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Retirement
centers thriving
By
Angela Gonzales Phoenix Business Journal, June 11, 2003An estimated
quarter-billion dollars worth of construction and renovation is in various
stages at Arizona's continuing-care retirement communities. Also known as CCRCs,
these highly specialized communities have dual licenses from the Arizona
Department of Health Services and the Arizona Department of Insurance to
offer continuing care to the elderly. Typically these communities offer
three levels of care, including independent living, assisted living and
skilled nursing care. Contruction plans
include two new CCRCs, one in Litchfield Park and the other in Tucson. The
Plaza Cos. is building a $90 million CCRC in Tucson in conjunction with
Mather LifeWays, a nonprofit organization based in Evanston, Ill. La Loma Village in
Litchfield Park is being developed by Roskamp/Sun Health Management
Services. Financed by $30 million in tax-exempt bonds, La Loma will
consist of a 120-unit independent-living complex for seniors who do not
need any type of health care services. It also will include a 96-bed
health care center. Roskamp/Sun Health
also manages Grandview Terrace Retirement Community, another CCRC in Sun
City West. That complex recently undertook $7 million in expansion work,
said Chief Operating Officer Gail Chase. This will be The
Plaza Cos.' third CCRC in Arizona, said Sharon Harper, president and chief
executive of the Peoria-based developer. In 1999, Plaza teamed with Hyatt
to develop a similar retirement community in Scottsdale. Plaza also
operates Freedom Plaza in Peoria. The new 40-acre
project in Tucson, called Splendido at Rancho Vistoso, will have 240
independent units and 60 health care beds. Just like La Loma it will
provide various levels of health services. Barriers to market entry
Although there are
many retirement communities in Arizona that offer campuses with various
levels of health care, there only are nine CCRCs regulated by the
insurance department. Harper said there
are many barriers to entering this particular market, one being that
financing and insurance regulations create a huge lead time before
developers see the project completed. "A lot of
developers aren't interested in large projects that really have a
long-term vision," Harper said. "That does make it more
difficult for many groups in the senior industry to enter that market, as
compared to building a freestanding assisted living project on four
acres." Agreeing is Darrell
Jensen, executive director of Friendship Village, a 25-year-old CCRC in
Tempe. "It's a long
development process because of meeting the requirements of the Department
of Insurance," Jensen said. "It requires a lot of capital. It's
kind of a long-term project. They don't become successful overnight. Many
developers are looking for the ability to develop something, get it up to
occupancy, sell it, and these types of projects don't work well for that
approach." More projects on horizon Other projects in
the works include:
Phase two will
include a 245,624-square-foot expansion of residential living space
consisting of a five-story apartment building containing 84 units and 24
new apartments in the assisted-living building.
The 15-year-old
facility is 100 percent occupied and has a waiting list, said Bud Hart,
chief executive and executive director of Westminster Village. The 16-acre campus
is land-locked, he said. But the board has hired an architectural
consulting firm, Perkins Eastman, to assess the campus' future. Like many of the
older CCRC campuses, Westminster Village only provides two levels of care:
skilled nursing and independent living. For the interim level of care,
assisted living, Westminster Village has a licensed home health agency on
campus to serve residents in independent living apartments until they need
to move to the next level. Hart said the board
and consulting firm are trying to determine if a separate assisted-living
facility should be added or Westmister should stay with the status quo. "Both are
legitimate service models," he said. "The question becomes what
does the market want and how does that work financially."
The nonprofit
retirement community is 100 percent occupied with a five-year waiting
list, said Kendra Eberhart, chief executive of Royal Oaks. Because there are
only nine existing CCRCs spread out throughout the Valley, they don't
really consider each other competition, and the nonprofit facilities work
together to share best practices, Eberhart said. "When we went
to build our assisted living, we took buses of our residents to visit
Darrell and his staff at Friendship Village," Eberhart said. "We
were interested in seeing how you add assisted living to a life care
campus that's already in existence and make it work. In a couple of weeks,
folks from Westminster will come to us."
Finding a niche Other retirement
campuses in the Valley that do not have the insurance department license
also are expanding, including $22.5 million in projects by Christian Care
Cos., which is in escrow to purchase a facility in Mesa. "We have a
rental CCRC," said John Norris, chief executive of Christian Care
Cos. "We have the continuum of care, but there are no entrance fees
associated with it. We're a de facto CCRC." Norris said his
campuses serve a lower-income niche, those who can't afford to pay a
$150,000 life-care policy to receive free or discounted health services
for the rest of their lives. "We have offered the rental variety so
that it's basically pay as you go," he said. Garry Davis,
president of Davis Appraisal Services Inc. in Scottsdale, said the CCRC
market was expected to be a major player in the early 1990s. But those
expectations never panned out because the cost of developing these types
of projects is so high. Still, Davis expects
DOI-regulated CCRCs to continue to be developed over the next 20 years as
a result of the increasing senior population. "These things are selling," Davis said. "There is a market for them." Copyright
© 2002 Global Action on Aging |
