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HomeMy WebLinkAbout2016-01-12 Agenda and Supporting Documentation Town Council Regular MeetingVAIL TOWN COUNCIL SPECIAL MEETING AGENDA TOWN OF4� 0i VAIL TOWN COUNCIL CHAMBERS 75 S. Frontage Road W. Vail, CO 81657 10:30 A.M., JANUARY 12, 2016 NOTE: Times of items are approximate, subject to change, and cannot be relied upon to determine at what time Council will consider an item. Public comments on work session item may be solicited by the Town Council 1. ITEM/TOPIC: Summit County Tour of Affordable Housing Properties Tour itinerary below: 10:30 AM Depart Vail Municipal Building (Town of Vail bus) 11:30 AM Arrive at Town of Breckenridge Offices to meet with Breckenridge Community Development and Housing Staff (lunch will be served) 1:15 PM Depart for tour of Valley Brook Neighborhood, 1100 Airport Road, Breckenridge 2:00 PM Depart for tour of Peak One Neighborhood, 257 Belford Street, Frisco 2:45 PM Depart Frisco for Vail 3:30 PM Arrive at Vail Municipal Building BREAK UNTIL 6 PM PRESENTER(S): George Ruther, Director of Community Development, Alan Nazzaro, Housing Manager 2- ITEM/TOPIC: Discussion with the Vail Town Council to clarify the vision for the Chamonix development and determine the target market of the future home owners at Chamonix. Public comment will betaken. (120 min. ) PRESENTER(S): George Ruther, Director of Community Development, Alan Nazzaro, Housing Manager BACKGROUND: The purpose of this special meeting is to seek clarification from the Vail Town Council on the vision for future development on the Chamonix site in West Vail and to determine the target market of the future home owners at Chamonix. In doing so, first, a number of key considerations will be shared with the Town Council in an effort to provide information, background and context. Considerations such as the existing inventory of deed restricted housing within the community, the gap in affordability faced by prospective homeowners, the results of three market studies and an overview of the strategic planning efforts which have been completed to date to make affordable housing on the Chamonix site a reality. In the end, the Town Council is being asked to answer a number of key questions to assist in determining their vision for the future development on 1/12/2016 the Chamonix site. This action helps achieve the Town Council's adopted goal of "growing a thriving and balanced community". 3. ITEM/TOPIC: Adjournment (8:00 p.m.) Please call (970) 479-2136 for additional information. Sign language interpretation is available upon request with 48-hour notification. Please call (970) 479-2356, Telecommunication Device for the Deaf (TDD), for information. 1/12/2016 TOWN OF VAIN VAIL TOWN COUNCIL AGENDA MEMO MEETING DATE: January 12, 2016 ITEM/TOPIC: Summit County Tour of Affordable Housing Properties Tour itinerary below: 10:30 AM Depart Vail Municipal Building (Town of Vail bus) 11:30 AM Arrive at Town of Breckenridge Offices to meet with Breckenridge Community Development and Housing Staff (lunch will be served) 1:15 PM Depart for tour of Valley Brook Neighborhood, 1100 Airport Road, Breckenridge 2:00 PM Depart for tour of Peak One Neighborhood, 257 Belford Street, Frisco 2:45 PM Depart Frisco for Vail 3:30 PM Arrive at Vail Municipal Building BREAK UNTIL 6 PM PRESENTER(S): George Ruther, Director of Community Development, Alan Nazzaro, Housing Manager 1/12/2016 Towx of vn' 1[1 VAIL TOWN COUNCIL AGENDA MEMO MEETING DATE: January 12, 2016 ITEM/TOPIC: Discussion with the Vail Town Council to clarify the vision for the Chamonix development and determine the target market of the future home owners at Chamonix. Public comment will be taken. PRESENTER(S): George Ruther, Director of Community Development, Alan Nazzaro, Housing Manager BACKGROUND: The purpose of this special meeting is to seek clarification from the Vail Town Council on the vision for future development on the Chamonix site in West Vail and to determine the target market of the future home owners at Chamonix. In doing so, first, a number of key considerations will be shared with the Town Council in an effort to provide information, background and context. Considerations such as the existing inventory of deed restricted housing within the community, the gap in affordability faced by prospective homeowners, the results of three market studies and an overview of the strategic planning efforts which have been completed to date to make affordable housing on the Chamonix site a reality. In the end, the Town Council is being asked to answer a number of key questions to assist in determining their vision for the future development on the Chamonix site. This action helps achieve the Town Council's adopted goal of "growing a thriving and balanced community". ATTACHMENTS: Staff Memorandum 2014 Chamonix Market Study Letter Market Study 2014 Chamonix Master Plan Chamonix Informational Update Memorandum 12172013 Employee Housing Inventory 1/12/2016 Memorandum To: Vail Town Council From: George Ruther, Director of Community Development Alan Nazzaro, Housing Manager Date: January 12, 2016 Subject: Public meeting with the Vail Town Council to clarify the vision for the Chamonix neighborhood and determine the target market of the future homeowners at Chamonix. I. Purpose of the Meeting The purpose of this public meeting is to seek clarification from the Vail Town Council on the vision for future development at the Chamonix neighborhood in West Vail and to determine the target market of the future homeowners. In doing so, first, a number of key considerations will be shared with the Town Council in an effort to provide background and context. Considerations such as the existing inventory of deed restricted housing within the community, the gap in affordability faced by prospective homeowners, the results of three market studies and an overview of the strategic planning efforts which have been completed to date to make affordable housing on the Chamonix site a reality. In the end, the Town Council is being asked to answer a number of key questions to assist in determining their vision for the future development within the Chamonix neighborhood. This action helps achieve the Town Council's adopted goal of "growing a thriving and balanced community'. II. Project Goals and Objectives A list of project goals and objectives has been adopted for the future development on the Chamonix site. The project team has relied upon these goals and objectives throughout the planning process. On April 15, 2014, the Vail Town Council affirmed and adopted the following project goals and objectives: • Optimize the use of the site for affordable for -sale housing (15 - 25 du's per acre) • Design a context sensitive design solution (design review guidelines) • Ability to be phased over time (min. two phases) • Deliver desirable, marketable and diverse types of housing products (duplexes; one, two & three bedroom flats; townhomes, etc.) • Maximize the town's limited supply of financial resources 1/12/2016 • Build responsibly given the existing site configuration, topography and natural features of the site • Develop a diversified cost/sales structure to respond to a wider range of buyers (i.e. pricing structure based upon income) III. Housing Inventory In October of 2015, an Inventory of Existing Employee Housing Units in the Town of Vail was compiled by the Community Development Department (see attached Table 1). This inventory consists of 737 total units with 665 being rental and 72 for sale. The breakdown of bedroom mix is 86 efficiency, 149 one -bedroom, 392 two-bedroom 74 three bedroom, and 28 four-bedroom units. The average size of the units range from a minimum of 460 square feet for an efficiency to a maximum of 1,552 square feet for the three-bedroom unit. 86.43% of the total inventory is made up of efficiency, one and two- bedroom units. The smaller percentage (13.84%) of higher bedroom units partially explains the down valley movement of families to locations with more suitable sized housing within which to grow. In 2006, the Vail 20/20 Focus on the Future process resulted in the following housing goal statement: "The Town of Vail recognizes the need for housing as infrastructure that promotes community, reduces transit needs and keeps more employees living in the town, and will provide enough deed restricted housing for at least 30 percent of the workforce through policies, regulations and publicly initiated development." In 2008 the Vail Town Council adopted the Employee Housing Strategic Plan. This Plan states, "Based upon the community's work, the Vail Town Council has confirmed the Town of Vail recognizes deed restricted employee housing as basic infrastructure. This type of housing allows employees to live within the town, promoting community, and improving the quality of our local workforce, thereby supporting the local economy, and reducing regional transit needs." The Town has faced this issue of housing throughout its existence. One of the first buildings erected by Vail's founders was a hostel for employees. Over the years the Town has been initiated regulations to assist with the provision of EHUs, i.e., commercial linkage and inclusionary zoning. They have incentivized development through density bonuses and EHU exchanges. They have also engaged in sponsorship of EHU development. Town has sponsored employee housing developments as a catch up strategy to fill gaps in the employee housing inventory over the years. To date, the Town has sponsored the development of for -sale, deed restricted units that are priced to be 2 1/12/2016 permanently affordable to local employees. The Town's master deed restriction further enhances affordability by being Federal National Mortgage Association (FNMA) approved, allowing buyers to obtain mortgages on the secondary market. The master deed restriction recorded for Vail Commons, Red Sandstone, North Trail, Arosa Duplex and Buy Down Units includes: ✓ Maximum annual price appreciation of 3% per year (prorated at the rate of 0.25% for each whole month of any part of a year). ✓ Permitted Capital Improvements may be recouped and shall not exceed 15% of the purchase price for every ten-year period. o Increased from 10% and Permitted Capital Improvements was expanded to include replacement flooring, appliances, etc. on a five-year depreciation schedule. ✓ Owner shall use the unit as their permanent residence. ✓ Owner shall not own any interest in another developed residential property in Eagle County. o Exception made during new construction — time of construction allows prospective purchasers to sell their free market unit prior to closing on the Town of Vail deed restricted unit. ✓ Owner may rent the unit for a limited period of time, with Town approval, but not as an income producing asset. ✓ Nothing precludes an owner from sharing occupancy of the unit with non -owners on a rental basis. ✓ Units are resold through the Town. ✓ The deed restriction does not survive foreclosure. This direct involvement by the Town has resulted in four EHU developments within the borders of Vail: Arosa Duplex, North Trail Townhomes, Red Sandstone and Vail Commons for a total of 79 units of 1, 2 and 3 -bedroom homes. Demoaraahics Overview of Current Priced Capped EHU Owners Arosa Duplex (2 units completed June 2010) • Average age of owners is 37 years old • Average length of ownership is 4 years 7 months • Both owners were 1 st time homebuyers Units are owned 100% by couples North Trail (6 units completed May 2001) • Average age of owners is 52 years old • Average length of ownership is 10 years 5 months • There are 3 original owners • Owners have been 1 st time homebuyers (50%) or from Vail Commons (50%) • Units are owned 66% by women, 17% by men, and 17% by couples Red Sandstone (18 units completed September 1999) 1/12/2016 • One-half of the units are owned by individuals (9 units) • Average age of individual owners is 43 years old • Average length of ownership is 7 years 8 months • Individual owners have all been 1St time homebuyers • Owners of 2 units were born and raised in Vail • Units are owned 44% by couples, 33% by women, and 22% by men Vail Commons (53 units completed in 1996-1997) • Average age of owners is 53 years old • Average length of ownership is 11 years • 1St time homebuyers or current Vail Commons owners purchase resales • Original purchasers own 42% (22) of the units • Owners of 2 units were born and raised in Vail • Three-bedroom unit resales have been purchased 50% by Vail Commons two- bedroom unit owners 50% of the time and 1 at time homebuyers • Units are owned 52% by men, 27% by couples, and 21 % by women Demographics of All Properties • 52 years old is the average owner's age • 34% of owners are married • 23% of owners have children • 6% of units are owned by people born and raised in Vail • 84% of units had at least one owner employed in Vail in 2013 Town of Vail as an Employer The Town of Vail is not only the municipal government, it is also an employer. As an employer, the Town has a goal of providing deed restricted housing for at least 30% of its workforce in Vail. The benefits of doing so are: • Improves employee recruitment and retention • Keeps critical service employees geographically accessible • Reduces over -time costs by enabling the Town to be more fully staffed • Stabilizes employment costs • Reduces employee commuting times and distances To meet the goal the Town provides: • Seasonal and long-term rentals • Priority for deed restricted purchases at Red Sandstone Creek • Down payment assistance loans and rental assistance loans • Reduced monthly rental rates The Town of Vail employs +/- 345 people. Today, 69 (+/-20%) Town employees live in 52 Town - owned rental units. 4 1/12/2016 Number of Town Employees in Town -Owned Rental Units Critical Employees Essential Employees Source: Town of Vail Human Resources OVERVIEW OF CURRENT EMPLOYEE RENTERS • Average age ranges from 25-40 • Average employee tenure — 5 years or less (seasonal employees excluded) • Currently there are two families with children in Town -owned rental housing • 90% of residents are single IV. Affordability Gap As part of the subsidy policy discussion staff was asked to prepare policy options that ensures a wide range of buyers. In order to accomplish this, staff had to take into consideration the Affordability Gap and Housing Affordability Index, which are used to determine the level of subsidy needed. The home purchase "affordability gap" (AG) is defined as the difference between the price that the average household can afford to pay for a home and the median price of housing on the market. Another indication of affordability in a given community is determined by calculating the Housing Affordability Index (HAI). o The HAI measures whether a typical family can qualify for a mortgage loan on a typical home. o The typical family is defined as a four person household earning 100% of the AMI, as reported by HUD. o The prevailing mortgage interest rate is the effective rate on loans closed on existing homes from the Federal Housing Finance Board. o A HAI Value of 100 means that a typical family earning 100% of the Area Median Income has enough income to qualify for a mortgage on a median -priced home, assuming a 20 percent down payment. o An increase in the HAI, then, indicates that this family is more able to afford the median priced home. 1/12/2016 For example: • The median price for a home in Vail increased to $1.4 million, in the second quarter of 2015. • The median income for a family of four for Eagle County for 2015 was $86,200 • The Affordability Index for Vail equals 23 o Which means the typical family needs to earn more than three times their current income to be able to afford the typical Free Market home in this community. • The corresponding affordability gap is: o $1.4 million - $320,000* _ $1.08 million V. Area Median Income There are a myriad of terms used in housing that can be confusing because they are related to or generated by the use of government regulated funding programs. One of the key terms is Area Median Income (AMI), because it is often AMI categories that are used for when developing pricing and subsidy policies. Here are some relevant terms and definitions: 1. Median income is the amount that divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount. 2. Area Median Income is the median income of a state or an area within a state established annually by HUD to set income limits for various funding programs. HUD uses Census data supplemented with Bureau of Labor Statistics data, as well as state and local data to estimate these income levels by size of household and publishes them for use by grantees nationwide. 3. Family means all persons living in the same household who are related by birth, marriage or adoption. 4. Household (HH) means all persons who occupy a housing unit. The occupants may be a single family, one person living alone, two or more families living together, or any other group of related or unrelated persons who share living arrangements. 5. Household Income - This includes the income of the householder and all other individuals 15 years old and over in the household, whether they are related to the householder or not. 11 1/12/2016 The HUD established AMI levels by household size for Eagle County are available on the Colorado Housing Finance Authority (CHFA) website and Table 1 below lists the 2015 levels for 1-4 person HH. Table 2 - 2015 Area Median Income - Eagle County AMI 1 2 3 4 2 Person Persons Persons Person _ 140% $84,560 $96,600 $108,640 _Persons $120,680 130% $78,520 $89,700 $100,880 $112,060 120% $721480 $82,800 $93,120 $103,440 110% $661440 $75,900 $85,360 $94,820 100% $60,400 $69,000 $77,600 $86,200 90% $54,360 $62,100 $69,840 $77,580 80% $48,320 $55,200 $62,080 $68,960 70% $42,280 $48,300 $54,320 $60,340 60% $36,240 $41,400 $46,560 $51,720 Source: Colorado Housing and Finance Authority $169,000 To calculate the maximum affordable prices for these targeted households, the following assumptions are used: • The monthly mortgage payment equals 30% of gross household income; • The monthly mortgage payment includes estimated property taxes, homeowner insurance and HOA fees; • Down payments of 5% of the purchase price; and • The interest rate is 5.0% for 30 -years. If rates rise the amount that households in the targeted income range can afford would decrease. 1/12/2016 Table 3 - Maximum Affordable Prices AMI 1 2 3 4 Person Persons Persons Persons 140% $309,000 $361,300 $408,000 $475,000 130% $282,000 $333,000 $378,250 $431,500 120% $255,000 $305,000 $348,500 $388,000 110% $229,000 $275,000 $314,000 $354,000 100% $203,000 1 $245,000 $283,500 $320,000 90% $178,000 $214,000 $248,000 $278,500 80% $153,000 $183,000 $213,500 $240,000 70% $126,000 1 $152,350 $180,000 $204,500 60% $100,000 $121,700 $157,500 $169,000 Source: staff calculations using an affordable housing calculator To calculate the maximum affordable prices for these targeted households, the following assumptions are used: • The monthly mortgage payment equals 30% of gross household income; • The monthly mortgage payment includes estimated property taxes, homeowner insurance and HOA fees; • Down payments of 5% of the purchase price; and • The interest rate is 5.0% for 30 -years. If rates rise the amount that households in the targeted income range can afford would decrease. 1/12/2016 Table 4 below illustrates the effect of sales/cost policy whereby units are priced at cost of vertical construction and the only subsidy being the contribution of the land and infrastructure into the development. As is demonstrated, a 1 -person household at 100% of AMI can afford a 680 square foot unit at $300 per cost per square foot. The table further demonstrates that the range in size of units affordable to all households at 100% of AMI range from 680 square feet to 1,067 square feet in size. The largest sized unit that 3 and 4 -person households can afford is 940 and 1,067 square feet, respectively. Table 4 Estimated Home Price based on Estimated Construction Cost Note: Same assumptions were used for these calculations as Table 3 above Table 5 below illustrates the estimated subsidies required for 1 — 4 person households earning 100% of AMI to afford units of a reasonable size for the corresponding size of household. The calculations assume an estimated cost of $300 per square foot for vertical construction only. The data demonstrates that the cost of moderately sized units, even without land and infrastructure factored into the equation, have an affordability gap for households at 100% of AMI. The additional subsidies required to make these units affordable range from $28,500 per unit for a 615 square foot unit to $220,000 for an 1,800 square foot unit. Table 5 Subsidies Needed Based on Size of Unit & Estimated Construction Cost HH Size Max Affordable Price with 5% Down Maximum Price of Home at $300/sq. ft. Price Home at $350/sq. ft. Affordable Subsidy Needed at $350/sq. ft. 1 -person $204,000.00 Price with $184,500.00 $215,250.00 Square $11,250.00 2 -person $249,000.00 5% Down $277,500.00 Assumed Footage at Affordable 3 -person Eagle County and 5% Mortgage Monthly $300/sq. ft. Square Footage at HH Size 100% of AMI Interest Amount HOA Cost $350/sq. ft. Cost 1 -person $60,400.00 $204,000.00 $193,800.00 $ 350.00 680 583 2 -person $69,000.00 $249,000.00 $232,750.00 $ 340.00 830 711 3 -person $77,600.00 $282,000.00 $267,900.00 $ 345.00 940 806 4 -person $86,200.00 $320,000.00 $304,000.00 $ 365.00 1,067 914 Note: Same assumptions were used for these calculations as Table 3 above Table 5 below illustrates the estimated subsidies required for 1 — 4 person households earning 100% of AMI to afford units of a reasonable size for the corresponding size of household. The calculations assume an estimated cost of $300 per square foot for vertical construction only. The data demonstrates that the cost of moderately sized units, even without land and infrastructure factored into the equation, have an affordability gap for households at 100% of AMI. The additional subsidies required to make these units affordable range from $28,500 per unit for a 615 square foot unit to $220,000 for an 1,800 square foot unit. Table 5 Subsidies Needed Based on Size of Unit & Estimated Construction Cost HH Size Max Affordable Price with 5% Down Estimated Sq. ft. size Price of Home at $300/sq. ft. Price Home at $350/sq. ft. Subsidy Needed at $300/sq. ft. Subsidy Needed at $350/sq. ft. 1 -person $204,000.00 615 $184,500.00 $215,250.00 0 $11,250.00 2 -person $249,000.00 925 $277,500.00 $323,750.00 $28,500.00 $74,750.00 3 -person $282,000.00 1,550 $465,000.00 $542,500.00 $183,000.00 $260,500.00 4 -person $320,000.00 1,800 $540,000.00 $630,000.00 $220,000.00 $310,000.00 Note: Same assumptions were used for these calculations as Table 2 above VI. Market Study Summary A total of three independent market studies have been prepared for the Vail Town Council for the Chamonix site. Two studies were completed by Economic & Planning Systems, and more recently, a third study was prepared by Rees Consulting, Inc. In each instance, the overriding conclusion of the studies has been the same; "market conditions appear to be prime now for proceeding with the development of Chamonix". E3 1/12/2016 In summary, the studies conclude the following: • The economy is recovering with growth in jobs and significant reductions in unemployment. • The real estate housing market is rebounding. • Deed restricted units in Vail perform well, remain 100% occupied and command the maximum allowable resale price at closing. • The inventory of deed restricted units within Vail and located down valley is not growing to meet current market demand. • Rental availability is increasingly limited and rising rental rents are within the range of potential cost of home ownership at Chamonix. • Households most likely to purchase a home at Chamonix have an income in the 60% to 140% AMI range with a low required capture rate of less than 4%. Most recently, Melanie Rees, of Rees Consulting, Inc. recommended the following with regard to future development on the Chamonix site: • The pricing and value of homes at Miller Ranch should be considered when designing and setting home prices for Chamonix. (competition) • Prices should be primarily affordable for households in the 80% to 120% AMI range. (wider range of buyer) • Prices should set slightly lower than the maximum affordable levels. (affordable) • Pricing should be structured using income tiers where deed restrictions impose income limits. (affordable/diverse sales & cost structure) • Price should be set with the expectation that interest rates will rise. (affordable) • A variety of unit types (flats, townhomes, duplexes and single family) and sizes should be provided. (desirable and marketable) • Consideration should be given to providing fewer flats and more townhomes to address phasing, livability, buyer preference, marketability, mortgage availability, etc. (desirable and marketable) • Work with local lenders to obtain approval of deed restrictions to broaden the availability of loan products. (affordable/desirable and marketable) • Obtain Fannie Mae and FHA direct approval of the development. (affordable) • Assist prospective buyers with educational information on loan products to aid in sound financial decision making. • To enhance livability and competitiveness, the following amenities are recommended: o Enclosed garages with a minimum of two spaces per unit o Adequate storage suitable for bikes, skis, snowboards, etc. o Small fenced areas for children and pets o Functional common outdoor areas o Access to sunlight and views o Mud rooms o Sound proofing and noise attenuation o Energy efficiency o Pedestrian connectivity (desirable and marketable) A copy of the Market Study has been attached for reference E] 1/12/2016 VII. Master Plan Overview A Master Plan was finalized in early 2009 for the town -owned, 3.6 acre parcel known as the Chamonix site. According to this plan, the site is to be rezoned to the Housing (H) District and 100% of the homes developed on the site should be deed -restricted, for -sale employee housing units, as defined by the Town's Zoning Regulations. The vision for the site going into the master planning process called for a variety of units types and sizes aimed a serving families (min. three persons per household) with incomes between 60% and 120% of the Eagle County Area Median Income (AMI), possibly ranging as high as 140% and greater AMI. Upon considering and evaluating three possible development scenarios for the site, the Neighborhood Block scheme was selected. This Scheme envisions a mix of residential unit types and sizes with a density (dwelling units per acre) of approximately 16 du/acre. Vehicular access to all of the units is to be provided via a private road within the interior of the site. No vehicular access to the site is allowed off of Chamonix Lane. In 2011, the Vail Town Council approved an amendment to the 2009 Chamonix Master Plan. Most notably, following input and participation from the adjacent property owners along Chamonix Lane, this amendment removed the prohibition against access to the site off of Chamonix Lane provided access is to limited duplex or single-family type residences which are one-story in height above the street, and that a new sidewalk be constructed along the length of the site on the south side of the street. All other recommendations and expectations for the site remained largely unchanged. A copy of a the staff memorandum to the Vail Town Council of December 17, 2013, entitled "Chamonix Master Plan Information Update", has been attached for reference. VIII. Visioning Questions People • What is the target market for the development at the Chamonix neighborhood? • Who do you see living in the Chamonix neighborhood? • Where do the future owners within the Chamonix neighborhood currently reside? • Where are the future owners primarily employed in Vail? Down valley? Both? • What are their likely occupations? • Are they primarily employed full time? Part time? Seasonally? • Why is it important that these people live within the Chamonix neighborhood? • How do these people help the Town of Vail achieve its mission of being "The Premier International Mountain Resort Community'? Place • When you look at the Chamonix neighborhood what do you see? • What is the character of the neighborhood? Of the buildings? • What do you see happening within the Chamonix neighborhood in five years? 15 years? 25 years? 10 1/12/2016 • How is the Chamonix neighborhood integrated into the surrounding area? The community? • What community opportunities or issues are being addressed or solved as a result of people living within the Chamonix neighborhood? • What role does the Chamonix neighborhood play in addressing diversity within the community (income, longevity, family type, product type, etc.)? • What do you want people to say about the Chamonix neighborhood once completed? IX. Attachments Market Analysis: Chamonix For -Sale Employee Housing, Rees Consulting, Inc., May 2014 Chamonix Master Plan, Stan Clauson Associates, Inc., January, 2009. Staff memorandum to the Vail Town Council, entitled "Chamonix Master Plan Information Update", dated December 17, 2013. Inventory of Existing Employee Housing Units in the Town of Vail, October 2015. 11 1/12/2016 Rees Consulting, Inc. PO Box 3845 Crested Butte, CO 81224 970/349-9845 melanie@reesconsultinginc.com October 27, 2015 George Ruther Community Development Dept. Town of Vail 75 S. Frontage Rd. Vail, CO 81657 Re: Update to May 2014 Chamonix Market Study Dear George: The conclusions of the market study I prepared last year for the development of ownership housing on the Chamonix site remain valid. It does not appear to me that an update to the study is needed at this time. Specifically: The estimates of potential market size, total demand and capture rates for Chamonix were projected forward for two years; we are within the time period the study covered. The economy is continuing the trends identified in the report with growth in jobs and declining unemployment. The unemployment rate was 5.3% in early 2014 and had dropped to only 2.4% as of September 2015. The real estate market has continued its rebound with increases in home prices and diminishing inventory of homes listed for sale. The 70 price -capped employee ownership units in Vail are still performing well with no empty homes and ample applicants. All re -sales continue to command maximum allowed appreciation. Competition from down valley has not changed significantly. While a couple of large developments that will ultimately offer employee housing are in the pipeline (Wolcott and Eagle River Station), construction has not yet commenced. Nothing has changed about the location and the site's marketability. I hope this addresses your concerns. Sincerely, Melanie Rees 1/12/2016 Market Analysis Chamonix For -Sale Employee Housing Draft 4-30-14 Prepared by: Rees Consulting, Inc. PO Box 3845 Crested Butte, CO 81224 970-349-9845 reesconsultinginc.com Contents Introduction................................................................................................................................ 1 Purposeof the Study.............................................................................................................. 1 Organizationof the Report...................................................................................................... 1 Methodology and Sources...................................................................................................... 1 AreaCovered......................................................................................................................... 2 1. Master Plan Summary..................................................................................................... 3 Number, Type and Size of Units............................................................................................. 3 Income Targeting and Prices.................................................................................................. 4 Amenities............................................................................................................................... 4 SitePlan................................................................................................................................. 5 Access and Infrastructure....................................................................................................... 5 Potential Market Impediments................................................................................................ 5 11. Location Analysis................................................................................................................ 6 Street Address/Street Boundaries.......................................................................................... 6 SurroundingLand Use............................................................................................................ 6 Proximityto Services.............................................................................................................. 9 Shoppingand Dining........................................................................................................... 9 PublicTransit...................................................................................................................... 9 Bike and Pedestrian Access............................................................................................... 9 Parks.................................................................................................................................. 9 Schools..............................................................................................................................10 Marketabilityof the Site.........................................................................................................10 III. Demographic and Economic Framework........................................................................12 Market Area Demographics...................................................................................................12 DemographicTrends.............................................................................................................14 TheEconomy........................................................................................................................16 IV. Rental Market Overview.................................................................................................19 ApartmentInventory..............................................................................................................19 OccupancyLevels.................................................................................................................20 Rents.....................................................................................................................................21 Condominium/Townhome Rentals.........................................................................................22 V. Ownership Market Conditions............................................................................................24 County -Wide Ownership Market Trends................................................................................24 PriceVariation by Area..........................................................................................................26 Availability of Market Housing................................................................................................27 1/12/2016 Sales of Deed Restricted Units..............................................................................................29 Availability of Deed Restricted Housing.................................................................................30 LotSales...............................................................................................................................31 Foreclosures..........................................................................................................................31 VI. Competitive Analysis......................................................................................................32 Vail Deed Restricted Inventory..............................................................................................32 Amenities/Design Features....................................................................................................37 VII. Demand Estimates.........................................................................................................39 MarketSegmentation............................................................................................................39 MarketSize...........................................................................................................................42 DemandEstimate..................................................................................................................43 Lottery/Buyer Applicants........................................................................................................44 VIII. Mortgage Availability......................................................................................................45 LoanProducts.......................................................................................................................45 Deed Restriction Limitations..................................................................................................45 Lending on Condominiums....................................................................................................46 LeasedLand..........................................................................................................................46 ARM's....................................................................................................................................46 The Impacts of Interest Rates on Affordability.......................................................................47 Down Payment Assistance....................................................................................................47 BorrowerProfile.....................................................................................................................47 IX. Conclusions and Recommendations..............................................................................48 Competition...........................................................................................................................49 FamilyOrientation.................................................................................................................50 Income Targets and Pricing...................................................................................................50 Unit Size, Type and Bedroom Mix.........................................................................................51 MortgageAvailability.............................................................................................................52 Marketing..............................................................................................................................53 Amenities/Design Features....................................................................................................53 Phasing.................................................................................................................................53 1/12/2016 Draft 4-3-14 Introduction Purpose of the Study The Town of Vail contracted with Rees Consulting, Inc. to analyze the market for Chamonix, a proposed employee housing development. As envisioned, Chamonix will provide 58 units of deed restricted ownership housing, ranging from two-bedroom flats to three-bedroom duplexes serving households with incomes from 60% of the Area Median Income (AMI) to 120% or possibly 140% AMI. The 3.6 -acre Chamonix site just north of the west Vail 1-70 interchange was acquired by the Town in 2005. The original master plan for Chamonix was first adopted that same year. The current master plan, adopted in 2009, examined three development scenarios and involved citizen input and stakeholder focus groups. A guiding policy of the master plan calls for a family-oriented neighborhood. Two previous studies have been done analyzing the market, similar developments in other communities and financial feasibility/gap. Organization of the Report This report has nine main sections as follows: I. Master Plan Summary II. Location Analysis III. Demographic and Economic Framework IV. Rental Market Overview V. Ownership Market Conditions VI. Competitive Analysis VII. Demand Estimates VIII. Mortgage Availability IX. Conclusions and Recommendations The appendix contains supplemental tables with data supporting statements made herein. Methodology and Sources This study incorporates information from numerous sources including: Interviews of staff managing deed restricted units in Vail, Avon and Eagle County's down valley communities, the school district, the Eagle River Water and Sanitation District, four realtors, an apartment manager and three mortgage lenders; Eagle County Assessor records; The Vail Board of Realtors MLS; A rent and vacancy survey conducted by Polar Star Properties; For -rent notices on craigslist.org and in the Vail Daily: Current data on jobs, employment and the unemployment rate; The 2000 and 2010 Census; Rees Consulting, Inc. 1/12/2016 Draft 4-3-14 Population and employment projections from the Demography Section of the Colorado Department of Local Affairs; and Findings from the 2007 Eagle County Housing Needs Assessment survey. Area Covered While Vail is the focus of this study, information is also provided on other areas within Eagle County as needed to analyze housing market supply and demand. Eagle County's economy and population are very inter -connected with 1-70, public transit, and well established commuting patterns. Depending upon topic and information availability, the areas covered in this report include: Vail, which includes only the area within municipal boundaries when referencing Census data but extends to the zip code boundary for jobs and the developed zone for MLS data. The Up Valley Area, which includes the towns of Vail and Avon and the unincorporated community of Eagle -Vail, but does not include Beaver Creek, Arrowhead or other development to the west. Eagle County, which is all encompassing with Vail and the Up Valley area included. Occasionally information is also provided by town within the county, such as when historical data is provided on the sale of deed restricted homes. Rees Consulting, Inc. 1/12/2016 Draft 4-3-14 1. Master Plan Summary A Master Plan was finalized in early 2009 for a 3.6 -acre parcel owned by the Town of Vail known as the Chamonix site. According to this plan, 100% of the housing to be developed on the site should be deed restricted, for -sale employee housing. The vision for the site going into the master planning process called for a mix of units serving families with incomes between 60% and 120% of the Area Median Income (AMI), possibly ranging as high as 140% AMI. After considering three development scenarios, the Neighborhood Block scheme was selected which provides for a mix of residential units with a density in the middle of the range considered and open space. It also included a new fire station on adjacent land known as the Wendy's site. This station has since been constructed. Number, Type and Size of Units The Neighborhood Block scheme contains 58 units, ranging from almost 1,300 square feet in size to over 1,600 square feet. Proposed Units by Size Unit Type # of Units Square Feet 2 BR Flats 20 1,292 2 BR Lofts 16 1,333 3 BR Lofts or TH's 8 1,460 3 BR Duplexes 14 1,632 No one -bedroom units are planned. This unit mix provides 81,696 sq. ft. of housing with a density of 16 dwelling units per acre. A main access street, which gained access to the site from Chamonix Road, bisects the site with the 14 three-bedroom duplexes on the north side and the 44 multi -family units on the south side. An alley offers secondary access to the multi -family units. The duplexes will be situated with southern exposure. The multi -family units will have varying north, south, east and west exposure, providing options based on views, sun exposure, highway noise and other preferences. Units on the north side of the buildings will view residential uses up the hill and the hillside, 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; and 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. Rees Consulting, Inc. 1/12/2016 Draft 4-3-14 Income Targeting and Prices Prices for the proposed homes have not yet been determined pending the outcome of this market study and a subsequent analysis of the development's financial feasibility. Based on 2014 AMI's the proposed units should serve households with annual incomes from approximately $40,000 to $120,000. 2014 Area Median Income - Eagle County AMI 1 Person 2 Persons 3 Persons 4 Persons 140% $85,260 $97,440 $109,620 $121,660 120% $73,080 $83,520 $93,960 $104,280 100% $60,900 $69,600 $78,300 $86,900 80% $44,750 $51,150 $57,550 $63,900 60% $36,540 $41,760 $46,980 $52,140 Source: Colorado Housing and Finance Authority For the proposed homes to be affordable for all households with these income categories, prices would need to range from about $135,000 to $450,000. Source: Rees Consulting calculation To calculate affordable prices for these targeted households, the following assumptions were used: The monthly payment equals 30% of gross household income; 20% of the monthly mortgage payment covers taxes, insurance and HOA fees; Down payments average 5% of the purchase price; and The interest rate is 5.5% for 30 -years. As rates rise, a prediction economists seem to agree upon, the amount that households in the targeted income range can afford will decrease. Amenities As planned, Chamonix will offer the following amenities and design features: Garages, probably for two cars, with the duplexes; Parking for multi -family homes on site, probably in common garages under the buildings; Semi -private stepped courtyards between the duplexes; Rees Consulting, Inc. 4 1/12/2016 Maximum Affordable Prices AMI 1 Person 2 Persons 3 Persons 4 Persons 140% $316,100 $361,300 $406,500 $451,100 120% $271,000 $309,700 $348,400 $386,700 100% $225,800 $258,100 $290,300 $322,200 80% $165,900 $189,700 $213,400 $236,900 60% $135,500 $154,800 $174,200 $193,300 Source: Rees Consulting calculation To calculate affordable prices for these targeted households, the following assumptions were used: The monthly payment equals 30% of gross household income; 20% of the monthly mortgage payment covers taxes, insurance and HOA fees; Down payments average 5% of the purchase price; and The interest rate is 5.5% for 30 -years. As rates rise, a prediction economists seem to agree upon, the amount that households in the targeted income range can afford will decrease. Amenities As planned, Chamonix will offer the following amenities and design features: Garages, probably for two cars, with the duplexes; Parking for multi -family homes on site, probably in common garages under the buildings; Semi -private stepped courtyards between the duplexes; Rees Consulting, Inc. 4 1/12/2016 Draft 4-3-14 Common area between the two rows of multi -family units large enough for a play area, grill and tables, flower/vegetable beds, etc. Open space at the east end of the parcel which could potentially be used for a dog park; Open space at the steeply sloping west end that might provide for viewing for fire station activities separated by a series of low landscaped walls; and Extensive landscaping, including aspen groves and native vegetation along the southern edge of the parcel to buffer homes from neighboring commercial uses. Site Plan The parcel is about 3.6 -acres. Zoning is Housing (H); the proposed use is allowed. The parcel is vacant, with native grasses, a few bushes and, on the southwest side of the parcel, scattered trees. The parcel has a moderate downhill slope from north to south, with a steep slope in the northwest corner of the parcel, which is not planned for development. Views of the mountains occur across 1-70 to the south, southwest and southeast of the parcel. Chamonix Lane borders the property to the north. Chamonix Road runs along the east and southeast side of the property and the West Vail Fire Station borders the property on the southwest. Access and Infrastructure Access to the site will from Chamonix Lane (to the north) and Chamonix Road (to the east). The access off of Chamonix Road will loop through the West Vail Fire Station to the North Frontage Road, allowing for dual points of access and reducing internal traffic congestion. Power, water and sewer lines are in place on Chamonix Lane. Utilities connections will be provided concurrent with construction; significant utilities/infrastructure improvements are not needed prior to developing the site. Potential Market Impediments Although decisions have not been finalized on many aspects of the Chamonix development, this study examines the marketability of the proposed project taking into consideration: Deed restrictions that allow only employees earning at least 75% of their income in Eagle County to purchase units and limit resale prices to no more than 3% per year; income limits would not be imposed; Developing the 44 multi -family units and possibly the duplex units as condominiums; and An underlying long-term land lease held by the Town of Vail. Rees Consulting, Inc. 1/12/2016 Draft 4-3-14 II. Location Analysis Street Address/Street Boundaries The project is located in west Vail just north of North Frontage Road. It is in a highly visible location on the north side of 1-70, a major east -west interstate highway through Colorado, just off of exit 173. Project Location Map Surrounding Land Use Highway commercial and strip mall commercial development characterizes the uses off of the North Frontage Road and Chamonix Road, with residential neighborhoods characterizing the use patterns off of Chamonix Lane. To the south and east of the parcel, off of Chamonix Road, includes two gas stations, a bank and associated commercial uses, a Holiday Inn hotel, cafe and local market and a brew pub. Bordering the southwest corner of the parcel is the West Vail Fire Station, with access off of the North Frontage Road. Rees Consulting, Inc. 1/12/2016 Draft 4-3-14 Primarily single family and duplex units are accessed off of Chamonix Lane to the north of the parcel. Vicinity Map r no A residential area is located to the north of the parcel accessed via Chamonix Lane. The units are primarily single family homes and duplexes although there are some interspersed townhomes and condominiums. The units were mostly built in the late 1960's and the '70's. Most are modest by Vail standards, and there are few signs of redevelopment/remodeling. Homes appear to be occupied by a mix of residents and second -home owners. The duplexes planned as part of the Chamonix development were placed along Chamonix Lane to ensure the greatest compatibility with adjacent neighbors in terms of unit type, size and style. Rees Consulting, Inc. 7 1/12/2016 �r�r Rees Consulting, Inc. Draft 4-3-14 The Chamonix parcel, looking to the east from the northwest corner. Chamonix Road borders the east side of the parcel and the truck on the south side is in the West Vail Fire Station parking lot. Some residential uses can be seen on the north side of the parcel, off of Chamonix Lane. Standing on Chamonix Lane to the north, looking east. This shows mountain views and the Holiday Inn hotel. Standing on Chamonix Lane to the north, looking southeast. This shows the mountain views, back of the bank (grey building) and back of the cafe/market (green -blue roof). 1/12/2016 Shopping and Dining Draft 4-3-14 Standing on Chamonix Lane to the north, looking south. This shows the mountain views, 1-70 bridge, and two gas stations adjacent to the parcel on the south. Proximity to Services Safeway is within 3 -tenths of a mile of the site on North Frontage Road — about a six -minute walk along the relatively flat bike and pedestrian trail. This is also reachable via personal vehicle or bus. Other neighboring amenities include gas stations, bank, hotel, bar/restaurant, local market and, near the Safeway, a barber, UPS store, dental office, child care center, liquor store, coffee shop, Sports Authority, and 7 -Eleven. Restaurants include a pizza place, sub shop, cafe, sushi restaurant and quick serve options, including Subway, McDonalds and Qdoba. Public Transit The site is located within %-mile of several bus stops on both the West Vail Red and Green Loop transit lines, including stops off of the North Frontage Road, Chamonix Lane and the South Frontage Road. These lines provide service every 40 -minutes in the summer (May 27 through mid-December), once per hour in the spring (April 15 through May 26) and in 30 -minute intervals during peak hours in the winter (December 10 through April 14). 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 A bike and pedestrian path runs along North Frontage Road to the south of the parcel. This access also travels under 1-70 to access the South Frontage Road and associated amenities. Parks The Chamonix Master Plan calls for some community gathering spots and semi -private courtyards between the duplex units. Larger open areas are provided on the east and west ends of the Rees Consulting, Inc. 1/12/2016 Draft 4-3-14 development. The open space on the east end could be utilized for such uses as a dog park. Otherwise, Town of Vail parks, numerous mountain trails and open spaces are accessed from the property via the bike and pedestrian trails, bus service, and personal vehicles. Schools Children living at Chamonix would attend the following Eagle County public schools: Red Sandstone Elementary is located at 551 North Frontage Road, 2.3 miles east of the Chamonix site (about a 5 minute drive). Homestake Peak School, located at 750 Eagle Road in Eagle -Vail, 5.2 miles west of the site, is where middle school children would attend. It offers kindergarten through eighth grade. Battle Mountain High School, located at 0151 Miller Ranch Road in Edwards, is 11 miles, or about 15 minutes if roads are dry, west of the Chamonix site. School bus service is available with the closest stop a short distance from the site at Chamonix and North Frontage Road. Two different routes serve this stop. The route serving Red Sandstone Elementary, which continues on to Battle Mountain, has 9 students assigned for this stop. Morning pick up is at 7:33. Afternoon drop off is 4:25. For Homestake Peak, pick up is at 7:47 AM and drop off is also at 4:25 PM. Three students from this stop are now assigned to this route. Most of the District's bus routes are running full; a significant increase in students at the Chamonix site would need to be discussed with the District to make sure adequate capacity exists to serve them. Marketability of the Site The site is marketable in many aspects though has attributes that may not appeal to some, especially families with children and others seeking quiet, safe surroundings. It is located between a residential and commercial area, with easy access to groceries and other necessary goods and services. With a bike/pedestrian path running near the property and nearby bus stops serviced by two public transit routes, it is very convenient. Proximity to a transit stop is a big plus — a car is not required to reach most job sites, shopping, skiing and Vail's other amenities. 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 1-70 and Frontage Road bus/truck traffic presents some concerns. The proximity of the West Vail Fire Station also adds some noise concerns, but conversely provides quick emergency response times. Trees will be planted 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. Trees will also be planted around the open spaces surrounding the duplex units and a few scattered throughout the development. Rees Consulting, Inc. 10 1/12/2016 Draft 4-3-14 The site is highly visible; it can be seen from 1-70 and both frontage roads and is conveniently located just off of Exit 173. It will not be difficult to provide directions to potential residents when they make inquiries. Impediments to marketability of the site include: The proximity to 1-70 and its noise. While there are few other options within Vail, many down valley housing options would be quieter. Proximity to adjacent commercial uses. While convenient, these commercial uses generate traffic and bring in persons who are not residents of the community. Limited public open space in the area. It is a densely developed area with much of the land consumed by buildings and parking lots, private residential lots and steep hillsides. There are no nearby parks within walking distance. Distance to public schools. All children living in the area would have to bus to school, other than elementary school students who are old enough to bike to Red Sandstone. This is a distinct disadvantage compared to deed restricted housing options located in Edwards and further down valley. Rees Consulting, Inc. 11 1/12/2016 Draft 4-3-14 III. Demographic and Economic Framework 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. Since most buyers of deed restricted homes are first time buyers, the focus is on the demographics of renter households. Market Area Demographics As of 2010, Eagle County had a population of around 52,000 persons residing in 19,236 households/housing units. Of these, 2,604 households or 13.5% of the total were within the town of Vail. About one-third of the county's households resided in the larger up valley area. 2010 Population and Housing Occupancy Eagle County is projected to have a relatively strong rate of growth during upcoming years, averaging 2% per year through 2015 then 2.9% per year through 2020. The State Demography Section projects that the county will have a population of 66,382 in 2020, a gain of over 14,000 residents, or about 700 persons per year. These growth estimates may be somewhat overstated; however. State Demography estimates for 2012 indicate the Eagle County has declined slightly since the Census, from 52,197 to 51,944. While most residential units in Eagle County were occupied as primary residences in 2010 (approximately 61%), only 36% of units in Vail were occupied by residents; second homes/vacation accommodations comprised the majority. In the up valley 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 the operation and maintenance of the units. Rees Consulting, Inc. 12 1/12/2016 Vail Up Valley Eagle County Population 5,305 15,257 52,197 Housing units 7,230 13,064 31,312 Households 2,604 6,294 19,236 Housing occupancy rate 36.0% 48.2% 61.4% Source: 2010 US Census Eagle County is projected to have a relatively strong rate of growth during upcoming years, averaging 2% per year through 2015 then 2.9% per year through 2020. The State Demography Section projects that the county will have a population of 66,382 in 2020, a gain of over 14,000 residents, or about 700 persons per year. These growth estimates may be somewhat overstated; however. State Demography estimates for 2012 indicate the Eagle County has declined slightly since the Census, from 52,197 to 51,944. While most residential units in Eagle County were occupied as primary residences in 2010 (approximately 61%), only 36% of units in Vail were occupied by residents; second homes/vacation accommodations comprised the majority. In the up valley 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 the operation and maintenance of the units. Rees Consulting, Inc. 12 1/12/2016 Draft 4-3-14 Proportionately more renters live up valley while more owners live down valley. While up valley is home to about one-third of Eagle County's total households, nearly 45% of total renter households reside there. Relatively fewer households can afford to buy homes in the Vail area; the option other than commuting to buy down valley is to rent up valley. Over one-half of the households in Vail and nearly 50% of those in the up valley 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. Of the 3,336 renter households living up valley 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: Up Valley Area Family, no children Roommates 479 total 37 /o ( ) (1,152 total) 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%). Rees Consulting, Inc. 13 1/12/2016 Draft 4-3-14 The average size of renter households within the up valley 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 of one- and two -person households, which combined total 61%. 2010 Renter Households by Size: Up Valley Area 5+ person 4 -person 9% 12% (264 total) 1 -person (2 3 -person 18% (571 total) Demographic Trends Source: 2010 US Census 29% 9 total) son YO (1,014 total) 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 up valley area. The population increased by 25% in the county but only 17% in Vail and just under 6% in the up valley area. Growth in households followed a similar pattern. Total housing units, however, increased at about the same rate in the county and the up valley 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. Change in Population, Housing Units and Households: 2000 - 2010 Rees Consulting, Inc. 14 1/12/2016 Vail Up Valley Eagle County Population 2000 4,531 15,326 41,659 2010 5,305 16,234 52,197 • change 17.1% 5.9% 25.3% Total Housing Units 2000 5,389 11,527 22,111 2010 7,230 16,286 31,312 • change 34.2% 41.3% 41.6% Source: 2000 and 2010 US Census Rees Consulting, Inc. 14 1/12/2016 Draft 4-3-14 The housing occupancy rate declined by about 7 percentage points in the county, 4 points in Vail and 9 points in the up valley 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 up valley area gained 680 households (owners and renters combined) between 2000 and 2010, for an average increase of 68 households per year. The increase in households within the up valley area was due primarily to growth in the number of renter households (a gain of 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. 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 up valley area and from 49% to 45% in Vail. Renters living alone increased, especially in Vail, from 33% to 36%. 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. 2000 2010 Change in Composition of Renter Households: 2000 — 2010 Family, no children Family, with children Living alone Non -family, roommates Family, no children Family, with children Living alone Non -family, roommates Source: 2000 and 2010 US Census Vail Up Valley Eagle County 1,032 2,917 5,499 12% 11% 17% 7% 19% 25% 33% 25% 25% 49% 44% 34% 100% 100% 100% 1,340 3,336 6,893 11% 15% 18% 8% 18% 29% 36% 29% 26% 45% 38% 27% 100% 100% 100% Changes in renter household size also varied by region: Renter households decreased in size in both the town of Vail and the up valley area while size increased slightly in the county. Rees Consulting, Inc. 15 1/12/2016 Draft 4-3-14 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 up valley area (22%) than in Vail (10%). 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 up valley area than in the county as a whole. 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 up valley area). The Economy The economy in Eagle County is slowly recovering. Eagle County currently had about 37,820 jobs on average in 2013. 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. Change in Jobs: Eagle County, 2005 — 2013 44,000 42,000 40,499 40,163 40,000 - 38,319 37,821 38,000 - 7,2300 047 36,529 36,030 0 35,662 36,000 0 0 34,000 32,000 30,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Colorado Department of Local Affairs (DOLA), State Demography Section Rees Consulting, Inc. 16 1/12/2016 Draft 4-3-14 The unemployment rate in Eagle County has been declining. Unemployment reached a high of 9.6% in 2010 and declined to an average annual rate of 6.6% in 2013, slightly lower than the state average of 6.8%. This is still much higher than pre -recession rates, which varied between 2.9% and 3.9% from 2005 and 2008, although during the 2013/14 ski season the rate hovered just above 5%. Average Yearly Labor Force and Employment: Eagle County 2005 - 2013 Year Labor Force Employment Unemployment Unemployment Rate 2013 29,391 27,454 1,937 6.6% 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 It appears that the decline in the unemployment rate has been due in part to the continued out mitigation of the labor force. The total number of Eagle County's residents who were employed in the 2013/14 ski season was slightly lower than in the 2012/13 season. 35000 30000 d ,i 25000 0 20000 m 0 0 15000 UJ 1111 5000 Employment and Unemployment by Month: Eagle County July 2012 — June 2013 Employment (Unemployment Rate (%) 9.7% .1% 8.0°/ ° 8.4% 0 1.1 o rjo0 7.3% 6% no/ -.6 .4 ° .3% 6.6% 0 0/65.1%05.3 '4 % 12% 10% 8% 6% >, 0 n E d 4% 0 2% 0 0% C Source: Colorado Department of Labor and Employment Rees Consulting, Inc. 17 1/12/2016 Draft 4-3-14 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. 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. Vail is no longer the economic center of Eagle County in terms of jobs. Based on the Quarterly Census of Employment and Wages (does not include sole proprietors and employees exempt from unemployment insurance), approximately 26% of the county's employees work in the Vail zip code area. Just over 15% of establishments (businesses, government, non profits, etc.) are located in Vail, an indication that employers tend to be larger in Vail than elsewhere in the county. Wages in Vail are slightly higher than in Eagle County as a whole. Employees and Employers by Area Average Jobs Eagle County Vail Percent Vail 2012 28,179 7,401 26.3% 2013: 1st -3rd Qtr. 28,910 7,569 26.2% # of Establishments 2012 3,191 493 15.4% 2013: 1st -3rd Qtr. 3,199 483 15.1% Source: Colorado Department of Labor and Employment, Quarterly Census of Employment and Wages Rees Consulting, Inc. 18 1/12/2016 Draft 4-3-14 IV. Rental Market Overview To assess the extent to which limited rental availability and rising rents could impact the demand for ownership housing, rental market conditions in the Vail area are summarized, including number of units, vacancy rates, apartment and condominium rents, and trends in rental rates. Apartment Inventory This analysis focuses on two major apartment complexes in Vail, two in the Dowd Junction area and three in Avon. Combined, these properties have a total of 1,046 units. These units house approximately 30% of the renter households residing in the area. All but one of these properties, River Run, has some type of occupancy and/or income restriction. General Description of Competing Properties The only apartment projects within Vail through Avon 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. 19 1/12/2016 Buffalo Buffalo EagleBend Kayak Middle River Run Timber Ridge Ridge II Crossing Creek Ridge Management Polar Star Corum Polar Star Polar Star Coughlin & Texas Capital Corum Properties Properties Properties Company Partners LLC Location Avon Avon Avon Dowd Vail Dowd Junction Vail Junction # of floors 4 4 3 3 3-8 3-4 3 Unit Type flats flats flats flats flats Flats/lofts/TH flats 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 Restrictions Local LIHTC/Mkt Local Local LIHTC/Mkt Mkt Local 50% AM I 40 6 60% AMI 92 91 80% AMI 68 120% AMI 294 50 None 44 45 117 199 The only apartment projects within Vail through Avon 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. 19 1/12/2016 �APo Gey FaN Property Location Map 1 %R gp Trail Timber Ridge Middle Creek z Buffalo Ridge y AcR ��"� GWctit P.h— GuCh� , ' 9'' W�t Yall i Y ` ! Kayak Crossingj 73 � EagleBend fi _ River Run Occupancy Levels _ _ •ppGame Geek 'I Boxd Draft 4-3-14 Vai fl ntam 112W et.10997 5uicrfoxn-A Erni Soxd Sox? - _ _ _ T_ -P ltum - � T_ El `Traily- Rental occupancy levels were very high in March. The overall rate among the county's major non- seasonal apartment complexes was over 97%. Timber Ridge, water damage and long term wear/tear limited the ability to rent some units, had the highest vacancy rate and skewed the overall average. Excluding Timber Ridge, the overall average occupancy rate was nearly 99%. 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 before the recession 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 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. Rees Consulting, Inc. 20 1/12/2016 Draft 4-3-14 Vacancy rates vary by season. Rates are consistently lower in the first quarter of each year and tend to be lowest in the third quarter. April and May generally have the highest turnover. The following table shows that properties in Avon and Edwards have similar occupancy levels as those within Vail. This means that, as occupancy levels 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. Occupancy Levels by Property, March 2013 Rents The rents shown on the following table are market rates or rents for units with income restrictions in the same range at 80% to 120% AMI which, according to property managers, are set based on market conditions rather than income caps. In other words, the maximum allowed rents for 80% and 120% are not charged; rents reflect the market. The rents for Low Income Housing Tax Credit (LIHTC) units with restrictions at 50% and 60% AMI have been excluded from this analysis. Rents by Unit Type and Property Location # Units Occupancy Kayak Middle River Rate Buffalo Ridge Avon 68 100% Buffalo Ridge II Avon 176 100% EagleBend Avon 294 99% Eagle Villas Eagle 120 93% Kayak Crossing Avon 50 98% Lake Creek Edwards 270 99% Middle Creek Vail 142 100% Timber Ridge Vail 198 87% River Run Avon 117 100% Total/Average 1 BR 1435 97.3% Source: Polar Star Properties Market Summary, 3/17/14 Rents The rents shown on the following table are market rates or rents for units with income restrictions in the same range at 80% to 120% AMI which, according to property managers, are set based on market conditions rather than income caps. In other words, the maximum allowed rents for 80% and 120% are not charged; rents reflect the market. The rents for Low Income Housing Tax Credit (LIHTC) units with restrictions at 50% and 60% AMI have been excluded from this analysis. Rents by Unit Type and Property 1/12/2016 Buffalo Buffalo Ridge II Eagle Kayak Middle River Timber Average Ridge Bend Crossing Creek Run Ridge Income 80% 50% -Mkt 120%AMI 120% 60% -Mkt Mkt None Restriction AMI AMI Studios $735 mkt $735 1 BR $930 $925 mkt $804 $1,703 $1,091 2 BR/1 BA $1,220 $1095 mkt $1,045 $1,140 $1,075 $1,115 2 BR/2 BA $1,910 $1,910 3 BR $1,455 $1,324 $1,450 $1,985 $2,210 $1,685 4+ BR $1,650 $1,650 Rees Consulting, Inc. 21 1/12/2016 Draft 4-3-14 Historically rents have generally been higher in Vail than down valley. Current rents among these properties, however, only partially reflect this. For example, rents for three-bedroom units at Middle Creek in Vail average about $575 higher than at Buffalo Ridge, EagleBend and Kayak Crossing further down valley. Alternatively, River Run, a condominium project in the Dowd Junction area that functions as an apartment property (all units owned and managed by one company) without any type of occupancy or income restriction, recently raised rents by around $540 per month, exceeding rents in Vail. The extent to which these rent increases may negatively impact occupancy levels or marketability can be evaluated by mid -summer when units vacated in April/May should be leased. Condominium/Townhome Rentals During the last week in April, a total of 61 units were listed for rent in the Up Valley area (Vail through Avon), 40 on craigslist and 24 in the Vail Daily, with only three duplicates. Of these, most were condominiums although a few were listed as apartments, townhomes, duplexes and lock offs. Rents for these units ranged from $700 for a studio to $3,200 for a three bedroom duplex. The overall average rent for these units was $1,918. Condominium and Townhomes For -Rent Listings Unit Type Average Rent 1 Bdrm $1,285 2 Bdrm $1,859 3 Bdrm $2,550 Trends in Rents Rents are rising after several post -recession years when rates dropped and discounts were widespread. The overall average rent for apartments increased 3% between July 2012 and 2013, and the per -square - foot average grew by 15%, indicating relatively higher increases for smaller units. Change in Average Apartment Rents July 2012 — July 2013 July July March 2012 2013 2014 Avg. Rent/Unit $1,159 $1,162 $1,264 Avg, Rent/SF $1.17 $1.35 $1.46 Source: Polar Star Properties Rees Consulting, Inc. 22 1/12/2016 Draft 4-3-14 Rates for units listed for rent in the Vail Daily and on craigslist.org were higher in April 2014 than in July/August 2013. Condo/Townhome Rent Increases Unit Type Average Rent Average Rent Percent Change July/Aug 2013 April 2014 1 Bdrm $1,104 $1,285 16.4% 2 Bdrm $1,762 $1,859 5.5% 3 Bdrm $2,106 $2,550 21.1% Source: Vail Daily and craigslist The decreased availability of rental units combined with rising rents will cause some renters who want to live in Vail to consider buying, especially households that have been residing in the area for some time. Employees moving into the area will be more likely than longer term residents to live with multiple roommates, allowing them to share the cost of higher rents with others and crowd into and occupy available units. Market rents have increased to levels where mortgage payments could be competitive, depending upon how units at Chamonix are priced. To be affordable for households with incomes ranging from 60% AMI to 140% AMI, monthly payments would need to range from about $900 to $3,000, with resulting in an overall average below $2,000 per month. Rents now average about $1,860 for two-bedroom condos/town homes and $2,550 for three bedrooms. Rees Consulting, Inc. 23 1/12/2016 Draft 4-3-14 V. Ownership Market Conditions This section provides an overview of the ownership market in Eagle County for both market rate and deed restricted housing. This section evaluates current conditions and past trends including the number of sales, sales prices, and inventory of units listed for sale. Variations in market conditions by location within the valley is also analyzed to determine how values vary and if down valley housing is competitive given commuting costs. The focus is on deed restricted homes and market units priced less than $500,000 given that units at this price point would be most competitive with homes at Chamonix. Because Chamonix is proposed to target households with incomes in the 60% to 140% AMI range, this equates to a price range of $135,000 to $450,000, or a midpoint around $300,000. County -Wide Ownership Market Trends The ownership market in Eagle County has improved since 2009, although the recovery has not been robust or consistent across the board. Dollar volume jumped quickly in 2010 due to high-end sales then declined due to sales of bank owned properties and lower -end bargains. The number of sales, however, has steadily increased since 2009. In 2013, the overall dollar volume decreased slightly from 2012 yet the number of sales continued to increase. Trends - Transactions and Dollar Volume $1,600,000,000 $1,400,000,000 $1,200,000,000 $1,000,000,000 $800,000,000 $600,000,000 $400,000,000 $200,000,000 $0 Source: Land Title Guarantee 2009 2010 2011 2012 2013 Dollar Volume Number of Transactions 2000 1800 1600 1400 1200 1000 800 600 400 200 0 Just over 1,400 residential units sold in Eagle County in 2013. This figure includes the sale of 45 deed restricted units. The inventory of bargains and bank owned homes largely disappeared as buyers became motivated by several factors: Evidence that prices had hit bottom and were starting to rebound; Economic recovery; and Rees Consulting, Inc. 24 1/12/2016 Draft 4-3-14 Widespread predictions that mortgage interest rates will rise. Of total sales in 2013, over half were for prices at or below $500,000. The free market overall remains priced higher than deed restricted units in most of the county. The average 2013 sales price of $887,330 is nearly three times the $300,000 midpoint of the price range targeted by Chamonix. Residential Sales by Price Range, 2013 While non -local buyers, often paying cash, were some of the first buyers to take advantage of lower, post -recession prices, over half of the sales in Eagle County in 2013 were to local buyers. Sales to locals drove the high number of sales in 2013 of units priced under $500,000. All Sales by Unit Type, 2013 Origin of Buyer Number of Percent of Units Units Sold Sold Local 943 53% Front Range 267 15% Out of State - US 532 30% International 24 1% Total 1,766 100% Source: Land Title Guarantee Note: 365 vacant lots and non- residential sales included in these figures. The number of sales were about evenly divided in 2013 between up valley (Vail through Avon) and mid/down valley communities. Just over one-third of sales were within Vail. Vail Up Valley Area Down Valley Source: Land Title Guarantee Sales by Area, 2013 Number of Sales Percent of Sales 598 Number of Sales Percent of Sales Average Price <$500,000 724 51.7% $306,338 $500,001 - $1,000,000 374 26.7% $696,944 $1,000,001 - $1,500,000 108 7.7% $1,237,384 $1,500,001- $2,000,000 74 5.3% $1,734,328 >$2 million 121 8.6% N/A Total/Average 1,401 100.0% $887,330 Source: Land Title Guarantee While non -local buyers, often paying cash, were some of the first buyers to take advantage of lower, post -recession prices, over half of the sales in Eagle County in 2013 were to local buyers. Sales to locals drove the high number of sales in 2013 of units priced under $500,000. All Sales by Unit Type, 2013 Origin of Buyer Number of Percent of Units Units Sold Sold Local 943 53% Front Range 267 15% Out of State - US 532 30% International 24 1% Total 1,766 100% Source: Land Title Guarantee Note: 365 vacant lots and non- residential sales included in these figures. The number of sales were about evenly divided in 2013 between up valley (Vail through Avon) and mid/down valley communities. Just over one-third of sales were within Vail. Vail Up Valley Area Down Valley Source: Land Title Guarantee Sales by Area, 2013 Number of Sales Percent of Sales 598 34% 842 48% 924 52% Rees Consulting, Inc. 25 1/12/2016 Draft 4-3-14 Sales were about evenly split between single family homes and multi -family units. The similarity in average price between the two categories is not typical in most market areas and can be attributed to the sale of high-end, multi -family second/vacation homes. Residential Sales by Unit Type, 2013 Number of Percent of Units Average Price Units Sold Sold Single Family 707 50.5% $970,764 Multi Family 694 49.5% $802,332 Total/Average 1,401 100.0% $887,330 Source: Land Title Guarantee Price Variation by Area Prices vary widely within Vail, due to the location, age, size and quality of units within various areas of the town. The Chamonix parcel is within the Buffer Creek, Vail Das Shone, Vail Heights, Vail Ridge area, where the median price in 2013 was $480,000. The average price per square foot was $475 for single family homes and $349 for multi -family units. County wide, variation in price is location dependent but is also influenced by age and size of units. The median price of 2013 sales in Gypsum, Edwards and Avon was lower or equal to the mid point of $300,000 under consideration for Chamonix. 2013 Sales by Area and Price Rees Consulting, Inc. 26 1/12/2016 Number Median Avg. PPSF Avg. PPSF of Sales Price SF MF Bighorn, East Vail 85 $471,000 $475 $405 Vail Village 67 $1,650,000 $1,485 $1,581 Lionsridge, Sandstone, The Ridge, The Valley 40 $395,000 $506 $1,041 Buffer Creek, Vail Das Shone, Vail Heights, Vail Ridge 11 $480,000 $475 $349 Intermountain, Matterhorn, Vail Village West 45 $527,000 $394 $372 Minturn, Redcliff 43 $305,000 $271 $257 Eagle -Vail 80 $427,500 $247 $226 Avon 121 $278,000 $244 $326 Edwards 87 $300,000 $229 $258 Homestead, South 40 56 $422,500 $242 $225 Eagle 229 $341,000 $173 $160 Gypsum 229 $228,500 $133 $97 Source: Land Title Guarantee Note: 365 vacant lots and non-residential sales included in these figures. Rees Consulting, Inc. 26 1/12/2016 Draft 4-3-14 Availability of Market Housing The availability of housing listed for sale in Eagle County at prices under $500,000 is very limited. A total of 78 units as of early April were for sale at this price point in the major communities. This equates to a 1.3 -month inventory based on 724 sales in this price range in 2013. While the inventory of homes listed for sale may increase in the summer months it was very tight as of early April. Nearly half of the 78 units were condominiums, most of which were located in Vail. While the down valley inventory of homes in this price range has been much larger in recent years, only 21 units were for sale in Eagle and 16 units in Gypsum. To buy a free market single family home for less than $500,000 generally requires living in Eagle and Gypsum. Single family homes at this price point are no longer available in Edwards. Of the 15 units in Edwards, 13 were condominiums and the other two were duplex units. Market Units Listed for Sale at <$500,000, by Type and Location Condo Townhome Duplex Single Total Family Listings Vail 23 2 1 26 Edwards 13 2 15 Eagle 1 7 4 9 21 Gypsum 2 13 16 36 11 7 24 78 Source: Vail Board of Realtors MLS Note: A list of units for sale by area is in the appendix to this report. Opportunities to buy a free market homes for less than $300,000 were very limited throughout the county —12 in total, half of which were condominiums in Vail built in the 1960's or early '70's. Choice improves in the $300,000 to $400,000 range where 30 units were listed for sale. For this price, a buyer could choose among condominiums in in Vail or Edwards, small single family homes or larger townhomes in Eagle, or two- to four-bedroom single family homes in Gypsum. In the $400,000 to $500,000 price range, choices in Vail range from a lodge unit to a 1,500 square foot duplex. The average age of these 14 units is 42 years, with most built in the early 1970's. Of the five units in Edwards, four were larger, relatively newer condominiums (compared to Vail) and one townhome. In Eagle, a total of 7 duplexes and single family homes were for sale, averaging 2,500 square feet. In Gypsum, 10 single family homes were for sale at about the same average size as in Eagle though the range was much larger, from 1,816 to 4,130 square feet. The variation in price per square foot is indicative of the difference in home values in the county. At $527 per square foot the price of homes listed for sale in Vail under $500,000 is nearly three times the average price in Gypsum. The average price per square foot drops sharply between Vail and Edwards (-45%) but then declines more gradually between Edwards and Eagle (-30%). The difference in the average price per square foot between Eagle and Gypsum was only $19. Rees Consulting, Inc. 27 1/12/2016 Draft 4-3-14 Market Units Listed for Sale at <$500,000, by Price Range and Location A total of 26 residential units were listed for sale in Vail in early April and priced under $500,000. The four units for sale most comparable to the proposed Chamonix units in terms of location and suitability for occupancy by year-round residents were listed for an average price of $458,750, averaged 1,298 square feet in size and were built between 1969 and 1972. Comparable Market For -Sale Listing in Vail Price Vail Edwards Eagle Gypsum Total $100,000 - $149,999 Chamonix Ln 2 $475,000 1 1 $150,000 - $199,999 East Vail 2 1 1500 1 $200,000 - $249,999 1 1 1 3 $250,000 - $299,999 6 1 7 $300,000 - $349,999 3 5 11 2 21 $350,000 - $399,999 2 4 1 2 9 $400,000 - $449,000 7 2 4 3 16 $450,000 - $500,000 7 3 3 7 20 Total Listings 26 15 21 16 78 Avg. Price/Sq Ft $527 $308 $212 $193 Source: Vail Board of Realtors MLS, 4-8-2014 A total of 26 residential units were listed for sale in Vail in early April and priced under $500,000. The four units for sale most comparable to the proposed Chamonix units in terms of location and suitability for occupancy by year-round residents were listed for an average price of $458,750, averaged 1,298 square feet in size and were built between 1969 and 1972. Comparable Market For -Sale Listing in Vail Price Project/Area Bdrms $432,500 Chamonix Ln 2 $432,500 Chamonix Ln 2 $475,000 Chamonix Ln 3 $495,000 East Vail 2 Source: Vail Board of Realtors MLS, 4-8-2014 Of the comparable properties: Baths Scl Ft Price/SF Yr Built Type 2 1103 $392 1972 TH 2 1110 $390 1972 TH 2 1480 $321 1969 Condo 3 1500 $330 1967 Duplex Two are townhomes on Chamonix Lane that are within different phases of the same property. Each townhome is listed at $432,500. One unit had just been listed in early April. The other had been on the market for about one month and received much interest — 6 or 7 showings within a few weeks. Most were from professionals who had lived in Vail some time (not new to the area) and were in their late 20's to early 40's. Some were singles and others were couples, but none had children. The units both have homemade storage sheds and small yards, but no garages. One is a condominium listed for sale at $475,000 on Chamonix Lane that was originally a three- bedroom unit, but later converted into a two-bedroom unit on the upper floor with a lock -off studio and kitchen downstairs that can be rented separately. The two units combined total 1,480 square feet. It was built in 1969. It has a storage closet off of the patio, but no garage. The property had three offers within a couple of days of being listed — one from a Denver resident looking to buy a second home and two from developers looking for a unit to deed restrict in order to satisfy the Town's housing requirements. Rees Consulting, Inc. 28 1/12/2016 Draft 4-3-14 The other unit listed for sale that is somewhat comparable to the proposed Chamonix homes is a duplex unit in east Vail with an EHU restriction (occupancy by an employee working 30+ hours in Eagle County). This 1,500 square foot, two-bedroom unit built in 1967 is listed at $495,000. It has been on the market for about one year. Interest has been moderate with 6 to 8 showings to qualified buyers. These potential buyers have all been single or couples without children. They have been considering homes as far down valley as Edwards, although some have also looked in Eagle. Sales of Deed Restricted Units County Assessor records indicate 144 deed restricted housing units sold from 2010 through March 2014, for an average of nearly 35 units per year or 2.8 units per month. In 2010 and 2011, the inventory of deed restricted units listed for sale was large due to a combination of factors: employees left the valley due to lack of work, opted to purchase free market homes when prices dropped, or delayed purchasing due to economic uncertainty and tough mortgage lending standards. By 2013, however, the deed restricted market had rebounded with 45 sales in a single year. In 2013, a record was set at the largest deed restricted development in the county, Miller Ranch. By the end of the year, the inventory of units listed for sale had been largely absorbed; none were listed for sale through Eagle County's Valley Home Store. The trend in deed restricted sales in Vail differed from that in the rest of the county. The number of sales peaked in 2010 then declined to only one sale in 2013. This was due to decreased availability of units for sale rather than demand, however. When owners of deed restricted units moved out of Vail during the recession, units became available for others to buy. Also two new units were added in 2010, the Arosa duplex. Availability did not last for long, however, as there were sufficient lottery applicants to purchase all homes that became available. Buyers during this period were always able to obtain maximum allowed resale prices, an indication that demand continued to outweigh supply. Sales of Deed Restricted Homes, 2010 — March 2014 Rees Consulting, Inc. 29 1/12/2016 2010 2011 2012 2013 2014 Total Percent of Jan -Mar Total Vail 11 5 4 1 2 23 16.0% Avon 1 1 0.7% Edwards 25 14 21 30 2 92 63.9% Eagle 2 4 5 5 1 17 11.8% Gypsum 7 7 4.9% Basalt 1 2 1 4 2.8% Total 39 24 30 45 6 144 100.0% Source: County Assessor data. Note: units with covenants only requiring preference be given to employees not included. Rees Consulting, Inc. 29 1/12/2016 Draft 4-3-14 Unlike with the free market, prices of deed restricted housing do not vary much by community. The homes at Miller Ranch in Edwards have generally been higher on both a per-unit and per -square -foot basis than units in Vail. While the development includes single family homes, it also includes duplex and condominium units. Deed restricted prices have been consistently lower in Eagle but the price differential is not nearly as great as in the free market. Prices of Deed Restricted Sales by Area, 2010 — 2013 Avg. Price/Unit 2010 2011 2012 2013 Eagle $172,500 $145,000 $153,700 $202,300 Edwards $247,904 $238,700 $237,319 $253,220 Gypsum $157,100 Vail $238,718 $199,060 $197,400 $164,300 Avg. Price/SF Eagle $189 $144 $130 $177 Edwards $226 $197 $200 $219 Gypsum $141 Vail $195 $167 $200 $177 Source: County Assessor data While sales of deed restricted homes in Vail have historically been able to command the maximum appreciation allowed, this has not always been the case down valley. Following the recession, the inventory grew and it was clearly a buyers' market. In 2011, deed restricted homes sold for 10% to 20% below allowed maximum resale price. The trend is reversing, however. In 2012, resale prices were generally 5% to 10% below the allowed maximum, and by 2013 the reduction averaged around 5%. So far in 2014, some sellers have been able to obtain full appreciation while others have had to reduce prices up to 7% reduction. Sellers of smaller units are better able to stay firm on price whereas larger, more expensive homes are taking the biggest price hits. The down valley deed restricted market is definitively switching from being a buyer's to a seller's market. The 2010 average sale price for deed restricted homes in Vail may best represent the prices of the town's entire deed restricted inventory since there have been few sales since then and only one in 2013. Availability of Deed Restricted Housing Very few deed restricted homes are available for purchase. As of late April, four units at Miller Ranch and one at Eagle Ranch were listed for sale through the Valley Home Store. The Town of Vail had received notification that two units (one at Red Sandstone and one at Vail Heights) were being listed for sale. These seven units combined equal a 1.9 -month inventory based on 45 sales in 2013. Rees Consulting, Inc. 30 1/12/2016 Deed Restricted Units Listed for Sale Unit Type Development Town Bdrms Price Condo* Vail Heights Vail 1 $212,544 Condo Red Sandstone Vail 2 $236,248 Condo Miller Ranch Edwards 2 $183,000 Condo Miller Ranch Edwards 3 $248,000 Townhome Eagle Ranch Eagle 3 $354,900 Single Family Miller Ranch Edwards 3 $390,000 Single Family Miller Ranch Edwards 3 $354,000 *Town of Vail employees have priority. Note: Table does not include units that may be listed by realtors. Lot Sales Draft 4-3-14 In 2013, a total of 176 vacant residential parcels sold for an average of $264,750, up from 103 sales in 2012 and 100 sales in 2011. Foreclosures Short sales and sales of bank owned homes obtained through foreclosure should not have significant impact on the market in the near future. The number of foreclosures has dropped off sharply. In 2011, 463 foreclosures were filed in/near the county's major towns (not including the portion of Eagle County within the Roaring Fork valley). In 2013, the number had dropped to 178 or about 36% of the total two years before. Foreclosures Filed by Town, 2011 and 2013 Compared 2011 2013 Avon 103 43 Eagle 109 36 Edwards 64 34 Gypsum 152 51 Vail 35 14 Total 463 178 Source: Eagle County Public Trustee Rees Consulting, Inc. 31 1/12/2016 Draft 4-3-14 VI. Competitive Analysis This section will focus on deed restricted units throughout the county. This analysis, in combination with the pricing and availability of free market housing both in Vail and down valley are used to determine the prices that the proposed units can command (see Conclusions and Recommendations). This analysis first focuses on the inventory of deed restricted ownership units in Vail then provides information on the nearly 650 other deed restricted units elsewhere in Eagle County. The marketability of amenities and design features is then examined. Vail Deed Restricted Inventory A total of 137 deed restricted condominium, townhome and duplex units are located within the town of Vail. This inventory does not include apartments. The largest project is Vail Commons, with 53 units. All of the inventory is deed restricted for occupancy by employees who work in Eagle County 30 or more hours per week. Most units (about 60%) also have resale price caps that limit appreciation in order to maintain permanent affordability. The other 40% are Employee Housing Units (EHU's) units, which are scattered in various developments in Vail. These 56 units have occupancy restriction (they can only be owned by or rented to a household with an employee who works 30 or more hours in Eagle County). These units have no initial or resale price restrictions, nor are they tracked by the Town of Vail. Inventory of Deed Restricted Units in Vail Shading denotes focus of analysis. Location # Units Arosa Duplex 2 North Trail Townhomes 6 ERWSD Pitkin Creek & Trailridge 2 Red Sandstone 18 Vail Commons 53 Employee Housing Units (EHU) 56 Total 137 Not all of these units are owner occupied, including 9 units at Red Sandstone — 7 are owned by the Eagle River Water and Sanitation District and renter occupied and 2 are owned by Mountain Valley Development Services. This analysis will focus on the 79 units shaded in the table above since they are the most comparable to the proposed Chamonix units in terms of deed restrictions and method by which they are sold to qualified buyers. Rees Consulting, Inc. 32 1/12/2016 Draft 4-3-14 Arosa Duplex A LEED Silver Certified duplex completed in 2010 and located at the start of Arosa Drive in West Vail, this development is comprised of two units, each with three -bedrooms, two and one-half bathrooms and attached two -car garages. These units are two floors and are approximately 1,500 square feet of living area plus garages. Since this project is fairly new, applicants for these units are considered in the Demand Analysis section of this report. Units are located at the west end of North Frontage Road, where it turns north and becomes Arosa Drive. The City Market center and associated services are less than one mile east on North Frontage Road from the development. A transit stop is located about two-tenths of a mile from the duplex. The duplex is nestled on a small, relatively flat site at the end of a gulley. Residential uses are across the street and north of the site. The duplex gets good sun exposure, with one unit having south, east and west facing exposure and the other having north, east and west exposure. Views to the south look upon 1-70 and the mountains; hills/mountains are seen in the other directions. Noise from I- 70 is very apparent. The Arosa units sold in 2010 for $402,300 and $410,300, or $254 per square foot. North Trail Town Homes This six -unit complex completed in 2001 is located at the intersection of Arosa Drive and Garmisch Drive. This development is comprised of: 4 two-bedroom, two -bath townhomes located in a four-plex, all with attached one -car garages. These units are two floors and start at approximately 1,230 square feet. 2 three-bedroom, two -bath townhomes located in a duplex, with attached one -car garages. These units are two floors and start at approximately 1,440 square feet. This complex has little exposure to 1-70 noise. It also has the best park access of all comparables, being located adjacent to Ellefson Park, providing usable outdoor recreation space for the residents. It is located in quiet residential neighborhood along Garmish Drive, which dead ends just east of the development. Duplex units face north/south and the 4-plex faces east/west with views of hills and mountains in all directions. The nearest transit stop is about four -tenths of a mile from the development. The nearest large grocery store Rees Consulting, Inc. 33 1/12/2016 Draft 4-3-14 (Safeway) is less than one mile, along with restaurant, fuel, convenience store, mail, lodging and shopping services. One of the six units in North Trail townhomes has sold since 2010 for a price of $223,800 or $198 per square foot. Red Sandstone Creek This 18 -unit complex completed in 1999 is located on Red Sandstone Road across from the Potato Patch Club in Vail. This development is comprised of two buildings with dispersed unit types of: 2 one -bedroom, one -bath townhomes, with attached one -car garages. These units are two floors and approximately 850 square feet. 10 two-bedroom, one -bath townhomes, with attached one -car garages. These units are two floors and approximately 1,040 square feet. 2 two-bedroom, two -bath condominiums, with attached one -car garages. These units are one floor and approximately 1,160 square feet. 4 three-bedroom, two -bath condominiums, with attached one -car garages. These units are three floors and approximately 1,430 square feet. Even though some units are townhome style (two story) all are part of a single condominium project. The Eagle River Water and Sanitation District either owns and rents out or has first right of refusal on 11 units. These units have had roof problems with some owners taking out second mortgages for repair. They have little to no noise exposure from 1-70. Red Sandstone is located about three -tenths of a mile north of the North Frontage Road, nestled among the hills. A creek runs along the west side of the units. Brookstone Condominiums are on the other side of the creek, which appear to be a mix of local and second homeowner occupied units. The units are separated on the east side from the primarily residential and recreation -access Red Sandstone Road by a berm. Units face east/west, with good sun exposure. Views of mountains are available to the south, whereas north and west views are of the surrounding hills and east views include the river valley, Brookstone we7ii.. u � . u . � •.�ifil� Public transportation is available via the Sandstone Purple transit line and stops about two-tenths of a mile from the site. A pedestrian bridge is available within one mile of the units, which crosses over 1-70 Rees Consulting, Inc. 34 1/12/2016 Draft 4-3-14 into the Vail town center. The nearest grocery and other resident services are located within the City Market shopping center, about 1.6 miles from the development along the North Frontage Road. The development itself has limited shared outdoor space. Hiking is available on the hillsides near the development. From 2010 through March 2014, turnover was high at Red Sandstone when 12 of the 18 units sold. This equates to an average annual turnover rate of nearly 16%. The prices for these units were as follows: Price Range Price Range 1 BR $168,000 - $177,900 2 BR $174,200 - $213,500 3 BR $235,000 - $249,000 Source: County Assessor records Vail Commons Average Price Average PPSF $172,950 $167 $200,217 $193 $239,975 $197 A complex with 53 for -sale and 18 rental units completed in 1997. The for -sale units are comprised of: 24 two-bedroom condominiums located in three buildings, including either one -and -a -half baths or two -baths, each with a large exterior storage closet and a shared garage under every building. These units are one floor and approximately 992 square feet. 13 two-bedroom, two -bath townhomes located in two buildings, no covered parking. These units are two floors and approximately 1,018 square feet. 6 three-bedroom, two -bath townhomes located in two buildings, all with one -car attached garages. These units are two floors, were built with an unfinished basement and are approximately 1,800 square feet. 10 three-bedroom, two -bath townhomes located in three buildings, all with two -car attached garages. These units are two floors, were built with an unfinished basement and are approximately 1,850 square feet. Units are located between the North Frontage Road and Chamonix Lane, just east of the City Market in Vail. Groceries and other services (restaurants, postal, hardware, shopping, vision care, etc.) are within easy walking distance of the complex and a day care center is located within the development. Transit stops are located within mile of the development. Units primarily face either north/south or east/west. Units located adjacent to the frontage road receive the most highway noise, although 1-70 noise is present throughout the development. Views of mountains are available in all directions, with units located along the perimeter of the development having the best access to views. Rees Consulting, Inc. 35 1/12/2016 Draft 4-3-14 Open space within the development is of limited usability, primarily providing interior pedestrian pathways and property drainage. Hiking is available on the hillsides to the immediate north of the development. Of the 53 ownership units at Vail Commons, eight sold between 2010 and March 2004, a far lower turnover rate of 3.5% per year than at Red Sandstone. The prices for these eight units were as follows: Price Range Price Range 2 BR $155,400 - $176,700 3 BR $250,300 Average Price Average PPSF Other Deed Restricted Ownership Units in Eagle County $166,814 $172 $250,300 $132 There are nearly 650 deed restricted condos, townhomes, duplexes and single-family homes down valley from Vail in Eagle County (apartments and units in the Roaring Fork Valley not included). Deed restrictions vary widely from those with employment, income and resale limitations to ones only requiring that preference be given to Eagle County employees for a defined time when listed for sale. Down Valley Deed Restricted Ownership Housing Project location # Deed/Covenant Restricted Units Brett Ranch Edwards 156 Multiple Sites* Avon 64 Eagle Ranch Eagle 43 Miller Ranch Edwards 282 Red Draw Condos Edwards 16 Riverwalk Edwards 59 Stratton Flats Gypsum 26 Total 646 *Larger projects include the Sheridan, Chapel Square, Wildwood Townhomes and Grandview. With 282 units, Miller Ranch in Edwards is by far the largest deed restricted development in Eagle County. Completed in 2006, it offers 69 single family homes, 64 duplexes, 49 townhomes and 100 condominiums. Features that make this development particularly attractive include walking distance to schools, ample parks/green space and neighborhood design. Deed restrictions limit price appreciation and occupancy to county residents who are employed, earn Rees Consulting, Inc. 36 1/12/2016 Draft 4-3-14 at least 75% of their income within the county and are qualified for the Valley Home Store's Master Buyers List. Red Draw Condominiums is a 16 -unit development in Edwards next to the St. Claire of Assisi Church has both local employment occupancy and resale price restrictions. The two- bedroom/two-bathroom units initially sold for $263,600. Riverwalk Condominiums in downtown Edwards has restrictions that limit sale to Riverwalk then Eagle County employees for 90 days before anyone can purchase. Brett Ranch in Edwards has covenants that impose a 1% transfer fee on sales to households that do not include Eagle County employees or that own another residential property. Stratton Flats in Gypsum is a single family home development offering three and four bedroom homes with two -car garages starting around $240,000. Of the total of 339 units at build out, six were built under deed restrictions that limit price and occupancy. A modified deed restriction limiting occupancy to Eagle County employees has been applied to about 20 units. These units have sold for market prices with a small incentive (1% - 1.5%) for closing costs. The deed restricted housing inventory in Avon includes 64 units scattered through the community in nine developments (apartment project excluded). Most units have occupancy restrictions (employment 30+ hours per week in Eagle County and incomes no greater than 120% AMI) and limits on capital improvements and resale prices. Of the 64 units, 13 are still owned by their developers and rented to employees. There is little turnover among the units. Amenities/Design Features Interviews of staff involved in managing/selling deed restricted housing as well as realtors revealed consistent opinions about the features most desired by local homebuyers. They are: 1. Storage — Mountain residents have lots of gear and recreational equipment. Plus outdoor furniture and grills must often be moved into storage in the winter so as not to impede snow removal. In -unit spaces, exterior storage lockers and extra space in garages have all worked well. Garages/Parking — Parking is very tight throughout most of Vail. While residents often take a bus, walk or bike to work, they have cars for other errands and travel. With a harsh winter climate, garages are highly desired for parking as well as storage. It does not appear that there are strong preferences for private attached garages over common garages with storage lockers and or detached private garages. Parking for guests is crucial but access should be limited so that day skiers do not park at Chamonix due to its proximity to a bus stop. 3. Outdoor Space — Common outdoor areas should be functional, large enough and designed so that it can be used for more than open/green space. It should be sunny. Grills, tables, seating, space for a garden, a play area for children, and a play area for dogs would all be appealing. Small private fenced outdoor areas for children and/or dogs is highly desired by many. Rees Consulting, Inc. 37 1/12/2016 Draft 4-3-14 4. Access to Sunlight and Views — Vail is known for having limited access to the sun in the winter. More sunlight has been cited by buyers of down valley housing as a reason for not considering Vail. Fortunately for the Chamonix site, access to one will provide access to the other — south facing units get the most sun and the best views are to the south. North facing walkways, front doors and garages entrances can be problematic. Positioning all units so that each has a south facing wall would be ideal. 5. An Extra Bedroom — While many of the owners now living in Vail's deed restricted housing and many of the potential buyers are single they want the opportunity to rent to a roommate even if only seasonally. Also, residents of resort communities tend to have a lot of company during peak winter and summer periods. Most want one more bedroom than they absolutely need. 6. Energy Efficient Heating System — Utilities can be very expensive in Vail. Heating systems are typically used nine months per year and occasionally even in the summer months. New, energy efficient systems, especially in floor heat, would be very appealing when compared to the systems in the older residential units in Vail and would keep heating bills comparatively low. 7. Convenient Access to Bus Stop — Sidewalks and internal walkways should be designed so as to make it easy to travel, wearing ski boots, from units to the bus stop. 8. Mud Room —Since Vail's residents have many boots, coats, hats and gear, a "mud" room/entryway is far more functional and appealing than a coat closet. Designs that provide an air lock/doorway between the entry and main living area would also improve energy efficiency. 9. A Second Bathroom — Whether for use by a roommate, family member or guest, most buyers seek two bathrooms. Other design features that should be a given but that have been overlooked in the past include: Outdoor spigots —the lack of them has been a problem at Miller Ranch; Roofs that last given snow loads without features that create ice dams and cause leaking; and Snow shed/snow storage. Rees Consulting, Inc. 38 1/12/2016 Draft 4-3-14 VII. Demand Estimates This section quantifies the size of the market and the capture rates for the proposed units taking into consideration the number of households residing within the market area by income and household size, in migration of households from outside the market area, and projected growth in households. Market Segmentation To estimate the potential size of the market for the proposed Chamonix homes, the profile of buyers is analyzed to segment those who qualify and are most likely to qualify. From Where The potential market for deed restricted homes in Vail primarily consists of persons who already live in or near Vail. Very little movement up valley of families from Eagle and Gypsum should be expected although interest would likely be higher among some now living in Edwards. Results from a 2007 household survey in Eagle County showed there is not strong interest in moving from mid valley and down valley communities to Vail. Of the residents who indicated Vail was their first choice in which to live, 65% already lived within the community, 4% lived in the unincorporated area adjacent to Vail, 6% lived in Eagle -Vail, 4% in Minturn and 4% in Avon. Only 8% lived in Edwards and 3% in the Eagle area. Preference to Live in Vail Where Now Live Want to Live in Vail Edwards 8% Eagle/Brush Creek 3% Gypsum/Gypsum Creek 3% Vail -Incorporated 65% Avon 4% Basalt/EI Jebel/Frying Pan 1% Minturn/Redcliffe 4% Eagle -Vail 6% Other 1% Vail -Unincorporated 4% Wolcott/Bellyache Ridge 1% 100% Source: 2007 Eagle County Housing Needs Assessment Respondents to the 2007 survey were also asked whether they wanted to buy or rent a different residence and which community they preferred. Results showed that: Rees Consulting, Inc. 39 1/12/2016 Draft 4-3-14 Edwards was the number one choice of where residents looking to buy most want to live followed by the Eagle/Brush Creek area; and Vail was third overall with nearly 15% of those surveyed indicating it was their first choice. There has been a fundamental shift in location preferences. According to the 1999 Eagle County Housing Needs Assessment survey, Vail had the highest ranking of where Eagle County's residents most wanted to live (22%) followed by the Edwards area at 20% and Eagle at 12%. The mix of applicants for the Arosa duplex lottery supports the 2007 survey findings. Of the 11 applicants, nine were living in Vail or Eagle -Vail at the time of application and two were living in Edwards, indicating that housing in Vail will primarily attract persons who already live in or near Vail. Arosa Duplex Lottery Applicants Household Type Where they lived @ application Priority Purchasers Couple with child Vail Commons Couple with child Eagle -Vail Townhouse Couple with 2 children East Vail Couple with child Eagle -Vail Townhouse Couple with child West Vail Single with 2 children Edwards Non -Priority Purchasers Couple no children Red Sandstone Couple no children Vail Commons Single Vail Commons Couple no children West Vail Single with 1 child Edwards There is less correlation between job location and where residents most want to live than might be presumed. According to the 2007 survey, about 40% of employees working in Vail indicated their first choice of location to live is Vail. Length of Residency Most buyers of deed restricted properties are long-time residents. Very few buyers will be new to the area. Although not tracked, the typical applicant for Vail's lotteries has lived in Vail for about 10 years. Of the 31 buyers of Miller Ranch homes in 2013, only one was moving in from outside of the county. The 2007 Housing Needs Assessment survey found that only 2% of homeowners in the county had lived there for less than one year. Most (69%) had lived in the county for 10 or more years. First Time or Move-Up/Move-Down The majority of Chamonix purchasers will be first-time homebuyers, probably 75% or more based on historical sales. Rees Consulting, Inc. 40 1/12/2016 Draft 4-3-14 Some will be moving within the deed restricted system, either moving up as families grow or, as has been increasingly the case, buying two residences to replace one in the event of divorce. There have been a few cases where buyers have sold free market homes down valley and purchased deed restricted housing in Edwards. The extent to which this is likely to happen at Chamonix is hard to judge, but the possibility may increase as the free market appreciates over time. Household Composition Compared with Eagle County households overall, residents who indicated Vail was their first choice of where to live in the 2007 survey were more likely to live alone or with roommates than were residents who preferred to live down valley. Approximately 37% of the county's households overall compared with 25% of those who wanted to live in Vail included at least one child. Of the 79 fully deed restricted ownership units in Vail, 37 (or 47%) are now occupied by singles without children. Families own about 42% of the units. The rest are owned by the Eagle River Water and Sanitation District or Mountain Valley Developmental Services and are rented. A couple lives in the only one bedroom unit that is owner occupied. Three of the 24 three-bedroom units are owned by a single individual without children; 16 are occupied by households with at least one child (typically one). Of the 53 two-bedroom units, 34 were purchased by singles. Rees Consulting, Inc. 41 1/12/2016 OVERALL Vail —1' Choice Couple with child(ren) 27% 20% Couple, no child(ren) 27% 25% Adult living alone 23% 31% Unrelated roommates 10% 17% Single parent with child(ren) 8% 4% Family members and unrelated roommates 3% 2% Immediate and extended family members 2% 1% Other 1% 100% 100% Source: 2007 Housing Needs Assessment Survey Of the 79 fully deed restricted ownership units in Vail, 37 (or 47%) are now occupied by singles without children. Families own about 42% of the units. The rest are owned by the Eagle River Water and Sanitation District or Mountain Valley Developmental Services and are rented. A couple lives in the only one bedroom unit that is owner occupied. Three of the 24 three-bedroom units are owned by a single individual without children; 16 are occupied by households with at least one child (typically one). Of the 53 two-bedroom units, 34 were purchased by singles. Rees Consulting, Inc. 41 1/12/2016 Draft 4-3-14 Household Composition — Owners of Vail Deed Restricted Units Single Single w/ Couple Couple w/ Other Total Child(ren) Child(ren) Units Vail Commons 2 BR 25 2 10 37 3 BR 3 3 1 8 1 16 Red Sandstone 1 BR 1 1 2 2 BR 6 1 5 12 3 BR 1 1 2 4 North Trail Townhomes 2 BR 3 1 4 3 BR 2 2 Arosa Duplex 3 BR 2 2 Total 37 7 14 12 9 79 Percent of Total 46.8% 8.9% 17.7% 15.2% 11.4% 100% There are distinct differences between buyers interested in Edwards and those who prefer to live in Eagle or Gypsum. Edwards attracts singles as well as families, appeals to those who work mid valley or who commute in both directions, works well for residents who like to ski often, is attractive to households that prefer greater diversity in the community and are interested in higher density multifamily housing. Market Size Approximately 3,100 renters reside in the area that includes Vail, Eagle -Vail and Avon. This area should be considered the primary market area for the proposed Chamonix development since: Past surveys have shown in interest in living in Vail is highest among existing residents; and Lottery applicants and buyers of deed restricted housing in Vail lived in or near Vail at the time of application. Of these 3,100 renter households, roughly 1,600 households have incomes within the ranges specified by the Chamonix Master Plan (60% AMI to 140% AMI). How the proposed units are ultimately priced will impact the extent to which they are actually affordable for the wide range of targeted households. Rees Consulting, Inc. 42 1/12/2016 Draft 4-3-14 Market Area Renter Households by Income and Size, 2013 Income Range 1 -Person 2 -Person 3 -Person 4 -Person 5+ -Person Total 60%AM1 $36,540 $41,760 $46,980 $52,140 $56,340 N/A 140% AMI $85,260 $97,440 $109,620 $121,660 $131,460 $0-10,000 211 69 6 16 0 302 $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 Within Targeted Income Ranges 450 637 247 181 94 1,609 % by Household Size 28.0% 39.6% 15.4% 11.2% 5.8% 100.0% Source: Ribbon Demographics data and Rees Consulting calculations Demand Estimate There is total potential demand for approximately 1,850 ownership units in Vail generated by households with incomes in the ranges targeted by the Chamonix Master Plan. The proposed 58 units would need to capture 3.1% of this demand, which is a low capture rate. Demand and Capture Rate Calculation # Households Market Area Renter Households 3,100 In Targeted Income Ranges 1,600 Growth within 2 Years (2% per year) 65 Total Up Valley Market 1,665 In Migration (from down valley or out of county) 10% Total Demand 1,850 Capture Rate (58 units proposed) 3.1% This estimate of potential demand includes households that may not want to buy or may not be able to buy because they cannot qualify for a mortgage; however, with a conservative capture rate of only 3.1%, it appears that demand is more than adequate for the proposed units. Rees Consulting, Inc. 43 1/12/2016 Draft 4-3-14 While four of the 11 applicants for the Arosa lottery were seeking to move up from existing deed restricted housing within Vail (Vail Commons and Red Sandstone), the vacated units will need to be sold; therefore, demand from existing owners has not been considered in this calculation. Lottery/Buyer Applicants Information on lottery/homebuyer applicants is provided for additional insight into demand. The Valley Home Store maintains a Master Buyers List with approximately 100 applicants currently who are pre -qualified under both Eagle County's Guidelines and for a mortgage. Of these applicants, roughly 20% include a member who works full time in Vail. At least some of the applicants on the list are potential buyers for Chamonix. The Town of Vail has had an average of 8.4 applicants over the past five years for its annual lottery (between 13 and three applicants each year). This lottery has been for resales; a separate lottery was held for the Arosa duplex units. No other new units were completed during this period. Lottery fatigue and perceptions that there was nothing available may have resulted in fewer households participating in the lottery than were interested in purchasing housing. Rees Consulting, Inc. 44 1/12/2016 Draft 4-3-14 VIII. Mortgage Availability Obtaining home mortgages has been more difficult since the recession due to the imposition of stricter lending standards. Further, mortgage availability is complicated by deed restrictions, leased land and condominium ownership. Through interviews of mortgage lenders, this section of the report examines how mortgage availability, deed restrictions/complications and interest rates affect the ability for households to purchase and afford homes. Loan Products Mortgage lenders provide a full array of loan products for deed restricted housing in Eagle County, including: Conventional mortgages sold on the secondary market most often under Fannie Mae guidelines; Portfolio loans held by the originating lenders and underwritten based on in-house criteria. These are most often 5- or 7 -year adjustable rate mortgages (ARM'S), but at least one lender can offer 30 -year fixed rates; and Government insured or guaranteed loans for 15- or 30 -year fixed rate mortgages — USDA for which no down payment is required and FHA that requires about 3.5% down. None of the lenders interviewed are now processing VA loans for deed restricted housing due at least in part to their understanding that VA requires deed restrictions to have income caps, which is typically not the case in Vail or Eagle County. Not all lenders provide all these loan products. Some provide only portfolio loans on deed restricted homes, while others also offer conventional and possibly government loans. Deed Restriction Limitations Deed restrictions must be approved by lenders. There are generally two approaches: In house approvals by larger lenders with the restrictions submitted for each individual loan application. This is the way it has typically been done in Eagle County. The requirements vary somewhat by lender. Project approval by Fannie Mae and/or FHA that would then allow any lender to originate conventional/secondary market mortgages for units within the development. The application process can be time consuming. Fannie Mae requires an application fee, and the approval is in effect for only two years. Lenders often apply their own unique limitations or "overlays" on top of Fannie Mae/USDA/FHA criteria. While underwriting guidelines vary, the following requirements are typical: Rees Consulting, Inc. 45 1/12/2016 Draft 4-3-14 The deed restriction must terminate at foreclosure or deed in lieu of foreclosure. Fannie Mae no longer imposes this requirement, but lenders in Eagle County have not yet dealt with restrictions that survive foreclosure; The appraisal has to include three comparables with similar deed restrictions; The lender is not required to send notices of foreclosure to third parties, including the Town or other entities that might have an interest in preservation of the deed restriction; Right of first refusal will only be granted to the entity that applied the deed restriction and the time period for acting on the right cannot exceed 90 days; Resale controls must have a fixed period of time; and The deed restriction must be in a public record identifiable through a routine title search. Lending on Condominiums Mortgage lending on condominiums is more complex and time consuming than for townhomes, duplexes and single-family homes for which the underlying land is subdivided. Several requirements are typically imposed that limit loans for condominiums, including having too many renter -occupied units in the complex, too many units owned by one party (as is the case at Red Sandstone where the Eagle River Water and Sanitation District owns seven units) and mixed/commercial uses on site. At least one local lender will not provide any long-term, fixed rate loans on condos at this point in time. A limit on the number of loans that can be made by a mortgage company on any one project is also common to limit their exposure (usually calculated as a percentage of total units in the development). The interest rate for mortgages on condominiums may also be higher or require more points. The condominium approval process can be intertwined with deed restriction approval procedures. Since FHA no longer allows "spot" loans within condominium projects, FHA approval of the entire project is required. In Eagle County Few projects (maybe only one) have current FHA approvals in place. None of the deed restricted housing in Vail is FHA approved or has a Fannie Mae master project approval. Leased Land Mortgage lenders typically accept land leases provided that the term extends beyond the term of the loan by a specified number of years. While leases complicate the mortgage application since underwriters must review and approve the lease with every application, they do not significantly limit the types of loans available. ARM's While most borrowers prefer loans where their payment is fixed for typically 15 or 30 years, most of the buyers of deed restricted units in Vail have obtained 5 or 7 year ARM's amortized over 30 years with a five point maximum lifetime increase in the interest rate. The initial interest rate on ARM's has been very low in recent years — below 3%, and the annual adjustments have not been to the maximums allowed since fixed rates have been held low by Federal Reserve polices for a relatively long time. In other words, ARMS have provided the lowest, most affordable payments possible and have been stable in recent years. Rees Consulting, Inc. 46 1/12/2016 Draft 4-3-14 Interest rates are going to rise, however. Fixed rates have increased one percentage point since last year. Mortgage lenders generally feel that rates will remain mostly stable through this year but will increase starting next year as the Federal Reserve backs down from its economic stimulus efforts. The Impacts of Interest Rates on Affordability Interest rates have a profound impact on housing affordability. For every 1/4 point difference that rates rise between 4.5% (about the current average for a 30 -year fixed rate mortgage) and 5.5%, a buyer's borrowing capacity decreases by nearly 3%. A one point increase in the rate, as occurred in 2013, would drop the affordable purchase price for a household with an income of around 80% AMI by $20,000 to $25,000. According to a recent quote, the interest rate on ARMs is about 3% for 5 years and 3.5% for 7 years. The monthly payment for a $250,000 ARM at 3.5% with a 5 point lifetime cap could increase 73% during a period of rising interest rates, from less than $1,100 to nearly $1,900 in five to seven years. Interest Rate Comparison for Adjustable Rate Mortgages Starting Rate Maximum Rate Loan Amount $250,000 $250,000 Interest rate 3.25% 8.25% Monthly Payment (principal & interest) $1,088 $1,878 Down Payment Assistance Eagle County's down payment program was adjusted in recent years to limit the amount provided to no more than 3.5% of the purchase price. The program has not been utilized much since this change, however. The availability of funds is currently good. The program is ideal for use with FHA mortgages; however, the fact that few deed restricted projects are approved by FHA is likely reducing its utilization. Borrower Profile Most of the applicants for mortgages on deed restricted units are first time buyers. They tend to be young singles or families, though there seems to be an increase in middle aged borrowers. Many have credit issues. One lender indicated about 70% can eventually qualify while 30% cannot. Since the recession, credit problems have become more frequent. Very few have a 20% down payment and thus must obtain a government loan or pay for private mortgage insurance. At Miller Ranch, which is the largest of the deed restricted properties and has had the highest number of sales, between 30% and 50% of buyers have obtained USDA mortgages, which allow loans up to 102% of price or appraised value in order to cover the program's up -front costs. Rees Consulting, Inc. 47 1/12/2016 Draft 4-3-14 IX. Conclusions and Recommendations Market conditions appear to be prime now for proceeding with the development of Chamonix. The availability of housing affordable for households with incomes between 60% and 140% AMI to purchase is small while potential demand appears to be more than sufficient for the absorption of 53 additional homes. Specifically: The economy is recovering with growth in jobs and significant reductions in unemployment. Projections call for continuation of this trend and population growth of 2% to 2.9% per year through 2020. The housing market is rebounding. The number and choice of free market homes for sale down valley has decreased and prices are starting to rise. Bargains have disappeared and the number of foreclosures and bank sales has dropped sharply. The deed restricted units currently in Vail have performed well. All units that have been listed for sale have sold, commanding the maximum allowable price appreciation. The inventory of deed restricted units available for sale down valley has largely disappeared. There are five listings currently, all of which have been placed on the market this year. All units listed for sale in 2013 were sold or removed from the market by the end of 2013. Rental availability is becoming increasingly limited and rents are rising; current average market rents are within the range that it would cost to purchase a Chamonix home at the targeted incomes. Demand for deed restricted ownership opportunities is increasing with a record number of sales at Miller Ranch last year, an increase in lottery applicants (both Town of Vail and the Valley Home Store), and approximately 100 pre -qualified applicants on the County's Master Buyers List. Knowledge that the housing market has bottomed out and that prices are starting to rise, combined with concerns about interest rate increases, are spurring residents to buy. Potential demand from households that are most likely to buy at Chamonix (i.e., households that now rent in or near Vail, have incomes in the 60% to 140% AMI range, and have from one to five members) appears be to be adequate for the proposed units with a low required capture rate of less than 4%. To be responsive to demand and competition with limited but nonetheless attractive choices, some modifications to the existing development plan are recommended. These include some revisions to Master Plan concepts (unit mix and size) and additional recommendations for pricing, amenities/design features, marketing and mortgage options to enhance marketability of the proposed homes. Rees Consulting, Inc. 48 1/12/2016 Draft 4-3-14 Competition From within Vail Competition from within Vail is very limited. Of the units listed for sale under $500,000, only three condominium units and one townhome could be considered comparable to the proposed Chamonix units in terms of their suitability for year-round workforce households. While they offer a choice for households that might consider Chamonix, they are 42 to 48 years old and have no garages, outdated/inefficient heating systems, and HOA dues that are likely higher than will be charged at Chamonix. The one with an EHU restriction in place has been on the market for about one year. Interest in the unrestricted units has been higher, in part due to developers wanting to buy units to satisfy their employee housing requirements. Their price range from $432,500 to $495,000 sets an upper limit for Chamonix. Only two units in Vail with full deed restrictions as envisioned for Chamonix are listed for sale or soon will be, with maximum allowable prices of $212,544 and $236,248. The competition that Chamonix will create for current owners who desire to sell their deed restricted homes should be a concern only if the new units are priced lower than existing units. From Down Volley A total of 78 units down valley from Vail were listed for sale through the MLS in early April at prices less than $500,000. Prices per square foot were far lower than in Vail and decreased the farther down valley the units were located (527 in Vail, $308 in Edwards, $212 in Eagle and $193 in Gypsum). The free market is not generating significant competition in Edwards — only a few condominiums and townhomes were in this price range. A couple of small single family homes were listed for sale in Eagle for less than $400,000, but Gypsum is the only community were buyers can choose among new single family homes in the $300,000 to $500,000 range. The competition generated by homes in Gypsum and, to a smaller degree, Eagle for families with children should decline as the market continues its recovery. Regardless, the distance and the difference between Vail and Gypsum is so great, that attempting to set prices for Chamonix based on prices in Gypsum is not necessary — direct competition with these units will be limited. The deed restricted homes down valley, particularly in Edwards, provide attractive alternatives to purchasing at Chamonix. The neighborhoods like Miller Ranch, Eagle Ranch and Stratton Flats are attractive, well designed, near schools and parks and convenient to many jobs. They offer single family homes, which Chamonix will not provide. Yet availability is now low and no new deed restricted developments are currently planned. Five deed restricted homes were listed for sale in Edwards and Eagle through the Valley Home Store as of late April, with list prices that ranged from $183,000 for a condominium to $390,000 for a single family home at Miller Ranch. Miller Ranch will pose the greatest competition since it has so many units (282), has K-12 schools within a short walk, is a much shorter commute for employees working in the Vail area than Eagle or Gypsum, offers a variety of unit types (15 different models ranging from condominiums to single family), offers a wide range of pricing and is in Edwards, which appeals to singles as well as families. While the Chamonix site is suitable for housing, the proximity to commercial uses and the lack of schools and parks within Rees Consulting, Inc. 49 1/12/2016 Draft 4-3-14 walking distance make it less desirable for families with children. The pricing and value of homes at Miller Ranch should be considered when designing and setting prices for Chamonix. Family Orientation Approximately 20% to 30% of the buyers at Chamonix will have children. Expectations that Chamonix will primarily target families is counter to experience among other properties, demographic trends and resident preferences. Specifically: 25% of the county's households that prefer to live in Vail include at least one child. 24% of the deed restricted units in Vail are occupied by households with at least one child. 32% of the renter households with incomes in the targeted income range have three or more members, but this figure includes roommate households; 28% live alone and 40% are two - person households. These statistics reflect what all of the key informants interviewed as part of this study relayed - households with school age children have housing options down valley that better meet their family's needs and preferences. Few families have moved back to Vail when three-bedroom homes have become available; the large majority of applicants for those homes lived in or near Vail. Chamonix will be ideal for couples, however, who plan to have children. Over time, the number of households with children living at Chamonix will probably increase. Income Targets and Pricing The Master Plan target of 60% AMI to 140% AMI is a wide range to serve in one 58 -unit development. Prices that are affordable for 60% AMI households would be much lower than what a household earning 140% AMI could afford and would likely pay for a larger/higher quality home. In 2014 figures, the income range would extend from less than $40,000 to over $120,000. Serving this entire range will necessitate a wage range of prices, from about $135,000 to just over $450,000. At the upper end, pricing units at the 140% AMI level is not recommended for several reasons: Single family homes are available in Edwards at Miller Ranch for less ($350,000 - $390,000). Historically, deed restricted housing in Vail has been priced at similar or lower levels than at Miller Ranch. The market is providing housing in this price range in Vail. While only four units were listed in early April for less than $500,000 that are well suited for ownership by year round residents, buyers generally expect deed restricted units to be priced below the free market. There are relatively few renter households residing within the Vail/up-valley area that have incomes at and above 140% AMI. The income distribution shows a drop in households between 100% and 120% depending upon household size. Of the relatively few with incomes above $140% AMI, most are two -person households and many of them are likely roommate households. Rees Consulting, Inc. 50 1/12/2016 Draft 4-3-14 While some households may want to move up from existing deed restricted homes in Vail, the incomes of these households are not known and the step up would large in terms of price. For example, the last two-bedroom unit at Vail Commons to sell was priced just over $250,000. To purchase a three-bedroom home priced around $450,000 for 140% AMI households would result in a significant increase in the monthly payment. Unless research on existing residents of Vail's deed restricted homes documents move up desire and capacity, Chamonix pricing should not extend to the 140%AMI level. At the lower end, developing units for households with incomes as low as 60% AMI (roughly $135,000 to $175,000) will require substantial subsidies. It will also likely be more challenging for households at this income level to obtain mortgages. There are a significant number of renters with incomes in the 60% to 80% AMI range, but there are more with incomes between 80% and 100% AMI. It is therefore recommended that prices at Chamonix: Be primarily affordable for households in the 80% to 120% range. If sufficient subsidies are available, providing some units for 60% AMI households should be considered, but pricing as high as 140% AMI is not advised at this time. Be set lower than at maximum affordable levels. For example, to serve households with incomes at 80% AMI, prices should be set at 75% AMI, or even lower during periods of rising interest rates. Possibly be structured using income tiers. In other words, identical units could sell for different amounts. This pricing technique is common for deed restricted units where the restrictions impose income limits. This has not been the way that Vail's deed restrictions have been structured in the past. Be set with the expectation that interest rates will rise. Unit Size, Type and Bedroom Mix To serve a variety of households with incomes in the 80% AMI to 120% AMI variety in unit type and size is recommended. Specifically: The size range should be expanded. As proposed, units would range in size from 1,292 for two- bedroom flats to 1,632 square feet for three bedroom duplexes. These sizes are relatively large. o Two-bedroom flats could be as small as 800 to 900 square feet and still be very livable provided that garage/storage space is provided. o Townhomes could range from 1,200 to 1,400, perhaps smaller depending upon price. o Duplexes units would be attractive as currently envisioned (1,632 SF) but could be marketable at 1,300 to 1,400 square feet. Rees Consulting, Inc. 51 1/12/2016 Draft 4-3-14 Consideration should be given to reducing the number of condominiums and offering townhomes. Each unit could have a south facing wall, private garages might be feasible, mortgage availability/pricing would improve, the development would lend itself more readily to phasing, and it would allow for private outdoor space. Provide variety within unit types, perhaps two or three models, so as to allow for a wider range of pricing, provide more choice for buyers and enhance marketability. The bedroom mix could be adjusted to offer slightly fewer three-bedroom units. Existing deed restricted properties already disproportionately accommodates families with about 30% of units (not counting EHU's) having three bedrooms. As now proposed, 38% of the Chamonix units will have three bedrooms. Mortgage Availability Mortgage availability for the proposed Chamonix units will be complicated by: Deed restrictions limiting purchase to eligible households; Building at least some of the units as condominiums; and Developing the project on land leased from the Town of Vail. With interest rates on the rise, the availability of 30 -year, fixed rate mortgages will become more important to the marketability of deed restricted housing. Although most of Vail's buyers have been willing to obtain ARMs in the past, more borrowers prefer a 30 -year fixed rate and, with rate increases, will insist upon it. Furthermore, limitations on mortgage availability will negatively impact Chamonix's competiveness relative to Miller Ranch, where about half of the buyers in recent years have obtained USDA loans with the lowest fixed rates available and no down payment. To increase the type of mortgages available and the lowest/most competitive interest rates for borrowers: Consider redesign of the proposed flats and lofts so that all or at least some of the units are townhomes rather than condominiums. Work with local lenders to obtain approval of the deed restrictions and land leases so that both conventional, government (USDA, FHA and VA) and portfolio loan products are available. Explore obtaining Fannie Mae and FHA direct approval of the project. Divide the development into multiple HOA's so that the duplex units and townhome units, if built, are not subject to the same limitations and rates as condominium units. Provide a lender referral packet to applicants that describes the various loan projects each lender offers and compares fixed to adjustable rate alternatives. Rees Consulting, Inc. 52 1/12/2016 Draft 4-3-14 Marketing Vail's once a year lottery system has worked adequately for resales and project -specific lotteries have generated sufficient buyers in the past. Chamonix will be the largest deed restricted development built to date in Vail, however. Given this, the following steps are recommended to enhance sales: Provide a more flexible sale system than a single project lottery. Pre -sell to allow for interior finish choices. Work with the Valley Home Store to access their Master Buyers List. Amenities/Design Features To enhance the livability and competitiveness of the Chamonix homes, the following should be provided: Garages, space for parking at least two cars per unit and adequate guest parking; Additional storage suitable for bikes, skis and other recreational gear; Small fenced outdoor areas for small children and dogs; Functional common outdoor areas; Access to sunlight and views (each unit should ideally have some south facing exposure); A mud room; Adequate sound proofing from 1-70 noise; A landscaped buffer between the site and the adjacent commercial uses; Energy efficiency; and Convenient pedestrian access to the bus stop. It is important to make the outdoor areas at Chamonix functional for more than open/green space. The semi -private areas between the duplexes should be fenced. The green areas on either ends of the parcel should be developed for use, perhaps a dog park and a playground. The areas between the row of duplexes and multifamily units to the south should be usable yet not too noisy. Phasing If the recommendations provided herein are followed with variety in unit type, size, pricing and mortgage availability in combination with well-designed units, desirable amenities and a flexible marketing system, phasing will likely not be necessary. Applications and presales could be used to test the validity of this conclusion, with adjustments made if it appears that the length of time for the units to sell will exceed the Town's ability to retain ownership of units after their completion. Construction phasing would be inconvenient and disruptive to initial buyers, would be more costly in the long run and would be difficult for condominium units. Rees Consulting, Inc. 53 1/12/2016 Draft 4-3-14 Appendix Change in Renter Households: 2000 - 2010 Source: 2000 and 2010 US Census Renter Household Composition by Area, 2010 J Vail # Renter Households 1,340 Up Valley Eagle County 3,336 6,893 ' 2000 # renter -households 1,032 2,917 176,8937 18% renter-households 47.7% 48.0% 2010 # renter -households 1,340 3,336 renter -households 51.5% 49.3% 35.8% % Change in renter households 29.8% 14.4% 25.4% # Change in renter households 308 419 1,394 Source: 2000 and 2010 US Census Renter Household Composition by Area, 2010 J Vail # Renter Households 1,340 Up Valley Eagle County 3,336 6,893 Renter -Occupied 51.5% 49.7% 35.8% 16% 18% 18% Renter Households by Type 8% 12% Family, no children 11% 15% 18% Family, with children 8% 19% 29% Living alone 36% 29% 26% Non -family, roommates 45% 37% 27% 100% 100% 100% Source: 2010 US Census Renter Household Size by Area, 2010 Persons per Unit 1 -person 2 -person !fail 36% 37% Up Valley 29% 32% Eagle 26% 30% 3 -person 16% 18% 18% 4 -person 8% 12% 14% 5+ person 2% 8% 13% Average size 2.04 2.45 2.68 Source: 2010 US Census Rees Consulting, Inc. 54 1/12/2016 Draft 4-3-14 Change in Age of Renter Households: 2000 — 2010 Source: 2000 and 2010 US Census For -Sale Listings in Vail, At or Under $500,000 April 2, 2013 Price Vail Up Valley Eagle County Scl Ft 2000 (total renter households) 1,032 2,917 5,499 15 to 24 years 21% 22% 17% 25 to 34 years 46% 44% 40% 35 to 44 years 16% 18% 22% 45 to 54 years 10% 11% 14% 55 to 64 years 5% 4% 4% 65 years and over 2% 1% 3% 2010 (total renter households) 1,340 3,336 6,893 15 to 24 years 15% 14% 11% 25 to 34 years 42% 42% 36% 35 to 44 years 19% 21% 24% 45 to 54 years 12% 13% 16% 55 to 64 years 7% 7% 9% 65 years and over 4% 3% 4% $347 100% 100% 100% Source: 2000 and 2010 US Census For -Sale Listings in Vail, At or Under $500,000 April 2, 2013 Price Project/Area Bdrms Baths Scl Ft Price/SF Yr Built Type $248,500 East Vail 2 1 797 $312 1965 Condo $267,500 1 1 705 $379 1971 Condo $275,000 short term rental 1 1 835 $329 1973 Condo $279,000 Sandstone 1 1 530 $526 1974 Condo $289,000 1 1 576 $502 1973 Condo $299,000 1 1 576 $519 1973 Condo $299,900 East Vail 2 1 865 $347 1965 Condo $300,000 1 1 728 $412 1980 Condo $309,900 Vail Racquet Club 1 1 576 $538 1973 Condo $318,000 2 1 901 $353 1970 Condo $350,000 2 1 882 $397 1970 Condo $390,000 2 2 990 $394 1980 Condo $415,000 Vail Racquet Club 2 2 864 $480 1979 Condo $415,000 Vail Racquet Club 2 2 864 $480 1975 Condo $420,000 Vail Racquet Club 2 2 864 $486 1979 Condo $429,000 Vail Racquet Club 2 2 864 $497 1976 Condo Rees Consulting, Inc. 55 1/12/2016 $432,500 Chamonix Ln $432,500 Chamonix Ln $435,000 2 2 $475,000 Chamonix Ln $489,000 Lionshead $495,000 East Vail $495,000 Lionshead $495,000 East Vail $499,000 Lions Sq. Lodge $499,000 Lions Sq. Lodge $499,000 Lions Sq. Lodge Source: Vail Area Realtors MLS MLS Listings - VRB.net Edwards 4/8/2014 Price $210,500 $309,000 $310,000 $315,000 $325,000 $329,000 $379,000 $397,900 $399,000 $399,500 $430,000 $438,000 $488,000 $490,000 $495,000 Draft 4-3-14 2 2 1103 $392 1972 TH 2 2 1110 $390 1972 TH 3 3 1792 $243 1972 Condo 3 2 1480 3 1969 Condo 1 1 506 $966 1972 Condo 2 3 1500 $330 1967 Duplex 0 1 308 $1,607 1971 Condo 2 2 1223 $405 1973 Condo 0 1 660 $756 1971 Condo 0 1 660 $756 1971 Condo 0 1 660 $756 1971 Condo Bdrms SF 2 3 3 2 2 3 2 2 2 1 1 2 1 3 2 924 1393 1259 1415 849 1415 1229 1884 1333 756 1293 1089 1078 2163 1505 Type Condo Condo Condo Condo Condo Condo Condo TH Condo Condo Condo Condo Condo TH Condo Eagle $189,900 2 908 Condo $299,000 2 1334 TH $312,500 2 1016 Duplex $324,000 3 1809 TH $325,000 3 1798 SF $325,000 2 938 SF $329,000 2 968 SF $335,000 3 1765 TH $335,000 3 1717 TH Rees Consulting, Inc. Price/SF $227.81 $221.82 $246.23 $222.61 $382.80 $232.51 $308.38 $211.20 $299.32 $528.44 $332.56 $402.20 $452.69 $226.54 $328.90 $308.27 $209.14 $224.14 $307.58 $179.10 $180.76 $346.48 $339.88 $189.80 $195.11 56 1/12/2016 Draft 4-3-14 $341,000 3 1739 TH $196.09 $345,000 3 1717 TH $200.93 $349,000 3 1784 TH $195.63 $349,000 3 1702 Duplex $205.05 $375,000 3 2004 SF $187.13 $400,000 6 2582 SF $154.92 $407,000 3 2092 Duplex $194.55 $445,000 4 2756 SF $161.47 $447,000 3 1892 SF $236.26 $469,500 5 2905 SF $161.62 $497,500 3 2453 SF $202.81 $499,995 3 2822 Duplex $177.18 $211.70 Gypsum $149,900 3 1152 SF/mod $130.12 $245,000 4 1647 SF $148.76 $319,900 2 1213 SF $263.73 $349,900 3 2029 SF $172.45 $387,000 4 2992 Duplex $129.34 $395,000 4 2014 SF $196.13 $418,000 3 2006 SF $208.37 $449,000 3 2006 SF $223.83 $449,000 4 1996 SF $224.95 $450,000 4 2003 Duplex $224.66 $465,000 3 1816 SF $256.06 $477,000 3 2103 SF $226.82 $479,900 6 3705 SF $129.53 $485,000 5 4130 SF $117.43 $489,000 4 2948 SF $165.88 $489,000 3 1860 SF $262.90 $192.56 Rees Consulting, Inc. 57 1/12/2016 Chamonix Master Plan 6 January 2009 Adopted by Resolution No. 2, Series of 2009 Prepared For the Town of Vail by STAN CLAUSON ASSOMATES Lam.. .......... . .. .... . .... ..... � I Drexel, Barrell & Co. a r c h i c e c, s 1/12/2016 J F �'l �7 � I D M� l F' J F ji r 1 1/12/2016 1 L Chamonix Master Plan Acknowledaements The Chamonix Area Master Plan Amendment is the result of over a year of work on the part of many individuals. Without the effort of the Vail Town Council, the Chamonix Advisory Committee, the Planning and Environmental Commission, the Vail Local Housing Authority, and Town of Vail Staff the Chamonix Area Master Plan would not have been completed. Vail Town Council Planning and Environmental Commission Dick Cleveland, Mayor Bill Pierce, Chair Andy Daly, Mayor Pro -Tem Rollie Kjesbo, Co -Chair Kevin Foley Michael Kurz Mark Gordon Sarah Robinson-Paladino Farrow Hitt Scott Proper Kim Newbury Susie Tjossem Margaret Rogers David Viele Chamonix Advisory Committee Vail Local Housing Authority Bob Armour Mark Ristow, Chair Jack Bergey Sally Jackie Andy Daly Steve Lindstrom Rollie Kjesbo Ethan Moore Ethan Moore Kim Newbury Mark Ristow Margaret Rogers David Viele Town of Vail Staff Consultants Stan Zemler, Town Manager Stan Clauson Associates, Inc. George Ruther, Community Dev. Director Studio B Architects Mark Miller, Vail Fire Chief Drexel, Barrell & Co. Craig Davis, Vail Fire Department Economic & Planning Systems Nina Timm, Housing Coordinator Scott Hunn, Former Project Planner 1/12/2016 Chamonix Master Plan Table of Contents 1. Project Scope 1 2. Process 3 A. Overview B. Advisory Committee C. Town Council Hearing D. Refinement of Schemes E. Sustainability 3. Final Recommendations 6 A. Advisory Committee B. Final Town Council Approval 4. Preferred Option 7 5. Procedural Requirements 9 6. Non -Preferred Options 9 7. Recommended Actions 12 8. Appendix 12 [1 n L� Chamonix Master Plan 1. PROJECT SCOPE The proposed design schemes for the Chamonix Master Plan Area were directed by the stated goals and objectives developed early in the community participation process. The consultant team of Stan Clauson Associates, Inc., Studio B Architects, and Drexel, Barrell & Co. identified a variety of opportunities and constraints from the unique physical characteristics of the Chamonix site. The inclusion of a fire station and student dormitory further complicated the layout and programmatic elements of the site design. 4F The Master Plan Area is generally south facing and - . sloped and occupies a highly visible location off of the west • ��~ Vail exit (Exit No. 173) from I- j� - 70. Highway commercial and strip mall commercial development characterizes the uses off of the frontage road and Chamonix Road, with residential neighborhoods characterizing the use patterns off of Chamonix Lane. The Chamonix Master Plan Area is located near to bus stops on both the West Vail Red and Green Loop transit lines. Commercial and employment opportunities are located in the commercial areas within walking distance of the site. The Town Council identified eleven development goals to direct the master planning process. These goals were: • The site is to be used for development of a fire station and employee housing. Housing for student fire department employees should be considered in the design of the fire station. An ambulance substation could be an ancillary use on the site. • Energy-efficient and sustainable design and construction techniques are important. Certification by a particular program (LEED, Green Globes) is to be investigated, although not mandatory. • 100 percent of housing developed should be deed -restricted, for -sale employee 1/12/2016 Chamonix Master Plan housing, with a mix of one-, two-, and three-bedroom units. • The site should be optimized to provide the greatest amount of employee housing. • Re -zoning the site to Housing (H) District is preferred to allow flexibility in design and development. • Additional traffic onto Chamonix Lane should be limited. • One-story of development along Chamonix Lane is acceptable. • All financing and phasing options will be considered. • New pedestrian circulation and access routes should be provided around the site, along Chamonix Road and/or Lane, to ensure connectivity of the surrounding neighborhood to other areas within West Vail. Existing pedestrian paths through the site are to be limited. The charge made by the Vail Town Council to "optimize the site" required that the planning concepts developed by the design team be evaluated in the context of adjacent uses. The ultimate goal was to provide a plan for the Chamonix Master Plan Area that balanced the concepts of density, neighborhood impact, and traffic and parking concerns with aesthetics, sustainability, and value in a way that would address the community need for additional affordable housing in a contextually appropriate way. The target group for the Chamonix development was families. The target group income was determined to fall within 60-120% of the Area Median Income (AMI) range for Eagle County, with a possible inclusion of incomes up to 140% of AMI. In current dollars, this equated to a household income range of $47,000 to $94,000, with a possible excursion to $110,000. An important component to the site plan for the Chamonix Master Plan Area was the inclusion of a new fire station. Members of the Town Council recommended the fire station be segregated from the residential use of the Chamonix development for safety and noise reasons. Dedicated access for emergency equipment was requested, as was the incorporation of a community room for public gathering. A student dormitory, to help alleviate the cramped conditions experienced by fire department recruits, was also requested. Finally, provisions for possible Ambulance District participation were to be considered. P] 1/12/2016 u Chamonix Master Plan 2. PROCESS A. History of Chamonix Master Plan Area The Town of Vail acquired the 3.6 -acre "Chamonix Parcel" in October, 2002, for the purpose of constructing a fire station, employee housing and land banking. To achieve the Town's goals the Town of Vail adopted the Chamonix Master Plan in 2005. The Master Plan outlined development areas for a fire station, employee housing and open space. In 2007, the Town of Vail was able to acquire the adjacent former Wendy's Site. It was determined the former Wendy's Site was a more optimal location, from an emergency services perspective, for a future West Vail Fire Station. Based upon the acquisition of the new property, the Town of Vail determined it could better utilize the two parcels if a new, comprehensive master plan process was completed. A Request for Proposals to hire a new consultant team was issued in September, 2007. The Team of Stan Clauson Associates, Inc., Studio B Architects, and Drexel, Barrell & Co. were retained by the Town of Vail to develop this new Chamonix Master Plan. B. Overview During a period of six months, the consulting team developed three schemes. The three schemes, titled Neighborhood Block, Neighborhood Cluster, and Village Neighborhood, explored varying densities and internal character. Development of the three schemes benefited from informal and formal meetings with stakeholders and Town staff and from responses to a survey distributed to potential residents. Members of the consultant team also attended the Fire Chief Magazine "Station Style Design Conference" in Phoenix to broaden their understanding of current fire station design trends. Revisions to the three schemes were periodically presented to the Advisory Committee for additional input and direction, and these refinements were subsequently presented to the Town Council. Information from the Town department heads was considered in the site planning and design guidelines for the development of the employee housing and fire station at the Chamonix Master Plan Area. Information from other sources was balanced with the input gained from the Focus Groups. 3 1/12/2016 C. Advisory Committee Chamonix Master Plan lown Staff On 16 January 2008 a "Kick -Off" meeting was held for the purpose of introducing the Chamonix Site Master Plan project to the Advisory Committee. The Advisory Committee, which was selected by Town of Vail staff as well as citizens, consisted of representative from the Town Council, the Planning and Environmental Commission, the Housing Authority, the Vail Fire Department, Community Development, and two Citizens at large. Duties of the Advisory Committee consisted of reviewing previous master planning efforts produced for the Chamonix site, engaging in discussions on new opportunities and changed conditions to be considered during the new master planning effort, and issuing recommendations to the consultant team on the parameters that would guide the process and the creation of alternative development scenarios. D. Town Council Hearing The Town Council received an update on the work to date on 20 May 2008. The consultant team presented three schemes which ranged in total unit counts from 50 to 70 units. Optimizing the density of the site, the Council's charge at the outset of the master planning effort, was not construed to mean that the maximum number of units possible for the site should be sought. Rather, the consultant team sought a balance between number of units and resident population, with special consideration given to the quality of the experience of living in and around the 4 I� t r t I i 11 1/12/2016 LI 1 1 1 Chamonix Master Plan development. The Town Council instructed the design team to seek a middle path on density, considering internal views and character of the surrounding neighborhoods. There was also a discussion of unit sizes, with the Council inclining toward larger units of two, there and possibly four bedrooms. E. Refinement of Schemes Based on the Council's comments and the request accommodate more family- oriented units, the schemes were refined to concentrate on the creation of two and three bedroom units. Units ranged in size from 768 sq. ft for 1 -bedroom units, 1,292 sq. ft. for 2 -bedroom flats, 1,333 sq. ft. for 2 bedroom lofts, 1,460 sq. ft. for 3 -bedroom units to 1,632 sq. ft. for 3 bedroom duplex units. Because family housing was the stated focus of the development, one bedroom units were incorporated sparingly and generally used as "infill." There was attention to the possibility of providing 4 - bedroom units. While these were not included in the final unit mix, some units were designed with expansion potential, where a fourth bedroom could be finished later. F. Sustainability Various construction methods and site design techniques were discussed for the site which conformed to "green" practices. Both traditional on-site building methods as well as the use of offsite, factory built construction were considered for the ultimate construction of the housing structures. Based on discussions with the Advisory Committee, offsite, factory built construction became the preferred method due to the energy efficiencies as well as lower construction costs inherent with this construction method. Site design standards which focused on solar orientation, limits to site disturbance, brown -field development, open space preservation, access to transit, and on-site storm water retention were integrated into the three schemes as providing the basis for certifiably sustainable construction practices. Certification of the project using a third -party certification program, such as the United States Green Building Council LEED certification process, was considered and ' was included in the cost estimates. The Advisory Committee determined that third - party certification would create potential advantages in the future marketing of the development, would leverage the green techniques used in the development to s 1/12/2016 Chamonix Master Plan encourage or require other private developments to seek the same standards, and foster community pride. As a part of the third party certification process, on-site storm water detention, which would minimize impacts from impermeable surfaces at the Chamonix site to the municipal storm water system, was incorporated in to the design. 3. FINAL RECOMMENDATIONS A. Advisory Committee On 17 July 2008, the final Advisory Committee meeting was held. The consultants presented the final versions of the three schemes and, after discussing the schemes, the Advisory Committee members in attendance voted on their preferred scheme for recommendation to the Town Council. The "Village Neighborhood" scheme, which was the most dense scheme that featured an underground parking garage, received six of the ten votes cast, the "Neighborhood Block" plan received four of the ten votes cast, and the "Neighborhood Cluster" received none of the votes cast. While the Village Neighborhood became the elected preference of the Advisory Committee, a subsequent discussion after the vote tended to suggest that there was significant concern regarding the additional cost and maintenance of the sub -grade parking garage. This concern was noted and included in the report to Town Council. B. Final Council Approval On 5 August 2008, a final presentation of the three schemes was made to the Town Council. Following an update on the Advisory Committee recommendations the council voted six to one for the Neighborhood Block scheme as the preferred option. Reasons given for the preference for the Neighborhood Block scheme ranged from the middle density character of the scheme, the inclusion of open space, the mix of units, and the flexibility of unit layout. Council members voiced support for the third party certification of the project as well as for factory, off-site construction. b n P, 11 1/12/2016 Chamonix Master Plan 4. PREFERRED OPTION Neighborhood Block / 1Xdll��s A. Overview The Neighborhood Block scheme contains 58 units. The following unit mix was proposed: • No 1 -bedroom units; • twenty, 2 -bedroom flats; • sixteen, 2 bedroom lofts; • eight, 3 -bedroom units; and • fourteen, 3 bedroom duplexes. This unit mix provided for 81,696 sq. ft. of housing with a density of 16 dwelling units per acre. A main access street, which gained access to the site from Chamonix Road, bisected the site, with 3 -bedroom duplexes on the north side and multi -family units on the south side. An alley offers secondary access to the multi -family units. The main 1/12/2016 1 Chamonix Master Plan street passed through the development to the fire station site. While access to the fire station was intended to be limited, this configuration allowed for dual points of access 1 to the site, thus alleviating internal traffic congestion. The landscape located throughout the plan potential community gathering spots scheme. Semi -private, stepped courtyards were located between the duplex units. Turf areas were limited to large open spaces on the east and west ends of the 1 development. The open space on the east end could be utilized for such uses as a dog park. Landscaping on the east end was kept away from the street to preserve 1 sightlines at the Chamonix Road/Chamonix Lane intersection. The open space on the west end would provide a viewing area into the fire station operations. For safety 1 reasons, the viewing area was segregated from the fire station by a series of low, landscaped walls. The landscape palette utilized native trees and shrubs. Aspens were situated along p p P 9 the northern edge of the site and gradually "spilled" through the spaces created by the structures. In these stands of aspen, a native understory of grasses (Thurber's fescue, wheatgrass and blue -wild rye) was punctuated by (orbs such as columbine, common lupine, golden banner, and strawberry. Along the southern portion of the site, where retention ponds were intended to hold and treat storm water runoff, more water -oriented plants took over. Blue spruce was planted densely to act as a screen to the commercial uses to the south and 1-70 beyond. Shrub thickets of willow and birch filled in among the spruce. B. Fire Station The fire station design shown in the Neighborhood Block scheme was the consensus alternative of Fire District staff and the Advisory Committee. The building foundation itself provided retention of z - the steep slopes to the north of the site, and thereby offered the most cost- _ /? effective site design. 8 -r 1/12/2016 t L t t t Chamonix Master Plan 5. PROCEDURAL REQUIREMENTS Following extensive analysis of both the Chamonix Parcel and the Wendy's Site, staff determined the Official Land Use Map for the Town of Vail should be amended to reflect the new designation of Chamonix Master Plan Area. The designation of Chamonix Master Plan Area is harmonious with the residential and commercial uses in the surrounding neighborhood and achieves the development goals listed above. Both properties were rezoned to reflect the development goals of the Chamonix Master Plan Area. The 3.6 -acre parcel commonly known as the Chamonix Parcel was rezoned from Two -Family Primary/Secondary (P/S) zone district to Housing (H) zone district (Ordinance No. 27, Series of 2008)and the 1.25 -acre former Wendy's Site was rezoned from Commercial Core 3 (CC3) zone district to General Use (GU) zone district (Ordinance No. 26, Series of 2008) on November 18, 2008. Ultimately, the fire station itself will require the approval of a Conditional Use Permit by the Planning and Environmental Commission (PEC) in the General Use (GU) zone district as it is a conditional use rather than a permitted use in all zone districts. The master plan is intended to be used as the development guide for the Chamonix Master Plan Area. The plan identifies the location for the fire station and the employee housing. The plan locates the highest density employee housing to the south of the lower density employee housing. This layout ensures the greatest compatibility with the adjacent neighbors. Locating the fire station on the southern edge of the property also locates this more commercial type use farthest from residential development. 6. NON -PREFERRED OPTIONS A. Neighborhood Cluster Overview The Neighborhood Cluster scheme contained 50 units. Unit mix consisted of: • four, 1 -bedroom units; • eight, 2 -bedroom flats; • sixteen, 2 -bedroom lofts; • fourteen, 3 -bedroom units; and • eight, 3 -bedroom duplexes. W* 1/12/2016 Chamonix Master Plan The unit mix provided for 68,232 sq. ft. of housing with a density of 14 dwelling units per acre. A main access street, which gained access to the site from Chamonix Road, passed through the site to the fire station, again offering dual points of access. Access to the fire station was limited for safety reasons. Multi -family units were situated off the north and south side of the access road. Drives extend to the north off the main street to duplex units. The landscape plan, similar to the Neighborhood Block scheme, located community gathering spots throughout the design. These community spots utilized terraced courtyards which were located off of internal pedestrian circulation routes. As with the Neighborhood Block scheme, turf areas were provided on the east and west ends of the development, connected by a pedestrian trail. The turf area on the eastern portion could be utilized for an amenity such as a dog park, while the western turf area offered a segregated vantage point of the fire station operations. frd A I� t t I I I � n 1 1/12/2016 Chamonix Master Plan B. Village Neighborhood Overview A The Village Neighborhood scheme contained 70 units. This scheme offered a combination of lower density duplex and multifamily units and a multi -story, multi- family structure. Unit mix consisted of: • nine, 1 bedroom units; • thirty-two, 2 bedroom flats; • no 2 bedroom lofts; • sixteen, 3 bedrooms; and • ten, 3 bedroom duplexes. The unit mix provided for 87,936 sq. ft. of housing with a density of 19 dwelling units per acre, the highest density of the three schemes. The main access to the site is via Chamonix Road. The entry road offered a traditional neighborhood lane, with duplex units to the north and multi -family units to the south. The lane terminated in the plaza located in the center courtyard of the multi -story, multi -family structure. The plaza was of a more urban character, with paving that allowed for pedestrian 1/12/2016 Chamonix Master Plan and occasional vehicular access as needed. A raised landscaped platform in the center offered a green gathering spot for residents. A parking structure was located below the plaza and provided parking for the residents of the multi -storied structure. The parking structure was accessed via a dedicated entrance off of the frontage road. As in the previous schemes, open space was provided on the eastern and western ends of the site, with similar possibilities for programming. 7. RECOMMENDED ACTIONS A. Amend the Vail Land Use Plan. • Planning and Environmental Commission recommendation on December 22, 2008 • Vail Town Council adoption, on first reading of Ordinance No. 1, Series of 2009, scheduled for January 6, 2009 B. Rezone the "Chamonix Parcel" to Housing (H) District. • Occurred on November 18, 2008 (Ordinance No. 26, Series of 2008) C. Rezone the "Wendy's Site" to General Use (GU) District. • Occurred on November 18, 2008 (Ordinance No. 27, Series of 2007) D. Complete the final Chamonix Affordable Housing Development Cost and Revenue Analysis by Economic & Planning Systems. • Draft complete on December 9, 2008 E. Complete a site and unit mix specific market study to determine demand for the development, based on the pre -determined area median income target. • Initiated Phase II of contract with Economic & Planning Systems on December 16, 2008. Anticipated completion by February 15, 2009. 8. APPENDIX A. Neighborhood Block Site Plan B. Chamonix Affordable Housing Development Cost and Revenue Analysis C. Vicinity Map 12 I I I I i1 1 1/12/2016 " -61 WEST VAL FIRE STATION L MQ AFFORDABLE HOUSING I r { `V/i`/J v /�/ if f •� ''1 1 II ut)l 013, .7 i 1 NEIGHBORHOOD --- —'' ' c ��, _ BLOCK 16 dwelling unit per acre It 9 o SF/ tohlSF/ , ; J* iR - ftalmafr md� Y of pokingspaces spaces Bre station spaces 26 enclosed a 68 en or tuck under 61 total r of s es ISS It unit unita unY udlfype 1 beoYoom 0 768 0 2 bedroom Bad 20 1,242 25,840 2t> < oom loft 16 1,333 21,328 3 bedroom 8 1.460 11,680 du - 3 np 14 1.632 22,848 dud r of ants SY total sq R 81,696 m M M M iii♦ iii. iili, i M M 11W/2� M M iii. M m M M M iii♦ iii. iili, i M M 11W/2� M M iii. M Chamonix Master P Appendix B CHAMONIX AFFORDABLE HOUSING DEVELOPMENT COST AND REVENUE ANALYSIS Prepared for: Town of Vail Prepared by: Economic & Planning Systems, Inc. December 9, 2008 14 Chamonix Master Plan TABLE OF CONTENTS 15 1/12/2016 PAGE I. Introduction................................................................................................. 2 ProjectBackground.......................................................................................... 2 Scopeof EPS Analysis........................................................................................ 2 ll. Comparative Analysis ................................................................................ 3 ComparativeProjects....................................................................................... 3 III. Feasibility Analysis..................................................................................... 10 ProjectCosts..................................................................................................... 10 ProjectRevenues............................................................................................. 11 CostScenerios.................................................................................................. 13 IV. Findings........................................................................................................ 0 CostConsiderations.......................................................................................... 0 UnitSubsidy......................................................................................................... 1 BuyerLending Issues.......................................................................................... 2 Additional Considerations ................................................................................ 2 15 1/12/2016 LIST OF TABLES Chamonix Master Plan PAGE Table 1 Total Project Costs.......................................................................... 11 Table 2 Affordability Calculation................................................................ 12 Table 3 Subsidy at Optimal AMI Levels ...................................................... 14 Table 4 AMI Levels for Stick Build & Standard Subsidy ............................ 15 Table 5 AMI Levels for Modular & Standard Subsidy ............................... 16 Table 6 Incomes Required to Cover Costs of Stick Built Construction . 17 Table 7 Incomes Required to Cover Costs of Modular Construction... 18 Table 8 Summary of Findings......................................................................... 1 16 11 Chamonix Master Plan I. INTRODUCTION The proposed Chamonix affordable housing project site is located on Chamonix Lane in close proximity to the West Vail interchange. The Town purchased the site several years ago for the purpose of constructing housing. The former Wendy's site was purchased more recently for the purpose of constructing a fire station. Collectively, the two sites total 5.5 acres and are slated for housing and the fire station. Surrounding land uses in the area consist of highway oriented commercial development. Further north from the highway along Chamonix Lane, the land use pattern is composed of both single family and multi family residential uses. PROJECT BACKGROUND ' The Town of Vail recently retained Stan Clauson Associates, Inc. to complete a site plan and cost estimation for an affordable housing project on the Chamonix site. As part of the work, Clauson identified three possible development programs with varying levels of density and building types. Clauson's work also estimated costs associated with construction, engineering, and landscaping of the scenarios for both stick built and modular construction. In addition, the report considered additional costs and fees associated with achieving LEED certification. The analysis was completed in the fall of 2008. From this work, the Town Council identified scheme 1, Neighborhood Block, as the favored development program. Included in this program are 58 total units with an overall density of 16 dwelling units per acre. The project cost estimated by Stan Clauson ranges from $16.7 to $23.3 million depending upon the building construction method. As part of the evaluation of the project, the Town seeks to develop a full understanding of any and all costs in addition to land costs that may occur throughout the course of the project's implementation. SCOPE OF EPS ANALYSIS Economic & Planning Systems (EPS) was retained by the Town of Vail to conduct a feasibility study of the project, building on the work done by Stan Clauson Associates. First, EPS researched comparable projects within Summit County, the Roaring Fork Valley, and Eagle County to identify prominent factors influencing the overall economics of a number of projects. Second, EPS modeled potential Chamonix project revenue based on targeted AMI levels. Project revenue was then compared to estimated costs, including additional cost factors identified by EPS, to determine the AMI requirements needed to provide sufficient revenue to make the project feasible. 2 1/12/2016 Vies Landing I The Vic's Landing project is located in the Town of Breckenridge across from the Breckenridge Golf Course on Tiger Road. The project was spurred by an annexation , request by the developer, Tom Silengo, and the corresponding request for water taps. As part of the annexation, the Town's inclusionary housing requirement was triggered. The Town required the developer to construct 24 affordable units in exchange for entitlements for 12 market rate units. Town contribution to the project viability was limited to fee waivers and the entitlement of the 12 market units. The project is evenly split between one- and two-bedroom units with target AMI levels of 80 and 100 percent. The 24 -unit project consists of six four-plexes. One -bedroom units are priced at $185,000 and target income levels at 80 percent of AMI. Two-bedroom units target both 80 and 100 percent of AMI and are priced at $229,500 and $285,000 per unit. Among other standards, the deed restriction limits annual appreciation to three percent or the increase in local AMI, dependant upon whichever measure is higher. In addition, resales of the units are subject to income testing on the part of the buyer with a 10 percent income level tolerance. I Closings began in April of 2008. The one -bedroom units in the project are sold out. Approximately half of the two bedroom units are sold. It should be noted that the two bedroom units were completed later and thus have been impacted to a greater degree by current credit restrictions. Federal Housing Administration (FHA) approval of the project was not originally sought, although an effort on the part of the developer is currently being made to receive approval. The approval is expected to broaden market demand as buyer financing will become more available. 3 1 1 1/12/2016 t Chamonix Master Plan II. COMPARATIVE ANALYSIS ' EPS compiled comparative cost information for seven projects in the Roaring Fork Valley, Summit County, and Eagle County based on interviews with project representatives. This ' section discusses the individual projects and then summarizes the relevant findings. 1 COMPARATIVE PROJECTS , SUMMIT COUNTY Vies Landing I The Vic's Landing project is located in the Town of Breckenridge across from the Breckenridge Golf Course on Tiger Road. The project was spurred by an annexation , request by the developer, Tom Silengo, and the corresponding request for water taps. As part of the annexation, the Town's inclusionary housing requirement was triggered. The Town required the developer to construct 24 affordable units in exchange for entitlements for 12 market rate units. Town contribution to the project viability was limited to fee waivers and the entitlement of the 12 market units. The project is evenly split between one- and two-bedroom units with target AMI levels of 80 and 100 percent. The 24 -unit project consists of six four-plexes. One -bedroom units are priced at $185,000 and target income levels at 80 percent of AMI. Two-bedroom units target both 80 and 100 percent of AMI and are priced at $229,500 and $285,000 per unit. Among other standards, the deed restriction limits annual appreciation to three percent or the increase in local AMI, dependant upon whichever measure is higher. In addition, resales of the units are subject to income testing on the part of the buyer with a 10 percent income level tolerance. I Closings began in April of 2008. The one -bedroom units in the project are sold out. Approximately half of the two bedroom units are sold. It should be noted that the two bedroom units were completed later and thus have been impacted to a greater degree by current credit restrictions. Federal Housing Administration (FHA) approval of the project was not originally sought, although an effort on the part of the developer is currently being made to receive approval. The approval is expected to broaden market demand as buyer financing will become more available. 3 1 1 1/12/2016 Chamonix Master Plan Valley Brook Valley Brook is a project in the final planning stages also located in the Town of Breckenridge on northeast corner of Airport Road and Valley Brook Street. The proposed project is being developed on a fee basis by Mercy Housing Colorado as a result of a Town issued RFQ in November 2007. As currently proposed, the project includes 42 units targeting income levels at 80 and 100 percent of AMI. The project is composed of two- and three-bedroom units in two-story townhomes. ' Approximately 52 percent of the units are targeted for AMI of 80 percent or less and 48 percent of the units are targeted for AMI of 100 percent or less. Units at 80 percent range in price from $133,000 to $160,000 per unit. Prices at 100 percent range from $200,000 to 1 $250,000. Similar to Vic's Landing, the deed restriction limits annual appreciation to three percent or the percent by which AMI increases. I Hard costs are currently estimated at $184 per square foot with total a total square foot IJ cost of $230 per square foot for hard and soft costs as well as site work. The cost excludes land and off-site costs. Construction prices have increased approximately 10 percent from the time of that the project was initially bid. However, both the developer and representatives from the Town expect to benefit from a downward renegotiation of costs. The developer is charging a one-time fee equivalent to approximately four percent of total costs, although a 10 percent fee is typically used by the developer. The project is being developed with a high level of subsidy with contributions from town, state, and federal sources. In total, it is estimated that grant funding will account for $4.7 million of the project's budget, or approximately 38 percent of total costs, which does not include costs of land (which was contributed to the project by the Town). The subsidy figure does include fee waivers by the Town. In addition, the Town may also contribute an additional subsidy in grant funding. At this time, the subsidy per unit is estimated at $117,000 per unit. Roaring Fork Valley Rodeo Place The Town of Snowmass has recently completed the first homes in Rodeo Place, a 27 -unit affordable housing development located near the Rodeo Grounds. The project is ' located within the Town of Snowmass, approximately half the distance between the base area and Highway 82, and is highly visible to traffic along Brush Creek Drive. The project consists of 20 single family homes, two duplexes, and one triplex. Phase I accounts for 15 of the 27 total units. The Town finished and closed six units in the fall of 4 1 1/12/2016 Chamonix Master Plan 2008 and plans to have the balance of Phase I completed by the spring of 2009. The homes are modular. Town staff noted that there have been problems coordinating the site work and the manufacturer resulting in project delays and cost increases. Nevertheless, the Town staff is pleased with the overall process and the quality of the architectural design. The Town did not established AMI targets for the prospective residents but relied on surveys of interested households to derive home prices. Approximately 50 to 60 households with at least one full-time employee based in Snowmass expressed interest in the project. Most of these households have maintained interest in the project since the surveys were first distributed in mid 2007. The deed restriction, which limits appreciation to three percent per year (among other terms), has caused some prospective purchasers to drop out of the process. However, because housing options are limited (particularly in Snowmass), most households have maintained their participation throughout the development process and the pool of buyers has remained sufficiently large to provide adequate demand. Based on the response to surveys, homes were designed to fall into a price range spanning from $300,000 to $550,000 per unit (which translates to an AMI of approximately 140 to more than 250 percent). The small single family homes and duplexes are priced at $300,000, for 1,400 square feet of finished living area plus 700 square feet of basement floor area ($214 per square foot, finished). Medium sized single family homes are priced from $425,000 to $450,000 for 1,800 square feet, plus 900 square feet of basement area ($229 per finished square foot). The largest are priced at $550,000 for 2,150 square feet plus 950 of basement floor area ($256 per square foot, finished). Basements were not an optional feature, as the Town mandated that they be included in each home. The requirement not only ensures adequate storage, but also creates additional bedroom area to be used for sublets and/or roommates, increasing the number of employees that can be housed locally. The construction costs range from $210 to $225 per square foot and covers only vertical costs. The Town absorbed costs for all on-site infrastructure improvements as well as soft costs related to the site engineering and architectural design. While staff did not have specific costs for these services, they estimate a 25 percent increase for these costs resulting in a total cost of $262 to $281 per square foot. The Town had acquired the land previously and contributed the cost of the land as a form of subsidy. Subsidies range from $33,000 to $80,000 per unit based on an average construction cost of $271 per square foot. The smaller units generate $300,000 of revenue while construction costs total $380,000 (1,400 * 271), resulting in a net subsidy of $80,000. The medium sized units required a subsidy of $50,000 and the largest units were subsidized by $33,000. The average among all three unit types is $54,000. 5 J I I I fl 1 1/12/2016 Chamonix Master Plan ' Burlingame Ranch Burlingame Ranch is a 21.5 acre affordable housing development in the Town of Aspen located off Highway 82 to the north of the Bar/X Ranch. The project is entirely dedicated to affordable housing and planned to be developed over three phases and will include a total of 236 units. To date, 91 units have been constructed on the site. Income targets for the project range widely, although the majority of the units accommodate income ' levels that range from approximately 80 to 140 percent of AMI. (Note that the Aspen Housing Office sets its own median income and corresponding AMI levels. The targets shown here are approximate.) The first phase of development includes 15 one bedroom units, 30 two bedroom units, 39 ' three bedroom units, and 7 single-family lots. Most of the units are townhomes. In addition to the identified income limits, residents are also required to earn a minimum of 75 percent of their yearly income within Pitkin County. The units are deed restricted to I three percent annual appreciation or the percent by which the Consumer Price Index (CPI) increases. All 91 units included in the first phase have been sold. I An extensive audit of Phase I costs in completed Burlingame Ranch was as a result of a 9 brochure that was published in 2005 misstating the total cost of the project to the public. The average sales price per unit (including lots) for the project was approximately $230,000. Hard costs for the project averaged $170 per square foot with an average total cost of $202 per square foot of hard and soft costs (which exclude land, off-site, and mitigation costs). Including land and all other costs, such an off-site infrastructure, mitigation, and community benefits, the total project cost $236 per square foot. The project's audit indicates a per unit subsidy of $331,567, or approximately 59 percent of the project's costs. This contrasts with an anticipated subsidy of $184,455 per unit. The increase is largely attributable to programmatic changes made by Council as well as shifting AMI targets to lower levels. The project costs increased by $11.7 million, resulting ' in relatively high per unit subsidies. 1 F-1 II Iron Bridge Iron Bridge is an affordable housing development located in Garfield County between Carbondale and Glenwood Springs. The affordable component of the project is part of the larger 300 home development by Iron Bridge Homes, LLC. The inclusion of affordable units in the development was a requirement of Garfield County's inclusionary housing ordinance triggered by the developer's request for a Planned Unit Development (PUD) density increase. A total of 30 deed restricted affordable single family units were required. County representatives expect 24 to be completed on site and another six to be addressed via fees -in -lieu. rel 1/12/2016 Chamonix Master Flan i 1 1/12/2016 i Chamonix Master Plan The affordable units are all comprised of 3 -bedroom 2 -bath units with an average size of 1,430 square feet. The units are targeted to families earning 80 percent or less of AMI and working in Garfield County. The units are priced at $230,000 as a result of ' calculation of AMI based on a 6 -person family. Garfield County has since amended their ordinance to limit the amount of people able to be included in the AMI calculation and maintain lower price points. The units are deed restricted to three percent annual ' appreciation or the percent by which the Consumer Price Index (CPI) increases (among other requirements). Sales within the affordable component have been slow, as the developer has closed on only four units However, the balance of the project is under contract and the remaining ' 20 units are awaiting their certificate of occupancy which has been delayed as a result of the involvement of Lehman Brothers in the construction loan. As a result, the completion of the units and release has been delayed several months. No County or ' other public subsidy was used in the construction of the units. Developer representatives report that their approach was to sell the units at the cost of vertical construction and shift costs related to land, infrastructure, and soft costs to the market rate portion of the development. Vertical construction costs are estimated range from $160 to $175 per square foot. The project is not currently FHA approved, although the developer and County are investigating the measures necessary to become approved. i� J iEAGLE COUNTY Stratton Flats Stratton Flats is a 47 -acre housing development located in the Town of Gypsum south i of Hwy 6 on the northwest side of the Eagle County Regional Airport. The developer for the project is Meritage Development Group. At build -out the 339 unit project will include 152 single family homes, 118 townhomes, and 69 condominiums of which 226 will include deed restrictions. At this time, a total of seven units have been permitted on the 47.3 acre site. ' The affordable units target income levels at 140 percent of AMI and are evenly divided between Town of Gypsum and Eagle County deed restrictions. The Gypsum restriction i limits income to 140 percent of AMI and requires that buyers earn 85 percent of their income in Eagle County. The Eagle County deed restriction limits income to 140 percent of AMI and includes a cap on annual appreciation based on the increase to the local i AMI. ' Units with the less restrictive Town of Gypsum deed restriction are priced at approximately $320,000 to $350,000 for townhomes and between $180,000 and $245,000 for condominiums. Units with the Eagle County restriction are priced at $350,000 for isingle family units, $300,000 to $330,000 units for townhomes, and between $180,000 and 8 1/12/2016 Chamonix Master Plan $245,000 for condominiums. Market rate units range from $400,000 to $430,000 for single- family homes and between $340,000 and $380,000 for townhomes. To date, the developer has written 8 contracts for units in the project. The developer reported that approximately 80 people had pursued loans without success. As a result, the developer has pursued and recently received FHA approval, which allows for 97 percent Loan -to - Value buyer financing. The project was completed using modular construction at a total cost of $200 per square foot. From the time of initially ordering the modular units through the current point in the construction process, the developer reported a cost increase of eight percent. Within the Gypsum deed restricted units, there is a per unit subsidy of approximately $23,000 which was provided in the form of fee waivers by the Town. Eagle County units required higher subsidies of approximately $23,000 of waived Town of Gypsum fees plus $40,000 per unit which was provided through a $4.5 million equity investment in the project by Eagle County in the form of a subordinated position. Eagle Ranch Village Eagle Ranch Village is a land development project by East-West Partners located in the Town of Eagle off Grand Avenue on Sylvan Lake Road. The project includes approximately 60 units which were constructed as part of the Town's inclusionary housing ordinance and were constructed approximately five to six years ago. The affordable units within the project are housed in four-plexes within the Sylvan Square development, which is part of a larger development that includes single-family houses, entitled lots, and additional multifamily housing. The affordable units sold for approximately $300,000 per unit as compared to market rate units within the project that sold for approximately $350,000 per unit. Hard costs within the project were approximately $180 per square foot for vertical construction only. Soft costs accounted for approximately 20 percent of hard costs resulting in a total cost to approximately $216 per foot. The developer of the affordable units reported that no profit margin was received on the affordable units. No income restrictions exist on the units. The deed restriction requires that residents must live and work in Eagle County and limits annual appreciation to three percent or CPI, although this provision is waived if the seller cannot find a buyer. The Eagle County Housing Authority has the first right of purchase from the owner. The affordable units were provided a development subsidy through a land donation by East-West Partners as well as a 0.2 percent transfer fee on the market rate units. The fee is allocated by a community housing committee to individual units. Including land and the transfer fee, the total subsidy in Sylvan Square was approximately $50,000 per unit. 9 1 1 1/12/2016 Chamonix Master Plan III. FEASIBILITY ANALYSIS EPS conducted a financial analysis to provide a full indication of the costs the Town of Vail will incur in the development of the Chamonix site. EPS analyzed potential revenues from varying AMI levels and projected the per unit subsidies needed to finance the project. Project Costs Town Council has indicated a preference for Scheme 1 of the Stan Clausen proposals which includes 36 two-bedroom and 22 three-bedroom units for a total of 58 units. EPS compiled the cost information provided by the consultant with line items for a developer's fee and contingency consideration. With these factors added to the original estimate, the total construction cost for the "stick built" Option A is $29,523,540. The cost for the modular built Option B is $21,844,116, as shown on the following page in Table 1. 10 1/12/2016 Chamonix Master Plan Table 1 Total Project Costs Chamonix Affordable Housing Costs and Revenue Analysis Sources & Uses Neighborhood Block Option A Option B Total Square Feet 81,696 81,696 Program $848,328 $848,328 1 Bedroom 0 0 2 Bedroom 36 36 3 Bedroom 22 22 Subtotal 58 58 Costs Cost Factor Engineering $848,328 $848,328 Engineering Services 7.0% 59,383 59,383 Construction 23,283,360 16,747,680 Landscaping 748,552 748,552 LEED Certification 135.420 135,420 Subtotal $25,075,043 $18,539,363 Cost per Square Foot $307 $227 Contingency Engineering Contingency 15.0% $127,249 $127,249 Construction Contingency' 10.0% 2,328,336 1,674,768 Landscaping Contingency 15.0% 112,283 112,283 Subtotal $2,567,868 $1,914,300 Fees LEED Certification Fee 0.5% 125,375 92,697 Developer Fee 7.0% $1,755,253 $1,297,755 Subtotal $1,880,628 $1,390,452 Total Costs $29,523,540 $21,844,116 ' EPS additions to Stan Clauson estimate Source: Economic & Planning Systems, Stan Clauson Associates ».,,.v -w cn..v,:1a—F—ftru,q+e+M+..n--w.can„W— Project Revenues EPS estimated appropriate sales prices based upon an Average Median Income (AMI) of $75,000 for a household of three in Eagle County, as shown in Table 2. Target home prices range from approximately $228,000 at 80 percent of AMI to $407,300 at 140 percent AMI. 11 Chamonix Master Plan Table 2 Affordability Calculation Chamonix Affordable Housing Costs and Revenue Analysis Description Factor I 80% 90% 100% 110% 120% 130% 140% Maximum Income 2 Bedroom 3 Bedroom Housing Payment Capacity Monthly Payment Less: Insurance Less: Property Taxes Net Available for Debt Service Affordability Target Loan Amount Loan Term Down Payment Loan : Value Ratio Target Affordable House Price 30% $600 / Year 0.50% 7% interest Source: HUD; Economic & Planning Systems H'\18887 -Vail Chant -in, Housing Site Feasibility Analy,s0ata\]18887 -AMI Eagle County As]OwnrAMOrd $60,320 $67,860 $75,400 $82,940 $90,480 $98,020 $105,560 $60,320 $67,860 $75,400 $82,940 $90,480 $98,020 $105,560 10% 10% 2 8r, 3 Bedroom 10% 10% 10% $1,508 $1,697 $1,885 $2,074 $2,262 $2,451 $2,639 -$50 -$50 -$50 -$50 -$50 -$50 -$50 -$90 - 100 -$110 -$120 - 130 -$140 - 150 $1,368 $1,547 $1,725 $1,904 $2,082 $2,261 $2,439 $205,600 $232,500 $259,300 $286,100 $312,900 $339,800 $366,600 30 Years 30 Years 30 Years 30 Years 30 Years 30 Years 30 Years 10% 10% 10% 10% 10% 10% 10% 90% 90% 90% 90% 90% 90% 90% $228,400 $258,300 $288,100 $317,900 $347,700 $377,600 $407,300 12 1/12/2016 Chamonix Master Plan COST SCENERIOS The total amount of revenue available to the project was determined by the number of units within the project dedicated to each income level. Total income was then compared to the total project cost to determine the net difference. This amount provides the basis of the estimate of subsidy per unit for the proposed Chamonix project in three scenarios. For this analysis, the costs are based on the San Clauson report. Stick built construction is assumed to cost $285 per square foot and modular is assumed to cost $205 per square foot. t The field research indicates that these may be overly conservative at this time and that a lower cost figure may be reasonable. In the analysis that follows, the original cost figures ' have been maintained. It is recommended that the feasibility analysis be rerun with lower figures after the Town has had the opportunity to review them. 11 The first scenario examined an optimal level of affordability with half of the units targeting households at 80 percent of AMI and half at 100 percent AMI. The second scenario determines the price points necessary to reach a per unit subsidy consistent with the comparative projects in the region. The third scenario examines the per unit prices needed for the project to break even. ' In the tables that follow, Scenario A refers to stick built construction costs and Scenario B is based on modular costs. 13 1 1 1/12/2016 Chamonix Master Plan OPTIMAL AMI TARGET An optimal AMI level of 80 and 100 percent of AMI was used in this analysis. At these levels a stick built project requires a per unit subsidy of approximately $251,000 per unit, as shown in Table 3. Modular construction at these incomes requires a per unit subsidy of $118,000. Table 3 Subsidy at Optimal AMI Levels Chamonix Affordable Housing Costs and Revenue Analysis Neighborhood Block Revenue Sources Option A Option B 2 Bedroom % of Total 80% AMI - 2 Bdrm. 50% 4,111,200 4,111,200 90% AMI - 2 Bdrm. 0% 0 0 100% AMI - 2 Bdrm. 50% 5,185,800 5,185,800 110% AMI - 2 Bdrm. 0% 0 0 120% AMI - 2 Bdrm. 0% 0 0 130% AMI - 2 Bdrm. 0% 0 0 140% AMI - 2 Bdrm. 0% 0 0 Subtotal 100% 9,297,000 9,297,000 3 Bedroom 80% AMI - 3 Bdrm. 50% 2,512,400 2,512,400 90% AMI - 3 Bdrm. 0% 0 0 100% AMI - 3 Bdrm. 50% 3,169,100 3,169,100 110% AMI - 3 Bdrm. 0% 0 0 120% AMI - 3 Bdrm. 0% 0 0 130% AMI - 3 Bdrm. 0% 0 0 140% AMI - 3 Bdrm. 0% 0 0 Subtotal 100% 5,681,500 5,681,500 Total Revenue $14,978,500 $14,978,500 Project Profit/Loss Square Feet ($178.04) ($84.04) Unit ($250,777) ($118,373) Total ($14,545,040) ($6,865,616) Source: Economic & Planning Systems, Stan Clauson Associates x.nme.-w cw�o,a,.�y sm rwe.n nwnm�w,eea�. au E.m• �un,.aWa��® 14 1/12/2016 Chamonix Master Plan TYPICAL SUBSIDY Based on the research of regional projects, a representative per unit subsidy for stick built construction in a project with only affordable units is approximately $120,000 per unit. A typical subsidy for modular construction is approximately $30,000 per unit. To reach a typical stick built subsidy, the program required units to be evenly split between 130 and 140 percent of AMI, as shown in Table 4. At these income levels, the project could be feasible with a per unit subsidy of approximately $117,000. Table 4 AMI Levels for Stick Build & Standard Subsidy Chamonix Affordable Housing Costs and Revenue Analysis Neighborhood Block Revenue Sources Option A 2 Bedroom % of Total 80% AMI - 2 Bdrm. 0% 0 90% AMI - 2 Bdrm. 0% 0 100% AMI - 2 Bdrm. 0% 0 110% AMI - 2 Bdrm. 0% 0 120% AMI - 2 Bdrm. 0% 0 130% AMI - 2 Bdrm. 50% 6,796,800 140% AMI - 2 Bdrm. 500/6 7.331,400 Subtotal 50% 14,128,200 3 Bedroom 80% AMI - 3 Bdrm. 0% 0 90% AMI - 3 Bdrm. 0% 0 100% AMI - 3 Bdrm. 0% 0 110% AMI - 3 Bdrm. 0% 0 120% AMI - 3 Bdrm. 0% 0 130% AMI - 3 Bdrm. 50% 4,153,600 140% AMI - 3 Bdrm. 50% 4.480.300 Subtotal 50% 8,633,900 Total Revenue $22,762,100 Project Profit/Loss Square Feet ($82.76) Unit ($116,577) Total ($6,761,440) Source: Economic & Planning Systems, Stan Clauson Associates , h.++an-w cn.no.—Ma F-01 M*w. ne --Eq, C—,AW p 15 , 1/12/2016 Chamonix Master Plan Modular construction affords a greater flexibility in the program required to reach typical subsidies. When 50 percent of units are priced for 120 percent AMI and the remaining units are divided between 110 and 130 percent AMI, a per unit subsidy of approximately $33,000 is needed, as shown in Table 5. Table 5 AMI Levels for Modular & Standard Subsidy Chamonix Affordable Housing Costs and Revenue Analysis Revenue Sources Neighborhood Block Option B 2 Bedroom % of Total 80% AMI - 2 Bdrm. 0% 0 90% AMI - 2 Bdrm. 0% 0 100% AMI - 2 Bdrm. 0% 0 110% AMI - 2 Bdrm. 30% 3,496,900 120% AMI - 2 Bdrm. 50% 6,258,600 130% AMI - 2 Bdrm. 20% 2,643,200 140% AMI - 2 Bdrm. 211 0 Subtotal 100% $12,398,700 3 Bedroom 80% AMI - 3 Bdrm. 0% 0 90% AMI - 3 Bdrm. 0% 0 100% AMI - 3 Bdrm. 0% 0 110% AMI - 3 Bdrm. 30% 2,225,300 120% AMI - 3 Bdrm. 50% 3,824,700 130% AMI - 3 Bdrm. 20% 1,510,400 140% AMI - 3 Bdrm. of 0 Subtotal 100% $7,560,400 Total Revenue $19,959,100 Project Profit/Loss Square Feet ($23.07) Unit ($32,500) Total ($1,885,016) Source: Economic 8 Planning Systems, Stan Clauson Associates 16 1/12/2016 Chamonix Master Plan MINIMAL SUBSIDY The following two tables test hypothetical scenarios in which the Town pays the least amount of subsidy. For stick built construction, the project requires a subsidy of $102,000 per units even if 100 percent of the units are sold at 140 percent of AMI, as shown in Table 6. Table 6 Incomes Required to Cover Costs of Stick Built Construction Chamonix Affordable Housing Costs and Revenue Analysis Revenue Sources Neighborhood Block Option A 2 Bedroom % of Total 80% AMI - 2 Bdrm. o% 0 90% AMI - 2 Bdrm. o% 0 100% AMI - 2 Bdrm. 0% 0 110% AMI - 2 Bdrm. o% 0 120% AMI - 2 Bdrm. o% 0 130% AMI - 2 Bdrm. o% 0 140% AMI - 2 Bdrm. 100% 14.662,800 Subtotal 0% 14,662,800 3 Bedroom 80% AN - 3 Bdrm. o% 0 90% AMI - 3 Bdrm. 0% 0 100% AMI - 3 Bdrm. o% 0 110% AMI - 3 Bdrm. o% 0 120% AMI - 3 Bdrm. o% 0 130% AMI - 3 Bdrm. 0% 0 140% AMI - 3 Bdrm. l00% 8.960.600 Subtotal 0% 8,960,600 Total Revenue $23,623,400 Project Profit/Loss Square Feet ($72.22) Unit ($101,727) Total ($5,900,140) Source: Economic & Planning Systems, Stan Clauson Associates K„.n-vr —"e F�bft r *d*le -. Ey.0 ar F.- 17 Chamonix Master Plan The Town could hypothetically achieve feasibility with minimal subsides using modular construction costs, as shown in Table 7. The sales modular constructed units are cost neutral when 40 percent and 50 percent of units are targeted for incomes of 130 and 140 percent of AMI, respectively. At these sales prices a small number of units can be devoted to 120 percent of AMI. Table 7 Incomes Required to Cover Costs of Modular Construction Chamonix Affordable Housing Costs and Revenue Analysis Revenue Sources Neighborhood Block Option B 2 Bedroom % of Total 80% AMI - 2 Bdrm. 0% 0 90% AMI - 2 Bdrm. 0% 0 100% AMI - 2 Bdrm. 0°i 0 110% AMI - 2 Bdrm. 0% 0 120% AMI - 2 Bdrm. 10% 1,390,800 130% AMI - 2 Bdrm. 50% 6,796,800 140% AMI - 2 Bdrm. 40% 5,702,200 Subtotal 60% $13,889,800 3 Bedroom 80% AMI - 3 Bdrm. 0% 0 90% AMI - 3 Bdrm. 0°i 0 100% AMI - 3 Bdrm. 0% 0 110% AMI - 3 Bdrm. 0% 0 120% AMI - 3 Bdrm. 10% 695,400 130% AMI - 3 Bdrm. 50% 4,153,600 140% AMI - 3 Bdrm. 40% 3,665,700 Subtotal 60 $8,514,700 Total Revenue $22,404,500 Project Profit/Loss Square Feet $6.86 Unit $9,662 Total $560,384 Source: Economic & Planning Systems, Stan Clauson Associates H \t000] -Vv CNmmi. Xaclnp Sm: F.m0n0y AmIHeDMcy,BBOi - PMI EeBle Ca„Bv X+P�nws 18 1/12/2016 Chamonix Master Plan I IV. FINDINGS The following analysis summarizes the most prominent issues encountered in the development of the selected affordable housing projects. Issues are organized by cost considerations, subsidy levels, and buyer lending. ' Cost Considerations Construction costs for the projects under consideration in this report ranged from $200 to $281 per ' square foot, as shown on the following page in Table 8, which summarizes the costs, revenues, and subsidies for the projects evaluated. The construction cost data shown in the table is exclusive of ' land, off site mitigation, and other considerations. The figures generally include hard costs, soft costs, and on-site infrastructure. Results indicate frequent instances of construction costs around $200 to $230 per square foot. 01 Developers experienced cost escalations ranging from 8 to 20 percent from the time an initial bid ' was received to construction. However, project representatives repeatedly indicated that downward pressure in materials costs has fallen 20 percent from 2007 to 2008. Contractors in the planning stages are tending to renegotiate prices in light of weakening demand for construction ' materials worldwide. 0 1 1/12/2016 t Chamonix Master Plan Table 8 Summary of Findings Chamonix Affordable Housing Costs and Revenue Analysis Construction Cost Project Planned Built Target AMI Cost Subsidy 5 Escalation Price Range (sq. ft.) (per unit) Summit County Vic's Landing 24 24 80% to 100% Mercy Housing 42 --- 80% & 100% Roaring Fork Valley Rodeo Ground 27 9 140%-250% Burlingame Ranch 91 91 80% to 140% 2 Iron Bridge 24 24 80% s Eagle County Stratton Flats' 226 7 140% Eagle Ranch Village 60 60 live/work in Cty. Modular units Majority of units in this range, AMI level based on survey Based on six person household "Total cost derived by allocating 20% of hard costs to soft costs 5 Burlingame Ranch and Mercy Housing figure do not include waived fees Source: Economic & Planning Systems n nsae,-v., a mn� w..y s , c�eq wa,rmy, am, . r.q,u acRun...y Unit Subsidy -- fee waivers --- $185,000 - $285,000 $230 $117,000 10% $133,000 - $250,000 $281 $300,000 - $550,000 $202 $332,000 12% avg. $230,000 $202 ° $0 --- $230,000 $200 $23,000 - $40,000 8% $180,000 - $350,000 $216 ° $50,000 20% $300,000 Subsidies take many forms in affordable housing development. The research shows a clustering of per unit subsidies in the $20,000 to $50,000 range as well as a cluster on the upper end that spans from $120,000 to $330,000. In all cases, these subsidy levels are on top of land costs. In each of the case studies provided, land was provided at no cost to the affordable units, which is a minimum threshold for pursuing an affordable housing project at this time. Generally, the projects requiring lower subsidies benefit from market rate units that defray the land, soft costs, developer fees, on-site infrastructure, and off-site mitigation. For example, Iron Bridge, Stratton Flats, Vic's Landing, and Eagle Ranch Village all received indirect subsidy through the ability of the developer to build market rate units on-site. In addition, the projects also received fee waivers to help offset the costs of affordable units. The $23,000 to $40,000 subsidy at Stratton Flats includes both fee waivers as well as the benefit of a $4.5 million equity contribution from Eagle County. The $50,000 per unit subsidy at Eagle Ranch Village includes both fee waivers proceeds from a RETA and the value of a land contribution from the master developer. Another way to reduce subsidies is to increase sales prices and target higher AMI levels. The Snowmass project reflects relatively unique approach as virtually all of the units are priced at the upper end of the affordable spectrum, reaching approximate AMI levels near (or above) 140 percent. The Town was able to reduce the subsidy to $54,000 per unit based on sales prices for some units that exceeded $500,000. The project with the lowest required subsidy, Stratton Flats, 1• 1/12/2016 Chamonix Master Plan reflects a combination of benefits, including on-site market rate units, modest deed restriction terms, as well as higher AMI targets. In projects without supporting market rate units and conventional AMI targets that reach households earning as little as 80 percent of AMI, higher subsidies are required to cover project costs. The proposed Valley Brook project anticipates a per unit subsidy of approximately $117,000. Burlingame Ranch requires $332,000 per unit. Moving forward, the Town of Vail should recognize that land subsidy alone will be insufficient for the project unless construction costs drop and/or AMI targets are set high. The Town should carefully consider higher AMI levels and should set them only after completing additional market analysis, as identified below. Generally, the Town should anticipate committing additional levels of subsidy to the project based on the research of comparative projects. Buyer Lending Issues Project developers repeatedly indicated that underwriting standards for residential borrowers represent the greatest current risk to affordable housing development. Preliminary research shows that mortgage terms require down payments of 10 to 15 percent. Many developers cited the need to secure Federal Housing Administration approval, thus providing 97 percent loan -to -value financing. Project representatives indicated that FHA approval was contingent upon review of the deed covenants and in the case of the modular development (Stratton Flats) approval of building plans, including the unit foundation. Construction loans appear to be less of an issue than individual homebuyer loans. Representatives from the Valley Brook project indicated a willing market for construction loans. In addition, downward pressure on construction costs has also eased restrictions to borrowing. Additional Considerations Based on discussions with developers with active affordable housing projects in the region, there are a number of critical issues that warrant consideration, in addition to the issues of costs, revenues, and feasibility. These include: ■ Competitive Market Position - The Town should understand the market position of the site relative to other projects within the county. Prospective home purchasers have options and can be expected to evaluate several other opportunities before selecting a home at this location. Documenting the market context and determining the competitive advantages provided by this site will shed light on the profiles of buyers likely to purchase here. The analysis will enable the Town to price its units based on the market and improve receptivity among the segment(s) most likely to consider it. 1! I I 1 1/12/2016 Chamonix Master Plan ■ Product Alignment - Once the market position and price banding has been established, the ' Town should revisit the products designed for the site. Aligning the products with the buyer profiles is a critical step to creating a marketable project. It should be noted that most developers attempt to provide as broad a range of products as possible, thus generating interest from across the spectrum of prospective buyers. This approach is recommended for the ' Chamonix site as well; however, the Town should identify the most profitable and saleable product and ensure that the development program is concentrated around this unit type. ' Market Depth by AMI Level - In addition to evaluating the market supply, as noted in the first two bullets, the Town should consider an analysis of market demand. Using recent survey data, the Town could understand the depth of potential demand for units by income level. The data can be cross -tabulated by a range of factors to better understand depth of demand by type ' of resident. ■ Financing Risk Mitigation - The current credit markets are substantially different from the recent past. Accordingly, developers must take action to ensure that financing is as available under the most flexible terms possible for future buyers. At this time, developers are seeking FHA approval to achieve this. The Town should understand the requirements of FHA and ensure that it is addressed from the start of 1/12/2016 Chamonix Master Plan I Appendix C J El C 4• 1/12/2016 rowN of va To: Vail Town Council From: George Ruther, Director of Community Development Date: December 17, 2013 Subject: Chamonix Master Plan Information Update I. Purpose The purpose of this memorandum is to provide the Vail Town Council with an information update on the Chamonix Master Plan. Over the past several months Town Council members have asked questions about the Chamonix Master Plan. In order to effectively convey the information this memorandum will focus primarily on the Chamonix Master Plan, however a number of other employee housing planning and policy related documents have been included. If there are any questions staff will schedule a work session to address them. II. Chamonix Master Plan 1. Where is the Chamonix Parcel located? • The Chamonix Parcel is located at 2310 Chamonix Road. Adjacent uses include the Shell Station, Vail Fire Station No. 3 and a mix of low and medium density residential developments. 2. When did the Town of Vail purchase the Chamonix Parcel? • The Town of Vail purchased the 3.6 -acre parcel in 2002 for "the purposes of constructing a fire station, employee housing and land banking." • In 2007 the Town acquired the adjacent 1.25 -acre Wendy's parcel as it is a more optimal location, from an emergency services perspective, for the West Vail Fire Station. 3. When was the Chamonix Parcel Land Use Plan adopted? • The Chamonix Parcel Land Use Plan was adopted in 2005 and it outlined development areas for a fire station, employee housing and open space. 4. Has the Chamonix Parcel Land Use Plan been amended? If so, what was the reason for the amendment? • Yes, the Chamonix Parcel Land Use Plan was amended in 2009 following the purchase of the former Wendy's Parcel. The result was the Chamonix Master Plan adopted January 2009. 1 1/12/2016 5. What was the objective of the Chamonix Master Plan (2009)? • The ultimate goal was to provide a plan for the Chamonix Master Plan Area that balanced the concepts of density, neighborhood impact, and traffic and parking concerns with aesthetics, sustainability, and value in a way that would address the community need for additional affordable housing in a contextually appropriate way. • The Town Council identified eleven development goals to direct the master planning process. These goals were: o The site is to be used for development of a fire station and employee housing. o Housing for student fire department employees should be considered in the design of the fire station. o An ambulance substation could be an ancillary use on the site. o Energy-efficient and sustainable design and construction techniques are important. Certification by a particular program (Green Globes, LEED) is to be investigated, although not mandatory. o 100 percent of housing developed should be deed -restricted, for -sale employee housing, with a mix of one-, two-, and three-bedroom units. o The site should be optimized to provide the greatest amount of employee housing. o Re -zoning the site to Housing (H) District is preferred to allow flexibility in design and development. o Additional traffic onto Chamonix Lane should be limited. o One-story of development along Chamonix Lane is acceptable. o All financing and phasing options will be considered. o New pedestrian circulation and access routes should be provided around the site, along Chamonix Road and/or Lane, to ensure connectivity of the surrounding neighborhood to other areas within West Vail. Existing pedestrian paths through the site are to be limited. 6. What role did the community play in the adoption of the master plan? • During a period of six months the consulting team developed three schemes exploring various densities and internal character. Development of the schemes benefited from informal and formal meetings with stakeholders and Town staff and from responses to a survey distributed to potential residents. Revisions to the three schemes were periodically presented to the Advisory Committee for additional input and direction, and these refinements were subsequently presented to the Town Council. Information from the Town department heads was considered in the site planning and design guidelines for the development of the employee housing and fire station at the Chamonix 2 1/12/2016 Master Plan Area. Information from other sources was balanced with input from the Focus Groups. Vail Town Council Consultant Team Advisory Town Staff Committee Employee Emergency Town Neighborhood Infrastructure Housing Focus Services Focus Department Group Group Focus Group Focus Group Heads 7. What is the relationship of the Chamonix Master Plan (2009) to the Employee Housing Strategic Plan (2008)? • In 2008, the Town of Vail adopted an Employee Housing Strategic Plan. The stated goal of the strategic plan is "to ensure there is deed restricted housing for at least 30% of Vail's workforce within the Town of Vail." The strategic plan identifies a series of actions steps the Town should consider, such as developing deed restricted housing on the Chamonix Parcel, in an effort to achieve its adopted housing goal. 8. What is the role of the Chamonix Master Plan in the decision-making process? • Like many of the Town's adopted master planning documents, the role of the Chamonix Master Plan is to illustrate and articulate the community's expectations and public input, and to guide decision -makers on how the Chamonix Parcel should be developed. 9. How can the Chamonix Parcel help the Town achieve its goals for deed restricted housing? • The Town's Employee Housing Strategic Plans identifies Town participation in the development of new deed -restricted employee housing as a "catch up" opportunity. • The 2011 Peel/Langenwalter Architects and Martin/Martin Consulting Engineers plan shows up to 48 units. The plan shows 5 duplexes (10 units) and up to 38 flats. 10. Is the Chamonix Parcel zoned? If so, what is the development potential of the Parcel? • The upper 3.6- acre portion of the Chamonix Parcel is zoned Housing (H) District and the lower (former Wendy's parcel) is zoned General Use (GU). 3 1/12/2016 11. Have development scenarios been proposed for the Chamonix Parcel? If so, what were they and what is the status of the project? • No development scenarios have been proposed for the Chamonix Parcel since the adoption of the Chamonix Master Plan. In 2011 the Town Council discussed preliminary plans for an initial phase of housing development at Chamonix. No further action has been taken. 12. Does the Town of Vail have a policy when it comes to conveying ownership of land underneath town -sponsored, for -sale housing developments? • The Town of Vail has retained ownership of the land under all of the deed -restricted, appreciation -capped units in Town. A 99 -year land lease exists under Vail Commons, North Trail and the Arosa Duplex. • The exception is Red Sandstone. There the Homeowner's Association was given the land under the development because the Town of Vail owned one-third of the land and Eagle River Water & Sanitation District owned two-thirds of the land. 13. To what degree has the Town studied the marketability and suitability of the Chamonix Parcel for development? • The Town completed a market study in 2008 and updated it 2011. • The Town completed an engineering/utility plan to optimize site utilization and the cost of constructing the infrastructure in 2011. 14. How have market conditions changed since the adoption of the master plan? • The Town has a proposal from Economic and Planning Systems to study and update the Chamonix Market Study to understand how market conditions have changed since the completion of the Chamonix Market Study as well as the 2011 Chamonix Market Update. III. Attachments • Chamonix Master Plan, January 2, 2009 • Resolution No. 2, Series of 2009 • Chamonix Parcel Land Use Plan, August 2, 2005 • Ordinance No. 17, Series of 2005 • Phase 1 & 2 Markup from Martin/Martin Consulting Engineers, 2011 • Chamonix Market Update, February 28, 2011 • Chamonix Market Study, 2008 4 1/12/2016 Table 1 Vail Employee Housing Inventory - October 2015 1/12/2016 # Units Bedroom Mix Unit Size (Average Square Feet) Yr. Built Summary Avg. Units Renter Owner Eff 1 BR 2 BR 3 BR 4+ BR Eff 1 BR 2 BR 3 BR 4+ BR Employee Housing Units 2001 430 360 70 45 60 357 68 0 395 602 916 1405 0 Owner -Occupied Buy Down Units 1977 2 0 2 0 1 2 0 0 0 662 1180 0 0 Town of Vail Employee Housing 1984 64 62 0 22 38 4 2 0 525 487 825 2070 0 Other Deed Restricted Employer Assisted Housing 2001 132 132 0 19 58 29 4 28 0 544 729 1200 1300 Zoning Incentive Units 1998 109 109 Totals: 737 663 721 86 159 392 74 28 460 573 912 1552 1300 1/12/2016 TOWN OF VAIN VAIL TOWN COUNCIL AGENDA MEMO MEETING DATE: January 12, 2016 ITEM/TOPIC: Adjournment (8:00 p.m.) 1/12/2016