COMMITTEE OF THE WHOLE AGENDA February 21, 2012 - 5:30 …

COMMITTEE OF THE WHOLE AGENDA February 21, 2012 - 5:30 PM City Hall Council Chambers

Committee of the Whole Meeting

1. Housing Update - Market Study and Communications Plan

2. City Manager Reports Upon request, accommodations for individuals with disabilities, language barriers, or other needs to allow participation in City Council meetings will be provided. To arrange assistance, call the City Clerk’s office at 218.299.5166 (voice) or 711 (TDD/TTY).

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Mayor and Council Communication

February 21, 2012 Page 1 of 3

SUBJECT: Housing Update - Market Study and Communications Plan RECOMMENDATION: No specific action is requested at this meeting. The Mayor and City Council will receive a briefing on the City’s marketing activities. There will also be a presentation of the draft housing market study conducted by Maxfield Research. BACKGROUND / KEY POINTS: The City of Moorhead experienced an 18.3% increase in population from 2000 – 2010; housing construction surged in the years 2002 – 2009 (peaking in 2008). Even as the national recession nearly suspended housing in other areas of the country, the Fargo-Moorhead area has continued to grow, albeit at a slower pace than previous years. In the past two years, Moorhead’s new housing starts and share of the metropolitan residential growth have decreased, and at a steeper rate than Fargo and West Fargo. Existing home sales throughout the metro area have also decreased; although Moorhead’s proportion of existing sales has remained relatively steady. In spring 2011, the Mayor and Council commissioned Maxfield Research to conduct a housing market study to review Moorhead’s market condition, competitive environment, and potential for growth. As part of this analysis, Maxfield’s Mary Bujold reviewed comparative statistics and data from the metro area and conducted numerous interviews and focus groups with elected officials, board and commission members, and many F-M housing industry professionals. Attached is the draft executive summary of the report; the full report is being edited and will be available by March 1. While the housing report has been under development, the Economic Development Authority Board moved forward to renew emphasis on Marketing Moorhead, contracting with Flint Communications to develop a Communications Plan that was informed by the Maxfield Research interviews, the City’s homebuyer survey, and EDA discussions. The Plan framework was approved by the EDA in November and the budget adjustments necessary for plan implementation were approved by the Mayor and Council in December 2012. Chris Hagen from Flint Communications will provide an update on the implementation of the Communications Action Plan on February 21 as well.

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Mayor and Council Communication - February 21, 2012 Page 2 of 3

Agenda Item No. 1.

PRESENTATION OUTLINE:

Introduction: Scott Hutchins and Lisa Vatnsdal, Community Services Improving Competitive Position – Metro Market Share Evaluation/Research Tools: Housing Market Study, Communications Plan

Goal: Residential growth, new residents, and additional homes The Moorhead Market: “Moorhead Housing Market Study” Mary Bujold, Maxfield Research

• Current Market Condition o Competitive Environment – state and local issues o Consumer Confidence o Community Amenities and Services o Future Benefit of Recent Policy Actions (Downtown TIF District, Flood

Mitigation Efforts) • Summary of Stakeholder Interviews • Demand Forecast – What are Moorhead’s Opportunities?

Influencing Demand: “Marketing and Communications Plan – Implementation”

Chris Hagen, Flint Communications • Consumer Orientation – reach prospective homebuyers while they shop • Key messages – based on Moorhead’s strengths – Your Hometown within the

Metro o Schools o Neighborhoods o Parks

• Communication Strategies o Media Placement o Micro Website o Outreach to Key Influencers - Real Estate Community o General Public

• Communicating in the community’s interest – opportunities and challenges

Moving Ahead: Michael Redlinger, City Manager • Communication and Customer Service • Subdivision Standards and Special Assessments Policy

o Home Builders Association Working Group • First Time Homebuyer Programs • New Construction and Remodeling Incentives • Building and Development Forum

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Mayor and Council Communication - February 21, 2012 Page 3 of 3

Agenda Item No. 1.

FINANCIAL CONSIDERATIONS: The Maxfield Study cost is $25,000, funds were included within the 2011 budget; the cost of the 2012 Communications Plan (planning and implementation) totaled $84,755 and is included in the 2012 EDA and Neighborhood Services budgets. VOTING REQUIREMENTS: Not Applicable Disclaimer: Voting requirements may be subject to changes in the law, parliamentary procedural matters, or other unforeseen issues. The City Attorney provides opinion on questions of voting requirements in accordance with the Moorhead City Code, Minnesota State Statues, and parliamentary procedure.

Respectfully Submitted:

Michael J. Redlinger City Manager

Department: Community Services Prepared by: Scott A. Hutchins, Director of Community Services Lisa J. Vatnsdal, Neighborhood Services Manager Attachments: Maxfield Research Moorhead Housing Market Study – Draft Executive Summary 2012 Communications Plan City of Moorhead – 2011 Annual Housing Report

-3- Agenda Item #1.

Executive Summary of the Moorhead Housing

Needs Analysis

Prepared for:

City of Moorhead Moorhead, Minnesota February 2012

1221 Nicollet Mall Suite 218 Minneapolis, MN 55403 612.338.0012 www.maxfieldresearch.com

-4-Agenda Item #1.

TABLE OF CONTENTS

Page STUDY IMPETUS ............................................................................................................. 1 SCOPE OF SERVICES ..................................................................................................... 1 GROWTH OF THE FARGO-MOORHEAD METROPOLITAN AREA ................... 1 BORDER COMMUNITIES ............................................................................................. 2 FACTORS AFFECTING RESIDENTIAL OR BUSINESS LOCATION DECISIONS 2 MOORHEAD’S COMPETITIVENESS IN THE REGIONAL/LOCAL MARKET .. 3 POPULATION AND HOUSEHOLD GROWTH TRENDS ......................................... 4 AGE DISTRIBUTION ...................................................................................................... 5 EMPLOYMENT GROWTH ............................................................................................ 6 CENTRAL CORRIDOR REDEVELOPMENT ............................................................. 6 HOUSING MARKET CONDITIONS ............................................................................. 7 HOUSING COSTS ............................................................................................................ 9 INTERVIEWS AND FOCUS GROUPS .......................................................................... 10 HOUSING DEMAND ........................................................................................................ 12 HOUSING OPPORTUNITIES ........................................................................................ 13 CONCLUSIONS AND RECOMMENDATIONS ........................................................... 14

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EXECUTIVE SUMMARY

MAXFIELD RESEARCH INC. 1

Study Impetus Maxfield Research Inc. was engaged by the City of Moorhead to undertake a housing and economic market analysis to assess current market conditions in Moorhead and the greater Moorhead-Fargo Metropolitan Area and to analyze Moorhead’s competitiveness within the greater Metropolitan Area. The focus communities incorporated into the majority of the analysis are the Cities of Moorhead, Fargo and West Fargo. Some data is only available at the County level or other smaller adjacent communities may be included to round out a specific segment of the analysis. In addition to considering housing and economic conditions, additional analysis was requested for the potential redevelopment of the 1st Avenue North Corridor extending from the Red River to approximately 20th Street. Scope of Services Information provided in the report includes:

analysis of demographic and economic growth trends; analysis of demographic characteristics of the population and household base; analysis of housing market conditions including rental and for-sale products and senior

housing; analysis of home foreclosures and home value trends; survey of students at MSUM, M-State and Concordia College (housing, parking); comparison analysis of current utility rates and property tax rates at the household level; comparison analysis of current assessment procedures for new housing subdivisions; personal interviews with City Council, Moorhead Public Schools School Superintendent,

EDA Board members, Park Board members, Planning Commission members, area Realtors, area homebuilders, local developers and mortgage lenders; and

review and assessment of 1st Avenue Corridor parcels and opportunities for redevelopment.

Growth of the Fargo-Moorhead Metropolitan Area According to the 2010 Census, the Fargo-Moorhead Metropolitan Statistical Area (F-M MSA) ranked 204th in size of the 367 MSAs in the United States. Total MSA population as of 2010 was 208,777 according to the Census Bureau, which represents growth of 19.7% over 2000. This growth rate ranks similarly with growth rates occurring in many of the Sunbelt MSAs such as Charlottesville, VA; Yuma, AZ; Las Cruces, NM; Marietta, GA; Bellingham, WA and Denver, CO. Many Midwest MSAs experienced growth rates much lower than that of the F-M Metro Area.

-6-Agenda Item #1.

EXECUTIVE SUMMARY


The F-M Metropolitan Area is home to a diverse array of businesses and a growing business base. Recently, the F-M Metropolitan Area was ranked #1 by the Milken Institute on their Best Performing Cities Index for 2010. The Index ranks metropolitan areas by how well they are creating jobs and sustaining economic growth. The components include job, wage and salary, and technology growth. As of year-end 2011, the F-M MSA total non-farm employment was an estimated 125,300 with an overall unemployment rate of 3.7%, which is one of the lowest in the Nation and significantly lower than the 8.3% unemployment rate in the US. People looking for jobs can seriously consider the Fargo-Moorhead Metropolitan Area as one with good job prospects at a time when other areas of the country are suffering. Although a number of these rankings refer directly to growth that has occurred on the North Dakota side of the River, Moorhead consistently benefits by the strong growth occurring in the Greater F-M Metropolitan Area. More jobs and more people coming to the area for careers, recreation, education and other reasons enhances Moorhead’s exposure to more companies, businesses and people that can see firsthand what Moorhead has to offer. Border Communities Moorhead and Fargo, separated by the Red River, are located in different states, but are connected physically and economically. The Nation’s strong history of state’s rights has caused individual states in the US to develop their own rules and regulations, some of which are significantly different. While each individual community benefits from the larger economic base of the metropolitan area, individual communities may find they compete directly for jobs, people, economic development, taxes and in other capacities. State regulations or state resources may create competitive advantages in one state or the other. Factors Affecting Residential or Business Location Decisions There are many local factors that drive people’s and businesses’ decisions about where to live, work and locate a business. Cultural roots and background also play a role in these decisions, but are not usually identified as a component in making an economic development or a residential location decision. Some larger companies are currently relocating or building in Fargo and West Fargo and transferring more people to the area. These “outsiders” are less likely to identify their cultural roots in making a decision about where to work or live. Those that are and have been residents in Fargo or West Fargo for many years likely take their cultural roots into account more often in making a relocation decision.

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EXECUTIVE SUMMARY


Moorhead Competitiveness in the Regional/Local Market Minnesota has historically been considered to have a relatively high quality of life. Despite its location in the “frost belt,” Minnesota has enjoyed the following:

Relatively low homestead property taxes No statewide sales tax on food or clothing Generally low utility costs (natural gas and electricity) Strong public education system High quality post-secondary educational institutions Abundant recreational opportunities Strong community park systems throughout the state High quality healthcare (HMOs/Mayo Clinic) High quality public services such as fire, police, public infrastructure

Many of these benefits also accrue to local communities in varying degrees. Moorhead’s ability to attract residents and businesses to the community has, in great measure, been connected to many of these statewide factors that are also a part of the local economic environment. To the contrary, Moorhead has struggled in competition with North Dakota on the following:

Limited retail and business development Higher corporate income tax in Minnesota Higher personal income tax in Minnesota

During the early to mid-2000s, the robust economy directed local sentiment toward more amenity-based considerations and away from significant concerns about taxes. As the economic downturn deepened and unemployment increased (2009), taxes (personal, corporate and property) and cost of living and doing business moved to the forefront. Households and corporations, concerned about the state of the overall economy, pulled back on spending and investment. The stock market became increasingly volatile and housing values, the significant appreciation of which had been largely inflated by easy mortgage credit and rapidly rising prices. Buyers in the middle of the decade viewed housing values as only continuing to go up. With the collapse of the housing bubble, speculative demand was wiped away. Also, more stringent lending practices and a modest increase in home foreclosures in the F-M Metro Area have reduced the pool of prospective buyers. Buyers “under water” on their mortgages are faced with waiting out the depreciation or potentially obtaining a reduction in principal based on the new value in their existing home. Other prospective buyers remain cautious regarding purchasing unless planning to remain in the area long-term. This is especially true in Moorhead, versus Fargo or West Fargo. Minnesota and Moorhead have traditionally had fewer outside business relocations and more home grown growth and development. This was also true of North Dakota until the 2000s when companies “discovered” Fargo/West Fargo’s very low unemployment rate and the State’s low corporate tax rate. Several larger companies relocated operations to the Fargo area and as a result, relocated a number of employees to the area to fill positions not readily filled by the local

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EXECUTIVE SUMMARY


labor force. As the economy worsened, those coming from other areas, who may be only temporary residents (two to three years) and do not have the same affinity for the area and because of their higher mobility, are looking to reduce their potential investment expense and/or optimize their investment opportunity during the period when they are in the Metro Area. Interviews with local real estate agents in the F-M Metro Area cited that these short-term residents are less likely to invest in Moorhead at this time, primarily because of the State’s budget issues and what outsiders view as Minnesota’s current economic difficulties which they may perceive are likely to worsen rather than improve over the next three years. The current national, regional and local situations create a challenging, environment for Moorhead, but opportunities as well. With the F-M Metro Area currently one of the most robust economies in the U.S., Moorhead can take advantage of the growth of the larger Metropolitan area and where possible, make strategic investments in economic development to capture jobs, businesses and residents, in that order. Population and Household Growth Trends Population All communities in the F-M Metropolitan Area experienced strong growth during the period from 2000-2010. During the 1990s, growth was disproportionately strong in Fargo with limited growth in West Fargo and a slight decline in population in Moorhead. During the 2000s, growth was more evenly spread among the three largest communities with West Fargo gaining the most proportionally (72.9%), followed by Moorhead (18.3%) and then Fargo (16.5%). Numerical gains showed Moorhead third among the three, with a gain of 5,888 people during the 2000s. Projected growth trends show that Moorhead is expected to gain 4,755 people during this decade a growth rate of 12.5%.

-2000

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

1990-2000 2000-2010 2010-2020 F

Population Growth by DecadeF-M Metro Largest Communities

1990-2020

Moorhead

Fargo

West Fargo

Sources: Metro COG; ESRI; Maxfield Research Inc.; Census Bureau

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EXECUTIVE SUMMARY


Households A similar trend occurred in the number of households added to each community with West Fargo experiencing the highest proportional household growth (79.3%), followed by Moorhead (22.7%) and Fargo (19.2%). Forecast growth during the 2010s is expected to continue this same pattern with West Fargo again experiencing the highest proportional growth rate (48.3%), followed by Moorhead (14.5%) and Fargo (13.8%). Numerically, Moorhead is expected to increase its household base by 2,076 households. Age Distribution The North Dakota and the Minnesota sides of the F-M Metro Area experienced similar growth trends with respect to different age groups. The largest growth is projected to occur among people age 55 to 64 with growth rates of 93.6% for the Fargo/West Fargo area and 69.9% growth for Moorhead-Dilworth-Oakport. Tract II of Oakport Township will be annexed into the City of Moorhead as of 2015. The second and third largest growth rates occurred among those ages 25 to 34, (49.5%) and those ages 20 to 24 (32.3%) in Moorhead-Dilworth-Oakport and 33.8% and 24.1%, respectively, in Fargo/West Fargo. The higher percentage growth rates in Moorhead/Dilworth/Oakport versus Fargo/West Fargo for these age groups reflect the location of several institutions of higher education in Moorhead. Students attending Moorhead post-secondary institutions total more than 16,000 and comprise a significant component of the F-M Metro Area housing market.

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

1990-2000 2000-2010 2010-2020 F

Household Growth by DecadeF-M Metro Largest Communities

1990-2000

Moorhead

Fargo

West Fargo

Sources: Metro COG; ESRI; Maxfield Research Inc.; Census Bureau

17.9

24.1

33.8

-0.7

20.1

93.6

19.3

32.1

24.5

7.7

32.3

49.5

-13.8

26.4

69.9

7.7

12.7

19.1

-20.0 0.0 20.0 40.0 60.0 80.0 100.0

Under 20

20 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65 to 74

75+

Total

Percent

Ag

e

Population Growth by Age Cohort2000-2010

Moorhead/Dilworth/Oakport

Fargo/West Fargo

Sources: Census Bureau; ESRI; Maxfield Research Inc.

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EXECUTIVE SUMMARY


Employment Growth The local unemployment rate in Moorhead increased by 0.1% to 4.2% as of year-end 2011, essentially stable over 2010. Civilian employment increased modestly in Moorhead as of the end of 2011, growing by 442 workers. The figures represent people living in Moorhead that are employed, not where they are employed. Many people living in Moorhead commute to work in Fargo and West Fargo. Fargo and West Fargo residents commute to Moorhead also, although in smaller proportion. Central Corridor Redevelopment The City currently owns parcels east and west of 11th Street North on the south side of First Avenue North, which are approximately one acre each in size and also a 5-acre parcel (Aggregate site) situated further east between about 15th Street North and 18th Street North. The parcels at 11th Street North and the Aggregate parcel have been cleared of blighted buildings and are essentially “ready” for development. The First Avenue North/Central Corridor TIF District identifies non-blighted and blighted properties. The parcels at 11th Street North are generally in close proximity to what are identified as non-blighted properties. The 5-acre Aggregate site is also located adjacent to parcels on the west side that have been identified as non-blighted. Our discussions and analysis of the F-M Metro Area market identified that retail development has continued in the Fargo/West Fargo area and it has been more difficult to attract retailers to Moorhead. A number of reasons were cited for this, but in essence, it likely is a combined result of several of the following conditions:

Concern among prospective retailers that Moorhead consumers will continue to spend the majority of their retail dollars in Fargo;

Concern regarding some business cost dynamics (i.e. restaurant tip credit) that are less

favorable in Minnesota;

Concern about pedestrian and vehicle connectivity at specific locations in the Downtown area where the railroads create barriers to convenient access.

Limited availability of property near concentrations of retail activity in Moorhead;

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Unemployment Rate

Moorhead

Fargo

Clay County

Cass County

Sources: MN DEED; NDWIN; Maxfield Research Inc.

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EXECUTIVE SUMMARY


The Retail Gap Analysis completed for the Housing Study identified the net amount of retail sales dollars that could be supported in each of the larger F-M Metro Area cities in various retail categories based on the amount of consumer demand from their respective resident bases. Fargo is attracting a significant level of sales from outside of its resident base. Moorhead is experiencing sales lost to Fargo in the following categories.

Food Services and Drinking Places Furniture and Home Furnishings Clothing and Clothing Accessories Health and Personal Care Items Sporting Goods, Books, and Music Stores Building Equipment, Hardware and Garden Supplies Miscellaneous Store Retailers Non-store Retailers

Individual retailer requirements may limit the ability of Moorhead to attract some of these businesses to the community such as minimum population densities within a given geographic radius, proximity to other competitors or proximity to other same stores, or will only co-locate if certain types of stores are present in the immediate area. However, given the current population base that exists in Moorhead, there is definitely a demand that is currently being served by retailers in the Fargo area from customers in Moorhead. Users locating on First Avenue North at 11th Street are likely those that will want to take advantage of high traffic volumes and the resident base to the north to support their businesses. Users would be primarily convenience-oriented retail businesses such as auto-related, fast food, hair/nail salon, bank, health care and other service businesses where customers would stop on their way to and from home or when conducting errands. At 11th Street, the sites’ proximity to Minnesota State University Moorhead is good, but connectivity is somewhat limited due to multiple rail lines. Uses locating on the 5-acre parcel are likely to be larger in size and more business-oriented or service-based, rather than pure retail. High-density housing may become a component of the Aggregate site. Housing Market Conditions For-Sale Market Activity The table shows market activity for communities in the F-M Metropolitan Area from 2006 through 2010. In each year, Moorhead had the second highest number of sold homes with a median sale price that held steady in 2007, 2008 and 2009. The median sale price increased in 2010 to $141,000. Fargo’s 2010 median home sale price was only $1,000 higher at $142,000. Moorhead’s proportion of closed sales ranged from 22.3% in 2006 to 23.7% in 2008, falling slightly to 22.2% in 2009 and 21.3% in 2010. This suggests that sales of existing homes in Moorhead competed successfully in the market against total home sales in Fargo and West Fargo. The slight decline in proportion of closed sales in 2009 and 2010 was minimal and the proportion rose slightly in 2011 to 21.8%, from 21.3%. However, the median home sale price in

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EXECUTIVE SUMMARY


Moorhead decreased slightly in 2011 to $139,000 while the median home price in Fargo rose to $152,000 and the median price in West Fargo climbed to $164,900. Comments by area real estate agents indicate that during 2011, closed sales in Moorhead decreased primarily due to buyer uncertainty regarding Minnesota budget deficit and uncertainty regarding funding for public education.

Closed Sales 2006*

Median Sales Price 2006

Closed Sales 2007*

Median Sales Price

2007

Closed Sales 2008*


Closed Sales 2009*


Closed Sales 2010*


Closed Sales 2011*


Fargo 1,431 $135,000 1,443 $140,000 1,255 $141,000 1,379 $136,700 1,247 $142,000 1,175 $152,000Moorhead 593 $130,708 635 $138,000 548 $138,000 557 $138,000 473 $141,000 464 $139,000West Fargo 544 $142,850 543 $144,700 448 $149,900 504 $154,960 460 $162,000 450 $164,900Dilworth 87 $136,150 75 $136,675 52 $145,250 66 $139,900 41 $133,000 37 $141,000Total 2,655 2,696 2,303 2,506 2,221 2,126Notes: Closed Sales represent single-family, twinhomes, townhomes and condominiums* Full year data (January 1 through December 31)not all closed home sales may be represented as Realtors may input sales data at a later date.

Source: Fargo-Moorhead Area Association of Realtors

FM METRO CLOSED HOME SALES2006 through 2011

Moorhead Homebuyer Survey A homebuyer survey was conducted by the City of Moorhead’s with homebuyers that purchased in 2009 and 2010. A total of 88 responses was received. Of those, 36 (41%) indicated they had lived in Moorhead before purchasing their most recent home. About 23% were drawn from South Fargo, 7% from West Fargo, 5% from North Fargo and 2% from elsewhere in North Dakota. Therefore, from all of the North Dakota side, 37% came from North Dakota and 56% came from Minnesota. Before purchasing in Moorhead, 36 respondents (4.5%) considered Fargo or West Fargo as a potential new home location. The top three reasons in order of selection that influenced buyers’ decisions to live in Moorhead were:

Wanted to live in Moorhead Wanted to live in Minnesota Close to work

Also, the percentage of first-time buyers purchasing in Moorhead and coming from South Fargo (46%) was higher than the percentage of first-time buyers coming from Moorhead (31%). The overriding factor for a majority of buyers is that they really wanted to live in Minnesota/Moorhead. In addition, buyers gave the highest rankings to the quality of their neighborhood, the affordability of the area, and parks and recreation. Neighborhoods and the parks and recreation system were identified by a number of people during the community interviews as key amenities in the City of Moorhead. The responses from the homebuyer survey support these comments.


EXECUTIVE SUMMARY


Area Rental Vacancy Rates The chart shows current vacancy rates in the F-M Metropolitan Area from 2008 through 2011. The table shows that vacancy rates in Fargo have continued to decrease despite substantial construction of new rental apartments over the past several years and throughout the past 20 years. Conversely, vacancy rates in Moorhead have remained higher than Fargo despite a substantial number of students attending Moorhead institutions. This suggests that during the 2000s, Moorhead exported many prospective renters to Fargo apartments because of their competitive rental rates and contemporary amenities including close proximity to a broad array of retail goods and services. Renters are, by nature, highly convenience-oriented. Although a portion of students live either on-campus or near campus because of the “convenient” location (within walking distance), the student housing survey findings identified that a number of students find the offerings in Fargo more desirable than those in Moorhead and more competitively priced. Housing Construction There are currently 1,125 vacant residential lots in Moorhead, with 525 of those lots having infrastructure and the remaining 600 lots platted, with trunk lines but no local infrastructure. From 2000 through 2011, average annual residential development was 321 units per year, with an average of 216 single-family homes and 108 multifamily homes developed annually. This compares with averages of 378 single-family and 578 multifamily in Fargo and 283 single-family and 130 multifamily in West Fargo. The table shows the number of housing units developed in Moorhead, Fargo and West Fargo as a ratio of population to housing units. Housing Costs Comparison of Residential Housing Costs Overall, there are relatively few differences in costs for building permits, infrastructure and most ownership costs between the three communities. The largest difference in the cost of ownership

New Housing Ratio

Population Units* Pop/Units

Moorhead 38,065 3,599 10.58

Fargo 105,549 9,412 11.21

West Fargo 25,830 4,640 5.57

* Residential building permits issued 2000-2010

RATIO OF POPULATION TO NEW HOUSING UNITS

SELECTED COMMUNITIES

F-M METROPOLITAN AREA

Sources: US Census Bureau; Cities of Moorhead, Fargo, West Fargo

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Dec 08 Dec 09 Dec 10 Dec 11P

erce

nt

Rental Vacancy RatesDecember 2008 through December 2011

Fargo

Moorhead

West Fargo

Source: Appraisal Services Inc.

-14-Agenda Item #1.

EXECUTIVE SUMMARY


at this time is for residential property taxes which are higher in Fargo than in Moorhead and income taxes, which are higher in Minnesota than North Dakota. The two-year property tax abatement program in Moorhead for homes valued up to $200,000 ended in 2011 (although the City of Moorhead is seeking an extension from the Minnesota Legislature). Meanwhile, Fargo’s tax abatement for homes valued at up to $150,000 remains in force. Discussions continue in North Dakota regarding how the State of North Dakota’s budget surplus may be used to reduce the property tax levels in North Dakota. There have been some discussions about eliminating property taxes in North Dakota. However, property taxes are an important source of revenue for local jurisdictions. Eliminating property taxes would require a significant reconfiguration of how communities are able to raise revenues for community operations and education. In addition, future growth and development in the western portion of North Dakota near the oil fields is likely to require significant investment that may reduce some of the current surplus being experienced as the oil areas become more mature. According to Appraisal Services Inc., a Fargo-based appraisal firm, the mill rate levy in Fargo has decreased in each of the past three years because of surplus funds allocated by the State of North Dakota, thereby effectively reducing property taxes. Interviews and Focus Groups In-person interviews were conducted with City Council members, Planning Commission, Park Board, and Economic Development Authority Board members, Moorhead School Superintendent, mortgage lenders, real estate sales agents and local area homebuilders to solicit their input on local housing issues, economic development, growth and development in the F-M Metro Area and Moorhead’s competitive position within the greater F-M Metropolitan Area. Key findings from the interviews are as follows:

Moorhead is a culturally and racially diverse community and those interviewed believe that Moorhead should celebrate this diversity and use it to its advantage. Moorhead has the only Spanish language immersion program (elementary education) in the F-M Metro Area and the High School will be offering Mandarin Chinese as a language option. Minnesota has always been regarded as providing high quality public education and Moorhead shares this reputation. The development of new public schools in the 2000s attracted many new families to Moorhead seeking a strong education for their children.

The significant concentration of highly regarded post-secondary educational institutions

in Moorhead also supports this diversity. Concordia foreign language camps are known globally and bring a unique dimension to the community.

Moorhead’s park system is substantial in size and is considered to be a significant

amenity to the community. Not only do the parks provide many opportunities for recreation, but park programs also offer educational opportunities for all citizens primarily during the summer months.


EXECUTIVE SUMMARY


Moorhead has made significant progress on flood mitigation efforts, more so than Fargo. The City of Moorhead purchased 176 properties in low-lying riverfront neighborhoods between 2009 and 2011 using $50.7 million1 of combined federal, state and local funding for flood mitigation projects. The City hopes to conclude the acquisitions of the final flood prone homes in 2012 with a requested $20 million State bonding appropriation.

Moorhead provides excellent public services to its citizens. There is a concern however, that while Moorhead once enjoyed much lower utility costs than Fargo/West Fargo, that this situation is changing and that costs to Moorhead residents are increasing, thereby reducing the gap.

Recent improvements to Moorhead’s Downtown are viewed as a success in the

community. A number of those interviewed want to continue to improve the Downtown area, focusing on enhancing entertainment, dining and shopping opportunities. There is no sales tax on food or clothing in Minnesota and clothing retailers in Moorhead often have Fargo/West Fargo customers.

It was mentioned that Moorhead has been at a competitive disadvantage in attracting primarily sit-down restaurants. The reason given is that North Dakota provides a tip credit to restaurants whereby restaurant owners can include tips as part of an employee’s wages. In Minnesota, restaurant owners must pay employees the minimum wage. Tips are in addition to the employee’s base pay.

Several of those interviewed believe that Moorhead should focus on attracting more

businesses and jobs into the community, including retail businesses to enhance community amenities. It was felt that Moorhead loses prospective apartment dwellers to the Fargo side because of the significant retail offerings in Fargo and the greater number of new apartments with contemporary features and amenities at moderate rents. With current low vacancies and rising demand in Fargo, local real estate professionals are already seeing rents increase. Conversely, Moorhead attracted a significant number of buyers of single-family homes during the 2000s because of high quality public education, homestead property taxes and new high-amenity subdivisions including public parks.

With the onset of the economic slowdown and Minnesota’s high state budget deficits,

buyers became more cautious about investing in housing on the Minnesota side. Concerns over property tax rates, income tax rates and potential reductions in public school funding have created a higher level of buyer uncertainty in the marketplace. As the recovery ensues, many of these issues are likely to be resolved in a favorable manner. In the interim however, buyers that are expecting to spend only a few years in the F-M Metropolitan Area want to have some degree of confidence that when they must relocate, they will be able to sell their home and experience some level of appreciation in value. Their perception is that Fargo/West Fargo offer a higher potential to achieve appreciation and property tax stability than does Moorhead (Minnesota).

1 Includes property acquisition, demolition and remediation

-16-Agenda Item #1.

EXECUTIVE SUMMARY


Real estate sales agents and local homebuilders all mentioned the annual roundtable discussions and informational meetings that used to be held in Moorhead. Participants of the focus groups believed that these meetings enable them to work more closely with the City to identify housing needs in the community and to be able to react in addressing those needs. These meetings were discontinued at some point, but each group (agents and homebuilders) indicated a desire to restart these meetings as a way to improve communication among housing professionals and City in serving community housing needs.

Housing Demand Moorhead is projected to increase its household base by 2,076 new households from 2010 to 2020 (excluding households that would be added to Moorhead by the annexation of Oakport-Tract 2). A portion of this increase has already been satisfied through a modest reduction in the rental vacancy rate in Moorhead in addition to continued residential construction. The table to the right shows the projected housing demand over the next three years and from 2015 to 2020. Note that senior demand reflects the growth that would be derived from seniors not currently living in Moorhead that would move to Moorhead to reside in senior facilities that would be developed. We expect that Moorhead should be able to absorb an estimated 300 residential lots over the next three years to 2015. After 2015, absorption is expected to rise gradually to 140 units in 2015, 160 units in 2016 and continuing to rise gradually to 200 units in 2019.

Year 2012 2013 2014 2015* 2016 2017 2018 2019 Total

Projected Single-Family Absorption 80 100 120 140 160 170 170 200 1,140

Remaining Lots (w/local services) 445 345 225 85

Local Services to New Lots

* Annexation of Oakport

Source: Maxfield Research Inc.

PROJECTED OWNED SINGLE-FAMILY UNIT ABSORPTION

MOORHEAD

2012 through 2019

Local Services to New Lots

2012 through 2015 through

2014 2019

Single-Family 337 609

Owned Multifamily 69 125

Rental Multifamily 191 345

Market Rate 96 173

Affordable 96 173

Senior - Total All Service Levels 234 397

Student

Source: Maxfield Research Inc.

PROJECTED HOUSING DEMAND IN UNITS

City of Moorhead

2012 through 2019

228


EXECUTIVE SUMMARY


Currently, there are 525 vacant serviced lots in Moorhead. Following the projected absorption schedule below, Moorhead would need to bring on new serviced lots beginning in mid to late 2014 through 2016. The City must also be receptive to platting new lots based on product, location, market and other considerations. The greatest uncertainty in the short-term is considering the potential enhancement or reduction in potential demand due to factors outside of Moorhead’s control, primarily the ability of the State of Minnesota to resolve its budget deficit issues and adequately fund public education without significantly increasing taxes. In moving forward, we view the stability of the economy and the stability of Minnesota’s property tax situation as important factors in the ability of the City to continue to attract new households. Housing Opportunities Moorhead will need to focus on promoting its strengths to reach its production goals in attracting new residents to the community. Households make choices about the location of their residence based on an array of factors. Those factors may include, but are not limited to:

The types of housing products available; The housing price; The overall cost of ownership and other living expenses; The availability and quality of local goods and services including retail, health care,

public schools, parks, neighborhood desirability, trail systems, entertainment options, among others.

Buyers seek a balance between the costs associated with ownership and the ultimate economic, social and emotional value that they derive from their purchase and their lifestyle within the community. During the 2000s, Moorhead’s strengths enabled the community to capture its fair share of housing demand. Those strengths include strong neighborhoods, a substantial park system, high quality K-12 schools and post-secondary institutions, new high-amenity subdivisions with trails, ponds and other landscape features. Market segments most likely to seek out these types of amenities are typically young families with children and Moorhead has been successful in the past in attracting this group with the construction of new schools in the early part of the 2000s. High quality post-secondary institutions attract a significant number of students ages 18 to 24 or older, most of which will be renters. Moorhead has experienced some difficulty in keeping students in Moorhead as many are attracted to the nightlife and retail offerings that exist in Fargo. In addition, rental offerings in Fargo tend to be newer and competitive in rental rates. This may change as demand for rentals in Fargo increases. However, it is likely that with low vacancy rates, new apartments will be under construction again in Fargo. In order to compete in this area, Moorhead must create additional amenities that will attract students. The student

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EXECUTIVE SUMMARY


survey highlighted an interest among students for newer high quality apartments that would be located near entertainment and retail offerings and in close proximity to the campus. Developing student housing should coincide with improving the retail offerings in and near the Downtown to provide amenities to support the new housing. New retail offerings in the Downtown would also be attractive to existing residents. The largest growth in population is expected to occur among households ages 55 to 64 over the next five to ten years. These households typically look for move-up housing, but moving forward, it is believed that households are likely to be more prudent in their housing choices. Single-level living on smaller lots (detached) is expected to increase in popularity. Those selling larger homes are likely to want to downsize. Purchasing on par with their existing home or slightly below the value will continue to appeal to a broader segment of the market. Conclusions and Recommendations During the 2000s, Moorhead was able to capture a proportionally significant portion of F-M Metropolitan Area new housing construction, a proportion higher than its population would otherwise indicate. As the recession took hold, Moorhead’s residential construction activity gradually decreased. In 2011, housing production was the lowest it has been in the past 12 years and was equal to the number of units developed in 2010. We believe that Moorhead will achieve more housing starts in 2012 than in 2011, although the new construction housing activity in the next three years is unlikely to reach the pace of housing development it enjoyed in the 2000s. Housing activity is reduced across the F-M Metro Area, but as the economy recovers, the F-M Metro Area is poised to experience reasonable growth. Moorhead’s ability to capture a share of that growth, proportionally equal to its earlier levels, is potentially constrained by the following issues in the short-term:

Uncertainty over Minnesota’s budget deficit; Uncertainty over the level of public education funding; Perception among some local developers and homebuilders that Moorhead’s residential

approval and development process is less efficient than that of Fargo; Local homebuilders’/developers’ perception that special assessments for new residential

development in Moorhead are higher than those in Fargo and West Fargo. [A detailed analysis of special assessments between communities is being conducted by the Moorhead Engineering Department and a report will be issued at a later date.]

Expiration of the two-year property tax abatement on all private owned residences valued up to $200,000. [Moorhead currently has an extension request before the MN Legislature]

Difficulty in attracting new retail businesses, primarily restaurants, to Moorhead. Many Moorhead residents regularly travel across the River to shop and dine at venues in Fargo.


EXECUTIVE SUMMARY


Moorhead has taken several recent policy actions that prepare it for additional growth and economic development, including:

Established a Tax Increment Finance District expanding redevelopment opportunities from the downtown corridor to the gateway corridors of First Avenue North, Center Avenue, and Main Avenue, and a portion of 8th Street South.

Established a new Mixed Use Zoning District to facilitate redevelopment. Economic Development Incentives for multifamily, commercial and industrial properties

with special consideration for redevelopment projects. Extensive flood mitigation efforts to keep the community “in business” during flood

events. Moorhead can create new momentum by implementing the following:

Implement the 2012 Communication Plan approved in December 2011 with the following strategies:

o Target homebuyers while they shop for a home confirming Moorhead’s community amenities and high quality public and private education (K-12 and post-secondary) through advertising, website and social media, presentations, and community messaging.

o Create cohesive communications systems that share community successes, deliver consistent, accurate information and city news, and reinforce investment in Moorhead as a community.

o Equip the real estate community to be Moorhead supporters and ambassadors, including semi-annual or annual meetings with the local business association and local homebuilders and developers to discuss housing market activity and identify ways in which the City can work with local housing professionals to satisfy market needs.

o Demonstrate business support through outreach, fostering an environment that positions Moorhead as a good place to do business. Provide business prospects with important information on household growth in the community and the opportunities that exist to capture consumer dollars in Moorhead.

Seek methods of reducing the cost of housing construction, including an analysis of infrastructure standards, timing of installation, special assessment fees and financing terms.

Emphasize customer service in all aspects of City of Moorhead interaction with the development, business, and residential community.

Promote current development incentives that were recently approved including: o allowing exemptions for multiple similar businesses so that Moorhead becomes a

destination for retail, services, food and entertainment; o property tax exemptions that were expanded to increase the length of exemption if

extra redevelopment costs are incurred; o property tax exemptions that were expanded so they can be utilized in a TIF

district or in conjunction with a TIF district; o property tax exemptions that were expanded so they include apartments to

encourage the development of additional high quality rental housing city wide.

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A number of students commented in the survey that they would like to see more retail and entertainment offerings in Downtown Moorhead. Many students are currently living in Fargo because of the higher level of retail and entertainment venues located there. We see the next phase of Downtown redevelopment as focusing on two primary components 1.) additional Downtown housing 2.) enhancing the retail that is already there through an upgrade of the Moorhead Mall spaces. This could include opening up the Mall area so that more stores could be accessed from the outside, which would create a different dynamic for new retailers and could aid existing retailers in increasing sales. Further expansion to the south, even leapfrogging over parcels could increase the connections to existing businesses and create better synergies. We recommend expanding Downtown Moorhead redevelopment to the south along Center Avenue and connecting redevelopment in the 1st Avenue Corridor with the core activity node between 1st Avenue and Center Avenue. Identify key locations to incorporate new multifamily housing in the Downtown near to the core activity node.

Despite a slowdown in the economy, Moorhead achieved strong growth during the decade of the 2000s. Some of this growth was generated by the overall national economy, but another portion was Moorhead’s focus and concentration on turning around its housing sector in the first part of the decade. Moorhead can capitalize on the growth that will occur in the F-M Metro Area and with additional focus, can resume a positive growth curve over the next decade.


Moorhead Marketing Action/Communication Plan

1 Moorhead Community Services/Flint Communications

Ultimate goal: Residential growth, new residents and additional homes Targeted audiences: Primary

New residents (who ultimately become new patrons/consumers for Moorhead‐based business) Secondary

Current residents and business

New and expanding business

Influencers o real estate industry; agents, brokers, lenders o regional and trade media

Key messages to homebuyers (primary audience):

When you invest in a home in Moorhead, you also gain community: great schools, parks and a neighborhood.

Moorhead is your hometown within the metro.

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Observations/opportunities and obstacles: Several recent factors have worked against instilling confidence in a Moorhead investment decision, including: the impact of the

economic recession, North Dakota prosperity compared to Minnesota’s budget situation, flood events and on‐going flood mitigation discussion, and housing buyouts.

There is limited time for city staff to interact extensively with many of the target audiences beyond traditional city business functions.

As a result, interactions between city staff and our targeted audiences have migrated to be more transactional and perfunctory.

Every interaction/touchpoint between marketing/communication tactics and our targeted audiences needs to support our objective of creating confidence in a Moorhead decision.

Likewise, every interaction between “the city” (which audiences perceive as both staff and elected officials) and one of our identified audiences works to form an impression of Moorhead, and can support our objective in message and tone, for example:

o Paying a utility bill in person at City Hall o Viewing a city council meeting on tv or online o Calling the city engineering department with questions o Watching a news report with an interview with the Mayor or City Manager o Attending a community information meeting

Traditional media outlets have seen dramatic staff reductions, and may not assign news reporters to routinely cover city business, K‐12 and higher education and positive Moorhead news in general. More sensational stories/news receives top priority in regional media.

There is an increasing prevalence of online news and shopping, and the growth of social media, and the result is that media consumption/communication habits vary greatly among our target audiences.

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Overriding objective: Restore/create confidence in a Moorhead investment decision.

Communication objectives:

Ensure the delivery of cohesive messages about Moorhead to all audiences, especially the opportunity and benefits available.

Impact and support Moorhead home ownership and development decisions, as measured by residential and school enrollment growth.

Strategy #1 Audiences Insights/ discussion

Tactics Process/action steps Timing Estimates/ who

Develop/place online and print advertising targeting homebuyers Bulk of ads should

be online Traditional print

focusing on homebuyer publications

Develop/place media plan for calendar year

Develop ads supporting Moorhead’s hometown/community feel

Direct to landing page/microsite for specific information

Plan, December; Placement, on‐going in 2012, with emphasis on February – May, August – October homebuying timeframes

Ads: design, production, placement: $2,800 Media cost: $45,725

Target homebuyers “while they shop for a home” with confirming Moorhead messages

Home‐buyers, new and existing

As Multiple Listing Service (MLS) has moved to online search, the home search process has followed. With limited resources, top priority will be those spaces/places that buyers frequent

Develop either landing page or microsite targeted strictly to homebuyers

Final recommendation based on content, how robust

Will provide homebuyer specific information

Would address timing needs

Can be ready for February 2012 media buy if approved/ design and production begins in December

Landing page: $4,000 ‐ $8,000 Microsite: $12,000 ‐ $20,000

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Develop brochure/literature that can be included with Realtor® information

Refinement/update of existing brochures with new messaging o Welcome/

community o “Green” program o Conduct cost of

living analysis; may not be included in final materials

Design, production: $3,000Printing: $1,600 ‐ $2,000 (depends on qty.) Cost of living analysis: $1,800

First time buyers

This tactic was first started in 1990s, and continues to support a positive impression of MHD

Outreach/presentations at first‐time homebuyer education

Present Moorhead neighborhood and community benefits messaging

Explain/share programs where/when available

On‐going Staff time

All Existing billboards are faded

Revise/revisit billboard messaging and design, as well as placement

Should confirm Moorhead messaging; budget will come into play

Spring 2012 Design: $800 ‐ $1,000 Production, 2 vinyl wraps: $2,000

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Create cohesive communication systems that: share/

celebrate community successes

deliver consistent, accurate information and city news

reinforce a MHD decision

support

All Traditional news will not/cannot deliver Moorhead’s story; we need to develop systems that deliver information more efficiently and consistently, and unfiltered. h b i

Design/redesign Moorhead website to serve as a: community portal information hub on

issues/ legislation

news source home base for other

social spaces

Develop architecture and design that encompasses all aspects of community from a resident’s or business owner’s perspective (not siloed by department or function), including: Ensure search‐ability of information

(SEO) Enhance functionality for “city business”

such as property data, etc. Include/develop news feed/success

sharing with Moorhead’s educational institutions

Create RSS to news feed Cross link/promote other entities

marketing Moorhead Develop brief concise meeting

summaries for city governance meetings

Complete in 2012

$100,000 ‐ $125,000

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community The website is the best/logical choice for serving as a community portal as well as continuing its role as a city business site.

Define purpose and strategy for social media spaces, to: Support

connections of community

Provide useful information, map back to website

Provoke conversation

Create engagement

Develop social media strategy and editorial calendar: Consider the appropriate use of polls,

questions, contests as conversation starters

Ensure tone, conversation is suited to the channel/space

Community manager could be an intern position, coordinating content between city manager/community services offices

January 2012

$2,800 ‐ $4,300 for strategy, calendar; community management is on‐going staff time



Group meeting with Realtors®/firms to deliver “why Moorhead” community information and specific opportunities: Include

food/specialties from a Moorhead business

Plan company tours/events/appearances to coincide with delivering information; can customize the event to the organization, including: Q&A for Realtors® Host Moorhead tours for CEU Guest at staff meetings

Spring 2012; 2x/yr calendar

Food/ treats not estimated; Staff/ official time

Equip influencers to be Moorhead supporters and ambassadors

Real estate industry, including agents, developers, lenders

Recognizing the limited amount of staff/time available to complete outreach efforts, elected officials, such as the Mayor, may need to assist in meeting with

Develop list/meet with relocation specialists at real estate firms

Use as opportunity to educate on Moorhead opportunities as well as uncover sensitivities of their buyers

Annually Staff/ official time

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Meet with commercial brokers/Realtors ® to deliver “why Moorhead” information

Host event/company presentations; can customize the event to the organization: Answer Q&A regarding commissions,

growth areas Create presentation/powerpoint

February 2012; annually

$300, powerpoint template Staff/ official time

Meet with lenders with housing program specifics

Deliver housing information for consumers; use opportunity to field concerns and questions, uncover opportunities/gaps

February 2012; annually/ as needed

Staff/ official time

Conduct editorial meeting with Forum

Hosted by the Mayor and City Administration Opportunity to explain advances,

changes Address advantages of Moorhead

investment

Annual and/ as needed


with influencers.

Contact/share news with traditional media outlets Same info shared

in other tactics direct to audiences

Triggering events: any news that impacts home ownership or business in MHD

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Meet with developers, one‐on‐one

Demonstrate support for their investment in Moorhead

Field, address questions Garner suggestions on how to

make the process easier

Annually; on‐going


HBA contractor continuing ed sponsorship

Update banner for display Builder education fact sheet

Annually $1,250 sponsor fee; produce, design materials: $1,300

Developers/builders

Need to bridge the differences between MN and ND development as well address issues and concerns on an on‐going basis

Host “Builders Summit”

Demonstrate Invite both existing and new builders to MHD

Address progress, changes, opportunities

Facilitate dialogue, discussion

Annually Meeting costs not estimated; invite, flyer: $2,000

Current business owners

The merged chamber as well as staff changes/reductions have meant a decrease in personal outreach to MHD businesses; there is an opportunity to use technology to ramp up outreach/ updates and overcome some of the gaps here

Proactively engage with passionate MHD supporters; keep updated on important issues, including: Business

Association Rotary Spuds

boosters

Develop business update bulletin/communication process addressing current questions and concerns: o Deliver online o Post Q&A o Distribute updates on issues

and projects that affect business

o Could be an expanded version of “biz buzz” content

On‐going Design and production, online banner: $800 Content and distribution, staff time

Demonstrate business support through outreach

Business, Chamber, HBA

On‐going advertising opportunities

Selectively place ads and sponsorships

Weigh, review, assess current opportunities, target audiences:

HBA map $100 Chamber Directory Ad, $2,500

On‐going Current spend:$3,800 Misc. events, mtgs, refresh:

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Business after HRS, $1,200 $1,500

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Flint CommunicationsCITY OF MOORHEAD

2012 PROPOSED MEDIA

MonthWeek of 26 2 9 16 23 30 6 13 20 27 5 12 19 26 2 9 16 23 30 7 14 21 28 4 11 18 25 2 9 16 23 30 6 13 20 27 3 10 17 24 1 8 15 22 29 5 12 19 26 3 10 17

Print Size

The Real Estate Book Full Page/4 color $2,376.004.81" x 7.63"

12,000 copies 35-mile radius of Fargo-Moorhead

The Forum Sunday Classified homesHQ 6C x 4"/4 color $4,200.00

front pagePrint Media Total: $6,576.00

Online Media

In-Forum 20-50 Mile Radius $10,000.00 ROS and homeshq.com of Fargo-Moorhead

600,000 impressions

Google Ad Words Key words TBD $15,000.00

Reach Local Networks Fargo-Moorhead DMA $4,250.00

Facebook 50 mile radius $5,600.00 Users Age 24-49 97,640 users Users Age 50-65 31,360 users

Online Media Total: $34,850.00

Media Grand Total: $41,426.00

At flintmedia services:We continuously strive to strengthen our industry expertise, encourage creative thinking, hone our negotiating skills, and add to knowledge and understanding of software tools to achieve increasingly better outcomes for our clients.

We dedicate ourselves to working efficiently and effectively, resulting in the best possible return on investment for our clients and enhancing the reputation of our company.

We are committed to creating successful relationships that permit us to work in partnership with colleagues, vendors, suppliers, media outlets, and the organizations we serve.

$396.00$396.00

August

$396.00 $396.00 $396.00 $396.00

January February March April May June October November DecemberJuly September2012

NET TOTALS

Page 1 version 1

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City of Moorhead 2011 Annual Housing Report

This report reviews Moorhead’s housing market for 2011 and compares progress to prior years’ statistics. This 2011 Housing Report can be found at http://www.cityofmoorhead.com/housing/index.asp. Executive Summary Property values continue to hold steady in Moorhead. Mortgage foreclosures in Moorhead continue to be significantly below other areas of Minnesota and the nation, fluctuating between 37 and 45 since 2007. There were 44 home foreclosure sales in Moorhead in 2011. Home sales are down about 4% in FM Metro area from 2010, although median sales prices appear to be holding steady. Like many metro areas around the country, Moorhead saw a surge in new housing permits mid-decade. Housing permits – both single family and multi family – saw a decline in 2009 and 2010. There were 60 multifamily units constructed in Moorhead in 2011, compared to no multifamily units constructed in 2010. Estimates for production of new housing priced at $150,000 or less in the Regional Workforce Housing Profile for the Fargo-Moorhead Metro Area (Profile) for the period 2005 - 2010 have been met, according to estimates based on the reported building permit value. The City of Moorhead purchased 176 properties in low-lying riverfront neighborhoods between 2009 and 2011 using $50.7 million1 of combined federal, state and local funding for flood mitigation projects. The City hopes to conclude the acquisitions of the final flood prone homes in 2012 with a requested $20 million State bonding appropriation. The City of Moorhead commissioned Maxfield Research to undertake a housing and economic market analysis in Moorhead and the greater metropolitan area in order to assess the City’s competitiveness and consider opportunities for growth and development. Background for the report includes statistical building and population data as well as personal interviews with City Council, Moorhead Public Schools Superintendent, EDA Board Members Park Board members, Planning Commission members, area Realtors, area homebuilders, local developers, and mortgage lenders. The report is anticipated to be available in the first quarter of 2012. The Economic Development Authority Board of Directors voted unanimously to approve the 2012 Moorhead Marketing Action/Communication Plan. The Plan was developed over a series of meetings with EDA board members and Flint Communications incorporating data gathered from the 2011 Homebuyer survey and data compiled by Maxfield Research for the Housing Market Study. As noted within the Plan, the goal is residential growth (residents who also become customers of local businesses and employees of local firms) and the overriding objective is to restore and create confidence in a Moorhead investment decision. There are numerous externalities affecting Moorhead, but Moorhead is still a sound investment and a good choice for individuals and families looking for a hometown. The Plan emphasizes public relations activities and electronic communication tools, including a City website overhaul and on-line advertising. There is also some continued investment in traditional advertising recommended. 1 Includes property acquisition, demolition and remediation Questions or requests for further information can be directed to Kristie Leshovsky, City Planner and Zoning Administrator, 218-299-5332 or [email protected]

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Moorhead, MN – 2011 Housing Report Page 2

Housing Sales Market (New and Existing Homes) Home sales are down about 4% in FM Metro area from 2010, although median sales prices appear to be holding steady.

Source: FMAAR – Data for 2011 gathered on January 26, 2012 Closed Sales Represents Single Family, Twinhomes, Townhomes and Condos *Full Year Data (January 1 – December 31) Note: not all closed home sales may be represented as realtors may input sales data at a later date

Infrastructure Expansion and Residential Housing Development Activity → Approximately 3,200 single family residential lots were platted in Moorhead between 2001 and 2011. → For those lots, approximately 2,075 building permits have been issued. → Of the remaining 1,125 platted lots with no building permit issued, approximately 525 represent fully-

serviced buildable lots and are located in various subdivisions throughout Moorhead. The remaining 600 lots, although platted, have not been serviced with local streets and utilities.

→ Three large subdivisions, Johnson Farms (platted in 2005), Stonemill Estates (platted in 2006), and Village Green 6th Addition (platted in 2006), represent approximately one-third of the new lots platted since 2001. Local streets and utilities to these three subdivisions are being completed in phases.

Table 2 – Partially Serviced Subdivisions

Subdivision Total Lots Serviced Not serviced Building Permits Issued Johnson Farms 368 201 167 129 Stonemill Estates 194 77 117 16 Village Green 6th 423 107 316 83 TOTAL LOTS 985 385 600 228

Status of Special Assessments for Stonemill Estates: Stonemill Estates: Substantial delinquency. Tax forfeiture anticipated in 2012. Special Assessment

bond payments are being covered by an existing cash balance in a Special Assessment Fund. There is no Letter of Credit.

Lot Absorption Rates The average number of single family attached and detached building permits issued from 2000 through 2011 was 200 permits.

Assuming the City’s current inventory of approximately 525 fully-serviced single family attached and detached buildable lots:

- If 300 building permits are issued per year, it would take approximately 2 years to absorb existing lots. - If 200 building permits are issued per year, it would take approximately 2.5 years to absorb existing lots. - If 100 building permits are issued per year, it would take approximately 5 years to absorb existing lots.

Table 1 – FM Metro Closed Housing Sales

2006 2007 2008 2009 2010 2011

Closed Sales*

Median Sales Price

Closed Sales*

Median Sales Price

Closed Sales*

Median Sales Price

Closed Sales*

Median Sales Price

Closed Sales*

Median Sales Price

Closed Sales*

Median Sales Price

Fargo 1,431 $135,000 1,443 $140,000 1,255 $141,000 1,379 $136,700 1,247 $142,000 1,175 $152,000

Moorhead 593 $130,708 635 $138,000 548 $138,000 557 $138,000 473 $141,000 464 $139,000

West Fargo 544 $142,850 543 $144,700 448 $149,900 504 $154,960 460 $162,000 450 $164,900

Dilworth 87 $136,150 75 $136,675 52 $145,250 66 $139,900 41 $133,000 37 $141,000

Total 2,655 2,696 2,303 2,506 2,221 2,126



New Housing Construction Activity Permits for single family attached and detached homes in 2011 were down by 50% compared to 2010. Permits for multifamily units were up by 60 units in 2011. Overall, the number of units constructed in 2011 is consistent with the number of units constructed in 2010, but down 70% compared to the mid-decade boom in 2005.

Table 3 - Building Permits Issued in Moorhead, MN (2000 –2011)

YEAR Single Family Detached

Units

Single Family Attached

Units

SF Attached &Detached

Units

Two, Three & Four Units*

Five or More Units*

MOORHEAD TOTAL UNITS

2011 70 10 80 21 60 161

2010 112 48 160 0 0 160

2009 143 32 175 0 124 299

2008 153 37 190 5 217 412

2007 161 64 225 38 68 331

2006 163 166 329 8 145 482

2005 190 130 320 62 132 514

2004 176 117 293 4 178 475

2003 113 82 195 4 160 359

2002 90 110 200 38 124 362

2001 74 32 106 6 36 148

2000 69 24 93 44 0 137 *Represents number of total units, not number of permits issued Source: City of Moorhead Building Codes Office (excludes permits issued in Oakport)

Chart 1 – Housing Units Constructed in Moorhead, MN (2000 – 2011)

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Workforce Housing → The Regional Workforce Housing Profile for the Fargo-Moorhead Metro Area (Profile) estimated that,

between 2005 and 2010, Moorhead could support a projected demand of an additional 1,050 newly constructed for-sale units within the following price range:

Below $150,000 ................................ 300 Units ................... 29% $150,000-$199,999 ........................... 425 Units ................... 40% $200,000-$299,999 ........................... 250 Units ................... 24%

$300,000 and higher ....................... 75 Units ..................... 7%

→ Moorhead issued 1,473 single family attached and detached building permits from 2005 through the 2011 and the permit data indicates that Moorhead is providing the number and type of housing units suggested in the Profile.

Table 4 Estimated Cost* of Attached and Detached Homes (2005 – 2011)

<$110,000 $110-149,999 $150-199,999 $200-299,999 >$300,000 Totals2011 6 35 14 14 11 802010 22 43 49 28 13 155 2009 38 53 42 25 17 1752008 32 45 71 29 13 190 2007 45 57 70 34 19 2252006 125 58 74 55 16 328 2005 109 75 69 49 18 320Totals 377 366 389 234 107 1,473

Permits issued for “Foundation Only” for house moving permits have been deleted, as they represent the estimated cost of the foundation only *Building Permit Value less than $125,000: add 14% to account for lot price and special assessments *Building Permit Value between $125,000 and $175,000: add 17% to account for lot price and special assessments *Building Permit Value above $175,000: add 20% to account for lot price and special assessments **These percentages are estimates and were based on average lot prices and special assessments for new homes constructed from 2005-2006

Foreclosure Sales In Moorhead (2005 to 2011) Moorhead’s residential foreclosure rate is not at a significant level when compared with other urban areas in Minnesota and across the country. At the time this issue became problematic nationwide, foreclosures in Moorhead did increase but the overall number remains low and foreclosed properties have not been shown to have a measurable market impact.

Table 5 Foreclosures Sales 2005 - 2011

2005 16 2006 20 2007 42 2008 37 2009 38 2010 45 2011 44

Voluntary Flood Acquisitions The City of Moorhead purchased 176 homes from 2009-2011. These homes have been acquired for flood mitigation projects. The acquisitions and infrastructure projects, once complete, will, with minimal temporary measures, reduce Moorhead’s flood risk to 42.5 feet. The City’s objective has been to prioritize the buyouts based on each property’s critical elevation to the new 100-year flood elevation. All buyout participation has been voluntary and will continue to remain so. Once homes are purchased, they are moved or demolished to make way for flood mitigation projects. G:\CSD\Community Development\Housing\2011 Housing Report


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genda Item #1.

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genda Item #1.

Documents

COMMITTEE OF THE WHOLE AGENDA February 21, 2012 - 5:30 …