Affordable & Senior Housing

Presented By:

Kurt Muchow, Community Development Consultant

v i s i o n t o r e a l i t y

League of Wisconsin Municipalities2014 Annual Conference

October 16, 2014

Presentation Outline

• What is Affordable

Housing?

• Why is it important?

• Define the Problem

• Barriers to Affordable

Housing

• Community Best

Practices

• Example Projects

What is Affordable Housing?

• Housing Costs (including mortgage or rent payments & utilities)

should not exceed 30% of the total household income.

• For example:

- 2012 Wisconsin Median Household Income = $ 52,627

- Allowable Housing Cost ($52,627 x 30%) = $ 1,315 / month

- 80% of Median Income (Moderate Income) = $ 42,100

- Allowable Housing Cost ($42,100 x 30%) = $ 1,052 / month

- 50% of Median Income (Low Income) = $ 26,313

- Allowable Housing Cost ($26,313 x 30%) = $ 658 / month

- 30% of Median Income (Very Low Income) = $ 15,788

- Allowable Housing Cost ($15,788 x 30%) = $ 395 / month

Source: U.S. Census Bureau, American Fact Finder, 2012 American Survey

Why Is It Important?

Community Development Program

Housing

Economic

Development

Public

Facilities

Why Is It Important?

Lack of affordable housing impacts both

communities & individual households!

• For Communities: attracting & retaining

employment opportunities, providing an

adequate quality of life for residents &

maintaining quality neighborhoods.

• For Households: self sufficiency, stability &

decent safe and sanitary housing.

Define the Problem

•Wisconsin Population vs. Income

Income Level No. of Households % of all Households

Moderate Income (50% to 80% of median) 427,958 households 19.23%

Low Income (30% to 50% of median) 302,552 households 13.59%

Very Low Income (0% to 30% of median) 347,130 households 15.60%

Total Very Low to Moderate Income 1,077,640 households 48.42%

Source: U.S. Census Bureau, American Fact Finder, 2012 American Survey

Define the Problem

•Wisconsin Median Household Income vs.

Housing Occupancy vs. Allowable

Housing Cost

Owner-occupied Renter-occupied

Description All Households Households Households

Median Household Income $52,627 $66,241 $29,425

30% of Household Income $1,315 / month $1,656 / month $735 / month

*Source: U.S. Census Bureau, American Fact Finder, 2012 American Survey

Define the Problem

• Wisconsin Household Income vs.

Housing Cost Greater Than 30%

% of Owner-Occupied Units % of Renter-Occupied Units

Household Income Paying More Than 30% Paying More than 30%

Less than $20,000 6.7% 27.1%

$20,000 to $34,999 6.6% 14.3%

$35,000 to $49,999 5.5% 3.1%

$50,000 to $74,999 5.6% 0.7%

$75,000 or more 3.2% 0.1%

Total 27.6% 45.3%

Source: U.S. Census Bureau, American Fact Finder, 2012 American Survey

Define the Problem

• Single Family Home Affordability

Median Single Family Home Sale Prices (Wis. Realtors Association)

• 2007 = $ 162,900

• 2011 = $ 132,000

• 2014 (thru August) = $ 148,450

Cost for Median Single Family Home vs. Required Income 2007 2014

• Mortgage Payment (80% loan to value, 20 year term) $ 890 / mo $ 810 / mo

• Real estate Taxes $ 270 / mo $ 270 / mo

• Utilities (electric, sewer, water, heat) $ 230 / mo $ 230 / mo

• Total $1,390 / mo $1,310 / mo

• Min. household income to afford Median Priced Home $55,600 $ 52,400

Define the Problem

• Multi- Family Affordability (Market Rate)

Typical Development Cost for new Multi-Family = $ 100,000 / unit

Housing Cost for Multi-Family vs. Required Income

• Mortgage Payment (80% loan to value, 20 year term) = $ 660 / month

• Real estate Taxes = $ 170 / month

• Utilities (electric, sewer, water, heat) = $ 190 / month

• Total = $ 1,020 / month

• Min. household income to afford Market Rate Apartment = $ 40,800

• Median Household Income for Renters in Wisconsin = $ 29,425

Define the Problem

• Senior Housing

Aging Baby Boomers are Fueling Growth in the 65 and Older Population

• Population of Age 65 and Older Will Surge by 65% by 2030

• Increase in Life Expectancy is Greatly Expanding Population Over 75

• Creates a Significant Demand for Senior Housing

• Baby Boomers Hold More Than 70% of U.S. Financial Assets & Over

50% of Discretionary Spending

Types of Senior Housing

• Independent Living: (Lowest Cost)- Growth+

• Assisted Living: (Avg. Cost $4,180 / Month) – Growth ?

• Skilled Nursing: (Avg. Cost $275 / Day) – Declining

• Continuing Care Communities: – Growth

• Special Needs: Dementia

Barriers to Affordable Housing

• Private Sector Impediments• Household Income:

- 48.42% of Wisconsin Households are Very Low Income to Moderate Income

- Median Household Income for Renters in Wisconsin = $29,425

• Lack of Equity for Down Payment & Financing Costs: Estimated 45% of Renters

Lack Required Equity to Purchase Home.

• Tougher Lending Criteria: Credit Scores, Employment History, Equity, etc.

• Rising Cost of Housing

• Lack of Affordable Housing that is Decent Safe & Sanitary

• Public Sector Impediments• Attitudes of the General Public – NIMBY

• Development Regulations – Zoning, Density, Infrastructure, Design Guidelines

• Development Costs – Infrastructure

• Local Fees -Taxes, Permit Fees, Impact Fees

• Lack of Public Funding

Barriers to Affordable Housing

• Who Is Impacted the Most?• Low Income

• Single Women With Children

• Minorities

• Elderly

• But, Who Else is Impacted?• Teachers

• Police Officers

• Restaurant Staff

• Retail Employees

• Service Workers

• Factory Workers

Community Best Practices

• Ways to Encourage Affordable Housing• Create Awareness – Make it a High Priority

• Update Local Development Regulations

• Utilize Good Land Use Practices

• Proactive Use of Public Funding

• Develop Public/Private Partnerships

Community Best Practices

• Create Awareness – Make it a High Priority• Get the Facts and Educate the Public

• Involve Key Stakeholders

• Create & Adopt a Plan to Create Affordable Housing for

all Residents

• Encourage Fair Housing Opportunities

• Take a Leadership Role in Implementation

Community Best Practices

• Update Local Development Regulations

• Update Zoning Ordinance – Density, Mixed-Use,

PUDs or Special Zoning Districts, etc.

• Update Development Regulations –

Infrastructure, Permit & Impact Fees, Parking, etc.

Community Best Practices

• Alternate Infrastructure Design Standards

Standard Reduced Width

Community Best Practices

• Utilize Good Land Use Practices

• Smart Growth & New Urbanism –

Development of Mixed-Use, Dense Town

Centers

• Infill Development – Restoration of Existing

Structures & Use of Vacant Land Within

Urbanized Areas

• Urban Redevelopment –

Acquisition/Demolition of Blighted Structures

& Develop New Residential

Community Best Practices

• Proactive Use of Public Funding Programs

• Local Funded Programs – TIF, RLFs, Trust

Funds, etc.

• Intergovernmental Programs – Grants, Tax

Credits, Low Interest Loans, Subsidies, etc.

• Funding Agencies

- Wis. Dept. Of Admin. – Division of Housing

- WHEDA

- USDA Rural Development

- Wis. Dept. Of Health Services

Community Best Practices

• Develop Public/Private Partnerships

• Local Development Corporations & Housing

Authorities – Collaborative Effort

• Regional Development Corporations &

Housing Authorities – Utilize Outside

Resources

• Partner With Developers & Landlords –

Facilitate and Incentivize

Community Best Practices

• Benefits From Best Practices

• Reduces Land & Infrastructure Costs

• Eliminates Blight & Revitalizes Distressed

Neighborhoods

• Reduces Sprawl & Preserves Land

• Increases Tax Base

• Provides Affordable Decent, Safe & Sanitary

Housing

Example Project #1 - Community-Wide Strategy

• Strategic Housing Program to Meet Community Needs & Goals

• Economic Development Plan Identified Needs

• High Percent of Elderly Over 65 Living in Their Own Home

• High Percentage of Workers are Age 55 or Older

• Local Employment is Projected to Increase 8% by 2020

• Business Survey - Lack of Workforce and Available Housing are Top Issues

• #1 Community Priority - Revitalize Central Business District

• Strategic Opportunities

• Create New Senior Apartments & Assisted Living Units

• Transition Single Family Owner Occupied Units from Senior to Families

• Creates Affordable Housing for Workforce to Fill Employment Opportunities

(Average Sale Price for existing Homes = $120,000)

• Increases Population in Existing Housing Stock

(Change 50 Units from 1.35 to 3.0 Persons per Household = 82 More Persons

• Helps to Address Business Workforce & Housing Issues

• Helps to Revitalize Central Business District

(Construct Senior Housing Facilities Adjacent to Downtown)

Example Project #2 - WHEDA Section 42

Multi-Family & Urban Redevelopment

• Central Business District Redevelopment Project• Adjacent to Historic Downtown

• Blighted Properties

• Redevelopment District & Tax Increment District (TIF)

• Construction of New 48 Unit Senior Apartments

• Total Project Cost = $6 million, or $125,000 per Unit

• Financing: WHEDA Section 42 Tax Credits,

$940,000 CDBG & TIF Grants, and Private Financing

• Apartment Composition:

8 Units - Market Rate

8 Units – 30% - 40% of County Median Income

32 Units – 60% of County Median Income

• Lease Rate, Including utilities are Based on Household Size, Income and

Number of Bedrooms

1 Person @ 30% of CMI in One Bedroom Unit = $379 / Month

1 Person @ 60% of CMI in Two Bedroom Unit = $759 / Month

2 Persons @ 60% of CMI in Two Bedroom Unit = $910 / Month

Example Project #3 - Urban Redevelopment

- Community Development Authority

• Urban Redevelopment in Residential Neighborhood• Project Designed to Eliminate Blight, Enhance

Neighborhood & Provide Needed Affordable

Housing.

• Community Lead Project – Owned & Developed

by CDA With TIF Assistance From City

• Mixed-Use: 7 Single Family, Two 4 – Unit

Apartments, Daycare Facility & Neighborhood

Park

• 100% of Acquisition, Demolition, Infrastructure &

Platting Costs Funded With TIF

• CDA Serving as Developer

• Revenue from Land Sales will Fund CDA Revolving Loan Fund

Example Project #4 - High Density

Residential Development

• New Development For Affordable Workforce Housing• New Housing for the Workforce

• Public/Private Partnership

(City & Private Developer)

• City Created Special Zoning District

(Smaller Lots & Lower Cost Houses)

• Special Covenants to Address Quality

of Life Within Higher Density Subd.

• Private Developer Funded

• Reduced Housing Cost by 25%

Example Project #5 - Senior Apartment

Building - Local Housing Authority

• New Senior Apartment Complex• Small Rural Community – Small Market

• Private Developers Not Interested

• Village Created Housing Authority

• Obtained Financing from Rural Development

• Constructed New 8 Unit Elderly Apartment Building

• Contracted With the County Housing Authority to Manage Facility

Example Project #6 - Market Rate

Multi-Family With TIF Assistance

• Greenfield Development In Tax Increment District• Project Designed to Address Severe Housing Shortage

• Greenfield Site & Tax Increment District

• Total Project Cost = $6.3 million

• Financing: Private Financing & TIF To Bridge Financing Gap

• Apartment Composition:

40 Studio Apartments

40 One Bedroom Apartments

40 Two Bedroom Apartments

• Lease Rate, Including utilities

Studio Apartment = $ 495 / Month

One Bedroom Apartment = $ 725 / Month

Two bedroom Apartment = $825 / Month

Example Project #7 – Assisted Living

• New Assisted Living Facility in Tax

Increment District

• Redevelopment Project

• 40 Unit Assisted Living

• Located in Tax Increment District

• Financing: Private Financing & TIF to Bridge

Financing Gap.

Example Project #8 – Urban

Redevelopment Idle Industrial Site

• Mix Use Redevelopment• 20 Acres Site

• Adjacent to Downtown & River

• Proposed Uses

• 27 Bed Assisted Living (Incl. Memory Care)

• 24 Unit Affordable Housing (30%, 50%, & 60% of CMI)

• 64 Unit Market Rate Apartments

• Office Renovation – Office Space

• $19.9 Million Project Cost

• Funding: WEDC Idle Ind. Grant, TIF, Home

: Private Investment

Questions & Answers

Kurt R. Muchow

Vierbicher Associates, Inc.

400 Viking Drive

Reedsburg, WI

(608) 768-4817

Email: kmuc@vierbicher.com