FINANCING. STRATEGIES FOR THE CREATION OF AFFORDABLE
CONGREGATE LIFE CARE FACILITIES
A COMPARATIVE CASE STUDY
by
Douglas H. Cole
Master of Architecture
The University of California, Berkeley
1984
Bachelor of Science
California State University, Los Angeles
1981
SUBMITTED TO THE DEPARTMENT OF ARCHITECTURE
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
OF THE DEGREE
MASTER OF SCIENCE IN REAL ESTATE DEVELOPMENT
at the
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
September, 1987
Douglas H. Cole
The Author hereby grants to M.I.T.
permission to reproduce and distribute copies
of this thesis document in whole or in part.
Signature of the Author
Douglas H. Cole
Department of Architecture
July 31, 1987
Certified by_________
___
Michael Wheeler
Visiting Professor of Urban Studies and Planning
Thesis Supervisor
Accepted by
Michael Wheeler
Chairman
Development
Estate
Real
Interdepartmental Degree Program in
Rotch
.& '.
FINANCING STRATEGIES FOR THE CREATION OF AFFORDABLE
CONGREGATE LIFE CARE FACILITIES:
A COMPARATIVE CASE STUDY
by
DOUGLAS H. COLE
Submitted to the Department of Architecture
in partial fulfillment of the requirements
of the degree
Master of Science in Real Estate Development
ABSTRACT
This thesis examines the need to build more affordable
quality housing for the elderly by reviewing the demographic,
social and economic characteristics of a growing elderly
market and establishing a position for proprietary developers
to assist in providing this product. The thesis focuses on
in the
in which
public/private participation
methods
development of congregate housing and the provision for
services have been implemented through policies, programs and
funding at the federal, state and local levels.
Given the needs of the elderly, and the capabilities of
government, the central question is: Can private proprietary
developers produce affordable congregate housing and services
which meet the needs of low to moderate income elderly and
obtain a reasonable operating income and cash flow for these
developments?
provide some insight into this
In an attempt to
question, the final part of the thesis analyzes the concepts
and feasibility of two proposals for creating affordable
congregate life care facilities.
Thesis Supervisor: Michael Wheeler
Title: Visiting Professor of Urban Studies and Planning
2
ACKNOWLEDGMENTS
In researching and writing
this thesis, I became
indebted to many people.
Chief among them were Barbara
Ryther and Yina Moore of the Massachusetts Housing Finance
Agency, Mark Williams, James Carey, Bridgette Flannigan, and
Professor Michael Wheeler.
For their assistance
in providing the development
proposals and directing my research, I would like to thank
Mark Williams of the Haverhill Project, James Carey of the
Ipswich
Project and
Bridgette
Flannigan of
Building
Diagnostics.
In researching this thesis, I relied upon the assistance
of Barbara Ryther of Research and Program Development at the
Massachusetts Housing Finance Agency, and the libraries of
the Executive Office of Communities and Development, the
Executive Office of Elder Affairs, the John F. Kennedy School
of Government, Rotch Library at the Massachusetts Institute
of Technology, and the Public Libraries in the City of
Haverhill and the Town of Ipswich.
I am especially indebted to Micheal Wheeler, my thesis
advisor and Yina Moore, Development Officer at MHFA who
served as my reader.
Their aid and commitment provided
encouragement in the completion of my thesis.
Douglas H. Cole
2A
TABLE OF CONTENTS
I.
INTRODUCTION.........................................
A.
LIFESTYLES: UNDERSTANDING THE ELDERLY
II. OVERVIEW.............................................
A.
B.
C.
7
DEMOGRAPHIC AND SOCIAL CHARACTERISTICS
HOUSEHOLD AND ECONOMIC STATUS
THE AFFORDABILITY GAP
III. POLITICAL RESPONSE TO RETIREMENT AND
HOUSING ISSUES......................................
A.
5
15
LAWS AND REGULATIONS
B. FUNDING: EXPENDITURES FOR THE ELDERLY
C.
ELDERLY HOUSING PROGRAMS
IV. THE NEED FOR CONGREGATE LIFE CARE FACILITIES........
A.
B.
C.
V.
THE INTERDEPENDENCE FACTOR
THE COST ASSUMPTIONS
THE RENTAL STRUCTURE
PUBLIC SECTOR/NON-PROFIT INVOLVEMENT................
A.
19
PARTICIPANTS AND THEIR ROLES
1. PUBLIC SECTOR PARTICIPANTS
2. NON-PROFIT PARTICIPANTS
3
24
VI. DEVELOPMENT PROPOSAL ANALYSIS:
HAVERHILL AND IPSWICH...............................
A.
B.
C.
D.
29
NARRATIVE OF PROPOSED CONCEPTS
1. BACKGROUND
2. WHO THE PLAYERS ARE
COMMUNITY PROFILE
1. DEMOGRAPHICS
2. LOCAL HOUSING STATUS
3. COMMUNITY SERVICES AND SERVICE DELIVERY
CONSTRAINTS AND OPPORTUNITIES
1. ZONING REGULATIONS AND APPROVALS
2. SITE SELECTION AND DESIGN ISSUES
3. MARKET ACCEPTANCE
4. COMMUNITY SUPPORT
FINANCIAL STURCTURE
1. PROJECT RISKS
2. INCOME POTENTIAL AND EXPENSES
3. DEVELOPMENT COSTS
4. FINANCING
75
VII. CONCLUSIONS................
VIII. APPENDIX
...........................................
SUMMARIES AND TABLES
NOTES AND REFERENCES
4
78
I.
A.
As
INTRODUCTION
LIFESTYLES:
being the provider to
aspect of the older
affects many
life styles
older, their
people grow
gradual shift from
UNDERSTANDING THE ELDERLY
The
change.
being provided for
person's life.
Retirement
Dramatic
results in a smaller and, frequently, fixed income.
personal and social adaptations have to be made when children
grow
move away
up and
naturally
or when
reduces physical
a spouse
And
dies.
and mobility,
strength
aging
forcing
older people to be more dependent on others.
life
housing requirements
changes affect
These
Housing
style.
needs of older
specially designed
productive lives.
including
design
the
of
the
site
to
local
A broad
the
organization of the buildings on
of
to respond
people permits them to continue
independent and
as well
as
to the
to lead safe
range of issues,
individual
units,
the
the site, and the proximity
amenities
transportation, must be addressed if
such
as
shopping
and
the quality of an older
person's life is to be enhanced.
Developing
elderly
housing
has
social
and
economic
benefits both for the older citizens and for the community as
a whole.
When
older people are
5
able to maintain
life long
friendships and active membership in local organizations, the
resulting
continuity
and to
psychological well-being
the community
are
more
their
the social
physical
their
current
elderly
setting,
housing
for the
continue
to live
independently and
less appropriate nursing home care.
6
needs in
allows
and
cohesiveness of
By providing living
around them.
suitable to
to
contributes
units that
a
familiar
older people
postpones more
to
costly,
II. OVERVIEW
A.
DEMOGRAPHICS AND SOCIAL CHARACTERISTICS
The elderly
population in the
of the total population.
numbers and as a percentage
beginning of
the century, one
U.S. were over 65.
by 2050, one
last two
U.S. is growing
in twenty-five people
In 1984, one
At the
in the
in nine was at least 65 and
in five will fall into this
decades, the 65
both in
age group.
and over population
twice as fast as the under 65 population.
In the
has increased
While in 1980 only
40 percent of the elderly were over the age of 75, 50 percent
are expected to be in the 75+ group by the year 2000.
been estimated that, by the time
the last of the baby boomer
population reaches retirement age,
from the 1980 figure
than doubled
million
by
the
year
2050.
It has
See
this group will have more
of 26 million to
Table
2A-1,
over 60
Actual
and
Projected Growth of the Elderly, in Appendix.
The
U.S.
Census,
and various
economic
in compiling
other
has
elderly population
percentage
decades
of the
total
and projected
information
become
and over.
an increasingly
and
As
larger
the past
several
U.S. government
and the
population over
future, the
social,
on population
the elderly as 65
households, has categorized
the
demographic,
retirement industry has found the need to further segment the
7
elderly market into 65-74; 75-84; 85 and older as the elderly
populations needs have changed.
According to
Witter
Reynolds
the Corporate
Inc.
Finance Department
(DWR)
which
of Dean
specializes
in
the
development of and execution of new financial instruments for
the health care industry -
life after age 65 falls into three
stages: the "young elderly" (between
the "middle elderly"
(75 to 84)
the ages of 65 and 74);
and the "old elderly"
(85 and
older).
Others, in the retirement industry, have categorized the
"over
the 65
market"
into three
similar, respective
related" sub-markets: The "Go-Go"group
"age
of retired people who
are fully self
sufficient; the "Slow-Go" group
for themselves
with some
assistance; and the
who can care
"No-Go" group
who require continuous nursing care.2
The
young
they
retirement,
independence.
emphasis on
elderly
The
in
their
enjoy
good
are
typically
housing needs
of
this
the availability of recreation
early
years
health
and
group, with
of
full
an
and other social
functions, have been targeted by the real estate industry for
some time.
Housing developments in this group have typically
served the upper income
elderly consumer market whereby high
8
entrance or endowment fees as
helped
to
finance
and
well as high monthly fees have
service
the
operations
of
these
facilities.
The
old
serious
elderly
illness or
professional care.
tend
infirmity,
Too here,
to address the housing needs
nursing homes.
by the
to be
confronted
and require
with
either
round-the-clock
the industry has and continues
of this group by producing more
Providers in this group have been represented
private sector,
as well as,
both public
sector and
non-profit involvement.
Only
within
identified the
potential
the
past
few
second sub market,
opportunity.
The
years,
has
the
industry
the middle elderly,
middle elderly
go
as a
through
a
period of life where the eventual death of a spouse occurs, a
health scare,
to re-evaluate
they
or fears about personal
security, causes them
their living environment.
can usually
continue living
assists them by preparing
At
this juncture,
independently if
someone
their meals, cleaning their homes,
and reminding them to take their medications.
By
larger
far, the
middle and
percentage of
old elders
the elderly
2000 the younger elderly will
(75+) represent
population.
By
a
the year
have increased by more than by
9
10 percent whereas, the middle
and old elderly combined will
increase by more than 43 percent over the next 13 years.
The
significance of these figures and projections is that many of
the middle and old elderly are alone and will be forced to go
into nursing homes because they
homes.
Many of
them are
no longer can maintain their
frightened to
be alone
and need
security and companionship.
B. HOUSEHOLD AND ECONOMIC STATUS
As
shown in
represented
Table
11.3 percent
2B-1, the
of the
elderly,
65 and
total population
older,
in 1980.
While total population is important, the real estate industry
is generally more concerned with the number of households and
the composition of those
typically requires
the
number of
demand.
households.
a separate
Because each household
housing unit, an
households will
result in
increase in
increased housing
Of the 11.3 percent elderly, 63.1 percent were Heads
of Households.
See Table 2B-1,
Age Distribution of the U.S.
Population, 1980, in Appendix.
Of the 63.1, percent 26.7 percent lived in housing units
which were renter occupied, and 73.3 percent lived in housing
units which were owner occupied.
in single family homes,
a "house poor", yet
The 73.3 percent that lived
and typically lived alone, represent
"equity rich" market and
10
they have been
targeted
for much
Table 2B-2,
of
the rental
Owner and Renter
retirement housing.
Housing Units in the
See
U.S.
By
Age of the Householder, in Appendix.
While
the
total
population
represent a smaller percentage
represent
a
of elderly
65
and
over
of the total population; they
higher percentage
of
the
population who
are
household heads, peaking at 64 percent for 65 to 74 year olds
and
declining
percent.
somewhat
See Table
for
2B-1.
elders 75
The
increases because of deaths and
number
of
reverses
one
for
adult
elders
institutional care
percent of
and
or reside
over
to
61.9
household heads
divorces result in a growing
households
75
and
over
over
time.
because
with children or
This
many
trend
require
other family
members.
The elderly rely heavily on Social Security benefits and
asset income.
Between 1968 and
elderly families
percent
to
1983 the share of income for
provided by Social Security
34.3 percent.
During
this
grew from 22.9
period, the
share
provided by asset income increased from 14.6 to 20.9 percent.
At the same time the
48.2 to
28 percent.
share contributed by earnings fell from
See Table 2B-3,
Household
65 and
income is
unevenly divided:
Older as
Sources of
a Percentage
one third
11
Income of
of Income.
of the
-Asset
elderly have
none and
of the remainder,
the lower income group
derive a
much smaller proportion of their income from this source than
the more
80
affluent group.
percent of
the
In 1982,
income of
$5,000 per year, but only
of
$20,000
or more.
substantially less
non cash
Social Security provided
persons
receiving less
19 percent for people with incomes
While
older
persons generally
cash income than those
factors favor
than
the elderly: tax
have
under 65, several
treatment, reduced
family size, paid up mortgages,
and in kind benefits such as
Medicare, Medicaid, group health
insurance, and food stamps.
One fourth of the elderly
paying
their expenses
living.
Among
accounts,
the
have money left for luxuries after
for a
assets
on
of
personal property,
estate equity, and insurance
is
comfortable level
the
increase
substantial portion
incentives to
and
the
elderly
stocks,
home
policies.
will
in
are
savings
and other
real
Income from pensions
the
due to the legislation
invest in IRA, Keough,
of everyday
future
provide
a
providing strong
and other tax-deferred
profit sharing plans.
Persons
who are
lower cash incomes
age groups.
85 and
85 years
or older
than those in the
In 1983, the
over ($11,988)
have significantly
65 to 74 and
75 to 84
median cash income of couples aged
was less than
three quarters
median cash income of couples aged 65 to 74 ($17,798).
12
of the
Women
over 65 account for over
half of the elderly population, but
account for over three quarters of the poor.
C.
THE AFFORDABILITY GAP:
While a number of housing
product
and services
being
result of the needs and
of
the "intra-market"
options exist in terms of the
marketed to
the
elderly as
a
demands of this consumer group, much
segmentation is
attributable to
the
issue of affordability.
There has been controversy over
affordable.
Affordability
relationship
of an
median
area's
house prices.
compares median
relationships
Or
in
the meaning of the term
terms
housing,
household median
in terms
of
rent to median income
are then
of
gauged
by
is
income to
the rental
per household.
a
its
market,
These
lending institutions
or
government and tested against industry and program standards.
Private industry has demonstrated an increasing interest
in the
care
"elderly market", particularly
and retirement
focused primarily
and shows
housing.
This
in the areas
interest however,
on upper income, market
every indication of continuing
involvement.
13
of life
has
rate developments
and expanding that
At the
local housing
income
need
programs.
spectrum, state
agencies and
authorities have been addressing
the very low
other end
through
of the
of the housing
Most
state
housing
options have relied
on past
federal
various
and
federal programs such as Section 8 subsidies, 202, etc.
There
however, some
is,
for benefits or
the market place.
the "edges"
people have either too
public programs where
be eligible
at
inequity
of
much income to
them in
too little to purchase
Between the upper and lower end markets, a
growing and unmet need for affordable housing options for the
elderly
still
providing
exists.
The
affordable
affordability
of rents,
difficulties
which
in
housing
fall
in
areas:
1.
given
high
development costs;
2.
affordability of services; and
three
exist
3. underwriting projects with
low income.
Perhaps through public/private participation, mechanisms
such
as
subsidies
providers,
tax-exempt
and
the
bond
financing,
collaboration
affordable elderly
of
housing
tax-credits,
housing
can
and
other
service
be targeted
"mixed-income" levels that assure economic feasibility.
14
to
III. POLITICAL RESPONSE TO RETIREMENT AND HOUSING ISSUES
A.
LAWS AND REGULATIONS
The Commonwealth of Massachusetts recognizes three types
of retirement facilities
the
elderly:
Nursing
distinction
Continuing
1)
Homes
which span a continuum
and
between
3)
Care
Congregate
the
three
between dependent, semi-dependent
vary
with
regard
endowments and
to
Retirement
nursing
Care
types
of care for
Centers;
2)
Facilities.
The
facilities
fall
of
and independent living and
and
fees, residential vs.
rehabilitative
care,
institutional quality,
amenities, services, and shared living.
The amount of
regulation imposed on a
facility in most
states depends on the degree of separation of the health care
insurance component from the
Unlike
congregate
housing
continuing care communities
and monthly
which
fees.
covers
residency
the
and
is
housing and services component.
facilities
nursing
homes,
charge substantial entrance fees
The entrance
residents
similar
and
fee goes into
health
to an
care
an endowment
needs
insurance
fee.
while
in
Several
bankruptcies and bond defaults have occurred in the life care
field
due
management
to
insufficient
with
entrance fees
regard
to heirs
project
to the
of a
financing
repayment
requirements
deceased relative;
15
and
poor
of
and longer
than expected resident life
faced with
spans.
the potential loss
Many residents have been
of their life savings.
As a
result, many financial institutions involved in the life care
industry, including
In
response, a
York,
and
insurance companies have
number of
Florida
states including
have
extensive
laws
gotten burned.
California, New
and
restrictions
pertaining to congregate living, nursing homes and continuing
care facilities for the
in
Florida
elderly.
subject life
care
Continuing care provisions
facilities
to a
number
has
laws
of
administrative and financing requirements.
Though
the
state
regulations which
of
Massachusetts
pertain to the housing
and
of elderly persons
of low-income, long term and rehabilitative care, and nursing
facilities as well as laws
there
seem
congregate
formalize
to
be
no
on age discrimination in housing,
current
housing directly.
by
contract
the
regulations
which
Nevertheless,
transfer of
address
a decision
residents
to
from
a
congregate facility to a nursing home or other health related
facility
could result
in
a change
in classification
from
congregate care to a continuing care retirement community per
H.B.
108.
Similarly, should the
institutional provider,
sponsor be defined
the facility
rest home under Massachusetts law.3
16
would be
as an
classified a
B.
FUNDING: EXPENDITURES FOR THE ELDERLY
In 1985, the federal
27.5
percent
benefiting
of
the
the
expenditures
government spent $236.5 billion or
total
elderly.
were
A
large
attributable
represented 55 percent of the
such
federal
as medicaid,
budget
on
percentage
to
social
expenses
of
these
security
which
total outlays and health costs
medicare and
other federal
health costs
represented 26.5 percent, of total outlays.
While subsidized housing and section 202 elderly housing
loans
together, only
represented 3.8
outlays, the estimated increase for
102
percent
percent.
with
percent of
1985 over 1984 level was
subsidized housing
See Table
3B-1,
the total
Federal
increasing
by
117.8
Outlays Benefiting
the
Elderly, in Appendix.
As the average
age of the population
has increased not
only federal but personal "out-of-pocket" expenditures of the
elderly for health care have risen.
is presented in
1983,
it
on fixed
concern to them.
housing
cost tables as 100 in June
had risen
primarily
(223
contribute
The Consumer Price Index
to
298.4.
incomes,
Because many
price increases
The rises in medical
percent),
to their
and
1967 and by June
problems.
17
are of
are
great
costs (257 percent),
transportation
financial
elderly
(319
percent)
See Table
3B-2,
Consumer Price
Index and
Selected Items in
Average Annual Percent
The U.S.,
in
Change for
Appendix.
C. ELDERLY HOUSING PROGRAMS
With an increasing elderly population, the production of
affordable,
continue
quality
to
federal,
a
state
tax-exempt
rental,
and
and tax
low and
concern.
local
direct
moderate
loans,
of programs
Community
programs
Corporations,
and resources
developers
in this
impact of
which assist
goal.
With
tax reform, the
will
response,
the
mortgage
insurance,
the production
for the
of
elderly.
and resources
that
moderate- and mixed-income
for the Public Housing
Development
and
sponsored
income housing
a number
has
have
assist in
the production of low-
rental housing
In
governments
credits to
there are
exist for
rental housing
national
financing,
subsidies
Though
be,
elderly
Authorities and Local
there
are
few
such
proprietary for-profit
federal cut
state's role in
backs and
the
addressing local
housing concerns has increased.
A summary of rental housing
program
as
activities which
proprietary
for-profit
serve
incentives to
development
interests
increase
in
the
production of affordable elderly rental housing are described
in
the
Appendix.
administered
by
These
agencies of
programs
the
authorities.
18
state
and
resources
and local
are
housing
IV. THE NEED FOR CONGREGATE HOUSING
A.
THE INTERDEPENDENCE FACTOR
Congregate housing
is defined as:
Assisted independent
group living made possible by a residential environment which
incorporates shelter
and services needed by
the impaired or
socially deprived (but not ill) elderly to maintain or return
to a
semi-independent life style
and to avoid
premature or
unnecessary institutionalization as they grow older.
The
range
of
needs of
are varied
the elderly
physical,
emotional
mental and
and span
a wide
characteristics.
typically include people who
Residents of congregate housing
are: 4
*
physically "well" but do not wish to live alone;
*
physically "well"
but who "need
to feel needed"
by doing
for others;
*
physically
"well" but
in need
of the
kind of
emotional
support available by living with others;
*
physically
encouragement
lifestyle,
but
"capable"
in
gaining
such as
a
in
need
back a
person
of
assistance
relatively
who has
been
and
independent
living in
a
nursing home; and/or
*
physically "unwell" or handicapped and in need of formal or
informal support.
19
The
goal
alternative
of
congregate
housing
living arrangement
(other
apartment) that also provides a
maintaining
an
companionship
intent is
allowing
to provide
unnecessary
or
than a
lifestyle
offer
providing
services.
the elderly
Its
other than
institutionalization,
which will maintain and/or
an
conventional
by
for supportive
an option for
premature
to
setting which assists one in
independent
and
is
an
option
restore dignity, independence and
the exercise of options.
Congregate
service need.
provide
a
residents
Some use
service
residents.
By
in
have
the
support
managing and
competence.
residential
As
option
independent
and
different
no services at
all, in
they
of
fact, some
give
to
other
they need
on and, thus, reinforce their
such, congregate
to
levels
getting the services
for themselves, residents rely
own
very
fill
the
institutional
housing
gap
living
provides
between
a
totally
environments;
and
offsets the social isolation so often experienced by elders.
Of
the
available
congregate housing
production
providing
of
a
housing
provides the
affordable
basic
level
options
for
services
20
the
elderly,
greatest potential
housing
of
for
the
in
elderly
a
for the
while
supportive,
residential, non-institutional environment.
According to
the Dean
Witter Reynolds
earlier, as with nursing homes,
facilities greatly
development
quadrupling of
overall
the need for congregate care
outstrips the supply.
of congregate
Estimates
care facilities
today's number of
capital
requirement
study mentioned
for the
call for
a near
facilities by 1992
and an
for the
construction
of
new
facilities of nearly $15 billion by the year 2000.
B.
In addition
THE COST ASSUMPTION
to the
potential psychological
and social
benefits to the elderly, a recent study found that congregate
living is a
home
much more cost effective
care. 5
Obviously
the
alternative to nursing
overriding
advantage
of
congregating living units and services is economy.
The cost
conventional
of congregate housing compares
approaches.
In
1985,
favorably with
traditional,
state
financed one bedroom elderly units were being constructed for
$30,000 to
$40,000 a unit,
with some in the
$50,000 range.
Federal units exceeded this price by roughly $20,000, meaning
a price
tag
of
around
$70,000
congregate housing units were
a
unit.
By
contrast,
being constructed by the state
of Massachusetts for $15,000 to $30,000 per bedroom.
21
Much of
the savings
facilities, building
to shared
were attributed
fewer kitchens and baths.
in the overall costs of
There are four major components
congregate care:
1. Management
support
Costs:
paid
to
These
the
costs
include
congregate
the
salary
coordinators
by
and
the
Executive Office of Elder Affairs (EOEA).
2. Operating
Costs: The
operating
include primarily the maintenance
are funded in two ways.
to
the local
The
costs
of the
congregate
and utility costs, these
tenant pays 25% of his income
housing authority
as rent.
Any additional
expenses are paid to the housing authority by the Executive
Office of Communities and Development (EOCD).
3. Shelter Costs: Shelter costs include the funds paid for the
physical development
construction
and
of the congregate including
or
rehabilitation.
These
costs of
funds
are
financed through the sale of state bonds.
4. Service
certain
Costs: While
the previous
congregate sites,
costs are
service costs
specific to
are specific
to
certain individuals.
The funding for these services can come from various sources.
C. THE RENTAL STRUCTURE
The congregate rental
facility is operated as
22
a pay as
you go rental, thereby
fee,
or
maintenance
resident.
The
not requiring any endowment, entrance
responsibility
key services included
on
the
part
in the rent
of
the
include a
central dining facility with at least one meal per day served
(typically
lunch),
transportation, social
and health
of
monthly
retirement
fees
centers
A fee structure
consisting entirely
most common
which
forfeiting
charge
in
a
congregates.
hefty
control of assets with
and any
the
service,
programs, security,
invest his or
monthly rental
than
is
linen
and recreational
monitoring.
renting leaves the
renter can
housekeeping,
endowment
additional services
to the
fee,
the resident; the
her assets to generate
assets
Unlike
income for
desired, rather
developer.
As
such,
liquidity for the resident is high.
For the developer,
the project
In some
start up, operating risk
locations, given
levels of
Unlike
a rental structure has
the
the elderly,
endowment
an effect on
and financing options.
the political sensitivity
is the
fees
imposition of
used
to
finance
of rent
rent control.
and
operate
continuing care retirement communities (CCRC's), a rental fee
structure forces the developer to secure outside, third party
financing unless it uses its own equity for projects costs.
23
V.
A.
PUBLIC SECTOR/NON-PROFIT INVOLVEMENT
PARTICIPANTS: THEIR ROLES AND CONCERNS
1. PUBLIC SECTOR PARTICIPANTS
Massachusetts currently
housing units
for the
elderly at
and, by 1989, may fund as
involvement
services
in
the
has
the
Guidelines
made
for
successful
the
Planning
Department of
housing
through
and
level which have responsibilities
The Executive
Public sector
and
interagency
As described in
Management
Housing for Elders, the
include: The Executive Office
(EOCD);
different sites,
congregate
state and local levels.
State-Funded Congregate
the state
over 17
217 congregate
many as 1200 units.
production of
been
coodination at the
funds more than
of
agencies on
for the program
of Communities and Development
Office of
Elder Affairs
Public Welfare (DPW); and
(EOEA); The
other agencies such
as the Massachusetts Housing Finance Agency (MHFA).
EOCD is
concerned with the actual
project
location,
housing
project.
Section 40 requires
and
development and
Massachusetts
building and design,
management
General Law
EOCD to provide an
of
Chapter 121
the
B
operating subsidy to
housing authorities if required.
EOEA, is the major state agency for elderly programs, in
24
cooperation with the state aging network (e.g., Area Agencies
on
Aging, Home
Care
Corporations and
Councils on
Aging),
provides planning assistance and identify local resources for
the
devlopment
contracts
congregate
with local
delivery
public
of
of
agencies for
supportive services
congregate housing
applicable
housing
Home Care
Care Services
services.
EOEA
the coordination
to
the
facilities.
residents of
In accordance
Program regulations,
to elders living in
of the
the
with
EOEA funds
Home
public congregate housing
units as needed.
DPW is
of
committed to the identification
alternatives
assistance
service
in
Division
administration
and
may
addition,
Income
making and
for
is
also
to
responsible
receive
payments
for
and
of
the
stamps
needy
and
health services
Eligible
through
DPW.
supplements Supplemental
to
Welfare
provision
eligible tenants.
food
offers
alternative
Public
assistance for
Medicaid
Public Welfare
(SSI)
planning
congregate housing.
of financial
medical care
tenants
institutionalization,
policy
delivery
Medicaid
to
and development
residents
of
In
Security
congregate
housing.
MHFA,
while
a new
market, has financed over
player
in
the congregate
housing
63,000 mixed-income housing units.
25
MHFA
quasi-public
is a
interest, construction
which provides
finance agency
and permanent loan
financing through
their authority to sell tax-exempt and taxable bonds.
enhancements, such
as HUD
coinsurance programs,
to
both
requires
agency
private and
that
25
Credit
90 percent
year terms at fixed-rates are
mortgages, 30 and sometimes 40
available
low
non-profit
of
percent
sponsors.
the
units
The
provide
affordable housing to low and moderate income persons.
MHFA execute
agency's
that
Memorandums of
authority and
each
adequate
congregate
housing
and
DPW, and
coordination, EOCD, EOEA,
Through interagency
Understanding to
financial
housing
identify each
responsibility to
resident
an appropriate
is
provided
level
of
assure
with
supportive
services.
2.
The planning
housing
begins at
consist of
NON-PROFIT PARTICIPANTS
process for the development
the local
level.
the Area
Agency or
Aging; and
by
agencies, which
primarily non-profit organizations,
Local Housing Authority; the Area
or
Those
of congregate
Home Care
Visiting Nurse
Agency on Aging (AOA) and,
Corporation; the
local Home
Association; the local
other local agencies which
residents of
congregate housing.
26
include: The
Health
Council on
offer services needed
These agencies
enter
of Understanding, which identifies
into their own Memorandum
each agency's responsibilities and
commitment for funding or
service dilivery.
The AOA is responsible for the planning and coordination
of
The
services for
funding from
its
receives
agency
EOEA
to
areas.
meet
the
which evaluate
and State Plans
both the Area
objectives of
specified geographic
elders within
priority needs and sets implementation procedures.
Home Care Corporations
to
support
elders
in
non-profit organizations
the areas
Other
of case
supportive
provide those services necessary
a community
based
setting.
offer direct services to
management and information
services
are generally
These
elders in
and referral.
obtained
through
sub-contracts with existing community service agencies.
The
Council
on
Aging
Services
organization which provides services
quality of life
and older.
is
a
municipal
designed to improve the
for local residents who are 60
years of age
The Council offers a wide variety of services and
programs to local
residents and is funded
EOEA for planning, coordination,
services.
27
by grants through
and implementation of these
In
addition
philanthropic
to
these
organizations
active, and play
participants,
have
groups have
services.
successfully
many innovative housing projects.
have
access
to
importantly,
the
particular.
counseling
significant
trust
of
and
seed money
Churches and church
developed and
capital
but
people,
organizations
to
very
marketed
Many of these institutions
many
Philanthropic
traditionally
both developing congregate
a major role in
housing, and providing needed
sponsored
been
and
churches
develop
perhaps
the
more
elderly
have
in
provided
pilot projects
for
housing programs that benefit the elderly.
While
the public
have been successful in
and coordination
the need
in
sector
and non-profit
the production of congregate housing
of services,
more attention is
to increase investment of
joint participation
organizations
with
turning to
untapped private capital
the capabilities
of state
local goverment in improving housing for the elderly.
28
an
VI. DEVELOPMENT PROPOSAL ANALYSIS: HAVERHILL AND IPSWICH
A.
NARRATIVE OF PROPOSED CONCEPTS
1. BACKGROUND
HAVERHILL
The
proposed
site,
owned
by
a
small
liberal
arts
college, is located in the City of Haverhill, in the Bradford
residential section.
chartered by
by a
The college
the Commonwealth of Massachusetts
board of trustees.
slipping,
overwhelmed
enrollment.
president,
faculty
is a nonprofit institution
Under
Prior
by
involvement
to 1982 the school
money
the guidance
implementation
in
of
and governed
problems
and
new
planning
and
management
programs
changes,
and
had been
declining
of a
new
increased
enrollment
has
increased. 6
The college
has decided that their
could help solve long-term
financial problems by leasing and
generating some revenue from
proper, occupies
the college's land.
36.24 acres.
An additional
wooded land remains undeveloped of
leased for the development of
a period
of
99
years.
medium density
The campus
34.28 acres of
which 10-12 acres will be
a congregate care facility for
The site
improved and unimproved land: to
and
surplus real estate
single family
29
is
surrounded
by
both
the north and south are low
homes; to
the west
is a
wooded area
and to the
east are
the playing fields
of the
college.
proposed
The
project
construction
for
handicapped.
The units
shared and
the
consists
frail
will
kitchen, a dining
one bedroom units and 25 two
the
elderly;
25
low-moderate-income
contains
elderly
70,000
units
and
be designed
independent living.
include a
of 100
of
new
physically
to promote
The common
both
facilities will
and living room.
There
are 75
bedroom units to be marketed to
percent
of
individuals
square feet
the
units
and couples.
of
net
are
The
for
project
residential area,
73
percent of the gross floor area of the project.
IPSWICH
The proposed development site was operated as a hospital
serving
the
Ipswich community
since
1916.
In the
early
1970's a doctor's office building was added to the site.
Cable Hospital contains 39,000
In addition, Beverly
with
the exception
square feet of building area.
Hospital who has owned
of
the doctor's
the entire site
office
since 1982
constructing an outpatient treatment facility.
will offer
a full
the
of
Town
service outpatient treatment
Ipswich
Patients requiring
and
The
the
surrounding
admission to a hospital
30
is
This facility
program for
communities.
will be referred
to the main campus of the Beverly Hospital.
A private, for profit
proprietary developer, The Harbor
Development Corporation and
will form
the Beverly Hospital Corporation
a limited dividend partnership:
Associates.
The name
Gardens.
The
existing
building into
of the proposed project
partnership is
proposing to
approximately 17
development.
entire
building,
not
developed as
adult
day
Visiting
care center
uniquely
of
situated
facility which
for
will be
of
the
uses,
offices
(VNA).
of the
These
uses
via
the
treatment facility make
the
housing.
existing
would
would be utili zed
medical care
the outpatient
units of
residential
the
Association
availability
offices or
for
and
rehabilitate the
basement
commercial spaces and
Nurses
immediate
The
suitable
will be Cable
contain the commo n area for
The existing building would also
the
Cable Development
development
directed to a
of
a
be
as an
Bay
Area
and
the
doctor's
the site
congregate
frail elderly
and to
physically handicapped population.
The entire development is to contain 70 units consisting
of
40 one
bedroom units
percent of the units for
17 of these
an 30
two bedroom
the low-income.
units would be in the existing
31
units with
40
As stated earlier,
building and the
remaining 53 units would be in
a three story addition to the
rear of the existing structure.
B2. WHO THE PLAYERS ARE
There
have
development
been
a
entities
retirement housing.
number
which
of
share
As mentioned
"smaller"
interest
proprietary
in
developing
before, the development of
congregate care facilities involves two major components, the
real estate and the
an
undertaking
operational or service components.
typically
requires
the
formation
Such
of
a
partnership with organizations
or individuals experienced in
providing
older
relations.
services, needs
of
people, and
community
Insufficient experience and or financial strength
to access public and private financial markets without credit
support will not
but also
only have repercussions on
on the service
the real estate
component as well.
The successful
provision for congregate housing and services is in essence a
balancing act which relies on proper planning.
With
obtaining
and
the inherent
risks and
financial commitments,
Ipswich
each
have
organization/partnership.
apply
for tax-exempt
turn, will
difficulties involved
the projects
formed
Doing
a
in
limited
in
Haverhill
dividend
so
will qualify
them
bond financing
through MHFA
which in
enable them to obtain
32
to
construction and permanent
financing
at a
lower interest
conventional financing.
rate than
The two
available through
projects have the potential
to receive Chapter 707 rental subsidies through EOCD, as well
as
rental assistance
through
the SHARP
program and
HoDAG
grant participation administered and managed through MHFA and
the
Local Housing
Authority.
A
"limited dividend
status"
would also allow the partnership to apply for a comprehensive
zoning permit
under chapter 774 should
Haverhill or Ipswich
not be in compliance with stated requirements.
In the
hospital
development project
(Beverly
proposed site,
discount.
below
difference
will sell
Because
market
Hospital
value
the
as
between the
equity contribution
developer will
in Ipswich,
Corporation),
the land to
two amounts
in the form
owner
of
the partnership
discounted amount
determined
the for-profit
by
an
will be
is
at a
considerably
appraisal,
treated as
of a land write
contribute the remaining
the
down.
the
an
The
equity contribution
required in cash.
In Haverhill, Bradford College, a non-profit educational
institution without a direct interest in the development, has
set
a market
value
for
their land
developer for a period of 99
years.
to
be
leased to
At the end of that time
the property reverts to the institution in year 100.
33
the
the college makes up a large
The surplus real estate of
portion of its assets.
provide
a
steady
Stability of
Rents from the proposed project could
stream
the income
of
over an
college's
extended
image and
use
of
the
period of
concern
constraints on
land.
college.
use could
be an
time.
Because of
the
for managing
its assets,
the
retain the right to influence
This
the design
the
of rent-up and changes in the
college would probably want to
the
for
from the proposed
issue with regard to the risks
market
revenue
could
place
as well as
an
additional
the operation
of the
project for the developer.
Tax
rules
involvement
Rental
in
income
may
influence
the project
from
land
revenue, while income from
be
The
taxable.
objectives
and measure
implications.
income purposes
taxes as
college,
In most
the
to
college
the
leases
role of
is
to
limit
land
considered
its
lessor.
endowment
a joint-venture partnership would
consider
its
against certain
tax
estate development
for
therefore,
its objectives
states real
must
becomes subject to local
well, while non-profit education
are generally exempt. 7
34
and state property
academic campuses
There are
by the
distinct differences in the
land holders in
interests shared
the development of
these proposals.
Beverly Hospital will continue to operate a facility adjacent
to
the
site
as
an
potential
contract
residents
of
college
the
to
outpatient
provide
congregate
is detached
facility and has
emergency
from the
medical
facility.
clinic
services
By
operations of
an interest in the income
with
a
to
the
contrast
the
the congregate
potential of the
land, assuming its highest and best use.
B. COMMUNITY PROFILES
1. DEMOGRAPHICS
In 1980,
population figures
and of that number, 16 percent
for Haverhill
were 46,865
were 65 years and over.
This
percentage is three points higher than that of the county and
nine points
higher than the national
percentage.
Today the
city of Haverhill has one of the largest elder populations in
the
Commonwealth,
with
over
10,872
senior
citizens
representing 18 percent of Haverhill's population.
By comparison, there were 11,158 persons residing in the
town of
Ipswich in 1980,
In 1980, 12
age
a 3.8 percent increase
percent of the total population was
or older.
The elderly
as
35
a percentage
over 1970.
65 years of
of the
total
population in Ipswich
See
Table
4B1-1,
has increased to 20
Comparative
percent, to date.
Population
Characteristics:
Haverhill/Ipswich, in Appendix.
In 1985,
the Haverhill-Lawrence SMSA led
population
growth
figures.
Boston
with a
5.2
percent
increased
0.5
Salem-Glouster MSA which includes
percent.
See
Table
4B1-2,
Commonwealth Since 1980,
The City
incorporated
established
northeastern
occupies
in
per square
Changes
the
in
established in 1640
The
Town of
communities
Massachusetts in
33
northern
square
the 1980 Census,
mile in
and
Ipswich only increased 0.4
1870.
Both
approximately
According to
percent,
1980
The
in Appendix.
city in
1634.
increase over
Population
of Haverhill was
as a
the region in
total density of persons per
Ipswich was
are
located
Essex County;
miles
of
land
the total density
Haverhill was
1,308.
and was
By
in
each
area.
of persons
contrast, the
square mile in Ipswich was only
335.
The City of Haverhill
is adjacent to Methuen on
the
south,
West
Newbury
northeast, and the state of
straddles the Merrimack river and
the west, Groveland and Boxford on
on
the
New Hampshire to the north.
The
on
the
36
east,
Merrimac
shore town
of Ipswich
surrounded by
Boxford on the
is situated
off of
Topsfield, Hamilton,
Route lA
and Essex on
west, Rowley on the north, and
shoreline along the Atlantic Ocean
and is
the south,
64.4 miles of
on the east.
See Map, in
Appendix.
Haverhill
is
33
miles
Manchester, New Hamshire,
seven
to twelve
miles)
from
Boston,
31
and three townships
northwest of
miles
from
(approximately
Ipswich.
Ipswich
is
about 27 miles north of Boston.
Because of its proximity to Boston, Haverhill has become
a growing
technology
industries.
Because
center
of
with
a
diversity
its centralized
Interstates 93 and 95 and route
of
location
modern
between
495, the city has become the
focal point of development and growth in the Merimack Valley.
Haverhill, has been a
predominately blue-collar city, a
place where manufacturing flourished.
been quietly
shifting from a
The city however, has
blue collar to a
community, approaching a near 50-50 ratio.
white collar
Currently, nearly
one-fourth of the companies in Haverhill are in manufacturing
while 23
percent are in
the wholesale and retail
percent in services and 18 percent in government.
37
trade, 21
In comparison Ipswich, a primarily residential community
has been blessed with 65
a much
more
scenic
miles of coastline, making the town
and
touristed
wholesale and retail trade represent
industry divisions in Ipswich.
area.
As
a
result,
38 percent of all other
Manufacturing and government,
each make up 17 percent, and services make up 11 percent.
In general,
in
total employment in Haverhill
1985, increased
8.36 and
11.88 percent
and Ipswich,
over respective
1980 total employment figures of 16,253 and 2,524.
4B1-3,
Average
Annual
Employment:
See Table
Haverhill/Ipswich,
in
Appendix.
2.
Many
elderly residents
large homes and would
living
LOCAL HOUSING STATUS
spaces.
in
Haverhill
The number
of
no assisted living housing units
of Haverhill, the Town of Ipswich
provide
the
own
likely prefer smaller, more manageable
elderly
family homes in Haverhill number 7,865.
would
and Ipswich
type of
in private
single
Currently, there are
for the elderly in the City
or the Cape Ann area which
supportive
living
environment
envisioned as a result of the proposed developments.
Most
of
elderly consist
the
housing
developments
provided
of public housing complexes
38
for
the
and nursing and
convalescent
housing
1,090
homes.
complexes and
units
and
Housing Authority
Residents in
1,819
Haverhill
830
has a
total of
fourteen nursing
units
owns 296
homes which
respectively.
of these elderly
elderly housing
ten elderly
The
supply
Haverhill
housing units.
number 1,188 (12
percent) and
(8 percent) of the elderly reside in nursing homes.
The
Town
of
Ipswich
participated
Development Block Grant Program
it identified
a target
successfully
in
the
Community
in 1980.
Under this program
area for housing
rehabilitation and
implemented
a
multi-faceted
program
which
addressed the needs of low-income elderly and families in the
community.
The Ipswich
for over 350
The
units of state and
Authority
housing.
Housing Authority has responsibility
has
Ipswich
leased housing
200
units
is also
programs.
federally assisted housing.
of
active in
state-assisted
the state
The Authority
elderly
and federal
has a total
of 119
leased housing units, 30 of the units are under the Section 8
Program and 89 are under
operates
in
a similar
the State Chapter 707 Program which
fashion
to
the Federal
Section
8
Program.
Both Haverhill and Ipswich Housing Authorities currently
have
lengthy wait
persons.
With the
list
for their
existing
stock
39
elderly and
handicapped
of affordable
housing,
placement typically
takes from
1-1/2 to 2
years, sometimes
longer.
The 1980
census indicated that there
units in Ipswich, with a
were 1,271 rental
vacancy rate of 2.8 percent.
Based
upon a sample of 295 units, or 23 percent of the total rental
housing stock in
the community, the overall
currently .7 percent.
Haverhill also has a low vacancy rate.
This reflects the serious
within Haverhill
rental
condominium
overall shortage of rental housing
and Ipswich.
housing stock
conversion
vacancy rate is
Since 1980,
has been
has
added to
taken
virtually no new
the inventory
place.
Both
reducing the available rental housing stock.
housing
in
Haverhill
limited in number
housing
and
Ipswich
has
and expensive in price.
options needs
to be
provided.
and
actions
As such, rental
become
A
Both
relatively
wider range of
Haverhill and
Ipswich must add both market rate and subsidized rental units
to its housing stock to address the demand for rental housing
both within the community and the region.
The recent private revitalization
activity has also had
a severe impact on Haverhill and Ipswich.
reflection of
growth of
the robust Boston/Massachusetts
the regions economy
the ability of
This activity is a
economy.
has had an adverse
low income households to afford
40
The
effect on
the level of
rent increases in these communities.
Median
according
rents
to the
for
Haverhill
1980 census,
housing survey and from $214
to $525
have not
over a
kept pace
in a
from
$187,
recent rental
to $550 in Ipswich.
rents in Haverhill and Ipswich
respectively
increased
The median
increased 281 and 257 percent
seven year
period.
with the increases
Incomes,
in rent
however,
levels.
In
1980 the median family income for the Lawrence-Haverhill SMSA
was $21,103.
For Haverhill alone, this
By comparison, 1980 figure for
income
figures for
Ipswich was $23,428.
Haverhill and
$38,000 respectively.
figure was $18,890.
Ipswich were
For Ipswich,
the 1980
In 1987
$35,000 and
median income
was based upon the
non-metropolitan portion of Essex County.
However,
median income
the 1987
was based
upon the
Salem
Glouster MSA in which Ipswich was included after 1983.
Based
upon the
by 54
percent
above, incomes
while rent
Incomes in
in Haverhill
levels
have increased
have increased
Ipswich have increased
by 281
by 62 percent
percent.
while rent
levels in the town have increased by 257 percent.
The tremendous growth in the economy as evidenced by the
growth of annual construction activity has adversely effected
low
and moderate
1980 a family
income renters
in these
earning 50 percent of the
41
communities.
In
median income could
afford the median rent in the community.
With regard to the discussion of median rents and median
incomes
above, a
family earning
afford a rental of $236 a
in 1980.
median
$9,445 in
Haverhill could
month using a 30% income standard,
In 1987 however, a family earning 50 percent of the
income or
$17,500 could
afford a
rental of
$438 a
month which is substantially below the identified median rent
in
Haverhill.
$11,714 could
1987
Similarly,
in
Ipswich,
afford a rental of
however, a
family
a
family
$292 a month in
earning 50%
$19,000, could afford a rental of
of
earning
1980.
In
median income,
or
$475 a month which is also
substantially below the identified median rent in Ipswich.
Like
other
communities
Haverhill and the Town
revitalization
in
in
the region,
the
City
of
of Ipswich are communities undergoing
which
housing
opportunities
for
lower
income households are declining.
3. COMMUNITY SERVICES AND SERVICE DELIVERY
The
equally
service
as
component
important
as
of
a
congregate
the design
of
the
facility
is
facility
in
balancing the costs issues with residents' well being.
42
Congregate
residents
living
arrange for
forces services
obtrusive.
provides
the
the
resources
support they
on residents, nor makes
Services
to
need, but
neither
the services overly
are made available to
assist residents
in managing daily activities of independent living.
can
also
be provided
on
an
as
help
needed basis
Services
only,
thus
avoiding unwarranted dependency on supportive services.
In
determining what
utilize
in
the
understand
the
service to
community
nature
offer in-house
the developer
of
the
must
service
ways in which they may
the
integral
is
to
assess
resources,
limitations, and the
congregate
and or
creating
and
their
be optimized by
an
effective
congregate setting.
An
argument
utilizing
for
community
generally be
separating out
service
providers
are housekeeping,
transportation as needed.
is the
assists
is
more cost effective because
Those service supports which should
residents
some
services or support
residents
and
that
can
they
of larger volumes.
be made available to all
personal
The
operations
care, nutrition,
and
most important formal support
coordinator, a staff
in locating
the
services
member who
they need
to
maintain their life cycles and facilitates group interaction.
The
coordinator is
responsible
43
for how
well services
are
matched.
Whether or
management
not services
of these
operations but
these
services is
goes
of
beyond
merely
routine maintenance.
sensitive
to the
needs of
type of
not only
the
off site,
key in
terms of
Management for
typical
collecting
landlord/tenant
rents
and
conducting
Management requires specialists who are
special
social,
senior residents.
housing requires
services
on or
also in obtaining financing.
services
relationship
are utilized
necessary to
physical, and
emotional
In addition,
management of this
the ability to
coordinate special
meet
the
day to
day
needs of
the
residents such as meal service, transportation, housekeeping,
and security.
The Haverhill
and Ipswich projects will
elderly residents
supportive
living
mentioned above.
a day at noon.
or three
needs through
by
respond to the
the concept of
including
those
assisted or
formal
services
The Haverhill project will provide one meal
In Ipswich
times a day
service will be provided one, two
for the
residents who choose
such an
option.
The
city
community, as
of
Haverhill
a result,
is
a
very
residents of the
44
"service
rich"
Haverhill project
could rely on support services which already exist within the
In Ipswich the closest social day care program is
community.
about 60 minutes away, the closest adult day health center is
40
minutes
away.
recommends that
The
Commonwealth
an elder travel
for these services.
of
Massachusetts
no further than
30 minutes
As a result, the development of a social
day care or adult day health
care center and offices for the
Bay
Association
Area
components
Visiting
of the
the connection
the
Nurses
Ipswich facility.
of the
residents
could
from the
be
integral
Additionally, through
Ipswich project to
benefit
will
Beverly Hospital,
many
programs
the
hospital has put in place.
Both Haverhill and Ipswich have other services available
for their
residents through
other community
agencies.
The
Councils on Aging provide recreational and social activities.
Senior Home Care
homemaking,
Inc. serves as a case
respite, chore,
manager and provides
transportation and
other vital
services.
C. CONSTRAINTS AND OPPORTUNITIES
1. ZONING REGULATIONS AND APPROVALS
Local zoning ordinances have eliminated site choices for
multi-unit
dwellings
neighborhoods.
single-family
within
residential
Under "The Zoning Act", Massachusetts General
45
Law
40-A,
(M.G.L.), Chapter
by-laws
ordinances or
zoning
provide for the use of structures as "shared elderly housing"
upon
the
issuance
ordinances or
of
a
special
permit.
by-laws shall specify the
age requirements
and any
Such
zoning
maximum number, any
other conditions
deemed necessary
for the special permits to be granted.
Multi-family residential uses are not permitted by right
in zoning districts of the proposed sites in either Haverhill
or Ipswich.
require
As such, the proposed development programs would
a
special
permit
from the
rezoning of the subject sites.
to be
rezoned from
Residence
require
to
Intown
a Planning
zone to
have to be rezoned
Residence;
Board
Appeals
or
a high
permit a multifamily residential
Ipswich site would
The
of
The Haverhill site would have
low density residential
density residential zone to
use.
Board
and
upon
Special Permit
from Rural
rezoning,
will
to accommodate
a
mixed commercial/residential land use.
Given that neither the City
Ipswich are in compliance with
also be
permitted through
enabled under M.G.L..
approval of
Appeals.
of Haverhill or the Town of
Chapter 774, the projects may
a Comprehensive Zoning
Permit as
Chapter 774 provides for comprehensive
assisted rental housing
This permitting
process
46
via the local
supersedes local
Board of
zoning
regulations and
and approved
the site.
and
enables the development plan
without granting of
a variance or
purpose of the law is to
The
improve the
to be reviewed
rezoning of
increase the supply
regional distribution
of low
and moderate
income housing by allowing the limited suspension of existing
local
regulations
that
are
inconsistent
with
such
construction.
Cities and
fail to
towns that do
do so for one
not comply with
or more of the
Chapter 774,
following reasons:
1. Ten percent or more of the existing housing in the city or
town is not subsidized low or moderate income housing; or
2. sites used
for subsidized low or
do not already equal one
moderate income housing
and one-half percent of all land
zoned for residential, commercial, or industrial purposes,
not including land owned by government or a public agency;
and
3. the application
not result in
the construction of low
housing on more
as
in (2),
before the Zoning Board
of Appeals would
or moderate income
than 0.3 percent of the
or ten
acres,
total land zoned
whichever is
larger, in
any
calendar year.
Both the
compliance for
City Haverhill
the first and
and the
Town of
second reasons.
47
Ipswich fail
As
a result,
the projects could not be
denied a comprehensive permit, and
the needed zoning approvals should be expedited.
A comprehensive permit from
would allow
an adult
association,
both
day care center
considered
within the facility in
be
restricted
to a
the Zoning Board of Appeals
visiting nurse
commercial uses,
Ipswich.
maximum
and a
to
operate
The Haverhill project would
"rezoning"
of ten
acres
for
approval of the comprehensive permit.
There is
with low
relatively little
incomes in that
little damage, pay
on
neighbors
their rent on time, and
and
neighborhoods.
fears of
These
are often
effect of
Actually, studies have
income
or
masked
not, to
be
to cause
make few demands
Nevertheless,
economic and
zoning waivers on property
sewer or trash services
to elderly
the elderly tenants tend
communities have
attitudes
stigma attached
by
some
racial integration.
arguments about
values,
the
overloading of
or exacerbation of traffic problems.
shown the impact of
in
effect
the elderly, low
less than
these
claims
purport.9
2.
Proper site
SITE SELECTION AND DESIGN ISSUES
selection and good design
greater accessibility for the
should result in
frail elderly who are hindered
48
by steep
terrain, inclement weather, exposure,
surroundings,
and should
also
provide a
and man-made
safe and
secure,
non-institutional environment.10
The elderly typically wish to
remain close to the place
where they have spent a good part of their adult lives, or at
least one which is reminiscent
in their
living
of their old home.
neighborhood, allows the elderly
patterns
and
Therefore, it is
be
close
to
important to make a
Remaining
to continue their
family
and
friends.
connection between old
and new environments and provide a strong sense of place.
The
relationship
addressed with
For
example,
of
volume
sensitivity to
care has
to
to human
provide a
be
taken
scale
must
be
residential scale.
not to
overpower
or
overwhelm residents with extremely high ceilings or corridors
that
needs,
are too
long.
In
design elements
opportunity to
types, such
should
provide
observe, interact
their environment.
institutional
balancing project
residents with
and claim
user
the
identity within
Although it is difficult to eliminate the
character in
as schools
foster residential
costs with
the
reuse
and hospitals,
themes should
entire project.
49
of certain
building
characteristics that
be carried
throughout the
In developing
should
be given
compensate
various program areas,
to the
design
for physical
Design features
generally include bathrooms
the bathroom and bedroom.
of the elderly
which help
might have.
with grab-bars,
and emergency call systems in
The special needs and disabilities
must be addressed before design
The developer and
marketing
to
lighted common areas, non-glare
floor and countertop surfaces,
with
of elements
disabilities residents
barrier free corridors, well
begins.
special attention
of a project
architect should regularly confer
consultants
and
local
community
groups
familiar with the elderly in defining their health care needs
and
other essential
services
as an
integral
part of
the
design program.
The
developer
of
the
Haverhill
project
tentatively
proposed a development consisting of a single story structure
of 100 units.
of building
fact that the
On its face this raises some serious questions
efficiency and cost;
and it also points
need for manageable space runs
number of units.
to the
counter to the
Initially 75 units were proposed.
This was
increased to 100 to create economies of scale and to increase
income
potential.
single
level
obviously
serious impact on
between
Having
a large
generates
number of
more rents,
the distance residents would
residential
units
and
50
common
units over
but
has
a
a
have to walk
facilities.
The
spreading of 100 units over the site is certainly not typical
of a
"congregate" concept in housing
development, and seems
inefficient.
While not
developed in
this thesis, four
other issues
the developer may want to address in siting the facility are:
*
Buffering or screening the
proposed project from adjoining
residential properties,
*
provisions for handicapped
*
vehicular ingress and egress, parking, drop-off and pick-up
accessibility on site,
areas,
*
and
obtaining
a
conservation
easement
to
permanently
restrict future use of the site.
The neighborhood context suggests maintaining a colonial
character, one or
two stories in height
and clapboard siding.
with pitched roofs,
Other elements within the neighborhood
that could be repeated to reinforce the residential character
in
the
project are
dormers,
porches,
and other
elements
typical of post WWI construction.
The Ipswich
building with
proposal consists
a three
of an
original masonary
story addition, and
new construction
which will pick up on the contextual elements and make use of
balconies,
gables,
dormers
and
51
chimneys
to
create
a
residential quality.
The renovated buildings
the new construction, will form
landscaped island and circle
with
direct vehicular
environment.
adjacent
Careful
emergency
perception of the
combined with
a U-shape, oriented around a
drive which will provide guests
access and
planning to
facility's
residents with
an active
reduce the impact
activities
both
community and as a buffer
of the
from
the
to residents is
also important.
3. MARKET ACCEPTANCE
Rental
housing
for
relatively new concept
retirement
in some areas and
the project may take longer
developments of
Haverhill
by the 1-1/2
and Ipswich
communities.
fulfilling its
that
the
to 2
the
congregate
accept
and gain
in both
"misalignment" that
Marketing
line and issues
As mentioned in
year waiting lists
levels and the median
developer must
a
for affordable housing is great
intended objectives, is an
successful operation
the bottom
and
is
initial rent-up of
a more standard character.
between median rent
these
occupants
than initial rent-up for housing
an earlier chapter, the need
as evidenced
age
in
incomes levels in
facilities
establish
In
of market acceptance,
some softer issues.
52
and
intensive process
order to
credibility.
exists
a
addition to
there are
The
Ipswich
project
received in the market.
landmark to
has
The
the community
due to
the intersection
Can
considered a
resident
population?
building
as
because of
a
of two state
previous
could
the perceived
to
its prominent
prime location
The
hospital
potential
be
well
existing building is a familiar
location, at
this be
the
use
siting and
highway routes.
for housing
of
negatively
this
the
existing
impact
rent-up
institutional character
or stigma
associated with the residential reuse of a hospital.
The location of the Haverhill
single-family
neighborhood
campus,
require
will
establish an
identity.
site selection
and the
a
on
the
project, tucked away in a
fringes
strong marketing
Locational
the pulse
community, but it
the residents.
estate and
college
just
to
in the
of on-site
removes it from
places an
even greater
facility itself to serve most of
the needs of
This is an interdependent development of real
services.
when standing
effort
comprehensive provisions
isolate this facility and
demand on the
a
factors involved
services not only
of the
of
Neither
meet the test
alone --whether conceptually
of feasibility
or financially--
within the Haverhill market.
The proposed market rents and service fees total 3 times
the median rents in Haverhill.
With the abundance of elderly
53
assisted housing already available,
its
affordability to
a
more affluent
project, on the other hand,
25 percent
the area and it also provides
by the
The developer
commercial tenant
provided
by an
outside
income housing
and
Ipswich are
population and
has
to
be
incomes of
expects health services, provided
a-la-carte or packaged
total
and meals,
less than
$300.
25 percent over the Ipswich
allowance.
It can
be inferred,
by
service structures, that Haverhill
serving different
are taking
the same problem.
Ipswich
40 percent of the units to the
caterer to
their proposed rental and
The
the 1986 median
Ipswich's rents and services are
median
group.
has offered base rents below the
housing allowance of
low-income.
this project has limited
segments of
entirely different
the elderly
approaches to
The target market as well as the community
educated
to
the
distinctions,
benefits
and
stability of such an approach to housing decisions.
Ipswich has a very small
of
a
strong
service
component for
Haverhill's active community
formed
Ipswich
an in-town
is
65
the
elderly.
Unlike
service organizations that have
enclave of
miles
resident activity.
town center and does not boast
elderly, the
of shoreline
As a result,
and individualism are pervasive.
type is a new concept for Ipswich.
54
and
focal point
seasonal
in
vacation
diffusion, noncohesiveness
Multifamily housing of any
Elderly housing and related services are familiar to the
Haverhill community.
It is
thrives
of
independent
a service-rich environment which
an individual's
particular
living
situation or housing type as it attempts to enhance the lives
of
all
of the
health
town's
services,
luncheons, trips
proposal is
risk.
discount
Ipswich has
politically, which
The
maximize
a
convenient
population whether
transportation,
and other social events.
not new,
elderly.
elderly
cheap or
shuttle
buses,
This development
convenient and
no obviuos
through
represents a
system, programmatically
promotes the continued well-being
developer is
higher
access
seemingly missing the
rental
income
to services
in
from
an
the
or
of the
market to
offering
equity rich
of
elderly
market.
In
the past,
considering
regard
to the
elderly
These
the
many projects
specific
local market,
planned without
particularly
effects of
aging on
residents, by
housing prototype
for this
very different
projects come
to
the
marketplace without
acceptance, consumer satisfaction
real needs and
the project
types of
have been
As
facilities have an
market.
achieving
residents for which
a result, developers
additional task before
55
using an
or fully understanding the
desires of the potential
is intended.
with
of these
them to
overcome
some
projects
of
of
the
earlier
operators did
bad
press
history
not understand
that
received
from
have
failed
the market
troubled
because
and underestimated
future costs.
B4. COMMUNITY SUPPORT
Marketing congregate
exists, to
people who
housing, requires
housing in a community
have never
heard of
time and patience.
where none
such a
type of
Congregate facilities
with unique characteristics have taken as much as one year to
achieve 100 percent occupancy.
the
financial
budgets,
the
difficulties.
anyone who
equations
project
If
for
can
this is not factored into
development
run
the developer
is interested just
how inappropriate
If
into
and
operating
serious
financial
feels compelled to
to make ends meet,
the resident
may be, the
the serious risk of a bad mix of residents.
stages
should consider
research.
devastating
The
these
consequences
financially if
congregate runs
Initial planning
by thorough
of
can
this
people move
congregate housing
developer
only
has
no matter
problems
community that
not
rent to
be
far
more
out and
inform the
doesn't work.
Thus the
a responsibility
to
residents but also to the community and industry.
56
market
the
elderly
On
the
other
hand,
many
communities
congregate housing and embrace the idea.
are
aware
of
There may even be a
share-a-home or home matching program in place that has paved
the way for a congregate facility. 1 2
As
noted
earlier, Haverhill
elderly
populations
variety
of housing
People
within
elderly and
the
in
homes
services
and
and services
community
their needs.
one
of the
Commonwealth
options
care facilities within
nursing
the
has
are thus
and
familiar
offered through
elderly
the
housing
elderly.
with
the
a number of
projects
city's Council
a
no congregate
the community, there are
public
provides
for the
Although there are
largest
on Aging
with
and
other outside providers.
It is interesting
that the majority of
services for the elderly are
center of the city.
terms
grouped together near the civic
Perhaps this is for convenience sake, in
of accessibility,
or political
opposition to multi-family housing
family residential neighborhoods.
recognition of and
exist with
sects
reasons due
community
to local
in more exclusive singleIn a city which boasts its
provisions for the elderly,
regard to how
of the
the housing and
well the
embrace the
an irony may
community as a
various
whole or
needs of
the
elderly and the potential siting of congregate housing within
57
their neighborhood.
Perhaps it
is only
an issue
when the
project consists of low-income residents.
Though the
smaller
than
number of elderly in
in Haverhill
sincere effort on
unmet
need
comparison
smaller
density, as
The
community that
more
town.
based
is
As a
there
need
the
it is
no
Haverhill.
Ipswich is
programs in
a
much
in
than Haverhill.
place within
for a congregate
the
facility, the
the concept
of the
In essence,
the proposed
proposed project
project in
an experiment
is important
hence the
a
In
residents but
more suburban
demonstration, it
be
meet a previously
number of
demonstration project,
project work,
seems to
in
Haverhill,
pave the way
to embrace
a
of
there are
than Haverhill.
Ipswich
continual
only in
well, and
fact that
town seems
a
the city
town not
however,
the part of the town to
versus
to
Ipswich are relatively
for the
that the
town's participation
need
in the
project is critically important.
Haverhill and Ipswich
with
respect
to
present an interesting comparison
perceived
attitudinal
Haverhill community will have to
a new way and distinguish
differences.
The
interpret an old concept in
themselves and their product.
The
single family residential community will have to overcome any
stigma they
may have
associated with
58
a low
income housing
component within their neighborhood.
the community will
By contrast in Ipswich,
have to be educated for the
first time -
yet look forward to the proposed project.
The
housing
Haverhill project
which
character.
elderly
is
proposed
income
purely
project, while
funded
having
will
a larger
concept.
lower
percentage
been by
income
provide
housing
a
programs.
five
market rate
in
The
low-moderate
market
rate
units
is a
new
elderly housing in Haverhill has
public sector
elderly.
The proposed
below market
residential
25 percent
the
city's "house poor" but
create
The provision of elderly housing
of
The production of
typically
and
provide seventy
housing units and services.
with
opportunity to
typically addressed the low-income
publicly
component,
the
contextual
Haverhill has
through
has
and targeted
project
towards
targets
the
"equity rich" elderly population and
rate
housing for
25
percent of
the
residents.
E. FINANCIAL STRUCTURE
1.
PROJECT RISKS
The decision to invest in rental housing for the elderly
with services
not only involves the
construction
of
management
and
the
physical
operations,
the
59
development, design and
component,
service
but
equally,
component.
The
provision
for health
and other
services as mentioned
total
development
care, meals,
and
are
counseling, coordination
before are integral
quite
management
Because of the management intensive
facilities, lenders
tend to
intensive.
nature of these types of
treat these
types of
business loans
rather than real estate
and management
skills of facility operators
are often considered
to the
loans as
loans, the marketing
or coordinators
to be more important than
the value of
the underlying real estate.
In
packaging the
toward a
requirements
product.
can be
and services
specific, local market, the
the project's or the
and
needed design
The
developer must examine
partnership's objectives and what risks
are inherent
in
providing
developer must also determine
managed effectively
performance.
targeted
to enhance
The developer must
this type
of
how the project
short and
long term
also consider what products
succeed in today's market and where, and how they differ; are
variations limited or does the market allow for flexibility.
The
include
risks
but
associated
are
not
with
limited
construction of these projects.
ownership
and
following:
rent-up as a
operation
of
real
to
the
estate
operations,
development
and
Other risks inherent in the
these
projects
include
the
result of competition, variations in
60
rental
schedules as
rates, operating
All
of these
general
a result
of fluctuations
in occupancy
expenses and
future sales of
the project.
risks may
and local
demand
in
turn be
economic
for services,
adversely affected
conditions, the
zoning
laws, rent
supply of
controls and
by
and
real
property tax rates.
Additionally,
regulations
there
and standards
local authorities.
apply to
could
are
various
which are
during the
to a
population in the
enforced by
operation of the
life
of
non-compliance and impact costs.
will depend
and
safety
state and
These regulations and standards generally
the construction and
change
health
large extent
project and
the project,
result
in
The success of the projects
on the
size of
community in which the
the elderly
project is located
because the tenant population is only a subset of the general
population
which is
segmented even
further with
regard to
need, desires and income potential.
2. INCOME POTENTIAL AND EXPENSES
The neccessary
rent levels create a
real and perceived
affordability problem.
Given the development costs
projects,
levels would
monthly rent
have to
$1,100 and $1,500 to make the projects feasible.
percent of income spent for
of both
range between
Based on 30
rent and median income levels of
61
$35,000 and
$38,000 for Haverhill and
median rent
levels could not
Ipswich respectively,
be greater than $875
and $950
per month.
The problem is indeed more pronounced.
of the
range
elderly in
between
$0
these two
and
Nineteen percent
localities have
$10,000; another
between $11,000 and $25,000;
incomes which
19
percent
range
8 percent range between $26,000
and $35,000; and only 9 percent of the households have income
greater
than $35,000.
elderly
in
This means
Haverhill and
greater than
$250 per
Ipswich
could
month; another
afford greater than $500 per month;
of the elderly
that 19
percent of
not afford
19 percent
the
rents
could not
and only 8 and 9 percent
could afford monthly rents
greater than $500
and $875 respectively.
Assuming
economic rent
needed to
30%
of
income
of $1,300, a
make each unit
incomes of $10,000.
spent
on
rent
and
$15,000 annual subsidy
affordable for those
The per
average
would be
elderly with
unit subsidy required for those
elderly with incomes of $25,000
would be $10,500; even those
with a $35,000 income would require a $7,500 subsidy.
Ipswich
is
able
to
provide lower
percentage of the elderly population.
62
rents
to
a
high
Through the use of the
707 mod-rehab subsidy and the
the
project achieves
Haverhill
does not
a
annuity income from the HoDAG,
positive cash
achieve a
wide level
only 17 percent of that city's
those
high rents.
potential,
This
because of
flow.
By
contrast,
of affordability;
elderly would be able to meet
narrow market
longer
affects the
periods of
income
rent-up and
lost
first year operating income.
Even fewer elderly will be
able to afford the Haverhill
service package which represents
gross income.
(It does not
and depends on 100 percent
particular risk
that, based
60 percent of the effective
offer the options of a-la-carte,
participation of the tenancy.) At
is the investment
on the
real estate alone,
service payments after adjusting
the services costs the
service income
development costs
project.
recognizing
Ipswich
both
expenses.
which is essential
not
the high
created a
become
costs
self-sustaining
The resulting
buys $6,811,490
and
real
in project
to the success
the
combining these two distinct elements.
has
meet debt
The provision of
to be $1,142,671.
of $657,681
has
could not
a project
development $484,000 with a projected
annual income from services
net
of a lender to
service
of the
provider,
risks involved
with
The Ipswich developer
estate project
which,
through the assignment of space, provides commercial area for
income and the provision of services.
63
Higher
marketing the
net
income
potential
market rate
reducing expenses
could
units to the
by changing
be
equity rich;
the product
affordability
equity is added to
is increased
by
or by
configuration or
service package; or securing lower cost debt.
income from converted
achieved
When potential
other fixed icome,
significantly.
If
Haverhill is
targeting its product towards a higher income group, they may
want to examine more closely the number of elderly households
with potential equity.
3. DEVELOPMENT COSTS
The
total development
almost identical
basis.
on a square
For the sake
problems later in
foot, per unit
Because the
developmental stages,
levels of
and percentage
projects are in
refinement vary.
both developments are fairly in line
with industry
percentage standards,
70
percent
10
projects are
they may contribute to feasibility
the process.
Hard and soft costs for
and
the two
of analysis, conceptual differences are
important to recognize as
different
costs for
of
the
averaging approximately
total
development
costs
respectively.
A
key element
in analyzing
the construction
costs of
congregate facilities, particularly when there is an in-house
64
service component, is a
careful spatial analysis.
Haverhill
has not broken out costs for the 25,890 square feet of 95,890
gross
square feet
common area.
costs
predicts for
The developer has
upward
suburban
it
to $78,205
single-story
per
unit,
At
hard costs, Ipswich has allowed
renovation and
commercial
partial fit-up
area.
standard common
an
Ipswich
caterer.
or slightly
construction
over
costs,
new
to
$80,244 per unit of total
for the $106 per square foot
of the
has also
3,514 square
included,
area, a community dining
industrial kitchen
service-related
adjusted per unit total hard
woodframe
seemingly reflect these costs.
use as
for on-site
feet of
within
the
area equipped with
meal preparation
by the
The Haverhill development should review the program
which calls for 25 percent of the gross floor area to be used
as common
area.
An
analysis of the
relative costs
to the
project for providing space for services or amenities and the
true income potential on a per square foot basis is necessary
in
order
to
avoid
underestimating
real
costs
and
overprojecting its value.
The variables
hard and soft
based on
major
that obviously
cost lines in these
the MHFA
format.
inconsistencies
differ occur
development cost proforma
In isolation
with regard
beneath the
to
they point
the
amount of
assumed by the developers and the true costs for land.
65
to the
fees
Capitalizing front-end
endeavor
for a
costs is
congregate life
care facility.
market analyses
and pre-marketing
cost intensive.
To
income and tax status.
a costly
The needed
efforts is both
absorb some of these costs
realizable in the cash flow,
philosophy, the
likely to be
time and
that are not
the developer must review their
Assuming a basic profit maximization
developer's fee
should reflect
the efforts
expended.
Haverhill surprisingly takes slightly over 50 percent of
the 10 percent fee previously
to
provide
incentive for
allowed by MHFA, hardly enough
the
level
of risk
involved
or
enticement for another for-profit entity to joint venture the
deal.
The
extraordinarily low
enable the
developer to
(or
transactions)
paper
substantially
increasing
5.5
percent
fee does
exercise any reinvestment
at
the
equity
closing
and
of funds
table,
therefore
not
towards
increasing
their maximum allowable annual dividend.
MHFA's standard fee was 10
percent prior to tax reform.
In order to eliminate the effects of lost syndication used to
capitalize
projects
annual
projects,
increase
still planning
dividend,
percent and created
the
replacement
to syndicate,
it increased
the
developer's
a line item for a
66
and to
value
of
increase the
fee to
20
5 percent developer's
overhead for
therefore,
specific projects.
available
for
of 25
reinvestment.
developer's fee is a required
The
percent is
20
percent
reinvestment as equity and the
5 percent overhead can be used
at the closing table.
A total
to meet a 2% cash requirement
Although all projects are not eligible
for each of these mechanisms, cases can be made.
Ipswich has taken
into
the development
$150,000 of its
$114,000
a twenty percent fee,
at the
closing table
own cash, increasing its
compared
to
poured it back
Haverhill's
and contributed
annual dividend to
$30,000
without
other
sources of equity.
The other
land
variable deserving
purchase/lease agreements
relative importance
financial
of
the
these play in the
structure.
Ipswich
through the RFP process, a
purchase and
review is
has
the negotiated
developers and
development costs and
actually
negotiated,
discounted price for the land.
sale agreement
the
of $300,000 enabled
A
the equity
based financing to benefit from the higher appraised value of
the land of $800,000.
An
amount
the
in
excess of
$500,000 is used as an
unit costs
$800,000 value is financed and the
purchase
and sale
equity contribution.
of the $800,000
agreement
of
The overall per
financed is $11,429 and
the per
unit cost of the actual $300,000 paid to the owner is $4,286.
67
This
land
discount
creates $30,000
in
additional
annual
dividend dollars available to the developer.
The
Haverhill developer
acquisition
and
was
accommodated the long
time payment of
developer
$57,932
negotiated
years 31
offered
a
99
land owner
year
term interests of the
represents
the
debt
a
service.
annual payments
and beyond
total annual
The
which
college.
A one
the required
land to the
cash
parties
which would
for
lease
$600,000 secures the use of the
and
of
solicited the
outlay
of
could
have
have extended
into
payments to
the college,
preventing the front loading of the initial development costs
and
transferring the
owner.
$1,714
The per
land payment
unit costs
higher than
land
are $6,000
owned in
agreement not only terminates the
but also reverts
the college.
obligations to
the
land or
Ipswich deal.
The
land agreement at year 100
ownership of land and
This element of
for leased
the next
improvements back to
the negotiated deal
seems to
imply that some sort of concession was made by the land owner
for which they
should be compensated.
At
$60,000 per acre,
this is a high compensation for a non-participating entity.
68
4.
FINANCING
HAVERHILL
The project's
MHFA through
the sale
this project.
methods
in
security
follow
developer intends to seek
of tax-exempt bonds
specifically for
The maximum loan will be determined by several
the underwriting
of the
lender's
process
which
investment.
the income-to-value
require a
financing from
will test
The financing
appraisal determination
110 percent debt
the
service coverage ratio
will
method,
based on
the first year's net income of the project, require a fifteen
year
lock-in of
the low-income
thirty year fixed rate
units, and
will provide
a
mortgage at approximately 9% interest
rate for both construction and permanent financing.
As
structured,
scrutiny
of
assess the
this
the state's
value of
proposal
review
will
process
the land compared
not
survive
which first
to the
the
must
amount being
paid through the lease agreement, evaluate the provisions for
reversion of
the risks
ownership at year
should the borrower default
ability to sell the property,
sufficient security in the
through equity
Haverhill
100 to Bradford
or other
meets any
such
college and
limiting the lender's
and determine whether there is
project provided by the developer
forms.
It is
tests.
security, the developer has offered
69
On
questionable whether
the
latter issue
of
less than two percent in
a cash contribution to the
project which may reveal his own
uneasiness in the venture.
The
the real
project's value lies only in
estate, the improvements, and
the income potential
derived from these elements; it cannot be underwritten on the
net service
income.
This
results in a
fundamental problem
for loan-to-value ratio requirements of 90 percent for this
project.
The
Haverhill
interest in
development
forming a
therefore precluding
cash
or
proforma
has
not
limited partnership for
stated
in
the
available
as an
incorrect
because the
interest
that
subsidy, but
SHARP
source of
developer's risk.
developer assumes
SHARP
any
this project
syndication as an additional
any reduction
the
team
In
the
funds will
be
this assumption
is
guidelines specifically
makes
ineligible, housing designed for an elderly or other specific
target
markets.
(Executive
Office
available.
A
Likewise
of
Elder
Affairs)
competitive program,
the preliminary stages
named
the funds
projected
are
currently
similar to SHARP,
of development and is
CHOICE "Congregate
from
EOEA
not
is in
proposed to be
Housing Opportunities
to Increase
Choices for the Elderly."
The development
can be
converted to condominiums
refinanced, sold as
by the developer in
70
rentals or
year 16 after
presumed
repayments
to
outstanding
obligations, such as SHARP-like loans.
mortgagees will
end-of-lease
college.
have to take into
obligation to
There
the town or
consideration the 99-year
improvements to
no form of
college on the sustained use
as an elderly facility or
a low-income
component.
mortgage
Subsequent buyers and
convey the
currently exists
second
the
agreement with
of the development
any permanence in the provision of
A
such guarantees required
negotiated 774
permit may
concessions to be made
make
by both the
developer and the college.
IPSWICH
The partnership
for
construction
hopes to receive a
and
permanent
Massachusetts Housing Finance Agency
amount is
from
based on
the project.
with cash
estimates of
These funds
equity from
mortgage commitment
financing
(MHFA).
the cash
will be
the developer,
from
the
The total loan
flow anticipated
utilized, together
to purchase
the site
from the Beverly Hospital Corporation (owner of the site) and
to
cover all
project.
from
the hard
and soft
costs associated
with the
The project will require Chapter 707 rental subsidy
EOCD, and
an
project feasibility.
and interest
additional infusion
The annuity
income return on
principal and is held in
of
an annuity
for
is based on the investment
a HoDAG which
represents the
a Project Investment Account (PIA).
71
The city is
loaning the developer, under
a second mortgage,
the income of their investment.
The PIA payments
continue for
monthly
that
16 years.
basis
thereafter.
would begin in year 1
These payments would
during
The
operating
the
first
year
be made
and
on a
semi-annually
proforma's assumptions are
conservative in
expenses
at
are
projected
respectively for the project term.
will be the same for the
the mortgage from
period.
of start-up and
5
percent
The debt service payments
twenty year projected term; in fact
MHFA will be amortized over
a thirty year
The rental income for the project will increase at a
rate of 5 percent, and the Chapter 707 rental subsidy for the
low-income
component
will also
percent.
The Chapter 707 rental
program,
increases
marketplace.
to
rental
The project dividend,
the MHFA
service coverage
at
a rate
increases
5
in
the
in year one, is slightly
under the HoDAG program.
requirement that
of 110 percent
of
subsidy, like the Section 8
reflect
higher than the 4% allowed
to reflect
increase
projects have
in year one and
This is
a debt
limits the
MHFA maximum return-on-equity to 6 percent.
The HoDAG financing is being
Ipswich.
The PIA,
applied for by the Town of
to be held by either
the Ipswich Housing
Authority (IHA) or MHFA, will make annual disbursements for a
72
period of 16
and this
years to subsidize the
loan will be
property.
secured by
project's rental income
a second mortgage
on the
Under the terms of
the loan, the partnership must
repay the money with interest
accruing at one percent at the
end of 20
years.
The town will be required
to use the debt
payment proceeds to provide low-priced housing.
Upon repayment of the debt
of the
to the city, the termination
low-income provisionary requirements,
with tax-exempt
prepayment regulations, the
refinance, sell
the development
apartments
value.
to
condominiums and
This raises
some
to convert
town
42 of the units;
purchase the
authority
in
to
sell
them
convert the
at fair
market
issues about
public
If the partnership wanted
one solution would be
28 low-income
order
partnership can
as rentals, or
interesting
purpose and social responsibility.
and compliance
units through
maintain them
for
the
that the
the housing
low-income
elderly.
The developer plans to refinance
or 22.
At that time, the
be paid to the Town.
the elderly, the
covenant in the
the project in year 21
amount of the second mortgage will
In response to the town and concerns of
developer has agreed however,
deed which will require
to include a
that the low-income
units will remain as low-income rental housing until year 30.
73
In years
21 through
30 the covenant
will provide
that the
Town and the developer may mutually agree to use the proceeds
from
the loan
low-income
payment in
units
by the
continue to subsidize
could leverage
year
Ipswich
21 to
either purchase
Housing
the rentals on these
an agreement
to option
units.
the purchase
units at any time between years 21 and 30.
74
Authority or
the
to
The Town
of the
VII. CONCLUSIONS
This thesis
of
reviewed two proposals for
affordable
development
congregate
processes
capabilities of the
feasible
project
life
care
the development
facilities.
utilized financial
and
government in an attempt
within
economic context.
the local
The
programmatic
to structure a
political,
social
and
As indicated in the thesis, there are some
interesting similarities and differences.
The
Ipswich
developer
was
process, whereas the Haverhill
of
the site.
split
The
combine
development
their
between
respective
and operations.
through
an
RFP
developer solicited the owner
Ipswich developer
limited partnership
that
selected
structured an
two for-profit
expertise
Haverhill
percent ownership and operational
in
evenly
entities
real
estate
is maintaining
100
responsibility in the name
of the for-profit proprietary developer.
Both the Hospital and the College have evaluated ways in
which
they
value,
long
can utilize
maximizing its
term
college
interests
return
have
on
expressed
of their
their
property
by increasing
development potential
the transaction.
commitments
communities
75
to
as they
The
its
and gaining
hospital
observe
the
have proceeded
a
and
best
to
explore options for appropriate use of their properties.
Given the
motives of
of
escalating costs
developers and recent tax
affordable
elderly
without
incentives
present
and
care
for new
future,
alternatives for
Among
explored, though not
bonds,
Investment
would be
hard
the government.
the
the
as
to
Looking
the
at
structuring
solutions
that
facilities,
and Master
the
of
will have to
Limited
life
are
a topic of this thesis, are
(REIT)
realize
financing congregate
resident-investor
Trusts
the profit
reform, the production
more difficult, the industry
facilities.
taxable
housing
from
towards
financing becomes
search
of development,
being
the use of
Real
Estate
Partnerships
(MLP).
The
options for
potential investor
structure
services
of the
deal.
Unlike
thus, limiting
from
feasibility
Separating
the opportunities
Haverhill which
lender and
service
attracts
the services
component,
lender
from the
and
for
by the
integrates
investor interest,
sets up a model which
the
and
and
participation should be maximized
Ipswich case study
estate
financing
the
separates the real
attains
investor
real estate,
project
interest.
essentially
creates a mixed-use development which is mutually supportive.
76
What
can Haverhill
affordability and
do to
impact feasibility,
create a successful
The Haverhill developer needs
provide
retirement community?
to reevaluate their objectives
and exposure to risk by:
*
considering options for restructuring the ownership;
*
including
an experienced
service provider
to manage
the
operations or
*
contracting out the service component;
*
bringing
in
a partner
to
share
some of
the
potential
liability;
*
performing a
thorough market
study to assess
the housing
and service needs of the targeted market;
*
considering resident ownership or entrance fees; and
*
renegotiating the terms of the landlease.
A complete
is
necessary
in order
enhancements
identifies
understanding of state and
to
and financing
a
model
for
utilize
federal programs
the appropriate
instruments.
credit
While
this thesis
the
contractual
feasibility,
provisions for affordable housing have an expiring use at the
end of year 15.
carries
should
components
condominium
over
The relative amounts of subsidy each project
benefit
the
conversion
the
long
or
low-
term,
any
moderate-income
precluding
other
affordability and displaces the elderly.
77
and
use
market
which
rate
impacts
VIII APPENDIX
SUMMARIES AND TABLES
A SUMMARY OF HOUSING AND DEV5IOPMENT OPTIONS
FOR THE ELDERLY
EQUITY EXCHANGE: A transaction in which the owner's residence
is renovated to include additional unit(s) which are in turn
marketed as coop or condo units.
Advantages: Provides owner with a new unit that should better
suit individual needs;
encourages efficient use of older,
larger housing stock; great potential for areas with aging
stock and tight housing market; program design can minimize
dislocation by marketing to neighborhood residents; support
services for elderly can be easily incorporated into plan.
Disadvantages: Elderly may be reluctant to move to new unit;
in the case where a senior owns the structure to be
renovated, he/she may be reluctant to have the home altered
or to have others share it once renovations are completed;
local zoning ordinances may impede conversions.
DEEP EQUITY COOPERATIVE: A transaction in which the elderly
home owner invests a larger portion of the proceeds from the
sale of his/her house in the purchase of a new unit in an
elderly community.
Advantages:
Provides housing and a lifestyle designed for
independent elderly; senior moves from former unit promoting
liquidity in housing market; appealing options for areas with
strong demand for turnover of existing elderly occupied stock
and need for additional new elderly housing; provides elderly
with alternative to nursing homes or other more restricted
living environments.
Disadvantages: A significant number of units must be presold
for feasible financing;
financing plan dependent on owner
being able to sell long term residence; financing options may
be limited and/or complex.
LIFE CARE:
Elderly communities which most often provide
on-site health facilities, housing and health care for
residents under a contractual arrangement.
Advantages:
Provides elderly with a pleasant living and
social environment complete with basic medical
services;
suited for elderly who are not full independent but who do
not require
a nursing home;
religious
and charitable
organizations have begun to explore ways to make this option
available to low and moderate income elderly.
Disadvantages:
Financing
plans have
traditionally been
dependent on sizeable entrance fees paid by the elderly, a
requirement that has restricted
the facilities to the
relatively affluent; early life care developments experienced
78
financial problems.
CONGREGATE HOUSING:
A structure with separate bedrooms but
with common living and dining areas.
Baths and kitchen
facilities may be separate or shared.
Advantages:
Promotes liquidity
in stock
by providing
alternative to
long-term residence;
cost
effective to
construct and maintain on a per unit basis, support services
can easily be incorporated into plan; can utilize existing
stock or new construction; highly successful projects with
proven track records both nationally and in Massachusetts.
Disadvantages: Local zoning ordinance may be an impediment;
elderly may be reluctant to move or adapt to sharing kitchen
and or bath facilities.
79
A SUMMARY OF MULTIFAMILY AND ELDERLY
RENTAL HOUSING PROGRAMS
Federal Unassisted Programs
Section 231: Section 231 is federal mortgage insurance to
facilitate financing of construction or rehabilitation of
rental housing for the elderly or handicapped. The nature of
the program is to assure a supply of rental housing suited to
the needs of the elderly or handicapped.
HUD insures
mortgages made by private lending institutions to build or
rehabilitate multifamily projects consisting of eight or more
units. HUD may insure up to 100 percent of project costs for
non-profit and public mortgagors, but only up to 90 percent
for private mortgagors.
Private, public and non-profit
sponsors may qualify for mortgage insurance.
Section
221(d) (3),
221(d) (4):
Section 221(d) (3),
221(d) (4)
insures mortgages made by private lending institutions to
help finance construction or substantial rehabilitation of
multifamily rental or cooperative
housing for low and
moderate income families. Projects may consist of detatched,
semi-detached, row, walk-up or elevator structures.
The
principal difference between the programs is that HUD may
insure up to 100 percent of total project cost under Section
221(d)(3) for non-profit and cooperative mortgagors but only
up to 90 percent under Section 221(d) (4) irrespective of the
type of mortgagor.
Section 221(d) (3) and
(4) mortgages may
be obtained by public agencies; non-profit, limited dividend
or cooperative organizations, private builders or investors
who sell completed projects to such organizations. Section
221(d) (4)
mortgages may be obtained by profit-motivated
sponsors.
Tenant occupancy is not restricted by income
limits.
Section 207:
Section 207 also provides
federal mortgage
insurance to finance construction or rehabilitation or a
broad cross section of rental husing. HUD insures mortgages
made
by private
lending insitutions
to finance
the
construction or rehabilitation of multifamily rental housing
by private or public developers. The project must contain at
least five dwelling units. Housing financed under this
program, whether in urban or suburban areas,
should be able
to accommodate families
(with
or without children) at
reasonable rents.
Investors,
builders, developers, and
others who meet HUD requirements may apply for funds to an
FHA-approved lending institution after conferring with their
local HUD office. The housing project must be located in an
area approved by HUD for rental housing and in which market
conditions show a need for such housing
80
Section 232: Section 232
provides federal mortgage insurance
to facilitate financing or rehabilitation or nursing or
intermediate
care facilities
made by
private lending
institutions.
Facilities must accomodate 20 or more patients
requiring skilled nursing care and related medical services,
or those in need of minimum but continuous care provided by
liscensed
or
trained
personnel.
Nursing
home
and
intermediate care services may be combined
in the same
facility covered by an insured mortgage or may be separate
facilities. Additionally, major equiptment needed to operate
the facility may be included in the mortgage. Facilities for
day care may be included. Investors, developers, and private
non-profit corporations or associations, which are liscensed
ir regulated by the State to accommodate convalescents and
persons requiring skilled nursing care or intermediate care,
may qualify for mortgage insurance.
Patients requiring
skilled nursing or intermediate care are eligible to live in
these facilties.
Federal Assisted Programs
Section 202:
Section 202
is a long-term direct loan to
eligible, private/non-profit sponsors to finance rental or
cooperative housing facilities for occupancy by elderly or
handicapped persons.
The current interest rate is based on
the average rate paid on Federal obligations during the
preceding fiscal year. Section 8 funds are made available
for 100 percent of the section 202 units.
Section 8: Section 8 aids low and very low income families in
obtaining decent, safe and sanitary housing in private
accommodations. HUD makes up the difference between what a
low and very low income household can afford and the fair
market rent for an adequate housing unit. Eligible tenants
must pay the highest of either 30 percent or adjusted income,
10 percent of gross income or the portion of welfare
assistance designated to meet housing costs.
Housing thus
subsidized by HUD must meet certain standards of safety and
sanitation, and rents for these units must fall within the
range of fair market rents as determined by HUD. This rental
assistance may
be used
in existing housing,
in new
construction and in moderately or substantially rehabilitated
units.
Project sponsors may be private owners, profit
motivated and nonprofit or cooperative organizations, public
housing agencies and State housing finance agencies. Very
low-income families whose incomes do not exceed 50 percent of
the median income for the area are eligible to occupy the
assisted units. No more than 5 percent of the available
units may be rented to lower-income families whose incomes ar
between 50 percent and 80 percent of median.
81
Housing Voucher Program: The voucher demonstration program is
similar to the Section 8 program but additionally provides
assisted families with a greater choice in the selection of a
rental unit.
Congregate Housing Services:
The Congregate Housing Services
Program provides three to five-year federal grants to Public
Housing
Agencies(PHAs) and Section
202 borrowers for two
meals a day, seven days a week, and other supportive services
needed by eligible residents
to prevent premature and
unnecessary
insititutionalization.
An
independent
professional assessment committee constituted by the grantee
screens resident who apply for the program, determines
individual eligibility for services and recommends a service
package to management. A congregate housing project for the
elderly or non-elderly handicapped that is either
(a) a PHA
congregate project as defined in Section 7 of the U.S.
Housing Act of 1937;
or (b) housing owned by a non-profit
corporation and funded under Section 202 of the Housing Act
of 1959.
State Unassisted Programs
Massachusetts Housing Financing Agency (MHFA): HHFA is a
financing
agent which
provides both
construction and
permanant loan financing to both private and non-profit
sponsors through tax-exempt bonds.
The agency requires that
25 percent of the units provide affordable housing to low and
moderate income persons.
State Assisted Programs
Chapter 707 Rental Assistance:
Provides subsidies to low
income households to enable them to live in private market
rental housing (existing or newly construction) while paying
no more than 25%
of their income for rent.
Eligible
applicants are families and individuals whose incomes are
below the Chapter 707 area income limits.
Local housing
authority
(LHA) applies to EOCD for subsidy funds.
LHA
subsidy payments to private landlord/owner for difference
between tenant rent share and established allowable rent.
LHA must sign a 5-yr. annual contributions contract with EOCD
for subsidy; then 3-party lease with private owner & tenant.
HODAG (Interim Rental Assistance): Provides short-term bridge
loans, guarantees, & letters of credit to assit private or
partnership
developers
in
comprehensive
non-profit
rental housing projects in
communities of mixed-income
meeting a deadline. The requirements are that closing must
occur quickly, only short term financing must be needed,
there must exist a likelihood of quick payback and no other
means of covering costs. The program is administered through
82
the Massachusetts Housing Partnership and the Economic Office
of Communities and Development.
Federal Income Tax Credits for Assisted Housing: Owners and
private or non-profit developers of qualified mixed or low
income housing developments can take a 9 percent or 4 percent
tax credit on
certain development expenses.
Qualified
projects must contain at
least 20 percent units with
household incomes less than 50 percent of area median or at
least 40 percent units with household incomes less than 60
percent of median.
83
6
rr
7
7'.
NEW HAMPSHIRE
fT
----
-
R
FiCES
-
- --
- --
-
---
'dol"
SE
I
E
tS
-e
-~,
7
1
*--=-* -SUFFOLK
"
,:-NORFOLK
*-n\(PART)
-
,,-- + ...
me
CONNECTICU
---
Dw-s
-
-
se
-
r
PA
....
T'DC14e.
U~dw esn~ogutyo
77*
s
67*7
84
r
o
TABLE:
Total
2A-1 ACTUAL AND PROJECTED ELDERLY POPULATION
65 -
74 Yrs 75 -
84 Yrs 85 and Over 65 and Over
Pop. -----------------------------------------------Year all ages
#
%
#
%
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
76,303
91,972
105,711
122,775
131,669
150,967
179,323
203,302
226,505
249,657
267,955
283,238
296,597
304,807
308,559
309,488
OURCE:N
2,189 2.9
772
989
2,793 3.0
3,464 3.3 1,259
4,721 3.8 1,641
6,375 4.8 2,278
8,415 5.6 3,278
10,997
6.1 4,633
12,447 6.1 6,124
15,578 6.9 7,727
18,035 7.2 10,349
17,677 6.6 12,318
20,318 7.2 12,326
29,855 10.1 14,486
34,535 11.3 21,434
29,272 9.5 24,882
30,114 9.7 21,263
#
123
1.0
1.1
167
1.2
210
1.3
272
1.7
365
577
2.2
2.6
929
1,409
3.0
3.4
2,240
4.1
3,313
4.6
4,926
4.4
6,551
4.9
7,081
7.0 8,612
8.1 12,834
6.9 16,034
198-200:--S-B-eauoft-eCenus
85
%
0.2
0.2
0.2
0.2
0.3
0.4
0.5
0.7
1.0
1.3
1.8
2.3
2.4
2.8
4.2
5.2
#
3,084
3,950
4,933
6,634
9,019
12,270
16,560
19,980
25,544
31,697
34,921
39,195
51,422
64,581
66,988
67,411
%
4.0
4.3
4.7
5.4
6.8
8.1
9.2
9.8
11.3
12.7
13.0
13.8
17.3
21.2
21.7
21.8
TABLE:
2B-1 AGE DISTRIBUTION OF THE U.S.
Number
of
People
Age
Category
< -15
15-24
25-34
35-44
45-54
55-64
65-74
75 +
Number
of
Households
Total
Pop
51,290,339
42,486,828
37,081,839
25,634,710
22,799,787
21,702,875
15,580,605
9.968.882
22.6
18.7
16.4
11.3
10.1
9.6
6.9
4.4
6,708,863
18,350,679
13,948,436
12,630,383
12,617,323
9,967,479
6.166.510
-- ---------------77.4
175,255,526
-----
TOTAL
TABLE:
POPULATION IN 1980
-----------
80,389,673
% of
Pop
Number That are
of Total Hsehld
Heads
Household
8.3
22.8
17.4
15.7
15.7
12.4
7.7
15.8
49.5
54.4
55.4
58.1
64
61.9
-------------
100
2B-2 OWNER AND RENTER HOUSING UNITS IN THE U.S.
BY AGE OF THE HOUSEHOLDER
Housing Units (in Thousands)
OwnerOccupied
RenterOccupied
Total
% OwnerOccupied
Less than 25
25-34
25-29
30-34
35-44
45-64
65 or More
1,115
9,913
3,938
5,975
10,751
20,176
12,387
4,469
10,019
5,839
4,180
4,282
4,553
4,516
5,584
19,932
9,777
10,155
15,033
25,729
16,903
20.0
49.7
40.3
58.9
71.5
78.4
73.3
Total
64,255
37,858
103,113
65.3
Age of
Householder
SOURCE:~U~S.-Bureau often ~ensus: ~nnual~ouing~ ~Survey,1981
86
TABLE 2B-3 SOURCES OF INCOME OF HOUSEHOLD HEADS 65 AND OLDER
AS A PERCENTAGE OF INCOME
Social
Security
railroad
retirement
Families:
1968
1970
1972
1974
1976
1978
1980
1981
1982
1983
Individuals:
1968
1970
1972
1974
1976
1978
1980
1981
1982
1983
Asset
SSI/Public
income
assistance
Pensions
Earnings
22.9
25.0
28.1
31.1
32.3
32.2
32.4
33.0
33.1
34.3
14.6
14.5
14.0
15.4
15.6
15.7
19.4
21.7
21.4
20.9
1.3
1.4
1.1
1.3
1.4
1.2
1.1
1.0
0.8
0.8
12.3
12.5
12.5
13.5
14.5
13.8
15.6
14.9
14.8
16.0
48.2
46.6
44.2
38.8
36.1
37.1
31.4
29.5
29.9
28.0
34.2
37.3
41.7
44.9
46.9
45.9
47.4
45.9
45.3
44.0
26.5
24.1
24.2
21.7
20.9
22.7
24.4
26.6
28.7
28.7
4.1
4.1
3.2
3.7
3.0
2.7
2.5
1.9
1.8
1.9
14.4
15.4
14.3
16.2
15.7
16.9
14.6
14.1
14.1
15.5
20.8
19.1
16.6
13.6
13.4
11.8
11.2
11.5
10.1
9.8
Source: U.S. Bureau of the Census
TABLE: 2B-4 INCOME DISTRIBUTION OR 70+ HOUSEHOLDS, 1985
CASH INCOMES
Income
$0
-$9,999
$15,000-$24,999
$25,000-$34,000
$35,000 +
Households
%
2,337,000
2,337,000
948,000
1,107,000
19.0%
19.0%
8.0%
9.0%
WITH POTENTIAL
EQUITY*
Households
1,845,000
3,198,000
1,107,000
1,722,000
15.0%
26.0%
9.0%
14.0%
Total
12,300,000
100.0%
12,300,000
100.0%
*Assumes homes are sold and net proceeds are invested at 10%.
SOURCE: Rkeal- EtateReegarch Caorporatin----------
87
TABLE:
3B-1 FEDERAL OUTLAYS BENEFITING THE ELDERLY
1984-1985 (In Millions of Dollars)
Fiscal Year
2984 actual 1985 estimate
Health
Retirement/Disability
Subsidized Housing
Section 202 Elderly Housing Loans
Other Miscellaneous
64,806.6
161,792.7
4,382.6
595.0
4,258.1
74,260.0
174,993.8
9,549.5
514.4
4,246.8
Total Elderly Outlays
Percent of Total Federal Outlays
235,835.0
27.7%
263,564.5
27.5%
SOURCE: Office of Management and Budget.
AND AVERAGE ANNUAL
CONSUMER PRICE INDEX
3B-2
TABLE
PERCENT CHANGE FOR ALL ITEMS AND SELECTED ITEMS
Item
Year
Medical
Care
All1
Items
BASE YR 1967
1970
1975
1976
1977
1978
1979
1980
1981
1982
1983
100.0
1967-1970
5.8
6.5
7.7
11.3
13.5
10.4
6.1
3.2
1970-1975
1975-1976
1977-1978
1979-1980
1980-1981
1981-1982
1982-1983
sOUCEiBue~
116.3
161.2
170.5
181.5
195.4
217.4
246.8
272.4
289.1
298.4
Housing
Transportation
Consumer Price Index
100.0
100.0
118.2
120.6
164.5
168.6
184.7
202.4
219.4
239.7
265.9
294.5
328.7
357.3
174.6
186.5
202.8
227.6
263.3
293.5
314.7
323.1
Average annual percent change
9.5
6.1
9.6
6.8
8.4
8.7
9.3
12.2
10.9
15.7
10.8
11.5
11.6
7.2
8.7
2.7
-Labor~Sisis,
Consumer Price Index.
88
100.0
107.0
176.6
189.3
207.3
220.4
275.9
361.1
410.0
416.1
419.3
7.2
9.5
6.3
25.2
30.9
13.5
1.5
0.8
U~s.~~ept.~of Labor:
TABLE 4B1-1 COMPARATIVE POPULATION CHARACTERISTICS:
HAVERHILL/IPSWICH
---------------------------------------HAVERHILL
IPSWICH
46,120
46,865
46,172
47,401
10,750
11,158
11,541
11,370
7,306
1,332
17,261
7,306
4,056
965
6,433
9,098
15044
8,175
11,740
20640
POPULATION
1970
1980
1985
1990
AGE:
65 and over
HOUSEHOLDS
Total
with persons over 65
INCOME
per capita income, 1979
per capita income, 1983
median household income,
1979
TABLE 4B1-2 POPULATION CHANGES IN
SINCE 1980-
THE COMMONWEALTH
-~~--------------------------
Percent Change
since 1980
Community
--------
----------------------------
Boston
Haverhill -Lawrence
Salem-Glouster (Including Ipswich)
Lowell
Brockton
Springfield
Worchester
River
Fall
Nashua, N.H.
SOURCE: U-S.-CENSUS-UREAU,-1980
89
0.5
5.2
0.4
3.0
1.8
0.1
0.5
(0.4)
7.6
TABLE 4B1-3 AVERAGE ANNUAL EMPLOYMENT: HAVERHILL/IPSWICH
Government
Contract Construction
Manufacturing
Trans-Comm-Utilities
Wholesale and Retail Trade
Finance Insurance Real Estate
Services
Agriculture/Fisheries
Total Employment
SRIVISION
OF
HAVERHILL
IPSWICH
2,914
618
4,059
902
3,755
708
3,421
26
421
174
418
81
961
150
284
35
16,403
2,524
MASSLOYMETSUIY19
DIVISION OF EMPLOYMENT SECURITY, 1985.
90
FINANCIAL TABLES
91
BAVEREILL: SPACE ANALYSIS
LOi!MOMIt1 INCOME UNITS:
OiE BEDPe- UNITS
TVO BEDROOM Ullis titTE A1
TWO BEDROOM UNITS (?TPE B)
MARKET INCOME UNITS:
ONE BEDROOM UNITS
A)
TWO BEDROOM UNITS (TYPE B)
TWO BEDROOM UNITS (TYPE
t 1TEIDfENTIPL Vi1tt
NUMBER % TYPE
SQFT
PER UNIT
19%
650
19
4
2
850
4%
50
i
25
25%
2,350
56
15
56%
15%
650
4
75
100
4%
350
50
TOTAL
SQ FT
% TOTAL
12,350
13%
11,4s
18%
36,400
12,750
38%
13%
3,400
1,700
4%
2%
4%
3,400
75%
2,350
52,550
55%
101%
4,700
70,000
73%
COMMON ARIA/OTBER FACILITIES
25,891
27%
TOTAL GROSS SQUARE FOOTAGE
95,190
100%
IPSWICE: SPACE ANALYSIS
NUMBER
LoU(NOCEEATE [ICOnE UNITS:
% TYPE
SQ FT
PER UNIT
TOTAL
So FT
% TOTAL
609
122
13,398
4,932
17%
6%
40%
1,431
11,330
23%
18
24
26%
34%
609
122
10,962
19,723
14%
25%
42
60%
1,431
30,690
39%
70
100%
2,862
49,020
62%
CIRCULATION
19,681
25%
GROSS RESIDENTIAL ANDCOMMON SPACE
GROSS COMMERCIAL SPACE
75,573
96%
ONE BEDROOM UNITS
TWO
BEDROOM
UNITS
22
6
31%
28
9%
MARKET INCOME UNITS:
ONE BEDROOM UNITS
TWO BEDROOM UNITS
NET RESIDENTIAL SPACE
COMMON AREA
6,872
3,514
TOTAL GROSS SQUARE
FOOTAGE
79,087
z::
ttzz:
Z: : 2: zz: z: Z:: z::
:tzzz ZZ:zz
92
9%
4%
100%
:2
IPSVICB: PROJECT SUMMARY/ASSUMPTIONS
DEVELOPMENT COSTS:
RESIDENTIAL DEVELOPMENT COST PER UNIT
EUIBER AID TYPE OF UNITS:
1BR
2BR
FINANCING ASSUMPTIONS:
77%
PERCENT LEVERAGED
MORTGAGE AMOUNT
$6,408,380
91
INTEREST RATE
30
TERM
(NUMBER
OF YEARS)
2%
ORIGINATIO COST (1OF MORTGAGE AMOUNT)
$113,966
40
30
-----------71
RESIDENTIAL DEVILOPMEI1 tS1I
COMMERCIAL DEVELOPMENT COST
f132,43
IIVESTMENT nTQRUTURE:
TOTAL DEVELOPMENT COST
OTEER
GROSS
GfoSt
GROSS
TOTAL
ESTIMATED PROJECT COSTS:
RESIDENTIAL SQ FT
COMMUNITY
SQPT
COMMERCIAL SOFT
GROSS SQ FT
NET RENTABLE RESIDENTIAL SQ FT
NET RES. SO F? AS % OF GROSS RES. SQFT
NET COMMMERCIAL SQ FT
$53,054
$636,646
10TBLY DEBT SERVICE
AiNUAL DEBT SERtVICE
$7977,054
RATE
A'rIMUM TAX
PASS17E 1011 LINITATIONS
LOV INCOME TAX CREDIT ASSUMPTIONS:
PERCENT OF UNITS ELIGIBLE FOR ClIDIT
In1 CREDIT RATE
60,701
6,872
3,514
19,Wi1
$1,310,051
EQUITY REQUIREMENT
$1,901,677
401
41
--------------------------------------------------CONS?. COST PER GROSS RtS.R COMMON
SQf?
CONS?. COST PER RESIDENTIAL UNIT
CONS?. COST PER GROSS COMMERICAL SQ FT
68,701
91%
3,514
EQUlIy REQUIREMENTS:
DEVELOPMENT COST
MORTGAGE AMOUNT
25%
NONE
(IF CORPORATE INVESTOR)
ALLOCATION OFCONSTRUC iGO
COST:
LAND COST ($11 429 PER UNIT)
BUILDING AND
SbFT CDSTS
(6,401,380)
$71.02
$76674
$72.95
$800,000
$7,510,056
$8,310,056
DEVELOPERS FEE 1 20% OF TOTAL CONST COST $1,251,676
LAND CONTRIBUTION
500,000
CASH CONTRIBUTION
150,000
TAX CREDIT CALCULATIONS:
DEPRECIABLE BASIS
ANNUAL CUttLT kilILBLE
$1,901,676
93
$1510,056
1300,402
EAVEREILL: PROJECT SUMMAIT/ASSUMPTIOIS
DEVELOPMENT COSTS:
EUKEE LED TTFt er
FINANCING ASSUMPTIONS:
100%
PERCENT LEVERAGED
MORTGAGE AMOUNT
$10,000,160
9%
INTEREST RATE
TERM (IUMBER OF TEARS)
30
RIGIAT103 COST (tOF MORTGAGE AMOUNT)
2%
101,961
DEVELOPMENT CWST PER UNIT
Itn:
lIt
2B1
75
25
-
-
100
TOTAL DEVELOPMENT COST
-----------------------------------------------------
INVESTMENT STRUCTURE:
MAXIMUM TAX RATE
PASSIVE LOSS LIMITATIONS
OTHER ESTIMATED PROJECT COSTS:
GROSS RESIDEN!AL SC 7T
GROSS COMM'NJIi SQ FT
1211ESS S FT
70,000
25,890
95,90
IET RENTABLE RESIDENTIAL SQ FT
iET IRS. SQ FT AS I OF GROSS RES. SQ FT
71,000
73%
=D17 UEQUIREIwT
25%
IONE
(IFCORPORATE INVESTOR)
LOV INCOME TAI CREDIT ASSUMPTIONS:
PERCENT OF UNITS ELIGIBLE FOR CREDIT
TAX CREDIT RATE
$11
CONST. COST PER GROSS RES.i COMMON SQ FT
COIST. COST PER RESIDEWTIAL UNIT
$49,000
----------------------------------------------------EQUITY REQUIREMENTS:
DEVELOPMENT COST
MORTGAGE AMOUNT
$80,464
$965,563
MOITHLY DEBT SERVICE
ANNUAL DENT SERTICE
10,196,104
ALLOCATION OF CONSTRUCTION COST:
LAND COST ($6 000 PER UNIT)
BUILDIIG ANDSOFT COSTS
25%
4%
$600,000
$9,596,104
$10,196,104
============
$10,196,104
($10,000,160)
TAX CREDIT CALCULATIONS:
DEPRECIABLE BASIS
ANNUAL CREDIT AVAILABLE
$195,944
94
$9596,104
1313,844
IAVEREILL DEVELOPMENT COSTS
RESIDENTIAL RESIDENTIAL
UNIT COST
COST
BARD COSTYS.
CONSTRUCTION
CONTINGENCY
SITE COSTS
BOND SURVEYS AND PERMITS
ARCEITECTURAL DESIGN
SOFT COSTS:
CONSTRUCTION Lol INTERST
REAL ESTATE TAIES
JISURANCE
W1!A SITE11SPECTIO FEE
MEFA A iCAT0if IE
MEFi VIIAfCING FMN
LEGAL FEES
BORINGS AND TESTS
ACCOUNTING I COST CERTIFICATION
RENT-UP I MARKETING
DEVELOPERS' FEE
LAND
TOTAL DEVELOPMENT COST
$95,390
4,195
4,795
1,151
5,934
$,712,310
315 ,15
335,615
80,543
352,391
COST PER
SQ. FT.
$70
1.50
3.50
9.14
3.6
65.83%
3,29%
3.19%
0.19%
3.46%
111,164
1,750
250
146
500
7,116,475
S75,011
2S, At
50,001
1.67
0.52
300
2,000
S00
350
100
1,000
30,000
200,003
90,000
35,000
10,000
100,090
0.31
2.09
0.94
0.31
0.10
1.04
0.29%
1.96%
1.88%
0.34%
0.10%
$12,796
$1,279,621
$13
12.55%
5,l00
1,000
500,000
600,000
5.21
1.26
4.90%
$101,961 $10,196,104
$101
100.01%
it,51
81.52
0.00
7.04
% TOTAL
6.21
71.66%
6.62%
0.25%
0.63%
0.49%
0.90%
5.80%
IPSEICR DEVELOPMENT COSTS
RESIDENTIAL RESIDENTIAL COST PER
UNIT COST
SQ. FT.
COMMERCIAL COST PER
SO. FT.
RESIDENTIAL
ACOMMERCIAL
I TOTAL
NARD COSTS:
CONSTRUCTION
SURVEYS & PERMITS
BOND PREMIUM
DESIGN
INSPECTION
SOFT COSTS:
CONSTRUCTION LOAN INTERST
REAL ESTATE TAIES
INSURANCE
MHFA SITE INSPECTION FEE
MEFA APPLICATION FEE
MHFA FINANCING FEE
LEGAL FEES
TITLE AND RECORDING EIPEISES
ACCOUNTING I COST CERTIFICATION
RENT-UP I MARKETING
APPRAISAL FEES
DEVELOPERS' FEE
LAND
TOTAL DEVELOPMENT COST
$72,696
206
$5,08,000
14,400
$67.33
0.19
$212,000
600
$60.33 $5,300,000
8.17
15,000
63.70%
1.18%
509
35,615
0.47
1,484
0.42
37,099
0.45%
2,907
727
203,520
50,879
2.69
0.67
9,400
2,120
2.41
0.10
212,000
52,999
2.55%
0.64%
$77,934
$5,392,414
$71.35
$224,684
$63.94 $5,117,098
67.59%
4,691
123
151
439
264
1,753
328,316
8,140
10,560
30,760
19,456
123,041
4.35
0.11
0.14
0.41
0.24
1.63
13,682
360
440
1,212
769
5,127
3.19
0.10
0.13
6.36
0.22
1.46
342,048
9,000
11,000
32,042
19,225
128,118
4.12%
1.11%
0.13%
1.39%
0.23%
1.54%
340
23,803
992
0.28
24,100
0.30%
171
69
686
103
0.32
12,000
4,800
48,000
1,200
0.16
0.06
0.14
0.10
500
200
2,0
300
0.14
0.06
6.57
..
0.69
$8,795
$1615,631
$3.15
$25,652
$7.30
$641,283
7.72%
17,166
19,971
1,201,101
1618,000
15.93
10.11
50,067
32,000
14.25
9.11
1,251,676
800,000
15.06%
9.63%
$113,966
$1,977,654
$105.51
$332,I03
$94.59
$8,310,057
100.00%
95
12,500
5,000
50,000
7,500
.15%
0.06%
60%
0.09%
EAVERHILL CASH FLOW PROFORKA
INFLATIO1 AID OTHER
ASSUMPTIONS:
CUOSS POTNTIL HITS:
VACAJCT ASA (% OF GPR)
OTHER INCOME:
SERVICE FEE INCOME (LOV/MODERAtII
SERVICE FEE INCOME (KARKET)
SURP INCOME
TENDOR INCOME
1980
$804,996
(40,250)
lN
113966
'1,
375,000
2,500
1989
1990
1991
$845,246
(42,263)
$887,508
(44,376)
$931,183
(46,594)
203,370
6U0,059
375,000
2,625
213,539
630,062
375,00
2,756
224,216
661,565
375,000
2,194
1992
1993
$978,478 $1,027,402
(48,924)
(51,370)
235,427
694,644
375,000
3,039
247,198
729,376
375,000
3,191
EFFECTIR GIOSS INCOMIl
OPERATING 11ISES
$1 907,417 $2102,781 $2 102,927 $2200,074 $2,318,477 $2,434,401
1803,561) 1895,1391
930,026) 1976,527) (1,025,354) (1,076,621)
NET OPERATING INCOME
$1 063,856 $1 117,049
DEBT
SERVICE
1965,563) 1965,563)
$1 172,901 $1 231,546
1965,563) 1965563)
$1 293,124
1965,563)
$1 357,780
1965,563)
I1 CAI FLOf HuOU TABS
$98,293
$103,208
$108,369
$113,787
$119,476
$125,450
MH ALLOWABLE
CISE FLOW
120,002
120,002
120,002
120,002
120,002
120,002
EXCESS CASH FLOW
SHARP REDUCTION
3011 REDUCTI01
(21,709)
(16,794)
(11,633)
(6,215)
(526)
5,448
3,284
2,165
TOTAL
SEARP CONTRIBUTION
TOTAL I0E1 CONTRIBUTION
FOR KPV CLULATION
NET PRESENT VALUE 1 10% =
lITERIAL RATE OFRETURN =
245,033
371,716
(200,003)
$98,293 $103,208
$108,369
$113,787
$119,476
$831,966
54.04%
-------------------------------------------------------------------------------------------------IPSWICB CASH
FLOW
PROFORMA
----------------------------------------------------------------------INFLATION AID OTHER ASSUMPTIONS:
1500
1195
1590
1991
1992
EFFECTIVE GROSS INCOME
VACACT
OTHER INCOME:
10DAG ANNUITY
EOCD
707 MOD
RENlB GRANT
TOTAL INCOME
OPERATING EIPEISES
$125,450
5.00%
5.00%
5.00%
1193
$511,694
(24,711)
$537,279
(26,020)
$564,143
(27,321)
$592,350
(28,618)
$621,567
(30,122)
$653,066
(31,628)
$486,913
$511,258
$536,121
$563,662
$591,845
$621,438
374,845
94,464
361,153
99,107
351,054
104,147
333,101
109,354
314,250
114,822
294,456
120,563
$469,309
$467,340
$455,201
$442,455
$425,072
$415,019
992,022 1 006,117
1 020,917
1 036, 456
956,222
970,598
(251,534)
(264,111)
(277,316)
1291,182)
1305,741)
1321,028)
IET OPERATING IICOME
DEBT SERVICE
$704 ,681
(636,641)
$714,408
(636,646)
$714,705
636,646)
$714,935
(636,646)
$715,176
(636,646)
$715,428
(636,646)
NET CAI FLOW
5EFO1TAiES
$68,042
$77,842
$78,059
$70,209
$78,530
$78,782
63,042
77,842
78,059
78,289
78,530
70,782
FOR NPV
CLCULATION
NiT PRESET TALUE 10 %
INTERNAL RATE OF RETURN
(650,300)
$15 618
16.38%
96
OAVERBILL CASE FLOW PROFORMA
1994
ISTLLTION AND OTHER ASSUMPTIONS:
GROSS POTENTIAL EiTS:
VACAJCi AS A (% OF oPill
OTEi INCOME:
SER11CE fE INCOME (LOW/MODE1hl
SERVICE FEE IICOME (MARET)
SHARP INCOME
VENDOR INCOKE
IFFECTIVE GROSS INCOME
1995
1996
1997
1998
1999
1993
$1,071,772 $1,132,710 $1,139,346 $1,248,113 $1,311,254 $1,376,016 $1,027,402
153,939)
(56,636) (59,468)
(62,441) (65,563)
(68,841)
(51,370)
11
259,558
212,56
1
S,45 804,137
315,000
375,000
3,350
3,518
286,162
300,471
844,341
886,561
375,000
3,694
375,0810
3,378
315,494
931,819
375,010
4,072
331,269
977,433
375,000
4,276
247,198
729,376
375,000
3,191
$2,556,121
OPERATING EXPENSES
$1,683,921 $2,818,124 $2,959,030 $3,106,981 $3,262,330 $2,434,401
(1,130,452) (1,116,975)(1,246,324) (1,308,640)(1,374,072) (1,442,776) (1,076,621)
IVT *1ERTIG
DEBT SE lICE
$1425,669 $1496 ,952 $1571 ,800 $1650,390 $1732,909 $1319,555 $1357 ,70
1965,563)
196,563) 1965,563) 1965,563) 1965,563) 1965,563) 1965,563)
11COME
NET CASE
FLOW
BEFORE TiKES
KA ALLOVABLE CASE FLOW
EXCESS CASE TLOW
SHARP REDUCTIOI
E0EA REDUCTION
TOTAL SHARP CONTRIBUTION
TOTAL 80EA CONTRIBUTION
FOR IPV CALULATION
$131,723
$138,309
$145,224
$152,485
$160,110
$168,115
$125,450
120,002
120,002
120,002
120,002
128,8012
120,002
120,002
11,721
25,222
14,306
10,917
32,483
18,034
4,794
13,307
16,652
1,105
14,450
40,108
21,182
18,326
48,113
25,546
22,567
5,448
3,284
2,165
254,764
368,074
264,831
364,398
275,246
360,694
286,021
356,966
297,168
353,218
308,702
349,454
245,033
371,716
$131,723
$138,309
$145,224
$152,485
$160,110
$168,115
$125,450
1995
1996
1997
1998
1999
1993
6,926
IPSVICH CASE FLOW PROFORMA
INFLATION AND OTHER ASSUMPTIONS:
EFFECTIVE GROSS INCOKE
VACANCY
OTHER INCOME:
HoDAG ANNUITY
EOCD
707 NOD REA GRANT
TOTAL INCOME
OPERATING EXPEISES
SET OPERATING INCOME
DEBT SERVICE
IET CASE FLOW BEFORE TAIES
FOR IPV CALCULATION
1994
$685,719
(33,209)
$120,005 $756,005
(34,870) (36,613)
$793,805 $833,496
(38,444) (40,366)
$375,170
(42,385)
$653,066
(31,628)
$652,509
$685,135
$719,392
$755,361
$793,129
$832,786
$621,438
273,613
126,591
251,850
132,920
228,937
139,566
204,878
146,545
179,615
153,372
153,090
161,565
294,456
120,563
$400,264
$384,770
$363,503
$351,423
$333,487
$314,655
$415,019
1 106,784 1 126,616
1 147,441
1 036,456
$717,233
$715,428
(636,646)
(636,646)
$30,587
30,587
$78,782
73,782
1 052,773
1337,180)
$715,694
1 069,905 1 087,395
1353,934) 1371,630) 1390,212) 1409,722)
$715,972
$716,265
$716,572
(636,646)
(636,646)
(636,646)
(636,646) (636,646)
$79,848
79,348
$79,326
79,326
$79,619
79,619
97
$19,926
79,926
$716,394
$30,248
80,248
1430,209)
1321,128)
AVIERHILL: CAILCULAARIA MEDIAN INCOME:
NUMBER. OF
LOW-IICOME UNITS: BEDROOMS
1
2
MARKIET
REITS:
$35,001
MEDIAN
INCOME
IICOME
LIMITS
42% $14,700
48% $16,800
NUMBER OF
BEDROOMS
INCOME
1 $26,96D
2 32,600
LOV-IICOME UNITS:
MAlET RATE UIITS:
2 BR
1 IR
1
2
2
19
0
0
0
4
2
1
2
2
56
0
75
0
TOTAL
IPSVICB: CALCULATIARIA MEDIAN IICOME:
BASE
BEDROOMS
INCOME
1 $25,000
2 $29,000
LOV-IICOME UNITS:
MARET RATE UNITS:
1
1
2
1
2
TOTAL
EEEEEa
E-EEEa::
RENT
$355
$405
TOTAL
ACTUAL
ANNUAL
RENT
$6,408
$7,416
RENT
$534
$618
TOTAL INCOME FROM RESIDENTIAL
OPERATIONS
RESIDENTIAL:
LOW/MODERATE
$166,248
638,748
VACAICT ALLOVANCE 0 (40,250)
MONTHLY
ANNUAL
SERVICE FE SERY FEE
PER UNIT PER UNIT
4
2
$6,421
6,900
11,400
0
15
4
56
15
4
535
575
6,420
6,00
11,400
25
100
950
MAREET
SERVICE FEE INCOME:
LOW/MODERATE
ARiET
30%OF
IICOME
$7,500
$8,700
VENDOR INCOME
R
ALLOWABLE
ATTAINABLE
30% OF MONTHLY UTILITIES
NET
INCOME
RENT ALLOWINCE
RENT
$4,788
$399
($13)
$386
$5,472
$456
($15)
$441
RESIDENTIAL
LOW
MARKET
CDMMERICIA
TOTAL
2 31R TOTAL
22
0
10
S
0
24
22
6
18
24
40
30
70
S
6
EEEE:Ec
EEE
-E::------------
ACTUAL
RENT
$360
$405
VACANCY CALCULATIONS:
ACTUAL
RENT
$625
$725
3%
5% $3,721
10%
3,865
$24,781
TOTAL INCOME FROM RESIDENTIAL
COMMERCIAL SOURCES
RESIDENTIAL
LOW
MARKET
COMMERCIAL
LAUNDRY
$124,260
343,800
38,654
5,040
TACAINCY
z
a::aE:
98
764,746
172,380
508,620
681,000
TOTAL
TOTAL
Z-:EEEEEEEEaEEE:EEa
ITTINABLE ACTUAL
NET MONTHLY
$38,000
IUMBER OF
UNIT - TYPE MII: NUMBER OF
BEDROOMS
MONTELY UTILITIES
REIT ALLOWANCE
$368
($13)
$420
($15)
$535
575
SO
NUMBER OF %MEDIAI
INCOME
BEDROOM
INCOME
LIMITS
LOV-IICOME UNITS:
1
42% $15,960
2
418%
$18,240
MARKET REITS:
ALLOVABLE
ACTUAL
ACTUAL
30%OF NONTILY
ANNUAL
INCOME
RENT ill
$2,247
$674
$8,088
2,717
815
,710
BASE
UNIT - TYPE MII: NUMBER OF
BEDR000DMS
30\ OF
INCOME
$4,410
$5,04s
(24,781)
$486,513
at:
2
I
2,508
$1,448,246
IAVERBILL TOTAL ANNUAL OPERATING EIPENSE SCHEDULE
ITEM
TOTAL
RESIDENTIAL
UNIT COST RESIDENTIAL
$765
MAAGEMENT FEE
/IISUWCE
E
l /C
ADMI
650
750
IDMIXISTRAT1
$76,494
65,001
75,000
95,000
950
3,917
391,725
OPERATING lIP. FORE TA & REP. RESERVE
REAL ESTATE TAIES
REPLACEMENT RESERVES (%OF DIR. CONS?.)
$7,032
$703,215
503
50,342
TOTE ANUAL OPERATIIG EIPENSES
$9,436
$843,561
UTILITIES
COST OF ELDERLY SERVICES
900
90,000
IPSWICH TOTAL ANIUL OPERATING IPESE SCHEDULE
ITEM
TOTAL
RESIDENTIAL
UNIT COST RESIDENTIAL
ANAGEMEINT:
ADMINISTRATIVE:
PAYROLL EIPENSES-IICL. TAIES, ETC.
LEGAL
AUDIT
MARKETING EIPENSES
TELEPHONE
OFFICE SUPPLIES
$402
$28,150
$1,735
164
29
39
11,500
2,000
2,700
1,500
3,700
1,000
1,200
$50,250
$3,239
21,700
1,160
7,200
4,000
17,000
4,500
3,500
1,110
500
20
2,400
$970
$60,660
$2,400
126
578
10
9,90t
40,435
12,609
$113
$61,935
63
224
4,440
15,680
$287
$20,120
2,759
521
275
(63)
153,065
36,500
19,250
(4,441)
53
14
17
$718
MAIITENANCE:
PAYROLL EXPEISES-INCL. TAIES, ETC.
JANITORIAL MATERIL
LANDSCAPING
DECORATING (INTERIOR)
EITERIOR)
REPAIRS (INTERIOR AND
ELEVETOR MAINTENANCE
TRASH REMOVAL
GARBAGE AND
REMOVAL
SNOw
EITERMINATING
310
16
103
57
243
64
50
16
7
4
MISCELLANEOUS
UTILITIES:
ELECTRICITY
GAS
WATER AND SNVER
UTILITY ALLOVACE (SECTIOI I ONLY)
INsURAiCE
OPERATING EXP. IEFORE TA. I REP. RESERE
REAL ESTATE TAES
REPLACEMENT RESERVES (%DIR. CONS?)
UTILITY ALLOVNCE (SECTIOI 1)
TOTAL
COMMERCIA
$0
$0
5,635
1,500
$244,395 c c $7,139
$3,491
t
z..
~z:::=
................
:::=:
TOTA ANNUAL OPERATING EXPEISES
99
NOTES
1 Lautman,
William D. and Rydzewski, John J.
"Health Care
Finance: Separating Real Estate and Operations," Real Estate
Finance Journal, Spring 1987,p.32.
2 The terms
"Go-Go," "Slow-Go" and "No-Go" were used in the
article
entitled
"Developing Retirement
Housing" which
appeared in
the October 15,
1984 issue of The Mortgage and
Real Estate Executives Report
(Boston, Mass.: Warren, Gorham
& Lamont, Inc.).
3 "Legislative
Recommendations", Massachusetts Executive
Office of Elder Affairs, Newsletter, Spring 1987,p.5.
Derived from "Guidelines for the Planning and Management of
State Funded Congregate Housing for the Elderly", Executive
Offices
1985.
of Elder
Affairs/Communities
and Development,
May
McArdle, Nancy, "Congregate Housing Versus Institutional
Care:
A Cost Comparison", Working Paper, Prepared
for the
Executive Office of Elder Affairs and the John F. Kennedy
School of Government, Harvard University, May 1986.
6
Cohen,
Muriel
"Good College Leaders Can Create Good
Colleges", The Sunday Boston Globe, August 3, 1986, p. B102.
Wolfe,
Robert J.,
"When University Becomes a Developer",
Real Estate Finance Journal, Summer 1986, p.59.
8
Summary
of Chapter 774
of the Acts of
1969
(H5681),
"Criteria for Deciding Appeals to The House of Appeals
Committee", The Commonwealth of Massachusetts.
Mitchell,
J. Paul,
"Federal Housing Policy and Programs,
Past and Present" Rutgers, State University of New Jersy,
1985, p.198.
10 Howell, Sandra C., "Site Selection and The Elderly" in
the
Community Planning for an Aging Society edited by R.J.
Newcomer, M.P. Lawton and T.O.
Byerts, Stroudsburg, PA:
Dowden, Hutchinson and Ross, 1976, p.181.
11 Parker, V., Welch, P. and Zeisel, J.,"Independence Through
Interdependence,
Congregate Living
for Older
People",
Department of Elderly Affairs, 1984.
12 ibid.
100
123
Derived from Kennedy, Sheila Rauch, "Housing Options For
The Elderly", A report of the Massachusetts Housing Finance
Agency, June 1985, pp.
26-27.
101
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The