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031714-CCHRAPC-ws-CompleteAgenda CITY OF RICHFIELD, MINNESOTA MONDAY, MARCH 17, 2014 RICHFIELD MUNICIPAL CENTER 6700 PORTLAND AVENUE ******************************************************************************************************* SPECIAL CONCURRENT HOUSING AND REDEVELOPMENT AUTHORITY/ CITY COUNCIL/PLANNING COMMISSION WORKSESSION BARTHOLOMEW ROOM 6:00 P.M. AGENDA Call to order (Worksession discussion times are approximate) 6:00 - 6:55 p.m. 1. Presentation and discussion of the Senior Housing Demand Assessment (HRA Memo No. 14/Council Memo No. 31) Notes: _________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9738. CITY OF RICHFIELD, MINNESOTA Office of City Manager March 13, 2014 Council Memorandum No. 31 HRA Memorandum No. 14 The Honorable Mayor Housing and Redevelopment and Authority Commissioners Members of the City Council City of Richfield Subject: Senior Housing Demand Analysis (Worksession Agenda Item No. 1) Council Members: During the past several years, developers have continued to express an interest in building senior housing developments in Richfield. At the same time, however, there has been a degree of skepticism on the part of many policy makers in the community regarding the need and/or desire for additional senior housing in the community. Two studies have been conducted in recent years that alluded to senior housing needs. The Urban Land Institute Minnesota Regional Council of Mayor's "Opportunity City Program" analysis of Richfield (completed in 2009) made two statements related to senior housing, first, that "the City can anticipate a rapid increase in seniors over the next 5-10 years," and then asked the question, "to retain social fabric through senior retention, will there be new opportunities for downsizing to one level and higher density senior housing?" The 2012 "Rental Housing Inventory and Needs Analysis" (conducted by Stantec, Inc.) identified four major gaps in the rental housing market; one of which was "senior housing of all types." In an effort to provide more detailed information on whether or not there is a need for senior housing, staff asked Maxfield Research to conduct a Senior Housing Demand Assessment. Maxfield's assessment concludes that, considering only the needs of Richfield residents, there is currently an overabundance of both owner-occupied independent living units and congregate care units. There is unmet demand, however, for rental independent living units, assisted living units and memory care units (see attached Summary Table). With regards to memory care, there are currently no such units located in Richfield. While the Assessment concludes that there is a substantial unmet demand for affordable senior housing, it also cautions that developing affordable senior housing is extremely challenging due to high costs and limited funding sources. The Richfield Housing Visioning Task Force has received the Senior Housing Needs Assessment and has held one discussion on the findings, with a follow-up discussion scheduled for April. A combined Work Session of the City Council, Housing and Redevelopment Authority (HRA) and Planning Commission is scheduled for 6:00 p.m. on Monday March 17 to hear a presentation on the Assessment from Mary Bujold of Maxfield, Inc. and to discuss the Assessment. I Following the Task Force meeting and the Work Session, staff will recommend next steps on the Assessment based on the discussion occurring at those meetings. Res 0-- submitt-., , ,/f,„ , JP A��i!�!� IIiVVVr\rr\��� ev . De anager SLD:jcs Attachments Email: Department Directors Assistant City Manager Planning Commission Senior Housing Demand Assessment Summary Table Excess Demand RichfieldMarket Area Service Level2013201820132018 Mkt. Rate Adult/Few Services (Ownership)-34346466 Mkt. Rate Adult/Few Services (Rental)90113167168 Mkt. Rate Congregate-107-806971 Mkt. Rate Assisted Living193222224252 Mkt. Rate Memory Care132140167206 Subtotal - Market Rate Senior Housing274429691763 Low-Income Adult/Few Services40146not analyzed Moderate-Income Adult/Few Services4955not analyzed Affordable Assisted Living117131not analyzed Affordable Memory Care91102not analyzed Skilled Nursing Beds143151not analyzed Subtotal - Affordable Senior Housing440585 Grand Total9881443 xfleld Research Inc January 15, 2014 1/T, e . - \ D 1/ TO: Mr. John Stark City of Richfield FROM: Ms. Mary C. Bujold Mr. Rob Wilder Maxfield Research Inc. RE: Assessment of Need for Senior Housing in the City of Richfield, Minnesota Introduction/Purpose and Scope of Research The analysis provides an assessment of the current market conditions for existing senior hous- ing in Richfield and the potential market support for additional senior units (active adult, inde- pendent living (optional services) assisted living and memory care) in the City of Richfield, Min- nesota. This memorandum first identifies market support from only the City of Richfield and the residents that current reside within its boundaries. However, all housing developments tend to draw potential customers from a geographic area that is larger than the city. The second part of the analysis defines the primary draw area, or Primary Market Area ("PMA"), for senior housing in Richfield and presents an overview of the demographic and eco- nomic characteristics of that Primary Market Area. For the analyses, existing and pending sen- ior housing developments are inventoried that would compete either directly or indirectly with additional senior housing in the City. Demand for senior housing is calculated based on demo- graphic, economic and competitive factors that would impact demand for additional senior housing units in the City of Richfield and in the PMA. The methodology used to calculate demand in this memorandum is proprietary to Maxfield Re- search but is consistent with methodologies used by analysts throughout the senior housing in- dustry. The demand estimates presented herein do not consider specific sites for development and are intended to broadly assess the depth of demand for senior housing in Richfield proper and in a Primary Market Area that represents the geographic boundaries from which a majority of residents of senior housing would be drawn. The analyses identify current demographic trends and the level of need that exists in the community. The analysis does not however, con- sider a specific project at a specific location for development. (main) 612-338-0012 (fax) 612-904-7979 1221 Nicollet Mall, Suite 218, Minneapolis, MN 55403 www.maxfieldresearch.com Mr. John Stark January 15, 2014 City of Richfield Page 2 Existing Senior Housing in Richfield There are six senior living communities in Richfield. Mainstreet Village and Village Shores each offer independent living with some services and assisted living. Five of the six communities are located near the intersection of West 66th Street and Lyindale Ave S. Mainstreet Village is locat- ed south on Lyndale Ave S. at the intersection of West 77th Street. • Site 1 is Mainstreet Village, located at 7601 Lyndlale Ave S. • Site 2 is Village Shores, located at 6501 Woodlake Drive. • Site 3 is Lake Shore Drive Condominiums, located at 6615 Lake Shore Drive. • Site 4 is Woodlake Point, located at 6500 Woodlake Drive. • Site 5 is The Pines, located at 400 West 67th Street. • Site 6 is Gramercy Park Cooperative, located at 6711 Lake Shore Drive Site Locations MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 3 City of Richfield Maxfield Research initially analyzed the capacity of Richfield proper to support additional senior housing based on its current resident base and considering growth trends and demographic characteristics, traffic and community orientation patterns, geographic and man-made barriers, discussions with local officials, and our experience in senior housing feasibility. In considering Richfield proper, we estimate that 85% of the demand for senior housing in Rich- field will be generated from the City proper. The remaining portion of the demand (15%) would come from outside of Richfield. These individuals will include people currently residing just outside Richfield who have an orientation to the area (i.e. church, doctor, etc.), people who once resided in the area who desire to move back to be near friends and family, retirees who wish to relocate to the area, and parents of adult children living in Richfield. A map of Richfield is shown below. City of Richfield MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 4 Older Adult (Age 55+) Population and Household Trends Table 1 shows the age distribution of people and households age 55 and older in Richfield. In- formation for 2000 and 2010 is supplied by the U.S. Census Bureau. The 2013 estimate and 2018 projection were supplied by ESRI, a nationally recognized demographics firm. The follow- ing points are key observations from Table 1: As of 2010, Richfield had 35,228 residents and 14,818 households. The population in- creased by 789 people (+2.3%) while the household base contracted by 223 households (- 1.5%) from 2000 to 2010. The number of new households was low relative to the number of new people. We estimate that the population has increased by over 700 people to 36,047 between 2010 and 2013. • Aging of baby boomers led to an increase of 1,131 people (+40.9%) in the 55 to 64 popula- tion between 2000 and 2010. As this group ages, all cohorts age 55 or greater are predicted to see increases over the next five years, particularly the 55 to 64 and 65 to 69 age groups which are projected to grow 8.4% (+351 people) and 24.4% (+314 people), respectively. The 70 to 74 age group is expected to increase by 259 people (+25.3%). 5,000 4,000 3,000 2,000 1,000 0 Projected Household Growth by Age of Householder City of Richfield 2000 to 2018 55 to 64 65 to 74 65+ 1 ■ 2000 ■ 2010 ■ 2013 2018 • Between 2013 and 2018, Richfield's senior (65+) population is projected to increase by 870 people (+16.3%). Much of this growth will be among people age 65 to 69, as the leading edge of the baby boom ages into their late 60s. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 5 • The age 75 and over population is projected to grow 9.8% (+297 people) between 2013 and 2018 after shrinking 9.3% (-297 people) between 2000 and 2010. The fluctuating growth during this period in the age 7S+ population reflects the aging of people born during the Depression Era, a period of much lower births. The primary market for service -enhanced housing is senior households age 75 and older. While individuals in their 50s and 6Os typically do not comprise the market base for service - enhanced senior housing, they often have elderly parents to whom they provide support when they decide to relocate to senior housing. Since elderly parents typically prefer to be near their adult caregivers, growth in the older adult age cohort (age 55 to 64) generally re- sults in additional demand for senior housing products. TABLE 1 OLDER ADULT (55+) POPULATION & HOUSEHOLD AGE DISTRIBUTION PRIMARY MARKET AREA 2000 to 2018 � C= 0 POPULATION Age 2000 2010 2013 2018 2000-2010 1,131 40.9% 2013-2018 351 8.4% 55 to 64 2,767 3,898 4,185 4,536 65 to 69 1,077 1,165 1,287 1,601 88 8.2% 314 24.4% 70 to 74 1,358 944 1,024 1,283 -414 -30.5% 259 25.3% 75 to 79 1,470 816 841 971 -654 -44.5% 130 15.4% 80 to 84 1,042 978 992 1,021 -64 -6.1% 29 2.9% 85+ 686 1,107 1,206 1,344 421 61.4% 138 11.4% Total 55+ 8,400 8,908 9,534 1 10,756 508 6.0% 1,222 12.8% Tota 1 65+ 5,633 5,010 5,350 6,220 -623 -11.1% 870 16.3% Tota 1 75+ 3,198 2,901 3,039 3,336 -297 -9.3% 297 9.8% Tot. Pop. 34,439 35,228 36,047 37,461 789 2.3% 1,414 3.9% HOUSEHOLDS Age 2000 2010 2013 2018 2000-2010 764 46.0% 2013-2018 181 7.0% 55 to 64 1,660 2,424 2,573 2,754 65 to 74 1,519 1,366 1,488 1,833 -153 -10.1% 346 23.2% 75+ 2,217 2,167 2,258 2,451 -50 -2.3% 193 8.5% Tota 1 55+ 5,396 5,957 6,318 7,038 561 10.4% 720 11.4% Tota 1 65+ 3,736 3,533 3,746 4,285 -203 -5.4% 539 14.4% Tota 175+ 2,217 2,167 2,258 2,451 -50 -2.3% 193 8.5% Tot. HH 15,041 11 14,818 15,145 1 1 15,781 1 1 -223 -1.5%11 636 4.2% Sources: U.S. Census Bureau; ESRI.; Maxfield Research Inc. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 6 Older Adult and Senior Household Incomes Table 2 shows incomes for older adult and senior households in Richfield in 2013 and 2018 based on information provided by ESRI and the U.S. Census Bureau. The data in Table 2 helps determine demand for senior housing based on the size of the market at specific income levels. This data is incorporated into the demand calculations which are presented in a following sec- tion. It is important to note that the data does not account for the asset base of senior house- holds or supplemental income that a senior household could gain from the proceeds of a sale of a home or from contributions from family members. 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 willing to pay increasing proportions of their incomes on housing with services, beginning with an income allocation of 40% to 50% for market rate adult senior housing with few or no services, increasing to 65% for congregate housing and to 80% to 90% or more for assisted living housing. The proceeds from the sales of their homes, as well as financial assistance from their adult children, are often used as supple- mental income in order to afford senior housing alternatives. The following are key points from Table 2: Overall, senior households in the PMA have below-average incomes when compared to the draw area. The median income of $34,609 for 65+ households in 2013 in Richfield. The key market for active adult/few services housing is comprised of senior households (age 65+), with incomes of $35,000 or more. In 2013, we estimate there were 1,670 age- and in- come -qualified households in the PMA that comprise the key market for active adult hous- ing. Including all households with incomes of $35,000 and over (adjusted for inflation), the number of 65+ senior households projected to income -qualify for active adult/few services housing is expected to grow to 2,401 households in 2018 (+43.7%). • Independent living with some services (congregate) housing demand is driven by senior households (primarily age 75+) with incomes of $35,000 or more. We estimate the number of age- and income -qualified households in the PMA to be 787 households in 2013, increas- ing to 1,075 (+35.6%) households in 2018. The target market for assisted living housing is senior households age 75 and older with in- comes of at least $40,000 (plus senior homeowners with somewhat lower incomes). As of 2013, there were an estimated 684 older senior households (age 75+) in the PMA with in- comes of at least $40,000, accounting for about 33.5% of all older senior households. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 7 • Including all households with incomes of $45,000 and over (adjusted for inflation), the number of older senior households projected to income -qualify for assisted living senior housing is expected to increase to 837 households in 2018 (+22.4%). • Memory care housing has a target market of senior households age 65 and older with in- comes of at least $60,000. As of 2013, there were approximately 356 age 65+ households in Richfield with incomes of at least $60,000, accounting for 10.5% of all senior households. The number of income -qualified households with incomes of $65,000 (adjusted for infla- tion) is projected to increase to 561 by 2018 (+57.6°x6). Since senior housing with services is need -driven, seniors with low incomes are still candi- dates for private pay housing, provided they have home equity or other financial assistance that they can utilize to pay for the costs. Very low-income seniors who are Medicaid - qualified also could live in assisted living or memory care facilities that accept Elderly Waiv- ers. Due to the limited availability of facilities that accept Elderly Waivers, demand from low-income seniors is often substantial. 5,000 4,500 4,000 3,500 N 0 3,000 v 2,500 0 2,000 z 1,500 1,000 Soo Age- and Income -Qualified Households City of Richfield 2013 and 2018 Adult/=ew Congregate Assisted Living Memory Care Services MAXFIELD RESEARCH INC. Mr. John Stark January 1S, 2014 City of Richfield Page 8 TABLE 2 OLDER ADULT (55+) INCOME DISTRIBUTION PRIMARY MARKET AREA 2013 & 2018 55-64 65-74 75+ Total 65+ No. Pct. No. Pct. No. Pct. No. Pct. 207 8.9 137 10.2 428 21.0 566 16.7 Under $15,000 $15,000-$24,999 204 8.8 123 9.1 477 23.4 599 17.7 $25,000-$34,999 237 10.2 200 14.9 348 17.0 548 16.2 $35,000-$49,999 353 15.2 277 20.6 308 15.1 586 17.3 $50,000-$74,999 533 22.9 358 26.6 304 14.9 661 19.5 $75,000-$99,999 329 14.2 126 9.4 127 6.2 254 7.5 $100,000-$149,999 304 13.1 75 5.6 41 2.0 116 3.4 $150,000-$199,999 80 3.4 21 1.6 5 0.2 25 0.8 $200,000 or more 76 3.2 26 2.0 2 0.1 28 0.8 2,323 100.0 1,344 100.0 2,040 100.01 Tota 1 1 3,383 100.0 Median Income $56,901 $46,777 $28,638 $34,609 65-74 55-64 75+ Total 65+ No. Pct. No. Pct. No. Pct. No. Pct. 245 8.6 588 23.3 790 17.9 U n d e r $15,000 202 10.7 $15,000-$24,999 165 5.8 140 7.4 514 20.3 654 14.8 $25,000-$34,999 214 7.5 224 11.8 351 13.9 575 13.0 $35,000-$49,999 366 12.9 342 18.1 358 14.1 700 15.8 $50,000-$74,999 596 21.0 487 25.7 389 15.4 875 19.8 $75,000-$99,999 544 19.1 262 13.9 254 10.0 516 11.7 $100,000-$149,999 465 16.4 145 7.6 64 2.5 209 4.7 $150,000-$199,999 143 5.1 47 2.5 8 0.3 55 1.2 $200,000 or more 102 3.6 44 2.3 2 0.1 46 1.0 2,840 100.0 1,891 100.0 1 2,528 100.0 4,420 100.0 Total Median Income $67,725 $52,799 $29,974 $39,090 Change 2013 to 2018 55-64 65-74 75+ Total 65+ No. Pct. No. Pct. No. Pct. No. Pct. Under $15,000 38 18.3 64 46.8 160 37.3 224 39.6 $15,000-$24,999 -38 -18.9 18 14.3 37 7.7 54 9.1 $25,000-$34,999 -23 -9.8 23 11.7 4 1.1 27 5.0 $35,000+ 54135.6 442 52.9 288 36.9 730 45.2 Tota I 517 22.3 548 40.8 489 24.0 1,037 30.6 Sources: U.S. Census Bureau; ESRI; Maxfield Research Inc. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 9 Homeownership Rate Table 3 shows the number of older adult and senior households that owned and rented their housing in Richfield in 2000 and 2010 according to the U.S. Census. This information lends in- sight into the number of households that may still have homes to sell and could potentially supplement their incomes from the sales of their homes to support monthly fees for alternative housing. • The Primary Market Area maintains reasonably high rates of homeownership in the older adult age cohorts. The homeownership rate in 2010 was 76% for age 55 to 64 households. The homeownership rate increases to 82% for age 65 to 74 households. Seniors typically begin to consider moving into senior housing alternatives in their early to mid-70s. This movement pattern is demonstrated by the drop in homeownership between the 65 to 74 age cohort (82%) and the 75+ age cohort (73%). 65+ Total 75+ 65-74 55-64 Homeownership Rate Comparison by Age Primary Market Area 2000 and 2010 65%, 7011/0 7')% 80% 85% 02010 ■ 2000 86% 90% • With a homeownership rate of 76% for all households over the age of 65, many residents would be able to use the proceeds from the sales of their homes toward senior housing al- ternatives. The homeownership rate has decreased in this cohort since 2000, from 83%, which indicates a preference toward renting among 65+ seniors, and is even more pro- nounced in the 75+ age group. The resale of single-family homes would allow additional senior households to qualify for market rate housing products, since equity from the home sale could be used as supplemental income for alternative housing. These considerations are factored into our demand calculations, which are presented in a following section of this memorandum. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 10 Home Sale Values Table 4 presents home sale data for single-family homes in Richfield, Minnesota. The home sale data is useful in that it represents the amount of equity seniors may be able to derive from the sales of their homes that could be used to cover the cost of senior housing alternatives. The data on home sales in Table 4 was obtained from the Minneapolis Area Association of Real- tors. The following points summarize key findings: In Richfield, the median sale price of single-family homes increased from $186,500 in 2009 to $189,950 in 2013, representing an increase of 1.8%. • Based on the 2013 median sale price in Richfield ($189,950), a senior household could gen- erate approximately $3,570 of additional income annually (about $300 per month), if they invested in an income-producing account (2.0% interest rate) after accounting for market- ing costs and/or real estate commissions (6.0% of home sale price). Should a senior utilize the home proceeds dollar for dollar to support living in senior hous- ing with services, the proceeds of this home would last roughly eight years in independent living with some services (congregate) housing (monthly rent approximated at $2,000), roughly four and a half years in assisted living (monthly rent approximated at $3,500), or about three and a half years in memory care housing (monthly rent approximated at $4,500). Seniors in service -intensive housing typically have lengths of stays between two and three years indicating that a large portion of PMA seniors would be financially prepared to privately pay for their housing and services. MAXFIELD RESEARCH INC. TABLE 3 OLDER ADULT HOUSEHOLD TENURE PRIMARY MARKET AREA 2000 & 2010 ------- Age of Householder -------- Own RentOwn Rent Own Rent FO.n"Rent 2010 No. of Households 1,854 570 1,114 252 1,587 580 2,701 832 Homeownership Rate 76% 82% 73% 76% 2000 No. of Households 1,331 329 1,306 213 1,800 417 3,106 630 Homeownership Rate 80% 86% 81% 83% Sources: U.S. Census Bureau, ESRI, Maxfield Research Inc. Home Sale Values Table 4 presents home sale data for single-family homes in Richfield, Minnesota. The home sale data is useful in that it represents the amount of equity seniors may be able to derive from the sales of their homes that could be used to cover the cost of senior housing alternatives. The data on home sales in Table 4 was obtained from the Minneapolis Area Association of Real- tors. The following points summarize key findings: In Richfield, the median sale price of single-family homes increased from $186,500 in 2009 to $189,950 in 2013, representing an increase of 1.8%. • Based on the 2013 median sale price in Richfield ($189,950), a senior household could gen- erate approximately $3,570 of additional income annually (about $300 per month), if they invested in an income-producing account (2.0% interest rate) after accounting for market- ing costs and/or real estate commissions (6.0% of home sale price). Should a senior utilize the home proceeds dollar for dollar to support living in senior hous- ing with services, the proceeds of this home would last roughly eight years in independent living with some services (congregate) housing (monthly rent approximated at $2,000), roughly four and a half years in assisted living (monthly rent approximated at $3,500), or about three and a half years in memory care housing (monthly rent approximated at $4,500). Seniors in service -intensive housing typically have lengths of stays between two and three years indicating that a large portion of PMA seniors would be financially prepared to privately pay for their housing and services. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 11 TABLE 4 SINGLE-FAMILY HOME SALES PRIMARY MARKET AREA 2009 through 2013 (December) City of Richfield Cumulative Average No. of Average Median Days on Median Year Sales Price Price Market Year Built 2013 377 $191,785 189,950 50 1951 2012 343 $173,661 169,745 68 1952 2011 237 $174,345 170,000 110 1952 2010 217 $184,414 183,000 88 1952 2009 223 $184,811 186,500 74 1951 %Change 2009 - 2013 69.1% 3.8% 1.8% -32.9% Note: Single Family home sales included Sales for 2013 through December 10, 2013. Source: Minneapolis Area Assoc. of Realtors Senior Housing Defined Senior housing is a concept that generally refers to the integrated delivery of housing and services to seniors. However, as Figure 1 illustrates, senior housing embodies a wide variety of product types across the service -delivery spectrum. Products range 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 "memory care") on the other end of the spectrum. 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 (ADLs). For analytical purposes, Maxfield Research Inc. classifies market rate senior housing into five categories based on the level and type of services offered. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 12 FIGURE 1 CONTINUUM OF HOUSING AND SERVICES FOR SENIORS Fully Independent Fully or Highly Dependent on Care Lifestyle 71 Senior Housing Product Type Source: Maxfield Research Inc. Active Adult properties (or independent living without services available) are similar to a general -occupancy building, in that they offer virtually no services but have age -restrictions (typically 55 or 62 or older). Residents are generally age 70 or older if in an apartment -style building. Organized activities and occasionally a transportation program represent the ex- tent of services typically available at these properties. Because of the lack of services, ac- tive adult properties generally do not command the rent premiums of more service - enriched senior housing. Active adult properties can have a rental or owner -occupied (con- dominium or cooperative) format. Congregate properties (or independent living with services available) offer support services such as meals and/or housekeeping, either on an optional basis or a limited amount includ- ed in the rents. These properties often dedicate a larger share of the overall building area to common areas, in part, because the units are smaller than in active adult housing and in part to encourage socialization among residents. Congregate properties attract a slightly older target market than active adult housing, typically seniors age 75 or older. Rents are also above those of the active adult buildings. Sponsorship by a nursing home, hospital or other health care organization is common. • Assisted Living properties come in a variety of forms, but the target market for most is gen- erally the same: very frail seniors, typically age 80 or older (but can be much younger, de- pending on their particular health situation), who are in need of extensive support services and personal care assistance. Absent an assisted living option, these seniors would other- wise need to move to a nursing facility. At a minimum, assisted living properties include two meals per day and weekly housekeeping in the monthly fee, with the availability of a third meal and personal care (either included in the monthly fee or for an additional cost). Assisted living properties also have either staff on duty 24 hours per day or at least 24-hour emergency response. MAXFIELD RESEARCH INC. Single -Family Congregate Apartments w/ Optional Townhome or Apartment Assisted Living Nursing Facilities Home Services Age -Restricted Independent Single -Family or Congregate Apartments w/ Memory Care Townhomes or Apartments or Condominiums or Intensive Services (Alzheimer's Units) Cooperatives Active Adult properties (or independent living without services available) are similar to a general -occupancy building, in that they offer virtually no services but have age -restrictions (typically 55 or 62 or older). Residents are generally age 70 or older if in an apartment -style building. Organized activities and occasionally a transportation program represent the ex- tent of services typically available at these properties. Because of the lack of services, ac- tive adult properties generally do not command the rent premiums of more service - enriched senior housing. Active adult properties can have a rental or owner -occupied (con- dominium or cooperative) format. Congregate properties (or independent living with services available) offer support services such as meals and/or housekeeping, either on an optional basis or a limited amount includ- ed in the rents. These properties often dedicate a larger share of the overall building area to common areas, in part, because the units are smaller than in active adult housing and in part to encourage socialization among residents. Congregate properties attract a slightly older target market than active adult housing, typically seniors age 75 or older. Rents are also above those of the active adult buildings. Sponsorship by a nursing home, hospital or other health care organization is common. • Assisted Living properties come in a variety of forms, but the target market for most is gen- erally the same: very frail seniors, typically age 80 or older (but can be much younger, de- pending on their particular health situation), who are in need of extensive support services and personal care assistance. Absent an assisted living option, these seniors would other- wise need to move to a nursing facility. At a minimum, assisted living properties include two meals per day and weekly housekeeping in the monthly fee, with the availability of a third meal and personal care (either included in the monthly fee or for an additional cost). Assisted living properties also have either staff on duty 24 hours per day or at least 24-hour emergency response. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 13 Memory Care properties, designed specifically for persons suffering from Alzheimer's dis- ease or other dementias, is one of the newest trends in senior housing. Properties consist mostly of suite -style or studio units or occasionally one -bedroom apartment -style units, and large amounts of communal areas for activities and programming. In addition, staff typical- ly undergoes specialized training in the care of this population. Because of the greater amount of individualized personal care required by residents, staffing ratios are much high- er than traditional assisted living and thus, the costs of care are also higher. Unlike conven- tional assisted living, however, which addresses housing needs almost exclusively for wid- ows or widowers, a higher proportion of persons afflicted with Alzheimer's disease are in two -person households. That means the decision to move a spouse into a memory care fa- cility involves the caregiver's concern of incurring the costs of health care at a special facility while continuing to maintain their home. Skilled Nursing Care, or long-term care facilities, provides a living arrangement that inte- grates shelter and food with medical, nursing, psychosocial and rehabilitation services for persons who require 24-hour nursing supervision. Residents in skilled nursing homes can be funded under Medicare, Medicaid, Veterans, HMOs, insurance as well as use of private funds. Supply of Senior Housing in Richfield Table 5 shows an inventory of existing senior housing products located in Richfield that may compete directly or indirectly with additional senior housing units in Richfield. We identified six senior properties in Richfield with a total of 899 units of age -restricted or service -based housing targeted to adults 55 years or 62 years or older. • There are two congregate/optional services facilities, three facilities that provide assisted living services and three properties that offer no services but offer an age -restricted living environment. Two of the facilities offer congregate and assisted living combined within one building. In total, Richfield has 275 congregate units, 130 assisted living units and 494 units that offer independent living with few or no services. Opened in 2000, Mainstreet Village offers two living options including congregate/optional services and assisted living in the same complex, which opened in 2001. Mainstreet Village offers a variety of floor plans and pricing options, as well as amenities that include chef pre- pared meals and scheduled transportation to various activities. The congregate living com- ponent contains 130 units and the assisted living offers 31 units. Prices increased from last year, and there is currently a waiting list for congregate living. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 14 • Village Shores, located on 6501 Woodlake Drive, is the other congregate/optional services and assisted living combination facility located in Richfield. Village Shores has been open since 1995 and provides 145 units of congregate/optional services living and 21 units of as- sisted living. Amenities include the Village Cafe, a beauty/barber shop, and a billiard room and common room with a big screen television. According to management, there are some vacancies, but would not specify the exact number. • The Pines is an assisted living facility located at 400 West 67th Street that opened in 2000 and offers 78 units. Some of the services available include a restaurant and movie theater, and Life Enrichment programming such as bingo and trivia night. According to manage- ment, there are a few vacancies, but fewer than this same time last year. Most residents are single women; the remainder is couples and singles males. Lakeshore Drive Condominiums is an independent living center for residents age 55 and older. Located at 6615 Lakeshore Drive, the facility has been operating since 1982. Ameni- ties include 24-hour reception services, an exercise room, and a woodworking shop. For a fee, guest rooms and a party or community room are available. Lakeshore Drive Condomin- iums contains 178 units. Management noted that pricing has been increasing while the age of residents has been decreasing indicating that younger seniors are making the move into units that are for -sale. Woodlake Point is a 55 -plus living community at 6500 Woodlake Drive. Opened in 1986, the facility at Woodlake Point has 157 units and offers amenities such as an exercise room, workshop, billiard room as well as a community room. Guest rooms may be rented nightly for an additional cost. Gramercy Park Cooperative of Lakeshore Drive is the only 55+ plus cooperative community in Richfield. Located at 6711 Lakeshore Drive, it houses 159 units. A corporation owns the community and members purchase shares in the corporation. The shares allow members the right to reside in their unit. Opening in 2000, Gramercy Park also has a library, wood shop, grocery store, fitness center, hair salon. Additional amenities include tai chi and aer- obics classes. Pending Senior Developments in Richfield There are currently no pending projects in the City of Richfield, proper. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 15 Active Adult Housing Demand Estimates Table 6 illustrates the estimated demand for adult senior housing units in Richfield for 2013 and 2018. As a starting point, we identify that all individuals age 55 and older would be age - qualified for market rate adult housing. In order to arrive at the potential age/income/asset- qualified base for market rate adult housing, we include all older adult and senior households with annual incomes at or above $35,000 (able to afford monthly rents of $1,200 or more). We also include older adult and senior households who own their homes and would be able to derive additional income from the sale of their single family homes. At the estimated 2013 me- dian sales price of $189,950 in Richfield, a senior household could generate about $3,570 of ad- ditional income annually from the invested home resale assets after accounting for marketing and moving costs. Conservatively, we include all homeowner households with incomes be- tween $25,000 and $35,000 who would be able to derive additional income from the sale of their single-family homes. Qualifying homeowner households are calculated based on the homeownership rate for each age cohort as highlighted in Table 2. Based on these factors, we estimate the number of age/income/asset-qualified households in Richfield to be about 4,041 households. MAXFIELD RESEARCH INC. TABLE 5 MARKET RATE SENIOR HOUSING PROPERTIES CITY OF RICHFIELD December 2013 Year Total Development Address City Opened Units Congregate/Optional Services Mai nstreet Vi I lage 7601 Lyndale Avenue South Richfield 2000 130 Villa eShores 6501Woodlake Drive Richfield 1995 145 Total 275 Assisted Living Mai nstreet Vi I lage (AL) 7601 LyndaleAvenue South Richfield 2001 31 Pines, the 400 West 67th Street Richfield 2000 78 Village Shores (AL) 6501 Woodlake Drive Richfield 1995 21 Total 130 Active Adult (Ownership) Lakeshore Drive Condominiums 6615 Lakeshore Drive Richfield 1982 178 Wood Iake Point 6500 Woodlake Drive Richfield 1986 157 Total 335 Active Adult(Cooperative) Gramercy Park Cooperative of Lakeshore Drive 6711 Lakeshore Drive Richfield 2000 159 Total 159 Grand Total 899 Source: Maxfield Research Inc. Active Adult Housing Demand Estimates Table 6 illustrates the estimated demand for adult senior housing units in Richfield for 2013 and 2018. As a starting point, we identify that all individuals age 55 and older would be age - qualified for market rate adult housing. In order to arrive at the potential age/income/asset- qualified base for market rate adult housing, we include all older adult and senior households with annual incomes at or above $35,000 (able to afford monthly rents of $1,200 or more). We also include older adult and senior households who own their homes and would be able to derive additional income from the sale of their single family homes. At the estimated 2013 me- dian sales price of $189,950 in Richfield, a senior household could generate about $3,570 of ad- ditional income annually from the invested home resale assets after accounting for marketing and moving costs. Conservatively, we include all homeowner households with incomes be- tween $25,000 and $35,000 who would be able to derive additional income from the sale of their single-family homes. Qualifying homeowner households are calculated based on the homeownership rate for each age cohort as highlighted in Table 2. Based on these factors, we estimate the number of age/income/asset-qualified households in Richfield to be about 4,041 households. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 16 Next, we adjust to include achievable capture rates for each age cohort (1.0% of households age 55 to 64, 8.0% of households age 65 to 74, and 18.0% of households age 75 and older), which results in a local demand potential for 307 adult housing units in 2013. These capture rates reduce the total number of age/income/asset-qualified households to consider only the portion of older adult and senior households who would be able, willing, and inclined to move to senior housing alternatives in the short-term including both owner- and renter -occupied housing. Demand for adult housing products is typically divided between seniors interested in renter - occupied housing due to the lack of commitment involved and those preferring owner -occupied housing due to the tax advantages and potential for equity gains. Overarching the housing de- cision, however, is that the housing alternative must meet the needs of the resident in regard to affordability, location, features and amenities, regardless of the renter- or owner -occupied nature of the complex. Based on the demographic characteristics of Richfield seniors as well as MAXFIELD RESEARCH INC. TABLE 6 MARKET RATE ACTIVE ADULT HOUSING DEMAND CITY OF RICHFIELD 2013 & 2018 Age of Householder Age of Householder 55-64 65-74 75+ 55-64 65-74 75+ # of Households w/ I ncomes of >$35,000 1,675 883 787 2,216 1,326 1,075 (plus) # of Households w/ Incomes of $25,000 to $34,999+' + 237 200 348 214 224 351 x 76% 82% 73% (times ) Homeownership Rate 76% 82% 73% = 182 163 254 (equals) Potential Market = 164 182 257 (equals)Total Potential Market Base = 1,856 1,047 1,138 = 2,379 1,508 1,332 (times) Potential Capture Rate x 1.0% 8.0% 18.0% x 1.0% 8.0% 18.0% - 19 84 205 - 24 121 240 (equals) Demand Potential Total Market Rate Demand Potential - 307 4 = 384 41 Ownership Rental Ownership Rental (times) Y. for housing w/services & w/o services x 75% x 25% x 75% x 25% - 230 77 (equals) Demand potential = 288 = 96 (plus) Demand from Outside Market Area (15%) + 41 + 14 + 51 + 17 = 271 = 90 (equals) Total Demand Potential = 339 = 113 (minus) Existing Competitive and Pending Units 21 305 0 305 0 (equals) Long-term Demand - -34 - 90 - 34 1 2013 income -qualified figures adjusted for inflation ($34K or more+homeowners w/ inc. of $25K - 35K) 2 Competitive existing and pending units include adult rental/ownership at 959/6 occupancy (market equilibrium). We have subtracted 35% of the units in the current supply to account for units already occupied by non -Richfield, non PMA residents. Source: Maxfield Research Inc. Demand for adult housing products is typically divided between seniors interested in renter - occupied housing due to the lack of commitment involved and those preferring owner -occupied housing due to the tax advantages and potential for equity gains. Overarching the housing de- cision, however, is that the housing alternative must meet the needs of the resident in regard to affordability, location, features and amenities, regardless of the renter- or owner -occupied nature of the complex. Based on the demographic characteristics of Richfield seniors as well as MAXFIELD RESEARCH INC. Mr. John Stark January 1S, 2014 City of Richfield Page 17 the performance of competitive projects, we estimate that 75% of the demand for adult hous- ing will be for owner -occupied units while the remaining 25% of the potential market will be for rental housing options. There are currently no active adult rental options in the City of Rich- field. This results in potential demand for 230 ownership units and 77 rental units. In addition to the demand generated in the City of Richfield, a second portion of demand will come from areas outside of Richfield city boundaries (neighborhoods in south Minneapolis and Bloomington) in addition to a small portion of people from outside of all of these areas (15%). This demand will consist primarily of parents of adult children living in Richfield individuals who live just outside of Richfield and have an orientation to the area, and former residents who de- sire to return upon retirement. Accounting for another 1S% results in potential demand for 271 ownership units and 90 rental units. Demand for Congregate Senior Housing Table 7 presents our demand calculations for congregate living senior housing in the Primary Market Area in 2013 and 2018. This analysis focuses on the potential private pay/market rate demand for congregate living units in the City of Richfield. In order to arrive at the potential age -income qualified base for congregate senior housing, we include all senior households with incomes of $35,000 or more and homeowners with incomes between $25,000 and $35,000 who would qualify with the proceeds from a home sale (this proportion was estimated based on the homeownership rates for each age cohort). Senior householders with incomes of $35,000 allocating 65% of their income toward base housing costs could afford beginning rents of $1,900. We estimate the number of age/income/asset-qualified households in the Market Area to be 1,864 householders as of 2013, increasing to 2,338 in 2018. Demand for congregate housing is need -driven, which reduces the qualified market to only the portion of seniors who need some assistance. Thus, the age/income-qualified base is multiplied by the percentage of seniors who need some assistance with IADLs (at least three), but not six or more ADLs/IADLs, as these frailer seniors would need the level of care found in service - intensive assisted living. According to the Summary Health Statistics of the U.S. Population: Na- tional Health Interview Survey, 2008 (conducted by the U.S. Department of Health and Human Services), the percentage of seniors having limitation in activities of daily living (bathing, dress- ing, toileting, transferring, eating) and instrumental activities of daily living (using the tele- phone, shopping, food preparation, housekeeping, laundry, transportation, taking medication, handling finances) are as follows: Limitation in ADLs & IADLs Age ADLs IADLs ----------------------------------------------------------------� --------------- 65-74 years 3.3% 6.3% 75+ years 11.0% 20.0% MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 18 It is most likely that seniors who need assistance with ADLs also need assistance with multiple IADLs, and are more likely to be candidates for service -intensive assisted living. The prime can- didates for congregate living are seniors needing assistance with IADLs, but not ADLs. We de- rive the capture rate for congregate housing by subtracting the percentage of seniors needing assistance with ADLs from those needing assistance with IADLs, which equates to 3.0% of sen- iors age 65 to 74 and 9.0% of seniors 75+. For the purpose of this report and understanding that many seniors do not view senior housing as an alternative retirement destination but a supportive living option only when they can no longer live independently, we have reduced the potential capture rates for the 6S to 74 age group to 1.S% while increasing the capture rate of the 75+ age group to 13.0%. Multiplying the senior household base by these capture rates re- sults in a demand potential for 131 congregate housing units in 2013 and 154 units in 2018 in Richfield. As discussed earlier in this report, we estimate that seniors currently residing outside Richfield will generate 15% of the demand for congregate senior housing — increasing total demand by 23 congregate units in 2013. This demand consists primarily of parents of adult children living in Richfield, individuals who live just outside Richfield and have an orientation to the area, re- tirees who wish to relocate to the area and former residents who desire to return upon retire- ment. Together, the demand from Richfield seniors and demand from seniors who would relo- cate to Richfield totals about 154 congregate units as of 2013 and 181 units in 2018. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 19 TABLE 6 MARKET RATE CONGREGATE RENTAL HOUSING DEMAND CITY OF RICHFIELD 2013 & 2018 Age of Householder Age of Householder 65-74 75+ 65-74 75+ # of Households w/ I ncomes of >$35,000' 883 787 1,212 956 # of Households w/ I ncomes of $30,000 to $34,999' + 100 174 + 113 119 (times) Homeownership Rate x 85% 63% x 85% 63% (equals) Total Potential Market Base = 968 896 = 1,307 1,031 (times) Potential Capture Rate x 1.5% 13.0% x 1.5% 13.0% (equals) Potential Demand = 15 + 117 = 20 + 134 Potential Demand from PMA Residents = 131 = 154 (plus) Demand from Outside Market Area (15%) + 23 + 27 (equals) Total Demand Potential = 154 = 181 (minus) Existing and Pending Congregate Units3 261 261 (equals) Total Congregate Demand Potential = -107 = -80 ' 2018 calculations define income -qualified households as all households with incomes greater than $40,000 and homeowner households with incomes between $35,000 and $39,999. 2The potential capture rate is derived from data from the Summary Health Statistics for the U.S. Population: National Health Interview Survey, 2008 by the U.S. Department of Health and Human Services. The capture rate used is the percentage of seniors needing assistance with IADLs, but not ADLs (seniors needing assistance with ADLs typcial ly need assistancewith multiple IADLs and are primary candidates for service -intensive assisted living). 3 Competitive units include congregate units at 95% occupancy (market equilibrium). Source: Maxfield Research Inc. Next, existing congregate units are subtracted from overall demand. There are two properties with a total of 275 units in the Market Area. Overall, we subtract 261 competitive units from the demand potential after accounting for a 5% vacancy rate, resulting in a total negative de- mand in Richfield of -107 units in 2013, decreasing to -80 units in 2018. The existing congregate facilities currently offer multiple service levels. In drawing conclusions regarding potential de- mand, we consider the current multi -service level format of these facilities It appears that the current supply of congregate units in Richfield is large enough to satisfy ex- isting demand, although growth in the number of age- and income -qualified seniors over the next five years will increase demand potential in 2018. However, even with the increase in de- mand, we anticipate a surplus supply of 81 units. Assisted Living Demand Estimate MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 20 Table 8 presents our demand calculations for assisted living housing in the City of Richfield in 2013 and 2018. This analysis focuses on the potential private pay/market rote demand for as- sisted living units in the City of Richfield. The availability of more intensive support services such as meals, housekeeping and personal care at assisted living facilities usually attracts older, frailer seniors. According to the 2009 Overview of Assisted Living (which is a collaborative research project by the American Associa- tion of Homes and Services for the Aging, the American Seniors Housing Association, National Center for Assisted Living, and National Investment Center for the Seniors Housing and Care In- dustry), the average age of residents in freestanding assisted living facilities was 87 years in 2008. Hence, the age -qualified market for assisted living is defined as seniors ages 7S and over, as we estimate that of the half of demand from seniors under age 87, almost all would be over age 7S. In 2013, there were an estimated 3,039 seniors ages 7S and over in the PMA and we project that this number will increase to 3,336 in 2018. Demand for assisted living housing is need -driven, which reduces the qualified market to only the portion of seniors who need assistance. Based on the publication Health, United States, 1999 Health and Aging Chartbook, conducted by the Centers for Disease Control and Preven- tion and the National Center for Health Statistics, about 39% of seniors needed assistance with everyday activities (from 25.5% of 75 -to -79 -year-olds, to 33.6% of 80 -to -84 -year-olds and 51.6% of 85+ year olds). Applying these percentages to the senior population yields a potential assist- ed living market of an estimated 1,170 seniors in the City of Richfield in 2013 and 1,284 in 2018. Due to the supportive nature of assisted living housing, most daily essentials are included in monthly rental fees which allow seniors to spend a higher proportion of their incomes on hous- ing with basic services. Therefore, the second step in determining the potential demand for as- sisted living housing in the PMA is to identify the income -qualified market based on a senior's ability to pay the monthly rent. We consider seniors in households with incomes of $40,000 or greater to be income -qualified for assisted living senior housing in Richfield Households with incomes of $40,000 could afford monthly assisted living fees of $2,800 by allocating a high pro- portion of their income toward the fees. According to the 2009 Overview of Assisted Living, the average arrival income of assisted living residents in 2008 was $27,260, while the average annual assisted living fee was $37,281 ($3,107/month). This data highlights that seniors are spending down assets to live in assisted living and avoid institutional care. Thus, in addition to households with incomes of $40,000 or greater, there is a substantial base of senior households with lower incomes who income - qualify based on assets — their homes, in particular. Seventy three percent of age 75+ households in Richfield are homeowners and the median sale price of existing single family homes in the Metro Area during 2013 was $189,950. Seniors sell- ing their homes for the median price would generate about $178,550 in proceeds after selling costs. With an average monthly fee of $3,500, these proceeds would last approximately 4.25 MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 21 years (51 months) in assisted living housing, which is longer than the average length of stay in assisted living (20 months according to the 2009 Overview of Assisted Living). For the age groups in Table 7, we estimate the income -qualified percentage to be all seniors in households with incomes at or above $40,000 (who could afford monthly rents of $3,000+ per month) plus 40% of the estimated seniors in owner households with incomes below $40,000 (who will spend down assets, including home -equity, in order to live in assisted living housing). This results in a total potential market for about 1,170 units from Richfield in 2013. Because the vast majority of assisted living residents are single (88% according to the 2009 Overview of Assisted Living), our demand methodology multiplies the total potential market by the percentage of seniors age 75+ in the PMA living alone, or 57% based on Census data. This results in a total base of about 554 age/income-qualified singles. The 2009 Overview of Assist- ed Living found that 12% of residents in assisted living were couples. Including couples results in a total of 75 age/income-qualified seniors needing assistance in Richfield in 2013. We estimate that 60% of the qualified market needing significant assistance with ADLs could ei- ther remain in their homes or less service -intensive senior housing with the assistance of a family member or home health care, or would need greater care provided in a skilled care facili- ty. The remaining 40% could be served by assisted living housing. Applying this market pene- tration rate of 40% results in demand for 252 assisted living units in 2013. We estimate that a portion of demand for assisted living units in Richfield (15%) will come from outside the City. This secondary demand will include seniors currently living just outside of Richfield, former residents, and parents of adult children who desire supportive housing near their adult children. Applying this figure results in total potential demand for 296 assisted living units in 2013. Next, existing assisted living units are subtracted from overall demand. There are three existing properties in Richfield with a total of 130 assisted living units. However, we adjust the number of competing units based on location and format and exclude estimated units occupied by low- income seniors utilizing Elderly Waivers (26 units). After subtracting the existing units (minus a 7% vacancy factor) from the total demand equals an excess demand potential for 193 assisted living units in the City of Richfield in 2013. Following this same methodology, we project that total excess demand in Richfield will jump to 222 units in 2018. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 22 TABLE 7 MARKET RATE ASSISTED LIVING DEMAND CITY OF RICHFIELD 2013 & 2018 Percent Number Percent Number Needing Needing Needing Needing Age group People Assistance' Assistancel People Assistance' Assistance' 75-79 841 25.5% 215 971 25.5% 248 80-84 992 33.6% 333 1,021 33.6% 343 85+ 1,206 51.6% 622 1,344 51.6% 694 Total 3,039 1,170 3,336 1,284 Percent Income-Qualified2 83% 83% Total potential market 971 1,066 (times) Percent living alone x 57% 57% (equals)Age/income-qualified singles needing assistance = 554 608 (plus) Proportion of demand from couples (12%)3 + 75 83 (equals) Total age/income-qualified market needing assistance = 629 690 (times) Potential penetration rate x 40% 40% (equals) Potential demand from PMA residents = 252 276 (plus) Proportion from outside the PMA (151/6) + 44 49 (equals)Total potential assisted living demand = 296 325 (minus) Existing market rate assisted living unitss 103 103 (equals) Total excess market rate assisted living demand 193 1 The percentage of seniors unable to perform or having difficulting with ADLs, based on the publication Health, United States, 1999 Health and Aging Chartbook, conducted by the Centers for Disease Control and Prevention and the National Center for Health Statistics. z Includes households with incomes of $40,000 or more (who could afford monthly rents of $2,800+ per month) plus 40% of estimated owner households with incomes below $40,000 (who will spend down assets, including home -equity, in order to live in assisted living 3 The 2009 Overview of Assisted Living (a collaborative project of AAHSA, ASHA, ALFA, NCAL & NIC) found that 12% of assisted living residents are couples. ° We estimate that 601/6of the qualified market needing assistance with ADLs could either remain in their homes or reside at less advanced senior housing with the assistance of a family member or home health care, or would need greater care provided in a skilled 5 Existing and pending units at 93% occupancy. We exclude 15% of units to accountfor seniors utilizing public subsidy. Source: Maxfield Research Inc. Demand for Memory Care Senior Housing Table 9 presents our demand calculations for memory care housing in Richfield in 2013 and 2018. Demand is calculated by starting with the estimated Richfield senior (ages 65+) popula- tion in 2013 and multiplying by the incidence rate of Alzheimer's/dementia among this popula- tion's age cohorts. This yields a potential market of about 901 seniors in Richfield in 2013. According to data from the National Institute of Aging, about 25% of all individuals with memory care impairments are a market for memory care housing units. This figure considers that seniors in the early stages of dementia will be able to live independently with the care of a spouse or other family member, while those in the latter stages of dementia will require inten- sive medical care that would only be available in skilled care facilities. Applying this figure to MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 23 the estimated population with memory impairments yields a potential market of about 225 seniors in Richfield in 2013. TABLE 8 MARKET RATE MEMORY CARE DEMAND PRIMARY MARKET AREA 2013 & 2018 65 to 74 Population 2,310 2,884 (times) Dementia Incidence Rate' x 2% x 2% = 46 = 58 (equals) Estimated Age 65 to 74 Pop. with Dementia 75 to 84 Population 1,833 1,992 (times) Dementia Incidence Rate' x 19% x 19% = 348 = 378 (equals) Estimated Age 75 to 84 Pop. with Dementia 85+ Population 1,206 1,344 (times) Dementia Incidence Rate' x 42% x 42% = 507 = 565 (equals) Estimated Age 85+ Pop. with Dementia (equals) Total Senior Population with Dementia = 901 = 1,001 (times) Percent lncome/Asset-Qualified2 x 44% x 42% (equals) Total Income -Qualified Market Base = 396 = 420 (times) Percent Needing Specialized Memory Care Assistance x 25% x 25% (equals) Total Need for Dementia Care = 99 = 105 (plus) Demand from Outside the PMA (25%) + 33 + 35 Total Demand for Memory Care Units = 132 140 (minus) Existing and Pending Memory Care Units 0 0 (equals) Excess PMA Demand Potential = 132 = 140 Alzheimer's Association: Alzheimer's Disease Facts & Figures (2007) 2Includes seniors with income at $60,000 or above ($65,000 in 2018) plus 40% of homeowners with incomes below this threshold (who will spend clow assets, including home -equity, in order to live in memory care housing. 3 Existing memory care units at 7% vacancy rate. We exclude 15% of units to account for seniors utilizing public subsidy. Source: Maxfield Research Inc. Because of the staff -intensive nature of dementia care, typical monthly fees for this type of housing start at about $4,000. Although some of the seniors will have high monthly incomes, most will be seniors willing to spend down assets and/or receive financial assistance from fami- ly members to afford memory care housing. Based on our review of senior household incomes in Richfield, homeownership rates, and home sale data, we estimate that 44% of all seniors in Richfield have incomes and/or assets to sufficiently cover the costs for memory care housing. This figure takes into account married couple households where one spouse may have memory care needs and allows for a sufficient income for the other spouse to live independently. Mul- tiplying the potential market (901 seniors) by 44% results in a total of 396 income -qualified sen- iors in Richfield in 2013. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 24 We estimate that 15% of the overall demand for memory care housing in Richfield would come from outside Richfield, for a total demand for 132 units in 2013. Currently, there are no memory care units in Richfield. We would typically subtract 15% of these units (excluding El- derly Waivers) and allocate a 7% vacancy factor. We add any projects that are currently pend- ing, planned or under construction and subtract the total from the 2018 demand. This results in a projected increase in demand to 140 memory care units by 2018. Conclusions As described below, our assessment of the factors impacting demand for senior housing, includ- ing demographic, economic and competitive variables, demonstrates there is currently a suffi- cient supply of housing product for independent living with optional or included services, a modest amount of demand for assisted living and relatively strong demand for adult/few ser- vices and memory care housing in Richfield. Projected growth in the age- and income -qualified population over the next several years will generate additional demand by 2018, however, shows that demand for independent living with services and memory care remain essentially the same while the demand for active adult and assisted living is expected to increase. Demand is expected to grow for three of the four service levels over the next five years at vary- ing levels. By 2018, we project that demand will increase to 131 units of active adult, 222 units of assisted living and 140 units of memory care. Projected demand for market rate independ- ent living with services (congregate) is expected to increase but still show negative demand based on our calculations. Given the transitional relationship of congregate and assisted living units, where a senior will move into congregate living with the expectation of needing assisted living later on, the demands for these two products could be combined which would result in demand for 90 units of service -based housing in 2013, increasing to 142 units by 2018. The demand for this housing could possibly be satisfied in a "catered living" environment where res- idents would select the type and level of services that they require. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 25 TABLE 9 DEMAND SUMMARY CITY OF RICHFIELD 2013 & 2018 Service Level Excess Demand in Richfield These conclusions do not consider the quality of a particular site for a senior housing develop- ment, historical performance of other senior housing developments in the City of Richfield, proper, price and positioning of any subject project, or other important factors (i.e. architectur- al, marketing and management issues) that would likely impact the market feasibility of the subject development. MAXFIELD RESEARCH INC. Mkt. Rate Adult/Few Services (Ownership) -34 34 Mkt. Rate Adult/Few Services (Rental) 90 113 Mkt. Rate Congregate -107 -80 Mkt. Rate Assisted Living 193 222 Mkt. Rate Memory Care 132 140 Total Units (excess demand) 291 396 Source: Maxfield Research Inc. These conclusions do not consider the quality of a particular site for a senior housing develop- ment, historical performance of other senior housing developments in the City of Richfield, proper, price and positioning of any subject project, or other important factors (i.e. architectur- al, marketing and management issues) that would likely impact the market feasibility of the subject development. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 26 Primary Market Area (Richfield and Surrounding Area) To fully appreciate the market for senior housing in Richfield, it is important to understand the larger geographic area from which potential senior residents at existing and future facilities may reside. There are currently two senior housing locations in the Primary Market Area that are not in Richfield. • Nokomis Square Cooperative, located at 5015 35th Avenue North, in Minneapolis. Nokomis Square Cooperative is a 55+ community with 199 units and a multitude of amenities includ- ing a 7 -story atrium with a fountain, a party room, complimentary coffee, as well as numer- ous committees that members can participate in. • Realife Cooperative of Bloomington, located on 8641 Wentworth Avenue North, in Bloom- ington. It contains 78 units, and members can use a library, billiards hall, and common room with a fireplace. Older Adult (Age 55+) Population and Household Trends Table 11 shows the age distribution of people and households age 55 and older in the Primary Market Area (PMA). Information for 2000 and 2010 is supplied by the U.S. Census Bureau. The estimate for 2013 and the projection for 2018 were supplied by ESRI, a nationally recognized demographics firm. The following points are key observations from Table 1: MAXFIELD RESEARCH INC. tua La Are Memer 1h H Ford W 5o to Ss hl;r!nehvr.Ar Edrna �un1 t. q .r Av f FO" 5 f.An"WA po W M ,r r Paul 101 Fuchfi Arppq - lrGyr: ri •t Farr 9 Sn01Frq s Leb Lvrr� ; st.,[. Park Nerd i'r� a LMa ►'' hh r Fer1. _ 3 - Lit• • Nokomis Square Cooperative, located at 5015 35th Avenue North, in Minneapolis. Nokomis Square Cooperative is a 55+ community with 199 units and a multitude of amenities includ- ing a 7 -story atrium with a fountain, a party room, complimentary coffee, as well as numer- ous committees that members can participate in. • Realife Cooperative of Bloomington, located on 8641 Wentworth Avenue North, in Bloom- ington. It contains 78 units, and members can use a library, billiards hall, and common room with a fireplace. Older Adult (Age 55+) Population and Household Trends Table 11 shows the age distribution of people and households age 55 and older in the Primary Market Area (PMA). Information for 2000 and 2010 is supplied by the U.S. Census Bureau. The estimate for 2013 and the projection for 2018 were supplied by ESRI, a nationally recognized demographics firm. The following points are key observations from Table 1: MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 27 • As of 2010, the Primary Market Area had 78,969 residents and 33,300 households. The population increased by 517 people (+0.7%) while the household base contracted by 807 households (-2.4%) from 2000 to 2010. The number of new households was low relative to the number of new people. We estimate that the population increased to 79,871 between 2010 and 2013. • Aging of baby boomers led to an increase of 3,067 people (+51.6%) in the 55 to 64 popula- tion between 2000 and 2010. As this group ages, all cohorts age 55 or greater are predicted to see increases over the next five years, particularly the 55 to 64 and 65 to 69 age groups which are projected to grow 7.6% (+724 people) and 23.7% (+636 people), respectively. The 70 to 74 age group is expected to increase by 501 people (+24.3%). 0=1111111111 I A Projected Household Growth by Age of Householder Primary Market Area 2000 to 2018 55 to 64 65 to 74 65+ 75+ ■ 2000 ■ 2010 ■ 2013 2018 • Between 2013 and 2018, the Primary Market Area's senior (65+) population is projected to increase by 1,592 people (+15.9%). Much of this growth will be among people age 65 to 69, as the leading edge of the baby boom ages into their late 60s. • The age 75 and over population is projected to grow 8.6% (+455 people) between 2013 and 2018 after shrinking 17.2% (-1,061 people) between 2000 and 2010. The fluctuating growth during this period in the age 75+ population reflects the aging of people born during the Depression Era, a period of much lower births. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 28 The primary market for service -enhanced housing is senior households age 75 and older. While individuals in their 50s and 6Os typically do not comprise the market base for service - enhanced senior housing, they often have elderly parents to whom they provide support when they decide to relocate to senior housing. Since elderly parents typically prefer to be near their adult caregivers, growth in the older adult age cohort (age 55 to 64) generally re- sults in additional demand for senior housing products. TABLE 11 OLDER ADULT (55+) POPULATION & HOUSEHOLD AGE DISTRIBUTION PRIMARY MARKET AREA 2000 to 2018 ' ■ POPULATION Age 2000 2010 2013 2018 2000-2010 3,067 51.6% 2013-2018 724 7.6% 55 to 64 5,949 9,016 9,512 10,236 65 to 69 2,257 2,460 2,679 3,315 203 9.0% 636 23.7% 70 to 74 2,712 1,931 2,062 2,563 -781 -28.8% 501 24.3% 75 to 79 2,810 1,565 1,594 1,822 -1,245 -44.3% 228 14.3% 80 to 84 1,988 1,660 1,660 1,688 -328 -16.5% 28 1.7% 85+ 1,377 1,889 2,022 2,220 512 37.2% 199 9.8% Total 55+ 17,093 18,521 19,528 1 21,845 1,428 8.4% 2,317 11.9% Tota 165+ 11,144 9,505 10,017 11,609 -1,639 -14.7% 1,592 15.9% Tota 175+ 6,175 5,114 5,276 5,731 -1,061 -17.2% 455 8.6% Tot. Pop. 78,452 78,969 79,871 82,284 517 0.7% 2,414 3.0% HOUSEHOLDS Age 2000 2010 2013 2018 2000-2010 2,143 59.8% 2013-2018 387 6.4% 55 to 64 3,586 5,729 5,997 6,384 65 to 74 3,139 2,847 3,061 3,760 -292 -9.3% 698 22.8% 75+ 4,387 3,843 3,949 4,248 -544 -12.4% 298 7.5% Tota 1 55+ 11,112 12,419 13,008 14,391 1,307 11.8% 1,383 10.6% Tata 1 65+ 7,526 6,690 7,011 8,007 -836 -11.1% 996 14.2% Tota 1 75+ 4,387 3,843 3,949 4,248 -544 -12.4% 298 7.5% Tot. HH 34,107 33,300 33,642 1 1 34,732 1 1 -807 -2.4%11 1,090 3.2% Sources: U.S. Census Bureau; ESRI.; Maxfield Research Inc. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 29 Older Adult and Senior Household Incomes Table 12 shows incomes for older adult and senior households in the PMA in 2013 and 2018 based on information provided by ESRI and the U.S. Census Bureau. The data in Table 12 helps determine demand for senior housing based on the size of the market at specific income levels. This data is incorporated into our demand calculations which are presented in a following sec- tion. It is important to note that the data does not account for the asset base of senior house- holds or supplemental income that a senior household could gain from the proceeds of a sale of a home or from contributions from family members. 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 willing to pay increasing proportions of their incomes on housing with services, beginning with an income allocation of 40% to 50% for market rate adult senior housing with little or no services, increasing to 65% for congregate housing and to 80% to 90% or more for assisted living housing. The proceeds from the sales of their homes, as well as financial assistance from their adult children, are often used as supple- mental income in order to afford senior housing alternatives. The following are key points from Table 12: Overall, senior households in the PMA have below-average incomes when compared to the draw area. The median income of $37,290 for 65+ households in 2013 in the Primary Mar- ket Area. The key market for active adult/few services housing is comprised of senior households (age 65+), with incomes of $35,000 or more. In 2013, we estimate there were 3,704 age- and in- come -qualified households in the PMA that comprise the key market for active adult hous- ing. Including all households with incomes of $35,000 and over (adjusted for inflation), the number of 65+ senior households projected to income -qualify for active adult/few services housing is expected to grow to 4,635 households in 2018 (+25.1%). Independent living with some services (congregate) housing demand is driven by senior households (primarily age 75+) with incomes of $35,000 or more. We estimate the number of age- and income -qualified households in the PMA to be 1,612 householders in 2013, in- creasing to 1,905 (+18.2%) householders in 2018. The target market for assisted living housing is senior households age 75 and older with in- comes of at least $40,000 (plus senior homeowners with somewhat lower incomes). As of 2013, there were an estimated 1,387 older senior households (age 75+) in the PMA with in- comes of at least $40,000, accounting for about 35.3% of all older senior households. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 30 TABLE 12 OLDER ADULT (55+) INCOME DISTRIBUTION PRIMARY MARKET AREA 2013 & 2018 55-64 65-74 75+ Total 65+ No. Pct. No. Pct. No. Pct. No. Pct. 488 8.1 298 9.7 774 19.6 1,072 15.3 Under $15,000 $15,000-$24,999 464 7.7 280 9.1 853 21.6 1,133 16.2 $25,000-$34,999 583 9.7 391 12.8 710 18.0 1,102 15.7 $35,000-$49,999 966 16.1 627 20.5 677 17.1 1,304 18.6 $50,000-$74,999 1,285 21.4 787 25.7 577 14.6 1,364 19.5 $75,000-$99,999 868 14.5 323 10.6 228 5.8 551 7.9 $100,000-$149,999 906 15.1 229 7.5 113 2.9 342 4.9 $150,000-$199,999 252 4.2 69 2.3 13 0.3 82 1.2 $200,000 or more 186 3.1 57 1.9 4 0.1 61 0.9 5,997 100.0 3,061 100.0 1 3,949 100.0 Tota I 1 7,011 100.0 Median Income $58,906 $49,363 $30,158 $37,290 65-74 55-64 75+ Total 65+ No. Pct. No. Pct. No. Pct. No. Pct. 492 7.7 912 21.5 1,279 16.0 Under $15,000 367 9.8 $15,000-$24,999 327 5.1 280 7.4 802 18.9 1,081 13.5 $25,000-$34,999 457 7.2 383 10.2 629 14.8 1,012 12.6 $35,000-$49,999 366 5.7 665 17.7 692 16.3 1,357 16.9 $50,000-$74,999 1,246 19.5 918 24.4 647 15.2 1,565 19.5 $75,000-$99,999 1,242 19.5 586 15.6 386 9.1 973 12.1 $100,000-$149,999 1,174 18.4 364 9.7 156 3.7 520 6.5 $150,000-$199,999 370 5.8 120 3.2 20 0.5 140 1.7 $200,000 or more 216 3.4 76 2.0 4 0.1 80 1.0 6,384 100.0 3,760 100.0 1 4,248 100.0 8,007 100.0 Tota 1 Median Income $71,800 $55,029 $31,975 $41,977 Change 2013 to 2018 55-64 65-74 75+ Total 65+ No. Pct. No. Pct. No. Pct. No. Pct. Under $15,000 4 0.9 69 23.2 139 17.9 208 19.4 $15,000-$24,999 -137 -29.5 0 -0.1 -51 -6.0 -52 -4.6 $25,000-$34,999 -126 -21.7 -8 -2.1 -82 -11.5 -90 -8.2 $35,000+ 151 3.8 638 32.4 293 18.3 930 26.1 Total -107 1.8 698 22.8 298 7.5 996 14.2 Sources: U.S. Census Bureau; ESRI; Maxfield Research Inc. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 31 • Including all households with incomes of $45,000 and over (adjusted for inflation), the number of older senior households projected to income -qualify for assisted living senior housing is expected to increase to 1,444 households in 2018 (+4.1%). • Memory care housing has a target market of senior households age 65 and older with in- comes of at least $60,000. As of 2013, there were approximately 1,855 age 65+ households in the Primary Market Area with incomes of at least $60,000, accounting for 26.5% of all senior households. The number of income -qualified households is projected to increase to 2,652 by 2018 (+38.1%). Since senior housing with services is need -driven, seniors with low incomes are still candidates for private pay housing, provided they have home equity or other financial assistance that they can utilize to pay for the costs. Very low-income seniors who are Medicaid -qualified also could live in assisted living or memory care facilities that accept Elderly Waivers. Due to the limited availability of facilities that accept Elderly Waivers, demand from low-income seniors is often substantial. 5,000 4,500 4,000 3,500 0 3,000 2,500 D 2,000 1,500 1,000 500 Age- and Income -Qualified Households Primary Market Area 2013 and 2018 Adult/Few Congregate Assisted Living Memory Care Services MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 32 Home Sale Values Table 13 presents home sale data for single-family homes in the Primary Market Area. The home sale data is useful in that it represents the amount of equity seniors may be able to de- rive from the sales of their homes that could be used to cover the cost of senior housing alter- natives. The data on home sales in Table 5 was obtained from the Minneapolis Area Associa- tion of Realtors. The following points summarize key findings: In the PMA, the median sale price of single-family homes increased from $228,000 in 2009 to $239,450 in 2013, representing an increase of 5.0%. Based on the 2013 median sale price in in the PMA ($239,450), a senior household could generate approximately $4,500 of additional income annually (about $375 per month), if they invested in an income-producing account (2.0% interest rate) after accounting for mar- keting costs and/or real estate commissions (6.0% of home sale price). TABLE 13 SINGLE-FAMILY HOME SALES Primary Market Area 2009 through 2013 December Primary Market Area Cumulative Average Median Days on Median Year No. of Sales Average Price Price Market Year Built 2013 815 $251,584 239,450 49 1941 2012 642 $230,545 220,000 81 1941 2011 237 $223,789 212,500 116 1940 2010 491 $243,684 230,000 92 1940 2009 418 $238,258 228,000 75 1941 Change 2009 - 2013 95.0% 5.6% 5.0% -35.3% Note: Single Family home sales included Sales for 2013 through December 31, 2013. Source: Minneapolis Area Assoc. of Realtors Should a senior utilize the home proceeds dollar for dollar to support living in senior hous- ing with services, the proceeds of this home would last roughly nine years in independent living with some services (congregate) housing (monthly rent approximated at $2,000), roughly five and a half years in assisted living (monthly rent approximated at $3,500), or about four years in memory care housing (monthly rent approximated at $4,500). Seniors in service -intensive housing typically have lengths of stays between two and three years in- MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 33 dicating that a large portion of PMA seniors would be financially prepared to privately pay for their housing and services. Supply of Senior Housing in PMA Table 14 shows an inventory of existing senior housing products located in the PMA that may compete directly or indirectly with additional senior housing units in Richfield. We identified two facilities in the PMA that are not located in Richfield with a total of 277 age -restricted or service -based housing targeted to adults 55 years or 62 years or older. Additionally, there are two projects that are pending. Realife Cooperative of Bloomington is located at 8641 Wentworth Avenue South in Bloom- ington. Opened in 1999, Realife Cooperative of Bloomington is a facility of Realife, Inc., which operates several other facilities in Minnesota and the Upper Midwest. It has 78 Adult/Few Services units, and offers its members amenities such as a library, exercise room, a community room and a spacious guest suite. Realife is currently at almost full occupancy, and increased entrance fees substantially over the last year. Nokomis Square Cooperative is located at 5015 35th Avenue South. Opened in 1984, Noko- mis Square Cooperative has 199active adult, with amenities that include a seven story atri- um with a fountain, a garden patio, fitness center, library/ media center, and underground parking. The average age of residents has increased, and they have filled almost all of their vacancies from last year. Most of the residents are from south Minneapolis or have an adult child living in the neighborhood. Pending Senior Developments in the PMA There are two sites that are pending. Continental Gardens in Edina at 7151 York Avenue South has planned an addition in the form of a combination of 76 assisted living and memory care units to their existing campus. The proposed addition would abut the Richfield border along Xerxes Avenue South. The new building's amenities would include congregate dining, lounge rooms on each floor, as well as a library/ computer room with complimentary internet access and a theater. Bloomington Senior Partners has been approved to build a 166 -unit senior housing facility with independent living, assisted living and memory care at 8735 Portland Avenue South. While the 50 unit apartment building opened in July 2009, the senior facility has not yet ap- plied for permits and is still trying to secure financing. Change to approved in table. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 34 The map on the following page illustrates the locations of the existing senior housing products (in yellow) and the pending senior housing projects (in blue); sites located in Richfield are in red. 1) Realife Cooperative of Bloomington, 8641 Wentworth Avenue South. 2) Nokomis Square Cooperative, 5015 35th Avenue South. 3) Continental Gardens, 7151 York Avenue South. 4) Bloomington Senior Partners, 8735 Portland Avenue South. MAXFIELD RESEARCH INC. TABLE 14 MARKET RATE SENIOR HOUSING PROPERTIES PRIMARY MARKET AREA January 2014 Year Total Development Address City .Opened Units Congregate/Optional Services Mai nstreet Vi I lage 7601 Lyndale Avenue South Richfield 2000 130 Vil lage Shores 6501 Woodlake Drive Richfield 1995 145 Total 275 Assisted Living Mainstreet Village (AL) 7601LyndaleAvenueSouth Richfield 2001 31 Pines, the 400 West 67th Street Richfield 2000 78 Village Shores (AL) 6501 Woodlake Drive Richfield 1995 21 Total 130 Adult/Few Services(ownership) Lakeshore Drive Condominiums 6615 Lakeshore Drive Richfield 1982 178 Woodlake Point 6500 Woodlake Drive Richfield 1986 157 Total 335 Adult/Few Services (Cooperative) Gramercy Park Cooperative of Lakeshore Drive 6711 Lakeshore Drive Richfield 2000 159 Nokomis Square Cooperative 5015 35th Avenue South Minneapolis 1984 207 Rea IIifeCooperative ofBloomington 8641 Wentworth Ave. S. Bloomington 1999 78 Total 444 Grand Total of All Units 1,184 Pending Projects Continental Gardens 7151 York Avenue South Edina Planned 76 Bloomington Senior Partners 8735 Portland Avenue South Richfield Approved 166 Total 242 Source: Maxfield Research Inc. The map on the following page illustrates the locations of the existing senior housing products (in yellow) and the pending senior housing projects (in blue); sites located in Richfield are in red. 1) Realife Cooperative of Bloomington, 8641 Wentworth Avenue South. 2) Nokomis Square Cooperative, 5015 35th Avenue South. 3) Continental Gardens, 7151 York Avenue South. 4) Bloomington Senior Partners, 8735 Portland Avenue South. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 35 Active Adult Housing Demand Estimates Table 15 illustrates the estimated demand for adult senior housing units in the PMA for 2013 and 2018. As a starting point, we identify that all individuals age 55 and older would be age - qualified for market rate adult housing. In order to arrive at the potential age/income/asset- qualified base for market rate adult housing, we include all older adult and senior households with annual incomes at or above $35,000 (able to afford monthly rents of $900 or more). We also include older adult and senior households who own their homes and would be able to derive additional income from the sale of their single family homes. At the estimated 2013 me- dian sales price of $239,450 in PMA, a senior household could generate about $4,500 of addi- tional income annually from the invested home resale assets after accounting for marketing and moving costs. Conservatively, we include all homeowner households with incomes be- tween $25,000 and $35,000 who would be able to derive additional income from the sale of their single-family homes. Qualifying homeowner households are calculated based on the homeownership rate for each age cohort as highlighted in Table 12. Based on these factors, we MAXFIELD RESEARCH INC. J•. E 5.i .., 5t e Fayl [nt'I c F,FAHpo't -_ i t: :m• st a F ' •t n �W !lfn 3[ � � to $t F err• .r _ �ICan 9NRW-nrrt,•, N r•m r:c:r: IydL -., .. e y w f Bin ki St t' Hmq C i. ,fy 541.4 rarF c` — of 4V e6th St Lowe, Pa ran .. Loir a' 4 w W sR ark !' 47nd Sr Active Adult Housing Demand Estimates Table 15 illustrates the estimated demand for adult senior housing units in the PMA for 2013 and 2018. As a starting point, we identify that all individuals age 55 and older would be age - qualified for market rate adult housing. In order to arrive at the potential age/income/asset- qualified base for market rate adult housing, we include all older adult and senior households with annual incomes at or above $35,000 (able to afford monthly rents of $900 or more). We also include older adult and senior households who own their homes and would be able to derive additional income from the sale of their single family homes. At the estimated 2013 me- dian sales price of $239,450 in PMA, a senior household could generate about $4,500 of addi- tional income annually from the invested home resale assets after accounting for marketing and moving costs. Conservatively, we include all homeowner households with incomes be- tween $25,000 and $35,000 who would be able to derive additional income from the sale of their single-family homes. Qualifying homeowner households are calculated based on the homeownership rate for each age cohort as highlighted in Table 12. Based on these factors, we MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 36 estimate the number of age/income/asset-qualified households in Richfield to be about 10,022 households. Next, we adjust to include achievable 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), which results in a local demand potential for 711 adult housing units in 2013. These capture rates reduce the total number of age/income/asset-qualified households to consider only the portion of older adult and senior households who would be able, willing, and inclined to move to senior housing alternatives, including both owner- and renter -occupied housing. Demand for adult housing products is typically divided between seniors interested in renter - occupied housing due to the lack of commitment involved and those preferring owner -occupied housing due to the tax advantages and potential for equity gains. Overarching the housing de- cision, however, is that the housing alternative must meet the needs of the resident in regard to affordability, location, features and amenities, regardless of the renter- or owner -occupied MAXFIELD RESEARCH INC. TABLE 15 MARKET RATE ADULT/FEW SERVICES HOUSING DEMAND PRIMARY MARKET AREA 2013 & 2018 Age of Householder Age of Householder 55-64 65-74 75+ 55-64 65-74 75+ #of Households w/ Incomes of>$35,000 4,463 2,092 1,612 4,615 2,730 1,905 (plus) #of Households w/ Incomes of $25,000 to $34,999+' + 583 391 710 457 383 629 x 81% 84% 81% (times ) Homeownership Rate 81% 84% 81% (equals) Potential Market = 471 331 573 = 369 324 507 (equals)Total Potential Market Base = 4,934 2,423 2,665 = 4,983 3,053 2,412 (times) Potential Capture Rate x 1.0% 7.5% 18.0% x 1.0% 7.5% 18.0% - 49 182 480 - 50 229 434 (equals) Demand Potential Total Market Rate Demand Potential = 711 = 713 49 Ownership Rental Ownership Rental (times) %for housingw/services & w/o services x 80% x 20% x 80% x 20% = 569 142 (equals) Demand potential = 570 = 143 (plus) Demand from Outside Market Area (15%) + 100 + 25 + 101 + 25 = 669 = 167 (equals)Total Demand Potential = 671 = 168 (minus) Existing Competitive and Pending Units 605 0 605 0 (equals) Long-term Demand 1- 64 - 167 - 66 1 2013 income -qualified figures adjusted for inflation ($34K or more+ homeowners w/ inc. of $25K - 35K) Z Competitive existing and pending units include adult rental/ownership at 95% occupancy (market equilibrium). Nokomis Square and Realife Bloomington included at only 50% of units due to market overlap. Source: Maxfield Research Inc. estimate the number of age/income/asset-qualified households in Richfield to be about 10,022 households. Next, we adjust to include achievable 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), which results in a local demand potential for 711 adult housing units in 2013. These capture rates reduce the total number of age/income/asset-qualified households to consider only the portion of older adult and senior households who would be able, willing, and inclined to move to senior housing alternatives, including both owner- and renter -occupied housing. Demand for adult housing products is typically divided between seniors interested in renter - occupied housing due to the lack of commitment involved and those preferring owner -occupied housing due to the tax advantages and potential for equity gains. Overarching the housing de- cision, however, is that the housing alternative must meet the needs of the resident in regard to affordability, location, features and amenities, regardless of the renter- or owner -occupied MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 37 nature of the complex. Based on the demographic characteristics of PMA seniors as well as the performance of competitive projects, we estimate that 80% of the demand for adult housing will be for owner -occupied units while the remaining 20% of the potential market will be for cooperative units. There are currently no rental options for active adult living in the PMA. In addition to the demand generated in the PMA, a second portion of demand will come from outside of the PMA (15%). This demand will consist primarily of parents of adult children living in the PMA, individuals who live just outside the PMA and have an orientation to the area, and former residents who desire to return upon retirement. Together, the demand from PMA older adults and seniors and demand from those who would relocate to the PMA totals 669 market rate adult ownership units and 167 adult rental units as of 2013. Subtracting 605 competitive ownership units from the demand calculations results in remaining excess demand for 64 market rate ownership units and 167 market rate rental units as of 2013. Demand is projected to remain essentially the same over the next five years at 66 market rate ownership units and 168 rental units. Demand for Congregate Senior Housing Table 16 presents our demand calculations for congregate living senior housing in the Primary Market Area in 2013 and 2018. This analysis focuses on the potential private pay/market rate demand for congregate living units in the Primary Market Area. In order to arrive at the poten- tial age -income qualified base for congregate senior housing, we include all senior households with incomes of $35,000 or more and homeowners with incomes between $25,000 and $35,000 who would qualify with the proceeds from a home sale (this proportion was estimated based on the homeownership rates for each age cohort). Senior householders with incomes of $35,000 allocating 65% of their income toward base housing cost could afford beginning rents of $1,900. We estimate the number of age/income/asset-qualified households in the Market Area to be 4,157 householders as of 2013, increasing to 4,553 in 2018. Demand for congregate housing is need -driven, which reduces the qualified market to only the portion of seniors who need some assistance. Thus, the age/income-qualified base is multiplied by the percentage of seniors who need some assistance with IADLs (at least three), but not six or more ADLs/IADLs, as these frailer seniors would need the level of care found in service - intensive assisted living. According to the Summary Health Statistics of the U.S. Population: Na- tional Health Interview Survey, 2008 (conducted by the U.S. Department of Health and Human Services), the percentage of seniors having limitation in activities of daily living (bathing, dress- ing, toileting, transferring, eating) and instrumental activities of daily living (using the tele- phone, shopping, food preparation, housekeeping, laundry, transportation, taking medication, handling finances) are as follows: MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 38 Limitation in ADLs & IADLs Age ADLs IADLs 65-74 years 3.3% 6.3% 75+ years 11.0% 20.0% TABLE 16 MARKET RATE CONGREGATE RENTAL HOUSING DEMAND PRIMARY MARKET AREA 2013 & 2018 Age of Householder Age of Householder 65-74 75+ 65-74 75+ # of Households w/ I ncomes of >$35,000' 2,092 1,612 2,508 1,674 # of Households w/ I ncomes of $30,000 to $34,999' + 196 355 + 219 230 (times) Homeownership Rate x 84% 81% x 84% 81% (equals) Total Potential Market Base = 2,256 1,900 = 2,692 1,861 (times) Potential Capture Rate x 1.5% 13.0% x 1.5% 13.0% (equals) Potential Demand = 34 + 247 = 40 + 242 Potential Demand from PMA Residents = 281 = 282 (plus) Demand from Outside Market Area (15%) + 50 + 50 (equals) Total Demand Potential = 330 = 332 (minus) Existing and Pending Congregate Units3 261 261 (equals) Total Congregate Demand Potential = 69 = 71 ' 2018 calculations define income -qualified households as all households with incomes greater than $40,000 and homeowner households with incomes between $35,000 and $39,999. 2The potential capture rate is derived from data from the Summary Health Statistics for the U.S. Population: National Health Interview Survey, 2008 by the U.S. Department of Health and Human Services. The capture rate used is the percentage of seniors needing assistance with (ADLs, but not ADLs (seniors needing assistance with ADLs typcial ly need assistance with multiple IADLs and are primary candidates for service -intensive assisted living). 3 Competitive units include congregate units at 95% occupancy (market equilibrium). Source: Maxfield Research Inc. It is most likely that seniors who need assistance with ADLs also need assistance with multiple IADLs, and are more likely to be candidates for service -intensive assisted living. The prime can- didates for congregate living are seniors needing assistance with IADLs, but not ADLs. We de- rive the capture rate for congregate housing by subtracting the percentage of seniors needing assistance with ADLs from those needing assistance with IADLs, which equates to 3.0% of sen- iors age 65 to 74 and 9.0% of seniors 75+. For the purposes of this report and understanding that many seniors do not view senior housing as an alternative retirement destination but a supportive living option only when they can no longer live independently, we have reduced the potential capture rates for the 65 to 74 age group to 1.5% while increasing the capture rate of MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 39 the 75+ age group to 13.0%. Multiplying the senior household base by these capture rates re- sults in the Primary Market Area demand potential for 281 congregate housing units in 2013 and 282 units in 2018. As discussed earlier in this report, we estimate that seniors currently residing outside the Mar- ket Area will generate 15% of the demand for congregate senior housing — increasing total de- mand by 50 congregate units in 2013. This demand consists primarily of parents of adult chil- dren living in the Market Area, individuals who live just outside the Market Area and have an orientation to the area, retirees who wish to relocate to the area and former residents who de- sire to return upon retirement. Together, the demand from Market Area seniors and demand from seniors who would relocate to the Market Area totals about 330 congregate units as of 2013 and 332 units in 2018. Subtracting the existing market rate congregate units in the PMA (all in Richfield) results in re- maining excess demand for 69 units in 2013, remaining essentially stable at 71 units as of 2018. Assisted Living Demand Estimate Table 17 presents our demand calculations for assisted living housing in the PMA in 2013 and 2018. This analysis focuses on the potential private pay/market rate demand for assisted living units in the PMA. The availability of more intensive support services such as meals, housekeeping and personal care at assisted living facilities usually attracts older, frailer seniors. According to the 2009 Overview of Assisted Living (which is a collaborative research project by the American Associa- tion of Homes and Services for the Aging, the American Seniors Housing Association, National Center for Assisted Living, and National Investment Center for the Seniors Housing and Care In- dustry), the average age of residents in freestanding assisted living facilities was 87 years in 2008. Hence, the age -qualified market for assisted living is defined as seniors ages 75 and over, as we estimate that of the half of demand from seniors under age 87, almost all would be over age 75. In 2013, there were an estimated 5,276 seniors ages 75 and over in the PMA and we project that this number will increase to 5,731 in 2018. Demand for assisted living housing is need -driven, which reduces the qualified market to only the portion of seniors who need assistance. Based on the publication Health, United States, 1999 Health and Aging Chartbook, conducted by the Centers for Disease Control and Preven- tion and the National Center for Health Statistics, about 39% of seniors needed assistance with everyday activities (from 25.5% of 75 -to -79 -year-olds, to 33.6% of 80 -to -84 -year-olds and 51.6% of 85+ year olds). Applying these percentages to the senior population yields a potential assist- ed living market of an estimated 2,007 seniors in the PMA in 2013 and 2,178 in 2018. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 40 Due to the supportive nature of assisted living housing, most daily essentials are included in monthly rental fees which allow seniors to spend a higher proportion of their incomes on hous- ing with basic services. Therefore, the second step in determining the potential demand for as- sisted living housing in the PMA is to identify the income -qualified market based on a senior's ability to pay the monthly rent. We consider seniors in households with incomes of $40,000 or greater to be income -qualified for assisted living senior housing in the PMA. Households with incomes of $40,000 could afford monthly assisted living fees of $2,800 by allocating a high pro- portion of their income toward the fees. According to the 2009 Overview of Assisted Living, the average arrival income of assisted living residents in 2008 was $27,260, while the average annual assisted living fee was $37,281 ($3,107/month). This data highlights that seniors are spending down assets to live in assisted living and avoid institutional care. Thus, in addition to households with incomes of $40,000 or greater, there is a substantial base of senior households with lower incomes who income - qualify based on assets — their homes, in particular. Eighty one percent of age 75+ households in the PMA are homeowners and the median sale price of existing single family homes in the PMA during 2013 was$239,450. Seniors selling their homes for the median price would generate about $225,000 in proceeds after selling costs. With an average monthly fee of $3,500, these proceeds would last approximately 5.35 years (64 months) in assisted living housing, which is longer than the average length of stay in assisted liv- ing (20 months according to the 2009 Overview of Assisted Living). For the age groups in Table 14, we estimate the income -qualified percentage to be all seniors in households with incomes at or above $40,000 (who could afford monthly rents of $3,000+ per month) plus 40% of the estimated seniors in owner households with incomes below $40,000 (who will spend down assets, including home -equity, in order to live in assisted living housing). This results in a total potential market for about 1,225 units from the PMA in 2013. Because the vast majority of assisted living residents are single (88% according to the 2009 Overview of Assisted Living), our demand methodology multiplies the total potential market by the percentage of seniors age 75+ in the PMA living alone, or 50% based on Census data. This results in a total base of about 612 age/income-qualified singles. The 2009 Overview of Assist- ed Living found that 12% of residents in assisted living were couples. Including couples results in a total of 75 age/income-qualified seniors needing assistance in the PMA in 2013. We estimate that 60% of the qualified market needing significant assistance with ADLs could either remain in their homes or less service -intensive senior housing with the assistance of a family member or home health care, or would need greater care provided in a skilled care facility. The remaining 40% could be served by assisted living housing. Applying this market penetration rate of 40% results in demand for 278 assisted living units in 2013. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 41 TABLE 17 MARKET RATE ASSISTED LIVING DEMAND PRIMARY MARKET AREA 2013 & 2018 Percent Number Percent Number Needing Needing Needing Needing Age group People Assistance' Assistancel People Assistance' Assistance' 75-79 1,594 25.5% 406 1,822 25.5% 465 80-84 1,660 33.6% 558 1,688 33.6% 567 85+ 2,022 51.6% 1,043 2,220 51.6% 1,146 Total 5,276 2,007 5,731 2,178 Percent Income-Qualified2 61% 61% Total potential market 1,225 1,328 (times) Percent living alone x 50% 50% (equals)Age/income-qualified singles needing assistance = 612 664 (plus) Proportion of demand from couples (12%)3 + 83 91 (equals) Total age/income-qualified market needing assistance = 696 755 (times) Potential penetration rate x 40% 40% (equals) Potential demand from PMA residents = 278 302 (plus) Proportion from outside the PMA (151/6) + 49 53 (equals)Total potential assisted living demand = 327 355 (minus) Existing market rate assisted living unitss 103 103 (equals) Total excess market rate assisted living demand 224 1 The percentage of seniors unable to perform or having difficulting with ADLs, based on the publication Health, United States, 1999 Health and Aging Chartbook, conducted by the Centers for Disease Control and Prevention and the National Center for Health Statistics. z Includes households with incomes of $40,000 or more (who could afford monthly rents of $2,800+ per month) plus 40% of estimated owner households with incomes below $40,000 (who will spend down assets, including home -equity, in order to live in assisted living 3 The 2009 Overview of Assisted Living (a collaborative project of AAHSA, ASHA, ALFA, NCAL & NIC) found that 12% of assisted living residents are couples. ° We estimate that 601/6of the qualified market needing assistance with ADLs could either remain in their homes or reside at less advanced senior housing with the assistance of a family member or home health care, or would need greater care provided in a skilled 5 Existing and pending units at 93% occupancy. We exclude 15% of units to accountfor seniors utilizing public subsidy. Source: Maxfield Research Inc. We estimate that a portion of demand for assisted living units in the PMA (15%) will come from outside the PMA. This secondary demand includes seniors currently living just outside the PMA, former residents, and parents of adult children who desire supportive housing near their adult children. Applying this figure results in total potential demand for 327 assisted living units in 2013. Next, existing assisted living units are subtracted from overall demand. There are three existing properties in the PMA with a total of 130 assisted living units. However, we adjust the number of competing units based on location and format and exclude estimated units occupied by low- income seniors utilizing Elderly Waivers. After subtracting the existing units (minus a 7% vacan- cy factor) from the total demand equals an excess demand potential for 224 assisted living units MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 42 in the PMA in 2013. Following this same methodology, we project that total excess demand in the PMA is anticipated to increase to 252 units in 2018. Demand for Memory Care Senior Housing Table 18 presents our demand calculations for memory care housing in the Primary Market Ar- ea in 2013 and 2018. Demand is calculated by starting with the estimated Market Area senior (ages 65+) population in 2013 and multiplying by the incidence rate of Alzheimer's/dementia among this population's age cohorts. This yields a potential market of about 1,562 seniors in the Primary Market Area in 2013. According to data from the National Institute of Aging, about 25% of all individuals with memory care impairments are a market for memory care housing units. This figure considers that seniors in the early stages of dementia will be able to live independently with the care of a spouse or other family member, while those in the latter stages of dementia will require inten- sive 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 about 391 seniors in the Primary Market Area in 2013. Because of the staff -intensive nature of dementia care, typical monthly fees for this type of housing start at about $4,000. Although some of the seniors will have high monthly incomes, most will be seniors willing to spend down assets and/or receive financial assistance from fami- ly members to afford memory care housing. Based on our review of senior household incomes in the Market Area, homeownership rates, and home sale data, we estimate that 44% of all seniors in the Market Area have incomes and/or assets to sufficiently cover the costs for memory care housing. This figure takes into account married couple households where one spouse may have memory care needs and allows for a sufficient income for the other spouse to live independently. Multiplying the potential market (1,562 seniors) by 32% results in a total of about 500 income -qualified seniors in the Market Area in 2013. We estimate that 25% of the overall demand for memory care housing in the PMA would come from outside the Market Area, for a total demand for 42 units in 2013. Currently, there are no memory care units in the Market Area. We subtract 20% of these units for Elderly Waivers and allocate a 7% vacancy factor. We add any projects that are currently pending, planned or under construction and subtract the total from the demand. There are no memory care units in the PMA at this time. Therefore, excess demand is calculated at 167 units in 2013 rising to 206 units in 2018. MAXFIELD RESEARCH INC. Mr. John Stark January 1S, 2014 City of Richfield Page 43 TABLE 18 MARKET RATE MEMORY CARE DEMAND PRIMARY MARKET AREA 2013 & 2018 65 to 74 Population 4,741 5,878 (times) Dementia Incidence Rate' x 2% x 2% (equals) Estimated Age 65 to 74 Pop. with Dementia = 95 = 118 75 to 84 Population 3,254 3,510 (times) Dementia Incidence Rate' x 19% x 19% = 618 = 667 (equals) Estimated Age 75 to 84 Pop. with Dementia 85+ Population 2,022 2,220 (times) Dementia Incidence Rate' x 42% x 42% (equals) Estimated Age 85+ Pop. with Dementia = 849 = 932 (equals) Total Senior Population with Dementia = 1,562 = 1,717 (times) Percent lncome/Asset-Qualified2 x 32% x 36% (equals) Total Income -Qualified Market Base = 500 = 618 (times) Percent Needing Specialized Memory Care Assistance x 25% x 25% (equals) Total Need for Dementia Care = 125 = 155 (plus) Demand from Outside the PMA (25%) + 42 + 52 Total Demand for Memory Care Units = 167 206 (minus) Existing and Pending Memory Care Units 0 0 (equals) Excess PMA Demand Potential = 167 = 206 Alzheimer's Association: Alzheimer's Disease Facts & Figures (2007) 2Includes seniors with income at $60,000 or above ($65,000 in 2018) plus 40% of homeowners with incomes below this threshold (who will spend clow assets, including home -equity, in order to live in memory care housing. 3 Existing memory care units at 7% vacancy rate. We exclude 20% of units to account for seniors utilizing public subsidy. Source: Maxfield Research Inc. Conclusions- PMA Demand Our assessment of the factors impacting demand for senior housing, including demographic, economic and competitive variables, shows that there is market support at all service levels in 2013 and in 2018. However, historical information on the cross -shopping and housing selection patterns of seniors in South Minneapolis suggest that many senior households leave Minneap- olis when they decide to relocate to senior housing, primarily because of very limited senior housing options. In addition, a number of Minneapolis seniors move to suburban locations to be closer to their adult children. Projected growth in the age- and income -qualified population over the next several years is anticipated to generate additional growth in demand across all senior housing products by 2018. MAXFIELD RESEARCH INC. Mr. John Stark January 15, 2014 City of Richfield Page 44 TABLE 19 DEMAND SUMMARY PRIMARY MARKET AREA 2013 & 2018 Service Level Excess Demand in the Primary Market Area Mkt. Rate Adult/FewServices Ownership 64 66 Mkt. Rate Adult/Few Servi ces Rental Mkt. Rate Congregate Mkt. Rate Assisted Living Mkt. Rate Memory Care Total Units (excess demand) Source: Maxfield Research Inc. 167 168 69 71 224 252 167 206 691 763 Demand is projected to increase for all services levels over the next five years. By 2018, excess demand is projected for 66 market rate adult ownership and 168 market rate adult rental units 71 independent living with services units, 252 assisted living units, and 206 memory care units. The conclusions presented here do not consider the quality of a particular site for a senior housing development, historical performance of other senior housing developments in the City of Richfield, proper, price and positioning of any subject project, or other important factors (i.e. architectural, marketing and management issues) MAXFIELD RESEARCH INC. March 3, 2014 Meld Research Inc. l�il�►�II�]:LL1�1�1►�il TO: Mr. John Stark Community Development Director FROM: Ms. Mary C. Bujold Maxfield Research Inc. RE: ADDENDUM TO SENIOR HOUSING DEMAND ANALYSIS Introduction This memorandum discusses the potential need/demand for affordable (50% to 60% of area median family household income) and low-income (less than 50% of area median family household income) for age -restricted senior housing without and with services in Richfield. This information supplements the initial document that primarily discussed the need for market rate senior housing at all service levels. There is very little affordable senior housing in the Twin Cities Metro Area. In the 1990s, MN Housing was placing proposals for tax credits for senior housing higher on their priority list. This changed in the late 1990s when there was a greater emphasis placed on funding for family projects. Affordable senior housing has been developed primarily in Anoka County, Dakota County and Scott County. Affordable senior housing has focused on independent living with no services. However, Dakota County was one of the first Counties to develop an affordable assisted living and memory care facility in a renovated shopping center space in Burnsville, Minnesota. These components recently opened are still in their initial lease -up phases. Individuals that need affordable assisted living and memory care senior housing have some options, but they are relatively limited and targeted to senior households that usually have very low incomes and have exhausted most if not all of their assets in order to be able to qualify to receive benefits. One of the most widely utilized programs is through home and community- based services and is the Elderly Waiver program. The Elderly Waiver program enables an individual to pay for the housing component of their residency with the service component taken care of through reimbursement to the facility by the State. Service provision through this (612) 338-0012 fax (612) 904-7979 1221 Nicollet Avenue South Suite 218, Minneapolis, MN SS413 www.maxfieldresearch.com Mr. John Stark March 3, 2014 City of Richfield Page 2 program has increased dramatically as the State has been shifting seniors away from nursing homes to home and community-based care. Market rate senior care facilities however, rarely take Elderly Waiver clients directly into their facilities. Most EW clients are those that have been previously private pay and have exhausted their assets. These individuals continue to be cared for in their respective facilities through the Elderly Waiver program. Most market rate facilities prefer to limit the number of EW clients to no more than 20% to 25% of their total client base. Over time, many facilities carry a waiting list of clients seeking to be served through the Elderly Waiver program. Another program that is less well-known is benefits provided to Veterans and their surviving spouses. This program is beginning to receive more recognition in Minnesota, but has been more widely marketed in other areas of the Nation. These benefits through the Aid and Attendance Program, similar to Elderly Waiver, provide monetary benefits to Veterans and their surviving spouses for care in senior assisted living, memory care and skilled nursing facilities. If the Veteran and/or their spouse can qualify for the program, it can pay up to $2,085 per month for a couple, $1,759 per month for a Veteran and $1,130 per month for a surviving spouse toward their care and services. For a couple, the aid in attendance income maximum limit is $24,238 per year and $20,446 for a single for a community facility. There is also an asset -test and the general maximum threshold is $80,000 in assets, although benefits may be denied if the asset base is not less than $20,000. The asset test threshold is generally at the discretion of the service representative and is based on the amount of recurring care needed by the individual or individuals. Senior Housing (Low -Income) Individuals that are age 62 or older and have a household income that is equal to or less than 50% of the Household Area Median Family Income (HAMFI) adjusted for household size are eligible to reside in a facility that is income -restricted and designated specifically for the elderly. The two most widely recognized programs are project -based meaning that the subsidy remains with the unit are project -based Section 8 and the Section 202 program. Both of these programs are financed by the Department of Housing and Urban Development. Project -based Section 8 buildings are generally older, having been constructed in the 1960s and 1970s. The Section 202 program is newer, but competition for the development of units under this program is highly competitive and awarding of the assistance is based on a points basis and is currently targeted to areas where there is substantial need. The most recent 202 developments have been located in the central Midway area and Frogtown neighborhood of St. Paul. These programs provide only for housing and basic needs such as a meal program and transportation. No services are typically provided in these types of properties. However, there are examples where additional funding has been sought to provide seniors residing in Section 8 developments with additional care services. This was successfully done at two developments in Duluth, Minnesota. For the service components, many low-income seniors that need care will contract separately for home-based services through a home care provider. MAXFIELD RESEARCH INC. Mr. John Stark March 3, 2014 City of Richfield Page 3 The Household Area Median Family Income (HAMFI) for the Twin Cities Metropolitan Area as of 2014 is $82,900 for a family of four. Adjusted for household size, the maximum income limit at 50% for a one-person household is $29,050 and for a two -person household is $33,200. At these income limits, there is also some limited overlap between those qualifying for low- income housing and those qualifying for moderate income housing and those qualifying for market rate housing. The overlap generally occurs because seniors can usually afford to pay more than 30% of their income for housing and services because they usually are no longer paying a mortgage and have fewer start-up household expenses. For market rate senior housing, seniors with incomes of $35,000 or more usually can qualify to reside in market rate housing properties. Senior Housing Properties (Low -Income) in Richfield In Richfield, we identified one senior property in Richfield that is dedicated to seniors age 62 or older and those that are handicapped and/or disabled. Richfield Towers was constructed in 1977 and features 150 units, nearly all of which are one -bedroom units and a very small number of two-bedroom units. Residents must have annual household incomes below the require threshold and then pay 30% of their income towards rent. The remaining rent is supported through a reimbursement from HUD. Typically, these properties have very low vacancies and almost always have a waiting list. A number of these older properties are undergoing renovations to keep these properties viable in the marketplace. Senior Housing Demand (Low -Income) — Adult/Few Services Maxfield Research Inc. calculated demand for low-income senior housing in Richfield. Considering the income limits required for low-income senior housing which are $29,050 for a single -person household and $33,200 for a two -person household and the potential overlap between moderate -rent and low-income subsidized senior housing, we identify a maximum income threshold of $25,000. Excluding senior homeowners with incomes of between $20,000 and $24,999 results in an income -qualified group of 1,046 people age 62 or older living in Richfield as of 2014. Capture rates for the senior housing are applied by age group. For those age 62 to 64 (2.0%), those age 65 to 74 (8.5%) and for those 75+ (16.0%). This results in demand for 140 units of low-income senior housing as of 2013, increasing to 293 units by 2018. Seniors with low-income units are generally more mobile and will travel a greater distance to seek out housing that meets their income threshold. Therefore, we increase the potential MAXFIELD RESEARCH INC. Mr. John Stark City of Richfield March 3, 2014 Page 4 demand by 25% of seniors that would live in Richfield because this type of housing would be available to them. This results in potential demand for 187 units in 2013, rising to 293 units by 2018. We subtract existing units minus a 2% vacancy rate (stabilized occupancy) or 147 units. This results in remaining excess demand for 40 units of low-income senior housing, increasing to 146 units of low-income housing by 2018. Despite the need for low-income senior housing, many low-income seniors try to avoid these types of properties, especially if the resident mix includes households that are non -senior. Some properties have experienced higher vacancy rates in the recent past because of this situation. Low-income seniors may often try to remain in their own homes or non -age restricted apartments for a longer period of time because of this. Funding for these types of properties is very limited and highly competitive across the country. As such, increases in the need and demand for low-income senior housing are likely to occur over time. Although additional sources of money are available for seniors that need services, those that are able to live independently are either limited to this type of housing or live in general market rate rental apartments where rents are currently increasing placing greater pressure on households with limited incomes. MAXFIELD RESEARCH INC. Mr. John Stark City of Richfield March 3, 2014 Page 5 TABLE 1 LOW-INCOME ADULT/FEW SERVICES HOUSING DEMAND CITY OF RICHFIELD 2013 & 2018 Age of Householder Age of Householder 62-64 65-74 75+ 62-64 65-74 75+ #of Households w/ Incomes of>$25,000' 107 260 905 134 454 1,278 #of Households w/ Incomes of <$20,000-$24,999' + 27 62 239 + 28 112 176 (times ) Homeownership Rate x 83% 85% 63% x 83% 85% 63% = 85 207 754 (equals) Total Potential Market Base = 111 359 1,167 (times) Potential Capture Rate x 2.0% 8.5% 16.0% x 2.0% 8.5% 16.0% (equals) Potential Demand = 2 18 121 = 2 30 187 Potential Demand from PMA Residents = 140 = 219 (plus) Demand from Outside MarketArea(25%) + 47 + 73 (equals) Total Demand Potential = 187 = 293 (minus) Existing and Pending Active Adult UnitS2 - 147 - 147 (equals) Total Demand Potential by Type 40 146 ' 2018 calculations define income -qualified households as all households with incomes less than $30,000 minus owner households with incomes between $25,000 and $29,999. 2 Existing and pending are deducted at market equilibrium, or 98% occupancy. Source: Maxfield Research Inc. Senior Housing Demand (Moderate -Income) — Adult/Few Services As mentioned previously, moderate income seniors are considered to be households with incomes that range between 50% and 60% of Household Area Median Family Income for the Twin Cities Metropolitan Area. According to income guidelines published by MN Housing which administrates nearly all of the Low -Income Housing Tax Credits (LIHTC), maximum income limits for a tax credit (affordable) property are: 50% of Median 1PP 2PP $29,050 $33,200 60% of Median 1PP 2PP $34,860 $39,840 As shown on above, households with incomes at the 60% level are often just on the lower -level threshold for market rate senior housing. Since the substantial reduction in priority funding for MAXFIELD RESEARCH INC. Mr. John Stark March 3, 2014 City of Richfield Page 6 senior housing developments by MN Housing, many seniors with moderate incomes have elected to locate in market rate properties that are older with affordable rents. When senior tax credit properties were first brought to the market, they were wildly successful. Some of these properties have remained affordable and are generally almost always fully - occupied. The highest numbers of these properties are currently located in the Northeast Quadrant of the Twin Cities Metro in communities such as Maplewood, Oakdale and St. Paul. In addition, Dakota County began in 1990, a program to develop affordable senior housing for residents of the County. To date, Dakota County has more than 20 affordable senior housing properties providing affordable senior housing to more than 1,100 households. Residents of Dakota County must meet income requirements in order to reside at these properties. The Scott County EDA and the Anoka County HRA have also developed affordable senior properties in their communities, but the EDA and the HRA have written down the rents to an affordable level. Seniors residing in those communities are not required to meet a maximum income threshold. Residents of the County are however, given preference. MN Housing is currently evaluating is previous policies regarding tax credit senior housing and it is likely that within the next several years some tax credit senior properties may be developed in the Twin Cities Metro Area. Moderate Income Senior Housing Demand Table 2 shows a calculation of demand for moderate -income senior housing in Richfield. Considering the income limits required for a tax -credit senior housing property which range from $29,050 for a single -person household up to $39,840 for a two -person household at 60% of the area median household income. For the purposes of this analysis, we utilize senior households with household incomes of between $25,000 and $39,840. We exclude senior homeowner households with incomes of between $25,000 and $39,840, a portion of which could qualify for market rate housing by investing the proceeds from a home sale. Excluding senior homeowners in this income range results in an income -qualified group of 223 people age 62 or older living in Richfield as of 2014. Capture rates for the senior housing are applied by age group. For those age 62 to 64 (2.5%), those age 65 to 74 (10.0%) and for those 75+ (18.0%). This results in demand for 34 units of moderate -income senior housing as of 2013, increasing to 38 units by 2018. Seniors with low-income units are generally more mobile and will travel a greater distance to seek out housing that meets their income threshold. Therefore, we increase the potential demand by 30% of seniors that would live in Richfield because this type of housing would be available to them. This results in potential demand for 49 units in 2013, rising to 55 units by 2018. We do not subtract any units as there are currently no moderate income age -restricted MAXFIELD RESEARCH INC. Mr. John Stark City of Richfield March 3, 2014 Page 7 units in Richfield. This results in remaining excess demand for 49 units of moderate -income senior housing, increasing to 55 units by 2018. Because most of the moderate -income properties are newer, seniors are attracted to these properties and will travel greater distances to find and occupy these types of units because they are affordable. These properties generally stay occupied and some properties have waiting lists for people that want to move in. Funding for these types of properties has been generally restricted by MN Housing, but that may be changing. If it does change, we envision that a number of non-profit housing developers in the Twin Cities and some for-profit developers will want to develop this type of housing for seniors. Good Samaritan in Roseville is considering the potential development of a tax -credit affordable senior housing property on its campus. The vast majority of these units are entirely independent living with no services. Some seniors residing in these properties will contract for additional home health care services through a separate home care provider. TABLE 2 MODERATE INCOME-ADULT/FEW SERVICES AFFORDABLE HOUSING CITY OF RICHFIELD 2013 & 2018 Age of Householder Age of Householder 62-64 65-74 75+ 62-64 65-74 75+ # of Households w/ Incomes between $25,000'a nd $39,840 91 289 447 98 371 488 # of Households w/ Incomes of $25,000-$39,840' + 91 289 447 + 98 371 488 (times ) Homeownership Rate x 83% 85% 63% x 83% 85% 63% = 15 43 165 (equals) Total Potential Market Base = 17 56 181 (times) Potential Capture Rate x 2.5% 10.0% 18.0% x 2.5% 10.0% 18.0% (equals) Potential Demand = 0 4 30 = 0 6 33 Potential Demand from PMA Residents = 34 = 38 (plus) Demand from Outside Market Area (30%) + 15 + 16 (equals) Total Demand Potential = 49 = 55 (minus) Existing and Pending Active Adult Units' 0 0 (equals) Total Demand Potential by Type 49 55 2018 calculations define income -qualified households as all households with incomes between $26,500 and $42,900 minus owner households with incomes in this range. Z Existing and pending are deducted at market equilibrium, or 98% occupancy. Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. Mr. John Stark March 3, 2014 City of Richfield Page 8 Affordable Assisted Living Table 3 shows the potential need/demand for affordable assisted living services in Richfield. For market rate assisted living, Maxfield Research Inc. includes all 75+ single -person households and a small proportion of 75+ couple households (12%) with incomes of $40,000 or over as income -qualified for assisted living. In addition, 40% of households that own their own housing can qualify for market rate assisted living by utilizing the proceeds from the sale of their homes to support living and care expenses in an assisted living facility. A portion of seniors that can qualify to receive Elderly Waivers would be able to reside in a market rate assisted living facility if that facility will accept Elderly Waivers. Most market rate facilities restrict the number of residents on Elderly Waivers to no more than 25% of all residents. Most facilities require that the resident initially private pay upon entry. If the resident exhausts their private resources, then the resident may continue to receive care by transitioning to the Elderly Waiver program. Maxfield Research Inc. calculates the population that would qualify for affordable assisted living excluding those that could afford to pay for assisted living using funds from the sale of a home. Households with incomes less than $40,000 and of those with incomes below $40,000 (including 60% of homeowners and all renter households. Applying these criteria to the Richfield senior household base of households age 75+ results in an age and income -qualified base of 468 people as of 2013 increasing to 514 people by 2018. We exclude a portion of households from this group that would qualify to receive Elderly Waivers. However, it is becoming increasingly difficult for households with Elderly Waivers to enter into market rate senior assisted living housing. We can account for those receiving Elderly Waivers at existing facilities by subtracting these households from the base. Utilizing 468 people that would income -qualify for affordable assisted living housing, we then apply the proportion of the qualified population that is living alone (57%). This reduces potential demand to 267 units. We incorporate a factor for couples (12%) resulting in demand for 303 units. An estimated 40% of these individuals are likely to require assisted living in the short-term which reduces the potential demand to 121 units. Adding in a small proportion (15%) of people that would look to Richfield facilities for this type of care from outside of the City results in a potential demand for 143 units. Subtracting the number of households that would utilize Elderly Waivers (26 units at 100% occupancy) results in remaining excess demand for affordable senior housing of 117 units in 2013, rising to 131 units by 2018. Most households that require affordable assisted living either remain in their own homes with outside care or move to a market rate facility and spend down their assets to avoid nursing home placement. Other than Elderly Waivers, there are very few tools to provide for MAXFIELD RESEARCH INC. Mr. John Stark March 3, 2014 City of Richfield Page 9 affordable assisted living. Dakota County recently opened some affordable assisted living units in Burnsville at Valley Ridge. These units are leasing up at a rate similar to a private pay facility. It is difficult to determine the level of affordability that would be required in order to successfully capture this group and provide for economic feasibility of a public facility. TABLE 3 AFFORDABLE ASSISTED LIVING DEMAND CITY OF RICHFIELD 2013 & 2018 Percent Income-Qualified2 40% Percent Number (times) Percent living alone x 57% Needing Needing Age group People Assistance' Assistancel 75-79 841 25.5% 215 80-84 992 33.6% 333 S5+ 1,206 51.6% 622 Total 3,039 1,170 Percent Income-Qualified2 40% Total potential market 468 (times) Percent living alone x 57% (equals)Age/income-qualified singles needing assistance = 267 (plus) Proportion of demand from couples (12%)3 + 36 (equals) Total age/income-qualified market needing assistance = 303 (times) Potential penetration rate x 40% (equals) Potential demand from PMA residents = 121 (plus) Proportion from outsidethePMA(15%) + 21 (equals)Total potential assisted living demand = 143 (minus) Existing affordable assisted living units 26 (equals) Total excess affordable assisted living demand = 117 Percent Number Needing Needing People Assistance' Assistance' 971 25.5% 248 1,021 33.6% 343 1,344 51.6% 694 3,336 1,284 40% 514 57% 293 40 333 26 131 ' The percentage of seniors unable to perform or having difficulting with ADLs, based on the publication Health, United States, 1999 Health and Aging Chartbook, conducted bythe Centers for Disease Control and Prevention and the National Center for Health z Includes households with incomes of less than $40,000 minus 40% of the estimated owner households with incomes below $40,000 (who will spend down assets, including home -equity, in order to live in market rate assisted living housing). 3 The 2009 Overview of Assisted Living (a collaborative project of AAHSA, ASHA, ALFA, NCAL & NIC) found that 12% of assisted living residents are couples. ° We estimate that 60% of the qualified market needing assistance with ADLs could either remain in their homes or reside at less advanced senior housing with the assistance of a family member or home health care, or would need greater care provided in a Is Existing and pending units at 100%occupancy. We exclude 20% of units to account for seniors utilizing public subsidy. Source: Maxfield Research Inc. Affordable Memory Care Table 4 presents a similar calculation for affordable memory care housing. In order to qualify for market rate memory care senior housing, households need an income of at least $60,000. Households with incomes below $60,000 could qualify for affordable memory care senior housing. MAXFIELD RESEARCH INC. Mr. John Stark March 3, 2014 City of Richfield Page 10 Utilizing a similar methodology for the affordable memory care calculation, we identify that an estimated 37% of the potential market for memory care housing would qualify for affordable memory care housing. Reducing this figure by the 25% that would require care in a supervised setting results in potential demand for 83 units. Adding in a small portion of individuals that would seek this care from outside of the City of Richfield results in potential demand for 98 affordable memory care units. There are no dedicated memory care units in Richfield at this time. Therefore, the demand remains the same at 98 units in 2013 rising to 102 units by 2018. Existing assisted living facilities in the City of Richfield are currently caring for some residents with mild dementia and/or early diagnosis of Alzheimer's. This is similar to many other facilities in the Twin Cities Metro Area where assisted living facilities are caring for individuals that do not require a secure memory care environment, but perhaps need some additional services because they may have some early symptoms of a dementia. If peoples' safety and health needs increase to the point where they would need higher levels of care, they may need to be transferred to a secure memory care environment. At this time, Mainstreet Village is currently planning to add some memory care units to its facility within the next three years. These units would be market rate, but would also account for a small proportion of households that could receive Elderly Waivers. Similar to affordable assisted living, Elderly Waivers can assist a portion of people that need care and services offered by a dedicated memory care facility. However, only a small portion of those in market rate facilities can utilize Elderly Waivers. Other people that cannot afford to pay privately for memory care will typically spend down assets to avoid nursing home placement. As such, a number of households currently receiving care in private pay facilities are spending down assets. MAXFIELD RESEARCH INC. Mr. John Stark City of Richfield March 3, 2014 Page 11 TABLE 4 AFFORDABLE MEMORY CARE DEMAND CITY OF RICHFIELD 2013 & 2018 65 to 74 Population 2,310 2,884 (times) Dementia Incidence Rate' x 2% x 2% (equals) Estimated Age 65 to 74 Pop. with Dementia = 46 = 58 75 to 84 Population 1,833 1,992 (times) Dementia Incidence Rate' x 19% x 19% (equals) Estimated Age 75 to 84 Pop. with Dementia = 348 = 378 85+ Population 1,206 1,344 (times) Dementia Incidence Rate' x 42% x 42% (equals) Estimated Age 85+Pop. with Dementia = 507 = 565 (equals) Total Senior Population with Dementia = 901 = 1,001 (times) Percent Income/Asset-Qualified2 x 37% x 37% (equals)Total Income -Qualified Market Base = 333 = 370 (times) Percent Needing Specialized Memory Care Assistance x 25% x 25% (equals) Total Need for Dementia Care = 83 = 93 (plus) Demand from Outside the PMA (15%) + 15 + 16 Total Demand for Memory Care Units = 98 109 (minus) Existing and Pending Memory Care Units 7 7 (equals) Excess PMA Demand Potential = 91 = 102 Alzheimer's Association: Alzheimer's Disease Facts & Figures (2007) 2Includes seniors with income less than $60,000 ($65,000 in 2018) minus 25% of homeowners with incomes below this threshold (who will spend down assets, including home -equity, in order to live in memory care housing. 3 We exclude 20% of units to account for seniors utilizing public subsidy. Source: Maxfield Research Inc. Skilled Nursing Demand As of September 30, 2012, Minnesota had 392 licensed nursing home and licensed and certified board and care homes with a total of 31,996 beds in active service with 375 licensed facilities and 30,351 licensed beds certified to participate in the Medicaid Program. The number of nursing homes and licensed beds has been declining since 1987, when Minnesota had 468 facilities with 48,307 beds. By September 30, 2012, 76 facilities had closed altogether (net of new facilities opened) and 15,213 beds had been completely delicensed. An additional 1,205 beds were out of active service, in layaway status. The supply of beds has declined by 34% over the 25 years since the 1987 peak. In the last three years, the bed supply has declined by 1,989 beds or 5.9%. MAXFIELD RESEARCH INC. Mr. John Stark March 3, 2014 City of Richfield Page 12 Historically, Minnesota has been one of the highest bedded states in the Nation, and in terms of beds/1,000 people, Minnesota continues to have more nursing home beds availability than the national average when beds are measured as # of beds per 1,000 people age 65 or older. However, in 2011, for the first time, Minnesota had fewer beds than the national average when measured as # of beds per 1,000 population age 85 or older. In 1995, Minnesota had 58% more beds per 1,000 age 65+ and 28% more beds per 1,000 age 85+ than the national average. By 2008, these figures had decreased to 22% and 9%, respectively. And in 2011, the most recent year with national data available, Minnesota had only 13% more beds per 1,000 age 65+ and had 0.4% fewer beds per 1,000 population age 85+ than the national average. Between 1995 and 2011, Minnesota reduced its bed capacity by 27.92%, more than any other state. During this time period, 23 states increased their capacities while the US, overall, decreased its capacity by 2.73%. Before examining the distribution of beds in Minnesota, it is necessary to describe a new method of measurement – Age/Intensity Adjusted (AIA) beds per thousand. Comparing the availability of beds over time or between regions is an inexact science. The two measures that are commonly used, number of beds per 1,000 population age 65+ and number of beds per 1,000 population age 85+, are inadequate because of variations in the age composition of the elderly, and differing utilization rates associated with different age groups. The solution to this problem is risk-adjustment—adjusting for differences in age composition. A detailed explanation of this method and the state distribution of age intensity adjusted beds per 1,000 rates can be found in the full report. Occupancy is defined as the percentage of days that nursing home beds are occupied. It is calculated as the actual number of resident days of nursing home care provided during a year divided by the maximum capacity for that year, that is, the number of resident days that would have been provided if all beds in active service were occupied every day. Occupancy in Minnesota's nursing homes has ranged from a high of 95.4% in 1993 to a low of 90.1% in 2012. This rather narrow range of occupancy has been maintained in recent years largely by taking beds out of service. Occupancy is important to monitor for two reasons. If occupancy were too high, consumers would have difficulty accessing nursing home care and would have limited choice. Low occupancy would likely put a financial strain on facilities, and perhaps reduce the overall efficiency of the industry. The nursing home utilization rate for older people in Minnesota has been declining for the past 27 years. In 1984, the utilization rate for people age 65+ was 8.4%. By 2011, it had dropped to 3.7%, a 56% reduction. The utilization rate for people age 85+ declined even more dramatically, from 36.4% in 1984 to 14.1% in 2011, a 61% reduction. The reduced utilization of nursing home services has been accompanied by increased numbers of people receiving LTSS in their own homes and in assisted living settings. MAXFIELD RESEARCH INC. Mr. John Stark March 3, 2014 City of Richfield Page 13 Utilization rates by older age group for Minnesota nursing homes as of 2011 were: 65-69 0.6% 70-74 1.2% 75-79 2.3% 80-84 4.3% 85+ 14.1% Applying these nursing home utilization rates to the senior population in the City of Richfield results in an estimated number of 5,349 seniors that would potentially need nursing home care in Richfield as of 2013. Accounting for continued declining nursing home utilization rates due to higher use of in-home and assisted living care facilities and a projected increase in the number of seniors in Richfield, this number increases to 6,220 by 2018. Estimated bed need as of 2013 is 253 beds increasing to 261 beds by 2018. There are a substantial number of nursing home beds within a five -mile radius of Richfield, with nursing homes nearby in Minneapolis, St. Louis Park, Edina and Bloomington. It is common for residents to be located in a nearby nursing home if beds at nursing homes in Richfield are full. However, the Richfield Health Center with 118 beds in service is considered to be one of the largest nursing homes in the State of Minnesota. As such, it is unlikely that beds would not be available at the Richfield Health Center. Therefore, considering only local demand for nursing care beds results in excess demand for 143 beds as of 2013, increasing to 151 beds by 2018. There remains a moratorium on nursing home beds in Minnesota, with the exception of hardship counties. Hennepin County is not a hardship county. Residents in Richfield that need nursing home care can elect Richfield Health Center or another nursing home nearby to Richfield in an adjacent community. The state is closely monitoring the need for nursing home beds throughout counties across Minnesota. Although some beds have been transferred into the Twin Cities Metro Area from other areas of the State that are overbedded, the number is limited. MAXFIELD RESEARCH INC. Mr. John Stark City of Richfield March 3, 2014 Page 14 Summary of Affordable Demand and Skilled Nursing Beds Table 6 shows a summary of the excess demand for low-income and affordable senior housing products for the City of Richfield along with the potential need for skilled nursing beds. While there is a need for low-income and affordable senior housing at all service -levels, the tools available to create this housing are limited. The state is again considering its funding allocations for the potential development of affordable senior housing, but no definite decisions have yet been made. With potential increases in the baby boom population affecting senior age cohorts over the next 30 years, it is likely there will be additional consideration given to developing more affordable senior housing products throughout the Region. TABLE 6 DEMAND SUMMARY CITY OF RICHFIELD 2013 & 2018 Service Level Excess Demand in the City of Richfield Low -Income Adult/FewServices 40 146 Moderate -Income Adult/FewServices 49 55 Affordable Assisted Living 117 131 Affordable Memory Care 91 102 Skilled Nursing Beds 143 151 Total Units (with excess demand) 440 585 Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. TABLE 5 SKILLED NURSING CARE DEMAND CITY OF RICHFIELD 2013 & 2018 Ski I I ed Ca re Bed Ski I I ed Ca re Bed Age Need* Population Need Need* Population Need 65-74 0.9% 2,310 21 0.7% 2,884 20 75-84 3.4% 1,833 62 3.0% 1,992 60 85+ 14.1% 1,206 170 13.5% 1,344 181 5,349 253 6,220 261 Local Demand 253 261 (plus) Demand from Primary MarketArea (0%) + 0 0 (equals) Total Potential Bed Demand 253 261 Number of Existing Beds in the PMA 110 110 (beds per 1,000 65+ pop.) 21 18 Excess Demand for Nursing Beds in the PMA = 143 = 151 * Includes demand for long-term, post acute, respite and hospice care and is based on average length of stay for each component. Sources: Maxfield Research Inc. Summary of Affordable Demand and Skilled Nursing Beds Table 6 shows a summary of the excess demand for low-income and affordable senior housing products for the City of Richfield along with the potential need for skilled nursing beds. While there is a need for low-income and affordable senior housing at all service -levels, the tools available to create this housing are limited. The state is again considering its funding allocations for the potential development of affordable senior housing, but no definite decisions have yet been made. With potential increases in the baby boom population affecting senior age cohorts over the next 30 years, it is likely there will be additional consideration given to developing more affordable senior housing products throughout the Region. TABLE 6 DEMAND SUMMARY CITY OF RICHFIELD 2013 & 2018 Service Level Excess Demand in the City of Richfield Low -Income Adult/FewServices 40 146 Moderate -Income Adult/FewServices 49 55 Affordable Assisted Living 117 131 Affordable Memory Care 91 102 Skilled Nursing Beds 143 151 Total Units (with excess demand) 440 585 Source: Maxfield Research Inc. MAXFIELD RESEARCH INC.