HomeMy WebLinkAboutRedevelopment of Eastern half of Timber Ridge Village Apartments0
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Memorandum
To: Vail Town Council
From: George Ruther, Director of Community Development
Date: November 19, 2013
Subject: Redevelopment of the Eastern One -Half of Timber Ridge Village Apartments
I. Purpose
The purpose of this memorandum is to provide the Vail Town Council with a summary of the
proposed redevelopment of the eastern one -half of the Timber Ridge Village Apartments
located at 1280 North Frontage Road in Vail, Colorado. A summary presentation of the
redevelopment proposal is required pursuant to the terms outlined in the Pre - Development
Agreement, executed by and between the Town of Vail and Gorman and Company.
The summary presentation will address the following topics:
• Proposed Project Program
• Project Next Steps
In the end, the Vail Town Council is being asked to direct the Town Manager to sign the
development application, on behalf of the Town of Vail, to allow the project, as proposed,
to proceed through the Town's development review process.
II. Proposed Project Program
1. Town Council instructed staff to enter into discussions with Jen Wright and Gary Gorman on
the redevelopment of Timber Ridge. All parties agreed that an RFP process was not needed as
that process has failed to achieve our objectives on three previous occasions.
2. Town staff entered into a 120 -day exclusive negotiations process with Jen Wright and Gary
Gorman.
3. Assume no financial subsidies will be provided by the Town. ($8 million gap)
4. A "bottom up" approach based upon carrying capacity of the site has been used to determine
development potential. (ie parking requirement, type of construction, surface parking,
landscape areas, livability, etc.). This approach has resulted in a project which is financially
feasible and can be constructed unlike the previous three attempts.
5. Easternmost 5.24 acres of Timber Ridge. Lots1 -5, a resubdivision of Lion's Ridge
Subdivision, Block C, Town of Vail.
6. Site designated Housing Zone District. Development shall be in full compliance with the
development regulations prescribed for the District.
7. Assemblage of four, three -story tall buildings containing at least 113 dwelling units. At least
70% shall be deed restricted pursuant to zoning requirements.
8. Based upon a recently completed market study, a mix of one and two bedroom units
(26 %/74 %)
9. Eighty -four (84) two bedroom units ranging in size from 870 square feet to 933 square feet
and twenty -nine (29) one bedroom units ranging in size from 597 square feet to 633 square feet.
10. Capable of housing at least 233 persons (1.5 persons /unit average x 29 one bedroom units
= 43.5 persons) (2.25 persons /unit average x 84 two bedroom units = 189 persons)
11. Each unit is provided with its own entrance off of a shared exterior stairwell.
12. Each unit is provided with a washer and dryer, gas furnace, energy star rated kitchen
appliances and a 360 cubic foot storage closet (5'x8'x9').
13. 153 surface parking spaces total. 1 parking space per one bedroom unit and 1.47 parking
spaces per two bedroom unit.
14. >25 du /acre. Density calculation takes into account steep slopes and unbuildable areas of
the site.
15. 35 -year ground lease with no upfront or annual payment. Improvements revert to the Town
at the end of the 35 -year term.
16. Financial provisions ensure the improvements are in good repair at the end of the 35 -year
term.
17. Town obligated to mitigate rockfall hazard. +/- $100,000 initial construction cost with
annual maintenance required. Developer obligated to pay for Frontage Road turn lane
improvements.
18. Deed restriction required consistent with the Housing Zone District 70 %/30%
19. Initial pre - application meetings with Fire and PW. Project proposal is consistent with Town
requirements.
20. CDOT application and meetings pending. Town to apply for CDOT access permit on behalf
of the project.
21. Development application submitted by November 25, 2013. Final PEC meeting on
December 16, 2013. Schedule based upon construction start by late spring 2014.
II. Project Next Steps
A preliminary project schedule has been created to facilitate the successful outcome for this
project. The next steps for the project include:
• Deed restriction discussion with the Vail Town Council
• Final Lease Agreement negotiations with the Vail Town Council
• Rockfall mitigation approval
• Transit stop improvements discussion
Town of Vail Page 2
• Development application submittal to the Town of Vail by November 29th
• Final development application review by the PEC on December 16th
• Conceptual design application review by the DRB on December 18th
• Final design application review by the DRB on January 8th or 22nd
• Submit building permit application by March 15th
• Issuance of building permit by May 18`
This schedule is subject to change as discussions regarding this project continue.
Town of Vail Page 3
Market audy
Apartment Property in Vail, Colorado
November 2013
Prepared by:
Rees Consulting, Inc.
PO Box 3845
Crested Butte, CO 81224
970.349.9845
melanie @reesconsultinginc.com
November 2013
Contents
Introduction................................................................................................. ............................... 1
Purposeof the Study ............................................................................... ...............................
1
Organizationof the Report ....................................................................... ...............................
1
ConsultantQualifications ......................................................................... ...............................
1
1. Project and Site Description ................................................................. ...............................
3
Number, Type and Size of Units .............................................................. ...............................
3
Amenities................................................................................................ ...............................
3
UnitDesign .............................................................................................. ...............................
3
Rents....................................................................................................... ...............................
4
Utilities..................................................................................................... ...............................
4
Accessand Infrastructure ........................................................................ ...............................
5
Parking.................................................................................................... ...............................
5
2. Location Analysis ................................................................................. ...............................
6
Street Address /Street Boundaries ........................................................... ...............................
6
SurroundingLand Use ............................................................................. ...............................
6
Proximity to Services ............................................................................... ............................... 8
Shoppingand Dining ............................................................................ ...............................
8
PublicTransit ....................................................................................... ............................... 9
Bike and Pedestrian Access ................................................................ ...............................
9
Parks................................................................................................... ............................... 9
Marketability............................................................................................ ...............................
9
3. Identification of Market Area Boundaries ........................................... .............................11
4. Market Conditions ................................................................................. .............................13
Rents........................................................................................................ .............................13
Vacancies................................................................................................. .............................14
5. Competitive Analysis ......................................................................... .............................17
Selectionof Comparables ......................................................................... .............................17
GeneralDescription .................................................................................. .............................19
Income, Rent and /or Employment Restrictions ......................................... .............................21
ResidentProfiles ...................................................................................... .............................22
LeaseTerms ............................................................................................ .............................23
Amenities................................................................................................. .............................23
Parking..................................................................................................... .............................25
Utilities...................................................................................................... .............................26
UnitMix .................................................................................................... .............................26
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UnitSize ................................................................................................... .............................28
Vacancies................................................................................................. .............................28
Rents........................................................................................................
.............................30
Disco unts /I ncentives ................................................................................. .............................31
CondominiumRentals ..............................................................................
.............................32
Demographic Trends and Economic Conditions ................................ .............................33
MarketArea Demographics ......................................................................
.............................33
DemographicTrends ................................................................................
.............................35
TheEconomy ...........................................................................................
.............................40
DemandAnalysis ..............................................................................
.............................44
Demand from Market -Area Renters .......................................................... .............................44
Rental Demand from Job Growth ............................................................. .............................46
Rental Demand from Down Valley ............................................................ .............................47
Conclusions and Recommendations ................................................. .............................48
DesignConsiderations ............................................................................. .............................48
UnitMix ................................................................................................. .............................48
UnitSize ...............................................................................................
.............................48
SoundAbatement .................................................................................
.............................49
Utilities..................................................................................................
.............................49
Parking.................................................................................................
.............................49
Marketability of Location ........................................................................... .............................50
OverallMarket Conditions ........................................................................
.............................50
Responsiveness to Demographic and Economic Trends ..........................
.............................50
Competition..............................................................................................
.............................51
Demand for Rental Housing .....................................................................
.............................51
Rents........................................................................................................
.............................52
Rees Consulting, Inc.
November 2013
Introduction
Purpose of the Study
The purpose of this study is to assess the marketability of the proposed redevelopment of
approximately half of the Timber Ridge apartment property in Vail, Colorado. Timber Ridge is
now owned by the Town of Vail. Gorman and Company in team with Wright and Company, a
long -time Vail Valley real estate development firm, proposes to demolish 102 units built in 1981
and now in very poor condition and to replace them with 112 one- and two- bedroom
apartments.
This report evaluates the design and site, analyzes the location, assesses the competition,
provides information on demographic trends and economic condition and determines if
demand exists for the proposed units. Conclusions and recommendations are made on design,
unit mix, rents and amenities.
Organization of the Report
This report consists of eight major sections:
1. Project and Site Analysis
2. Location Analysis
3. Identification of Market Boundaries
4. Market Conditions
5. Competitive Analysis
6. Demographic Trends and Economic Conditions
7. Demand Analysis
8. Conclusions and Recommendations
Consultant Qualifications
Over the past 20 years, Melanie Rees has become an industry leader in housing market analysis
with clients that include private and non - profit developers, public housing authorities, lenders
and local governments. Her focus is on areas throughout the mountain west where housing
costs are high, including the amenity -rich resort communities.
The firm's services generally fall within three categories: housing needs assessments, project
specific market studies and strategic planning and program development. Rees Consulting is an
approved market analyst for programs administered by the Colorado Housing and Finance
Authority and the Colorado Division of Housing.
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November 2013
Work in the Vail Valley has included:
• The Vail Commons Master Plan, through which both ownership townhomes and
employee rental units were developed as part of a mixed -used property on a 6.4 acre
site acquired by the Town of Vail. The 52 townhomes are located on top of a grocery
store yet, with grade separations and other design elements, appear and function as a
residential property.
• Housing needs assessments covering all of Eagle County completed in 1995, 2001 and
2007 in team with RRC Associates of Boulder.
• Market studies for multiple apartment developments including Lake Creek Village, River
Edge, River Run and, as a subcontractor, Middle Creek.
• Workforce housing impact study for the Eagle River Station, a large mixed use
development now in early development stages.
• Consultation during the past year with the Eagle River Water and Sanitation District on
modifications to their extensive, valley -wide employee housing program.
Rees Consulting has prepared market studies for numerous apartment properties in mountain
communities including:
Protect Name
Location
960 East
Durango
Animas Village
Durango
Breckenridge Terrace
Breckenridge
Crested Butte Flats
Crested Butte
Fox Run
Fraser
Gold Hill Village
Central City
Lake Creek Village
Edwards
Melody Ranch
Jackson, WY
Merced de las Animas
Durango
Middle Creek
Vail
Mountain Village
Steamboat Springs
Pence Miller
Avon
Pinewood Village
Breckenridge
River Edge
Avon
River Run
Avon
Swan River Village
Breckenridge
Tabernash Apts.,
Grand County
Valle de Merced
Durango
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1. Project and Site Description
Number, Type and Size of Units
A total of 113 one- and two - bedroom apartments and one leasing /management office are
planned. Of the total, 74% will have two bedrooms and two full bathrooms and 26% will be
one - bedroom units. All will be flats.
The proposed apartments will range in size from 597 to 633 square feet for one bedroom and
from 870 to 933 square feet for two bedrooms. The overall average size will be 889 square feet
in size. All units will have a deck measuring 95 or 115 square feet.
Proposed Unit Type and Size
Unit Type
1 BR
# of Unit!
17
1 BR
12
2 BR /2 BA
42
2 BR /2 BA
36
2 BR /2 BA
6
Total /Average
113
Amenities
The units will have:
597
95
633
115
870
95
911
115
933
115
• A large exterior storage closet off of the balconies that average around 33 square feet in
size for the one - bedroom units and 57.5 square feet for the two - bedroom units;
• Coat closets by the entrance door;
• Walk -in closets;
• Large kitchens with ample counter space and cabinets;
• Microwaves
• Energy star appliances
The property will have an on -site leasing /management office located at the southwest corner
of Building B on the first floor. The 597 square foot office will have the same exterior
dimensions as a one - bedroom unit.
Unit Design
All of the units will have:
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• An 'T' shaped kitchen with room for table;
• A single entrance into the living room;
• A stackable washer and dryer and mechanical room accessed from a door in the kitchen;
The one - bedroom units have a full bathroom with large vanity accessed through the bedroom.
The two - bedroom units will have a master bedroom suite with walk -in closet and full
bathroom. The second bedroom will be located directly across the hall from a full bathroom.
Units will be accessed via interior stairs that lead to the front doors. There are no corridors.
Given the cold, snowy weather in Vail, the interior stairs will not only be safer in winter but will
also shield against cold air entering the units every time the door is opened.
Rents
Rents have not yet been finalized. A range of $1,200 to $1,300 per month is being considered
for the one - bedroom units and the rent for the two- bedroom units will range between $1,600
and $1,700 per month.
Assuming the midpoint of the range, , rents on a per- square -foot basis will range from $1.77 for
the largest two- bedroom apartments to $2.09 for the smaller one - bedroom units, with an
average of $1.90.
Rents by Unit Type
1 BR
17
597
$1,200 - $1,300
$2.09
1 BR
12
633
$1,200 - $1,300
$1.98
2 BR /2 BA
42
870
$1,600 - $1,700
$1.90
2 BR /2 BA
2 BR /2 BA
Total /Average
36
6
113
911
933
820
$1,600 - $1,700
$1,600 - $1,700
$1,548
$1.81
$1.77
$1.90
Utilities
The cost of water, sewer and trash collection will be covered by base rent. Residents will be
responsible for their own electricity and gas. Heat will be forced air gas. While these systems
are far more efficient that the electric baseboard heat in the existing Timber Ridge units, they
are generally less efficient and most costly to operate than hot water heating systems.
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November 2013
Access and Infrastructure
Road access and other infrastructure is in place to serve the 102 apartments that will be
demolished. The existing access off of the Frontage Road is proposed to be replaced with one
new vehicle entry point from the existing Frontage Road.
Parking
A total of 152 surface parking spaces are planned. This equates to a ratio of 1.34 spaces per
unit. One space will be provided free of charge for each unit. An additional space will be
provided for $75 per month on a first come /first served basis.
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November 2013
2. Location Analysis
Street Address /Street Boundaries
The project is located in the town of Vail on the north side of 1 -70, a major east -west interstate
highway through Colorado, at 1280 North Frontage Road. It is about 1.5 miles west of Exit 176,
one of three exits in Vail off of 1 -70.
Project Location Map
Surrounding Land Use
The property is in a primarily residential area. More specifically:
• Immediately to the east of the parcel are Simba Run Vail Condominiums, which include
about 70 one- and two - bedroom, amenity -rich condominiums that are primarily
marketed as short -term visitor rentals.
• Only the east half of the existing Timber Ridge Apartments are to be redeveloped,
meaning that the existing apartments will border the west side of the redevelopment.
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November 2013
These apartments will remain as workforce housing, with units master leased by Vail
Resorts for their employees, until it is redeveloped at a future date.
• The US Post Office is located just beyond Timber Ridge to the west, at 1300 North
Frontage Road.
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The mountainside, with some luxury single -
family homes at the top of the hill and a
road serving residential areas, Lions Ridge
Loop, borders the north end of the
property. The photo shows the hillside
looking north from the eastern access to
the property.
The south end of the site is bordered first by
a pedestrian /bike path, followed by the
Frontage Road, and then 1 -70, with each
path /road separated by a natural grass
median. The photo is looking southeast
from the west access to the property.
November 2013
Vicinity Map
Proximity to Services
Shopping and Dining
The nearest major grocery stores are City Market and Safeway, located less than one mile west
of the property along North Frontage Road. These are reachable via bus transit, personal
vehicle, or the bike and pedestrian trail, which has only a slight incline traveling west.
Several other amenities are located within the same development as the Safeway, including a
bank, barber, UPS store, dental office, child care center, liquor store, coffee shop, Sports
Authority, 7- Eleven and a Holiday Inn. Restaurants include a pizza place, sub shop, cafe, sushi
restaurant and quick serve options, including Subway, McDonalds and Qdoba.
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November 2013
Public Transit
A covered bus stop is located at the existing western access to Timber Ridge apartments. This
bus stop will be redesigned and reconstructed as part of the construction of turn lanes into
Timber Ridge and the proposed apartments. A landscaped entrance will be provided to serve
as a transition between the two properties.
The stop is serviced by the West Vail Red and Green bus routes year round and provides service
every 40- minutes in the summer (May 27 through mid - December), once per hour in the spring
(April 15 through May 26), 30- minute intervals during peak hours in the winter (December 10
through April 14). In the winter, the site is also served by the Lionsridge route at varying
intervals. Buses run between 6 a.m. and 12 a.m. each day, with service offered until about 2
a.m. in the winter. Routes traverse the length of the North and South Frontage Roads, from
West Vail to Vail Village.
Bike and Pedestrian Access
The property is bordered by a bike and pedestrian path on the south, traveling along much of
the Frontage Road. It is located just over one half mile west of the pedestrian overpass bridge,
which ends in Vail near the Lionshead Ski School and Gondola.
A vehicle, bike and pedestrian underpass that would traverse under 1 -70, allowing more
convenient access to the heart of Vail and Lionshead is in the planning phase. The Town of Vail
has hired a firm to study the feasibility and environmental impacts of the underpass, and has
committed to provide 30% of the project's funding. The north end of the underpass would
connect with North Frontage Road very near the east side of the Timber Ridge parcel in front of
the Simba Run condominium complex. The underpass has been discussed for years, but
appears to be moving forward although financing and construction could take several years.
This underpass would enhance Timber Ridge's already very convenient location.
Parks
The redevelopment will include a modest park areas for residents. Otherwise, Town of Vail
parks and numerous mountain trails and federal open spaces are easily accessed from the
property via the bike and pedestrian trails, bus service, and personal vehicles.
Marketability
The site is very marketable. It is in a primarily residential area with easy access to groceries and
other necessary goods and services. With a bike /pedestrian path running along the property
and a bus stop serviced by two public transit routes, it is very convenient. A car is not required
to reach most job sites, shopping, skiing and Vail's other resort amenities.
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November 2013
Views of the mountains to the south, southwest and southeast are desirable, as well as the
southern sun exposure for units facing that direction. Noise from traffic is of concern for south
facing units, however, given the proximity to 1 -70 and bus /truck traffic along the Interstate and
the Frontage Road.
The apartments will be situated such that some will be facing toward the north and south and
others will be facing west and east, providing options based on views, sun exposure, highway
noise and other preferences.
• Units on the north side of the buildings will provide views of the side of the mountain
and some will also view the parking lot, but will be more protected from 1 -70 noise than
other units;
• Units facing south will have greater sun exposure in the winter and provide views of the
mountains, but will be most prone to highway noise;
• Units facing west and east will have limited mountain views and varying degrees of sun
exposure during the day, and moderate exposure to noise from the Interstate.
The project will retain trees along the south border, helping to mitigate the sight and sounds of
traffic. Nonetheless, the use of advanced soundproofing in units to protect against such noise
should help the marketability of units.
The site is highly visible; it can be seen from 1 -70, both frontage roads and much of the town.
The redevelopment, which has already received coverage in the Vail Daily newspaper, will be
well known, particularly since Timber Ridge is adjacent to the Post Office, which most Vail
residents will at least occasionally visit. This exposure will benefit marketing efforts. It will not
be difficult to provide directions to potential residents when they make inquiries.
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3. Identification of Market Area Boundaries
The primary market area (PMA) for the proposed project includes the towns of Vail and Avon
and the unincorporated community of Eagle -Vail in between. It includes Census Tracts 5.02,
5.03, 7.01, 7.02 and 7.03. These boundaries were selected based on the following factors:
• The communities are in close proximity with only minor physical separation; from the
Timber Ridge site to the heart of Avon is eight miles. Beyond Avon, communities are
distinct and separated by large areas of undeveloped land.
• Vail and Avon are similar in terms of their economies and jobs offered; both are home
to destination ski areas, high -end accommodations, boutique shopping and fine dining.
Down valley communities are very different with big -box retailers and commercial
development that primarily serves the local population.
• The rental inventory is similar throughout the market area with apartment properties
that primarily target low -wage year -round employees or seasonal workers.
• Demographic characteristics are also similar within the PMA, yet very distinct from
those in down - valley communities, as described in the Demographic Trends and
Economic Conditions section of this report.
Primary Market Area Map
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Avon 04110
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�. 1 l
r
S.01
.....x.7.02
•l
5.02.;
Nintur %920
!
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The PMA does not include the Beaver Creek resort, Arrowhead or other development to the
west. While it includes the residential units accessed by the Piney Lake Road, there are no
apartment projects in this remote area, and likely few units occupied as long -term rentals.
The PMA includes approximately 42% of the housing units in Eagle County, but only 33% of its
households and 29% of the county's population. The up- valley communities of Vail and Avon
have proportionately more second /vacation homes than the down - valley communities of
Edwards, Wolcott, Eagle and Gypsum, which accounts for the higher percentage of housing
units within the PMA compared to population.
Approximately 35% of the population within the PMA resides in Vail. More reside in Eagle -Vail,
which is primarily a residential community where many local residents live. Through
annexations to the east, Avon now encompasses undeveloped areas, but also takes in several
apartment projects that are covered in the Competitive Analysis section of this report.
Population and Housing Units, 2010
Source: 2010 Census
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November 2013
4. Market Conditions
This section of the report examines both current and historical occupancy levels /vacancy rates
and rents throughout Eagle County. It identifies trends and provides context for interpreting
the information presented on seven comparable properties in the Competitive Analysis section
of this report. Two sources of data were used:
The Multifamily Rent and Vacancy Survey published by the Colorado Division of Housing.
It is conducted twice yearly in the first and third quarters. The survey is flawed by an
inconsistent sample. It reported on around 1,200 units from 2008 through 2011 but, as
of the first quarter of 2013, covered only 831 units. The properties covered by the
survey are not disclosed. Nonetheless, it is useful for examining historical trends.
• Reports compiled and published by Polar Star Properties, which manages three of the
seven properties examined in the Competitive Analysis section of this report. Their
report covers nine properties (plus two seasonal housing projects owned by Vail
Resorts, which were excluded from this analysis). The reports provide detailed project -
by- project information that allows comparison of up valley and down valley
performance and monthly occupancy levels that illustrate seasonality in the market.
Historical data, however, is no longer published.
Rents
Rents are generally higher in the market area than down valley.
• Eagle Villas, a LIHTC project in Eagle, has an average per square foot rent of $1.04.
• Lake Creek, a project in good condition in Edwards with employment restrictions only
(i.e., no income or rent limits) rents for $1.16 per square foot, on average.
• Timber Ridge in Vail, which is in poor condition and managed by the same company as
Lake Creek, commands an average rent of $1.37.
• Middle Creek, a LIHTC project in Vail with 44 market rate three - bedroom units, rents for
the most, at $1.97 per square foot.
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November 2013
Rents by Property, July 2013
Buffalo Ridge
Location Avg.
Avon
Rents Avg.
$1,341
Rents/SF
$1.27
Buffalo Ridge II
Avon
$924
$1.69
EagleBend
Avon
$995
$1.36
Eagle Villas
Eagle
$1,036
$1.04
Kayak Crossing
Avon
$1,576
$1.31
Lake Creek
Edwards
$1,023
$1.16
Middle Creek
Vail
$1,262
$1.97
Timber Ridge
Vail
$1,026
$1.37
River Run
Avon
$1,275
$1.28
Overall
$1,162
$1.35
Source: Polar Star Properties
Rents are starting to rise after several post- recession years when rates dropped and discounts
were widespread. The overall average rent increased 3% between July 2012 and 2013, and the
per- square -foot average grew by 15 %.
Change in Average Rents
July 2012 — July 2013
I
Avg. Rent /Unit $1,159 $1,162
Avg, Rent /SF $1.17 $1.35
Source: Polar Star Properties
Vacancies
The following chart illustrates that apartment vacancy rates remained low through 2009, shot
upward in 2010, started to decline in 2011 and dropped to their lowest point in three years by
the first quarter of 2013. More specifically:
• Vacancy rates remained low through 2009, long after the recession caused rental
markets to soften throughout much of the country. This was due to the strong influence
that construction has on jobs and the economy in the Vail Valley; construction projects
initiated while the development boom continued through 2007 were not completed
until 2009.
• In 2010, vacancies shot upward from a combination of job losses and Vail Resorts
terminating their master leases on many units. Their need to import seasonal
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November 2013
employees dropped when high unemployment freed up many local workers to fill
seasonal ski resort positions. Vail Resorts had extremely high vacancies in the seasonal
worker properties they owned, as was the case at other Colorado ski resorts.
• Vacancy rates also vary by season. Rates are consistently lower in the first quarter of
each year than in the third quarter. The high vacancy rate of 14.2% in the third quarter
of 2012 is an anomaly. It was likely due to turnover and reporting inconsistencies rather
than a sudden short-term spike in the vacancy rate.
Multifamily Vacancies, 2008 -2013
8.0%
6.7
6.0%
4.5%
2.7% 2.9%
2.1%
Source: Colorado Division of Housing
The following table shows that down - valley properties have similar occupancy levels as those
within the market area. This means that, as occupancies levels peak during the ski season and
as they continue to rise in general with the economy's recovery, moving down valley will not be
a viable alternative to the decreasing availability and rising rents in the Vail area.
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16.0%
14.2
14.0%
12.0%
a
10.0%
�v
M
ac
U
8.0%
V
M
>
6.0%
4.0%
3.5%
2.0%
0.0%
1st 3rd 1st 3rd 1st 3rd 1st 3rd 1st 3rd 1st
Qtr 08 Qtr 08 Qtr 09 Qtr 09 Qtr 10 Qtr 10 Qtr 11 Qtr 11 Qtr 12 Qtr 12 Qtr 13
8.0%
6.7
6.0%
4.5%
2.7% 2.9%
2.1%
Source: Colorado Division of Housing
The following table shows that down - valley properties have similar occupancy levels as those
within the market area. This means that, as occupancies levels peak during the ski season and
as they continue to rise in general with the economy's recovery, moving down valley will not be
a viable alternative to the decreasing availability and rising rents in the Vail area.
Rees Consulting, Inc. 15
November 2013
Occupancy Levels by Property, July 2013
Buffalo Ridge
# Units
68
Occupancy
Rate
93%
Buffalo Ridge II
176
90%
EagleBend
294
94%
Eagle Villas
120
90%
Kayak Crossing
50
98%
Lake Creek
270
96%
Middle Creek
142
98%
Timber Ridge
198
87%
River Run
117
93%
Total /Average
1435
93.2%
Source: Polar Star Properties
Rees Consulting, Inc. 16
November 2013
5. Competitive Analysis
This section of the report examines seven apartment properties within the primary market
area. It covers:
• General description including location, age, number of units, condition and photos;
• Income and /or rent restrictions;
• Resident profiles;
• Lease terms;
• Amenities;
• Parking;
• Utilities;
• Unit mix;
• Unit size;
• Vacancies;
• Rents, per unit and per square foot; and
• Discounts /incentives.
This section also provides information on the rents charged for condominium rentals located
within the PMA. The proposed units, being unlike existing apartment projects in the area, will
be the most comparable to condominium rentals in terms of design, location, amenities and
rents. This is because the proposed units will target a higher income population than projects
with income and /or rent restrictions and will be much newer and in a superior location than
other market rate apartment properties.
Selection of Comparables
The selection of properties was based primarily on location and target market served. All
apartment properties that are located within the primary market area and offer at least some
market rate units were included. The only apartment projects within the PMA that were not
examined as part of this analysis are:
• Riverview Apartments, a 72 -unit rent subsidized Section 8 complex in Eagle -Vail serving
very low income households;
• Three seasonal employee projects owned by Vail Resorts: First Chair, Vail, a 124 -bed
project completed in 2011; River Edge, Avon, a 103 -unit project built in 1997; and The
Tarnes, Avon, a 136 -unit project built in 2000;
• 18 rental units located at Vail Commons above retail space; and
• 36 units in two projects (Buzzard Park and Creekside) owned by the Town of Vail and
rented to Town employees.
Rees Consulting, Inc. 17
November 2013
Combined, the six comparable properties have a total of 1,046 units. These units house
approximately 30% of the renter households residing in the market area.
Property Location Map
Rees Consulting, Inc. 18
General Description
EagleBend is on the north bank of the Eagle
River on a long narrow site with buildings
running east /west. It is near the center of
Avon, yet is in a quiet location. Rents are
higher for units located directly on the river.
Even though it was built in 1990, the 294 -unit
property appears to be well maintained and in
good condition and has attractive, mature
landscaping.
http : / /www.eaglebendapartments.com/
Kayak Crossing is located on the river west of
Vail near Dowd Junction, the area in the
immediate vicinity of the 1 -70 Minturn exit.
The 50 -unit property has access to fishing and
a kayak launch on site. The units are in three -
story buildings with interior stairs. The unit
mix is unusual; most units have five bedrooms
designed initially to function as housing for
seasonal Vail Resort employees. Polar Star
Properties now manages all units for year
round employees. The property appears to be
in excellent condition.
http: / /www.kayakcrossing.com/
Rees Consulting, Inc.
November 2013
w f .•
Buffalo Ridge is in Avon on the north side of I-
70 along a hillside yet in an isolated location.
The four -story buildings are aligned
east /west; all units face south with views. It
was developed as two separate projects for
financing purposes. In total, there are 244
units. One phase with 68 units is owned by a
non - profit housing corporation and managed
by Polar Star Properties. The remaining 176
units are owned /managed by Corum Real
Estate Group.
http : / /www.buffaloridgeapts.com/
http : / /buffaloridgeapartments.com/
19
Middle Creek is a LIHTC property completed
in 2004. It is owned and managed by
Coughlin and Company. The 142 units are
located on south sloping hillside just to the
north of 1 -70. Buildings range from three
stories served by stairs to eight stories with
an elevator. Most parking is in a central
garage. http : / /www.middlecreekvillage.com /
November 2013
River Run is a 117 -unit condominium project
that functions as an apartment property. It
offers a mix of one -, two- and three -
bedroom units. It is nicely landscaped and
on the Eagle River next to Kayak Crossing in
a quiet location that is convenient to either
Vail or Avon.
http: / /www.riverrunvaiIvaIley.com /index.as
PX
Timber Ridge has 199 units, all with two
bedrooms and one bath. Vail Resorts
master leases a portion of the units for its
employees. The current lease is for 98
units. At its pre- recession peak, VR master
leased 170 units. Timber Ridge does not
have a web site.
Rees Consulting, Inc. 20
November 2013
General Description of Competing Properties
Income, Rent and /or Employment Restrictions
• At Buffalo Ridge there are no income restrictions, but rents must not exceed rates that
are affordable for households with incomes at 80% AMI.
• Buffalo Ridge II has a combination of LIHTC units at 50% and 60% AMI and market rate
units that have an Eagle County employment restriction. All but four of the 44 studios
and four of the 44 one - bedroom units are LIHTC restricted at 50% and 60 %, respectively,
whereas 52 of the two - bedroom units have LIHTC restrictions and 36 are market.
Of the 142 units at Middle Creek, 97 are income restricted, 91 at 60% AMI and 6 at 50%
AMI. The three - bedroom units are the only ones without income restrictions. About
10% of the inquiries are from persons /households with incomes above the 60% AMI
restriction.
Rees Consulting, Inc. 21
Ridge
Middle
Management
Polar Star
.•
Corum
Polar Star
Polar Star
Coughlin
Texas Capital
Ridge
Corum Real
Properties
Real
Properties
Properties
and
Partners LLC
Estate Grp
Estate Grp
Company
Address
0930 Swift
1020 Swift
0010
0033
145 N.
41929 Hwy 6
1208 N.
Gulch Rd.
Gulch Rd.
Stonebridge
Kayak Ct.
Frontage
Frontage
Dr.
Rd. w.
Rd. w.
Location
Avon
Avon
Avon
Avon
Vail
Avon
Vail
Property Type
4 stories
4 stories
3 stories
3 stories
3-8
3- 4 stories
(garden
(garden
stories
level w/3
level w/3
floors
floors
above)
above)
Unit Type
flats
flats
flats
flats
flats
flats; lofts,
flats
townhomes
Year Built
2003
2003
1990
2000
2003 -04
1985
1981
General
excellent
excellent
good
good
excellent
good
poor
Total Units
68
176
294
50
142
117
199
Income /Rent
Restrictions
50% AMI
40
6
60% AMI
92
91
80% AM I
68
120% AMI
294
50
None
44
45
117
199
Income, Rent and /or Employment Restrictions
• At Buffalo Ridge there are no income restrictions, but rents must not exceed rates that
are affordable for households with incomes at 80% AMI.
• Buffalo Ridge II has a combination of LIHTC units at 50% and 60% AMI and market rate
units that have an Eagle County employment restriction. All but four of the 44 studios
and four of the 44 one - bedroom units are LIHTC restricted at 50% and 60 %, respectively,
whereas 52 of the two - bedroom units have LIHTC restrictions and 36 are market.
Of the 142 units at Middle Creek, 97 are income restricted, 91 at 60% AMI and 6 at 50%
AMI. The three - bedroom units are the only ones without income restrictions. About
10% of the inquiries are from persons /households with incomes above the 60% AMI
restriction.
Rees Consulting, Inc. 21
November 2013
• At Timber Ridge at least one member of each household must be employed in Eagle
County; however, there are no income or rent restrictions imposed.
• River Run has no employment, income or rent restrictions.
• Kayak Crossing, which is owned by a non - profit corporation, has income restrictions of
120 %AMI, but no rent restrictions.
Resident Profiles
The resident profiles vary by property. In general, they reflect the way in which demographic
trends vary within Eagle County. Residents living at apartment properties in Vail tend to be
single, living alone or with a roommate(s), or couples without children. The two properties in
the Dowd Junction area, located about mid -way between Vail and Avon, have some families
with children, but most households are adult -only. The properties farther down valley in Avon
are more family oriented with larger households and many children.
• Buffalo Ridge has a wide mix of residents with single persons living alone in the studios
and about a 50/50 mix between singles living alone and couples in the one - bedroom
units. Approximately 40% to 50% of the LIHTC two- bedroom units have families with
children. The non -LIHTC two and three - bedroom units serve both roommate and family
households. About half of the residents move in from locations outside of Eagle County.
• At Middle Creek, approximately 80% of residents move to the property from out of
state. The rest typically move from down - valley locations, with some occasionally
coming from elsewhere in the Vail area. About 60% of the property's one - bedroom
units are occupied by two persons, whereas only about 10% of its two - bedroom units
are occupied by just one person.
• Timber Ridge attracts residents who are new to the area, most coming from out of
state. Rarely does it draw residents from other properties in the Vail area. It is in such
poor condition that it is considered to be the last choice for persons who want to live in
Vail. About 40% to 50% of units are occupied by roommate households, with the rest
being evenly split between singles living alone and couples. Very few children live at
Timber Ridge.
• While about half of the residents at River Run move there from out of state, the
property attracts about 40% of its residents from the Vail area and another 10% from
Rees Consulting, Inc. 22
November 2013
down valley. About 40% of its one - bedroom units are occupied by two persons,
whereas 10% of its two- bedroom units have one occupant.
• EagleBend is a family- oriented project where the majority of residents are Hispanic.
Most have children. About 80% of the property's one - bedroom units have two
occupants. Very few, if any, of the two - bedroom units are lived in by only one person.
Lease Terms
Most properties now offer only one -year leases. Timber Ridge has seven six -month leases for
which it charges $50 more per month. Buffalo Ridge II also offers six month leases but at no
additional cost. When occupancy levels were lower in 2010 and 2011, management was more
flexible and offered six month or month -to -month leases.
Property managers schedule most of their leases to expire in the late summer or fall so that
units can be leased quickly as the ski season approaches. During the summer of 2012, Polar
Star sought 18 -month leases in order to carry tenants through until the ski season the following
year. Leases that expire in the spring typically take the longest to fill; however, property
managers reported little trouble filling vacancies that occurred in the spring and early summer
of this year.
Amenities
None of the apartment properties could be considered Class A yet most offer the amenities
most desired by renters in mountain resort communities, including balconies /patios, extra
storage space and on -site laundry.
None of the properties provide in -unit washers and dryers, yet River Run, the only one with
hookups, reports that many residents provide their own appliances. Other properties report
that residents bring in portable washers and dryers. Although two properties offer free WI-171 in
their community building /room, none have internet service throughout the property.
Rees Consulting, Inc. 23
November 2013
Amenities by Project
Community Room
Buffalo
Ridge
Buffalo
Ridge
Eagle
X
Kayak
Middle
X
X
.•
Playground
X
BBQ
X
X
X
X
X
On Site Office
X
X
X
X
X
Covered Parking
X
X
Private Garages
60
$100 /mo
85
$100 /mo
Balconies /patios
X
X
X
X
X
Walk -in Closets
X
X
X
Storage Closets
X
X
X
X
X
Free WI -FI
X in
community
room
X in
clubhouse
Cable TV
X
X
X
X in VR
units
Washers /Dryers
W/D Hookups
X
Central Laundry
X
X
X
X
X- 2
X
X- 2
Microwaves
X
X
Other:
Air
conditioning
Air
conditioning
Basketball
Hot tub
Sauna
Fitness Ctr
Pets Allowed
$300 dep
$25 /mo
$300 dep
$10 /mo
Cats only
$300 dep
$25 /mo
$300 dep
$25 /mo
$300 dep
$200 2nd
$25 /mo
$400 dep
$25 /mo
$300 dep
All properties allow pets and all but EagleBend allow dogs. Most charge a $300 pet deposit,
half of which is non refundable. All except Timber Ridge charges rent for pets, typically $25 per
month.
River Run has the most amenities. Designed as condominiums, the property has a nicely
furnished clubhouse with billiards, copy /fax machines and free WI-Fl. Units have fireplaces,
ceiling fans and, in some units, vaulted ceilings.
EagleBend has many amenities including a playground; the only property that provides one.
The leasing office for Polar Star's three properties is located at EagleBend. Polar Star provides
bilingual staff at its three properties as well as basic cable TV that residents can upgrade if
desired.
Rees Consulting, Inc. 24
November 2013
Timber Ridge offers the fewest amenities, but does have storage closets and an on -site leasing
office.
Parking
Parking has to be carefully managed at some properties, especially during the peak ski season.
While all have good proximity to a public transit stop with the exception of Buffalo Ridge, most
residents have cars. They often do not use their cars for transportation to their jobs since
parking is unavailable or very expensive in close proximity to where they work.
Most properties have parking policies and enforced regulations. Polar Star properties issues
two parking passes for the three - bedroom units at all of their properties and only one pass for
two - bedroom units in some cases. They report that parking continues to be problematic for
many of their residents and results in regular booting of unauthorized vehicles.
• At Buffalo Ridge, there are 60 private garages for 68 units, which rent separately for
$100 per month. The property also has 95 surface parking spaces for a ratio of 2.28
spaces per unit, or roughly 0.9 spaces per bedroom. At this ratio, parking is tight.
• Buffalo Ridge II has 85 garages that rent for $100 per month plus one surface space per
unit with a few additional spaces for visitors. Parking is a challenge. While the property
is served by a school bus, the nearest public transit stop is at the bottom of the hill.
Managers are attempting to restore transit service.
• Kayak Crossing offers only surface parking free of charge. Although the number of
spaces is unknown, parking is ample for their resident's needs.
• Middle Creek has 22 surface parking spaces; the rest are in a central garage. Many
residents (typically 30% to 40 %) do not have cars. One space is provided free of charge
for the LIHTC units; $75 is charged per space for all other spaces, whether surface or in
the garage. Management reports parking is adequate.
• Property managers do not know the number of surface parking spaces at River Run but
parking is adequate and there are no fees for parking.
• Timber Ridge has 220 surface parking spaces for its 199 units. One space is provided per
unit free of charge. A $75 monthly fee is charged for 15 additional parking spaces.
Because of its convenient location next to a transit stop, day skiers park illegally on site
to avoid $30 per day parking fees in the town's public garages. Parking regulations are
enforced by towing with a $200 charge to retrieve cars. Even discounting the problems
caused by day skiers, spaces are inadequate for residents and their guests during the
peak ski season.
Rees Consulting, Inc. 25
November 2013
Utilities
Most properties charge residents for some or all utilities in addition to rent. At Middle Creek,
hot water and heat are provided as part of rent for LIHTC units; $4S per month is charged for
gas heat and hot water in the three - bedroom units. Timber Ridge is the only property where
residents are responsible for all of their utilities with water /sewer and trash covered by rent.
Buffalo Ridge is the only property that has air conditioning necessitated by its location on a
south - facing slope with south - facing windows.
Utility Charges by Property
Type of Heat
Buffalo
Hot
water
Buffalo
Ridge 11
Hot
water
Eagle
Bend
Hot
water
Kayak
Crossing
Gas
Middle
Creek
Hot
water
Run
Electric
baseboard
Ridge
Electric
baseboard
Utility Provided
Heat
X
X
X
X
X
Hot Water
X
X
X
X
X
Water /Sewer/
Trash
X
X
X
X
X
X
Electricity
X
X
X
Gas
X
X
X
X
Utility Charges
None
Studio
$79
1 BR
$170
$100
$150
$59
2 BR
$185
$110
$170-
$175
$180
$95
3 BR
$200
$190
$200
$45
$127
4 BR
$220-
$240
Unit Mix
Most of the comparable properties offer at least three types of units. Timber Ridge is the only
exception; all units have two bedrooms and one bathroom. Just over half of all comparable
units have two bedrooms. Only one property, River Run, provides two- bedroom /two-
bathroom units. The other properties offer only one bathroom in their two- bedroom units.
Rees Consulting, Inc. 26
November 2013
Unit Mix by Property
Studios
Buffalo
Ridge
Buffalo
Ridge 11
44
Eagle
Bend
Kayak
Crossing
Middle
Creek Run
45
.-
Ridge
89
Total
8.5%
1 BR
4
44
112
29
38
227
21.7%
2 BR /1 BA
24
88
138
2
24
199 475
45.4%
2 BR /2 BA
59
59
5.6%
3 BR
40
44
21
44
20
169
16.2%
4+ BR
27
27
2.6%
Total
68
176
294
50
142
117
199 1046
100.0%
Buffalo Ridge has a high proportion of large units, while Buffalo Ridge II has smaller units — most
are studios or have one bedroom. Buffalo Ridge has three different two- bedroom /one-
bathroom floor plans.
EagleBend has a unit mix which is commonly found in apartment properties in urban market
areas with more two - bedroom units than any other type. EagleBend has three different one -
bedroom floor plans and four designs for its two - bedroom units.
The unit mix at Kayak Crossing is atypical. It is the only property that offers units with four or
more bedrooms. It has no one - bedroom units and only two two - bedroom units. The property
was originally designed to primarily provide housing for seasonal workers; however, since Vail
Resorts discontinued their master leasing of units, they are now occupied on a one -year lease
basis.
Middle Creek offers studios through three - bedroom units; the two - bedroom units are the
easiest to lease and keep occupied. Units with mountain views are popular. Most bathrooms
at Middle Creek have showers only. Tubs are only in one of the bathrooms in the three -
bedroom units.
At River Run, the 19 two- bedroom loft units are most popular. One bedroom and bath are on
the lower floor with the other bedroom and bathroom in the loft, allowing greater privacy for
roommate households. The smaller two- bedroom units have 1% baths.
Rees Consulting, Inc. 27
November 2013
Unit Size
Units vary from very small 325 square -foot studios to large four - bedroom units with dens
averaging 1,271 square feet. Average sizes are as follows:
• 360 square feet for studios;
• 603 square feet for one - bedroom units;
• 804 square feet for two - bedroom /one- bathroom units;
• 1,088 square feet for two - bedroom /two- bathroom units (one project only);
• 1,111 for three - bedroom units; and
• 1,271 for units with four + - bedrooms.
Unit Size by Property
Vacancies
Among the seven properties examined, the overall vacancy rate was 7.5% as of mid - August. It
was highest for studios (11.2 %), followed by three - bedroom units (10.1 %). It was lowest for
two - bedroom /two- bathroom units (none vacant) and for one - bedroom units (1.8 %). This
variation by unit type appears to be typical. Property managers report that:
• One- and two - bedroom units are the easiest to lease and keep occupied;
• Studios typically have high vacancy rates and turnover. They are relatively easy to lease
as the ski season approaches; and
• Three - bedroom units are typically the last to lease. Renters prefer not to live with
multiple roommates but for those who are willing to do so, the three - bedroom units are
the most economical choice.
Rees Consulting, Inc. 28
Buff alo
Buffalo Eagle
Kayak Middle
Ridge
Studios
325
395
360
1 BR
605
599 542 -594
495
750
603
565 avg
2 BR /1 BA
846-953
872 736-880
828 685-750
750 804
886 avg
771 avg
718 avg
2 BR /2 BA
975
1088
1200
3 BR
1199
1029
1085 940 -945
1300
1111
4+ BR
1271
1271
Vacancies
Among the seven properties examined, the overall vacancy rate was 7.5% as of mid - August. It
was highest for studios (11.2 %), followed by three - bedroom units (10.1 %). It was lowest for
two - bedroom /two- bathroom units (none vacant) and for one - bedroom units (1.8 %). This
variation by unit type appears to be typical. Property managers report that:
• One- and two - bedroom units are the easiest to lease and keep occupied;
• Studios typically have high vacancy rates and turnover. They are relatively easy to lease
as the ski season approaches; and
• Three - bedroom units are typically the last to lease. Renters prefer not to live with
multiple roommates but for those who are willing to do so, the three - bedroom units are
the most economical choice.
Rees Consulting, Inc. 28
November 2013
Vacancies by Property and Unit Type, Mid August 2013
Studios
Buffalo
Ridge
Buff alo
Ridge 11
10
Eagle
Bend
Kayak
Crossing
Middle
Creek
Run
Ridge
10
11.2%
1 BR
2
1
1
4
1.8%
2 BR /1 BA
8
1
37
46
9.7%
2 BR /2 BA
0
0.0%
3 BR
4
11
2
17
10.1%
4+ BR
1
1
3.7%
Total Vacant
4
20
13
1
2
1
37
78
7.5%
Total Units
68
176
294
50
142
117
199
1046
Vacancy
Rate
5.9%
11.4%
4.4%
2.0%
1.4%
0.9%
18.6%
7.5%
Vacancies are lowest during the ski season. All property managers report that they expect
100% occupancy by November 15Y if not sooner. As of mid - August:
• Buffalo Ridge had a vacancy rate of 5.9 %; all vacant units had three bedrooms.
• Buffalo Ridge II had 20 of 176 units vacant, for an overall vacancy rate of 11.4 %. All of
the vacant units were under LIHTC income restrictions. Property management reported
that their market units fill the fastest because many applicants have incomes higher
than allowed for the LIHTC units. Half of the vacant units were studios, which typically
have the highest turnover. The vacancy rate for the 325 square foot studios was 23 %.
• EagleBend had an overall vacancy rate of 4.4% primarily due to 11 vacant three -
bedroom units; however, several of these units were leased for future occupancy.
• Kayak Crossing had only one vacant four - bedroom unit, which equates to a very low
vacancy rate of 2 %.
The vacancy rate at Middle Creek was 1.4 %. Only two units were vacant, both of which
were three - bedroom units. Studio units have a high rate of turnover. Most turnover
when leases expire; however, most residents stay at Middle Creek moving into a one -
bedroom unit alone or into a two - bedroom apartment with a roommate. Usually all
three - bedroom units turnover. Overall turnover is 60% per year with most residents
leaving the area.
Timber Ridge had the highest vacancy rate by far of the comparable properties due
primarily to the condition of units. Of its 199 units, 37 were vacant yet most of those
were out of service; only eight units were vacant and available to rent. Adjusting for the
out -of- service units drops the effective vacancy rate from 18.4% to 4 %. The 98 units
Rees Consulting, Inc. 29
November 2013
master leased by Vail Resorts are always counted as occupied whether or not they are
since rent is being paid on the units and they are not available for non -VR employees to
rent.
• River Run had the lowest vacancy rate at 0.9 %; only one of its one - bedroom units was
available to lease.
Rents
The overall weighted average rent as of August was $1,132 among the seven properties. The
average ranged from:
• $704 for studios;
• $901 for one - bedroom units;
• $1,072 for two - bedroom /one- bathroom units;
• $1,443 for two - bedroom /two- bathroom units; and
• $1,725 for units with four+ bedrooms.
Rents by Unit Type and Property
• LIHTC units were priced at the maximums allowed, which were below market rates for
identical units.
• The market units at Buffalo Ridge II rented for $5 less per month than the same type of
unit at Buffalo Ridge.
Rees Consulting, Inc. 30
Buffalo
Buffalo Ridge
.. le
River Timber
Average
Ridg
.•
Studios
$655 50% AMI
$744
$704
$735 mkt
50 %AMI
1 BR
$930
$845 60% AM
$785 -$830
$957
$1,200
$901
$925 mkt
2 BR /1 BA
$1,220
$1020 60 %AM1
$995 - $1,065
$1,140
$1,145
$1,075
$1,072
$1095 mkt
$1,130 -1,195
2 BR /2 BA
$1,375
$1,443
$1,475
3 BR
$1,455
$1,275-
$1,450
$1,900
$1,650
$1,598
$1,345
$2,200
4+ BR
$1,650
$1,725
$1,800
Average
$1,341
$904
$995
$1,576
$1,260
$1,390 $1,075
$1,132
• LIHTC units were priced at the maximums allowed, which were below market rates for
identical units.
• The market units at Buffalo Ridge II rented for $5 less per month than the same type of
unit at Buffalo Ridge.
Rees Consulting, Inc. 30
November 2013
• EagleBend's rates vary according to whether the unit is on or off the Eagle River. Off
river units are discounted $45 to $70.
• Kayak Crossing's rents are in the middle of the range, but $200 per month lower than
the same type of unit at neighboring River Run.
• At Middle Creek, rents for the three - bedroom units vary by $300 per month depending
primarily by location within the property; premium rents are charged for the best views.
The maximum rents allowed are charged for the LIHTC and HOME units.
• At Timber Ridge, $50 more per month is charged for six -month leases
• At River Run, units in the two buildings that are not on the river rent for $75 less per
month than the rate shown in the table.
The average rent per square foot was $1.47 in August. It ranged from $1.30 to $1.96. The rents
generally decrease as the unit size increases; however, the high rents per square foot for the
three - bedroom units at Middle Creek ($2.17/SF) altered this pattern, which is atypical. Rents
per square foot by property varied little, ranging from $1.27 to $1.42, with the exception of
Middle Creek at $1.93, again due to the unrestricted three - bedroom rents.
Rents per Square Foot
Discounts/Incentives
Discounts are disappearing. In 2010 through at least the first half of 2012, discounts were
common, like one to two months free rent. One property manager said, "We were buying our
occupancies."
Rees Consulting, Inc. 31
Buffalo
Ridge
Buffalo
Ridge 11
Eagle
Bend
Kayak
Crossing
Middle
Creek
Run
Ridge Average
Studios
$2.02
$2.26
$1.88
$1.96
1 BR
$1.54
$1.41
$1.54
$1.42
$1.93
$1.60
$1.49
2 BR /1 BA
$1.38
$1.17
$1.26
$1.36
$1.38
$1.59
$1.43 $1.36
2 BR /2 BA
$1.41
$1.23
$1.29
3 BR
$1.21
$1.29
$1.43
$2.17
$1.27
$1.52
4+ BR
$1.30
$1.30
Average
$1.27
$1.47
$1.36
$1.31
$1.93
$1.42
$1.43 $1.47
Discounts/Incentives
Discounts are disappearing. In 2010 through at least the first half of 2012, discounts were
common, like one to two months free rent. One property manager said, "We were buying our
occupancies."
Rees Consulting, Inc. 31
November 2013
• At Polar Star's three properties, the net effective rents are about 10% lower than stated
rents from discounts offered during the past year. One- and two- bedroom units are
now commanding stated rents but "one month off' is still being offered for the larger
units. Higher discounts are occasionally offered for three - bedroom units. Some older,
soon to expire leases at Kayak and Buffalo Ridge are still under the two month free
discounts offered in 2012.
• Timber Ridge had a $500 move in incentive special in 2012 but is no longer offering any
discounts.
• Buffalo Ridge II is offering $500 deposits, which are usually equal to one month's rent.
• Neither Middle Creek nor River Run are offering any discounts or incentives at this time.
Condominium Rentals
A total of 59 unduplicated listings for long -term rentals were found over four dates in July and
August in the Vail Daily and on Craig's List. Of these, 28 were condominiums and eight were
listed as townhomes. Rents for these units ranged from $1,000 to $3,800, and averaged
$1,776. One- bedroom units averaged $1,104 per month; however, the sample only included six
units so may not well represent the market. The average rent for the 17 two - bedroom listings
was $1,762.
Condominium and Townhomes For -Rent Listings
1 Bdrm
6
$1,104
2 Bdrm
17
$1,762
3 Bdrm
13
$2,106
About one -third of the units were located in Avon, a few were in Eagle -Vail and the rest were in
Vail. The units in Avon tended to rent for less than the ones in Vail, although the sample is too
small to conclusively quantify the difference.
Only 16 of the 36 condo /townhome listings provided unit size. Per - square -foot rents ranged
from $1.15 for a large three - bedroom unit in Avon to $2.50 for a 500 square foot, one - bedroom
condominium in Vail. The average was $1.62 per square foot. All of the one - bedroom units for
which size was provided were small, from 500 to 540 square feet.
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November 2013
6. Demographic Trends and Economic Conditions
This section of the market study consists of three parts:
• Market Area Demographics, which provides information on population, housing units,
households and household composition and size of renter households.
• Demographic Trends, which presents information from the 2000 and 2010 Censuses to
identify trends and gain insights as to how current demographic characteristics will likely
be changing in the future.
• Economic Conditions, which covers jobs, wages and the distribution of jobs in Eagle
County.
Market Area Demographics
About one -third of Eagle County's households (6,294 households) reside in the market area. Of
these, 2,604 reside within the town of Vail.
2010 Population and Housing Occupancy
Source: 2010 US Census
While most residential units in Eagle County are occupied as primary residences (61 %), only
36% of units in Vail were occupied by residents in 2010; second homes /vacation
accommodations comprised the majority. In the entire market area, the housing occupancy
rate was only 48% in 2010. The homes that are not occupied by members of the workforce
typically create demand for workforce housing through cleaning, repair, snow removal,
landscaping and similar jobs involved in operation and maintenance of the units.
While one -third of Eagle County's households reside in the market area, about 45% of Eagle
County's renter households reside in the Market Area. Relatively fewer households can afford
to buy homes up valley; the only option other than commuting is to rent.
Over one -half of the households in Vail and nearly 50% of those in the entire market area rent.
Demographic characteristics vary by area. There are clear differences between up- valley and
down - valley communities. Vail has proportionately more renters than owners, more singles
and roommate households than families, and smaller renter households than down valley.
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November 2013
Of the 3,336 renter households living in the market area in 2010:
• Roommate households were the most common (37 %).
• Nearly 30% had only one member living alone.
• Families were in the minority. About 19% were families with children and 15% were
families (both couples and singles) without children.
2010 Renter Households by Type: Market Area
Roommates
37%
(1,152 total)
Lip
Family, no
children
15%
29%
(899 total)
Source: 2010 US Census
Family, with
children
19%
(800 total)
In Vail, proportionately fewer renter households have children (only 8 %) and more consist of
singles living alone (36 %) or with roommates (45 %).
Renter Household Composition by Area, 2010
# Renter Households
Eagle
County
6,893
Vail
1,340
Market
Area
3,336
% Renter - Occupied
35.8%
51.5%
49.7%
Renter Households by Type
Family, no children
18%
11%
15%
Family, with children
29%
8%
19%
Living alone
26%
36%
29%
Non - family, roommates
27%
45%
37%
100%
100%
100%
Source: 2010 US Census
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November 2013
The average size of renter households within the market area is about 2.45 persons per unit. In
Vail is it considerably smaller at 2.04 persons per renter occupied unit. The largest segment of
the renter market is comprised on one- and two - person households, which combined total
61 %.
2010 Renter Households by Size: Market Area
4- person
12%
(3
3- person
18%
(571 total)
5+ person
9%
(264 total)
1- person
29%
19 total)
Source: 2010 US Census
'son
'/o
(1,014 total)
Renter Household Size by Area, 2010
1- person
2- person
3- person
4- person
5+ person
Average size
Source: 2010 US Census
Demographic Trends
26%
36%
29%
30%
37%
32%
18%
16%
18%
14%
8%
12%
13%
2.68
2%
2.04
8%
11 2.45
Between 2000 and 2010, most of the population growth in Eagle County occurred down valley.
While growth in Vail was slower, the rate of growth was particularly low elsewhere within the
market area. The population increased by 25% in the County (over 10,000 persons), but only
17% in Vail (774 persons) and just under 6% in the market area (908 persons). Growth in
households (occupied housing units) followed a similar pattern.
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November 2013
Total housing units, however, increased at about the same rate in the county and the market
area (41 %) and at a slower pace in Vail (34 %), where land availability is very limited. The
number of housing units grew faster than the resident population and households due to
construction of second /seasonal homes.
The housing occupancy rate declined by about 7 percentage points in the county, 4 points in
Vail and 9 points in the market area, indicating a significant rise in second homes. Even though
growth in the number of households did not keep pace with growth in second /seasonal homes,
the number of units occupied by local residents increased. The market area gained 680
households (owners and renters combined) between 2000 and 2010, for an average increase of
68 households per year.
Change in Population, Housing Units and Households: 2000 - 2010
Population
2000
2010
• change
Total Housing Units
County Eagle
Vail
Market Area
41,659
4,531
15,326
52,197
5,305
16,234
25.3%
17.1%
5.9%
2000
22,111
5,389
11,527
2010
31,312
7,230
16,286
• change
41.6%
34.2%
41.3%
Households /Occupied Housing Units
2000
15,148
2,165
6,080
2010
19,236
2,604
6,760
# Change
4,088
439
680
% change
27.0%
20.3%
11.2%
Housing Occupancy Rate
2000
68.5%
40.2%
52.7%
2010
61.4%
36.0%
41.5%
Source: 2000 and 2010 US Census
The increase in households within the market area was due primarily to growth in the number
of renter households. The market area gained 419 renter households between 2000 and 2010,
or an average of nearly 42 households per year. Renters now comprise the majority of
households living in Vail (51.5 %). The number of renter households in Eagle County as a whole
increased by nearly 1,400 households, or an average gain of 140 households each year.
Rees Consulting, Inc. 36
November 2013
Change in Renter Households: 2000 - 2010
2000 # renter - households
Eagle
County
5,499
Vail
1,032
Market Area
2,917
% renter - households
36.3%
47.7%
48.0%
2010 # renter - households
6,893
1,340
3,336
% renter - households
35.8%
51.5%
49.3%
% Change in renter households
25.4%
29.8%
14.4%
# Change in renter households
1,394
308
419
Source: 2000 and 2010 US Census
There were some significant changes in the composition of renter households, which varied by
area:
• Roommate households declined as a percentage of households in all areas, from 34% to
27% in Eagle County, from 44% to 38% within the market area and from 49% to 45% in
Vail.
Renters living alone increased, especially in Vail, from 33% to 36 %. The change in points
between roommate households and persons living alone in Vail was very similar (4 and
3 points respectively), indicating that singles who lived together in 2000 found ways to
live alone by 2010 rather than forming couples and families.
• The percentage of family households, with and without children, stayed about the same
in Vail but increased in the county as a whole; growth in families largely occurred down
valley.
Change in Composition of Renter Households: 2000 — 2010
2000 (total renter households)
Eagle
County
5,499
Vail
1,032
Market Area
2,917
Family, no children
17%
12%
11%
Family, with children
25%
7%
19%
Living alone
25%
33%
25%
Non - family, roommates
34%
49%
44%
100%
100%
100%
2010 (total renter households)
6,893
1,340
3,336
Family, no children
18%
11%
15%
Family, with children
29%
8%
18%
Living alone
26%
36%
29%
Non - family, roommates
27%
45%
38%
100%
100%
100%
Source: 2000 and 2010 US Census
Rees Consulting, Inc. 37
November 2013
Changes in renter household size also varied by region:
• Renter households decreased in size in both the town of Vail and the market area while
size increased slightly in the county.
• Renter households in all areas predominately have one or two - persons (56% to 73 %),
followed by 3- person households (16% to 18 %).
• A much larger percentage of households have three or more members in both the
county (26 %) and the market area (22 %) than in Vail (10 %).
Change in Size of Renter Households: 2000 — 2010
2000 (total renter households)
Eagle
County
5,499
Vail
1,032
Market Area
2,917
1- person
25%
33%
25%
2- person
32%
40%
33%
3- person
18%
17%
19%
4- person
14%
7%
14%
5+ person
12%
3%
8%
Average size
2.67
2.11
2.54
2010 (total renter households)
6,893
1,340
3,336
1- person
26%
36%
29%
2- person
30%
18%
37%
16%
33%
3- person
4- person
5+ person
Average size
18%
14%
8%
2%
12%
13%
8%
2.43
2.68
2.04
Source: 2000 and 2010 US Census
The population and labor force in the Vail area is aging as is the trend in other Colorado
mountain resort communities. The age of renter households increased between 2000 and
2010.
• The largest increase occurred in households 35 to 44 years of age.
• The percentage of households under 35 declined in all areas; although these younger
households comprise a larger percentage of households in Vail and the market area
than in the county as a whole.
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November 2013
Only households with a householder under 25 years of age decreased in number as well
as percentage in all areas ( -21 in Vail, -150 in Eagle County and -153 in the market area).
Change in Age of Renter Households: 2000 — 2010
2000 (total renter households)
Eagle
County
5,499
Vail
1,032
Market Area
2,917
15 to 24 years
17%
21%
22%
25 to 34 years
40%
46%
44%
35 to 44 years
22%
16%
18%
45 to 54 years
14%
10%
11%
55 to 64 years
4%
5%
4%
65 years and over
3%
2%
1%
2010 (total renter households)
6,893
1,340
3,336
15 to 24 years
11%
15%
14%
25 to 34 years
36%
42%
42%
35 to 44 years
24%
19%
21%
45 to 54 years
16%
12%
13%
55 to 64 years
9%
7%
7%
65 years and over
4%
4%
3%
100%
100%
100%
Source: 2000 and 2010 US Census
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November 2013
The Economy
The economy in Eagle County is recovering. Eagle County currently has about 37,820 jobs. This
is down from the peak of about 40,500 jobs in 2008, but up from a low of 35,660 in 2010. The
loss of 2,680 jobs reported by the Colorado Department of Local Affairs is much lower than a
local estimate of nearly 6,000 jobs, a difference likely attributed in part to construction jobs,
which are hard to track. Since 2010, total employment has increased by approximately 2,160
jobs, which equates to an average rate of growth of about 2% per year.
44,000
42,000
40,000
38,000
0
R
36,000
0
0
34,000
32,000
30,000
Change in Jobs: Eagle County, 2005 - 2013
2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Colorado Department of Local Affairs (DOLA), State Demography Section
The unemployment rate in Eagle County has been declining. Unemployment reached a high of
9.6% in 2010 and declined to 8.1% in 2012. This is still much higher than pre- recession rates,
which varied between about 2.9% and 3.9% between 2005 and 2008.
Average Yearly Labor Force and Employment: Eagle County 2000 - 2012
Year
Labor .
Employment
.. Unemployment
2012
29,793
27,388
2,405
8.1%
2011
29,293
26,689
2,604
8.9%
2010
29,674
26,836
2,838
9.6%
2009
30,624
28,235
2,389
7.8%
2008
31,837
30,705
1,132
3.6%
2007
31,161
30,267
894
2.9%
2006
30,206
29,191
1,015
3.4%
2005
28,670
27,555
1,115
3.9%
Source: Colorado Department of Labor and Employment
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November 2013
Unemployment rates in Eagle County vary by season. Unemployment is lowest during the
winter months (December through March) and highest during the shoulder seasons, in May and
November. For those who qualify, filing for unemployment is a common way to make it
through the shoulder seasons.
35,000
30,000
d
LL 25,000
0
20,000
-a
d
0
—°& 15,000
E
W
10,000
5,000
0
Employment and Unemployment by Month:
Eagle County July 2012 — June 2013
�-0
Source: Colorado Department of Labor and Employment
12%
10%
d
8% R
d
6% >,
0
a
E
a�
4%
2%
0%
Rees Consulting, Inc. 41
November 2013
Eagle County jobs paid an average annual wage of about $39,187 in 2012. About 40% of jobs in
Eagle County are in the lowest wage sectors of accommodations and food, arts and retail trade,
averaging between about $28,700 and $34,000 per year.
Estimated Jobs by Sector: Eagle County 2012
Estimated Total Jobs
Jobs
36,817
Jobs
100%
$39,187
Accommodation and food
7,487
20.3%
$28,727
Arts
3,756
10.2%
$32,129
Retail Trade
3,554
9.7%
$33,923
Construction
3,503
9.5%
$47,157
Government
3,343
9.1%
$51,356
Real estate
3,073
8.3%
$41,214
Other services, except public administration
2,447
6.6%
$37,912
Health Services
2,219
6.0%
$59,141
Professional and business services
2,139
5.8%
$59,849
Admin and waste
1,965
5.3%
$30,882
Finance activities
763
2.1%
$63,240
Transportation and warehousing
633
1.7%
$41,827
Wholesale trade
495
1.3%
$67,113
Information
404
1.1%
$47,511
Education
335
0.9%
$39,340
Manufacturing
304
0.8%
$43,719
Agriculture
205
0.6%
$39,111
Management of companies and enterprise
112
0.3%
$78,358
Utilities
61
0.2%
$62,790
Mining
19
0.1%
$49,134
Sources: 2012 Total Jobs: DOLA, State Demography Section, Jobs Projections; Jobs by Sector: 2011 DOLA,
Colorado Economic and Demographic Information System (CEDIS); Wages by Occupation: 2012 Quarterly
Census of Employment and Wages (QCEW)
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November 2013
Approximately 15,300 employees work within the market area, which equates to almost 56% of
the employees within all of Eagle County. Wages in the market area average about 3% more
than those in the county as a whole.
Employees, Businesses and Average Annual Wage:
Employees Average
Avon
# of Average
7,596
#
591
Average
$44,243
Vail
7,564
546
$45,536
Eagle -Vail
140
31
$33,967
TOTAL Market Area
15,300
1,168
$44,789
COUNTYWIDE
27,481
3,213
$43,367
% Market Area
55.7%
36.4%
103.3%
Source: Economic Council of Eagle County based on Colorado Department of Labor and
Employment Quarterly Census of Employment and Wages (QCEW) data.
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November 2013
7. Demand Analysis
Demand for the proposed rental units is primarily a function of:
• Renter households that now reside within the market area who meet household size
and income targets;
• Renters who will move into the area as the result of job growth; and
• Renters who now reside down valley and commute to jobs within the market area.
The proposed project may attract other households. The Town of Vail is imposing a
requirement that 70% of the new units must be occupied by at least one person employed in
Eagle County through the zoning on the parcel. The other 30% could be leased to non -
employee households including:
• Retirees who are cashing out of homes they own in Eagle County and want to remain in
the Vail area;
• Retirees who want to move to the area for the lifestyle it offers; and
Second -home renters looking for an apartment convenient to the ski slopes and Vail's
many other amenities.
The prime purpose of the proposed project is workforce housing, however. As such, this
analysis of demand provides only estimates generated by existing renter households and
employees who will move into the market area. Because of this, estimated demand and
capture rates should be considered conservative.
Demand from Market -Area Renters
An estimated 3,114 renter households now reside within the market area, down slightly from
3,336 households as of the 2010 Census. The out migration of renters was due to job losses in
2009 and 2010. The proposed 113 units would need to capture 3.6% of the renter households
now residing in the market area to be fully occupied.
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November 2013
Market Area Renter Households by Income and Size, 2013
$0-10,000
1-Person
211
2-Person
69
. n
6
4-Person
16
5+-Person
0
Total
302
$10,000- 20,000
189
23
115
9
10
346
$20,000- 30,000
32
157
68
99
13
369
$30,000- 40,000
83
46
107
22
148
406
$40,000- 50,000
123
174
43
32
2
374
$50,000- 60,000
132
171
94
21
11
429
$60,000- 75,000
97
126
37
54
67
381
$75,000- 100,000
15
166
37
97
9
324
$100,000- 125,000
16
30
36
9
7
98
$125,000- 150,000
4
2
9
9
0
24
$150,000- 200,000
11
32
10
0
0
53
$200,000+
6
1
1
0
0
8
Total
919
997
563
368
267
3,114
Percent of Total
29.5%
32.0%
18.1%
11.8%
8.6%
100%
Source: Ribbon Demographics
With a mix of one- and two - bedroom units, the proposed property will mostly attract one- and
two - person households. There may be cases when three - person households lease units (a
couple with one roommate, a couple with a child or a single parent with two children), but,
based on demographic trends, these households should comprise an insignificant share of the
target market. There may also be an isolated case when three roommates rent a two - bedroom
unit, as has occurred at Timber Ridge in the past; however, given the positioning of the project
to target households with incomes higher than those served by the seasonal and LIHTC projects
that now exist in the area, it is unlikely that many units will be rented to roommates who must
share a bedroom.
Given the proposed rents, the project will serve households with incomes between $40,000 and
$100,000 per year. With rents starting at $1,250 per month (the midpoint of the range under
consideration for one - bedroom units), households with incomes of $40,000 per year would
need to spend 37.5% of their income on rent. This is well within the range that renters in high
cost mountain resort communities typically pay. Renters with annual household incomes
exceeding $100,000 should have many choices in terms of what they can afford to rent and will
likely opt for units with more amenities, although some may choose to rent at the proposed
property due to its convenient location.
Based on these assumptions, just over 1,000 renter households now reside in the market area
that are of the size and income that the proposed project will primarily target (see the table on
the following page). This equates to 32% of all renter households living within the market area.
A capture rate of 11% would be required to achieve 100% occupancy based solely on renters
already living within the market area.
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November 2013
Targeted Renter Households within Market Area
$40,000- 50,000
123
174
297
$50,000- 60,000
132
171
303
$60,000- 75,000
97
126
223
$75,000- 100,000
15
166
181
Total
367
637
1,00,
Source: Ribbon Demographics
Rental Demand from Job Growth
Since 2010, jobs have been increasing at an average of about 2% per year. The rate of job
growth will likely increase in the future. The 2012 Eagle County Housing Needs Assessment
estimated that the rate of job growth in 2013 through 2015 would be 2.5 %. By 2016, when the
proposed units should be completed, there should be 2,908 additional jobs in Eagle County.
Of total new jobs, 1,620 should be located within the market area if new jobs are distributed at
the same ratio as existing jobs, with 55.7% located within the market area.
Job Growth and Housing Demand Estimates
Eagle County Jobs in 2013 37,821
Eagle County Jobs in 2016 40,729
Increase in Jobs Countywide 2,908
Increase in Jobs in Market Area (55.7 %) 1,620
Housing Demand from New Jobs in Market Area
(1.2 jobs per employee; 1.7 employees per household) 794
Rental Demand from New Jobs in Market Area (70% of total demand) 556
To calculate the housing demand generated by new jobs, the number of jobs is first divided by
1.2, the average number of jobs per employee, then by 1.7, the average number of employees
per housing unit. These standards are from the 2007 and 2012 Eagle County Housing Needs
Assessments.
Most of the employees that will be moving to the area to fill the new jobs will rent. According
to a housing survey conducted in neighboring Summit County in 2012, 70% of employees who
had lived in the county for five years or less rented. It is appropriate to assume that at least
that many will rent in the market area, and the percentage is likely higher given that housing
costs are higher. Assuming 70% of new worker households will rent, demand for 556 additional
rental units will be generated by job growth by 2016. The proposed 113 units would need to
capture 20% of this demand based solely on new job growth to achieve 100% occupancy.
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November 2013
Rental Demand from Down Valley
Apartment property managers reported that only a small percentage of their residents moved
in from down - valley communities. Rough estimates were around 10 %. Based on this history,
about 10 of the proposed units will be leased by households that already reside in Eagle
County, but outside of the market area.
Rees Consulting, Inc. 47
November 2013
8. Conclusions and Recommendations
Based on the market, redevelopment of the eastern half of Timber Ridge in Vail to replace 102
aging two - bedroom units with 113 more upscale apartments targeted to serve the year round
population is warranted. This conclusion is based on a combination of factors:
• The site is an excellent location for rental housing;
• The rental market has recovered from the slump of 2010 and 2011;
• Vacancies are low among competing properties and rents are starting to rise;
• Competition is not likely to increase. No other new apartment properties are now
planned;
• Demand from one- and two - person renter households already residing in the market
area with incomes in the targeted $40,000 to $100,000 range is sufficiently strong to
achieve 100% occupancy with a moderate capture rate of 11 %;
• The economy is recovering and the number of jobs is increasing. By 2016, job growth
within the market area should generate demand for over 550 additional rental units.
To maximize the proposed property's marketability and long -term livability, specific conclusions
and recommendations are offered.
Design Considerations
Unit Mix
The mix of one- and two - bedroom units will be unique among apartment properties in the
market area, which is good. Most existing properties have three - bedroom units, yet property
managers report these units are the most difficult to lease and have very high turnover. Small
studios are also problematic with high turnover and higher than average vacancy rates.
Offering two bathrooms in all two - bedroom units should be very appealing. River Run is the
only apartment property in the market area that has two - bedroom units with two bathrooms;
they report that the units are popular and easy to lease, especially the units with two full
bathrooms.
Unit Size
The proposed one bedroom units will be about average in size compared to the units in
competing properties. The average among existing units is 603 square foot. The proposed
units will range from 597 to 633 square feet. The two - bedroom units will be larger than most
of the two- bedroom units at competing properties. The proposed units will range from 870 to
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933 square feet, which compares with an average of 804 square feet for existing two -
bedroom /one- bathroom units and 1,088 square feet for the only two bedroom /two- bathroom
units offered at one project.
The proposed units will have ample interior closets as well as exterior storage closets large
enough for bikes, skis and even most kayaks. The large balconies will also be very appealing to
potential residents.
Sound Abatement
Effective sound proofing to abate the noise from 1 -70 and the frontage road in the units that
face the Interstate should be provided.
Utilities
Hot water heating should be considered in order to lower heating bills and improve inside air
quality. Energy efficient heating systems and windows should be a priority as well as high value
insulation. Other green building items like non -toxic paints and building materials should be
used. In general, the targeted population will be environmentally conscious; green building
would be a highly marketable feature that distinguishes the proposed property from other
apartment and condominium rentals.
As planned, residents should be responsible for their own utilities rather than charged a flat
rate over which they have no control. While covering all utilities with a single fee as done at
Polar Star Properties' three complexes is convenient for residents when moving in, the
proposed project will target households that are capable of providing deposits and placing
utilities in their name. Residents have no incentive to conserve when flat rates are charged.
Utility costs based on usage would especially appeal to retirees and second home renters who
might not occupy their units full time.
Parking
Parking will likely be tight at times, which is common in the Vail Valley. Since the property will
serve year round residents that are older and have higher incomes than the households now
living at Middle Creek and Timber Ridge, all of the households will likely have at least one car.
Also, unlike the other two properties in Vail, parking may be a year round issue rather than just
a problem during the ski season.
The proposed parking policy of one space per unit and an additional space, first come /first
served, for $75 per month should be workable but should be refined to give priority to two -
bedroom units for the additional space. One - bedroom units will be occupied by one person or
couples who could more easily share a car than the roommate households that will occupy
many of the two - bedroom units. Additional recommendations for parking:
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• Consider raising the fee for the additional space. Given the income levels targeted, a
higher fee could be affordable and would be an incentive to find off -site parking for
extra vehicles.
• Prohibit parking by day skiers and limit visitor access to parking. Gated entrances or
other means should be used to ensure that parking spaces are available for residents. If
forced, visitors can take public transit to the property.
• Attempt to locate off -site parking to which residents could be referred.
• Consider rent reductions for residents who do not park on site. The space they would
have been provided could be rented to other households, thereby making up the
revenue from the discount. Attempt to make it financially worthwhile to live without a
car or to find a place to park off -site.
Marketability of Location
The location is excellent in terms of convenience, access to services and facilities, availability of
public transit, views and solar gain, visibility and compatibility with surrounding land uses. The
remaining western half of Timber Ridge will be unattractive, however. Privacy fencing,
landscaping or some combination of the two should be used to visually separate the new
property from the old Timber Ridge. In the future, the western half of Timber Ridge will also be
redeveloped, which will enhance the site's already good marketability.
A new name for the proposed property is needed, which will help distinguish it from the old
Timber Ridge.
Overall Market Conditions
The rental market is strong and indicators are trending upward. Occupancy levels are
increasing after the market softened in 2010 due to job losses and termination of master leases
by Vail Resorts. The overall occupancy rate was about 93% in July, 2013, with levels expected
to increase during the peak ski season. Rents are starting to rebound. Most discounts and
incentives have disappeared. By mid 2014, rates will probably have increased as much as 10%
over current levels.
Responsiveness to Demographic and Economic Trends
• The proposed project will primarily target the largest segment of renter households —
61% of renter households within the market area are one- or two - person households.
• The proposed project will increase the number of one - bedroom units (Timber Ridge
now has only two - bedroom units), which is appropriate given the prevailing trends of an
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aging population, proportionately more renters living alone, fewer renters living with
roommates and relatively fewer families, with and without children, living in the market
area.
Growth in the market area population has been slow compared with the rest of Eagle
County, but this has been due to housing costs and the limited availability and high cost
of residential land. What growth has occurred has largely been in the renter population.
Homeownership up valley has been and will remain beyond the reach of most
workforce households. Families with children find housing that meets their needs down
valley, while renters without children are more likely to choose up valley as a place to
live.
Despite the gain of 680 renter households within the market area between 2000 and
2010, growth in second /vacation homes far outpaced it. This growth in non - primary
housing units generates demand for additional workforce housing through jobs created
in construction, maintenance and operations. This trend will likely continue with job -
generating second home growth exceeding growth in workforce housing.
Competition
There will be little direct competition with the proposed property. The two apartment projects
in Vail primarily target seasonal and /or low- income employees. The properties in Avon are
more family oriented and some are income restricted. River Run in the Dowd Junction area is
the most comparable of the seven properties examined. It has the lowest vacancy rate, the
largest units, the only two - bedroom units with two bathrooms, the most amenities and some of
the highest rents, but it is nearly 30 years old.
The availability of rental housing should be extremely low by the time the proposed property is
completed. As of mid - August, which is not when occupancies peak, only 32 units were vacant
among the six competing properties within the market area, not counting the 46 units vacant at
Timber Ridge. These properties cannot absorb the households that will be displaced from the
demolition of 102 units at Timber Ridge. Competition from other apartment properties should,
therefore, not be a concern.
The most direct competition will be from condominium units that are rented long -term. Most
of these units are relatively old, however, with inefficient heating systems and high utilities.
Some may be in locations that are equally convenient, but others are located in less desirable
areas. Most are in complexes with nightly or weekly vacation rentals, a situation that is not
desirable to many year round residents who dislike sharing walls with vacationing strangers.
Demand for Rental Housing
The demand for rental housing is more than adequate to warrant the construction of the
proposed 113 income producing units.
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• Approximately 3,114 renter households now reside in the market area. The proposed
units would need to capture only 3.6% of these households to achieve 100% occupancy.
An estimated 1,004 one- and two - person renter households with incomes in the
targeted range of $40,000 to $100,000 per year now reside in the market area. These
are the households that the proposed project will primarily serve. To fill all units, the
property will need to attract 11% of these households, which is a moderate capture
rate.
Demand will likely be generated for 556 additional rental units within the market area
by 2016 due to job growth. The proposed units will need to capture 20% of this demand
to be fully leased.
• Roughly 10% of the proposed units are likely to be leased by renters who now live down
valley but would rather live in Vail. There have been no new apartments built within
Vail in many years without income restrictions that moderate and middle income
renters could lease.
While the two apartment properties in Vail attract most of their residents from out of state, the
proposed property will likely draw more of its residents from the market area and down valley.
The estimates of demand for the proposed project are conservative because they do not take
into account leasing of units to anyone other than employees. Up to 30% of the proposed 111
units will not have employment restrictions. Retirees who want to remain living in Vail, retirees
who would like to move into the area and second home renters are all potential candidates for
these unrestricted units.
Rents
The proposed rents of $1,200 to $1,300 per month for one - bedroom units and $1,600 to $1,700
per month for two - bedroom apartments should be competitive and marketable. Although the
proposed rates for one - bedroom units are higher than the prevailing average, River Run, which
is older and in a less convenient location, already charges $1,200 for its one - bedroom units.
The two - bedroom rents will also be higher than the average of $1,443 yet rents are starting to
rise and should be at least equal to or possibly greater than the proposed rents when the
project is completed. The proposed rates will be lower than the average current rate of over
$1,700 for two - bedroom condominiums and townhomes.
On a per square foot basis, the proposed rents will average $1.90. This is considerably lower
than the average of $1.93 charged at Middle Creek, the only comparable property located
within Vail. Middle Creek does not have balconies or in -unit washers and dryers.
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Consider varying rents based on location within the property and views. Assuming that sound
proofing is adequate, the south facing units with views of the mountain and ample sun should
command the highest rents. The north facing units, particularly on the lower floors where
views are limited by the abutting hillside, should rent for less. At Middle Creek, rent for three -
bedroom units differs as much as $300 per month based on location and views.
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