HomeMy WebLinkAboutSummit Housing 2 of 2 appliances including a dishwasher and/or disposal, carpets and blinds. Two included a
patio/balcony, air conditioning with one including washer/dryer hookups. None of the
existing projects include washer/dryers or microwaves, as does the subject.
Unit Size Comparison
Rance Average Subject
One bdrm one bath 440 - 750 S.F. 573 S.F. 750 S.F.
Two bdrm two bath 800 S.F. 800 S.F. 980 S.F.
The subject's One bedroom one bath units are much larger on average than existing
competitive units in the market area(by 31 %), The two bedroom units are about 22 %
larger, although we should note that there is just one project that has two bedroom with
two baths and that unit is actually 1 '/z bath. All of these units sizes are from the areas
six family projects. The manager at the one senior project, Bridger Peaks did not know
the size of units.
Rental Rates
We have listed on the following page a summary of rents we obtained in our rental
survey of the Bozeman area. In addition, we have listed a"Net Adjusted Market Rent",
that is what we feel the rents would be at the proposed Larkspur Commons, if leased as a
market rate project.
We have looked at four factors to determine the net adjusted market rent. We have taken
into account: 1)the age and condition of the comparable projects; 2) unit amenities; 3)
project amenities; and 4)unit sizes
Avera e� Adjustment Adj. Mkt. Rent
One bedroom one bath $ 807.00 10.0 %or $ 81.00 $ 888.00
Two bedroom one bath $ 923.00 7.5 %or $ 69.00 $ 992.00
Two bedroom two bath $ 1,101.00 0.0 %or $ 0.00 $ 1,100.00
Market Rent Proposed
Bozeman Area Rose Park
One bedroom one bath $ 888.00 $ 429.00, 557.00 & 626.00
Two bedroom one bath $ 992.00 $NA
Two bedroom two bath $ 1,100.00 $ 515.00, 669.00 & 728.00
Detailed information with pictures of each project surveyed is listed in Section C
V. ANALYSIS OF RENT GAP
40 %Rents
Maximum Proposed Proposed Rent
Restricted Rent Net Rent Mkt. Rent Mkt Rent Gan
3 - One bdrm $ 515.00 $ 429.00 $ 888.00 $459.00 - 52 %
2 - Two bdrm 2 bath $ 618.00 $ 515.00 $ 1,100.00 $ 585.00 - 53 %
50 %Rents
Maximum Proposed Proposed Rent
Restricted Rent Net Rent Mkt. Rent Mkt Rent Gan
14 - One bdrm $ 643.00 $ 557.00 $ 888.00 $ 331.00 - 37 %
12 - Two bdrm 2 bath $ 772.00 $ 669.00 $ 1,100.00 $ 431.00 - 39%
60 %Rents
Maximum Proposed Proposed Rent
Restricted Rent Net Rent Mkt. Rent Mkt Rent Gan
18 - One bdrm $ 772.00 $ 626.00 $ 888.00 $ 262.00 - 30%
17 - Two bdrm 2 bath $ 927.00 $ 738.00 $ 1,100.00 $ 362.00 - 33 %
Maximum Restricted Rents from MBOH - 03/06/2015
The proposed rents at Larkspur Commons will run from 18 to 40 %under our net adjusted
market rents.
VI. ANALYSIS OF THE PROJECT'S EFFECT ON THE MARKET AREA
In looking at the overall demand for this project including the number of income and tenure
eligible households, and after discussions with managers at existing competitive projects, it is
our opinion that the subject Larkspur Commons will have very little or no affect on existing
family tax credit communities in the area. All existing competitive family communities (as
well as senior), are 100 %occupied. Additionally, several of the managers at existing
projects expressed their support for this new community and felt that there was an on-going
need in the Bozeman area for additional affordable family units. None felt that this proposed
project would have an adverse affect on their community. Additionally, the number of non-
senior renter households in the market area is projected to increase by 516 households or 103
annually over the next five years. So by its projected opening in 2016,the number of non-
senior renter households will increase by 103. Even when taking into consideration the new
Stoneridge family LIHTC project which is currently under construction,we feel that existing
competitive projects will be able to remain full. With all of the projected growth in the
City/market area and the lack of available rental units, demand for this proposed project
should only increase in the coming years.
VI. ANALYSIS OF THE PROJECT'S EFFECT ON THE MARKET AREA
Effect on Existing Market
The overall vacancy rate in the Bozeman area is under 1 % (0.6 %), meaning that there are
very few rentals available in the market, including market rate and income restricted. With
a growing population and the low vacancy rates, it is our opinion that the subject,
Stoneridge Apartments will fill a very strong unmet demand in the community, that is for
affordable rental housing for very low to low income families. There may be some
movement from other tax credit communities to the subject simply due to the it's unique
location, close to area services and employment opportunities. In addition, as the subject
will offer above average unit amenities at below-market rents,this may attract tenants from
some of the older market rate projects in the City who would naturally take an interest in
the subject. Overall, we do not see the subject as having any real effect on existing
projects in the market due mainly to the current lack of available units.
VII. CONCLUSION
a. Specific Questions
i. Is the project as proposed,viable? Yes - with its strong location and below market
rents, it is our opinion that the subject will be very successful if built as planned. The
subject's location is close to employment opportunities including Walmart, Target,
Lowes, Home Depot, Smith's Grocery Store & Pharmacy and many other retail and
commercial businesses in the northwest part of the City. At the present time, there are
currently very few options for renters in general, with the overall vacancy rate in the
City at 0.1 %. In addition, all six competitive family tax credit projects in Bozeman
with 344 total units are 100 %occupied, with managers noting that once a unit
becomes available, they are able to lease it immediately. Rents in the area have
increased by 7 to 11 %over the past 12 months and by 16 to 58 % since 2010. Rents
at the subject will run from 18 to 40%under market rents while providing strong unit
and project based amenities. It is important to again note, that in the City, 3,242 renter
households or 36.6 %of the total pay more than 35 % of their income to rent(rent
over-burdened). And in fact 2,069 or 23.3 %pay more than 50 %of their income to
rent. These households will certainly be interested in the subject due to its below
market rents. Taking into account all of these factors, the subject will provide good
quality rental units at below market rents and will prove successful if built as planned.
Does the project meet a current or projected need? Yes -the current vacancy rate
at existing income restricted family communities is 0.0 %with a 5 %rate considered
average. Additionally,the vacancy rate at market rate projects in the City is very low
at 0.2 %. With these very high occupancy rate (99 - 100%), potential renters have
few, if any options, and in most cases have no choices as to complex, floor location or
in some cases, bedroom sizes. With the growing population, demand for housing will
only increase in the near future. According to the City of Bozeman,there is one
competitive project currently in planning or under construction (income restricted-
family). That project, Stoneridge will include 48, 2 & 3 bedroom units at 40 - 60 %
AMI. Over the next five years,Nielsen is projecting an increase in population of 7.0
%or 1.4 %annually for Bozeman. As noted,that projection seems very low, when
looking at recent growth. Over the past year(2013 - 2014), the City's population
increased by a very good 4.6 % and by 2.9 % annually since 2010. Of the 1,480
households entering the market area over the next five years, Ribbon is projecting that
867 or 173 annually will be non-senior. Of those, they are projecting that 516 or 103
per year on average will be renter tenure. So in total by 2016 (expected date of project
opening), there is projected to be 8,791 non-senior renter households in the market
area. In our calculation of eligible households, we have determined that there are
currently 1,408 size, income and tenure eligible households. Additionally, between
2015 and 2016 the number of age, size and income eligible households will increase
by 17.
iii. Does the project supply units below market rate? Yes -All 136 of the units will be
designated for households with income at or below the 60 %AMI level. The project
will include sixty-eight(68) units at the 50 % level with rents running 34 - 40 %under
net adjusted market rent, with the remaining sixty-eight(68) units at 60 %with rents
running from 18 -27 % under the market rent.
iv. If not,Does the Project Provide Some Other Public Benefit? -NA
b. Summary
i. Recap of Project-The proposed Rose Apartments to be located in Bozeman, Montana
will be a 42 unit LIHTC senior rental community. Five (5) of the units will designated
for households at the 40/49 %AMI level, with twenty-six(26) units at 50155 %AMI
and the remaining eleven (11) units at 60%. Twenty-four(24) of the units will be one
bedroom one bath @ 750 S.F., with eighteen (18) units being two bedroom two bath at
950 S.F. The subject will include all kitchen appliances including a dishwasher,
disposal and microwave, as well as washer/dryer in the unit, carpets, blinds, AC,
ceiling fans, a patio/balcony and additional storage. Community features will include
a community room with kitchen, computer area and exercise room, as well as a BBQ
area w/tables and covered parking.
ii. Conclusion and Recommendations
We have looked at several factors in determining the success of the forty-two(42)unit
Rose Park senior apartment project to be located in Bozeman, Montana.
a. Project Site - We would rate the site as very good in terms of a senior rental project.
The site is close to services including, retail business's, banks and is on a City bus line.
A large retail center with a Smith's Grocery & Pharmacy, a bank and 20 additional
businesses is within 0.6 miles. In addition, a Target, Ross, Borders and Costco, along
with several other big box retailers are within 1.4 miles of the site.
b. Between 2010 and 2014, Gallatin County ranked 2"among all counties in the State in
overall numeric increase and ranked 3" by percentage increase over the same period.
Over the previous decade (2000 -2010), the County ranked V in both total population
increase and by percentage increase. The annual rate of growth between 2010 and
2014 was 2.2 %, compared to growth of 3.2 %annually from 2000 -2010.
c. The City of Bozeman, the State's 4"'most populous city, saw its population increase
by 4,380 or 11.7 %2.9 %per year on average over the past four years, ranking it 2"d
among all cities in the State in total growth. Nielsen is projecting growth of 7.0 % or
1.4 % annually from 2015 to 2020.
d. The market area(Nielsen Data)population in 2015 was estimated at 41,138, an
increase of 10.3 % or 2.1 %annually from the 2010 Census figure of 37,280. That
increase came after growth of 37.9 % or 3.8 %per year on average between 2000 and
2010. As noted above,Nielsen has projected that the population of this market area
will increase by 7.0 %or 1.4%annually over the next five years (2015 - 2020).
e. Nielsen has estimated that in 2015 in the market area there are 17,857 total
households, of which 4,992 are non-senior. Of the existing senior households, 1,403
or 28.1 % are renter tenure. Nielsen is projecting the number of senior households in
the market area will increase by 579 or 116 annually between 2015 and 2020. Of
those, 295 or 59 per year on average will be renter tenure.
f. The City of Bozeman permitted 2,062 residential permits between 2012 and 2014, of
which 1,012 or 49.1 %were single family with the remaining 1,050 units being multi-
family. That is an annual average increase of 350 multi-family units over the past
three years. Through May 2015, the City has permitted another 123 single family
homes and 66 multi-family units.
g. The average age of housing in Bozeman is very new with 55.7 %being built after
1990 and 74.9 % since 1970. Conversely, 18.6 %were built prior to 1960 and 9.8 %
before 1940.
h. Overcrowded housing units (more than 1.01 persons per room)made up 2.1 %of the
total. In addition, a very high 3,242 or 36.6 % of renter households in Bozeman paid
more than 35 % of their income towards rent. In fact, 23.3 % or 2,069 paid more than
50%. All according to the U.S. Census Bureau (2011-2013 American Community
Survey).
i. In our(Property Dynamics) apartment survey of 15 projects and 1,352 units (including
market rate and family tax credit), we found an overall vacancy rate of just 0.1 %,
down from the 0.6 %rate found in July 2014. The vacancy rate for the ten (10)
market rate projects surveyed with 1,008 total units was 0.2 %, again down from the
1.0 %rate in July 2014. At the six existing family tax credit communities in Bozeman
with 344 units, the vacancy rate was 0.0 %, the same rate found in July 2014.
j. Rental rates at the proposed Rose Park Senior Apartments will run from 30 %to 53 %
under the net adjusted market rents in the Bozeman area. In fact, rents will run from
to %under the "average"rents from our survey.
k. Overall,we would rate economic conditions in the County as very good. Total
employment in the County increased by 4.5 % in both Bozeman and Gallatin County
from 2013 to 2014 and was up by 4.4 % in both areas when comparing May 2015 to
May 2014. The unemployment rate has decreased every year in both areas (City &
County) since at least 2009 and dropped from 4.1 % in 2013 to 3.5 %in 2014 in the
County, and from 3.8 % in 2013 to 3.1 % in 2014 in Bozeman. In addition, the rates
were down in both areas when comparing the latest monthly figures available.
1. In our"New Unit Demand Estimate"we have determined that there is currently a need
for 123 units to meet the needs of senior households at the 40, 50 & 60 % level. By
2017,that need will increase by 22 to 145 new affordable rental units. In 2015 there
are 252 age, size, income and tenure eligible households in the market area for this
proposed project. In addition, between 2015 and 2017 that number will increase by
112 households to 364.
m. Target Population -the 42 tax credit units at the proposed Rose Park Senior
Apartments will target very low to low income senior households (age 55+), with
incomes at 40, 50%to 60 %of area median income.
Recommendations
After discussions with managers of existing income restricted projects in the City, we
would not recommend any changes to the subject's unit mix or unit sizes. All agreed that
the biggest need in the area is for two bedroom units, followed by one bedroom,then three
bedroom units. The unit mix at Larkspur Commons match's that need. As for project and
unit amenities, we would again not recommend any changes. Finally, the unit sizes at the
subject are slightly larger on average, when compared to existing competitive family tax
credit communities in the City. In fact,these units will be among the largest in the area,
including the newer high priced market rate projects.
MARKET STUDY SUMMARY-LOCATION OF ITEMS IN MARKET STUDY
Average (comparable) Market Rents in Immediate Area: Reference Page A-42,43 & C-1
Average Net Adjusted Proposed Rose Percent Below
Rent* Market Rent Park net Average Market
One bdrm one bath $ 807.00 $ 888.00 $429.00-626.00 22/47 % 30/52 %
Two bdrm two bath $ 1,101.00 $ 1,100.00 $ 515.00-738.00 33/53 % 33/53 %
* From our Property Dynamics survey taken on September 11, 2015
#of New Units Needed: 123 Reference Page A-32
Vacancy Rate: Reference Page A-30,33 & C-2
Sept. 2015
Conventional Vacancy Rate 0.2 %
Family Tax Credit Vacancy Rate 0.0%
Senior Tax Credit 0.0%
Low Income Vacancy Rate 0.0%
Overall Vacancy Rate 0.1 %
Total Units Surveyed 1,352
Capture Rate: 16.7 % Reference Page A-38
(proposed units/projected income eligible tenants who will move in next year)
Units Needed in Market Area: 123* Reference Page A-32
* in 2015, by projected opening in 2017 - 145
Absorption Rate: 83.7 % 3 Months Reference Page A-38
(proposed units/existing LIH market area units required)
Penetration Rate: 22.0 % Reference page A-38
(existing LIH units/total eligible households)
Number of LI renter tenure households that can afford rent of proposed project: 252
Reference page A-32, 35
Distances to Essential Services Reference Page A-10.11
Distances to Site:
1. 0.1 Bus Stop -Proposed (N. 27"Avenue & Tschache Ln)*
2. 0.1 Rose Park
3. 0.3 Post Office
4. 0.4 Town Pump/Conoco Convenience Store
5. 0.4 Elementary School -Emily Dickinson
6. 0.6 Mountain West Bank
7. 0.6 Smiths Grocery/pharmacy, Heritage Bank, Gap& 16 additional stores
8. 0.7 Fire Station
9. 1.2 Target, Ross, Etc.
10. 1.3 Family Doctors Urgent Care
11. 1.4 Middle School
12. 1.4 Costco
12. 1.7 High School
14. 3.4 Library
15. 4.6 Hospital
* A City bus stop (Streamline) at N. 27`'Avenue& Tschache Ln will begin August 2015. It is
currently available along 19", 0.3 miles from the proposed location
Distances calculated along dedicated roads - actual driving miles
Distances calculated by Property Dynamics
HOUSING CHARACTERISTICS - CITY OF BOZEMAN, MONTANA
Year Structure Built Units % of Total
04/10- 07/15 2,358 11.9%
04/00- 03/10 5,820 29.4%
1990 - 03/00 2,905 14.7 %
1980 - 1989 1,300 6.6 %
l 970 - 1979 2,482 12.5 %
1960- 1969 1,293 6.5 %
1940- 1959 1,730 8.7 %
1939 or earlier 1,934 9.8 %
19,822 100.0 %
Source: 2000 U.S. Census - Tale DP-4, 2010 U.S. Census Bureau
04/2010 - 07/2015 Housing Units: U.S. Census Bureau - Censtats
Renter Selected Characteristics:
Lacking complete plumbing facilities: 17 - 0.2 %
Lacking complete kitchen facilities: 106 - 1.2 %
Renter Occupants per Room:
1.00 or less 8,678 97.9 %
1.01 to 1.50 168 1.9 %
1.51 or more 18 0.2 %
Total 8,864 100.0 %
Gross Rent as a Percentage of Household Income:
Percent Paid Units % Total
Less than 20 percent 2,321 26.2 %
20 -24.9 percent 1,026 11.6 %
25 -29.9 percent 1,163 13.1 %
30 - 34.9 percent 716 8.1 %
35 percent or more 3,242 36.6 %
50 percent or more 2,069 23.3 %
Not computed 396 4.7 %
Total 8,864 100.0 %
Source: U.S. Census Bureau: 2011 -2013 American Community Survey (3 Year Estimates)
HOUSING CHARACTERISTICS -BOZEMAN CONTINUED
Renter Tenure Housing y Number of Bedrooms:
Bedrooms Units %of Total
No Bedroom 276 3.1 %
One Bedroom 1,365 15.4 %
Two Bedrooms 3,774 42.6 %
Three Bedrooms 2,765 31.2 %
Four Bedrooms 524 5.9 %
Five or More Bedrooms 160 1.8 %
Total 8,864 100.0 %
Renter Tenure Housing y Household Size:
Household Size Units %of Total
One Person 3,236 36.5 %
Two Persons 3,155 35.6%
Three Persons 1,338 15.1 %
Four Persons 648 7.3 %
Five Persons 449 5.1 %
Six Persons 9 0.1 %
Seven or More Persons 29 0.3 %
Total 8,864 100.0 %
Source: U.S. Census Bureau: 2011 -2013 American Community Survey (3 Year Estimates)
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��f x CITY OF BOZEMAN
f Bozeman,Montana
Office of the City Manager
�r;J
September 28, 2015
Mr.Sam Long
Summit Housing Group, Inc.
BHL Development, Inc.
283 W. Front St.,Ste. 1
Missoula, MT 59802
RE: Summit Housing Group, Inc.'s LIHTC application to the Montana Board of Housing for the
creation of affordable rental housing on the property legally described as Lot 5A,of the
amended plat of Lot 5, Block 8 of the West Winds Subdivision Phases 2A&2B
Dear Mr. Long,
On behalf of the City of Bozeman, please accept this letter as an expression of the City's strong support
for the Low Income Housing Tax Credit(LIHTC)application Summit Housing Group is submitting to the
Montana Board of Housing for the development of Rose Park Apartments, a 42 unit affordable senior
housing apartment building.
The development will provide the City with additional affordable rentals, particularly senior housing
units where we are experiencing unprecedented low-vacancy rates.The site currently carries a Land Use
Restriction that requires multifamily development for persons making 65%or below the Area Median
Income.We wholeheartedly support your efforts to provide new affordable housing in this area of
Bozeman. The site is close to shopping,transit and two large parks which makes it ideal for a LIHTC
development.
The City of Bozeman earmarked funding in the FY 16 budget to assist LIHTC developers by paying a
portion of the impact fees for housing developed for households earning less than 60%of Area Median
Income.Summit Housing has applied for funding under this set aside and staff is recommending the City
Commission allocate funding to support this development.
As this City continues to experience rapid growth, affordable housing is in short supply.Your proposed
project will help meet the need of small and large families at or below 60%of the median income.With
the increased cost of housing in Bozeman,we feel that a project of this type will help meet the housing
need in our community.
M
Chuck Winn,Assistant City Manager
121 North Rouse Avenue Phone: (406)582-2306
P.O.Box 1230 TDD: (406)582-2301
Bozeman,Montana 59771-1230