workforce housing in londonderry financial feasibility analysis londonderry zba presentation
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Workforce Housing In Londonderry 1
Workforce Housing In LondonderryFinancial Feasibility Analysis
Londonderry ZBA Presentation
February 20, 2013
Russell Thibeault Applied Economic Research
Workforce Housing In Londonderry 2
Scope of Analysis
• Evaluate financial feasibility of town’s workforce housing provisions:– 75% of units workforce housing, affordable to renters with
incomes at 60% or less of area median and paying no more than 30% of their income on rent, including utilities.
Two scenarios– 15 buildings, 16 units each, 75% workforce housing. Cost=
$37.3 million– 10 buildings 24 units each, 50% for workforce housing.
Cost=$33 million.
Workforce Housing In Londonderry 3
What Can Market Units Rent For?
Workforce Housing In Londonderry 4
What Are Comparables Renting For?
Complex Fairways Hampshire Green Legacy Park Royal Crest EstatesLocatyion Forest Ridge Road, Derry Route 3, Bedford Bradley St, Manchester 1 Newcastle Drive, NashuaAverage Unit Size 1,000 1,200 850 1,250 Average Monthly Rent 1,150$ 1,600$ 1,175$ 1,300$
Average = 1,300/month without utilities.
New 2 Bedroom in Amoskeag Millyard will have monthly rent of $1,400 per month Without utilities.
Conclusion: New 2 Bedroom Units in Londonderry Can Rent for $1,375 per month without utilities
5
What is Allowable Workforce Housing Rent In Londonderry?
$1360 per month with utilities, $1,100 per month per month without utilities
Workforce Housing In Londonderry
Workforce Housing In Londonderry 6
What Income is Available To Support Investment?
75% Workforce 50% Workforce
Gross Rental Income 3,265,000$ 3,457,100$
Operating Expenses (property taxes, maintenance, insurance, etc.) (1,275,800)$ (1,275,800)$
Net Income Available To Support Costs 1,989,200$ 2,181,300$
Workforce Housing In Londonderry 7
How Much Investment Can Be Supported?
75% Workforce 50% WorkforceCost To Build 37,300,000$ 33,000,000$ Rate Of Return Required 6.50% 6.50%Income Required 2,424,500$ 2,145,000$ Estimated Net Income 1,989,200$ 2,181,300$ Surplus or (Deficit) (435,300)$ 36,300$
Workforce Housing In Londonderry 8
Is The Return Adequate To Justify The Investment?
75% Workforce 50% WorkforceNet Income Available To Support Costs 1,989,200$ 2,181,300$ Cost To Build 37,300,000 33,000,000Rate of Return 5.33% 6.61%
Workforce Housing In Londonderry 9
Conclusions
• It would cost more to build the proposal with 75% workforce housing than with 50% workforce housing;
• The 75% workforce housing scenario would generate less income than the 50% workforce housing scenario;
• The 75% workforce housing scenario is not feasible;
• The 50% workforce housing scenario is feasible.
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