
number of vacant units. Owner-occupied units decreasedfrom 77% in 2000 to 76% in 2010
and renter-occupied units from 21% to 19%. Consequently, the number of vacant occupied
units was only 2% in 2000 while increasing to over 5% in 2010. Projections through 2020
indicate a stabilization of owner-occupied housing and vacant units.
TABLE HC-4
HOUSING UNITS BY OCCUPANCY STATUS & TENURE
ELK RIVER
2000 to 2020
Elk River
Year/OccupancyNo.Pct.
2000
Owner Occupied76.6
4,431
Renter Occupied21.3
1,233
Vacant2.0
118
Total100.0
5,782
2010
Owner Occupied75.8
6,478
Renter Occupied18.8
1,602
Vacant5.4
462
Total100.0
8,542
2015
Owner Occupied77.9
6,650
Renter Occupied19.9
1,703
Vacant5.4
457
Total103.1
8,810
2020
Owner Occupied75.4
7,012
Renter Occupied19.2
1,790
Vacant5.3
495
Total100.0
9,297
Sources: U.S. Census Bureau; ESRI; Maxfield Research & Consulting, LLC
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The percentages in Table HC-4 compared to Table D-6 on Page 23 are due to the additional of
vacant unit totals. Table D-6 does not account for vacant units and thus percentages are
slightly different.
Owner-Occupied Housing Units by Mortgage Status
Table HC-5 shows mortgage status and average values from the American Community Survey
for 2013(5-Year). Mortgage status provides information on the cost of homeownership when
analyzed in conjunction with mortgage payment data. A mortgage refers to all forms of debt
where the property is pledged as security for repayment of debt. A first mortgage has priority
claim over any other mortgage or if it’s the only mortgage. A second (and sometimes third)
mortgage is called a “junior mortgage,” a home equity line of credit (HELOC) would also fall into
this category. Finally, a housing unit without a mortgage is owned free and clear and is debt
free. The following key points summarize findings from Table HC-5.
Approximately 81% of Elk River homeowners have a mortgage. About 24% of homeowners
with mortgages also have a second mortgage and/or home equity loan. Comparatively,
about 66% of homeowners in the United States have a mortgage.
The average home value of a home with a mortgage from Elk River homeowners is
approximately $216,650. By comparison, the same value in the U.S. is about $263,629, or
22% higher than Elk River.
TABLE HC-5
HOUSING UNITS BY MORTGAGE STATUS
ELK RIVER
2013 (5-Year Estimate)
Elk River
Twin CitiesMN
Mortgage Status
No.Pct.Pct.Pct.
Housing units without a mortgage1,18419.024.230.4
Housing units with a mortgage/debt5,05281.075.869.6
Second mortgage only 423 6.85.64.7
Home equity loan only 990 15.915.312.6
Both second mortgage and equity loan 85 1.40.80.7
No second mortgage or equity loan 3,554 57.054.251.6
Total6,236100.0100.0100.0
Average Value by Mortgage Status
$216,650
Housing units with a mortgage$265,537$231,401
$256,762
Housing units without a mortgage$250,624$202,693
Sources: U.S. Census Bureau - 2013 ACS;
Maxfield Research & Consulting, LLC
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HOUSING CHARACTERISTICS
Owner-Occupied Housing Units by Value
Table HC-6 presents data on housing values summarized by nine price ranges. Housing value
refers to the estimated price point the property would sell if the property were for sale. For
single-family and townhome properties, value includes both the land and the structure. For
condominium units, value refers to only the unit.
Over one-third of the owner-occupied housing stock in Elk River is estimated to be valued
between $200,000 and $299,999 (36%).
The median and average owner-occupied home in Elk River is $206,300and $224,226,
respectively. Twenty-three percent of the Elk River’s home values are valued under
$150,000.
TABLE HC-6
UNITS BY VALUE
ELK RIVER
2013 (5-Year Estimate)
Elk River
Twin CitiesMN
Home Value
No.Pct.Pct.Pct.
Less than $50,000911.53.56.1
$50,000-$99,9993726.04.410.4
$100,000-$149,99994615.212.016.6
$150,000-$199,9991,55625.022.221.4
$200,000-$299,9992,22935.730.725.0
$3000,000-$499,99995215.319.414.8
Greater than $500,000901.47.85.7
Total6,236100.0100.0100.0
$206,300
Median Home Value$221,493
$187,900
$224,266
Average Home Value$261,926
$222,672
Sources: U.S. Census Bureau - 2013 ACS;
Maxfield Research & Consulting, LLC
Owner-Occupied Units by Value
Elk River - 2013 ACS (5-Year)
2,500
2,229
2,000
Hsg. Units
1,500
1,556
1,000
952
946
372
500
91 90
0
Less than$50k to$100k to$150k to$200k to$250k to$300k+
$50k$99.9k$149.9k$199.9k$249.9k$299.9k
Home Value
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HOUSING CHARACTERISTICS
Renter-Occupied Units by Contract Rent
Contract rent (also known as asking rent) provides information on the monthly housing costs
for renters. Contract rent is the monthly rent agreed to regardless of any utilities, furnishings,
fees, or services that may be included. Key findings from Table HC-7 follow.
The median and average contract rents in Elk River were $794 and $898, respectively.
Based on a 30% allocation of income to housing, a household would need an income of
about $31,760 to afford an average monthly rent of $794.
Approximately 34% of Elk River renters have monthly rents ranging from $500 to $749.
Another 35% of renters have monthly rents ranging from $750 to $999. Over 48% of
renters have monthly rents of $1,000 or greater.
Housing units without payment of rent (“no cash rent”) make up only 4% of Elk River
renters. Typically units may be owned by a relative or friend who lives elsewhere whom
allow occupancy without charge. Other sources may include caretakers or ministers who
may occupy a residence without charge.
TABLE HC-7
HOUSING UNITS BY CONTRACT RENT
ELK RIVER
2013 (5-Year Estimate)
Elk River
Twin CitiesMN
Contract Rent
No.Pct.Pct.Pct.
No Cash Rent483.62.74.8
Cash Rent1,27896.497.395.2
$0 to $249644.86.17.9
$250-$49914410.97.315.1
$500-$74944633.624.729.0
$750-$99946334.930.524.6
$1,000+63147.631.423.4
Total1,326100.0100.0100.0
$794
Median Contract Rent$835$734
$898
Average Contract Rent$887$784
Sources: U.S. Census Bureau - 2013 ACS;
Maxfield Research & Consulting, LLC
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RENTAL MARKET ANALYSIS
Introduction
MaxfieldResearch and Consulting LLC identified and surveyed larger rental properties of 16 or
more units in the Elk River. In addition, interviews were conducted with real estate agents,
developers, rental housing management firms, and others in the community familiar with Elk
River’s rental housing stock.
For purposes of our analysis, we have classified rental projects into two groups, general
occupancy and senior (age restricted). All senior projects are included in the Senior Rental
Analysis section of this report. The general occupancy rental projects are divided into three
groups, market rate (those without income restrictions), affordable, (those receiving tax credits
in order to keep rents affordable), and subsidized (those with income restrictions based on 30%
allocation of income to housing).
General-Occupancy Rental Projects
Our research of Elk River’s general occupancy rental market included a survey of 22 apartment
properties (16 units and larger) in October 2015. These projects represent a combined total of
931 units, including 633 market rate units and 298 affordable/subsidized units. At the time of
our survey, 45 market rate units and one affordable/subsidized units were vacant, resulting in
an overall vacancy rates of 7.1% for market rate units and 1.3% for affordable/subsidized. It is
important to note however, that 28 of the 45 market rate vacancies are located within Elk Park
Estates which has changed ownership and management. Excluding this property decreases the
vacancy rate to 3.0%. We were unable to gather complete information forthe propertyof Elk
Ridge Estates.
The overall market rate vacancy rate of 5.3%, excluding Elk Park Estates drops the vacancy rate
to 2.4% which is lower than the industry standard of 5% vacancy for a stabilized rental market,
which promotes competitive rates, ensures adequate choice, and allows for unit turnover. The
pent-up market indicates a possible need of additional rental housing for all major sectors of
the rental market: low-income, moderate-income, and market rate. Table RMA-1 summarizes
information on general occupancy projects surveyed. The following are key points from our
survey of these developments.
Market Rate
Granite Shores, converted to rental in 2012, is the newest market rate general occupancy
building built in nearly 20 years. Granite Shores contains a total of 67 units and was
originally built as a for-sale condominium in 2006, but struggled to sell units and went into
foreclosure. Granite Shores has the highest rents in Elk River, at $1,129 to $1,589 per
month for one-bedroom units, $1,299 to $1,539 per month for one-bedroom plus Den
units, and $1,429 per month for two-bedroom units. The monthly rents are about 40% to
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RENTAL MARKET ANALYSIS
50% higher than the other older market rate properties and had three vacancies at the time
of the survey.
One-bedroom monthly rents ranged from $675to $1,589 with rents per square foot from
$0.80 to $1.28. Two-bedroom monthly rents ranged from $725 to $1,429 with rents per
square foot from $0.69 to $1.38. Evans Meadows has six three-bedroom units that rent for
$1,965 per month ($1.31 per square foot).
Overall, the average price per square foot for units in Elk River is $0.93. The average price
per square foot rents for a efficiency unit is $1.16, $1.05 for a one-bedroom unit, $1.44 for a
one-bedroom plus den unit, $0.94 for a two-bedroom unit, and $0.90 for three-bedroom
units. The newest units built at Evans Meadows are renting at a price per square foot
ranging from $1.31 for three-bedroom units to $1.38 for one-bedroom units.
A common laundry room with coin-operated washers and dryers is available in all market
rate properties surveyed. Granite Shores has in-unit laundry and Tara Hills Estates has in-
unit hook-up for laundry. All of the properties surveyed have underground, attached, or
detached garages either included in the monthly rent or are available for an extra fee ($25
to $50 per month).
Affordable/Subsidized
We identified five affordable projects (244 units) which are financed through the Low
Income Housing Tax Credit (LIHTC) program, otherwise known as the Section 42 program.
The maximum income limit for residency at these projects is at 60% of the area median
income. Income limits are represented for both programs in Figures 1 and 2 on page 48.
We also identified two subsidized projects (54 units). Both are Rural Development
developments requiring rent of 30% of a resident’s adjusted gross income (AGI).
There have been three affordable developments built within the past 10 years. Coachman
Ridge is the most recent development which opened in November 2015. Coachman Ridge
was fully leased before the occupancy date. The other new affordable developments are
Jackson Place (32 units) which was built in 2007 in Downtown Elk River and The Depot at Elk
River Station (53 units) built in 2011 near the commuter rail station . The majority of the
subsidized and Tax-Credit properties were built 15 or more years ago.
All subsidized units were occupied and there were four vacant units in the affordable
properties as of October 2015 for a total vacancy rate of 1.3%. Typically, subsidized and
affordable rental properties should be able to maintain vacancy rates of 3% or less in most
housing markets. The low vacancy rates in the market indicate pent-up demand for
affordable and subsidized units and also are an indication of the current economic climate
in the area.
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MAXFIELD RESEARCH
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MAXFIELD RESEARCH
RENTAL MARKET ANALYSIS
TABLE RMA-2
COMMON AREA FEATURES/AMENITIES
EXISTING GENERAL OCCUPANCY RENTAL PROJECTS
CITY OF ELK RIVER
October 2015
Utilities and Parking
In Unit/Common Area Amenities
Projects
Market Rate Rental
Granite Shores Cent.YYYIUYYYNNYIIUG Included
Evans Meadows WYYYCNYYYYYIIIAG Included
Lions Park CAYSSCNNNYNNIIUG Indluded
Oak Crest WSNNCNNNNNNIIIDG Included
Ridgewood Manor WYSYCNNNNNNIIIDG Included
Tara Hills Estates WYYNHUNNNNNNIIDG Included
Elk Park Estates WYYNCNNNNNYIIIDG Included
Elk Ridge Estates WNNNCNNNNNNIIDG Included
Balmoral Apartments WYSYCNNNYNNIIDG$25
Elk Crossings WYNNCNYNNNNI IIDG$50
School Street WYNNCNYNNNNI IIDG$50
River Garden WYSSCNNNYNNIIIDG$50
Pineview WSYSCNNNNNNIIIDG$50
Lake Orono Estates W/SNSNCNNNNNYIIIDG$35
Affordable/Subsidized Rental
Coachman Ridge CAYYYIUYYYYNYIIIUG Included
The Depot of Elk River CAYYYIUYYYYNYIIIUG Included
Jackson Place CAYSYIUYYNNNNIIIUG Included
Dove Tree WYYYCNYNNNNIIIA/DG$45/$55
Lanesboro Heights WNYSHUNNNYNNIIDG$30
Dove Terrace WYSYCNYNNYNIIIDG$45
Auburn Place WYNNCNNNYNNIIIDG$40
Elk Ridge Manor CANNNCNNNYNNIIIDG Included
Note: Y=Available, N=Not Available; I=Included
CA=Central Air; W=Wall unit air; S=Some units; DG=Detached Garage; UG=Underground; AG=Attached Garage; O=Offstreet; IU=In-unit; HU=Hook-ups;
C=Common
Source: Maxfield Research & Consulting, LLC
Along with income limits for residents, the projects have maximum rents that are based on
a percentage of median income –usually 60% of median income. Rents at the affordable
projects range from $695to $800 for one-bedroom units, from $70 to $900 for two-
bedroom units, and from $899to $1,025 for three-bedroom units. These rents are similar
to many of the market rate projects, and there is likely some market overlap.
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RENTAL MARKET ANALYSIS
Elk River General Occupancy Rental Housing Locations
Maxfield Research & Consulting, LVC
Key:
60 + Units
40-59 Units
Market Rate Affordable
1.Granite Shores 14. The Depot at Elk River Station
21-39 Units
2.Evans Meadows 15. Jackson Place
Less than 20 Units
3.Lion’s Park 16. Dove Tree Apartments
4.Ridgewood Manor 17. Dove Terrace Apartments
5.Tara Hills Estates 18. Elk Ridge Manor
6.Elk Park Estates 19. Coachman Ridge
7.Elk Ridge Estates
8.Balmoral Apartments Section 8
9.Elk Crossings/School Street 20. Lanesboro Heights Townhomes
10.River Garden Apartments 21. Auburn Place
11.Pineview Estates
12.Lake Orono Estates
13.Oak Crest Apartments
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RENTAL MARKET ANALYSIS
Because the two newer Tax Credit properties were built in the last five years, the properties
offer more amenities than the other older affordable and subsidized properties amenities
include in-unit washer and dryers, dishwashers, central a/c units, and heated underground
garages. Unit and common area amenities are minimal at the older affordable and subsidized
projects. All projects feature attached or detached garages renting from $30 to $55 per month.
FIGURE 1
2015 MHFA/HUD Income Limits
Sherburne County
Income Limits by Household Size
1 phh2 phh3 phh4 phh5phh6phh7phh8phh
30% of median$18,210$20,790$23,400$25,980$28,080$30,150$32,220$34,320
50% of median$30,350$34,650$39,000$43,300$46,800$50,250$53,700$57,200
60% of median$36,420$41,580$46,800$51,960$56,160$60,300$64,440$68,640
Maximum Gross Rents by Bedroom Size
0 BR1BR2BR3BR
30% of median$455$487$585$675
50% of median$758$812$975$1,126
60% of median$910$975$1,170$1,351
Sources: MHFA; Maxfield Research & Consulting, LLC
Figure 1 above shows the maximum allowable incomes by household size to qualify for
affordable housing and maximum gross rents that can be charged by bedroom size in
Sherburne County. Comparing the maximum rents with the market rate rents in Table RMA-1
we can see that all rental buildings except for The Depot at Elk River Station offer rents below
60% of the AMI and most units are below 50% of the AMI. The majority of the properties with
rents below 50% of AMI are 20 years and older. The quick absorption occurring at Granite
Shores, which offers the highest rents in the market and is the newest rental development,
indicates the market is willing and able to afford higher market rents when buildings with
updated amenities are offered.
Subsidized Housing Assistance Program
In addition to subsidized apartments, Elk River also has a “tenant-based” subsidy called Housing
Choice Vouchers to help lower income households find affordable housing. The tenant-based
subsidy is funded by the Department of Housing and Urban Development’s (HUD), and is
managed by the St. Cloud Housing and Redevelopment Authority (HRA). Under the Housing
Choice Voucher program (formerly Section 8 Certificates and Vouchers) qualified households
are issued a voucher that the household can take to an apartment that has rent levels allowable
under HUD guidelines. The household then pays 30% of their adjusted gross income for rent
and utilities, and the Federal government pays the remainder of the rent to the landlord.
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RENTAL MARKET ANALYSIS
Applicants in Elk River may be eligible for the program if their income is below the current limits
shown in Figure 2, which are set by HUD on an annual basis.
Currently, the HRA is maxed out on the 873 vouchers they issue. Because the majority of these
households have very low incomes, very few could afford rental housing in Elk River without
the assistance of the voucher program. Demand for the program is high, as there is at least a
five year waiting list and currently stands at over 3,000 households. The funding for the
program is very low so the HRA cannot issue any more vouchers and the waiting list is currently
closed. The St. Cloud HRA manages their vouchers throughout St. Cloud, Benton, Sherburne,
and Wright Counties. The HRA could not provide the amount being used specifically in Elk
River.
FIGURE 2
Income Limits
Sherburne County
Housing Choice Voucher Program
FmailyExtremely Very
SizeLow-IncomeLow-Income
1-Person$18,200$30,350
2-Persons$20,800$34,650
3-Persons$23,400$39,000
4-Persons$26,000$43,300
5-Persons$28,410$46,800
6-Persons$32,570$50,250
7-Persons$36,730$53,700
8-Persons$40,890$57,200
Source: St. Cloud HRA
Pending Rental Developments in Elk River
Maxfield Research and Consulting LLC interviewed City staff in Elk River to determine pending
and planned rental developments. As of November 2015, there are no rental developments
planned within Elk River.
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RENTAL MARKET ANALYSIS
Rental Market Interview Summary
Interviews with area rental property managers, real estate agents, developers, and other
persons familiar with the rental market in Elk River were conducted to solicit their impressions
of the rental housing market in the community. The following are some key points from these
interviews:
The majority of property managers stated that rental demandhas remained strong and
vacancy rates remain low. Most of the issues continue to revolve around finding the right
qualified tenants. Although they are usually fully occupied, most market rate properties do
not maintain a waiting list, and if they do the list is relatively small. Managers state that
most vacancies will be filled relatively quickly over a few months. Most of the affordable
and subsidized properties maintain lengthy waiting lists due to the strong demand for low-
income rental units. The subsidized properties in particular have very long lists with
Lanesboro Heights stating a five-year wait.
If an apartment is not available in Elk River, the potential tenant will search in the
surrounding communities such as Rogers, Monticello, Albertville, Otsego, and Big Lake.
The majority of managers prefer not to divulge renter profiles and typically stated they had
a wide mix of tenants. Most of the managers indicated that the majority of tenants work
locally.
Most managers indicated that very few, if any renters utilized the commuter rail for work
purposes as most renters work in the local area.
Many of Elk River’s rental housing buildings are composed of larger-sized (30 to 60 units)
structures targeted at the low- to moderate-income market. The majority of these buildings
were built at least 20 year ago and do not feature a variety of contemporary amenities.
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SENIOR HOUSING ANALYSIS
Senior Housing Defined
The term “senior housing” refers to any housing development that is restricted to people age
55 or older. Today, senior housing includes an entire spectrum of housing alternatives, which
occasionally overlap, thus making the differences somewhat ambiguous. However, the level of
support services offered best distinguishes them. Maxfield Research and Consulting LLC
classifies senior housing projects into five categories based on the level of support services
offered:
Adult/Few Services; where few, if any, support services are provided, and rents tend to be
modest as a result;
Congregate/Optional-Services; where support services such as meals and light housekeeping
are available for an additional fee;
Congregate/Service-Intensive; where support services such as meals and light housekeeping are
included in the monthly rents;
Assisted Living; where two or three daily meals as well as basic support services such as
transportation, housekeeping and/or linen changes are included in the fees. Personal care
services such as assistance with bathing, grooming and dressing is included in the fees or is
available either for an additional fee or included in the rents.
Memory Care; where more rigorous and service-intensive personal care is required for people
with dementia and Alzheimer’s disease. Typically, support services and meal plans are similar
to those found at assisted living facilities, but the heightened levels of personalized care
demand more staffing and higher rental fees.
These five senior housing products tend to share several characteristics. First, they usually offer
individual living apartments with living areas, bathrooms, and kitchens or kitchenettes. Second,
they generally have an emergency response system with pull-cords or pendants to promote
security. Third, they often have a community room and other common space to encourage
socialization. Finally, they are age-restricted and offer conveniences desired by seniors,
although assisted living projects sometimes serve non-elderly people with special health
considerations.
The five senior housing products offered today form a continuum of care (see Figure 2 on the
following page), from a low level to a fairly intensive one; often the service offerings at one
type overlapwith those at another. In general, however, adult/few services projects tend to
attract younger, more independent seniors, while assisted living and memory care projects
tend to attract older, frailer seniors.
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SENIOR HOUSING ANALYSIS
CONTINUUM OF HOUSING AND SERVICES FOR SENIORS
Congregate Apartments w/ Optional
Townhome or
Single-Family HomeAssisted LivingNursing Facilities
Services
Apartment
Age-Restricted Independent Single-Family, Memory Care
Congregate Apartments w/
Townhomes, Apartments, Condominiums, (Alzheimer's and
Intensive Services
CooperativesDementia Units)
Fully Independent Fully or Highly
LifestyleDependent on Care
Senior Housing Product Type
Source: Maxfield Research & Consulting, LLC
Senior Housing in Elk River
As of October 2015, Maxfield Research identified nine senior housing developments in Elk
River. These projects contain a total of 412 units. Three of the projects are subsidized, while
the remaining six are market rate. Guardian Angels owns and manages seven of the nine
properties.
Table SH-1 provides information on the total units by product type and Table SH-2 shows
detailed information on each development including year built, number of units, unit mix,
number of vacant units, rents, and general comments about each project.
TABLE SH-1
SENIOR HOUSING UNITS BY TYPE
CITY OF ELK RIVER
October 2015
Active Adult/Few Services
OwnershipMR RentalAFF/Sub. RentalAssisted LivingMemory Care
12483115*6030
* All units are subsidized. There are no designated affordable senior units in Elk River.
Source: Maxfield Research & Consulting, LLC
Market Rate Senior Projects
We identified five existing adult/few service senior project in Elk River with a total of 207
units. Two of the developments are ownership (124 units) and the other three are rental
(83 units) buildings. Pullman Place is the newest market rate development built in 2005 and
is a cooperative ownership product with 65 units. The remaining products are 10 years and
older.
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MAXFIELD RESEARCH & CONSULTING, LLC.
53
HOUSING ANALYSIS
MAXFIELD RESEARCH INC.
SENIOR
54
HOUSING ANALYSIS
MAXFIELD RESEARCH INC.
SENIOR
55
Meals
Housekeeping
Laundry
Activities
Transportation
Guest Suite
Garage Parking
Exercise Rm.
Storage Lockers
Computer Ctr.
Library
Craft/Hobby Rm.
Dining Rm.
Community Rm.
Balcony/Patio
Walk-in Closet
W/D
Microwave Oven
Dishwasher
A/C
HOUSING ANALYSIS
MAXFIELD RESEARCH INC.
SENIOR
SENIOR HOUSING ANALYSIS
Elk River Senior Housing Locations
Maxfield Research & Consulting LLC
60 + Units
Key:
40-59 Units
Adult/Few-Services Ownership
21-39 Units
1.Pullman Place
Less than 20 Units
2.Elk Run Village
Adult/Few-Services Rental
Market Rate
3.Elk Terrace
4.Evans Park
5.Riverview Apartments
Subsidized
5. Riverview Apartments
6.Angel Ridge
7.Guardian Oaks
Assisted Living
8.Guardian Angels by the Lake
Memory Care
8. Guardian Angels by the Lake
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MAXFIELD RESEARCH & CONSULTING, LLC
SENIOR HOUSING ANALYSIS
Pullman Place is a limited equity cooperative. Cooperative products involve purchasing a
unit (or share) and then paying monthly fees which includes all utilities, of property and
commons areas, and future building maintenance. Pullman Place sold out fairly quickly
when it opened at the height of the real estate market. However current residents who
purchased during the peak have lost value in their units. All unit types currently sell fairly
quickly compared to 2012 and a few years before.
Elk Run Village is a for sale age-restricted townhome development for active adults. There
are a total of 52 homes along with a clubhouse. All of the units are one-level, two-
bedrooms with attached garages.
Monthly rent for the rental buildings ranges $517 for efficiency units at Riverview
Apartments to $1,109 for a two-bedroom unit at Evans Park. Unit sizes range from 320
square feet for an efficiency to 826 for a two-bedroom unit. Both of the market rate
buildings are about 30 years and older.
Subsidized Senior Housing Projects
There are a total of 138 units in two subsidized senior projects. As of October2015, all of
the subsidized units were occupied indicating pent-up demand for subsidized senior rental
units.
Overall, the unit sizes at the subsidized senior projects are considerably smaller than many
of the previously mentioned general-occupancy rental projects. One-bedrooms range from
540 to 688 square feet and two-bedrooms range from 734 to 800 square feet.
Typically subsidized senior housing offers limited to no amenities. However Guardian
Angels has developed Angel Ridge and Guardian Oaks with common area amenities such as
a grocery store, gift shop, beauty salon, dining room, community room, extra storage space,
and coffee shop. Personal care services are also available at an extra cost along with
scheduled activities.
Subsidized senior housing offers affordable rents to qualified lower income seniors and
handicapped/disabled persons. Typically, rents are tied to residents’ incomes and based on 30
percent of adjusted gross income (AGI), or a rent that is below the fair market rent. For those
households meeting the age and income qualifications, subsidized senior housing is usually the
most affordable rental option available.
Senior Housing with Services
There is one facility in Elk River that offers assisted living and memory care services.
Guardian Angels by the Lake is a 90 unit development opened in 1998 and recently
57
MAXFIELD RESEARCH & CONSULTING, LLC
SENIOR HOUSING ANALYSIS
expanded in 2012. A new 30 unit memory care wing was added in 2012 and the former 13
unit memory care wing in the original building, have been converted to assisted living.
Personal care services are provided a-la-carte for both assisted living and memory care. The
base fee included weekly housekeeping and linens. Assisted living included two meals per
day and memory care includes three meals per day.
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MAXFIELD RESEARCH & CONSULTING, LLC
FOR-SALE MARKET ANALYSIS
Introduction
MaxfieldResearch and Consulting LLC analyzed the for-sale housing market in Elk River by
analyzing data on single-family and multifamily home sales and active listings; identifying
pending for-sale developments; and conducting interviews with local real estate professionals,
developers and planning officials.
Overview of For-Sale Housing Market Conditions
Table FS-1 presents home resale data on single-family and multifamily housing in Elk River from
2000 through June2015. The data was obtained from the Regional Multiple Listing Services of
Minnesota and shows annual number of sales, median and average pricing, average days of
market, cumulative days on market, and percentage of sales that are lender-mediated (i.e.
short-sale or foreclosure). It should be noted that lender-mediated sales were not categorized
until July 2008 and the cumulative days on market were not calculated until 2006.
Table FS-2 breaks down resale activity from Table FS-1 into single-family and multifamily
resales. The following are key points observed from our analysis of this data.
Like across the Twin Cities Metro Area and the nation, pricing peaked in 2005 & 2006 at the
height of the real estate boom. The average and median sales price plateaued at roughly
$254,000 and $234,900 respectively. For comparison, the Twin Cities Metro Area median
sales priced peaked at $230,000 in 2006.
Between 2000 and 2005, the median sales price increased annually from $159,000 to
$234,900, a gain of 48%. However, from 2005 to 2010the median sales price declined to
$160,000 (-32%). Since 2010, home resale prices have increased significantly rising to
$209,975 (31%).
Sales prices increased between 2009 and 2010, mostly a result of the first-time homebuyer
tax credit that was available in the second half of 2009 through September 2010. The tax
credit also spurred transaction activity, resulting in nearly 400 sales in 2009 (17% over 2008
sales). However, the sales price was at its lowest in 2009 at $132,000. Since 2011; the
median sales prices has rising annually and is at $209,975 (+59%).
The average number of resales has averaged about 405 sales annually during the last
decade. So far through June 2015, the number of sales has averaged 391. The years of
2013 and 2014 showed substantial improvement in sales from early this decade.
The number of lender-mediated properties accounted for over one-half of all home
transactions between 2008 and 2012; peaking in 2010 and 2011 at 70%. Since 2012, the
number has come down substantially and was at about 12% through the first half of 2015.
59
MAXFIELD RESEARCH & CONSULTING, LLC
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CONSULTING, LLC
SALE MARKET ANALYSIS
&
MAXFIELD RESEARCH
-
FOR
61
Resales
700600500400300200100
0
975
,
840
209
272
,
216
$
466
$
445
390
Average Sold Price
000
781
,
,
382
132
145
$
$
2015
313
to
2000
397
340
-
Sale Resales
Median Sold Price
Year
360
038
900
439
,
254,
-
234
Elk River For
$
519
$
611
Resales
466
435
000
CONSULTING, LLC
324
769
,
159
,
172
SALE MARKET ANALYSIS
$
353
$
$300,000$250,000$200,000$150,000$100,000$50,000$0
&
MAXFIELD RESEARCH
Sales Price
-
FOR
FOR-SALE MARKET ANALYSIS
TABLE FS-2
SINGLE-FAMILY AND MULTIFAMILY RESIDENTIAL SALES
CITY OF ELK RIVER
2000 through 2015 (1st Half)
MedianAverage
NumberSelling%Selling%
Yearof SalesPriceChg.PriceChg.
Single-Family
2000318$162,400--$175,779--
2001288$174,7007.6%$191,4338.9%
2002358$199,92514.4%$219,40114.6%
2003360$222,00011.0%$244,36611.4%
2004470$239,2507.8%$256,3514.9%
2005411$251,9005.3%$272,3836.3%
2006325$251,500-0.2%$273,7850.5%
2007252$249,230-0.9%$260,260-4.9%
2008262$205,950-17.4%$220,158-15.4%
2009308$172,950-16.0%$183,223-16.8%
2010235$181,0004.7%$193,9315.8%
2011273$160,000-11.6%$166,955-13.9%
2012293$175,0009.4%$181,4398.7%
2013350$189,4508.3%$202,38511.5%
2014353$214,90013.4%$225,62311.5%
2015^208$227,2505.7%$234,6924.0%
Pct. Change
00' - 14'11.0%32.3%28.4%
Multifamily*
200035$142,580--$145,163--
200136$146,4002.7%$154,2276.2%
200277$152,1974.0%$167,8038.8%
2003106$162,2006.6%$172,2222.6%
2004141$167,1233.0%$179,2534.1%
2005108$172,7753.4%$184,2272.8%
2006114$167,025-3.3%$176,956-3.9%
2007108$164,995-1.2%$169,623-4.1%
200878$132,500-19.7%$137,021-19.2%
200989$100,000-24.5%$107,015-21.9%
201078$107,4427.4%$110,5553.3%
2011109$90,000-16.2%$92,842-16.0%
201297$105,00016.7%$106,74615.0%
201395$117,50011.9%$119,31311.8%
2014113$135,00014.9%$150,57026.2%
2015^64$146,5008.5%$158,8185.5%
Pct. Change
00' - 14'222.9%-5.3%3.7%
^2015: Sales from January to June
* Multifamily includes twinhomes, townhomes, and condominiums (cooperatives are typically
not listed in the MLS)
Source: Regional Multiple Listing Service of MN; Maxfield Research & Consulting, LLC
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MAXFIELD RESEARCH & CONSULTING, LLC
63
250500
2015^
,,
227146
$$
000
Multifamily 2014
,
135
900
$
500
,
2013
214
,
117
$
450
$
,
000
189
000
2012
,
105
$,
175
Single-Family
$
000
$
000
,2011
160
,
90
$
$
2015
000442
2010
,
,
181107
to
$
$
000
2000
2009
950
,
100
,
172
$
Median Resale Values in Elk River:
950500
$
230
2008
,,
205132
,
249
Year
$$
995
$
2007
,
164
500
$
025
,
251
2006
,
167
$
$
900775
2005
,,
251172
$$
250123
2004
,,
239167
$$
000
2003
,
222
200
$
925197
,
162 2002
,,
199152
$
$$
& CONSULTING, LLC
700400
2001
,,
174146
$$
580
SALE MARKET ANALYSIS
400
2000
,
,
142
162
$
$
$275,000$250,000$225,000$200,000$175,000$150,000$125,000$100,000$75,000
MAXFIELD RESEARCH
Medain Value
-
FOR
FOR-SALE MARKET ANALYSIS
Single-family housing types accounted for about 90% of all sales since 2000. Multifamily
resales were highest in 2007 when they accounted for 30% of total sales.Since 2008,
multifamily home sales have remained relatively stable accounting for roughly 24% of total
sales
During the real estate boom, multifamily housing priced closely to single-family housing and
sold for about 12%to 25%less than a single-family home. However, during the later-half of
the last decade and early part of this decade multifamily pricing decreased substantially and
was priced about 44% lower in 2011. The gap between the housing types is slowly closing
with multifamily homes priced currently 35% lower than single-family homes.
Home Resales by Price
Table FS-3 shows the distribution of sales within nine price ranges from resales in 2014. The
graph on the following page visually displays the sales data.
Homes pricedfrom $150,000 to $249,999accounted for 58% of totalsingle-family home
resales in 2014. Conversely, homes priced under $100,000 and over $400,000 accounted
for less than 5% of resales.
Multifamily homes priced from $100,000 to $150,000 accounted for 59% of resales in 2014.
Another 21% priced from $150,000 to $199,999 and 16% from $200,000 to $249,999.
There were no multifamily homes sold over the price of $250,000.
TABLE FS-3
HOME RESALES BY SALES PRICE & PRODUCT TYPE
CITY OF ELK RIVER
2014
Single-familyMultifamilyCombined
Price RangeNo.Pct.No.Pct.No.Pct.
Under $100,00072.0%43.5%112.4%
$100,000 to $149,9993911.0%6759.3%10622.7%
$150,000 to $199,99910429.5%2421.2%12827.5%
$200,000 to $249,99910128.6%1815.9%11925.5%
$250,000 to $299,9994412.5%00.0%449.4%
$300,000 to $349,9993710.5%00.0%377.9%
$350,000 to $399,999123.4%00.0%122.6%
$400,000 to 499,99982.3%00.0%81.7%
$500,000+10.3%00.0%10.2%
Total353100.0%113100.0%466100.0%
Sources: Regional Multiple Listing Service of Minnesota, Maxfield Research & Consulting, LLC
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MAXFIELD RESEARCH & CONSULTING, LLC
FOR-SALE MARKET ANALYSIS
Overall, 75% for all home resales in 2014 were priced from $100,000 to $249,999. Less than
3% of home are sold for less than $100,000 and only 4.5% sold for more than $350,000.
Based on the median price of $210,000 in Elk River as of the first half of2015, a household’s
monthly payment (assuming 10% down and principal/interest, insurance, taxes, and 4%
mortgage interest rate) would be about $1,350. The income required to afford a home at
this price would be about $54,000based on purchasing a home utilizing 30% of their
adjusted gross income (and assuming they do not have a high level of debt or existing
equity). In 2015, 74% (4,964 households) of Elk River’s non-senior households had incomes
greater than $54,000, meaning that three-quarters of non-senior households in Elk River
can afford a median-priced home in the city.
Resales by Price Point & Type: 2014
90.0%
80.5%
80.0%
SFMF
70.0%
60.0%
Pct. of Sales
50.0%
41.1%
40.5%
40.0%
30.0%
15.9%
20.0%
13.9%
10.0%
3.5%
2.3%
2.0%
0.3%
0.0%
<$100k$100k-$200k$200k-$300k$300k-$400k$400k-$500k$500k+
Sales Price
Home Resales per Square Foot (“PSF”)
Table FS-4on the following page shows the distribution of sales from 2005 to June 2015. Data
is provided the existing homes and new construction in Elk River. The graph on the following
page visually displays the sales data.
The median and average price per square foot has declined significantly since 2005. The
median price per square foot was $122 in 2005 declining to its lowest point in 2011 at $69
per square foot (-43%). Since 2011 the price per square foot has steadily increase to $96
per square foot (39%) as of June 2015.
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MAXFIELD RESEARCH & CONSULTING, LLC
FOR-SALE MARKET ANALYSIS
Before the housing bust and the Great Recession, the price per square foot for existing
home was about 10% to 20% less than new home construction.In 2007, the price per
square foot between the two was exactly the same. Since 2007, price per square footfor
new home construction has been considerably higher. The highest difference occurring in
2012 when the new home construction was 71% higher. New home construction is
currently 50% higher as of June 2015.
TABLE FS-4
HOUSING SALES PER SQUARE FOOT (PSF)
ELK RIVER
2005 to June 2015
MedianAvg.Existing HomeNew Const.
Year
PSFPSFMedian PSFMedian PSF
2005$122$131$116$140
2006$117$126$114$127
2007$113$121$113$113
2008$92$98$90$118
2009$79$82$76$103
2010$82$85$79$107
2011$69$72$68$111
2012$76$80$76$130
2013$86$92$84$130
2014$94$98$91$136
2015*$96$102$93$140
* Through June 2015
Source: Regional Multiple Listing Service of MN, Maxfield Research & Consulting, LLC
Elk River Sales per Square Foot (PSF)
$140
Median PSFAvg. PSF
$
$120
131
$
$126
$
122
$
121
117$
$100
113
$
$$
102
$
98$98
$$
96
$80
94
9292
PSF
$
$
$$86
85
$
$
8282
$80
79
$
76
$60
$
72
69
$40
$20
$0
20052006200720082009201020112012201320142015*
Year
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MAXFIELD RESEARCH & CONSULTING, LLC
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For comparison, the median PSF cost for housing in the Twin Cities is $113 PSF for an
existing home and $152 PSF for new construction. Existing construction is about 18% less
than the Twin Cities median; however new constructionis only about 8% less PSF than the
Twin Cities median.
Current Supply of Homes on the Market
To more closely examine the current market for available owner-occupied housing in Elk River,
we reviewed the current supply of homes on the market (listed for sale). Tables FS-5 through
FS-8homesshows currently listed for sale in Elk River. The data was provided by the Regional
Multiple Listing Services of Minnesota and is based on active listings in August 2015. MLS
listings generally account for the vast majority of all residential sale listings in a given area.
Table FS-5 shows the number of listings by property type (i.e. single-family,
townhome/twinhome, or condominium) while Table FS-6 shows listings by home style. The
following points are key findings from our assessment of the active single-family and
multifamily homes listed in Elk River.
About 150 homes were listed for sale in Elk River as of August 2015. Single-family homes
accounted for 73% of all active listings. The remaining listings are townhomes (27%). There
were no condominiums listed.
The median list price in Elk River was $245,960 for single-family homes and $215,725 for
multifamily homes). The median sale price is generally a more accurate indicator of
housing values in a community than the average sale price. Average sale prices can be
easily skewed by a few very high-priced or low-priced home sales in any given year, whereas
the median sale price better represents the pricing of a majority of homes in a given
market.
Based on a median list price of $245,960, a household would need an income of about
$63,225 in order to afford to make monthly housing payments of about $1,581 (assuming a
10% down payment, 4.00% 30-year fixed mortgage). A household with significantly more
equity (in an existing home and/or savings) could put more than 10% down and afford a
higher priced home. About 67.8% of Elk River’s non-senior households have annual
incomes at or above $63,225.
About 21% of listings in Elk River are priced under $175,000 and none of those listings are
priced under $100,000. Homes priced from $200,000 to $299,999 account for 45% of those
listed in August 2015. Higher priced homes ($300,300 to $399,999) consist of 21% of the
listings and those $400,000 constitute 7%.
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FOR-SALE MARKET ANALYSIS
The majority of multifamily listings (44%) are priced between $200,000 and $249,999 and
between $125,000 and $174,999 (44%). For single-family listings, 16.5% are priced
between $150,000 and $199,999, 43% are priced between $200,000 and $299,999, and
28% are between $300,000 and $399,999.
TABLE FS-5
HOMES CURRENTLY LISTED FOR-SALE
CITY OF ELK RIVER
August 2015
1
Single-FamilyMultifamily
Price RangeNo.Pct.No.Pct.
< $99,99900.0%00.0%
$100,000 to $149,99954.6%922.0%
$150,000 to $174,99987.3%1024.4%
$175,000 to $199,999109.2%00.0%
$200,000 to $249,9992018.3%1843.9%
$250,000 to $299,9992724.8%37.3%
$300,000 to $349,9991917.4%12.4%
$350,000 to $399,9991211.0%00.0%
$400,000 and Over87.3%00.0%
109100%41100%
Minimum$114,900$104,900
$625,900$328,350
Maximum
Median$279,900$215,725
Average$285,456$197,080
1
Includes townhomes (attached & detached), twinhomes, and
condominiums
Sources: Regional Multiple Listing Service of MN
Maxfield Research & Consulting, LLC
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Elk River Active Listings - August 2015
35
31
Single-FamilyMultifamily
30
27
25
20
# of Listings
18 18
20
15
10
9
8
10
5
3
5
1
0
Under $100k$100k to$150k to$200k to$250k to$300k to$400k+
$149.9k$199.9k$249.9k$299.9k$399.9k
List Price
TABLE FS-6
ACTIVE LISTINGS BY HOUSING TYPE
ELK RIVER
August 2015
Property TypeListingsPct.
Single-family10972.7%
Townhome/Twinhome4127.3%
Condominium00.0%
Total150100.0%
Sources: Regional Multiple Listing Service of MN; Maxfield
Research & Consulting, LLC
The majority of active single-family listings are among one-story and two-story housing
types with 33% and 32%, respectively. The remaining types are distributed fairly evenly.
Detached townhomes comprise the majority of current townhome listings (49%). Side-by-
side townhomes are the next largest type townhome listing at 39%). There are only a few
twin home and quad townhomes listed.
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TABLE FS-7
ACTIVE LISTINGS BY HOUSING TYPE
ELK RIVER
August 2015
Avg. List Avg. Home SizeAvg. List PriceAvg. Age
Property TypeListingsPct.PriceSq. Ft.Per Sq. Ft.of Home
Single-Family
One story3633.0%$283,2752,467$1151986
1.5-story32.8%$176,5001,651$1071944
2-story3532.1%$314,9792,795$1132001
Modifed 2-story109.2%$358,4703,310$1081999
Split entry/Bi-level109.2%$213,0821,832$1161995
3-level split54.6%$231,9002,201$1051990
4 or more split-level109.2%$248,8002,442$1021991
Total109100.0%$285,4562,554$1121992
Townhomes/Twinhomes
Detached Townhomes2048.8%$244,0981,605$1522015
Twin Homes49.8%$152,6311,313$1161996
Side-by-side1639.0%$151,1191,526$992003
Quad12.4%$169,9001,850$922006
Total41100.0%$197,0801,552$1272008
Condominiums/Cooperatives
Condominium 100.0%
Total0100.0%$0$00
Total150$261,3002,280$1151997
Source: Regional Multiple Listing Service of MN; Maxfield Research & Consulting, LLC
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Average List Price by Type
$350,000$140
Avg. List PricePSF
$127
$300,000$120
$116
$115
$112
$107
$
$103
283
$250,000$100
$
324
Avg. List Price
,
275
$
243
,
644
$200,000$80
$
,
PSF
167
213
$
197
,
082
$
$150,000$60
176
,
080
,
500
$100,000$40
$50,000
$20
$0$0
1 story1.5-story2 story+Split entry3-level split+Townhomes
Housing Type
Listings by Housing Type - Elk River
Townhomes
27.3%
3-level split+
10.0%
Hsg. Type
Split entry
6.7%
2 story+
30.0%
1.5-story
2.0%
1 story
24.0%
0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%
Pct.
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TABLE FS-8
ACTIVE LISTINGS BY YEAR BUILT
ELK RIVER
August 2015
Number ofPct.Avg.
DecadeListingsListingsList Price
1900 to 190910.7%$124,900
1910 to 191910.7%$169,900
1920 to 192910.7%$139,100
1930 to 193921.3%$142,400
1940 to 194900.0%n/a
1950 to 195921.3%$165,000
1960 to 196910.7%$249,900
1970 to 1979138.7%$227,815
1980 to 19891711.3%$274,012
1990 to 19992617.3%$253,008
2000 to 20095134.0%$279,088
2010+3523.3%$270,425
Subtotal150100.0%
Source: Regional Multiple Listing Service of MN, Maxfield
Research & Consulting LLC
Listings by Decade Built: Elk River
60
51
50
40
35
30
26
17
20
13
10
2 2
1 1 1 1
0
0
1900s1910s1920s1930s1940s1950s1960s1970s1980s1990s2000s2010s
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Elk River Lot Supply
TablesFS-9, FS-10, and FS-11 showan inventory of lots within platted subdivisions in Elk River.
The table includes information on the year the subdivision was platted, the total number of lots
platted, number of lots developed, lots available, and type of lot. The data in Tables FS-9 and
FS-10 was provided by Metrostudy (a nationally recognized firm providing data for the
residential housing market). The data in Table FS-11 was provided by Sherburne County.
The following terms are used in the lot inventory tables:
Annual Starts and Closings: The sum of activity for the most recent four quarters.
Closing: Defined as when a “move in” has occurred and the home is occupied.
Future Lots Inventory: Future lots are recorded after a preliminary plat or site plan has
been submitted for consideration by the city.
Lot Front: Range of all lot sizes within the subdivision; based on the lot front foot width
Occupied: A buyer has taken possession of the home that was previously under
construction or a model home.
Price: Range of all base home price offered within the subdivision
Starts: The housing slab or foundation has been poured.
Total Lots: A summation of all lots platted in a subdivision, including those closed,
under construction, and vacant.
Vacant Developed lot (VDL): The subdivision is considered developed after subdivision
streets are paved and vehicles can physically drive in front of the lot.
The following are key points from Tables FS-9 and FS-10:
nd
As of 2 Quarter 2015, Elk River had a total of 200 vacant lots within 26 subdivisions.
However, 188 of the vacant lots were single-family lots while 11 vacant lots were attached
lots.
The majority of the subdivisions (20) were platted between 2000 and 2006. Roughly 54% of
the lots were platted between 2004 and 2006, the peak years of the real estate boom.
There have been three subdivisions platted recently in over the past two years.
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TABLE FS-11
VACANT LOT FOR PARCELS PLATTED
SHERBURNE COUNTY
2000 to Present
20122015
City/Township
Elk River253117
Baldwin Township248193
Becker6937
Becker Township221130
Big Lake11843
Big Lake Township7043
Blue Hill Township152142
Clear Lake4025
Clear Lake Township3629
Haven Township76
Livonia Township244162
Orrock Township244178
St. Cloud2612
Palmer Township1213
Princeton1011
Santiago Township124
Zimmerman9453
Subtotal1,8561,198
Source: Sherburne County, Maxfield Research & Consulting, LLC
Only 5% of the available lots are within thee subdivisions that have townhome lots platted.
Consequently, nearly all the demand for new construction today is for single-family lots as
townhome product suffered more soduring the recession and has not recovered to the
same degree as single-family product.
Although the current single-family vacant lot is waning as few new subdivisions have been
platted since the recession; there are enough lots in the short-term to meet lot demand. In
addition, there are 369 lots classified as future lots that will likely make the transition from
future lots to finished lots to meet forthcoming demand.
The median lot size for new single-family construction is about 0.40 acres for single-family
product type and 0.10 acres for attached housing products. Although there are few
attached lots identified in Table FS-10; they are actively marketing twinhomes and detached
townhomes in the West Oaks subdivision. Kliever Lake Fields is also actively marketing
detached townhomes.
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The average price of new construction in Elk River is approximately $250,000, or $136 per
square foot for single-family housing. Comparatively, new construction detached
townhomes and twinhomes are priced similar to single-family housing and averaging prices
around $236,000 ($152 PSF).
According to recent data provided by Sherburne County, vacant platted lots have decreased
significantly since 2012. Elk River experienced a decline from 253 lots in 2012 down to 117
lots in 2015. This equates to just over half of the platted lots in Elk River being absorbed
since 2012.
Pending For-Sale Developments
According to the City of Elk River, there are no pending for-sale housing developments in the
planning process at this time.
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Introduction
Previous sections of this study analyzed the existing housing supply and the growth and
demographic characteristics of the population andhousehold base in Elk River. This section of
the report presents our estimates of housing demand in Elk River from 2015through 2025.
Demographic Profile and Housing Demand
The demographic profile of a community affects housing demand and the types of housing that
are needed. The housing life-cycle stages are:
1.Entry-level householders
Often prefer to rent basic, inexpensive apartments
Usually singles or couples in their early 20’s without children
Will often “double-up” with roommates in apartment setting
2.First-time homebuyers and move-up renters
Often prefer to purchase modestly-priced single-family homes or rent
more upscale apartments
Usually married or cohabiting couples, in their mid-20's or 30's, some
with children, but most are withoutchildren
3.Move-up homebuyers
Typically prefer to purchase newer, larger, and therefore more
expensive single-family homes
Typically families with children where householders are in their late
30's to 40's
4.Empty-nesters (persons whose children have grown and left home) and
never-nesters (persons who never have children)
Prefer owning but will consider renting their housing
Some will move to alternative lower-maintenance housing products
Generally couples in their 50's or 60's
5.Younger independent seniors
Prefer owning but will consider renting their housing
Will often move (at least part of the year) to retirement havens in the
Sunbelt and desire to reduce their responsibilities for upkeep and
maintenance
Generally in their late 60's or 70's
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6.Older seniors
May need to move out of their single-family home due to physical
and/or health constraints or a desire to reduce their responsibilities
for upkeep and maintenance
Generally single females (widows) in their mid-70's or older
Demand for housing can come from several sources including: household growth, changes in
housing preferences, and replacement need. Household growth necessitates building new
housing unless there is enough desirable vacant housing available to absorb the increase in
households. Demand is also affected by shifting demographic factors such as the aging of the
population, which dictates the type of housing preferred. New housing to meet replacement
need is required, even in the absence of household growth, when existing units no longer meet
the needs of the population and when renovation is not feasible because the structure is
physically or functionally obsolete.
Rural areas tend to have higher proportions of younger households that own their housing than
in the larger growth centers or metropolitan areas such as the Twin Cities Metro Area. In
addition, senior households tend to move to alternative housing at an older age. These
conditions are a result of housing market dynamics, which typically provide more affordable
single-family housing for young households and a scarcity of senior housing alternatives for
older households.
The graphic on the following page provides greater detail of various housing types supported
within each housing life cycle. Information on square footage, average bedrooms/bathrooms,
and lot size is provided on the subsequent graphic.
Housing Demand Overview
The previous sections of this assessment focused on demographic and economic factors driving
demand for housing in the Elk River. In this section, we utilize findings from the economic and
demographic analysis to calculate demand for new general occupancy housing units in Elk
River.
Housing markets are driven by a range of supply and demand factors that vary by location and
submarket. The following points outline several of the key variables driving housing demand.
Demographics
Demographics are major influences that drive housing demand. Household growth and
formations are critical (natural growth, immigration, etc.), as well as household types, size, age
of householders, incomes, etc.
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TYPICAL HOUSING TYPE CHARACTERISTICS
Target Market/Unit/HomeLot Sizes/
Housing Types
1
DemographicCharacteristicsUnits Per Acre
Entry-level single-familyFirst-time buyers: Families, 1,200 to 2,200 sq. ft.80'+ wide lot
2.5-3.0 DU/Acre
couples w/no children, some 2-4 BR | 2 BA
singles
Move-up single-family2,000 sq. ft.+80'+ wide lot
Step-up buyers: Families,
couples w/no children3-4 BR | 2-3 BA2.5-3.0 DU/Acre
Executive single-familyStep-up buyers: Families, 2,500 sq. ft.+100'+ wide lot
couples w/no children3-4 BR | 2-3 BA1.5-2.0 DU/Acre
Small-lot single-familyFirst-time & move-down buyers: 1,700 to 2,500 sq. ft.40' to 60' wide lot
5.0-8.0 DU/Acre
Families, couples w/no children, 3-4 BR | 2-3 BA
empty nesters, retirees
Entry-level townhomesFirst-time buyers: Singles, 1,200 to 1,600 sq. ft.6.0-12.0 DU/Acre
2-3 BR | 1.5BA+
couples w/no children
Move-up townhomesFirst-time & step-up buyers: 1,400 to 2,000 sq. ft.6.0-8.0. DU/Acre
Singles, couples, some families, 2-3 BR | 2BA+
empty-nesters
Executive townhomes/twinhomesStep-up buyers: Empty-nesters, 2,000+ sq. ft.4.0-6.0 DU/Acre
3 BR+ | 2BA+
retirees
Detached TownhomeStep-up buyers: Empty-nesters, 2,000+ sq. ft.4.0-6.0 DU/Acre
retirees, some families 3 BR+ | 2BA+
CondominumsFirst-time & step-up buyers: 800 to 1,700 sq. ft.Low-rise: 18.0-24.0 DU/Acre
1-2 BR | 1-2 BAMid-rise: 25.0+ DU/Acre
Singles, couples, empty-nesters,
retireesHi-rise: 75.0+ DU/Acre
Apartment-style rental housing675 to 1,250 sq. ft.Low-rise: 18.0-24.0 DU/Acre
Singles, couples, single-parents,
some families, seniors1-3 BR | 1-2 BAMid-rise: 25.0+ DU/Acre
Hi-rise: 75.0+ DU/Acre
Townhome-style rental housingSingle-parents, families 900 to 1,700 sq. ft.8.0-12.0 DU/Acre
w/children, empty nesters2-4 BR | 2BA
Student rental housing550 to 1,400 sq. ft.Low-rise: 18.0-24.0 DU/Acre
College students, mostly
undergraduates1-4BR | 1-2 BAMid-rise: 25.0+ DU/Acre
Hi-rise: 50.0+ DU/Acre
Senior housingRetirees, Seniors550 to 1,500 sq. ft.Varies considerably based on
Suites - 2BR | 1-2 BAsenior product type
1
Dwelling units(DU) per acre expressed in net acreage (minus right-of-way)
Source: Maxfield Research & Consulting, LLC
Economy & Job Growth
The economy and housing market are intertwined; the health of the housing market affects the
broader economy and vice versa. Housing market growth depends on job growth (or the
prospect of); jobs generate income growth which results in the formation of more households
and can stimulate household turnover. Historically low unemployment rates have driven both
existing home purchases and new-home purchases. Lack of job growth leads to slow or
diminishing household growth, which in-turn relates to reduced housing demand. Additionally,
low income growth results in fewer move-up buyers which results in diminished housing
turnover across all income brackets.
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Consumer Choice/Preferences
A variety of factors contribute to consumer choice and preferences. Many times a change in
family status is the primary factor for a change in housing type (i.e. growing families, empty-
nest families, etc.). However, housing demand is also generated from the turnover of existing
households who decide to move for a range of reasons. Some households may want to move-
up, downsize, change their tenure status (i.e. owner to renter or vice versa), or simply move to
a new location.
Supply (Existing Housing Stock)
The stock of existing housing plays a crucial component in the demand for new housing. There
are a variety of unique household types and styles, not all of which are desirable to today’s
consumers. The age of the housing stock is an important component for housing demand, as
communities with aging housing stocks have higher demand for remodeling services,
replacement new construction, or new home construction as the current inventory does not
provide the supply that consumers seek.
Pent-up demand may also exist if supply is unavailable as householders postpone a move until
new housing product becomes available.
Housing Finance
Household income is the fundamental measure that dictates what a householder can afford to
pay for housing costs. According to the U.S. Department of Housing and Urban Development
(HUD), the definition of affordability is for a household to pay no more than 30% of its annual
income on housing (including utilities). Families who pay more than 30% of their income for
housing (either rent or mortgage) are considered cost burdened and may have difficulty
affording necessities such as food, clothing, transportation and medical care.
The ability of buyers to obtain mortgage financing has been increasingly challenging since the
Great Recession as lenders have overcorrected from the subprime mortgage crisis. As a result,
many borrowers have remained on the sidelines as lenders have enforced tight lending
requirements, thereby increasing the demand for rental housing.
Mobility
It is important to note that demand is somewhat fluid between other northeast Iowa
communities and will be impacted by development activity in nearby areas, including other
communities outside Sherburne County.
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Estimated Demand for For-Sale Housing
Table HD-1 presents our demand calculations for general occupancy for-sale housing in Elk
Riverbetween 2015 and 2025.
The 65 and older cohort is typically not a target market for new general occupancy for-sale
housing, therefore, we limit demand from household growth to only those households under
the age of 65. According to our projections, the Elk River is expected to increase by estimated
704 households under the age of 65 between 2015 and 2025. Of this projected household
growth, we estimate that 82% have a propensity to own, thus projected demand from
household growth total 577 households.
TABLE HD-1
FOR-SALE HOUSING DEMAND
ELK RIVER
2015 to 2025
Demand from Projected Household Growth
704
Projected HH growth under age 65 in the Market Area 2015 to 2025¹
2
(times) % propensity to own
x82.0%
577
(equals) Projected demand from new HH growth=
Demand from Existing Owner Households
3
Number of owner households (age 64 and younger) in Market Area (2015)
5,745
(times) Estimated percent of owner turnover 4
x55%
3,160
(equals) Total existing households projected to turnover=
8.3%
(times) Estimated percent desiring new housingx
261
838
(equals) Total demand from HH growth and existing HHs 2015 to 2025=
15%
(times) Demand from outside Elk River Market Area
986
(equals) Total demand potential for ownership housing, 2015 to 2025
Single Multi-
Familyfamily*
5
(times) Percent desiring for-sale single-family vs. multifamily
x80%20%
(equals) Total demand potential for new single-family & multifamily for-sale housing=789197
6
(minus) Units marketing or approved platted lots (undeveloped and developed lots)
-18811
(equals) Excess demand for new general occupancy for-sale housing =601186
1
Estimated household growth based on data from Table D-1 as adjusted by Maxfield Research & Consulting, LLC
2
Pct. of owner households under the age of 65 (U.S. Census - 2010, ESRI, Maxfield Research Inc.). Adjusted by Maxfield Research to account for shift in
3 Estimate based on 2010 owner households and new owner household growth 2010 to 2015 (under age 65)
4 Based on on turnover from 2010 American Community Survey for households moving over 10-year period.
5 Based on preference for housing type and land availability
6
Approved platted lot data does not account for the scattered lot supply which includes individual lots and lots in older non-marketing subdivisions.
* Multi-family demand includes demand for townhomes, twinhomes, and condominium units.
Source: Maxfield Research & Consulting, LLC
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Demand is also forecast to emerge from existing Market Area householders through turnover.
An estimated 5,745 owner-occupied households under age 65 are located in the Elk River in
2015. Based on mobility data from the Census Bureau, an estimated 55% of owner households
will turnover in a ten-year period, resulting in 3,160 existing households projected to turnover.
Finally, we estimate 8.3% of the existing owner households will seek new for-sale housing,
resulting in demand for nearly 261 for-sale units through 2025. Combining the demand from
new household growth and from household turnover equals a total demand for 838 for-sale
housing units from 2015 to 2025
Next, we estimate that 15% of the total demand for new for-sale units in the Elk River will come
from people currently living outside of the Market Area. A small portion of this market will be
former residents of the area, such as “snow-birds” heading south for the winters. Adding
demand from outside the Elk River to the existing demand potential, results in a total estimated
demand for 986 for-sale housing units by 2025.
Based on land available, building trends, and demographic shifts (increasing older adult
population), we project 80% of the for-sale owners will prefer traditional single-family product
types while the remaining 20% will prefer a maintenance-free multi-family product (i.e. twin
homes, townhomes, or condominiums).
We then subtract the current identified platted lots that are under construction or approved.
After subtracting the current lot supply in subdivisions (188 total single-family lots) we find
total demand through 2025 resulting in 601 single-family lots and 186 multifamily lots.
Estimated Demand for General-Occupancy Rental Housing
Table HD-2 presents our calculation of general occupancy rental housing demand for Elk River.
This analysis identifies potential demand for rental housing that is generated from both new
households and turnover households.
The 65 and older cohort is typically not a target market for new general occupancy rental
housing, therefore, we limit demand from household growth to only those households under
the age of 65. According to our projections, the Elk Riveris expected to increase by 704
households under the age of 65 between 2015 and 2025.
Demand is also forecast to emerge from existing Market Area householders through turnover.
An estimated 1,450renter-occupied households under age 65 are located in the Elk Riverin
2015. Based on mobilitydata from the Census Bureau, we estimate renter household by age
group forturnover in a ten-year period, resulting inexisting households projected to turnover.
Finally, we estimate the percentage of the existing renter households that willdesirenew rental
housing, resulting in demand for 244rental units through 2025.
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Combining demand from household growth plus turnover results in total demand in Elk River
for 375 rental units over the next 10 years. Next, we estimate that 15% of the total demand for
new for-sale units in the Elk River will come from people currently living outside of Elk River for
a total of 442 rental units.
We then estimate the number of rental units each product type could capture in Elk River.
This capture rate is estimated based on the current products and product pricing within in Elk
River along with household incomes for current renters. We find that there is demand for 44
subsidized housing units, 133 affordable rental units, and 265 market rate units.
From the total demand for general occupancy units, we subtract any development under
construction or proposed at market equilibrium (95% occupancy) to find the remaining excess
demand in Elk River. At the time of this study there was no one planned rental developments
and thus, excess demand remains for 44 subsidized units, 133 affordable units, and 265 market
rate units.
Estimated Demand for Independent Adult/Few Service Senior Housing
Table HD-3 presents our demand calculations for market rate independent senior housing in Elk
River in 2015 and 2020.
In order to determine demand for independent senior housing, the potential market is reduced
to those households that are both age and income qualified. The age-qualified market is
defined as seniors age 55 and older, although independent living projects will primarily attract
seniors age 65 and older.
We calculate that the minimum income needed to afford monthly rents is $35,000, since
seniors with this income could afford a monthly rent of $1,165 based on spending 40% of their
income, which is much higher than the rents of $635 to $734 for two-bedroom units at Elk
Terrace and slightly higher than rent of $1,109 at Evans Park for two-bedroom apartments.It is
important to note that the existing developments are both over 20 years old and a new senior
development would garner the higher rents. In addition, we add households with incomes
between $25,000 and $34,999 who would be able to supplement their incomes with the
proceeds from a home sale. We estimate the number of age/income-qualified senior
households in Elk River in 2015 to be 2,558 households.
Adjusting to include appropriate long-term capture rates for each age cohort (0.5% of
households age 55 to 64, about 5.0% of households age 65 to 74, and 15.0% of households age
75 and over) results in a market rate demand potential for 119 independent senior rental units
in 2015.
Some additional demand will come from outside Elk River. We estimate that 25% of the long-
term demand for independent senior housing will be generated by seniors currently residing
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outside Elk River. This demand will consist primarily of parents of adult children living in Elk
River, individuals who live just outside of Elk River and have an orientation to the area, as well
as former residents who desire to return. Together, the demand from Elk River seniors and
demand from seniors who would relocate to Elk River results in a total long-term demand for
159 active adult units in 2015.
Independent demand in Elk River is split into housing that offers ownership housing and rental
housing. Based on the current product available in Elk River, we project that 40% of Elk River’s
demand will be for adult ownership housing (63 units) and 60% will be for rental housing (95
units).
TABLE HD-3
MARKET RATE ADULT/FEW SERVICES HOUSING DEMAND
ELK RIVER
2015 & 2020
20152020
Age of HouseholderAge of Householder
55-6465-7475+55-6465-7475+
# of Households w/ Incomes of >$35,000 1 1,2137324301,412928789
# of Households w/ Incomes of $24,999 to $34,999 1 7377887279113
++
(times ) Homeownership Rate87%84%63%87%84%63%
xx
(equals) Total Potential Market Base=1,277796485=1,475994860
(times) Potential Capture Rate x0.5%5.0%15.0%x0.5%5.0%15.0%
(equals) Demand Potential =64073=750129
Potential Demand from Market Area Residents=119=186
(plus Demand from Outside Market Area (25%)2+40+62
(equals) Total Demand Potential=159=248
Renter-Renter-
Owner-Owner-
OccupiedOccupiedOccupiedOccupied
(times) % by Product Typex40%x60%x40%x60%
(equals) Demand Potential by Product Type=63=95=99=149
(minus) Existing and Pending MR Active Adult Units 3-111-72-111-72
(equals) Excess Demand for MR Active Adult Units=0=23=0=77
1
2020 calculations define income-qualified households as all households with incomes greater than $40,000 and homeowner households with incomes
between $30,000 and $39,999.
2
Based on project manager interviews and historical trends. We estimate that roughly 40% of demand will come from outside the markt area.
3
Existing and pending are deducted at market equilibrium (95% occupancy).
Source: Maxfield Research & Consulting, LLC
Next, we subtract existing competitive market rate units (minus a vacancy factor of 5% to allow
for sufficient consumer choice and turnover) from the owner and rental demand. Subtracting
the existing competitive market rate units results in total demand potential for zero adult
owner-occupied units and 23 adult rental units in 2015.
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Adjusting for inflation, we have estimated that households with incomes of $40,000 or more
and homeowners with incomes of $230,000 to $39,999 would income qualify for market rate
independent senior housing in 2020. Considering the growth in the older adult base, the
income distribution of the older adult population in 2020, the methodology projected that
there will be no demand for adult owner-occupied units and increase to 77 adult rental units
in the City of Elk River by 2020.
Estimated Demand for Affordable Independent Senior Housing
Table HD-4 presents our demand calculations for affordable senior housing for households with
incomes qualifying at or below 50% and 80% of AMI in Elk River in 2015 and 2020.
In order to arrive at the potential age and income-qualified base for low-income and affordable
housing, we include all senior (65+) households that qualify for the income guidelines for one-
and two-person households in 2015 at or below 50% and 80% of AMI ($30,350 and $52,650).
Adjusting to include appropriate long-term capture rates for each age cohort (1.5% of
households age 55 to 64, about 10.0% of households age 65 to 74, and 20.0% of households
age 75 and over) results in a market rate demand potential for 23 independent senior rental
units in 2015.
TABLE HD-4
AFFORDABLE INDEPENDENT SENIOR HOUSING DEMAND
ELK RIVER
2015 & 2020
20152020
Age of HouseholderAge of Householder
55-6465-7475+55-6465-7475+
# of Households w/ Incomes of $28,000 to $52,650233208262197213288
(times ) Percent Renter Households13%16%37%13%16%37%
xx
(equals) Total Potential Market Base3033972634107
=
(times) Potential Capture Rate x1.5%10.0%20.0%x1.5%10.0%20.0%
(equals) Demand Potential =0319=0321
Total Market Rate Demand Potential=23=25
(plus) Demand from Outside Market Area (40%)+15+17
(equals) Total Demand Potential=39=42
(minus) Existing and Pending Aff. Independent Units 1-0-0
(equals) Total Demand Potential in Market Area=39=42
1
Includes existing and pending units at 95% occupancy, or market equilibrium. No additional units are planned through 2020.
Source: Maxfield Research & Consulting, LLC
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We then estimate that seniors currently residing outside of Elk River would generate 40% of the
demand for affordable senior housing. This demand includes seniors who reside outside of Elk
River that would move to the city, as well as those who would relocate from other places of
residence (i.e. rural areas, other areas of the state and out-of-state). Together, demand from
Elk River seniors and demand from seniors who would locate to Elk River total an estimated 39
affordable units in 2015.
There are no affordable senior rental properties in Elk River and thus, the total potential
demand remains at 39 units in 2015.
Following the same methodology, we project that excess demand capturable in Elk River is
calculated to increase slightly to 42 affordable independent senior housing units by 2020.
Estimated Demand for Subsidized Senior Housing
Table HD-6 presents our demand calculations for subsidized senior housing in Elk River in 2015
and 2020.
The 2015 income qualifications for extremely-low income housing in Sherburne County are
$18,200 for a one-person household and $20,800 for a two-person household. Seniors with
incomes meeting these guidelines are designated as having low incomes and are in need of
subsidized housing; households with incomes above these guidelines but below those
necessary to obtain market rate housing would be candidates for affordable housing. Seniors
living at a Section 202 building pay their rent according to their monthly income (30% of
monthly income). Households with incomes slightly above 50% of MFI are primarily a target for
affordable housing, with rents usually set at 50% to 80% of MFI, and would not qualify for
deeply-subsidized housing. It should be noted that many senior households in low and very low
income categories own their homes and therefore have untapped equity which, upon the sales
of their homes, can be used toward market rate housing.
Maxfield Research & Consulting LLCcalculated demand for subsidized senior housing as
displayed in Table HD-5. We assume that all households over the age of 65 with incomes of
$20,800 or less in Elk River are income-qualified and would be candidates for subsidized senior
housing. In 2015, we find a total of an estimated 223 households over the age of 65 in Elk River
meeting these age- and income-qualifications.
We estimate that approximately 30% of the total age/income-qualified market would both
need and desire subsidized senior housing. The remaining households would either remain in
their homes until in need of housing with services or obtain affordable/market rate housing
with assistance from family members or through the sale of a home or other assets. Applying a
30% capture rate, results in an estimated potential demand for 67 subsidized senior housing
units in Elk River in 2015 and 66 units in 2020.
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TABLE HD-5
SUBSIDIZED INDEPENDENT SENIOR HOUSING DEMAND
ELK RIVER
2015 & 2020
20152020
Age 65+ Households w/Incomes < $20,000223220
(times) Percent of Income Qualified Seniors Needing/Desiring Subsidized Senior Housingx30%30%
(equals) Demand Potenital from Market Area residents=6766
(plus) Demand From Ouside the Market Area (40%)+4544
(equals) Total Demand Potential for Subsidized Senior Housing in Market Area112110
(minus) Existing & Pending Subsidized Senior Units in Market Area*-118118
(equals) Total Market Area Subsidized Senior Housing Demand Potential=00
* Competitive subsidized units, minus a 7% vacancy rate.
Source: Maxfield Research & Consulting, LLC
We anticipate that at least 40% of the demand for subsidized senior housing in Elk River will
come from seniors currently residing in surrounding communities who would move to the Elk
River to be near their family or for other reasons. Including demand from outside of Elk River
increases total demand potential to 112 units in 2015 and 110 units in 2020.
From this potential demand, we subtract the existing number of competitive housing units in
Elk River. Currently, there are only two identified subsidized senior buildings in the Market
Area with a total of 122 units and are both fully occupied with waiting lists. Subtracting these
units, minus a 3% vacancy factor, results in sufficient subsidized units in Elk River in both 2015
and 2020. The existing subsidized housing units are sufficiently serving the Elk River market
through 2020.
Estimated Demand for Congregate Senior Housing
Table HD-6 presents our demand calculationsfor congregate housing in Elk River in 2015and
2020.
The potential age-and income-qualified base for congregate senior housing includes all senior
(65+) households with incomes of $35,000 as well as homeowner households with incomes
between $25,000 and $35,000 who would qualify with the proceeds from the sales of their
homes. The proportion of eligible homeowners is based on the homeownership rates of areas
seniors, as identified in the demographics section of this study. The number of age, income,
and asset-qualified households in Elk River is estimated to be 1,282 households in 2015.
Adjusting to include appropriate capture rates for each age cohort (1.5% of households age 65
to 74 and 11.0% of households age 75 and older) results in a local demand potential for 65
congregate units in 2015.
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TABLE HD-6
MARKET RATE CONGREGATE HOUSING DEMAND
ELK RIVER
2015 & 2020
20152020
Age of Age of
HouseholderHouseholder
65-7475+65-7475+
732430928489
# of Households w/ Incomes of >$35,000¹
778879113
# of Households w/ Incomes of $25,000 to $34,999¹++
84%63%84%63%
(times) Homeownership Ratexx
65556671
(equals) Potential Market==
797485994560
(equals) Total Potential Market Base==
1.5%11.0%1.5%11.0%
(times) Potential Capture Rate²xx
12531562
(equals) Demand Potential =+=+
6577
Potential Demand from Market Area Residents==
2226
(plus) Demand from Outside Market Area (25%)++
87102
(equals) Total Demand Potential==
3
00
(minus) Existing and Pending Congregate Units--
87102
(equals) Excess Demand for Congregate Units==
¹ 2020 calculations define income-qualified households as all households with incomes greater than $40,000 and homeowner
households with incomes between $30,000 and $49,999.
² The potential capture rate is derived from data from the Summary Health Statistics for the U.S. Population: National Health
Interview Survey, 2007 by the U.S. Department of Health and Human Services. The capture rate used is the percentage of seniors
needing assistance with IADLs, but not ADLs (seniors needing assistance with ADLs typcially need assistance with multiple IADLs and
are primary candidates for assisted living.).
3
Existing and pending are deducted at market equilibrium (95%
occupancy).
Source: Maxfield Research & Consulting, LLC
We estimate that seniors currently residing outside of Elk River will generate 25% of the
demand for congregate senior housing. This demand will consist primarily of parents of adult
children living in Elk River, individuals who live just outside Elk River and have an orientation to
the area, and former residents who desire to return upon retirement. Together, the demand
from Elk River seniors and demand from seniors who are willing to locate to Elk River totals 87
units of congregate senior housing in 2015.
Since there are no existing congregate units in Elk River, we do not reduce the demand
potential by any competitive units. As a result, demand is calculated for 87 congregate units in
Elk River in 2015.
Adjusting for inflation, we estimate that households with incomes of $35,000 or more and
senior homeowners with incomes between $25,000 and $35,000 would qualify for congregate
housing in 2017. Following the same methodology, demand is calculated to increase to 102
units through 2020.
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Demand Estimate for Assisted Living Housing
Table HD-7 presents our demand calculations for assisted living senior housing in Elk River in
2015and 2020. This analysis focuses on the potential private pay/market rate demand for
assisted living units.
The availability of more intensive support services such as meals, housekeeping and personal
care at assisted living facilities usually attracts older, frailer seniors. According to the 2009
Overview of Assisted Living (which is a collaborative research project by the American
Association of Homes and Services for the Aging, the American Seniors Housing Association,
National Center for Assisted Living, and National Investment Center for the Seniors Housing and
Care Industry), the average age of residents in freestanding assisted living facilities was 87 years
in 2008. Hence, the age-qualified market for assisted living is defined as seniors ages 75 and
over, as we estimate that of the half of demand from seniors under age 87, almost all would be
from seniors over age 75. In 2010, there were 1,024 seniors age 75 and older in the PMA.
Demand for assisted living housing is need-driven, which reduces the qualified market to only
the portion of seniors who need assistance. According to a study completed by the U. S. Census
Bureau (2008 panels of the Survey of Income and Program Participation (SIPP) files), 30% of
seniors needed assistance with everyday activities (from 25.5% of 75-to-79-year-olds, to 33.6%
of 80-to-84-year-olds and 51.6% of 85+ year olds). Applying these percentages to the senior
population yields a potential assisted living market of 370 seniors in the PMA.
Due to the supportive nature of assisted living housing, most daily essentials are included in
monthly rental fees, which allow seniors to spend a higher proportion of their incomes on
housing with basic services. Therefore, the second step in determining the potential demand
for assisted living housing in the PMA is to identify the income-qualified market based on a
senior’s ability to pay the monthly rent. We consider seniors in households with incomes of
$40,000 or greater to be income-qualified for assisted living senior housing in the PMA.
Households with incomes of $40,000 could afford monthly assisted living fees of $3,000 by
allocating 90% of their income toward the fees.
According to the 2009 Overview of Assisted Living, the average arrival income of assisted living
residents in 2008 was $27,260, while the average annual assisted living fee was $37,281
($3,107/month). This data highlights that seniors are spending down assets to live in assisted
living and avoid institutional care. Thus, in addition to households with incomes of $40,000 or
greater, there is a substantial base of senior households with lower incomes who income-
qualify based on assets – their homes, in particular.
Sixty-three percent of the age 75+ households in the PMA are homeowners, and the 2015 year-
to-date median resale price of homes in the PMA was $209,975. Seniors selling their homes for
the median resale price would generate about $197,367 in proceeds after selling costs. With an
average monthly fee of $3,000, these proceeds would last just over five years in an assisted
living facility, which is longer than the average length of stay in an assisted living facility (27
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months according to the 2009 Overview of Assisted Living). For each age group in Table HD-7,
we estimate the income-qualified percentage to be all seniors in households with incomes
above $40,000 (who could afford monthly rents of $3,000+ per month) plus 40% of the
estimated seniors in homeowner households with incomes below $40,000 (who will spend
down assets, including home-equity, in order to live in assisted living housing). This results in a
total potential market of 211 units from the PMA in 2010.
TABLE HD-7
MARKET RATE ASSISTED LIVING DEMAND
ELK RIVER
2015 & 2020
20152020
NumberNumber
PercentPercent
NeedingNeeding
NeedingNeeding
11
AssistanceAssistance
Age groupPeopleAssistance¹PeopleAssistance¹
100133
75 - 7939425.5%52025.5%
103114
80 - 8430733.6%33833.6%
167187
85+32351.6%36351.6%
370433
Total1,0241,221
2
57%56%
Percent Income-Qualified
211243
Total potential market
51%51%
(times) Percent living alonex
108124
(equals) Age/income-qualified singles needing assistance=
1517
(plus) Proportion of demand from couples (12%)³+
122141
(equals) Total age/income-qualified market needing assistance=
4
40%40%
(times) Potential penetration ratex
4956
(equals) Potential demand from PMA residents=
3338
(plus) Proportion from outside the PMA (40%)+
8294
(equals) Total potential assisted living demand=
5
4747
(minus) Existing market rate assisted living units-
3547
(equals) Total excess market rate assisted living demand=
1
The percentage of seniors unable to perform or having difficulting with ADLs, based on the 2008 Survey of Income and Program
Participation (SIPP) files, conducted by the U.S. Census Bureau.
2
Includes households with incomes of $40,000 or more (who could afford monthly rents of $3,000+ per month) plus 40% of the
estimated owner households with incomes below $40,000 (who will spend down assets, including home-equity, in order to live in
assisted living housing).
3
The 2009 Overview of Assisted Living (a collaborative project of AAHSA, ASHA, ALFA, NCAL & NIC) found that 12% of assisted living
residents are couples.
4
We estimate that 60% of the qualified market needing assistance with ADLs could either remain in their homes or reside at less
advanced senior housing with the assistance of a family member or home health care, or would need greater care provided in a
skilled care facility.
5
Existing and pending units at 93% occupancy. We exclde 15% of units to be Home and Community Based Waiver recipients.
Source: Maxfield Research & Consulting, LLC
Because the vast majority of assisted living residents are single (88% according to the 2009
Overview of Assisted Living), our demand methodology multiplies the total potential market by
the percentage of seniors age 75+ in the PMA living alone. Based on 2010 Census data, 51% of
age 75+ households in the PMA lived alone. Applying this percentage results in a total base of
211 age/income-qualified singles. The 2009 Overview of Assisted Living found that 12% of
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residents in assisted living were couples. There are a total of 108 age/income-qualified seniors
needing assistance in the PMA including both couples and singles.
We estimate that roughly 60% of the qualified market needing significant assistance with ADLs
would either remain in their homes or less service-intensive senior housing with the assistance
of a family member or home health care, or would need greater care provided in a skilled care
facility. The remaining 40% could be served by assisted living housing. Applying this potential
market penetration rate of 40% results in demand for 49 assisted living units in 2010.
We estimate that a portion of demand for assisted living units in the PMA (40%) will come from
outside the PMA. Applying this figure results in total potential demand for 82 market rate
assisted living units in the PMA.
Next, existing assisted living units are subtracted from overall demand. We have adjusted the
competitive number of units based on an estimated 15% of units that are occupied by lower-
income seniors using the Elderly Waiver program, to pay for their services in an assisted living
environment. Overall, we subtract 47 competitive units (after accounting for a 7% vacancy
rate) from the demand potential, resulting in 35 units of excess demand for assisted living
housing in the PMA.
By 2020, total excess demand for market rate assisted living units in Elk River is projected to
increase to 47 units.
Estimated Demand for Memory Care Housing
Table HD-8 presents our demand calculations for market rate memory care senior housing in
Elk River in 2015 and 20120.
Demand is calculated by starting with the estimated Elk River senior (age 65+) population in
2015and multiplying by the incidence rate of Alzheimer’s/dementia among this population’s
age cohorts. According to the Alzheimer’s Association (Alzheimer’s Disease Facts and Figures,
2007), 2% of seniors ages 65 to 74, 19% of seniors ages 75 to 84, and 42% of seniors ages 85+
are inflicted with Alzheimer’s Disease. This yields a potential market of 299seniors in Elk River.
Because of the staff-intensive nature of dementia care, typical monthly fees for this type of
housing are at least $4,000 and range upwards of $5,000 when including service packages.
Based on our review of senior household incomes in Elk River, homeownership rates and home
sale data, we estimate that 30% of seniors in Elk River would have incomes and/or assets to
sufficiently cover the costs of memory care housing. This figure takes into account married
couple households where one spouse may have memory care needs and allows for a sufficient
income for the other spouse to live independently. Multiplying the number of seniors with
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Alzheimer’s/dementia (299 seniors) by the income-qualified percentage results in a total of 111
age/income-qualified seniors in the Elk River in 2015.
TABLE HD-8
MEMORY CARE DEMAND
ELK RIVER
2015 & 2020
20152020
65 to 74 Population1,5001,904
(times) Dementia Incidence Rate¹x2%x2%
(equals) Estimated Age 65 to 74 Pop. with Dementia=30=38
75 to 84 Population701858
(times) Dementia Incidence Rate¹x19%x19%
(equals) Estimated Age 75 to 84 Pop. with Dementia=133=163
85+ Population323363
(times) Dementia Incidence Rate¹x42%x42%
(equals) Estimated Age 85+ Pop. with Dementia=136=152
(equals) Total Senior Population with Dementia=299=354
(times) Percent Income/Asset-Qualified²x37%x38%
(equals) Total Income-Qualified Market Base=111=134
(times) Percent Needing Specialized Memory Care Assistancex25%x25%
(equals) Total Need for Dementia Care=28=34
(plus) Demand from Outside Market Area (40%)+18+22
Total Demand Potential=4656
(minus) Existing and Pending Memory Care Units³-28-28
(equals) Excess Demand for Memory Care Units=18=28
¹ Alzheimer's Association: Alzheimer's Disease Facts & Figures (2009)
² Income-qualified households consider 3/4 of those with incomes greater than $60,000 plus 15% of homeowners with
incomes below this threshold.
³ Existing memory care units less units occupied by public pay residents and a 7% vacancy rate.
Source: Maxfield Research & Consulting, LLC
According to data from the National Institute of Aging, about 25% of all individuals with
memory care impairments comprise the market for memory care housing units. This figure
considers that seniors in the early stages of dementia will be able to live independently with the
care of a spouse or other family member, while those in the later stages of dementia will
require intensive medical care that would only be available in skilled care facilities. Applying
this figure to the estimated population with memory impairments yields a potential market of
about 28 seniors in Elk River.
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We estimate that 40% of the overall demand for memory care housing in the Elk River would
come from outside of Elk River. Demand from both inside and outside of Elk River totals 46
memory care units in 2015.
We reduce the demand potential by the 30 competitive units (less a 93% occupancy rate).
Subtracting these competitive units decreases the excess memory care demand to 18 units.
Demand is calculated for 18 memory care units in the City of Elk River in 2015. Following the
same methodology, demand is calculated to increase to 28 memory care units through 2020.
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Introduction/Overall Housing Recommendations
This section summarizes demand calculated for specific housing products in Elk River and
recommends development concepts to meet the housing needs forecast for the City. All
recommendations are based on findings of the Comprehensive Housing Needs Assessment. The
following table and charts illustrate calculated demand by product type. It is important to
recognize that housing demand is highly contingent on projected household growth; household
growth could be higher should increased job growth ensue and the overall economy continues
to improve.
TABLE CR-1
SUMMARY OF HOUSING DEMAND
CITY OF ELK RIVER
Novemeber 2015
Type of Use2015-20252015
General-Occupancy
Rental Units - Market Rate265
Rental Units - Affordable133
Rental Units - Subsidized44
For-Sale Units - Single-family601
For-Sale Units - Multifamily186
Total General Occupancy Supportable1,229
20152020
Age-Restricted (Senior)
Market Rate
Adult Few Services (Active Adult)2377
Ownership00
Rental2377
Congregate87102
Assisted Living3547
Memory Care1828
Total Market Rate Senior Supportable163254
Affordable/Subsidized
Active Adult - Subsidized00
Active Adult - Affordable3942
Total Affordable Senior Supportable3942
Source: Maxfield Research & Consulting, LLC
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General-Occupancy Demand by Type
2015 to 2025
For-Sale Units - Multifamily
186
For-Sale Units - Single-family
601
Rental Units - Subsidized
44
Rental Units - Affordable
133
Rental Units - Market Rate
265
0100200300400500600700
Units
Senior Housing Demand by Type
2015 & 2020
2015
Adult - Owner
2020
23
Adult - Rental
77
87
Congregate
102
20
Assisted Living
47
18
Memory Care
28
39
Affordable
42
Subsidized
0102030405060708090100110
Units
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Based on the finding of our analysis and demand calculations, Table CR-2provides a summary
of the recommended development concepts by product type for the City of Elk River. It is
important to note that these proposed concepts are intended to act as a development guide to
most effectively meet the housing needs of existing and future households in Elk River. The
recommended development types do not directly coincide with total demand as illustrated in
Table CR-1.
TABLE CR-2
RECOMMENDED HOUSING DEVELOPMENT
CITY OF ELK RIVER
2015 to 2025
No. of
Purchase Price/Pct.Development
Units
Monthly Rent Range¹of TotalTiming
Owner-Occupied Homes
Single Family 2
Entry-level>$225,000175-20031%2016+
Move-up$250,000 - $350,000320-35056%2016+
Executive$350,000+75-8013%2017+
Total570-630100%
Townhomes/Detached Townhomes/Twinhomes 2
Entry-level>$200,00050-6031%2018+
Move-up$200,000+110-13069%2016+
Total160-190100%
Total Owner-Occupied730-820
General Occupancy Rental Housing
Market Rate Rental Housing
Apartment-style$950/1BR - $1,450/3BR180-20078%2017+
Townhomes$1,200/2BR - $1,500/3BR50-6022%2016+
Total230-260100%
Affordable Rental Housing
Moderate Income 3
Apartment-style90-10073%2017+
Moderate Income 3
Townhomes30-4027%2016+
Total120-140100%
Total Renter-Occupied350-400
Senior Housing (i.e. Age Restricted)
Moderate Income 3
Active Adult Affordable Rental40-4227%2016+
Active Adult Market Rate Rental 4
$900/1BR - $1,200/2BR+50-6036%2019+
Independent Living (Congregate)$1,750/1BR - $1,950/2BR60-8045%2018+
Assisted Living$2,750/EFF - $4,000/2BR40-5029%2017+
Memory Care$4,000/EFF - $5,000/2BR26-2818%2017+
Total144-164100%
Total - All Units1,224-1,384
¹ Pricing in 2015 dollars. Pricing can be adjusted to account for inflation.
2
Recommendations include the absorption of some existing previously platted lots.
3
Affordablity subject to income guidelines per MHFA. See Table HA-1 for Sherburne County Income limits.
4 Alternative development concept is to combine active adult affordable and market rate active adult into mixed-income senior
community
Note - Recommended development does not coincide with total demand. Elk River may not be able to accommodate all recommended housing
types based on a variety of factors (i.e. development constraints, land availability, etc.)
Source: Maxfield Research & Consulting, LLC
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Recommended Housing Product Types
For-Sale Housing
Single-Family Housing
Table HD-1 identified demand for about 790 single-family housing units in Elk River through
2025. However, after accounting for the existing 188 vacant single-family newer lots in Elk
River (see Table FS-9); demand is reduced to about 600 new lots in Elk River through 2025.
Based on historic construction activity over the past three years, there has been an average of
about 70 new single-family units per year in Elk River; down substantially from the early part of
last decade when about 220 units on average were added between 2000 and 2005.
The lot supply benchmark for growing communities is a three- to five-year lot supply, which
ensures adequate consumer choice without excessively prolonging developer-carrying costs.
Given the number of existing platted lots in Elk River and the number of homes constructed
annually, the current lot supply is able to meet demand only for about two to three years.
Although Table FS-9 identified 369 future lots; many of these subdivisions may still be
speculative based on preliminary plat information prior to the housing bust of last decade.
Therefore, new lots will need to be platted or moved from future lots to vacant developed lots
to meet future demand.
Due to the age and price of the existing housing stock in Elk River, most of the existing older
housing stock appeals to entry-level buyers. Entry-level existing homes, which we generally
classify as homes priced under $150,000 will be mainly satisfied by existing single-family homes
as residents of existing homes move into newer housing products built in the Elk River Area,
such as move-up single-family homes, twinhomes, rental housing and senior housing. A move-
up buyer or step-up buyer is typically one who is selling one house and purchasing another one,
usually a larger and more expensive home. Usually the move is desired because of a lifestyle
change, such as a new job or a growing family. Based on our interviews with Elk River Realtors,
move-up homes are generally priced from $250,000 to $350,000. Executive-level homes are
loosely defined as those homes priced above $350,000. Most of these homes would be build-
to-suit new construction in one of the city’s newer subdivisions or are on larger acreages
located on the fringe of Elk River.
The average base price of all new construction actively marketing in Elk River is approximately
$250,000, or about $135 to $140 PSF for single-family housing stock. Although there would be
substantial demand for a new single-family housing product priced under $200,000, financially
it will be extremely difficult to develop even with public assistance due to infrastructure costs
and rising labor and material costs. Based on land and building costs, it is very difficult to build
new single-family homes for less than $225,000.
Because there only 188 vacant lots, new lots will be needed in the next few years to meet buyer
demand. Many of the existing lots in Elk River are flat and target the first-time and move-up
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buyers; we also recommend additional “choice lots” that cater to executive buyers and have
the topography for walk-out lots and more vegetation on the property. We also recommend
considering smaller lots that will increase density while bringing down new subdivision
infrastructure costs.
For-Sale Multifamily Housing
A growing number of households desire alternative housing types such as townhouses,
detached townhomes, and twinhomes. Typically, the target market for for-sale multifamily
housing is empty-nesters and retirees seeking to downsize from their single-familyhomes. In
addition, professionals, particularly singles and couples without children, also will seek
townhomes if they prefer not to have the maintenance responsibilities of a single-family home.
In some housing markets, younger households also find purchasing multifamily units to be
generally more affordable than purchasing new single-family homes.
Over the past fifteen years, multifamily resales have averaged about 20% of all resales in Elk
River; however the median sales price has been about 33% lower than single-family housing.
Currently, the West Oaks subdivision is marketing a variety of twinhomes and detached
townhomes in Elk River.
Based on the changing demographics and the need for alternative housing types, demand was
calculated for 186 new multifamily for-sale units in Elk River through 2025. Since 2007, there
have been only three new townhome/twinhome units constructed in Elk River as this sector
experienced severe downturn during the recession. However, given the aging of the population
and the high growth rate in the 55+ population (especially 65-74 age cohorts), Elk River would
benefit from a more diversified housing stock.
These attached units could be developed as twin homes, detached townhomes or villas,
townhomes/row homes, or any combination. Because the main target market is empty-nesters
and young seniors, the majority of townhomes should be one-level, or at least have a master
suite on the main level if a unit is two-stories.
The following provides greater detail into townhome and twinhome style housing.
Twinhomes–By definition, a twin home is basically two units with a shared wall with each
owner owning half of the lot the home is on. Some one-level living units are designed in
three-, four-, or even six-unit buildings in a variety of configurations. The swell of support
for twinhome and one-level living units is generated by the aging baby boomer generation,
which is increasing the numbers of older adults and seniors who desire low-maintenance
housing alternatives to their single-family homes but are not ready to move to service-
enhanced rental housing (i.e. downsizing or right sizing).
Traditionally most twin home developments have been designed with the garage being the
prominent feature of the home; however, today’s newer twin homes have much more
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architectural detail. Many higher-end twin home developments feature designs where one
garage faces the street and the other to the side yard. This design helps reduce the
prominence of the garage domination with two separate entrances. Housing products
designed to meet the needs of these aging Elk River residents, many of whom desire to stay
in their current community if housing is available to meet their needs, will be needed into
the foreseeable future.
Twinhomes are also a preferred for-sale product by builders in today’s market as units can
be developed as demand warrants. Because twinhomes bring higher density and
economies of scale to the construction process, the price point can be lower than stand-
alone single-family housing. As previously mentioned, there are a number of new twin
homes under construction in the West Oaks subdivision; however twin homes will continue
to be in demand as many older adults and seniors will move to this housing product with
substantial equity in their existing single-family home and will be willing to purchase a
maintenance-free home that is priced similar to their existing single-family home. Move-up
twin homes has especially been popular in the Twin Cities Metro Area over the past few
years.
Twinhome Examples
Standard Twinhome – garage on end Standard Twinhome – garage in middle
Executive Twinhome with alternate garages Executive-style Twinhome –front facing garage
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Detached Townhomes/Villas –An alternative to the twinhomeis the one-level villa product
and/or rambler. This product also appeals mainly to baby boomers and empty nesters
seeking a product similar to a single-family living on a smaller scale while receiving the
benefits of maintenance-free living. Many of these units are designed with a walk-out or
lookout lower level if the topography warrants. We recommend lot widths ranging from 45
to 55 feet with main-level living areas between 1,600 and 1,800 square feet. The main
level living area usually features a master bedroom, great room, dining room, kitchen, and
laundry room while offering a “flex room” that could be another bedroom, office, media
room, or exercise room. However, owners should also be able to purchase the home with
the option to finish the lower level (i.e. additional bedrooms, game room, storage,
den/study, etc.) and some owners may want a slab-on-grade product for affordability
reasons. Finally, builders could also provide the option to build a two-story detached
product that could be mixed with the villa product.
Pricing for a detached townhome/villa will vary based on a slab-on-grade home versus a
home with a basement. Base pricing should start at $250,000 and will fluctuate based on
custom finishes, upgrades, etc.
Detached Townhome/Villa Examples
Cottage-style (alley-loaded garage) Executive-style –side garage entrance
Villa –Garage in front2-story tuck-under
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Side-by-Side and Back-to-Back Townhomes – This housing product is designed with three
or four or more separate living units in one building and can be built in a variety of
configurations. With the relative affordability of these units and multi-level living, side-by-
side and back-to-back townhomes have the greatest appeal among entry-level households
without children, young families and singles and/or roommates across the age span.
However, two-story townhomes would also be attractive to middle-market, move-up, and
empty-nester buyers. Many of these buyers want to downsize from a single-family home
into maintenance-free housing, many of which will have equity from the sale of their
single-family home.
Side-by-side townhomes have been slow to recover from the recession. Many of the
townhome developments completed last decade in Elk River had many lender-mediated
sales and were attractive for real estate investors. Recently there have been a few new
townhome developments move forward in the Twin Cities; however they have been
located in high demand communities where the single-family market has priced many
buyers out of the market. New construction townhomes in Elk River are still premature;
but this sector should begin to turn should land costs escalate and buyers are priced out of
many new single-family subdivisions.
Townhome Examples
3-Plex (one-level living w/basement)Tuck-under garage
Row-house style Back-to-back style (6-Plex)
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General Occupancy Rental Housing
Our competitive inventory identified that the vacancy rates for all types of general occupancy
rental product is below market equilibrium indicating pent-up demand for rental housing. The
few newer products that have entered the market in the past few years have all performed
well. Coachman Apartments which began marketing in 2015 has absorbed all units before
occupancy date. Due to the age and positioning of the remaining existing rental supply (pre-
1990 construction), a significant portion of units arepriced at or below guidelines for affordable
housing, which indirectly satisfies demand from households that income-qualify for financially
assisted housing. However, the growing renter base is seeking newer rental properties with
additional and updated amenities that are not offered in older developments. Although
ownership housing in older homes in Elk River is generally affordable for first-time home
buyers, some are choosing to rent due to fears of past housing market performance.
Maxfield Research and Consulting LLC calculated demand for 265 market rate and 133
affordable rental housing units in Elk River through 2025. New general-occupancy rental
housing can be developed immediately and will continue to be in demand throughout this
decade.
Market Rate Rental–The existing market rate rental supply in Elk River has a mix of ages
and household types represented. A new rental project will also have a diverse resident
profile, including young to mid-age professionals as well as singles and couples across the
age span.
Because there is demand for 265 units; new market rate product will likely be developed
across multiple buildings and developments. We recommend new middle-market to upper-
middle market rental project(s) with roughly that will continue to attract a diverse resident
profile; including young to mid-age professionals as well as singles and couples across all
ages. To appeal to wide target market, we suggest a market rate apartment project with a
unit mix consisting of one-bedroom units, one-bedroom plus den units, two-bedroom units,
and a few two-bedroom plus den or three-bedroom units.
Monthly rents (in 2015 dollars) should range from $950 for a one-bedroom unit to $1,450
for a three-bedroom unit. Average rents in Elk River are roughly $1.04 per square foot, thus
we recommend that monthly rents at a new development should charge on average $1.15
per square foot to be financially feasible. Monthly rents can be trended up by 2.0%
annually prior to occupancy to account for inflation depending on overall market
conditions.
New market rate rental units should be designed with contemporary amenities that include
open floor plans, higher ceilings, in-unit washer and dryer, full appliance package, central
air-conditioning, and garage parking.
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Market Rate General Occupancy Rental Townhomes–In addition to the recommended
traditional multi-story apartment projects, we find demand exists for larger townhome
units for families -including those who are new to the community and want to rent until
they find a home for purchase. An additional 50 to 60 rental townhome units could be
supported in Elk River over this decade. We recommend a project with rents starting at
approximately $1,200 for two-bedroom units to $1,500 for three-bedroom units. Units
should feature contemporary amenities (i.e. in-unit washer/dryer, high ceilings, etc.) and
an attached two car garage.
Affordable General Occupancy Multifamily Housing–There have been three affordable
developments built since 2007 in Elk River. These developments have been extremely
successful and have maintained nearly 100% occupancy since opening. Unlike the market
rate supply, existing affordable properties are typically dominated by families with children
who find it more difficult to afford ownership property and market rate rents.
The success of the moderate income affordable Coachman Ridge (53 units) rental project
by Duffy Development near the transit station continues to support the excess demand
shown for affordable housing.These projects would have income-restrictions established
by HUD and would likely target households with incomes between 50% to 80% of area
median income; however some could be workforce units with affordability up to 120%
AMI.
We find that demand exists for about 100 affordable units through 2025. Affordable
housing attracts households that cannot afford market rate housing units but do not
income-qualify for deep subsidy housing. Affordable projects attract a broad group of
people based of tenants based on the unit type. One-bedroom units target singles and
couples, whereas two and three-bedroom units target families. Some retired seniors
would also be attracted to an affordable concept. We recommend an affordable concept
that would target residents at 50% to 60% AMI. A workforce housing project targeting
households from 80% to 120% AMI could also be pursued in Elk River.
Affordable General Occupancy Rental Townhomes–Rental townhomes affordable to
moderate-income households would also be in high demand throughout Elk River. There is
currently only one income based townhome development in the City (Lanesboro Heights –
Section 8) that is full with a long waiting list. Affordable rental townhomes have been
found to very popular throughout many communities. These projects would have income-
restrictions established by HUD and would likely target households with incomes between
50% to 80% of area median income; however some could be workforce units with
affordability up to 120% AMI. We recommend a project with two- and three-bedroom
units and a project of 30 to 40 units. Units should feature central air conditioning, full
appliance package, in-unit washer/dryer, an attached one/two car garage. Such
developments are popular with families that cannot afford housing options in the for-sale
market or market rate rentals.
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Senior Housing
As illustrated in Table CR-1, demand exists for almost alltypes of senior housing product types
in Elk River. Over the course of five years, there is demand for about 300 new senior units
through 2020. The unmetof additional senior housing is recommended in order to provide
housing opportunity to these aging residents in their stages of later life. The development of
additional senior housing serves a two-fold purpose in meeting the housing needs in Elk River:
older adult and senior residents are able to relocate to new age-restricted housing in Elk River,
and existing homes and rental units that were occupied by seniors become available to other
new households. Hence, development of additional senior housing does not mean the housing
needs of younger households are neglected; it simply means that a greater percentage of
housing need is satisfied by housing unit turnover. The types of housing products needed to
accommodate the aging population base are discussed individually in the following section.
Active Adult Rental – Demand was projected for about 75market rate active adult rental
units in Elk River through 2020. However, most of this demand will be closer to 2020.
Currently, there are three market rate active adult rental projects in the City. The newest
was built in 1992, while the other two are over 30 years old. There may be seniors who
currently residing in general-occupancy housing that would consider a newer active adult
product.
Development of this product could be in separate stand-alone facilities or in a mixed-
income project. We believe a mixed-income building would be an ideal development
concept to create the most dynamic, inclusive community for active seniors and to temper
stigmas and potential neighborhood opposition of affordable housing development.
We recommend a new project of about 50 to 60 units later this decade. The project modest
rents with base monthly rents starting at $900 per month for one-bedroom units and from
$1,200 or more for two-bedroom units. The project should offer transportation, activities,
and optional services for housekeeping, etc.
Affordable and Subsidized Senior Few Services Rental – Elk River demand for
affordable/subsidized senior housing isapproximately 40 units in 2020. All of the demand
was for affordable senior housing as the existing subsidized housing units is meeting the
current demand. Although this product would be well received by seniors in and near the
Elk River area; it will be difficult to develop given the economies of scale needed and
financing challenges. Affordable senior housing will likely be a low-income tax credit
project through the Minnesota Housing Finance Agency (MHFA). MHFA recently started to
consider affordable senior housing projects under the tax credit program and is slowly
starting to expand financing for this product type.
Independent Living/Congregate– There are no designated congregate units (meals and
limited support service) in Elk River, however, Guardian Angels provides meals and services
at Evans Park at an extra charge. Demand was calculated for just over 100 congregate units
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over the next five years. Based on this demand, we recommend 60 to 80 congregate units
with a mix of one-bedroom, one-bedroom plus den, and two-bedroom units. Monthly rents
should range from $1,750 for one-bedroom units to $1,950 for two-bedroom units. The
monthly fees should include all utilities (except telephone and basic cable/satellite
television) and the following services:
I’m OK program;
Daily noon meal;
Regularly scheduled van transportation;
Social, health, wellness and educational programs;
24-hour emergency call system; and
Complimentary use of laundry facilities.
In addition, meals and other support and personal care services will be available to
congregate residents on a fee-for-service basis, such as laundry, housekeeping, etc. When
their care needs increase, residents also have the option of receiving assisted living
packages in their existing units.
New independent housing could be developed adjacent to an existing senior campus or in a
stand-alone development.
Assisted Living and Memory Care Senior Housing– Based on our analysis, we project
demand to support an additional 47 assisted living units and 28 memory care units in Elk
River through 2020. Although we find demand, we recommend new units later this
decade. Guardian Angels is the primary senior housing provider and they could add new
product to one of their existing facilities.
We recommend assisted living units include a mix of studio, and one-bedroom, and a few
two-bedroom units with base monthly rents ranging from $2,750 to $4,000. Memory care
unit mix should be mostly studios and one-bedroom units with a few two-bedroom units
for couples with basemonthly rents ranging from $3,800 to $5,500. Memory care units
should be located in a secured, self-contained wing located on the first floor of a building
and should feature its own dining and common area amenities including a secured outdoor
patio and wandering area.
The base monthly fees should include all utilities (except telephone and basic
cable/satellite television) and the following services:
Three meals per day;
Weekly housekeeping and linen service;
Two loads of laundry per week;
Weekly health and wellness clinics;
Meal assistance;
Regularly scheduled transportation;
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Professional activity programs and scheduled outings;
Nursing care management;
I’m OK program;
24-hour on site staffing;
Personal alert pendant with emergency response; and
Nurse visit every other month.
Additional personal care packages should also be available for an extra monthly charge
above the required base care package. A care needs assessment is recommended to be
conducted to determine the appropriate level of services for prospective residents.
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Challenges and Opportunities
Table CR-2 identified and recommended housing types that would satisfy the housing needs in
Elk River over the next ten years. The following were identified as the greatest challenges and
opportunities for developing the recommended housing types (in no particular order-
alphabetically).
Affordability. Based on current home prices, about 75% of Elk River householders could
afford to purchase an entry-level home given today’s pricing (see table on the following
page). Likewise, most householders (85%) can also afford the average market rate rent at a
one-bedroom rental project in Elk River. Because of this condition, some householders who
would not consider purchasing may do so earlier since the cost to own an entry-level home
is on-par with rental housing costs. The following chart compares the costs of
homeownership to rentals given today’s housing costs based on a 30% allocation of income
to housing. We do note, however, that not all householders will have the credit scores and
down payment that would qualify them to purchase for-sale housing.
TABLE HA-4
ELK RIVER MARKET AREA HOUSING AFFORDABILITY - BASED ON HOUSEHOLD INCOME
For-Sale
(Assumes 10% down payment and good credit)
Single-FamilyTownhome/Twinhome
Entry-LevelMove-UpExecutiveEntry-LevelMove-UpExecutive
Price of House$175,000$250,000$300,000$150,000$225,000$300,000
Pct. Down Payment10.0%10.0%10.0%10.0%10.0%10.0%
Total Down Payment Amt.$17,500$25,000$30,000$15,000$22,500$30,000
Estimated Closing Costs (rolled into mortgage)$5,250$7,500$9,000$4,500$6,750$9,000
Cost of Loan$162,750$232,500$279,000$139,500$209,250$279,000
Interest Rate4.000%4.000%4.000%4.000%4.000%4.000%
Number of Pmts.360360360360360360
Monthly Payment (P & I)-$777-$1,110-$1,332-$666-$999-$1,332
(plus) Prop. Tax-$219-$313-$375-$188-$281-$375
(plus) HO Insurance/Assoc. Fee for TH-$58-$83-$100-$100-$100-$100
(plus) PMI/MIP (less than 20%)-$71-$101-$121-$60-$91-$121
Subtotal monthly costs-$1,125-$1,607-$1,928-$1,014-$1,471-$1,928
Housing Costs as % of Income30%30%30%30%30%30%
Minimum Income Required$44,984$64,263$77,116$40,558$58,837$77,116
Pct. of ALL Elk River HHDS who can afford175.9%60.8%52.0%79.8%65.9%52.0%
No. of Elk River HHDS who can afford16,0924,8864,1766,4135,2954,176
Pct. of Elk River owner HHDs who can afford281.4%65.9%55.8%84.0%71.9%55.8%
No. of Elk River owner HHDs who can afford25,0764,1113,4785,2404,4833,478
No. of Elk River owner HHDS who cannot afford21,1602,1252,7589961,7532,758
Rental (Market Rate)
Existing Rental New Rental
1BR2BR3BR1BR2BR3BR
Monthly Rent$850$950$1,300$950$1,200$1,350
Annual Rent$10,200$11,400$15,600$11,400$14,400$16,200
Housing Costs as % of Income30%30%30%30%30%30%
Minimum Income Required$34,000$38,000$52,000$38,000$48,000$54,000
Pct. of ALL Elk River HHDS who can afford184.8%80.5%70.3%80.5%73.4%68.8%
No. of Elk River HHDS who can afford16,8126,4645,6456,4645,8925,528
Pct. of Elk River renter HHDs who can afford259.3%50.9%74.4%50.9%38.3%32.1%
No. of Elk River renter HHDs who can afford21,0669141,336914688576
No. of Elk River renter HHDS who cannot afford27308824608821,1081,220
1
Based on 2015 household income for ALL households
2
Based on 2013 ACS household income by tenure (i.e. owner and renter incomes. Owner incomes = $85,739 vs. renter incomes = $41,109)
Source: Maxfield Research & Consulting, LLC
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Lender-mediated Properties. As illustrated in Table FS-1, lender-mediated properties have
declined substantially since the housing downturn and Great Recession of last decade.
Lender mediated properties (i.e. foreclosures and short sales) accounted for over 70% of
transactions between 2009 and 2011 before declining annually since and comprising about
12% of transactions thus far in 2015. The continued decline in lender-mediated properties
will enhance the overall real estate market and pricing will continue to gain from all the
losses of last decade. The median sales price is still down about 10% from the height of the
real estate market; hence some homeowners are still upside down on their mortgage. As
more and more homeowners regain lost equity, the real estate market will experience
strong velocity as many owners desire trade-up housing.
Lot Supply. Tables FS-9 and FS-10 inventoried active subdivisions with available lots. Based
on our research there are under than 200 finished vacant single-family lots, not included
scattered lots throughout the city. Based on this lot supply and the recent construction
activity over the past few years, the current finished lot inventory is very low and is less
than three years. Therefore, future lots will be needed to be converted to finished lots to
meet this demand. Because of the time frame to deliver lots (i.e. permitting process,
infrastructure, etc.) new platted lots should begin in 2016 to ensure the lot supply will be
ample to support new construction throughout this decade.
Mortgage Rates. Mortgage rates play a crucial part in housing affordability. Lower
mortgage rates result in a lower monthly mortgage payment and buyers receiving more
home for their dollar. Rising interest rates often require homebuyers to raise their down
payment in order to maintain the same housing costs. Mortgage rates have remained at
historic lows over the past several years coming out of the Great Recession. However, the
Federal Reserve has indicated they may begin raising the Federal Funds Rate this December
2015 and into 2016 that would result in an increase in interest rates. The anticipation of
the rate hike has increased buyer activity in 2015 as buyers are locking today’s interest rates
hoping to avoid rate increases. The anticipated increases are projected to be small;
although affordability will be affected most economists do not anticipate a major change in
the short-term. Low mortgage rates have been critical for the housing recovery; especially
in a market like Elk River that was affected by significant lender-mediated properties. A
significant increase in rates (+1% or more; over 5% in the short term) would greatly affect
the housing market and would slow projected housing demand.
The following chart illustrates historical mortgage rate averages as compiled by Freddie
Mac. The Freddie Mac Market Survey (PMMS) has been tracking mortgage rates since 1971
and is the most relied upon benchmark for evaluating mortgage interest market conditions.
The Freddie Mac survey is based on 30-year mortgages with a loan-to-value of 80%.
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Historic 30-year Mortgage Rates 1972 to 2015 (YTD)
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
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APPENDIX -DEFINITIONS
Definitions
Absorption Period – The period of time necessary for newly constructed or renovated
properties to achieve the stabilized level of occupancy. The absorption period begins when the
first certificate of occupancy is issued and ends when the last unit to reach the stabilized level
of occupancy has signed a lease.
Absorption Rate–The average number of units rented each month during the absorption
period.
Active adult (or independent living without services available) – Active Adult properties are
similar to a general-occupancy apartment building, in that they offer virtually no services but
have age-restrictions(typically 55 or 62 or older). Organized activities and occasionally a
transportation program are usually all that are available at these properties. Because of the
lack of services, active adult properties typically do not command the rent premiums of more
service-enriched senior housing.
Adjusted Gross Income “AGI” – Income from taxable sources (including wages, interest, capital
gains, income from retirement accounts, etc.) adjusted to account for specific deductions (i.e.
contributions to retirementaccounts, unreimbursed business and medical expenses, alimony,
etc.).
Affordable housing – Housing that is income-restricted to households earning at or below 80%
AMI, though individual properties can have income-restrictions set at 40%, 50%, 60% or 80%
AMI. Rent is not based on income but instead is a contract amount that is affordable to
households within the specific income restriction segment. It is essentially housing affordable
to low or very low-income tenants.
Amenity – Tangible or intangible benefits offered to a tenant in the form of common area
amenities or in-unit amenities. Typical in-unit amenities include dishwashers, washer/dryers,
walk-in showers and closets and upgraded kitchen finishes. Typical common area amenities
include detachedor attached garage parking, community room, fitness center and an outdoor
patio or grill/picnic area.
Area Median Income “AMI”– AMI is the midpoint in the income distribution within a specific
geographic area. By definition, 50% of households earn lessthan the median income and 50%
earn more. The U.S. Department of Housing and Urban Development (HUD) calculates AMI
annually and adjustments are made for family size.
Assisted Living – Assisted Living properties come in a variety of forms, but the target market for
most is generally the same: very frail seniors, typically age 80 or older (but can be much
younger, depending on their particular health situation), who are in need of extensive support
services and personal care assistance. Absent an assisted living option, these seniors would
otherwise need to move to a nursing facility. At a minimum, assisted living properties include
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two meals per day and weekly housekeeping in the monthly fee, with the availability of a third
meal and personal care (either included in the monthly fee or for an additional cost). Assisted
living properties also have either staff on duty 24 hours per day or at least 24-hour emergency
response.
Building Permit – Building permits track housing starts and the number of housing units
authorized to be built by the local governing authority. Most jurisdictions require building
permits for new construction, major renovations, as well as other building improvements.
Building permits ensure that all the work meets applicable building and safety rules and is
typically required to be completed by a licensed professional. Once the building is complete
and meets the inspector’s satisfaction, the jurisdiction will issue a “CO” or “Certificate of
Occupancy.” Building permits are a key barometer for the health of the housing market and are
often a leading indicator in the rest of the economy as it has a major impact on consumer
spending.
Capture Rate– The percentage of age, size, and income-qualified renter households in a given
area or “Market Area” that the property must capture to fill the units. The capture rate is
calculated by dividing the total number of units at the property by the total number of age, size
and income-qualified renter households in the designated area.
Comparable Property–A property that is representative of the rental housing choices of the
designated area or “Market Area” that is similar in construction, size, amenities, location and/or
age.
Concession – Discount or incentives given to a prospective tenant to inducesignature of a
lease. Concessions typically are in the form of reduced rent or free rent for a specific lease
term, or free amenities, which are normally charged separately, such as parking.
Congregate (or independent living with services available) –Congregate properties offer
support services such as meals and/or housekeeping, either on an optional basis or a limited
amount included in the rents. These properties typically dedicate a larger share of the overall
building area to common areas, in part, because the units are smaller than in adult housing and
in part to encourage socialization among residents. Congregate properties attract a slightly
older target market than adult housing, typically seniors age 75 or older. Rents are also above
those of the active adult buildings, even excluding the services.
Contract Rent – The actual monthly rent payable by the tenant, including any rent subsidy paid
on behalf of the tenant, to the owner, inclusive of all terms of the lease.
Demand –The total number of households that would potentially move into a proposed new or
renovated housing project. These households must be of appropriate age, income, tenure and
size for a specific proposed development. Components vary and can include, but are not
limited to: turnover, people living in substandard conditions, rent over-burdened households,
income-qualified households and age of householder. Demand is project specific.
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Density – Number of units in a given area. Density is typically measured in dwelling units (DU)
per acre – the larger the number of units permitted per acre the higher the density; the fewer
units permitted results in lower density. Density is often presented in a gross and net format:
Gross Density – The number of dwelling units per acre based on the gross site acreage.
Gross Density = Total residential units/total development area
Net Density - The number of dwelling units per acre located on the site, but excludes
public right-of-ways (ROW) such as streets, alleys, easements, open spaces, etc.
Net Density = Total residential units/total residential land area (excluding ROWs)
Detached housing – a freestanding dwelling unit, most often single-family homes, situated on
its own lot.
Effective Rents – Contract rent less applicable concessions.
Elderly or Senior Housing – Housing where all the units in the property are restricted for
occupancy by persons age 62 years or better, or at least 80% of the units in each building are
restricted for occupancy by households where at least one household member is 55 years of
age or better and the housing is designed with amenities, facilities and services to meet the
needs of senior citizens.
Extremely low-income – person or household with incomes below 30% of Area Median
Income, adjusted for respective household size.
Fair Market Rent – Estimates established by HUD of the Gross Rents needed to obtain modest
rental units in acceptable conditions in a specific geographic area. The amount of rental income
a given property would command if it were open for leasing at any given moment and/or the
amount derived based on market conditions that is needed to pay gross monthly rent at
modest rental housing in a given area. This figure is used as a basis for determining the
payment standard amount used to calculate the maximum monthly subsidy for families on at
financially assisted housing.
Fair Market Rent – Sherburne County 2015
Fair Market Rent
EFF1BR2BR3BR4BR
Fair Market Rent$641$796$996$1,403$1,656
Floor Area Ratio (FAR) Ratio of the floor area of a building to area of the lot on which the
building is located.
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Foreclosure–A legal process in which a lender or financial institute attempts to recover the
balance of a loan from a borrower who has stopped making payments to the lender by using
the sale of the house as collateral for the loan.
Gross Rent – The monthly housing cost to a tenant which equals the Contract Rent provided for
in the lease, plus the estimated cost of all utilities paid by tenants. Maximum Gross Rents for
Sherburne County in 2015 are as follows:
Gross Rent
Sherburne County –2015
Maximum Gross Rent
EFF1BR2BR3BR4BR
30% of Median$455$519$585$649$702
50% of Median$758$866$975$1,082$1,170
60% of Median$910$1,039$1,170$1,299$1,404
80% of Median$1,214$1,386$1,560$1,732$1,827
100% of Median$1,517$1,732$1,950$2,165$2,340
120% of Median$1,821$2,079$2,340$2,598$2,808
Household – All persons who occupy a housing unit, including occupants of a single-family, one
person living alone, two or more families living together, or any other group of related or
unrelated persons who share living arrangements.
Household Trends – Changes in the number of households for any particular areas over a
measurable period of time, which is a function of hew households formations, changes in
average household size, and met migration.
Housing Choice Voucher Program –The federal government's major program for assisting very
low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing
in the private market. A family that is issued a housing voucher is responsible for finding a
suitable housing unit of the family's choice where the owner agrees to rent under the program.
Housing choice vouchers are administered locally by public housing agencies. They receive
federal funds from the U.S. Department of Housing and Urban Development (HUD) to
administer the voucher program. A housing subsidy is paid to the landlord directly by the public
housing agency on behalf of the participating family. The family then pays the difference
between the actual rent charged by the landlord and the amount subsidized by the program.
Housing unit –House, apartment, mobile home, or group of rooms used as a separate living
quarters by a single household.
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HUD Project-Based Section 8 – A federal government program that provides rental housing for
very low-income families, the elderly, and the disabled in privately owned and managed rental
units. The owner reserves some or all of the units in a building in return for a Federal
government guarantee to make up the difference between the tenant's contribution and the
rent. A tenant who leaves a subsidized project will lose access to the project-based subsidy.
HUD Section 202 Program – Federal program that provides direct capital assistance and
operating or rental assistance to finance housing designed for occupancy by elder household
who have incomes not exceeding 50% of Area Median Income.
HUD Section 811 Program – Federal program that provides direct capital assistance and
operating or rental assistance to finance housing designed for occupancy of persons with
disabilities who have incomes not exceeding 50% Area Median Income.
HUD Section 236 Program–Federal program that provides interest reduction payments for
loans which finance housing targeted to households with income not exceeding 80% Area
Median Income who pay rent equal to the greater or market rate or 30% of their adjusted
income.
Income limits – Maximum households income by a designed geographic area, adjusted for
household size and expressed as a percentage of the Area Median Income, for the purpose of
establishing an upper limit for eligibility for a specific housing program.
MAXIMUM RENT BASED ON HOUSEHOLD SIZE AND AREA MEDIAN INCOME
HENDRICKS COUNTY - 2015
Maximum Rent Based on Household Size (@30% of Income)
HHD Size30%50%60%80%100%120%
1
Unit Type
MinMaxMin. Max.Min. Max.Min. Max.Min. Max.Min. Max.Min. Max.
Studio11$366-$366$610-$610$732-$732$976-$976$1,220-$1,220$1,464-$1,464
1BR 12$366-$419$610-$698$732-$837$976-$1,116$1,220-$1,395$1,464-$1,674
2BR 24$419-$523$698-$871$837-$1,046$1,116-$1,394$1,395-$1,743$1,674-$2,091
3BR36$470-$607$784-$1,011$941-$1,214$1,254-$1,618$1,568-$2,023$1,881-$2,427
4BR48$523-$690$871-$1,150$1,046-$1,380$1,394-$1,840$1,743-$2,300$2,091-$2,760
1
One-bedroom plus den and two-bedroom plus den units are classified as 1BR and 2BR units, respectively. To be classified as a bedroom, a den must have a window and
closet.
Note: 4-person Hendricks County AMI is $69,700 (2015)
Sources: HUD, Novogradac, Maxfield Research Inc.
Inflow/Outflow – The Inflow/Outflow Analysis generates results showing the count and
characteristics of worker flows in to, out of, and within the defined geographic area.
Low-Income – Person or household with gross household incomes below 80% of Area Median
Income, adjusted for household size.
Low-Income Housing Tax Credit –A program aimed to generate equity for investment in
affordable rental housing authorized pursuant to Section 42 of the Internal Revenue Code. The
program requires that a certain percentage of units built be restricted for occupancy to
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households earning 60% or less of Area Median Income, and rents on these units be restricted
accordingly.
Market analysis – The study of real estate market conditions for a specific type of property,
geographic area or proposed (re)development.
Market rent – The rent that an apartment, without rent or income restrictions or rent
subsidies, would command in a given area or “Market Area” considering its location, features
and amenities.
Market study – A comprehensive study of a specific proposal including a review of the housing
market in a defined market or geography. Project specific market studies are often used by
developers, property managers or government entities to determine the appropriateness of a
proposed development, whereas market specific market studies are used to determine what
house needs, if any, existing within a specific geography.
Market rate rental housing– Housing that does not have any income-restrictions. Some
properties will have income guidelines, which are minimum annual incomes required in order
to reside at the property.
Memory Care– Memory Care properties, designed specifically for persons suffering from
Alzheimer’s disease or other dementias, is one of the newest trends in senior housing.
Properties consist mostly of suite-style or studio units or occasionally one-bedroom apartment-
style units, and large amounts of communal areas for activities and programming. In addition,
staff typically undergoes specialized training in the care of this population. Because of the
greater amount of individualized personal care required by residents, staffing ratios are much
higher than traditional assisted living and thus, the costs of care are also higher. Unlike
conventional assisted living, however, which deals almost exclusively with widows or widowers,
a higher proportion of persons afflicted with Alzheimer’s disease are in two-person households.
That means the decision to move a spouse into a memory care facility involves the caregiver’s
concern of incurring the costs of health care at a special facility while continuing to maintain
their home.
Migration–The movement of households and/or people into or out of an area.
Mixed-income property–An apartment property contained either both income-restricted and
unrestricted units or units restricted at two or more income limits.
Mobility – The ease at which people move from one location to another.
Moderate Income–Person or household with gross household income between 80% and 120%
of the Area Median Income, adjusted for household size.
Multifamily– Properties and structures that contain more than two housing units.
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Naturally Occurring Affordable Housing– Although affordable housing is typically associated
with an income-restricted property, there are other housing units in communities that
indirectly provide affordable housing. Housing units that were not developed or designated
with income guidelines (i.e. assisted) yet are more affordable than other units in a community
are considered “naturally-occurring” or “unsubsidized affordable” units. This rental supply is
available through the private market, versus assisted housing programs through various
governmental agencies. Property values on these units are lower based on a combination of
factors, such as: age of structure/housing stock, location, condition, size, functionally obsolete,
school district, etc.
Net Income – Income earned after payroll withholdings such as state and federal income taxes,
social security, as well as retirement savings and health insurance.
Net Worth– The difference between assets and liabilities, or the total value of assets after the
debt is subtracted.
Pent-up demand –A market in which there is a scarcity of supply and as such, vacancy rates are
very low or non-existent.
Population–All people living in a geographic area.
Population Density–The population of an area divided by the number of square miles of land
area.
Population Trends – Changes in population levels for a particular geographic area over a
specific period of time –a function of the level of births, deaths, and in/out migration.
Project-Based rent assistance– Rental assistance from any source that is allocated to the
property or a specific number of units in the property and is available to each income eligible
tenant of the property or an assisted unit.
Redevelopment – The redesign, rehabilitation or expansion of existing properties.
Rent burden – gross rent divided by adjusted monthly household income.
Restricted rent – The rent charged under the restriction of a specific housing program or
subsidy.
Saturation –The point at which there is no longer demand to support additional market rate,
affordable/subsidized, rental, for-sale, or senior housing units. Saturation usually refers to a
particular segment of a specific market.
Senior Housing– The term “senior housing” refers to any housing development that is
restricted to people age 55 or older. Today, senior housing includes an entire spectrum of
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housing alternatives. Maxfield Research Inc. classifies senior housing into four categories based
on the level of support services. The four categories are: Active Adult, Congregate, Assisted
Living and Memory Care.
Short Sale –A sale of real estate in which the net proceeds from selling the property do not
cover the sellers’ mortgage obligations. The difference is forgiven by the lender, or other
arrangements are made with the lender to settle the remainder of the debt.
Single-family home – A dwelling unit, either attached or detached, designed for use by one
household and with direct street access. It does not share heating facilities or other essential
electrical, mechanical or building facilities with another dwelling.
Stabilized level of occupancy – The underwritten or actual number of occupied units that a
property is expected to maintain after the initial lease-up period.
Subsidized housing–Housing thatis income-restricted to households earning at or below 30%
AMI. Rent is generally based on income, with the household contributing 30% of their adjusted
gross income toward rent. Also referred to as extremely low income housing.
Subsidy – Monthly income received by a tenant or by an owner on behalf of a tenant to pay the
difference between the apartment’s contract/market rate rent and the amount paid by the
tenant toward rent.
Substandard conditions – Housing conditions that are conventionally considered unacceptable
and can be defined in terms of lacking plumbing facilities, one or more major mechanical or
electrical system malfunctions, or overcrowded conditions.
Target population – The market segment or segments of the given population a development
would appeal or cater to.
Tenant – One who rents real property from another individual or rental company.
Tenant-paid utilities – The cost of utilities, excluding cable, telephone, or internet necessary for
the habitation of a dwelling unit, which are paid by said tenant.
Tenure – The distinction between owner-occupied and renter-occupied housing units.
Turnover –A measure of movement of residents into and out of a geographic location.
Turnover period– An estimate of the number of housing units in a geographic location as a
percentage of the total house units that will likely change occupants in any one year.
Unrestricted units–Units that are not subject to any income or rent restrictions.
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Vacancy period – The amount of time an apartment remains vacant and is available on the
market for rent.
Workforce housing – Housing that is income-restricted to households earning between 80%
and 120% AMI. Also referred to as moderate-income housing.
Zoning –Classification and regulation of land use by local governments according to use
categories (zones); often also includes density designations and limitations
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Springsted Incorporated
380 Jackson Street, Suite 300
Saint Paul, MN 55101-2887
Tel: 651-223-3000
Fax: 651-223-3002
www.springsted.com
MEMORANDUM
TO: Members of the EDA
Brian Beeman, Economic Development Director
FROM: Mikaela Huot, Vice President/Consultant
DATE: February 11, 2014
SUBJECT: Tax Increment Financing, Tax Abatement and Business Subsidy Policy Updates
The Elk River City Council and Housing and Redevelopment Authority (HRA) held joint meetings on Monday,
November 4, 2013 and December 2, 2013 to discuss the City’s existing tax increment financing (TIF) policy that was
initially created in 1991 and later amended in 2000 and 2006. The policy contains the purpose, objectives of tax
increment financing, policies for use of tax increment financing, project qualifications, application for TIF, and
application review worksheet. The policy lists many City objectives regarding the use of tax increment financing,
including creation of affordable housing; however the application review worksheet does not align with the scoring
and review of potential housing projects. As a result of the joint meetings, staff and Springsted were asked to update
the current policy to include the review of affordable housing projects. A general review and update of the existing
TIF policy in conjunction with development of the housing review worksheet has also occurred and was reviewed and
approved by the HRA at its February 3, 2014 meeting.
It was also advised that updates be made to the existing business subsidy and tax abatement policies to ensure
compliance with current statutory requirements and consistency. The purpose of this memo is to provide a brief
summary of the recommended changes and potential areas of discussion for the updates. .
Tax Increment Financing (TIF) Policy Updates
1.Inclusion of housing projects under Section III (b) (3)
2.Edit under Section III (j)
3.Addition of Section V Subsidy Agreement & Reporting Requirements
4.Edits to Section VI. Application Process for TIF (1) to be consistent with City’s fee schedule
5.Edits to Section VI. Application Process for TIF (2) inclusion of housing projects
6.Edits to Section VII. Section E to be consistent with City’s fee schedule
7.Minor edits to Section IX
8.Addition of Section X – Housing Review Worksheet
Tax Abatement Policy Updates
1.Edits under Section VI. to update statutory reference
2.Edits to Section VII. A to be consistent with City’s fee schedule
3.Edits to Section VIII E to be consistent with City’s fee schedule
Business Subsidy Policy Updates
1.Edits to Section I to update statutory reference
2.Edits to Section II to clarify definition of business subsidy
3.Edits to Section V(A.) to clarify intent
4.Edits to Section V(E.) to update minimum wage requirement
a.Subject to discussion – some alternates to consider
i.At least state or federal minimum wage, whichever is greater, exclusive of benefits
ii.Wage of higher or $__/hr or __% federal minimum wage, exclusive of benefits
iii.___% of most recent median wage figure for County
iv.___% of federal poverty level
v.___% of minimum wage
5.Removal of Section VI. (included under Section II)
6.Edits to Section VII to be consistent with statutory requirement
7.Edits to Section VIII for clarification
Thank you for the opportunity to be of assistance to the City of Elk River. We look forward to discussing in greater
detail at the February 18, 2014 scheduled meeting. I can be reached at 651-223-3036 or mhuot@springsted.com
with any questions or comments.
Joint Special Meeting of the Elk River City Council
and Housing and Redevelopment Authority
Held at Elk River City Hall
Monday, November 4, 2013
Members Present: Mayor Dietz, Councilmembers Westgaard, Wilson, Burandt, and
Motin
HRA Commissioners Chuba, Kuester, and Toth
Members Absent: None
Staff Present: City Administrator Calvin Portner, Community Operations and
Development Deputy Director Manager Jeremy Barnhart, Director
of Economic Development Brian Beeman, Finance Director Tim
Simon, Community Operations and Development Director Suzanne
Fischer, and City Clerk Tina Allard
1.Call Meeting to Order
Pursuant to due call and notice thereof, the meeting of the Elk River City Council
was called to order at 5:50 p.m. by Mayor Dietz.
2. Pledge of Allegiance
The Pledge of Allegiance was recited.
3. Discuss Tax Increment Financing Housing Policy
Mr. Beeman presented the staff report. He introduced Springsted Consultant
Mikaela Hout.
Ms. Hout discussed the following:
Role of an HRA/EDA.
Mission/objectives for tax increment financing.
Importance of establishing criteria/policies based on what the market will
support.
Public purpose benefits.
City's policy for use of Tax Increment Financing
City's project qualifications.
What drives the need for public financing assistance.
What role the community wants to play to encourage development.
Development efforts a city makes may affect the city's financial reputation.
Ms. Hout reviewed a survey that was sent our earlier to Council and Housing and
Redevelopment Authority members.
Joint Special City Council & HRA Minutes Page 2
November 4, 2013
-----------------------------
Councilmember Wilson questioned the minimum numbers and when they were
established.
Ms. Hout noted the policy was amended in May 2006 but adopted in 1991 and stated
staff could check on how reasonable the numbers are for current tax increment
financing projects.
Mayor Dietz questioned Council and HRA on whether and how TIF should be used
for housing.
Ms. Hout stated they should consider if it is their objective that TIF be used for
housing. If so, then the policy should have some language to allow the city to explore
options. If no, then this change should be made clear in policy. She further stated the
city could limit the types of housing they would like to consider, such as making it
available only for senior housing.
Commissioner Toth questioned the criteria for the scoring sheet and had concerns
with it being too flexible and setting precedence when allowing exceptions.
Ms. Hout stated the policy acts as general guidelines for the city and would be
flexible and dependent upon community need.
Mayor Dietz suggested the policy be flexible enough so each project can stand on its
own.
Councilmember Westgaard stated he is not opposed to keeping housing as a
consideration in TIF districts but he is not sure if the city should narrow down to
development versus a redevelopment scenario. He’d like to allow for TIF for
housing but put it as a lower priority over other types of applications. He’d like to
stay more on the conservative side from the risk component.
Commissioner Kuester stated the commission hasn't covered much with housing
and believes the current project is an opportunity to go to market when there is a
need in the community for senior housing. She stated the Mayfield Study backs up
the need for senior housing.
Commissioner Toth commented he likes the set up the city has with the MN Central
Housing Partnership. He agreed on the need for some housing work done in the
city. He stated TIF may be an avenue worth exploring but it needs to be done
carefully with a new evaluation criteria and looking to the long-term benefits for the
community.
Commissioner Chuba stated he feels it is important for the city to have life cycle
housing with a range of affordable housing for the young and elderly. He stated the
TIF financing should be flexible, but issues need to be worked out, such as how
much TIF to allow, how long it should be good for, and how much increase in value
is expected.
Joint Special City Council & HRA Minutes Page 3
November 4, 2013
-----------------------------
Councilmember Motin stated he would not like to see TIF for housing purposes but
if the city votes to have it, then the developer would need to meet some other need
such as being in an area that also needs redevelopment or close to where it will help
a commercial area. He stated the Maxfield Study was done from the viewpoint of, if
you build it, they will come, rather than based on a community need. He also noted
there are other funding options available for developers.
Councilmember Burandt concurred with Commissioner Chuba regarding life cycle
housing and felt the need for having different types of availability for all income
levels. She felt there is a need to be flexible with the TIF policy and that TIF for
housing should be included. She stated there will be more seniors in the near future
and the city needs to plan for them coming back to their community.
Councilmember Wilson stated housing has not been addressed over the years by the
HRA. He stated he would like to address the city policy and limit TIF to senior
housing. He stated there is a gap between what Guardian Angels offers, which is low
income housing, versus affordable housing.
Roger Derrick stated people are already here and they need help now.
Commissioner Toth stated he has no issue with using TIF but the city needs well
maintained criteria.
Ms. Hout stated they would look at the changes that are needed to the existing policy
and prepare a new scoring worksheet based on the discussion tonight.
4. Adjournment
There being no further business, Mayor Dietz adjourned the meeting at 6:55 p.m.
_________________ __
John J. Dietz, Mayor
_____________________
Tina Allard, City Clerk
Joint Special Meeting of the Elk River City Council
and Housing and Redevelopment Authority
Held at Elk River City Hall
Monday, December 2, 2013
Members Present: Mayor Dietz, Councilmembers Wilson, Motin, and Westgaard (6:27 p.m.)
HRA Commissioners Chuba, Kuester, and Toth
Members Absent: Councilmembers Burandt and Commissioner Kuester
Staff Present: City Administrator Calvin Portner, Community Operations and
Development Deputy Director Manager Jeremy Barnhart, Director of
Economic Development Brian Beeman, and Senior Administrative
Assistant/Recording Secretary Jennifer Johnson
1.Call Meeting to Order
Pursuant to due call and notice thereof, the meeting of the Elk River City Council was called
to order at 5:46 p.m. by Mayor Dietz.
2.1 Discuss Housing Survey and Develop Housing Tax Increment Financing
Scoring Worksheet
Mr. Beeman presented the staff report. He introduced Springsted Consultant Mikaela Huot,
who reviewed the draft application scoring worksheet with the Council and commission
members.
The following areas of the worksheet were discussed and adjustments suggested:
Under question 1 of the application worksheet, “The policy meets the criteria set forth in
Section IV of the city’s Tax Increment Financing policy,” Ms. Huot reviewed the TIF policy
sections asked if the overall policy should be adjusted. She noted the policy as currently
worded remained in compliance with state statute. There were no comments regarding
question 1.
Under question 2, “Ratio of Private to All Public Investment in Project,” Councilmember
Motin suggested no points be awarded if the ratio was less than 2:1. Discussion ensued
regarding whether or not to assign 0 points versus 1 point if some aspects of a project don’t
meet specific thresholds. Ms. Huot stated some projects may have areas that still qualify it as
a worthy, viable project, but may have areas that don’t meet all thresholds even by assigning
0 points. It was decided to consider each project in a case-by-case basis.
Under question 3, “Job Creation in the City of Elk River,” Commissioner Chuba noted his
concerns with the number of jobs retained being viewed as significantly less valuable than
the new creation of jobs. He felt it more a penalty not attempt to retain businesses who may
wish to relocate. Councilmember Motin felt it important to remain consistent between both
industrial and housing project types. Ms. Huot agreed and noted other cities differ across the
board, depending upon whether or not retainage of current jobs is more important than
creating new jobs. It was decided to lower the number of existing/retained jobs divided by a
lower number instead of 10.
Joint Special City Council & HRA Minutes Page 2
December 2, 2013
-----------------------------
Under question 4, “Wage level of new jobs created/retained,” Councilmember Motin had
concerns with requiring a certain minimum number of jobs and felt an emphasis was placed
on higher paying jobs. Commissioner Toth asked if these jobs were considered temporary,
part time, or full time positions. Ms. Huot gave an example of a healthcare wage in an
assisted living or memory care setting would produce a full time, higher wage job than a
manufacturing type of job. She noted these figures come from the existing policy, which was
based upon old figures and should be adjusted to a more current salary market. She stated
the positions created would be on permanent, full time-equivalent positions.
Under question 5, “Market Value/Tax Base Generation,” Ms. Hout stated the focus should
be on per unit value, not cost to construct. Councilmember Motin stated he felt the range
from $95,000/unit to $135,000 was too narrow and suggested a higher price per unit would
also increase the quality of the unit. Commissioner Chuba noted values increase and decrease
based upon the economy, and if these values were set in stone, it would be difficult to have
gotten these figures about 4 years ago but felt a $40,000 variation isn’t too far out of line in
this area. Councilmember Wilson asked if the building’s other amenities were factored into
the unit cost. Ms. Huot stated it would depend upon how the assessor applied the value of
the unit along with any amenities the building offered such as a community room. She also
noted the project intention would also drive the per-price unit, such as if the project were an
income-based property.
Question 6, “Project provides housing that is restricted to persons 55 years and older” and
question 7, “Project provides that at least 30% of the total units are three-bedroom or more”
were discussed together. Ms. Huot asked the members to consider the focus of TIF and if it
be towards senior housing projects or a multi-unit housing projects. Councilmember Wilson
referenced the senior housing flowchart included in the staff report and asked if using the
term “55 years” was proper and should be reworded to “senior housing.” Ms. Huot
recommended eliminating question 7 if the desire was to focus housing needs on senior
housing. She then recommended changing the points for question 6 to 5 points instead of 3
points if the project provided housing that is restricted to seniors. Commissioner Toth
expressed concerns with discrimination if only awarding points to senior housing. Ms. Huot
stated the project could still generate enough points to qualify for financing even if the
project wasn’t specific for senior housing.
Question 8, “Project proposes rehabilitation of existing housing, housing stock, and
maximizes utilization of existing infrastructure” and question 9, “Project proposes a location
near existing jobs, transportation, recreation, retail services, social services, and schools”
were discussed together, and targeted areas of redevelopment. Commissioners Toth and
Chuba asked who determines the criteria of the meaning of the word “near” in question 9.
Ms. Huot states this was based upon comments received of the importance to position
housing in areas of the city where the use a sidewalk or transportation services were already
available. Commissioner Wilson felt this zeroes in on certain areas of the city that would
qualify for that type of a development but felt society had decent means of transportation
available to them. Mayor Dietz suggested changing the number of points in question 9 to 2
points instead of 4.
Question 10 “Type of project” was discussed and the question was discussed if it matters if
the property is owner-occupied or rental. It was determined to leave the points as is.
Question 11 “Use” was discussed; the consensus was to eliminate question 11.
Joint Special City Council & HRA Minutes Page 3
December 2, 2013
-----------------------------
Councilmember Westgaard suggested removing question 11 and suggested incorporating
into question 10 or 11 more areas of use, such as mixed use or owner-occupied housing.
Question 12 “Likelihood that the project will result in unsubsidized, spin-off development”
was discussed. Question 13 “Bonus points” was discussed. Both questions were consistent
with current policy.
Ms. Huot summarized that based upon the comments this evening, the total points would
adjust moderately from 45 to 38.
After discussion, Mayor Dietz asked what the next steps would be.
Ms. Huot stated she will make the final adjustments to the application worksheet that were
discussed, make any final adjustments to the policy, and bring back to both the HRA and
EDA for final review and approval. Once that is completed, the Council will have the final
say in reviewing and approving the final policy and worksheet.
There was some question as to the need for both HRA and EDA to review the final
application and policy revisions. It was the consensus of both the Council and Authority to
have the HRA and EDA review before bringing back to Council for final approval.
3. Adjournment
There being no further business, Mayor Dietz adjourned the meeting at 6:40 p.m.
Minutes prepared by Jennifer Johnson.
____________________
John J. Dietz, Mayor
____________________
Tina Allard, City Clerk