HomeMy WebLinkAbout2.b. Maxfield Senior Housing StudyAGENDA ITEM: Maxfield Senior Housing Study
AGENDA SECTION:
Discussion
PREPARED BY: Kim Lindquist, Community Development
Director
AGENDA NO.
2 6,
ATTACHMENTS: Maxfield Senior Housing Study
APPROVED BY:
RECOMMENDED ACTION: Information Item
ROSEMOUNT
CITY COUNCIL
City Council Work Session Date: May 11, 2011
EXECUTIVE SUMMARY
ISSUE
In March, the City Council discussed commissioning a market study for senior housing in the
community. The scope of the study was to review all types of senior housing demand; from
independent living to full services and from rental to home ownership. The Study varied from the
previous information provided by the CDA which did not address independent living and did not
look exclusively at Rosemount. Attached is a preliminary demand estimate for senior housing in
Rosemount.
The Study uses as the primary market area (PMA) Rosemount and Empire, Vermillion, and
Nininger Townships. The Study conclusion is that there is a market for some senior housing within
Rosemount both in 2010 and projected in 2015. Much of the demand is for housing with some type
of services and in fact, the study indicates that the PMA is oversupplied in active adult ownership
senior housing.
If the Council is comfortable with the conclusions of the preliminary demand study, staff will
distribute the study to senior housing providers. If you have specific companies you are interested in
pursuing please forward that information to staff.
April 15, 2011
xfield
Research Inc.
MEMORANDUM
TO: Ms. Kim Lindquist
Community Development Director
FROM: Mr. Matt Mullins
Ms. Amanda Janzen
Maxfield Research Inc.
RE: Preliminary Demand Estimate for Senior Housing in Rosemount, Minnesota
Introduction/Purpose and Scope of Research
This memorandum provides a preliminary assessment of the potential market support for senior
housing in Rosemount, Minnesota. Specifically, adult ownership, adult rental (affordable and
market rate), congregate, assisted living and memory care product types are considered in this
analysis.
The methodology used to calculate demand in this memorandum is proprietary to Maxfield
Research but is consistent with methodologies used by analysts throughout the senior housing
industry. It is important to note that demand estimates and conclusions contained herein are
preliminary and are intended only to broadly assess the depth of demand for senior housing in
Rosemount. A more thorough investigation of the characteristics of the primary draw area,
outlined in a Full Feasibility Study, would reveal more specific factors that would impact
demand and appropriate market positioning.
This memorandum delineates a primary draw area, or Primary Market Area "PMA for senior
housing in Rosemount and presents an overview of the demographic and economic
characteristics of this area. It then defines the various types of senior housing available in
today's market and inventories existing and pending senior housing projects in the PMA.
Finally, it presents demand calculations for adult ownership, adult rental (affordable and market
rate), congregate, assisted living and memory care senior housing based on demographic,
economic, and competitive market factors that would impact demand. The preliminary
assessment concludes with a calculation of the number of senior housing units that could be
supported on a site in Rosemount.
612 338 -0012 (fax) 612-904-7979
615 First Avenue NE, Suite 500, Minneapolis, MN 55413
www.maxfieldresearch.com
Ms. Kim Lindquist
City of Rosemount
Market Area Definition
Maxfield Research Inc. determined the primary draw area for senior housing in Rosemount
based on geographic and man -made barriers, commuting patterns, the location of other
competitive senior housing, and our experience in senior housing feasibility. The PMA includes
the City of Rosemount, Nininger Township, City of Coates, Empire Township, City of
Vermillion and Vermillion Township. We estimate that this PMA will constitute 80% of the
market support for senior housing.
The remaining portion of demand approximately 20% —will be generated from seniors
currently residing outside the defined PMA. Potential residents comprising this second segment
of demand would include people currently residing just outside the PMA 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, and parents of adult children living in the PMA. A
map of the PMA is displayed below.
Prima Market Area
Vermdhon %Township
MAXFIELD RESEARCH INC.
April 15, 2011
Page 2
Ms. Kim Lindquist
City of Rosemount
Older Adult (Age 55 Population and Household Trends
April 15, 2011
Page 3
Table 1 shows the age distribution of people and households age 55 and older in the PMA.
Historical information for 2000 is supplied by the U.S. Census Bureau. The 2010 total
population and household figures are from the 2010 Census. However, data on the 2010 age
distribution has not been released yet. Estimates for the age distribution for 2010 and projections
for 2015 were calculated by Maxfield Research Inc. based on demographic information supplied
by ESRI, a nationally recognized demographics firm.
The following are key points from Table 1:
In 2010, the PMA totaled 27,040 people and 9,397 households. The older adult and senior
population (age 55 comprised 12.9% of the total population and 26.3% of the total
households in the PMA.
The PMA's older adult and senior population and household bases experienced strong growth
in all older age segments between 2000 and 2010. Between 2000 and 2010, the PMA
population age 55+ increased by +1,266 +57 and +1,126 households +83.8
Projected forward, the older adult and senior population is anticipated to grow through 2015.
Between 2010 and 2015, the PMA's older adult and senior population is projected to add
+1,699 people +48.7 and 782 households +31.7
Typically, seniors ages 70 and older have the highest propensity to move into independent
senior housing. However, we currently see a trend in which projects are attracting people in
their mid to late 60s, especially in projects with an ownership structure such as townhomes,
condominiums and cooperatives.
The primary market for service- enhanced (congregate, assisted living and memory care)
housing is seniors age 75 and older. While individuals in their 50s and 60s 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 results in additional demand for senior housing products.
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
Preliminary Conclusions
MAXFIELD RESEARCH INC.
TABLE 11
DEMAND SUMMARY
SITE IN ROSEMOUNT
2010 2015
Total Units
2010
2015
Market Bate
Active Adult Ownership 0
Active Adult Rental 21
Congregate 33
Assisted Living 34
Elderly Waiver 8 8
Memory Care 19 22
Total Units 86 104
0
28
43
39
Affordable
Active Adult Affordable 33 30
33 30
Source: Maxfield Research Inc.
April 15, 2011
Page 29
Our preliminary assessment of the factors impacting demand for senior housing, including
demographic, economic, and competitive variables, shows market support for additional units in
the PMA. Table 11 provides a summary of demand that could be captured by a development on
a high quality site in Rosemount.
It should be noted that our conclusions are preliminary and do not consider the quality of a
particular site for a senior housing development, price and positioning of the subject project, or
other important factors (i.e. architectural, marketing and management issues) that would likely
impact the market feasibility of the subject development.
Ms. Kim Lindquist
City of Rosemount
TABLE 1
55+ POPULATION HOUSEHOLD AGE DISTRIBUTION
PRIMARY MARKET AREA
2000 -2015
POPULATION
Tot. Po i.
18,965
27,040
2015
31,700
8,075
42.6%
1
4,660
17.2%
HOUSEHOLDS
Tot. HH
2000
6,156
2010
9,397
2015
11,276
2000 2010
3,241
52.6%
1,879
20.0%
Sources: U.S. Census Bureau; ESRI.; Maxfield Research Inc.
Older Adult and Senior Household Incomes
MAXFIELD RESEARCH INC.
April 15, 2011
Page 4
Table 2 provides data on incomes for older adult and senior households in the PMA in 2010 and
2015 based on information provided by ESRI. It is important to note that the data does not
account for the asset base of senior households or supplemental income that a senior household
could gain from the proceeds of the sale of a home or from contributions from family members.
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 our demand calculations, which are
presented in a following section.
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
(independent with some services) and to 80% to 90% or more for assisted living and memory
care housing. Seniors also often use the proceeds from the sales of their homes, as well as
Ms. Kim Lindquist
City of Rosemount
April 15, 2011
Page 5
financial assistance from their adult children, as supplemental income in order to afford senior
housing alternatives.
The following are key points from Table 2:
In 2010, the median income for all age 65+ households in the PMA was $44,601. Within this
age group, the median income for households between the ages of 65 and 74 was $53,409
and for households age 75+ was $35,806. The higher median income for younger senior
households (age 65 to 74) compared to older seniors (age 75 is primarily due to the fact
that a higher proportion of younger seniors are married and are more likely to have two
pensions, along with the fact that many younger seniors continue to have income producing
employment.
The target market for market rate senior housing is typically senior households age 65+ with
incomes of at least $30,000 (plus some senior homeowners with incomes of at least $20,000).
As of 2010, there were approximately 800 senior households age 65+ in the PMA with
incomes of at least $30,000, or about 65% of all 65+ households.
This study also considers the portion of senior households that cannot afford market rate sen-
ior housing alternatives. According to information from the Dakota County Community De-
velopment Agency (CDA), the following are current income restrictions for their Senior
Housing Program:
MAXFIELD RESEARCH INC.
1 person household $45,100
2 person household $51,500
Based on the income restrictions detailed above, a significant portion of seniors (65 would
be income qualified for Dakota County CDA affordable housing. After adjusting for typical
household sizes, approximately 625 households in 2010 would qualify for affordable hous-
ing.
The majority of affordable housing options cater to low- income or moderate income seniors
who are independent and do not need personal care or other services. For seniors who re-
quire additional assistance and would be better served in an assisted living environment,
Medicare funds, waivers and other forms of financial assistance are often accepted in order to
cover the cost of assisting living care.
Ms. Kim Lindquist
City of Rosemount
Senior Household Tenure
MAXFIELD RESEARCH INC.
April 15, 2011
Page 6
TABLE 2
OLDER ADULT INCOME DISTRIBUTION
PRIMARY MARKET AREA
2010 2015
Under $15,000
$25,000- $34,999
$50,000- $74,999
$100,000 or more
To
95 7.6
152 12.3
290 23.4
Under $15,000
$15,b0 $249
$25,000- $34,999
$35 000 $49,999
$50,000- $74,999
S,13;07#7$09.999
$100,000 or more
To
Median Income`
Under $15,000
$15000 $24 99
$25,000- $34,999
$35 000 $49;
$50,000474,999
$75,000-$99 99
$100,000 or more
o
V
Median Income..,
2010
553,409
2015
Pct.
153 22.9
8 s 87
61 9.1
O0 r 15`0
68 10.1
43 t. 6.5
184 27.6
666 X100.0
55 -64
122,944'
55 -64
r: 18.0
65 -74
$71,758 OW.
Changc 2010 -2015
65 -74
$18,349 `34.4
x $35,806
75+
4 1144,244
P ct.
-12 -25.3
7„ 38.4
I 1 -24.4
22 f 3 1.3
25 14.2
11,
379 58.0
377 `30.6
83 79.2
42pw 571
171 95.6
292'''!
21 44.4
19 76.2
72 64.8
13 20.5
104 68.5
',61 61.
243 83.7
404-1> ,32.6
75+
$8,437 :.23.6
844;601
Total 65+
$62,272
Total 65+
$17,671 39.6
Sources: ESRI; Maxfield Research Inc.
Ms. Kim Lindquist
City of Rosemount
Table 3 shows the number of older adult and senior households that owned and rented their
housing in the PMA in 2000 and 2009 according to the U.S. Census and American Community
Survey. This information aids in quantifying 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. Additionally, the information provides insight into
the propensity of seniors to rent instead of own their housing.
Typically, homeownership declines as households age. In 2009, homeownership rates
remained high in older adult and younger senior household groups, with 91% among
households age 54 to 64 and 95% among households age 65 to 74.
A significant decrease in homeownership is observed between younger seniors (95 and
older seniors (80 This pattern suggests that a high percentage of PMA seniors begin
moving into renter occupied housing alternatives after the age of 75.
The high homeownership rates of PMA older adult and senior households would allow
prospective residents to use proceeds from the sales of their homes toward senior housing
alternatives. The resale of a single- family home would allow a greater proportion of seniors
to qualify for market rate housing products, since equity from the home sale could be used as
supplemental income for alternative housing.
MAXFIELD RESEARCH INC.
April 15, 2011
Page 7
TABLE 3
OLDER ADULT HOUSEHOLD TENURE
PRIMARY MARKET AREA
2000 2009*
No. of Households
Homeownershi Rate
Ale of Householder
55 -64 65 -74
Own Rent Own Rent
Own
75+
Rent
Total 65+
Own Rent
2000
600 48 I 392 48
93% 89%
I 211
80%
54
603 102
86%
No. of Households
Homeownershi s Rate
2009
1,216 117 I 576 31
91% 95%
I 390
80%
95
1 966 126
88%
No. of Households
Homeownershi• Rate
Change 2009 2000
616 69 I 184 -17
51% 59% 32% -55%
I 179
46%
41
43%
363 24
38% 19%
Sources: U.S. Census Bureau, Maxfield Research Inc.
Ms. Kim Lindquist
City of Rosemount
Table 3 shows the number of older adult and senior households that owned and rented their
housing in the PMA in 2000 and 2009 according to the U.S. Census and American Community
Survey. This information aids in quantifying 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. Additionally, the information provides insight into
the propensity of seniors to rent instead of own their housing.
Typically, homeownership declines as households age. In 2009, homeownership rates
remained high in older adult and younger senior household groups, with 91% among
households age 54 to 64 and 95% among households age 65 to 74.
A significant decrease in homeownership is observed between younger seniors (95 and
older seniors (80 This pattern suggests that a high percentage of PMA seniors begin
moving into renter occupied housing alternatives after the age of 75.
The high homeownership rates of PMA older adult and senior households would allow
prospective residents to use proceeds from the sales of their homes toward senior housing
alternatives. The resale of a single- family home would allow a greater proportion of seniors
to qualify for market rate housing products, since equity from the home sale could be used as
supplemental income for alternative housing.
MAXFIELD RESEARCH INC.
April 15, 2011
Page 7
Ms. Kim Lindquist
City of Rosemount
Home Resale Values
April 15, 2011
Page 8
Table 4 presents residential sales data for older single- family homes (built before 1996) for the
City of Rosemount and the Remainder of the PMA from the Regional Multiple Listing Service
of Minnesota. The data is presented from 2005 through March 2011. This 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. We exclude newer homes,
since most seniors have lived in their homes for about 15 years or more.
The following points summarize key findings:
As of the end of March 2011, the average sales price of a single- family home built before
1996 in Rosemount was $166,554 and the median price was $163,000. It should be noted
that median sales prices are generally a more accurate portrayal of home equity since average
figures can be skewed by a few very high- or low- priced homes.
Sale prices in Rosemount are higher than the Remainder of the PMA. The median sale price
in Rosemount in 2010 was $167,500 compared to $101,200 in the Remainder of the PMA.
Consistent with the housing conditions across the Nation, home values have depreciated in
Rosemount and the Remainder of the PMA due to the slow down in the housing market and
economy. From 2005 to 2010, the median sales price in Rosemount decreased -29.3% and
the Remainder of the PMA decreased 31.9
Based on the 2010 median resale value in Rosemount ($167,500), a senior household could
generate approximately $3,894 of additional income annually (about $325 per month), if they
invested in an income producing account (2.5% interest rate) after accounting for marketing
costs and /or real estate commissions (7.0% of home sale price).
Because of the lengthy time to sell a home in Rosemount, it will be important to begin
marketing a development to area seniors at groundbreaking or before.
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
TABLE 4
SINGLE FAMILY HOME RESALE VALUES BUILT BEFORE 1996
PRIMARY MARKET AREA
2005 to 2011*
2011* 19 $166,554 $163,000 166
2010 111 $184,596 $167,500 130
2009 131 $194,685 $184,000 126
2008 132 $205,859 $200,000 139
2007 140 $248,913 $230,000 108
2006 159 $258,020 $238,000 87
2005 238 $250,013 $237,000 54
Chan l e 2005 -2010
-26.2%
-29.3%
111
'f eu
2011* 1 $101,200 $101,200
2010 9 $183,725 $153,000
2009 14 $186,189 $181,000
2008 4 $188,075 $164,950
2007 5 $202,859 $207,395
2006 6 $190,016 $192,500
2005 2 $224,800 $224,800
11
88
69
138
109
113
124
Chan a 2005 -2010
-18.3%
-31.9%
January 1, 2011 to March 31, 2011
Sources: Multiple Listing Service; Maxfield Research Inc.
MAXFIELD RESEARCH INC.
April 15, 2011
Page 9
Ms. Kim Lindquist
City of Rosemount
Types of Senior Housing in Today's Market
April 15, 2011
Page 10
For analytical proposes, Maxfield Research Inc. classifies market rate senior housing into four
categories based on the level and type of services offered:
Active Adult properties (or independent living without services available) are similar to a
general- occupancy apartment building, in that they offer virtually no services but have age
restrictions (typically 55 or 62 or older). Organized activities and occasionally a
transportation program are usually all that are available at these properties. Because of the
lack of services, active adult properties typically do not command the rent premiums of more
service- enriched senior housing.
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 included
in the rents. These properties typically dedicate a larger share of the overall building area to
common areas, in part, because the units are smaller than in adult housing and in part to
encourage socialization among residents. Congregate properties attract a slightly older target
market than adult housing, typically seniors age 75 or older. Rents are also above those of
the active adult buildings, even excluding the services. 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
generally the same: very frail seniors, typically age 80 or older (but can be much younger,
depending 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 otherwise
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.
Memory Care properties, designed specifically for persons suffering from Alzheimer's
disease 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 typically
undergoes specialized training in the care of thispopulation. Because of the greater amount
of individualized personal care required by residents, staffing ratios are much higher than
traditional assisted living and thus, the costs of care are also higher. Unlike conventional
assisted living, however, which deals almost exclusively with widows 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 facility involves the caregiver's
concern of incurring the costs of health care at a special facility while continuing to maintain
their home.
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
April 15, 2011
Page 11
Skilled Nursing Care, or long -term care facilities, provides a living arrangement that
integrates 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.
Fully
Independent
Source: Maxfield Research Inc.
FIGURE 1
CONTINUUM OF HOUSING AND SERVICES FOR SENIORS
Senior Housing Product Type
Fully or Highly
Dependent on Care
The senior housing products available today, when combined with long -term care facilities form
a full continuum of care, extending from virtually a purely residential model to a medically
intensive one. Often the services available at these properties overlap with another making these
definitions somewhat ambiguous. In general, active adult properties tend to attract younger
active seniors, who merely wish to rid themselves of home maintenance; congregate properties
serve independent seniors that desire support services (i.e., meals, housekeeping, transportation,
etc.) while assisted living properties tend to attract older, frail seniors who need assistance with
daily activities, but not the skilled medical care available only in a nursing facility.
Supply of Senior Housing in the PMA
Table 5 shows an inventory of existing senior housing located in and surrounding the PMA. The
following points summarize key findings:
The PMA contains the following senior housing options: four adult ownership developments
and one affordable adult rental development. All of the developments are located in the City
of Rosemount and provides a total of 435 units.
The City of Rosemount is surrounded by communities to the west and north that have several
senior housing developments. These units provide an additional 2,345 senior housing units.
The inventoried developments in neighboring cities are intended to serve as a guide in
assessing current trends in the local senior housing industry. We do not, however, consider
communities outside the PMA to be directly competitive. As such, only PMA developments
are included in our demand calculations.
MAXFIELD RESEARCH INC.
Single Family
Home
Townhome or Apartment
Congregate Apartments w/ Optional
Services
Assisted Living
Nursing Facilities
Age Restricted Independent Single- Family or
Townhomes or Apartments or Condominiums or
Cooperatives
Congregate Apartments w/
Intensive Services
Memory Care
(Alzheimer's Units)
Ms. Kim Lindquist
City of Rosemount
April 15, 2011
Page 11
Skilled Nursing Care, or long -term care facilities, provides a living arrangement that
integrates 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.
Fully
Independent
Source: Maxfield Research Inc.
FIGURE 1
CONTINUUM OF HOUSING AND SERVICES FOR SENIORS
Senior Housing Product Type
Fully or Highly
Dependent on Care
The senior housing products available today, when combined with long -term care facilities form
a full continuum of care, extending from virtually a purely residential model to a medically
intensive one. Often the services available at these properties overlap with another making these
definitions somewhat ambiguous. In general, active adult properties tend to attract younger
active seniors, who merely wish to rid themselves of home maintenance; congregate properties
serve independent seniors that desire support services (i.e., meals, housekeeping, transportation,
etc.) while assisted living properties tend to attract older, frail seniors who need assistance with
daily activities, but not the skilled medical care available only in a nursing facility.
Supply of Senior Housing in the PMA
Table 5 shows an inventory of existing senior housing located in and surrounding the PMA. The
following points summarize key findings:
The PMA contains the following senior housing options: four adult ownership developments
and one affordable adult rental development. All of the developments are located in the City
of Rosemount and provides a total of 435 units.
The City of Rosemount is surrounded by communities to the west and north that have several
senior housing developments. These units provide an additional 2,345 senior housing units.
The inventoried developments in neighboring cities are intended to serve as a guide in
assessing current trends in the local senior housing industry. We do not, however, consider
communities outside the PMA to be directly competitive. As such, only PMA developments
are included in our demand calculations.
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
Non Competitive Subsidized Senior Housing
MAXFIELD RESEARCH INC.
April 15, 2011
Page 12
The majority of the adult ownership developments in Rosemount are newer, with three of
them built since 2003. Rosemount Plaza Condos is the oldest adult ownership development
built in 1989.
All of the affordable adult rental developments in and outside the PMA are managed by the
Dakota County Community Development Agency. To qualify for residency in the Dakota
County CDA developments, applicants must be age 55+ and have incomes at or below 80%
of median area income. Residents of one bedroom units pay 30% of their income for rent
(between a minimum of $368 and a maximum of $677). Residents of two- bedroom units pay
32% of their income for rent (between a minimum of $541 and a maximum of $857).
Several of the senior housing products outside the PMA are located on campuses which
incorporate multiple levels of care services. As many seniors age in place, they prefer to live
closer to care services as their needs grow. Apple Valley Villa is the oldest property outside
the PMA having been built in 1986 and is located on a campus with Apple Valley Health
Care Center. Seasons of Apple Valley is the newest development outside the PMA, which
just opened up March 1, 2011. Seasons of Apple Valley has "housing with services" units, of
which about 40% of the residents are projected to purchase assisted living care packages.
In addition to the affordable rental properties identified in Table 5, there is also one senior
housing property with deep subsidies in Rosemount. Rosemount Plaza is subsidized through
Section 8, has 39 units and was built in 1985. The subsidized project primarily differs from the
affordable projects by their age limit (62 and income limits. Rosemount Plaza has income
limits of $29,400 for one person households and $33,600 for two- person households (compared
to $45,100 and $51,500 for one person and two person households for the affordable projects).
They also differ in that there is no minimum rent. Monthly rents are based solely on 30% of a
qualified household's Adjusted Gross Income (AGI). The seniors in these properties would not
be able to afford contract rents at affordable senior housing. Thus, there is almost no market
overlap between subsidized and affordable properties. Therefore, we do not subtract the 39 units
at Rosemount Plaza in our demand calculations presented later in the memo.
Ms. Kim Lindquist
City of Rosemount
MAXFIELD RESEARCH INC.
April 15, 2011
Page 13
TABLE 5
SENIOR HOUSING DEVELOPMENTS
IN AND NEAR THE PRIMARY MARKET AREA
April 2011
Pro ect
Location
Year
Built
Number of
Units
hilt`
Inside PMA
Bard's Crossing
Crosscroft at Evermoor
Wachter Lake
Rosemount Plaza Condos
Outside PMA
Summerhill of Apple Valley Coop
Gramercy Park Coop
Timberwood Village
Inverness Village
Black Hawk Trail
Gramercy Park Coop
Rosemount
Rosemount
Rosemount
Rosemount
Apple Valley
Eagan
Eagan
Inver Grove Heights
Inver Grove Heights
Inver Grove Heights
2004 2006 110
2003 212
2003 48
1989 21
2003 70
2001 69
1996 52
1996 1999 55
2002 32
1997 111
Inside PMA
None
Outside PMA
The Timbers at Apple Valley
Presbyterian Homes
Inside PMA
Cameo Place
Outside PMA
Courtland Square
Orchard Square
Cobblestone Square
Lakeside Pointe
Oak Woods East
Oak Woods of Eagan
Cahill Commons
Carmen Court
Crossroads Commons
Main Street Manor
Winsor Plaza
Apple Valley
Inver Grove Heights
Rosemount
Apple Valley
Apple Valley
Apple Valley
Eagan
Eagan
Eagan
Inver Grove Heights
Inver Grove Heights
Lakeville
Lakeville
Lakeville
2004
2002
1997
2001
1995
2010
2004
2008
1992
2002
1994
2009
2001
1990
106
67
44
60
50
60
60
55
65
60
51
87
51
64
Continued
Ms. Kim Lindquist
City of Rosemount
April 15, 2011
Page 14
TABLE 5 Cont.
SENIOR HOUSING DEVELOPMENTS
IN AND NEAR THE PRIMARY MARKET AREA
April 2011
Pro'ect
Location
Year
Built
Number of
Units
Inside PMA
None
Outside PMA
Apple Valley Villa
Seasons of Apple Valley'
Commons on Marice
Keystone of Eagan
Presbyterian Homes
Highview Hills
Apple Valley
Apple Valley
Eagan
Eagan
Inver Grove Heights
Lakeville
e
1986
2011
1999
2004
2002
2009
80
68
60
78
90
75
Inside PMA
None
Outside PMA
Apple Valley Villa
Seasons of Apple Valley'
White Pine
Centennial House of Apple Valley
Commons on Marice
Keystone of Eagan
Presbyterian Homes
Sterling House
Highview Hills
Inside PMA
None
Outside PMA
Apple Valley Villa
Seasons of Apple Valley
Clarebridge of Eagan
White Pine
Centennial House of Apple Valley
Commons on Marice
Keystone of Eagan
Presbyterian Homes
Highview Hills
Apple Valley
Apple Valley
Inver Grove Heights
Apple Valley
Eagan
Eagan
Inver Grove Heights
Inver Grove Heights
Lakeville
Apple Valley
Apple Valley
Eagan
Inver Grove Heights
Apple Valley
Eagan
Eagan
Inver Grove Heights
Lakeville
1986
2011
2008
1996
1999
2004
2003
1999
2009
2009
2011
1998
2010
2006 2009
1999
2004
2003
2009
53
46
63
45
57
34
66
20
44
5
20
52
44
34
28
16
18
24
Seasons of Apple Valley has "Housing with Services" units, of which about 40% of the residents are
projected to purchase assisted living care packages.
Source: Maxfield Research Inc.
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
Pending Senior Housing Developments
April 15, 2011
Page 15
Maxfield Research interviewed staff members in PMA communities in order to identify and
profile any pending senior housing projects that may be competitive with the proposed
development. The following points summarize key information from these interviews.
Lakeville
Southview Senior Living Management received City approval to develop a senior housing
facility to be named Kingsley Shores. The facility would be adjacent to the Chart House lo-
cated at 11287 Klamath Trail in Lakeville. Kingsley Shores would include 23 independent
units, 46 assisted living units, and 32 memory care units on a 35,000 square foot campus.
Twenty percent of the units would be income -based which are reserved for lower to moderate
income residents. Construction is expected to begin summer 2011 with a completion date of
summer or fall of 2012. Kingsley Shores would not be competitive with a development in
Rosemount since it is located outside of the PMA.
Hosanna Lutheran Church and Ebenezer Management Services, located on 162 Street in
Lakeville, received City approval to develop a senior housing campus on its property. The
church has a fast growing congregation of over 6,000 members. The proposed Hosanna Ha-
ven development would consist of 20 congregate units, 47 assisted living units and 24 mem-
ory care units. Construction is expected to start spring 2011 and the facility is projected to
open in the summer of 2012. Hosanna Haven would not be competitive with a development
in Rosemount; therefore, we do not subtract any units from the demand calculations.
Apple Valley
Oxford Senior Funds received Planning Commission approval about one year ago for the de-
velopment of Cobblestone on the Lake, a 214 -unit senior housing development to be located
along the southwestern shoreline of Cobblestone Lake. As proposed, the development is a
continuum of care campus with 152 independent living units, 32 assisted living units and 30
memory care units. According to the City, the developer is still planning to move forward
with development once financing is secured. We do not subtract any of its units from our
demand calculations presented later in this report because the timing is uncertain and it is lo-
cated outside the PMA.
Apple Valley Villa is repositioning six units of their senior housing into memory care suites.
The suites are located on the fifth floor and will consist of two private suites and four shared
suites. We do not subtract any of its units from our demand calculations presented later in
this report because it is located outside the PMA.
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
Eagan
April 15, 2011
Page 16
Christ Lutheran Church is proposing to develop a senior housing facility adjacent to their
church at Diffley Road and Beaver Dam Road (between I35E Cedar Avenue). This poten-
tial development is still preliminary, and has not formally entered the city approval process.
A rezoning would be needed as the parcel is currently zoned for public facilities. The parcel
is about five acres and can support between 80 to 100 units, depending on whether a three- or
four -story building is developed. Because the proposed development is so preliminary, we
do not know what the service -level mix would be, or how many total units would be built or
the timing. We do not subtract any of its units from our demand calculations presented later
in this report because the timing is uncertain and it is located outside the PMA.
Walker Methodist is exploring the potential to develop senior housing in Eagan. Three loca-
tions are being considered one in the Cedarvale redevelopment area (east of Cedar Avenue
on Highway 13), the Carriage Hills Golf Course (on Yankee Doodle Road east of I -35E), and
on the Parkview Golf Course (Cliff Road just east of Pilot Knob Road). The type of devel-
opment being considered is about 150+ units with congregate, assisted living, and memory
care housing along with skilled care beds. Which site will be chosen, the number of units,
and timing are all uncertain since the development is so preliminary and financing has not
been secured. We do not subtract any of these proposed units from our demand calculations
since it is so preliminary and it is located outside the PMA.
Farmington
The Dakota County CDA will break ground on Vermillion River Crossing on May 4, 2011.
Vermillion River Crossing will be a 66 -unit affordable senior housing development located
on Duschane Parkway south of County Road 50. The facility is projected to open in the
summer of 2012. Since this development is located outside of the PMA, we do not subtract
any units from our demand calculations.
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
April 15, 2011
Page 17
Preliminary Demand Estimate for Market Rate Adult /Few Services Housing
Table 6 presents our demand calculations for market rate active adult housing in the PMA in
2010 and 2015.
The market for active adult housing is comprised of older adult (age 55 to 64), younger senior
(age 65 to 74) and older senior (age 75 households, with market demand weighted most heav-
ily toward older seniors. In order to arrive at the potential age income- and asset qualified base
for active adult housing, we include all age qualified households with incomes of $30,000 or
more plus homeowner households with incomes between $20,000 and $29,999 who would qual-
ify with the proceeds from a home sale. The number of qualifying homeowner households is es-
timated by applying the appropriate homeownership rate, as identified in Table 3 to each age co-
hort. In 2010, we estimate there are 2,091 age income- and asset qualified households in the
PMA that comprise the market for active adult housing.
Adjusting to include appropriate capture rates for each age cohort (0.5% of households age 55 to
64, 5.5% of households age 65 to 74, and 16.5% of households age 75 and older) results in a de-
mand potential for 96 active adult housing units in 2010.
We estimate that seniors currently residing outside the PMA will generate 20% of the demand
for active adult housing increasing demand to 120 active adult units. Demand for outside the
PMA includes 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 retire-
ment.
Demand for active adult housing in the PMA is apportioned between ownership and rental prod-
uct types. Based on the age distribution of the PMA population, homeownership rates and cur-
rent trends for senior ownership product in the PMA, we project that 65% of the PMA's demand
will be for owner- occupied active adult housing (78 units), and the remaining 35% of demand
will be for rental active adult housing units (42 units).
The existing supply of active adult housing satisfies some of the housing needs in the PMA. Af-
ter subtracting the existing units from the demand potential (at market equilibrium, or 95% oc-
cupancy), we find excess supply for -293 owner- occupied units and demand for 30 rental units in
2010.
No single Site can capture all of the excess demand in a PMA. Due to the current excess supply
of owner occupied senior housing, we estimate that a new project in Rosemount could not sup-
port any more units. However, we estimate that a high quality site in Rosemount can capture
50% of total demand for rental units. Based on the calculations in Table 6, we find that a pro-
ject in Rosemount could capture 21 active adult rental units in 2010.
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
April 15, 2011
Page 18
Table 6
MARKET RATE ADULT/FEW SERVICES HOUSING DEMAND
PRIMARY MARKET AREA
2010 2015
of Households w/ Incomes of >$30,000'
of Households w/ Incomes of $20,000 to $29,999'
(times Homeownership Rate
(equals) Total Potential Market Base
(times) Potential Capture Rate
(equals) Demand Potential
Potential Demand from Market Area Residents
(plus Demand from Outside Market Area (20
(equals) Total Demand Potential
(times) by Product Type
(equals) Demand Potential by Product Type
(minus) Existing and Pending Active Adult Units
(equals) Pent -up Demand by Type
(times) Percent ca.turable by a project in Rosemount
2
Age of Householder
55 -64 65 -74 75+
1,145 496 311
31 64 63
x 91% 95% 80%
1,173 557 361
x 0.5% 5.5% 16.5%
6 31 60
Owner
Occupied
x 65%
78
371
-293
x 0%
96 4
24
120
Renter
Occupied
x 35%
42
0
42
x 50%
2015
Age of Householder
55 -64 65 -74 75+
1,529 774 395
34 41 61
x 91% 95% 80%
1,560 813 444
x 0.5% 5.5% 16.5%
8 45
126 4
31
157
73
Owner Renter
Occupied Occupied
x 65% x 35%
102 55
371 0
-269 55
x 0% x 50%
MO
2015 calculations define income qualified households as all households with incomes greater than $35,000 and homeowner households with incomes
between $25,000 and $34,999.
'Existing and pending are deducted at market equilibrium, or 95% occupancy.
Source: Maxfield Research Inc.
Adjusting for inflation, we estimate that households with incomes of $35,000 or more and home-
owners with incomes of $25,000 to $34,999 would be candidates for active adult housing in
2015. Following the same methodology, we project that demand for active adult housing on a
site in Rosemount will increase to 28 units through 2015.
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
April 15, 2011
Page 19
Preliminary Demand Estimate for Affordable Independent Senior Housing
Table 7 presents our demand calculations for affordable independent senior housing in the PMA
in 2010 and 2015.
While the methodology used to calculate demand for affordable housing closely mirrors the me-
thodology used to calculate demand for market rate housing, we make several adjustments to
more precisely quantify demand among this market segment. The following points summarize
these adjustments:
Income-Oualifications: The market for affordable independent rental housing is house-
holds age 55+ who earn up to 80% of the Area Median Income and can afford the rents at
affordable senior properties. Households earning $15,000 would be qualified for income
restricted housing products, but still could afford contract monthly rents beginning at $368
(allocating 30% of their income toward housing). The income restriction for Dakota County
CDA affordable housing products is currently $45,100 for a one person household and
$51,500 for a two- person household. We use $45,000 as the upper end of the income range
and $15,000 as the lower end of the income range. We also include homeowner households
earning incomes between $10,000 and $14,999, as these households would have additional
equity that could be converted to monthly income following the sales of their single family
homes. To account for inflation, our figures in 2015 are adjusted to include households
earning incomes between $20,000 and $50,000; homeowner households with incomes be-
tween $15,000 and $19,999 are included with the market potential for financially- assisted
housing.
Capture Rates: Households in a need -based situation (either requiring services or financial
assistance) more readily move to housing alternatives than those in non -need based situa-
tions. Hence, the capture rate among each age group is higher than for market rate housing.
Capture rates are employed at 2.0% for households age 55 to 64, 10.0% for households age
65 to 74 and 20.0% for households age 75 and older.
Potential Demand Capture: Seniors in need -based situations are less selective when secur-
ing housing than those in non -need based situations. We estimate that a high quality site
would capture a greater proportion of total demand for financially- assisted housing than for
market rate housing; hence, the potential capture rate increases to 60% for affordable inde-
pendent housing.
Using the methodology described above results in a demand potential for 72 affordable inde-
pendent housing units in 2010. We estimate that seniors currently residing outside the PMA will
generate 25% of the demand for affordable independent housing increasing demand to 96 af-
fordable units. Demand for outside the PMA includes 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.
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
MAXFIELD RESEARCH INC.
April 15, 2011
Page 20
The existing supply of affordable senior housing satisfies some of the housing needs in the PMA.
After subtracting the existing units from the demand potential (at market equilibrium, or 95%
occupancy), we find demand for 47 affordable units in 2010.
TABLE 7
AFFORDABLE INDEPENDENT HOUSING DEMAND
PRIMARY MARKET AREA
2010 2015
211111
55-64 65 -74 75+
of Households w/ Incomes of $15,000 to $45,000 109 210 191
Plus Households w/ Incomes of $10,000 to $14,999 16 26 49
(times Homeownership Rate x 91% 95% 80%
(equals) Total Potential Market Base 124 235 230
(times) Potential Capture Rate
(equals) Demand Potential
Total Market Rate Demand Potential
(plus) Demand from Outside Market Area (25
(equals) Total Demand Potential
(minus) Existing and Pending Independent Units'
(equals) Total Demand Potential in Market Area
x 2.0% 10.0% 20.0%
2
Age of Householder
72 4
24
96
42
54
(times) Estimated Percent Ca turable by a Pro'ect in Rosemount x 60%
23 46
2015
Age of Householder
55-64 65 -74 75+
88 201 190
6 39 29
x 91% 95% 80%
93 238 213
x 2.0% 10.0% 20.0%
2 24 43
68 4
23
91
42
49
x 60%
2015 calculations define income qualified households as all households with incomes between $20,000 and $50,000 plus homeowners with incomes between
$1 5,000 and $20,000.
2 Includes existing and pending units at 95% occupancy, or market equilibrium. No additional units are planned through 2015.
Source: Maxfield Research Inc,
No single Site can capture all of the excess demand in a PMA. Based on Rosemount's position
in the PMA, we estimate that a site in Rosemount can capture 60% of the PMA demand, result-
ing in demand for 33 affordable independent senior units in 2010.
Adjusting for inflation, we estimate that households with incomes between $20,000 and $50,000
would be candidates for financially- assisted independent housing in 2015. We increase the po-
tential market by homeowner households earning between $15,000 and $19,999 that would have
additional equity that could be converted to monthly income following the sales of their single
family homes. Following the same methodology, we project that excess demand capturable by
a site in Rosemount is calculated for 30 affordable independent senior housing units by
2015.
Ms. Kim Lindquist
City of Rosemount
Preliminary Demand Estimate for Congregate Housing
April 15, 2011
Page 21
Table 8 presents our demand calculations for market rate congregate senior housing in the PMA
in 2010 and 2015. In order to arrive at the potential age- income qualified base for congregate
senior housing, we include all senior households with incomes of $30,000 or more and
homeowners with incomes between $20,000 and $30,000 who would qualify with the proceeds
from a home sale (this proportion was estimated based on the homeownership rates for each age
cohort). We estimate the number of age /income /asset qualified households in the PMA as of
2010 to be 918 households.
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 Instrumental Activities of Daily
Living, or "IADLs," (at least three), but not six or more Activities of Daily Living (ADLs) or
IADLs, as these frailer seniors would need the level of care found in assisted living.
According to the Summary Health Statistics of the U.S. Population: National 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, dressing, toileting, transferring,
eating) and instrumental activities of daily living (using the telephone, shopping, food
preparation, housekeeping, laundry, transportation, taking medication, handling finances) are as
follows:
Limitation in ADLs IADLs
Age ADLs IADLs
65 -74 years 3.4% 6.9%
75+ years 10.0% 19.2%
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 assisted living. The prime candidates for
congregate housing are seniors needing assistance with IADLs, but not ADLs. We derive this
percentage by subtracting the percentage of seniors needing assistance with ADLs from those
needing assistance with IADLs, which equate to 3.5% of seniors ages 65 to 74 and 9.2% of
seniors ages 75 Multiplying the senior household base by these capture rates results in demand
potential for 53 units of congregate in the from the PMA.
We estimate that seniors currently residing outside the PMA will generate 20% of the demand
for congregate senior housing increasing total demand by 13 congregate units. 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 seniors and demand from seniors who would
relocate to the PMA totals 66 congregate units as of 2010.
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
April 15, 2011
Page 22
Next, existing congregate units are subtracted from overall demand. However, there are no
congregate units located in the PMA. No single location or development can capture all of the
demand in a PMA. Based on Rosemount's position in the PMA, we estimate that a site in
Rosemount can capture 50% of the PMA demand, resulting in demand for 33 market rate
congregate units in 2010.
Adjusting for inflation, we have estimated that households with incomes of $35,000 or more and
homeowners with incomes of $25,000 to $35,000 would qualify for market rate congregate
housing in 2015. We project the age /income qualified base for congregate housing to increase to
1,257 senior households in 2015. There are no pending congregate units in the PMA. A site in
Rosemount is estimated to capture 50% of PMA demand for a total of 43 market rate
congregate units in 2015.
TABLE 8
MARKET RATE CONGREGATE HOUSING DEMAND
PRIMARY MARKET AREA
2010 2015
of Households w/ Incomes of >$30,000'
of Households w/ Incomes of $20,000 to $29,999'
(times Homeownership Rate
(equals) Total Potential Market Base
(times) Potential Capture Rate
(equals) Demand Potential
Potential Demand from Market Area Residents
(plus Demand from Outside Market Area (20
(equals) Total Demand Potential
(minus) Existing and Pending Congregate Units'
(equals) Total Excess Congregate Demand
(times) Percent capturable by a project in Rosemount
201(1
Age of Householder
65 -74 75+
496 311
64 63
x 95% 80%
557 361
x 3.5%
9.2%
19 33
53
13
66
x
0
66
50%
2(11 5
Age of Householder
65 -74 75+
774 395
41 61
x 95% 80%
813 444
x 3.5% 9.2%
28 41
69
17
87
0
87
x
50%
2015 calculations define income qualified households as all households with incomes greater than $35,000 and homeowner
households with incomes between $25,000 and $34,999.
2 The 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 typcially need assistance with multiple IADLs
and are primary candidates for service- intensive assisted living.).
Existing and pending units are deducted at market equilibrium, or 95% occupancy.
Source: Maxfield Research Inc.
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
Preliminary Demand Estimate for Assisted Living Housing
April 15, 2011
Page 23
Table 9 presents our demand calculations for assisted living senior housing in the PMA in 2010
and 2015. This analysis focuses on the potential private pay /market rate demand for assisted
living units.
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
Association 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 Industry), 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 from seniors over age 75. In 2010, there were 790 seniors age 75 and older in the PMA.
Demand for assisted living housing is need driven, which reduces the qualified market to only
the portion of seniors who need assistance. According to a study completed by the U.S. Census
Bureau (1990 1991 panels of the Survey of Income and Program Participation (SIPP) files),
30% of seniors needed assistance with everyday activities (from 19.5% of 75- to -79- year -olds, to
31.2% of 80- to- 84- year -olds and 49.5% of 85+ year olds). Applying these percentages to the
senior population yields a potential assisted living market of 276 seniors in the PMA.
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
housing with basic services. Therefore, the second step in determining the potential demand for
assisted 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 $3,000 by allocating 90% 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 $30,000 or
greater, there is a substantial base of senior households with lower incomes who income qualify
based on assets their homes in particular.
Eighty percent of the age 75+ households in the PMA are homeowners, and the 2010 median
resale price of homes in Rosemount was $167,500. Seniors selling their homes for the median
resale price would generate about $155,775 in proceeds after selling costs. With an average
monthly fee of $3,000, these proceeds would last about four and a half years in an assisted living
facility, which is longer than the average length of stay in assisted living (27 months according
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
April 15, 2011
Page 24
to the 2009 Overview of Assisted Living). For each age group in Table 9, we estimate the
income- qualified percentage to be all seniors in households with incomes above $40,000 (who
could afford monthly rents of $3,000+ per month) plus 25% of the estimated seniors in
homeowner 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
of 170 units from the PMA in 2010.
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. Based on 2000 Census data, 58% of
age 75+ households in the PMA lived alone. Applying this percentage results in a total base of
98 age /income qualified singles. The 2009 Overview of Assisted Living found that 12% of
residents in assisted living were couples. There are a total of 112 age /income qualified seniors
needing assistance in the PMA including both couples and singles.
We estimate that roughly 60% of the qualified market needing significant assistance with ADLs
would 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 potential
market penetration rate of 40% results in demand for 45 assisted living units in 2010.
We estimate that a portion of demand for assisted living units in the PMA (20 will come from
outside the PMA. Applying this figure results in total potential demand for 56 market rate
assisted living units in the PMA.
There are no assisted living units located in the PMA. We preliminarily estimate that a site in
Rosemount could capture approximately 60% of the PMA excess demand for a total of 34
assisted living units in 2010.
The same calculations are applied to the age /income qualified base in 2015. Due to increase
growth in the senior population, total potential demand for assisted living housing on a site in
Rosemount is expected to increase to 39 units through 2015.
MAXFIELD RESEARCH INC.
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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.
2 Includes households with incomes above $40,000 (who could afford monthly rents of $3,000+ per month) plus
25% of the estimated owner households with incomes below $40,000 (who will spend down assets, including
home equity, in order to live in assisted living housing).
s The 2009 Overview of Assisted Living (a collaborative project of AAHSA, ASHA, ALFA, NCAL MC)
found that 12% of assisted living residents are couples.
4 We estimate that 65% 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 skilled care facility.
Existing assisted living units less units occupied by public pay residents and a 5% vacancy rate.
Ms. Kim Lindquist
City of Rosemount
April 15, 2011
Page 26
Preliminary Demand Estimate for Memory Care Senior Housing
Table 10 presents our demand calculations for market rate memory care senior housing in the
PMA in 2010 and 2015.
Demand is calculated by starting with the estimated PMA senior (age 65 population in 2010
and multiplying by the incidence rate of Alzheimer's /dementia among this population's age
cohorts. According to the Alzheimer's Association (Alzheimer's Disease Facts and Figures,
2007), 2% of seniors ages 65 to 74, 19% of seniors ages 75 to 84, and 42% of seniors ages 85+
are inflicted with Alzheimer's Disease. This yields a potential market of 220 seniors in the
PMA.
Because of the staff- intensive nature of dementia care, typical monthly fees for this type of
housing are at least $4,000 and range upwards of $5,000 when including service packages.
Based on our review of senior household incomes in the PMA, homeownership rates and home
sale data, we estimate that 45% of seniors in the PMA would have incomes and/or assets to
sufficiently cover the costs of 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 number of seniors with
Alzheimer's /dementia (220 seniors) by the income qualified percentage results in a total of 99
age /income qualified seniors in the PMA in 2010.
According to data from the National Institute of Aging, about 25% of all individuals with
memory care impairments comprise the 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 later stages of dementia will require
intensive 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 25 seniors in
the PMA.
MAXFIELD RESEARCH INC.
TABLE 10
MEMORY CARE DEMAND
PRIMARY MARKET AREA
2010 2015
65 to 74 Population
(times) Dementia Incidence Rate'
(equals) Estimated Age 65 to 74 Pop. with Dementia
75 to 84 Population
(times) Dementia Incidence Rate'
(equals) Estimated Age 75 to 84 Pop. with Dementia
85+ Population
(times) Dementia Incidence Rate'
(equals) Estimated Age 85+ Pop. with Dementia
2010
1,090
x 2%
2015
1,520
x 2%
30
667
x 19%
22
579
x 19%
127
253
x 42%
110
211
x 42%
106
89
263
(equals) Total Senior Population with Dementia
220
x 45%
(times) Percent Income /Asset- Qualified
(equals) Total Income Qualified Market Base
(times) Percent Needing Specialized Memory Care Assistance
(equals) Total Need for Dementia Care
(plus) Demand from Outside the PMA (20
Total Demand for Memory Care Units
(minus) Existing and Pending Memory Care Units
(equals) Excess Market Area Demand Potential
times) Estimated Percent Capturable b a ,roject in Rosemount
x 45%
99
x 25%
119
x 25%
30
7
25
6
37
0
37
x 60%
31
0
31
x 60%
a.a r-,, m`. ai(J�tl 'I I. 1Tlii 1 iII ?91 s l Y iil 'It .1 I i,
1 Alzheimer's Association: Alzheimer's Disease Facts Figures (2007)
2 Income qualified households considered 85% of seniors with incomes greater. than $60,000 in 2010 ($65,000 in 2015) plus 15%
of homeowners with incomes below this threshold.
3 Existing memory care units at a 5% vacancy rate.
Source: Maxfield Research Inc.
Ms. Kim Lindquist
City of Rosemount
April 15, 2011
Page 27
We estimate that 20% of the overall demand for memory care housing in Rosemount would
come from outside the PMA. This secondary demand will include households currently living
just outside the PMA, former residents, parents of adult children who desire supportive housing
near their adult children and increasingly frail retirees returning from retirement communities.
Together, demand totals 31 memory care units in 2010.
Currently, there no existing memory care units in the PMA that would directly compete with the
subject development.
MAXFIELD RESEARCH INC.
Ms. Kim Lindquist
City of Rosemount
No one location or building can capture all of the excess demand in the PMA. We preliminarily
estimate that a site in Rosemount could capture 60% of the excess PMA memory care demand,
or 19 units, in 2010.
By 2015, total excess demand for market rate memory care units in the PMA is projected to
increase to 37 units. We estimate that a site in Rosemount could capture 60% of PMA demand
for a total of 22 memory care units in 2015.
Elderly Waiver Program
Some seniors in the Market Area will need to receive supplemental income in order to afford
congregate /service- intensive, assisted living or memory care housing. While some of these sen-
iors will receive income from the sales of their homes, others will need to rely on other sources
of public aid. The Elderly Waiver program in Minnesota has provided public funding for seniors
who wish to receive "alternative" care that allows them to stay in the community as opposed to
receiving similar care at a nursing home.
The Elderly Waiver program funds home- and community -based services for people age 65 and
older who are eligible for Medical Assistance (age 65+ with an income for singles below
$10,836 and assets below $3,000) and require the level of care provided in a nursing home, but
choose to reside in the community. The Elderly Waiver cost for an individual cannot be greater
than the estimated nursing home cost for that same individual. The State of Minnesota Depart-
ment of Human Services operates the Elderly Waiver program under a federal waiver to Minne-
sota's Medicaid State Plan and is administered individually by each county in addition to some
health plan partners.
Based on senior population and income data in Tables 1 and 2, we estimate that about 150 sen-
iors in the PMA would income /asset qualify for the Elderly Waiver Program, initially. Estimat-
ing that only 10% of these qualified seniors would need nursing home level of care and would
also prefer assisted living housing over other services (such as remaining in their homes and re-
ceiving home care services), we find demand for 15 units of assisted living from very low in-
come seniors, initially. Projecting that a site in Rosemount could capture 60% of this demand
equates to 9 units in 2010. Over time, however, some existing assisted living residents would
exhaust their assets and become eligible for the program. Thus over the long term, assisted liv-
ing demand from low- income seniors will likely increase.
MAXFIELD RESEARCH INC.
April 15, 2011
Page 28