A MARKET FEASIBILITY STUDY OF
Transcription
A MARKET FEASIBILITY STUDY OF
A MARKET FEASIBILITY STUDY OF NORTHWEST PASSAGE 701 1st Street McCall, Valley County, Idaho 83638 Effective Date: January 26, 2015 Report Date: February 2, 2015 Prepared for Idaho Housing and Finance Association P.O. Box 7899 Boise, ID 83707 On Behalf Of Mr. Chance Hobbs Northwest Real Estate Capital Corporation 309 East Lake Street, Suite 1 McCall, ID 83638 Prepared By Novogradac & Company LLP 4449 Easton Way, Suite 2090 Columbus, Ohio 43219 (614) 934-1110 February 2, 2015 Idaho Housing and Finance Association P.O. Box 7899 Boise, ID 83707 Mr. Chance Hobbs VCD, LLC 309 East Lake Street, Suite 1 McCall, ID 83638 Re: Market Study for Northwest Passage, located in McCall, Valley County, Idaho. Dear Mr. Hobbs: At your request, Novogradac & Company LLP has performed a market study of the multifamily rental market in the McCall, Idaho area relative to the above-referenced Low-Income Housing Tax Credit (LIHTC) project. The purpose of this market study is to assess the viability of the 36-unit Northwest Passage multifamily project. It will be a newly constructed multifamily property restricted to families earning 40, 45, 50, 55, and 60 percent of the Area Median Income (AMI), or less. Additionally, four of the units will be unrestricted. The following report provides support for the findings of the study and outlines the sources of information and the methodologies used to arrive at these conclusions. The scope of this report meets the requirements of the Idaho Housing and Finance Association (effective January 2015): Inspecting the site of the proposed Subject, and its general location. Analyzing the appropriateness of the proposed unit mix, rent levels, unit and complex amenities, and site. Estimating the market rents, absorption rates and stabilized occupancy levels for the market area. Investigating the general economic health and conditions of the multifamily rental market. Calculating income bands, given the proposed Subject rents. Estimating the number of income-eligible households. Reviewing relevant public records and contacting appropriate public agencies. Analyzing the economic and social conditions in the market area, in relation to the proposed project. Establishing the Subject’s Primary and Secondary Market Area(s), if applicable. Surveying competing projects, both LIHTC and market-rate. 4449 EASTON WAY SUITE 2090 COLUMBUS, OHIO 43219 (614) 934-1110 FAX (866) 669-3821 http://novoco.com Mr. Chance Hobbs VCD, LLC February 2015 Page 2 This report contains, to the fullest extent possible and practical, explanations of the data, reasoning, and analyses that were used to develop the opinions contained herein. The depth of discussion contained in the report is specific to the needs of the client. The National Council of Housing Market Analysts (NCHMA) is a professional organization chartered to promote the development of high quality market analysis for the affordable housing industry. Novogradac is a charter member of this organization. NCHMA has compiled model content standards for market studies. This report generally conforms to those standards. Any slight modifications or departures from those standards are considered incidental and result from client specific needs. Please do not hesitate to contact us if there are any questions regarding the report or if Novogradac & Company LLP can be of further assistance. It has been our pleasure to assist you with this project. Respectfully submitted, H. Blair Kincer, MAI, CRE LEED Green Associate Partner David Boisture LEED Green Associate Principal K. David Adamescu Analyst Jimmy McCune Researcher 4449 EASTON WAY SUITE 2090 COLUMBUS, OHIO 43219 (614) 934-1110 FAX (866) 669-3821 http://novoco.com Table of Contents EXECUTIVE SUMMARY ................................................................................................................ 1 CONCLUSIONS AND RECOMMENDATIONS ............................................................................ 5 FACTUAL DESCRIPTION ............................................................................................................ 15 REGIONAL AND LOCAL AREA ANALYSIS ............................................................................ 22 DEMOGRAPHIC ANALYSIS ........................................................................................................ 39 SUPPLY ANALYSIS ........................................................................................................................ 51 DEMAND ANALYSIS ..................................................................................................................... 73 ADDENDA......................................................................................................................................... 74 EXECUTIVE SUMMARY Northwest Passage – McCall, Idaho – Market Study EXECUTIVE SUMMARY PROPERTY SUMMARY OF SUBJECT Nothwest Passage, the Subject, will be a new construction multifamily property. The Subject will be located at 701 1st Street in the downtown area of McCall, Valley County, Idaho. Subject Property Description and Improvements: Northwest Passage will consist of 36 units, which will include five one-bedroom units, 23 two-bedroom units, and eight threebedroom units. Thirty-two units will be LIHTC restricted to households earning 40, 45, 50, 55, and 60 percent of AMI. The remaining four units will be unrestricted. The Subject will consist of the new construction of a single three-story, elevator-served building. Community amenities will include community room, business center, elevator, fitness center, playground, on-site management, and service coordination. The Subject site is currently improved with the local senior center. According to the sponsor, the McCall Senior Center will be relocated into a portion of the newly constructed building and rebranded as multi-generational activity space that can be utilized by the residents at the Subject, members of the community, and various community service agencies. Activities will be coordinated through several local organizations, including the Yellow Couch Teen Center (teen gatherings, afterschool activities) and McCall Senior Center (social activities, twice a week dinners, and meals on wheels program). Developer Name and Contact: Novogradac & Company LLP The project will be sponsored by Northwest Real Estate Capital Corporation. The contact person is Mr. Chance Hobbs, whose telephone number is (208) 608-9140. 2 Northwest Passage – McCall, Idaho – Market Study Subject site Subject site – existing senior center Property Address: The Subject will be located at 701 1st Street in McCall, Valley County, Idaho. Zoning Classification: The Subject site is zoned CV, or Civic Use, by the City of McCall. According to the McCall City Code, the Civic Use zone designation is intended to provide for governmental offices and other civic uses including governmental, cultural, and recreational facilities. Mixed-use and multifamily dwellings are permitted in this zone. According to a zoning letter provided by the sponsor, the Subject development as proposed will be a permitted use. Location and Surrounding Uses: The Subject site is located in a predominately established neighborhood within the downtown area of McCall. Predominant land uses in the Subject neighborhood include a mix of commercial retail, office, and single-family housing. Land uses immediately adjacent to the Subject site include civic offices in generally good condition, including the city hall, police department, department of health, and library, to the north, The Alpine Village mixed-use development in excellent condition to the east, and a mix of forested land and single-family homes in average condition to the south and west. Alpine Village was built in 2009 and consists of 27 one, two, three and four-bedroom condominiums as well as 18,000 square feet of ground floor commercial space. The condominiums range in pricing from $200,000 to $675,000 and all but two have sold. None are being leased to long-term tenants. Areas farther north and east consists of predominately retail and office improvements in average to good condition. Additionally, Payette Lake is approximately two blocks to the north. Single-family housing in generally average condition Novogradac & Company LLP 3 Northwest Passage – McCall, Idaho – Market Study extends farther to the south and west. Valley One Apartments, a LIHTC comparable, is located 0.1 miles to the south. The property was built in 1995 and is fully occupied with a threehousehold wait list. The retail improvements in the neighborhood include a pharmacy, several restaurants, banks, a grocery, a hotel and several other smaller retailers. The retail improvements appear to be better than 90 percent occupied overall. Uses in the Subject neighborhood generally range in age from approximately five to 80 years old. Proposed Rents: The following table details the proposed rents for the Subject’s units. PROPOSED RENTS Unit Type Unit Size Number of (SF) Units Asking Rent 1BR 2BR 605 760 1 1 $400 $500 1BR 2BR 3BR 605 760 1,025 1 1 1 $450 $550 $625 2BR 3BR 760 1,025 4 1 $600 $675 2BR 3BR 760 1,025 7 2 $650 $750 1BR 2BR 3BR 605 760 1,025 3 8 2 $575 $700 $800 2BR 3BR Total 800 1,250 2 2 36 $800 $975 Utility Allowance (1) 40% AMI $56 $66 45% AMI $56 $66 $83 50% AMI $66 $83 55% AMI $66 $83 60% AMI $56 $66 $83 Market N/Ap N/Ap Gross Rent LIHTC Maximum Allowable Gross Rent HUD Fair Market Rents $456 $566 $500 $600 $580 $688 $506 $616 $708 $562 $675 $779 $580 $688 $1,014 $666 $758 $750 $866 $688 $1,014 $716 $833 $825 $952 $688 $1,014 $631 $766 $883 $750 $900 $1,039 $580 $688 $1,014 N/Ap N/Ap N/Ap N/Ap $688 $1,014 Notes (1) Source of Utility Allowance based upon energy audit provided by the Developer. The Subject’s proposed 40, 45, 50, 55 and 60 percent AMI rents are below the maximum allowable levels. Additionally, the developer’s Subject-specific utility allowance is below the housing authority’s utility allowance. Inspection Date: Novogradac & Company LLP The Subject site was inspected on January 26, 2015. This shall be the effective date of the market study. 4 CONCLUSIONS AND RECOMMENDATIONS Northwest Passage – McCall, Idaho – Market Study CONCLUSIONS Overall, we believe there is demand in the marketplace for the Subject as conceived. We recommend no changes to the development scheme. The availability of rental data in the PMA is considered average. However, the availability of newer market rate data as well as elevator-serviced product in the PMA is limited. The rental inventory in the market is predominately older walk-up and townhouse product within small complexes. Nonetheless, we believe that we have sufficient data in order to determine marketability for the Subject property. We have included two LIHTC properties and six market rate properties as comparables in the analysis. Additionally, due to the limited availability of market rate data in the PMA, we have supplemented our rent analysis with local classified listings. All of the comparable properties are located within the PMA. # 1 2 3 4 5 6 7 8 COMPARABLE PROPERTIES Property Name City Type The Springs Mccall LIHTC Valley One Apartments Mccall LIHTC 400 Mission Street 4-plex Mccall Market 433 Payette Triplex Donnelly Market Aspen Glen Mccall Market Pine Creek Apartments Mccall Market The Timbers Mccall Market Thula Street Tri-plex Mccall Market Distance 1.0 miles 0.1 miles 0.4 miles 12.1 miles 1.3 miles 0.8 miles 0.7 miles 0.5 miles Based upon our market research, demographic calculations and analysis, we believe that there is demand for the Subject property as conceived. The overall market vacancy rate is strong at 1.3 percent and the two LIHTC comparables are fully occupied with wait lists. None of the comparables are offering concessions. Further, despite demographic trends that project limited growth in households in the PMA, market data such as the full occupancy and wait lists at the LIHTC comparables as well as the generally low capture rates indicate that there is likely latent demand for affordable housing. Further, the Subject will be new construction and in excellent condition upon completion and will be more desirable than the predominately fair to average condition rental housing stock in the PMA. We believe that units at the Subject will be well-received, as comparable properties are performing at high occupancy. Strengths of the Subject development will be its location, age and condition, and amenities package. The Springs is the only comparable property that was able to provide absorption data. The property opened in 2011 and absorbed its units in approximately eight months, an absorption pace of approximately 4.5 units per month. However, considering the relatively low vacancy rates at the LIHTC and market rate properties, the waiting list at The Springs, as well as the Subject’s capture rates, we estimate that the Subject will reach a stabilized occupancy within six months. This estimate equates to an absorption pace of approximately six units per month. Novogradac & Company LLP 6 Northwest Passage – McCall, Idaho – Market Study The following table summarizes overall weighted vacancy levels at the surveyed properties. OVERALL VACANCY Property name The Springs Valley One Apartments 400 Mission Street 4-plex* 433 Payette Triplex Aspen Glen Pine Creek Apartments The Timbers* Thula Street Tri-plex LIHTC Total Market Total Total Rent Structure LIHTC LIHTC Market Market Market Market Market Market Total Units 36 8 3 3 4 7 15 3 44 35 79 Vacant Units 0 0 0 1 0 0 0 0 0 1 1 Vacancy Rate 0.0% 0.0% 0.0% 33.3% 0.0% 0.0% 0.0% 0.0% 0.0% 2.9% 1.3% *400 Mission Street has one vacant unit that is down for renovations and has not been included; T he T imbers has two units down for renovations that have not been included The vacancy rate among the comparables ranges from zero to 33.0 percent, with an average vacancy rate of 1.3 percent. The two LIHTC comparables are both fully-occupied and keep short waiting lists. The market rate comparables reported an overall vacancy of 2.9 percent; with 433 Payette Triplex being the only comparable that reported a vacancy. 400 Mission Street has one unit down for renovations and management expects the unit to be occupied by early February. Additionally, two of the 17 units at the Timbers are uninhabitable and will be undergoing renovations in the spring. Therefore, these units have been excluded in the vacancy analysis. Taking the market data into account, we expect the Subject to maintain a vacancy rate of five percent or less upon completion. The following tables depict the rental rates at the surveyed LIHTC properties and the Subject’s proposed rental rates. LIHTC Rent Comparison - @40% Property Name 1BR Northwest Passage (Subject) $400 LIHTC Maximum (Net) $444 The Springs $375 Average (excluding Subject) $375 Achievable LIHTC Rent $400 LIHTC Rent Comparison - @45% Property Name 1BR 2BR Northwest Passage (Subject) $450 $550 LIHTC Maximum (Net) $506 $609 The Springs $425 N/Ap Average (excluding Subject) $425 N/AP Achievable LIHTC Rent $450 $550 Novogradac & Company LLP 2BR $500 $534 N/Ap N/Ap $500 3BR $625 $696 N/Ap N/Ap $625 7 Northwest Passage – McCall, Idaho – Market Study LIHTC Rent Comparison - @50% Property Name 2BR Northwest Passage (Subject) $600 LIHTC Maximum (Net) $684 The Springs $555 Valley One Apartments $500 Average (excluding Subject) $528 Achievable LIHTC Rent $600 3BR $675 $783 $635 N/Ap $635 $675 LIHTC Rent Comparison - @55% Property Name 2BR Northwest Passage (Subject) $620 LIHTC Maximum (Net) $759 The Springs $620 Average (excluding Subject) $620 Achievable LIHTC Rent $650 3BR $750 $869 $710 $710 $750 LIHTC Rent Comparison - @60% Property Name 1BR 2BR Northwest Passage (Subject) $575 $700 LIHTC Maximum (Net) $694 $834 The Springs $535 $680 Valley One Apartments N/Ap $550 Average (excluding Subject) $535 $615 Achievable LIHTC Rent $575 $700 3BR $800 $956 $780 $600 $690 $800 As seen in the previous tables, the Subject’s proposed 40, 45, 50, 55, and 60 percent rents are set below the maximum allowable levels. The Springs and Valley One Apartments are achieving rents well below the maximum allowable levels for their respective units. It should be noted that none of the comparable LIHTC properties offer two-bedroom units at 40 or 45 percent AMI nor three-bedroom units at 45 percent AMI. The Subject will be most similar to The Springs in terms of overall condition and design. The Springs was built in 2011 and is fully occupied with a short wait list. Upon completion, the Subject will offer generally superior in-unit and common area amenities, slightly superior condition, and slightly inferior unit sizes. The Springs is achieving rents well below the maximum allowable levels. However, The Springs is operated by a non-profit that deliberately keeps rents low. We spoke with Greg Putnam, the Regional Compliance Manager for The Springs and he stated that the property typically operates with a wait list and that slightly higher rent increases would be possible. However, he stated that maximum allowable rents would likely not be achievable in the market. Given the Subject’s superior position in the market relative to The Springs, we believe that the Subject could achieve rents above The Springs but below the maximum allowable levels. Therefore, we believe that the proposed LIHTC rents are all at their achievable levels. Based on the quality of the surveyed comparable properties and the anticipated quality of the proposed Subject, we conclude that the Subject’s LIHTC rental rates are below the Novogradac & Company LLP 8 Northwest Passage – McCall, Idaho – Market Study achievable market rates for the Subject’s area. The following tables show the proposed LIHTC rent comparisons to market rents. Unit Type 1 BR @ 40% 2 BR @ 40% 1 BR @ 45% 2 BR @ 45% 3 BR @ 45% 2 BR @ 50% 3 BR @ 50% 2 BR @ 55% 3 BR @ 55% 1 BR @ 60% 2 BR @ 60% 3 BR @ 60% 2 BR Market* 3 BR Market* Subject Comparison To Market Rents Surveyed Surveyed Surveyed Subject Min Max Average $400 $350 $450 $422 $500 $444 $700 $568 $450 $350 $450 $422 $550 $444 $700 $568 $625 $470 $825 $603 $600 $444 $700 $568 $675 $470 $825 $603 $620 $444 $700 $568 $750 $470 $825 $603 $575 $350 $450 $422 $700 $444 $700 $568 $800 $470 $825 $603 $800 $444 $700 $568 $975 $470 $825 $603 Achievable Market Rents $650 $775 $650 $775 $900 $775 $900 $775 $900 $650 $775 $900 $800 $975 Subject Rent Advantage 38% 35% 31% 29% 31% 23% 25% 20% 17% 12% 10% 11% 0% 0% *T he Subject's market rate unit units will have larger unit sizes, thus the achievable market rents are above those for the smaller unit sizes. As illustrated in the preceding table, the Subject’s achievable LIHTC rents are below the achievable market rents, giving the Subject a 10 to 38 percent rent advantage over the achievable market rents. The achievable market rents for the Subject’s units are placed moderately above the surveyed maximum market rate rents, as the Subject will offer a superior location, condition, in-unit amenities, and common area amenities upon completion. Additionally, the achievable rent for the Subject’s two and three-bedroom market rate units are above the achievable market rate rent for the LIHTC units because they are larger. Overall, the Subject will be most similar to Aspen Glen and 433 Payette, which are the newest properties, in terms of curb appeal and quality. Compared to Aspen Glen, the Subject will have a superior condition, similar location, superior unit and common amenities, and similar unit size. Compared to 433 Payette Triplex, the Subject will have a superior condition, superior location, superior unit and common amenities, and inferior unit size. Therefore, we believe market rate two and three-bedroom rents moderately above the rents at Aspen Glen and 433 Payette Triplex are achievable. The Timbers and 400 Mission Street 4plex are the only market rate comparables that offer one-bedroom units. Compared to these two properties, the Subject will have a superior condition, similar location, superior unit and common amenities and generally similar to inferior unit sizes. Therefore, we believe that market rate one-bedroom rent well above these comparables is reasonable. Novogradac & Company LLP 9 Northwest Passage – McCall, Idaho – Market Study The following tables depict the Subject’s proposed rents and the market rents at Aspen Glen and 433 Payette Triplex. Unit Type 1BR @ 40% 2BR @ 40% 1BR @45% 2BR @ 45% 3BR @ 45% 2 BR @ 50% 3 BR @ 50% 2 BR @ 55% 3 BR @55% 1 BR @ 60% 2 BR @ 60% 3 BR @ 60% 2 BR Market 3 BR Market Subject Comparison with Aspen Glen Aspen Glen Subject Rent Square Feet Rent $400 605 N/Ap $500 760 $700 $450 605 N/Ap $550 760 $700 $625 1,025 N/Ap $600 760 $700 $675 1,025 N/Ap $620 760 $700 $750 1,025 N/Ap $575 605 N/Ap $700 760 $700 $800 1,025 N/Ap $800 800 $700 $975 1,250 N/Ap Square Feet N/Ap 760 N/Ap 760 N/Ap 760 N/Ap 760 N/Ap N/Ap 760 N/Ap 760 N/Ap Subject Rent Advantage N/Ap 29% N/Ap 21% N/Ap 14% N/Ap 11% N/Ap N/Ap 0% N/Ap -14% N/Ap Unit Type 1BR @ 40% 2BR @ 40% 1BR @45% 2BR @ 45% 3BR @ 45% 2 BR @ 50% 3 BR @ 50% 2 BR @ 55% 3 BR @55% 1 BR @ 60% 2 BR @ 60% 3 BR @ 60% 2 BR Market 3 BR Market Subject Comparison with 433 Payette Triplex 433 Payette Square Subject Rent Square Feet Street Rent Feet $400 605 N/Ap N/Ap $500 760 N/Ap N/Ap $450 605 N/Ap N/Ap $550 760 N/Ap N/Ap $625 1,025 $825 1,400 $600 760 N/Ap N/Ap $675 1,025 $825 1,400 $620 760 N/Ap N/Ap $750 1,025 $825 1,400 $575 605 N/Ap N/Ap $700 760 N/Ap N/Ap $800 1,025 $825 1,400 $800 800 N/Ap N/Ap $975 1,250 $825 1,400 Subject Rent Advantage N/Ap N/Ap N/Ap N/Ap 24% N/Ap 18% N/Ap 9% N/Ap N/Ap 3% N/Ap -18% Novogradac & Company LLP 10 Northwest Passage – McCall, Idaho – Market Study Due to limited market-rate data, we have supplemented our rent analysis with local classified listings. The following table shows two and three-bedroom market rate classified listings within the area. One-bedroom classified listings were unavailable. CLASSIFIED LISTINGS Bedroom/Baths Address City Type Square Feet Rent* 2BR/2BA 129 Stibnite St E McCall Condominium 1,200 $800 2BR/1BA W Lake Street 2BR/2BA 130 Stibnite St E 2BR/2BA East side of Lake Street McCall Single-family home 1,100 $750 Full kitchen, covered parking, Baseboard hating, close proximity to downtown McCall Condominium 1,100 $800 W/d in unit, some furnishings, patio, full kitchen, sky lights McCall Trailer 900 $750 Upgraded single-wide trailer, close to downtown McCall, full kitchen 1,075 $775 Average Subject 60 percent AMI rent 760 $700 Achievable Market Rent 760-800 $775-$800 3BR/1BA N/A 3BR/2BA 110 Thula Street 3BR/1.5BA Comments Fully furnished, w/d in unit, back patio, air condtioning, sky lights McCall N/A $650 Cable included, full kitchen, on site laundry, off street parking McCall Single-family home Apartment 1,800 $900 Wifi included, wood heating, back patio, full kitchen East of Spring Valley Road Donnelly Single-family home 1,900 $1,100 1,850 $883 Average Subject 60 percent AMI rent 1,025 $800 Achievable Market Rent 1,025-1,250 $900-$975 W/d in unit, garage parking, new appliances, hardwood floors * Classifieds include water/sewer/trash in rent Source: craigslist.com and trulia.com Comparable classified listings for two-bedroom units exhibit a range of asking rental rates from $750 to $800 while the three-bedroom units exhibit a range of $600 to $1,100. The rental housing stock in the area is generally older and all of the properties are inferior in quality and amenities when compared to the Subject. However, the average unit sizes at the classifieds are significantly larger than the Subject’s and several of the classifieds offer superior single-family design. Additionally, two classified offer partially/fully furnished units. Therefore, we believe an achievable two and three-bedroom market rents close to the average is reasonable. Further, we have considered the market rents being achieved at two recently constructed properties in the northern Boise metropolitan area (one in Meridian and one in Boise), approximately 95 miles south of McCall in suburban Boise, which is the nearest community with newer comparable market rate product. Selway Apartments is a 171-unit market rate community located at 2552 W. Selway Rapids Lane in Meridian, Idaho. This community opened in 2009 and offers one, two, and three-bedroom garden-style units. Selway Apartments is currently 95.9 percent occupied with a wait list of three to four months on several unit types. The property offers comprehensive unit and community amenities that feature full appliance package, patio/balcony, central air conditioning, walk-in closet, washer and dryer appliances, community room, fitness center, hot tub, on-site management, picnic area, and swimming pool. Retreat at Silvercloud is a 180-unit market rate community located at 8448 W. Limelight Drive in northern Boise, Idaho. This community opened October 2014 and offers one, two, and three-bedroom garden-style units. Retreat at Silvercloud is currently in initial lease-up and is 52 percent occupied, absorbing approximately 24 units per month, a strong rate. The property offers comprehensive unit and community amenities that feature full appliance package, patio/balcony, central air conditioning, walk-in closet, Novogradac & Company LLP 11 Northwest Passage – McCall, Idaho – Market Study washer and dryer appliances, community room, fitness center, hot tub, on-site management, picnic area, playground and swimming pool. Both Selway Apartments and Retreat at Silvercloud will have overall superior locations, superior unit sizes, slightly inferior condition, and similar amenities. Overall, we believe that rents moderately below these two comparables would be achievable and, therefore, the proposed rents appear reasonable. The following tables compare the Subject’s rents with those at Selway Apartments and Retreat at Silvercloud. Unit Type 1BR @ 40% 2BR @ 40% 1BR @45% 2BR @ 45% 3BR @ 45% 2 BR @ 50% 3 BR @ 50% 2 BR @ 55% 3 BR @55% 1 BR @ 60% 2 BR @ 60% 3 BR @ 60% 2 BR Market 3 BR Market Subject Comparison with Selway Apartments Selway Square Subject Rent Square Feet Apartment Rent Feet $400 605 $853 730 $500 760 $929 884 $450 605 $853 730 $550 760 $929 884 $625 1,025 $1,165 1,120 $600 760 $929 884 $675 1,025 $1,165 1,120 $620 760 $929 884 $750 1,025 $1,165 1,120 $575 605 $853 730 $700 760 $929 884 $800 1,025 $1,165 1,120 $800 800 $929 884 $975 1,250 $1,165 1,120 Subject Rent Advantage 53% 46% 47% 41% 46% 35% 42% 33% 36% 33% 25% 31% 14% 16% Unit Type 1BR @ 40% 2BR @ 40% 1BR @45% 2BR @ 45% 3BR @ 45% 2 BR @ 50% 3 BR @ 50% 2 BR @ 55% 3 BR @55% 1 BR @ 60% 2 BR @ 60% 3 BR @ 60% 2 BR Market 3 BR Market Subject Comparison with Retreat at Silvercloud Retreat at Square Subject Rent Square Feet Silvercloud Rent Feet $400 605 $715 650 $500 760 $890 907 $450 605 $715 650 $550 760 $890 907 $625 1,025 $1,095 1,187 $600 760 $890 907 $675 1,025 $1,095 1,187 $620 760 $890 907 $750 1,025 $1,095 1,187 $575 605 $715 650 $700 760 $890 907 $800 1,025 $1,095 1,187 $800 800 $890 907 $975 1,250 $1,095 1,187 Subject Rent Advantage 44% 44% 37% 38% 43% 33% 38% 30% 32% 20% 21% 27% 10% 11% Novogradac & Company LLP 12 Northwest Passage – McCall, Idaho – Market Study The following table illustrates the rent per square footage of the Subject and market rate comparables. UNIT TYPE 1BR @ 40% 2BR @ 40% 1BR @45% 2BR @ 45% 3BR @ 45% 2 BR @ 50% 3 BR @ 50% 2 BR @ 55% 3 BR @55% 1 BR @ 60% 2 BR @ 60% 3 BR @ 60% 2 BR Market 3 BR Market Min $350 $444 $350 $444 $470 $444 $470 $444 $470 $350 $444 $470 $444 $470 MARKET RENTS* Rent Rent PSF Max Min Max $450 $0.39 $1.17 $700 $0.59 $1.05 $450 $0.39 $1.17 $700 $0.59 $1.05 $825 $0.51 $1.04 $700 $0.59 $1.05 $825 $0.51 $1.04 $700 $0.59 $1.05 $825 $0.51 $1.04 $450 $0.39 $1.17 $700 $0.59 $1.05 $825 $0.51 $1.04 $700 $0.59 $1.05 $825 $0.51 $1.04 PRO FORMA RENTS Rent $400 $500 $450 $550 $625 $600 $675 $620 $750 $575 $700 $800 $800 $975 SF 605 760 605 760 1,025 760 1,025 760 1,025 605 760 1,025 800 1,225 Rent PSF $0.66 $0.66 $0.74 $0.72 $0.61 $0.79 $0.66 $0.82 $0.73 $0.95 $0.92 $0.78 $1.00 $0.80 *Including classifieds and supplemental comparables The Subject’s achievable LIHTC rents are generally within the middle of the range of the market rents on a rent per square foot basis and appear reasonable. The following table details rent growth at the comparable properties over the past twelve months. RENT GROWTH Comparable Property The Springs Valley One Apartments 400 Mission Street 4-plex 433 Payette Triplex Aspen Glen Pine Creek Apartments The Timbers Thula Street Tri-plex Rent Structure LIHTC LIHTC Market Market Market Market Market Market Rent Growth Increased 2 to 5% Increased 26 to 30% None None None None None None As seen in the previous table, the two LIHTC comparable properties reported rental rate increases, ranging from two to 30 percent. The Springs reported slight rental increases ranging from two to five percent. Valley One Apartments changed management in December 2014 and reported significant rent increases ranging from 26 to 30 percent. However, both properties are achieving rents well below the maximum allowable levels. The Subject’s proposed 40, 45, 50, 55, and 60 percent AMI rents are below the maximum allowable levels and rent increases would not be dependent on AMI growth. Novogradac & Company LLP 13 Northwest Passage – McCall, Idaho – Market Study Population and households in the PMA and SMA increased at faster rates than the nation from 2000 to 2014. It is projected that population and households in the PMA will remain generally stable through 2019. Despite the projected stable trends in the PMA, market data such as the full occupancy and wait lists at the LIHTC comparables as well as the generally low capture rates indicate that there is likely latent demand for affordable housing. Further, the Subject will be new construction and in excellent condition upon completion and will be more desirable than the predominately fair to average condition rental housing stock in the PMA. Through 2019, the median household income in the PMA is expected to grow at a rate less than that of the SMA and nation. Additionally, approximately 49.8 percent of renter households within the PMA have incomes of less than $40,000 as of 2014. This data illustrates a need for additional affordable housing within the PMA and the SMA. The PMA’s economy is highly dependent on the tourism industry as a significant percentage of the workforce is employed in the accommodation/food service and retail trade sectors. The PMA is likely to be impacted to a larger degree in economic downturns such as the national recession when people have less discretionary income for vacationing. The SMA economy still lags behind the nation. However, with recent announcements of expansions in area tourism and mining jobs and a generally increasing employment trend over the past three years, the SMA’s economy is showing signs of recovery. We expect McCall and the SMA will continue to experience recovery from the economic downturn. The demand analysis illustrates demand for the Subject based on capture rates of incomeeligible renter households. When viewing total income-eligible renter households the calculation illustrates the following overall capture rates: AMI 40% 45% 50% 55% 60% Unrestricted CAPTURE RATE SUMMARY 1BR 2BR 3BR 2.40% 2.14% N/Ap 1.10% 0.98% 2.35% N/Ap 4.29% 2.58% N/Ap 6.84% 4.71% 2.24% 5.32% 3.20% N/Ap 0.91% 2.18% Overall 2.26% 1.27% 3.79% 6.22% 3.74% 1.28% The capture rates are considered reasonable taking into account the other indications of demand including full occupancy and wait lists at comparable LIHTC properties. Therefore, we believe there is sufficient demand for units at the Subject as proposed. Additionally, we conducted an annual demand analysis, which is based on new income-eligible renter households moving into the area (in the Subject’s first year of operation only) and those income-eligible renter households that are rent-overburdened (paying over 35 percent of income to living costs). This annual capture rate is 14.3 percent for the first year of operation. This suggests that the Subject will need to capture only a portion of the available demand in its first year of operation in order to stabilize. Novogradac & Company LLP 14 FACTUAL DESCRIPTION Northwest Passage – McCall, Idaho – Market Study DESCRIPTION OF THE SITE The location of a multifamily property can have a substantial negative or positive impact upon the performance, safety and appeal of the project. The site description will discuss the physical features of the site, as well as layout, access issues, and traffic flow. Subject Site Shape: The site is irregular. Frontage: The site has frontage along 1st Street and Railroad Avenue. Topography: The site is generally level. Utilities: All utilities are provided to the site. Visibility/Views: The Subject will have excellent visibility from 1st Street and Railroad Avenue. Views from the Subject consist of government buildings and commercial buildings in average condition to the north and Alpine Village mix-use condominium/retail development in excellent Novogradac & Company LLP 16 Northwest Passage – McCall, Idaho – Market Study condition to the east. South and west of the Subject is forested land and single-family homes in average condition. Access and Traffic Flow: Layout and Curb Appeal: The Subject will be accessible via 1st Street to the west and Park Street to the north. According to the sponsor, there will be a shared access agreement between the Subject and the civic buildings to the north. Given the light traffic in the area, we do not anticipate any significant adverse effect from the shared access. Both 1st Street and Park Street are lightly traveled collector streets that run north/south and east/west, respectively, and provide access throughout McCall. Park Street provides access to N. 3rd Street, or Idaho State Highway 55, approximately 0.1 miles to the northeast of the site. Idaho State Highway 55 runs north/south from Meridian to New Meadows. Overall, access and traffic flow at the Subject is considered good. Based on a review of the site plan, the Subject will have functional layout and excellent curb appeal. The site plan is provided in the Addendum of this report. Environmental, Soil and Subsoil Conditions and Drainage: We were not provided with an environmental study. During our site inspection, no environmental issues were uncovered; however, no specific tests were performed by Novogradac, as we are not experts in this field. We were not provided with soil surveys, but the surrounding improvements suggest that the soils are adequate for the proposed development. Appears adequate; however, no specific tests were performed. Flood Plain: Novogradac & Company LLP According to www.floodinsights.com Community Panel Number 160175 0002A, dated April 17, 1989, the Subject site is located within Zone X, which is outside both the 100-year and 500-year floodplain. The flood map is presented below. 17 Northwest Passage – McCall, Idaho – Market Study Detrimental Influences: We did not observe any detrimental influences in the Subject’s neighborhood. Conclusion: The Subject is physically capable of supporting a variety of legally permissible uses and is considered a desirable site. Novogradac & Company LLP 18 Northwest Passage – McCall, Idaho – Market Study DESCRIPTION OF THE IMPROVEMENTS Property Improvements: Northwest Passage will be a newly constructed, elevatorserviced three-story apartment building that will consist of 36 low-rise units, which will include five one-bedroom units, 23 two-bedroom units, and eight three-bedroom units. The Subject’s units will be restricted to households earning 40, 45, 50, 55, and 60 percent of AMI along with market rate units. Additionally, the Subject will include four ADA accessible units. Date of Construction: Construction of the Subject is planned to commence in April 2016 and completion is projected to be in March 2017. Unit Mix: The following table details the proposed unit mix and unit sizes for the Subject. UNIT MIX AND SQUARE FOOTAGE Number of Unit Size Gross Unit Type Units (SF) Area 1BR/1BA 5 605 3,025 2BR/1BA 21 760 15,960 2BR/1BA 2 800 1,600 3BR/2BA 6 1,025 6,150 3BR/2BA 2 1,250 2,500 Total 36 4,440 29,235 NLA: The Subject property will have approximately 29,235 square feet of residential space. Number of Stories: The Subject will consist of one three-story residential building. Community Amenities: Community amenities at the Subject will include a computer lab, clubhouse/community room, elevators, exercise facility, on-site management, non-shelter services, playground, and service coordination. Additionally, there will be activities coordinated through several local organizations, including the Yellow Couch Teen Center (teen gatherings, afterschool activities) and McCall Senior Center (social activities, twice a week dinners, and meals on wheels program). Unit Amenities: Unit amenities will include balconies/patios, blinds, carpeting, coat closets, dishwashers, exterior storage, garbage disposal celling fans, microwaves, an oven, a refrigerator, walk-in closets, and in-unit washers/dryers. Novogradac & Company LLP 19 Northwest Passage – McCall, Idaho – Market Study Unit Layout: Based on our review of floor plans, the units at the Subject will be functional and market-oriented. Floor plans are provided in the Addendum of this report. Parking: The Subject will offer 54 free off-street parking spaces and 18 carports free of charge. This equates to a parking ratio of 2.0 spaces per unit. We believe that the proposed parking will be adequate. Utility Structure: Tenants will be responsible for electricity for heating, cooking, lights, and a small service fee. Cold water, sewer, and trash will be included in the rental rates. The following table illustrates the utility allowance calculations. UTILITY ALLOWANCES Utility Utilities-Electricity Utilities-Air Conditioning Utilities-Electric Heating Utilities-Electric Cooking Utilities-Electric Heated Hot Water Utilities-Water and Sewer Services Utilities-Trash Collection Total Utility Allowance Total Tenant Paid Utilities Developer's Utility Allowance Estimate Paid By Tenant None Tenant Tenant Tenant Landlord Landlord One-bedroom $15.00 $0.00 $43.00 $6.00 $20.00 $80.00 Two-bedroom $19.00 $0.00 $54.00 $8.00 $25.00 $82.00 Three-bedroom $22.00 $0.00 $68.00 $9.00 $31.00 $85.00 $16.00 $180.00 $84.00 $56.00 $16.00 $204.00 $106.00 $66.00 $16.00 $231.00 $130.00 $83.00 Source: Southern Idaho Cooperative Housing Authority, Effective January 1, 2015 The previous utility allowance was obtained from the Southwestern Idaho Cooperative Housing and effective January 1, 2015. The Subject’s sponsor has provided Subjectspecific utility allowances based on an energy audit that differ from the local housing authority’s provided allowance. We believe that the sponsor’s utility allowance estimates are reasonable due to the Subject’s new construction and energy efficient features. However, we have used the local housing authority’s provided utility allowances in our rent analysis. Americans With Disabilities Act of 1990: As new construction, we assume the property will not have any violations of the Americans with Disabilities Act of 1990. Quality of Construction Condition and Deferred Maintenance: We assume the Subject will be constructed in a timely manner consistent with the information provided, using average-quality materials. As a newly constructed property, the Subject will Novogradac & Company LLP 20 Northwest Passage – McCall, Idaho – Market Study not suffer from deferred maintenance. Functional Utility: Based on our review of floor and site plans, the units at the Subject will be functional and market-oriented. Site and floor plans are provided in the Addendum of this report. Conclusion: The Subject will be a newly constructed property offering a comprehensive in-unit and community amenities package. We believe that the Subject will be of good quality and that its units will be functional. Novogradac & Company LLP 21 REGIONAL AND LOCAL AREA ANALYSIS Northwest Passage – McCall, Idaho – Market Study REGIONAL MAP Overview The Subject is located in McCall, Valley County, Idaho. McCall has a population of 2,991 as of the 2010 U.S. census, making it the largest city in Valley County. Located in east-central Idaho on Lake Payette, the city covers 10.09 square miles. Novogradac & Company LLP 23 Northwest Passage – McCall, Idaho – Market Study Location and Proximity to Metropolitan Areas McCall and Valley County are located in east-central Idaho. The following table illustrates distances to surrounding metropolitan areas. PROXIMITY TO MAJOR CITIES Location Distance Boise, ID 105 miles Spokane, WA 260 miles Missoula, MT 260 miles Idaho Falls, ID 368 miles Portland, OR 457 miles Transportation Highway: Idaho State Highway 55 is located 0.1 miles northeast of the Subject site. Idaho State Highway 55 provides access to Meridian to the south New Meadows to the northwest. Idaho State Highway 55 intersects with Interstate 84 approximately 100 miles to the south in Meridian, which travels northwest to Portland and east to Boise and Twin Falls, Idaho. After crossing into Utah, Interstate 84 becomes Interstate 15, which travels south to Salt Lake City. Air: McCall Municipal Airport is located 1.7 miles south of the Subject site. The airport is a public use airport that does not provide commercial service. The airport serves as a base to the U.S. Forest Service Smokejumper Association, an organization that fights wildfires from the air. Healthcare St. Luke’s McCall Medical Center, the only hospital in McCall, is located 0.6 miles west of the Subject. This 15-bed hospital provides general medical and surgical care services to the communities of McCall, New Meadows, Council Riggins, Lake Fork, Donnelly, and Cascade. Higher Education McCall is home to McCall College, a small non-profit college that offers courses in computer science, recreational leadership, business, natural sciences, and art classes. McCall College had an enrollment of 32 students as of Fall 2014. As will be discussed later in the Economic Analysis section, there are plans to redevelop the University of Idaho McCall Field Campus, which is utilized for summer field programs. Novogradac & Company LLP 24 Northwest Passage – McCall, Idaho – Market Study ECONOMIC ANALYSIS McCall is a town located on Lake Payette in east-central Idaho. McCall is a popular tourist destination in the summer and winter months due to its proximity to outdoor attractions. In the summer months, people vacation to McCall for water activities centered on Lake Payette, a popular destination for boating, fishing, canoeing, and hiking, while during the winter activates are centered around skiing and snow sports. McCall is within close proximity to two ski resorts, Brundage Mountain Resort and Tamarack Resort, approximately 7.5 miles to the northwest and 15 miles to the south of the Subject, respectively. In our interviews with local property managers, leasing agents, and the City Planner, it was stated that McCall is generally a second home community. In an article titled “Mud on the Boots Town is Rising as a Resort” in the New York Times, it was stated that nearly 60 percent of the housing units in McCall are second homes. Additionally, it was noted the local economy is dependent on tourism and is susceptible to downturns in the economy when people generally do not have as much discretionary income. The historical number of tourists to the region was unavailable. Major Employers The following table details the largest employers in Valley County provided by Jim Thackeray, Manager of the Idaho Department of Labor’s Office in McCall. The number of people employed by each company/agency was unavailable. MAJOR EMPLOYERS Valley County, ID Employer Industry U.S. Forest Service Forestry Valley County Government Paul's Market Grocery Chain McCall-Donnelly School District Education Brundage Resort Leisure/hospitality Tamarack Resort Leisure/hospitality Ridley's Market Grocery Chain St. Lukes McCall Medical Center Health care Shore Lodge Leisure/hospitality State of Idaho (Numerous agencies) Government Source: Jim T hackeray, Idaho Departmentof Labor, McCall Office; January 28, 2015 The largest employers in Valley County are in leisure/hospitality, government, retail, and education sectors. Many of the major employers including Brundage Mountain Resort, Tamarack Resort, and Shore Lodge are centered around the tourism industry, the main driver of the local economy. Additionally, Mr. Thackeray mentioned Valley County and the State of Idaho have numerous offices for different agencies located McCall and New Meadows. Novogradac & Company LLP 25 Northwest Passage – McCall, Idaho – Market Study Expansions/Contractions We interviewed Michelle Groenevelt, Community Development Director in McCall, regarding recent and future job expansions. Ms. Groenevelt said the city of McCall is a tourist town and is generally dependent on the resorts in the area and activities surrounding Lake Payette, a popular recreation destination. Ms. Groenvelt, along with additional research, noted the following expansions in the Subject’s area. Tamarack Resort, a popular ski destination located in Donnelly, will be open for seven days a week for the 2104-2015 ski season. According to an article written in November 2014 titled “New Owner Takes Over Tamarack Resort” published in First Tracks, an online ski magazine, the resort was only open four days a week since 2010 due to financial constraints. The resort recently hired 40 additional employees to operate seven days a week. According to the article, “A total of $2.6 million has been invested for the coming season including refinements to the snowmaking system, an upgrade of the ski rental fleet, new snowcats and snowmobiles, terrain park improvements and expansion, and ski slope brush and undergrowth clearing enabled by a grant from the National Ski Area Association.” In an article written in December 2014 titled “Skiing Bounces Back” by Roger Phillips of the Washington Times, both Tamarack Resort and Brundage Mountain Resort are making significant upgrades in order to improve business. Brundage Mountain is updating their ski lodge and adding more runs to their existing park. Additionally, the park plans to add another lift in the near future. It was unknown how many jobs this would bring to the region. Midas Gold, has made preliminary plans for a large gold mine in Stibnite, approximately 37 miles east of the Subject. The plan is currently in environmental review and could bring a significant number of jobs to the region if given approval. There are plans to redevelop the University of Idaho McCall Field Campus, which is located near Ponderosa State Park and utilized for summer field programs. The redevelopment may take 10 to 15 years and the extent of facilities and programs to be offered is yet to be determined. According to the Idaho Department of Labor WARN notifications, there have been no significant layoffs in the Subject’s PMA over the past three years. Further, local officials were not able to provide any details on recent closures or layoffs, only stating that employment is susceptible to fluctuations due seasonal nature of jobs in the area. Nonetheless, economic trends indicate recent declines in total employment in the Subject’s PMA. Novogradac & Company LLP 26 Northwest Passage – McCall, Idaho – Market Study Employment and Unemployment Trends The following table details employment and unemployment trends for the Secondary Market Area (SMA), which is defined as Valley and Adams Counties, from 2004 to November 2014. EMPLOYMENT & UNEMPLOYMENT TRENDS (NOT SEASONALLY ADJUSTED) Adams County and Valley County, Idaho USA Year Total Employment % Change Unemployment Rate Change 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD Average* Nov-2013 Nov-2014 5,403 6,156 6,743 6,663 6,099 5,847 5,568 5,394 5,613 5,671 5,585 5,455 5,297 13.9% 9.5% -1.2% -8.5% -4.1% -4.8% -3.1% 4.1% 1.0% -1.5% -2.9% 7.5% 5.4% 4.4% 4.5% 9.0% 13.0% 16.0% 15.4% 12.6% 11.4% 8.3% 10.6% 6.5% -2.1% -1.0% 0.0% 4.6% 4.0% 3.0% -0.6% -2.8% -1.2% -4.3% -4.0% Total Employment 139,252,000 141,730,000 144,427,000 146,047,000 145,362,000 139,877,000 139,064,000 139,869,000 142,469,000 143,929,000 146,224,909 144,775,000 147,666,000 % Change Unemployment Rate Change 1.8% 1.9% 1.1% -0.5% -3.8% -0.6% 0.6% 1.9% 1.0% 1.6% 2.0% 5.5% 5.1% 4.6% 4.6% 5.8% 9.3% 9.6% 8.9% 8.1% 7.4% 6.2% 6.6% 5.5% -0.4% -0.5% 0.0% 1.2% 3.5% 0.3% -0.7% -0.8% -0.7% -1.9% -1.1% Source: U.S. Bureau of Labor Statistics January 2015 *2014 data is through Nov Novogradac & Company LLP 27 Northwest Passage – McCall, Idaho – Market Study As seen in the previous table, total employment within the SMA declined between 2007 and 2011, as a result of the national recession. In 2012 and 2013, the total employment increased slightly, but declined as of 2014 year-to-date. For the 12-month period ending November 2014, total employment has decreased by 2.9 percent, while the national total employment increased 2.0 percent. Unemployment in the SMA has historically been higher than the national unemployment rate and currently stands 210 basis points higher than the national level. Unemployment in the SMA reached its peak in 2010 but has declined every year since. November 2014 year-over-year, the unemployment rate has declined by 410 basis points in the SMA, compared to a 110 basis point decline nationally. However, this recent decline in unemployment is likely due in part to people exiting the workforce, as total employment has decreased over the same time period. In our interview with Michelle Groenevelt, Community Development Director for the city of McCall, it was mentioned that the local economy is seasonal, as the town is centered on tourism due to its location on Payette Lake and close proximity of two ski resorts in the area, Tamarak Resort and Brundage Mountain Resort. Therefore, total employment and unemployment data can often fluctuate in the off-seasons, which they believe accounts for the slight decline in 2014 employment, although there had been no major layoffs announced. It is also worth noting that due to the low population in the SMA, changes in total employment when compared to the nation will be exaggerated. Although the SMA’s economy is showing signs of improvement, total employment recently declined slightly and is still below pre-recession levels indicating that the SMA is still lagging behind the nation in terms of recovery. Nonetheless, recent announcements of expansions in area tourism and mining jobs are positive indicators. Novogradac & Company LLP 28 Northwest Passage – McCall, Idaho – Market Study Employment by Industry The following table illustrates employment by industry for the PMA. 2014 EMPLOYMENT BY INDUSTRY PMA Industry Accommodation/Food Services Construction Retail Trade Agric/Forestry/Fishing/Hunting Health Care/Social Assistance Educational Services Manufacturing Prof/Scientific/Tech Services Arts/Entertainment/Recreation Information Real Estate/Rental/Leasing Other Services (excl Publ Adm) Wholesale Trade Admin/Support/Waste Mgmt Srvcs Public Administration Transportation/Warehousing Mining Finance/Insurance Utilities Mgmt of Companies/Enterprises Total Employment Number Employed 559 521 448 412 388 310 238 192 166 151 126 103 95 91 77 72 63 46 37 0 4,095 Percent Employed 13.7% 12.7% 10.9% 10.1% 9.5% 7.6% 5.8% 4.7% 4.1% 3.7% 3.1% 2.5% 2.3% 2.2% 1.9% 1.8% 1.5% 1.1% 0.9% 0.0% 100.0% USA Number Percent Employed Employed 10,849,114 7.6% 8,291,595 5.8% 16,592,605 11.6% 1,800,354 1.3% 20,080,547 14.0% 12,979,314 9.1% 15,162,651 10.6% 9,808,289 6.8% 3,151,821 2.2% 2,577,845 1.8% 2,627,562 1.8% 7,850,739 5.5% 3,628,118 2.5% 6,316,579 4.4% 6,713,073 4.7% 5,898,791 4.1% 868,282 0.6% 6,884,133 4.8% 1,107,105 0.8% 97,762 0.1% 143,286,279 100.0% Source: ESRI Demographics 2014, Novogradac & Company LLP, January 2015 Novogradac & Company LLP 29 Northwest Passage – McCall, Idaho – Market Study The PMA has a relatively diverse employment base, with a large portion of the workforce employed in the accommodation/food service, construction, retail trade, and agricultural/forestry/fishing/hunting sectors. Combined, these four sectors comprise over 47.4 percent of the employment base within the PMA. Accommodation/food service, construction, and agriculture/forestry/fishing/hunting, are represented at a higher rate within the PMA than the nation. Retail trade, health care/social assistance, and educational services, exhibit a higher percentage of workers in the nation than the PMA. Conclusion The PMA’s economy is highly dependent on the tourism industry as a significant percentage of the workforce is employed in the accommodation/food service and retail trade sectors. The PMA is likely to be impacted to a larger degree in economic downturns such as the national recession when people have less discretionary income for vacationing. The SMA economy still lags behind the nation. However, with recent announcements of expansions in area tourism and mining jobs and a generally increasing employment trend over the past three years, the SMA’s economy is showing signs of recovery. We expect McCall and the SMA will continue to experience recovery from the economic downturn. Novogradac & Company LLP 30 Northwest Passage – McCall, Idaho – Market Study NEIGHBORHOOD DESCRIPTION AND ANALYSIS Introduction The neighborhood surrounding an apartment property often impacts the property's status, image, class, and style of operation, and sometimes its ability to attract and properly serve a particular market segment. This section investigates the property's neighborhood and evaluates any pertinent locational factors that could affect its rent, its occupancy, and its overall profitability. Predominant Land Uses The Subject site is located in a predominately established neighborhood within the downtown area of McCall. Predominant land uses in the Subject neighborhood include a mix of commercial retail, office, and single-family housing. Land uses immediately adjacent to the Subject site include civic offices in generally good condition, including the city hall, police department, department of health, and library, to the north, The Alpine Village mixed-use development in excellent condition to the east, and a mix of forested land and single-family homes in average condition to the south and west. Alpine Village was built in 2009 and consists of 27 one, two, three and four-bedroom condominiums as well as 18,000 square feet of ground floor commercial space. The condominiums range in pricing from $200,000 to $675,000 and all but two have sold. None are being leased to long-term tenants. Areas farther north and east consists of predominately retail and office improvements in average to good condition. Additionally, Payette Lake is approximately two blocks to the north. Single-family Novogradac & Company LLP 31 Northwest Passage – McCall, Idaho – Market Study housing in generally average condition extends farther to the south and west. Valley One Apartments, a LIHTC comparable, is located 0.1 miles to the south. The property was built in 1995 and is fully occupied with a three-household wait list. The retail improvements in the neighborhood include a pharmacy, several restaurants, banks, a grocery, a hotel and several other smaller retailers. The retail improvements appear to be better than 90 percent occupied overall. Uses in the Subject neighborhood generally range in age from approximately five to 80 years old. Subject site Subject site – existing senior center Subject site View to north toward government buildings Novogradac & Company LLP 32 Northwest Passage – McCall, Idaho – Market Study View to east toward Alpine Village (condominiums) View to south toward forested land and single-family homes View west toward forested land and single-family homes View south along 1st Street View north along 1st Street View west along Idaho Street Novogradac & Company LLP 33 Northwest Passage – McCall, Idaho – Market Study Health Department building adjacent to north Police Department adjacent to north City Hall to north Library to northeast Retail to north Retail to north Novogradac & Company LLP 34 Northwest Passage – McCall, Idaho – Market Study Retail to north Grocery store to northwest Typical single-family to west Typical single-family to west High school to west Walking trail adjacent to south Novogradac & Company LLP 35 Northwest Passage – McCall, Idaho – Market Study Alpine Village (condominiums and retail) to east Retail to east Retail/offices to east Typical single-family home to south Typical single-family home to south Valley One Apartments (LIHTC) to south Novogradac & Company LLP 36 Northwest Passage – McCall, Idaho – Market Study Compatibility to the Area and Age/Condition of Surrounding Properties The Subject will be compatible with the existing surroundings. The Subject’s neighborhood is comprised of a mix of commercial retail, office, and single-family housing. The adjacent improvements are in generally average to excellent condition. Single-family housing in the neighborhood is in generally average to good condition. Additionally, the retail improvements in the neighborhood are in good condition and appear to be better than 90 percent occupied overall. Proximity to Local Services The following table illustrates the Subject’s proximity to necessary services. Map numbers correspond with the Locational Amenities Map, presented below. Novogradac & Company LLP 37 Northwest Passage – McCall, Idaho – Market Study LOCATIONAL AMENITIES # Service Amenity Distance from Subject 1 Public Transportation Bus Stop Adjacent 2 Library McCall Public Library 0.1 miles 3 Police Department McCall Police Department 0.1 miles 4 High School McCall-Donnelly High School 0.1 miles 5 Bank U.S. Bank 0.2 miles 6 Grocery Store Paul's Market 0.2 miles 7 Pharmacy McCall Drug 0.3 miles 8 Gas/ Convenient Store Lakeview Chevron 0.3 miles 9 Post Office U.S. Post Office 0.4 miles 10 Hospital St. Luke's McCall Medical Center 0.5 miles 11 Fire Department McCall Fire Department 0.9 miles 12 Middle School Payette Lakes Middle Schoole 1.2 miles 13 Elementary School Barbara Morgan Elementary School 1.5 miles Public Transportation Treasure Valley Transit provides regularly scheduled bus service throughout the city of McCall. The nearest bus stop to the Subject is located adjacent along First Street. Service is seven days a week with limited service on weekends. Local bus service is free to all. The Subject’s access to public transportation is considered to be good. Conclusion The Subject’s neighborhood appears to be a good location in a well-established neighborhood in downtown McCall. The Subject site is located in close proximity to a variety of neighborhood services and amenities. All locational amenities are located within 1.5 miles of the Subject site. The Subject will be a compatible use and we believe will be an appropriate addition to the market. Novogradac & Company LLP 38 DEMOGRAPHIC ANALYSIS Northwest Passage – McCall, Idaho – Market Study DEMOGRAPHIC ANALYSIS The following sections will provide an analysis of the demographic characteristics within the market area. Data such as population, households and growth patterns will be studied, to determine if the Primary Market Area (PMA) and the Secondary Market Area (SMA) are areas of growth or contraction. PRIMARY MARKET AREA (PMA) AND SECONDARY MARKET AREA (SMA) The PMA was defined based on interviews with local property managers within the area. We spoke with Cindi Jones from McCall Real Estate and Michelle Groenevelt, Community Development Director in McCall, about the Subject’s general market area. Both stated many people commute from nearby towns such as New Meadows and Donnelly to work at the resorts, restaurants, and hotels in the area. Therefore, the boundaries of the PMA represent approximately a 20 minute drive time from the Subject. Additionally, the PMA boundaries and overall market health assessment are based upon analyses of physical boundaries, which include traffic and commuting patterns within the area, surveys of existing market rate and affordable apartment projects undertaken by Novogradac & Company LLP, and insights gained from resident managers, area planning staff, and others familiar with the multifamily market. McCall is not part of a metropolitan area. Therefore, we have defined the SMA as Valley and Adams County. We have estimated that 15 percent of tenants will come from outside the PMA boundaries. Novogradac & Company LLP 40 Northwest Passage – McCall, Idaho – Market Study PMA Map Novogradac & Company LLP 41 Northwest Passage – McCall, Idaho – Market Study SMA Map Novogradac & Company LLP 42 Northwest Passage – McCall, Idaho – Market Study Population and Households The following tables illustrate population and household trends in the PMA, SMA, and nation from 2000 through 2019. POPULATION Year 2000 2014 2019 Number 5,696 7,729 7,689 PMA Annual Change 2.5% -0.1% Number 11,127 13,891 13,803 SMA Annual Change 1.7% -0.1% Number 281,421,906 314,467,933 325,843,774 USA Annual Change 0.8% 0.7% Number 105,991,193 118,979,182 123,464,895 USA Annual Change 0.9% 0.8% Source: ESRI Demographics 2014, Novogradac & Company LLP, January 2015 HOUSEHOLDS Year 2000 2014 2019 Number 2,349 3,427 3,437 PMA Annual Change 3.2% 0.1% Number 4,632 6,239 6,254 SMA Annual Change 2.4% 0.0% Source: ESRI Demographics 2014, Novogradac & Company LLP, January 2015 Both the population and number of households in the PMA increased from 2000 to 2014, at a faster rate than both the SMA and nation over the same time period. Through 2019, the population and households in the PMA and SMA are projected to remain generally steady. National population and households are projected to increase slightly through 2019, at a faster rate than both the PMA and SMA. Despite the projected stable trends in the PMA, market data such as the full occupancy and wait lists at the LIHTC comparables as well as the generally low capture rates indicate that there is likely latent demand for affordable housing. Further, the Subject will be new construction and in excellent condition upon completion and will be more desirable than the predominately fair to average condition rental housing stock in the PMA. The map on the following page depicts the population trends in the state. Novogradac & Company LLP 43 Northwest Passage – McCall, Idaho – Market Study Valley County Average Household Size The following table is a summary of the average household size in the PMA, SMA, and nation from 2000 to 2019. AVERAGE HOUSEHOLD SIZE Year 2000 2014 2019 Number 2.40 2.24 2.22 PMA Annual Change -0.5% -0.2% Number 2.38 2.21 2.19 SMA Annual Change -0.5% -0.2% USA Number 2.58 2.58 2.57 Annual Change 0.0% 0.0% Source: ESRI Demographics 2014, Novogradac & Company LLP, January 2015 The average household size in the PMA is similar to that of the SMA, but slightly smaller than the national average. Through 2019, the average household size of the PMA is projected to remain generally stable. Novogradac & Company LLP 44 Northwest Passage – McCall, Idaho – Market Study Median Household Income The table below illustrates the median household income in the SMA, PMA, and nation from 2000 through 2019. MEDIAN HOUSEHOLD INCOME Year 2000 2014 2019 Amount $37,075 $51,813 $56,316 PMA Annual Change 2.8% 1.7% Amount $34,291 $46,193 $52,395 SMA Annual Change 2.4% 2.7% USA Amount $42,164 $51,314 $59,580 Annual Change 1.5% 3.2% Source: ESRI Demographics 2014, Novogradac & Company LLP, January 2015 The median household income in the PMA is above the SMA and similar to the national average. Through 2019, the median household income in the PMA is expected to grow at a rate less than that of the SMA and nation. The following map depicts the median household income by county in the state. Valley County Novogradac & Company LLP 45 Northwest Passage – McCall, Idaho – Market Study For Section 42 LIHTC rent determination purposes, the Area Median Income (AMI) is used. The following chart illustrates the AMI level for a four-person household in Valley County. Source: Novogradac & Company LLP (8/2014) The previous chart illustrates the area median gross income (AMGI) of a four-person household in the Valley County, ID between 2000 and 2014. On average, from 2000 to 2014 the AMGI has increased by 4.3 percentage points per annum. As of 2014, the AMI increased by 6.6 percent. Nationally, 43 percent of the counties saw a decrease in the 2014 AMI level. The Subject’s proposed 40, 45, 50, 55, and 60 percent AMI rents are below the maximum allowable levels and thus, rent increases will not be depend on changes on the AMGI. Novogradac & Company LLP 46 Northwest Passage – McCall, Idaho – Market Study Household Income The following tables illustrate household income levels in the PMA, SMA, and nation. HOUSEHOLD INCOME PMA PMA Income Cohort $0-9,999 $10,000-19,999 $20,000-29,999 $30,000-39,999 $40,000-49,999 $50,000-59,999 $60,000-74,999 $75,000-99,999 $100,000-124,999 $125,000-149,999 $150,000-199,999 $200,000+ Total 2014 2019 Percentage 7.3% 9.7% 14.0% 16.1% 11.8% 7.7% 7.0% 12.3% 7.8% 2.1% 2.4% 1.7% 100.0% Number 251 333 479 550 404 266 240 422 268 73 83 58 3,427 Number 284 374 561 507 398 261 242 406 215 64 69 56 3,437 Percentage 8.3% 10.9% 16.3% 14.8% 11.6% 7.6% 7.1% 11.8% 6.2% 1.9% 2.0% 1.6% 100.0% Annual Change 2014 to 2019 Percentage Number 7 2.6% 8 2.5% 16 3.4% -9 -1.6% -1 -0.3% -1 -0.4% 1 0.2% -3 -0.8% -11 -4.0% -2 -2.6% -3 -3.3% 0 -0.6% Source: Ribbon Demographics 2014, Novogradac & Company LLP, January 2015 HOUSEHOLD INCOME MSA SMA Income Cohort $0-9,999 $10,000-19,999 $20,000-29,999 $30,000-39,999 $40,000-49,999 $50,000-59,999 $60,000-74,999 $75,000-99,999 $100,000-124,999 $125,000-149,999 $150,000-199,999 $200,000+ Total 2014 Number 532 786 906 951 725 440 519 681 407 98 109 85 6,239 2019 Percentage 8.5% 12.6% 14.5% 15.3% 11.6% 7.1% 8.3% 10.9% 6.5% 1.6% 1.7% 1.4% 100.0% Number 603 884 1,048 871 694 430 513 644 315 85 90 78 6,254 Percentage 9.6% 14.1% 16.8% 13.9% 11.1% 6.9% 8.2% 10.3% 5.0% 1.4% 1.4% 1.2% 100.0% Annual Change 2014 to 2019 Percentage Number 14 2.7% 20 2.5% 28 3.1% -16 -1.7% -6 -0.9% -2 -0.4% -1 -0.2% -8 -1.1% -18 -4.5% -3 -2.7% -4 -3.5% -1 -1.6% Source: Ribbon Demographics 2014, Novogradac & Company LLP, January 2015 Both the SMA and the PMA feature significant portions of the population with household incomes lower than the AMI. In the PMA, more than 47 percent of households have incomes below $40,000 per year compared to over 50 percent of SMA households. The income-eligible range for the Subject’s LIHTC units is between $17,143 and $43,200. As the Demand Analysis presented later in this report will indicate, there is demand in the PMA for the Subject. Novogradac & Company LLP 47 Northwest Passage – McCall, Idaho – Market Study Renter Household Income Distribution The following tables illustrate the renter household income distribution in 2014 and 2019 in the PMA and SMA. RENTER HOUSEHOLD INCOME PMA PMA Income Cohort $0-9,999 $10,000-19,999 $20,000-29,999 $30,000-39,999 $40,000-49,999 $50,000-59,999 $60,000-74,999 $75,000-99,999 $100,000-124,999 $125,000-149,999 $150,000-199,999 $200,000+ Total 2014 Number 64 84 184 147 170 120 63 37 60 13 17 6 964 2019 Percentage 6.7% 8.7% 19.1% 15.3% 17.6% 12.4% 6.6% 3.8% 6.2% 1.4% 1.7% 0.6% 100.0% Number 75 87 204 133 167 116 61 41 49 12 15 5 964 Percentage 7.8% 9.0% 21.2% 13.8% 17.3% 12.0% 6.4% 4.2% 5.0% 1.2% 1.6% 0.5% 100.0% Annual Change 2014 to 2019 Percentage Number 2 3.4% 1 0.6% 4 2.2% -3 -1.9% -1 -0.3% -1 -0.6% 0 -0.6% 1 2.2% -2 -3.7% 0 -2.6% 0 -1.9% 0 -3.3% Source: Ribbon Demographics 2014, Novogradac & Company LLP, January 2015 RENTER HOUSEHOLD INCOME SMA SMA Income Cohort $0-9,999 $10,000-19,999 $20,000-29,999 $30,000-39,999 $40,000-49,999 $50,000-59,999 $60,000-74,999 $75,000-99,999 $100,000-124,999 $125,000-149,999 $150,000-199,999 $200,000+ Total 2014 Number 169 210 280 236 245 161 83 49 72 15 18 8 1,547 2019 Percentage 10.9% 13.6% 18.1% 15.3% 15.9% 10.4% 5.4% 3.2% 4.7% 1.0% 1.1% 0.5% 97.4% Number 190 212 316 208 239 155 80 53 52 11 17 8 1,540 Percentage 12.3% 13.8% 20.5% 13.5% 15.5% 10.1% 5.2% 3.4% 3.4% 0.7% 1.1% 0.5% 97.7% Annual Change 2014 to 2019 Percentage Number 4 2.5% 0 0.2% 7 2.5% -6 -2.4% -1 -0.5% -1 -0.7% -1 -0.8% 1 1.4% -4 -5.7% -1 -5.3% 0 -0.8% 0 0.5% Source: Ribbon Demographics 2014, Novogradac & Company LLP, January 2015 According to the table above, approximately 49.8 percent of renter households within the PMA have incomes of less than $40,000 as of 2014. The income-eligible range for the Subject’s LIHTC units is between $15,634 and $43,200. According to the table displaying SMA data, approximately 57.9 percent of renter households have incomes of less than $40,000 as of 2014. This data illustrates a need for additional affordable housing within the PMA and the SMA. Novogradac & Company LLP 48 Northwest Passage – McCall, Idaho – Market Study Renter Household Income Distribution by Household Size The following tables illustrate the renter household income distribution by household size in 2014 and 2019 in the PMA. RENTER HOUSEHOLD INCOME BY HOUSEHOLD SIZE PMA 2014 Income Cohort $0-9,999 $10,000-19,999 $20,000-29,999 $30,000-39,999 $40,000-49,999 $50,000-59,999 $60,000-74,999 $75,000-99,999 $100,000-124,999 $125,000-149,999 $150,000-199,999 $200,000+ T otal 1 19 71 53 60 33 28 6 17 18 4 7 3 318 2 42 2 43 39 28 79 0 8 29 2 2 1 275 3 2 8 9 9 68 2 41 10 2 1 7 0 158 4 0 1 40 40 7 10 9 2 6 0 0 1 115 5+ 1 2 39 0 34 1 8 0 6 6 1 0 98 Source: Ribbon Demographics 2014, Novogradac & Company LLP, January 2015 RENTER HOUSEHOLD INCOME BY HOUSEHOLD SIZE PMA 2019 Income Cohort $0-9,999 $10,000-19,999 $20,000-29,999 $30,000-39,999 $40,000-49,999 $50,000-59,999 $60,000-74,999 $75,000-99,999 $100,000-124,999 $125,000-149,999 $150,000-199,999 $200,000+ T otal 1 24 75 60 57 30 31 6 17 16 5 7 2 331 2 48 2 52 35 25 72 0 8 23 1 2 1 270 3 1 8 10 10 70 2 38 13 2 0 3 0 159 4 1 0 42 31 7 10 12 2 3 0 1 1 111 5+ 1 1 39 0 35 0 6 0 3 6 1 0 93 Source: Ribbon Demographics 2014, Novogradac & Company LLP, January 2015 As illustrated, there are a significant number of one, two, and three-person renter households in the PMA. Novogradac & Company LLP 49 Northwest Passage – McCall, Idaho – Market Study General Population Conclusion Population and households in the PMA and SMA increased at faster rates than the nation from 2000 to 2014. It is projected that population and households in the PMA will remain generally stable through 2019. Despite the projected stable trends in the PMA, market data such as the full occupancy and wait lists at the LIHTC comparables as well as the generally low capture rates indicate that there is likely latent demand for affordable housing. Further, the Subject will be new construction and in excellent condition upon completion and will be more desirable than the predominately fair to average condition rental housing stock in the PMA. Through 2019, the median household income in the PMA is expected to grow at a rate less than that of the SMA and nation. Additionally, approximately 49.8 percent of renter households within the PMA have incomes of less than $40,000 as of 2014. This data illustrates a need for additional affordable housing within the PMA and the SMA. Novogradac & Company LLP 50 SUPPLY ANALYSIS Northwest Passage – McCall, Idaho – Market Study SUPPLY ANALYSIS HOUSING SUMMARY The availability of rental data in the PMA is considered average. However, the availability of newer market rate data in the PMA is limited. Nonetheless, we believe that we have sufficient data in order to determine marketability for the Subject property. We have included two LIHTC properties and six market rate properties as comparables in the analysis. The following table details the affordable properties within the PMA. Property Name Roseberry Court The Springs Valley One Apartments McCall Senior Housing AFFORDABLE PROPERTIES WITHIN THE PMA Location Type Tenancy Units McCall Rural Development Family 18 McCall LIHTC Family 36 McCall LIHTC Family 8 McCall Rural Development Senior 28 Reason for Exclusion Subsidized rents Included Included Subsidized rents/different tenancy Tenure The following table is a summary of the tenure patterns of the housing stock in the PMA. TENURE PATTERNS PMA Year 2000 2014 2019 Owner-Occupied Percentage Renter-Occupied Percentage Units Owner-Occupied Units Renter-Occupied 1,767 75.2% 582 24.8% 2,463 71.9% 964 28.1% 2,473 72.0% 964 28.0% Source: ESRI Demographics 2014, Novogradac & Company LLP, January 2015 Renter-occupied units comprise a lower percentage of units than owner-occupied units in the PMA. Nationally, approximately two-thirds of households are homeowners and one-third are renters. The PMA has a similar percentage of renter households than the nation as a whole. Foreclosure Discussion According to realtytrac.com, approximately one in every 1,153 housing units is currently in the foreclosure process across the nation, as of December 2014. In Idaho, the rate is one in every 2,554 housing units. Foreclosure data for Valley County was not available. Novogradac & Company LLP 52 Northwest Passage – McCall, Idaho – Market Study Building Permit Activity The following table depicts building activity from 2003 through November 2014 in the City of McCall and Valley County (unincorporated). BUILDING PERMITS: City of McCall and Valley County - 2003 to 2014* Single-family Three and Five or More Year and Duplex Four-Family Family Total Units 2003 109 0 0 109 2004 247 0 0 247 2005 307 0 0 307 2006 320 0 0 320 2007 126 0 0 126 2008 70 0 0 70 2009 33 0 0 33 2010 3 0 0 3 2011 10 0 0 10 2012 49 0 0 49 2013 84 0 0 84 2014* Total Average** 60 1,418 123 0 0 0 0 0 0 60 1,418 123 *Only includes through November 2014 ** Does not include 2014 permits According to the Census Building Permit data, since 2003, there have been no building permits issued for multifamily developments in McCall or Valley County (unincorporated). However, we are aware of new multifamily in form of a recently built LIHTC property (The Springs, built in 2011) and condominiums at Alpine Village, which were built in 2009. There was no formal explanation provided by the Community Development Department; however, it is our understanding that the reporting of permitting data to the Census Bureau is voluntary and, further, that it is subject to error and may not include all permitting activity. Novogradac & Company LLP 53 Northwest Passage – McCall, Idaho – Market Study INTERVIEWS/DISCUSSION In order to ascertain the need for housing and affordable housing in the Subject’s area, interviews were conducted with various local officials, including the local housing authority and the Community Development Director for the City of McCall. Southwestern Idaho Cooperative Housing Authority In order to ascertain the need for housing and affordable housing in the Subject’s area, we interviewed the local housing authority to determine demand in the market. The Southwestern Idaho Cooperative Housing Authority has jurisdiction in Valley County. According to Ms. Janie DeMond, a representative for Valley County, the Authority currently has 26 active Housing Choice Vouchers in Valley County. There are 75 households on the Authority’s Valley County waiting list. The following table illustrates the current gross payment standards. PAYMENT STANDARDS 1 BDRM 2 BDRM 3 BDRM $614 $730 $1,075 The Subject’s proposed 40, 55, and 50 percent AMI one, two and three-bedroom gross rents are below the payment standards. The Subject’s 55 and 60 percent AMI one and two-bedroom gross rents are above the payment standards. City of McCall Planning and Zoning Department We interviewed Ms. Michelle Groenevelt, Community Development Director for the City of McCall. According to Ms. Groenevelt, are no multifamily projects besides the Subject that are planned in McCall at this time. LIHTC Competition / Recent and Proposed Construction According to the Idaho Housing and Finance Association, there have been no projects awarded LIHTC’s in the Subject’s PMA since 2011. Novogradac & Company LLP 54 Northwest Passage – McCall, Idaho – Market Study SURVEY OF COMPARABLE PROJECTS Comparable properties are examined on the basis of physical characteristics; i.e., building type, building age/quality, the level of common amenities, absorption rates, and similarity in rent structure. We attempted to compare the Subject to properties from the competing market, in order to provide a picture of the general economic health and available supply in the market. Description of Property Types Surveyed/Determination of Number of Tax Credit Units To evaluate the competitive position of the Subject, 82 units in eight rental properties were surveyed in depth. Property managers were interviewed for information on unit mix, sizes, and absorption rates, unit features and project amenities; tenant profiles; and market trends in general. The availability of rental data in the PMA is considered average. However, the availability of newer market rate data as well as elevator-serviced product in the PMA is limited. The rental inventory in the market is predominately older walk-up and townhouse product within small complexes. Nonetheless, we believe that we have sufficient data in order to determine marketability for the Subject property. We have included two LIHTC properties and six market rate properties as comparables in the analysis. Additionally, due to the limited availability of market rate data in the PMA, we have supplemented our rent analysis with local classified listings. All of the comparable properties are located within the PMA. Detailed matrices describing the individual competitive properties, as well as the proposed Subject, are provided in the addenda of this report. A map illustrating the location of the Subject in relation to the comparable properties is also below. Novogradac & Company LLP 55 Northwest Passage – McCall, Idaho – Market Study COMPARABLE RENTAL PROPERTY MAP Novogradac & Company LLP 56 Northwest Passage – McCall, Idaho – Market Study # 1 2 3 4 5 6 7 8 COMPARABLE PROPERTIES Property Name City Type The Springs Mccall LIHTC Valley One Apartments Mccall LIHTC 400 Mission Street 4-plex Mccall Market 433 Payette Triplex Donnelly Market Aspen Glen Mccall Market Pine Creek Apartments Mccall Market The Timbers Mccall Market Thula Street Tri-plex Mccall Market Novogradac & Company LLP Distance 1.0 miles 0.1 miles 0.4 miles 12.1 miles 1.3 miles 0.8 miles 0.7 miles 0.5 miles 57 Northwest Passage – McCall, Idaho – Market Study PROPERTY CHARACTERISTICS Following are relevant characteristics of the comparable properties surveyed: Location The Subject is located in downtown McCall, within a predominately established mixed-use area that has convenient pedestrian access to numerous local amenities. The following tables detail the location characteristics of the Subject and the comparable properties within a 0.5 mile radius. Locational Comparison Radius Name Address City State ZIP Code MSA Locational qualities Population 2013 MSA STATE Population 65+ 2013 Median Household Income 2013 MSA STATE Renter Household Percent 2013 MSA STATE Owner Household Percent 2013 MSA STATE Vacant Housing Unit Percent 2013 MSA STATE Total Crime Personal Crime Property Crime Walk Score® Walk Score® Name 0.5 miles 0.5 miles 0.5 miles 0.5 miles 0.5 miles Northwest Passage 701 1st Street Mccall ID 83638 The Springs 325 Valley Springs Road Mccall ID 83638 Valley One Apartments 210 Colorado Street Mccall ID 83638 400 Mission Street 4-plex 400 Mission Street Mccall ID 83638 433 Payette Triplex 433 Payette Street Donnelly ID 83638 583 13,891 1,628,760 17.15% $54,644 $49,193 $45,031 15.26% 24.80% 27.65% 33.03% 75.20% 58.75% 51.71% 57.42% 13.60% 111 88 106 58 Somewhat Walkable 359 13,891 1,628,760 19.78% $52,829 $49,193 $45,031 23.01% 24.80% 27.65% 45.19% 75.20% 58.75% 31.80% 57.42% 13.60% 111 88 106 57 Somewhat Walkable 624 13,891 1,628,760 16.51% $55,536 $49,193 $45,031 14.74% 24.80% 27.65% 31.31% 75.20% 58.75% 54.10% 57.42% 13.60% 111 88 106 53 Somewhat Walkable 48 13,891 1,628,760 14.58% $58,163 $49,193 $45,031 9.80% 24.80% 27.65% 21.57% 75.20% 58.75% 68.63% 57.42% 13.60% 79 58 79 10 Car-Dependent 143 13,891 1,628,760 16.78% $55,427 $49,193 $45,031 14.13% 24.80% 27.65% 46.74% 75.20% 58.75% 39.13% 57.42% 13.60% 79 58 79 13 Car-Dependent 0.5 miles 0.5 miles 0.5 miles 0.5 miles 0.5 miles Northwest Passage 701 1st Street Mccall ID 83638 Aspen Glen 310 Gabi Lane Mccall ID 83638 Pine Creek Apartments 905 West Lake Street Mccall ID 83638 The Timbers 1305 Ponderosa Street Mccall ID 83638 Thula Street Tri-plex 300 Thula Street Mccall ID 83638 583 13,891 1,628,760 17.15% $54,644 $49,193 $45,031 15.26% 24.80% 27.65% 33.03% 75.20% 58.75% 51.71% 57.42% 13.60% 111 88 106 58 Somewhat Walkable 270 13,891 1,628,760 13.70% $58,317 $49,193 $45,031 13.18% 24.80% 27.65% 27.36% 75.20% 58.75% 59.46% 57.42% 13.60% 79 58 79 0 Car-Dependent 221 13,891 1,628,760 17.19% $54,945 $49,193 $45,031 9.73% 24.80% 27.65% 21.24% 75.20% 58.75% 69.32% 57.42% 13.60% 111 88 106 15 Car-Dependent 858 13,891 1,628,760 20.28% $51,504 $49,193 $45,031 9.53% 24.80% 27.65% 19.86% 75.20% 58.75% 70.54% 57.42% 13.60% 142 117 132 36 Car-Dependent 404 13,891 1,628,760 17.33% $55,235 $49,193 $45,031 16.54% 24.80% 27.65% 33.33% 75.20% 58.75% 50.12% 57.42% 13.60% 111 88 106 40 Car-Dependent Locational Comparison Radius Name Address City State ZIP Code MSA Locational qualities Population 2013 MSA STATE Population 65+ 2013 Median Household Income 2013 MSA STATE Renter Household Percent 2013 MSA STATE Owner Household Percent 2013 MSA STATE Vacant Housing Unit Percent 2013 MSA STATE Total Crime Personal Crime Property Crime Walk Score® Walk Score® Name Note that all of the Subject and all of the comparables have high neighborhood housing vacancies; however, this is due to prevalence of seasonal homes in the area, which are defined by the Census as ‘vacant.’ The Subject’s location has a generally similar median household income relative and crime index relative to all the comparable properties. The Subject has a walk score of 58 which is Novogradac & Company LLP 58 Northwest Passage – McCall, Idaho – Market Study considered “somewhat walkable.” The Springs and Valley One Apartments are the only comparables that are considered “somewhat walkable.” It is also important to note that the Subject is located within downtown McCall and has convenient pedestrian access to Payette Lake (two blocks to the north), which is superior to all of the comparables. Overall, the Subject’s location is considered generally similar to Valley One and superior to the remaining comparables. Age and Condition/Design The two LIHTC properties, The Springs and Valley One Apartments, were built in 2011 and 1995, respectively. The Subject will be slightly superior to The Springs and superior to Valley One Apartments in terms of age and condition. The market rate properties were built or rehabilitated between 1960 and 2014, with the majority constructed in 1990 or earlier. It is important to note that the reported scope of renovations in the market are somewhat limited and include flooring and appliances. As such, the overall quality of the market rate comparables based on vintage and condition will be inferior to the Subject. Unit Mix The following table summarizes the unit mix at the Subject compared to that at the comparable properties. UNIT MIX Unit Type Studio 1 BR 2 BR 3 BR Total Total Units (Subject) 0 5 23 8 36 Percent (Subject) 0% 14% 64% 22% 100% Total Units (Comps) 4 15 45 18 82 Percent (Comps) 5% 18% 55% 22% 100% The Subject will consist of 14 percent one-bedroom units, 64 percent two-bedroom units, and 22 percent three-bedroom units. The Subject’s proposed mix is generally similar to the comparables and appears reasonable. Unit Size The following table summarizes unit sizes in the market area, and provides a comparison of the Subject’s unit sizes and the surveyed average unit sizes in the market. UNIT SIZE COMPARISON Unit Type 1 BR 2 BR 3 BR Subject 605 760 - 800 1,025 - 1,250 Surveyed Min 600 750 925 Surveyed Max 900 900 1,400 Surveyed Average 701 843 1,095 Advantage/ Disadvantage -14% -9% to -5% -6% to 14% One, two and three-bedroom unit sizes as proposed at the Subject will be within the range of comparables. However, they will be on the lower end of the range and will be smaller than the Novogradac & Company LLP 59 Northwest Passage – McCall, Idaho – Market Study surveyed average with the exception of the Subject’s market rate three bedroom units, which will be slightly larger than the surveyed average. We have considered the Subject’s unit sizes in our rent determinations. Total Number of Baths per Unit The Subject will offer one bathroom in its one and two-bedroom units and two bathrooms in its three-bedroom units. All of the comparables offer similar number of baths in their one, two and three-bedroom units. We believe that the proposed number of baths per unit is market-oriented. Amenities The following chart illustrates the amenities at the Subject property and the amenities offered by the comparables. Novogradac & Company LLP 60 Northwest Passage – McCall, Idaho – Market Study UNIT MATRIX REPORT Northwest Passage Subject The Springs 1 Valley One Apartments 2 Lowrise (3 stories) 2016 / n/a Garden (2 stories) 2011 / n/a Townhouse (2 stories) 1995 / n/a One-story One-story One-story 1960 / 2014 2005 / n/a LIHTC/Market LIHTC LIHTC Market Utility Adjusments Cooking Water Heat Heat Other Electric Water Sewer Trash Collection no no no no yes yes yes no no no no yes yes yes no no no no yes yes yes In-Unit Amenities Balcony/Patio Blinds Cable/Satellite/Internet Carpeting Central A/C Coat Closet Dishwasher Exterior Storage Ceiling Fan Fireplace Garbage Disposal Microwave Oven Refrigerator Walk-In Closet Wall A/C Washer/Dryer Washer/Dryer hookup yes yes no yes no yes yes yes yes no yes yes yes yes yes no yes yes yes yes no yes no no yes no no no yes no yes yes no yes no no yes yes Comp # Property Information Property Type Year Built / Renovated Market (Conv.)/Subsidy Type Property Amenities Business Center/Computer Lab Carport Clubhouse/Meeting Room/Community Room Elevators Exercise Facility Central Laundry Non-shelter Services Off-Street Parking On-Site Management Playground Recreation Areas Service Coordination Carport Fee 400 Mission 433 Payette Street 4-plex Triplex 3 4 Aspen Glen 5 Pine Creek Apartments 6 The Timbers Thula Street Tri-plex 7 8 1990 / 2010 Garden (2 stories) 2004 / n/a Garden (2 stories) 1980 / n/a Duplex 1990 / n/a Market Market Market Market Market no no no no yes yes yes no no no no yes yes yes no no no no yes yes yes no no no no yes yes yes yes yes yes yes yes yes yes no no no no yes yes yes yes yes no yes no no yes no no no no no yes yes no no no yes no yes no yes yes no no no yes no no no yes yes no no no no no yes no yes yes yes yes no yes no yes no yes yes no no yes yes no yes no yes no no yes no no yes yes no yes yes no no yes yes no yes no yes no yes yes no no no yes no yes yes no no yes yes no yes yes yes no no yes no no no no no yes yes no no no no yes yes yes yes no no yes yes yes yes yes no yes yes yes no yes yes no yes no no no no no no no no no no no no no no yes yes yes no yes yes yes yes no yes $50.00 yes no yes yes no yes yes yes yes no N/A no no no no no yes no no no no N/A no no no no no yes no no no no N/A no no no no no yes no no no no N/A no no no no no yes no no no no N/A no no no no no yes no no no no N/A no no no yes no yes no no no no N/A no no no no no yes no no no no N/A yes yes yes no no no no no no no no no no no no no no no Services Security Limited Access Video Surveillance Novogradac & Company LLP 61 Northwest Passage – McCall, Idaho – Market Study Unit Amenities The Subject will offer exterior storage, which is not offered at seven of the comparables; ceiling fans, which are not offered at five of the comparables; walk-in closets, which are not offered at seven of the comparables and in-unit washer/dryers, which are not offered at four of the comparables. However, two of the comparables include cable with rent and two offer fireplaces, all of which are not offered at the Subject. The Subject’s unit amenities will be generally superior to the LIHTC and market rate comparables with the exception of the Thula Street Tri-plex, which includes cable in rent, garbage disposals and fireplaces. The Subject will have slightly inferior in-unit amenities compared to the Thula Street Triplex. Overall, we believe that the Subject’s proposed unit amenities will be competitive. Common Area Amenities In terms of common area amenities, the Subject will offer a computer center, clubhouse, elevators, an exercise facility, non-shelter services, on site management, playground, and service coordination. The Springs is the only comprarable that offers a clubhouse, exercise facility, on site management and a playground. The remaining comparables are smaller multifamily properties and do not offer many common area amenities. Overall, the Subject will be slightly superior to The Springs and superior to the remaining comparables in terms of common area amenities. Utility Structure Tenants will be responsible for electricity for heating, cooking, lights, and a small service fee. Cold water, sewer, and trash will be included in the rental rates. A majority of the comparable properties include the cost of cold water, sewer service and trash in the cost of rent, similar to the Subject’s utility convention. The Timbers is the only comparable that includes all utilities. Parking The Subject will offer 18 carport parking spaces and 54 surface parking spaces, or a ratio of 2.0 spaces per unit. All of the comparable properties include free off-street parking and The Springs is the only comparable that offers carports. The Springs has one carport assigned per unit free of charge along with additional off-street parking. Overall, the Subject’s parking options will be market-oriented. Further, although parking ratios for comparables were unavailable, we believe that the proposed parking will be adequate based on the proposed unit mix of one, two, and threebedroom units. Novogradac & Company LLP 62 Northwest Passage – McCall, Idaho – Market Study MARKET CHARACTERISTICS Following are relevant market characteristics for the comparable properties surveyed. Absorption The Springs is the only comparable property that was able to provide absorption data. The property opened in 2011 and absorbed its units in approximately eight months, an absorption pace of approximately 4.5 units per month. However, considering the relatively low vacancy rates at the LIHTC and market rate properties, the waiting list at The Springs, as well as the Subject’s capture rates, we estimate that the Subject will reach a stabilized occupancy within six months assuming the achievable LIHTC rent. This estimate equates to an absorption pace of approximately six units per month. Tenant Makeup The following table illustrates tenant characteristics of the comparable properties, as reported by the property managers. TENANT CHARACTERISTICS Comparable Property The Springs Valley One Apartments 400 Mission Street 4-plex 433 Payette Triplex Aspen Glen Pine Creek Apartments The Timbers Thula Street Tri-plex Type LIHTC LIHTC Market Market Market Market Market Market Tenant Characteristics Would not provide Small families, couples from McCall Singles, one couple Would not identify Small families, singles Families and couples from McCall Couples with children; singles Couples and singles from McCall As illustrated, most property managers indicate that tenants consist of a mix of singles, couples, and small families that are predominately from the McCall area. Based on the proposed unit mix, we believe that the Subject will attract predominately singles, couples, and small families from McCall and the surrounding area. TENANTS WITH VOUCHERS Comparable Property The Springs Valley One Apartments 400 Mission Street 4-plex 433 Payette Triplex Aspen Glen Pine Creek Apartments The Timbers Thula Street Tri-plex Novogradac & Company LLP Type LIHTC LIHTC Market Market Market Market Market Market Housing Choice Voucher Tenants 15% 38% 0% 0% N/A 0% 0% 0% 63 Northwest Passage – McCall, Idaho – Market Study The comparables reported voucher tenancy from zero to 38 percent. The Springs and Valley One Apartments, the two LIHTC comparables, reported 15 to 38 percent of tenants using a voucher, respectively. The market rate properties reported no tenants using vouchers. We anticipate 25 percent or less voucher reliance at the Subject. Turnover The following table illustrates turnover as reported by the comparable properties. TURNOVER Property name The Springs Valley One Apartments 400 Mission Street 4-plex 433 Payette Triplex Aspen Glen Pine Creek Apartments The Timbers Thula Street Tri-plex Average Turnover Rent Structure LIHTC LIHTC Market Market Market Market Market Market Turnover 35% 20% 25% N/A 25% 15% 20% N/A 23% Overall, comparable properties in the PMA reported an average of 23 percent annual turnover. Of the comparables, LIHTC properties reported an average turnover of 28 percent, while market rate properties reported an average of turnover of 21 percent. We anticipate that the Subject will experience an annual turnover of 25 to 35 percent. Vacancy Levels The following table summarizes overall weighted vacancy levels at the surveyed properties. OVERALL VACANCY Property name The Springs Valley One Apartments 400 Mission Street 4-plex* 433 Payette Triplex Aspen Glen Pine Creek Apartments The Timbers* Thula Street Tri-plex LIHTC Total Market Total Total Rent Structure LIHTC LIHTC Market Market Market Market Market Market Total Units 36 8 3 3 4 7 15 3 44 35 79 Vacant Units 0 0 0 1 0 0 0 0 0 1 1 Vacancy Rate 0.0% 0.0% 0.0% 33.3% 0.0% 0.0% 0.0% 0.0% 0.0% 2.9% 1.3% *400 Mission Street has one vacant unit that is down for renovations and has not been included; T he T imbers has two units down for renovations that have not been included Novogradac & Company LLP 64 Northwest Passage – McCall, Idaho – Market Study The vacancy rate among the comparables ranges from zero to 33.0 percent, with an average vacancy rate of 1.3 percent. The two LIHTC comparables are both fully-occupied and keep short waiting lists. The market rate comparables reported an overall vacancy of 2.9 percent; with 433 Payette Triplex being the only comparable that reported a vacancy. 400 Mission Street has one unit down for renovations and management expects the unit to be occupied by early February. Additionally, two of the 17 units at the Timbers are uninhabitable and will be undergoing renovations in the spring. Therefore, these units have been excluded in the vacancy analysis. Taking the market data into account, we expect the Subject to maintain a vacancy rate of five percent or less upon completion. Concessions None of the comparable properties are offering rent concessions. We do not anticipate that the Subject will need to offer rent concessions during lease-up or upon stabilization. Waiting Lists The Springs and Valley one both reported having short wait lists. The Springs has a wait list of four households and Valley One Apartments has a wait list of three households. We anticipate that the Subject will likely operate with a short waiting list. Rental Rate Increases The following table details rent growth at the comparable properties over the past twelve months. RENT GROWTH Comparable Property The Springs Valley One Apartments 400 Mission Street 4-plex 433 Payette Triplex Aspen Glen Pine Creek Apartments The Timbers Thula Street Tri-plex Rent Structure LIHTC LIHTC Market Market Market Market Market Market Rent Growth Increased 2 to 5% Increased 26 to 30% None None None None None None As seen in the previous table, the two LIHTC comparable properties reported rental rate increases, ranging from two to 30 percent. The Springs reported slight rental increases ranging from two to five percent. Valley One Apartments changed management in December 2014 and reported significant rent increases ranging from 26 to 30 percent. However, both properties are achieving rents well below the maximum allowable levels. The Subject’s proposed 40, 45, 50, 55, and 60 percent AMI rents are below the maximum allowable levels and rent increases would not be dependent on AMI growth. Novogradac & Company LLP 65 Northwest Passage – McCall, Idaho – Market Study Reasonability of Rents The following table is a comparison of the Subject’s and comparable properties’ rents. For the purposes of this market study, “Base Rents” are the actual rents quoted to the tenant, and are most frequently those rents that potential renters consider when making a housing decision. “Net rents” are rents adjusted for the cost of utilities (adjusted to the Subject’s convention) and are used to compensate for the differing utility structures of the Subject and the comparable properties. Net rents represent the actual costs of residing at a property, and help to provide an “apples-to-apples” comparison of rents. LIHTC Rent Comparison - @40% Property Name 1BR Northwest Passage (Subject) $400 LIHTC Maximum (Net) $444 The Springs $375 Average (excluding Subject) $375 Achievable LIHTC Rent $400 2BR $500 $534 N/Ap N/Ap $500 LIHTC Rent Comparison - @45% Property Name 1BR 2BR Northwest Passage (Subject) $450 $550 LIHTC Maximum (Net) $506 $609 The Springs $425 N/Ap Average (excluding Subject) $425 N/AP Achievable LIHTC Rent $450 $550 3BR $625 $696 N/Ap N/Ap $625 LIHTC Rent Comparison - @50% Property Name 2BR Northwest Passage (Subject) $600 LIHTC Maximum (Net) $684 The Springs $555 Valley One Apartments $500 Average (excluding Subject) $528 Achievable LIHTC Rent $600 3BR $675 $783 $635 N/Ap $635 $675 LIHTC Rent Comparison - @55% Property Name 2BR Northwest Passage (Subject) $620 LIHTC Maximum (Net) $759 The Springs $620 Average (excluding Subject) $620 Achievable LIHTC Rent $650 3BR $750 $869 $710 $710 $750 Novogradac & Company LLP 66 Northwest Passage – McCall, Idaho – Market Study LIHTC Rent Comparison - @60% Property Name 1BR 2BR Northwest Passage (Subject) $575 $700 LIHTC Maximum (Net) $694 $834 The Springs $535 $680 Valley One Apartments N/Ap $550 Average (excluding Subject) $535 $615 Achievable LIHTC Rent $575 $700 3BR $800 $956 $780 $600 $690 $800 As seen in the previous tables, the Subject’s proposed 40, 45, 50, 55, and 60 percent rents are set at the maximum allowable levels. The Springs and Valley One Apartments are achieving rents well below the maximum allowable levels for their respective units. It should be noted that none of the comparable LIHTC properties offer two-bedroom units at 40 or 45 percent AMI nor three-bedroom units at 45 percent AMI. The Subject will be most similar to The Springs in terms of overall condition and design. The Springs was built in 2011 and is fully occupied with a short wait list. Upon completion, the Subject will offer generally superior in-unit and common area amenities, slightly superior condition, and slightly inferior unit sizes. The Springs is achieving rents well below the maximum allowable levels. However, The Springs is operated by a non-profit that deliberately keeps rents low. We spoke with Greg Putnam, the Regional Compliance Manager for The Springs and he stated that the property typically operates with a wait list and that slightly higher rent increases would be possible. However, he stated that maximum allowable rents would likely not be achievable in the market. Given the Subject’s superior position in the market relative to The Springs, we believe that the Subject could achieve rents above The Springs but below the maximum allowable levels. Therefore, we believe that the proposed LIHTC rents are all at their achievable levels. Novogradac & Company LLP 67 Northwest Passage – McCall, Idaho – Market Study Achievable Market Rents Based on the quality of the surveyed comparable properties and the anticipated quality of the proposed Subject, we conclude that the Subject’s LIHTC rental rates are below the achievable market rates for the Subject’s area. The following tables show the proposed LIHTC rent comparisons to market rents. Unit Type 1 BR @ 40% 2 BR @ 40% 1 BR @ 45% 2 BR @ 45% 3 BR @ 45% 2 BR @ 50% 3 BR @ 50% 2 BR @ 55% 3 BR @ 55% 1 BR @ 60% 2 BR @ 60% 3 BR @ 60% 2 BR Market* 3 BR Market* Subject Comparison To Market Rents Surveyed Surveyed Surveyed Subject Min Max Average $400 $350 $450 $422 $500 $444 $700 $568 $450 $350 $450 $422 $550 $444 $700 $568 $625 $470 $825 $603 $600 $444 $700 $568 $675 $470 $825 $603 $620 $444 $700 $568 $750 $470 $825 $603 $575 $350 $450 $422 $700 $444 $700 $568 $800 $470 $825 $603 $800 $444 $700 $568 $975 $470 $825 $603 Achievable Market Rents $650 $775 $650 $775 $900 $775 $900 $775 $900 $650 $775 $900 $800 $975 Subject Rent Advantage 38% 35% 31% 29% 31% 23% 25% 20% 17% 12% 10% 11% 0% 0% *T he Subject's market rate unit units will have larger unit sizes, thus the achievable market rents are above those for the smaller unit sizes. As illustrated in the preceding table, the Subject’s achievable LIHTC rents are below the achievable market rents, giving the Subject a 10 to 38 percent rent advantage over the achievable market rents. The achievable market rents for the Subject’s units are placed moderately above the surveyed maximum market rate rents, as the Subject will offer a superior location, condition, in-unit amenities, and common area amenities upon completion. Additionally, the achievable rent for the Subject’s two and three-bedroom market rate units are above the achievable market rate rent for the LIHTC units because they are larger. Overall, the Subject will be most similar to Aspen Glen and 433 Payette, which are the newest properties, in terms of curb appeal and quality. Compared to Aspen Glen, the Subject will have a superior condition, similar location, superior unit and common amenities, and similar unit size. Compared to 433 Payette Triplex, the Subject will have a superior condition, superior location, superior unit and common amenities, and inferior unit size. Therefore, we believe market rate two and three-bedroom rents moderately above the rents at Aspen Glen and 433 Payette Triplex are achievable. The Timbers and 400 Mission Street 4-plex are the only market rate comparables that offer one-bedroom units. Compared to these two properties, the Subject will have a superior condition, similar location, superior unit and common amenities and generally similar to inferior unit sizes. Therefore, we believe that market rate one-bedroom rent well above these comparables is reasonable. Novogradac & Company LLP 68 Northwest Passage – McCall, Idaho – Market Study The following tables depict the Subject’s proposed rents and the market rents at Aspen Glen and 433 Payette Triplex. Unit Type 1BR @ 40% 2BR @ 40% 1BR @45% 2BR @ 45% 3BR @ 45% 2 BR @ 50% 3 BR @ 50% 2 BR @ 55% 3 BR @55% 1 BR @ 60% 2 BR @ 60% 3 BR @ 60% 2 BR Market 3 BR Market Subject Comparison with Aspen Glen Aspen Glen Subject Rent Square Feet Rent $400 605 N/Ap $500 760 $700 $450 605 N/Ap $550 760 $700 $625 1,025 N/Ap $600 760 $700 $675 1,025 N/Ap $620 760 $700 $750 1,025 N/Ap $575 605 N/Ap $700 760 $700 $800 1,025 N/Ap $800 800 $700 $1,000 1,250 N/Ap Square Feet N/Ap 760 N/Ap 760 N/Ap 760 N/Ap 760 N/Ap N/Ap 760 N/Ap 760 N/Ap Subject Rent Advantage N/Ap 29% N/Ap 21% N/Ap 14% N/Ap 11% N/Ap N/Ap 0% N/Ap -14% N/Ap Unit Type 1BR @ 40% 2BR @ 40% 1BR @45% 2BR @ 45% 3BR @ 45% 2 BR @ 50% 3 BR @ 50% 2 BR @ 55% 3 BR @55% 1 BR @ 60% 2 BR @ 60% 3 BR @ 60% 2 BR Market 3 BR Market Subject Comparison with 433 Payette Triplex 433 Payette Square Subject Rent Square Feet Street Rent Feet $400 605 N/Ap N/Ap $500 760 N/Ap N/Ap $450 605 N/Ap N/Ap $550 760 N/Ap N/Ap $625 1,025 $825 1,400 $600 760 N/Ap N/Ap $675 1,025 $825 1,400 $620 760 N/Ap N/Ap $750 1,025 $825 1,400 $575 605 N/Ap N/Ap $700 760 N/Ap N/Ap $800 1,025 $825 1,400 $800 800 N/Ap N/Ap $1,000 1,250 $825 1,400 Subject Rent Advantage N/Ap N/Ap N/Ap N/Ap 24% N/Ap 18% N/Ap 9% N/Ap N/Ap 3% N/Ap -21% Novogradac & Company LLP 69 Northwest Passage – McCall, Idaho – Market Study Due to limited market-rate data, we have supplemented our rent analysis with local classified listings. The following table shows two and three-bedroom market rate classified listings within the area. One-bedroom classified listings were unavailable. CLASSIFIED LISTINGS Bedroom/Baths Address City Type Square Feet Rent* 2BR/2BA 129 Stibnite St E McCall Condominium 1,200 $800 2BR/1BA W Lake Street 2BR/2BA 130 Stibnite St E 2BR/2BA East side of Lake Street McCall Single-family home 1,100 $750 Full kitchen, covered parking, Baseboard hating, close proximity to downtown McCall Condominium 1,100 $800 W/d in unit, some furnishings, patio, full kitchen, sky lights McCall Trailer 900 $750 Upgraded single-wide trailer, close to downtown McCall, full kitchen 1,075 $775 Average Subject 60 percent AMI rent 760 $700 Achievable Market Rent 760-800 $775-$800 3BR/1BA N/A 3BR/2BA 110 Thula Street 3BR/1.5BA Comments Fully furnished, w/d in unit, back patio, air condtioning, sky lights McCall N/A $650 Cable included, full kitchen, on site laundry, off street parking McCall Single-family home Apartment 1,800 $900 Wifi included, wood heating, back patio, full kitchen East of Spring Valley Road Donnelly Single-family home 1,900 $1,100 1,850 $883 Average Subject 60 percent AMI rent 1,025 $800 Achievable Market Rent 1,025-1,250 $900-$975 W/d in unit, garage parking, new appliances, hardwood floors * Classifieds include water/sewer/trash in rent Source: craigslist.com and trulia.com Comparable classified listings for two-bedroom units exhibit a range of asking rental rates from $750 to $800 while the three-bedroom units exhibit a range of $600 to $1,100. The rental housing stock in the area is generally older and all of the properties are inferior in quality and amenities when compared to the Subject. However, the average unit sizes at the classifieds are significantly larger than the Subject’s and several of the classifieds offer superior single-family design. Additionally, two classified offer partially/fully furnished units. Therefore, we believe an achievable two and three-bedroom market rent close to the average is reasonable. Further, we have considered the market rents being achieved at two recently constructed properties in the northern Boise metropolitan area (one in Meridian and one in Boise), approximately 95 miles south of McCall in suburban Boise, which is the nearest community with newer comparable market rate product. Selway Apartments is a 171-unit market rate community located at 2552 W. Selway Rapids Lane in Meridian, Idaho. This community opened in 2009 and offers one, two, and three-bedroom garden-style units. Selway Apartments is currently 95.9 percent occupied with a wait list of three to four months on several unit types. The property offers comprehensive unit and community amenities that feature full appliance package, patio/balcony, central air conditioning, walk-in closet, washer and dryer appliances, community room, fitness center, hot tub, on-site management, picnic area, and swimming pool. Retreat at Silvercloud is a 180-unit market rate community located at 8448 W. Limelight Drive in northern Boise, Idaho. This community opened October 2014 and offers one, two, and three-bedroom garden-style units. Retreat at Silvercloud is currently in initial lease-up and is 52 percent occupied, absorbing approximately 24 units per month, a strong rate. The property offers comprehensive unit and community amenities that feature full appliance package, patio/balcony, central air conditioning, walk-in closet, washer and dryer appliances, community room, fitness center, hot tub, on-site management, picnic area, playground and swimming pool. Novogradac & Company LLP 70 Northwest Passage – McCall, Idaho – Market Study Both Selway Apartments and Retreat at Silvercloud will have overall superior locations, superior unit sizes, slightly inferior condition, and similar amenities. Overall, we believe that rents moderately below these two comparables would be achievable and, therefore, the proposed rents appear reasonable. The following tables compare the Subject’s rents with those at Selway Apartments and Retreat at Silvercloud. Unit Type 1BR @ 40% 2BR @ 40% 1BR @45% 2BR @ 45% 3BR @ 45% 2 BR @ 50% 3 BR @ 50% 2 BR @ 55% 3 BR @55% 1 BR @ 60% 2 BR @ 60% 3 BR @ 60% 2 BR Market 3 BR Market Subject Comparison with Selway Apartments Selway Square Subject Rent Square Feet Apartment Rent Feet $400 605 $853 730 $500 760 $929 884 $450 605 $853 730 $550 760 $929 884 $625 1,025 $1,165 1,120 $600 760 $929 884 $675 1,025 $1,165 1,120 $620 760 $929 884 $750 1,025 $1,165 1,120 $575 605 $853 730 $700 760 $929 884 $800 1,025 $1,165 1,120 $800 800 $929 884 $975 1,250 $1,165 1,120 Subject Rent Advantage 53% 46% 47% 41% 46% 35% 42% 33% 36% 33% 25% 31% 14% 16% Unit Type 1BR @ 40% 2BR @ 40% 1BR @45% 2BR @ 45% 3BR @ 45% 2 BR @ 50% 3 BR @ 50% 2 BR @ 55% 3 BR @55% 1 BR @ 60% 2 BR @ 60% 3 BR @ 60% 2 BR Market 3 BR Market Subject Comparison with Retreat at Silvercloud Retreat at Square Subject Rent Square Feet Silvercloud Rent Feet $400 605 $715 650 $500 760 $890 907 $450 605 $715 650 $550 760 $890 907 $625 1,025 $1,095 1,187 $600 760 $890 907 $675 1,025 $1,095 1,187 $620 760 $890 907 $750 1,025 $1,095 1,187 $575 605 $715 650 $700 760 $890 907 $800 1,025 $1,095 1,187 $800 800 $890 907 $975 1,250 $1,095 1,187 Subject Rent Advantage 44% 44% 37% 38% 43% 33% 38% 30% 32% 20% 21% 27% 10% 11% Novogradac & Company LLP 71 Northwest Passage – McCall, Idaho – Market Study The following table illustrates the rent per square footage of the Subject and market rate comparables. UNIT TYPE 1BR @ 40% 2BR @ 40% 1BR @45% 2BR @ 45% 3BR @ 45% 2 BR @ 50% 3 BR @ 50% 2 BR @ 55% 3 BR @55% 1 BR @ 60% 2 BR @ 60% 3 BR @ 60% 2 BR Market 3 BR Market Min $350 $444 $350 $444 $470 $444 $470 $444 $470 $350 $444 $470 $444 $470 MARKET RENTS* Rent Rent PSF Max Min Max $450 $0.39 $1.17 $700 $0.59 $1.05 $450 $0.39 $1.17 $700 $0.59 $1.05 $825 $0.51 $1.04 $700 $0.59 $1.05 $825 $0.51 $1.04 $700 $0.59 $1.05 $825 $0.51 $1.04 $450 $0.39 $1.17 $700 $0.59 $1.05 $825 $0.51 $1.04 $700 $0.59 $1.05 $825 $0.51 $1.04 PRO FORMA RENTS Rent $400 $500 $450 $550 $625 $600 $675 $620 $750 $575 $700 $800 $800 $975 SF 605 760 605 760 1,025 760 1,025 760 1,025 605 760 1,025 800 1,225 Rent PSF $0.66 $0.66 $0.74 $0.72 $0.61 $0.79 $0.66 $0.82 $0.73 $0.95 $0.92 $0.78 $1.00 $0.80 *Including classifieds and supplemental comparables The Subject’s achievable LIHTC rents are generally within the middle of the range of the market rents on a rent per square foot basis and appear reasonable. Summary Evaluation of the Proposed Project Based upon our market research, demographic calculations and analysis, we believe that there is demand for the Subject property as conceived. The overall market vacancy rate is strong at 1.3 percent and the two LIHTC comparables are fully occupied with wait lists. None of the comparables are offering concessions. Further, despite demographic trends that project limited growth in households in the PMA, market data such as the full occupancy and wait lists at the LIHTC comparables as well as the generally low capture rates indicate that there is likely latent demand for affordable housing. Further, the Subject will be new construction and in excellent condition upon completion and will be more desirable than the predominately fair to average condition rental housing stock in the PMA. We believe that units at the Subject will be well-received, as comparable properties are performing at high occupancy. Strengths of the Subject development will be its location, age and condition, and amenities package. Novogradac & Company LLP 72 DEMAND ANALYSIS Northwest Passage – McCall, Idaho – Market Study DEMAND ANALYSIS Introduction Northwest Passage is a proposed newly constructed multifamily development and income limitations will restrict eligibility. We calculated the number of income-eligible residents in this section of the analysis. LIHTC rents are based upon a percentage of the AMI, adjusted for household size and utilities. HUD estimates the relevant income levels, with annual updates. Rents are calculated assuming that the maximum net rent a family household will pay is 35 percent of income at the appropriate AMI levels. Household size is assumed to be 1.5 persons per bedroom for LIHTC rent calculation purposes. Additionally HUD assumes that one-person households are accommodated in one-bedroom units. For LIHTC income purposes, the actual size of the household is used. To assess the likely number of tenants in the market area eligible to live in the Subject, we used Census information as provided by ESRI Business Information Solutions. Primary Market Area Defined For the purposes of this study, it is necessary to define the market area, or the area from which potential tenants for the project are likely to be drawn. In some areas, residents are very much “neighborhood-oriented” and are generally very reluctant to move from the area in which they have grown up. In other areas, residents are much more mobile and will relocate to a completely new area, especially if there is an attraction such as affordable housing at below-market rents. Seventy percent of the Subject’s tenants are expected to hail from the PMA; demand estimates will be adjusted to reflect the potential for “leakage.” The primary market area (PMA) for the Subject was identified as an approximate 20 minute drivetime from the Subject. The PMA was defined based on interviews with local property managers within the area. We have estimated that 15 percent of tenants will come from outside these boundaries. Novogradac & Company LLP 74 Northwest Passage – McCall, Idaho – Market Study Income-eligible Calculations To establish the number of income-eligible potential tenants for the Subject, the calculations are as follows: First, we estimate the Subject’s minimum and maximum income levels for the proposed LIHTC project. HUD determines maximum income guidelines for tax credit properties, based on the AMI. For Valley County, the AMI is $67,600 for a four-person household. We have used 120 percent of AMI as the maximum for the unrestricted units, as it is our experience that the propensity for households to rent diminishes as incomes increase. Further, comments from local market rate property managers indicated that households typically earn less than $100,000 annually. Minimum income levels were calculated based on the assumption that lower-income households should pay no more than 35 percent of their income to rent. Often, lower-income households pay a higher percentage of gross income toward housing costs. Therefore, we used 35 percent for LIHTC calculations. Secondly, we illustrate the household population segregated by income band in order to determine those who are income-qualified to reside in the Subject property. This income distribution was illustrated previously in the demographic analysis section of this report. Third, we combine the allowable income range with the income distribution analysis in order to determine the number of potential income-qualified households. In some cases the LIHTC incomeeligible band overlaps with more than one census income range. In those cases, the prorated share of more than one census range will be calculated. This provides an estimate of the total number of households that are income-eligible. This also derives an estimate of the percentage of the households that are income-eligible, illustrated by AMI threshold. Novogradac & Company LLP 75 Northwest Passage – McCall, Idaho – Market Study INCOME DISTRIBUTION 2014 Income Cohort Total Renter cohort overlap $0-9,999 $10,000-19,999 $20,000-29,999 $30,000-39,999 $40,000-49,999 $50,000-59,999 $60,000-74,999 $75,000-99,999 $100,000-124,999 $125,000-149,999 $150,000-199,999 $200,000+ Total Income Cohort 64 84 184 147 170 120 63 37 60 13 17 6 964 Total Renter 4,365 4,000 cohort overlap $0-9,999 $10,000-19,999 $20,000-29,999 $30,000-39,999 $40,000-49,999 $50,000-59,999 $60,000-74,999 $75,000-99,999 $100,000-124,999 $125,000-149,999 $150,000-199,999 $200,000+ Total 64 84 184 147 170 120 63 37 60 13 17 6 964 5,450 9,600 40% AMI % in cohort # in cohort 43.65% 40.00% 37 74 11.45% 110 55% AMI % in cohort # in cohort 54.51% 96.01% 100 141 25.08% 242 cohort overlap 2,650 9,999 2,400 cohort overlap 8,365 9,999 3,200 45% AMI % in cohort # in cohort 26.51% 100.00% 24.00% 22 184 35 25.07% 242 60% AMI % in cohort # in cohort 83.66% 100.00% 32.00% 154 147 54 36.88% 355 cohort overlap 7,165 6,000 cohort overlap 308 9,999 9,999 9,999 14,999 11,400 50% AMI % in cohort # in cohort 71.65% 60.01% 132 88 22.85% 220 Market Rate* % in cohort # in cohort 3.08% 100.00% 100.00% 100.00% 100.00% 45.60% 6 147 170 120 63 17 54.16% 522 cohort overlap 4,365 9,999 9,999 9,999 9,999 14,999 11,400 All Units % in cohort # in cohort 43.65% 100.00% 100.00% 100.00% 100.00% 100.00% 45.60% 37 184 147 170 120 63 17 76.46% 737 *Assumes 120 percent AMI Novogradac & Company LLP 76 Northwest Passage – McCall, Idaho – Market Study – Market Study INCOME LIMITS Unit Type 1BR 2BR 3BR Studio 2BR 3BR 4BR Minimum Maximum Allowable Allowable Income Income 40% AMI $15,634 $21,320 $19,406 $24,000 N/Ap N/Ap Minimum Maximum Allowable Allowable Income Income 55% AMI N/Ap N/Ap $24,549 $33,000 $28,560 $39,600 Minimum Maximum Allowable Allowable Income Income 45% AMI $17,349 $23,985 $21,120 $27,000 $24,274 $32,400 Minimum Maximum Allowable Allowable Income Income 60% AMI $21,634 $31,980 $26,263 $36,000 $30,274 $43,200 Minimum Maximum Allowable Allowable Income Income 50% AMI N/Ap N/Ap $22,834 $30,000 $25,989 $36,000 Minimum Maximum Allowable Allowable Income Income Market Rate* N/Ap N/Ap $29,691 $72,000 $36,274 $86,400 *Assumes 120 percent AMI The table above demonstrates that there are a total of 746 income-eligible households in the PMA. The Subject would need to capture 34, or 4.6 percent of these households, to stabilize at 95 percent. Novogradac & Company LLP Northwest Passage – McCall, Idaho – Market Study DEMAND ANALYSIS ONE - CAPTURE RATE ANALYSIS BY UNIT TYPE In order to determine demand for the proposed market mix, we also analyzed the demand capture rates expected at the Subject by bedroom type. This analysis illustrates demand for the 40, 45, 50, 55, and 60 percent of AMI levels as well as unrestricted units. The by-unit-type breakdown illustrates a reasonable level of demand at the 40, 45, 50, 55, and 60 percent of AMI levels as well as unrestricted units when considered on a by-bedroom basis. The capture rates illustrated are low, conservative, and indicative of demand. The distribution of households by unit type is dependent on the following assumptions. HOUSEHOLD DISTRIBUTION 80% 20% 10% 80% 60% 40% 70% Novogradac & Company LLP Of one-person households in 1BR units Of two-person households in 1BR units Of one-person households in 2BR units Of two-person households in 2BR units Of three-person households in 2BR units Of three-person households in 3BR units Of four-person households in 3BR units 78 Northwest Passage – McCall, Idaho – Market Study 40% Demand PROJECTED RENTER HOUSEHOLD DEMAND BY BEDROOM TYPE Renter Household Distribution 2014 Renter Household Size Total Number of Distribution Renter Households 33.0% 318 28.5% 275 16.4% 158 12.0% 115 10.1% 98 100.0% 964 1 person 2 persons 3 persons 4 persons 5+ persons Total Income-Qualified Renter Demand Total Number of % Income-Qualified Renter Households Renter Households 318 x 11.4% 275 x 11.4% 158 x 11.4% 115 x 11.4% 98 x 11.4% 964 1 person 2 persons 3 persons 4 persons 5+ persons Total Number Qualified Renter Households 36 31 18 13 11 110 Projected Renter Household Demand by Bedroom Size Number of Qualified Renter Households 1BR 35 2BR 40 Total 75 Capture Rate Analysis - 40% AMI Developer's Unit Mix Capture Rate 1 2.82% 1 2.52% 2 2.66% 1BR 2BR Total/Overall 1BR 2BR Total/Overall Adjusted for Leakage from Outside of the PMA 1 1 2 Novogradac & Company LLP 15% 2.40% 2.14% 2.26% 79 Northwest Passage – McCall, Idaho – Market Study 45% Demand PROJECTED RENTER HOUSEHOLD DEMAND BY BEDROOM TYPE Renter Household Distribution 2014 Renter Household Size Total Number of Distribution Renter Households 33.0% 318 28.5% 275 16.4% 158 12.0% 115 10.1% 98 100.0% 964 1 person 2 persons 3 persons 4 persons 5+ persons Total Income-Qualified Renter Demand Total Number of % Income-Qualified Renter Households Renter Households 318 x 25.1% 275 x 25.1% 158 x 25.1% 115 x 25.1% 98 x 25.1% 964 1 person 2 persons 3 persons 4 persons 5+ persons Total Number Qualified Renter Households 80 69 40 29 24 242 Projected Renter Household Demand by Bedroom Size Number of Qualified Renter Households 1BR 78 2BR 87 3BR 36 Total 201 Capture Rate Analysis - 45% AMI Developer's Unit Mix Capture Rate 1 1.29% 1 1.15% 1 2.77% 3 1.50% 1BR 2BR 3BR Total/Overall 1BR 2BR 3BR Total/Overall Adjusted for Leakage from Outside of the PMA 1 1 1 3 Novogradac & Company LLP 15% 1.10% 0.98% 2.35% 1.27% 80 Northwest Passage – McCall, Idaho – Market Study 50% Demand PROJECTED RENTER HOUSEHOLD DEMAND BY BEDROOM TYPE Renter Household Distribution 2014 Renter Household Size Total Number of Distribution Renter Households 33.0% 318 28.5% 275 16.4% 158 12.0% 115 10.1% 98 100.0% 964 1 person 2 persons 3 persons 4 persons 5+ persons Total Income-Qualified Renter Demand Total Number of % Income-Qualified Renter Households Renter Households 318 x 22.8% 275 x 22.8% 158 x 22.8% 115 x 22.8% 98 x 22.8% 964 1 person 2 persons 3 persons 4 persons 5+ persons Total Number Qualified Renter Households 73 63 36 26 22 220 Projected Renter Household Demand by Bedroom Size Number of Qualified Renter Households 2BR 79 3BR 33 Total 112 Capture Rate Analysis - 50% AMI Developer's Unit Mix Capture Rate 4 5.05% 1 3.04% 5 4.46% 2BR 3BR Total/Overall 2BR 3BR Total/Overall Adjusted for Leakage from Outside of the PMA 4 1 5 Novogradac & Company LLP 15% 4.29% 2.58% 3.79% 81 Northwest Passage – McCall, Idaho – Market Study 55% Demand PROJECTED RENTER HOUSEHOLD DEMAND BY BEDROOM TYPE Renter Household Distribution 2014 Renter Household Size Total Number of Distribution Renter Households 33.0% 318 28.5% 275 16.4% 158 12.0% 115 10.1% 98 100.0% 964 1 person 2 persons 3 persons 4 persons 5+ persons Total Income-Qualified Renter Demand Total Number of % Income-Qualified Renter Households Renter Households 318 x 25.1% 275 x 25.1% 158 x 25.1% 115 x 25.1% 98 x 25.1% 964 1 person 2 persons 3 persons 4 persons 5+ persons Total Number Qualified Renter Households 80 69 40 29 24 242 Projected Renter Household Demand by Bedroom Size Number of Qualified Renter Households 2BR 87 3BR 36 Total 123 Capture Rate Analysis - 55% AMI Developer's Unit Mix Capture Rate 7 8.05% 2 5.54% 9 7.31% 2BR 3BR Total/Overall 2BR 3BR Total/Overall Adjusted for Leakage from Outside of the PMA 7 2 9 Novogradac & Company LLP 15% 6.84% 4.71% 6.22% 82 Northwest Passage – McCall, Idaho – Market Study 60% Demand PROJECTED RENTER HOUSEHOLD DEMAND BY BEDROOM TYPE Renter Household Distribution 2014 Renter Household Size Total Number of Distribution Renter Households 33.0% 318 28.5% 275 16.4% 158 12.0% 115 10.1% 98 100.0% 964 1 person 2 persons 3 persons 4 persons 5+ persons Total Income-Qualified Renter Demand Total Number of % Income-Qualified Renter Households Renter Households 318 x 36.9% 275 x 36.9% 158 x 36.9% 115 x 36.9% 98 x 36.9% 964 1 person 2 persons 3 persons 4 persons 5+ persons Total Number Qualified Renter Households 117 101 58 42 36 355 Projected Renter Household Demand by Bedroom Size Number of Qualified Renter Households 1BR 114 2BR 128 3BR 53 Total 295 Capture Rate Analysis - 60% AMI Developer's Unit Mix Capture Rate 3 2.63% 8 6.26% 2 3.77% 13 4.41% 1BR 2BR 3BR Total/Overall 1BR 2BR 3BR Total/Overall Adjusted for Leakage from Outside of the PMA 3 8 2 13 Novogradac & Company LLP 15% 2.24% 5.32% 3.20% 3.74% 83 Northwest Passage – McCall, Idaho – Market Study Unrestricted Demand PROJECTED RENTER HOUSEHOLD DEMAND BY BEDROOM TYPE Renter Household Distribution 2014 Renter Household Size Total Number of Distribution Renter Households 33.0% 318 28.5% 275 16.4% 158 12.0% 115 10.1% 98 100.0% 964 1 person 2 persons 3 persons 4 persons 5+ persons Total Income-Qualified Renter Demand Total Number of % Income-Qualified Renter Households Renter Households 318 x 54.2% 275 x 54.2% 158 x 54.2% 115 x 54.2% 98 x 54.2% 964 1 person 2 persons 3 persons 4 persons 5+ persons Total Number Qualified Renter Households 172 149 86 62 53 522 Projected Renter Household Demand by Bedroom Size Number of Qualified Renter Households 2BR 188 3BR 78 Total 266 Capture Rate Analysis - Unrestricted Developer's Unit Mix Capture Rate 2 1.07% 2 2.56% 4 1.51% 2BR 3BR Total/Overall 2BR 3BR Total/Overall Adjusted for Leakage from Outside of the PMA 2 2 4 Novogradac & Company LLP 15% 0.91% 2.18% 1.28% 84 Northwest Passage – McCall, Idaho – Market Study DEMAND ANALYSIS TWO – ANNUAL CAPTURE RATE ANALYSIS The second calculation derives an estimated market penetration rate based on per annum demand. This is an indication of the percentage of net demand penetration that the Subject must attract in order to reach stabilized occupancy. This measure essentially takes the available household demand searching for apartments in the market area and deducts competition in order to determine net demand available to the Subject. The table below outlines the analysis of this methodology. The annual demand for rental housing depends upon the following factors: Existing households that live in the area but move to a new home: This phenomenon occurs because people are searching for better housing, more affordable housing, or housing in a desired location. The calculation begins by determining base level eligible demand in the year 2014. This is calculated by adding project household growth to the 2014 income-eligible households. This is then adjusted by the percentage of renters in the PMA. To determine how many of these households will be looking for units, we multiply the number by the estimated turnover rate. The 2000 Census indicated that approximately 27.6 percent of renter households in the PMA pay 35 percent or higher of their annual wages towards housing costs and therefore were considered rent-overburdened. An estimated rent overburdened population at 27.6 percent, reflecting both severe rent overburden and movership in the market area, is considered very reasonable, as the national average is estimated to be 28.8 percent. Population change as a result of new households moving in or out of the area: This was previously calculated, in the estimated population increase from 2014 to 2019. Since the newly derived population will all be eligible, they are included directly into the annual demand estimate. Additionally, we have deducted currently planned and non-stabilized inventory in the PMA. There are currently no planned or under construction rental product that will directly compete with the Subject, so no units have been deducted. This calculation derives an annual capture rate for the Subject. Total demand, both currently present and moving into the market, is adjusted for income eligibility and renter status. It is further adjusted by the number of units that are currently in a lease-up phase. The demand estimate remaining is the number of units that will be unsatisfied in the market without construction of the Subject. These unaccommodated units of demand will be forced to leave the market without additional housing construction. The penetration rate is the percentage of this demand that the Subject will capture. A number below 100 percent is a positive indicator and represents an expected absorption rate of less than one year. A number greater than 100 percent indicates an absorption pace longer than one year. Novogradac & Company LLP 85 Northwest Passage – McCall, Idaho – Market Study Annual Demand Table ANNUAL DEMAND Calculation Number of Renter Households in 2014 Increase in Number of Renter Households Number of Renter Households in 2019 PMA 964 964 Existing Demand Percentage of Total Households that are Renter Percentage of Income-Qualified Renter Households Number of Income-Qualified Renter Households Percentage of Rent-Overburdened Existing Income-Qualified Renter Household Turnover 28.1% 76.5% 737 27.6% 204 New Income-Qualified Demand, Stated Annually Increase in Renter Households per Annum Percentage of Income-Qualified Renter Households New Rental Income Qualified Households 76.5% - Capture Rate Analysis Number of Units in Subject Occupied Units at Subject With Vacancy of: 5% Units Pre-Leased Total Demand (Turnover and Growth) from within PMA Portion Originating within PMA Total Demand (Turnover and Growth) from within PMA Less: Existing LIHTC Projects in Absorption Process (Number of Units) 0 Total Demand after Competition (Turnover and Growth) Yielded Annual Capture Rate of Available Demand in 2015 36 34 0 204 85% 240 240 14.3% The yielded capture rate is approximately 14.3 percent of available demand per annum, for all of the Subject’s units. Novogradac & Company LLP 86 Northwest Passage – McCall, Idaho – Market Study Conclusion The demand analysis illustrates demand for the Subject based on capture rates of income-eligible renter households. When viewing total income-eligible renter households the calculation illustrates the following overall capture rates: AMI 40% 45% 50% 55% 60% Unrestricted CAPTURE RATE SUMMARY 1BR 2BR 3BR 2.40% 2.14% N/Ap 1.10% 0.98% 2.35% N/Ap 4.29% 2.58% N/Ap 6.84% 4.71% 2.24% 5.32% 3.20% N/Ap 0.91% 2.18% Overall 2.26% 1.27% 3.79% 6.22% 3.74% 1.28% The capture rates are considered reasonable taking into account the other indications of demand including full occupancy and wait lists at comparable LIHTC properties. Therefore, we believe there is sufficient demand for units at the Subject as proposed. To provide another level of analysis, we removed the households from the income-eligible renter demand pool that are currently suitably housed elsewhere in the PMA. We conducted an annual demand analysis, which is based on new income-eligible renter households moving into the area (in the Subject’s first year of operation only) and those income-eligible renter households that are rentoverburdened (paying over 35 percent of income to living costs). This is a subset of the incomeeligible renter households used previously and yields a far more conservative annual capture rate. This annual capture rate is 14.3 percent for the first year of operation. This suggests that the Subject will need to capture only a portion of the available demand in its first year of operation in order to stabilize. This implies that no demand will be accommodated that is currently suitably housed elsewhere. This calculation illustrates that there are approximately 182 units of demand in the first year of the Subject’s operation after construction. The Subject will need to accommodate 34 units of demand in order to stabilize at 95 percent occupancy. Any unaccommodated households will most likely leave the PMA or remain severely rent-overburdened. The lack of available units will force many to look elsewhere. Novogradac & Company LLP 87 ADDENDUM A Assumptions and Limiting Conditions ASSUMPTIONS AND LIMITING CONDITIONS 1. In the event that the client provided a legal description, building plans, title policy and/or survey, etc., the appraiser has relied extensively upon such data in the formulation of all analyses. 2. The legal description as supplied by the client is assumed to be correct and the author assumes no responsibility for legal matters, and renders no opinion of property title, which is assumed to be good and merchantable. 3. All encumbrances, including mortgages, liens, leases, and servitudes, were disregarded in this valuation unless specified in the report. It was recognized, however, that the typical purchaser would likely take advantage of the best available financing, and the effects of such financing on property value were considered. 4. All information contained in the report, which others furnished, was assumed to be true, correct, and reliable. A reasonable effort was made to verify such information, but the author assumes no responsibility for its accuracy. 5. The report was made assuming responsible ownership and capable management of the property. 6. The sketches, photographs, and other exhibits in this report are solely for the purpose of assisting the reader in visualizing the property. The author made no property survey, and assumes no liability in connection with such matters. It was also assumed there is no property encroachment or trespass unless noted in the report. 7. The author of this report assumes no responsibility for hidden or unapparent conditions of the property, subsoil or structures, or the correction of any defects now existing or that may develop in the future. Equipment components were assumed in good working condition unless otherwise stated in this report. 8. It is assumed that there are no hidden or unapparent conditions for the property, subsoil, or structures, which would render it more or less valuable. No responsibility is assumed for such conditions or for engineering, which may be required to discover such factors. 9. The investigation made it reasonable to assume, for report purposes, that no insulation or other product banned by the Consumer Product Safety Commission has been introduced into the Subject premises. Visual inspection by the appraiser did not indicate the presence of any hazardous waste. It is suggested the client obtain a professional environmental hazard survey to further define the condition of the Subject soil if they deem necessary. 10. Any distribution of total property value between land and improvements applies only under the existing or specified program of property utilization. Separate valuations for land and buildings must not be used in conjunction with any other study or appraisal and are invalid if so used. 11. Possession of the report, or a copy thereof, does not carry with it the right of publication, nor may it be reproduced in whole or in part, in any manner, by any person, without the prior written consent of the author particularly as to value conclusions, the identity of the author or the firm with which he or she is connected. Neither all nor any part of the report, or copy thereof shall be disseminated to the general public by the use of advertising, public relations, news, sales, or other media for public communication without the prior written consent and approval of the appraiser. Nor shall the appraiser, firm, or professional organizations of which the appraiser is a member be identified without written consent of the appraiser. 12. Disclosure of the contents of this report is governed by the Bylaws and Regulations of the professional appraisal organization with which the appraiser is affiliated: specifically, the Appraisal Institute. 13. The author of this report is not required to give testimony or attendance in legal or other proceedings relative to this report or to the Subject property unless satisfactory additional arrangements are made prior to the need for such services. 14. The opinions contained in this report are those of the author and no responsibility is accepted by the author for the results of actions taken by others based on information contained herein. 15. Opinions of value contained herein are estimates. There is no guarantee, written or implied, that the Subject property will sell or lease for the indicated amounts. 16. All applicable zoning and use regulations and restrictions are assumed to have been complied with, unless nonconformity has been stated, defined, and considered in the appraisal report. 17. It is assumed that all required licenses, permits, covenants or other legislative or administrative authority from any local, state, or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. 18. On all studies, Subject to satisfactory completion, repairs, or alterations, the report and conclusions are contingent upon completion of the improvements in a workmanlike manner and in a reasonable period of time. 19. All general codes, ordinances, regulations or statutes affecting the property have been and will be enforced and the property is not Subject to flood plain or utility restrictions or moratoriums, except as reported to the appraiser and contained in this report. 20. The party for whom this report is prepared has reported to the appraiser there are no original existing condition or development plans that would Subject this property to the regulations of the Securities and Exchange Commission or similar agencies on the state or local level. 21. Unless stated otherwise, no percolation tests have been performed on this property. In making the appraisal, it has been assumed the property is capable of passing such tests so as to be developable to its highest and best use, as detailed in this report. 22. No in-depth inspection was made of existing plumbing (including well and septic), electrical, or heating systems. The appraiser does not warrant the condition or adequacy of such systems. 23. No in-depth inspection of existing insulation was made. It is specifically assumed no Urea Formaldehyde Foam Insulation (UFFI), or any other product banned or discouraged by the Consumer Product Safety Commission has been introduced into the appraised property. The appraiser reserves the right to review and/or modify this appraisal if said insulation exists on the Subject property. 24. Estimates presented in this report are assignable to parties to the development’s financial structure. ADDENDUM B Subject Property and Neighborhood Photographs Subject site Subject site – existing senior center Subject site View to north toward government buildings View to east toward Alpine Village (condominiums) View to south toward forested land and single-family homes View west toward forested land and single-family homes View south along 1st Street View north along 1st Street View west along Idaho Street Health Department building adjacent to north Police Department adjacent to north City Hall to north Library to northeast Retail to north Retail to north Retail to north Grocery store to northwest Typical single-family to west Typical single-family to west High school to west Walking trail adjacent to south Alpine Village (condominiums and retail) to east Retail to east Retail/offices to east Typical single-family home to south Typical single-family home to south Valley One Apartments (LIHTC) to south ADDENDUM C Matrices, Rent and Square Footage Ranking, and Comparable Property Profiles SUMMARY MATRIX Comp # Project Subject Northwest Passage 701 1st Street Mccall, ID 83638 Valley County County Distance n/a Type / Built / Renovated Lowrise (3 stories) 2016 / n/a Market / Subsidy Units # % @40%, @45%, @50%, @55%, @60%, Market 1BR / 1BA 1BR / 1BA 1BR / 1BA 2BR / 1BA 2BR / 1BA 2BR / 1BA 2BR / 1BA 2BR / 1BA 2BR / 1BA 3BR / 2BA 3BR / 2BA 3BR / 2BA 3BR / 2BA 3BR / 2BA 1 1 3 1 1 4 7 8 2 1 1 2 2 2 2.80% 2.80% 8.30% 2.80% 2.80% 11.10% 19.40% 22.20% 5.60% 2.80% 2.80% 5.60% 5.60% 5.60% Restriction Rent (Adj.) Size Max Wait Units Vacant Vacancy Rate (SF) Rent? List? @40% $400 605 no N/A N/A @45% $450 605 no N/A N/A N/A N/A @60% $575 605 no @40% $500 760 no N/A N/A N/A N/A @45% $550 760 no @50% $600 760 no N/A N/A N/A N/A @55% $650 760 no N/A N/A @60% $700 760 no Market $800 800 n/a N/A N/A @45% $625 1,025 no N/A N/A N/A N/A @50% $675 1,025 no N/A N/A @55% $750 1,025 no N/A N/A @60% $800 1,025 no Market $975 1,250 n/a N/A N/A 1 The Springs 325 Valley Springs Road Mccall, ID 83638 Valley County County 1 mile Garden (2 stories) 2011 / n/a @30%, @35%, @40%, @45%, @50%, @55%, @60% Studio / 1BA Studio / 1BA Studio / 1BA 1BR / 1BA 1BR / 1BA 1BR / 1BA 1BR / 1BA 2BR / 1BA 2BR / 1BA 2BR / 1BA 3BR / 2BA 3BR / 2BA 3BR / 2BA 36 2 1 1 1 1 4 2 7 7 4 3 1 2 100% 5.60% 2.80% 2.80% 2.80% 2.80% 11.10% 5.60% 19.40% 19.40% 11.10% 8.30% 2.80% 5.60% @30% @35% @40% @40% @45% @50% @55% @50% @55% @60% @50% @55% @60% $285 $325 $350 $375 $425 $475 $535 $555 $620 $680 $635 $710 $780 508 508 508 640 640 640 640 882 882 882 1,115 1,115 1,115 no no no no no no no no no no no no no Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes N/A 0 0 0 0 0 0 0 0 0 0 0 0 0 N/A 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 2 Valley One Apartments 210 Colorado Mccall, ID 83638 Valley County 0.1 mile Townhouse (2 stories) 1995 / n/a @50%, @60% 2BR / 2BA 2BR / 2BA 3BR / 2BA 36 2 2 4 100% 25.00% 25.00% 50.00% @50% @60% @60% $500 $550 $600 850 850 1,050 no no no No No No 0 0 0 0 0.00% 0.00% 0.00% 0.00% 3 400 Mission Street 4-plex 400 Mission Street Mccall, ID 83638 Valley County County 0.4 mile One-story 1960 / 2014 Market 1BR / 1BA 1BR / 1BA 8 1 3 100% 25.00% 75.00% Market Market $350 $450 900 900 n/a n/a No No 0 0 1 0.00% 0.00% 33.30% 4 433 Payette Triplex 433 Payette Street Donnelly, ID 83638 Valley County Aspen Glen 310 Gabi Lane Mccall, ID 83638 Valley County Pine Creek Apartments 905 West Lake Street Mccall, ID 83638 Valley County County The Timbers 1305 Ponderosa Mccall, ID 83638 Valley County 12.1 miles One-story 2005 / n/a Market 3BR / 2BA 4 3 100% 100.00% Market $825 1,400 n/a No 1 1 25.00% 33.30% 1.3 miles One-story 1990? / 2010 Market 2BR / 1BA 3 4 100% 100.00% Market $700 760 n/a 1 0 33.30% 0.00% 0.8 miles Garden (2 stories) 2004 / n/a Market 2BR / 1BA 4 7 100% 100.00% Market $625 900 n/a No 0 0 0.00% 0.00% 0.7 miles Garden (2 stories) 1980 / n/a Market 1BR / 1BA 2BR / 1BA 3BR / 1BA 7 3 9 5 100% 17.60% 52.90% 29.40% Market Market Market $417 $444 $470 600 750 925 n/a n/a n/a No No No 0 1 1 0 0.00% 33.30% 11.10% 0.00% Thula Street Tri-plex 300 Thula Street Mccall, ID 83638 Valley County 0.5 miles Duplex 1990 / n/a Market 2BR / 1BA 2BR / 1BA 17 1 2 100% 33.30% 66.70% Market Market $550 $650 850 850 n/a n/a No No 2 0 0 11.80% 0.00% 0.00% 3 100% 0 0.00% 5 6 7 8 RENT AND SQUARE FOOTAGE RANKING -- All rents adjusted for utilities and concessions extracted from the market. Effective Rent Date: Jan-15 One Bedroom One Bath RENT SQUARE FOOTAGE RENT PER SQUARE FOOT Property Northwest Passage * (60%) The Springs * (55%) The Springs * (50%) Northwest Passage * (45%) 400 Mission Street 4-plex The Springs * (45%) The Timbers Northwest Passage * (40%) The Springs * (40%) 400 Mission Street 4-plex Units Surveyed: Market Rate Tax Credit Two Bedrooms One Bath 82 38 44 Average $800 $700 $700 $680 $650 $650 $625 $620 $600 $555 $550 $550 $550 $500 $500 $444 Weighted Occupancy: Market Rate Tax Credit Three Bedrooms Two Bath Property Northwest Passage * (M) 433 Payette Triplex Northwest Passage * (60%) The Springs * (60%) Northwest Passage * (55%) The Springs * (55%) Northwest Passage * (50%) The Springs * (50%) Northwest Passage * (45%) Valley One Apartments * (60%) The Timbers (1BA) 95.10% 89.50% 100.00% Average $575 $535 $475 $450 $450 $425 $417 $400 $375 $350 Property Northwest Passage * (M) Northwest Passage * (60%) Aspen Glen The Springs * (60%) Northwest Passage * (55%) Thula Street Tri-plex Pine Creek Apartments The Springs * (55%) Northwest Passage * (50%) The Springs * (50%) Northwest Passage * (45%) Valley One Apartments * (2BA 60%) Thula Street Tri-plex Northwest Passage * (40%) Valley One Apartments * (2BA 50%) The Timbers Average $975 $825 $800 $780 $750 $710 $675 $635 $625 $600 $470 400 Mission Street 4-plex 900 Pine Creek Apartments 900 433 Payette Triplex 1,400 400 Mission Street 4-plex The Springs * (40%) The Springs * (45%) The Springs * (50%) The Springs * (55%) Northwest Passage * (40%) Northwest Passage * (45%) Northwest Passage * (60%) The Timbers 900 640 640 640 640 605 605 605 600 The Springs * (50%) The Springs * (55%) The Springs * (60%) Valley One Apartments * (2BA 50%) Valley One Apartments * (2BA 60%) Thula Street Tri-plex Thula Street Tri-plex Northwest Passage * (M) Northwest Passage * (40%) Northwest Passage * (45%) Northwest Passage * (50%) Northwest Passage * (55%) Northwest Passage * (60%) Aspen Glen The Timbers 882 882 882 850 850 850 850 800 760 760 760 760 760 760 750 Northwest Passage * (M) The Springs * (50%) The Springs * (55%) The Springs * (60%) Valley One Apartments * (60%) Northwest Passage * (45%) Northwest Passage * (50%) Northwest Passage * (55%) Northwest Passage * (60%) The Timbers (1BA) 1,250 1,115 1,115 1,115 1,050 1,025 1,025 1,025 1,025 925 Northwest Passage * (60%) $0.95 Northwest Passage * (M) $1.00 Northwest Passage * (60%) $0.78 The Springs * (55%) Northwest Passage * (45%) The Springs * (50%) The Timbers The Springs * (45%) Northwest Passage * (40%) The Springs * (40%) 400 Mission Street 4-plex 400 Mission Street 4-plex $0.84 $0.74 $0.74 $0.70 $0.66 $0.66 $0.59 $0.50 $0.39 Northwest Passage * (60%) Aspen Glen Northwest Passage * (55%) Northwest Passage * (50%) The Springs * (60%) Thula Street Tri-plex Northwest Passage * (45%) The Springs * (55%) Pine Creek Apartments Northwest Passage * (40%) Valley One Apartments * (2BA 60%) Thula Street Tri-plex The Springs * (50%) The Timbers Valley One Apartments * (2BA 50%) $0.92 $0.92 $0.86 $0.79 $0.77 $0.76 $0.72 $0.70 $0.69 $0.66 $0.65 $0.65 $0.63 $0.59 $0.59 Northwest Passage * (M) Northwest Passage * (55%) The Springs * (60%) Northwest Passage * (50%) The Springs * (55%) Northwest Passage * (45%) 433 Payette Triplex Valley One Apartments * (60%) The Springs * (50%) The Timbers (1BA) $0.78 $0.73 $0.70 $0.66 $0.64 $0.61 $0.59 $0.57 $0.57 $0.51 PROPERTY PROFILE REPORT The Springs Effective Rent Date 1/15/2015 Location 325 Valley Springs Road Mccall, ID 83638 Valley County County Distance Units Vacant Units Vacancy Rate Type Year Built/Renovated Marketing Began Leasing Began Last Unit Leased Major Competitors Tenant Characteristics Contact Name Phone 1 mile 36 0 0.0% Garden (2 stories) 2011 / N/A N/A N/A N/A There are no competitors Would not provide Shannon (208) 634-8152 Market Information Program Annual Turnover Rate Units/Month Absorbed HCV Tenants Leasing Pace Annual Chg. in Rent Concession Utilities @30%, @35%, @40%, @45%, @50%, A/C not included -- wall 35% 4.5 N/A One to two weeks Increased 2 to 5% None Cooking Water Heat Heat Other Electric Water Sewer Trash Collection not included -- electric not included -- electric not included -- electric not included included included included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Restriction $285 Concession (monthly) $0 Vacant @30% Waiting List Yes 0 1 2 508 0 1 1 0 1 1 1 1 1 1 1 1 1 2 1 2 1 2 1 3 2 3 2 3 2 Garden (2 stories) Garden (2 stories) Garden (2 stories) Garden (2 stories) Garden (2 stories) Garden (2 stories) Garden (2 stories) Garden (2 stories) Garden (2 stories) Garden (2 stories) Garden (2 stories) Garden (2 stories) Garden (2 stories) 508 $325 $0 @35% Yes 0 0.0% no None 1 508 $350 $0 @40% Yes 0 0.0% no None 1 640 $375 $0 @40% Yes 0 0.0% no None 1 640 $425 $0 @45% Yes 0 0.0% no None 4 640 $475 $0 @50% Yes 0 0.0% no None 2 640 $535 $0 @55% Yes 0 0.0% no None 7 882 $555 $0 @50% Yes 0 0.0% no None 7 882 $620 $0 @55% Yes 0 0.0% no None 4 882 $680 $0 @60% Yes 0 0.0% no None 3 1,115 $635 $0 @50% Yes 0 0.0% no None 1 1,115 $710 $0 @55% Yes 0 0.0% no None 2 1,115 $780 $0 @60% Yes 0 0.0% no None © Novogradac & Company LLP 2015 All Rights Reserved. 0 Vacancy Max Rent? Rate 0.0% no Range None The Springs, continued Unit Mix @30% Face Rent Conc. Concd. Rent Util. Adj. Rent $285 $0 $285 $0 $285 Studio / 1BA Face Rent Conc. Concd. Rent Util. Adj. Rent Studio / 1BA @40% $350 $0 $350 $0 $350 1BR / 1BA $375 $0 $375 $0 $375 @50% @35% Studio / 1BA @45% 1BR / 1BA Conc. Concd. Rent Util. Adj. Rent $325 $0 $325 $0 $325 Face Rent Conc. Concd. Rent Util. Adj. Rent $425 $0 $425 $0 $425 Face Rent Conc. Concd. Rent Util. Adj. Rent Face Rent Conc. Concd. Rent Util. Adj. Rent 1BR / 1BA $475 $0 $475 $0 $475 1BR / 1BA $535 $0 $535 $0 $535 2BR / 1BA $555 $0 $555 $0 $555 2BR / 1BA $620 $0 $620 $0 $620 3BR / 2BA $635 $0 $635 $0 $635 3BR / 2BA $710 $0 $710 $0 $710 Face Rent Conc. Concd. Rent Util. Adj. Rent 2BR / 1BA @60% $680 $0 $680 $0 $680 3BR / 2BA $780 $0 $780 $0 $780 @55% Face Rent Amenities In-Unit Balcony/Patio Carpeting Garbage Disposal Refrigerator Security Blinds Dishwasher Oven Wall A/C Property Carport Exercise Facility Off-Street Parking Playground Clubhouse/Meeting Central Laundry On-Site Management Recreation Areas Limited Access Services None Premium Other None None Comments Management would not provide tenant information or voucher tenancy. There are currently four households on the wait list. A wait list by bedroom type and AMI level was not available. The property is operated by a non-profit and rents are deliberately kept below the maximum allowable level. Greg Putnam, regional compliance manager for the Springs, stated the property is typically fully occupied and slight rent increases are possible. However, he does not believe maximum allowable rents would be achievable. The property absorbed its units in approximately eight months, due to the lack of qualified tenants in the area. © Novogradac & Company LLP 2015 All Rights Reserved. The Springs, continued Photos © Novogradac & Company LLP 2015 All Rights Reserved. PROPERTY PROFILE REPORT Valley One Apartments Effective Rent Date 1/26/2015 Location 210 Colorado Mccall, ID 83638 Valley County Distance Units Vacant Units Vacancy Rate Type Year Built/Renovated Marketing Began Leasing Began Last Unit Leased Major Competitors Tenant Characteristics Contact Name Phone 0.1 miles 8 0 0.0% Townhouse (2 stories) 1995 / N/A N/A N/A N/A None Small families, couples from McCall Jennifer 208-642-9086 Market Information Program Annual Turnover Rate Units/Month Absorbed HCV Tenants Leasing Pace Annual Chg. in Rent Concession Utilities @50%, @60% A/C not included -- none 20% N/A 50% Immediate Increased 26 to 30% None Cooking Water Heat Heat Other Electric Water Sewer Trash Collection not included -- electric not included -- electric not included -- electric not included included included included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Restriction $500 Concession (monthly) $0 2 2 2 850 2 2 2 3 2 Townhouse (2 stories) Townhouse (2 stories) Townhouse (2 stories) Vacant @50% Waiting List No 850 $550 4 1,050 $600 Vacancy Max Rent? Rate 0.0% no $0 @60% No 0 0.0% no None $0 @60% No 0 0.0% no None 0 Range None Unit Mix @50% Face Rent Conc. Concd. Rent Util. Adj. Rent $500 $0 $500 $0 $500 2BR / 2BA Face Rent Conc. Concd. Rent Util. Adj. Rent 2BR / 2BA @60% $550 $0 $550 $0 $550 3BR / 2BA $600 $0 $600 $0 $600 Amenities In-Unit Balcony/Patio Carpeting Oven Washer/Dryer hookup Security Blinds Dishwasher Refrigerator None Services None Property Premium Other Off-Street Parking None None © Novogradac & Company LLP 2015 All Rights Reserved. Valley One Apartments, continued Comments The Housing Company in Boise took over management of the property in December of 2014 and raised the asking rents 26 to 30 percent. Management said they keep a short waiting list of approximately three households. A wait list by bedroom type and AMI level was not available. Greg Putnam, regional compliance manager for Valley One Apartments stated the property is typically fully occupied and slightly higher rents are likely achievable. Additionally, he does not believe maximum allowable rents would be achievable. © Novogradac & Company LLP 2015 All Rights Reserved. Valley One Apartments, continued Photos © Novogradac & Company LLP 2015 All Rights Reserved. PROPERTY PROFILE REPORT 400 Mission Street 4-plex Effective Rent Date 1/21/2015 Location 400 Mission Street Mccall, ID 83638 Valley County County Distance Units Vacant Units Vacancy Rate Type Year Built/Renovated Marketing Began Leasing Began Last Unit Leased Major Competitors Tenant Characteristics Contact Name Phone 0.4 miles 4 1 25.0% One-story 1960 / 2014 N/A N/A N/A None identified Singles, one couple Michelle 208-634-2100 Market Information Program Annual Turnover Rate Units/Month Absorbed HCV Tenants Leasing Pace Annual Chg. in Rent Concession Utilities Market A/C not included -- central N/A N/A 0% N/A None None Cooking Water Heat Heat Other Electric Water Sewer Trash Collection not included -- electric not included -- electric not included -- electric not included included included included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent 1 1 1 1 One-story One-story 1 3 900 900 $350 $450 Concession (monthly) $0 $0 Restriction Market Market Waiting List No No Vacant Vacancy Max Rent? Rate 0.0% N/A 33.3% N/A 0 1 Range None None Unit Mix Market Face Rent Conc. Concd. Rent Util. Adj. Rent 1BR / 1BA $350 - $450 $0 $350 - $450 $0 $350 - $450 Amenities In-Unit Blinds Central A/C Oven Security Carpeting Ceiling Fan Refrigerator None Services None Property Premium Other Off-Street Parking None None Comments The less expensive one-bedroom units are not remolded. The contact stated the one vacancy is offline and being renovated with new flooring and appliances but should be occupied by early February. The contact said the remaining units will be remolded with new flooring and appliances upon turnover. © Novogradac & Company LLP 2015 All Rights Reserved. PROPERTY PROFILE REPORT 433 Payette Triplex Effective Rent Date 1/21/2015 Location 433 Payette Street Donnelly, ID 83638 Valley County Distance Units Vacant Units Vacancy Rate Type Year Built/Renovated Marketing Began Leasing Began Last Unit Leased Major Competitors Tenant Characteristics Contact Name Phone 12.1 miles 3 1 33.3% One-story 2005 / N/A N/A N/A N/A None identified Would not identify Shawna (208) 630-5045 Market Information Program Annual Turnover Rate Units/Month Absorbed HCV Tenants Leasing Pace Annual Chg. in Rent Concession Utilities Market A/C not included -- none N/A N/A 0% N/A None None Cooking Water Heat Heat Other Electric Water Sewer Trash Collection not included -- electric not included -- electric not included -- electric not included included included included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent 3 2 One-story 3 1,400 $825 Concession (monthly) $0 Restriction Market Waiting List No Vacant Vacancy Max Rent? Rate 33.3% N/A 1 Unit Mix Market Face Rent Conc. Concd. Rent Util. Adj. Rent 3BR / 2BA $825 $0 $825 $0 $825 Amenities In-Unit Blinds Central A/C Dishwasher Garbage Disposal Refrigerator Washer/Dryer hookup Security Carpeting Coat Closet Ceiling Fan Oven Washer/Dryer None Services None Property Premium Other Off-Street Parking None None Comments This property is managed by McCall cabins. © Novogradac & Company LLP 2015 All Rights Reserved. Range None PROPERTY PROFILE REPORT Aspen Glen Effective Rent Date 1/21/2015 Location 310 Gabi Lane Mccall, ID 83638 Valley County Distance Units Vacant Units Vacancy Rate Type Year Built/Renovated Marketing Began Leasing Began Last Unit Leased Major Competitors Tenant Characteristics Contact Name Phone 1.3 miles 4 0 0.0% One-story 1990? / 2010 N/A N/A N/A N/A Small families, singles Shawna 208-880-2122 Market Information Program Annual Turnover Rate Units/Month Absorbed HCV Tenants Leasing Pace Annual Chg. in Rent Concession Utilities Market A/C not included -- none 25% N/A N/A 1 week None None Cooking Water Heat Heat Other Electric Water Sewer Trash Collection not included -- electric not included -- electric not included -- electric not included included included included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent 2 1 One-story 4 760 $700 Concession (monthly) $0 Restriction Market Waiting List N/A Vacant Vacancy Max Rent? Rate 0.0% N/A 0 Unit Mix Market Face Rent Conc. Concd. Rent Util. Adj. Rent 2BR / 1BA $700 $0 $700 $0 $700 Amenities In-Unit Blinds Dishwasher Garbage Disposal Refrigerator Washer/Dryer hookup Security Carpeting Fireplace Oven Washer/Dryer None Services None Property Premium Other Off-Street Parking None None Comments The property was rehabilitated in 2010 with new carpet, flooring and appliances. The contact stated turnover is very rare. © Novogradac & Company LLP 2015 All Rights Reserved. Range None Aspen Glen, continued Trend Report Vacancy Rates 3Q05 0.0% 1Q15 0.0% Trend: Market 2BR / 1BA Year QT Vac. Face Rent Conc. Concd. Rent Adj. Rent 2005 3 0.0% $675 $0 $675 $675 2015 1 0.0% $700 $0 $700 $700 Trend: Comments 3Q05 This property is referred to as the "Gabi Lane 4-plex" even though it's actually on Rio Vista. Jessica did not know the date built or the square footage/unit for this property. The property will accept Section 8 tenants but has none now. Three of the tenants have lived there for at least six months, but one unit has turned over at least twice during the last six months. 1Q15 The property was rehabilitated in 2010 with new carpet, flooring and appliances. The contact stated turnover is very rare. © Novogradac & Company LLP 2015 All Rights Reserved. PROPERTY PROFILE REPORT Pine Creek Apartments Effective Rent Date 1/21/2015 Location 905 West Lake Street Mccall, ID 83638 Valley County County Distance Units Vacant Units Vacancy Rate Type Year Built/Renovated Marketing Began Leasing Began Last Unit Leased Major Competitors Tenant Characteristics Contact Name Phone 0.8 miles 7 0 0.0% Garden (2 stories) 2004 / N/A N/A N/A N/A None identified Families and couples from McCall Shawna (208) 630-5045 Market Information Program Annual Turnover Rate Units/Month Absorbed HCV Tenants Leasing Pace Annual Chg. in Rent Concession Utilities Market A/C not included -- none 15% N/A 0% N/A None None Cooking Water Heat Heat Other Electric Water Sewer Trash Collection not included -- electric not included -- electric not included -- electric not included included included included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent 2 1 Garden (2 stories) 7 900 $625 Concession (monthly) $0 Restriction Market Waiting List No Vacant Vacancy Max Rent? Rate 0.0% N/A 0 Unit Mix Market Face Rent Conc. Concd. Rent Util. Adj. Rent 2BR / 1BA $625 $0 $625 $0 $625 Amenities In-Unit Blinds Coat Closet Garbage Disposal Refrigerator Washer/Dryer hookup Security Carpeting Dishwasher Oven Washer/Dryer None Services None Property Premium Other Off-Street Parking None None Comments This property is managed by McCall Cabins. The contact stated there us little turnover at the property and the units are always fully occupied. © Novogradac & Company LLP 2015 All Rights Reserved. Range None Pine Creek Apartments, continued Photos © Novogradac & Company LLP 2015 All Rights Reserved. PROPERTY PROFILE REPORT The Timbers Effective Rent Date 1/22/2015 Location 1305 Ponderosa Mccall, ID 83638 Valley County Distance Units Vacant Units Vacancy Rate Type Year Built/Renovated Marketing Began Leasing Began Last Unit Leased Major Competitors Tenant Characteristics Contact Name Phone 0.7 miles 17 2 11.8% Garden (2 stories) 1980 / N/A N/A N/A N/A None Couples with children; roommates Garth (208) 634-1234 Market Information Program Annual Turnover Rate Units/Month Absorbed HCV Tenants Leasing Pace Annual Chg. in Rent Concession Utilities Market A/C included -- none 20% N/A 0% 1 week or less None None Cooking Water Heat Heat Other Electric Water Sewer Trash Collection included -- electric included -- electric included -- electric included included included included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Restriction $500 Concession (monthly) $0 1 1 3 600 2 1 9 3 1 Garden (2 stories) Garden (2 stories) Garden (2 stories) Vacant Market Waiting List No 750 $550 5 925 $600 Vacancy Max Rent? Rate 33.3% N/A $0 Market No 1 11.1% N/A None $0 Market No 0 0.0% N/A None 1 Unit Mix Market Face Rent Conc. Concd. Rent Util. Adj. Rent 1BR / 1BA $500 $0 $500 -$83 $417 2BR / 1BA $550 $0 $550 -$106 $444 3BR / 1BA $600 $0 $600 -$130 $470 Amenities In-Unit Blinds Carpeting Oven Security Cable/Satellite/Internet Dishwasher Refrigerator Property Central Laundry Off-Street Parking None Services None Premium Other None None © Novogradac & Company LLP 2015 All Rights Reserved. Range None The Timbers, continued Comments This property recently changed owners in November 2014. Management stated the property is in poor condition and needs renovations. Two of the vacant units are not leasable and will be undergoing repairs in the spring or summer. Management stated the property needs new siding, a new roof, light fixtures, and new appliances. © Novogradac & Company LLP 2015 All Rights Reserved. The Timbers, continued Photos © Novogradac & Company LLP 2015 All Rights Reserved. PROPERTY PROFILE REPORT Thula Street Tri-plex Effective Rent Date 1/21/2015 Location 300 Thula Street Mccall, ID 83638 Valley County Distance Units Vacant Units Vacancy Rate Type Year Built/Renovated Marketing Began Leasing Began Last Unit Leased Major Competitors Tenant Characteristics Contact Name Phone 0.5 miles 3 0 0.0% Duplex 1990 / N/A N/A N/A N/A N/A Couples and singles from McCall Leasing Agent 208-634-7134 Market Information Program Annual Turnover Rate Units/Month Absorbed HCV Tenants Leasing Pace Annual Chg. in Rent Concession Utilities Market A/C not included -- none N/A N/A 0% 1 week None None Cooking Water Heat Heat Other Electric Water Sewer Trash Collection not included -- electric not included -- electric not included -- electric not included included included included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent 2 2 1 1 Duplex Duplex 1 2 850 850 $550 $650 Concession (monthly) $0 $0 Restriction Market Market Waiting List No No Vacant Vacancy Max Rent? Rate 0.0% N/A 0.0% N/A 0 0 Unit Mix Market Face Rent Conc. Concd. Rent Util. Adj. Rent 2BR / 1BA $550 - $650 $0 $550 - $650 $0 $550 - $650 Amenities In-Unit Balcony/Patio Cable/Satellite/Internet Dishwasher Ceiling Fan Garbage Disposal Refrigerator Washer/Dryer Security Blinds Carpeting Exterior Storage Fireplace Oven Walk-In Closet Washer/Dryer hookup None Services None Property Premium Other Off-Street Parking None None © Novogradac & Company LLP 2015 All Rights Reserved. Range None None Thula Street Tri-plex, continued Comments This property is managed by Johnson and Company Real Estate. Units have wood stoves and small shed out back (one for each unit). The contact said the property is typically fully occupied and has little turnover. The center unit of the triplex leases for $550 due to fewer windows. © Novogradac & Company LLP 2015 All Rights Reserved. ADDENDUM D Site and Floor Plans pt ce on C pt ce on C pt ce on C pt ce on C ADDENDUM E Qualifications of Consultants STATEMENT OF PROFESSIONAL QUALIFICATIONS H. BLAIR KINCER, MAI, CRE I. Education Duquesne University, Pittsburgh, Pennsylvania Masters in Business Administration Graduated Summa Cum Laude West Virginia University, Morgantown, West Virginia Bachelor of Science in Business Administration Graduated Magna Cum Laude II. Licensing and Professional Affiliation Member of the Appraisal Institute (MAI) Member, The Counselors of Real Estate (CRE) Member, National Council of Affordable Housing Market Analysts (NCAHMA) Past Member Frostburg Housing Authority Certified General Real Estate Appraiser, No. 31534 – State of Arizona Certified General Real Estate Appraiser, No. RCG1046 – State of Connecticut Certified General Real Estate Appraiser, No. CG100026242 – State of Colorado Certified General Real Estate Appraiser, No 4206 – State of Kentucky Certified General Real Estate Appraiser, No. 1326 – State of Maryland Certified General Real Estate Appraiser, No. GA-805 – State of Mississippi Certified General Real Estate Appraiser, No. 46000039124 – State of New York Certified General Real Estate Appraiser, No. A6765 – State of North Carolina Certified General Real Estate Appraiser, No. GA001407L – Commonwealth of Pennsylvania Certified General Real Estate Appraiser, No. 5930 – State of South Carolina Certified General Real Estate Appraiser, No. 3918 – State of Tennessee Certified General Real Estate Appraiser, No. 4001004822 – Commonwealth of Virginia Certified General Real Estate Appraiser, No. 1101008 – State of Washington Certified General Real Estate Appraiser, No. CG360 – State of West Virginia III. Professional Experience Partner, Novogradac & Company LLP Vice President, Capital Realty Advisors, Inc. Vice President - Acquisitions, The Community Partners Development Group, LLC Commercial Loan Officer/Work-Out Specialist, First Federal Savings Bank of Western MD Manager - Real Estate Valuation Services, Ernst & Young LLP Senior Associate, Joseph J. Blake and Associates, Inc. Senior Appraiser, Chevy Chase, F.S.B. Senior Consultant, Pannell Kerr Forster H. Blair Kincer Qualifications Page 2 IV. Professional Training Have presented at and attended various IPED and Novogradac conferences regarding the affordable housing industry. Have done presentations on the appraisal and market analysis of Section 8 and 42 properties. Have spoken regarding general market analysis topics. Obtained the MAI designation in 1998 and maintained continuing education requirements since. V. Real Estate Assignments – Examples In general, have managed and conducted numerous market analyses and appraisals for all types of commercial real estate since 1988. Performed numerous appraisals for the US Army Corps of Engineers US Geological Survey and the GSA. Property types included Office, Hotel, Residential, Land, Gymnasium, warehouse space, border patrol office. Properties located in varied locations such as the Washington, DC area, Yuma, AZ, Moscow, ID, Blaine, WA, Lakewood, CO, Seattle, WA Performed appraisals of commercial properties such as hotels, retail strip centers, grocery stores, shopping centers etc for properties in various locations throughout Pennsylvania, New Jersey, Maryland, New York for Holiday, Fenoglio, Fowler, LP and Three Rivers Bank. Have managed and conducted numerous market and feasibility studies for affordable housing. Properties are generally Section 42 Low Income Housing Tax Credit Properties. Local housing authorities, developers, syndicators and lenders have used these studies to assist in the financial underwriting and design of LIHTC properties. Analysis typically includes; unit mix determination, demand projections, rental rate analysis, competitive property surveying and overall market analysis. An area of special concentration has been the category of Senior Independent living properties. Work has been national in scope. Provided appraisal and market studies for a large portfolio of properties located throughout the United States. The reports provided included a variety of property types including vacant land, office buildings, multifamily rental properties, gas stations, hotels, retail buildings, industrial and warehouse space, country clubs and golf courses, etc. The portfolio included more than 150 assets and the work was performed for the SBA through Metec Asset Management LLP. Have managed and conducted numerous appraisals of affordable housing (primarily LIHTC developments). Appraisal assignments typically involved determining the as is, as if complete and the as if complete and stabilized values. Additionally, encumbered (LIHTC) and unencumbered values were typically derived. The three traditional approaches to value are developed with special methodologies included to value tax credit equity, below market financing and Pilot agreements. Performed numerous appraisals in 17 states of proposed new construction and existing properties under the HUD Multifamily Accelerated Processing program. These appraisals meet the requirements outlined in HUD Handbook 4465.1 and Chapter 7 of the HUD MAP Guide. H. Blair Kincer Qualifications Page 3 Performed numerous market study/appraisals assignments for USDA RD properties in several states in conjunction with acquisition rehabilitation redevelopments. Documents are used by states, FannieMae, USDA and the developer in the underwriting process. Market studies are compliant to State, FannieMae and USDA requirements. Appraisals are compliant to FannieMae and USDA HB-1-3560 Chapter 7 and Attachments. Completed numerous FannieMae appraisals of affordable and market rate multi-family properties for Fannie DUS Lenders. Currently have ongoing assignment relationships with several DUS Lenders. In accordance with HUD’s Section 8 Renewal Policy and Chapter 9, Mr. Kincer has completed numerous Rent Comparability Studies for various property owners and local housing authorities. The properties were typically undergoing recertification under HUD’s Mark to Market Program. STATEMENT OF PROFESSIONAL QUALIFICATIONS DAVID BOISTURE I. Education Ohio University, Athens, Ohio Masters of Public Administration Frostburg State University, Frostburg, Maryland Bachelor of Science in Political Science and Justice Studies II. Professional Experience Principal, Novogradac & Company LLP Graduate Assistant, Institute for Local Government and Rural Development III. Professional Affiliation LEED Green Associate IV. Real Estate Assignments A representative sample of Due Diligence, Consulting, or Valuation Engagements includes: Have managed and prepared market studies for proposed Low-Income Housing Tax Credit, market rate, HOME financed, USDA Rural Development, and HUD subsidized properties, on a national basis. Analysis includes property screenings, market analysis, comparable rent surveys, demand analysis based on the number of income qualified renters in each market, supply analysis, and operating expenses analysis. Property types include proposed multifamily, senior independent living, large family, and acquisition with rehabilitation. Have managed and assisted in appraisals of proposed new construction, rehabilitation, and existing Low- Income Housing Tax Credit properties, USDA Rural Development, HUD subsidized properties, and market rate multifamily developments. Analysis includes property screenings, valuation analysis, rent comparability studies, expense comparability analysis, determination of market rents, and general market analysis. Assisted in preparing a comprehensive senior housing study in Seattle, Washington for the Seattle Housing Authority. This study evaluated the Seattle Housing Authority’s affordable senior housing project for their position within the entire city’s senior housing market. The research involved analysis of the senior population by neighborhood, income, household size, racial composition, and tenure. Have managed and assisted in the preparation of Rent Comparability Studies according the HUD Section 8 Renewal Policy in the Chapter 9 guidelines. Assisted in the review of Rent Comparability Studies for HUD Contract Administrators. David Boisture Resume Page 2 Assisted in the HUD MAP Quality Control market study and appraisal reviews. Managed and assisted in the preparation of market studies for projects under the HUD Multifamily Accelerated Processing program. The market studies meet the requirements outlined in Chapter 7 of the HUD MAP Guide. Managed and assisted in appraisals of proposed new construction and existing properties under the HUD Multifamily Accelerated Processing program. The appraisals meet the requirements outlined in Chapter 7 of the HUD MAP Guide. Assisted in preparing an approved HUD Consolidated Plan for the City of Gainesville, GA; which included a housing and homeless needs assessment, market analysis, nonhousing needs analysis, and a strategic plan, which conformed to 24CFR Part 91, Consolidated Plan Regulations for the ensuing five-year period (2004-2009). Assisted in various appraisals for the US Army Corps of Engineers including Walter Reed Army Medical Center, proposed office site on the Enhanced Use Lease sites Y and Z at Fort Meade, proposed automobile testing facility at the Yuma Proving Grounds, proposed industrial park at Camp Navajo, and the National Geospatial-Intelligence Agency. Managed the preparation of Site Inspection Reports and Appraisals as the subcontractor to the Transaction Team Specialist hired by the Department of Housing and Urban Development to facilitate the design and sale of HUD’s nonperforming Multifamily and Healthcare notes. Assisted in the preparation of the Fair Market Value analyses for solar panel installations, wind turbine installations, and other renewable energy assets in connection with financing and structuring analyses performed by various clients. The reports are used by clients to evaluate with their advisors certain tax consequences applicable to ownership. Additionally, the reports can be used in connection with the application for the federal grant identified as Section 1603 American Recovery & Reinvestment Act of 2009 and in the ITC funding process. STATEMENT OF PROFESSIONAL QUALIFICATIONS K. DAVID ADAMESCU I. Education The Ohio State University, Columbus, OH Masters of City and Regional Planning Bachelors of Arts, Economics II. Professional Experience Real Estate Analyst, Novogradac & Company LLP Project Director, VWB Research Field Analyst, The Danter Company III. Real Estate Assignments A representative of assignments relating to research and market feasibility studies includes: Written and supervised the production of affordable rental housing market studies for projects located throughout the continental United States as well as Alaska. The preponderance of experience is with the Section 42 Low-income Housing Tax Credit, HUD Section 8, and USDA Rural Development programs. Additional experience authoring market feasibility analyses for market-rate rental housing, condominium housing, single-family housing, senior-oriented housing, seasonal housing, retail, office, golf course/marina resorts, and mixed-use developments. Assisted in numerous appraisals of proposed LIHTC rental housing, commercial office, and commercial retail properties. Analysis typically includes physical inspection of the property and market, concept analysis, demographic and economic analysis, demand and absorption projections, comparable surveying, supply analysis and rent determination, operating expense analysis to determine cost estimates, capitalization rate determination, valuation utilizing the three approaches to value, insurable value estimation, and LIHTC equity valuation. Conducted special research for highest and best use evaluations, the impact of “green” development principals on marketability, and seasonal housing dynamics. Reviewed third-party market studies and appraisals for investors in the secondary market. STATEMENT OF PROFESSIONAL QUALIFICATIONS Jimmy McCune I. Education The Ohio State University, Columbus, OH Masters of City and Regional Planning West Virginia University, Morgantown, WV Bachelor of Arts in Geography II. Professional Experience Researcher, Novogradac & Company LLP, January 2013 – Present Planning and Policy Research Assistant, Ohio Housing Finance Agency, September 2012September 2014 III. Research Assignments A representative sample of Due Diligence, Consulting, or Valuation Engagements includes: ▪ Assisted numerous market and feasibility studies for family and senior affordable housing. Local housing authorities, developers, syndicators and lenders have used these studies to assist in the financial underwriting and design of market-rate and Low-Income Housing Tax Credit (LIHTC) properties. Analysis typically includes; unit mix determination, demand projections, rental rate analysis, competitive property surveying and overall market analysis. ▪ Assisted with numerous appraisals of new construction and existing LIHTC and market-rate properties. ▪ Performed all aspects of data collection and data mining for web-based rent reasonableness systems for use by local housing authorities.