7.4 Resolution No. 22-8090 Live SalinaCITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
07/12/2021 4:00 P.M.
AGENDA SECTION
ORIGINATING DEPARTMENT:
FISCAL APPROVAL:
NO: 7
Community and Development
Services
BY.
ITEM
FINAL APPROVAL:
NO: 4
Page 1
BY: Lauren Driscoll, Director
BY:
ITEM: Resolution 22-8090 Adopting The Live Salina Plan 2022 Supplement
BACKGROUND:
Resolution 16-7315 adopting and implementing the Live Salina Housing Assessment and Strategic
Plan was adopted by the Salina City Commission on January 25, 2016. The housing assessment and
plan were the result of 18 months' worth of work with RDG Planning and Design Group, a consulting
firm based out of Omaha, Nebraska.
Since 2016 Salina has continued to be the chosen expansion location of several economic
development prospects. One Vision, a commercial airplane restoration company, NIAR, Schwan's and
Great Plains Manufacturing have all announced substantial expansions. Associated industries like
medical, education, retail, and entertainment will be affected by the influx of newjobs and are expected
to see an increase in their own employment needs in order to meet new demands.
In January of 2021 the City worked with RDG Planning and Design Group to update the Live Salina
Housing Assessment and Strategic Plan. The purpose of updating the plan was to ensure that the
community's demographics and new employment numbers are as current as possible, allowing the
City to understand the projected housing need over the next 10 years. Additionally, the City wanted
the updated plan to objectively assess the housing development challenges and costs with the
anticipation that developers would be seeking financial assistance or incentives from the City. The
updated Live Salina Housing Plan — 2021 Supplement was adopted on July 12, 2021. The Salina
Housing Incentive Policy was adopted on July 19, 2021 with Resolution No. 21-7971.
Since the adoption of the 2021 Supplement, the community has seen many factors shift and impact
the housing market. The current market has high demand for labor with a low supply, a constricted
supply chain, tight lending, and rising interest rates. In order for the City to have the most accurate
and relevant data available for decision making, staff has engaged RDG to refresh the supplement
with current numbers and demographics.
Attached for the Commission's review and adoption is the 2022 Live Salina Supplement. In summary,
the update makes clear the continued, and increased, need for housing production in Salina,
recommending over 2,300 new units through 2030. The largest need is identified as small -lot single-
family and low-density attached owner -occupied units under $225,000 followed by high-density multi-
family rental units under $1,000. An additional component of this report includes opportunities the City
can take to help address the barriers to housing production through a variety of both stand-alone and
stackable incentive tools. To be concise in the 2022 Supplemental Update, only the tables updated
with new data from the 2021 document are shown in this update document. All other maps, strategies,
and recommendations of the 2021 Live Salina document are still relevant and important to consider
in the context of housing need.
AGENDA SECTION
NO:
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
07/12/2021 4:00 P.M.
ORIGINATING DEPARTMENT: I FISCAL APPROVAL:
Community and Development BY.
ITEM Services FINAL APPROVAL:
NO:
Page 2 BY: Lauren Driscoll, Director BY:
FISCAL NOTE:
There is no direct cost associated with the adoption of this supplemental plan update
COMMISSION ACTION OR RECOMMENDED ACTION:
Staff has identified the following options for the City Commission's consideration:
Resolution 22-8090
A Resolution Adopting The Live Salina Plan — 2022 Supplement And Supporting Its Implementation
1.) Approve Resolution No. 22-8090
2.) Approve Resolution No. 22-8090 with amendments as the City Commission deems
appropriate.
3.) Postpone consideration of Resolution No. 22-8090 to a specified date and time and provide
staff direction regarding additional information or amendments the City Commission would like
to request for their further consideration.
4.) Vote to decline to approve Resolution No. 22-8090 resulting in the 2022 Supplement to the Live
Salina Plan not being adopted and the current Live Salina Plan being unrepresentative of
current housing market conditions.
Staff recommends Option #1
Attachments:
1) 2022 Supplement — Live Salina Plan (DRAFT)
2) Resolution No. 22-8090 (DRAFT)
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LIVE SALINA: 2022 UPDATE
Live Salina. A Strategic Housing Plan, published in March, 2016, presented a
detailed analysis of Salina's housing characteristics, markets, and opportunities
and included specific recommendations and strategies to address key housing
and neighborhood development issues. The 2016 document included an
extensive community engagement process that included open houses, public
surveys, and small group listening sessions and discussions. The original study
was refined in 2021 to include a supplement with key variables, the most
recent available data, new analysis based on Salina's current position, and a
housing policy framework to take advantage of opportunities for growth and
development.
With ever changing conditions and markets, the next series of pages provides
an update to critical market data as of June 2022, noting comparisons to
2021 data. To be concise, only tables updated with new data from the 2021
document are shown in this update document. All other maps, strategies,
and recommendations of the 2021 Live Salina document are still relevant and
important to consider in the context of housing need. The update makes clear
the continued, and increased, need for housing production in Salina.
City
2010
2020
%Change
Salina
47,707
46,889*
-1.7%
Emporia
24,916
24,139
-3.1%
Lawrence
87,643
94,934
8.3%
Leavenworth
35,251
37,351
6.0%
Manhattan
52,281
54,100
3.5%
Topeka
127,473
126,587
-0.7%
*An undercount is suspected because of
the pandemic and the shortened time
frame to follow up with people that did not
voluntarily fill out their Census form in 2020.
Historically, minority groups are less likely
to fill out their Census forms voluntarily.
In 2020, the Census Bureau reports an
undercount of 4.99% for Hispanic or Latino
populations and 1.48% for renters across
the country. The reported Hispanic or Latino
population in Salina was 12.5% in 2020,
which is similar to Kansas (12.7%).
The likely undercounting in Salina is
supported according to a 2021 Finney
County Economic Development Corporation
report which finds that 10%-20% of Saline
County's population was at -risk of being
undercounted, mostly attributed to Hispanic
populations. When corrected for just one-
fourth of the undercount risk, Saline County's
estimated population growth is over 1,000
people between 2010 and 2020.
Therefore, to forecast a more accurate future
housing demand, the reported 2020 Census
count is inflated to capture one-fourth of the
undercount risk, to a conservative 48,647
total 2020 population, shown in Figure 2.
3
POPULATION CHARACTERISTICS
Figure 1 displays estimated population change in Salina compared to a sample
of peer cities in the state. According to the 2020 Census, Salina's population
declined slightly from its 2010 historic peak of 47,707 to about 47,000. We believe
this is an undercount and detail our reasoning below. The Census Bureau
has also recognized the undercount potential of the 2020 results. With the
supplemental under count analysis, we believe the actual 2020 population is
conservatively around 48,600, which represents a 2.0% growth from 2010-2020.
55.000---- -- -- ---- --.- -.
r r.r
45,000
40,000 I
35,000
48,647
30,000 ' --- -
1970 1980 1990
2000 2010 2019 2020
10,000
+207
9,000
8,000
7,000 -376 -817 +98
6,000 99
5,000 -548
4;000 -176 -120
3,000 +240
2,000 139
1,0000 ■
0-14 15-19 20-24 25-34 35-44 45-54 55-64 65-74 75-84 85+
■ 2020 Predicted ❑ 2020 Actual
Source: D.S. Census Bureau; RD6 Planning & Design
2021-2022 Report Comparison
An updated base population in 2020
that factors under count reports.
Updated to 48,647 in this report.
Increase the percent of jobs that
will produce new households in
Salina, from 40% to 60%. Limited
construction activity in the region will
create more opportunity and need
to accommodate these employees in
Salina.
An increase in the projected job
growth from about 1,100 new jobs to
about 1,850 new jobs. The increase is
based on data provided by employers
regarding their growth plans.
A slight reduction in people per
household from 2.38 to 2.35 to
account for an aging population
and the potential younger, single
population needed to fill job openings.
An overall increase from 2021 to
2022 in the forecasted households
by 2030, from 20,400 to 22,215. This
indicates the growth in housing need
from just one year of changing market
conditions and continued strong job
base.
Population with Basic Growth Rate (0.50°% annually)
POPULATION PROJECTION
Figure 4 below displays Salina's forecasted population to 2030, based on past
trends and employment growth projections as of March 2022. This calculation
differs significantly from the 2016 study because of data provided by employers
about the number of newjobs that will be created by industrial expansion in the
coming years. This projection includes the following assumptions:
Growth Attributed to Job Expansion
Population with Basic Growth and Job Expansion
Population in Households with Growth and Job Expansion
Average People per Household
» A basic annual growth rate of 0.50% is held through 2030. The basic
growth rate excludes projected population gain from new employment. It is
based on building trends and past growth rates. The growth is alsojustified
based on the potential spin-off business and attraction created by industrial
expansions in the early 2020s.
Addition of about 1,850 newjobs in major industries in the next
several years, 70% which need to be absorbed by 2025 and the
remainder through 2030 as employers gain capacity to hire and attract
workers. Adding of these jobs hinges on adequate housing options. The
population forecast estimates that 60% of these newjobs will produce
households new to Salina, with the balance in surrounding regional
communities or representing people already in the city and surrounding
area that take newjobs in expanding industries.
Population per household will remain at the 2020 level of 2.35 for the
next ten years, and the percentage of people living in households
(rather than group quarters) will remain at the current level of 97%.
Households are the critical number in projecting new housing unit
demand.
1020 Base 2021-2025 2026-2030
48,647 49,875 51,135
1,826 783
48,647 51,701 53,744
47,188 50,201 52,205
2.35 2.35 2.35
Number of Households Needed at End of Period 20,078 21,362 22,215
Source: ADG Planning & Design
INCOME DISTRIBUTION
Figure 5 updates income data from the 2016
study using 2020 estimates. These data
partially account for the economic impact of
the COVID pandemic, including federal relief
payments. While Salina remains a moderate
income market, it has experienced significant
income growth of about 19% between 2010
and 2020. This level of growth (slightly higher
than inflation) is lower than the group of
peer cities but Salina still had a similar overall
median household income to peers in 2020.
Figure 6 provides a reminder about the
geography of income levels in Salina from
the 2019 study update. The highest median
incomes are in the East and Southeast parts
of the city. Map data was not updated for the
2022 study revisions.
2021-2022 Report Comparison
Incomes reported by the American
Community Survey rose between
2019 and 2020 in Emporia, Lawrence,
Leavenworth, and Manhattan.
Incomes in Salina between 2019 and
2020 stayed around $50,000.
Wichita and Kearney, NE were added
in the 2022 report to provide different
areas for comparison.
FIGURE 5: Annual Median Household Income, 2010 and 2020- Salina and
Comparison Communities
02010 •zozo
$70,000
+22% +38%
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
+19% • +39%
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FIGURE 6: Median Household Income by Census Tract, 2019
Source: American Community Survey 5 -year Estimates
FIGURE 7: Occupancy
, ,
HOUSING TENURE AND COMPARATIVE COST
2020
Leavenworth
Figure 7 shows estimates of tenure from the 2020 American Community Survey.
Topeka
2010 2020** Change
Salina currently has an owner/renter occupancy split of about 63% owner to 37%
Owner -Occupied
12,409 11,887 .522
renter. The ACS estimates indicate a vacancy rate of 8.5%.
Renter -Occupied
6,982 7,358 +376
However, the ACS also provides data about the reason units are vacant. Units
Total Vacant
1,412 1,779 +367
nearly constructed but not yet occupied are counted as vacant units, even if
49.1%
39.7%
a renter or homeowner is secured. Conversely, units that are condemned or
For rent
645 413 -232
exposed to the elements are not considered vacant.
occupied of
P
38 199 +161
To get a truer sense of the market, we subtracted the "other vacancy" and
41.4%
Vacancy Rates
vacation home category from the actual number of vacancies. These vacant
For sale only
213 406 +193
units are not available options to fill housing demand because they are for
Sold, not occupied
66 75 +9
occasional use, foreclosure, repairs, and legal reasons among others. The
$133,500
$98,200
exclusion results in a vacancy rate around 5.2%, which is used for projection
Forseasonal,
$213,200
purposes on the following pages.
recreational, or
55 46 -9
$668
occasional use
$958
$910
Formigratory
workers
g 0 -8
2021-2022 Report Comparison
1967
1987
A decrease in the overall vacancy rate from 9.8% to 8.5%.
All other vacant
387 640 +253
Average household size of owner-
A decrease in the vacancy rate excluding "other vacant," vacation
Vacancy Rate
6.8% 8.5%*
homes, and not yet occupied units from 6.0% to 3.9%. This means
Total
20,803 21,024 +221
units were brought out of vacant status and converted to occupied
3
2.4
rentals.
*When excluding "other vacant"
and vacation homes, the vacancy
rate is 5.296 m 2020 versus 4.7% in 2010.
An increase in value -to -income ratios across all comparison cities,
**Subject to margin oferrorsiothe2020AmericanCommunity
except Topeka. Ownership became slightly more unaffordable.
Survey
216
1.98
Source: American Community Survey 5 -year Estimates
6
Salina
Emporia
Lawrence
Leavenworth
Manhattan
Topeka
Total Units
21,024
11,479
42,033
14,331
23,992
60,489
%Owner
61.8%
47.9%
44.6%
49.1%
39.7%
58.6%
%Renter
38.2%
52.1%
55.4%
50.9%
60.3%
41.4%
Vacancy Rates
8.5%
12.5%
6.2%
10.4%
14.0%
10.6%
Median Value (Owner -Occupied)
$133,500
$98,200
$204,800
$136,800
$213,200
$105,700
Median Rent (Gross)
$769
$668
$924
$958
$910
$815
Median Year Structure Built
1965
1967
1987
1969
1982
1965
Average household size of owner-
occupied unit
2.47
2.7
3
2.4
2.49
2.33
Average household size of renter-
occupied unit
216
1.98
2.06
2.68
2.28
2.11
Value -to -Income Ratio*
2.68
2.26
3.68
2.25
4.18
2.13
*see 2021 supplement document far definitions
Source: American Community Survey 5 -year Estimates
6
2021-2022 Report Comparison
AFFORDABILITY ANALYSIS
The same trends year-to-year related
Figure 9 examines supply and demand through the lens of what is "affordable"
to gaps in options for households
to different income groups to answer the question: is there an adequate supply
making under $25,000 and over
$75,000 a year.
of housing options available for residents of different income groups? Figure 9
illustrates five major components in pursuit of the above story:
The balance of supply and demand
Units
became more unbalanced across all
1. Income Ranges.The starting pointof the analysis is the spectrum of
income levels.
incomes across all residents. From these incomes, corresponding "affordable"
$0-$25,000
housing prices are established for ownership and rental opportunities.
>$60,000
2. Number of Households in Each Income Range. The number of households
$0-499
in each income range is the demand; these residents seek housing options
3,179
that are affordable to them.
3. Affordability Ranges. An affordable ownership home is calculated at
2-3 times the household income depending on the income range. Lower
income households tend to spend a higher percentage of their income on
housing and higher income households tend to spend a lower percentage of
their total income on housing. An affordable rental would be nearly 30% of
household income.
4. Number of Housing Units in Each Affordability Range. The number of
housing units in each affordability range is the supply of affordable options.
S. The Balance of Supply and Demand.
- If the number of households exceeds the number of units available, those
households must seek options in different affordability ranges.
- If the number of units exceeds the number of households, it indicates that
the units are occupied by households in different income ranges.
- This analysis is meant to illustrate larger trends in how existing units are
being occupied. It does not demonstrate exact market demand in certain
price ranges.
Compared with the 2016 analysis, the deficit shown in Figure 9 has decreased
somewhat for the lowest income group and grown at the upper end of the
income scale. This indicates that higher income households are occupying
Income Range
11 of Households
Affordable
Range for
k of Owner
Affordable
Range for
d of Renter
Total
Affordable
Balance
in Each Range
Owner Units
Units
Renter Units
Units
Units
$0-$25,000
4,368
>$60,000
940
$0-499
2,239
3,179
-1,189
$25,000- $49,999
5,278
$60,000-124,999
4,381
$500-999
4,536
8,917
3,639
$50,000 - $74,999
3,891
$125,000-199,999
4,089
$1,000-1,499
319
4,408
517
$75,000-$99,999
2,128
$200,000-249,999
1,361
$1,500-1,999
195
1,556
-572
$100,000-$150,000
2,450
$250,000-399,999
738
$2,000-2,999
25
763
-1,687
$150,000+
1,130
$400,000+
378
$3000+
43
421
-709
Source: American Community Survey 5 -year Estimates
7
FIGURE 10: New Construction by Type
(2010-2021)
FIGURE 11: Residential Building Permits by
Unit
e..
80
70
60
some of the city's more affordable stockand that housing in the city may also
be somewhat undervalued. The largest deficits are above $200,000 for owner -
occupied housing and above $1,000 a month for renters. We draw the following
conclusions from Figure 9:
Competition for housing and rentals at mid -price points is extreme.
The imbalance of options for households making more than $75,000
and below $25,000 means there are many having to live in the mid -
price point units. This is particularly concerning for the lowest income
households who may have to share rent, double -up on units, or pay
more than 30% of their income for rent.
Significant opportunities for move -up housing, in turn opening lower-
cost existing units for new or moderate -income households.
In general, housing in the city is relatively undervalued, an important
finding of the original Live Salina study.
Production, even of market -rate units, is a significant challenge.
However, recent developments are starting to prove market demand at
the higher price points, such as Southview Estates and Aero Plains.
CONSTRUCTION ACTIVITY
Figures 10 and 11 display construction activity in Salina from 2010-2021.
Residential construction was overwhelmingly in single-family detached
residential, accounting for about 80% of all new housing units. This runs
counter to trends in most other cities, where single-family and other forms were
roughly in parity. Also counter to trends in much of the country after the 2008
financial crisis, Salina's single-family production remained relatively strong at
the beginning of the decade. It has tailed off since 2016, possibly because rising
costs for detached housing are affordable to a smaller slice of the potential
market. Multi -family development has focused on the occasional large project,
rather than proceeding ata steady annual rate.
40 85 0 B
30 65 66
54 57
48
20 39
34 36
25 30
10 24
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Single -Family ■ Single -Family Attached ■ Duplex ■ Multi -Family
Source: City of Salina
HOUSING DEMAND PROGRAM
Figure 12 uses the population and household projections
and affordability analysis to develop an updated demand
projection for the next ten years in Salina. Basic assumptions
used to calculate demand include:
A slightly increasing vacancy rate
ACS Indicates a current 5.2% vacancy rate when excluding
the "other vacancy" rate and vacation homes. This rate
should increase slightly overtime to reach a 6% rate. This is
especially true as an influx of rental options need to come
online with industrial job growth.
A 6% vacancy rate is a reasonable target in a healthy
market.
Replacement rate of 15 unitslyear
Replacement is generated by demolition and conversion of
housing to other uses.
Average annual residential demolition permits since 2010
at 16 units.
Forecast model assumes annual replacement need of 15
units.
Population at End of Period
ease HOusenold Population at tnd of
Dodnd
Population Growth from New lobs
mtai nousendia ropulation wim roD
Average Household Size
Household Demand at End of Period
Projected Vacancy Rate
Unit Needs at End of Period
Total Replacement Need
2022-2025
Owner/Renter tenure split
From 2022-2025, immediate demand is likely to be for
quality rentals. This is especially true given the shortage of
contemporary rentals
During the following five years, demand may level out
somewhat and people, becoming vested in the city, are
likely to increase demand for ownership housing.
Given this reasoning, the program includes a 50/50 split
through 2025 and a more typical 60/40 owner/renter split
between 2026 and 2030.
The calculation indicates a potential need for over 2,300 new
housing units through 2030, assuming projected growth in
employment occurs. It is important to note that this is not a
prediction, but a projection of potential if the market responds
and Salina competes successfully in attracting new households
in response to announced and anticipated job growth.
2026-2030
Total:
2022-2030
60 75 135
Cumulative Need During Period
1,357
1,039
2,396
Average Annual Construction
339
208
240
Source: RDG Planning & Design
9
2021-2022 Report Comparison
DEMAND BY PRICE POINT
Total housing demand has increased
Figure 13 distributes the forecasted demand by price point, based on the 2020
significantly year-to-year, largely
distribution of household incomes in Salina. This assumes that the lower income
attributed to increases in employment
ranges of the income distribution will be served by existing housing, a more
growth currently and in the coming
years. Forecasted housing need was
realistic assumption given development costs. The majority of new demand for
1,664 in the 2021 study versus 2,396 in
owner -occupied units will be in the $225,000 to $400,000 range in 2020 dollars,
the 2022 study.
and in rents around $1,000 per month.
The forecasted need between owner
and renter units remains distributed
Note that in 2022, the price ranges likely need to be slightly higher because of
the same, at 50%/50% from 2022-
inflation and on-going high construction cost rates. For example, the <$225,000
2025 and 60% owner/40% renter
category may be close to approaching <$250,000. In addition, increases
units from 2026-2030.
in mortgage rates in 2022 can add several hundreds of dollars to monthly
The model updated in 2022 allocates
ownership costs, which will drive households to rent longer or choose renting
a higher percentage of new jobs to be
over owning when first moving to Salina. These types of households can likely
absorbed between 2026 and 2030
afford higher rents when the ownership market is that much more out of reach.
to account for existing openings
169
that need to be filled and employer
272
capacity/time needed to onboard new
92
employees and build facility capacity.
149
Total Need
2022-1025
1,357
2026-2030
1,039
Total
2,396
Total Owner Occupied
<$225,000
678
418
624
384
1,302
802
$225-$300,000
97
89
186
$300-$400,000
Over $400,000
112
52
103
47
214
99
Total Renter Occupied
678
416
1,094
Less Than $625
189
116
305
$625-$1,000
229
140
369
$1,000-$1,500
169
103
272
Over $1,500
92
56
149
Source: RDG Planning & Design
Note: Affordability ranges are also influenced by interest rates —people can afford more expensive homes when interest rates are low. Increases in residential interest rates may
reduce the stock of affordable workforce housing and create an even greater demand for quality rental units.
10
2021-2022 Report Comparison
The percent allocation for each
housing type remains the same
because there still remains a need for
a variety of housing types to meet
households' preferences and ability to
afford housing.
DEMAND BY HOUSING TYPE
The analysis illustrated in Figure 14 has important implications for the types
of housing products built in the Salina market. Most of the city's housing
production to date has been conventional single-family detached homes on
relatively large lots, typically 8,000 square feet and more, and multi -family
development in either new construction or adaptive reuse in projects like Lee
Hardware Lofts and Pioneer Presidents Place (2006). Nationally, a significant
amount of attention has been given to the "missing middle"- moderate
and medium density housing forms that are more efficient and affordable to
family households entering the ownership market. These products include
single-family attached, duplexes (including owner -occupied duplexes where a
household rents out the attached unit), townhouses and rowhouses, and small
footprint studio apartments. These products are scarce in the Salina market, and
builders are not familiar with developing and marketing them.
Figure 14 distributes the forecasted 2030 housing demand by price point over
different housing forms, assuming that single-family detached homes will
continue to dominate higher -end markets, but other solutions like attached
units will be needed to deliver family -friendly, affordable products.
Conventional Small Lot 1 -Family, Duplex, Low -Density High -Density
Total Demand 1 -Family Attached, Townhomes and Townhomes and
1 -Family Duplex Rowhouses Multifamily/Studios
Typical Density (units/acre) <4 4-8 8-12 >12
OWNERSHIP
<$225,000
775
0(0%)
321(40%)
321 (40%)
160(20%)
$225,000-$300,000
180
37(20%)
74(40%)
56 (30%)
19(10%)
$300,000-$400,000
207
129(60%)
32(15%)
32 (15%)
21 (10%)
>$400,000
95
69(70%)
10(10%)
10(10%)
10(10%)
RENTAL
<$625
307
00%)
61(20%)
92(30%)
153 (50%)
$62541,000
371
0(0%)
74(20%)
111 (30%)
184(50%)
$1,000-$1,500
273
0(0%)
82(30%)
95 (35%)
95(35%)
>$1,500
149
0(0%)
52(35%)
52(35%)
45(30%)
TOTAL BY TYPE
2,396
235
706
768
687
tells with 0% indicate that a housing type is not feasible and/or desirable at that price paint. For example, it would be very difficult in the 2022 market to construct and sell a conventional
1 -Family home for under $225,000.
Source: RDG Planning & Design
11
FIGURE 15: Alternative Housing Forms
Small lot single-family
Owner -occupied duplexes
Single-family attached
Townhouses
Rowhouses
Small footprint apartments
SENIOR HOUSING
21% of the Salina's population is 55 and over.
DEMAND
From 2010 to 2020, Salina's population 55 and over group grew by 14.4%. A
This section examines senior population
large part of this growth is from the 70-74 age group, which grew by 30% due
characteristics and trends in the city to
to the natural aging of the large baby boomer age group.
quantify demand for senior housing. These
5,501
households are the primary market for
Some senior age groups experienced migration into the city, while others did
targeted new residential products that
not.
are maintenance -provided ownership
Figure 17 projects the population of each senior age group, based on recent
settings, senior independent living, and
migration rates and current population distribution. Potential new demand
assisted living. Findings include:
for alternative senior housing settings in 2025 is conservatively about 71
16.8%
units. This represents 0.8% of the potential senior households.
Note, the demand for 71 units will include a need across different price
points. Not all seniors have an income that can support a move to a new
living complex.
r ,„toptuationl
5 -Year Age Groups (55+)
2010
i 1 1
2020
Percent Change
55-64
5,501
6,267
13.9%
65-69
1,817
2,122
16.8%
70-74
1,543
2,008
30.1%
75-79
1,243
1,336
7.5%
80-84
1,126
1,220
8.3%
85 and Over
1,103
1,158
5.0%
Total 55 and Over
12,333
14,111
14.4%
Total 65 and Over
6,832
7,844
14.8%
Source: U.S. Census Bureau; American Community Survey
5 -year Estimates;-Ameri<an Community Survey Estimate, 2020 Census age cohorts not available at the time of this update
Projected i Population ,
2025 Population Projection
, Demands for1
Estimated Household Size
of
Total Households
Demand for Alternative Senior
Housing Settings (0.5%-1%of Total)
55-64
5,352
2
2,676
27
65-74
4,682
1.75
2,676
27
75 and Over
4,329
1.25
3,463
17
Total 55 and Over
Source: RUG Planning & Design
14,363
--
8,815
71
13
Analysis of market conditions
AN EXERCISE IN DEVELOPMENT ECONOMICS
and housing economics since
The 2021 Study Supplement helped answer several questions regarding
the 2021 Supplement report still
appropriate public assistance toward housing projects, based on the following
show significant challenges to
conclusions.
make a housing project "work."
We note that inflation as of the
Salina has a very low vacancy rate, especially in good quality, multifamily
first quarter of 2022 is higher than
housing. Many properties have no vacancies, and new residents have few
in 2021, and this inflation should
options in the city.
be considered for financing
Existing rents in Salina are at relatively modest levels.
packages in the near term. The
longevity of elevated inflation
„ Rental development has been very limited during the last ten years. The
only two major projects during the decade were The Heritage in 2011 and
and potential near-term recession
Lee Hardware Lofts in 2020.However, these are developments with income
possibilities are uncertain (as of
qualification requirements. A significant amount of the multifamily inventory
the summer of 2022).
is limited to older adults.
Very little "missing middle" housing forms have been developed in Salina.
2021-2022 Report Comparison
Most new development has been conventional lot single-family detached
• The loan rate was increased from
homes and a relatively small number of rental units.
4.5% in the 2021 model to 6.0% in this
model to reflect rising rates.
Typical apartment density is about 13 to 14 units per acre, with the
• The property tax rate was updated to
exception of downtown area adaptive reuse projects.
the current recent rate.
The Economics of New Rentals: A Hypothetical Case
A financial analysis built around a hypothetical 50 unit apartment project in
Salina can help test the need for and effectiveness of development incentives.
Figure 18 below presents the basic parameters of this study, built around typical
project character in the city. This conservative hypothetical project is a basic
development without considering significant site features and amenities
like covered parking, public spaces, and pools.
Dwelling
Variable
Units
Units
50 units
Assumptions
Site Area
(Acres)
3.85 acres
13 units/acre
Site Area (SF) 167,500 SF
Gross Residential Area (SF) 52,941 SF 85%efficiency
Net Residential Area (SF) 45,000 SF
Average Unit Size 900 SF
On -Site Parking 88 stalls 1.75 stalls/unit
Source: ROG Planning & Design
As an example, $1.98 per square foot Figure 19 below summarizes development costs for this hypothetical project,
translates to a monthly market -rate
again based on local land and construction cost.
rent of:
Studio (450 SF) - $889
Figure 20 lists typical financing assumptions for a project of this scale.
• One -bed (700 SF) - $1,383
Then Figure 21 on the next page displays a simplified proforma and concludes
One/Two bed (900 SF) - $1,778
< with the amount of rent necessary per square foot to "make the numbers work'
• Two bed+ (1,200 SF) - $2,371
on this hypothetical development. The calculation indicates that a project
developed along these relatively typical lines requires about $1.98/SF/month.
Contingency
• The rent assumption is based on all private funding and average unit sizes.
$455,000 5%
Market rate studios tend to rent more per square foot than 1-2 bedroom units.
The rents on the left Include other fees that residents could be charged, such as
Hard Cost
parking. However, the rent per square foot does not factor any public assistance
$9,554,500
that may be granted to the project -discussed more on the following pages.
Component
Cost (rounded) Assumptions
Land Cost
$670,000 $4/SF for improved land
Building Construction
$7,941,000 $150/SF
Parking
$153,000 $5/SF,350 SF per stall
Other Site Development Cost
$335,000 $2/SF
Contingency
$455,000 5%
Hard Cost
$9,554,500
Soft Cost
$2,388,600 25% of hard cost
Total Development Cost
$11,943,000
Scenario: 50 Unit Multifamily Structure at an Average
Component
Equity
900 SF Per Unit
Assumption
30%
Notes
$3,583,000
Debt
70%
$8,360,200
Mortgage Loan Rate
6.0%
Permanent Loan Term
25 years
Permanent Loan Take -Out Year
Year 2
Expected Cash on Cash Return
Source: RD6 Planning & Design
5%
Note: 5% annual cash on equity may seem like a low rate of
return. It is important to rememberthough that many equity
investors realize their return from tax advantages rather than
annual cash return. In Low Income Housing Tax Credit (LINT()
projects, an investor may receive a tax credit up to 9% annually
(a direct reduction of income tax liability) for ten years plus the
residual value of their capital investment and depreciation.
15
2021-2022 Report Comparison
Because of rising interest rates, the typical rent in this scenario rose from $1,645 to $1,778 from 2021 to 2022.
Filling the Gap
A variety of financial tools and incentives are available to reduce this financing gap. Since this hypothetical project is designed as a
market rate development, the Low Income Housing Tax Credit is not included in this analysis. The techniques evaluated include:
Tax Incentives, including Rural Housing Incentive Districts and tax abatements through Industrial Revenue Bonds (IRB's) or
the Neighborhood Revitalization Program. RHIDs are a tax increment device, allocating added taxes created by the project to
financing eligible project -related improvements. IRB's offer sales tax exemptions and a ten year abatement of property taxes.
Interest rate subsidy.
Land contributed without cost to a project.
Increasing the density yield on the site to achieve higher revenues. In this example, an increase in density from 13 to 20 units/
acre would increase the density yield from 50 to 77 units and reduce the rent rate per square foot by $0.29.
Deferral of annual cash on equity return. If the project is sold to limited partners (equity investors) who are in the project for tax
benefits and residual value at the end of a given period rather than annual cash return, the required yield drops substantially
Grant through the State of Kansas Moderate Income Housing program, with a maximum grant of $400,000.
• Lengthening the loan term from 25 to 30 years.
• Waiving building permit fees (3%).
Up front cash subsidy to total development costs.
Figure 22 displays the impact of each of these incentives or variations have on the base $1.98/SF rent requirement.
This calculation shows that the most effective strategies are tax related tools such as IRBs/RHIDs or tax abatements; deferral or
elimination of annual cash on equity payments that are at least partially a tax driven policy as well; and promoting higher density
development on a given site to increase revenues and reduce marginal cost per unit.
FIGURE 21: Simplified Typical Year
Scenario: 50 Unit Multifamily Structure
FIXED COST ITEM
Annual Debt Service
Proforma - Without
at an Average
Cost (rounded)
$646,400
Incentives
11 SF Per Unit
Assumptions
6.0%, 25 yea r am ort izat ion
Annual Operation and Maintenance
$132,400
$2.50/SF annualized
Property Taxes
$109,200
1.27% Saline County rate
Annual Cash on Equity Return
$179,100
5%
Total Annual Fixed Cost
$1,067,000
REQUIRED REVENUE YIELD
Leasable Area (SF)
45,000
Necessary Annual Revenue/SF
$23.71
Necessary Monthly Revenue/SF
$1.98
Rent for Typical 900 SF Unit
$1,778
Source: RDG Planning & Design
Savings on
STRATEGY Monthly Rent
per SF/month
Tax Abatement orlRB/RHIDIncrement $0.21
Interest Subsidy by 2% $0.25
Free Land $0.13
Increase in Density to 20 du/A on Full Site $0.29
Increase in Density Reducing Site Size $0.07
Deferral of Annual Cash Return $0.34
Maximum Moderate Income Housing Grant $0.06
Increase in Loan Term to 30 years $0.09
Waiving Developer Fees (3%) $0.04
Up Front Cash Assistance of $1 million $0.13
What Influence Can Salina Have?
As Figure 22 illustrates, there are several tools that the City can pursue to help
lessen the financial cost of development, and ultimately the price paid by renters
or owners. However, as Figure 23 illustrates, there are limits to how much Salina
can influence housing prices.
Figure 23 applies the savings to the hypothetical development project in
Figures 18-21, where the needed market rent for a 900 square foot apartment is
$1,778. Note, the savings application assumes the developer applies 100% of the
assistance toward rental price reductions.
These savings are on a basic 50 unit apartment, without additional
features like covered parking, public spaces, and pools.
While some of these strategies can be combined for one project, the
options to combine tools requires the involvement of banks, property
owners, and developers themselves. Also, the level of savings per tool is the
best case scenario given perfect efficiency in application and filtering of the
incentive to the end renter.
» For atypical scenario where the City offers RHID/IRB incentives, the
savings on rent is limited to $189 a month. If the project is awarded the
maximum State MIH Grant, the savings on monthly rent rises to $243 a
month in this scenario.
STRATEGY Savings on Monthly Rent Reduced Market Rent for Savings for Renter per
per SF/month Scenario 900 SF Unit Month
Tax Abatement orlRB/RHID Increment
$0.21
$1,589
$189
Interest Subsidy to 2%
Free Land
$0.25
$0.13
$1,553
$1,661
$225
$117
Increase in Density to 20 du/A on Full Site
$0.29
$1,517
$261
Increase in Density Reducing Site Size
$0.07
$1,715
$63
Deferral of Annual (ash Return
$0.34
$1,472
$306
Maximum Moderate Income Housing (MIH) Grant
$0.06
$1,724
$54
Increase in Loan Term to 30 years
$0.09
$1,697
$81
Waiving Building Permit Fees (3%)
$0.04
$1,742
$36
Up Front cash Assistance of $1 million
$0.13 per $1 million cash
$1,661
$117
17
RESOLUTION NUMBER 22-8090
A RESOLUTION ADOPTING THE LIVE SALINA PLAN - 2022 SUPPLMENT AND
SUPPORTING ITS IMPLEMENTATION.
WHEREAS:
A. In 2016 the City Commission adopted Resolution Number 16-7315 adopting the Live Salina
Plan and supporting its implementation;
B. In July of 2021 the City Commission adopted Resolution Number 21-7970 adopting the Live
Salina Plan -2021 Supplement and supporting its implementation;
C. Since the adoption of the Live Salina Plan, multiple economic development projects of
significance have resulted in over one thousand jobs planned for the community,
D. The increased number of new employees coming to the community has increased the need for
hosing of all types in the community;
E. The City has contracted with RDG Planning and Design, the consulting firm who helped author
the 2016 Live Salina Plan, and the 2021 Supplement to complete annual updates of the plan;
F. In 2021 the City Commission adopted Resolution Number 21-7971 adopting the 2021 Live
Salina Plan Supplement and supporting its implementation;
G. Significant shifts in the housing market continue to occur requiring additional updates to the
2021 Live Salina Plan Supplement;
H. The City further engaged RDG Planning and Design to revise the 2021 Live Salina Plan
Supplement with new demographics and data in order to have the most current and accurate information.
THEREFORE, BE IT RESOLVED by the Governing Body of the City of Salina, Kansas:
Section 1. The Governing Body adopts the Live Salina Plan- 2022 Supplement.
Section 2. The Live Salina Plan as supplemented by the Live Salina Plan — 2022 Supplement shall
serve as a guide for review and consideration of requests for public or private financing or incentives and
land use applications.
2022. Section 3. This resolution shall be in full force and effect form and after its adoption on October 24,
Adopted by the Board of City Commissioners and signed by the Mayor this October 24, 2022.
{SEAL}
Trent W. Davis, M.D., Mayor
ATTEST:
JoVonna A. Rutherford, City Clerk