2020 Housing Needs & Market Demand (Monticello, MN)

City of Monticello

2020 Housing Needs & Market Demand

Acknowledgments

City of Monticello - Economic Development Authority

Steve Johnson, President Bill Tapper, Vice President Jon Morphew, Treasurer Tracy Hinz Olive (Ollie) White Jim Davison, Council Representative Lloyd Hilgart, Council Representative

Prepared by: This document was prepared by MSA Professional Services, Inc. with assistance from City Staff.

Project No.: 13731002

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Purpose This Housing Study presents an in-depth look at the City of Monticello’s housing conditions, market, and needs. Though national discourse portrays housing affordability as a universal crisis, we know that every community is unique, having distinct needs dependent upon local economic and social conditions. This study examines these conditions in Monticello, and proposes how housing needs can best be met - especially in the context of a community with pressures for growth.

Content O1

25

INTRODUCTION » Community Basics » Population » Households » Age » Income » Projections Study Process » Affordable Housing » Housing Affordability » Workforce Housing » Who Needs Housing?

RENTAL MARKET » Affordability » Tenure » Rental Housing Stress » Consumption » Unit Types » Affordability Trends » Cost » Vacancy » Size » Age

47

71 79 95

OWNERSHIP MARKET » Affordability » Tenure » Owner Housing Stress » Consumption » Spatial Affordability » Affordability Trends » Entry-Level Affordability » Availability » Mortgage Status » Unit Types » Size OTHER MARKET SECTORS » Homelessness » Aging Populations » Disability LOCAL IMPACTS » Assessment » Improvement Value Ratio » Available Lots/Lot Value » Zoning » Development Fees UNIT DEMAND & RECOMMENDATIONS » Ownership Demand » Ownership Recommendations » Rental Demand » Rental Recommendations » Senior Household Demand

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1

1 About Monticello

Rental Market

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This study was commissioned by the City of Monticello’s Economic Development Authority in May 2020. The City has identified housing as a critical issue that needs to be addressed in order to provide opportunity for existing and future residents, and continue to grow the City’s economic and residential base. City leaders have clearly identified these needs based on feedback from various stakeholders, as well as sustained demand that has provided consistent proposals for both greenfield and infill development. The purpose of this study is to expand and revisit the City’s prior housing study. This will help the City better understand its housing market and to craft targeted strategies to improve housing options.

City of Monticello

SSA AIIN NTT M MIICCH HA AEELL CCIITTYY RRO OG GEERRSS CCIITTYY

HENNEPIN CO U N T Y

There are two main components to all municipal housing markets. The first component of this market is all of the housing located in the City of Monticello; the second component is the housing in surrounding communities, many of those homes occupied by people who work or shop in Monticello but who chose to live elsewhere.

The housing physically located in Monticello is the easiest to measure and analyze, and is also the market portion that the City has the most control over. Housing outside of Monticello is more difficult to quantify and qualify, but it is nevertheless important to a holistic understanding of the market. This report attempts to document conditions and trends in the overall market, including insight in two key areas: • how much demand exists for what types of housing in the City • general strategies to support housing needs and development in the community

Housing Needs and Demand

3

Study Process

This study uses a variety of methods and data to better understand the housing market. Objective, measurable data were collected from the City, the Multiple Listing Service (real estate listings and sales), real estate aggregators, Wright County, the State of Minnesota, the U.S. Census Bureau, and the U.S. Department of Housing and Urban Development. The City is at times compared to its regional peer communities, to a wider context (county, metro) in a variety of ways, and also compared to itself in the form of time-series data that reveal trends. This study also incorporates a series of interviews with people familiar with the housing market, and a community survey of area residents.

Project Oversight

The study was initiated by the City of Monticello Economic Development Authority. A working group of staff in Economic and Community Development regularly provided insight, including review of data and material that comprise this final report. These staff members met with MSA’s project team a total of three times throughout the project to provide direction to the planning process.

Interviews

The planning team met with and interviewed a variety of residents with knowledge and insight into the local housing market, including those who know it best: users of the market themselves. These interviews included realtors, lenders, developers, landlords, employers, and employees. Feedback collected through interviews often naturally gravitated toward similar topics and knowledge, indicating a strong shared understanding of how the local housing market inherently functions. This feedback is used throughout the report.

Community Survey

An online community survey was conducted in July of 2020. In total, the survey received 153 responses from individuals that either live, work, or recreate in the City. The survey was promoted through an extensive community network, as well as through City media and social media channels.

Full responses to the survey are provided as Appendix A, and relevant findings are discussed throughout this report, including insights from crosstabulations between various demographics.

Data Notes

All American Community Survey (ACS) data in this report utilizes 5-Year Estimates from the most recent US Census Bureau data release, which is the 2014-2018 data vintage. The U.S. Department of Housing & Urban Development (HUD) releases custom tabulations of ACS data annually, known as the HUD Comprehensive Housing Affordability Strategy (CHAS) dataset, that better portrays housing statistics and need. The CHAS dataset is also used throughout this report where appropriate, though due to the custom tabulations releases are slower than typical for normal US Census data products. CHAS data vintage utilized in this report is 2012-2016. CHAS data is used to provide additional insight in certain study components where newer data sources do not provide necessary level of detail.

About Monticello

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Monticello is a community in Wright County, The City is notably located directly on Interstate 94, MN, located along the Mississippi River directly providing direct access to the Twin Cities Metro, adjacent to Big Lake and Sherburne County. The but especially convenient access to the northwest larger Monticello region, though not part of the suburbs of Minneapolis, many of which are within Metropolitan Council, is considered by HUD to BU BUFFFFA ALLaO O30-minute drive of Monticello’s downtown. S A I N T SAINT be within the larger 11-county Twin Cities MetroTTO OW WN NSSH HIIPP M IICCH M HA AEELL Region. Monticello is about 27 miles from St. Cloud, C I T Y C I T Y 26 miles from Maple Grove, and 50 miles from St. BU Paul.

BUFFFFA ALLO O CCIITTYY With the largest population of all adjoining municipalities, Monticello is known for its natural landscapes, including access to parks and trails systems along the Mississippi River.

City of Monticello

Housing Needs and Demand

5

Population Population Growth has been steady across the region throughout the past decade. Monticello saw a net increase of 1,209 residents from 2010 to 2018 per American Community Survey estimates.

This represents a total percentage growth of 9.9%, the second lowest growth percentage among peer communities. The closest community in growth percentage is the City of Becker, which grew at approximately the same rate (10.2%) as Monticello in the same timeframe.

Population Growth Rates

As discussed in later sections, this population growth percentage is not consistent with broader growth trends in the area. Increasing rates of household and housing unit growth throughout the region predict steady population growth at a healthy rate. Historical rates of growth are not necessarily predictors of future growth. Changing preferences, regional economic conditions, and other factors contribute to past and future housing choices for residents of the Metro. Unit demand has been increasing, and continued growth will follow - which is anticipated at 2% annually in Monticello 2040.

Population Trends

Municipality

2010 - 2018 Population Growth

Annual Percent Change

St. Michael

1,944

1.58%

Big Lake

1,040

1.35%

Becker

445

1.28%

Monticello

1,209

1.24%

Buffalo

1,321

1.12%

Source: American Community Survey 5-Year Estimates

Popula�on Trends

18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

Mon�cello Source: American Community Survey 5-Year Estimates

Bualo

Becker

Big Lake

St. Michael

About Monticello

6

Households Household growth within the City has

Household Growth Rates Municipality

2010 - 2018 Household Growth

Annual Percent Change

Becker

328

2.64%

Monticello

402

1.06%

Big Lake

273

1.02%

Buffalo

293

0.65%

St. Michael

228

0.55%

Source: American Community Survey 5-Year Estimates

remained relatively steady since 2010, mirroring consistent and slight increases in population growth. Counter to the longer term national trend of shrinking average household size, causing the number of households to grow faster than population, Monticello has seen relative stability to slight growth in household growth since 2010. This is a noteworthy trend deserving our attention as we consider how housing demand is changing in Monticello. Often this manifests in demand for family-sized housing units in both rental and ownership markets, and appears to be driven by slightly larger family sizes since 2010. Owner-occupied household size has remained 2.8 persons per household from 2010 to 2018, while renter households displayed an increase from 2.0 to 2.3 - and the current overall 2020 estimate across all tenures has increased further to 3.32.

This may represent more households having children, and/or in-migration of families with children.

Housheolds 7,000

Household Trends 6,000

5,000

4,000

3,000

2,000

1,000

0

Mon�cello Source: American Community Survey 5-Year Estimates

City of Monticello

Bualo

Becker

Big Lake

St. Michael

Housing Needs and Demand

7

Age Cohorts Monticello Age Cohort Population Change

Age Trends can help predict current and future needs of the community. As populations continue to age, or add members to their households, needs change as well. Since 2010, the City has seen the largest percentage increase in population amongst persons approaching and exceeding retirement age. Age cohorts above 50 are driving much of the population change, with approximately 7% annual growth in each of the 3 highest-aged categories. These persons and households have likely aged into this category over the decade, which is consistent with general trends of aging in the County, State, and Nation as baby-boomers reach retirement.

While age trends show slight decreases in populations in all age categories from 10-49, growth in the 0-9 age category does indicate that these households are locating their families, or expanding their families, as they reach the 2034 age category, a common time for household expansion.

Annual Percent Change

Age Cohort

2010

2018

0 - 9 Years

2,128

2,298

0.97%

10 - 19 Years

2,079

1,881

-1.24%

20 - 34 Years

2,813

2,755

-0.26%

35 - 49 Years

2,911

2,607

-1.37%

50 - 64 Years

1,235

2,231

7.67%

65 - 79 Years

624

1,075

7.04%

80 and Over

355

591

6.60%

Source: American Community Survey 5-Year Estimates

Age Growth

Age Trends 3,500

3,000

2,500

2,000

1,500

1,000

500

-

2010 0 - 9 Years

2011 10 - 19 Years

Source: American Community Survey 5-Year Estimates

2012

2013 20 - 34 Years

2014 35 - 49 Years

2015 50 - 64 Years

2016 65 - 79 Years

2017

2018

80 and Over

About Monticello

8

Population Projections

Monticello Population Growth Scenario Monticello Population Projections

2020

Monticello 2040

2025 13,988

15,255

2030

2035 16,637

2040 18,145

19,738

Projecting Monticello’s population growth

00

00

The community’s current comprehensive planning into the future is somewhat uncertain - and due to process identified a plan for growth of 2% annually, its location and amenities is partially dependent with the plan offering development availability upon the availability and development of housing and appropriate densities with potential to units. For a community of this size, large multi-unit draw regional households into the local housing developments or new subdivision developmentPopulaƟon ProjecƟons market. Ranges displayed show impact of could be absorbed into the market on an annual growth scenarios at 2% annually, consistent with basis, though would impact long-term projections.

Monticello 2040 growth projections.

As new development occurs, and new amenities are added, demand will likely continue to increase with overall desirability of location and access.

PopulaƟon ProjecƟons 25,000

Population Projections

00

20,000

15,000

00

10,000

00 5,000

0

0

MonƟcello MonƟcello

City of Monticello

MonƟcello MonƟcello 2040 2040

Housing Needs and Demand

9

Household Projections This recent trend is potentially due to the local combination of households youth staying at home longer, as well as in-migration of youngfamily households with a preference for smallertown living within the Metro for various reasons.

Projection scenarios for the Monticello 2040 Comprehensive Plan anticipate reducing household size into the future, with larger household than population gains - again largely dependent upon the appetite for development and continued expansion of both housing opportunity as well as local amenities.

Projecting Monticello’s future households

is tied to both future population projections as well as anticipated persons per household as demographics change and age. Across the nation, reductions in household sizes are expected to continue through at least 2040, though Monticello has run counter to that trend over the past 10 years.

Monticello Household Growth Scenario 25,000

Monticello Household Projections Monticello 2040

2020

2025 4,912

20,000

2030 5,476

PopulaƟon ProjecƟons

2035

6,106

6,808

2040 7,650

Household ProjecƟons 9,000

Household Projections 8,000

15,000

7,000

6,000

10,000

5,000

4,000

3,000

5,000 2,000

1,000

0

0

MonƟcello

MonƟcello 2040MonƟcello

MonƟcello 2040 Emerging Community

Established DesƟnaƟon

About Monticello

10

Age Cohort Projections As Populations Age, their housing needs begin to change. While a family of four might be best suited to a three- or four-bedroom home, once children move out of the home they have the effect of overconsuming in the market - using more housing than they need. Continuing to age, householders may prefer to downsize, making upkeep and care more accommodating to their preferred lifestyle. Similarly, younger households (both single-person and two-person) have needs for smaller units prior to family creation, often seeking smaller homes and apartments before needing larger homes once they begin to have children.

Age Cohort Rates

Looking at projected population growth rates to 2050, the fastest growing populations are those age 65 and over - by a significant margin. There is a distinct need for housing tailored to this age group, whether age-specific housing or policies that assist aging in place in their own homes. The remaining growth in the market is projected largely to be driven by family-forming households and children aged 0-9.

Age Cohort

2020 Estimate*

Projected Percent Possible Increase 2050

0 - 9 Years

2,292

12.2%

2,573

10 - 19 Years

1,876

-3.7%

1,806

20 - 34 Years

2,757

11.2%

3,066

35 - 49 Years

2,598

17.5%

3,053

50 - 64 Years

2,274

-26.5%

1,672

65 - 79 Years

1,094

55.7%

1,703

80 and Over

601

252.6%

2,120

*Tied to projections in Wright County, not directly to 2018 estimates.

Source: Minnesota State Demographics Center

Chart Title 4,500

Age Cohort Projection 4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

-

0 - 9 Years

City of Monticello

10 - 19 Years

20 - 34 Years

35 - 49 Years

50 - 64 Years

65 - 79 Years

80 and Over

Housing Needs and Demand

11

Income Trends Income and Earnings are central to housing affordability. The more income that a household earns, more housing falls within their affordability threshold (in this report capped at 30% of total income toward housing cost). While incomes are mobile (households can move place to place), housing units are stationary. In practice, this means that households will often commute, choosing to live wherever they find the acceptable balance among convenience, quality, and affordability.

City Variance From Difference County Income Distribution $200,000 or More $150,000 to $199,999 $100,000 to $149,999 $75,000 to $99,999 $50,000 to $74,999

Among regional peer communities, Monticello has the lowest median and mean incomes meaning that households who live in the City earn less on average than those who live in other communities, regardless of their place of employment. In variance from the County, larger percentages of Monticello’s population fall into lower-income categories, and less of the City’s population falls into high-income categories. Part of this is likely due to retail jobs and younger householders, largely living in apartments in the community, as well as generally lower housing costs in the region.

$35,000 to $49,999 $25,000 to $34,999 $15,000 to $24,999 $10,000 to $14,999 Less than $10,000 -4.0%

-2.0%

0.0%

2.0%

Lower % than County

4.0%

6.0%

Higher % than County

Source: American Community Survey 5-Year Estimates

Chart Title

Household Income (2018) $120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$-

Median Household Income Mon�cello

Source: American Community Survey 5-Year Estimates

Mean Household Income Buffalo

Becker

Big Lake

St. Michael

Wright County

About Monticello

8.0%

12

Employment Indicators Variance

City Variance From County Educational Attainment Income is dependent on many factors, including resident educational attainment and the overall health of the economy.

Bachelor's or Higher

Among City residents, educational attainment is generally lesser than across the entire County.

For residents 25 and over, the City has a larger share of residents than Wright County whose educational attainment is capped below a Bachelors Degree or equivalent. This is consistent with generally lower incomes, and reflective of generally lower costs of the housing market.

Some College or Associate's

Graduated High School

Even considering educational attainment and increased job volatility, unemployment for the County remained at healthy rates pre-COVID. For those in the labor force and seeking employment, there is seemingly enough opportunity for residents to secure employment, whether in the City or in other accessible communities.

Less than High School Diploma

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

Lower % than County

Source: American Community Survey 5-Year Estimates

2.0%

4.0%

6.0%

Higher % than County

City of Monticello Employment Indicators

90%

10%

Graduated High School

No High School Diploma

39%

3.8%

Some College or Associate’s Degree

Unemployment Rate pre-COVID*

19%

Bachelor’s Degree or Higher Source: American Community Survey 5-Year Estimates

City of Monticello

7.1%

Unemployment Rate post-COVID*

Housing Needs and Demand

13

Local Employment Major Employers, 2020

Income being dependent upon accessible

employment opportunities, Monticello offers a variety of employers in different sectors - most with a range of positions offering varying levels of compensation and experience. Monticello also benefits from access to Interstate 94 and proximity to both the Twin Cities Metro and St. Cloud, which provide more than 200,000 job opportunities for residents within a reasonable commute. This also means that the City is within a reasonable commute for thousands of residents, and has large potential to continue to capture shares of regional growth from both local economic development initiatives as well as for commuting households.

Major local employers (table on right) represent nearly 3,800 positions available in the community.

Employment in the City acts as a regional draw, resulting in daytime population growth from outlying communities that evenly offsets daytime population loss (balanced commuting patterns).

These in-commuters largely reside in other, more rural portions of the County and metro - there is not significant in-commuting from suburbs within the 7-county area.

Employer

Employees

Xcel Energy

680

Monticello Schools

678

CentraCare

535

Cargill

425

UMC

210

Walmart

209

WSI

135

Target

109

Bondhus

103

Home Depot

102

Dahlheimer Beverage

96

Genereux-Westland

67

Suburban Manufacturing

65

Twin Cities Die Cast

62

Camping World

59

Cub Foods

58

Aroplax

52

Production Stamping

50

Karlsburger Foods

49

Source: City of Monticello Community Development Department (2018)

About Monticello

14

Occupational Affordability Wage Ranges of employee incomes (both between different occupations and within career paths) have a direct impact on the amount of money they can afford to spend on housing in the City of Monticello. Using the American Community Survey of the US Census Bureau to identify common occupations in the City and associated hybrid-wage data from the US Bureau of Labor Statistics, general income ranges for positions can be translated into housing “affordability limits” for both rental and ownership markets.

For many of Monticello’s most common occupation groups, affordability limits indicate modest monthly housing costs are most appropriate to ensure enough residual income for other necessary expenses. Though the numbers below represent single-person households, tightening housing markets and increased cost of ownership still impact and limit many households that may wish to purchase within Monticello’s ownership market.

Affordability limits represent the amount that could be paid monthly for all housing costs - including taxes, utilities, insurance, etc. - without paying more than 30% of total income toward housing.

Major Monticello Occupation Classes

Entry-Level Wage

MidCareer Wage

Entry MidLevel Career Rent Limit Rent Limit

Entry Level Mid-Career Number Ownership Ownership of Limit Limit Workers

Office & Administrative Support - All

$26,340

$41,005

$659

$1,025

$88,502

$137,777

1,007

Sales & Related Occupations - All

$22,140

$31,810

$554

$795

$74,390

$106,882

765

Production Occupations - All

$26,370

$38,825

$659

$971

$88,603

$130,452

659

Transportation & Material Moving - All

$23,445

$36,210

$586

$905

$78,775

$121,666

649

Management Occupations - All

$55,760

$102,995

$1,394

$2,575

$187,354

$346,063

618

Food Prep & Serving - All

$21,420

$25,210

$536

$630

$71,971

$84,706

526

Healthcare Practitioners & Related - All

$42,105

$74,885

$1,053

$1,872

$141,473

$251,614

381

Business and Financial Operations - All

$41,795

$66,300

$1,045

$1,658

$140,431

$222,768

238

Educational Instruction & Library - All

$27,740

$52,495

$694

$1,312

$93,206

$176,383

233

Source: 2019 Bureau of Labor Statistics. BLS offers data for Minneapolis and St. Cloud Metro areas - the numbers above represent an average of both Metro regions (though wages are comparable between the two). Entry-Level Wage is considered to be the 10th Percentile of reported Wages. Mid-Career is considered to be the Median (50th Percentile) of reported wages. Number of workers Age 16 and Older per 2014-2018 ACS Estimates. Number of workers is reflective of 2018 ACS 5-Year Estimates.

City of Monticello

Housing Needs and Demand

15

Commuting Trends Monticello Resident Top Places of Work, 2015 Place of Work

Resident Employees

Monticello

2,063

Minneapolis

497

Buffalo (city)

356

Plymouth

322

Albertville

252

Brooklyn Park

240

Other common destinations include Plymouth, Brooklyn Park, Rogers, Maple Grove, and St. Paul. This is consistent with community survey responses, in which 48% of all respondents indicated that their primary place of employment was either “Twin Cities�, or directly named a first- or second-ring suburb of the Twin Cities in a comment. As issues with housing access and affordability continue in the larger region and transit access is increased, coupled with individual preference some households have for smaller communities, this share is likely to remain a strong portion of the housing market within the City.

St. Michael

238

Rogers

210

Maple Grove

197

St. Paul

167

Big Lake

160

Bloomington

149

St. Cloud

138

Osseo

119

Though preliminary, impacts of COVID were mentioned in the community survey and are worth considering in future growth. Several respondents indicated working from home in addition to other COVID-influenced factors in their housing and commuting, and as workfrom-home accommodations become more prevalent, this could begin to impact the local market as households with a preference for smaller-town living no longer find it necessary to remain in the City for their employment. It is likely this will have less of an impact on Monticello than surrounding communities (as key transportation corridors already eased access to the Twin Cities), though there is still potential for impact and this dynamic should be tracked in the coming years.

Eden Prairie

118

Elk River

98

Buffalo (township)

96

Fridley

93

Delano

76

Champlin

72

Edina

70

St. Louis Park

70

Medina

70

Employment Location for residents who

live in the City of Monticello varies, with a large share (42%) commuting into metro counties daily for work. Notably, a significant share of residents who commute into the metro are traveling well into it during their daily commute, bypassing other employment centers that exist in both firstand second-ring suburbs. The most common place of employment for residents besides the City of Monticello itself is Minneapolis, with nearly 500 commuters daily by the most recently available data.

Source: US Census Journey to Work Commuter Shares 2015 Data most recent vintage.

About Monticello

16

Commuting Trends County of Employment

Commuting will continue to remain a factor for future housing decisions and growth. As scenarios in the comprehensive plan update focus on development potential, availability of units based on future land use decisions and development potential will directly impact the commutershare that Monticello captures out of the Twin Cities market. While 58% of current residents work in places outside of the 7-county metro, an increasingly large share commute into metro counties on a daily basis.

9% 9%

8%

34%

8%

34%

For example, 42% of Monticello residents work within the 7-county metro, while regional communities display shares of 40% for Buffalo, 47% for Big Lake, and only 20% for Becker. Key differences include community size, access to amenities, and ease of transportation - which may position Monticello to continue to see housing market demand pressures from potential outcommuters.

49% 49% Hennepin

Wright

Other Metro County

Source: US Census Journey to Work Commuter Shares 2015 Data most recent vintage.

Hennepin

Wright

Other Metro County

Other Non-Metro

Number Other Non-Metro

of Residents

60% County of Employment for Monticello Residents

49%

50%

40% 34% 30%

20%

10%

0%

6%

3%

3% 0%

1%

1%

3%

1%

Source: US Census Journey to Work Commuter Shares 2015 Data most recent vintage.

City of Monticello

Housing Needs and Demand

17

Regional Growth Wright County Production & Growth 2011

2012

2013

2014

2015

2016

2017

2018

Households Added

270

133

167

81

201

622

681

678

Housing Units Added

506

229

136

287

259

319

756

529

Annual Gap

+236

+96

-31

+206

+58

-303

+75

-149

Source: American Community Survey 5-Year Estimates

A Balanced Housing Market requires

new unit production to keep pace with new households moving into the market. This is discussed in more thorough detail within the following chapters, but at a most basic level, housing unit production must match increases in demand (in-migration and new household formation) in order to continue to provide a balanced housing market for all residents and would-be-residents of the City. This includes unit production at a variety of price points that serve

the income needs for households currently working in the City, as well as higher-priced housing for choice commuters and users that have a greater degree of mobility, or choices, within the housing market. Though housing unit production has remained ahead of household increases in recent years at a County level, the gap between the two has decreased, indicating a shrinking vacancy rate and suggesting more competition for housing units. This is a common dynamic in housing markets since the Great Recession.

Wright County Growth

Households Added Source: American Community Survey 5-Year Estimates

Housing Units Added

About Monticello

18

Regional Growth Tightening housing markets within the County

can be seen more readily when the annual addition of both housing units and households are viewed cumulatively. While a healthy supply gap remained through 2015, data indicates an increase in housing demand from household growth in the County, which occurred at times at a rate higher than that of housing unit construction.

Tighter housing markets impact the market in various ways - most notably through decreasing the amount of vacancy in both ownership and rental markets. Decreasing vacancy shifts market balance toward sellers and landlords in both sectors, and often result in increased competition for units, increased prices, and can lead to decreased stability for individual households whose incomes may be capped at levels that cannot sustain increasing housing costs.

Wright County Cumulative Production & Growth 2011

2012

2013

2014

2015

2016

2017

2018

Households Added

270

403

570

651

852

1,474

2,155

2,833

Housing Units Added

506

735

871

1,158

1,417

1,736

2,492

3,021

Cum. Gap

+236

+332

+301

+507

+565

+262

+337

+188

Source: American Community Survey 5-Year Estimates

Wright County Growth

Households Added

Housing Units Added

Source: American Community Survey 5-Year Estimates

City of Monticello

Housing Needs and Demand

19

Employee Housing is found both inside and outside the City. Per the U.S. Census, 4,000-5,000 workers live outside Monticello and commute in for work, nearly an equal amount commute out of the City for work, and 1,000-2,000 persons both live and work in Monticello.

Inflow/Outflow of Primary Jobs, 2017

Source: US Census On the Map

Ten municipalities other than the City of Monticello in the table on right represent 3,620 employees whose primary job is in Monticello 58% of all employees that commute into the City daily for work.

Top Employee Places of Residence, 2015 Municipality

Commuting Employees

Monticello

2,063

Big Lake

817

Becker (Township)

498

Monticello (Township)

491

Big Lake (Township)

379

St. Michael

292

Otsego

266

Buffalo

246

Silver Creek (Township)

234

Becker

217

Elk River

180

Source: US Census Journey to Work

Everyone wants a safe, stable home they can afford in a community of their choice, but this is not the reality for many Minnesotans. Housing costs are outpacing income growth, and more people are struggling to find and maintain housing.

Nearly half a million lower-income households [in Minnesota] are spending more than 30% of their income on housing.

- Minnesota Housing Finance Agency 2019 Program Assessment Report About Monticello

20

Local Affordable Housing Definitions Affordable Housing is housing that serves the residents currently living in a community or wanting to move to a community, especially residents with no income up through residents making 80% of the area median income (less than 100% AMI).

Funding for newly constructed affordable housing often comes through subsidy that offsets costs of construction and/or operation, primarily through federal tax credits awarded by the Minnesota Housing Finance Agency. This allows rents to be set at an amount that is considered to be manageable for lower-income households, while also ensuring they have residual income to afford childcare, transportation, healthcare, and all other amenities necessary for personal and family health and stability. Many housing subsidy programs set income limits to qualify households, typically a percentage of the area median income, adjusted by household size. Other forms of affordable housing can include: » Naturally Occurring Affordable Housing » Housing Operated by Non-Profits » Vouchers and Other Federal Programs » Housing supported through TIF

However, these numbers are calculated by HUD using family incomes for the MinneapolisSt. Paul Metro. If calculated locally using a similar methodology, the income categories for households already living in Monticello would be much lower, as indicated in the table below.

In Monticello, the area median income (as defined by the U.S. Department of Housing and Urban Development and applied by the Minnesota Housing Finance Agency) is $103,400 for a family of 4. This means that the 80% income limit is $78,500 for a family of 4.

Local Household Income Categories Median Family Income

$74,026 Monticello

(100% AMI)

Persons in Household 1

2

3

4

5

6

7

8

Extremely Low Income (30% AMI)

$18,340

$20,960

$23,580

$26,200

$28,296

$30,392

$32,488

$34,584

Very Low Income (50% AMI)

$25,909

$29,610

$33,312

$37,013

$39,974

$42,935

$45,896

$48,857

Low Income (80% AMI)

$41,455

$47,377

$53,299

$59,221

$63,958

$68,696

$73,434

$78,171

Source: American Community Survey 5-Year Estimate Family Income Adjusted per HUD FY Income Limits

City of Monticello

Housing Needs and Demand

21

Example Monthly Costs: 2 Adults 1 Child Annual Income = $45,000

30% housing limit = $1,125

Costs Monthly Income

$3,750

Transportation

($1,217)

Food

($585)

Childcare

($600)

Medical

($554)

Income left for Housing & $794 Other Expenses

Housing Affordability describes the relationship between housing cost and household income. Affordability is measured at the household level, in terms of the percentage of gross income that goes toward housing costs. The widely accepted standard for “affordable� is 30% of total household income going to housing. For renters, housing costs include contract rent, utilities, and renters insurance. Homeowner costs include principal, interest, taxes, insurance, and utilities.

This measure is relative, meaning that higher income households have the choice of many homes within their budget, while lower income households generally have fewer options that would be affordable within the housing market.

2 Adults 1 Child Annual Income = $70,500

30% housing limit = $1,763

Costs Monthly Income

$5,875

Transportation

($1,217)

Food

($585)

Childcare

($600)

Medical

($554)

Income left for Housing & $2,919 Other Expenses

Residual Income describes the remaining income a household can pay toward other expenses or save after housing and other costs of living are accounted for. As most other costs are fixed, most households pay the same for them regardless of how much they earn (e.g. food, childcare, etc.).

For example, a Monticello household of 2 adults and 1 child earning $70,500 could comfortably pay $1,763 in housing cost while still saving nearly $1,500 monthly. The same household earning $45,000 annually (which equates to one full time job at $22/hour) could afford a $1,125 monthly housing cost, but after other fixed expenses would not have enough money to pay 30%, likely sacrificing expenses elsewhere to pay for housing.

Local Housing Affordability About Monticello

22

Local vs. Regional Workforce Housing Workforce Housing is housing that is

Housing Variety is a necessary component

Income categories below are calculated based on HUD methodology, and can be used to determine appropriate monthly housing costs for different households in Monticello.

Workforce Affordability is different among essential members of the workforce.

Management employees, service workers, municipal workers (police, fire, etc.) all have housing need, while all generally desire costappropriate housing that allows enough residual income to support other necessary expenses.

affordable to the workforce in a community regardless of income. Because incomes within the workforce vary (pg. 14), a range of housing options is needed to fit different needs. Workforce housing means ensuring a supply of affordable housing for employee households that earn minimum wage - and ensuring appropriately priced housing for moderate to high income earners in both the rental and ownership markets.

in a healthy housing market, as households have a variety of preferences and needs that impact where and how they can live. A healthy local economy requires a variety of housing to serve area employees including various structure types, sizes, locations, and price points.

Housing Affordability Limits

Monticello

Monthly Housing Cost Household Limit Income Extremely Low Income (30% AMI) $1,851 Very Low Income (100% (50% AMI) AMI) Low Income (80% AMI)

Persons in Household 1

2

3

4

5

6

7

8

$459

$524

$590

$655

$707

$760

$812

$865

$648

$740

$833

$925

$999

$1,073

$1,147

$1,221

$1,036

$1,184

$1,332

$1,481

$1,599

$1,717

$1,836

$1,954

Source: American Community Survey 5-Year Estimate Family Income Adjusted per HUD FY Income Limits

City of Monticello

Housing Needs and Demand

23

Affordability Within the Metro varies, as incomes are different for residents of different areas.

For example, the following are “affordable� housing costs at three different levels: the City of Monticello, Wright County, and the 11-County Metro.

Monticello Affordability Limits

Monticello

Monthly Housing Cost Household Limit Income Extremely Low Income (30% AMI) $1,851 Very Low Income (100% (50% AMI) AMI) Low Income (80% AMI)

Persons in Household 1

2

3

4

5

6

7

8

$459

$524

$590

$655

$707

$760

$812

$865

$648

$740

$833

$925

$999

$1,073

$1,147

$1,221

$1,036

$1,184

$1,332

$1,481

$1,599

$1,717

$1,836

$1,954

Source: American Community Survey 5-Year Estimate Family Income Adjusted per HUD FY Income Limits

Wright County Affordability Limits

Wright County

Monthly Housing Cost Household Limit Income Extremely Low Income (30% AMI) $2,478 Very Low Income (100% (50% AMI) AMI) Low Income (80% AMI)

Persons in Household 1

2

3

4

5

6

7

8

$520

$595

$669

$743

$803

$862

$922

$981

$867

$991

$1,115

$1,239

$1,338

$1,437

$1,536

$1,635

$1,388

$1,586

$1,784

$1,982

$2,141

$2,300

$2,458

$2,617

Source: American Community Survey 5-Year Estimate Family Income Adjusted per HUD FY Income Limits

11-County Affordability Limits

Twin Cities Metro

Monthly Housing Cost Household Limit Income Extremely Low Income (30% AMI) $2,585 Very Low Income (100% (50% AMI) AMI) Low Income (80% AMI)

Persons in Household 1

2

3

4

5

6

7

8

$543

$620

$698

$776

$838

$900

$962

$1,024

$905

$1,034

$1,163

$1,293

$1,396

$1,499

$1,603

$1,706

$1,448

$1,654

$1,861

$2,068

$2,233

$2,399

$2,564

$2,730

Source: HUD FY 2020 Income Limits

About Monticello

24

City of Monticello

Housing Needs and Demand

25

2 Rental Market Demand & Supply

Rental Market

26 26

Rental Market

× 50

Residential Properties Renter Occupied

10 / .

10 / .

Monticello Housing Study

ST

×

2

RK PA

TH 00

VD BL

× 212

W BROADWAY S T

17

Streets

CSAH 43

W RIVER ST

×

CR-50

× 11

CAM ERON ST

Monticello, Wright County, MN

43

State Road

SHERBURNE CO U N T Y

W R I G H T CO U N T Y ! " # 94

CSAH 39

Interstate US Highway Water Body Parcel Boundary

× 39

EB RO AD

WA YS T

7TH ST

× 14

EB RO AD WA Y

Surrounding Municipality

CSAH 14

Monticello

ST

Rental Property

×

Mixed Tenure Property

287

×

DA V E NE

39

Right of Way

BRIARW OO

CHELSEA RD

× HARDING AVE NE

189

SCH O OL BLV D

× 2222

90TH ST NE

× 18

× 106

85TH ST NE

" # !

94

Data Sources: Minnesota GIS Data Wright County GIS & Assessor Data

0

Monticello’s rental market consists of a

variety of housing types. Single-unit homes, rented attached unit housing, and 5+ unit multi-family residential structures are the most prevalent type of rental units found in the City.

Importantly, there is also generally good distribution of rental units throughout the community. Interview and focus group conversations did not identify any particular areas that are lacking in access for renters, which is confirmed through assessment data (mapped

City of Monticello

0.25

above), which shows consistency with the local understanding of the community.

As would be expected within the City, there are higher concentrations of rental units throughout the downtown, core City, and off of key transportation corridors such as Interstate 94.

However, neighborhood and subdivision access to rental housing options is adequate to provide choices in tenure for households, providing opportunity to own or rent in areas of their preference throughout Monticello.

Housing Needs and Demand

0.5 Miles

27 27

Affordability Limits in the Rental Market Income of Residents is central to housing affordability. Though the housing market extends outside of Monticello, and the City has a large commuter-share working in the Metro, incomes shown below illustrate the median for current residents currently living in the community.

Using the City’s incomes to determine affordability limits as opposed to those used by the Minnesota Housing Finance Agency and U.S. Department of Housing & Urban Development gives income ranges and categories found below, which reflect the lower average income than in other geographies.

Monticello Income Categories Median Family Income

$74,026 Monticello

(100% AMI)

Persons in Household

1

2

3

4

5

6

Extremely Low Income (30% AMI)

$18,340

$20,960

$23,580

$26,200

$28,296

$30,392

Very Low Income (50% AMI)

$25,909

$29,610

$33,312

$37,013

$39,974

$42,935

Low Income (80% AMI)

$41,455

$47,377

$53,299

$59,221

$63,958

$68,696

Source: American Community Survey 5-Year Estimate Family Income Adjusted per HUD FY Income Limits

Affordable Rental Limits are calculated based on the incomes above illustrate the general amount a household already living in the City could afford in the housing market without becoming housing cost burdened. These vary based on percentages of the Area Median Income (AMI) as well as family size. The median income household for the City (100% AMI) could afford about $1,850 monthly in total housing costs (not solely contract rent), while maintaining “affordable” housing.

Monticello Rental “Affordability” Limits Rent Limit

$1,851 Monticello

(100% AMI)

Persons in Household 3 4

1

2

5

6

Extremely Low Income (30% AMI)

$459

$524

$590

$655

$707

$760

Very Low Income (50% AMI)

$648

$740

$833

$925

$999

$1,073

Low Income (80% AMI)

$1,036

$1,184

$1,332

$1,481

$1,599

$1,717

Source: American Community Survey 5-Year Estimate Family Income Adjusted per HUD FY Income Limits

Rental Market

28

[Following the Great Recession], household growth has finally returned to a more normal pace.

Housing production, however, has not. The shortfall in new homes is keeping the pressure on house prices and rents, eroding affordability—particularly for modest-income households in high-cost markets. While demographic trends should support a vibrant housing market over the coming decade, realizing this potential depends heavily on whether the market can provide a broader and more affordable range of housing options for tomorrow’s households.

- Joint Center for Housing Studies of Harvard University; State of the Nation’s Housing 2019

City of Monticello

Housing Needs and Demand

29 29

Tenure in the Housing Market Tenure in the housing market refers to the structure of occupancy - ownership or rental. Within the City, ownership is by far the most common tenure type - more households own their primary place of residence than rent, though this has been decreasing slightly since 2010 (74.7% to 73.2% between 2010 and 2018).

Households, Income & Tenure

This is consistent with general trends within the region - similar homeownership shares in peer communities, generally more affordable housing than other areas of the larger region, and access to various types of structures. Lower-income households nationwide are more likely to be renter households, and this is true in the City as well, especially for the lowest income households earning 30% AMI or less.

As households (and their associated incomes) are mobile, housing in the City represents larger shares of more lower-cost rental options that are affordable to lower-wage workers. High-income (>100% AMI) renters are choosing to live in the community, though a large majority of households transition to the ownership market once their income reaches this point.

1,800

2,000

1,600

1,800

Households

1,000 800

Owners

0% - 30% AMI

480

155

635

31% - 50% AMI

200

355

555

51% - 80% AMI

405

580

985

81% - 100% AMI

155

545

700

>100% AMI

130

1,815

Total

1,370

Total

1,945

3,450

4,820

Source: HUD Comprehensive Housing Affordability Strategy

Chart Title

2,000

1,200

Renters

Chart Title

Tenure by Income

1,400

Income

1,600 1,400 1,200 1,000 800

600

600

400

400

200

200

0

0

0% - 30% AMI

0% - 30% AMI

31% - 50% AMI

31% - 50% AMI

51% - 80% AMI

51% - 80% AMI

Owner

Source: HUD Comprehensive Housing Affordability Strategy

Owner

81% - 100% AMI

81% - 100% AMI

> 100% AMI

> 100% AMI

Renter

Renter

Rental Market

30 30

Tenure in the Housing Market Regional Peer Communities, while part

of the commuter shed and larger Monticello housing market, display different trends in rates of homeownership. Income is generally higher for residents of these communities - and considering higher income ranges it is expected that they have higher rates of homeownership. Coupled with ease of transportation access and amenities found in Monticello, rental housing is more accessible and affordable as situated regionally.

Monticello has the 2nd highest rate of renter households of peer communities, with only Buffalo having a higher share of rental housing. This reflects not only income differences between these communities, but how the built environment has adjusted to market demand. With a higher share of ownership options available, households who want to purchase homes outside30.3% of the metro without the direct access to the Interstate have historically driven this market - and are more likely to be households with higher incomes and more purchasing power.

69.7%

Owner Households

Renter Households

16.5% 21.4%

69.7%

Big Lake Renter Households

Owner Households

16.5%

73.2% 69.7% 73.2%

Owner Households Owner Households

Becker

30.3%

26.8% 26.8% 30.3%

Owner Households

Regional Tenure Comparisons Buffalo

Tenure Monticello

83.5% 78.6%

St. Michael Renter Households

Owner Households

Renter Households

Owner Households

83.5% 78.6% Renter Households

Owner Households

Renter Households

21.4% 18.3%

78.6% 81.7%

21.4%

Owner Households

Renter Households

Wright County

13.5%

Source: American Community Survey 5-Year Estimates

Renter Households

86.5%

h ld

h ld

Owner Households

Renter Households

Owner Households

Renter Households

Renter Households

13.5% City of Monticello

Housing Needs and Demand

31 31

Rental Housing Stress

Rental Housing Stress

Municipality

% of Renter Households with Cost Burden

# of Cost Burdened Renter Households

Monticello

47.4%

633

Buffalo

53.1%

939

Becker

29.5%

110

Big Lake

55.1%

318

St. Michael

45.0%

321

Wright County

44.5%

3,858

Source: American Community Survey 5-Year Estimates

Housing Stress - Tenure

Chart Title

Renter Households

Burden <=30%

Housing Stress is measured by cost burden, which reflects the amount of income a household pays for total housing costs.

Generally municipalities with larger stock of rental housing and very little vacancy would show higher housing costs for consumers and increasing rates of cost burden. This does not hold true in Monticello when compared to peer communities, which show similar rates of rental burden overall (with the exception of Becker).

This also represents a share of older rental housing stock that is naturally more affordable to households through a combination of age, amenities, and “wear- and tear” on the units themselves. There is some evidence of higherincome households “renting down” within the market (spending less than 30% income toward rent), which in this case lowers rates of cost burden overall.

As is typical due to income disparities between tenure types, cost burden is much more prevalent in Monticello for renter than owner households, indicative of generally higher owner income and tight lending standards.

Chart Title

Chart Title

Owner Households

Cost Burden <=30% Cost Burden >30% to <=50% Cost Burden >50% Cost Burden >30% to <=50% Cost Burden Cost <=30% Burden >50%Cost Burden >30% to <=50%

Source: HUD Comprehensive Housing Affordability Strategy

Cost Burde

Rental Market

32 32

Rental Stress by Income Rental Stress in Monticello exists almost

entirely within low-income City households. While there are renter households over 80% AMI that experience cost burden, higher-income cost burdened households often have the option to spend more than 30% of income toward housing while still maintaining the ability to cover fixed costs - cost burden by choice. Due to the structure of the rental market in the City, there are gaps in unit availability at appropriate price points to serve specific incomes in the market.

Overall, there is a general oversupply of low-cost units that serve households between 31% and 80% AMI (approx. $800 - $1,300 monthly rent). These units represent natural appreciation of units within the market - they do not have subsidies that allow them to alleviate cost burden for the lowestincome households, while also not filling demand for the highest-income users in the market.

There are significant housing gaps at both the top and bottom of the rental housing market, with an undersupply of market-rate units for households earning over 80% AMI (rental housing cost $1,500+) as well as affordable units with

rents below $800 monthly. Although there is a high market gap, there is an upwards limit to income that can realistically be spent on housing.

Many higher income households also value affordability (spending less than 30%), so this does not display true unit for unit demand for high cost housing. It does create some additional market tension, where some high income households rent significantly below what they could afford, using units otherwise affordable to lower-income households.

Rental Unit Mismatch Income Range

Rental Renter Units Households Available

Over-/ UnderSupply

0% - 30% AMI

480

215

-265

31% - 50% AMI

200

650

450

51% - 80% AMI

405

460

55

> 81% AMI

285

45*

-240

*most recent available data - does not include Monticello Crossings Source: American Community Survey 5-Year Estimates

Chart Title 300

Cost Burden by Income 250

200

150

135

215

100

69

50

88

37 0

Less than $20,000

30 $20,000 - $34,999

$35,000 - $49,999 Cost Burdened

Source: American Community Survey 5-Year Estimates

City of Monticello

19 $50,000 - $74,999

40 > $75,000

Severely Cost Burdened

Housing Needs and Demand

33 33

Rental Housing Stress Rates of Renter Cost Burden may

be low in Monticello overall, but those renters who are cost burdened are much more likely to be severely cost burdened (spending more than 50% income toward rental costs). Of those experiencing cost burden in the City, 73% are severely cost burdened. This rate is significantly higher than in regional peer communities, 21.7 points higher than the next closest community.

Cost Burdened Renter Households

Municipality

# with Cost Burden (30%-50%)

# with Severe Burden (>50%)

% Severely Cost Burdened

Monticello

174

459

72.5%

Buffalo

519

420

44.7%

Becker

72

38

34.5%

Big Lake

289

29

9.1%

St. Michael

165

159

48.6%

Wright County

1,889

1,959

50.8%

While rates of cost burden are low overall, higher income households “renting down”, as well as increased demand in the market overall increases competition for units in the moderate- and middle- market segments.

This also indicates a lack of appropriatelypriced units for the lowest income households already living in the community, and indicates opportunity to better serve low-income households through income-restricted and subsidized units that ensure affordability levels not currently provided within the market.

Source: American Community Survey 5-Year Estimates

Levels of Cost Burden (2018) 100% 100%

Chart Title Chart Title

90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0%

Mon�cello Mon�cello

Buffalo Becker Buffalo Becker Cost Burden (30%-50% Income Toward Rent) Cost Burden (30%-50% Income Toward Rent)

Source: HUD Comprehensive Housing Affordability Strategy

Big Lake St. Michael Big Lake St. Michael Severe Cost Burden (>50% Income Toward Rent) Severe Cost Burden (>50% Income Toward Rent)

Wright County Wright County

Rental Market

34 34

Rental Unit Consumption Which households are over- or underconsuming housing (renting above or below an affordable limit) is tracked annually by both the US Census Bureau and the Department of Housing and Urban Development (HUD). While we know based on general over- and undersupply that higher-income renter households â&#x20AC;&#x153;rent downâ&#x20AC;?, spending less than 30% of income on housing, we can also match which income-range units they are actually occupying.

Moderate- to high-income households (making over 80% AMI) rent approximately 14% of rental housing units that would be affordable to households earning 31% - 80% AMI. The largest mismatches in unit consumption in the City are from households earning 51% - 80% AMI renting units affordable to 31% - 50% AMI households (32% of those units), and 0% - 30% AMI households renting units above their affordability level (64% of all extremely low income households are in units unaffordable to them).

In Monticello at the time of data collection, lowincome households (80% AMI or under) had been renting 100% of higher-end market rate units. This has likely changed, as US Census and HUD data do not yet reflect unit increases in the market-rate segment of the Monticello rental market from newly developed units.

While this means access to affordable housing options are readily available for low- and moderate-income households (>80% AMI), it also means that extremely low-income households (which are less competitive in the rental market) must spend more to secure housing, and often housing that is significantly above their affordability limit.

This reflects some of the reason for increased rates of severe cost burden in the City overall, though due to unit numbers does not account for a large portion.

Chart Title

Rental Unit Consumption (by income) 0%

10%

20%

20%

30%

Chart 30% Title 40%

40%

50%

50%

60%

60%

70%

70%

80%

80%

90%

90%

100%

Units

0%

10%

Household Income

0% - 30% AMI

31% - 50% AMI

51% - 80% AMI

81% - 100% AMI

> 100% AMI

Source: HUD Comprehensive Housing Affordability Strategy

City of Monticello

0% - 30% AMI

31% - 50% AMI

51% - 80% AMI

81% - 100% AMI

> 100% AMI Housing

Needs and Demand

100%

35 35

Rental Unit Consumption

While Unit Choice is important to the

freedom and desirability of the local housing market, more options at appropriate price points can help guide consumers into more appropriately priced units that ease burden at all levels.

Comments received in the Community Survey largely called out this need for housing across multiple price points - even when not directly asked. While a few respondents were hesitant toward new development, themes largely arose that clearly identified both affordable and executive level housing options as needs within the community. This included a significant response for increased housing support directed toward households at risk of homelessness which per HUD guidance is considered severely cost burdened, extremely low-income renter households (approx. 225 of these households currently live in the City).

The survey also identified specific building types they would like to see within the market - and in addition to amenity-rich market rate options for renters who may choose to telecommute, attached unit and townhome development were commonly listed as options to help fill the mid-level market, whether ownership or rental.

In looking to directly address rental costs for lowincome households, one method commonly used is to aim to add the undersupply. In Monticello, this would be a goal to add 265 units of rental housing affordable to the lowest-income earners in the community (0% - 30% AMI households). This would allow options for these households to eliminate or severely reduce their housing costs, decrease rates of rental cost burden, and open up units they were occupying to other households in the community or moving to the community at pricepoints appropriate to their own income.

Rental Unit Household Occupancy Households by Income Rental Units

0% - 30%

31% - 50%

51% - 80%

81% - 100%

Affordable at 30%

175

40

0

0

0

Affordable 31% - 50%

195

85

210

105

60

Affordable 51% - 80%

95

60

180

50

70

Affordable at >80%

15

15

15

0

0

Source: HUD Comprehensive Housing Affordability Strategy

>100%

Rental Market

36 36

Print Date: 8/20/2020

Rental Unit Types Renter Occupied Residential Properties

By Number of Units

10 / .

×

10 / .

50

ST

×

2

RK PA

TH 00

212

W BROADWAY S T 17

Streets

CSAH 43

W RIVER ST

Monticello, Wright County, MN

×

CR-50

× 11

CAM ERON ST

Monticello Housing Study

43

VD BL

×

94

US Highway Water Body Parcel Boundary

× 39

EB RO AD

WA YS T

7TH ST

× 14

EB RO AD WA Y

Surrounding Municipality

CSAH 14

Monticello

ST

Number of Units

× 287

Single Unit Detached

×

DA V E NE

39

CHELSEA RD

Single Unit Attached

BRIARW OO

× 189

HARDING AVE NE

Printed By: smorrison, File: \\msa-ps.com\fs\Project\13\13731\13731002\GIS\13731002_ResProperties_byNoUnits_RenterOcc_202000820.mxd

State Road

SHERBURNE CO U N T Y

WRIGHT COUNTY ! " # CSAH 39

Interstate

SCH O OL BLV D

× 2222

90TH ST NE

2 3-4 5-19 20 or More Manufactured Home Park

× 106

" ! #

× 18

85TH ST NE

Right of Way

94

Data Sources: Minnesota GIS Data Wright County GIS & Assessor Data

0

Unit types are important to provide choice

in the housing market that match characteristics and meet preferences of residents and potential residents of the City. Of note, there are very few rental units per the U.S. Census that are in 2-4 unit structures.

32% of the rental units in the City are either singleunit detached or single-unit attached homes.

Although a significant portion of the rental housing stock, 44% of all rental units are in 20+ unit structures. Commonly housing different household types, this balance across structure (and cost) segments indicates a healthy mix of preference and type options for varying household needs.

0.25

0.5 Miles

Rental Units - Type Unit Type

Number of Units

% of Total Rental Units

Rental as % of Unit Type

1-unit detached 207

15.5%

7.0%

1-unit attached

220

16.5%

24.5%

2-4 unit

24

1.8%

64.9%

5-19 unit

245

18.4%

93.9%

20+ unit

587

44.0%

100%

Mobile Home

52

3.9%

19.4%

Source: American Community Survey 5-Year Estimates

City of Monticello

Housing Needs and Demand

37 37

Affordability Trends General Measures and trends

in affordability are a contrast of current incomes compared to current costs. One measure is whether or not the median renter household can afford the median rental unit, which is a measure of choice.

If yes, 50% or more of all rental units would be available to that household. If no, choice is restricted and market supply and demand are unbalanced. Though the median rent was affordable to the median renter in 2018, the newest units in the City are not accounted for in this dataset.

Recent estimates of family income (using HUD methodology) have shown a brief decrease while rents have continued to steadily rise.

0

0

0

Rental Cost & Income $1,200

$1,000

0

0

0

$600

$400

$200

2010

$0

2011 2010

2011

20122012

Median Rent

Median Rent

2013 2013

2014

2014 2015

2015 2016

20172016 2018

2017

Rent AďŹ&#x20AC;ordable to Median Renter Household

Rent AďŹ&#x20AC;ordable to Median Renter Household

Source: American Community Survey 5-Year Estimates

Chart Title 350

Unit Rents

Ranges of unit rental costs in the City show that most units rent between $900-$1,300 2018 per month (including utilities), and though there are units priced below $500 monthly, there is not enough supply for residents at this income level already living in the City.

About $500 in rental costs per month is the affordability limit for a household earning $20,000 annually, and equates to a City household just below 30% AMI.

300

250

200

150

Units

0

$800

100

50

0

Gross Rent Source: American Community Survey 5-Year Estimates

Rental Market

38 38

Rental Housing Cost

Renter Households in the City currently

Monthly Rental Estimates

pay $935-$1,000 per month for a 1-bedroom unit (average), and between $1,115-$1,240 per month for 2-bedroom units (average). Within the market, however, there is significant variation in unit costs expected with variance in age of construction, location, and amenities.

Among peer communities, Monticello generally sees lower rent amounts for units of all sizes across the spectrum. Due to the way this data is collected, it does not include most-recent rental unit construction - but also does not include recent construction in peer communities. The only unit size in which Monticello has higher prices than peer communities is for 1-bedroom rental units. All other unit prices remain generally more affordable in comparison to the region, although matching affordability for current residents remains a top concern.

Income

Census (2018)

(1) Rent Aggregator

(2) Rent Aggregator

Efficiency

$472

-

1 Bedroom

$937

$935

$1,000

2 Bedroom

$901

$1,240

$1,115

3 Bedroom

$1,017

-

$1,525

4 Bedroom

$1,397

-

$1,750

All Bedrooms

$952

$1,007

-

Rental Aggregators are based on adjusted active listings, average for 2020 Source: American Community Survey 5-Year Estimates; (1) RentJungle; (2) Zumper

Chart Title $2,000

Rental Unit Cost $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0

EďŹ&#x192;ciency

1-Bedroom Mon�cello

Source: American Community Survey 5-Year Estimates

City of Monticello

2-Bedroom BuďŹ&#x20AC;alo

Becker

3-Bedroom Big Lake

St. Michael

4-Bedroom

5+ Bedroom

Wright County

Housing Needs and Demand

39 39

Vacancy Rate Vacancies in the rental market are important

to continued access and affordability. Healthy vacancy rates are considered to be between 5% and 7% of all units. This falls within the assumed vacancy for new development (5%), allows turnover and growth in population, keeps market rental cost increases to appropriate amounts, and provides a general balance between landlord and tenant.

The U.S. Census Bureau provides relatively accurate numbers for rental vacancy in the City, especially when utilizing moving averages over multiple survey years. These vacancy numbers were verified to be relatively accurate through interviews with property managers, developers, and landlords, though there was variation reported based on unit age and condition. Generally, more affordable older units were at vacancies approaching 0%, while newer unit construction had greater vacancy - though still below typical development assumption of 5%.

In general, low vacancy increases competition for units, and as a byproduct can inflate year Vacancy Rate over year rental cost increases. These large year over year increases were confirmed by study participants, with some reporting contract rent increases of over 10% on an annual basis without impacting renewals or lease-ups.

10%

Chart Title

140 120 100 80 60 40 20 0

2010

2011

2012

2013

2014

2015

2016

2017

2018

Vacant for Rent (Units) Source: American Community Survey 5-Year Estimates

Increasing Supply and increasing vacancy of rental units in the community would be healthy for the housing market. Doing so would allow potential residents, employees, and commuters that prefer smaller markets the opportunity to move into the community. It “Healthy” Vacancy Range would also allow healthy turnover of units within the market providing more choices of housing for current residents, and allow residents to selfselect into housing of both an appropriate size and type.

Wright County Vacancy Rate Vacancy Rate

9% 8% 7%

Rental Unit Vacancies

“Healthy” Vacancy Range

The significant decrease in rental vacancy from 2010 to 2018 has continued, and though development has occurred, property owners and managers interviewed for the study did not report significant vacancies at their properties with all below the recognized healthy range of 5%-7%.

6% 5% 4% 3% 2% 1%

20100%

2011 2010

20122012 2013 2013

2011

2014

2014

Vacancy Vacancy RateRate

Source: American Community Survey 5-Year Estimates

2015

2015 2016

2 per.

Avg. Avg. Vacancy Rate 2 per.

Vacancy

2016 2017

2017

2018

2018

Rate

Rental Market

40 40

Rental Housing Size MonƟcello MonƟcello

Household Size is important to the housing

Renter Household Size - Monticello

market, as larger households require units with more bedrooms so as not to be overcrowded (more then 1 person per room). While renter households generally have smaller household sizes, City growth trends have shown increasing household sizes over recent years. This is consistent with data from the Community Survey, in which 58% of respondents indicated having children under the age of 19 in the home. In the rental market, especially for low- and moderate-income family households, maintaining access to 3+ bedroom units will be important in the coming years to allow residents to grow their families in place.

25% 25%

43% 43%

3% 3%

Overall in the City, 30% of all rental units have 3- or more bedrooms. However, with increasing household size and many families having children, this submarket will remain an important component of new development. When asked to identify the greatest unmet housing need for the City in the Community Survey, the 2nd most common response was a lack of housing for large families.

29% 29% 1-Person

2-Person

3-Person MonƟcello

4-or-more Person

Source: American Community Survey 5-Year Estimates

1-Person

Renter Household Size Buffalo Buffalo Buffalo Buffalo

Becker Becker

Buffalo

23% 23%

39% 39%

Becker Becker

Becker 21% 21%

23% 23%

3-Person

Wright County

25%

39% 39% 47% 47%

47% 47%

21%

11% 11%

43%

14% 14%

24% 24%

1-Person 1-Person

30% 30%

21% 21%

24% 24%

Big Big Lake Lake 3-Person 1-Person

2-Person 2-Person

Big Big Lake Lake

2-Person Person 3-Person 1-Person 4-or-more 4-or-more 2-Person Person3-Person 3-Person

Big Lake

30% 30%

4-or-more 4-or-more Person Person

30% 30%

30% 30%

1-Person 1-Person

38% 38%

21% 21%

St. St. Michael Michael 3-Person 1-Person

St. Michael 2-Person 2-Person

St. St. Michael Michael

2-Person Person 3-Person 1-Person 4-or-more 4-or-more 2-Person Person3-Person 3-Person

38% 38%

19% 19% 21% 21%

21% 21%

28% 28%

38%

3% 4-or-more 4-or-more Person Person

15% 30% 30%

30% 30%

29% 4% 4%

19% 19%

4-or-more Person

Wright County

21% 21%

11% 11% 14% 14%

2-Person

26%

4% 4%

28% 28%

1-Person

1-Person

2-Person

2-Person

3-Person

3-Person

4-or-more Person

4-or-more Person

Source: American Community Survey 5-Year Estimates

City of Monticello

Housing Needs and Demand

41 41

Rental Housing Size Chart Title Chart Title

Number of Bedrooms -13% Rental 6%

Housing Unit Size works to not only match

the requirements of households based on family size, but also preferences for additional space - for example, the expanding need for housing that includes room for office spaces and other work from home accommodations. Several survey responses as well as interview participants indicated a belief that Monticello is well-positioned to attract larger number of work from home or telecommuter residents. This is due to current conditions as related to public health regulations and restrictions on large gatherings, but also due to larger trends within employment.

One key amenity that is not often mentioned in housing choice is access to fiber internet connection. As many rural areas struggle with access, this amenity could work to further attract former metro residents who prefer smaller town accommodations, while allowing fluidity in commute as well as telecommute access. If this trend does persist long-term, even a small change in preference to work from home or more remote locations could have a significant impact on the rental housing market, as well as preferences for size of housing.

6%

13%

24%

17%

24%

17%

41% 41% EďŹ&#x192;ciency

1-Bedroom

2-Bedroom

Source: American Community Survey 5-Year Estimates

EďŹ&#x192;ciency

1-Bedroom

2-Bedroom

3-Bedroom

4-Bedroom

3-Bedroom

4-Bedroom

Chart Title 600 Rental Units by Bedroom Size

500

Units

400

41%

300

200

24%

17%

100

0

13%

6% EďŹ&#x192;ciency

Source: American Community Survey 5-Year Estimates

1-Bedroom

2-Bedroom

3-Bedroom

4-Bedroom

Rental Market

42 42

Rental Units & Buildings Apartment Buildings

Units

Address

Constructed

Monticello Crossings

202

2205 Meadow Oak Ave

2015

*Willows Landing

92

9872 Hart Blvd

2020

*St Benedicts—(Independent Living)

91

1301 E 7th St

1999

Bluffs, The

72

700 , 707, 714 E 7th St

1987

Monticello Village Apts

60

725 - 733 MN St

2000

*St Benedicts—(Independent Living)

59

1305 E 7th St

1999

*Mississippi Shores

49

1213 Hart Blvd

1997

Ridgemont Apts—(Low Income)

48

716 Maple St

1988

Rivertown Residential Suites

47

212 Locust St

2020

Ridgeway Apts—(Low Income)

44

330 - 333 W 6th St

1976

Westcello Apts

44

915 - 921 Golf Course Rd

1987

*Cedar Crest Apt

38

406 Cedar St

1977

Hillside Properties I—(Low Income)

35

207 E 7th St

1981

Silvercrest Apts

35

307 E 7th St

2002

*River Park View Apts

31

218 W River St

1986

*Broadway Square Apts

28

243 W Broadway

1989

Terrace View Apts—(Low Income)

26

401 E 7th St

1986

Jefferson Heights Apts

24

615 7th St E

1975

River Road Apts

24

139 Riverview Dr

1986

Marywood Apts

24

407 E 7th St

1985

Hammer Apts

15

154 E Broadway

1943

Seventh Street Townhomes

15

313 W 7th St

1993

Chock Apts

12

801, 803, 807 W 3rd St

1970-1985

Hillside Properties II—(Low Income)

12

301, 303 E 7th St

1981

Monticello Manor

12

306 W 6th St

1972

Pointe Apts, The

12

607 E 7th St

1975

Terrace Six Apts

12

318 W 6th St

1972

City of Monticello

Housing Needs and Demand

43 43

Print Date: 8/20/2020

Multi-Unit Rental Age Renter Occupied Residential Properties

by Year Built

10 . /

× 50

10 / .

SHERBURNE CO U N T Y

× 212

× 11

Monticello Housing Study

× 43

Monticello, Wright County, MN

×

Streets

17

Interstate State Road US Highway Water Body

" ! # 94

Parcel Boundary

×

Surrounding Municipality

39

×

Monticello

14

Printed By: smorrison, File: \\msa-ps.com\fs\Project\13\13731\13731002\GIS\13731002_ResProperties_ByAge_RentalUnits_202000820.mxd

Year Built 1850 - 1895

W R IG H T C O U N T Y

1896 - 1930

× 39

× 287

1931 - 1969 1970 - 1991 1992 - 2007

×

2008 - 2018

189

No Year Built Data

× 2222

× 106

Non Residential Parcels

× 18

Right of Way

" ! # 94

Data Sources: Minnesota GIS Data

0

Monticello’s rental market consists of a variety of housing

types - with varying ages of construction. Many of the oldest rental units in the City are single-unit structures throughout the downtown, consistent with general development patterns.

There are also significant larger-unit rental structures built near downtown that were built in the 1970s and 80s. Monticello Crossings is the largest unit structure that has been built since the recession in 2008.

Nineteen percent of all rental units in the housing market were built prior to 1989, and are often the most affordable rentals in a community. The 1990s saw a large increase in construction that became rental housing, and the early 2000s saw decreased production before the recession, though rebounding pos-2014.

0.25

Rental Units - Year Built Unit Type

Number of Units

1959 or Earlier

74

1970 to 1989

451

1990 to 1999

401

2000 to 2009

266

2010 or Later

249

Source: American Community Survey 5-Year Estimates supplemented by City of Monticello data records.

Approval exists for 165 units under construction (Deephaven).

Rental Market

0.5 Miles

44 44

Example - Construction Cost 1-Bedroom Rental (New Construction) Example 1-Bedroom Unit Construction & Land Cost = $150,000 Equity to Cost Ratio

20%

Loan to Cost Ratio

Required Equity

$30,000

Mortgage Loan

Annual Pre-tax Distribution Rate 10%

Mortgage Interest Rate

Cash Payments for Equity

Debt Service

$3,000

Net Operating Income

$10,750

Operating Expenses

$2,500

Real Estate Taxes

$3,000

Replacement Reserve

$450

Effective Gross Revenue

$16,700

Vacancy (5% required assumption)

$835

Gross Potential Income

$17,535

Breakeven Annual Rent

$17,535

Breakeven Monthly Rent

$1,460

80% $120,000 5% $7,750

Source: Construction and Land Cost Estimates for the Twin Cities Metro region

There is a Need for new rental construction

in the City that serves low- and high-income earners alike. High-income earning households can afford rents associated with higher cost of new-construction, and developers can market increased costs through increased amenities.

However, lower-income households largely cannot afford new construction.

Construction cost and the requisite rents to cover debt service, reserves, and operating expenses even under a conservative example necessitate rents that would be unaffordable for low-income

City of Monticello

households. Simply, construction costs are a direct barrier to ensuring Monticelloâ&#x20AC;&#x2122;s lowest-income households have access to housing they can afford.

To ensure expanded opportunities and units that meet the needs of all residents of the City, subsidies are needed to offset construction costs to make more units affordable, in combination with rehabilitation programs to ensure continued unit adequacy at affordable cost (pg. 27), especially for existing aging units.

Housing Needs and Demand

45 45

Example - Affordability Persons in Household

Monthly Housing Cost Limit

$1,851 Monticello

(100% AMI)

1

2

3

4

5

6

7

8

Extremely Low Income (30% AMI)

$459

$524

$590

$655

$707

$760

$812

$865

Very Low Income (50% AMI)

$648

$740

$833

$925

$999

$1,073

$1,147

$1,221

Low Income (80% AMI)

$1,036

$1,184

$1,332

$1,481

$1,599

$1,717

$1,836

$1,954

Source: American Community Survey 5-Year Estimate Family Income Adjusted per HUD FY Income Limits

Households marked by red in the Housing Affordability Limit table above would not be able to afford the 1-bedroom new construction rental unit in the example.

Rental Market

46

Page intentionally left blank.

City of Monticello

Housing Needs and Demand

47

3 Ownership Market Demand & Supply

Rental Market

48

Ownership Market

Owner Occupied Residential Properties

By Number of Units

10 / .

×

10 . /

50

ST

×

2

RK PA

TH 00

212

W BROADWAY S T

17

Streets

CSAH 43

W RIVER ST

Monticello, Wright County, MN

×

CR-50

× 11

CAM ERON ST

Monticello Housing Study

43

VD BL

×

State Road

SHERBURNE CO U N T Y

WRIGHT COUNTY " ! # 94

CSAH 39

Interstate

US Highway Water Body Parcel Boundary

× 39

EB RO AD

WA YS T

7TH ST

× 14

EB RO AD WA Y

Surrounding Municipality

CSAH 14

Monticello

ST

Number of Units

× 287

Single Unit Detached

×

DA V E NE

39

Single Unit Attached

BRIARW OO

CHELSEA RD

× HARDING AVE NE

189

SCH O OL BLV D

× 2222

Manufactured Home Park Right of Way

90TH ST NE

× 106

× 18

85TH ST NE

" ! # 94

Data Sources: Minnesota GIS Data Wright County GIS & Assessor Data

0

The Majority of Residential Parcels

in the City of Monticello are owner-occupied units. This holds true across all areas of the City, not only throughout various neighborhood and subdivisions, though downtown parcels are more evenly divided. Owner housing is a large and key component of the local housing market, and ownership opportunity is one of the key considerations that has been driving growth in the City over the past decade.

City of Monticello

0.25

While the majority of owner-occupied units within the City are single-unit detached housing, there is also good representation of single-unit attached housing units, as well as a few condo units in small residential (3 to 9 unit) structures. Notably, the two manufactured home parks account for over 200 total units of owner-occupied housing, which serves a key market in the City for low-cost housing stability at a reduced cost.

Housing Needs and Demand

0.5 Miles

49

Affordability Limits in the Ownership Market Income of Residents is central to housing affordability. For ownership opportunities, this largely refers to the “purchasing power” of a given household based on known incomes. Though the housing market extends outside of Monticello, and the City has a large commuter-share working in the Metro, incomes shown below illustrate the median for current residents of the community.

Using the City’s incomes to determine affordability limits as opposed to those used by the Minnesota Housing Finance Agency and U.S. Department of Housing & Urban Development gives income ranges and categories found below, which reflect the lower average income than in other geographies.

Monticello Income Categories Median Family Income

$74,026 Monticello

(100% AMI)

Persons in Household

1

2

3

4

5

6

Extremely Low Income (30% AMI)

$18,340

$20,960

$23,580

$26,200

$28,296

$30,392

Very Low Income (50% AMI)

$25,909

$29,610

$33,312

$37,013

$39,974

$42,935

Low Income (80% AMI)

$41,455

$47,377

$53,299

$59,221

$63,958

$68,696

Source: American Community Survey 5-Year Estimate Family Income Adjusted per HUD FY Income Limits

Purchase Limits based on the incomes above illustrate the general amount a household could afford in the housing market without becoming housing cost burdened. The median income household in the City could afford a $248,727 home purchase from annual income of $74,026.

Monticello Ownership “Affordability” Limits Purchase Limit

$248,727 Monticello

(100% AMI)

Persons in Household 3 4

1

2

5

6

Extremely Low Income (30% AMI)

$61,622

$70,426

$79,229

$88,032

$95,075

$102,117

Very Low Income (50% AMI)

$87,055

$99,491

$111,927

$124,363

$134,313

$144,262

Low Income (80% AMI)

$139,287

$159,186

$179,084

$198,982

$214,900

$230,819

Source: American Community Survey 5-Year Estimate Family Income Adjusted per HUD FY Income Limits

Ownership Market

50

Tenure in the Housing Market

Tenure Monticello Tenure Impacts Ownership Markets

as well as rental markets. Referring to whether a household owns or rents their property, tenureâ&#x20AC;&#x2122;s impacts means that larger shares of owner households in a community mean more owner housing stock - and more choices for households who prefer ownership as a tenure over renting.

26.8% 26.8%

30.3%

The current percent of ownership households in Monticello is slightly less than in most regional peer communities. While this makes it slightly out of line for the region, it does have easy access to Interstate 94, generally lower-cost housing, and older rental housing stock that make it more affordable for renters, decreasing owner households as a 30.3% percentage of the community overall.

69.7%

73.2% 73.2% 69.7% Owner Households Owner Households

Owner Households

Regional Tenure Comparisons Owner Households

Buffalo

Renter Households

Becker

16.5% 21.4%

30.3%

69.7%

Big Lake Renter Households

Owner Households

16.5%

21.4% 18.3% 83.5% 78.6%

St. Michael Renter Households

Owner Households

Renter Households

Owner Households

78.6% 81.7%

21.4%

83.5% 78.6% Owner Households

Renter Households

City of Monticello Owner Households Renter Households

Renter Households

Renter Households

Wright County

13.5%

Source: American Community Survey 5-Year Estimates

Renter Households

Source: American Community Survey 5-Year Estimates

86.5% Owner Households h ld

h ld

Owner Households

Renter Households

Renter Households

Housing Needs and Demand

51

Tenure by Income

The Majority of owner-occupied homes in the City are occupied by households that are above the median income for the 11-county metro. This is not an uncommon occurrence, as increased income opens up increased ownership opportunities and eases costs associated with homeownership (downpayment, taxes, etc.).

While the largest share of owner households in the City earn more than the metro median income, there are still large portions of lower-income households who do own their housing within the City. These households may be attracted to the general lower cost of housing compared to other areas of the metro - they also often represent aging homeowners who have entered retirement and seen significant loss in income, which brings new challenges. Although these owners may own their home free and clear, they may struggle with property tax payments, upkeep, and other factors of homeownership that require continual maintenance funds or physical requirements that aging populations sometimes struggle to meet.

Households, Income & Tenure Income

Renters

Owners

0% - 30% AMI

480

155

635

31% - 50% AMI

200

355

555

51% - 80% AMI

405

580

985

81% - 100% AMI

155

545

700

>100% AMI

130

1,815

Total

1,370

3,450

Total

1,945 4,820

Source: HUD Comprehensive Housing Affordability Strategy

Tenure by Income 2,500

2,000

1,500

1,000

500

0

0% - 30% AMI

31% - 50% AMI

51% - 80% AMI

Owner Household Source: HUD Comprehensive Housing Affordability Strategy

81% - 100% AMI

> 100% AMI

Renter Household

Ownership Market

52

Owner Housing Stress

Ownership Housing Stress

Municipality

% of Owner Households with Cost Burden

# of Cost Burdened Owner Households

Monticello

16.5%

603

Buffalo

15.3%

625

Becker

15.6%

214

Big Lake

24.0%

699

St. Michael

13.4%

610

Wright County

18.8%

7,263

Source: American Community Survey 5-Year Estimates

Housing Stress - Tenure

Chart Title

Renter Households

Burden <=30%

Housing Stress is measured by cost burden, which reflects the amount of income a household pays for total housing costs. While the rental housing market in Monticello is marked by relatively high levels of cost burden (> 30% income toward rental costs), the ownership housing market has significantly reduced levels of burden in comparison.

Further - for those households in the ownership market who do experience cost burden, they are much less likely to experience severe cost burden (> 50% income toward housing costs).

While housing is a necessity, so all households must participate in the market in some aspect, owner households have the financial resources available to choose to purchase their housing.

An effect of that choice is that in order to qualify, potential owner households must meet underwriting standards - an aspect of the market that drastically reduces the cost risk associated with owning, as borrowers are more likely to have higher incomes and increased access to credit.

Chart Title

Chart Title

Owner Households

Cost Burden <=30% Cost Burden >30% to <=50% Cost Burden >50% Cost Burden >30% to <=50% Cost Burden Cost <=30% Burden >50%Cost Burden >30% to <=50%

Cost Burden

Source: HUD Comprehensive Housing Affordability Strategy

City of Monticello

Housing Needs and Demand

53

Owner Stress by Income Owner Housing Stress in Monticello exists almost entirely within low-income households. Important to consider is that for households above this amount - 80% AMI or greater, cost burden is less impactful than for low-income households. Even accounting for increased housing costs, costs associated with fixed-cost goods (childcare, healthcare, food, etc.) allow more flexibility within a monthly budget to allow some levels of cost burden while maintaining financial stability. For lowerincome households, there is less room for increased costs or unexpected expenditure.

Ownership Unit Mismatch Ownership Owner Units Income Range Households Available

In ownership unit mismatch, homes available in the market are generally oversupplied in the lower cost market when considering incomes for the 11-county metro. This is consistent with known lower housing costs in the area - but is also reflective of slightly lower incomes in the City than the County and metro as a whole.

Cost Burden (income)

Over-/ UnderSupply

0% - 50% AMI

510

1,810

1,300

51% - 80% AMI

580

1,310

730

81% - 100% AMI

545

290

-255

> 100% AMI

1,815

165

-1,650

Unit numbers are reflective of vacancy within the market Source: HUD Comprehensive Housing Affordability Strategy

Chart Title

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Cost Burden Source: American Community Survey 5-Year Estimates

No Cost burden

Ownership Market

54

Owner Housing Stress Cost Burdened Owner Households

Municipality

# with Cost Burden (30%-50%)

# with Severe Burden (>50%)

% Severely Cost Burdened

Monticello

370

110

23%

Buffalo

455

190

29%

Becker

170

55

24%

Big Lake

465

255

35%

St. Michael

415

295

42%

Wright County

4,065

2,330

36%

Most recent dataset vintage 2016. Less detailed data from 2018 on pg. 52 indicates higher rates of owner cost burden overall.

Source: HUD Comprehensive Housing Affordability Strategy

Among those 480 Monticello owner households that are cost burdened, less than one-quarter are severely cost burdened (spending 50% or more of income on housing). This is again reflective of relatively more affordable housing costs in the City compared to peer communities, and has been decreasing year-to-year.

Combined, these factors display relative historic stability within the ownership market.

For the majority of those that own their homes, current housing costs are relatively affordable.

With that in mind, housing prices are appreciating to a point where more typical homes within the community are becoming more unaffordable to the typical household - due to a combination of slight reduction in income, increased housing demand, and increasing housing prices in the ownership market.

Levels of Owner Cost Burden 100% 90%

23%

29%

24% 35%

80%

42%

36%

70% 60% 50% 40%

77%

71%

76% 65%

30%

58%

64%

20% 10% 0%

Mon�cello

BuďŹ&#x20AC;alo

Becker

Cost Burden (30% - 50% Income Toward Housing Cost) Source: American Community Survey 5-Year Estimates

City of Monticello

Big Lake

St. Michael

Wright County

Severe Cost Burden (>50% Income Toward Housing Cost)

Housing Needs and Demand

55

Owner Unit Consumption

The U.S. Department of Housing & Urban Development tracks household incomes compared to the cost of the housing unit they live in. Per HUD data, within the City the largest share of ownership homes in the market (1,810 units) should be affordable to households earning about 50% of the 11-county metroâ&#x20AC;&#x2122;s AMI ($52,000 for a family of 4). Of these housing units, only about 20% are owned by households that fall into that income category. The remainder are owned by higherincome households, with nearly 45% being owned by households earning above the 100% of the 11-county area median income.

Overall, the market at all levels is dominated by households earning over 80% AMI (68% of all owners). These households are consuming units in the housing market that are very affordable to them - their relative incomes significantly lower housing cost burden, and income shares spent on housing costs are extremely low. While this is beneficial to these households, it does strain the market and ultimately increase sales prices in all housing ranges, from entry-level homes upward.

Consistent with insights from the Community Survey, residents feel that the largest negative aspect to the housing market in Monticello is ownership housing affordability (45% of all respondents), with 52% of those with an opinion indicating that affordable housing is becoming increasing harder to find year-to-year. As the market is restricted, community concerns of affordability and availability are connected as higher-income owner households can outbid lower-income households for homes that would otherwise be affordable at a lower rate.

These homes are extremely affordable to higherincome households, and provide desirable affordable ownership options for high income earners. However, it does provide increased competition that precludes lower-income earners from entering the owner housing market.

Units

Ownership Unit Consumption (by income)

0%

10% 0% - 30% AMI

20%

30%

31% - 50% AMI

40% 51% - 80% AMI

50%

60%

81% - 100% AMI

70%

80%

90%

100%

> 100% AMI

Household Income Source: HUD Comprehensive Housing Affordability Strategy

Ownership Market

56

Owner Unit Consumption Disparity in ownership opportunity is apparent

when looking at the distribution of homes, by value, that have a lien on the property. The table above shows the household incomes of occupants of ownership housing both with and without a mortgage. Difference in mortgage status can generally be thought of as “purchased in the past 15-30 years” for homes with a mortgage and “purchased more than 15-30 years ago” for homes without a mortgage.

For units with a mortgage (representing more recent home purchases), 57% were purchased by households earning more than the 11-county

median family income ($103,400 for a family of 4).

However, homeowners > 100% AMI own only 38% of homes without a mortgage. While some of this discrepancy is due to reduced income for retirees who have paid off their homes, it is also reflective of appreciating values within the market over a typical 30-year amortization period - those homes that have resold have sold for more.

Tightening lending standards and unit availability do have an impact on lower-income households within the market, but many are finding homes that they can purchase, especially households at middle-incomes that are greater than 50% of the 11-county median income.

Ownership Unit Household Occupancy 0% - 30%

31% - 50%

51% - 80%

81% - 100%

Units With a Mortgage

Affordable at 50%

50

60

215

315

595

Affordable at 51% - 80%

25

25

210

125

710

Affordable at 81% - 100%

0

0

60

4

135

Affordable at > 100%

0

0

0

0

25

Units Without a Mortgage

Owner Household Income Ownership Units

>100%

Affordable at 50%

80

165

35

60

230

Affordable at 51% - 80%

0

85

35

40

60

Affordable at 81% - 100%

0

25

25

0

40

Affordable at > 100%

0

0

0

0

15

Source: HUD Comprehensive Housing Affordability Strategy This table represents 2,554 ownership units with a mortgage, and 895 with no mortgage or other lien on the property.

City of Monticello

Housing Needs and Demand

57

Spatial Affordability × CR-50

50

Owner Occupied Residential Properties Total Property Value

10 / .

10 / .

Monticello Housing Study

2

RK PA

TH 00

ST

VD BL

× 212

W BROADWAY S T

43

17

×

Streets Interstate

CSAH 43

W RIVER ST

×

×

11

CAM ERON ST

Monticello, Wright County, MN

State Road

× ×

US Highway

27

SHERBURNE CO U N T Y

75

WRIGHT COUNTY CSAH 39

Water Body Parcel Boundary

× 39

EB RO AD

WA YS T

7TH ST

× 44

× 287

" ! # 94

× 14

EB RO AD WA Y

Monticello Right of Way

CSAH 14

Total Property Value

ST

×

Less than $100,000

101

×

DA V E NE

×

$100,000 - $200,000

×

75

CHELSEA RD

39

$200,001 - $250,000

BRIARW OO

116

$250,001 - $300,000

× 189

×

$300,001 - $350,000

HARDING AVE NE

SCH O OL BLV D

× 105

2222

$350,000 - $450,000 Greater than $450,000

90TH ST NE

× 106

× 18

85TH ST NE

No Assessed Value

" ! # 94

Non Residential Parcels Data Sources: Minnesota GIS Data Wright County GIS & Assessor Data

0

Approximate Value of homes is mapped above, using assessment records. While this is not a perfect approximation of sales/cost value within the market, it does offer a baseline for estimation and comparison. This spatial availability of homes by market cost shows where opportunity for affordability exists in the City’s housing market for residents at different income levels.

This map (also in Appendix A), illustrates the general affordability of smaller and attached-unit housing options within the community. In general, the more affordable ownership options are within the downtown core of the City, as well as in scattered attached-unit housing development throughout different neighborhoods. Maintaining this range of options is key in ensuring new development remains affordable for households at various income levels.

0.25

0.5 Miles

Ownership units, 11-County Unit Affordability

Low Cost

High Cost

Affordable up to 50% AMI

-

$173,800

Affordable at 51% - 80% AMI

173,801

$277,950

Affordable at 81% - 100% AMI $277,951

$347,500

Affordable above 100% AMI

-

$347,501

AMI calculation shown is applicable to the entire 11-County Metro based on a household size of 4 persons. Monticello limits on pg. 51,

Ownership Market

58

Affordability Trends Year Owner Moved Into Unit

General Measures and trends

in homeowner affordability have to do with market conditions in real estate markets and prospective buyer incomes at the time of purchase. Looking at housing in the City of Monticello, home values historically peaked pre-Great Recession before seeing a decrease in value through the recession.

Both condo and single family units have regained lost value associated with the recession, surpassing previous market highs by 2015 and continuing to rise since.

Within the City, many households have remained in their home for long periods of time, with many having been in their unit since 2009 or earlier. These represent longtenured homeowners who are residing in their homes longer than the 7-year national average.

0

200

400

600

800

1000

1200

1400

Source: American Community Survey 5-Year Estimates

Single-Unit & Condo Market Value $250,000

$200,000

$150,000

$100,000

$50,000

$0

Single-Family

Condo

6 per. Mov. Avg. (Single-Family)

6 per. Mov. Avg. (Condo)

Source: Multiple Listing Service

City of Monticello

Housing Needs and Demand

59

Affordability Trends While Unit Price is an important factor in

housing affordability, unit price must be compared with incomes and affordability levels to reflect a true measure of housing access. The City of Monticello experienced rising incomes for residents coming out of the recession - and for a time these incomes rose at a rate ahead of the real estate market. When single-family and condo units reached the bottom of their market dip in 2012, both were affordable to many local households based on income.

In 2012, the median single-unit home was within the affordability limit of not only the median household, but also within the limits of households at 80% and 50% of the City median income.

Households at 50% AMI had seen an increase in incomes so that the median condo/townhouse unit was an attainable method of homeownership through 2015.

Since 2014 however, house value growth has drastically outpaced income growth for the same period. While the median single-unit home is still affordable to the median household, it has surpassed the affordability limit of an 80% AMI household in the City as of 2017. This is largely reflective of regional forces and increased demand that appreciate home values, while local income conditions have caused the median Monticello household to see a slight reduction in real income over recent years.

Of note, the appreciation in market value of both single-unit detached and condo/townhouse units has continued to rise at a steady rate. The relative consistency in appreciation has more than doubled housing prices for entry into the ownership market over the past decade, while current incomes remain at a similar levels to a decade ago, illustrating challenges in ownership opportunity and affordable options.

Single-Unit & Condo Affordability $300,000

$250,000

$200,000

$150,000

$100,000

$50,000

$0

Single-Family Value Condo Value Very Low Income AďŹ&#x20AC;ordability Limit Low Income AďŹ&#x20AC;ordability Limit Source: Multiple Listing Service

Median AďŹ&#x20AC;ordability Limit

2019 and 2020 Affordability Limits are based on estimates, not on

Ownership Market

60

Affordability Trends Increasing Sales Prices of houses in the City directly impact monthly owner cost and affordability. While some homes are owned free and clear with monthly costs consisting solely of taxes and insurance, new borrowers are paying increasingly more for housing. Appreciation as well as the large cost of new construction places ownership entry costs into higher brackets year to year, and represent many of the higher monthly owner costs recorded.

By cost per square foot, there has been a 106% increase as tracked through home sales since 2010. This increase is higher in the City of Monticello than in any of the peer communities in this study, as well as for rates within the County. Using 2010 as a baseline, price per square foot has risen by $68 since 2010, compared to a peer community high of $52/sq.ft., and higher than homes in the Monticello School District as a whole ($65/ sq.ft.).

Monthly Owner Cost $2,500 or more $2,000 to $2,499 $1,500 to $1,999 $1,250 to $1,499 $1,000 to $1,249 $800 to $999 $600 to $799 $400 to $599 $200 to $399 Less than $200 0

200

400

600

800

Source: American Community Survey 5-Year Estimates

Increase in Single-Unit Price Per Sq. Ft $60

$40

$20

$0

-$20

Mon�cello Source: Multiple Listing Service

City of Monticello

Mon�cello Big Lake

BuffaloBuffalo

Big Lake

Becker Becker

Wright County Saint Michael

Saint Michael

Wright County

Housing Needs and Demand

1000

61

Entry-Level Affordability Lower-Income Households that own their housing commonly occupy what is referred to as the “starter home” market. For purposes of this study, this is tracked as the “Bottom Tier Home Value” and is the median of the 5th to 35th percentile of all home values within the City.

These homes followed the same general trend both going into and coming out of the recession - showing consistent steady increases in cost over the past decade. Amongst peer communities, Monticello still has the lowest-cost entry point into the ownership market, even considering appreciation.

Occupant Incomes of Houses Affordable to 50% AMI Households

However, the “starter home” market is still becoming increasingly unaffordable for those who live in the City. As of the most recent data and estimates (2020), the median starter-home cost is equivalent to the affordability limit for a City household earning 80% of the median income ($209,000 home entry cost vs. $208,000 purchase limit). As housing costs continue to rise throughout the market, Monticello households will be increasingly precluded or “priced-out” of ownership opportunities in the City, consistent with occupancy and consumption records.

Household Income

With Without Mortgage Mortgage

0% - 50% AMI

110

245

51% - 80% AMI

215

35

81% - 100% AMI

315

60

> 100% AMI

595

230

Source: HUD Comprehensive Housing Affordability Strategy

$300,000

Starter Home Value $250,000

$200,000

$150,000

$100,000

$50,000

$0

Mon�cello Source: Zillow Data and Research (MLS Aggregator)

Buffalo

Becker

Big Lake

Saint Michael

Ownership Market

62

House Availability Single-Unit Home Availability as

tracked by the Multiple listing Service is often inversely related to prices - as inventory decreases, prices increase. As the local housing market was coming out of the recession, there was a market slowdown - though this slowdown (as represented by months’ of supply) still indicated a balanced market. Months’ supply is generally considered to be balanced when there are 4-6 months’ of inventory in the market. As that lessens, it is indicative of increased competition for available homes in what is often referred to as a “seller’s market”.

Since peaking in 2011 at more than three months, the average days on market has dropped to a steady 3-5 weeks on market over the past 4 years. There is seasonal variation within the data that reflect common market periods, but time on market has generally decreased to a point where during peak real estate season, houses have averaged less than 3 weeks since 2016.

This increased sales activity is directly reflected in the months of supply metric, as it is the balance between inventory and demand (number of sales). Together, these metrics indicate a competitive market with increased competition among buyers that is causing cost inflation well beyond the 2% average U.S. inflation rate.

5-Year Average Appreciation Rate on Median SF Home:

7.1% Annually 5-Year Appreciation on Median SF Home (by Sales Price):

$69,737

Source: Multiple Listing Service

200

9

180 Family Availability Single

8

160

7 6

120 5 100 4 80

Months of Supply

Days on Market

140

3

60

2

40 20

1

0

0

Seasonally Adjusted Days on Market

Seasonally Adjusted Months of Supply

Source: Multiple Listing Service

City of Monticello

Housing Needs and Demand

63

House Availability

From January 2015 to September of 2018 during the period of decreasing inventory, the median home appreciated at a rate of 9.6% annually.

Since inventory has held steady, the median home has appreciated at a rate of 4.2% annually. This shows that steady inventory helps to ease pressures on the market that cause cost increases, though the months of supply metric indicates there is still demand for units in the market that will further shift buyer/seller indices toward a more balanced market.

Townhome Availability and Cost $140

6

$120

5

$100

4

$80 3 $60 2

$40

1

$20

0

$-

Price/sq.Ĺ&#x152;.

Months Supply

$300,000

120

$250,000

100

$200,000

80

$150,000

60

$100,000

40

$50,000

20

Median Sales Price

Monthly Inventory

$0

Inventory

Source: Multiple Listing Service

0

Monthly Inventory

Median Sales Price

Source: Multiple Listing Service

Ownership Market

Months Supply

Price/sq.Ĺ&#x152;.

Inventory of single-family houses for sale slowly decreased from 2015 to 2018, though have held steady month-to-month from 2018 to present.

As inventory decreased, the median sales price showed steady corresponding increases - with fewer homes available, and steady demand, markets shift toward favoring sellers through increased competition and appreciation. As available supply has maintained over the past two years, there have been times of minimal median price increase, notably from May of 2019 to May of 2020 before increasing again entering the summer real estate season.

64

House Sales Sale to List Price Ratios also display

trends in the ownership market that indicate increased competition on an year-to-year basis - though stabilizing as inventory of units on the market has also stabilized. Since coming out of the recession, sellers have generally accepted offers that have been more than 95% of the asking price for single-family homes in the City. This does show variation between single-family and townhome units, with townhome units showing increased seasonal variation while still trending upward on an annual basis.

Of note - during the past two years without dramatic change in monthly inventory, the seasonal variation has become less pronounced.

In the single-family ownership market, the past offpeak selling season saw much less of a reduction in sale:list price ratio than in prior post-recession years, and townhome units have begun to more closely track the single-family market in total ratio as the market has become more constrained in total number of units available.

Townhome Pct of Original Price (July 2020)

100% or over for 3

consecutive months

Single-Family Pct of Original Price (July 2020)

100%

for 6 consecutive months Source: Multiple Listing Service

105%

Median Sales Price Compared to Listing 100%

95%

90%

85%

80%

Source: Multiple Listing Service

Townhome

Single-Family

6-month Moving Average

City of Monticello

Housing Needs and Demand

65

House Sales Regional Sales Trends largely indicate a tightening (increased demand) of the market for many peer communities as well. Though Monticelloâ&#x20AC;&#x2122;s market was slightly slower to see increased competition and increasing offers post-recession (when tracked through sale:listing ratio), it then increased to become the second community to see the median sale cost meeting asking price, behind only Big Lake.

Townhome Pct of Original Price in Peer Communities (July 2020)

99% in July 2020

Monticello has the highest current sale:list price ratio among its peer communities, though many have shown a consistency through the past year.

Off-peak sales without a large percent decrease in sales price indicates that growth potential for the region is strong, and demand is shifting into other areas. It also likely indicates that Monticello (as the community with the largest ratio) is seeing demand that it cannot fill with the existing stock, which has spillover into other regional communities (both peer communities and others), although this is impossible to tell solely from data.

Single-Family Pct of Original Price in Peer Communities (July 2020)

100%

for 4 consecutive months Source: Multiple Listing Service

102%

Single Family Sales Price Compared to Listing, Peer Communities 100%

98%

96%

94%

92%

90%

88%

Mon�cello Source: Multiple Listing Service

Big Lake

BuďŹ&#x20AC;alo

Becker

Saint Michael 6-month Moving Average

Ownership Market

66

Mortgage Status Age of Householders is one of the aspects

that impacts mortgage status. While the average householder nationally remains in their home for 7 years, many members of the community purchase homes to age into them, not for capital investment, but to provide consistent shelter costs throughout their ownership. The City of Monticello has a large number of owner households with a mortgage on their property, consistent with the age range of the owners themselves. With 69% of all owner-occupied homes being owned by residents under the age of 55, the largest portion of the ownership market will look to either remain in their homes, or consider move-up housing options.

The remaining 30% of owner households 55 or older may choose to age-in-place, while some will require other housing options in the community with age-accessibility options. The Community Survey indicated at different points desire for zero-entry, patio, and rambler style homes that serve aging populations, and capture well the construction styles and design features that serve aging households at various price points throughout the market.

100%

25% Mortgage Status

70%

7%

Ownership market - Age

21%

7%

21% 23% 23%

48% 48% 35 or Under

35 to 54

55 to 74

75 or Over

Source: American Community Survey 5-Year Estimates

90% 80%

The City should take into consideration plans to best serve these community members over the Percent next 20-30 years as more residents continue to age into this range, with nearly 3,000 additional Percent residents expected reach this age range by 2050.

16%

25%

35 or Under 12%

35 to 54

55 to 74

25%

75 or Over 27%

100% 90%

25%

25%

16%

12% 25%

27%

80%

60% 70%

50% 40% 30% 20%

60% 50%

75%

75%

40%

84%

75%

75%

84%

88% 75%

88% 75%

73% 73%

30% 20%

10% 0%

10% 0%

Mon�celloMon�cello

BuffaloBuffalo

Source: American Community Survey 5-Year Estimates

City of Monticello

Becker Becker With a Mortgage With a Mortgage

Big Big LakeLake

St. Michael Wright CoutnyWright Coutny St. Michael

Without a Mortgage Without a Mortgage

Housing Needs and Demand

67

Ownership Unit Types Owner Occupied Residential Properties

By Number of Units

10 . /

×

10 . /

50

×

2

RK PA

TH 00

ST

212

W BROADWAY S T

×

Streets

CSAH 43

W RIVER ST

Monticello, Wright County, MN

17

CR-50

× 11

CAM ERON ST

Monticello Housing Study

43

VD BL

×

State Road

SHERBURNE CO U N T Y

WRIGHT COUNTY ! " # 94

CSAH 39

Interstate

US Highway Water Body Parcel Boundary

× 39

EB RO AD

WA YS T

7TH ST

× 14

EB RO AD WA Y

Surrounding Municipality

CSAH 14

Monticello

ST

Number of Units

× 287

Single Unit Detached

×

DA V E NE

39

Single Unit Attached

BRIARW OO

CHELSEA RD

Manufactured Home Park

× 189

Right of Way

HARDING AVE NE

SCH O OL BLV D

× 2222

90TH ST NE

× 106

" ! #

×

94

18

85TH ST NE

Data Sources: Minnesota GIS Data Wright County GIS & Assessor Data

0

Ownership Unit Type Distribution

across the City shows that the majority of owner households live in single unit detached homes, though the city has a healthy and growing number of attached unit homes as well. Together, these two unit types make up 93% of all ownership unit types, in the City - the large remainder being manufactured housing (6% of all ownership housing).

While the Condo as an ownership structure type within the market has never been prevalent in the City, the lack of 2-19 unit structures presents an ownership opportunity for denser redevelopment in areas of the downtown while maintaining ownership options through gradual redevelopment and density increase where financially feasible.

0.25

0.5 Miles

Ownership Units - Type Unit Type

Number of Units

% of Total Owner Occupied

Ownership as % of Unit Type

1-unit detached 2,742

75.1%

93.0%

1-unit attached

662

18.1%

75.5%

2-4 unit

13

0.4%

35.1%

5-19 unit

16

0.5%

6.1%

20+ unit

0

0%

Mobile Home

216

5.9%

0% 80.6%

Source: American Community Survey 5-Year Estimates

Ownership Market

MonƟcello 68

Ownership Housing Size 19%

29%

The Most Common household size for owner households within the City is 2-person14% households. 38% Which often represents younger ownership markets - areas where young family households with no children will locate to be able to afford a “starter Owner Household home” within their price range before having Size children. Knowing that the market in Monticello is 1-Person 2-Person 3-Person 4-or-more Person generally affordable when compared to the larger Wright County region, the large number of 1-person and 2-person households is typical under that context. These smaller household types make up 57% of all owner households in the City, slightly more than the County as a whole, and more than all peer communities.

16%

MonƟcello

MonƟcello

19%

29%

29%

31%

As these households continue to undergo expansion, or changes in life circumstance, they often look MonƟcello to move up into options that afford more space to grow. This includes 3- and 4- bedroom units as family size grows. Additionally, there has been a trend of commuter-share households who may prefer the housing cost and community character 19% of Monticello, who will continue to telecommute or 29% work from home in evolving employment markets, which may increase need for housing size over time at a rate unpredicted by needs based solely upon Becker householdBuffalo size requirements.

14%

-Person

38%

14% 3-Person

2-Person

17% Buffalo Owner Household Size 29%

Buffalo

17% 1-Person 38%

29% 17%

more Person 1-Person

17% 2-Person

32%

Big Lake 3-Person

2-Person

33%

16% 3-Person 37%

St. Michael 3-Person

26%

29%

45%

Source: American Survey 5-Year Estimates more Person 1-Person 1-Person 2-PersonCommunity 3-Person 4-or-more Person2-Person

26% City of Monticello

1-Person

4-or-more Person

16% 3-Person

16%

3-Person County

4-or-more P

16%

37% County Wright

31%

2-Person 15%

16% 37%

3-Person

16%

4-or-more Person

St. 31% Michael 4-or-more Person 1-Person

2-Person

11%

11%

Becker

4-or-more Person 32% 15%

3-Person

4-or-more Person

11%

St. Michael 29%

3-Person

Wright County

37% 4-or-more Person

3-Person

45% 11%

33%

32%

1-PersonPerson2-Person 4-or-more

11%

2-Person

Source: American Community Survey 5-Year Estimates

St. Michael

Big Lake

38%

Becker

38% Person 4-or-more 1-Person 2-Person Wright 16% 16%

2-Person 32% 15%

Big Lake

more Person 1-Person

1-Person

Becker

38% 4-or-more 1-PersonPerson2-Person 15%

38%

14%16%

Becker

3-Person

19%

St. Michael 29%

29%

11%

45% 1-Person

4-or-more Person 1-Person

1-Person

16%

16%

45%

2-Person

16% 2-Person 3-Person

16%

2-Person

38% 29%

38%

29% 3-Person 4-or-more Person

4-or-more Person

3-Person 4-or-more Pers Housing Needs and Demand 1-Person

69

Ownership Housing Size The Most Common bedroom size for owneroccupied housing in the City is in 3-bedroom units (42%), followed by 4-bedroom units (31%) and 2-bedroom units (20%). Ownership housing often has a larger size (more bedrooms) than rental units, and is a component of the preference for families in commonly seeking out ownership housing units rather than rental. While smaller-unit ownership housing is generally more affordable both within existing and new-construction markets, balance between small and large bedroom units within a community helps to accommodate households who wish to remain long-term residents through changes in need and requirements.

Manufactured homes likely make up a sizable portion 31% of smaller ownership housing units listed as 1- and 2-bedroom units (up to 25% of these categories).

Development of smaller-size single-unit structures outside of manufactured home communities are an important component of the housing market, especially as prices continue to appreciate so that options are available for families without children, aging households have the option to downsize, and lower-income households have the ability to enter 1-Bedroom 2-Bedroom the ownership market earlier.

1-Bedroom

Owner Units by Bedroom Size

Number of Bedrooms - Owner

7% 0% 7%

0% 20%

7%

20% 31%

0% 20%

31%

42%

42%

42%

1-Bedroom 2-Bedroom 3-Bedroom 3-Bedroom 4-Bedroom 5+ Bedroom Source: American Community Survey 5-Year Estimates

2-Bedroom

3-Bedroom

4-Bedroom

4-Bedroom

1,600 1,400 1,200 1,000 800 600 400 200 -

1-Bedroom

Source: American Community Survey 5-Year Estimates

2-Bedroom

3-Bedroom

4-Bedroom

5+ Bedroom Ownership Market

70

City of Monticello

Housing Needs and Demand

71

4 Other Market Sectors Demand & Supply

Other Populations

72

Homelessness Homelessness in Greater Minnesota is often United Way Wright County Community Snapshot: • Over 6,000 Wright County households live in poverty • One in three homeless persons continue to work at a job • Wright County ranks 10th in population, but 5th in child protection cases • One-third of Wright County homeless are children, half under the age of 5

not a central part of the housing conversation, as rates of homelessness are much lower than those within the Twin Cities metro. However, the local Continuum of Care (Central CoC) still tracks and reports homelessness within the community. A vital statistic is the annual PIT (Point-In-Time) count, which takes the total number of persons experiencing homelessness on a given night in the community.

This data include those who are experiencing homelessness but sheltered. For instance, all homeless individuals and families in Wright County during the PIT in 2019 were in some form of shelter - and all households with children reported were in transitional housing.

It is important to note that the PIT does not always capture all homeless households, especially in more rural areas. Common categories that count as homeless, though not “literal homelessness” include doubling up with friends or family, stays in hotels, and other types of “recovery” homes - although these households may not have a fixed, permanent nighttime residence.

12 Homelessness - Wright County 2019 PIT 10 8 6 4 2 0

Children under 18

Young Adults (18-24) Households with Children

Adults (over 24)

Young Adults (18-24)

Adults (over 24)

Households Without Children

Source: Central MN Continuum of Care

City of Monticello

Housing Needs and Demand

73

At-Risk of Homelessness Traditional Measures of homelessness are focused on assisting households and individuals in finding housing, stabilizing employment, and arranging long-term solutions. But there are different risk factors associated with homelessness, which include financial insecurity and housing cost burden. Per the U.S. Department of Housing and Urban Development, households who are extremely low-income (<30% AMI), severely cost burdened, renter households are those who are at the greatest risk of facing homelessness, and are classified “at-risk”.

In quickly appreciating and tight housing markets, extremely low-income households are likely to be the first “squeezed out”, and income shocks are more impactful to a household remaining in housing. In most recent data (2016), there are 200 households in the City of Monticello that meet this definition of being at-risk of homelessness those with the lowest incomes, whose housing costs make up the highest portion of their annual incomes.

The number of these at-risk households has largely remained consistent on a yearly basis, perhaps even slightly declining over time. As recent income estimates show slight decreases, while housing markets have shown increased costs, it would be expected that the number of households already living in the community that classify would increase - especially under consideration that this AMI standard is for the 11-county metro, which has largely shown income growth over the same timeframe.

If income in the 11-county metro continues to show strong growth, and local incomes remain consistent or decrease slightly, more local households fall into the definition of low-income categories used by Minnesota Housing Finance Agency and HUD which set 30%, 50%, 60%, and 80% AMI income standards for the region.

300 Point-In-Time Count 255

250

225 200

200 200 150

190

180

150

100

50

0

At-Risk Households Source: Central MN Continuum of Care

Other Populations

74

Aging Populations Senior Households are anticipated to

have the largest percentage growth through 2050.

Many are current homeowners, and some will require different accommodations, specialized housing, or programming to assist aging-in-place.

Senior housing generally refers to the combination of services and housing that allow seniors to continue to live comfortably. This ranges from continuing to live in their own home with virtually no services, townhomes and apartments that offer the ability to â&#x20AC;&#x153;downsizeâ&#x20AC;? living quarters, specialized housing units with limited services, and different types of assisted living facilities.

Generally, independent-living senior facilities attract residents age 65 and older, while more specialized facilities (assisted living, etc.) attract residents who are age 80 and over and need assistance with daily living activities.

The Community Basics section of this plan detailed expected population increases for

0

0

0

0

0

0

0

0

As varying levels of services are included with different types of housing for aging populations, typical affordability standards do not apply.

Often senior households will pay up to 50% of their income for market rate senior housing, up to 90% of their income for specialized and assisted living, often funded in part through the sale of a home they owned. Many households age 62+ in the City are still homeowners, who have not yet sold homes to fund other housing or services, while those 85+ are more likely to be renters as they continue to age and need alternate accommodations.

Over the next 30 years, approximately 1,500 residents will age into the 80+ age category, and may look to sell their housing for other living options.

62+ Household Income and Tenure - Monticello 450

195

400

35

350

15

195

0

0

senior populations in the City. In addition, growth in population aged 35 and older often sees an accompanying increase in senior populations as persons aged 35-54 often have parents who will locate closer to their children for care as they age into more intensive services and care.

300

40

35

35 15

250 200

145

40

35

25

115 145

150

115

200

100 50

25

200

90

85

90

0

Elderly Family Elderly Family

85

Elderly Non-Family Elderly Non-Family

15

15

Elderly Elderly FamilyFamily

Owner Owner

Renter <30% AMI

<30% AMI Source: HUD Comprehensive Housing Affordability Strategy

City of Monticello

Elderly Non-Family Elderly Non-Family

31% - 50% AMI

31% - 50% AMI

51% - 80% AMI

51% - 80% AMI

Renter

> 80% AMI

> 80% AMI

Housing Needs and Demand

75

Aging Populations Importantly, many of the households who might otherwise have sold their home during the past decade may have delayed plans for other housing options due to decreased housing values associated with the recession, choosing to continue to age-in-place. With recent appreciation of home values in the City, these households may be more interested in sale of their home over the coming years should demand continue to drive appreciation closer to the 8% average annual mark post-recession.

Many Aging Households will be able

to use funds from home sales for other housing options. While home value increases make it more difficult for lower-income households to enter the housing market, it also means that senior homeowners have access to extra capital through the rapid appreciation of homes, and will have more funds available to ensure care as they continue to age.

Assuming that a senior household owns their home free and clear, and their home sells for the most recent median value of $265,450, they would be able to generate approximately $5,360 in annual income from a 2% interest producing account ($446.50 per month) to supplement housing costs.

Monticelloâ&#x20AC;&#x2122;s current mill rate (at the highest district value) signifies an additional $2,900 annually they would have already been paying for housing cost, which brings their monthly total housing allowance to $690 without increasing share of income spent on housing.

In the next 10 years, this does not represent a drastic number of housing units that may be transitioning - likely between 125 and 145 units, or 12-15 annually. However long-term, especially as other 55+ age groups continue to age, this could represent upwards of 30 additional units per year opening to new owner households, which will help alleviate some market pressures through transition of existing housing stock - including more housing stock in desirable locations at various price points that had not been on the market for many years.

372

55+ Detailed Household Categories - Monticello 400

372

286

350 286

300

203

250

150

203

152

200

128

152

84

100

87

84

90

90

87

82

128

82 55

50

55

0

55 to 59

55 to 59

60 to 6460 to 64

65 65 to to 7474 Owner

Owner

7575 to to 84 84

85 and85 over and over

Renter

Renter

Source: American Community Survey 5-Year Estimates

Other Populations

76

Disability Persons with a disability do not inherently require access to specific housing types or accommodations, dependent upon the type and severity of the disability. More commonly, persons with a disability receive services and accommodations related to the disability as they continue to age and require more specialized forms of housing. This is due to the percentage of population, by age, that experience a disability being disproportionately higher in aging and senior households.

Age Projections

When housing units are constructed, they are not traditionally built using methods that easily accommodate aging populations and often require renovation such as wider doorways, lower countertops, and zero entry showers/baths. For instance, Monticello offers density, height, and parking bonuses/reductions for new construction with significant percentages of units built to universal design standards (among other green building standards) within overlay districts. These standards will remain an integral component of choice for aging households over the next 30 years.

Age Cohort

2018

Projected Percent Projected Increase 2050

0 - 9 Years

2,292

12.2%

2,573

10 - 19 Years

1,876

-3.7%

1,806

20 - 34 Years

2,757

11.2%

3,066

35 - 49 Years

2,598

17.5%

3,053

50 - 64 Years

2,274

-26.5%

1,672

65 - 79 Years

1,094

55.7%

1,703

80 and Over

601

252.6%

2,120

*Tied to projections in Wright County, not directly to 2018 estimates.

Source: MN State Demographic Center

Percentage of Age Group with a Disability - Monticello 60% 52.6% 50%

40%

30%

20% 14.0% 10% 3.4% 0%

< 17 years

Source: American Community Survey 5-Year Estimates

City of Monticello

16.4%

6.2%

18 to 34

35 to 64

65 to 74

75 and over

Housing Needs and Demand

77

Accessibility

New Market Rate and Workforce

There is no database on a local level for units currently accessible (due to the nature of private market retrofits at varying levels), though estimates nationally place accessible single family homes at just 1% of the total housing stock.

units in the City, both ownership and rental, will likely see an increased demand for universal design features due to projected age increases for residents - both current and within the larger County (due to hospital and transportation accessibility). Current City trends show that while there are households containing a member with a disability in all income ranges, there is especially a need at both the highest and lowest income categories, indicating need for both affordable and market rate housing options.

This is important as, even at advanced ages, many residents choose to continue to remain in their own housing. For those that do move at advanced ages, including in the ownership market, over 50% choose to actively seek out residential units with accessibility features such as no-step entries, level style door handles, accessible shelving and electrical, and single floor living. As the population of the City continues to age, and parents of residents move to be closer to their primary caretaker, ensuring continued supply of units with accessibility features should remain a priority.

While lower-income households often have disabilities go unreported or undiagnosed, there are residents at all ages in households of all incomes that require access to appropriate housing design to meet their needs. Many middleincome households may additionally fall into lower-income categories as income becomes more limited in retirement.

Disability & Income - Monticello 250 200

195

200

175

Households

150

145 115

100

95

85

90

85 65

50

0

95

85

95

105

55

30

< 30% AMI Hearing/Vision Impairment

Source: HUD Comprehensive Housing Affordability Strategy

31% - 50% AMI Ambulatory LimitaƟon

51% - 80% AMI CogniƟve LimitaƟon

> 80% AMI

Self-Care/Independent Living LimitaƟon

Other Populations

78

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City of Monticello

Housing Needs and Demand

79

5 Local Impacts on Housing

Local Impacts

80

New Construction

New Construction in the City has

increased significantly post-recession, with the single-unit detached market being the first residential construction sector to rebound with significant starts in 2012. Since 2012, the attachedunit market also started seeing increases in starts annually in the City, with every year bringing at least a handful of new units online.

New single-unit permits peaked in 2014, and have since been in decline. Over the past two years (2018 and 2019), the attached-unit market has made up 50% or more of all new single-unit construction.

While there is still a healthy amount of construction activity in the single-unit market on an annual basis, construction costs have been increasing and therefore ownership and rental costs as well.

This is one of the forces regionally and nationally pushing toward attached-unit construction, as efficiencies in construction and decreased land cost create some cost-savings in the development process.

Attached units are a key component of a healthy market, especially in Monticello, where generally lower regional incomes combined with increased demand from in-migration means that more affordable options are needed to ensure current residents can continue to call Monticello home.

New Single-Unit Permits by Type 80 70 60 50 40 30 20 10 0

2010

Source: City of Monticello

City of Monticello

2011

2012

2013

2014

Single-Unit AĆŠached

2015

2016

2017

2018

2019

Single-Unit Detached Housing Needs and Demand

81

New Unit Construction

required than expected in development assumptions, and it is likely that there is a continued market for multifamily housing to continue to serve as market differentiators for the City.

New Unit Construction over the past

decade has also consisted of development in the multi-unit or multi-family market. This development primarily occurs to supplement the rental supply with newer options, as many of the existing rental units in the City are in older multi-unit buildings. Multifamily development in the City has historically existed in older housing stock, and as residents commuting to the metro continues to increase, expanding and diversifying options across market segments helps to expand opportunity for a variety of household types across all incomes, family types, and preferences.

In years where multi-unit construction occurs, it makes up a significant portion of housing starts. While 44% or more of current rental units in the market exist in 20+ unit buildings, there is opportunity to expand construction while also balancing options and opportunity through encouragement of new single-unit rental properties both attached and detached, which currently exist in the core city as well as in subdivisions and neighborhoods throughout the City.

Recent market rate developments in the City report healthy lease up rates with less vacancy

New 250 Unit Permits by Type

200

150

100

50

0

2010

2011

2012

2013

MulĆ&#x;-Unit

2014

2015

AĆŠached

2016

2017

2018

2019

Detached

Source: City of Monticello Note: Monticello Crossings permits spread across 2015 and 2016.

Local Impacts

82

New Unit Affordability

Permitted Units are charged permit fees,

which are based on the total cost of construction (valuation) - as market costs are largely unknowable at the time of permitting. This makes judging future affordability of proposed units somewhat difficult, as builders and developers are taking a risk in development that their investment will come online in an appreciated market to maximize returns.

While there is no consistent, perfect method to anticipate future market costs based solely on the cost of construction, the basis of just construction costs adjusted for builder/developer profit show general ranges for what a buyer would pay for the type and quality of construction needed in new single-family starts regardless of location in the City.

The National Association of Home Builders reports increasing gross profit year-to-year, with current percentages just over 19%. Using a 3-year average (18.9%) applied to valuation over the past 5 years, the chart below shows the approximate market construction cost of units (cost to buyer) that have been permitted.

This is necessary to track trends in new construction, as many homes may not be directly listed with the Multiple Listing Service, but marketed and sold either before built, or directly by the developer.

In recent years, the shift from low-cost to highercost can be seen through the number of units with higher construction costs year-to-year.

SF New Construction - Construction Cost to Buyer 35 30 25 20 15 10 5 0

2015 < $150,000

2016 $150,001 - $200,000

$200,001 - $250,000

2017 $250,001 - $300,000

2018 $300,001 - $350,000

2019 $350,001 - $450,000

> $450,000

Source: City of Monticello

City of Monticello

Housing Needs and Demand

83

New Unit Affordability

affordability much construction is still higher than many households that live in the City can afford.

The low end of the buyer construction cost range ($300,000) would be â&#x20AC;&#x153;affordableâ&#x20AC;? to a household earning approximately $90,000 annually, which is about $13,000 more than the median household in the City. The high-end range ($350,000), equates to affordable cost for a household earning $104,000 annually, which is more than the median for the entire 11-county metro - and does not include significant land pricing.

New Unit Valuation since 2015 shows a

decrease in new unit construction in several areas of the market - slightly less construction at the most affordable price points, slightly less construction in the highest-cost price points, and increased construction in the middle of the market.

Though house construction in recent years has spanned many building sales price categories (consumer costs excluding land), in terms of

New Single-Family Construction Cost to Buyers Approximate Sales Cost Ownership Units < $150,000

2015

2016

2017

2018

2019

0

0

1

0

1

$150,000 - $200,000

15

25

6

10

16

$200,001 - $250,000

16

14

34

6

8

$250,001 - $300,000

7

5

6

15

10

$300,001 - $350,000

4

10

8

7

5

$350,001 - $450,000

4

6

6

3

0

> $450,000

0

1

0

0

0

Source: City of Monticello

Local Impacts

84

Print Date: 8/2/2020

Valuation Residential Properties Total Property Value

10 / .

× 50

75

CR-50

10 / .

TH 00

RK PA

212

43

T

× 17

×

W RIVER ST

RIV ER

Streets CSAH 43

11

CAM ERON ST

Monticello, Wright County, MN

ORMSBEE ST S

W BROADW AY S

120TH ST NE

Monticello Housing Study

×

VD BL

×

ST

2

CS AH

VIE W

Interstate

LA

State Road

" # !

W RIVER

SHERBURNE CO U N T Y

ST

94

CSAH 39

×

Water Body Parcel Boundary Surrounding Municipality

39

EB RO

AD W

14

EB

W R I G H T CO U N T Y

PAR K

×

AY ST

RO

7TH ST

ADW AY S

Monticello

CSAH 14

Total Property Value

T

18 0T H AVE

PLAC E

Less Than $50,001

D R

CSAH 39

RIVERV CHELSEA RD

287

×

$50,000 - $200,000

39

IEW DR

HAUG A

×

VE

$200,001 - $500,001 N E

189

AVE NE

HARDING AVE NE

OAKWOO D DR

OD WO

×

FALLON AVE NE

DUNDAS RD BRI AR

SCH O OL BLVD

× 2222

90TH ST NE JA SO

AV E

" # !

×

A VE ON SO N

The Valuation of land in the City helps to

portray local impact and accessibility of the housing market. Residential values have increased significantly in recent years consistent with overall market conditions, and outpacing commercial valuations by as much as 3-to-1.

As assessments and valuations roll into housing cost for resident homeowners, increasing valuations can lead to increasing unaffordability for residents who own their homes, especially those with limited, fixed, or decreasing incomes.

As Monticello’s median family income has remained relatively steady since 2010, this can create tension in the housing market where owners invested at the top of their affordability limits can see increases that make their current housing unaffordable. In the Community Survey, 10% of homeowner respondents indicated

City of Monticello

FENNING AVE NE

85TH ST NE

85TH ST NE

NE

106

$500,001 - $1,000,000 $1,000,000 - $5,000,000 Greater than $5,000,001 No Assessed Value Non Residential Parcels

N

94

18

×

ED M

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US Highway 196TH ST

CSA H1 1

JA

SO

NA VE

NE

Right of Way

Data Sources: Minnesota GIS Data Wright County GIS & Assessor Data

0

0.25

they had to forego other needs such as food, healthcare, or childcare to continue to be able to afford housing in the past 5 years.

Appreciating housing is important to healthy markets, and provides a stable financial base for homeowners into the future. However as the capital is tied up into housing, the increased costs at rates higher than inflation and income increase can become burdensome over time.

Spatially within the City, subdivision development in the residential market generally sees higher property values than areas built out in the City center, with the exception of riverfront properties.

Attached-unit affordability is also shown directly in this map, as observed through categorization differences between detached and attached ownership areas.

Housing Needs and Demand

0.5 Miles

85

Improvement Value Ratio Since construction and development is based heavily on financial incentive, parcels with low Improvement:Land value ratios are more prone to redevelopment, and will often see increased pressure for teardown/rebuilds even in the singlefamily market.

Parcel Valuation is made up of two

components - land value and improvement value.

While both land and improvements (buildings) generally appreciate over time, development and use trends can drastically shift associated land values over the course of decades. In practice, this means that very desirable areas have large increases in land value, while other areas grow at rates more consistent with overall inflation.

In the City, newer construction generally shows higher Improvement:Land Value ratios. This is partially due to lower land costs (location) as well as increased construction cost and buyer preference (size/bedrooms/etc.). Areas of the City that are most prepared for redevelopment are, in general, areas of the downtown and central city that have older housing stock and low ratios, while greenfield construction will increase values on the edges of the City.

Print Date: 8/2/2020

This shifting land value impacts the housing market due to the overall usable life of residential buildings. Single-unit homes have a usable life of 100 years or more, while small- to mid-size multiunits buildings can have a usable life between 65 and 80 years if properly maintained.

× 50

Residential Properties Improvement Ratio

10 . /

10 / .

Monticello Housing Study

×

2

RK PA

TH 00

ST

VD BL

× 212

Monticello, Wright County, MN

43

W BROADWAY S T

× 17

×

Streets Interstate

CSAH 43

W RIVER ST

CR-50

11

CAM ERON ST

US Highway

SHERBURNE CO U N T Y

" # !

94

CSAH 39

State Road

Water Body Parcel Boundary Surrounding Municipality

× 39

EB RO AD

WA YS T

7TH ST

× 14

EB RO AD WA Y

Monticello

CSAH 14

Improvement Ratio

ST

Less than or Equal to 1.0 1.0 - 3.0

× 39

×

CHELSEA RD

287

3.1 - 6.0

×

O WO BRI AR

HARDING AVE NE

189

D AVE NE

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W R I G H T CO U N T Y

SCH O OL BLV D

× 2222

6.1 - 10.0 10.1 - 15.0 Greater than 15.0 No Year Built Data Non Residential Parcels

90TH ST NE

× 18

× 106

85TH ST NE

" # !

Right of Way

94

Data Sources: Minnesota GIS Data Wright County GIS & Assessor Data

0

0.25

Local Impacts

0.5 Miles

86

Print Date: 10/8/2020

Available Lots Available Residential Properties

10 / .

×

10 . /

50

Monticello Housing Study

× 43

VD BL

× 212

W BROADWAY S T 17

Streets Interstate

CSAH 43

W RIVER ST

×

CR-50

× 11

CAM ERON ST

Monticello, Wright County, MN

ST

2

RK PA

TH 00

State Road

94

CSAH 39

US Highway

SHERBURNE CO U N T Y

WRIGHT COUNTY ! " #

Water Body Parcel Boundary

× 39

EB RO AD

WA YS T

7TH ST

× 14

EB RO AD WA Y

Surrounding Municipality Monticello

CSAH 14

Residential Vacant Land

ST

Single - Unit Bank Owned

×

×

Right of Way

DA V E NE

39

CHELSEA RD

BRIARW OO

× 189

HARDING AVE NE

Printed By: smorrison, File: \\msa-ps.com\fs\Project\13\13731\13731002\GIS\13731002_ResProperties_Available_202001008.mxd

287

SCH O OL BLV D

× 2222

90TH ST NE

× 106

× 18

85TH ST NE

" ! # 94

Data Sources: Minnesota GIS Data Wright County GIS & Assessor Data

0

0.25

Aside from Redevelopment, there

are parcels in the City that remain vacant and awaiting construction/development of some type.

The map above shows residential parcels which have an assessed improvement value of $0 and are zoned for residential development. Some of these are already platted and serviced, while other require re-platting.

Available parcels are located in several zoning districts, though the number available in each varies. Notably, there are significant numbers of parcels identified as being available within the downtown of the City. Though individual parcels, they provide opportunity for slight increases in density that supports other downtown development.

City of Monticello

This analysis is largely focused on showing which parcels are available for potential development, and is not intended to be all-encompassing. The City maintains a map of available residential parcels that have been platted in subdivisions (pg.

90), which contains more detailed information on specific numbers of units available for construction in each.

A full-size scalable version of this map is located in the appendix to better identify parcels with potential for development opportunity.

Housing Needs and Demand

0.5 Miles

87

Without action, excessive local barriers drive up housing costs, undermining affordable housing at most income levels, and resulting in declines in homeownership. Demonstrated success in addressing these challenges can help overcome apprehension about neighborhoods evolving and growing through new development.

- 2016 White House Housing Development Toolkit

Properties for Sale

Jim Thares | Jim.Thares@ci.monticello.mn.us | (763) 271-3254

| Guided Downtown/Residential

Updated: February 2020

PID 1 2

3.

3

Owner

Size (Acres) 2019 Taxes

Zoning

155-010-017011

City of Monticello

0.47

$0.00

CCD

155-010-050011

Monticello EDA

0.19

$0.00

CCD

155-010-054011

Monticello EDA

0.25

$0.00

CCD

155-010-036090

Monticello EDA

0.10

$0.00

CCD

155-010-052071

Monticello EDA

0.22

$0.00

CCD

155-010-034130 / 155-010-034140 / 155-010-034150

Monticello EDA

0.36

$0.00

CCD

155-010-034102

Monticello EDA

0.19

$0.00

CCD

2.

4 14.

5 13.

10.

6

11.

5.

7

4.

8 9 19.

6.

9.

7.

16.

10

15.

18. 17.

11

8.

12 13 14 15 1.

16 17

Legend EDA Owned - Guided Downtown EDA Owned - Guided Residential

18 12.

19

155-010-034040

City of Monticello

0.50

$0.00

CCD

155-010-067010 / 155-010-067060 / 155-010-067100

Monticello EDA

1.33

$0.00

CCD

155-010-052120

Monticello EDA

0.07

$0.00

CCD

155-010-052110

Monticello EDA

0.43

$0.00

CCD

155-019-007050 / 155-019-008010 / 155-010-067100

Monticello EDA

1.40

$0.00

R-2

155-010-052132 / 155-010-052140

City of Monticello

0.28

$0.00

CCD

155-010-052150

Monticello EDA

0.23

$0.00

CCD

155-010-034080

City of Monticello

0.25

$0.00

B-3

155-010-034101

City of Monticello

0.09

$0.00

B-3

155-010-034030

City of Monticello

0.25

$0.00

B-3

155-010-034020

City of Monticello

0.25

$0.00

B-3

155-010-035011

City of Monticello

0.70

$0.00

B-3

City Owned Parking Lots

Local Impacts

88

Print Date: 10/8/2020

Available Lots - City-Owned City Owned Properties

10 / .

×

Monticello Housing Study

10 / .

50

ST

×

2

RK PA

TH 00

Monticello, Wright County, MN 43

VD BL

× 212

W BROADWAY S T

× 17

×

Streets

CSAH 43

W RIVER ST

CR-50

11

CAM ERON ST

Interstate State Road

" ! # CSAH 39

US Highway

SHERBURNE CO U N T Y

94

Water Body Parcel Boundary

×

Surrounding Municipality

39

EB RO AD

WA YS T

7TH ST

× 14

EB RO AD WA Y

Monticello

CSAH 14

Available City Owned Properties

ST

Right of Way

W R IG H T C O U N T Y CHELSEA RD

287

×

O WO BRI AR

HARDING AVE NE

189

D AVE

NE

Printed By: smorrison, File: \\msa-ps.com\fs\Project\13\13731\13731002\GIS\13731002_CityOwned_20201008.mxd

× 39

×

SCH O OL BLV D

× 2222

90TH ST NE

× 106

× 18

85TH ST NE

" ! # 94

Data Sources: Minnesota GIS Data Wright County GIS & Assessor Data

0

A Component of Available Parcels;

there are parcels in Monticello that are under direct ownership and control of the EDA (inset pg. 87). Many of these parcels are available for residential use, and should continue to be considered in unique strategies that can increase affordability, types of development, and integration of tenure types.

Local control over development parcels allows Monticello the ability to heavily influence any future development that would occur, utilizing known needs and the vision of the comprehensive plan to guide development types in key areas.

City of Monticello

0.25

0.5 Miles

Parcels displayed on this map are available parcels that are zoned for some form of residential use, and exclude all land records that indicate park use for the properties. While many of the properties are within neighborhoods and subdivisions, there are also parcels in key corridors along Interstate 94, the downtown, and other districts.

The City has consciously invested into securing properties for future redevelopment, and should continue to do so as growth pressures continue to ensure quality design and housing that meets the needs of residents.

Housing Needs and Demand

89

City-Owned Lots by Zoning

Available Lots under EDA ownership have been located in a variety of different districts with different associated densities and building structure types - ranging from Single and Two family Residential, Medium Density Residential, Traditional Residential, Residential Amenities District, and carryover parcels that have undergone zoning conversion to PUD.

As the City updates the comprehensive plan and looks categorically at future land use and densities in specific areas, continuing proactive acquisition of parcels in areas that advance City housing policies should be a key consideration - including continuing to activate and increase density and vibrancy in the downtown, subdivisions with ranges of unit types, structure sizes, and tenure, and more intensive development options in areas with transportation and easy amenity access.

While some of these parcels are dedications from development, they are indicative of the opportunities that the City has to control development potential in different areas of the City across zoning districts.

Downtown inset is on pg. 87.

City Owned Properties

By Zoning

10 . /

×

10 / .

50

Monticello Housing Study 43

VD BL

× 212

W BROADWAY S T

× 17

×

Streets

CSAH 43

W RIVER ST

CR-50

11

CAM ERON ST

Monticello, Wright County, MN

×

2

RK PA

TH 00

ST

Interstate State Road

" ! # CSAH 39

US Highway

SHERBURNE CO U N T Y

94

Water Body Parcel Boundary

×

Surrounding Municipality

39

EB RO AD

WA YS T

7TH ST

× 14

EB RO AD WA Y

Monticello

CSAH 14

Right of Way

ST

Monticello Zoning

W R IG H T C O U N T Y

Highway Business

×

Medium Density Residential

39

×

CHELSEA RD

287

O WO BRI AR

×

D AVE

HARDING AVE NE

189

NE

SCH O OL BLV D

× 2222

90TH ST NE

× 106

× 18

85TH ST NE

" ! # 94

Data Sources: Minnesota GIS Data Wright County GIS & Assessor Data

0

0.25

Local Impacts

0.5 Miles

90

Platted Properties within the City represent current available parcels that are ready for development, including approved numbers of total units for potential purchasers both in the City and those looking to relocate.

Three of these subdivisions are largely built out, containing opportunity for 1, 2, and 5 units in Hillside Farm, Club West, and Carlisle Village respectively. Sunset Ponds recently received approvals and permits for completion.

There are currently 5 subdivision developments that have been platted, and include opportunity for 153 new units in the City. These are included in demand calculations to best ensure accurate availability of lots and units ready for creation.

The total unit mix across these subdivisions indicates a unit mix consistent with recent development across both single-unit and multi-unit building structures.

Residential Platted Properties Updated: February 2020 | Available Platted and Utility Serviced Lots Development BR OA DW AY

To St. Cloud

Monticello Country Club

s

Club West

m n

Ott

C er

¾ ?

A @

H G Õ E

3 Miles to T.H. 10

25

Pinewood Elementary School

S }

39

ST

GOLF COURSE RD

k ree

MCC/City Office

Multi Family Lots

25

0

Hillside Farm

1

0

Carlisle Village

5

13 buildings / 60

Autumn Ridge Villas

24

0

Club West

2

0

Haven Ridge

27

0

0

2 buildings / 9

84

69 units

Sunset Ponds

CentraCare Health

® v

PIN ES

T

First Lake

Single Family Lots

Featherstone

Totals:

m n

r iv e iR i pp s is ss Mi

Monticello Middle School Mud Lake

H G Õ E S } th

90

St

SE

RIVER VIEW

39

DR

CHELSEA RD

94

Little Mountain Elementary School

Monticello High School

Eastview Education Center

m n

m n

m n

Edmonson Ave

g S

SCHOOL BLVD

75

Autumn Ridge

¾ ?

A @

LEGEND

EDMONSON AVE

Single Family Available Multi Family Available

Previous Preliminary Plat Requires Platting

500

1,000

$ b " !

Haven Ridge

To Twin Cities

FENNING AVE

City Limit

Hunters Crossing

Hillside Farm 25

¯ 0

Spirit Hills Featherstone

Carlisle Village 4th Addition

Feet

City of Monticello

Housing Needs and Demand

94

Document Path: K:\015355-000\GIS\Maps\ResidentialPropertyMap_PlattedAvailable_Base.mxd

Residential Platted Lots

91

Development Fees One of the Costs directly passed on to consumers in both ownership and rental markets are fees associated with development. These fees are assessed by the City in order to ensure quality of development, as well as to mitigate potential negative impacts associated with increased residential density. Monticelloâ&#x20AC;&#x2122;s fee schedule is reproduced on an annual basis, reassessed to ensure fees charged meet the required intent without dissuading development due to prohibitive cost.

Type

Multi-Family Construction

Single-Family Attached

Single-Family Detached

Source: City of Monticello

Permit Fees:

The amounts in the table below are a sample of recent per-unit permit fees for development projects in the City over the past four years. These fees are used for illustrative purposes only, to give relative example of how individual subdivision, building, or structure types have different associated permitting and development fees dependent upon project details and levels of review.

Per Unit Cost

Total Project Valuation

Revenue

Plan Check

State Fee

SAC Fees

WAC Fees

Total per Unit

$15,500,000

$3,483.12

$364.37

$20.88

$2,576.99

$56.08

$6,501.58

$5,125,000

$510.82

$272.76

$32.05

$4,651.94

$88.15

$5,556.00

$6,480,000

$367.40

$238.81

$23.85

$4,190.00

-

$4,820.06

$141,864

$2,024.04

$320.71

$70.93

$4,315.00

$833.00

$7,563.68

$159,326

$2,130.96

$352.44

$79.66

$4,315.00

$833.00

$7,711.06

$203,200

$2,364.32

$417.78

$101.60 $4,190.00

$833.00

$7,906.70

$218,971

$2,453.42

$1,114.16

$109.49 $4,190.00

$833.00

$8,730.07

$224,762

$2,489.06

$1,167.32

$112.38 $4,190.00

$833.00

$8,791.76

$152,000

$2,038.67

$340.57

$76.00

$4,190.00

$833.00

$7,478.24

$187,528

$2,252.51

$1,024.46

$93.76

$4,190.00

$833.00

$8,393.73

$215,000

$2,457.66

$1,128.71

$107.50 $4,315.00

$833.00

$8,841.87

$270,000

$2,784.36

$1,341.07

$135.00 $4,315.00

$833.00

$9,408.43

$302,000

$2,946.44

1,464.62

$151

$833.00

$9,585.06

$4,190.00

Local Impacts

92

Zoning Monticello’s Zoning Ordinance

is written to have 6 main residential districts.

Counting permitted (by-right) uses, this includes 3 low-density single-family only districts, 1 medium density single-family only district, 1 single-family/ townhome district, and 1 townhome/multi-family district. As the City looks to update future land uses and development patterns, it may be beneficial to

AO RA R1 R2

Zoning District

TN R3

R4 B1

continue to proactively anticipate development in certain districts that promotes mixes of unit types, sizes, and structures within subdivision development and platting to offer increased access to residents. Other considerations may include revisions to districts that allow more “missing middle” housing (3+ unit) housing by-right in certain districts, to save on developer holding costs that increase the price of housing.

Minimum Residential Lot Size

Minimum Lot Width

SingleFamily

2 acre

200’

P

P/C

14,000 sq. ft. **

90’ **

P

P/C

10,000 sq. ft. **

70’ **

P

P/C

10,000 sq. ft. SF 10,000 base + 4,000 /unit MF 80’ 7,000 sq. ft Duplex/Att.

P

7,500 sq. ft.

45’

P

10,980 sq. ft./unit TH 5,124 sq. ft./unit MF

80’

30,000 sq. ft.

8,000 sq. ft

TwoFamily

P

3-4 Unit

C*

5+ Unit

C

Accessory Dwelling

P/C P/C

C

P

P

P/C

-

C

C

P/C

80’

C

C

P/C

P = Permitted Use; C = Conditional Use *Allowed as Permitted Use in Broadway and General CCD subarea in certain situations ** Lot averaging can be utilized in subdivision development

The residential base zoning districts established in this section are intended to provide a variety of housing options in a comfortable, healthy, safe, and pleasant environment in which to live and recreate at a neighborhood level.

City of Monticello

- City of Monticello Zoning Ordinance

Housing Needs and Demand

93

Zoning th St

NE

lw oo

Hill cres

dR d

Hillcrest Rd

Co

un

y

Lief

er

Cra ig

Jerr

Cir

Ln

Hilltop Dr

tD r

Cir side River

Kevin L on gley Dr

Hw y 75

Otter Creek Rd

ty

an Ln

Oak view

Balboul Cir

Hedm

Marvin Elwood Road

Praire Road

Kenneth Ln

vin E

Matthew Cir

Crocus Ln

Mar

tC ir

120

W

Rive r

St

Ln

Ch

estn

ut St

Willo

w St

Oak

Fron

t St

Locu st

St New

Pine

He

06

r St

1 inch = 2,500 feet

k Ln

St llow Wi

ut St stn

Thomas Cir

Br

Thomas Park Dr

St

E Riv

Bro

adw

Hen

n Av eN

Ch

to ral

03

Rd

Oakwook Dr

rt

Fallon Ave NE

Ha d Blv

Miss

St

Fal lon

m Ho

ad

D

r

River view

River

M ill Dr ne

Sto

Dr

Cir ridge

02

Mill Run Rd

Rd

River Ridge Ln

Ln

Pebblebrook Dr

Ja

Martin Dr

ty

Hw y 75

Mockingbird

Ln

Haug Ave NE East Oak Dr

90th St NE

Meadow Oak Ct

Wildwood Way

kvi ew

Ct

Fallon Ave NE

Fenning Ave NE

un

w Ln

w Ln

Oak Ridge Cir

Fallon Ave NE

Meado

Oakvie

Oa Edmonson Ave NE

Co

Tanager Cir

Oa k Dr

Ci r

w

n

Oak Ridge Dr N

Fenning Ave NE

Oriole Ln

Widgeon Ln

Fallon Dr Mallard Ln

or

Edmonson Ave NE

Farmstead Ave

Tanager Cir

d Ln

Ln

Ac

ott Tr

Mockingbir

ak

Endic

Mallard Ln

95th St NE

O

Ln

Graystone Ave

Falcon Dr

Fallon Dr

ad ow

ado

Ln

Diamond Dr

Red Oak

Diamond Dr

Cir

Ci r

llow Swa

st

Pelican Ln

re

Eider Ln

ldc

Cir

Briar Oaks Blvd Martin Dr

Starling Dr

Cheyenne Ct

Fie

st

Jason Ave NE

Pebblebrook Dr

08

re

Me

School Blvd

12

Graystone Ave

Meadow Oak Ave

Fi el dc

02

Eastw ood

ge Cir erid

Red Rock Ln

e Hw y 25

Ston

St at

r

Cir

D

all ow

ad

Sw

te

Eastwood Cir

d Dr stea

es

Pelican Ln

Farm

m

Me

08

Stoneridge Dr

Countr y Cir

Starling Dr

Cheyenne Ct

Falcon Dr

Eider Ln

12

Widgeon Ln

03

Jas

on

Av e NE

!

85th St NE

!

!

! !

!

!

85th St NE

!

!

!

!

!

Performance Based Overlay District Performance Based Overlay District Special Use Overlay District

!

Special Use Overlay District Mississippi Wild, Scenic & Rec Overlay District Shoreland & District Mississippi Wild, Scenic Rec Overlay District Freeway Bonus Sign District

Shoreland District Freeway Bonus Sign District

Residential Development by right within

the zoning code helps to ease planning and construction by having clear, concise rules and regulations so that residents and developers understand expectations for the site. Good zoning creates guidelines for this development while maintaining flexibility balanced with community health and aesthetically pleasing design.

Overall, the many districts in the City offer a range of development opportunities for a wide variety of housing types. There is likely opportunity to continue to thoughtfully integrate attached-units

Fenning Ave NE

River Forest Dr

Osprey Cir

Oriole Ln

Mill Trail

Oakwook Dr

te

05

Ho

Hw y 25

es

School Blvd

Dundas Rd

Sta te

Mill Ct

Blv d

Gillard Ave NE

Fallon Ave NE

lsea

Dundas Cir

Che

rt

Farmstead Ave

St dar Ce

Ha

Dr tead

Countr y Cir

Red Rock Ln

Stoneridge Dr

Av e NE

Oakwood Dr

oa dw ay

St

04

11

Country Ln

Monticello RV Deephaven Center 8th Monticello Business 12 Center 8th

E 7th

Farms

Rd

10 11

Br

Thomas Park Dr

Country Ln

Marvin

h St 90t

NE

05

issip

pi Dr

Thomas Cir

NE

rg Rd

Av e

Sandbe

rro w

Rd

Dundas Cir

elsea

Du ndas Rd

07 Da

Dr

Fa llo

St ngt on Wa shi

St sey Ram

St ight Wr

rri

10

B-4

ippi

St

Te

06

way

04

11

nep

St

o ad

St

E

Oakwood Dr

er St

ay St

in St

W

da r

St

Ce

igh

t St

New E 3rd

Wr

St

E 3rd

Palm

St

St

St

St Pine

Ced ar

t St

5th

Wa lnu

nes Min

W

E 7th

Fallon Ave NE

Map

01

Minnesota St

Elm

St

St

Sandberg Rd

St

le St

Linn

St

09 ust

St Vine

St

St

6th

ota

Elm

St

Sandtrap Cir

Bunker Cir

Center Cir

St

W

Rd

h

90th

NE

St

St

St

Loc

Fairway Dr

5th

4th

Marvin

Eagle Cir

W

nes

W

Golf Course Rd

Fenning Ave NE

St

St

ota

3rd

nt

Min

Club View Rd

7t

!

Fro

E

!

!

!

!

N

W

W

!

Mississ

Ave

Kampa Cir

Point-In-Time Monticello Business 12

OVERLAY DISTRICTS OVERLAY DISTRICTS

07

Che

CCD

lvd

10

ro w

tB

Fallon Ave NE

Rive

Oa

-- Medium Residential Densities Legend Industrial Districts T-N BASE ZONING DISTRICTS IBC Residential Districts Business Districts R-2 -- Low Residential Densities I-1 B-1 A-O R-PUD B-2 R-A I-2 B-3

St

St

ey

W

Rams

e Cir rsid

Otter Creek Rd

Rive

01 Swan River CCD -- High Residential Densities -- Medium Residential Densities High School 02 Monticello Industrial Districts T-N R-3 03 Mills Fleet Farm IBC R-2 04 Red RoosterI-1 R-4 R-PUD I-2 05 Spaeth Industrial Park M-H 06 Camping World River 01 Swan -- PUDs High Residential Densities 02 Monticello High School 07 Affordable Storage R-3 03 Mills Fleet Farm 08 Autumn Ridge 04 Red Rooster R-4 OTHER 05 Spaeth Industrial Park M-H 09 Rivertown Suites 06 Camping World Water PUDs 07 Affordable 10 Monticello RV Storage 08 Autumn Ridge OTHER 11 Deephaven 09 Rivertown Suites

er St

ay St

ngto n

aig Cr

Kevin L on gley Dr

Wrig ht St

t Dr

Kenneth Ln

fer

Dar

Water

Broa dw

W ashi

Ln

Lie

B-4

R-1

W

Har

R-1

: E Riv

Wrig ht

d St

d St

nnep

E 3r

in St

Minnesota St

Elm

St

Matthew Cir

Hilltop Dr

Cir

ry

kvi ew

Jer

Oa

Ln

Marvin Elwood Road

Balboul Cir

Hed man

E 3r

St

St

Palm

5t h

da r

W

Ce

Minn es

St

01 ut St

St

Hillcrest Rd

St

Lin n St

St

St Ma ple

Vin e St

St

est lcr Hil

Croc

us Ln

6t h

City of Monticello Official Zoning Map

09

d lR o ra rrit

B-3

St

Te

B-2

R-A

W

Cir

St

B-1

A-O

4t h

St

d Rd

Praire Road

-- Low Residential Densities

5t h

Elm

h

Business Districts

Sandtrap Cir

7t

Ma rvi n Elw oo

Residential Districts

W

Center Cir

W

BASE ZONING DISTRICTS

Eagle Cir

Fairway Dr

Golf Course Rd

Bunker Cir

Legend

W

St

Waln

Club View Rd

3rd

St

Kampa Cir

NE

ota St

h St

Minn esot a St

W 120t

or small multi-unit structures into some low density residential districts by allowing them as permitted uses, as well as to slowly increase density (and affordability) through further lot size reductions (or lowering averages below the base to allow a more natural range of housing choices).

One structure that is not explicitly listed in the ordinance as an accessory use type are Accessory Dwelling Units. These unit options may want to be called out as they are in the general provisions, providing guidance in development.

Local Impacts

!

94

City of Monticello

Housing Needs and Demand

95

6 Unit Demand Findings & Recommendations Local Impacts

96

Owner Demand - Low Estimate Growth projections for the City of Monticello indicate that current household growth rates will continue - and may have the potential to increase. More commuters are looking to call Monticello home. More area residents would like more options in the housing market. This demand analysis identifies a need to increase the number of ownership units in the City - creating more opportunity for ownership that can serve residents and newcomers alike.

There are two pages of demand analysis per housing tenure type (ownership and rental) - this is done to illustrate the range of potential growth that the City may undergo. In general, low estimates are based on 1.7% household growth, and high estimates are based upon 2.4% household growth. Some assumptions in each are the same - such as the need to bring vacancy back to healthy levels, and decrease the rapid speed of cost increases on housing. Other estimates differ based on current best projections.

The low estimate should be used as a baseline - a minimum threshold for unit construction, not just plats.

New Construction Ownership Housing Demand to 2025 - Low Estimate Demand from Household Growth Within the City Household Growth in Owner Demographics

294 additional households

Demographic Ownership Rate

63%

Demand for New Construction

185 ownership units

Demand from Existing Resident Households Current Owner Households looking to Step-Up

2,183 households

Current Owners Actively Looking for New Housing

12.6%

Increased Demand from Existing Residents

275 ownership units

Desire for New Construction

56%

Existing Resident Demand for New Construction

154 ownership units

Total Demand for New Construction Ownership Units = 339 units Preference for SF-Detached

70% Preference for SF-Attached #

Existing Platted SF-D Lots SF-Detached Supply Gap Additional Need for Vacancy Total SF-Detached Need

237

30% #

84 Existing Platted SF-A Lots

102 69

153 units SF-Attached Supply Gap

33 units

43 units Additional Need for Vacancy 196 units Total SF-Attached Need

18 units 51 units

Total Unit Need for New Developed Lots (not platted) = 247 units City of Monticello

Housing Needs and Demand

97

Owner Demand - High Estimate This high estimate should be used as a goal - a measure of units that could be constructed in the market to provide additional housing choice - in location, type, and price point for buyers at any given point in time. Community feedback through this process indicated the desire that there be multiple areas under different stages of development at the same time, so that buyers who want to move to the City have areas to choose in where to call home. This estimate would likely require multiple active subdivisions in order to have the demand met and fully constructed by 2025.

Development interest and demand drive the housing market. Due to lending requirements and market analyses needed for large-scale developer investment, if there is developer interest, there is also likely demand.

New Construction Ownership Housing Demand to 2025 - High Estimate Demand from Household Growth Within the City Household Growth in Owner Demographics

626 additional households

Demographic Ownership Rate

63%

Demand for New Construction

394 ownership units

Demand from Existing Resident Households Current Owner Households looking to Step-Up

2,183 households

Current Owners Actively Looking for New Housing

12.6%

Increased Demand from Existing Residents

275 ownership units

Desire for New Construction

56%

Existing Resident Demand for New Construction

154 ownership units

Total Demand for New Construction Ownership Units = 548 units Preference for SF-Detached

70% Preference for SF-Attached #

Existing Platted SF-D Lots SF-Detached Supply Gap Additional Need for Vacancy Total SF-Detached Need

384

30% #

84 Existing Platted SF-A Lots 300 units SF-Attached Supply Gap 46 units Additional Need for Vacancy 346 units Total SF-Attached Need

164 69 95 units 19 units 114 units

Total Unit Need for New Developed Lots (not platted) = 460 units Unit Demand & Recommendations

98

Ownership Findings General Conditions Impacting the Housing Market: • Recent increase in average household size indicates more households with young children (p. 6) • Aging households are the fastest increasing demographic since 2010 (p. 7) • Aging households will be a significant portion of households through 2050 (p. 10) • Households with children will continue to increase, driving need for larger units (p. 10) • Monticello residents have lower average incomes compared to peer communities (p. 11) • Monticello residents have lower degrees of educational attainment compared to the County (p. 12) • Common occupation groups in the City indicate a need for affordable housing, especially for entry-level positions (p. 14) • Large shares of residents (42% as of 2015) commute into metro counties daily for work.

Forty-eight percent of survey respondents indicated Twin Cities or a suburb as place of employment (p. 15) • Housing unit production has not kept pace with new households moving to the area, decreasing vacancy and increasing cost (p. 17)

What Residents Want: • Increase in zero-entry, patio, and rambler style homes • Detached, accessory, missing middle, and townhome units for aging populations • Higher-cost “upper scale” housing in addition to starter-home development • Areas with different development options to build in

Major Ownership Market Findings: • Though the majority of ownership housing is single-family detached, there are also many attached ownership units (p. 48) • Owners make up a smaller portion of the overall housing market than in most regional communities (p. 50) • The majority of owners in Monticello (53%) have incomes above the median for the entire Metro region ($103,400 in 2020) (p. 51) • Most homeowners can comfortably afford their current housing costs (p. 55) • There is an ample supply of homes affordable to households at 50% AMI - though 4 out of 5 are owned by higher-income households (p.

55) • Though affordable homes exist in the market, residents still identified the largest negative aspect of the market as lack of affordability, with more than half of survey respondents indicating that affordable housing is becoming harder to find (p. 55) • There are generally more affordable ownership opportunities in the city core, though attached ownership units are affordable in many areas (p. 57) • Many households are remaining in their housing longer than the 7-year national average (p. 58) • Since 2014, home costs have drastically outpaced income growth, reducing affordability and access for potential homebuyers (p. 59) • The median home cost has more than doubled since 2010 (p. 59) • Cost per square foot has increased more in Monticello than in peer communities studied (p. 60) • The median starter home in the City is approximately affordable to households earning 80% AMI and above (p. 61) • Monticello has the current highest Sales:List price ratio among peer communities (p. 65)

City of Monticello

• There is an opportunity for missing middle townhouse redevelopment in the core city (p. 67) Housing Needs and Demand

99

Ownership Recommendations

For residents who already live in the City, there are several key issues. Moderate-income residents who previously would have been able to afford homeownership are now finding themselves being outpriced in an appreciating and competitive market. There are areas of the core city with low home values and low improvement ratios. And the average days on market is holding steady at one month, well below a healthy market.

Continue to Plat and Service New Subdivisions and Developments

Assess Requirements, Minimum Lot Sizes, and Averaged Minimums

While construction activity has been ongoing, residents and prospective residents have indicated a need for more choices within the market. In order to meet the housing construction demand outlined above, it will likely require multiple subdivisions in various stages of build-out at any given point. The City should Continue to work with developers who are bringing forward housing - at all price ranges - to serve needs of the community.

The City has the ability to review parking requirements, minimum lot sizes, and averaged minimums to further bring down new ownership costs that can help maintain Monticelloâ&#x20AC;&#x2122;s affordability. Both small-lot and large-lot units have been identified as needs. The City should actively work to ensure developers take advantage of lotaveraging that can offer a full scope of options for potential homeowners in new development. This step toward continued affordability will provide options for both existing and prospective residents.

Partner with Developers to Deliver a Mix of Housing Options While small-lot and large-lot new development is a need, so are unit-type mixes within new subdivision development. Integrating a mix of housing types (attached/detached, 4-19 unit rental, etc.) within subdivision plans allows more choices and options in the housing market - ensuring that households of all income can call new development home. This can work to encourage more natural community character, and help preserve the neighborhood and small-town feel of the community through personal connection.

There is a Market for â&#x20AC;&#x153;Luxuryâ&#x20AC;?

Housing - but the Market is Limited There are households in Monticello who can afford $450,000+ new construction homes. We have heard through this process that largelot availability and acreage are reasons those seeking higher-cost homes choose to live in the region. While there are certainly opportunities for development in this price range, sales would likely be targeted to residents from the larger region where incomes are higher and households have more choice in this competitive market sector.

Actively Promote Repair Assistance from MHFA, USDA, and WCCA Wright County Community Action (WCCA) provides assistance in homebuyer training, rehabilitation, and other housing-financing issues that can prove a stumbling block to lowerincome owners. WCCA is also prepared to assist homeowners in securing financing through the Minnesota Housing Finance Agency (MHFA) and USDA Rural Development, and can guide owners through complicated processes to improve their homes.

Keep in Mind Aging Homeowners The large share of senior persons projected through 2050 is a national trend - and households will need continued options. Whether promoting accessibility programs to retrofit homes to agein-place, developing zoning flexibility to develop Accessory Dwelling Units for caretakers, or tracking the need for continued senior-living options in the community, this demographic represents a large share of specialized housing need moving toward 2050.

Unit Demand & Recommendations

100

Rental Demand Low Estimate Within the rental market, projections are based on projected household growth, current rates of household tenure for demographics likely to be seeking rental housing, and then focused based on rates of affordability to current residents who rent within the housing market. This demand analysis indicates a slow shift from ownership to renter markets, consistent with changes in rates of tenure over the past decade. Gradual and thoughtful demand-driven outcomes will likely see more a higher percentage of rental units created in an average year than the current overall percentage of renters in the community.

The low estimate for rental housing in the next 5 years assumes fewer new units than have been created in the past 5-year period, and should be treated as a baseline for unit development, not a target that should preclude development when the baseline has been met.

New Construction Rental Housing Demand to 2025 - Low Estimate Demand from Household Growth Within the City Household Growth in Rental Demographics

329 additional households

Demographic Renter Rate

37%

Demand from New Construction

122 rental units

Demand from Existing Resident Households Current Renters in Market

1,162 households

Percent of Renters Seeking New Housing

28%

Increased Demand from Existing Renters

325 rental units

Renters with Preference for New Construction

20%

Existing Renter Demand for New Construction

65 rental units

Total Demand for New Construction Rental Units = 187 units Affordable Units

50% Mid-Level Units

40% High Market Units

10%

New Affordable Demand

93 units

New Mid-Level Demand

75 units

New High Market Demand

19 units

Additional Need for Vacancy

52 units

Additional Need for Vacancy

32 units

Additional Need for Vacancy

19 units

Total High Market Need

38 units

Total Affordable Need

145 units Total Mid-Level Need

107 units

Total Unit Need = 290 units

City of Monticello

Housing Needs and Demand

101

Rental Demand High Estimate High estimates for rental demand assume continued, strong demand within the market - and matches approximately the same number of units that have been created over the past 5-year period. This suggests continued demand for development types that have been coming forward in the City, and planning for the trend to continue will allow the City to identify sites and areas through downtown and key corridors. The City can balance market demand for more rental housing with small town character through smart siting and design regulations.

This estimate of demand may come to be met if growth pressures increase further than current projections indicate, and developments should be considered based on their own merits and demonstrated need on an annual basis.

New Construction Rental Housing Demand to 2025 - High Estimate Demand from Household Growth Within the City Household Growth in Rental Demographics

510 additional households

Demographic Renter Rate

37%

Demand from New Construction

189 rental units

Demand from Existing Resident Households Current Renters in Market

1,162 households

Percent of Renters Seeking New Housing

28%

Increased Demand from Existing Renters

325 rental units

Renters with Preference for New Construction

20%

Existing Renter Demand for New Construction

65 rental units

Total Demand for New Construction Rental Units = 254 units Affordable Units New Affordable Demand Additional Need for Vacancy Total Affordable Need

50% Mid-Level Units 127 units 54 units

New Mid-Level Demand Additional Need for Vacancy

181 units Total Mid-Level Need

40% High Market Units

10%

New High Market Demand

25 units

Additional Need for Vacancy

20 units

Total High Market Need

45 units

102 units 34 units 136 units

Total Unit Need = 362 units

Unit Demand & Recommendations

102

What do we mean by Affordable, Mid-Level, and High Market Rents?

City of Monticello

Housing Needs and Demand

103

Affordability - what a household can spend on housing cost - is relative to each individual household. Higher-income households can afford more within the market, meaning that there are more options that would be within their spending limit, whether they spend 10% or 30% of their income toward housing cost. Lower-income households have fewer choices in the market due to similar fixed-costs, but less units that generally rent at a level that would fall within a comfortable limit. In addition to having less units available, they sometimes directly compete with higher-income households who are â&#x20AC;&#x153;spending-downâ&#x20AC;? in the market, occupying housing units that are especially affordable.

The Affordable Housing rental production numbers outlined above are based on resident incomes by tenure - that is the percent of renter households who rent at each income level, before deciding to transition to the ownership market. Affordable Housing targets for these recommendations are units priced at an affordability level of 30% - 50% of the area median income for the 11-county metro. This is used to maintain consistency with common funding categories, and are adjusted to match household and bedroom size. Fifty percent of all Monticello renter households fall into this affordability range.

Number of Bedrooms Ideal Monthly Affordable Rent Housing Maximum Monthly Rent

0

1

2

3

4

5

6

$543

$582

$698

$806

$900

$993

$1,085

$905

$970

$1,163

$1,344

$1,500

$1,655

$1,809

Mid-Level housing indicates prices that would be affordable to a household earning between 50% and 80% of the median income for the 11-county metro. They are adjusted to match household/ family size, and represent consistency with MHFA and HUD guidelines. Thirty percent of all Monticello renter households are within this affordability range.

Number of Bedrooms

Mid-Level Housing

0

1

2

3

4

5

6

Ideal Monthly Rent

$905

$970

$1,163

$1,344

$1,500

$1,655

$1,809

Maximum Monthly Rent

$1,448

$1,552

$1,862

$2,151

$2,400

$2,648

$2,895

High Market Housing is the last category for recommended cost of new units - and does not have an upper maximum. While households do rent within this category, there is a transition to homeownership that is consistent with both increasing incomes and geographic location of the City.

Data and community input indicate that households tend to move to Monticello for affordability and accessibility, and the same holds true for high-income earners. There is a larger share of housing that is more affordable to these households than in the larger metro, even for households currently living in the City that could move if they choose.

Number of Bedrooms

High Market Housing

0

1

2

3

4

5

6

Ideal Monthly Rent

$1,448

$1,552

$1,862

$2,151

$2,400

$2,648

$2,895

Maximum Monthly Rent

-

-

-

-

-

-

Unit Demand & Recommendations

104

Rental Findings

General Conditions Impacting the Housing Market: • Recent increase in average household size indicates more households with young children (p. 6) • Aging households are the fastest increasing demographic since 2010 (p. 7) • Aging households will be a significant portion of households through 2050 (p. 10) • Households with children will continue to increase, driving need for larger units (p. 10) • Monticello residents have lower average incomes compared to peer communities (p. 11) • Monticello residents have lower degrees of educational attainment compared to the County (p. 12) • Common occupation groups in the City indicate a need for affordable housing, especially for entry-level positions (p. 14) • Large shares of residents (42% as of 2015) commute into metro counties daily for work.

Forty-eight percent of survey respondents indicated Twin Cities or a suburb as place of employment (p. 15) • Housing unit production has not kept pace with new households moving to the area, decreasing vacancy and increasing cost (p. 17)

What Residents Want: • Housing for young adults and early-career households • Affordable housing for those who work in the community, and higher-amenity options to move up to as income increases • Larger units for families and/or spaces to have an office • Ranges of housing types (structures/sizes) to provide a range of options

City of Monticello

Major Rental Market Findings: • There is good geographic distribution of rental units throughout the City (p. 26) • Renter households have been increasing slightly as a total percentage of City households since 2010 (p. 29) • Lower-income households are much more likely to be renters (p. 29) • Rental housing in the City is easily accessible within the region, with good access and amenities (p. 30) • Monticello has the 2nd highest rate of renter households among peer communities studied (p. 30) • Rates of cost burden is much higher for renter than owner households (p. 31) • There are significant housing gaps at both the top and bottom of the rental housing market (low- and high-cost) (p. 32) • There is a lack of units appropriately priced for low-income households already living in the City (265 units), indicating need for subsidized, income-restricted units (p. 32) • Most renters that are housing cost burdened pay more than 50% of their income toward housing costs (p. 33) • There are very few rental options in 2-4 unit structures in the City (p. 36) • New units are needed to bring the vacancy rate back to healthy and balanced levels (p. 39) • 3+ bedroom units will be needed at all price points for projected household growth (p. 40) • Fiber internet is a key rental amenity that is attractive to households throughout the region (p. 41) • Housing subsidies (both local and state/ federal) will be needed to offset increasing construction costs and ensure lower-income households can afford rental costs (p. 44)

Housing Needs and Demand

105

Rental Recommendations Households in the rental market, as well as local housing experts, have identified a need for middle-cost housing options in the City. Due to a large share of older rental housing stock, there are more affordable options than in other areas of the Metro. However, incomes of many local residents are also below highmarket housing cost. Employers are seeing that their growth and employment base needs a middleground in the rental market that offers both amenities and reduced unit pricing.

Take Advantage of Opportunities for Tax Credit & Subsidized Development

Encourage Rehabilitation, Redevelopment, and Reinvestment

Though referred to as “affordable housing”, tax credit developments offer new construction at rents that fit within the limits and demand of the community. Local employers are reporting that their workers need a middle-option, often fitting inside income categories for these units. These developments that offer opportunity to increase density in key areas, and can also be utilized for mixed-use developments that provide amenities in central, walkable areas. The City can also directly encourage more affordable rental costs through programs such as Tax Increment Financing.

Maintaining housing affordability across a range of incomes is vital for community health - and is one of the reasons that some households choose to live in Monticello in the first place. However, aging housing stock requires upkeep in order to maintain desirability. Many rehabilitation programs offer deferred-loan assistance to landlords of small properties (such as MHFA’s Rural Rehabilitation Deferred Loan program). These incentivized loans often come with income restrictions. Though not an immediate solution, increased investment in new unit development in key areas (e.g. downtown), and new unit development in general can work to relax vacancy in the market, allowing households to select units that meet their balance of affordability & amenity - and structures with rehab needs will require maintenance investment to maintain market share.

There is a Market for “Luxury” Housing - but the Market is Limited Though there are at least 285 renter households in the City that could afford luxury-unit rents, both data and interviews indicate that the reason these households move to the City is to save on housing cost, as opposed to living in other more central areas with more amenity options. This is especially true for commuter households. While there is potential for an increase in high-market rental housing, the market over the next 5 years is likely capped at one development.

Continue to Focus on Universal Design in Central Areas As households continue to age, and many wanting to age in the community, providing a range of options that have accessibility features and follow universal design will promote healthy neighborhoods. This is needed throughout the City, as well as in key walkable central areas that increase access to amenities. Many homeowners who downsize, as well as those with differing levels of ability, live in private market units and prefer walkable areas with access to amenities.

Maintain a Mix of Bedroom Sizes in New Development Household size is expected to grow in coming years, both in ownership and rental markets.

Important to this growth is ensuring households have access to a variety of both new and older stock options that meet their need for family size and perhaps for home offices as telecommuting becomes more common. In practice, this means incorporating 3-bedroom units as a significant portion of the rental market, whether in townhome, detached, or multi-unit construction.

Encouraging larger unit construction balanced with small unit construction ensures needs of all household types are served through new units.

Encourage Missing Middle Housing Structures with 2-19 units fill a gap that exists in the market, providing more options for residents, and reduced construction costs for development compared to single-unit detached structures.

Unit design fits well among both existing and new structures, and will fill in missing unit types.

Unit Demand & Recommendations

106

Aging Households

Senior households live in homes in both the rental and ownership markets, but as they continue to age, many need more specialized care or prefer alternate options. Nationally, HUD reports that 93% of medicare-enrollees age 65 and older are already aging in place. This vast majority of the market is remaining in their current housing - staying in non-age restricted housing until life events necessitate a move. Once households do move, many rental options offer combinations of active living, independent living, assisted living, and memory care within the same campus. Within the market, there are several options to help older households find options that work for them: Ensuring a Variety of Options in the Private Market Easing access to Accessory Dwelling Unit construction, whether internal or external to the existing primary residence, helps aging households remain in their home. Some older households design the unit with accessibility standards in mind and look to downsize into it themselves, while other households plan on it as a space for family or a caretaker who can assist them with daily tasks.

Ensuring there is access to or developing non-age restricted smaller apartments in more central locations is another method of ensuring older household options in the market. This allows households to live in new construction that has a mix of access and privacy, while still having friends and other households close by. One more option is small lot size development, either in central areas or cottage court communities. These allow both rental and ownership options as households continue to age - as long as the housing is built with aging and universal design in mind (such as patio homes).

Active Adult Housing Active Adult Communities are specially-designed developments with accommodations for aging households in mind. They provide upkeep-free housing, easing maintenance burden.

They also often provide a sense of community for others who prefer neighbors their own age, as opposed to smaller and accessible unit options in market rentals. And, they can offer a variety of tenure choices, with many allowing residents to own or lease their housing.

Independent Living Independent Living is designed for households who can - and want to - accomplish the majority of daily tasks on their own, but need assistance from time to time. These facilities often are inclusive of food and medical care, as well as other potential on-site amenities such as cleaning, laundry, and general housekeeping. These housing units are operated most similarly to a rental unit - and as amenities go above and beyond typical housing cost, are not subject to the typical 30% affordability standard.

Assisted Living Assisted Living is designed to make it easy for residents who need assistance with everyday activities in accomplishing tasks that they would not be able to do in their own homes. This is often provided through scheduled, regular support that runs a spectrum from cooking and cleaning to in-unit medical visits, transportation, and medication management.

City of Monticello

Housing Needs and Demand

107

Senior Unit Type Demand Active Adult Housing Demand for market rate, active living senior housing comes from those household that prefer this type of unit and can afford it, either because they have sufficient current income or because they have sufficient savings, most often in the form of home sale equity. All households in this demand category, both current and projected, have at least one household member above the age of 55. Many active adult housing communities are age-restricted and become available once a household member reaches the limit (typically 55), while other are not restricted - solely marketing themselves as active adult communities to ensure inclusivity.

It is important to note that indicated demand for this market type does not include units that already exist within the market, and should be adjusted accordingly.

Market Rate Active Adult Demand 2020

2025

Number of Households with Qualifying Incomes

437

641

Potentially Qualifying Households with Home Sale Equity

110

112

Base Demand

547

753

Unit Type Preference

6.5%

6.5%

Existing City Resident Demand

36

49

New City Resident Demand

24

34

Total unit demand

60 units

83 units

Subsidized Independent Living Subsidized independent living refers to income-restricted independent living developments.

This offers opportunity for income-limited and fixed-income households to have access to those services they require as they continue to age. Demand is calculated by measure of fixed- and income-restricted households without the potential for home sale equity. This is then adjusted to the average percentage of households who prefer or need to live in this style housing in 55+ age categories.

It is important to note that indicated demand for this market type does not include units that already exist within the market, and should be adjusted accordingly.

Subsidized Independent Living Demand 2020

2025

Number of Households with Qualifying Incomes

493

548

Base Demand

493

548

Unit Type Preference

12.5%

12.5%

Existing City Resident Demand

62

69

New City Resident Demand

30

34

Total unit demand

92 units

103 units

Unit Demand & Recommendations

108

Senior Unit Type Demand Market Rate Independent Living Market Rate independent living refers to non-income restricted independent living developments.

This offers opportunity for higher-income senior households and those with potential home sale equity to have access to required services as they continue to age.

It is important to note that indicated demand for this market type does not include units that already exist within the market, and should be adjusted accordingly.

Market Rate Independent Living Demand 2020

2025

Number of Households with Qualifying Incomes

219

246

Potentially Qualifying Households with Home Sale Equity Base Demand

74 293

84 330

Unit Type Preference

10%

10%

Existing City Resident Demand

29

33

New City Resident Demand

18

22

Total unit demand

47 units

55 units

Market Rate Assisted Living Market Rate assisted living refers to assisted living development for households with a higherincome or access to potential home sale equity. Demand is calculated by measure of incomequalified households, as well as potentially qualifying household with access to home sale equity.

This is then adjusted based on the local number of single-person senior households in Monticello, and filtered by the estimated percent of households who can continue in-home care as opposed to assisted living.

It is important to note that indicated demand for this market type does not include units that already exist within the market, and should be adjusted accordingly.

Market Rate Assisted Living Demand 2020

2025

Persons in Need with Potential Home Sale Equity

368

480

Percent of Households with Qualifying Incomes

41%

41%

Number of Income Qualified Households

221

221

Base Demand

370

416

Demand from Current Single Person Households

167

187

Demand from Current Two Person Households Unit Type Preference/Need

204 40%

229 40%

Existing City Resident Demand

148

166

New City Resident Demand

60

76

Total unit demand

City of Monticello

208 units

242 units

Housing Needs and Demand