Loading...
HomeMy WebLinkAbout11-27-07 City of Lakeville Economic Development Commission Regular Meeting Agenda Tuesday, November 27, 2007, 5:00 p.m. City Hall, 20195 Holyoke Avenue Lakeville, MN 1. Call meeting to order. 2. Approve October 24, 2007 meeting minutes 3. Presentation by Maxfield Research on Senior and Workforce Housing Market Analysis 4. Presentation of BTTTF Recommendations 5. Review CDA Redevelopment Grant Application 6. Review Recommended 2008 CDBG Application Activities 7. Review and final strategic work areas and goals for the 2008-2010 Strategic Plan for Economic Development 8. Director's Report 9. Adjourn Attachments: October Building Permit Report MN Department of Employment & Economic Development News Release, November 13, 2007 Airlake unveils new South Creek Business Park, Minnesota Real Estate Journal, November 9, 2007 NAIOP,Citizens League ioin in fiscal disparities effort, Minnesota Real Estate Journal, November 9, 2007 City of Lakeville Economic Development Commission/City Council Joint Work Session and Regular Meeting Meeting Minutes October 22, 2007 Marion Conference Room, City Hall.:: Members Present: Comms. Matasosky, Emond, Ericks ~~~5chubert, Tushie, Gehrke, Pogatchnik, Brantly, Ex-officio member City Admini~~~`c~~ °teve Mielke, Ex-officio member Chamber of Commerce Executive Director To~tl Born~i}ser. ~ w~, Members Absent: Comms. Vlasak, Smith ` Others Present: City Council Members Ivt~~~Bellows, 1~endy Wulff ~ Swecker and Laurie Rieb; David Olson, Community &~~onorn~evelopment Director; Adam Kienberger, Economic Development Specialist Anderson, Assistant to City Administrator; Todd Rapp, Consult Himle Horne~E~i~. 1. Call Meeting to Order Acting Mayor Bello~~ the ~~etito ~ at' 5:30 p.m. in the Marion Conference Room~~C 20195~1~q`ke Aven~~~'Lakeville, Minnesota. ,T:; 2. Review and '~~ssion w~tE~~ity Couns~I of proposed strategic work areas and goals for the 201010 a~~4c Plan fEconomic Development Todd 'tate~~~'discussion w`r~the City Council and EDC to gather input on ~~propos ~ ategu~ork areas and goals for the 2008-2010 Strategic Plan for ~~rbmic Develo~nt. 1~rs~?app reviewed each strategic work area and goal with the~;a~y Council and ~gesteevisions to the document were noted. ~~~4~ Based' the discu n between the EDC and City Council, the strategic work areas an ~ Is will vised to read as follows: Transportation 1. Coin lete the County Road 70 Interchange 2. Participate in the development of transit in Lakeville 3. Promote continued planning of the EastNllest Corridors 4. Provide assistance to the City Council on the efforts to secure additional highway funding 5. Monitor the Airlake Airport and MAC's Comprehensive Plan Economic Development Commission MeeBng Minutes October 22, 2007 6. Investigate options for the use of the Urban Partnership Agreement (UPA) Grant for I-35 and Cedar Avenue transit facility development Life-cycle Housing 1. Help the City create a workforce housing approach that reflects the needs of business 2. Help the City achieve reasonable and realistic housing goals that balance the need for different housing types f~~`~esidents Technology a~ 1. Advocate for Lakeville to become,a;a ~,tn telecommunications services ` Growth Management ~ ~ 1. Advocate to maintain balan growth 2. Continue to define and pro ~ the info tion future businesses and developers need in order tod~e to ~s in Lakeville 3. Provide input on the Comprehensn~reknd Use Plan 4. Analyze the viabil dditional off~~ark locations in Lakeville Communication ~ \ a ; 1. Create a single, ~ ectroe~~ S~gel~~atForm about economic r devel ~g~" 2. Cre ~ma~ ~~~g plan Partnershq~~\ 1 De\t a~ parCships, whenever possible, to achieve ~ ~ ~~lore ortunities to bui d relationships ~ ~ a~~iscal Manage'\~ 1. Contin~ \to a rage sound fiscal management by the City of o~ Lakevill The EDC rnrdismi from the City Council work session at 6:00 p.m. to conduct their regular ip~ the Orchard Conference Room. 5~~: 3. Approve Septem er 25, 2007 Meeting Minutes Motion 07.11 Comms. Pogatchnik/Gehrke moved to approve the minutes of the September 25, 2007 meeting as presented. Motion carried unanimously. 2 Economic Development Commission Meeting Minutes October 22, 2007 4. Discuss outcomes for the proposed 2008-2010 Strategic Plan for Economic Development The EDC discussed the revisions made to the strategic work areas and goals of the 2008-2010 Strategic Plan for Economic Development and proceeded to outline desired outcomes of the Plan. Mr. Rapp facilitated the discussion with the EDC and the EDC reached consensus on the following Strategic Plan Outcomes: 1. A transit plan for Lakeville based on the ben~~~fo local residents and businesses 2. A housing mix that reflects Lakeville's exp~~teCt po~ation changes and job growth 3. Leadership in telecommunications serv~becomes art of distinction for Lakeville 4. A partnership with ISD 194 and ably Dakota County is~tablished for development of goals set fo the mess Telec ° a~unications Technology Task Force ~ ~ 5. Convey benefits of a marketing plan to~ Council 6. Secure EDC representa the Vermi aver Watershed Board 7. New partnerships are ex establis ~ ith Dakota County ~ 8. Lakeville remains in the boi thir~pr City taxi Dakota County 5. Director's Report Q, ~ ~ z..~. Mr. Kienberger~t~ewed the ector's Report. v ~ ~ z~ The ~dtod d at 7:15 p m. ~ ~ \ r~~ Resp@~~ully submi by: Attested to: a Adam Kienberg° R. T. Brantly, Secretary Economic Development Specialist 3 gem No. ~ City of Lakeville ' ~ Community and Economic Development Memorandum To: Economic Development Commission From: David L. Olson, Community and Economic Development Director Copy: Steve Mielke, City Administrator Adam Kienberger, Economic Development Specialist Date: November 21, 2007 Subject: Presentation of Senior and Workforce Housing Market Analysis Attached is a copy of the Senior and Workforce Housing Market Analysis and Demand Estimates report for the City of Lakeville as prepared by Maxfield Research Inc. Jay Thompson and Brian Smith of Maxfield Research will be in attendance at the meeting to present the results of this market analysis. The Executive Summary on pages 2-4 and the Conclusions and Recommendations on pages 66-70 provide a good overview of the findings of the report. The completion of this analysis is the first part of a goal in the 2005-2007 Strategic Plan for Economic Development to establish an affordable housing goal(s) for Lakeville for persons of all life cycles. EDC members are encouraged to ask questions regarding the market analysis during the presentation. This report will be presented to the City Council in December. Senior and Workforce Housing Market Analysis and Demand Estimates for Lakeville, Minnesota Prepared for: City of Lakeville Lakeville, Minnesota September 2007 xfield Researchlnc. 615 First Avenue NE Suite 400 Minneapolis, MN 55413 612.338.0012 www.maxfieldresearch. com ~ x~ield 12e~reareh I®e. • Oct 2, 2007 Mr. Adam Kienberger Economic Development Specialist City of Lakeville 20195 Holyoke Avenue Lakeville, MN 55044 Dear: Mr. Kienberger Attached is a draft of the study entitled "Senior and Workforce Housing Market Analysis and Demand Estimates for Lakeville, Minnesota" conducted by Maxfield Research Inc. The study projects demand for senior housing and workforce housing demand through 2020. We provided recommendations on the amount and type of housing that could be built in Lakeville to satisfy workforce demand from future residents over the 13 years. The study identifies a potential demand for almost 1,300 units of senior housing at all of the various levels and for about 2,400 workforce housing units in Lakeville from 2007 to 2020. Detailed information regarding recommended housing concepts can be found in the Conclusions and Recommendations section at the end of the report. We have enjoyed performing this study for you and are available should you have any questions or need additional information: Sincerely, MAXFIELD RESEARCH 1NC. ~ Jay Thompson Brian Smith Senior Research Analyst Research Analyst Attachment TABLE OF CONTENTS Paae PURPOSE AND SCOPE OF STUDY 1 Study Impetus 1 EXECUTIVE SUMMARY 2 Introduction 2 Senior Housing Analysis 3 Workforce Housing Analysis 3 Senior and Workforce Housing Demand Summary and Conclusions 4 SENIOR HOUSING ANALYSIS 6 Introduction 7 Senior Market Area Definition 7 Older Adult (Age 55+) Population and Household Growth Trends 8 Older Adult and Senior Household Incomes 10 Homeownership Rate/Housing Values 14 Senior Housing Defined 16 Supply of Senior Housing in the Lakeville Market Area 17 Pending Senior Housing in the Lakeville Market Area 19 Preliminary Demand Estimates for Adult/Few Services Housing 20 Preliminary Demand Estimate for Congregate Housing 22 Preliminary Demand Estimate for Assisted Living Housing 23 Preliminary Demand Estimate for Memory Care Housing 26 Conclusions 27 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS 29 Introduction 30 Lakeville Workforce Market Area Definition 31 Population, Household and Employment Growth Trends and Projections 32 Population Age Distribution Trends 34 Household Income 36 Tenure by Age of Householder 39 Employment Growth Trends 41 Business Growth 43 Commuting Patterns 45 Major Employer Interviews 46 TABLE OF CONTENTS continued) Paee WORKFORCE HOUSING FOR-SALE MARKET ANALYSIS 48 Introduction 49 Housing Values 49 Foreclosures 52 Current Supply of Homes on the Market 53 Actively Marketing For-Sale Developments 54 Mohile Homes 56 Planned and Pending For-Sale Housing Communities 57 WORKFORCE HOUSING RENTAL ANALYSIS 59 Introduction 60 Lakeville Rental Communities 60 Pending and Proposed Rental Developments 63 WORKFORCE HOUSING CONCLUSIONS AND RECOMMENDATIONS........... 65 Introduction 66 For-Sale Housing Demand 66 Workforce Rental Housing Demand 68 Conclusions and Recommendations 70 LIST OF TABLES Table Number and Title Page 1 Older Adult Population & Household Age Distribution, Lakeville Senior Market Area, 1990, 2000 & 2012 9 2 Household Income by Age of Householder, Lakeville Senior Market Area, 2007.... 12 3 Household Income by Age of Householder, Lakeville Senior Market Area, 2012.... 13 4 Older Adult Household Tenure, Lakeville Senior Market Area, 1990 and 2000....... 14 5 Home Sales -Single Family Homes, Lakeville Senior Market Area, 2002 to 2007. 15 6 Senior Housing Developments, Lakeville Senior Market Area, August 2007........... 18 7 Market Rate Adult/Few Services Housing Demand, Lakeville Senior Market Area, 2007 & 2012 21 8 Market Rate Congregate Rental Senior Housing Demand, Lakeville Senior Market Area, 2007 & 2012 23 9 Market Rate Assisted Living Demand, Lakeville Senior Market Area, 2007 & 2012 25 10 Memory Care Demand, Lakeville Senior Market Area, 2007 & 2012 27 11 Population, Household and Employment Growth Trends and Projections, Lakeville Market Study Area, 1990 to 2020 33 12 Population Age Distribution, Lakeville Market Area, 1990, 2000 & 2012 35 i 3 Household Income by Age of Householder, Lakeville Market Area, 2007 37 14 Household Income by Age of Householder, Lakeville Market Area, 2012 38 15 Tenure by Age of Householder, Lakeville Market Area, 1990 and 2000 40 16 Employment Growth Trends and Projections, Lakeville Market Area, 1990 to 2020 42 17 Business Growth by Size of Business, Selected Industries, Lakeville Zip Code-55044, 2000 - 2005 44 18 Lakeville Commuting Patterns, 2000 45 19 Single Family and Multifamily Home Sales, Lakeville Market Area, 2002 to 2007. 51 20 Distribution of Existing Home Sales, Lakeville, 2002/2006/2007 52 21 Distribution of Active Listings, Lakeville, 2007 53 22 Current Pricing and Absorption, Active For-Sale Single Family Developments, Lakeville August 2007 55 23 Ctixrrent Pricing, Absorption and Unit Mix, Selected Active For-Sale Multifamily Developments, Lakeville, August 2007 56 24 Mobile Home Pazks, City of Lakeville, August 2007 57 25 General Occupancy Rental Housing, City of Lakeville, August 2007 61 26 Workforce For-Sale Housing Demand, Lakeville, 2007 through 2020 67 27 Workforce Rental Housing Demand, Lakeville; 2000 - 2020 69 28 Workforce Housing Demand Summary, Lakeville, 2007 to 2020 71 PURPOSE AND SCOPE OF STUDY Study Impetus Maxfield Research Inc. was engaged by the City of Lakeville to complete an assessment of the potential demand for workforce (households with lower- and moderate-incomes) and senior housing (including independent rental and ownership, congregate, assisted living, and memory care) in Lakeville, Minnesota. Specifically, Maxfield Research Inc. examined demographic trends and characteristics, economic growth trends, and current housing market conditions and calculated demand for workforce housing (both owner and renter housing) and senior housing in Lakeville. The report contains primary and secondary research. Primary research includes interviews with rental property managers/owners, City staff, County staff, Lakeville employers, and others involved with local and regional housing needs. All of the market data on existing/pending housing communities was collected by Maxfield Research Inc. and is accurate to the best of our knowledge. Secondary data, such as U.S. Census, is credited to the source, and is used as a basis for analysis. MAXFIELD RESEARCH INC. 1 EXECUTIVE SUMMARY Introduction Maxfield Research Inc. was engaged by the City of Lakeville to complete an assessment of the potential demand for workforce (households ages 15 to 64 with lower- and moderate-incomes) and senior housing (including independent rental and ownership, congregate, assisted living, and memory care) in Lakeville, Minnesota. Workforce housing can have many definitions. This study generally defines "workforce hous- ing" as for-sale or rental housing that is affordable to lower- and moderate-income households. Members of these households ofren hold jobs that are essential, frontline servers in the economy. They may be single persons with or without children, or marred persons, one (or occasionally, both) with a workforce job. Examples of "workforce" jobs include light manufacturing worker, police officer, teacher, bus driver, nurse, retail salesperson and restaurant server. The importance of the workforce sector to the full economy cannot be overstated. Workers earning workforce wages fill the majority of jobs in nearly every sector of the economy, especially services, retail trade and manufacturing, the three largest industry sectors. For the purposes of this study, Maxfield Research Inc. calculated housing demand for house- holds at three income ranges for both rental and for-sale housing (shown in the table below). In addition, senior households were excluded so that the demand calculations only include work- force-age households (households ages 15 to 64). We understand, however, that many people over age 65 continue to work. For owner-occupied housing, the first workforce income range is based on the level of afforda- bility as defined by the Metropolitan Council's Livable Communities Act (LCA) defmition of affordable housing. The LVA identifies the purchase price ceiling for anowner-occupied home based upon what a family of four with an income at or below 80% of area median income (AMI) can afford at prevailing interest rates. As of 2007, this amount was identified at $206,800. We also calculated demand for owner-occupied housing among households with incomes between 80% and 100% of AMI and households with incomes between 100% and 115% of AMI. These households have incomes between $62,800 and $90,000 -and few could purchase new- construction single-family homes. Rental housing demand is calculated for workforce-age households with incomes below 30% of AMI, 30% to 60%AMI, and 60% to 80%AMI. Workforce households with incomes below 30% of AMI are extremely-low-income and would have a difficult time affording rents at most affordable buildings financed through the federal low-income housing tax credit (LIHTC pro- gram). Workforce households with incomes between 30% and 60% would income-qualify and could afford monthly rents at most affordable rental buildings. All of the rental units affordable to households in these income ranges would be considered affordable based on the definition of affordable housing by the Metropolitan Council's LCA (which is the maximum rents permitted in the metropolitan area for the LIHTC program. We also included demand calculations for households with incomes up to 80%, since many of these moderate-income households would not be able to afford monthly rents at newer, market-rate rental buildings. M.AXFIELD RESEARCH INC. 2 EXECUTIVE SUMMARY Workforce Housing -Household Income and Home Price Ranges Percent of Affordable Home Household Income Area Median Income Price !Gross Rent's For-SaleHous' $62,800 <80%ofAMI $206,800 $62,800 - $78,500 80% - 100% $206,800 - $260,000 $78,500 - $90,000 100% - 115% $260,000 - $300,000 Rental Hoasin . - _ - ~ , < $23,550 < 30% AMI <$530 $23,550 - $47,100 30% - 60% $530 - $883 $47,100 - $62,800 60%- 80% $883 - $1,060 * Affordable gross monthly rent is quoted fora 2BR unit. Note: The area median income (AMI) for the Twin Cities Metro Area is $78,500 in 2007. Source: Maxfield Research Inc. Senior Housing Analysis / There is a growing need for senior housing in Lakeville in response to a rapidly growing senior population in Lakeville and its primary draw area. The 65+ population in the draw area (see map on Page 8) is projected to grow from about 10,800 people in 2000 to about 24,000 in 2012 and 37,000 in 2020. ? Several senior developments have been added this decade in communities just to the north of Lakeville -Apple Valley and Burnsville, among others - to meet the growing demand for senior housing. Only two developments have been added in Lakeville, however. Both are affordable rental developments by the Dakota County CDA (Winsor Plaza and Main Street Manor). Currently, there are no market-rate senior developments in Lakeville offering hous- ing to independent seniors seeking no services or frailer seniors needing service-intensive housing. Workforce Housing Analysis / Lakeville is one of the fastest growing communities in the Twin Cities Metro Area. Its population is projected to increase from about 43,000 in 2000 to about 59,000 in 2010 and to about 78,000 in 2020. Among the new residents will be many in their working years em- ployed not only in neighboring communities, but in Lakeville's growing job base. We expect Lakeville to exceed Metropolitan Council's employment projections for this decade by add- ing over 5,000 jobs. / Currently, about 85% of Lakeville's non-senior households are owners -with most of them having higher incomes sufficient to own single-family homes. There are a growing number MAXFIELD RESEARCH INC. 3 EXECUTIVE SUMMARY ofnon-senior households with incomes between $47,100 and $90,000 (60% to 115% of me- dian income) who could not afford most newer single-family homes and thus, would be can- didates for workforce housing -both owned and rental products. ? While there is a growing demand for workforce housing, interviews with representatives of some major employers in Lakeville revealed that overall, availability of housing is not a ma- jor concern for the employers and employees. That is because the majority of new hires from the Twin Cities Metro Area typically commute from their place of origin. However, there are some issues with affordability. Employees that moved to the area choose to live in the community where they find a house that meets their needs. For lower- and moderate-income households, that often is not Lakeville, suggesting that workforce housing is needed in the community. ? Currently, the supply of workforce housing in Lakeville has fallen behind as employment has increased substantially. It has been well over a decade when the last market rate property was built in 1992. Only two buildings have been constructed since 1990 (Lakevillage Apart- ments in 1991 and Southfork II in 1992). There are four affordable rental developments in Lakeville with a total of 151 units and no vacancies all built after 1995 and two in the last five years. In addition to rental communities, there are 536 for-sale townhome units that are being rented in Lakeville. The large number of rental townhomes further reveals the need for affordable workforce housing as households in Lakeville are pursuing this option due to the lack of rental units along with their inability to own homes of their own due the higher prices ? The average price of new single-family home in Lakeville is $404,700. Thus, the owned housing most affordable to workforce households is existing single-family homes (average price of $336,750 in 2006) and for-sale townhomes (average price of $223,000 in 2006). Given these prices, almost all of the new workforce households moving to Lakeville seeking owned housing will either purchase older single-family homes or new townhomes. Senior and Worldorce Housing Demand Summary and Conclusions The summary table of the following page displays the total Lakeville housing demand for both senior housing and workforce housing through 2020. The table shows that Lakeville could capture demand for almost 1,300 senior housing units by 2020 (about 500 by 2012 and 800 between 2012 and 2020) and Lakeville will need nearly 2,400 units of workforce housing through 2020. ? There is a need for all types of senior housing at all service types shown in the table on the following page. We recommend that the City of Lakeville promote the development of sen- ior housing of the various service levels. In the short-term, we find demand for another af- fordable rental housing building (similar to Mainstreet Manor and Winsor Plaza) along with a senior ownership building (such as a cooperative or condominium) and aservice-intensive development with about 115 congregate units, 70 assisted living units, and 45 memory care units. 1VIAXFIELD RESEARCH INC. 4 EXECUTIVE SUMMARY ? To increase the supply of new single-family homes affordable to workforce households, the City of Lakeville should promote homes with smaller squaze feet and smaller lot sizes. In addition to single-family homes, the city should also promote multifamily units with a greater number of bedrooms (such as three- and four-bedroom units). ? We recommend that the city support new rental developments through the LIHTC program, Dakota County CDA, and others (including providing municipal bond financing) to help de- velop units affordable to workforce-age households earning less than 80% of median income (or $62,800). LAKEVII.LE HOUSING DEMAND SUMMARY 2007 to 2020 Purchase Prices No. of Monthly Rent Range Units Sentai•.Hans s~ ~~ri:;:!n Independent Rental 270 Independent Ownership 440 Congregate 300 Assisted Living 180 Memory Care 100 Total 1,290 * Owner-0cca red Housin ' Sinlge-Family Affordable <$206,000 0 Moderate-income $206,000-$260,000 505 Upper moderate-income $260,000-$300,000 380 Tota[ 885 Multifamily Affordable <$206,000 480 Moderate-income $206,000-$260,000 250 Upper moderate-income $260,000-$300,000 210 Tota! 940 General Occa "an Reu~alilT ~ :A=! °"a Moderate Rental 60% to 80% of AMI** 275 Affordable Rental 30% to 60% of AMI** 225 Subsidized Rental <30% of AMI** 70 Total 570 * About 60% of senior demand will occur after 2012. Area median income. Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 5 SENIOR HOUSING ANALYSIS Senior Housing Analysis MAXFIELD RESEARCH INC. 6 SENIOR HOUSING ANALYSIS Introduction This section contains a preliminary assessment of the market potential for market-rate senior housing in Lakeville, Minnesota. Maxfield Research Inc. calculated the potential demand for adult housing (rental and ownership), congregate, assisted living, and memory care senior housing based on two primary factors: 1) the size of the income/asset-qualified target market; and 2) the supply of existing and planned competitive senior housing units. The methodology used to calculate demand in this report is proprietary to Maxfield Research, but is consistent with methodologies used by analysts throughout the senior housing industry. It is important to note that the demand estimates and conclusions contained herein are intended only to broadly assess the depth of the senior housing market in Lakeville and to determine whether a variety of senior housing products could be supported. This section begins by delineating the primary draw ("market") area for senior housing in Lakeville and presents an overview of the demographic and economic characteristics ofthe area's target market. It then defines the various types of senior housing and inventories existing market-rate senior housing in the Market Area. Finally, it presents demand calculations for adult/few-services, congregate, assisted living, and memory care senior housing. Senior Market Area Definition Based on traffic and community orientation patterns, geographic and man-made barriers, and the experience of the Market Area's existing senior housing developments, we estimate that roughly 70% of the demand for senior housing in Lakeville would come from a draw area that includes the cities of Apple Valley, Burnsville, Elko New Market, Farmington, Lakeville, Rosemount, and Savage, as well as the townships of Castle Rock, Credit River, Empire, Eureka, and New Market. We define this area as the subject property's primary draw or "Market" area. A map of the Senior Market Area is shown on the following page. The remaining 30% of the demand for senior housing in Lakeville will come from outside the defined Senior Market Area. These individuals will include people currently residing just outside the Senior Market Area who have an orientation to the area (i.e. church, doctor, etc.), people who once resided in the area that desire to move back to be near friends and family, as well as parents of adult children living in the Senior Market Area. MAXFIELD RESEARCH INC. 7 SENIOR HOUSING ANALYSIS Lakeville Senior Market Area ~ 7 f Heights ~ x $ ~ \ \ Y ~I ; r ! i ~F Al ~ i a .,r Saa aKe L x~' ~:fi ' r P~~k Z ~ yam- v:~,\pplr~\allea Y' ~ F2oiemount, } ~'c ' 2r4 a x - i~~t is rib ~_,f _ i ~4'~b ski Oil f& x ~ u~.s~ - ~ :Lakea~ille~ ~ ~ ~ Empnr .~C~ecl~t•R' a '~'~a~n ~n~to ~ ~ ux I • ~ Y.asR . ~ ~ fieti srr fH , z 5 crnaillion Tarp, ~ r '\eaa AI»~ het ~ `r ` ~ ~ ~ ~ ~ .:ure~kn ;'~*y a ~ (aviFe N~ulu ~ ~~i t `4 ~ ElkofiN~ k ache r~i - ~ ~ s - r,: - vy, \\~ebster f>reem ele 1\n crl'arJ ticiuta n~a eexe.,~mr. Older Adult (Age 55+) Population and Household Growth Trends Table 1 shows the age distribution of people and households aged 55 and older in the Lakeville Senior Mazket Area in 1990 and 2000, with projections for 2012. The 1990 and 2000 figures aze from the U.S. Census while the projections are calculated by Maxfield Reseazch, Inc:, based on data provided by Claritas, Inc., a nationally recognized demographic services firm, and the Metropolitan Council. Between 2000 and 2012, the Senior Market Area's older adult and senior population is projected to increase by roughly nearly 32,700 people (130%), to 57,900 people in 2012. The majority (roughly 60%) of the growth, however, will be among people age 55 to 64 (an increase of nearly 19,441 people), as the leading edge of the baby boom ages into their late SOs and early 60s. MAXFIELD RESEARCH INC. 8 SENIOR HOUSING ANALYSIS TABLE 1 OLDER ADULT (55+) POPULATION & HOUSEHOLD AGE DISTRIBUTION LAKEVILLE SENIOR MARKET AREA 1990 2000 & 2012 r,. PflEULATION t„+. .....Age 5 r 1 1 SS to 64 6,681 14,439 33,880 7,758 116.1% 19,441 134.6% 65 YO 69 1,894 3,796 10,010 1,902 100.4% 6,214 163.7% 70 to 74 1,367 2,762 6,025 1,395 102.0% 3,263 118.1% 75 to 79' 850 1',885 3,710 1,035 121.8% ' 1,825 96.8% SO to 84 524 1,276 2,250 752 143.5% 974 76.3% 85 + 490 1,047 ' 2,015 557' 113.7°/u 968 92:5% Tota155+ 11,806 25,205 57,890 13,399 113.5% 32,685 129.7% Percent 55+ 8.2% 12.0% 19.5% Tota165+ 5,125 10,766 24,010 5,641 ' 110.1% s 13,244.'.. 123.0% Percent65+ 3.6% S.1% 8.1% Tota175+ 1,864 4,208 7,975 2,344 125.8% 3,767 89.5% Percent 75+ 1.3% 2.0% 2.7% Tot. Po 143,405 209,353 ~{(2y9~;6,854 yT65,948 46.0% 87,501 41.8% S -x.' ~i'liY' N'~L1YS~~` ~ F i,44f~. Age 55 to 64 4,128 8,528 19,605 4,400 106.6% 11,077 129.9°/n 65 to 74 2,032 4,150 9,895 2,118 104.2% 5,745 ? .138.4% 75 to 84 736 2,038 3,830 1,302 1?6.9% 1,792 87.9% SS+ 259 563 1,145 " ' .304 117.4% 582' : 103:4% Tota155+ 7,155 15,279 34,475 8,124 113.5% 19,196 125.6% Percent 55+ 14.7% 20.8% 31.6% Tota165+ 3,027 6,751 14,870 3,724 123.0%° 8,119-' 120.3% Percent 65+ 6.2% 9.2% 13.5% Tota175+ 995 2,601 4,975 1,606 161.4% 2,374 91.3% Percent 75+ 2.0% 3.5% 4.6% Tot. HH 48,776 73,367 109,122 24,591 50.4% 35,755 48.7% Sources: US Census Bureau, Claritas Inc., Maxfield Research Inc. Senior household trends closely parallel the population trends summarized above. Increases among each age cohort that occurred during the 1990s are projected to continue through 2012. Between 2000 and 2012, it is projected that the Senior Market Area will add about nearly 19,200 households (126%) age 55 to 64, nearly 8,120 households (120%) age 65 to 74, and over 2,370 households (91 age 75+. Table 11 in the workforce housing section shows that the City of Lakeville had a senior population (65+) of 1,226 in 2000, which was about 11% of the Senior Market Area's total While age projections by Claritas, Inc. go out five years - or to 2012, Maxfield Research projects that by 2020, the Lakeville Senior Market Area will have 44,000 seniors age 55 to 64, 25,000 seniors age 65 to 74, and 12,600 seniors age 75 and over. MAXFIELD RESEARCH INC. 9 SENIOR HOUSING ANALYSIS Typically, seniors age 70 and older have the highest propensity to move into age-restricted housing. However, active adult projects are attracting some people in their late SOs or early 60s, especially in projects with an ownership structure such as townhomes, condominiums and cooperatives. In addition, growth among older seniors (age 75 and older), the primary market for senior housing with services, is also expected to continue into the future. The substantial in- creases in seniors have and will continue to fuel demand for additional senior housing in the Senior Market Area into the foreseeable future. ` Older Adult & Senior Popnlafto~ - Lakeville ~euiarlYlarket Area j ;1fl0A1~2flI~ - ~ ~ . ~o obl 33saa q ~ ~ G x. R d s~ :,p°,. IS 6Dd!rk~b,03S s x. 1#1,Daa ~ - ~ z - ~ - - 5 u'~:~la ~ ~ 8,261 3,161 5 963 2,017 ~fa, + ],374 490 1,047„ t ~ t~ 75-.84 ~ z nk.;'..,~'. ®1990 ~ 2000 - 2012 r%. ~ elder Adult and Senior Household Incomes Tables 2 and 3 show incomes for older adult and senior households in the Senior Market Area in 2007 and 2012, based on estimates by Claritas, Inc. It is important 4o note that the data does not account for the asset base of senior households, nor supplemental income that a senior household could gain from the proceeds of a sale of a home or from contributions from family members. The data in Tables 2 and 3 helps determine the demand for senior housing based on the size of the market at specific price levels. This data is incorporated into demand calculations, which are presented later. The frailer the senior, the greater the proportion of their income they will typically spend on housing and services. Studies have shown that seniors are often willing to pay 40 to 50 % of their incomes for market rate senior housing with little or no services, while income allocations of up to 65 % are typical in a congregate setting and 80% to 90% for assisted living housing. It is also important to note that the proceeds from the sales of their homes, as well as financial assistance from their adult children are often used as supplemental income in order to afford senior housing alternatives. The following are key points from Tables 2 and 3. / The median income among all age 65+ households in the Lakeville Senior Market Area was estimated at $41,870 in 2007. Within this age group, the median income for households be- HAYFIELD RESEARCH INC. 10 SENIOR HOUSING ANALYSIS tween the ages of 65 and 74 was much higher than among households age 75 and over. The higher incomes for younger senior households compared to older seniors is primarily due to the fact thata higher proportion of younger seniors are marred, and are more likely to have two pensions or higher Social Security benefits; some continue to work. / The target market for independent senior housing is generally senior households age 65 and older with incomes of at least $30,000. Older adults, ages 55 to 64, may also choose age- restricted housing, but overall, they usually account for only a small portion of the demand within any given market area. As of 2007, we estimate 6,775 senior households (ages 65+) in the Senior Market Area with incomes of at least $30,000, accounting for roughly 66% of all senior households. In addition, there were an estimated 12,500 households age 55 to 64 in the Senior Market Area with incomes of at least $30,000. =Groe~thandlncumeTrendsby,~rofHouseholder ~n Lakeville # ~ ~ a $I21~QOD } ~ ~ ,~N. -~1~iD4:` 395.7Aa 0 2012 'S70D,DD0 _ y ~ 2007 Income ~ ~ a ` G adD~'. _ ~ x$6,100 - r `e ' 555.598 6p's'~; 4 1,SOD ate!... $32,fi57 ~#{i a S2D,!} SOQ ~ ..o P b $6 § n °+3 t t k r e,~*'' 53:64 i~ 4 I ii 75+. ~ Dt "der . ~ i = } / The target market for senior housing with services is generally senior households age 75 and older, with incomes of at least $30,000. In 2007, nearly 1,935 households age 75 and older had incomes of at least $30,000. / The number of age (65+) and income qualified households in 2012 ($34,000 to account for inflation) is expected to increase by 47% between 2007 and 2012, for a total of 9,935 seniors. The majority of growth in the age and income qualified households will be among house- holds age 65 to 74. The number of age 75+ households with incomes above $34,000 is pro- jected to increase by 725 households, or 37%. / The growth in senior households will translate to increases in every income level. However, seniors with higher incomes are projected to growth at a faster rate than those with lower in- comes (less than $30,000). Members of income groups below $15,000 are usually excluded from market rate housing, unless they have access to additional financial assistance, from adult children or from the sale of assets. MAXFIELD RESEARCH INC. 11 SENIOR HOUSING ANALYSIS TABLE 2 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER LAKEVILLE SENIOR MARKET AREA (Number of Households) 2007 ~~ryvf~x . No. Pct. No. Pct. No. Pct. No. Pct. Lakeville Less than $15,000 89 3.5 65 6.8 60 12.6 125 8.7 $15,OOOto $24,999 56 2.2 151 15.8 93 19.5 244 17.0 $25,OOOto $34,999 95 3.7 80 8.4 111 23.3 191 13.3 $35,OOOto $49,999 355 13.9 110 11.5 50 10.5 160 11.2 $50,000 to $74,999 321 12.5 326 34.0 96 20.2 422 29.4 $75,000 to $99,999 439 17.1 79 8.2 32 6.7 111 7.7 $100,000 or more 1,207 47.1 147 15.3 34 7.1 181 12.6 Total 2,552 100.0 f . 958 100.0 476 100.0 1,434 lOD.0 Median Inciiaie 4~1aS9~ 785 ~ S55 `598 32,657 $49 718 Remainder of Market Area Less than $15,000 657 5.7 461 8.3 748 22.8 1,210 13.7 $15,OOOto $24,999 392 3.4 606 10.9 577 17.6 1,183 13.4 $25,OOOto $34,999 771 6.7 735 13.2 573 17.5 1,308 14.8 $35,000 to $49,999 1,397 12.1 1,044 18.8 720 22.0 1,765 19.9 $50,000 to $74,999 2,125 18.4 1,469. 26.4 364 11.1 1,833 20.7 $75,OOOto $99,999 2,091 18.1 625 11.2 178 5.4 804 9.1 $1OQ000ormore 4,134 35.7 628 11.3 119 3.6 748 8.4 .Total 11,557 100.0 ` 5,569 ` 100.0 3,281 1D0.0 8;85D "i00.0' ~liRisYs`mier:*~ ~ 73 549109 ~ -....1{97'. - ~i 'f Market Area Total Less than $15,000 746 5.3 526 8.1 808 21.5 1,335 13.0 $15,000 to $24,999 448 3.2 757 11.6 670 17.8 1,427 13.9 $25,OOOto $34,999 866. 6.1 815 12.5 684 18.2 1,499 14.6 $35,000 to $49,999 1,752 12.4 1,154 17.7 770 20.5 1,925 18.7 $50,000 to $74,999 2,446 17.3 1,795 27.5 460 12.3 2,255 21.9 $75,OOOto $99,999 2,530 17.9 704 10.8 210 5.6 915 8.9 $100,000 or more 5,341 37.8 775 11.9 153 4.1 929 9.0 Total 14,129 100.0 6,527 100.0 3,757 ID0.0 10,284 100.0 14i~rliari7neotne 582,~Jb5 $54154 .'83 84z-- ~ . T41,869 K? $owces: Claritas, Inc. Maxfield Research Inc. MAXFIELD RESEARCH INC. 12 SENIOR HOUSING ANALYSIS TABLE 3 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER LAKEVILLESENIORMARKF.TAREA (Number of Households) 2012 No. Pct. No. Pct. No. Pct. No. Pct. Lakeville Less than $15,000 118 2.9 94 5.2 63 9.1 157 6.3 $15,000to $24,999 66 1.6 186 10.3 118 17.1 304 12.2 $25,000 to $34,999 122 3.0 196 10.8 107 15.5 303 12.1 $35,000 to $49,999 376 9.2 159 8.8 128 I8.5 287 11.4 $SO,000to $74,999 566 13.8 537 29.6 105 15.2 642 25.6 $75,000to $99,999 593 14.5 283 15.6 86 12.5 369 14.8 $100,000 or more 2,250 55.0 358 19.8 84 12.1 442 17.7 Total 4,091 100.0 1,814 I90.O i b90 100.0 2,504 100.0< fincbme c~"" ;,1r~ $IIM$'619.,,:. $b2"SS3 541724. ,:a ' $57,841 Remainder of Market Area Less than $15,000 783 5.0 561 6.9 793 18.5 1,354 10.9 $15,000to $24,999 486 3.1 720 8.9 664 15.5 1,384 11.2 $25,000to $34,999 800 5.2 976 12.0 680 15.9 1,656 13.4 $35,000 to $49,999 1,704 11.0 1,482 18.3 990 23.1 2,472 19.9 $50,000 to $74,999 2,600 16.7 2,012 24.8 593 13.9 2,605 21.0 $75,000 to $99,999 2,758 17.8 1,155 14.2 262 6.1 1,417 11.4 $IOO,000ormore 6,404 41.2 1,211 14.9 296 6.9 1,507 12.2 `Total 15,536 100.0 8,117 100.0 4,277 100.0 12,394. .100.0 lnea~ ~ 553 97i 535025 54 942 Market Area Total Less than $15,000 901 4.6 654 6.6 856 17.2 1,511 10.1 $15,000to $24,999 552 2.8 907 91 782 15.7 1,688 11.3 $25,000to $34,999 922 4.7 1,173 11.8 786 15.8 1,959 13.1 $35,000 to $49,999 2,080 10.6 1,641 16.5 1,118 22.5 2,758 18.5 $SO,000to $74,999 3,165 16.1 2,549 25.7 697 14.0 3,246 21.8 $75,000 to $99,999 3,351 17.1 1,438 14.5 348 ZO 1,787 12.0 $100,000 or more 8,654 44.1 1,569 15.8 379 7.6 1,949 13.1 ..Total 19,627 100.0 9,931 `'`100.0 4,967 > 100.0 14,898 100.0 Mediarilrieume. 591,3;10 =n w.5..._ 535,792 , ,~°,597459.:;:'_. Sowces: Claritas, Inc. Maxfield Research Inc. MAXFIELD RESEARCH INC. 13 SENIOR HOUSING ANALYSIS Homeownership Rate/FIousing Values As Table 4 shows, 77 % of the Senior Market Area's households age 65 and older owned their housing in 2000. Homeownership rates, however, decline the older the household, from 92 among households age 55 to 64, to 87 % for households age 65 to 74 and 62 % for households age 75 and older. / As seniors age, they may no longer desire, or be able to maintain their single-family homes. They may prefer to move to housing that offers them greater freedom from maintenance and/or offers them support services. Seniors typically begin to consider moving into senior housing alternatives in their early 70s. However, as more and more independent senior hous- ing options become available, younger seniors have begun to decide on senior housing sooner, moving into developments such as cooperatives in their 60s. TABLE 4 OLDER ADULT HOUSEHOLD TENURE LAKEVILLE SENIOR MARKET AREA 1990 and 2000 7"`*I of Haasehuldei Own Rent Own Rent Own Rent Own Renf Lakeville 1,250 61 467 52 179 76 646 t28 Percent Own 95% 90% 70% 83% ~,~r .612 x- 605 ;~-488 i 43S t' ~.~79 ' 1.898 Percent 921 . '$710 _ 83 s*= 979u.: ~s`~~.. Mazket Area Total 7,862 666 3,610 54D 1,615 986 5,225 1,526 Percent Own 92% 87% 62% 77% Lakeville 474 36 208 36 92 59 300 95 Percent Own 93% 85% 61% 76% Rematn ~ ~ti 39$9 is 768 520 9tt6 ~?8 3,378 t:2G1 Peii~errt - ~:7-a . $ = t.rty . s~, E796 75~~ , : Mazket Area Total 6,463 804 2,880 656 998 648 3,878 1,304 Percent Own 89% 81% 67% 75% Lakeville 776 25 259 16 87 17 346 33 Percentage 164% 69% 125% 44% 95% 29% 115% 35% Remasst ° - ;1~ ° I 32 530 : '32t - ~~OOt . 1$ Percent e I`~" "r'~0"s.,k~ z°'J{?.°~ i:'~~~ ~ ~iy`~9o ':5836 54°,6 28'=,E~:x~~~'.... Market Area Total 1,399 -138 730 -116 617 338 1,347 222 Percenta e 22% -17% 25% -]8% 62% 52% 35% 17% Sources: U.S. Census Bureau; Maxfield Research Inc. / The current high homeownership rates in the Senior Market Area for older adult and senior households will allow prospective residents to transfer a portion of their home proceeds into share costs and also allow more moderate-income households to derive additional income upon the sale of their homes that can be utilized for alternative housing. MAXFIELD RESEARCH INC. 14 SENIOR HOUSING ANALYSIS Table 5 presents home resale data for the Lakeville Senior Market Area from the Regional Multiple Listing Service of Minnesota over the last five years. This data is useful in that it represents the amount of equity that seniors maybe able to derive upon the sale of their homes that could be used to supplement their income should they desire or need to move into alternative housing. As of July 2007, the average resale price of asingle-family home in Lakeville was $277,750 while the median resale price was $252,000. In the Remainder of the Senior Market Area, the single-family resale average was $268,750 and median resale was $250,000 in July 2007. TABLE 5 HOME SALES -SINGLE-FAMILY HOMES (Ages 15 years and older) LAKE VILE SENIOR MARKET AREA 2002 to 2007* No. of Average Median Avg. CitylCounty Sales Price Price DOM u;d ` ; 2007* 153 $277,752 $252,000 64 2006 276 $283,673 $262,250 66 2005 360 $290,583 $260,000 62 2004 420 $275,334 $251,450 43 2003 439 $258,166 $232,000 41 2002 415 $238,986 $215,000 32 Chan e2002-2007 16% 17% Rerxialaderof&ZarketArea ~~~?;4,„~, ,;`~'x 2007* 570 $268,756 $250,000 60~ 2006 1,122 $276,300 $255,000 63 2005 1,340 $277,085 $250,000 58 2004 1,467 $259,660 $240,000 36 2003 1,579 $241,316 $224,000 45 2002 ],461 $224,835 $209,500 33 Chan e 2002-2007 20% 19% Market Area Total ~ ~ ~ ; ~ w. . 2007* 723 $270,660 $250,000 61 2006 1,398 $277,757 $256,000 63 2005 1,700 $279,947 $255,400 59 2004 1,887 $236,149 $242,900 36 2003 2,018 $244,982 $225,000 45 2002 1,876 $227,965 $210,000 33 Chan e 2002-2007 19% 19% * Through Suly, 2007 Sources: Multiple Listing Service; Maxfield Research Inc. Home values appreciated significantly in the Senior Market Area up until the past yeaz when the housing market took a downturn. The average days on market for homes in Lakeville doubled from 32 days in 2002 to 64 days in July 2007. Along with the drop in number of sales, this MAXFIELD RESEARCH INC. 15 SENIOR HOUSING ANALYSIS represents a slowing in the housing market, as it corrects itself from double-digit appreciation in previous years. Despite the slowing in the market, seniors should be able to sell their homes in a reasonably short period of time should they decide to sell. The target market for senior housing will typically be older adults and seniors who live in slightly older single-family home, and thus, the median sale price is likely a more accurate portrayal of the amount of equity a senior would derive from the sale of their home. Based on the July 2007 median single-family home sale price in Lakeville ($252,000), a senior household -could generate approximately $9,375 of additional income annually (about $780 per month), if they invested in an income-producing account (5% interest rate) after accounting for marketing costs and/or real estate commissions (7% of home sale price). Should a senior utilize the home proceeds on adollar-for-dollar basis to support living in senior housing with services, the pro- ceeds of this home would last roughly 93 months (nearly 8 years) based on an average monthly rent of $2,500. Senior Housing Defined Senior housing is a concept that generally refers to the integrated delivery of housing and ser- vices to seniors. However, as Figure 1 on the following page shows, senior housing embodies a wide variety of product types across the service-delivery spectrum, from independent apartments and/or townhomes with virtually no services on one end, to highly specialized, service-intensive, assisted living units or housing geared for people with dementia-related illnesses (termed "mem- orycare"). In general, independent senior housing attracts people age 65 and over while assisted living typically attracts people age 80 and older who need assistance with activities of daily living (ADCs). The least service-intensive projects, also termed "active adult" or "adult" projects, are similar to general occupancy housing projects, offering virtually no support services or health care, but restricting tenancy to those ages 55 and over. Congregate/optional-services projects, the next level to the right on the service-delivery spectrum, offer support services such as meals and housekeeping, but a-la-carte so that residents can choose whether or not to pay for them. A third type of senior housing is congregate/service-intensive; these projects include some basic support services in the rent and as such, attract a frailer senior population than adult or optional-services projects. The most service-intensive product types, assisted living and memory care, offer the highest level of services short of a nursing home. Typical services covered in the fee for both of these product types include all meals, housekeeping, linen changes, personal laundry, 24-hour emer- gency response, and a wide range of personal care and therapeutic services (either built into the fee or a-la-carte). Sponsorship by a nursing home, hospital or other health care organization is common for assisted living and memory care projects (as well as for many congregate/service- intensive projects). MAXFIELD RESEARCH INC. 16 SENIOR HOUSING ANALYSIS CONTINUUM OF HOUSING AND SERVICES FOR SENIORS Single-Family Townhome, condo. or ~tk~hitensive Apts. w/ Optional Services:' + Nut,~Esc>lt#ies Home Apartment ed''Livmg . ~H..,, sr-, Age-Restrietetl adutf tawnhomea, Apts. wl Stitensive Services, Memory~Care condos, coop ar apts,. i~{LirnitadCare~Assisted Living) y~,Tnits Fully lrsdependent Fu![y or Aigh[y Lifestyle Dependent ors Care Senior Housing Types Source: Maxfield Reseazch Inc. Supply of Senior Housing in the Lakeville Market Area Table 6 shows an inventory of market-rate senior housing in the Lakeville Senior Market Area. We identified 28 senior housing developments with a total of 1,790 units within the Market Area. Key points follow. / There were no market-rate senior buildings in Lakeville, including no buildings offering services. Only three senior buildings were identified in Lakeville are Winsor Plaza, Main- street Manor, and Fairfield Terrace. Winsor Plaza and Mainstreet Manor are both affordable adult/few services developments with 64 units and 51 units, respectively. Fairfield Terrace is subsidized and has 24 units. There are no market rate buildings in Lakeville. / We identified eight owner-occupied senior housing developments in the Senior Market Area with a total of 734 units. Three of the properties are cooperative and the remaining five are condominiums. / Included in the table are 10 adult/few service rental properties with 176 market rate rental units and 437 affordable units. In addition we also identified five congregate developments with 504 units in the Market Area. / Assisted living and memory care housing units located within the Senior Market Area total 317 and 59, respectively. These existing market rate units with services account for only about 19% of all households over the age of 75 in the Senior Market Area with incomes above $30,000 (1,935 households). / Of all the market rate units identified in the Senior Market Area, there were none located in Lakeville. Burnsville and Apple Valley had the most market rate units with 934 units (52%) and 443 units (25%), respectively. MAXFIELD RESEARCH INC. 17 SENIOR HOUSING ANALYSIS TABLE 6 SENIOR HOUSING DEVELOPMENTS LAKEVILLE SENIOR MARKET AREA Au ust 2007 Year Project Location Built Units I Ownership Gramercy Pazk of Burnsville Bumsville 2004/05 126 Cameron Woods I & II Farmington 2000/01 84 Bard's Crossing I & II Rosemount 2004 1 ] 0 Crosscroft of Eveimoor Rosemount 2004 97 Meadowood Village Bumsville 1998 75 Parkway Cooperative Bumsville 1997 102 Realife Cooperative of Bumsville Bumsville 1996 119 Rosemount Plaza Rosemount 1989 21 Subtotal Ownership 734 Market Rate Rental Timbers at Apple Valley Apple Valley 2003 106 Summerhill of Apple Valley Apple Valley 2003 70 Sabto[al Market Rate 176 Affordable Rental Mainsheet Manor Lakeville 2002 51 Courtland Square Apple Valley 2001 60 Hamilton, the Savage 20D0 42 Park Ridge Place Burnsville 1999 66 Cameo Place Rosemount 1997 44 Orchard Square Apple Valley 1995 50 Eagle Ridge I & II Burnsville 1991/94 60 Winsor Plaza Lakeville 1990 64 Faifield Terrace Lakeville 1985 24 Subtotal Affordable 437 Regent at Bumsville Burnsville 2004 76 Rivers Estates Burnsville 1999 120 Trinity Terrace Farmington 1995 55 Lynn Court Savage 1987 45 .Apple Valley Villa Apple Valley 1986 208 Subtotal 504 Regent at Bumsville Bumsville 2004 36 Arbors at Ridges Bumsville 2002 45 Emerald Crest II Bumsville 2000 24 Rivers Manor, The Bumsville 1999 58 Centennial House Apple Valley 1996 59 Carefree Living Bumsville 1987 95 Subtotal 317 Carefree Living Bumsville 2006 12 Regent at Bumsville Burnsville 2004 11 Emerald Crest I Burnsville 1999 36 Subtotal 59 Total Senior Housing 2,227 Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 18 SENIOR HOUSING ANALYSIS / Market-rate senior housing is a relatively new concept. As such, all but four Market Area buildings opened since 1990, including 12 that have opened since 2000. Pending Senior Housing in the Lakeville Market Area Maxfield Research interviewed local officials in each community of the Senior Market Area to learn of any pending developments for senior housing. The following were identified. / Walker Methodist and Welsh Companies have proposed to develop a senior housing campus in Lakeville at 202°d Street east of City Hall. The project would consist of 96 independent living units, 32 assisted living units, 16 memory care units, and 10 care units for a total of 154 units. The current timeframe is to be in the ground spring 2008 and open for occupancy in the spring or summer of 2009. 1 Legacy Village, by the Hartford Group, is a proposed mixed-use development on 75 acres east of 153`d Street and Galaxie Avenue in Apple Valley's recent high-density "downtown" project. The senior housing component of the development has been on hold for a few years due to market conditions and financing issues. A revised proposal of the project called The Regent is expected at the September planning meeting. The development will be a contin- uum of care project where residents can stay in their units and increase their services as needed. The proposal is for 134 senior units of which at the beginning they estimate 90 units would be occupied by independent seniors and 44 units by frailer seniors needing assisted living. However, this could change based on services requested by future tenants. / A sketch plan fora 4-story 140 unit independent senior housing development in Apple Valley at Cobblestone Lake has been submitted to the planning commission by First Capital Commercial Services and NAI Architects Inc. This project is very preliminary and there is no timeframe for development. / The Scott County HRA is developing the Hamilton II affordable senior building adjacent and positioned identical to the existing Hamilton in Savage. Hamilton II will consist of 62 units and is planned to open in September 2008 with preliminary rents for one-bedroom units from $730 to $795, one-bedroom den units from $895 to $945, and two-bedroom units from $970 to $1,075. / The Scott County HRA is currently in the condemnation process with the City of Elko New Market for a market rate independent senior project with a concept of roughly 50 units. This project is in the early stages and has no set timeframe. Senior housing contacts in the cities of Burnsville, Farmington, and Rosemount did not indicate nor expect any new senior housing proposals in the next year. The Market Area Townships cannot support senior housing. / The Dakota County CDA has plans to develop an 80-unit senior housing building at Dodd Road and Cedar Avenue in Lakeville beginning in 2008 or 2009. MAXFIELD RESEARCH INC. 19 SENIOR HOUSING ANALYSIS / The Dakota County CDA will attempt to get approval from Apple Valley fora 60 unit affordable independent senior housing project. Because it has yet to be approved, there is no timeframe for development. Preliminary Demand Estimates for Adult/Few Services Housing Table 7 presents our demand calculations for market-rate adult few services senior housing in the Senior Market Area in 2007 and 2012. In order to arrive at the potential age-income qualified base for adult/few services senior hous- ing, we have included all older adult, senior, and older senior households with incomes of $30,000 or more plus households with incomes between $20,000 and $30,000 who would qualify with the proceeds from a home sale. We have estimated this proportion based on the homeown- ership rates for each age cohort. We estimate the number of age/income/asset-qualified house- holds in the Lakeville Senior Market Area as of 2007 to be just over 20,000 households. Adjusting to include appropriate capture rates for each age cohort (1.0% of households age 55 to 64, 7.5% % of households age 65 to 74, and 18.0% of households age 75 and older) results in a local demand potential for approximately 970 market rate adult/few services units. Adult/few services demand in the Senior Market Area is split into rental and owner-occupied (condominium and cooperative) housing. Based on the age distribution of the Senior Market Area population and current trends, we project that 65% of the Senior Market Area demand will be for ownership units (630 units) and 35% will be for adult rental (340 units) in 2007. Additional demand will come from outside the Senior Market Area. We estimate that seniors currently residing outside the Senior Market Area will generate 30% of the demand for senior housing -increasing total demand to 900 ownership units and over 480 adult rental units. This demand will consist primarily of parents of adult children living in the Senior Market Area, individuals who live just outside the Senior Market Area and have an orientation to the area, as well as former residents who desire to return upon retirement. From this total, we subtract existing and pending units (minus a vacancy factor of 5°/a to allow for sufficient consumer choice and turnover) in both rental and ownership units. We included 50% of affordable units. Subtracting existing units results in excess demand for 200 ownership and 120 adult rental units in 2007. No single community can capture all of the demand in a Senior Market Area. We have estimated that Lakeville, based on its location and growth trends, can capture 40% of the adult rental demand and 30% of the owner-occupied demand potential. Based on the calculations in Table 7, we find excess demand in Lakeville for about 60 ownership units and 50 adult rental units in 2007. It should be noted that because of market overlap, we estimate that affordable rental developments by the Dakota County CDA can satisfy about two-thirds of the market rate rental demand calculated in Table 7. MAXFIELD RESEARCH INC. 20 SENIOR HOUSING ANALYSIS TABLE 7 MARKET RATE ADULT/FEW SERVICES HOUSING DEMAND LAKEVILLE SENIOR MARKET AREA 2007 & 2012 A e of Householder A e of Householder 55-64 65-74 75+ 55-64 65-74 75+ # of Households w/ Incomes of $20,000 to $29,999' 657 787 677 955 1,394 1,032 (times) Homeownership Rate x 92% 87% 62% x 92% 87% 62% (equals) Potential Market = 604 685 420 = 879 1,213 640 (plus) # of Households w/ Incomes of $30,000+' + 12,502 4,836 1,935 17,339 7,314 2,621 (equals)Total Potential Market Base = 13,106 5,521 2,355 = 18,218 8,527 3,261 (times) Potential Capture Rate x 1.0% 7.5% 18.0% x 1.0% 7.5% 18.0% (equals) Demand Potential = 131 414 424 = 182 640 587 Total Market Rate Demand Potential = 969 ~ = 1,409 Adult Adult Ownership Rentah Ownership Rental' (times) %far housing w/services & w/o services x 65% x 35% x 65% x 35% (equals) Demand potential = 630 339 = 916 = 493 (plus) Demand from Outside Market Area (30%) + 270 + 145 + 392 + 211 (equals) Total Demand Potential = 900 = 484 = 1,308 = 704 (minus) Existing Competitive and Pending Units3 - 697 363 697 - 430 (equals) Total Excess Demand Potential = 203 = 121 = 611 = 274 (times) Percent ca turable in Lakeville x 30% x 40% x 30% x 40% ''tials # of units sa rta.ble in Latcevtlle . n; .=,y1= bl ;S'`"~ _ 49. }:itM...:r~ ~ 2012 income-qualified figures adjusted for inflation ($34K or more +homeowners w/ inc. of $22.SK - 34K). z We estimate that affordable rental developments by the Dakota County CDA can satisfy two-thirds of the calculated demand. s Competitive existing and pending units include adult rental/ownership at 95% occupancy (market equilibrium). Source: Maxfield Research Inc Adjusting for inflation, we have estimated that households with incomes of $34,000 or more and homeowners with incomes of $22,500 to $34,000 would qualify for market rate independent senior rental housing in 2012. Considering the growth in the older adult base, the income distribution of the older adult population in 2012, and accounting for pending senior projects in the development pipeline (we subtract none, since there are no developments in the advanced planning stages or under construction), our methodology projected that demand in Lakeville will increase to approximately 18D ownership units and 110 adult rental units in 2012. MAXFIELD RESEARCH INC. 21 SENIOR HOUSING ANALYSIS Preliminary Demand Estimate for Congregate Housing Table 8 presents our demand calculations for market-rate, congregate senior rental housing in the Lakeville Senior Market Area in 2007 and 2012. In order to arrive at the potential age-income qualified base for congregate senior housing, we have included all senior households with incomes of $30,000 or more plus households with incomes between $20,000 and $30,000 who would qualify with the proceeds from a home sale. We have estimated this proportion based on the homeownership rates for each age cohort. We estimate the number ofage/income/asset-qualified households in the Lakeville Senior Market Area as of 2007 to roughly 7,875 households. Adjusting to include appropriate capture rates for each age cohort (4.5% of households age 65 to 74 and 8.0% of households age 75 and older) results in a local demand potential for approxi- mately 440 market rate congregate units in 2007. We estimate that seniors currently residing outside the Senior Market Area will generate 30% of the demand for congregate senior housing - increasing total demand by 187 units. This demand will consist primarily of parents of adult children living in the Senior Market Area, individuals who live just outside the Senior Market Area and have an orientation to the area, as well as former residents who desire to return upon retirement. Together, the demand from Senior Market Area seniors and demand from seniors who would relocate to the Market Area totals about 625 units in 2007. From this total, we subtract existing and pending units (minus a vacancy factor of 5% to allow for sufficient consumer choice and turnover). Subtracting the number of units of this project in the Market Area, the market is left with a total excess demand of 145 units of congregate housing in 2007. No single community can capture all of the demand in a Market Area. We have estimated that Lakeville can capture 33% of the excess demand potential in the Lakeville Senior Market Area. Notice that the capture rate is higher for congregate housing than adult/few services housing since location is less of a factor in choosing housing with services than it is for active adults seeking housing with no services. This results in an excess demand in Lakeville for 50 con- gregate units in 2007. Adjusting for inflation, we have estimated that households with incomes of $34,000 or more and homeowners with incomes of $22,500 to $34,000 would qualify for market rate congregate housing in 2012. With growth in senior households, we project the age/income-qualified base for congregate housing to grow to over 11,070 senior households in 2012. Accounting for pending senior projects in the development pipeline (excluding those in Lakeville), our method- ology projected that demand for congregate housing in Lakeville will increase to 115 units in 2012. MAXFIELD RESEARCH INC. 22 SENIOR HOUSING ANALYSIS TABLE 8 MARKET RATE CONGREGATE RENTAL SENIOR HOUSING DEMAND LAKEVILLE SENIOR MARKET AREA 2007 & 2012 Age of Age of Householder Householder 65-74 75+ 65-74 75+ # of Households w/ Incomes of>$3Q000~ 4,836 1,935 7,314 2,621 (plus) + + # of Households w/ Incomes of $20,000 - $30,0002 787 677 1,394 1,032 (times) Homeownership Rate x 87% 62% x 87% 62% (equals) Potential Market = 685 420 = 1,213 640 (equals) Total Potential Market Base = 5,521 2,355 = 8,527 3,261 (times) Potential Capture Rate x 4.5% 8.0% x 4.5% 8.0% (equals) Potential Demand = 248 + 188 = 384 + 261 Total Local Demand Potential = 437 = 645 (plus) Demand from Outside Market Area (30%) + 187 + 276 (equals) Total Demand Potential = 624 = 921 (minus) Existing Competitive Units - 479 - 565 (equals) Total Congregate Demand Potential = 145 = 356 (times) Percent of demand capturable in Lakeville x 33% x 33% als '1'olalE~ees's~.o' feDemandauLakeville _ 48 -:'s~r3"7~ ~ Incomes greater than $34,000 in 2012. 'Incomes of $22,500 - $34,000 in 2012 Source: Maxfield Research Inc. Preliminary Demand Estimate for Assisted Living Housing Demand for assisted living units is generated by two main sources. The primary source of demand comes from Lakeville Senior Market Area seniors who need extensive support services. The second source of demand is seniors moving from outside the area such as seniors who want to be near their children, those who lived in the area previously and are returning from a retire- ment locale, and those living nearby who would move to live in a specific development. Table 9 presents our calculations of demand for market rate assisted living housing in the Lake- ville Senior Market Area. The availability of support services such as meals, housekeeping, and personal care at assisted living facilities usually attracts older, frailer seniors. The age-qualified market for assisted living housing is therefore defined as people ages 75 and over - a figure that is consistent with industry trends both locally and around the country. Because of the supportive nature of assisted living housing, seniors can typically afford to spend a significant portion of MAXFTELD RESEARCH INC. 23 SENIOR HOUSING ANALYSIS their incomes on assisted living as the monthly fees typically include meals, utilities and other support services in addition to housing. The primary market for assisted living housing in the Senior Market Area is seniors age 75 and over with incomes of $30,000 or more. An income of $30,000 and an 85% allocation of that income for housing translate to an affordable monthly fee of about $2,150, approximately the starting price for basic units at most assisted living projects. A portion of senior homeowners with lower incomes could also afford assisted living housing upon allocating the proceeds from the sale of their homes toward assisted living housing. It should also be noted that there are a significant number of seniors who will spend down their assets in order to avoid institutional care. According to several recent national studies, anywhere from 35% to 50% of assisted living residents either spent down assets or received other financial assistance (i.e., long-term care insurance or assistance from family) in order to afford assisted living care. Because the vast majority (90% according to an ALFA survey) of assisted living residents are single, our demand methodology separates the estimated number of senior households that live alone from those that live with a spouse or other friends or relatives. From these figures, we have applied acceptable capture rates to each income cohort and household type to derive the potential income-qualified market. As of 2007, there were an estimated 2,140 age/income- qualified seniors in the Lakeville Senior Market Area. Because demand for assisted living housing is need-driven, we then reduce the age/income- qualified market to account for the potential market needing assistance. Studies by several government agencies indicate that about 30% of all non-institutionalized seniors age 75 and over need assistance with at least three independent activities of daily living and would be a potential market for assisted living housing. Applying this proportion to the age/income-qualified house- . hold base yields a potential assisted living market base of 642 seniors. Due to the availability of home health care service providers and the likelihood of family mem- bers providing limited assistance, we estimate that over half of the age/income-qualified market needing assistance will be able to remain in their homes. The remaining seniors (45%) will need assisted living housing. Applying this market penetration rate of 45% we find a local demand of 289 units in 2007. We estimate that 30% of the demand for assisted living at the proposed project would come from seniors currently living outside the Senior Market Area. This supplemental demand would include seniors currently living just outside the Senior Market Area, former residents desiring to return to the area or parents of adult children currently living in the Market Area. Adding this demand into the total demand from Senior Market Area residents, results in a potential assisted living market base of 413 seniors. MAXFIELD RESEARCH INC. 24 ~ ` N rTi M W M L~ O N n h M N ~ y~ M T M ~ M N i•r.. L M m Vl V e e o % h o Ci °1 + L ~ N P ~ N v~ . N N r a a O p: N Z ~ _ O L v ~ ~ e e m ~ N ~ ~ U } ~ n 4 M p ~ q ^'L' V' v~ N 2' T > v d d a ` O ce S - Z W ~ P ~ r 0.i C Or O ..]d 5 ~ o H O F O .W7 F CC N ~~~H ^ mmO°a n v F h L w W e ~ d nN oa ~ = N o a M ~nw ~ Ed" ~ O ,7' N N h N ~ b ~ N ~ V N ~ ~ v,, t'TO v ~ ~ ~ ~ X II k II + II II x j e e Yd ='a° 9 C1 ~ V Q 9 C = + S 5~ oti"'~ d' c°i Pr`s m ~ o = ~ s zx U 9 ~ C C 'A ~ N \ ^LV' d. d (+'1 h VI p N ~ y 'O 9 O N M C ~ v r m l~ N ~[y~~~yj 6i Q =n v C 3 R '~i' ~~l` F a ry 9 F. G' J R ~1 ~ e e ° ~ _ ~ 'J > 9_ 'C y ~y A fX N x U~ 0 3 Y.. E 'in a m ~a Z + O F~ O J_ N~ ~ ~ H 9_ x rF N m R a I~_ .^y^ G\ C C ~ ip O ~ O r° ~ ip L .C. Ltj d Y 9 d ~ V O C R C C .n Vl ~ d E C K V=. v ~ u Ro W x o a~ oa m~ ~ ~ x 0 c°P`+ ,~,~4 ~ of mF 0.`!-..' ~ g W v W v rv m o o ~ Q E o~ c c~ ~ W c ~ ~p sz zs u v a E m - y SENIOR HOUSING ANALYSIS From this total, we subtract the number of existing market rate competitive units in the Market Area; less a 7% vacancy factor to ensure adequate consumer choice and turnover. Subtracting these units' results in excess demand for 118 units in the Lakeville Senior Market Area in 2007. No one project or community can capture 100% of Market Area demand. We have determined that Lakeville would be able to capture about 35% of the total Market Area demand potential for assisted living units. Therefore, in 2007 we find a demand for about 40 units of assisted living housing in Lakeville. After adjusting for inflation and utilizing the projected incomes of older senior households, the same methodology results in excess demand for about 70 units of assisted living housing in Lakeville through 2012. Preliminary Demand Estimate for Memory Care Housing Table 10 shows the age/income-qualified market for memory care housing in the Senior Market Area for 2007 and 2012. Demand is calculated by estimating the Senior Market Area senior population (age 65+) in 2007 and 2012 and multiplying by the eight percent incidence rate of Alzheimer's/dementia. This yields a potential market of 1,330 seniors in the Senior Market Area in 2007. According to data from the National Institute of Aging, about one out of four people with memory care impairments constitute the market for memory care housing. This figure takes into account that the majority of seniors with dementia will still be able to live independently with the assistance of a caregiver while those in the latter stages of dementia will require intensive medical care that would only be available in skilled care facilities. Applying this figure to the estimated population with memory impairments yields a potential market of 333 seniors in the Senior Market Area in 2007. Because of the staff-intensive nature of dementia care, typical monthly fees for this type of housing start at about $3,500. Due to the high cost of memory care housing, many households will be willing to spend down assets and/or receive financial assistance from family members to afford memory care housing. We estimate that 40% of Senior Market Area seniors would be income-qualified for memory care housing (this figure takes into account marred-couple house- holds where one spouse may require memory care while the other spouse will live independ- ently). Multiplying the potential market (333 seniors) by 40% results in a total of 133 income- qualified seniors in the Senior Market Area in 2007. In addition, we estimate that 30% of demand for memory care housing would come from outside the Market Area. This additional demand brings the Senior Market Area demand up to 190 units in 2007. Currently, there are 50 existing memory care units in the Senior Market Area to subtract from the total potential demand (minus a vacancy factor of 7%). Subtracting these units we fmd that MAXFIELD RESEARCH INC. 26 SENIOR HOUSING ANALYSIS excess demand for 140 memory care units in 2007. After accounting for any growth in the age/income/asset qualified market, inflation, excess demand rises to 224 units in 2012. TABLE 10 MEMORY CARE DEMAND LAKEVILLE SENIOR MARKET AREA 2007 & 2012 2007 2012 65+Population 16,625 24,010 (times) 8% Dementia incidence rate x 8% x 8% (equals) Estimated senior pop. with dementia = 1,330 = 1,921 (times) Percent needing specialized memory care assistance x 25% 25% (equals) Total need for dementia care = 333 = 480 (times) Percent income/asses[-qualified x 40% x 40% (equals) Total income-qualified market base = 133 = 192 (plus) Demand from outside Market Area (30%) + 57 + 82 Total Demand for memory care units 190 274 (minus) Existing memory care units* - 50 - 50 (equals) Demand potential for memory care in Market Area = 140 = 224 (times) Percent ca tunable in Lakeville x 20% x 20% uals Excess memo care'°demaud c turable'iri = 28 45 * Existing memory care units minus a 7.0% vacancy rate. Source: Maxfield Research Inc. We estimate that a Site in Lakeville would be able to capture 20% of the total Market Area demand potential for assisted living units. Therefore, in 2007 we find a demand for about 30 units of memory care housing in Lakeville. After adjusting for inflation and utilizing the projected incomes of older senior households, the same methodology results in excess demand for about 45 units of memory care housing in Lakeville through 2012. Conclusions Our preliminary assessment of the age/income-qualified senior base and inventory of existing market rate senior housing units in the Lakeville Senior Market Area indicates that pent-up demand currently exits to support all types of adult and senior housing with services. MAXFIELD RESEARCH INC. 27 SENIOR HOUSING ANALYSIS We estimate that unmet demand in Lakeville in 2007 exists for about 60 owner-occupied units, 50 adult rental units, 50 congregate units, 40 assisted living units and 30 memory care units. Due to increases in the projected number of income qualified households, unmet demand will in- crease to 180 owner-occupied units, 110 adult rental units, 115 congregate units, 70 assisted living units, and 45 memory care units in 2012. It should be noted that our conclusions do not consider the appropriateness of a particular site for senior housing, the historical performance of other senior housing developments in the Market Area, the price and positioning of a subject project, or other important factors (i.e. architectural, marketing and management issues) that would likely affect the potential success of a project in Lakeville. In Tables 7 through 10, 2012 is the latest year for which senior housing demand is calculated for since that is the latest year that senior household income projections are available. However, senior demand in Lakeville will grow at a faster rate after 2012 due to the aging of the population in the surrounding area. By 2020, we project the Lakeville Senior Market Area to contain about 81,500 seniors ages 55 to 64, up from 57,900 in 2012. In Lakeville itself, we project there to be about 16,900 people ages 55 and over, including over 6,100 seniors ages 65 and over. This will be an increase from about 10,600 people age 55 and over from 2012 to 2020, with 3,800 of those being over age 65. Based on the projected senior population growth in the Market Area over the next decade and applying typical capture rates of senior housing, we estimate that there will be a need for an additiona1725 to 835 units in Lakeville between 2012 and 2020. This is over and above the figures calculated in Tables 7 through 10. The break-out by type of senior housing is shown below. Projected number of additional market rate senior housing units needed in Lakeville between 2012 and 2020 Housing Type Number of Uni[s Adult ownership 250 - 275 Adult rental 150 - 175 Congregate 175 - 200 Assisted living 100 - 125 Memory care 50 - 60 Tota! 725 - 835 If Lakeville were to see the development of 1,300 senior units by 2020 (total calculated demand), there would be about one senior housing unit for ever eight residents over age 60 in 2020. In comparison, the following are the current ratios of senior units to the 60+ population in other mature suburban communities: Bloomington 1:12 Burnsville 1:7.5 Edina 1:8.5 Minnetonka 1:9 MAXFIELD RESEARCH INC. 28 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS Workforce Housing Demographic Analysis D4AXFIELD RESEARCH INC. 29 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS Introduction This section of the report examines factors related to the cunent and future demand for both owner- and renter-occupied workforce housing in Lakeville, Minnesota. The workforce housing analysis calculates demand from 2007 to 2020 for various levels of affon3ability as defined below. Workforce housing can have many definitions. This study generally defines "workforce hous- ing" as for-sale or rental housing that is affordable to lower- and moderate-income households. Members of these households often hold jobs that are essential, frontline servers in the economy. They maybe single persons with or without children, or married persons, one (or occasionally, both) with a workforce job. Examples of "workforce" jobs include light manufacturing worker, police officer, teacher, bus driver, nurse, retail salesperson and restaurant server. The importance of the workforce sector to the full economy cannot be overstated. Workers earning workforce wages fill the majority of jobs in nearly every sector of the economy, especially services, retail trade and manufacturing, the three largest industry sectors. For the purposes of this study, Maxfield Research Inc. calculated housing demand for house- holds at three income ranges for both rental and for-sale housing (shown in the table below). In addition, senior households were excluded so that the demand calculations only include work- force-age households (households ages I S to 64). We understand, however, that many people over age 65 continue to work. For owner-occupied housing, the first workforce income range is based on the level of afforda- bility as defined by the Metropolitan Council's Livable Communities Act (LCA) defmition of affordable housing. The LCA identifies the purchase price ceiling for anowner-occupied home based upon what a family of four with an income at or below 80% of area median income (AMI) can afford at prevailing interest rates. As of 2007, this amount was identified at $206,800. We also calculated demand for owner-occupied housing among households with incomes between 80% and 100% of AMI and households with incomes between 100% and 115% of AML These households have incomes between $62,800 and $90,000 -and few could purchase new- constmction single-family homes. Rental housing demand is calculated for workforce-age households with incomes below 30% of AMI, 30% to 60%AMI, and 60% to 80%AMI. Workforce households with incomes below 30% of AMI are extremely-low-income and would have a difficult time affording rents at most affordable buildings financed through the federal low-income housing tax credit (LIHTC pro- gram). Workforce households with incomes between 30% and 60% would income-qualify and could afford monthly rents at most affordable rental buildings. All of the rental units affordable to households in these income ranges would be considered affordable based on the definition of affordable housing by the Metropolitan Council's LCA (which is the maximum rents permitted in the metropolitan area for the LIHTC program. We also included demand calculations for households with incomes up to 80%, since many of these moderate-income households would not be able to afford monthly rents at newer, market-rate rental buildings. MAXFIELD RESEARCH L'VC. 30 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS Lakeville Workforce Market Area Definition The draw area for determining current and workforce housing demand in Lakeville is based on traffic pattern, community orientation, natural and manmade geographic barriers, and our knowl- edge of the draw areas for housing. The Lakeville Market Area is comprised of the Cities of Apple Valley, Burnsville, Farmington, Lakeville, Savage and the Township of Credit River. Lakeville Workforce Market Area ns - - -:'a T ' z , iw ~ v .r ~ ~ K f ~ + P ~ t PF_: «yyi,,~ 4.' ~ x v ~ it Qil] M r4`. '7Mr='~~ ^f7t1 i*? i ~ Bm nsi'ille rs._ `r~ sh~ ee ~4,F",~ ~ _ x ~C ~ w X~Sa~age r , ~ a • 2 u u° + ~pple~F alley"+^~ . iseinoun[ Fi~~n• Lake i ~ .dam po ~ 1 ~i i i~ ~~~y ~i ~ ~ ~ u i I L~ i A~~~ 4 p ~ ~ ~ C ~ ~ Lttlte1711e~~ ~ i"~~~ ~ ~ Empire +nkCledrtRrver ~ "Po r~~ ~ _ SprinoL:~6e , ~~s si e - ^5"t` x Farmmaton V~ 4x 'I '~r, 7` '}3 r ~4 ,r ~~~~wj z~ k i f ~n 3 a~ yT~` ~ "~e~m t~'~4' Ce~larLake tie«~Rlarlcet Eareka Y'astleRock r Tiaffield Aessemc4 LU. MAXFIELD RESEARCH INC. 31 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS Population, Household and Employment Growth Trends and Projections Table I 1 shows population and household growth trends for Lakeville and the Remainder of the Lakeville Market Area from 1990 to 2020. The data from 1990 to 2000 is from the U.S. Census, while the projections for 2010 and 2020 are based on projections from Metropolitan Council. Key findings of Table 10 are: / According to the U.S. Census Bureau, the Lakeville Market Area contained 186,250 people and nearly 65,860 households in 2000. Lakeville, with a population of nearly 43,130 people and 13,610 households accounted for roughly 23% and 21% of the Lakeville Market Area's population and household base, respectively. By 2020 Lakeville is projected to account for roughly 28% of the Market Area's population and 26% of its households. ~y~ ~ ~ Populatuin wth Trends ~i ~h`r ~x La1~~udle si~y 1990 - 2024 { 35D,DD0 t. . ':300,DDp' ' zal;aso _ ¦ 1990 t, a `25QOOD y z396io 02000 ~ 200,OOD ' lse zso ®2010 ~ , ~ O 2020 15QOOD 129,440 R 100,000. 78,400 3~- 59,SOD 5D,DDO 43,128 24 854 0 W i s.Y. { rP~j~~I ? ~~f ~ L~kevilic Ma~et Aiwa Lsike l~ mL . / It is projected that Lakeville and the total Market Area will continue to see significant growth through this decade and the next. Between 2000 and 2010, Lakeville is projected to increase by 16,370 people (38%) and nearly 6,600 households (48%). Between 2010 and 2020, Lakeville is expected to grow by another 18,900 people (32%) and 8,200 households (41%). / Household growth in the Market Area is out pacing population growth. This indicates a continual decrease in household size, primarily the result of an aging population as well as younger couples having fewer children or no children at all. MAXFIELD RESEARCH INC. 32 M M .pxl ti r h~ N h G1 P O 7 V' ~ OD ~ O [mil d' 0p h ~ OC r M 00 V T ao N N~ N .-i N N E N N N N O O 0 0 0 0 0 0 p " 0 0 0 0 0 0 O O O O O O O r r O O O O O O r r O~ C 'U ~D N 00 N V' O~ O ~n ~ f7 N _ ti r ~D r ~ N W C' M M ~ X,,, ~ zx O h O op ~ V ~O Q ~ ~ Q~ V' ~O V: OC Vl N Vl 00 00 00 r V' O~ O~ t7 z ~ ~ M M l~ h N ~ Q M r V' N e~ Q d O ~ !i.'. O N N ,a N M O h v) ti O a M~ M 00 N W o r r ao M co ~o o ~ o. v, M a ~c in U O r r ~ O N O h M r- M O O~ N ~ ~ b -r W O ~ s N b b~ ai R ~ a ~3z V~V V N N ~n T M V' ao O oo ~p Z M ,r. m b M M1V M N Q~ M W d ~ J~ r M O E M ~ G r d' N 0 0 7 R ~ e N +~ri ~ z s W 5.. @ T N ~n U ~ GO O~ O h N o0 N O r N M N O R O : 1/) Q~ V' O h r N Q T N O~ O~ ~ N O 0p O~ ~ ~ [ ~ h vi M V'~ F Oi 00 O 00 ~ r b DA * VI h V N M r+ F Q 3~ O q 0 0 0 0 0 0 0 O o 0 0 0 o e a.7 000 Dom oo .0000000 00 ~ ~ ~ a-o-~ow e~ ~o vihr eV ~ r~i~ o 0o a; M ~ a v 00" r~ o m .~i F.r NO CO. r ~ ~p N M N .u ~ N N N ~ O ~ Z N C C 4 ~ _ W ~ O O ~4F. N 3 yYQa J a: 000000 0 8eooooo o ~ 0 0 0 0 0 0 0 0 0 0 0. W ~ : a".-..-TO~o a ~ eni v;r~.-. r a~ ~ ra ~ VJ N M N N N N D7 k W ~ m ~ p ~ ~ Z~ - ooroh~h o a,vrrnrN ae 'o Q N N N ~O T V5 O V o7 H O C V1 ~ d' .w vi N M m N ~ b M b~ 07 N 00 xi 5 ~ ° R ~ C1 61 0 ' ~ 00 ao 0 ~ v o ~n r a h ~ ~o a .~7 U1 V, O~ 00 ~ O h T U1 VI 7 N h ~D O O Q OC h ~ G1 O~ 00 ~ 00 O N 00 M V" z ~ a v ~n o: ri a' ~ ~ ~ a ~i ri d` O N M h ~ ~ Q O W Q N A a Z ~ a Z m ~ ~ ' U `0 LC x a o a o U W F c~v '.-3' a W CYr m ro ° > Q y m 'p ~ ¢ ~ ~ ~ A m y co a Y i v y on ~ Y ~ A m a w ~ ro R w °a n ~ o W WWW .~QCG v, v~U z .~dmv. <nU ~"r v~ ~ Q 3 ~ WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS Population Age Distribution Trends Table 12 on the following page shows the age distribution of the Lakeville Market Area popula- tion in 1990 and 2000, as well as projections for 2012. The 1990 and 2000 distributions are from the U.S: Census. Maxfield Research Inc. derived the 2012 projections from data obtained from Claritas Inc. and Minnesota Department of Administration. The following are key trends in the Lakeville Market Area's age distribution: / All age groups in Lakeville and the Market Area experienced substantial growth in popula- tion during the 1990s. During the decade, Lakeville's primary working population (ages 18 to 64) increased by 41%, or 10,920 people. This is nearly double that of the total Market Area's working population, which increased by 38%, or 44,660 people. / The workforce population is projected to continue growing through 2012 with an increase of over 12,800 people (33%) in Lakeville. The total Market Area is projected to increase by roughly 33,690 people (22%). By 2012, all working households in Lakeville except the 35 to 44 age group are projected to continue to increase. Combined, the 25 to 34 and 35 to 44 age cohorts are projected to de- crease by over -430 people (-4%). This change is due to the aging of the echo boomers (children of the baby boomers) into their 20s and 30s, as well as the aging of the baby boom- ers into their 40s and SOs and being replaced by the smaller baby buster generation. r~~'o r t<{~~~~ ~``e Dppisnbu~tgian=" 1~u~~~~ . .k. ~ ~C jfi~V ~ ~lla= ~ ~ i"~ A"f,. ZC1;tH10~ a . a ~y'y ~ =„x ' ^ ~k 16,311 15,880 17,145 r~~ s ° .10,507 ~i ptt>N~ . ° ~ I" i 6,147 7,500 i ~ i ~~~4 ~luul'u~`l~ ~„h' ~I ~ ' ih i h'I F ''ii~~3~l~t~~ 2,531 3,033 3891 ~ ~i ~pV+~'. 1,883 1 22 ~wp ~vII tlla ~G ~p ' 591 ",+"~~"1'''~~~k~ly ®i99o ¦ zooo ? zot2 = ~ ~ MAXFIELD RESEARCH INC. 34 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS TABLE 12 POPULATION AGE DISTRIBUTION LAKEVILLE MARKET AREA 1990, 2000 & 2012 ~',v, Nnmber o#Persan~ "r~~ll' _ A` * Y' r ; Lakeville No. No. No. No. Pct. No. Pct. „W , v 17 &under 8,844 . 15,550 ~$;„~4~ 5;720 76u0 „ x,587, 16v 18-24 1,883 2,531 6,147 648 34.4 3,616 142.9 _ . " 25-34, bl lb~~ 6,55+4 G,559~ X36 7.1 _ . ,kfl2 35-44 4,389 9,757 9,311 5,368 122.3 -446 -4.6 45 5 5;215 10,92$ ~ ~ ~ 139' 1 S,x~1..~t1.:3~.{} 55-64 852 2,285 6,817 1,433 168.2 4,532 198.3 55 74:,` ~~~4... _ 838 ~ Z,835.~, ~ 12? i ,n. 7 35~J 75+ 217 388 986 171 78.8 598 154.1 Total" 24' 43'<128 6I12q' ;'818 7d~ 73.5 ~..:r:.4L; Remainder of Market Area No. No. No. No. Pct. No. Pct. ':_.13 & uztder 32,55$, ~17r2$4 "',k: ~ 43~83U a , }:9;696", 29;8. , 1,576 3 7 18-24 9,885 11,375 15,650 1,490 15.1 4,275 37.6 ~ 25-34 ~ 22 52 ,6$7 '..23.324 ra1Y165~. , =4.7° -36~~,~t ~ I S 35134 19,218 27,387 26,298 8,169 42.5 -1,089 -4.0 ' 45 Sin ll~~l~ ~ ~ .~48 ~ 28x322 ~ $~03. ; 0.1 8,834W~+~ 55-64 5,036 10,662 19,864 5,626 111.7 9,202 86.3 ~+5 74,~.f,a ;4,919 9,835 r~z~. 1023 _ ~ : , r~'9~:5 75+ 1,378 3,350 5,221 1,972 143.1 1,871 55.9 Fatal::.:.- 104' 6 ld '122.. 172" 2d 6'; 3fi.8 9'w. ~.:'2q.4 Market Area Total No. No. No. No. Pct. No. Pct. ~7 &~ader 4 .S?~4A 51y977 39 7 ' 18-24 11,768 13,906 21,797 2,138 18.2 7,891 56.7 25 , : ~3 y 3(341 29,893 ~ S-2 -3~#~ 35134 23,607 37,144 35,609 13,537 57.3 -1,535 -4.1 . 45 54 _ 13,63~1t . , 24,703 ~ ' :38,550. 11~0{t ° 81,1 „ °13,947 55-64 5,888 12,947 26,681 7,059 119.9 13,734 106.1 _ 65-7~ „ .i,~~$~ , . ~ 5,753 i2,~i~fl ~ . 1i1S,2 ,b;8'13,$'~ 75+ 1,595 3,738 6,207 2,143 134.4 2,469 66.1 Total E °.I29,4Afl 18625q ~~3 55 $Itt*.:' ~13;~^,,, , 7194 ~ , Sources: U.S. Census Bureau; Claritas, Inc.; Maxfield Research Inc. MAXFIELD RESEARCH INC. 35 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS Household Income The estimated distribution of household incomes in the Lakeville Market Area for 2007 and 2012 is shown in Tables 13 and 14. The data was estimated by Claritas and adjusted by Maxfield Research based on household growth projections by the Metropolitan Council. The data helps in ascertaining the demand for different housing products based on the size of the market at specific cost levels. The Department of Housing and Urban Development defines affordable housing costs as 30% of a household's adjusted gross income. Maxfield Research Inc. uses a figure of 25% to 30% for younger households and 40% or more for seniors, since seniors generally have lower living expenses and can often sell their homes and use the proceeds toward rent payments. The follow- ing are key points: / The median household income for all households in the City of Lakeville was estimated to be $89,250 in 2007 and is projected to increase by about 10% between 2007 and 2012 to $98,100 in 2012: The median income in the overall Market Area is projected to increase from $77,920 in 2007 to $85,040 in 2012, a 9% rate of growth. / In 2007, 2.5% of the non-senior households in the Lakeville Market Area had incomes under $15,000 (1,990 households). All of these households would be eligible for subsidized rental housing. Another 2% of the Market Area's non-senior households had incomes between $15,000 and $25,000 (1,650 households). Many of these households would qualify for sub- sidized housing, but many could also afford "affordable" or older market-rate rentals. If housing costs absorb 30% of income, households with incomes of $15,000 to $25,000 could afford to pay $375 to $625 per month in rent plus utilities. / Younger householders are strong candidates for affordable housing as they tend to have lower incomes, less savings, and typically do not have equity in an existing home. The me- dian income of 15-24 year old households in Lakeville was $50,170 in 2007. MAXFIELD RESEARCH INC. 36 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS TABLE 13 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER LAKEVILLE MARKET AREA (Number of Households) 2007 ,~W4...~ ,3.,~„„= A nfifousehalder'~ .a":"". ® Lakeville Less than $15,000 412 67 43 69 10 93 68 63 $15,000 to $24,999 531 29 38 72 80 58 157 97 $25,000 to $34,999 727 113 145 97 75 99 83 116 $35,000 to $49,999 1,390 102 192 331 228 370 115 52 $50,000 to $74,999 3,753 227 724 7,183 844 335 340 100 $75,000 to $99,999 3,877 84 738 1,443 1,038 457 82 33 $100,000 or more 7,464 2 822 2,496 2,698 1,258 153 35 Total ]8,154 624 - 2,701 5,691 4,974 '.2,670 998. 496 5 000 "~a^"s r 443 ~ ~ 96 141 41 :wF .:1~1' 22~ r s:' ~ . . x aw* 535;000+ 76,48?F 41b . 2 476 5,453 { ,a (Y6 2,420 ~,;.r~~ : Mediau lacome ~ ~ `S89 600 : X550 172 $8 097 -$93 943 :``.'=31510 1182 X95 785 : $S5' S!$ Remainder of Market Area Less than $15,000 2,663 203 364. 324 291 542 338 582 $15,000 to $24,999 2,775 291 376 417 330 338 513 510 $25,000 to $34,999 4,551 586 862 651 705 666 609 472 $35,000 to $49,999 8,122 739 1,630 1,803 1,329 1,225 869 526 $50,000 to $74,999 14,021 780 3,458 3,730 2,918 1,679 1,167 289 $75,000 to $99,999 12,195 284 2,782 3,566 3,131 1,748 522 162 $100,000 or more 18,745 249 2,861 5,350 6.223 3,415 527 121 Total 63,071 3,131 12;333 15,841 14,928 9,672 4,565 2,661 s;$250 k k,1^ „ .-3438 41 6 880 871~:r1*~92 $35,000~~.,~, ,'x~. 33 062 ~::..~al .14 449 w13 60~.. a - 8,1166 3 A85 _ 3W McBiaa3~me~~},> ~ '.573 37 >...`a ~ ~,~5T1t,2 '$$1;976 ~ 590093:x.:-.-580,iD5:° .548 ~ Market Area To[l Less than $15,000 3,075 269 407 393 301 634 426 644 $15,000 to $24,999 3,306 320 413 489 410 396 671 fi07 $25,000 to $34,999 5,278 698 1,007 748 780 765 692 588 $35,000 to $49,999 9,512 841 1,822 2,135 1,557 1,595 984 578 $50,000 to $74,999 17,773 1,007 4,182 4,913 3,762 2,013 1,507 389 $75,000 to $99,999 16,072 369 3,520 5,009 4,169 2,205 604 195 $100,000 or more 26,209 251 3,683 7,845 8,921 4,673 680 156 Total 81,225 3,756 15,034 ;21,532 19,902 12,281 5 5,564- 3,157 ~2~,00¢ ~ ~ ~'u I, ~ i, w~ ~ : b,381 585` 62~„~ 88~" 711 ~ - 1039 sal, 5$i^~dV ~lii~~~il.~~'~~~ ~~~I i~ie ~~.'wi. b9,566 ~I 2,468 13r^`~~ ~a a:.. B~i10 ;i'1$f+ 7`f3 ; Median inenme ^ ^ ° 577 395 515 525 ~ 'S7 120 ~:~~83 3 4 - 136~'~'$".530-. Sources: Claritas, Inc. Maxfield Research lnc. MAXFIELD RESEARCH INC. 37 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS TABLE 14 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER LAKEVILLE MARKET AREA (Number of Households) 2012 ....;L:~ ~~e`tfr' afHouselmlder , ` ® ® Lakeville Less than $15,000 438 69 42 44 8 1 I S 94 63 $IS,DOD to $24,999 545 39 25 49 62 66 186 118 $25,000 to $34,999 793 93 119 76 79 122 ]96 107 $35,000 to $49,999 1,464 122 207 227 245 376 159 128 $50,000 to $74,999 3,661 240 603 804 807 566 537 105 575,000 to $99,999 4,349 177 852 1,208 1,149 593 283 86 3700,000 or more 10,590 50 1,246 2,812 3,790 2,250 358 84 Total ' 21,840 790 , 3,095 5,220... 6,140 4,091 1,814 690 ~¢25 OOOc ]48x ~ ~ 67 9~ ~ 59 184 2%0 i' 181' $,31;000+ ' , ~ ? ',.2,rJ08 5 0 ~ ~ 5,991 3,785 ~ 1 ~~'~.,s~~:~..~.~ '402 E3eman Ineomi~,:, ~ 11~ a='~'~'~55 il::r, =543154 Slfl4 1 5 677 sSl 619 $62 b53s,„.. ;„~F41 '73,+1 Remainder of Market Area Less than $15,000 2,656 176 374 262 287 605 427 586 $15,000 to $24,999 2,732 229 309 297 327 406 598 566 $25,000 to $34,999 4,20(1 492 650 449 584 678 808 545 $35,000 to $49,999 8,299 812 1,369 1,386 1,35D 1,431 1,2]2 739 $50,000 to $74,999 14,186 919 3,088 3,177 2,959 2,083 1,53] 430 $75,000 to $99,999 13,110 389 2,711 3,319 3,427 2,144 904 217 $100,000 or more 24,955 385 3,644 6,448 8,212 5,043 977 246 .Total :70,144 3,401 12,084 15,337::. 17,147 12,390 6,456 3,328 2, 5 0~""~~~~^': '~s~' r::i9 88 ~ ~I i ~ 405 623 559 513 1,011 , 1,025 1,152 $,~SOOD+ i= 1` ' SQ.. , '',..2,504 70,8LI ° ` ~~14'33Yt,a~.` ~?~7..5,944 10,7D2 4,62~,~~7~'~',~.;%1,63..".. edtaniatYiiuie.3'r'.2`~'1.~`.="586~;T07. 8#9848 ST/ 3• • ""590805 X9'7 65 ;586 66 "S5 99t ^ ~..~%$34407 Market Area Total Less than $15,000 3,093 246 356 306 295 723 520 648 $15,000 to $24,999 3,277 267 335 345 388 472 785 684 $25,000 to $34,999 4,999 585 769 525 664 800 1,004 652 $35,000m $49,999 9,763 935 1,576 1,613 1,595 1,807 1,371 867 $50,000 to $74,999 17,847 1,159 3,691 3,981 3,766 2,649 2,068 534 $75,000 to $99,999 17,459 566 3,563 4,527 4,576 2,738 1,187 303 $100,000 or more 35,545 434 4,890 9,261 12,003 7,293 1,335 330 Total 91,984 ;4,192 15,179 20,558 -,23284 ::16;482' 8,269 4,018 X25 tlDb } sc~• .6,370 - 313 69D ~ r ~65i ' ~1I3 7,305 r ~ 535Os.~.`ix'~ *~y ~ . ~ _ ~015*..~ rw....~ 719, e s~i.$1 ~ ~.1,r9.39 ~ ~ .,1"~. 5 4§0 . 3t~#74 Medtaa~acome°'~ 1~a:53 32 O58"~ ' ~Slpl ~ 5301 63 I "891'' 500 '~-LL'S3 Sources: Claritas, Inc. Maxfield Research Inc. MAXFIELD RESEARCH INC. 3 S WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS Tenure by Age of Householder Table 15 shows the number of owner and renter households in the Lakeville Market Area by age group as of 2000. The data in the table shows the propensity of households to own or rent their housing based on their age. Key points derived from the data are: / In 2000, 85% of the households in Lakeville owned their housing. This is down 5% from 1990. This is compared to the total Lakeville Market Area which had a rate of 75% in 2000, down from 78% in 1990. OwnerHoushol a ofHouseholde oooo x Ci of y~. e, 2000 . x~ ° 9o°i° 3A0°', R6/o RS% S2% y{..'x= 40#&:' ~ 71% r~..oi 30% c 4~' d49i,.'~o,.. 0 3,000 54% 50'~y 0 2,000 '.?;0%. ~ 1,0°0 : ~k~ 181 367 125 S'~~ . M rl. LSW24 5to 34 ~°'z3S t°§4 'e.. .,'e SSt°64 65 t°74 k~~9€ 0, E, No. of HomeownerstHomeownershtp ltat at / The homeownership rate in Lakeville among workforce households was 87% in 2000, with the homeownership rate peaking in the 35 to 44 age cohort at 90%. All of the workforce households' age groups except the 15 to 24 age cohort had an 80% homeownership rate or more in 2000. / Younger people have much higher propensity to rent their housing. In 2000, 46% of house- holds ages 15 to 24 rented their housing. As their population is projected to increase (as shown in Table 11) through 2012, a portion of these young renters will need affordable hous- ing, as they also have lower incomes. MAXFIELD RESEARCH INC. 39 C OC M {!3 ~ ~N~ rr~ o rn 7 v O `R Cs y . V] ~D N^ Q~ V M at n MI o b b ^i h O ~ > h ~ .w OD N ~ Q Dx ~o ~ n i q k? ~ n M p .w N N N t` M 03 ~ `N e o vi s. ~ o~'v _.yN ~qM ~"n oem 4}~ ~ ~ q B ~ yM, ¢ b hM t i ~ eA ~ C ~ ~ ~ ~ ~ ar. N k+~f KH f~i 1~ 00 yy~ ~ a i b N b 5.. N f? ~ R O a, h ~o 'SS h. v 0.`~' a M S}z,. ~ ~ n n0 b 'n b 4 ¢O. ~ h V O N t1 M 3 b 'o Ne o :v :e - o0 0 yf: 5~ N M b IP ~ O.. N N R k' ~ w! 1 ti N C ~ C V a ni N a. a .w O O ~p N b, „i N ao""" cd ,.,fin co~@ W ~ ~ iF ~ " ~'T ~ 4 a ~;y ~ M b tT N N N fi- 3 o n n n :n c a ~ ~ ~ e. = N G +r1 OO ~ O h N Gs7 a ~ M M n ~ Qa tii.. < N = W Off} ~ \CM ~,.N ~ ~~\D ~ n..~ e e e Q r~ O I N N b O n ~-0 W W ~D O I h q O l~ Q O N O N W L>: a 9 3 H o7 N t~...~ ~ ~ q~ Po ~ q ~ oC0 N .~i N .~i M} Cs ~I 6 N a ~ F a ~ '~C. i y. :e7 ~o a n ',y C7 ~y w a,' i rx ~ ~ .r e e I~ ~ d Ii b N ~ h M ,-y b ~ ~ Q op ~p Fr Z ~ 5 I~ ~ m ~ ~ ~ N a ti ~ n ~ ~ N r ~ ~ ~ a F O ''7 ~ n iv a e-i M vi I~, tl i V ~ 'w Ri S,` ~ ~ n o .a ~ a 4 ~i a v" ~ e a 3 @N ~ 4~b~,~ ~ °G ~ b;eR b V ~ T Q ~ N ~ tY 83. ° ry n .O. t ~ti W °~x .±{..~y XX rQF ~ N 3 ~OY i0: Ynl ~ N N r Pi 1Y Tamil ~ U e e e „ U H ^l i r 5~ "'1 O. q. M VV N l0 GO ~p y i"i 3 AGh~@F"CV nod' ,~.N mb ^T^ ti x ~ ~ ~ ~ ~ ~ U `t t ¢ a ~ w o ~ ~ x ~ Ro~ ~ o 0 ~ ~ ~ s o ~ ~ o~ ode C4 d ~ .a s ~ ~ = ° a ' ' a ~ x O m O yam„ O . a~i b~ O~ y' ~ v m ~ v i~ aa~a~a ~a a'~'a .aa~ .t0aa~m° WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS Employment Growth Trends Since employment growth generally fuels household growth, employment trends are a reliable indicator of housing demand. Typically, households prefer to live neaz work for convenience. This is particularly true for lower- and moderate-income households, since transportation costs are a greater portion of their income. Table 16 presents employment growth trends for the Lakeville Market Area from 1990 to 2020. The data comes from the Metropolitan Council and has been adjusted by Maxfield Research Inc based on figures from the Minnesota Department of Employment and Economic Development. The following are key trends derived from the employment data: / There was rapid employment growth in both Lakeville and the Market Area during the 1990s. Over 4,400 jobs were added in Lakeville (67%) and over 20,300 jobs added to the Market Area (46%). By 2010, Lakeville is expected to increase by another 5,000 jobs (46%) and the Market Area is expected to add roughly 17,700 jobs (28%). / Job growth in both Lakeville and the Market Area is projected to continue through 2020 with Lakeville increasing by 3,900 jobs (20%) and the Market Area increasing by 13,830 jobs (14%). ~ r s . t ~~5a. ~ °T... Mu`+k i l~IlilllOfRlerit ~TCCnds t = t I r~l'~,i. 'ta~keyille Market Are X940 2020 ' £r ~ 117C100t1 ~ ~ y;... ~ ~ ,3 s 96,000 i i F• 82,]70 ~ 1990 ~ 2000 c" ~ 64 454 AayJ ®2010 RI~'x ~ M ? 2020 G if ~ 44,151 ~ ~ w 40;OS1~.= rry' x~.: 41(1 r °t~Q 16,000 .t n~~ 10966 6 563 a:: ~ ~ ~ ~ a - f~ r~ ~a+:, r.,s C'<`77IE11'I~ekEf~At~ea ~C _ ~ ~i~.'. MAXFIELD RESEARCH INC. 41 N ~D 7 N C O O 7 O = ti M1 N N~ N O N v.:. w ti O 0 0 0 0 0 N M M (V ~--i N #~A O~ oo ^ iD O O~ Yl O ~.m ~n ~ m ~ N ~ N G r U O p~ M^ M N ,.y, O T tp ~ N Vl V N M ;T e ~ 7 Q~ N l~ O O VI ~ l~ h V C Op v1 "~A C f~ b e0 N l~ ~ O Q F N p U O M ao h 7~ vi M O l~ N V c0 ~ O t".. ~ ~ Q v~ M V' M Or W at a x a~ oooSoo ~ F t,i~', ~ M d' O M w0 .UG. ~ a 6 w ~ ~ N O ^ m Q ti W~ U G O O O O O O'. ' 0 0 0 0 0 t~ M1 ~ F H~ ~ v `W O m r~ w N 'O ~ ^ M ~O 00 N' N I~1 ~ ~ G d . C N M V1 T' V Wales ~ l~ ~ 4/'` ry~ 00 OO N O O ~I 2 W U] vNi t7 M O O fN ~ V l~ vi N m ^ ;C. y z f k~ O A N ~`x' n ~ w7 _ H U "~i 3 Z j U F m' vz ~ v d G > L [y > v m . ~ 00 ~i,. tai r lWJ ,y G a~. > d ~ fi. WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS Business Growth Table 17 shows the increase in the number of business establishments by industry sector for the zip code 55044 within the City of Lakeville between 2000 and 2005. This data was obtained from the US Census Bureau from Zip Code Statistics as compiled through County Business Patterns. This information is the most recent available. The table shows that there was a net increase of 321 businesses in total during this period. We note that these figures represent the change in the number of businesses located within this zip code: Some businesses may have relocated outside of this zip code while others moved in. The following are key points from the table: / The largest increase from 2000 to 2005 were in the number of businesses with between one and nine employees with 260 new businesses (44%) followed by those with 10 to 49 em- ployees increasing by 47 new businesses (30%). / All of the industry sectors experienced growth from 2000 to 2005. The sectors that exhibited the greatest increases during the period were Services sector with 126 new businesses (41%) and the Finance, Insurance, and Real Estate (FIRE) sector with 91 new businesses (117°/a). / As mentioned above the Services sector experienced the greatest increase in the number of business over the period. The Service sector includes education and health service and lei- sure and hospitality services which had average yearly wages of $35,500 and $13,300, re- spectively. B~isanes~ i~m~1? bj~~ of I1~s~sa r ~r • _ #fi~~,yv~'4 '?~k.K. ~''4~ ArA ~r r'L .~}a'... `m u - ' O ~ s. tom. yrt 4 'i~F s, ra 2 ~ i@ ~ a ~_N ~ _ $ o- ~ t ~ Y I y 43E !f4it } Y rir l ~ S r I 1 ~ 4£ ' + SU.fi7~~ 4 Ur'~A ~.4:}r r s x MAXPIELD RESEARCH INC. 43 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS TABLE 17 BUSINESS GROWTH BY SIZE OF BUSINESS, SELECTED INDUSTRIES, 2000-2005 LAKEVILLE ZIP CODE - 55044 2000 2005 Change Size of Business No. Pct. No. Pct. No. Pct. MiaingamlC6n8ti'aCt1Dn 1 ~ L. 4 ~ , 1 to 9 130 833 161 83.0 31 23.8 10 to 49 24 15.4 30 15.5 6 25.0 _ 50 to 99 2 13 2 1.0 0 0.0 100 or more 0 0.0 1 0.5 1 100.0 Total Businesses 156 100.0 194 100.0 38 24.4 141~inu~acibanng and TCUr _ ~...v*~ 1 to 9 56 56.6 73 58.4 17 30.4 10 to 49 27 27.3 33 26.4 6 22.2 50 to 99 7 7.1 13 10.4 6 85.7 100 or more 9 9.1 6 4.8 -3 -33.3 Total Businesses 99 100.0 125 100.0 26 26.3 elesa7e Trade...... } y .wu.. ~ ~ „sux....~u...:~., 1 to 9 51 66.2 60 57.7 9 17.6 10 to 49 14 18.2 I S 14.4 1 7.1 50 to 99 2 2.6 4 3.8 2 100.0 100 ar more 0 0.0 1 1.0 1 l OD.D Total Businesses 67 87.0 80 76.9 13 19.4 1 to 9 51 66.2 67 64.4 16 31.4 10 to 49 19 24.7 30 28.8 11 57.9 50 to 99 5 6.5 4 3.8 -1 -20.0 100 or more 2 2.6 3 2.9 1 50.0 Total Businesses 77 100.0 104 .100.0 27 .35.1 Fana~' y I~nrauce, aodrt~Real Estate , ~ .°qc . _ _ ~ .~i i . 1 to 9 61 19.7 158 36.3 97 ~ 159A~ 10 to 49 16 5.2 11 2.5 -5 -31.3 50 to 99 I 0.3 0 D.0 -1 -100.0 100 or more 0 0.0 0 0.0 0 0.0 Total Businesses 78 25.2 169 38.9 91 116.7 Services" ° , :6 w ~;3 ~i lto9 ~-238 77.0 328 ~~s~75.4 90 37.8 10 to 49 57 18.4 85 19.5 28 49.1 50 to 99 12 3.9 18 4.1 6 50.0 l OD or more 2 0.6 4 0.9 2 100.0 Total Businesses 309 100.0 435 100.0 126 40.8 TOtals G ~??Aaffi, ~ ~ vA ~ sa~u. ~Ys ~ iy 'F§ ~ ,~c: 1 to 9 587 ° 74.7 847 76.5 260 44.3 10 to 49 157 20.0 204 18.4 47 29.9 50 to 99 29 3.7 41 3.7 12 41.4 100 or more 13 1.7 15 1.4 2 15.4 Total Businesses 786 100.0 1,10? 100.D 321 40.8 ~ Transportafion, Communications, Utilities Source: U.S. Dept. of Commerce, Zip Code Business Patterns MAXFIELD RESEARCH INC. 44 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS Commuting Patterns Table 18 shows commuter patterns to and from Lakeville based on data obtained from the 2000 Census. The data shows the work destinations for persons who live in Lakeville, as well as where employees live who are employed in Lakeville. The following bullets summarize com- muting patterns based from the latest census. / As illustrated in the table, there is a large out migration of workers from Lakeville. In 2000, there were an estimated 23,000 workers, of which 84% commuted to other communities for their employment. The vast majority of Lakeville residents commute to other destinations in the Twin Cities Metro Area, led by Burnsville, Bloomington, Eagan, Minneapolis, Apple Valley, and St. Paul. ? About 35% of the 10,800 jobs in Lakeville were filled by residents of Lakeville. Outside of Lakeville, Burnsville and Apple Valley are the largest originators for commuters to jobs lo- cated in Lakeville. TABLE 18 LAKEVII.LE COMMUTING PATTERNS zoos Place of Residence Place of Employment Count Percent Lakeville Lakeville 3,791 16.5% Lakeville Bumsville 2,487 10.8% Lakeville Bloomington 2,360 10.3% Lakeville Eagan 2,165 9.4% Lakeville Minneapolis 2,090 9.1% Lakeville Apple Valley 1,467 6.4% Lakeville St. Paul 1,071 4.7% Lakeville Other 7,567 32.9% 22,998 100.0% Lakeville Iakeville 3,791 35.2% Bumsville Lakeville 884 8.2% Apple Valley Lakeville 840 7.8% Famungton Lakeville 470 4.4% Eagan Lakeville 390 3.6% Northfield Lakeville 270 2.5% Minneapolis Lakeville 260 2.4% New Market Lakeville 247 2.3% Other Lakeville 3,627 33.6% 10,779 100.0% Sources: US Census Bureau; Maxfield Research Inc. MAXFIELD RESEARCH INC. 45 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS Major Employer Interviews Maxfield Research Inc. interviewed representatives of large employers (Lakeville ISD #194, Imagetrend, Ryt-way Industries, Imperial Plastics, Despatch Industries, and Menasha Corp.) in Lakeville. The interviews covered topics such as recent trends in job growth, projected job growth, job types, and average hourly wages or annual salaries. Representatives were also asked about the housing needs of their employees. Interviews with the area's largest employers not only provide data regarding job growth, but also reveal employer attitudes and perceptions regazding housing demand in the city. The following are key points from the interviews with major employers. / The only housing issue that the employers mentioned was affordability. Employees that moved to the area will choose the community where they find a house that meets there needs. / Overall, housing was not a major concern for the employers and employees. The housing market does not hinder their ability to hire employees and there is no need for additional housing for their employees. / The employers interviewed stated that most new hires currently live in the immediate region south of the Minnesota River and choose to commute from their established residence with a small percentage moving to Lakeville. It was also stated that most employees hired through- out the Twin Cities also usually commute from their current residence. Despatch Industries encourages new hires from out of state to move to or near Lakeville. / All the employers surveyed stated that the majority of their employees were from either Lakeville or the surrounding communities and as far south as Faribault and Cannon Falls. There area also quite a few that commutes from all over Twin Cities Metro Area. / The typical cycle of a new employee out of school consists of buying a new car along with renting an apartment. This is followed eventually with buying a townhome due to the af- fordabilityissue. Eventually the employee gains enough equity and earning power to afford a single-family home. / There were over 4,500 jobs within the major companies listed in Table 18, based on data from the Minnesota Department of Employment and Economic Development. Some of the data was adjusted based on interviews with the major employers. ? The largest employer in Lakeville is the Lakeville ISD #194 (1,650 employees), double that of the next largest employer Ryt-Way Industries (800 employees). / All employers have experienced growth or have remained stable during the past three years and they all expect to continue this trend over the next three years. The Lakeville Public Schools growth is dependent upon funding approved by voters. / Wages for production and support staff ranged from roughly $10 to $26 per hour ($20,000 to $55,000 per year). MAXFIELD RESEARCH INC. 46 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS / Public transit is not an issue. Most people utilizing the transit system would be leaving the community to travel to Minneapolis/St. Paul and most if not all current employees own a ve- hicle and commute to work. / Non-housing issues that were stated by same employers consisted of lack of cultural activi- ties south of the river and lack of quality hotels in Lakeville for potential hires and clients to stay in. MAXFIELD RESEARCH INC. 47 WORKFORCE HOUSING DEMOGRAPHIC ANALYSIS Workforce Housing For-Sale .Analysis MAXFIELD RESEARCH INC. 48 WORKFORCE HOUSING -FOR-SALE ANALYSIS Introduction This section of the report examines the for-sale housing market conditions in Lakeville. Infor- mation analyzed in this section includes housing value trends for existing homes, existing homes currently listed for sale, and an inventory of the active subdivisions with homes affordable to moderate-income buyers. Housing Values Tables 19 and 20 show single-family and multifamily home resales in the City of Lakeville between 2002 and August 2007. The tables show the annual number of sales, median resale prices, average days on market, and the distribution of resales in five price ranges. The follow- ing are key points from tables. Single-Family Homes Resales / The median resale price ofsingle-family homes in 2007 (through August) was $300,000 in Lakeville and $265,000 in the Remainder of the Market Area. The Remainder has a lower median sale price largely because it has an older housing stock. / Median home prices in Lakeville have appreciated by 27% from 2002 to 2005. A slowdown occurred from 2005 to 2006, when homes appreciated by less than 1 So far through Au- gust 2007 median home sale prices have decreased from 2006 by 5%. This slowdown and decline is consistent with Metro Area trends. / In 2007, the median household income is estimated at $89,250 while the median single- family home price was $304,000, or 3.4 times median income. Typically the standard is 3.0 to 3.5 times the household income. The higher home prices compared to incomes indicates that a lower percentage of families maybe able to afford single-family homes in Lakeville over the coming years. / In 2002, Lakeville had 160 homes sell for under $200,000, by 2006 that number decreased to only 10. Over 80% of the homes sold in Lakeville in 2006 were $250,000 and over with 32% of these sales occurring in homes $400,000 plus. Table 20 indicates that much of the single-family housing stock in the Market Area is priced beyond the reach of most moderate income families (who can afford a maximum home price of about $206,800). MAXFIELD RESEARCH INC. 49 WORKFORCE HOUSING -FOR-SALE ANALYSIS ~ Single-Famll Hume Sales m~., ~ 'Sy -x x y 2 ~ ~ $317.320 $320,000 $2A9,900 .k.,~.: $267950 $300,OD0. $~0;> $25Q,OOp $304,000 i', 3=.;. $250,060 'rr~ - ~lOp,4[f0 i ffi50,Op4 ~ $D '2003 2003 2004 2005 2D06 ~s~~~ '~'4"` - . H . €i~ Home Sales -~-Median Sales Pnce ~l°x, ~,x.~~, .x Multifamily Home Resales ? The median resale price of multifamily homes in 2007 (through August) was $201,500 in Lakeville and $182,500 in the Remainder of the Market Area. As with single-family homes, the Remainder of the Market Area has a lower median sale price largely because it has an older housing stock. x' tti 3$ rc S hp ~ # ~ t~402-3U07* ~ a ~ r i~ k '.x(10 ~ ~ ~ ~24'fi+'~. $201,000 ~ ~ ; $197,.500 $201500 5200;Q}D 4Dp $iD3;tfd0 $190,325 ~ k .1~..:,. m 5196,OOOw;,, 3D0. Sx'yy t~i85,000 a v $177,35 ~4,t~OD ~ 25.000 r „s c ~ ,~iD0 u... 6~9fl0 ~ Q;03 i *~2~Og4 a iii i ~ 3DQ5 ~ " ~ a r ,,,M Home Sales -~-Median Sales Price ~ ~ < 4 / Lakeville had 96 multifamily homes sell for under $200,000 in 2002. By 2006, that number increased to 126. Multifamily homes are increasingly becoming the most affordable housing MAXFIELD RESEARCH INC. 50 WORKFORCE HOUSING -FOR-SALE ANALYSIS ownership option. While almost 100% of the existing single-family homes sold in Lakeville in 2006 were over $200,000, or out of reach of most households with incomes below $62,800, nearly half of existing multifamily homes sold for under $200,000. It should be noted, that over half of the multifamily units sold under $200,000 only had two bedrooms or less and would not be suitable for families with two or more children. TABLE 19 SINGLE-FAMILY AND MULIFAMILY HOME SALES LAKEVILE MARKET AREA 2002 to 2D07* Na. of Average Median Avg. No. of Average Median Avg. City/County Sales Price Price DOM Sales Price Price DOM 2007* 330 $350,242 $304,000 68 157 $219,230 $201,500 76 2006 614 $360,740 $320,000 68 265 $223,003 $201,000 66 2005 723 $356,087 $317,320 69 280 $225,289 $197,500. 74 2004 776 $325,729 $289,900 42 263 $219,777 $190,325 57 2003 794 $301,600 $267,950 39 207 $211,206 $185,000 49 2002 787 $274442 $250,000 37 142 $205,549 $177,353 52 °/a Chan e 2002-2007 28% 22% 7% 14°/a Remainder af~Yiarke#Area r f~, i,,. ..~'~~5~*i:~~~~ v~sf , ~n 2007* 777 $296,578 $265,000 63 572 $182,566 $174,000 70 2006 1,512 $305,837 $272,500 65 1,140 $189,443 $178,500 71 2005 1,802 $303,758 $269,988 60 1,345 $189,528 $178,500 69 2004 1,950 $285,335 $254,900 36 1,520 $184,147 $173,468 44 2003 2,033 $262,246 $236,100 34 1,421 $176,690 $166,800 35 2002 1,975 $246,008 $219,900 34 1,240 $164,499 $156,650 31 %Chan e2002-2007 21% 21% 11% 11°/a MarketAn~7'atadti?` s ~`i "~`~w~.^~~~`.. k~~. ~ r 2007* 1,107 $312,575 $273,000 65 729 $190,462 $179,900 71 2006 2,126 $321,697 $281,259 66 1,405 $195,773 $183,000 70 2005 2,525 $318,742 $279,900 63 1,625 $195,708 $182,950 70 2004 2,726 $296,824 $262,000 38 1,783 $189,403 $176,870 43 2003 2,827 $273,300 $242,900 36 1,628 $181,079 $169,445 37 2002 2,762 $254,135 $225,700 35 1,382 $168,717 $158,000 34 %Chan e2002-2007 23°/a 21% 13% 14°/o * Sales For 2007 are through August Sources: Multiple Listing Service; Maxfield Research Inc. MAXFIELD RESEARCH INC. 51 WORKFORCE HOUSING -FOR-SALE ANALYSIS TABLE 20 DISTRIBUTION OF EXISTING HOME SALES LAKEVILLE 2002/2006/2007* ~inglc~Fam7y ~ x.fz No. of 02'-06' List Price Homes Chan e $200,000-$249,999 236 104 78 -56% $250,000-$299,999 154 150 73 -3% $300,000-$399,999 174 153 75 -12% $400,000 + 63 197 103 213% Mnlhfamly YY ~,'~r«=, No. of 02'-06' List Price Homes Chan e $15Q000-$199,999 78 119 76 53% $200,000 - $249,999 17 70 45 312% $250,000-$299,999 11 40 18 264% $30D,000 + 18 29 20 61% * 2007 sales data through August. Sources: Northstar MLS, Maxfield Research, Inc. Foreclosures The entire Twin Cities Metro Area along with the country is experiencing an alarmingly high rate of foreclosures due primarily to sub prime mortgages along with individuals who purchased homes beyond their means. We obtained data from the Dakota CDA on foreclosures occurring in Lakeville. Figure 1 LAKEVILLE HOUSING FORECLOSURES 2000 - 2007* 2000 159 2001 172 8% 2002 222 29% 2003 257 16% 2004 336 31% 2005 459 37% 2006 880 92% 2007 676" * 2007 data through 6/27/07 Source: Dakota County CDA, Maxfield Research Inc MAXFIELD RESEARCH INC. 52 WORKFORCE HOUSING -FOR-SALE ANALYSIS Figure 1 on the previous page shows that foreclosures have almost tripled from 159 in 2000 to 459 in 2005, a 189% increase. From 2005 to 2006 foreclosures have increased 92% for a total of 880. So far through June 2007 there have been 676 foreclosures and are on pace to surpass the number of foreclosures in 2006. It is likely that the total foreclosures in 2006 and 2007 com- bined will be greater than the six years from 2000 through 2005. Current Supply of Homes on the Market Table 21 shows the number ofsingle-family and multifamily homes can-ently listed for-sale in Lakeville. The home sale listings are distributed into five price ranges. The data was provided by the Northstar Multiple Listing Service. Key findings from our assessment of the actively listed homes are shown below. Homes considered affordable by the Metropolitan Council are those affordable to families earning 80% of the Metro Area's median income, or $206,800 in 2007. As the Table 20 shows, there are virtually no single-family homes listed for-sale below this level. There is about 60 multifamily units listed for-sale below this level, however. TABLE 21 DISTRIBUTION OF ACTIVE LISTINGS LAKEVII,LE 2007 'yyg 4^a. c ~ ~ III I y]~yf~ ~~J~`„Y: ~R - Y 1a/ire-ll'Sm~y'. I P k~,?~ 1119 - i No. of % of No. of % of List Price Homes Total List Price Homes Total $200,000 - $249,999 55 14% $150,000 - $199,999 59 41% $250,000 - $299,999 65 17% $200,000 - $249,999 36 25% $300,000 - $399,999 96 25% $250,000 - $299,999 23 16% $400,000 + 160 42% $300,000 + 25 17% Mediam °J~ ,4r,~~?-I Itil~dsan Lsst Price kk $2I9,138 Au"'' ~~ilre ,"~45~}2~-° A~~ e=Listprce - `.$250,947 Sources: Nordvstar MLS, Maxfield Research, Inc. MAXFIELD RESEARCH INC. 53 WORKFORCE HOUSING -FOR-SALE ANALYSIS Actively Marketing For-Sale Developments Tables 22 and 23 illustrate active housing communities in Lakeville. Table 22 lists active single- family housing communities while Table 23 lists active multifamily housing communities. It is important to note that tables do not include pending communities that have not begun marketing. The pending communities are discussed in the following the tables. The following are key points from Table 22 and 23: ? We identified 15 actively marketing single-family subdivisions with a tota16691ots currently available. All but one of the single-family developments have a starting home price of $300,000 or higher. None of the actively marketing single-family subdivisions had homes affordable to moderate income households. ? We identified 14 multifamily communities marketing in Lakeville that would provide the majority of new for-sale housing units to the workforce population. These 14 communities have a total of about 655 available units, the majority of which are priced between $180,000 and $250,000. These communities are largely marketing to the young first-time home buy- ers. ? Of the 14 multifamily developments, six have units that would qualify as affordable for moderate income households under the guidelines of the Metropolitan Council. These de- velopments total 500 units with 331 units still available, of which a portion could be afford- able to Lakeville workforce population. MAXFIELD RESEARCH INC. 54 p p p p p p p p p pppp pp p d+ C O O~ N O O O ~ R } } } b } l~ O ~ ~ } M O } ~ ~ coo v+ o `n ~ a ~ o~ m o r ~ L G C O O f.9 O 69 69 69 69 O 69 69 p Y3 M O• C T O Q G"~ ~ T Q O M u G S O ~ z P~~ O E c mMOO o+oooovoo~o p~ N h v~ O M O O S O C O ~/1 O 5q L 69 69 69 P X 0 0 O 69 0 0 0 G; O V vl V1 W V1 N V p O fT N Vl O~ d' V1 M V M V V] M N3 69 69 N3 Vi 69 V3 z9 O t~ V~ O O M l7 OC L1 h •h ~ y ViV ~ O• a 7 M V ~D 7 V O. 00 C N O} 0 0 Q O O C O O O C O O O N~ T V~ V1 W V1 '7-" V Vl O N O~ 'V ~G ~D v~ O ~ F'• ; N N N N N M M N N N M M N N O O O C p 0 0 0 C O 0 0 C 0 n z w ~ ~n °o °o 0. n o 0 Gi'~, ~ osc's~ ~sso o° sNS°O e OF. W a °o op°dd°o poQ°o°oC ~ Q°,°C _ ~ v °~z'Z ~~sv 'z cv o~y ~,y v tl , ~ Na~.Wae '"~fa.ae ry r N m~?~k~ F„UC7~ o d v C .z..a a 0. m F Gs7 w e e c~ gyn. a w n vvi vii .rn e~- M N e z .a m z~ e x o ryya v F-i ~ ^p ~ N a .-i l0 O ~ r N N vl ~ N U w a a a s p ~ ~ ~ p p O~ ~ ~ O N ~ 0 0 0 0 0 y N G ~ G N N N 0 0 0 0 G O N N p N N W N N N N N ~ U aZ. 7 ~ z Oy ~ = a W 'C v V U Q V ~ W ~ rv L C d Gz7 WO ~ = 3 ~ M .1 ~ ~ Y rq E G~~ y T 9 v ~ R 9 p~ 'O ~ a ~ ail 0 c 3 0 .Icy 'c ~ v 0.' m 3° o~ m o c ti 3 ~ o o .q ~ eu .a 3~ ~ Y a o c c es WORKFORCE HOUSING -FOR-SALE ANALYSIS TABLE 23 CURRENT PRICING, ABSORPTION, AND UNIT MIX SELECTED ACTIVE FOR-SALE MULTIFAMILY DEVELOPMENTS LAKEVILLE Au ust 2007 Year Total Available Home Prices Unit Size Development Platted Units Units Min Max Min Max Fieldstone Creek 2nd & 3rd 2006/07 84 68 $176,900 - $180,210 1,420 - 1,449 Kenyon Woods 2006 76 76 N/A N/A - Donnelly Farme 1st & 2nd 2006 135 126 $189,900 - $305,000 993 - 2,237 Bellante 1st & 2nd 2005/06 91 83 $46Q,000 - $655,000 3,235 - 3,887 Spruce Place 2005 32 30 $180,000 - 1,420 - 1,420 Woodhill 2005 62 20 $218,900 - $275,000 1,700 -2,465 Prairie Lake 1st, 7th, & 8th 2002/05 141 65 93,000 - $231,000 1,504 - 1,746 Spirit of Brandtjen Farms 2nd 2005 21 10 $490,000 + N/A Morgan Square 2nd 2005 40 24 $238,200 - $245,600 1,763 1,810 Lake Place 4th 2004 48 8 $178,900 - $299,900 1,473 - 1,824 Stone Borough 1st & 2nd 2004 109 74 $250,000 + 1,716 - 1,716 Fox Meadows 2nd 2003 60 34 $190,000 - N/A Morgan Square 2002 40 24 $223,505 - $245,000 1,763 - 1,810 St. Frances Woods 2002 29 13 N/A -2,900 Totals/Averages 968 655 $249,109 67.7% Avg. Base Source: Maxfield Research Inc. Mobile Homes Because home prices are beyond the reach of many families, we included a list of mobile home parks in Lakeville. Mobile homes are an affordable option for those households who would prefer to own than rent. Table 241ists the five mobile home parks within Lakeville and provides location, age of park, total pads, vacant pads, and pad or home rental rates. These mobile homes supply Lakeville with the majority of its affordable housing stock. The following are key points from the table: ? There are a total of 1,097 mobile home pads in Lakeville. About 183 of these pads are vacant, for a rate of 16.7%. Ardmore Village contains 142 of the vacant pads. The Manager at Ardmore stated that they have had many foreclosures over the past few years that have contributed to the large number of vacant pads. They also have strict requirements for entry into the park and thus do not fill the vacant pads quickly. MAXFTELD RESEARCH INC. 56 WORKFORCE HOUSING -FOR-SALE ANALYSIS TABLE 24 MOBILE HOME PARKS CITY OF LAKEV[LLE Au ust 2007 Project Name/ Total Address Age Pads Vacant Rent Range Comments North Creek 1984 164 10 $385 - $395 All owned by residents, no rentals owned by park owner; 5622 173rd Street Wes[ (Pad Only) garbage pick-up, snow removal included; Gas, Electric, water/sewer and cable/dish paid by tennant; Profile: mostly families. Cunairy¢lew 1972 373 ~ t.~ 24•• ~ $41fl All owned by restd s ownedbypark owner, 5775 CojmhyuiewTratl ~ s ~*r -{Pad Only) garbage pick uP aucl hided. ~~water, sewe ~vw-: a - 'eies:5ie, ahd cableldtsh tennans,., rro5lcwiderange rl,s,r. _ s 5 ; ormsideats: semocs tie ...°y ~ Swtmmwg~Paelard v,_ , .~~"lo- = ~;,'~;~,al: ~,'citmmuni.. mom. .~'x]'+~°;--_ Ardmore Village 1974 339 142 $452 All owned by residents, no rentals owned by pazk owner; 20990 Cedar Avenue (Pad Only) gafiage pick-up and recycle included. Water, sewer, electric, and cable/dish paid by tennant; Profile: wide range of residents: seniors to families. Majority work in surroundin area. Swimmin Pool. QueguAaa~t~`ourts 1959 Ifil 4 $38i .Mixture orttwmxi. and muted mob?lc~`„Lomas, 1Yf 1770I ~Laue ~ {red Only~~„ garbaga,~rw mmoirnl tur:Inda3r y ramifies and. > a ~r ,;E~sy xnaruedcouples. ' °x s ~ =~.f ~ mq ~ ~ ~ s Connelley 1950's 60 3 $345 - $370 All owned by residents, no rentals owned by park owner; (Pad Only) Water, sewer, garbage piok-up, snow removal included; Electric, and cable/dish paid by tennant; Profile: wide range of residents: seniors [o families. Majority work in surroundin area. Tarel 1,897 183 76.'7°/a 'Vacany Rate Source: Maxfield Research Inc. ? Rental rates for pads only range from $345 to $452. Only Queen Anne Courts offers mobile home rentals with rents ranging from $700 to $750. Most of the parks can accommodate any size mobile home; however, Connelley Park has only 60 foot lots and cannot fit the larger new mobile homes being built. Thus, when a mo- bile home is removed it is difficult for them to replace that home. Planned and Pending For-Sale Housing Communities Data provided by the City Lakeville in Figure 2 on the following page lists pending single-family and multifamily for-sale developments in the community. The figure indicates that there are eight single-family developments pending in Lakeville with a total of 5661ots. There are five (Chadwick Farm, Crescentllidge, Fieldstone Creek, Quail riIAXFIELD RESEARCH INC. 57 WORKFORCE HOUSING -FOR-SALE ANALYSIS Ridge, and Spirit of Brandjent Farm) of the eight developments that would be additions to existing subdivisions. This indicates that most if not all of the pending lots would not be afford- able to moderate income families. There are also three pending multifamily developments in the City of Lakeville with 155 total units. All three would be additions to currently marketing developments. All three of the developments would not include homes that would be affordable to moderate income families. Most of these pending developments are being delayed because of the poor housing market. Figure 2 LAKEVILLE PENDING FOR-SALE DEVELOPMENTS Au ust 200? Develo meats # of Units Chadwick Farm 67 Crescent Ridge 2nd Addition 75 Fieldstone Creek 43 Jamesdale Estates 62 Quail Ridge 31 Spirit of Brandtjen Farms 3rd Addition 90 Stoneridge 50 Tullamore 148 Total 566 Morgan Square 3rd Addition 35 St. Francis Woods 62 Stone Borough 58 Total 155 Source: City of Lakeville, Maxfield Research Inc MAXFIELD RESEARCH INC. 58 WORKFORCE HOUSING RENTAL ANALYSIS WORKFORCE HOUSING RENTAL ANALYSIS MAXFIELD RESEARCH INC. 59 WORKFORCE ROUSING -RENTAL ANALYSIS Introduction This section reviews the current supply and market conditions for competitive market rate and affordable rental housing in the defined Market Area. Lakeville Rental Communities Maxfield Research identified 10 larger rental properties within the City of Lakeville to gauge how the rental communities may be meeting the needs ofmoderate-income households in Lakeville. The Metropolitan Council livable communities act classifies affordable rents. as affordable to families at or below 50% of area median income. Information on location, number of units, vacancies, unit mix, and monthly rents are displayed in Table 25. RENTAL AFFORDABII,ITY STANDARDS RENT BY BEDROOM SIZE 2007 Bedroom Size Rent* Efficiency $687 One-Bedroom $736 Two-Bedrooom $883 Three-Bedroom $1,020 Four-Bedroom $1,138 * Monthly Boss rent including tenant-paid utilites, at 50% of AMI Source: Metroploitan Council The following are key points from Table 25: / We identified six market rate rental properties within Lakeville with a total of 532 units. Of these, 29 were found vacant. This translates to an overall vacancy rate of 5.5%, which is slightly above the 5.0% level considered to be market equilibrium. Market equilibrium is considered by the industry to reflect sufficient consumer choice and adequate turnover. / Lakeville has had a lack of newer market rate rental housing development as only two properties has been built since 1990 (Lakevillage Apartments and Southfork II). The focus has been shifted to affordable rental as all four properties located in Lakeville were built after 1996. However the affordable rental projects are all townhome style and market to family households. Thus, younger professionals in the workforce have been forced to find newer rental units in other communities. MAXFIELD RESEARCH INC. 60 o q 3 3 c °1 a, w D ~ ~ 0. ~ c. m ~ e1On .q ~ ° ~~T~ .5 0 ~ A R ~ ~ ~ h N L O o f W~~ ~@~ ~ J4 N .~3 ~ ~ ~ ~ R ' ~ O C v~' w C W S1 D S R T L ~+ry' n v d YAa k. H d C B m a. op G. t~ p~ n e v u-. ~ ' pup ~ ~ 'O G ~a' K+ G14'S. U an d t F ~ ~ ~ v v G ~u ti ~ w ~ a~ m F ~ ao ~g z,,:,` s G y C ~ y 4 .8 Iy` a a 'v ~ D w st "o ~ _ y w ~ 3 a o K y T ~ m~ 4 ~ a m a x n ° K 'ai' cmx ~ m v < Y! b h G C7 c oo c a ~ ~ so. 0 3 Z d O ~ 3 ,n O F ~ v ~ ' U Den F ~ u u an -o R' ~n a °z PP .a ~ M~ ~^°N ~ 0O Z ; A ~ sPS» n ~ ~ s°OS sPS cv is ~ crs s~'v,~ aNO a vrj ~ ono O .P+n ~ +~r5' N C4 W p F4 s9 vi ' v» to ~ Y~ cg :M .a V yi N .i , . V3 49 N h ~ ~ at C F ~ O Q K 1~ FL .x Ki ~i x Cyr 6i 0.~ 0: C: Lli U:. ~ CG WN9 W GNl !C] a 0.r1mID -L^ m pi WN > O J ~ ~ i C o0 O N N C~ ~O co DO +C OO C ~J r D\ p vi Ka M/] ~D N N vs sT ~ VI W Z W C V~ O r O N ? O N N 1} t~f O~ ~`1 Vl P ,a N r s ~ w O a N f"' V b N O C r .e4 I N f" Cam'`, ~ ~ ~ ~ ra E .y v. " _ ~ rt- z _ Q ra'I o. ~~~€~wc r ^ P O~ P V FFF ~ U VI xz d ~y v ~ V ~ ~ m ~ o w u 3 and w =v 'S7 W K ~ U 'O E Y ~ N h iF I , Af X' ~ ~ ~ ~ .Ni. C .w/ .y E ~i W NF ~ FV 0l' d s a N v~ o w ao .w. Q Z N N .n e~' µ i i,4 O c T*L d W .i w° 'm. o Y o„'i a~ c i ii. ~ m rn O v ~ idG N t *c N v ~ ~ v v E r; E v .5 ~ ' ~ ~r ' yi~1' 'o s ~ ~ -5 ~ C ~ 4S ~ R. N 'O ~ 'C ~api L Y ~ p+ tl p~ y 'J A ^i ~ 'Y G ~ W a R~ 9 Y~ J N~ L' N V .POD m g ° ~ ° v V ~ !C N 9 W = L' ¢ . ~ t5 . u 5 :r a is ~ C~~ :Q 3a Qom„ p m G 3'e ~ o = L cr~~ a+~ c a ~ 3 0, X02 .c o z a ~ .c' a .x.' Z o o m• O m 2-~G y ~o c A 'C '4 N H a u A 3- ~ 3 R L1 ~ m m i ~ o 's o ~ ~ a~Y aW ~ Q F.] w ~ o sus °a c~sw ~t+'S~ r [Zz1 ~ r C ~ ~ v>;" ~ h ~ s9 of rz} . . n Crj] °O oT ..°°rsw d N m:x~~ CC i U ~ ~ ~ d 0] -0.1 CO 0.` LI] OJ p~'~ p~p~~ 7+i 6 G C, ~ ~ N M N M ~ N M M M > C J r' J 'e cN oo= .+v~ e e d N M N N m ~ O N W O W I C I r xx' u O O O 'O~ O O O 0 0 0 O ~ W N ~ r FN ~ F C I y~ V O N 'a. a~II ~ v~ Y"d "u ~o ~n oo k ~ m ccv~ ' _ _ U V ~ z k~ Z y*~h T ~O/ ~F U W ~ c 3 ~SZ ? rn a ~ a ~ x w o w ~ d c~ m~~, z R a m N «a O w L ~ Gil mow/ Z ~ ~ i'H 1~#.4~` ' c0 ~ ~ L W ~ i 0 yF r. b i" ~ W U ~ O Y C~ .~~nI"a~• Z M ~ a~IS O yew 'ij a O M cc WORKFORCE HOUSING ANALYSIS ? The projects built before 1990 have rents for one- and two-bedroom units that would be affordable for moderate income families. Lakevillage Apartments has a portion of their two- and three-bedroom units that would be affordable while Southfork I & II is the only market rate development to have rents that qualify for moderate incomes. Southfork is the only mar- ketrate rental townhome development in Lakeville. Using the industry standard that households can afford a housing cost of 30% of their in- come, asingle earning approximately $35,000 could. afford the average one-bedroom rent in the two newer apartments. Singles earning approximately $25,000 could afford one- bedroom units at older apartments. Two-person households would need incomes of ap- proximately $41,000 and $30,000 to afford units at the newer and older communities, respec- lively. Overall, our analysis of Lakeville market rate communities fmds that these units, de- spite being market rate, provide housing to workforce households. / There aze four affordable rental developments in Lakeville with a total of 151 units and no vacancies. All of the developments aze townhomes and have lengthy waiting lists. Three of the four properties are owned and operated by the Dakota County CDA and require tenants to have children 18 and under. / In addition to rental communities, there aze a large number of for-sale townhome units that are being rented in Lakeville. Data from the Dakota County Assessors Office identified 536 for-sale townhomes that are currently being rented scattered throughout Lakeville. We esti- mate that townhomes valued at $170,000 or less that would be affordable to moderate in- come families. Only 65 townhomes valued less than $170,000 were identified out of the to- ta1536. Pending and Proposed Rental Developments Maxfield Research surveyed Market Area cities for information regarding pending apartment projects that have been proposed and/or are pending within the Market Area. We identified the following projects: Lakeville ? There is currently one market rate apartment development under construction. Lakeville Woods is being developed by Wally Johnson and will consist of 76 market rate units. This project is slated to open in Mareh and has yet to begin any preleasing. The development will have underground pazking for $45 per month. Building amenities in the project include; two club rooms with the main room having a full kitchen and billiard table, exercise room, busi- ness center, balconies and patios, and car wash area. The unit mix is as follows: MAXFIELD RESEARCH INC. 63 WORKFORCE HOUSING ANALYSIS Lakeville Woods A artments Unit Type Unit Size Monthly Rent RentlSg. Ft. 1BR 794 $930 $1.17 1BR+D 890 1,124 $1,000 $1,275 $1.12 $1.13 2BR 1,106 1,299 $1,250 $1,375 $1.06 $1.13 2BR+D 1,241 1,302 $1,350 $1,400 $1.08 $1.09 3BR 1,406 1,545 $1,440 $1,600 $1.02 $1.04 ? The Dakota County CDA is planning to develop a site in Lakeville with a 40-unit affordable townhome development. The site is currently being cleaned up due to contamination. The development is slated to begin no earlier than 2009. Auule Valley ? Due to the current market conditions, officials of the City have stated that many previously pending projects have been tabled. ? The Village at Founders Circle development located at Galaxie Avenue and 153`a Street is planned to have 197 market rate rental units. The project was approved over a yeaz ago and construction keeps getting pushed back by the developer. Current timeframe has the project starting construction in October 2007. However, this is not a concrete date. ? The Hartford Group has submitted an application fora 96 unit market rate rental townhome development in Legacy Village. This project has been on hold for three plus years. The timeframe for development is unknown. ? The Dakota County CDA has plans to develop an affordable 32 unit townhome development in Apple Valley. There is no current timeframe for this development. Farmin¢ton ? The Dakota County CDA has will. begin Phase I of a 50 unit affordable townhome develop- ment in Fazmington in August 2008. The first Phase will consist of 25 units. There is no schedule for the second Phase. MAXFIELD RESEARCH INC. 64 WORKFORCE HOUSING CONCLUSIONS AND RECOMMENDATIONS WORKFORCE HOUSING CONCLUSIONS AND RECOMMENDATIONS MAXFIELD RESEARCH INC. 65 WORKFORCE HOUSING CONCLUSIONS AND RECOMMENDATIONS Introduction Earlier sections of this report assessed the market potential for workforce housing in Lakeville by examining demographic characteristics of the Market Area population, and current market conditions of for-sale and general-occupancy rental housing. This section of the report forecasts demand for single-family and multifamily for-sale housing along with general-occupancy rental housing affordable to people with low- and moderate-incomes. For-Sale Housing Demand Table 26 shows our demand calculations for single-family and multifamily workforce homes in the City of Lakeville between 2007 and 2020. Demand will be driven by overall new household growth through 2020. We then estimate demand for owner-occupied workforce homes based on the growth of workforce-age households. The following points summarize our demand calcula- tions. ? From 2007 to 2020, we project that the City of Lakeville to grow by 10,246 households. We estimate that 67% of the household growth would be workforce-age households. Based on homeownership rates, we estimate that 85% of the new workforce-age households through 2020 will seek ownership products over rental. This equates to workforce-age household demand for about 6,865 new for-sale units through 2020. / Based on recent building trends as well as demographic characteristics, we anticipate that half of the demand through 2020 will be for single-family and half will be for multifamily homes, or about 2,920 homes (about 225 annually) for both single-family and multifamily. / According to the Metropolitan Councils Livable Communities Act a family of four at 80% of area median income could afford a home price at $206,500. Given today's development costs, new homes cannot be built at this price and thus these lower income households seek- ing single-family homes will be limited to the resale housing market. An estimated 380 (13%) of workforce households could afford homes priced between $206,000 and $260,000 (80% to 100% of AMI), and roughly 320 (11%) will be for homes priced at $260,000 to $300,000 (100% to 115% of AMI). / Multifamily demand is adjusted for three-person households. An estimated 470 (16%) of workforce-age household demand could qualify for homes at or below $206,000, 320 (11 workforce-age households for homes $206,000 to $260,000, and roughly 290 (10%) will be for homes $260,000 to $300,000. / Because suburbs to the north of Lakeville are mostly built out, we estimate that Lakeville's demand could be increased by 25% by capturing excess demand from these other communi- ties. Thus, we find support for 500 homes from $206,000 to $260,000 and 430 homes from $260,000 to $300,000. Multifamily units supportable in Lakeville would increase to 140 at or below $206,000, 250 from $206,000 to $260,000, and 210 from $260,000 to $300,000. A4AXFIELD RESEARCH INC. 66 ,o O p ry ~ j W ~ N d - N m N r yp e ~ Q vi C# F•A~~ O N ~ N IX> ~ C 6Ng O'.. b ~ N ~ ONO ~ Q N m Q 0 N ~ N e V e rn r ~ ~ oC o V m ~ N .w O O Ci ,e ^ e ~ C ~ e~ M N V ~ en A ~ z 6 i. ~i:.. W e ~ V voi r ° 0 0 0 y ~ en N V) N h .ti p N, O k N ~p 0 , N d N y Z C 6 CC1 C W T s,~' i ~ O 'vi O O O -y Q rYi r N ,6 F O , N X II % II % "II ~ % II + II II v 0 W ~ ~ ° a U o ° ~ o a ~ m ~ O = o _ l ~ ~ r N O ~ 7 ~ 3 = e :~V O N N ? ~ L C NO ~G ,G' A N O b0 -T ti ° O O ^C 9 Z o s T .C :~o: o- o c y N c T w s o °o - N - D 1~ ~ y O ~ ~ 9 J ~ N~ A O o U 9 W IE N N 1~1 4 y O = ° O .OC V 3 9 .a > O O. ~r 3 $ ~ ~ o- = v ~ ~ a rim-' ~ i.~.l ; 9 ~ L C T~ 6 7 G G E y y xi o ~ o c o ,c o w°~,° ° y 3 9 Q ° Q e ~ ~ e ~ ~ ~ o ~ ~ ~ R o ~ w .a a d~~0.a ~~°,Aa~ o~ W~, ~ r~ d ~ ~ Vie= 3 ~ 'a ~ o, ~ c, `e .v ` a ~ E W ~ ~ c o WORKFORCE HOUSING ANALYSIS / We then subtract the existing actively marketing single-family lots in Lakeville from the total lot demand captureable by Lakeville to calculate the number of additional lots needed. Sub- tracting out these lots results in an estimated demand for about an additiona1505 single- family lots from $206,000 to $260,000, and 380 single-family lots from $260,000 to $300,000 through 2020. For multifamily units, we find demand for roughly 480 units at or below $206,000, 250 units between $206,000 and $260,000, and around 210 units $260,000 to $300,000 in Lakeville from 2007 to 2020. Workforce Rental Housing Demand Table 27 shows our demand calculations for general-occupancy market rate, affordable, and subsidized workforce rental housing in the City of Lakeville between 2007 and 2020. Like for- salehousing demand, rental housing demand will also be driven by overall new household growth during through 2020. We then estimate demand for renter-occupied workforce homes based on the growth of workforce-age households. The following points summarize our demand calculations. / Based on Metropolitan Council data, the City of Lakeville is projected to grow by 10,246 households between 2007 and 2020. We estimate that 67% of the growth would be work- force-age households. From the 6,865 workforce-age households we estimate that 15% would be interested in renting their housing. This results in demand for 1,030 new work- force-age renter housing units in the Market Area between 2007 and 2020. ? Of these households, we estimate that 20% of workforce-age households will have incomes of at least $33,100, or 60% of the area median income for aone-person household. This represents the percentage of households able to afford moderate rate rental housing, resulting in the demand for 205 units. We then deduct the moderate rental units in Lakeville that are pending or under construction of which at this time there are currently none proposed. This results in remaining demand remaining at 205 units. We estimate that demand from outside of Lakeville would be 25% of the workforce rental housing demand, resulting in the demand for 275 moderate rate units in Lakeville through 2020. Affordable Demand ? Of the 1,030 workforce-age households interested in renting their housing in the Market Area, approximately 20% have moderate incomes from $16,700 (30% of AMI for one-person household) to $47,100 (60% of AMI for aforr-person household) to qualify for affordable housing. This results in the demand for 206 affordable rental units. 111AXFIELD RESEARCH INC. 68 ° N ~ o _ 7 ~ ~ o ~ N kr ° ~ ~ x ~ v w v, o ~ e o N o ~ o m ~ e ~ a, ~ o Sri O nU^ 00 y~ O ~ O ~ cn ~ N . ~ ~ p Q ~i', y °t~•,4 O * `T n N f N d a o 0 0 n' ~ ~O+ N N N N 'C?.... 'O G 5 Z c Q Q X k II X II ~ II + 11` y o s w U ~ O A o ~ 3 ~ o ~ C ~ ~ 3 N O J N ~ 00 rS N N ~i ~ O O t ,n? A L Q 'V. O N C k m 3 N 2 Q N ~ ~ a d .a ° O N ~i ~ Y '9 ~ O L ~ '6 N .L i3 Y N m Vl rO, G ~ y O o O N. ~ O .T. ~ ~ ~ ° ~ C U iy V i ed p N O G e na N. ~ OO y .o w ~ I e m m s0.~ m O o ~ N O W LO O Y L ~ G v~ N, C v, R N O O pp ~ Y o .co o ~ ~ o o °a y u ~ oOD m p O ° L ~ ~ ' ,a ~ R 'o R on s ~ ° ~ c ,a. H o ti ~ 3 w ~ ~a xo c m ~ ~ o ~ is ~ ~ o ° 3 ~o v '17 F v o ° 3 ~ a ~ ? s 3 o Y b~ 8 ° 3 w y~ m ti O G' ^ G 3 ~ R -vp `y 'b~ p N ~ V ai ~a m ° E o x x "T" m ~ ~ v o ~ a=i ~ ° ~ K CG ~ w a. m a ~ y ~ ` ~ ~ ~ cC io.~ r-, = m rly m C[7 m y o C ni d O z O ~+4 ~ ~ ~ ~ ~ ~ R ~ ~ ~ O o L Q 0. aJ m ~ N ~ -y' iF m iG VJ GTi WORKFORCE HOUSING -CONCLUSIONS AND RECOMMENDATIONS ? A portion of the rental demand will be met by the projects that may potentially come on-line after 2007. Accounting for these 40 pending and proposed affordable units (less a 2.0% va- cancy rate) results in excess demand for nearly 170 units in Lakeville between 2007 and 2020. We use a lower vacancy rate for affordable units as it has been our experience that these units typically maintain higher than average occupancy rates. We estimate that 25% of demand from outside of Lakeville would be for affordable housing, resulting in the demand for nearly 225 affordable rental units in Lakeville through 2020. Subsidized Demand / Subsidized workforce renters at 30% or less of the area median income are estimated to account for approximately 5% of workforce households. This results in the demand for 50 subsidized rental units. / There are no subsidized rental units proposed within the Market Area. Thus the excess subsidized demand in the Market Area remains at 50 units. ? We estimate that 25% of demand for subsidized rental housing would come from outside of Lakeville, resulting in demand for 70 subsidized rental units in Lakeville through 2020. Conclusions and Recommendations The housing demand calculations in Tables 26 and 27 indicate that between 2007 and 2020, nearly 2,400 housing units will be needed in Lakeville to satisfy the workforce housing demand. The majority of workforce housing demand through 2020 will be for for-sale products, particu- larly multifamily (940 units). Single-family homes account for 885 homes of workforce housing demand and general-occupancy rental workforce demand of 570 units. Table 28 on the follow- ingpage shows a summary of the workforce housing demand. For-Sale Housine It is difficult for a city to develop new single-family homes that are affordable to the workforce. The cost of land, labor and materials prevents developers from being able to build new afford- able single-family homes. Thus, the older existing single-family homes in Lakeville are going to satisfy the majority of the affordable and moderate for-sale workforce housing demand shown in Table 28. New single-family construction attracts the move-up buyer market that typically has the household income and equity to purchase these higher priced homes. The turnover of older single-family homes from the move-up market will be absorbed by the first-time home buyer. The city should provide afirst-time homebuyer program would help assist those people purchas- ing existing homes within Lakeville. The options to reduce single-family home prices are limited without some government assis- tance. Lot size reduction would only slightly reduce home prices (roughly $10,000 or less) at MAXFIELD RESEARCH INC. 70 WORKFORCE HOUSING -CONCLUSIONS AND RECOMMENDATIONS which most new homes are priced so high that the decrease in lot size would not make a differ- ence in the overall affordability of the homes. Reducing both the lot sizes (<10,000 square feet) and the total square footage (<2,000 square feet) of the homes together could decrease the cost to make a new home affordable at the upper moderate-income level listed in the table. Thus, a portion of the upper moderate-income single-family workforce demand could be captured by this type of product. The for-sale workforce housing demand not satisfied by the turnover of existing single-family homes is going to be absorbed by new multifamily townhomes. Currently the majority of actively listed multifamily homes in Lakeville are two-bedroom units that attract smaller sized families. There are very few (about 5°/a of listed multifamily homes) four-bedroom townhome units cwrently listed in Lakeville. We recommend that the City of Lakeville promote the devel- opment of more three- and four- bedroom multifamily units over the next decade. TABLE 28 WORKFORCE HOUSING DEMAND SUMMARY LAKEVILLE 2007 to 2020 Purchase Price/ No. of Monthly Rent Range Units Owner-0ccu ied Hausi r` r>,w SiNge-Family Affordable <$206,000 0 Moderate-income $206,000-$260,000 505 Uppermoderate-income $260,000-$300,000 380 Total 885 Multifamily Affordable <$206,000 480 Moderate-income $206,000-$260,000 250 Uppermodera[e-income $260,000-$300,000 210 Total 940 Gee • ,gQ , Moderate Rental 60% to 80% of AMI* 275 Affordable Rental 30% to 60% of AMI* 225 Subsidized Rental <30% of AMI* 70 Total 570 * Area median income. Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 71 WORKFORCE HOUSING -CONCLUSIONS AND RECOMMENDATIONS General Occupancy Rental Housin¢ There are few programs available to develop projects with rental units at or below 30% of the area median income that require deep subsidies. The subsidies rely on the Department of Hous- ing and Urban Development (HUD) to allocate more funds to the programs. There are some households with extremely-low-incomes that are not included in the workforce (hence there very low incomes) but may have some sort of disability. The need for affordable workforce rental housing would need to use the Low Income Housing Tax Credit (LIHTC) program to keep rents affordable to households at 30% to 60% of the area median income. The Dakota County CDA has developed 15 family townhomes developments in Dakota County (Three in Lakeville with one more proposed) as part of their Family Townhome Program. These developments meet some of the need for affordable workforce housing in Lakeville. A portion of households in Lakeville have income too high to be able to qualify for rents at affordable rental properties yet too low to afford market rate rental housing. These households that fall into the moderate income rental units at 60% to 80% of the area median income maybe difficult to develop and keep rents low due to the construction costs. Thus, the City may need to participate in the development of this type of project to reduce cost by offering assistance such as tax abatement and bonding. It should be noted that a portion of the moderate rental units would capture demand from market rate income households due to the affordable rents offered. These apartments would serve some new employees to the area who are not in a position to purchase housing immediately, but may have incomes too high to income-qualify for subsidized/affordable rental housing (including some people hired as teachers, healthcare workers, and police officers, among others). Lakeville has a fairly large supply of mobile homes which can absorb some of the immediate need for affordable for-sale and rental workforce housing. However, because the addition of new mobile parks is unlikely, the current parks will not meet the need for workforce housing from future household growth in Lakeville. It is important to note that the demand projections above reflect the workforce housing needed to satisfy Lakeville's future household demand from local job growth. The workforce housing projections do not satisfy the needs of the greater area. Thus, workforce demand in the commu- nity will not exceed local job growth. Comparison to Determinin¢ Affordable HOUSIDE Need in the Twin Ciies 2011- 2020 In January 2006, an advisory panel to the Metropolitan Council completed a report titled Deter- mining Affordable Housing Need in the Twin Cities 2011- 2020. The report determined the 2011 to 2020 regional need for new affordable housing units in the Twin Cities and allocated the regional need to communities. The primary purpose of the report was to assist communities with land planning for the comprehensive plan updates in 2008. MAXFIELD RESEARCH INC. 72 WORKFORCE HOUSING -CONCLUSIONS AND RECOMMENDATIONS For purposes of the report, a housing unit was defined as affordable if it is priced at or below 30% of gross income of a household earning 60% of the Twin Cities median family income (or $46,200 in 2005). The 60% income threshold is determined by HUD and is the cutoff for tax- credit housing development. Overall, the report calculated a need for 51,000 newly-constructed, affordable housing units in the Twin Cities Metro Area. Individual communities were allocated a portion of this affordable need based on household growth potential, ratio of local low-wage jobs to low-wage workers, current provision of affordable housing, and transit service. Lakeville was calculated as needing 2,288 new affordable housing units between 2011 and 2020. This equates to 30% of the afford- able demand calculated for Dakota County (7,600 units). This figure of 2,288 affordable units for Lakeville is higher than our calculations in this report. In total, we find a need for 2,395 "modest" general-occupancy units and 1,290 senior units between 2007 and 2020. Of these units, however, only about 300 of the general-occupancy rental units would be needed for households earning less than 60% of median income. We do anticipate, however, that slightly more than half of the senior units would be occupied by house- holds earning less than 60% of median income (frail seniors residing in market rate senior housing often have low incomes but spend down assets, such as home equity, to pay for their housing and services). Among others, the two primary reasons for the difference between the finding of this report and the report for the Metropolitan Council are as follows: / We anticipate that about one-third of the household growth in Lakeville between 2007 and 2020 will be among seniors, the majority of whom will have incomes below 60% of median income. We believe that the Metropolitan Council figure of 2,288 affordable housing units needed between 2011 and 2020 could be reduced by about 700 units to account for lower- income senior households moving into market rate senior housing (by spending down assets). / Our researoh finds that virtually no for-sale units can be constructed with prices affordable to households earning less than 60% of median income. Thus, all of the new affordable de- mand calculated in the report for the Metropolitan Council would have to be accommodated by rental housing. At the same time, however, market trends indicate that demand for for- salehousing will continue to exceed that for general-occupancy rental housing. We theorize that instead of renting, many lower-income people are purchasing lower-cost housing, such as older homes or townhomes, by pooling their incomes with other lower-income people (such as in married-couple households, cohabitating couples, or roommates). This occur- rence isreducing the affordable rental need by some level. The report for the Metropolitan Council defines affordable households as those earning less than 60% of the Metro median income, or $46,200 in 2005. We find that many people in "workforce" professions earn more than $46,200, but still cannot afford newer single-family homes or mar- ket-rate rental housing. Thus, the calculations for housing demand in this report are made not just for households earning less than 60% of median income, but also for households earning up to 80% of median income seeking rental housing and up to 115% for those seeking ownership MAXFIELD RESEARCH INC. 73 WORKFORCE HOUSING -CONCLUSIONS AND RECOMMENDATIONS housing. Given our theory about lower-income people pooling their resources for housing as pointed out above, we estimate that a good portion of the affordable housing demand as calcu- lated in the report for the Metropolitan Council (2,288 units) was calculated by Maxfield Re- search Inc. in this report as affordable housing demand for households earning between 60% and 115% of median income (2,100 units between 2007 and 2020). MAXFIELD RESEARCH INC. 74 a ~ City of Lakeville Community and Economic Development Memorandum To: Economic Development Commission From: Adam Kienberger, Economic Development Specialist Copy: David L. Olson, Community and Economic Development Director Steve Mielke, City Administrator Date: November 21, 2007 Subject: Business Telecommunications Technology Task Force (BTTTF) Report The City Council approved the creation of the BTTTF in January, 2007 to evaluate the telecommunications technology needs of the business community. The membership consists of representatives of the local business community, EDC, Telecommunications Commission, Chamber of Commerce, and residents employed in the technology industry. Two key points from the report include: • That Lakeville views its business community as a whole including home-based businesses, work-at-home employees and traditional work places • The City should actively explore, conduct feasibility, negotiate and pursue the use of current public/private assets for the creation of a municipal commons with open competitive provider participation - an Open Network Ben Coons, the Lakeville Chamber of Commerce representative from the BTTTF, along with Steve Gehrke who served as the EDC representative on the BTTTF will be available at the meeting to answer questions and discuss the report. A short PowerPoint presentation will be made summarizing the findings of the BTTTF. Please find attached a copy of the report for you to review. This is currently scheduled to be presented to the City Council at their December 3ro, 2007 meeting. Business Telecommunications Technology Task Force Report Prepared for the City of Lakeville October 2007 The City of Lakeville launched a study to assess potentials for increasing economic development and support for the business community through the availability of forward thinking communication structures -technology and business models. The outcomes are intended to benefit the community in the following ways: O Increase awareness of business requirements -short and long term ? Increase public and private investment in support of business ? Advance attractiveness of Lakeville for new and expanding businesses Members of the Business Telecommunications Technology Task Force are: Ben Coons Paul Rehmke Chamber of Commerce Lakeville Business Representative Tom Diamond Robin Selvig Lakeville Resident Telecommunications Commission Steve Gehrke Kevin Wetzel Economic Development Commission Lakeville Resident Mike McBrady Lakeville Business Representative Lakeville Staff: Steve Mielke David Olson City Administrator Community & Econ. Dev. Director Jeff Lueders Adam Kienberger Cable Coordinator Economic Development Specialist Eric Lampland Lookout Point Communications Consultant to BTTTF Assembled by the Committee October 24, 2007 Table of Contents EXECUTIVE SUMMARY ..............................................................................................................................3 ASSESSMENT OF BUSINESS COMMUNITY NEEDS .............................................................................5 - GENERAL FINDINGS-BUSINESSNEEDS .......................................................................................................6 ASSESSMENT OF CURRENT SERVICE PROVIDERS ...........................................................................7 FRONTIER~COMMUNICATIONS SUMMARY INFORMATION ...........................:...................................................7 CHARTER COMMUNICATIONS SUMMARY INFORMATION ................................................................................9 PRIVATE OVER BUILDER 1 ~ GENERAL FINDINGS -SERVICE PROVIDERS 1 ~ ASSESSMENT OF PUBLIC INFRASTRUCTURE ACTIVITIES ............................................................11 GENERAL FINDINGS-PUBLIC ACTIVITIES 13 ASSESSMENT OF LOCAL RESOURCES ..............................................................................................14 SUMMARY OF INDEPENDENT SCHOOL DISTRICT (ISD) 194 CAPABILITIES 14 SUMMARY OF DAKOTA COUNTY'S CAPABILITIES 15 SUMMARY OF SCOTT COUNTY'S CAPABILITIES 16 GENERAL FINDINGS -LOCAL RESOURCES 16 OPEN NETWORKS-AN ALTERNATIVE 17 DEVELOPING A M UNICI PAL COMMONS 18 DEVELOPINGACOMPETITIVE SERVICES ENVIRONMENT 1J NEXT STEPS TOWARD AN OPEN NET^IORK 20 RECOMMENDED NEXT STEPS .....................:........................................................................................21 APPENDIX A 22 INITIAL COMMITTEE CHARGE 22 APPENDIX B 24 INDEPENDENT SCHOOL DISTRICT 194 FIBER MAP 24 APPENDIX C 25 POTENTIAL INTERCONNECTIONS 25 APPENDIX D 26 RELATIVE SPEEDS FOR DIFFERING TECHNOLOGIES 26 APPENDUC E 27 GLOSSARY 27 page 2 Executive Summary Cities throughout the world are realizing high-speed broadband is a significant contributor to economic growth. And broadband means more than speed. It means services of any kind: voice, video, data, mobile or fixed-line with countless new applications. Numerous studies have shown contributions to local tax bases, growth in local business development, and increased employment are achieved where leaders seek the future beyond business plans normal to the private sector. Strong benefits accrue whether the private sector is led to move in concert with public needs or the public sector acts alone to serve those needs. To lead is key. Leadership will help create an attractive, healthy and vibrant community -where business and family want to be. To that end the Council established the Business Telecommunications Technology Task Force (BTTTF) on January 16, 2007. The intent was to define current business communication resources and needs. Align those needs with future requirements and technology. Then create recommendations to encourage positive business growth. Throughout the first half of 2007 the BTTTF met with local providers, assessed governmental resources and options, discussed the common communications climate -locally, nationally and internationally -and weighed this information at meetings with local businesses who shared their concerns and requirements. The BTTTF assessments and findings are detailed in the first four sections covering business needs, service provider capability, municipal activities elsewhere and Lakeville local public communication resources. At the erid of each assessment we list specific findings, which by themselves may prove some indication of directions needed and are intended as a quick section summary. The BTTTF then describes the motivation and construction of an Open Network or municipal commons and concludes with recommendations, both short and long term, and the initial implementation steps to achieve them. Briefly, the BTTTF found that current services needed by fhe business community were not being met, and that market appeal for businesses small or large suffered major hurdles. Furthermore the prospects that existing providers will address these issues in the future are unclear, but not promising. Needs for high service availability, competitive offerings and pricing, prevalence and breadth of service offerings and the ability to plan for growth or new services -amongst others -are necessary to create aforward-looking and attractive climate. Passively left alone there is no indicafion that fhe service provider market will step forward and address these needs. The City should acf rf it wishes to create a more attractive business climate. But more importantly, the review process paints a picture of who we are and shows promise of what we can strive to be and achieve. It identified the growing number of alternatives and actions taken by other cities and their accomplishments. -For Lakeville this promise will require implementing concrete, doable steps. Two core recommendations frame our views: ® That Lakeville view its business community as a whole. This includes home-based business and work-at-home employee connections as well as those contained in the Airlake Industrial Park or other normal business communities and concentrations. page 3 ~ The City should actively explore, conduct feasibility, negotiate and pursue the use of current public/private assets for the creation of a municipal communications commons with open competitive provider participation - an Open Network. The establishment of a municipal commons or Open Network is a significant undertaking. Many of the building blocks for a Lakeville construction are already present and detailed in the sections on Local Resources and Open Networks. What we are recommending, however, is to proceed with a detailed study of this approach. Such a study usually takes six months or longer. Should the study prove feasibility, construction of such a network may take a year or more before customers can be served. As such the BTTTF recommends that we also include a short study of wireless backhaul as a low cost immediate relief to the redundancy requirements of Airlake businesses. This would be included in the feasibility study as a separate, but related, evaluation. And further, that the feasibility study identify the incremental phases of construction to be considered. Certain important recommendations are necessary to ensure proper oversight of these activities or are elements needed to proceed. These four enabling recommendations are: ? The City should establish a broadband commission, or similar group, to ensure that business and community needs are being met. The group would serve as operational oversight for the feasibility study and continue to monitor this critical area as needs and technology change on an ongoing basis. The City should consider a review of codes, ordinances, and procedures that affect any aspect of communications and align them with emergent city strategies including making the use of right-of-ways, water towers, city properties, and information about such or any other pertinent aspect to entities providing capabilities in the best interest of Lakeville citizens. ~ The City should open dialogue with Independent School District (ISD) 194, Dakota County, Scott County and others necessary to assess and use their facilities in the creation of a municipal communications commons. Letters of interest need to be created and sent to both the Dakota County Administrator, Scott County and ISD 194 for information to be shared. ~ The City might consider aligning this effort with the needs of citizens in general and the activities of the Telecommunications Commission. The BTTTF was primarily concerned with the state of business attractiveness in communications and options to bring those inline with goals. There will be ample opportunity to discuss actual methods and process. The details of network technology can overwhelm even the most teamed practitioner. There may be confusion about the BTTTFs recommendations -why not current providers, what is a municipal communications commons, an open network, is that a public or private enterprise and more. The BTTTF hopes to address those and other issues in our report. Our disclosure of these issues makes a case to begin an ongoing dialogue. We encourage questions, but suggest avoiding detail not yet known. This area, communications, now of many types, has become critical to the success of each of us. We almost take for granted its presence in our business and daily lives. It is much more so as a measure of the health of any community. It is ongoing. It cannot be left solely to those whose primary concern is for the benefit of their profitability. The City must take an active part. page 4 Assessment of Business Community Needs Surveys, meetings with business owners, comparisons with nearby competitive environments and the experience of task force members themselves all produced a general consensus concerning the current state and future needs of the Lakeville business community. Much of the information gained was anecdotal. This process was one that required thought and projection. The BTTTF asked a series of difficult questions including what kind of business community are we likely to attract, how long a period should we project for, what is the expectation for growth in volume of traffic or bandwidth today or required by new applications, what are the future applications and so forth. Much of the BTTTFs projections rested on experience in the growth of their own businesses, current needs not being met, visible signs of changes in the emerging landscape such as the greater use of video; opportunities presented by Long Tail economic theories, the collaborative impacts of the interactive web, WEB 2.0; ever greater needs for rapid response to customers and for government regulation; and the distribution-coordination nature of modem business structures. Most important was the obvious - we are not simply reliant on telecommunications; it is, today, part of the very fabric of our businesses. Telecommunications includes, but is not limited to, phone, data, video with high-speed wireline services and mobility. Without highly reliable communications we do not function for long. No business will be attracted to a community, or stay in a community, where even anecdotal information suggests a lack of service or performance. One business owner with 11 facilities, in 4 states with 1,000 employees commented that Lakeville is its largest metro area yet it is the facility at greatest risk due to unavailability of reliable communications from multiple providers. Lakeville was behind Sioux City, LeMars and Cherokee, Iowa; behind Chillicothe, Missouri; behind Napoleon, Massillon and Fairfield, Ohio and behind Fairmont, Minnesota. This business owner spoke to the BTTTF of legal response requirements of fewer than four hours, which is impossible to meet without reliable communications, supply and demand fluctuations for building and depleting inventory that must be dynamic and instantaneously coordinated with customers, rail car orders, and trucking. He spoke of operating losses that occur when communication failures arise. He said, "Lakeville is my biggest city, my only industrial park, but my worst service it keeps me up at night." From several businesses we heard, "People are counting on their Internet connections." "When it's down, our stores are down." "Not knowing how long an outage is, is even more difficult than the outage itself." Over and over the issue of reliability came forward. The BTTTF found that communications technology was woven into the lives of people and business. For example, some said, "We do a fair amount of work from home." Which lead to questions such as: "What do we mean by support for the business community?" Does this involve support for employees as well? And further, "What type of businesses do we, or should we, attract?" Care must betaken in understanding the complex nature of this information, how findings are stated, and eventually how recommendations are made. Technology for some is a confusing, almost mysterious arena filled with acronyms and frustration. The view and interests of incumbent Service Providers is to be welcomed and understood, but it should be remembered that what they express is also in their own interest. The BTTTF needs to challenge those interests and assumptions to reflect and align with community needs. page 5 Innovation has never been as present as it has during the last ten years in telecommunications. Seemingly every day another application, another capability or device surprises and delights us. Along with this new opportunity comes the pain in the management of change. Business practice, legacy investment, even standing laws and/or policy, are all sources that need respect and understanding. However real those issues maybe, individually they cannot jeopardize the vitality of the community. General frndings -business needs The primary findings in our assessment of business needs were: ~ Continual availability, non-interruptive services are not being met. Communication outages have been a primary concern of local businesses and their willingness to expand in Lakeville. In the future, businesses require highly available network connections, particularly wifh both physical and logically redundant pafhs to, from and within Lakeville. ~ Higher speeds as standard offerings are .more expensive to obtain in Lakeville. In the future, business should have access to high-speed service - as a continually upward moving target -that meets those available in nearby communities, including the cities of St. Paul and Minneapolis, in capacity, fime fo obtain service and price. ? The minimum speed requirement today is 8Mbps for business connections. This speed is not a standard offering from Frontier as yet. Frontier expects their new upgrade to yield, on average, up to 6Mbps. Charter offers up to 10Mbps to the business, but only 2Mbps towards the Internet, and no service to Airlake as yet. Lack of symmetrical speeds (same speed in both directions) is true for both providers' normal offerings. Lakeville currently lacks multiple service providers offering connections in the business park areas. The building of further connections to at least one other provider is cost prohibitive on a case-by-case basis. In the future, business requires the availability of a compefifive array of service providers. ® Mobility technologies of several types are emerging. In the future, wireless communications should be considered as normal additions fo an underlying higher speed fabric ® Electrical power redundancy was also found to be lacking. Instances of outages were noted that are impacting the cost of doing business and the willingness to expand services in Lakeville. This was not a key area of study and the BTTTF recommends it for further research. ~ Current service providers are undergoing change from historical roles selling telephone or video services. In the future, individual circuit terminations should be capable of supporting any type of traffic required. ® Business should have the ability to manage Service Level Agreemenfs (SLAB) to meet appropriate quality of service requirements. These must include measures to ensure latency, packet drop, circuit availability, and security attributes at minimum. Businesses should have access to high-speed service at negotiated rates up to and including circuits rated for core transmission backbones commonly in use. ® The BTTTF emphasized short-term needs for light industrial and commercial areas of the City, primarily along County Road 70 and felt the considerafions for longer-term strategies should include any area within Lakeville where business acfivifies, of any type, are conducted. This may include work-af-home, employee support, education and/or government services. page 6 Assessment of Current Service Providers Lakeville has two primary private sector telecommunications providers: Frontier Communication Solutions, a division of Citizens Communications Company, and Charter Communications. They currently support combinations of services including business support for voice and data and in Charter's case, support for video. Each provider has a standard data offering based on technologies unique to their architecture, which range in support for speeds up to a few megabits. Both providers claim incremental increases will be forthcoming at a date uncertain in the future, perhaps within a year or two. Additionally, both providers are willing to work on special case-by-case installations for direct fiber installations with up to 1 Gbps of throughput. However, specific pricing and availability has not been made available. In one instance reported to the BTTTF, such an offering was priced with a $40,000 installation fee, plus monthly expense. To obtain this information the BTTTF met several times with each service provider. Initially each provider was given a series of questions and each responded to those in writing. Both provided additional information concerning their plans at a meeting with the BTTTF. Follow- up meetings were held to clarify certain information. Information provided in response to questions asked were highly generalized by both parties. Queries for more specific information were returned with vague declarations of propriety. This was true even when the general methods, distances and technical data are well known by network architects and vendors. When seeking gpabilities and abilities to provide a given service, in a given geography, responses to the effect that such services and pricing would be only forthcoming on an individual company's request or application were received. This is clearly within the rights of any service provider. It does, however, leave Lakeville without an ability to plan and market. It has long been an argument of service providers in general that they alone can register demand and allocate capital investments appropriately. Many have rebuffed this argument. As communication networks become more vital to the health of communities the need for cooperation from the private sector is ever more important. Without this cooperation, communities must act for their own benefit and those of their citizens and businesses. Frontier Communications Summary Information Frontier Communications is a significant carrier supporting approximately 2.5 million access lines in 23 states. Approximately 18% of those access lines provide some level of high- . speed service, the rest are simply telephones.' Lakeville is a part of their Central Region. This region serves eight states including portions of Minnesota, Illinois, Nebraska, Iowa, Wisconsin, Michigan, Indiana and Pennsylvania and represents approximately 550,000 access lines? Within Minnesota Frontier serves communities throughout the State, concentrating in the southern and western suburbs with such familiar communities as Burnsville (local headquarters), Apple Valley, Rosemount, and Farmington. May 2007, Frontier Communication Services, marketing literature z August 2007, Minnesota Fact Sheet, Frontier marketing literature page 7 Frontier offers a range of services to local businesses from many standard voice capabilities, Asynchronous Digital Subscriber Line service (ADSL), direct Ethernet services, Virtual Private Network support (VPNs), and legacy offerings. For certain wmmunities, not Lakeville, they are beginning the introduction of certain wireless services (WiFi: 802.11 b/g). Although this latter capability is not business specific, it is important to note that capital investments directed to this wireless upgrade far other cities impacted the capital expenditures for Lakeville's ADSL2+ network upgrades. Frontier's current ADSL network supports download speeds (toward the customer) up to 3Mbps and upload speeds (toward the network) of up to 512Kbps. The maximum speeds are dependent on the distance from the xDSL serving office, which is somewhere north of City Hall (precise locations not given by Frontier). To understand the impact on business we can cite that such maximum speeds (3Mbps/512Kbps) are rarely achieved at the longer distances this standard allows (18,000 feet or roughly 3 miles). Generally, the farther you go the slower you go. At maximum distance you would possibly see their minimum speeds of 512Kbps download and 128Kbps upload. In trying to support the Airlake Industrial Park on the southern edge of the City this distance needs to be understood. Given that from City Hall it is 2.6 miles to the southern end of Airlake Industrial Park, and 3.7 miles to I-35 and County Road 70, you can see that businesses are at a distance and therefore likely to receive slower services. To its credit, Frontier plans to upgrade this network to a new standard called ADSL2+. This involves laying additional fiber, reducing the copper distance, placing the serving units in the field (remote from north of City Hall) and other technical issues. Essentially, distance is again the primary determinate. Frontier's goal is to reduce the copper portion to less than 10,000 feet (2 miles for the customer's connection as copper wire with the remaining distance as fiber). At that distance, speeds should be able to increase to around 6Mbps (download, slower uploads). Frontier marketing literature suggests 9 to 12Mbps, which is possible with usual distances substantially under their target maximum. Of the two new remote locations, shown to us, one appeared to have a distance of around 2.5 miles to I-35 and over 3 miles to Airlake. The other will serve Airlake well at .7 miles but be over 4 miles to I-35. The significance of all of this is two fold. First, current business needs are for speeds well in excess of this new upgrade in the period of time being discussed by Frontier. Second, for issues of redundancy (separate physically diverse paths), connections to each new ADSL serving location would be desirable. While one might argue some improvement in speed, but not equally to both new serving locations. The BTTTF does not see both speed and redundancy in service to this business corridor. Frontier is beginning to offer Ethemet services ranging in speed from SMbps upward to 1 Gbps. This could be a valid near term solution for medium size business (e.g. ISD 194 uses their own 1Gbps services today and can upgrade speeds easily at minimal cost). Unfortunately, when asked for information about cost and architecture, Frontier felt this information was proprietary. As such the BTTTF is unable to reliably offer an evaluation, which would assure business needs are met -both short and long term, both cost of service and reliability. Other characteristics we noticed include an emphasis on residential markets, the beginning of converged services over IP protocols, the implementation of methods to distinguish traffic qualities and the implementation of new services valuable to both businesses and the community in general. Frontier has not begun deployment of video services using IPTV page 8 technologies, but say they have it under study. Following our meeting with Frontier management, BTTTF was left with a very positive and cooperative view. Initial queries and subsequent responses were more guarded and information needed for assessment was not forthcoming. That said, it is also clear that Frontier's current network upgrades and investments will not meet the needs expressed by the business community. Further, the dictates of Frontier and their owner Citizen Communications are quite naturally more important a guiding tool for themselves than the needs of Lakeville's businesses. This is not unexpected. Charter Communications Summary Informafion Charter Communications is a significant cable operator serving more than 5.7 million analog video customers in 29 states3. Charter offers a full range of services including voice and data in addition to their historical cable TV offering. Lakeville is part of their Central Division, which includes Arkansas, Illinois, Indiana, Michigan, Minnesota, Missouri, Nebraska and Wisconsin. Charter has over 2 million analog video customers in this division. The BTTTF has no information as to the number ofhigh-speed connections represented in this total. Charter offers a range of services to businesses including popular calling features for telephones, high-speed Internet and video. Charter does not reveal the technologies used for telephone services, RF (radio frequency) is the core of their video support and switched digital broadcast is under study with Data Over Cable Service Interface Spec cation (DOCSIS) release 1.1 and 2.0 currently supporting data transport. Discussions with Charter indicated a desire to upgrade their data service to DOCSIS 3.0 at a point uncertain in the future. These techniques are deployed on a Hybrid Fiber Coax (HFC) network, which means that fiber extends and connects to loops of coax that support upwards of 300 to 700 customers. Hence, the term shared network is used for such a system. The capacity of an HFC network for any given customer is a function of which protocol (DOCSIS version 1.1, 2.0 or 3.0) and the number of users sharing that service on the coax portion of the network along with certain settings on equipment. As such it is generally more difficult to define actual speeds. On non-congested coax loops one can easily experience advertised speeds. However, this is not always the case and speeds maybe less due to the activity of other users. The advertised business class speeds suggest up to 10Mbps downloads with 2Mbps uploads. With future upgrades, including the reduction in the number of subscribers per coax loop, this could increase. Charter also offers direct fiber connections with symmetrical speeds up to 1Gbps. These speeds would meet the current business needs for speed. However, Charter, like Frontier, does not provide technical information necessary to ensure that needs such as redundancies are met. Indeed, during the month of July three fiber cuts occurred resulting from roadwork construction. In each of these cases major outages occurred and were sustained for unacceptable durations. Charter's primary aggregation center, video head end, is located on Cedar Avenue and, from casual observation; fiber is connected via direct paths without physical redundancy. Mankato is Charter's other local head end, but no known fiber travels from Lakeville to Mankato. Charter's phone switch is in St. Louis, Missouri. s Charter Communications web site, htto://www.charter.com/Visitors/AboutCharter.aspx?, October, 2D07 page 9 Finally, Charter does not have fiber, or even coax, in the Airlake business park. Their service has been primarily residential customers. The BTTTF knows of no current Charter business customers. They claim to be willing to offer such service, but anecdotal sources provided one quote for such business service that included cone-time charge of $40,000, which is substantially more than it would cost that business to lay their own fiber. The BTTTF has been told that Charter's culture is "If you need it, they will build it. We need signed contracts:' Private Over builder Minnesota Fiber Exchange (MFE) approached the BTTTF with a proposal to build fiber optics along County Road 70 terminating it in a building to be built by them. MFE is a new firm whose capabilities include the design and installation of physical fiber optics (a business segment referred to as outside plant). The capabilities of the principals in this firm are extensive. They have been involved in outside plant (i.e. construct of physical wires or fiber) for many years and had significant involvement in the Rosemount Evermore FTTH project. MFE suggested that instead of fiber being built to a customer by only one provider, leaving the customer with a single choice in obtaining services; MFE would build and terminate multiple fiber strands in a common building where multiple providers might attach. All service providers would be housed in this new building, connecting to customers there. By rearranging the fiber termination, the customer might have a choice of several such providers who will compete for their business. The City would pay for the fiber and the building. The City would contract with MFE who would do the initial design and provide maintenance and operations for multiple service parties. MFE would bring service providers to the community. The BTTTF reviewed this proposal, met with the principals and concluded that if such an option were in the interest of Lakeville businesses, multiple outside plant providers, including MFE, would be issued an RFP. Other reservations discussed involved the firm's ability to market to multiple service providers, whether such a concept had been successfully implemented by this firm or another firm elsewhere (one similar effort was found in South Bend, Indiana), whether the lack of electronics or operating software would be problematic and, of course, what were the proposed costs. Private over builders may be an alternative to examine should business models so dictate, but current alternatives are not immediately compelling. General i~indings -service providers Can current service providers do what we want? The BTTTFs primary findings were: ~ General dissatisfaction with current providers is high. This is both anecdotal and speck. While marketing efforts of each stress very positive outcomes, a deeper investigation of their current and planned capabilities does not yield a significant change. Capabilities, fechnology and implementations, in support of expressed needs and the satisfaction levels sought are not forthcoming, promised or planned. ® The conduct of the provider market is closed and proprietary. Even filings with the Public Utilities Commission are complex and not specific in the manner needed. However necessary these practices are for providers, infomration to alleviate concerns and assess promised capabilities is unlikely to be forthcoming. page 10 - ~ Decisions on capital investments in infrastructure are solely theirs, changeable and nonbinding without prior public or private commitment of funds. The ability to promote and plan is hampered. ? Provider claims that infrastructure investments are meeting demand or that no demand exists have clearly fallen short. Such decisions to withhold investment are more complex than "lack of demand" in an environment of only two providers. ~ There is little or no competition to these two providers save small wireless providers who currently do not have the capacity to support large circuit redundancies. In today's critical communications environment it would be hoped that existing providers with their extensive knowledge would lead efforts to move us into a competitive posture. Why they are failing to do so is their concern, that they are failing to do so is ours. Assessment of Public Infrastructure Activities World wide the attention to communications infrastructure is ablaze. In barely more than ten years since the Internet moved from an academic nicety to a public good it has virtually changed the way we live and work. The BTTTF looked at trends in public actions on infrastructure. In some cases those actions involved motivating private entities, in some direct public investment and in others' combinations of publiclprivate co-development. In all cases, the initial motivation begins with a belief that needs are not being met. Studies were done and implementations occurred where warranted and needed. In many cases, the returns from public actions brought additional government revenue, better service, lower costs, higher employment and a better sense of community: The needs sought were fairly common over a large number of government efforts. Primary is the concern that citizens and businesses are not able to access newer technologies due to a lack of services, lack of technology or because of cost barriers. The impact of substandard communications on economic development affects the ability to attract businesses and their employees resulting in competitive displacements, both local and worldwide - BTTTFs particular concern. And finally, concerns for the delivery of effective and e}~cient govemmenta! services that could be enhanced by public investment. For example, locally the coordination of security and emergency services enabled via HiPP (High Performance Partnerships), joint powers agreements and Dakota County's networks. These concerns have been addressed by many nations through regulation or the setting of policies. The history of efforts in the United States is well known -the breakup of AT&T in 1984 and the Telecommunications Reform Act of 1996. Both were attempts to motivate private service providers to enhance their offerings and provide competition. More recently, however, service providers have moved to consolidate markets. Today the number of providers - be they cable, phone, or satellite -have declined precipitously. In the wake of these recent changes the United States has fallen from 1s` to 19"' in the world in high-speed connectivity°, with smaller communities facing the greatest harm. In a similar manner the BTTTF noticed that Frontier's infrastructure's capital investment was downgraded from our first meeting to our second. The BTTTF wishes to recognize that businesses do this, it is their right, but its effect on Lakeville occurs nonetheless. While high- ° Organization for Economic Co-operation and Development, OECD Fact book 2007, retrieved from http://www.oecd.ora, August 2007 page 11 speed penetration rates in the US range toward 49%, Europe ranges from 60% to 80%, Asia toward 90%5, Frontier claims 28% and that includes dial-up.e In another document it is suggested that high-speed services may be as low as 18% and this high-speed is no higher than 3Mbps in Lakeville today. The BTTTF looked at the international community and found examples of Open Networks where many service providers share a common municipal fiber network -driving down the cost of services through competition. We observed ever-greater speeds and services - continual improvements where just getting xDSL is not enough. Korea, who once claimed the highest penetration rate in the world at 90% with xDSL speeds of 100Mbps per customer, is now actively implementing fiber-to-the-home. Meanwhile the Netherlands raced ahead in speed and Amsterdam's Open Network now has the highest penetration rate. Japan has been primarily fiber connected for several years. Brazil, Sweden, Denmark, Singapore and Malaysia, to mention just a few, are all moving faster than the United States. At the global level there is a keen understanding of the importance that communication networks have for competitiveness. Cities and regions throughout the State, Nation and World are working to ensure competitive advantage through increased communication capabilities. By competitive advantage the BTTTF is not only pointing to the ability to perform, but also the cost to do so. Direct casts for higher speed connections are higher than experienced in Europe and all of Asia (e.g. Japan's average cost per Megabit is $0.90, Belgium is $11.50, whereas the US is $35.30).' Locally, the cities of Chaska, Burnsville, Eagan, Farmington, Minneapolis, Montevideo, Northfield, Rosemount, Red Wing, St. Louis Park, and St. Paul have proceeded to develop, or studied, publiclprivate improvements to communication services for business and citizens - beyond governmental needs. Scott County is completing a $3.5 million fiber ring, connecting all County cities and townships, this November. Dakota County's network build out provides enormous capability and the BTTTF has held very preliminary discussions to determine if cooperation with these entities holds promise for Lakeville. Nationally and locally Lakeville is not on the leading edge. If the BTTTFs recommendations meet with approval, Lakeville will be in the company of many cities that have pursued municipal action. According to FTTH Council's (Fiber To The Home) market consultant RVA LLC, the United States passed over 1,000 fiber-to-the-home communities in 20068. Many successful communities from Windom, Minnesota to Fort Wayne, Indiana have deployed public networks or enticed private service providers to build state of the art networks. These deployments are not without controversy. Some service providers continue to believe that they can both not deploy advanced networks and then criticize those that do. But such criticisms need to be seen for what they are. Windom is currently being criticized for seeking more bonding authority to expand their network. Their growth rates were so high that they under anticipated their need. Most providers would like to have that problem, but instead they criticize. Others have been lambasted for every vice from "it's not their business" to e Paraphrase of a statement of Daniel K. Inouye, Broadband and Competitiveness: How does the US Measure Up?Tuesday April 4, 2007 - Mr. Inouye's statistics 8 Frontier Communications, "Minnesota Fact Sheet", August 2007 Organization for Economic Co-operation and Development, OECD Fact book 2007, retrieved from http://www.oecd.ora, August 2007 8 RVA LLC Market Research Report to the FTTH Council, June 2007 page 12 "they sold it for a profit" It seems some service providers have chosen to criticize communities regardless of their success. The issue is: who will meet the need? When providers are unwilling, governments must see to the health of their community. Questions the BTTTF asked were who has done municipal networks and what has been the result. The BTTTF looked at several cities. One was South Dundas, Ontario, a small community southeast of Ottawa, Ontario. They were concerned with jobs and business growth. In 2001, they invested approximately three quarters of a million dollars in a small business fiber network. Later a report prepared for them said: "Between June 2001 and April 2003, the following economic effects can be directly attributed to the fibre network 62.5 new jabs; 2.8 million in commercial-industrial expansion; $140,000 in increased revenues and decreased costs.... [two to four year projections] included $25.22M increase in GDP; $3.5M increase in provincial tax revenues; $4.5M in new federal tax revenues:'9 South Dundas is a small community, which made a relatively small investment and had almost immediate returns. We looked at Cedar Falls, Iowa whose well-known success prompted Mayor John Rooff of neighboring Waterloo to comment: "In order for Waterloo with its businesses to move into the 21st century, we need fiber optic capability...l believe it has hurt us economically to not be able to provide fiber optics to businesses locating in our city."10 We looked at Chelan, Washington who began building a fiber network in a very sparsely populated area in late 2003. Sparseness is one of the most difficult criteria for cost versus revenue success. Yet, their revenue projections forecast $11 million by 2012 with revenues exceeding costs (operations, maintenance, interest and capital expenses) by 2013." To be cash positive in less than ten years and returning revenues to government treasuries is a fine accomplishment, especially against difficult odds. For the BTTTF, these cases and others suggests that such projects can be cash positive, revenue generating and not requiring any taxation support Bonding authority, when used, can be retired with revenues from service providers and/or businesses. General frndings -Public Activities Government and public/private investments, which began in earnest during the 1990s, have grown substantially. In the US, over 1,000 communities have developed municipal feberstructures. Worldwide, nationally, and even within Minnesota there are countless successful examples. Business models to support infrastructure investment an: varied and can be creative. These include non-profit spin-offs, fully private developers, municipal utilities, co-ops, open networks, and myriad combinations.. This creativity allows communities to mold local needs to appropriate methods. ® The vast majority of municipal networks use their bonding authorities to begin and use revenue gained from selling access and services to support the initial capital, ongoing s Department of Trade and Industry, United Kingdom, Economic Study of the South Dundas Township Fibre Network June 27, 2003 10 A Study of the Economic and Community Benefits of Cedar Falls, Iowa's Municipal Telecommunications Network, Doris J. Kelly, Telecommunications Coordinator, Iowa Association of Municipal Utilities October 2, 2003 " Chelan PUD report to the Board of Commissioners, February 27, 2006 page 13 operations and maintenance, and interest. Bonds used to begin such are normally retired well in advance of the life cycle of fiber. Levied taxes have not been required and are rarely desired. ® Funding for everything from feasibility studies to final installations and operations can be supported by an array of sources from local contributions, municipal bonding authority, Federal RUS (Rural Utilities Service) programs amongst others. There are active parties who can aid with frnancia! options. ® Resistance from imbedded interests can be expecfed. Bringing all cooperative parties to the table early and asking for positive contributions is a difficult but. winning approach when the interest of the community is kept paramount. Assessment of Local Resources The BTTTF also discussed how public resources might meet the needs of Lakeville. Presentations from the City's IT Coordinator, Danny Barth, and ISD 194s Technology Coordinator, Greg Utecht, were held early. Local conversations from Burnsville, Eagan and others were noted as those communities struggled with similar issues. The dialogues ran throughout the year as new developments occurred. Other City activities, although outside the scope of the BTTTF, continued to spark interest and present synergies where seen. In those conversations problematic findings in the BTTTFs own pursuit of service provider alternatives were echoed. For many we spoke with the common issues pressed public action and possibilities to the forefront. It is often difficult to say when ideas begin to crystallize, when possibilities seem to firm up, but identification with the use of local resources were not the first choices as we began this investigation. The bias toward private business, and hence, private service providers was strong and still tempers our thinking. But the evidence of successful public action in response to similar concerns was powerful. The BTTTFs primary concerns as mentioned previously included network reliability. Could we find multiple physical paths in and out of Lakeville? If we could, would we find competitively priced and cost effective ways to use that, leverage that or build that? How do you introduce competition to a market of two providers? What would cause two providers to compete? We found the possibility of answering these questions when we joined with others who had been down similar paths. The School District installed their own fiber and network. Scott County is installing their own fiber with a private partner and is using it as both a cost effective tool and, perhaps, as a little leverage with incumbent providers. Dakota County installs fiber and cooperatively runs it with cooperation from School Districts, Cities, and the State. Not only did these entities install fiber, they knew how to do it and they knew how to run it. Not only is there local fiber in abundance, but there is talent too. Summary of Independent Schoo! District (ISD) 194 capabilities ISD 194 serves the vast majority of Lakeville's students, save for those on the northeast comer and a few further touches along the eastern boarder. The District first began interconnecting buildings in 1998 and today has fifteen schools and administrative offices on their network. Additionally, they support connections for the City via Heritage Library, City Hall and the new Ice Arena. They have worked closely with Dakota County's networks to interconnect their District to other County and State resources and have a current connection to the "511" building in downtown Minneapolis. The "511" building is known as the primary page 14 fiber hub for the Metropolitan Area. Virtually all service providers, of any kind (AT&T, McLeod, Qwest, various ISPs, etc), have a connection to this infrastructure hub. ISD 194 began investigations into replacing service provider circuits some years ago. In doing so they sought assistance and bids from the same providers we spoke with and had essentially the same results - provider willingness was present, but at costs that were greater than ISD 194 could afford. And, costs were certainly more than doing it themselves. After many rounds with private companies the decision to lay ISD owned fiber was made and the network was built. A graphic showing the general placement of their fiber can be found in Appendix B. The network design was established such that each school was connected to Lakeville North High School (LNHS) with a bundle of 24 individual fibers (strands). A normal connection usually requires 2 of those strands, one for transmissions to the school and one for transmissions in the opposite direction. The District also reserves 2 strands for the eventual use of a separate video service. This leaves twenty strands, minus some for occasional maintenance or breakage. For an estimate, we could say there were twelve free strands along the corridors to each building or roughly 180 unused strands (15 buildings x 12). These strands lie along the corridors as can be seen in Appendix B, but roughly bisects Lakeville along Ipava Ave., with a loop on the south end which runs along 215"' street, County Road 70, east and west, bordering Airlake and the expected business development there. As a further prospect, ISD 194 has been in discussions with Scott County for interconnection between Lakeville South High School and Scott County's new fiber ring. This new ring will have a planned connection to McLeod's Metropolitan ring which in turn connects to the "511" building. Further ISD work with Dakota County provides connections to Farmington and those County connections plan additional diverse routes outbound to other valuable interconnections and themselves back to "511." ISD 194 is interested in providing support to the City and would consider discussions involving the use of their fiber. After technical design work was roughly done and specifications made a cost or revenue sharing plan that was suitable and justifiable might be constructed. The total cost of the fiber portion of their build was approximately $568,000. An opportunity of acquiring a full backbone for some part of that expense would be very cost effective. There is abundant and sufficient fiber to address both the needs of the BTTTF as well as future growth toward employee home support should that become desirable. Summary of Dakota County's capabiiifies Dakota County and the various cities within have been in the process of building key infrastructure for a number of years. Initial County efforts were contained to their own needs and the construction of I-Net began. This network was solely for Dakota County governmental needs and some of the fiber infrastructure was "leased" from Comcast. Those early Comcast circuits had restrictions on use and other technical limitations. As needs advanced and other Dakota County jurisdictions saw the potential of these networks, the County began the construction of its own fiber network. Interconnection of school districts began. Interconnections for emergency services were accomplished with support for cities through the HiPP efforts and joint powers agreements. In general, the networking staff in Dakota County has worked closely with cities to aid in their needs and their assistance page 15 continues in Lakeville activities connecting the Ice Arena or with ISD 194s connection to Farmington's High School. Additionally, Dakota County has a close relationship in the operation of their networks with the State. Currently, common County/School DistricUState interconnection fabrics are operated by the State and the County sees to the installation of fiber and physical issues. Dakota County also initiated the Regional Broadband conference in November 2006, which spawned a task force for the eventual linking of all metropolitan counties: Hennepin, Ramsey, Scott, Washington, Dakota, and more. This task force is meeting regularly in hopes of finding common networking solutions to issues of capacity, cost, and other shortcomings of our currently fractured service provider offerings. Like the School District and others, there are available fiber strands within these constructs that present opportunities for Lakeville and that have no restrictions on commercial traffic. The number of potential paths through the County solving reliability/availability issues is only the tip of opportunity. There are more than just two service providers that could be connected to the network, for example. The possibility of lower cost services, of a truly competitive environment and for Lakeville businesses may be within reach. Summary of Scott County's capabilities Scott County assembled a task force called SCALE (Scott County Association for Leadership and Efficiency) composed of all cities within the County. While the issues SCALE addresses are broader than fiber, like Lakeville's participation in HiPP, nonetheless this group advocated for a countywide fiber network to be initially shared by every city and school district. This 94- mile network is composed of a high fiber strand count, some shared amongst the public bodies, leaving many strands not currently designated for use. Additionally, Access Communications, who is building the ring, will lay their own fiber in this trench and be able to offer businesses point-to-point connectivity in competition to local service providers. Scott County's vision is to use this $3,500,000 nng to drive down service costs to its business community, serve as a catalyst for economic growth and eventually direct connections to residents. "Adds, Jim Campbell, the IT director for neighboring Dakota County, "It's a very aggressive move on their part, their system is never going to get bogged down"12 Importantly for the BTTTF, this new ring, with the capability to carry Lakeville business traffic, is to be connected to ISD 194s ring, at Lakeville South High School. Scott County's ring connects to the City of Burnsville, which is connected to Dakota County's Western Service Center, which is in turn connected to Oak Hills Elementary (ISD 194) - completing a highly reliable physical ring. And this fully connected ring is in turn connected to McLeod's metropolitan ring, which goes through the "511 building. General findings - Loca! Resources The key issue of reliability and network availability depends on two issues. The first is proper network architecture (equipment and its usage design) in which faults and failure are key elements. And second is a physical structure with multiple, diverse routes, which ensure connections within and outside of Lakeville. 'Z Scott County betting on fiber's future, Minneapolis Star Tribune, August 15, 2007 .page 16 The BTTTF generally found: ® /SD 194 has available fiber connectivity to begin supporting a municipal fiber network. This fiber network bisects the very center of Lakeville and touches not only the business corridor along County Road 70, but all of Lakeville. ® The ability to provide multiple physically diverse paths toffrom Lakeville exists through ISD 194s networks, Dakota County and Scott County. Use of these pathways will provide the reliability needed by local business and, perhaps later, residents. Lakeville's lack of competition can be addressed by enabling access to a Lakeville network at other points in common. By use of countywide reach and eventual connectivity into the very heart of the Twin Cities (the "511" building), Lakeville will open itself to multiple service providers and services. ~ Network talent and understanding was present in many of these conversations. Leveraging such a .rich combination of Lakeville staff and local government personnel will aid in understanding best practices and approaches. The momentum in local activity is increasing. Being part of this developing climate will keep Lakeville postured for success. Active encouragement of City staff in these activities has been excellent and should be furthered. Open Networks-An alternative Open Networks is a concept that has emerged in response to the critical issue, the critical insufficiency, of communication networks for both business and residences today. Its form has the potential to maximize the strengths of both. public and private resources, lowering costs for end consumers, improving government services and catapulting current communication environments to world-class excellence. The construction of such a network assumes two key elements: a separate or independent municipal commons and a competitive array of service providers. In the increasingly complex assembly of technologies and services that comprise communications today, a series of issues and trends have become well known. First among those is the consequence of older technology investments and the economic divisions that hold those investments in place. Simply put cable and telephone .technologies are not sufficient to cany new services at competitive price points today. Without doubt, it can be seen that these companies are expending great capital investment to alter these deficiencies. But most often their efforts reflect a series of incremental mod cations, which satisfy few and certainly do not compete on the worldwide stage. Moreover, even if they were more successful in satisfying today's needs for convergence and speed, both heading to the same direct fiber connections, the result would be two or more carriers offering a product (connectivity), which is no longer in specific demand. Today the demand is not for connectivity, were it sufficient, but services. The historical analogies are abundant. This race to lay track, or legacy-improved technologies, if you will, was common to railroads with different gauge rail beds. It was common in the early, fiercely fought, completion to provide direct or alternating electrical current and the associated multiple of wires and power plants that would have resulted. The public wanted electricity, not a choice of two kinds -rail transportation not different engines and tracks. In cases where public good results, it has been the role of standards bodies and governments to establish common standards, practices and, in some cases, the actual service itself. Arguments about roads and sewers, whether publicly or privately provided, have resolved to public provision with great benefits. page 17 These historical lessons have paved the concept of a municipal commons. Today legacy industries are competing on outdated needs -and they know it. Business and residential consumers do not want or need the disruption involved in connecting different physical 'wires" to their offices and homes, just to benefit from some idea of competition. They seek the services that are transported on those "wires." They want Internet connections of some ever-growing size. They want phone services -preferably with mobility and high quality. They want visual content be that television, video conferencing, video movie trailers, movies, telepresence or any of the new and emerging visual applications. The response from legacy providers is to provide "triple-play", "quadruple play" (add mobility), and eventually "any-play." But what they are speaking of really are services, services not constrained by older technology deficiencies that kept them in separate legacy neiworks. And, not only are they each racing to duplicate these services, they are also fighting with non- traditional providers of those services: video from non-traditional providers (YouTube, Yahoo, Miro, Swamcast for major league sports, and so on), voice provided Internet web services (e.g. eBay's Skype or Vonage), and data, well it's everywhere. Some believe that by the time telephone providers implement "cable TV' much of that content will be delivered over the Intemet. It is a losing battle, at least for the public. The idea of holding on to customers by capturing their "wires" is as antiquated, and useless, as different gauge rail lines. A better course is here -Open Networks. As said, it requires two key elements: a municipal commons and a competitive array of service providers. Developing a Municipal Commons The construction of communication networks is a highly complex task around which has grown academically trained personnel, changing vendor products, best practices and policies, architectural approaches and the like. In this sense it is no different than many disciplines such as building architecture, roads, sewers, water utilities, or electrical and gas services. It is special only in the sense that it is newer. But even here public awareness of components such as fiber, switches, servers, and so on is ever more commonplace. And like building architecture, people know some of the elements that make for desirable results (windows, doors, closets -fiber, mobility, bandwidth). They just might not know how it goes together and what details are more important than others. One common area where this peripheral knowledge can aid is in the knowledge that fiber is the best medium far "high-speed" delivery of content. Every service provider in the world, public or private, is moving in that direction. What the actual comparisons of media types (fiber, xDSL, HFC, wireless) are, how "big" is content or how "big" are the requirements, and, perhaps, how is it installed and where is it are among these vague notions that people have, but may not fully understand. Critical to the general understanding is that excess strands of fiber, unused .strands, or empty conduit to place fiber in are normally installed initially for later unanticipated needs. This in-place, unused fiber and conduit can now be used for public benefit at substantially reduced cost. This is the case throughout Lakeville and exists in School District implementations and City implementations along certain roads. Once inventoried and agreements for use finalized, these existing fiber resources would form the transport or backbone component of the municipal commons. This "public" fiber is in addition to the conduits and strands of private fiber by various carriers. Further, local Dakota County fiber and fiber in adjoining counties provide access to metropolitan fiber rings that access page 18 neutral service provider commons at a building known as the "511." Each of Lakeville's existing service providers has a presence in the 511 building. Other providers, not currently local to Lakeville; are also present at 511. Three elements do not yet exist for the development of a Lakeville municipal commons fiber infrastructure: customer access fiber, the optical and electronic equipment connecting access fiber and transport fiber, and operational software and personnel. Access fiber and access electronics differ in their implementation by architectural approach. The common architectures today are Gigabit Passive Optical Networks (GPON), Ethernet Passive Optical Networks (EPON) and Active Ethernet. Each has its strengths and weaknesses and is the domain of network architects who select such based on requirements and objectives. One criterion today is speed and each of these technologies would minimally provide in excess of 50Mbps, synchronously, to any customer. One of the criteria in this discussion is the radius, or distance from the electronics to the business/home, for each approach. Without much hesitation it can be anticipated that both GPON and EPON would have sufficient distance to connect business and homes to existing ISD public fiber serving as the "transport' or aggregation backbone of Lakeville's network. The access networks would need construction, an architecture would determine appropriate opto-electronic interconnection equipment, Dakota County and neighbor county implementations would provide multiple and redundant access to a neutral service provider commons (the 511 or others) and operational sofware, systems and personnel would need to be installed and retained. Developing a Competitive Services Environment To be a world class communications environment means that you have access to the most advance services at costs, which are at least equal to, preferably less than, those whom you are competing against. This is true whether you are speaking of individual's expense or those of business. Today those services, in availability and cost, are simply a function of the business decisions of the geographical incumbent(s). It has been long known that barriers in the form of customer access networks have precluded true competition for services. Eliminating this barrier was the driving concept, however poorly executed, behind the 1996 Telecommunications Act. Lakeville's municipal commons, with connection to a neutral provider commons, will create a truly competitive environment. Additionally, this structure will provide the economic and financial resources to pay for the commons, replace revenues lost to existing City franchise fees, continue support for public services such as PEG, and lower communications cost for business and citizens of Lakeville. According to an April 2007 study by MIT and Carnegie Mellon, today's average cost per megabit of Internet bandwidth is approximately $35.50 in the US, $11.50 in Belgium and $0.90 in Japan. Today, a provider of voice services can obtain the full provision of all services (switching, call waiting, forwarding, dial tone, long distance interconnection, etc.) by outsourcing this to a common carrier for under $10 a month per customer. Yet customers pay a good deal more. You might say they pay this additional cost to pay for the access network. Admittedly, these are simple cost numbers, which need to be more fully understood. However, what is easy to understand is that competition drives down costs, improves customer service, and provides a platform for innovation. What is also clear is that there is value in the access network itself. If a connection for voice service at a neutral provider page 19 commons costs $10, then maybe part of another $10 can serve as revenue for the municipal commons infrastructure and the customer gets phone service for $20. The provider commons in the 511 building exists today and fiber, publicly available fiber, exists today connecting Lakeville to the 511. Most major national carriers (AT&T, XO Communications, Level 3, Verizon-MCI), regional carriers, local carriers (Qwest, Integra Telecom, McLeod, Enventus/Hickory Tech, Century Tel, Onvoy/Zayo), cable providers (Charter, Comcast), local, State and Educational providers exist today at the neutral provider commons. One can be sure that they are interested in new business. Access to a new customer base for the mere cost of accessing the municipal commons is very attractive. Agreements and revenue sharing need to be established. Operational considerations need to be built or implemented. And customers need to be invited to a new and cost effective smorgasbord of services and providers. Importantly the financial models, which support the municipal commons, provide for provider incentive and reduce Lakeville citizens' costs, need to be constructed. What is fortunate is that all of the building blocks are present today. Next Steps toward an Open Network Open Networks have value to all concerned. Existing service providers can focus their investments and business on the newly emerging services. Municipal commons provides a common sense approach to today's crisis in communications capabilities. Customers, business or residences, will have access to the most advanced service offerings at competitive prices. The City itself will be able to reduce cost of services, avail itself of new revenue streams, attract and retain strong businesses and move toward aworld-class communications environment. These are not wishful promises, but real and tangible objectives. The following nine key steps are recommended. ? Hire, contractor promote key individuals to shoulder network architectural design and reviews, financial analysis, marketing survey and study coordination. ? Inventory public fiber and initiate tentative agreements for long-term rights of use. This would include those fiber connections to the neutral provider commons. ® Develop an appropriate network architecture and outside plant design with costs, potential implementations schedules, requirements definition, and personnel requirements. Include the time frames and rough costs for equipment replacements and network upgrades. This may be done for multiple architectural approaches, which are then submitted for review. ~ Initiate discussions with multiple providers and the selected neutral provider commons to determine costs and willingness or criteria for participation. ~ Review and establish the operational criteria including software for operational support systems and billing, personnel and responsibilities for services support. ® Initiate a marketing program to ensure adequate customer participation, take rate, by access network areas, to guide deployment and ensure .financial viability. ~ Develop an appropriate and detailed financial and operational plan and business case. Seek to understand the appropriate combination of public and private participation in each component of the municipal commons, the neutral provider commons and operational aspects along with their benefits and risks. page 20 Present a detailed approach and recommendation for implementation to all public and private parties responsible for the Open Network's success. Finally, Open Networks are a public requirement that like all such needs may be implemented under different combinations of public/private business models. It is important to remember that what is being addressed is in response to the critical issue, the critical insufficiency, of communication networks today. Recommended Next Steps The individual findings and recommendations listed in this report are intended to guide an understanding of Lakeville's environment and the ability to further advance its appeal to businesses and their employees and to the community as a whole with respect to advanced communications. During this study it became more apparent how reliant each of us has become on communications and the applications, sources of information and tools accessed across networks. It is complex and to many it is new ground. As such we recommend a measured pace. Much has been accomplished this year, but more needs to be known. Specifically, we need to know whether the ideas and preliminary information gathering holds up under a more detailed scrutiny. We need to better understand the various public fiber owners and private service providers' needs as partners. We need to define the costs and revenues that such partnering might entail. We need to have at least a high level view of proposed technical network architectures in order to properly cost such. We need to understand the willingness of Lakeville businesses, and perhaps citizens, to become customers df this network with some set of competitive services in order to properly define this portion of revenue. We need to study this recommendation. The BTTTF recommends: 1. Conduct a feasibility study with those items listed under Next Steps for an Open Network. 2. Include within that feasibility study a study of wireless backhaul options to provide immediate redundancy for the Airlake industrial Park. 3. Authorization to issue letters of interest requesting each of the public bodies that may consider contributing existing fiber infrastructures to Lakeville's municipal commons. 4. Authorization to form a Broadband Commission with a composition similar to the BTTTF. 5. Participation of relevant staff resources from Community & Economic Development, Cable staff, Inspections, Engineering, Planning, and the City Attorney's office in support of this effort. The BTTTF wishes to thank the Council for the opportunity to explore these issues on their behalf and are available to answer any concerns or questions we failed to properly address. page 21 Appendix A Initial Committee Charge Recommendation: Creation of a Business Telecommunications Technology Task Force Purpose of the Task Force: To make recommendations to the City Council regarding: 1. Telecommunication technology resources available to Lakeville businesses and the ability of those resources to meet the current and future needs of the business community. 2. New and emerging technologies that could better support existing businesses and encourage new business developments in Lakeville. Scope of Work: The Task Force shall: 1. Explore and evaluate broadband technologies, Wireless, end-user fiber build out, and other telecommunications technologies that provide any and or all telecommunications services to our business community; 2. Assess the need for altemative or duplicative technologies to support and provide businesses with multiple methods of acquiring and maintaining adequate telecommunications services. 3. Explore various business models by which the private sector, the city (iF needed), or others could offer these technologies. Review options with service providers such as publicJprivate partnerships, contract or lease arrangements, and other models, and examine what role if any the city might play in such models; 4. Consider these and any related questions that might assist the Task Force in fulfilling its purpose: i. Is d possible for the city to motivate providers to increase services within the City of Lakeville? ii. If needed, what City resources might be utilized? iii. What is the fiscal viability of the preferred alternative(s)? iv. What are the direct benefits of providing this service through the preferred aRemafive(s)? v. Could a revenue generating solution be a possibility? vi. What are altemative sources to fund preferred alternative(s)? vii. What risks are there in the selected alternative(s)? page 22 viii. What role would the City play in the selected alternative(s)? Owner, lessor, partner with private industry, etc. 5. Invite a wide array of experts and persons knowledgeable in the issues to be studied by the Task Force, to inform, generate helpful discussion and assist in evaluation of technologies. 6. Prepare a preliminary report, to be authored with the assistance of City staff, reflecting the preliminary conclusions of the Task Force. 7. Obtain feedback and input on the preliminary report from a variety of sources including but not limited to the public, the Telecommunications Commission, the Economic Development Commission, and known providers of telecommunication services. 8. Prepare and submit a final report to the City Council. Recommended Task Force members: Seven members 1. Economic Development Commission member (1) 2. Telecommunications Commission member (1) 3. Chamber of Commerce member (1) 4. Lakeville Residents employed in Telecommunications or Technology (2) 5. Business Owners within the Community (2) page 23 Appendix B Independent School District 194 Fiber Map y~ r l..r•• , , ~ i Y` • ~p ti [ • tin ~ o~~ u r~ ~ r.. ~r~ •y• ? ~ ~ - ! ! i~ 'j ill ® ~ ^ S '"fig, ° . col t t ' f ~s o~ b°:: s ` ~ e 'fit Y r°~d.,~ ° ® ~ ~ i E ~ ~ - ~ q ~m.~•. ~ S` `~J ~ n ~ o . y~ ~ I~~~ ~ ~,.w ~ fi N~ ~ ~ ~ r ~ I ? .r.. ~ _ . f~. ne :a,-' W r ~¦¦r i f 1 ~ ~ 9 `r l `{JJ ~ * ~ , [ kb~ -p t ~ page 24 Appendix C Potential Interconnections Current State Connection S11 i i McLeod Ring ; Weste Se"`~ Dakota County ~ Ring & Scott w.. I S D 196 County w Ring , ~ ~.,,e . . J page 25 Appendix D Relative Speeds for Differing Technologies Relative Broadband S eeds me abits per second Type Optimal Speed (Mbps) Common Primary Issues Service Mb s Download U load Down Up Dial up (V.90) .056 .336 Varies Varies Wire quality xDSL ADSL .256 to 8 .064 to 1.02 3 .256 Length of copper ADSL2+ .256 to 24 .064 to 3.5 18 2 wire portion, VDSL2+ 12 to 250 12 to 250 30 10 marketin Cable (DOCSIS) Version 1.0 38 10 3 1 Number of users Version 2.0 40 30 8 2 per coax loop, Version 3.0 160 120 n/a n/a marketin Wireless WiFi (802.11b) 11 11 2 1 Legacy support WiMax (802.16e) 70 70 3 1.5 and interference EVDO Rev.A (cell) 3.1 1.8 1.5 .5 from buildings, trees, etc. Fiber EPON (802.3ah) 5.6 to 1000 5.6 to 1000 10 10 Marketing GPON 2,400 1,200 30/50 30/50 page 26 Appendix E Glossary ADSL2+ A variety of the xDSL family of frequency division techniques that provides for increased throughput (bandwidth) over earlier standards of ADSL. See xDSL. Backbone Connections between points of customer or circuit aggregation, which serve to transfer network traffic between those points. Usually the largest capacity circuits in a network. Bit Binary digit, basic building element of characters (typically 8 bits per character such as an A, B, @, or numbers} BTTTF Business Telecommunications Technology Task Force DOCSIS Data Over Cable Service Interface Specification is a protocol developed by Cable Labs to transport IP Packets over an RF HFC network, See RF and HFC. EPON Ethernet Passive Optical Networks is a method standardized by the IEEE, which provides very high-speed fiber connections to homes and businesses. Ethernet A protocol standardized by the IEEE, which is commonly used to convey Internet Protocol packets over various media including copper pair and fiber. Gbps Gigabits per second; billions of bits per second GPON Gigabit Passive Optical Networks is a method standardized by the International Telecommunication Union of the United Nations, which provides very high-speed fiber connections to homes and businesses. HiPP High Performance Partnerships is a collaboration among cities in Dakota County to achieve efficiencies in service delivery. HFC Hybrid Fiber Coax is an architectural form that combines fiber linkages to neighborhood coax loops with many customers attached to the coax portion. Used in construction of cable TV systems. IEEE Institute of Electrical and Electronic Engineering Association IP Intemet Protocol is the primary protocol used on the Internet containing a payload (something to be delivered) and addressing information (who sent, who should receive). IPTV IP for television. A manor of carrying television signals in the payload of IP packets. ISD Independent School District page 27 ISP Internet Service Provider Kbps Kilobits per second; thousands of bits per second Mbps Megabits per second; millions of bits per second Municipal commons A network constructed by and/or for a given municipality such that all services to end customers traverse this common infrastructure without respect to, or limitation by, any given service or provider. Open Network A network characterized by the availability of many service providers to end customers, providing choice and customer mobility for any particular service. Packet A group of characters with a body containing a payload (something being delivered) and proceeded by addressing and administrative information used to ensuring proper handling, SCALE Scott County Association for Leadership and Efficiency SLA Service Level Agreement. The contractual terms defining the qualities of service a provider and customer establish concerning circuit availability; percent of lost packets, packet jitter, security and so forth. Service Providers. Any of several companies that provide telephone, Internet, video and supportive services such as data backup and security. RFP Request for Proposal. One of several forms and methods used to define alternative approaches and costs of competing suppliers. RF Radio Frequency, a method to transport television signals over a cable infrastructure. Also used to transport various services over air. VPN Virtual Private Network. A method of labeling and separating multiple paths (virtual paths) over some common circuit(s). WiFi Wireless Fidelity (aka; 802.11 a/b/g/n) is a protocol used to convey Internet Protocol packets over air at frequencies of 2.4Ghz and 5 GHz. xDSL x ([A] Asynchronous, [VJ Very High Speed, etc.) Digital Subscriber Line service - a method of frequency division multiplexing that separates voice paths from data paths. page 28 ~v~oi i~a City of Lakeville ' ~ Community and Economic Development Memorandum To: Economic Development Commission From: Adam Kienberger, Economic Development Specialist Copy: David L. Olson, Community and Economic Development Director Steve Mielke, City Administrator Date: November 21, 2007 Subject: CDA Redevelopment Application As part of the Downtown Development Guide approved by the City Council in December, 2006, a plan for a public plaza at 208m Street and Holyoke Avenue was identified as one of the key components. This item was identified as one of the priorities in the subsequent Action Plan, and planning has been underway for it since early 2007. To facilitate the development of this public plaza known tentatively as °Market Park", the City is proposing to submit an application for a Redevelopment Incentive Grant to the Dakota County CDA in the amount of $200,000. The City recently received commitment from the Dakota County CDA that they will provide up to $350,000 in TIF assistance for the creation of the Market Park improvements located at Holyoke and 208"' Street. These improvements will consist of a public parking area with adjacent streetscape improvements and will provide a permanent location for the Farmers Market and other Downtown events. The City also hopes to pursue some an environmental grant to provide for the construction of the streetscape improvements utilizing Low Impact Development (LID) methods such as permeable pavers and porous pavement. CDBG dollars will be used to fund the demolition costs of the fireplace store building. Below is a preliminary budget assembled for the grant application: Downtown Lakeville Market Park Redevelopment Project Estimated Public Improvement Costs 1. Public Parking and streetscape Improvements $250,000 2. Engineering, Administration, Contingency $62,500 3. Acquisition of Fireplace Store Property $175,000 4. Relocation of Two Commercial Businesses $25,000 5. Demolition of Fireplace Store Building $20,000 6. Bury Overhead Electric Lines $67,500 Total $600,000 Source of Funds Amount Committed Pendin CDA TIF $350,000 X CDBG -Demo $20,000 X Dakota Co. SWCD $30,000 X CDA Redev. Grant 200 000 X Total $600 000 The City is currently working with a developer to coordinate this Downtown planning effort and is nearing an agreement to acquire the fireplace store building on the corner of 208th and Holt Avenue as part of this redevelopment. The acquisition and relocation line items in the above budget reflect this pending action. The application is due to the CDA by Monday, December 3rd, 2007 and is scheduled to go to City Council for approval at their December 3`d, 2007 meeting. A copy of the proposed site plan for Market Park is attached. Action Requested: Recommend that the City Council authorize submittal of a $200,000 Redevelopment Incentive Grant application to the Dakota County CDA. aaiv..oda^on.+, ~ 'w^^w ^w•waa +wx ososl y ~ xasxxor -a xnae +•^w^ws Ntlld 3115 ~ sa L ~ xg 053xxm w x+ls tl1053NNIW •3llIA3NVl ~ I 88~~.. f4-- aa § •w r+ .^w +w .•o•^ ,e3uN~nr 153M 133x15 N1601 W NtlOAIOW a~~& vwwia•~ 4^v • w^ 1 ww v^ ^•ww•a^• tl10S3NNIW 3llIA3Ntll xoaalaw+ •xna ant wxl biwa ,v.rv 1 w x'~"'° °°+w°" ~lavd Nvean ~ sNla~lne ~IV13a I 3 c~ ti r_ 0 1332llS 031tlOtlA ~l/ 3nN?nd L~oH ~ I W o N O F W WI- ~ a u.~ ~ ~ uzz z _ ~o au~' o _x o d~ ~rz Z Yp WuWu11U O F -UQ,W ~~Q ~ p ~ z 4^;L5 s ~ ~ = SI 4Z'. 1- O U Z w'a ~ W ~ Qp. ~.LL ~ 'f. W Z 111 z `NQW ~?L 1 b N wp ~ w o~ ~iW ~ z s t~~~y 0 UXZ z DD ~~q, W 3~(1 ~r S zIN U ~ ~ ~ 4 J o Q!7= Ip OZ O CIII ® o uilw~ d ~Z n~Q p SO WNW U ~ ~ W f ~ ~ a1 _ _.I I.. £9'9Z ~ ~ ~nN?n~ 3~?~,~?H I ~ ~ ~ I ~ r~r--- 'gem Noa ~ City of Lakeville ' Community and Economic Development Memorandum To: Economic Development Commission i From: David L. Olson, Community and Economic Development Director' Copy: Steve Mielke, City Administrator Adam Kienberger, Economic Development Specialist Date: November 21, 2007 Subject: 2008 Community Development Block Grant Application The City is required to submit its 2008 Community Development Block Grant (CDBG) application to the Dakota County CDA by December 31, 2007. It is anticipated that the City will receive $103,500 in 2008 which is the same amount that was received in 2007. The CDA is continuing its requirement that 50% of a City's activities to be funded with CDBG funds involve activities that benefit Low-Moderate Income (LMI) households. One of the more commonly identified LMI activities in other cities in Dakota County is the Home Rehabilitation Loan program administered by the Dakota County CDA. Preservation of the existing residential neighborhoods adjacent to the Downtown has been identified as a goal of the City Council approved Downtown Development Guide. In addition, earlier this year, the City Council in response to residential neighborhood concerns, adopted an Exterior Maintenance Ordinance that attempts to address concerns about the exterior condition of existing homes in older neighborhoods. This past summer, the City did a targeted mailing to residential neighborhoods near Downtown and Valley Park in an effort to increase awareness of the Home Rehabilitation Loan program administered by the CDA. As a result a total of 6 rehab loans have been approved in Lakeville in the current program year totaling $85,700. There is currently a balance available of $24,670 in this program. Staff would recommend a funding level for this program of $51,750 for 2008. The other activity funded with the City's 2007 allocation is the Downtown Code Improvement Program. This activity currently has a balance of $149,079 from funding in previous years. it is recommended that additional funding in the amount of $51,750 be provided in 2008. This will provide sufficient funding to complete at least two Downtown Code Improvement grants in 2008 and 2009. A recommendation is to re-allocate some of these funds to clearance activities in the Downtown if the Market Park project proceeds in 2008. 2008 Funding Recommendations Staff recommends the following activities to be funded with the City's 2008 CDBG allocation. Downtown Code Improvement Program $51,750 Home Rehab Loan Program $51,750 Request Action Staff requests the EDC discuss these recommendations and forward its recommendations to the City Council. ~ City of Lakeville Community and Economic Development Memorandum To: Economic Development Commission From: Adam Kienberger, Economic Development Specialist Copy: David L. Olson, Community and Economic Development Director Steve Mielke, City Administrator Date: November 21, 2007 Subject: 2008-2010 Strategic Plan for Economic Development Attached are the notes from the October 22nd Joint Work Session on the 2008-2010 Strategic Plan that was facilitated by Todd Rapp of Himle Horner. Included in this information are the proposed Vision, Mission, Organizational Definition, Strategic Work Areas and Goals, and Outcomes that have been identified throughout the past several meetings. Staff is requesting that the EDC approve the attached items and forward them on to the City Council for approval. The final version of the 2008-2010 Strategic Plan for Economic Development is scheduled to be presented to the City Council at their December 17"' meeting. 2008-2010 Strategic Plan Vision Lakeville is a unique and attractive community where people and families want to live, learn, work and enjoy for their entire lives and where businesses choose to locate due to an attractive business climate. 2008-2010 Strategic Plan Mission The Economic Development Commission is committed to identifying and supporting opportunities for innovative economic growth, which enhance the quality of life and provide balance to the business and residential community. 2008-2010 Strategic Plan Organizational Definition The EDC is an advisory group of business people that promotes and responds to community and economic growth by: • Serving as policy advisors to Council and staff about community and economic development issues • Anticipating internal and external changes in opportunities, challenges and trends that may affect development • Communicating with the Council, residents and stakeholders while listening and reacting to the opinions of interested parties Building relationships and facilitating cooperation among stakeholders • Promoting Lakeville as a good place to live, work and do business 2008-2010 Strategic Plan for Economic Development Goals Seven strategic work areas and seventeen goals were identified for the 2008- 2010 Strategic Plan. The work areas and goals are listed below. *bo/ded items indicate the years these items wi/l be emphasized Transportation 1. Complete the County Road 70 Interchange miming: Year 1, Year 2) a. Communicate with businesses during construction b. Keep focus on getting it done right c. Maintain post-interchange work d. Land use and support current and future development Z. Participate the development of transit in Lakeville (Year 1, Year 2, Year 3) a. How do we make the right investment for Lakeville? b. Encourage others to promote and plan together for a viable transit plan c. We must engage this process because decisions will be made with or without us d. Can we benefit from reverse commuting? e. Assist the political stakeholders 3. Promote continued planning of the East/West Corridors (Year 1, Year 2, Year 3) a. Getting future improvements on schedule b. Addressing the planning for the doughnut hole 4. Provide assistance to the City Council on the efforts to secure additional highway funding (Years, Year 2, Year 3) 5. Monitor the Airlake Airport and MAC's Comprehensive Plan (Year 1, Year 2, Year 3) a. MAC procedure to adopt long range plan 6. Investigate options for the use of the Urban Partnership Agreement (UPA) Grant for I-35 and Cedar Avenue transit facility development (Year 1, Year 2, Year 3) Life-cycle Flouring 1. Help the City create a workforce housing approach that reflects the needs of business (Year 2J 2. Help the City achieve reasonable and realistic housing goals that balance the need for different housing types for residents (Year 1, Year2, Year 3) a. Meets market needs b. Provides quality c. Addresses need for single-family entry-level housing d. Advocate with other policy makers to agree on housing goals e. Research affordable housing options and solutions Technology 1. Advocate for Lakeville to become a leader in telecommunications services (Year 1, Year2, Year 3) a. Utilize recommendations of the Business Telecommunications Technology Task Force (BTTTF) b. Include redundancy c. Create partnerships (school district, private) d. Make Lakeville a place telecommunications providers choose to serve Growth Management 1. Advocate to maintain balanced growth (Year 1, Year2, Year 3) a. Monitor, react, and if needed advocate for specific growth strategies b. Regional analysis of scenarios that may affect fiscal stability of City 2. Continue to define and provide the information future businesses and developers need in order to decide to locate in Lakeville (Year 1, Year2, Year 3) 3. Provide input on the Comprehensive Land Use Plan (Year 1, Year 3) a. Land use planning b. Implementation 4. Analyze the viability of additional office park locations in Lakeville 2 Communication 1. Create a single, effective message/platform about economic development (Year 1, Year 2) a. Why choose Lakeville? b. Challenges faced in Lakeville 2. Create a marketing plan that: (Year 2) a. Reflects Lakeville brand b. Identifies the right businesses to attract c. Analyzes the resources needed to be successful d. Complements other local efforts to promote this community Partnerships 1. Develop and enhance partnerships, whenever possible, to achieve EDC goals (Year 1, Year 2, Year 3) a. Technology initiatives must utilize partnerships to be successful 2. Explore opportunities to build relationships (Year 1, Year Z, Year 3) a. EDC representation on the Vermillion River Watershed Board Fiscal Management 1. Continue to encourage sound fiscal management by the City of Lakeville (Year i, Year 2, Year 3) a. Public/private partnerships b. Balanced and growing tax base c. Communicating values of economic development services d. Explaining why money needs to be spent for economic development 3 2008-2010 Strategic Plan for Economic Development Outcomes 1. A transit plan for Lakeville based on the benefits to local residents and businesses 2. A housing mix that reflects Lakeville's expected population changes and job growth 3. Leadership in telecommunications services becomes a point of distinction for Lakeville 4. A partnership with ISD 194 and possibly Dakota County is established for development of goals set forth by the Business Telecommunications Technology Task Force 5. Convey benefits of a marketing plan to the City Council 6. Secure EDC representation on the Vermillion River Watershed Board 7. New partnerships are explored and established with Dakota County 8. Lakeville remains in the bottom third for City taxes in Dakota County gem boa City of Lakeville Community and Economic Development Memorandum To: Economic Development Commission From: David L. Olson, Community and Economic Development Director Copy: Steve Mielke, City Administrator Adam Kienberger, Economic Development Specialist Date: November 21, 2007 Subject: November Director's Report The following is the Director's Report for November of 2007. Manufacturers Week Events The Manufacturers Appreciation Luncheon event in Lakeville was held on Wednesday, October 24"' at 11:30 at the Holiday Inn and Suites. Nearly 100 people attended this year's event and the City has received positive feedback on both the location and the program for this year's event. The program consisted of City Administrator Steve Mielke making a presentation on the City's Comprehensive Planning efforts and how this process will impact industrial areas of our City. Thanks to the EDC members who were able to attend this event. Building Permit Report The City issued building permits through the end of October with a total valuation of $129,266,600. This compares to a total of $153,963,381 during the same period in 2006. Included in this valuation were commercial and industrial permits with a total valuation of $41,681,600. This compares to a total valuation of $33,147,500 during the same period in 2006. The City issued permits for 162 single family homes through October with a total valuation of $43,091,000. This compares to 206 single family home permits during the same period in 2006 with a total valuation of $61,070,955. The City issued permits for 114 townhome and condo units through October which compares to 203 townhome and condo permits issued during the same period in 2006. It should also be pointed out that the Ciry issued a permit fora 76 unit market rate apartment building earlier this year with a valuation of $5,950,000. New Commercial Developments A number of new commercial projects were completed and opened for business in October and the first half of November. These included the new Cub store in Heritage Commons, the new Best Buy store in TimberCrest, the Hewitt Investment building in Downtown Lakeville, Bremer Bank at Cedar and Dodd, the New Market Bank and Platt Dental building at 205th Street and Kenrick Ave. and the Porterhouse Steak and Seafood Restaurant at 205' Street and Kenrick Avenue. The Family Health Clinic -Lakeville being developed near Lakeville South High School is scheduled to open on December 3ra Business Closure 84 Lumber located in Airlake Industrial Park has closed and the property is currently for sale. ~ ~ ~ ~ ~ ~ a ~ c ~ ~ d d ~ ~trJ ~ c ~ "7 v o o a o ~ v' d O f] D 'C 7J a e _ x 3. 'ra 8 5' c m c ~a ~ co v^, ~ ~ c ~ R a_ w x a c a~ y n B 5 5 w c w ~ a v 0 2. a ? ~ w ~ [n tit ~ a ~ o ~ ,off a ~ 5 a; f ~ 5' 5' 'o' x x R_ 5 5 5 x 7 0 ~1~ a w a ~ c ~ m ~ o ~ 'A vai 00 ~ •2 5 3 ~ = ~ 'n ~ n C w ~ ~ ~ ~ C'1 2 5' ~ ~ ~ ~ o _ V a y o ~ C7 ~ m ~ ro D w- E' S. 5. Y H h ~ w a. m y a o 5 m ~ ~ £ 9 a ~ ~ £ K 5 F ` 2. ~ b 0. V. ~ d G w y~ 'y I+I^- 9 ~ m L ~ y n 3 C ~ y a Ap v IC N ~O ~1 J~ N J A A U J W O J N A - J~ In In N- N O J~ W N m N A O~ _ w O~ Oo ~ w r N w cn O C r r ? po A~ w w W Q~ A~ W N ~D O N O~ oo O w A w ~O w w Oo N A w r y po J m J A A ~O W IJ ~ N J O~ ~D ~O r W J J~ A W N Cn w J A N A O Oo ~O Go In N O U ~O J to O t~ O O w A A A ~c w U N O w v~ 'w ~ ~n J A S ~o o~ ~ O J m ~o w a~ C cn ~ U~ C O O O O N O u~ 0 u O aAc 0 U 0 0 0 lJii VNi U U S O ~ O N 0 0 0 lNii ~ [s] r C C N ~ O .Ti ~ Ci' W r r N VWi 00 lA/~ A lA ~ e y ~O b ~t W oo J U A oo m O~ W O W O~ Oo ~D U ~D ~O J ~D J O~ ~ cn pa r N r O W C r A~ C U O r O~ U ~D N trn N O U J O J N w G U ~D O Q~ ao ~ Oo N 0 0 O Vi C ~O W A O~'- pppp O C C ~C 0 0 0 0 C G G~ C O O C C r Z yy.~ A S S w S to O O S S O O S O S O S O O O O O O O O S C C S O S O 0 0 0 0 C C V r O [-0 A C C O C C O O O O O O O O C O O O O O C O O C O O C C C O 0 0 C O o c o o C c O c o c o c C c o 0 0 0 0 0 o O o 0 o c c o O o o S S O o 2 ~ 3 °c j y b F~1 a ~ m N w w o+ ~n A ~ o ~An .A. = w x ~ ~ m a O J O ~ A A v ~ N Q~ ~ W C U mJ ~ O O O pp~ C~ O w Oa C O ~O 0 0 0 0 0 0 0 J O W C~ ~O C C J Oo W O~ O N J O C O S O A O N O W N S J J O O O O S O O U O O C ao J O S N C E O p~ C r [n N N J N O Vwi A N lNi~ N O~ A oa J J O~ J ~O tNii ao O~ ~ N N A J~ W S A r C 0 K' - w A ~ to J m? N A w n r N N N ~C ~D J A VNi S U N W U O~ Oo w ~p ~l '.n A w ~O oo w ~D J w C pp to A A oo w Q+ AA ~ A ~D ~O cn AA O W W N O O~ J w p~ u O ~ ~ U to O N O A ~D J ~D A~ to A i b O U O W W ~D W O O oo O O O ~c O vi O+ J J N O m w ~O O ~D oo C O Ky I C O to i- J C Go A O In ~1 N O O O U J N N to C O C O N A J iD O ~l C O R7 C O O cn to to O :n G O O N vi to O O O O O D U U O C C C O~ V~ ~O ~O O In C O ~+1 N ~ ° C e W G ~O N J N J J - r J O p~ ~L` ~ 0 0 O~ W D F, C N a1 cn N 00 ~ A b J W N J N A J N J A O G~ W to N N J ~p Oo ~ W n- s O~ J O~ O to N O O O `C,~ w N ao O tJ w C O O in ~ O O cn 0 0 0 O O ~O O O ~ y O O~ C w O O C O 0 0 0 0 0 0 0 C O 0 0 0 0 0 0 0 0 0 S 0 0 ,VUi C O O C H N Z O C O C C O O C O C O C O O O O O O O O O O O O O O O C O O C C ~ "n O O O C C O O C C O O O O O C C O O O C C C O O G O O C O O O S S S O z a tit b m a R N cn r w r J to cn O~. A O J~ r Z W w N to T w to in W J O J Oo W W ~ O OOOCOWOCUO~?COOOOOOOSNC~~JOO~O~G ANDwOC F ~r w O C C O ~D O C Q~ O w Q~ O O C O O w O w oo w 0 0 ~L' Oo In r J ~D 0 0 R7 ~ N C O O O+ C N O O O~ O In A O O O O S O S J N C A A O C O Oo W A r Q~ A O C ~ 00 J t' 'n D~ Vi C H H H w~ y vi y rn y ti w 'F O O O~ r u 5 'S. .T O "n 'sf ?f C'7 C) CZ CJ 9 A ~ Q C~ .p m G a ^w o o F e F ~0 5~ ~ m m m y ~ ~ w o ti o m ~ o o w 4' n C e F H o S ~ F 9 r5' ti o~ w o a ~ o F F ~ ~ c m o ~ p. ~ o. O ~ O v ie n n' ^ 9 c y~ 5 o e 'ti w o o 5' ~ B 6. n c n c o 9 S a 5C t^ m "A o m to a. w 'n m rn Q EE n m ~ n rn m 'i F ~ "_rcl = a aa' m `2 a D~ w m E c a ~ ~ 2¢ t a m ,a z qy~ W a: y. o ~ A a ao x = ~ o w 9 ~ ~ ~ ~ c p C1 ~ ~ n ~ ~ ~ n o ~ a ~ m o ~ n o 5 ° t a w ~ _ ~ ~ y c ~ a o .n a v, 2 S " a 3 w A s w A O J~ w~ A w A w~ w c~ii N~ N~ N cn O~ ;n N O N x O w w w In t~ii aPO N w W A A A ~O w N U w J VNi N b N Oo :n O~ N to cn Vi N oo Oo A C ao J w C J A In ~D In ~l N ~ w w U O C w A A C~ O~ to r~ N O~ N ~O w A O N ~O ~ ~ J w 0\ vJ w b U C O w w ~D A O ~D C N~ W C N W w aC J W A J A A C ~D W J O1 ~O CA ~D ~O O A W A ~D J W Q~ W W U U O~ O J U O D U U C W In to to O to to cn to U C U O to ~D O O O U to cn O ~P u U U A O N U O w m w O O O O O O w O O C O O C C O C C O O C w 0 0 0 0 0 0 0 w 0 0 0 W O U O A ~ N J lJ ? pNN A W J N W O~ A J tAn U A A- NA w u~i N A N O W W W A oAO vii w tJi~ C A p Op ~ ~ N A O W O A c v p W O C +Ji ~ ~ C O N J N (.n O O O O~ In O~ O O O O U O C w C O C O C !n to 8 0 0 J C O w oo C O O w O C C . . . . . . . . p. . . . . . . O O C O 0 0 0 0 0 0 0 O O O O O O O O O O O O O O O O O O O O C O 0 0 0 0 0 O O O O b J A O C O C O G O O C O O O O O O O O O O O O O O O O O O O C O O C C O 0 0 0 0 A C O O $S8 $S$88888$$SSo$$o$$$0$0$$88$~S~$oooo ~oo~ w w N ld J N W N~ OA N Vi A J ~ A - N O N N ~D a 07 ~ W A G ~O ~O J C C J ~O w N N A 0 0 W N W O ~O N w w w ~O to ~ N C A 0 A N w to r 0 N O O to ao ~D W O~ W w A N W W O ao ~ w O J O~ IJ N ~O W N W A L w ao A ao A W w 0 A ~O to N pp N O to oo to N as w A A N m N W W A A Do A N O. U to J A G1 A Gl N W ~O A w J W W C W J O O O O U O C J O to O O O ~n O O O O to C Cn ~ O N O C C O O C w to O C O O A pp. . . .p .p . .p . . . . . . . . . . O O A ~ O O C O O C O O O C C O O O C O O O O O O O C O O C C O lNn C O O O O U C O C A J ~ ~D O w p~ W ~ w A w W N A ao pp Oppp to m ? N ? ~ O~ ~ Up N N :n N O O J N 0 0 0 0 0 0 0 0 0 0 0 0 ON C~ O O O N C O O~ O O~ C O O O O O C J O O C . .p p. . .p . . . . 0 0 0 O O O O O O O O O C O O O O O C O O O C O C O O O O O O G O 0 0 0 0 0 O O O O O W J O O O O C O O O O C O O C O O O O O O O O C O C O C O O C O O O C O O O C O O N O C C C O O O 0 0 0 ~O C O O C O 0 0 0 0 ~O O O C O C O O O O C O O O C O O O C O O Oo C O O O O O C O O C O C C C O O O O O O C O O C O O O C O C O O O C O 0 0 0 0 ~ C C O ~ ~ m h m ~a ~o ~ r O l7 m m ~ ~ ~ 7.~ 'n ~ r ~ O n 9 b m C .b 5 ~ 5 C7 P "n n ~ Y "A~ ~ m o~ C m o o c~ G rt T m m y ,m F' o a C ~ ~ ~ ~ .~a. iO > ~ n C R ~ ~ " ~ m 33 0 2 C a w m o 'sf w° ~ ~ f] ~ ' P ~ f] C] o ~ y ~ 9 ry ° Ro ~ ti x ~ ~ ~ c FRO C 'F q ~ ~ ~C+ ° ~ uo c' ~ ~ ° ~o ~L~. ~ a o ~ a^ ~ o m ~ f] ~ m ~ ~0 ~ 'O e n 3 ro 60 ~ ~ M ~ ~ ova m ~ ~ ~ ~ ~ ° O p o rn o ~ y ~ e 'v 'A o ~ ~ 2 2 a £ H ' as ~ 2. ~ ~ °L' a ~ w ~ 9 ~ ^ O R y ~ ~ 9 R O Ov ~ A b to N O Vi cn A Q~ O~ In In o0 w O~ G U r O w r N T A O~- N O s w w ao 0o J A O~ W O~ w to ~O J T N O O O A w J r J ~D ~ w T N N N A N N .c~ii N A w r OA L U O N GA A A ~O w in w w r C O L. W A ~O ~ C W to N W W iD Oo W A O W J A ~ N A ~O ~D N W C r J ~D J In O W U w A w O N 0 00 ~O O J A C O ~o b w N C w W C W O. N Oo A a` O ~n A O~ In ~D w N A to O Vi VU O to O O to C U In O A O In IJ O C 'cn to C J O O N V~ to O O In N In O~ J C C O O O C O O C O O G~ 'b O O~ O O O O C w 0 0 O O O~ C O C O O O O A 0 0 A C N W N r ~ ~ ~ N U ~ N ~ OAO J ~O N r N A w ao W V O~ r m b N )O ~ W O O O J O J O~ a N O v w N r p~. J- O J N oo ~ Oo O~ O O ~O W to w 'O ~O w O~ N C O O O C O O C O O O oo w w 0 to to C O O C O O O C N to O O A O O p Cp Jp- O rO ~O O C O O O O O O C O O O O O O O C O C O O O^~` 8 0 O O C C O C O O C O O O C O O O O O O C O 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 C O O O O O O C O O C O O O O O O O O O C O~ O C O O O O C O O O O O O C O C c °o o °O o °o g~~~ d S g g~ g S g °o °c °o c° o °o o °O c~ g c g °o °c °o o °o o °o °c N oJO QNi U w T N r W w W A W J to A Oi Qi N O r J N r w O 0 A O Q~ W O- W O O w A 0 oa A w N N to J O w w~ w U A a A W N r J Q~ U r W O N^ ~O p~ Cn r ~ W W~ Oo A Oo ~O O~ A N r W A U N O p~ W W O~ 70 00 lp A J r J ~D W J N J J O 00 ~ ~D J J W 01 W~ J~~ J W N ~C A O A ;D A W~ O ~C ; n J O N~ b J~ A W P A O C b ;D W O~ J Oo W w J oo N to C N O to to O In to O O W O~ U O J O U p O to a to O N O w C p u s O to U w to O O O O O O O O O O C O O O Cn O O O to O C O O C :n O O oo w ~C C O C O O O O O~ O C J w w N N ~ O w N N ~ b w~ O ~ cn cn T O w In ~G ~D Oo r A W ^ A A W O~ Oo Oa OC N ~O tJi V O C lO to ~ ~O ~O J W N W U N 00 w ~p w w AA .O O ~O J m A J b A A O O O O C O C O O O O O Vi A C O O O O O O O A 0 0 A ^ ~O C O J O O p Op w ~D O w ~p N O O O O O C O O O O O C O C C G O O O O C C g 0 O O C O O O O O C O O O C G O O O O O O O O O G O O C O O O O O O O O O C O O O O O C O O O O O C O C O O O C O O C O O O O O C O O O O O C O 0 0 0 O C O O O O O C O O O O O C O C O O O C O 0 0 0 O C O C O O C O O p ~'1J 0 0 0 O C O O O O O O O O C O O O O O O O O O O O O O~ C C O O C O O O O C O O O O O O y v, ~ Y o v, ~ ~.^b 3. ~ ;Bl_:-. rt4..ro awe' ~ m S ~ ~ 7 S c~ ~ ti S ,o C $ nw o 'A d e o S, o ~ ~ to ~ `n' ~ ~ ~ m ~ ~ F ? G ran v~ o c F ~ ~ 5' vo a N pNp a A ~ A J N~ W A N N b F+ F~+ 00 A pw Cn A N Vwi O O O C O J w C O O C C 00 O 0 0 ~ O O in C O C C W F+ O O O C O O O C O O O Oo N b p T A p~ O O O O O O O O O C O O O w C O 0 0 C 0 0 0 0 O 0 0 O O O O O C O O O O O C O C N b b J a O O O C O O O C O 0 0 O G o 0 0 O O C G C O O C pp T O O O O C O O O O O C C N N r~+ ~ Obi ~ O to O N ~ .w- A ~ F+ W O A w~ A W C O F+ C O O O O N A ~O V O ~ ~ ~ pp O G O 'i O C O~ ~ O J ~ U W b ~ 4 U W O O oa r O C O O 0 0 0 0 O O O C O G O O O ~O O O O 0 0 O O O O O O O O C O O 0 0 O C w V N O G O O O p O C O O _O C O Obi O O O O C O O O O O O O _ ~e c~~ x z x a ro~~ r a n~ m a o c m m a a s ~ c c y N a o n a ro z ?n £ e N y ° o c 91 ° 0° p° E E. c a n n 'E. o 0 0£ 5°° o o m m ° ~ c ~ ~ Q n~~ w m n a s y ~ y B B 0q ao a s .d, CpC~s, ~ 'o K. h y' m a ~ a <o m~ ~ m i ,•e a w o'w ~ o rn ~ w 5' ~O m Fo a ~ K m ° ~ D5 ~ o w o-C, A a n y- O 6: ° o~~ W b z 2. ~C. D ~ ° ° < ~ a 9 a ° ~ 9 F ~ ~ m .ry'°.. 7 7y £ m o a m a Z £ m n 'Z y M o h' S a ~ a n ^ 6 F 6 U ° y n ~ < a I ~ r ~ _ ~ h C C y N N[.~~. O O O O m W A N 0 A O N to O C~ A cn O O W O N a J ~N- O O Oa O K,' 7 ~ A N W w J O N C C In Oo A N •n+ N w N A w N O~ A~ ~C V'~1 O C O O ON J~ W O W `O O T C O+ O C SAC W 0 0 0~ 0 ~O N~ Q~ N C C~ O O C O O Oo O U O N cn O N 0 0 0 ~O O O Cn ~D N O O ~D O C O~ G~ ~ W 0 0 0 0 ~ O O O O to V~ O O O to O O Vi 0 0 0 v~ O O O to cn C C to O C O ~n O to O O O O ~ ° n c N ~ °e ~ J oo ~ N A ~ w W~ A tCii T ~ W~ In N perp]~ ~O In A N W Oo )D a. N U O O~ O w C A S O O O O O O O O S S S S O 9 r z 1 l oo~o~~~oooooo~ooooo~o~o~ooo~oo~~ooo ~ a~ b SSSS$SSSSSSSSSSSSSSSS~SSSBSSSSSSOSS °z 8 K~c ~ r ' N N A N D N rp ~ O O O O O W O A O w C O~ O O O C p O O O N O O O W".~ O T •N ap~ W C O C ~C„ ~ O O O O O W O~ O~ O O~ O O O O S O O t'n S S O Oi O O~ A A N S O N O ~ p C~ O C~ A A u w N v C O~ C A O O O W C- O C ~ to A~ J O O O O K W N N N W O~ ~ W O A ~ A O N A aAa v to ~ .J-~ w~ N A T ~ A~ w J A ~ C ~C O C R c.n Oo O~ Oo W O~ C O w C 0 J 0 0 0 N a b O O~~ N~ W N O O O C kJ S O S S S cNi~ O tNn O O~ S S VJi C O O S O O vNi O tNi~ S C~ O S C to l°n O S O S ,i'lJ F+ i ro ~ N tJ O N oo ~ C a O W W~ N O O~ W O~ O~ tNn N w N w ~ y O H O O to ~C N C W A A O~ O O O~ O N :n O ~QD o 0 0 C O O C [ W~ to O O O O C O O O O~ S S O O O O O O O O O C C O ~ N z O O O O O~ C .ni O O C O O O O O C S S °o °o S S °o SSSS °o SSSS °o °o S S °o SSS °o SSS °o S °c S S °o S z a m i ro ~ r ~ a y a A N z A c ~ A 0 J U v w to O a~ N ~ ro O O C O O A O O O C O O O w O C 0 ,O C O A O~ O O O J C u N Oo O C C .O C 1 O O O O O N ^a S O S S O S A O S O S C 0~ C O O Q~ S W J N N S O S O ~ R C O O C O O W v, r m a ~ c ~ y y /a 0 0 0 '3 ~ r r g 5 x.' C] `n n n t_: n D ~ W p~ ~ ~ f° a' 'S. F ° P ~ do ~ '2 ~ ~ ~ .'"n c ~ f £ ~ ~ T i ~ ~ 3 3 c, ~ n ~ ~ S O ~ .n ,o ~ .o K n` n a s b a. ? ~ ~ o H w a.. ~ y ~ e n p o p ~ R1 m m m a m m 'if w m ~ c~ ~ m n~ ~ rt a .7 p7 r+ ~ E r F o. b ~ z a ~ ~ rn ~ tr ~ ~ ~ S S m O ~o ~ ~ ~ ~ ~ i ~ ~ C ~ ~ ~ ~ n ~ e e n r ~ n °v. ~ oo ~ n: ~ rn a' ~ ~ w a = d'' ° ° a m ti a ~ ~ ~ R G 2 _ _ N 0 0 N X 0 0 E N O C O N A A C O~ O N O O~~ N O C V~ O~ N J C w A m N W W J N r W VJi VJi W W W J W J A to A J W W J b W J N O r ld A O J O O ~O O O ~O ~ ~O C N C O ~O A w m C O O C~ O O b~ b O O J J ~O Cn N O W G7 N o7 O O O O J U C O In O O O O C O to C O O C O O O O O O Cn N O O O u 0 0 O u 0 Oo O O O C O O~ O C C O O O O O C O O O C O C O O O C O C C O 0 0 0 0 0 0 O~ O O O O O O J W w w A w OO O ~ W W W ? U w O A U A L oO O c.o O O CAii O O O C O O O O S O O O O C O O O O C C O C O C O O O O O O U~ 0 0 0 w C g o S c g o g c g o 0 0 0 0 o c o c o o c c o c o 0 o c o o~ c g o 0 0 0 0 0 o c N N W C C O O O O O O C O O O O O C C O O O O O O O O C O O C O O O C ppO O O O O O O N O S O S S S S S S S S O S O O O S O O O S O S O S S S S S S S S O C S O O O O S A S O~ O C T ~ N G C O N W O ^ A O ONO :n ~C O N C :n ~ ~ to O O W O w J ~O A 0 0 N O C J W N N N O V~ w N N r- A N ? ~ .J- A w O N N 07 U O ~O A N to N w A N 0 J~ N A J N Vi O C O~ C O O O C U O O O O O O O O C O O O O C U C cn O O O C O O~ U U 0 0 A C ~ O S~ cNii S C O O O O O O S O O O O O S O O S S S O O O S S O S S O s O S O S lwii S N W J O - C to A 'rp ~l O A co U J N w N C O N C O O C C S S O O O O O O C O O O C O C O O O O C O C S O 0 0 0 0 0 0 N C C C O O O O C C C C C O O O C O C O O O O O C O C O C O O C C O 0 0 CC O OG O O C C 0 0 0 C O O O O O O C O O O O O C O O O O O C O O C O O O C O O O O O O O O O J G1 U w C C O O O O O O O C O C O O C O O O O O C O C O O O O C O O O C O O O C O O C W C b o o b o 0 0 0 0 0 0 0 o c o C o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o g g g~ a g c o 0 0 0 0 0 o c o 0 0 0 0 o c o 0 o c o c o o c c o c o c o c o 0 0 y rn y 'o aq Vi ~ ~ v, v, v, ~n ~ d o ~ e C` `C b ~ o o a C C ~ 'A 2 ^5 n n .A c D 9a ~ a c ~ p n m S n~^ N C ~ ~ ~ N ~ y c: 3 a s m~ m .a ~ n? S °i " u C1 f1 y < m ~ ~O ~ ~ ti, ~ ° c n 3 b w .d~. o' o q' m m ~ 2. ~ ~ v^, ~ ~ ' c y E off. o ~ n^ ~ o ~ 3 d' d o ~ ~ ~ R o o ~ o o n ~ ^ p w c m ~ m~ °1. 00 ~ ~ s~ z. N ~ ~ ~a y ,N E Z' ~ o_ n - n ~ 3 'o n A w Qi O O W O N O r O O O ~ w C Q~ J W N to w~ N ~ O O J A w r J A A r N A J O~ W N W W U N N r W r O r' N ~~O N J U J (A W W W U ~O W r Gl r r W b W O~ N W J O~ W cn to O J O O w O A C ~G O O O N O N J O W W J 00 ~D W ~D 0 0 Q~ W oo ~C O~ N oo iD . . . . . . . . . . . O O O to O O u 0 In C Cn O O C J O C to C C u to N~~ to N O O~ O to to !n :n C N O O O O C O O O C C O 0 0 0 to C O O O C O O to O O O C O O O O O O O C C O w_ W N N J A A J O ~ 'N w O\ O~ J co Oa O ~A.. N ~ O N O O C O C O C O C O C O O O A H O C eWn C O O O O O s 0 0 0~ 0 0 0~ 0 0 0 . . . . . . . °o °oS S SSSSSS°cS°o c° °o S°o°o°oS°o°o°o°o°o 0 0°0.°oo°OO°o°o °o S~'d°o 0 0 0 0 0 o c o 0 0 0 0 o c o 0 o c o c c o 0 0 0 o c o 0 0 0 0 0 0 0 o c C O~ O O 'O O O O O O O O C '^J O O C O C O O O C C O^~ S S S O O O S O O O C O a O O C O C O O O C O C O O C O C C C O G O O O N Oo W C O O~ N O O C O O N U O ~O N O C W~ W ^ r r O J A W N A A A p~ Ln N A A N r J w N J ~L O~ Cn J U U C to W DA b QA J W b~ S r W J W W J r J lA N In W O O C w C O C A ~L O O O O O Q+ w 0 O+ A O W ~A w 00 ~n Q+ ~O ~ O r w Oo ~O W Cn co ~p O O S O S S S C O S S 0 0 0 O O S O C S S G S C C ~ C O S O S O O S `AG O C A A A cn w V A ~ oo A w A C C ~O N A oo V~ N_ cn J Oo Oa Go J J pp O O J Cn O O 'n C A •O O O O C C O O O O C C O O C O W W O O C O 0 0 0 0 0 w O O O O O O O O w 0 0 C O O S O O S S O O S O S O S C S O S C S O O S S C O S S O O O O O S O O O O O C O O O O O C O O C O O O O O C~ 0 0~ 0 0 C O O O O O O O O C O O C 0 0 O C C O O O O O O C O C O O J C O O C C C O p 0 0 0 0 0 0 0 0 0 O O O O O C C O O O O C C O C C O C C O O S C S C C O O C O O O O C C O C N ~3 Uz a 9 O ~Vr m ~ 'b ~ ~ `Cl C ~ v O u O - O = q ~ x `2 CA n' a W ~i O f v C ~ O a £ ~ g' rn oa N J J A w O O O O O O N Uri A W P O O C O C C O O O W C O O C 0 0 0 0 r O O O O 0 0 0 0 A w+ J O C O O C Cp Op O C O O C C O O O N N a0 N C O O O C C O O W O 0 0 C 0 0 0 0 A O O O C O C O O F+ b O W W~ O O C O O N O J ~ O O O O O C O O ~ p p O S O O O C O O W O b O O O O ~ O p O p G O O j O O O O O C C J J W W O O O O Dp C O C r O O O O S ~KC 0 0 Page 1 of 2 Olson, David From: MN Department of Employment & Economic Development [StateOfM innesota@ngwm ail.des.state.mn. us] Sent: Tuesday, November 13, 2007 12:00 PM To: Olson, David Subject: NEWS RELEASE: October Unemployment Report If ou cannot read this message, please click here / COfinrTlllrtlC3tir)n5 Office • Web 51te:. WWW.~ed.8tafe.mil.US Phsme:55l-297-1192 or 1-$00-657-365$ • Faz: 651-215-3$41 FOR IMMEDIATE RELEASE Contact: Kirsten Morell November 73, 2007 651-259-7161 Unemployment Rate Back in Line with National Rate of 4.7 Percent Minnesota employers shed 6, 600 jobs in October ST. PAUL- Minnesota's October unemployment rate fell two-tenths of a percent to 4.7 percent, bringing it back in line with the national unemployment rate. Despite the decrease, Minnesota's employers shed 6,600 jobs in October, according to figures released today by the Minnesota Department of Employment and Economic Development (DEED). Over-the-year, employers have created 2,166 new jobs in Minnesota, which reflects a downward revision of September's jobs by 2,900. The state job growth rate is 0.1 percent; the over-the-year job growth for the nation as a whole is 1.2 percent. "The employment data over the past few months are concerning, and we will take a deeper look at what is happening in the state," said Commissioner Dan McEkoy of the Department of Employment and Economic Development. "There are several complex forces at play and there is a need to conduct a more in-depth review. I am directing our economists and deparhnent experts to look at the trends and make recommendations on how to encourage stronger economic growth." The state saw modest job gains in five major sectors in October. Construction gained 600 jobs; followed by Leisure & Hospitality (up 300 jobs), Trade, Transportation and Utilities (up 200 jobs), Other Services (up 200 jobs) and Natural Resources & Mining (up100 jobs). Education & Health Services led the six declining sectors in October with 3,200 job losses, followed by Manufacturing (down 2,700 jobs), and Professional and Business Services (down 1,300 jobs). The Government, Information, and Financial Activities sectors posting combined 11/14/2007 Page 2 of 2 losses of 800 jobs. "It is important to keep a sense of perspective." McElroy said. "The jobs we've lost -while important, are a relatively small portion of the more than 2.7 million jobs statewide." Seasonally Adjusted Not Seasonally Adjusted Unemployment September October Rate 2007 2007 Minnesota 4.9% 4.7% U.S. 4.7% 4.7% Employment September October Oct. '06 -Oct. '07 Oct. '06 -Oct. '07 2007 2007 Level Change Percent Change Minnesota 2,771,100 2,764,500 2,166 0.1% U.S. 138,255,000138,421,000 1,618 1.2% Over The Year Em to ent Growth B Indus Sector OTY Job OTY Growth US OTY Chan e Rate % Growth Rate otal Non-Farm 2,166 0.1 1.2 atural Resource & Minin 128 2.1 4.2 Construcfion -6,982 -5.0 -1.4 anufacturin -11,419 -3.3 -1.5 rade, Trans. & Utilities -1,783 -0.3 0.8 nformation -1,309 -2.3 1.1 financial Activities 434 0.2 4.2 rof. & Business Services 37 0.0 2.0 d. & Health Services 15,892 3.9 3.2 eisure & Hos italit 4,807 2.0 3.2 Other Services -1,022 -0.9 0.5 Government 3,383 0.8 1.1 This message was sent to Jolson@ci.lakeville.mn.us by: MN Department of Em I~ovme_nt & Economic Development (chtstopher sorungtolstate_m n_us) 332 Minnesota Street Suite E200 St. Paul, MN 55101-1351 • 800-657-3858 Subscribe • Modify Your_Profile • Unsubscribe 11/14/2007 REJournals.com -Airlake unveils new South Creek Business Park Page 1 of 1 I~IIIESOT~ RESL ESTATE JOURNAL • - ~ Nov. 13,: Friday November 09 2007 Welcome, Airlake unveils new South Creek Business Park siynout Phase One has 30,000 square feet of office/warehouse s v5taff Writer REJournals.com ~ F Airlake Development Inc. has completed construction of Airlake South Creek ~l:ws Business Park Phase I, a 30,000 square foot speculative multi-tenant office/warehouse facility located at the northwest corner of Cedar Avenue and Look Highway 70 in Lakeville. Inside It's situated on five acres owned by Airlake and features upscale design elements befitting its "prominent gateway location at the entrance to the Airlake Industrial Park," company officials say. They add it can accommodate users from 3,700 square feet to 3D,000 square feet and provides fast access to Interstate 35, just three miles to the west on ~ - Highway 7D, and to Minneapolis/St. Paul International Airport to the north on Cedar Avenue. "This project will provide excellent leasing opportunities for small and medium office/warehouse-type businesses seeking a south metro location," says Dave ~ Olson, community and economic development director for the city of Lakeville. Airlake spokesman Dan Regan says, "We're very excited to be shell finished with our latest offering to the south suburban market. Leasing activity has been extremely high recently, which illustrates our view that the timing is right for this type of project in Lakeville." ~ ~ Future development plans for the site include construction of an adjacent • 15,000 square foot office/warehouse building. APPRO Development acted as the primary site planner, architect and general contractor on Airlake South Creek Business Park. Would you li advertise wi Lear_n___howy Minnesota Real Estate Journal 5353 Wayzata Bivd, Suite 307 Minneapolis, MN 55416 1-868-516-7939 Real Estate Publishing Group 415 N State Street Chicago IL 60610 1-888-753-7828 Copyright 2000-2005 ©Real Estate Publishing Group. By using this site you agree to the Terms Of Use, http://www.mrej.com/story.cfm?Market=MN&StoryID=15287 11/13/2007 REJournals.com - NAIOP, Citizens League join in fiscal disparities effort Page 1 of 2 _ rIA44VIrr • ~ a ,e. Nov. 13,: Friday November 09 2007 Welcome, NAIOP, Citizens League join in fiscal disparities effort 6ignout Aim to raise awareness of law as legislators consider changes ~ o v5taff Writer REJOUrnals.com The Minnesota Chapter of the National Association of Industrial and Office Properties (NAIOP) is intensifying its push to educate state leaders about Lpajt current fiscal disparities program by teaming with the Citizens League to In51Clf produce a new publication. The groups have generated asix-page brochure entitled "Sharing the Wealth" which they say will be widely distributed to local chambers of commerce, realtor - organizations and "many business and trade groups." NAIOP in the publication has been careful not to advocate a.position pro or con - on efforts to change the fiscal disparities law, calling it a purely educational effort. However, the group's leaders have gone on record in the past opposing legislative attempts to tamper with the current law, which established aseven- county program for sharing area-wide commercial-industrial (C-I) property tax base. • Bob DeBoer, director of policy development for the Citizens League, says, "those who are affected by a policy should be knowledgeable about it and be in ` - aposition to inform policy solutions. Those who may be affected by any potential changes should be well informed about how fiscal disparities works. e i "We think this publication which is aimed at business property owners ~ does that in a very effective way." Under the Metropolitan Revenue Distribution Act, commonly referred to as "fiscal disparities," each metro-area community or local taxing unit contributes up to 40 percent of the growth in its local C-I tax base each year, measured from the base year when the law was enacted. This combined "pool of tax base value" is then redistributed based on whether each community or taxing unit's fiscal capacity per capita is higher or lower than the metro area average. would you ii advertise wi Learn how_y In the absence of fiscal disparities, says NAIOP, the full value of every commercial or industrial property would be included in the tax base of the community where it is located, and then be taxed at local rates. The equalizer helps underpin the tax bases of those metro area communities that do not have a significant commercial-industrial tax base. Recent proposals have been floated in the Legislature to use fiscal disparities' nearly $400 million area-wide tax base to fund new public or private development or to exempt specific projects from tax-base sharing, which NAIOP opposes.