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HomeMy WebLinkAbout6A3�_ (IV ��') iSOLTti ��� Department of Community 1865,. Investment Memorandum Friday, February 08, 2013 TO: Redevelopment Commission FROM: Jitin Kain, Director of Planning SUBJECT: Study of Residential Market Potential for Downtown South Bend Attached is a proposal from Zimmerman /Volk Associates, Inc. for conducting a study of residential market potential for downtown South Bend. Zimmerman /Volk Associates, Inc. is a nationally known expert specializing in the analysis of compact and sustainable development; mixed - income, mixed - tenure redevelopment; mixed -use urban revitalization; traditional neighborhood developments; and integrated -use master - planned communities. Over the last two years, downtown South Bend has seen some exciting new residential development with potential for additional development in coming years. As the City continues its efforts to encourage more residential in downtown, many in the development community have asked for a market analysis of the demand and capacity for downtown residential. The scope of services for this analysis includes determining: • Where the potential renters and buyers of newly- created housing units in Downtown South Bend are likely to move from (the draw areas); • Who currently lives in the draw areas and what they are like (the target markets); • How many are likely to move to the Downtown if appropriate housing units were to be made available (depth and breadth of the market); • What their housing preferences are in aggregate (rental or ownership, multi - family or single - family); • What are they currently willing to pay to rent or purchase newly- created dwelling units within the Downtown; • What their alternatives are (new construction or existing housing stock in the South Bend market area); and • How many newly- created dwelling units can be leased or sold within the Downtown over the next five years (absorption forecasts). Staff requests approval of the attached study in the amount of $38,000 from the SBCDA TIF. 227 W. JEFFERSON BLVD. SOUTH BEND, IN 46601 1 P: 574- 235 -9371 1 FAX: 574 - 235 -9021 1 SOUTHBENDIN.GOV ZIMMERMANNOLK ASSOCIATES, INC. 6 East Main Street Clinton, New Jersey 08809 908 735 - 6336.908 735 -4751 facsimile www.ZVA.cc • info @ZVA.cc Research & Strategic Analysis SCOPE OF SERVICES AND FEE ESTIMATE For An Analysis of Residential Market Potential Within Downtown South Bend In The City of South Bend, St. Joseph County, Indiana January 7, 2013 Scope of Services and Fee Estimate An Analysis of Residential Market Potential Page 2 Downtown South Bend City of South Bend, St. Joseph County, Indiana January 7, 2013 INTRODUCTION This document outlines the scope of work designed to establish the depth and breadth of the potential market for new market -rate dwelling units, to be added through adaptive re -use of existing non - residential structures and /or new construction, within Downtown South Bend (the Study Area), in the City of South Bend, St. Joseph County, Indiana. The initial assumption is that the boundaries of the Study Area are concurrent with those of the South Bend Central Development Area (TIF area), but the boundaries may be refined after Phase One. For this analysis, Zimmerman /Volk Associates, Inc. will research and evaluate market activity and geo- demographic data relating to the Downtown, the City of South Bend, and St. Joseph County. The determination of the market potential for new and existing dwelling units in the Downtown and the city will be based on the housing preferences and economic capabilities of target households, the existing conditions and characteristics of the Downtown, as well as the development objectives of the client. The scope of services will determine: • Where the potential renters and buyers of newly- created housing units in Downtown South Bend are likely to move from (the draw areas); • Who currently lives in the draw areas and what they are like (the target markets); • How many are likely to move to the Downtown if appropriate housing units were to be made available (depth and breadth of the market); • What their housing preferences are in aggregate (rental or ownership, multi - family or single - family); • What are they currently willing to pay to rent or purchase newly- created dwelling units within the Downtown; • What their alternatives are (new construction or existing housing stock in the South Bend market area); and • How many newly- created dwelling units can be leased or sold within the Downtown over the next five years (absorption forecasts). ZIMMERMANNOLK ASSOCIATES, INC. Scope of Services and Fee Estimate An Analysis of Residential Market Potential Page 3 Downtown South Bend City of South Bend, St. Joseph County, Indiana January 7, 2013 SCOPE OF SERVICES The scope of services includes: PHASE ONE: PROJECT INITIATION TASK 1.1 —DATA COLLECTION The City will provide any previous relevant studies and base maps for the Downtown Study Area in advance of the area visit. TASK 1.2— CLIENT MEETING A Zimmerman /Volk Associates principal will meet with appropriate city personnel and /or stakeholders during the area visit to review the objectives of the study and the methodology to be employed in the analysis. A key goal of the meeting will be to ensure that Zimmerman /Volk Associates possesses all pertinent data regarding the Study Area, as well as to review potential study area delineations, specific development sites, and schedule. TASK 1.3 —STUDY AREA EVALUATION Zimmerman /Volk Associates will evaluate the characteristics, constraints and opportunities of the Downtown, and the potential for market -rate residential development. Residential opportunities will be assessed based on the character of the Downtown, location of vacant or under - utilized sites or buildings, potential amenities, and the Downtown's potential position within the housing market context. Residential market activity within areas germane to the City of South Bend will be evaluated during this visit. TASK 1.4— INTERVIEWS Real estate professionals (brokers, sales agents, leasing managers, developers, builders, bankers, city personnel, residents, neighborhood representatives) and other stakeholders familiar with the nuances of the South Bend market area will be interviewed for their opinions on market challenges and opportunities in the Downtown. TASK 1.5— INITIAL PRESENTATION A principal of Zimmerman /Volk Associates will make a presentation, using PowerPoint, at a meeting to take place on a specified date during the initial area visit. Based on the firm's extensive experience with downtowns, the presentation will discuss the evolution of the market for downtown housing, and the impact the recent housing collapse, recovery and shifting neighborhood preferences, among other factors, are having on the housing market in general and urban locations in specific. ZIMMERMAN /YOLK ASSOCIATES, INC. Scope of Services and Fee Estimate An Analysis of Residential Market Potential Page 4 Downtown South Bend City of South Bend, St. Joseph County, Indiana January 7, 2013 PHASE TWO: MARKET ANALYSIS TASK 2.1— MARKET POTENTIAL: TARGET MARKET ANALYSIS To achieve the study objectives and establish the framework for analysis, Zimmerman /Volk Associates will employ its proprietary target market methodology. In contrast to traditional supply /demand analysis —which is based on supply -side dynamics and baseline demographic projections— target market analysis establishes the optimum market position for new housing based on the housing and lifestyle preferences and financial capabilities of households in the draw areas. Task 2.1.1 —The Competitive Context: Supply -Side Analysis Analysis of the competitive context, including information on relevant newly- created market -rate for -sale developments and relevant existing market -rate rental developments. Zimmerman /Volk Associates will evaluate the residential context in relation to potential residential or mixed -use development within the Downtown, based on available supply - side data and field investigation by Zimmerman /Volk Associates' personnel. Task 2.1.2 —Draw Area Delineation Zimmerman /Volk Associates will identify the appropriate draw areas for housing within the City of South Bend and the Downtown, based on historical settlement patterns, migration trends, and other market dynamics. Task 2.1.3— Determination of Market Potential Zimmerman /Volk Associates will determine the depth and breadth of the potential market for the City of South Bend and the Downtown — including rehabilitation /renovation or adaptive re -use of existing structures as well as new construction — through target market analysis of households in the draw areas, as follows: • Current (2013) household classification by market group within the draw areas. • Qualification and filtering of the draw area households by relevant criteria including, among others, housing and neighborhood preferences and household mobility rates. • Identification of those households within the draw areas with the potential to move within or to the City of South Bend and to the Downtown. The potential market will be correlated by household group (empty- nesters /retirees, traditional and non - traditional families, younger singles /couples); by tenure (rental and ownership); and by housing type (e.g.— multi - family for -rent and for -sale ZIMMERMANNOLK ASSOCIATES, INC. Scope of Services and Fee Estimate An Analysis of Residential Market Potential Downtown South Bend City of South Bend, St. Joseph County, Indiana January 7, 2013 {lofts /apartments }, single - family attached {rowhouses /townhouses /live- workl, single - family detached). PHASE THREE: CONCLUSIONS AND RECOMMENDATIONS TASK 3.1— DETERMINATION OF OPTIMUM MARKET POSITION Target market data and supply -side data, as well as existing conditions, constraints and opportunities will be correlated and analyzed in order to determine the optimum market position for Downtown South Bend. Market recommendations will include: • Housing types appropriate within the Downtown; • Sizes and configurations of units preferred by the potential market; • General price ranges (for ownership units); • General rent ranges (for rental units); and • Annual market capture by value (price and rent) range, over five years (absorption forecasts). Market capture is based on Zimmerman /Volk Associates' capture rate methodology within the context of the market performance of relevant existing properties in the market area. The target market capture rate is derived by dividing the annual forecast absorption by the number of households that have the potential to move to the area in a given year. These housing type - specific capture rates are within the parameters required for feasible development. TASK 3.2— PROGRAMS AND POLICIES, AND IMPLEMENTATION STRATEGIES Based on experience in comparable circumstances in cities across the country, and an understanding of the barriers to urban development and redevelopment, Zimmerman /Volk Associates will recommend principles and strategies, programs and policies relevant to Downtown South Bend for effective implementation of the recommendations. PHASE FOUR: PUBLICATION AND PRESENTATION OF FINDINGS TASK 4.1— PUBLICATION Page 5 The complete study, including text and all appendices, will be provided in print- compatible Adobe Portable Document File (.pdf) format for unlimited reproduction of the study. TASK 4.2— PRESENTATION OF FINDINGS A principal of Zimmerman/Volk Associates will present the findings of the analysis, using PowerPoint, at meetings to take place on a specified date after completion of the study. In addition to city representatives /stakeholders, this presentation can be made to a variety of stakeholders, including political figures, bankers, the local press, real estate personnel and other interested parties. ZIMMERMANNOLK ASSOCIATES, INC. Scope of Services and Fee Estimate An Analysis of Residential Market Potential Page 6 Downtown South Bend City of South Bend, St. Joseph County, Indiana January 7, 2013 SCHEDULE Unless otherwise A general timeline for this market analysis would be as follows: Month One (March) Review of existing planning /research materials Client meeting Study area evaluation Initial presentation Month Two Supply -side analysis Target market analysis Month Three Determination of optimum market position Program and policy recommendations established Delivery of study Month Four Presentation of findings FEE /EXPENSES The professional fee for the above - described scope of services is $35,000. Reimbursable expenses for the analysis have been estimated based on two visits to South Bend —the first visit will include a Zimmerman /Volk Associates' principal and an associate; the second visit will include a Zimmerman /Volk Associates' principal only. Reimbursable expenses are charged as follows, with estimates based on current fares and recent comparable assignments: • Census, demographic, and consumer data, At cost- • Air transportation (United mid -week coach, airport transit), At cost, three round- trips- • Auto rental and /or mileage, tolls, gasoline, and parking, At cost, two trips- • Lodging and meals, At cost, two persons trip one; one person trip two— Total estimated expenses— Estimated at $250 Estimated at $1,500 Estimated at $400 Estimated at $850 $3,000 Total fee /estimated expenses— $38,000 ZIMMERMANNOLK ASSOCIATES, INC. Scope of Services and Fee Estimate An Analysis of Residential Market Potential Page 7 Downtown South Bend City of South Bend, St. Joseph County, Indiana January 7, 2013 BILLING, PAYMENT AND TERMINATION The total professional fee is invoiced and due as follows: $9,000 after execution of this proposal. $9,000 plus expenses, after the first visit to South Bend. $12,000 after delivery of the draft. $5,000 plus any additional expenses, after delivery of the complete study and presentation of findings. Additional meeting and /or charrette fees and expenses would be invoiced as incurred. All payments are within 30 days of the billing date. Payments received after 30 days may be assessed a one - and -a -half percent (1.5 %) per month late payment charge at the discretion of Zimmerman /Volk Associates. The client acknowledges that if Zimmerman /Volk Associates must resort to legal action to obtain payment, then the costs of such action will be borne by the client and not by Zimmerman /Volk Associates should Zimmerman /Volk Associates prevail in such action. This contract can be terminated by either party with written notice. In the event the contract is terminated by the client, Zimmerman /Volk Associates will cease all work upon receipt of written notice. The amount due Zimmerman /Volk Associates shall be calculated according to the actual work completed as a percentage of the total project. ZIMMERMAN /YOLK ASSOCIATES, INC. Scope of Services and Fee Estimate An Analysis of Residential Market Potential Page 8 Downtown South Bend City of South Bend, St. Joseph County, Indiana January 7, 2013 ACCEPTANCE This agreement will become effective with the appropriate signatures below. One signed copy should be returned to Zimmerman /Volk Associates. Upon acceptance with authorized signatures below, this document constitutes the entire contract between the client and Zimmerman /Volk Associates. Any modification to this agreement must be made in writing, signed by both parties, and attached to this document. The authorized signatures below show acceptance of the terms and obligations of this agreement by Zimmerman /Volk Associates, Inc., and the client. Laurie Volk For ZIMMERMAN /YOLK ASSOCIATES, INC. January 7, 2013 The methodology, schedule, client obligations, fees, and payment method outlined above, as well as any signed attachments, are accepted for the client with the following signature(s) of responsible and authorized individual(s): For the client: Title Date ZIMMERMANNOLK ASSOCIATES, INC.