DAVID C. BABBITT & ASSOCIATES, LLC Land Planning Consultants P.O. Box 922 Frazer, PA 19355-0922 610-651-5717 fax 610-651-5718 email: david@babbittplanning.com November 6, 2016 Mr. Michael P. Markman, President BET Investments 200 Witmer Road Suite 200 Horsham, PA 19044 Via email to mmarkman@betinvestments.com Re: Demographic and Fiscal Impact Analysis Promenade at Upper Dublin Upper Dublin Township, Montgomery County Dear Michael: As you requested, I have prepared this resource to assist Upper Dublin Township officials and citizens in their understanding of the unique demographic characteristics of high end rental apartments in this area, and how those demographic characteristics translate into positive fiscal impacts for the proposed Promenade at Upper Dublin development. As you know, high end rental apartments in a suburban environment like Upper Dublin on average house relatively few persons overall, and extremely few school age children. These low numbers of persons and school age children translate into low expenditures for Upper Dublin Township, the Upper Dublin School District, and Montgomery County. Coupled with the high revenue from the proposed development, the net impact is projected to be very strongly positive for all three entities. Residential Demographic Multipliers Rutgers University Center for Urban Policy Research For the fiscal impact analysis, I used a document called Residential Demographic Multipliers Estimates of the Occupants of New Housing, by Robert W. Burchell, David Listokin, and William Dolphin of the Rutgers University Center for Urban Policy Research (CUPR), published in June, 2006 (available at http://www.dataplace.org, under data available, and attached as a pdf document). These multipliers are based on the U.S. Bureau of the Census 2000 Public Use Microdata Sample, and are specific to this dwelling type, size, rent and state. The Rutgers CUPR examined housing built between 1990 and 2000 specifically in Pennsylvania, which totals tens of thousands of units across the Commonwealth. By analyzing this data, the CUPR determined the demographic multipliers for a variety of dwelling types (detached, attached, multifamily, etc.), size (in number of bedrooms), and housing value or monthly rent. These are the four variables that the CUPR has determined to be associated with statistically significant differences in demographic characteristics. The figures for number of persons per unit are 1.36 for one bedroom apartments with monthly rents above $950, and 1.75 for two bedroom apartments with monthly rents above $1,300. Using these demographic multipliers, the proposed Promenade at Upper Dublin is projected to house 690 persons at buildout and full occupancy. The CUPR study also includes the number of school age children (ages 5-17) per unit of 0.05 for one
Mr. Michael P. Markman -2- November 6, 2016 bedroom apartments with monthly rents above $950, and 0.09 for two bedroom apartments with monthly rents above $1,300. Using these demographic multipliers, and the 82.6 percent of school age children attending public schools in Upper Dublin (according to the 2013 American Community Survey, a function of the U.S. Census, specifically for Upper Dublin Township, which reported 4,157 public school students out of 5,034 school age children), the number of School District students projected to reside in the proposed development at buildout and full occupancy totals 26. Characteristics of the Population in New and Existing Housing Units Montgomery County Planning Commission A similar study was done by the Montgomery County Planning Commission, called Characteristics of the Population in New and Existing Housing Units, dated January, 2012 (available on the County Planning Commission s web page, and attached as a pdf document). The MCPC study examined the 28,000 units built in the County between 2000 and 2010, and differentiated by dwelling type only, and not by number of bedrooms, tenure or value like the CUPR study. The MCPC demographic multipliers for new multifamily housing are 1.67 persons per unit and 0.04 school age children per unit. Using these multipliers, the number of residents at the proposed Promenade at Upper Dublin is projected to total 723, the number of school age children is projected to total 17, and the number of public school students is projected to total 14. I prefer using the CUPR demographic multipliers because they differentiate not only by dwelling type (like the MCPC study), but also by dwelling size, tenure and value or rent. In particular, please note that the MCPC figures include multifamily dwellings with three or more bedrooms, while the proposed development has only one and two bedroom units. Nonetheless, the two sets of demographic multipliers are very similar. The two tables below show the differences between the CUPR study and the MCPC study, as applied to the proposed Promenade at Upper Dublin development. The first table compares the number of persons per unit, and the second compares the number of school age children. Please note that the second table also includes the 82.6 percent of school age children attending public schools in Upper Dublin Township. Proposed Units CUPR Persons CUPR Total Persons MCPC Persons MCPC Total Persons Difference 173 1 BR Apts. 1.36 235 1.67 289 +54 260 2 BR Apts. 1.75 455 1.67 434-21 Total 433 Units 690 723 +33 Proposed Units CUPR School Age Children CUPR Total Public School Students** MCPC School Age Children MCPC Total Public School Students** Difference 173 1 BR Apts. 0.05 7 0.04 6-1 260 2 BR Apts. 0.09 19 0.04 9-10 Total 433 Units 26 15-11 ** Figures have been multiplied by 82.6 percent to show public school students only.
Mr. Michael P. Markman -3- November 6, 2016 I also want to point out that the CUPR study clearly shows that demographic multipliers nearly always go down between dwelling types (singles to townhomes to rental apartments), even when holding the number of bedrooms constant. The table below shows the demographic multipliers for number of persons per unit for two bedroom and three bedroom units across these various dwelling types. All figures use highest value units in each category. Dwelling Type Bedrooms Number of Persons Number of School Age Children Singles 2 2.16 0.23 Townhomes 2 1.76 0.06 Rental Apts. 2 1.75 0.09 Singles 3 2.82 0.51 Townhomes 3 2.22 0.21 Rental Apts. 3 2.37 0.41 As you can see, two bedroom singles house more persons and far more school age children than two bedroom townhomes or apartments. The two bedroom apartments house 19.0 percent fewer persons and 60.9 percent fewer school age children than the two bedroom singles. And the differences between the three bedroom apartments and three bedroom singles are nearly as significant. I include this table to support my professional opinion that demographic multipliers should differentiate by dwelling type, not just by number of bedrooms. Occasionally, I see demographic studies that claim that the number of persons and school age children per unit are constants related to the number of bedrooms only, and not also the dwelling types. As is evident from the CUPR study, this simply is not true, especially with respect to the number of school age children per unit. Other Demographic Studies In addition to the CUPR and MCPC studies, I have compiled the demographics for numerous existing rental multifamily developments in strong school districts in the Philadelphia suburbs. These studies show relatively few residents per unit and very few public school students per unit living in high end, recently developed apartment complexes, which are comparable to the proposed Promenade at Upper Dublin. The Verandas at Newtown Square is a new apartment complex in Newtown Township, Delaware County with 213 units and monthly rents between $1,500 and $3,000. A recent census of the development shows 322 residents, for a demographic multiplier of 1.5 persons per unit, and only 13 school age children, for a demographic multiplier of 0.06 school age children per unit. Chestnut Square is a new complex in West Chester, Chester County, with 144 occupied units and monthly rents between $1,800 and $2,600. A recent census shows only 3 school age children, for a demographic multiplier of 0.02 per unit. The average household size is approximately 1.4 persons per unit. The Parc Apartments is a new complex in Plymouth Township, with 398 units and monthly rents
Mr. Michael P. Markman -4- November 6, 2016 between $1,380 and $2,250. A recent census shows only 24 persons under the age of 18, for a demographic multiplier of 0.06 children per unit. Please note that this includes more individuals than simply the school age children (ages 5-17), and far more than the number of public school students. Londonbury is a recently constructed complex along the Conshohocken riverfront, with 309 occupied units and monthly rents between $1,500 and $3,100. A recent census shows 358 persons, for a demographic multiplier of 1.2 persons per unit. Riverwalk is a new complex along the Conshohocken riverfront, with 375 units and monthly rents between $1,500 and $2,800. This development sent only three children to the public school system in the 2012-2013 school year, for a demographic multiplier of 0.01 public school students per unit. The Courts at Spring Mill Station is a new complex in Whitemarsh Township, with 385 units and monthly rents between $1,400 and $2,800. This development sent only six children to the public school system in the 2014-2015 school year, for a demographic multiplier of 0.02 public school students per unit. Household Income Household income is a function of the monthly rent charged to residents of an apartment complex higher monthly rents require higher household income levels. Companies that manage these newer, high end rental communities require prospective tenants to provide evidence that their household income levels are high enough to pay the monthly rent. In general, household income is required to be high enough so that no more than 25 percent is used toward rent. For the proposed Promenade at Upper Dublin, the monthly rents are projected to average $2,000 for the one bedroom units and $2,200 for the two bedroom units. These monthly rents translate into minimum annual household income levels of $96,000 for the one bedroom units and $105,600 for the two bedroom units. Please note that these are the minimum levels of household income necessary to afford the monthly rents, not the average household income levels, which are often significantly higher. For example, the average annual household income at the Verandas at Newtown Square is $124,500. The average annual household income at Chestnut Square in West Chester is $138,000. The average annual household income at Londonbury in Conshohocken is $101,017. At the East Side Flats in Malvern, 102 out of 163 occupied units (or 62.6 percent) have annual household incomes above $100,000, and 39 units (or 23.9 percent) have annual household incomes above $200,000. In short, the high rents charged in these newer complexes requires higher household income levels. The only residents who do not have high enough income levels to pay the rents are retirees, who are required to show they have liquid assets to cover their rents. Conclusion As should be clear, high end rental apartments in suburban Philadelphia exhibit very low demographics and very high income levels. The low demographics result in low expenditures for municipalities, school districts and counties, and the high income levels and significant assessed value of these developments result in high revenue. The combination of low expenditures and high revenue translates to annual operating surpluses for all three levels of government. For the Promenade at Upper Dublin, the proposed development scenario includes 433 units plus 130,000 square feet of retail commercial development, along with structured parking. The proposed development
Mr. Michael P. Markman -5- November 6, 2016 is projected to generate nearly $70 million in taxable assessed value, equal to nearly 3 percent of the assessed value of all properties in Upper Dublin ($2.44 billion). The annual net impact (revenue minus expenditures) is projected to total positive $246,212 for the Township, positive $1,893,476 for the School District, and positive $174,406 for the County, for a total of positive $2,314,094. The annual combined surplus exceeds the annual combined expenditures by 221.6 percent. The annual net impact to the School District is particularly noteworthy. The projected annual surplus of nearly $1.9 million represents more than 2 percent of the District s annual operating expenditures of $90.9 million (in 2015-2016). In other words, the proposed development could expand the District s resources enough that the administration may not need to raise its real estate tax millage for one or more budget years. Put another way, the projected annual surplus from the Promenade at Upper Dublin is enough to pay for the education of 89 public school students, beyond the 26 who are projected to live in the proposed development. I hope this information proves helpful. Please feel free to contact me should you have any questions. I look forward to presenting this analysis and the fiscal impact analysis at the upcoming Board of Commissioners hearing later in November. Sincerely, David C. Babbitt, AICP President attachments
Apartment Project Units Monthly Rent Number of School Age Children Verandas at Newtown 213 $1,500-$3,000 13 Newtown Square, PA Chestnut Square 144 $1,800-$2,600 3 West Chester, PA Parc Plymouth Meeting 398 $1,380-$2,250 24* Plymouth Township, PA Riverwalk at Millenium 375 $1,500-$2,800 3** Conshohocken, PA Courts at Spring Mill 385 $1,400-$2,800 6** Whitemarsh, PA Lincoln Woods 216 $1,100-$1,850 4* Springfield, PA *Includes all children under 18. **Indicates the number of public school children.