CITY OF FROSTBURG, MARYLAND

REQUEST FOR PROPOSALS (RFP):

PURCHASE AND DEVELOPMENT OF A MIXED-USE PROJECT ON CENTER STREET, FROSTBURG, MARYLAND

October 2021

October 25, 2021

REQUEST FOR PROPOSALS (RFP):

PURCHASE AND DEVELOPMENT OF A MIXED-USE PROJECT ON CENTER STREET, FROSTBURG, MARYLAND

OVERVIEW: The City of Frostburg is soliciting proposals from developers (or multi-firm project teams) interested in the purchase of 8 vacant parcels of land, comprising one City block and developing the block as a mixed-use property. The residential component should be purposefully designed for professional housing and the first-floor space planned for commercial or office space that uniquely complements the college setting. The project goals are to enhance the appearance of the gateway into the community from Interstate 68 to Frostburg State University, meet a well-documented housing need that exists in Allegany County for professionals at Frostburg State University and regional employers, and stimulate the local economy by offering additional commercial opportunities within the City. The City seeks to identify a private development partner (or partners) to enter into an Agreement to purchase the properties and then design, construct, operate, and maintain a mixed-use development.

Although the City will consider alternative proposals and facility configurations from interested bidders, the primary goal is the construction of 2 to 4 story mixed-use structure with professional housing in the upper stories and commercial space on the ground floor.

1. SITE DESCRIPTION:

The City-owned property, collectively is approximately 1 acre, and includes the City block bounded by Center Street, Alley 33, Oak Street, and American Avenue. The property is situated across Center Street from the campus of Frostburg State University. The City acquired 8 residential structures, all which were student rentals, and razed the properties in 2020. The total project cost was $1,435,757 and was funded by the Maryland Department of Housing and Community Development, the Allegany County Community Enhancement Program, and the City of Frostburg. The property is subject to the City’s Zoning Ordinance and is zoned "C1" University Corridor/Mixed-Use District. The property is also afforded some development standard flexibility as the property is situated within the "ID" Infill Development Overlay District. Near the project site, at the intersection of Park Avenue, Alley 33, Bowery Street, Braddock Road, and Center Street, the Frostburg Gateway Enhancement Project is in the design phase to construct a 4-leg roundabout. In addition, the roundabout is being designed to accommodate

two-way traffic flow on Center Street between the roundabout and College Avenue. This is an estimated $4M and is being designed to improve the traffic flow, functionality, and aesthetics at the intersection that serves as the “Gateway” to downtown Frostburg, including the project area. Additionally, the City is pursuing the possible construction of a “Transit Hub” in partnership with Frostburg State University and Allegany County. If constructed, various forms of public transportation serving the community would be aggregated at one site in close proximity to the Center Street property. Frostburg has a history of underground mining and commercial/institutional buildings of certain scale in certain locations have required subsurface grouting to provide a suitable building base. Mapping resources of underground mine activity are available through Maryland Bureau of Mines and/or Frostburg State University. Preliminary research indicates subsidence may not be an issue in this location due to the number and depth of the coal seam(s) that were mined; however, a geotechnical study during the negotiation period with the City is strongly recommended to the developer. 2. PROJECT DEVELOPMENT GUIDELINES: This initiative seeks the new construction of a 2 to 4-story mixed use development, with ground floor space that is retail, office, or a combination thereof, and upper floors that are market rate residential units designed to attract professionals at nearby employers, including Frostburg State University. The number of residential units that may be supported will vary based on the number of bedrooms per unit, but 24 to 48 units are anticipated. The building and all core systems must meet all City of Frostburg code requirements (current Maryland Building Performance Standards) upon project completion.

A. Residential Units: The residential units may be of various sizes and bedroom configurations with the following preferred minimum square footage requirements. The sizes and configurations set forth below are not intended to preclude other sizes and configurations.

• One bedroom – 500 square feet • Two bedroom – 625 square feet • Three bedroom – 750 square feet

The following features and amenities are required for residential units:

• Interior hallway access to units • Central HVAC or ductless mini-split system • Datacom and phone wiring to each tenant space • Washer and dryer • Wood veneer or solid wood kitchen and bathroom cabinets

• Approved solid surface counter tops in kitchens and bathrooms • Recessed lighting • Ceramic, Porcelain Tile, or approved vinyl in bathrooms and kitchen • Hardwood flows or approved solid surface flooring in halls and other common

areas • Hardwood floors or wall to wall carpeting in bedrooms • A video system including a camera inside each exterior entry door • An intercom system on the exterior of the building and door release button in

each apartment. • Outdoor amenities (e.g. balconies, roof top decks, porches, etc.) where possible. • Communal amenities such as a fitness center, fire pit, outdoor patio area, etc. are

encouraged.

B. Commercial Units: The ground floor commercial space shall be used for retail, restaurants, branch banks, personal service businesses, arts and entertainment enterprises, offices, including medical and dental offices, and other similar uses permitted by the Zoning Ordinance. The following features and amenities are required for commercial units:

• Central HVAC or ductless mini-split system • Fully wired for internet and phone access •

C. The Building: The building shall have the following features:

• Dusk-to-dawn lighting at the exterior doors and within every vestibule • Exterior security cameras providing a 360-degree view of the building • Façade should be brick, stone, or fiber-cement siding, or a combination thereof • Fire alarm and automatic sprinkler protection required • Sound transmission rating between units of a minimum for STC 60 for partition

walls • Onsite parking for tenants required (see Zoning Ordinance for more information)

3. DEVELOPMENT AGREEMENT The City’s final acceptance of a proposal is contingent upon its entry into a development agreement with the selected developer. The agreement shall include the matters set forth in Section 2 of this RFP and this section together with other details and requirements for the project.

A. Tax Rebates/Credits; Purchase Price Concession

Tax rebates or credits or other uniquely structured incentives will not be offered from or through the City of Frostburg or Allegany County. The City’s ability to incentivize the development of the property is limited to concessions on its purchase price. The development agreement shall include benchmarks for the project and development of the property. The following benchmarks are strongly preferred but may be negotiated. but can be negotiated with justification from the developer. The period of performance shall be included within the development agreement.

• Within 45 days of property transfer – conceptual renderings, floor plan, and lot

layout should be provided to the City. • Within 270 days of property transfer - final construction and site development

plans shall be submitted and approved by the City. • Within 90 days of plan approval, ground breaking, subject to winter weather shut

down • Within 455 days of plan approval, issuance of use and occupancy permit.

B. Protections for City

The deed for the property will include rights of reverter providing that the title to the property will revert to the City in the event project benchmarks are not met. The City acknowledges that it is unlikely that a developer will be able to obtain financing for the project unless any rights of reverter are rescinded. The City will rescind such rights when the developer secures financing from a financier approved by the City. The developer will be required to post security for the performance of its obligations under the terms of the development agreement before the rights of reverter are rescinded. Such security may include bonding, a letter of credit or other security for the performance of the developer’s obligations under the terms of the development agreement which is approved by the City Attorney. The form and terms of the bond, letter or credit and alternate security also be shall be subject to the approval of the City Attorney. The City, its employees, agents, representatives and contractors shall have the right to enter upon the property to inspect it from time-to-time. They shall also have the right to enter upon the property for the purpose of completing the project in the event of a default in the terms of the development agreement. The City’s right to complete the project may be subject to a financier’s right to step into the developer’s shoes and assume its obligations under the terms of the development agreement. The eight (8) parcels comprising the property shall no longer be considered to be lots of record and that any future division of the property shall be subject to the terms of the City’s Subdivision Ordinance. The deed shall include a statement to this effect.

4. PARTNERSHIP / INCENTIVES

As the property is situated directly across Center Street from the campus of Frostburg State University, the University has a keen interest in the development complementing and enhancing the community and providing value to the students, faculty, and/or staff. As such, Frostburg State University will discuss opportunities for a cooperative relationship with the developer to include the potential for a public-private partnership in the development and/or operations of the property or any components or the development. The University also owns property located between the project site and the aforementioned roundabout that could be discussed as a component of an overall larger project. The City of Frostburg may assist the developer by convening County and State partners to discuss programs, loans, and/or resources that may be applicable to the project. Due to the location of the property, certain state and federal incentives are available. The property is located in an Opportunity Zone. The property is located in the Frostburg Enterprise Zone and the commercial space will be eligible for participation in that program. This project is located in a Maryland Department of Housing and Community Development designated Sustainable Community. As such, it would be eligible for consideration for Neighborhood Business Works loans as part of the financing package. Tri-County Council of Western Maryland may be an additional resource outside of traditional bank funding for this project. 5. ITEMS TO BE PROVIDED BY THE CITY:

The City will provide all such interested respondents to this RFP with digital copies of the BAE Economics Housing market demand study.

6. EVALUATION CRITERIA:

The Selection Committee will recommend the firm (or project team) to the City Council that best meets the following criteria (in no particular order and with no particular weighting):

• Qualifications & Experience of Developer's Design and Construction

Team:

o Demonstrated experience as a project developer for a mixed-use development or a combination of both residential and commercial projects

o Demonstrated experience designing and constructing projects with requirements similar to those set forth in this RFP.

• Qualifications & Experience of Facility Operating Team:

o Demonstrated success with prior projects with professional residential management and high commercial occupancy rate

• Project Characteristics:

o Preliminary development concept and proposed amenities o Proposed project schedule/timeline o Proposed project management/delivery plan, including relevant quality

control measures o Proposed property management approach o Proposed ancillary development plan (if any) o Anticipated value of completed project

• Project Partnership & Funding:

o The purchase price for the property o Preliminary estimated project cost o Financial condition of the primary project firm with supporting

documents o Preliminary financing plan, identity of project funders and proof of

availability of funding o The nature and timing of project financier’s commitment o Any other relevant elements

7. SCHEDULE FOR RFP SUBMISSION:

A response to this RFP should be submitted to and received by the City at 37 Broadway, Frostburg, MD 21532, Attn: Elizabeth Stahlman no later than December 17, 2021, at 11:00 AM local time. Other dates of interest concerning this RFP process include:

• No Deadline: Indicate your interest in responding via email at

estahlman@frostburgcity.org. • November 30, 2021: Non-Mandatory Pre-Proposal Conference will be held at 11:00

am in the Frostburg Municipal Center, Room 100 at 37 Broadway, Frostburg, MD or via zoom (TBD). Minutes will be distributed as an addendum to all firms that submitted their interest in responding.

• December 3, 2021: 4:30 PM deadline for any questions from proposing firms. Responses to Q&A will be distributed as an addendum to all firms that submitted their interest in responding by December 9, 2021.

• December 17, 2021: Proposal receipt deadline at 11:00 AM local time. • Week of January 3, 2021: Approximate target date for on-site interviews, if

necessary. • January 13, 2021: Staff review proposals with the Mayor and City Council

• January – March 2022: Approximate target date to begin negotiations with the selected firm. Upon completion, the City Council will approve the development Agreement and the project will commence.

If the developer fails to start construction within one calendar year from the date of the development Agreement, the Agreement can be terminated at the City's discretion.

8. PROPOSAL SUBMISSION INSTRUCTIONS:

Please send an email to Elizabeth Stahlman, City Administrator at estahlman@frostburgcity.org to express your interest in responding to this RFP and to be eligible for future RFP Addendum or other notifications.

The proposal document submitted by each firm should be organized in six (6) clearly labeled sections and provide requested information as follows:

1) Introduction - Cover page, cover letter, and table of contents. 2) Firm Information (Primary) - Information for primary firm, including firm

history and background, office and contact information for this project, resumes of assigned persom1el, and case studies (with project reference) for relevant projects.

3) Firm Information (Subcontractors)-Additional firm information (as described above) for known sub-contractors, which at minimum should include design, construction management, and property management, unless provided in-house by the primary firm.

4) Proposed Concept - Preliminary concept. In this section, please include: a) conceptual sketch of the exterior of the property and site plan; OR a

detailed description of the property appearance, siting on the property, building footprint size, proposed number of parking spaces.

b) Narrative of number of residential units and amenities to be provided for the residential tenants

c) preliminary project development timeline, d) preliminary construction cost estimate, e) narrative regarding proposed project management/delivery plan, f) narrative regarding proposed property management, g) narrative regarding proposed ancillary development plan (if applicable), h) narrative regarding potential lease space for commercial and/or office space

on first floor 5) Purchase Price Range and Financial Capacity - Provide an estimated range in which your firm expects to pay for the property, if selected based off of your plan and the factors provided in this RFP. Based on the preliminary construction cost estimate for your concept, and the purchase price for the property please provide a preliminary financing plan. If possible, please base this plan on one of the scenarios above and similar models that you have found successful for other

projects. In this section, please also include: a) statement of financial condition of the primary firm (note: please mark this as "confidential" if you do not wish it to be considered as public information), b) the identity, credit history and past performance of any third party that will provide financing for the project and the nature and timing of their commitment, and c.) any other relative information related to a successful financing plan.

Any other information that the respondent wishes to include that is not outlined above should be attached as a separate appendix.

Responses shall be submitted to and received by the City at 37 Broadway, Frostburg, MD 21532, attn: Elizabeth Stahlman no later than December 17, 2021, at 11:00 AM local time consisting of and labeled as follows:

• Sealed envelope including five (5) printed copies and one (1) digital copy on a USB

flash drive. • Please label envelope clearly on the outside as "REQUEST FOR PROPOSALS:

CENTER STREET REDEVELOPMENT" and also include the name and address of the lead firm on the front of the envelope.

• All responses should be signed in ink by an authorized principal of the lead firm.

9. TERMS & CONDITIONS OF THIS RFP:

The City reserves the right to reject any and all responses to this RFP, and even if the City does elect to begin negotiations with any firm that responds to this RFP, the Project Description described above is in no way binding on the City.

The City shall not pay any costs incurred by any responding company for time and/or materials used to prepare the response or make any presentation(s) related to this RFP.

Any submitted responses become the property of the City of Frostburg. The City of Frostburg and its agency partners will review the responses and investigate the qualifications of the team members and the demonstrated ability to perform satisfactorily, as well as the financial stability of the firms submitting the responses. The City of Frostburg reserves the right to require either telephone or personal interviews with each firm submitting a response. The City of Frostburg reserves the right to reject any or all responses in any order or combination, accept or reject any portion of a response, make modifications to the project after submission of the responses, and waive any formalities in responses if they deem it is in the best interest of the City of Frostburg do so, without liability on the part of the City.

Neither this Request for Proposals nor the City's consideration of any proposal shall create any contract, express or implied any contractual obligation by the City to any respondent, or any other obligation by the City to any respondent. The City makes no promise, express or implied, regarding whether it will enter into an agreement with any respondent or regarding the manner in which it will consider the submitted responses to this RFP.

Applicants should note that freedom of information statutes give any person ("a requesting party") the right to obtain government documents unless the documents (or portions thereof) are exempt from disclosure as specifically enumerated in the applicable statute. The City does not intend to release proposal documents until such time as a development agreement is entered into with the successful applicant as such earlier release may cause substantial harm to bidders’ competitive positions. Information that is exempt from disclosure includes, for example, trade secrets and confidential commercial and financial information. Applicants are solely responsible for marking the applicable portions of their proposals as "confidential". Failure to designate information as confidential or marking substantial portions or the entirety of a bid submission as confidential in an arbitrary manner may result in disclosure to a requesting party. Attachments: Site photograph Roundabout Preliminary Design BAE Economics Housing Market Analysis

Center Street Property. Picture taken from Frostburg State University Campus, looking east.

DoIT, MD iMAP, MDPCenter Street Redevelopment Project Area

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bae urban economics

Frostburg Demographic, Economic and Market Analysis For the City of Frostburg, Maryland

June 30, 2020

Contents EXECUTIVE SUMMARY ............................................................................................................... 1

INTRODUCTION .......................................................................................................................... 2

METHODOLOGY ......................................................................................................................... 3

DEMOGRAPHIC AND ECONOMIC CONDITIONS.......................................................................... 4

Population and Households ........................................................................................................ 4

Household Composition ............................................................................................................... 6

Household Tenure ........................................................................................................................ 7

Age ................................................................................................................................................ 8

Income ....................................................................................................................................... 10

Race and Ethnicity .................................................................................................................... 11

Resident Employment ............................................................................................................... 11

Employment by Industry ........................................................................................................... 12

RESIDENTIAL REAL ESTATE MARKET ...................................................................................... 14

For-Sale Residential .................................................................................................................. 14

For-Rent Residential ................................................................................................................. 15

RETAIL REAL ESTATE MARKET ANALYSIS ............................................................................... 17

SUMMARY OF FINDINGS ......................................................................................................... 18

bae urban economics

San Francisco Sacramento Los Angeles Washington DC New York City

2600 10th St., Suite 300 803 2nd St., Suite A 448 South Hill St., Suite 701 1140 Third St NE, 2nd Floor 234 5th Ave.

Berkeley, CA 94710 Davis, CA 95616 Los Angeles, CA 90013 Washington, DC 20002 New York, NY 10001

510.547.9380 530.750.2195 213.471.2666 202.588.8945 212.683.4486

www.bae1.com

June 30, 2020

Elizabeth Stahlman

City Administrator

Frostburg City Hall

59 E Main St, Frostburg, MD 21532

Dear Ms. Stahlman:

BAE Urban Economics is pleased to submit this Demographic, Economic and Market Analysis

of Frostburg ahead of a potential new mixed-use development on city-owned property on

Center Street. This report includes data on existing demographic and economic conditions in

the city as well as current real estate market information. The real estate market information

is presented by sector and includes a review of for-sale residential, for-rent residential and

retail market conditions and trends.

The data and information presented here will help inform the feasibility of new development

on Center Street, identifying regional demand and the opportunities for Frostburg to capture it.

We look forward to presenting the findings from this study in the future.

Thank you for the opportunity to work with the city of Frostburg on this important project. It has

been a pleasure working with you.

Sincerely,

Mary Burkholder

Associate Principal

1

EXECUTIVE SUMMARY

BAE Urban Economics, Inc. was engaged by the City of Frostburg to conduct a market study

evaluating the demand for a new multifamily and retail development on Center Street. This

study includes an analysis of demographic and economic trends in Frostburg, comparing the

city to Mineral County, WV, and the Cumberland Metropolitan Statistical area to add context.

Data on the residential for-sale and for-rent markets were also analyzed, as well as data on the

retail market. Findings were evaluated alongside interview transcripts from discussions with

local stakeholders, including the Vice President for Regional Development and Engagement at

Frostburg State University, two local real estate brokers, and the economic development

directors of Allegany and Mineral counties.

The challenge in assessing the market for a new development in Center Street is that, on first

glance, potential new demand may appear limited given the decline in overall population in the

region. Nevertheless, regional economic development agencies and Frostburg State University

work actively to locate high-paying technology and engineering jobs in the area, seeking to

build upon the existing base of aerospace supply chain jobs. Projections of jobs from specific

employers demonstrate there is a growing base of relatively high-income young professionals

in the region, with Frostburg as a desirable location for these workers to live. Higher-end

apartments for rent in Frostburg currently have little to no vacancy, which suggests that there

is demand for new multifamily development. This same growing base of young professionals

can potentially support new retail development as well.

This report includes an overview of the methodologies employed in conducting this study,

findings from the analysis of demographic and economic data, and an evaluation of real estate

market data. Findings from the data analysis are compared to and consolidated with

information provided during stakeholder interviews, in order to gain a clear picture of the

existing market conditions in Frostburg and the surrounding areas.

2

INTRODUCTION

BAE Urban Economics, Inc. was engaged by the City of Frostburg to conduct a market study

evaluating the demand for new multifamily and retail development at Center Street. The

challenge for the study is to evaluate demand despite population and household projections

that suggest Frostburg and the Cumberland Metropolitan Statistical Area (Cumberland Metro)

will shrink over the next 10 to 15 years. While this overall trend may be true given the rural

nature of the region, the market analysis demonstrates that there are new, high paying jobs in

the region being created every year. This is due mainly to the presence of Rocket Center in

Mineral County, West Virginia, which not only has hundreds of jobs itself, but is the epicenter

of a larger aerospace technology supply chain industry that is well-established in the region.

In addition, local jurisdictions and others including the city of Frostburg, Cumberland, and

Allegany County economic development organizations, and Frostburg State University (FSU),

are actively working to attract businesses with high-paying jobs. For example, a new branch of

the University of Pittsburgh Medical Center system opened in Cumberland in 2019, which

supports many higher-paying jobs. Berkeley Springs Instruments, which also high-paying jobs,

is relocating its headquarters from Cumberland to newly-built facility in Frostburg itself.

Whether the high-paying jobs growth is in the region generally or within Frostburg, the city is

unique within the region due to the presence of FSU. The range of retail, restaurants and

entertainment options are both numerous and located conveniently in a walkable downtown

that includes relatively dense residential development.

Frostburg’s relatively high number of attractions for the region has translated to demand for

smaller, rent-based housing products from the young professionals that are increasingly

moving to work in the area. Indeed, many of the apartments on Main Street in Frostburg have

been rehabilitated or redeveloped with this target market in mind, and they are all at zero to

very low vacancy. There is potential for this target market to generate increased demand for

retail, particularly retail above and beyond just student-oriented retail, and projects such as

the redevelopment of the Gunter Hotel as well as the increasing number of bars and craft

breweries indicate that businesses recognize this potential.

The findings of this study follow a brief discussion of the methodologies employed in

conducting the study, which included both data analysis and stakeholder interviews. As the

results demonstrate, there does exist a market for new, higher-end residential and retail

development at Center Street, although it does depend on the sustained success of regional

economic development efforts.

3

METHODOLOGY

This study includes an analysis of demographic and economic trends in Frostburg, comparing

the city to Mineral County, WV, and the Cumberland Metropolitan Statistical area to add

context. Data on the residential for-sale and for-rent markets were also analyzed, as well as

data on the retail market. Findings were evaluated alongside interview transcripts from

discussions with local stakeholders, including the Vice President for Regional Development

and Engagement at FSU, two local real estate brokers, and the economic development

directors of Allegany and Mineral counties.

Data was obtained from a range of sources including Esri Business Analyst, the American

Community Survey, CoStar, and Zillow. Given the rural nature of the region, CoStar data on

multifamily and retail markets was limited. Data from CoStar that was available was the basis

of inquiry for confirmation from knowledgeable local stakeholders. Findings presented in this

study on the for-rent residential and retail markets are presented as ranges based on an

evaluation of the quantitative and qualitative data. BAE staff also conducted a physical survey

and tour of the both the Center Street site and the city of Frostburg overall with the City

Administrator, Elizabeth Stahlman. This enabled further corroboration of research findings.

It is important to note that population and employment projections for Frostburg and the

Cumberland Metro show a decline over the next 10 to 15 years, and this overall projection is

not disputed. However, there has been growth in higher-paying jobs and the number of young

professionals in the area, as the findings show. As the purpose of the study is to assess the

market for development catering to this population, the analysis and projections of demand

are based on growth in this population and identifying demand from elsewhere, if any, in the

context of broader regional trends. Thus, the projections that show an overall shrinking of the

region are not germane to this study, and the accuracy of those projections is not reevaluated

here.

4

DEMOGRAPHIC AND ECONOMIC CONDITIONS

This report provides an analysis of demographic, economic and real estate market data from

the city of Frostburg for a potential mixed-use development on Center Street. The feasibility of

the project will depend in part on the market strength of the local and surrounding areas. The

analysis includes an overview of existing conditions in Frostburg, and a comparison to

conditions in Mineral County, West Virginia, and the Cumberland Metropolitan Statistical Area

(Cumberland Metro).1

Population and Households

The estimated population in Frostburg is 8,770, which represents a 2.8 percent decline since

2010. This trend is generally in line with the population decline of the Cumberland Metro

overall, which was 2.4 percent between 2010 and 2019. However, while the trends may be

related as Frostburg is part of the Cumberland Metro, at least some of the decline of

Frostburg’s population is owed to declining enrollment at FSU over the past 10 years.

Although also a part of the Cumberland Metro, Mineral County notably experienced population

growth of 1.1 percent between 2010 and 2019.

Like population trends, the number of households in Frostburg and the Cumberland Metro

declined overall between 2010 and 2019, although the number of households fell at a greater

rate in the city of Frostburg. On the other hand, Mineral County households increased by 1.7

percent. Mineral County and the Cumberland Metro have similar average household sizes

(between 2.3 and 2.4 persons per household), and this is notably higher than in Frostburg,

where the average household size is currently 2.16 persons per household. This is not

surprising given that Frostburg is a college town, meaning there is a greater share of students

in the city than in the comparison geographies. According to real estate brokers and local

stakeholders, there has been a growing trend of recent college graduates and young

professionals that work in the Cumberland Metro choosing to live in Frostburg. However, it is

unclear in the data the extent to which this population has impacted average household size in

the city. Average household did not change significantly between 2010 and 2019 in any of the

three geographies. Trends in population, households and average household size are

summarized in Table 1.

1 The Cumberland, MD-WV Metropolitan Statistical Area (MSA) is defined as the combination of Allegany County,

Maryland and Mineral County, West Virginia. It is referred in short as the 'Cumberland Metro'

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Table 1: Population, Households and Average Household Size, 2010-2019

Notes: (a) The Cumberland, MD-WV Metropolitan Statistical Area (MSA) is defined as the combination of Allegany County, Maryland and Mineral County, West Virginia. It is referred in short as the 'Cumberland Metro' Source: ESRI Business Analyst, BAE 2020.

Population and household projections from the Maryland Department of Planning suggest that

the City of Frostburg and Allegheny County will shrink in size. However, these estimates do not

consider active economic development efforts undertaken by the city of Frostburg, FSU and

other regional stakeholders and jurisdictions. The pipeline of new jobs will be discussed in the

Resident Employment section below, but in general, FSU itself has a significant impact on

population growth in the region. Since 2010, 3,580 FSU alumni across all degree programs

have settled within 50 miles of Frostburg, which is an average of 358 new regional residents

per year2. Even if there is still an overall decline in population over the next 10 years in

Frostburg, there is a consistent base of young professionals with college degrees who will

potentially work and live in the City.

As shown in Figure 1, although undergraduate enrollment at FSU has declined since the Fall

Semester of 2010, graduate and doctoral enrollment has increased. Furthermore, while there

is excess capacity in terms of dorms for undergraduates, there are no extra beds for the

growing graduate student population, according to Al Delia, Vice President for Regional

Development and Engagement at FSU. These graduate students would make up at least

some of the demand for higher-quality apartments in Frostburg.

2 “Count of Alumni within 50 miles of FSU” – data provided by Frostburg State University, 2020.

6

Figure 1: Frostburg State University Enrollment Trends, 2010-2019

Source: Frostburg State University, BAE; 2020

Household Composition

Table 2 shows how the composition of households have shifted over the past 10 years. The

decline in households in Frostburg is due almost entirely to the decline in non-family

households, which likely reflects the declining enrollment at Frostburg State University. The

growth Mineral County experienced between 2010 and 2019 was based on an increase in

non-family households, as family households only increased by 0.2 percent. This may be

explained by the increase in young workers relocating to the area for jobs in Rocket Center.

The overall decline in population and households in the Cumberland Metro is due to a decline

in the number of family households, which contrasts with the city of Frostburg.

Therefore, given that Frostburg’s population and household trends are most likely due to

declining college enrollment at FSU and that Mineral County, in fact, grew between 2010 and

2019, the negative trends in the Cumberland Metro are indicators of weakening economic

conditions in places other than Frostburg and Mineral County, such as the city of Cumberland

itself. The negative trends in the Cumberland Metro do not necessarily undermine the viability

of a mixed-use development in Frostburg, particularly given Frostburg’s proximity to the

employment centers in growing Mineral County.

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Table 2: Household Composition, 2010-2019

Source: ESRI Business Analyst, BAE 2020.

Household Tenure

In Mineral County and the Cumberland Metro, overall household tenure shifted from owner-

occupied to renter-occupied. Despite less than 2.0 percent household growth in Mineral

County and the decline in households in the Cumberland Metro, renter-occupied housing

increased by 30.3 percent and 20.2 percent, respectively. In Frostburg, owner-occupied

housing fell by 9.6 percent and renter-occupied housing increased by 2.6 percent. Given

declining enrollment, it is possible that Frostburg is also affected by national trends towards

increased renter-occupied housing. In any case, compared to Mineral County and the

Cumberland Metro, Frostburg has a much higher rate of renter-occupied housing given the

presence of students. As shown in Table 3, nearly 60 percent of Frostburg households are

renter-occupied, compared to 29.5 percent in Mineral County and 35.1 percent in the

Cumberland Metro.

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Table 3: Household Tenure, 2010-2019

Source: ESRI Business Analyst, BAE 2020.

Age

As shown in Table 4, the median age in Frostburg is estimated to be 26.9 years, an increase

from the median age of 24.1 in 2010. Despite population decline, the population aged 25 to

34 increased by 46.8 percent, which corresponds to observations made by local stakeholders.

The median age in Mineral County (44.9) and in the Cumberland Metro (43.2) are comparable,

and much older than in Frostburg. Nonetheless, the population aged between 25 and 34 also

increased by 15.0 percent and 12.2 percent, respectively, in Mineral County and the

Cumberland Metro. This suggests there is potentially a market for housing for young

professionals, which the Center Street project aims to capture.

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Table 4: Age Distribution, 2010-2019

Source: ESRI Business Analyst, BAE 2020.

Additionally, based on discussions with human resources staff at the IBM facility in Rocket

Center, new hires tend to be between 25 to 34 years old, which corresponds with the trends in

the data. Discussions with real estate brokers from Frostburg echo the finding that young

professionals make up an increasingly large share of the city’s population.

In all three geographies, there was also a significant increase in the 65 years and older age

cohort. The 28.4 percent increase in the population aged 65 and older in Mineral County is at

least, in part, explained by the observation of local real estate brokers that Mineral County is a

desirable location for retirees. Moreover, real estate brokers and IBM human resources staff

noted that of the new hires in Rocket Center, older executive hires tend to locate within

Mineral County. However, the population aged between 55 and 64 grew at a faster rate in

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Frostburg (10.6 percent) than in Mineral County (4.3 percent). This age cohort may present a

market opportunity for new housing in Frostburg as well.

Income

The median household income in Frostburg is $36,970, which is lower than in both Mineral

County and the Cumberland Metro, as shown in Figure 2. This is likely due to the presence of

students in Frostburg. Notably, Frostburg has a greater share of households earning over

$150,000 than Mineral County. Overall, the income distribution in Mineral County and the

Cumberland Metro is similar, while Frostburg incomes are skewed by students.

Figure 2: Income Distribution, 2019

Source: ESRI Business Analyst, BAE 2020.

Discussions with IBM staff and Mr. Delia of FSU reveal that the kinds of jobs generated at

Rocket Center and the nature of businesses relocating to the region are generally higher

paying. Young professionals newly hired at IBM earn starting salaries of approximately

$75,000 a year. This is comparable to salaries in software development and engineering

outside of Rocket Center that are increasing in Frostburg and the region. It is also noteworthy

that FSU is actively working to create a pipeline of students for these kinds of jobs. Even if it is

not most of the housing demand, imminent job growth will include jobs with this higher range

of salaries, which would support higher-end development for the Center Street project.

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Race and Ethnicity

Frostburg is more racially and ethnically diverse than either Mineral County or the Cumberland

Metro. However, while the share of non-Hispanic White residents has declined in all three

geographies over the past 10 years, Frostburg, Mineral County and Cumberland are all over 80

percent non-Hispanic White. Mineral County is the least diverse. This is summarized in Figure

3.

Figure 3: Racial and Ethnic Distribution, 2019

Notes: (a) All Other Race/Ethnicities includes Native American, Asian, Native Hawaiian/Pacific Islander and 'Other' residents, as well as residents of Two or More Races Source: ESRI Business Analyst, BAE 2020.

Resident Employment

As shown in Figure 4, resident employment data reveals that a greater share of Frostburg

residents likely work in higher-paying jobs than residents of Mineral County and the

Cumberland Metro. Frostburg has the highest share of residents working in Professional,

Scientific, and Technical jobs, and in Information jobs, which is supported by comments from

local sources. According to Al Delia, Vice President for Regional Development and

Engagement at FSU, who tracks local employment, a significant share of new young residents

in Frostburg are employed at jobs in Rocket Center, the Western Maryland Medical Center, and

companies like Exclamation Labs and Berkeley Springs Instruments (BSI). As aforementioned,

BSI is moving from Cumberland to a new headquarters in Frostburg by 2021.

Specific jobs with these employers include software developers and engineers. Not

surprisingly, a large share of Frostburg residents is employed in Educational Services. Mineral

County has the smallest share of residents employed in the Professional, Scientific, and

Technical jobs and Information sectors, despite being home to Rocket Center. Mr. Delia also

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believes there is potential for Frostburg to attract workers from urban centers such as

Pittsburgh, Baltimore and Washington, DC, given the rise of teleworking generally, particularly

after the COVID-19 lockdowns.

Figure 4: Resident Employment, 2019

Source: ESRI Business Analyst, BAE 2020.

Employment by Industry

Interestingly, despite the presence of Rocket Center, Mineral County has the smallest share of

Professional, Scientific, and Technical jobs and Information jobs, although it has the largest

share of Manufacturing jobs. This may be due the classification of jobs in Rocket Center,

where there is at least some manufacturing. Notably, Frostburg has the largest share of

Professional, Scientific, and Technical jobs, and Information jobs, particularly the latter.

Frostburg has a relatively small share of Manufacturing and Construction jobs compared to

Mineral County and the Cumberland Metro. This is summarized in Figure 5.

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Figure 5: Employment by Industry, 2019

Source: ESRI Business Analyst, BAE 2020.

The presence of FSU also has a dynamic effect on employment in the region. According to Mr.

Delia from FSU, the Frostburg State University Division of Regional Development &

Engagement assists regional economic development organizations by aligning student

programs and education with the workforce needs of industry clusters present in Western

Maryland and the region in general. Some such industries include lifestyle manufacturing (i.e.

bootmakers, canoe builders, etc.), software technology and the aerospace supply chain.

Based on the coordinated efforts of regional economic development organizations, including

Frostburg State’s, Mr. Delia estimates that several hundred and up to one thousand new jobs

will be created over the next 10 years in the five-county region he defines as the combination

of Allegheny County and Garrett County in Maryland, Mineral County in West Virginia, and

Bedford and Somerset Counties in Pennsylvania. According to Mr. Delia, given the rural nature

of the region, and as evidenced by commuting patterns, inter-county commuting between the

region is very common and he believes economic development in any of the five counties

helps to support growth region-wide. According to Jeff Barclay, Director of Allegany County

Department of Economic and Community Development, the ATK facility at Rocket Center is

committed to hiring 543 new people over the next five years.

Rocket Center is a major employment center for the region, and discussions with human

resources staff at the IBM Facility in Rocket Center revealed that there are 40 to 50 net new

hires on an annual basis at IBM alone, and that most of these hires are young professionals

working in information technology. IBM has experienced challenges in recruitment specifically

14

due to the limited range of housing options, and human resources staffers themselves often

work to settle new hires in the region. Therefore, new housing products that include amenities

not found in other apartment units in the region, such as WiFi, restaurants and fitness

facilities, may help IBM and other companies at Rocket Center increase the number of annual

new hires. However, any indirect impact of improved housing options on the ability of Rocket

Center companies to attract and retain new hires may be marginal, as the overall employment

at Rocket Center is largely based on government contracts.

RESIDENTIAL REAL ESTATE MARKET

For-Sale Residential

As shown in Table 5, of the 108 homes sold in Frostburg in 2019, 78.7 percent had more than

two bedrooms, and there were no one-bedroom units sold. The median size of homes sold in

2019 in Frostburg was 1,886 square feet, and the median sale price was $117,450. As

Frostburg home sale data was analyzed, it became clear that many of the larger homes are

intended for students and split into duplexes. This may help to explain why the average price

per square foot of these sold homes is lowest for units of five bedrooms or larger. It is unclear

why the average price per square foot is highest for four-bedroom units, as these are a mix of

both student housing and higher-end single family homes. There may be a competitive market

for four-bedroom student housing units, and newer four-bedroom units in subdivisions like

Sand Springs are relatively expensive compared to the rest of the market.

Table 5: Frostburg Home Sales Price Distribution, 2019

Source: Redfin, BAE 2020.

It is notable that the second-highest price per square foot of homes sold in 2019 was for two-

bedroom units. While they are single-family detached homes (i.e., not apartments), these

units indicate that there is a relatively healthy market for smaller homes, which could point to

15

demand for higher-end multifamily units as well. Based on an overview of the data, the two-

bedroom units sold were not intended as student housing.

The sales price distribution of homes sold in 2019 varies between Frostburg, Mineral County,

and the Cumberland Metro. Nevertheless, as shown in Figure 6, the distributions of average

sales price per square foot by number of bedrooms in Mineral County and the Cumberland

Metro are comparable. Excluding unique one-bedroom units, in both Mineral County and the

Cumberland Metro, the average sale price per square foot was highest for three-bedroom

units, and similar to the average sale price per square foot for four-bedroom units. This

contrasts with the relatively higher price per square foot of two-bedroom units in Frostburg

compared to three-bedroom units, which could suggest that the demand for smaller units is

higher in Frostburg than elsewhere in the region. Indeed, two-bedroom units made up a larger

share of 2019 home sales in Frostburg (21.3 percent) than in Mineral County (15.7 percent)

or the Cumberland Metro (16.3 percent).

Figure 6: Comparison of Home Sales Price Distribution, 2019

Source: Redfin, BAE 2020.

For-Rent Residential

BAE obtained data from CoStar on multifamily rental units in Frostburg, Mineral County, and

the Cumberland Metro. However, the data was incomplete and unreliable on its own as CoStar

data is typically stronger in urban markets where there are more frequent real estate

transactions. As a result, the data presented on the for-rent residential units inventory are

based on input from local real estate brokers. CoStar data were used a baseline to compare

16

input from real estate brokers and any major discrepancies were discussed and evaluated.

Table 6 provides an overview of these findings.

Table 6: Overview of For-Rent Units, 2019

Notes: (a) Figures and ranges shown here are estimates based on discussions with local real estate brokers and data obtained from the CoStar Group Source: CoStar; Carter & Roque Real Estate; The Goodfellow Agency; BAE, 2020

According to Kevin Clark, Executive Director of Mineral County Development Authority,

affordable housing developers can get attractive financing to develop in Mineral County.

Developers otherwise struggle to build market-rate apartments because they cannot charge

rents high enough to cover development costs. This suggests a weaker market in Mineral

County and the indication that it simply does not have the kinds of housing options attractive

to young professionals. In addition, given the differences in retail options and walkability

between Frostburg and Mineral County (and specifically, Keyser, WV), it is unlikely there will be

direct competition for tenants between affordable apartments in Mineral County and new

apartments at Center Street in Frostburg.

Two real estate brokers interviewed for this study, both of whom own and manage renovated

apartments in Frostburg that cater to young professionals, describe almost no vacancy in their

properties, many of which are on Main Street. The reasons given for this is the proximity to

retail, restaurant, and entertainment options in Frostburg, described as more desirable than

retail, restaurant, and entertainment options in the city of Cumberland, as well as better

walkability and public safety in Frostburg. Both the city of Cumberland and Frostburg have

more retail, restaurants, and entertainment options, as well as better walkability than Keyser,

where such establishments are smaller-scale and local-serving.

Total Monthly %Geography (a) Units Rent OccupiedFrostburg 240 $600-$1,200 90%-95%Mineral County, WV 80-100 $600-$900 94%-96%Cumberland Metro 900 $500-$1,400 93%-95%

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RETAIL REAL ESTATE MARKET ANALYSIS

As shown in Table 7, there is 438,438 square feet of retail in the City of Frostburg,

representing 8.7 percent of the overall retail inventory of the Cumberland Metro. Although

Frostburg reportedly has the lowest vacancy rate among all three geographies, real estate

brokers, the City Administrator and a physical survey of the city’s retail core found this to be

inaccurate. The inaccuracy of the vacancy data may be due to the fact there are vacant retail

storefronts that could be leased, but are instead unoccupied either because repairs would be

too costly, or because the property owner is simply unwilling to lease retail space. While

asking rents trend data are unreliable, the Q4 2019 asking rent estimates in Table 7 are

considered to be accurate, showing that rents are highest in Frostburg and roughly

comparable to rents in Mineral County and the Cumberland Metro.

Table 7: Retail Market Overview

Notes: (a) The reported retail vacancy rate for Frostburg was 1.0%, although this is disputed by real estate brokers, the City Administrator, and a physical survey of the city's retail core. (b) Asking rents for Q4 of 2018 in Frostburg was unavailable. Source: CoStar, BAE 2020.

Frostburg’s retail core is vibrant, with several unique restaurants and bars, including

breweries, and at least one distillery and one winery. It also boasts several novelty retail

options and a farmer’s market, and it is highly walkable. This contrasts with the retail in

Cumberland, which is less walkable while also being more tourist-serving (it is home to the

C&O Canal Trailhead and the Western Maryland Scenic Railroad). Retail in Mineral County is

dispersed throughout the County and the largest retail core, located in Keyser, is less vibrant

than Frostburg as it is smaller and there is less development, particularly dense development,

surrounding it.

Mineral CumberlandFrostburg County, WV Metro

Summary, Q4 2019Inventory 438,438 802,759 5,037,243Occupied Stock 434,198 770,209 4,894,619Vacant Stock 4,240 32,550 142,624Vacancy Rate (a) 1.0% 4.1% 2.8%

Annual Asking Rents (b)Avg. Annual Asking Rent, NNN (psf), Q4 2018 -$ 9.48$ 10.20$ Avg. Annual Asking Rent, NNN (psf), Q4 2019 10.44$ 9.48$ 9.60$ % Change - 0.0% -5.9%

Net AbsorptionNet Absorption, 2018 2,958 1,950 (38,445)Net Absorption, 2019 (4,240) 1,200 43,476

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Nevertheless, despite the strengths of Frostburg’s retail market, it is not without challenges.

Properties require upgrades, which can be difficult with the number of historic properties in the

city. In addition, with some property owners unwilling to lease or sell their properties, asking

rents may be inflated. Still, ambitious projects such as the upgrading and/or renovation of the

Gunter Hotel, the storefront occupied by J&S Pawn, the former National Bank Building, LG’s

Pizza and Pub building, and the Lyric Building are serving to raise the overall quality of retail in

the city, which may motivate similar development down the line.

It is notable that retail inventory in Frostburg did not increase between 2010 and 2019, so

new retail in the Center Street project would be the first such development in many years. It is

unclear what retail gap exists or if there is significant market demand for new retail space, but

reportedly there have been inquiries about leasing properties on Main Street that have been

refused by property owners, for whatever reason. This may be an indicator of demand for

retail space that is not being met. Ultimately, the demand for new retail in Frostburg will be

driven by regional employment growth and the success of Frostburg and FSU to capture new

employees as city residents. There may be existing unmet demand for retail space, but the

vision of retail for the Center Street development hinges on young professionals choosing to

live in Frostburg, and evidence of that is not found in the snapshot of the current retail market

in the city.

There is some indication that university-focused retail at the Center Street location could be

supported by students. One idea that has been floated is moving the FSU student bookstore

off campus into the potential new mixed-use development on Center Street.

There is also little evidence in the retail market data that Frostburg is competing with other

locations elsewhere in the Cumberland Metro to capture retail demand. The Cumberland

Metro retail inventory increased by 2.3 percent between 2010 and 2019, representing an

increase of 112,985 square feet. This is a relatively modest amount of development for the

two-county region, suggesting retail growth was limited region-wide.

SUMMARY OF FINDINGS

This market analysis for the City of Frostburg intends to evaluate the demand for new

multifamily and retail development at Center Street. Based on the methodologies employed in

this study, which include data analysis, stakeholder interviews, and a physical survey of the

city, current demand would support new development at Center Street. As detailed in the

summary of findings below, the demand is strongly supported by the active efforts of regional

economic development agencies and FSU to locate high-paying technology and engineering

jobs in the area, building on the assets that Rocket Center provides and the aerospace

technology ecosystem it has created.

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While the demand is regional and could theoretically be met in the city of Cumberland or in

Keyser, WV, Frostburg already has a larger base of younger population. FSU has the effect of

both providing the city a base of residents, as well as potentially generating demand for

increased and higher-end retail than in surrounding areas, and new development in Frostburg

is best-suited to capture increased demand from regional economic growth.

• Although the population of Frostburg and the Cumberland Metro is projected to decline

over next 10 to 15 years, specific economic development efforts from local

jurisdictions and organizations has led to the expansion of the aerospace supply chain

industry and have cultivated other jobs in technology and other higher-paying sectors.

• While the population of Frostburg declined over the past 10 years, the trend is

consistent with declining enrollment trends at FSU. On the other hand, the region is

declining overall, as indicated by the decline in the population of the Cumberland

Metro.

• The city of Frostburg has the youngest residents among Mineral County and the

Cumberland Metro, and the fastest growing cohort of residents aged 25 to 24, which

increased by 46.8 percent between 2010 and 2019. This corresponds to the

observation of stakeholders that young workers in the region are attracted to Frostburg

and that there is a pipeline of jobs in the region for FSU graduates.

• While Frostburg has a relatively low median household income, employers in Rocket

Center that hire young professionals pay starting salaries of $75,000, comparable to

other higher-end jobs that attract young professionals to the area, such as jobs in

software development and other jobs at the Western Maryland Medical Center.

• Frostburg has the highest share of residents working in Professional, Scientific, and

Technical jobs, and in Information jobs in the Cumberland Metro. The FSU official

interviewed suggests that a significant share of young graduates that stay in Frostburg,

as well as other young professionals, are employed at jobs in Rocket Center, the

Western Maryland Medical Center, and companies like Exclamation Labs and Berkeley

Springs Instruments (BSI), which is moving from Cumberland to a new headquarters in

Frostburg by 2021.

• Based on observed trends at specific employers and within specific sectors, such as

technology and aerospace, interviewed stakeholders suggest that there will be several

hundred and up to one thousand new jobs created over the next 10 years in the five-

county region that includes the combination of Allegany County and Garrett County in

Maryland, Mineral County in West Virginia, and Bedford and Somerset Counties in

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Pennsylvania. This includes an annual average of 40 to 50 net new hires at Rocket

Center’s IBM facility, alone.

• The for-sale residential real estate market in Frostburg is skewed by the presence of

student housing, as evidence by the very low price per square foot for duplex homes of

5 bedrooms or more. Notably, two-bedroom units sold in Frostburg have a relatively

high average price per square foot, which was the highest for these types of units in

Frostburg compared to Mineral County and the Cumberland Metro. This could suggest

that the demand for smaller units is higher in Frostburg than elsewhere in the region.

• Rent data for multifamily properties was unreliable, although discussions with real

estate brokers showed that Frostburg had higher average rents than Mineral County,

which in Cumberland Metro region, suggest desirability of these properties.

• Renovated apartments on Main Street that cater to young professionals and have

higher rents than student housing, reportedly have almost no vacancy and are the

kinds of units that human resources staff at IBM say are appealing to new hires, as

they often assist new hires with finding suitable housing.

• Frostburg has relatively dense development, particularly along Main Street, that

contrasts with Mineral County. In addition, although Cumberland is relatively densely

developed, it is not as walkable as Frostburg. In this sense, Frostburg is best suited for

a new apartment building to leverage the city’s assets to attract tenants.

• Retail rents in Frostburg in Frostburg, Mineral County and the Cumberland Metro are

relatively comparable, but they are lowest in Mineral County. Although this indicates

the relative strength of the Frostburg retail real estate market compared to Mineral

County, Frostburg has a higher than reported retail vacancy rate. While real estate

brokers suggest this is a function of property owners unwilling to manage their

properties, it is unclear what level of demand there is for existing retail space.

• Ultimately, the demand for new retail in Frostburg will be driven by regional

employment growth and the success of Frostburg and FSU to capture new employees

as city residents. There may be existing unmet demand for retail space, but the vision

of retail for the Center Street development hinges on young professionals choosing to

live in Frostburg.