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HRA2018 YEAR END REPORT
HUTCHINSON HOUSING AND
REDEVELOPMENT AUTHORITY
The Hutchinson HRA is a public body politic formed by the Hutchinson City Council in 1969
according to MN State Statue. The HRA was created to address a shortage of housing needs for
low to moderate income families and to address substandard areas in Hutchinson. In November
2017, the first phase of Highfield Apartments consisting of 29 units opened. The HRA
completed the SCDP downtown rental rehab program for a total reinvestment in downtown
rental housing of$668,271.00. The HRA also administered owner occupied rehab programs
throughout the city and owned and managed Park Towers Apartments.
Why does Housing matter?
Housing matters because:
• Decent, affordable housing is shown to stabilize families. Studies have shown that children
who have stable housing do better in school.
• Housing Programs help improve neighborhoods and maintain property values.
• Housing Programs provide economic stimulus for the local economy by providing work for
local contractors and businesses.
In 2018, the HRA worked on the following housing objectives:
• Continue to maintain strong emphasis on property management, property improvements, and
energy conservation at Park Towers.
• Support rehabilitation of housing to preserve housing stock and improve neighborhoods.
• Monitor housing data to identify housing needs.
• Offer relevant housing programs that provide a positive impact on the community.
Summary of 2018 Activities:
Park Towers Apartments:
The Park Towers 2018 HUD score was a designated HUD high performer.
Asset preservation,property improvements and energy conservation remains a priority at
Park Towers
• Over$200,000 in building improvements included: caulked the
building exterior, completed one third of the tuck pointing project,
replaced eighty four unit air conditioners, twenty seven refrigerators -
and 50 ranges.
Park Towers Property Management
1. Fifteen apartments were re-occupied in 2018.
2. Achieved a 99.5% average occupancy for 2018.
3. Park Towers continues to be a needed source of subsidized rent
based on 30% of income for one-bedroom apartments with a
preference for the elderly and disabled, or low income workforce.
The current demographic report shows the average household
income is $15,870 and the average tenant rent is $298 including
utilities.
2018 Hutchinson HRA Year End Report 2/20/2019 Page 1 of 7 Pages
Tenant Services
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 and served
at Park Towers Monday through Friday. The suggested donation for a meal is $4.50.
City Center Operations:
Owner Occupied Rehabilitation
In 2015, City of Hutchinson TIF owner occupied housing rehab funds (HILP)was added as a
flexible tool for single family owner occupied housing rehab to continue owner occupied rehab
efforts throughout the city. The City HILP Deferred Grant program and Minnesota Housing
Rehab Loan Program are "full service" programs that are HRA labor intensive, requiring home
inspections, work write ups, procurement and bidding, loan closing with the owner(s),
construction oversight, and disbursement of loan proceeds to the contractor.
The Minnesota Housing Fix Up Loan Program, Community Fix Up Loan Program, City
Accessibility Deferred Grant and City HILP Streamlined Deferred Grant requires that the owner
submit contractor quotes and that the owner meets loan underwriting criteria to obtain home
improvement loan proceeds. However,HRA inspection and construction management is not
required.
After the MHFA Impact Program was revised to allow rehab of manufactured homes to match
City HILP (TIF), four loans were closed.
City HILP Deferred Grant Program(TIF): Match Funds:
MHFA Impact Total
Live and Work Funds Personal Weatherization Project Cost
$5,000.00 Golf Course Rd.NW $5,000.00
HILP-Deferred Grant
$10,000.00 5th Avenue NW $11,475.00 $550.00 $22,025.00
Mobile Home Initiative
$10,000.00 1525 McDonald Dr. SW $11,200.00 $21,200.00
$10,000.00 1525 McDonald Dr. SW $12,910.00 $5,750.00 $28,660.00
$9,903.60 1525 McDonald Dr. SW $9,909.50 $19,813.10
$10,000.00 1525 McDonald Dr. SW $10,000.00 $2,665.00 $22,665.00
Total $39,903.60 $44,019.50 $2,665.00 $5,750.00 $89,673.10
MHFA Fix Up Loan-
Secured Loan $21,037.30 Monroe Street SE
MHFA Fix Up Loan-
Unsecured Loan $5,402.691 Maryland Street NW
Owner Occupied Loans Available:
1. City HILP Deferred Grant Program — Six loans closed in 2018.
2. Minnesota Housing (MHFA) Impact Deferred Loan Program — owner match funds at 0%
for City HILP Deferred Grant Program. Five loans closed 2018.
3. MHFA Fix Up Loan (secured&unsecured)—Two loans closed in 2018.
2018 Hutchinson HRA Year End Report 2/20/2019 Page 2 of 7 Pages
Rental Rehabilitation
A preliminary proposal was submitted to DEED for the rental im
rehab of South Dale Apartments; that proposal was selected tosubmit a full application by February 28, 2019.
Trends:
1. Rental Housing
Market Rate General Occupancy Rental
The market rate general occupancy rate in August of 2018 was 2.76%. A 5.0%vacancy rate
is considered a healthy vacancy rate to allow for turnover and consumer choice. A vacancy
rate of greater than 5.0% indicates a soft demand or mismatch between supply and demand.
Since 1999, the rental vacancy rate has fluctuated from 1.00%to a high of 14.9% in 2009 due
to area layoffs. Highfield Apartments (Kuepers developers)has completed two buildings (54
units) and is scheduled to complete the third (27 units) at the end of spring 2019. Kuepers
has plans for an additional 70 units that are not-TIF financed and is currently permitted for 35
units. Century Court Apartments has an approved site plan of 84 total units that are not TIF
financed and is currently permitted for 3 buildings of 12 units each.
Market Rate General Occupancy Vacancy Rate
14.90%
15.00%
10.31
10.00% 9.00%9.00% 7 54% 8.38% '
°
.7.54Y.
5.30% _
5.00% 4. °° 4 % 2.76%
2.12% 1.89% 5% ° 1.76°— E i_
0.00%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Non-Market Rate General Occupancy Rental
The vacancy rate of non-market rate general occupancy projects in the fall of 2018 was
2.38% Vacancies in subsidized developments should typically fall around 2.0% - 3.0%.
Senior Housing
The 2018 vacancy rate for market rate, apartment style senior housing for the Oaks & Pines
and Prince of Peace Retirement Living, (not including memory care)was 0.82%.
Woodstone is planning an expansion of 38 units of senior independent living.
Prince of Peace is considering an expansion of 10 — 12 units of senior housing.
The 2018 vacancy rate for affordable/subsidized senior housing was 0.00%. Vacancies in
subsidized developments should typically be around 2.0 - 3.0%.
2018 Hutchinson HRA Year End Report 2/20/2019 Page 3 of 7 Pages
2.76%
3.00% 2. °° ■Market Rate General
Occupancy
2.00% ■Subsidized General Occupancy
0. °°
° 0.00% Senior Market Rate Rental
Housing
0.00% ■Senior Subsidized Rental
2018 Vacancy Rates Housing
2. Homeownership
Foreclosures declined in 2018. Interest rates are currently low; low interest rates and an
affordable median sales price provide opportunities for buyers who have good credit and are
mortgage ready. The interest rate in January 2018 for a first time homebuyer MHFA Start
Up loan for an RD or FHANA loan was 4.625%.
According to information from the Minneapolis Area Association of Realtors, the median
sales price rose 5.6%in 2018, a steady increase in the for sale housing market. Looking at
data for Hutchinson, the 2018 median sales price was $170,000 compared to $161,000 in
2017. There were 330 sales in 2018 compared to 308 sales in 2017. As of December 2018,
there were 45 homes for sale.
According to information from McLeod County, in 2018 there were 359 sales in Hutchinson
with a median sales price of$161,900.
HOMERESAIES
CITY OF HUTCHINSON
2008 through 2018
Year 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
Price Range No. Pct. No. Pct. No. Pct. No. Pct. No. Per No. Pct No. Pct. No. Pct. No. Pct. No. Pct. No. Pct.
Under$50,000 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 9 4.2 6 2.7
$50,000 to$74,999 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 27 12.5 11 4.9
$75,000 to$99,999 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 36 16.7 23 10.2
$100,000 to$124,999 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 47 21.8 43 19.0
$125,000 to$149999 67 18.7% 70 21.0% 76 23.1% 68 19.1% 68 21.5 59 20.8 41 143 33 13.6 38 17.6 46 21.3 34 15.0
$150,000 to$174,999 70 19.5% 73 21.9% 55 16.7% 60 16.9% 51 16.1 29 10.2 16 5.6 22 9.1 23 10.6 20 9.3 51 22.6
$175,000 to$199,999 55 15.3% 39 11.7% 23 7.0% 27 7.6% 21 6.6 16 5.6 13 4.5 9 3.7 12 5.6 12 5.6 22 9.7
$200,000+ 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 19 8.8 36 15.9
Total 359 100.0% #3333100.0% 329 100.0% 356 100.0% 316 100.0 284 100.0 287 100.0 242 100.0 216 100.0 216 100.0 226 100.0
Meclan $161,900 , 00 1 $140,000 1 $138,750 1 $133,500 1 $121,000 1 $101,400 $109,950 $121,600 $117,750 $146,750
Sources: Peterson-Paulsen Associates Inc.Realty
Maxfield Research Inc.
McLeod County Assessor's Office
Based on a household being able to afford a home priced at 3.0 times their income, not
factoring in savings or debt that they may have, a household would need an income of
$56,666 or $27.24/hour based on 40 hours per week to afford a home priced at$170,000 the
MLS 2018 median sales price of a house.
2018 Hutchinson HRA Year End Report 2/20/2019 Page 4 of 7 Pages
2018 Hutchinson Home Sale Price Ranges Hutchinson Median Sales Price
$170,000 161,900
■Under$50,000 $157,900
$160,000
153,500 $146,750
1,9% 3.1% 4.2% 0$50,000 to$74,999 $150,000 $140,000
0$75,000 to$99,999 $140,000
$130,000 5138,75d
0$100,000 to$124,999 $133,500121,60
$120,000 $117,750
115.39A 1$• $125,000 to$149,999 $110,000 $121,000
109,950
0$150,000 to$174,999 $100,000 101,400
0$175,000 to$199,999 $90,000
$80,000 #Seriesl
0$200,000+ 00 1 (0 h 3 L ti O C� Ib 1
Total 2018 Hutchinson Year End Home Resales=359 tioti roti tioti tioti tioti tioti tioti tioti tioti tio° tio° tio°
3. Housing Construction in Hutchinson
According to the City of Hutchinson, Planning/Zoning/Building Department, there were 34
new construction dwelling units built in 2018 and as of 12/31/2018 there were 156 lots
available. The lot supply benchmark for growing communities is a three to five year lot
supply. A three to five year lot supply allows adequate consumer choice but minimizes
developer's carrying costs.
Residential Lots Available
500
400 397
318 292 292 254 331 323 317
300 262
314 314 309 299 284 279
200 ISCO� 239
�216156
100
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Number of New Dwelling Units Construction
80 73
60
40
19 23 30
20 20
0 58
4 4 5
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
The above charts are based on information from the Department of Planning,Zoning and Building
2018 Hutchinson HRA Year End Report 2/20/2019 Page 5 of 7 Pages
4. Foreclosure Update: Foreclosures in 2018 were lower than in 2004 when foreclosure data
was initially tracked.
McLeod County and Hutchinson
Foreclosure Counts
20
200 142 159 76
3 135
100 40 50 62 77 3 5 3 44 34 24 ■McLeod County
0 25 18 —ii—V ■Hutchinson
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Number of Foreclosures in McLeod County and Hutchinson
Year McLeod Hutchinson
2004 48 14
2005 56
2006 72
2007 142 40
2008 159 42
2009 135 50
2010 200 62
2011 176 77
2012 135 45
2013 93 39
2014 75 28
2015 53 25
2016 44 18
2017 34 11
2018 24 7
2018 Sheriff Sales Cancelled In Hutchinson 7
2018 Predictions from Local Realtors:
Q. What do you see for the housing market for Hutchinson in 2019? Are there any factors that
will be most influential in 2019?
A. We are expecting a good year in 2019, but maybe not as robust as 2018. Some of the factors
that will influence the market will be interest rates and availability of homes for sale.
Q. What do you think will happen to new housing construction in 2019?
A I think that it will continue to grow mainly because of the lack of existing home inventory.
Q. It appears that the median resale price increased in 2018. Do you expect this trend to
continue and will this help to spur listings in 2019?
A. I think the prices will continue to rise, but maybe not as much as 2018. I don't think the
price increase affects inventory as much as what is available for people to move into once
they sell their homes.
2018 Hutchinson HRA Year End Report 2/20/2019 Page 6 of 7 Pages
Hutchinson HRA Priorities for 2019:
HRA Park Towers:
• Complete tuckpointing
• Seal-cote exterior stucco
• Consider repositioning Public Housing to RAD
City Center Operations,Rental Rehab Promram:
• If the application is approved by DEED, implement the South Dale Apartment rental rehab.
City Center Operations, First Time Homebuyers New Construction
• Administer affordability gap for five first time homebuyers to purchase new construction
starter homes.
City Center Operations, Owner Occupied Rehab:
• Administer the City Deferred Home Improvement Grant Program (TIF available funds) for
owner occupied rehab.
• Administer Minnesota Housing Impact Funds, and Fix-Up Loans, as leverage funds to the
City Deferred Home Improvement Grant Program.
• Administer the Minnesota Housing Rehab Loan Program for owner occupied rehab for very
low income homeowners.
• Administer the Fix Up Fund Home Improvement Loan Program.
City Center Operations,Rental Development
• Monitor the General Occupancy Vacancy Rate
Workforce Housing
• Housing affordability is typically calculated at 30% of monthly gross household income. For
example, a rent of$750 per month will be affordable for a household gross wage rate of
$14.42 per hour or$30,000 per year. A $30,000 income could afford generally 3.0 times
their income to purchase a house at$90,000.00.
IIRA/Year End Report/2018 HRA Year End Report
2018 Hutchinson HRA Year End Report 2/20/2019 Page 7 of 7 Pages
2/20/2019
HRA
HUTCHINSON HOUSING AND
REDEVELOPMENT AUTHORITY
2018 Year End by the Numbers
General Occupancy Vacancy Rates
August 2018
A healthy vacancy rate is 5.0%to allow for unit turnover and consumer choice
Market Rate General Occupancy Vacancy Rate
16.00% - 14.90%
14.00% _
12.00% 10.31%
10.00% 9.00% 0 8.38%
8.00%
6.00% 4.60% 407°4.68 o o °
4.00% 2.12% 1.890/ ° 1_76%1.76o/,,2.76%
2.00%
0.00%
'ti
r�0
1
2/20/2019
2018 Vacancy Rates
2.76% ■Market Rate General Occupancy
3.00% 2.38%
■Subsidized General Occupancy
2.00%
0. '0 ■Senior Market Rate Rental Housing
1.00%
0.00%
0.00% ■Senior Subsidized Rental Housing
2018 Home Resales Source McLeod County
The 2018 McLeod County median resale was$161,900 compared to the MLS median of$170,000
The MLS median showed a steady 5.6%increase from the previous year
HOME RESALES
CITY OFHUTCHINSON
2008 thio 2018
Year 2018 2017 2016 1 2015 2014 2013 1 2012 2011 2010 2009 2008
Price Ranee No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. NoPct. No. Pct. No. Pct. No. Pct. No. Pct.
Under$50,000 7 1.9% 9 2.7% 10 3.0% 15 42% 18 5.7 29 10.2 44 15.3 30 12.4 24 11.1 9 4.2 6 2.7
$50,000 to$74,999 it 3.1% 10 3.0% 15 4.6% 26 7.3% 17 5.4 35 12.3 33 11.5 31 12.8 16 7A 27 12.5 11 4.9
$75,000 to$99,999 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 36 16.7 23 10.2
$100,000 to$124,999 46 12.8% 46 13.8% 54 16.4% 58 163% 59 18.7 49 17.3 52 18.1 48 19.8 38 17.6 47 21.8 43 19.0
$125,000 to$149,999 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 46 21.3 34 15.0
$150,000 to$174,999 70 19.5% 73 21.9% 55 16.7% 60 16.9% 51 16.1 29 10.2 16 5.6 22 9.1 23 10.6 20 9.3 51 22.6
$175,0 0to$199,999 55 15.3% 39 11.7% 23 7.0% 27 7.6% 21 6.6 16 5.6 13 4.5 9 3.7 12 5.6 12 5.6 22 9.7
$200,000+ 88 24.5% 64 19.2% 58 17.6% 63 17.7% 48 152 31 10.9 26 9.1 23 9.5 33 15.3 19 8.8 36 15.9
Total 359 100.0% 3331 100.0% 329 100.0% 3561 100.0%1 3161 100.01 2841 100.0 287 100.0 242 100.0 216 100.0 216 100.0 226 100.0
Median $161,900 $153,500 $140,000 $138,750 $133,500 $121,000 $101,400 $109y50 $121,600 SI17.750 5146,750
Sources: Peterson-Paulsen Associates Inc.Realty
M axfield Research Inc.
McLeod County Assessor's Office
2
2/20/2019
2018 Home Resales
Source: McLeod County
2018 Hutchinson Home Sale Price Ranges $170,000 $161,900 Hutchinson Median Sales Price
$157,900
■Under$50,000 $160,000
1.9%3.1% 4.2% $146750
■$50,000 to $150,000
'.5% $140,000
$74,999 $140,000
0$75,000 to $138,750 $133,500
18.7% $99,999 $130,000
$121,000 $121,
0$100,000 to $120,000 $117,750
19.5% $124,999 $110,000 1091950
■$125,000 to
$149,999 $100,000 101,400
■$150,000 to $90,000
$174,999 $80,000 momseriesl
Total 2018 Hutchinson Year End Home Resales=359 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Residential Lots Available
• According to the City of Hutchinson Building Department, as of
12/31/2018 there were 156 lots available. Construction of 34 homes per
year equates to a 4.5 year lot supply. The lot supply benchmark for growing
communities is a three to five year lot supply. A three to five year lot supply
allows adequate consumer choice but minimizes developer's carrying costs.
3
2/20/2019
Number of New Dwelling Units Construction
Rolling Meadows East starter home construction contributed to increased numbers during 2004,2005,2006. This
starter home initiative was completed prior to the Great Recession. The HRA had$20,000 in affordability gap to help
purchase a starter home in 2006 priced at$150,000-$160,000. In 2019,a starter home costs upwards of$200,000 to
construct,a 25%increase.
100
80
6058
34
40 32 30
27
20 19 23 20
:1 4 7 4 5 12
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Foreclosures
Foreclosures in 2018 continued to fall and were at the lowest point since 2004
McLeod County and Hutchinson
■McLeod County
Foreclosure Counts
■Hutchinson
200
200 142 159 11111 176
3 135
100 0 62 77 3 5 53 44 34 7
2 45 39 28 25 18 11 24
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
4
2/20/2019
2018 Hutchinson Housing Highlights
• Kuepers Architects and Builders,Highfield Apartments,including TIF financing, opened
its second building of 29 units in 2018.
2018 Hutchinson Housing Highlights
• Submitted SCDP preliminary proposal to DEED for the rehab of 40
apartments at South Dale Apartments.
• Assisted 8 owner occupied properties with rehab funding.
• Park Towers Apartments again achieved HUD high performer status in 2018.
Invested over $200,000 in exterior caulking, and new appliances.
5
2/20/2019
2019 Rental Development Plans
General Occupancy
• The third and final 29 unit building of Highfield Apartments,TIF project,is
scheduled to open early summer 2019.
• Kuepers,Architects and Builders has an approved site plan of an additional
70 units and is currently permitted to build an additional 35 units, financed
without TIF.
• Century Court Apartments has an approved site plan of 84 units and is
currently permitted to build three buildings of 12 units each, financed
without TIF.
2019 Rental Development Plans
Senior Housing
• Woodstone is planning an expansion of 38 units of senior independent
living.
• Prince of Peace is considering an expansion of 10 — 12 units of senior
housing.
6
2/20/2019
2019 Priorities
• Submit full SCDP rehab application for South Dale Apartments for a total
project cost of $789,286.
• Assist five first time homebuyers with affordability gap to purchase newly
constructed starter homes. Current cost estimate of a starter home
$225,000.
• Obtain a Capital Needs Assessment (CNA) for Park Towers Apartments and
evaluate feasibility of repositioning from Public Housing to Project Based
Rental Assistance.
• Continue owner occupied rehab programs throughout the City.
Realtors predict. . . .
2019 Realtor Trends
Q. What do you see for the housing market for Hutchinson in 2019? Are there any factors that will be
most influential in 2019?
A. We are expecting a good year in 2019,but maybe not as robust as 2018. Some of the factors that will
influence the market will be interest rates and availability of homes for sale.
Q. What do you think will happen to new housing construction in 2019?
A. I think that it will continue to grow mainly because of the lack of existing home inventory.
Q. It appears that the median resale price increased in 2018. Do you expect this trend to continue and
will this help to spur listings in 2019?
A. I think the prices will continue to rise,but maybe not as much as 2018. 1 don't think the price increase
affects inventory as much as what is available for people to move into once they sell their homes.
7
2/20/2019
Questions???
Information will be at www.tiutcfil-nsoniira.com
_ Owner Occupied Rehab
8