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

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RENTAL MARKET ANALYSIS foreclosure. It wasn't until recently that the conversion from a for-sale condominium to a luxury rental building occurred. Granite Shores has the highest rents in Elk River, at $940 to $1,599 per month for one-bedroom units, $1,021 to $1,399 per month for one-bedroom plus Den units, and $1,206 to $1,426 per month for two-bedroom units. The development has been marketing for roughly three months and has absorbed 35 of the remaining 42 units (25 of the 67 units were being leased before the complete conversion). The monthly rents are about 40%to 50% higher than the other older market rate properties. • One-bedroom monthly rents ranged from $450 to $1,599 with rents per square foot from $0.80 to $1.28. Two-bedroom monthly rents ranged from $650 to $1,426 with rents per square foot from $0.76 to $1.25. There are no market rate three-bedroom units. • A common laundry room with coin-operated washers and dryers is available in all market rate properties surveyed. Granite Shores has in-unit laundry and Tara Hills Estates has in- unit hook-up for laundry. All of the properties surveyed have underground, attached, or detached garages either included in the monthly rent or are available for an extra fee. • In addition to the above market rate rental building Elk River has 72 rental units in smaller buildings (12-units or less). Although these buildings would have some overlap with any new developments they would most likely not be competitive, and thus we have not surveyed these properties. Affordable/Subsidized • We identified five affordable projects (244 units) which are financed through the Low Income Housing Tax Credit (LIHTC) program, otherwise known as the Section 42 program. The maximum income limit for residency at these projects is at 60% of the area median income. Income limits are represented for both programs in Figures 1 and 2 on page 40. • We also identified two subsidized projects (54 units). Both are Rural Development developments requiring rent of 30% of a resident's adjusted gross income (AGI). • There have been two affordable developments built within the past five years. Jackson Place which was built in 2007 in Downtown Elk River contains 32 units and The Depot at Elk River Station built in 2011 near the commuter rail station has 53 units. The majority of the subsidized and Tax-Credit properties were built 15 or more years ago. • All subsidized units were occupied and there were six vacant units in the affordable properties as of July 2012 for a total vacancy rate of 2%. Dove Terrace Apartments has five of the six vacant units. Typically, subsidized and affordable rental properties should be able to maintain vacancy rates of 3% or less in most housing markets. The low vacancy rates in the market indicate pent-up demand for affordable and subsidized units and also are an indication of the current economic climate in the area. MAXFIELD RESEARCH INC. 44