2040 BANCROFT WAY, SUITE 302 BERKELEY, CALIFORNIA 94704 PHONE: 415 398 3050 FAX: 415 397 5065 002-001; jf
WWW.KEYSERMARSTON.COM 19311.006
ADVISORS IN:
REAL ESTATE
AFFORDABLE HOUSING
ECONOMIC DEVELOPMENT
SAN FRANCISCO
A. JERRY KEYSER
TIMOTHY C. KELLY
DEBBIE M. KERN
DAVID DOEZEMA
LOS ANGELES
KATHLEEN H. HEAD
JAMES A. RABE
GREGORY D. SOO‐HOO
KEVIN E. ENGSTROM
JULIE L. ROMEY
SAN DIEGO
PAUL C. MARRA
MEMORAN
DUM
To: David M. Guhin, Assistant City Manager/Director
City of Santa Rosa
From: Keyser Marston Associates, Inc.
Date: September 6, 2018
Subject: High-Density Multi-Family Residential Incentives Introduction
As it is a top priority of the City of Santa Rosa to increase the number of residents living in downtown, the City is exploring ways to incentivize high-density residential development in the downtown over the next several years.
Under consideration is a High-Density Multi-Family Residential Incentive Program (Incentive Program) that would apply to multi-family projects located within the Downtown Station Area Plan and General Plan Downtown Core Boundary. The program would waive the Park Impact Fee and the Capital Facilities Fee on residential units above the first three residential floors for projects located in the Downtown Core and above the first two floors for projects located elsewhere in the Downtown Station Area Plan and General Plan Downtown Core Boundary. The program would also defer the timing for payment of water and wastewater demand fees until after issuance of occupancy and provide additional incentives specifically for affordable/ inclusionary housing projects.
The purpose of this conceptual pro forma analysis is to provide an understanding of the development economics of high-density apartment developments in downtown Santa Rosa, and the impact that proposed incentives might have on the feasibility of residential development going forward. The analysis uses prototypes developed with City staff to evaluate the effect of potential incentives on the development economics of apartment projects of different heights, construction types, and submarkets.
Attachment 2
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The conclusion is that high-density residential development currently faces challenges due to high development costs and the inability to project future apartment rent growth to offset rising costs. If the City Council chooses to provide incentives, the incentives would create a positive impact and increase the likelihood that projects can move forward.
While other variables in addition to fee incentives must be addressed, the fee incentive is one piece of the puzzle that developers could use as they seek to fund projects in the near term.
Current Development Impact Fee Levels and Potential Incentives The City has three types of development impact fees that could be reduced or deferred to encourage high-density residential development:
Park Impact Fee ($7,734 per unit)
Capital Facilities Fee ($5,433 per unit)
Water and wastewater demand fees ($9,490 per unit)
In the context of high-density downtown apartment projects (100+ units per acre), the following observations are made regarding existing development impact fees:
High-density apartments are more expensive to build than lower-density, suburban projects due to higher land values and construction costs. Unit size does not determine the amount of the above development impact fees, i.e. fees are the same for a studio apartment as a three-bedroom unit. High- density apartments therefore pay more in fees on a square foot basis versus lower-density projects. For example, the above development impact fees amount to $28 per net sq. ft. for a high-density project with 800 sq. ft. units versus $14 per net sq. ft. for a low-density project with 1,600 sq. ft. units. Development impact fees for high-density projects are significant relative to land values in the downtown area. Land values in the downtown area are estimated to range from $75 to $100 per sq. ft. of land while development impact fees amount to $50 per land sq. ft. assuming a density of 100 units per acre. As fees are due upon issuance of building permits, fees must be financed with equity during the construction phase, which adds to the project’s total cost.
The City is considering several incentives for high-density multi-family projects including a reduction in Park Impact and Capital Facilities fees and a deferral of the timing for the payment of water and wastewater demand fees. The reduction in Park Impact and Capital Facilities fees would be achieved through a cap on the number of floors of residential units subject to the fees. It is proposed that fees be paid on the first three To: David Guhin September 6, 2018
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residential floors and waived on upper floors for projects located in the Downtown Core zoned CD-7 or CD-10, which permits heights of 7 and 10 stories, respectively.
Elsewhere in the Downtown Specific Plan Area where the height allowed by zoning is less than CD-7 and CD-10 zoning, fees would be paid on the first two residential floors and waived on upper floors. For affordable and inclusionary projects, a reduction in Park and Capital Facilities fees for non-exempt units is being considered as well. For detail on proposed incentives, please see the Staff report dated September 25, 2018.
Approach to Analysis
This conceptual analysis relies on generic residential apartment prototypes to illustrate “average” or “typical” high-density apartment projects envisioned for downtown. By its nature the conceptual analysis can only provide an overview-level assessment of real estate development economics. The development economics may be better or worse when a specific project is proposed, due to any number of unique circumstances, such as site configuration and conditions, construction efficiencies, project design, land cost basis, and sources of capital. As a result, all financial and programmatic estimates are preliminary in nature.
The analysis presents a snapshot in time as of mid-2018. Real estate development economics are fluid and are impacted by constantly changing conditions with regard to rent potential, construction costs, land costs, and costs of financing. A year or two from now, conditions will undoubtedly be different, so the pro forma conclusions are not expected to hold over a longer-term time horizon.
A summary of the conceptual pro forma analysis is provided below; financial and market inputs are detailed in the attached tables. The financial and market inputs are based on third party real estate sources, such as land sales transactions and apartment rental rates. This information was adjusted to reflect the prototypes being evaluated.
Conceptual Development Prototypes
In collaboration with City staff, four generic prototypes were selected to serve as examples of the types of high-density residential development that the City seeks to encourage in the downtown:
5-story low-rise building (Type V construction over a podium) 6-story mid-rise building (Type III construction over a podium ) 7-story mid-rise building (Type III construction over a podium ) 10-story high-rise building (Type I construction)
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The building prototypes are assumed to exhibit a similar unit mix and size (an average of 800 sq. ft., consistent with recently built and/or proposed projects). All prototypes are assumed to be for rent as this is the predominant tenure of recently proposed high- density projects in the downtown area. While projects may be required to provide a minimum amount of ground floor commercial, this analysis focuses on the development economics of apartments and presumes that commercial development will pay for itself.
Downtown Submarkets
While the proposed Incentive Program would encompass the entire downtown area, defined by the Downtown Station Area Plan and General Plan Downtown Core Boundary, this analysis focuses on two submarkets where fee incentives are most likely to apply based on current zoning (see map):
Downtown Core: zoned “Downtown Commercial” (CD), which permits heights between 5 and 10 stories
Railroad Square: zoned “Transit Village – Mixed” (TV-M), which permits heights up to 5 stories.
Market assumptions (rents and land prices) for the low-rise (5-story) prototype reflect the Railroad Square submarket. Market assumptions for mid-rise and high-rise prototypes reflect the Downtown Core submarket.
High-Density Zoning Districts in the Downtown Station Area Plan and General Plan Downtown Core Boundary
▬ Downtown area
■ Downtown Core
■ Railroad Square
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Factors Affecting Development Economics of High-Density Apartments
There are number of factors that impact the likelihood that high-density apartment projects are funded and built. In a dynamic market, these factors change. The following is a summary of key factors:
Construction Costs: Construction costs continue to increase. Direct construction costs for a to-be-built project are estimated to be approximately $225 per square foot of gross building area for low-rise (Type V) projects, $235 to $240 per square foot for midrise (Type III) projects, and $270 per square foot for high-rise (Type I) projects. The pricing reflects many variables, including parking ratios of at least one parking space per unit.
˗ The direct construction cost per unit (before land and indire ct costs) is estimated to range from $225,000 to $270,000 per unit based on the building type. Total development costs, including land and indirect costs, is in the range of $350,000 to $395,000 per unit.
Land Costs: Land values are in the range of $75 to $100+ per sq. ft. of land area, or $20,000 to $35,000 per entitled depending on the density and location. If land owners have limited options, i.e. accepting a lower value versus continuing to hold for investment, land owners may be willing to accept a lower price.
Alternatively, the land owner can wait for the next cycle. Asking Rents: The average one-bedroom asking rent for the top tier of recently completed projects in Santa Rosa is approximately $2,350 per month. Asking rents for high-density apartments in downtown are projected to be similar or slightly higher, ranging from $2,350 to $2,500 per month (depending on building type and location). Rents exceeding this range would approach current asking rents of smaller single-family homes.
Project Values: The project’s value upon completion is determined by capitalizing the net operating income, i.e. net operating income divided by the capitalization rate. The capitalization rate is based on benchmarks published by nationally recognized research firms. The conceptual pro forma estimates that the capitalization rate for residential projects is currently in the range of 4.5% to 5.0%. Profit Target: Profit is defined as the difference between value and cost. The estimated minimum profit target for all prototypes is 10% to 15% of costs.
Achieving the threshold level of profit is used in determining if the project is worth pursuing. Equity partners weigh the projected return on high-density apartments with investment opportunities in other geographic locations and elsewhere in the capital markets.
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Conceptual Pro Forma Analysis Findings
The conceptual pro forma analysis compares the estimated profit supported by the development prototypes to the minimum profit target of 10% to 15% based on a range of development impact fee levels for Park Impact and Capital Facilities illustrating the effect of potential fee incentives:
Park Impact and Capital Facilities fees at current levels (~$1 3,100 per unit) 75% of current Park and Capital Facilities fees
50% of current Park and Capital Facilities fees
25% of current Park and Capital Facilities fees
No Park and Capital Facilities fees (not the intent of the Cit y, but shown for illustrative purposes).
The City is considering fee incentives that would waive Park Impact and Capital Facilities fees for units above the second or third residential floor. The attached staff report provides examples of how the fee waiver would apply to buildings of different heights. It is estimated that, after incentives, a five-story market rate building would pay 75% of current Park Impact and Capital Facilities fees (or 50% of fees if located outside the Downtown Core), a six- to seven-story building would pay 50% to 60% of current fees, and a ten-story building would pay 33% of current fees. The full range of fee levels is shown below for all prototypes for discussion purposes.
Per the table below, high-density residential development currently faces challenges due to high development costs and the inability to project future rent growth to offset rising costs. The analysis indicates that even if Park and Capital Facilities impact fees were completely waived for 2018 (which is not the intent of the City), the estimated development profit would still fall at or below the lower end of the targeted profit range.
Estimated Profit Per Unit Before and After Park and Capital Facilities Fee Incentives Submarket Stories
Value/
Unit
Cost/
Unit
Estimated Profit Per Unit
CFF, Park Impact Fee Level:
Full 75% 50% 33% None
Railroad Sq. 5 $380,000 $352,000 8% 9% 10% 11% 12%
Downtown Core 6 $390,000 $365,000 7% 8% 9% 9% 11%
7 $390,000 $365,000 7% 8% 9% 9% 11%
10 $410,000 $395,000 4% 5% 6% 6% 7%
Profit is shown as a percentage of development costs.
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Deferral of Water and Wastewater Fee Payment
In addition to Park and Capital Facilities fee incentives, the City is considering a deferral of the timing for the payment of water and wastewater demand fees for high-density projects in the downtown area. By deferring the fee payment, there can be significant savings to the developer, since fees are typically financed with equity, which requires a return once it is funded.
The carrying cost with equity during the construction period effectively increases the cost of the fee by nearly 25% over two years, assuming that equity requires a 12% rate of return. The effect is that water and wastewater fees of $9,500 per unit become $11,800 per unit when the cost of capital is included.
As illustrated in the table below, if water and wastewater fees were paid at, say, the close of permanent financing, which might be two or more years after when the fee would normally be paid, then the developer does not have to fund the return on equity for the fee payment during the construction period. Assuming the City charges a modest interest rate of 3% per year, the cost savings to the developer would be approximately $1,700 per unit.
Potential Cost Savings to Developer from Deferral of Water and Wastewater Demand Fees Demand Total Financing Cost Savings Over 2 Years
Units Fees/Unit Fee Annual* 2 Years Per Unit
300 $9,500 $2,850,000 9% $513,000 $1,700
*Difference between estimated 12% return on equity and estimated 3% interest to be charged by City.
Deferral of the payment of water and wastewater demand fees enhances the return over time to the developer and investors, i.e. to the extent dollars can be invested on a deferred basis, then the return over time is higher when compared to investing the same dollars up front, say two years earlier at issuance of permits.
Additional Incentives for Affordable/ Inclusionary Projects
The City may consider additional fee incentives for affordable housing and/or inclusionary housing projects in the downtown area. The development of high-density affordable/inclusionary projects is especially challenging considering that the value per unit supported by below-market rents is significantly less than the estimated development cost. As shown in the table below, the gap between the capitalized value of an affordable unit and the estimated development cost ranges from $185,000 to $266,000 per unit, depending on the income level targeted. While the application of Low Income Housing Tax Credits may reduce this gap, it is common for developers of To: David Guhin September 6, 2018
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affordable units to require local support on the order of $100,000 to $200,000 per unit.
By providing additional fee incentives, the City would potentially reduce the subsidy required from other local sources such as the Santa Rosa Housing Authority. These funding sources, in turn, could support additional affordable units, moving the City closer toward the affordable housing goals outlined in the Housing Action Plan.
Development Cost versus Capitalized Value of Affordable Units 60% AMI 80% AMI
Building Height 7 Stories 7 Stories
Unit Type/ Size 1BR, 800 SF 1BR, 800 SF
Monthly Rent (incl. Utilities) Per Unit $1,105 $1,414
Value Supported by Rent Per Unit $123,000 $204,000
Development Cost (incl. Profit) Per Unit $389,000 $389,000 Gap (Cost minus Value) Per Unit $266,000 $185,000
Conclusions and Recommendations
High-density residential development currently faces challenges due to high development costs and the inability to project future apartment rent growth to offset rising costs. If the City Council chooses to provide incentives, the incentives would create a positive impact and increase the likelihood that projects can move forward.
While other variables in addition to fee incentives must be addressed, the fee incentive is one piece of the puzzle that developers could use as they seek to fund projects in the near term.
SUMMARY
CONCEPTUAL PRO FORMA ANALYSIS
DOWNTOWN HOUSING INCENTIVES
SANTA ROSA, CA
Source: KMA assumptions based on planned and recently built projects (Tables 3 and 4) Prototype A Prototype B Prototype C Prototype D
Five Stories Six Stories Seven Stories 10 Stories
Table 1 Table 2 Table 3 Table 4
Submarket Railroad Sq. DT Core DT Core DT Core
Zoning TV-M CD-7 CD-7 CD-10
Building Type Type V Type III Type III Type I
over podium over podium over podium
Density 100 du/acre 130 du/acre 150 du/acre 190 du/acre Average Unit Size 800 800 800 800
Building Efficiency 80% 80% 80% 80%
Parking Ratio 1.0 1.0 1.0 1.0
Conceptual Pro Forma
Value Per Unit $380,000 $390,000 $390,000 $410,000
Cost Per Unit $352,000 $365,000 $365,000 $395,000
Profit Per Unit $28,000 $25,000 $25,000 $15,000
Profit as % of Costs 8% 7% 7% 4%
Profit After Incentives fee/du
Full Parks Fee, CFF $13,100 8% 7% 7% 4%
75% Parks, CFF $9,825 9% 8% 8% 5%
50% Parks, CFF $6,550 10% 9% 9% 6%
33% Parks, CFF $4,367 11% 9% 9% 6%
No Parks, CFF* $0 12% 11% 11% 7%
* Full fee waiver not under consideration. Shown for illustrative purposes only. 9/6/2018
Prepared by Keyser Marston Associates, Inc.
\\SF-FS2\wp\19\19311\006\Pro Forma 5 v2; Summary; 9/6/2018 TABLE 1
CONCEPTUAL PRO FORMA: FIVE STORIES
DOWNTOWN HOUSING INCENTIVES
SANTA ROSA, CA
PROGRAM
Submarket Railroad Square
Construction Type Type V over podium
Building Stories 4 over 1
Density 100 du/acre
Average Unit Size 800 SF/unit
Building Efficiency 80% efficiency
Parking Ratio 1.0 spaces/unit
DEVELOPMENT COSTS $/Unit
Land $75 /SF land $33,000
Estimated Direct Costs $225 /GSF $225,000
Indirect Costs 22% of direct costs $49,000
Capital Facilities and Parks Fees $13,100
Housing Allocation Fee $1,800
Water/Wastewater Cxn Fees $9,500
Other Governmental Fees1
$4,600
Construction Financing 5.50% interest rate $16,000
2 years
55% avg drawdown
Total Development Cost Per Unit $352,000
OPERATING INCOME
Weighted Average Rent Per Month $2.94 PSF/mo $2,350
Other Income Per Month $1,200 /year $100
Vacancy 5%
Effective Gross Income Per Year $27,900
Operating Exp. (incl. Prop. Tax) Per Year $9,000
Net Operating Income $18,900
ESTIMATED CAPITALIZED VALUE
Estimated Capitalized Value 5.00% cap rate $380,000
vs. Estimated Development Costs $352,000
ESTIMATED PROFIT
Estimated Profit Before Incentives Value minus costs $28,000 As % of costs 8.0% of cost
9/6/2018
1 Building inspection, plan review, fire permit, technology, advanced planning, micrographics, state-mandated fees, and school fees.
Prepared by Keyser Marston Associates, Inc.
\\SF-FS2\wp\19\19311\006\Pro Forma 5 v2; 5.Stories; 9/6/2018 TABLE 2
CONCEPTUAL PRO FORMA: SIX STORIES
DOWNTOWN HOUSING INCENTIVES
SANTA ROSA, CA
PROGRAM
Submarket Downtown core
Construction Type Type III over podium
Building Stories 4 over 2
Density 130 du/acre
Average Unit Size 800 SF/unit
Building Efficiency 80% efficiency
Parking Ratio 1.0 spaces/unit
DEVELOPMENT COSTS $/Unit
Land $100 /SF land $34,000
Estimated Direct Costs $235 /GSF $235,000
Indirect Costs 21% of direct costs $50,000
Capital Facilities and Parks Fees $13,100
Housing Allocation Fee $1,800
Water/Wastewater Cxn Fees $9,500
Other Governmental Fees1
$4,600
Construction Financing 5.50% interest rate $17,000
2 years
55% avg drawdown
Total Development Cost Per Unit $365,000
OPERATING INCOME
Weighted Average Rent Per Month $3.00 PSF/mo $2,400
Other Income Per Month $1,200 /year $100
Vacancy 5%
Effective Gross Income Per Year $28,500
Operating Exp. (incl. Prop. Tax) Per Year $9,100
Net Operating Income $19,400
ESTIMATED CAPITALIZED VALUE
Estimated Capitalized Value 5.00% cap rate $390,000
vs. Estimated Development Costs $365,000
ESTIMATED PROFIT
Estimated Profit Before Incentives Value minus costs $25,000 As % of costs 6.8% of cost
9/6/2018
1 Building inspection, plan review, fire permit, technology, advanced planning, micrographics, state-mandated fees, and school fees.
Prepared by Keyser Marston Associates, Inc.
\\SF-FS2\wp\19\19311\006\Pro Forma 5 v2; 6.Stories; 9/6/2018 TABLE 3
CONCEPTUAL PRO FORMA: SEVEN STORIES
DOWNTOWN HOUSING INCENTIVES
SANTA ROSA, CA
PROGRAM
Submarket Downtown core
Construction Type Type III over podium
Building Stories 5 over 2
Density 150 du/acre
Average Unit Size 800 SF/unit
Building Efficiency 80% efficiency
Parking Ratio 1.0 spaces/unit
DEVELOPMENT COSTS $/Unit
Land $100 /SF land $29,000
Estimated Direct Costs $240 /GSF $240,000
Indirect Costs 21% of direct costs $50,000
Capital Facilities and Parks Fees $13,100
Housing Allocation Fee $1,800
Water/Wastewater Cxn Fees $9,500
Other Governmental Fees1
$4,600
Construction Financing 5.50% interest rate $17,000
2 years
55% avg drawdown
Total Development Cost Per Unit $365,000
OPERATING INCOME
Weighted Average Rent Per Month $3.00 PSF/mo $2,400
Other Income Per Month $1,200 /year $100
Vacancy 5%
Effective Gross Income Per Year $28,500
Operating Exp. (incl. Prop. Tax) Per Year $9,100
Net Operating Income $19,400
ESTIMATED CAPITALIZED VALUE
Estimated Capitalized Value 5.00% cap rate $390,000
vs. Estimated Development Costs $365,000
ESTIMATED PROFIT
Estimated Profit Before Incentives Value minus costs $25,000 As % of costs 6.8% of cost
1 Building inspection, plan review, fire permit, technology, advanced planning, micrographics, state-mandated fees, and school fees. 9/6/2018
Prepared by Keyser Marston Associates, Inc.
\\SF-FS2\wp\19\19311\006\Pro Forma 5 v2; 7.Stories; 9/6/2018 TABLE 4
CONCEPTUAL PRO FORMA: 10 STORIES
DOWNTOWN HOUSING INCENTIVES
SANTA ROSA, CA
PROGRAM
Submarket Downtown core
Construction Type Type I tower
Building Stories 10 stories
Density 190 du/acre
Average Unit Size 800 SF/unit
Building Efficiency 80% efficiency
Parking Ratio 1.0 spaces/unit
DEVELOPMENT COSTS $/Unit
Land $100 /SF land $23,000
Estimated Direct Costs $270 /GSF $270,000
Indirect Costs 20% of direct costs $55,000
Capital Facilities and Parks Fees $13,100
Housing Allocation Fee $1,800
Water/Wastewater Cxn Fees $9,500
Other Governmental Fees1
$4,600
Construction Financing 5.50% interest rate $18,000
2 years
55% avg drawdown
Total Development Cost Per Unit $395,000
OPERATING INCOME
Weighted Average Rent Per Month $3.13 PSF/mo $2,500
Other Income Per Month $1,200 /year $100
Vacancy 5%
Effective Gross Income Per Year $29,600
Operating Exp. (incl. Prop. Tax) Per Year $9,500
Net Operating Income $20,100
ESTIMATED CAPITALIZED VALUE
Estimated Capitalized Value 4.90% cap rate $410,000
vs. Estimated Development Costs $395,000
ESTIMATED PROFIT
Estimated Profit Before Incentives Value minus costs $15,000 As % of costs 3.8% of cost
9/6/2018
1 Building inspection, plan review, fire permit, technology, advanced planning, micrographics, state-mandated fees, and school fees.
Prepared by Keyser Marston Associates, Inc.
\\SF-FS2\wp\19\19311\006\Pro Forma 5 v2; 10.Stories; 9/6/2018
APPENDIX A
DEVELOPMENT PIPELINE: DOWNTOWN STATION AREA SPECIFIC PLAN AREA
DOWNTOWN HOUSING INCENTIVES
SANTA ROSA, CA 9/6/2018
Source: City of Santa Rosa
Units/
Project Units Acre Status Stories Zoning Notes
1) 888 Fourth Street 52 68 Approved 7 CD-7
888 4Th St
Downtown
2) Art House 21 105 Approved 4 CD5-SA
620 7Th St
Downtown
3) Deturk Village 185 54 Approved 4 TV-R-H-SA 185 units includes density bonus 8 W 9Th St Seeking increase in units to 240
West End
4) 420 Mendocino 128 207 Under Review 6 CD-10-SA
420 Mendocino
Downtown
5) Pullman Lofts 72 39 Approved 3 TV-R-SA
701 Wilson Street
West End
6) Railroad Sq. Transit Village 268 50 Opportunity TBD TV-M-H-SA ROEM selected previously 2 Fourth Street Now being re-bid by SMART
Railroad Square
7) Santa Rosa Canners 93 72 Inactive TBD TV-M-H-SA Affordable senior housing 3 W 3Rd St (as of last active proposal)
Railroad Square
Prepared by Keyser Marston Associates, Inc.
\\SF-FS2\wp\19\19311\006\Pro Forma 5 v2; App.A; 9/6/2018
APPENDIX A
DEVELOPMENT PIPELINE: DOWNTOWN STATION AREA SPECIFIC PLAN AREA
DOWNTOWN HOUSING INCENTIVES
SANTA ROSA, CA 9/6/2018
Source: City of Santa Rosa
Project Map
Prepared by Keyser Marston Associates, Inc.
\\SF-FS2\wp\19\19311\006\Pro Forma 5 v2; App.A; 9/6/2018
APPENDIX B
ASKING RENTS OF RECENTLY BUILT PROJECTS IN SANTA ROSA
DOWNTOWN HOUSING INCENTIVES
SANTA ROSA, CA 9/6/2018
Source: Costar
Average Monthly Rent 1
Project Sq. Ft. Asking w/ Concessions Rent/ SF Comments
1. Six1Five Built in 2007
615 Healdsburg Ave Downtown/ St Rose
1BR 754 $2,193 $2,186 $2.90 79 units, 4 stories
2BR 1,060 $2,411 $2,401 $2.27 88 du/ acre
Total 909 $2,303 $2,295 $2.52 1 pkg. space/unit
2. Annadel Apts. Built in 2015
1020 Jennings Ave Coddingtown
1BR 759 $2,135 $2,135 $2.81 270 units, 3 stories
2BR 1,009 $2,533 $2,533 $2.51 25 du/ acre
3BR 1,191 $3,374 $3,374 $2.83 1.9 pkg spaces/unit
Total 913 $2,429 $2,429 $2.66
3. Annadel Apts. II Built in 2018
1020 Jennings Ave Coddingtown
1BR 761 $2,343 $2,343 $3.08 120 units, 3 stories
2BR 1,039 $2,607 $2,607 $2.51 25 du/ acre
3BR 1,191 $3,154 $3,154 $2.65 TBD parking ratio
Total 922 $2,536 $2,536 $2.75
4. Magnolia Place Built in 2017
1108 14th Street Junior College
2BR 1,008 $2,251 $2,238 $2.22 20 units, 2 stories
3BR 1,296 $2,558 $2,543 $1.96 18 du/ac
Total 1,066 $2,312 $2,299 $2.16 2.6 pkg. spaces/unit
5. Canyon Oaks Built in 2018
Thomas Lake Harris Dr Outer Santa Rosa
3BR 1,446 $3,195 $3,195 $2.21 96 units, 3 stories
Total 1,446 $3,195 $3,195 $2.21 10 du/ acre
2.3 pkg spaces/unit
Summary ($/ Month) Min Max Average
1BR $2,135 $2,343 $2,221
2BR $2,238 $2,607 $2,445
3BR $2,543 $3,374 $3,067
1 At least one parking space appears to be included in lease in all cases.
Monthly fee for pets: $40-$50 per month (where permitted).
Prepared by Keyser Marston Associates, Inc.
\\SF-FS2\wp\19\19311\006\Pro Forma 5 v2; App.B; 9/6/2018
APPENDIX B
ASKING RENTS OF RECENTLY BUILT PROJECTS IN SANTA ROSA
DOWNTOWN HOUSING INCENTIVES
SANTA ROSA, CA 9/6/2018
Source: Costar
Project Map
2 &
Prepared by Keyser Marston Associates, Inc.
\\SF-FS2\wp\19\19311\006\Pro Forma 5 v2; App.B; 9/6/2018
APPENDIX C
RECENT MULTIFAMILY PROPERTY TRANSACTIONS IN SANTA ROSA
DOWNTOWN HOUSING INCENTIVES
SANTA ROSA, CA 9/6/2018
Source: Costar
Year Unts/ Year
Property Built Units Acre Sold Sale Price $/Unit Cap Rate 1 3680 Kelsey Knolls Grove 2004 124 12 2016 $42,351,000 $341,540 4.60% 2 Magnolia Place (1108 14th St) 2017 20 18 2017 $6,600,000 $330,000 5.02% 3 2111 Kawana Springs Rd 2002 138 15 2016 $43,000,000 $311,594 4.50% 4 200 Bicentennial Way 2003 78 12 2016 $24,026,000 $308,026 4.60% 5 4656 Quigg Dr 2003 277 24 2017 $84,919,408 $306,568
6 2327 Summercreek Dr 2004 104 18 2016 $30,500,000 $293,269 4.85% 7 2315-2335 Lomitas Ave 2004 28 30 2018 $7,115,000 $254,107 Prepared by Keyser Marston Associates, Inc.
\\SF-FS2\wp\19\19311\006\Pro Forma 5 v2; App.C; 9/6/2018
APPENDIX D
CURRENT GOVERNMENTAL FEES
DOWNTOWN HOUSING INCENTIVES
SANTA ROSA, CA 9/6/2018
Source: City of Santa Rosa
Potential
Fee Item Fee Amount Incentives
Building - Inspection
Multi-Family Residential $0.09 /Sq. Ft.
Parking Garage $0.10 /Sq. Ft.
Retail Sales $0.60 /Sq. Ft.
Storage $0.43 /Sq. Ft.
Micrographics Fee 0.04% of Valuation
Plan Review
Multi-Family Residential $0.25 /Sq. Ft.
Parking Garage $0.36 /Sq. Ft.
Retail Sales $1.60 /Sq. Ft.
Storage $1.07 /Sq. Ft.
Fire Permit Fees
Fire Inspection $7,446 Lump Sum
Fire Plan Review $20,562 Lump Sum
Fire Micrographics - BLDG $700 Lump Sum
Fire Technology - BLDG $700 Lump Sum
Technology Fee $93 Lump Sum
Advance Planning Fee $370 Lump Sum
Impact - Capital Facilities
Mini Warehouse $1.54 /Sq. Ft.
Retail $14.16 /Sq. Ft.
Residential, Medium-High Density $5,433 /Unit Reduction Impact - Parks
Multifamily - Northeast $7,734 /Unit Reduction
Strong Motion Tax - Residential 0.01% of Valuation
SB1473 CBSC Fee 0.004% of Valuation
Housing Allocation Fee1
$1,000 /Unit or
$1.50 /NSF
School District
Residential $3.48 /SF
Commercial $3.56 /SF
Water/ Wastewater
Water Connection $2,469 /unit Deferral
Wastewater Connection $7,021 /unit Deferral
Public Art (Commercial Only) 1% of Valuation
1 Fee varies based on unit size. Fees shown are the average per unit or per net square foot for 420 Mendocino (670 NSF/unit).
Prepared by Keyser Marston Associates, Inc.
\\SF-FS2\wp\19\19311\006\Pro Forma 5 v2; App.D; 9/6/2018