The reader should be familiar with methodology that will be employed by GAR Associates in this analysis. If there are differences in regard to the specific project in question, then these should be agreed upon before initiation of the assignment. We have also outlined some general assumptions that are applied within our analysis. It should be noted that GAR Associates is familiar with the requirements of the QAP including their market study guidelines. We have been approved on the DHCR list to perform market studies throughout New York State and have conversed with DHCR pertaining to their requirements.
Generally, the context of our market studies will involve the following components:
Some notes pertaining to the methodology typically employed by GAR Associates include the following:
Typically, GAR Associates utilizes realistic assumptions pertaining to market draw area. We will analyze mobility patterns, physical and sociological barriers of entry, commuter patterns and transportation linkages, and also converse directly with operators of existing developments in order to provide support for the market draw established. Usually, we utilize only a primary market draw area and do not provide contribution from secondary or tertiary market areas as they are not a primary contributor to projects of this nature.
We will review census documentation, but for the demand model and detailed analysis, we will utilize HISTA data (2000/current year and five year projections). This data is prepared by Claritas in conjunction with Ribbon Demographics and has been found to be useful in regard to identifying specific perspective tenant contribution based on the demand methodology applied by GAR. HISTA stands for “Households by Income, Size, Tenure and Age” and breaks down the census documentation by household size, and income contributions. In addition to the household data we recently obtained population information, which will also be utilized and discussed.
We are familiar with the requirements of the agency to which this document will be submitted. Typically, the agencies include the New York State Division of Housing and Community Renewal (DHCR), Rural Development (RD) or HUD. GAR Associates reviews the requirements of these various agencies on a consistent basis, and we attempt to meet with representatives of each agency in order to obtain an update pertaining to any changes in their underwriting criteria. While we do feel that we understand their goals and guidelines, in no way do the results of our analysis guarantee funding or approval from the agency in question. Even if the capture rates and the demand analysis prepared by GAR Associates is indicative of likely project support, there could be other issues or items that preclude the project from receiving such funding as approval and funding for housing developments of this nature as a highly competitive and complicated process.
Our demand model typically accounts for what we call a net demand analysis wherein all existing affordable housing is eliminated from the model prior to establishing capture. In order to do this, it is usually necessary to undertake a two-staged income qualification process. This is necessary in order to properly account for all income qualified households who may be likely candidates for a deep subsidy affordable project (where income qualifications as low as zero can occasionally be utilized), and then subsequently for application to the income band specifically applicable to the project in question.
The demand model in this study will be based on the rent structure anticipated by the developer, under the assumption that the rents forecasted are within compliance with the agency requirements and supported by market characteristics. If not, then we may recommend alternatives.
The only exception to the above is if the purpose of the market study is to establish rent parameters for the developer’s review, in which case we will provide alternatives.
Capture rates are important for consideration but are only one of a number of important variables that lead to an indication of market support. Generally based on assumptions applied in a standard DHCR report capture rates at or below 20 percent are indicative of likely project support. The lower the overall project capture, the more likely that there are an adequate number of age income-qualified households to support a project. However, there are no set thresholds that necessarily indicate specific approval or acceptance of the development by the allocating agencies.
Scott Allen and GAR Associates are members of the National Council of Housing Market Analysts (NCHMA). This national organization has been instrumental in developing standard model content to be used by market analysts and we abide by their guidelines and standard definitions, which will be outlined in detail within the context of the market study. A certificate stating such will be part of our report. Scott Allen is a member in good standing with this organization.