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

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DEMOGRAPHIC ANALYSIS Tenure by Income The following graph shows the number of renter households in Elk River by income cohort as of 2000 and 2010 (5-year American Community Survey estimates). The data provided in Table D-6 is useful in that shows the housing options and preferences for households based on affordability. The Department of Housing and Urban Development determines affordable housing as not exceeding 30% of the household's income. It is important to note however, that the higher the income, the lower percentage a household typically allocates to housing. Many lower income households, as well as many young and senior households, spend more than 30% of their income, while middle-aged households in their prime earning years typically allocate 20% to 25%of their income. Key points derived from the data are: • As income increases, so does the rate of homeownership. The 2010 estimates for Elk River indicates that 91% of those households earning $50,000 or more owned homes compared to 79% for households with incomes between $35,000 and $49,999, 58%with incomes of $25,000 to $34,999, and 57% of households with incomes of$24,999 or less owned their housing. Many of these lower-income homeowners are seniors who live on fixed incomes but have paid off of their mortgage. • Although, many of the lower-income households rent their housing, the largest number of renters (331 households or nearly 25% of all renters) have incomes between $50,000 and $74,999. Should these households allocate 25% of their income on housing, they could afford monthly rents of roughly $1,050 to $1,550 per month, significantly higher than the rents at most market-rate apartment units in Elk River. • Typically, renter households with incomes of$20,000 or less qualify for government- subsidized housing, where rents are often based on sliding scale (30%of income). Based on a 30% allocation of income, these households could afford monthly rents of no more than $500. As of 2010, there were 444 households in Elk River with incomes of$20,000 or less renting their housing. • Renter households with incomes of between $20,000 and $35,000 are usually the market for "affordable" rental projects with a shallow subsidy (housing with income restrictions and rents slightly below market rents, such as those financed through Minnesota Housing Finance Agency's Section 42/Low-Income Housing Tax Credit program). These households can typically afford housing costs of from $500 to $875 per month. As of 2010, there are an estimated 345 renter households in Elk River with incomes between $20,000 and $35,000. MAXFIELD RESEARCH INC. 21