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2022 HRAYER H ',RA ' I REDEVELOPMENT AUTHORITY 2022 Annual L� o u ,u i r i v x, r i l / i PARK TOWERS CITY CENTER OFFICE �m 111 Hassan Street SE 133 Third Ave. SW Hutchinson, MN 55350 Hutchinson, MN 55350 (320) 234-4251 (320) 587-2168 Fax (320) 234-4240 FAX (320) 587-3748 Website a,buutbisbf° a, Hutchinson HRA 2022 Annual Report Page 1 of 11 ExecutiveSummary: The Hutchinson HRA (HHRA) is a public body politic formed by the Hutchinson City Council in 1969 according to MN State Statue. The HHRA was created to address a shortage of housing for low to moderate income families and to address substandard areas in Hutchinson. The HHRA owns and manages Park Towers Apartments. In addition, the HHRA administered other housing rehab programs throughout the city to preserve housing stock and improve neighborhoods. Yearly the HHRA collects housing data to help identify changing community housing needs and then administer/develop housing programs that will provide a positive impact on the community. 2022 Hutchinson Yearly Comparisons: • Very Low Apartment Vacancy Rates • Median Home Sale of$244,000 • Home Mortgage rates on the rise • 24 Single-family new construction units • 3 Multifamily new construction units • 10 Foreclosures Summary of HHRA Activities and Accomplishments: Park Towers: • New Housing Specialist started in August • 1 HUD management monitoring and 1 HUD property inspection • 20 move-ins, and 25 move-outs in 2022 • Updated/Repaired/Installed: office telephone service, boilers, vinyl planking in 9 units, water saver power flush toilets in 4 units, 1 unit range, 1 unit refrigerator and slab jacked various spots of sidewalk around the building • Awarded $28,300 from HAI, Inc. for replacement of 20+unit, Federal Pacific Electric Panels City Center: • New HRA Technician started in July • 12 City Home Improvement Program Grants (TIF) • 1 Minnesota Housing Rehab Loan Program project HHRA Priorities: • Staff training • Marketing of available HHRA programs • Implement HUD Multifamily, Section 8 Project Based Rental Assistance Program (PBRA)policy changes at Park Towers • Continue with asset preservation and energy conservation improvements at Park Towers • Continue to administer City Home Improvement Program Grants and Minnesota Housing's Home Improvement Programs • Explore the availability of housing programs and projects that will address identified housing needs of Hutchinson Hutchinson HRA 2022 Annual Report Page 2 of 11 Hutchinson ea.rl.y "���ni���, �, ��,��, Rental Data from the Draft 2022 Maxfield Research & Consulting Hutchinson Comprehensive Housing Needs Assessment: Market Rate General Occupancy Vacancy Rate 16.00% 14.90% 14.00/ 12.00% 10.31% 10.00% 1, 9 00%9.00% 7.54% 8.38% 8.00% 4 6'(t% . 4� f ©% 4.00% 07°/,, 4 08a�J. 9%1.85°T.76 0 1.767D6� 1 83%2.00% o° no 0.00% I I �1111 0.71 1 O� O� O� Oh OHO 01 O� 00 y0 titi ti� ti� ti� tih ti0 tit ti� ti0 titi ti0 ti0 ti0 LO LO -0 .0 .ti0 -0 -0 ,ti0 ti0 .LO .0 -0 ,ti0 ti0 LO f; ti0 *July/Aug.2022 Survey of 30 General Occupancy properties of 12 or more units. Hutchinson 2022 Vacancy Rates Average Hutchinson 4.50% Market Rate General Rents* 5.00% Occupancy(1092 units) Studio $498 4.00% IIIIIIII Affordable General (114 1 Bedroom $699 2.60% 1 1 11 units)Occupancy 2 Bedroom $843 3.00°i° 3 Bedroom $1,013 2.00% 1 00% IIIIIIII Subsidized General ' *July/Aug. 2022 Maxfield Survey. Q Occupancy(177 units) 1.00% IIIIIIIIIIII Subsidized Senior Rental 0.00% �` y�' Housing 2022 Vacancy Rates Home Resales Data from McLeod County Assessor's Office: Home Resales City of Hutchinson 2010 through 2022 Year 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Price Range No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. Under$50,000 2 0.7% 4 1.1% 7 2.0% 1 0.3% 7 1.9% 9 2.7% 10 3.0% 15 4.2% 18 5.7% 29 10.2% 44 15.3% 30 12.4% 24 11.1% $50,000 to$74,999 4 1.3% 5 1.3% 10 2.9% 5 1.6% 11 3.1% 10 3.0% 15 4.6% 26 7.3% 17 5.4% 35 12.3% 33 11.5% 31 12.8% 16 7.4% $75,000 to$99,999 11 3.7% 13 3.5% 10 2.9% 8 2.5% 15 4.2% 22 6.6% 38 11.6% 39 11.0% 34 10.8% 36 12.7% 62 21.6% 46 19.0% 32 14.8% $100,000 to$124,999 7 2.3% 10 2.7% 19 5.5% 27 8.6% 46 12.8% 46 13.8% 54 16.4% 58 16.3% 59 18.7% 49 17.3% 52 18.1% 48 19.8% 38 17.6% $125,000 to$149,999 12 4.0% 29 7.8% 49 14.4% 50 15.9% 67 18.7% 70 21.0% 76 23.1% 68 19.1% 68 21.5% 59 20.8% 41 14.3% 33 13.6% 38 17.6% $150,000 to$174,999 21 7.0% 34 9.1% 51 14.9% 64 20.3% 70 19.5% 73 21.9% 55 16.7% 60 16.8% 51 16.1% 29 10.2% 16 5.6% 22 9.29, 23 10.6% $175,000 to 199,999 30 10.0% 58 15.5% 55 16.0% 59 18.7% 55 15.3% 39 11.8% 23 7.0% 27 7.6% 21 6.6% 16 5.6% 13 4.5% 9 3.7% 12 5.6% $200,000+ 212 70.9% 220 59.0% 142 41.4% 101 32.1% 88 24.5% 64 19.2% 58 17.6% 63 17.7% 48 15.2% 31 10.9% 26 9.1% 23 9.5% 33 15.3% Total 299 100.0% 373 100.0% 343 100.0% 315 100.0% 359 100.0% 333 100.0% 329 100.0%13561100.0%13161 100.0% 284 100.0% 287 100.0% 242 100.0% 216 100.0% Median 1 $244,000 1 $215,400 1 $186,000 1 $175,000 1 $161,900 1 $153,500 1 $140,000 1 $138,750 1 $133,500 1 $121,000 1 $101,400 1 $109,950 1 $121,600 Sources: McLeod County Assessor's Office Maxfield Research Inc Peterson-Paulsen Associates Inc.Realty Hutchinson HRA 2022 Annual Report Page 3 of 11 : .'...� . 1.34 : s 2022 Hutchinson Home Sale Price Ranges u Under$150,000==: .67% $150,000'to 74,999= 11..34% 715 000 to 9 999 3.6` % C.C.C. =- `°� � �.CDCD,CDCDCD'U:a �.24,JJJ �.�64/� mm 1.2,15,000 to 11.49,999=4.01.% $1.150,000 to 11.74,999 _:7.02,% ee 1.715,000to 1.99,999= 1.0.03% $200,000to 224,999= 1.1..67% mm 2215,000 to 249,999==: 1.3.04% $2150,000 to 274,999==: 1.0.7% �IW C W+ i' C,C, C,C,C, % IIIIII 2,,%.>,���to 2,JJ,...�...�...��.:�:crAs.��/r� IIIIII ���,����,��V..I.S�.:�:2,,%.,%,%/r� 1,,,,l tchins n Median Sales Price $300,000.00 244➢000.00 $230,000.00 215,400.00 $200,000.00 4%1%$186000.00 No, 00 6 3,500.00 175,000.III 1 1,900.00 $ SIII$140,000.00 `1.50 000.00 ioo 138,750.0 133,500.00 '" uuuuuuuuwnmuu 1,000.00 $121,600.00 uomoumwimuwimuwim�n000000oo$11211 $109,950.00 $101,400.00 �$.too,000.00 wm� $50,000.00 2022 2021. 2020 201.9 201.8 201.7 201.6 201.5 201.4 201.3 201.2 201.1. 201.0 Year End Hutchinson Home Resales Data from the Minneapolis Area Association of Realtors: 2022 2021 2020 2019 2018 2017 Median Sales Price $262,450 $235,000 $200,000 $181,000 $170,000 $161,000 # of Sales 265 317 324 315 330 318 • 16.7% less home sales in 2022 than in 2021. • 1.5% of the home sales in 2022 where distressed sales (foreclosure/short sales). • 299 new home listings in 2022 vs. 333 in 2021. • 27 days on the market in 2022 vs. 21 in 2021. 2022 Home Mortgage Rates: Early in 2022, the 30-year fixed home mortgage rate was 3.22% and ended at 6.42% according to Freddiemac.com. The Federal Reserve Bank increased the interest rate 7 times in 2022. Hutchinson HRA 2022 Annual Report Page 4 of 11 New Construction Units (the following 3 charts are based on information from the Department of Planning,Zoning and Building Department): Number of New Construction Single-Family Dwelling Units 80 60 58 .. 40 ... ,32 34 36 35 30 27 23 h 20 .. IjG' .... .... 12 23 ... 2�� �� ... .. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Number of Certificate of Occupancy for General Occupancy Multi-Family Dwelling Units 200 100 11� oIm �� 1994 1996 1999 2017 2018 2019 2020 2021 2021 2022 Ridgedale Deer Park Century Highfield Highfield Highfield Century Century Highfield 101 Park Square Court TH Court west Court west Place Apts. East Residential Lots Available »gVl�llillu � �„,�m D1J11 lUr Illllllllllll J1J�,Vii /I(pp r r �°���P„JrI�,JII YJJ�JIr��aiy 1�111 �r,�11J1�1 /1I(/f�P111�s 1J1�1JDJ{uu /Dllllll// lJJ JJI/nro/ �i�iul� 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20112012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Hutchinson Foreclosures: 250 McLeod County and Hutchinson IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII McLeod County 200 Foreclosure Counts IIIIIIIIIIIIIIIIIIIIIIIIIII Hutchinson 159 150 142 1. 135 .... 100 7.. 93 2 50 0 2 0 5 39...... 53 41 .... .... .... .... 18 0 Ll 41111111 ....5 3 111110.... 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 -50 *In 2020 there was a Moratorium on all pending and future foreclosures when the foreclosure arises out of a substantial decrease in income or substantial out of pocket medical expenses caused by the COVID-19 pandemic,or any local,state,or federal governmental response to COVID-19(State of Minnesota Emergency Executive Order 20-79) Hutchinson HRA 2022 Annual Report Page 5 of 11 u o FI FI .Arco f�, i sh ,,,,,,,,,tints: Park Towers Apartments Management - Multifamily, Section 8 Project Based Rental Assistance Program (PBRA): Park Towers Property Management • May 2022, HUD Limited MOR (Management and Operations Review) —"No Findings". • The new Housing Specialist started in August. • September 2022, HUD REAC Inspection— Score of 81c, another inspection in 2 years. • November 2022, annual unit inspections. • 20 move-ins, and 25 move-outs in 2022. Asset Preservation, Property Improvements and Energy Conservation • Updated the management office Nuvera telephone service. • Boiler repairs that included the replacement of the circular pump, deteriorating copper gas lines and the main controller. • Awarded $28,300 from HAI, Inc., our insurance company, for replacement of 20 unit, Federal Pacific Electric Panels. • New vinyl planking was installed in 9 units at turns. • Water saver power flush toilets were installed in 4 units to save water and reduce toilet plugs. • 1 unit range and 1 unit refrigerator were replaced. • Slab jacking various spots of sidewalk around the building. Tenant Demographics • Average age is 57. 0 37 Elderly 0 43 Disabled • Income Categories: 0 20.5%Extremely Low (i.e. 1-person household $18,700 or less than) 0 78.4%Very Low (i.e. 1-person household $18,701- $31,100) 0 1.1% Low (i.e. 1-person household $31,101 - $49,750) Tenant Services • Hosted National Night Out where the tenants got to know the new HHRA staff. The HHRA staff also hosted a Christmas Dinner for the tenants. • Park Towers continued as a Senior Dining Program Site through a lease with Lutheran Social Services. Meals are prepared at the Evergreen Senior Dining kitchen, then delivered to Park Towers Monday through Friday. ���"� y � ✓ i gy,i �uu ✓� � rya d�✓�6 .y Hutchinson HRA 2022 Annual Report Page 6 of 11 City Center Operations: Operations: The new HRA Technician started in July of 2022 and has had marketing the Hutchinson HRA and all it's programs as his priority. Owner Occupied Rehabilitation Programs Available: 1. City Home Improvement Program Grants (TIF): This program was added in 2015 as a flexible tool for rehab of single-family, owner occupied housing throughout the city. It has multiple divisions to target different community needs. In November 2022, the Hutchinson HRA Board approved another division, the Hutchinson Healthy Homes Initiative. This initiative was created in partnership with McLeod County Public Health to assist Hutchinson homeowners to test and mitigate Radon and Asthma Triggers in their homes. Program Division Accomplishments: • Live and Work in Hutchinson, Is' Time Homebuyer Workforce Initiative— 5 projects closed in 2022 • City Home Repair Grant Program—9 projects closed in 2022 (3 of them also got the Live and Work grant) • City Accessibility Grant Program— one project closed in 2022 • Hutchinson Emergency Home Repair Grant Program—Zero projects closed in 2022 • Hutchinson Healthy Homes Initiative Grants Zero projects closed in 2022 �� 9�n �� IIVfIWyWOM'IYa�frNMAftRVur!dltll0 ` eft F f� j / r 171I1111111u iiii1111 u �4um wrr RRaiu r RraRr3' .�/xr nm«Rr��� $10,000 City Home Repair Grant for windows. $4,104 City Home Repair Grant for windows. Six past City of Hutchinson Owner Occupied Rehab Program projects were completely forgiven in 2022. 2. Minnesota Housing Rehab Loan Program (RLP)— One manufactured home, rehab project was complete in 2022. ,ur JN' J,�. , Fw, ww7l t ro ...................................... $15,412 MH RLP Grant for doors/windows,miscellaneous carpentry and HVAC items. Hutchinson HRA 2022 Annual Report Page 7 of 11 3. MHFA Fix Up Loan (secured&unsecured)—No MHFA Fix Up Loans (secured & unsecured) closed in 2022. City Houle Improvement Program (ITW Match Funds: Total Project Live&Work Grant Amount Address Improvement Personal Cost $4,350.00 835 Oak Street NE lumb/heat $4,350.00 $4,811.00 459 Prospect St NE Fum/a/c $4,811.00 $5,000.00 736Hassan Street SE Fum/waterht/a/c $5,000.00 $5,000.00 659 2nd Ave SW basement $5,000.00 $5,000.00 32 Century Ave SE basement $5,000.00 Total $24,161.00 $0 $24,161.00 Home Repair Grant Total Project Grant Amount Address Improvement Personal Cost $4,537.00 45 Jefferson Street SE Boiler&electric $4,537.00 $9,074.00 $4,104.00406 Adam Street SE Window $4,104.00 $8,208.00 $10,000.00 531 2nd Ave SW Windows $10,000.00 $20,000.00 $9,141.41 430 Washin gto Ave W Windows&door $9,141.41 $18,282.82 $10,000.00 625 Oak Street NE Roof/siding/windows $10,000.00 $20,000.00 $4,025.00 370 Shady Ridge Road Furnace&a/c $4,025.00 $8,050.00 $8,610.00 736Hassan Street SE* Fum/waterht/a/c $8,610.00 $17,220.00 $10,000.00 659 2nd Ave SW* basement $10,000.00 $20,000.00 $2,962.50 32 Century Ave SE* heating,electric $2,962.50 $5,925.00 Total $63,379.91 $63,379.91 $126,759.82 *Projects combined with L&W progrm Total Project Assessiblity Personal Cost $5,000.00 555 Franklin St SW accessible shower $5,000.00 Total $5,000.00 $0.00 $5,000.00 2022 Total City Home improve ent Program Projects 12 MH RLP Match Funds: Total Project Grant Amount Address Improvement Cost $15,412.00 1525 McDonald Dr SW windows/doors/nvsc carpentary&HVA $15,412.00 Rental Rehabilitation • DEED officially closed out the SCDP project at 907 Dale Street Apartments (aka South Dale Apartments). Completed construction August 2021. Final Budgets Former Change Final Federal Reverted $469,751.00 - $469,751.00 Met small cities goals Program Income $105,249.00 - $105,249.00 Leveraged funds $214,286.00 $31,715.00 $246,001.00 Exceeded leverage goals Totals 1 $789,286.00 1 $31,715.00 1 $821,001.00 • Ongoing Annual Recertifications of other City of Hutchinson Rental Rehab Program proj ects. o Four past City of Hutchinson Rental Rehab Program projects were completely forgiven in 2022. Hutchinson HRA 2022 Annual Report Page 8 of 11 What do you see for the housing market for Hutchinson in 2023? I believe the overall market movement(unit sales) will be down 10-20%. I also believe price will remain stable with 1-5%appreciation. Low inventory will continue to be an issue. What are the most influential factors affecting housing in Hutchinson? INTEREST RATE! Over 65% of existing homeowners have a fixed mortgage rate below 4%. The current rate is 6.25%. This is discouraging people from moving out of their existing situation. What do you think will happen to new housing construction in 2023? I think single family new construction will continue to be a challenge in our market due to cost. The average cost of new construction in Hutchinson is $215/sgft, which makes a 2000sgft home $430k. Our average home sale price is $285k. I think we will continue to see new construction thrive in the retirement segment(patio homes and twin homes) because there is a lack ofstipply and this demographic tends to have the financial ability to purchase at new construction costs. in.n °�� t�!m Area Associ��tit;n o Realtors is predicting that there will be an increase in foreclosure/short sales in 2023, but hopefully with the strong gains in equity in the last few years it will limit the number though. Local Mort(ya(ye Lender 2023 11ousin(y Market Predictions: What do you see for the Hutchinson housing market in 2023? Nationwide,purchase activity is expected to be higher than in 2022. Although several headwinds are affecting housing at the moment...higher interest rates, low inventory, seller resistance to sell due to mortgage rate changes, etc. Selling prices are anticipated to rise, although at a much more typical rate of 2- 3%. What are the most influential factors affecting housing in Hutchinson?Lack of available inventory, significant cost increases for new construction, selling reluctance for sellers due to mortgage rate change, rental unit availability and costs continue to drive first time homebuyers into the market to purchase. What do you think will happen to new housing construction in 2023? Builders are affected by material cost increases as well as labor shortages/costs. Custom homes will continue to be built at higher price points...and builders with existing lot inventory will continue to build/sell, but I don't see significant changes/increases from the last year or two. Rental unit costs are driving more people to consider other housing options. Local E Illy iii�,,,,,iihii.i. t1h. �uiiillldiikii. ,,,,,�iii�d�u, �iii ' 0 �����msingjh,,,,, ���°@�.e Predictions: What do you think will happen to Hutchinson's new construction housing in 2023? I think new residential construction will slow in 2023, in comparison to the past several years. With the cost of borrowing money being more than twice what it was 18 months ago, continued high material and labor costs, and a shortage of construction labor I think cost and availability will continue to slow construction projects. Hutchinson HRA 2022 Annual Report Page 9 of 11 Do you think modular construction might be the way of the future in affordable housing construction?Anecdotally, the cost difference between site built and manufactured housing seems to have gotten to be less in recent years, often making the choice for a manufactured home one based on timeframe considerations. I I u I c h i n s o n LIRA I.)r iorit e s for 2 023 Park Towers Apartments Mana,-ement: • Administer the RAD Multifamily, Section 8 PBRA program at Park Towers. • Staff training for RAD Multifamily, Section 8 PBRA program and new HUD program changes such as AFFH rule, HOTMA, VAWA and NSPIRE inspections. • Housing Specialist getting a Minnesota Department of Labor and Industry issued Special Engineer boiler license. • Cross training of staff. • Continue to install vinyl planking and power flush water saver toilets at unit turns. • Continue to replace the remaining Federal Pacific Electric Panels in the units. • Update the security camera system. • Institute a tenant text messaging system for snow removal and other important messages for the tenants. • Follow legislation that may require sprinklers in high rise residential buildings. • Support the Tenant Council activities. City Center Operations, Owner Occupied Rehab: • Administer the City Home Improvement Grant Program (TIF available funds), Minnesota Housing Rehab Loan Program and the Fix Up Fund Home Improvement Loan Program. • Market available programs throughout the community. • Identify and determine interest of potential SCDP owner occupied rehab project. City Center Operations,SCDP Rental Rehab Prozram: • Identify and determine interest of potential SCDP rental rehab projects. City Center Operations, Housinz Development • Explore other housing resources available to address the housing needs identified in the Maxfield Comprehensive Housing Study/Market Analysis for the City of Hutchinson o Determine best use of the HHRA Island View Heights lots. Hutchinson HRA 2022 Annual Report Page 10 of 11 SCDP City Revolving Local Income Balance $196,025.46 SCDP City Revolving Program Income Balance $51,873.89 TIF Available Balance $220,000.00 Total Funds Available: $467,899.35 City SCDP New Construction $78,450.00 City SCDP Rehab (Owner & Rental) $337,089.37 City TIF Owner Rehab $64,903.60 Total Balance of City SCDP Loans Receivable $480,442.97 HRA Notes Receivable HHPOP $9,245.56 HRA Notes Receivable Rehab $0.00 Total Balance of HRA Loans Receivable $9,245.56 "Why Fir Housing?— We All Do Better When We All Do Better"March/April 2023 Multi Housing Advocate article by Cecil Smith,President and CEO of Minnesota Multi Housing Association TkWW61q Executive Director (320)234-4451 �f1F�zro�r iz�ro(l.ln�a;t 11iz�.or roi,riovv(City Center) (320)587-2168 �f1F�zro�riz�rro(1.1nirllnlF 1 r�,r,� (Park Towers) Hutchinson HRA 2022 Annual Report Page 11 of 11