These Market Study Guidelines ("Guidelines") apply to all applicants
seeking Housing Tax Credits under Arkansas' Low-Income Housing Tax Credit
Program (LIHTC), tax-exempt bond financing under Arkansas' Volume Cap for
Private Activity Bonds Program, funding from the HOME Investment Partnership
Program, or any of the Arkansas Development Finance Authority's (the
"Authority") affordable housing programs. By requiring specific information in
all market studies, the Authority will be able to assess the affordable housing
need in competing communities through a
comparison of similar characteristics. By requiring that all market studies be
prepared in accordance with a specific outline, the Authority will be able to
perform a more comprehensive and expeditious review.
The objective of the market study is to demonstrate the existence of
sufficient
need
for the proposed
affordable rental development in the Market Area. The Authority also wants to
ensure the proposed development will not cause an adverse affect on other
viable affordable rental developments in the Market Area. The market study must
be conducted at the applicant's expense by a disinterested third party approved
to perform market studies by the Authority. A complete list of market study
firms approved to perform market studies by the Authority can be found on the
Authority's website at:
http://www.arkansas.gov/adfa/LIHTC%2008/Market%20Analysts%20Approved%20List_08.pdf.
Market studies performed by a firm that is not on the Authority's
approved list will not be accepted. All market studies must include a
letter, signed by the market analyst, certifying to the following:
1. Name, address, telephone number and e-mail
address of person authorizing the market study;
2. Name, address, telephone number and e-mail
address of person who prepared and certified the market study;
3. Development type, i.e.,
acquisition/rehabilitation and/or new construction;
4. Date of the market study (the market study
must be dated within six (6) months prior to the Application
Deadline);
5. A statement that
there exists no identity of interest between the analyst and the applicant or
its principals;
6. A statement that
recommendations and conclusions are based solely on the professional opinion
and best efforts of the analyst.
The market study must be organized in a format that follows these
Guidelines and provides an index or table of contents indicating the page
within the market study where each of the following minimum requirements can be
found within the study. In addition, the market study
must reference by footnote the data provider,
e.g., ESRI, Claritas,U.S. Census Bureau, U.S. Department of Labor,
etc., that has supplied the data or projection referenced in the
market study. A copy of the page(s) from the source data provider must be
included in an Appendix to the market study. The footnote must include the
Appendix number to the source document page. Any additional relevant data, such
as primary source data from surveys or focus groups,
must be identified by footnote with the source
documentation included in the Appendix to the market study.
The market study must address all of the items listed below and must
demonstrate sufficient need in the Market Area to support the proposed housing.
Market studies not meeting these Guidelines will not be accepted. Market
analysts that do not comply with these Guidelines are subject to removal from
the Authority's approved list. These Guidelines establish the
minimum requirements of the Authority. Market analysts
are expected to include any additional information they consider relevant and
necessary to the analysis.
I.
Table of Contents
A. Each section of the market study must be
identified with the corresponding page number.
B. Any exhibit or chart within the market
study must be numbered for easy reference.
II.
Photographs
All photographs should be labeled and placed in the section of the
market study where referenced.
A.
Good, quality color photographs of the subject property must be included. The
photographs must be properly labeled and include north, south, east and west
orientations of the property with views of the neighborhood, surrounding
neighborhoods, and street scenes.
B. Rehabilitation properties must include
photographs of each side of each building and on-site, community
amenities.
C. Photographs of all
comparable developments in the Market Area are required. See,
"Comparable Units and Developments" below.
D. A map clearly identifying the location of
the development is required. The map should also identify the following:
i. Existing and proposed comparable
developments in the Market Area. The map should distinguish between LIHTC
developments, USDA Rural Development developments, HUD developments, and
conventionally financed developments; and
ii. Existing grocery stores, medical and/or
pharmaceutical facilities, schools, public transportation and other service
facilities in the Market Area. The map should identify each service facility
and its nearest
driving
distance from the
proposed development's location. See, "Delineation of Market Area"
below.
III.
Executive Summary and
Conclusions - the following must be included:
A. A concise description of the site and
adjacent parcels, particularly neighborhood housing. The description must
include the development's name, street address (if available), city, county,
zip code and census tract number. Street by street directions to the
development location must be provided beginning from the Arkansas State Highway
or Interstate Highway closest to the development location.
B. A statement of assumptions and limited
conditions considered by the analyst.
C. A brief summary of the development,
including the type of construction (new and/or rehabilitation), number of
buildings, number and type of units, proposed gross rents and population
served.
D. A brief description of
the Market Area.
E. A precise
statement of the analyst's opinion of market feasibility including the prospect
for long-term performance of the development given housing, demographic trends
and economic factors. The statement must include a capture rate of the need for
each unit type, based on the targeted income group determined by the gross rent
for such unit, in the expected year of market entry.
F. A summary of market related strengths
and/or weakness which may influence the subject development's marketability,
including but not limited to: compatibility with surrounding uses; the
appropriateness of the subject development's location; service facilities;
on-site amenities; off-site amenities and their driving distance from the
development; units sizes and configurations; and number of units.
G. A summary of all comparable developments
which distinguishes existing and planned affordable housing developments by
type and includes driving distance from the subject development, population
served, number of units by bedroom size, gross rent by unit size, supportive
services and on-site amenities.
H.
A precise statement of key conclusions reached by the analyst, supported by the
data contained in the market study. These conclusions must include:
i. A summary of positive and negative
attributes and issues that will affect the property's performance and lease-up,
the analyst's observations that would mitigate or reduce any negative
attributes, and any recommendations and/or suggested modifications to the
proposed development;
ii. An
evaluation of the proposed development, given the target population and market
conditions. This evaluation should include market justification for the
proposed development, including the proposed rents by unit and population type,
estimated absorption rate, and should further evaluate the proposed unit,
development, and on-site amenities given the market.
iii. An objective review of past, present,
and future demographic and economic trends in the defined Market Area and
include an estimate of how the proposed development will be integrated into the
Market Area based on existing and proposed comparable rental
developments.
IV.
Development
Description
- the following must be included:
A. A detailed description of the development
location including closest streets, number of acres, site configuration,
contiguous land use and zoning.
B.
Total proposed development units and total tax credit units by: number of
bedrooms, gross rent assigned by the applicant, income limit as a percent of
the area median income as selected by the applicant, unit size in square feet,
and utility allowances for tenant paid utilities.
C. Description of the development's target
population and occupancy type (family; senior by type, e.g.,
55+, 62, USDA Rural Development ("RD"), or U.S. Department of Housing
and Urban Development ("HUD"); assisted living; other supportive housing;
etc.).
D. Projected date for
development completion and start of lease-up.
E. Tenant paid utility schedule and source of
that schedule.
F. Description of:
the number of buildings, design (walk-up, elevator, single-family detached,
etc.), and number of stories, unit and common amenities, and number of parking
spaces.
G. For rehabilitation
proposals, current occupancy levels, current rents, identification of any
existing assisted housing program.
V.
Delineation of Market
Area
- the following must be included:
A. An identification of the geographic Market
Area by census tracts, jurisdictions, street names, or other geography forming
the boundaries from which potential renters will be drawn (include a map which
clearly delineates the Market Area). The analyst must provide a reasonable
rationale for the Market Area taking into account political and natural
boundaries, experience of comparable rental housing developments in the Market
Area, and socioeconomic characteristics.
B. A
driving
distance map of the suggested Market Area that identifies:
i. the proposed development;
ii. all comparable rental
properties;
iii. closest
medical/pharmaceutical facility;
iv.
closest full-service grocery store (do not include convenience
stores);
v. schools; and
vi. public transportation.
C. Description of
current site characteristics, including:
i. topography, e.g., grade,
low-lying area, flood plain, or wetlands;
ii. proximity in feet to nuisances, e.g.,
railroad tracks, major highways/interstates, manufacturing/production plants;
and
iii. environmental
issues.
VI.
Market Area Economy
- except independent
senior, assisted living, and supportive housing for disabled persons'
developments, the following information regarding the Market Area must be
included:
A. Employment by industry type,
i.e., manufacturing, service, finance, or
government.
B. Major current
employers and any anticipated expansion, reduction or closure. The analyst must
provide workforce numbers and anticipated incomes as relevant to the
development's targeted income group(s);
C. New major employers
known, as evidenced by proper documentation, to be
locating in the Market Area prior to the expected year of market entry for such
development. The analyst must provide workforce numbers and anticipated incomes
as relevant to the development's targeted income group(s);
D. Employment growth for each of the seven
(7) years prior to the expected year of market entry for such
development;
E. Unemployment rate
for each of the seven (7) years prior to the expected year of market entry for
such development.
VII.
Demographic Data
All proposals shall provide the following
demographic information for the Market Area. The information must be provided
for:
1) Most recent census year (use
as baseline data);
2) the fifth
(5th) year following the baseline year;
3) the calendar year of the application;
and
4) the expected calendar year
of market entry for such development. The market study
must reference by footnote and appendix the national
proprietary data provider that has supplied the demographic data and
projections used by the market analyst. A copy of the page(s) from the source
data provider must be included in the appendix to the market study.
A. Population Trends
i. Total population;
ii. Population by age group; and
iii. Number of senior and non-senior (senior
developments only)
iv. Other
special needs population by age group
B. Household Trends
i. Total number of households;
ii. Households by tenure; that is, the number
of owner and renter households;
iii. For senior developments, separately
designate senior households by tenure and senior type, i.e.,
55+ years, 62 years, RD, HUD;
iv.
For assisted living developments, separately designate households by tenure and
type;
v. Other special needs
households, e.g., disabled, separately designate households by
tenure and type
vi. Average
household size by tenure
C. Income Trends
i. Estimate of household incomes in $10,000
increments by household size and tenure;
ii. For senior developments, separately
designate senior household incomes by tenure and senior type,
i.e., 55+ years, 62 years, RD, or HUD;
iii. For assisted living developments,
separately designate household incomes by tenure and type; and iv. Other
special needs households,
e.g., disabled, separately designate
household incomes by tenure and type.
Independent Senior Housing proposals. The data
for independent senior housing must be based upon the type of senior housing
proposed, i.e., 55+ years, 62 years, RD, or HUD.
Assisted Living Housing proposals. The data
must be based upon households, a member of which meets the medical criteria set
forth in Section 26205II. of the Medical Services Policy Manual for the
Arkansas Department of Human Services.1
Supportive Housing for Disabled Persons
proposals. The data must be based upon those households, a member
of which has a handicap as defined in the Fair Housing Act at
42 USC §
3602(h) (http://www.access.gpo.gov/uscode/title42/chapter45_subchapteri_.html).
(See also,
24 C.F.R. §
100.201,
http://edocket.access.gpo.gov/cfr_2008/aprqtr/pdf/24cfr100.201.pdf),
that are intended to be served by the development. The market analyst must
identify the disabled population the development intends to serve directly
taking into account and identifying the design and construction of the
development and the supportive services to be offered by the development which
meet the needs of the disabled population to be
served.
VIII.
Need
Analysis
In preparing its analysis of the need for the proposed development in
the Market Area, it is the responsibility of the market analyst to be aware of
the applicable income and gross rent restrictions and requirements of the
applicable affordable housing assistance program (e.g. LIHTC, HOME,
Tax-exempt bond). Need must be calculated using an income range based
upon:
1) the minimum annual income a
household can make and still afford the proposed gross rent set for the unit
size (e.g. 0-bedroom; 1-bedroom; 2-bedrooms, etc.) and type
(e.g., LIHTC, HIGH-HOME, LOW-HOME, Tax-exempt bond, Market
Rate); and
(2)the maximum
annual income a household can make for the unit size and type. The percentage
of annual household income that can be used to determine the minimum annual
household income amount, based upon the gross rent set for the
unit,
2 is
thirty percent
(30%).
3,
4 The maximum annual household income amount that
can be taken into account for the restricted units in the development is the
maximum annual household income allowed for the targeted income group,
e.g., 30%, 50% or 60% of the area median income, for the unit
type
(e.g., LIHTC, HIGH-HOME, LOW-HOME, Tax-exempt bond, Market Rate)
based upon two (2) persons per bedroom.
5
However, the maximum annual household income for efficiency units with "0"
bedrooms must be based upon a one (1) person household.
A separate need analysis must be performed for each group of units in
the development of the same:
A. Type
(e.g., LIHTC, HIGH-HOME, LOW-HOME, Market Rate);
B. Gross rent;
C. Targeted income group (e.g., 30%,
50% or 60% of the area median income); and
D. Bedroom size.
Income eligible households cannot be double counted, meaning, an income
eligible household cannot be taken into account in the need analysis of more
than one of the group of units in the development. The market analyst must
distribute income eligible households, which overlap into
2 The gross rent for the affordable units in
the development is that amount restricted for the unit type by law,
e.g., (e.g., LIHTC, HIGH-HOME, LOW-HOME, Tax-exempt, Market
Rate).
3 This percentage
is based upon Section 42(g)(2)(A) of the Internal Revenue Code and HUD's
statement that: "The generally accepted definition of affordability is for a
household to pay no more than 30 percent of its annual income on housing.
Families who pay more than 30 percent of their income for housing are
considered cost burdened and may have difficulty affording necessities such as
food, clothing, transportation, and medical care." The percentage must be
applied for both affordable and market rate units.
4 If the development will have a rental
assistance contract, the minimum annual household income amount is $0.00 for
those units receiving the rental assistance. The market analyst must describe
the terms of the rental assistance contract and identify which LIHTC units will
receive the rental assistance contract.
5 Arkansas Code Annotated §
16-123-307(c)(3)
provides: "An occupancy limitation of two (2) persons per bedroom residing in a
dwelling unit shall be presumed reasonable in this state or any political
subdivision of this state."
more than one group of units:
1) pro-rata among those groups, or
2) among those groups on a reasonable basis
as identified by the market analyst.
Each need analysis must be based upon the following components:
A.
Family
Developments - the sum of:
i.
Income eligible renter households projected to move into the market area the
calendar year of market entry for such development;6
and
ii. Existing income eligible
renter households, as of the calendar year of market entry for such
development, that have any one of the following housing problems:
a) Rent over-burdened, meaning the household
is paying more than 30% of its annual income to gross rent; or
b) Overcrowded, meaning the household has
1.01 or more persons per room living in the unit; or
c) Living in sub-standard housing unit,
meaning unit does not have complete kitchen or plumbing facilities as defined
in HUD's 2000 Comprehensive Housing Affordability Strategy Data
Report.
B.
Independent Senior Developments - the sum of:
i. Income eligible, senior renter households
projected to move into the market area the calendar year of market entry for
such development;
ii. Existing
income eligible renter households, as of the calendar year of market entry for
such development, that have any one of the following housing problems:
a) Rent over-burdened, meaning the household
is paying more than 30% of its annual income to gross rent; or
b) Overcrowded, meaning the household has
1.01 or more persons per room living in the household; or d) Living in
sub-standard housing unit, meaning unit does not have complete kitchen or
plumbing facilities as defined in HUD's 2000 Comprehensive Housing
Affordability Strategy Data Report.
C.
Assisted Living
Developments - the sum of:
i.
Income eligible households, a member of which meets the medical criteria set
forth in Section 26205II. of the Medical Services Policy Manual for the
Arkansas Department of Human Services, that are projected to move into the
market area the calendar year of market entry for such development;
ii. Existing income eligible households, not
living in an existing assisted living facility, a member of which meets the
medical criteria set forth in Section 26205II. of Medical Services Policy
Manual for the Arkansas Department of Human Services; and
iii. Existing income eligible households,
living in an existing assisted living facility, but are rent over-burdened,
meaning the household is paying more than 30% of its annual income to gross
rent
D.
Supportive Housing for Disabled Persons Developments -
the sum of:
i. Income eligible households, a
member of which is disabled, as defined by HUD, and needs housing with
supportive services, that are projected to move into the market area the
calendar year of market entry for such development;
ii. Existing income eligible households, a
member of which is disabled but not living in a supportive housing development;
and
6 The market analyst cannot include
households under categories identified as "leakage" or "spill-over" for areas
outside the Market Area. Categories of this type should be included in the
households projected to move into the Market Area.
iii. Existing income eligible households, a
member of which is disabled and living in a supportive housing development but
are rent over-burdened, meaning the household is paying more than 30% of its
annual income to gross rent.
Capture Rate. Each needs analysis
must calculate the Capture Rate of its group of units from the "net" number of
households in the Market Area that are income eligible and in need of the
housing proposed. The Capture rate is determined by dividing the number of
units in the proposed group of units by the "net" number of households in the
Market Area in need of the housing proposed. The "net" number of households is
determined by subtracting:
1)
existing, vacant comparable units in the Market Area,
2) proposed comparable units in the Market
Area that have not yet been placed in service, and
3) in the case of rehabilitation
developments, current households that will not be eligible to remain in the
development; from the number of households determined to need the proposed
housing in the Market Area. "Comparable units" are those units with comparable
gross rents, bedroom size and purpose
(e.g. family, senior, assisted
living, supportive housing) as those proposed in the development. If
the market analyst excludes any comparable, vacant unit from the "net" number
of households, the market analyst must give a detailed, but concise,
explanation for the exclusion.
Format. A format similar to the
following should be used to summarize the results of each needs
analysis:
|
Summary of need for 3-1br at 30% income
level:
|
|
* Total income eligible households (p. 61 of market
study):
|
76
|
|
* 29.8% of households are renters (p. 23 of market
study):
|
23
|
|
* 49.1% are rent overburdened households (p. 67 of market
study):
|
12
|
|
Net number of income eligible households:
|
12
|
|
Capture rate (3/12):
|
25%
|
|
Summary of need for 5-2br at 50% income level
(LOW-HOME):
|
|
* Total income eligible households (p. 61 of market
study):
|
618
|
|
* 29.8% of households are renters (p. 23 of market
study):
|
185
|
|
* 49.1% are rent overburdened households (p. 67 of market
study):
|
91
|
|
Less vacant comparable units (Fayetteville; Springdale,
Arkansas)
|
-2
|
|
Net number of income eligible households:
|
89
|
|
Capture rate (13/89):
|
14.61%
|
|
Summary of need and demand for 7-3br at 60%
income level (HIGH-HOME):
|
|
* Total income eligible households (p. 61 of market
study):
|
152
|
|
* 29.8% of households are renters (p. 23 of market
study):
|
46
|
|
* 49.1% are rent overburdened households (p. 67 of market
study):
|
23
|
|
Net number of income eligible households:
|
23
|
|
Capture rate (7/23):
|
30.43%
|
|
Summary of need and demand for 12-3br at 60%
income level:
|
|
* Total income eligible households (p. 61 of market
study):
|
307
|
|
* 29.8% of households are renters (p. 23 of market
study):
|
92
|
|
* 49.1% are rent overburdened households (p. 67 of market
study):
|
46
|
|
Income eligible households projected to move in year of market
entry:
|
3
|
|
Net number of income eligible households:
|
49
|
|
Capture rate (12/49):
|
24.49%
|
IX.
Absorption Period:
The market study should define and justify the Absorption Period for
the development. The Absorption Period is considered to start as soon as the
first units are released for occupancy. The analysis must provide an estimate
of the time required to reach 95% occupancy. The absorption period
determination should consider, but is not limited to, such factors as the
overall estimate of new household growth, the available supply of comparable
units, observed trends in the absorption of comparable units, and the
availability of rent subsidies.
X.
Comparable Units and
Developments
The market study must identify all comparable units and developments in
the Market Area. There is no minimum or maximum number of comparable
developments as all such developments must be
included. Do not omit any comparable development or information for a
comparable development because of lack of information. Information that is not
available must be noted with a "N/A" with an explanation as to why the
information was not obtainable. The following information must be included for
each comparable development:
. Color photograph(s) of Comparable Development
. Development Name
. Development Address
. Development Telephone Number
. Distance from Subject
. Current Occupancy Rate
. Purpose (e.g., family, senior, assisted
living,
supportive housing)
. Type of supportive services offered
. Chart/Table outlining: unit type (e.g., LIHTC,
HIGH-HOME, LOW-HOME, Market Rate); number of units per unit type;
number of bedrooms and bathrooms per unit type; square footage for each unit
type; rent for each unit type; vacancies per unit type and current vacancy rate
per unit type. Totals for each column must be included.
. Amenities (by unit and common areas)
. Appliances
. Unit Features
. Security Features
. Utility Type
. Waiting List (by unit type)
. Development Type (LIHTC, HOME,
MARKET RATE)
XI.
Appendix
The national proprietary data provider for any
data entry in the market study must be referenced by footnote with a copy of
the source document page included in the Appendix. The footnote should identify
the Appendix number of the source document page. All surveys and other data
relied on by the market analyst must be included in the Appendix. The Appendix
must be separated from the rest of the market study by a tabbed, page
divider.
XII.
Disclaimer
The Authority reserves the right, in its sole and absolute discretion,
to evaluate the need for the affordable housing proposed to be developed in the
Market Area. The Authority is not bound by any recommendation or conclusion of
the market analyst and may substitute its own analysis and conclusions for
those submitted by the market analysis.
