Comprehensive Housing Needs Assessment for Olmsted County, Minnesota

Comprehensive Housing Needs Assessment for Olmsted County, Minnesota 612.338.0012 1221 Nicollet Mall, Suite 218 Minneapolis, MN 55403 www.maxfieldresearch.com

February 7, 2014 Mr. Paul Fleissner Director of Community Services Olmsted County 2117 Campus Drive SE, Suite 200 Rochester, MN 55904 Dear Mr. Fleissner: Attached is the study Comprehensive Housing Needs Assessment for Olmsted County, Minnesota conducted by Maxfield Research Inc. The study projects housing demand for submarkets in the Olmsted County Market Area from 2013 through 2030. It also provides recommendations on the amount and types of housing that could be built to satisfy demand from current and future residents over the next decade and beyond. The Comprehensive Housing Needs Assessment finds the rental market in Olmsted County is tight with a vacancy rate of 3.7% and the for sale market and new construction market is rebounding after years of falling prices during the Great Recession. As a result, the vacant lot supply is declining and new lots will be needed to accommodate future demand. The study identifies a potential demand for approximately 22,700 new housing units in the Olmsted County Market Area through 2030. Demand will be spread across all product types; including 11,363 for sale units, 7,074 general occupancy rental units, and 7,358 senior units. Demand could be even higher based on future Destination Medical Center ( DMC ) initiatives. Detailed information regarding housing demand by submarket and recommended housing types can be found in the Conclusions and Recommendations section at the end of the report. We have enjoyed the opportunity to be able to assist you as you consider housing needs and specific initiatives for Olmsted County. If you need additional information, please contact us. Sincerely, MAXFIELD RESEARCH INC. Matt Mullins Vice President Attachment 612 338 0012 (fax) 612 904 7979 1221 Nicollet Avenue South Suite 218, Minneapolis, MN 55403 www.maxfieldresearch.com

TABLE OF CONTENTS Page KEY FINDINGS... 1 PURPOSE AND SCOPE... 5 Study Impetus... 5 Scope of Work... 5 Overview of Market Area... 6 DEMOGRAPHIC ANALYSIS... 8 Introduction... 8 Population and Household Growth from 1990 to 2030... 8 Household Size... 20 Age Distribution Trends... 21 Race and Ethnicity... 26 Language by Olmsted County K 12 Students... 28 Household Income by Age of Householder... 29 Median Income by Race... 41 Tenure by Age of Householder... 43 Tenure by Race... 46 Tenure by Household Income... 48 Tenure by Household Size... 50 Household Size by Occupied Housing Type and Race... 53 Household Type... 55 Net Worth... 58 Demographic Comparison to Metro Area... 61 Demographic Comparison to Outstate Minnesota... 64 HOUSING CHARACTERISTICS... 66 Introduction... 66 Residential Construction Trends 2000 to Present... 66 Housing Units by Occupancy Status & Tenure... 75 American Community Survey... 81 Age of Housing Stock... 81 Housing Units by Structure and Occupancy... 83 Owner Occupied Housing Units by Mortgage Status... 86 Owner Occupied Housing Units by Value... 88 Renter Occupied Units by Contract Rent... 91 Mobility in the Past Year Olmsted County Market Area... 93 Mobility in the Past Year Comparisons... 97

Page EMPLOYMENT TRENDS... 100 Introduction... 100 Employment Growth & Projections... 100 Resident Labor Force... 102 Covered Employment by Industry... 104 Commuting Patterns... 111 Inflow/Outflow... 117 Resident/Worker Profile Comparison... 120 Long Term Growth/High Paying Jobs... 123 Major Employers... 125 Employer Survey... 127 Employment Summary... 128 RENTAL MARKET ANALYSIS... 130 Introduction... 130 General Occupancy Rental Projects... 132 Rental Market Interview Summary... 150 SENIOR HOUSING ANALYSIS... 151 Senior Housing Defined... 151 Senior Housing in the Olmsted County Market Area... 152 Nursing Home Facilities... 169 FOR SALE MARKET ANALYSIS... 172 Introduction... 172 County Wide Home Resale Comparison... 172 Home Resale Comparison in Olmsted County & Vicinity... 176 Current Supply of Homes on the Market... 185 New Construction Pricing... 191 Months of Active Supply... 193 Lender Mediated Properties... 194 Owner Occupied Turnover... 197 Lot Inventory... 199 Actively Marketing Subdivisions... 207 Realtor/Builder/Developer Interviews... 211 PLANNED AND PROPOSED HOUSING PROJECTS... 216

Page HOUSING AFFORDABILITY... 219 Introduction... 219 Rental Affordability by Bedroom Type... 223 Home Ownership and Rental Affordability by Submarket... 224 Home Ownership Affordability by Household Income... 227 Housing Cost Burden... 229 Housing Vouchers... 237 Community Land Trust... 237 SPECIAL NEEDS HOUSING... 240 Introduction... 240 Persons with Disabilities... 240 People with Limitations/Disabilities... 242 Housing Facilities for Disabled Persons... 243 Specialized Housing Facilities... 244 People Living with AIDS... 246 Homelessness... 247 American Community Survey... 250 HOUSING DEMAND ANALYSIS... 253 Introduction... 253 Demographic Profile and Housing Demand... 253 Housing Demand Overview... 254 For Sale Housing Market Demand Analysis... 258 Rental Housing Demand Analysis... 267 Senior Housing Demand Analysis... 273 DEMAND SUMMARY AND RECOMMENDATIONS... 293 Olmsted County Market Area Demand Summary... 293 Byron Summary of Demographic and Housing Condition Findings... 300 Byron Recommendations... 301 East Summary of Demographic and Housing Findings... 303 East Recommendations... 304 North Summary of Demographic and Housing Condition Findings... 306 North Recommendations... 307 Rochester Summary of Demographic and Housing Condition Findings... 309 Rochester Recommendations... 310 Rochester Fringe Summary of Demographic and Housing Condition Findings... 312 Rochester Fringe Recommendations... 313 Stewartville Summary of Demographic and Housing Condition Findings... 315 Stewartville Recommendations... 316 CHALLENGES AND OPPORTUNITIES... 318

Page APPENDIX... 332 Definitions... 333

LIST OF TABLES Table Number and Title Page D 1. Historic Population Growth Trends, Olmsted County, 1990 2030... 10 D 2. Historic Household Growth Trends Olmsted County, 1990 2030... 11 D 3. Average Household Size, Olmsted County Market Area, 1990 2030... 20 D 4. Population Age Distribution, Olmsted County Market Area, 2000 to 2018... 23 D 5. Population Age Distribution, Olmsted County, 2000 to 2018... 25 D 6. Race by Households, Olmsted County Market Area, 2000 & 2010... 27 D 7. Ethnicity, Olmsted County Market Area, 2000 & 2010... 29 D 8. Household Income by Age of Householder, Byron Submarket, 2013 & 2018... 30 D 9. Household Income County Comparisons, 2013... 40 D 10. Median Income by Race, Olmsted County Cities, 2012... 42 D 11. Tenure by Age of Householder, Olmsted County Market Area, 2010... 44 D 12. Tenure by Race, Olmsted County Market Area Cities, 2010... 47 D 13. Tenure by Household Income, Olmsted County Market Area, 20011... 49 D 14. Tenure by Household Size, Olmsted County Market Area, 2000 & 2010... 51 D 15. Average Household Size by Occupied Housing Type & Race, Olmsted County Market Area Cities, 2010... 54 D 16. Household Type, Olmsted County Market Area, 2000 & 2010... 57 D 17. Estimated Net Worth by Age of Householder, Olmsted County Market Area, 2013 60 D 18. Demographic Summary, Olmsted County Market Area Compared to Other Counties, 2010... 62 D 19. Demographic Summary, Olmsted Market Area, 2010... 63 D 20. Demogrpahic Summary, Comparable Cities Throughout Minnesota, 2010... 65 D 21. Demographic Summary, Comparable Counties throughout Minnesota, 2010... 65 HC 1. Residential Construction/Annual Building Permits Issued, Olmsted County, US Census Bureau, 2000 to 2012... 67 HC 2. Annual Residential Building Activity, Units Permitted, Olmsted County Market Area, 2004 2012... 69 HC 3. Demolition Permits, City of Rochester, 2001 to 2013... 74 HC 4. Housing Units by Occupancy Status & Tenure, Olmsted County Market Area, 2000 & 2010... 76 HC 5. Age of Housing Stock, Olmsted County Market Area, 2011... 82 HC 6. Housing Units by Structure & Tenure, Olmsted County Market Area, 2011... 84 HC 7. Owner Occupied Housing Units by Mortgage Status, Olmsted County Market Area, 2011... 87 HC 8. Owner Occupied Units by Value, Olmsted County Market Area, 2011... 89 HC 9. Renter Occupied Units by Contract Rent, Olmsted County Market Area, 2011... 92 HC 10. Mobility in the Past Year by Age for Current Residence, Olmsted County Market Area, 2011... 94 HC 11. Mobility in the Past Year by Submarket for Current Residence, Olmsted County Market Area, 2011... 95

HC 12. Mobility in the Past Year by Submarket for Current Residence, Olmsted County vs. Select Geographies, 2012... 98 EMP 1. Historic & Projected Employment Growth, Olmsted County, 1970 to 2030... 100 EMP 2. Employment Projections, Olmsted County, 2010 2020... 101 EMP 3. Historic Unemployment Statistis, Olmsted County, 1990 to 2013... 102 EMP 4. Resident Employment, Olmsted County, 2000 through 2013... 103 EMP 5. Quarterly Census of Employment and Wages, Olmsted County & Twin Cities Metro Area... 107 EMP 6. Average Annual Wages, Olmsted County Market Area, 2012... 108 EMP 7. Wage Comparisons, 2012... 109 EMP 8. Commuting Patterns, Byron Submarket, 2011... 112 EMP 9. Commuting Patterns, East Submarket, 2011... 112 EMP 10. Commuting Patterns, North Submarket, 2011... 113 EMP 11. Commuting Patterns, Rochester, 2011... 113 EMP 12. Commuting Patterns, Rochester Fringe, 2011... 114 EMP 13. Commuting Patterns, Stewartville, 2011... 114 EMP 14. Commuting Patterns, Olmsted County, 2011... 115 EMP 15. Commuting Patterns, Olmsted County, 2011... 116 EMP 16. Commuting Patterns Summary, Olmsted County Submarkets, 2011... 117 EMP 17. Commuting Inflow/Outflow, Olmsted County Market Area, 2011... 118 EMP 18. Resident Profile, Olmsted County, 2011... 121 EMP 19. Worker Profile, Olmsted County, 2011... 122 EMP 20. Long Term High Growth/High Pay Jobs, Southeast Minnesota Planning Area, 2010 to 2020... 124 EMP 21. Major Employers, Olmsted County, December 2013... 126 EMP 22. Employment Summary, Olmsted County Compared to Other Counties, 2011... 129 R 1. Bedrooms by Gross Rent, Renter Occupied Housing Units, Olmsted County, 2011 131 R 2. Summary of General Occupancy Rental Project Inventoried by Submarket, 4 th Qtr., 2013... 134 R 3. Market Rate Rental Properties, Olmsted County Market Area, 4 th Qtr. 2013... 136 R 4. Affordable/Subsidized Rental Properties, Olmsted County Market Area, 4 th Qtr. 2013... 143 R 5. Common Area Features/Amenities, Existing Rental Projects, Olmsted County Market Area, 4 th Qtr. 2013... 146 S 1. Senior Housing Summary by Olmsted County Submarket, 4 th Qtr. 2013... 152 S 2. Subsidized/Affordable Senior Housing Projects, Olmsted County Market Area, 4 th Qtr. 2013... 154 S 3. Market Rate Senior Housing Projects, Olmsted County Market Area, 4 th Qtr. 2013 156 S 4. Assisted Living Senior Projects, Olmsted County Market Area, 4 th Qtr. 2013... 158 S 5. Services Comparison, Market Rate Senior Projects, Olmsted County Market Area, 4 th Qtr. 2013... 160

S 6. Amenity Comparison, Market Rate Senior Projects, Olmsted County Market Area, 4 th Qtr. 2013... 162 S 7. Services Comparison, Subsidized/Affordable Senior Projects, Olmsted County Market Area, 4 th Qtr. 2013... 164 S 8. Amenity Comparison, Subsidized Affordable Senior Projects, Olmsted County Market Area, 4 th Qtr. 2013... 165 S 9. Nursing Home Facilities, Olmsted County Market Area, 4 th Qtr. 2013... 170 FS 1. Median Resale Comparison, 2008 to 2013... 173 FS 2. Resale Comparison, 2013... 175 FS 3. Single Family Home Resales, Olmsted County & Vicinity, 2000, 2005 to 2013... 177 FS 4. Multifamily Home Resales, Olmsted County & Vicinity, 2000, 2005 to 2013... 181 FS 5. Homes Currently Listed For Sale, Olmsted County & Vicinity, November 2013... 186 FS 6. Active Listings by Type and Submarket, November 2013... 188 FS 7. Active Listings by Housing Type, Olmsted County & Vicinity, November 2013... 189 FS 8. New Construction Median Sales Price, Olmsted County vs. Metro Area Counties, 2005 to 2013... 192 FS 9. Active Supply of Homes For Sale, Olmsted County & Metro Area, 2005 to 2013. 193 FS 10. Lender Mediated Real Estate Activity, Olmsted County Comparison, 2010 to 2013 195 FS 11. Foreclosures, Olmsted County, 2008 2013... 197 FS 12. Owner Occupied Turnover, Olmsted County Market Area... 198 FS 13. Olmsted County Vacant Lots, 2012 Lot Counts... 200 FS 14. Olmsted County Vacant Lot Summary, 2012 Year End... 206 FS 15. Active Single Family Subdivisions, Olmsted County Market Area, 4 th Qtr. 2013... 208 P 1. Planned/Pending Residential Projects, Olmsted County Market Area, 4 th Qtr. 2013 217 HA 1. MHFA/HUD Income and Rent Limits, Olmsted County, 2013... 221 HA 2. Maximum Rent Based on Household Size & Area Median Income, Olmsted County, 2013... 222 HA 3. Household Income Needed to Afford Average Rent, Olmsted County Market Area, 2013... 223 HA 4. Percent of Households by Tenure that can Afford Average Priced Home & Rent, Olmsted County Market Area, 2013... 225 HA 5. Homeownership Affordability by Income, Olmsted County Market Area, 2013... 227 HA 6. Housing Cost Burden, Olmsted County Market Area & Select Geographies, 2011 231 HA 7. Average Housing Vouchers by Year, Olmsted County, 2008 to 2013... 237 SN 1. Type of Disability by Age of Non Institutionalized Person, Olmsted County, 2012 241 SN 2. Estimates of Disability by Income Level, Olmsted County, 2008 2010... 243 SN 3. Inventory of Housing For Disabled Persons, Olmsted County, 4 th Qtr. 2013... 244 SN 4. Specialized Housing, Olmsted County, 2013... 245 SN 5. Estimated People Living with AIDS, Select Counties, 2012... 246 SN 6. Shelter Survey, Olmsted County, January and July 2013... 249

SN 7. Distribution of Long Term Homelessness by Family Type and Region, Greater Minnesota, 2013... 250 DMD 1. Demand for Additional For Sale Housing, Olmsted County Market Area, 2013 to 2020... 261 DMD 2. Demand for Additional For Sale Housing, Olmsted County Market Area, 2020 to 2030... 262 DMD 3. Summary of Modest For Sale Housing Demand by Pricepoint, Olmsted County Market Area, 2013 to 2020... 263 DMD 4. Demand for Additional Rental Housing, Olmsted County Market Area, 2013 to 2020... 268 DMD 5. Demand for Additional Rental Housing, Olmsted County Market Area, 2020 to 2030... 269 DMD 6. Demand for Market Rate Active Adult Rental Housing, Olmsted County Market Area, 2013 to 2030... 275 DMD 7. Demand for Subsidized/Affordable Senior Housing, Olmsted County Market Area, 2013 to 2030... 278 DMD 8. Demand for Congregate Rental Housing, Olmsted County Market Area, 2013 to 2030... 281 DMD 9. Demand for Assisted Living Rental Housing, Olmsted County Market Area, 2013 to 2030... 284 DMD 10. Demand for Affordable Assisted Living Rental Housing, Olmsted County Market Area, 2013 to 2030... 287 DMD 11. Demand for Memory Care Rental Housing, Olmsted County Market Area, 2013 to 2030... 290 DMD 12. General Occupancy Excess Demand Summary, Olmsted County Market Area, 2013 to 2030... 294 DMD 13. Senior Housing Excess Demand Summary, Olmsted County Market Area, 2013 to 2030... 295 CH 1. Olmsted County Market Area Housing Affordability, Based on Household Income 321 CH 2. Household Income vs. Average Wages Olmsted County Market Area... 322

KEY FINDINGS This section highlights the key findings from the Comprehensive Housing Needs Assessment completed for Olmsted County. Calculations of projected housing demand are provided through 2030 and recommendations for housing products to meet demand over the short term are found in the Conclusions and Recommendations section of the report. Key Findings 1. Due to the housing slowdown and ensuing Great Recession, growth slowed in Olmsted County during the latter half of the 2000s as building permit activity was down 54% compared to the first half of the decade. However, even with after accounting for the downturn, Olmsted County household growth still surpassed the 1990s this past decade. Since 2012, the housing and economic recovery has been talking hold that has resulted in renewed growth, in part from pent up demand. 2. Population and household growth is projected to be on par with the last decade; an increase of nearly 9,800 households (+19.4%). However, these projections could be exceeded based on the future impact and timing of the Destination Medical Center. 3. The aging baby boomer generation is substantially impacting the composition of Olmsted County s population. This demographic is projected to have the highest growth rate and will be aging into their young senior years later this decade. This shift will result in demand for alternative housing products. At the same time overall household sizes are shrinking while non family households are growing. This shift is expected to continue due to shifting demographics (i.e. delayed marriages, fewer children, aging of the population, etc.) 4. Olmsted County is a job importer as the ratio of employed residents to jobs is 1.16; higher than Twin Cities Metro Area ratio of 1.04. Because Rochester is the employment hub in Southeastern Minnesota, there is a positive inflow of about 21,000 workers in the Olmsted County Market Area. Furthermore, the average wage in the Olmsted County is nearly as high as the Metro Area ($52,416 vs. $55,952) yet housing costs in Olmsted County are more affordable when compared to the Metro Area. 5. Housing Demand a. General occupancy demand is projected for an estimated 11,363 owned housing units and 7,074 rental units between 2013 and 2030. Rochester is projected to account for 77.5% of for sale demand and 90% of rental demand in the Market Area. MAXFIELD RESEARCH INC. 1

KEY FINDINGS b. Approximately 62% of the general occupancy demand is projected to be for owned housing and 38% for rental housing. i. 2013 2020 = 6,884 (58% owned, 42% rental) ii. 2020 2030 = 11,553 (64% owned, 36% rental) c. Of the 7,074 rental units demanded by 2030, approximately 41% will be for market rate units, 29% for affordable units, and 30% for subsidized units. i. Market Rate = 2,865 units (40.5%) ii. Affordable = 2,082 units (29.4%) iii. Subsidized = 2,127 units (30.1%) d. There is also demand for 4,244 senior housing units by 2030. i. Subsidized = 363 units (8.7%) ii. Affordable = 776 units (18.3%) iii. Active Adult = 1,596 units (37.6%) iv. Congregate = 624 units (14.7%) v. Assisted Living = 434 units (10.2%) vi. Aff. Assisted Living = 238 units (5.6%) vii. Memory Care = 208 units (4.9%) e. General Occupancy rental housing demand from 2013 to 2030 by submarket: i. Byron = 164 units (2.3%) ii. East = 175 units (2.5%) iii. North = 132 units (1.9%) iv. Rochester = 6,410 units (90.6%) v. Rochester Fringe = 63 units (0.9%) vi. Stewartville = 130 units (1.8%) f. For sale housing demand from 2013 to 2030 by submarket: i. Byron = 556 units (4.9%) ii. East = 294 units (2.6%) iii. North = 442 units (3.9%) iv. Rochester = 8,811 units (77.5%) v. Rochester Fringe = 873 units (7.7%) vi. Stewartville = 385 units (3.4%) 6. There are a variety of factors that could enhance growth projections and exceed forecasts. Most notably, the Destination Medical Center has the potential to transform Olmsted County should the projected jobs (35,000 to 45,000 in Minnesota and 25,000 to 30,000 in Southwest Minnesota) result over the next few decades. However, since DMC master planning is recently commencing, it is premature to estimate how housing MAXFIELD RESEARCH INC. 2

KEY FINDINGS demand will be affected. Other demand stimulants include the proposed high speed rail line and future expansion of the University of Minnesota Rochester master plan. 7. Olmsted County renter occupied households tend to be more housing cost burdened than owner occupied households. About 22% of owner households and 45% of renter households are estimated to be paying more than 30% of their income for housing costs. The number of cost burdened households in the Olmsted County Market Area increases proportionally based on lower incomes. About 74% of renters with incomes below $35,000 are cost burdened and 53% of owners with incomes below $50,000 are cost burdened. Based on a typical new entry level home priced at $175,000, it is affordable to approximately 76.5% of all owner occupied households in the Olmsted County Market Area. Conversely, based on a typical new one bedroom rental unit priced at $800 per month, it is affordable to approximately 50% of all renter occupied households. 8. The overall rental vacancy rate in the Olmsted County Market Area is 3.7%, below equilibrium for consumer choice and turnover. Rental vacancy rates are extremely low among affordable rental housing (1.4%) and subsidized rental housing (0.9%) products. As a result, low and moderate income households are experiencing greater challenges to secure affordable housing and production of affordable housing will need to increase to meet the growing demand. New market rate move up apartments are needed among renter households, opening up more affordable units to low and moderateincome households. 9. The Olmsted County residential real estate market was healthy in 2013 as the median resale price increased by 6% while lender mediated transactions continue to decline as the housing market recovers. A decrease in inventory is resulting in higher list to sale ratios and declining days on market. There is a pricing bifurcation between existing housing and new construction; Olmsted County new construction has an average price of $385,000 ($157 per square foot) compared the average resale value of about $199,400 ($88 per square foot). 10. The number of vacant developed lots is decreasing as few new developments have been platted since the downturn in the housing market. Most of the desirable bank owned lots have been absorbed hence land costs have bottomed out. There are an estimated 1,500 vacant developed lots in the Olmsted County Market Area; resulting in a threeyear lot supply. As the for sale market has improved and housing starts have increased this past year, builders are once again seeking out land for future subdivisions. However, because the land development process can be long, it can take one to two years to have new lots available for newly platted subdivisions. 11. Although there are a variety of housing resources in Olmsted County, there is not a central organization that compiles housing resources and services. Maxfield Research recommends the establishment of a one stop shop housing resource that will assist both MAXFIELD RESEARCH INC. 3

KEY FINDINGS the public and private sectors. The central organization would help organization navigate the processes and housing need while promoting collaboration between all sectors. MAXFIELD RESEARCH INC. 4

PURPOSE AND SCOPE Study Impetus Maxfield Research Inc. was engaged by Olmsted County Community Services (in coordination with the Mayo Clinic and Rochester Area Foundation) to conduct Comprehensive Housing Needs Assessment for Olmsted County. The comprehensive housing needs assessment calculates demand from 2013 to 2030 for various types of housing in each defined Market Area in the County. The study provides recommendations on the amount and types of housing that should be developed to accommodate the housing needs of new and existing households. Scope of Work The scope of this study includes: an analysis of the demographic growth trends and characteristics of the County to 2030; an assessment of current housing characteristics in the County; an analysis of the for sale housing market in the County; an analysis of the rental housing market in the County; an analysis of the senior housing market in the County; an analysis of the special needs housing market in the County; an estimate of the demand for all types of housing in the County from 2013 to 2030; and recommendations of appropriate housing concepts to meet current and future needs of County residents. The report contains primary and secondary research. Primary research includes interviews with rental property managers and owners, developers, City staff and others involved in the housing market in Olmsted County. All of the market data on existing and pending housing developments was collected by Maxfield Research Inc. and is accurate to the best of our knowledge. Secondary data, such as U.S. Census, is credited to the source, and is used as a basis for analysis. MAXFIELD RESEARCH INC. 5

PURPOSE AND SCOPE Overview of Market Area For purposes of the housing analysis, the Olmsted County Market Area (i.e. Market Area or MA ) was divided into six submarkets; Byron, East, North, Rochester, Rochester Fringe, and Stewartville. Subsequent data in the housing analysis is illustrated by submarket and countywide. The chart below defines each submarket by geography while the map on the following visually illustrates these Market Areas. EAST SUBMARKET ROCHESTER FRINGE SUBMARKET NORTH SUBMARKET Townships Cities Townships Cities Townships Cities Dover Chatfield (All)* Cascade Farmington Oronoco Elmira Dover Haverhill New Haven Pine Island (All)*** Eyota Eyota Marion Oronoco Orion St. Charles (All)** Rochester Pleasant Grove Quincy Viola Townships Cities Townships Cities Townships Cities Kalmar Byron High Forest Stewartville Rochester Salem Rock Dell Areas to be included OUTSIDE of Olmsted County OLMSTED COUNTY MARKET AREA Submarket Geographies BYRON SUBMARKET STEWARTVILLE SUBMARKET ROCHESTER SUBMARKET Chatfield* Saint Charles** Pine Island*** Partially in Olmsted and Fillmore County Located in Winona county Partially in Olmsted and Goodhue county MAXFIELD RESEARCH INC. 6

PURPOSE AND SCOPE Olmsted County Market Area Submarket Map MAXFIELD RESEARCH INC. 7

DEMOGRAPHIC ANALYSIS Introduction This section of the report examines factors related to the current and future demand for both owner and renter occupied housing in Olmsted County, Minnesota. It includes an analysis of population and household growth trends and projections, projected age distribution, household income, household types, household tenure, and net worth in the Olmsted County Market Area. A review of these characteristics will provide insight into the demand for various types of housing in the County. Population and Household Growth from 1990 to 2030 Tables D 1 and D 2 presents the population and household growth of each submarket in the Olmsted County Market Area. Data from 1990 to 2010 is based on the U.S. Census. Estimates for 2013 and projections through 2030 are based on information from the Minnesota Department of Administration and ESRI (a national demographics service provider) and adjusted by Maxfield Research Inc. based on local trends. Population and household projections are based on the historic high growth rates in Rochester and Olmsted County that are influenced by the Mayo Clinic and other health care related industries. Projections assume the majority of growth in the Olmsted County Market Area will be caputured in Rochester while household sizes continue to decline across the Market Area. Population and household projections therefore already include the majority of the effects of the Destination Medical Center ( DMC see Employment Analysis for greater detail) economic development initiative. Because the DMC is presently in the initial conceptual stage, there are a number of unknown s that will be identified over the next few years. As a result, projections in Tables D 1 and D 2 could be exceeded as the effects of the DMS are speculative at this time. Population The strongest percentage growth occurred between 1990 and 2000. Olmsted County s population grew by 17,807 people (+16.7%). The majority of the growth in Olmsted County can be attributed to the growth in the City of Rochester. Approximately 85% of all population growth in the County occurred in the City of Rochester between 1990 and 2000. Olmsted County population grew from 106,470 people in 1990 to 124,277 in 2010, a 16.7% increase. Strong population growth continued this last decade as the population base increased to 144,248 people in 2010 (+19,971 people, +16.1%). The majority of the growth occurred during the first half of the decade. Growth slowed during the late 2000s due to the housing downturn. MAXFIELD RESEARCH INC. 8

DEMOGRAPHIC ANALYSIS In comparison, the Olmsted County Market Area s population grew by 18,598 people (+16.5%) between 1990 and 2000. From 2000 to 2010, the Olmsted County Market Area s base grew from 131,048 people to 152,116 people (+21,068 people, +16.1%). The Rochester submarket experienced the largest percentage growth between 1990 and 2000 (21.3%), and grew by 24.4% between 2000 and 2010. In addition, the Byron submarket increased significantly between 1990 and 2000 (20.7%), and grew by 22.4% between 2000 and 2010. MAXFIELD RESEARCH INC. 9

DEMOGRAPHIC ANALYSIS TABLE D 1 HISTORIC POPULATION GROWTH TRENDS OLMSTED COUNTY MARKET AREA 1990 2030 MN State Historic Change Projected Change U.S. Census Demo. Est. Projections 1990 2000 2000 2010 2010 2020 2020 2030 Submarket/Location 1990 2000 2010 2012 2013 2018 2020 2030 No. Pct. No. Pct. No. Pct. No. Pct. Byron Submarket Byron city, Olmsted County 2,441 3,500 4,914 5,039 5,260 5,836 6,066 7,440 1,059 43.4% 1,414 40.4% 1,152 23.4% 1,374 22.6% Kalmar township, Olmsted County 1,271 1,196 1,046 1,049 1,039 1,027 1,022 990 75 5.9% 150 12.5% 24 2.3% 32 3.2% Salem township, Olmsted County 1,056 1,061 1,086 1,100 1,078 1,063 1,058 1,005 5 0.5% 25 2.4% 28 2.6% 53 5.0% Byron Submarket Total 4,768 5,757 7,046 7,188 7,376 7,926 8,146 9,435 989 20.7% 1,289 22.4% 1,100 15.6% 1,289 15.8% East Submarket Chatfield city, Fillmore County 1,245 1,257 1,573 1,579 1,578 1,587 1,591 1,599 12 1.0% 316 25.1% 18 1.1% 8 0.5% Chatfield city, Olmsted County 977 1,137 1,206 1,215 1,278 1,399 1,447 1,757 160 16.4% 69 6.1% 241 20.0% 310 21.5% Dover city, Olmsted County 416 438 735 747 783 864 896 1,096 22 5.3% 297 67.8% 161 21.9% 200 22.3% Dover township, Olmsted County 464 440 389 395 389 388 388 380 24 5.2% 51 11.6% 1 0.2% 8 2.1% Elmira township, Olmsted County 346 352 354 365 354 354 354 340 6 1.7% 2 0.6% 0 0.1% 14 3.9% Eyota city, Olmsted County 1,448 1,644 1,977 2,023 2,059 2,195 2,249 2,554 196 13.5% 333 20.3% 272 13.8% 305 13.6% Eyota township, Olmsted County 527 448 464 488 451 430 422 335 79 15.0% 16 3.6% 42 9.1% 87 20.5% Orion township, Olmsted County 616 614 592 612 590 588 587 555 2 0.3% 22 3.6% 5 0.9% 32 5.4% Pleasant Grove township 741 787 806 821 807 808 809 795 46 6.2% 19 2.4% 3 0.4% 14 1.7% Quincy township, Olmsted County 385 356 339 351 335 329 326 295 29 7.5% 17 4.8% 13 3.7% 31 9.6% Viola township, Olmsted County 604 555 589 601 576 555 546 475 49 8.1% 34 6.1% 43 7.3% 71 13.0% St. Charles city, Winona County 2,642 3,295 3,735 3,742 3,779 3,851 3,880 3,978 653 24.7% 440 13.4% 145 3.9% 97 2.5% East Submarket Total 10,411 11,323 12,759 12,939 12,980 13,348 13,496 14,159 912 8.8% 1,436 12.7% 737 5.8% 663 4.9% North Submarket Pine Island city, Goodhue County 2,093 2,219 2,560 2,573 2,597 2,659 2,684 2,757 126 6.0% 341 15.4% 124 4.9% 73 2.7% Farmington township, Olmsted County 571 516 444 446 440 435 432 415 55 9.6% 72 14.0% 12 2.7% 17 4.0% New Haven township, Olmsted County 1,201 1,205 1,184 1,193 1,178 1,167 1,162 1,125 4 0.3% 21 1.7% 22 1.8% 37 3.2% Oronoco city, Olmsted County 727 883 1,300 1,312 1,423 1,627 1,709 2,238 156 21.5% 417 47.2% 409 31.5% 529 31.0% Oronoco township, Olmsted County 2,026 2,239 2,220 2,266 2,250 2,301 2,321 2,400 213 10.5% 19 0.8% 101 4.5% 79 3.4% Pine Island city, Olmsted County 118 703 745 834 1,051 1,138 1,661 585 495.8% 435 61.9% 523 45.9% North Submarket Total 6,618 7,180 8,411 8,535 8,722 9,240 9,447 10,596 562 8.5% 1,231 17.1% 1,036 12.3% 1,149 12.2% Rochester Fringe Submarket Cascade township, Olmsted County 3,128 3,183 2,815 2,835 2,796 2,765 2,752 2,650 55 1.8% 368 11.6% 63 2.2% 102 3.7% Haverhill township, Olmsted County 1,467 1,601 1,495 1,520 1,535 1,601 1,628 1,775 134 9.1% 106 6.6% 133 8.9% 147 9.0% Marion township, Olmsted County 5,960 6,159 3,653 3,756 3,817 4,091 4,201 4,800 199 3.3% 2,506 40.7% 548 15.0% 599 14.3% Rochester township, Olmsted County 3,226 2,916 1,629 1,691 1,674 1,749 1,779 1,899 310 9.6% 1,287 44.1% 150 9.2% 120 6.8% Rochester Fringe Submarket Total 13,781 13,859 9,592 9,802 9,822 10,206 10,359 11,124 78 0.6% 4,267 30.8% 767 8.0% 765 7.4% Rochester Submarket Rochester city, Olmsted County 70,745 85,806 106,769 108,814 112,433 121,872 125,648 148,230 15,061 21.3% 20,963 24.4% 18,879 17.7% 22,582 18.0% Rochester Submarket Total 70,745 85,806 106,769 108,814 112,433 121,872 125,648 148,230 15,061 21.3% 20,963 24.4% 18,879 17.7% 22,582 18.0% Stewartville Submarket High Forest township, Olmsted County 964 1,085 976 994 1,004 1,052 1,071 1,175 121 12.6% 109 10.0% 95 9.7% 104 9.7% Rock Dell township, Olmsted County 643 627 647 659 645 643 641 620 16 2.5% 20 3.2% 6 0.9% 21 3.3% Stewartville city, Olmsted County 4,520 5,411 5,916 6,086 6,129 6,485 6,627 7,359 891 19.7% 505 9.3% 711 12.0% 732 11.1% Stewartville Submarket Total 6,127 7,123 7,539 7,739 7,779 8,179 8,339 9,154 996 16.3% 416 5.8% 800 10.6% 815 9.8% Olmsted County 106,470 124,277 144,248 147,123 151,157 162,673 167,279 194,364 17,807 16.7% 19,971 16.1% 23,031 16.0% 27,085 16.2% Olmsted County Market Area 112,450 131,048 152,116 155,017 159,112 170,771 175,435 202,698 18,598 16.5% 21,068 16.1% 23,319 15.3% 27,263 15.5% Sources: U.S. Census Bureau; Minnesota Department of Administration, Maxfield Research Inc. MAXFIELD RESEARCH INC. 10

DEMOGRAPHIC ANALYSIS MN State Historic Change Projected Change U.S. Census Demo. Est. Projections 1990 2000 2000 2010 2010 2020 2020 2030 Submarket/Location 1990 2000 2010 2012 2013 2018 2020 2030 No. Pct. No. Pct. No. Pct. No. Pct. Byron Submarket Byron city, Olmsted County 802 1,179 1,796 1,843 1,931 2,157 2,247 2,776 377 47.0% 617 52.3% 451 25.1% 529 23.6% Kalmar township, Olmsted County 415 418 410 415 410 409 409 401 3 0.7% 8 1.9% 1 0.3% 8 2.0% Salem township, Olmsted County 373 399 423 430 423 423 423 407 26 7.0% 24 6.0% 0 0.0% 16 3.8% Byron Submarket Total 1,590 1,996 2,629 2,688 2,764 2,989 3,079 3,584 406 25.5% 633 31.7% 450 17.1% 505 16.4% East Submarket Chatfield city, Fillmore County 493 509 627 630 634 645 649 666 16 3.2% 118 23.2% 22 3.6% 17 2.6% Chatfield city, Olmsted County 353 421 465 470 496 547 567 703 68 19.3% 44 10.5% 102 22.0% 136 23.9% Dover city, Olmsted County 152 171 261 265 279 310 322 399 19 12.5% 90 52.6% 61 23.5% 76 23.6% Dover township, Olmsted County 144 149 145 148 146 148 149 149 5 3.5% 4 2.7% 4 2.9% 0 0.2% Elmira township, Olmsted County 110 119 131 136 133 135 136 133 9 8.2% 12 10.1% 5 3.9% 3 2.0% Eyota city, Olmsted County 505 597 758 779 797 863 889 1,022 92 18.2% 161 27.0% 131 17.3% 133 14.9% Eyota township, Olmsted County 168 165 165 173 161 156 153 124 3 1.8% 0 0.0% 12 7.1% 29 19.1% Orion township, Olmsted County 210 226 231 240 233 235 237 227 16 7.6% 5 2.2% 6 2.4% 10 4.3% Pleasant Grove township 275 305 319 325 321 325 326 324 30 10.9% 14 4.6% 7 2.2% 2 0.5% Quincy township, Olmsted County 121 124 125 130 124 124 123 113 3 2.5% 1 0.8% 2 1.4% 10 7.9% Viola township, Olmsted County 190 199 218 223 216 212 210 186 9 4.7% 19 9.5% 8 3.7% 24 11.3% St. Charles city, Winona County 1,000 1,238 1,416 1,422 1,448 1,501 1,522 1,591 238 23.8% 178 14.4% 106 7.5% 69 4.6% East Submarket Total 3,721 4,223 4,861 4,941 4,988 5,200 5,285 5,637 502 13.5% 638 15.1% 424 8.7% 353 6.7% North Submarket Pine Island city, Goodhue County 772 832 1,053 1,064 1,078 1,121 1,137 1,199 60 7.8% 221 26.6% 84 8.0% 61 5.4% Farmington township, Olmsted County 200 189 185 187 186 187 188 184 11 5.5% 4 2.1% 3 1.6% 3 1.8% New Haven township, Olmsted County 393 427 461 467 465 472 474 469 34 8.7% 34 8.0% 13 2.9% 6 1.2% Oronoco city, Olmsted County 258 335 451 455 497 573 604 799 77 29.8% 116 34.6% 153 33.9% 195 32.4% Oronoco township, Olmsted County 702 816 820 838 837 865 876 923 114 16.2% 4 0.5% 56 6.8% 47 5.4% Pine Island city, Olmsted County n/a 32 239 254 287 367 399 593 207 646.9% 160 67.1% 194 48.5% North Submarket Total 2,325 2,631 3,209 3,265 3,350 3,585 3,679 4,167 306 13.2% 578 22.0% 470 14.6% 489 13.3% Rochester Fringe Submarket Cascade township, Olmsted County 1,060 1,064 1,030 1,043 1,029 1,028 1,027 1,000 4 0.4% 34 3.2% 3 0.3% 27 2.6% Haverhill township, Olmsted County 500 531 546 557 564 595 607 670 31 6.2% 15 2.8% 61 11.3% 62 10.3% Marion township, Olmsted County 2,003 2,205 1,377 1,422 1,458 1,593 1,647 1,920 202 10.1% 828 37.6% 270 19.6% 273 16.5% Rochester township, Olmsted County 1,088 1,006 559 580 579 611 624 678 82 7.5% 447 44.4% 65 11.6% 54 8.7% Rochester Fringe Submarket Total 4,651 4,806 3,512 3,602 3,630 3,827 3,906 4,268 155 3.3% 1,294 26.9% 394 11.2% 362 9.3% Rochester Submarket Rochester city, Olmsted County 27,913 34,116 43,025 43,801 45,823 50,488 52,353 63,077 6,203 22.2% 8,909 26.1% 9,328 21.7% 10,723 20.5% Rochester Submarket Total 27,913 34,116 43,025 43,801 45,823 50,488 52,353 63,077 6,203 22.2% 8,909 26.1% 9,328 21.7% 10,723 20.5% Stewartville Submarket High Forest township, Olmsted County 323 377 380 389 396 421 432 480 54 16.7% 3 0.8% 52 13.6% 48 11.1% Rock Dell township, Olmsted County 212 224 242 247 243 246 247 243 12 5.7% 18 8.0% 5 1.9% 4 1.4% Stewartville city, Olmsted County 1,588 2013 2318 2,392 2,431 2,619 2,694 3,041 425 26.8% 305 15.2% 376 16.2% 347 12.9% Stewartville Submarket Total 2,123 2,614 2,940 3,028 3,070 3,286 3,372 3,764 491 23.1% 326 12.5% 432 14.7% 391 11.6% Olmsted County 40,058 47,807 57,080 58,209 60,465 66,108 68,365 81,041 7,749 19.3% 9,273 19.4% 11,285 19.8% 12,676 18.5% Olmsted County Market Area 42,323 50,386 60,176 61,325 63,625 69,374 71,673 84,497 8,063 19.1% 9,790 19.4% 11,497 19.1% 12,824 17.9% Sources: U.S. Census Bureau; Minnesota Department of Administration, Maxfield Research Inc. TABLE D 2 HISTORIC HOUSEHOLD GROWTH TRENDS OLMSTED COUNTY MARKET AREA 1990 2030 MAXFIELD RESEARCH INC. 11

DEMOGRAPHIC ANALYSIS Households Household growth trends are typically a more accurate indicator of housing needs than population growth since a household is, by definition, an occupied housing unit. However, additional demand can result from changing demographics of the population base, which results in demand for different housing products. Olmsted County added 9,273 households during the 2000s (+19.4%), increasing its household base to 57,080 households as of 2010. Households in the Twin Cities Metro Area increased 9.4% over the same time period. Approximately 96% of the growth between 2000 and 2010 occurred in the Rochester submarket. Consequently, this high percentage is a result annexation that occurred between Rochester and the surrounding townships. The Rochester Fringe submarket experienced a substantial decline between 2000 and 2010, decreasing its household base by 1,294 households ( 26.9%). This was in part due to annexation agreements. Household growth rates outpaced population growth in Olmsted County. Olmsted County s population increased 16.1% compared to a 19.4% increase in households between 2000 and 2010. This is the result of fewer persons in each household, caused by demographic and social trends such as couples delaying marriage, an increasing senior base, and couples decisions to have fewer children or no children at all. MAXFIELD RESEARCH INC. 12

DEMOGRAPHIC ANALYSIS Historic Population (excluding Rochester) 16,000 14,000 1990 2000 2010 12,000 10,000 8,000 6,000 4,000 2,000 4,768 5,757 7,046 10,411 11,323 12,759 6,618 7,180 8,411 13,781 13,859 9,592 6,127 7,123 7,539 120,000 Historic Population (Rochester) 100,000 80,000 60,000 40,000 70,745 85,806 106,769 20,000 1990 2000 2010 MAXFIELD RESEARCH INC. 13

DEMOGRAPHIC ANALYSIS Historic Households (excluding Rochester) 6,000 5,000 1990 2000 2010 4,000 3,000 2,000 1,000 1,590 1,996 2,629 3,721 4,223 4,861 2,325 2,631 3,209 4,651 4,806 3,512 2,123 2,614 2,940 Historic Households (Rochester) 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 27,913 34,116 43,025 1990 2000 2010 Olmsted County will continue to experience strong growth during the next decade. We project that Olmsted County will grow by 23,031 persons (+16.0%) and by about 11,285 households (19.8%) between 2010 and 2020. In addition, Olmsted County is projected to grow by about 27,085 persons (16.2%) and 12,676 households (18.5%) between 2020 and 2030. MAXFIELD RESEARCH INC. 14

DEMOGRAPHIC ANALYSIS In comparison, Olmsted County Market Area is projected to grow by 23,319 persons (+15.3%) and by about 11,500 households (+19.1%) between 2010 and 2020. Also, Olmsted County Market Area is projected to grow by 27,263 persons (+15.5%) and 12,824 households (+17.9%) between 2020 and 2030. Since households are occupied housing units, a growth of approximately 12,000 households in Olmsted County this decade would require an equal number of available units to accommodate the new household growth. Population growth is apparent in most cities within the Olmsted County Market Area. However, most of the townships have experienced a steady decline from 1990 to 2010 and we expect this trend to continue through 2030. Olmsted County Population Trends 250,000 Olmsted County Olmsted Co. Market Area 200,000 150,000 100,000 50,000 106,470 112,450 124,277 131,048 144,248 152,116 167,279 175,435 194,364 202,698 1990 2000 2010 2020 2030 Olmsted County Household Trends 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Olmsted Co Olmsted Co. Market Area 40,058 42,323 47,807 50,386 57,080 60,176 68,365 71,673 81,041 84,497 1990 2000 2010 2020 2030 MAXFIELD RESEARCH INC. 15

DEMOGRAPHIC ANALYSIS 2013 Population MAXFIELD RESEARCH INC. 16

DEMOGRAPHIC ANALYSIS 2013 Households MAXFIELD RESEARCH INC. 17

DEMOGRAPHIC ANALYSIS Population Change 2013 to 2030 MAXFIELD RESEARCH INC. 18

DEMOGRAPHIC ANALYSIS Household Change 2013 to 2030 MAXFIELD RESEARCH INC. 19

DEMOGRAPHIC ANALYSIS Household Size Household size is calculated by dividing the number of persons in households by the number of households (or householders). Nationally, the average number of people per household has been declining for over a century; however, there have been sharp declines starting in the 1960s and 1970s. Persons per household in the U.S. were about 4.5 in 1916 and declined to 3.2 in the 1960s. Over the past 50 years, it dropped to 2.57 as of the 2000 Census. However, due to the economic recession this trend has been temporarily halted as renters and laid off employees doubled up which increased the average U.S. household size to 2.59 as of the 2010 Census. The declining household size has been caused by many factors, including: aging, higher divorce rates, smaller family sizes, demographic trends in marriage, etc. Most of these changes have resulted from shifts in societal values, the economy, and improvements in health care that have influenced how people organize their lives. Table D 3 and the following charts shows household size in each submarket in the Olmsted County Market Area. In 2010, the average household size ranged between 2.48 (Rochester Fringe submarket) and 2.73 (Rochester submarket). In Olmsted County Market Area overall, the average household size was 2.53. By 2030, the average household size in Olmsted County Market Area is projected to decrease to 2.40. 1990 2000 2010 2020 2030 Byron 3.00 2.88 2.68 2.65 2.63 East 2.80 2.68 2.62 2.55 2.51 North 2.85 2.73 2.62 2.57 2.54 Rochester 2.96 2.88 2.73 2.65 2.61 Rochester Fringe 2.53 2.52 2.48 2.40 2.35 Stewartville 2.89 2.72 2.56 2.47 2.43 Olmsted County 2.66 2.60 2.53 2.45 2.40 Olmsted County Market Area 2.66 2.60 2.53 2.45 2.40 Source: Maxfield Research Inc. TABLE D 3 AVERAGE HOUSEHOLD SIZE OLMSTED COUNTY MARKET AREA U.S. Census Projections MAXFIELD RESEARCH INC. 20

DEMOGRAPHIC ANALYSIS 3.5 3 2.5 2 1.5 1 0.5 0 Average Household Size: 1990, 2010, 2020 1990 2010 2030 Age Distribution Trends Table D 4 shows the distribution of persons within nine age cohorts for the six submarkets in the Olmsted County Market Area in 2000 and 2010 with estimates for 2013 and projections for 2018. Tables D 5 shows the distribution of persons within nine age groups for Olmsted County and the Olmsted County Market Area. The 2000 and 2010 age distribution is from the U.S. Census Bureau. Maxfield Research Inc. derived the 2013 estimates and 2018 projections by adjustments made to data obtained from ESRI and local trends. The following are key points from the table. In 2010, the largest adult cohort in the Olmsted County Market Area was 45 to 54, totaling 23,253 people (15.2% of the total population). Mirroring trends observed across the Nation, the aging baby boomer generation is substantially impacting the composition of County s population. Born between 1946 and 1964, these individuals comprised the age groups 45 to 54 and 55 to 64 in 2010. As of 2010, baby boomers accounted for an estimated 26% of Olmsted County Market Area s population. The social changes that occurred with the aging of the baby boom generation, such as higher divorce rates, higher levels of education, and lower birth rates has led to a greater variety of lifestyles than existed in the past not only among the baby boomers, but also among their parents and children. The increased variety of lifestyles has fueled demand for alternative housing products to the single family homes. Seniors, in particular, and middleaged persons tend to do more traveling and participate in more activities than previous generations, and they increasingly prefer maintenance free housing that enables them to spend more time on activities outside the home. MAXFIELD RESEARCH INC. 21

DEMOGRAPHIC ANALYSIS The 25 to 34 age group was a large adult cohort with 23,120 people (15.2%). Olmsted County Market Area s population of 18 to 34 year olds, which consists primarily of renters and first time homebuyers, increased by 17% between 2000 and 2010, and is projected to increase (10.8%) between 2010 and 2018. This will increase demand for rental units and starter homes. The 65 to 74 age cohort is projected to have the greatest percentage growth increasing by 4,373 people (43.2%) from 2010 to 2018. The growth in this age cohort can be primarily attributed to the baby boom generation aging into their young senior years. Population Age Distribution Olmsted County Market Area 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Under 18 18 to 24 25 to 34 35 to 44 45 to 54 2000 2010 2018 55 to 64 65 to 74 75 to 84 85+ Change in Population by Age Olmsted County Market Area 2010 to 2018 85+ 75 to 84 65 to 74 55 to 64 45 to 54 35 to 44 25 to 34 18 to 24 Under 18 626 1,003 4,373 3,744 151 1,225 3,301 482 3,749 0 1,000 2,000 3,000 4,000 5,000 MAXFIELD RESEARCH INC. 22

DEMOGRAPHIC ANALYSIS TABLE D 4 POPULATION AGE DISTRIBUTION OLMSTED COUNTY MARKET AREA 2000 to 2018 Number of People U.S. Census Estimate Projection 2000 2010 2013 2018 Change 2000 2010 2010 2018 Byron No. No. No. No. No. Pct. No. Pct. Under 18 1,805 1,981 2,087 2,228 176 8.9 247 12.5 18 to 24 471 485 512 515 14 2.9 30 6.1 25 to 34 696 889 963 1,054 193 21.7 165 18.6 35 to 44 1,129 979 1,022 1,072 150 15.3 93 9.5 45 to 54 747 1,226 1,229 1,215 479 39.1 11 0.9 55 to 64 523 763 802 899 240 31.5 136 17.8 65 to 74 228 489 515 662 261 53.4 173 35.4 75 to 84 126 186 192 218 60 32.3 32 17.4 85+ 32 48 54 63 16 33.3 15 30.3 Total 5,757 7,046 7,376 7,926 1,289 18.3 880 12.5 East No. No. No. No. No. Pct. No. Pct. Under 18 3,214 3,538 3,574 3,635 324 9.2 97 2.7 18 to 24 905 868 882 841 37 4.3 27 3.1 25 to 34 1,393 1,618 1,598 1,655 225 13.9 37 2.3 35 to 44 1,878 1,677 1,653 1,653 201 12.0 24 1.4 45 to 54 1,434 1,906 1,904 1,812 472 24.8 94 4.9 55 to 64 860 1,374 1,502 1,609 514 37.4 235 17.1 65 to 74 749 848 938 1,159 99 11.7 311 36.7 75 to 84 646 599 593 628 47 7.8 29 4.9 85+ 244 331 337 355 87 26.3 24 7.3 Total 11,323 12,759 12,980 13,348 1,436 11.3 589 4.6 North No. No. No. No. No. Pct. No. Pct. Under 18 2,014 2,207 2,219 2,328 193 8.7 121 5.5 18 to 24 496 515 533 524 19 3.7 9 1.8 25 to 34 740 930 980 1,045 190 20.4 115 12.4 35 to 44 1,353 1,046 1,036 1,067 307 29.3 21 2.0 45 to 54 1,102 1,581 1,604 1,571 479 30.3 10 0.6 55 to 64 650 1,058 1,177 1,299 408 38.6 241 22.8 65 to 74 418 601 701 887 183 30.4 286 47.6 75 to 84 299 318 317 350 19 6.0 32 10.1 85+ 108 155 155 169 47 30.3 14 9.0 Total 7,180 8,411 8,722 9,240 1,231 14.6 829 9.9 CONTINUED MAXFIELD RESEARCH INC. 23

DEMOGRAPHIC ANALYSIS TABLE D 4 Continued POPULATION AGE DISTRIBUTION OLMSTED COUNTY MARKET AREA 2000 to 2018 Number of People U.S. Census Estimate Projection 2000 2010 2013 2018 Change 2000 2010 2010 2018 Rochester No. No. No. No. No. Pct. No. Pct. Under 18 22,112 26,470 27,254 29,338 4,358 16.5 2,868 10.8 18 to 24 7,830 8,845 9,330 9,364 1,015 11.5 519 5.9 25 to 34 13,891 18,080 19,062 20,779 4,189 23.2 2,699 14.9 35 to 44 14,734 13,425 13,566 14,356 1,309 9.8 931 6.9 45 to 54 10,754 15,107 15,651 15,658 4,353 28.8 551 3.6 55 to 64 6,634 11,235 12,568 14,175 4,601 41.0 2,940 26.2 65 to 74 4,686 6,773 7,715 9,974 2,087 30.8 3,201 47.3 75 to 84 3,543 4,538 4,761 5,380 995 21.9 842 18.6 85+ 1,622 2,296 2,525 2,848 674 29.4 552 24.0 Total 85,806 106,769 112,433 121,872 20,963 19.6 15,103 14.1 Rochester Fringe No. No. No. No. No. Pct. No. Pct. Under 18 4,129 2,332 2,486 2,578 1,797 77.1 246 10.5 18 to 24 814 602 598 577 212 35.2 25 4.2 25 to 34 1,191 603 841 879 588 97.5 276 45.7 35 to 44 2,778 1,032 1,169 1,179 1,746 169.2 147 14.2 45 to 54 2,374 2,302 2,100 2,016 72 3.1 286 12.4 55 to 64 1,484 1,575 1,479 1,603 91 5.8 28 1.8 65 to 74 735 789 768 960 54 6.8 171 21.7 75 to 84 271 296 315 344 25 8.4 48 16.3 85+ 83 61 67 71 22 36.1 10 16.8 Total 13,859 9,592 9,822 10,206 4,267 44.5 614 6.4 Stewartville No. No. No. No. No. Pct. No. Pct. Under 18 2,115 2,032 2,090 2,164 83 4.1 132 6.5 18 to 24 555 564 576 563 9 1.6 1 0.3 25 to 34 955 1,000 1,077 1,133 45 4.5 133 13.3 35 to 44 1,192 963 988 1,013 229 23.8 50 5.2 45 to 54 851 1,131 1,102 1,065 280 24.8 66 5.9 55 to 64 656 772 820 899 116 15.0 127 16.5 65 to 74 361 613 651 827 252 41.1 214 35.0 75 to 84 254 285 287 313 31 10.9 28 9.7 85+ 184 179 188 202 5 2.8 23 13.0 Total 7,123 7,539 7,779 8,179 416 5.5 640 8.5 Sources: U.S. Census Bureau; ESRI; Maxfield Research, Inc. MAXFIELD RESEARCH INC. 24

DEMOGRAPHIC ANALYSIS Number of People U.S. Census Estimate Projection Change 2000 2010 2013 2018 2000 2010 2010 2018 Olmsted County No. No. No. No. No. Pct. No. Pct. Under 18 35,533 36,440 37,581 40,148 907 2.5 3,708 10.2 18 to 24 8,506 11,307 11,844 11,811 2,801 24.8 504 4.5 25 to 34 18,043 22,018 23,424 25,348 3,975 18.1 3,330 15.1 35 to 44 21,990 18,182 18,524 19,452 3,808 20.9 1,270 7.0 45 to 54 16,471 22,166 22,531 22,385 5,695 25.7 219 1.0 55 to 64 10,342 16,002 17,491 19,603 5,660 35.4 3,601 22.5 65 to 74 6,729 9,587 10,712 13,782 2,858 29.8 4,195 43.8 75 to 84 4,643 5,795 6,045 6,787 1,152 19.9 992 17.1 85+ 2,020 2,751 3,004 3,357 731 26.6 606 22.0 Total 124,277 144,248 151,157 162,673 19,971 13.8 18,425 12.8 Sources: U.S. Census Bureau; ESRI; Maxfield Research, Inc. TABLE D 5 POPULATION AGE DISTRIBUTION OLMSTED COUNTY 2000 to 2018 TABLE D 5 (continued) POPULATION AGE DISTRIBUTION OLMSTED COUNTY MARKET AREA 2000 to 2018 Number of People U.S. Census Estimate Projection Change 2000 2010 2013 2018 2000 2010 2010 2018 Olmsted Co. MA No. No. No. No. No. Pct. No. Pct. Under 18 35,389 38,560 39,724 42,309 3,171 8.2 3,749 9.7 18 to 24 11,071 11,879 12,423 12,361 808 6.8 482 4.1 25 to 34 18,866 23,120 24,475 26,421 4,254 18.4 3,301 14.3 35 to 44 23,064 19,122 19,437 20,347 3,942 20.6 1,225 6.4 45 to 54 17,262 23,253 23,616 23,404 5,991 25.8 151 0.6 55 to 64 10,807 16,777 18,360 20,521 5,970 35.6 3,744 22.3 65 to 74 7,177 10,113 11,292 14,486 2,936 29.0 4,373 43.2 75 to 84 5,139 6,222 6,462 7,225 1,083 17.4 1,003 16.1 85+ 2,273 3,070 3,323 3,696 797 26.0 626 20.4 Total 131,048 152,116 159,112 170,771 21,068 13.8 18,655 12.3 Sources: U.S. Census Bureau; ESRI; Maxfield Research, Inc. MAXFIELD RESEARCH INC. 25

DEMOGRAPHIC ANALYSIS Race and Ethnicity The race and ethnicity of the population shows the diversity for each submarket in the Olmsted County Market Area. Tables D 6 presents race by number of households and D 7 presents ethnicity population data in 2000 and 2010. Whites comprise the largest proportion of households in every submarket. In 2010, the Rochester submarket had the lowest percentage (87.7%) and the Stewartville submarket had the highest (98.8%). While Whites has remained the largest race category in 2000, it represented a smaller proportion of total households decreasing from 93.1% in 2000 to 90.2%. Some Other Race experienced a large percentage growth between 2000 and 2010, increasing 109.7% (316 households). Although Hispanics/Latinos comprised only 2.4% of the population in 2010, there was a 105.5% increase between 2000 and 2010. It should be noted that one must select their race as well as whether one is of Hispanic/Latino origin. Since people self identify their racial classification, there may be confusion on the part of some people about what category most accurately describes their race. Some people may choose to self identify using their ethnicity as their race. The increasing diversity of the nation will likely result in some confusion over these figures for some time. MAXFIELD RESEARCH INC. 26

DEMOGRAPHIC ANALYSIS TABLE D 6 RACE BY HOUSEHOLDS OLMSTED COUNTY MARKET AREA 2000 & 2010 White Alone Native Hawaiian or Black or African American Indian or Two or More Other Pacific Asian Alone Some Other Race American Alone Alaska Native Alone Races Alone Islander Alone 2000 2010 2000 2010 2000 2010 2000 2010 2000 2010 2000 2010 2000 2010 Number Byron 1,970 2,578 5 13 2 1 0 0 7 21 5 8 7 8 East 4,128 4,748 17 7 6 10 1 0 28 37 26 38 17 21 North 2,588 3,142 11 12 5 3 0 3 10 22 3 5 14 22 Rochester 31,095 37,725 902 1,913 59 80 6 14 1,448 2,262 259 564 347 467 Rochester Fringe 4,632 3,367 38 19 5 7 2 2 80 84 15 12 34 21 Stewartville 2,579 2,904 9 11 5 3 0 0 3 7 4 5 14 10 Olmsted County 44,490 51,468 970 1,966 78 98 8 18 1,549 2,398 288 604 424 528 Olmsted Market Area 46,992 54,464 982 1,975 82 104 9 19 1,576 2,433 312 632 433 549 Percent of Total Byron 98.7% 98.1% 0.3% 0.5% 0.1% 0.0% 0.0% 0.0% 0.4% 0.8% 0.3% 0.3% 0.4% 0.3% East 97.8% 97.7% 0.4% 0.1% 0.1% 0.2% 0.0% 0.0% 0.7% 0.8% 0.6% 0.8% 0.4% 0.4% North 98.4% 97.9% 0.4% 0.4% 0.2% 0.1% 0.0% 0.1% 0.4% 0.7% 0.1% 0.2% 0.5% 0.7% Rochester 91.1% 87.7% 2.6% 4.4% 0.2% 0.2% 0.0% 0.0% 4.2% 5.3% 0.8% 1.3% 1.0% 1.1% Rochester Fringe 96.4% 95.9% 0.8% 0.5% 0.1% 0.2% 0.0% 0.1% 1.7% 2.4% 0.3% 0.3% 0.7% 0.6% Stewartville 98.7% 98.8% 0.3% 0.4% 0.2% 0.1% 0.0% 0.0% 0.1% 0.2% 0.2% 0.2% 0.5% 0.3% Olmsted County 93.1% 90.2% 2.0% 3.4% 0.2% 0.2% 0.0% 0.0% 3.2% 4.2% 0.6% 1.1% 0.9% 0.9% Olmsted Market Area 93.3% 90.5% 1.9% 3.3% 0.2% 0.2% 0.0% 0.0% 3.1% 4.0% 0.6% 1.1% 0.9% 0.9% Sources: U.S. Census Bureau; Maxfield Research Inc. MAXFIELD RESEARCH INC. 27

DEMOGRAPHIC ANALYSIS Number 2000 2010 2000 2010 Byron 37 120 5,720 6,926 East 225 450 11,098 12,309 North 77 148 7,103 8,263 Rochester 2,565 5,508 83,241 101,261 Rochester Fringe 185 147 13,674 9,445 Stewartville 67 95 7,056 7,444 Olmsted County 2,959 6,081 121,318 138,167 Olmsted Market Area 3,156 6,468 127,892 145,648 Percent of Total TABLE D 7 ETHNICITY OLMSTED COUNTY MARKET AREA 2000 & 2010 Hispanic or Latino Byron 0.6% 1.7% 99.4% 98.3% East 2.0% 3.5% 98.0% 96.5% North 1.1% 1.8% 98.9% 98.2% Rochester 3.0% 5.2% 97.0% 94.8% Rochester Fringe 1.3% 1.5% 98.7% 98.5% Stewartville 0.9% 1.3% 99.1% 98.7% Olmsted County 2.4% 4.2% 97.6% 95.8% Olmsted Market Area 2.4% 4.3% 97.6% 95.7% Sources: U.S. Census Bureau; Maxfield Research Inc. Not Hispanic or Latino Language by Olmsted County K 12 Students A total of 81 languages are spoken in the homes of Olmsted County K 12 students Other than English, Somali and Spanish are the two most common languages spoken. Over 2,000 K 12 students are speaking these languages. Somali and Spanish populations have doubled in the past decade. Other notable languages spoken include Khmer/Cambodian, Arabic, Vietnamese, Chinese/Mandarin, Lao/Laotian, and Bosnian. The totals for the top ten languages are shown below. English 18,415 Vietnamese 197 Somali 1,005 Chinese/Mandarin 192 Spanish 1,003 Lao/Laotian 146 Khmer/Cambodian 358 Bosnian 136 Arabic 298 Hmong 77 MAXFIELD RESEARCH INC. 28

DEMOGRAPHIC ANALYSIS Household Income by Age of Householder The estimated distribution of household incomes of each of the submarkets within the Olmsted County Market Area for 2013 and 2018 are shown in Tables D 8. The data was estimated by Maxfield Research Inc. based on income trends provided by ESRI. The data helps ascertain the demand for different housing products based on the size of the market at specific cost levels. (Please see the Appendix for a definition of household income). The Department of Housing and Urban Development defines affordable housing costs as 30% of a household s adjusted gross income. For example, a household with an income of $50,000 per year would be able to afford a monthly housing cost of about $1,250. Maxfield Research Inc. utilizes a figure of 25% to 30% for younger households and 40% or more for seniors, since seniors generally have lower living expenses and can often sell their homes and use the proceeds toward rent payments. A generally accepted standard for affordable owner occupied housing is that a typical household can afford to pay 3.0 to 3.5 times their annual income on a single family home. Thus, a $50,000 income would translate to an affordable single family home of $150,000 to $175,000. The higher end of this range assumes that the person has adequate funds for down payment and closing costs, but also does not include savings or equity in an existing home which would allow them to purchase a higher priced home. In 2013, the median household income in the Olmsted County Market Area was estimated to be $61,302 and is projected to climb over 19% to $72,917 by 2018. Within the Olmsted County Market Area, the Rochester Fringe submarket had the highest median household income in 2013, at $88,788 (31% higher than the Olmsted County Market Area median), followed by North at $68,534. Lowest incomes were found in East ($52,540) and Stewartville ($51,969). As households age through the lifecycle, their household incomes tend to peak in their late 40s and early 50s which explains why most upscale housing is targeted to persons in this age group. This trend is apparent in the Olmsted County Market Area as households in the 45 to 54 age group have a median household income of $79,997. With a household income of $61,302, a household could afford a monthly housing cost of about $1,533, based on an allocation of 30% of income toward housing. MAXFIELD RESEARCH INC. 29

DEMOGRAPHIC ANALYSIS Total Under 25 25 34 35 44 45 54 55 64 65 74 75+ 2013 Less than $15,000 123 3 22 13 24 19 18 24 $15,000 to $24,999 170 8 23 18 25 23 37 37 $25,000 to $34,999 216 8 35 31 41 26 34 42 $35,000 to $49,999 352 23 79 43 63 64 39 42 $50,000 to $74,999 773 33 149 155 187 139 96 14 $75,000 to $99,999 537 6 100 141 154 85 46 4 $100,000 to $149,999 408 7 57 109 131 73 25 6 $150,000 to $199,999 108 0 10 27 37 25 9 0 $200,000+ 78 0 8 16 34 14 5 0 Total 2,764 88 483 553 694 467 310 169 Median Income $64,097 $50,748 $60,893 $76,909 $75,951 $65,850 $54,439 $29,705 2018 Less than $15,000 122 3 21 9 19 17 23 31 $15,000 to $24,999 131 7 18 7 14 14 33 37 $25,000 to $34,999 161 7 27 18 23 18 30 39 $35,000 to $49,999 311 21 69 33 47 54 40 48 $50,000 to $74,999 756 33 148 136 158 139 122 20 $75,000 to $99,999 756 9 148 188 191 127 83 9 $100,000 to $149,999 510 9 75 129 149 96 40 10 $150,000 to $199,999 154 0 14 37 50 38 14 0 $200,000+ 88 0 9 21 34 18 6 0 Total 2,989 90 529 579 684 520 392 194 Median Income $75,268 $52,841 $70,674 $83,497 $83,105 $77,562 $61,132 $31,625 Change 2013 to 2018 Less than $15,000 1 0 1 4 5 3 4 7 $15,000 to $24,999 39 1 5 11 10 8 4 0 $25,000 to $34,999 55 1 8 13 18 8 4 3 $35,000 to $49,999 40 2 10 10 16 10 1 6 $50,000 to $74,999 17 0 1 18 28 1 26 5 $75,000 to $99,999 219 3 47 47 38 42 37 5 $100,000 to $149,999 102 2 18 21 18 23 16 4 $150,000 to $199,999 46 0 4 11 13 14 5 0 $200,000+ 10 0 1 4 0 3 1 0 Total 225 2 47 26 9 53 82 25 Median Income $11,171 $2,093 $9,781 $6,588 $7,154 $11,712 $6,693 $1,920 Sources: ESRI; Maxfield Research Inc. TABLE D 8 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER BYRON SUBMARKET (Number of Households) 2013 & 2018 Age of Householder MAXFIELD RESEARCH INC. 30

DEMOGRAPHIC ANALYSIS Total Under 25 25 34 35 44 45 54 55 64 65 74 75+ 2013 Less than $15,000 476 42 67 33 52 81 72 127 $15,000 to $24,999 566 32 69 57 75 87 69 175 $25,000 to $34,999 485 12 77 72 82 62 68 110 $35,000 to $49,999 779 20 132 136 149 132 102 110 $50,000 to $74,999 1,235 39 230 242 271 238 146 67 $75,000 to $99,999 730 11 131 185 191 132 51 29 $100,000 to $149,999 458 6 45 120 142 103 32 11 $150,000 to $199,999 158 0 11 47 47 41 9 2 $200,000+ 102 0 12 18 37 21 11 2 Total 4,988 163 775 911 1,048 898 561 632 Median Income $52,540 $30,238 $52,771 $63,448 $62,392 $56,402 $44,215 $25,960 2018 Less than $15,000 461 37 62 26 42 75 86 134 $15,000 to $24,999 452 26 52 35 49 64 69 158 $25,000 to $34,999 383 10 58 49 53 45 67 103 $35,000 to $49,999 694 16 113 109 111 115 111 116 $50,000 to $74,999 1,319 39 250 238 251 258 194 90 $75,000 to $99,999 1,009 14 186 236 241 187 91 55 $100,000 to $149,999 554 7 57 140 151 132 51 16 $150,000 to $199,999 214 0 17 64 58 57 16 3 $200,000+ 114 0 13 22 41 25 11 3 Total 5,200 148 807 919 996 957 695 678 Median Income $58,900 $36,069 $58,737 $75,163 $73,896 $64,907 $51,124 $28,733 Change 2013 to 2018 Less than $15,000 15 5 6 7 10 7 13 8 $15,000 to $24,999 114 6 18 22 27 24 1 17 $25,000 to $34,999 101 2 20 24 30 18 2 7 $35,000 to $49,999 86 4 18 26 37 16 10 7 $50,000 to $74,999 84 0 20 4 21 19 48 22 $75,000 to $99,999 279 3 55 51 50 55 39 26 $100,000 to $149,999 96 1 11 21 10 30 19 5 $150,000 to $199,999 56 0 6 16 10 16 7 1 $200,000+ 13 0 1 4 4 4 0 1 Total 212 15 32 8 51 60 134 45 Median Income $6,360 $5,831 $5,966 $11,715 $11,504 $8,505 $6,909 $2,773 Sources: ESRI; Maxfield Research Inc. TABLE D 8 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER EAST SUBMARKET (Number of Households) 2013 & 2018 Age of Householder MAXFIELD RESEARCH INC. 31

DEMOGRAPHIC ANALYSIS Total Under 25 25 34 35 44 45 54 55 64 65 74 75+ 2013 Less than $15,000 263 15 33 24 31 48 38 74 $15,000 to $24,999 228 11 30 23 30 32 38 65 $25,000 to $34,999 271 12 38 31 41 35 45 69 $35,000 to $49,999 414 7 63 49 79 86 81 48 $50,000 to $74,999 623 14 108 105 151 122 108 15 $75,000 to $99,999 564 6 99 111 174 108 56 10 $100,000 to $149,999 560 6 58 129 196 126 34 10 $150,000 to $199,999 244 2 14 48 94 59 23 4 $200,000+ 183 1 10 29 80 49 11 2 Total 3,350 76 452 548 876 665 434 298 Median Income $68,534 $33,896 $61,813 $82,700 $88,257 $76,577 $52,199 $26,011 2018 Less than $15,000 253 14 27 19 23 41 42 87 $15,000 to $24,999 181 10 21 10 18 17 40 65 $25,000 to $34,999 206 7 29 19 21 26 42 62 $35,000 to $49,999 358 6 52 36 57 71 85 51 $50,000 to $74,999 638 16 117 99 133 125 130 19 $75,000 to $99,999 745 8 134 137 201 147 100 18 $100,000 to $149,999 676 7 72 151 212 160 58 16 $150,000 to $199,999 327 2 19 59 114 85 41 7 $200,000+ 200 1 13 34 80 56 15 3 Total 3,585 72 485 563 858 727 551 328 Median Income $78,864 $45,473 $73,526 $91,038 $96,045 $87,157 $60,175 $26,417 Change 2013 to 2018 Less than $15,000 10 2 6 5 8 7 4 13 $15,000 to $24,999 47 1 9 12 12 15 2 0 $25,000 to $34,999 65 5 9 12 20 9 3 7 $35,000 to $49,999 55 1 10 14 22 15 4 3 $50,000 to $74,999 15 1 10 6 18 2 22 3 $75,000 to $99,999 181 2 36 26 28 39 43 8 $100,000 to $149,999 116 1 15 22 16 34 24 5 $150,000 to $199,999 83 0 4 10 20 26 18 3 $200,000+ 17 0 2 5 0 6 3 1 Total 235 4 33 14 18 62 117 30 Median Income $10,330 $11,577 $11,713 $8,338 $7,788 $10,580 $7,976 $406 Sources: ESRI; Maxfield Research Inc. TABLE D 8 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER NORTH SUBMARKET (Number of Households) 2013 & 2018 Age of Householder MAXFIELD RESEARCH INC. 32

DEMOGRAPHIC ANALYSIS Total Under 25 25 34 35 44 45 54 55 64 65 74 75+ 2013 Less than $15,000 112 3 11 9 19 17 26 25 $15,000 to $24,999 196 6 17 18 27 39 26 62 $25,000 to $34,999 150 2 14 18 31 30 19 36 $35,000 to $49,999 386 10 45 54 76 83 71 46 $50,000 to $74,999 594 13 89 91 148 129 99 26 $75,000 to $99,999 604 4 90 117 198 122 60 13 $100,000 to $149,999 858 9 67 183 306 197 73 21 $150,000 to $199,999 329 1 13 52 132 96 31 4 $200,000+ 401 0 13 63 162 115 37 11 Total 3,630 49 359 606 1,100 828 443 245 Median Income $88,778 $53,771 $75,634 $98,684 $105,104 $98,381 $67,846 $34,809 2018 Less than $15,000 106 3 11 5 15 15 28 28 $15,000 to $24,999 141 4 12 7 15 19 28 55 $25,000 to $34,999 107 2 10 9 15 21 18 31 $35,000 to $49,999 318 8 37 38 51 67 68 49 $50,000 to $74,999 529 13 78 74 111 118 105 29 $75,000 to $99,999 779 4 118 143 224 162 105 23 $100,000 to $149,999 981 11 81 202 312 237 105 32 $150,000 to $199,999 441 1 19 69 158 133 53 8 $200,000+ 425 0 13 68 155 130 45 15 Total 3,827 47 380 615 1,057 902 556 271 Median Income $96,924 $58,561 $81,177 $104,379 $110,362 $106,665 $80,449 $40,264 Change 2013 to 2018 Less than $15,000 6 0 0 4 4 2 2 3 $15,000 to $24,999 56 2 5 11 12 19 2 7 $25,000 to $34,999 42 0 4 9 15 8 1 4 $35,000 to $49,999 68 2 7 15 26 17 3 3 $50,000 to $74,999 66 0 11 17 36 12 7 3 $75,000 to $99,999 174 0 28 26 25 40 45 10 $100,000 to $149,999 123 2 14 18 6 40 32 11 $150,000 to $199,999 112 0 6 17 26 37 22 4 $200,000+ 24 0 0 5 7 15 8 4 Total 197 2 21 9 44 73 113 26 Median Income $8,146 $4,790 $5,543 $5,695 $5,258 $8,284 $12,603 $5,455 Sources: ESRI; Maxfield Research Inc. TABLE D 8 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER ROCHESTER FRINGE SUBMARKET (Number of Households) 2013 & 2018 Age of Householder MAXFIELD RESEARCH INC. 33

DEMOGRAPHIC ANALYSIS Total Under 25 25 34 35 44 45 54 55 64 65 74 75+ 2013 Less than $15,000 3,575 460 647 263 402 432 438 932 $15,000 to $24,999 3,587 439 657 289 382 436 476 907 $25,000 to $34,999 4,006 252 937 535 553 482 522 726 $35,000 to $49,999 6,497 462 1,597 864 952 1,043 752 825 $50,000 to $74,999 9,614 513 2,476 1,568 1,849 1,574 1,070 564 $75,000 to $99,999 6,505 145 1,740 1,351 1,522 997 465 286 $100,000 to $149,999 7,008 122 1,296 1,636 1,887 1,346 443 279 $150,000 to $199,999 2,462 13 301 495 726 601 247 80 $200,000+ 2,569 16 281 459 831 647 259 77 Total 45,823 2,422 9,931 7,461 9,102 7,559 4,672 4,676 Median Income $61,084 $36,342 $58,631 $77,880 $80,309 $70,834 $52,250 $31,157 2018 Less than $15,000 3,881 474 671 240 375 454 563 1,105 $15,000 to $24,999 2,976 376 528 161 251 311 486 864 $25,000 to $34,999 3,245 207 734 351 380 378 540 654 $35,000 to $49,999 6,146 440 1,480 738 776 972 848 893 $50,000 to $74,999 9,579 510 2,478 1,446 1,600 1,578 1,292 675 $75,000 to $99,999 9,324 210 2,554 1,820 1,910 1,492 852 486 $100,000 to $149,999 8,773 156 1,688 1,974 2,090 1,743 703 420 $150,000 to $199,999 3,533 20 452 684 914 882 442 140 $200,000+ 3,029 18 345 550 869 775 366 107 Total 50,488 2,410 10,931 7,962 9,165 8,585 6,092 5,344 Median Income $72,857 $38,892 $69,076 $87,083 $88,625 $83,163 $59,235 $35,568 Change 2013 to 2018 Less than $15,000 306 14 24 24 27 22 125 173 $15,000 to $24,999 610 63 129 129 131 125 10 43 $25,000 to $34,999 761 45 202 184 172 104 18 71 $35,000 to $49,999 350 23 117 126 176 71 96 67 $50,000 to $74,999 34 3 2 122 249 4 222 111 $75,000 to $99,999 2,819 65 814 469 388 495 388 200 $100,000 to $149,999 1,766 34 392 338 204 397 260 141 $150,000 to $199,999 1,070 7 151 189 188 281 195 60 $200,000+ 460 2 64 90 38 128 107 30 Total 4,665 11 999 501 63 1,026 1,419 668 Median Income $11,773 $2,550 $10,445 $9,203 $8,316 $12,329 $6,985 $4,411 Sources: ESRI; Maxfield Research Inc. TABLE D 8 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER ROCHESTER SUBMARKET (Number of Households) 2013 & 2018 Age of Householder MAXFIELD RESEARCH INC. 34

DEMOGRAPHIC ANALYSIS Total Under 25 25 34 35 44 45 54 55 64 65 74 75+ 2013 Less than $15,000 311 27 44 34 43 47 44 72 $15,000 to $24,999 325 20 57 28 44 44 48 84 $25,000 to $34,999 307 11 49 51 53 33 51 58 $35,000 to $49,999 504 25 107 78 85 80 80 48 $50,000 to $74,999 715 29 138 134 153 123 103 34 $75,000 to $99,999 479 5 100 117 128 72 49 8 $100,000 to $149,999 289 7 50 75 88 46 19 4 $150,000 to $199,999 84 0 9 20 25 22 5 3 $200,000+ 55 0 5 13 24 10 2 1 Total 3,070 125 560 550 643 477 401 314 Median Income $51,969 $36,757 $52,639 $62,826 $63,110 $54,774 $44,630 $25,060 2018 Less than $15,000 335 28 45 30 41 47 58 86 $15,000 to $24,999 266 16 47 17 28 33 48 77 $25,000 to $34,999 245 9 37 33 37 24 50 55 $35,000 to $49,999 470 24 98 66 69 72 90 51 $50,000 to $74,999 722 27 139 122 136 127 128 42 $75,000 to $99,999 680 8 139 156 161 109 91 16 $100,000 to $149,999 374 10 71 96 101 63 28 5 $150,000 to $199,999 126 0 12 30 33 35 10 7 $200,000+ 67 0 7 17 26 13 3 1 Total 3,286 122 594 568 632 522 507 342 Median Income $58,651 $38,596 $59,978 $76,552 $75,478 $64,362 $50,895 $26,005 Change 2013 to 2018 Less than $15,000 24 1 1 4 1 0 14 14 $15,000 to $24,999 59 3 11 11 15 11 0 7 $25,000 to $34,999 63 3 12 18 16 9 1 3 $35,000 to $49,999 34 1 9 12 17 8 10 3 $50,000 to $74,999 7 2 2 13 17 4 25 8 $75,000 to $99,999 200 2 39 39 33 37 42 8 $100,000 to $149,999 86 2 21 21 14 17 10 1 $150,000 to $199,999 42 0 3 11 8 13 5 3 $200,000+ 12 0 1 5 2 3 1 0 Total 216 3 34 18 11 45 106 28 Median Income $6,682 $1,839 $7,339 $13,726 $12,368 $9,588 $6,265 $945 Sources: ESRI; Maxfield Research Inc. TABLE D 8 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER STEWARTVILLE SUBMARKET (Number of Households) 2013 & 2018 Age of Householder MAXFIELD RESEARCH INC. 35

DEMOGRAPHIC ANALYSIS Total Under 25 25 34 35 44 45 54 55 64 65 74 75+ 2013 Less than $15,000 4,410 510 761 343 525 574 581 1,116 $15,000 to $24,999 4,705 489 787 400 539 616 667 1,207 $25,000 to $34,999 5,129 281 1,088 694 764 631 692 979 $35,000 to $49,999 8,459 535 1,932 1,150 1,323 1,413 1,062 1,044 $50,000 to $74,999 12,901 621 3,049 2,166 2,619 2,217 1,547 682 $75,000 to $99,999 8,984 167 2,176 1,931 2,250 1,433 687 339 $100,000 to $149,999 9,263 152 1,530 2,182 2,658 1,815 601 325 $150,000 to $199,999 3,281 16 348 658 1,036 814 317 93 $200,000+ 3,333 17 320 585 1,155 848 316 93 Total 60,465 2,787 11,992 10,108 12,869 10,362 6,470 5,878 Median Income $62,037 $37,306 $58,895 $77,845 $80,773 $70,749 $52,445 $30,494 2018 Less than $15,000 4,715 517 778 300 477 587 738 1,317 $15,000 to $24,999 3,852 415 626 218 342 432 673 1,147 $25,000 to $34,999 4,098 229 844 445 507 485 698 890 $35,000 to $49,999 7,872 501 1,764 959 1,050 1,289 1,179 1,130 $50,000 to $74,999 12,757 612 3,030 1,973 2,243 2,212 1,871 816 $75,000 to $99,999 12,769 239 3,165 2,581 2,813 2,128 1,263 579 $100,000 to $149,999 11,507 194 1,980 2,614 2,929 2,348 955 488 $150,000 to $199,999 4,664 23 516 907 1,301 1,191 563 163 $200,000+ 3,875 18 389 698 1,193 1,011 437 129 Total 66,108 2,748 13,091 10,695 12,854 11,682 8,378 6,660 Median Income $74,329 $40,069 $69,321 $86,691 $88,960 $82,912 $59,398 $34,639 Change 2013 to 2018 Less than $15,000 305 8 17 43 48 12 158 201 $15,000 to $24,999 853 74 161 183 197 184 6 60 $25,000 to $34,999 1,031 52 244 249 257 146 6 89 $35,000 to $49,999 587 34 168 191 273 124 117 86 $50,000 to $74,999 144 10 19 193 377 5 325 134 $75,000 to $99,999 3,785 72 989 650 563 695 576 240 $100,000 to $149,999 2,244 42 450 432 271 533 353 163 $150,000 to $199,999 1,383 7 168 249 265 377 246 71 $200,000+ 542 2 69 113 38 163 121 36 Total 5,643 39 1,100 587 15 1,321 1,908 782 Median Income $12,292 $2,763 $10,426 $8,846 $8,187 $12,163 $6,953 $4,145 Sources: ESRI; Maxfield Research Inc. TABLE D 8 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER OLMSTED COUNTY (Number of Households) 2013 & 2018 Age of Householder MAXFIELD RESEARCH INC. 36

DEMOGRAPHIC ANALYSIS Total Under 25 25 34 35 44 45 54 55 64 65 74 75+ 2013 Less than $15,000 4,857 550 822 377 570 646 638 1,253 $15,000 to $24,999 5,075 515 851 435 584 662 695 1,332 $25,000 to $34,999 5,432 297 1,147 738 801 668 740 1,041 $35,000 to $49,999 8,930 545 2,018 1,225 1,406 1,489 1,126 1,119 $50,000 to $74,999 13,558 640 3,184 2,297 2,762 2,329 1,624 721 $75,000 to $99,999 9,426 177 2,256 2,024 2,371 1,519 729 351 $100,000 to $149,999 9,577 157 1,569 2,251 2,752 1,891 626 331 $150,000 to $199,999 3,385 16 358 689 1,063 843 324 93 $200,000+ 3,385 17 329 597 1,168 857 325 93 Total 63,625 2,913 12,534 10,635 13,478 10,905 6,826 6,334 Median Income $61,302 $36,874 $58,433 $77,180 $79,997 $69,921 $52,114 $29,761 2018 Less than $15,000 5,145 554 831 328 514 649 800 1,468 $15,000 to $24,999 4,151 436 674 239 377 460 705 1,261 $25,000 to $34,999 4,340 240 890 477 529 512 746 947 $35,000 to $49,999 8,288 510 1,840 1,021 1,112 1,352 1,245 1,208 $50,000 to $74,999 13,564 635 3,201 2,122 2,399 2,354 1,980 873 $75,000 to $99,999 13,313 252 3,266 2,687 2,942 2,233 1,327 606 $100,000 to $149,999 11,862 200 2,029 2,691 3,023 2,436 987 497 $150,000 to $199,999 4,794 23 529 944 1,330 1,231 574 163 $200,000+ 3,917 18 396 709 1,206 1,015 444 128 Total 69,374 2,867 13,656 11,218 13,433 12,241 8,808 7,152 Median Income $72,917 $39,738 $68,473 $85,837 $87,982 $82,063 $58,849 $33,635 Change 2013 to 2018 Less than $15,000 288 4 9 49 56 3 162 215 $15,000 to $24,999 924 79 178 196 207 202 10 71 $25,000 to $34,999 1,092 57 257 261 272 156 6 94 $35,000 to $49,999 642 36 178 204 294 138 119 89 $50,000 to $74,999 6 5 17 176 363 24 356 152 $75,000 to $99,999 3,887 75 1,011 663 571 714 598 255 $100,000 to $149,999 2,285 43 460 439 271 545 361 166 $150,000 to $199,999 1,409 7 171 255 267 388 251 70 $200,000+ 532 2 67 112 38 158 119 36 Total 5,749 47 1,122 584 46 1,335 1,982 818 Median Income $11,615 $2,864 $10,040 $8,657 $7,985 $12,142 $6,735 $3,874 Sources: ESRI; Maxfield Research Inc. TABLE D 8 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER OLMSTED COUNTY MARKET AREA (Number of Households) 2013 & 2018 Age of Householder MAXFIELD RESEARCH INC. 37

DEMOGRAPHIC ANALYSIS Growth and Income Trends by Age of Householder Olmsted County Market Area: 2013 & 2018 No. of Households 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2013 2018 2013 Income 79,997 77,180 69,921 58,433 52,114 36,874 29,761 15 24 25 34 35 44 45 54 55 64 65 74 75+ 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2013 Median Income Age of Householder Median Household Income by Submarket 2013 & 2018 $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2013 2018 MAXFIELD RESEARCH INC. 38

DEMOGRAPHIC ANALYSIS Household Income 2013 Household Income Comparison Table D 9 compares household income in Olmsted County and Rochester against the Metro Area and select outstate Minnesota cities and counties. The table displays household median and average incomes in 2013 similar to Table D 8. Key findings follow. MAXFIELD RESEARCH INC. 39

DEMOGRAPHIC ANALYSIS The 2013 median household income in Olmsted County is slightly higher than the Metro Area ($62,037 versus $61,175). However, five of the seven Metro Area counties have median household incomes higher than Olmsted County. When compared to other non Metro Area counties, Olmsted County has median household incomes from 15% higher than Stearns County ($52,518) to 34% higher than St. Louis County ($40,906). Similarly, Rochester has higher incomes compared to other outstate Minnesota communities. Rochester s median income of $61,084 is about 20% higher than St. Cloud s ($48,513) and 41% higher than Winona s ($36,227). TABLE D 9 HOUSEHOLD INCOME COUNTY COMPARISONS 2013 Household Income Median Average Out state MN Counties Olmsted $62,037 $81,849 Blue Earth $48,077 $59,848 Stearns $52,518 $64,586 St. Louis $40,906 $53,975 Winona $41,843 $54,587 Out state MN Cities Rochester $61,084 $81,408 Duluth $37,868 $52,484 Mankato $41,877 $56,126 St. Cloud $48,513 $63,629 Winona $36,227 $49,003 Metro Area Counties Anoka $66,563 $79,315 Carver $76,755 $97,575 Dakota $70,050 $87,613 Hennepin $57,326 $79,880 Ramsey $49,965 $68,830 Scott $79,010 $94,830 Washington $76,800 $95,872 Metro Area $61,175 $81,259 Source: ESRI, Maxfield Research Inc. MAXFIELD RESEARCH INC. 40

DEMOGRAPHIC ANALYSIS $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Median Houshold Income by County: 2012 $70,000 Median Houshold Income by County: 2012 $60,000 $50,000 $61,084 $40,000 $30,000 $20,000 $37,868 $41,877 $48,513 $36,227 $10,000 $0 Rochester Duluth Mankato St. Cloud Winona Median Income by Race Table D 10 shows 2012 income by race data for each of the major cities within the Olmsted County Market Area from the U.S. Census Bureau. Only select data was available for the major cities within the Market Area. The following are key findings from Table D 10. MAXFIELD RESEARCH INC. 41

DEMOGRAPHIC ANALYSIS In 2012, Oronoco has the highest White Alone median income out of all the major cities within the Olmsted County Market Area. The White Alone median income in Oronoco is $100,673, which is significantly higher than Olmsted County ($68,148). As the table illustrates, Rochester has median incomes by race that are comparable to Olmsted County. However, Rochester s Two or More Races median income ($26,920) is roughly 50% of the Olmsted County s median income ($54,375). In 2012, Olmsted County s highest median income is from Asians, who have a median income of $73,571 a year. TABLE D 10 MEDIAN INCOME BY RACE OLMSTED COUNTY CITIES 2012 Major Cities Olmsted Cty. Race Byron Chatfield Dover Eyota Oronoco Pine Island Rochester St.Charles Stewartville White Alone $69,069 $51,223 $75,714 $65,959 $100,673 $54,105 $65,450 $59,630 $46,062 $68,148 Black or African American n/a n/a n/a n/a n/a n/a $32,093 n/a $12,132 $32,233 American Indian/ Alaska Native n/a n/a n/a n/a n/a n/a $21,394 n/a n/a $21,731 Native Hawaiian/Other Pacific Islander n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Asian n/a n/a n/a n/a n/a n/a $72,712 $20,833 n/a $73,571 Some Other Race n/a n/a n/a n/a n/a n/a $63,913 $26,648 n/a $63,750 Two or More Races n/a n/a n/a n/a n/a n/a $26,920 $118,250 n/a $54,375 Source: U.S. Census; Maxfield Research Inc. Median Income by Race Olmsted County $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 $68,148 White Alone $32,233 Black or African American $21,731 American Indian or Alaska Native Native Hawaiian or Other Pacific Islander $73,571 Asian $63,750 Some Other Race $54,375 Two or More Races MAXFIELD RESEARCH INC. 42

DEMOGRAPHIC ANALYSIS Tenure by Age of Householder Table D 11 shows 2010 tenure data for each of the submarkets within the Olmsted County Market Area from the U.S. Census Bureau. This data is useful in determining demand for certain types of housing since housing preferences change throughout an individual s life cycle. The following are key findings from Table D 11. In 2010, 74.9% of all households in the Olmsted County Market Area owned their housing. This is higher than the Twin Cities Metro Area with a 70% homeownership rate. The housing market downturn contributed to the decrease in the homeownership rate during the late 2000s as it became more difficult for households to secure mortgage loans, households delayed purchasing homes due to the uncertainty of the housing market, and foreclosures forced households out of their homes. Within the Olmsted County Market Area, Rochester Fringe had the highest ownership rate at 94.6% while Rochester had the lowest ownership rate (70.8%). As households progress through their life cycle, housing needs change. Typically, the proportion of renter households decreases as households age out of their young adult years. This pattern is apparent in the Olmsted County Market Area as 74.9% of households age 15 to 24, 38.3% of age 25 to 34 households, and 21.4% of 65 and older households rented in 2010. In the 15 to 24 age group, Rochester had the highest percentage of renters at 77.3% (1,833 renter households), followed by East at 69.4% (120 renter households). MAXFIELD RESEARCH INC. 43

DEMOGRAPHIC ANALYSIS TABLE D 11 TENURE BY AGE OF HOUSEHOLDER OLMSTED COUNTY MARKET AREA 2010 Byron East North Rochester Rochester Fringe Stewartville Olmsted Co. Olmsted MA Age No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. 15 24 Own 29 34.1 53 30.6 31 39.2 537 22.7 22 59.5 47 39.2 679 24.9 719 25.1 Rent 56 65.9 120 69.4 48 60.8 1,833 77.3 15 40.5 73 60.8 2,047 75.1 2,145 74.9 Total 85 100.0 173 100.0 79 100.0 2,370 100.0 37 100.0 120 100.0 2,726 100.0 2,864 100.0 25 34 Own 325 74.4 567 72.4 311 72.0 5,490 58.5 165 78.6 397 76.8 6,876 61.4 7,255 61.7 Rent 112 25.6 216 27.6 121 28.0 3,891 41.5 45 21.4 120 23.2 4,320 38.6 4,505 38.3 Total 437 100.0 783 100.0 432 100.0 9,381 100.0 210 100.0 517 100.0 11,196 100.0 11,760 100.0 35 44 Own 457 87.2 753 82.3 484 86.7 5,381 73.2 482 93.4 448 84.5 7,596 77.0 8,005 77.0 Rent 67 12.8 162 17.7 74 13.3 1,973 26.8 34 6.6 82 15.5 2,271 23.0 2,392 23.0 Total 524 100.0 915 100.0 558 100.0 7,354 100.0 516 100.0 530 100.0 9,867 100.0 10,397 100.0 45 54 Own 610 88.8 905 86.6 783 89.8 7,076 80.7 1,144 96.1 592 90.5 10,607 84.1 11,110 84.1 Rent 77 11.2 140 13.4 89 10.2 1,692 19.3 47 3.9 62 9.5 1,999 15.9 2,107 15.9 Total 687 100.0 1,045 100.0 872 100.0 8,768 100.0 1,191 100.0 654 100.0 12,606 100.0 13,217 100.0 55 64 Own 403 91.6 718 88.2 546 91.2 5,592 83.0 851 97.7 410 91.7 8,124 86.2 8,520 86.0 Rent 37 8.4 96 11.8 53 8.8 1,144 17.0 20 2.3 37 8.3 1,306 13.8 1,387 14.0 Total 440 100.0 814 100.0 599 100.0 6,736 100.0 871 100.0 447 100.0 9,430 100.0 9,907 100.0 65 + Own 416 91.2 866 76.6 568 84.9 6,396 76.0 660 96.1 545 81.1 8,930 79.3 9,451 78.6 Rent 40 8.8 265 23.4 101 15.1 2,020 24.0 27 3.9 127 18.9 2,325 20.7 2,580 21.4 Total 456 100.0 1,131 100.0 669 100.0 8,416 100.0 687 100.0 672 100.0 11,255 100.0 12,031 100.0 TOTAL Own 2,240 85.2 3,862 79.4 2,723 84.9 30,472 70.8 3,324 94.6 2,439 83.0 42,812 75.0 45,060 74.9 Rent 389 14.8 999 20.6 486 15.1 12,553 29.2 188 5.4 501 17.0 14,268 25.0 15,116 25.1 Total 2,629 100.0 4,861 100.0 3,209 100.0 43,025 100.0 3,512 100.0 2,940 100.0 57,080 100.0 60,176 100.0 Sources: U.S. Census Bureau; Maxfield Research Inc. MAXFIELD RESEARCH INC. 44

DEMOGRAPHIC ANALYSIS Tenure by Age Olmsted County Market Area 2010 100.0% 90.0% 80.0% 38.3% 23.0% 15.9% 14.0% 21.4% 70.0% 60.0% 74.9% 50.0% 40.0% 30.0% 61.7% 77.0% 84.1% 86.0% 78.6% Renter Owner 20.0% 10.0% 25.1% 0.0% 15 24 25 34 35 44 45 54 55 64 65+ The decline in homeownership rates is a national trend as the U.S. homeownership rate fell to the lowest since 1995. The share of American homeowners was 65% in 2013, down from 65.4% a year earlier and the lowest level since 1995. Tight credit, tight for sale inventory, the challenge of saving for a down payment, and more rental single family supply lowered the homeownership rate. However, homeownership rates are the highest in the Midwest with a 70.0% homeownership rate in 2013 compared to 65% in the U.S. The graphic on the following page shows the annual homeownership rates in the U.S. and Midwest from the American Community Survey. MAXFIELD RESEARCH INC. 45

DEMOGRAPHIC ANALYSIS Annual Homeownership Rates 1965 2013 75.0% 74.0% 73.0% 72.0% 71.0% 70.0% 69.0% 68.0% 67.0% 66.0% 65.0% 64.0% 63.0% 62.0% 61.0% 60.0% US Midwest Tenure by Race Table D 12 shows 2010 tenure by race data for each of the major cities within the Olmsted County Market Area from the U.S. Census Bureau. The following are key findings from Table D 12. As a percentage, St. Charles has the lowest percentage of White Alone owner occupied households at 74%. Rochester has the second lowest percentage at 74.6%, which is slightly lower than Olmsted County (78.2%). Black or African American Alone has the highest percentage of renter occupied households in Olmsted County (76%). The second highest percentage of owner occupied households in Olmsted County is from Other Pacific Islander Alone at 72.2%. MAXFIELD RESEARCH INC. 46

DEMOGRAPHIC ANALYSIS TABLE D 12 TENURE BY RACE OLMSTED COUNTY MARKET AREA CITIES 2010 American Indian Native Hawaiian or White Black or African or Alaska Native Other Pacific Asian Some Other Two or More Alone American Alone Alone Islander Alone Alone Race Alone Races Alone Byron Total 1,749 13 1 0 18 8 7 Owned Occupied 1,464 8 1 0 14 4 2 Renter Occupied 285 5 0 0 4 4 5 Chatfield Total 1,080 1 2 0 1 3 5 Owned Occupied 818 0 0 0 1 1 2 Renter Occupied 262 1 2 0 0 2 3 Dover Total 255 0 0 0 0 5 1 Owned Occupied 229 0 0 0 0 3 1 Renter Occupied 26 0 0 0 0 2 0 Eyota Total 755 1 0 0 1 1 0 Owned Occupied 615 0 0 0 1 1 0 Renter Occupied 140 1 0 0 0 0 0 Oronoco Total 440 0 1 1 6 1 2 Owned Occupied 403 0 0 1 6 1 1 Renter Occupied 37 0 1 0 0 0 1 Pine Island Total 1,265 6 1 1 8 0 11 Owned Occupied 956 1 1 1 4 0 5 Renter Occupied 309 5 0 0 4 0 6 Rochester Total 37,725 1,913 80 14 2,262 564 467 Owned Occupied 28,148 436 36 10 1,363 258 221 Renter Occupied 9,577 1,477 44 4 899 306 246 St. Charles Total 1,346 2 5 0 30 25 8 Owned Occupied 996 1 2 0 19 14 6 Renter Occupied 350 1 3 0 11 11 2 Stewartville Total 2,286 10 2 0 7 4 9 Owned Occupied 1,868 3 1 0 3 2 5 Renter Occupied 418 7 1 0 4 2 4 Olmsted County Total 51,468 1,966 98 18 2,398 604 528 Owned Occupied 40,253 471 49 13 1,481 282 263 Renter Occupied 11,215 1,495 49 5 917 322 265 Source: U.S. Census, Maxfield Research Inc. MAXFIELD RESEARCH INC. 47

DEMOGRAPHIC ANALYSIS Tenure by Race Owner Occupied Olmsted County 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 78.2% White Alone 24.0% Black or African American 50.0% American Indian or Alaska Native 72.2% Native Hawaiian or Other Pacific Islander 61.8% Asian 46.7% 49.8% Some Other Race Two or More Races Tenure by Household Income Table D 13 shows household tenure by income for Olmsted County Market Area in 2011. Data is an estimate from the American Community Survey. Household tenure information is important to assess the propensity for owner occupied or renter occupied housing options based on household affordability. As stated earlier, the Department of Housing and Urban Development determines affordable housing as not exceeding 30% of the household s income. It is important to note that the higher the income, the lower percentage a household typically allocates to housing. Many lower income households, as well as many young and senior households, spend more than 30% of their income, while middle aged households in their prime earning years typically allocate 20% to 25% of their income. Typically, as income increases, so does the rate of homeownership. This can be seen in the Olmsted County Market Area, where the homeownership rate steadily increases from 34.2% of households with incomes below $15,000 to 93% of households with incomes above $100,000. A portion of renter households that are referred to as lifestyle renters, or those who are financially able to own but choose to rent, have household incomes above $50,000 (about 28.6% of Olmsted County Market Area s renters in 2011). Households with incomes below $15,000 are typically a market for deep subsidy rental housing (about 21.9% of Olmsted County Market Area s renters in 2011). MAXFIELD RESEARCH INC. 48

DEMOGRAPHIC ANALYSIS TABLE D 13 TENURE BY HOUSEHOLD INCOME OLMSTED COUNTY MARKET AREA 2011 BYRON EAST NORTH ROCHESTER Owner Renter Owner Renter Owner Renter Owner Renter Income Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Less than $15,000 62 46.3% 72 53.7% 159 39.9% 239 60.1% 144 46.5% 166 53.5% 1,059 29.8% 2,492 70.2% $15,000 to $24,999 84 69.4% 37 30.6% 247 60.4% 162 39.6% 115 54.8% 95 45.2% 1,598 42.8% 2,140 57.2% $25,000 to $34,999 144 55.8% 114 44.2% 333 60.5% 217 39.5% 173 71.8% 68 28.2% 2,029 53.7% 1,749 46.3% $35,000 to $49,999 210 76.1% 66 23.9% 448 73.3% 163 26.7% 238 82.1% 52 17.9% 3,491 63.9% 1,969 36.1% $50,000 to $74,999 463 91.5% 43 8.5% 967 91.1% 95 8.9% 471 93.1% 35 6.9% 6,723 79.1% 1,771 20.9% $75,000 to $99,999 488 93.7% 33 6.3% 732 96.3% 28 3.7% 493 91.3% 47 8.7% 5,534 88.3% 730 11.7% $100,000 to $149,999 421 100% 0 0.0% 671 98.4% 11 1.6% 647 94.7% 36 5.3% 6,308 90.9% 628 9.1% $150,000+ 306 99.0% 3 1.0% 299 99.3% 2 0.7% 402 99.0% 4 1.0% 3,919 89.2% 473 10.8% Total 2,178 85.5% 368 14.5% 3,856 80.8% 917 19.2% 2,683 84.2% 503 15.8% 30,661 72.0% 11,952 28.0% Median Household Income $81,644 $51,904 $72,903 $33,178 $86,072 $55,984 $76,698 $32,963 ROCHESTER FRINGE STEWARTVILLE OLMSTED COUNTY OLMSTED COUNTY MARKET AREA Owner Renter Owner Renter Owner Renter Owner Renter Units in Structure Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Less than $15,000 88 81.5% 20 18.5% 137 43.4% 179 56.6% 1,556 35.2% 2,870 64.8% 1,649 34.2% 3,168 65.8% $15,000 to $24,999 92 100.0% 0 0.0% 156 67.0% 77 33.0% 2,150 47.8% 2,351 52.2% 2,292 47.7% 2,511 52.3% $25,000 to $34,999 150 93.2% 11 6.8% 237 76.0% 75 24.0% 2,841 58.3% 2,029 41.7% 3,066 57.8% 2,234 42.2% $35,000 to $49,999 267 91.1% 26 8.9% 460 78.5% 126 21.5% 4,846 67.7% 2,309 32.3% 5,114 68.0% 2,402 32.0% $50,000 to $74,999 387 92.4% 32 7.6% 448 81.5% 102 18.5% 8,888 81.4% 2,027 18.6% 9,459 82% 2,078 18.0% $75,000 to $99,999 498 99.6% 2 0.4% 356 100.0% 0 0.0% 7,761 90.6% 808 9.4% 8,101 90.6% 840 9.4% $100,000 to $149,999 881 100.0% 0 0.0% 368 86.8% 56 13.2% 8,920 92.5% 726 7.5% 9,296 93% 731 7.3% $150,000+ 1,065 100.0% 0 0.0% 154 93.9% 10 6.1% 6,025 92.5% 492 7.5% 6,145 93% 492 7.4% Total 3,428 97.4% 91 2.6% 2,316 78.7% 625 21.3% 42,987 76.0% 13,612 24.0% 45,122 75.7% 14,456 24.3% Median Household Income $120,491 $45,872 $69,137 $45,983 $84,820 $45,142 $82,837 $42,902 Sources: U.S. Census Bureau American Community Survey; Maxfield Research Inc. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 65.8% 52.3% 42.2% 32.0% 18.0% 9.4% 7.3% 7.4% 90.6% 92.7% 92.6% 82.0% 34.2% Less than $15K Household Income by Tenure Olmsted County Market Area 2011 47.7% $15K to $24.9K 57.8% $25K to $34.9K 68.0% $35K to $49.9K Renter $50K to $74.9K Owner $75K to $99.9K $100K to $149.9K $150K+ MAXFIELD RESEARCH INC. 49

DEMOGRAPHIC ANALYSIS $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Median Household Income Olmsted County Market Area2011 Owner Renter Tenure by Household Size Table D 14 shows the distribution of households by size and tenure in the Olmsted County Market Area in 2000 and 2010. This data is useful in that it sheds insight into the number of units by unit type that may be most needed in Olmsted County Market Area. Household size for renters tends to be smaller than for owners. This trend is a result of the typical market segments for rental housing, including households that are younger and are less likely to be married with children as well as older adults and seniors who choose to downsize from their single family homes. In 2010, over 46% of the total renter occupied households in the Olmsted County Market Area were one person households. An estimated 72% of renter households in the Olmsted County Market Area in 2010 have either one or two people. The one person households would primarily seek one bedroom units and two person households that are couple would primarily seek one bedroom units. Two person households that consist of a parent and child or roommate would primarily seek two bedroom units. Larger households would seek units with multiple bedrooms. One person households in the Olmsted County Market Area have the highest percentage of renters among all household types. About 43% of one person households are renters compared to 25% of all the households in the Olmsted County Market Area. Four person households have the lowest renter percentage among all household types (15%). MAXFIELD RESEARCH INC. 50

DEMOGRAPHIC ANALYSIS Byron Submarket TABLE D 14 TENURE BY HOUSEHOLD SIZE OLMSTED COUNTY MARKET AREA 2000 & 2010 East Submarket North Submarket 2000 2010 2000 2010 2000 2010 Owner Occupied Renter Occupied Owner Occupied Renter Occupied Owner Occupied Renter Occupied Owner Occupied Renter Occupied Owner Occupied Renter Occupied Owner Occupied Renter Occupied Size Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. 1PP Household 181 10.5% 92 33.9% 336 15.0% 148 38.0% 551 16.7% 369 40.2% 652 16.9% 483 48.3% 378 16.4% 128 40.0% 480 17.6% 189 38.9% 2PP Household 608 35.2% 85 31.4% 860 38.4% 106 27.2% 1,195 36.1% 271 29.6% 1468 38.0% 247 24.7% 845 36.6% 97 30.3% 1073 39.4% 142 29.2% 3PP Household 316 18.3% 47 17.3% 377 16.8% 65 16.7% 557 16.8% 146 15.9% 612 15.8% 109 10.9% 385 16.7% 54 16.9% 454 16.7% 70 14.4% 4PP Household 391 22.7% 29 10.7% 441 19.7% 39 10.0% 610 18.5% 81 8.8% 713 18.5% 84 8.4% 428 18.5% 22 6.9% 440 16.2% 49 10.1% 5PP Household 170 9.9% 14 5.2% 167 7.5% 23 5.9% 274 8.3% 30 3.3% 290 7.5% 47 4.7% 207 9.0% 12 3.8% 201 7.4% 21 4.3% 6PP Household 46 2.7% 2 0.7% 44 2.0% 7 1.8% 82 2.5% 15 1.6% 89 2.3% 20 2.0% 49 2.1% 5 1.6% 53 1.9% 12 2.5% 7PP+ Household 13 0.8% 2 0.7% 15 0.7% 1 0.3% 37 1.1% 5 0.5% 38 1.0% 9 0.9% 19 0.8% 2 0.6% 22 0.8% 3 0.6% Total 1,725 100.0% 271 100.0% 2,240 100.0% 389 100.0% 3,306 100.0% 917 100.0% 3,862 100.0% 999 100.0% 2,311 100.0% 320 100.0% 2,723 100.0% 486 100.0% Rochester Submarket Rochester Fringe Submarket Stewartville Submarket 2000 2010 2000 2010 2000 2010 Owner Occupied Renter Occupied Owner Occupied Renter Occupied Owner Occupied Renter Occupied Owner Occupied Renter Occupied Owner Occupied Renter Occupied Owner Occupied Renter Occupied Size Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. 1PP Household 5,103 21.1% 5,023 50.7% 7087 23.3% 5844 46.6% 550 12.2% 98 31.4% 408 12.3% 65 34.6% 336 15.6% 216 46.4% 454 18.6% 248 49.5% 2PP Household 8,751 36.1% 2,626 26.5% 11450 37.6% 3215 25.6% 1,674 37.2% 89 28.5% 1478 44.5% 52 27.7% 761 35.4% 138 29.6% 933 38.3% 117 23.4% 3PP Household 3,782 15.6% 1,038 10.5% 4617 15.2% 1559 12.4% 781 17.4% 53 17.0% 549 16.5% 27 14.4% 360 16.8% 51 10.9% 427 17.5% 70 14.0% 4PP Household 4,161 17.2% 729 7.4% 4435 14.6% 979 7.8% 915 20.4% 45 14.4% 541 16.3% 21 11.2% 426 19.8% 37 7.9% 385 15.8% 44 8.8% 5PP Household 1,683 7.0% 276 2.8% 1839 6.0% 508 4.0% 408 9.1% 14 4.5% 235 7.1% 11 5.9% 198 9.2% 17 3.6% 159 6.5% 14 2.8% 6PP Household 499 2.1% 129 1.3% 693 2.3% 251 2.0% 126 2.8% 8 2.6% 84 2.5% 6 3.2% 55 2.6% 6 1.3% 53 2.2% 5 1.0% 7PP+ Household 235 1.0% 81 0.8% 351 1.2% 197 1.6% 40 0.9% 5 1.6% 29 0.9% 6 3.2% 12 0.6% 1 0.2% 28 1.1% 3 0.6% Total 24,214 100.0% 9,902 100.0% 30,472 100.0% 12,553 100.0% 4,494 100.0% 312 100.0% 3,324 100.0% 188 100.0% 2,148 100.0% 466 100.0% 2,439 100.0% 501 100.0% Olmsted County 2000 2010 Owner Occupied Renter Occupied Owner Occupied Renter Occupied Total Olmsted County PMA 2000 2010 Owner Occupied Renter Occupied Owner Occupied Renter Occupied Size Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. Number Pct. 1PP Household 6,757 18.6% 5,601 48.7% 8988 21.0% 6536 45.8% 7,099 18.6% 5,926 48.6% 9,417 20.9% 6,977 46.2% 2PP Household 13,158 36.2% 3,104 27.0% 16409 38.3% 3677 25.8% 13,834 36.2% 3,306 27.1% 17,262 38.3% 3,879 25.7% 3PP Household 5,850 16.1% 1,294 11.2% 6688 15.6% 1814 12.7% 6,181 16.2% 1,389 11.4% 7,036 15.6% 1,900 12.6% 4PP Household 6,616 18.2% 909 7.9% 6569 15.3% 1149 8.1% 6,931 18.1% 943 7.7% 6,955 15.4% 1,216 8.0% 5PP Household 2,783 7.7% 344 3.0% 2734 6.4% 595 4.2% 2,940 7.7% 363 3.0% 2,891 6.4% 624 4.1% 6PP Household 805 2.2% 158 1.4% 967 2.3% 284 2.0% 857 2.2% 165 1.4% 1,016 2.3% 301 2.0% 7PP+ Household 335 0.9% 93 0.8% 457 1.1% 213 1.5% 356 0.9% 96 0.8% 483 1.1% 219 1.4% Total 36,304 100.0% 11,503 100.0% 42,812 100.0% 14,268 100.0% 38,198 100.0% 12,188 100.0% 45,060 100.0% 15,116 100.0% Sources: U.S. Census Bureau; Maxfield Research Inc. MAXFIELD RESEARCH INC. 51

DEMOGRAPHIC ANALYSIS 45.0% 40.0% Tenure by HH Size Owner Occupied Units Olmsted County Market Area 2000 & 2010 2000 2010 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 1PP HH 2PP HH 3PP HH 4PP HH 5PP HH 6PP HH 7PP+ HH 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Tenure by HH Size 2010 Olmsted County Market Area 42.6% 18.3% 21.3% 14.9% 17.8% 22.9% 31.2% 25.1% 57.4% 81.7% 78.7% 85.1% 82.2% 77.1% 68.8% 74.9% 1PP HH 2PP HH 3PP HH 4PP HH 5PP HH 6PP HH 7PP+ HH All Pct. Renter Pct. Owner MAXFIELD RESEARCH INC. 52

DEMOGRAPHIC ANALYSIS Household Size by Occupied Housing Type and Race Table D 15 shows the average household size by occupied housing type and race for most of the cities within the Olmsted County Market Area in 2010. Data was gathered from the 2010 U.S. Census. Household sizes vary considerably by race within the Olmsted County Market Area. For example, in Rochester, White Alone has an average household size of 2.31, while Some Other Race Alone has an average household size of 3.63. Other races in Rochester have high average household sizes like Hispanic or Latino (3.39) and Black or African American Alone (3.24). In St. Charles, White Alone has an average household size of 2.55, while Black or African American Alone has an average household size of 6.00. In Dover, White Alone has an average household size of 2.77, while Some Other Race Alone and Hispanic or Latino has larger household sizes at 5.00 and 4.29, respectively. It is important to note that average household sizes by race may be skewed in the smaller cities. Cities that have low household totals and small sample sizes of different races may appear to have large averages throughout the Olmsted County Market Area. MAXFIELD RESEARCH INC. 53

DEMOGRAPHIC ANALYSIS TABLE D 15 AVERAGE HOUSEHOLD SIZE BY OCCUPIED HOUSING TYPE & RACE OLMSTED COUNTY MARKET AREA CITIES 2010 American Indian Native Hawaiian or White Black or African or Alaska Native Other Pacific Asian Some Other Two or More Hispanic or White Alone, not Alone American Alone Alone Isander Alone Alone Race Alone Races Alone Latino Hispanic or Latino Byron Total 2.72 3.23 4.00 3.28 0.00 3.88 2.86 3.53 2.71 Owned Occupied 2.82 3.38 4.00 3.43 0.00 3.50 4.00 3.54 2.82 Renter Occupied 2.18 3.00 0.00 2.75 0.00 4.25 2.40 3.50 2.16 Chatfield Total 2.47 1.00 1.50 1.00 0.00 2.67 4.20 3.67 2.47 Owned Occupied 2.63 0.00 0.00 1.00 0.00 2.00 3.00 3.29 2.63 Renter Occupied 1.97 1.00 1.50 0.00 0.00 3.00 5.00 4.20 1.97 Dover Total 2.77 0.00 0.00 0.00 0.00 5.00 4.00 4.29 2.77 Owned Occupied 2.81 0.00 0.00 0.00 0.00 5.67 4.00 4.00 2.81 Renter Occupied 2.42 0.00 0.00 0.00 0.00 4.00 0.00 6.00 2.42 Eyota Total 2.60 3.00 0.00 5.00 0.00 5.00 0.00 4.00 2.60 Owned Occupied 2.80 0.00 0.00 5.00 0.00 5.00 0.00 0.00 2.80 Renter Occupied 1.74 3.00 0.00 0.00 0.00 0.00 0.00 4.00 1.70 Oronoco Total 2.82 0.00 3.00 4.17 4.00 4.00 8.50 4.00 2.82 Owned Occupied 2.87 0.00 0.00 4.17 4.00 4.00 13.00 4.00 2.87 Renter Occupied 2.24 0.00 3.00 0.00 0.00 0.00 4.00 0.00 2.24 Pine Island Total 2.46 4.00 4.00 3.00 2.00 0.00 2.73 3.38 2.45 Owned Occupied 2.57 7.00 4.00 3.75 2.00 0.00 3.80 3.60 2.57 Renter Occupied 2.10 3.40 0.00 2.25 0.00 0.00 1.83 3.00 2.09 Rochester Total 2.31 3.24 2.41 3.11 2.93 3.63 2.91 3.39 2.30 Owned Occupied 2.46 3.94 2.58 3.59 3.40 4.26 3.19 3.77 2.44 Renter Occupied 1.89 3.03 2.27 2.38 1.75 3.10 2.65 3.00 1.86 St. Charles Total 2.55 6.00 2.40 3.10 0.00 3.76 4.13 4.66 2.48 Owned Occupied 2.76 2.00 4.00 3.89 0.00 3.86 4.67 4.83 2.71 Renter Occupied 1.98 10.00 1.33 1.73 0.00 3.64 2.50 4.45 1.82 Stewartville Total 2.51 3.10 3.50 3.29 0.00 2.00 2.56 2.86 2.51 Owned Occupied 2.64 5.67 4.00 5.00 0.00 2.50 3.00 2.94 2.64 Renter Occupied 1.91 2.00 3.00 2.00 0.00 1.50 2.00 2.50 1.91 Olmsted County Total 2.40 3.23 2.42 3.06 3.14 3.64 2.94 3.39 2.39 Owned Occupied 2.50 3.89 2.59 3.23 3.60 4.21 3.20 3.70 2.52 Renter Occupied 1.94 3.03 2.24 2.60 2.40 3.14 2.68 3.04 1.90 Source: U.S. Census, Maxfield Research Inc. MAXFIELD RESEARCH INC. 54

DEMOGRAPHIC ANALYSIS 4.00 3.50 3.00 2.50 2.40 3.23 Olmsted County Household Size by Race 2010 2.42 3.06 3.14 3.64 2.94 3.39 2.39 2.00 1.50 1.00 0.50 0.00 White Alone Black or African American Alone American Indian or Alaska Native Alone Native Hawaiin or Other Pacific Isalander Alone Asian Alone Some Other Race Alone Two or More Races Alone Hispanic White or Latino Alone, not Alone Hispanic or Latino Alone Household Type Table D 16 shows a breakdown of the type of households present in the Olmsted County Market Area in 2000 and 2010. The data is useful in assessing housing demand since the household composition often dictates the type of housing needed and preferred. Family households were the most common type of household in the Olmsted County Market Area, representing over 66% of all households in 2010. Married couples without children comprised 28.7% of all households in 2000 and 30.2% in 2010. Married couple families with children comprised 27.9% of all the Olmsted County Market Area households in 2000, dropping to 23.3% in 2010. Married couple families without children are generally made up of younger couples that have not had children and older couples with adult children that have moved out of the home. There is also a growing national trend toward married couples choosing delay childbirth, delaying children, or choosing not to have children entirely as birthrates have noticeably decreased. Older couples with adult children often desire multifamily housing options for convenience reasons but older couples in rural areas typically hold onto their singlefamily homes until they need services. Married couple families with children typically generate demand for single family detached ownership housing. Other family households, defined as a male or female householder with no spouse present (typically single parent households), often require affordable housing. MAXFIELD RESEARCH INC. 55

DEMOGRAPHIC ANALYSIS Non family households made up 32.4% of all households in 2000, increasing to 33.9% in 2010. The percentage of people living alone increased from 25.9% in 2000 to 27.2% in 2010. Roommates and unmarried couples comprised 6.5% of Olmsted County Market Area households in 2000, compared to 6.7% in 2010. Between 2000 and 2010, Other family households experienced the largest increase as a percentage (+37.2%). Other families include single parents and unmarried couples with children. With only one income, these families are most likely to need affordable or modest housing, both rental and for sale. According to the 2013 National Association of Realtors (NAR) Home Buyer and Seller Generational Trends, approximately 65% of all homebuyers were married couples, 25% were single, 8% were unmarried couples, and 2% were other. MAXFIELD RESEARCH INC. 56

DEMOGRAPHIC ANALYSIS Family Households Non Family Households Total HH's Married w/o Child Married w/ Child Other * Living Alone Roommates 2000 2010 2000 2010 2000 2010 2000 2010 2000 2010 2000 2010 Number of Households Byron 1,996 2,629 666 926 749 770 223 331 273 484 85 118 East 4,223 4,861 1,331 1,584 1,272 1,291 500 638 920 1,135 200 213 North 2,631 3,209 914 1,177 790 862 296 343 506 669 125 158 Rochester 34,116 43,025 9,029 11,877 8,643 9,376 3,806 5,600 10,126 12,931 2,512 3,241 Rochester Fringe 4,806 3,512 1,771 1,644 1,805 986 366 271 648 473 216 138 Stewartville 2,614 2,940 767 941 811 735 342 407 552 702 142 155 Olmsted Co. Total 47,807 57,080 13,728 17,258 13,365 13,287 5,215 7,148 12,358 15,524 3,141 3,863 Olmsted Co. PMA Total 50,386 60,176 14,478 18,149 14,070 14,020 5,533 7,590 13,025 16,394 3,280 4,023 Percent of Total Byron 100% 100% 33.4% 35.2% 37.5% 29.3% 11.2% 12.6% 13.7% 18.4% 4.3% 4.5% East 100% 100% 31.5% 32.6% 30.1% 26.6% 11.8% 13.1% 21.8% 23.3% 4.7% 4.4% North 100% 100% 34.7% 36.7% 30.0% 26.9% 11.3% 10.7% 19.2% 20.8% 4.8% 4.9% Rochester 100% 100% 26.5% 27.6% 25.3% 21.8% 11.2% 13.0% 29.7% 30.1% 7.4% 7.5% Rochester Fringe 100% 100% 36.8% 46.8% 37.6% 28.1% 7.6% 7.7% 13.5% 13.5% 4.5% 3.9% Stewartville 100% 100% 29.3% 32.0% 31.0% 25.0% 13.1% 13.8% 21.1% 23.9% 5.4% 5.3% Olmsted Co. Total 100.0% 100.0% 28.7% 30.2% 28.0% 23.3% 10.9% 12.5% 25.8% 27.2% 6.6% 6.8% Olmsted Co. PMA Total 100.0% 100.0% 28.7% 30.2% 27.9% 23.3% 11.0% 12.6% 25.9% 27.2% 6.5% 6.7% * Single parent families, unmarried couples with children. Sources: U.S. Census Bureau; Maxfield Research Inc. TABLE D 16 HOUSEHOLD TYPE OLMSTED COUNTY MARKET AREA 2000 & 2010 MAXFIELD RESEARCH INC. 57

DEMOGRAPHIC ANALYSIS Households 20,000 15,000 10,000 14,070 14,020 Household Type Olmsted County Market Area 2000 and 2010 14,478 18,149 13,025 16,394 2000 2010 5,000 0 Married with Child Married w/o Child 5,533 7,590 3,280 4,023 Other Family Living Alone Roommates Net Worth Table D 17 shows household net worth in the Olmsted County Market Area in 2013. Simply stated, net worth is the difference between assets and liabilities, or the total value of assets after the debt is subtracted. The data was compiled and estimated by ESRI based on the Survey of Consumer Finances and Federal Reserve Board data. According to data released by the National Association of Realtors in 2012, the average American homeowner has a net worth about 34 times greater than that of a renter. Research was based on the 2007 to 2010 Federal Reserve survey that showed the average net worth of a homeowner was $174,500, whereas the average net worth of a renter was $5,100. Olmsted County had an average net worth of $604,391 in 2013 and a median net worth of $134,304. Median net worth is generally a more accurate depiction of wealth than the average figure. A few households with very large net worth can significantly skew the average. As a comparison, the Olmsted County Market Area had an average net worth of $592,106 and median net worth of $129,470. Similar to household income, net worth increases as households age and decreases after they pass their peak earning years and move into retirement. Median and average net worth peak in the 55 to 64 age cohort, posting an average net worth of $1,028,652 and a median net worth of $250,001 in the Olmsted County Market Area. MAXFIELD RESEARCH INC. 58

DEMOGRAPHIC ANALYSIS Within the Olmsted County Market Area, the Rochester Fringe submarket had the highest median net worth at $359,909 followed by the North submarket at $183,151. Conversely, the Stewartville submarket had the lowest median net worth at $96,509. Households often delay purchasing homes and instead choose to rent until they acquire sufficient net worth to cover the costs of a down payment and closing costs associated with home ownership. This will be especially true in the short term as tightening lending requirements make mortgages with little or no down payments more difficult to obtain. Net Worth Olmsted County Market Area 2013 $1,200,000 $1,000,000 $800,000 Average Median $600,000 $400,000 $200,000 $0 MAXFIELD RESEARCH INC. 59

DEMOGRAPHIC ANALYSIS Total 15 24 25 34 35 44 45 54 55 64 65 74 75+ Average Median Average Median Average Median Average Median Average Median Average Median Average Median Average Median Byron $539,496 $151,502 $27,759 $14,830 $163,653 $59,812 $295,580 $84,256 $766,351 $213,473 $1,073,549 $250,001 $1,024,210 $250,001 $819,331 $250,001 East $411,219 $100,932 $23,727 $11,869 $121,230 $33,207 $198,099 $55,773 $576,734 $147,021 $804,318 $184,322 $787,396 $204,525 $582,691 $170,265 North $705,847 $183,151 $73,691 $16,902 $184,400 $51,883 $349,233 $78,782 $896,125 $250,001 $1,059,038 $250,001 $995,692 $250,001 $645,916 $191,167 Rochester Fringe $1,064,302 $359,909 $49,265 $33,704 $281,744 $106,551 $545,174 $183,019 $1,133,427 $250,001 $1,362,359 $250,001 $1,265,267 $250,001 $900,935 $250,001 Rochester $581,721 $119,151 $40,760 $10,967 $171,073 $34,027 $321,240 $69,308 $785,539 $223,938 $1,026,977 $250,001 $947,829 $250,001 $699,117 $219,528 Stewartville $398,477 $96,509 $38,148 $13,235 $123,416 $40,085 $197,256 $51,861 $612,548 $154,216 $809,810 $189,446 $864,996 $250,001 $510,999 $144,051 Olmsted County Total $604,391 $134,304 $41,139 $11,421 $171,886 $40,095 $325,255 $73,671 $809,074 $239,739 $1,046,365 $250,001 $971,516 $250,001 $706,956 $224,687 Olmsted County MA Total $592,106 $129,470 $40,278 $11,429 $169,222 $38,512 $317,073 $71,261 $795,957 $230,721 $1,028,652 $250,001 $956,898 $250,001 $686,723 $212,234 Sources: ESRI; Maxfield Research, Inc. TABLE D 17 ESTIMATED NET WORTH BY AGE OF HOUSEHOLDER OLMSTED COUNTY MARKET AREA 2013 Age of Householder MAXFIELD RESEARCH INC. 60

DEMOGRAPHIC ANALYSIS Demographic Comparison to Metro Area Table D 18 provides a demographic summary that compares the Olmsted County Market Area to the six counties in the Metro Area. Table D 19 shows a demographic summary comparison of the Olmsted County Market Area submarkets. Compared to the Metro Area, the Olmsted County Market Area had the fifth largest population size at 152,116 people in 2010. Scott County (129,928 people) and Carver County (91,042 people) were close behind. The Olmsted County Market Area had the sixth highest median household income at $61,302 in 2013, behind Scott County ($79,010), Carver County ($76,755), and Dakota County ($70,050). The Olmsted County Market Area had the sixth highest ownership rate at 74.9%, just behind Dakota County (76.5%). The Olmsted County Market Area had the second highest percentage of married without children households, comprising 30.2% of all households in 2010. Anoka County has the highest percentage (31.5%). MAXFIELD RESEARCH INC. 61

DEMOGRAPHIC ANALYSIS Demographic Summary Total Population and Households Population Households TABLE D 18 DEMOGRAPHIC SUMMARY OLMSTED COUNTY MARKET AREA COMPARED TO OTHER COUNTIES 2010 Anoka Carver Dakota Hennepin Ramsey Scott Olmsted Co. Olmsted MA Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. 330,844 121,227 91,042 398,552 1,152,425 508,640 129,928 144,248 32,891 152,060 475,913 202,691 45,108 57,080 152,116 60,176 Age Distribution Under 18 86,031 26.0% 27,205 29.9% 105,060 26.4% 261,345 22.7% 118,493 23.3% 39,228 30.2% 36,440 25.3% 38,560 25.3% 18 to 24 26,671 8.1% 5,893 6.5% 30,691 7.7% 113,551 9.9% 61,429 12.1% 8,180 6.3% 11,307 7.8% 11,879 7.8% 25 to 34 43,632 13.2% 10,830 11.9% 54,279 13.6% 187,523 16.3% 77,119 15.2% 18,064 13.9% 22,018 15.3% 23,120 15.2% 35 to 44 48,295 14.6% 14,440 15.9% 56,912 14.3% 154,304 13.4% 60,993 12.0% 22,197 17.1% 18,182 12.6% 19,122 12.6% 45 to 54 55,929 16.9% 15,857 17.4% 66,334 16.6% 171,130 14.8% 70,570 13.9% 20,521 15.8% 22,166 15.4% 23,253 15.3% 55 to 64 38,054 11.5% 9,110 10.0% 45,460 11.4% 133,758 11.6% 58,915 11.6% 11,722 9.0% 16,002 11.1% 16,777 11.0% 65 to 74 19,556 5.9% 4,160 4.6% 22,433 5.6% 66,516 5.8% 60,351 11.9% 5,969 4.6% 9,587 6.6% 10,113 6.6% 75+ 12,676 3.8% 3,547 3.9% 17,383 4.4% 64,298 5.6% 30,830 6.1% 4,047 3.1% 8,546 5.9% 9,292 6.1% Household Income Average Household Income Median Household Income $79,315 $66,563 $97,575 $87,613 $76,755 $70,050 $79,880 $68,830 $94,830 $81,849 $80,782 $57,326 $49,965 $79,010 $62,037 $61,302 Net Worth Average Net Worth Median Net Worth $606,770 $159,981 $750,710 $661,581 $199,720 $154,701 $557,370 $84,516 $441,991 $56,918 $709,785 $192,483 $604,391 $134,304 $592,106 $129,470 Household Tenure Own 99,258 81.9% 26,846 81.6% 116,308 76.5% 306,121 64.3% 123,448 60.9% 37,776 83.7% 42,812 75.0% 45,060 74.9% Rent 21,969 18.1% 6,045 18.4% 35,752 23.5% 169,792 35.7% 79,243 39.1% 7,332 16.3% 14,268 25.0% 15,116 25.1% Household Type Married with Children 30,763 25.4% 11,060 33.6% 39,472 26.0% 89,084 18.7% 34,574 17.1% 15,356 34.0% 13,287 23.3% 14,020 23.3% Married without Children 38,217 31.5% 9,621 29.3% 44,458 29.2% 116,099 24.4% 48,816 24.1% 13,193 29.2% 17,258 30.2% 18,149 30.2% Other 18,843 15.5% 3,697 11.2% 21,818 14.3% 67,072 14.1% 34,409 17.0% 5,872 13.0% 7,148 12.5% 7,590 12.6% Living Alone 25,795 21.3% 6,893 21.0% 36,620 24.1% 155,807 32.7% 67,181 33.1% 8,068 17.9% 15,524 27.2% 16,394 27.2% Roommates 7,609 6.3% 1,620 4.9% 9,692 6.4% 47,221 9.9% 17,711 8.7% 2,619 5.8% 3,863 6.8% 4,023 6.7% Source: U.S. Census Bureau; ESRI; Maxfield Research, Inc. MAXFIELD RESEARCH INC. 62

DEMOGRAPHIC ANALYSIS Demographic Summary Total Population and Households Population Households TABLE D 19 DEMOGRAPHIC SUMMARY OLMSTED COUNTY MARKET AREA 2010 Byron East North Rochester Rochester Fringe Stewartville Olmsted Co. Olmsted MA Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. 7,046 12,759 8,411 106,769 9,592 7,539 144,248 2,629 4,861 3,209 43,025 3,512 2,940 57,080 152,116 60,176 Age Distribution Under 18 1,981 28.1% 3,538 27.7% 2,207 26.2% 26,470 24.8% 2,332 24.3% 2,032 27.0% 36,440 25.3% 38,560 25.3% 18 to 24 485 6.9% 868 6.8% 515 6.1% 8,845 8.3% 602 6.3% 564 7.5% 11,307 7.8% 11,879 7.8% 25 to 34 889 12.6% 1,618 12.7% 930 11.1% 18,080 16.9% 603 6.3% 1,000 13.3% 22,018 15.3% 23,120 15.2% 35 to 44 979 13.9% 1,677 13.1% 1,046 12.4% 13,425 12.6% 1,032 10.8% 963 12.8% 18,182 12.6% 19,122 12.6% 45 to 54 1,226 17.4% 1,906 14.9% 1,581 18.8% 15,107 14.1% 2,302 24.0% 1,131 15.0% 22,166 15.4% 23,253 15.3% 55 to 64 763 10.8% 1,374 10.8% 1,058 12.6% 11,235 10.5% 1,575 16.4% 772 10.2% 16,002 11.1% 16,777 11.0% 65 to 74 489 6.9% 848 6.6% 601 7.1% 6,773 6.3% 789 8.2% 613 8.1% 9,587 6.6% 10,113 6.6% 75+ 234 3.3% 930 7.3% 473 5.6% 6,834 6.4% 357 3.7% 464 6.2% 8,546 5.9% 9,292 6.1% Household Income Average Household Income Median Household Income $77,412 $63,630 $64,097 $52,540 $85,478 $81,408 $109,822 $62,932 $81,849 $80,782 $68,534 $61,084 $88,778 $51,969 $62,037 $61,302 Net Worth Average Net Worth Median Net Worth $539,496 $411,219 $151,502 $100,932 $705,847 $183,151 $581,721 $119,151 $1,064,302 $359,909 $398,477 $96,509 $604,391 $134,304 $592,106 $129,470 Household Tenure Own 2,240 85.2% 3,862 79.4% 2,723 84.9% 30,472 70.8% 3,324 94.6% 2,439 83.0% 42,812 75.0% 45,060 74.9% Rent 389 14.8% 999 20.6% 486 15.1% 12,553 29.2% 188 6.4% 501 17.0% 14,268 25.0% 15,116 25.1% Household Type Married with Children 770 29.3% 1,291 26.6% 862 26.9% 9,376 21.8% 986 28.1% 735 25.0% 13,287 23.3% 14,020 23.3% Married without Children 926 35.2% 1,584 32.6% 1,177 36.7% 11,877 27.6% 1,644 46.8% 941 32.0% 17,258 30.2% 18,149 30.2% Other 331 12.6% 638 13.1% 343 10.7% 5,600 13.0% 271 7.7% 407 13.8% 7,148 12.5% 7,590 12.6% Living Alone 484 18.4% 1,135 23.3% 669 20.8% 12,931 30.1% 473 13.5% 702 23.9% 15,524 27.2% 16,394 27.2% Roommates 118 4.5% 213 4.4% 158 4.9% 3,241 7.5% 138 3.9% 155 5.3% 3,863 6.8% 4,023 6.7% Source: U.S. Census Bureau; ESRI; Maxfield Research, Inc. MAXFIELD RESEARCH INC. 63

DEMOGRAPHIC ANALYSIS Demographic Comparison to Outstate Minnesota Table D 20 provides a demographic summary that compares Rochester to other similar cities throughout Minnesota. Table D 21 shows a demographic summary comparison of Olmsted County to other similar counties throughout Minnesota. On a city level, Rochester has the highest median income compared to the other cities ($61,084). In addition, Rochester has the highest ownership rate (70.8%) and highest average weekly wage ($1,033). St. Cloud has the highest mobility rate at 31% compared to the other cities. In addition, St. Cloud has the highest renter occupied household percentage (46.7%). On a county level, Olmsted County has the highest median income compared to the other counties ($62,037). Also, Olmsted County has the highest ownership rate (75%). Winona County has the lowest average weekly wage ($703) and the lowest total labor force with 28,987. MAXFIELD RESEARCH INC. 64

DEMOGRAPHIC ANALYSIS Demographic Summary Population Households HH Size HH Income/Median HH Income/Avg. Percent HH's w/children Percent HH's Living Alone Housing Characteristics Percent Own Percent Rent Median Contract Rent Mobility Rate (Percent Moved) Employment Avg. Weekly Wage Unemployment Rate (2014) Total Labor Force (2014) TABLE D 20 DEMOGRAPHIC SUMMARY COMPARABLE CITIES THROUGHOUT MINNESOTA 2010 Rochester Duluth Mankato St. Cloud Winona Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. 106,769 86,265 39,309 65,842 27,592 43,025 35,705 14,851 25,439 10,449 2.48 2.42 2.65 2.59 2.64 $61,084 $81,408 $37,868 $52,484 $41,877 $56,126 $48,513 $63,629 $36,227 $49,003 21.8% 13.3% 14.1% 14.7% 12.7% 30.1% 35.1% 30.9% 30.8% 35.6% 70.8% 60.4% 53.6% 53.3% 58.7% 29.2% 39.6% 46.4% 46.7% 41.3% $689 $631 $627 $629 $494 16.0% 24.3% 28.0% 31.0% 22.9% $1,033 $788 $722 $802 $702 4.6% 6.0% 4.7% 5.6% 5.5% 60,063 45,370 24,668 38,114 15,353 Source: U.S. Census Bureau; ESRI; DEED; Maxfield Research, Inc. Demographic Summary Population Households HH Size HH Income/Median HH Income/Avg. Percent HH's w/children Percent HH's Living Alone Housing Characteristics Percent Own Percent Rent Median Contract Rent Mobility Rate (Percent Moved) Employment Avg. Weekly Wage Unemployment Rate (2014) Total Labor Force (2014) $1,008 4.5% 82,225 Source: U.S. Census Bureau; ESRI; DEED; Maxfield Research, Inc. TABLE D 21 DEMOGRAPHIC SUMMARY COMPARABLE COUNTIES THROUGHOUT MINNESOTA 2010 Olmsted Blue Earth Stearns St. Louis Winona Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. 144,248 64,013 150,642 200,226 51,461 57,080 24,445 56,232 84,783 19,554 2.53 2.62 2.68 2.36 2.63 $62,037 $81,849 23.3% 27.2% 75.0% 25.0% $673 13.8% $48,077 $59,848 17.8% 27.5% 65.2% 34.8% $613 20.5% $717 4.5% 39,164 $52,518 $64,586 21.9% 14.9% 25.1% 32.9% 71.6% 28.4% $642 19.6% $747 5.8% 85,705 $40,906 $53,975 71.3% 28.7% $564 16.6% $764 7.0% 103,881 $41,843 $54,587 17.7% 29.0% 69.6% 30.4% $501 16.0% $703 5.2% 28,987 MAXFIELD RESEARCH INC. 65

HOUSING CHARACTERISTICS Introduction The variety and condition of the housing stock in a community provides the basis for an attractive living environment. Housing functions as a building block for neighborhoods and goods and services. We examined the housing market in each Olmsted County submarket by reviewing data on the age of the existing housing supply; examining residential building trends since 2000; and reviewing housing data from the American Community Survey. Residential Construction Trends 2000 to Present Maxfield Research obtained data on the number of building permits issued for new housing units from 2000 through 2012 from the U.S. Census Building Permits Survey (BPS) and from the individual cities and townships. The purpose of the BPS is to provide national, state, and local statistics on the new privately owned housing units authorized by building or zoning permits in the United States. Statistics from the BPS are based on reports submitted by local permit officials and the survey covers all permit issuing places which are jurisdictions that issue building or zoning permits. Areas for which no authorization is required to construct new housing units are not included in the survey. Table HC 1 displays the number of units permitted for single family homes and multifamily structures (includes duplexes, structures with three or four units, and structures with five or more units) from 2000 through 2012, which is the most recent full year data available. Multifamily housing includes both for sale and rental units, and is defined as residential buildings containing units built one on top of another and those built side by side which do not have a ground to roof wall and/or have common facilities. Single family housing is defined as fully detached, semi detached (semi attached, side by side), row houses, and townhouses. For attached units, each unit must be separated from the adjacent unit by a ground to roof wall and they must not share systems or utilities to be classified as single family. Between 2000 and 2012, over 9,700 building permits were issued in Olmsted County for a total of nearly 12,350 residential units, equating to 952 units annually. Approximately 77% of these units were single family while the remaining 23% were in multifamily structures. Seventy percent of all residential units permitted between 2000 and 2005 were singlefamily homes; averaging nearly 1,500 units per year. However, after the housing market slowdown Olmsted County has averaged 525 units annually since 2006. Townhomes/twinhomes and three and four unit structures accounted for only 13% of the multifamily units constructed since 2000 in Olmsted County. About 87% of the multifamily units permitted were in structures of five or more units. MAXFIELD RESEARCH INC. 66

HOUSING CHARACTERISTICS Single Family Homes Townhome/ Twinhome TABLE HC 1 RESIDENTIAL CONSTRUCTION/ANNUAL BUILDING PERMITS ISSUED OLMSTED COUNTY US CENSUS BUREAU 2000 to 2012 Olmsted County Permits 3 & 4 Unit Multifamily (5+ units) Total Housing Permits Single Family Homes Townhome/ Twinhome Olmsted County Units ESTIMATES WITH IMPUTATION 2000 892 37 28 30 987 892 74 110 476 1,552 2001 1,120 13 28 20 1,181 1,120 26 111 346 1,603 2002 1,279 0 2 15 1,296 1,279 0 8 245 1,532 2003 1,326 0 3 9 1,338 1,326 0 12 224 1,562 2004 1,248 1 0 2 1,251 1,248 2 0 27 1,277 2005 873 1 1 16 891 873 2 4 265 1,144 2006 645 5 0 29 679 645 10 0 238 893 2007 528 0 1 6 535 528 0 4 132 664 2008 371 3 1 5 380 371 6 4 152 533 2009 333 0 2 11 346 333 0 8 142 483 2010 256 0 1 2 259 256 0 4 138 398 2011 252 0 0 1 253 252 0 0 24 276 2012 369 0 0 1 370 369 0 0 62 431 Total 9,492 60 67 147 9,766 9,492 120 265 2,471 12,348 Avg. 730 5 5 11 751 730 9 20 190 950 REPORTED ONLY 2000 732 24 20 27 803 732 48 80 412 1,272 2001 1,080 10 26 18 1,134 1,080 20 103 307 1,510 2002 1,279 0 2 15 1,296 1,279 0 8 245 1,532 2003 1,326 0 3 9 1,338 1,326 0 12 224 1,562 2004 1,248 1 0 2 1,251 1,248 2 0 27 1,277 2005 859 1 1 16 877 859 2 4 265 1,130 2006 635 5 0 29 669 635 10 0 238 883 2007 522 0 1 6 529 522 0 4 132 658 2008 371 3 1 5 380 371 6 4 152 533 2009 333 0 2 11 346 333 0 8 142 483 2010 256 0 1 2 259 256 0 4 138 398 2011 252 0 0 1 253 252 0 0 24 276 2012 369 0 0 1 370 369 0 0 62 431 Total 9,262 44 57 142 9,505 9,262 88 227 2,368 11,945 Avg. 712 3 4 11 731 712 7 17 182 919 Sources: U.S. Census; Maxfield Research Inc. 3 & 4 Unit Multifamily (5+ units) Total Housing Units As illustrated in the table, 2001 was the most active year for residential permitting activity in Olmsted County, with a total of 1,603 units permitted, followed by 2003 (1,562 units). Residential construction activity slowed considerably after 2006 and declined to only 276 units in 2011. MAXFIELD RESEARCH INC. 67

HOUSING CHARACTERISTICS Units 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Residential New Construction (Units) Olmsted County 2000 2012 (US Census) Multifamily Single family 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year In addition, Maxfield Research contacted each municipality and township in the Olmsted County Market Area to further identify building permit trends at the local level. It is important to note however that each community collects and categorizes building permit activity differently and the level of detail varies between communities. Table HC 2 illustrates building permit activity from 2004 to 2012 for those communties. The subsequent bullet points highlight new construction activity by submarket. Between 2004 and 2012, about 5,700 housing units were permitted equating to 633 units annually. Approximately 75% of these units were single family while the remaining 25% were in multifamily structures. The number of Olmsted County Market Area permits was highest in 2004 with 1,296 new housing units. However, residential permits permitted declined annually between 2005 and 2008. There was a slight uptick in permits in 2009 when the first time home buyer credit was issued, however permits declined again in 2010 to only 406 units. Since 2010 permits have increased annually. Over 4,500 housing units were permitted in Rochester between 2004 and 2012, accounting for 78% of the total building activity in the Olmsted County Market Area. Like the Olmsted County Market Area, 2004 was the peak year when nearly 1,000 units were permitted. Outside of the Rochester Submarket, the Byron, East, and North Submarkets permitted just over 300 units individually during the nine year period identified. MAXFIELD RESEARCH INC. 68

HOUSING CHARACTERISTICS TABLE HC 2 ANNUAL RESIDENTIAL BUILDING ACTIVITY, UNITS PERMITTED OLMSTED COUNTY MARKET AREA 2004 2012 Submarket 2004 2005 2006 2007 2008 2009 2010 2011 2012 04 '12 TOTAL UNITS Byron Submarket 73 69 38 28 18 17 16 23 42 324 Byron 73 69 38 28 18 17 16 23 42 324 East Submarket 80 80 43 29 28 14 15 12 8 309 Eyota 0 14 6 1 6 0 6 6 1 40 Dover 15 14 15 5 3 0 0 1 0 53 Chatfield 31 34 9 9 7 6 3 0 4 103 St. Charles 34 18 13 14 12 8 6 5 3 113 North Submarket 80 51 57 45 18 11 6 10 26 304 Pine Island 50 27 27 26 10 6 3 6 7 162 Oronoco/ Oronoco Twp. 30 24 30 19 8 5 3 4 19 142 Rochester Submarket 998 734 549 426 316 437 342 391 371 4,564 Rochester Fringe Submarket 21 18 20 14 19 13 8 12 11 136 Cascade Twp. 6 3 3 2 2 1 1 0 2 20 Rochester Twp. 13 9 12 8 11 11 7 7 8 86 Marion Twp. 0 0 0 0 0 0 0 0 0 0 Haverhill Twp. 2 6 5 4 6 1 0 5 1 30 Stewartville Submarket 44 42 15 21 18 14 19 8 12 193 Stewartville 44 42 15 21 18 14 19 8 12 193 Olmsted County & Vicinity 1,296 994 722 563 417 506 406 456 470 5,830 SINGLE FAMILY UNITS Byron Submarket 52 36 26 22 18 13 14 19 42 242 Byron 52 36 26 22 18 13 14 19 42 242 East Submarket 72 66 39 27 28 14 15 12 8 281 Eyota 0 14 6 1 6 0 6 6 1 40 Dover 15 14 15 5 3 0 0 1 0 53 Chatfield 23 20 5 7 7 6 3 0 4 75 St. Charles 34 18 13 14 12 8 6 5 3 113 North Submarket 80 51 57 45 18 11 6 10 26 304 Pine Island 50 27 27 26 10 6 3 6 7 162 Oronoco/ Oronoco Twp. 30 24 30 19 8 5 3 4 19 142 Rochester 721 544 416 349 294 256 200 205 299 3,284 Rochester Fringe Submarket 21 18 20 14 19 13 8 12 11 136 Cascade Twp. 6 3 3 2 2 1 1 0 2 20 Rochester Twp. 13 9 12 8 11 11 7 7 8 86 Marion Twp. 0 0 0 0 0 0 0 0 0 0 Haverhill Twp. 2 6 5 4 6 1 0 5 1 30 Stewartville Submarket 30 19 6 19 18 14 19 8 12 145 Stewartville 30 19 6 19 18 14 19 8 12 145 Olmsted County & Vicinity 976 734 564 476 395 321 262 266 398 4,392 CONTINUED Year MAXFIELD RESEARCH INC. 69

HOUSING CHARACTERISTICS TABLE HC 2 (continued) ANNUAL RESIDENTIAL BUILDING ACTIVITY, UNITS PERMITTED OLMSTED COUNTY & VICINITY 2004 2012 Submarket 2004 2005 2006 2007 2008 2009 2010 2011 2012 MULTIFAMILY UNITS Byron Submarket 21 33 12 6 0 4 2 4 0 82 Byron 21 33 12 6 0 4 2 4 0 82 East Submarket 8 14 4 2 0 0 0 0 0 28 Eyota 0 0 0 0 0 0 0 0 0 0 Dover 0 0 0 0 0 0 0 0 0 0 Chatfield 8 14 4 2 0 0 0 0 0 28 St. Charles 0 0 0 0 0 0 0 0 0 0 North Submarket 0 0 0 0 0 0 0 0 0 0 Pine Island 0 0 0 0 0 0 0 0 0 0 Oronoco/ Oronoco Twp. 0 0 0 0 0 0 0 0 0 0 Rochester 277 190 133 77 22 181 142 186 72 1,280 Rochester Fringe Submarket 0 0 0 0 0 0 0 0 0 0 Cascade Twp. 0 0 0 0 0 0 0 0 0 0 Rochester Twp. 0 0 0 0 0 0 0 0 0 0 Marion Twp. 0 0 0 0 0 0 0 0 0 0 Haverhill Twp. 0 0 0 0 0 0 0 0 0 0 Stewartville Submarket 14 23 9 2 0 0 0 0 0 48 Stewartville 14 23 9 2 0 0 0 0 0 48 Olmsted County & Vicinity 320 260 158 87 22 185 144 190 72 1,438 * Building Permits unavailable, however, permit data was derived from the Olmsted County database based on year built of property. Sources: Individual cities and townships; Maxfield Research, Inc. Year 1,400 1,200 1,000 800 600 400 200 Residential Building Permits by Submarket 2004 2012 MF SF 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 MAXFIELD RESEARCH INC. 70

HOUSING CHARACTERISTICS Average Annual Building Permits (2004 to 2012) MAXFIELD RESEARCH INC. 71

HOUSING CHARACTERISTICS Building Pemit Pct. by Type of Permit 2004 2012 Avg. 78.0% 22.0% 2012 85% 15% SF 2011 58% 42% MF 2010 65% 35% 2009 63% 37% 2008 95% 5% 2007 85% 15% 2006 78% 22% 2005 74% 26% 2004 75% 25% 0% 20% 40% 60% 80% 100% 1,200 Rochester Building Permits 2004 to 2012 1,000 800 998 600 734 400 200 549 426 316 437 342 391 371 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 MAXFIELD RESEARCH INC. 72

HOUSING CHARACTERISTICS 90 80 70 60 50 40 30 20 10 0 Building Permits in Rural Olmsted County Market Area: 2004 to 2012 Byron East North Rochester Fringe Stewartville 2004 2005 2006 2007 2008 2009 2010 2011 2012 Demolition Permits In addition to building permits, the City of Rochester also tracks housing demolitions. A permit is required for demolishing or moving a housing structure and ensures the property will be removed from the assessor s tax role. The permit also allows city staff and utility companies to prepare for the demolition or moving process. Please note that not all demolition permits result in a one to one replacement for new housing stock. Table HC 3 presents demolition permits in Rochester since 2001. Over the past 13 years over 200 single family and 70 multifamily demolition permits have been issued in Rochester. On average, about 16 single family and five multifamily permits are issued annually. Multifamily demolition permits account for about 25% of the number of demolition permits issued since 2001. Between 2003 and 2007 over 20 single family demolition permits were issued annually. Over the past three years, about 9 to 10 single family demolition permits have been issued yearly. MAXFIELD RESEARCH INC. 73

HOUSING CHARACTERISTICS TABLE HC 3 Demolition Permits City of Rochester 2001 to 2013 One & Two Multifamily Year Unit Permits Permits 2001 8 1 2002 7 10 2003 27 7 2004 24 4 2005 21 4 2006 21 5 2007 20 13 2008 17 3 2009 15 1 2010 20 13 2011 9 1 2012 10 5 2013 9 3 Total 208 70 Avg. 16 5 Note: Number of permits only; the number of units is not computed Source: City of Rochester, Maxfield Research Inc. 30 25 City of Rochester Demolition Permits: 2001 2013 SF MF 20 Permits 15 10 5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year MAXFIELD RESEARCH INC. 74

HOUSING CHARACTERISTICS Housing Units by Occupancy Status & Tenure Tenure is a key variable that analyzes the propensity for householders to rent or own their housing unit. Tenure is an integral statistic used by numerous governmental agencies and private sector industries to assess neighborhood stability. Table HC 4 shows historic trends in 2000 and 2010. Maps illustrating tenure by submarket and census tract follow. 74.9% of housing units in Olmsted County Market Area were owner occupied as of 2010. This was a slight decrease from 2000 (75.8%), in part due to the Great Recession and a shift from ownership to rental. 100% Tenure by Submarket: 2010 90% 80% 70% 60% 50% 14.8% 85.2% 20.6% 79.4% 84.9% 15.1% 70.8% 29.2% 94.6% 5.4% 83.0% 17.0% 25.0% 75.0% 25.1% 74.9% Rent Own 40% 30% 20% 10% 0% MAXFIELD RESEARCH INC. 75

HOUSING CHARACTERISTICS BYRON SUBMARKET EAST SUBMARKET NORTH SUBMARKET CITY OF ROCHESTER Year/Occupancy No. Pct. No. Pct. No. Pct. No. Pct. Owner Occupied 1,725 86.4 3,306 78.3 2,311 87.8 24,214 71.0 Renter Occupied 271 13.6 917 21.7 320 12.2 9,902 29.0 Total 1,996 100.0 4,223 100.0 2,631 100.0 34,116 100.0 ROCHESTER FRINGE STEWARTVILLE OLMSTED COUNTY MARKET AREA TOTAL Year/Occupancy No. Pct. No. Pct. No. Pct. No. Pct. Owner Occupied 4,494 93.5 2,148 82.2 36,304 75.9 38,198 75.8 Renter Occupied 312 6.5 466 17.8 11,503 24.1 12,188 24.2 Total 4,806 100.0 2,614 100.0 47,807 100.0 50,386 100.0 2010 BYRON SUBMARKET EAST SUBMARKET NORTH SUBMARKET CITY OF ROCHESTER Year/Occupancy No. Pct. No. Pct. No. Pct. No. Pct. Owner Occupied 2,240 85.2 3,862 79.4 2,723 84.9 30,472 70.8 Renter Occupied 389 14.8 999 20.6 486 15.1 12,553 29.2 Total 2,629 100.0 4,861 100.0 3,209 100.0 43,025 100.0 ROCHESTER FRINGE STEWARTVILLE OLMSTED COUNTY MARKET AREA TOTAL Year/Occupancy No. Pct. No. Pct. No. Pct. No. Pct. Owner Occupied 3,324 94.6 2,439 83.0 42,812 75.0 45,060 74.9 Renter Occupied 188 5.4 501 17.0 14,268 25.0 15,116 25.1 Total 3,512 100.0 2,940 100.0 57,080 100.0 60,176 100.0 Sources: U.S. Census Bureau; Maxfield Research Inc. TABLE HC 4 HOUSING UNITS BY OCCUPANCY STATUS & TENURE OLMSTED COUNTY MARKET AREA 2000 & 2010 2000 The number of housing units increased by 9,790 units over the decade, with owneroccupied units increasing by approximately 6,862 units (70% of the growth). The percentage of owner occupied housing units dropped in the Byron, North, and Rochester submarkets between 2000 and 2010. However, the percentage of owner occupied housing units increased in the East, Rochester Fringe, and Stewartville submarkets between 2000 and 2010. The Rochester Fringe had the highest percentage of owner occupied housing units in the Olmsted County Market Area at 94.6% as of the 2010 Census. The highest proportion of renter occupied housing units in 2010 could be found in the Rochester submarket (29.2%) and East submarket (20.6%). MAXFIELD RESEARCH INC. 76

HOUSING CHARACTERISTICS Rental Tenure 2010 MAXFIELD RESEARCH INC. 77

HOUSING CHARACTERISTICS Rental Tenure by Census Tract 2009 MAXFIELD RESEARCH INC. 78

HOUSING CHARACTERISTICS Owner Tenure 2010 MAXFIELD RESEARCH INC. 79

HOUSING CHARACTERISTICS Owner Tenure by Census Tract 2009 MAXFIELD RESEARCH INC. 80

HOUSING CHARACTERISTICS American Community Survey The American Community Survey ( ACS ) is an ongoing statistical survey administered by the U.S. Census Bureau that is sent to approximately 3 million addresses annually. The survey gathers data previously contained only in the long form of the decennial census. As a result, the survey is ongoing and provides a more up to date portrait of demographic, economic, social, and household characteristics every year, not just every ten years. Whenever possible, Maxfield Research Inc. used the five year estimates as it provides the largest sample size and has a longer period of data collection. It should be noted that all ACS surveys are subject to sampling error and uncertainty. The ACS reports margins of errors (MOEs) with estimates for most standard census geographies. The MOE is shown by reliability from low, medium to high. Due to the MOE, 2011 ACS data may have inconsistencies with previous 2010 Census data. Tables HC 5 through HC 10 show key data from the American Community Survey for the Olmsted County Market Area. For a comparison, information for the Olmsted County Market Area is broken down by submarket. Age of Housing Stock Table HC 5 illustrates the number of housing units built in the Olmsted County Market Area and the vicinity by decade based on data from the U.S. Census Bureau and the American Community Survey (5 year). The greatest percentages of homes built in the Olmsted County Market Area were built in the 2000s, which comprised 20.0% of the entire housing stock. However, the vast majority of these housing units were constructed in the first half of the decade before the housing market decline. Less than 8% of Rochester s occupied housing units were constructed prior to 1940 (3,326 housing units). About 24% of Rochester s housing stock was built prior to 1960 (10,115 units). Approximately 20% of Rochester s housing stock has been constructed since 2000. The East submarket has the highest proportion of older homes as nearly 24% of the housing supply was built prior to 1940, followed by the Stewartville submarket (16.8%). Approximately 72% of all Olmsted County Market Area housing units are located in Rochester. Together with the Rochester Fringe, 77% of the housing units are in the Rochester Area. Since 2005, about 3,600 housing units have been added to the Olmsted County Market Area s housing stock, roughly 6% of the total. The Rochester submarket was the leader with 2,880 new units, accounting for 79% off all new units in the County since 2005. MAXFIELD RESEARCH INC. 81

HOUSING CHARACTERISTICS TABLE HC 5 AGE OF HOUSING STOCK (OCCUPIED HOUSING UNITS) OLMSTED COUNTY MARKET AREA 2011 Year Structure Built Total Med. Yr. <1940 1940s 1950s 1960s 1970s 1980s 1990s 2000 to 2004 2005 or later Submarket Units Built No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. Byron 2,547 1976 236 9.3% 24 0.9% 163 6.4% 254 10.0% 410 16.1% 381 15.0% 431 16.9% 500 19.6% 148 5.8% East 4,773 1972 1,136 23.8% 235 4.9% 372 7.8% 353 7.4% 663 13.9% 548 11.5% 600 12.6% 693 14.5% 173 3.6% North 3,186 1981 480 15.1% 86 2.7% 144 4.5% 299 9.4% 536 16.8% 426 13.4% 529 16.6% 528 16.6% 158 5.0% City of Rochester 42,613 1980 3,326 7.8% 1,808 4.2% 4,971 11.7% 5,202 12.2% 5,964 14.0% 5,944 13.9% 6,762 15.9% 5,756 13.5% 2,880 6.8% Rochester Fringe 3,519 1984 181 5.1% 70 2.0% 153 4.3% 283 8.0% 742 21.1% 798 22.7% 768 21.8% 394 11.2% 130 3.7% Stewartville 2,943 1973 493 16.8% 55 1.9% 218 7.4% 271 9.2% 597 20.3% 274 9.3% 453 15.4% 446 15.2% 136 4.6% Olmsted County 56,601 1980 5,274 9.3% 2,142 3.8% 5,753 10.2% 6,400 11.3% 8,495 15.0% 7,985 14.1% 9,112 16.1% 7,945 14.0% 3,495 6.2% Market Area Total 59,581 1977 5,852 9.8% 2,278 3.8% 6,021 10.1% 6,662 11.2% 8,912 15.0% 8,371 14.0% 9,543 16.0% 8,317 14.0% 3,625 6.1% Sources: U.S. Census Bureau American Community Survey; Maxfield Research Inc. 12,000 10,000 Olmsted County Market Area Housing Units Built by Decade 11,942 Unts 8,000 6,000 4,000 5,852 6,021 6,662 8,912 8,371 9,543 2,000 0 2,278 <1940 1940s 1950s 1960s 1970s 1980s 1990s 2000+ Year Built MAXFIELD RESEARCH INC. 82

HOUSING CHARACTERISTICS Olmsted County Market Area Housing Units by Submarket & Decade Market Area Total Olmsted County Stewartville Rochester Fringe Rochester North <1940 40s 50s 60s 70s 80s 90s 2000s+ East Byron 0% 20% 40% 60% 80% 100% Housing Units by Structure and Occupancy or (Housing Stock by Structure Type) Table HC 6 shows the housing stock in the Olmsted County Market Area by type of structure and tenure based on the 2011 ACS. The dominant housing type is the single family detached home, representing 86.1% of all owner occupied housing units in the Olmsted County Market Area. The Byron and Rochester Fringe submarkets have the highest proportions of single family owner occupied detached housing, representing 93% and 92% of their respective housing inventories. Conversely, the Rochester submarket has the smallest proportion of singlefamily owner occupied detached housing in the Olmsted County Market Area at 84%. Although single family housing is dominated by detached units, the majority of renteroccupied housing units are located in structures with two or more units. Nearly threequarters of rental units are located in multifamily structures with two or more units. The Rochester Submarket contains 83% of the Olmsted County Market Area s rental housing stock. Nearly 12,000 rental units were identified in Rochester, of which about one half of the units are located in structures with more than 10 units. MAXFIELD RESEARCH INC. 83

HOUSING CHARACTERISTICS BYRON SUBMARKET EAST SUBMARKET NORTH SUBMARKET CITY OF ROCHESTER Owner Renter Owner Renter Owner Renter Owner Renter Units in Structure Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. 1, detached 2,028 93.1% 133 36.1% 3,480 90.2% 272 29.7% 2,444 91.1% 138 27.4% 25,793 84.1% 2,109 17.6% 1, attached 108 5.0% 27 7.3% 144 3.7% 31 3.4% 67 2.5% 37 7.4% 2,361 7.7% 743 6.2% 2 10 0.5% 8 2.2% 4 0.1% 48 5.2% 0 0.0% 3 0.6% 185 0.6% 638 5.3% 3 to 4 0 0.0% 22 6.0% 0 0.0% 155 16.9% 0 0.0% 56 11.1% 356 1.2% 1,609 13.5% 5 to 9 0 0.0% 65 17.7% 23 0.6% 185 20.2% 0 0.0% 86 17.1% 188 0.6% 1,337 11.2% 10 to 19 0 0.0% 32 8.7% 0 0.0% 83 9.1% 0 0.0% 88 17.5% 97 0.3% 1,257 10.5% 20 to 49 0 0.0% 61 16.6% 0 0.0% 97 10.6% 0 0.0% 63 12.5% 301 1.0% 2,159 18.1% 50 or more 0 0.0% 20 5.4% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 453 1.5% 2,001 16.7% Mobile home 33 1.5% 0 0.0% 205 5.3% 46 5.0% 172 6.4% 32 6.4% 913 3.0% 99 0.8% Boat, RV, van, etc. 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 14 0.0% 0 0.0% Total 2,179 100% 368 100% 3,856 100% 917 100% 2,683 100% 503 100% 30,661 100% 11,952 100% ROCHESTER FRINGE SUBMARKET STEWARTVILLE SUBMARKET OLMSTED COUNTY OLMSTED CO. MARKET AREA TOTAL Owner Renter Owner Renter Owner Renter Owner Renter Units in Structure Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. Occupied Pct. 1, detached 3,146 91.8% 52 57.1% 1,960 84.6% 69 11.0% 36,954 86.0% 2,628 19.3% 38,851 86.1% 2,773 19.2% 1, attached 3 0.1% 21 23.1% 96 4.1% 101 16.1% 2,664 6.2% 907 6.7% 2,779 6.2% 960 6.6% 2 0 0.0% 0 0.0% 0 0.0% 16 2.6% 199 0.5% 669 4.9% 199 0.4% 713 4.9% 3 to 4 0 0.0% 0 0.0% 0 0.0% 144 23.0% 356 0.8% 1,851 13.6% 356 0.8% 1,986 13.7% 5 to 9 0 0.0% 0 0.0% 0 0.0% 48 7.7% 188 0.4% 1,531 11.2% 211 0.5% 1,721 11.9% 10 to 19 0 0.0% 0 0.0% 0 0.0% 81 12.9% 97 0.2% 1,400 10.3% 97 0.2% 1,541 10.7% 20 to 49 0 0.0% 0 0.0% 0 0.0% 132 21.1% 301 0.7% 2,392 17.6% 301 0.7% 2,512 17.4% 50 or more 0 0.0% 0 0.0% 0 0.0% 17 2.7% 453 1.1% 2,038 15.0% 453 1.0% 2,038 14.1% Mobile home 279 8.1% 18 19.8% 260 11.2% 19 3.0% 1,761 4.1% 198 1.5% 1,862 4.1% 214 1.5% Boat, RV, van, etc. 0 0.0% 0 0.0% 0 0.0% 0 0.0% 14 0.0% 0 0.0% 14 0.0% 0 0.0% Total 3,428 100% 91 100% 2,316 100% 627 100% 42,987 100% 13,614 100% 45,123 100% 14,458 100% Sources: U.S. Census Bureau American Community Survey; Maxfield Research Inc. TABLE HC 6 HOUSING UNITS BY STRUCTURE & TENURE OLMSTED COUNTY MARKET AREA 2011 MAXFIELD RESEARCH INC. 84

HOUSING CHARACTERISTICS Housing Units by Structure and Tenure Market Area Total 2011 1,638 1,932 2,813 2,491 2,076 1 2 to 4 5 to 9 3,254 10 to 19 45,363 20 to 49 50+ Mobile Home 100% Owner Occupied Housing Units by Structure &Tenure 95% Mobile home 90% 85% 80% 93.1% 90.2% 91.1% 84.1% 91.8% 84.6% 86.0% 86.1% 50+ 20 to 49 10 to 19 5 to 9 2 to 4 75% 1, attached 1, detached MAXFIELD RESEARCH INC. 85

HOUSING CHARACTERISTICS 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Renter Occupied Housing Units by Structure and Tenure 5% 5% 6% 1% 3% 1% 1% 17% 11% 17% 20% 3% 15% 14% 13% 21% 9% 9% 17% 18% 18% 17% 23% 20% 13% 18% 11% 10% 11% 17% 8% 8% 11% 11% 12% 22% 7% 12% 26% 3% 7% 19% 19% 19% 6% 16% 7% 7% 36% 30% 27% 18% 57% 11% 19% 19% Mobile home 50+ 20 to 49 10 to 19 5 to 9 2 to 4 1, attached 1, detached Owner Occupied Housing Units by Mortgage Status Table HC 7 shows mortgage status and average values from the American Community Survey for 2011 (5 Year). Mortgage status provides information on the cost of homeownership when analyzed in conjunction with mortgage payment data. A mortgage refers to all forms of debt where the property is pledged as security for repayment of debt. A first mortgage has priority claim over any other mortgage or if it is the only mortgage. A second (and sometimes third) mortgage is called a junior mortgage, a home equity line of credit (HELOC) would also fall into this category. Finally, a housing unit without a mortgage is owned free and clear and is debt free. Approximately 73% of the Olmsted County Market Area s homeowners have a mortgage. Nationally, about 70% of U.S. homeowners have a mortgage on their property. About 20% of homeowners with mortgages in the Olmsted County Market Area also have a second mortgage and/or home equity loan. The median value for homes with a mortgage for the Olmsted County Market Area homeowners was approximately $190,254. The Rochester Fringe submarket had the highest median value at $331,492 and the Rochester submarket had the lowest at $169,300. The Rochester Fringe submarket had the highest percentage of homeowners without a mortgage; approximately 33%. Conversely, the Byron Submarket had the highest percentage of homeowners with a mortgage at 76%. MAXFIELD RESEARCH INC. 86

HOUSING CHARACTERISTICS TABLE HC 7 OWNER OCCUPIED HOUSING UNITS BY MORTGAGE STATUS OLMSTED COUNTY MARKET AREA 2011 BYRON SUBMARKET EAST SUBMARKET NORTH SUBMARKET CITY OF ROCHESTER Mortgage Status No. Pct. No. Pct. No. Pct. No. Pct. Housing units without a mortgage 518 23.8 1,213 31.5 822 30.6 7,831 25.5 Housing units with a mortgage/debt 1,661 76.2 2,643 68.5 1,861 69.4 22,830 74.5 Second mortgage only 103 4.7 192 5.0 91 3.4 1567 5.1 Home equity loan only 457 21.0 669 17.3 389 14.5 4,452 14.5 Both second mortgage and equity loan 18 0.8 41 1.1 28 1.0 154 0.5 No second mortgage or equity loan 1,083 49.7 1,741 45.2 1,353 50.4 16,657 54.3 Total 2,179 100.0 3,856 100.0 2,683 100.0 30,661 100.0 Average Value by Mortgage Status Housing units with a mortgage Housing units without a mortgage $213,812 $206,495 $186,746 $174,632 $273,674 $197,525 $169,300 $154,700 ROCHESTER FRINGE STEWARTVILLE SUBMARKET OLMSTED COUNTY MARKET AREA TOTAL Mortgage Status No. Pct. No. Pct. No. Pct. No. Pct. Housing units without a mortgage 1,127 32.9 662 28.6 11,509 26.8 12,173 27.0 0 Housing units with a mortgage/debt 2,301 67.1 1,654 71.4 31,478 73.2 32,950 73.0 Second mortgage only 195 5.7 95 4.1 2,144 5.0 2,243 5.0 Home equity loan only 645 18.8 376 16.2 6,609 15.4 6,988 15.5 Both second mortgage and equity loan 42 1.2 3 0.1 260 0.6 286 0.6 No second mortgage or equity loan 1,419 41.4 1,180 50.9 22,465 52.3 23,433 51.9 Total 3,428 100.0 2,316 100.0 42,987 100.0 45,123 100.0 Average Value by Mortgage Status Housing units with a mortgage Housing units without a mortgage $331,492 $171,075 $282,882 $165,948 $177,800 $161,100 $190,254 $174,261 Sources: U.S. Census Bureau American Community Survey; Maxfield Research Inc. MAXFIELD RESEARCH INC. 87

HOUSING CHARACTERISTICS Owner Occupied Units by Mortgage Status 2011 100% 90% 80% 70% 60% 50% 40% 30% 76.2 68.5 69.4 74.5 67.1 71.4 73.2 73.0 Pct w Pct w/o 20% 10% 0% 23.8 31.5 30.6 25.5 32.9 28.6 26.8 27.0 Owner Occupied Housing Units by Value Table HC 8 presents data on housing values summarized by nine price ranges. Housing value refers to the estimated price point the property would sell if the property were for sale. For single family and townhome properties, value includes both the land and the structure. For condominium units, value refers to only the unit. The median owner occupied home in Olmsted County was $187,827 or $1,275 higher than the median home value of the Market Area ($186,552). Median values in the Olmsted County Market Area range from a low of $165,800 in the Rochester Submarket to a high of $261,455 in the Rochester Fringe Submarket. Stewartville, East, and Rochester were the only submarkets below the Olmsted County Market Area median value. MAXFIELD RESEARCH INC. 88

HOUSING CHARACTERISTICS TABLE HC 8 OWNER OCCUPIED UNITS BY VALUE OMLSTED COUNTY MARKET AREA 2011 BYRON SUBMARKET EAST SUBMARKET NORTH SUBMARKET CITY OF ROCHESTER Home Value No. Pct. No. Pct. No. Pct. No. Pct. Less than $50,000 37 1.7 190 4.9 118 6.1 1,307 4.3 $50,000 $99,999 90 4.1 396 10.3 73 3.8 2,247 7.3 $100,000 $149,999 330 15.1 925 24.0 108 5.6 8,502 27.7 $150,000 $199,999 686 31.5 900 23.3 251 13.0 8,373 27.3 $200,000 $249,999 318 14.6 495 12.8 326 16.8 4,010 13.1 $250,000 $299,999 219 10.1 349 9.1 240 12.4 2,226 7.3 $300,000 $399,999 265 12.2 323 8.4 308 15.9 2,293 7.5 $400,000 $499,999 74 3.4 87 2.3 256 13.2 934 3.0 Greater than $500,000 160 7.3 191 5.0 258 13.3 769 2.5 Total 2,179 100.0 3,856 100.0 1,938 100.0 30,661 100.0 Median Home Value $211,084 $183,126 $255,562 $165,800 ROCHESTER FRINGE STEWARTVILLE SUBMARKET OLMSTED COUNTY MARKET AREA TOTAL Home Value No. Pct. No. Pct. No. Pct. Pct. Pct. Less than $50,000 301 7.2 290 12.5 2,163 5.0 2,243 5.0 $50,000 $99,999 115 2.8 133 5.7 2,813 6.5 3,054 6.8 $100,000 $149,999 506 12.1 587 25.3 10,375 24.1 10,958 24.3 $150,000 $199,999 468 11.2 692 29.9 10,778 25.1 11,370 25.2 $200,000 $249,999 446 10.7 247 10.7 5,534 12.9 5,842 12.9 $250,000 $299,999 508 12.2 140 6.0 3,500 8.1 3,682 8.2 $300,000 $399,999 977 23.4 120 5.2 4,179 9.7 4,286 9.5 $400,000 $499,999 343 8.2 41 1.8 1,725 4.0 1,735 3.8 Greater than $500,000 509 12.2 66 2.8 1,920 4.5 1,953 4.3 Total 4,173 100.0 2,316 100.0 42,987 100.0 45,123 100.0 Median Home Value $261,455 $168,986 $187,827 $186,552 Sources: U.S. Census Bureau American Community Survey; Maxfield Research Inc. MAXFIELD RESEARCH INC. 89

HOUSING CHARACTERISTICS 1,200 1,000 Owner Occupied Units by Value (excluding Rochester) 2011 Byron East North Rochester Fringe Stewartville 800 600 400 200 0 12,000 10,000 Owner Occupied Units by Value (Rochester & Market Area) 2011 Rochester Olmsted Cty. MA 8,000 6,000 4,000 2,000 0 MAXFIELD RESEARCH INC. 90

HOUSING CHARACTERISTICS Renter Occupied Units by Contract Rent Table HC 9 presents information on the monthly housing costs for renters called contract rent (also known as asking rent) in 2011. Contract rent is the monthly rent agreed to regardless of any utilities, furnishings, fees, or services that may be included. The median contract rent in the Olmsted County Market Area was $673. Based on a 30% allocation of income to housing, an income of $26,917 would be needed to afford the median rent. The East Submarket had the lowest contract rent at $517. Rochester had the highest contract rent at $689. Nearly 38% of the Olmsted County Market Area renters paying cash have monthly rents ranging from $500 to $749, 19.8% had monthly rents ranging from $750 to $999, and 14.8% had monthly rents between $250 and $499. Housing units without payment of rent ( no cash rent ) make up only 3.9% of the Olmsted County Market Area s renters. Typically units may be owned by a relative or friend who lives elsewhere whom allow occupancy without charge. Other sources may include caretakers or ministers who may occupy a residence without charge. 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Olmsted County Market Area Contract Rent (exluding Rochester) 2011 No Cash Rent $0 to $249 $250 $499 $500 $749 $750 $999 $1,000 $1,500 $1,500+ MAXFIELD RESEARCH INC. 91

HOUSING CHARACTERISTICS TABLE HC 9 RENTER OCCUPIED UNITS BY CONTRACT RENT OLMSTED COUNTY MARKET AREA 2011 BYRON SUBMARKET EAST SUBMARKET NORTH SUBMARKET CITY OF ROCHESTER Contract Rent No. Pct. No. Pct. No. Pct. No. Pct. No Cash Rent 32 8.7 78 8.5 26 5.2 397 3.3 Cash Rent 336 91.3 839 91.5 477 94.8 11,555 96.7 $0 to $249 41 11.1 69 7.5 82 16.3 797 6.7 $250 $499 110 29.9 340 37.1 135 26.8 1,450 12.1 $500 $749 56 15.2 314 34.2 98 19.5 4,793 40.1 $750 $999 34 9.2 71 7.7 82 16.3 2,549 21.3 $1,000 $1,500 95 25.8 18 2.0 52 10.3 1,344 11.2 $1,500+ 0 0.0 27 2.9 28 5.6 622 5.2 Total 368 100.0 917 100.0 503 100.0 11,952 100.0 Median Contract Rent $663 $517 $611 $689 ROCHESTER FRINGE STEWARTVILLE SUBMARKET OLMSTED COUNTY MARKET AREA TOTAL Contract Rent No. Pct. No. Pct. No. Pct. No. Pct. No Cash Rent 15 16.5 19 3.0 542 4.0 567 3.9 Cash Rent 76 83.5 608 97.0 13,072 96.0 13,891 96.1 $0 to $249 7 7.7 15 2.4 896 6.6 1,011 7.0 $250 $499 17 18.7 95 15.2 1,841 13.5 2,147 14.8 $500 $749 20 22.0 257 41.0 5,315 39.0 5,538 38.3 $750 $999 28 30.8 98 15.6 2,728 20.0 2,862 19.8 $1,000 $1,500 4 4.4 69 11.0 1,557 11.4 1,582 10.9 $1,500+ 0 0.0 74 11.8 735 5.4 751 5.2 Total 91 100.0 627 100.0 13,614 100.0 14,458 100.0 Median Contract Rent $630 $659 $683 $673 Sources: U.S. Census Bureau American Community Survey; Maxfield Research Inc. MAXFIELD RESEARCH INC. 92

HOUSING CHARACTERISTICS 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Olmsted County Market Area Contract Rent (Rochester & Market Area) 2011 No Cash Rent $0 to $249 $250 $499 $500 $749 $750 $999 $1,000 $1,500 $1,500+ Mobility in the Past Year (Omsted County Market Area) Table HC 10 shows the mobility patterns of Olmsted County Market Area residents within a one year time frame (2011 is the last year available). Table HC 11 shows mobility patterns of each submarket within the Olmsted County Market Area. The majority of residents (87%) did not move within the last year. Of the remaining 13% of residents that moved within the last year, approximately 2.8% moved from outside of the Olmsted County Market Area but within Minnesota and 7.3% moved to a different housing unit from within the Olmsted County Market Area. About 6% of residents that moved were from Outside Olmsted County. A greater proportion of younger age cohorts tended to move within the last year compared to older age cohorts. Approximately 22.3% of those age 18 to 24 moved within the last year compared to 4.5% of those age 75+. The Rochester Fringe submarket had the highest percentage of people who did not move in the last year (94.8%), while Rochester had the lowest percentage (85.1%). The North submarket had the highest percentage of people who moved from a different county from Minnesota (4.8%), while the East had the second highest percentage (4.3%). MAXFIELD RESEARCH INC. 93

HOUSING CHARACTERISTICS TABLE HC 10 MOBILITY IN THE PAST YEAR BY AGE FOR CURRENT RESIDENCE OLMSTED COUNTY MARKET AREA 2011 Not Moved Moved Same House Within Same County Different County Same State Different State Abroad Age No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. Under 18 31,733 88.1% 2,806 7.8% 737 2.0% 612 1.7% 145 0.4% 18 to 24 8,626 70.2% 1,809 14.7% 1,271 10.3% 562 4.6% 13 0.1% 25 to 34 17,740 77.3% 2,702 11.8% 1,011 4.4% 1,148 5.0% 344 1.5% 35 to 44 17,467 89.7% 1,249 6.4% 268 1.4% 406 2.1% 82 0.4% 45 to 54 21,069 92.0% 916 4.0% 450 2.0% 446 1.9% 16 0.1% 55 to 64 15,488 95.0% 492 3.0% 167 1.0% 134 0.8% 25 0.2% 65 to 74 9,060 93.8% 262 2.7% 169 1.7% 170 1.8% 0 0.0% 75+ 8,256 90.5% 575 6.3% 125 1.4% 117 1.3% 50 0.5% Total 129,439 87.0% 10,811 7.3% 4,198 2.8% 3,595 2.4% 675 0.5% Sources: U.S. Census Bureau American Community Survey; Maxfield Research Inc. MAXFIELD RESEARCH INC. 94

HOUSING CHARACTERISTICS Not Moved Moved Same House Within Same County Different County Same State Different State Abroad Submarket No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. Byron 6,260 91.9% 273 4.0% 118 1.7% 157 2.3% 3 0.0% East 11,609 90.9% 500 3.9% 549 4.3% 105 0.8% 3 0.0% North 7,494 90.7% 297 3.6% 399 4.8% 45 0.5% 24 0.3% Rochester 88,493 85.1% 8,904 8.6% 2,863 2.8% 3,093 3.0% 645 0.6% Rochester Fringe 9,131 94.8% 303 3.1% 122 1.3% 78 0.8% 0 0.0% Stewartville 6,452 89.0% 534 7.4% 147 2.0% 117 1.6% 0 0.0% Olmsted County 122,609 87.0% 10,558 7.5% 3,532 2.5% 3,572 2.5% 666 0.5% Olmsted County Market Area 129,439 87.0% 10,811 7.3% 4,198 2.8% 3,595 2.4% 675 0.5% Sources: U.S. Census Bureau American Community Survey; Maxfield Research Inc. TABLE HC 11 MOBILITY IN THE PAST YEAR BY SUBMARKET FOR CURRENT RESIDENCE OLMSTED COUNTY MARKET AREA 2011 MAXFIELD RESEARCH INC. 95

HOUSING CHARACTERISTICS 30.0% Percent of People that Moved in Last Year Olmsted County Market Area 2011 27.0% 25.0% 22.3% 20.0% 19.0% 15.0% 10.0% 10.4% 9.5% 5.0% 4.2% 3.1% 4.5% 0.0% Under 18 18 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 to 74 75+ 16.0% 14.0% 12.0% Mobility by Submarket in One Year (2011) 14.9% 11.0% 13.0% 13.0% 10.0% 8.0% 8.1% 9.1% 9.3% 6.0% 5.2% 4.0% 2.0% 0.0% The number of people who moved to Rochester from another state or abroad is significantly higher than the remaining communities in Olmsted County. Rochester captured 85% Olmsted County of new households from out of state and 97% of new households from abroad. MAXFIELD RESEARCH INC. 96

HOUSING CHARACTERISTICS Mobility in the Past Year (Comparisons) Like Table HC 11, Table HC 12 shows mobility comparisons in other geographies within a oneyear time frame (2011 is the last year available). For comparison purposes, Metro Area counties and select outstate Minnesota cities and counties were illustrated. Compared to the Metro Area, the one year mobility rate in Olmsted County is slightly lower (13.8% compared to 15.3%). However, mobility rates in the Metro Area are weighted heavily by Hennepin and Ramsey Counties (17.8% and 18.6% respectively). The remaining Metro Area counties have mobility rates lower than Olmsted County. Olmsted County has lower mobility rates than other larger counties in outstate Minnesota. Mobility rates in larger counties range from 16% in Winona County (Winona) to 20.5% in Blue Earth County (Mankato). Similar to county level mobility patterns, larger outstate Minnesota communities posted higher mobility rates than Rochester. Rochester s one year mobility of 16% compares to 22.9% in Winona, 24.3% in Duluth, 28% in Mankato, and 31% in St. Cloud. These mobility rates are higher because all four of the aforementioned communities are college towns and have a large university presence. Olmsted County posted the lowest percentage of moves from one Minnesota county to another. Whereas Blue Earth and Stearns Counties posted different county moves of about 8%, Olmsted County was only 2.5%. This in in part due to a higher percentage of out ofstate relocations to Olmsted County. MAXFIELD RESEARCH INC. 97

HOUSING CHARACTERISTICS Not Moved Moved Same House Within Same County Different County Same State Different State Abroad County No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. Outstate MN Olmsted 122,752 86.2% 11,199 7.9% 3,586 2.5% 4,167 2.9% 749 0.5% Blue Earth 50,188 79.5% 6,211 9.8% 5,152 8.2% 1,446 2.3% 150 0.2% Stearns 119,350 80.4% 13,702 9.2% 11,683 7.9% 2,938 2.0% 820 0.6% St. Louis 165,324 83.4% 21,544 10.9% 7,906 4.0% 2,761 1.4% 746 0.4% Winona 42,837 84.0% 4,344 8.5% 2,276 4.5% 1,374 2.7% 150 0.3% Outstate MN Cities Rochester 88,485 84.0% 9,400 8.9% 3,015 2.9% 3,772 3.6% 725 0.7% Duluth 64,598 75.7% 13,197 15.5% 5,369 6.3% 1,582 1.9% 532 0.6% Mankato 27,870 72.0% 5,335 13.8% 4,181 10.8% 1,189 3.1% 114 0.3% St. Cloud 44,809 69.0% 8,333 12.8% 9,273 14.3% 2,024 3.1% 536 0.8% Winona 21,205 77.1% 3,166 11.5% 1,903 6.9% 1,074 3.9% 140 0.5% Metro Area Anoka 287,386 87.8% 19,243 5.9% 15,867 4.8% 3,744 1.1% 1,256 0.4% Carver 79,863 88.5% 4,055 4.5% 4,613 5.1% 1,396 1.5% 274 0.3% Dakota 344,779 87.4% 25,890 6.6% 15,455 3.9% 6,484 1.6% 1,736 0.4% Hennepin 939,529 82.2% 127,832 11.2% 38,286 3.4% 28,010 2.5% 9,053 0.8% Ramsey 409,854 81.4% 50,135 10.0% 27,116 5.4% 11,885 2.4% 4,792 1.0% Scott 115,902 89.9% 4,368 3.4% 6,719 5.2% 1,663 1.3% 334 0.3% Washington 212,922 90.2% 9,145 3.9% 9,649 4.1% 3,651 1.5% 746 0.3% Metro Area 2,390,235 84.7% 240,668 8.5% 117,705 4.2% 56,833 2.0% 18,191 0.6% Sources: U.S. Census Bureau American Community Survey; Maxfield Research Inc. TABLE HC 12 MOBILITY IN THE PAST YEAR BY SUBMARKET FOR CURRENT RESIDENCE OLMSTED COUNTY VS. SELECT GEOGRAPHIES 2012 MAXFIELD RESEARCH INC. 98

HOUSING CHARACTERISTICS 25.0% 20.0% 15.0% 10.0% Mobility by County in One Year (2012) 20.5% 19.6% 17.8% 18.6% 16.6% 16.0% 13.8% 12.2% 11.5% 12.6% 10.1% 9.8% 15.3% 5.0% 0.0% 35.0% 30.0% Mobility by Community in One Year (2012) 28.0% 31.0% 25.0% 24.3% 22.9% 20.0% 15.0% 16.0% 10.0% 5.0% 0.0% Rochester Duluth Mankato St. Cloud Winona MAXFIELD RESEARCH INC. 99

EMPLOYMENT TRENDS Introduction Since employment growth generally fuels household growth, employment trends are a reliable indicator of housing demand. Typically, households prefer to live near work for convenience. However, housing is often less expensive in smaller towns, making commuting from outlying communities to work in larger employment centers attractive for households concerned about housing affordability. Conversely, rising fuel costs could slow housing demand in fringe communities in rural Olmsted County. Employment Growth & Projections Tables EMP 1 and EMP 2 show historic and projected employment growth in Olmsted County. Table EMP 1 illustrates Olmsted County employment from 1970 to 2030 and is sourced to Woods & Poole Economics, a national economic and demographic provider. Table EMP 2 shows employment growth trends and projections from 2010 to 2020 based on the most recent information available from the Minnesota Department of Employment and Economic Development (DEED). The 2020 forecast is based on 2010 2020 industry projections for the southeast Minnesota region and the Twin Cities Metro Area. Maxfield Research applied the projected ten year growth rate of 12.0% for the Twin Cities to the 2010 employment data to arrive at the 2020 forecast for the Metro Area. TABLE EMP 1 HISTORIC & PROJECTED EMPLOYMENT GROWTH OLMSTED COUNTY 1970 to 2030 Total Pct. Change Year Jobs by Decade 1970 41,600 1980 61,260 47.3% 1990 78,980 28.9% 2000 99,890 26.5% 2010 109,170 9.3% 2020 130,310 19.4% 2030 160,800 23.4% Source: Woods & Poole Economics, Maxfield Research Inc. Olmsted County experienced strong job growth over the past four decades. Job growth over the last decade increased by 9% between 2000 and 2010; although growth was not as high given the housing slowdown and ensuing Great Recession. MAXFIELD RESEARCH INC. 100

EMPLOYMENT TRENDS Significant job growth is expected between 2020 (+19.4) and 2030 (+23.4%). Over 51,000 jobs are projected over the next two decades. Solid job growth is expected between 2010 and 2020 in Southeast Minnesota as well. The Southeast Minnesota planning region is projected to experience a 14.3% gain (+36,384 jobs) during the decade. In comparison, employment in the Twin Cities Metro Area is projected to experience a 12.0% gain (+185, 354 jobs) during the decade. TABLE EMP 2 EMPLOYMENT PROJECTIONS OLMSTED COUNTY 2010 2020 Estimate Forecast 2010 2020 2010 2020 No. No. No. Pct. Southeast Minnesota 255,288 291,672 36,384 14.3% Twin Cities Metro Area 1,544,613 1,729,967 185,354 12.0% Note: Twin Cities Metro represents the 7 County planning region Sources: MN Dept of Employment and Economic Development; Metropolitan Council; Maxfield Research, Inc. Olmsted County Employment Projections 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 Southeast MN Twin Cities Metro 2010 2020 MAXFIELD RESEARCH INC. 101

EMPLOYMENT TRENDS Resident Labor Force Table EMP 3 presents historic employment statistics for Olmsted County from 1990 to 2013. Table EMP 4 presents annual data between 2000 and 2013. The data is from the Minnesota Workforce Center. Table EMP 4 presents resident employment data for Olmsted County. Resident employment data is calculated as an annual average and reveals the work force and number of employed persons living in the County. It is important to note that not all of these individuals necessarily work in the County. The data is from the Minnesota Department of Employment and Economic Development. Olmsted County s labor force has grown substantially over the past few decades. During the 1990s the labor force added 10,788 people (+17.4%) and the 2000s added 8,464 people (11.7%). Resident employment in Olmsted County increased by about 7,624 people between 2000 and 2013 (10.8%). The number of individuals in the labor market also increased, but at a higher rate than resident employment. This resulted in an increase in unemployment from 2.6% (2000) to 4.2% (2013). Olmsted County s unemployment rate has been lower than the State of Minnesota in every year from 2000 to 2013. Since 2006, the unemployment rate in Olmsted County increased annually to a high of 6.3% in 2009. However, since 2009 the unemployment rate has fallen annually to 4.2% in 2013, below the State and nation at 5.1% and 7.4%, respectively. These are indicators that the economy is recovering. 1990 2000 2000 2010 2010 2013 1990 2000 2010 2013 No. Pct. No. Pct. No. Pct. Labor Force 61,845 72,623 81,107 81,749 10,778 17.4% 8,484 11.7% 642 0.8% Employment 60,116 70,702 76,241 78,326 10,586 17.6% 5,539 7.8% 2,085 2.7% Unemployment 1,729 1,921 4,866 3,423 192 11.1% 2,945 153.3% 1,443 29.7% Unemployment Rate 2.8% 2.6% 6.0% 4.2% Source: Minnesota Workforce Center, Maxfield Research Inc. TABLE EMP 3 HISTORIC UNEMPLOYMENT STATISTICS OLMSTED COUNTY 1990 to 2013 MAXFIELD RESEARCH INC. 102

EMPLOYMENT TRENDS TABLE EMP 4 RESIDENT EMPLOYMENT (ANNUAL AVERAGE) OLMSTED COUNTY 2000 through 2013 Total Minnesota U.S. Labor Total Total Unemployment Unemployment Unemployment Year Force Employed Unemployed Rate Rate Rate 2000 72,623 70,702 1,921 2.6% 3.1% 4.0% 2001 74,663 72,503 2,160 2.9% 3.8% 4.7% 2002 76,449 73,476 2,973 3.9% 4.5% 5.8% 2003 77,062 73,739 3,323 4.3% 4.8% 6.0% 2004 77,993 74,895 3,098 4.0% 4.6% 5.6% 2005 78,275 75,494 2,781 3.6% 4.1% 5.1% 2006 78,704 75,960 2,744 3.5% 4.0% 4.6% 2007 80,049 76,983 3,066 3.8% 4.6% 4.6% 2008 80,105 76,565 3,540 4.4% 5.4% 5.8% 2009 81,726 76,571 5,155 6.3% 8.1% 9.3% 2010 81,107 76,241 4,866 6.0% 7.3% 9.6% 2011 81,161 76,849 4,312 5.3% 6.4% 8.9% 2012 82,032 78,340 3,692 4.5% 5.7% 8.1% 2013 81,749 78,326 3,423 4.2% 5.1% 7.4% Change 2000 13 9,126 7,624 1,502 1.6% 2.0% 3.4% Sources: Minnesota Workforce Center; Maxfield Research Inc. 10.0% 9.0% 8.0% Olmsted County Minnesota U.S. UNEMPLOYMENT RATE OLMSTED COUNTY 2000 TO 2013 9.3% 8.1% 8.1% 7.4% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 6.3% 5.7% 5.1% 4.0% 4.5% 4.2% 3.1% 2.6% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 MAXFIELD RESEARCH INC. 103

EMPLOYMENT TRENDS No. of Persons 84,000 82,000 80,000 78,000 76,000 74,000 72,000 70,000 72,623 70,702 77,062 LABOR FORCE AND EMPLOYED RESIDENTS OLMSTED COUNTY 2000 to 2013 73,739 78,704 80,105 75,960 76,565 82,032 78,340 81,749 78,326 68,000 Labor Force 66,000 64,000 Total Employed Year Covered Employment by Industry The following tables display information on the employment and wage situation in Olmsted County along with a summary for the Twin Cities Metro Area and other select geographies. Covered employment data is calculated as an annual average and reveals the number of jobs in the submarket, which are covered by unemployment insurance. Most farm jobs, self employed persons, and some other types of jobs are not covered by unemployment insurance and are not included in the table. The data is from the Minnesota Department of Employment and Economic Development. Olmsted County There were 91,008 jobs in Olmsted County as of 2012 which, based on the 2012 annual count of employed residents, represented a jobs to employed resident ratio of 1.16 compared to 1.04 in the Metro Area. The ratio of 1.16 for Olmsted County means that there were more jobs than employed residents, indicating that employers attracted workers from outside the County. As illustrated in the chart on the following page, the County s employment concentrations were higher than the Metro Area in the Natural Resource and Mining, and Education and Health Services industries, while all other sectors had lower concentrations of employment. The Education and Health Services industry was the largest employment sector in Olmsted County, providing 45,005 jobs in 2012 (49.5% of the total). The Trade, Transportation and Utilities sector was the next largest sector with 13,707 workers (15.1% of the total jobs). MAXFIELD RESEARCH INC. 104

EMPLOYMENT TRENDS Within Olmsted County, the most notable job losses occurred in the Financial Activities industry (163 jobs for a 7.6% decline). The most significant hiring occurred in the Education and Health Services sector (1,514 jobs for a 3.5% increase). However, as a percentage, the Professional and Business Services industry had the largest growth in 2012 (7.4% increase). 2012 Employment: % of Total Public Administration Other Services Leisure & Hospitality Education & Health Services Professional & Business Services Financial Activities Information Trade, Transportation, Utilities Manufacturing Construction Natural Resources & Mining Metro Area Olmsted Co. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% From 2011 to 2012, the average weekly wage in Olmsted County increased 2.0% ($20) to $1,008. By comparison, wages increased 3.0% in the Metro Area to $1,076. Average wages were lower in Olmsted County than in the Metro Area for most of the industry sectors. Manufacturing has the highest wages in Olmsted County; averaging $1,415 weekly or about $73,500 annually. About 8% of all jobs in Olmsted County are in the manufacturing sector. About 50% of all Olmsted County jobs are in the education and health services sector. The majority of these jobs are tied to the strong health care industry in Rochester. In addition, these jobs average $1,244 weekly, or about $64,700 annually. Average annual wages in the Olmsted County Market Area vary considerably by submarket. Although the average wage is nearly $52,000, wages ranged from $28,340 in the Byron submarket to $53,716 in the Rochester submarket. MAXFIELD RESEARCH INC. 105

EMPLOYMENT TRENDS 2012 Average Weekly Wage Public Administration Other Services Leisure & Hospitality Education & Health Services Professional & Business Services Financial Activities Information Trade, Transportation, Utilities Manufacturing Construction Natural Resources & Mining Total, All Industries Metro Area Olmsted Co $0 $500 $1,000 $1,500 $2,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Olmsted County Market Area Avg. Annual Wage $53,716 $46,020 $35,672 $32,656 $28,340 $29,536 $51,948 MAXFIELD RESEARCH INC. 106

EMPLOYMENT TRENDS Industry Establishments 2011 2012 Change 2011 2012 Employment Wage ments ment Wage # % # % Weekly Establish Employ Weekly Employment Wage OLMSTED COUNTY Total, All Industries 3,393 88,339 $988 3,434 91,008 $1,008 2,669 3.0% $20 2.0% Natural Resources & Mining 45 256 $552 46 260 $554 4 1.6% $2 0.4% Construction 398 2,825 $946 400 2,928 $982 103 3.6% $36 3.8% Manufacturing 111 7,647 $1,452 111 7,775 $1,415 128 1.7% ($37) 2.5% Trade, Transportation, Utilities 832 13,551 $554 827 13,707 $563 156 1.2% $9 1.6% Information n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Financial Activities 341 2,150 $931 342 1,987 $958 163 7.6% $27 2.9% Professional & Business Services 435 4,519 $739 444 4,852 $767 333 7.4% $28 3.8% Education & Health Services 356 43,491 $1,213 367 45,005 $1,244 1,514 3.5% $31 2.6% Leisure & Hospitality 379 7,571 $292 392 7,984 $300 413 5.5% $8 2.7% Other Services 350 2,039 $475 374 2,175 $473 136 6.7% ($2) 0.4% Public Administration 77 2,892 $1,168 76 2,842 $1,192 50 1.7% $24 2.1% Total, All Industries 80,602 1,564,365 $1,045 81,342 1,588,495 $1,076 24,130 1.5% $31 3.0% Natural Resources & Mining 279 3,532 $788 297 3,636 $816 104 2.9% $28 3.6% Construction 6,961 51,618 $1,146 6,993 53,110 $1,179 1,492 2.9% $33 2.9% Manufacturing 4,267 160,620 $1,288 4,212 162,161 $1,328 1,541 1.0% $40 3.1% Trade, Transportation, Utilities 16,619 298,134 $892 16,578 299,445 $907 1,311 0.4% $15 1.7% Information 1,497 40,857 $1,412 1,477 40,587 $1,368 270 0.7% $44 3.1% Financial Activities 9,319 132,637 $1,595 9,184 135,719 $1,749 3,082 2.3% $154 9.7% Professional & Business Services 16,122 260,552 $1,386 16,258 265,522 $1,418 4,970 1.9% $32 2.3% Education & Health Services 9,426 346,399 $888 9,796 353,886 $910 7,487 2.2% $22 2.5% Leisure & Hospitality 6,937 151,462 $405 7,135 154,893 $409 3,431 2.3% $4 1.0% Other Services 7,778 53,304 $586 8,159 53,882 $601 578 1.1% $15 2.6% Public Administration 1,241 65,179 $1,072 1,218 65,583 $1,055 404 0.6% $17 1.6% Sources: Minnesota Workforce Center; Maxfield Research, Inc. TABLE EMP 5 QUARTERLY CENSUS OF EMPLOYMENT AND WAGES OLMSTED COUNTY & TWIN CITIES METRO AREA TWIN CITIES METRO AREA MAXFIELD RESEARCH INC. 107

EMPLOYMENT TRENDS TABLE EMP 6 AVG. ANNUAL WAGES OLMSTED COUNTY MARKET AREA 2012 Avg. Weekly Wage Avg. Annual Wage Submarket/Location Byron Submarket $545 $28,340 Byron, Olmsted $532 $27,664 Kalmar Twp, Olmsted $721 $37,492 Salem Twp, Olmsted $506 $26,312 East Submarket $568 $29,536 Chatfield, Fillmore Olmsted $585 $30,420 Dover Twp, Olmsted $507 $26,364 Dover, Olmsted $447 $23,244 Elmira Twp, Olmsted $729 $37,908 Eyota Twp, Olmsted $732 $38,064 Eyota, Olmsted $519 $26,988 Orion Twp, Olmsted $667 $34,684 Pleasant Grove Twp, Olmsted $388 $20,176 Quincy Twp, Olmsted $398 $20,696 Saint Charles, Winona $559 $29,068 Viola Twp, Olmsted $588 $30,576 North Submarket $686 $35,672 Farmington Twp, Olmsted $497 $25,844 New Haven Twp, Olmsted $532 $27,664 Oronoco Twp, Olmsted $618 $32,136 Oronoco, Olmsted $835 $43,420 Pine Island, largely Goodhue $675 $35,100 Rochester Fringe Submarket $885 $46,020 Cascade Twp, Olmsted $1,043 $54,236 Haverhill Twp, Olmsted $876 $45,552 Marion Twp, Olmsted $900 $46,800 Rochester Twp, Olmsted $480 $24,960 Rochester Submarket $1,033 $53,716 Rochester, Olmsted $1,033 $53,716 Stewartville Submarket $628 $32,656 High Forest Twp, Olmsted $618 $32,136 Rock Dell Twp, Olmsted n/a n/a Stewartville, Olmsted $628 $32,656 Olmsted County Market Area Total $999 $51,948 Note: Wages are for jobs located in the selected geography Source: MN Workforce Center; Maxfield Research Inc. MAXFIELD RESEARCH INC. 108

EMPLOYMENT TRENDS TABLE EMP 7 WAGE COMPARISONS 2012 Avg. Weekly Avg. Annual Location Wage Wage Out State MN Counties Olmsted $1,008 $52,416 Blue Earth $717 $37,284 Stearns $747 $38,844 St. Louis $764 $39,728 Winona $703 $36,556 Out State MN Cities Rochester $1,033 $53,716 Duluth $788 $40,976 Mankato $722 $37,544 St. Cloud $802 $41,704 Winona $702 $36,504 Metro Area Counties Anoka $877 $45,604 Carver $892 $46,384 Dakota $914 $47,528 Hennepin $1,194 $62,088 Ramsey $1,045 $54,340 Scott $833 $43,316 Washington $766 $39,832 Metro Area $1,076 $55,952 Source: MN DEED, Maxfield Research Inc Although Olmsted County wages are slightly lower than the Metro Area average, Olmsted County wages are higher than five of the seven Metro Area counties (all but Hennepin and Ramsey Counties). Olmsted County wages are about 26% to 32% higher than other outstate Minnesota counties identified. Similarly, Rochester wages are about 22% to 32% higher than other larger outstate Minnesota communities. MAXFIELD RESEARCH INC. 109

EMPLOYMENT TRENDS $70,000 Avg. Annual Wages by County Comparison 2012 $60,000 $50,000 $40,000 $30,000 $20,000 $52,416 $37,284 $38,844 $39,728 $36,556 $45,604 $46,384 $47,528 $62,088 $54,340 $43,316 $39,832 $55,952 $10,000 $0 $60,000 Avg. Annual Wage Comparison by City 2012 $50,000 $40,000 $30,000 $53,716 $40,976 $37,544 $41,704 $36,504 $20,000 $10,000 $0 Rochester Duluth Mankato St. Cloud Winona MAXFIELD RESEARCH INC. 110

EMPLOYMENT TRENDS Commuting Patterns Proximity to employment is often a primary consideration when choosing where to live, since transportation costs often account for a large proportion of households budgets. Table EMP 8 through EMP 13 highlight the commuting patterns of workers in each submarket located in Olmsted County in 2011 (the most recent data available), based on Employer Household Dynamics data from the U.S. Census Bureau. Tables EMP 14 and EMP 15 highlight commuting patterns of the entire County. Data is unavailable for the entire Olmsted County Market Area; therefore tables do not include portions outside of Olmsted County (Chatfield in Fillmore County, St. Charles in Winona County, and Pine Island in Goodhue County). Home Destination is defined as where workers live who work in the submarket, whereas Work destination is where workers are employed that live in the submarket. Olmsted County Submarkets The majority of Olmsted County residents also worked in Rochester. The Rochester Fringe has the highest percentage (84.6%), followed by the Rochester submarket (75.4%). Surrounding submarkets, Byron (67%), North (65.5%), Stewartville (56.4%), and East (55.1%) also had high percentages of residents working in Rochester. Other than the cities located within Olmsted County, commuters were most often coming from nearby cities such as Dodge Center, Kasson, or Winona. However, Rochester attracts a number of commuters from the Twin Cities Metro Area. All Other Locations accounted for a significant amount in each of the submarkets, as well as Olmsted County as a whole. For residents who worked in the County, percentages ranged from 11.1% to 24.2%. Approximately 96,275 persons are employed in Olmsted County; however the Olmsted County workforce is about 75,330 persons resulting in a positive net inflow of about 21,000 jobs. The rural Olmsted County submarkets have a combined outflow of about 12,950 jobs; while Rochester has a positive inflow of nearly 33,900 jobs. MAXFIELD RESEARCH INC. 111

EMPLOYMENT TRENDS Home Destination TABLE EMP 8 COMMUTING PATTERNS BYRON SUBMARKET 2011 Work Destination Place of Residence Count Share Place of Employment Count Share Rochester city, MN 339 25.6% Rochester city, MN 2,488 67.0% Byron city, MN 285 21.5% Byron city, MN 296 8.0% Kasson city, MN 83 6.3% Dodge Center city, MN 87 2.3% Stewartville city, MN 33 2.5% Kasson city, MN 59 1.6% Dodge Center city, MN 25 1.9% Stewartville city, MN 52 1.4% Mantorville city, MN 22 1.7% Pine Island city, MN 41 1.1% Pine Island city, MN 19 1.4% St. Charles city, MN 36 1.0% Austin city, MN 15 1.1% St. Paul city, MN 34 0.9% Oronoco city, MN 12 0.9% Minneapolis city, MN 31 0.8% Chatfield city, MN 8 0.6% Winona city, MN 23 0.6% All Other Locations 482 36.4% All Other Locations 564 15.2% Total All Jobs 1,323 Total All Jobs 3,711 Home Destination = Where workers live who are employed in the selection area Work Destination = Where workers are employed who live in the selection area Sources: US Census Bureau Local Employment Dynamics; Maxfield Research, Inc. TABLE EMP 9 COMMUTING PATTERNS EAST SUBMARKET 2011 Home Destination Work Destination Place of Residence Count Share Place of Employment Count Share Chatfield city, MN 154 12.2% Rochester city, MN 1,977 55.1% Rochester city, MN 143 11.4% Chatfield city, MN 254 7.1% Eyota city, MN 128 10.2% Eyota city, MN 112 3.1% St. Charles city, MN 49 3.9% St. Charles city, MN 97 2.7% Dover city, MN 32 2.5% Stewartville city, MN 69 1.9% Wykoff city, MN 23 1.8% Plainview city, MN 65 1.8% Fountain city, MN 22 1.7% St. Paul city, MN 46 1.3% Stewartville city, MN 21 1.7% Dover city, MN 34 0.9% Plainview city, MN 19 1.5% Fountain city, MN 32 0.9% Winona city, MN 15 1.2% Minneapolis city, MN 32 0.9% All Other Locations 652 51.8% All Other Locations 870 24.2% Total All Jobs 1,258 Total All Jobs 3,588 Home Destination = Where workers live who are employed in the selection area Work Destination = Where workers are employed who live in the selection area *Note: Data only includes Cities and Townships in Olmsted County. Sources: US Census Bureau Local Employment Dynamics; Maxfield Research, Inc. MAXFIELD RESEARCH INC. 112

EMPLOYMENT TRENDS Home Destination TABLE EMP 10 COMMUTING PATTERNS NORTH SUBMARKET 2011 Place of Residence Count Share Place of Employment Count Share Rochester city, MN 185 30.3% Rochester city, MN 2,067 65.5% Minneapolis city, MN 44 7.2% Pine Island city, MN 116 3.7% Pine Island city, MN 23 3.8% Byron city, MN 54 1.7% Bloomington city, MN 11 1.8% Dodge Center city, MN 43 1.4% Byron city, MN 11 1.8% St. Paul city, MN 43 1.4% Oronoco city, MN 11 1.8% Winona city, MN 36 1.1% Stewartville city, MN 11 1.8% Minneapolis city, MN 35 1.1% St. Paul city, MN 10 1.6% Bloomington city, MN 31 1.0% Plainview city, MN 9 1.5% Austin city, MN 24 0.8% Maplewood city, MN 8 1.3% Mankato city, MN 24 0.8% All Other Locations 288 47.1% All Other Locations 684 21.7% Total All Jobs 611 Total All Jobs 3,157 Home Destination = Where workers live who are employed in the selection area Work Destination = Where workers are employed who live in the selection area Note: Data only includes cities and townships in Olmsted County. Work Destination Sources: US Census Bureau Local Employment Dynamics; Maxfield Research, Inc. TABLE EMP 11 COMMUTING PATTERNS ROCHESTER 2011 Home Destination Work Destination Place of Residence Count Share Place of Employment Count Share Rochester city, MN 41,671 46.7% Rochester city, MN 41,756 75.4% Stewartville city, MN 1,840 2.1% St. Paul city, MN 687 1.2% Byron city, MN 1,788 2.0% Minneapolis city, MN 615 1.1% Kasson city, MN 1,521 1.7% Winona city, MN 484 0.9% Minneapolis city, MN 1,319 1.5% Bloomington city, MN 454 0.8% St. Paul city, MN 1,307 1.5% Edina city, MN 373 0.7% Pine Island city, MN 790 0.9% Dodge Center city, MN 370 0.7% St. Charles city, MN 712 0.8% Stewartville city, MN 363 0.7% Austin city, MN 703 0.8% Austin city, MN 331 0.6% Plainview city, MN 629 0.7% Plymouth city, MN 323 0.6% All Other Locations 37,012 41.5% All Other Locations 9,654 17.4% Total All Jobs 89,292 Total All Jobs 55,410 Home Destination = Where workers live who are employed in the selection area Work Destination = Where workers are employed who live in the selection area Sources: US Census Bureau Local Employment Dynamics; Maxfield Research, Inc. MAXFIELD RESEARCH INC. 113

EMPLOYMENT TRENDS Home Destination TABLE EMP 12 COMMUTING PATTERNS ROCHESTER FRINGE 2011 Work Destination Place of Residence Count Share Place of Employment Count Share Rochester city, MN 852 42.7% Rochester city, MN 4,449 84.6% Stewartville city, MN 70 3.5% St. Charles city, MN 45 0.9% Kasson city, MN 49 2.5% Stewartville city, MN 31 0.6% Byron city, MN 35 1.8% St. Paul city, MN 30 0.6% St. Charles city, MN 33 1.7% Minneapolis city, MN 26 0.5% Eyota city, MN 30 1.5% Byron city, MN 20 0.4% Chatfield city, MN 27 1.4% Winona city, MN 20 0.4% Plainview city, MN 24 1.2% Austin city, MN 18 0.3% Austin city, MN 16 0.8% Dodge Center city, MN 17 0.3% Pine Island city, MN 16 0.8% Mankato city, MN 17 0.3% All Other Locations 845 42.3% All Other Locations 586 11.1% Total All Jobs 1,997 Total All Jobs 5,259 Home Destination = Where workers live who are employed in the selection area Work Destination = Where workers are employed who live in the selection area Sources: US Census Bureau Local Employment Dynamics; Maxfield Research, Inc. TABLE EMP 13 COMMUTING PATTERNS STEWARTVILLE 2011 Home Destination Work Destination Place of Residence Count Share Place of Employment Count Share Stewartville city, MN 542 30.2% Rochester city, MN 2,373 56.4% Rochester city, MN 390 21.8% Stewartville city, MN 581 13.8% Spring Valley city, MN 52 2.9% St. Paul city, MN 71 1.7% Grand Meadow city, MN 31 1.7% Minneapolis city, MN 65 1.5% Chatfield city, MN 30 1.7% Winona city, MN 47 1.1% Austin city, MN 27 1.5% Byron city, MN 42 1.0% Byron city, MN 15 0.8% Bloomington city, MN 40 1.0% Eyota city, MN 14 0.8% St. Charles city, MN 40 1.0% Kasson city, MN 14 0.8% Austin city, MN 39 0.9% St. Charles city, MN 14 0.8% Chatfield city, MN 34 0.8% All Other Locations 663 37.0% All Other Locations 875 20.8% Total All Jobs 1,792 Total All Jobs 4,207 Home Destination = Where workers live who are employed in the selection area Work Destination = Where workers are employed who live in the selection area Sources: US Census Bureau Local Employment Dynamics; Maxfield Research, Inc. MAXFIELD RESEARCH INC. 114

EMPLOYMENT TRENDS Place of Residence Count Share Place of Employment Count Share Olmsted County 58,996 61.3% Olmsted County 58,996 78.3% Dodge County 4,193 4.4% Hennepin County 4,192 5.6% Hennepin County 4,117 4.3% Winona County 1,547 2.1% Wabasha County 3,169 3.3% Ramsey County 1,436 1.9% Fillmore County 2,991 3.1% Dodge County 1,067 1.4% Goodhue County 2,667 2.8% Goodhue County 764 1.0% Mower County 2,630 2.7% Dakota County 672 0.9% Ramsey County 2,440 2.5% Mower County 632 0.8% Winona County 2,393 2.5% Fillmore County 629 0.8% Dakota County 1,939 2.0% Wabasha County 513 0.7% All Other Locations 10,738 11.2% All Other Locations 4,884 6.5% Distance Traveled Home Destination TABLE EMP 14 COMMUTING PATTERNS OLMSTED COUNTY 2011 Distance Traveled Total All Jobs 96,273 100.0% Total All Jobs 75,332 100.0% Less than 10 miles 53,334 55.4% Less than 10 miles 53,330 70.8% 10 to 24 miles 17,343 18.0% 10 to 24 miles 8,607 11.4% 25 to 50 miles 8,164 8.5% 25 to 50 miles 2,795 3.7% Greater than 50 miles 17432 18.1% Greater than 50 miles 10,600 14.1% Home Destination = Where workers live who are employed in the selection area Work Destination = Where workers are employed who live in the selection area Sources: US Census Bureau Local Employment Dynamics; Maxfield Research, Inc. Olmsted County by County Work Destination As the table illustrates, Olmsted County is top home destination for workers in the County with a 61.3% share, while 38.7% of Olmsted County s workers reside outside the County, with most commuting from Dodge County (4.4%), Hennepin County (4.3%), and Wabasha County (3.3%) for employment. Approximately 55% of the workers in Olmsted County reside within ten miles of their place of employment while over 18% travel greater than 50 miles. Exactly 18% of workers in the County travel 10 to 24 miles for employment and 8% commute a distance ranging from 25 to 50 miles. Olmsted County by City Roughly 73.2% of the workers living in Olmsted County also have jobs in Rochester. The remaining 26.8% commute to other communities, such as Stewartville (1.5%), St. Paul (1.2%), and Minneapolis (1.1%). MAXFIELD RESEARCH INC. 115

EMPLOYMENT TRENDS Place of Residence Count Share Place of Employment Count Share Rochester 43,580 45.3% Rochester 55,110 73.2% Stewartville 2,517 2.6% Stewartville 1,111 1.5% Byron 2,136 2.2% St. Paul 911 1.2% Kasson 1,674 1.7% Minneapolis 804 1.1% Minneapolis 1,379 1.4% Byron 710 0.9% St. Paul 1,331 1.4% Winona 632 0.8% Pine Island 862 0.9% Bloomington 579 0.8% Chatfield 832 0.9% St. Charles 558 0.7% St. Charles 809 0.8% Dodge Center 552 0.7% Austin 767 0.8% Edina 469 0.6% All Other Locations 40,386 41.9% All Other Locations 13,896 18.4% Distance Traveled Home Destination TABLE EMP 15 COMMUTING PATTERNS OLMSTED COUNTY 2011 Distance Traveled Work Destination Total All Jobs 96,273 100.0% Total All Jobs 75,332 100.0% Less than 10 miles 53,334 55.4% Less than 10 miles 53,330 70.8% 10 to 24 miles 17,343 18.0% 10 to 24 miles 8,607 11.4% 25 to 50 miles 8,164 8.5% 25 to 50 miles 2,795 3.7% Greater than 50 miles 17,432 18.1% Greater than 50 miles 10,600 14.1% Home Destination = Where workers live who are employed in the selection area Work Destination = Where workers are employed who live in the selection area Sources: US Census Bureau Local Employment Dynamics; Maxfield Research, Inc. Over 70% of Olmsted County s residents travel less than ten miles to their place of employment, while 14% have a commute distance of more than 50 miles. Around 4% commute between 25 and 50 miles to get to work and 11% travel from 10 to 24 miles. MAXFIELD RESEARCH INC. 116

EMPLOYMENT TRENDS TABLE EMP 16 COMMUTTING PATTERNS SUMMARY OLMSTED COUNTY SUBMARKETS 2011 Employed Workers Workforce Living Submarket in Submarket (i.e. Jobs) in Submarket Byron 1,323 3,711 East 1,258 3,588 North 611 3,157 Rochester 89,292 55,410 Rochester Fringe 1,997 5,259 Stewartville 1,792 4,207 Olmsted County 96,273 75,332 Source: US Census LEHD, Maxfield Research Inc. Inflow/Outflow Table EMP 17 provides a summary of the inflow and outflow of workers in the Olmsted County. Outflow reflects the number of workers living in the Olmsted County but employed outside of the Olmsted County while inflow measures the number of workers that are employed in the Olmsted County but live outside. Interior flow reflects the number of workers that both live and work in the Olmsted County. Data is unavailable for the Olmsted Market Area; therefore tables will not include portions outside of Olmsted County (Chatfield Fillmore County, St. Charles Winona County, and Pine Island Goodhue County). Olmsted County can be considered an importer of workers, as the number of residents coming into the County (inflow) for employment exceeded the number of residents leaving the County for work (outflow). Approximately 53,259 workers came into the County for work while 32,318 workers left, for a net difference of 20,941. The Rochester submarket is the only submarket in the Market Area that imports workers. All of the rural Olmsted County submarkets are exporters of workers and are bedroom communities to Rochester. The five rural submarkets have a net loss of workers ranging from 2,330 in the East submarket to 3,262 workers in the Rochester Fringe submarket. MAXFIELD RESEARCH INC. 117

EMPLOYMENT TRENDS Num. Pct. Num. Pct. Num. Pct. Num. Pct. Employed in the Selection Area 1,323 100% 1,258 100% 611 100% 89,292 100% Employed in the Selection Area but Living Outside 1,012 76.5% 844 67.1% 548 89.7% 47,772 53.5% Employed and Living in the Selection Area 311 23.5% 414 32.9% 63 10.3% 41,520 46.5% Living in the Selection Area 3,711 100% 3,588 100% 3,157 100% 55,410 100% Living in the Selection Area but Employed Outside 3,400 91.6% 3,174 88.5% 3,094 98.0% 13,890 25.1% Living and Employed in the Selection Area 311 8.4% 414 11.5% 63 2.0% 41,520 74.9% ROCHESTER FRINGE STEWARTVILLE OLMSTED COUNTY Num. Pct. Num. Pct. Num. Pct. Employed in the Selection Area 1,997 100% 1,792 100% 96,273 100% Employed in the Selection Area but Living Outside 1,897 95.0% 1,186 66.2% 53,259 55.3% Employed and Living in the Selection Area 100 5.0% 606 33.8% 43,014 44.7% Living in the Selection Area 5,259 100% 4,207 100% 75,332 100% Living in the Selection Area but Employed Outside 5,159 98.1% 3,601 85.6% 32,318 42.9% Living and Employed in the Selection Area 100 1.9% 606 14.4% 43,014 57.1% Sources: Longitudinal Employer Household Dynamics; Maxfield Research Inc. TABLE EMP 17 COMMUTING INFLOW/OUTFLOW OLMSTED COUNTY MARKET AREA 2011 BYRON EAST NORTH ROCHESTER MAXFIELD RESEARCH INC. 118

EMPLOYMENT TRENDS Olmsted County (excluding Rochester) Employment Inflow/Outflow 6,000 5,000 4,000 3,000 2,000 1,000 0 1,000 2,000 3,000 Byron 3,400 2,388 1,012 East 3,174 2,330 844 Inflow Outflow Net North 3,094 2,546 548 Rochester Fringe 5,159 3,262 1,897 Stewartville 3,601 2,415 1,186 Rochester & Olmsted County Employment Inflow/Outflow 40,000 30,000 20,000 10,000 0 10,000 20,000 30,000 40,000 50,000 60,000 Inflow Outflow Net Rochester 13,890 33,882 47,772 Olmsted Co. 32,318 20,941 53,259 MAXFIELD RESEARCH INC. 119

EMPLOYMENT TRENDS Resident/Worker Profile Comparison Table EMP 18 compares characteristics of employed residents living in the Olmsted County in 2011. Information on monthly earnings, age, race and ethnicity, educational attainment and job classification is provided. Conversely, Table EMP 19 compares characteristics of employees working in the Olmsted County. Data is unavailable for the entire Olmsted Market Area; therefore tables do not include portions outside of Olmsted County (Chatfield in Fillmore County, St. Charles in Winona County, and Pine Island in Goodhue County). Resident Profile Olmsted County residents have a large proportion of high income earners. As of 2011, approximately 48% of all employed residents earn more than $3,333 per month. The Rochester submarket has over 53% of their employed residents earning more than $3,333 per month, followed by Rochester Fringe (39%). The rural submarkets have a significantly lower percentage of employed residents earning more than $3,333 per month. The Bryon, East, North, and Stewartville submarkets have between 24.3% and 29.1% of employed residents exceeding $3,333 monthly. Higher earnings also correlated to higher educational attainment. Approximately 26% of all employed Olmsted County residents had a Bachelor s Degree or Advanced Degree. The Rochester submarket has approximately 29% of their employed residents earning a Bachelor s Degree or Advanced Degree, followed by Byron (21.4%). The greatest proportion of Olmsted County residents worked in the Health Care and Social Assistance industry (37% in 2011). Worker Profile Olmsted County workers have a large proportion of high income earners. As of 2011, approximately 52% of all employed residents earn more than $3,333 per month. The Rochester Fringe submarket has over 56% of their employed residents earning more than $3,333 per month, followed by North (53%). Although resident employment showed lower wages for the rural submarkets, workers from the rural submarkets commuting to Rochester have significantly higher wages. Higher earnings also correlated to higher educational attainment. Approximately 28% of all employed Olmsted County residents had a Bachelor s Degree or Advanced Degree. The Rochester Fringe submarket has approximately 30% of their employed residents earning a Bachelor s Degree or Advanced Degree, followed by North (28%). The greatest proportion of Olmsted County residents worked in the Health Care and Social Assistance industry (38% in 2011). MAXFIELD RESEARCH INC. 120

EMPLOYMENT TRENDS TABLE EMP 18 RESIDENT PROFILE OLMSTED COUNTY 2011 Corridor Wide Resident Profile Byron East North Rochester Rochester Fringe Stewartville Olmsted County Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Total Working in Selection Area Total Working in Selection Area 1,323 100% 1,258 100% 611 100% 89,292 100% 1,997 100% 1,792 100% 75,332 100% Monthly Earnings $1,250 or Less 466 35.2% 578 45.9% 202 33.1% 17,915 20.1% 551 27.6% 528 29.5% 18,547 24.6% $1,251 to $3,333 472 35.7% 374 29.7% 245 40.1% 23,943 26.8% 670 33.6% 764 42.6% 20,810 27.6% More Than $3,333 385 29.1% 306 24.3% 164 26.8% 47,434 53.1% 776 38.9% 500 27.9% 35,975 47.8% Worker Ages Age 29 or Younger 371 28.0% 367 29.2% 176 28.8% 21,155 23.7% 424 21.2% 459 25.6% 19,147 25.4% Age 30 to 54 732 55.3% 581 46.2% 346 56.6% 51,938 58.2% 1,195 59.8% 974 54.4% 42,261 56.1% Age 55 or Older 220 16.6% 310 24.6% 89 14.6% 16,199 18.1% 378 18.9% 359 20.0% 13,924 18.5% Worker Race and Ethnicity Race White Alone 1,266 95.7% 1,222 97.1% 538 88.1% 81,216 91.0% 1,873 93.8% 1,684 94.0% 68,194 90.5% Black or African American Alone 12 0.9% 10 0.8% 57 9.3% 2,757 3.1% 25 1.3% 36 2.0% 2,442 3.2% American Indian or Alaska Native Alone 3 0.2% 3 0.2% 3 0.5% 280 0.3% 7 0.4% 4 0.2% 226 0.3% Asian Alone 35 2.6% 14 1.1% 8 1.3% 4,214 4.7% 75 3.8% 49 2.7% 3,780 5.0% Native Hawaiian or Other Pacific Islander Alone 3 0.2% 0 0.0% 0 0.0% 49 0.1% 1 0.1% 0 0.0% 39 0.1% Two or More Race Groups 4 0.3% 9 0.7% 5 0.8% 776 0.9% 16 0.8% 19 1.1% 651 0.9% Ethnicity Not Hispanic or Latino 1,305 98.6% 1,231 97.9% 600 98.2% 86,813 97.2% 1,955 97.9% 1,762 98.3% 73,079 97.0% Hispanic or Latino 18 1.4% 27 2.1% 11 1.8% 2,479 2.8% 42 2.1% 30 1.7% 2,253 3.0% Worker Educational Attainment Less Than High School 63 4.8% 84 6.7% 40 6.5% 3,379 3.8% 111 5.6% 92 5.1% 3,279 4.4% High School or Equivalent, No College 262 19.8% 266 21.1% 131 21.4% 14,366 16.1% 489 24.5% 439 24.5% 13,031 17.3% Some College or Associate Degree 344 26.0% 323 25.7% 163 26.7% 24,341 27.3% 599 30.0% 481 26.8% 20,026 26.6% Bachelor's Degree or Advanced Degree 283 21.4% 218 17.3% 101 16.5% 26,051 29.2% 374 18.7% 321 17.9% 19,849 26.3% Educational Attainment Not Available 371 28.0% 367 29.2% 176 28.8% 21,155 23.7% 424 21.2% 459 25.6% 19,147 25.4% Jobs by NAICS Industry Sector Agriculture, Forestry, Fishing and Hunting 28 2.1% 126 10.0% 28 4.6% 26 0.0% 32 1.6% 6 0.3% 309 0.4% Mining, Quarrying, and Oil and Gas Extraction 5 0.4% 0 0.0% 0 0.0% 3 0.0% 0 0.0% 0 0.0% 22 0.0% Utilities 0 0.0% 0 0.0% 0 0.0% 143 0.2% 2 0.1% 2 0.1% 153 0.2% Construction 91 6.9% 88 7.0% 94 15.4% 1,822 2.0% 599 30.0% 100 5.6% 2,110 2.8% Manufacturing 318 24.0% 31 2.5% 18 2.9% 7,660 8.6% 224 11.2% 512 28.6% 8,041 10.7% Wholesale Trade 77 5.8% 37 2.9% 28 4.6% 1,342 1.5% 158 7.9% 95 5.3% 2,023 2.7% Retail Trade 195 14.7% 167 13.3% 10 1.6% 8,194 9.2% 116 5.8% 197 11.0% 8,285 11.0% Transportation and Warehousing 21 1.6% 136 10.8% 16 2.6% 1,219 1.4% 109 5.5% 61 3.4% 1,476 2.0% Information 1 0.1% 0 0.0% 0 0.0% 1,771 2.0% 23 1.2% 5 0.3% 1,299 1.7% Finance and Insurance 27 2.0% 16 1.3% 0 0.0% 10,591 11.9% 2 0.1% 25 1.4% 1,944 2.6% Real Estate and Rental and Leasing 22 1.7% 1 0.1% 4 0.7% 630 0.7% 12 0.6% 18 1.0% 594 0.8% Professional, Scientific, and Technical Services 20 1.5% 49 3.9% 6 1.0% 1,571 1.8% 42 2.1% 15 0.8% 1,705 2.3% Management of Companies and Enterprises 0 0.0% 0 0.0% 0 0.0% 383 0.4% 0 0.0% 0 0.0% 810 1.1% Admin & Support, Waste Mgmt and Remediation 85 6.4% 12 1.0% 159 26.0% 2,207 2.5% 85 4.3% 19 1.1% 2,666 3.5% Educational Services 206 15.6% 315 25.0% 0 0.0% 3,883 4.3% 79 4.0% 333 18.6% 4,936 6.6% Health Care and Social Assistance 50 3.8% 71 5.6% 164 26.8% 35,743 40.0% 299 15.0% 179 10.0% 27,827 36.9% Arts, Entertainment, and Recreation 8 0.6% 23 1.8% 0 0.0% 719 0.8% 0 0.0% 38 2.1% 767 1.0% Accommodation and Food Services 61 4.6% 62 4.9% 61 10.0% 6,671 7.5% 147 7.4% 118 6.6% 5,972 7.9% Other Services (excluding Public Administration) 41 3.1% 45 3.6% 16 2.6% 1,854 2.1% 55 2.8% 52 2.9% 1,808 2.4% Public Administration 67 5.1% 79 6.3% 7 1.1% 2,860 3.2% 13 0.7% 17 0.9% 2,585 3.4% Source: U.S. Census Bureau; Maxfield Research, Inc. MAXFIELD RESEARCH INC. 121

EMPLOYMENT TRENDS Corridor Wide Worker Profile TABLE EMP 19 WORKER PROFILE OLMSTED COUNTY 2011 Byron East North Rochester Rochester Fringe Stewartville Olmsted County Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Total Working in Selection Area Total Working in Selection Area 3,711 100% 3,588 100% 3,157 100% 55,410 100% 5,259 100% 4,207 100% 96,273 100% Monthly Earnings $1,250 or Less 907 24.4% 934 26.0% 691 21.9% 13,851 25.0% 1,116 21.2% 1,048 24.9% 20,240 21.0% $1,251 to $3,333 954 25.7% 1,044 29.1% 799 25.3% 15,446 27.9% 1,204 22.9% 1,363 32.4% 26,468 27.5% More Than $3,333 1,850 49.9% 1,610 44.9% 1,667 52.8% 26,113 47.1% 2,939 55.9% 1,796 42.7% 49,565 51.5% Worker Ages Age 29 or Younger 875 23.6% 822 22.9% 609 19.3% 14,722 26.6% 1,107 21.0% 1,012 24.1% 22,952 23.8% Age 30 to 54 2,247 60.5% 2,075 57.8% 1,885 59.7% 30,587 55.2% 3,070 58.4% 2,397 57.0% 55,766 57.9% Age 55 or Older 589 15.9% 691 19.3% 663 21.0% 10,101 18.2% 1,082 20.6% 798 19.0% 17,555 18.2% Worker Race and Ethnicity Race White Alone 3,604 97.1% 3,507 97.7% 3,061 97.0% 48,979 88.4% 4,940 93.9% 4,103 97.5% 87,799 91.2% Black or African American Alone 29 0.8% 13 0.4% 25 0.8% 2,257 4.1% 69 1.3% 49 1.2% 2,897 3.0% American Indian or Alaska Native Alone 5 0.1% 12 0.3% 8 0.3% 181 0.3% 10 0.2% 10 0.2% 300 0.3% Asian Alone 55 1.5% 35 1.0% 42 1.3% 3,415 6.2% 208 4.0% 25 0.6% 4,395 4.6% Native Hawaiian or Other Pacific Islander Alone 5 0.1% 1 0.0% 1 0.0% 26 0.0% 5 0.1% 1 0.0% 53 0.1% Two or More Race Groups 13 0.4% 20 0.6% 20 0.6% 552 1.0% 27 0.5% 19 0.5% 829 0.9% Ethnicity Not Hispanic or Latino 3,650 98.4% 3,549 98.9% 3,117 98.7% 53,434 96.4% 5,176 98.4% 4,153 98.7% 93,666 97.3% Hispanic or Latino 61 1.6% 39 1.1% 40 1.3% 1,976 3.6% 83 1.6% 54 1.3% 2,607 2.7% Worker Educational Attainment Less Than High School 148 4.0% 166 4.6% 124 3.9% 2,440 4.4% 194 3.7% 207 4.9% 3,769 3.9% High School or Equivalent, No College 638 17.2% 694 19.3% 588 18.6% 9,389 16.9% 904 17.2% 818 19.4% 15,953 16.6% Some College or Associate Degree 1,066 28.7% 1,056 29.4% 951 30.1% 14,295 25.8% 1,468 27.9% 1,190 28.3% 26,251 27.3% Bachelor's Degree or Advanced Degree 984 26.5% 850 23.7% 885 28.0% 14,564 26.3% 1,586 30.2% 980 23.3% 27,348 28.4% Educational Attainment Not Available 875 23.6% 822 22.9% 609 19.3% 14,722 26.6% 1,107 21.0% 1,012 24.1% 22,952 23.8% Jobs by NAICS Industry Sector Agriculture, Forestry, Fishing and Hunting 17 0.5% 63 1.8% 33 1.0% 163 0.3% 14 0.3% 19 0.5% 246 0.3% Mining, Quarrying, and Oil and Gas Extraction 1 0.0% 1 0.0% 0 0.0% 15 0.0% 2 0.0% 3 0.1% 8 0.0% Utilities 13 0.4% 13 0.4% 6 0.2% 107 0.2% 6 0.1% 8 0.2% 147 0.2% Construction 157 4.2% 187 5.2% 95 3.0% 1,322 2.4% 162 3.1% 187 4.4% 2,794 2.9% Manufacturing 426 11.5% 337 9.4% 488 15.5% 5,798 10.5% 587 11.2% 405 9.6% 8,763 9.1% Wholesale Trade 106 2.9% 131 3.7% 119 3.8% 1,390 2.5% 101 1.9% 176 4.2% 1,737 1.8% Retail Trade 418 11.3% 442 12.3% 329 10.4% 6,103 11.0% 479 9.1% 514 12.2% 8,879 9.2% Transportation and Warehousing 72 1.9% 130 3.6% 72 2.3% 990 1.8% 92 1.7% 120 2.9% 1,562 1.6% Information 69 1.9% 30 0.8% 40 1.3% 1,023 1.8% 79 1.5% 58 1.4% 1,800 1.9% Finance and Insurance 96 2.6% 99 2.8% 85 2.7% 1,420 2.6% 119 2.3% 125 3.0% 10,661 11.1% Real Estate and Rental and Leasing 26 0.7% 29 0.8% 20 0.6% 435 0.8% 41 0.8% 43 1.0% 687 0.7% Professional, Scientific, and Technical Services 83 2.2% 103 2.9% 73 2.3% 1,231 2.2% 114 2.2% 101 2.4% 1,703 1.8% Management of Companies and Enterprises 47 1.3% 40 1.1% 48 1.5% 578 1.0% 42 0.8% 55 1.3% 383 0.4% Admin & Support, Waste Mgmt and Remediation 122 3.3% 96 2.7% 99 3.1% 2,081 3.8% 139 2.6% 129 3.1% 2,567 2.7% Educational Services 222 6.0% 279 7.8% 220 7.0% 3,553 6.4% 331 6.3% 331 7.9% 4,816 5.0% Health Care and Social Assistance 1,248 33.6% 1,094 30.5% 1,022 32.4% 20,949 37.8% 2,235 42.5% 1,279 30.4% 36,506 37.9% Arts, Entertainment, and Recreation 35 0.9% 35 1.0% 31 1.0% 572 1.0% 40 0.8% 54 1.3% 788 0.8% Accommodation and Food Services 289 7.8% 203 5.7% 165 5.2% 4,605 8.3% 377 7.2% 333 7.9% 7,120 7.4% Other Services (excluding Public Administration) 100 2.7% 90 2.5% 80 2.5% 1,312 2.4% 109 2.1% 117 2.8% 2,063 2.1% Public Administration 164 4.4% 186 5.2% 132 4.2% 1,763 3.2% 190 3.6% 150 3.6% 3,043 3.2% Source: U.S. Census Bureau; Maxfield Research, Inc. MAXFIELD RESEARCH INC. 122

EMPLOYMENT TRENDS Long Term Growth/High Paying Jobs Table EMP 20 shows long term growth high paying jobs located in the Southeast Minnesota Planning Area as provided from the Department of Employment and Economic Development. The table depicts 2010 historical employment and the estimated job openings and median salary for future high paying jobs in the region. The largest number of job openings in Southeastern Minnesota is for Heavy and Tractor Trailer Truck Drivers, which will be experiencing an estimated 1,780 openings. This profession has a median salary of $38,407. Business Operation Specialists and Licensed Practical and Licensed Vocational Nurses will experience a significant number of estimated job openings as well, with 1,110 and 1,070 respectively. A high percentage of these jobs will be located in Rochester among various health care providers. The greatest percentage growth will occur for Heating, Air Conditioning, and Refrigeration Mechanics, which will experience a 51.5% change (+240 jobs). Plumbers, Pipe Fitters, and Steamfitters are projected to grow by 47.4% (+610 jobs). Overall, the Southeast Minnesota Planning Area is projected to gain 97,350 estimated job openings, which will be a 14.3% change from the previous decade. Median salary is estimated to be approximately $35,200 a year. MAXFIELD RESEARCH INC. 123

EMPLOYMENT TRENDS TABLE EMP 20 LONG TERM HIGH GROWTH/HIGH PAY JOBS SOUTHEAST MINNESOTA PLANNING AREA 2010 to 2020 2010 2020 Estimated Median Title Employment Percent Change Job Openings Salary Heavy and Tractor Trailer Truck Drivers 3,783 27.1 1,780 $38,407 Business Operations Specialists, All Other 3,179 15.7 1,110 $56,917 Licensed Practical and Licensed Vocational Nurses 2,257 20.9 1,070 $40,391 Medical Secretaries 2,096 34.1 990 $40,478 Electricians 1,116 39.2 740 $53,835 Carpenters 1,610 20.8 680 $41,755 Plumbers, Pipefitters, and Steamfitters 798 47.4 610 $58,796 Medical and Clinical Laboratory Technologists 1,454 20.7 580 $62,591 Billing and Posting Clerks 1,173 18.1 410 $36,297 Software Developers, Applications 1,235 21.9 400 $89,936 Machinists 931 23.7 390 $42,218 Welders, Cutters, Solderers, and Brazers 827 20.6 390 $36,313 Industrial Machinery Mechanics 926 19.8 360 $44,110 Operating Engineers and Other Construction Equipme 722 24.1 340 $44,335 Computer Occupations, All Other 611 25.7 280 $62,431 Medical Equipment Preparers 598 32.4 280 $37,473 Pharmacists 557 23.9 270 $133,824 Medical and Health Services Managers 580 20.2 260 $100,030 Biological Technicians 421 28.3 260 $70,461 Heating, Air Conditioning, and Refrigeration Mecha 357 51.5 240 $47,906 Insurance Sales Agents 499 22.8 220 $51,198 Loan Officers 510 14.3 200 $63,649 Bus and Truck Mechanics and Diesel Engine Speciali 493 18.3 200 $43,222 Dental Assistants 483 20.1 200 $43,499 Physical Therapists 417 35.7 200 $79,203 Sales Representatives, Services, All Other 406 20.4 200 $44,010 Construction Laborers 828 14.5 190 $35,464 Management Analysts 613 15.2 190 $83,285 Painters, Construction and Maintenance 463 19.2 190 $43,813 Financial Specialists, All Other 445 22 190 $46,351 Network and Computer Systems Administrators 490 20.2 180 $66,357 Clinical, Counseling, and School Psychologists 303 25.4 180 $67,312 Life Scientists, All Other 468 29.9 170 $58,731 Educational, Guidance, School, and Vocational Coun 404 18.1 160 $52,476 Medical Records and Health Information Technicians 373 21.2 160 $45,017 Dental Hygienists 337 25.8 160 $67,438 Industrial Production Managers 389 15.7 150 $86,215 Medical and Clinical Laboratory Technicians 354 21.8 150 $45,879 Human Resources Assistants, Except Payroll and Tim 329 18.8 150 $38,965 Physician Assistants 259 33.2 140 $108,514 Surgical Technologists 408 15.9 130 $55,384 First Line Supervisors of Transportation and Mater 316 20.9 130 $54,743 Administrative Services Managers 302 17.9 130 $73,734 Respiratory Therapists 260 30 130 $66,535 Massage Therapists 298 22.5 120 $46,132 Dispatchers, Except Police, Fire, and Ambulance 281 23.8 120 $43,491 Mechanical Engineers 261 14.6 120 $77,231 Construction Managers 403 19.4 110 $79,373 Telecommunications Equipment Installers and Repair 281 24.9 110 $49,093 Payroll and Timekeeping Clerks 273 15.8 100 $36,875 Cutting, Punching, and Press Machine Setters, Oper 456 14.3 90 $36,695 Total, All Occupations 255,288 14.3 97,350 $35,229 Source: DEED; Maxfield Research Inc. MAXFIELD RESEARCH INC. 124

EMPLOYMENT TRENDS Major Employers Table EMP 21 shows the major employers based on data provided by Rochester Area Economic Development and surrounding cities within the Olmsted County Market Area. The Mayo Clinic in Rochester is by far the largest employer in the Olmsted County Market Area with 35,000 employees. According to the Minnesota Department of Employment and Economic Development, the Mayo Clinic is the third largest employer in Minnesota, behind the State of Minnesota and the United States Federal Government. IBM, also located in Rochester, is the second largest employer in the Olmsted County Market Area. However, IBM s employee total could not be confirmed. According to the Rochester Post Bulletin, IBM s employee total was estimated at 3,000 employees in 2013. Rochester Public Schools is the third largest employer with nearly 2,400 employees. Schmidt Printing Inc. in Byron is the largest employer outside of the Rochester Area with 250 employees. Destination Medical Center The Destination Medical Center ( DMC ) initiative is one of the largest and most advanced economic development strategies in the State of Minnesota. Its goal is to secure Rochester s and Minnesota s status as a global medical destination. DMC main objectives are as follows: Sustain Rochester and Minnesota as a global destination that offers patients a welcoming, comfortable and engaging environment in which to receive the most advanced medical care in the world. Grow Rochester as a magnet community attracting the most promising students and sophisticated healthcare professionals from across the globe. Leverage Mayo Clinic s presence in Minnesota to ignite institutional and commercial research in an environment that encourages shared knowledge, partnerships, medical advancements, and innovation. Create unparralled and meaningful experiences of hope, health, and hospitality for every person. Provide the ideal patient, companion, and visitor experience to become the world s premier destination medical community. MAXFIELD RESEARCH INC. 125

EMPLOYMENT TRENDS TABLE EMP 21 MAJOR EMPLOYERS OLMSTED COUNTY MARKET AREA DECEMBER 2013 Employee Name City Industry/Product/Service Size Rochester Submarket Mayo Clinic Rochester Medical/Hospital 35,000 IBM Rochester Electronics Computer n/a Rochester Public Schools Rochester Education Services 2,367 Olmsted County Rochester Government 1,215 Olmsted Medical Center Rochester Medical/Hospital Services 1,166 City of Rochester Rochester Local Government 840 Charter Communications Rochester Cable Television/High Speed Internet 764 Crenlo Rochester Fabricated Metal 703 Interstate Hotels & Resorts Rochester Hotel/Restaurant Services 680 RCTC Rochester Post Secondary Education 500 Federal Medical Center Rochester Corrections/Medical 450 Reichel Foods Rochester Refrigerated lunch & snacks 450 Samaritan Bethany, Inc. Rochester Health Care of the Aging 430 Other Submarkets Schmidt Printing Inc. Byron Printing Services 250 Byron Schools ISD 531 Byron Education 219 Dover Eyota Public Schools Eyota Education 203 Strongwell Chatfield Fiberglass Prolusion 200 Chosen Valley Care Center Chatfield Skilled Nursing 150 Tuohy Furniture Corp Chatfield Wood Furniture 150 North Star Foods Inc St.Charles Animal Slaughtering & Processing 119 St Charles Schools ISD #858 St.Charles Elementary & Secondary Schools 115 Somerby Golf Community Byron Golf Course 100 Whitewater Healthcare Ctr St.Charles Nursing Care Facilities 93 Gar Lin Dairy Farm Eyota Agriculture 50 People's Coop Oronoco Grocery 50 Excel Manufacturing Inc St.Charles Other General Purpose Machinery 49 Eyota Market Eyota Grocery 34 Mike s Food Center St.Charles Grocery Stores 31 Arbor Gardens Eyota Nursing Care Facilities 30 Eyota Kids Corner Eyota Day care/preschool 20 Stewartville Care Center Stewartville Nursing Care Facilities n/a Pine Island Public Schools Pine Island Education n/a Source: Rochester Area Economic Development; Surrounding cities within Market Area; Maxfield Research Inc. Although Rochester is known worldwide for Mayo Clinic, the city is transforming into a hub for medical education, research, and innovation. Rochester is a regional employment center for MAXFIELD RESEARCH INC. 126

EMPLOYMENT TRENDS southeast Minnesota, with a current employment base of approximately 105,000 jobs. According to the U.S. Bureau of Labor Statistics, the labor force within Rochester is 59,000 persons, which means the city supports employment that doubles its local workforce population. The DMC is a major economic development initiative that will drive substantial new job growth for future generations. The target for the DMC is to grow the employment base by 35,000 to 45,000 jobs and bring tax revenue in excess of $7 billion to the State. Because of the DMC, previous employment projections for Rochester and Southeast Minnesota are understated over the next few decades. However, because the DMC initiative is in the early stages it is unknown yet to what extent when and how many jobs will be created and spin off. Employer Survey Maxfield Research surveyed representatives of the largest employers in the Olmsted County Market Area during January 2014. The questions covered topics such as recent trends in job growth, average wages and salaries, employee turnover, projected job growth. In addition, representatives were asked their opinion about issues related to housing in the area. Specifically, they were asked whether the current supply of housing in the area matches the needs of their workforce. The following points summarize the findings of this survey process. Employers could not identify a central location that most of their employees commute to their workplace, but believe most employees commute between 20 to 40 miles to their work destination. However, many employers said they several employees who commute from the Minneapolis/St. Paul area. Hiring is expected to remain steady or increase over the next three to five years as service needs and business conditions dictate. There was a general consensus that most employees in the County currently own their homes, but many new employees relocating to Olmsted County from other areas tend to rent at first. Employers were satisfied with the availability of single family homes in the area. Employers said there are no concerns with new employees finding adequate housing. In addition, there appears to be a sufficient supply of rental units. Employers believe there are a variety of rental options for young professionals or families moving into the area. MAXFIELD RESEARCH INC. 127

EMPLOYMENT TRENDS Employment Summary Table EMP 22 provides an employment summary that compares Olmsted County to Metro Area counties. Olmsted County had the second highest inflow/outflow ratio. There were about twice as many people coming into Olmsted County than commuting outside of Olmsted County. Washington County had the lowest inflow/outflow ratio. Olmsted County had the lowest percentage of employees earning $1,250 or less per month (21.0%) followed by Hennepin County with 22.0% earning $1,250 or less. Olmsted County had the highest percentage of Health Care and Social Assistance (37.9%) and Finance and Insurance (11.1%) jobs. Olmsted County had the third highest percentage of Accommodation and Food Service jobs at 7.4%. Washington County had the highest percentage at 9.9%. MAXFIELD RESEARCH INC. 128

EMPLOYMENT TRENDS Employment Summary Inflow/Outflow Inflow Outflow Interior Flow TABLE EMP 22 EMPLOYMENT SUMMARY OLMSTED COUNTY COMPARED TO OTHER COUNTIES 2011 Anoka Dakota Hennepin Ramsey Carver Washington Olmsted Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. Num Pct. 63,532 86,319 424,103 219,206 17,926 51,802 37,277 123,765 134,208 151,355 132,057 37,607 109,819 16,336 51,738 77,426 418,696 107,062 13,248 14,890 58,996 Employee Monthly Earnings $1,250 or Less 29,975 26.0% 41,976 25.6% 185,005 22.0% 73,432 22.5% 7,539 24.2% 21,032 31.5% 20,240 21.0% $1,251 to $3,333 35,642 30.9% 51,498 31.5% 236,498 28.1% 93,962 28.8% 9,649 31.0% 21,053 31.6% 26,468 27.5% More Than $3,333 49,653 43.1% 70,271 42.9% 421,296 50.0% 158,874 48.7% 13,986 44.9% 24,607 36.9% 49,565 51.5% Employee Ages Age 29 or Younger 28,639 24.8% 40,897 25.0% 203,565 24.2% 74,699 22.9% 7,394 23.7% 18,595 27.9% 22,952 23.8% Age 30 to 54 65,331 56.7% 93,170 56.9% 488,868 58.0% 186,743 57.2% 18,287 58.7% 36,984 55.5% 55,766 57.9% Age 55 or Older 21,300 18.5% 29,678 18.1% 150,366 17.8% 64,826 19.9% 5,493 17.6% 11,113 16.7% 17,555 18.2% Jobs by NAICS Industry Sector Agriculture, Forestry, Fishing and Hunting 316 0.3% 610 0.4% 668 0.1% 277 0.1% 132 0.4% 511 0.8% 246 0.3% Mining 2 0.0% 157 0.1% 233 0.0% 2 0.0% 1 0.0% 60 0.1% 8 0.0% Utilities 365 0.3% 331 0.2% 7,251 0.9% 363 0.1% 19 0.1% 18 0.0% 147 0.2% Construction 5,960 5.2% 6,822 4.2% 25,024 3.0% 10,180 3.1% 1,265 4.1% 2,974 4.5% 2,794 2.9% Manufacturing 23,553 20.4% 19,354 11.8% 74,160 8.8% 28,670 8.8% 7,778 25.0% 7,235 10.8% 8,763 9.1% Wholesale Trade 5,052 4.4% 10,734 6.6% 53,549 6.4% 13,583 4.2% 1,535 4.9% 1,887 2.8% 1,737 1.8% Retail Trade 17,532 15.2% 16,704 10.2% 78,269 9.3% 25,377 7.8% 2,693 8.6% 9,435 14.1% 8,879 9.2% Transportation & Warehousing 3,346 2.9% 11,549 7.1% 13,649 1.6% 5,398 1.7% 280 0.9% 2,555 3.8% 1,562 1.6% Information 643 0.6% 4,475 2.7% 23,179 2.8% 8,405 2.6% 586 1.9% 572 0.9% 1,800 1.9% Finance & Insurance 1,974 1.7% 8,487 5.2% 67,586 8.0% 13,180 4.0% 619 2.0% 2,641 4.0% 10,661 11.1% Real Estate, Rental & Leasing 1,313 1.1% 2,571 1.6% 24,636 2.9% 5,676 1.7% 308 1.0% 725 1.1% 687 0.7% Professional, Scientific & Tech Services 3,179 2.8% 7,165 4.4% 73,609 8.7% 16,734 5.1% 1,341 4.3% 2,787 4.2% 1,703 1.8% Management of Companies & Enterprises 688 0.6% 2,649 1.6% 41,472 4.9% 24,586 7.5% 681 2.2% 1,166 1.7% 383 0.4% Admin & Support & Waste Mgmt & Remediation 6,505 5.6% 6,873 4.2% 55,680 6.6% 23,949 7.3% 911 2.9% 2,536 3.8% 2,567 2.7% Educational Services 10,287 8.9% 17,030 10.4% 64,742 7.7% 33,627 10.3% 3,571 11.5% 7,753 11.6% 4,816 5.0% Health Care & Social Assistance 14,666 12.7% 19,181 11.7% 117,368 13.9% 54,216 16.6% 4,535 14.5% 9,755 14.6% 36,506 37.9% Arts, Entertainment & Recreation 1,932 1.7% 2,140 1.3% 14,016 1.7% 5,296 1.6% 632 2.0% 1,383 2.1% 788 0.8% Accommodation & Food Services 7,891 6.8% 13,968 8.5% 60,841 7.2% 20,669 6.3% 2,055 6.6% 6,600 9.9% 7,120 7.4% Other Services (except Public Administration) 4,828 4.2% 7,339 4.5% 28,138 3.3% 10,949 3.4% 811 2.6% 2,599 3.9% 2,063 2.1% Public Administration 5,238 4.5% 5,606 3.4% 18,729 2.2% 25,131 7.7% 1,421 4.6% 3,500 5.2% 3,043 3.2% Source: U.S. Census Bureau; ESRI; Maxfield Research, Inc. MAXFIELD RESEARCH INC. 129

RENTAL MARKET ANALYSIS Introduction Maxfield Research Inc. identified and surveyed larger rental properties of 12 or more units in the Olmsted County Market Area. Because many of the rental properties of less than 12 units are owned by private investors with no property management firm, many of the smaller rental properties were difficult to reach. In addition, interviews were conducted with real estate agents, developers, rental housing management firms, and others in the community familiar with Olmsted County s rental housing stock. For purposes of our analysis, we have classified rental projects into two groups, general occupancy and senior (age restricted). All senior projects are included in the Senior Rental Analysis section of this report. The general occupancy rental projects are divided into three groups, market rate (those without income restrictions), affordable, (those receiving tax credits in order to keep rents affordable), and subsidized (those with income restrictions based on 30% allocation of income to housing). Rental Market Conditions Maxfield Research utilized data from the American Community Survey (ACS) to summarize rental market conditions in Olmsted County. The ACS is an ongoing survey conducted by the United States Census Bureau that provides data every year rather than every ten years as presented by the decennial census. We utilize this data because these figures are not available from the decennial census. Table R 1 on the following page presents a breakdown of median gross rent and monthly gross rent ranges by number of bedrooms in renter occupied housing units from the 2011 ACS in Olmsted County in comparison to the Minneapolis/St. Paul/Bloomington Metro Area and Minnesota. Gross rent is defined as the amount of the contract rent plus the estimated average monthly cost of utilities (electricity, gas, and water and sewer) and fuels (oil, coal, wood, etc.) if these are paid by the renter. Approximately 29% of the renter occupied housing units in Olmsted County have three or more bedrooms compared to 21% in the Metro Area. One bedroom units comprise 27% of Olmsted County s renter occupied housing supply, while only 3% of the renter occupied units have no bedrooms. By comparison, roughly 36% of the Metro Area s renter occupied housing units are one bedroom and 5% have no bedrooms. Roughly 40% of the renter occupied housing units in Olmsted County are two bedrooms compared to 37% in the Metro Area. MAXFIELD RESEARCH INC. 130

RENTAL MARKET ANALYSIS TABLE R 1 BEDROOMS BY GROSS RENT, RENTER OCCUPIED HOUSING UNITS OLMSTED COUNTY Olmsted County # % of Total 2011 Mpls/St.P/Blm. Metro Area # % of Total # Minnesota % of Total Total: 14,544 100% 376,279 100% 551,895 100% Median Gross Rent $782 $858 $783 No Bedroom 505 3% 19,818 5% 23,344 4% Less than $200 0 0% 1,357 0% 1,230 0% $200 to $299 0 0% 782 0% 1,980 0% $300 to $499 88 1% 2,900 1% 5,373 1% $500 to $749 293 2% 9,659 3% 9,732 2% $750 to $999 0 0% 2,639 1% 2,403 0% $1,000 or more 124 1% 1,975 1% 2,258 0% No cash rent 0 0% 506 0% 368 0% 1 Bedroom 3,974 27% 136,983 36% 192,165 35% Less than $200 329 2% 5,456 1% 8,848 2% $200 to $299 683 5% 10,917 3% 18,537 3% $300 to $499 490 3% 9,854 3% 27,321 5% $500 to $749 1,636 11% 53,581 14% 66,736 12% $750 to $999 314 2% 37,555 10% 45,817 8% $1,000 or more 494 3% 18,958 5% 22,395 4% No cash rent 28 0% 662 0% 2,511 0% 2 Bedrooms 5,791 40% 138,872 37% 208,573 38% Less than $200 53 0% 1,836 0% 4,350 1% $200 to $299 0 0% 1,832 0% 4,128 1% $300 to $499 62 0% 4,752 1% 14,823 3% $500 to $749 1,868 13% 17,659 5% 48,263 9% $750 to $999 2,606 18% 55,798 15% 70,154 13% $1,000 or more 1,034 7% 53,767 14% 59,051 11% No cash rent 168 1% 3,228 1% 7,804 1% 3 or More Bedrooms 4,274 29% 80,606 21% 127,813 23% Less than $200 79 1% 698 0% 1,699 0% $200 to $299 31 0% 1,073 0% 2,289 0% $300 to $499 243 2% 2,529 1% 8,294 2% $500 to $749 334 2% 6,309 2% 17,506 3% $750 to $999 1,192 8% 10,127 3% 20,775 4% $1,000 or more 1,750 12% 53,188 14% 61,720 11% No cash rent 645 4% 6,682 2% 15,530 3% Sources: American Community Survey 2011; Maxfield Research, Inc. MAXFIELD RESEARCH INC. 131

RENTAL MARKET ANALYSIS 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 29% 40% 27% 21% 23% 37% 38% 36% 35% 3% 5% 4% Olmsted County Renter Occupied Housing Units By Number of Bedrooms Mpls/St.P/Blm. Metro Area Minnesota 3BR+ 2BR 1BR No BR Olmsted County has nearly identical rents compared to Minnesota. The median gross rent in Olmsted County is $782 which is 9% lower than the median rent of $858 in the Metro Area. Olmsted County s monthly gross rents range from less than $200 to over $1,000 with over 28% renting for $500 to $749 per month. Approximately 23% have gross monthly rents $1,000 or more while 6% have rents between $300 and $499. By comparison, in the Metro Area, about 34% of units have gross monthly rents that are $1,000 or more. Also, nearly 24% have gross monthly rents that are $500 to $749 as well. In addition, around 29% have rents between $750 and $999. General Occupancy Rental Projects Our research of Olmsted County Market Area s general occupancy rental market included a survey of 85 market rate apartment properties (12 units and larger) and 28 affordable/subsidized communities in the 4 th quarter of 2013. These projects represent a combined total of 6,523 units, including 5,344 market rate units and 1,179 affordable/subsidized units. Although we were able to contact and obtain up to date information on the majority of rental properties, there were some projects we were unable to reach. It was common for smaller complexes, which are most often privately owned, to not participate in our survey. Overall, 96 out of 113 properties participated in the rental survey (85% participation rate). At the time of our survey, 229 market rate units and 14 affordable/subsidized units were vacant, resulting in an overall vacancy rates of 4.5% for market rate units and 1.2% for affordable/subsidized. The overall market rate vacancy rate of 4.5% is lower than the industry stand MAXFIELD RESEARCH INC. 132

RENTAL MARKET ANALYSIS ard of 5% vacancy for a stabilized rental market, which promotes competitive rates, ensures adequate choice, and allows for unit turnover. Table R 2 shows vacancy rate comparison of submarkets within the Olmsted County Market Area. Table R 3 summarizes information on market rate projects, while Table R 4 summarizes information on affordable and subsidized projects. Table R 5 summarizes unit features and common area amenities among all rented housing developments. Market Rate Metropolitan Market Place, constructed in 2013, is the newest market rate rental building in Olmsted County. Overall, median year built for all units is 1981 in the Olmsted County Market Area. About 24% of Olmsted County Market Area s market rate rental units were constructed in the 2000s. Also, 17% of the market rate rental units were built in the 1990s. Olmsted County Market Area Market Rate Rental Stock (Year Built) 1,600 1,400 Units Projects 16 14 1,200 12 Units 1,000 800 600 10 8 6 # of Projects 400 4 200 2 0 2010s 2000s 1990s 1980s 1970s 1960s 1950s Prior to 1950 0 Nearly 50% of the market rate units in the Olmsted County Market Area are two bedroom units. The unit breakout by unit type is summarized below. o Efficiency units: 3.4% o One bedroom units: 29.1% o Two bedroom units: 49.5% o Three bedroom units: 16.5% o Four bedroom units: 1.5% The following is the monthly rent ranges and average rent for each unit type: o Efficiency units: $485 to $905 Avg. $555 o One bedroom units: $545 to $1,338 Avg. $802 o Two bedroom units: $595 to $1,595 Avg. $963 o Three bedroom units: $810 to $1,630 Avg. $1,156 o Four bedroom units: $1,500 to $1,820 Avg. $1,536 MAXFIELD RESEARCH INC. 133

RENTAL MARKET ANALYSIS The average monthly rent per square foot among those surveyed properties was $0.97. Rent per square foot varied by unit type as illustrated below: o Efficiency units: $1.22 o One bedroom units: $1.14 o Two bedroom units: $0.94 o Three bedroom units: $0.86 o Four bedroom units: $1.19 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 Avg. Rent and Avg. PSF Efficiency 1BR 2BR 3BR 4BR $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 Avg. Rent Avg. PSF TABLE R 2 SUMMARY OF GENERAL OCCUPANCY RENTAL PROJECTS INVENTORIED BY SUBMARKET 4th QUARTER 2013 Market Rate Affordable Subsidized Total Vacancy Vacancy Vacancy Vacancy Units Units Units Units Submarket Rate* Rate* Rate* Rate* Byron 121 4.1% 48 2.1% 169 3.6% East 108 5.4% 39 4.2% 80 5.0% 227 3.5% North 38 0.0% 24 0.0% 56 1.8% 118 0.8% Rochester 4,976 4.6% 515 1.4% 362 0.0% 5,853 3.9% Rochester Fringe Stewartville 101 0.0% 55 0.0% 156 0.0% Total 5,344 4.5% 626 1.4% 553 0.9% 6,523 3.7% * Vacancy rates based on partipating properties. Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 134

RENTAL MARKET ANALYSIS Market Rate Vacancy Rate by Submarket 6.0% 5.0% 4.0% 4.1% 5.4% 4.6% 4.5% 3.0% 2.0% 1.0% 0.0% 0.0% 0.0% 0.0% MAXFIELD RESEARCH INC. 135

RENTAL MARKET ANALYSIS Year Project Name/Location Built Total Vacant BYRON SUBMARKET Table R 3 Market Rate Rental Properties Olmsted County Market Area 4th Quarter 2013 Kodiak Apartments 2003 73 5 2 1BR 892 $795 $820 $0.89 $0.92 304 9th Ave 53 2BR 1,058 1,154 $850 $975 $0.80 $0.84 Byron 18 3BR 1,078 1,154 $1,000 $1,075 $0.93 $0.93 Villa East Apartments 1983 24 0 6 1BR 701 3rd Ave NE 18 2BR Byron Villa West Apartments 1982 24 0 8 1BR 109 7th St NE 16 2BR Byron Byron Submarket Total 121 5 4.1% EAST SUBMARKET Soppa's Independent Apartments 1993 48 3 34 1BR 402 W 4th Street 14 2BR St. Charles Coyote Apartments 1930 8 0 2 studio n/a $390 $445 15 SE Second Street 2 1BR n/a $550 Chatfield 4 2BR n/a $635 $655 Brittany Apartments n/a 36 n/a n/a 1BR 840 n/a 1097 Oakview Drive n/a 2BR 910 n/a St.Charles n/a 3BR 980 n/a R & M Apts n/a 16 n/a n/a 1BR 815 Grand Street SE n/a 2BR Chatfield East Submarket Total 108 3 5.4%* NORTH SUBMARKET Baylee Place Apartments 2004 4 0 4 2BR 737 Baylee Place SW Pine Island Ridgeway Estates 2001 34 0 17 2BR 501 Ridgeway Lane NE 17 3BR Pine Island North Submarket Total 38 0 0.0% ROCHESTER SUBMARKET Metropolitan Market Place 2013 62 n/a 36 EFF 515 1st Ave SW 12 1BR Rochester 12 2BR 2 3BR Quarry Ridge Apartments 2012 313 7 4 EFF 337 445 $590 $770 $1.73 $1.75 1823 Quarry Ridge Place NW 2001 111 1BR 939 1,025 $1,045 $1,265 $1.11 $1.23 Rochester 151 2BR 1,047 1,120 $1,160 $1,360 $1.11 $1.21 47 3BR 1,320 1,451 $1,345 $1,565 $1.02 $1.08 Unit Mix Washington Village East 2012 47 0 10 1BR 970 11th Avenue NW 34 2BR Rochester 3 3BR CONTINUED Unit Size 602 761 602 761 n/a $780 n/a $805 2,400 910 1,200 541 n/a 1,036 n/a 700 970 1,185 Monthly Rent $545 $595 $545 $595 $1,100 $810 $910 $900 $1,100 $1,400 $1,900 $620 $735 $845 Rent per Square Foot $0.91 $0.78 $0.91 $0.78 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a $0.46 $0.89 $0.76 $1.66 n/a $1.35 n/a $0.89 $0.76 $0.71 MAXFIELD RESEARCH INC. 136

RENTAL MARKET ANALYSIS Table R 3 Market Rate Rental Properties Olmsted County Market Area 4th Quarter 2013 Year Monthly Rent per Project Name/Location Built Total Vacant Unit Mix Unit Size Rent Square Foot Richard Apartments 2012 24 0 24 1BR 770 $995 $1,080 $1.29 $1.40 11 7th Ave SW Rochester Hamilton Apartments 2011 24 0 8 studio n/a $799 $824 n/a 500 4th Street SW 16 1BR n/a $995 $1,080 n/a Rochester Cascade Shores 2010 90 3 62 2BR 1,012 1,532 $1,295 $1,385 $0.90 $1.28 144 Beach Lake Rd SW 28 3BR 1,693 $1,435 $0.85 Rochester Washington Village 2009 67 0 10 1BR 700 $690 $0.99 910 11th Ave NW 38 2BR 970 $820 $0.85 Rochester 19 3BR 1,185 $935 $0.79 GrandeVille @ Cascade Lake Apts 2006 276 17 68 1BR 772 917 $1,179 $1,338 $1.46 $1.53 182 Grandeville Rd SW 136 2BR 1,161 1,315 $1,414 $1,595 $1.21 $1.22 Rochester 64 3BR 1,440 $1,549 $1,628 $1.08 $1.13 8 4BR 1,612 $1,790 $1,820 $1.11 $1.13 The Pines 2004 17 0 17 2BR 971 1,289 $935 $1,095 $0.85 $0.96 2007 29th Place NW Rochester Rolling Ridge Townhomes 2003 35 0 14 2BR 851 Rolling Ridge Ave SE 21 3BR Rochester Rivers Edge Apartments 2003 39 0 8 1BR 695 $550 $700 $0.79 $1.01 33 13 1/2 ST NW 31 2BR 874 1,154 $690 $855 $0.79 $0.98 Rochester Avalon Cove Townhomes 2002 188 4 120 2BR 1,248 $1,275 $1,325 $1.02 $1.06 3202 Avalon Cove Lane NW 68 3BR 1,530 1,862 $1,385 $1,555 $0.84 $0.91 Rochester Douglas Trail Townhomes 2001 100 2 40 2BR 1,005 $795 $0.79 5041 Weatherstone Circle NW 60 3BR 1,250 $895 $935 $0.72 $0.75 Rochester Parkside Townhomes 2001 24 0 12 2BR 1042 Peregrine Dr SE 12 3BR Rochester Georgetowne Homes 2001 100 5 68 2BR 1,170 $715 $945 $0.61 $0.81 2670 Georgetowne Pl NW 32 3BR 1,360 $815 $1,045 $0.60 $0.77 Rochester Crown Apartments 2001 48 1 n/a 1BR 714 $825 $1.16 2852 59th ST NW n/a 2BR 1,024 1,050 $850 $980 $0.83 $0.93 Rochester n/a 3BR 1,182 1,231 $1,055 $1,080 $0.88 $0.89 Brittany's Townhomes 2001 98 5 18 2BR 1,000 $895 $0.90 3085 Brittany Lane NW 52 2BR TH 1,600 $1,250 $0.78 Rochester 28 3BR TH 1,600 $1,325 $0.83 Sunset Trail Apartments 2000 146 10 2 studio 701 $905 $1.29 3639 41st St. NW 48 1BR 800 832 $1,025 $1.23 $1.28 Rochester 72 2BR 1,053 1,207 $1,170 $1,300 $1.08 $1.11 24 3BR 1,420 $1,400 $1,440 $0.99 $1.01 CONTINUED 1,100 1,300 1,005 1,250 $810 $910 $791 $894 $0.74 $0.70 $0.79 $0.72 MAXFIELD RESEARCH INC. 137

RENTAL MARKET ANALYSIS Table R 3 Market Rate Rental Properties Olmsted County Market Area 4th Quarter 2013 Year Monthly Rent per Project Name/Location Built Total Vacant Unit Mix Unit Size Rent Square Foot The Village at Essex Park 1999 144 5 38 1BR 718 750 $975 $1.30 $1.36 941 41st Street NW 52 2BR 998 1,008 $1,025 $1.02 $1.03 Rochester 54 3BR 1,172 1,222 $1,150 $0.94 $0.98 Royal Oaks Townhomes 1997 24 2 12 2BR 1,003 113 $925 $0.92 $8.19 3094 25th St NW 12 3BR 1,159 1,290 $975 $1,050 $0.81 $0.84 Rochester Crystal Bay Townhomes 1997 76 3 62 2BR 1,248 $1,185 $1,225 $0.95 $0.98 2301 Crystal Bay SW 14 3BR 1,485 $1,335 $0.90 Rochester Jordan Mills & Jordan Creek Apts 1991 181 3 n/a 2BR 886 920 $800 $950 $0.90 $1.03 1737 48th St. NW 1985 n/a 3BR 1,060 1,280 $979 $1,150 $0.90 $0.92 Rochester Civic Square Apartments 1991 124 2 83 1BR 470 826 $650 $795 $0.96 $1.38 101 Civic Center Dr NE 41 2BR 855 977 $900 $900 $0.92 $1.05 Rochester French Creek Townhomes 1991 40 0 28 2BR 1,038 $985 $0.95 2000 Chardonnay Lane NW 12 3BR 1,576 $1,100 $1,150 $0.70 $0.73 Rochester Woodridge Apartments 1990 110 5 42 1BR 760 815 $975 $1,095 $1.28 $1.34 2804 2nd Street SW 48 2BR 1,045 1,100 $1,155 $1,255 $1.11 $1.14 Rochester 20 3BR 1,247 1,515 $1,255 $1,325 $0.87 $1.01 Bear Creek Apartments 1990 72 3 3 1BR 600 $470 $0.78 1505 Marion RD SE 2000 52 2BR 800 $640 $0.80 Rochester 17 3BR 1,200 $810 $0.68 Evanston Heights Apartments** 1986 60 2 60 4BR 1,250 $1,500 $1.20 842 21st Avenue SE Rochester Country View Apartments Early 1980s 12 0 12 2BR 870 $685 $0.79 Valley High Drive & 30th Ave Rochester Park Place Apartments 1979 72 8 72 1BR 624 $525 $625 $0.84 $1.00 1903 17th St SE Rochester Hunter Ridge Properties 1979 80 21 n/a 2BR 2016 8 1/2 St SE n/a 3BR Rochester Rolling Greens Apartments 1978 44 4 11 1BR 1820 37th St 33 2BR Rochester Olympik Village 1976 140 9 24 1BR 700 $700 $750 $1.00 $1.07 402 31st Street NE 98 2BR 875 $750 $750 $0.86 $0.86 Rochester 18 3BR 1,150 $890 $940 $0.77 $0.82 CONTINUED 1,150 1,150 730 830 $756 $840 $650 $725 $0.66 $0.73 $0.89 $0.87 MAXFIELD RESEARCH INC. 138

RENTAL MARKET ANALYSIS Table R 3 Market Rate Rental Properties Olmsted County Market Area 4th Quarter 2013 Year Monthly Rent per Project Name/Location Built Total Vacant Unit Mix Unit Size Rent Square Foot Center Street Village Apartments 1976 36 3 36 2BR 805 $700 $0.87 626 E Center St Rochester Summit Square 1975 150 5 78 1BR 700 750 $699 $815 $1.00 $1.09 936 41st Street NW 72 2BR 860 910 $751 $842 $0.87 $0.93 Rochester Timberland Heights 1975 161 4 49 1BR 630 640 $655 $740 $1.04 $1.16 1515 41st St. NW 91 2BR 940 $725 $775 $0.77 $0.82 Rochester 21 3BR 1,080 $855 $960 $0.79 $0.89 Meadow Park Apartments 1975 90 2 24 1BR n/a $525 n/a 412 14th St SE 48 2BR n/a $625 n/a Rochester 18 3BR n/a $725 n/a Berkshire Village 1974 90 1 30 1BR 600 $649 $1.08 1258 17th Avenue NW 42 2BR 800 $729 $0.91 Rochester 18 2BR 825 $749 $0.91 Eastwood Manor 1973 29 2 15 1BR n/a $550 n/a 1532 10th Street SE 24 2BR n/a $620 n/a Rochester Lamoine Apartments 1973 20 1 4 1BR n/a $550 n/a 1525 10th Street SE 16 2BR n/a $620 n/a Rochester Village Green Townhomes 1972 36 1 n/a 2BR 1,160 $905 $0.78 1828 41st Street NW n/a 3BR 1,160 1,250 $955 $975 $0.78 $0.82 Rochester Gates of Rochester 1971 412 28 112 1BR 609 $690 $750 $1.13 $1.23 2015 41st Street NW 208 2BR 867 966 $748 $965 $0.86 $1.00 Rochester 92 3BR 1,106 1,200 $892 $1,043 $0.81 $0.87 Winchester Apartments 1970 115 2 60 1BR 700 $682 $753 $0.97 $1.08 3908 19th Avenue NW 55 2BR 950 $738 $807 $0.78 $0.85 Rochester Uptown Landing Apartments 1969 23 0 23 1BR 500 $635 $645 $1.27 $1.29 621 1 ST SW 55902 Rochester Heritage Manor 1968 182 19 12 EFF 400 $500 $1.25 2409 Highway 52 North 12 studio 500 $580 $1.16 Rochester 86 1BR 700 $655 $680 $0.94 $0.97 74 2BR 800 $730 $770 $0.91 $0.96 Far Park Apartments 1968 27 0 6 1BR 650 $645 $0.99 417 27th St NE 21 2BR 938 996 $720 $785 $0.77 $0.79 Rochester 3rd Ave Loft Apartments 1968 41 5 6 studio 450 $500 $1.11 519 3rd Avenue SW 29 1BR 500 $650 $1.30 Rochester 6 2BR 575 $700 $750 $1.22 $1.30 Uptown Terrace 1967 17 1 15 1BR 500 $645 $655 $1.29 $1.31 625 3 ST SW 2 2BR 700 $745 $785 $1.06 $1.12 Rochester Residences of Old City Hall 1966 22 0 22 1BR 614 $550 $0.90 224 1st Ave SW Rochester Uptown Court 1966 28 0 28 1BR 500 $695 $715 $1.39 $1.43 225 6 AVE SW 55902 Rochester CONTINUED MAXFIELD RESEARCH INC. 139

RENTAL MARKET ANALYSIS Table R 3 Market Rate Rental Properties Olmsted County Market Area 4th Quarter 2013 Year Monthly Rent per Project Name/Location Built Total Vacant Unit Mix Unit Size Rent Square Foot Highland Court Apartments 1965 30 3 4 1BR 650 $550 $0.85 828 46th Ave NW 14 2BR 850 $610 $660 $0.72 $0.78 Rochester 12 3TH 1,200 $720 $0.60 Mile Manor Apartments 1965 53 2 8 studio 416 480 $485 $495 $1.03 $1.17 1617 4th St NE 12 1BR 756 $590 $0.78 Rochester 32 2BR 1 3BR 896 1,100 $640 $700 $0.71 $0.64 Cavalier Apartments 1965 24 1 24 1BR 500 $625 $650 $1.25 $1.30 806 2nd Street SW Rochester 2nd Street Villas 1964 37 n/a n/a 1BR 620 2nd St SW n/a 2BR Rochester Regency Apartments 1963 20 n/a n/a 1BR 513 2nd St NW n/a 2BR Rochester Hillcrest Apartments 1963 34 n/a 34 studio 1701 52 Hwy Rochester Silver Lake Apartments 1955 126 1 n/a EFF 1515 3rd Ave NE n/a 1BR Rochester Hillside Apartments 1928 54 0 n/a EFF 450 500 $500 $1.00 $1.11 718 5th ST SW n/a studio 580 600 $600 $1.00 $1.03 Rochester n/a 1BR 680 700 $700 $750 $1.03 $1.07 n/a 2BR 825 900 $850 $950 $1.03 $1.06 Pillhill Apartments 1928 15 0 5 studio n/a $625 n/a 730 5th St 4 1BR n/a $650 n/a Rochester 6 2BR n/a $700 n/a Chalet Apartments 1928 19 0 n/a EFF 400 $425 $525 $1.06 $1.31 855 1 ST SW 55902 n/a 1BR 550 $650 $800 $1.18 $1.45 Rochester Zick Apartments 1927 19 1 6 studio n/a $550 $599 n/a 603 1st Street SW 12 1BR n/a $675 $695 n/a Rochester 1 2BR n/a $900 n/a Raymond Apartments 1921 26 1 15 studio n/a $550 $610 23 7th Ave SW 11 1BR n/a $680 $695 Rochester Parkside Terrace 1917 17 n/a n/a 1BR n/a n/a 428 6th St SW n/a 2BR n/a n/a Rochester Furlow Apartments 1900 22 0 1 EFF n/a n/a 512 4th Street SW 6 studio n/a $610 Rochester 15 1BR n/a $680 $695 The Edge Apartments of UCR** n/a 60 15 n/a 2BR 875 21st Ave SE n/a 3BR Rochester Northern Valley Apartments n/a 16 2 16 2BR 690 730 $711 $0.97 $1.03 2826 Northern Valley Homes Rochester Jakobson Management n/a 12 n/a n/a 1BR 109 16th St. NE n/a 2BR Rochester CONTINUED n/a n/a n/a n/a n/a n/a n/a 900 1,000 n/a n/a n/a n/a n/a n/a n/a $385 $485 $750 $1,050 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a $0.83 $1.05 n/a n/a MAXFIELD RESEARCH INC. 140

RENTAL MARKET ANALYSIS Table R 3 Market Rate Rental Properties Olmsted County Market Area 4th Quarter 2013 Year Project Name/Location Built Total Vacant Monthly Rent per Unit Mix Unit Size Rent Square Foot 318 Commons** n/a n/a n/a n/a 1BR 318 First Ave SW n/a 2BR Rochester n/a n/a n/a n/a n/a n/a Colby Manor n/a n/a n/a n/a 1BR 1804 2nd St SW n/a 2BR Rochester Windsor Court n/a n/a n/a n/a 1BR 1226 4th Ave n/a 2BR Rochester Folwell Manor Apts n/a n/a n/a n/a 1BR 1716 5th St SW n/a 2BR Rochester Edgewood Apts n/a n/a n/a n/a 1BR 897 16th Ave SE n/a 2BR Rochester Lairview Apts n/a 24 n/a n/a 1BR 108 16 St SE n/a 2BR Rochester Engelhardt Apts n/a 12 n/a n/a 1BR 307 3 AVE NW n/a 2BR Rochester n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Rochester Submarket Total 4976 221 4.6%* STEWARTVILLE SUBMARKET Cottages of Stewartville 1995 60 0 16 1BR 1830 Maple St 28 2BR Stewartville 16 3BR 800 1,000 1,080 $675 $775 $825 $0.84 $0.78 $0.76 Cedarwood Apartments 1978 16 0 16 2BR 118 1st St E Stewartville 802 $675 $0.84 Stewartville Apartments n/a 25 n/a 17 1BR 206 6th St SE 8 2BR Stewartville n/a n/a n/a n/a n/a n/a Stewartville Submarket Total 101 0 0%* Total of All Submarkets 5,344 229 4.5%* *Vacanty rate does not include proporties that did not participate in rental survey. **Properties are primarily used for student housing. Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 141

RENTAL MARKET ANALYSIS MAXFIELD RESEARCH INC. 142

RENTAL MARKET ANALYSIS Table R 4 Affordable/ Subsidized Rental Properties Olmsted County Market Area 4th Quarter 2013 Year Project Name/Location Built Total Vacant BYRON SUBMARKET AFFORDABLE ValleyView Estates 1995 48 1 36 2BR 711 ValleyView Court NE 12 3BR Byron Byron Submarket Total 48 1 2.1% EAST SUBMARKET AFFORDABLE Mill Pond Townhomes 1999 24 1 12 2BR 348 Hilltop Dr 12 3BR Chatfield Main Street Apts n/a 15 n/a n/a 1BR 714 South Main Street n/a 2BR Chatfield East Submarket Total 39 1 4.2%* NORTH SUBMARKET AFFORDABLE Monthly Rent per Unit Mix Unit Size Rent Square Foot Wazuweeta Woods Apartments 2002 24 0 12 2BR 910 $575 $645 $0.63 $0.71 532 6th Street SW 10 3BR 1,150 $655 $720 $0.57 $0.63 Pine Island 2 4BR 1,470 $735 $810 $0.50 $0.55 North Submarket Total 24 0 0.0% ROCHESTER SUBMARKET AFFORDABLE 880 1,080 1,005 1,080 $600 $700 $660 $725 $0.68 $0.65 $0.66 $0.67 n/a n/a n/a n/a n/a n/a Cascade Creek Apts. 2011 40 0 8 1BR 421 6th Avenue NW 19 2BR Rochester 13 3BR 700 860 1,100 $660 $760 $860 $0.94 $0.88 $0.78 Castle View Apts. 2008 32 0 32 EFF 400 $390 $455 $0.98 $1.14 120 N Broadway Avenue Rochester Village on 3rd Apts. 2007 66 0 16 1BR 655 $625 $665 $0.95 $1.02 516 3rd Avenue SE 22 2BR 916 $755 $0.82 Rochester 15 2BR 9 3BR 4 3BR 974 1,120 1,142 $795 $905 $955 $0.82 $0.81 $0.84 Georgetowne Square 2005 32 0 24 2BR 2670 Georgetowne Pl NW 8 3BR Rochester n/a n/a $660 $760 n/a n/a Sunrise Townhomes 2000 24 0 8 2BR 5920 Bandel Road NW 16 3BR Rochester 1,170 1,270 $685 $765 $0.59 $0.60 Valley High Apartments 2000 24 0 10 2BR 1,015 1,117 $740 $795 $0.71 $0.73 2350 Valleyhigh Dr. NW 14 3BR 1,269 1,400 $845 $865 $0.62 $0.67 Rochester Bandel Hills Townhomes 1996 25 0 8 2BR 1,221 $490 $623 $0.40 $0.51 5920 Bandel Rd NW 10 3BR 1,464 $514 $643 $0.35 $0.44 Rochester 7 4BR 1,560 $580 $697 $0.37 $0.45 Essex Place Apts. 1991 144 6 28 1BR 941 41st Street NW 80 2BR Rochester 24 3BR 12 3BR 750 1,008 1,008 1,372 $780 $850 $925 n/a $1.04 $0.84 $0.92 n/a CONTINUED MAXFIELD RESEARCH INC. 143

RENTAL MARKET ANALYSIS Table R 4 Affordable/ Subsidized Rental Properties Olmsted County Market Area 4th Quarter 2013 Year Monthly Rent per Project Name/Location Built Total Vacant Unit Mix Unit Size Rent Square Foot Oakridge Apts 1990 26 0 20 1BR 539 Broadway Ave 6 2BR Rochester 529 622 $801 $944 $1.51 $1.52 Homestead Village Townhomes 1961 102 1 82 2BR 825 $695 $728 $0.84 $0.88 862 Homestead Lane SE 20 3BR 1,083 $850 $884 $0.78 $0.82 Rochester Rochester Submarket Total 515 7 1.4% Total of All Affordable Submarkets 626 9 1.4%* BYRON SUBMARKET SUBSIDIZED None. EAST SUBMARKET SUBSIDIZED Whitewater Way Apartments 1989 24 1 3 1BR 418 Wabasha Ave West 21 2BR St. Charles Eyota Manor 1986 24 0 17 1BR 600 $480 $515 $0.80 $0.86 319 W 2nd Street 5 2BR 750 $505 $540 $0.67 $0.72 Eyota 2 3BR 900 $520 $555 $0.58 $0.62 595 765 $440 $475 $0.74 $0.62 Clover Patch Apartments n/a 32 3 24 1BR 400 Clover Court 8 2BR St. Charles 600 750 $429 $449 $0.72 $0.60 East Submarket Total 80 4 5.0% NORTH SUBMARKET SUBSIDIZED Knollwood Apartments 1986 24 0 6 1BR 580 $435 $596 $0.75 $1.03 505 SW 5th St 18 2BR 757 $470 $636 $0.62 $0.84 Pine Island Fox Meadows 1978 32 1 16 1BR 600 NW Main St 16 2BR Pine Island n/a n/a $666 $731 n/a n/a North Submarket Total 56 1 1.8% ROCHESTER SUBMARKET SUBSIDIZED Bostrom Terrace 2005 14 0 14 1BR 1600 Eastwood Rd SE Rochester 540 $594 $1.10 Newbridge Apartments 1985 41 0 30 1BR 325 1st Ave SW 11 2BR Rochester 533 745 $885 $993 $1.66 $1.33 CONTINUED MAXFIELD RESEARCH INC. 144

RENTAL MARKET ANALYSIS Table R 4 Affordable/ Subsidized Rental Properties Olmsted County Market Area 4th Quarter 2013 Year Monthly Rent per Project Name/Location Built Total Vacant Unit Mix Unit Size Rent Square Foot Innsbruck 1982 40 0 27 2BR 1510 1570 50th St NW 12 3BR Rochester 1 4BR 885 $886 $1.00 1,076 1,517 $987 $1,045 $0.92 $0.69 The Hylands 1980 100 0 6 1BR 2700 Charles Court NW 62 2BR Rochester 32 3BR n/a $654 n/a $741 n/a $800 n/a n/a n/a Rochester Square 1970 65 0 8 EFF 400 $374 $0.94 320 31st Street NE 24 1BR 575 $519 $580 $0.90 $1.01 Rochester 33 2BR 700 $654 $675 $0.93 $0.96 Eastridge Estates 1970 90 0 39 1BR 2009 17th Street SE 39 2BR Rochester 12 3BR 680 885 1,095 $697 $840 $1,050 $1.03 $0.95 $0.96 Northgate Community Housing 1965 12 0 12 1BR 2025 18 1/2 Avenue NW Rochester 618 $367 $0.59 Rochester Submarket Total 362 0 0.0% STEWARTVILLE SUBMARKET SUBSIDIZED Eastside Village 1977 30 0 16 1BR 111 2nd St 10 2BR Stewartville 4 3BR n/a n/a n/a 30% of income 30% of income 30% of income n/a n/a n/a Downtowner II n/a 25 0 n/a 1BR 106 4th Street NE n/a 2BR Stewartville n/a $550 n/a $575 n/a n/a Stewartville Submarket Total 55 0 0.0% Total of All Subsidized Submarkets 553 5 0.9% Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 145

RENTAL MARKET ANALYSIS TABLE R 5 COMMON AREA FEATURES/AMENITIES EXISTING RENTAL PROJECTS OLMSTED COUNTY MARKET AREA 4th Quarter 2013 In Unit/Common Area Amenities Utilities and Parking Projects Air Conditioning Dishwasher Patio/Balcony Walk in Closet Laundry Elevator Community Room Fitness Center Playground Pool Extra Storage Space Heat/Gas Electricity Water/Sewer Trash Cable Parking Parking Fee (per month) Olympik Village Y Y Y na Y na Y na Y Y Y L T L L T DG $40 Berkshire Village Y Y Y na Y na na na na na Y L T L L T O Winchester Y Y Y na Y na na na Y Y na L T L L T DG $45 Heritage Manor Y Y Y na Y na Y na Y Y Y L T L L T DG $40 Woodridge Apts Y Y Y na Y Y Y Y Y Y na L T L L T UG Gates of Rochester Y Y Y na Y na Y Y Y Y na T T L L T DG Summit Square Y Y na na Y na Y Y Y Y Y L T L L T DG $40 Avalon Cove TH Y Y Y na Y na Y na Y na Y T T T L T AG Jordan Mills & Creek Y Y na Y Y na na Y na na Y L T T T T DG Homestead Village TH Y Y na Y Y na na na na na Y T T T L T AG Timberland Heights Y Y Y Y Y na Y Y Y Y na T T T T T DG $50 Evanston Heights Y Y na na Y na na na na na na L L L L T O Douglas Trail TH Y Y Y na Y na na na na na na T T L L T AG GrandeVille Y Y Y na Y na Y Y Y Y na T T L L T DG Rolling Ridge TH Y Y Y na Y na na na Y na na L T L L T AG Quarry Ridge Y Y Y na Y Y Y Y na Y na T T L L T UG Royal Oaks TH Y Y na na Y na na na Y na na L T L L T DG The Edge at UCR Y Y na na Y na na na na na na L L L L T O Sunset Trail Y Y Y na Y Y Y Y Y Y na L T L L T UG Parkside TH Y Y Y na Y na na na Y na na L T L L T AG Bear Creek Y Y Y na Y na na na Y na na L T L L T na Meadow Park na na na na na na na na na na na na na na na na na na Center St. Village Y Y Y Y Y na na na na na na T T L L T DG Civic Square Y Y na na Y na Y Y na na na T T L L T O Residences at Old City Y Y na na Y na na na na na na L L L L T O Silver Lake na na na na na na na na na na na na na na na na na na Hillside Y Y na na Y Y na na na na Y L L L L T O Note: Y=Available, N=Not Available; I=Included CA=Central Air; W=Wall unit air; S=Some units; DG=Detached Garage; UG=Underground; AG=Attached Garage; O=Offstreet; IU=In unit; HU=Hook ups; C=Common CONTINUED MAXFIELD RESEARCH INC. 146

RENTAL MARKET ANALYSIS TABLE R 5 Continued COMMON AREA FEATURES/AMENITIES EXISTING RENTAL PROJECTS OLMSTED COUNTY MARKET AREA 4th Quarter 2013 In Unit/Common Area Amenities Utilities and Parking Projects Air Conditioning Dishwasher Patio/Balcony Walk in Closet Laundry Elevator Community Room Fitness Center Playground Pool Extra Storage Space Heat/Gas Electricity Water/Sewer Trash Cable Parking Parking Fee (per month) River's Edge Y Y na na Y na na na na na na T T L L T O Valley High Y Y Y na Y na na na Y na na na na na na na DG Hawk Ridge TH na na na na na na na na na na na na na na na na na na Highland Court Y Y Y na Y na na na na na na L T L L T O Georgetowne Homes Y Y Y na Y na na na Y na na T T L L T AG Georgetown Square Y Y Y na Y na na na Y na na T T L L T AG Crown Y Y Y na Y na na na na na na T T L L T DG Bandel Hills TH Y Y Y na Y na Y na Y na na T T L L T AG Colby Manor Y Y na na Y na na na na na na na na na na na na na Pillhill Y Y na na Y na na na na na na L T L L T O Mile Manor Y Y Y na Y na na na na na Y L T L L T O Windsor Court Y Y na na Y na na na na na na na na na na na na na Sutton Place Y Y na na Y na na na na na na L T L L T O Rolling Greens Y Y na na Y na na na na na Y L T L L T AG Wyndmark na na na na na na na na na na na na na na na na na na Kodiak Y Y Y na Y na Y Y na Y na na na na na na UG Cottages of Stewartville Y Y Y na Y na Y na na na Y na Lakewood Y Y Y Y Y Y na na na na na T T L L T O Far Park Y Y Y na na Y na na na na na L T T T L DG 3rd Ave Lofts Y Y Y na na Y na na na na na na Brittany's TH Y Y Y na Y na na na Y na na na na na na na AG Metropolitan Market na na na na na na na na na na na na na na na na UG Cavalier Y Y na na Y na na na na na na L T L L T DG Cascade Shores TH Y Y Y na Y na Y na Y na Y T T T L T AG Regency Y Y na na Y na na na na na na L T L T L O Villa East Y Y na na Y na na na Y na na L T L L T O Villa West Y Y na na Y na na na Y na na L T L L T O 307 3rd Ave NW na na na na na na na na na na na na na na na na na 318 Commons Y Y na na Y na na na na na na L L L L T O Northern Valley Y Y na na Y na na na na na na T T L L T DG Note: Y=Available, N=Not Available; I=Included CA=Central Air; W=Wall unit air; S=Some units; DG=Detached Garage; UG=Underground; AG=Attached Garage; O=Offstreet; IU=In unit; HU=Hook ups; C=Common CONTINUED MAXFIELD RESEARCH INC. 147

RENTAL MARKET ANALYSIS TABLE R 5 Continued COMMON AREA FEATURES/AMENITIES EXISTING RENTAL PROJECTS OLMSTED COUNTY MARKET AREA 4th Quarter 2013 In Unit/Common Area Amenities Utilities and Parking Projects Air Conditioning Dishwasher Patio/Balcony Walk in Closet Laundry Elevator Community Room Fitness Center Playground Pool Extra Storage Space Heat/Gas Electricity Water/Sewer Trash Cable Parking Parking Fee (per month) Village Green TH Y Y Y na Y na na na Y Y na T T L L T AG Washington Village Y Y Y na Y na Y na Y na na L T L L T DG 109 16th St. NE na na na na na na na na na na na na na na na na na Washington Village East Y Y Y na Y na Y na Y na na L T L L T DG Pineview TH Y Y Y Y Y na na na Y na na na na na na na AG Village at Essex Park Y Y na na Y na Y Y na na na na na na na na DG $40 Country View Y Y na na Y na na na na na na T T T L T O Eastwood Manor Y Y na na Y na na na na na na L T L T T O Furlow Y Y na na Y na na na na na na L T L T T O Hamilton Y Y Y na Y na na na na na na L T L T T O Lamoine Y Y na na Y na na na na na na L T L L T O Raymond Y Y na na Y na na na na na na L T L L T O Richard Y Y Y na Y na na na na na na L T L L T DG Sunrise TH Y Y Y na Y na na na Y na na T T T L T AG The Pines Y Y Y na Y na na na na na na T T T T T AG Zick Apartments Y Y na na Y na na na na na na L T L L T O Soppa's Independent Y Y Y na Y na na na na na na na na na na na AG Crystal Bay TH Y Y Y na Y na Y na Y na Y T T T L T AG French Creek TH Y Y Y na Y na Y na Y na Y T T T L T AG Baylee TH na na na na na na na na na na na na na na na na AG Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 148

RENTAL MARKET ANALYSIS Affordable/Subsidized There are a total of 28 income restricted projects (affordable and subsidized) in the Olmsted County Market Area with 1,179 total units. Combined, 14 units are vacant posting a vacancy rate of only 1.2%. Typically, subsidized and affordable rental properties should be able to maintain vacancy rates of 3% or less in most housing markets. The low vacancy rates in the market indicate pent up demand for affordable and subsidized units and also are an indication of the current economic climate in the area. About 28% of the affordable/subsidized inventory was constructed in the 2000s. Also, 20% of the inventory was built in the 1990s and 24% in the 1970s. Units 300 250 200 150 100 50 0 Olmsted County Market Area Aff./ Sub.Rental Stock (Year Built) Units Projects 2010s 2000s 1990s 1980s 1970s 1960s 8 7 6 5 4 3 2 1 0 # of Projects There are a total of 14 affordable projects in the Olmsted County Market Area that consist of 626 units. As of 4 th Quarter 2013, there are 9 vacancies (1.4% vacancy rate). Affordable projects are typically financed through the Low Income Housing Tax Credit (LIHTC) program, otherwise known as the Section 42 program. The maximum income limit for residency at these projects is established by HUD and the Minnesota Housing Finance agency (MHFA) and is based on Olmsted County incomes (see page 202 in the Housing Affordability section). Nearly all of the affordable projects are affordable at 60% of area median income (AMI). The fourteen subsidized projects comprise 553 units and three vacancies (0.9% vacancy rate). The properties are a mix of Section 8 and Section 236 developments. Projects have rents based on 30% of a resident s adjusted gross income (AGI). Cascade Creek Apartments and Castle View Apartments are the newest affordable developments having been constructed in 2011 and 2008, respectively. Because they are newer tax credit properties, they offer more amenities than the older affordable and subsidized MAXFIELD RESEARCH INC. 149

RENTAL MARKET ANALYSIS properties. Project amenities include laundry, dishwashers, air conditioning, attached/underground garage parking, and extra storage space. Rental Market Interview Summary Interviews with area rental property managers, real estate agents, developers, and other persons familiar with the rental market in Olmsted County were conducted to solicit their impressions of the rental housing market in the community. The following are some key points from these interviews: Most market rate apartments have had no issue finding future residents over the last three to five years. Many of the market rate apartments that are struggling to fill open units are older complexes, lack an attractive amenity package, or do not have competitive rents for the area. It is easy for prospective residents to locate bigger unit complexes online. However, many of the smaller unit complexes are managed by individuals rather than management companies and only advertise with a phone number on the building or the local newspaper. As a result, it can be difficult for future residents to discover these complexes. The renter profile did not have an outstanding majority, managers at each property stated they had a wide mix of tenants. Some apartments indicated that their tenant mix ranged from college students to middle aged professionals. Most subsidized and affordable apartments have had no issue finding future residents over the last three to five years as well. Several property managers believe there is an extreme need for subsidized/ affordable housing in Olmsted County. Real estate agents and developers believe that smaller units, such as studios, have become less desirable to prospective residents over the past years. Although studio units are cheaper, the price per square foot is usually much higher than other units. The majority of Olmsted County s rental housing units were built in the 1990s to 2010s. The rental housing market since 2000 has featured several luxury style apartments. These apartments feature many additional amenities such as updated appliances, unique floor plans, underground parking, washer/dryer in unit, walk in closets, and fitness centers. MAXFIELD RESEARCH INC. 150

SENIOR HOUSING ANALYSIS Senior Housing Defined The term senior housing refers to any housing development that is restricted to people age 55 or older. Today, senior housing includes an entire spectrum of housing alternatives, which occasionally overlap, thus making the differences somewhat ambiguous. However, the level of support services offered best distinguishes them. Maxfield Research Inc. classifies senior housing projects into five categories based on the level of support services offered: Adult/Few Services; where few, if any, support services are provided, and rents tend to be modest as a result; Congregate/Optional Services; where support services such as meals and light housekeeping are available for an additional fee; Congregate/Service Intensive; where support services such as meals and light housekeeping are included in the monthly rents; Assisted Living; where two or three daily meals as well as basic support services such as transportation, housekeeping and/or linen changes are included in the fees. Personal care services such as assistance with bathing, grooming and dressing is included in the fees or is available either for an additional fee or included in the rents. Memory Care; where more rigorous and service intensive personal care is required for people with dementia and Alzheimer s disease. Typically, support services and meal plans are similar to those found at assisted living facilities, but the heightened levels of personalized care demand more staffing and higher rental fees. These five senior housing products tend to share several characteristics. First, they usually offer individual living apartments with living areas, bathrooms, and kitchens or kitchenettes. Second, they generally have an emergency response system with pull cords or pendants to promote security. Third, they often have a community room and other common space to encourage socialization. Finally, they are age restricted and offer conveniences desired by seniors, although assisted living projects sometimes serve non elderly people with special health considerations. The five senior housing products offered today form a continuum of care (see illustration below) from a low level to a fairly intensive one; often the service offerings at one type overlap with those at another. In general, however, adult/few services projects tend to attract younger, more independent seniors, while assisted living and memory care projects tend to attract older, frailer seniors. MAXFIELD RESEARCH INC. 151

SENIOR HOUSING ANALYSIS CONTINUUM OF HOUSING AND SERVICES FOR SENIORS Single-Fam ily Home Townhome or Congregate Apartm ents w/ Assisted Living Apartment O ptional Services Age-Restricted Independent Apartments, Congregate Apartm ents Townhom es, Condom inium s, or w/ Intensive Services Cooperatives Nursing Facilities M emory Care Units Fully Independent Lifestyle Fully or H ighly Dependent on Care Source: Maxfield Research Inc. Senior Housing Products Senior Housing in the Olmsted County Market Area As of 4 th Quarter 2013, Maxfield Research identified 44 senior housing developments in the Olmsted County Market Area. Combined, these projects contain a total of 2,599 units. Thirty of the projects are market rate, while the remaining fourteen projects are affordable/subsidized. Tables S 1 provides a summary of units and vacancies for each submarket within the Olmsted County Market Area. Tables S 2 through S 4 provides information on both the market rate and affordable/subsidized projects. Information in the table includes year built, number of units, unit mix, number of vacant units, rents, and general comments about each project. Tables S 5 and S 8 illustrate identify amenities and services at each of the projects. Table S 9 shows information on nursing home facilities in the Olmsted County Market Area. Senior Housing Summary by Submarket TABLE S 1 SENIOR HOUSING SUMMARY BY OLMSTED COUNTY SUBMARKET 4TH QUARTER 2013 Olmsted County Submarket Product Type Byron East North Rochester Rochester Fringe Stewartville Total Affordable/Subsidized Units 36 23 799 35 893 Vacancy Rate* 8.3% 0.0% 0.4% 8.6% 0.9% Active Adult Ownership Units 276 276 Vacancy Rate* 4.0% 4.0% Congregate Optional Services Units 12 12 258 29 311 Vacancy Rate* 0.0% 0.0% 0.7% 6.9% 1.3% Congregate Service Intensive Units 457 457 Vacancy Rate* 5.9% 5.9% Assisted Living Units 64 12 293 12 381 Vacancy Rate* 31.0% 16.7% 1.0% n/a 6.8% Memory Care Units 281 281 Vacancy Rate* 3.6% 3.6% Total Units 112 47 2,364 76 2,599 Vacancy Rate 23.9% 4.3% 4.5% 8.6% 3.5% * Vacancy rate includes only participating properties Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 152

SENIOR HOUSING ANALYSIS Affordable/Subsidized Senior Housing Projects Subsidized senior housing offers affordable rents to qualified lower income seniors and handicapped/disabled persons. Typically, rents are tied to residents incomes and based on 30 percent of adjusted gross income (AGI), or a rent that is below the fair market rent. For those households meeting the age and income qualifications, subsidized senior housing is usually the most affordable rental option available. Affordable projects are typically taxcredit projects that are limited to households earning less than 80% of Olmsted County s area median income. There are a total of 893 units in fourteen affordable/subsidized senior projects. As of 4 th Quarter 2013, there were seven units vacant (0.9% vacancy rate), indicating pent up demand for affordable/subsidized senior rental units. About 94% of the affordable/subsidized units are one bedrooms. The remaining units are two bedrooms (5.0%), three bedrooms (0.6%), and four bedrooms (0.4%). Units 1000 900 800 700 600 500 400 300 200 100 0 Olmsted County Market Area Senior Housing Inventory 276 Active Adult Ownership 311 457 381 281 893 Cong. Opt. Svs. Cong. Svs. Int. Assisted Living Memory Care Aff./Sub. Service Level MAXFIELD RESEARCH INC. 153

SENIOR HOUSING ANALYSIS TABLE S 2 SUBSIDIZED/AFFORDABLE SENIOR HOUSING PROJECTS OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 Occ. No. of Vac. Units/ Unit Sizes Rent/Price Per Project Name Date Units Vac. Rate Unit Mix (Sq. Ft.) Monthly Rents* Square Foot Comments Active Adult/Few Services Kenosha Drive Apartments/ 2010 53 1 53 1BR Rochester Senior Housing 1.9% 3461 Kenosha Drive NW Rochester, MN 800 $485 $0.61 Section 202 for seniors age 62+. The High Pointe II 2004 54 0 54 1BR 1830 High Pointe Lane NW 0.0% Rochester, MN 540 $566 30% of AMI $1.05 PRAC 202. Owned and operated by Volunteers of America. The High Pointe I 2001 39 0 39 1BR 1800 High Pointe Lane NW 0.0% Rochester, MN 540 $566 30% of AMI $1.05 PRAC 202. Owned and operated by Volunteers of America. Fontaine Towers 1983 151 0 150 1BR 545 Contract $990 102 2nd Street SE 0.0% 1 2BR 1,025 Contract $1,167 Rochester, MN 30% AMI Halter Heights 1980 12 1 11 1BR 624 Basic $465 $0.75 1224 East Avenue 8.3% 1 2BR 750 Market $630 $1.01 St. Charles, MN Basic $485 Market $650 $0.65 $0.87 Section 8. 17 story tower located in Downtown Rochester. 8 units are handicapped accessible. HUD Rural Development. Approximately five units with assistance. Northgate Plaza 1979 151 2 151 1BR 902 11th Avenue NW 1.3% Rochester, MN 561 $667 Section 8. senior dining Park Towers 1973 180 0 180 1BR 650 $554 $614 $0.85 $0.94 22 North Broadway 0.0% 30% of AMI Rochester, MN Rochester Square Apts. 1970 30 0 4 Studio 400 $374 $0.94 310 & 320 NE 31st Street 0.0% 11 1BR 575 $519 $580 $0.90 $1.01 Rochester, MN 15 2BR 700 $654 $675 $0.93 $0.96 Section 8. Noon meals provided 5 days/week by SEMCAC. HUD. Consists of 104 total units; 9 being tax credit and 65 as Section 8 for families. 30 units are for the elderly. Eastridge Estates 1970 36 0 15 1BR 2009 17th Street SE 0.0% 15 2BR Rochester, MN 6 3BR 680 885 1,095 $697 $840 $1,050 $1.03 $0.95 $0.96 HUD. No pets allowed. Consists of 126 total units, of which 36 are for elderly and 90 are for families. Lakewood Apartments n/a 24 n/a 24 1BR 475 n/a n/a n/a n/a 420 Bench Street 30% AMI Chatfield, MN Section 8. 62+ community, disabled or handicapped. Features carpeting and is cable ready. CONTINUED MAXFIELD RESEARCH INC. 154

SENIOR HOUSING ANALYSIS Occ. No. of Vac. Units/ Unit Sizes Rent/Price Per Project Name Date Units Vac. Rate Unit Mix (Sq. Ft.) Monthly Rents* Square Foot Comments City Centre/Pine Island Apts. n/a 23 0 21 1BR 780 Basic $452 $0.58 FmHA. Rural Development age 62+. Approximately 10 300 SE 1st Ave 0.0% Market $642 $0.82 units are receiving assistance. Pine Island, MN 2 2BR 1,020 Basic $472 Market $662 $0.46 $0.65 Central Towers n/a 105 n/a 96 1BR n/a n/a n/a n/a n/a n/a Section 42. 200 First Ave NE 9 2BR Rochester, MN The Downtowner II NA 35 3 31 1BR NA Contract $550 USDA Rural Development, age restricted to 62 and 106 4th Street NE 8.6% 4 2BR NA Contract $575 older. Stewartville, MN Bostrom Terrace NA NA NA NA NA NA 30% of AMI NA NA Section 8. Managed by Accessible Space. 1680 Eastwood Road SE NA NA NA NA NA Management declined to give out information Rochester, MN NA NA NA NA NA pertaining to year built, vacancies, unit mix, unit sizes or monthly rents. Total Subs./Affordable 893 7 Source: Maxfield Research Inc. TABLE S 2 (Con't) SUBSIDIZED/AFFORDABLE SENIOR HOUSING PROJECTS OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 MAXFIELD RESEARCH INC. 155

SENIOR HOUSING ANALYSIS TABLE S 3 MARKET RATE SENIOR HOUSING PROJECTS OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 Occupancy No. of Vacant Units/ Unit Sizes Entrance Fee/ Rent/Price Per Project Name Date Units Vacancy Rate Unit Mix (Sq. Ft.) Share Cost* Monthly Rents* Square Foot Comments Active Adult Ownership River Bluff Cooperative at Elton Hills 2009 50 8 12 1BR 798 922 $145,900 $185,900 $331 $388 $0.41 $0.49 1530 Greenview Drive SW 16.0% 30 2BR 1,104 1,290 $196,900 $210,900 $216 $465 $0.20 $0.36 Rochester, MN 2 2BR+D 6 3BR 1,350 1,461 $252,900 $261,900 $536 $573 $0.40 $0.39 Features an underground car wash bay, business center, workshop, trash chutes and party room with fully equipped kitchen. Share costs for 1BR units are approximate. Fairway Ridge 2004 52 3 4 1BR 807 n/a n/a n/a n/a n/a n/a 3504 Fairway Ridge Lane SW 5.8% 15 1BR/D 976 1,717 n/a n/a n/a n/a n/a n/a Rochester, MN 25 2BR 1,195 1,306 n/a n/a n/a n/a n/a n/a 8 3BR 1,471 n/a n/a n/a n/a n/a n/a 20 2BR TH 1,700 3,400 n/a n/a n/a n/a n/a n/a Gramercy Park 1997 87 n/a 26 1BR 695 876 $27,559 n/a $574 n/a n/a n/a 1333 Arthur Lane NW 61 2BR 993 1,352 n/a n/a n/a n/a n/a n/a Rochester, MN Features computer room, workshop and car wash. Currently has a waiting list. $500 fee to add name to wait list. Realife Cooperative 1993 87 0 23 1BR 660 795 $26,359 $32,089 $519 $560 $0.79 $0.85 Currently has a waiting list. 825 Essex Parkway NW 0.0% 64 2BR 1,074 1,387 $38,741 $57,071 $671 $1,118 $0.62 $0.81 Rochester, MN Active Adult Ownership Subtotal 276 11 4.0% Congregate Service Intensive The Homestead 2 2005/ 77 0 17 1BR 828 870 $1,395 1900 Ballington Drive NW 2006 0.0% $31,300 $1,195 Rochester, MN 7 1BR+D 682 725 $1,720 $39,000 $1,470 32 2BR 660 1,205 $1,980 $3,070 $44,700 $70,000 $1,690 $2,615 21 2BR+D 1,075 2,052 $2,225 $3,875 $51,000 $88,400 $1,900 $3,310 Meadow Lakes 2000 65 3 50 1BR 564 686 $2,330 $3,250 $4.13 $4.74 22 45th Ave NW 4.6% 15 2BR 830 $2,870 $3,790 $3.46 $4.57 Rochester, MN Charter House 2 1985 234 23 106 1BR 670 750 $0 $3,690 $4,485 $5.51 $5.98 211 2nd St NW 9.8% $105,000 $135,000 $2,090 $2,350 $156.72 $180.00 Rochester, MN 75 2BR 1,000 1,340 $0 $5,810 $5,810 $4.34 $5.81 $180,000 $180,000 $3,275 $3,730 $134.33 $180.00 53 2BR Large 1,460 1,750 $0 $6,985 $8,685 $4.78 $4.96 $275,000 $340,000 $3,840 $5,575 $188.36 $194.29 Madonna Towers 2 1967 81 1 6 Studio 341 $1,980 $1.54 $4.02 4001 19th Ave NW 1.2% 51 1BR 521 682 $1,980 $3,670 $1.36 $5.29 Rochester, MN 3 1BR TH 540 660 $1,980 $3.55 $4.06 15 2BR 878 1,321 $2,440 $4,460 $2.18 $4.00 6 2BR TH 878 1,321 $2,440 A Volunteers of America property. Also features transitional/short term care. There is currently a 2.5 year waiting list. Breaking ground December on a 54 unit expansion due to extended waitlist. Residents have the option to put down an entrance fee in return for a smaller monthly rent. Second occupant fee of $540. All residents receive three meals per day. The facility is a CCRC. Most residents put down entrance fees. Second occupant fee of $660. Used to feature 239 units, but converted some to guest suites. One unit was combined with another resulting in a 2,100 s.f. two bedroom apartment. Entrance fee is optional. Offers home health care and rehab services. Features garden plots, mini store and chapel. CONTINUED MAXFIELD RESEARCH INC. 156

SENIOR HOUSING ANALYSIS Occupancy No. of Vacant Units/ Unit Sizes Entrance Fee/ Rent/Price Per Project Name Date Units Vacancy Rate Unit Mix (Sq. Ft.) Share Cost* Monthly Rents* Square Foot Comments Arbor Gardens 2003 12 0 2 1BR 535 Canyon Drive NW 0.0% 10 2BR Eyota, MN TABLE S 3 CONTINUED MARKET RATE SENIOR HOUSING PROJECTS OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 Congregate Optional Services 709 $956 $1.35 1,032 $1,130 $1.09 Satellite connection and remote call pendants are $20 monthly each. Shorewood Place 1 1999 157 0 54 1BR 662 928 $1,330 $1,787 $1.93 $2.01 Have priority for the assisted living 2115 2nd St SW 0.0% 41 1BR/D 848 989 $1,642 $1,862 $1.88 $1.94 Rochester, MN 59 2BR 1,021 1,074 $1,877 $1,971 $1.84 $1.84 3 3BR 1,434 $2,503 $1.75 Root River Estates 1998 29 2 23 1BR 500 $1,130 $2.26 Part of the Stewartville Care Center campus. 120 4th St. NE 6.9% 6 2BR 736 $1,445 $1.96 Currently has a waitlist of over a year. Stewartville, MN Evergreen Place 1995 12 0 6 1BR 505 538 $900 $1.67 $1.78 210 3rd Street NW 0.0% 6 2BR 600 700 $1,200 $1.71 $2.00 Pine Island, MN Samaritan Bethany Arbor Terrace 1992 51 0 35 1BR 380 450 $1,305 $1,476 $3.28 $3.43 700 NW 2nd Avenue 0.0% 16 2BR 590 650 $1,650 $1,819 $2.80 $2.80 Rochester, MN Stewartvilla Apartments 1980 32 0 31 1BR 120 4th St. NE 0.0% 1 2BR Rochester, MN The Maples Apts. 1960 18 2 4 1BR 1893 19th St. NW 1988 11.1% 14 2BR Rochester, MN 550 650 650 727 $634 $752 $750 $1,000 $1.15 $1.16 $1.15 $1.38 Two story building adjacent and connected to Pine Haven Care Center. Free storage lockers. Located Downtown Rochester near Mayo Clinic campus. Three story building. Features two handicapped accessible apartments. Part of the Stewartville Care Center campus. Attached to and a part of the Maple Manor Health Care and Rehabilitation Center. Two units are currently under renovation. Second occupant fee is $150. Only 2BR units have walk in closets. Congregate Total 768 31 4.0% Total Independent Living 1,044 42 4.0% 1 Fees includes a $56/mo. mandatory meal package that includes eight meals per month. 2 Multiple financing plans available. Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 157

SENIOR HOUSING ANALYSIS TABLE S 4 ASSISTED LIVING SENIOR PROJECTS OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 Date No. of Vacant Units/ Unit Sizes Rent/Price Per Project Name Opened Units Vacancy Rate Unit Mix (Sq. Ft.) Monthly Rents 1 Square Foot Comments Assisted Living The Homestead 2005 44 2 35 1BR 639 803 $2,655 $3,330 $3.31 $4.15 Four story building owned and 1900 Ballington Drive NW 4.5% 9 2BR 964 1,082 $4,010 $4,490 $4.16 $4.66 managed by VOA. Rochester, MN Arbor Gardens 2003 22 1 14 Studio 476 515 $2,300 $4.47 $4.83 535 Canyon Drive NW 4.5% 8 1BR 546 $2,500 $2,600 $4.58 $4.76 Eyota, MN St. Charles Assisted Living 2002 42 19 34 Studio 390 450 $1,980 $4.40 $5.08 402 West 4th St. 45.2% 8 1BR 550 $2,380 $4.33 St. Charles, MN Charter House 2001 82 0 50 Prvt. Ste. 470 $6,810 $14.49 211 2nd Street MW 0.0% 32 Enhanced Care/ 218 240 $7,350 $7,860 $32.75 $33.72 Rochester, MN Supportive Second person fee of $545/month. Contracts with Olmsted County programs of CADI, EW and GRH. Features a whirlpool room. Across the street from the Olmdsted Medical Cetner and Weber & Judd. Exclusively for residents of Indepenent living, not open to public. Daily rates are $227 for private suites and range from $245 $262 for enhanced care. Samaritan Bethany Arbor Terrace 2000 16 0 16 Studio 700 NW 2nd Avenue 0.0% Rochester, MN 240 $2,853 $11.89 Monthly rents are all inclusive. Shorewood Commons Reflections * 1999 61 0 18 Studio 451 $2,491 $5.52 2115 2nd St. SW 0.0% 32 1BR 528 668 $2,839 $3,047 $4.56 $5.38 Rochester, MN 11 2BR 681 882 $3,112 $3,598 $4.08 $4.57 Madonna Meadows 1999 72 1 12 Comp. Ste. 430 $4,400 $10.23 3035 Salem Meadows Drive SW 1.4% 54 Prvt. Ste. 270 $3,190 $3,240 $11.81 $12.00 Rochester, MN 6 Deluxe Ste. 300 $3,340 $11.13 Features garden plots, patio and fireplace parlor. Formerly Wynwood. Rents all inclusive. Evergreen Place 1995 12 2 12 Studio 210 3rd Street NW 16.7% Pine Island, MN 375 $2,300 $6.13 Two story building adjacent and connected to Pine Haven Care Center. Free storage lockers. Madonna Towers 1967 18 0 10 Studio 4001 19th Avenue NW 0.0% 8 1BR Rochester, MN 341 $3,795 $11.13 521 $4,550 $8.73 Features garden plots, mini store and chapel. CONTINUED MAXFIELD RESEARCH INC. 158

SENIOR HOUSING ANALYSIS TABLE S 4 ASSISTED LIVING/MEMORY CARE SENIOR PROJECTS OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 Date No. of Vacant Units/ Unit Sizes Rent/Price Per Project Name Opened Units Vacancy Rate Unit Mix (Sq. Ft.) Monthly Rents 1 Square Foot Comments Stewartville Garden Cottages n/a 12 n/a n/a Studio n/a n/a n/a Not available. 500 1st Ave SE n/a 1BR n/a n/a n/a Stewartville Assisted Living Total 381 25 6.6% Samaritan Bethany Arbor Terrace 2011 16 0 16 Studio 700 NW 2nd Avenue 0.0% Rochester, MN Memory Care 240 $4,715 $19.65 Monthly rents are all inclusive. Madonna Towers 2008 16 2 14 Studio 390 $4,500 $11.54 4001 19th Avenue NW 12.5% 2 Shared 490 $4,940 $10.08 Rochester, MN The Homestead 2005 16 0 5 Studio 412 530 $3,087 $5.82 $7.49 1900 Ballington Drive NW 0.0% 11 1BR 639 685 $3,446 $3,662 $5.39 $5.73 Rochester, MN Shorewood Commons * 1998 13 0 4 0BR 451 $3,087 $6.84 2115 2nd St. SW 0.0% 7 1BR 528 669 $3,446 $3,662 $5.47 $6.53 Rochester, MN 2 2BR 681 882 $3,713 $4,236 $4.80 $5.45 Cottagewood Senior Communities* 1995 220 8 192 Shared 340 $3,660 $10.76 4310 4336 55th Street NW 2000 3.6% 28 Prvt. Ste. 540 $4,110 $4,410 $7.61 $8.17 Rochester, MN Attached to nursing home. Features enclosed courtyard. Second occupant fee of $800. Four story building owned and managed by VOA. Private bathroom in each unit. Services provided by 24 hour resident care team and RN. Formerly known as Sunrise. Changed ownership and focused strictly on memory care 4 years ago. Memory Care Total 281 10 # 3.6% Total AL/MC Units 662 35 5.3% Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 159

SENIOR HOUSING ANALYSIS TABLE S-5 SERVICES COMPARISON MARKET RATE SENIOR PROJECTS OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 Utilities Transportation Activities Meal Program Laundry Hskpg. Health/Misc. Active Adult Ownership Fairway Ridge Resident pays heat, Scheduled van service. Coordinated by mgmt. & None. None. None. None. electric & cable. resident committee. Grammercy Park Resident pays heat, Scheduled 4x daily Monday Coordinated by Mgt. & None. Optional $25/hr. None. electric, & cable. through Friday. resident committee. Realife Electricity paid by Van service 4 x daily Monday - Coordinated by mgmt. & None. Community facilities. None. None. resident. Friday. resident committee. River Bluff Residents pay electric, Scheduled van service. Coordinated by activities None. In-Unit. None. None. heat, internet and phone. committee. Congregate Service Intensive Meadow Lakes All included except cable and phone. Van transportation provided as needed. Coordinated by F.T. Activity Director. Three meals per day plus snacks. Community facilities. 30 minutes provided weekly. 24-hour on-site staff. Can contract with a Home Health for addt'l services. Charter House All included except internet and phone. Daily van transportation. Full-time director, 2 full 26 meals/mo. Included. Community facilities. Weekly included. Services available a-la carte via onsite time fitness staff. Home Health. Madonna Towers All included. Daily scheduled trips. Full-time director. 20 meals a month. Community facilities. 2 times a month. Home Health agency on-site. The Homestead All included except Scheduled van transportation Full time director and Continental breakfast, In-unit. Optional. internet. and as needed. staff. additional meals available. Optional through on-site Home Health Agency. Congregate Optional Services Shorewood Place Residents pay electric Scheduled transportation. Full-time activities 6 meals required monthly. Community facilities. Optional. and phone. director. Available through Comfort Home Health. Samaritan Bethany - All included except phone Medical appts Monday to Friday Full-time coordinator Full breakfast included, Community facilities. Weekly/included. Provided by on-site staff. and cable. as needed, grocery shopping and staff. additional meals are Arbor Terrace on Friday. optional. Arbor Gardens Resident pays electric. Scheduled van service. None. Optional. In-unit, community Optional. Optional. facilities provided. Root River Estates All included electric, Availible through Heartland Coordinated by Optional. Community facilities. Optional. phone and cable. Express. residents. 24-hr emergency response. RN available. Evergreen Place All included except telephone. Van to outings, appointments and shopping. Coordinated by management and staff. Optional. Available for purchase. Free community W/Ds provided. Light hskpg included weekly. Optional and are available a-la carte. Stewartvilla Apartments All included electric, Availible through Heartland Coordinated by resident Optional. Community facilities, Optional. telephone and cable. Express. committee. optional. 24-hr emergency response. RN available. The Maples All included except cable None. Coordinated by resident Provided by Maple Manor. One laundry room per Weekly optional. and phone committee. 4-plex. Available through Home Health agencies. CONTINUED MAXFIELD RESEARCH INC. 160

SENIOR HOUSING ANALYSIS TABLE S-5 CONTINUED SERVICES COMPARISON MARKET RATE SENIOR PROJECTS OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 Utilities Transportation Activities Meal Program Laundry Hskpg. Health/Misc. Assisted Living Charter House All included. Daily van transportation. Full-time director, 2 full time fitness staff. Three meals plus snacks daily. Weekly included. Weekly included and as needed. All inclusive with monthly rent. Samaritan Bethany - All included except phone Medical appts only Monday to Full-time coordinator Full breakfast included, Weekly included. Weekly included. Provided by on-site staff. Arbor Terrace and cable. Friday as needed, grocery and staff. additional meals are shopping on Friday. optional. Shorewood Commons - Reflections All included except phone. Daily van transportation. Full-time director, 2 full time fitness staff. Three meals plus snacks daily. Weekly included. Weekly included and as needed. All inclusive with monthly rent. Madonna Meadows All included except phone and cable. Shuttle to and from appointments provided as needed. Full-time coordinator and staff. Three meals plus snacks daily. Personal laundry included weekly. Weekly included. Point system with up to 100 points with each service billed individually Madonna Towers All included except phone and cable. Shuttle to and from appointments provided as needed. Full-time director and staff. Three meals plus snacks daily. Personal laundry included weekly. Weekly included. Point system with up to 100 points with each service billed individually. Arbor Gardens All included telephone Van to outings and shopping on Coordinated by mgmt. Three meals plus snacks In-unit. Optional for an Weekly included. 24-hour on-site staff. and cable. a scheduled basis. daily. extra fee. St. Charles Assisted Living All included telephone Van to outings and shopping on Coordinated by mgmt. Three meals plus snacks Weekly included. Weekly included. 24-hour on-site staff. and cable. a scheduled basis. daily. Evergreen Place All included except phone Van transportation available as Coordinated by F.T. Three meals per day Weekly included. Weekly included. 24-hour on-site staff. and cable. needed. director. included. The Homestead All included except Scheduled van transportation Full time director and Three meals plus snacks Weekly included. Weekly included. internet. and as needed. staff. daily. Point system ranging from $307 at Level 1 (required) up to $3,300 (Level 11). Memory Care Cottagewood Senior Communities All included except phone Scheduled transportation Full-time coordinator Three meals plus snacks Weekly included. Weekly included. 24-hour on-site staff. and cable. provided. and staff. daily. Shorewood Commons* All included except phone. Daily van transportation. Full-time director, 2 full time fitness staff. Three meals plus snacks daily. Weekly included. Weekly included and as needed. All inclusive with monthly rent. Samaritan Bethany - All included except phone Medical appts only Monday to Full-time coordinator Full breakfast included, Weekly included. Weekly included. Provided by on-site staff. and cable. Friday as needed, grocery and staff. additional meals are Arbor Terrace shopping on Friday. optional. Madonna Towers All included except phone Shuttle to and from Full-time director and Three meals plus snacks Weekly included. Weekly included. and cable. appointments provided as staff. daily. needed. The Homestead All included except Scheduled van transportation Full time director and Three meals plus snacks Weekly included. Weekly included. internet. and as needed. staff. daily. Point system with up to 100 points with each service billed individually. Services in packages ranging from $2,545 to $3,585. Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 161

SENIOR HOUSING ANALYSIS TABLE S 6 AMENITY COMPARISON MARKET RATE SENIOR PROJECTS OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 Emer. Call A/C Dishwasher Disposals Balc./Patio Walk in Shower Walk in Closet In Unit Laundry Storage Comm. Rm. Amenities/Features: Active Adult Ownership Fairway Ridge Yes Cent. Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes No Yes Underground included in fee Grammercy Park Yes Cent. Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Underground included in fee Realife Yes Cent. Yes Yes Yes Some Yes No Yes Yes Yes Yes Yes No Yes Yes No Yes Underground $45/mo. River Bluff No Cent. Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes No Yes Yes Yes Yes Underground included Congregate Meadow Lakes Yes Wall No No No Yes Yes No No Yes Yes No No Yes No Yes Yes Yes Garages $45/mo. Shorewood Place Yes Cent. Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes No No Underground $45/mo. Samaritan Bethany Arbor Terrace Yes Yes No No No Yes No No No Yes Yes No Yes Yes Yes No Yes No Off street surface Charter House Yes Cent. Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Ramp $45/month Madonna Towers Yes Cent. No No Yes Some No No Yes Yes Yes Yes Yes Yes Yes Yes No Yes Garages $30/month Arbor Gardens Yes Wall Yes Yes Yes Some Yes Yes Yes Yes Yes Yes Yes Yes No No No No Off street surface Root River Estates Yes Cent. No No No No No No No Yes Yes Yes No No No No Yes No Off street surface Evergreen Place Yes Wall No Yes No Yes No No Yes Yes Yes No No Yes No No No No Garages available Stewartvilla Apartments Yes Yes No No No Yes Yes No No Yes Yes No No Yes Yes Yes No No Off street surface The Maples Apts. Yes Wall No Yes No No Some No No Yes Yes No No No No No No No Off street surface The Homestead Yes Cent. Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Underground for $47/mo. CONTINUED Dining Room Exercise Rm. Activity Rm. Salon Library Game Rm. Terrace/porch Guest Suites Parking MAXFIELD RESEARCH INC. 162

SENIOR HOUSING ANALYSIS TABLE S 6 AMENITY COMPARISON MARKET RATE SENIOR PROJECTS OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 Amenities/Features: Emer. Call A/C Dishwasher Disposals Balc./Patio Walk in Shower Walk in Closet In Unit Laundry Storage Comm. Rm. Dining Room Exercise Rm. Activity Rm. Salon Library Game Rm. Terrace/porch Guest Suites Parking Assisted Living Charter House Yes Cent. Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Ramp $45/month Samaritan Bethany Yes Yes No No No No No No No Yes Yes No Yes Yes Yes No Yes No Off street Arbor Terrace surface Shorewood Commons Reflections Yes Cent. Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes No No NA Madonna Meadows Yes Cent. No No No No No No No Yes Yes Yes Yes Yes Yes Yes Yes No Off street surface Madonna Towers Yes Cent. No No Yes Some No No Yes Yes Yes Yes Yes Yes Yes Yes No Yes Garages $30/month Arbor Gardens Yes Yes No Yes No No No Yes No Yes No Yes Yes Yes Yes No No No Surface St. Charles Assisted Living Yes Cent. Yes Yes Yes Yes Yes No Yes Yes Yes No No Yes Yes Yes No No NA Evergreen Place Yes Wall No Yes No Yes No No Yes Yes Yes No No Yes No No No No Garages available The Homestead Yes Cent. No No No Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Underground for $47/mo. Memory Care Cottagewood Senior Communities* Yes Cent. No No No Yes Yes No No Yes Yes No Yes Yes Yes No Yes Yes Off street surface Shorewood Commons Yes Cent. No No No Yes Yes No No Yes Yes No Yes Yes Yes No No No Off street surface Samaritan Bethany Yes Yes No No No No No No No Yes Yes No Yes Yes Yes No Yes No Off street Arbor Terrace surface Madonna Towers Yes Cent. No No No Yes Yes No No Yes Yes No Yes Yes Yes No No No Off street surface The Homestead Yes Cent. No No No Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Underground for $47/mo. Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 163

SENIOR HOUSING ANALYSIS TABLE S 7 SERVICES COMPARISON SUBSIDIZED/AFFORDABLE SENIOR PROJECTS OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 Utilities Transportation Activities Meal Program Laundry Hskpg. Health/Misc. Active Adult Lakewood Apartments Resident pay heat, electric, cable & Available through R&S n/a None. Meals on Wheels available. Community facilities None. None. internet. Transportation provided. City Centre/Pine Island Apts. n/a n/a n/a n/a n/a n/a n/a Central Towers n/a n/a n/a n/a n/a n/a n/a Eastridge Estates All included except electric, phone, None. Resident committee. None. Community facilities. None. None. cable and internet. Fontaine Towers Water, heat and trash removal Walmart shuttle. Resident club. Noon meal provided Monday Community facilities None. included. through Friday by SEMCAC for provided. $3.50. Kenosha Drive Apartments/ NA Transportation provided Available for residents Available for residents Rochester Senior Housing through community who purchase Assisted who purchase Assisted resources. Living services. Living services. Three meals per day available for those who purchase Assisted Living service. Optional lunch delivery through SEMCAC. Available for residents who purchase Assisted Living services. Available through Home Health agency of their choosing. 24 hour on site resident assistant staff for residents who purchase Assisted Living services. Northgate Plaza n/a n/a n/a n/a n/a n/a n/a included Park Towers All included. Pay $8/month for a None. Social committee by Noon Meals delivered by SEMCAC Community facilities. None. None. wall A/C, which is not provided by residents. five times a week. the facility. Rochester Square Apts. All included except electric, phone, None. Resident committee. None. Community facilities. None. None. cable and internet. The High Pointe I All included except electric, phone None. Coordinated by Optional meals Monday through Community facilities. None. and cable. residents. Friday. The High Pointe II All included except electric, phone None. Coordinated by Optional meals Monday through Community facilities. None. and cable. residents. Friday. Service coordinator onsite. Service coordinator onsite. The Downtowner II All included except electric, phone None. None. None. Community facilities. None. None. and cable. Halter Heights All included except electric, cable None. None. None. None. None. None. and phone. Bostrom Terrace NA Transportation provided through community resources. Available for residents who purchase Assisted Living services. Three meals per day available for those who purchase Assisted Living service. Optional lunch delivery through SEMCAC. Available for residents who purchase Assisted Living services. Available for residents who purchase Assisted Living services. 24 hour on site resident assistant staff for residents who purchase Assisted Living services. Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 164

SENIOR HOUSING ANALYSIS TABLE S 8 AMENITY COMPARISON SUBSIDIZED/AFFORDABLE SENIOR PROJECTS OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 Amenities/Features: Adult Emer. Call A/C Dishwasher Disposals Balc./Patio Walk in Closet In Unit Laundry Storage Comm. Rm. Dining Room Exercise Rm. Activity Rm. Salon Library Game Rm. Terrace/porch Guest Suites Parking Lakewood Apartments Yes Wall Yes Yes No Yes No No No No No No No No No No n/a City Centre/Pine Island Apts. n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Central Towers n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Eastridge Estates Yes Wall Yes Yes Yes No No No Yes Yes Yes Yes No Yes No No No Off street surface Fontaine Towers Yes Wall No No No Some No No Yes Yes Yes Yes No Yes Yes Yes No Ramp next door for $75/month. Kenosha Drive Apartments/ Yes Yes No No No No No No Yes No Yes No No Yes No Yes No Off street Rochester Senior Housing surface Northgate Plaza n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Park Towers Yes No No No No Yes No No Yes Yes No Yes No No Yes Yes No Surface parking included, but is limited. Rochester Square Apts. Yes Wall Yes Yes Yes No No No Yes Yes Yes Yes No Yes No No No Ramp The High Pointe I Yes Wall No Yes No No No No Yes Yes Yes Yes No Yes Yes Yes No Surface included The High Pointe II Yes Wall No Yes No No No No Yes Yes Yes Yes No Yes Yes Yes No Surface included The Downtowner II No Wall Yes Yes No Yes No No Yes No No No No No No No No Off street included Halter Heights Yes Wall Yes Yes No No No No Yes No No No No No No No No Off street included Bostrom Terrace Yes Yes No No No No No No Yes No Yes No No Yes No Yes No Off street surface Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 165

SENIOR HOUSING ANALYSIS MAXFIELD RESEARCH INC. 166

SENIOR HOUSING ANALYSIS Olmsted County Market Area Senior Vacancy Rates Aff./Sub. 0.9% Memory Care 3.6% Service Level Assisted Living Cong. Svs. Int. Cong. Opt. Svs. 1.3% 5.9% 6.8% Active Adult Ownership 4.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% Vacancy Rate Kenosha Drive Apartments/Rochester Senior Living is the newest subsidized senior complex in Olmsted County as of 4 th Quarter 2013. At this time, Kenosha Drive Apartments has one vacancy, resulting in a 1.9% vacancy rate. Typically subsidized senior housing offers limited to no amenities. However, some of the complexes offer service packages as well such as transportation services, activity schedule option, and meal plan option. Active Adult Ownership There are four existing adult rental senior projects in the Olmsted County Market Area. All together these projects total 276 units. Combined the four projects have 11 vacancies, resulting in a vacancy factor of 4.0%. Generally a healthy senior housing market will have a vacancy rate of around 5.0% in order to allow for sufficient consumer choice and turnover. River Bluff Cooperative at Elton Hill is the newest active adult ownership project in the Olmsted County Market Area. It has 50 total units and is currently 84% occupied as of 4 th Quarter 2013. Entrance fees/purchase prices range from $145,900 to $185,900 for a onebedroom, $196,900 to $210,900 for a two bedroom, $252,900 for a two bedroom plus den, and $261,900 for a three bedroom unit. Unit sizes range from 798 to 922 sq. ft. for a onebedroom, 1,104 to 1,290 sq. ft. for a two bedroom, 1,350 for a two bedroom plus den, and 1,461 sq. ft. for a three bedroom. Fairway Ridge is the second newest adult rental project that consists of 52 total units and is currently 94% occupied. Rent ranges and unit sizes were unavailable at this time. MAXFIELD RESEARCH INC. 167

SENIOR HOUSING ANALYSIS Purchase prices amongst all the active adult ownership properties range from $26,359 to $185,900 for a one bedroom and $38,741 to $210,900 for a two bedroom. Rent ranges vary based on amenity and service packages offered. Congregate Optional Services There are a total of seven congregate optional services projects in the Olmsted County Market Area. Combined these facilities total 311 units and are 98.7% occupied as of 4 th Quarter 2013. Rent amongst all the congregate optional services projects range between $634 to $1,787 for a one bedroom unit and $752 to $1,971 for a two bedroom unit. Services include local transportation, coordinated activities, and 24 hour on site staff. Meal plans and housekeeping options are optional at many of the facilities. Congregate Service Intensive There are four congregate service intensive projects in the Olmsted County Market Area that total 457 units. Together, the four projects have a vacancy rate of 5.9%. All of these projects are located in Rochester. Rent ranges from $1,395 to $4,485 for one bedroom units and $1,980 to $5,810 for twobedroom units. Charter House also offers some large two bedroom units that range from $3,840 to $8,685 a month. Rent ranges can vary depending on entrance fees at some congregate service intensive facilities. Services include shuttle to local areas, activities coordinated by staff, two to three meals daily, weekly/monthly housekeeping, and 24 hour on site staff. Assisted Living Olmsted County Market Area has a total of ten assisted living facilities with 369 units with a vacancy rate of 6.8%. However, St. Charles Assisted Living has nineteen out of the twentyfive total vacancies. Excluding St. Charles Assisted Living, the vacancy rate is 1.8%. The Homestead is the newest assisted living development in the Olmsted County Market Area. It has a total of 44 units and is currently 95% occupied as of 4 th Quarter 2013. Rates range from $2,655 to $3,330 for a one bedroom unit and $4,010 to $4,490 for a twobedroom unit. Rent amongst all the assisted living facilities range between $1,980 to $3,795 for an efficiency unit, $2,380 to $4,550 for a one bedroom unit and $3,112 to $4,490 for a two MAXFIELD RESEARCH INC. 168

SENIOR HOUSING ANALYSIS bedroom unit. Private and enhanced care suites are also available at some facilities, which can range from $4,400 to $7,860. All of the assisted living projects include scheduled activities, weekly housekeeping, laundry, 24 hour staff, and at least one meal daily. Base monthly fees vary from project to project, depending largely on the personal care package and health services that are included in the monthly rent. Memory Care A total of five memory care facilities with 281 units are located in the Olmsted County Market Area. The memory care vacancy rate is approximately 3.6% as of 4 th Quarter 2013. Samaritan Bethany Arbor Terrace is the newest memory care development in the Olmsted County Market Area. It has a total of 16 units and is currently 100% occupied as of 4 th Quarter 2013. All units are studios that are listed at $4,715 a month. Rent amongst all the memory care developments range between $3,087 to $4,715 for a studio unit, $3,446 to $3,662 for one bedroom units, and $3,713 to $4,236 for twobedroom units. All of the memory care developments include scheduled activities, weekly housekeeping, laundry, 24 hour staff, and three meals daily. Base monthly fees vary from project to project, depending largely on the personal care package and health services that are included in the monthly rent. Nursing Home Facilities Table S 9, on the following page, shows information regarding nursing home facilities within the Olmsted County Market Area. Data includes year built, number of licensed beds, number of beds in service, payment sources, daily rates, and additional comments. The Olmsted County Market Area has ten skilled nursing facilities with 815 total licensed beds. Samaritan Bethany Home on Eighth, has 182 licensed beds and is the largest skilled nursing facility in the Market Area; accounting for 22% of all beds. MAXFIELD RESEARCH INC. 169

SENIOR HOUSING ANALYSIS TABLE S 9 NURSING HOME FACILITIES OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 # of # of Year Beds Beds Current Census Payment Source Built Lic. in svc. Total % Prvt. Pay Medicare Medicaid Daily Rates Comments: OLMSTED COUNTY Madonna Towers 1967/ 62 62 62 100% 40.0% 25.0% 35.0% $147.38 $318.99 4001 19th Avenue NW 2003 62 Private Rochester, MN Charter House 2001 32 31 32 97% 5.0% 95.0% 211 NW 2nd St. 16 Semi Prvt. Rochester, MN 16 Prvt. Golden LivingCenter Rochester East 1960s/ 116 114 114 98% 28.85% 10.95% 54.19% $119.31 $280.77 501 8th Ave SE 1970s Rochester, MN Golden LivingCenter Rochester West NA 54 NA NA NA NA NA NA $124.67 $309.90 2215 Highway 52 Rochester, MN Maple Manor Healthcare & Rehab 1964/ 81 75 81 93% NA NA NA $125.65 $331.94 1875 19th Street NW 1975 74 Semi Prvt. Rochester, MN 7 Prvt. Samaritan Bethany Home on Eighth 1922/ 182 182 182 100% 33.0% 16.6% 50.4% $152.58 $361.83 24 8th Street NW 2011 20 Private Rochester, MN 162 Semi private Stewartville Care Center 1970 85 76 85 30.0% 10.0% 60.0% $125.93 $326.09 110 4th Street NE 25 Private Stewartville, MN 60 Semi Prvt Olmsted County Subtotal 612 540 88% $604 $633 Private room differential of $46.50. two beds are medicare and the remaining 60 are medicare/medicaid. Short term rehabilitation. Private room differential of $30.00. The remaining 6% of payment sources are managed sources. Private room differential of $25.00. Private room differential: small private is $25.00, semi private is $50.00 and regular private is $30.00. Private room differential of $25.25. Private room differential of $16.69. OLMSTED COUNTY VICINITY Pine Haven Care Center 1964/ 70 66 70 94% 35.0% 5.0% 60.0% $111.70 $300.03 210 NW 3rd Street 2014 3 Private Pine Island, MN 67 Semi private Chosen Valley Care Center 1976 78 76 76 97% NA NA NA $116.57 $297.28 1102 Liberty Street SE 16 Private Chatfield, MN 62 Semi private Golden LivingCenter Whitewater 1967/ 55 55 55 100% NA NA NA $116.05 $274.40 525 Bluff Avenue 2000 8 Private St. Charles, MN 47 Semi private Olmsted County Vicinity Subtotal 203 197 97% Private room differential of $14.82. Adding onto the facility beginning Spring 2014 and will double the size of the facility. Private room differential of $15.29 for beds in private rooms and $13.29 for beds in single rooms. Private room differential of $20.00. Olmsted County Market Area Totals 815 737 Occupancy Rate 90% Source: Maxfield Research, Inc. Golden LivingCenter Rochester East, has the second most licensed beds with 116, which accounts for 14% of the Market Area s licensed bed total. Most of the skilled nursing facilities are old having been constructed in the 1960s and 1970s. MAXFIELD RESEARCH INC. 170

SENIOR HOUSING ANALYSIS TABLE S 9 NURSING HOME FACILITIES OLMSTED COUNTY MARKET AREA 4TH QUARTER 2013 # of # of Year Beds Beds Current Census Payment Source Built Lic. in svc. Total % Prvt. Pay Medicare Medicaid Daily Rates Comments: OLMSTED COUNTY Madonna Towers 1967/ 62 62 62 100% 40.0% 25.0% 35.0% $147.38 $318.99 4001 19th Avenue NW 2003 62 Private Rochester, MN Charter House 2001 32 31 32 97% 5.0% 95.0% 211 NW 2nd St. 16 Semi Prvt. Rochester, MN 16 Prvt. Golden LivingCenter Rochester East 1960s/ 116 114 114 98% 28.85% 10.95% 54.19% $119.31 $280.77 501 8th Ave SE 1970s Rochester, MN Golden LivingCenter Rochester West NA 54 NA NA NA NA NA NA $124.67 $309.90 2215 Highway 52 Rochester, MN Maple Manor Healthcare & Rehab 1964/ 81 75 81 93% NA NA NA $125.65 $331.94 1875 19th Street NW 1975 74 Semi Prvt. Rochester, MN 7 Prvt. Samaritan Bethany Home on Eighth 1922/ 182 182 182 100% 33.0% 16.6% 50.4% $152.58 $361.83 24 8th Street NW 2011 20 Private Rochester, MN 162 Semi private Stewartville Care Center 1970 85 76 85 30.0% 10.0% 60.0% $125.93 $326.09 110 4th Street NE 25 Private Stewartville, MN 60 Semi Prvt Olmsted County Subtotal 612 540 88% $604 $633 Private room differential of $46.50. two beds are medicare and the remaining 60 are medicare/medicaid. Short term rehabilitation. Private room differential of $30.00. The remaining 6% of payment sources are managed sources. Private room differential of $25.00. Private room differential: small private is $25.00, semi private is $50.00 and regular private is $30.00. Private room differential of $25.25. Private room differential of $16.69. OLMSTED COUNTY COLLAR CITIES Pine Haven Care Center 1964/ 70 66 70 94% 35.0% 5.0% 60.0% $111.70 $300.03 210 NW 3rd Street 2014 3 Private Pine Island, MN 67 Semi private Chosen Valley Care Center 1976 78 76 76 97% NA NA NA $116.57 $297.28 1102 Liberty Street SE 16 Private Chatfield, MN 62 Semi private Golden LivingCenter Whitewater 1967/ 55 55 55 100% NA NA NA $116.05 $274.40 525 Bluff Avenue 2000 8 Private St. Charles, MN 47 Semi private Olmsted County Vicinity Subtotal 203 197 97% Private room differential of $14.82. Adding onto the facility beginning Spring 2014 and will double the size of the facility. Private room differential of $15.29 for beds in private rooms and $13.29 for beds in single rooms. Private room differential of $20.00. Olmsted County Market Area Totals 815 737 Occupancy Rate 90% Source: Maxfield Research, Inc. MAXFIELD RESEARCH INC. 171

FOR SALE MARKET ANALYSIS Introduction Maxfield Research Inc. analyzed the for sale housing market in the Olmsted County Market Area by analyzing data on single family and multifamily home sales and active listings, identifying active subdivisions and pending for sale developments; reviewing lender mediated property data, and conducting interviews with local real estate professionals, developers and planning officials. County wide Home Resale Comparison Tables FS 1 and FS 2 compare Olmsted County resale data against the Twin Cities Metro Area. The tables show summary level resale data for single family and multifamily housing units between 2008 and 2013 according to the Minneapolis Association of Realtors ( MAAR ). Table FS 1 shows median resale prices while Table FS 2 illustrates key metrics for closed sales in 2013. The following are key points from Tables FS 1 and FS 2. Olmsted County s resale values between 2008 and 2013 did not experience the peaks and valleys experienced in the Twin Cities Metro Area. Over this time, Olmsted County s median resale value increased by 1.5% ($162,500 to $165,000), while the Twin Cities Metro Area resale price decreased by 1.5% ($195,000 to $192,000). Olmsted County pricing increased by nearly 6% between 2012 and 2013. Over the past six years, Olmsted County posted its highest median resale value in 2013 ($165,000). When compared to the Metro Area, Olmsted County median sales prices have been on par with the Metro Area over the past several years. However, median sales prices increased significantly in the Metro Area in 2013 and only Ramsey County had a lower median resale price than Olmsted County. New construction accounted for 15% of Olmsted County resales in 2013. This percentage is double the percentage of newly constructed home sales in the Metro Area (6.9%). The number of distressed resales in Olmsted County is significantly lower than the Metro Area. In 2013, only 12% of all resales were lender mediated compared to approximately 26% in the Metro Area. It is estimated the number of lender mediated transactions will be even lower in 2014 in both Olmsted County and the Metro Area. MAXFIELD RESEARCH INC. 172

FOR SALE MARKET ANALYSIS TABLE FS 1 MEDIAN RESALE COMPARISON 2008 to 2013 County 2008 2009 2010 2011 2012 2013 Olmsted $162,500 $152,725 $153,750 $150,000 $156,000 $165,000 Anoka $180,000 $155,000 $155,000 $136,900 $152,000 $174,900 Carver $248,500 $218,000 $230,000 $215,784 $229,900 $251,820 Dakota $205,000 $174,250 $175,000 $156,000 $170,814 $200,000 Hennepin $205,000 $174,025 $184,000 $162,500 $182,500 $209,900 Ramsey $174,900 $144,000 $145,000 $125,500 $142,000 $163,000 Scott $224,700 $200,000 $190,000 $180,000 $197,000 $226,550 Washington $226,000 $189,000 $195,000 $179,000 $200,000 $220,000 Twin Cities Region $195,000 $165,000 $169,900 $150,000 $167,900 $192,000 Source: Minneapolis Area Association of Realtors, Maxfield Research Inc. $260,000 Median Resale Value by County: '08 to '13 $240,000 $220,000 $200,000 $180,000 $160,000 $140,000 $120,000 2008 2009 2010 2011 2012 2013 Olmsted Anoka Carver Dakota Hennepin Ramsey Scott Washington T. C. Region MAXFIELD RESEARCH INC. 173

FOR SALE MARKET ANALYSIS $260,000 $240,000 Median Resale Value by County: '08 to '13 2008 2009 2010 2011 2012 2013 $220,000 $200,000 $180,000 $160,000 $140,000 $120,000 $175,000 Olmsted County Median Resale Price 2005 to 2013 $170,000 $165,000 $160,000 $155,000 $150,000 $145,000 $166,000 $171,200 $163,000 $163,584 $153,000 $154,900 $152,900 $156,000 $165,000 $140,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 MAXFIELD RESEARCH INC. 174

FOR SALE MARKET ANALYSIS TABLE FS 2 RESALE COMPARISON 2013 Percent Closed New Townhome/ Pct. of Orig. Geography Sales Construction Condo Distressed 2 CDOM 1 List Price Olmsted 2,479 15.3% 16.2% 12.4% 71 95.7% Anoka 5,294 9.4% 19.6% 32.5% 74 96.9% Carver 1,848 17.5% 22.5% 18.4% 92 96.2% Dakota 6,336 7.6% 32.1% 27.4% 74 96.7% Hennepin 19,107 5.0% 25.4% 22.4% 78 96.1% Ramsey 6,699 1.8% 19.2% 28.0% 85 95.3% Scott 2,461 9.4% 24.0% 26.7% 81 96.6% Washington 4,295 9.7% 27.7% 23.9% 85 96.3% Twin Cities Region 53,087 6.9% 22.6% 26.4% 83 96.1% 1 Cumulative Days on Market ("CDOM") is the collective sum of days on the market from the current and any previous listings within the past year. 2 Includes foreclosures and short sales Source: Minneapolis Area Association of Realtors, Maxfield Research Inc. 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Resale Percentages Comparison 2013 New Const. TH/Condo Distressed MAXFIELD RESEARCH INC. 175

FOR SALE MARKET ANALYSIS Home Resale Comparison in Olmsted County & Vicinity Tables FS 3 and FS 4 present summary data for resales of single family and multifamily housing units for the Olmsted County submarkets in 2000, and from 2005 to 3 rd Quarter 2013. All data is sourced to the Southeast Minnesota Association of Realtors (SEMAR) or the Regional Multiple Listing Service of Minnesota (RMLS). Because real estate data is tied to mailing addresses, the Rochester Fringe submarket has been combined with the Rochester submarket. Single Family Resales Between 2000 and 2006, Olmsted County submarkets experienced rapid home sale appreciation during the real estate boom, posting a median sales price increase of 33%. However, after the housing market plateaued in 2006, Olmsted County communities experienced modest sliding housing values as the housing market burst. Between 2006 and 2012, the median resale price declined by 7%. The number of resales in the Olmsted County submarkets peaked in 2005 with 2,430 transactions. Resales declined year to year from 2006 to 2010, before increasing annually in 2011 and 2012. Through the 3 rd Quarter 2013, median resale prices in the Olmsted County Market Area increased by 6% over 2012. At the same time, indications suggest the number of resales will surpass 2012 year end sales activity. 3,000 2,500 2,000 1,500 1,000 500 0 Single Family Resales: 2000, 2005 3Q2013 Number Sold Median Price $190,000 $170,000 $150,000 $130,000 $110,000 $90,000 $70,000 $50,000 MAXFIELD RESEARCH INC. 176

FOR SALE MARKET ANALYSIS TABLE FS 3 SINGLE FAMILY HOME RESALES OLMSTED COUNTY & VICINITY 2000, 2005 to 3Q2013 Avg. Avg. No. Avg. Median Time on No. Avg. Median Time on Year Sold Sold Price Sold Price Market 1 Year Sold Sold Price Sold Price Market 1 Byron Submarket East SubMarket 2000 69 $130,692 $125,000 2000 82 $123,804 $109,675 2005 94 $204,288 $169,500 2005 154 $157,074 $141,369 2006 82 $208,976 $178,155 2006 146 $162,625 $142,450 2007 77 $220,750 $177,000 2007 142 $153,827 $145,000 2008 63 $198,872 $161,000 138 2008 114 $156,657 $147,125 123 2009 82 $179,676 $156,600 133 2009 106 $133,665 $124,665 120 2010 65 $229,258 $174,000 138 2010 103 $140,608 $127,900 135 2011 85 $192,653 $165,000 136 2011 119 $133,347 $124,750 153 2012 90 $239,514 $189,500 104 2012 141 $160,795 $144,500 112 2013* 88 $219,224 $191,750 93 2013* 135 $143,724 $135,000 129 Pct. Change Pct. Change 00 to 06 19% 60% 43% 00 to 06 78% 31% 30% 06 to 12 10% 15% 6% 06 to 12 3% 1% 1% 00 to 12 30% 83% 52% 00 to 12 72% 30% 32% North Submarket Rochester Submarket 2000 84 $166,937 $159,450 2000 1,504 $150,467 $132,340 2005 100 $242,914 $218,450 2005 1,978 $202,185 $168,000 2006 89 $228,054 $194,700 2006 1,834 $211,003 $175,950 2007 68 $245,376 $200,750 2007 1,796 $206,865 $172,550 2008 82 $213,542 $185,750 112 2008 1,535 $199,844 $169,900 105 2009 74 $212,462 $179,900 168 2009 1,422 $184,542 $157,900 111 2010 79 $199,359 $185,000 149 2010 1,188 $186,046 $161,550 126 2011 75 $181,074 $154,000 139 2011 1,312 $188,456 $156,900 132 2012 73 $201,597 $159,900 109 2012 1,583 $191,625 $165,000 98 2013* 99 $242,276 $226,750 99 2013* 1,332 $202,570 $174,000 77 Pct. Change Pct. Change 00 to 06 6% 37% 22% 00 to 06 22% 40% 33% 06 to 12 18% 12% 18% 06 to 12 14% 9% 6% 00 to 12 13% 21% 0% 00 to 12 5% 27% 25% Stewartville Submarket Olmsted County Market Area 2000 72 $133,910 $126,075 2000 1,811 $148,612 $131,250 2005 104 $166,646 $159,925 2005 2,430 $199,562 $167,900 2006 74 $158,000 $155,550 2006 2,225 $206,673 $174,000 2007 73 $169,068 $154,900 2007 2,156 $203,802 $170,000 2008 83 $159,117 $145,000 126 2008 1,877 $195,986 $167,100 108 2009 80 $142,783 $131,500 112 2009 1,764 $180,536 $155,000 115 2010 79 $167,197 $165,000 95 2010 1,513 $184,610 $161,600 127 2011 71 $159,660 $140,000 97 2011 1,662 $183,162 $154,900 132 2012 81 $146,775 $151,200 84 2012 1,967 $190,115 $162,000 99 2013* 89 $168,996 $155,500 66 2013* 1,672 $199,436 $172,000 82 Pct. Change Pct. Change 00 to 06 3% 18% 23% 00 to 06 23% 39% 33% 06 to 12 9% 7% 3% 06 to 12 12% 8% 7% 00 to 12 13% 10% 20% 00 to 12 9% 28% 23% * Through 3rd Quarter 2013 ¹ Cummulative Days on the Market began in 2008 Sources: Southeast MN Association of Realtors; Maxfield Research Inc. Rochester accounts for approximately 81% of all resales in the Olmsted County Market Area. Because of the high percentage of resales, the median resale price in Rochester mirrors the Olmsted County Market Area total each year. The North submarket experienced significant gains in both resales and the median resale price between 2012 and 3 rd Quarter 2013. Resales increased 36% and the median sales price increased by 42% during the aforementioned period of time. MAXFIELD RESEARCH INC. 177

FOR SALE MARKET ANALYSIS 65.0% 55.0% 45.0% 35.0% 25.0% 15.0% 5.0% 5.0% 15.0% 25.0% SF Sales Price Pct. Change 00 to '06 06 to '12 12 3Q'13 42.5% 41.8% 33.0% 29.9% 32.6% 22.1% 23.4% 5.5% 6.2% 2.8% 6.4% 1.2% 1.4% 6.2% 2.8% 6.9% 6.6% 17.9% $250,000 Median Resale Price of Single Family Homes by Submarket 2000 2006 2012 2013 3Q $200,000 Price Sold $150,000 $100,000 $50,000 $0 Submarket MAXFIELD RESEARCH INC. 178

FOR SALE MARKET ANALYSIS Single family Resale Values 2013 MAXFIELD RESEARCH INC. 179

FOR SALE MARKET ANALYSIS Multifamily Resales Between 2005 and 2012, multifamily resales have accounted for approximately 17% of Olmsted County Market Area resales. Through 3 rd Quarter 2013, multifamily has accounted for about 16% of all resales. Similar to the single family housing market, multifamily resales in the Olmsted County Market Area also peaked in 2005 (490 transactions). Multifamily resales decreased between 2006 and 2011 before increasing in 2012. It is very likely year end 2013 transactions will be higher than 2012. Multifamily resales in Rochester account for approximately 90% of all transactions in the Olmsted County Market Area. The submarkets outside of Rochester are dominated by single family housing stock. The multifamily median resale price has remained rather consistent over the past decade. Multifamily housing in the Olmsted County Market Area did not experience the peaks and valleys like the Twin Cities Metro Area. Although the pricing is down from the peak in 2005, multifamily housing resale values were similar in the years 2000 and 2012 before increasing in 2013. 600 500 400 300 200 100 0 Multifamily Resales: 2000, 2005 3Q2013 Number Sold Median Price $150,000 $140,000 $130,000 $120,000 $110,000 $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 MAXFIELD RESEARCH INC. 180

FOR SALE MARKET ANALYSIS TABLE FS 4 MULTI FAMILY HOME RESALES OLMSTED COUNTY & VICINITY 2000, 2005 to 3Q2013 Avg. Avg. No. Avg. Median Time on No. Avg. Median Time on Year Sold Sold Price Sold Price Market 1 Year Sold Sold Price Sold Price Market 1 Byron Submarket East Submarket 2000 5 $116,460 $114,900 0 2000 4 $99,750 $94,000 0 2005 18 $186,918 $159,950 97 2005 10 $176,130 $161,650 0 2006 22 $235,266 $163,500 107 2006 9 $150,660 $144,900 162 2007 13 $202,765 $150,600 134 2007 12 $130,312 $118,450 46 2008 14 $201,529 $170,500 279 2008 3 $120,333 $108,000 143 2009 17 $179,529 $139,000 278 2009 5 $108,200 $99,500 85 2010 16 $107,931 $116,838 181 2010 6 $129,945 $108,860 120 2011 14 $191,936 $145,950 213 2011 6 $116,483 $119,950 192 2012 18 $135,211 $122,500 104 2012 5 $114,949 $122,000 233 2013* 15 $172,793 $134,900 116 2013* 6 $136,217 $126,000 111 Pct. Change Pct. Change 00 to 06 340% 102% 42% 00 to 06 125% 51% 54% 06 to 12 18% 43% 25% 06 to 12 44% 24% 16% 00 to 12 260% 16% 7% 00 to 12 25% 15% 30% North Submarket Rochester Submarket 2000 1 $115,725 $115,725 0 2000 319 $120,803 $122,000 6 2005 2 $190,500 $190,500 53 2005 455 $145,361 $142,000 16 2006 1 $127,900 $127,900 0 2006 447 $144,191 $140,000 25 2007 4 $154,725 $157,200 231 2007 385 $142,886 $141,000 70 2008 2 $162,500 $162,500 1 2008 327 $143,338 $135,000 119 2009 6 $87,333 $76,000 63 2009 306 $141,970 $136,200 146 2010 19 $76,670 $79,000 62 2010 294 $139,397 $131,675 140 2011 5 $88,360 $86,900 70 2011 282 $123,745 $118,950 173 2012 4 $85,100 $82,750 84 2012 345 $136,603 $125,000 130 2013* 5 $87,218 $89,900 28 2013* 284 $150,379 $134,500 105 Pct. Change Pct. Change 00 to 06 0% 11% 11% 00 to 06 40% 19% 15% 06 to 12 300% 33% 35% 06 to 12 23% 5% 11% 00 to 12 300% 26% 28% 00 to 12 8% 13% 2% Stewartville Submarket Olmsted County Market Area 2000 1 $126,900 $126,900 0 2000 330 $120,485 $121,813 6 2005 5 $184,126 $158,200 98 2005 490 $148,095 $143,990 19 2006 9 $153,770 $149,527 34 2006 488 $148,559 $141,813 31 2007 10 $161,362 $158,000 143 2007 424 $144,913 $142,745 74 2008 7 $168,269 $180,000 150 2008 353 $146,053 $137,400 126 2009 10 $149,130 $148,700 100 2009 344 $142,591 $135,450 149 2010 8 $130,660 $138,700 166 2010 343 $134,085 $129,900 138 2011 5 $129,280 $124,500 126 2011 312 $126,187 $119,896 173 2012 9 $123,176 $122,780 76 2012 381 $135,396 $123,497 129 2013* 5 $139,260 $140,000 205 2013* 313 $149,998 $134,000 106 Pct. Change Pct. Change 00 to 06 800% 21% 18% 00 to 06 48% 23% 16% 06 to 12 0% 20% 18% 06 to 12 22% 9% 13% 00 to 12 800% 3% 3% 00 to 12 15% 12% 1% * Through 3rd Quarter 2013 ¹ Cummulative Days on the Market began in 2008 Sources: Southeast MN Association of Realtors; Maxfield Research Inc. MAXFIELD RESEARCH INC. 181

FOR SALE MARKET ANALYSIS 65.0% 54.1% MF Sales Price Pct. Change 00 to '06 06 to '12 12 3Q'13 45.0% 42.3% 25.0% 5.0% 10.1% 3.3% 14.8% 17.8% 14.0% 16.4% 10.5% 8.6% 7.6% 8.5% 15.0% 25.1% 15.8% 10.7% 17.9% 12.9% 35.0% Price Sold $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Median Resale Price of Multifamily Homes by Submarket 2000 2006 2012 2013 3Q Submarket MAXFIELD RESEARCH INC. 182

FOR SALE MARKET ANALYSIS Multifamily Housing Resale Values 2013 MAXFIELD RESEARCH INC. 183

FOR SALE MARKET ANALYSIS Single family vs. Multifamily Resales Multifamily property resales have historically accounted from 15% to 18.5% of all resales in the Olmsted County Market Area since 2000. Through the 3 rd Quarter 2013, multifamily resales make up 15.8% of total transactions. Historically, single family homes have sold for approximately 20% higher price than multifamily housing products. In the early 2000s multifamily housing resale values were similar to single family values, however after the Great Recession the gap between single family and multifamily product types widened. As of 3 rd Quarter 2013, multifamily property median values are about 23% lower than single family housing stock. Resales by Housing Type: 2000 3Q2013 2,500 2,000 1,500 Single Family Multifamily 1,000 500 0 Median Real Estate Values by Type 2000, 2005 3Q2013 $180,000 $170,000 $160,000 $150,000 $140,000 $130,000 $120,000 $110,000 $100,000 Single Family Multifamily MAXFIELD RESEARCH INC. 184

FOR SALE MARKET ANALYSIS 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Median Sale Price Annual Pct. Change SF MF Current Supply of Homes on the Market To more closely examine the current market for available owner occupied housing in the Olmsted County Market Area, we reviewed the current supply of homes on the market (listed for sale). Table FS 5 shows homes currently listed for sale in the Olmsted County Market Area distributed into 11 price ranges. The data was provided by the Regional Multiple Listing Services of Minnesota (RMLS) and is based on active listings in November 2013. MLS listings generally account for the vast majority of all residential sale listings in a given area. Table FS 6 summarizes active listings by submarket and housing type. Table FS 7 shows listings by home style (i.e. one story, two story, townhome, condominium) and illustrates key metrics by each housing type. Key findings from the tables follow. As of November 2013, there were 820 homes listed for sale in the Olmsted County Market Area. Single family homes accounted for 83% of all listings. The median list price in the Olmsted County Market Area is approximately $185,500 ($195,000 for single family homes and $137,950 for multifamily homes). The median sale price is generally a more accurate indicator of housing values in a community than the average sale price. Average sale prices can be easily skewed by a few very high priced or lowpriced home sales in any given year, whereas the median sale price better represents the pricing of a majority of homes in a given market. MAXFIELD RESEARCH INC. 185

FOR SALE MARKET ANALYSIS Byron Submarket East Submarket North Submarket Rochester Submarket Single Family Multifamily 1 Single Family Multifamily 1 Single Family Multifamily 1 Single Family Multifamily 1 Price Range No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. < $49,999 1 2.7% 0 2 8.0% 0 0 0 2 0.4% 3 2.4% $50,000 to $99,999 1 2.7% 0 4 16.0% 0 4 12.5% 0 54 9.6% 33 26.6% $100,000 to $149,999 6 16.2% 3 60.0% 7 28.0% 1 50.0% 5 15.6% 1 100.0% 148 26.2% 38 30.6% $150,000 to $199,999 5 13.5% 0 4 16.0% 1 50.0% 7 21.9% 0 90 16.0% 11 8.9% $200,000 to $249,999 2 5.4% 0 2 8.0% 0 4 12.5% 0 66 11.7% 9 7.3% $250,000 to $299,999 5 13.5% 0 1 4.0% 0 3 9.4% 0 40 7.1% 14 11.3% $300,000 to $399,999 9 24.3% 1 20.0% 2 8.0% 0 6 18.8% 0 85 15.1% 10 8.1% $400,000 to $499,999 4 10.8% 1 20.0% 1 4.0% 0 2 6.3% 0 36 6.4% 6 4.8% $500,000 to $749,999 3 8.1% 0 2 8.0% 0 1 3.1% 0 27 4.8% 0 $750,000 to $999,999 0 0.0% 0 0 0 0 0 9 1.6% 0 $1,000,000 and Over 1 2.7% 0 0 0 0 0 7 1.2% 0 37 100% 5 100% 25 100% 2 32 100% 1 100% 564 100.0% 124 100.0% Minimum Maximum Median Average $38,500 $1,650,000 $274,450 $315,063 $117,500 $499,000 $136,000 $241,980 $45,900 $699,000 $149,900 $208,808 $104,900 $154,900 $129,900 $129,900 $69,900 $572,500 $204,900 $236,719 $119,900 $119,900 $119,900 $119,900 $44,900 $1,700,000 $194,900 $257,978 $39,900 $469,900 $139,900 $170,519 Stewartville Submarket Olmsted County & Vicinity Single Family Multifamily 1 Single Family Multifamily 1 Price Range No. Pct. No. Pct. No. Pct. No. Pct. < $49,999 0 0 5 0.7% 3 2.2% $50,000 to $99,999 2 7.7% 0 65 9.5% 33 24.3% $100,000 to $149,999 6 23.1% 3 75.0% 172 25.1% 46 33.8% $150,000 to $199,999 8 30.8% 1 25.0% 114 16.7% 13 9.6% $200,000 to $249,999 3 11.5% 0 77 11.3% 9 6.6% $250,000 to $299,999 3 11.5% 0 52 7.6% 14 10.3% $300,000 to $399,999 1 3.8% 0 103 15.1% 11 8.1% $400,000 to $499,999 1 3.8% 0 44 6.4% 7 5.1% $500,000 to $749,999 1 3.8% 0 34 5.0% 0 $750,000 to $999,999 1 3.8% 0 10 1.5% 0 $1,000,000 and Over 0 0 8 1.2% 0 26 100% 4 100% 684 100.0% 136 100.0% Minimum Maximum Median Average Sources: Regional Multiple Listing Service of Minnesota (RMLS), Maxfield Research Inc. TABLE FS 5 HOMES CURRENTLY LISTED FOR SALE OLMSTED COUNTY & VICINITY NOVEMBER 2013 $79,900 $134,500 $38,500 $39,900 $875,000 $199,900 $1,700,000 $499,000 $178,700 $137,400 $195,000 $137,950 $616,607 $152,300 $258,101 $171,640 MAXFIELD RESEARCH INC. 186

FOR SALE MARKET ANALYSIS Based on a median list price in the Olmsted County Area of $185,538, the income required to afford a home at this price would be about $53,000 to $61,850, based on the standard of 3.0 to 3.5 times the median income (and assuming these households do not have a high level of debt). A household with significantly more equity (in an existing home and/or savings) could afford a higher priced home. About 59% of Olmsted County Market Area households have annual incomes at or above $53,000. Approximately 100 properties, or 13% of all listings, are priced under $100,000. However, only 10% of single family listings are priced under $100,000 compared to 26% of multifamily properties. The majority of homes priced under $100,000 are located in the Rochester submarket. Over 40% of all active listings are priced between $100,000 and $199,999. About 27% of all listings are priced between $100,000 and $149,999; the largest numeric category. Nearly 27% of listings are priced higher than $300,000. Single family properties account for 92% of all listings priced higher than $300,000. The median list price for single family homes ranges from $149,900 in the East submarket to $272,450 in the Byron submarket. Multifamily median list prices range from $139,900 in the Rochester submarket to $199,900 in the North submarket. Median List PRice $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Median List Price by Submarket November 2013 SF MF $274,450 $136,000 $149,900 $129,900 $204,900 $119,900 $194,900 $139,900 $178,700 $137,400 $195,000 $137,950 $0 Byron East North Rochester Stewartville Olmsted Cty. & Vicinity Submarket The Rochester submarket boasts nearly 690 listings in the Olmsted County Market Area, accounting for 84% of the supply of homes for sale in the Olmsted County area. About 18% of the Rochester submarket listings are multifamily properties; mostly townhomes. The Rochester submarket contains 91% of all multifamily listings in the Olmsted County Market Area. MAXFIELD RESEARCH INC. 187

FOR SALE MARKET ANALYSIS Nearly all of the multifamily product for sale is either townhomes or twinhomes. Only one condominium was listed for sale as of November 2013. TABLE FS 6 ACTIVE LISTINGS BY TYPE & SUBMARKET November 2013 Product Type Submarket Single Family Townhome/Twinhome Condo/Coop Total Listings East 25 2 0 27 Bryon 37 5 0 42 North 32 1 0 33 Rochester 564 123 1 688 Stewartville 26 4 0 30 Olmsted County Market Area 684 135 1 820 Percent East 92.6% 7.4% 0.0% 100% Bryon 88.1% 11.9% 0.0% 100% North 97.0% 3.0% 0.0% 100% Rochester 82.0% 17.9% 0.1% 100% Stewartville 86.7% 13.3% 0.0% 100% Olmsted County Market Area 83.4% 16.5% 0.1% 100% Source: Regional Multiple Listing Service of MN; Maxfield Research Inc. Pct. of Listings by Submarket & Type Olmsted Cty. MA Stewartville Rochester 83.4% 86.7% 82.0% SF MF North Bryon 88.1% 97.0% East 92.6% 0% 20% 40% 60% 80% 100% MAXFIELD RESEARCH INC. 188

FOR SALE MARKET ANALYSIS TABLE FS 7 ACTIVE LISTINGS BY HOUSING TYPE OLMSTED COUNTY & VICINITY November 2013 Avg. List Avg. Size Avg. List Price Avg. Avg. Avg. Age Property Type Listings Pct. Price (Sq. Ft.) Per Sq. Ft. Bedrooms Bathrooms of Home OLMSTED COUNTY & VICINITY Single Family One story 251 36.7% $244,065 2,332 $105 3.31 2.31 1979 1.5 story 84 12.3% $147,933 1,921 $77 2.98 1.65 1945 2 story 175 25.6% $386,647 3,363 $115 4.11 3.42 1989 Modifed 2 story 1 0.1% $319,900 4,599 $70 6.00 4.00 2003 More than 2 stories 11 1.6% $338,954 3,545 $96 4.18 3.36 1948 Split entry/bi level 15 2.2% $208,500 2,618 $80 4.07 2.80 1985 3 level split 15 2.2% $226,640 2,131 $106 3.47 3.53 1983 4 or more split level 1 0.1% $144,900 1,838 $79 3.00 2.00 1967 Other 131 19.2% $186,798 2,068 $90 3.65 2.18 1992 Total/Avg. 684 100.0% $258,101 2,519 $102 3.58 2.54 1980 Townhomes/Twinhomes Twin Home 2 1.5% $73,450 $906 $81 2.00 2.00 1980 Side by Side 133 98.5% $173,784 1,600 $109 2.29 1.98 1995 Total/Avg. 135 100.0% $172,298 1,590 $108 2.28 1.99 1994 Condominiums/Cooperatives Low rise (3 stories or less) 1 100.0% $82,900 827 $100 2.00 1.00 2001 Total/Avg. 1 100.0% $82,900 827 $100 2.00 1.00 2001 Olmsted Cty. Market Area Total 820 $243,957 2,365 $103 3.36 2.45 1983 Source: Regional Multiple Listing Service of MN; Maxfield Research Inc. Two story properties have the highest sale prices in the Olmsted County Market Area; averaging about $386,650. Two story housing types account for 25% of the single family inventory and also have the highest list price per square foot. One half story homes have the lowest average list price in the Olmsted County Market Area; averaging about $148,000 ($77 per square foot). This style generally contains the oldest housing stock in the Market Area as the average age of home is nearly 70 years old. Side by side townhomes (often referred to as row homes) dominate the townhome style property types. However, there has recently been resurgence in twin homes or detachedtownhomes that target older buyers who are looking to downsize. MAXFIELD RESEARCH INC. 189

FOR SALE MARKET ANALYSIS Listings by Housing Type Olmsted County & Vicinity November 2013 One story 251 1.5 story 84 2 story+ 187 Hsg. Type 2 level split 3 level split+ 15 16 Other Townhomes 131 135 Condo 1 0 50 100 150 200 250 300 No. of Listings One story Average List Price by Type Olmsted County & Vicinity November 2013 1.5 story 2 story+ Hsg. Type 2 level split 3 level split+ Other Townhomes Condo $0 $100,000 $200,000 $300,000 $400,000 List Price MAXFIELD RESEARCH INC. 190

FOR SALE MARKET ANALYSIS Avg. List Price $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Average List Price by Housing Type Olmsted County & Vicinity November 2013 $82,900 Avg. List Price $172,298 $186,798 PSF $221,531 $208,500 $383,485 $147,933 $244,065 $130 $110 $90 $70 $50 $30 $10 $10 Per Sq. Ft. Housing Type New Construction Pricing Table FS 8 compares new construction median sales pricing in Olmsted County versus the Twin Cities Metro Area counties. The table compares new construction sales prices between 2005 and 2013 and the annual percentage change. Compared to the Metro Area, new construction in Olmsted County is historically priced about 15% lower. Olmsted County new construction pricing is closest to Anoka County in the Metro Area. Although Olmsted County had the lowest median new construction sales price in 2013, Olmsted County posted the highest percentage annual change between 2012 and 2013 (+25.8%). Olmsted County did not experience the peaks and valleys during the housing downturn like many areas in the Metro Area. Since 2005, Olmsted County new construction pricing has increased by 21.5%. MAXFIELD RESEARCH INC. 191

FOR SALE MARKET ANALYSIS Submarket Year Olmsted Anoka Carver Dakota Hennepin Ramsey Scott Washington 2005 $242,700 $294,700 $256,000 $257,720 $289,893 $237,000 $283,130 $312,897 2006 $286,000 $295,040 $323,698 $279,900 $289,287 $248,800 $280,493 $309,750 2007 $246,779 $264,900 $300,000 $287,125 $299,990 $247,400 $279,900 $306,595 2008 $248,700 $252,095 $269,900 $307,950 $315,058 $240,475 $300,000 $330,000 2009 $239,900 $225,450 $269,999 $285,000 $299,900 $230,250 $241,000 $289,900 2010 $220,968 $235,000 $318,640 $289,495 $337,750 $220,000 $235,000 $305,545 2011 $254,100 $231,198 $353,000 $311,750 $365,759 $243,500 $293,000 $313,995 2012 $234,278 $268,000 $339,500 $312,000 $417,801 $421,525 $294,900 $319,413 2013 $294,800 $297,000 $361,291 $366,900 $483,184 $371,949 $329,258 $371,325 Annual Pct. Change 2005 06 17.8% 0.1% 26.4% 8.6% 0.2% 5.0% 0.9% 1.0% 2006 07 13.7% 10.2% 7.3% 2.6% 3.7% 0.6% 0.2% 1.0% 2007 08 0.8% 4.8% 10.0% 7.3% 5.0% 2.8% 7.2% 7.6% 2008 09 3.5% 10.6% 0.0% 7.5% 4.8% 4.3% 19.7% 12.2% 2009 10 7.9% 4.2% 18.0% 1.6% 12.6% 4.5% 2.5% 5.4% 2010 11 15.0% 1.6% 10.8% 7.7% 8.3% 10.7% 24.7% 2.8% 2011 12 7.8% 15.9% 3.8% 0.1% 14.2% 73.1% 0.6% 1.7% 2012 13 25.8% 10.8% 6.4% 17.6% 15.6% 11.8% 11.7% 16.3% Source: 10K Research and Marketing, Maxfield Research Inc. TABLE FS 8 NEW CONSTRUCTION MEDIAN SALES PRICE OLMSTED COUNTY VS. METRO AREA COUNTIES 2005 to 2013 $500,000 New Construction Median Sales Price 2013 $400,000 $483,184 $300,000 $200,000 $294,800 $297,000 $361,291 $366,900 $371,949 $329,258 $371,325 $100,000 $0 MAXFIELD RESEARCH INC. 192

FOR SALE MARKET ANALYSIS Months of Active Supply Table FS 9 illustrates the historic supply of actively marketing properties in Olmsted County and the Twin Cities Metro Area from 2005 to 2013. The table depicts the number of homes for sale at the end of each year and the months of supply. The months of supply metric calculates the number of months it would take for all the current homes for sale to sell given the monthly sales absorption. Generally a balanced supply is considered four to six months. The higher the months of supply indicates there are more sellers than buyers; and the lower the months of supply indicates there are more buyers than sellers. Key findings from Table FS 9 follow. The number of homes for sale in Olmsted County peaked in 2010 at 1,680. However the supply has decreased significantly since 2010 and there were less than half of the homes on the market in 2013 (824 homes) as three years prior. Olmsted County months of supply was 4.1 in 2013, indicating a sellers market given the home inventory. Olmsted County inventory has favored sellers for the past three years. As Tables FS 3 and FS 4 indicated, home values are rising in Olmsted County. Because of rising prices, many sellers who would have previously been underwater may consider listing their home thereby increasing the supply of homes for sale. Compared to the Twin Cities Metro Area supply, Olmsted County did not realize the peak and valleys like the Metro Area and hence had a much more stable housing market through the housing downturn and Great Recession. TABLE FS 9 ACTIVE SUPPLY OF HOMES FOR SALE OLMSTED COUNTY & METRO AREA 2005 to 2013 Months Supply Homes for Sale Olmsted Twin Cities Olmsted Twin Cities Year County Region County Region 2005 5.9 4.2 758 22,705 2006 6.8 6.6 900 29,366 2007 7.9 8.8 1,475 32,373 2008 5 9.7 1,514 31,555 2009 4.9 7.3 1,416 26,147 2010 5.9 7.4 1,680 26,483 2011 4.6 7.1 1,062 22,695 2012 3.6 4.5 716 17,188 2013 4.1 3.4 824 14,822 Source: 10K Research & Marketing, Maxfield Research Inc. MAXFIELD RESEARCH INC. 193

FOR SALE MARKET ANALYSIS Homes for Sale 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Olmsted County Active Supply of Homes for Sale 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year Homes for Sale Olmsted County Months Supply 9 8 7 6 5 4 3 2 1 0 Months Supply Lender Mediated Properties Table FS 10 identifies lender mediated real estate sales activity in Olmsted County as listed on the Regional Multiple listing Service of Minnesota (RMLS). Table FS 11 inventories Olmsted County foreclosures by submarket between 2008 and 2013 as compiled by the Olmsted County Property, Records and Licensing Department. Lender mediated transactions (foreclosures and short sales) are different from traditional sales because a third party (often the lender) is involved in the transaction; either acting as the seller in the case of foreclosures, or as an intermediary with approval powers in the case of a short sale. Foreclosures are properties in which the financial institutions or lender has taken possession of the home from the owner due to non payment of mortgage obligations/default by the borrower. In a short sale, the lender(s) and the home owner work together and attempt to sell the home prior to foreclosure. Because the net proceeds from the sale are not enough to cover the sellers mortgage obligations, the difference is forgiven by the lender, or other arrangements are made with the lender to settle the remainder of the debt. In either circumstance, lenders want to move the debt off their books and will hence discount the asking price. Lender mediated property information is an important metric when reviewing the health of real estate markets. After the real estate bust and ensuing Great Recession, lender mediated homes increased substantially as an overall market share of the for sale inventory. The higher market share resulted in downward pricing on aggregate sales price figures, giving the impression that the entire housing market was losing considerable value. However, real estate sales data shows stark differences between traditional and lender mediated transactions. MAXFIELD RESEARCH INC. 194

FOR SALE MARKET ANALYSIS Table FS 10 illustrates lender mediated transaction activity for Olmsted County that sold between 2010 and 2013 (November to October) that have sold via a foreclosure or short sale. Key points from the table follow. The percentage of lender mediated sales has decreased annually since 2010. In 2010, lender mediated sales accounted for about 20% of all resales before decreasing to 13% in 2013. Compared to the Metro Area, the number of lender mediated transactions in Olmsted County was significantly lower. About 26% of transactions in the Metro Area were lender mediated in 2013. Lender mediated sales pricing in Olmsted County were discounted by about 50% for foreclosures and 25% for short sales when compared to traditional sales between 2012 and 2013. Traditional (Nov. to Oct.) Foreclosures (Nov. to Oct.) Short Sales (Nov. to Oct.) '10 '11 '11 '12 '12 '13 '10 '11 '11 '12 '12 '13 '10 '11 '11 '12 '12 '13 Median Sales Price Olmsted County $169,900 $165,000 $170,900 $77,750 $90,000 $90,500 $126,000 $128,700 $132,014 Total Transactions Olmsted County 2,079 1,905 2,155 446 323 276 74 82 42 Note: Sales Activity from November to October Sources: 10K Research & Marketing, Maxfield Research Inc. TABLE FS 10 LENDER MEDIATED REAL ESTATE ACTIVITY OLMSTED COUNTY COMPARISON 2010 to 2013 (Nov to Oct) $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Tradtional vs. Lender mediated sales prices: 2010 2013 $169,900 $77,750 $126,000 Trad. Fore. SS 10 10 11 10 11 11 $165,000 $90,000 $128,700 Trad. Fore. SS 11 11 12 11 12 12 $170,900 $90,500 $132,014 Trad. Fore. SS 12 12 13 12 13 13 MAXFIELD RESEARCH INC. 195

FOR SALE MARKET ANALYSIS Pct. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Resale Pct. by Type of Sale Olmsted County 2010 2013 2.8% 3.5% 1.7% 17.2% 14.0% 11.2% 87.1% 80.0% 82.5% 10 11 11 12 12 13 Year SS Fore. Trad. As illustrated in Table FS 11, there have been approximately 2,500 foreclosures in Olmsted County between 2008 and 2013. Foreclosures were high in 2008, before declining in 2009 (possibly a result of the first time home buyer tax credit), but peaked again in 2010 with over 600 foreclosures. Foreclosure activity has declined annually since 2010 and only 115 Olmsted County properties were foreclosed in 2013. Over the past six years, Rochester has accounted for 74% of all foreclosure activity. Foreclosures outside of Rochester peaked in 2008 with high numbers in Byron, Pine Island, and Stewartville. 700 Olmsted County Foreclosures: 2008 2013 No. Foreclosures 600 500 400 300 200 561 415 610 505 326 100 0 115 2008 2009 2010 2011 2012 2013 Year As the housing market continues to rebound the number of foreclosures is projected to decline even further in 2014. MAXFIELD RESEARCH INC. 196

FOR SALE MARKET ANALYSIS TABLE FS 11 FORECLOSURES OLMSTED COUNTY 2008 2013 Submarket/Geography Submarket 2008 2009 2010 2011 2012 2013 Total Byron Kalmar Township Byron 2 2 City of Byron Byron 131 15 23 14 9 4 196 Salem Township Byron 3 1 1 2 7 Subtotal 134 16 25 15 11 4 205 East Dover Township East 1 1 2 Orion Township East 2 1 3 Viola Township East 1 2 2 1 1 7 Dover City East 1 2 2 5 1 11 City of Eyota East 35 6 9 3 9 2 64 Chatfield City East 13 5 4 2 1 25 Pleasant Grove Township East 3 3 6 Quincy Township East 1 1 2 Subtotal 50 16 19 16 16 3 120 North New Haven Township North 3 7 2 1 2 15 Oronoco Township North 4 6 11 4 3 1 29 City of Oronoco North 5 6 8 5 4 3 31 Pine Island City North 88 4 1 3 4 2 102 Farmington Township North 2 2 Subtotal 100 16 27 16 12 8 179 Rochester Rochester City Rochester 251 344 491 427 271 88 1,872 Rochester Fringe Cascade Township Rochester Fringe 2 5 1 1 9 Haverhill Township Rochester Fringe 1 2 5 2 1 1 12 Marion Township Rochester Fringe 4 5 13 7 4 7 40 Rochester Township Rochester Fringe 5 3 2 10 Subtotal 5 12 23 16 6 9 71 Stewartville City High Forest Township Stewartville 1 1 1 3 Rock Dell Township Stewartville 1 2 1 4 Stewartville City Stewartville 20 11 23 12 9 3 78 Subtotal 21 11 25 15 10 3 85 Olmsted County Total 561 415 610 505 326 115 2,532 Source: Olmsted County (Property, Records & Licensing), Maxfield Research Inc. Owner occupied Turnover Table FS 12 illustrates existing home turnover as a percentage of owner occupied units by Olmsted County submarket. Resales are based on historic transaction volume between 2005 and 2012 as listed on the Multiple Listing Service. Owner occupied housing units are sourced to the U.S. Census as of 2010. As displayed in the table, approximately 5% of the Olmsted County Market Area s owneroccupied housing stock is sold annually. The Rochester Area had the highest turnover rates in the Market Area (5.7%), while the North submarket had the lowest turnover in the Market MAXFIELD RESEARCH INC. 197

FOR SALE MARKET ANALYSIS Area. Typically we find owner occupied turnover ranges from 3% at the low end to 8% at the high end in many communities throughout Minnesota. Owner occupied Resales Turnover Submarket Housing Units 1 Annual Avg. 2 Pct. Byron 2,240 94 4.2% East 3,862 130 3.4% North 2,723 85 3.1% Rochester/Rochester Fringe 33,796 1,924 5.7% Stewartville 2,439 87 3.6% Olmsted County Market Area 45,060 2,320 5.1% 1 Owner occupied housing units in 2010 TABLE FS 12 OWNER OCCUPIED TURNOVER OLMSTED COUNTY MARKET AREA 2 Average of MLS resales between 2005 and 2012 Source: U.S. Census Bureau, Minneapolis Assoc. of Realtors, Maxfield Research Inc. Owner Occupied Annual Turnover Olmsted Cty. MA 5.1% Stewartville 3.6% Rochester Area 5.7% North 3.1% East 3.4% Byron 4.2% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% MAXFIELD RESEARCH INC. 198

FOR SALE MARKET ANALYSIS Lot Inventory Tables FS 13 and FS 14 summarize the Olmsted County lot inventory as of year end 2012 (2013 data was unavailable from the Rochester Olmsted Planning and GIS Department. The table includes platted subdivisions by submarket, dwelling type, and average lot acreage. The data was compiled from the Olmsted County GIS database. The following are key points from Tables FS 13 and FS 14. Through 2012, there were 294 platted subdivisions in Olmsted County with available lots. The Rochester Area contained 214 subdivisions, or 73% of the total platted subdivisions. Combined there were 2,750 vacant lots in Olmsted County. Nearly 75% of the vacant lots are single family lots (2,028 lots). The Rochester Area has 1,850 vacant lots representing 67% of the vacant lot inventory. About 28% of the vacant lots in the Rochester Area are for multifamily housing products. Outside of the Rochester Area, the Byron submarket has the highest inventory of vacant lots (384). It is important to recognize that not all of the lots inventoried in the tables are actively marketing. Between scattered lots and subdivisions with multiple phases it is likely a moderate percentage of the inventory is unavailable. There were very few new subdivisions platted after 2005 and 2006 after the housing market stalled. However, in 2013 builders and developers were beginning to plat lots again; albeit in small subdivisions to mitigate land holding risk. MAXFIELD RESEARCH INC. 199

FOR SALE MARKET ANALYSIS TABLE FS 13 OLMSTED COUNTY VACANT LOTS 2012 LOT COUNTS Vacant Dwelling Type Avg. Platname City Lots SF 1 MF 2 Acreage 3 Byron Submarket BEARWOOD ESTATES 3RD SUBD Byron 4 4 0 0.22 BEARWOOD ESTATES 4TH SUBD Byron 12 6 6 0.22 BELVIOR AT SOMERBY CIC #195 Byron 32 0 32 0.06 BRIDGEFORD SOMERBY GOLF COMMUNITY Byron 29 0 29 0.22 BROOK LAWN ESTATES 10TH SUB Byron 22 22 0 0.28 BROOK LAWN ESTATES 6TH SUBD Byron 2 2 0 0.29 BROOK LAWN ESTATES 8TH Byron 1 1 0 0.25 BROOK LAWN ESTATES 9TH SUB Byron 8 8 0 0.28 BROOK LAWN ESTATES WEST Byron 6 6 0 0.30 BROOKMOOR 2ND Byron 2 2 0 0.18 BROOKMOOR 3RD Byron 2 2 0 0.18 BYRON TOWNE VILLAGE 1ST Byron 19 19 0 0.22 BYRON TOWNE VILLAGE 2ND ADDN Byron 71 71 0 0.23 COUNTRY LANE WEST SUB Byron 2 2 0 0.26 DIBELL AND WESTCOTT'S Byron 1 1 0 0.24 DISEWORTH AT SOMERBY CIC #196 Byron 10 0 10 0.09 DISEWORTH AT SOMERBY SECOND ADDITION CIC #345 Byron 2 0 2 0.09 EAST BROOKFIELD 2ND SUBD Byron 5 5 0 0.28 EAST BROOKFIELD SUB Byron 1 1 0 0.20 SHARDLOW 2ND ADDN Byron 30 0 30 0.06 SHARDLOW ADDITION Byron 4 0 4 0.03 SOMERBY GOLF COMM CLUBHOUSE Byron 5 5 0 0.39 SOMERBY GOLF COMMUNITY Byron 71 71 0 0.42 TOWNE SQUARE TOWNHOMES CIC #213 Byron 32 0 32 0.05 WYNNSONG 1ST Byron 1 1 0 0.53 WYNNSONG 2ND Byron 10 10 0 0.40 Subtotal 384 239 145 0.23 East Submarket ATKINSON ADDITION Chatfield 4 4 0 0.18 CLARK'S FIRST Chatfield 4 0 4 0.06 HISEY'S 2ND SUB Chatfield 38 38 0 0.37 MEYER'S 2ND SUB Chatfield 1 1 0 0.21 OLSON PINE 2ND SUB Chatfield 2 2 0 0.26 ORCHARD RIDGE T/H CIC #167 Chatfield 6 0 6 0.07 T B TWIFORD'S ADDITION Chatfield 3 3 0 0.68 TERMAR SECOND SUB Chatfield 1 1 0 2.50 HENRY ESTATES 2ND ADD Dover 3 3 0 0.61 HENRY ESTATES 5TH ADD Dover 1 1 0 0.25 HENRY ESTATES 7TH ADD Dover 12 12 0 0.42 HENRY ESTATES 8TH Dover 2 2 0 0.80 JAY B 2ND ADD Dover 3 3 0 0.31 MARKHAM'S SUB Dover 9 9 0 0.20 SHEEK'S ADDITION (DOVER) Dover 1 1 0 0.64 SPEER'S 1ST Dover 1 1 0 0.29 EYOTA PK 1ST SUB REPL LOTS 4 6 Eyota 1 1 0 0.18 STONE RIDGE 2ND ADD Eyota 9 9 0 0.30 STONE RIDGE CIC #174 Eyota 10 2 8 0.12 SUMMERFIELD Eyota 4 4 0 0.27 SUNSET SQUARE 1ST SUB Eyota 1 1 0 0.24 Subtotal 116 98 18 0.33 CONTINUED MAXFIELD RESEARCH INC. 200

FOR SALE MARKET ANALYSIS TABLE FS 13 (Con't) OLMSTED COUNTY VACANT LOTS 2012 LOT COUNTS Vacant Dwelling Type Avg. Platname City Lots SF MF Acreage North Submarket CEDAR WOODLANDS Oronoco 36 36 0 0.88 CEDAR WOODLANDS 2ND Oronoco 24 24 0 1.06 ORONOCO VILLAGE Oronoco 3 3 0 0.95 RIVER PARK SUBDIVISION Oronoco 131 131 0 1.00 RIVERWOOD HILLS Oronoco 6 6 0 1.01 RIVERWOOD HILLS 3RD Oronoco 10 10 0 0.84 RIVERWOOD HILLS 4TH Oronoco 18 18 0 0.92 ZUMBRO HAVEN Oronoco 29 29 0 0.82 ZUMBRO SOUND Oronoco 7 7 0 4.06 BACH ESTATES 4TH Pine Island 1 1 0 0.22 CHAMPAGNE HILL Pine Island 13 13 0 0.30 HASSLER 1ST ADD Pine Island 25 25 0 0.23 KISPERT FARMS Pine Island 8 8 0 0.24 KISPERT FARMS 4TH ADD PUD Pine Island 15 0 15 0.03 ROLLING WOODS Pine Island 10 10 0 0.28 Subtotal 336 321 15 0.86 Rochester Submarket AUDITOR'S PLAT A Rochester 1 1 0 0.09 AUDITOR'S PLAT C Rochester 1 1 0 0.36 BADGER HILLS 2ND Rochester 3 3 0 0.20 BADGER HILLS 3RD Rochester 17 17 0 0.21 BADGER HILLS SUB Rochester 5 5 0 0.20 BAIHLY HEIGHTS 6TH SUB Rochester 6 6 0 0.36 BAIHLY HEIGHTS 7TH SUB Rochester 1 1 0 0.34 BAMBER RIDGE 4TH Rochester 1 1 0 0.19 BAMBER VALLEY ESTATES 2ND Rochester 9 9 0 0.32 BAMBER VALLEY ESTATES 3RD Rochester 2 2 0 2.05 BANDEL NORTH 2ND Rochester 7 7 0 0.28 BARONY WOODS Rochester 3 3 0 0.54 BELMONT SLOPE Rochester 2 2 0 0.42 BOULDER RIDGE 4TH Rochester 3 3 0 0.44 BOULDER RIDGE 5TH Rochester 18 18 0 0.24 BOYER'S 1ST SUB Rochester 10 10 0 0.34 CASCADE CREEK REDEVELOPMENT Rochester 6 0 6 0.32 CASCADE MANOR Rochester 1 1 0 0.17 CASCADE PASS Rochester 6 6 0 0.23 CASCADE RIDGE SUB Rochester 4 0 4 0.55 CEDAR PARK FIRST SUB Rochester 21 21 0 0.28 CENTURY HILLS 8TH SUBD Rochester 5 5 0 0.35 CENTURY HILLS 9TH SUBD Rochester 14 14 0 0.44 CHRISTOPHER COURTS 2ND SUB Rochester 1 1 0 1.74 CHRISTOPHER COURTS SUB Rochester 2 2 0 0.23 CITY LANDS 106 13 04 Rochester 24 0 24 2.47 CITY LANDS 106 13 07 Rochester 1 1 0 0.84 CITY LANDS 106 14 03 Rochester 1 1 0 0.84 CITY LANDS 106 14 09 Rochester 1 1 0 0.54 CITY LANDS 106 14 10 Rochester 5 5 0 1.81 CITY LANDS 106 14 14 Rochester 10 2 8 0.58 CONTINUED MAXFIELD RESEARCH INC. 201

FOR SALE MARKET ANALYSIS TABLE FS 13 (Con't) OLMSTED COUNTY VACANT LOTS 2012 LOT COUNTS Vacant Dwelling Type Avg. Platname City Lots SF MF Acreage CITY LANDS 106 14 15 Rochester 1 1 0 3.28 CITY LANDS 106 14 35 Rochester 2 2 0 1.38 CITY LANDS 107 14 26 Rochester 1 1 0 0.72 COLLEGE VIEW Rochester 1 1 0 0.10 COUNTRY CLUB ESTATES 2ND Rochester 3 3 0 0.34 CRYSTAL SPRINGS Rochester 1 1 0 0.77 CUMMINGS ADDITION Rochester 2 2 0 0.12 CUMMINGS OUTLOT Rochester 20 0 20 0.15 DORNACK'S 1ST SUB Rochester 3 3 0 0.94 EAGLE RIDGE 1ST SUB Rochester 1 1 0 0.33 EAST ROCHESTER ADDITION Rochester 1 1 0 0.14 EASTWOOD HILLS 2ND SUBD Rochester 1 1 0 0.33 ECHO RIDGE Rochester 37 37 0 0.32 ELMCROFT 3RD ADD Rochester 2 2 0 0.40 ELTON HILLS NORTH 2ND Rochester 1 1 0 0.20 EMERALD HILLS SUB Rochester 1 1 0 7.85 ESSEX ESTATES 3RD Rochester 1 1 0 0.25 FAIRWAY RIDGE 2ND Rochester 8 0 8 0.21 FERGUSON'S REPLAT Rochester 17 1 16 0.22 FIELDSTONE Rochester 5 5 0 0.28 FIELDSTONE 2ND Rochester 34 34 0 0.32 FLATHERS ADDITION Rochester 1 1 0 0.15 FOLWELL HEIGHTS ADDITION Rochester 1 1 0 0.11 FOLWELL RIDGE SUBDIVISION Rochester 2 2 0 0.37 FOLWELL RIDGE TOWNHOME CIC#215 Rochester 18 0 18 0.08 FOLWELL WEST 1ST SUB Rochester 5 5 0 0.29 FOLWELL WEST 3RD SUB Rochester 1 1 0 0.24 FOREST HILLS 3RD ANX 12/27/00 Rochester 2 2 0 0.66 FOREST HILLS 6TH SUB Rochester 8 8 0 0.42 FOREST KNOLL SUB Rochester 16 16 0 0.23 FOX HILL 4TH Rochester 14 14 0 0.24 FOX HILL SUBD 10262001 Rochester 2 2 0 0.23 FOX TRAILS Rochester 1 1 0 0.22 FOX TRAILS RIDGE TOWNHOMES Rochester 1 1 0 0.10 FOXCROFT NORTH 2ND Rochester 1 1 0 0.62 FOXCROFT NORTH 4TH Rochester 2 2 0 0.38 FOXFIELD LUXURY TOWNHOMES Rochester 104 0 104 0.05 GOLDEN HILL ADDITION Rochester 6 6 0 0.62 GOODING'S ADDITION Rochester 1 1 0 0.17 GRAMS 1ST SUB Rochester 2 2 0 0.36 HADLEY CREEK VILLAGE 2ND Rochester 33 33 0 0.15 HAMMER AND FANNING'S ADDITION Rochester 1 1 0 0.15 HART FARM SOUTH Rochester 56 2 54 0.38 HART FARM SOUTH 3RD Rochester 10 10 0 0.26 HART FARM SUBDIVISION (CITY) Rochester 1 1 0 0.28 HARVESTVIEW 3RD Rochester 102 102 0 0.14 HARVESTVIEW 4TH Rochester 13 13 0 0.22 HEAD AND MCMAHON ADDITION Rochester 1 1 0 0.05 HIGHLAND ADDITION Rochester 4 4 0 0.17 HILLCREST SUB Rochester 1 1 0 0.29 HILMER'S HIGH VIEW ACRES Rochester 3 3 0 0.68 HILMER'S HIGH VIEW NO. 2 Rochester 1 1 0 0.22 CONTINUED MAXFIELD RESEARCH INC. 202

FOR SALE MARKET ANALYSIS TABLE FS 13 (Con't) OLMSTED COUNTY VACANT LOTS 2012 LOT COUNTS Vacant Dwelling Type Avg. Platname City Lots SF MF Acreage HUNDRED ACRE WOODS 2ND Rochester 73 73 0 0.33 INSTITUTE HILLS SUB ANX Rochester 1 1 0 1.38 JEFFERSON WILSHIRE Rochester 2 2 0 0.46 KAHOUN'S ADDITION Rochester 1 1 0 0.36 KINGSBURY HILLS 3RD Rochester 1 1 0 0.19 KINGSBURY HILLS 4TH Rochester 10 10 0 0.23 KINGSBURY HILLS 6TH Rochester 38 38 0 0.20 KINGSBURY HILLS 7TH Rochester 23 23 0 0.21 KINGSBURY HILLS 8TH Rochester 16 16 0 0.23 LA MAR ADDITION ANX 12/27/2000 Rochester 3 3 0 1.17 LAIR'S VALLEY Rochester 4 4 0 0.28 LAKE'S SUB Rochester 5 5 0 0.36 LARSON'S FIRST SUB Rochester 2 2 0 0.84 LENWOOD HEIGHTS ANX 12/27/2000 Rochester 4 4 0 0.47 MANOR WOODS NORTH 1ST SUBD Rochester 1 1 0 0.26 MANOR WOODS WEST 12TH Rochester 2 2 0 0.32 MANOR WOODS WEST 14TH SUB Rochester 7 7 0 0.33 MANOR WOODS WEST 15TH Rochester 7 7 0 0.27 MANORWOOD LAKES 3RD Rochester 4 4 0 0.21 MANORWOOD LAKES 6TH Rochester 2 2 0 0.23 MEADOW HILLS SOUTH SUB Rochester 3 3 0 0.21 MEADOW LAKES ESTATES Rochester 6 6 0 0.65 MEADOW LAKES VILLAS Rochester 2 2 0 0.22 MEADOW LAKES VILLAS 2ND Rochester 4 4 0 0.23 MERRIHILLS SUB Rochester 3 3 0 3.02 MORSE AND SARGEANT'S ADDITION Rochester 2 2 0 0.18 NORTH PARK 11TH SUB Rochester 1 1 0 0.15 NORTH SUNNY SLOPES Rochester 1 1 0 0.75 NORTHERN HEIGHTS Rochester 1 1 0 0.37 NORTHERN HEIGHTS NORTH 1ST SUB Rochester 1 1 0 0.26 NORTHERN HEIGHTS NORTH 3RD Rochester 3 3 0 0.28 NORTHERN OUTLOTS Rochester 1 1 0 0.19 NORTHERN RESERVE Rochester 57 0 57 0.08 NORTHERN SLOPES 6TH SUB Rochester 4 0 4 0.24 NORTHRIDGE SECOND Rochester 6 0 6 0.34 NORTHWOOD 3RD ADDITION Rochester 2 2 0 0.35 NORTHWOOD 3RD REPLAT Rochester 1 1 0 0.47 OAK HILLS Rochester 1 1 0 0.31 OAK REST REPLAT Rochester 3 3 0 0.27 ORCHARD HILLS NORTH Rochester 1 1 0 1.43 ORCHARD RIDGE 1ST ADD Rochester 29 29 0 0.21 ORIGINAL PLAT (CITY OF ROCH) Rochester 4 0 4 0.15 PARK HOME SUB Rochester 9 9 0 0.21 PARKWOOD HILLS SUB Rochester 1 1 0 0.29 PATIO HOMES OF MEADOW LAKES Rochester 5 5 0 0.17 PATIO HOMES OF MEADOW LAKES 2ND Rochester 8 8 0 0.24 PEBBLE CREEK Rochester 36 36 0 0.12 PINE RIDGE ESTATES 2ND SUB Rochester 1 1 0 0.44 PINE RIDGE ESTATES 3RD SUB Rochester 1 1 0 2.94 PINE RIDGE ESTATES 4TH Rochester 8 8 0 0.34 PINE RIDGE ESTATES 5TH SUB Rochester 3 3 0 0.28 PINEWOOD HILLS 1ST SUBD Rochester 10 10 0 1.14 CONTINUED MAXFIELD RESEARCH INC. 203

FOR SALE MARKET ANALYSIS TABLE FS 13 (Con't) OLMSTED COUNTY VACANT LOTS 2012 LOT COUNTS Vacant Dwelling Type Avg. Platname City Lots SF MF Acreage PINEWOOD RIDGE 2ND SUB Rochester 18 18 0 0.43 PINEWOOD RIDGE SUB Rochester 18 18 0 0.59 PORTAGE TOWNHOMES CIC#269 Rochester 40 0 40 0.04 PRAIRIE CROSSING Rochester 79 79 0 0.26 PRAIRIE CROSSING 1ST REPLAT Rochester 12 12 0 0.17 REFLECTIONS ON MAYO LAKE Rochester 23 23 0 0.33 REPL LTS 17&22 COUNTRYWOOD EST Rochester 1 1 0 2.32 REPLAT BLK 6 MARVALE NO 4 Rochester 6 6 0 0.39 RIDGEVIEW MANOR 3RD Rochester 11 11 0 0.24 RIDGEVIEW MANOR 4TH Rochester 15 15 0 0.27 RIVER COURT ESTATES Rochester 6 6 0 1.98 ROCHESTER TOWNE CLUB VILLAGES Rochester 24 24 0 0.24 ROSE HARBOR 1ST (CITY) Rochester 1 1 0 0.37 ROSE HARBOR 1ST (TWNSHP) Rochester 4 4 0 0.31 ROSE HARBOR 2ND (TWNSHP) Rochester 10 10 0 0.36 ROSE HARBOR 3RD (TWNSHP) Rochester 3 3 0 0.32 ROSE HARBOR 4TH (CITY) Rochester 2 2 0 0.37 ROSE HARBOR 4TH (TWNSHP) Rochester 8 8 0 0.34 ROSE HARBOR ESTATES Rochester 3 3 0 0.18 ROSE HARBOR ESTATES 2ND Rochester 1 1 0 0.51 ROSE HARBOR ESTATES 3RD Rochester 6 6 0 0.17 RUSSELL'S SUB Rochester 1 1 0 0.24 SALEM HEIGHTS ESTATES Rochester 3 3 0 0.70 SALEM HEIGHTS TWNHMS CIC #206 Rochester 4 0 4 0.09 SALEM POINT Rochester 24 0 24 5.76 SALEM SOUND Rochester 1 1 0 0.33 SAMELIAN'S 2ND SUB Rochester 4 4 0 0.48 SANBORN'S SUB Rochester 1 1 0 0.20 SCENIC OAKS 3RD ADD Rochester 2 2 0 0.38 SCENIC OAKS 4TH ADD Rochester 3 3 0 0.52 SCENIC OAKS 5TH ADD Rochester 6 6 0 0.42 SCENIC OAKS 6TH ADD Rochester 14 14 0 0.71 SCENIC OAKS 7TH ADD Rochester 4 4 0 0.49 SCHOENFELDER'S 1ST SUB Rochester 1 1 0 0.33 SCHWANKE'S 2ND SUB ANX 12/2000 Rochester 5 5 0 0.47 SHANNON OAKS 1ST SUBD Rochester 2 2 0 0.45 SHANNON OAKS 3RD SUB Rochester 16 16 0 0.40 SHANNON OAKS 4TH SUB Rochester 3 3 0 0.47 SONNENBERG'S REPLAT Rochester 1 1 0 0.51 SOUTH ADD TO KNOLLWOOD ACRES Rochester 1 1 0 0.28 SOUTH POINTE 2ND Rochester 1 1 0 0.56 SOUTH POINTE 3RD Rochester 1 1 0 0.76 SOUTH POINTE 9TH Rochester 4 0 4 0.04 SOUTHERN HILLS Rochester 1 1 0 0.40 SOUTHERN HILLS 2ND Rochester 1 1 0 0.37 SOUTHERN HILLS 3RD Rochester 3 3 0 0.38 SOUTHERN WOODS 3RD ADD Rochester 4 4 0 0.40 SOUTHERN WOODS 5TH CIC Rochester 10 0 10 0.07 SOUTHTOWN HEIGHTS REPLAT Rochester 1 1 0 1.31 SPRUCE MEADOWS SUB Rochester 1 1 0 0.19 STONEHEDGE ESTATES 3RD Rochester 4 4 0 0.31 STONEHEDGE ESTATES SUBD Rochester 1 1 0 0.25 SUMMIT POINTE 2ND Rochester 1 1 0 0.20 CONTINUED MAXFIELD RESEARCH INC. 204

FOR SALE MARKET ANALYSIS Vacant Dwelling Type Avg. Platname City Lots SF MF Acreage SUNNY SLOPES Rochester 3 3 0 0.99 SUNNYDALE 1ST REPLAT Rochester 5 5 0 0.21 SUNNYDALE NO 2 Rochester 2 2 0 0.40 SUNRISE ESTATES 1ST SUB Rochester 1 1 0 0.19 SUPERIOR RIDG TNHMS RPL Rochester 40 0 40 0.06 THATCHER ADDITION Rochester 6 6 0 0.25 THE GARDENS Rochester 1 1 0 0.21 THE GARDENS 4TH SUBD Rochester 38 38 0 0.15 THE VILLAS AT ORCHARD HILLS 2ND ADD Rochester 10 0 10 0.13 THE VILLAS OF VALLEY SIDE Rochester 12 0 12 0.05 TOOGOOD PLAZA Rochester 2 2 0 0.28 TOOGOOD'S SUB Rochester 3 3 0 0.48 TYROL HILLS 1ST SUB Rochester 15 15 0 0.57 VANDALS 1ST SUB Rochester 1 1 0 1.87 VIOLA HILLS SUBD Rochester 8 8 0 0.34 WEATHERSTONE CIC#166 1 REPLAT Rochester 20 0 20 0.04 WEATHERSTONE WEST Rochester 21 15 6 0.19 WEDGEWOOD HILLS 7TH Rochester 2 2 0 0.22 WELCH AND WENDT SUB Rochester 1 1 0 0.39 WEST PARK Rochester 19 19 0 0.25 WEST ZUMBRO ADDITION Rochester 6 6 0 0.15 WESTWOOD 1ST REPLAT Rochester 2 2 0 0.46 WHISPERING OAKS Rochester 25 2 23 0.12 WILDWOOD MEADOW Rochester 10 10 0 0.14 WILSHIRE ESTATES 5TH SUB Rochester 1 1 0 0.24 WOODGATE 1ST SUB Rochester 1 1 0 0.38 Subtotal 1,847 1,321 526 0.38 Stewartville Submarket BERGS 1ST SUB Stewartville 1 1 0 0.23 BUCKNELL 1ST SUBD Stewartville 1 1 0 0.26 GEORGETOWN MEADOWS 3RD SUBD Stewartville 1 1 0 0.27 GEORGETOWN MEADOWS 4TH SUBD Stewartville 2 2 0 0.57 GEORGETOWN MEADOWS 5TH SUBD Stewartville 2 2 0 0.30 GEORGETOWN MEADOWS 6TH SUBD Stewartville 13 13 0 0.28 GOLFVIEW VILLAGE SUB CIC#135 Stewartville 2 0 2 0.06 MAPLEBROOK SUBDIVISION Stewartville 16 16 0 0.31 PETERSEN 3RD SUBD Stewartville 8 0 8 0.05 PETERSEN 4TH SUBD Stewartville 3 3 0 0.21 PHEASANT RUN COMMONS Stewartville 1 1 0 0.19 PRAIRIE STONE SUBD Stewartville 3 3 0 0.28 REICHEL'S 6TH ADDITION Stewartville 1 1 0 0.14 RIVER OAKS TOWNHOMES Stewartville 4 0 4 0.03 RIVER OAKS TOWNHOMES THIRD Stewartville 3 0 3 0.04 SCHUG'S 1ST ADDITION Stewartville 1 1 0 0.64 SCHUMANN'S ROLLING RIDGE SUB Stewartville 3 3 0 0.20 WOOLDRIDGE ADDITION Stewartville 1 1 0 0.16 Subtotal 66 49 17 0.23 Olmsted County Total 2,749 2,028 721 0.41 1 Includes Single family detached structures 2 Townhomes, twinhomes, patio homes, etc. 3 Average acreage of vacant lots only TABLE FS 13 (Con't) OLMSTED COUNTY VACANT LOTS 2012 LOT COUNTS Source: Olmsted County GIS, Maxfield Research. MAXFIELD RESEARCH INC. 205

FOR SALE MARKET ANALYSIS TABLE FS 14 OLMSTED COUNTY VACANT LOT SUMMARY 2012 YEAR END Vacant Dwelling Type Avg. Submarket/Community Lots SF MF Acreage Bryon Submarket 384 239 145 0.23 Bryon 384 239 145 0.23 East Submarket 116 98 18 0.33 Chatfield 59 49 10 0.35 Dover 32 32 0 0.39 Eyota 25 17 8 0.22 North Submarket 336 321 15 0.86 Ornonoco 264 264 0 1.04 Pine Island 72 57 15 0.21 Rochester 1,847 1,321 526 0.38 Rochester 1,847 1,321 526 0.38 Stewartville 66 49 17 0.23 Stewartville 66 49 17 0.23 Olmsted County 2,749 2,028 721 0.41 Source: Olmsted County GIS, Maxfield Research Inc. 1,400 1,200 1,000 800 600 400 200 SF Olmsted County Lot Inventory 2012 MF 0 Byron East North Rochester Stewartville MAXFIELD RESEARCH INC. 206

FOR SALE MARKET ANALYSIS Actively Marketing Subdivisions Maxfield Research Inc. identified single family and multifamily developments that are currently being marketed in the Olmsted County Market Area. Subdivisions are classified as active if they are marketing homes and/or lots on the Multiple Listing Service ( MLS ) or marketing lots through the Builders Association of Rochester. Because not all new construction or vacant lots are listed on the MLS, it is likely there are several subdivisions that are marketing lots that are not identified in Tables FS 14 and FS 15. Table FS 14 identifies single family subdivisions and includes information on year platted, number of total lots, vacant lots, builder restrictions, average marketing lot costs, average marketing sales prices, and average lot sizes. Table FS 15 inventories marketing multifamily developments and illustrates year platted or built, number of units/lots, vacant units/lots, unit size, average assessed value, and average list price. Key points from the tables follow. There are 77 subdivisions actively marketing lots at this time. Combined, there are about 1,240 single family lots available among these subdivisions. Although there are a variety of lot sizes available, most lots range from about one quarter (0.25) to one half (0.50) an acre. The average marketing lot size in the Olmsted County Market Area is 0.44 acres. The Rochester submarket has the largest lot sizes in the Market Area at 0.51 acres; however the larger lot sizes can be attributed to parcels in the townships in the Rochester Fringe. Lot prices vary considerably based on location, acreage, views, topography, etc. The East submarket has the lowest average lot cost ($32,000); while the Byron submarket has the highest average lot cost ($73,500). Collectively, the average lot cost in the Olmsted County Market Area is about $62,235. New home construction pricing came down after the peak of the real estate boom, in part due to the excess supply of land and the builders ability to pass land savings along to the consumer. However, most of the desirable foreclosed land has been absorbed and builders are no longer able to offer new construction at steep discounts. Therefore, actively marketing home costs are expected to slowly rise in 2014 as the new construction market continues to rebound. The price per square foot (including land) varies considerably based on design, amenities, square footage, type of lot, etc. The average actively marketing price is approximately $332,000 in the Olmsted County Market Area. New construction townhomes predominantly target the move up buyer and average $253,000, or $142 per square foot. New single family housing also targets mostly move up and executive buyers and averages $385,000, or $157 per square foot. MAXFIELD RESEARCH INC. 207

FOR SALE MARKET ANALYSIS TABLE FS 15 ACTIVE SINGLE FAMILY SUBDIVISIONS OLMSTED COUNTY MARKET AREA 4th QUARTER 2013 Builder Year No. of Vacant/ Avg. Lot Actively Marketing Lot Costs 2 Actively Marketing Home Value Costs 3 Subdivision/Location City/Twp. Restrictions Platted Lots Avail. Lots 1 Acreage Min Max Avg. Min Max Avg. Byron Submarket Bearwood Estates Byron Open 2000 140 10 0.28 $32,000 $39,000 $34,000 $199,900 $199,900 Brook Lawn Estates Byron Open 2003 86 39 0.27 $50,000 $55,000 $52,000 $200,000 $450,000 $329,900 Byron Towne Village I & II Bryon Open 2004/2005 116 90 0.25 $38,000 $60,000 $38,000 $229,900 $309,900 $262,500 Somerby Epperstone Byron Open 2005 17 9 0.55 $249,900 $279,900 $271,775 $700,000 $1,279,000 $1,279,000 Somerby Cossington Byron Open 2005 23 6 0.37 $149,900 $183,900 $169,150 $299,500 $599,000 $442,800 Somerby Donnington Byron Open 2005 14 3 0.57 $72,900 $72,900 $72,900 $365,000 $450,000 $400,000 Somerby Maplebeck Byron Open 2005 36 11 0.39 $79,900 $174,900 $106,800 $303,500 $587,900 $415,000 Somerby Bridgeford Byron Open 2005 29 25 $115,000 $155,000 $135,400 $589,900 $780,000 $677,000 Somerby Ancaster Byron Open 2005 37 11 0.33 $56,900 $173,900 $95,700 $285,000 $870,000 $499,000 Somerby on 9th Byron Open 2005 11 4 0.28 $48,900 $59,900 $53,700 $232,000 $339,900 $251,000 Subtotal 509 208 0.29 $73,533 $393,466 East Submarket Henry Estates Dover Open 2000 107 18 0.26 $27,600 $41,000 $33,300 $118,000 $318,900 $184,200 Fingerson Donahue Chatfield Open 2003 39 15 0.34 $29,900 $42,900 $36,515 $254,900 Hilltop Estates Chatfield Open 2008 23 11 0.45 $44,000 $80,000 $57,875 $289,375 Lone Stone Chatfield Open 2003 56 25 0.28 $31,000 $45,000 $35,360 $169,900 $239,900 $203,200 Golfview Manor Estates St. Charles Open 2003 5 1 0.46 $29,900 $29,900 $29,900 $145,000 $145,000 Northern Hills St. Charles Open 2001 93 28 0.49 $17,500 $61,500 $37,246 $87,500 $307,500 $186,230 Southfork St. Charles Open 2003 65 51 0.23 $29,000 $33,900 $20,125 $146,700 $169,800 $165,000 Subtotal 897 149 0.32 $31,993 $195,817 North Submarket Greens View Pine Island Open 1997 46 5 0.69 $51,500 $53,900 $52,500 $259,200 $269,500 $265,900 Hassler 1st Addition Pine Island Open 2000 48 26 0.25 $40,000 $163,900 $227,000 $204,750 Kispert Farms Pine Island Open 2000 80 9 0.26 $11,500 $35,000 $11,500 $179,900 $206,900 $193,400 Pine Crest Pine Island Open 1995 97 47 0.23 $12,999 $89,000 $18,471 $139,000 $250,000 $151,950 Rolling Woods Pine Island Open 2002 24 5 0.42 $40,900 $40,900 $220,000 $375,000 $219,000 Trophy Lake Estates Pine Island Open 2003 22 2 1.63 $59,900 $59,000 $59,900 $240,000 $399,900 $319,950 Cedar Woodlands Oronoco Open 2003 41 8 0.83 $64,900 $89,900 $73,525 $367,625 Zumbro Haven Oronoco Open 2002 45 27 0.76 $65,000 $99,500 $81,748 $500,000 $1,000,000 $550,000 Zumbro Sound* Oronoco Open 2004 7 1 4.06 $169,000 $272,000 $200,000 $500,000 $1,000,000 $550,000 Subtotal 410 130 0.46 $41,491 $273,932 CONTINUED MAXFIELD RESEARCH INC. 208

FOR SALE MARKET ANALYSIS TABLE FS 15 (Con't) ACTIVE SINGLE FAMILY SUBDIVISIONS OLMSTED COUNTY MARKET AREA 4th QUARTER 2013 Builder Year No. of Vacant/ Avg. Lot Actively Marketing Lot Costs 2 Actively Marketing Home Value Costs 3 Subdivision/Location City/Twp. Restrictions Platted Lots Avail. Lots 1 Acreage Min Max Avg. Min Max Avg. Rochester Submarket Badger Hills Rochester NW Open 2004 137 6 0.23 $34,900 $42,900 $36,233 $249,900 $325,000 $249,900 Bandel North Rochester NW Open 2000 120 7 0.32 $50,000 $62,000 $50,000 $224,900 $224,900 Barony Woods Rochester 2004 3 0.50 $181,282 $906,410 $906,410 Boulder Creek Rochester SW Select Group 2005 1.32 $269,000 $269,000 $269,000 $963,900 $963,900 Bear Ridge Rochester Open 2000 87 1 2.70 $82,000 $82,000 $82,000 $410,000 Boulder Ridge Rochester Open 2006 41 21 0.37 $42,900 $42,900 $289,900 $354,900 $311,875 Century Hills Rochester NE Open 2004 92 19 0.35 $43,995 $43,995 $43,995 $349,900 $439,900 $372,629 Century Point Rochester NE Open 2003 1 0.24 $290,000 $399,900 $399,900 $249,900 $320,000 $249,900 Echo Ridge Rochester SW Open 2006 75 37 0.24 $56,000 $56,000 $56,000 $344,900 $399,900 $376,567 Fieldstone Rochester SW Open 2003 118 5 0.29 $39,900 $78,900 $61,825 $348,125 $349,900 $349,013 Forest Knoll Rochester SE Open 2004 50 16 0.22 $18,500 $39,900 $23,720 $92,500 $199,500 $190,000 Fox Hill Rochester SW Open 2001 78 1 0.35 $89,900 $89,900 $89,900 $449,500 Fox Trails Rochester NW Open 2004 128 1 0.28 $44,000 $52,000 $50,000 $190,000 $350,000 $249,900 Hadley Creek Village Rochester Babcock Builders 2008 51 1.63 Part of Package $240,000 $650,000 $339,900 Hart Farm Rochester Open 2001 107 13 0.29 $44,000 $47,000 $45,000 $225,000 $269,900 $259,900 Harvestview Rochester NW Bigelow Homes 2003 175 115 0.20 $40,000 $50,000 $50,000 $200,000 $259,900 $254,267 Heritage Hills Rochester SW Open 2000 51 3 1.37 $69,900 $89,900 $79,900 $300,000 $750,000 $494,900 Hundred Acre Woods Rochester Open 2003 146 73 1.35 $65,000 $65,000 $65,000 $299,000 $339,900 $322,527 Hunter Pointe Rochester Open 2006 77 9 1.14 $130,000 $180,000 $150,556 $650,000 $900,000 $753,000 Kinsgsbury Hills Rochester NW Bigelow Homes 2000 520 87 0.21 $42,000 $47,000 $42,000 $189,900 $244,900 $209,200 Manor Woods Lakes Rochester 1990 224 6 0.23 $52,000 $259,900 $259,900 Mayo Woodlands Rochester SW Open 2002 60 8 1.53 $75,000 $120,000 $86,500 $90,000 $325,000 $432,500 Mayo Woodlands at the River Rochester SW Open 2008 12 4 3.30 $140,000 $200,000 $170,000 $700,000 $850,000 Morris Hills Rochester Open 2006 107 0.37 $57,000 $109,900 $72,500 $300,000 $409,900 $362,500 Orchard Ridge 1st Rochester NW Open 2000 212 29 0.23 $34,900 $54,900 $35,000 $160,000 $400,000 $172,900 Pine Ridge Estates Rochester Open 1991 147 13 0.52 $65,000 $65,000 $65,000 $325,000 Pinewood Hills Rochester SW Open 2000 45 10 0.56 $66,000 $49,000 $59,118 $249,900 $249,900 Pinewood Ridge Rochester NW Open 2003 75 36 0.50 $39,900 $69,900 $54,000 $225,000 $500,000 $322,815 Pinewood Summit Rochester Open 2007 41 0.20 $40,000 $46,000 $44,000 $150,000 $300,000 $219,900 Reflections at Mayo Lake Rochester Open 2010 23 13 0.24 $53,900 $177,900 $82,000 $450,000 $1,200,000 $410,000 Ridgeview Manor Rochester Open 2001 229 26 0.24 $35,000 $62,000 $45,600 $165,000 $234,900 $228,233 River Highlands Rochester Open 2012 9 6 2.61 $90,000 $245,000 $137,000 $685,000 River Place Rochester Open 2001 1 1 7.92 $320,000 $320,000 $320,000 $320,000 Rochester Town Club Rochester NE Open 2006 60 24 0.29 $65,000 $299,900 $359,900 $329,900 Scenic Oaks Rochester Select Group 1999 204 29 0.58 $70,000 $175,000 $118,333 $379,900 $1,000,000 $521,543 Shannon Oaks Rochester SE Open 2002 113 21 0.47 $54,900 $79,900 $65,000 $299,900 $449,900 $384,675 Southern Hills Rochester NE Open 1995 95 5 0.40 $55,000 $85,000 $65,000 $250,000 $335,900 Southern Woods Rochester NW Bigelow Homes 1999 86 4 0.61 $39,000 $75,000 $49,900 $250,000 $550,000 $361,600 Stonebrooke Rochester SE Open 2002 48 16 0.95 $29,000 $44,000 $57,281 $150,000 $350,000 $325,000 Stonehedge Estates Rochester Countryside 2002 207 5 0.33 $49,900 $94,900 $65,000 $275,000 $650,000 $333,200 Spruce Meadows Rochester Open 2000 41 1 2.00 $871,200 $871,200 $871,200 $325,000 Summit Point Rochester Open 2000 211 1 0.28 $39,900 $39,900 $259,900 $260,000 Tyrol Hills Rochester NW Open 1998 22 15 0.50 $44,900 $59,900 $59,900 $200,000 $400,000 $300,000 Viola Hills Rochester Open 2003 18 8 0.25 $37,900 $65,000 $51,450 $369,900 $369,900 Wildwood Meadows Rochester Open 2004 38 38 0.50 $198,000 $198,000 $198,000 $990,000 West Park Rochester Bigelow Homes 2002 82 19 0.38 $45,000 $75,000 $50,000 $246,400 $269,900 $258,400 Subtotal 4,463 756 0.51 $67,262 $345,615 CONTINUED MAXFIELD RESEARCH INC. 209

FOR SALE MARKET ANALYSIS TABLE FS 15 (Con't) ACTIVE SINGLE FAMILY SUBDIVISIONS OLMSTED COUNTY MARKET AREA 4th QUARTER 2013 Builder Year No. of Vacant/ Avg. Lot Actively Marketing Lot Costs 2 Actively Marketing Home Value Costs 3 Subdivision/Location City/Twp. Restrictions Platted Lots Avail. Lots 1 Acreage Min Max Avg. Min Max Avg. Stewartville Submarket Georgetown Meadows Stewartville Open 2000 89 18 0.36 $57,440 $287,200 Maplebrook Stewartville Open 2002 42 16 0.22 $42,260 $190,000 $223,800 $211,300 Pheasan Run IV & Commons Stewartville Open 2002 88 1 0.19 $39,600 $198,000 Schumann's Rolling Ridge Stewartville Open 2003 37 3 0.18 $36,980 $184,900 Rock Dell Woods Rock Dell Twp Open 2002 12 2.88 $95,980 $479,900 Subtotal 268 38 0.28 $48,964 $244,818 Olmsted County Market Area 6,547 1,243 0.44 $62,234 $332,179 1 Avilable lots per year end 2012. When available, vacant lots have been updated per year end 2013. 2 Lot value and home value based on MLS Listings, Builders Association of Rochester, and Olmsted County Assesor's Data. In new subdivisions with no recorded sales, the values represent the value of the property as its marketing. 3 Active is defined as having both a significant number of open lots as well as listings on MLS. Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 210

FOR SALE MARKET ANALYSIS Nearly all the single family subdivisions identified in Table FS 15 were platted during the first half of the last decade. Only 11 of the 77 subdivisions were platted after 2006. Reflections at Mayo Lake (2010) and River Highlands (2012) in Rochester are two newest subdivisions in the table. $400,000 $350,000 Active Marketing Subdivisions Lot Costs and Home Prices Lot Costs Home Price $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Byron East North Rochester Area Stewartville Realtor/Builder/Developer Interviews Maxfield Research Inc. interviewed real estate agents, home builders, and other professionals familiar with Olmsted County s owner occupied market to solicit their impressions of the forsale housing market in the county. Key points are summarized by topic as follows. Market Overview Olmsted County Realtors stated the overall sentiment is positive after years of postrecessionary housing activity. Although the market is still in recovery mode, most Realtors felt the market has turned considerably over the past year. Several Realtors thought 2013 was a banner year in the local real estate market. The overall sentiment from area Realtors for 2014 is stable with gradual improvements in the market. Most Realtors are optimistic that 2014 will perform better than 2013. The number of homes listed for sale (i.e. home inventory) remains historically low. Realtors across Olmsted County stated inventory is down across most price points; especially among MAXFIELD RESEARCH INC. 211

FOR SALE MARKET ANALYSIS entry level homes. Some Realtors feel sales activity would be higher if ample supply was available to meet buyer demand. The number of days on market ( DOM ) continues to improve throughout the County. Many move in ready updated homes have recently sold in days. Overall, the average market time is estimated to be around 100 days. The sales price to original list price ratio also has improved over the past year. Over this past summer 2013 (the peak selling season), most homes were selling for about 92% to 95% of the list price. Some Realtors speculate that as the Destination Medical Center development increases, demand for more affordable entry level homes will be led by the outlying Olmsted County communities versus Rochester proper. Although the Destination Medical Center has increased the demand for real estate acquisitions in Downtown Rochester near the Mayo Clinic, the announcement of the DMC has not noticeably increased the demand for homes in Olmsted County at this time. Many of the real estate transactions that have occurred in Downtown Rochester were in the works or planned prior to the DMC. New construction activity has increased significantly this year after many years of slow activity that followed the housing downturn. Realtors believe this could be the best year since 2007 or 2008 for new home building activity. Foreclosures continue to decline which has resulted in positive appreciation to the overall housing market. There continues to be demand for lender mediated properties from buyers seeking discounted homes; however fewer foreclosed homes are available today. Various Realtors commented on the lack of quality rental housing options in Olmsted County. Realtors mentioned households were left no option but to purchase a home as they found few rental housing options that met their needs and price point. Because of increasing housing values, many homeowners are regaining equity and are no longer underwater on their mortgage. Realtors believe many of these homeowners are move up buyers and will decide to move now that they are able. MAXFIELD RESEARCH INC. 212

FOR SALE MARKET ANALYSIS Land/Lots All of the newly platted subdivisions moving forward today tend to be smaller (less than 50 lots and 20 30 acres or less) and were previously platted last decade. Some of these subdivisions were previously bank owned lots that were purchased by a new builder/developer. There have been no large tract subdivisions (100 lots or more) platted for at least seven years. Some of the new subdivisions range from only 10 to 20 lots. During the housing boom in the early 2000s, many builders were platting large acreage parcels that were estimated to sell out in longer timeframes (six years or more). However after the housing downturn, most builders are platting new subdivisions that will have no more than a two to three year build out. It is estimated about 300 lots were platted in the Rochester vicinity in 2013. The number of new platted lots should increase in 2014 with low supply and increased housing values. Demand for raw land for future single family housing development is very slow. Builders prefer to purchase other previously platted lots. However, demand is high for multifamily land for apartment style rental housing. Several developers are actively pursuing multifamily property in Rochester, in particular in or near Downtown Rochester. Many of the multifamily developers are not from Rochester. Although there are a number of lots available, some builders believe many of the premium lots (i.e. walk outs, wooded, etc.) are unavailable and the less desirable lots are remaining (i.e. topography challenges, location, size of lot, etc.). Many interviewees stated demand was high for wooded, walk out lots with larger lot sizes (0.50 acres+). Various Realtors commented that there is a good supply of flat lots; but generally many of these lots are not highly desirable by today s buyers. Builders estimate that approximately $12,000 to $15,000 of the final lot cost pays the sewer access and water access fee (SAC and WAC), park dedication fees, and planned investment fee (PIF). Together with infrastructure and utility costs and raw land costs, the cost to develop a standard single family lot in Rochester is estimated to be at least $37,000 (excluding developer soft costs, holding costs, etc.). Lender owned lots in desirable locations have been mostly absorbed. Many of these lots sold for about $35,000 to $40,000 in Rochester and are difficult to find today. The development process (i.e. entitlement, raw land purchase, installation of utilities, etc.) generally takes 16 to 18 months before it is shovel ready and ready for new construction. Builders commented that the entitlement and building permit process takes longer in Rochester than the surrounding Olmsted County communities. MAXFIELD RESEARCH INC. 213

FOR SALE MARKET ANALYSIS Many interviewees stated there are a number of non listed ( MLS ) lots in Olmsted County. As a result, industry professionals are unable to gauge how many undeveloped lots are really available in the Olmsted County marketplace. Raw land costs vary considerably based on proximity to Rochester, political boundaries, topography, etc. Generally, raw land costs in Rochester have been averaging sales prices of about $15,000 to $20,000 per acre. Raw land costs decrease significantly outside of Rochester in the rural areas of Olmsted County. Entry level Rochester lots typically sell from $25,000 to $40,000; move up lots from $40,000 to about $70,000, and executive lots sell for over $75,000. The highest demand for lots in Rochester is in the Southwest and Northeast Submarkets. New Construction A number of subdivisions that received preliminary plat approval during the real estate boom last decade have stalled out and have not proceeded. As a result, many of the municipal approvals expired and it is unclear if some of these subdivisions will move forward as the housing market improves. Due to the Great Recession and housing slowdown, there are fewer builders and developers in the Rochester area today than the last decade. The Rochester area is characterized by local builders and no national builders exist in the marketplace today. Many builders continue to operate conservatively and favor build to suit, meaning the consumer chooses the floor plan, finishes, etc. Although spec construction is slowly increasing, most builders are not producing spec housing due to the perceived risk and holding costs. New construction activity was very robust between 2000 and 2005/2006 before the housing slowdown. During the peak years (2004 to 2006), Rochester was producing nearly 1,000 new housing units annually. However, since the peak new housing inventory has been down over 50% annually since 2007. The average price per square foot ( PSF ) for new single family construction with moderate finishes has been around $150/PSF or more for new construction across Olmsted County. Homes with higher end finishes, finished basements, etc. will be higher and exceed $175/PSF. The construction industry faces increased costs for building materials, skilled labor shortages, and raw land as agricultural values continue to escalate. As a result, builders will be forced to increase the price of the home to compensate for increased construction costs. MAXFIELD RESEARCH INC. 214

FOR SALE MARKET ANALYSIS Several Realtors commented on the desire for one level living or a ranch style home. Many of these homes feature a walk out basement and large open floor plans on the main level. Buyers of all household types and ages have been attracted to this architectural style. Single family housing is the preferred new construction type for most buyers. However there has been demand for upper bracket, larger townhome developments that have been attractive to buyers down sizing from single family homes. Nearly all of the actively marketing subdivisions are open builder subdivisions that allow the lot buyer to select the builder of their choice to the subdivision. However, most subdivisions have covenants and architectural guidelines that are enforced. MAXFIELD RESEARCH INC. 215

PLANNED & PROPOSED HOUSING PROJECTS Planned and Proposed Housing Projects Maxfield Research interviewed municipal staff members in communities throughout the Olmsted County Market Area order to identify housing developments under construction, planned, or pending. Table P 1 inventories and summarizes the number of housing units by product type that are either recently completed, under construction, or are planned to move forward. In addition, we also identified other projects that are either in the concept stages or have stalled. There are approximately 1,320 housing units in the development pipeline either under construction, planned, or pending. About 76% of the housing units are located in Rochester. Senior housing units account for 31% of the proposed development in the Olmsted County Market Area (409 units). Market rate rental housing makes up 24% of the inventory (320 units), while single family housing subdivisions account for 23% of the housing units (298 lots). There are also seven speculative rental housing developments in Rochester that may move forward, all three of the market rate projects would be located in Downtown Rochester. The other four developments would be affordable rental projects with income guidelines. Outside of Rochester, there are very few projects planned or proposed in the smaller Olmsted County communities. Combined there are five projects that include 28 singlefamily lots, 24 townhome lots, 241 units mobile home park, and a 30 bed skilled nursing home expansion. Units 450 400 350 300 250 200 150 100 50 0 Olmsted County Market Area Development Pipeline 4th Quarter 2013 298 Single Family 409 Senior Housing 30 320 Skilled Market Rate Nursing Rental Housing Type Housing 24 241 Townhomes Mobile home MAXFIELD RESEARCH INC. 216

PLANNED & PENDING HOUSING DEVELOPMENTS TABLE P 1 PLANNED/PENDING RESIDENTIAL PROJECTS OLMSTED COUNTY MARKET AREA 4th Quarter 2013 Project Name/Location Developer/Applicant Project Type Units/Lots Timing Comments City of Rochester The Homestead Volunteers of America Senior Housing 54 Fall 2014 (Congregate) Expansion on to the existing Homestead congregate facility consisting of 77 units due to a 2.5 year waiting list. The Waters at Mayowood Waters Senior Living Senior housing 175 Constru. Aug. 2013 71 Ind, 70 AL, 6 enhanced, and 28 MC 827 Mayowood Rd. Occ. Late 2014 TBD Titan Development & Investments Senior Housing 88 Under construction 70 AL & 18 MC units, On Zumbro River 1409 North Broadway (Old RV site) (Assisted living & memory care) Towne Club Apartments CommonBond Communities Senior housing 40 Under Construction Felty Ave. & Towne Club Rd. Fall 2014 opening TBD Greiner Construction (Tim Trimble) Senior Housing 52 Break ground in spring 2014 Broadway at Center Titan Development Mixed use w/rental housing 150 Const. to begin in 2014 39,500 sq. foot affordable housing, HUD 202 funded through 4% tax credits. Age 62+ $75 million, 32 story mixed use project will feature 30,000 square feet of commercial space and four story hotel TBD Venstar LLC Rental Housing 100 120 3rd Ave. SW & 6th St. SW 100 TBD Gerrard Companies Rental Housing 70 Seeking TIF assistance 8 1/2 Ave. Morris Hills North 3rd Majestic Homes Inc. Single Family Subdivision 11 8.48 acres Final Plat Stone Pinte Drive NE Morris Hills North 2nd Majestic Homes Inc. Single Family Subdivision 19 9.04 acres Final Plat Stone Pinte Drive NE Centurion Ridge Centurion Ridge LLC Single Family Subdivision 46 32.95 acres Final Plat Viola Rd, along 23rd Ave. Sw Fox Valley Villas Fox Hill Builders Single Family Subdivision 30 8.97 acres Final Plat Fox Valley Drive SW Hart Farms South Arcon Development Inc. Single Family Subdivision 25 10.37 acres Final Plat N. of 40th St. SW Fieldstone Third GP Development Single Family Subdivision 28 9.30 acres Final Plat S. of Weston SW Scenic Oaks 9th Add. Hanson & Young LLC Single Family Subdivision 25 21.02 acres Final Plat N. of Britwood Lane Hart Farm 4th Woodcrest Development Inc. Single Family Subdivision 38 22.21 acres Final Plat W. of Odyssey Drive SW Summit Point Fifth Arcon Development Single Family Subdivision 57 33.42 acres Preliminary Plat E. of 50th Ave., 65th St. NW CONTINUED Luxury rental, potential for short and long term leases. Likely mixed use with first floor commercial MAXFIELD RESEARCH INC. 217

PLANNED & PENDING HOUSING DEVELOPMENTS TABLE P 1 (Con't) PLANNED/PENDING RESIDENTIAL PROJECTS OLMSTED COUNTY MARKET AREA 4th Quarter 2013 Project Name/Location Developer/Applicant Project Type Units/Lots Timing Comments City of Rochester Speculative Towne Club Apartments CommonBond Communities Rental Housing (Town home) 50 Felty Ave. & Towne Club Rd. Affordable Tax credit Denied by MN Housing in 2013; plan to reapply in 2014 Cascade Creek Redevelopment MetroPlains Rental Housing 24 TBD Weiss Development Rental Housing TBD Exploring sites for affordable tax credit development Lofts on First Mac Hamilton/Topel & Sons Inc. Rental Housing 20 Market Rate Fifth on Fifth Mac Hamilton Rental Housing 39 Market Rate 5th Ave. & 5th St. Gerrard Project Gerrard Corp. Rental Housing TBD 2nd project similar to Metropolitan Marketplace Market Rate Center City Housing Project Center City Housing Supportive Housing 40 City of Byron None City of Chatfield Landmark Subdivision Single family Subdivision 9 22 acres, includes 1 outlot City of Dover None City of Eyota None City of Oronoco None City of Pine Island Pine Haven Care Center Pine Haven Community Skilled nursing 30 bed expanson Semi private rooms Affordable tax credit applying for 2014 funding. Project also includes units for long term homelessness City of St. Charles None City of Stewartville Rolling Ridge Marv Sherman Single Family Subdivision 19 Spring 2014 Golfview Village Dan Himmer Townhome lots 24 Northridge Estates American Land Leasing Mobile home lots 241 Preliminary plat approved, final plat forthcoming with design of water, sewer and streets. Located in the northwest portion of the City. Adjacent to Riverview Greens Golf Course. Future 20 acre site remaining to develop that would inclde 11 single family & 32 townhome lots Mobile home park will feature units for rent or purchase Source: Interviews with city staff, Maxfield Research Inc. MAXFIELD RESEARCH INC. 218

HOUSING AFFORDABILITY Introduction Affordable housing is a term that has various definitions according to different people and is a product of supply and demand. According to the U.S. Department of Housing and Urban Development (HUD), the definition of affordability is for a household to pay no more than 30% of its annual income on housing (including utilities). Families who pay more than 30% of their income for housing (either rent or mortgage) are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care. Generally, housing that is income restricted to households earning at or below 80% of Area Median Income (AMI) is considered affordable. However, many individual properties have income restrictions set anywhere from 30% to 80% of AMI. Rent is not based on income but instead is a contract amount that is affordable to households within the specific income restriction segment. Moderate income housing, often referred to as workforce housing, refers to both rental and ownership housing. Hence the definition is broadly defined as housing that is income restricted to households earning between 50% and 120% AMI. Figure 1 below summarizes income ranges by definition. Definition FIGURE 1 AREA MEDIAN INCOME (AMI) DEFINITIONS AMI Range Extremely Low Income 0% 30% Very Low Income 31% 50% Low Income 51% 80% Moderate Income Workforce Housing 50% 120% Note: Olmsted County 4 person AMI = $80,500 (2013) Naturally Occurring Affordable Housing (i.e. Unsubsidized Affordable) Although affordable housing is typically associated with an income restricted property, there are other housing units in communities that indirectly provide affordable housing. Housing units that were not developed or designated with income guidelines (i.e. assisted) yet are more affordable than other units in a community are considered naturally occurring or unsubsidized affordable units. This rental supply is available through the private market, versus assisted housing programs through various governmental agencies. Property values on these units are lower based on a combination of factors, such as: age of structure/housing stock, location, condition, size, functionally obsolete, school district, etc. Because of these factors, housing costs tend to be lower. MAXFIELD RESEARCH INC. 219

HOUSING AFFORDABILITY According to the Joint Center for Housing Studies of Harvard University, the privately unsubsidized housing stock supplies three times as many low cost affordable units than assisted projects nationwide. Unlike assisted rental developments, most unsubsidized affordable units are scattered across small properties (one to four unit structures) or in older multifamily structures. Many of these older developments are vulnerable to redevelopment due to their age, modest rents, and deferred maintenance. Because many of these housing units have affordable rents, project based and private housing markets cannot be easily separated. Some households (typically those with household incomes of 50% to 60% AMI) income qualify for both market rate and project based affordable housing. Rent and Income Limits Table HA 1 shows the maximum allowable incomes by household size to qualify for affordable housing and maximum gross rents that can be charged by bedroom size in Olmsted County. These incomes are published and revised annually by the Department of Housing and Urban Development (HUD) and also published separately by the Minnesota Housing Finance Agency (MHFA) based on the date the project was placed into service. Fair market rent is the amount needed to pay gross monthly rent at modest rental housing in a given area. This table is used as a basis for determining the payment standard amount used to calculate the maximum monthly subsidy for families at financially assisted housing. Table HA 2 shows the maximum rents by household size and AMI based on income limits illustrated in Table HA 1. The rents on Table HA 2 are based on HUD s allocation that monthly rents should not exceed 30% of income. In addition, the table reflects maximum household size based on HUD guidelines of number of persons per unit. For each additional bedroom, the maximum household size increases by two persons. MAXFIELD RESEARCH INC. 220

HOUSING AFFORDABILITY Table HA 1 MHFA/HUD INCOME AND RENT LIMITS OLMSTED COUNTY 2013 Income Limits by Household Size 1 phh 2 phh 3 phh 4 phh 5 phh 6 phh 7 phh 8 phh 30% of median $16,920 $19,320 $21,750 $24,150 $26,100 $28,020 $29,970 $31,890 50% of median $28,200 $32,200 $36,250 $40,250 $43,500 $46,700 $49,950 $53,150 60% of median $33,840 $38,640 $43,500 $48,300 $52,200 $56,040 $59,940 $63,780 80% of median $45,120 $51,520 $58,000 $64,400 $69,520 $74,720 $79,840 $85,040 100% of median $56,400 $64,400 $72,500 $80,500 $86,900 $93,400 $99,800 $106,300 120% of median $67,680 $77,280 $87,000 $96,600 $104,280 $112,080 $119,760 $127,560 Maximum Gross Rent EFF 1BR 2BR 3BR 4BR 30% of median $423 $453 $543 $628 $700 50% of median $705 $755 $906 $1,046 $1,167 60% of median $846 $906 $1,087 $1,256 $1,401 80% of median $1,128 $1,288 $1,450 $1,610 $1,738 100% of median $1,410 $1,610 $1,812 $2,012 $2,172 120% of median $1,692 $1,932 $2,175 $2,415 $2,607 Fair Market Rent EFF 1BR 2BR 3BR 4BR Fair Market Rent $573 $622 $838 $1,123 $1,484 Sources: MHFA, HUD, Maxfield Research Inc. MAXFIELD RESEARCH INC. 221

HOUSING AFFORDABILITY HHD Size TABLE HA 2 MAXIMUM RENT BASED ON HOUSEHOLD SIZE AND AREA MEDIAN INCOME OLMSTED COUNTY 2013 Maximum Rent Based on Household Size (@30% of Income) 30% 50% 60% 80% 100% 120% Unit Type 1 Min Max Min. Max. Min. Max. Min. Max. Min. Max. Min. Max. Min. Max. Studio 1 1 $423 $423 $705 $705 $846 $846 $1,128 $1,128 $1,410 $1,410 $1,692 $1,692 1BR 1 2 $423 $483 $705 $805 $846 $966 $1,128 $1,288 $1,410 $1,610 $1,692 $1,932 2BR 2 4 $483 $604 $805 $1,006 $966 $1,208 $1,288 $1,610 $1,610 $2,013 $1,932 $2,415 3BR 3 6 $544 $701 $906 $1,168 $1,088 $1,401 $1,450 $1,868 $1,813 $2,335 $2,175 $2,802 4BR 4 8 $604 $797 $1,006 $1,329 $1,208 $1,595 $1,610 $2,126 $2,013 $2,658 $2,415 $3,189 1 One bedroom plus den and two bedroom plus den units are classified as 1BR and 2BR units, respectively. To be classified as a bedroom, a den must have a window and closet. Note: 4 person Olmsted County AMI is $80,500 (2013) Sources: HUD, MHFA, Maxfield Research Inc. MAXFIELD RESEARCH INC. 222

HOUSING AFFORDABILITY Rental Affordability by Bedroom Type Table HA 3 shows the average market rate rents by unit type and the proportion of Olmsted County Market Area renter households that could afford the monthly rents. Monthly rents are based on a 30% allocation of household income to housing costs. Key findings from the table follow. Across all market rate rental units, about 42% of existing renters can afford the market rate monthly rents without being cost burdened (i.e. spending more than 30% of income on housing). Nearly two thirds of Olmsted County Market Area renters can afford to rent an efficiency unit. The number of income qualified renter households decreases with each larger unit as rents increase. Approximately 56% can afford one bedroom units, 42% could afford twobedroom units, and 33% could afford three bedroom units. TABLE HA 3 HOUSEHOLD INCOME NEEDED TO AFFORD AVERAGE RENT OLMSTED COUNTY MARKET AREA 2013 Average HHD Income Pct. of Renter HHDS Unit Type Rent Needed to Afford that can Afford* Efficiency $555 $22,200 65.6% 1 BR $801 $32,040 56.1% 2 BR $963 $38,520 41.9% 3 BR $1,155 $46,200 32.8% All Units $957 $38,280 41.8% * Based on 2011 renter incomes Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 223

HOUSING AFFORDABILITY $1,400 $1,200 Rental Affordabilty by Bedroom Type Average Rent Pct. of Renter HHDS Income Qual. 70.0% 60.0% Monthly Rent $1,000 $800 $600 $400 50.0% 40.0% 30.0% 20.0% Pct. Income Qualified $200 10.0% $0 Efficiency 1 BR 2 BR 3 BR All Units Unit Type 0.0% Home Ownership and Rental Affordability by Submarket Table HA 4 shows the average sales price of a home in 3 rd Quarter 2013 by Olmsted County submarket and the minimum household income needed to purchase a home. Prior to the Great Recession and housing bust, a household could afford to purchase a home of about three times their gross income. However, due to the low mortgage rates and depressed pricing, affordability has increased and the purchasing power is higher (from 3.0 to 3.5 times gross income). Please note that Table HA 4 does not consider strict underwriting criteria for home purchases (i.e. credit scores, down payment, length of employment, etc.). Because of rather strict lender guidelines, a recovering resale market, and increasing interest rates; not all owner households will financially qualify. The table also illustrates the number of income qualified households that could afford market rate rents based on the average rent of each submarket. Exhibited household incomes are based on 2011 household income figures by tenure (i.e. owner and renter). The following bullet points identify key findings. About 70% of existing owners could afford an average priced home in the Olmsted County Market Area. Nearly 80% of owner households qualify to purchase in the East Submarket compared to 60% income qualified in the North Submarket. MAXFIELD RESEARCH INC. 224

HOUSING AFFORDABILITY Because homeowner incomes are significantly higher than renter incomes, a much greater percentage of households can afford the average home price than the average market rent. Only 42% of renter households can afford the average monthly rent in the Olmsted County Market Area. About 40% of renter households in the Rochester Area can afford the average market rate rent ($967). Whereas about 65% of renters in the East Submarket can afford the average market rate rent ($566). Home Ownership Market Rate Rental Housing HHD Income Pct. of Olmsted Co. HHD Income Pct. of Olmsted Co. Average Needed to Afford Owner HHDs Average Income Needed to Renter HHDs Submarket Sales Price 1 Avg. Home Who can Afford 2 Rent Afford Avg. Rent Who can Afford 2 Byron $219,224 $60,061 64.8% $798 $31,920 49.9% East $143,724 $39,376 79.9% $566 $22,640 64.7% North $242,276 $66,377 59.7% $885 $35,400 44.6% Rochester Area* $202,570 $55,499 68.5% $967 $38,680 39.3% Stewartville $168,996 $46,300 77.3% $743 $29,720 53.1% Olmsted MA Avg. $199,436 $54,640 69.2% $957 $38,280 41.6% 1 Average sales price includes both single family and multifamily resales. Based on 3Q 2013 resale data. 2 Based on 2011 ACS household incomes by tenure (i.e. owner and renter incomes) * Pricing based on Rochester and Rochester Fringe averages Note: Affordability has been adjusted to account for today's low interest rates (4.5%; 30 year fixed mortgage) Source: Maxfield Research Inc. TABLE HA 4 PCT. OF HOUSEHOLDS BY TENURE THAT CAN AFFORD AVERAGE PRICED HOME & RENT OLMSTED COUNTY MARKET AREA 2013 MAXFIELD RESEARCH INC. 225

HOUSING AFFORDABILITY HHD Income $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 2013 Income Needed to Afford Average Price Home Olmsted County Market Area HHD Income Needed to Afford Avg. Home Owner HHDs who can afford 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% Pct. $0 Byron East North Rochester Area* Submarket Stewartville Olmsted MA Avg. 0.0% $45,000 2013 Income Needed to Afford Avg. Rent Olmsted County Market Area HHD Income Needed to Afford Avg. Rent Renter HHDs who can afford 70.0% HHD Income $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% Pct. $0 Byron East North Rochester Area* Submarket Stewartville Olmsted MA Avg. 0.0% MAXFIELD RESEARCH INC. 226

HOUSING AFFORDABILITY Home Ownership Affordability by Household Income Table HA 5 illustrates the price point of a home Olmsted County Market Area householders could afford based on household income. In addition, the table shows the number of active listings that fall within the home price range. The active listings were provided by the Regional Multiple Listing Service of Minnesota from November 2013. Key findings from the table follow. About 24% of Olmsted County Market Area households have household incomes less than $35,000. Persons earning less than $35,000 could afford a home value of up to $127,750. About 26% of all active listings in the Olmsted County Market Area are affordable to persons earning less than $35,000. The proportion of listings to household income is near equilibrium for most householders earning more than $50,000. However, for householders earning between $25,000 and $49,999 there is higher home inventory based on the number of income qualified households. Table HA 5 Home Ownership Affordability by Income 2013 Olmsted County Market Area Pct. of HHDs Affordable Home Price Active Listings 2013 Income * Income Qual. Min Max No. Pct. <$15,000 7.3% $0 $54,750 12 1.5% $15k to $24.9k 7.8% $54,750 $91,246 67 8.2% $25k to $34.9k 8.5% $91,250 $127,746 130 15.9% $35k to $49.9k 14.0% $127,750 $182,496 201 24.5% $50k to $74.9k 21.3% $182,500 $273,746 160 19.5% $75k to $99.9k 14.9% $273,750 $364,996 115 14.0% $100k to $149.9k 15.3% $365,000 $547,496 90 11.0% $150k to $199.9k 5.4% $547,500 $729,996 25 3.0% $200,000k + 5.5% $730,000 20 2.4% * Household income includes both renters and owners. Source: Regional Multiple Listing Service of MN, Maxfield Research Inc. MAXFIELD RESEARCH INC. 227

HOUSING AFFORDABILITY Pct. 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Home Ownership Affordabilty by Income 2013 Pct. Income Qual. 24.5% Pct. of Listings 21.3% 19.5% 15.9% 14.9% 15.3% 14.0% 14.0% 11.0% 7.3% 7.8% 8.2% 8.5% 5.4% 5.5% 3.0% 2.4% 1.5% HHD Income Housing Cost Burden Table HA 6 shows the number and percentage of owner and renter households in the Olmsted County Market Area that pay 30% or more of their gross income for housing. This information was compiled from the American Community Survey 2011 estimates. This information is different than the 2000 Census which separated households that paid 35% or more in housing costs. As such, the information presented in the tables may be overstated in terms of households that may be cost burdened. The Federal standard for affordability is 30% of income for housing costs. Without a separate break out for households that pay 35% or more, there are likely a number of households that elect to pay slightly more than 30% of their gross income to select the housing that they choose. Moderately cost burdened is defined as households paying between 30% and 50% of their income to housing; while severely cost burdened is defined as households paying more than 50% of their income for housing. Higher income households that are cost burdened may have the option of moving to lower priced housing, but lower income households often do not. The figures focus on owner households with incomes below $50,000 and renter households with incomes below $35,000. Key findings from Table HA 6 follow. Approximately 27% of all owner households had incomes less than $50,000, while 55% of renter households had incomes less than $35,000 in the Olmsted County Market Area. MAXFIELD RESEARCH INC. 228

HOUSING AFFORDABILITY About 22% of owner households and 45% of renter householders are estimated to be paying more than 30% of their income for housing costs. Compared to the Metro Area, the percentage of cost burdened households is lower in Olmsted County. Metro Area cost burdened households are 29% for owner households and 49% for renter households. The number of cost burdened households in the Olmsted County Market Area increases proportionally based on lower incomes. About 74% of renters with incomes below $35,000 are cost burdened and 53% of owners with incomes below $50,000 are cost burdened. The Stewartville Submarket has the highest percentage of cost burdened owner households in the Olmsted County Market Area. About 30% of all owner households are cost burdened, while 57% of owner households earning less than $50,000 are cost burdened. Nearly 90% of all cost burdened renter households in Olmsted County are located in the Rochester Submarket (5,139 households). Three quarters of renter households earning less than $35,000 are cost burdened. 120.0% 100.0% Cost Burdened Olmsted County Market Area All Renter HHs Renter HHs <$35k All Owner HHs Owner HHs <$50k 80.0% 60.0% 40.0% 20.0% 0.0% MAXFIELD RESEARCH INC. 229

HOUSING AFFORDABILITY 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Owner Cost Burdened Olmsted County Market Area All Owner HHs Owner HHs <$50k 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Renter Cost Burdened Olmsted County Market Area All Renter HHs Renter HHs <$35k MAXFIELD RESEARCH INC. 230

HOUSING AFFORDABILITY TABLE HA 6 HOUSING COST BURDEN OLMSTED COUNTY MARKET AREA & SELECT GEOGRAPHIES 2011 Byron East North Rochester Rochester Fringe Stewartville Olmsted County Olmsted County MA Olmsted County Market Area No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. Owner Households All Owner Households 2,179 3,856 2,683 30,661 3,428 2,316 42,987 45,123 Cost Burden 30% or greater 599 27.5% 942 24.5% 677 25.3% 6,421 21.0% 546 16.0% 700 30.4% 9,436 22.0% 9,885 22.0% Owner Households w/ incomes <$50,000 501 1,187 670 8,177 597 990 11,393 12,122 Cost Burden 30% or greater 264 52.7% 591 50.3% 365 55.4% 4,292 53.1% 223 37.9% 555 56.9% 5,994 53.2% 6,290 52.5% Renter Households All Renter Households 368 917 503 11,952 91 627 13,614 14,458 Cost Burden 30% or greater 155 46.1% 388 46.6% 199 41.7% 5,139 45.4% 31 40.8% 280 46.1% 5,804 45.2% 6,192 45.3% Renter Households w/ incomes <$35,000 223 618 329 6,381 31 333 7,252 7,915 Cost Burden 30% or greater 145 66.8% 355 61.1% 191 59.5% 4,516 75.3% 27 100.0% 260 80.7% 5,123 75.2% 5,494 73.6% Median Contract Rent 1 $663 $517 $611 $689 $630 $659 $673 $683 Anoka Co. Carver Co. Dakota Co. Hennepin Co. Ramsey Co. Scott Co. Wash. Co. Metro Area Avg. Metro Area Seven County No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. Owner Households All Owner Households 99,474 27,295 116,871 305,885 122,573 38,394 72,214 782,706 Cost Burden 30% or greater 29,084 29.4% 8,021 29.5% 31,395 27.0% 90,762 29.8% 33,776 27.7% 11,242 29.4% 19,863 27.6% 224,143 28.7% Owner Households w/ incomes <$50,000 27,042 5,092 27,157 78,057 37,226 6,782 15,885 197,241 Cost Burden 30% or greater 16,210 61.0% 3,057 61.0% 16,881 63.2% 50,379 65.7% 20,994 57.2% 4,324 64.7% 10,014 63.8% 121,859 61.9% Renter Households All Renter Households 22,117 5,505 35,520 169,629 81,273 6,872 15,808 336,724 Cost Burden 30% or greater 11,006 51.7% 2,905 55.1% 15,804 46.1% 81,601 50.0% 42,262 54.1% 3,106 46.5% 7,039 47.3% 163,723 48.7% Renter Households w/ incomes <$35,000 10,878 3,019 16,421 88,821 49,109 3,245 6,780 178,273 Cost Burden 30% or greater 8,445 81.4% 2,197 76.6% 12,904 82.7% 68,998 82.1% 37,413 80.2% 2,394 77.8% 5,229 82.9% 137,580 77.4% Median Contract Rent 1 $932 $906 $879 $868 $809 $894 $1,045 Blue Earth Co. Stearns Co. St. Louis Co. Winona Co. Duluth Mankato Out State MN No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. Owner Households All Owner Households 16,063 41,005 61,685 13,703 21,502 8,007 13,900 6,475 Cost Burden 30% or greater 3,799 23.7% 10,091 24.7% 14,391 23.4% 3,291 24.1% 5,264 24.6% 1,929 24.2% 3,403 24.5% 1,441 22.3% Owner Households w/ incomes <$50,000 5,891 14,192 25,667 5,529 8,156 3,282 5,263 2,790 Cost Burden 30% or greater 2,660 45.6% 6,650 47.1% 10,799 42.5% 2,431 44.5% 4,033 50.0% 1,421 43.7% 2,465 47.1% 1,174 42.4% Renter Households All Renter Households 7,982 15,464 24,761 5,589 14,823 6,615 12,050 4,168 Cost Burden 30% or greater 4,170 55.8% 7,440 51.1% 12,534 54.6% 2,787 53.9% 8,210 58.2% 3,805 60.5% 6,780 58.4% 2,233 56.8% Renter Households w/ incomes <$35,000 5,211 9,561 17,919 4,366 10,963 4,531 8,344 3,481 Cost Burden 30% or greater 3,759 76.3% 6,837 76.9% 11,703 71.4% 2,735 67.4% 7,616 73.6% 3,430 79.2% 6,447 81.4% 2,198 67.1% St. Cloud Winona (City) Median Contract Rent 1 $613 $642 $564 $501 $631 $627 $629 $494 1 Median Contract Rent 2011 Note: Calculations exclude households not computed. Sources: American Community Survey, 2007 2011 estimates; Maxfield Research Inc. MAXFIELD RESEARCH INC. 231

HOUSING AFFORDABILITY For comparison purposes, data is also presented for the Twin Cities Metro Area and select counties and cities in outstate Minnesota. Outstate Minnesota cities and counties include: Duluth St. Louis County Mankato Blue Earth County St. Cloud Stearns County Winona Winona County The percentage of cost burdened renter households in Olmsted County (45.2%) is lower than other Outstate Minnesota counties (51.1% to 55.8%). Likewise the City of Rochester (45.4%) is lower than other larger cities in Outstate Minnesota (56.8% to 60.5%). Compared to the Metro Area, the number of cost burdened renter households in Olmsted County (45.2%) is slightly lower than the Metro Area average (48.7%). When comparing cost burdened renter households earning less than $35,000, Olmsted County has a higher percentage (75.2%) than most Metro Area counties; excluding Scott County (77.8%) and Washington County (82.9%). The percentage of cost burdened owner households in Olmsted County (22%) is slightly lower than other Outstate Minnesota counties (23.4% to 24.7%). However, when analyzing cost burdened owner households earning less than $50,000 annually Olmsted County has the highest percentage (53.2%) compared to other Outstate Minnesota counties (42.5% to 47.1%). Compared to the Metro Area, Olmsted County has a lower percentage of owner occupied cost burdened households (22.0% in Olmsted County versus 28.7% Metro Area average). After adjusting for incomes below $50,000; the percentage of Olmsted County cost burdened households in 53.2% compared to the Metro Area average of 61.9%. The percentage of cost burdened households earning less than $50,000 ranges from 57.2% in Ramsey County to 65.7% in Hennepin County. MAXFIELD RESEARCH INC. 232

HOUSING AFFORDABILITY 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Renter Cost Burdened Outstate Minnesota All Renter HHs Renter HHs <$35k 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Renter Cost Burdened Olmsted Co. vs. Metro Area Counties All Renter HHs Renter HHs <$35k MAXFIELD RESEARCH INC. 233

HOUSING AFFORDABILITY 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Owner Cost Burdened Outstate Minnesota All Owner HHs Owner HHs <$50k 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Owner Cost Burdened Olmsted Co. vs. Metro Area Counties All Owner HHs Owner HHs <$50k MAXFIELD RESEARCH INC. 234

HOUSING AFFORDABILITY Housing Cost Burden for Owners w/incomes less than $50k (by Census Tract & Number) MAXFIELD RESEARCH INC. 235

HOUSING AFFORDABILITY Housing Cost Burden for Renters w/incomes less than $35k (by Census Tract & Number) MAXFIELD RESEARCH INC. 236

HOUSING AFFORDABILITY Housing Vouchers In addition to subsidized apartments, tenant based subsidies like Housing Choice Vouchers, can help lower income households afford market rate rental housing. The tenant based subsidy is funded by the Department of Housing and Urban Development (HUD), and is managed by the Olmsted County HRA. Under the Housing Choice Voucher program (also referred to as Section 8) qualified households are issued a voucher that the household can take to an apartment that has rent levels with Payment Standards. The household then pays approximately 30% of their adjusted gross income for rent and utilities, and the Federal government pays the remainder of the rent to the landlord. The maximum income limit to be eligible for a Housing Choice Voucher is 50% AMI based on household size, as shown in Table HA 1. Currently, the HRA administers approximately 500 Housing Choice Vouchers in Olmsted County and 14 portability clients. Portability clients are households who hold a Housing Choice Voucher issued from another jurisdiction but have chosen to live in Olmsted County. The current waiting list for the Housing Choice Voucher program is closed for new pre applications. In 2012, 70 households received vouchers from among the 1,200 pre applications that were received. TABLE HA 7 AVERAGE HOUSING VOUCHERS BY YEAR OLMSTED COUNTY 2008 to 2013 2008 2009 2010 2011 2012 2013 Vouchers 530 521 518 522 518 505 Vouchers Port In n/a n/a n/a 23 11 14 Source: Olmsted County HRA; Maxfield Research Inc. Community Land Trust The Rochester Area Foundation/First Homes Program developed and manages the Community Land Trust (CLT) Program in southeastern Minnesota. The Rochester Area Foundation (RAF) formed and launched the First Home Program (a subsidiary organization) with an initial goal of building 875 workforce homes (375 rental units and 500 single family homes). First Homes established the Community Land Trust in July 2001 to address the affordable housing need in the community. The First Homes CLT is one of only ten land trusts in the State of Minnesota and is the second largest in terms of number of households served. A land trust is an affordable homeownership program enabling households with modest incomes to purchase a home. The land is owned by First Homes while utilizing a 99 year ground lease resulting in lower housing costs as the buyers do not own the land. Should the home MAXFIELD RESEARCH INC. 237

HOUSING AFFORDABILITY owner decide to sell the home; the home would be sold to another modest income buyer in the future meeting specific income guidelines and a resale formula. CLT homeowners are able to build equity and take advantage of tax advantages just like other homeowners. In addition to new construction, the CLT program also started Heritage Homes that renovated properties in and near Downtown Rochester. First Homes renovated 52 dilapidated homes and added them to the CLT program. The graphic on the following page outlines the benefits and requirements for the land trust program. According to First Homes, since the inception of the program over 1,050 affordable housing units have been created resulting in funding of over $90 million. Other facts about the program include: There are 210 CLT homes in the First Homes Program; including 157 new construction single family homes and 53 acquisitions/renovations of homes in downtown core neighborhoods Homes have been constructed throughout Olmsted County and Southeast Minnesota; including; Byron, Dover, Chatfield, Grand Meadow, Kasson, Pine Island, Plainview, Rochester, St. Charles, and Wabasha. 293 households have been serviced through the First Homes CLT Program 83 homes have been resold through the First Homes CLT Program 46% of buyers had incomes below 50% AMI and 23% had incomes below 60% AMI 31% of CLT households were female heads of households and 19% were households of color MAXFIELD RESEARCH INC. 238

HOUSING AFFORDABILITY MAXFIELD RESEARCH INC. 239

SPECIAL NEEDS HOUSING Introduction This section of the report examines the need for additional special needs housing in Olmsted County by examining the following data: number of people in the County with disabilities; number of people with AIDS; estimates of disability by income level; distribution of long term homelessness by family type; specialized housing facilities; bi yearly shelter survey; US Census American Community Survey results; and Inventory of housing for disabled persons in Olmsted County. Persons with Disabilities Data on the number of people in the Olmsted County with disabilities was obtained from the 2012 US Census American Community Survey. The Census Bureau defines a disability as a longlasting physical, mental, or emotional condition lasting six months or more. Table SN 1 shows the number of people by age group who are classified as having one of four types of disabilities: hearing, vision, cognitive (difficulty with various types of mental tasks) and ambulatory (difficulty moving from place to place without aid). It should be noted that a person can have more than one disability. The following are key points from Table SN 1. Overall, 16.3% of the County s non institutionalized population has some form of disability. This percentage is higher than the State s (10%). When comparing disabilities by age, 0.5% of the County s age 5 to 17 population had a disability, as did about 7.1% of the age 18 to 64 population and 8.6% of the age 65 and over population. Cognitive disability is the most prevalent type of disability among children (59.6%) and ages 18 to 64 (26.1%). Among seniors, the most common disability is hearing (27.0%). Ambulatory disabilities are also common among seniors as well (23.6%). MAXFIELD RESEARCH INC. 240

SPECIAL NEEDS TABLE SN 1 TYPE OF DISABILITY BY AGE OF NON INSTITUTIONALIZED PERSON OLMSTED COUNTY 2012 Total Number Percent with Disability Age 5 to 17 years Hearing disability 90 0.3% Vision disability 105 0.4% Cognitive disability 473 1.8% Ambulatory disability 52 0.2% Total 794 0.5% Self care disability 74 0.3% Age 18 to 64 years Hearing disability 1,478 1.6% Vision disability 967 1.1% Cognitive disability 2,687 3.0% Ambulatory disability 2,271 2.5% Total 10,301 7.1% Self care disability 1,131 1.3% Independent Living Disability 1,767 2.0% Age 65 years and over Hearing disability 3,310 18.0% Vision disability 1,162 6.3% Cognitive disability 1,245 6.8% Ambulatory disability 2,948 16.1% Total 12,462 8.6% Self care disability 1,317 7.2% Independent Living Disability 2,480 13.5% Total disabilities (all ages): 23,557 16.3% Sources: Census 2012 ACS; Maxfield Research Inc. MAXFIELD RESEARCH INC. 241

SPECIAL NEEDS People with Limitations/Disabilities The 2000 Census provided a strong dataset on the number of people with disabilities. Disability categories were expanded in the 2000 Census and included several categories. This data gathering was not available for the 2010 Census and information obtained through the American Community Survey provides only limited information for selected larger communities. HUD Consolidated Planning division has compiled specific tabulations of households with various types of disabilities to address this issue. The special tabulations were developed using information specifically provided to HUD by the Census Bureau using an average of three years between 2008 and 2010. Table SN 2 summarizes the number of households in Olmsted County that have identified some physical or mental limitation or none of the above limitations. Disabilities represented on the table include: hearing or vision impairment, ambulatory limitation (a condition that substantially limits one or more basic physical activities, such as walking, climbing stairs, reaching lifting, or carrying), cognitive (difficulty learning, remembering, or concentrating) and self care or independent living limitation (household requires assistance with activities of daily living such as bathing, dressing, grooming). A household may have more than one member with these limitations and an individual may have more than one limitation. The following are key points from Table SN 2. A large number of renter households (2,065 households) or 45.2% of all renter households with incomes of 30% or less of AMI indicated some type of limitation either vision/hearing, ambulatory, cognitive, or self care. As incomes increase, the number of owner households also increases. As identified on the table, approximately 32,675 owner households (which includes the none of the above limitations category) with disabilities have incomes of 80% or higher of the AMI. Comparatively, 47,015 owner households indicated some type of limitation versus 15,575 renter households. Owner households with limitations are more likely to have higher incomes than are renter households with limitations. The data does not however, identify the severity of the limitation other than the disability or limitation must last six months or more. MAXFIELD RESEARCH INC. 242

SPECIAL NEEDS TABLE SN 2 ESTIMATES OF DISABILITY BY INCOME LEVEL OLMSTED COUNTY 2008 2010 (Three Year Average) Total HHs Owner HHs Renter HHs Type of Limitation and Income Category No. Pct. No. Pct. No. Pct. Households w/incomes at or less than 30% AMI With a hearing or vision impairment 615 1.0% 270 0.6% 345 2.2% With an ambulatory limitation 830 1.3% 245 0.5% 585 3.8% With a cognitive limitation 695 1.1% 160 0.3% 535 3.4% With a self care or independent living limitation 920 1.5% 320 0.7% 600 3.9% With none of the above limitations 4,105 6.6% 1,600 3.4% 2,505 16.1% Households w/incomes greater than 30% but 50% or less of AMI With a hearing or vision impairment 695 1.1% 370 0.8% 325 2.1% With an ambulatory limitation 720 1.2% 385 0.8% 335 2.2% With a cognitive limitation 490 0.8% 260 0.6% 230 1.5% With a self care or independent living limitation 620 1.0% 285 0.6% 335 2.2% With none of the above limitations 5,030 8.0% 2,585 5.5% 2,445 15.7% Households w/incomes greater than 50% but 80% or less of AMI With a hearing or vision impairment 615 1.0% 555 1.2% 60 0.4% With an ambulatory limitation 735 1.2% 600 1.3% 135 0.9% With a cognitive limitation 645 1.0% 555 1.2% 90 0.6% With a self care or independent living limitation 590 0.9% 505 1.1% 85 0.5% With none of the above limitations 8,085 12.9% 5,645 12.0% 2,440 15.7% Households w/incomes greater than 80% of AMI With a hearing or vision impairment 1,810 2.9% 1,455 3.1% 355 2.3% With an ambulatory limitation 1,745 2.8% 1,355 2.9% 390 2.5% With a cognitive limitation 1,215 1.9% 1,045 2.2% 170 1.1% With a self care or independent living limitation 1,730 2.8% 1,370 2.9% 360 2.3% With none of the above limitations 30,700 49.0% 27,450 58.4% 3,250 20.9% Total 62,590 100.0% 47,015 100.0% 15,575 100.0% Proportion Owner vs. Renter 75.1% 24.9% Source: HUD CHAS 2008 2010 (Three year average) Housing Facilities for Disabled Persons Olmsted County has 233 facilities that serve persons with disabilities licensed with the Minnesota Department of Human Services in 2013. These facilities are summarized in Table SN 3 by the type of program. The table also provides a program description. The following are key points from Table SN 3. Adult foster care provides the greatest amount of housing for persons with disabilities in Olmsted County. There are 215 adult foster care facilities in the County. The majority of adult foster care homes serve persons with developmental disabilities and mental illness. A smaller portion is licensed to serve other populations such as persons with traumatic brain injury or the elderly. There are twelve Semi Independent Living Services buildings within the County and only five Residential Services facilities. MAXFIELD RESEARCH INC. 243

SPECIAL NEEDS Overall, housing options for disabled persons are spread throughout the County in a pattern that closely follows overall population. Rochester has the greatest number of adult foster care beds. Meanwhile, communities and townships with smaller populations have fewer beds proportionally. TABLE SN 3 INVENTORY OF HOUSING FOR DISABLED PERSONS OLMSTED COUNTY 4th Quarter 2013 Total Facilities Program Description Adult Foster Care 215 A living arrangement that provides food, lodging, supervision, and household services. They may also provide personal care and medication assistance. Adult foster care providers may be licensed to serve up to four adults and costs for room and board are met with client such as Social Security Income and Group Residential Housing (GRH). Waiver Services N/A Home and community based services for people who would otherwise require the level of care provided in a nursing facility. Waiver services may be provided in a private home, foster care home, board & lodging, or assisted living facility. Semi Independent 12 Includes training and assistance to persons managing money, preparing meals, Living Services shopping, personal appearance, hygiene and other activities needed to maintain (SILS) and improve the capacity of a developmentally disabled person to live in the community. Residential 1 Intensive Residential Treatment Services (IRTS) facility designed to enhance Mental Illness psychiatric stability and personal and emotional adjustment. Residential 5 Licensed residential service providers for persons with developmental Services disability or related conditions. Total 233 Source: MN Dept. of Human Services; Maxfield Research Inc. Specialized Housing Facilities Olmsted County has numerous housing facilities dedicated to servicing specialized populations. Specialized populations include ex offenders, homeless individuals, chemical dependency members, mental illness individuals, etc. These facilities are summarized in Table SN 4, on the following page, by the type of program. The table also provides a program description. MAXFIELD RESEARCH INC. 244

SPECIAL NEEDS TABLE SN 4 SPECIALIZED HOUSING OLMSTED COUNTY 4th Quarter 2013 Existing Ex Offender Re Entry Housing Next Chapter Ministries Program Description Three homes that offer transitional housing for 9 males and 3 females who are exiting the prison system. Length of stay is 1 year. An additional 1 extended stay transitional bed is available for up to 6 months. Damascus Way Re entry program, prior to release from prison system. One house with 16 beds for adult men who have 8 months or less left of sentence. The program is licensed by the Minnesota Department of Corrections and holds Supervised Release and Work Release Contracts. Transitional Living Center 10 bed unit for ex offenders coming out of local detention or prison, stays limited to 90 days. DFO Correction and ATTIC collaborative Existing Supportive Housing for Adults with Disabilities (who are homeless) Olmsted County HRA Francis Apartments. Permanent supported housing; 17 efficiency apartments for adults with mental illness, chemical dependency, or HIV who are homeless. Zumbro Valley Mental Health Center Shelter Plus Care Sites. Permanent support housing for adults with mental illness who are homeless;12 subsidized apartments in scattered community sites Olmsted County HRA Bridges Program. Subsides to persons with a verifiable serious and persistent mental illness if they meet the State homeless definition and are financially eligible which is determined by HRA. There are 8 homeless subsidies and 1 long term homeless subsidy. Rochester Salvation Army Castleview Apartments. 16 units for single adults Silver Creek Corners Permanent supportive housing for 40 single adults who are chronic inebriates. Collaboration with Center City Housing, Olmsted County HRA, Olmsted County Community Services Existing Supportive Housing for Adults with Disabilities Zumbro Valley Mental Health Center Thomas House. Permanent supported group residential housing for adults with mental illness; 6 private bedrooms, board & lodging Zumbro Valley Mental Health Center Shared Housing. Congregate supported housing for adults with mental illness Zumbro Valley Mental Health Center Northgate Apartments. Permanent supported site subsidized apartments for adults with mental illness;12 1 bedroom apartments. Zumbro Valley Mental Health Center Scattered Site Apartments. Permanent supported housing for adults with mental illness; 38 subsidized apartments in scattered community sites Olmsted County HRA Bridges Program. Subsides to persons with a verifiable serious and persistent mental illness if they are financially eligible which is determined by HRA. There are 9 subsidies. Specialized Housing Cronin Home 44 beds for persons suffering from chemical dependency, 28 male and 16 female. Specialized, Supportive Services Olmsted County Adult Services Homeless Services Team. Serves 40 long term homeless single adults. Provides intensive case management Zumbro Valley Mental Health Center services with a housing first focus. Services include, but not limited to: laundry, grocery shopping, applying for Hearth Connection benefits from federal, state, and local agencies, mental and chemical health support and treatment, Homeless Prevention & Other Housing Assistance di ti it i d di l d d t l d Olmsted Community Action Program Family Homeless Prevention and Assistance Program (FHPAP). Provides homeless prevention assistance for rent to assist participants in remaining in their homes. Services include rent, some case management, budget counseling, information and referral. Olmsted County Veteran Services Assists veterans in applying for temporary financial assistance from the State Soldiers Assistance Program (SSAP). SSAP is income and asset based and includes shelter, personal needs allowances and utility payments for veterans who are unable to work for a period of at least 30 days. Veterans in receipt of public cash assistance benefits such as General Assistance (GA), Minnesota Family Investment Program (MFIP), are not eligible. In addition, there is a once in a lifetime Special Needs Grant for unforeseen financial emergencies. Olmsted County Adult Services, Community Services Department Managers apply directly to MN Housing for funding. Rochester Salvation Army Rapid Re housing and Emergency Solutions Grant are programs for literally homeless individuals that can offer assistance and case management for up to a period of 24 months. Other Options for Housing stability or permanency Olmsted County Family Support & Emergency County Aid is intended to provide a cost effective intervention that resolves a current shelter crisis Assistance that the eligible household cannot otherwise meet with their own resources. Assistance available once in a 12 month period. Rochester Salvation Army Rural Housing Assistance and Stability Program (RHASP) assists homeless families and individuals with first month s rent and/or deposit. Assistance is provided to households who find themselves homeless according to HUD s definition. Olmsted County HRA Transitional Rent Assistance Program (T RAP). A program funded by MHFA that will be used to serve single female heads of household with at least one minor child, households of color, and priority for homeless or near homeless. Household must have income below 30% of the median income. The maximum rent assistance will be $250 and the Olmsted County HRA expects to serve 20 households. Choices of Southeastern Minnesota The Choices program serves displaced home makers in the community. The assistance depends on what the displaced person needs to become employed in the community and is determined on a case by case basis. Source: Olmsted County Community Services; Maxfield Research Inc. Crisis Housing Fund. These funds are used to help individuals with SPMI maintain their housing while in residential treatment for MI and/or CD. Funds can be used to pay mortgage, rent and/or utilities. Case MAXFIELD RESEARCH INC. 245

SPECIAL NEEDS People Living With AIDS Acquired Immunodeficiency Syndrome, or AIDS, was first reported in the United States in mid 1981. Since that time, the Public Health Service has received reports of more than 1.2 million people with AIDS in the Country. Through 2012 in Minnesota, 10,112 HIV and AIDS cases have been reported including 3,947 that have died. AIDS is caused by the human immunodeficiency virus (HIV). This virus infects certain cells of the immune system, and can also directly infect the central nervous system and brain. Infection with HIV may not always lead to AIDS. Some infected persons remain in good health for years. Others develop illness varying in severity from mild to extremely serious. There is no vaccine to prevent HIV infection nor is there a cure. There are treatments that can help persons live longer and healthier, however. Table SN 5 shows the estimated number of people living with AIDS in 2012 in Olmsted County and each of the major metro area counties in the State, as well as in Minnesota and the United States. The data is from the Minnesota Department of Health and includes only those with AIDS, not those diagnosed with HIV but only AIDS. As the table shows, about 53 people in Olmsted County were living with AIDS in 2012. TABLE SN 5 ESTIMATED PEOPLE LIVING WITH AIDS SELECT COUNTIES, 2012 No. of People County with AIDS Hennepin County 1,920 Ramsey County 592 Dakota County 160 Anoka County 165 Washington County 71 St. Louis County 61 Olmsted County 53 Stearns County 33 Scott County 44 Carver County 29 Total 3,542 State Total 3,974 U.S. Total 1 487,968 1 US Total is the 2009 value from the Kaiser Family Foundation. Source: Minnesota Department of Health, Maxfield Research Inc. MAXFIELD RESEARCH INC. 246

SPECIAL NEEDS Homelessness HUD defines homeless as an individual that meets the following criteria: Individuals and families who lack a fixed, regular, and adequate nighttime residence and includes a subset for an individual that resided in an emergency shelter or a place not meant for human habitation and who is exiting a residence where they temporarily resided. Individuals and families who imminently lose their primary nighttime residence. Unaccompanied youth and families with children and youth who are defined as homeless under other federal statutes who do not otherwise qualify as homeless under this definition. Individuals and families who are fleeing or who are attempting to flee domestic violence, dating violence, sexual assault, stalking or other dangerous or life threatening conditions that relate to violence against a family member. It is challenging to identify the total number of homeless members in the community. The total number can vary greatly as homeless members move from location to location. Shelter Survey The Minnesota Department of Children, Families and Learning conducts the Shelter Survey two times each year, but conducted the survey four times each year in the past. The survey covers over 300 shelters, transitional housing programs, and motel voucher providing agencies, such as County social service agencies, community action agencies, and Salvation Army units across the state. The Shelter Survey does not count the number of people sleeping on the street, in cars, in abandoned buildings, or those who are inappropriately doubled up. For this reason, the survey is not a count of all homeless people, only those provided with shelter for the night. The survey counts people staying in shelter facilities and those provided with motel vouchers. The following types of agencies are included in the survey: Overnight Shelters Battered Women s Shelters Youth Shelters /Transitional Housing County Social Service Agencies Miscellaneous Agencies Transitional Housing Programs Battered Women s Safe Homes Salvation Army Centers Community Action Agencies Detoxification Centers MAXFIELD RESEARCH INC. 247

SPECIAL NEEDS Table SN 6 on the following page shows the total number of people sheltered in Olmsted County in January 2013 and July 2013. The following are key points from Table SN 6. In the July 2013 survey, 61 homeless people were sheltered in Olmsted County s eight facilities. This included 31 women and 26 children (93% of the total persons sheltered). Only four men were sheltered. There are fewer options for homeless men, as most facilities serve single women or women with children. In January 2013, 70 people were sheltered in Olmsted County. The percentage of men, women and children sheltered was similar to the July 2013 survey. Participation in the bi yearly shelter survey varies by agency. Lack of participation or warmer weather in the 2013 July survey may have contributed to the lower numbers in comparison to the 2013 January survey. MAXFIELD RESEARCH INC. 248

SPECIAL NEEDS TABLE SN 6 SHELTER SURVEY OLMSTED COUNTY January 2013 and July 2013 Persons Sheltered Agency Legal Name Men Women Kids Total January 2013 Interfaith Hospitality Network of Greater Rochester 3 3 6 12 Lutheran Social Services of Minnesota 0 0 0 0 MN Department of Corrections 1 0 0 1 Salvation Army (Rochester) 0 0 0 0 Salvation Army (Rochester) 1 6 11 18 Women's Shelter 0 3 16 19 Women's Shelter 0 12 8 20 Olmsted County Total 5 24 41 70 July 2013 MN Department of Corrections 1 0 0 1 MN Department of Corrections 1 0 0 1 MN Department of Corrections 1 0 0 1 Lutheran Social Service of Minnesota 0 0 0 0 Salvation Army (Rochester) 1 2 0 3 Salvation Army (Rochester) 0 6 13 19 Women's Shelter 0 13 12 25 Women's Shelter 0 10 1 11 Olmsted County Total 4 31 26 61 Note: Agency participation may vary on bi yearly basis. Sources: Dept. of Children, Families and Learning; Maxfield Research Inc. Table SN 7 shows the distribution of long term homelessness by family type in Southeast Minnesota and throughout the Greater Minnesota for comparison purposes. This data is obtained through Wilder Research, which specializes in providing research to address the needs of people in the Metro Area. The following are important points from Table SN 7: Southeast Minnesota has a moderate amount of households experiencing long term homelessness in Greater Minnesota, which accounts for 13.9% of the Greater Minnesota total. Southeast Minnesota has a relatively low rate of Adults (18+) without children that have experienced long term homelessness (12.9%) in comparison to the other areas in the Greater Minnesota. MAXFIELD RESEARCH INC. 249

SPECIAL NEEDS Nearly 19% of children with their parents are experiencing long term homelessness in Southeast Minnesota, which ranks third highest in Greater Minnesota. Unaccompanied Adults (18+) minors (<18) Parents Childen Total Total w/o children w/o children w/children w/their parents persons households # % # % # % # % # % # % Central 114 15.3% 0 0.0% 29 18.1% 51 14.7% 194 15.3% 143 15.5% Northeast 56 7.5% 3 15.8% 15 9.4% 32 9.2% 106 8.4% 74 8.0% Northwest 178 24.0% 5 26.3% 37 23.1% 80 23.1% 300 23.7% 220 23.9% St. Louis County 197 26.5% 3 15.8% 32 20.0% 76 22.0% 308 24.3% 232 25.2% Southeast 96 12.9% 4 21.1% 27 16.9% 65 18.8% 192 15.1% 128 13.9% Southwest 13 1.7% 0 0.0% 8 5.0% 18 5.2% 39 3.1% 20 2.2% West Central 89 12.0% 4 21.1% 12 7.5% 24 6.9% 129 10.2% 105 11.4% Greater MN Total 743 100.0% 19 100.0% 160 100.0% 346 100.0% 1268 100.0% 922 100.0% Statewide Total 2102 39 459 914 3514 2600 Source: Wilder Research Inc.; Maxfield Research Inc. TABLE SN 7 DISTRIBUTION OF LONG TERM HOMELESSNESS BY FAMILY TYPE AND REGION GREATER MINNESOTA 2013 American Community Survey Veterans According to the Federal Government, a veteran is any person who served honorably on active duty in the armed forces of the United States. According to the US Census Bureau s American Community Survey 2012, Olmsted County had an estimated 9,818 veterans. Among these veterans, the dominant demographic characteristics are: 34.4% are Vietnam era Veterans 13.2% are Gulf War Veterans (8/1990 to 8/2001) 93.5% are male 22.1% are between the ages of 35 to 54 23.9% are between the ages of 55 to 64 97.0% are white Median Income over the past 12 months was $41,629 34.1% have some college or an associate s degree 2.8% unemployment rate for Veterans in the labor force (lower than general population) 16.8% of Veterans are not in the labor force (percentage does not include unemployed) MAXFIELD RESEARCH INC. 250

SPECIAL NEEDS 30.0% 25.0% 20.0% 15.0% Veterans by Age in Olmsted County 23.9% 22.1% 19.9% 26.0% 10.0% 7.9% 5.0% 0.0% 18 to 34 years 35 to 54 years 55 to 64 years 65 to 74 years 75 years and over Poverty As stated in the US Census Bureau s American Community Survey 2012, Olmsted County had an estimated 12,013 persons below poverty level in the past 12 months. Key findings from the data include: 8.5% of Olmsted County population is below poverty level 9.8% of all individuals under the age of 18 are in poverty 9.3% of all females are in poverty 38.1% of all Black or African American are in poverty 27.1% have less than a high school education 12.0% 10.0% 8.0% 6.0% Poverty Rates by Age in Olmsted County 9.8% 8.2% 7.0% 8.5% 4.0% 2.0% 0.0% Under 18 18 to 64 years 65 years and over All people MAXFIELD RESEARCH INC. 251

SPECIAL NEEDS The unemployment rate for those who fall under the poverty level is more than double the overall population s rate. This can be largely attributed to many not working full time yearround in the past 12 months. According to American Community Survey, only 1.2% worked fulltime, year round. In addition, about 12% worked less than full time year round and 17.5% did not work at all. Poverty Rates by Race in Olmsted County Two or more races 16.8% Some other race 7.1% Native Hawaiian and Other Pacific 0.0% Asian 7.2% American Indian and Alaska Native 14.6% Black or African American 38.1% White 6.8% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% In Olmsted County, poverty rates are lowest among Native Hawaiian and Other Pacific residents and highest among Black and African Americans. Also, as illustrated in the graph, persons who are one race (8.3%) are much less likely to fall under the poverty level than those who are two or more races (16.8%). MAXFIELD RESEARCH INC. 252

HOUSING DEMAND ANALYSIS Introduction Previous sections of this study analyzed the existing housing supply and the growth and demographic characteristics of the population and household base in the Olmsted County Market Area. This section of the report presents our estimates of housing demand in the County from 2013 through 2030. Demand estimates are baseline prior to Destination Medical Center initiatives. Demographic Profile and Housing Demand The demographic profile of a community affects housing demand and the types of housing that are needed. The housing life cycle stages are: 1. Entry level householders Often prefer to rent basic, inexpensive apartments Usually singles or couples in their early 20 s without children Will often double up with roommates in apartment setting 2. First time homebuyers and move up renters Often prefer to purchase modestly priced single family homes or rent more upscale apartments Usually married or cohabiting couples, in their mid 20's or 30's, some with children, but most are without children 3. Move up homebuyers Typically prefer to purchase newer, larger, and therefore more expensive single family homes Typically families with children where householders are in their late 30's to 40's 4. Empty nesters (persons whose children have grown and left home) and never nesters (persons who never have children) Prefer owning but will consider renting their housing Some will move to alternative lower maintenance housing products Generally couples in their 50's or 60's 5. Younger independent seniors Prefer owning but will consider renting their housing Will often move (at least part of the year) to retirement havens in the Sunbelt and desire to reduce their responsibilities for upkeep and maintenance Generally in their late 60's or 70's MAXFIELD RESEARCH INC. 253

HOUSING DEMAND ANALYSIS 6. Older seniors May need to move out of their single family home due to physical and/or health constraints or a desire to reduce their responsibilities for upkeep and maintenance Generally single females (widows) in their mid 70's or older Demand for housing can come from several sources including: household growth, changes in housing preferences, and replacement need. Household growth necessitates building new housing unless there is enough desirable vacant housing available to absorb the increase in households. Demand is also affected by shifting demographic factors such as the aging of the population, which dictates the type of housing preferred. New housing to meet replacement need is required, even in the absence of household growth, when existing units no longer meet the needs of the population and when renovation is not feasible because the structure is physically or functionally obsolete. Because of the relatively young age of the County s housing stock, available vacant land, and the fact that redevelopment has not taken a significant number of homes out of the market, demand for housing in the Olmsted County Market Area will be driven almost exclusively by household growth. Turnover will increase as the housing stock ages and new product is developed. Between 2013 and 2020, the Olmsted County Market Area is projected to see an increase of approximately 8,050 households. Between 2020 and 2030, another 12,800 households are projected to be added. Since each household equates to an occupied housing unit, the County will need to build an equal number of housing units to support this growth or approximately 20,850 housing units by 2030. The graphic on the following page provides greater detail of various housing types supported within each housing life cycle. Information on square footage, average bedrooms/bathrooms, and lot size is provided on the subsequent graphic. Housing Demand Overview The previous sections of this assessment focused on demographic and economic factors driving demand for housing in the Olmsted County Market Area. In this section, we utilize findings from the economic and demographic analysis to calculate demand for new general occupancy housing units in the County. In addition, we present housing demand for each submarket in the County. Housing markets are driven by a range of supply and demand factors that vary by location and submarket. The following points outline several of the key variables driving housing demand. MAXFIELD RESEARCH INC. 254

HOUSING DEMAND ANALYSIS DEMOGRAPHICS & HOUSING DEMAND Age Student Rental 1st time Move up 2nd Empty Nester/ Senior Cohort Housing Housing Home Buyer Home Buyer Home Buyer Downsizer Housing 18 24 18 24 25 29 30 34 35 39 40 44 45 49 50 54 55 59 60 64 65 69 70 74 75 79 80 84 85+ 18 34 65 79 25 39 30 49 40 64 55 74 55+ & 65+ Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 255

HOUSING DEMAND ANALYSIS TYPICAL HOUSING TYPE CHARACTERISTICS For Sale Housing Housing Types Target Market/ Unit/Home Lot Sizes/ Demographic Characteristics Units Per Acre Entry level single family First time buyers: Families, 1,200 to 2,200 sq. ft. 80'+ wide lot couples w/no children, some 2 4 BR 2 BA 2.5 3.0 DU/Acre singles Move up single family Step up buyers: Families, 2,000 sq. ft.+ 80'+ wide lot couples w/no children 3 4 BR 2 3 BA 2.5 3.0 DU/Acre Executive single family Step up buyers: Families, 2,500 sq. ft.+ 100'+ wide lot couples w/no children 3 4 BR 2 3 BA 1.5 2.0 DU/Acre Small lot single family First time & move down buyers: 1,700 to 2,500 sq. ft. 40' to 60' wide lot Families, couples w/no children, 3 4 BR 2 3 BA 5.0 8.0 DU/Acre empty nesters, retirees Entry level townhomes First time buyers: Singles, 1,200 to 1,600 sq. ft. 6.0 12.0 DU/Acre couples, 2 3 BR 1.5BA+ Move up townhomes First time & step up buyers: 1,400 to 2,000 sq. ft. 6.0 8.0. DU/Acre Singles, couples, some families, 2 3 BR 2BA+ empty nesters Executive townhomes/twinhomes Step up buyers: Empty nesters, 2,000+ sq. ft. 4.0 6.0 DU/Acre retirees 3 BR+ 2BA+ Detached Townhome Step up buyers: Empty nesters, 2,000+ sq. ft. 4.0 6.0 DU/Acre retirees, some families 3 BR+ 2BA+ Rental Housing Both Condominums First time & step up buyers: 800 to 1,700 sq. ft. Low rise: 18.0 24.0 DU/Acre Singles, couples, empty nesters, retirees 1 2 BR 1 2 BA Mid rise: 25.0+ DU/Acre Hi rise: 75.0+ DU/Acre Apartment style rental housing Singles, couples, single parents, 675 to 1,250 sq. ft. Low rise: 18.0 24.0 DU/Acre some families, seniors 1 3 BR 1 2 BA Mid rise: 25.0+ DU/Acre Hi rise: 75.0+ DU/Acre Townhome style rental housing Single parents, families 900 to 1,700 sq. ft. 8.0 12.0 DU/Acre w/children, empty nesters 2 4 BR 2BA Student rental housing College students, mostly 550 to 1,400 sq. ft. Low rise: 18.0 24.0 DU/Acre undergraduates 1 4BR 1 2 BA Mid rise: 25.0+ DU/Acre Hi rise: 50.0+ DU/Acre Senior housing Retirees, Seniors 550 to 1,500 sq. ft. Varies considerably based on Suites 2BR 1 2 BA senior product type Source: Maxfield Research Inc. Demographics Demographics are major influences that drive housing demand. Household growth and formations are critical (natural growth, immigration, etc.), as well as household types, size, age of householders, incomes, etc. Economy & Job Growth The economy and housing market are intertwined; the health of the housing market affects the broader economy and vice versa. Housing market growth depends on job growth (or the prospect of); jobs generate income growth which results in the formation of more households and can stimulate household turnover. Historically low unemployment rates have driven both existing home purchases and new home purchases. Lack of job growth leads to slow or diminishing household growth, which in turn relates to reduced housing demand. Additionally, low MAXFIELD RESEARCH INC. 256

HOUSING DEMAND ANALYSIS income growth results in fewer move up buyers which results in diminished housing turnover across all income brackets. Consumer Choice/Preferences A variety of factors contribute to consumer choice and preferences. Many times a change in family status is the primary factor for a change in housing type (i.e. growing families, emptynest families, etc.). However, housing demand is also generated from the turnover of existing households who decide to move for a range of reasons. Some households may want to moveup, downsize, change their tenure status (i.e. owner to renter or vice versa), or simply move to a new location. Supply (Existing Housing Stock) The stock of existing housing plays a crucial component in the demand for new housing. There are a variety of unique household types and styles, not all of which are desirable to today s consumers. The age of the housing stock is an important component for housing demand, as communities with aging housing stocks have higher demand for remodeling services, replacement new construction, or new home construction as the current inventory does not provide the supply that consumers seek. Pent up demand may also exist if supply is unavailable as householders postpone a move until new housing product becomes available. Housing Finance Household income is the fundamental measure that dictates what a householder can afford to pay for housing costs. According to the U.S. Department of Housing and Urban Development (HUD), the definition of affordability is for a household to pay no more than 30% of its annual income on housing (including utilities). Families who pay more than 30% of their income for housing (either rent or mortgage) are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care. The ability of buyers to obtain mortgage financing has been increasingly challenging over the past few years as lenders have overcorrected from the subprime mortgage crisis. As a result, many borrowers have remained on the sidelines as lenders have enforced tight lending requirements, thereby increasing the demand for rental housing. Mobility It is important to note that demand is somewhat fluid between submarkets and will be impacted by development activity in nearby areas, including other communities outside Olmsted County. Demand given for each submarket may be lower or higher if proposed and/or planned developments move forward. For example, if a senior housing project moves ahead in Stew MAXFIELD RESEARCH INC. 257

HOUSING DEMAND ANALYSIS artville, Stewartville may also capture a portion of the southern Rochester submarkets potential demand. Because of Rochester s size and employment opportunities, Rochester will draw from all of Olmsted County and beyond. For Sale Housing Market Demand Analysis Tables DMD 1 to DMD 3 present our demand calculations for general occupancy for sale housing in the Olmsted County Market Area between 2013 and 2020 and between 2020 and 2030, respectively. This analysis identifies potential demand for general occupancy for sale housing that is generated from both new households and turnover households. The following points summarize our findings. Because the 65 and older cohort is typically not a target market for new general occupancy for sale housing, we limit demand from household growth to only those households under the age of 65. According to our projections, the Olmsted County Market Area is expected to grow by 4,731 households under age 65 between 2013 and 2020. Based on household tenure data from the U.S. Census, we expect that between 69.6% of the demand (Rochester submarket) to 94.3% of the demand (Rochester Fringe submarket) will be for owner occupied housing units, equating to a potential for about 3,400 owner households from household growth. As of 2013, there are approximately 37,300 owner households under the age of 65 in the Olmsted County Market Area. Based on household turnover data from the 2011 American Community Survey, we estimate that between 17.3% and 34.3% of these under 65 owner households will experience turnover between 2013 and 2020 (turnover rate varies by submarket). This estimate results in anticipated turnover of approximately 22,900 existing households by 2020. We then estimate the percent of existing owner households turning over that would prefer to purchase new housing. Throughout the United States, approximately 8% of all home sales were for new homes over the past three years while slightly over 5% of Midwest sales were for new homes. Considering the wide age range of housing stock in the Olmsted County Market Area, we conservatively estimate that 5% of the households turning over will desire new housing. This estimate results in demand from existing households for 586 new residential units in the Olmsted County Market Area between 2013 and 2020. Total demand from household growth and existing household turnover between 2013 and 2020 equates to 3,991 new for sale housing units. MAXFIELD RESEARCH INC. 258

HOUSING DEMAND ANALYSIS Single family demand is calculated for modest homes, move up homes, and executive homes. Because of the pricing differentiation between the Rochester/Byron submarkets and the remainder of the Market Area; the definition is defined as follows: o Modest: <$200k (Remainder of Olmsted MA) <$250k (Rochester/Byron submarkets) o Move up: $200k $300k (Remainder of Olmsted MA) $250k $400k (Rochester/Byron submarkets) o Executive: $300k+ (Remainder of Olmsted MA) $450k+ (Rochester/Bryon submarkets) Approximately 31% of the new single family homes built in the Olmsted County Market Area between 2013 and 2020 are projected to be modest, 44% are projected to be moveup, and 25% are projected to be executive homes. Increased costs for building materials and labor, together with a diminishing finished lot supply of lender mediated lots have made housing construction more expensive. Existing single family homes and new for sale townhomes will accommodate much of the demand for modest homes. After adjusting for the portion of single family and multifamily for sale demand, demand exists for about 2,900 single family units and 1,080 multifamily units. The Rochester submarket accounts for 78% of the total single family demand (2,263 units) and 90% of the total multifamily demand (970 units). Outside of the Rochester submarket, the Byron submarket shows the next highest demand through 2020 with 185 housing units followed by the North submarket (164 units). Single family demand in the Olmsted County Market Area is highest among move up homes (1,291 units), followed by modest homes (893 units) and executive homes (724 homes). Table DMD 3 summarizes single family modest housing demand by price point from 2013 to 2030. Roughly 60% of the entry level demand was for product priced from $150,000 to $199,999. Demand between $200,000 and $249,000 is concentrated in Byron, Rochester, and the Rochester Fringe. While there are various target markets for multifamily ownership housing, a portion of demand will be from younger households who have modest incomes and little savings or equity in an existing home. The other target market will be from empty nesters seeking to downsize from their existing single family homes into one level living multifamily options. According to many Realtors, this market segment has been strong with many baby boomers and older adults purchasing executive level, patio style homes. Similar to single family demand, multifamily demand was apportioned between modest homes and move up homes. Modest multifamily is classified as homes under $150,000; whereas move up multifamily includes homes greater than $150,000. Move up multifamily MAXFIELD RESEARCH INC. 259

HOUSING DEMAND ANALYSIS homes would also include executive level townhomes, twinhomes, and detached townhomes. Through 2020, demand was calculated for about 450 modest units and 630 moveup homes. MAXFIELD RESEARCH INC. 260

HOUSING DEMAND ANALYSIS DEMAND FROM NEW HOUSEHOLD GROWTH Household growth under age 65, 2013 to 2020 (times) % propensity to own¹ 190 83.9% 95 80.3% 160 84.8% 4,020 69.6% 120 94.3% 146 83.5% 4,731 74.0% (Equals) Demand from new household growth 159 76 136 2,798 113 122 3,404 DEMAND FROM EXISTING HOUSEHOLDS Total owner households under age 65, 2013 (times) % of owner turnover 2013 2020² (times) % desiring new owner housing (Equals) Demand from existing households TOTAL MARKET DEMAND Total demand from new HH growth and turnover 185 116 164 3,233 137 154 3,991 Proportion Single family vs. Multifamily 70% 30% 85% 15% 95% 5% 70% 30% 100% 0% 80% 20% 73% 27% No. of Single family vs. Multifamily Units 130 56 99 17 156 8 2,263 970 137 0 123 31 2,908 1,082 Single Family Percent Modest (<$200k or $250k) Number Percent Move up ($200k $300k or $250k to $400k) Number Percent Executive ($300k or $450k+) Number Multifamily³ Percent Modest (<$150k) Number Percent Move up ($150,000+) Number TABLE DMD 1 DEMAND FOR ADDITONAL FOR SALE HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2020 Byron East North Rochester ¹ Based on percent owner households under age 65 in 2010 ² Based on household turnover and mobility data (2011 American Community Survey, Five Year Estimates) ³ Includes twinhomes, townhomes, condos, etc. Note: Demand by price point varies between the Rochester/Byron Submarkets and all other submarkets. Source: Maxfield Research Inc. Rochester Fringe 1,917 3,047 2,219 25,387 2,774 26.9% 26.2% 25.8% 34.3% 17.3% 5.0% 5.0% 5.0% 5.0% 5.0% 1,966 33.0% 5.0% 26 40 29 435 24 32 35% 50% 40% 30% 10% 35% 31% 45 49 62 679 14 43 893 40% 40% 45% 45% 45% 40% 44% 52 40 70 1,018 62 49 1,291 25% 10% 15% 25% 45% 25% 25% 32 10 23 566 62 31 724 50% 75% 50% 40% 0% 28 13 4 388 0 Stewartville 50% 25% 50% 60% 0% 40% 28 4 4 582 0 12 Olmsted County MA 37,310 586 60% 42% 19 451 58% 631 MAXFIELD RESEARCH INC. 261

HOUSING DEMAND ANALYSIS DEMAND FROM NEW HOUSEHOLD GROWTH Household growth under age 65, 2020 to 2030 (times) % propensity to own¹ DEMAND FROM EXISTING HOUSEHOLDS Total households under age 65, 2020 (times) % of owner turnover 2020 2030² (times) % desiring new owner housing TABLE DMD 2 DEMAND FOR ADDITONAL FOR SALE HOUSING OLMSTED COUNTY MARKET AREA 2020 to 2030 Byron East North Rochester Rochester Fringe Stewartville 409 171 292 7,320 754 83.9% 80.3% 84.8% 69.6% 94.3% (Equals) Demand from new household growth 343 137 248 5,095 711 TOTAL MARKET DEMAND Total demand from new HH growth and turnover 371 178 278 5,578 736 231 6,942 7,372 Proportion Single family vs. Multifamily 65% 35% 80% 20% 90% 10% 65% 35% 100% 0% 75% 25% 70% 30% 70% 30% No. of Single family vs. Multifamily Units 241 130 143 36 250 28 3,626 1,952 736 0 173 58 4,860 2,083 5,169 2,203 235 83.5% 196 Olmsted County Olmsted County MA 8,565 9,181 73.9% 74.0% 6,330 6,730 2,077 3,123 2,355 28,184 2,888 2,088 39,029 40,715 26.9% 26.2% 25.8% 34.3% 17.3% 33.0% 31.4% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 25 34 613 642 (Equals) Demand from existing households 28 41 30 483 Single Family Percent Modest (<$200k or $250k) Number Percent Move up ($200k $300k or $250k to $400k) Number Percent Executive ($300k or $450k+) Number Multifamily³ Percent Modest (<$150k) Number Percent Move up ($150,000+) Number ¹ Based on percent owner households under age 65 in 2010 ² Based on household turnover and mobility data (2011 American Community Survey, Five Year Estimates) ³ Includes twinhomes, townhomes, condos, etc. 35% 50% 40% 30% 10% 35% 29% 84 71 100 1,088 74 61 1,389 40% 40% 45% 45% 45% 40% 44% 96 57 113 1,632 331 69 2,161 25% 10% 15% 25% 45% 60 14 38 906 331 25% 27% 43 1,310 50% 75% 50% 40% 0% 60% 42% 65 27 14 781 0 35 871 50% 25% 50% 60% 0% 40% 58% 65 9 14 1,171 0 23 1,212 29% 1,478 44% 2,298 27% 1,393 42% 921 58% 1,282 Note: Demand by price point varies between the Rochester/Byron Submarkets and all other submarkets. Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 262

HOUSING DEMAND ANALYSIS TABLE DMD 3 SUMMARY OF MODEST FOR SALE HOUSING DEMAND BY PRICE POINT OLMESTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe Stewartville Olmsted MA Entry Level Price Point No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. 2013 to 2020 $150,000 to $174,999 12 26.8% 25 52.0% 32 52.0% 183 27.0% 3 24.7% 22 52.0% 279 31.3% $175,000 to $199,999 11 25.2% 24 48.0% 30 48.0% 172 25.3% 3 23.2% 21 48.0% 260 29.2% $200,000 to $224,999 13 29.3% 200 29.4% 4 27.0% 217 24.3% $225,000 to $249,999 8 18.7% 124 18.3% 4 25.0% 136 15.3% Total 45 100% 49 100% 62 100% 679 100% 14 100% 43 100% 892 100% 2020 to 2030 $150,000 to $174,999 23 26.8% 37 52.0% 52 52.0% 294 27.0% 18 24.7% 32 52.0% 455 30.8% $175,000 to $199,999 21 25.2% 34 48.0% 48 48.0% 275 25.3% 17 23.2% 29 48.0% 425 28.8% $200,000 to $224,999 25 29.3% 320 29.4% 20 27.0% 364 24.7% $225,000 to $249,999 16 18.7% 199 18.3% 19 25.0% 233 15.8% Total 84 100% 71 100% 100 100% 1,088 100% 74 100% 61 100% 1,478 100% 2013 to 2030 $150,000 to $174,999 35 26.8% 62 52.0% 84 52.0% 477 27.0% 22 24.7% 54 52.0% 734 31.0% $175,000 to $199,999 33 25.2% 58 48.0% 78 48.0% 447 25.3% 20 23.2% 50 48.0% 685 28.9% $200,000 to $224,999 38 29.3% 519 29.4% 24 27.0% 581 24.5% $225,000 to $249,999 24 18.7% 323 18.3% 22 25.0% 369 15.6% Total 129 100% 120 100% 162 100% 1,767 100% 88 100% 104 100% 2,370 100% Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 263

HOUSING DEMAND ANALYSIS Modest Housing Demand by Submarket: 2013 2030 Byron East North 45 84 49 71 62 100 2013 2020 2020 2030 Rochester 679 1,088 Rochester Fringe 14 74 Stewartville 43 61 0 200 400 600 800 1,000 1,200 Housing Units 180 160 140 120 100 80 60 40 20 0 Single family Multifamily 130 56 General Occupany For Sale Housing Demand (excluding Rochester) 2013 2020 99 156 137 17 8 0 Byron East North Rochester Fringe Stewartville Submarket 123 31 MAXFIELD RESEARCH INC. 264

HOUSING DEMAND ANALYSIS 3,500 3,000 2,500 Single family Multifamily General Occupany For Sale Housing Demand (Rochester & Olmsted County Market Area) 2013 2020 2,908 Housing Units 2,000 1,500 1,000 500 2,263 970 1,082 0 Rochester Olmsted MA Submarket 800 700 600 Single family Multifamily General Occupany For Sale Housing Demand (excluding Rochester) 2020 2030 736 Housing Units 500 400 300 200 100 0 241 250 130 143 173 36 28 0 58 Byron East North Rochester Fringe Stewartville Submarket MAXFIELD RESEARCH INC. 265

HOUSING DEMAND ANALYSIS 6,000 5,000 Single family Multifamily General Occupany For Sale Housing Demand (Rochester & Olmsted County Market Area) 2020 2030 5,169 Housing Units 4,000 3,000 2,000 1,000 3,626 1,952 2,203 0 Rochester Submarket Olmsted MA MAXFIELD RESEARCH INC. 266

HOUSING DEMAND ANALYSIS Rental Housing Demand Analysis Tables DMD 4 and DMD 5 presents our calculation of general occupancy rental housing demand for the Olmsted County Market Area. This analysis identifies potential demand for rental housing that is generated from both new households and turnover households. Market rate housing is defined as non income restricted, affordable housing is 40% to 60% AMI, and subsidized is 30% AMI. According to our projections, the Olmsted County Market Area is expected to grow by 4,731 households under age 65 between 2013 and 2020. Because the 65 and older cohort is typically not a target market for new general occupancy market rate rental housing, we limit demand from household growth to only those households under the age of 65. We identify the percentage of households that are likely to rent their housing based on 2010 tenure data. The propensity to rent ranges from 5.7% (Rochester Fringe) to 30.4% (Rochester) based on the submarket. After adjusting household growth by renters, growth through 2020 is reduced to 1,327 new renter households in the Olmsted County Market Area. Secondly, we calculate demand from existing households under the age of 65 in the Market Area that could be expected to turnover between 2013 and 2020. As of 2013, there are 13,159 renter households under the age of 65 in the Olmsted County Market Area. Based on household turnover data from the 2011 American Community Survey, we estimate that between 76.3% (Rochester Fringe) and 88.4% (Byron) of these under 65 owner households will experience turnover between 2013 and 2020 (turnover rate varies by submarket). This estimate results in anticipated turnover of approximately 11,050 existing households by 2020. We then estimate the percent of existing renter households turning over that would prefer to rent in a new rental development. Considering the age of the County s housing stock, we estimate that 5% to 15% of the households turning over in the Olmsted County Market Area will desire new rental housing. This estimate results in demand from existing households for 1,567 new residential rental units between 2013 and 2020. Combining demand from household growth plus turnover results in total demand in the Market Area for 2,893 rental units between 2013 and 2020. Based on a review of renter household incomes and sizes and monthly rents at existing properties, we estimate that 27% to 56% of the total demand will be for market rate housing. Through 2020, demand exists for about 1,170 market rate rental units. Demand for market rate rental housing will be concentrated mainly in Rochester, as about 90% of all market rate demand is located in the Rochester submarket. MAXFIELD RESEARCH INC. 267

HOUSING DEMAND ANALYSIS DEMAND FROM NEW HOUSEHOLD GROWTH Household growth under age 65, 2013 to 2020 (times) % propensity to rent¹ DEMAND FROM EXISTING HOUSEHOLDS Total renter households under age 65, 2013 (times) % of renter turnover 2013 2020² (times) % desiring new rental housing TOTAL MARKET DEMAND Total demand from new HH growth and turnover TABLE DMD 4 DEMAND FOR ADDITONAL RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2020 Byron East North Rochester Rochester Fringe Stewartville 190 95 160 4,020 120 146 16.1% 19.7% 15.2% 30.4% 5.7% 16.5% (Equals) Demand from new household growth 31 19 24 1,222 7 (Equals) Demand from existing households 368 748 398 11,088 168 88.4% 81.2% 76.8% 84.4% 76.3% 10.0% 10.0% 10.0% 15.0% 5.0% 33 61 31 1,404 6 63 Olmsted County 4,696 26.1% 12,559 84.0% 13.0% 1,371 Olmsted County MA 4,731 28.0% 24 1,226 1,327 389 84.3% 10.0% 13,159 1,567 79 55 2,626 13 57 2,597 2,893 33 Percent Market Rate 3 Number 33% 27% 31% 41% 56% 21 21 17 1,079 7 40% 41% 40% 23 1,067 1,169 Percent Affordable 3 Number 42% 38% 26% 29% 22% 25% 29% 29% 27 31 14 764 3 14 758 853 Percent Subsidized 3 Number ¹ Based on percent renter households under age 65 in 2010 25% 16 35% 28 42% 23 30% 782 22% 3 35% 20 30% 771 30% 872 ² Based on household turnover and mobility data (2011 American Community Survey, Five Year Estimates) 3 Based on the pricing of current rental product and household incomes of area renters (i.e. exludes owner incomes) Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 268

HOUSING DEMAND ANALYSIS DEMAND FROM NEW HOUSEHOLD GROWTH Household growth under age 65, 2020 to 2030 (times) % propensity to rent¹ TOTAL MARKET DEMAND Total demand from new HH growth and turnover TABLE DMD 5 DEMAND FOR ADDITONAL RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2020 to 2030 Byron East North Rochester (Equals) Demand from new household growth 66 34 44 2,225 43 Rochester Fringe 409 171 292 7,320 754 16.1% 19.7% 15.2% 30.4% 5.7% Stewartville DEMAND FROM EXISTING HOUSEHOLDS Total renter households under age 65, 2020 (times) % of renter turnover 2020 2030² (times) % desiring new rental housing 398 88.4% 10.0% 766 81.2% 10.0% 422 76.8% 10.0% 12,310 84.4% 15.0% 175 76.3% 5.0% 413 84.3% 10.0% 13,784 84.0% 13.0% 14,484 (Equals) Demand from existing households 35 62 32 1,558 7 35 1,505 1,730 Olmsted County 101 96 77 3,784 50 74 3,741 Olmsted County MA 235 8,565 9,181 16.5% 26.1% 26.7% 39 2,235 2,451 4,181 Percent Market Rate 3 Number Percent Affordable 3 Number 33% 27% 31% 41% 56% 40% 41% 41% 34 26 24 1,555 28 30 1,537 1,696 42% 38% 26% 29% 22% 25% 29% 29% 42 37 20 1,101 11 18 1,092 1,230 Percent Subsidized 3 Number 25% 35% 42% 30% 22% 25 33 33 1,128 11 ¹ Based on percent renter households under age 65 in 2010 ² Based on household turnover and mobility data (2011 American Community Survey, Five Year Estimates) 3 Based on the pricing of current rental product and household incomes of area renters (i.e. exludes owner incomes) 35% 30% 30% 26 1,111 1,255 Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 269

HOUSING DEMAND ANALYSIS We estimate that about 30% of the total demand in the Olmsted County Market Area will be for affordable housing and another 30% will be for subsidized housing. Like market rate housing, the majority of the demand will be in the Rochester submarket (90% of total affordable/subsidized demand). Housing Units 35 30 25 20 15 10 5 0 27 21 21 16 General Occupancy Rental Housing Demand (excluding Rochester) 2013 2020 31 28 17 Market Rate Affordable Subsidized 14 Byron East North Rochester Fringe Stewartville 23 Submarket 7 3 3 23 14 20 1,400 1,200 1,000 Housing Units 800 600 400 1,079 General Occupancy Rental Housing Demand (Rochester & Olmsted County Market Area) 2013 2020 764 782 Market Rate Affordable Subsidized 1,169 853 872 200 0 Rochester Submarket Olmsted MA MAXFIELD RESEARCH INC. 270

HOUSING DEMAND ANALYSIS Housing Units 45 40 35 30 25 20 15 10 5 0 34 42 25 General Occupancy Rental Housing Demand (excluding Rochester) 2020 2030 26 37 33 33 24 Market Rate Affordable Subsidized 20 Byron East North Rochester Fringe Stewartville Submarket 28 11 11 30 18 26 General Occupancy Rental Housing Demand (Rochester & Olmsted County Market Area) 2020 2030 1,800 Market Rate Affordable Subsidized 1,600 1,400 1,555 1,696 Housing Units 1,200 1,000 800 600 1,101 1,128 1,230 1,255 400 200 0 Rochester Olmsted MA Submarket MAXFIELD RESEARCH INC. 271

HOUSING DEMAND ANALYSIS Housing Units 80 70 60 50 40 30 20 10 0 55 69 67 40 General Occupancy Rental Housing Demand (excluding Rochester) 2013 2030 47 61 41 Market Rate Affordable Subsidized 35 Byron East North Rochester Fringe Stewartville 56 Submarket 35 14 14 53 32 45 Housing Units 3,500 3,000 2,500 2,000 1,500 1,000 500 2,634 General Occupancy Rental Housing Demand (Rochester & Olmsted County Market Area) 2013 2030 1,865 1,910 Market Rate Affordable Subsidized 2,865 2,082 2,127 0 Rochester Submarket Olmsted MA MAXFIELD RESEARCH INC. 272

HOUSING DEMAND ANALYSIS Senior Housing Demand Analysis Tables DMD 6 through DMD 11 show demand calculations for senior housing in the Olmsted County Market Area by submarket in 2013, 2020 and 2030. Demand methodology employed by Maxfield Research Inc. utilizes capture and penetration rates that blend national senior housing trends with local market characteristics, preferences and patterns. Unlike demand for general occupancy housing, demand for senior housing is need driven and dependent on the capture rate of the point in time population versus population growth. As a result, senior demand is calculated for 2013, 2020, and 2030. Our demand calculations consider the following target market segments for each product types: Market Rate Active Adult Rental and Ownership Housing: Target market base includes age 55+ older adult and senior households with incomes of $35,000 or more and senior homeowners with incomes between $25,000 and $34,999. Affordable/Subsidized Independent Housing: Target market base includes age 55+ older adult and senior households with incomes of $35,000 or less. Congregate Housing: Target market base includes age 65+ seniors who would be financially able to pay for housing and service costs associated with congregate housing. Income ranges considered capable of paying for congregate housing are the same as for active adult housing. Assisted Living Housing: Target market base includes older seniors (age 75+) who would be financially able to pay for private pay assisted living housing (incomes of $40,000 or more and some homeowners with incomes below $40,000). Additional demand for subsidized assisted living is not included in this demand but would result in greater demand for assisted living housing if considered. Affordable Service Enhanced Senior Housing: Target market base includes older seniors (75+) who are unable to afford market rate assisting living. Program is funded through the Elderly Waiver (EW) program that funds home and community based funds for seniors who are eligible for Medical Assistance (MA) and require the level of care provided in a nursing home, but choose to reside in a senior community. The EW program has both income and health conditions criteria; for purposes of our demand methodology we have included senior renters with incomes less than $20,000. Memory Care Housing: Target market base includes age 65+ seniors with memory impairments who would be financially able to pay for housing and service costs associated with memory care housing. Income ranges considered capable of paying for memory care housing ($60,000 or more) are higher than other service levels due to the increased cost of care. Existing and pending senior housing units are subtracted from overall demand for each product type. Finally, it is important to note that the senior housing demand is only for those ageincome qualified senior households within the respective submarket and excludes demand MAXFIELD RESEARCH INC. 273

HOUSING DEMAND ANALYSIS from outside the respective Market Area. Typically most senior projects draw about 25% of residents from outside the trade area. This demand will usually consist primarily of parents of adult children living in the Market Area, individuals who live just outside of the Market Area and have an orientation to the area, as well as former residents who desire to return. This percentage is even higher in Rochester which has an expansive draw area because of the Mayo Clinic and proximity to other medical services. MAXFIELD RESEARCH INC. 274

HOUSING DEMAND ANALYSIS 2013 Households age 55 64 (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential Households age 65 74 (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential Households age 75+ (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential Percent Owner Occupied Number (minus) Existing and Pending Units 3 (equals) Total Owner Occupied Demand Percent Renter Occupied Number (minus) Existing and Pending Units 3 (equals) Total Renter Occupied Demand TABLE DMD 6 DEMAND FOR MARKET RATE ACTIVE ADULT RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe Stewartville Olmsted County MA 467 898 665 7,559 828 477 10,894 85.5% 74.2% 82.7% 82.1% 89.7% 74.0% 5.3% 6.1% 4.8% 5.3% 3.5% 6.4% 25 55 32 401 29 31 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 2 4 3 33 4 2 310 561 434 4,672 443 401 71.2% 62.5% 72.1% 69.2% 83.7% 64.4% 9.8% 10.0% 9.1% 9.0% 4.2% 11.1% 30 56 39 420 19 45 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 14 22 19 201 21 17 6,821 169 632 298 4,376 245 314 6,034 39.4% 35.0% 30.3% 45.1% 49.8% 31.6% 17.3% 12.0% 17.8% 10.6% 13.6% 12.7% 29 76 53 464 33 40 16.5% 16.5% 16.5% 16.5% 16.5% 16.5% 16 49 24 402 26 23 (Equals) Demand potential from Olmsted Cty. Residents 32 75 46 636 51 30% 20% 25% 40% 20% 11 17 13 339 10 0 0 0 170 0 11 17 13 169 10 70% 80% 75% 60% 80% 25 67 38 509 41 0 0 0 0 0 25 67 38 509 41 42 881 (plus) Demand from Outside Olmsted Cty./Submarket) 10% 10% 10% 25% 0% 10% (Equals) total Demand Potential 35 83 51 848 51 46 1,115 CONTINUED 25% 12 401 0 170 12 231 75% 35 714 0 0 35 714 MAXFIELD RESEARCH INC. 275

HOUSING DEMAND ANALYSIS 2020 Households age 55 64 (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential Households age 65 74 (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential Households age 75+ (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential TABLE DMD 6 CONT. DEMAND FOR MARKET RATE ACTIVE ADULT RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe Stewartville Olmsted County MA 536 973 746 8,902 920 535 12,612 85.5% 74.2% 82.7% 82.1% 89.7% 74.0% 5.3% 6.1% 4.8% 5.3% 3.5% 6.4% 28 59 36 472 32 34 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 2 4 3 39 4 2 404 706 566 6,317 567 520 71.2% 62.5% 72.1% 69.2% 83.7% 64.4% 9.8% 10.0% 9.1% 9.0% 4.2% 11.1% 40 71 52 569 24 58 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 18 28 25 272 27 22 9,080 200 689 337 5,541 277 351 7,395 39.4% 35.0% 30.3% 45.1% 49.8% 31.6% 17.3% 12.0% 17.8% 10.6% 13.6% 12.7% 35 83 60 587 38 45 16.5% 16.5% 16.5% 16.5% 16.5% 16.5% 19 53 27 509 29 26 (Equals) Demand potential from Olmsted Cty. Residents 39 85 55 820 61 (plus) Demand from Outside Olmsted Cty./Submarket) 10% 10% 10% 25% 0% (Equals) total Demand Potential 43 95 61 1,093 61 49 1,110 10% 55 1,409 Percent Owner Occupied Number (minus) Existing and Pending Units 3 (equals) Total Owner Occupied Demand Percent Renter Occupied Number (minus) Existing and Pending Units 3 (equals) Total Renter Occupied Demand 30% 20% 25% 40% 20% 13 19 15 437 12 0 0 0 170 0 13 19 15 267 12 70% 80% 75% 60% 80% 30 76 46 656 49 0 0 0 0 0 30 76 46 656 49 CONTINUED 25% 14 511 0 170 14 340 75% 41 898 0 0 41 898 MAXFIELD RESEARCH INC. 276

HOUSING DEMAND ANALYSIS 2030 Households age 55 64 (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential Households age 65 74 (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential Households age 75+ (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential Percent Owner Occupied Number (minus) Existing and Pending Units 3 (equals) Total Owner Occupied Demand Percent Renter Occupied Number (minus) Existing and Pending Units 3 (equals) Total Renter Occupied Demand ¹ Based on households earning $35,000+ in 2013 2 Estimated homeowners with incomes between $25,000 and $34,000 in 2013 3 Existing and pending units are deducted at market equilibrium (95% occupancy). Rochester competitive units adjusted to account for inflow of senior households outside the Market Area. Source: Maxfield Research Inc. TABLE DMD 6 CONT. DEMAND FOR MARKET RATE ACTIVE ADULT RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe Stewartville Olmsted County MA 645 1,084 879 11,150 1,138 610 15,506 85.5% 74.2% 82.7% 82.1% 89.7% 74.0% 5.3% 6.1% 4.8% 5.3% 3.5% 6.4% 34 66 42 591 40 39 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 3 4 4 49 5 2 503 818 717 8,344 740 626 71.2% 62.5% 72.1% 69.2% 83.7% 64.4% 9.8% 10.0% 9.1% 9.0% 4.2% 11.1% 49 82 65 751 31 69 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 22 33 32 359 36 26 11,748 252 759 381 6,918 354 402 9,066 39.4% 35.0% 30.3% 45.1% 49.8% 31.6% 17.3% 12.0% 17.8% 10.6% 13.6% 12.7% 44 91 68 733 48 51 16.5% 16.5% 16.5% 16.5% 16.5% 16.5% 24 59 30 636 37 29 (Equals) Demand potential from Olmsted Cty. Residents 49 96 66 1,043 78 (plus) Demand from Outside Olmsted Cty./Submarket) 10% 10% 10% 25% 0% (Equals) total Demand Potential 54 106 73 1,391 78 30% 20% 25% 40% 20% 16 21 18 556 16 0 0 0 170 0 0 16 21 18 386 16 25% 16 644 170 16 474 70% 80% 75% 60% 80% 75% 38 85 55 835 62 48 1,124 0 0 0 0 0 0 0 38 85 55 835 62 48 1,124 58 1,390 10% 64 1,768 MAXFIELD RESEARCH INC. 277

HOUSING DEMAND ANALYSIS TABLE DMD 7 DEMAND FOR SUBSIDIZED/AFFORDABLE SENIOR HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 2013 Households age 55 64 (times) % income qualified¹ (times) potential capture rate Households age 65 74 (times) % income qualified¹ (times) potential capture rate Households age 75+ (times) % income qualified¹ (times) potential capture rate (Equals) Demand potential from Olmsted Cty. Residents (plus) Demand from Outside Olmsted Cty./Submarket) (Equals) total Demand Potential Percent Subsidized² Number (minus) Existing and Pending Units 3 (equals) Total Subsidized Demand Percent Affordable² Number (minus) Existing and Pending Units 3 (equals) Total Affordable Demand Byron East North Rochester Rochester Fringe 467 898 665 7,559 828 14.5% 25.8% 27.3% 17.9% 10.3% 2.0% 2.0% 2.0% 2.0% 2.0% 310 561 434 4,672 443 28.8% 37.5% 27.9% 30.8% 14.3% 10.0% 10.0% 10.0% 10.0% 10.0% 169 632 298 4,376 245 60.6% 65.0% 29.7% 54.9% 50.2% 20.0% 20.0% 20.0% 20.0% 20.0% 31 108 33 651 33 Stewartville 10% 10% 10% 25% 0% 10% 34 120 37 869 33 66 42% 52% 51% 51% 47% 14 63 19 440 15 0 34 22 453 0 14 29 0 0 15 58% 48% 49% 49% 53% 20 57 18 428 17 0 0 0 65 0 20 57 18 363 17 CONTINUED Olmsted County MA 477 10,894 26.0% 2.0% 401 6,821 35.6% 10.0% 314 6,034 68.4% 20.0% 60 916 1,159 52% 35 587 33 543 0 58 48% 32 572 0 65 32 507 MAXFIELD RESEARCH INC. 278

HOUSING DEMAND ANALYSIS TABLE DMD 7 CONT. DEMAND FOR SUBSIDIZED/AFFORDABLE SENIOR HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 2020 Households age 55 64 (times) % income qualified¹ (times) potential capture rate Households age 65 74 (times) % income qualified¹ (times) potential capture rate Households age 75+ (times) % income qualified¹ (times) potential capture rate Byron East North Rochester Rochester Fringe 536 973 746 8,902 920 14.5% 25.8% 27.3% 17.9% 10.3% 2.0% 2.0% 2.0% 2.0% 2.0% 404 706 566 6,317 567 28.8% 37.5% 27.9% 30.8% 14.3% 10.0% 10.0% 10.0% 10.0% 10.0% 200 689 337 5,541 277 60.6% 65.0% 29.7% 54.9% 50.2% 20.0% 20.0% 20.0% 20.0% 20.0% (Equals) Demand potential from Olmsted Cty. Residents 37 121 40 835 38 Stewartville Olmsted County MA 535 12,612 26.0% 2.0% 520 9,080 35.6% 10.0% 351 7,395 68.4% 20.0% 69 1,140 (plus) Demand from Outside Olmsted Cty./Submarket) 10% 10% 10% 25% 0% 10% (Equals) total Demand Potential 42 135 44 1,113 38 77 1,448 Percent Subsidized² Number (minus) Existing and Pending Units 3 (equals) Total Subsidized Demand Percent Affordable² Number (minus) Existing and Pending Units 3 (equals) Total Affordable Demand 42% 18 0 18 58% 24 0 24 52% 70 34 36 48% 64 0 64 51% 23 22 0 49% 22 0 22 51% 564 453 0 49% 549 114 435 47% 18 0 18 53% 20 0 20 52% 40 33 7 48% 37 0 37 733 543 79 715 114 601 CONTINUED MAXFIELD RESEARCH INC. 279

HOUSING DEMAND ANALYSIS 2030 Households age 55 64 (times) % income qualified¹ (times) potential capture rate Households age 65 74 (times) % income qualified¹ (times) potential capture rate Households age 75+ (times) % income qualified¹ (times) potential capture rate Percent Subsidized² Number (minus) Existing and Pending Units 3 (equals) Total Subsidized Demand Percent Affordable² Number (minus) Existing and Pending Units 3 (equals) Total Affordable Demand ¹ Based on households earning $35,000 and under in 2013 ² Based on household turnover and mobility data (2010 American Community Survey, Five Year Estimates) 3 Existing and pending units are deducted at market equilibrium (95% occupancy). Rochester competitive units adjusted to account for inflow of senior households outside the Source: Maxfield Research Inc. TABLE DMD 7 CONT. DEMAND FOR SUBSIDIZED/AFFORDABLE SENIOR HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe Stewartville Olmsted County MA 645 1,084 879 11,150 1,138 610 15,506 14.5% 25.8% 27.3% 17.9% 10.3% 26.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 503 818 717 8,344 740 626 11,748 28.8% 37.5% 27.9% 30.8% 14.3% 35.6% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 252 759 381 6,918 354 402 9,066 60.6% 65.0% 29.7% 54.9% 50.2% 68.4% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% (Equals) Demand potential from Olmsted Cty. Residents 47 135 47 1,057 48 80 1,415 (plus) Demand from Outside Olmsted Cty./Submarket) 10% 10% (Equals) total Demand Potential 52 150 Market Area. 10% 25% 0% 10% 53 1,409 48 89 1,801 42% 52% 51% 51% 47% 22 79 27 714 23 0 34 22 453 0 22 44 5 261 23 58% 48% 49% 49% 53% 30 71 26 694 26 52% 47 911 33 543 13 369 48% 43 890 0 0 0 114 0 0 114 30 71 26 580 26 43 776 MAXFIELD RESEARCH INC. 280

HOUSING DEMAND ANALYSIS TABLE DMD 8 DEMAND FOR CONGREGATE RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 2013 Households age 65 74 (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential Households age 75+ (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential (Equals) Demand potential from Olmsted Cty. (plus) Demand from Outside Olmsted (Equals) total Demand Potential Byron East North Rochester Rochester Fringe Stewartville Olmsted County MA 310 561 434 4,672 443 401 6,821 71.2% 62.5% 72.1% 69.2% 83.7% 64.4% 9.8% 10.0% 9.1% 9.0% 4.2% 11.1% 30 56 39 420 19 45 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 4 6 5 55 6 5 169 632 298 4,376 245 314 39.4% 35.0% 30.3% 45.1% 49.8% 31.6% 17.3% 12.0% 17.8% 10.6% 13.6% 12.7% 29 76 53 464 33 40 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11 33 16 268 17 15 14 39 21 323 23 10% 10% 10% 25% 0% 10% 16 43 23 431 23 22 1.5% 6,034 11.0% 20 440 558 (minus) Existing and Pending Units 3 (Equals) Total Congregate Demand 0 11 11 159 0 16 32 12 271 23 CONTINUED 28 210 0 354 MAXFIELD RESEARCH INC. 281

HOUSING DEMAND ANALYSIS 2020 Households age 65 74 (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential Households age 75+ (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential (Equals) Demand potential from Olmsted Cty. TABLE DMD 8 CONT. DEMAND FOR CONGREGATE RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe Stewartville Olmsted County MA 404 706 566 6,317 567 520 9,080 71.2% 62.5% 72.1% 69.2% 83.7% 64.4% 9.8% 10.0% 9.1% 9.0% 4.2% 11.1% 40 71 52 569 24 58 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 5 8 7 74 7 6 200 689 337 5,541 277 351 39.4% 35.0% 30.3% 45.1% 49.8% 31.6% 17.3% 12.0% 17.8% 10.6% 13.6% 12.7% 35 83 60 587 38 45 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 12 36 18 339 19 17 1.5% 7,395 11.0% 17 43 25 414 27 23 549 (plus) Demand from Outside Olmsted 10% 10% 10% 25% 0% 10% (Equals) total Demand Potential 19 48 27 551 27 26 699 (minus) Existing and Pending Units 3 (Equals) Total Congregate Demand 0 11 11 194 0 28 19 37 16 357 27 0 CONTINUED 245 456 MAXFIELD RESEARCH INC. 282

HOUSING DEMAND ANALYSIS TABLE DMD 8 CONT. DEMAND FOR CONGREGATE RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 2030 Households age 65 74 (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential Households age 75+ (times) % income qualified¹ (times) HO factor $25k $35k (plus) Homeowners w/incomes $25k 35k 2 (times) potential capture rate (equals) demand potential (Equals) Demand potential from Olmsted Cty. (plus) Demand from Outside Olmsted (Equals) total Demand Potential Byron East North Rochester Rochester Fringe Stewartville Olmsted County MA 503 818 717 8,344 740 626 11,748 71.2% 62.5% 72.1% 69.2% 83.7% 64.4% 9.8% 10.0% 9.1% 9.0% 4.2% 11.1% 49 82 65 751 31 69 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 6 9 9 98 10 7 252 759 381 6,918 354 402 39.4% 35.0% 30.3% 45.1% 49.8% 31.6% 17.3% 12.0% 17.8% 10.6% 13.6% 12.7% 44 91 68 733 48 51 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 16 39 20 424 25 20 22 48 29 522 34 27 682 10% 10% 10% 25% 0% 10% 24 53 32 696 34 30 1.5% 9,066 11.0% 870 (minus) Existing and Pending Units 3 (Equals) Total Congregate Demand ¹ Based on households earning $35,000+ in 2013 2 Estimated homeowners with incomes between $25,000 and $34,000 in 2013 3 Existing and pending units are deducted at market equilibrium (95% occupancy). Rochester competitve units adjusted to account for senior household inflow from outside the Market Area. Source: Maxfield Research Inc. 0 11 11 194 0 28 245 24 42 21 501 34 2 625 MAXFIELD RESEARCH INC. 283

HOUSING DEMAND ANALYSIS 2013 People age 75 79 (times) % needing assistance¹ People age 80 84 (times) % needing assistance¹ People age 85+ (times) % needing assistance¹ (Equals) Number needing assistance 82 348 169 2,692 124 181 (times) Percent Income Qualified² (equals) Total Potential Market (times) Percent Living Alone (equals) Age Income Qualified singles needing assistance (plus) Proportion of demand from couples (12%) 3 (equals) Total Age Income Qualified market needing assistance (times) Potential penetration rate 4 (Equals) Demand potential from Olmsted Cty. Residents (plus) Demand from Outside Olmsted Cty./Submarket) (Equals) total Demand Potential (minus) Existing and Pending Units 5 (Equals) Total Assisted Living Demand TABLE DMD 9 DEMAND FOR ASSISTED LIVING RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe 131 316 186 2,594 199 25.5% 25.5% 25.5% 25.5% 25.5% 61 277 126 2,167 116 130 2,877 33.6% 33.6% 33.6% 33.6% 33.6% 33.6% 33.6% 54 337 153 2,525 67 188 3,324 51.6% 51.6% 51.6% 51.6% 51.6% 51.6% 51.6% 50.3% 48.8% 48.0% 55.8% 64.7% 46.6% 41 170 81 1,502 80 84 1,959 41.3% 55.5% 47.7% 49.4% 28.0% 56.1% 17 94 39 742 23 47 962 2 13 5 101 3 6 131 19 107 44 843 26 54 1,093 40.0% 40.0% 40.0% 40.0% 40.0% 8 43 18 337 10 Stewartville 158 3,584 25.5% 25.5% 40.0% 10% 10% 10% 45% 0% 10% 9 48 20 613 10 24 723 0 51 9 415 0 9 485 9 0 10 198 10 14 242 CONTINUED 22 Olmsted County MA 3,596 437 MAXFIELD RESEARCH INC. 284

HOUSING DEMAND ANALYSIS 2020 People age 75 79 (times) % needing assistance¹ People age 80 84 (times) % needing assistance¹ People age 85+ (times) % needing assistance¹ (Equals) Number needing assistance 159 25.5% 65 33.6% 64 51.6% 95 358 25.5% 277 33.6% 359 51.6% 370 311 25.5% 183 33.6% 239 51.6% 264 3,176 25.5% 2,370 33.6% 2,936 51.6% 3,121 233 25.5% 117 33.6% 72 51.6% 136 185 25.5% 134 33.6% 206 51.6% 198 4,422 25.5% 3,146 33.6% 3,876 51.6% 4,185 (times) Percent Income Qualified² (equals) Total Potential Market (times) Percent Living Alone (equals) Age Income Qualified singles needing assistance (plus) Proportion of demand from couples (12%) 3 (equals) Total Age Income Qualified market needing assistance (times) Potential penetration rate 4 50.3% 48 41.3% 20 3 23 40.0% 48.8% 180 55.5% 100 14 114 40.0% 48.0% 127 47.7% 60 8 69 40.0% 55.8% 1,742 49.4% 860 117 978 40.0% 64.7% 88 28.0% 25 3 28 40.0% 46.6% 92 56.1% 52 7 59 40.0% 2,277 1,117 152 1,270 (Equals) Demand potential from Olmsted Cty. Residents 9 46 27 391 11 24 508 (plus) Demand from Outside Olmsted Cty./Submarket) 10% 10% 10% 45% 0% 10% (Equals) total Demand Potential 10 51 31 711 11 26 840 (minus) Existing and Pending Units 5 0 51 9 498 0 9 568 (Equals) Total Assisted Living Demand TABLE DMD 9 CONT. DEMAND FOR ASSISTED LIVING RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe Stewartville Olmsted County MA 10 0 21 213 11 17 272 CONTINUED MAXFIELD RESEARCH INC. 285

HOUSING DEMAND ANALYSIS 2030 People age 75 79 (times) % needing assistance¹ People age 80 84 (times) % needing assistance¹ People age 85+ (times) % needing assistance¹ 190 25.5% 75 33.6% 80 51.6% 390 25.5% 277 33.6% 382 51.6% 344 25.5% 187 33.6% 255 51.6% 3,924 25.5% 2,741 33.6% 3,602 51.6% 268 25.5% 126 33.6% 82 51.6% 209 25.5% 142 33.6% 231 51.6% 5,325 25.5% 3,548 33.6% 4,632 51.6% (Equals) Number needing assistance 115 390 282 3,780 153 220 4,940 (times) Percent Income Qualified² (equals) Total Potential Market (times) Percent Living Alone (equals) Age Income Qualified singles needing assistance (plus) Proportion of demand from couples (12%) 3 (equals) Total Age Income Qualified market needing assistance (times) Potential penetration rate 4 (plus) Demand from Outside Olmsted Cty./Submarket) 10% 10% 10% 45% 0% 10% (Equals) total Demand Potential 12 53 33 861 13 29 1,001 (minus) Existing and Pending Units 5 (Equals) Total Assisted Living Demand 0 12 51 3 9 23 498 363 0 13 9 20 568 433 ¹ The percentage of seniors unable to perform or having difficulting with ADLs, based on the publication Health, United States, 1999 Health and Aging Chartbook, conducted by the Centers for Disease Control and Prevention and the National Center for Health Statistics. ² Includes households with incomes of $40,000 or more (who could afford monthly rents of $3,000+ per month) plus 40% of the estimated owner households with incomes below $40,000 (who will spend down assets, including home equity, in order to live in assisted living housing). ³ The 2009 Overview of Assisted Living (a collaborative project of AAHSA, ASHA, ALFA, NCAL & NIC) found that 12% of assisted living residents are couples. 4 We estimate that 60% of the qualified market needing assistance with ADLs could either remain in their homes or reside at less advanced senior housing with the assistance of a family member or home health care, or would need greater care provided in a skilled care facility. 5 Existing and pending units at 93% occupancy. We exclude 15% of units to be Elderly Waiver. Rochester competitive units adjusted to account for inflow of senior households outside the Market Area. Source: Maxfield Research Inc. TABLE DMD 9 CONT. DEMAND FOR ASSISTED LIVING RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe Stewartville Olmsted County MA 50.3% 48.8% 48.0% 55.8% 64.7% 46.6% 58 190 135 2,109 99 103 2,694 41.3% 55.5% 47.7% 49.4% 28.0% 56.1% 24 106 65 1,042 28 58 1,321 3 14 9 142 4 8 180 27 120 73 1,184 31 65 1,501 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% (Equals) Demand potential from Olmsted Cty. Residents 11 48 29 474 13 26 601 MAXFIELD RESEARCH INC. 286

HOUSING DEMAND ANALYSIS 2013 People age 75 79 (times) % needing assistance¹ People age 80 84 (times) % needing assistance¹ People age 85+ (times) % needing assistance¹ (Equals) Number needing assistance 82 348 169 2,692 124 181 (times) Percent Income Qualified² (equals) Total Potential Market (times) Percent Living Alone (equals) Age Income Qualified singles needing assistance (plus) Proportion of demand from couples (12%) 3 (equals) Total Age Income Qualified market needing assistance (times) Potential penetration rate 4 (Equals) Demand potential from Olmsted Cty. Residents (plus) Demand from Outside Olmsted Cty./Submarket) (Equals) total Demand Potential (minus) Existing and Pending Units 5 (Equals) Total Assisted Living Demand TABLE DMD 10 DEMAND FOR AFFORDABLE ASSISTED LIVING RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe 131 316 186 2,594 199 25.5% 25.5% 25.5% 25.5% 25.5% 61 277 126 2,167 116 130 2,877 33.6% 33.6% 33.6% 33.6% 33.6% 33.6% 33.6% 54 337 153 2,525 67 188 3,324 51.6% 51.6% 51.6% 51.6% 51.6% 51.6% 51.6% 14.0% 20.5% 11.5% 12.4% 18.2% 16.6% 11 71 19 334 23 30 489 41.3% 55.5% 47.7% 49.4% 28.0% 56.1% 5 40 9 165 6 17 242 1 5 1 22 1 2 33 5 45 11 187 7 19 275 40.0% 40.0% 40.0% 40.0% 40.0% 2 18 4 75 3 Stewartville 158 3,584 25.5% 25.5% 40.0% 10% 10% 10% 45% 0% 10% 2 20 5 136 3 9 175 0 0 0 0 0 0 0 2 20 5 136 3 9 175 CONTINUED 8 Olmsted County MA 3,596 110 MAXFIELD RESEARCH INC. 287

HOUSING DEMAND ANALYSIS TABLE DMD 10 CONT. DEMAND FOR ASSISTED LIVING RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe Stewartville 2020 People age 75 79 (times) % needing assistance¹ People age 80 84 (times) % needing assistance¹ People age 85+ (times) % needing assistance¹ (Equals) Number needing assistance 159 25.5% 65 33.6% 64 51.6% 95 358 25.5% 277 33.6% 359 51.6% 370 311 25.5% 183 33.6% 239 51.6% 264 3,176 25.5% 2,370 33.6% 2,936 51.6% 3,121 233 25.5% 117 33.6% 72 51.6% 136 185 25.5% 134 33.6% 206 51.6% 198 4,422 25.5% 3,146 33.6% 3,876 51.6% 4,185 (times) Percent Income Qualified² (equals) Total Potential Market (times) Percent Living Alone (equals) Age Income Qualified singles needing assistance (plus) Proportion of demand from couples (12%) 3 (equals) Total Age Income Qualified market needing assistance (times) Potential penetration rate 4 14.0% 13 41.3% 6 1 6 40.0% 20.5% 76 55.5% 42 6 48 40.0% 11.5% 30 47.7% 14 2 16 40.0% 12.4% 387 49.4% 191 26 217 40.0% 18.2% 25 28.0% 7 1 8 40.0% 16.6% 33 56.1% 18 3 21 40.0% 564 279 38 317 (Equals) Demand potential from Olmsted Cty. Residents 3 19 7 87 3 8 127 (plus) Demand from Outside Olmsted Cty./Submarket) 10% 10% 10% 45% 0% 10% (Equals) total Demand Potential 3 21 7 158 3 9 202 (minus) Existing and Pending Units 5 (Equals) Total Assisted Living Demand 0 3 0 21 0 7 0 158 0 3 0 9 0 202 CONTINUED Olmsted County MA MAXFIELD RESEARCH INC. 288

HOUSING DEMAND ANALYSIS 2030 People age 75 79 (times) % needing assistance¹ People age 80 84 (times) % needing assistance¹ People age 85+ (times) % needing assistance¹ 190 25.5% 75 33.6% 80 51.6% 390 25.5% 277 33.6% 382 51.6% 344 25.5% 187 33.6% 255 51.6% 3,924 25.5% 2,741 33.6% 3,602 51.6% 268 25.5% 126 33.6% 82 51.6% 209 25.5% 142 33.6% 231 51.6% 5,325 25.5% 3,548 33.6% 4,632 51.6% (Equals) Number needing assistance 115 390 282 3,780 153 220 4,940 (times) Percent Income Qualified² (equals) Total Potential Market (times) Percent Living Alone (equals) Age Income Qualified singles needing assistance (plus) Proportion of demand from couples (12%) 3 (equals) Total Age Income Qualified market needing assistance (times) Potential penetration rate 4 (plus) Demand from Outside Olmsted Cty./Submarket) 10% 10% 10% 45% 0% 10% (Equals) total Demand Potential 3 22 8 191 4 10 239 (minus) Existing and Pending Units 5 (Equals) Total Assisted Living Demand 0 3 0 22 0 8 0 191 0 4 0 10 0 239 ¹ The percentage of seniors unable to perform or having difficulting with ADLs, based on the publication Health, United States, 1999 Health and Aging Chartbook, conducted by the Centers for Disease Control and Prevention and the National Center for Health Statistics. ² Includes renter households with incomes of $20,000 or less and who have less than $3,000 in total assets. ³ The 2009 Overview of Assisted Living (a collaborative project of AAHSA, ASHA, ALFA, NCAL & NIC) found that 12% of assisted living residents are couples. 4 We estimate that 60% of the qualified market needing assistance with ADLs could either remain in their homes or reside at less advanced senior housing with the assistance of a family member or home health care, or would need greater care provided in a skilled care facility. 5 Existing and pending units at 93% occupancy. Rochester competitive units adjusted to account for inflow of senior households outside the Market Area. Source: Maxfield Research Inc. TABLE DMD 10 CONT. DEMAND FOR ASSISTED LIVING RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe Stewartville Olmsted County MA 14.0% 20.5% 11.5% 12.4% 18.2% 16.6% 16 80 32 469 28 37 662 41.3% 55.5% 47.7% 49.4% 28.0% 56.1% 7 44 15 232 8 21 326 1 6 2 32 1 3 44 8 50 18 263 9 23 371 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% (Equals) Demand potential from Olmsted Cty. Residents 3 20 7 105 4 9 148 MAXFIELD RESEARCH INC. 289

HOUSING DEMAND ANALYSIS 2013 People age 65 74 (times) Dementia incident rate¹ People age 75 84 (times) Dementia incident rate¹ People age 85+ (times) Dementia incident rate¹ (times) Percent Income Qualified² (times) Potential penetration rate TABLE DMD 11 DEMAND FOR MEMORY CARE RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe 515 938 690 7,715 768 2.0% 2.0% 2.0% 2.0% 2.0% Stewartville Olmsted County MA 651 11,277 2.0% 2.0% 192 593 312 4,761 315 287 6,460 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 54 337 153 2,525 67 42.0% 42.0% 42.0% 42.0% 42.0% (Equals) Total senior population with dementia 69 273 137 2,119 103 147 (Equals) Demand potential from Olmsted Cty. Residents 26.7% 28.4% 29.0% 35.9% 43.9% 27.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 5 19 10 190 11 188 3,324 42.0% 42.0% 10 2,849 25.0% 245 (plus) Demand from Outside Olmsted Cty./Submarket) (Equals) total Demand Potential (minus) Existing and Pending Units 3 (Equals) Total Memory Care Demand 10% 10% 10% 35% 0% 10% 5 22 11 293 11 11 353 0 0 0 190 0 5 22 11 103 11 11 CONTINUED 0 190 163 MAXFIELD RESEARCH INC. 290

HOUSING DEMAND ANALYSIS 2020 People age 65 74 (times) Dementia incident rate¹ People age 75 84 (times) Dementia incident rate¹ People age 85+ (times) Dementia incident rate¹ (times) Percent Income Qualified² (times) Potential penetration rate (plus) Demand from Outside Olmsted Cty./Submarket) 10% 10% 10% 30% 0% 10% (Equals) total Demand Potential 6 23 18 320 13 12 392 (minus) Existing and Pending Units 3 0 0 0 262 0 0 262 (Equals) Total Memory Care Demand TABLE DMD 11 CONT. DEMAND FOR MEMORY CARE RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe 681 1,172 1,209 10,283 974 2.0% 2.0% 2.0% 2.0% 2.0% Stewartville Olmsted County MA 844 15,163 2.0% 2.0% 224 635 495 5,547 350 319 7,570 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 64 359 239 2,936 72 42.0% 42.0% 42.0% 42.0% 42.0% (Equals) Total senior population with dementia 83 295 219 2,493 116 164 (Equals) Demand potential from Olmsted Cty. Residents 26.7% 28.4% 29.0% 35.9% 43.9% 27.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 6 21 16 224 13 6 23 18 58 13 12 CONTINUED 206 3,876 42.0% 42.0% 11 3,369 25.0% 290 130 MAXFIELD RESEARCH INC. 291

HOUSING DEMAND ANALYSIS 2030 People age 65 74 (times) Dementia incident rate¹ People age 75 84 (times) Dementia incident rate¹ (times) Percent Income Qualified² (times) Potential penetration rate (plus) Demand from Outside Olmsted Cty./Submarket) (Equals) total Demand Potential (minus) Existing and Pending Units 3 (Equals) Total Memory Care Demand 7 25 19 129 14 14 209 ¹ Alzheimer's Association: Alzheimer's Disease Facts & Figures (2007) ² Includes seniors with income at $60,000 or above plus 25% of homeowners with incomes below this threshold (who will spend dow assets, including home equity, in order to 3 Existing and pending units at 93% occupancy. We exclude 15% of the units to be Elderly Waiver. Rochester competitve units adjusted to account for senior household inflow from outside the Market Area Source: Maxfield Research Inc. TABLE DMD 11 CONT. DEMAND FOR MEMORY CARE RENTAL HOUSING OLMSTED COUNTY MARKET AREA 2013 to 2030 Byron East North Rochester Rochester Fringe Stewartville Olmsted County MA 855 1,373 1,445 13,496 1,120 1,017 19,306 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 265 667 531 6,665 394 19.0% 19.0% 19.0% 19.0% 19.0% People age 85+ 80 382 255 3,602 82 231 (times) Dementia incident rate¹ 42.0% 42.0% 42.0% 42.0% 42.0% 42.0% (Equals) Total senior population with dementia 101 315 237 3,049 132 184 (Equals) Demand potential from Olmsted Cty. Residents 26.7% 28.4% 29.0% 35.9% 43.9% 25.0% 25.0% 25.0% 25.0% 25.0% 352 8,874 19.0% 19.0% 27.0% 25.0% 4,632 42.0% 7 22 17 274 14 12 347 0 0 0 262 0 0 4,018 25.0% 10% 10% 10% 30% 0% 10% 7 25 19 391 14 14 471 262 MAXFIELD RESEARCH INC. 292

DEMAND SUMMARY AND RECOMMENDATIONS 1,200 1,000 Olmsted County Market Area Senior Housing Demand Summary 2013 2020 2030 800 600 400 200 0 Subsidized Rental Affordable Rental MR Owner MR Rental MR Congregate MR Assisted Living Aff. Assisted Living MR Memory Care Olmsted County Market Area Demand Summary The housing demand calculations in Tables DMD 1 through DMD 11 indicate that between 2013 and 2020, nearly 4,000 for sale housing units, 2,900 rental units, and 2,980 senior units will be needed in the Olmsted County Market Area to satisfy the housing demand for current and future residents. Summary demand tables for general occupancy and senior housing are broken down by submarket in Tables DMD 12 and DMD 13. We recommend maintaining a single family lot supply of at least three years to provide adequate consumer choice but not prolonged developer carrying costs. With an average of about 490 new single family homes built annually between 2005 and 2012, this equates to a lot supply of 4,400 lots. According to Table FS 13, there are about 2,030 vacant single famly lots in Olmsted County at the end of 2012. After adjusting for 2013 lot absorption, Maxfield Research estimates there are about 1,500 vacant single family lots in Olmsted County. This equates to a three year lot supply. Overall, the rental market has been strong in the Olmsted County Market Area over the past two years with vacancies below the stabilized rate of 5%. The rental market has been the lowest among affordable/subsizied product averaging just over a 1% vacancy rate. With a strong rental market, we find that new units will need to be added in the short term to satisfy potential household growth. While most of the smaller communities can support some rental units, the majority of the demand will be in Rochester where the majority of jobs, as well as shopping and services, are located. MAXFIELD RESEARCH INC. 293

DEMAND SUMMARY AND RECOMMENDATIONS 2013 to 2020 Single Family For Sale Multifamily Rental Submarket Modest Move up Executive Total Modest Move up Total Market Rate Affordable Subsidized Total Byron 45 52 32 130 28 28 56 21 27 16 63 East 49 40 10 99 13 4 17 21 31 28 79 North 62 70 23 156 4 4 8 17 14 23 55 Rochester 679 1,018 566 2,263 388 582 970 1,079 764 782 2,626 Rochester Fringe 14 62 62 137 0 0 0 7 3 3 13 Stewartville 43 49 31 123 19 12 31 23 14 20 57 OLMSTED COUNTY MA 893 1,291 724 2,908 451 631 1,082 1,169 853 872 2,893 2020 to 2030 Single Family For Sale Multifamily Rental Submarket Modest Move up Executive Total Modest Move up Total Market Rate Affordable Subsidized Total Byron 84 96 60 241 65 65 130 34 42 25 101 East 71 57 14 143 27 9 36 26 37 33 96 North 100 113 38 250 14 14 28 24 20 33 77 Rochester 1,088 1,632 906 3,626 781 1,171 1,952 1,555 1,101 1,128 3,784 Rochester Fringe 74 331 331 736 0 0 0 28 11 11 50 Stewartville 61 69 43 173 35 23 58 30 18 26 74 OLMSTED COUNTY MA 1,478 2,298 1,393 5,169 921 1,282 2,203 1,696 1,230 1,255 4,181 2013 to 2030 Single Family For Sale Multifamily Rental Submarket Modest Move up Executive Total Modest Move up Total Market Rate Affordable Subsidized Total Byron 130 148 93 371 93 93 185 55 69 40 164 East 121 97 24 241 40 13 53 47 67 61 175 North 163 183 61 406 18 18 36 41 35 56 132 Rochester 1,767 2,650 1,472 5,889 1,169 1,753 2,922 2,634 1,865 1,910 6,410 Rochester Fringe 87 393 393 873 0 0 0 35 14 14 63 Stewartville 104 119 74 296 53 35 89 53 32 45 130 OLMSTED COUNTY MA 2,371 3,589 2,117 8,077 1,373 1,913 3,285 2,865 2,082 2,127 7,074 Sources: Maxfield Research Inc. TABLE DMD 12 GENERAL OCCUPANCY EXCESS DEMAND SUMMARY OLMSTED COUNTY MARKET AREA 2013 to 2030 MAXFIELD RESEARCH INC. 294

DEMAND SUMMARY AND RECOMMENDATIONS TABLE DMD 13 SENIOR HOUSING EXCESS DEMAND SUMMARY OLMSTED COUNTY MARKET AREA 2013 to 2030 2013 ACTIVE ADULT SERVICE ENHANCED** Subsidized Rental Affordable Rental MR Owner MR Rental Total MR Congregate MR Assisted Living Aff. Assisted Living MR Memory Care Total Byron 14 20 11 25 70 16 9 2 5 32 East 29 57 17 67 170 32 0 20 22 74 North 0 18 13 38 69 12 10 5 11 38 Rochester 0 363 169 509 1,041 271 198 136 103 708 Rochester Fringe 15 17 10 41 83 23 10 3 11 47 Stewartville 0 32 12 35 79 0 14 9 11 34 OLMSTED COUNTY MA 58 507 232 715 1,512 354 241 175 163 933 2020 ACTIVE ADULT SERVICE ENHANCED** Subsidized Rental Affordable Rental MR Owner MR Rental Total MR Congregate MR Assisted Living Aff. Assisted Living MR Memory Care Total Byron 18 24 13 30 85 19 10 3 6 38 East 36 64 19 76 195 37 0 21 23 81 North 0 22 15 46 83 16 21 7 18 62 Rochester 0 435 267 656 1,358 357 213 158 58 786 Rochester Fringe 18 20 12 49 99 27 11 3 13 54 Stewartville 7 37 14 41 99 0 17 9 12 38 OLMSTED COUNTY MA 79 602 340 898 1,919 456 272 201 130 1,059 2030 ACTIVE ADULT SERVICE ENHANCED** Subsidized Rental Affordable Rental MR Owner MR Rental Total MR Congregate MR Assisted Living Aff. Assisted Living MR Memory Care Total Byron 22 30 16 38 106 24 12 3 7 46 East 44 71 21 85 221 42 3 22 25 92 North 5 26 18 55 104 21 23 8 19 71 Rochester 261 580 386 835 2,062 501 363 191 129 1,184 Rochester Fringe 23 26 16 62 127 34 13 4 14 65 Stewartville 13 43 16 48 120 2 20 10 14 46 OLMSTED COUNTY MA 368 776 473 1,123 2,740 624 434 238 208 1,504 ** Service enhanced demand is calculated for private pay seniors only; additional demand could be captured if Elderly Waiver and other sources of non private payment sources are permitted. Please note: Demand for each benchmark year is a "point in time demand" and not a cumulative demand for each year. Sources: Maxfield Research Inc. MAXFIELD RESEARCH INC. 295

DEMAND SUMMARY AND RECOMMENDATIONS Vacancy rates for senior housing vary by submarket, but overall Olmsted County Market Area senior housing projects are peforming well with a vacany rate of only 3.5%. As such, additional senior development will be needed to meet the growing senior population. In the short term, there are a number of senior projects either under consdtruction or planned/propossed that will meet a portion of this demand (see Table P 1). MAXFIELD RESEARCH INC. 296

DEMAND SUMMARY AND RECOMMENDATIONS Olmsted County Market Area Projected General Occupancy Demand, 2013 2020 Olmsted County Market Area Projected Senior Demand, 2013 2020 MAXFIELD RESEARCH INC. 297

DEMAND SUMMARY AND RECOMMENDATIONS Olmsted County Market Area Housing Demand by Type 2013 2030 Senior Total 4,244 Housing Type Rental Total For Sale MF 3,285 7,074 For Sale SF 8,077 0 2,000 4,000 6,000 8,000 10,000 Units Olmsted County Market Area General Occupancy Rental & Senior Demand 2013 2030 SR Sub SR AFF AL 238 368 SR AFF 776 SR MR 2,862 GO Sub GO Aff 2,127 2,082 GO MR 2,865 0 500 1,000 1,500 2,000 2,500 3,000 Units MAXFIELD RESEARCH INC. 298

DEMAND SUMMARY AND RECOMMENDATIONS Housing Demand 2013 2030 MAXFIELD RESEARCH INC. 299

DEMAND SUMMARY AND RECOMMENDATIONS Byron Summary of Demographic and Housing Condition Findings Key demographic and housing market findings for the Bryon submarket from the housing study are highlighted below. For a comparison, figures for Olmsted County Market Area are shown as well. Population (2010 & 2020) 7,046 8,146 152,116 175,435 Households (2010 & 2020) 2,629 3,079 60,176 71,673 Household Growth (2010 & 2020) 450 11,497 Median Household Income (2013) Median Net Worth (2013) Homeownership Rate (2010) Occupied Housing Units (2010) 2,629 95% 60,176 94% Vacant Housing Units (2010) 137 5% 3,655 6% Number of single family units permitted (2004 2012) Number of multifamily units permitted (2004 2012) Median age of housing stock (2011) 242 82 1976 4,392 1,438 1977 Housing stock built before 1950 260 10% 8,130 14% Housing stock built between 1950 and 1990 1,208 47% 29,966 50% Housing stock built after 1990 1,079 42% 21,485 36% Median home value of owner occupied units (2011) Median contract rent for renter occupied units (2011) $211,084 $663 $186,552 $673 Employment Total Establishments (2012) Total Employees (2012) Average Annual Wage (2012) Median resale price of existing single family homes (2013 3Q) Median resale price of existing multifamily homes (2013 3Q) Median list price of actively marketing sf homes (Nov. 2013) Median list price of actively marketing mf homes (Nov. 2013) Distribution of rental units by type Market rate 121 71.6% 5,344 81.9% Affordable/Subsidized 48 28.4% 1,179 18.1% Average rent for market rate unit 1BR 2BR 3BR Demographic and Housing Characteristics Summary Demographics Housing Characteristics For Sale Housing General Occupancy Rental Housing Senior Housing Byron Olmsted County MA $64,097 $61,302 $151,502 $129,470 85.2% 74.9% 137 3,676 1,330 93,334 $28,340 $51,948 $191,750 $134,900 $172,000 $134,000 $274,450 $195,000 $136,000 $137,950 $578 $788 $1,038 $801 $963 $1,155 Distribution of senior housing by type Affordable/Subsidized Active Adult 0 / 0.0% 893 / 34.4% Market Rate Active Adult 0 / 0.0% 276 / 10.6% Congregate 0 / 0.0% 768 / 29.5% Assisted Living 0 / 0.0% 381 / 14.7% Memory Care 0 / 0.0% 281 / 10.8% MAXFIELD RESEARCH INC. 300

DEMAND SUMMARY AND RECOMMENDATIONS Byron Recommendations The Byron submarket experienced rapid growth over the last decade, most of which occurred in the City of Byron. Byron boasted household growth of +47% in the 1990s and +52% in the 2000s. Byron is projected to add about 450 households between 2010 and 2020 (+25%), while the townships are projected to remain consistent with flat growth. About 52% of all the general occupancy housing demand in the Byron submarket between 2013 and 2020 is projected to be for single family homes or 130 of 248 total units. Most new residents will be moderate to higher income households in search of single family homes. Byron Projected General Occupancy Demand, 2013 2020 Byron Projected Senior Demand, 2020 Note: Because households are mobile and are willing to seek out various housing products in adjacent communities, these demand figures may experience fluctuations. MAXFIELD RESEARCH INC. 301

DEMAND SUMMARY AND RECOMMENDATIONS For Sale Housing: The Byron submarket had an estimated 239 vacant single lots and 145 multifamily lots at year end 2012. Based on the demand for 130 single family homes and 56 multifamily homes through 2020, the current lot supply should be adequate to allow consumer choice in the short term. However, new lots will be needed to be platted later this decade to accommodate growth beyond 2020. The Byron submarket will continue to be a sought after area given g its easy access and proximity to Rochester. Rental Housing: Only three rental projects were inventoried in the Byron submarket with a total of 121 units. Although there are demand for rental units at all price points, it may be difficult to develop a rental property due to economies of scale. However, a new project in Byron also has the potential to capture demand from other Olmsted County submarkets with competitive rents. Senior Housing: There is no age restricted housing in the Byron submarket at this time. By 2020 there will be demand for 123 senior rental units. Most of this demand will occur closer to 2020 when senior demand begins to increase due to the aging of the baby boomers into their 70s. Because of the close proximity of Byron to Rochester, seniors in the Byron submarket migrate to the Rochester submarket for senior housing with services. However, senior housing demand in the Byron submarket is increasing and can support the development of new senior housing later this decade. A service intensive project including from independent living with services, assisted living, and memory care will be needed. MAXFIELD RESEARCH INC. 302

DEMAND SUMMARY AND RECOMMENDATIONS East Summary of Demographic and Housing Condition Findings Key demographic and housing market findings for the East submarket from the housing study are highlighted below. For a comparison, figures for Olmsted County Market Area are shown as well. Population (2010 & 2020) 12,759 13,496 152,116 175,435 Households (2010 & 2020) 4,861 5,285 60,176 71,673 Household Growth (2010 & 2020) 424 11,497 Median Household Income (2013) Median Net Worth (2013) Homeownership Rate (2010) Occupied Housing Units (2010) 4,861 94% 60,176 94% Vacant Housing Units (2010) 337 6% 3,655 6% Number of single family units permitted (2004 2012) Number of multifamily units permitted (2004 2012) Median age of housing stock (2011) 463 53 1972 4,392 1,438 1977 Housing stock built before 1950 1,371 29% 8,130 14% Housing stock built between 1950 and 1990 1,936 41% 29,966 50% Housing stock built after 1990 1,466 31% 21,485 36% Median home value of owner occupied units (2011) Median contract rent for renter occupied units (2011) $183,126 $517 $186,552 $673 Total Establishments (2012) Total Employees (2012) Average Annual Wage (2012) Median resale price of existing single family homes (2013 3Q) Median resale price of existing multifamily homes (2013 3Q) Median list price of actively marketing sf homes (Nov. 2013) Median list price of actively marketing mf homes (Nov. 2013) Distribution of rental units by type Market rate 108 47.6% 5,344 81.9% Affordable/Subsidized 119 52.4% 1,179 18.1% Average rent for market rate unit 1BR 2BR 3BR Demographic and Housing Characteristics Summary Demographics Housing Characteristics Employment For Sale Housing General Occupancy Rental Housing Senior Housing $52,540 $61,302 $100,932 $129,470 79.4% 74.9% 323 3,676 2,565 93,334 $29,536 $51,948 Distribution of senior housing by type Affordable/Subsidized Active Adult 36 / 32.1% 893 / 34.4% Market Rate Active Adult 0 / 0.0% 276 / 10.6% Congregate 12 / 10.7% 768 / 29.5% Assisted Living 64 / 57.1% 381 / 14.7% Memory Care 0 / 0.0% 281 / 10.8% East Olmsted County MA $135,000 $172,000 $126,000 $134,000 $149,900 $195,000 $129,900 $137,950 $767 $801 $866 $963 $1,155 MAXFIELD RESEARCH INC. 303

DEMAND SUMMARY AND RECOMMENDATIONS East Recommendations Outside of Rochester, the East submarket is the most populated and has the most communities within the Olmsted County Market Area. The East submarket showed household growth of 15.1% last decade (+638 households) with most of the growth occurring in Chatfield, Dover, Eyota, and St. Charles. Household growth this decade is projected at 8.7% (+424 households). The East submarket is projected to add about 300 households between 2013 and 2020. Approximately 50% of the general occupancy housing demand will be for single family homes (99 homes), 9% for owner occupied multifamily homes (17 homes), and 40% for rental units (79 units). East Projected General Occupancy Demand, 2013 2020 East Projected Senior Demand, 2020 Note: Because households are mobile and are willing to seek out various housing products in adjacent communities, these demand figures may experience fluctuations. MAXFIELD RESEARCH INC. 304

DEMAND SUMMARY AND RECOMMENDATIONS For Sale Housing: Based on the subdivisions marketing in the East submarket, there are about 150 vacant single family lots. Single family demand through 2020 was estimated at 100 singlefamily homes; hence the current supply of lots should meet demand through this decade. Lots in the East submarket average about $32,000 and are the lowest in the Olmsted Market Area. As a result, the East submarket also has the most affordable new construction pricing in the Market Area and will be desirable for householders seeking entry level new construction. Rental Housing: Four rental housing projects were identified in the East submarket with a total of 108 units. Demand for about 80 units was found across market rate, affordable, and subsidized rental housing. Because of economies of scale, it may be financially difficult to develop new rental housing as demand is spread across numerous communities in the East submarket. Townhome style rentals may be more economical to develop than traditional multifamily housing. Senior Housing: The East submarket has senior product in Chatfield, Eyota, and St. Charles across various service and income levels. Combined, the existing projects have 112 units; however demand exists for 276 senior housing units through 2020. We project demand for 195 active adult and 81 service enhanced units between 2013 and 2020. The greatest need will be for active adult rental units which has projected demand for 76 units the remainder of this decade. MAXFIELD RESEARCH INC. 305

DEMAND SUMMARY AND RECOMMENDATIONS North Summary of Demographic and Housing Condition Findings Key demographic and housing market findings for the North submarket from the housing study are highlighted below. For a comparison, figures for Olmsted County Market Area are shown as well. Population (2010 & 2020) 8,411 9,447 152,116 175,435 Households (2010 & 2020) 3,209 3,679 60,176 71,673 Household Growth (2010 & 2020) 470 11,497 Median Household Income (2013) Median Net Worth (2013) Homeownership Rate (2010) Occupied Housing Units (2010) 3,209 93% 60,176 94% Vacant Housing Units (2010) 254 7% 3,655 6% Number of single family units permitted (2004 2012) Number of multifamily units permitted (2004 2012) Median age of housing stock (2011) 476 0 1981 4,392 1,438 1977 Housing stock built before 1950 566 18% 8,130 14% Housing stock built between 1950 and 1990 1,405 44% 29,966 50% Housing stock built after 1990 1,215 38% 21,485 36% Median home value of owner occupied units (2011) Median contract rent for renter occupied units (2011) $353,804 $611 $186,552 $673 Total Establishments (2012) Total Employees (2012) Average Annual Wage (2012) Median resale price of existing single family homes (2013 3Q) Median resale price of existing multifamily homes (2013 3Q) Median list price of actively marketing sf homes (Nov. 2013) Median list price of actively marketing mf homes (Nov. 2013) Distribution of rental units by type Market rate 38 32.2% 5,344 81.9% Affordable/Subsidized 80 67.8% 1,179 18.1% Average rent for market rate unit 1BR 2BR 3BR Demographic and Housing Characteristics Summary Demographics Housing Characteristics Employment For Sale Housing General Occupancy Rental Housing Senior Housing North Olmsted County MA $68,534 $61,302 $183,151 $129,470 84.9% 74.9% 146 3,676 1,316 93,334 $35,672 $51,948 $226,750 $172,000 $89,900 $134,000 $204,900 $195,000 $119,900 $137,950 $801 $865 $963 $910 $1,155 Distribution of senior housing by type Affordable/Subsidized Active Adult 23 / 48.9% 893 / 34.4% Market Rate Active Adult 0 / 0.0% 276 / 10.6% Congregate 12 / 25.5% 768 / 29.5% Assisted Living 12 / 25.5% 381 / 14.7% Memory Care 0 / 0.0% 281 / 10.8% MAXFIELD RESEARCH INC. 306

DEMAND SUMMARY AND RECOMMENDATIONS North Recommendations The North submarket added about 575 households last decade (+22%), however most of the growth occurred in Pine Island or Oronoco. The North submarket is projected to add 470 households this decade (+14.6%); about 84% of the submarket growth is forecasted in Pine Island and Oronoco. About 95% of the for sale demand between 2013 and 2020 is projected to be for single family housing. A portion of the single family demand in the North submarket will be for lowerdensity single family housing in the townships. Rental demand is projected to account for 25% of general occupancy housing this decade, or about 55 units. North Projected General Occupancy Demand, 2013 2020 North Projected Senior Demand, 2020 Note: Because households are mobile and are willing to seek out various housing products in adjacent communities, these demand figures may experience fluctuations. MAXFIELD RESEARCH INC. 307

DEMAND SUMMARY AND RECOMMENDATIONS For Sale Housing: The North submarket currently has about 130 vacant developed singlefamily lots among single family subdivisions marketing; however; approximately 150 lots are needed to meet the projected single family home demand. Therefore additional subdivisions may need to be platted later this decade to ensure adequate lot supply and consumer choice. Pine Island has some of the more affordable lot costs in the Olmsted County Market Area. Rental Housing: Although there is demand for 55 rental units across all affordability levels, it would be difficult to develop a rental property due to economies of scale. Townhome style rentals may be more economical to develop than traditional multifamily housing. Senior Housing: Nearly 150 senior units will be demanded by 2020 in the North submarket. Most of this demand will occur closer to 2020 when senior demand begins to increase due to the aging of the baby boomers into their 70s. Currently, there are only 47 total senior housing units in the North submarket among various service levels and incomes. The majority of senior housing demand will be for service intensive housing, especially assisted living and memory care. MAXFIELD RESEARCH INC. 308

DEMAND SUMMARY AND RECOMMENDATIONS Rochester Summary of Demographic and Housing Condition Findings Key demographic and housing market findings for the Rochester submarket from the housing study are highlighted below. For a comparison, figures for Olmsted County Market Area are shown as well. Population (2010 & 2020) 106,769 125,648 152,116 175,435 Households (2010 & 2020) 43,025 52,353 60,176 71,673 Household Growth (2010 & 2020) 9,328 11,497 Median Household Income (2013) Median Net Worth (2013) Homeownership Rate (2010) Occupied Housing Units (2010) 43,025 94% 60,176 94% Vacant Housing Units (2010) 2,658 6% 3,655 6% Number of single family units permitted (2004 2012) Number of multifamily units permitted (2004 2012) Median age of housing stock (2011) 5,499 1,808 1980 4,392 1,438 1977 Housing stock built before 1950 5,134 12% 8,130 14% Housing stock built between 1950 and 1990 22,081 52% 29,966 50% Housing stock built after 1990 15,398 36% 21,485 36% Median home value of owner occupied units (2011) Median contract rent for renter occupied units (2011) $165,800 $689 $186,552 $673 Total Establishments (2012) Total Employees (2012) Average Annual Wage (2012) Median resale price of existing single family homes (2013 3Q) Median resale price of existing multifamily homes (2013 3Q) Median list price of actively marketing sf homes (Nov. 2013) Median list price of actively marketing mf homes (Nov. 2013) Distribution of rental units by type Market rate 4,976 85.0% 5,344 81.9% Affordable/Subsidized 877 15.0% 1,179 18.1% Average rent for market rate unit 1BR 2BR 3BR Demographic and Housing Characteristics Summary Demographics Housing Characteristics Employment For Sale Housing General Occupancy Rental Housing Senior Housing Rochester Olmsted County MA $61,084 $61,302 $119,151 $129,470 70.8% 74.9% 2,839 3,676 85,140 93,334 $53,716 $51,948 $174,000 $172,000 $134,500 $134,000 $194,900 $195,000 $139,900 $137,950 $806 $801 $977 $963 $1,172 $1,155 Distribution of senior housing by type Affordable/Subsidized Active Adult 799 / 33.8% 893 / 34.4% Market Rate Active Adult 276 / 11.7% 276 / 10.6% Congregate 715 / 30.2% 768 / 29.5% Assisted Living 293 / 12.4% 381 / 14.7% Memory Care 281 / 11.9% 281 / 10.8% MAXFIELD RESEARCH INC. 309

DEMAND SUMMARY AND RECOMMENDATIONS Rochester Recommendations The Rochester submarket is poised for strong growth; even more so with the future Destination Medical Center enhancements to Rochester. The Rochester submarket is projected to add over 9,300 households this decade and will account for 80% of total housing demand in the Olmsted County Market Area. Approximately 74% of Rochester s housing demand will be for general occupancy housing projects this decade (5,859 units) while senior housing demand will make up 26% of demand (2,144 units). About 55% of Rochester s general occupancy demand will be for sale product (3,233 units), while rental housing will make up 45% of demand (2,626 units). Rochester Projected General Occupancy Demand, 2013 2020 Rochester Projected Senior Demand, 2020 Note: Because households are mobile and are willing to seek out various housing products in adjacent communities, these demand figures may experience fluctuations. MAXFIELD RESEARCH INC. 310

DEMAND SUMMARY AND RECOMMENDATIONS For Sale Housing: There is demand for over 2,200 single family housing units in Rochester between 2013 and 2020. Of the total single family housing demand, we project that about 30% is for modest homes (679 homes), 45% for move up homes (1,108 homes), and 25% for executive homes (566 homes). We estimate there are approximately 1,300 vacant single family lots within existing subdivisions marketing; hence additional lots will need to be platted throughout this decade to meet demand. In addition, we find demand for nearly 1,000 multifamily for sale units through 2020. Most of the demand will be for twinhomes and townhomes, however condominium units in and near Downtown Rochester may also be supported later in the decade. Rental Housing: Demand was calculated for 2,626 rental units between 2013 and 2020, of which market rate accounts for 1,079 units, 764 affordable units, and 782 subsidized units. With strong job growth and an overall vacancy rate under 4%, rental housing for all incomes will be in high demand. Vacancy rates for affordable and subsided housing products were about 1%, indicating pent up demand for affordable/subsidized product. Senior Housing: Rochester has nearly 1,600 existing senior housing units and 350 units under construction, planned, or pending. Because of the Mayo Clinic and other healthcare providers in Rochester, Rochester is a sought out community for seniors who desire accessibility to health care. As a result Rochester draws from an expansive draw area beyond Olmsted County. Through 2020, demand was found for an additional 2,144 units across most senior housing services. The greatest need will be for market rate active adult rental (656 units) and affordable rental (435 units). Other categories with high demand include market rate congregate (357 units) and ownership products (267 units). MAXFIELD RESEARCH INC. 311

DEMAND SUMMARY AND RECOMMENDATIONS Rochester Fringe Summary of Demographic and Housing Condition Findings Key demographic and housing market findings for the Rochester Fringe submarket from the housing study are highlighted below. For a comparison, figures for Olmsted County Market Area are shown as well. Population (2010 & 2020) 9,592 10,359 152,116 175,435 Households (2010 & 2020) 3,512 3,906 60,176 71,673 Household Growth (2010 & 2020) 394 11,497 Median Household Income (2013) Median Net Worth (2013) Homeownership Rate (2010) Occupied Housing Units (2010) 3,512 96% 60,176 94% Vacant Housing Units (2010) 134 4% 3,655 6% Number of single family units permitted (2004 2012) Number of multifamily units permitted (2004 2012) Median age of housing stock (2011) 288 0 1984 4,392 1,438 1977 Housing stock built before 1950 251 7% 8,130 14% Housing stock built between 1950 and 1990 1,976 56% 29,966 50% Housing stock built after 1990 1,292 37% 21,485 36% Median home value of owner occupied units (2011) Median contract rent for renter occupied units (2011) $261,455 $630 $186,552 $673 Total Establishments (2012) Total Employees (2012) Average Annual Wage (2012) Median resale price of existing single family homes (2013 3Q) Median resale price of existing multifamily homes (2013 3Q) Median list price of actively marketing sf homes (Nov. 2013) Median list price of actively marketing mf homes (Nov. 2013) Distribution of rental units by type Market rate 0 0.0% 5,344 81.9% Affordable/Subsidized 0 0.0% 1,179 18.1% Average rent for market rate unit 1BR 2BR 3BR Demographic and Housing Characteristics Summary Demographics Housing Characteristics Employment For Sale Housing General Occupancy Rental Housing Senior Housing Rochester Fringe Olmsted County MA $88,778 $61,302 $359,909 $129,470 94.6% 74.9% 87 3,676 1,218 93,334 $46,020 $51,948 $172,000 $134,000 $195,000 $137,950 $963 $801 $1,155 Distribution of senior housing by type Affordable/Subsidized Active Adult 0 / 0.0% 893 / 34.4% Market Rate Active Adult 0 / 0.0% 276 / 10.6% Congregate 0 / 0.0% 768 / 29.5% Assisted Living 0 / 0.0% 381 / 14.7% Memory Care 0 / 0.0% 281 / 10.8% MAXFIELD RESEARCH INC. 312

DEMAND SUMMARY AND RECOMMENDATIONS Rochester Fringe Recommendations The Rochester Fringe submarket experienced population and household declines last decade because of annexation. Since the submarket consists of rural townships, future development will be low density on large acreage sites. The Rochester Fringe submarket is projected to add nearly 400 households this decade (+11.2%). All of the for sale demand will be for single family housing as higher density housing types are not permitted in the township jurisdictions. Additionally, although rental and senior demand was found in the submarket, most multifamily product will not meet zoning restrictions and hence will not be permitted without zoning amendments or a conditional use permit. Rochester Fringe Projected General Occupancy Demand, 2013 2020 Rochester Fringe Projected Senior Demand, 2020 Note: Because households are mobile and are willing to seek out various housing products in adjacent communities, these demand figures may experience fluctuations. MAXFIELD RESEARCH INC. 313

DEMAND SUMMARY AND RECOMMENDATIONS For Sale Housing: Single family housing is predominantly the only permitted housing type in the submarket. Demand is projected through 2020 for 14 modest homes (10% of units) to 62 homes for both move up and executive homes (45% respectively). All of this product type will be subdivided on larger acreage plats. Rental Housing: Multifamily rental housing will not be permitted based on the zoning code. Hence any new rental housing construction would be required to be single family rental housing. Senior Housing: Like rental housing, senior housing will not be a permitted use in the Rochester Fringe submarket. Seniors needing assistance will move to other communities in the Olmsted County Market Area if they desire senior housing. MAXFIELD RESEARCH INC. 314

DEMAND SUMMARY AND RECOMMENDATIONS Stewartville Summary of Demographic and Housing Condition Findings Key demographic and housing market findings for the Stewartville submarket from the housing study are highlighted below. For a comparison, figures for Olmsted County Market Area are shown as well. Population (2010 & 2020) 7,539 8,339 152,116 175,435 Households (2010 & 2020) 2,940 3,372 60,176 71,673 Household Growth (2010 & 2020) 432 11,497 Median Household Income (2013) Median Net Worth (2013) Homeownership Rate (2010) Occupied Housing Units (2010) 2,940 96% 60,176 94% Vacant Housing Units (2010) 135 4% 3,655 6% Number of single family units permitted (2004 2012) Number of multifamily units permitted (2004 2012) Median age of housing stock (2011) 208 76 1973 4,392 1,438 1977 Housing stock built before 1950 548 19% 8,130 14% Housing stock built between 1950 and 1990 1,360 46% 29,966 50% Housing stock built after 1990 1,035 35% 21,485 36% Median home value of owner occupied units (2011) Median contract rent for renter occupied units (2011) $168,986 $659 $186,552 $673 Total Establishments (2012) Total Employees (2012) Average Annual Wage (2012) Median resale price of existing single family homes (2013 3Q) Median resale price of existing multifamily homes (2013 3Q) Median list price of actively marketing sf homes (Nov. 2013) Median list price of actively marketing mf homes (Nov. 2013) Distribution of rental units by type Market rate 101 64.7% 5,344 81.9% Affordable/Subsidized 55 35.3% 1,179 18.1% Average rent for market rate unit 1BR 2BR 3BR Demographic and Housing Characteristics Summary Demographics Housing Characteristics Employment For Sale Housing General Occupancy Rental Housing Senior Housing Stewartville Olmsted County MA $51,969 $61,302 $96,509 $129,470 83.0% 74.9% 144 3,676 1,765 93,334 $32,656 $51,948 $155,500 $172,000 $140,000 $134,000 $178,700 $195,000 $137,400 $137,950 $675 $801 $739 $963 $825 $1,155 Distribution of senior housing by type Affordable/Subsidized Active Adult 35 / 46.1% 893 / 34.4% Market Rate Active Adult 0 / 0.0% 276 / 10.6% Congregate 29 / 38.2% 768 / 29.5% Assisted Living 12 / 15.8% 381 / 14.7% Memory Care 0 / 0.0% 281 / 10.8% MAXFIELD RESEARCH INC. 315

DEMAND SUMMARY AND RECOMMENDATIONS Stewartville Recommendations The Stewartville submarket experienced rapid growth in the 1990s (+491 household, 23.1%) and strong growth in the past decade (+326 households, 12.5%). Household growth this decade is projected to increase with 432 new households (+14.7) with nearly all the growth in the City of Stewartville. For sale demand is projected to account for about 73% of the general occupancy demand through 2020 (154 units), while rental housing makes up 27% of the general occupancy demand (57 units). Stewartville Projected General Occupancy Demand, 2013 2020 Stewartville Projected Senior Demand, 2020 Note: Because households are mobile and are willing to seek out various housing products in adjacent communities, these demand figures may experience fluctuations. MAXFIELD RESEARCH INC. 316

DEMAND SUMMARY AND RECOMMENDATIONS For Sale Housing: New construction was prevalent in the first half of the last decade in Stewartville before the ensuing housing bust and Great Recession. After the housing slowdown, new construction has been dormant since 2007. The Stewartville submarket is estimated to have about 40 vacant lots in marketing subdivisions. Based on the demand for about 125 single family housing units in this decade, new lots will need to be platted to meet this need. Rental Housing: A total of three market rate rental buildings were inventoried in the Stewartville submarket comprising 101 units and no vacancies (among participating properties). Rental housing demand was calculated for 23 market rate units, 14 affordable units, and 20 subsidized units through 2020. Although there is demand for 57 rental units across all affordability levels, it may be difficult to develop a multifamily rental property due to economies of scale. Townhome style rentals may be more economical to develop than traditional multifamily housing. Senior Housing: The Stewartville submarket features three senior projects with 76 units offering subsidized, independent living, and assisted living options. Senior housing demand is strongest for market rate active adult rental (41 units) and affordable rental (37 units). MAXFIELD RESEARCH INC. 317

CHALLENGES AND OPPORTUNITIES The following were identified as the greatest challenges and opportunities for developing the recommended housing types. Aging Baby Boomers. The aging of the baby boom generation is increasing the need for maintenance free housing in Olmsted County as housing preferences change as their life cycle evolves. As of 2013, the baby boom generation included nearly 35,000 persons accounting for 22% of the Olmsted County Market Area population. As of 2013, baby boomers are ages 49 to 67, and as they age over the next 15 years, they will cause a significant increase in the empty nester and young senior age groups. Although the majority of these people will prefer to stay in their single family homes, others will prefer to relocate to maintenance free housing. In addition, baby boomers have created demand for new housing products as they have aged through every part of their life cycles. It is anticipated that baby boomers may not act in the same manner as did their parents when consider housing products for their senior years. Although maintenance free housing products are likely to increase in popularity, the type of housing product selected may not be the traditional products of the past. Baby boomers are also open to relocating to Olmsted County for access to the Mayo Clinic and other health care providers. As a result, this demographic could grow even higher than projected. Community Land Trust. The Rochester Area Foundation/First Homes Land Trust was summarized in the Housing Affordability section of the report. Although the land trust is still active, the program has been highly utilized and the majority of funding the program received has been dispersed. Because home prices are rising again and the number of foreclosures has dwindled, there has recently been upward pressure on housing affordability. As a result moderate income households seeking affordable home ownership opportunities will face higher housing costs and may get priced out of the market. The CLT is an excellent housing tool that can provide housing opportunities while meeting the needs to low to moderate income families. Therefore, expansion of this program through funding partners is recommended. Destination Medical Center. The Destination Medical Center (DMC) is planned to transform Rochester into a worldwide destination for medical care. The DMC is projected to bring 35,000 to 45,000 new jobs to the State of Minnesota over the next few decades that would result in tremendous economic impact to Olmsted County and the region. The State of Minnesota will provide infrastructure aid but not until DMC expenditures have exceeded $200 million from the Mayo Clinic or local private developers. Because the DMC plan is still developing there are many unknowns at this time. It is estimated a draft master development plan for the DMC will be completed in mid to late 2014 that will start to address key issues and milestones. Undoubtable the DMC will affect housing needs in Olmsted County and beyond; however it is too premature to estimate to what extent at this point in time. MAXFIELD RESEARCH INC. 318

CHALLENGES AND OPPORTUNITIES Household Size. Table D 4 in the Demographic Analysis section of the report illustrated the declining household sizes of the Olmsted County Market Area. The average household size in the Olmsted County Market Area in 1990 was 2.66 persons per household and decreased to 2.53 as of the 2010 Census. Future projections show the trend continuing over the next two decades declining to 2.40 persons per household by 2030. Table D 14 (Household Type) showed that while married couple households are the largest household type in Olmsted County, the fasted growing sectors as a percentage are other family, persons living alone, roommates, and married households without children. Because of the changing household type dynamics, future housing types will need to accommodate the shift to smaller household sizes. The following chart illustrates the type of housing product typically demanded based on the size of the household. Persons in Household Housing Type 1 2 3 4+ Efficiency Condo/Apartment 1BR Condo/Apartment 2BR Condo/Apartment 3BR+ Condo/Apartment Townhome/Twinhomes Senior Housing Single Family Detached Source: Maxfield Research Inc. MATRIX OF HOUSING TYPES BY HOUSEHOLD SIZE Although the overall household size will continue to decline in Olmsted County, demand for larger household and family types will remain. Table D 16 identified the average household size by race and found non white householders have larger household sizes than white alone householders. Many emerging market households have larger families and/or are intergernational families who desire housing units with more bedrooms. Housing Costs as Percentage of Household Income. Housing costs are generally considered affordable at 30% of a households adjusted gross income. The table on the following page illustrates key housing metrics based on housing costs and household incomes in the Olmsted County Market Area. The table estimates the percentage of Olmsted County Market Area householders that can afford rental and for sale housing based on a 30% allocation of income to housing. Housing costs are based on an Olmsted County Market Average; hence housing values skewed upward based on higher housing costs and the high percentage of the Market Area s housing stock located in Rochester. MAXFIELD RESEARCH INC. 319

CHALLENGES AND OPPORTUNITIES The housing affordability calculations assume the following: For Sale Housing 10% down payment with good credit score Closing costs rolled into mortgage 30 year mortgage at 4.5% interest rate Private mortgage insurance (equity of less than 20%) Homeowners insurance for single family homes and association dues for townhomes Owner household income per 2011 ACS Rental Housing Background check on tenant to ensure credit history 30% allocation of income Renter household income per 2011 ACS Because of the down payment requirement and strict underwriting criteria for a mortgage, not all households will meet the income qualifications as outlined above. MAXFIELD RESEARCH INC. 320

CHALLENGES AND OPPORTUNITIES TABLE CH 1 OLMSTED COUNTY MARKET AREA HOUSING AFFORDABILITY BASED ON HOUSEHOLD INCOME For Sale (Assumes 10% down payment and good credit) Single Family Townhome/Condo Entry Level Move Up Executive Entry Level Move Up Executive Price of House $175,000 $300,000 $400,000 $125,000 $175,000 $300,000 Pct. Down Payment 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% Total Down Payment Amt. $17,500 $30,000 $40,000 $12,500 $17,500 $30,000 Estimated Closing Costs (rolled into mortgage) $5,250 $9,000 $12,000 $3,750 $5,250 $9,000 Cost of Loan $162,750 $279,000 $372,000 $116,250 $162,750 $279,000 Interest Rate 4.500% 4.500% 4.500% 4.500% 4.500% 4.500% Number of Pmts. 360 360 360 360 360 360 Monthly Payment (P & I) $825 $1,414 $1,885 $589 $825 $1,414 (plus) Prop. Tax $182 $313 $417 $130 $182 $313 (plus) HO Insurance/Assoc. Fee for TH $58 $100 $133 $150 $150 $150 (plus) PMI/MIP (less than 20%) $71 $121 $161 $50 $71 $121 Subtotal monthly costs $1,136 $1,947 $2,596 $920 $1,227 $1,997 Housing Costs as % of Income 30% 30% 30% 30% 30% 30% Minimum Income Required $45,431 $77,882 $103,843 $36,784 $49,098 $79,882 Pct. of Olmsted Cty. MA owner HHDs who can afford* 76.5% 50.0% 32.8% 82.8% 73.9% 48.6% No. of Olmsted Cty. MA owner HHDs who can afford* 34,535 22,570 14,790 37,348 33,359 21,922 No. of Olmsted Cty. MA owner HHDS who cannot afford* 10,587 22,552 30,332 7,774 11,763 23,200 Rental (Market Rate) Existing Rental New Rental 1BR 2BR 3BR 1BR 2BR 3BR Monthly Rent $800 $963 $1,155 $1,050 $1,250 $1,400 Annual Rent $9,600 $11,556 $13,860 $12,600 $15,000 $16,800 Housing Costs as % of Income 30% 30% 30% 30% 30% 30% Minimum Income Required $32,000 $38,520 $46,200 $42,000 $50,000 $56,000 Pct. of Olmsted Cty. MA renter HHDs who can afford* 49.9% 41.3% 32.8% 36.5% 28.6% 25.2% No. of Olmsted Cty. MA renter HHDs who can afford* 7,213 5,967 4,742 5,270 4,141 3,642 No. of Olmsted Cty. MA. renter HHDS who cannot afford* 7,243 8,489 9,715 9,186 10,315 10,814 * Based on 2011 ACS household income by tenure (i.e. owner and renter incomes. Owner incomes = $82,837 vs. renter incomes = $42,902) Note: Housing costs based on a blended housing value across the Market Area; hence values are averaged upward based on Rochester's proportion of the Olmsted County Market Area's housing stock. Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 321

CHALLENGES AND OPPORTUNITIES Housing Affordability for Residents compared to Workers. Many residents in rural Olmsted County commute for higher paying jobs in Rochester. As a result, it may be more difficult to afford housing based on the average yearly wages amongst jobs located in the rural submarkets. For example, the average yearly wage in the Byron Submarket is approximately $28,300 compared to the average household income of $64,100. Household income includes dual incomes; however a single income householder would have difficulty affording for sale housing in Byron based on average wages in Byron. TABLE CH 2 HOUSEHOLD INCOME VS. AVERAGE WAGES OLMSTED COUNTY MARKET AREA Median Avg. Yearly Submarket HH Income (2013) Wage (2012) Byron $64,097 $28,340 East $52,540 $29,536 North $68,534 $35,672 Rochester $61,084 $53,716 Rochester Fringe $88,778 $46,020 Stewartville $51,969 $32,656 Olmsted Cty. MA $61,302 $51,948 Source: Maxfield Research Inc. Housing Levy. According to the State of Minnesota Department of Revenue, there are 86 Housing and Redevelopment Authorities ( HRAs ) across Minnesota that have initiated an HRA levy and report tax collections to the State of Minnesota. According to Minnesota Statutes, a HRA has the authority to levy a special tax upon all taxable property within the local jurisdiction for the purpose of funding housing programs in the local HRA. Money generated from the HRA levy can be allocated to a number of housing issues as long they fall within the boundaries established by state law. Typically levy funds are used to supplement existing housing programs, establish new programs/projects, or allocated to administrational needs. Because of Olmsted County s HRA lacks the financial resources other HRAs feature, the Olmsted County HRA does not provide housing programs to the same level as HRAs that have enacted the levy. Many HRAs offer housing programs that target households of all incomes; including market rate and affordable programs. HRA levy income varies by jurisdiction; however the largest ten levies in 2013 are as follows: o Dakota County CDA: $6.5 million o Hennepin County HRA: $6.4 million o Washington County HRA: $3.3 million o St. Paul HRA: $3.1 million o Scott County HRA/CDA: $2.4 million MAXFIELD RESEARCH INC. 322

CHALLENGES AND OPPORTUNITIES o Carver County CDA: $1.8 million o Bloomington HRA: $1.78 million o Anoka County HRA: $1.34 million o Minneapolis Chapter: $1.02 million o St. Louis Park HRA: $900,900 Housing Programs. There are a number of organizations that offer programs to promote and preserve the existing housing stock and offer programs to those in need in Olmsted County. Because there are so many organizations, we recommend establishing a one stopshop resource that could be created bringing together the public and private sectors to help navigate housing challenges while addressing common goals and housing issues that will enhance Olmsted County. The following section outlines some of the key programs and services that are promoted: Greater Minnesota Housing Fund The Greater Minnesota Housing Fund ( GMHF ) supports, preserves, and creates affordable housing in the 80 counties outside the core Twin Cities Metro Area. The GMHF provides numerous programs, financing mechanisms, technical support, and research to support production of affordable housing across Greater Minnesota. http://www.gmhf.com/ Hiawatha Homes Foundation, Inc. Hiawatha Homes provides residential services for developmentally disabled individuals. Services include daily living skills, occupational therapy, physical therapy, speech/communication therapy, nursing advocacy and transportation. Housing is provided through single family homes or group homes. http://www.hiawathahomes.org. Interfaith Hospitality of Greater Rochester is a network of volunteers who offer food and shelter to families who find themselves homeless. In the year 2011, Interfaith Hospitality served 29 families and 86 individuals, served nearly 5,900 meals and provided 814 nights of lodging. http://www.ihn greater rochester.org. Olmsted County Community Action Program (CAP) The CAP provides services for lowincome individuals and families. They provide emergency and longer term assisted housing through resources from the Minnesota Department of Education and the MHFA. http://www.mncaa.org Olmsted County Housing and Redevelopment Authority (OCHRA) The HRA assists qualified, low income persons with rent payments, home purchases and home improvement loans. The mission of the HRA is to provide opportunities to obtain quality, affordable housing for Olmsted County residents. The HRA owns rental housing and administers the housing voucher program. In addition, a number of Rehab programs are administered through the HRA including the following: MAXFIELD RESEARCH INC. 323

CHALLENGES AND OPPORTUNITIES Rental Rehab Monitoring Shelter Care Plus Community Fix Up Fund Fix Up Fund MHFA Rehab Loans Rochester CDBG Rehab Rental Rehab Loans HOME Rental Rehab Please see the following website for additional programs and services administered by the Olmsted County Housing and Redevelopment Authority. http://www.co.olmsted.mn.us/planning/ochra/pages/default.aspx Rochester Area Habitat for Humanity builds about three to four affordable homes annually. Since 1990, over 70 homes have been built or rehabilitated through Habitat in the Rochester Area. Families are required to provide up 500 sweat equity hours for building their home and complete a series of classes. http://www.rahh.org. Rochester Area Foundation (RAF) is a community foundation created in 1944 to receive and make a positive impact, assisting those in need. That vision remains a bulwark of the work of the foundation to this day; RAF is the recognized leader in preparing the Greater Rochester area for its future challenges, expanding the culture of giving, and galvanizing diverse resources to improve the quality of life for all. The assets of the Foundation are currently over $43 million. In 1999, the Rochester Area Foundation, prompted by the critical shortage of affordable housing options for working families in Rochester and the surrounding area, determined it wanted to develop a comprehensive, effective program to address this urgent need, from which First Homes was created. From its inception in late 1999 to present, First Homes has provided housing subsidies to over 719 households through homeownership and provided funding to nine (9) multi family rental unit complexes with a total of 423 units. With State, Federal, local and private funding, the First Homes Program has generated over $90 million in funding. http://www.rochesterarea.org. SE Minnesota Center for Independent Living (SEMCIL) SEMCIL provides independent living services to persons with disabilities. Funding is provided by state and federal grants, United Way and Olmsted County Social Services. SEMCIL developed a housing directory that lists all complexes that have subsidized, income based and fair market rental units. They assist individuals to locate and renovate appropriate housing options. http://www.semcil.org. Three Rivers Community Action The Three Rivers Community Action is a nonprofit human service organization that serves southeastern Minnesota. The organization services primari MAXFIELD RESEARCH INC. 324

CHALLENGES AND OPPORTUNITIES ly low and moderate income families through a variety of programs. The organization is a non profit housing developer and has developed and preserved a variety of housing types; including apartments, townhomes, and single family homes. The Three Rivers Community Action partnered with the Southwest Minnesota Housing Partnership in 2008 to launch a Southern Minnesota Emerging Markets Homeownership Initiative. The program was designed to identify and address barriers to homeownership from emerging market households across southern Minnesota. The program has four key services: homebuyer education classes, financial literacy classes, pre purchase financial counseling sessions, and downpayment/closing cost assistance programs. The Emerging Markets Gap Program offers buyer down payment and closing cost assistance to qualified households who meet all program guidelines. Funds are available on a first come, first served basis and qualified applicants can receive up to $18,500 in a deferred loan gap. Between 2008 and 2013, it is estimated that over 20,000 households throughout southern Minnesota have benefited from one of the housing programs and over 200 families have new homes because of the Achieve Homeownership program offered by Three Rivers Community Action. http://www.threeriverscap.org/housing/achieve homeownership Salvation Army The Salvation Army provides rental assistance to prevent or end homelessness, emergency shelter vouchers and transitional housing programs. Rental assistance helps people with up to one month s rent if they are threatened with an eviction or are ending their homelessness. Emergency motel vouchers are used when there are no other housing options. http://salvationarmynorth.org/community/rochester Women s Shelter The Women s Shelter provides temporary shelter for women and children who are fleeing abuse. Residents may stay as long as necessary; however, most stay less than two weeks (excluding the transitional house). The women and children stay free of charge at the shelters and pay according to their income at the transitional house. http://www.womens shelter.org. Zumbro Valley Mental Health Center Zumbro Valley provides many programs. They include Housing Options, Housing Options Subsidy Program, Transitional Housing Program and Northgate Community Housing. These programs offer housing or housing assistance to persons that are homeless or at risk of homelessness and are also seriously mentally ill, chronic substance abusers or HIV positive. Tenants typically pay 30% or 1/3 of their income towards rent. http://zumbromhc.org. In addition, there are a variety of housing programs that can be administered to improve the housing stock. The following is a sampling of potential programs that could be explored. MAXFIELD RESEARCH INC. 325

CHALLENGES AND OPPORTUNITIES o Architectural Design Services The local government authority (City, HRA, etc.) partners with local architects to provide design consultation with homeowners. Homeowner pays a small fee for service, while the City absorbs the majority of the cost. No income restriction. o Construction Management Services Assist homeowners regarding local building codes, reviewing contractor bids, etc. Typically provided as a service by the building department. This type of service could also be rolled into various remodeling related programs. o Density Bonuses Since the cost of land is a significant barrier to housing affordability, increasing densities can result in lower housing costs by reducing the land costs per unit. Municipalities can offer density bonuses as a way to encourage higher density residential development while also promoting an affordable housing component. o Fast Track Permitting Program designed to reduce delays during the development process that ultimately add to the total costs of housing development. By expediting the permitting process costs can be reduced to developers while providing certainty into the development process. Typically no cost to the local government jurisdiction. o Historic Preservation Encourage residents to preserve historic housing stock in neighborhoods with homes with character through restoring and preserving architectural and building characteristics. Typically funded with low interest rates on loans for preservation construction costs. o Home Improvement Area (HIA) HIAs allow a townhome or condo association low interest loans to finance improvements to common areas. Unit owners repay the loan through fees imposed on the property, usually through property taxes. Typically a "last resort" financing tool when associations are unable to obtain traditional financing due to the loss of equity from the real estate market or deferred maintenance on older properties. o Home Building Trades Partnerships Partnership between local Technical Colleges or High Schools that offer building trades programs. Affordability is gained through reduced labor costs provided by the school. New housing production serves as the classroom for future trades people to gain experience in the construction industry. o Home Sale Point of Sale City ordinance requiring an inspection prior to the sale or transfer of residential real estate. The inspection is intended to prevent adverse conditions and meet minimum building codes. Sellers are responsible for incurring any costs for the inspection. Depending on the community, evaluations are completed by city inspectors or 3rd party licensed inspectors. o Housing Fair Free seminars and advice for homeowners related to remodeling and home improvements. Most housing fairs offer educational seminars and "ask the expert" consulting services. Exhibitors include architects, landscapers, building contractors, home products, city inspectors, financial services, among others. o Home Energy Loans Offer low interest home energy loans to make energy improvements in their homes. o H.O.M.E. Program Persons 60 and over receive homemaker and maintenance services. Typical services include house cleaning, grocery shopping, yard work/lawn care, and other miscellaneous maintenance requests. MAXFIELD RESEARCH INC. 326

CHALLENGES AND OPPORTUNITIES o Infill Lots The City or HRA purchase blighted or substandard housing units from willing sellers. After the home has been removed, the vacant land is placed into the program for future housing redevelopment. Future purchasers can be builders or the future owner occupant who has a contract with a builder. Typically all construction must be completed within an allocated time frame (one year in most cases). o Inclusionary Housing Inclusionary housing policies and programs rely on private sector housing developers to create affordable housing as they develop market rate projects. Inclusionary zoning encourages or mandates the inclusion of a set proportion of affordable housing units in each new market rate housing development above a certain size. These programs are popular approaches for local and state governments to encourage the development of affordable housing. o Land Banking Land Banking is a program of acquiring land with the purpose of developing at a later date. After a holding period, the land can be sold to a developer (often at a price lower than market) with the purpose of developing affordable housing. o Live Where You Work Program designed to promote homeownership in the same community where employees work. City provides a grant to eligible employees to purchase a home near their workplace. Employers can also contribute or match the city's contribution. Participants must obtain a first mortgage through participating lenders. The grant can be allocated towards down payment assistance, closing costs, and gap financing. Some restrictions apply (i.e. length of employment, income, home buyer education, etc.) o Realtor Forum Typically administered by City with partnership by local school board. Inform local Realtors about school district news, current development projects, and other marketing factors related to real estate in the community. In addition, Realtors usually receive CE credits. o Remodeling Tours City driven home remodeling tour intended to promote the enhancement of the housing stock through home renovations/additions. Homeowners open their homes to the public to showcase home improvements. o Rent to Own Income eligible families rent for a specified length of time with the endgoal of buying a home. The HRA saves a portion of the monthly rent that will be allocated for a down payment on a future house. o Rental License Licensing rental properties in the communities. Designed to ensure all rental properties meet local building and safety codes. Typically enforced by the fire marshal or building inspection department. Should require annual license renewal. Rochester is the only city in Olmsted County that requires a rental license; other communities should consider this program. o Rental Collaboration City organizes regular meetings with owners, property managers, and other stakeholders operating in the rental housing industry. Collaborative, informational meetings that includes city staff, updates on economic development and real estate development, and updates from the local police, fire department, and building inspection departments. o Shallow Rent Subsidy: The HRA funds a shallow rent subsidy program to provide program participants living in market rate rentals a rent subsidy (typically about $100 to $300 per month). MAXFIELD RESEARCH INC. 327

CHALLENGES AND OPPORTUNITIES o Tax Increment Financing (TIF): Program that offers communities a flexible financing tool to assist housing projects and related infrastructure. TIF enables communities to dedicate the incremental tax revenues from new housing development to help make the housing more affordable or pay for related costs. o Transfer of Development Rights Transfer of Development Rights (TDR) is a program that shifts the development potential of one site to another site or different location, even a different community. TDR programs allow landowners to sever development rights from properties in government designated low density areas, and sell them to purchasers who want to increase the density of development in areas that local governments have selected as higher density areas. o Vacant Housing Recycling Program Partnership between city and neighborhoods designed to remove blighted properties and provide matching funds for the acquisition and disposition of residential properties. City will then sell lot intended for new home construction. (Similar to the First Homes program). o Waiver or Reduction of Development Fees There are several fees developers must pay including impact fees, utility and connection fees, park land dedication fees, etc. To help facilitate affordable housing, some fees could be waived or reduced to pass the cost savings onto the housing consumer. Lifestyle Renters. The for sale market, which until recently has been considered the worst downturn since the Great Depression, has resulted in a fundamental shift in the way American s view homeownership today. Home buyer psychology has changed since the mid 2000s as many former homeowners lost their homes to foreclosures, lost home equity in the sale of their home, or simply have decided to temporarily return to the renter pool during the economic recovery. Although buyers began returning to the market in 2013, some potential buyers are still on the sidelines waiting for further improvements in the economy before deciding to purchase a home. Historically, householders rented because they couldn t afford to buy or didn t have the credit to qualify for a mortgage. Today that is no longer the case and many householders are renting by choice. Demand is being driven by the Millennials, would be buyers on the side line, and empty nesters. As a result, rental housing is one of the preferred real estate asset classes today across country. Downtown Rochester will continue to be an attractive location for rental multifamily housing that will be attractive to a variety of household types that will desire to rent while enjoying downtown amenities. Land Costs. Land values for agricultural land throughout Southeastern Minnesota have increased substantially over the past few years due to strong commodity prices and investment demand. Per acre farmland prices have doubled over the past five years as topvalued land has been averaging up to $8,000 per acre. Because of increasing land values in the rural areas, developers and home builders seeking to purchase plots of land for new housing subdivisions will face escalated acquisition costs, which will continue to drive up the costs of retail sales price of homes. MAXFIELD RESEARCH INC. 328

CHALLENGES AND OPPORTUNITIES The price of previously platted lots has bottomed out from the recent housing bust. Over the past several years builders have purchased bank owned lots for new construction to mitigate any land hold risk while keeping the retail price of the home down. However, most of the desirable lender mediated lots have been sold and builders are facing increased lot costs that will be passed onto the consumer. Many builders prefer a just in time land acquisition strategy versus purchasing and holding a numbers lots and the prolonged carrying costs. Due to raw land costs, entitlements, and the cost to develop infrastructure, developers will be cautious given the lot price they could achieve. Prolonged carrying costs due to slow lot absorption are deterrents for builders and developers who must absorb project development costs until the lots are sold. Therefore the platting of smaller subdivisions is expected to continue in the short term until achievable lot sales justify the platting and development of future lots. An improved single family lot should generally cost from 18% to 25% of the projected retail price of the home. A review of Olmsted County Market Area ratios shows a range from 15% in the North submarket to 20% in the Stewartville submarket. Based on an average lot cost of approximately $62,200 in the Olmsted County Market Area, the retail price for a new single family home would be about $310,000 based on a 20% lot to home ratio. Since the average lot to home ratio in the Olmsted County Market Area is 19%, new home buyers in Olmsted County are receiving more home for their dollar as land costs ratios are slightly lower than national averages. Finally, property zoned for multifamily housing has experienced rising land values due to the demand for rental and senior housing. Land costs in Downtown Rochester began to climb before the announcement of the Destination Medical Center and have since swelled since the DMC announcement. Rising land values in Downtown Rochester will affect the housing affordability in the downtown core as many housing projects may not be financially feasible to support new housing development. Lot Supply. A three to five year supply of lots is an appropriate balance between providing adequate consumer choice and minimizing developers carrying costs. With an annual average absorption of nearly 500 single family lots (based on the average annual number of building permits between 2004 and 2012), Olmsted County would need a supply of at least 1,500 platted lots to maintain a three year lot supply. Maxfield Research estimates there are approximately 1,500 vacant developed lots at year end 2013 resulting in a three year lot supply. However, new lots will be needed to be platted to meet the growing demand this decade. Lender Mediated Properties. Tables FS 10 to FS 11 illustrated the declining number of lender mediated properties in Olmsted County. Traditional transactions account for about 87% of all Olmsted County MLS real estate sales in 2013 and the number of lender mediated properties should continue to wane as the real estate market continues its recovery. As MAXFIELD RESEARCH INC. 329

CHALLENGES AND OPPORTUNITIES a result, home values should continue to increase as lender mediated properties decline. The private market will continue to absorb these homes as traditional buyers and investors seek out these homes because of the discounted price. Although foreclosures are declining, we recommend that local governmental authorities continue to monitor these properties. Multifamily Development Costs. Although moderate demand for rental housing was found in the submarkets outside of Rochester, it may be difficult to construct new multifamily product in these submarkets given achievable rents and development costs. According to RS Means construction costs data, construction costs in rural Olmsted County will likely average about $145 per square foot (gross), or upwards to $160,000 per unit to develop. Development costs of this scale will likely require rents per square foot of at least $1.25 to $1.35 to cash flow. Based on the average rents in the Olmsted County Market Area, these rents would be significantly higher than existing product. Newer product in Rochester is able to command these rents, however these rents are not currently achievable outside of Rochester. Based on these costs, it will be extremely difficult to develop stand alone market rate multifamily housing structures by the private sector based on achievable rents. As a result, a private public partnership or other financing programs will likely be required to spur development. Short Term Housing/Extended Stay. Because of Rochester s draw as a medical destination, there are a number of temporary and short term stay housing accommodations in Rochester. Establishments range from hotels, suites, apartments, camp grounds, RV parks, townhomes or single family homes, etc. Many of these furnished units offer weekly and monthly rates that have flexible rental agreements. Mayo Clinic patients are the driver of this type of housing; however other target markets include UMR students, Mayo faculty/staff, corporate relocations, etc. The demand for this product will likely increase with future DMC initiatives. Future multifamily housing developments in Downtown Rochester may develop prototype concepts that include both a short term and long term stay leases. Short term housing may also be needed for construction workers as future DMC development moves forward. Transportation/Zip Rail. A 100 mile corridor between Rochester and the Twin Cities Metro Area has been discussed that would provide high speed passenger rail. The potential project is currently being studied by the Olmsted County Regional Railroad Authority (OCRRA), in partnership with the Minnesota Department of Transportation (MnDOT) and the Federal Railroad Administration (FRA). The zip line would also have the potential to connect with the proposed Twin Cities high speed passenger rail to Chicago. MAXFIELD RESEARCH INC. 330

CHALLENGES AND OPPORTUNITIES Although this concept is still in the preliminary planning stages, the development of a highspeed rail line through Olmsted County would stimulate commercial and residential real estate development along the line which could further increase housing demand. University of Minnesota Rochester Campus. The University of Minnesota Rochester (UMR) is the newest campus from the University of Minnesota higher education system, having been established in late 2006. UMR course curriculum commenced in Fall 2007 and is located at University Square in Downtown Rochester. The campus serves about 750 undergraduate and graduate students while specializing in health sciences and bioscience careers. However, the university is poised for strong growth as UMR is in the process of assembling land for a future 10 acre campus. The vision of the master plan is a campus location in the downtown urban core in close proximity to the Mayo Clinic and other downtown amenities. Long term enrollment projections are estimated for a campus of up to 5,000 students. As a result, there will be a growing need for housing in Downtown Rochester that will be desired by undergraduate and graduate students, as well as some faculty and staff. MAXFIELD RESEARCH INC. 331

APPENDIX APPENDIX MAXFIELD RESEARCH INC. 332

APPENDIX DEFINITIONS Definitions Absorption Period The period of time necessary for newly constructed or renovated properties to achieve the stabilized level of occupancy. The absorption period begins when the first certificate of occupancy is issued and ends when the last unit to reach the stabilized level of occupancy has signed a lease. Absorption Rate The average number of units rented each month during the absorption period. Active adult (or independent living without services available) Active Adult properties are similar to a general occupancy apartment building, in that they offer virtually no services but have age restrictions (typically 55 or 62 or older). Organized activities and occasionally a transportation program are usually all that are available at these properties. Because of the lack of services, active adult properties typically do not command the rent premiums of more service enriched senior housing. Adjusted Gross Income AGI Income from taxable sources (including wages, interest, capital gains, income from retirement accounts, etc.) adjusted to account for specific deductions (i.e. contributions to retirement accounts, unreimbursed business and medical expenses, alimony, etc.). Affordable housing The general definition of affordability is for a household to pay no more than 30% of their income for housing. For purposes of this study we define affordable housing that is income restricted to households earning at or below 80% AMI, though individual properties can have income restrictions set at 40%, 50%, 60% or 80% AMI. Rent is not based on income but instead is a contract amount that is affordable to households within the specific income restriction segment. It is essentially housing affordable to low or very low income tenants. Amenity Tangible or intangible benefits offered to a tenant in the form of common area amenities or in unit amenities. Typical in unit amenities include dishwashers, washer/dryers, walk in showers and closets and upgraded kitchen finishes. Typical common area amenities include detached or attached garage parking, community room, fitness center and an outdoor patio or grill/picnic area. Area Median Income AMI AMI is the midpoint in the income distribution within a specific geographic area. By definition, 50% of households earn less than the median income and 50% earn more. The U.S. Department of Housing and Urban Development (HUD) calculates AMI annually and adjustments are made for family size. MAXFIELD RESEARCH INC. 333

APPENDIX DEFINITIONS Assisted Living Assisted Living properties come in a variety of forms, but the target market for most is generally the same: very frail seniors, typically age 80 or older (but can be much younger, depending on their particular health situation), who are in need of extensive support services and personal care assistance. Absent an assisted living option, these seniors would otherwise need to move to a nursing facility. At a minimum, assisted living properties include two meals per day and weekly housekeeping in the monthly fee, with the availability of a third meal and personal care (either included in the monthly fee or for an additional cost). Assisted living properties also have either staff on duty 24 hours per day or at least 24 hour emergency response. Building Permit Building permits track housing starts and the number of housing units authorized to be built by the local governing authority. Most jurisdictions require building permits for new construction, major renovations, as well as other building improvements. Building permits ensure that all the work meets applicable building and safety rules and is typically required to be completed by a licensed professional. Once the building is complete and meets the inspector s satisfaction, the jurisdiction will issue a CO or Certificate of Occupancy. Building permits are a key barometer for the health of the housing market and are often a leading indicator in the rest of the economy as it has a major impact on consumer spending. Capture Rate The percentage of age, size, and income qualified renter households in a given area or Market Area that the property must capture to fill the units. The capture rate is calculated by dividing the total number of units at the property by the total number of age, size and income qualified renter households in the designated area. Comparable Property A property that is representative of the rental housing choices of the designated area or Market Area that is similar in construction, size, amenities, location and/or age. Concession Discount or incentives given to a prospective tenant to induce signature of a lease. Concessions typically are in the form of reduced rent or free rent for a specific lease term, or free amenities, which are normally charged separately, such as parking. Congregate (or independent living with services available) Congregate properties offer support services such as meals and/or housekeeping, either on an optional basis or a limited amount included in the rents. These properties typically dedicate a larger share of the overall building area to common areas, in part, because the units are smaller than in adult housing and in part to encourage socialization among residents. Congregate properties attract a slightly older target market than adult housing, typically seniors age 75 or older. Rents are also above those of the active adult buildings, even excluding the services. Contract Rent The actual monthly rent payable by the tenant, including any rent subsidy paid on behalf of the tenant, to the owner, inclusive of all terms of the lease. MAXFIELD RESEARCH INC. 334

APPENDIX DEFINITIONS Demand The total number of households that would potentially move into a proposed new or renovated housing project. These households must be of appropriate age, income, tenure and size for a specific proposed development. Components vary and can include, but are not limited to: turnover, people living in substandard conditions, rent over burdened households, income qualified households and age of householder. Demand is project specific. Density Number of units in a given area. Density is typically measured in dwelling units (DU) per acre the larger the number of units permitted per acre the higher the density; the fewer units permitted results in lower density. Density is often presented in a gross and net format: Gross Density The number of dwelling units per acre based on the gross site acreage. Gross Density = Total residential units/total development area Net Density The number of dwelling units per acre located on the site, but excludes public right of ways (ROW) such as streets, alleys, easements, open spaces, etc. Net Density = Total residential units/total residential land area (excluding ROWs) Detached housing a freestanding dwelling unit, most often single family homes, situated on its own lot. Effective Rents Contract rent less applicable concessions. Elderly or Senior Housing Housing where all the units in the property are restricted for occupancy by persons age 62 years or better, or at least 80% of the units in each building are restricted for occupancy by households where at least one household member is 55 years of age or better and the housing is designed with amenities, facilities and services to meet the needs of senior citizens. Extremely low income person or household with incomes below 30% of Area Median Income, adjusted for respective household size. Fair Market Rent Estimates established by HUD of the Gross Rents needed to obtain modest rental units in acceptable conditions in a specific geographic area. The amount of rental income a given property would command if it were open for leasing at any given moment and/or the amount derived based on market conditions that is needed to pay gross monthly rent at modest rental housing in a given area. This figure is used as a basis for determining the payment standard amount used to calculate the maximum monthly subsidy for families on at financially assisted housing. Foreclosure A legal process in which a lender or financial institute attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by using the sale of the house as collateral for the loan. Gross Rent The monthly housing cost to a tenant which equals the Contract Rent provided for in the lease, plus the estimated cost of all utilities paid by tenants. MAXFIELD RESEARCH INC. 335

APPENDIX DEFINITIONS Household All persons who occupy a housing unit, including occupants of a single family, one person living alone, two or more families living together, or any other group of related or unrelated persons who share living arrangements. Household Income The combined gross income all household members who are 15 years of age or older. Household income includes all forms of income; from salaries and wages, retirement income, investment gains, unemployment compensation, Social Security, etc. Income amounts are expressed in current dollars, including an adjustment for inflation or cost of living increases. Median Income Value that divides the distribution of household income into two equal parts. Per Capita Income Average income of all persons calculated from the aggregate income of persons 15 years of age or older. Household Trends Changes in the number of households for any particular areas over a measurable period of time, which is a function of hew households formations, changes in average household size, and met migration. Housing Choice Voucher Program The federal government's major program for assisting very low income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. A family that is issued a housing voucher is responsible for finding a suitable housing unit of the family's choice where the owner agrees to rent under the program. Housing choice vouchers are administered locally by public housing agencies. They receive federal funds from the U.S. Department of Housing and Urban Development (HUD) to administer the voucher program. A housing subsidy is paid to the landlord directly by the public housing agency on behalf of the participating family. The family then pays the difference between the actual rent charged by the landlord and the amount subsidized by the program. Housing unit House, apartment, mobile home, or group of rooms used as a separate living quarters by a single household. HUD Project Based Section 8 A federal government program that provides rental housing for very low income families, the elderly, and the disabled in privately owned and managed rental units. The owner reserves some or all of the units in a building in return for a Federal government guarantee to make up the difference between the tenant's contribution and the rent. A tenant who leaves a subsidized project will lose access to the project based subsidy. HUD Section 202 Program Federal program that provides direct capital assistance and operating or rental assistance to finance housing designed for occupancy by elder household who have incomes not exceeding 50% of Area Median Income. MAXFIELD RESEARCH INC. 336

APPENDIX DEFINITIONS HUD Section 811 Program Federal program that provides direct capital assistance and operating or rental assistance to finance housing designed for occupancy of persons with disabilities who have incomes not exceeding 50% Area Median Income. HUD Section 236 Program Federal program that provides interest reduction payments for loans which finance housing targeted to households with income not exceeding 80% Area Median Income who pay rent equal to the greater or market rate or 30% of their adjusted income. Income limits Maximum households income by a designed geographic area, adjusted for household size and expressed as a percentage of the Area Median Income, for the purpose of establishing an upper limit for eligibility for a specific housing program. See Incomequalifications. Inflow/Outflow The Inflow/Outflow Analysis generates results showing the count and characteristics of worker flows in to, out of, and within the defined geographic area. Low Income Person or household with gross household incomes below 80% of Area Median Income, adjusted for household size. Low Income Housing Tax Credit A program aimed to generate equity for investment in affordable rental housing authorized pursuant to Section 42 of the Internal Revenue Code. The program requires that a certain percentage of units built be restricted for occupancy to households earning 60% or less of Area Median Income, and rents on these units be restricted accordingly. Market analysis The study of real estate market conditions for a specific type of property, geographic area or proposed (re)development. Market rent The rent that an apartment, without rent or income restrictions or rent subsidies, would command in a given area or Market Area considering its location, features and amenities. Market study A comprehensive study of a specific proposal including a review of the housing market in a defined market or geography. Project specific market studies are often used by developers, property managers or government entities to determine the appropriateness of a proposed development, whereas market specific market studies are used to determine what house needs, if any, existing within a specific geography. Market rate rental housing Housing that does not have any income restrictions. Some properties will have income guidelines, which are minimum annual incomes required in order to reside at the property. MAXFIELD RESEARCH INC. 337

APPENDIX DEFINITIONS Median Rent/Home Price The median refers to the price point where half of the rents/homes are priced above the point, and half are priced below it. The median is a more accurate gauge of housing costs as averages tend to skew prices at the high and low end of the market. Memory Care Memory Care properties, designed specifically for persons suffering from Alzheimer s disease or other dementias, is one of the newest trends in senior housing. Properties consist mostly of suite style or studio units or occasionally one bedroom apartment style units, and large amounts of communal areas for activities and programming. In addition, staff typically undergoes specialized training in the care of this population. Because of the greater amount of individualized personal care required by residents, staffing ratios are much higher than traditional assisted living and thus, the costs of care are also higher. Unlike conventional assisted living, however, which deals almost exclusively with widows or widowers, a higher proportion of persons afflicted with Alzheimer s disease are in two person households. That means the decision to move a spouse into a memory care facility involves the caregiver s concern of incurring the costs of health care at a special facility while continuing to maintain their home. Migration The movement of households and/or people into or out of an area. Mixed income property An apartment property contained either both income restricted and unrestricted units or units restricted at two or more income limits. Mobility The ease at which people move from one location to another. Moderate Income Person or household with gross household income between 80% and 120% of the Area Median Income, adjusted for household size. Multifamily Properties and structures that contain more than two housing units. Naturally Occurring Affordable Housing Although affordable housing is typically associated with an income restricted property, there are other housing units in communities that indirectly provide affordable housing. Housing units that were not developed or designated with income guidelines (i.e. assisted) yet are more affordable than other units in a community are considered naturally occurring or unsubsidized affordable units. This rental supply is available through the private market, versus assisted housing programs through various governmental agencies. Property values on these units are lower based on a combination of factors, such as: age of structure/housing stock, location, condition, size, functionally obsolete, school district, etc. Net Income Income earned after payroll withholdings such as state and federal income taxes, social security, as well as retirement savings and health insurance. Net Worth The difference between assets and liabilities, or the total value of assets after the debt is subtracted. MAXFIELD RESEARCH INC. 338

APPENDIX DEFINITIONS Pent up demand A market in which there is a scarcity of supply and as such, vacancy rates are very low or non existent. Population All people living in a geographic area. Population Density The population of an area divided by the number of square miles of land area. Population Trends Changes in population levels for a particular geographic area over a specific period of time a function of the level of births, deaths, and in/out migration. Project Based rent assistance Rental assistance from any source that is allocated to the property or a specific number of units in the property and is available to each income eligible tenant of the property or an assisted unit. Redevelopment The redesign, rehabilitation or expansion of existing properties. Rent burden gross rent divided by adjusted monthly household income. Restricted rent The rent charged under the restriction of a specific housing program or subsidy. Saturation The point at which there is no longer demand to support additional market rate, affordable/subsidized, rental, for sale, or senior housing units. Saturation usually refers to a particular segment of a specific market. Senior Housing The term senior housing refers to any housing development that is restricted to people age 55 or older. Today, senior housing includes an entire spectrum of housing alternatives. Maxfield Research Inc. classifies senior housing into four categories based on the level of support services. The four categories are: Active Adult, Congregate, Assisted Living and Memory Care. Short Sale A sale of real estate in which the net proceeds from selling the property do not cover the sellers mortgage obligations. The difference is forgiven by the lender, or other arrangements are made with the lender to settle the remainder of the debt. Single family home A dwelling unit, either attached or detached, designed for use by one household and with direct street access. It does not share heating facilities or other essential electrical, mechanical or building facilities with another dwelling. Stabilized level of occupancy The underwritten or actual number of occupied units that a property is expected to maintain after the initial lease up period. MAXFIELD RESEARCH INC. 339

APPENDIX DEFINITIONS Subsidized housing Housing that is income restricted to households earning at or below 30% AMI. Rent is generally based on income, with the household contributing 30% of their adjusted gross income toward rent. Also referred to as extremely low income housing. Subsidy Monthly income received by a tenant or by an owner on behalf of a tenant to pay the difference between the apartment s contract/market rate rent and the amount paid by the tenant toward rent. Substandard conditions Housing conditions that are conventionally considered unacceptable and can be defined in terms of lacking plumbing facilities, one or more major mechanical or electrical system malfunctions, or overcrowded conditions. Target population The market segment or segments of the given population a development would appeal or cater to. Tenant One who rents real property from another individual or rental company. Tenant paid utilities The cost of utilities, excluding cable, telephone, or internet necessary for the habitation of a dwelling unit, which are paid by said tenant. Tenure The distinction between owner occupied and renter occupied housing units. Turnover A measure of movement of residents into and out of a geographic location. Turnover period An estimate of the number of housing units in a geographic location as a percentage of the total house units that will likely change occupants in any one year. Unrestricted units Units that are not subject to any income or rent restrictions. Vacancy period The amount of time an apartment remains vacant and is available on the market for rent. Workforce housing Housing that is income restricted to households earning between 50% and 120% AMI. Also referred to as moderate income housing. Zoning Classification and regulation of land use by local governments according to use categories (zones); often also includes density designations and limitations. MAXFIELD RESEARCH INC. 340