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

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HOUSING DEMAND ANALYSIS Independent demand in Elk River is split into housing that offers ownership housing and rental housing. Based on the current product available in Elk River, we project that 30% of Elk River's demand will be for adult ownership housing (37 units) and 70%will be for rental housing (85 units). TABLE HD-3 MARKET RATE ADULT/FEW SERVICES HOUSING DEMAND ELK RIVER 2012&2017 2012 2017 Age of Householder Age of Householder 55-64 65-74 75+ 55-64 65-74 75+ #of Households w/Incomes of>$30,000' 1,162 426 197 1,463 633 235 #of Households w/Incomes of$20,000 to$29,9991 + 78 73 52 + 21 31 60 (times)Homeownership Rate x 87% 84% 63% x 87% 84% 63% (equals)Total Potential Market Base = 1,230 487 230 = 1,481 659 273 (times)Potential Capture Rate x 0.5% 6.0% 16.5% x 0.5% 6.0% 16.5% (equals)Demand Potential = 6 29 38 = 7 40 45 Potential Demand from Market Area Residents = 73 = 92 (plus Demand from Outside Market Area(40%) + 49 + 61 (equals)Total Demand Potential = 122 = 153 Owner- Renter- Owner- Renter- Occupied Occupied Occupied Occupied (times)%by Product Type x 30% x 70% x 30% x 70% (equals)Demand Potential by Product Type = 37 = 85 = 46 = 107 (minus)Existing and Pending MR Active Adult Units2 - 111 - 57 - 111 - 57 (equals)Excess Demand for MR Active Adult Units = 0 = 28 = 0 = 50 (times)Percent capturable by a Site in Elk River x 80% x 80% x 80% x 80% (equals)#of units supportable by a Site in Elk River = 0 = 23 = 0 = 40 2017 calculations define income-qualified households as all households with incomes greater than$35,000 and homeowner households with incomes between$25,000 and$34,999. 2 Based on project manager interviews and historical trends. We estimate that roughly 40%of demand will come from outside the markt area. 3 Existing and pending are deducted at market equilibrium(95%occupancy). Source: Maxfield Research Inc. Next, we subtract existing competitive market rate units (minus a vacancy factor of 5%to allow for sufficient consumer choice and turnover) from the owner and rental demand. Subtracting the existing competitive market rate units results in total demand potential for zero adult owner-occupied units and 28 adult rental units in 2012. No one community, including Elk River, would be able to capture 100% of the demand. Since Elk River is the primary service center, containing health care and shopping in addition to other services, we believe that it can capture 80% of the demand for ownership projects and rental projects. This results in total demand for zero adult owner-occupied units and 23 adult rental units in Elk River in 2012. MAXFIELD RESEARCH INC. 80