Affordable and Assisted with a Wow Factor
By Mark Olshaker
7 min read
Wallick Communities builds the Ashford as a pilot
“Given the need for more Affordable Assisted Living, Wallick Communities decided to bring its 50 years of affordable housing expertise together with its 30 years of assisted living experience to create The Ashford: our Affordable Assisted Living community.”
This is how Sharon Shaffer, senior vice president for senior living development of the Columbus, OH-based developer, described its bold model program combining affordable and assisted living at NH&RA’s 2017 Summer Institute in Quebec City in July. Shaffer defines assisted living as a residential setting with 24-hour healthcare available.
The idea for combining affordable and assisted living started for Wallick with the reality that the average monthly cost of assisted living in Ohio is $4,000. “Market-rate assisted living is really about homeowners with equity,” Shaffer says. A 65-year-old homeowner in the state has, on average, enough equity to pay for assisted living for about six and a half years. A renter of the same age, only has enough disposable savings for about two months. So, the question became: Could anything be done to help alleviate this situation?
“One option for seniors with limited income and assets is the Ohio Medicaid Waiver program,” says Shaffer, “which provides up to $70 per day for assisted living and $175 per day for skilled nursing. To date, there has been a limited number of assisted living beds available, so seniors are left only with the option of a skilled nursing home bed if they need care but can’t afford it. From a taxpayer perspective, this is costlier and places the seniors in a more restricted living environment than they might otherwise need.” This goes along with the national trend to offer seniors, particularly those with various health needs or medical requirements, as much independence, dignity and personal agency as possible.
The Wallick board and executives wanted to test an approach to the problem, and the idea came before the specific location or the building. “We were looking for a site or acquisition to develop as a test case. We thought, if anyone is going to figure this out (providing quality assisted living at an affordable rate), we will. Though Wallick was open to various possibilities, Shaffer says she and her colleagues “thought a hotel building would have the right ‘bones’ for what we wanted to do.”
They eventually settled on a 150-room Ramada Inn on East Broad Street in Whitehall, OH, not far from Wallick’s corporate headquarters. It had originally been a Holiday Inn, built to be the closest hotel to the Port Columbus International Airport, renamed John Glenn Columbus International Airport in 2016. Sometime after the hotel’s construction, the airport began allowing hotels to be built on its property, but the Ramada was still operating as a hotel when Wallick acquired it in January 2015.
“We reached out and found three charities that wanted all the furniture, silverware and serving equipment, and all the interior furnishings,” says Shaffer.
Conversion from hotel to residential building took about 18 months, and the Before and After comparison photos are stunning. “We put out an RFP stating, ‘Here’s our building. What can we do with it?’”
The winning proposal came from Robert Shepherd, an architect with the innovative Kontogiannis & Associates firm of Columbus. “We wanted something not so institutional looking,” Shaffer explains. “Kontogiannis transformed the flat roof and mixed up the rooflines so it looked more like an English manor than an airport motel. They enclosed some of the balconies as interior space and planted lawns in front.” The Ashford’s final appearance is anything but institutional.
The 150 rooms of the hotel became 131 studio and one-bedroom assisted living units, two-thirds of which were designed for certification for the state’s Medicaid waiver reimbursement rate. Also, fulfilling a state mandate, the waiver units are spread throughout the building rather than grouped together. The 87 studio waiver apartments currently rent for $2,788 per month, a substantial discount over the state average. By comparison, the 12 private-pay studios in the building rent for $3,186 per month – still a savings – and the 32 one-bedroom private-pay units go for $3,586. It should be noted that some of the private- pay residences are in a spend-down mode, whereby residents pay the full tariff until they have spent down their assets and then qualify for a Medicaid subsidy.
The Ashford community completed construction in September 2016 and by early 2018 a stabilized occupancy of 93 percent is expected. Given the financing stack needed to complete most affordable housing projects, all the more so with the added assisted component, the logical course would be to apply for Low Income Housing Tax Credits (LIHTCs) to combine with Medicaid Waivers. But with Ashford, Wallick wanted to prove that the affordable-assisted concept worked on its own, so in this instance, the company opted to forego LIHTCs. (See Sources and Uses Sidebar.)
“We did it with our own equity and took out a mortgage with Huntington Bank,” Shaffer relates. “We partnered with the Ohio Housing Finance Agency (OHFA), which was willing to take a subordinate position for a second mortgage. Since this was to be a pilot program, one of the reasons for doing it this way was to allow OHFA to get experience with this type of transaction. There is plenty of work to be done, so we were trying to say, ‘Here are some tools.’” As a result, OHFA is now accepting applications for affordable assisted projects.
With The Ashford successfully up and running, Wallick is working on a pilot program in Ohio that would employ four percent LIHTCs as part of the financing package. The company has acquired another existing residential facility in Cincinnati. “We’re pushing the envelope in terms of what is the best resident experience. I’ve not see others using pure equity for this kind of project without having the tax credit compliance overlay, but in 2018 or 2019, we’ll have enough experience to be able to add that, so we’ll be incorporating tax credits into the model.”
One component of the model is to evaluate all capital and operating costs and determine if there are better alternatives. “For example,” says Shaffer, “we considered a movie theater at the Ashford, as many assisted living facilities have. But we thought it would be better to have more flexible space rather than large rooms dedicated to a single purpose. Instead of a theater, we chose to create a better dining experience for residents.”
While Wallick would like The Ashford and subsequent affordable-assisted residences to be models of what can be done in the current business and regulatory environment, it must be remembered that each state has its own Medicaid program specifics, priorities and funding levels and each state has its own qualifications for LIHTC allocations. Therefore, what works in one state might be impractical in another and all affordable-assisted strategies must keep in mind the realities in that state, and often in the community. However, it is also true that the same general rule of thumb applies as for straight affordable housing projects: the endeavor stands a much greater chance of success if local authorities and stakeholders are supportive, or, as Wallick has done, getting the state housing finance agency directly involved.
The company is justly proud of the way The Ashford has helped revitalize the eastern entrance to Columbus and become a big hit with residents. “It’s beautiful. Everything is new,” one 77-year-old resident told This Week Community News of Columbus. “It’s convenient to everything.”
“There’s a wow factor when people walk in,” Shaffer observes. “It is a beautiful building and looks like any other good market-rate assisted living residence. We love showing it.”
Story Contact:
Sharon Shaffer, Wallick Communities
Senior Vice President for Senior Living Development
sshaffer@wallick.com
Sources and Uses Sidebar
The Ashford
Financial Sources
Huntington Bank………………………………………………. $13,300,000
Ohio Housing Finance Agency…………………………….. $ 2,700,000
Equity……………………………………………………………… $ 1,700,000
Total:………………………………………………………………. $17,700,000
USES
Acquisition of Ramada Inn………………………………….. $ 2,100,000
Construction and Renovations……………………………. $10,000,000
Other Soft Costs and Reserves…………………………….. $ 5,600,000
Total:………………………………………………………………. $17,700,000
