Market Study - Colorado Mountain...

Rees Consulting, Inc. 1

Market Study

Denison Placer Apartments II

Breckenridge, CO

August 2016

Rees Consulting, Inc. PO Box 3845

Crested Butte, CO 81224

970.349.9845

[email protected]


1. Introduction

Purpose

The Town of Breckenridge is planning the development of 30 apartments on Lot 3 of the Denison Placer Subdivision off of Airport Road on the north side of Breckenridge. The proposed studio and one-bedroom flats will be between the Colorado Mountain College (CMC) Breckenridge campus to the north and 66 planned two- and three-bedroom rental units that will be restricted for low income households and primarily target families to the south. The purpose of this market analysis report is to evaluate key aspects of the proposed project’s marketability and help the Town make key decisions on design, income targeting, rents and possible collaboration with the CMC. Market analysis for the 66 units is covered in a separate report; the units are referred to in this report as the LIHTC project.

Project Overview

Denison Place Apartments will function as one property with a shared leasing office, community building and on-site resident manager but are being developed in two phases:

Phase 1 -- An application for Low Income Housing Tax Credits (LIHTC) is being submitted for the 66 two- and three-bedroom units, most of which are townhomes, on Lots 2 and 4; construction is anticipated to start mid-2017.

Phase 2 – The 30 studio and one-bedroom flats that are the subject of this market analysis report will be financed and developed by the Town of Breckenridge; contrary to the numbering of the phases, construction will start June 2016 and overlap with Phase 1 by a couple of months.

Organization of the Report

This report includes the following five sections:

1. Design Evaluation 2. Market Size and Income Levels 3. Demand and Capture Rate Analysis 4. The Colorado Mountain College Market 5. Conclusions and Recommendations

The LIHTC market study for Phase 1 covers additional considerations such as the appropriateness of the location. Please refer to that report for more details if needed.


2. Design Evaluation The section describes and critiques the proposed site plan, unit plans and amenities.

Site Location and Plan

The 30 proposed apartments will be developed on Lot 3 of the Denison Placer Subdivision, which is a one-acre triangle located between Phase 1, a family-oriented rental property, and the south end of the CMC campus. A recent study for CMC identifies the south end of the campus as the appropriate location for traditional student housing in the future, but recommends that it not be developed at this time due to a combination of concerns. More information on CMC is provided in Section 4 of this report. The proposed units will be in the three buildings on the right of the site aerial below labeled Parcel 2. At 30 units per acre, the development is high density but, with compact studio and one-bedroom units, it should have adequate open space and be compatible with the scale/massing of residential development in Breckenridge.

Site Aerial

Source: Coburn Development

The two phases of Denison Placer will be separated by landscaping and the backyard fences of the Phase 1 townhomes. The distance between the buildings in the two Denison Placer phases is a concern. The distance varies since the buildings are aligned at different angles. The corners of the middle and east building appear to be about the length of a parking space from the


neighboring townhomes. This is close proximity for units that are of such different size and design.

Denison Place Phase 2 Site Plan

Source: Coburn Development

A path runs around the middle building but does not connect to off-site trails or the bus stop. The property will have a sign near its entrance although the exact location has not been identified. A temporary bus turnaround will be constructed so that buses can use Floradora upon completion of Denison Placer. When Block 11 is developed to the south, the turnaround will be removed. Buses will ultimately travel the length of Floradora Drive between Block 11’s two access points at Breckenridge Terrace and Denison Placer. A single parking lot with 35 spaces, the minimum required by the Town, will serve the three buildings. The Town of Breckenridge will develop Parcel 3, which is across Denison Placer Drive to the west, as multi-purpose parking lot that will be used as needed. It could serve as additional guest parking, or temporary parking during snow removal for Block 11 when further developed. Use will be controlled by the Town so that the site remains attractive at the north entrance to the Block 11 neighborhood. The Town code also requires extensive landscaping.


Building and Unit Plans

The 30 units will be in three 10-plex buildings. Two of the building will each have four units on the lower two floors and two apartments on the top floor.

Source: Coburn Architecture

The third building will have two units and storage lockers on the ground floor and four units on each of the top two floors. Units will be accessed via interior stairs.

Source: Coburn Architecture

Of the 30 units, 20 will be studios and 10 will have a separate bedroom. The studios will average 470 square feet while the one-bedroom flats will measure 646 square feet. This unit mix is unique in Summit County and will add diversity to the community’s workforce housing inventory. The sizes are adequate given the storage lockers located on the ground floor of the middle building.


Unit Mix and Size

Type Number Size

Studio 20 470 SF

1 BR 10 646 SF

Total/Avg. 30 529 SF

The units will all be located on a corner of the building and have windows facing in at least two directions. Given the length of winters in Breckenridge, access to sunlight is important and will be provided at Denison Placer. The one-bedroom units will have:

L-shaped kitchens

Side-by-side washers and dryers

A linen closet in the bathroom, a hall closet, a coat closet by the door and an adequate bedroom closet.

The studios will have:

One-wall kitchens

Stackable washers and dryers

A large closet near the door, a closet/pantry next to the kitchen and a walk in closet where the washer/dryer will be located.

Denison Placer will meet or exceed ANSI standards, IBC requirements for accessibility and Colorado Revised Statutes requirements for accessibility by providing two ANSI A units and four ANSI B units. ANSI A is the most stringent while B allows for convertibility.

Amenities

Units at Denison Placer will have:

Microwaves

In-unit washers and dryers

Balconies or concrete patios with fenced back yards

E-star appliances

Ceiling fans

Storage lockers for each unit that measure 3’x6’x8’ tall

The 30 Denison Placer Lot 3 units will have access to the community building developed as part of the LIHTC project. The Community Building will have:


An on-site leasing office.

A 23’ by 29’ community room with a small kitchen.

An outside seating area large enough for approximately six tables and benches. Grills are

an option although they will also be provided along with picnic tables and a shelter at

adjacent Oxbow Park.

A small fenced tot lot on the east side with several pieces of play equipment suitable for

children ages 2 to 5 and benches. A berm will separate it from the street and on-street

parking. This tot lot is intended to provide a safe place for small children when parents

are attending gatherings in the community room. A larger playground will be provided

at Oxbow Park.

A maintenance garage.

Bike racks next to each apartment building and the Community Building. Bikes can also

be parked in the fenced yards behind every townhome.

Pets will be allowed at Denison Placer, a feature that will appeal to many renters in the community. One of the units will house an on-site manager.


2. Market Size and Income Levels This section of the study provides 2016 estimates for singles and two-person renter households by income to determine which segments of the renter market the proposed 30 apartments should target. This analysis focuses on the Upper Blue Basin and provides overall figures for Summit County for insight into the differences and similarities of renters in the Breckenridge area compared to the rest of the county.

Number of Renter Households

Approximately 1,700 renter households now reside in the Upper Blue Basin, which equates to 37% of Summit County’s total. Of these, two-thirds or 1,130 households have one or two members and are therefore potential candidates for the proposed studio and one-bedroom apartments.

Source: Ribbon Demographics

There are slight differences in the size of 4,530 renter households county-wide compared to renters in the Upper Blue Basin. Based on 2015 Ribbon Demographics data, the county has proportionately more large households but fewer two-person households. The extent of these differences was greater according to the 2013 Housing Needs Assessment survey. According to both sources, one- and two-person households comprise the majority.

32%

35%

16%

11% 6%

Upper Blue Renter Households by Size

1-Person 2-Person 3-Person 4-Person 5+-Person


Renter Household Size - Upper Blue Basin and Summit County Compared

1-Person

2-Person

3-Person

4-Person

5+-Person

Total

Upper Blue Basin 538 589 269 190 102 1,688

32% 35% 16% 11% 6% 100%

Summit County 1,451 1,502 730 491 352 4,526

32% 33% 16% 11% 8% 100%

Source: Ribbon Demographics

Projected Growth in Renters

The Colorado State Demographer estimates that Summit County’s households will increase by over 14% between 2015 and 2020, which would mean a gain of 635 households. Ribbon Demographics estimates that the renter household population will grow to 4,813 households by 2021, an increase of 6.5%. The State Demographers estimate seems the more likely scenario given recent levels of job growth and current low unemployment rates (an average of 2.5% in 2015 and 1.5% in January 2016, well below the state average for unemployment).

One- and Two-Person Renter Households by Income

The incomes of one- and two-person renter households are widely distributed in the Upper Blue Basin with about the same percentage making $10,000 or less as earning $100,000 or more. The $60,000 to $75,000 category has the most with 16%. The largest concentration falls in the $30,000 through $75,000 range with 57% of small renter households.

Upper Blue Renter Households by Size and Income Shading denotes largest concentration.

1-Person 2-Person Total % of Total

$0-10,000 51 7 58 5%

$10,000-20,000 44 65 109 10%

$20,000-30,000 119 20 139 12%

$30,000-40,000 43 110 153 14%

$40,000-50,000 87 70 157 14%

$50,000-60,000 103 43 146 13%

$60,000-75,000 2 179 181 16%

$75,000-100,000 76 63 139 12%

$100,000-125,000 10 4 14 1%

$125,000-150,000 1 3 4 0%

$150,000-200,000 1 20 21 2%

$200,000+ 1 5 6 1%

Total 538 589 1,127 100% Source: Ribbon Demographics


In Summit County as a whole, there are relatively fewer renters in the upper income categories and more with annual incomes below $10,000. The $30,000 through $75,000 mid-range has a similar concentration.

Converting Dollar Incomes to AMI’s

Household incomes are typically expressed as a percentage of the Area Median Income (AMI) to allow for applicability among various programs and across geographies. Figures vary by household size and are published annually by the Department of Housing and Urban Development (HUD). 2016 amounts are attached as an appendix to this report. AMI’s are used to determine eligibility to rent most of the apartment complexes in Summit County. Rents are calcuated to be affordable at different AMI levels, and are often expressed by the AMI at which the corresponding rental unit is income restricted, for example 60% AMI rents.

Maximum Affordable Rents by AMI and Bedrooms

Studio 1 BR 2 BR 3 BR

120% $1,731 $1,854 2,223 2,568

100% $1,442 $1,545 1,852 2,140

80% $1,154 $1,236 1,482 1,712

60% $865 $927 1,111 1,284

30% $432 $463 555 642

Source: CHFA

Small Renter Households by AMI

The incomes of small renter households in the Upper Blue Basin converted into AMI’s shows that one-fourth are in the 31% to 60% AMI range and distributed broadly among other ranges.

Upper Blue One- and Two-Person Renter Households by AMI

AMI # %

<30% 154 14%

31-60% 277 25%

61 - 80% 163 15%

81 - 100% 214 19%

101-120% 144 13%

>120% 174 15%

1,127 100%

Source: Ribbon Demographics data; WSW Consulting conversion


Income Targeting and Rents

The broad distribution of renter incomes provides flexibility when determing the income levels and corresponding rents that the proposed 30 Denison Placer studios and one-bedroom units should target.


3. Demand Analysis This section provides estimates of:

Net demand and capture rates by AMI given income targets for existing and planned apartment properties; and

The extent to which all new/planned apartment projects including the 30 proposed Denison Placer units will address the five-year demand for rental housing in the Upper Blue Basin as projected by the 2013 Summit County Housing Needs Assessment.

Since the Town of Breckenridge focuses its resources on housing for the workforce who cannot afford market rents, current market rents are first examined to determine their affordability.

Rental Market Conditions and Trends

Conditions are extremely tight and rents are rising. The Summit Combined Housing Authority maintains a rental database covering approximately 900 rental units. The database is updated twice yearly to track rents and availability. No vacancies were reported in either of the 2015 surveys. In the 7-month period between April and November 2015, market apartments increased 6.2% and condo/duplex/SF homes rentals leased through property management companies increased 7.4%. Market rents have continued to increase. Market rents averaged about 80% AMI in 2013. A total of 101 non-duplicated long-term rentals in Summit County were listed on Craigslist, Zillow and in the Summit Daily News in March and the first half of April 2016. The median county-wide rent had grown to $1,898 per month, or about 100% AMI. The county median rent was $1,475 for studios and one-bedroom units and $1,895 for two-bedroom rentals.

Market Rents by Area, Mar/Apr 2016

Breckenridge Dillon Frisco Silverthorne Keystone & Copper

Countywide

Studio/1 BR 12 10 7 3 32

2 BR 19 4 4 8 3 38

3+ BR 9 11 2 7 2 31

Total Listings 40 25 13 15 8 101

Median Rent $1,925 $1,650 $1,823 $2,200 $1,623 $1,898

Sources: Summit Daily News, Zillow and Craigslist


Of the for-rent listings in March/April, 40 units were in or near Breckenridge. Rents in Breckenridge were higher than in the rest of Summit County, with an overall median monthly rent of $1,925, or about 104% AMI. While the rents for these 40 listings are likely higher that the rates paid by renters who have leased the same units for many years, it is clear that the market no longer serves households with incomes at or below 80%. The majority (over 70%) of available listings are priced at 100% AMI and above.

Rents in the Upper Blue by AMI, Apr/Mar 2016

61 - 80% 81 - 100% 101-120% >120% Total

Studio/1 BR 3 1 7 1 12

2 BR 2 5 7 5 19

3+ BR 2 7 9

Total Listings 5 6 16 13 40

12.5% 15.0% 40.0% 32.5% 100.0%

Sources: Summit Daily News, Zillow and Craigslist

Net Demand and Capture Rates

Net demand is the difference between the number of targeted households and the units that house them or are planned for construction. In the calculation of the proposed studio and one-bedroom apartments, targeted households consist of renters living in the Upper Blue Basin alone or with one other person. Net demand is similar among all AMI categories below 100% AMI though slightly lower in the 61% to 80% AMI range. Capture rates vary, however from a low of 2% in the 30% AMI category to 46% in the 31% to 60% AMI range. This indicates that income-restricted rental housing is serving the largest income group (31% to 60% AMI) thereby decreasing net demand but disproportionately serving the largest group relative to other income groups. This is common and primarily a function of the income limits associated with Low Income Housing Tax Credits. If rents are set for all of the proposed 30 units to be affordable at 61% to 80% AMI, the capture rate for that category would increase from 16% to 34% yet still be lower than for the 31% to 60% range.


Rental Demand and Capture Rate Calculations for the Upper Blue Basin <30% 31-60% 61 - 80% 81 - 100% 101-120% >120%

1-& 2-Person HH’s 154 277 163 214 144 174

Existing Rentals

Pinewood Village 1 19 55

Pinewood Village 2 45

Proposed Rentals

Denison Placer LIHTC 3 63

Huron Landing 26

Total Units 3 127 26 55 Mkt Mkt

Net Demand 151 150 137 159 N/A N/A

Existing Capture Rates 2% 46% 16% 26% N/A N/A

Denison Placer 2 30

Required Capture Rates 2% 46% 34% 26%

The 30% AMI and below category is an uncertainty. While data sources suggest there are over 150 renter households in this extremely low income category, income verifications often show that applicants who apply for income restricted housing have higher incomes than reported. Qualifying applicants for 40% AMI LIHTC units in Silverthorne has been challenging. The proposed Denison Placer LIHTC project will have 3 two-bedroom units serving households with incomes no greater than 30% AMI. These units will provide experience valuable for determining if additional rental housing should be income restricted for this group in the future.

2013 Housing Needs Assessment Projections

The 2013 Summit County Housing Needs Assessment projected that 200 to 370 additional rental units would be needed in the Upper Blue Basin in five years. Low and high-end estimates were provided based on assumptions about the rate of growth in jobs. The high-end estimates should be viewed as more accurate for two reasons: strong job growth and conversion of long-term rental units into short-term vacation rentals, a factor not adequately considered in the 2013 calculations.

Upper Blue Summit County

Low High Low High

<=30% 32 60 84 156

30.1-60% 124 232 322 600

60.1-80% 42 78 109 204

TOTAL Gap 200 370 515 960


Since these projections were developed, no apartments have been built in the Upper Blue Basin. Construction of 45 apartments at Pinewood Village 2 is nearing completion, and plans call for the development of 92 additional apartments (66 two-and three-bedroom units at Denison Placer and 26 two-bedroom apartments at Huron Landing). Combined the 137 units will address 37% of the projected demand.

Addressing Projected Rental Needs in the Upper Blue Basin

Rental Units Needed

Rental Units Built/Planned

Percent of Need Addressed

<=30% 60 3 5%

30.1-60% 232 107 46%

60.1-80% 78 27 35%

TOTAL Gap 370 137 37%

The high-end projection for Summit County as a whole called for 960 additional rental units within five years. Villa Sierra Madre added 64 units in 2014. No other apartment projects have been completed and none are under construction except for Pinewood Village 2. Taking into account these projects as well as Huron Landing, 22% of the projected need will be addressed.

Addressing Projected Rental Needs in Summit County

Rental Units Needed



<=30% 156 3 2%

30.1-60% 600 181 30%

60.1-80% 204 27 13%

TOTAL Gap 960 211 22%

The proposed Denison Placer studios and one-bedroom flats will increase the total number of new rental units to 167 in the Upper Blue Basin, which equates to 45% of projected demand. In Summit County overall, the 30 proposed units will increase the number of new rental units to 241 and the amount of need addressed to 25%.


4. The Colorado Mountain College (CMC) Market

Faculty, staff and students at the Breckenridge campus of the Colorado Mountain College are a segment of the workforce in the Upper Blue Basin. Most attend classes or work for CMC on a part-time basis and hold jobs in the community as well. This section references Student and Workforce Housing Demand and Market Analysis, February 2016, prepared by The Scion Group for seven of CMC’s campuses. Scion provided survey tabulations for this analysis beyond those included in their report. In addition, CMC provided access to their online enrollment tracking system for information on non-traditional students. This section of the report is divided into two parts that separately examine potential housing demand from faculty/staff and students.

Faculty and Staff

CMC employs 42 full-time and 90 to 100 part-time faculty and staff in Summit County. This is the combined total for the campuses in Breckenridge and Dillon. Many employees drive back and forth between the two campuses. Housing is particularly difficult to find for new hires relocating from outside of Summit County. CMC fills five to 10 positions per year with new recruits. Most of the faculty and staff hired in recent years live in Alma or Fairplay and commute over Hoosier Pass for work. CMC provides relocation assistance (first and last months’ rent and deposits) to new recruits, which has to be repaid in one year. CMC discontinued a homeownership assistance program it once offered. Regarding CMC faculty and staff working in Breckenridge, the Scion report found that:

Just over half were or might be interested in rental or for-sale workforce housing offered by the college, with staff having a higher level of interest than faculty.

Approximately two-thirds would have been interested in housing when they were first employed by CMC, due to the difficulty new hires experience when relocating to Summit County.

The majority of faculty and staff now own their homes (85% of the 33 respondents) and most live in single-family homes.

Some adjunct faculty feel that they should be given priority for housing due to their lower compensation.


A mix of ownership and rental housing is needed in Breckenridge that is compatible with the community; the majority would consider either ownership or rental housing.

The top five factors when deciding where to live out of 17 options were, in order: 1. Safe environment 2. Availability of parking 3. Cost 4. Adequate living space 5. Physical condition of housing

Most live with at least one other person; only about one-fourth live alone. Relatively few households include children.

About half live within 15 minutes of campus but the others commute from outside of Breckenridge; Breckenridge is preferred over Dillon as a place to live.

Most (75% of respondents) live in a dual-income household with the majority having household incomes over 100% AMI.

The majority are cost burdened by high housing expenses relative to income; the percentage who spend more than 30% of their household income on their housing payment varies little between faculty and staff.

The large majority (88% of survey respondents) were satisfied or very satisfied with their current housing.

One-bedroom apartments generated the least interest while three-bedroom homes were the most preferred. These choices were not cost conditioned, however, which could have significantly altered responses.

The Scion report concluded that rental housing is currently needed for 21 employees. It appears this represents the total number of faculty and staff who now rent. With approximately 140 faculty and staff, of which roughly 85% now own their homes, only 20 employees rent. This figure could vary given the small number of survey responses (33 from Breckenridge) but it appears to be a sound “ballpark” estimate of total rental demand. The report recommended a handful of townhomes and one small apartment building.


CMC Students

Enrollment The Breckenridge CMC campus has approximately 1,100 part- and full-time students. Most are part time. Just over 20% enroll for 12 or more credit hours per semester and are classified as full time. Enrollment varies by season with summer having the lowest number of students. Many work full time or leave the area for the summer months. Fall has higher enrollment than the spring semester because seasonal jobs are at a low level leaving more time for studies. The spring semester starts during the peak employment period when many students are working long hours.

Number of Students by Semester and Classification

Summer 2014

Fall 2014

Spring 2015

Full Time 48 254 223

Part Time 282 495 517

Non Credit/Combination 294 361 310

Total 624 1110 1050

Source: CMC Breckenridge

Enrollment at the Breckenridge campus has doubled since 2005 with a large jump following completion of the new, highly visible building in 2007, and is projected to increase 3% per year. Interestingly, college enrollment typically goes in the opposite direction from the economy. When the economy declines and unemployment rises, college enrollment increases. During economic booms, enrollment often declines. Enrollment is now steady at the Breckenridge campus despite a labor shortage throughout Summit County. Factors contributing to this include the new campus, the addition of degree programs, the availability of part-time jobs for students working their way through school, and the attractiveness/lifestyle of Breckenridge. Enrollment is projected to grow by at least 3% per year due to several factors including:

Growth in enrollment at the Summit County High School.

Growth in the overall population with the State Demographer projecting that Summit County will have one of the highest rates of growth in Colorado between now and 2040.

There may be a larger bump in enrollment, however if the Board of Directors approves construction of additional academic and student services space currently under consideration. If approved, construction would start next spring and be completed in 2017.


Demographics Among the students enrolled at CMC Breckenridge for spring semester 2015:

Only about one-third were in the age range typical for undergraduate students – 17 to 24. Just over half were in their prime income-earning years. The remaining 15% were at or nearing retirement age.

There were slightly more females but the difference was minimal -- 54% compared to 46% males.

Nearly 85% were white. Hispanics comprise the largest minority – about 6% of students. The demographics of students enrolled in the summer semester shifts slightly with proportionately more minorities, males, younger students (under 17) and older students (over 60) with relatively fewer students in the 25 through 59 age range.

Scion Conclusions and Recommendations The Scion report focused on the housing needs and preferences of full-time, single students, the profile of student who typically lives in on-campus student housing. Key conclusions from

17 - 24 34%

25 - 39 33%

40 - 59 18%

60+ 15%

Age of Students at CMC Breckenridge, Spring 2015

17 - 24 25 - 39 40 - 59 60+


the report potentially relevant to the proposed Denison Placer apartment property are summarized below:

Demand exists for 88 beds for full-time, single students at the Breckenridge campus.

Demand should increase to 99 beds by 2018 based on enrollment goals and projections although full time enrollment in Breckenridge dropped 10% between 2011 and 2015.

Quad occupancy suites are the most preferred option while studios are the least desired.

Purpose-built student housing should provide furnishings, cable, internet, common and individual study areas, and by-bed leasing.

Breckenridge and Dillon campuses could be served jointly by one housing development due to proximity.

Focus groups showed a high level of interest in pet friendly housing for $400 to $750/month.

Recommendations from the report specific to the Breckenridge campus include:

Focus on housing for non-traditional students due to implications of converting to a

24/7 campus and concerns about negatively impacting other CMC campuses that have

on-site housing.

On-campus housing should be located along the east/Blue River side of the parcel and at

the south end of the campus.

Family Students Focus The potential demand for the proposed studio and one-bedroom flats at Denison Placer generated by family students (students who live with one or more family members) is examined due to multiple considerations:

Full-time, single students seem inappropriate for Denison Placer given their housing preferences and Scion’s recommendations to target non-traditional students.

Denison Placer Phase 1 is designed to accommodate families in two- and three-bedroom units, most of which are townhomes with fenced yards. Since the two properties will function as one, families in both would be compatible.


On-site amenities, Oxbow Park and the location make Denison Placer ideally suited for families.

Small families where a parent is a part time student are very cost conscious, and may be attracted to the small, conveniently-located units.

Key characteristics of CMC family students in Breckenridge:

Most found it very difficult to find a place to rent.

Most are now satisfied with their housing.

55% rent.

Proportionately more are full-time students (42%) compared with the student body as a whole (only 21% were full time in spring 2015).

About one-third reside with another CMC student.

Most have a commute exceeding 15 minutes and therefore do not live within the town of Breckenridge.

Key Characteristics of Family Students

% Survey Responses

Enrolled 3+ terms 70%

Difficulty finding place to rent

Very difficult 60%

Somewhat difficult 11%

Easy 3%

N/A – did not look to rent 27%

Dissatisfied with housing 15%

Own 42%

Rent 55%

Live with parents 3%

Live w/ other CMC student 34%

Commute from Home to Campus

<15 minutes 44%

15 – 30 minutes 37%

31 – 60 minutes 13%

1 hour + 6% Source: Scion student survey


Number of Family Students Approximately 400 students at CMC Breckenridge live with one or more family members based on spring 2015 enrollment estimates. Of this total, approximately 160 currently rent and form the core potential market for the proposed Denison Placer units. Studios or one-bedroom units would be potentially acceptable to family students who live with just one other family member (52%). Applying this percentage to family students who rent results in an estimate of approximately 80 family students who are well positioned to rent at Denison Placer Phase 2.

Family Students at CMC Breckenridge

Percent Number

Total Enrollment 100% 1050

Family Students Enrolled* 38% 400

Rent 40% 160

Live with 1 other person 52% 83 Sources: Scion student survey, CMC enrollment figures and Rees calculations *Based on 80 surveys responses from family students out of 206 total responses

It should be noted that the number of family students living with their parents is small - only 3% of the survey respondents.

Housing Now Occupied by Family Students About one-third of family students now reside in studio or one-bedroom units, an estimate that includes both renters and owners. This is evidence that small units are adequate for many couples.

Type and Cost of Housing Now Occupied by Family Students

% Responses

Bedrooms

Studio 11%

1 BR 23%

2 BR 36%

3+ BR 30%

Share of Rent

Average $817

Minimum $385

Maximum $2100 Source: Scion student survey


Family students pay, on average, $817 for their share of rent. With families, it is unclear as to how they may have responded to this survey question; total rent was not asked.

Housing Preferences About one-third of family students indicated they would be willing to pay $1,250 per month for a one-bedroom apartment.

Willing to Pay in Rent for 1 Bedroom Apt.

% Survey Responses

$1,250 32%

$1,251 - $1,300 3%

Not interested because of floor plan 8%

Not interested at any cost 57% Source: Scion student survey

Cost is the most important consideration among family students when choosing where to live with an overall average rating of 4.2 on a scale where 1 = not important and 5 = extremely important. Proximity to campus ranked relatively low.

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

Outside play for kids

Proximity to partner's work

Proximity to campus

Size of living space

Sense of community

Quiet environment

Condition of housing

Own bathroom

Parking

Privacy

Own bedroom

Safety/security

Cost

Importance when Choosing Where to Live


The student survey also asked for the most important aspects of a new housing community for student families. Denison Place Phase 2 will provide most of the important features, which in order are:

1. Ability to have pets 2. Laundry facilities in the building 3. Car parking adjacent to unit 4. Adjacent, outdoor recreation and gathering space 5. Club house / community space 6. Exterior, secured storage 7. Neighbors who are also students, faculty or staff of CMC 8. Access to childcare (at extra cost) 9. Ability to meet new friends 10. Separate bathroom for children 11. Food for sale 12. Bike parking


5. Conclusions and Recommendations

Design

Many aspects of the design are livable, responsive to renter preferences and marketable.

Storage will be ample.

All flats will have a balcony or patio.

Windows will provide good light.

All of the flats will be corner units and have two exterior walls.

Interior stairs will be free of snow and ice.

Parking should be adequate for residents and overflow parking for guests is available just across the street to the south.

The unit mix will add diversity to Breckenridge’s workforce housing inventory. There are two primary concerns about the design as proposed.

The Phase 2 studios and one-bedroom flats will be very close to the Phase 1 two- and three-bedroom townhomes. The upper floor balaconies will overlook backyards where children will play much of the year. Noise as well as behavior that may be inappropriate for children including cigarette and marijuana smoking may be a source of disruption and conflict.

The site is not well connected to its surroundings. Residents will often walk, bike or take the bus to their work and other destinations since parking is so limited and expensive in Breckenridge during peak periods. It is important that the site have connecting pathways. The site plan could be improved to take advantage of the excellent proximity to free transit and bike/pedestrain network.

Recommendations:

The site plan should be reconfigured to provide more space between the two phases. Changing the building alignment to match the Phase 1 buildings is one way this could be achieved. Breaking up the parking lot and moving the middle building to the north might also be possible on the site.

Paths should lead from the buildings to the bus stop. The middle building where the storage lockers are located should be connected to the other buildings, the parking lot and the bus stop. A path on the east side of the parcel should connect with Oxbow Park and the bridge to the Blue Rive Recreation Path.


Market Size and Income Levels

Approximately 1,700 housing units in the Upper Blue Basin are now occupied by renters. Of these, 1,130 households have one or two members and are therefore the primary market for the proposed studios and one-bedroom flats. This is a sizable population from which the 30 proposed rental units will draw residents. Small units that target small households serve the largest segment of the renter market. The project will increase the number of renter-occupied units in the basin by less than 2%. With five-year growth projections that range from 6.5% to 14%, it will address only a small part of the growing need for rental housing. Given its size relative to need, risk is low. The incomes of small renter households (one and two persons) vary widely. This provides great flexibility when setting rents. While there are more renters with incomes in the 31% to 60% AMI range than in any other category, only 25% are in this range, and tend to be better served since they are eligible to reside at LIHTC properties.

Demand Analysis

Rental availability is extremely limited and rents are rising. The median market rent in the Breckenridge area is now $1,925, which is affordable for households with incomes just over 100% AMI. In 2013, average market rents were affordable at 80% AMI. Simplistically stated, this is due to demand that outweighs supply.

Net demand (total households minus existing workforce units) is now highest for the 81% to 100% AMI category but not significantly higher than in any other category given the wide distribution of incomes.

Capture rates (the percentage of demand that existing units address – lower shows underserved) are highest in the 31% to 60% AMI category, which is common because it is the income range financed by LIHTC. Denison Placer Phase 2 should not target this range.

Of the five-year projected need for additional rental units contained in the 2013 Summit County Housing Needs Assessment, only 37% has or will be addressed with units built or planned. The proposed 30 units will increase the need addressed to 45%.

Addressing Projected Rental Needs in the Upper Blue Basin

Rental Units Needed



<=30% 60 3 5%

30.1-60% 232 107 46%

60.1-80% 78 27 35%

TOTAL Gap 370 137 37%


Recommendations:

Target rents to be affordable for 61% to 80% AMI because:

o The category is above LIHTC eligibility and relatively under served. o While Huron Landing is going to serve the same income category, all of its units

will have two bedrooms and therefore house a different segment of the renter market.

o The capture rate would be 34% if all of the 30 proposed Denison Place Phase 2 units target this range, well below the current 46% capture rate for the 31% to 60% AMI category.

o Proportionately fewer units have been built or are planned for development serving this income group relative to five-year projected needs.

Consider targeting the 81% to 100% AMI category, which also has a relatively low capture rate (26%), in the near future. With current market rents averaging around 100% AMI, the market still provides some units affordable at 80% AMI. This will change, and Town initiatives will need to serve higher income renters.

The Colorado Mountain College Market

Faculty and Staff CMC employees who rent could benefit from and would likely lease CMC-sponsored rental housing due to a combination of factors:

High market rents– most CMC employees spend more than 30% of their income on housing.

Limited options – rental vacancy rates are extremely low forcing most new hires to commute over Hoosier Pass from Alma or Fairplay.

Household incomes that are too high to qualify for new apartments that will become available at Pinewood Village 2, Huron Landing and proposed Dension Placer LIHTC project.

CMC should not, however attempt to sponsor rental housing for 100% of their employees who rent (± 20 employees). Rental housing should primarily target new hires and employees who have been forced to live outside of Summit County. Most live alone or with one other person but no children. With 5 to 10 new hires per year, approximately 10 rental units for faculty and staff would be more appropriate.


Given that the large majority of faculty and staff now own their homes, it is reasonable to expect that new hires will want to buy once they have spent a year or two in the community and become committed to it and their jobs. If affordable homeownership opportunities are provided, the number of rental units that CMC needs to sponsor should remain somewhat static, assuming no significant increases in the number of employees at the Breckenridge campus. If employees are unable to move into ownership, the number of rental units sponsored by CMC should increase over time to make room for additional new hires.

CMC Students While Scion estimated demand for 88 beds for full-time, single students at the Breckenridge campus, the proposed 30 studio and one-bedroom units are not well designed for traditional student housing and would be too expensive.

Quad occupancy suites are the top preference for traditional student housing; studios the lowest.

The proposed units are livable for singles and couples but not roommates.

Students prefer housing with a per share cost in the range of $400 to $750 per month. The enrollment patterns and demographics of CMC Breckenridge students suggest that non-traditional student housing would be more appropriate candidates for Denison Placer 2. Family students comprise a viable target market for the proposed studios and one-bedroom flats, and would likely be compatible with their neighbors in the Denison Placer 1 townhomes. Approximately 80 students live with one other family member and rent, providing more than adequate demand for one of the proposed buildings.

Recommendations Consider an arrangement with CMC to earmark a portion of the 30 proposed Denison Placer 2 flats for relocating or commuting faculty/staff and for non-traditional students, especially families. While familial status cannot be the basis for determining if a student is eligible to rent or not, CMC could market to family students and create referrals to leasing agents for housing that meets their needs.


Appendix

2016 AMI’s for Summit County

AMI 1 Person 2 Person 3 Person 4 Person 5 Person

120% 69,240 79,080 88,920 98,760 106,680

100% 57,700 65,900 74,100 82,300 88,900

80% 46,160 52,720 59,280 65,840 71,120

60% 34,620 $39,540 $44,460 $49,380 $53,340

50% 28,850 $32,950 $37,050 $41,150 $44,450

40% 23,080 $26,360 $29,640 $32,920 $35,560

30% 17,310 $19,770 $22,230 $24,690 $26,670

Source: CHFA

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