1. Douglas County/City of Superior Comprehensive Housing Study Findings Presented by: Mary Bujold | Maxfield Research and Consulting, LLC January 27, 2016

2. Objective Project Scope Provide custom comprehensive housing needs assessment Approach Identify current & future housing needs for residents in Douglas County and City of Superior; provide a focus on need for new multifamily and single-family development. Goal Provide decision makers with an overview of housing conditions for existing and future residents. Deliverables Key study checkpoints Primary Data collection: May 2015 to September 2015 Draft: October 2015 Final: December 2015

3.  Primary Market Area includes all of Douglas County  Analysis considered:  City of Superior  Villages in the Co.  Rural Towns  Demand accounts for households that would move into the City/Co. from other locations Primary Market Area

4. Projections compiled by Maxfield Research from a thorough review of several factors (i.e. impact of recession/recovery, 2010 Census, building permits issued, Wisconsin State Demographer - population and household growth estimates and projections) Numerical growth is Anticipated to be greatest In the Co. However, Superior could Increase its household Growth through higher Development densities

5. Demand Drivers Demographics Economy & Job Growth Consumer Choice | Preferences Turnover/Mobility Supply (i.e. Existing Hsg. Stock) Replacement need (i.e. functionally /physically obsolete) Equity and Financing Demand Components  Household growth  No. of owner/renter households  Hsg. Lifecyles of major demographic groups  Household Incomes  Product types | Preferences Demand Components Methodology  HH growth projections between 2015 and 2020  Consideration of employment growth trends  Modest shift in Household tenure rates to slightly higher rental proportions  Consider land availability and increased densities in urban locations

6.  +1,205 households (2015-2025)  Proportion of rental to increase modestly against ownership from 2015-2025  Increasing senior demand anticipated after 2020 as baby boomers age  Demand for additional housing (‘15-’25)  828 owned/ 1,111 rental  Millennials (ages 15-35 in 2015) largest adult age cohort between 2015 and 2020  Trend toward shrinking household sizes as the population ages  Median HH income  ‘15 Superior/Co. = $38,698/$44,505  ‘20 Superior/Co. =$43,639/$51,596

7. Employment & Housing Demand  Job growth  ‘00-’10 – Loss of 1,025 jobs  ’10-’15 – Gain of 169 jobs  7,387 jobs ‘10-’20 (10.7%)  Superior imports workers  8,045 people commute to Superior  6,941 people commute out of Sup.  4,729 people live & work in Sup.  Difference between owner/renter incomes and incomes of Douglas Co. workers:  Median HH income Co: $44,505  $58,921 (owner) vs. $25,652 (renter)  Avg. Co. Wkly. wage: $733  Avg. WI Wkly. wage: $837

8. Rental Housing Superior Rental Survey (2015)  Market Rate, Affordable, Senior  Total Units=1,794 Market Rate  328 units | 17 properties  2.0% vacancy rate  Vacancies Low = Rents Increasing  $608 avg. rent ($0.95 PSF) (2015)  Efficiency: $411 ($1.19 PSF)  1BR: $561 ($0.95 PSF)  2BR: $665 ($0.93 PSF) General Trends  Rental Housing is the most popular R.E. asset class  New product includes mkt. rate, workforce  More challenging to get new units developed in outlying areas and rural communities

9. Rental Housing: Deep and Shallow Subsidy Cost Burdened Households (All Ages) General-Occupancy Deep-Subsidy and Shallow Subsidy  430 units (Shallow Subsidy)| 6 properties  0.0% vacancy  189 units (Deep Subsidy| 3 properties.  0.0% vacancy  Waiting Lists at nearly all assisted housing  39% of Superior renters (1,998 HHs) pay 35% or more of income for rent (2014)  20% of Superior renters (1,034 HHs) pay 50% or more of income for rent (2014)  Douglas County (26.7% pay 35% or more) (16% pay 50% or more)

10. Housing Production City of Superior: Limited MF production since 2000; Limited housing production since 2009 Douglas County: Strong SF production in early 2000s Most MF production focused in Superior

11. Senior Housing Market Rate*  196 units | 6 properties  6.1% vacancy rate  15 units Active-Adult| 13.3% vac. rate  0 units Congregate | Not Applicable  129 units Assisted Living | 14.0% vac. rate  52 units Memory Care | 3.8% vac. rate Deep-Subsidy  530 units | 11 properties  0.6% vacancy rate City of Superior  847 units | 22 properties  3.0% vacancy rate 5%-7% Vacancy = Market Equilibrium Shallow-Subsidy  121 units | 4 properties  0.0% vacancy rate

12. Lot Supply  Limited land available for new owned housing development  119 SF lots available  Avg. annual starts  20 in Superior  109 in Rem. Of Douglas County For-Sale Market  Housing market rebounding  Median resale price $117,500 in 2014, up from $107,200 in 2013  Total sales 480 in 2014, consistently increased since 2010  Very limited new product available

13. Age of Housing Stock City of Superior Owned Housing –23.1% built before 1940 –79.9% built before 1980 Rental Housing –31.0% built before 1940 –80.5% built before 1980 Single-Family Homes Rented –31% of all units rented –68% of all units rented & built prior to 1940 are SF or Duplex Douglas County Owned Housing –27.5% built before 1940 –67.8% built before 1980 Rental Housing –28.5% built before 1940 –76.8% built before 1980 Single-Family Homes Rented –36% of all units rented –33% of SF built prior to 1940

14. General-Occupancy Summary Demand Summary Demand – 2015 to 2025  1,066 units (’15-’20)  873 units (‘20-’25)  Demand by housing type (‘15- ’25):  30% single family for-sale  13% multifamily for-sale  57% rental  Distribution:  48% in Superior  52% in Remainder of Douglas County

15. Policy considerations of implementing a rental licensing program –Improved Quality of Rental Housing (may impact positively) –Efficiency of Rental Markets (may impact negatively – i.e. if rents increase substantially) –Availability of Affordable Housing (may impact positively or negatively) –Attractiveness of the City to Middle-Income Households (healthy middle-income base is important to maintaining an attractive community and a high quality of living) –Administrative and Economic Feasibility City of Milwaukee (Rental Licensing Assessment) –City undertook an analysis to determine whether a rental licensing program should be implemented; –Inspections focused on specific habitability issues including: Lack of hot and/or cold running water; Heating facilities not in operable condition or not capable of maintaining a temp. of 67% F. Dwelling unit is not served by electricity Structural or other conditions in the unit which present a significant health and safety hazard Not served by plumbing facilities in operable condition Not served by sanitary sewage disposal Rental Licensing Program

16. Challenges related to rental licensing programs –City of Minneapolis must notify tenants that an inspection is being completed –Of the 15 reviews of rental licensing programs, only two were able to fully fund their programs. Milwaukee is restricted to charging only what it costs to complete the inspections. Kansas City, KS however is allowed to charge a higher fee related to inspections. –Political difficulties in passing rental inspection ordinances at the City level. Goals are to provide safe and secure housing for the community. Other avenues may be available to accomplish this without a full rental licensing program. Rental Licensing

17. Key Takeaways Summary  Pent-up demand for ownership and general occupancy rental housing and low-income senior housing.  Millennials are the largest adult age group between 2015 and 2020  Baby Boomers will experience substantial growth among those 65 to 74 from 2015 to 2020  Rental Vacancies are Low and Very Limited New Product  Vacancies for market rate units were at 2.0% and were at 0.0% for shallow and deep subsidy housing  Housing stock is generally older with a high proportion of older SF and Duplex units built prior to 1940 being rented  Consideration of quality standards for rental housing  For-Sale market activity has been increasing since 2010, but there is very limited new housing product available in Superior. Households seeking new SF homes have generally moved out beyond the City boundaries.  Limited land available for new single-family homes  Potential to consider targeted rehabilitation of existing homes  Develop new ownership units targeted to empty-nesters and independent seniors

18. Mary Bujold Maxfield Research and Consulting, LLC 612.904.7977 mbujold@maxfieldresearch.com www.maxfieldresearch.com http://twitter.com/realestatedev https://www.facebook.com/pag es/Maxfield-Research-Inc/ http://www.linkedin.com/co mpany/maxfield-research-inc Questions ….