Inclusionary Housing In Lieu Fee Analysis

Transcription

1 Inclusionary Housing In Lieu Fee Analysis City of Pasadena April 12, 2016 DAVID PAUL ROSEN & ASSOCIATES D EVELOPMENT, FINANCE AND POLICY ADVISORS

2 Proposed City Of Pasadena In Lieu Fee Schedule Adopted FY 2016 Rate Proposed Rate Percent Change Rental Units Sub-area A TBD NA Sub-area B % Sub-area C % Sub-area D % 50 + Rental Units Sub-area A TBD NA Sub-area B % Sub-area C % Sub-area D % For-Sale Units Sub-area A % Sub-area B % Sub-area C % Sub-area D % 50 + For-Sale Units Sub-area A % Sub-area B % Sub-area C % Sub-area D % Pasadena Affordable Housing In Lieu Fee Analysis 2

3 DAVID PAUL ROSE N & ASSOCI ATES Rental & For-Sale Sub-Area Maps D E V E L O P M E N T, F I N A N C E A N D P O L I C Y A D V I S O R S Pasadena Affordable Housing In Lieu Fee Analysis 3

4 Overview Housing prototypes Gap analysis methodology Market rents and sale prices Affordable rents and sale prices In lieu fee Pasadena Affordable Housing In Lieu Fee Analysis 4

5 Prototypes 1 rental prototype and 2 condo prototypes Based on recently built and proposed rental and condo projects Establish prototypical units sizes and bedroom mix Pasadena Affordable Housing In Lieu Fee Analysis 5

6 Pasadena Prototypes Stacked Flats Apartments Stacked Flats Condos Detached Condo All Sub-Areas Sub-Areas B & D Sub Area C Tenure Rental Owner-Condo Owner-Condo Unit Count 200 Units 100 Units 20 Units Number of Stories 5 Stories 5 Stories 2 Stories Density (DUs/Net Acre) NA Units by Bedroom Count Studio One Bedroom Two Bedroom Three Bedroom % of Units by Bedroom Count Studio 25% 0% 0% One Bedroom 50% 10% 0% Two Bedroom 0% 0% 0% Two Bedroom 25% 25% 0% Three Bedroom 0% 65% 100% Unit Size (Net Square Feet) Studio 700 NA NA One Bedroom NA Two Bedroom 1,100 1,500 NA Three Bedroom NA 1,750 2,616 Average Unit Square Feet 850 1,584 2,616 Pasadena Affordable Housing In Lieu Fee Analysis 6

7 Affordability Gap Analysis Affordability gap methodology for calculating in lieu fees: The difference between market prices of new housing units (rental and ownership) and the prices low and moderate income households can afford to pay, as determined in accordance with the IHO affordable housing requirements. Pasadena Affordable Housing In Lieu Fee Analysis 7

8 Affordability Gap Analysis Rental Compares estimated market rent levels At a hypothetical rental project based on rental prototype Located in each rental Sub-Area With rents affordable to low income household's (30% of 80% AMI) and moderate income households (30% of 120% AMI) For-Sale Compares estimated market sale prices At a hypothetical condo project based on the condo prototypes Located in each condo Sub-Area With sale prices based on a total housing cost that is 40% of 110% AMI (sold to households with incomes 120% AMI) Pasadena Affordable Housing In Lieu Fee Analysis 8

9 Rental Housing Affordability Gap and In Lieu Fee Analysis Pasadena Affordable Housing In Lieu Fee Analysis 9

10 Rental Market Survey of Apartment Projects Constructed Since 2001 City of Pasadena Gap Study 2015 Sub-Area C Current Market Rents Project Year Built Total Units Unit Type Monthly Rent (Avg) Unit Square Feet (Avg) Rent/Square Foot (Avg) Arpeggio /1 $2, $ Cordova Street 2/2 $2,761 1,066 $2.59 Avalon Del Mar Station Studio/1 $2, $ Arroyo Parkway 1/1 $2, $2.50 2/2 $3,047 1,414 $2.15 Eaves Old Town Pasadena /1 $2, $ East Del Mar Blvd. 2/2 $2,587 1,075 $2.41 Westgate Studio/1 $2, $ South De Lacey Avenue 1/1 $2, $3.01 2/2 $2,871 1,049 $2.74 Sub-Area C Average Studio/1 $2, $2.64 1/1 $2, $2.85 2/2 $2,893 1,176 $2.49 Sub-Area D Current Market Rents Project Year Built Total Units Unit Type Monthly Rent (Avg) Unit Square Feet (Avg) Rent/Square Foot (Avg) Acappella Pasadena /1 $1, $ Corson Street 2/2 $2,618 1,032 $2.54 Avalon Pasadena /1 $2, $ South Oak Knoll Ave. 2/2 $2,690 1,106 $2.43 City Place /1 $2, $ East Walnut Street 2/2 $3,046 1,146 $2.66 TRIO Studio/1 $1, $ North Madison 1/1 $2, $2.65 2/2 $3,037 1,209 $2.51 Pasadena Gateway Villas Studio/1 $1, $ North Hudson Ave. 1/1 $2, $2.53 2/2 $2,980 1,206 $2.47 Stuart at Sierra Madre Villa Apt. Homes /1 $2, $ East Foothill Blvd. 2/2 $2,548 1,112 $2.29 Terraces at Paseo Colorado Studio/1 $2, $ East Green Street 1/1 $2, $3.10 2/2 $2, $2.61 Sub-Area D Average Studio/1 $1, $3.12 1/1 $2, $2.88 2/2 $2,780 1,112 $2.50

11 Market Rents Existing Apartment Rents Studio 1-BR 2-BR Sub-Area C Average Rent $2,022 $2,148 $2,893 Sub-Area C Rent/SF $2.64 $2.85 $2.49 Sub-Area D Average Rent $1,981 $2,232 $2,780 Sub-Area D Rent/SF $3.12 $2.88 $2.50 Source: DRA survey of rental properties constructed since 2001 Estimated premium for newly constructed apartments over over market: 20% Estimated New Apartment Rents/SF Studio 1-BR 2-BR Sub-Area C Rent/SF $3.16 $3.42 $2.99 Sub-Area D Rent/SF $3.74 $3.46 $3.00 New Apartment Prototype Rents Studio 1-BR 2-BR Unit Size: Sub-Areas C & D 700 SF 800 SF 1,100 SF Sub-Area C Projected Rent $2,215 $2,735 $3,293 Sub-Area D Projected Rent $2,619 $2,765 $3,302 Pasadena Affordable Housing In Lieu Fee Analysis 11

12 Maximum Income & Housing Cost Maximum Annual Income and Monthly Rental Affordable Housing Cost 2015 AMI for Family of 4: $64,800 Low Income (80% AMI) Moderate Income (120% AMI) Household Size Unit Type Income Housing Cost Income Housing Cost 1 Person Studio $36,288 $907 $54,432 $1,361 2 Persons 1-BR $41,472 $1,037 $62,208 $1,555 3 Persons 2-BR $46,656 $1,166 $69,984 $1,750 The calculation of maximum housing cost reflects the IHO requirement that no more than 30 percent of annual income be allocated to housing costs. Pasadena Affordable Housing In Lieu Fee Analysis 12

13 Maximum IHO Rents Utility Allowances Housing Authority of Pasadena (2015) Unit Type Monthly Utility Allowance Studio $38 One-Bedroom $55 Two-Bedroom $70 Assumes residents pay for gas heating and water heating, electric cooking, air conditioning, and general electricity. IHO Program Maximum Affordable Rents (June 2015) Maximum Rent Unit Type Low Income Moderate Income Studio $869 $1,323 1-BR $982 $1,500 2-BR $1,096 $1,680 Pasadena Affordable Housing In Lieu Fee Analysis 13

14 Rental Housing Affordability Gap Rental Housing Affordability Gap by Sub-Area Capitalized NOI Valuation Sub-Area C Sub-Area D Assumed Cap Rate 6% 6% Market-Rate NOI per Unit 23,302 24,473 Capitalized Value per Unit 388, ,878 Moderate Income NOI per Unit 11,163 11,163 Capitalized Value per Unit 186, ,043 Moderate Income Gap to Market 202, ,836 Low Income NOI per Unit 6,102 6,102 Capitalized Value per Unit 101, ,694 Low Income Gap to Market 286, ,184 Pasadena Affordable Housing In Lieu Fee Analysis 14

15 Rental In Lieu Fee Rental In Lieu Fee by Sub-Area for Projects with 50 or More Units Sub-Area A 2 B 2 C D Weighted Average Affordability Gap 1 $258,83 $278,349 In Lieu-Fee per Market-rate Unit $38,826 $41,752 In Lieu Fee per Square Foot $49.12 $27.74 $45.68 $49.12 Rental In Lieu Fee by Sub-Area for Projects with Units In Lieu Fee per Square Foot $35.37 $19.97 $32.89 $ In lieu fee calculations use the weighted average affordability gap as determined by applying to the prototype the IHO affordability set-aside requirement of 10% low income and 5% moderate income. 2 Given the absence of new construction rental development (and corresponding new construction rents) in in Sub-Areas A and B, DRA used the following procedures for determining rental housing in lieu fees in these areas: Given the housing market similarities between Sub-Areas A and D, DRA set the apartment in lieu fee for Sub-Area A equal to the Sub-Area D in lieu fee. DRA determined the Sub-Area B in lieu fee by calculating the following ratio: Sub-Area B condo in lieu fee divided by Sub-Area C condo in lieu fee. We then multiplied this ratio (0.61) by the rental in lieu fee calculated for Sub-Area C ($45.68), yielding a rental in lieu fee of $27.74 for Sub-Area B. In employing this methodology, we assume that the relationship between apartment prices in the two areas, as expressed in terms of a ratio, will be similar to the relationship between condo prices in the two areas. Pasadena Affordable Housing In Lieu Fee Analysis 15

16 Condominium Affordability Gap and In Lieu Fee Analysis Pasadena Affordable Housing In Lieu Fee Analysis 16

17 Condominium Sales Data Units Built and Sold Between 2009 and 2014 City of Pasadena Average of Price Average of Unit Sq. Ft. Average of Price/Sq. Ft. Number of Sales Year of SA B SA C SA D SA B SA C SA D SA B SA C SA D SA B SA C SA D Sale 2009 $655,000 $539,833 1,620 1,597 $404 $ $523,000 $878,167 $745,872 1,580 2,712 1,646 $331 $324 $ $486,000 $843,563 $744,400 1,280 2,581 1,591 $380 $327 $ $403,000 $895,000 $579,467 1,470 2,612 1,375 $273 $343 $ $499,500 $963,163 1,697 1,759 $339 $ $1,179,097 1,866 $ Grand Total $489,167 $856,500 $854,405 1,589 2,616 1,666 $331 $327 $

18 Condominium Market Sale Prices Sub- Area Base Year Base Year Sales Condominium Market Sales Analysis Inflated from Base Year to 2014 Base Year Base Year Avg. Avg. Inflation Adjusted Avg. Adjusted Avg. Sale Price Price/SF Factor Price Price/SF B $499,500 $ % $549,404 $ C $843,563 $ % $1,029,526 $ D $1,179,097 $ % $1,179,097 $ Pasadena Affordable Housing In Lieu Fee Analysis 18

19 Prototype Market Prices Market Price Estimates of New Condominiums Based on Sizes of Prototypes Units Unit Size per Prototype Sub-Areas B & D 1-Bedroom Units 2-Bedroom Units 3-Bedroom Units 710 SF 1,500 SF 1,750 SF Sub-Area B Market Price $264,571 $558,953 $652,111 Sub-Area D Market Price $448,686 $947,929 $1,105,917 Unit Size per Prototype Sub-Area C NA NA 2,616 SF Sub-Area C Market Price NA NA $1,043,472 Pasadena Affordable Housing In Lieu Fee Analysis 19

20 Maximum Income and Affordable Sale Price Maximum Annual Income and Affordable Sale Price 2015 AMI for Family of 4: $64,800 Household Moderate Income Maximum Affordable Sale Unit Type Size (120% AMI) Price 2 Persons 1-BR $62,208 $263,865 3 Persons 2-BR $69,984 $294,880 4 Persons 3-BR $77,760 $324,752 Maximum affordable sale price based on 110% AMI. Pasadena Affordable Housing In Lieu Fee Analysis 20

21 Condominium Ownership Affordability Gap Condominium Affordability Gap for Moderate Income Households (120% AMI) Sub-Area B Sub-Area C Sub-Area D 1-Bedroom Units Market Price $264,571 NA $448,686 Affordable Price $264,000 $264,000 $264,000 Affordability Gap ($19,429) NA $184,686 2-Bedroom Units Market Price $558,953 NA $947,929 Affordable Price $295,000 $295,000 $295,000 Affordability Gap $263,953 NA $652,929 3-Bedroom Units Market Price $652,111 $1,043,472 $1,105,917 Affordable Price $325,000 $325,000 $325,000 Affordability Gap $327,111 $718,472 $780,917 Weighted Average 1 Market Price $590,068 $1,043,472 $1,000,697 Affordable Price $311,000 $325,000 $311,000 Affordability Gap $278,700 $718,500 $689,300 1 Weighted averages are based on condo prototype unit distributions (Sub-Areas A, B and D: 1-br: 10%, 2-br: 25%, 3-br: 65%. Sub-Area D: 3-br: 100%). Pasadena Affordable Housing In Lieu Fee Analysis 21

22 Condominium In Lieu Fee Condominium In Lieu Fees by Sub-Area Projects with 50 or More Units Sub-Area A 1 Sub-Area B Sub-Area C Sub-Area D Affordability Gap $689,300 $278,700 $718,500 $689,300 In Lieu Fee per Unit $103,395 $41,805 $107,775 $103,395 In Lieu Fee per Square Foot $65.30 $26.40 $41.20 $65.30 Condominium In Lieu Fees by Sub-Area for Projects with Units In Lieu Fee per Square Foot Due to the absence of new construction condominium development sales data in Sub-Area A, DRA used the Sub-Area D in lieu fee for Sub- Area A, given the housing market similarities between the two areas. Pasadena Affordable Housing In Lieu Fee Analysis 22