Fort Walton Beach Council agenda — 03-23-2010 Special-Soundside Develp. Project — reading text

Three Bed/ Two Bath Section 8 12 6. 0% 1, 259 N/ A 1, 259 15, 108 181, 296 Three Bed/ Two Bath 60% AMI 17 8. 4% 1, 034 194 840 14, 112 169, 344 Three Bed/ Two Bath 80% AMI 19 9. 6% 1, 379 194 1, 185 22, 752 273, 024 Four Bed/ Two Bath Section 8 3 1. 5% 1, 244 N/ A 1, 244 3, 732 44, 784 Four Bed / Two Bath 60% A.MI 4 2. 1% 1, 153 244 909 3, 818 45, 814 Four Bed/ Two Bath 80% A.Ml 5 2. 4% 1, 538 244 1, 294 6, 211 74, 534 Total/ Weighted Average t 200 100. 0% 1, 019 117 902 180, 330 2, 163, 960 Value Tech Realty Services, Inc. www.gotovalue.com Page 33 116- Sound Side Apartments Income and Expense Analysis Other - Miscellaneous Income Miscellaneous income can be generated from premiums, such as unit location, views, or amenities that the market desires. Miscellaneous income can also be obtained through laundry, applications fees, deposits, forfeits, check return, late fees, pet fees and related. To estimate the subject' s potential to receive other income, the miscellaneous income of similarly operated apartment communities were surveyed. The miscellaneous income of each comparable property along with the projected amount is shown below: MISCELLANEOUS INCOME MONTHLY REVENUE PER UNIT Comparable A 35 Comparable B 31 Comparable C 38 Comparable D 39 Average 36 Subject 35 Based on total available units. Miscellaneous income was estimated at $ 35 per available unit. A slightly lower amount per month than the comparables was utilized because the subject maintains a lower income orientation. Thus, it is likely expenditures outside of rent will be slightly constrained by the lower income households. Forecasted Stabilized Occupancy Both rent/ income -restricted and market -rate properties in the market are generally performing at or near stabilized levels. The subject will be a newly constructed 200 -unit apartment complex orientated to low and moderate income families and is expected to operate similarly. As such, stabilized occupancy is projected at 95 %, this includes both vacancy and collection loss. Page 34 Value Tech Realty Services, Inc. www.gotovalue.com 117-  Sound Side Apartments Income and Expense Analysis Total Revenue Total revenue for the proposed project is estimated to be as follows: Sound Side Apartments REVENUE PROJETIONS - RESTRICTED Income 94. 00% Unit Type Orientation Units Monthly Rate Annual One Bed/ One Bath Section 8 17 729 Month 148, 716 One Bed/ One Bath 60% AMI 24 622 Month 177, 643 One Bed/ One Bath 80% AMI 27 875 Month 285, 600 Two Bed/ Two Bath Section 8 18 820 Month 177, 120 Two Bed/ Two Bath 60% AMI 25 747 Month 225, 893 Two Bed/ Two Bath 80% AMI 29 1, 046 Month 361, 498 Three Bed/ Two Bath Section 8 12 1, 259 Month 181, 296 Three Bed/ Two Bath 60% AMI 17 840 Month 169, 344 Three Bed/ Two Bath 80% AMI 19 1, 185 Month 273, 024 Four Bed/ Two Bath Section 8 3 1 , 244 Month 44, 784 Four Bed/ Two Bath 60% AMI 4 909 Month 45, 814 Four Bed/ Two Bath 80% AMI 5 1, 294 Month 74, 534 Gross Rental Revenue: 200 902 Month 2, 165, 266 Other Potential Income /Loss: Miscellaneous 200 35 Month 84,000 Total Other Income: 200 35 Month 84, 000 Total Gross Income 84,000 Gross Income Potential 2, 249,266 Vacancy Factor 5. 0% Vacancy Amount 112, 463) Effective Gross Income: 200 881 Month 2, 136, 802 EGI Per Unit: 1 1 10, 684 Absorption To estimate the lease -up period for the subject, the lease -up of the surrounding communities were surveyed. One of the most recently built communities in the area is Alexan Henderson Beach. Although not technically in the primary market area, this 340 -unit, market -rate apartment community is located in Destin, east of the primary market. With all units marketed toward moderate to high income households, management began leasing in May 2009 following the completion of Phase I construction. As of January 2010, the property is 24% pre - leased. This represents a lease -up rate of approximately 9 units per month. Although Alexan Henderson Beach provides a good indication of absorption trends in the area, a slightly higher rate was used for the subject due to its income! orientation. Value Tech Realty Services, Inc. www.gotovalue.com Page 35 118-  Sound Side Apartments Income and Expense Analysis At completion, the subject will offer 50 project -based Section 8 units to low income households. According to the Fort Walton Beach Housing Authority, these units will be replacing low income housing. As such, these units will be rapidly occupied with an expected wait list. If all 50 units are distributed among the eight residential buildings, this would generate an additional six units per building. Adding this to the absorption trends observed at Alexan Henderson Beach, will result in the absorption of about 14 to 18 units per month. A slightly lower rate is anticipated toward the end of the absorption period when there are fewer units to select from by potential tenants. Therefore, the absorption for the subject is estimated as follows: Sound Side Apartments Total Units 200 Stabilized Occupancy 95. 0% Stabilized Units 190.0 Month Move Ins Occ. Units Occupancy Month I - Construction Begins 0. 0 0. 0 0. 0% Month 9 - First C/ O Issued 18. 0 18. 0 9.0% Month 10 18. 0 36. 0 18. 0% Month 11 18. 0 54. 0 27.0% Month 12 18. 0 72. 0 36. 0% Month 13 16. 0 88. 0 44.0% Month 14 16. 0 104.0 52. 0% Month 15 16. 0 120. 0 60. 0% Month 16- Construction Complete 16. 0 136. 0 68. 0% Month 17- Pre Cost Certification 14. 0 150. 0 75. 0% Month 18- Pre Cost Certification 14. 0 164. 0 82. 0% Month 19 14.0 178. 0 89.0% Month 20- Stabilized Occupancy 12. 0 190. 0 95. 0% Total 190. 0 190. 0 95. 0% Average Monthly Absorption 15. 8 109. 2 54.6% The subject will be comprised of eight, 2 to 3 story building that will enter the market independently. As indicated, the subject is expected to reach stabilized occupancy of 95% based on a projection of about 15 to 16 units per month. Historical Income and Expense Analysis Since the subject is proposed, no historical information was available. As such, expense comparables data was utilized in projecting future expenses. The expense comparables as well as the projected values are located in the addendum. Operating Expenses In forecasting income and expenses, we relied upon expense data derived from Income and Expense Comparables. Value Tech Realty Services, Inc. www.golovalue.com Page 36 119-  Sound Side Apartments Income and Expense Analysis Expense Analysis Expense comparables utilized were considered to represent the best comparables relative to the subject. Our search for expense comparables was based primarily on the location of properties that would operate in a similar manner to the subject. We were able to obtain expense information in sufficient detail to apply them to the Form- HUD -92274. A summary of the income and expense comparables utilized in the analysis are presented in the following table. EXPENSE COMPARABLES Comparable 1 2 3