Market Analysis Robert Regan Village Berryville, Virginia

Prepared for:

Mr. David Mark Koogler Mark-Dana Corporation

August, 2018

S. Patz and Associates, Inc. 46175 Westlake Drive, Suite 400 Potomac Falls, Virginia 20165

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August 17, 2018 Mr. David M. Koogler Chairman & CEO Mark-Dana 26302 Oak Ridge Drive Spring, Texas 77380 Dear Mr. Koogler: This will submit our completed market analysis for the proposed development of the 120-unit Robert Regan Village Apartments, a new construction affordable apartment building planned for active seniors in Berryville. The proposal is being submitted to officials of VHDA for non-taxable bond financing with 4 percent LIHTC in early-Fall, 2018. The elevator-served apartment building will also have 20 two-bedroom apartment units set aside at market rents and with no rent restrictions. The proposal is for a “truly” attractive apartment building, one which will be at the top of the market for affordable housing in the greater Berryville, Winchester and Loudoun County marketplace. It will be one of three age-restricted affordable apartment buildings in the market area. Rents will reflect this project “positioning” at the top of the market and the premium for a new building compared with 20± year-old buildings. There are rent restricted apartment properties in the market area with similar rents to the Subject proposal. These properties attract mainly seniors, but are mature and without elevators. Sufficient apartment market data and demographic trends fully support the proposed rents at Robert Regan Village. The market area affordable apartment market has a very low overall vacancy rate. The occupancy rate is 100 percent at the market area’s two age-restricted communities for seniors and a combined waiting list of almost 140 exists at these properties. Additionally, the affordable general occupancy apartment properties have a total of 180 senior residents who pay at or near the rents proposed at Robert Regan Village Apartments. In all, a large pent-up demand for affordable apartment units for seniors exists within the market area under study for Robert Regan Village Apartments. The VHDA Demand Analysis Chart substantiates these findings and conclusions. The report was prepared within a methodology required by VHDA for market studies. As with all studies in low density locations, some market study variations are required. I trust that our report covers all of the factors set forth by VHDA for market studies for age-restricted housing. Please call if additional data or clarification are needed.

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Mr. David M. Koogler August 17, 2018

Sincerely,

Stuart M. Patz President

SMP/mes

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TABLE OF CONTENTS

PAGE

Section I – Introduction .......................................................................................................................................... 5 Robert Regan Village ................................................................................................................................ 9 Site Description ....................................................................................................................................... 9 Mary Hardesty House ......................................................................................................................... 15 Phoenix Senior Living (PSL) ............................................................................................................... 16 Site Setting ............................................................................................................................................. 18 Robert Regan Village ........................................................................................................................... 19 Proposed Net Rents ............................................................................................................................. 23 Gross Rent Comparison ...................................................................................................................... 23 Defined Market Area ........................................................................................................................... 24 Site Regional Setting ............................................................................................................................ 25 Market Area Economic Overview ........................................................................................................ 30 Clarke County At-Place Jobs .............................................................................................................. 31 Employment and Labor Force ............................................................................................................ 33 Clarke County Economic Development Activity............................................................................ 34 Frederick County .................................................................................................................................. 34 Market Area Summary ........................................................................................................................ 38 Section II – Senior Apartment Market Analysis .............................................................................................. 40 Demographic Analysis .......................................................................................................................... 40 Population Trends and Projections ................................................................................................... 40 Group Quarters Population ................................................................................................................ 41 Households ........................................................................................................................................... 42 Target Market for Robert Regan Village ........................................................................................... 43 Renter Household by Size ................................................................................................................... 43 Competitive Apartment Market .......................................................................................................... 44 Characteristics of Competitive LIHTC Apartment Communities ............................................... 44 Senior Renters ....................................................................................................................................... 50 Net Rent Analysis ................................................................................................................................. 50 Market Rate Rents ................................................................................................................................ 51 Rent Per Square Foot............................................................................................................................ 52 Apartment Unit Sizes .......................................................................................................................... 52 Apartment Unit Mix ............................................................................................................................ 52 Amenities ............................................................................................................................................... 53 Market Rate Rent Analysis ................................................................................................................. 53 Section III - Conclusions ........................................................................................................................................ 55 VHDA Demand Chart .......................................................................................................................... 57 Market Rent Apartment Demand ...................................................................................................... 58 Absorption Period ................................................................................................................................ 59

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Section I Introduction

This will set forth our full market study for the proposed construction of Robert

Regan Village Apartments, which is planned for development, using non-taxable bonds

and four percent LIHTC. Development is expected to start during 2019 and possibly

extending into 2020. Project opening likely will be by 2020, with lease-up possibly

extending into 2021. Robert Regan Village is planned as age-restricted housing for

active seniors. It will have rent, income, and age restrictions. The site is located in the

Town of Berryville, Clarke County. The site visit by the SPA staff was conducted on

August 6, 2018.

The market study to follow will be submitted to officials of the Virginia Housing

Development Authority (VHDA) for project financing, along with the full required

VHDA financing package for tax credit funding. The market report was prepared

within the strict VHDA market study guidelines.

The market report is presented in three separate sections. The first, the

Introduction, is a detailed analysis of the Robert Regan Village site and its setting within

the north part of the Town of Berryville, within a neighborhood planned and zoned OPR

for senior housing, referred to as Older People Residential. The site is part of the

Battleground Estates community and is located within a 30-acre

commercial/multifamily section of the community.

The site analysis includes a detailed description of the site location and adjacent

land uses, as several age-restricted housing communities are located adjacent to the

Robert Regan Village site and a new assisted living facility (ALF) is under construction

adjacent to the Robert Regan Village site.

The site analysis details the public and private facilities within and near the

Town of Berryville that serve the Town’s current population and will serve the new

residents of Robert Regan Village. Included in this analysis are the number and types of

area facilities designed for seniors that exist in the Town.

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The last part of the site analysis is a detailed description of the senior living

housing proposal, in terms of: (1) rents, (2) unit mix and sizes, (3) project and unit

amenities and (4) the “target” market for the apartment units. Robert Regan Village will

be an upscale community, albeit with primarily affordable rents. However, twenty of the

proposed 120 apartment units will be set aside at market rate rents.

A second part of the Introduction is an economic overview analysis of the market

area, which includes Clarke County and Frederick County, including the City of

Winchester, and eastern Loudoun County. This represents the market area under study.

On-site management at the adjacent affordable senior apartment community, Mary

Hardesty House, reports that 30± percent of all residents at that apartment property

move from out of state and another 20 to 25 percent are from nearby Loudoun County.

The remaining (50+ percent) residents are local from Clarke County, Frederick County

and the City of Winchester. These data are the basis of our defined market area.

The economic overview is shown in detail for Clarke and Frederick counties,

including the City of Winchester. Including Loudoun County in this analysis would

skew the economic trends, as Loudoun County is much larger and with more

development than the counties to the west. Thus, while Loudoun County residents are a

key part of the market for Robert Regan Village Apartments, the economic trends in

Loudoun County are vastly different from those in Clarke and Frederick counties, so

they were not included in the report’s economic analysis.

The more immediate area surrounding Berryville is studied for net growth in

jobs, employment and labor force. These are the three key factors that “define” the

economic stability of the region/market area and generate net population and

household growth. In turn, household growth is the key determinant for housing unit

demand. The demographic analysis will concentrate on the active, older adult market,

particularly the sector of the active, older adult market that can support the rents

proposed for Robert Regan Village, as described below.

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Section II is the supply/demand analysis for affordable age-restricted housing. It

includes the demographic analysis in support of the 120-unit apartment proposal for

active seniors, and the competitive apartment market that currently exists for housing of

the type under study within the market area.

The demographic analysis is presented first. It solves for the number and growth

of active senior-headed households, aged 65 to 79, with incomes, reported in constant

2018 dollars, of $38,000 to $52,000. This is the income range of the majority (85%) of the

residents expected to reside at Robert Regan Village Apartments. Twenty of the

apartment units will have no rent restrictions and will be marketed to older adults with

household incomes of $50,000 and above. In terms of age, while the active older adult

market is typically persons within the 65 to 79 age category, normally 10 percent of

residents are under 65 or over 80 years of age and another 10 percent often have Section

8 vouchers.

For housing of the type proposed, senior-headed households can afford net rents

at 35 percent of annual income, as cold water, sewer and electricity are paid by the

resident and only trash collection is included in the rents. This is the basis for

determining qualified incomes for future residents of the apartment building. Seniors

can afford rents at 40 percent of gross rent, but Robert Regan Village will offer units at

net rents.

The rents shown below are net. They include only trash collection. Thus, while

VHDA’s guidelines allow for up to 40 percent of income allocated to gross rent, the

proposed rents at Robert Regan Village are net and thus residents will need to pay up to

35 percent of income.

The second part of Section II is the competitive apartment market analysis. All

apartment properties under study are rent restricted under the federal LIHTC program.

All the properties under study have “tax credit” rents without additional rent

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restrictions. Lower rent properties are not defined as “comps” and are not included in

the study.

There are only two age-restricted apartment properties in the market area. One

is Mary Hardesty House which is located near the Robert Regan Village site. The second

is Wingler House, a two-building property located in Ashburn Village on the east side of

Loudoun County. There are no “comps” for Robert Regan Village in Warren County to

the south, or in any of the counties located along the north part of the I-81 corridor.

Fairfax County to the east of Loudoun County is not a comparable marketplace.

Thus, we used eight general occupancy LIHTC apartment properties for the

competitive analysis, in addition to the two senior properties, to provide greater depth

in analyzing rents and to determine the number of seniors who reside in these non-

elevator, general occupancy buildings and represent a pent-up demand for new age-

restricted housing.

The VHDA guidelines require that the market analyst look outside the market

area for “comps”, if there are none or few within the defined market area. We did that

and found no other comparable properties. Thus, our competitive market is two age-

restricted affordable apartment properties and eight family properties that attract

seniors and have comparable rents to the study proposal.

For the age-restricted properties, the complexes are studied for rents, unit

characteristics and project amenities. The family properties are studied only for the

number of seniors that occupy units there, and the rents that they pay.

The third and final section is the market study Conclusions. It includes an

analysis of the Robert Regan Village proposal in terms of rents, unit and projection

characteristics and the competitive position compared with area “comps”. The VHDA

Demand Analysis Chart is included, as the basis for documenting apartment unit

demand and the absorption pace for the apartment units during marketing.

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Robert Regan Village

Site Description

Robert Regan Village Apartments will be built on a 10.9-acre section of a larger

site located at the western end of Chamberlain Street, with Chamberlain Street to be

extended into the site. The map to follow shows the subject property to be a generally

rectangular parcel. Current access is from a gravel road at the west end of Chamberlain

Street. A second entrance will be built from Mosby Boulevard into the site. Primary

access will be from Mosby Boulevard with a second access from Chamberlain Street.

The site map shows the location of a new ALF that is under construction (No.

10). The ALF’s entrance road will connect with the new entrance road to Robert Regan

Village. On the east side of the Subject site, along Chamberlain Street is the Greenfield

ALF (No. 20) and Mary Hardesty House, an age-restricted independent living apartment

property (No. 25). The area along Mosby Boulevard in front of Robert Regan Village is

vacant. Two age-restricted homes have been built along Chamberlain Street, with

additional lots for future development.

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Map A – Robert Regan Village Site & Setting

Following are photos of the property. The site has a slight rise from east to west

and from the entrance to the property along Chamberlain Street. Once into the site, the

property is relatively flat, primarily meadowland and with most tree clusters removed.

The first two photos show the entrance to the property from Chamberlain Street.

Chamberlain Street is a two-lane paved road that is paved to the east of McClellan Street

and gravel to the west of McClellan Street and up to the site entrance.

The site is fully vacant, as shown in the second set of photos. There are large

wooded areas on the north side of the site and on the west side of the area.

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In the next group of photos, the first two show Chamberlain Street in front of the

site entrance and extending into the property. Chamberlain Street is a two-lane gravel

road at the site entrance. The photos show the road into the site with trees removed.

The last photos show two new homes that were built along Chamberlain Street.

Site Entrance from Chamberlain Street

Center of Site

View East from Site along Chamberlain St.

Two Homes along Chamberlain St.

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Following are additional photos of the Robert Regan Village site and adjacent

areas:

• Photo 1 – Current Site Access shows the current access road through the property with a view of the new ALF under construction, on an adjacent property on the west.

• Photo 2 – Phoenix Senior Living is the new ALF under construction with 73 beds. Project opening is planned for October or November of 2018.

• Photo 3 & 4 – New Site Entrance shows the new road recently built from Mosby Boulevard to the Phoenix Senior Living property. Photo 4 is the new access road into the Robert Regan Village property.

• Photo 5 – Mosby Boulevard Frontage shows vacant single-family lots along the primary road of Battlefield Estates. The Robert Regan Village site is behind the line of trees.

• Photo 6 – Mosby Boulevard Homes shows the cul-de-sac located across from the new entrance road and an example of homes along Mosby Boulevard.

1- Current Site Access 2- Phoenix Senior Living

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3- New Site Entrance 4- New Site Entrance

5- Mosby Boulevard Frontage 6- Homes along Mosby Boulevard

The following aerial shows the site and its setting along Mosby Boulevard and

Chamberlain Street. First noted is the close proximity of the Battlefield Estates

community to the interchange of Route 340 and Route 7.

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The site is located in close proximity to the U.S. Route 340/U.S. Route 7 interchange.

A Shop & Save anchored shopping center (No. 1) is located at the

entrance to Battlefield Estates. The center has a bank and a new McDonalds restaurant is planned at this center.

Number 2 on the aerial is Mary Hardesty House. A full description of

this property is presented below.

Greenfield Assisted Living Facility (ALF) is shown (Number 3) at its location between Mary Hardesty House and the proposed Robert Regan Village (No. 4). The ALF is reported to be typically at 95+ percent occupancy.

Number 4 is the Robert Regan Village site. On the west side of the site

(No. 5) is the location of the new 73-bed ALF. The new ALF will likely be served by a new road from Mosby Boulevard.

A children’s day care center is located in front of Mary Hardesty House

with frontage on Mosby Boulevard. Much of Battlefield Estates is developed with single family homes built during the 1990’s. These homes are priced from $300,000 to $500,000, depending upon home size.

Aerial View of Immediate Area

The aerial is somewhat old. It shows the Robert Regan Village site to be fully

wooded. While the property does still have some wooded areas, it is more

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meadowland, as most trees were removed. Also, all of Chamberlain Street is shown as

paved. This is not the case. The western end of Chamberlain Street is technically part of

the Robert Regan Village Apartment site and will be paved and upgraded with

shoulders and sidewalks as part of the site development.

The Robert Regan Village multifamily site is currently zoned OPR and

designated primarily for senior housing. This zoning will remain in place. The part of

the property planned for a new ALF site is zoned B. The ALF site will be built on an

8.6± acre parcel within the “B” zoning.

Public water and sewer are to the property and only require extensions from the

site property line. No off-site improvements are required for project development, only

the paving of the new entrance road form Mosby Boulevard and the access road to the

Robert Regan Village property.

Mary Hardesty House is one of two affordable age-restricted apartment

properties in the market area. It is located one long block east of the Robert Regan

Village site. Mary Hardesty House was built in 1998 using taxable bonds and with

rents at or below 50 percent of AMI for the market area. The apartment building has 60

apartment units; all are two-bedroom with two full baths. The apartment building has

had recent upgrades with new common area carpeting and interior parking. All new

windows were added to comply with VHDA’s energy efficient requirements.

Management keeps an updated waiting list that now totals 35. Rents at Mary Hardesty

House include cold water, sewer and trash collection and are currently $960.

There are no residents with Section 8 vouchers at this time at Mary Hardesty House.

The key amenities at Mary Hardesty House include:

Emergency pull cords Dishwasher Community room with kitchen and TV Game room and exercise room

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In-house salon Two elevators for the three-story building

Following is a photo of Mary Hardesty House. All apartment units have small

balconies. The property is well maintained; it is 20± years old. An abundance of surface

parking exists at the property. The market area for Mary Hardesty House was described

above. The market area has evolved to a more local market, due to more growth in the

western part of the market area.

The rents shown above are $100± more than in 2010. Management at Mary

Hardesty House has generated annual rent increases incomes of $20± since 2010 without

a decrease of occupancy. Management reports that all persons/households on the

waiting list can afford the $960 current rents.

Mary Hardesty House is important to the analysis of Robert Regan Village

because it establishes a market for senior housing, even with rents below the Robert

Regan Village proposal. It shows a pent-up demand for new units and from where

demand is being generated.

Mary Hardesty House

Phoenix Senior Living (PSL) is an assisted living facility (ALF) with memory

care (the website refers to The Retreat at Berryville). This is a full service ALF with a

reported extensive level of services and amenities. The facility will offer studio, private

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rooms and one-bedroom apartments. Marketing is underway and 15 of the 73 “beds”

are preleased. The private rooms have a monthly fee of $4,700.

Map B provides a better description of the proximity of the two new senior

housing proposals and shows the new entrance road from Mosby Boulevard and the

new entrance into the Robert Regan Village property.

Map B – Proximity Map of the Two New Age-Restricted Properties

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Site Setting

The aerial to follow shows the setting of Robert Regan Village within the Town

of Berryville. It is on the north side of the Town within a residential zone for senior

housing. The center of Berryville is at the intersection of Route 340 and Main Street

(Business Route 7). Berryville has historically been an agriculture based community and

the center of commerce for Clarke County. A railroad line runs north-south on the east

side of the Town, where a cluster of blighted industrial buildings still remain. New

subdivisions have been built for commuters into Northern Virginia. The immediate

Town area has limited commercial development and attracts few new businesses. Most

available land is for single-family residential development.

Site Setting in the Town of Berryville

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Robert Regan Village

Robert Regan Village will be a 120-unit mixed-income community with 100

affordable apartment units and 20 units set aside at market rents. All of the one’s will be

affordable. These are spacious units of 764 net rentable square feet. There are 60

affordable two-bedroom units with unit sizes of 1,037 square feet and 20 two’s at market

rent. The affordable units are set at rents at or below 60 percent of AMI for the

Berryville marketplace. Berryville is included in the Northern Virginia Region for the

determination of maximum allowable rents.

Table 1 Robert Regan Village Development Proposal Berryville, Virginia, August, 2018

Unit Mix

Unit Sizes

Proposed Net Rents

One-Bedroom (affordable) 40 764 $1,205.00 Two-Bedroom (affordable) 60 1,037 $1,436.00 Two-Bedroom (market) 20 1,037 $1,650.00 Total 120

Source: Winks Snowa Architects; Mark-Dana Corporation

Next shown are examples of the unit floor plans. The units have open kitchens; a

separate laundry room that can support full size washers/dryers; a separate dining area;

a large bedroom and a connected bathroom. Each unit has a partially recessed

deck/balcony. Closet space is sizable.

The two-bedroom is designed with a split bedroom floor plan with each

bedroom on opposite sides of the apartment unit. The two-bedroom apartments have

two full baths. For the two-bedroom model, both bedrooms have walk-in closets. There

is some storage area in the mechanical rooms, located off of the deck. All units have

large windows for an abundance of light and air.

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The building first floor plan is shown next. The building design is a “U” shape

that conforms with the rectangular shape of the site. The first floor has:

• A double height club room • Activity and fitness rooms • Mail room • Leasing office, conference room and maintenance room

The kitchens have a free-standing island with sink, a dishwasher and other

standard appliances.

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The building has two elevators, one on each side of the building. A large

courtyard exists in the center of the building.

The front building elevation is shown next. The building is three stories in

height with an exterior of brick veneer and hardi-board. There is a covered entrance

area to the lobby. All 120 units will be in one building with a single main entrance to the

lobby. Units will have large windows and a walk-out to a small balcony.

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Proposed Net Rents

The rents shown are net and exclude utility costs. The one-bedroom affordable

net rent is $1,205. The net rent for the two-bedroom affordable units is $1,436. The

market rent two’s will generate a higher rent at $1,650, or approximately $110 above the

proposed LIHTC rents.

Gross Rent Comparison (affordable units) The chart to follow shows a gross rent comparison of the rates for the proposed

affordable apartment units at Robert Regan Village, with the HUD maximum allowable

gross rents. This comparison shows that the proposed rents are within the maximum

allowable range. The market rent units have no rent limits.

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Gross Rent Comparison

Robert Regan Village HUD Max Allowable (Gross Rent)

Net Rent

UA

Gross Rent

One-Bedroom $1,205 $114 $1,319 $1,407 Two-Bedroom $1,436 $146 $1,582 $1,582

Defined Market Area

The market area was described above. It is shown on Map B. It includes all of

Clarke County, all of Frederick County (including Winchester) and the western part of

Loudoun County, generally east to Ashburn. The market study was primarily defined

by input from on-site management at Mary Hardesty House.

Map B – Robert Regan Village Market Area

The market area is essentially the Route 7 corridor from Ashburn to Winchester.

Areas east of Ashburn are too far from Berryville to be competitive. The areas to the

west of Winchester, and to the north and south of Route 7 are rural and without any

competitive properties.

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Site Regional Setting Map C shows the regional setting of Berryville along Route 7 and its proximity to

the City of Winchester and Loudoun County. Berryville is a small, rural town. The

majority of the Town contains mature, modestly priced residential, primarily small

frame homes on small lots. There is a small downtown with several restaurants, a

pharmacy, dry cleaners, and a few doctors/dentists. Five new businesses, including

antique shops, opened in the downtown over the past few years. A health care clinic is

located in the downtown and a large family doctor’s building exists on Route 340 close

to Mosby Boulevard. The Shop & Save, in the former Food Lion space in Battlefield

Estates, is the only grocery store in town. The downtown area has a large fire and rescue

squad on Route 340 south of Route 7 that is very convenient to the Battlefield Heights

subdivision. However, the vast majority of public and commercial services available to

town residents are located in Winchester, approximately 10 to 12 minutes drive to the

west.

Map C shows that Berryville is equidistant from Winchester on the west and

Purcellville in Loudoun County, on the east. Purcellville is also a small town but far

more upscale compared with Berryville and with attractive specialty retail stores and

considerable medical office space. A recently built Harris Teeter anchored shopping

center exists on the east side of Town, just off of Route 7.

Map C - Berryville Regional Setting

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The following paragraphs describe the community and public services/facilities

available to current and future residents of Berryville and Clarke County.

Community Facilities. The nearest post office is situated in downtown Berryville

at 27 N. Church Street, about one mile southeast of the Battlefield Estates community.

The closest fire department is John H. Enders Volunteer Fire, located at 9 S. Buckmarsh

Street in downtown Berryville, one mile southeast of the Subject. The nearest public

library to the subject is Clarke County Library, located 1.2 miles southeast of the Subject

at 101 Chalmers Court.

Parks and Recreation. The largest park close to Robert Regan Village is the

Clarke County Park, located 1.8 miles west along Al Smith Circle. This 102-acre park

houses an outdoor swimming pool, lighted outdoor tennis courts, 6 ball fields,

numerous soccer fields, a Recreation Center, 4 picnic shelters, 2 playgrounds and a

fitness trail. Within downtown Berryville is the three-acre Rose Hill Park at E. Main

Street, which includes a playground, basketball courts and a gazebo. Throughout the

course of the year, Rose Hill Park hosts numerous concerts, festivals, and other events.

Religious Institutions. Several churches are located within close proximity to the

Robert Regan Village site, primarily in downtown Berryville. Nearby churches are listed

in the chart below and shown in the adjacent map (Map D).

Location of Nearby Religious Institutions

Church Distance Grace Episcopal Church 0.9 miles SE Berryville Presbyterian Church 0.9 miles SE Zion Church 1.5 miles SE St Mary's Episcopal Church 0.6 miles SE Duncan Memorial United Methodist 1.1 miles SE Berryville Baptist Church 0.8 miles SE Saint Luke’s Baptist Church 0.9 miles SE St Bridget of Ireland Church 0.6 miles NW

Source: S. Patz & Associates field survey

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Medical Care. The Town of Berryville houses one large medical office building

that is close to the Robert Regan Village site. However, for more extensive medical

services, residents of Berryville would likely go to the large and nationally recognized

Winchester Medical Center, located at the interchange of Amherst Street (U.S. Route 50)

and SR 37, the western bypass of Winchester. The hospital is accessed by U.S. 7 west to

U.S. 50 via travel through the City, or by Route 7 to I-81 north to SR 37 south to Route 50.

The Winchester Medical Center is briefly described below.

Winchester Medical Center is a 445-bed, non-profit regional referral hospital offering a wide range of services, including diagnostic, medical, surgical and rehabilitative care. WMC is a level II trauma center and serves more than 400,000 residents in Winchester and neighboring areas of West Virginia and Maryland. Winchester Medical Center opened in 1903 and relocated to its current 168-acre campus at 1840 Amherst Street in 1990. The medical campus includes medical office buildings, a retail pharmacy, cancer center, outpatient diagnostic and surgery facilities, imaging center with MRI and CT scanning, adult and adolescent psychiatric centers, 250-seat conference facility, two employee child care centers, restaurant, park, and walking trails. Winchester Medical Center completed a major three-year expansion project in 2012 that produced more than 368,000 square feet of new space and 80,000 square feet of renovated space.

Winchester Medical Center recently developed a new 47,000± square foot Cancer Center. Currently, some of those departments are in separate buildings within the medical campus. The center includes space for future radiological technology and additional surgical sub-specialties. The Cancer Center opened in early-2015 and is located behind the north tower and next to the diagnostic center.

Purcellville has numerous medical offices along Route 7 business.

While only basic medical services are available within Berryville, a full-service

hospital with an abundance of medical doctor’s offices is located close by in Winchester.

Within the hospital vicinity is considerable medical office space. In addition to these

medical services, the Greenfield ALF is located next to Mary Hardesty House. A new,

large CCRC, Orchard Ridge, just opened in Winchester, on a site just west of the

hospital. This facility has AL beds and skilled nursing care. Nursing facilities are also

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available in Winchester. A new ALF is under construction on an adjacent site to Robert

Regan Village.

Shopping. As previously noted, the only grocery store in Berryville is Shop &

Save, which includes a pharmacy, and is located just east along Mosby Boulevard. More

substantial retail options are located within the City of Winchester and neighboring

Frederick County, about 10 miles west of Berryville. The retail stores in Winchester

provide all required shopping for area residents. In addition to several free-standing

retailers, such as a Lowe’s Home Improvement, Kmart, Target, Costco, and three Wal-

Mart Supercenters, the Winchester area is the location of many retail centers. Existing

shopping centers within Winchester and immediate surrounding are detailed in the

paragraphs below.

Winchester Gateway is a regional Martin's Grocery-anchored shopping center consisting of 160,000 square feet of retail space and multiple pad sites. Retailers in this shopping center include Petco, Starbucks, Wachovia Bank, Hobby Town, Med Express and Real McCoy's Bar and Grill. Winchester gateway is located along Gateway Drive at I-81 and Route 7.

Sunnyside Plaza is a 64,810 square foot Food Lion-anchored shopping center

located at 223-263 Sunnyside Plaza Circle. Additional tenants include H&R lock, VA ABVC Store and CVS.

Apple Valley Square is a 55,840 square foot retail center that opened in 1974

and was renovated in 1996. It is located at 802 Berryville Avenue. Tenants include Solenberger's True Value Hardware, CVS, AutoZone and Wachovia.

Apple Blossom Mall is a large enclosed mall located at 1850 Apple Blossom

Drive. The 440,600± square foot center is anchored by Belk, JCPenney’s and Sears, plus 90 specialty shops. The mall opened in 1992. The mall has had recent interior renovations which include adding a 14,000± square foot Encore, a store of designer shoes, as well as adding a 1,200 square foot children's play area. A new 12-screen cinema was built in the area.

Delco Plaza is a 162,630 square foot retail center located at 182 Delco Plaza.

Retailers include a 52,690 square foot Gabriel Brothers, 29,000 square foot Food Lion, 24,480 square foot Room Store and 14,400 square foot Body Renew.

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Winchester Commons is located at 2350 Legge Boulevard. Built in 2001, the 173,790 square foot retail center is anchored by Target, T.J. Maxx, PetSmart, Home Depot, Pier 1 Imports and Famous Footwear.

Winchester Station. Constructed in 2005, this 167,000 square foot retail center

is leased to a mix of regional and local tenants, including hhgregg, Ross Dress for Less, Bed Bath & Beyond, Michaels, Old Navy, Olive Garden and Red Lobster. The property is located at 2400 Pleasant Valley Road.

Apple Blossom Corners is located at 2190 S. Pleasant Valley Road. This 23-

year-old, 240,560 square foot community center is located on the Apple Blossom Mall Road. Tenants include a 67,660 square foot Martin's Food Store, a 23,350 square foot Office Max, an 84,000 square foot Kohl's and a 20,090 square food Books-A-Million.

Pleasant Valley Marketplace is located 2173 S. Pleasant Valley Road. The

shopping center is anchored by a Staples, Verizon Wireless store and Dollar Tree.

The above shopping centers are shown on the aerial below.

Winchester Retail Centers

Winchester Retail Centers

30

Map D below shows the location of the nearby facilities that serve the subject.

The map legend is attached.

Map D – Community Facilities in Berryville

Map D Key

USPS 1 John H Enders Volunteer Fire 2 Clarke County Library 3 Clarke County Park 4 Rose Hill Park 5 Food Lion 6 Medical Office Space 7

Market Area Economic Overview

Following is an analysis of economic trends in Clarke County and in Frederick

County, with data from the City of Winchester included in Frederick County data.

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Again, we did not include Loudoun County in this part of the analysis, as the magnitude

of growth in Loudoun County is substantial compared with the remainder of the market

area.

The purpose of the economic overview analysis is to determine the economic

vitality of the greater Berryville area, and market area, based on job and employment

growth, as this is the basis for attracting seniors to the market area, as job and

employment growth will cause area families to remain in place, a prerequisite for

seniors to move near families. Approximately 30± percent of occupants of senior

housing typically move to a community where their family resides.

The following analysis shows three key factors related to the market area’s

growth and economy – job growth, employment/unemployment trends and current

development activity.

Clarke County At-Place Jobs

Table 2 shows the at-place job trends in Clarke County for the ten-year period of

2008 to year-end 2017, with 2017 being the most recent data for published BLS economic

data. 2006 was the peak year for at-place jobs in Clarke County, with 4,360± jobs. The

job total decreased after 2008 with the start of the recession and continued declining

until 2016. Approximately 550 jobs in the County were lost between 2008 and 2015. As of

year-end 2017, total at-place jobs in Clarke County is reported at approximately 4,000,

which is 300 below the 2008 count and 360 below the job totals in 2003. To date, Clarke

County as not fully rebounded from the job losses associated with the recession. Job

growth has been largely stagnant since 2012. At present, the trends in the County

remain the same as in recent years.

The second key point of note in Table 2 is the large loss of Manufacturing jobs.

This sector has shed nearly half of its manufacturing jobs over the past decade, which

represents nearly 95 percent of all job losses in the County since 2006. Most of these job

losses, however, took place early in the decade and immediately following the recession.

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Major post-recession job losses in the Manufacturing sector include 250± jobs lost with

the closure of American Woodmark Corp.’s kitchen cabinet facility in 2009, and three

rounds of reduction by Berryville Graphics between 2009 and 2010 that eliminated 140±

jobs. Employment in the Manufacturing sector grew by 150 since 2014.

Table 2 also shows modest growth in several sectors including

Professional/Tech. Services, Other Services and Wholesale Trade. Excluding

Manufacturing, other sectors with job losses since 2006 include: Construction,

Accommodations/Food, Retail Trade, Local Government, State Government.

Overall, there has been job losses throughout the County over the last part of the

2000 decade and up to year-end 2015. This is an atypical trend for most marketplaces.

Considerable recent job growth occurred in the Purcellville area and in Winchester. In

terms of job growth, Clarke County and Berryville have not kept pace with adjacent

communities and that condition remains, as few quality developable sites are available.

Table: 2 Trends in Average At-Place Employment, Clarke County, Virginia, 2008-2017

Industry 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1/

Agriculture/Forestry/Fishing ND ND ND ND ND ND ND ND ND ND

Mining ND ND ND ND ND ND ND ND ND ND

Utilities ND ND ND ND ND ND ND ND ND ND

Construction 385 309 294 286 300 314 270 268 268 276

Manufacturing 1,103 912 667 618 539 539 520 606 649 669

Wholesale Trade 160 156 152 147 152 162 158 133 164 181

Retail Trade 293 288 284 273 245 246 236 245 258 264

Transportation/ Warehousing 24 22 20 15 17 31 35 40 42 39

Information 21 19 21 22 18 23 23 25 23 25

Finance/Insurance 104 102 99 97 93 99 100 102 95 91

Real Estate 43 43 39 45 47 28 32 37 38 39

Professional/Tech. Services 165 16 170 198 217 231 373 281 246 221

Management of Companies ND ND ND ND ND ND ND ND ND ND

Administrative/Waste Services ND ND ND ND ND ND ND ND ND ND

Educational Services ND ND 205 237 ND ND ND ND ND 283

Health Care ND ND 311 339 ND ND ND ND ND 308

Arts/Enter./Recreation 95 104 118 80 52 41 38 41 37 41

Accommodations/Food 168 192 210 220 214 210 190 188 203 210

Other Services 140 141 129 132 133 134 133 162 178 240

Local Government 594 587 581 579 567 570 570 563 568 637

State Government 111 108 110 118 131 127 124 77 70 73

Federal Government 37 41 44 40 37 32 31 29 27 28

Total 4,298 4,021 3,806 3,794 3,719 3,744 3,797 3,752 3,842 3,997

Notes: ND = Data do not meet BLS or State agency disclosure standards.

1/ Preliminary data.

Source: United States Department of Labor, Bureau of Labor Statistics

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Employment and Labor Force. Employment refers to the number of Clarke

County residents who are employed, no matter where the job is located. It differs from

at-place jobs, as at-place jobs refer to jobs located in Clarke County. The fact that

employment in the County is approximately double the total of at-place jobs means that

half of the employed persons in Clarke County commute outside of the County for

work, most likely to Northern Virginia.

Table 3 shows employment data in Clarke County. Employment shrank by 650±

jobs over the past ten years, which is similar the at-place jobs lost during the same

period. The table shows that employment grew slightly in 2011, but realized declines

after 2014. There was a 100± employment increase in 2017.

Table 3: Trends in Employment and Unemployment, Clarke County, VA, 2008-2017

Labor Force Employment Unemployment Percent Unemployed

2008 8,195 7,915 280 3.4% 2009 8,102 7,591 511 6.3% 2010 7,695 7,181 514 6.7% 2011 7,773 7,328 445 5.7% 2012 7,737 7,332 405 5.2% 2013 7,623 7,261 362 4.7% 2014 7,545 7,213 332 4.4% 2015 7,430 7,134 296 4.0% 2016 7,423 7,156 267 3.6% 2017 7,519 7,261 258 3.4% Net Change -676 -654 -22 0.0%

Source: United States Department of Labor, Bureau of Labor Statistics

The economic trends in Clarke County are not positive. Many of the jobs that

exist are in the agricultural industry. That is the prime reason that employment is

considerably larger than at-place jobs. There are limited viable options for job growth in

the County. Most County residents commute outside the County for work. The fact

that the County’s employment decreased after 2014, albeit modest, was due in part to

lack of new business development and downsizing in other businesses.

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Overall, the Clarke County economy is expected to remain slow or no growth.

The County’s economy, in terms of employment, in particular, is dependent upon

growth in neighboring jurisdictions.

Clarke County Economic Development Activity. Currently, Clarke County has

limited new development activity, due partly to the lack of readily available land with

public water and sewer. The limited number of developments in planning are detailed

in the paragraphs below.

McDonald’s announced that construction would begin on a 3,040± square foot restaurant with two drive-through lanes in Berryville in the October, 2018. The restaurant will be located adjacent to the Bank of Clarke County on McNeil Drive in Battlefield Estates.

Phoenix Senior Living, a planned 73-bed assisted living facility is under construction on a site on Chamberlain Street in the Battlefield Estates subdivision next to the Robert Regan Village property. Once open, the facility will likely employ between 30 and 45 people.

Blue Ridge Wildlife Center. Construction was completed in December, 2016 on this expanded 8,700 square foot veterinary, rehabilitation and educational facility in Boyce.

The Farmer’s Daughter. This store, which features modern vintage farmhouse decor, opened in Downtown Berryville in July, 2016 at 5 S. Church Street.

Rosie’s Sweets. This bakery and coffee shop opened in at 23 Crow Street in Berryville in July, 2016.

Roy’s Upholstery opened in June, 2016 at 15a First Street in Berryville.

Overall, new business investments remain modest in Clarke County and in the

Town of Berryville.

Frederick County

As of year-end 2017, Frederick County and the City of Winchester totaled

nearly 60,500± at-place jobs. That total is 4,500± more jobs than the 2008 total and 8,200±

greater than the past recession level in 2010. Frederick County realized significant job

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losses between 2006 and 2010. Thus, job losses were taking place prior to the recession.

These losses also took place almost entirely in the Manufacturing sector. Currently,

employment growth has occurred every year since 2010, indicating area job expansion

after declines during the recession. Approximately 8,200 new jobs have been created

since 2010, 3,000± new jobs were added in 2015. Current job growth trends in Frederick

County are very positive.

Table 4: Trends in Average At-Place Employment, Clarke County/Frederick County/Winchester City, Virginia, 2008-2017

Industry 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1/ Agriculture/Forestry/Fishing ND ND ND ND ND ND ND ND ND ND Mining ND ND ND ND ND ND ND ND ND ND Utilities ND ND ND ND ND ND ND ND ND ND Construction ND ND ND ND ND ND ND ND ND ND Manufacturing 8,883 7,727 7,555 7,578 7,218 7,186 7,188 7,376 7,593 8,017 Wholesale Trade ND ND 1,520 ND ND ND ND 1,641 1,661 1,693 Retail Trade 8,091 7,620 7,629 7,785 7,941 8,006 7,948 7,960 8,110 8,099 Transportation/ Warehousing ND 1,662 1,670 1,822 1,869 2,068 2,061 2,398 2,490 2,648 Information 458 513 558 ND 508 511 452 503 513 491 Finance/Insurance 1,353 1,363 1,391 1,472 1,557 1,758 2,055 2,313 2,518 2,594 Real Estate 658 610 569 524 544 550 590 637 632 571 Professional/Tech. Services 1,768 1,589 1,658 1,644 1,697 1,754 ND ND ND ND Management of Companies ND ND ND ND ND ND ND ND ND ND Administrative/Waste Services ND ND ND ND ND ND ND ND ND ND Educational Services ND ND 1,528 1,610 ND ND ND ND ND 1,575 Health Care ND ND 7,906 8,256 ND ND ND ND ND 8,990 Arts/Enter./Recreation 672 601 583 548 568 585 564 588 564 496 Accommodations/Food 4,445 4,449 4,378 4,591 4,761 4,950 5,006 5,063 5,188 5,183 Other Services 1,534 1,411 1,424 ND 1,346 1,384 1,349 1,327 1,421 1,581 Local Government 5,736 5,541 5,433 5,513 5,543 5,512 5,489 5,499 5,592 5,733 State Government 779 804 845 897 979 1,023 1,011 974 975 990 Federal Government 1,067 1,345 1,599 1,708 1,739 1,865 2,061 1,962 2,011 2,154 Total 55,160 52,136 52,233 53,666 54,285 55,675 56,496 57,562 58,936 60,460

Notes: ND = Data do not meet BLS or State agency disclosure standards. 1/ Preliminary data.

Source: United States Department of Labor, Bureau of Labor Statistics

Data in Table 5 show which industrial job sectors grow in Clarke and Frederick

counties since 2008. The largest growth industrial categories were Financial/Insurance,

Accommodations/Food, and Federal Government.

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Table 5: Change in Average At-Place Employment, Clarke County/ Frederick County/Winchester City, VA, 2008-2017

Industry Clarke County

Frederick County

Winchester City

Total

Construction -109 -287 -- -- Manufacturing -434 1,407 -1,839 -866 Wholesale Trade 21 -- -79 -- Retail Trade -29 966 -929 8 Transportation/ Warehousing 15 -- -101 -- Information 4 122 -93 33 Finance/Insurance -13 1,325 -71 1,241 Real Estate -4 -7 -76 -87 Professional/Tech. Services 56 169 -- -- Management of Companies -- 66 -- -- Administrative/Waste Services -- 745 -459 -- Educational Services -- 105 -120 -- Health Care -- 327 906 -- Arts/Enter./Recreation -54 2 -124 -176 Accommodations/Food 42 473 223 738 Other Services 100 119 -172 47 Local Government 43 -22 -24 -3 State Government -38 254 -5 211 Federal Government -9 631 465 1,087 Total -301 7,529 -1,928 5,300

Source: U.S. Department of Labor, Bureau of Labor Statistics

Table 6: Trends in Employment and Unemployment, Clarke County/ Frederick County/Winchester City, VA, 2008-2017

Labor Force Employment Unemployment Percent Unemployed

2008 64,004 61,337 2,667 4.2% 2009 63,222 58,476 4,746 7.5% 2010 63,364 58,564 4,800 7.6% 2011 65,050 60,757 4,293 6.6% 2012 65,462 61,593 3,869 5.9% 2013 66,120 62,585 3,535 5.3% 2014 66,452 63,283 3,169 4.8% 2015 66,241 63,551 2,690 4.1% 2016 67,001 64,557 2,444 3.6% 2017 68,385 66,122 2,263 3.3% Net Change 4,381 4,785 -404 -0.9%

Source: United States Department of Labor, Bureau of Labor Statistics

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Frederick County’s employment total is approximately 66,100 as of year-end

2017. The fact that Frederick County’s employment is higher than at-place jobs means

that there is considerable out-commuting from that part of the market area.

The unemployment rate in Frederick County is low and has decreased steadily

since 2010. It is currently 3.3 percent.

Winchester and Frederick County have a sizable number of active new

developments that are expected to generate sizable new job growth. These jobs are

detailed in the paragraphs below.

Equus Capital Partners broke ground in September, 2017 on a 287,000± speculative warehouse logistics facility in Stonewall Industrial Park, located along the Interstate 81 corridor in Frederick County. Rubbermaid Commercial Products announced in April, 2018 that it would lease the space. The same developer announced in August, 2018 that it would construct an 820,000± square foot speculative warehouse building in the same park atat 420 Lenoir Drive.

Amazon completed construction in June,2018 on an e-commerce warehouse and distribution operation at 281 Woodbine Road off Martinsburg Pike (U.S. 11) in the White Hall Commerce Center in Frederick County. The 1,061,040± square foot warehouse and distribution center will ultimately be staffed by 1,000 employees paying an average of $13 per hour. Approximately 200 people have been employed to date. Employees at the fulfillment center pick, pack and ship large customer items such as big-screen televisions, kayaks and patio furniture.

Bojangles’ Famous Chicken ‘n Biscuits. Construction will be completed in October, 2018 on this fast food restaurant at 191 Gateway Drive in the Winchester Gateway Plaza. The 4,000 square foot restaurant has a staff of 60 people.

Navy Federal Credit Union, the world’s largest credit union, announced in January, 2017 that it would expand its Frederick County operations center, creating 1,400 new jobs. The expansion will include the addition of a three-level 180,000± square foot building, as well as a five-story parking garage. Construction is slated to be completed by late-2018. The new jobs will consist of lending, information services and contact center positions.

Marriott Springhill Suites Hotel. Ground was broken in July, 2018 on this 96 room hotel on the southeast side of Market Street. The 63,500± square foot, four-story hotel will include a lounge/dining area, a fitness center and an indoor pool.

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M&H Plastics, a manufacturer that specializes in the production and decoration of high-quality plastic bottles, jars, flexible tubes, and closures, announced in January, 2018 that it would expand its Brooke Road facility in Winchester by adding 157 new jobs.

RPC Superfos, a company that provides injection molded plastic packaging solutions, announced in January, 2018 that it would hire 35 additional employees.

FBI Central Records Complex. Ground was broken in October, 2017 at 2117 Millwood Pike for the new FBI Central Records Complex that will streamline the FBI’s worldwide records management by consolidating records from 265 locations into a single facility. The complex will contain a 256,000± square facility and surface parking lot. It will employ 446 people. The facility is expected to open in the summer of 2020.

Urgent Care Center and Valley Health Winchester Family Practice. Construction was completed in October, 2017 on this 8,500± square foot urgent care center at 160 Merchant Street in Frederick County. There are seven exam rooms, one procedure room and an on-site lab and X-ray machine. 25 people staff the facility.

West Oaks Farm Market. Construction is ongoing on a 20,000± square foot addition to the West Oaks Farm Market on Middle Road in Winchester. A little more than 3,450± square feet of the facility will be a special event center that can accommodate up to 275 people. The retail farm market will occupy 10,500± square feet. The rest of the space will be for storage. The special event facility will have a banquet room for weddings, business meetings, birthday parties, showers, reunions and events hosted by the market. It also will include a catering kitchen for hired catering services to use.

Valley Health Surgery Center. Construction was completed in January, 2018 Valley Health’s new surgery center at 174 Botanical Boulevard. The 21,760± square foot facility contains three operating rooms, two procedure rooms and 20 patient holding bays with room to expand. It is on property adjacent to the Courtyard Marriott Winchester Medical Center hotel. In total, the announced new jobs at these larger businesses will, in time, create

over 3,000 new permanent jobs, plus construction jobs.

Market Area Summary

Overall, the market area is a large growth area with both job and employment

growth. While Clarke County has not fully participated in the economic expansions of

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adjacent counties, it is in close proximity to areas with sizable growth. The primary

point to note is that the market area is not only stable, but is rapidly expanding.

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Section II Senior Apartment Market Analysis

Following is the supply/demand analysis for the Robert Regan Village proposal.

First presented is the demographic analysis that solves for the number and growth of

active older adults with incomes of $38,000 to $52,000, when incomes are reported in

2018 dollars. The forecast date for the demographic analysis is 2021, as Robert Regan

Village is expected to be started in earkt-2019, with marketing during 2020 and possibly

2021.

The demographic analysis is followed by the analysis of market area LIHTC

apartment properties, and the number of seniors who occupy these apartment

properties. As noted above, the market area has only two age-restricted apartment

properties and eight affordable properties for families (and seniors).

Demographic Analysis

Population Trends and Projections

The market area total population is approximately 250,700 in 2018, based on data

from the 2017 Census’s American Community Survey and trend analyses. Data

presented in Table 7 shows a net market area population growth of 27,000 during the

1990’s, 80,000+ during the 2000 decade and 45,000 during the first eight years of the

current decade. The population projection for the 2018 to 2021 period is nearly 26,000.

The population in the market area grew considerably during the 2000 decade,

even with the recession of the late-2000’s. The early part of the current decade was a

rather slow growth period, but that has changed for the past three years, with a market

area population growth of 17,000 from 2015 to 2018.

There is slow and steady growth in Clarke County and the City of Winchester.

Current population growth in the eastern part of Frederick County has been moderate,

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at 4,500 since 2010. Much of the population growth has been in eastern Loudoun

County.

Group Quarters Population

The market area has a very small Group Quarters population, which includes

primarily students in dorms at Shenandoah University, and persons in jails, shelters and

nursing homes. The Group Quarters population is subtracted from total population to

determine Household Population. Household Population is the basis for determining

household growth and housing unit demand. Data in Table 7 show that 1.3 percent of

the market area population lives in group quarters.

Table 7: Population Trends and Projections by Age, Berryville Market Area, 1990-2021 (Constant 208 Dollars)

1990 2000 2010 2018 2021 Market Area Population 96,680 123,780 205,140 250,700 3/ 276,300 Clarke County 12,100 12,650 14,030 14,550 15,200 Eastern Frederick County 25,310 35,930 45,450 49,950 54,000 Winchester City 21,950 23,590 26,200 28,000 29,500 Western Loudoun County 37,320 51,610 119,460 158,200 177,600 Group Quarters Population 1,970 2,090 3,100 2/ 3,200 3,300 Household Population 95,010 121,690 202,040 247,500 273,300 Persons Per Household 2.61 2.61 2.77 2.74 2.72 Total Households 36,450 46,630 72,930 90,330 101,580 Senior Demographics (65-79) Total Population 8,190 9,800 14,950 19,050 21,550 Percent of Total Population 8.5% 7.9% 7.3% 7.6% 7.8% Senior Households 5,220 6,350 9,230 11,400 13,700 Percent of Total Households 14.3% 13.6% 12.7% 13.0% 13.5% Target Market 4/ Households 700 910 1,460 1,960 2,400 Percent of Senior Households 13.4% 14.3% 15.8% 16.0% 17.5%

Notes: 1/ Market area includes Clarke County, Winchester City and the following 2010 U.S. Census tracts in Frederick County: 508.01, 508.02, 508.03, 509, 510, 511.01 and 511.02. Includes the following 2010 U.S. Census tracts in Loudoun County: 6102.02, 6104, 6105.03, 6105.04, 6105.05, 6105.06, 6105.07, 6106.01, 6106.02, 6106.03, 6106.04, 6107.01, 6107.02, 6107.03, 6108, 6109, 6110.04, 6110.09, 6110.11, 6110.12, 6110.13, 6110.14, 6110.16, 6110.17 and 6110.24. 2/ Group Quarters Population includes 1,010 in correctional institutions, 570 in nursing homes, and 1,070 in on-campus university housing. 3/ Based on data from the 2017 Census American Community Survey. 4/ Persons between 65 and 79 years of age earning annual incomes ranging between $38,000 and $52,000. Source: 1990, 2000 and 2010 Census, U.S. Census Bureau, U.S. Department of Commerce; S. Patz & Associates, Inc.

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Households

Currently there are approximately 90,300 households in the market area.

Household growth has been substantial during the 2000 decade and to date in the 2010

decade. Since 2010, the net increase in households was 17,000 or 1,700 per year on

average.

The market area’s average household size has increased since 2000, a reversal of

past and long-term trends and the continuous of trends in most communities. That is

due to: (1) some doubling up of households during the recession due to job losses or

salary declines; and (2) a large increase in single family home development, as opposed

to apartment unit development or townhome development. Trends during the 2000’s

are reversing and the average household size has started to decline again (since 2010), in

light with normal market area trends.

Data presented in Table 7 show that 7.6± percent of total population in 2008 is in

the active older adult age category of 65 to 79 years of age. That percentage has declined

since 1990 due to a large population increase of young families buying new homes.

For active senior-headed households, the percentage is of total households with a

senior head approximately 13 percent, with that percentage also having decreased

slightly since 1990 and 2000. The average household size of active senior-headed

households is 1.62, an indication of a need for larger apartment units in age-restricted

housing.

As of 2018, the market area has a 19,000+ active senior population. Since 2010,

that population has increased by 4,000, or 500 per year on average. There are 11,700+

senior-headed households. Senior-headed households increased by 2,500 since 2010.

The average household size for active seniors at just under 1.7 persons per household

has remained relatively stable over recent years.

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Target Market for Robert Regan Village

Independent living apartment units attract primarily active seniors in the 65 to 79

age category. These apartments have an age range of 55 and above. The residents who

are younger than 65 typically have some disability. ILF’s also typically attract 10 percent

of their resident with Section 8 housing vouchers.

The majority of the residents at move-in are expected to be in the 65 to 79 age

category, with incomes of $38,000 to $52,000, based on rents and the allocation of 35

percent of income spent on net rent.

The target market studied in Table 7 show that there are 1,960 active senior-

headed households in the income range under study in the market area in 2018, a

growth of 500 since 2010. This total is expected to increase by another 500± by 2021, but

depending on the development of more affordable senior housing.

The market for the 100 affordable apartment units at Robert Regan Village will

include 80 to 90 percent of persons within the age and income categories under study.

The other 10 to 20 percent of units will be occupied by persons under 65 years of age

and/or households with Section 8 housing vouchers. The 20 market rent units will

attract active seniors with incomes likely of $50,000 and above.

Renter Households by Size

Approximately one-third of market area renters are one-person households.

Another 25 percent are two-person households. These percentages are typical for

“suburban” marketplaces.

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Table 8: Renter Households by Size, Berryville Market Area, 2010

Clarke County

Eastern Frederick County

Winchester City

Western Loudoun County

Market Area Total

1-person household 508 1,111 2,339 2,733 6,691

2-person household 385 1,080 1,407 2,210 5,082

3-person household 217 734 783 1,494 3,228

4-person household 131 583 605 1,346 2,665

5-person household 70 321 334 730 1,455

6-person household 27 123 159 316 625

7-or-more-person household 15 85 119 179 398

Total 1,353 4,037 5,746 9,008 20,144

Source: 2010 U. S. Department of Commerce, Bureau of the Census

Competitive Apartment Market

Characteristics of Competitive LIHTC Apartment Communities

Table 9 lists the market area’s two age-restricted apartment communities and the

eight family properties with LIHTC rent restrictions. In addition, the market area

contains a 20-unit age-restricted apartment property, Levi Hill House, but rents there are

at 30 percent of AMI, and thus, the property is not competitive. Aside from Mary

Hardesty House, Berryville has two low rent garden properties that are not competitive

with the Robert Regan Village proposal. Winchester/Frederick County and western

Loudoun County also have mature, and or, high rent general occupancy properties that

are not “comps”. The properties that defined as competitive under study are shown on

Map F.

Two of these properties – Autumn Wind and Preston Place – are located in

Winchester. These are garden properties that are 20± years old and with modest rents

compared with the Robert Regan Village proposal. Preston Place was renovated in 2014.

These are not good comps.

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Mary Hardesty House, as stated many times, is located in Berryville and in close

proximity to the Robert Regan Village site. Rents at Mary Hardesty House are at 50% of

AMI and considerably below the proposed rents at Robert Regan Village.

Map F – Location of Market Area LIHTC Apartment Properties

Wingler House is well located in Ashburn on the far eastern side of the market

area. Wingler House was built in two phases in 1993 and 2003. It is one of the larger

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LIHTC properties in the market area. Even with the Ashburn location, Wingler House

has rents below the rents proposed for Robert Regan Village, as detailed below.

The Grove at Flynn’s Crossing is also in Ashburn. This is also a 20±-year-old

property, but rents are at the same level as those under study at the Subject proposal.

Potomac Station is the third Ashburn property. It too has high rents that are comparable

with the Robert Regan Village proposal.

There are two apartment properties in Leesburg – Evans Ridge and Fields of

Leesburg. Purcellville also has two LIHTC properties. The Purcellville setting typically

generates higher rents compared with the Berryville and Winchester area marketplaces

Data in Table 9 show that almost all of the properties listed are 20+ years old.

For the two age-restricted apartment properties, the newest is Wingler House which

opened phase I in 1999 and phase II in 2003. Mary Hardesty House opened in 1998. It

had some interior renovations undertaken in 2016.

Table 9: Characteristics of Competitive Apartment Communities, Berryville Market Area, August, 2018

Map F Key

Year Built Income

Restrictions Total Units

Senior Units

Vacant Units

Age-Restricted Properties Mary Hardesty House 1 1998 50% 60 60 0 Wingler House I & II 2 1993/03 60% 264 264 0 (Subtotal) (324) (324) (0) Family Properties Autumn Wind 3 2000 60% 104 20 0 Evans Ridge 4 1996 60% 150 10 1 Fields of Leesburg I & II 5 1998/99 60% 404 40 16 1/ Grove at Flynn’s Crossing 6 1998 50%/60% 168 30 0 Main Street Commons 7 2001 60% 90 25 4 Maple Avenue Apartments 8 2001 60% 60 10 0 Potomac Station 9 2002 60% 130 25 1 Preston Place 10 1993/97 50%/60% 236 20 5 (Subtotal) (1,342) (180) (26) Total 1,666 504 26 Vacancy Rate 1.6%

Notes: 1/ Management notes that this is a typical vacancy rate.

Source: Field and Telephone Survey by S. Patz and Associates, Inc.

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Except for Preston Place, the family LIHTC apartment properties were built

between 1996 and 2002. Potomac Station is the newest of these properties.

Mary Hardesty House has rents set at or below 50 percent of AMI. Grove at

Flynn’s Crossing and Preston Place have a mix of 50% and 60% rents. The remaining

properties are at rents at or below 60% of AMI.

There are 324 apartment units at the two age-restricted properties. Occupancy is

at 100 percent with a waiting list. Mary Hardesty House has a 35-person waiting list.

Wingler House has a waiting list that exceeds 100. The waiting list of Mary Hardesty

House was recently “purged” and persons who no longer needed an apartment at the

property or could not afford the current rents, were removed.

The vacancy rate for the eight family properties is 2.6 percent. The only

apartment property with vacancies is the 404-unit, Fields of Leesburg. The other

properties are at or near 100 percent occupancy.

Three key points are noted in Table 9.

1. The competitive apartment market is at near full occupancy and that condition has been stable for several years.

2. No new LIHTC apartment properties have been built in the market area since 2002 and the newest LIHTC properties are located in Loudoun County.

Most Loudoun County sites are too expensive for LIHTC properties, but a family apartment building is under construction at the new One Loudoun planned community

3. There are approximately 180 seniors living at area LIHTC general

occupancy apartment properties, or 13± percent of total units that total has not changed in recent years.

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Overall, there have not been many changes in the competitive LIHTC apartment

market in the market area, for either general occupancy or age-restricted apartment

properties, except rent increases, as will be described below.

Photos of the competitive apartment properties follow. Mary Hardesty House

has been well maintained and has had interior upgrades. Wingler House has a basic

“1990’s” design. This apartment complex has also had recent upgrades. The general

occupancy properties are standard, basic, three-story gardens, typically of 20± year-old

properties.

Mary Hardesty House Wingler House

Autumn Wind Evans Ridge

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Fields of Leesburg Grove at Flynn’s Crossing

Main Street Commons Maple Avenue

Potomac Station Preston Place

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Senior Renters. Data in Table 9 show that 180 senior-headed households are

residents of the area’s general occupancy LIHTC apartment properties. This fact, and

the nearly 140 seniors on the waiting list at the two age-restricted apartment properties,

show that a large pent-up demand exists in the market area for new housing for older

adults.

Net Rent Analysis

The rents shown in Table 10 were updated to August, 2018 and adjusted to

exclude all utilities to be consistent with the rents proposed at Robert Regan Village.

Rents at Robert Regan Village include only trash collection. That rent adjustment was

not made. The apartment properties that are highlighted include an in-unit

washer/dryer.

The rent analysis can be summarized as follows:

The rents at the adjacent Mary Hardesty House are low at $960, as this is a 50% of AMI property. The rents have increased by over $100 over the past 2+ years, after years of stagnant rents. The apartment complex has a large waiting list and low turnover rate.

Rents at Wingler House (without an in-unit washer/dryer) are

approximately $200 to $300 lower compared with rents planned at Robert Regan Village. Rents at Wingler House, with recent renovations, have increased slightly each year for the past few years.

Rents at Evan Ridge, Grove at Flynn’s Crossing and Potomac Station are

at rates equal to, or higher, than the proposed rents under study at Robert Regan Village. All of these apartment properties include the cost of a washer/dryer in the rent. These apartment properties contain 75 older adult residents who pay rates consistent with the Robert Regan Village proposal.

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Table 10: Rental Rates at Competitive Apartment Communities, Berryville Market Area, August, 2018

One-Bedroom Two-Bedroom Age-Restricted Properties Mary Hardesty House 3/ -- $960 Wingler House I & II 2/ $950-$1,010 $1,175-$1,190 (Average) ($980) ($1,070) Family Properties Autumn Wind -- $961 Evans Ridge 3/ -- $1,490 Fields of Leesburg I & II $1,250 $1,290-$1,395 Grove at Flynn’s Crossing 3/ $1,214 $1,445 Main Street Commons 3/ $1,025 $1,050 Maple Avenue Apartments 3/ $1,088 $1,225-$1,280 Potomac Station 3/ 4/ -- $1,419 Preston Place -- $906 (Average) ($1,140) ($1,650) Robert Regan Village (affordable) $1,205 $1,436

Notes: 1/ 30% rents excluded. Rents adjusted to include water, sewage and trash collection. 2/ Includes gas. 3/ Includes washer and dryer. 4/ Larger two-bedroom units have two bathrooms. 5/ One-bedroom rents are $650. Two-bedroom rents are $975.

Source: Field and Telephone Survey by S. Patz and Associates, Inc.

There is a rent premium for apartments located in Loudoun County, compared

with Berryville, including Purcellville and Ashburn. However, with a near 100 percent

occupancy rate and limited available land for new affordable housing, Berryville

becomes a viable location for high rent properties. The data presented in Table 10 show

that the rents proposed at Robert Regan Village are fully “at market” given the quality of

the new building, with elevator service.

On average, rents since Winter, 2015 increased well over $100 per apartment

unit, and in some cases will over $200.

Market Rate Rents. The two-bedroom market rate rents at Robert Regan Village

are at the top of the market, and above the LIHTC rents. These rents will be studied in

more detail below.

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Rent Per Square Foot. We did not do this calculation as all “comps” are mature

and not good comparables for the Subject proposal.

Apartment Unit Sizes

The unit sizes at Robert Regan Village are substantially larger than the units at

the market area’s two age-restricted apartment properties. They are at or above the sizes

at the market area’s LIHTC garden properties.

Table 11: Unit Sizes at Competitive Apartment Communities, Berryville Market Area, August, 2018

One-Bedroom Two-Bedroom Age-Restricted Properties Mary Hardesty House -- 966 Wingler House I & II 544-598 878 (Average) (571) (922) Family Properties Autumn Wind -- 988 Evans Ridge -- 900 Fields of Leesburg I & II 664 824-892 Grove at Flynn’s Crossing 807 971-1,119 Main Street Commons 775 932 Maple Avenue Apartments 839-914 1,047-1,147 Potomac Station -- 941-1,093 Preston Place -- 1,000-1,080 (Average) (781) (985) Robert Regan Village 764 1,037

Source: Field and Telephone Survey by S. Patz and Associates, Inc.

Apartment Unit Mix

Mary Hardesty House has all two-bedroom units. Wingler House has 60 percent

one’s and 40 percent two’s. Many general occupancy apartments have no one-bedroom

units.

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Table 12: Unit Mix at Competitive Apartment Communities, Berryville Market Area, January, 2017

One-Bedroom Two-Bedroom Three-Bedroom Total Age-Restricted Properties Mary Hardesty House 0 60 0 60 Wingler House I & II 161 103 0 264 (Subtotal) (175) (169) (0) (344) Family Properties Autumn Wind 0 68 36 104 Evans Ridge 0 90 60 150 Fields of Leesburg I & II 12 250 142 404 Grove at Flynn’s Crossing 24 126 18 168 Main Street Commons 12 60 18 90 Maple Avenue Apartments 12 48 0 60 Potomac Station 0 100 30 130 Preston Place 0 163 73 236 (Subtotal) (60) (905) (377) (1,342) Total 235 1,074 379 1,686 Percent of Total 13.9% 63.7% 22.4% 100.0%

Source: Field and Telephone Survey by S. Patz and Associates, Inc.

Amenities

The amenities were described above. Wingler House has the following

amenities.

On-site beauty salon Exercise room/fitness center Game room, library, arts and crafts room Van service Activity programs Wellness center

Market Rate Rent Analysis

There are no upper-priced apartment properties in Berryville or in

Winchester/Frederick County. Leesburg is the closest location for higher rent

apartment properties and are the best comps for the 20 market rent two-bedroom units

at Robert Regan Village. Data in Table 12 show that the Leesburg area apartment

properties have two-bedroom rents that greatly exceed the $1,650 market rents proposed

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at Robert Regan Village. These apartment properties were built between 2000 and 2014,

with Atley on the Greenway the newest addition to the market. Two-bedroom net rents

there are $1,900 and above. All of these properties have two-bedroom rents at or above

$1,700.

Table 13 Net Rental Rates at Newer Market Rate Apartment Communities, Ashburn, VA Market Area, August, 2018 1/

Year Built

Total Units

Two-Bedroom

Atley on the Greenway 2014 496 $1,930-$2,020 BLVD Loudoun Station 2012 357 $1,630-$2,060 Broadlands 2003 292 $1,902-$3,771 Camden Ashburn Farms 2000 162 $1,839-$2,189 Jefferson Arbors at Broadlands 2000 240 $1,617-$2,354 The Ashborough 2004 508 $1,650-$2,913 The Point at Ashburn 2009 373 $2,027-$2,251 Westwind Farms 2005 464 $1,680-$1,990 Total 2,892

Notes: 1/ Rental rates exclude utilities.

Source: Field and Telephone Survey by S. Patz and Associates, Inc.

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Section III Conclusions

The market analysis presented above shows that the market area under study

has a limited number of affordable apartment units for active seniors and the apartment

units that do exist are modest. Mary Hardesty House and Wingler House were built in

the late-1990’s and are not of the same quality as the apartments planned for Robert

Regan Village Apartments. The apartment units at these two properties are modest in

size. Mary Hardesty House has rents at or below 50% of AMI. The apartment units at

Wingler House do not include individual washers/dryers. Both properties are at 100

percent occupancy and each has an extensive waiting list.

The rents at these two apartment properties are well below the rates proposed

for the study site. Both properties current attract seniors with incomes below $35,000,

and in the case with Mary Hardesty House, a large percentage of residents have incomes

at the $30,000± range. Neither is a “direct” comp for Robert Regan Village Apartments.

In addition to the 135± residents on the waiting list at the market area’s two

affordable senior apartment proposals, plus there are 180± seniors residing in general

occupancy LIHTC apartment properties in the market area. An estimated 75 of these

residents pay rent equal to the rates to be charged at Robert Regan Village, once built.

Those rents are for 15+ year-old garden non-elevator buildings.

At this time, there are no pipeline proposals that will be competitive with the

Robert Regan Village proposal. A 70-unit LIHTC proposal is being planned in Frederick

County and is “in” for rezoning. This will be a 60% LIHTC property. Site approval is

expected and likely will be received prior to the end of 2018.

There are 75± active adults who pay rents equal to the rates of the Subject

proposal. Otherwise, most senior renters are at lower rents compared with the Subject

proposal.

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In evaluating the Robert Regan Village proposal, the unit mix is consistent with

the market, as most age-restricted, new upscale properties attract tenants for a two-

bedroom unit. The unit sizes are spacious and larger than market area LIHTC

apartment units. The site location is attractive and is a proven location for older adults.

The new ALF will be located adjacent to the Robert Regan Village apartment building

and will provide housing for future residents of Robert Regan Village as they age.

The demographic analysis shows that the market area has nearly 2,000

households within the age and income categories under study and that total is expected

to reach 2,400 by 2021. As noted, only 324 age-restricted units exist for this population, a

13.5 percent penetration rate. The evident pent-up demand is 75 residents who pay

equal rents at family affordable properties and part of the 135 persons on the waiting

lists at Mary Hardesty House and Wingler House.

Overall, there is a ready market for new age-restricted apartment units,

particularly for affordable units. There is a very large segment of the active senior

housing market with higher incomes that do not show up in competitive apartment

properties, because there are no comps. The 20 market rent, two-bedroom units, is

intended to serve this unmet market.

The two key issues that need reviewed are: (1) achievable rents and (2) the level

of demand that exists for the type of housing proposed.

1) The market area will have at the time of project opening in 2021, 2,400± households with the household head in the 65 to 79 age category and with incomes of $38,000 to $52,000. To date, only 100 or so “target” households reside at market area LIHTC apartment properties.

Additionally, there are 140± persons on waiting lists for age-restricted LIHTC apartment units within the market area. Most of these households are in the age and income levels under study. Most LIHTC apartment properties for seniors attract persons under 65 years of age and 10 to 15 percent have rent supplements via the Section 8

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program. Thus, Robert Regan Village will likely only need to attract 80 households within the defined target market.

2) The market area has 8,000± active senior-headed households with incomes of $50,000 and above. These represent the potential market for the 20 market rent units proposed.

3) The demand analysis is shown in the VHDA chart.

In terms of net rents, the “market” has supported rents at the affordable levels

proposed for Robert Regan Village at less attractive properties. While the proposed

rents at Robert Regan Village are at the top of the market, Robert Regan Village will

offer more spacious units, brand new units and an elevator-served building.

VHDA Demand Chart

The demand chart is presented next. It analyzes only the 100 affordable

apartment units. The 20 market rent units will be drawn from the 8,000± active senior

households with incomes of $50,000+. There are no market comps for the market rent

properties, so increases in the Demand Chart would have no value. Robert Regan

Village needs only 0.0025 percent of this market for the 20 non-rent restricted apartment

units.

The Demand Chart shows a net growth of 440 active senior households at or

below 60% of AMI for the 2018 to 2021 period. Added to this are 300 senior households

on the waiting list at area senior apartment complexes and seniors at general occupancy

apartment properties, as described above. Total potential growth demand, plus pent up

demand, equals 740 households.

We did not include seniors in substandard housing as part of our demand, as

this is not an issue within the greater Berryville marketplace. Any elderly converting to

rental housing is included in our demographic projections. Thus, total demand for

affordable apartment units in the Berryville market area is 740. There are no approved

pipeline proposals and no vacant units. Net demand is 740.

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VHDA Demand Chart

(2018-2021)

Income Restrictions Up to 60%

New Rental Households 440

PLUS

Existing Households – Waiting Lists & at General Occupancy Apartments

300

PLUS

Existing Households- Substandard Housing

--

PLUS

Elderly Households- Likely to Convert to Rental Housing

--

PLUS

Existing Qualifying Tenants – to Remain After Renovation

--

Total Demand 740

MINUS

Supply (includes directly comparable vacant units completed or in pipeline in PMA 1/

0

EQUALS

NET DEMAND 740

ABSORPTION PERIOD (in months) 2/

15

Notes: 1/ Excludes Frederick County proposal as it does not yet have rezoning and financing approvals. 2/ LIHTC apartment units.

Market Rent Apartment Demand. The market area has 8,000± active senior

headed households with incomes of $50,000 and above. There is no competition for this

sector of the market, so these data are not included in the Demand Chart. Management

at Robert Regan Village needs only a 0.025 capture rate for the planned 20 market rent

apartment units.

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Absorption Period

Robert Regan Village is expected to lease up at a rate of 7.0± units per month for

a 15-month marketing period, for the 100 LIHTC units. The 20 market rent units will

likely lease within this period.

The VHDA capture rate chart is as follows:

Number

Project Wide Capture Rate - LIHTC Units 1/ 4.2% Project Wide Capture Rate - Market Units 0.0025% Project Wide Capture Rate - All Units 1.2% Project Wide Absorption Period (in months) 15

Note: 1/ Does not subtract households that do not fall within the defined target market.

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I affirm the following:

1. I have made a physical inspection of the site and market area.

2. The appropriate information has been used in the comprehensive evaluation of the need and demand for the proposed rental units.

3. To the best of my knowledge, the market can support the demand shown in this

study. I understand that any misrepresentation in this statement may result in the denial of participation in the Low Income Housing Tax Credit Program in Virginia as administered by the Virginia Housing Development Authority.

4. Neither I nor anyone at my firm has any interest in the proposed development or

relationship with the ownership entity.

5. Neither I nor anyone at my firm nor anyone acting on behalf of my firm in connection with the preparation of this report has communicated to others that my firm is representing VHDA or in any way acting for, at the request of, or on behalf of VHDA.

6. Compensation for my services is not contingent upon this development receiving

a LIHTC reservation or allocation.

August 17, 2018

_______________________ ________________________

Market Analyst Date