7.2. HRSR 06-01-2020 �� Request for Action
Elk -
River
To Item Number
Housing and Redevelopment Authority 7.2
Agenda Section Meeting Date Prepared by
General Business June 1, 2020 Amanda Othoudt,EDD
Item Description Reviewed by
Hillside Heights Apartments—Letter of Support Cal Portner, City Administrator
Reviewed by
Action Requested
Approve or deny,by motion,a resolution of support to for the proposed use of tax increment financing
for Hillside Heights Apartments.
Background/Discussion
Community Housing Development Corporation (CHDC) proposes to develop a three-story new construction
affordable apartment building on the southeast corner of Twin Lakes Road NW and 175"'Avenue NW. The
building will consist of approximately 55 units with 13 one-bedroom units, 28 two-bedroom units, 14 three-
bedroom units and approximately 60 parking spaces. Common amenities proposed include storage, a roof
deck, fitness/physical therapy room,library, community room,patio area,ball court,playground, and
community garden.
At their May 26, 2020, meeting,the Joint Finance Committee reviewed a Housing TIF application for Hillside
Heights Apartments. The developer requested$450,000 for land acquisition and$330,000 for site
improvements for a total of$780,000, or 4.6% of the total project cost of$16,908,377.
The developer is proposing apay-asyougo method for eligible costs as reimbursement. To qualify as a Housing
TIF District, at least 20% of the units would be occupied by persons or families with incomes no greater than
50% of county median income or at least 40% of the units would be occupied by persons or families with
incomes no greater than 60% of county median income for the duration of the district.
Per city policy, the total estimated gross increment available is $1,818,810 ($121,254 annually) over 15 years, the
maximum term allowed. Following policy guidelines,the developer may be eligible to receive up to 90% of the
gross tax increment over 15 years. The estimated total net (90%) amount of tax increment over the 15-year
maximum period would be $1,636,935 ($109,129 annually). The estimated present value of the net tax
increment is projected to be $1,125,475 assuming 4%interest and would exceed the developer's request.
Current estimates indicate it may take only 10 years to meet the developer's full requested amount assuming a
4%interest rate.
The Elk River Vision
A n elcoming community n ith revolutionary and spirited resourcefulness, exceptional p D W E H E D D Y
service, and community engagement that encourages and inspires prosperity /` UR
At their May 26, 2020, meeting,the Joint Finance Committee made a recommendation to the Housing and
Redevelopment Authority to consider a letter of support for the project through tax increment financing,
subject to the applicant receiving an allocation of tax credits and there being a continued demonstrated need
for the additional 55 new affordable housing units in the amount of$780,000 plus interest over a period of up
to 15 years.
The applicant has also indicated that they intend to apply for $11,958,804 in Low Income Housing Tax Credits
(LIHTC) from the MN Housing Finance Authority which requires a resolution of support from the HRA and
City Council. The applicant requested the HRA to approve a resolution of support for their project,Low
Income Housing Tax Credit application and the TIF application.
The resolution does not approve the project or the TIF application and the city will not be required to approve
future land use applications for the site should the HRA adopt the resolution. However,high density uses are a
permitted use on this site and a future site plan application, consistent with all standards in the ordinance,
would not require Council review or a public hearing.
The letter of support will allow CHDC to apply to MN Housing Finance Authority for Low Income Housing
Tax Credits to assist with financing their project. Provided CHDC's application is approved by MN Housing
Finance, the letter provides support from the city for CHDC to move forward with their Housing TIF request
provided there is still a need for the additional 55 new affordable housing units.
Financial Impact
Per city policy, the total estimated gross increment available over 15 years for housing projects is $1,818,810.
The developer could receive 90% of the gross increment over 15 years of$1,636,935 or a present value of
$1,125,475. However, based on the developer's application and request for assistance,it may only take up to 10
years to meet the full requested amount.
Subject to project eligibility,it is at the city's discretion to capture the remaining 11-16 years of estimated
surplus increment from this project to assist in future housing projects.
Attachments
■ JFC Meeting Packet
■ Draft Resolution of Support
■ Draft Letter of Support
1
Dan Tveite Statement and Determination, as President of the The Economic Development
Authority for the City of Elk River Minnesota Regarding Conducting Meetings by Telephone
or Other Electronic Means
As President of the The Economic Development Authority for the City of Elk River Minnesota (the
“EDA”), Minnesota, I find as follows:
a. The spread of COVID-19 in the United States and Minnesota has raised serious public health
concerns and resulted in a great deal of uncertainty. Much remains unknown about the virus
and how it spreads.
b. On March 11, 2020, the World Health Organization determined that the COVID-19 outbreak
constitutes a pandemic. On March 13, 2020, President Trump declared a national state of
emergency as a result of the pandemic.
c. On March 13, 2020, Governor Tim Walz issued Emergency Executive Order 20-01 declaring
a state of peacetime emergency to address the COVID-19 pandemic in Minnesota. The
Governor’s Executive Order triggered activation of the County’s emergency management plan
and enabled the County to exercise its emergency powers.
d. Mayor John Dietz of the City of Elk River, Minnesota declared a local emergency due to the
COVID-19 pandemic in Minnesota.
e. On March 26, 2020, City Administrator Cal Portner declared that until further notice, or until
such time as the State of Minnesota determines to no longer be in a state of emergency, all
meetings of the EDA governed by Minnesota Statute, Section 13D shall be conducted by
telephone or other electronic means.
f. Minnesota Statutes, Section 13D.021 authorizes cities and other public bodies to meet by
telephone or other electronic means if the presiding officer, chief legal counsel, or chief
administrative officer determines that meeting in person or by interactive television is not
practical or prudent because of a health pandemic or an emergency has been declared. I
have consulted with the EDA’s chief legal counsel and chief administrative officer.
Based on the above findings, I determine as follows:
1. In accordance with the declarations of the Mayor and the City Administrator, until further
notice, all meetings of the EDA may be conducted by telephone or other electronic means in a
manner satisfying the requirements in Minnesota Statutes, Section 13D.021 and the
declarations of the Mayor and the City Administrator.
2. As is practical and feasible, the EDA will provide notice of how the public may listen to or
view meetings as they are being conducted, and the EDA will continue to make recordings of
its meetings available to the public.
3. All votes occurring at meetings in which all or some of the members are participating by
telephone or electronic means will be conducted by roll call.
Meeting
of the
Joint Finance
Committee
AGENDA
Tuesday, May 26, 2020
7:30 a.m.
Elk River City Hall
Virtual
1. CALL MEETING TO ORDER
2. CONSIDER AGENDA
3. CONSENT AGENDA
Considered to be routine and noncontroversial by the Economic Development Finance Committee and will be approved by one
motion. There will be no separate discussion of these items unless a Committee member, staff member, or citizen so requests, in
which case the item will be removed from the consent agenda and considered under the regular agenda.
3.1 August 27, 2019, Minutes
3.2 Revolving Loan Fund Balance Report
4. GENERAL BUSINESS
4.1 Housing TIF Application for Hillside Heights Apartments
5. ANNOUNCEMENTS
6. ADJOURNMENT
Meeting Protocol
No sidebar discussions
No interruptions
State your concern
Ensure you understand
Don’t take things personally
Adhere to time limits
Come prepared
Ensure all are heard
ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
MICRO LOANS
Current Current 5/12/20
Loan Loan Interest Term Monthly Principal
Borrower Date Amount Rate (Months)Payment Outstanding Current
Die Concepts 6/3/2016 $185,200 2.00%60 $936.90 $154,481.48 Y
Heritage Millwork 12/22/2016 $100,000 3.00%60 $965.61 $69,219.18 Y
Ralphies#1 9/10/2013 $74,999 3.00%120 $724.20 $27,067.98 Y
Ralphies#2 8/28/2018 $19,175 3.00%60 $343.65 $13,099.75 Y
TOTAL MICRO LOANS $263,868.39 Micro Loan Fund 240
Distinctive Iron 10/1/2019 $126,000 2.03%60 $1,050.07 186,440.15$ Y
Scott Morrell LLC 8/6/2015 $200,000 2.00%60 $1,011.77 159,419.31 Y
Orluck 7/17/2018 $200,000 3.00%84 $2,642.66 153,861.22 Y
$499,720.68 DEED Jobs Incentive Loan Fund 242
Fund Cash Balances 05/12/20:
Micro Loan Fund - 240 $893,005.71
State DEED Jobs Incentive - 242 $123,317.72
Meeting of the Elk River Joint Finance Committee
Held at Elk River City Hall
Tuesday, August 27, 2019
Members Present: Dan Tveite, Larry Toth, Ryan Hardin, Nate Ovall, and Rhonda Magnussen
Members Absent: Jim Gromberg, Chad Vitzthum, and Michelle Eder
Staff Present: Amanda Othoudt, Economic Development and Colleen Eddy, Economic
Development Specialist
Others Present: Cindy Hemmer, Distinctive Iron
1. Call Meeting to Order
Pursuant to due call and notice thereof, the meeting of the Elk River Joint Finance
Committee was called to order by Dan Tveite at 7:43 a.m.
2. Consider Agenda
Motion by Ovall and seconded by Hardin to approve the August 27, 2019, Joint
Finance Committee agenda.
Motion carried 5-0.
3. Consent Agenda
Motion by Ovall and seconded by Magnussen to approve the August 27, 2019 Joint
Finance Committee consent agenda:
3.1. June 25, 2019 Joint Finance Committee meeting minutes
3.2. Revolving Loan Fund Balance report
Motion carried 5-0.
4.1 Microloan Application for Distinctive Iron
Ms. Othoudt presented the staff report. Mr. Ovall announced that he is a representative at
the Bank of Elk River, but is not the bank representative for Ms. Hemmer and Distinctive
Iron. This announcement does not prevent him from voting on this application.
The Committee discussed several items on the application; is the applicant rolling their
previous microloan into this request, are the jobs proposed new ones, the Initiative
Foundation will also be providing gap financing for this project in the amount of $90,000.
Ms. Hemmer stated that they will be leasing a portion of their old building and will sell it if
the price is right.
Motion by Toth to recommend approval of the Jobs Incentive Microloan application
for Distinctive Iron to the EDA and seconded by Magnussen. Motion carried 5-0.
5.1 Announcements
Ms. Othoudt notified the committee that there is a vacancy on the committee and if
members know anyone they should send Ms. Othoudt their names.
6. Adjournment
There being no further business, Mr. Tveite adjourned the meeting at 8:08 a.m.
Minutes prepared by Colleen Eddy.
_____________________
Tina Allard
City Clerk
___________________
Amanda Othoudt
Economic Development Director
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity
Request for Action
To
Joint Finance Committee
Item Number
4.1
Agenda Section
General Business
Meeting Date
May 26, 2020
Prepared by
Amanda Othoudt, EDD
Item Description
Hillside Heights Apartments Housing TIF
Application and Financial Review
Reviewed by
Mikaela Huot, Financial Advisor
Reviewed by
Cal Portner, City Administrator
Action Requested
Review application and provide a recommendation to the Housing and Redevelopment Authority to
establish Tax Increment Financing District No. 26.
Background/Discussion
Community Housing Development Corporation (CHDC) proposes to develop a three-story new construction
affordable apartment building on the Southeast corner of Twin Lakes Road NW and 175th Ave NW. The
building will consist of approximately 55 units with 13 one-bedroom units, 28 two-bedroom units, 14 three-
bedroom units and approximately 60 parking spaces. Common amenities proposed include storage, a roof
deck, fitness/physical therapy room, library, community room, patio area, ball court, playground, and
community garden.
Based on an estimated taxable value upon completion of $7,766,300, provided by the Sherburne County
Assessor, the Hillside Heights Apartments Housing Project is estimated to generate approximately $3,152,604
in total gross tax increment over 26 years, the maximum term for a Housing TIF District. The net amount
projected to be available for the project is 90% or $2,837,354, with the city retaining 10% for administrative
and other eligible expenses over the 26-year term of the district.
The developer requested $450,000 for land acquisition and $330,000 for site improvements for a total of
$780,000.
Per city policy, the total estimated gross increment available is $1,818,810 ($121,254 annually) over 15 years, the
maximum term allowed. Following policy guidelines, the developer may be eligible to receive up to 90% of the
gross tax increment over 15 years. The estimated total net (90%) amount of tax increment over the 15-year
maximum period would be $1,636,935 ($109,129 annually). The estimated present value of the net tax
increment is projected to be $1,125,475 assuming 4% interest and would exceed the developer’s request.
Current estimates indicate it may take 10 years to meet the developer’s full requested amount assuming a 4%
interest rate.
N:\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\Joint Finance Committee Agenda
Packets\2020\4.1 sr Community Housing Development Corporation TIF Application.docx
The developer’s proposed financial package for the Hillside Heights Apartments Housing TIF Project includes
the following sources and uses of funds:
SOURCES AMOUNT NOTES
Minnesota Housing First Mortgage $3,290,000 40 years at 3.3% interest rate
TIF Mortgage $780,000 25 years at 3.3% interest rate
Sales Tax Rebate $349,509
Energy Rebate $27,500
Deferred Developer Fee $502,564 50% total fee. Max allowable
Tax Credit Proceeds $11,958,804
TOTAL $16,908,377
USES AMOUNT NOTES
Land Acquisition $450,000
Construction $12,760,000
Contingency $510,400
Professional Fees (Soft Costs) $1,216,775
Developer Fee $1,000,000
Syndication Fees $39,600
Financing Fees $635,070
Reserves $295,533
TOTAL $16,908,377
The developer is proposing a pay-as-you-go method for eligible costs as reimbursement. To qualify as a Housing
TIF District, at least 20% of the units would be occupied by persons or families with incomes no greater than
50% of county median income or at least 40% of the units would be occupied by persons or families with
incomes no greater than 60% of county median income for the duration of the district.
Policy Review
Staff completed a review of the application in accordance of the city’s Tax Increment Financing Policy adopted
on December 4, 2017.
Based on the Estimated Market Value of the project as calculated by Sherburne County, the project’s EMV is
approximately $7,766,300 or $141,205 per unit. Taxes generated by this project would be approximately
$151,640 or $2,757.09 per unit.
Public Purpose
The project must achieve one or more of the following public purpose statements:
1. Demonstrate long-term benefits to the community.
2. Retain local jobs and/or increase the number and diversity of jobs that offer stable employment
and/or attractive wages and benefits through:
Diversification of the local economy
Significant addition of permanent, high-wage, full-time jobs
Addition of jobs attractive to those unemployed or underemployed
3. Significantly increases the city’s commercial and industrial tax base.
4. Demonstrates the ability to encourage unsubsidized private development through “spin off”
development.
N:\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\Joint Finance Committee Agenda
Packets\2020\4.1 sr Community Housing Development Corporation TIF Application.docx
5. Facilitates the development process and achieves development on sites that would not develop “but
for” the use of TIF.
6. Removes blight and/or encourages redevelopment of commercial and industrial areas resulting in high
quality redevelopment and private reinvestment.
7. Offsets redevelopment costs (i.e. contaminated site cleanup) over and above the costs normally
incurred in development.
8. Aids the implementation of the Mississippi Connections Plan.
The proposed project meets public purpose objective #1.
TIF District Term
City’s policy limits TIF Districts to the minimum term necessary to meet the project needs. Only projects
exceeding the objectives identified in the policy will be considered to exceed the maximum term allowed for
housing projects of 15 years (26 Max) for Housing Districts.
The developer is requesting a term of 26 years of tax increment, which exceeds the general term
allowed by the policy for Housing Districts.
Policy Considerations
1. Each Project is required to meet the but for test to determine the need for and level of assistance.
Baker Tilly Municipal Advisors, LLC completed a but for analysis to determine if the project is
expected to proceed as proposed without TIF assistance and/or if alternate funding options,
structures or sources could be available that would still allow the project to proceed. The
developer has indicated in the application that tax increment financing assistance is necessary
for the project to be viable and meet the income restrictions of occupants and provide sufficient
cash flow to finance annual operating expenses and debt service.
2. Developers receiving TIF assistance shall provide a minimum of 10% cash equity investment in the
project. TIF is not to be used to supplement cash equity.
The developer is proposing to finance this project with multiple funding sources that include
Minnesota Housing First Mortgage, TIF Mortgage, Sales Tax Rebate, Energy Rebate, Deferred
Developer Fee and Tax Credit Proceeds. It is not a traditionally financed project that includes
Owner Cash Equity and Private Mortgage. The deferred developer fee included as a funding
source is $502,564, equating to 50% of the total upfront developer fee and the maximum
allowable for this type of project.
3. TIF will not be used in circumstances where land and property price is of fair market value.
The developer will be required to provide the city with recent appraisals, as required for
financing and performed by a third-party to determine the fair market value of the land.
4. The developer shall demonstrate a market demand for the proposed project.
The most recent housing study completed on February 15, 2018, indicates a need for 93 units of
affordable rental.
Financial Impact
Per city policy, the total estimated gross increment available over 15 years for housing projects is $1,818,810.
The developer could receive 90% of the gross increment over 15 years of $1,636,935 or a present value of
$1,125,475. However, based on the developer’s application and request for assistance, it may only take up to 10
years to meet the full requested amount.
N:\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\Joint Finance Committee Agenda
Packets\2020\4.1 sr Community Housing Development Corporation TIF Application.docx
Subject to project eligibility, it is at the city’s discretion to capture the remaining 11-16 years of estimated
surplus increment from this project to assist in future housing projects.
Attachments
Hillside Heights Apartments TIF Application and Supporting Materials
Baker Tilly Municipal Advisors, LLC analysis and supporting documents dated May 22, 2020
Memo
To: Members of the Joint Finance Committee
Amanda Othoudt, Economic Development Director
From: Mikaela Huot, Director
Date: May 22, 2020
Subject: Hillside Heights Tax Increment Financing Housing (TIF) District Revenue
Projections and Financial Analysis
Background
The City of Elk River received an application from Community Housing Development Corporation (CHDC), the
developer, for financial assistance through Tax Increment Financing (TIF) to assist with financing a portion of
the extraordinary development costs related to the construction of a new 55-unit affordable housing building.
The developer stated in the application for assistance that the Hillside Heights Apartments would meet part of
the remaining demand for affordable and subsidized rental housing and affordable independent living senior
rental housing according to Elk River’s 2018 Housing Study. CHDC proposes to develop a three-story new
construction affordable apartment building on the South East corner of Twin Lakes Road NW and 175th Ave
NW. The apartment building would consist of approximately 55 units with 13 one-bedroom units, 28 two-
bedroom units, 14 three-bedroom units and approximately 60 parking spaces. Common amenities will likely
include storage, a roof deck, fitness/physical therapy room, library, community room, patio area, ball court,
playground and community garden.
The purpose of this memorandum is to provide a summary of Baker Tilly’s review of the development project
costs and operating pro forma as provided by the developer to assist the City with making a determination if the
project as proposed would be unlikely to proceed “but-for” the requested Tax Increment Financing (TIF)
assistance, and to determine the appropriate amount, if any, of public assistance. Prior to establishing a tax
increment financing district, there are findings that need to be made by the City that include: 1) determination
that the project qualifies as a TIF district and 2) determination that the project as proposed would not proceed
without public assistance (meeting the “but-for” test. When reviewing requests for financial assistance it is
important to understand how the level of financial assistance would impact the ability of the project to proceed
as proposed and maximize new value created on the current project site.
Developer Request for Assistance
The developer’s application includes an approximate $16.9 million project that would be funded by an estimated
$11.9 million of tax credits, $3.29 million of debt financing, rebates, deferred developer fee and TIF mortgage.
The developer has asked for annual tax increment revenues generated by the new project to finance a gap of
approximately $780,000.
Financial assistance through pay-as-you-go tax increment financing from the City Elk River has been requested
to provide additional annual cash flow necessary to support the cash flow and debt service financing. Those
extraordinary development costs that cannot be supported solely by the project alone typically may justify the
need for public financial assistance that would allow the project to proceed as proposed to provide appropriate
upfront funding and meet the minimum debt coverage requirements. The developer has indicated the receipt of
City financial assistance is necessary for the project to proceed.
The sources and uses of funds from the developer’s financial materials is illustrated in the table below.
Sources Amount Uses Amount
First Mortgage $3,290,000 Acquisition $450,000
TIF Mortgage * $780,000 Construction $12,760,000
Syndication Proceeds $11,958,804 Contingency $510,400
Sales Tax Rebate $349,509 Professional Fees (Soft Costs) $1,216,775
Energy Rebates $27,500 Developer Fee $1,000,000
Deferred Developer Fee $502,564 Syndication Fees $39,600
Financing Fees $635,070
Reserves $295,533
Total $16,908,377 Total $16,908,377
* financed as pay as you go for reimbursement of certain costs and included with First
Mortgage
Qualifications
The City of Elk River has been approached by CHDC for the construction of 55 new apartment housing units
and would require the establishment of a Tax Increment Financing Housing District. Tax increment financing is
a tool the City may consider using to support financial assistance for the project, subject to meeting the but-for
test and need for public financial participation.
A housing TIF District is a type of tax increment district which consists of a project that is intended for
occupancy by persons or families of low and moderate income. Revenue derived from tax increment from a
housing district must be used solely to finance the cost of a housing project as defined.
For the proposed project to qualify as a tax increment financing housing district, the property must satisfy the
income requirements for a qualified residential rental project as defined in section 142(d) of the Internal
Revenue Code. The requirements of this subdivision apply for the duration of the tax increment financing
district. The income requirements are as follows:
• at least 20% of units are occupied by individuals whose income is 50% or less of area median income
• at least 40% of units are occupied by individuals whose income is 60% or less of area median income.
In addition, not more than 20 percent of the square footage of the buildings that receive assistance from tax
increments may consist of commercial, retail, or other non-residential uses.
The developer has indicated this project would meet the income requirements outlined above with 100% of the
units being affordable at levels below 50% of the area median income (AMI). The new units would include a mix
of 1, 2 and 3-bedroom units.
Revenues from a tax increment financing housing district can be used for all costs related to the qualifying
project that may include acquisition, rehabilitation and construction, utilities, parking, streets and sidewalks.
The cost of public improvements directly related to the housing projects and the allocated administrative
expenses of the City may be included in the cost of a housing project.
Project Financing
There are generally two ways in which assistance can be provided for most projects, either upfront or on a pay-
as-you-go basis. With upfront financing, the City would finance a portion of the developer’s initial project costs
through the issuance of bonds or as an internal loan. Future tax increment would be collected by the City and
used to pay debt service on the bonds or repayment of the internal loan. With pay-as-you-go financing, the
developer would finance all project costs upfront and would be reimbursed over time for a portion of those costs
as revenues are available.
Pay-as-you-go-financing is generally more acceptable than upfront financing for the City because it shifts the
risk for repayment to the developer. If tax increment revenues are less than originally projected, the developer
receives less and therefore bears the risk of not being reimbursed the full amount of their financing. However,
in some cases pay as you go financing may not be financially feasible. With bonds, the City would still need to
make debt service payments and would have to use other sources to fill any shortfall of tax increment revenues.
With internal financing, the City reimburses the loan with future revenue collections and may risk not repaying
itself in full if tax increment revenues are not sufficient. The project financing would be pay-as-you-go for
reimbursement of eligible costs.
Tax Increment Revenue Assumptions
The County Assessor provided a taxable value estimate for the project. To estimate the amount of available
TIF revenues generated by the proposed project, certain assumptions were made based on the value of the
project, construction schedule, and anticipated financing terms.
• Total existing value of $310,300
o Parcel ID: 75-002-4320
o Base value as of Jan. 1, 2019
o Original net tax capacity (ONTC) of $3,879
o Assuming reclassification to rental rates
Rental classification is 1.25%
• Estimated total market value upon completion
o 55 new units at $141,205/unit
55 rental units
$7,766,300
• Classification for all units as rental
o Rental class rate (1.25% per unit)
• Incremental value based on difference between existing and new land/building value
• Construction commences in 2020 and is completed in 2021
o Project values 100% complete for assess 2022 and taxes payable 2023
• First increment collected in 2023
o Election to delay first increment by up to 4 years
• Net present value (discount) rate of 4%
• 0% annual market value inflation
Tax Increment Revenue Estimates
Revenue Estimates
Estimated annual available increment (first year) $121,254
Total gross tax increment $3,152,604
City retainage (10%) $315,250
Net amount available for development (90%) $2,837,354
Total estimated present value (4%) $1,617,877
Estimated Maximum Developer Loan $780,000
Estimated Loan Payments $235,221
Total Estimated Payments $1,015,221
Estimated Surplus Funds $1,822,133
Developer Pro forma Analysis including But-For
Upon approval of a TIF district and project, the City must make several findings, including the “but for” test: that
the proposed development would not reasonably be expected to occur solely through private investment within
the reasonably foreseeable future. The developer has stated that but for the provision of tax increment
financing, the project as proposed would not occur due to a reduction in projected revenues causing a gap in
supportable permanent financing sources. Because the development would be income and rent restricted
housing, the supportable first mortgage would be lower than that of a market rate housing project. Based on
the developer’s stated position relative to the need for tax increment financing assistance, the City could make
its “but for” finding and provide tax increment assistance. We recommend, however, that the City review the
provided assumptions to consider if the project meets the but-for test and, if so, what an appropriate level and
type of TIF assistance may be based on the information submitted by the developer.
Following thorough evaluation of the project as provided allows the City to be prepared to make an informed
“but-for” decision based on the likelihood of the project needing assistance, as well as the appropriate level of
assistance. To complete this analysis, we reviewed the developer’s provided operating proforma and
constructed similar ten-year project proformas, showing a result if the developer received the assistance as
pay-as-you-go (reimbursement for TIF eligible costs) and showing a result if the developer did not receive
assistance. Our analysis of the proformas included a review of the development budget, projected operating
revenues and expenditures, and the project’s capacity to support annual debt service on outstanding debt. The
purpose of evaluating the operating proformas is to understand the potential cash flow performance through
initial development of the project and the annual operations of the project over a 10-year period to assist with
determining if the project is financially feasible and would need public participation.
Due to the financing structure that incorporates primarily tax credits and debt financing, we are not testing the
developer’s projected investment returns like we would for a privately financed for-profit project. Instead we are
reviewing the project proforma that includes upfront sources and uses and annual cash flow to assist with
making the determination that 1) tax increment assistance is necessary and 2) an appropriate level of
assistance. The amount of financing available for the project is based on net operating income. Net operating
income is revenues less operating expenses. The annual revenues (rents) as included in the proforma are
lower than a market rate project and using current rent and income levels would fall below 50% of AMI. As a
result, under the current financing structure, additional annual cash flow would be necessary to obtain a level of
debt financing necessary to fund all project costs. The developer has identified tax increment pledged from the
City as a method of providing the additional cash flow revenues required to achieve financial feasibility.
An additional measure of project feasibility is the Debt Coverage Ratio (DCR), which is a calculation detailing
the ratio by which operating income exceeds the debt-service payments for the project. If the DCR is greater
than 1.0 it indicates the project has operating income that is greater than the debt-service payment by some
margin; conversely if the DCR is less than 1.0 it indicates the project is incapable of meeting its debt-service
payment and would need to seek additional revenue sources in order to pay its debt. Typical lending standards
will require a DCR of greater than 1.0 as a measure of cushion in the event actual revenues and expenses are
different than projected. The developer’s operating proforma with tax increment assistance includes a 1.12x
DCR, which is the minimum level generally required for this type of project.
Our review of the operating proformas based on with assistance as pay-as-you-go and with no assistance
provides the range of financial feasibility for this project and what the estimated gap would be without
assistance. It is important to note that certain assumptions were made based on the developer’s provided
information and market industry standards for annual lease rates at the targeted income levels, vacancy rates
and annual revenue and operating expense inflators in order to analyze the project performance. Adjustments
were made to those assumptions to understand the potential impact on the project performance and required
need for and level of assistance.
To understand viability of the project and need for public assistance, we provided a sensitivity analysis to the
proformas with adjustments made to the funding sources and annual operating revenues and expenses.
Increases in the projected lease rates or decreases in operating expenses may result in similar returns and
DCR calculations as would be through providing tax increment assistance. The developer’s proforma includes
100% of the units at or less than approximately 50% of the AMI. To qualify as a housing TIF District, 20% of
the units would need to be at 50% AMI or 40% of the units at 60% AMI. Housing Credit (LIHTC) properties
must be rented only to families whose income is at or less than 60 percent of the area median income. Tenants’
rent payments are limited to 30 percent of their income.
Without annual tax increment financing revenues and developer-provided assumptions, the project is not
projected to be viable at the current rent levels. The annual revenues would not be sufficient to support the
level of debt necessary for the project to proceed. However, increasing the rents to meet the 60% AMI
threshold is projected to make it a viable project and would reduce the level and/or need for tax increment as
the revenues would be increased to a level that could support repayment of the required debt levels.
Other factors that may impact project feasibility include review of the City’s current TIF policy and implications to
the proforma assumptions. The maximum amount of assistance that could be provided for the project following
the policy guidelines is 15 years. Based on current projections of tax increment revenues, the actual term
would be less than 10 years to meet the requested level of $780,000, assuming an interest rate component.
With these adjusted assumptions regarding term of tax increment, subject to how the debt is structured, there
may be potential cash flow concerns once the tax increment revenue stream has ended, unless there is an
increase in revenues, alternate revenue source or restructuring of the financial obligation. Also related to policy
guidelines is the requirement of owner cash equity of 10%. The financing structure of this project is through tax
credits, bonding, rebates and deferred developer fee. Because it is a LIHTC project and not market rate, the
capital stack is not a traditional one that comprises private mortgage and owner equity.
Conclusion
The developer has requested financial assistance related to construction of the new project. Through
submission of the tax increment financing application and supporting financial information, the developer has
indicated that the project would not occur as proposed without financial assistance from the City due to the
reduced rents for all 55 housing units. Using the developer’s assumptions, with assistance, the project would
be able to obtain sufficient financing to support total project costs. Using the same assumptions, without
assistance, the project is expected to have a financial gap of $780,000. The developer has stated that applying
the City’s tax increment revenues to the project would provide the funding levels necessary to close that gap.
The projected rental rates are based on approximate 50% AMI affordability levels for 100% of the units. The
TIF statute requires at least 20% of the units at 50% AMI or 40% of the units at 60% AMI, putting this project at
a higher level of affordability than what is statutorily required for the tax increment financing tool. LIHTC project
requirements include 100% of the units at 60% AMI and this project proposal also exceeds those affordability
requirements. An increase in annual rental rates up to 60% AMI is projected to have a similar impact of
providing additional cash flow as would annual tax increment revenues and would eliminate the need for
assistance. Actual performance would be subject to market and developer’s ability to receive the required
funding sources and levels.
The maximum term of assistance pursuant to the City’s policy is 15 years and based on current revenues, the
actual term of assistance is projected to be closer to 10 years. The term of the bonds for the project is based
on 40 years and LIHTC requirements for affordability would be 30 years. The term of the tax increment
financing would be for a much shorter period than projected debt payments, which may lead to cash flow
considerations subject to restructuring. Consistent with development projects, including affordable housing
LIHTC projects, a developer fee has been included in the project costs. The developer is deferring just over
50% of those costs to provide additional upfront funding.
Thank you for the opportunity to be of assistance to the City of Elk River. Please contact me at 651.368.2533
or Mikaela.huot@bakertily.com with any questions or comments.
Projected Tax Increment Report
City of Elk River, Minnesota
Tax Increment Financing (Housing ) District
Hillside Senior Housing
Prelminiary Revenue Projections
Less: Retained Times:Less:Less:P.V.
Annual Total Total Original Captured Tax Annual State Aud.Subtotal Admin. Annual Annual
Period Market Net Tax Net Tax Net Tax Capacity Gross Tax Deduction Net Tax Retainage Net Net Rev. To
Ending Value (1)Capacity (2)Capacity (3)Capacity Rate
(4)Increment 0.360% Increment 10.00% Revenue 02/01/21
(1)(2)(3)(4)(6)(7)(8)(9)(10)(11)(12)4.00%
12/31/20 310,300 3,879 3,879 0 130.571%0 0 0 0 0 0
12/31/21 310,300 3,879 3,879 0 130.571%0 0 0 0 0 0
12/31/22 310,300 3,879 3,879 0 130.571%0 0 0 0 0 0
12/31/23 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 *97,333
12/31/24 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 93,589
12/31/25 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 89,990
12/31/26 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 86,529
12/31/27 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 83,201
12/31/28 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 80,001
12/31/29 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 76,924
12/31/30 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 73,965
12/31/31 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 71,120
12/31/32 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 68,385
12/31/33 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 65,755
12/31/34 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 63,226
12/31/35 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 60,794
12/31/36 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 58,456
12/31/37 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 56,207
12/31/38 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 54,045
12/31/39 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 51,967
12/31/40 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 49,968
12/31/41 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 48,046
12/31/42 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 46,198
12/31/43 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 44,421
12/31/44 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 42,713
12/31/45 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 41,070
12/31/46 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 39,491
12/31/47 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 37,972
12/31/48 7,766,300 97,079 3,879 93,200 130.571% 121,692 438 121,254 12,125 109,129 36,511
$3,163,992 $11,388 $3,152,604 $315,250 $2,837,354 $1,617,877
* election to delay receipt of first increment until 2023 (up to 4 years from approval date)
(1) Total estimated market value based on information provided by County Assessor ($141,205/unit)
very preliminary and subject to further review. Includes 0% annual market value inflator
(2) Total net tax capacity based on residential rental market rate class rate of 1.25%
(3) Original net tax capacity based on existing land & building value
(4) Total local combined tax rate available for taxes payable 2020 rates
Projected Pay-as-you-Go Loan Report
City of Elk River, Minnesota
Tax Increment Financing (Housing ) District
Hillside Senior Housing
Prelminiary Revenue Projections
Note Date:02/01/21
Note Rate:4.00%
Amount:$780,000
Cumulative Unpaid Semi-Annual Loan
Interest Accrued Net Balance
Date Principal Interest P & I Due Interest Revenue Outstanding
(1)(2)(3)(4)(5)(6)(7)(7)
780,000.00
02/01/21 0.00 0.00 0.00 0.00 0.00 0.00 780,000.00
08/01/21 0.00 0.00 0.00 15,600.00 15,600.00 0.00 780,000.00
02/01/22 0.00 0.00 0.00 31,200.00 31,200.00 0.00 780,000.00
08/01/22 0.00 0.00 0.00 46,800.00 46,800.00 0.00 780,000.00
02/01/23 0.00 0.00 0.00 62,400.00 62,400.00 0.00 780,000.00
08/01/23 0.00 54,564.50 54,564.50 78,000.00 23,435.50 54,564.50 780,000.00
02/01/24 15,529.00 39,035.50 54,564.50 39,035.50 0.00 54,564.50 764,471.00
08/01/24 39,275.08 15,289.42 54,564.50 15,289.42 0.00 54,564.50 725,195.92
02/01/25 40,060.58 14,503.92 54,564.50 14,503.92 0.00 54,564.50 685,135.34
08/01/25 40,861.79 13,702.71 54,564.50 13,702.71 0.00 54,564.50 644,273.55
02/01/26 41,679.03 12,885.47 54,564.50 12,885.47 0.00 54,564.50 602,594.52
08/01/26 42,512.61 12,051.89 54,564.50 12,051.89 0.00 54,564.50 560,081.91
02/01/27 43,362.86 11,201.64 54,564.50 11,201.64 0.00 54,564.50 516,719.05
08/01/27 44,230.12 10,334.38 54,564.50 10,334.38 0.00 54,564.50 472,488.93
02/01/28 45,114.72 9,449.78 54,564.50 9,449.78 0.00 54,564.50 427,374.21
08/01/28 46,017.02 8,547.48 54,564.50 8,547.48 0.00 54,564.50 381,357.19
02/01/29 46,937.36 7,627.14 54,564.50 7,627.14 0.00 54,564.50 334,419.83
08/01/29 47,876.10 6,688.40 54,564.50 6,688.40 0.00 54,564.50 286,543.73
02/01/30 48,833.63 5,730.87 54,564.50 5,730.87 0.00 54,564.50 237,710.10
08/01/30 49,810.30 4,754.20 54,564.50 4,754.20 0.00 54,564.50 187,899.80
02/01/31 50,806.50 3,758.00 54,564.50 3,758.00 0.00 54,564.50 137,093.30
08/01/31 51,822.63 2,741.87 54,564.50 2,741.87 0.00 54,564.50 85,270.67
02/01/32 52,859.09 1,705.41 54,564.50 1,705.41 0.00 54,564.50 32,411.58
08/01/32 32,411.58 648.23 33,059.81 648.23 0.00 33,059.81 0.00
02/01/33 0.00 0.00 0.00 0.00 0.00 0.00 0.00
08/01/33 0.00 0.00 0.00 0.00 0.00 0.00 0.00
02/01/34 0.00 0.00 0.00 0.00 0.00 0.00 0.00
08/01/34 0.00 0.00 0.00 0.00 0.00 0.00 0.00
02/01/35 0.00 0.00 0.00 0.00 0.00 0.00 0.00
08/01/35 0.00 0.00 0.00 0.00 0.00 0.00 0.00
02/01/36 0.00 0.00 0.00 0.00 0.00 0.00 0.00
08/01/36 0.00 0.00 0.00 0.00 0.00 0.00 0.00
02/01/37 0.00 0.00 0.00 0.00 0.00 0.00 0.00
08/01/37 0.00 0.00 0.00 0.00 0.00 0.00 0.00
02/01/38 0.00 0.00 0.00 0.00 0.00 0.00 0.00
$780,000 $235,220.81 $1,015,220.81 $1,015,220.81
Surplus Tax Increment 1,822,133
Total Net Revenue $2,837,354.00
Item
0 Narrative
1 Statement of Public Purpose
A Written business plan
B Financial Statements for Past Two Years
C Current Financial Statements
D Two Year Financial Projections
E Personal Financial Statements of all Major Shareholders
F Letter of Commitment from Applicant Pledging to Complete
G Letter of Commitment from the Other Sources of Financing
H Application deposit of $10,000
I Construction Plans and Itemized Project Construction Statement
J Attach the following documentation as Exhibits
Exhibit A Entity Documents
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)
City of Elk River ‐ TIF Application
Hillside Heights Apartments
City of Elk River – Tax Increment Financing Application
A. APPLICANT INFORMATION
Name of Entity: Community Housing Development Corporation
Address: 614 North 1st Street, Suite 100, Minneapolis, MN 55401
Primary Contact: Dan Walsh
Address: 614 North 1st Street, Suite 100, Minneapolis, MN 55401
Phone: (612) 274-7817 Fax: NA Email: dwalsh@chdcmn.org
Brief description of the entity business, including history, principal product or service:
Community Housing Development Corporation's (CHDC) mission is to sustain high-quality and affordable
homes, to enhance the community over the long term, and to create and maintain healthy living. As the
owner of 44 properties and more than 3,600 housing units, CHDC takes a unique, businesslike approach
to affordable housing by keeping overhead costs small and structuring its properties and operations to
be financially self-sustaining over the long term. For example, at the end of 2019, CHDC’s average
expense coverage ratio across its portfolio was 1.34, and it has never defaulted on any of its mortgages.
Founded in 1991, CHDC has provided stability to Minnesota residents and communities for more than
25 years as a developer and owner.
Brief description of the proposed project:
Hillside Heights Apartments will meet part of the remaining demand for affordable and subsidized rental
housing and affordable independent living senior rental housing according to Elk River’s 2018 Housing
Study. CHDC proposes to develop a three-story new construction affordable apartment building on the
South East corner of Twin Lakes Road NW and 175th Ave NW. The apartment building will consist of
approximately 55 units with 13 one-bedroom units, 28 two-bedroom units, 14 three-bedroom units and
approximately 60 parking spaces. Common amenities will likely include storage, a roof deck, fitness /
physical therapy room, library, community room, patio area, ball court, playground and community
garden.
Attorney Name: John Stern, Winthrop and Weinsteine
Address: Capella Tower, 225 South 6th St, Suite 3500, Minneapolis, MN 55402
Phone: (612) 604-6588 Fax: (612) 604-6800 Email: jstern@winthrop.com
Accountant Name: Donna Stevermer, Mahoney Ulbrich Christiansen and Russ, P.A.
Address: 10 River Park Plaza #800, St Paul, MN 55107
Phone: (651) 227-6695 Fax: (651) 227-9796 Email: dstevermer@mucr.com
Contractor Name: Mike Benedict, Frana Companies Inc.
Address: 633 2nd Ave S, Hopkins, MN 55343
Phone: (952) 908-2664 Fax: (952) 935-8644 Email: Mike@frana.com
Engineer Name (Civil & Structural): BKBM Engineers, John Timm and Keith Matte
Address: 5930 Brooklyn Boulevard, Minneapolis, MN 55429
Phone: (763) 843-0474 (John) / (763) 843-0446 (Keith) Fax: (763) 843-041
Email: jtimm@bkbm.com / kmatte@bkbm.com
Engineer Name (MEP): Design Tree Engineering, Robert Schuster and Aaron Mueller
Address: 21308 John Milless Drive, Suite 104, Rogers, MN 55374
Phone: (763) 270-6316 (Robert) / (763) 270-6313 (Aaron) Fax: (763) 923-8636
Email: rms@dte-ls.com / arm@ate-ls.com
Architect Name: Tod Elkins, UrbanWorks Architecture LLC
Address: 901 North Third Street Suite 145, Minneapolis, MN 55401
Phone: (612) 455-3104 Fax: (612)455-3199 Email: TElkins@urban-works.com
B. PROJECT INFORMATION
1. The project will be:
_____ Redevelopment District
__X__ Housing District
_____ Soils Condition District
_____ Renewal and Renovation District
_____ Economic Development District
2. The project will be: ___Owner Occupied _x (rental housing) _ Leased Space
3. Project Address: 17451 Twin Lakes Road, Elk River, MN 55330
Legal Description & Parcel Identification Number(s): PID: 75-002-4320
That part of the West 474.61 feet of the Southwest Quarter of the Southeast Quarter of Section 2,
Township 32, Range 26, Sherburne County, Minnesota, that lies North of the following described
line:
Commencing at the Southwest corner of said Southwest Quarter of the Southeast Quarter; thence
North along the West line thereof for 755.00 feet to the actual point of beginning of the line to be
hereby described; thence East at right angles for 474.61 feet and there terminating.
And that lies Easterly and Southerly of the following described centerline:
Commencing at the Southwest corner of said Southwest Quarter of the Southeast Quarter; thence South
89 degrees, 37 minutes, 23 seconds West, assumed bearing, along the South line of the Southwest
Quarter of said Section 2 for 293.37 feet; thence North 0 degrees, 22 minutes, 37 seconds West for 3.00
feet to a point to be hereafter known as Point "A" for the purposes of this description; thence South 89
degrees, 37 minutes, 23 seconds West parallel with said South line of the Southwest Quarter for 434.95
feet, more or less, to intersect the Northeasterly line of the right-of-way of the Burlington Northern
Railroad Company at the actual point of beginning of the centerline to be hereby described; thence
return North 89 degrees, 37 minutes, 23 seconds East to said Point "A"; thence Northeasterly and
Northerly along a tangential curve to the left, radius 299.87 feet, for a central angle of 88 degrees, 42
minutes, 19 seconds, and a length of 464.26 feet; thence North 0 degrees, 55 minutes, 04 seconds East
tangent to said curve for 554.93 feet; thence Northeasterly and Easterly along a tangential curve to the
right, radius 317.09 feet, for a central angle of 86 degrees, 49 minutes, 40 seconds, and a length of 80.53
feet; thence North 87 degrees, 44 minutes, 44 seconds East tangent to said curve for 2301.27 feet, more
or less, to intersect with and terminate at the East line of said Southeast Quarter of Section 2 at a point
thereon a distance of 17.31 feet south of the Northeast corner of the South Half of said Southeast
Quarter. (Abstract Property)
4. Site Plan and Preliminary Construction Plans Attached: __X__ Yes ____ No
5. Amount of Tax Increment Requested for:
Land Purchase: $450,000
Public Improvement: TBD
Site Improvement: $330,000
6. Current Real Estate Taxes on Project Site: $4,480.00
Estimated Real Estate Taxes upon Completion: $40,108.00
7. Construction Start Date: June 2021
Construction Completion Date: June 2022
If Phased Project:
Year _NA__ % Completed
Year _NA__ % 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.
See attached statement of public purpose.
__X__ Job Creation/Retention:
_____ Number of existing jobs
__X__ Number of jobs created by project (Property Mgmt: 2 full-time. Construction: 150 jobs)
__X__ Average hourly wage of jobs created/retained (Property Mgmt: est. $60,000 annually.
Construction: $51.00 per hour)
_____ New industrial development, which will result in additional private investment in the area
__X___ Enhancement or diversification of the city’s economic base
__X__ The project contributes to the fulfillment of the City’s Plan
__X___ Removal of blight or the rehabilitation of a high profile or priority site
__X__ Significantly increase the City’s tax base
__X___ Other: see attached
D. SOURCES & USES
SOURCES AMOUNT NOTES
Minnesota Housing First Mortgage $3,290,000 40 years at 3.3% interest rate
TIF Mortgage $780,000 25 years at 3.3% interest rate
Sales Tax Rebate $349,509
Energy Rebate $27,500
Deferred Developer Fee $502,564 50% total fee. Max allowable
Tax Credit Proceeds $11,958,804
TOTAL $16,908,377
USES AMOUNT NOTES
Land Acquisition $450,000
Construction $12,760,000
Contingency $510,400
Professional Fees (Soft Costs) $1,216,775
Developer Fee $1,000,000
Syndication Fees $39,600
Financing Fees $635,070
Reserves $295,533
TOTAL $16,908,377
E. ADDITIONAL DOCUMENTATION AND CHECKLIST
Applicants will also be required to provide the following documentation.
__X__A) Written business plan, including a description of the business, ownership/management, date
established, products and services, and future plans
__X__B) Financial Statements for Past Two Years
Profit & Loss Statement
Balance Sheet
__X__C) Current Financial Statements
Profit & Loss Statement to Date
Balance Sheet to Date
__X__D) Two Year Financial Projections
__X__E) Personal Financial Statements of all Major Shareholders - Current Tax Return
__X__F) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Timeline
__X__G) Letter of Commitment from the Other Sources of Financing,
Stating Terms and Conditions of their Participation in Project
__X__H) Application deposit of $10,000, with any unused portion to be refunded
__X__I) Construction Plans and Itemized Project Construction Statement
__X__J) Attach the following documentation as Exhibits
Exhibit A – Entity Documents
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)
Exhibit B – Description of Project
Hillside Heights Apartments will meet part of the remaining demand for affordable and subsidized rental
housing and affordable independent living senior rental housing according to Elk River’s 2018 Housing
Study. CHDC proposes to develop a three-story new construction affordable apartment building on the
South East corner of Twin Lakes Road NW and 175th Ave NW. The apartment building will consist of
approximately 55 units with 12 one-bedroom units, 15 two-bedroom units, 18 three-bedroom units and
approximately 60 parking spaces. Common amenities will likely include storage, a roof deck, fitness /
physical therapy room, library, community room, patio area, ball court, playground and community
garden.
C. Statement of Public Purpose for Hillside Heights Apartments
Meets the housing needs identified in the 2018 Housing Study
• Assuming CommonBond’s Elk Ridge Lodge is constructed and occupied, Hillside Heights
Apartments will meet part of the remaining demand for affordable and subsidized rental
housing and affordable independent living senior rental housing.
o Hillside Heights Apartments is an alternative development concept containing 55 total
units anticipated to serve 12 subsidized households, 27 affordable families and 16
affordable senior active adults. CHDC has had success developing multi-generational
housing and has seen positive outcomes including reduced loneliness and increased
security and youth enrichment.
o The following table summarizes how the development meets the identified needs:
Demand
Hillside
Heights Apts
Remaining
Demand Study Reference
Subsidized 34 12 22 Page 44 and Table CR-2
Affordable 35* 27 8 Page 44 and Table CR-2
Affordable Senior Active Adult 40 16 24 Page 46 and Table CR-2
*Note: 60-unit Elk Ridge Lodge netted out
• The 0% vacancy rates for affordable rental housing and senior housing at all levels (pages 30 and
31) indicate a pent-up demand for this type of housing.
• Additional demand for Hillside Heights Apartments will also likely come from outside Elk River in
the larger submarket area.
• Note: This study was completed before the COVID-19 pandemic, and it is reasonable to assume
that demand for affordable and senior housing and the jobs it supports will increase through
2025. Good housing is a fundamental piece of the economic recovery.
Consistent with the Comprehensive Plan
• Provide more housing type choices for the growing number of families in Elk River. “As the
percentage of ‘family households’ increased more substantially between 2000 and 2010 than
the County and the State.” (page 70)
• Diversify the housing types. “As of 2010, 80% perfect of the housing units in Elk River were
owner occupied.” and “…it is important for communities to have a mixture of both owner-
occupied and renter-occupied units.” (page 71)
• Create 55 units of housing for individuals and families at 50% of the area median income. “In
2010, 40.7% of renters paid over 30% of their household income in rent...” meaning that they
are rent burdened. (page 73)
• Help meet the demand of “the strong need to provide affordable housing for people of all ages.”
(page 78)
• Provide stable, affordable senior housing for “the notable increase in apartment rental needs in
Elk River by members of the baby boom generation.” (page 78)
• Provide 55 units of affordable housing within a half mile of the Northstar Commuter Rail Station.
“Affordable housing is important to a strong economy and a healthy community.” (page 79)
Consistent with the FAST Plan
• Accomplishes all the planning and zoning objectives for the 175th Avenue and Twin Lakes Road
site in FAST Hillside Heights subarea. (page 55)
• Density will be 26 units/acre. (page 38)
• Building will be stacked three story residential. (page 38)
• Offers a variety of housing options. (page 55)
• Attractive streetscape and pedestrian connection along Twin Lakes Parkway. (pages 55-57)
• Innovative stormwater practices (considering permeable paving, rain gardens, underground
tanks) and energy generation (considering geothermal, solar ready). (page 59)
• Open space connections and views. (pages 41, 46, 55)
• Landscape buffers. (pages 41, 46)
• Paths and crosswalk to the commuter rail station. (page 40)
• Site is located in the early Phase 1 project area where FAST concludes TIF will be needed to
implement the master plan. (pages 62,67, 71-74)
Demonstrates long-term benefits to the community
• The development will provide long-term, stable workforce and senior housing to approximately
55 households.
• CHDC intends to own the development indefinitely. It will be a good neighbor and ensure the
development remains a community asset for decades to come.
Increases the number and diversity of jobs that offer stable employment and/or attractive wages and
benefits
• The building will employee at least two on-site property management staff with salaries
estimated to be around $50,000 each.
• The project will create 150 temporary construction jobs at an estimated $51.00 per hour.
Significantly increases the city’s tax base
• Currently, the property pays $4,480 in taxes according to its 2020 property tax statement. By
significantly increasing the density on the site, estimated property taxes will increase $35,628,
to $40,108.
Demonstrates the ability to encourage unsubsidized development
• Following the goals and guidance of the FAST, the developer will request a subdivision in order
to develop Phase II, which will be another 55 units apartment building. The developer will likely
not need city subsidies for Phase II because of the reduced acquisition costs.
Facilitates the development process and achieves development on sites that would not develop “but
for” the use of TIF
• But for the award of tax increment financing, the development will not occur due to a gap in
permanent financing. Because the development is income/rent restricted housing, its
supportable first mortgage is comparatively smaller than an identical market rate housing
project’s mortgage.
• Per the FAST Plan, this site is located in the early Phase 1 project area where TIF will be needed
to implement the master plan.
Exhibit D – But-For Analysis
But for the award of tax increment financing, the development will not occur due to a gap in permanent
financing sources. Because the development is income/rent restricted housing, its supportable first
mortgage is comparatively smaller than an identical market rate housing project’s mortgage.
Per the FAST Plan, this site is located in the early Phase 1 project area where TIF will be needed to
implement the master plan.
See the permanent financing gap in the following summary sources and uses.
SOURCES AMOUNT NOTES
Minnesota Housing First Mortgage $3,290,000 40 years at 3.3% interest rate
GAP $780,000 Requested TIF mortgage
Sales Tax Rebate $349,509
Energy Rebate $27,500
Deferred Developer Fee $502,564 50% total fee. Max allowable
Tax Credit Proceeds $11,958,804
TOTAL $16,908,377
USES AMOUNT NOTES
Land Acquisition $450,000
Construction $12,760,000
Contingency $510,400
Professional Fees (Soft Costs) $1,216,775
Developer Fee $1,000,000
Syndication Fees $39,600
Financing Fees $635,070
Reserves $295,533
TOTAL $16,908,377
A Feasibility Analysis For
Hillside Heights Apartments
Elk River, MN
Sherburne County
Date of Report
April 24, 2020
Date of Site Visit
April 5, 2020
Prepared for:
Community Housing Development Corporation
Prepared by:
Chris Vance
Market Analyst Professionals
222 South 9th Street, Suite 1600
Minneapolis, MN 55402
PH: 248-515-0496
cavance@mindspring.com
chris.vance@mapyourproject.com
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 1 April 24, 2020
Table of Contents
SECTION 1: INTRODUCTION AND SCOPE OF WORK .................................................................... 3
SECTION 2: EXECUTIVE SUMMARY .................................................................................................. 4
SECTION 4: MARKET AREA DELINEATION ..................................................................................... 9
SECTION 5: SITE PROFILE .................................................................................................................. 13
Map: Aerial Map of Site Via Google ................................................................................................................................... 15
Map: Site and Adjacent Features ........................................................................................................................................ 16
Map: Local Area and Amenities .......................................................................................................................................... 17
SECTION 6: DEMOGRAPHIC TRENDS AND CHARACTERISTICS ............................................ 21
DEMOGRAPHIC OVERVIEW ................................................................................................................................... 21
POPULATION CHARACTERISTICS AND TRENDS ................................................................................................... 22
Population Trends and Forecast .......................................................................................................................................... 23
Population by Age Group ..................................................................................................................................................... 24
HOUSEHOLD CHARACTERISTICS AND TRENDS .................................................................................................... 25
Household Trends and Forecast .......................................................................................................................................... 26
Average Household Size and Group Quarters ..................................................................................................................... 27
Renter Households ............................................................................................................................................................... 29
Households by Tenure by Number of Persons in Household ............................................................................................... 30
Tenure by Age by Household................................................................................................................................................ 31
HOUSEHOLD INCOME ............................................................................................................................................ 32
Median Household Income ................................................................................................................................................... 32
Household Income Distribution by Tenure PMA ................................................................................................................. 34
Senior Household (65+) Income Distribution by Tenure PMA ............................................................................................ 35
Non-Senior Household Income by Tenure PMA .................................................................................................................. 36
Household Income Distribution by Tenure PMA ................................................................................................................. 37
SECTION 7: ECONOMIC ANALYSIS .................................................................................................. 38
ECONOMIC CHARACTERISTICS AND TRENDS ...................................................................................................... 39
Employee Commute Times ................................................................................................................................................... 39
Industry Employment Concentrations .................................................................................................................................. 40
Graph: Unemployment Rate Comparison ............................................................................................................................ 42
Annual Labor Force and Employment Statistics .................................................................................................................. 43
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Monthly Labor Force and Employment Statistics (Year/Year) ............................................................................................ 44
SECTION 8: SUPPLY ANALYSIS AND CHARACTERISTICS ........................................................ 46
BUILDING PERMITS ................................................................................................................................................ 46
SOURCE: HUD ........................................................................................................................................................ 46
LOCAL RENTAL MARKET ANALYSIS .................................................................................................................... 47
Rental Housing Survey-Competitive Set ............................................................................................................................... 49
Rental Housing Survey-Total Survey.................................................................................................................................... 54
COMPARABLE PROJECT INFORMATION ............................................................................................................... 58
Map: Comparable Projects .................................................................................................................................................. 58
Comparable Project Summary Sheets .................................................................................................................................. 61
SECTION 9: LOCAL PERSPECTIVE ................................................................................................... 67
SECTION 10: DEMAND ANALYSIS ..................................................................................................... 68
DEMAND FOR RENTAL UNITS ............................................................................................................................... 68
Rent Derivation .................................................................................................................................................................... 71
Rent Derivation .................................................................................................................................................................... 72
Future Rental Market and Associated Risks ........................................................................................................................ 74
RECOMMENDATIONS AND CONCLUSIONS ............................................................................................................ 74
SECTION 11: SPECIAL NEEDS ANALYSIS ....................................................................................... 75
SECTION 12: OTHER REQUIREMENTS ............................................................................................ 77
ADDENDUM A ........................................................................................................................................... 80
ADDENDUM B ........................................................................................................................................... 81
ADDENDUM: MARKET STUDY ANALYSIS AND CONSIDERATION: ........................................ 82
DEMAND ANALYSIS ................................................................................................................................................ 83
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 3 April 24, 2020
Section 1: Introduction and Scope of Work
Market Analyst Professionals, LLC (MAP) has prepared the following Comprehensive Market
Analysis Full Narrative Report to determine the market feasibility of an affordable housing project located
in Elk River, Minnesota. The report was prepared for Community Housing Development Corporation.
The subject proposal is described in detail in Section 3. The market study was prepared in accordance
with Minnesota Housing Finance Agency (MHFA) guidelines and industry accepted practices and is
written to meet the requirements of the MHFA market study requirement. The market study includes a
site visit and field work by the analyst signing the report conducted on April 5, 2020 with the senior
analyst signing the report responsible for conclusions and analysis of the report.
Information contained within the report is assumed to be trustworthy and reliable.
Recommendations and conclusions in the report are based on professional opinion. MAP does not
guarantee the data nor assume any liability for any errors in fact, analysis or judgment resulting from the
use of the report.
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 4 April 24, 2020
Section 2: Executive Summary
AMI
Target # of Units
# of
PBRA
Units
# of
Baths Type Average Sq.
Footage
Contract
Rent
Utility
Allowance Gross Rent Max Gross
Rent
Maximum
Income
Total 55 8 $64,530
Summary 1 BR 13 8 $49,680
1 BR-Apt 30% 4 4 1.0 Apt 680 $722 $62 $784 $582 $24,840
1 BR-Apt 50% 3 1.0 Apt 680 $908 $62 $970 $970 $49,680
1 BR-Apt 50% 4 4 1.0 Apt 680 $722 $62 $784 $970 $49,680
1 BR-Apt 60% 2 1.0 Apt 680 $1,102 $62 $1,164 $1,164 $49,680
Summary 2 BR 28 0 $55,860
2 BR-Apt 50% 14 1.0 Apt 980 $1,083 $80 $1,163 $1,163 $55,860
2 BR-Apt* 60% 14 1.0 Apt 980 $1,316 $80 $1,396 $1,396 $55,860
Summary 3 BR 14 0 $64,530
3 BR-Apt 50% 7 2.0 Apt 1,280 $1,246 $98 $1,344 $1,344 $64,530
3 BR-Apt 60% 7 2.0 Apt 1,280 $1,515 $98 $1,613 $1,613 $64,530
Based on the analysis within this report, the proposal will be successful as is, no changes are
deemed necessary. The site is located in a mixed-use area but with LIHTC residential uses located
a short distance from the site. Amenities and employment opportunities are located in close
proximity with easy access to Minneapolis to the southeast. Household growth in the area is
forecasted to increase through 2025 with the rate within the PMA exceeding the overall rate of the
state and county. The Minneapolis MSA has outperformed the state average in terms of the
unemployment rate in recent years and employment has increased annually each of the past nine
years. Derived demand statistics for the subject suggest sufficient demand to absorb the proposal.
Finally, supply side data indicates rents for the subject will be competitively positioned in the area
and the subject will be well positioned in the market and competitive with comparable projects
which have reported very strong occupancy indicative of strong demand in the area. As a result,
the development of the proposal to more adequately serve the PMA’s population is appropriate.
The subject is located in the city of Elk River within southeast Sherburne County, Minnesota. Elk
River is located approximately 8 miles north of Interstate 94. Both I-94 and US-10 provide
linkages to Minneapolis. Additionally, the Northstar commuter rail station is located just south of
the site. The site for the project is an occupied lot (with a home to be demolished) located
southeast of Twin Lakes Road and 175th Avenue in a mixed-use area. Land to the north of the site
is vacant and wooded, a single-family home in good condition is located to the immediate east,
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 5 April 24, 2020
and to the south is a tree line obscuring the site from what appears to be a poor condition
residential building. A short distance south of the site is a Northstar Light Rail Station as well as
both Coachman Apartments and The Depot at Elk River Apartments (LIHTC projects detailed in a
latter section of this report) and newer residential and commercial development.
The proposal is located in the city of Elk River, Minnesota, in Census Tract 305.02 of Sherburne
County. The PMA is defined by Census Tracts and encompasses an area northwest of Minneapolis
including a portion of Census Tracts located in Wright, Hennepin, Sherburne and Anoka Counties.
Major factors in defining the PMA were proximity to the site, socioeconomic conditions and
competition with surrounding areas. Specifically, the site is located in the city of Elk River near
the recently constructed Northstar commuter rail line. Declining proximity to the site was the
major factor in limiting the PMA. Specifically, the PMA extends less than 8 miles from the site in
all directions. Given the small geographic area it encompasses the PMA should be considered a
conservative estimate of demand.
The most comparable projects to the proposal include general occupancy units operating under
income restriction guidelines within the same area as the proposal and offering similar units.
Among LIHTC projects those in closest proximity and considered the most comparable to the
subject are included—excluding more dated projects. Additionally, two market rate projects are
included to gauge hypothetical market rents for the subject. Detailed information on these projects
is presented in the following pages. The overall occupancy rate for the most comparable projects is
99.7 percent. The subject will offer one- to three-bedroom general occupancy units with
comparable amenities and unit sizes to comparable facilities. The development will be the newest
project in the area, commanding a premium relative to more dated competitive set projects.
Among competitive set projects Coachman limits rents to 50 percent AMI (for 60 percent AMI
income restrictions) and these units are shifted in the rent grid. Considering adjustments and
projections to market entry the subject’s rents are consistent with MAP’s estimated achievable
LIHTC rents and are appropriately positioned relative to hypothetical market. Competitive rents
and strong demand for affordable housing in the area offer support for the success of the proposal.
Reported absorption among competitive set projects has been robust. Maple Village reported one
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Market Analyst Professionals, LLC 6 April 24, 2020
month absorption of 102 units, the Depot at Elk River Station reported 53 units in one month and
Coachmen Elk River reported absorption of 53 units in one month. Considering these rates as
well as absorption based on movership ratios and estimated capture rates among income qualified
households, it is conservatively estimated the subject would be fully absorbed within 5-6 months
of market entry.
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Market Analyst Professionals, LLC 7 April 24, 2020
Section 3: Project Description
Name:
Address:17451 Twin Lakes Road
Elk River, MN 55330
Target Population:Open
Total Units:55
Subsidized Units: 8
LIHTC Units: 55
Unrestricted Units: 0
Handicap Units: 4
Utilities Included in Rent
Heat: No
Electric: No
Water: Yes
Sewer: Yes
Trash: Yes
Heat Type: Gas
Construction Detail:
Construction: New
Building Type: Apartments
Total Buildings: 1
Stories: 3
Site Acreage: 4.36
Construction Schedule:
Beginning: May-21
Ending: May-22
Preleasing: Feb-22
Total Parking Spaces:
Surface: 20
Garage (attached): 40 Fee: $0
Plans:NA-Assumed competetive at development
Hillside Heights Apartments
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 8 April 24, 2020
Unit Configuration
AMI
Target # of Units
# of
PBRA
Units
# of
Baths Type Average Sq.
Footage
Contract
Rent
Utility
Allowance Gross Rent Max Gross
Rent
Maximum
Income
Total 55 8 $64,530
Summary 1 BR 13 8 $49,680
1 BR-Apt 30% 4 4 1.0 Apt 680 $722 $62 $784 $582 $24,840
1 BR-Apt 50% 3 1.0 Apt 680 $908 $62 $970 $970 $49,680
1 BR-Apt 50% 4 4 1.0 Apt 680 $722 $62 $784 $970 $49,680
1 BR-Apt 60% 2 1.0 Apt 680 $1,102 $62 $1,164 $1,164 $49,680
Summary 2 BR 28 0 $55,860
2 BR-Apt 50% 14 1.0 Apt 980 $1,083 $80 $1,163 $1,163 $55,860
2 BR-Apt* 60% 14 1.0 Apt 980 $1,316 $80 $1,396 $1,396 $55,860
Summary 3 BR 14 0 $64,530
3 BR-Apt 50% 7 2.0 Apt 1,280 $1,246 $98 $1,344 $1,344 $64,530
3 BR-Apt 60% 7 2.0 Apt 1,280 $1,515 $98 $1,613 $1,613 $64,530
-All units with 50% AMI targeting above are subject to 50% AMI rent restriction but 60% income restrictions.
Unit Amenities
Yes A/C - Central Yes Microwave Yes Patio/Balcony
A/C - Wall Unit Yes Ceiling Fan Basement
A/C - Sleeve Only Walk-In Closet Fireplace
Garbage Disposal Yes Window - Mini-Blinds Yes High Speed Internet 0 Extra Fee
Yes Dishwasher Window - Draperies Yes Individual Entry
Development Amenities
Clubhouse (separate building)Swimming Pool Yes Sports Courts (b-ball, tennis, v-ball, etc.)
Yes Community Room Yes Playground/Tot Lot Yes On-Site Management
Computer Center Yes Gazebo Secured Entry - Access Gate
Yes Exercise/Fitness Room Yes Elevator Yes Secured Entry - Intercom or Camera
Yes Community Kitchen(ette)Yes Exterior Storage Units Other
Laundry Type Parking Type
Coin-Operated Laundry Yes Surface Lot 20 Number of Spots Total
In-Unit Hook-up Only Carport Extra Fee ?
Yes In-Unit Washer/Dryer Yes Garage (attached)Extra Fee ?
None Garage (detached)Extra Fee ?
Proposed and Recommended Amenities
$0
Other Information:
The project will offer 4 supportive housing units.
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Market Analyst Professionals, LLC 9 April 24, 2020
Section 4: Market Area Delineation
The Primary Market Area (PMA) is considered to be the area from which households residing
near the site would look first for housing. The formulation of the PMA is influenced by the following
factors proximity to nearby communities (i.e. the gravity model), natural barriers, political boundaries,
employment centers, commuting patterns, proximity, transportation linkages and the availability of
competitive housing (e.g. limited senior housing options generally increase the relative size of market
areas for senior housing). The following demographic information, comparables, and demand analysis
are based on the Primary Market Area (PMA) as defined below and outlined in the following maps. For
comparison purposes data pertaining to the city of Elk River, Sherburne County and the state of
Minnesota has also been included throughout the analysis. The proposal is located in the city of Elk River,
Minnesota, in Census Tract 305.02 of Sherburne County. The PMA is defined by Census Tracts and
encompasses an area northwest of Minneapolis including a portion of Census Tracts located in Wright,
Hennepin, Sherburne and Anoka Counties.
Major factors in defining the PMA were proximity to the site, socioeconomic conditions and
competition with surrounding areas. Specifically, the site is located in the city of Elk River near the
recently constructed Northstar commuter rail line. Declining proximity to the site was the major factor in
limiting the PMA. Specifically, the PMA extends less than 8 miles from the site in all directions. Given
the small geographic area it encompasses the PMA should be considered a conservative estimate of
demand.
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Local Area Map
Hillside Heights Apartments, Elk River, Minnesota
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PMA Map
Primary Market Area
Site Location
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Tract Map
Primary Market Area
Site Location
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Section 5: Site Profile
Site Characteristics
The subject is located in the city of Elk River within southeast Sherburne County, Minnesota. Elk
River is located approximately 8 miles north of Interstate 94. Both I-94 and US-10 provide linkages to
Minneapolis. Additionally, the Northstar commuter rail station is located just south of the site. The site
for the project is an occupied lot (with a home to be demolished) located southeast of Twin Lakes Road
and 175th Avenue in a mixed-use area. Land to the north of the site is vacant and wooded, a single-family
home in good condition is located to the immediate east, to the south is a tree line obscuring the site from
what appears to be a poor condition residential building—given the limited visibility of this building it is
not deemed a detriment to the subject. A short distance south of the site is a Northstar Light Rail Station
as well as both Coachman Apartments and The Depot at Elk River Apartments (LIHTC projects detailed
in a latter section of this report) and newer residential and commercial development.
Marketability of Proposal
The site is located in area attractive to its targeted tenants. The site is located near new, attractive
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 14 April 24, 2020
residential development with easy access to commercial projects located to the north of the site. Proximity
to the commuter rail will likely enhance long-term growth and development in the area as well and is in
close proximity to the site.
Visibility and accessibility of the site
The site is located a short distance north of the rail station, which should provide the site with
good exposure and open opportunities for advertisement along the rail line. The site will be easily
accessible via Twin Lake Road.
Neighborhood Amenities/Retail/Services
A commercial concentration anchored by a Walmart and Home Depot is located a short distance
north of the site. Additional commercial development is located south of the site including Target. The
light rail is located a short distance to the south providing linkages to the northwest and southeast.
Health Care
The nearest medical service provider is Allina Health Elk River Clinic, offering primary care
physicians. The nearest major hospital is Mercy Hospital, located in Coon Rapids approximately 11 miles
from the site. Mercy responds to a wide range of health needs with specialty services including behavioral
health services, cancer care, heart and vascular services, orthopedics, neurosciences, and women's and
children's services.
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Market Analyst Professionals, LLC 15 April 24, 2020
Map: Aerial Map of Site Via Google
Hillside Heights Apartments, Elk River, Minnesota
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Map: Site and Adjacent Features
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Map: Local Area and Amenities
Hillside Heights Apartments, Elk River, Minnesota
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Site Photos
-Looking east at site
-Looking south at site from northern edge of site
Hillside Heights Apartments, Elk River, Minnesota
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-Looking west from site from northern edge of site
-Looking north from northern edge of site
Hillside Heights Apartments, Elk River, Minnesota
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-Looking east from site
-Single-family home east of site
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Section 6: Demographic Trends and Characteristics
Demographic Overview
Between 2000 and 2010 population increased in all areas. The rate of change in the PMA over this
period was faster relative to the state as a whole which increased at a mild annual rate and also faster
relative to the county which increased over this period. Between 2020 and 2025 ESRI forecasts that
population will increase in all areas. Between 2010 and 2020 ESRI estimates that households increased in
all areas. Between 2010 and 2025 ESRI forecasts that households will increase in all areas.
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Market Analyst Professionals, LLC 22 April 24, 2020
Population Characteristics and Trends
Population in the PMA represents 81.7 percent of the total population of the county. Between
2000 and 2010 population increased in all areas. Population in the PMA increased at an annual rate of 4.3
percent, representing a robust annual rate in MAP's estimation, while increasing in the county over this
period at a rate of 3.2 percent, also considered a robust rate. The highest rate of growth among all
submarkets was in the PMA at 4.3 percent relative to an overall increase in the state of 0.8 percent
annually. The overall total change over this period was: 6,434, 27,460, 24,082 and 384,446 in the city,
PMA, county and state respectively. Between 2010 and 2020 ESRI estimates that population increased in
all areas. Over this period population in the PMA increased at an annual rate of 1.6 percent while
increasing in the county at a rate of 1.1 percent. The rate of change in the PMA over this period was faster
relative to the state as a whole which increased at a mild annual rate and also faster relative to the county
which increased over this period. Between 2020 and 2025 ESRI forecasts that population will increase in
all areas. Population in the PMA will increase at an annual rate of 1.5 percent, representing a moderate
annual rate in MAP's estimation, while increasing in the county over this period at a rate of 1.1 percent,
also considered a moderate rate. The highest rate of forecasted growth among all submarkets is in the
PMA at 1.5 percent relative to an overall increase in the state of 0.7 percent annually.
Hillside Heights Apartments, Elk River, Minnesota
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Population Trends and Forecast
City of County of State of
Elk River PMA Sherburne MN
2000 Population 16,540 52,649 64,417 4,919,479
2010 Population 22,974 80,109 88,499 5,303,925
Percent Change (2000 to 2010)38.9% 52.2% 37.4% 7.8%
Total Change (2000 to 2010)6,434 27,460 24,082 384,446
Annual Change (2000 to 2010)643 2,746 2,408 38,445
Annualized Change (2000 to 2010)3.3% 4.3% 3.2% 0.8%
2020 Population Estimate 25,375 93,437 99,016 5,710,252
Percent Change (2010 to 2020)10.4% 16.6% 11.9% 7.7%
Total Change (2010 to 2020)2,401 13,328 10,517 406,327
Annual Change (2010 to 2020)240 1,333 1,052 40,633
Annualized Change (2010 to 2020)1.0%1.6%1.1% 0.7%
2022 Population Forecast 25,855 96,103 101,120 5,791,518
Percent Change (2010 to 2022) 12.5% 20.0% 14.3% 9.2%
Total Change (2010 to 2022) 2,881 15,994 12,621 487,593
Annual Change (2010 to 2022) 240 1,333 1,052 40,633
Annualized Change (2010 to 2022) 1.0% 1.5% 1.1% 0.7%
2024 Population Forecast 26,335 98,768 103,223 5,872,783
Percent Change (2010 to 2024) 14.6% 23.3% 16.6% 10.7%
Total Change (2010 to 2024) 3,361 18,659 14,724 568,858
Annual Change (2010 to 2024) 240 1,333 1,052 40,633
Annualized Change (2010 to 2024) 1.0% 1.5% 1.1% 0.7%
2025 Population Forecast 26,575 100,101 104,275 5,913,416
Percent Change (2010 to 2025) 15.7% 25.0% 17.8% 11.5%
Total Change (2010 to 2025) 3,601 19,992 15,776 609,491
Annual Change (2010 to 2025) 240 1,333 1,052 40,633
Annualized Change (2010 to 2025) 1.0% 1.5% 1.1% 0.7%
Source: Census of Population and Housing, U.S. Census Bureau; ESRI
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Age distribution characteristics are very similar within all three submarkets, with a heavy
concentration in the under 24 age segment. The aging of the Baby Boom generation will and has begun to
shift the national age distribution toward the 45 and over population segments in the coming years. This
national trend is evident within all areas here, with the most rapid growth concentrated in the 65 and over
age segments through 2025 on a percentage basis in the PMA, county and state.
Population by Age Group
City of County of State of
Elk River PMA Sherburne MN
Age 24 and Under - 2010 8,312 29,509 33,278 1,786,862
Percent of total 2010 population 36.2% 36.8% 37.6% 33.7%
Age Between 25 and 44 - 2010 6,788 24,075 26,237 1,396,680
Percent of total 2010 population 29.5% 30.1% 29.6% 26.3%
Age Between 45 and 64 - 2010 5,727 20,370 21,677 1,437,262
Percent of total 2010 population 24.9% 25.4% 24.5% 27.1%
Age 65 and Over - 2010 2,147 6,155 7,307 683,121
Percent of total 2010 population 9.3% 7.7% 8.3% 12.9%
Age 24 and Under - 2025 9,122 34,453 36,025 1,841,743
Percent of total 2025 population 34.3% 34.4% 34.5% 31.1%
Percent change (2010 to 2025)9.7% 16.8% 8.3% 3.1%
Age Between 25 and 44 - 2025 7,705 28,830 30,269 1,561,141
Percent of total 2025 population 29.0% 28.8% 29.0% 26.4%
Percent change (2010 to 2025)13.5% 19.8% 15.4% 11.8%
Age Between 45 and 64 - 2025 6,288 24,669 24,665 1,436,055
Percent of total 2025 population 23.7% 24.6% 23.7% 24.3%
Percent change (2010 to 2025)9.8% 21.1% 13.8% -0.1%
Age 65 and Over - 2025 3,459 12,149 13,317 1,074,477
Percent of total 2025 population 13.0% 12.1% 12.8% 18.2%
Percent change (2010 to 2025)61.1% 97.4% 82.2% 57.3%
Source: Census of Population and Housing, U.S. Census Bureau; ESRI
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Household Characteristics and Trends
Between 2010 and 2020 ESRI estimates that households increased in all areas. Over this period
households in the PMA increased at an annual rate of 1.5 percent while increasing in the county at a rate
of 1.1 percent. The rate of change in the PMA over this period was faster relative to the state as a whole
which increased at a mild annual rate and also faster relative to the county which increased over this
period. Between 2010 and 2025 ESRI forecasts that households will increase in all areas. Households in
the PMA will increase at an annual rate of 1.5 percent, representing a moderate annual rate in MAP's
estimation, while increasing in the county over this period at a rate of 1.1 percent, also considered a
moderate rate. The highest rate of forecasted growth among all submarkets is in the PMA at 1.5 percent
relative to an overall increase in the state of 0.7 percent annually.
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Household Trends and Forecast
City of County of State of
Elk River PMA Sherburne MN
2000 Household 5,689 17,424 21,581 1,895,127
2010 Household 8,080 27,553 30,212 2,087,227
Percent Change (2000 to 2010)42.0% 58.1% 40.0% 10.1%
Total Change (2000 to 2010)2,391 10,129 8,631 192,100
Annual Change (2000 to 2010)239 1,013 863 19,210
Annualized Change (2000 to 2010)3.6% 4.7% 3.4% 1.0%
2020 Household Estimate 8,919 32,107 33,807 2,238,299
Percent Change (2010 to 2020)10.4% 16.5% 11.9% 7.2%
Total Change (2010 to 2020)839 4,554 3,595 151,072
Annual Change (2010 to 2020)84 455 359 15,107
Annualized Change (2010 to 2020)1.0% 1.5% 1.1% 0.7%
2022 Household Forecast 9,087 33,018 34,525 2,268,514
Percent Change (2010 to 2022)12.5% 19.8% 14.3% 8.7%
Total Change (2010 to 2022)1,007 5,465 4,313 181,287
Annual Change (2010 to 2022)84 455 359 15,107
Annualized Change (2010 to 2022)1.0% 1.5% 1.1% 0.7%
2024 Household Forecast 9,254 33,929 35,244 2,298,728
Percent Change (2010 to 2024)14.5% 23.1% 16.7% 10.1%
Total Change (2010 to 2024)1,174 6,376 5,032 211,501
Annual Change (2010 to 2024)84 455 359 15,107
Annualized Change (2010 to 2024)1.0% 1.5% 1.1% 0.7%
2025 Household Forecast 9,338 34,384 35,604 2,313,836
Percent Change (2010 to 2025)15.6% 24.8% 17.8% 10.9%
Total Change (2010 to 2025)1,258 6,831 5,392 226,609
Annual Change (2010 to 2025)84 455 359 15,107
Annualized Change (2010 to 2025)1.0% 1.5% 1.1% 0.7%
Source: Census of Population and Housing, U.S. Census Bureau; ESRI
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 27 April 24, 2020
Average household size is estimated to have increased within all markets between 2010 and 2019
with very marginal changes. ESRI projections indicate ongoing marginal increases in average household
size through 2025 within all areas.
Average Household Size and Group Quarters
City of County of State of
Elk River PMA Sherburne MN
2010 Average Household Size 2.76 2.88 2.86 2.48
2020 Average Household Size Estimate 2.77 2.89 2.86 2.49
Percent Change (2010 to 2020)0.3% 0.2% 0.3% 0.6%
2022 Average Household Size Forecast 2.78 2.89 2.87 2.49
Percent Change (2010 to 2022)0.4% 0.3% 0.3% 0.7%
2024 Average Household Size Forecast 2.78 2.89 2.87 2.50
Percent Change (2010 to 2024)0.5% 0.3% 0.4% 0.8%
2025 Average Household Size Forecast 2.78 2.89 2.87 2.50
Percent Change (2010 to 2025)0.5% 0.3% 0.4% 0.9%
2010 Group Quarters 640 793 2,174 135,395
2020 Group Quarters Estimate 637 791 2,165 133,245
Percent Change (2010 to 2020)-0.5% -0.3% -0.4% -1.6%
2022 Group Quarters Forecast 636 790 2,163 132,815
Percent Change (2010 to 2022)-0.6% -0.4% -0.5% -1.9%
2024 Group Quarters Forecast 636 790 2,161 132,385
Percent Change (2010 to 2024)-0.7% -0.4% -0.6% -2.2%
2025 Group Quarters Forecast 635 789 2,160 132,170
Percent Change (2010 to 2025)-0.7% -0.5% -0.6% -2.4%
Source: Census of Population and Housing, U.S. Census Bureau; ESRI
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 28 April 24, 2020
Between 2000 and 2010 renter penetration rates increased in the PMA relative to an increase in the
county and increase in the state over this period. Increases over this period are consistent with the
financial crisis of 2008 and lasting impacts on home ownership. Among all submarkets renter penetration
is highest within the city at 19.8 percent relative to the lowest rate in the PMA at 12.9 percent and an
overall rate of 27 percent in the state. Between 2010 and 2025 ESRI forecasts renter households will
increase in the PMA despite with a decrease in the renter penetration rate over this period and relative to
an increase in overall households.
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 29 April 24, 2020
Renter Households
City of County of State of
Elk River PMA Sherburne MN
2000 Renter Households 1,228 1,785 3,430 482,262
Percent of Total HHs 21.6% 10.2% 15.9% 25.4%
2010 Renter Households 1,602 3,557 5,018 563,368
Percent of Total HHs 19.8% 12.9% 16.6% 27.0%
Percent Change (2000 to 2010)30.5% 99.3% 46.3% 16.8%
Total Change (2000 to 2010)374 1,772 1,588 81,106
Annual Change (2000 to 2010)37 177 159 8,111
Annualized Change (2000 to 2010)2.7% 7.1% 3.9% 1.6%
2020 Renter Households Estimate 1,256 3,582 4,106 634,374
Percent of Total HHs 14.1% 11.2% 12.1% 28.3%
Percent Change (2010 to 2020)-21.6% 0.7% -18.2% 12.6%
Total Change (2010 to 2020)-347 25 -912 71,006
Annual Change (2010 to 2020)-35 3 -91 7,101
Annualized Change (2010 to 2020)-2.4% 0.1% -2.0% 1.2%
2022 Renter Households Forecast 1,297 3,579 4,216 625,853
Percent of Total HHs 14.3% 10.8% 12.2% 27.6%
Percent Change (2010 to 2022)-19.0% 0.6% -16.0% 11.1%
Total Change (2010 to 2022)-305 22 -802 62,485
Annual Change (2010 to 2022)-25 2 -67 5,207
Annualized Change (2010 to 2022)-1.7% 0.1% -1.4% 0.9%
2024 Renter Households Forecast 1,246 3,583 4,082 636,268
Percent of Total HHs 13.5% 10.6% 11.6% 27.7%
Percent Change (2010 to 2024)-22.2% 0.7% -18.7% 12.9%
Total Change (2010 to 2024)-356 26 -936 72,900
Annual Change (2010 to 2024)-25 2 -67 5,207
Annualized Change (2010 to 2024)-1.8% 0.1% -1.5% 0.9%
2025 Renter Households Forecast 1,221 3,585 4,015 641,475
Percent of Total HHs 13.1% 10.4% 11.3% 27.7%
Percent Change (2010 to 2025)-23.8% 0.8% -20.0% 13.9%
Total Change (2010 to 2025)-381 28 -1,003 78,107
Annual Change (2010 to 2025)-25 2 -67 5,207
Annualized Change (2010 to 2025)-1.8% 0.1% -1.5% 0.9%
Source: Census of Population and Housing, U.S. Census Bureau; ESRI
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 30 April 24, 2020
All submarkets share similar household size distributions, skewing to larger renter household sizes
in the county and PMA relative to the city. The subject will offer one- to three-bedroom units appealing to
a broad spectrum of ages and household sizes.
Households by Tenure by Number of Persons in Household
City of County of State of
Elk River PMA Sherburne MN
Total 2010 Owner Occupied HUs 6,478 23,996 25,194 1,523,859
1-person HH 979 3,378 3,599 329,955
2-person HH 2,206 7,914 8,471 581,481
3-person HH 1,171 4,373 4,492 236,596
4-person HH 1,281 5,041 5,076 224,564
5-person HH 576 2,255 2,344 98,018
6-person HH 180 702 821 33,229
7-person or more HH 85 333 391 20,016
Imputed Avg. Owner HH Size*2.9 2.9 2.9 2.6
Total 2010 Renter Occupied HUs 1,602 3,557 5,018 563,368
1-person HH 602 1,260 1,736 254,053
2-person HH 411 863 1,265 142,905
3-person HH 269 576 848 71,198
4-person HH 195 479 675 50,057
5-person HH 81 237 305 24,984
6-person HH 30 91 119 11,029
7-person or more HH 14 51 70 9,142
Imputed Avg. Renter HH Size*2.3 2.5 2.4 2.1
Percent 2010 Owner Occupied HUs 6,478 23,996 25,194 1,523,859
1-person HH 15.1% 14.1% 14.3% 21.7%
2-person HH 34.1% 33.0% 33.6% 38.2%
3-person HH 18.1% 18.2% 17.8% 15.5%
4-person HH 19.8% 21.0% 20.1% 14.7%
5-person HH 8.9% 9.4% 9.3% 6.4%
6-person HH 2.8% 2.9% 3.3% 2.2%
7-person or more HH 1.3% 1.4% 1.6% 1.3%
Percent 2010 Renter Occupied HUs 1,602 3,557 5,018 563,368
1-person HH 37.6% 35.4% 34.6% 45.1%
2-person HH 25.7% 24.3% 25.2% 25.4%
3-person HH 16.8% 16.2% 16.9% 12.6%
4-person HH 12.2% 13.5% 13.5% 8.9%
5-person HH 5.1% 6.7% 6.1% 4.4%
6-person HH 1.9% 2.6% 2.4% 2.0%
7-person or more HH 0.9% 1.4% 1.4% 1.6%
Source: Census of Population and Housing, U.S. Census Bureau; ESRI
*-MAP estimated based on 7 persons per 7 or more HH size
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 31 April 24, 2020
Tenure by Age by Household
City of County of State of
Elk River PMA Sherburne MN
Total 2010 Owner Occupied HUs 6,478 23,996 25,194 1,523,859
15 to 24 years 106 388 473 19,639
25 to 34 years 1,029 3,985 4,175 192,401
35 to 44 years 1,544 6,075 6,160 276,241
45 to 54 years 1,696 6,395 6,597 374,959
55 to 64 years 1,079 4,029 4,323 317,264
Total Non-senior (64 years and under)5,454 20,872 21,728 1,180,504
65 years and over 1,024 3,124 3,466 343,355
Total 2010 Renter Occupied HUs 1,602 3,557 5,018 563,368
15 to 24 years 155 304 777 79,588
25 to 34 years 396 849 1,218 150,477
35 to 44 years 281 767 958 91,851
45 to 54 years 251 573 767 83,878
55 to 64 years 157 344 384 57,304
Total Non-senior (64 years and under)1,240 2,837 4,104 463,098
65 years and over 362 720 914 100,270
Percent 2010 Owner Occupied HUs 6,478 23,996 25,194 1,523,859
15 to 24 years 1.6% 1.6% 1.9% 1.3%
25 to 34 years 15.9% 16.6% 16.6% 12.6%
35 to 44 years 23.8% 25.3% 24.5% 18.1%
45 to 54 years 26.2% 26.7% 26.2% 24.6%
55 to 64 years 16.7% 16.8% 17.2% 20.8%
Total Non-senior (64 years and under)84.2% 87.0% 86.2% 77.5%
65 years and over 15.8% 13.0% 13.8% 22.5%
Percent 2010 Renter Occupied HUs 1,602 3,557 5,018 563,368
15 to 24 years 9.7% 8.5% 15.5% 14.1%
25 to 34 years 24.7% 23.9% 24.3% 26.7%
35 to 44 years 17.5% 21.6% 19.1% 16.3%
45 to 54 years 15.7% 16.1% 15.3% 14.9%
55 to 64 years 9.8% 9.7% 7.7% 10.2%
Total Non-senior (64 years and under)77.4% 79.8% 81.8% 82.2%
65 years and over 22.6% 20.2% 18.2% 17.8%
Source: Census of Population and Housing, U.S. Census Bureau; ESRI
Hillside Heights Apartments, Elk River, Minnesota
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Household Income
Median household income within all areas increased at a moderate annual rate between 2009 and
estimated 2020 incomes—indicating little increase in purchasing power. Income levels within the county
increased the most robustly over this period among submarkets. Incomes in the PMA are the highest
among all markets. ESRI forecasts a tepid rate of growth for median income for all areas through 2025.
Median Household Income
City of County of State of
Elk River PMA Sherburne MN
2010 Median Household Income $72,944 $81,135 $71,704 $57,243
2020 Median Household Income Estimate $91,570 $97,958 $89,052 $70,723
Percent Change (2010 to 2020)25.5% 20.7% 24.2% 23.5%
Annualized Change (2010 to 2020)2.3% 1.9% 2.2% 2.1%
2022 Median Household Income Forecast $95,295 $101,322 $92,522 $73,420
Percent Change (2010 to 2022)30.6% 24.9% 29.0% 28.3%
Annualized Change (2010 to 2022)2.3% 1.9% 2.1% 2.1%
2025 Median Household Income Forecast $100,883 $106,369 $97,726 $77,464
Percent Change (2010 to 2025)38.3% 31.1% 36.3% 35.3%
Annualized Change (2010 to 2025)2.2% 1.8% 2.1% 2.0%
Source: Census of Population and Housing, U.S. Census Bureau; ESRI
Hillside Heights Apartments, Elk River, Minnesota
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The tables below present household income by tenure for senior (ages 65 and over) households as
well as total and total less senior households. Senior housing by income tenure is not available for the
PMA. As a result, estimates below are based on extrapolations considering household income distribution
by age, household growth, inflation rates and tenure. In particular, household income distribution based
on 2010 Census data is applied to forecasted households for 2020 and 2022. Additionally, these income
distributions are inflated to current year dollars based on the Consumer Price Index.
Hillside Heights Apartments, Elk River, Minnesota
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Household Income Distribution by Tenure PMA
Total Owner Renter
Households Households Households
Less than $11,399 644 441 203
Percent of 2022 Households 2.0%1.4%5.7%
$11,399-$17,099 598 370 229
Percent of 2022 Households 1.8%1.1%6.4%
$17,099-$22,799 504 408 96
Percent of 2022 Households 1.5%1.4%2.7%
$22,799-$28,499 1,006 553 453
Percent of 2022 Households 3.0%1.6%12.7%
$28,499-$39,899 1,909 1,450 460
Percent of 2022 Households 5.8%4.7%12.8%
$39,899-$56,999 3,130 2,482 648
Percent of 2022 Households 9.5%8.2%18.1%
$56,999-$85,499 5,405 4,803 603
Percent of 2022 Households 16.4%16.3%16.8%
$85,500 or More 19,821 18,933 887
Percent of 2022 Households 60.0%65.3%24.8%
Source: Census of Population and Housing, U.S. Census Bureau; Bureau of Labor and Statistics
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Senior Household (65+) Income Distribution by Tenure PMA
Total Senior Senior Owner Senior Renter
Households Households Households
Less than $11,399 179 146 33
Percent of 2022 Households 2.8%2.5%4.6%
$11,399-$17,099 361 250 112
Percent of 2022 SR Households 5.6%4.3%15.4%
$17,099-$22,799 303 277 25
Percent of 2022 SR Households 4.7%4.9%3.5%
$22,799-$28,499 490 301 190
Percent of 2022 SR Households 7.6%5.1%26.2%
$28,499-$39,899 984 831 153
Percent of 2022 SR Households 15.3%14.5%21.1%
$39,899-$56,999 713 651 62
Percent of 2022 SR Households 11.1%11.4%8.5%
$56,999-$85,499 987 926 61
Percent of 2022 SR Households 15.3%16.3%8.4%
$85,500 or More 2,418 2,329 89
Percent of 2022 SR Households 37.6%41.0%12.3%
Source: Census of Population and Housing, U.S. Census Bureau; Bureau of Labor and Statistics, MAP
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 36 April 24, 2020
Non-Senior Household Income by Tenure PMA
Total Less Owner Less Renter Less
SR Households SR Households SR Households
Less than $11,399 465 295 170
Percent of Households 1.7%1.2%6.0%
$11,399-$17,099 237 120 117
Percent of 2022 Households 0.9%0.5%4.1%
$17,099-$22,799 201 130 71
Percent of 2022 Households 0.8%0.5%2.5%
$22,799-$28,499 515 252 263
Percent of 2022 Households 1.9%1.1%9.2%
$28,499-$39,899 926 619 306
Percent of 2022 Households 3.5%2.6%10.7%
$39,899-$56,999 2,418 1,831 586
Percent of 2022 Households 9.1%7.7%20.5%
$56,999-$85,499 4,418 3,877 542
Percent of 2022 Households 16.6%16.3%19.0%
$85,500 or More 17,403 16,605 798
Percent of 2022 Households 65.5%70.0%28.0%
Source: Census of Population and Housing, U.S. Census Bureau; Bureau of Labor and Statistics, MAP
Hillside Heights Apartments, Elk River, Minnesota
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Household Income Distribution by Tenure PMA
Total Owner Renter
Households Households Households
Less than $9,999 537 335 202
Percent of 2010 Households 2.0%1.4%5.7%
$10,000 -$14,999 499 272 227
Percent of 2010 Households 1.8%1.1%6.4%
$15,000 - $19,999 420 325 96
Percent of 2010 Households 1.5%1.4%2.7%
$20,000 - $24,999 839 389 450
Percent of 2010 Households 3.0%1.6%12.7%
$25,000 - $34,999 1,593 1,137 457
Percent of 2010 Households 5.8%4.7%12.8%
$35,000 - $49,999 2,612 1,968 644
Percent of 2010 Households 9.5%8.2%18.1%
$50,000 - $74,999 4,510 3,912 599
Percent of 2010 Households 16.4%16.3%16.8%
$75,000 and up 16,540 15,658 882
Percent of 2010 Households 60.0%65.3%24.8%
Source: Census of Population and Housing, U.S. Census Bureau; Bureau of Labor and Statistics
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 38 April 24, 2020
Section 7: Economic Analysis
Economic Overview
The proposal will offer units targeted at low and moderate income households within Elk River,
within the Minneapolis MSA. Economic analysis is provided for the Minneapolis MSA, city of
Minneapolis and Sherburne County, which are deemed the most insightful for the site’s economic
viability. In addition, information for the State of Minnesota and United States are illustrated to put these
trends into greater context.
Local economics are largely driven by the national economy, particularly for larger, more urban
areas with greater economic diversification. This is visually evident in the unemployment rate comparison
presented in the following pages (i.e., movements in the unemployment rate for the United States coincide
with state and local movements). While generally moving in tandem with national levels, the
unemployment rate within Minnesota and submarkets has been lower in comparison to national levels in
recent years. The national economy suffered a credit crisis in 2008, which led to worsening economic
conditions including declining consumer confidence, continued pressure on an already fragile housing
sector, declining consumer spending and a dramatic decline in automotive purchases all contributing to a
worsening in economic conditions throughout the nation. Unemployment rates have been declining for
the past ten years contributing to a more stable economic environment with low unemployment rates
evident in the city and county. At the time of completion of this report, the United States and global
economy are experiencing a tumultuous period marked by increasing unemployment claims as a result of
shelter in place orders in various states. The impact of this will likely be significant in the near term
despite government efforts to mitigate the impact through stimulus and other preventative measures.
Analysis throughout this report is based on economic conditions returning to growth and greater stability
at the time of market entry for the proposal.
Hillside Heights Apartments, Elk River, Minnesota
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Economic Characteristics and Trends
The subject is located within Elk River, with a high concentration of employment located a short
distance to the southeast in and near Minneapolis. Within the PMA, approximately 20 percent of workers
find employment within a less than 15 minute travel time, while an additional 27 percent of workers find
employment within a 30 minute radius. Commute times within the city and PMA are higher relative to
the county and state as a whole.
Employee Commute Times
City of County of State of
Elk River PMA Sherburne MN
2010 Total Workers via Census 12,460 46,085 47,808 2,812,166
Travel Time: < 15 Minutes 2,828 9,569 9,514 877,396
Percent of Workers 22.7% 20.8% 19.9% 31.2%
Travel Time: 15 - 29 Minutes 3,202 12,489 13,673 1,060,187
Percent of Workers 25.7% 27.1% 28.6% 37.7%
Travel Time: 30 - 44 Minutes 3,103 13,268 10,900 539,936
Percent of Workers 24.9% 28.8% 22.8% 19.2%
Travel Time: 45 - 59 Minutes 1,707 6,300 6,358 185,603
Percent of Workers 13.7% 13.7% 13.3% 6.6%
Travel Time: 60+ Minutes 1,620 4,453 7,315 149,045
Percent of Workers 13.0% 9.7% 15.3% 5.3%
Avg Travel Time in Minutes for Commuters 31 30 32 23
Source: Census of Population and Housing, U.S. Census Bureau; ESRI
Hillside Heights Apartments, Elk River, Minnesota
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Industry employment concentrations in the city, county and state are illustrated below with
national trends presented to put these figures into better context. Within all areas the highest concentration
of employment is within the services sector encompassing education and health services as well as
professional and business services.
Industry Employment Concentrations
City of County of State of
Elk River Sherburne MN USA
Ag, forestry, fishing and hunting, and mining 1.2% 1.4% 2.3% 1.9%
Construction 7.1% 8.0% 5.7% 6.8%
Manufacturing 14.1% 15.2% 13.5% 10.8%
Wholesale trade 4.1% 3.7% 2.9% 2.9%
Retail trade 15.4% 13.7% 11.2% 11.5%
Transp and warehousing, and util 5.7% 6.3% 4.6% 5.1%
Information 0.1% 0.8% 1.8% 2.3%
Fin and ins, and r.estate and rent/lease 5.8% 5.6% 7.2% 6.9%
Prof, sci, and mngt, and admin and waste 8.3% 8.6% 9.8% 10.5%
Ed services, and hlth care and soc assist 23.6% 21.9% 24.8% 22.5%
Arts, ent, and rec, and accommod/food 7.8% 7.3% 8.4% 9.0%
Other services, except public administration 4.4% 4.4% 4.5% 4.9%
Public administration 2.4% 3.0% 3.3% 4.9%
Total Occupations
Mngmt, bus, sci, and arts 38.3% 34.8% 39.8% 35.7%
Service occupations 14.8% 15.4% 16.4% 17.5%
Sales and office occupations 28.5% 23.9% 22.9% 25.1%
Nat res, construction, and maintenance 7.8% 10.2% 7.9% 9.6%
Prod, transp, and material moving 10.7% 15.7% 12.9% 12.2%
Source: Census of Population and Housing, U.S. Census Bureau
Hillside Heights Apartments, Elk River, Minnesota
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The largest employers in the Twin Cities metro area are illustrated below. A majority of residents
within the PMA find employment within the Twin Cities, where the majority of employment
opportunities are concentrated. Major employers in the Twin Cities metro area are detailed below and
include government, health care, financial services, retail and manufacturing. The Twin Cities’ diverse
employment base makes it somewhat recession-resilient.
Top Employers within Twin Cities Metro
Employer
Employees
(rounded to
nearest 1,000)Product/Service
State of Minnesota 33,000 Government
United States Federal Government 25,000 Government
Allina Health System 21,000 Health Care
Wells Fargo & Co.19,000 Financial Services
Target 18,000 Retail
Fairview Health Services 17,000 Health Care
University of Minnesota 17,000 Education
3M 15,000 Manufacturing
Health Partners 9,000 Health Care/Insurance
US Bancorp 8,000 Financial Services
Sources: Minneapolis St. Paul Business Journal, Star Tribune, Employer Websites
Hillside Heights Apartments, Elk River, Minnesota
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Graph: Unemployment Rate Comparison
Graph: Industry Employment Concentrations
Hillside Heights Apartments, Elk River, Minnesota Market Analyst Professionals, LLC 43 April 24, 2020 Annual Labor Force and Employment Statistics
Hillside Heights Apartments, Elk River, Minnesota Market Analyst Professionals, LLC 44 April 24, 2020 Monthly Labor Force and Employment Statistics (Year/Year)
Hillside Heights Apartments, Elk River, Minnesota
Market Analyst Professionals, LLC 45 April 24, 2020
Wages by Occupation
Wages by occupation within the Minneapolis MSA are illustrated below. Wages are ordered from
highest to lowest. Based on the subject's LIHTC income range approximately 3/4ths of occupations would
be income qualified for the proposal.
Wages by Occupation-Minneapolis MSA
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Section 8: Supply Analysis and Characteristics
Building Permit Trends
Information concerning the issuance of building permits can be used to analyze trends in building;
the table below illustrates this data within Elk River, Sherburne County and the state of Minnesota.
Construction dropped off markedly in all areas from 2005-6, consistent with the slowing housing market
across the nation, but with figures from 2012-13 forward showing a recovery within the city and county
generally accelerating through 2019 but remaining below historical horizon highs.
Building Permits
Source: HUD
Hillside Heights Apartments, Elk River, Minnesota
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Local Rental Market Analysis
MAP completed a survey of existing rental projects within the market area in April 2020. Leasing
specialists of developments within or near the market area were contacted to identify rental housing trends
as well as the most competitive projects within the area. Student, special needs and senior only projects
are excluded from the survey. Lanesboro Heights Townhomes could not be reached for updated
information, so information from a May 2019 survey is utilized. The area was also surveyed regarding
current developments under construction; these pipeline projects are discussed below.
A total of 19 projects responded to the survey; of these, 9 reported operating under LIHTC
guidelines for all or a portion of units at an average occupancy of 99.8 percent. The survey encompassed
1,175 units with 433 LIHTC units. The overall occupancy rate for the area was 98.9 percent indicative of
strong demand for rental housing throughout the area. The average build year for the surveyed facilities
was 1994 while the average build year for LIHTC facilities was 2003. For those facilities providing
information, the rental stock was weighted toward two-bedroom units which represent 47 percent of the
total housing stock.
Comparable Project Analysis
The most comparable projects to the proposal include general occupancy units operating under
income restriction guidelines within the same area as the proposal and offering similar units. Among
LIHTC projects those in closest proximity and considered the most comparable to the subject are
included—excluding more dated projects. Additionally, two market rate projects are included to gauge
hypothetical market rents for the subject. Detailed information on these projects is presented in the
following pages. The overall occupancy rate for the most comparable projects is 99.7 percent.
The subject will offer one- to three-bedroom general occupancy units with comparable amenities
and unit sizes to comparable facilities. The development will be the newest project in the area,
commanding a premium relative to more dated competitive set projects. Among competitive set projects
Coachman limits rents to 50 percent AMI (for 60 percent AMI income restrictions) and these units are
shifted in the rent grid. Considering adjustments and projections to market entry the subject’s rents are
consistent with MAP’s estimated achievable LIHTC rents and are appropriately positioned relative to
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Market Analyst Professionals, LLC 48 April 24, 2020
hypothetical market. Competitive rents and strong demand for affordable housing in the area offer support
for the success of the proposal.
Competitive Environment
Credit restrictions particularly for lower income buyers, as well as initial money cost have made
purchasing a home outside the reach of potential buyers who would fall within the qualified income
range. Thus, competition between rental and ownership options are limited for the subject within the
qualified income range, making rental housing the most viable option for low to moderate income
families. Given the high occupancy evident among comparable properties the subject will have no impact
on existing housing in the area.
Concessions Currently Offered and Trends in Rents
No comparable projects reported concessions. Among the comparable projects, rent increases of
approximately 5 to 15 percent over the past year were observed based on MAP’s previous contact with
these facilities.
Pipeline Considerations
The Crossing II is under construction and will enter the market in 2020. This project offers 38
general occupancy units and these units are deducted from the demand analysis in the following section.
Additionally, Elk River Lodge received an allocation in 2019, this project will offer 60 units and is
deducted from the demand analysis.
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Comparable Project Information
Map: Comparable Projects
Comp ID Project Name Program Address City State Phone
3 Dove Terrace LIHTC 1227 School St NW # 110 Elk River MN (763) 241-0020
4 Dove Tree Apartments LIHTC 1105 Lions Park Dr NW Elk River MN (763) 241-0495
5 Jackson Place LIHTC 300 Jackson Place Elk River MN (763) 633-1955
7 The Depot At Elk River Station LIHTC 10653 172nd Ave NW Elk River MN (763) 441-5445
8 The Crossing At Big Lake Station LIHTC 115-A Henry Rd Big Lake MN (763) 263-0449
9 Coachmen Elk River LIHTC 17250 Twin Lake Rd Elk River MN (763) 260-8864
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Map: Surveyed Rental Projects
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Comp ID Project Name Program Address City State Phone
1 Albertville Meadows Apartments LIHTC 10740 County Road 37 NE # 103Albertville MN (763) 497-5009
2 Albertville Meadows Townhomes LIHTC 10732 County Road 37 Albertville MN (763) 497-5009
3 Dove Terrace LIHTC 1227 School St NW # 110 Elk River MN (763) 241-0020
4 Dove Tree Apartments LIHTC 1105 Lions Park Dr NW Elk River MN (763) 241-0495
5 Jackson Place LIHTC 300 Jackson Place Elk River MN (763) 633-1955
6 Leighton'S Landing LIHTC 210 Maple Lane Big Lake MN (320) 252-6262
7 The Depot At Elk River Station LIHTC 10653 172nd Ave NW Elk River MN (763) 441-5445
8 The Crossing At Big Lake Station LIHTC 115-A Henry Rd Big Lake MN (763) 263-0449
9 Coachmen Elk River LIHTC 17250 Twin Lake Rd Elk River MN (763) 260-8864
10 Evans Meadows Apartments MARKET 355 Evans Ave NW # 206 Elk River MN (763) 441-6299
11 Heartland Pointe Apartments MARKET 13625 Bradley Blvd Becker MN (763) 261-3489
12 Lake Orono Estates MARKET 18594 Gary St NW Elk River MN (763) 441-8356
13 Lions Park MARKET 1001 School St NW Elk River MN (763) 324-0163
14 Monticello Village Apts MARKET 727 Minnesota St Monticello MN (763) 295-2226
15 Preserve At Commerce MARKET 21515 Maple Ave Rogers MN (763) 428-8150
16 Ridgewood Manor Apartments MARKET 11931 191 1/2 Ave NW Elk River MN (763) 441-8510
17 Sugar Maples Apartments MARKET 13600 Commerce Blvd Rogers MN (763) 428-4683
18 Elk Ridge Manor Apartments RD 847 Freeport Ave NW # 101 Elk River MN (763) 274-2700
19 Lanesboro Heights Townhomes BOI-HUD 11798 Highland Rd NW # A Elk River MN (763) 441-2642
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Comparable Project Summary Sheets
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Section 9: Local Perspective
MAP surveyed local apartment managers in the course of market study completion and surveyed
recent LIHTC allocations within the PMA (summarized in a preceding section). These interviews are
included throughout the analysis. Additionally, MAP has reviewed local comparable projects with the
results of these projects incorporated throughout the report. MAP was unable to reach the local planning
department for information on pipeline projects in the area.
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Section 10: Demand Analysis
Demand for Rental Units
Demand estimates for the proposal are outlined in the following pages based on qualified income
ranges for the proposal. Income ranges are based on an affordability ratio of 35 percent for family and 40
percent of income to gross rent for seniors and maximum LIHTC rents and income for Sherburne County.
Demand is based on age and income qualified renter households within the PMA.
Two ratios are used to quantify potential demand for the proposal. These ratios include the capture
rate which measures the ratio of units at the proposal to age- size- and income-qualified renter households
within the PMA. The second measure is the penetration rate, which measures the number of units in the
proposal plus comparable pipeline units relative to annual demand as outlined above. Demand for 30
percent AMI units is not presented as these units are over maximum allowable gross (consistent with the
project based subsidy for these units), creating nonsensical results. Based on these estimates, the
proposal’s demand estimates are within acceptable thresholds.
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Absorption Rate
Reported absorption among competitive set projects has been robust. Maple Village reported one
month absorption of 102 units, the Depot at Elk River Station reported 53 units in one month and
Coachmen Elk River reported absorption of 53 units in one month. Considering these rates as well as
absorption based on movership ratios and estimated capture rates among income qualified households, it
is conservatively estimated the subject would be fully absorbed within 5-6 months of market entry.
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Demand Estimates
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Market and Achievable Rent
Market and achievable rents for the subject are illustrated below. These rents were estimated based
on competitive positioning of the project in the area. An analysis utilizing both LIHTC and market rents is
presented on the following pages to help illustrate the competitive positioning of the subject and its
positioning as a hypothetical market rate project and in comparison to similar LIHTC projects. Rents are
adjusted based on appeal (including location, amenities and unit design), included utilities, unit size and
where applicable by maximum allowable gross and a minimum 10 percent market advantage when
evident within the market. Rents are projected to market entry based on 3.5 percent annual appreciation.
Site location, condition and appeal scores are relative to the subject (i.e., the subject is always rated as 5).
Based on these analyses proposed contract rents are consistent with estimated achievable LIHTC rent and
significantly discounted from hypothetical market rents.
Estimated LIHTC and hypothetical market rent represent an assessment of what a comparable
unit is receiving within the market. It is not an endorsement of rent at that level as the project was
analyzed considering contract rent. Changes in contract rent will impact absorption, demand statistics and
competitive positioning of the proposal and would necessitate additional analysis.
Rent Derivation
Proposed
AMI
Target
Proposed
Subject
Contract
Rent
# of Units # of Baths
Average Sq.
Footage
Estimated
Achievable Contract
Rent
Max Achievable
LIHTC Rent
Estimated
Achievable
Market Rent
Market
Advantage
Summary 1 BR
1 BR-Apt 30% $722 4 1.0 680 $557 $520 $1,351 47%
1 BR-Apt 50% $908 3 1.0 680 $973 $908 $1,351 33%
1 BR-Apt 50% $722 4 1.0 680 $973 $908 $1,351 47%
1 BR-Apt 60% $1,102 2 1.0 680 $1,177 $1,102 $1,351 18%
Summary 2 BR
2 BR-Apt 50% $1,083 14 1.0 980 $1,160 $1,083 $1,609 33%
2 BR-Apt 60% $1,316 14 1.0 980 $1,354 $1,316 $1,609 18%
Summary 3 BR
3 BR-Apt 50% $1,246 7 2.0 1,280 $1,335 $1,246 $1,917 35%
3 BR-Apt 60% $1,515 7 2.0 1,280 $1,519 $1,515 $1,917 21%
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Rent Derivation
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Future Rental Market and Associated Risks
The development of affordable housing is appropriate based on demand within the area. Given
demographic growth throughout the area as well as obsolescence of existing units and the excess demand
evident for affordable housing evident in the market survey, additional rental housing is likely to be in
demand in coming years. The development of affordable housing is appropriate based on demand within
the area. Since MHFA determines the number of competitive projects that come online, risks from future
unsustainable development are limited.
Recommendations and Conclusions
Based on the analysis within this report, the proposal will be successful as is, no changes are
deemed necessary. The site is located in a mixed-use area but with LIHTC residential uses located a short
distance from the site. Amenities and employment opportunities are located in close proximity with easy
access to Minneapolis to the southeast. Household growth in the area is forecasted to increase through
2025 with the rate within the PMA exceeding the overall rate of the state and county. The Minneapolis
MSA has outperformed the state average in terms of the unemployment rate in recent years and
employment has increased annually each of the past nine years. Derived demand statistics for the subject
suggest sufficient demand to absorb the proposal. Finally, supply side data indicates rents for the subject
will be competitively positioned in the area and the subject will be well positioned in the market and
competitive with comparable projects which have reported very strong occupancy indicative of strong
demand in the area. As a result, the development of the proposal to more adequately serve the PMA’s
population is appropriate.
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Section 11: Special Needs Analysis
The subject will offer four special needs units targeted at homeless persons, which will operate
with a project subsidy eliminating the issue of affordability for these units. The service provider for the
special needs units will be Rise.
Sherburne County, Minnesota since the late 1800's. They have extensive experience
Market Area Delineation and Demand for Units
Service providers for special needs groups generally serve large geographic areas based on city,
county boundaries or larger geographic areas. As such, the market area for the special needs units is
larger in comparison to the other units offered at the proposal. In this case Continuum of Care has
identified Sherburne County as falling within the Central Area.
Population and Income Distribution
Because of the nature of special needs persons, detailed statistics for this population are difficult to
obtain. MAP has reviewed studies focused on Homelessness in Minnesota and Sherburne County in
particular from both Wilder Research and The U.S. Department of Housing and Urban Development
Continuum of Care Program. Specific references to incomes are not made in either report. Based on a
review of recent reports as well as anecdotal evidence presented to MAP in conducting interviews with
special needs service providers throughout the Minneapolis metro area generally, special needs
populations exhibit very low incomes and are more highly concentrated among the middle age cohorts
(i.e., aged 26 to 40) in comparison to the general population and are employed in low paying positions
(approximately $20,000 per year income or less) and/or reliant on economic and familial assistance. The
Continuum of Care 2012 Heading Home Hennepin report indicates targeting housing at very low income
households, considered to be 30 percent AMI or less (approximately $21,720 for a one-person household
in 2020), consistent with anecdotal evidence presented to MAP in interviews with various special needs
services providers historically.
Comparable Special Needs Housing
Special needs persons often have difficulty in finding affordable housing. Because of numerous
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problems (including low incomes, inconsistent rental histories, and physical and mental disabilities)
special needs persons are often not given fair consideration in finding affordable housing. This problem
has received increasing recognition in recent years; however, substantial need for additional facilities
exists.
Demand for Special Needs Units
Based on the data presented above, it is estimated the special needs portion of the development
will fill quickly, within 4 months of the development entering the market. The subject will offer four
special needs units targeted at homeless persons, which will operate with a project subsidy eliminating the
issue of affordability for these units. The Continuum of Care's January 2018 point-in-time survey of
homelessness identified 2,091 families and 105 households unsheltered within the Central Region. While
the Wilder Research Center's 2018 Minnesota Homeless Study found 944 people homeless in the Central
Region, with 321 persons not in shelters relative. The proposal’s units will help meet this demand.
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Section 12: Other Requirements
Date of Report: April 24, 2020
Date of Site Visit: April 5, 2020
Field Work, Report and Conclusions Prepared by:
Chris Vance
Market Analyst Professionals
222 South 9th Street, Suite 1600
Minneapolis, MN 55402
PH: 248-515-0496
cavance@mindspring.com
chris.vance@mapyourproject.com
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Qualifications of the Market Analyst
CHRIS VANCE
EDUCATION:
Michigan State University
Master of Arts, Economics
Concentration in Industrial Organization
Doctorate level curriculum
Oakland University
Bachelor of Science, Economics
Concentrations in Finance and Computer Science
Graduated with Honors
EMPLOYMENT HISTORY:
MARKET ANALYST PROFESSIONALS, LLC, a real estate market research company
Founder (12/03 to Present)
Founder
Custom report development.
COMMUNITY RESEARCH GROUP, LLC, a real estate market research company.
Market Analyst/Consultant (2/00 to12/03)
Prepared real estate market feasibility studies considering site characteristics, economic and demographic
trends, market forecasts and project guidelines.
Developed analytical tools and improved methodologies.
Provided project recommendations based on analysis of market area.
Gathered information utilizing secondary market research and through personal interviews.
J.D. POWER AND ASSOCIATES, an automotive marketing information firm.
Analyst-Economic Analysis in Forecasting Group (6/98 to 9/99)
Senior Analyst-Economic Analysis in Forecasting Group (9/99 to 2/00)
Wrote detailed analysis of economic, political and automotive market conditions of global economies for
monthly, quarterly and annual reports.
Developed forecasting models and analytical tools to enhance forecasting capabilities using computer, data
collection and analysis skills.
Analyzed the impact of automotive market dynamics on automotive sales and competition, including pricing
and profitability analysis.
Forecasted economic growth and automotive sales for North and South America and Asia.
Traveled to Asia and Europe as needed to participate in the company’s strategic growth and product positioning
decisions.
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Bibliography
1990/2000/2010 U.S. Census of Population and Housing, U.S. Census Bureau
2019/2024 Demographic Forecasts, ESRI
American Housing Survey, U.S. Census Bureau and U.S. Department of Housing and Urban
Development
Economic information – Bureau of Labor and Statistics
Local roadway maps—Microsoft Streets and Trips 2010
Interviews with local officials, managers and leasing specialists of local rental developments
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Addendum A
Market Study Checklist
The following components have been addressed in this market study. The page number of each component is noted below.
Each component is fully discussed on that page or pages. In cases where the item is not relevant the author had indicated ‘N/A’
or not applicable. Where a conflict with or variation from Minnesota Housing Market Study Guidelines exists, the author has
indicated a ‘V” (variation) with a comment explaining the conflict.
Component Pages
1 Unit mix and pro forma rents 8
2 Description and justification of Primary Market Area 9
3 Income band for subject property 70
4 Demand projections 70
5 Comparison of subject to comparable market rate and affordable properties 47-66
6 Forecasted achievable market rents for the subject property 84
7 Required capture rate 70
8 Forecasted lease up schedule 69
9 Recommended changes to the project NA
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Addendum B
Minnesota Housing Market Study Certification
The undersigned certify that the following is true and correct:
1 That the Market Analyst is knowledgeable and experienced in the development of affordable
rental properties.
2 That the Market Analyst conducted and was the primary author of the attached low income
housing tax credit market study report (“Report”) for Hillside Heights Apartments (“Project”) for
Community Housing Development Corporation (Developer/owner name).
3 That the Report was completed on April 24, 2020.
4 That to the best of the Market Analyst knowledge, all data contained in the Report is accurate.
5 That the Market Analyst has made a physical inspection of the area in which the Project will be
located, reviewed all relevant data, and independently established the conclusions for the Report.
6 That all projections contained in the Report were based on current professionally accepted
methodology.
7 That the Market Analyst has no financial interest in the proposed Project.
8 That the Market Analyst ‘s fee for conducting the Report, and the findings and conclusions
contained therein , were not contingent upon the proposed Project being selected by the Minnesota
Housing Finance Agency.
9 That it is the Market Analyst’s unbiased and professional opinion that there is sufficient demand
for the Project as of the completion date of the Report.
By: ________________________________
(Authorized Representative-Market Analyst)
Title: ___Founder_____________________
Date: ___April 24, 2020________________
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Addendum: Market Study Analysis and Consideration:
Derivation of achievable HTC Rents
The most comparable projects to the proposal include general occupancy units operating under
income restriction guidelines within the same area as the proposal and offering similar units. Among
LIHTC projects those in closest proximity and considered the most comparable to the subject are
included—excluding more dated projects. Additionally, two market rate projects are included to gauge
hypothetical market rents for the subject. Detailed information on these projects is presented in the
following pages. The overall occupancy rate for the most comparable projects is 99.7 percent.
The subject will offer one- to three-bedroom general occupancy units with comparable amenities
and unit sizes to comparable facilities. The development will be the newest project in the area,
commanding a premium relative to more dated competitive set projects. Among competitive set projects
Coachman limits rents to 50 percent AMI (for 60 percent AMI income restrictions) and these units are
shifted in the rent grid. Considering adjustments and projections to market entry the subject’s rents are
consistent with MAP’s estimated achievable LIHTC rents and are appropriately positioned relative to
hypothetical market. Competitive rents and strong demand for affordable housing in the area offer support
for the success of the proposal.
Market and Achievable Rent
Market and achievable rents for the subject are illustrated below. These rents were estimated based
on competitive positioning of the project in the area. An analysis utilizing both LIHTC and market rents is
presented on the following pages to help illustrate the competitive positioning of the subject and its
positioning as a hypothetical market rate project and in comparison to similar LIHTC projects. Rents are
adjusted based on appeal (including location, amenities and unit design), included utilities, unit size and
where applicable by maximum allowable gross and a minimum 10 percent market advantage when
evident within the market. Rents are projected to market entry based on 3.5 percent annual appreciation.
Site location, condition and appeal scores are relative to the subject (i.e., the subject is always rated as 5).
Based on these analyses proposed contract rents are consistent with estimated achievable LIHTC rent and
significantly discounted from hypothetical market rents.
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Proposed
AMI
Target
Proposed
Subject
Contract
Rent
# of Units # of Baths
Average Sq.
Footage
Estimated
Achievable Contract
Rent
Max Achievable
LIHTC Rent
Estimated
Achievable
Market Rent
Market
Advantage
Summary 1 BR
1 BR-Apt 30% $722 4 1.0 680 $557 $520 $1,351 47%
1 BR-Apt 50% $908 3 1.0 680 $973 $908 $1,351 33%
1 BR-Apt 50% $722 4 1.0 680 $973 $908 $1,351 47%
1 BR-Apt 60% $1,102 2 1.0 680 $1,177 $1,102 $1,351 18%
Summary 2 BR
2 BR-Apt 50% $1,083 14 1.0 980 $1,160 $1,083 $1,609 33%
2 BR-Apt 60% $1,316 14 1.0 980 $1,354 $1,316 $1,609 18%
Summary 3 BR
3 BR-Apt 50% $1,246 7 2.0 1,280 $1,335 $1,246 $1,917 35%
3 BR-Apt 60% $1,515 7 2.0 1,280 $1,519 $1,515 $1,917 21%
Demand Analysis
Demand estimates for the proposal are based on qualified income ranges for the proposal. Income
ranges are based on an affordability ratio of 35 percent for family and 40 percent of income to gross rent
for seniors and maximum LIHTC rents and income for Sherburne County. Demand is based on age and
income qualified renter households within the PMA. Two ratios are used to quantify potential demand for
the proposal. These ratios include the capture rate which measures the ratio of units at the proposal to age-
size- and income-qualified renter households within the PMA. The second measure is the penetration rate,
which measures the number of units in the proposal plus comparable pipeline units relative to annual
demand as outlined above. Demand for 30 percent AMI units is not presented as these units are over
maximum allowable gross (consistent with the project based subsidy for these units), creating nonsensical
results. Based on these estimates, the proposal’s demand estimates are within acceptable thresholds.
Absorption Rate
Reported absorption among competitive set projects has been robust. Maple Village reported one
month absorption of 102 units, the Depot at Elk River Station reported 53 units in one month and
Coachmen Elk River reported absorption of 53 units in one month. Considering these rates as well as
absorption based on movership ratios and estimated capture rates among income qualified households, it
is conservatively estimated the subject would be fully absorbed within 5-6 months of market entry.
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Demand Estimates
ABOUT CHDC
Community Housing Development Corporation's (CHDC) mission is to sustain high-quality and affordable homes, to
enhance the community over the long term, and to create and maintain healthy living.
CHDC takes a unique, businesslike approach to affordable housing by keeping overhead costs small and structuring
its properties and operations to be financially self-sustaining over the long term.
CHDC, founded in 1991, has provided stability to Minnesota residents and communities for more than 25 years as a
nonprofit developer and owner. CHDC owns more than 3,500 affordable housing units. More than half of its units are
Section 8 and approximately 2,000 are LIHTC.
RECENT CHDC PARTNERSHIP PROJECTS
VETERANS EAST
CHDC worked with the Department of
Veterans Affairs to construct Veterans East
on the Minneapolis VA Medical Center
campus.
Veterans East provides 100 units of
permanent, affordable housing to a single
adult population of homeless with a priority
placement offered for veterans.
Veterans East operates successfully with
some of the lowest unsubsidized rents
anywhere in the metro at $435/month.
It serves a population that thrives in an
environment that is supportive, but not
service-intensive.
Veterans East opened in 2017.
CORNERSTONE CREEK
CHDC and Jewish Housing and Programming
(J-HAP) partnered to create 45 units in
Golden Valley for developmentally disabled
individuals.
J-HAP was formed to serve the life-long
needs of adults with developmental
disabilities, with progressive amenities that
allow individuals to live independently,
increase self-esteem and thrive within a
Jewish community that is open to all.
Cornerstone Creek was made possible
through J-HAP's vision and CHDC's
affordable housing expertise.
Cornerstone Creek opened January 2017.
SELBY MILTON VICTORIA
CHDC is partnering with the Rondo
Community Land Trust (Rondo CLT) to
develop Selby Milton Victoria, a two-
building project in St. Paul. The project
will create 34 units of affordable housing
for seniors with commercial space in each
building. 70% of the units are affordable
to seniors at 30% AMI and below, making
the project one of the most affordable new
developments in the St. Paul.
Rondo CLT, founded in 1993, provided insight
into the needs of the Rondo community.
The commercial space will promote local
economic development through small
business recruitment.
The building will be complete in early 2019.
ELIZABETH FLANNERY, PRESIDENT
Ms. Flannery has 27 years of increasingly responsible experience in real estate development. This has included positions with The National
Equity Fund, CommonBond Communities, Sherman Associates, and Everwood Development LLC.
Prior to beginning her real estate career, she worked in Mexico and Central America on humanitarian relief efforts. Ms. Flannery is a graduate
of Northwestern University, with a degree in Journalism from the Medill School at Northwestern.
HEIDI RATHMANN-SMITH, SENIOR VICE PRESIDENT
For the past three years, Ms. Rathmann has provided oversight to projects in the CHDC pipeline by reviewing project feasibility, gaining public
and political support, ensuring ongoing communication, and effective problem solving regarding the day-to-day activities of structuring and
closing projects. Ms. Rathmann also provides project management for new affordable housing and community development projects in
CHDC’s pipeline including general real estate activities, structuring the financing, and raising and closing on the capital funds.
Ms. Rathmann began the first 10 years of her career in affordable housing at the Dakota County Community Development Agency, Mercy
Housing, and Greater Minnesota Housing Fund. For 10 years, she was an independent development consultant for both for-profit and non-
profit developers providing expertise on affordable housing development. Ms. Rathmann has a Bachelor of Science degree in Business
Administration and a Master of Arts in Urban Studies.
DAN WALSH, VICE PRESIDENT, HOUSING DEVELOPMENT
Mr. Walsh works on portfolio recapitalizations and new project development. He focuses on sales and marketing and manages all phases of
the development process including site identification and control, partner support, financial structuring, design, entitlements, closing and
construction monitoring.
Mr. Walsh has more than eight years of experience with different housing programs and multifamily development including positions with the
Minnesota Housing Finance Agency; Aeon, a Minneapolis based non-profit affordable housing developer; and Donjek, a local consulting firm
focused on urban development. Mr. Walsh has a Master’s Degree in Public Policy from Harvard University with a concentration in Housing and
Urban Development. He got his undergraduate degree from the University of Wisconsin - Madison.
CHRIS MAIDA, DIRECTOR OF ASSET MANAGEMENT
Mr. Maida’s work is focused on preserving and promoting the long-term sustainability of the CHDC housing portfolio. His efforts include
monitoring portfolio performance, implementing strategies to add value for residents and properties, risk mitigation, and working with
partners to meet goals and commitments.
Previously, Mr. Maida worked for five years as an asset manager for CommonBond Communities with a portfolio of over 5,500 affordable
apartment units located in Minnesota, Wisconsin, and Iowa. He earned a Master’s Degree in Urban and Regional Planning with a concentration
in housing and community development from the University of Minnesota Humphrey School of Public Affairs and an undergraduate degree
from the University of Wisconsin-Milwaukee. Before graduate school, Mr. Maida spent four years working with Catholic Charities on an
emergency shelter for teens in Minneapolis.
SALLY RABBAN, PROJECT COORDINATOR
Ms. Rabban has been actively involved in housing and community development since 2009. As project coordinator at CHDC, Ms. Rabban works
with partners and funders to construct and rehabilitate affordable rental housing through the coordination of site acquisition, deal structuring
and assembling financial applications.
Before Ms. Rabban joined CHDC, she worked at Landon Group as housing development specialist for multi-family rental housing in Minnesota,
served in AmeriCorps with Twin Cities Habitat for Humanity, and worked at Seward Redesign. Ms. Rabban has a Master’s Degree in Urban and
Regional Planning from the Humphrey Institute with a concentration in housing and community development, and a Bachelor of Arts degree
in Architecture and Geography from the University of Minnesota.
BETSY MICHELS, PROJECT COORDINATOR
Ms. Michels assists in development, asset management, and administrative work. Her duties include preparing funding applications, assisting
throughout the development process, and daily clerical tasks. Ms. Michels is pursuing a Bachelor of Design in Architecture from the University
of Minnesota.
CHDC STAFF
CHDC PROPERTIES
Throughout Minnesota,
CHDC owns
44 PROPERTIES
3,517 UNITS
1,793 SECTION 8 UNITS
1,975 LIHTC UNITS
CHDC serves some of the lowest incomes
and offers the lowest rents in the City of
Minneapolis.
In Minneapolis, CHDC provides homes for
4,379 people.
The average household income is $20,946.
In its Minneapolis Section 8 properties, the
residents make approximately 20% area
median income.
In Minneapolis, CHDC owns
24 PROPERTIES
1,904 UNITS
683 SECTION 8 UNITS
974 LIHTC UNITS
CITY
ANOKA
APPLE VALLEY
BROOKLYN CENTER
BUFFALO
BURNSVILLE
EDEN PRAIRIE
FRIDLEY
GOLDEN VALLEY
HOPKINS
HUTCHINSON
LITTLE FALLS
MAHTOMEDI
MINNEAPOLIS
PARK RAPIDS
SAINT PAUL
VADNAIS HEIGHTS
UNITS
66
36
112
48
200
168
16
45
161
101
62
29
48
89
38
66
20
30
88
12
80
85
5
64
57
4
31
92
134
191
248
162
26
120
24
140
100
36
80
151
58
96
54
35
3,517
PROJECT
Franklin Lane
Haralson
Unity Place
Buffalo Court
Chancellor Manor
Prairie Meadows
Brandes Place
Cornerstone Creek
Hopkins Village
Raspberry Ridge
Evergreen
Willow
Lincoln Place
Albright
Blue Goose
Diamond Hill
Echo Flats
Elliot Park
Evergreen
Exodus
Glenwood
Higher Ground
Jefferson
LaSalle
Morrison Village
New Beginnings
Oakland Square
Olson Townhomes
Park Plaza
Riverside Homes
Seven Corners
Slater Square
Talmage Green
Trinity Apartments
Trinity on Lake
Veterans and
Community Housing
Veterans East
Zinsmaster
Woodland Court
Dale Street Place
Hamline Park
Hanover Townhomes
Ramsey Hill
Vadnais Highlands
TOTAL
CHDC ProjectsProperty
Albright Townhomes
Diamond Hill
Echo Flats
Elliot Park
Evergreen
Exodus
Glenwood
Higher Ground
Jefferson
LaSalle
Morrison Village
Olson Towne Homes
Park Plaza
Slater Square
Talmage Green
Trinity Apartments
Trinity on Lake
Veterans and Community
Housing
Veterans East
Zinsmaster
Oakland Square
New Beginnings
Dale Street Place
Hamline Park
Hanover Townhomes
Ramsey Hill
Franklin Lane
Haralson
Unity Place
Buffalo Court
Chancellor Manor
Prairie Meadows
Hopkins Village
Raspberry Ridge
Evergreen
Willow Apartments
Lincoln Place
Woodland Court
Vadnais Heights
Brandes Place
Cornerstone Creek
Androy
new
State Street
Park 7
Selby Milton
Selby Ave & N Victoria St
East Town
CHDC and House of Charity have partnered
to develop Park 7 in the Elliot Park
neighborhood in downtown Minneapolis.
Park 7 will provide 61 units of supportive
housing for individuals experiencing
long-term homelessness with chemical
dependency and/or serious mental illness.
House of Charity will provide services to
all of the residents, including access to the
House of Charity Food Centre.
Construction is expected to start in early
2019.
PARK 7
61 new units of affordable housing
with services
State Street Apartments is the adaptive
reuse of the New Ulm Middle School, a
historic structure built in 1918.
State Street will provide 49 units of
affordable housing for individuals and
families.
All units will be reserved for individuals and
families with children who meet the Section
42 income restrictions, particularly tenants
with household incomes ranging from 50 to
60% of Area Median Income.
Rehab is expected to start in December of
2018.
STATE STREET
APARTMENTS
49 new units of workforce housing
in New Ulm
SOURCES OF FUNDING:
City of Minneapolis AHTF - $1,525,000
Hennepin County AHIF - $400,000
SOURCES OF FUNDING:
Syndication proceeds - $8,947,498
Federal historic proceeds - $2,232,167
Housing Infrastructure Bonds - $5,384,499
Sales tax and energy rebates - $253,784
State historic TC GP loan - $2,452,931
Sales tax and energy rebates - $310,323
Met Council TBRA/LHIA - $565,000
National HTF - $2,806,585
First mortgage - $675,000
GMHF deferred loan - $546,000
CREATING NEW AFFORDABLE UNITS IN MINNESOTA
CREATING NEW AFFORDABLE UNITS IN MINNESOTA
EAST TOWN APARTMENTS
169 units of new workforce housing in Downtown East, Minneapolis
CHDC is partnering with First Covenant Church on the creation of 169 workforce housing units next to US Bank Stadium. East Town Apartments
is directly adjacent to major downtown employers and within one block of the US Bank Stadium LRT Station and high frequency bus transit.
The units will be reserved for those making 60% or less of the area median income, including 24 studios, 92 one-bedrooms, 47 two-bedrooms
and 6 three-bedrooms.
Construction is expected to start in December of 2018.
OTHER 2018-2020 NEW CONSTRUCTION PROJECTS
Selby Milton Victoria, Saint Paul - 34 units under construction
SINCE 2015, CHDC created 100 units of affordable housing in Minneapolis (145 total)
Veterans East - 100 units
Cornerstone Creek - 45 units
SOURCES OF FUNDING:
First Mortgage - $14,300,000
Syndication Proceeds - $12,491,072
Hennepin County TOD - $330,000
Sales tax and energy rebates - $854,877
Parking take out loan - $3,500,000
Pohlad Foundation - $250,000
Brownfields - $250,000
GP loan - $3,681,588
PRESERVING HOUSING AFFORDABILITY IN MINNESOTA
ALBRIGHT TOWNHOMES
Albright Townhomes, a 100% project-based
Section 8 project, is a 89-unit property
located in South Minneapolis. In April 2018,
Albright began renovation activities with a
construction budget of nearly $75,000/unit.
In addition to necessary upgrades to finishes
and systems, CHDC is adding amenities that
will improve residents’ lives and the Albright
community.
Albright Townhomes holds the first HAP
contract issued in Minnesota. In the early
1990s, Albright was at risk of converting
to market rate and the City of Minneapolis
requested CHDC's help. Since, CHDC has
worked to preserve Albright.
Rehab is expected to be complete by the
end of 2018.
RIVERSIDE HOMES
CHDC and West Bank Community
Development Corporation are
partnering to rehabilitate 191 units
throughout Minneapolis’ Cedar-Riverside
neighborhood.
WBCDC's mission is to improve the quality of
life in Cedar Riverside through community-
based planning processes. CHDC provides
insight into the preservation of affordable
housing to further WBCDC's mission, while
WBCDC gives insight into the community.
Riverside Homes consists of 103 project-
based Section 8 units. The remaining 88
units are affordable to households earning
60% AMI.
Rehab began in November 2018.
CHDC is dedicated to preserving its properties for the long term, through rehabilitation and strategic refinancing.
Its self-sustaining business model allows CHDC to recapitalize its existing portfolio without the use of scarce gap
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Riverside Homes buildings
are highlighted in red.
SINCE 2015, CHDC
preserved 1,011 units of affordable housing
Diamond Hill - 66 units
Trinity Apartments - 120 units
Prairie Meadows (Eden Prairie) - 168 units
Hanover Townhomes (Saint Paul) - 96 units
Hopkins Village (Hopkins) - 161 units
Franklin Lane (Anoka) - 66 units
Ramsey Hill (Saint Paul) - 54 units
Albright (Minneapolis) - 89 units
Riverside Homes (Minneapolis) - 191 units
OLSON TOWNE HOMES
Olson Towne Homes is a 100% project-
based Section 8 property located in North
Minneapolis, which provides 92 units of
housing to families and individuals.
In September 2019, CHDC will begin
reconstructing the existing, failing units
with new buildings with unit sizes suitable
for larger families.
The new plan, adjacent to the future
Bottineau LRT station, increases density
and frees up land for future phases of
redevelopment.
Funding commitments have been received
from CPED's Metropolitan Council.
OTHER 2018-2020 PRESERVATION PROJECTS
Unity Place
LaSalle
Echo Flats
Trinity on Lake
Talmage Green
New Beginnings
Woodland Court
Jefferson
Zinsmaster
Exodus
UPCOMING LONG-TERM
PRESERVATION OPPORTUNITIES
LIMITED PARTNER EXITS
6 in Minneapolis (360 unit)
12 total (609 units)
HAP CONTRACT EXPIRATIONS
7 in Minneapolis (493 units)
11 total (610 units)
614 North First Street, Suite 100
Minneapolis, Minnesota 55401
(612) 332-6264
VICINITY PLAN
175TH AVENUE NW
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TO ELK RIVER
NORTHSTAR STATION
TO HILLSIDE CITY PARK
KLIEVER MARSH PARKCONCEPT PLANELK RIVER, MN / 05.18.2020 / 20-0009
CHDC Elk River
1
SITE PLAN
PRELIMINARY CONCEPT
175TH AVENUE NW
TWIN LAKES ROAD NWPHASE 1 PHASE 2
EXTERIOR PROGRAM TO INCLUDE:
• Play Area
• Ball Court
• Community Gardens
• Outdoor Amenity Patio with
Grilling Stations
• Pollenator Gardens
• Rain Gardens
• Walk-up Units
CONCEPT PLANELK RIVER, MN / 05.18.2020 / 20-0009
CHDC Elk River
2
CORNER PERSPECTIVE
PRELIMINARY CONCEPT
PRECEDENT IMAGERYELK RIVER, MN / 05.18.2020 / 20-0009
CHDC Elk River
3
SOUTHERN APPROACH
PRELIMINARY CONCEPT
PRECEDENT IMAGERYELK RIVER, MN / 05.18.2020 / 20-0009
CHDC Elk River
4
ENTRANCE DRIVE
PRELIMINARY CONCEPT
PRECEDENT IMAGERYELK RIVER, MN / 05.18.2020 / 20-0009
CHDC Elk River
5
HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR
THE CITY OF ELK RIVER
RESOLUTION NO. 20-04
RESOLUTION EXPRESSING SUPPORT FOR THE PROPOSED USE OF TAX
INCREMENT FINANCING FOR A PROJECT BY COMMUNITY HOUSING
DEVELOPMENT CORPORATION
WHEREAS, the Housing and Redevelopment Authority in and for the City of Elk River
(the "HRA") and the City of Elk River, Minnesota (the "City") have received a request to assist
an entity to be formed by Community Housing Development Corporation (the "Developer") with
certain costs of construction of an approximately 55 unit multifamily rental housing development
in the City of Elk River(the"Project"); and
WHEREAS, the City engaged Maxfield Research and Consulting, LLC on February 15,
2018, to conduct a comprehensive housing market study update to our original study completed
in December of 2015. The study projects housing demand from 2017-2025 and provides
recommendations on the amount and type of housing that could be built in the City to satisfy
demand from current and future residents through 2025. The study showed a demand for
affordable rental housing in the City; and
WHEREAS, a need has been identified for additional affordable housing within the City
and that the proposed housing fills a need in the local housing market that currently has an unmet
need; and
WHEREAS, the success of the tax credit application is predicated on local support of the
proposal; and
WHEREAS, the Developer has requested that the HRA indicate its support of the use of
tax increment for the Project; and
WHEREAS, the Joint Finance Committee has reviewed the proposal and recommends
that the Board of Commissioners support the use of tax increment for the Project.
NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the
Housing and Redevelopment Authority in and for the City of Elk River that:
1. The Board of Commissioners supports the Project and the use of tax increment
financing for the Project; provided, however, that authorization of tax increment financing for
the Project is solely within the discretion of the Board of Commissioners following all legally
required proceedings pursuant to Minnesota Statues 469.174 through 469.1794, as amended,
including (i) a public hearing and approval by the City Council of the City; (ii) determining that
tax increment financing assistance is necessary for the Project; (iii) verification of development
financing need that substantiates that "but for" the use of tax increment financing the Project
would be unable to proceed based on an analysis performed by the City's municipal advisor; and
(iv) the negotiation of a development agreement including (among other things) the conditions
under which the City or the HRA will provide financial assistance.
2. The Board of Commissioners supports the Developer's application to MHFA for
tax credits for the Project.
3. The Board of Commissioners recommends that the City Council of the City adopt
a resolution supporting the Developer's application to MHFA for tax credits for the Project and
expressing support for providing tax increment financing assistance to the Developer for the
Proj ect.
Adopted by the Housing and Redevelopment Authority in and for the City of Elk
River this 1St day of June, 2020.
President
ATTEST:
Executive Director
2
City of
Elk NM%-
River
May 18, 2020
Jennifer Ho, Commissioner
Minnesota Housing Finance Agency
400 Wabasha St N UNIT 400,
St Paul,MN 55102
Re: Housing Tax Credit Threshold Letter—Hillside Heights Apartments
Dear Commissioner Ho:
The City of Elk River City Council, at its meeting on May 18, 2020, reviewed and preliminarily
endorsed Hillside Heights Apartments housing development proposal that proposes the new
construction of approximately 55 affordable rental units in the City of Elk River near its Northstar
Commuter Rail Station.
This endorsement is based upon the findings that the project will meet locally identified housing
needs and that the proposed housing is in short supply in the local housing market. This need is
evidenced by the following sources:
1. A comprehensive housing market study update completed by Maxfield Research&
Consulting for the City of Elk River in February 2018. The study projects housing demand
from 2017 through 2025 and provides recommendations on the amount and type of housing
that could be built in Elk River. Below is how this study aligns with the development of
Hillside Heights Apartments:
a. Hillside Heights Apartments is an alternative development concept containing 55 total
units anticipated to serve 12 subsidized households,27 affordable families and 16
affordable senior active adults.
b. The plan shows strong demand for rental housing (55 units)
c. The following table summarizes how the development meets the identified needs:
Hillside Heights Remaining
Demand Apartments Demand Stud Reference
Page 44 and Table
Subsidized 34 12 22 CR-2
Page 44 and Table
Affordable 35* 27 8 CR-2
Affordable Senior Active Page 46 and Table
Adult 40 16 24 CR-2
*Note:60-unit Elk Rid
ge Lodge netted out
13065 Orono Parkway
Elk River,MN 55330 P D W E R E D D Y
Phone:763.635.1000 INAWRE]
www.EJkRiverMN.gov
d. The 0%vacancy rates for affordable rental housing and senior housing at all levels
indicate a pent-up demand for this type of housing.
e. Additional demand for Hillside Heights Apartments will also likely come from outside
Elk River in the larger submarket area.
2. The 171"Avenue Focused Area Study ("FAST"). The council approved plan outlines short-
and long-term development and transportation goals for the 175th Avenue and Twin Lakes
Road intersection—the development sitein the FAST Hillside Heights subarea including:
a. Density at 26 units/acre.
b. A variety of housing options.
c. Attractive streetscape and pedestrian connection along Twin Lakes Road.
d. Paths and crosswalk to the commuter rail station.
3. The City's current Comprehensive Plan supports the development of Hillside Heights
Apartments in the following ways:
a. Provides more housing type choices for the growing number of families in Elk River.
b. Diversifies the housing types.
c. Creates 55 units of housing for individuals and families at 50% of the area median
income.
d. Helps meet the demand of"the strong need to provide affordable housing for people of
all ages."
e. Provides stable, affordable senior housing for"the notable increase in apartment rental
needs in Elk River by members of the baby boom generation."
f. Provides approximately 55 units of housing within a half mile of the Northstar
commuter rail station.
4. The market study completed by Market Analyst Professionals in April 2020 concludes
sufficient demand for the development, and projects it will be well positioned in the local
area.
As stated above,The City of Elk River has confirmed that Hillside Heights Apartments contributes
to the goals of development in the FAST Plan. The plan identifies specific geographic areas targeted
for a variety of housing options including affordable housing and growth in Elk River, and the
Hillside Heights Apartments site is in the Hillside Heights district as a priority target area.
As part of its endorsement,the City also proposes local financial assistance using tax increment
financing. The City of Elk River City Council preliminarily supports the allocation of$780,000 plus
interest in tax increment financing for a term of up to 15 years for the Hillside Heights Apartments
proposal. This assistance will be in the form of pay-as-you-go tax increment financing.
The City Council endorsement is evidenced by the City Council's approval of Resolution 20-xx a
copy of which is included with this letter.
Sincerely,
Mayor John Dietz