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HomeMy WebLinkAbout12142022 PACAB Work Session PacketPort& Commerce Advisory Board (PA CA B) Work Session Packet Topics: 1) Discuss Housing in Seward 2) Discuss 2023 PACAB Schedule Wednesday, December 14, 2022 City Council Chambers All public is invited to attend. Beginning at 12: 00 p.m. 220202 PACAB LAYDOWN Housing Issues Affecting Employment in Seward Presented By: Nicole Lawrence of Seward Properties Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties General Info on Rentals - Most people moving to Seward prefer to rent before buying - To learn the area and the job - Sometimes they have a house elsewhere that they need to sell first - People looking for jobs plan ahead - Details about which rental will be opening is often not known until the month before - This makes planning difficult and then potential employees cannot commit - Once people find a good rental they often stay in that unit for a long time - Not much turnover with leases on properties with good rental rates, utilities, and location - Results in a low vacancy rate and little openings for long -terms rentals - A major barrier for renters in Seward is that they have multiple pets - Landlords prefer to rent to people without pets - Sometimes paying a larger deposit will help - Educating landlords that it comes down to resnonsible net ownershin/references on nets Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties Length of Rentals in Seward Summer 2.7% Winter Only 13.3% *based off Seward Properties' managed rentals Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties Rental Availability 113 Total units under management *based off Seward Properties' managed rentals Leases renewed Leases ended Rentals are challenging due to availability more than prices Seward Rental Prices • Rental prices have stayed very close to the same as when we started managing properties 11 years ago. • Utilities account for some of the major cost when renting a house and should always be researched before signing a lease. *based off Seward Properties' rentals only Apartments (generally include utilities - very different layouts, size and amenities) 70% of our rentals are apartments or shared walls Size Monthly Rental Rate % of Rentals (SProp) 1 bed $900 23% 2 bed $1,150 14% 3 bed $1,300 30% 4 bed $1,700 1 % Houses (utilities are generally additional and avg extra $150-$500/month depending on size - very different layouts, size and amenities) 30% of our rentals are houses Size Monthly Rental Rate % of Rentals (SProp) 1 bed $1,100 10% 2 bed $1,250 14% 3 bed $1,500 6% 4 bed $1,700 1 % 5 bed $1,800 1 % Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties What Can A Renter Afford? - It is recommended to spend 30% of your monthly income on rent - For a 2 bed apt at $1150/month including utilities that would mean you would need to be making —$3,800/month or $46,000/year - For a 3 bed house at $1500/month plus $350/month in utilities that would mean you would need to be making—$6,200/month or $74,000/year - With home prices increasing, mortgages are increasing, and rents will too - Property owners want to cover their mortgages when they are renting out homes - Sales price increase = delayed rental rate increase - Three years from now average long term rental rates might go up 20% - A home renting for $1250/month in 2021 may be renting for $1450/month in 2024 - Tenants in the future possibly paying over 30% of monthly income unless wages rise to meet housing cost needs - Makes it harder for tenants to purchase Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties What Can A Buyer Afford? - It is recommended to spend 30% of your monthly income on housing - For a house costing $305,000, with 5% down and 3.5% interest on a 30 year loan... $105 $184 1' utiF , a a L"" ,., $173U;i;;� 1 000/ymr $350ililvilit�$2 x �+ �,✓ t t t t yo,r t t t 1,295 D 8[j 11 - Interest rates affect what a buyer can afford - This only work if interest rates stay low. When they go up, so do mortgages, which then increases the amount of annual income a buyer needs to afford that monthly payment. Seward Residential Average & Median Sales Prices Average Sales Price E Median Sales Price $400, 000 $300, 000 $200,000 $100, 000 $0 $306,000 $243,000$240OOG$252,000$268,OOC$267,000 , $193,000 212,000$215,000 $180,DDD 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 • The residential median sales price in Seward in 2021 was $306,000. This is the first year in history that it has broken $300,000. Prsented to 22 Residential Sales Prices in Seward Nicole Lawrenceoof Seward PBroperties `` 1 u)Nn: 49 $1 G I K-SS2O (jK 45.7% S2 1 K,-SO3(,:)"; ;; # $301 K-$400K 0 $401 K+ • 52% of homes are now selling for over $300K as compared to 35% 2 years ago • From 2009 - 2019, only 17 houses had sold for over $400K • From 2019-2021, 25 houses sold for over $400K in the past 2 years Seward Residential Rate of Appreciation 30.00% a� 20.00% o-10.00% Q \h ti0^10 101 ti0\11b , Yearly Comparison 24.50% n0 O '� `LO�OTO OrL �00ri- �L • Avg increase in value was 5% per year from 2012 - 2020 but jumped up 24.5% last year = not sustainable • Rate of appreciation is not sustainable but with limited land/homes and more demand than supply, likely rate of appreciation will go back down to 5% as an average. It is unlikely that homes will go down in value (with current average annual home inventory vs. demand) Seward "Sold" and "Days on Market" Residential Statistics Days on Market Number Sold 200 184 1+7,9 150 ��154 `128 100 9.8 4 50 /4:4— 4a1 3►7'___——4852 ----_37_-4546 24 0- 2012 2014 2016 2018 2020 • The total number of homes sold (in red) has stayed pretty steady since 2013. Without additional inventory (new construction), this number will likely remain the same. • The days on market has been decreasing drastically for the past decade. The average home is on the market 44 days but that is accounting for fixer uppers and homes over $600K which might be on the market for a year or more. Homes from $200K-$500K were on the market in Seward in 2021 for an average of 5 days! Presented 2/2/2022 to PACAB Types of Buyers 2019 - 2022 Nicole Lawrence of Seward Properties Second Home/Investment • 75% of the buyers in Seward are people Currently Living in Seward 49 Moved to Seward 17.6% 25.7% living here and using the home as their ♦ primary residence. 56.8% \ Non Primary Residence Purchasers • Many 2nd home buyers purchase non- Local Seward financeable properties and fix them up. s1.s°ro • Out of state buyers tend to respect City 42.1% zoning rules. • Of the properties sold over the past 2 years, only 3 have been identified as being purchased with the primary intent of changing the use from primary residence to nightly rentals. out of state --NMI AK 2nd Home 4Y.1 i 2016 I 1 Demographics of Buyers ■ - _ x 35-50 t 50 and uldrr Buyers under 35 have increased 113% in 5 years. Buyers 35-50 have remained steady. Buyers 50 and over have decreased by 50%. * many are investments Information Based off Seward Properties' Data from 2016, 2019 and 2020 Demographics of US Population/Potential Buyers Total US Population by Generation in 2020 Share of total populotion Greatest Gen (92-100 years in 2020): 1% Silent Gen (74-91 years in 2020): 7% f Gen-Z (0-20 years in 2020): 26% Baby Boomers (55-73 years in 2020): 21% Gen-X (39-54 years in 2020): 20% / \ MiLLenials (21-38 years in 2020): 25% Presented 2/2/2022 to PACAB Market Trends with Land in Seward Nicole Lawrence of Seward Properties Outside City Limits 2018 - $50,000/acre 2021 - $100,000/acre Land is becoming more scarce resulting in extremely high sales prices Building costs are also high - high costs result in more pressure on limited existing inventory resulting in more offers and higher residential sales prices These numbers are averages and depend on manyvariables including location, elevation, ease of utility installs, flood zone, etc. Possible Solutions? Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties More Houses/Land & Builders - Support making City land available for developing - Support expanding utilities to make building more affordable - More available housing means less competition for current inventory which would slow the rate of growth of home and land prices - Getting developers who can add consistent & quality housing to the market at a rate to keep up with demand - We have lots that people want to build on but our builders are at capacity and often 6 months to a year out City Enforcement - Consider a cap on the total amount of local nightly rentals to allow for more long-term rentals as many other Cities are doing - Don't allow nightly rentals in areas not zoned for it - Incentivize/Enforcing building to happen sooner on lots inside City limits - especially ones sold by the City More Multi-Plexes - Not low income but quality multi-plexes with different sized apartments - Downtown & walkability are important considerations for tenants' needs/wants - Focus on long-term rental opportunities for year-round employees - If built new, bunkhouses don't usually pencil out even with winter tenants Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties PI&W"d' Arolvert of SALES -RENTALS •MANAGEMENT Questions? Presented By: Nicole Lawrence SEWARD HOUSING NEEDS SURVEY PERFORMED AND PRESENTED BY THE SEWARD CHAMBER OF COMMERCE CHAMBER GOAL: Identify needs & impact Seward is rife with anecdotes about the housing crisis. It was our goal to collect data that identifies if housing is a barrier to business in Seward, and if so what is the community's need for housing. saw CHAMBER KEEP IN MIND... ADVERTISED & INCENTIVIZED 153 SURVEY RESPONSES SELF ASSESSMENT saw CHAMBER INSIDE & OUTSIDE OF CITY LIMITS Yes ARE YOU PERSONALLY STRUGGLING TO No FIND HOUSING IN THE SEWARD AREA? Write the author, source, or your thoughts about the statement N/A spa CHAMBER 0% 20% 40% 60% Yes DOES YOUR BUSINESS STRUGGLE TO HIRE No EMPLOYEES BECAUSE OF THE LACK OF HOUSING? N/A saw CHAMBER 20 40 60 Rent IF AVAILABLE, WOULD YOU PREFER TO RENT OR BUY? Buy N/A saw CHAMBER 10 20 30 40 50 ANNUAL RENTAL A year-round rental property in the Seward area that isn't subject to May move -out dates spa CHAMBER 1,2 BEDROOM PRIVATE HOME APARTMENT OR DUPLEX HOUSING NEEDS Chosen through a ranked choice, so multiple options were available to survey participants SEASONAL RENTALS May through Sept. 3+ BEDROOM PRIVATE HOME LAND -13% BUNKHOUSE-8% I'D TAKE ANYTHING! - 8% MOBILE HOME - 8% LOW INCOME HOUSING - 8% FINANCIAL IMPACT If your business is impacted financially by a lack of housing in Seward, please estimate the annual amount of lost revenue. *Self assessed number saw CHAMBER TOTAL: $4,619,750 Local business owners estimated their lost revenue due to a lack of housing at over $4.5 million. REASONING: "I cannot expand my business without additional staff housing, so I would estimate in the $300,000." "Where I do not have employees, I am dependent on businesses being open so their access to employees has an impact. Fewer days open means less sales for me." "We have to close one or two days a week." "It's more about burning out current employees so that there is high turnover year over year." We provide them housing so ... I would estimate $12,000 a year in expenses for housing our employees THANK YOU! KAT SORENSEN EXECUTIVE DIRECTOR SEWARD CHAMBER OF COMMERCE DIRECTOR@a SEWARD.COM 907. 224. 8051 CHAMBER PACAB Presenter Jan 19 (WS) Tara Reimer, ASLC Feb 2 (Mtg) Nicole Lawrence, Seward Properties Feb 16 (WS) Cathy LeCompte, AVTEC March 2 (Mtg) Jena Peterson, Seward Real Estate, CAP Construction March 2 (Mtg) Dr. Henry Burns, Seward High School Summary of Tara Reimer's Presentation The Alaska Sealife Center has considered building employee housing, but would rather rent units than maintain their own housing. Seasonal housing is a separate issue altogether and Tara is focusing on mainly year-round housing. Many of the Sealife Center positions are specialized and require at least a bachelor's degree. There have been multiple people turn down higher level jobs such as IT department and Aquarium positions due to inability to find a place to rent/buy. The people who come to work at the Sealife Center tend to be recently married no kids or singles of all ages who are a bit more adventurous when it comes to housing situations. Summary of Nicole Lawrence's Presentation Nicole works for Seward Properties. She would like to emphasize that she is a data driven person, and does not like to make predictions or speculations. In the past two years she has seen the price of houses break new records. There have been 25 houses sold over the $400,000 mark. This is the first year in Seward history that the median sales price has broken $300,000 mark. To afford a house at the median price would require a yearly household income of about $84,000. However, despite this sharp increase, the price of rentals has stayed roughly the same over the past 11 years. Of those rentals, there is a 70% renewal rate each year, which does not leave many new rental opportunities. Most people moving to Seward like to rent first prior to buying a house. Outside City Limits the land sales average jumped from $50,000/ acre to $100,000 /acre between 2018 to 2021. There is a lot less land available resulting in higher prices. When building costs are high and land cost are high, people are more likely to make offers on pre-existing homes. Nicole supports the idea of expanding City utilities to make building more affordable and making City land available for responsible development. Other cities are putting caps on limit of nightly rentals to allow for more long-term rentals. She would like to see more zoning enforcement to make sure nightly rentals are not operating illegally. Nicole would like to see builders create high quality multiplexes for those who are coming here to work at the Sealife Center/Hospital/Schools. Summary of Cathy LeCompt's Presentation Cathy is the director of AVTEC and currently has 68 employees in Seward. Half of that number are instructors. Their dorm apartments meet their housing needs for all AVTEC students. They are also are grandfathered into an agreement with the Sealife Center seasonal staff to live there during the summers. AVTEC apartments are roughly 50% full, but they do not have any plans to make the other 50% available to the general public as AVTEC is not in the rental business. AVTEC recruits state wide for specialists to move here to become instructors. Lack of child care is currently a factor for families moving here. Summary of Jena Peterson's Presentation Jena works in the real estate business and owns two 12-unit complexes in town. The housing crisis is nothing new to Seward as we have been dealing with this for decades. There is no overnight solution or quick fix. Jena feels that it is not the City's responsibility to fix the problem either. However, there are certain areas the City can make some changes or work to streamline some processes for building. This includes bringing utilities to properties so there's not additional costs when buying vacant land. The current cost of building a single-family house is $450,000 not even including the land. Also, a construction loan requires 25% down. This high cost and upfront payments are a huge deterrent to most people looking to build. Even if you did have the money to make this happen, the current builders in town are booked 6- months to a year out. Therefore, the market is looking more towards houses that are already built and for sale. Unfortunately, there are only 3 homes for sale in Seward right now in a very competitive market. The demand outweighs the supply. In regards to starting a new subdivision, it would be more attainable to find a way to get 10 homes built and then turn around and sell them because it's more feasible to get a loan this way then a construction loan. Summary of Dr. Henry Burns' Presentation Dr. Henry Burns moved here in July to take the job as High School Principal. He spent the first month living in an RV and is now facing the end of his rental lease which is booting him out to make way for summer nightly lodging. Although Dr. Burns makes $100,000 a year he cannot seem to afford any of the houses for sale in Seward. He has put offers on 5 houses and not even come close to getting one. Most recently he put $100,000 over the asking price on the table and still no luck. Burns has taken note that the 5 houses are currently sitting empty as they will be used for summer rentals. Despite all this, he does not hold a grudge against them because they are just trying to make money like everybody else. Most teachers here make in the range of $55-70k a year salary. Burns has had 6 teachers this year decline employment here due to housing issues. Other teachers who do live here in the winter are ousted in the summer and then return in the fall. Dr. Burns is in talks with the superintendent about possible solutions. There is vacant land where the old Middle School used to be that could potentially be a site for housing. Currently they are discussing with AVTEC about the possibility of teachers renting their student dorm apartments. Seward is not alone in this housing crisis, in fact Homer is facing near identical situation. Compiled by Kris Peck Deputy City Clerk March 2022 Bruce Jaffa PACAB Board Member PACAB Chair and All, PO Box 107 Moose Pass, Alaska 99631 907-288-3175 Bruce@JaffaConstruction.com Sorry to miss this meeting but I will offer these comment for information. 1. 1 have reviewed and appreciate the SMIC Development Plan. I do not have any serious addition or comments and feel the redline language is adequate and should be incorporated. 2. Regarding adding correspondence to the agenda package I am surprised this is an issue. If a letter is sent to the clerk for distribution, I have generally seen it sent around to all. The chair should be the principal recipient, at a minimum, and make presentations to Board of the resolution given to all correspondence. I am not sure what correspondence this letter refers to but I do agree the Board should be aware of all correspondence directed to the PACAB. B. The record should reflect that I was not confused by the lack of presenters or forward progress. Unfortunately, and likely without fault the ambitious schedule of gathering information was lost during the transition of PACAB Chairs. A list of contacts and potential presenters was turned over to the new Chair. The concept to have presenters in rapid succession was to advance a summary as soon as late March or April. The invitation to presenters has stalled, therefore the goal of a response to the administration could never fully completed as originally conceived. 4. In regard to housing, I had an informative tel-com meeting with Andre Spenelli with Speni Ili Homes. He is very familiar with Seward housing issues with local experience. Unlike the Anchorage or Girdwood markets, he sees Homer and Seward as having very similar issues regarding a lack of housing, although Seward had some benefit due zoning Homer does not. The solution that he expressed would be a developers method and included finding available land, affordable development costs including utilities, favorable local rules, a partnering of development ideas to allow the developer to have certain discretion and responsibility for development plans. Developed plans offered by an owner or city to the builder come with costs to the overall project and may increase rather than decrease the ultimate cost of housing. Often engineering firms hired to develop plans go to builders for advice that might otherwise have been available at lower costs. Mr. Spenelli felt that the difference in cost of single family, multifamily, townhomes or apartments was a small percentage of sale price. Further selection of housing type is a strategy regarding what will sell profitably. He stated developers worked at relatively small margins and the greater involvement (start to finish) the more Page 1 of 2 attractive a project would be to a developer. labor availability is clearly a problem to every builder. Some larger firms had some advantage in that regard. 5. last week in Anchorage, I had the opportunity to discuss housing with HUD and Ak Affordable housing at the Infrastructure Symposium. It may be noted that affordable housing complexes are in greater supply in Seward than other similar communities. Although single family homes remain a strong market there are an equal number of buyers looking for middle cost high density single family homes and apartments. Agencies are willing to support either as a developer determines the need. 6. To my understanding, the Heat loop ad hoc advocacy group selection can be by action from the Chair. I hope a community cross section group of volunteer's steps forward. I have offered to serve and will be willing to work with any group the Chair selects. I believe this group will and should continue activity during any PACAB hiatus. Respectfully, Bruce Jaffa PACAB Board Member Page 2 of 2 PACAB Meeting Date Meeting Topic REGULAR 1/4/2023 Harbor Tariff SPECIAL 1/18/2023 REGULAR 2/1/2023 Chamber Marketing SPECIAL 2/15/2023 REGULAR 3/1/2023 SMIC Development Plan SPECIAL 3/15/203 REGULAR 4/5/2023 Utility Infrastructure SPECIAL 4/18/2023 REGULAR 5/3/2023 Legislative Priorities SPECIAL 5/17/2023 REGULAR 9/6/2023 Vessel and Property Tax and AML Attendance SPECIAL 9/20/2023 REGULAR 10/4/2023 Harbor Plan REGULAR 10/18/2023 REGULAR 11/1/2023 Capital Improvement Plan SPECIAL 11/15/2023 REGULAR 12/6/2023 IFisheries Issues SPECIAL 12/20/2023