Prepared by Rylee Bonk, Yue Guan, Jennifer Spiegelberg

Students in HSG 4461: Housing Development and Management

College of Design | University of Minnesota Instructors: Lyn Bruin and Becky Yust

On behalf of The City of Rosemount

With support from

The Resilient Communities Project

May 6, 2015

This project was supported by the Resilient Communities Project (RCP), a program at the University of Minnesota that convenes the wide-­‐ranging expertise of U of M faculty and students to address strategic local projects that advance community resilience and sustainability. RCP is a program of the Center for Urban and Regional Affairs (CURA).

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Table of Contents

Executive Summary …………………………………………………………….… 2

Identification of Target Market …………………………………………………… 3

Project Description………………………………………………………….…….. 7

Financial Plan………………………………………………………………….….. 12

Entitlement Plan…………………………………………………………………... 14

Marketing Plan ………………………………………………………...…………. 15

References………………………………………………………………………… 18

Appendix………………………………………………………………………...… 19

1

Executive Summary

Enjoy affordable living in Rosemount, Minnesota at Callan Circle. Located at the

southeast corner of Akron Ave. and Connemara Trail, Callan Circle is conveniently set

just 1 mile north of Dakota County Technical College and offers easy access to the

major south metro thoroughfares of S Robert Trail, County Road 42, and Highway 52.

Unique apartment designs and numerous amenities provide all the comforts of

modern living, while beautifully landscaped grounds, a neighborhood park, and walking

trails make the most of the site's natural setting. Professionally managed with caring,

experienced, and attentive staff, Callan Circle will be a place to call home for residents

in various stages in the circle of life in Rosemount.

Callan Circle is a 3­story building with 80 apartment homes and offers Studio, 1

Bedroom, 2 Bedroom, and 3 Bedroom options. The building will feature residential

design elements of gabled roofs, a brick and stone exterior, and architecturally detailed

finishes to provide an appealing and well­suited addition to the neighborhood.

2

IDENTIFICATION OF TARGET MARKET

Both the city of Rosemount and Dakota County Technical College (DCTC) are in

dire need of rental housing units. It is necessary that DCTC have student­housing units

because, according to a Student Focus Group conducted with a group of current DCTC

students, the majority of students are commuting; sometimes long distances, in order to

get to the college. Potential students may be put off by the lack of affordable rental

housing for them to move into if they were to enroll in DCTC. For potential students that

live too great a distance to realistically commute to and from DCTC every day, it would

make sense to move near the college, but that is difficult to do with the minimal rental

options currently available in Rosemount. Technical school students, who are usually

enrolled in college for a shorter term than someone seeking a bachelor’s degree, are

not interested in extended­term leases or expensive rental housing payments. If

Rosemount lacks affordable rental opportunities that appeal to students in this position,

DCTC may see a decrease in student enrollment. This, in turn, would lower the number

of college­educated individuals that may find employment opportunities in Rosemount

post­graduation and want to stay, hopefully enriching the community. This development

3

would also aim to supply affordable rental housing to DCTC employees who find

themselves in the same commuter situation as students.

The general population of Rosemount is also in need of rental housing and the

need for affordable housing is a serious issue in greater Dakota County as well. In

2013, the Dakota County Community Development Agency (DCCDA) studied its

projected housing needs through the year 2030 and found the demand for affordable

housing would continue to significantly increase. Apartment rental units were cited

specifically as high demand since low vacancy rates and escalating rents have made

affordable rental units in short supply. The study was published in the DCCDA's July

2014 newsletter and included the following figures:

Dakota County Additional General Occupancy Rental Housing Demand Summary: 2010­2030

Affordable 3,793

Market Rate 4,708

Total 8,501

Source: http://www.dakotacda.org/CDA_publications.htm

Callan Circle would help to serve the city’s and the county's need for both market rate

and affordable rental units by contributing to the supply of affordable housing options in

Rosemount.

4

Callan Circle is a development that welcomes people in all stages of their lives.

The overriding goal of this development is to make living here as affordable as possible

for multiple backgrounds of people. Groups that this development is targeting include

DCTC students, young professionals, and families. Although this development is largely

being constructed with DCTC students in mind, the development must also be

comfortable, appealing and accommodating for non­students.

Although Callan Circle welcomes people across varying stages of the life cycle,

many of the basic necessities that this development will offer are sure to be enjoyed by

all. It is important that the development be in a safe neighborhood that residents are

proud to call their own. It is also important that the location of the development be in

close proximity to commercial amenities such as grocery stores, recreational areas, etc.

According to a DCTC student focus group, many students chose their residence based

on how close it was to a commercial center in order for them to easily walk to their

places of employment. Many of the students do not have access to their own vehicles

and therefore must strategically plan their lives around a short distance commute

between work and home or have to rely on roommates or friends for their vehicle. That

being the case, it would be extremely helpful for DCTC students in this situation to have

the opportunity to live in a development that is a very short distance from both their

5

college as well as a wealth of employment opportunities found in a commercial district

nearby. Although other populations living in the building may have constant access to

their own vehicle, everyone still enjoys a short commute in which to run errands.

Whether it is a full­time student or a single parent, everyone loves convenience in order

to make their daily lives that much easier.

Market research of existing conditions found in Rosemount’s supply of apartment

rentals was conducted via an online apartment search. Data was collected from a

number of properties in close proximity to the DCTC campus. The range of unit types,

unit sizes, and rent amounts offered by these properties were analyzed to understand

the local standards specific to this part of town and to help determine how the design of

the new Callan Circle development could meet, or exceed, these standards. Table 1

and Table 2 illustrate the data collected and are provided in the Appendix.

The DCTC student focus group provided two very interesting details about

student housing needs and preferences. First, the major factor in any decision about

housing is affordability and most agreed that a $650 per month expense for housing

was the amount they were able, or desired, to pay. Second, most students were willing

to share an apartment with roommates in an effort achieve affordability, but also and

perhaps more significantly, in an effort to achieve social connectivity. Sharing a

6

bedroom is an accepted practice at this young age and can help create a sense of

camaraderie that may be difficult to find on a campus filled with commuters. Students

are in a unique position to leverage this willingness to share an apartment with

roommates who will share the expenses against the ever­rising cost of rental housing.

The challenge is to find large, moderately priced units in a location near campus to

achieve real affordability. The unit mix, sizes, and rents set at Callan Circle hope to

meet this challenge.

PROJECT DESCRIPTION

As one of its goals established in its Comprehensive Plan, the city of Rosemount

desires to provide appropriate housing for its residents through all stages of life. The

Callan Circle housing development will target individuals in the early adulthood stage of

life who are generally aged 20­35. A special focus towards serving the needs of

students and young professionals aged 24­26 will be the primary goal of the housing

development. Individuals who are single or who are sharing an apartment with a

roommate(s) are expected be the dominant type of resident, yet accommodations for

couples, small families, and older adults will also be provided.

The Callan Circle housing development also aims to bring an affordable housing

option to the city of Rosemount. The housing development will target individuals of low­

to moderate­ income who are renters by circumstance have limited funds available for

housing expenses.

7

The Callan Circle housing development will be a medium sized 3­story building

offering studio, one bedroom, two bedroom, and three bedroom options and will offer

apartment homes for rent with varying short­term and long­term lease options. A

12­month lease period will be the property's standard, yet flexible lease terms suited to

the needs of DCTC students will be available at a premium in month­to­month, 3­, 6­ ,

and 9­month lease periods. Although a “head rent” practice is common in most student

housing developments, Callan Circle will maintain a standard per unit lease agreement

with all adult individuals named on a single lease. These rent policies are designed to

provide maximum control over the resident selection process, to ensure quality

residents who are familiar and comfortable living with one another, and to minimize the

disturbances to the larger apartment community that can come from high turnover rates

of students.

NAME

The town of Rosemount was named in 1855 by Irish settlers. Feeling strongly

about maintaining a connection to their native heritage, these first residents named their

new town after one from their homeland. Respect for the Irish tradition continues today

as the city and its residents identify Rosemount with an Irish heritage. Street names like

Ailesbury Court, neighborhood names like Falmoor Glen, and city events like

Leprechaun Days have set a precedent for the sense of place in this community. The

proposed development aims to fit into this community and to promote the city’s

8

connection to its Irish roots. The name Callan was chosen in the same manner as the

town's founding members as it is also the name of a small town in Ireland.

Also, one of the main goals for the proposed development is to provide life­cycle

housing for Rosemount residents throughout all phases of life. The name and imagery

of the circle were chosen to support the idea that one could be born in Rosemount,

grow, live, work, study, and play throughout the entire cycle of their life while remaining

in their hometown.

IMAGE

The image of the proposed building is of a 3­story building featuring residential

design elements like gabled rooflines, exterior materials of brick, stone, and lap siding,

double­hung windows, covered porches, and finishing details.

The housing development will also try to maintain the “hometown” feel that is

unique to living in Rosemount by modeling the apartment building after traditional single

family homes found in the surrounding neighborhoods. The size, scale and massing of

the structure should be an appropriate match for the existing housing styles found on

adjacent properties and make use of durable, residentially appropriate materials. The

proposed building image is included in the Appendix.

AMENITIES

Technology is an important factor in the life many of today's young people.

Amenities like reliable high­speed Internet, WI­FI access, docking/charging stations,

9

and good cell phone coverage are in high demand. Time­saving amenities like in­unit

laundry, efficient kitchen layouts, and “media savvy” management are also in demand.

Spaces to socialize outside the individual apartments are increasingly of interest so

Callan Circle will offer a Community Room, a Business Center, and an outdoor patio. An

online rent payment system, flexible leasing terms, an on­site resident manager, and

24­hour emergency maintenance are combined with durable construction, interior

wainscoting, secure building access, elevator service, bicycle storage, and a mix of

underground and surface parking to provide convenient and practical living solutions. A

neighborhood mini­park, a walking path, and an apartment bus service to nearby

regional service areas are some desirable amenities found only at Callan Circle.

Energy conservation is an important issue to the city and to its residents. While

Energy Star rated appliances, energy efficient lighting, and high performance HVAC

systems are planned to help reduce the property's overall energy consumption, the

special feature of a rooftop solar photovoltaic system is planned to help promote the

implementation of renewable energy solutions. The solar facility will provide research

data to Xcel Energy about multifamily residential energy use and generate energy to be

consumed on­site.

Bicycle and pedestrian access from the housing development to the future

commercial district planned for the northeast corner of Akron Ave. / County Road 42

and to DCTC across County Road 42 is also a desirable feature that would greatly

enhance the proposed development's connectivity to services, employment options, and

10

academic pursuits. This access should coordinate with the city's work on the Vermillion

Highlands Master Plan.

Plans for the future commercial district may consider attracting some service

providers who meet the specific needs of students who are typically short on time and

low on money. Some possible services could include a daycare offering extended hours

and flexible drop­off periods and a fresh market that incorporates a pharmacy, a

minute­clinic, a dry cleaner, and a small postal outlet. A variety of dining and convenient

food options, businesses that offer part­time job opportunities, and a Goodwill style thrift

shop where household items can be economically acquired should also be considered.

NEIGHBORHOOD AND HOUSING STYLE / TYPE

The property located north of DCTC at the southeast corner of 135th St. E. and

Akron Ave. is being considered. This location is attractive because it is currently zoned

R3 Medium Density Residential and R4 High Density Residential. An adjacent property

to the south is currently zoned C4 General Commercial. The Dakota County Community

Development Agency (DCCDA) currently owns an adjacent parcel of land on which they

plan to develop townhome style housing to the north and the potential exists for another

townhome development from Lennar to occur to the east. Single family homes built

throughout the 1990's and relatively new subdivisions of new construction homes exist

to the west and north. Traditionally styled 1­story and 2­story homes make up the

majority of the existing housing in this area. A sample of the existing housing styles,

proposed building image, proposed unit floorplans, and a proposed site plan are

11

included in the Appendix. Callan Circle will meet the city’s building requirements of a 35’

maximum height with a 3­story building plan. While certainly taller than its neighbors,

Callan Circle will try reduce the overall height of the building in certain areas to provide

a non­intrusive structure of appropriate massing.

FINANCIAL PLAN

Market research indicates the need for affordable housing will increase through

2030. Callan Circle will be a mixed­income housing development that offers 60% of its

units to market­rate residents and 40% of its units to low­ and moderate­income

residents who meet the criteria of 50% AMI. Funding for the development will be sought

from a mix of private and public sources. Private financing will be sought to fund the

market­rate portion of the project, where 75% of the funds needed will be provided

through bank loan/mortgage and 25% will be provided from equity investments. Public

financing will be sought to fund the affordable portion of the project, where 70% of the

funds needed will come from the use of Low Income Housing Tax Credits and 30% will

come from a combination of interest free loans and grant monies. Grants from the Xcel

Energy Renewable Development Fund and the U.S. Green Building Council's

Affordable Green Neighborhoods program will help to finance energy conservation

efforts and renewable energy generation. A breakdown of the proposed project funding

sources and Stage 1 Financial Analysis are included in the Appendix.

It seems the mixed­income portion of this development can make financing a

challenge. Earlier versions of this proposal calculated the financial analysis for a 66­unit

12

development and were unable to achieve a development profit. The critical number in

these calculations is the Net Operating Income (NOI). It determines the value of the

project and therefore the maximum loan amount, yet seems relatively independent from

any of the other major figures like construction costs or government subsidies. A shift in

any of these numbers generates no real change in the calculations, yet a shift in the

NOI by increasing gross potential revenue makes a significant difference. An 80­unit

development has shown to be much more financially successful, making a $844,761

development profit.

While the design team intended to keep the housing development small for a

variety of reasons outside of the financial analysis, it became clear that the project must

be larger in order to generate more revenue, and to ultimately demonstrate a profit that

would attract investors. Rents have been raised to the maximum level the market will

bear and the building’s overall size has been reduced. If a greater development profit is

desired, one last option could be to charge additional rent for parking in order to

increase the project’s total rental revenue and its NOI.

Callan Circle will ensure sustainability by being well­designed for flexibility,

adaptability, and longevity and by being managed appropriately with an emphasis on

maintaining a positive cash flow, successful collection of rents, and careful monitoring of

expenses. Maintaining a good reputation, staying current about trends and patterns in

the market, and being focused everyday on providing excellent customer service to both

new and current residents will be the keys to successful long­term operations.

13

ENTITLEMENT PLAN

A building permit is required for a construction in the City of Rosemount, MN.

Before the process of obtaining a building permit for this development, the zoning

process would come. The proposed site for the development of Callan Circle is currently

zoned medium density residential that is eligible to have 3­story multifamily

construction. The site is currently vacant and does not require obtaining a demolition

permit.

In order to obtaining all rights to accomplish this proposed development, working

with city planning staff to develop the most appropriate development possible will be a

key factor in promoting the project to local residents as a beneficial addition to their

community. Preliminary discussions with the Rosemount city planner confirmed the

city’s interest in a housing development targeted towards DCTC students and revealed

a willingness to consider creating a Planned Unit Development (PUD) for this housing

project. The PUD would allow the city and the developer to negotiate modifications to

the existing zoning standards for this specific property and use.

These negotiations may result in the need to meet higher standards in some

areas in exchange for reduced standards in others. Work sessions with city staff,

including planners, engineers, and the departments of public works, parks and

recreation, fire, and police will be needed to coordinate the details of the PUD

Agreement. Once details of the PUD Agreement are finalized the developer must

14

submit a set of required materials, like a Final Site Plan and a Final Building Plan Set to

the city for their review. Attendance at a public hearing before the city's Planning

Commission is also required. The city will notify neighboring property owners of the

public hearing and place a notice in the local community newspaper. If amendments to

the agreement are necessary based on comments from the public hearing, the

developer must revise their plans and re­submit their materials to the city for further

review. An additional public hearing may be need if the amendments are major changes

to the original PUD Agreement. Once a recommendation from the Planning Commission

is received, the developer must come before the City Council for final review of the

proposed development.

Neighborhood support would need to come from the adjacent single­family

neighborhoods to the north and west. Several homebuilders (Ryland, Brandl Anderson

Homes, Charles Merritt Homes, Lennar, Key Land Homes) are developing subdivisions

of new construction in these two areas. Outreach, education, and coordination with

these builders and the Home Owner's Associations in the subdivisions should be

considered very early in the planning process to begin addressing any NIMBY­ism that

may occur.

MARKETING PLAN

In order to attract students of DCTC to this development, it may be marketed as

a place where young people who are serious about their studies and their future

pursuits can thrive. While this development will marketed to attract students, its design

15

would not be specific to only students, nor would it have obvious ties to DCTC via

design principles. This is to ensure that other market populations such as families, older

adults, couples, etc. do not perceive the property to be a dorm or campus housing and

feel deterred from envisioning the development as their home. An important component

to consider when developing marketing strategies for this project is the juxtaposition

between the varied lifestyles of students, singles, and families. Typically, the first thing

that comes to mind when people think of students are loud, raucous, and messy people

who could potentially make bad neighbors. Marketing efforts will focus on the fact that

just because someone is a college student does not necessarily mean they have to live

like one and will stress the fact that the property’s design, the management policies, and

the resident selection process have been geared towards attracting, and meeting the

needs of, residents who will have a high regard for their neighbors and who will be

enjoyable to live near regardless of their status as a student.

Most people today expect that a high level of information about the property be

available through the Internet. Property web pages, apartment search engines, and

locator services are often consulted as the first step in any apartment search. A

carefully planned and well­executed profile should be created to obtain the best

possible position on these web­based platforms. Again considering the importance of

16

technology in the lives of today’s young people, it would be imperative that multiple

social media campaigns be utilized. These sources may include but are not limited to:

Facebook, Craigslist, Twitter, and Instagram. A mobile­friendly version of the property’s

website and a presence on community message boards should also be explored. More

traditional marketing efforts like advertising in neighborhood editions of the community

newspaper, local magazines, and apartment directories will also be used to reach

potential residents who seek information in a non­digital format.

A significant opportunity to market the property directly to students may available

by forming a connection to DCTC. A casual and informal relationship based on the idea

of being community partners, this connection could use DCTC resources to help raise

awareness of the property and its student­friendly amenities. The placement of posters

or flyers in student common areas, the establishment of a referral program, and the

formation of a directory of students interested in finding potential roommates are

possibilities to consider. In turn, Callan Circle should explore ways to support the

college by sponsoring of some of the college’s events, attending community open house

sessions, and participating in volunteer opportunities. Doing so will demonstrate a

shared interest in DCTC’s mission of empowering individuals through quality education.

17

References

Course Textbooks:

Kelley, E.N. (2009). Practical apartment management. (6th ed.). Chicago, IL : Institute of

Real Estate Management.

Peiser, R.B. & Hamilton, D. (2012). Professional real estate development : the ULI

guide to the business. (3rd ed. ). Washington, DC : Urban Land Institute.

Websites:

City of Rosemount: Retrieved from http://www.ci.rosemount.mn.us Dakota County Technical College: Retrieved from: http://www.dctc.edu Dakota County Community Development Agency: Retrieved from http://www.dakotacda.org Minnesota Housing Finance Agency: Retrieved fom: http://www.mnhousing.gov Xcel Energy Renewal Development Fund: Retrieved from: http://www.xcelenergy.com/Environment/Renewable_Energy/Renewable_Development_Fund U.S. Green Building Council Affordable Green Neighborhoods Grant Program: Retrieved from: http://www.usgbc.org/initiatives/grants/affordable­neighborhoods

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Appendix

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