Presented at CREW Miami’s Luncheon Meeting, June 27, 2018
Moderator: Lissette Calderon, CEO, Neology Group
Panelists: Lindsay Lecour, Senior Vice President, Atlantic I Pacific Companies
Lisa Silvers, Senior Vice President, Healthcare Finance, IDB Bank
Baby boomers (people born between 1946 and 1964) make up 20 percent of America’s population. According to the U.S. Census Bureau, the 78 million people age 65 and older are expected to outnumber youth under the age of 18 by 2035. Trends indicate that many baby boomers are selling their single-family homes and choose to rent where they can be with friends, have access to activities, and fine dining.
Yet economic pressures are driving developers to focus mainly on opposite extremes of the senior housing spectrum: either luxury properties or subsidized housing. Panelists said few instances exist to finance the repurposing of well-located hotel properties (although rooms are small, they are roommate-free) and to adapt existing multifamily properties with ramps, wider doorways, and other features to accommodate aging residents.
Senior housing and care industry expert Lisa Silvers clarified that housing designated for seniors describes a continuum of care that ranges from independent living, to assisted living, to skilled nursing and memory care. Asked what is out there for seniors, Silvers said that all senior housing options should provide residents with a uniform level of care across all income and cost levels. “It’s important to determine that the company is sound and the operators competent, but the level of care is the key component. Bells and whistles like fancy décor, activities, and recreational programs can be added on top of that.” She recommends that developers collaborate with facility operators and design experts in senior housing, because they know best what features and systems to include.
Lindsay Lecour explained that subsidized senior housing is for those whose income is below 60% of the median income in their area. Projects developed nationwide by her firm, Atlantic Pacific Companies (APC), are built with multipurpose rooms that can be adapted to meet a particular community’s desired amenities, programs, and activities. These vary by region and population. APC partners with non-profits like Meals on Wheels, music therapy programs, and other program providers to supply additional services for residents. Silvers added that Miami’s market is different from those of other regions because “people here are global, very individualistic. Products in South Florida have to be more diverse.”
Lecour discussed how federal low-income tax credit programs let developers pay market price for land and then apply to state, city, and county governments for subsidies and additional soft debt. The challenges facing developers of affordable housing are many, and competition for tax credits is stiff. “Government involvement means these loans have many strings attached. Programs have to meet complex requirements and be reevaluated annually. Government involvement makes loans more costly to administer because government policies change often. And with that insecurity comes a higher level of risk to lenders.” She noted that demand for subsidized housing constantly outpaces the supply.
Subsidized projects can get impact fee waivers and other concessions, but more solutions are needed. Already-strapped city and county coffers must fund many other social service needs in addition to housing. “Time is money, so permit expediting is another serious need because lenders dislike the long waits that permitting can take,” Lecour said. She said lenders are reluctant to finance medium-priced products; these are considered risky because there’s very little leeway for profitmaking by the developers. She mentioned that workforce and market rate projects (as well as senior housing) may benefit from density bonuses and have lower parking requirements. APC tries to locate its projects near existing mass transit to avoid building parking spaces which, in Miami, can cost $25,000 per space to build, she said.
Calderon asked panelists to describe how technology has affected the senior housing market, and how families can find out about available options. Silvers replied that a website called CarePredict.com provides a wealth of information for seniors and their family members. In terms of technology, she gave the example of a wrist monitor that tracks a person’s movements the way a Fitbit does. “It takes the wellness component to the next level; for example, increased inactivity may indicate a change in health, and the information that is transmitted can be used to improve a person’s quality of life.”
Regarding accommodations for seniors who are caring for grandchildren, Lecour said she has worked on intergenerational housing projects in Fort Lauderdale and Miami. “When you are building the units, it doesn’t cost that much more to add a second bedroom.” Community gardens and sometimes a YMCA or senior center nearby also benefit multigenerational families.
Asked whether financing is available for homeowners to modify their existing properties to age in place, the answer was no. Panelists said the Florida Housing Finance Corp. has been retrofitting residences for seniors in multifamily buildings, but not in private homes.
A new federal program similar to a 1031 exchange (IRS guidelines are still being worked) could be an incentive for the construction of work-force housing. According to an official statement, “Individual and corporate taxpayers in Florida and elsewhere in the US may have the choice of investing their 2018-2025 capital gains in ‘Qualified Opportunity Funds’ rather than paying income taxes currently on such gains.” Panelists cautioned that the ten-year time frame for closings in these “opportunity zones” may be too narrow to capture the proposed investment benefits, but they are aware of the program.