A RETIREMENT COMMUNITY
MINNETONKA COUNTRYSIDE:
by
Charles D. Nolan Jr.
B.S.,
Boston University
(1981)
SUBMITTED TO THE DEPARTMENT OF ARCHITECTURE IN PARTIAL
FULFILLMENT OF THE REQUIREMENTS OF THE
DEGREE OF
MASTER OF SCIENCE
IN REAL ESTATE DEVELOPMENT
at the
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
SEPTEMBER, 1986
@
Charles D. Nolan Jr.
1986
The Author hereby grants to M.I.T. permission to reproduce
thesis document
this
and distribute publicly copies of
part.
or
in
whole
in
Signature of the Author
lan Jr.
les D
Departmht of &hitecture
1986
August 1
Certified by
Jamfies McKellar
Professor of Architecture and Planning
upervisor
The
Accepted by
_________
Acceptd by
James McKellar
Chairman of the Interdepartmental
Degree Program in Real Estate Development
SEP 05 1986
Rotc'
TABLE OF CONTENTS
ABSTRACT .
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INTRODUCTION
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Current Trends
Target Sector .
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Potential Pitfalls and Problems
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Description and Context .
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THE SITE
CHAPTER TWO:
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History . . . . . . . . . . .
Survey and Physical Analysis
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THE PROJECT .
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Demographic Analysis
CHAPTER FOUR:
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Competition .
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MARKETING .
What to Market
Methods .
Strategy
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APPENDIX 1:
COMPETITION
APPENDIX 2:
DEMOGRAPHIC ANALYSIS
APPENDIX 3:
FINANCIAL ANALYSIS
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SUMMARY AND CONCLUSIONS
CHAPTER SEVEN:
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10
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FINANCIAL ANALYSIS
CHAPTER SIX:
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41
Amenities and Operations
Selecting Management
.
Physical Requirements . .
CHAPTER FIVE:
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Location Analysis
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20
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MARKET ANALYSIS
CHAPTER THREE:
2
4
THE RETIREMENT HOUSING INDUSTRY
CHAPTER ONE:
BIBLIOGRAPHY
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86
100
A RETIREMENT COMMUNITY
MINNETONKA COUNTRYSIDE:
by
Charles D.
Nolan Jr.
on August 15,
the Department of Architecture
Submitted to
of the
requirements
the
of
fulfillment
1986 in partial
Development
Estate
Real
in
Science
of
Degree of Master
at the Massachusetts Institute of Technology.
ABSTRACT
The purpose of this thesis is to investigate the development
potential of a parcel of land known as Minnetonka Countryretirement
a
use as
for
side in Minnetonka, Minnesota
with
units
living
incorporates
project
The
community.
services and amenities to assist and enhance the lifestyle
Countryside
Minnetonka
retirees.
of
independence
and
would become a community within a community.
The retirement housing industry, its history and current
Potential problems in the development
trends are discussed.
of such a project, and how those problems can be mitigated
A site analysis, design analysis
or avoided are presented.
the
in
assist
to
provided
are
analysis
market
and
A marketing
feasibility.
of the project.'s
determination
Finally, there
plan for the projects is* also designed.
is a financial investigation of the project, identifying
the risks.
James McKellar
Thesis Supervisor:
Professor of Architecture and Planning
Title:
3
INTRODUCTION
become one
of the most active real estate markets in recent
and there is every indication that it will continue.
years
27
million
of
the
expected
are
will
predict that
Forecasters
years.
be
group, or
approximately
65
the
by
in
Americans
million
2030,
year
35).
One industry
there
this
age
65 or older
one in every five Americans will be
(Gabler & McKinley, p.
50
next
the
over
figures
the
lifestyles,
dramatically
increase
to
12%
changing demographics,
to
improved
and
care,
constituting
older,
or
Due
general population.
health
better
65
aged
Americans
approximately
were
there
that
reported
census
1983
The
has
group
age
over-65
the
for
production
Housing
journal reported
that each day, 5500 Americans reach age 65, and 3800 persons
over
of
age
1700
predicted
million
63
per
elderly
that
new
This
die.
by
day
the
nursing
translates
into
(Adams, p.
75).
end
home
of
increase
net
Another
812,000
new
source
than
century, more
this
beds,
a
units
1
in
retirement centers and 116,000 new units in lifecare centers
would be required (Horn, p. 26).
Today's
elderly
population
is
not
only
expanding,
it is also wealthier and better educated than ever before.
In
1983,
72% of
home, and 84%
the
elderly
population
owned
of those homes were mortgage-free.
4
their
own
In 1983,
or higher
$20,000
those over age 65 had incomes of
of
39%
("Housing the Graying Market," p. 71.)
housing
developers,
health
related
and
to
available
options
the
several
are
creating
80's,
The developer of
among developers.
competition
of
retiree
the
broadened
has
There
sophisticated.
more
much
become
industry
the
result,
a
As
corporations.
national
large
and
organizations,
other
and
hospitals
groups,
church
multi-family
conventional
by
exhibited
been
has
Interest
industry.
the
in
involvement
and
interest
of
wave
a
prompted
have
these
like
statistics
Well-publicized
retirement
housing must understand the needs of the market and address
Developers
them.
with
product,
must
excellent
well
a
provide
superior
and
service
planned,
quality
management
in order to have a successful project.
paper
This
issues
the
possible,
However,
outline
the
the
in
in
of
actual
to
identify
context
of
a
paper
some
how
attempts
cases
the
analysis
task
site
paper
this
should
be
to
Where
details.
specific
will
provide
only
an
rather
than
analysis).
The
performed
(e.g. in-depth market
the
address
project.
proposed
report
will
and
project is a development proposal for a retirement housing
community,
city
prompted
officials,
who
by
a
conversation
expressed
a facility.
5
an
interest
with
in
Minnetonka
seeing
such
CHAPTER ONE
THE RETIREMENT HOUSING
for
Housing
in
emerged
care
industry.
as
elderly
the
the
to
response
new
far
The concept of continu-
back as the Revolutionary War era.
ing
a
not
for
housing
special
began
Americans
is
elderly
the
INDUSTRY
gradual
change
in
the American social structure.
1920's
in
the
in
interest
has
responded
way
religious
to
other
they
but
organizations
been
are
of
housing
dominated
giving
quickly
industry
Today's
organizations.
variety
always
has
industry
The
a
with
industry
the
has
recently
only
demand
the
to
alternatives.
by
elderly,
the
facilities
early and on-going
this
Despite
58).
(Jeck & Carlson, p.
care
continuing
new
as
Midwest
the
in
built
were
facilities
modern
earliest
The
still
finds
religious groups sponsoring many projects, but the majority
of
these
groups
are
involved
with credibility within
homes,
and
under-utilized
or
are being
Many other
such as
are
either
frequently
venturing
organizations
project
Hospitals, nursing
which
approached by developers
for-profit
provide the
the community.
universities,
land,
to
only
for
are
on
their
have
own
joint-ventures.
becoming involved
multi-family housing developers and major national
corporations
such
as
Marriott.
6
The
growth
within
the
ment
assistance
the
of
much
back
cutting
be
to
appears
time when govern-
at a
it comes
taking place, but
graphics
demo-
skewed
the
to
response
in
generally
is
industry
that was once set aside for the elderly.
The industry is also faced with increasing regulations,
both
response
in
comes
This
state.
and
federal
some
to
Although the number of failures
well-publicized failures.
"The
to date have been few, the consequences are serious.
retirement housing
a
of
failure
is
project
bad as the
as
crash of a 747, in the eyes of the American people"
&
If
66).
p.
Brecht,
reserves
be
annual
inspections
strict
guidelines
not
that
is
in
does
there
all
of
the
not
state,
midst
appear
that
while
project,
substantial
others
information
financial
management.
for
only within each
industry
the
in
held
are
elderly
As a result,
funds.
demanding
regulations
have
the
fails,
regulate retirement or elderly hous-
carefully
Some
ing.
project
sometimes without
without shelter and
many states
a
(Curran
The
require
or
have
vary,
regulations
but within each project.
of
to
dramatic
such
a
be
any
The
transition
standardization
or
set formula for retirement housing projects.
Current Trends
The
market
of options.
standards
for
elderly housing offers
a wide variety
In addition, the industry has not yet adopted
that
clearly
differentiate
7
between
the
various
As a result, it is difficult
being offered.
product types
The following appears
to categorize the options available.
to
137).
of America," p.
Sheltered or enriched housing.
Congregate Housing:
1)
Graying
("The
description
used
commonly
most
the
be
and
designed
Specially planned,
rental
multi-unit
managed
housing where support services such as meals, housekeeping,
provided.
be
of
independent
Health
families.
their
opportunity
the
persons
ambulatory
providing
house,
updated version of a boarding
an
is
Congregate
are
activities
recreational
and
social
transportation,
not
is
care
to
Residents living in a congregate
usually provided on-site.
facility are generally between 75 and 85 years old.
Domiciliary
2)
Personal
Care:
care
residential
or
care.
Group living arrangements providing staff-supervised
meals,
housekeeping,
sleeping
and
must
rooms.
personal
These
facilities
and
are
operating
designated
meet
care
or
private
licensed
generally
standards,
shared
including
minimum staff requirements.
3)
"removable"
self-contained
relative
on
family home.
housing
Elder
Housing:
Echo
the
same
cottage,
living
property
and
unit
granny
flats.
occupied
adjacent
to
a
by
A
a
single-
Due to the small size, this is an affordable
alternative
for
many
member.
8
families
with
an
elderly
4)
retirement
care
housing
development
to
provide
a full
a
within
arrangements
over
are
designed
of
care
to
skilled
nursing
generally
projects
Retirement
ownership and/or
to
of
continuum
living
individuals
As
projects
These
change.
with
level
the
units
living
nursing
substantial
require
rental
The
homes.
fees
up-front
They
typically
activities,
offer
developments
They range
units.
recreational
of
These
Village:
subdivisions.
moderate
selection
a
adjacent
in
not
as well as substantial monthly rents.
(endowments)
5)
care
is
care
independent
from
ranging
(85
residents
elderly
to provide
needed,
needs
their
older adults
facility.
single
a
older,
grow
65
includes
but
for
operated
and
continuing
or
care
Life
concept
singular
services
of
complex.
campus
care
designed,
planned,
range
older).
and
continuing
community,
A
years
Life care community, continuing
Life Care Complex:
from new towns
offer
creating
a
a
wide
campus
or country club atmosphere, attracting more active retirees,
aged 65 to 74.
A wide range of support services are offered
for a fee.
Many projects presently in operation are a combination
of
The
one
or
several
of
the
above
described
projects can differ in many ways.
product
types.
They can be rental
or condominium, offering services as a package or as-needed.
Health
care
can
be
or
packaged
9
pay-as-you-go;
it
can
be
off-site.
or
on-site
apartments,
project
where the
levels
Living units can be high-rise, low-rise,
of care available.
garden
of
a variety
be
can
There
or
is
on
not appear to
does
There
located.
depending
cottages,
individual
be one established method for projects for the elderly.
The
industry
is
options and modes of
financing
of
for-profit/non-profit
joint
for-profit developments with religious sponsors,
ventures,
Questions
etc.
mix
There are projects which
ownership.
non-profit,
strictly
are
wide
a
pursuing
such
as
what
does
(i.e. land or capital),
the project
of expertise
each
party
bring
to
what are their areas
(development, management, health care, etc.),
or what are the various tax implications, are all important
in determining the structure of the project.
There is a wide variety of financing options available.
The most
commonly used method in today's market has been
the issuance of tax exempt bonds.
However, due to potential
changes in the current tax laws, the continued availability
of this method is questionable.
Target Sector
The
property
would
project
is
have
additional
proposed
for
a combination of
the
character
of
the
Minnetonka
product types.
a
retirement
Countryside
The project
village
with
services more commonly found in the congregate
and domiciliary projects.
The project would be developed
as a campus-like setting with 280 garden style and low-rise
The proposal offers
care units, to be built in two phases.
services on an as-needed basis where possible.
a maximum of
or
with
luxury,
the
of
character
general
The
personal
40
with
combined
units,
living"
"independent
would
quality
to
on
emphasis
an
project
be
upscale
from the
draw
surrounding communities.
look closely at this
The
65.
past
industry
needs
they
as
years
5-10
age
subgroups
three
identified
has
market
over-65
the
within
every
change
population
this
The
it.
market and identify a target sector within
of
homogeneous
a
not
is
industry
potential development must
A
group.
housing
elderly
The
("Housing
the
Graying
Market",
are
the
young
retirees,
p. 73).
aged
1)
The
65
to
These
"go-go's."
They are active,
74 years.
independent,
self-
sufficient and want to enjoy their newly acquired leisure.
They
enjoy
entertainment,
travel,
recreation.
and
They
do not want to be tied down.
The
2)
85
who
are
"slow-go' s".
beginning
themselves
to
but
ages
Individuals
slow
may
down.
need
They
some
75
can
through
generally
assistance.
They
care
for
may,
for example,
require assistance with meal preparation
and housekeeping.
They would enjoy a putting green rather
than
an
9-hole
golf
course.
11
Typically
they
like
being
at
other
and
outings,
fellowship,
enjoy
home,
near
or
social activities.
have
and
housekeeping.
85
may
care
nursing
often
have
age
attribute.
physical
failing
of
form
some
meals
over
population
The
required.
be
85
skilled
to
care
from personal
Services
beyond
assistance
need
They
down.
slowed
who
age
over
group
the
is
This
"no-go's."
The
3)
When this occurs, access to health care becomes an important
need.
The
is
group
slow-go
Minnetonka
the
for
targeted
project because the property is not large enough to provide
for
the
the
group,
and
proper
medical
proposes
to
interest
of this target
in-depth study
more
to
facility
group,
this
attract
no-go
the
go-go
with
equipped
be
not
would
facility
the
by
required
activities
recreational
group.
the
A
group, how the project
this
and why
segment
was
selected will be discussed later in the paper.
Potential Pitfalls and. Problems
Retirement
just
than
the
a
real
development of
with
looks
emphasis
at
this
is
housing
on
estate
complicated
and
both commercial
the
issue,
A
transaction.
selling
of
and others,
toward a successful project.
12
project
involves
residential
services.
to
is more
in that it
guide
This
space,
section
decision makers
The first key to a successful project is understanding
the
market.
not
a
change
as
they
successful,
it
must
continually
to
be
to
used
the
in
result
are
residents
adversely
and
the
sector would
might
services
amenity
wrong
The
seeking.
capital,
waste
offering
not
in
affect
the
satisfying
at
that
amenities
of
creation
result
or
aimed
appeal
selected to
Failing to focus on one
that group.
needs of
services
the
and
group
one
not
group,
The complex must be designed
amenities
the
in mind;
group
one
project
the
For
specific
a
target
individuals
these
older.
grow
the elderly market in general.
with
of
needs
The
group.
homogeneous
is
market
elderly
the
earlier,
stated
As
not
be
potential
package
can
project's
the
feasibility.
developer should contract with a qualified market
The
analyst
or
consultant
to perform
an
in-depth market
study
of the area to determine the proper group and the particular
characteristics
determine
the
needs
or
proper
of
that
combination
group.
of
The
market
variables
will
defining
the product.
A
good
market
study
should
review
the
competition.
It should focus on size, location, services, fee structure,
age, and sponsor.
It is also helpful to know how successful
the competition has become.
13
area,
the
rent-up
slower
capital,
requires
the
is
What
rate.
educate the market?
to
it be necessary
market
the
Educating
a
will
or
to
introduced
been
concept
the
Has
conditions.
local
to consider
important
is
it
the market,
In assessing
means
also
it
but
relative
affluence
of the elderly population and can they afford the product?
quickly
How
An
accurate
to
the
related
of
newness
the
to
fact,
In
assumed.
risk
of
level
directly
is
Accuracy
industry.
the
due
difficult
is
market
the
of
assessment
project.
the
for
demand
the
determining
issues
important
These are
home?
their
sell
they move or
can
can
it
be assumed that "generic" market studies are useless because
each project is unique.
A
or
second major pitfall
effort.
presales
lack of a premarketing
is the
this
Although
is
more
difficult
in
a rental project because future residents cannot be commited
to
downpayment,
a
should be
it
should be attempted.
still
collected equal
the
market
are
commited
will
bear,
beyond
a
rent or whatever
to one month's
providing
that
assurance
An
interest.
casual
A deposit
tenants
average
time
frame of six months for a presales campaign is recommended
(Cwi, 1986).
of
a
project
Many lenders today are seeking 50-70% presales
before
construction
funds
are
released.
It
would, therefore, be prudent to implement a strong marketing
effort
be
prior
monitored
to
construction.
carefully
with
14
an
Marketing
unbiased
results
should
evaluation,
and
be
based in
in
the
should
proceed
decision to
the
those
part on
results.
to
compared
be
problem
is
experience
to
what
is
service
is
understand
to
Food
personnel.
manage
properly
to
required
or
service
food
quality
a
operate
may
project
The
adequate
have
not
do
developers
most
that
providing
toward
hotel.
luxury
a
of
that
management
are
retirement
a
of
management
The
services.
orientation
heavy
the
to
due
intensive
housing
retirement
projects
These
management.
is
industry
concern
of
area
third
A
one of the most difficult components to manage when dealing
*
commercial
.
service
food
"With
stated,
Industry
Service
Food
the
National
the
of
Greene
Floyd
volume.
in
and
profits
for
Institute
exceptions
few
institutional
food service budgets hang by delicate threads which require
careful
a collapsing
manipulation to avoid
point in the system."
at
stress
some
(Jeck & Carlson, p. 63)
The elderly, by nature, require a delicate and balanced
and
diet,
quality
outside,
handle
they
foods.
Most
qualified
each
a
prefer
varied
require
lenders
and
management
respective
and
operation
menu
interesting
to
developers
food
unless
the
hire
firms
service
of
to
developer
has had a successful track record in those areas.
The
not
be
importance
of
underemphasized.
providing
A
large
15
quality
service
proportion
of
should
tenants
The
come from referrals by others already in the project.
quality
the
of
result
direct
a
are
referrals
of
number
of service provided.
Another major pitfall in the development of a retire-
assumptions
optimistic
overly
and
Unrealistic
planning.
financial
in
is
community
ment
cause
the
been
have
of many project failures.
A sound financial plan requires an accurate assessment
of
of
the size
an
to
relates
This
market.
that
and the
the market
rate of capture within
recommendation
earlier
It also relates to a critical
for a good market analysis.
financial assumption, the rate of rent-up.
Many project failures have occurred because developers
and
conservative
as
act.
to
slow
project
retirement
elderly
The
rented.
be
would
rate
the
about
optimistic
too
were
the
last
at
which
generally
is
population
units
the
move
the
They
view
move
they will
to
a
and
make,
are particularly cautious.
typical
The
to
six
visits
tenant
prospective
over
a
two month
is
period
said
need
to
decision
a
before
four
Many are not familiar with the concept and require
is made.
an
education
of
6
8
to
Industry
process.
units
feel
realistic,
is
per month
experts
that
but
as
a
rate
few
as
4 should be expected (Cwi, 1986).
A
sound
reserves;
the
financial
first
is
plan
a
requires
construction
16
several
forms
contingency.
of
This
is
common
to
be
included
discussed
most
here.
above,
sufficient
to
scenario.
large
Second,
the
the
the
rent-up
deficit
project
and
deficit.
reserve
through
should
As
should
a
worse
be
case
The financial plan should also allow for adequate
operating and
replacement
such
to be
reserves
are
turned
set
aside
If
is
rent-up
carry
projects
development
reserves.
shown.
As
over, the project
to
maintain
neglected,
the
interest
lenders
require
the project ages and units
should have
quality
in
Many
the
sufficient
expected
project
by
will
funds
residents.
decline
and
the project would ultimately fail.
The
strength of
factor.
These
commitments.
the ownership
projects
It
is
ability
and
the
slow
rent-up
backed
by
financial
is
to withstand
important
substantial
financial
require
important
the
entity is an
the
that
the
lengthy
period.
A
strength
investor(s)
construction
successful
to
have
period,
development
adequately
deal
with
situations which will inevitably arise.
The
best
project
requires
sophisticated
planning.
The developer should work out detailed budgets and schedules
for
of
each
phase
reporting,
of
the
control
of
process,
quality,
have
and
organized
clearly
methods
designated
channels for decision making.
The
a
design,
retirement
services,
development
amenities,
are
17
different
and
management
from
other
of
types
Therefore, it is essential for the success
of development.
of the project that the developer assemble the best developteam
ment
possible,
to
experienced
an
With
lawyer,
banker,
the
can
developer
the
assumptions,
ruin
that
errors
avoid
realistic
and
planning,
proper
team,
manager.
and
contractor
marketer,
architect,
the
from
extends
requirement
This
requirement.
mandatory
a
experience
previous
with
potentially good projects.
identified
three areas which can cause retirement projects
construction, site location,
to fail within the first year:
to
Although
marketing.
and
retirement
the
1986)
(Conference,
Horwath
and
Laventhol
Finally,
type
the
industry,
of
unique
not
are
pitfalls
these
taken
risks
are
quite different due to the nature of the product.
Laventhol
needs
of
the
such
details
must
be
adapted
when
projects
provide
inadequate
areas
in
the
Developers
buildings.
and
layout
that
building
It
understanding
good
a
require
elderly.
as
stated
(Conference, 1986)
Horwath
decisions
construction
the
and
for
the
fixtures
Some
elderly.
areas
or
advantageous
of
understand
of
placement
common
is
must
that
activities
to work
with
architects who have designed projects for elderly residents.
The construction of the project must be carefully monitored
and should have a system for quality control and reporting.
This
is
important
for
two
reasons.
18
First,
the
elderly
as a group, are demanding.
They will not accept mediocrity
and demand quality craftsmanship.
of
such a project has a
orders
can
make
the
project
successful
Second,
the
development
low tolerance for mistakes.
difference
and
one
between
that
has
a
Change
competitive,
priced
itself
out
of the market.
Poor
site
identified
selection
by
the
was
study.
the
second
Selecting
area
the
of
right
site
difficult because there are several variables to
The
site
where
should be
the
should
located
prospective
be
residents
enough
large
in a secure
to
concern
is
consider.
neighborhood, near
already
accomodate
live.
the
The
site
requirements
of the project, and in an area that will satisfy the needs
of the elderly.
The
of
third area of
marketing
area
stems
the
concern cited in the study is
project.
from
the
The
fact
reason
that
this
there
focuses
on
selling
real
is
a
problem
a
common
A marketing effort
misconception about what is being sold.
that
is
that
will
estate
fail;
selling
units in a retirement center is the selling of a lifestyle.
The prospective
residents
what
they
are
purchasing
They
want
to
feel
secure
have a place
is
a
and
social and medical needs met.
19
place
have
in
to eat
which
basic,
and
to
sleep;
"live".
recreational,
CHAPTER TWO
THE SITE
Description and Context
located
site
acre
30+
a
is
Countryside
Minnetonka
12 miles west of Minneapolis in the affluent bedroom community
of
Highway
7, which
is
which
101,
101
crosses
approximately 1/4 mile to
the north,
access
that provides
lane divided highway
four
a major
Highway
State
south.
and
north
runs
State
by
accessed
is
It
Minnesota.
Minnetonka,
to downtown Minneapolis (see map on following page).
the
is
intersection
major
This
characterized
within
Included
quality
Also
boutiques.
by
two
these
of
within
the
a
the
shopping
area
and
center,
are
most
of
centers.
large-scale,
are
centers
discount
to
intersection
The
area.
sub-regional
three
stores,
food
for
amenities
commercial
access
provides
upscale
restaurants,
banks,
gas stations, flower shops, optical stores and professional
offices.
A
key amenity is
medical/dental
professional
the
existence
building.
a clinic
of
There
24-hour, walk-in medical emergency clinic.
is
also
and
a
The surrounding
area consists of single-family homes.
The
suburbs
city
in
of
the
Minnetonka
is
Minneapolis/St.
20
one
of
Paul
the
more
affluent
metropolitan
area.
21
It
rural-suburban atmosphere
national airport, yet maintains a
and
lakes,
of
abundance
woods,
dense
the
of
because
inter-
the
and
Minneapolis
downtown
to
convenient
is
extremely strict zoning.
History
parcel of
undeveloped
the
of
long
bitter
sometimes
and
for multi-family
housing
a
history
has
property
The
Minnetonka.
of
city
in
zoned
land
remaining
last
the
is
Countryside
Minnetonka
between
battles
City
the
and various land owners.
The
owners,
Mr.
Lund
Countryside".
partners,
two
years
several
an
attempting to
family)
(single
R-1
so
zoning,
and
that
the
apartment complex.
get
zoning
property
the property
an
to
could
rezoned
from
(multi-family)
R-4
be
spent
They
Gullickson.
Mr.
were
Brothers,
Nolan
to
prior
"Minnetonka
named
was
and
homes,
family
single
49
for
1960's
the
in
platted
originally
was
property
The
developed
as
an
The City would not yield and the zoning
change attempts were denied.
site
The
denial
to
became
Lund and
agreement
an
option
1971
to
purchase the
sale
was
for
with the
land.
contingent
from an R-1 to an R-4.
22
the
after
the
Brothers entered
on December 6,
partners
The agreement
upon
soon
sale
Gullickson, and Nolan
into
the
available
stipulated that
property
being
rezoned
for
approval
requested
development
The
units.
224
Brothers
Nolan
by
submitted
proposal
original
The
was
to encompass 200 quadraplex condominium units in 50 separate
24
buildings and
were
designed as
The
lots.
for
colonial
large
City of
approval
granted
rezoned
successfully
was
property
structures
homes with separate
style
eventually
Minnetonka
the
and
units
202
The
separate townhouse units.
on April 16, 1972.
Nolan Brothers consummated the purchase
the following day.
However, due to the economic recession
involvement with other
and an
the Minnetonka
developments,
project was not built.
several
next
the
For
Brothers
Nolan
years
remained
in contact with the City for fear of losing the multi-family
and,
develop
In
1977
they
decided
not
to
rather
than
risk
losing
the
zoning,
zoning.
the
site
the
property
would be sold.
On
February
1,
1979,
Nolan
Brothers
signed
an
option
agreement with Minnetonka Homes, a division of Lyman Lumber
Minnetonka
Company.
202
time
unit project
the
determined
fit
in
City
with
the
develop
to
proposed
that had been approved in 1972,
denied
that
Homes
the
approval
density
surrounding
dropped their proposal to
of
was
the
project.
too
great
community.
184
units
and
the
but this
The
did
Minnetonka
and was
same
City
not
Homes
again denied.
The City wanted only 109 units, which was basically single
family homes on 15,000 square foot lots.
23
be
to
going
it was
being
studied
1977,
was
uses
for
that
was
plan
which
began
in
appropriate
plan of
its
despite
However,
corridor.
7
was
study,
a master
redevelop
down-zoning
guide
7
The
area.
the
Highway
the
for
to
used
Highway
a
of
The
district.
R-1
an
part
as
recommended
property
recommend to the council that the
to
down-zoned
that
stated
board
the
proposal,
this
for
meeting
board
planning
a
of
middle
the
in
and
units,
165
to
proposal
the
dropped
Homes
Minnetonka
attempt,
third
the
On
not being adopted as law until 1983, the City of Minnetonka
down-zoned
the
and
R-1
action
arbitrary
This
denied.
to
land
the
proposal was
current
provoked
the
beginning
of a long and expensive court battle between Nolan Brothers
the
and
that
of Minnetonka,
City
still is
not
completely
resolved.
In 1980, Nolan Brothers filed
action,
property,
given
City
Council
legally
the
proposal
the
2
years
District
of
Judge's
circumstances,
the
denied
at
preparation
and
court
rendered
its
decision
On
was
1981,
December 16,
and
preliminary
them
that the action of
The
the
legally
City
before
that
Court
plaintiff.
the
whether
questioning
suit against the City's
the
battles,
in
Judge
down-zoned
the
whether
approval
of
time.
After
the
Fourth
favor
of
Iverson
the
found
the City was arbitrary and capricious.
decision
went
so
far
as
to
say,
"This
Court
is dismayed in the face of such a record that any governing
24
body would play so fast and loose with the rights of others"
(Iverson, p.
6).
submit a new plat,
Council shall permit the petitioners to
conform
its
to
include
acreage.
this
3) That
the
Court
to
insure
matter
residence
multiple
shall
be
the
city
calculated
City
consideration
(Iverson,
."
.
.
afforded
are
Council
use
land
petitioners'
that
total
in
jurisdiction
retains
hereby
Minnetonka
the
to
dedicated
outlot
reasonable
and
ordinance
the
to
proposals
the
to
conformance
of
fair
to
relating
2) That density of the proposed plat for purpose
land use.
over
ordinance
its
to
will
which
plans,
other
and
building
proposed
including
City
Minnetonka
the
"l) That
ordered:
Court
The
p.
6).
points
important
Two
This
not
relieve
The
City
matter
the
over
developer.
the
still
to
critical
is
developer
retained
its
and site plan approval.
tion of
density for
future
dedicated
owner as part of his proposal.
for
development,
but
is to
proposals
as
is
25
consider
the
does
process.
traffic
Second, that the calcula-
was
City
to
right
This is a 9.2 acre parcel of
the
regulatory
the
of
decision
the
because
1.
to
rights
the
insure
from
impacts
able
above
the
First, that the Court ordered to maintain juris-
decision.
diction
in
were' addressed
land
park
include Outlot
(see exhibit), which
land
by
the
previous
The lot would not be availconsidered
for
calculation
Ia
I.'
U T L 0 T
'
I
CN~
PART OF
9000
(4000)
of
available
In
same
the
the
site
the
decision,
Court's
under
that
to
developed
be
could
40.88.
now
calculated
planners
the
report,
was
calculation
density
for
planning
consulting
after the trial, the total
company hired by Nolan Brothers
acreage
a
to
According
density.
allowable
a
maximum of 710 units (Dahlgren, p. 3).
The City of Minnetonka appealed the Court's decision.
It
and
decision
Supreme
State
the
that
1984
Court's
lower
the
upheld
Court
August 16,
until
not
was
Minnetonka
was defeated.
was
a
contract
The
Council.
(well below
The
signed
and
a
developer
was
seeking
thereafter,
went
before
to
develop
465
units
and
turned
down.
was
the
Judge's
to
the
original
202
the
the
restricted
decision
that
units
of
proposal
allowable)
maximum
the
felt
City
number
market
was
Soon
sale.
for
the
on
put
again
property
the
ruling,
Court
Supreme
the
Following
accepted
decade
a
before.
In
parties
of
an
agreed
1985,
from
court
the
now
the
Judge
and
costly time
avoid
waive
to
Clarification
July 30,
to
effort
and
instead
retired
reaffirmed
seek
an
Order
Iverson.
Judge
his
both
expense,
On
decision
earlier
that the developer was not limited to 202 units but rather
is
allowed
zoning
to
develop
ordinance
the
regardless
land
of
27
as
the
provided
City's
in
claims
the
R-4
of
its
possible
effect
however,
also
obtain
approval
or
the
maintains
City
six
years,
disapproval.
After
15
tremendous
legal
expenses,
proposals,
development
the
still
must
developer
the
and
City
the
from
approval
of
right
that
reaffirmed
Judge,
The
question.
density
the
on
and
several court appearances, the property remains undeveloped
and the battle continues.
Survey and Physical. Analysis
101
and
consists
to
walk
is
site
The
private.
This
acres.
It
retail
area,
yet
easy
quiet
and
and mature
dense
hilly and uneven, with steep
topography
general
The
area.
watershed
Creek
an
The site lies within the Purga-
nature of the vegetation.
tory
within
remains
the
by
aided
is
privacy
is
Highway
of
side
west
the
31.68
of
major
the
on
situated
is
hills surrounded
by low-lying
existing
development,
swamp land.
Where
are
there
exception
the
either
the
of
characteristics
the
compensate
and
removed
to
costly
more
require
create
swampy
or
marsh,
bordering the road.
a
selectively,
the
preparation,
site
will
purchase
price.
The
and
atmosphere.
If
trees
provide
project with a sense of maturity.
28
the
Although these
attractive
stronger
privacy
with
terrain
the
from
generating
by
serve
slopes
steep
side
by
bordered
is
resulting
amenity
woods
site
the
marked
finished
EXISTING
SINGLE FAMILY
DEVELOPMENT
WETLAND
/*
...
\
*D)-
-
\/
b
~
I-.
~
-
/~(N
S_
e
I
ACCESS
SINGLE FAMILY
DEVELOPMENT
~SLOPES
~ /
TE FORCES
MINNETONKA
COUNTRYSIDE
CMY OF MM~ETOW.A. M"eESOTA
~!flfl!IIIIL ~.~ Yi
WETLAND
EXISTING SINGLE FAMILY DEVELOPMENT
H
#12%
-
-.
The site has been studied on three separate occasions,
a
of
summary
on
seen
be
can
which
map.
following
the
Natural soils in the area are predominately glacial outwash
from a former hill adjacent
pit operation
apparently
was
soil
to the easterly
some
fill
spread
over
operation,
time of this
sandy
fine
of
consisting
the
At
line.
property
a granular borrow
evidence of
There is
sand and gravels.
the flanking low lying areas (Mindess, p. 2).
There is a distinct ground water table gradient through
the
from
area,
the
south-east.
the
to
north-west
At the
was
found
to be in the approximate elevation of 906.5 to 904.5
feet.
time
The
report
that
states
water
ground
the
investigation,
of
table
fluctuation
seasonal
should
be
anticipated.
study of the test pits revealed that all portions
The
of
the
property
above the
They are probably capable
soils of medium to high density.
of
footing
relatively
conventional,
supporting
This
foundations.
sandy
contour contain
foot
920
area
shallow
constitutes
55%
spread
of
the
total property (Mindess, p. 3).
The
land
between
generally favorable,
surface
the
910
although 4 to
foot
920
and
4.5
feet
contours
is
of unsuitable
soils may have to be excavated at actual building
locations.
This
represents
another
total property (Mindess, pp. 3-4).
30
12%
to
17%
of
the
p
ST-2
POOR
0,
POUR
-
-7
./ -MARGINAL
\
MARGI
MA
-
/
-3
-
---.
MARGINAL
ST-3
)
-
2
I
)
-
-SEPT.
1971
JJ1IE 1978
7,\
1
a v
(
N ,1
N
SOIL REPORT LEGEND
-
4N
JNEl
*
1979
H
BOIN
SUBTERRANEAN
ENG24ERNG INC.
SOIt EXPLORATION
COMPANY
BRAUN ENGINEERING
P
R CORE
NUBR
O RIGINAL
T
INREP
SOIL SUITABILITY
MINNETONKA
COUNTRYSIDE
CITY OFM?*NTONA. M
lESOTA
The
920
worst
foot
soil
in
contour
encountered
conditions
the
and
central
lie
the
below
parts
east-central
In these locations silty sand fill was placed
of the site.
directly over peat.
Building foundations or utility lines
would have to bypass
the peat
to
6
tions
28%
occupy
feet
11
33%
to
the
are
areas
These
deep.
of
layer, necessitating excavato
4).
(Mindess, p.
property
total
estimated
However, another study found that organic soils necessitated
an
excavation
in
of
range
the
to
15
22
This,
feet.
of
An alternative would
course, would be excessively costly.
be to utilize the method of surcharging.
that
it
the
over
filled
was
the
of
areas
available
for
use
in
reduce
the
time
and money necessary
would
existing condition and
fill
result
procedure
this
of
would
be
making
This
site.
the
correct
Another
site.
the
of
to
soil
substantial usable
it would provide
remainder
the
for
usable
thus
material,
organic
other
excavate
to
be
would
recommendation
The
that
it
important
would
produce
a small pond.
The
and
abutted
to
the
west
is graced with woods, water
area
fashion
is
site
the
Great
owned
by
of
currently
developed as
beneficial
North
the
Woods.
City
a boardwalk park.
effects.
First,
the
32
of
by
a
large
marsh,
and bog in the
This
area,
Minnetonka,
which
is
could
be
This proposal has
potential
of
a
true
several
boardwalk
for
an
offers
park
project,
the
increasing
the
gain
and possibly
the
tenancy,
units
resulting
and
in
Second, it would ease the resis-
a quicker rent-up period.
tance
for
desirability
amenity
desirable
of
value
the
enhancing
a
create
to
opportunity
the
from
support
abutters,
which
have been so difficult in the past, by creating an amenity
for
existing
the
better
between
interaction
community
may
serve
and
the
at
large.
to ease
City,
It
neighborhood.
planned
the
Finally, the
the tension
perhaps
33
the
encourage
also
and
community
development of
between
allowing
a greater density.
would
the
the park
the property owners
developer
to
obtain
CHAPTER THREE
MARKET ANALYSIS
Location Analysis
The criteria for site location analysis of a retirement
as
to
important
these
it
as
projects
analysis
locational
proper
However,
market.
target
the
of
needs
special
the
of
because
unique
is
project
any
for
be
would
is
other real estate development proposal.
The first and most important criteria for a satisfactory site is that it be located in a safe area or neighbormore vulnerable
The
elderly
are
than other
sectors
of society.
hood.
is
location
the
in
City of
the
well
to
suited
Minnetonka
metropolitan
has
crime or
abuse
The Minnetonka Countryside
address
of
one
this
the
(Minneapolis
area
to
because
concern
lowest
crime rates
Tribune,
June
23,
1979).
second
A
to
a
potential
Current
family.
80%
of
minute
important
a
tenant's
of
present
the
market
site
is
the
is
located
("The
that
within
Graying
74; "Housing the Graying Market," p. 75).
34
site's
residence,
indicates
information
project's
drive
criteria
of
or
proximity
to
their
approximately
a
20
to
America,"
25
p.
A
its
third
important
proximity
demanded
homes
than
1
those
hospitals.
mile
of
site
The
physicians,
selection
from
several
two
nursing
services
dentists,
nursing
addresses
project is
The
is
The
site
Minnetonka
respects.
in most
adequately
for
to various medical facilities.
include
and
criteria
these
less
located
medical/dental
professional
buildings.
There
area.
are
is
One
and
the
other
are
not
long
be
desired,
spouse
a
of
north.
they
are
not
were
resident
on
resident
that
visits
area
the
This
is
a
is
would
would
to
want
not
located
negative
be
these
as
would
the
in
If
a
or
friend
ill
too
metro-
reside
to
to move to a nursing home,
in the project and were forced
that
west
the
close
site.
become
to
to
Although
projects
some
facilities
as
the
within
miles
the
that
considering
have
5
to
8 miles
distances,
market
politan
facilities
approximately
located
is
home
be
difficult.
approximately
attribute
located
conveniently
of
10
hospital
The
miles
to
the
so
for
east.
location
Minnetonka's
and could cause some loss of potential tenants.
The
is
the
fourth
project's
mile
As
away
is
mentioned
from
important
proximity
Minnetonka
events.
needs.
criteria
3
to
well
earlier,
sub-regional
35
to
potential
residents
other services and
situated
the
site
shopping
to
is
cultural
satisfy
less
malls.
these
than
1
Cultural
theaters
movie
extremely popular dinner
area and an
immediate
the
within
and
restaurants
several
include
options
theater 5 miles south of the site.
The final criteria is the site's general accessibility.
Countryside
Minnetonka
It
ways.
25
is
site
The
approximately 2
20-25
the
Interstate Highway
Minneapolis,
and
is
not
yet
airport,
international
area.
metropolitan
from downtown
minutes
the
from
minutes
from
miles
circling
beltway
major
the
494,
is
is easily accessible by major high-
congested with traffic even during peak driving hours.
The site is well suited for use as a retirement center
despite
its
distance
to
is
It
hospital.
major
a
to most amenities, yet maintains a very peaceful,
in
environment
a
community
that
consistently
close
suburban
remains
one
of the most desirable in the metropolitan area.
Competition
in operation or under
There are 61 housing facilities
in
construction
area
catering
1).
There
are
to
the
Minneapolis/St.
the
elderly
another
140+
population
housing
metropolitan
Paul
(see
projects
Appendix
that
offer
some form of elderly housing, but do not cater exclusively
to
those
product
amenities
over
types,
and
60.
These
offering
services
projects
virtually
available.
36
cover
every
a wide
range
of
combination
of
75%
of
Approximately
programs
Home
Administration
8
Section
programs,
Dec.
Guide,"
housing
public
include
The
form
some
offer
operation
("Consumer's
housing
rental
subsidized
in
or
line
on
projects
the
1985).
programs,
Farmers
programs,
Section
While
236 programs, and some privately sponsored programs.
location
because
to
regard
with
projects
with
There
as
discounted
be
projects,
of
the
puts
market
40+
competition
The local nature
area
market
primary
the
beyond
them
are
different
another
are
potential
because of their distance from the site.
they
Minnetonka
quite
are
markets
aged
the
proposed
the
levels.
income
can
that
target
the
housing
elderly
of
proportion
large
competition
direct
in
not
in
residing
currently
a
house
projects
these
of
of the project.
Hennepin
Suburban
the
County,
major
portion
of
the
primary market, presently has 11 market rate rental housing
projects
for
the
in
either
These projects offer
construction.
sizes.
elderly
operation
or
under
1,557 units of various
There are another 9 projects within suburban Henne-
pin
County
all
of
adding
these
1,727
projects
rate
market
are
in
direct
units
for
sale.
competition
Not
because
of differences in rents charged and services offered.
Further
investigation
of
the
market
reveals
that
there are 6 projects within a 20 minute drive of the Minnetonka
site
that
offer
upscale
37
or
luxury
accomodations
the
the
average
of
on
offer
1,196
and
sale
units
balance
the
Four of the six projects are high-rise structures
for rent.
and
average
sale
for
are
400
approximately
which
projects
The
$120,000.
the
and
$1200,
above
are
rents
above
is
price
Luxury is defined to be a project where
elderly.
for
larger
land
of
parcels
projects
the
of
None
low-rise.
are
two
10
than
located
are
Minnetonka
acres.
is
the only project located on a campus-type site.
Each of the six projects offers an amenities package,
of amenities and
the
has
Countryside
Minnetonka
but
most
extensivelist
One
services in the metropolitan market.
project offers a variety of restaurants on site; Minnetonka
formal
a
has
guest
accomodations
tonka
does
site;
Minnetonka
not.
the
to
downtown,
project
a
offers
are
two
of
residents;
located
in
to
and two are located in suburban areas.
on
Two
facility.
neighborhoods
adjacent
Minne-
amphitheater
an
multi-purpose
located
are
offers
offer
projects
the
the
for visitors of
One
facilities
of
Some
area.
dining
adjacent
malls
regional
None of the projects
offer the walking paths or privacy that Minnetonka offers.
of
Three
the
projects
under
are
construction
and
will
open in late 1986 or early 1987.
Demographic Analysis
The
demand
methodology
for
the
used
Minnetonka
to
determine
Countryside
38
potential
project
market
began
by
the
determining
primary
of
competition
currently
the
analyses
date assume that
tial
residents
The
would
in
the
currently
market
75%
of
the
place.
of a
reside
size
such as
depends on factors
primary market area
to
area.
market
amount
Most
project's
within
a
the
of
poten-
20
minute
drive of the site (Cwi, Laventhol & Horwath, 1986).
The range used in this study included towns and cities
within
a
10
to
15
mile
radius of
the
site,
depending
how direct the route is from the area to the site.
four towns and cities were
on
Twenty-
found to be within the primary
market area (see Appendix 2).
Population figures for the 74-85 age group (the market
segment targeted
by the project) were then obtained using
1980 figures published by the Metropolitan Council (Appendix
2).
The target market consists of those individuals between
74
and
85
home, who
who
are
potential
years
income
of
own
their own
20 minute drive of
the
site,
is
Census
then
figures
will
move
live
alone
($35,000
qualified
market
age
or
age, who
live within a
analysis.
years
of
in
broken
annual
down
The
income).
further
and
in
this
show
that
5%
any
given
year
("Housing
the
the
potential
for
of
those
74-85
Graying Market," p. 72).
The
50
results
tentants
per
of
year
the
analysis
from
the
39
show
primary
market
area.
If
this
the
represents
figure
for
projections
75% of
the
of
lease-up
demand
total
6
units
(67),
then
or
72
can
be
month
per
units per year may be slightly aggressive.
should
It
considered
be
would
to
be
that
noted
be
market
the
through
qualified
already
not
planned
be
to
limited
1980
obtained from the
census.
their
of
sale
individuals who had
to those
Third,
move.
individuals
Second, the potential
residence than the figures represent.
market might
analysis
More
conservative.
somewhat
income
the
the
number of
The
used
figures
were
individuals
in this age group is growing rapidly and would undoubtedly
be
Finally,
on-line.
by
higher
substantially
the
time
taken
competition
the
this
project
into
type
of
competition
could
account
The amount
in this analysis is already beginning rent-up.
and
comes
change
significantly
by
the time Minnetonka began its sales effort.
In
is
conclusion,
adquate to
However,
analysis.
It is
performed
appears
support the
project.
be
it
market
proposed Minnetonka
only
is
this
the
that
a
potential
Countryside
"first-run"
market
recommended that a more in-depth analysis
prior
to
any
decisions
project.
40
to
proceed
with
the
CHAPTER FOUR
THE PROJECT
Amenities and Operations
Minnetonka Countryside will offer a variety of alternatives
and
amenities
to
the
prospective
tenants.
Five
alternative
living arrangements will be offered:
studios,
1
1
assisted
bedroom,
living
units.
units,
all
bedroom
With
units
fireplaces,
and
also
be
main
building.
with
the
den,
exception
will
be
balconies
provided
with
a
Every
2 bedrooms,
of
equipped
or
assisted
with
full
porches.
separate
unit
the
is
Each
storage
equipped
and
living
kitchens,
unit
closet
with
will
in
a
24
the
hour
emergency call system in the bedroom, bathroom, and kitchen.
Monthly
includes
weekly
one
rents
will
meal
per
housekeeping
maintenance-free
phone
service,
range
day,
twice
service,
are
included
include
and
service,
monthly
social
activities
director
All
in
services
41
weekly
to
$1950,
linen
utilities
the
monthly
medical
will
service,
grounds,
rental
fee.
concierge,
examinations
provide
which
except tele-
transportation,
who
of group activities and events.
$1100
maintenance-free
living units.
Additional
postal
from
a
and
a
selection
The tenant
is
allowed use of all amenities and activi-
ties within the project.
These include
pool,
whirlpool,
courts,
room,
card
several
board
tennis
and
game
lounges,
courts,
room,
garden
woodworking
library,
an
services
will
and
theater,
plots,
horseshoes,
an indoor swimming
a
party
putting
exercise
crafts
room,
green,
room,
and
shuffle
a
nature
available.
These
boardwalk.
Additional
be
made
will include a local bank branch, mini-market/delicatessen,
gift shop, beauty/barber shop, and underground parking.
If
a
vidual,
unit
an
is
to
be occupied
additional
charge
to the base monthly rent.
with all
may
not
the
benefits
be occupied
approval has
been
of
by more
$300
per
than one indimonth
is
added
The additional person is provided
covered
by
the
by more than
granted.
base
rent.
A
unit
2 people unless written
Pets
are
not
allowed
without
written approval.
A
the
system
of
residents
on
attached
to
the
health
a
check
daily
door
is
basis.
of
each
also
used
This
unit.
is
An
a
to
monitor
flag
system
attendant
sets
the flags of each occupied unit in the middle of the night.
In
the
morning,
when
a
resident
opens
their
door,
the
position automatically changes, signaling that the resident
is
that
up.
all
By
mid-afternoon,
flags
have
been
the
attendant
removed.
42
If
one
checks
has
to
not,
see
then
the attendant may enter the unit to determine if the individual is in need of assistance.
who
The
assisted
are
either
living units
temporarily
are available
or
or in failing physical health.
is
that
they
the
project
The
services
bathe,
allow
residents
despite
the
provided
dress,
and
permanently
residents
handicapped,
The benefit of these units
an
opportunity
inability
include
move
to
to
live
assisting
Meals
about.
to
in
independently.
the
can
stay
resident
be. brought
to
to
the units if the resident so desires.
There
nursing
is
care
highly
whereas,
to
is
move
space
with
line
regard
regulated
and
does
move
should
be
a
not.
assisted
However,
to decide, with
assisted
regulations.
requires
to an
available.
between
to
living
temporarily
is
a
fine
assisted
the right
such
a
the
living
Nursing
certificate
A
of
resident
living
unit,
management
and
care
need,
is
free
provided
reserves
the aid of a physician, whether
permanent.
The
management
also
reserves the right to decide, with the aid of a physician,
whether
a
resident
should
cancel
their
lease
and
assume
residency in a more skilled nursing facility.
Selecting. Management
Minnetonka
enced third
Countryside will
party firm.
be
managed
The expertise
43
by
an experi-
required is
beyond
the
is
A
scope
as
the
of
as
important
any
task
and
screening
thorough
the
Selecting
developer.
the
in
right
company
process.
development
of
investigation
the
candidates
is recommended.
The
choices
more
no
to
begin
should
or
than four
five
by
narrowing
the
Once
alternatives.
been accomplished, an intensive interview process
this has
should
be
actual
management
The
process
selection
undertaken.
questions
The
team
should
to
be
focus
should
interview
assigned
to
be carefully thought
the
out
on
the
project.
to
identify
the personalities and philosophy of a particular team.
An area of extreme importance is the management candidate's
methods
role
and
hierarchy
of
the
reporting
accomplished.
is
form of
some
encourage
are
play
residents
A
used?
in
of
Also
the
become
concern
management
project
association.
to
control.
quality
successful
residents'
residents
for
system
A
and
What
is
how
should
the
this
involve
good project will
involved
in
many
of
the
management decisions.
The
on-site
visits
to
by the candidates.
with
the
interested?
These
A
process
selection
are
positive
other
key
and
also
currently
projects
several
include
being managed
How does the staff react to and interact
residents?
Do
should
they
Are
they
know
each
characteristics
courteous
staff
44
courteous,
of
for
is
the
tenants
management
vital
patient,
for
by
and
name?
to exhibit.
the
success
of the project.
The on-site visits should also investigate the activities
center
activities
enjoying
of
the
being
project.
What
offered?
themselves.
Do
Does
type and
the
the
how often are
residents
staff
get
seem
to
involved
in
be
the
activities?
Finally,
views
is
with
the
the
selection
residents
process
of
the
should
various
include
inter-
projects.
This
the best resource available because they are the consum-
ers.
The
interviews
answers
or
plaints
should
courtesy,
common
should
identify
attitudes,
be
rather
evaluated.
patience,
quality
trends.
than
individual
Questions
of
Repetitive
should
service,
com-
focus
and
on
interest.
Finally, would they recommend the project to a friend.
The
that
above
the
is
actual
a
guide
decision
only,
but
process
it
be
is
recommended
carefully
planned
and executed.
Physical Requirements
Minnetonka Countryside is to consist of 280 independent
living
phases.
and
units
40
assisted-living
units
built
the
of
the
two
The units should laid out with the idea of maximiz-
ing views and security, yet allowing privacy.
of
in
views
elderly
others.
should
enjoy
The
overlook
spending
unit
areas
time
layout
45
of
activity
observing
should
also
The majority
the
because
activities
consider
issues
such
to
as
circulation,
amenities.
projects,
placement
Other
such
as
issues,
of
parking
common
topography,
to
and
most
vegetation,
distance
development
micro-climate,
and treatment of the edge, should also be considered.
The
280
down
into
10
den,
and
100
independent
studio,
two
living
100
one
bedroom
units
bedroom,
units.
should
be
broken
70 one bedroom with
The
40
assisted
living
units will all be studios.
All
the
units will
assisted
be
living
equipped with full
units.
The
studio
kitchens except
units
will
be
750
s.f.,
one
s.f.,
the two bedrooms 1250 s.f. and the 40 assisted living
units
bedrooms
would
existing
900
contain
projects
s.f.,
650
in
one
s.f.
the
bedroom
An
investigation
metropolitan
these unit sizes to be 10% to 25%
with dens
area
1050
of
have
the
found
larger than any competing
facility is currently offering.
The 2 bedroom and
in
up
five
of
style
separate
several
and
units
the
will
central
clusters.
buildings
patio
atmosphere.
large 1 bedroom units will be built
The
be
units,
of
in
community
a
living
low
building
on
the
site
without
46
an
and
will
be
made
eight-plex garden
independent
and
rise
by elevators and interior hallways.
density
cluster
four-plex to
providing
assisted
built
Each
smaller
structure
are
to
1
as
be
village
bedroom
part
of
connected
This allows a greater
sacrificing
recreation
and
open
space.
Second,
to
potential
in
operation
it
provides a more diverse
residents.
have
Finally,
established
most
that
projects
tenants
smaller units are
generally less mobile;
to
are
larger
internal
units
hallways
generally
provide
more
less
selection
currently
attracted
to
tenants attracted
independent.
mobile
The
residents
with
protection from the severe Minnesota climate while limiting
their
commuting
Individuals
units
distance
enjoying
similar
to
more
many
to
the
various
independence
luxury
amenities.
would
condominium
have
living
developments,
with easy access to many of the services.
The
site
community
plan
should
building
are
laid
out
centrally
so
that
located.
the
pond
Together
and
they
divide the site down the middle, minimizing the distances,
creating
a
sense
of
community,
and
affording
each
unit
with privacy.
The
be
walkways
designed
connecting
with
characterize
the
various
extreme
Minnesota
structures
climate
winters.
should
conditions
However,
which
completely
enclosed walkways can be extremely expensive and may create
a
poor
environment.
This
issue
should
be
explored
community
building.
thoroughly to avoid a poor decision.
The
This
in
core
structure
addition to
of
the
houses
the
project
many
smaller
of
is
the
living
47
the
project's
units.
It
activities,
is the most
visible
and
therefore,
visitors
aid
sense
of
place
designed
with
and
a
for
the
have
The
the
area
lounging
traffic.
finding
in
their
quality
near,
but
Studies
while
The
the
on
main
of
a
not
have
creating
lobby
first
should
class
a
be
hotel,
the mainstream
in
of
important areas
lobby are very
entrance and
place.
as
serve
way,
residents.
is where most of the action
to the residents because this
takes
will
structure
As such, it should be well defined
entrance to the project.
to
important
structure
community
The
campus.
most
the
found
this
that
is
the
most
favored spot for residents to sit and observe the activities
of
others
be
given
(Wentling,
to
Particular
1986).
creating
an
environment
attention
that
caters
should
to
this
interest.
The
central
dining
activities building.
are
similar
to
room
is
also
housed
in
the main
The important elements to incorporate
those one
might
find
in
a
nice
but quiet
restaurant.
the
The
entrance
main
dining
friends
dining
smaller
of
should
area,
can
gather
or
area
should
be
areas.
these
people,
This
is
offer
comfortable
meet
prior
to
separated
lounge
with
designed
is
a
to
seating
dinner.
divide
the
important because dinner
traditionally
an
intimate
of family or friends to share conversation.
48
from
so
that
The
main
room
into
for most
gathering
This atmosphere
can
eliminate
facility
an
should
institutional
be
central
pond
and
adequate
in
size
situated
with
surrounding
to
atmosphere.
purpose
1500
to
room.
s.f.
This
with
be
used
or
as
be
separated
so
that
for
a
a
dining
small
room
facility will
activities,
with
a
the
should
one
be
third
be
the
multi-
style
space of
end.
The
such
dance
dining
can be
It
of
(125-135).
stage at one
from the
two
areas.
is an auditorium
cultural
party
the
the
dining
views
approximately
of the residents at any given time
Adjacent
optimal
green
accomodate
The
as
room would
showing
floor.
about
The
movies
room
will
facility by a moveable wall
joined
for
community wide affairs
such as a Christmas party.
The
a
community
barber/beauty
center
shop
delicatessen.
In
bank
office
be
and
post
delivered
to
and
will
a
addition,
the
with
house
small
gift
shop,
resident-operated
mini-market/
there
small
post
boxes
a
to
will
office
encourage
be
a
boxes.
branch
Mail
residents
will
to
get
out and interact with others.
A
separate
located in
the
fitness
the
structure,
core of
facilities
the
fitness
the project.
and
medical
center,
will
This building houses
clinic.
The
center includes an exercise room, men's and women's
rooms, an indoor/outdoor pool, and a whirlpool.
clinic
would consist of a
small check-up
49
be
fitness
locker
The medical
room with a nurse
on staff and a visiting physician available weekly.
Adjacent
center.
a
and
table,
This
area.
a
and
backside
The
fitness
center
the
houses
game
room,
this
requires
a
The
lounge.
activities
card
includes
screen
will
house
dock,
loading
the
large
structure
a
is
shop,
craft/woodworking
which
lounge with
a
of
employees'
and
the
area
This
library,
pool
to
television.
service
the
areas,
storage
small
basement
tables,
building
this
of
will provide space for residents to store additional belongings in separate wire cages.
The
project
interior
parking
in
the
same
will have
space
-manner
its own
for
the
parking
for
employees
This
units,
the
one
approximately
be
divided
each
cluster
should
whereby
garage and the main building will house
the
and
unit.
per
as
include
also
should
within
units
visitors will
it.
Additional
be provided
parking
but will
not
be interior.
The grounds surrounding the project and between structures should also be planned.
ity buildings
such
two
as
should contain additional outside
shuffle
tennis
The area between the commun-
board,
courts.
An
putting
a
additional
square feet, away from the
for garden plots.
green,
area
activities
horseshoes,
of
about
and
8,000
structures, should be set aside
The balance of the grounds should consist
of landscaped green area that has been skillfully integrated
50
with
places
project
to
could
sit.
be
developed
marsh
the
Finally,
into
paths with benches.
51
a
area
series
of
behind
the
boardwalk
CHAPTER FIVE
MARKETING
What to Market
proper
The
is
seem
The approach is
because
approaches
the
this
may
at
all
not
task
as
if
real estate projects
not
should
effort
project
unsuccessful.
be
will
to other
not similar
marketing
the
is
project
rental
typical
a
accomplished
who
developer
The
were
is
this
Although
success.
ultimate
its
how
obvious,
obvious.
it
to
critical
housing
retirement
a
marketing of
focused
be
on
real estate, but rather, on providing a lifestyle.
Some elderly people are content with where they reside,
but
find
it
independent
They
living.
do
the
like
not
deeply
a
create
must
ingrained
desire
belief
to
it
move;
all
that
idea
of
of moving
The proper marketing
to a place filled with other elderly.
effort
tasks
daily
the
handle
to
difficult
must
elderly
remove
the
housing
is
institutional and is merely a holding ground for individuals
who are soon to die.
68%
have
71)
A
study
of
the
people
showed
that
90%
to
retirees prefer
from
(see figure).
all
The
age
of
reside
groups
same
the
empty
in
(Adams
study showed
52
nesters
communities
& McLeister,
that
77%
and
that
p.
of the
WHERE OLDER AM ER ICANIS WANF TO LIVE
AcuLrS ONLY (8. Iyn.
MIX cr
ALL. AGE
(8n)
re~1rEs
fRTTIFEMEN17
AcUL.T
COMMUNIT(
(7.0C)
OtLY (25.ar.)
MIX cr ALL. AGE2 (67.a)
WHAT TURNS ON AND OFF OLDER AtIERICANS
EMPTY NESTERS
RETIREES
TURN ON
TURN OFF
TURN ON
TURN OFF
[.IVE WITH SAME
AGE GROUP
27.80%
72.20%
23.50%
76.50%
LIVE AMONG OTHER
PEOPLE
57.10%
42.90%
42.40%
57.60%
LOTS OF
ACTIVITIES
66.70%
33.30%
75.00%
25.00%
COMMON DINING
FACILITY
29.40%
70.60%
37.30%
66.70%
*
SOURCE: PROFESSIONAL BUILDER APRIL 1986 PG.71
53
They
project.
retirement
a
marketing
dealt
with
when
clearly
show
that
be
must
the
with
community
a
in
live
values
These
group.
age
same
to
desire
not
do
retirees
the desire to accept tenancy must be created.
of all prospective tenants, a physician
For nearly 50%
or
against
marketing
"You're
stated,
housing,
retirement
developer
a
Roderman,
Leon
inquiry
initial
the
make
elderly
the
1985).
March
("Location",
of
of
children
the
The children feel that they should have mom living
guilt.
with them, but they can't provide her with the companionship
lives near the good
in
of
life.
this
is
shopping center, near the golf course,
great part
the
or
people
way
that
subliminally
("Location,
not to die."
the place to come to live,
the
sell
to
You have
of town.'
advertising, assure
In
'my mother
say
to
they want to be able
Still
she needs.
Recreation," March 1985).
is
critical
set of
good
A
group.
satisfying
in
the
earlier,
discussed
As
of
needs
the
amenities
of
mix
proper
targeted
the
amenities will provide
age
impetus
the
toward overcoming prospective tenants' misconceptions.
marketing
The
which
are
concern
is
of
greatest
security.
secure.
to
feel
so
vulnerable.
This
They
concern
over
People
stems
also
to
from
this
group.
A
major
strong
have
a
the
fact
that
failing
issues
the
65
recognize
54
on
focus
should
approach
need
they
are
health
and
be
on
placed
living.
is
there
has
been
75%
of
that a
This
should
also
a
year
old.
60
of
being
into
put
institution
an
center
because
It
independent.
only
are
people
means
This
attitudes
set or
independence
of
loss
A
retirement
1986).
the mind
year old has
80
a
(Cwi,
age
chronological
typical
of
attitudinally,
that
should
cautiously
remain
to
need
strong
of
with
dealt
be
documented
their
aspect
maintenance
the
emphasis
result,
As a
do things.
inability to
the
feeling
a
or
does
not
coincide
this
age
group
with
the mind set of the target market.
Another
issue
the
at
community
from
cultural
activities,
importantly,
families.
they want
These
indicated
are security,
medical
to be
in
apart
feel
to
shopping,
More
facilities.
close
be
their
to
proximity
should
that
to
on
focused
in
Research done by Leisure Technology,
the marketing effort.
Inc.
and
areas
are
want
accessibility
desire
they
society;
not
do
They
large.
the
is
This means on-site and within
activities.
availability of
to
concern
of
the
that
primary
maintenance services,
motivations
of
buyers
recreational facilities,
and lifestyle opportunities (Tenzer, Feb. 1984).
The marketer may be aware of the motivations discussed
above
and
should
keep
in
mind
that
the
decision
to
move
to such a facility is actually the acceptance of a dramatic
lifestyle change for
the tenant.
55
Most prospective tenants
result,
the
already
a
team
marketing
The
thinking.
of
way
cautious
is
from what
considerably
slowed
is
process
a
As
make.
ever
will
they
move
last
the
as
this
view
should be prepared for, and patient with, the indecisiveness
elderly
the
attract
to
best way
The
individual.
the
of
market is to calm their worries about health and mobility,
while providing the most independent environment possible.
the
of
needs
is
it
Although
expectation.
a
will
:generate
sell
the
However, without
product.
a
become
an
tremendous
to
create
Curb
appeal
selling
approach
curb appeal,
inquiries
and
services
inquiries;
have
necessary.
is
appeal
curb
to move,
desire
has
top
the
of
Therefore,
homes.
their
in
pride
of
amount
generally
retirees
The
it
because
is
this
elderly,
one
as
ranked
necessarily
not
tool.
marketing
important
an
also
is
appeal
Curb
are more difficult to obtain.
A
final
longevity
and
the
to
issue
confident
they
will
earlier,
It
the
stands
the
the
project
be
taken
care
they view this
to
is
the
This
is
closely
reason
as
that
remain
will
of
the
they
of
the
project
Methods
of
dealing
56
last
feel
solvent
and
that
move
have
would
and
to
years.
the
over
the
with
this
related
want
elderly
The
security.
of
credibility
marketed
project.
that
longevity
owners.
of
be
to
aspect
As
stated
they will make.
concerns
credibility
issue
about
of
will
its
be
discussed in the next section.
Methods
Several
centers
The
are
elderly
This
methods
currently
being
will
not
of
marketing
employed
respond
to
a
in
are
further
extremely
eight
the
slow
and
necessary
as
before
Graying
discussion.
in
many
a
"hard
pressured.
The
keep
their
interest.
the
elderly,"
everything in
a
as
repeat
ten
approach.
its
importance
p.
soft
76).
sell
is
approach
one
is
to
elderly
move.
reached
people
is
no
the
Six
visits -are usually
These
"There
stated
decision
decision
industry.
sell"
mentioned,
making
final
Market,"
As
retirement
the
point was touched on previously, but
warrants
to
effective
the
impulse
developer.
("Housing
will
not
be
best
way
to
buying
"They
have
among
seen
life and are suspicious of the hotshot stuff."
("Housing the Graying Market," p. 76)
Today's
ever
elderly
before.
They
table,
coupled
of
unknown.
is
the
to
work
organizations.
with
population
bring
better
intelligence
uncertainty,
A method
marketing
The
is
the
suspicion
commonly used
efforts
relationship
can take on different forms.
to
educated
with
and
in
marketing
a
fear
the industry
through
such
than
religious
organizations
A religious group can sponsor
credibility
the
project,
providing
the
the
trust
of
potential
tenants.
57
The
needed
to
organization
gain
might
the
development
to
the
the
representing
The religious organization may also be a joint
motivated.
partner with
venture
on
take
would
role
the
money
necessarily
not
are
and
elderly
the
of
well-being
in
interest
stronger
a
have
project
individuals
the
that
means
also
It
project.
credibility
provides
again,
entity, which
for
facility
the
market
and/or
manage
to
contracted
be
the
developer.
any
of
those
In
their
case,
this
above,
mentioned
with
a legal interest in the project.
The use of model units is a highly recommended method
This is expensive, but the consensus within
of marketing.
An artist's
the industry is that it is worth the expense.
be
should
and
should
be
on
as
effective.
The
product.
The
final
the
touch
and
if
at
representation
of
the
the appearance
project.
It
interior,
office
an
high
comfortable
a
as
decorated
of
possible,
all
on-site
located
good
a
take
not
should
but
be
should
unit
model
see
to
want
elderly
not
but
alternative,
an
is
rendering
quality
living unit.
The
model
retirement
A
is
center,
an
effective
but
it
is
not
proper marketing effort should
or
video
of
a
presentation.
professional
15
sufficient
have a
show
marketing
by
a
itself.
top quality slide
presentation
The
minute
of
method
should
explaining
the
consist
concept,
showing the product (perhaps in a rendering), and describing
58
the
The
tenants.
of
interviews
interject
to
effective
is
It
lifestyle.
a
sells
it
importantly,
Most
services.
goal is to educate the consumer and dispel stereotypes.
a
hold
to
is
environment
threatened
for
the
than
if
allows
also
approach
team
marketing
the
reach
to
less
seminar
The
individually.
approached
feel
They
tenants.
prospective
comfortable
a
create
Seminars
of worship.
place
local
possible,
if
or,
site
the
at
group gatherings
project
the
marketing
of
method
effective
Another
more
prospective tenants in a given time period.
for
interest
create
To
of incentives.
have tried various methods
is
use
the
in direct mail marketing efforts.
A common method
sent
with invitations
brunches,
open house
of
marketers
gatherings,
these
sponsored
One developer
a celebrity luncheon in an effort to increase attendance.
tools
the
available.
eventual
benefit
a
excellent
individuals
It
tenants
already residing
in
credibility that
has
been
reported
come
from
the
for
need
referrals.
of
such
is needed.
This
They
housing,
Physicians
are also excellent sources of referrals.
59
50-60%
that
referral
Church
campaign.
marketing
effective
most
the
in the project.
presales
source
of
one
are
Referrals
does
of
leaders
and
tenants
however,
not,
often
of
are
are
provide
an
aware
the
and social workers
Strategy
Countryside
The marketing strategy for the Minnetonka
have
would
background
a
with
dispensing
time
difficult
residential
typical
a
with
agents
sales
Most
housing.
elderly
of
marketing
the
in
The
cautiously.
approached
be
experienced
be
must
team
should
and
strategy
the
of
aspect
important
most
the
is
This
team.
marketing
a
of
selection
proper
the
with
begin
should
project
the "hard sell" style.
salesperson
housing
good retirement
of a
profile
The
is one who is patient and sensitive, understands the needs
and
elderly
the
of
them.
with
work
to
how
knows
They
cannot be money motivated and must learn to gain the trust
Women are more effective
and friendship of the individual.
men
most
marketing
years
a
staffs
According
old.
project
units
selling
at
than
the
size
of
to
elderly
consist
to
of
entirely
industry
figures,
should
Minnetonka
In
fact,
women
30-50
clients.
the
for
staff
consist
of
five
salespeople and a marketing director (Leprevost, 1986).
Another
marketing
important
strategy
the sales effort.
session.
the
is
aspect
an
of
effective
the
development
method
of
of
a
monitoring
This should include an intensive training
The system should monitor presentation and track
various
effectiveness
agents'
of
the
follow-up.
follow-up
60
is
The
ability
important
because
and
of
the
for maintenance
system should also allow
The
individuals.
elderly
by
required
time
making
decision
protracted
of lists of contacts for future marketing efforts.
for
proper
a
maximum
enough
time
and
1986).
The
key
(Drass,
filled
be
can
With
funds.
and
time
project
any
funds,
of
allow
should
schedule
and
budget
marketing
A
word here is "enough".
per unit in marketing
The project should allow $4,000
6
units
8
units
per
due
month
a
total
an . average
commence 8 months
months
referrals,
and
The preleasing effort should
loses
Preleasing
far
too
performed
if
of
lease at a rate
prior to construction.
effectiveness
24
of
of
help
the
to
require a total of 18 months.
its
for
Phase two could expect to
for phase one.
of
allow
or
leased,
be
month to
per
should
schedule
The
expenses.
in
advance
as
individuals may change their decision or experience changes
in their health.
in
The
next
step
contacts
with
potential
approvals
have
form
certain
what
process
before
problems.
been
the
project
approvals
which
have
may
plan
is
This
clients.
obtained,
the
Changes,
marketing
or
when
will
it
take.
been
occur
is
done
is
generate
after
can
this
create
obtaining
approvals, can be difficult to explain to the buyer.
61
the
reasonably
Starting
granted
in
to
the
the
compiled,
is
tenants
potential
of
list
a
Once
marketing effort should focus on educating these individuals
cold
mailing,
the
top
A
effective.
brochure
should
The
brochure
is
the
represents
it
because
quality
stage.
education
presentations
and
calling
a
are
seminars
or
during
used
be
element
critical
will
buyer
a
impression
first
direct
of
use
The
project.
the
and
concept
the
about
have of the project.
Once
the
project
complete, and the costs
begin
their
used,
it
of
the
stage of
presales
should
fairly
be
has
determined, the
If
effort.
started
lengthy
approved,
been
delay
as
a
early
from
design
the
should
sales staff
unit
as
possible
construction.
to
is
model
be
because
By
the marketing program, the marketing team
this
should
have developed an extensive list of contacts and potential
consumers who have been kept aware of the progress through
mailings or newsletters.
62
CHAPTER SIX
FINANCIAL ANALYSIS
The base case financial analysis assumes the financing
be
30
years
phase
each
for
rate
10% fixed
a 'straight
to
the
in
mortgage
amortized
over
The
loan
development.
is for 80% of the value of each phase, including developer's
funded when the project
and is
rent-up deficit,
and
profit
reaches 60% occupancy for each.
The analysis allows $6000/unit for marketing expenses.
The
base
was
no
for preleased
leasing was assumed to commence following completion
units;
of
the potential
consideration given to
There
$60/foot.
at
set
was
cost
construction
A
construction.
project
The
added.
construction
contingency
a
relatively
produces
10%
was
strong
22%
of
internal rate of return.
Because of the slow lease-up rate for these projects,
the developer realizes very little return on his investment
with
6th
the
until
rather
a
project
phase
1
to
year
the
breakeven
reaches
3).
The
up-front
substantial
stand on its own.
to get
(Appendix
stage.
$6,448,000
by
investment
The
the
developer
equity
time
the
is
faced
get
the
required
for
project
can
to
Phase 2 requires an additional $1,538,000
it up and running, making the total equity invested
63
a
analysis
The
$8,031,000.
deep-pocket
investor
the
illustrates
who
can
fund
importance
such
a
deficit
of
and
can withstand a slow payback period.
the
Once
project
reaches
stabilization,
of
Appendix
21%.
by
year
The
10
reveals
year
in
stabilization
is
3
when
that
7,
the
the
investor is receiving a
the
on
reaches
investment
steadily, so
return climbs
cash-on-cash
project
return
net
produces
A look at exhibit
a very attractive return on investment.
6
it
that
return on
32%
his
investment per year.
once
investment
in
payments
is
stabilization
7
year
also
ratio
coverage
debt
The
are
reflects
The
reached.
times
1.51
covered
a
mortgage
the
by
and
the
forces
reflect
years
is
debt
the
a
deficiency
fully
not
to
investors
covered
fund
the
of
income
operating
year
until
5.
and
deficit
net
However,
operating income and continually rise from there.
the, early
sound
This
continue
equity investment until the project stabilizes.
The
need
for
capital
becomes
evident
more
upon
investigating part two of Appendix 3 (worst case scenario).
In
pro
this
the
actual
90%
of
that
rate was
forma,
rental
which
reduced
the
accepted
rate
was
from
models
analysis
originally
72
units
64
by
a
the
situation
is
market
predicted.
per year to
The
48
where
only
rent-up
per year.
caused an increase in the rent-up deficit
This combination
and the equity required.
The worst
invest
$8,625,000
to
developer
the
case scenario required
of
In addition,
first phase and $4,105,000 to fund the second.
return
the
the
after
in
this
case,
return
drops
this
return
is
rate
the
majority
of
been
14%,
and
only
after
the
this
should
to
23%
realized
of
potential
The
sold.
from
20%.
than
greater
return
of
internal
has
a
reaches
never
investor,
The
stabilization.
even
reduced
significantly
was
reached
project
The
project
equity
that
of
the
fund
to
equity
be
weighed, but more importantly, it illustrates the necessity
of an in-depth and accurate market study.
The importance of a good study is
3
of
held
to
by part
were
construction
foot.
equivalent
study
be
the
same
cost
was
cut
to
could
those
identify
worst
from
$60
per
but
the
to
$50
per
a
rents
what
returns
showed
If
case.
approximately
case,
foot
investigation
base
rent-up rate
the
the
the
of
rent and
as
this
of
result
The
The
3.
Appendix
further illustrated
marketing
would
be
obtainable, then the project could be built for that market.
Over-building
a
risk
sought
on
associated
have
not
quality
with
been
the
for
this
market
project
achieved
the metropolitan area.
65
by
is
because
any
other
definitely
rent
levels
project
in
is
and
amenities
the
all
for
calls
strategy
development
The
costs.
front-end
substantial
the
of
impact
the
analysis
the
by
illustrated
issue
important
Another
facilities to be built and in place when the project opens.
in
2.
on
the
investors.
these
and
1
phase
the cost
spread
to
results
extras
phase
units
22% more
are
there
However,
units,
between
difference
$21,193/unit
a
the
of
because
added
is
that
cost
The
it
marketing
burden
financial
substantial
a
places
in
helpful
be
might
this
While
over in phase 1 (Exhibit 4 of Appendix 3).
burden
This
for
be
even
reduced,
few
very
are
There
business.
requires
fully staffed the day the doors open
facility be
that the
increased
is
projects
these
of
nature
the
because
further
flow
cash
1
phase
the
on
only
there are
if
in the
few tenants
a
can
staff
where
areas
building.
The
combination of these heavy front-end and staffing
poor
are
spread
an
attractive
somewhat
until
in
over
the
this
given
by
many
delaying
strategy,
is
that
One
could
the
therefore,
deciding what
is
when
the
facility
mitigate
66
of
be
burden
this
some
thought
delayed.
costs
produces
facilities
certain risks
careful
to
these
only
construction
There are
investment
equity
large
units
return.
second phase.
before
It
returns.
initial
and
the
for
responsible
are
costs
involved
should
It
be
should
be
noted
that
one
not
should
consider
cutting
services
in this strategy.
The
analysis
indicates
have
been the
must
be
well
Most of the retirement development
capitalized and patient.
failures
investors
that
result of
poor financial
planning.
The first five years of this project will almost certainly
produce negative returns.
and
investors
have made financial
the
project,
the
returns
if this is anticipated
However,
over
the
than compensate for the added risks.
67
provisions
long
run
for
carrying
should
more
CHAPTER SEVEN
SUMMARY AND CONCLUSIONS
Summary
The
active
of
retirement
real
changing
lifestyles,
estate
housing
of
number
the
retirement
industry,
the
As
a
most
result
the
age
over-65
The growth in this market sector
must
developers
of
and improved
care,
in
individuals
To
a
provide
within
involvement
and
industry.
housing
one
recent years.
interest
increased
prompted
is
better health
group continues to climb.
has
in
markets
demographics,
the
industry
in
succeed
planned,
well
this
quality
product, with excellent service and superior management.
the
elderly.
The
these
alternatives
Care,
Echo
Village.
are
most
commonly
are:
Congregate
Life
Housing,
A variety
provided
are
alternatives
housing
Several
of
within
structures,
these
descriptions
used
Housing,
Complex,
Care
broad
available
now
for
Domiciliary
and
services
to
and
Retirement
amenities
categories,
including
of
financing
various levels of care.
The
options
industry
and
modes
is
of
a
wide
ownership.
The
pursuing
68
mix
project
might
be
developments
for-profit
each
of
implications
in
important
are
tax
and
expertise,
resources,
The
organization.
religious
a
by
sponsored
or
ventures,
joint
for-profit/non-profit
non-profit,
determining
the
for
the
structure of the project.
combination
A
Countryside
Minnetonka
a
of
character
the
of
village
retirement
have
would
project
The
property.
proposed
is
types
product
additional
with
services more commonly found in congregate and domiciliary
With
projects.
surrounding
an
emphasis
affluent
quality
on
to
project
this
communities,
bedroom
from the
draw
would be upscale or luxury.
Conclusions
An important factor in the development of a
project
not
is
to
understanding
a
homogeneous
market
must
be
designed
with
one
this
be
is
appeal
to
that
A
group.
targeted.
group
group,
The
elderly
market
specific
sector
within
market..
the
in
complex
The
mind,
and
retirement
the
then
should
selected
amenities
aimed
services
at
satisfying the specific needs of that group.
The developer
analyst
of
the
or
consultant to perform an
area.
combination
should contract with a qualified market
of
The
will
market
variables
defining
69
study
in-depth market
determine
the
the
product.
proper
A
good
also
study will
local
evaluate
and
competition
the
review
conditions.
to
present
elderly
The
suitability.
a
require
safe
evaluate
area,
proximity
medical
to
proximity
residence,
to
important
is
analysis
location
Site
facilities
and cultural events, and general accessibility.
experienced
and
after
firm,
party
third
involvement,
management
extensive
complex
A retirement
investigation of the candidates.
requires
screening
thorough
a
an
by
managed
be
will
Countryside
Minnetonka
comparable
It is imperative that management
to that of a luxury hotel.
and food service personnel be experienced and knowledgeable
in catering to the needs of the elderly.
A good marketing program is essential to the ultimate
of
success
real
other
be
should
this
to
succeed
lifestyle for
a
focus
to
appear
in
the
the
of
Physicians
provide
here
The
must
concern
greatest
and
to
marketing
religious
needed
credibility
the
methods
Additional
effort.
marketing
similar
focus
residents.
issues
the
on
group.
target
organizations
because
not
is
approach
The
projects
estate
providing
on
approach
to
project.
the
would include the use of model units, a video presentation,
seminars, and open houses.
effective
social
for
marketing
workers,
referrals.
and
The
tools
Referrals are one of
physicians
most
Church
available.
are
effective
70
an
the most
leaders,
excellent
referral,
source
however,
is the individual already residing in the complex.
The
factor
require
strength
in
the
of
the
success
budgets
schedules
and
a
for
slow
entity
project.
ability
have the
period
and
the
financial
construction
be
of
substantial
investor(s) must
ownership
is
The
an
project
commitment,
to withstand
rent-up
each phase
of
developed, with organized methods of
and
the
period.
the
important
the
lengthy
Detailed
process must
reporting, quality
control, and designated channels for decision making.
71
will
APPENDIX 1
COMPETITION
72
1W
SI
m
N
THE MARKET
EXISTING PROJECTS IN THE MINNEAPOLIS/
ST. PAUL METROPOLITAN AREA
ANOKA COUNTY:
1)
THE BOULEVARD -
COLUMBIA HEIGHTS, MN.
Rental units owned by and attached to Crestview Lutheran Home
1 and 2 bdrms. Annuity gift from $8,500 to $12,500.
Monthly rents from $523 to $688
transportation
Beauty shop, dining room,
Amenities:
service library, and underground parking.
Pets allowed.
2)
HACIENDA PLACE -
BLAINE, MN.
Townhouses for sale owned by Cypress Development Co
2 bdrms. priced from the low $90's.
Attached double garages, screened porches,
Amenities:
garden patios, maintenance free exterior.
Household pets allowed.
3)
MARGERET'S PLACE -
COON RAPIDS, MN.
Rental units owned and managed by Mary T. Inc.
On campus with Camilia Rose Health Center.
1 and 2 bdrms. Rents to be determined.
Craft room, exercise room, sauna,
Amenities:
pool, library and covered parking.
Pet policy to be determined.
whirl-
CARVER COUNTY:
4)
WESTVIEW ACRES -
WACONIA, MN.
Rental units owned and managed by Good Neighbor Care
Center Inc. On campus with Waconia Health Care Center.
1 and 2 bdrms. and 1 and 2 bdrm. luxury apartments.
Monthly rents from $600 to $1025.
Beauty parlor, library dining room, miniAmenities:
market, lounges and garages.
Pets allowed.
DAKOTA COUNTY:
5)
APPLE VALLEY VILLA - APPLE VALLEY, MN
Owned by Lemieux Partnerhsip II and managed by Lemieux
On campus with Apple Valley Health
Management Co.
Care.
1, 2, and 3 bdrm. units.
Monthly rents from $650 to $1275.
Beauty/barber shop, dining room, library,
Amenities:
pharmacy, recreation area and underground parking.
74
6)
FAIRVIEW RIDGES RETIREMENT HOUSING -
BURNSVILLE, MN
Rental units owned by Fairview Ridges Hospital.
1 and 2 bdrms., and 1 bdrm. with den.
Rent to be determined.
Beauty shop, library, craft rooms,
Amenities:
underground parking.
HENNEPIN COUNTY 7)
and
MINNEAPOLIS:
BECKETWOOD COOPERATIVE -
MINNEAPOLIS, MN.
Cooperative managed by Episcopal Church Home of Minnesota, Inc.
Studios, 1, 2, and 3 bdrms.
Priced from $57,000 to $181,000.
Craft room, woodworking shop, dark room,
Amenities:
dining room, exercise room, library, whirlpool, chapel,
and party room. Opened April 1986.
8)
BETHANY APARTMENTS - NORTHEAST MINNEAPOLIS
Rental units managed by Evangelical Covenant Church
Studios and 1 bdrms.
Entrance fees from $2000.
Rents from $835 to $1260.
Beauty/barber shop, community room, garden
Amenities:
space, library, dining room and craft room.
No pets.
9)
BETHANY ANNEX -
NORTHEAST MINNEAPOLIS
Rental units managed by Evangelical Covenant Church
1 bdrms. Rent from $23.50 to $30.50 per day
Three meals per day, housekeeping, and
Amenities:
Beauty/barber
linen service are included in rent.
shop, community room, craft room, garden space, library
and lounges.
10)
BREMER WAY CONDOMINIUMS -
NORTH MINNEAPOLIS
Condos managed by Realty Management Services
1 and 2 bdrms. and 1 bdrms. with den.
Price from $53,900 to $67,900
room,,
craft
room,
Community
Amenities:
underground parking, library and party room.
Small pets allowed.
11)
CENTRE PLACE -
lounges,
MINNEAPOLIS
Rental units managed by Walker Management Inc.
Studios, 1 and 2 bdrms.
Rents from $365 to $650 per month.
dini ng
library,
garage,
Indoor
Amenities:
and community rooms.
Pets allowed with approval.
75
room,
12)
CHANDLER PLACE - NORTHEAST MINNEAPOLIS
Rental units managed by and attached
Health Center
to
St.
Anthony
Studios, 1 and 2 bdrms. and 1 bdrms with den
Rent from $750 to $1250
Underground parking, beauty/barber shop,
Amenities:
exercise room, greenhouse, craft room, and coffee/gift
shop
13)
THE KENWOOD - SOUTHWEST MINNEAPOLIS
Rental units managed by ActiveLife Retirement
Studios, 1 and 2 bdrms.
Rent ranges from $950 to $1455 per month
(includes two meals/day, weekly housekeeping & linen)
exercise room, whirlParty room, sauna,
Amenities:
pool, gift shop, card room with large screen TV,
beauty/barber shop, and arts and crafts room.
Small pets allowed.
14)
KENWOOD ISLES CONDOMINIUM -
SOUTHWEST MINNEAPOLIS
Condo units managed by the Ebenezer Society
1, 2, and 3 bdrms priced from $58,200 to $143,600
parking,
underground
room,
Community
Amenities:
lounges, and garden
library, medical clinic attached,
space.
No pets
15)
THE KENZINGTON OF ST. ANTHONY -
MINNEAPOLIS
Condominiums managed by Health Central, Inc.
1 and 2 bdrms. and 1 bdrm with den
Priced from $62,900 to $128,900
garage,
underground
library,
Lounge,
Amenities:
game room, exercise room, whirlpool, and hobby room.
No pets. Open May.
16)
THE LINDENS -
SOUTH MINNEAPOLIS
Condo units managed by Schwartz/Weber Development Co
Priced from $61,000 to $102,000
1 and 2 bdrms.
Garden spaces, guest room, inside parking,
Amenities:
and lounges.
17)
NOKOMIS SQUARE COOPERATIVE -
SOUTH MINNEAPOLIS
Co-op units managed by Realty Management Services.
1 and 2 bdrms and 1 bdrm with den
Priced from $67,725 to $117,328
Underground parking, guest room, dining
Amenities:
room, arts and crafts room, woodworking shop, library
and party room.
76
18)
PARK CENTER APARTMENTS -
Rental
units
managed
EAST MINNEAPOLIS
by
Augustana
Homes,
on
campus
with Augustana Health Care Center
1 and 2 bdrms. Rents from $560 to $775
Amenities:
Exercise room, underground parking, garden
space, library, craft room, woodworking shop, whirlpool, lounges, beauty/barber shop.
19)
PENNINGTON PLACE -
SOUTHWEST MINNEAPOLIS
Rental units managed by Rainbow Development
1 bdrms. Rents from $1,000 to $1,500
Library, sunrooms, fireplace and
Amenities:
room.
20)
RAHKMA HOME ONE -
SOUTH MINNEAPOLIS
Rental units managed by Shirley Shaw
Studios that rent at $60/day or $1,800/month
Fireplace, private yard, deck
Amenities:
rooms
21)
dining
and
sun
ST. ANTHONY GREEN - NORTHEAST MINNEAPOLIS
Rental units managed by Catholic Eldercare. On campus
with St. Anthony Eldercare Health Center
1 and 2 bdrms. Rents to be determined.
Opens spring 1987
Library, activity room, and dining room
Amenities:
22)
ST. CHARLES -
EAST MINNEAPOLIS
Rental units managed by City Homes
Studios and 1 bdrms rent from $395 to $910
Community room, dining room,
Amenities:
ground parking. Pets allowed.
23)
STANDISH GREEN -
and
under-
EAST MINNEAPOLIS
Condo units managed by Walker Methodist
1 and 2 bdrms. priced from $59,900 to $81,900
Underground parking, garden plots, lounges,
Amenities:
and library. Pets allowed.
24)
TEACHERS HOME -
SOUTH MINNEAPOLIS
Rental units managed by Ebenezer Society
Teachers Home has 13-bed care center.
Rent from $231 to $486 per
Studios, 1 and 2 bdrms.
month.
Beauty/barber shop, dining room, library,
Amenities:
lounges, underground parking, and community room.
77
25)
WALKER PLACE - SOUTH MINNEAPOLIS
Endowment units managed by Walker
Methodist
Resident
Health Services
1 and 2 bdrms. Endowments from $23,100
Beauty/barber shop,exercise room, garden
Amenities:
gift
pharmacy,
room,
community
room,
craft
space,
shop, post office, library, lounges, and enclosed
parking.
HENNEPIN COUNTY 26)
NORTHERN
BROOKWOOD MANOR -
BROOKLYN CENTER
Rental units owned by Brutger Companies and managed
by Realty Management Services
1 and 2 bdrms and 1 bdrms with den.
Rents from $430 to $510
and craft
garden space,
Community room,
Amenities:
room.
27)
BROOKWOOD ESTATE APARTMENTS -
BROOKLYN CENTER
Rental units owned by Brutger Companies and managed
by Realty Management Services
1 and 2 bdrms and 1 bdrms with den.
Rents from $535 to $635
Sauna, whirlpool, exercise room, party
Amenities:
room, and craft room.
28)
CHARDON COURT
-
NEW HOPE
Rental units owned and managed by Northridge Properties
Rents from $495
1 and 2 bdrms and 1 bdrms with den.
to $750
Community room, lounges, transportation
Amenities:
to beauty/barber shop and pharmacy
29)
LEE SQUARE COOPERATIVE -
ROBBINSDALE
Co-op units managed by Ebenezer Company
1 and 2 bdrms and 1 bdrms with den
Priced from $53,900 to $82,900
Underground parking, dining
Amenities:
shops, garden spaces
30)
NORTHRIDGE APARTMENTS
-
room,
work-
NEW HOPE
Rental units owned and managed by Good Neighbors
Inc.
Studios, 1 and 2 bdrms and 1 bdrm handicapped units
Monthly rents from $735 to $1060 (includes dinner)
library,
pharmacy,
shop,
Beauty/barber
Amenities:
greenhouse, and craft room
78
31)
ST. THERESE RESIDENCE -
Rental
Inc.,
units
owned
NEW HOPE
managed
and
by
St.
1 and 2 bdrms. Rent from $605 to $780
Solarium, library, sauna,
Amenities:
whirlpool and beauty/barber shop
32)
Home,
Therese
on campus with St. Therese Health Care Center
SAGAMORE CONDOMINIUMS -
room,
dining
PLYMOUTH
1, 2, and 3 bdrms. Priced from $64,900
Indoor pool, outdoor pools, sauna,
Amenities:
game and exercise rooms, and 4-hole golf course
party,
WESTERN HENNEPIN COUNTY
33)
CAVALARY CENTER COOPERATIVE -
GOLDEN VALLEY
Co-op units managed by Realty Management Services
1, 2, and 3 bdrms. Priced from $57,000 to $120,000
dining room,
Greenhouse, garden space,
Amenities:
underground parking, craft room, library, and beauty/
barber shop
34)
CHAPEL VIEW APARTMENTS -
HOPKINS
Rental units owned by Chapel View, Inc. on campus
with Chapel View Health Center
Monthly rents from $462
Studios, 1, and 2 bdrms.
to $924 plus an entrance fee of $17,000 (fully refundable)
chapel,
shop,
beauty/barber
Library,
Amenities:
activity room on each floor
35)
COVENANT MANOR APARTMENTS -
GOLDEN VALLEY
Endowment unit owned and managed by Evangelical CovenAcross the street from Colonia Acres
ant Church.
Health Center
Studios, 1 and 2 bdrms. Prices not available
Dining room, swimming pool, garden plots,
Amenities:
sauna room, and jacuzzi
36)
THE HOMESTEAD -
MINNETONKA
Rental units managed by Walker Management Inc
Studios and 1 bdrms. Rents from $995 to $1475
To open
Dining room and lounges.
Amenities:
1986
37)
July
RIDGEPOINTE - MINNETONKA
Rental units owned by Marion Corp. and managed by
Ebenezer Company
1 and 2 bdrms, and 1 and 2 bdrms with den
Monthly rents from $635 to $1035
Guest rooms, whirlpool, arts and crafts
Amenities:
dining room, underground parking, exerprivate
room,
To open summer
plots and library.
garden
room,
cise
1986
79
38)
TWIN BIRCH VILLA -
SPRING PARK
Rental units managed by Edgewood Management Inc
Monthly rents from $590
Studios, 1 and 2 bdrms.
to $1500
beauty/barber shop,
Hot tubs, greenhouse,
Amenities:
guest
room,
and
underground
parking.
To
open
June
1986
SOUTHERN HENNEPIN COUNTY
39)
CASTLE RIDGE -
EDEN PRAIRIE
Rental units managed by Eberhardt Company
Studios, 1 and 2 bdrms. Rents from $710 to $1050
Indoor swimming pool, guest room, dining
Amenities:
room, solarium, and greenhouse, library, and woodworking shop
40)
EDINA PARK PLAZA - EDINA
Rental units managed by Active Life Retirement Co
Monthly rents from
1 and 2 bdrms and penthouses.
to $1900 (includes 2 meals/day, twice weekly
$950
housekeeping and linen service)
Spa, beauty/barber shop, gift shop, arts
Amenities:
and crafts room, party room, swimming pool, tennis
courts, and crafts room, party room, swimming pool,
To
restaurants.
and
amphitheater,
courts,
tennis
open January 1987
41)
FRIENDSHIP VILLAGE - BLOOMINGTON
On
Life care units managed by Lifecare Retirement.
campus with Friendship Village Nursing Home
Endowment fees from
Studios, 1, 2, and 3 bdrms.
to
$118,800
$49,750
Chapel, dining room, crafts room, and
Amenities:
library
42)
GIDEON POND -
BLOOMINGTON
Co-op units managed by Presbyterian Homes of Minnesota
Inc
Priced from $69,500 to $140,000
Gift shop, greenhouse, pharmacy, indoor
Amenities:
pool, whirlpool, exercise room, and library
To open December 1986
43)
GOOD NEIGHBOR RESIDENTIAL HOME -
EDINA
some nursing
needing
for persons
suites
Homelike
care.
Managed by Good Neighbor Services Inc.
Fee $98/day includes 3 meals, housekeeping, and nurse.
Sauna, whirlpool, workout gym, and beauty
Amenities:
salon
80
44)
LAKE SHORE DRIVE CONDOMINIUMS -
RICHFIELD
Condo units managed by Health Central Enterprises
Prices vary with
1 and 2 bdrms and 1 bdrms/den.
every unit
Beauty/barber shop, exercise room, hobby
Amenities:
area, game area, whirlpool, and guest room, and library
45)
REMBRANDT RETIREMENT COMMUNITY -
EDINA
Studios, 1 and 2 bdrms. Rent from $735 to $1395
Beauty shop, dining room, resident store,
Amenities:
and underground parking
46)
7500 YORK COOPERATIVE -
EDINA
Co-op units managed by Ebenezer Society
1, 2, and 3 bdrms priced from $13,543 to $29,518
(plus a monthly fee)
store,
convenience
shop,
Beauty/barber
Amenities:
whirlpool
and
parking,
underground
library, lounges,
47)
WOODLAKE POINT CONDOMINIUMS -
RICHFIELD
Condo units managed by Brookside Enterprises
Prices from $62,000 to $160,000
Underground parking, exercise room, whirlAmenities:
library, community room, and craft
terrace,
pool,
room
48)
900 COMO -
ST. PAUL
Rental units managed by Rainbow Development Co.
1 and 2 bdrms. Monthly rents from $635 to $935
Guest room, beauty shop, dining
Amenities:
underground garage and steam room
49)
LUTHER PLACE
-
room,
ST. PAUL
Condo units managed by Association
1 and 2 bdrms, and 1 and 2 bdrms/den
Guest room, library, underground parking,
Amenities:
and woodworking shop
50)
PATHWAYS ON THE PARK -
ST. PAUL
Rental units owned by Pathways Partnership and managed
by Skyline Builders
Rents from $470 to
1 and 2 bdrms and 1 bdrms/den.
$710
Lounge, solarium, social club, and parking
Amenities:
51)
THE WELLINGTON -
ST. PAUL
Rental units owned and managed by the Stewart Corp
Rents from $770 to $995 including
1 and 2 bdrms.
one meal a day and weekly housekeeping
Guest apartment, beauty shop, convenience
Amenities:
store, dining room, exercise room, whirlpool, library
and crafts
81
52)
WILDER PARK CONDOMINIUMS -
ST. PAUL
Condos owned by association and managed by Wilder
Foundation
1 and 2 bdrms. Resale only, prices depend on size
parking,
underground
room,
Community
Amenities:
library, garden plots, and sauna
SUBURBAN RAMSEY COUNTY
53)
THE ATRIUM -
SHOREVIEW
Rental units owned and managed by Hiner Homes Inc
1 and 2 bdrms and 1 bdrms/den. Rents $550 to $715
Underground parking, workshop, exercise
Amenities:
room, and atrium
54)
HAZEL RIDGE - MAPLEWOOD
Rental units owned and managed by Health Resources
Inc
1 and 2 bdrms. Rents to be determined
Underground parking, beauty/barber shop,
Amenities:
community room, and sun deck. To open early 1987.
55)
LAKE SQUARE -
WHITE BEAR LAKE
Rental units managed by Stuart Corp.
Studios, 1 and 2 bdrms and 1 and 2 bdrms with den
Monthly rents from $540
Exercise, room, library, underground parkAmenities:
ing, beauty/barber shop, dining room, and guest room.
Open 1987.
56)
LAKEVIEW RESIDENCE PRESBYTERIAN HOMES OF MN ARDEN HILLS
Rental
units
owned and managed
by Presbyterian Homes
of MN.
Monthly rents from $670 to $1200
1 bdrms and suites.
includes 3 meals per day
Swimming pool, beauty/barber shop, exercise
Amenities:
room, gift shop, and whirlpool
57)
PARK PLACE SENIOR HOUSING -
NEW BRIGHTON
Rental units owned by Housing Alliance
1 and 2 bdrms. Monthly rents to be determined
Covered parking, dining room, community
Amenities:
and crafts rooms. To open spring 1987
58)
SUTTON PLACE APARTMENTS - ARDEN HILLS
Rental units owned by Presbyterian Homes of Minnesota
and on campus with Presbyterian Homes
Monthly rents from $740 to $1240 includes
1 bdrms.
1 meal
shop, gift
coffee
shop,
Beauty/barber
Amenities:
shop, library, exercise room, garden space, swimming
pool and whirlpool
82
59)
VILLA PARK - ROSEVILLE
Condo units owned by Housing Alliance and managed
by Lynblomsten Management Co.
1 and 2 bdrms and 1 and 2 bdrms with den
Priced from $63,400 to $124,800
Heated garage, guest room, library, and
Amenities:
exericse room
WASHINGTON COUNTY
60)
CROIXDALE APARTMENTS -
BAYPORT
Rental apts. sponsored by Washington County and managed
by Margaret Juhl
Studios and 1 bdrms. Rent from $467 to $605
Beauty/barber shop, craft and exercise
Amenities:
rooms
61)
OAK RIDGE PLACE -
OAK RIDGE HEIGHTS
Rental units managed by Ebenezer Company
1 and 2 bdrms. Rents to be determined
Underground parking, dining room, two-story
Amenities:
To open Fall
atrium, rec/craft room, and terraces.
1986
62)
WOODBURY VILLAS -
WOODBURY
On
Rental units managed by Edgewood Management Inc.
campus with Woodbury Health Center
Studios, 1 and 2 bdrms. Rents from $550 to $1000
dining
lounges,
greenhouse,
tub,
Hot
Amenities:
areas.
recreation
and
room, underground parking,
Seniors Choice Housing Guide, Spring 1986, pubSources:
lished by The Seniors Choice; Consumer's Guide to Housing
published by
for Older People, December 1985,
Options
Area.
Cities
Twin
the
of
The Metropolitan Council
83
APPENDIX 2
DEMOGRAPHIC ANALYSIS
84
APPENDIX #2
MARKET DEMOGRAPHIC ANALYSIS
CITY
GOLDEN VALLEY
NEW HOPE
DEEPHAVEN
EXCELSIOR
GREENWOOD
HOPKINS
LONG LAKE
MAPLE PLAIN
MEDICINE LAKE
MEDINA
MINNETONKA
MNTKA BEACH
MINNETRISTA
MOUND
ORONO
PLYMOUTH
ST LOUIS PARK
SHOREWOOD
TONKA BAY
WAYZATA
WOODLAND
BLOOMINGTON
EDEN PRAIRE
EDINA
TOTAL POPULATION
# AGED
74-85
% LIVING ALONE
OR OWN A HOME
% INCOME
QUALIFIED
% OF MARKET
MARKET POTENTIAL
895
1,082
121
197
25
1,022
70
112
11
66
933
11
56
77.80%
60.30%
86.70%
83.30%
91.50%
84.30%
71.20%
71.20%
88.20%
88.40%
79.40%
95.50%
88.60%
69.00%
51.00%
78.00%
45.00%
68.00%
48.00%
62.00%49.00%
70.00%
63.00%
70.00%
81.00%
70.00%
15.00t
15.00%
20.00%
20.00%
'20.00%
20.00%
20.00%
10.00%
10.00%
15.00%
20.00%
15.00%
15.00%
3.60
2.50
0.82
0.74
0.16
4.14
0.31
0.20
0.03
0.28
5.19
0.06
0.26
256
198
91.20%
91.20%
46.00%
71.00%
15.00%
20.00%
0.81
1.28
320
2,489
88
36
86.20%
85.50%
92.00%
91.50%
63.00%
53.00%
60.00%
62.00%
15.00%
15.00%
15.00%
15.00%
1.30
8.46
0.36
0.15
261
92.20%
66.00%
20.00%
1.59
17
1,936
130
2,865
87.50%
83.30%
85.90%
90.60%
92.00%
66.00%
63.00%
73.00%
15.00%
15.00%
10.00%
10.00%
0.10
7.98
0.35
9.47
PROJECTED ANNUAL RENT-UP FROM
PRIMARY MARKET
50.14
13,197
85
APPENDIX 3
FINANCIAL ANALYSIS
86
MINNETONKA COUNTRYSIDE
EXHIBIT #1 DESCRIPTION
NUMBER
LIVING UNIT PHASE1
10
60
40
70
STUDIO
1 BDRM
1 BDRM/DEN
2BDRM
SUBTOTAL
3 @ 400 SF. EA.
LOUNGES
CIRCULATION @ 10%
SQ FT TOT SQ FT
750
900
1,050
1,250
7,500
54,000
42,000
87,500
191,000
1,200
19,220
180
MO FEE
TOT INC
$1,100
$1,400
$1,700
$1,950
$11,000
$84,000
$68,000
$136,500
$299,500
211,420
TOTAL
COMMUNITY SPACE
S.F.
COMMUNITY SPACE
DINING
PARTY ROOM
PCOT OFFICE
LIBRARY
CRAFT ROOM
CARD & GAME ROOM
MEDICAL CLINIC
EXCERCISE ROOM
1,500
800
1,200
500
300
1,000
3,500
1,500
LOBBY
GIFT SHOP
MINI-MARIKET
BANK
BARBER SHOP
ADMIN OFFICES
POOL AREA
SERVICE AREA
4,000
1,200
200
600
800
800
600
600
8,800
10,300
SUBTOTAL
S.F.
3,438
CIRCULATION @ 18%
TOTAL
22,538
INTERIOR 150 @ 200 S.F.
EXTERIOR 60 @ 200 S.F.
CIRCULATION 70 @ 150 S.F.
TOTAL BUILDING AREA PHASE 1
TOTAL PARKING AREA PHASE 1
30,000
12,000
10,500
PARKING:
233,958
42,000
TOT INC
MO FEE
TOT SQ FT
SQ FT
NUMBER
LIVING UNIT PHASE2
------------------------------------------------------------------------$56,000
$1,400
36,000
900
40
1 BDRM
$51,000
$1,700
31,500
1,050
30
1 BDRM/DEN
$58,500
$1,950
37,500
1,250
30
2 BDRM
$56,000
$1,400
26,000
650
40
ASSISTED LIVING
SUBTOTAL
LOUNGES 2 @ 400 SF.
CIRCULATION @ 10%
131,000
800
13,180
140
EA.
144,980
TOTAL BUILDING AREA PHASE 2
PARKING:
30,000
4,000
12,000
INTERIOR 150 @ 200 S.F.
EXTERIOR 20 @ 200 S.F.
CIRCULATION 80 @ 150 S.F.
87
$221,500
MINNETONKA COUNTRYSIDE
EXHIBIT #2 ASSUMPTIONS
ADDITIONAL INCOME:
PARKING FEE/MO.
SECOND OCCUPANT/MO
UNITS WITH 2 PER
RETAIL/FT/YR
DEVELOPMENT COSTS:
OCCUPANCY:
$20 RENT-UP PERIOD
$300 STABILIZED OCCUPANCY
20%
$6.00 REPLACEMENT RESERVE
INFLATION: @ 6%
HURDLE RATE
CAP RATE
HARD
LAND COST
SITE IMPROVEMENTS/UNIT
CONSTRUCTION/S.F.
PARKING/SPACE INTERIOR
EXTERIOR
BOARDWALK/L.F.
$1,250,000
$6,000
$60.00
$8,000
$1,200
$40
CIRULATION FOR PARKING IS CALCULATED
FOR ONLY THE SMALLER INTERIOR
UNITS. ALL OTHERS WILL BE SEPARATE GARAGES.
PHASE 2
18 MONTH
PHASE 1
30 MONTH
95%
1.00%
1.06
20.00%
10.00%
SOFT
ARCHITECTURE
ENGINEERING
DEV CONSULTANT
MKT ANALYSIS
ARCH CONSULTANT
LEGAL FEES
PERMITS
FFE
MARKETING/UNIT
DEVELOPMENT FEE
CONTINGENCY
5.0
1.01
$50,000
$50,000
$50,000
$50,000
$50,000
$200,000
$5,000
4.0
10.04
FINANCING:
PERMANENT
AMOUNT PHASE 1
AMOUNT PHASE 2
LTV RATIO
INTEREST RATE
POINTS
TERM
CONSTRUCTION
$20,000,000
AMOUNT PHASE 1
$10,000,000
AMOUNT PHASE 2
9.50%
INTEREST RATE
50.00%
AVG OUTSTANDING
12 MONTHS
CONST PERIOD
1.00%
POINTS
88
$21,500,000
$10,500,000
80.00%
10.09;
1.0%
30
MINNETONKA COUNTRYSIDE
EXHIBIT 3 STATEMENT OF EXPENSES
STAFFING PAYROLL:
FTE
WAGES
ANNUAL
/PERSON
$6.00
$6.00
$10.00
$6.50
$7.00
$75,000
$40,000
$30,000
$30,000
$12,480
$12,480
$20,800
$13,520
$14,560
$75,000
$40,000
$30,000
$30,000
$17,472
$37,440
$60,240
$13,520
$14,560
$318,232
ANNUAL
ADMINISTRATION:
ADMINISTRATOR
ASSISTANT ADMINISTRATOR
ACTIVITIES DIRECTOR
ADMISSIONS DIRECTOR
RECEPTION
SECURITY
NURSE
SECRETARY
BOOKEEPER
SUBTOTAL
1.4
3.0
3.0
1.0
1.0
11.4
HOUSKEEPING:
HOUSEKEEPING DIRECTOR
WORKING SUPERVISOR
HOUSEKEEPERS
JANITOR
ROVING HELPERS
LAUNDRY AIDE
SUBTOTAL
1.0
2.5
6.0
2.0
2.0
1.0
14.5
$7.00
$5.50
$6.00
$5.50
$5.50
$25,000
$14,560
$11,440
$12,480
$11,440
$11,440
$25,000
$36,400
$68,640
$24,960
$22,880
$11,440
$189,320
1.0
4.0
2.0
7.0
$5.50
$5.50
$25,000
$11,440
$11,440
$25,000
$45,760
$22,880
$93,640
MAINTENANCE:
MAINTENANCE SUPERVISOR
GROUNDS CREW
DRIVER
SUBTOTAL
1.0
1.0
TOTAL PAYROLL
BENEFITS @ 22%
PHASE 1
$508,632
$111,899
PHASE 1 & 2
$601,192
$132,262
TOTAL STAFFING EXPENSES
$620,531
$733,454
COST PER UNIT PER MONTH
PHASE 1:
OPERATING EXPENSES:
REAL ESTATE TAXES
SEWER AND WATER
UTILITIES
INSURANCE
MISCELLANEOUS @ $2/UNIT/DAY
TOTAL
DINING SERVICES
@ $260/UNIT/MONTH
$287
$191
PHASE 1
$165,000
$10,000
$50,000
$125,000
$131,400
$481,400
PHASE 1 & 2
$250,000
$15,000
$75,000
$175,000
$233,600
$748,600
$561,600
$998,400
* SOURCES: NORTH HILL RETIREMENT CENTER, NEEDHAM, MA. AND,
AN UNNAMED PROJECT IN PHILADELPHIA, PENNSYLVANIA.
89
PHASE 2:
MINNETONKA COUNTRYSIDE
EXHIBIT 4 DEVELOPMENT BUDGET PHASE 1
COST/UNIT
HARD COSTS:
LAND AQUISITION
SITE IMPROVEMENT
CONSTRUCTION
PARKING:INTERIOR
EXTERIOR
CIRCULAT
BOARDWALK
TENNIS
POOL
PUTTING
SUBTOTAL
SOFT COSTS:
ARCHITECTURE
ENGINEERING
DEV CONSULTANTS
LEGAL FEES
PERMITS
FFE
MARKETING
ARCH CONSULTANT
SUBTOTAL
DEVELOPMENT FEE
CONTINGENCY
TOTAL PHASE 1
COST/S.F.
TOTAL COST
$3,906
$6,000
$77,986
$6,667
$400
$6,667
$556
$111
$139
$28
$5.34
$4.62
$60.00
$5.13
$0.31
$5.13
$0.43
$0.09
$0.11
$0.02
$1,250,000
$1,080,000
$14,037,480
$1,200,000
$72,000
$53,865
$100,000
$20,000
$25,000
$5,000
$102,459
$81.17
$17,843,345
$5,123
$1,025
$222
$222
$222
$1,111
$6,000
$222
$4.06
$0.81
$0.17
$0.17
$0.17
$0.68
$4.62
$0.17
$892,167
$178,433
$40,000
$40,000
$40,000
$160,000
$1,080,000
$40,000
$14,148
$10.85
$2,470,601
$812,558
$2,031,395
$23,157,898
90
MINNETONKA COUNTRYSIDE
EXHIBIT 4 DEVELOPMENT BUDGET PHASE 2
COST/UNIT
------------HARD COSTS:
SITE IMPROVEMENT
$6,000
CONSTRUCTION
$62,134
PARKING:INTERIOR
$8,571
EXTERIOR
$171
CIRCULAT
$8,571
SUBTOTAL
SOFT COSTS:
ARCHITECTURE
ENGINEERING
DEV CONSULTANTS
ARCH CONSULTANTS
LEGAL FEES
PERMITS
FFE
MARKETING
SUBTOTAL
DEVELOPMENT FEE
CONTINGENCY
TOTAL PHASE 2
COST/S.F.
----------$5.79
$60.00
$8.28
$0.17
$8.28
TOTAL COST
------------$840,000
$8,698,800
$1,200,000
$24,000
$99,360
$76,877
$74.24
$10,862,160
$3,879
$776
$107
$107
$179
$107
$357
$6,000
$3.75
$0.75
$0.10
$0.10
$0.17
$0.10
$0.34
$5.79
$543,108
$108,622
$15,000
$15,000
$25,000
$15,000
$50,000
$840,000
$11,512
$11.12
$1,611,730
$498,956
$1,247,389
$12,473,890
91
MINNETONKA COUNTRYSIDE
EXHIBIT 5 ANNUAL CASH FLOW ANALYSIS
//////////////////////////////////////////////////////////////////////////////////////////
YEAR
2
LEASING1
CONSTRUCTION
------------INCOME:
0
AVG OCCUP(UNITS)
36
RENTAL INCOME
PARKING INCOME
SECOND OCCUPANT
RETAIL
T
TP AL INCOME
LESS VACANCY
PROJECT COST
EFFECTIVE INC.
MANAGEMENT FEE
EXPENSES:
ADMINISTRATION
HOUSEKEEPING
MAINTENANCE
3
LEASING1
------108
5
LEASING2
6
LEASING2
260
300
$4,038,221
$48,540
$145,619
$10,787
$6,182,965
$74,319
$222,958
$11,434
$7,562,242
$90,898
$272,695
$12,120
$8,550,375
$96,352
$308,327
$12,647
$6,491,677
$0
($12,473,890)
$7,937,955
$8,967,901 $9,505,975 $10,076,334 510,680,914
($427,519)
($453,170)
($480,360)
(509,182)
$11,321,769
($539,733)
($5,982,213)
$389,501
$7,937,955
$476,277
$8,540,383
$512,423
$9,052,806
$543,168
$9,595,974 $10,171,732
$575,758
$610,304
$10,782,036
$646,922
4
LEASING1
-------0
180
9
10
?
a
STABILI2ED
STAE3ILI2ED
STABILIZED STABILIZED
----------------------------320
320
320
320
$9,063,398
$102,133
$326,827
513,618
$9,607,201 $10.,183,633
%114,757
$108,261
$346,436
3367,223
$14,435
$15,301
SALE
320
$10,794,651
$121,642
$389,256
$16,219
so
$0
50
s0
$718,800
$8,640
$25,920
$9,600
$2,285,786
$27,475
s0
$762,960
$0
$2,405,862
$0
$4,243,166
$762,960
$45,778
$2,405,862
$144,352
$4,243,166
$254,590
$297,432
$129,000
$315,278
$136,740
$376,294
$217,580
$110,755
$398,872
$230,635
$117,401
$422,804
$244,473
$124,445
$448, 174
$259, 14
5131,91
$475,063
$274,690
$139,826
3503, 567
$291, 171
216
$533, 781
$87,132
$334,195
$144,944
$104,486
$704,630
$155,019
$746,908
$164,320
$791,722
$174,179
$839,22
$184,637
$889,579
$195,707
3942, 954
$p207, 450
$999,531
$219,897
$0
$82,426
$10,176
$0
(S23,157,898)
($23,157,898)
so
$0
s0
$0
$82,200
$0
$149,
$308,642
$157,109
TOTAL PAYROLL
BENEFITS
$0
s0
$508,632
5111,899
$539,150
5119,613
$583,625
$128,398
TOT STAFF EXP
50
$620,531
$657,763
$712,023
$859,649
$911,228
$965,901
51,023,85.
51,085,287
51', 150,404
$1,219,426
OPERATING EXPENSES
DINING EXPENSES
$0
so
$361,400
$112,320
$467,864
$357,178
$510,284
$1,001,468
$859,872
$1,0147,704
$992,160
$1,110,566
$1,058,304
$1,177,20
$1,121,80.
$1,247,832
$1,189,110
$1,322,702
$1,260,457
$1,402,064
$1,336,084
TOTAL EXPENSES
$0
($3,427,369)($3,647,194)($3,66,023C($4,097,98)($4:343,86)
($4,604,499)
REPLACEMENT RESERV
$0
NET OPERATING INC ($23,157,898)
$595,296
($1,160,029)($1,627,176)($2,072,193)
($7,630)
($404,698)
C$24,059)
$754,627
($42,432)
S2,128,541
($3,110,509)
$59,822
($9,032,901)
($79,380)
$4,431,207
($85,404)
$4,807,784
($90,526)
($95,960)
($101,717)
($107,820)
$5,096,251
$5,402,027
$5,726,148
$6,069,717
MINNETONKA COUNTRYSIDE
EXHIBIT 6 LEVERAGED CASH FLOW ANALYSIS
YEAR
1
CONSTRUCTION
2
LEASING 1
NET OPERATING INC ($23,157,998)
($404,698)
SALES PROCEEDS
CONST. MORTGAGE
$20,000,000 ($20,000,000)
($950,000) ($1,900,000)
CONST INTEREST
'D
4
1 LEASING 1
$754,627 $2,128,541
5
LEASING 2
($9,032,901)
$10,000,000
($4,107,898)
DEBT COVERAGE RATIO
CASH-ON-CASH
BEFORE TAX CASH FLOW RETURNS:
NET PRESENT VALUE
$936,676
22.37?
INTERNAL RATE
7
STABILIZED
STABILIZED
9
10
STABILIZED STABILIZED
SALE
$4,431,207
$4,807,784
$5,096,251
$5,402,027
$5,726,148
11
$6,069,717
$60,697,170
($10,000,000)
$10,500,000
($105,000)
($2,074,453)($2,074,453)
DEBT SERVICE
8
6
LEASING 2
($475,000)
521,500,000
($215,000)
PERM MORTGAGE
PERM POINTS
CASH FLOW AFTER
DEBT SERVICE
3
LEASING
($1,019,698)($1,319,826)
0.36
$54,088
1.03
0. 85%A
($2,074,453)
($1,582,354)
1.63
-24.792
($29,871,386)
($3,180,193)C$3,1B0,193)($3,180,19-:)($3,1B0,193)C$3,180,193)
$1,646,014
1.39
20.94%
$1,627,591
1.51
20.71X
$1,916,05$
1.60
24.38X
$2,221,834
1.70
2e.27%
$2,545,955
1.80
32.39%
$30,825,784
MINNETONKA COUNTRYSIDE
---------------------- ------------ --------------------------------------EXHIBIT #1 DESCRIPTION WITH 10% DROP IN RENTAL RATES
TOT INC
MO FEE
SQ FT TOT SQ FT
NUMBER
LIVING UNIT PHASE1
--------------------------------------------------------------------------$9,900
$990
7,500
750
10
STUDIO
$75,600
$1,260
54,000
900
60
1 BDRM
$61,200
$1,530
42,000
1,050
40
1 BDRM/DEN
$122,850
$1,755
87,500
1,250
70
2BDRM
SUBTOTAL
LOUNGES 3 @ 400 SF. EA.
CIRCULATION @ 10%
191,000
1,20019,220
180
$269,550
211,420
TOTAL
S.F.
COMMUNITY SPACE
S.F.
COMMUNITY SPACE
--------------------------------------------------------------------------4,000
DINING
1,500
LOBBY
1,200
PARTY ROOM
800
GIFT SHOP
200
POST OFFICE
1,200
MINI-MARKET
600
LIBRARY
500
BANK
800
CRAFT ROOM
300
BARBER SHOP
800
CARD & GAME ROOM
1,000
ADMIN OFFICES
600
MEDICAL CLINIC
3,500
POOL AREA
600
EXCERCISE ROOM
1,500
SERVICE AREA
SUBTOTAL
8,800
10,300
3,438
CIRCULATION @ 18%
TOTAL
22,538
INTERIOR 150 @ 200 S.F.
EXTERIOR 60 @ 200 S.F.
CIRCULATION 70 @ 150 S.F.
TOTAL BUILDING AREA PHASE 1
TOTAL PARKING AREA PHASE 1
30,000
12,000
10,500
PARKING:
233,958
42,000
TOT INC
MO FEE
TOT SQ FT
SQ FT
NUMBER
LIVING UNIT PHASE2
--------------------------------------------------------------------------$50,400
$1,260
36,000
900
40
1 BDRM
$45,900
$1,530
31,500
1,050
30
1 BDRM/DEN
$52,650
$1,755
37,500
1,250
30
2 BDRM
$50,400
$1,260
26,000
650
40
ASSISTED LIVING
SUBTOTAL
LOUNGES 2 @ 400 SF. EA.
CIRCULATION @ 10%
131,000
800
13,180
140
144,980
TOTAL BUILDING AREA PHASE 2
30,000
4,000
12,000
PARKING: INTERIOR 150 @ 200 S.F.
EXTERIOR 20 @ 200 S.F.
CIRCULATION 80 @ 150 S.F.
94
$199,350
MINNETONKA COUNTRYSIDE
EXHIBIT 5
ANNUAL CASH FLOW ANALYSIS WORST CASE
2///////////////////////////////////////////////////////////////////////////////////////
YEAR
3
4
5
2
CONSTRUCTION
LEASING1
LEASINGI
LEASING1
LEASING2
--------------------------INCOME:
24
72
122
170
AVG OCCUP(UNITS)
0
RENTAL INCOME
PARKING INCOME
SECOND OCCUPANT
RETAIL
k0
Ln
$0
s0
$0
$0
6
LEASING2
-------219
e
9
10
7
STABILIZED
STAGI3LIZEO
STABILIZED STABILIZED
0-----------------2-6--266
305
320
320
$3,638,437
$48,593
$145,780
$11,434
$4,945,706
$66,053
$198,158
$12,120
$6,396,749
$70,016
$256,297
$12,847
$7,774,696
S74,217
$311,507
$10,176
$2,463,315
$32,899
$98,697
$10,787
$431,280
$5,760
$17,280
$9,600
$1,371,471
$18,317
$54,950
S:13,618
$8, 646,481
$78, 670
$346,436
$14,435
.11
SALE
320
$9,165,270
$83,390
$367,223
$15,301
$9,715,186
$88,394
$389,256
$16,219
TOTAL INCOME
LESS VACANCY
PROJECT COST
s0
$0
($23,157,898)
$463,920
$1,454,915
$2,605,697
$0
$0
$3,844,245
$0
($12,473,890)
$5,222,037
$0
$6,735,909
($319,837)
$8, 174,037 $9,086,022
($388, 735) ($432,324)
$9,631,184
($458,264)
$10,209,055
($485,759)
EFFECTIVE INC.
MANAGEMENT FEE
EXPENSES:
ADMINISTRATION
HOUSEKEEPING
MAINTENANCE
($23,157,898)
$463,920
$27,835
$1,454,915
$87,295
$2,605,697
$156,342
($8,629,645)
$230,655
$5,222,037
$313,322
$6,416,072
$384,964
$7,785,302
$467,118
$9,172,920
$9,723,295
5583,398
$297,432
$129,000
$82,200
$306,355
$315,546
S136,856
$346,436
$203,091
$101,959
$356,829
$209,184
$105,018
$367,534
$215,460
$108,168
$378,560
$98,989
$221,923
$111,413
$389,917
$228,581
$114,756
$0
$0
s0
so
$0
$132,870
$84,666
$8,653,698
$519,222
TOTAL PAYROLL
BENEFITS
$0
$508,632
$111,899
$523,891
$0
$115,256
$551,391
$121,306
$651,486
$143,327
$671,031
$147,627
$691,162
$152,056
$711,89?
$156,61
$733,253
$161,316
TOT STAFF EXP
50
$620,531
$639,147
$672,697
$794,813
$816,658
$843,217
$868, 51
$694,569
OPERATING EXPENSES
DINING EXPENSES
$0
$0
$381,400
$74,890
$454,642
$231,379
$495,842
$392,059
$973,144
$546,312
$1,018,052
$700,565
$1,048,594
$854,818
$1,080,05
$880,46
$1,112,453
$906,e76
TOTAL EXPENSES
$0
REPLACEMENT RESERV
$0
NET OPERATING INC ($23,157,898)
($1,104,646)(1,412,463)($1,716,940) ($2,544,924)
($4,639)
($14,549)
($26,057)
$86,296
($645,365)
$27,902
$662,701
($11,088,273)
$550,375
$401, 614
$235,439
$118,198
$755, 251
$166,155
$921,406
$413,663
$242,502
$121,744
$777,909
$171,140
5949,049
$1,145,826
$934,082
$1, 180,201
$962,105
($2,850,597)(3,131,593)($3,296,14- >($3,433,120)($3,551,690)
($3,674,752)
(52,220)
$2,319,220
($64,161)
$3,220,318
($77,85.)
$4,411,304
($86,537)
$5,134,041
C$91,?29)
$5,529,501
($97,233)
$5,951,310
MINNETONKA COUNTRYSIDE
EXHIBIT 6 LEVERAGED CASH FLOW ANALYSIS WORST CASE
YEAR
1
CONSTRUCTION
2
LEASING
1
NET OPERATING INC ($23,157,898)
($645,365)
SALES PROCEEDS
CONST. MORTGAGE
$20,000,000 ($20,000,000)
CONST INTEREST
($950,000) ($1,900,000)
tO
4
LEASING 1
$27,902
$862,701
5
LEASING 2
6
LEASING 2
7
STABILI2ED
B
STABILIZED
9
10
STABILIZED STABILIZED
SALE
($11,088,273)
$2,319,220
$3,220,319
$4,411,304
S8,134,041
$10,000,000
($10,000,000)
$10,500,000
($105,000)
($2,074,453)($2,074,453)
DEBT SERVICE
($4,107,899)
DEBT COVERAGE RATIO
CASH-ON-CASH
BEFORE TAX CASH FLOW RETURNS:
NET PRESENT VALUE
($2,640,164)
INTERNAL RATE
13.B7%
$5,529,501
11
$5,951,310
$59,513,102
($475,000)
$21,500,000
($215,000)
PERM MORTGAGE
PERM POINTS
CASH FLOW AFTER
DEBT SERVICE
3
LEASING 1
($2,074,453)
C1,260,365)($2,046,551)($1,211,752) ($3,637,726)
0.01
0.42
-16.149%
0.63
-42.49%
($29,871,386)
C$3,190,193)C$3,180,193)C$3,180,19C)($3,180,193)($3,180,193)
($465,973)
0.73
-3. 85P
$40,125
1.01
0. 32%
$1,231,11,
1.39
9.8so-.
!1,953,848
1.61
15. 55%
$2,349,308
1.74
78%
1s.
$29,641,716
MINNETONKA COUNTRYSIDE
EXHIBIT 4 DEVELOPMENT BUDGET PHASE 1 (CONSTRUCTION COST $50/FT)
COST/UNIT
COST/S.F.
TOTAL COST
HARD COSTS:
LAND AQUISITION
SITE IMPROVEMENT
CONSTRUCTION
PARKING:INTERIOR
EXTERIOR
CIRCULAT
BOARDWALK
TENNIS
POOL
PUTTING
$3,906
$6,000
$64,988
$6,667
$400
$6,667
$556
$111
$139
$28
$5.34
$4.62
$50.00
$5.13
$0.31
$5.13
$0.43
$0.09
$0.11
$0.02
$1,250,000
$1,080,000
$11,697,900
$1,200,000
$72,000
$53,865
$100,000
$20,000
$25,000
$5,000
SUBTOTAL
$89,461
$71.17
$15,503,765
$4,473
$895
$222
$222
$222
$1,111
$6,000
$222
$3.56
$0.71
$0.17
$0.17
$0.17
$0.68
$4.62
$0.17
$775,188
$155,038
$40,000
$40,000
$40,000
$160,000
$1,080,000
$40,000
$13,368
$10.25
$2,330,226
SOFT COSTS:
ARCHITECTURE
ENGINEERING
DEV CONSULTANTS
LEGAL FEES
PERMITS
FFE
MARKETING
ARCH CONSULTANT
SUBTOTAL
DEVELOPMENT FEE
CONTINGENCY
TOTAL PHASE 1
$713,360
$1,783,399
$20,330,750
97
MINNETONKA COUNTRYSIDE
EXHIBIT 4 DEVELOPMENT BUDGET PHASE 2 (CONSTRUCTION COST $50/FT)
COST/UNIT
------------HARD COSTS:
SITE IMPROVEMENT
$6,000
CONSTRUCTION
$51,779
PARKING:INTERIOR
$8,571
EXTERIOR
$171
CIRCULAT
$8,571
SUBTOTAL
SOFT COSTS:
ARCHITECTURE
ENGINEERING
DEV CONSULTANTS
ARCH CONSULTANTS
LEGAL FEES
PERMITS
FFE
MARKETING
SUBTOTAL
DEVELOPMENT FEE
CONTINGENCY
TOTAL PHASE2
COST/S.F.
-----------$5.79
$50.00
$8.28
$0.17
$8.28
TOTAL COST
------------$840,000
$7,249,000
$1,200,000
$24,000
$99,360
$66,521
$64.24
$9,412,360
$3,362
$672
$107
$107
$179
$107
$357
$6,000
$3.25
$0.65
$0.10
$0.10
$0.17
$0.10
$0.34
$5.79
$470,618
$94,124
$15,000
$15,000
$25,000
$15,000
$50,000
$840,000
$10,891
$10.52
$1,524,742
$437,484
$1,093,710
$10,937,102
98
MINNETONKA COUNTRYSIDE
EXHIBIT 6 WORST CASE WITH CONSRUCTION COST AT $50/FT
YEAR
1
CONSTRUCTION
2
LEASING 1
NET OPERATING INC
SALES PROCEEDS
CONST. MORTGAGE
CONST INTEREST
($20,330,750)
($645,365)
to
5
LEASING 2
$862,701
($9,551,485)
6
LEASING 2
7
STABILI2EO
a
STABILIZED
9
10
STABILIZED STABILIZED
SALE
$2,319,220
$3,220,318
$4,411,304
$5,134,041
$10,000,000 ($10,000,000)
($475,000)
$21,500,000
($215,000)
$10,500,000
($105,000)
PERM POINTS
$5,529,501
11
$5,951,310
$59,513,102
($29,871,386)
($2,074,453)($2,074,453) ($2,074,453) ($3,180,193)($3,180,193)C3,1G0,193)($3,180,193)($3,180,193)
DEBT SERVICE
CASH FLOW AFTER
DEBT SERVICE
$27,902
4
LEASING 1
$20,000,000 ($20,000,000)
($950,000) ($1,900,000)
PERM MORTGAGE
%o
3
LEASING 1
(51,280,750)
DEBT COVERAGE RATIO
CASH-ON-CASH
BEFORE TAX CASH FLOW RETURNS:
$333,393
NET PRESENT VALUE
21. 09%
INTERNAL RATE
(S1,260,365)($2,046,551)($1,211,752)
0.01
0.42
-36.64P
($2,100,938)
($465,973)
$40,125
0.00
-44.19P
0.73
-7. 15%
1.01
0.57
$1,231,11.
1.39
17.63%
$1,953,848
1.61
27.99-'
$2,349,308
1.74
33.65%.
$29,641,716
BIBLIOGRAPHY
100
BIBLIOGRAPHY
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Conference, May 22, 1986.
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