2. CCSR-HRSR 09-04-2012 SPEC JOINT

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HOUSING DEMAND ANALYSIS Combining demand from household growth plus turnover results in total demand in Elk River for 178 units over the next five years. We then estimate the number of rental units each product type could capture in Elk River. This capture rate is estimated based on the current products and product pricing within in Elk River along with household incomes for current renters. We find that there is demand for nine subsidized housing units, 89 affordable rental units, and 80 market rate units. From the total demand for general occupancy units, we subtract any development under construction or proposed at market equilibrium (95% occupancy) to find the remaining excess demand in Elk River. At the time of this study there is only one planned development with a proposed 53 affordable competitive units and thus, excess demand remains for nine subsidized units, decreases to 40 affordable units, and remains at 81 market rate units. Estimated Demand for Independent Adult/Few Service Senior Housing Table HD-3 presents our demand calculations for market rate independent senior housing in Elk River in 2017 and 2017. In order to determine demand for independent senior housing, the potential market is reduced to those households that are both age and income qualified. The age-qualified market is defined as seniors age 55 and older, although independent living projects will primarily attract seniors age 65 and older. We calculate that the minimum income needed to afford monthly rents is $30,000, since seniors with this income could afford a monthly rent of$1,000 based on spending 40% of their income, which is slightly higher than the $825 to $890 starting rent for a two-bedroom apartment at the independent senior project in the area. In addition, we add households with incomes between $20,000 and $29,999 who would be able to supplement their incomes with the proceeds from a home sale. We estimate the number of age/income-qualified senior households in Elk River in 2012 to be 1,947 households. Adjusting to include appropriate long-term capture rates for each age cohort (0.5% of households age 55 to 64, about 6.0%of households age 65 to 74, and 16.5% of households age 75 and over) results in a market rate demand potential for 73 independent senior rental units in 2012. Some additional demand will come from outside Elk River. We estimate that 40% of the long- term demand for independent senior housing will be generated by seniors currently residing outside Elk River. This demand will consist primarily of parents of adult children living in Elk River, individuals who live just outside of Elk River and have an orientation to the area, as well as former residents who desire to return. Together, the demand from Elk River seniors and demand from seniors who would relocate to Elk River results in a total long-term demand for 122 active adult units in 2012. MAXFIELD RESEARCH INC. 79