planning for the elderly…now and

FEASIBILITY STUDY Senior Housing in Moorcroft Wilson & Company Sheridan, Wyoming

Planning for the Housing Needs of our Seniors and Elderly…now and in the future.

ECONOMIC DEVELOPMENT BOARD of DIRECTORS

TOWN

of MOORCROFT, WY

JULY 2009

CONTENTS

PAGE SECTION ONE - Introduction 1 SECTION TWO – Summary of Findings 2 SECTION THREE – Pre-Development Process 4 SECTION FOUR – Discussion of Senior Housing 6 SECTION FIVE – The Market Place 12 SECTION SIX – Demand for Housing 19 SECTION SEVEN – Affordability 24 SECTION EIGHT – Market Share 32 SECTION NINE – A Business Model 38 SECTION TEN – The Facility 39 SECTION ELEVEN – Funding and Financing 51 SECTION TWELVE – Program Management/Operation 60 SUPPLEMENTAL – Alternative Site Reviews

Wilson & Company Sheridan, Wyoming

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Wilson & Company 1 Sheridan, Wyoming

Introduction of the Study The Town of Moorcroft along with its Economic Development Board has commissioned a comprehensive study of the feasibility of developing senior specific housing in Moorcroft. This Study will report the findings of this work to the Economic Development Board and to other interested parties in the community as may be identified by the Board. With this information the Board will be better informed as they make decisions about the type, quantity and configuration of senior housing product(s) to be developed in Moorcroft. METHODOLOGY This work proceeds through a logical sequence leading to recommendations for consideration by the Economic Development Board. • Overview of the senior housing spectrum • Populations and demographics of the Moorcroft market area • Development of a demand model • Identification of existing housing in the market • Affordability and ability to purchase • Solutions for Moorcroft • Infrastructure and site • Funding and financing sources • Conclusions RESOURCES In conducting the study we used data from a variety of resources that are applicable to the specific components of housing that serve seniors and elderly populations. • U.S. Census Bureau – 2000 Population Base • Claritas, Inc. – Neilson Company – Population Estimates/Projections 2009 - 2014 • NIC – National Investment Conference – Senior Living and Long Term Care • Wyoming Housing Data Base • Wyoming Community Development Authority • Moorcroft Community Assessment – Wyoming Rural Development Council • MetLife – Mature Market Institute • Headwaters Economics – Crook and Weston County Socio Economic Profiles • National Center for Assisted Living - Resident Profiles • Assisted Living Federation of America • American Seniors Housing Association – The State of Seniors Housing

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Summary of Findings Moorcroft is an appropriate location for the development and operation of senior housing with services. The community should pursue funding and construction of a licensed facility that provides one bedroom apartments, meals and personal assistance to its tenants. CONCLUSIONS • The facility should be developed and owned by the Town of Moorcroft or by a

non-profit entity sponsored by the Town.

• All development and operational decisions should be made based on the premise that at least 51% of the apartment units will be occupied by low to moderate income persons, as defined by HUD low income guidelines.

• Rent levels must therefore be capped at HUD approved low rent levels for

51% of the apartments. • Design and construct 18 one bedroom apartment units with private

bathrooms and capacity for 19 persons.

• Facility should provide approximately 15,500 sq ft of space. • Development should provide a single story building with common areas for

food preparation, dining, socializing, operations and plant support. • Town/Non-Profit owner should engage qualified architect to develop

complete construction drawings and specifications for the facility. • The facility should be constructed using good commercial standards without

expensive or costly finishes and adornments that could make it difficult to finance and maintain as an affordable project.

• Current budget for construction should be $160 per sq ft based on competitive design, bid and build process.

• Site should provide three quarters to one acre of land, flat with utilities and infrastructure adjacent.

• Site, development and preparation of the site and associated infrastructure should be provided by Town of Moorcroft as owner of the project, thereby qualifying the project for state/federal community development and housing project funding.

• A qualified operator/management company should be contracted to develop the assisted living program and to operate it independently from the Town and/or the non-profit facility owner.


• Program content should provide for personal services as allowed in a licensed assisted living facility.

• Services should be provided on an assessment need basis, beginning with low level (congregate) services then up to and including highest level of services allowed by state licensure.

• The project should seek and qualify for federal rent subsidies and Medicaid

Waivers specifically designated for assisted living residency. • Financing should be a combination of Town of Moorcroft funding, private

donations, state and federal grants and federal program guaranteed loans. Assessment of Strengths and Challenges STRENGTHS • Location, on major highways, central to market • Sustainable growth in market area population • Support from community and Town • Qualified operator/manager available in area • Identified need for additional housing with personal services provided • Identified need for housing/services to low/moderate income senior persons • Favorable construction costs currently available • Suitable site available within the Town of Moorcroft CHALLENGES

• Limited retail services for seniors and elderly • Possible limited specialized workforce • Difficult market conditions for long term mortgage financing • Low income affordability compliance limits cash flow for debt service • Requires significant volunteer time and energy commitment from board • Requires significant funding commitment from town and county government

Estimated Cost 18 unit facility – 15,475 sq ft - $3,800,000 facility - $ 268,000 site development Conclusions This study indicates that a correctly design and programmed assisted living facility providing rentals and services for low/moderate income seniors and elderly is feasible. The success depends primarily upon a well crafted contract with an operator/manager and a workable long term financing package.

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Recommended Pre-Development Process This feasibility study suggests a need for an 18 unit assisted living facility to be built in the Town of Moorcroft. The process for developing and constructing a facility of this size and complexity can be challenging for an all volunteer organization. The following narrative provides a simplified guide for organizing and implementing the actions to advance the project through pre-development phase. Once this is completed a decision can be made to proceed with design, development and contracting for construction of the project.

• Conduct market study and feasibility analysis (Completed)

• Expand Economic Development to include a project committee and task force • Create business model for ownership and sponsorship with Town of Moorcroft • Develop planning grant application for facility master planning and concept • Interview and engage qualified architects for development of concept schematic

• Explore sites and secure control of final site selection • Enter into discussions for working relationship with facility manager/operator • Work with architect to develop good cost estimates • Develop budget for design, development and construction phase funding • Contact Wyoming Dept of Health–Facilities Division to introduce project • Research and further identify town, county, state and federal funding sources • Contact local and regional banks to introduce project and seek financing advice

• Contact Wyoming Business Council - explore of Business Committed Grants These tasks may proceed simultaneously as the development process evolves. The following organizational structure would provide multi-tasking committees and task force members to work in tandem, moving the development forward on several fronts at the same time.


PRE-DEVELOPMENT ORGANIZATION

Optional

Town of Moorcroft

Economic Development Board

Facility Development Task Force

Financing Development Task Force

Business Development Task Force

Architects

Engineers

Development Consultant

Grant Writer(s)

Advisors (Attorney)

Dept of Health Funding Sources

Facility Manager/Operator

Contractors

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Discussion of Senior Housing

SENIOR HOUSING IN THE CONTINUUM Well developed senior and elderly housing programs are an important part of a continuum of services for a community’s aging populations. The housing products should be very specific, well defined and intended to act as a provider of shelter and or services. These programs include products for persons who can live reasonably independent as might be found in one’s home or a private apartment and continuing through to a fully dependent arrangement as is found in a skilled nursing home setting. Independent living facilities are not licensed and can be operated as month to month rentals without any personal services being made available by the operators. This model provides all of the amenities found in a private residence but at a much smaller scale. The tenants live in fully contained private settings without any formal association with the others in the apartment complex. Some of these persons will, over time, become more dependent and frail. As this aging takes place they are less likely to be able to remain as independent tenants. At this point another senior living model can be considered. This would be a licensed congregate living facility. This product delivers appropriate housing along with low level personal services that do not involve health care issues. One of the key features of this setting is the provision of daily meals provide in a group dining room. Another can be limited personal assistance on a day to day basis. In Wyoming this product is known as board and care. The next step in the continuum is assisted living. These facilities are licensed and required to be quite specific about who can and who cannot live in and receive services in the setting. Persons who do not assess with needs allowed in the setting are not normally admitted into an assisted living facility. Persons who are admitted will need various levels of personal services that are significantly above those received in a congregate living facility. Persons who assess beyond the licensed capability of an assisted living facility either cannot be admitted or must move out when their aging progression results in needs that exceed those allowed in the facility. Therefore, assisted living facilities, while meeting a very real need for transition between independent living and dependent living, have characteristics that make them relatively short stay (18 to 22 months) and limit them in degree of clinical and medical services that can be delivered. The remaining delivery model within the long term care continuum is the skilled nursing facility. These programs are designed for admission of those persons who require 24 hour clinical care from skilled teams of professionals, licensed and qualified for complex health care services and interventions.


CONTINUUM

It is rare for small rural communities to be able to provide all of these components. Costs for capital construction and operations are high and out of reach for communities with small populations, limited workforce, few age related services and retail/social services that can help seniors and elderly remain independent. However, these communities can provide some of the components, particularly in the housing and limited services areas. Moorcroft currently provides some of the components of the continuum. A senior center located in town provides a gathering place for socializing, a local restaurant provides for home delivered meals. A fully certified home health agency provides home care, in-home services and nurse directed health and wellness to the seniors and elderly in the market area who are working to remain in their homes. This agency is located in Moorcroft. A clinic provides physician, physician assistant and licensed nurse directed medical care to the community. Missing from the continuum are locally available skilled nursing home services as well as acute care hospital services. The hospitals most likely serving the immediate needs of Moorcroft are located in Sundance, Newcastle and Gillette. Also missing from the continuum are other housing components such as independent living multi-family units and congregate living facilities that cater to seniors who are looking for a program that provides housing, social amenities, meals and on-site assistance.


Finally, for those elderly who become too frail and dependent to remain in a limited service facility there is no assisted living or long term skilled nursing facility. Admission into an appropriate assisted living program or skilled nursing setting requires relocation to Sundance, Newcastle or Gillette. Persons who must relocate because no services are available in their “home” town may also do so by moving out of the area entirely, relocating to wherever their family lives. TYPES OF SENIOR HOUSING Senior housing products are generally categorized in the industry as housing for ……… • Active seniors/elderly (Multi-family patio style housing) • Independent seniors/elderly (Multi-family apartment housing) • Partially dependent seniors/elderly (Congregate/assisted living facilities) This study initially examines these three types and does not consider skilled nursing in the traditional sense of “seniors housing”. PREFERENCES Other than remaining in their own homes through their entire aging process, seniors and their families make choices about alternative housing types. Some make these choices when they are able to consider what they might want, others make these choices as a matter of need driven decisions. They simply put it off until their health and well being make the decisions for them. Many never make the choice, living out their lives in their homes or the homes of family. For those that do make the decision to move …. choices are varied. Sometimes their home community offers these choices with a well developed continuum; at other times the choices involve relocating to communities where choices are available. The choices in Moorcroft are limited but this study will help the community leaders address the needs. 65 to 69 Age Group Populations There are 687 persons in the market area in this age group in 2009, increasing to 864 persons in 2012. Planners identify this age group as the initial seniors. This is the retirement group, most often empty nesters, living as a couple in the family home. They are looking, for the first time, at leisure time and opportunities to do things too long put off. One of the topics discussed around the kitchen table in these households is what should we do about downsizing


this old house. Wouldn’t it be nice if we didn’t have to mow the lawn, shovel that snow and repair the gutters? Obviously this generalization is only that, a general classification of the retirement sector. Some of these persons will find that they want or need some form of more specialized housing due to a variety of reasons. Others may find themselves suddenly living alone. An appropriate portion of the age group must be considered when planning apartments, retirement or assisted living facilities. Weston County, with its slightly larger total population has a few more persons in this age group than does Crook County. Projected growth is nearly identical over the next five years with Crook increasing its proportion of the age group as measured to total population. If this trend continues Crook County will become somewhat “older” than its neighbor to the south. This is the retirement age group and they will create a market for “empty nester” housing if they choose to remain in the area. 70 – 74 Age Group Populations This is the in-between age group. They are the households that are not as likely to make a decision to move and are waiting until they “need” to move because of health or living situations. It’s too late to sell the big family house and go to the trouble of finding downsized housing that they just might like. This age group has 523 persons in 2009 and 622 persons projected for 2014. 75 to 79 Age Group Populations The 75 to 79 age group known as the “young” elderly group is the group most likely to require housing designed for persons who remain somewhat independent, just not as independent as their “initial” senior friends and neighbors. Some may have experienced the loss of their spouse and find themselves living alone. Some require in-home services such as home maker assistance and limited medical nursing care. This group is usually the first to become a concern for their children and families. The conversation for the family always gets around to “what are we going to do with mom?” There are 397 persons in the market in this age group in 2009 increasing to 436 persons in 2014.


80 to 84 Age Group This age group is the first to look very seriously at assisted living as their acceptable housing type. The numbers say that this age group has developing needs for more personal services and 24 hour attention than they can usually receive from the independent sector. The decisions made by this group are more “need” driven than by wanting a different living arrangement. They may be already living in an independent setting and find that they just can’t do for themselves as well as they did when they were younger. The data shows a slightly higher percentage of the group select assisted over independent settings. In 2009 there are 333 persons in the age group, with increasing projected number of 359 persons. 85 Plus Age Group Populations Finally we examined the “old” elderly age group, persons who are 85 years and older. Generally speaking, they are more dependent, more frail and tend to experience chronic ailments that require physicians and therapists on a regular basis. These are the elderly most often associated with needs for high level assisted living or nursing home services. They are primarily female, living alone and have needs for personal assistance with bathing, dressing, ambulating and managing their medications. Many find it very difficult to live alone in their home. There are 335 persons in this age group in the market in 2009 increasing to 386 persons in 2012. The following provides a general profile of types and age group preferences. TARGET HOUSING TYPE Detached/Semi-Detached – Single Family

Detached single family private (empty nester) houses developed by market rate real estate developers and builders serve seniors by providing smaller, easier to maintain housing. Predominantly couples.

AGE GROUP DEMAND 65 – 69 23.0%

70 – 74 3.1%

75 – 79 15.8%

80 – 84 6.9%

85+ 1.1%

Age at purchase 60 years Median owner age 74 years Age at sale 80 years

Little or No need for assistance


TARGETED HOUSING TYPE Multi-Family – Apartments

Multi-family development such as apartments, duplexes, condominiums and group living cottages provide for single person households that want or need more security and social contact. Mixed couples, widowed females TARGETED HOUSING TYPE Assisted Living

Assisted living is the next choice in the continuum, where more dependent residents who may need 24/7 assistance with personal assistance or more medically complex interventions would live. Predominantly singles females Skilled Nursing Home This housing type is not a subject for this study. Skilled nursing facility provides for frail and chronic residents who need high levels of nursing care along with personal services on a daily basis. Predominantly singles females

AGE GROUP DEMAND 65 – 69 2.6% 70 – 74 0.9% 75 – 79 10.7% 80 – 84 9.7% 85+ 2.2%

AGE GROUP DEMAND 65 – 69 70 – 74 0.4% 75 – 79 5.0% 80 – 84 11.0% 85+ 7.7%

Median age at move-in 70 years Median age in facility 76 years Median age transfer out 82 years

Low need for assistance


Increased need for assistance


Maximum need for assistance

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The Market Place MOORCROFT

Northeast Wyoming is a mixture of high prairie, rolling foothills, lakes, streams, timber, agriculture, minerals, oil, gas and diverse people who value their lifestyle above almost everything else. Three counties, Campbell, Crook, and Weston Counties make up this region of Wyoming, acting as border counties with Montana to the north and South Dakota to the east. Crook and Weston - The Market Counties TOTAL POPULATIONS BY COUNTY 2000 THROUGH 2014

Two of these three counties are expected to provide the market for any senior housing and/or services developed in Moorcroft.

The general population base for the counties indicates a significant growth trend from 2000 through 2009, and increasing between 2009 and 2014. The graph at the right shows these growth curves for each of the counties. Clearly Crook County grew at a faster rate from 2000 to 2009 than its southern neighbor. And it appears that both counties are projected to experience a slightly higher rate of growth over the next five year period with Crook County projected at a somewhat higher rate. Crook County Moorcroft is located in Crook County, the county with the smallest population of the three in the northeastern section of the state. This county encompasses 2,856 sq mi in land mass with an estimated 2009 population density of 2.3 persons per sq mi. The populations

2000 2009 2014 CROOK COUNTY 5,887 6,446 6,845 WESTON COUNTY 6,644 7,015 7,348 TOTAL MARKET 12,531 13,461 14,193

2000 2009 2014 SUNDANCE 1,161 1,191 1,225 MOORCROFT 807 862 904 HULETT 408 431 448 PINE HAVEN 222 260 286 TOTAL IN TOWNS 2,598 2,744 2,863

POPULATION GROWTH RATE PER YR

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live in small towns located throughout the county as well as in developed subdivisions and mini-ranches. Fewer persons live on larger ranches that are widely spread throughout the county. The concentration of populations are found in the towns of Sundance, Moorcroft, Pine Haven and Hulett with distribution of estimated 2009

populations shown on the right. A comparison of rate of growth for each of these towns will show where the growth, as a percentage of total for the period, is expected to take place. The community of Pine Haven, as a newer place, naturally experienced the greatest rate of growth from 2000 through 2009, just under 2% per year. The projected growth rate is expected

to moderate and become steady at just over 2% per year. Moorcroft follows with a moderate growth projection for the next five years, after growing at just over 0.8% per year between 2000 and 2009. Between 2009 and 2012 the Town is projected to grow about 1% per year. Hulett is quite stable at about 0.6% per year and Sundance follows suit at just under 0.6% per year for the projected five years through 2012. Rural Areas Other very small communities account for concentrations to a lesser degree. These places are Aladdin, Alva, Beulah, Colony, Devils Tower, Farrall, Carlile, Oshoto, New Haven and Moskee. The balance of Crook County’s population is classified as rural. 58% of the County’s total populations live in unincorporated rural areas in 2009. Projections show this ratio remaining at that level for the next five years. These populations are growing somewhat faster than those in the towns. Crook County rural area populations increased between 2000 and 2009 at an estimated rate of 1.5% per year. Rural area growth is projected to continue at this rate through 2012. Only the town of Pine Haven is growing faster than these rural areas.

2000 2009 2014 RURAL AREAS 3,289 3,702 3,982

POPULATION GROWTH RATE PER YR

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Land use in Crook County is heavily concentrated in agricultural activities with a total of 1.4 million acres, primarily as dry farm and range lands. 77% of all county lands are privately held, 18% is federally owned and 6% owned by the State of Wyoming Employment in the county is diverse with largest concentrations in government (19%), farming (15%), construction (9%), mining (8%) and retail (8%). The balance are employed in a variety of work including health care, food services, real estate, transportation, etc. In 2005 the reported average annual wage was $28,370. Estimated median family income for the county in 2008 was $56,500 according to the Wyoming Housing Data Base Partnership Final Report August 2008. Numbers of housing units in the county, estimated as of July 2007 was 3,170 units, increased by 8.1% from same period in 2000. The rate of increase in numbers of housing units is three times as great in Crook County as it is in Weston. Crook County is experiencing current growth, increasing by an estimated 144 persons (2.3%) between 2007 and 2008. Net migration from outside the county accounts for a sizable portion of the projected increase as the workforce and retirement segment grows. Weston County The second county of interest for this analysis is Weston County. This region may be important as a “catchment” for seniors who would consider relocation into nearby Moorcroft if appropriate housing and/or services were made available. According to Claritas data, Weston County has just over 500 more people than Crook County, estimated at 7,015 persons in 2009. This county is slightly smaller in land mass than Crook County. 2,400 sq mi of land with a population density of 2.9 persons per sq mi. The population in Weston is concentrated in Newcastle, the county seat, and in Upton. Using the data from Claritas …. The town populations are:

Growth rates show that these towns are expected to grow at about the same rates as those in Crook County. Upton shows

2000 2009 2014 NEWCASTLE 3,065 3,191 3,320 UPTON 872 925 972 TOTAL IN TOWNS 3,937 4,116 4,292

Annual Growth Projections

2000 2009 2014 NEWCASTLE 0.5% 0.8% UPTON 0.7% 1.0%


somewhat faster growth as a percentage of their total populations than does Newcastle.

Other small communities in Weston County include Osage, Four Corners, Buckhorn, Clareton, Hampshire and Morrisey. These are included with the rural populations for this study.

Rural populations make up just 41% of the total county population in 2009. This is a much lower percentage than the 58% estimated for Crook County. Like Crook County, Weston County is also growing, 133 new persons between 2007 and 2008 (1.9%) Land use in Weston County is also heavily concentrated in agricultural activities with a total of 1.1 million acres, primarily as dry farm and range lands. 73% of all county lands are privately held and 27% owned publicly. Once again, employment in the county is diverse but distributed differently than in Crook County. Largest concentrations are in government (16%), mining (11%), retail (11%), farming (6%), and construction (6%), and The balance are employed in a variety of work including health care, food services, real estate, transportation, etc. In 2005 the reported average annual wage was $25,994. Estimated median family income for the county in 2008 was $52,500 according to the Wyoming Housing Data Base Partnership Final Report August 2008. Numbers of housing units in the county, estimated as of July 2007 was 3,317 units, increased by 2.7% from same period in 2000.

An examination of this population data shows a sizable number of persons living in the two county area with a concentration of these persons in the towns and rural subdivisions that are adjacent to these towns.

2000 2009 2014 RURAL AREAS 2,707 2,899 3,056 ANNUALIZED GROWTH RATE

0.00% 0.8% 1.1%

TOTAL MARKET GENERAL POPULATIONS

2000 2009 2014 SUNDANCE 1,161 1,191 1,225 MOORCROFT 807 862 904 HULETT 408 431 448 PINE HAVEN 222 260 286 NEWCASTLE 3,065 3,191 3,320 UPTON 872 925 972 CROOK RURAL 3,289 3,702 3,982 WESTON RURAL 2,707 2,899 3,056 TOTAL MARKET 12,531 13,461 14,193


All locations show steady and sustained growth projections. Age Groups within the Populations

65+ POPULATIONS IN THE MARKET The persons within this broad group are termed seniors by project planners and senior housing developers. For many federal programs the 65 year birthday marks a move into health care programs such as Medicare. Data for persons who are likely to need assistance with daily living is most often associated with persons who are at or beyond this benchmark age. A broad base indicator of the need for seniors housing in a market is the “aging profile” of the populations in that market. The profile shows the percentage of the 65 plus population to the total population. The chart on the right clearly shows the increasing percentage of 65+

2009 - MARKET AREA AGE GROUPS

0 to 20 21 to 54 55 to 59 60 to 64 65 to 69 70 to 74 75 to 79 80 to 84 85 Plus CROOK COUNTY 1,626 2,869 491 405 332 250 195 126 152 Percent of Total 25.2% 44.5% 7.6% 6.3% 5.2% 3.9% 3.0% 2.0% 2.4% Median Age 41.2 Yrs WESTON COUNTY 1,621 3,215 541 418 355 273 202 207 183 Percent of Total 23.1% 45.8% 7.7% 6.0% 5.1% 3.9% 2.9% 3.0% 2.6% Median Age 42.7 Yrs

2014 - MARKET AREA AGE GROUPS

0 to 20 21 to 54 55 to 59 60 to 64 65 to 69 70 to 74 75 to 79 80 to 84 85 Plus CROOK COUNTY 1,676 2,887 528 496 426 297 217 144 174 Percent of Total 26.0% 44.8% 8.2% 7.7% 6.6% 4.6% 3.4% 2.2% 2.7% Median Age 42.1 Yrs

WESTON COUNTY 1,648 3,157 632 502 438 325 219 215 212 Percent of Total 23.5% 45.0% 9.0% 7.2% 6.2% 4.6% 3.1% 3.1% 3.0% Median Age 43.5 Yrs

65 Plus Age Group % OF TOTAL POPULATION

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2000 2009 2014

CROOKCOUNTYWESTONCOUNTYWYOMING


persons as a percent of total persons in Crook and Weston County. 65+ populations in Weston County make up a bigger percentage of the total than they do in Crook County. Both counties have higher ratios than Wyoming. The two county market area has nearly 2,300 persons in the 65 plus bracket. Within this bracket are five age groups that can have different housing and services requirements.

65 Plus Total Persons = 2,275 in Market Area in 2009

65 Plus Total Persons = 2,667 in Market Area in 2014 These trends indicate a continuing market for senior housing and for some additional service enriched housing for the older age groups. Persons within the age group generally exhibit increasing needs for assistance and specialized housing as they age into their 70’s, 80’s and beyond.

SENIOR AGE GROUPS - 2009

65 to 69 Yrs 70 to 74 Yrs 75 to 79 Yrs 80 to 84 Yrs 85 Plus Yrs Totals CROOK COUNTY 332 250 195 126 152 1,055 WESTON COUNTY 355 273 202 207 183 1,220 TOTAL MARKET 687 523 397 333 335 2,275

SENIOR AGE GROUPS - 2014

65 to 69 Yrs 70 to 74 Yrs 75 to 79 Yrs 80 to 84 Yrs 85 Plus Yrs Totals CROOK COUNTY 426 297 217 144 174 1,258 WESTON COUNTY 438 325 219 215 212 1,409 TOTAL MARKET 864 622 436 359 386 2,667


HOUSING AVAILABLE IN THE MARKET The U.S. Census Bureau defines housing in “units” where a housing unit is a house, an apartment, a group of rooms or a single room intended for occupancy as a separate living quarters for individuals or groups. For example, with this definition, a duplex would be counted as 2 units, triplex as three and so on. Each apartment unit in an apartment building would count as a unit. As a further clarification, the term “multi-family” housing refers to structures that have more than one dwelling in the same building. According to U.S. Census Bureau 2007 estimated data there were a total of 3,170 housing units in Crook County and 3,317 units in Weston County. 5.5% of the Crook County units (175 units) and 6.3% (210 units) of the Weston County units were multi-family housing. Total Housing capacity increased between year 2000 and 2007 by 8% in Crook County and by 4% in Weston County. 73% of the growth in Crook County occurred since the year 2000. Weston increased by 58% for the same period. Taking a more detailed look at the 2007 capacity within the communities…. COMMUNITY HOUSING UNITS OWNER OCCUPIED RENTER OCCUPIED VACANT* Moorcroft 390 243 95 52 Pine Haven 163 110 8 45 Sundance 544 364 111 69 Newcastle 1,431 872 368 191 Hulett 218 137 41 40 Upton 475 328 76 71 * Vacant housing may indicate some seasonal occupancy but it is a primary indicator of housing no longer considered up to standard for occupancy as residence. This inventory could provide a source of available housing if renovation and upgrade programs were implemented. This information, obtained on-line from City-Data.com shows 3,221 total housing units located in the larger towns within the two counties. 65% of these are occupied by their owners, 21% are rented and 15% are shown as vacant.

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Demand for Senior Housing Developing demand models for senior housing is a bit of science mixed with practical experience in the field. Builders who specialize in these projects use market studies based on information gathered in all kinds and sizes of markets across the U.S. One of the best and most often used demand models is the result of collaborative research by the National Investment Conference for Senior Living and Long Term Care in partnership with ProMatura Group. In their joint report “1997 National Housing Survey of Adults”, they developed statistical models for demand based on surveys of 1,500 senior households not currently living in senior housing of any type. From this work they identified two categories of senior housing candidates .. persons who were definite about their intent to move into senior housing of some type, and those who would probably decide to move. Obviously these decisions would be effected by issues such as accessibility, availability, cost, appeal of the property, and services offered. Their findings 2.3% of all 65+ age groups living in a market area were defined “DEFINITES”. In the “DEFINITES” category the decision to move is somewhat weighted towards the 75 to 79 and the 80 to 84 year old persons. Notice that the 70 – 74 age group is the least likely to decide to move. The researchers indicated that this phenomena was likely related to the “in-between” status of the age group. They have not made an early decision to move, when it could have been because they “wanted” to find different living arrangements and now they are waiting until they “need” to move because of health or living situations.

When these aging populations move, they can be expected to select senior housing by type, based on their age groups. Age does make a difference in preference for housing type. Younger persons naturally prefer active settings while the

older groups will use group and/or assisted settings. Notice once again the lack of participation in the seniors market by the in-between 70 – 74 group.

65+ AGE GROUP Decided to Move Percent of Age Group

65 - 69 2.1% 70 - 74 0.4% 75 - 79 3.6% 80 - 84 4.5%

85+ 2.5%

DEMAND FOR SENIOR HOUSING – 65+ AGE GROUP "DEFINITES" as percent of total age group

AGE GROUP ACTIVE INDEPENDENT ASSISTED 65 – 69 23.0% 2.6% 25.5% 70 – 74 3.1% 0.9% 0.4% 4.4% 75 – 79 15.8% 10.7% 5.0% 31.5% 80 – 84 6.9% 9.7% 11.0% 27.6%

85+ 1.1% 2.2% 7.7% 11.0% TOTAL 49.8% 26.0% 24.2% 100.0%


The remaining segment is identified in the demand model as being interested in moving into seniors housing sometime. This segment is important in considering initial facility construction and for future expansion. This segment represents seniors who will consider moving, influenced by availability, cost and accessibility. 3.4% of all 65+ age groups living in a market area are “PROBABLES” for move. 3.4% of all 65+ age groups living in a market area were defined “PROBABLES”.

Market Demand for Senior Housing Applying the NIC demand parameters to the Moorcroft market populations we can project the total potential for senior living units, by age group for 2009 and 2014. These units are in addition to those already existing and in use throughout the two county market. Active seniors will make up the largest segment of the potential for seniors housing during the current period. One half of all senior housing demands will be for housing that appeals to this segment such as downsized single level family houses and duplex style patio homes. This same demand model projects an increase of about a dozen additional housing units by 2014. The independent segment, normally met by age qualified apartment units,

will make up 27% of the demand (34 persons) in 2009. By 2014 another six persons are projected in the demand. Assisted living units follow closely with the demand for 31 additional persons making up 24% of the total demand. This continues into 2014 with an additional demand for six more persons in assisted living.

DEMAND FOR SENIOR HOUSING - 65+ AGE GROUP “PROBABLES” as percent of total age group

AGE GROUP ACTIVE INDEPENDENT ASSISTED 65 – 69 21.7% 2.4% 24.2% 70 – 74 10.6% 3.0% 1.5% 15.2% 75 – 79 14.9% 10.2% 4.8% 29.9% 80 – 84 4.7% 6.5% 7.5% 18.6% 85+ 1.2% 2.4% 8.5% 12.1%

TOTAL 53.2% 24.6% 22.2% 100.0%

2009 "DEFINITE" PERSONS

MARKET AREA DEMAND FOR SENIORS HOUSING 0.023 1,055 24 CROOK 0.023 1,220 28 WESTON

2,275 52 MARKET

AGE GROUP ACTIVE INDEPENDENT ASSISTED

65 - 69 12 1 0

70 - 74 2 0 0 75 - 79 8 6 3 80 - 84 4 5 6

85+ 1 1 4 52 26 14 13 2009 "PROBABLE" PERSONS

MARKET AREA DEMAND FOR SENIORS HOUSING 0.034 1,055 36 CROOK 0.034 1,220 41 WESTON

2,275 77 MARKET

AGE GROUP ACTIVE INDEPENDENT ASSISTED 65 - 69 18 2 0 70 - 74 2 1 0 75 - 79 12 8 4 80 - 84 5 8 9

85+ 1 2 6 77 39 20 19 2009 TOTAL PERSONS IN MARKET

130 65 34 31


By totaling the various categories in the above TABLE the model projects 26 total seniors who are definitely in the market for housing catering to active seniors. If we add the 39 seniors who are seriously considering making the decision for active housing the maximum demand can be projected to be 65 persons. Using this same rational, 14 seniors are considered definite in the market now and 20 more are seriously considering the decision making a maximum demand of 34 total persons who will choose independent (apartment) housing. The remainder of the persons in the demand model is expected to be in the market for assisted living. 13 are definite in the market now and 19 more are seriously considering it for a maximum of 31 seniors. Existing Senior Housing The market area housing inventory does contain some age specific housing that is marketed to and occupied by senior persons. Our research has identified a total of 77 seniors specific housing units in the market. This housing is primarily located in Sundance and in Newcastle. Identification of existing senior housing in a marketplace depends upon the type of housing being considered. We are looking at identified seniors only active, independent and assisted housing as previously discussed. We have identified ACTIVE SENIORS HOUSING LOCATION TYPE SIZE Newcastle Housing Authority Newcastle Duplex/4 Plex 16 Units Weston Senior Suites Newcastle Apartments 10 Units 16 Units INDEPENDENT SENIORS HOUSING LOCATION TYPE SIZE Antelope Heights Project Upton Apartments 11 Units Green Mountain Estates Sundance Apartments 12 Units 23 Units ASSISTED LIVING HOUSING LOCATION TYPE SIZE Mondell Heights Retirement Newcastle Board & Care 23 Units Sundance Assisted Living Sundance Assisted Living 15 Units 38 Units It is important to keep in mind that these units are already in use and are not considered competitive to the identified demand for additional units. However, their impact will be felt whenever they have a vacancy and can accept additional seniors. This is a matter of re-fill and sustainability for the total available inventory of seniors housing including any new units that may be built in Moorcroft.


It is also important to note that the “active” market is normally met by private developers who work in the conventional real estate environment. They would build housing based on demand, it would be sold or rented as market rate properties and would not compete for low income or service enriched seniors housing. HOUSEHOLD INCOMES A careful analysis of the household income profile in the market area will provide information about the purchasing capacity of the age qualified populations. In the combined market area (Crook and Weston Counties) there are 1,469 households with head of household aged 65+ years. This total is projected to increase to 1,732 households in 2014. For purposes of participation in subsidized housing programs the U.S. Department of Housing and Urban Development (HUD) provides classifications by income levels by size of household. For this study we are using one person and two person households as representative of the senior population households in the market. For Crook and Weston Counties – 2009 HUD Low Income Limits – annual TOTAL MARKET ONE PERSON HOUSEHOLD TWO PERSON HOUSEHOLD Low Moderate Low Moderate Crook County $21,050 $33,650 $24,050 $38,500 Weston County $21,050 $33,650 $24,050 $38,500 43.5% of the 65+ population are in low income brackets in 2009. Within this income bracket ….. the distribution among the age groups is estimated to be as shown on the right. This group will most often require some form of subsidy or rent control housing. Another 17% of the 65+ group are considered moderate income with this distribution among the age groups. Some may require subsidies and rent control housing in order to live in the facility. The middle income segment of the 65+ age group accounts for 32% of the group. Age brackets within the group are as shown here. The NIC Report indicates that this

PERCENT OF EACH AGE GROUP LOW INCOME 65 - 69 70 - 74 75 – 79 80 - 84 85 + 11.0% 8.8% 8.6% 8.0% 7.1%

PERCENT OF EACH AGE GROUP MODERATE INCOME 65 - 69 70 - 74 75 – 79 80 - 84 85 + 5.1% 3.5% 3.4% 2.9% 2.0%

PERCENT OF EACH AGE GROUP MIDDLE INCOME 65 - 69 70 - 74 75 – 79 80 – 84 85 + 11.8% 9.2% 4.8% 3.6% 2.8%


income sector is not as likely to move into seniors housing even if it is made available. They tend to believe that they can’t afford the costs to live in service enriched housing and will try to hold on in their traditional home or apartment. Finally there is a segment that is considered to be upper income. 7.4% of the 65 plus age group. This group can afford their choice of housing and will be attracted to service enriched retirement housing that provides well appointed apartments in a setting that provides a selection of personal services and amenities. Demand by Income Classification Referring to the NIC Demand Model discussed above, we have identified the following number of persons living in the market area by Definite and Probable categories.

------------------------------------- PERSONS - 2009 ------------------------------------- INCOME GROUP ACTIVE HOUSING INDEPENDENT HOUSING ASSISTED LIVING TOTAL BY INCOME “DEFINITES” Low Income 12 6 6 24 45% Moderate Income 4 2 2 8 15% Middle Income 8 5 4 17 32% Upper Income 2 1 1 4 8% Sub Totals 26 14 13 53 “PROBABLES” Low Income 17 9 8 34 44% Moderate Income 7 3 3 13 17% Middle Income 12 7 6 25 32% Upper Income 3 2 1 6 7% Sub Totals 39 20 19 78 Total Demand in Market 65 34 32 131 Persons Excluding the active housing segment ….. Total Demand in Market 34 32 66 persons Excluding low income persons in the market … Market Rate Only Demand 19 18 37 persons

PERCENT OF EACH AGE GROUP UPPER INCOME 65 - 69 70 - 74 75 – 79 80 – 84 85 + 2.5% 2.2% 1.4% 1.1% 0.2%

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Affordability Affordability is a relative term, depending most often upon the spendable income of the involved person or household. How the Moorcroft market area seniors spend their money provides some indication of what they might perceive a product or services as “affordable”. To assist in this question, this study examined the most current report from U.S. Department of Labor, “Consumers Expenditures by Age of Household – 2007”. The assumption is made that Moorcroft area senior households are likely to spend, as a percentage of total expenditures, in the same patterns as do senior households across the country. Senior Population Expenditures Total housing costs is the largest category expenditure for a household. In this report, for 65+ consumers, the average expenditure for all housing expenses, including mortgage or rent, utilities, maintenance, furnishings and household operations was just over 31% of after tax household income. At an area median income of $28,000 for 65+ households, the average expenditure for housing would be just about $8,700 per year. The annualized spending profile for Moorcroft market area low and moderate income seniors also includes the general categories of food, transportation, healthcare and a variety of other expenditures like clothing, gifts, personal care products, etc.

MARKET AREA - ANNUAL EXPENDITURES BY 65+ LOW TO MODERATE INCOME HOUSEHOLDS INCOME HOUSING FOOD TRANSPORTATION HEALTHCARE ALL OTHER $34,000 31.7% $11,000 12.3% $ 4,200 20.8% $ 7,100 11.8% $ 4,000 23.4% $ 7,700

$32,000 31.7% $10,000 12.3% $ 3,900 20.8% $ 6,700 11.8% $ 3,800 23.4% $ 7,600

$30,000 31.7% $ 9,500 12.3% $ 3,700 20.8% $ 6,200 11.8% $ 3,500 23.4% $ 7,100

$28,000 31.7% $ 8,900 12.3% $ 3,400 20.8% $ 5,800 11.8% $ 3,300 23.4% $ 6,600

$26,000 31.7% $ 8,200 12.3% $ 3,200 20.8% $ 5,400 11.8% $ 3,100 23.4% $ 6,100

$24,000 31.7% $ 7,600 12.3% $ 3,000 20.8% $ 5,000 11.8% $ 2,800 23.4% $ 5,600

$22,000 31.7% $ 7,000 12.3% $ 2,700 20.8% $ 4,600 11.8% $ 2,600 23.4% $ 5,100

$20,000 31.7% $ 6,300 12.3% $ 2,500 20.8% $ 4,200 11.8% $ 2,400 23.4% $ 4,600

$18,000 31.7% $ 5,700 12.3% $ 2,200 20.8% $ 3,700 11.8% $ 2,100 23.4% $ 4,300

$16,000 31.7% $ 5,100 12.3% $ 2,000 20.8% $ 3,300 11.8% $ 1,900 23.4% $ 3,700

$14,000 31.7% $ 4.400 12.3% $ 1,700 20.8% $ 2,900 11.8% $ 1,700 23.4% $ 3,300

$12,000 31.7% $ 3,800 12.3% $ 1,500 20.8% $ 2,500 11.8% $ 1,400 23.4% $ 2,800

$10,000 31.7% $ 3,200 12.3% $ 1,200 20.8% $ 2,100 11.8% $1,200 23.4% $ 2,300

U.S Department of Labor Consumer Expenditure Survey – Modified for Moorcroft Market – Median by Income Group


Looking at the spending profile on a monthly basis it becomes clear that these households must be very careful with their expenditures. Money available for housing, food and healthcare becomes more problematic as the income level drops. MARKET AREA - MONTHLY EXPENDITURES BY 65+ LOW TO MODERATE INCOME HOUSEHOLDS

INCOME YEAR

INCOME MONTH

HOUSING/MO

31.7%

FOOD/MO

12.3%

TRANS/MO

20.8%

HEALTHCARE/MO

11.8%

ALL OTHER/MO

23.4%

$34,000 $2,833 $ 898

$ 845

$ 793

$ 740

$ 687

$ 634

$ 581

$ 528

$ 476

$ 423

$ 370

$ 317

$ 264

$ 349

$ 328

$ 308

$ 287

$ 267

$ 246

$ 226

$ 205

$ 185

$ 164

$ 144

$ 123

$ 103

$ 589

$ 555

$ 520

$ 485

$ 451

$ 416

$ 381

$ 347

$ 312

$ 277

$ 243

$ 208

$ 173

$ 334

$ 315

$ 295

$ 275

$ 256

$ 236

$ 216

$ 197

$ 177

$ 157

$ 138

$ 118

$ 98

$ 663

$ 624

$ 585

$ 546

$ 507

$ 468

$ 429

$ 390

$ 351

$ 312

$ 273

$ 234

$ 195

$32,000 $2,667

$30,000 $2,500

$28,000 $2,333

$26,000 $2,167

$24,000 $2,000

$22,000 $1,833

$20,000 $1,667

$18,000 $1,500

$16,000 $1,333

$14,000 $1,167

$12,000 $1,000

$10,000 $ 833

U.S Department of Labor Consumer Expenditure Survey – Modified for Moorcroft Market – Median by Income Group

Senior housing projects can provide some or most of the services in the major categories listed in the tables above. True independent living apartments can provide a portion of the housing through rent, maintenance, upkeep, a portion of the insurance, real estate taxes, etc. Many rental properties include the monthly utilities in their rent package. So, a senior seeking to rent an apartment can count on “fixing” a certain portion of their housing costs. The other portion is still subject to the ability of the tenant to find and pay for food, transportation, health care and so on. Independent Housing Rents In the two county market area, according to the Wyoming Housing Database Partnership (WHDP), base apartment rents for the last quarter of 2007 averaged $412.00 per month for Crook County and $525.00 per month in Weston County. These rents are for a one bedroom unit, rent only and do not include any utilities or services. Again, referring to the WHDP reports, the 10 year average rent increase for the market has averaged 2.5% per year. Applying this to the Crook/Weston rent index, the projected 2008 rental would be between $425/month in Crook and $540.00 per month. Adding another


2.5% for 2009 increase would indicate rents at $440 for Crook and $560 per month for Weston County.

* WHDP Final Report – August 2008

Utilities, including telephone and cable, would add $180 to $220 per month depending upon the size and occupancy of the unit. Larger units and/or units occupied by two persons would be more costly. Assuming a total rent and utility expense of $625 per month, these market rate rentals would seem affordable to Crook County senior households with incomes at or above $24,000 per year. In Weston County the household income level would rise to $28,000 before the rent and utilities would be affordable. This means that slightly more than half of the 65+ households in the market area can afford to pay market rate rentals leaving approximately 44% of these households that cannot afford market rate housing. These are the households that will rely on subsidized, low income housing. Low Income Rents Low income projects that receive subsidies from federal programs use “Maximum Affordable Rent” as published in HUD program authorizations as the allowable fair market rents that can be charged to the tenants of such projects.

PERIOD

Market Area ---- Market Rate --- Rent Only per Month – One Bedroom

CROOK WESTON BASE RENT UTILITIES TOTAL BASE RENT UTILITIES TOTAL

4th Qtr 2007* $412.00 $200.00 $612.00 $525.00 $200.00 $725.00 4th Qtr 2008 $425.00 $200.00 $625.00 $540.00 $200.00 $740.00 4th Qtr 2009 $440.00 $200.00 $640.00 $560.00 $200.00 $760.00

Annual

Household

Income

Annual

30% of

Income

Monthly

30% of

Income

Subsidy

Required

Allowable Low Income

Fair Market - includes

Rent + Utility per Month

$10,000 $3,000 $250 $215 $465 $12,000 $3,600 $300 $165 $465 $14,000 $4,200 $350 $115 $465 $16,000 $4,800 $400 $ 65 $465 $17,000 $5,400 $450 $ 15 $465 $18,000 $6,000 $500 $ 0 $465 $20,000 $6,600 $550 $ 0 $465 $22,000 $6,600 $600 $ 0 $465 $24,000 $7,200 $650 $ 0 $465


For 2009 in Crook and Weston counties the maximum level is $465.00 per month, including tenant paid utilities. This amount is further adjusted downward, as tenant income falls, to no more than 30% of their household income. With nearly 44% of all 65+ households in the market area identified as low income any proposed housing program should be developed to operate the housing portion of the project within the above rent and utility caps whether federal low income housing programs are used or not. For independent apartment living the subsidy may be available through HUD or USDA monthly subsidy payments that pay the difference between the facility rent rate and what the tenant can pay (most often 30% of their household income). Assisted Living Programs Assisted living programs go further by providing housing and food, transportation, limited healthcare items, limited personal items, entertainment, etc. Therefore, a significant amount of the monthly expenditures incurred by the senior can be wrapped into a single monthly fee paid to the assisted living property. The following table profiles the ability to pay and/or the associated need for financial subsidy in order for the senior person to live in the assisted living facility.

HOUSEHOLD INCOME SUBSIDIZE TOTAL 2008 PERSONAL INCOME PER PER FUNDS AVG RATE EXPEND

AFTER TAX MONTH MONTH PER MO PER MO * PER MO $ 10,000 $ 833 $ 2,110 $ 2,943 $ 2,740 $ 200 $ 12,000 $ 1,000 $ 1,940 $ 2,940 $ 2,740 $ 200 $ 14,000 $ 1,167 $ 1,773 $ 2,940 $ 2,740 $ 200 $ 16,000 $ 1,333 $ 1,607 $ 2,940 $ 2,740 $ 200 $ 18,000 $ 1,500 $ 1,440 $ 2,940 $ 2,740 $ 200 $ 20,000 $ 1,667 $ 1,273 $ 2,940 $ 2,740 $ 200 $ 22,000 $ 1,833 $ 1,107 $ 2,940 $ 2,740 $ 200 $ 24,000 $ 2,000 $ 940 $ 2,940 $ 2,740 $ 200 $ 26,000 $ 2,167 $ 773 $ 2,940 $ 2,740 $ 200 $ 28,000 $ 2,333 $ 607 $ 2,940 $ 2,740 $ 200 $ 30,000 $ 2,500 $ 440 $ 2,940 $ 2,740 $ 200 $ 32,000 $ 2,667 $ 273 $ 2,940 $ 2,740 $ 200 $ 34,000 $ 2,833 $ 107 $ 2,940 $ 2,740 $ 200 $ 36,000 $ 3,000 $ - $ 3,000 $ 2,740 $ 260 $ 38,000 $ 3,167 $ - $ 3,167 $ 2,740 $ 427 $ 40,000 $ 3,333 $ - $ 3,333 $ 2,740 $ 593 $ 42,000 $ 3,500 $ - $ 3,500 $ 2,740 $ 760 $ 44,000 $ 3,667 $ - $ 3,667 $ 2,740 $ 927 $ 46,000 $ 3,833 $ - $ 3,833 $ 2,740 $ 1,093

* MetLife Mature Market Institute – 2008 Survey of Nursing Home and Assisted Living – Wyoming


The “AVG RATE” used in the table is based on the most current information from MetLife for assisted living facilities located throughout Wyoming. Once again, the low to moderate income seniors will need some financial assistance in the form of subsidized rent and/or fee payments in order to be able to afford to pay for housing and services in the assisted living facility. For assisted living the subsidy is provided by State of Wyoming assistance through Home and Community Based Waiver payments to the assisted living facility. These waivers are very limited and must be applied for through a waiting list that can be quite lengthy. Assisted living programs are most often provided with a fee structure that covers base rent, meals and housing amenities as one component of the fee and personal services as the second component. The housing component is fixed by the provider dependent upon costs to provide. The services component is variable and dependent upon periodic assessments of need for care by the resident. This fee does increase as the resident becomes more frail and dependent upon the personal care provided. In evaluating the ability of a resident to pay consideration must be given to the increasing cost as resident ages. Initial entry into the facility is often at a low end of the rate range because the need for services is quite low. As persons age and become more frail while living in the facility their need for services generally increases. As these needs increase the cost to provide the services must increase as well. A typical fee structure can be assumed for discussion purposes.

Level Level Level Level One Two Three Four (exit level) Per Mo Per Mo Per Mo Per Mo $1,900 $2,300 $2,900 $3,400

COSULTANT – Developed from operating ALF programs in region These rates would cover all expenses except for things like personal expenditures, prescription medications, specialty medical supplies and equipment, and transportation over and above that provided by the facility. With an average length of stay of just over 27 months the increase in need for services and the associated increase in monthly rates can be quite dramatic. A contributing factor to this relative short stay is the fact that many residents will deplete their funds and be forced to relocate to a skilled nursing home. This gives them access to Medicaid funding that is beyond that available from Home and Community Based Waivers.


Modification for Independent Residents A fifth level should be added to accommodate the initial entry persons who are independent and who want or need limited services beyond daily meal services and the security of 24 hour staff on premise. This arrangement will help provide quality housing as well as selective services for the seniors and elders who are living in the Moorcroft market are. It will also provide consumers for the planned project helping to make it financially viable and sustainable. Entry Level Per Mo $ 900 Senior’s Sources for Payments As the aging process takes place and need for more services occurs, the resident with limited incomes will find it necessary to find other sources that can be used to help pay for assisted living. We have illustrated the importance of the state Medicaid Waiver as one resource for payment for services by lower income persons.

For many aging households their household income may be only a part of their ability to purchase. Six to eight percent of the elderly get financial help from their children. In addition, many have tangible assets, primarily equity in their family home. According to the 2000 U.S. Census 92% of the 65 plus households in the Moorcroft

marketplace own their homes. Nationally 80% of the 75 to 84 age group own their homes outright. This provides a substantial pool of equity wealth that is often converted to cash by the elderly as they purchase housing and services. Other resources such as help from the family and conversion of asset wealth, namely equity in a personal residence, are typically used in this effort. According to MetLife, older American’s wealth is held as assets distributed roughly in the percentages shown in the box to the left.

1. Paid by Resident 2. Paid by Family 3. Combination 4. Other sources

Older Households – Asset Ownership Home Ownership 82% Stocks and Mutual Funds 29% Checking Accounts 31% Savings Accounts 71% Vehicles Owned 78% IRA/Keogh Accounts 25%

SOURCES OF PAYMENT

69.9%

17.1%10.9%

2.1%0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

1 2 3 4


The majority of this wealth, even for the low income households, is in their home. 82% of 65 plus age persons in the United States are reported to own their homes. More than half own them free and clear. This asset base provides a significant source of cash for senior/elderly retirement and specialized housing with services. Conversion of this and other wealth to annuities provides cash that can be used to help pay for the older persons assisted living and nursing home care should it be needed. 70% of all residents in an assisted living facility pay their own fees. 17% are helped in a significant way by their children and other family members. The remaining 13% receive payments such as waiver assistance, veterans’ benefits and recently, from long term care insurance specifically for assisted living. Combining Sources Paying for senior housing and services is often a matter of combining many sources to make up a package of funds that will provide adequate money to allow seniors to live in the housing program that will meet their needs and match their ability to pay. The “mix” could include … • Senior’s own incomes (Social Security, savings, investments, other incomes) • Senior’s annuity from sale of real estate (family home) • Assistance from family • Supplemental Social Security • Low income subsidized housing and vouchers • Medicaid Home and Community Based Waivers • Charitable gifting to the facility as endowments for needy


DETERMINING A FACILITY SIZE Three criteria must be considered when making decisions about the development of a senior housing facility that is both affordable and sustainable 1. Total demand, need and affordability of the product 2. Capacity within the market to maintain occupancy (re-fill) 3. Ability to capitalize and finance the facility ESTIMATED TOTAL NEED FOR PROJECT Based on the analysis of the populations of age qualified seniors provided by the Demand Model, the affordability analysis just completed and excluding the identified potential for active senior housing, the projected market for independent and assisted living in the two county market is for 66 units of housing ….. distributed as follows. If all income groups are considered

• 34 persons (52%) independent living and 32 persons (48%) assisted living = 66 total persons If low income groups are not considered • 19 persons (52%) independent living and 18 persons (48%) assisted living = 37 total persons

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Market Share

The truth of the marketplace is that only a portion of those with a qualified need for the services will actually make the move. ……. How many can be expected to choose an independent and assisted living facility? The Demand Model used earlier in this work has established the maximum number of age qualified persons who are likely to move to appropriate senior housing should it become available. These numbers resulted in the estimated need of 66 persons and 37 persons respectively. Next in the study is the determination of a facility size and configuration that is likely to fill and maintain occupancy consistent with sound and sustainable operation in the market place. Penetration Rate It is advisable to conduct a penetration analysis of various unit capacities. The study will do this by testing various capacities against the identified maximum need. Penetration Rate = Proposed Number of Units/Number of Qualified Persons. Industry information from existing assisted living facilities suggests that a penetration rate of 35% for an affordable facility and 25% for market rate can be used. Market Share – Penetration from the Two County Market Area 35% Max 25% Max

ALL INCOME GROUPS

MARKET RATE INCOME GROUPS DEFINITE

DEFINITE

SUB TOTAL PENETRATION UNITS

SUB TOTAL PENETRATION UNITS 27 29.6% 8

15 13.3% 2

27 33.3% 9

15 20.0% 3 27 37.0% 10

15 26.7% 4

27 40.7% 11

15 33.3% 5 27 44.5% 12

15 40.0% 6

PROBABLE

PROBABLE SUB TOTAL PENETRATION UNITS

SUB TOTAL PENETRATION UNITS

39 20.5% 8

22 9.1% 2 39 23.1% 9

22 13.6% 3

39 25.6% 10

22 18.2% 4 39 31.7% 12

22 22.7% 5

39 35.9% 14

22 27.3% 6 TOTAL

TOTAL

TOTAL PENETRATION UNITS

TOTAL PENETRATION UNITS 66 24.3% 16

37 10.8% 4

66 27.3% 18

37 16.2% 6 66 30.3% 20

37 24.3% 9

66 36.4% 24

37 27.0% 10 66 39.4% 26

37 32.4% 12


Given that the Demand Model considers “Definites” and “Probables” in the total potential the study elects to apply a conservative penetration rate (25.6%) to the probable population and definite populations (37.0%) for an average of 30.3% for the facility suggesting that a 20 unit facility would be within an appropriate penetration rate.

20 Units/66 Persons = 30.3% 20 x 52% = 10 independent and 20 x 48% = 9 assisted = 19 Total Persons For market rate the definite population would allow 26.7% penetration while the probable group would allow 22.7% for a total for the facility of 24.3%. 9 Units/37 Persons = 24.3% 9 x 52% = 5 Independent and 9 x 48% = 4 Assisted = 9 Total Persons Market Share – Including Low Income Persons The combined result for the model that includes low income persons is a capacity that is conservative and below the 35% penetration rate. This analysis says that, from the two county market area …. 10 persons would purchase housing and limited services in an independent setting and 9 persons would purchase housing and significant services in an assisted living facility. Adjusting Market Share Consideration must also be given to two additional sources for potential residents in the facility.

(1) transfers from area nursing homes – persons inappropriately placed Studies from Assisted Living Federation of America (ALFA) state that 10.1% of all persons living in an assisted living facility are transfers from nursing home programs. For this project the study increases the assisted living demand by 10% x 19 persons = 2 additional persons.

(2) transfers from other counties to take advantage of low income status Estimating the impact of this in-flow of residents for the program is more difficult. No studies are available for projecting the effect of subsidized housing on in-migration from surrounding counties and communities except to quote from the NIC Study ….. “Developers and owners who are targeting the $20,000 and under market with well executed, affordable projects will continue to be rewarded with outstanding


market and fill-up results. The demand is extremely strong at this income level and it shows no sign of abating.” The conclusion from this is that the facility that knows how to operate as a subsidized business will fill. On the conservative side, we would suggest adding 15% or 3 additional persons to the total market share. To summarize: From Moorcroft market area = 19 persons From transfers from nursing homes = 2 persons From in-flow from adjacent areas = 3 persons Total = 24 persons 13 independent and 11 assisted living persons including low-income Market Share – excluding Low Income Persons When the study examines the market rate model (excluding low income persons), using a 25% penetration rate and the same rational as applied above the market share is considerably smaller. To summarize: From Moorcroft market area = 9 persons From transfers from nursing homes = 2 persons From in-flow from adjacent areas = 2 persons Total = 13 persons

7 independent and 6 assisted living persons excluding low-income Resident Turnover and Refill Projections A new facility should fill within nine to twelve months after opening and then maintain occupancy of 95% for the first two years. The ability of the market place to maintain this occupancy after the initial opening is dependent upon the rate of turnover and the numbers of additional age qualified persons developing in the market. An important consideration in the needs analysis is the ability to re-fill the senior living units as the in-place residents’ age beyond the licensed service level of the facility and must relocate to a nursing facility. Some will pass away while living in the facility. In the 2006 Overview of Assisted Living report from ALFA the average length of stay for an elderly resident in an assisted living facility was reported as 26 months with 20% of all residents leaving the facility during the first two years and 35% every year thereafter.


The question becomes: Are there enough new qualified persons in the market area each year to maintain occupancy by re-filling the turnover? The following table show projected growth and market capture of 65+ persons in the Moorcroft market areas.

ESTIMATED 65+ POPULATION GROWTH – 2009 TO 2014

MARKET AREA 2014 65 +

PERSONS

2009 65 +

PERSONS

2009 TO 2014 NEW 65 + PERSONS

TIME FRAME

AVERAGE NEW 65 +

PERSONS/YR Total Persons 2,667 2,275 392 5 yrs 78

Demand Model 77 66 11 5 yrs 2.0

Market Share @35% 1.0

Transfers N/H 2.0

In-Migration 3.0

Total per Year 6.0 Source: Consultant developed from Claritas 2009/2014 Data Based on this annual increase in 65+ persons in the Demand Model plus the transfers from nursing homes and in-migration, the overall market will contribute new residents every year. The combination will provide a total of 6 additional persons, including low income persons each year. If the facility is operated to exclude low income households the population growth would be expected to contribute 3 new persons per year. Initial Fill Rate The fill rate or the time it takes to reach the design occupancy for a new start-up property has been nine to twelve months from opening. This is dependent on many factors including size of the facility, location, competition, price level, etc. We would expect that any facility developed in Moorcroft would fill somewhat faster than the industry average due to the limited supply of independent and assisted living facilities. An un-met need and a quick fill-up are good for start-up but should not be confused with sustained need. A facility will experience rather quick turn over in its assisted living units as people age through the capabilities of the program and transfer to higher care. Others may spend their resources down and find the costs too expensive. Even with arrangements to service the waiver qualified persons for Medicaid supported services some of these low income persons will transfer to a skilled nursing home out of necessity. The independent segment will provide longer length of stay and act as a “feeder” to the higher care assisted living units.


Re-fill Requirements The re-fill requirements for a facility that accommodates low income persons and maintains a 95% occupancy can be tabulated as follows.

RE-FILL REQUIREMENTS – PERSONS FACILITY SIZE

UNITS PERSONS OCCUPANCY

RATE TURNOVER 20%

YEAR 1 AND 2 TURNOVER 35% YEAR 3 & AFTER

NEW PERSONS AVAILABLE PER YR

16 15 95% 3.0 5.3 6 18 17 95% 3.4 6.0 6 20 19 95% 3.8 6.7 6 22 21 95% 4.2 7.4 6 24 23 95% 4.6 8.1 6

SOURCE: Consultant An 18 unit facility would require 3 new persons to cover turnover each of the first two years. This would increase to 6 new persons in the third year and thereafter. A 20 unit facility would require 4 new residents each year during the first two years and 7 new persons each year after that. The re-fill requirements for a facility that does not accommodate low income persons can be tabulated as follows.

RE-FILL REQUIREMENTS – PERSONS FACILITY SIZE

UNITS PERSONS OCCUPANCY

RATE TURNOVER 20%

YEAR 1 AND 2 TURNOVER 35% YEAR 3 & AFTER

NEW PERSONS AVAILABLE PER YR

8 7 95% 1.4 2.5 3 10 9 95% 1.8 3.2 3 12 11 95% 2.2 3.9 3 14 13 95% 2.6 4.6 3

SOURCE: Consultant A 10 unit facility would require 2 new persons to cover turnover each of the first two years. This would increase to 3 new persons in the third year and thereafter. A 12 unit facility would require 2 new residents each year during the first two years and 4 new persons each year after that. There is evidence in the industry that an established facility that is offering quality services at a competitive price can increase market share, primarily by illustrating to the fully qualified pool of persons that the senior living lifestyle is appealing and affordable. We believe that the penetration rate could be expected to increase as the property matures in the market place. Additionally the catchment area could expand to adjacent counties as Moorcroft matures and expand their senior/elderly related support services (physicians, pharmacies, clinical services, transportation, etc).


Facility Size – Basis Initial and Re-Fill Demand For a property that serves all incomes – the initial need is 24 persons but considering the re-fill capacity of the market the sustainable number is 17 persons. Assuming 95% occupancy, these 17 persons will support an 18 unit facility. (17 persons @ 95% occupancy = 18 units). 18 units (10 independent units) (8 assisted living units) For a property that serves middle and upper incomes - 10 units (5 independent units) (5 assisted living units) ADJUSTMENTS TO FULLY QUALIFIED NUMBERS Competition – Other Providers A search of the licensed facilities database for the Wyoming Department of Health shows one other provider operating in the market area with a designation as an assisted living facility and licensed under applicable law as stipulated in the statute ….. Assisting Living Facilities Title 35: Chapter 2 – Article 9 – Licensing and Operations 35-2-901 and W.S. 16-3-101: Section 4 (b) “Assisted Living Facility” means a non-institutional dwelling operated by a person, firm, or corporation engaged in providing limited nursing care; personal care and boarding home care, but not habilitative care for persons not related to the owner of the facility. We have accounted for the existing assisted living facility as well as the providers of independent and limited support housing in the two county market area. Competitive impacts will be expected as other providers develop new or renovated living facilities. These providers will become competitors for the refill capacity provided by the markets in the future. The Moorcroft facility will have the advantage of providing for low income persons and of being established in the market place with a new, specifically designed facility.

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A Business Model OPERATING CONCEPT – SENIOR LIVING COMPLEX The Business Model It is suggested that Moorcroft develop and construct a suitable building that can provide space to house an assisted living facility that will be leased on a long term basis to a qualified operating manager who will assume day to day operations.

501c3 Non-Profit Corporation Board

TOWN OF MOORCROFT

Town Economic Development Board

Operator Assisted Living

Management Company

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The Facility A FACILITY MODEL The apartment building would be designed for quasi-independent and assisted living in a group setting for persons who are generally in the 65 plus year age group. Independent occupancy will be dependent upon a person’s ability to live within the apartment with limited programmed services being delivered by the facility. More dependent tenants would receive increasing services as they age. Assessed need for services will drive the amount of personal and clinical services provided. Age qualified persons who, privately or in council with their family, feel capable of living in the independent setting will receive initial and periodic assessments in keeping with state licensure requirements. The apartment will be an attractive alternative to their present living situations (living alone, in non-family settings, in more restrictive institutional settings, etc.). Persons would apply for residency and, based on vacancy, they will sign a rental and services agreement. Upon a vacancy occurring in the facility they can move in with their own furniture, belongings and personal things important to their lives. They will pay a deposit fee plus a monthly rental fee. The monthly rent will be subject to annual increases as deemed appropriate for the rental market in the area. Traditional “rules” for tenants as set by owner/manager will apply. Likewise state and federal regulations regarding tenant/landlord relationships will be applicable. As their assessment “scores” indicate a need for additional services they will pay increasing fees based on the acuity of their need for care. Tenants will be independent as relates to their life styles within the above mentioned “rules”. They will be free to come and go as they wish, have visitors, leave their apartments for extended lengths and generally be free to enjoy the quite security of their own apartment home. GENERAL CONFIGURATION Apartment Component The recommended concept for the apartment would create a “neighborhood” atmosphere providing a residential setting. To accommodate the needs of different individuals, the apartment would have three sizes of apartments:


APARTMENT TYPE UNIT SIZE Single efficiency apartments 475 sq ft each Single one bedroom apartments 515 sq ft each Expanded double occupancy apartment 625 sq ft each

Each apartment contains ample windows, a kitchenette, dining and living areas, storage, a bedroom with closet and a full private bathroom. In the bathroom, the design eliminates barriers by providing a large roll-in shower with a hand-held/sliding showerhead. A ceiling heat lamp increases the comfort of the bathing experience by providing a warm ambient temperature. Small-scale, yet efficient, the kitchenettes provide for a variety of mobility requirements; wheelchair users have plenty of knee space under counters. Efficiency apartments will provide adequate space for persons who require more affordable housing or for those not wanting extra space. A one bedroom unit will provide comfortable living space for a single person while the expanded units will accommodate a couple. Construction of the Building

The single story apartment building would consist of a cast-in-place concrete foundation and floor system, wood stud partitions and sloped wood truss roof system. Exterior finishes will all be pre-finished to minimize maintenance including a cultured stone wainscot with shingle siding or an exterior insulation and finish system above.

The earth-tone colors and natural-looking finishes of stone, pre-finished hardboard siding and stucco-look material that are incorporated help the structures blend in with the natural landscape of the Moorcroft area without dominating it’s location in the community. Interior finishes would be carpeted floors with painted gypsum board walls & ceilings in the living units with vinyl sheet flooring at all toilet rooms. Each living unit will have an individually controlled HVAC system to maximize comfort and control.


DESIGN CONCEPT A typical space relationship of the facility is illustrated by the following. There would be a total of 18 apartments with capacity for 19 persons. At 95% occupancy the design capacity would be 17 persons. The space concept encourages tenants to engage each other in conversation, exercise and hobbies within a weather-protected environment. Three distinct ‘neighborhoods’ offer amenities such as short hallways, a single floor design, access to a common laundry area, group dining, socializing space, house services, staff and visitors. Safety is enhanced by security locks and intercom communications as well as 24 hour staffing. Generally the space allocation is as follows.

MOORCROFT PROJECT – TO MEET IDENTIFIED NEED USE OF SPACE UNITS CAPACITY OCCUPIED 95% SQ FT EACH SQ FT TOTAL

Efficiency Apartments 5 5 persons 3 persons 475 2,375 Single One Bedroom 12 12 persons 12 persons 515 6,180

Expanded One Bedroom 1 2 persons 2 persons 625 625 TOTAL LIVING SPACE 18 19 persons 17 persons 9,180 Dining 820

Social and Activities 890 Kitchen and Food Prep 580

Resident Support Services 1,250 Circulation and Utility 2,755

TOTAL SUPPORT SPACE 6,295 TOTAL BUILDING SPACE 15,475

NOTE: The efficiency units are more likely to have vacancy but are necessary for accommodation of

some very low income persons. The expanded unit would be expected to accommodate 2 persons each.

COMMONS

APARTMENTS

APARTMENTS

PARKING

APARTMENTS

APARTMENTS

PARKING

PUBLIC ENTRY


The total building is estimated at 15,475 square feet. 59% will be used for the apartment units and 41% of the total space will provide common areas, dining, kitchen, social activity spaces and circulation throughout the building. Common spaces include • Congregate dining room with accommodations for residents and visitors • Complete kitchen for daily food preparation and serving three meals • Informal living room with comfortable seating, fireplace, reading and visiting • Dedicated area for daily resident activities and special occasions • Resident accessible laundry areas equipped for personal use • Staff laundry for safe management of linens, towels and house laundry • Administrative offices, reception and resident services coordination Dining will be provided in a sit down arrangement with staff delivery of the meal to the resident, waitress style. Table arrangements will enhance the experience without institutionalizing it. The common areas are arranged for maximum use by the residents as a part of their everyday living experiences within the facility. Comfortable seating, safe and secure flooring for easy transfer, appropriate, non-institutionalized lighting adds home like décor as do the wide corridors serving the apartments. Licensing of all apartment units as ‘Assisted Living’ will allow maximum flexibility when developing service plans for the individual residents. Admissions will take place under regulatory screening procedures and residents will be provided service levels consistent with their needs. As they age or have episodes of illness they may need additional services. The concept of the wings relative to the service center and common areas promotes access and observation of the higher acuity residents. If, in the future, the regulators allow skilled nursing beds to be incorporated into the assisted living environment this design will help to facilitate that conversion. The interior will be appealing with nice entry experiences, easy location of the various areas and immediate access to a staff person who knows what is going on. Dining in a group environment with well designed spaces, colors and light treatments will help with the home like atmosphere. A comfortable seating area around a fireplace will set the stage for visiting or waiting for a ride on the senior services bus. The activity center will provide TV and movie viewing, games tables, entertainment space and a music center around a piano.


The exterior will have non-institutional lines, roof gables, offset window treatments and a pleasant entry with loading/unloading area. The landscaping will be appropriate for the area and provide a breakup of the building profile after the trees and plantings mature. Safety and decorative lighting is a part of the exterior finish. Concrete or paved walkways in and around the property and between the wings will provide safe and secure exposure to the outdoors for the residents. Finally, the overarching strategy is to provide functional design without imposing an institutional flavor to the facility. The impression must be, from the curb to the heart of the apartment units that this is a place where an elderly person can feel at home. No uniforms on the staff, no strict rules about what a resident can or cannot do, access to visitors and friends, safety and functionality in all aspects are key elements in the design and operation of the facility. Site Requirements The site for the apartment building would require a minimum of one half acre. The desirable site would be relatively flat with close access to utilities served by all weather streets, existing sidewalks, curbs and gutter infrastructure. The building should be easily accessible from the front drop-off, and visitor-parking areas. The yard is landscaped to provide shade for sitting and opportunities for tending to flowers. The Committee and the Town discussed the possible sites offered in the preliminary study work. A suggestion was made that the location of the town maintenance shop would be ideal if it were big enough and could be made available through relocation of the shop facilities to another site within property owned by the Town of Moorcroft. This site was selected by the Committee and an analysis of the site was conducted by Stetson Engineering. Location of the site within the town limits is as shown:


The advantages of this location are important. Central location within the town, ease of access and protection from weather Infrastructure is in place and accessible Residential in nature lending to a more home like atmosphere Owned by the Town and could be available without cost to the project Removes “industrial” facility from a residential area Using a general square footage footprint suggested by the needs analysis in the study, the building will fit on the site with space for some off street parking and limited landscaping and outdoor circulation spaces. This draft analysis shows appropriate set-back allowances for all areas except the space merging to the alley on the west side of the building. An architectural design and space analysis will be required to fine tune the overall footprint size and configuration.


Architectural and Engineering Services The above discussion of building concepts and space allocations is taken from a sampling of similar projects evaluated by the consultant over the last two years. These project designs were developed in conjunction with qualified builders and/or architects with knowledge of assisted living and senior housing facilities throughout the region. The information presented is for preliminary discussion only. Moorcroft is encouraged to engage the services of qualified designers, engineers and builders with experience in senior housing.


COST ESTIMATES MOORCROFT SENIOR HOUSING STUDY STETSON ENGINEERING, INC. MAINTENANCE BUILDING SITE P.O. BOX 457 ENGINEER’S ESTIMATE GILLETTE, WY 82717 (307) 682-8936

UNIT EST QTY

UNIT PRICE TOTAL PRICE ITEM ITEM DESCRIPTION ($) ($)

1 BUILDING DEMOLITION LS 1 $ 20,000.00 $ 20,000.00 2 FENCE REMOVAL LF 630 $ 1.50 $ 945.00 3 SITE GRADING LS 1 $ 5,000.00 $ 5,000.00 4 RETAINING WALL SF 420 $ 40.00 $ 16,800.00 5 6" WATER SERVICE LF 150 $ 30.00 $ 4,500.00 6 CONNECT TO EXISTING WATER MAIN EA 1 $ 2,500.00 $ 2,500.00 7 ELECTRICAL SERVICE LS 1 $ 8,000.00 $ 8,000.00 8 INSTALL UNDERGROUND POWER TO BUILDING LF 90 $ 15.00 $ 1,350.00 9 TV SERVICE LS 1 $ 300.00 $ 300.00 10 GAS SERVICE LS 1 $ 500.00 $ 500.00 11 6"SEWER SERVICE PIPE LF 35 $ 40.00 $ 1,400.00 12 6" SEWER SERVICE EA 1 $ 700.00 $ 700.00 13 CURB AND GUTTER LF 120 $ 25.00 $ 3,000.00 14 12" SUBGRADE PROCESSING FOR PATCH SY 40 $ 13.75 $ 550.00 15 6" ASPHALT PATCH SY 40 $ 60.00 $ 2,400.00 16 5" ASPHALT CONCRETE PAVING SY 2475 $ 35.00 $ 86,625.00 17 INSTALL 5' WIDE SIDEWALK (4") SF 3600 $ 4.50 $ 16,200.00 18 REMOVAL OF PORTLAND CEMENT CONCRETE SY 375 $ 5.00 $ 1,875.00 19 LANDSCAPING LS 1 $ 10,000.00 $ 10,000.00 20 OVERHEAD POWER REMOVAL LS 1 $ 1,000.00 $ 1,000.00 21 INSTALL GREASE INTERCEPTOR LS 1 $ 8,000.00 $ 8,000.00

22 UNDERGROUND POWER TO EXISTING LIGHT POLE LF 175 $ 15.00 $ 2,625.00

ESTIMATED CONSTRUCTION COST $ 194,270.00

Contingency (15% Construction Cost) $ 29,140.50

CONSTRUCTION SUBTOTAL $ 223,410.50

Engineering (20% Subtotal) $ 44,682.10

PROJECT TOTAL $ 268,092.60

USE $ 268,000.00

Even though utilities and infrastructure are in place for the site, project specific work must be conducted to prepare the site for construction. This study assumes that the Town of Moorcroft will make this site available at no cost to the project. Funding for the site development may be available from grants for community improvement projects through WCDA (HUD), WBC (Business Committed Economic Development Project) and USDA RD Community Development.


DEVELOPMENT AND CONSTRUCTION The discussion that follows is provided as general information only and not intended to project actual costing that might be found in the Moorcroft area when a project is designed and bid for construction. Moorcroft is encouraged to seek professional architectural estimator services for specific cost estimating related to any planned facility. Development and Construction Tasks The tasks and related costs to develop, construct and open a senior living facility should include: DEVELOPMENT AND BUILDING – OWNER COSTS • Market and feasibility studies • Program analysis and development • Schematic, design and construction architectural services • Site and infrastructure analysis and design • Financing development – construction phase and long term mortgage • Regulatory submittal and approval • Bidding and contractor selection • Construction phase funding and owner oversight • Movable furnishings selection and procurement • Recruitment, selection and contract with qualified operator MOORCROFT TOWN COSTS • Land for site • Clearance of site • Infrastructure construction • Waiver of fees and permits for new building FACILITY OPERATOR AND MANAGER COSTS • Licensing and regulatory compliance • Marketing and pre-selling activities • Recruitment, staffing and training • Opening and start-up activities • Working capital


Comparative Project Studies The following discussion reflects consultant experience with similar project estimates over the past two years in the area. These were adjusted by the consultant to reflect the more favorable construction cost environment currently enjoyed by developers in the north central Wyoming area. Using this experience we can examine some estimated costs. Based on recent project estimating experiences and a good supply of qualified builders looking for projects, the following shows some typical senior/assisted living housing project estimates that have been received by our clients …..

REPRESENTATIVE COST ESTIMATES for REGION --------------------------------- CONSTRUCTION -------------------------------------

ESTIMATED ESTIMATED UNDER CONSTRUCTION Project Type Apartments Assisted Living Assisted Living Project Size 10 Units 20 Units 24 Units Sq Footage 10,950 16,500 19,200 Sq Foot/Unit 1,095 825 800

Per Sq Ft $ 145.00 $ 156.00 $ 160.00 Per Unit Cost $ 158,000 $ 128,700 $ 128,000

Total Hard Costs for Project $1,588,000 $2,574,000 $3,072,000 ----------------------------- ADDITIONAL PROJECT COSTS -------------------------

Contingency (10%) $ 158,000 $ 257,400 $ 316,800 A & E Fees (7.5%) $ 119,100 $ 193,100 $ 237,600 FF&E (2.5%) $ 39,700 $ 64,400 $ 79,200 Owner Admin (3.0%) $ 47,600 $ 77,200 $ 95,000

Total Other Costs for Project $ 364,400 $ 592,100 $ 728,600 TOTAL BUILDING $1,952,400 $3,166,100 $3.800,600

CONSULTANT – Representative projects under study. Do not include site acquisition or infrastructure development These projects are active and reflect current contractor responses to requests for estimates and/or actual contracts to construct the senior living buildings. The additional costs show the percentage of construction costs added by fees for services, furniture and fixture estimates and funds that the developer/owner feels is appropriate for their administration expenses related to getting the project completed.


Moorcroft Project - Costs to Construct and Equip a Facility Using these typical projects as guides, we can make an assumption that the Moorcroft project, as described in this study and subject to current area construction industry estimating, could be developed and made ready for occupancy as follows.

NOTE: These numbers do not include site acquisition or infrastructure development costs.

Alternatives Some minor cost savings may be negotiated through competitive bidding for the construction. Value engineering can help reduce costs through simplified building lines, roof treatment, window selection and interior finishes. These savings will not be identified until an actual plan and specification process is completed. One significant cost reduction would be to develop a smaller building which would obviously reduce the number of apartments resulting in a facility that would serve fewer seniors.

REPRESENTATIVE COST ESTIMATES for MOORCROFT PROJECT ----------------------- CONSTRUCTION ---------------------

ESTIMATED Project Type Assisted Living Project Size 18 Units Sq Footage 15,480 Sq Foot/Unit 860

Per Sq Ft $ 160.00 Per Unit Cost $ 137,600

Total Hard Costs for Project $ 2,476,000 --------------- ADDITIONAL PROJECT COSTS ------------

Contingency (10%) $ 247,600 A & E Fees (7.5%) $ 185,700 FF&E (2.5%) $ 61,900 Owner Admin (3.0%) $ 74,300

Total Other Costs for Project $ 569,500 TOTAL BUILDING $ 3,045,500


A comparison summary costing table for smaller buildings with fewer numbers of apartment units follows.

NOTE: These numbers do not include site acquisition or infrastructure development costs. Clearly these alternative building sizes can be constructed at lower overall costs although the per sq ft cost remains the same. The per unit cost does increase as the facility becomes smaller. The 15 unit building is nearly 17% less costly to build while the 12 unit facility is estimated to be 32% lower. If total cash required were the only issue then this strategy would appear to be useful in financing and funding considerations. However, there are other issues to consider in developing …. • a facility with capacity for the identified need for affordable seniors housing • a facility that can become financially attractive for an operator/manager • a facility that is large enough to attract qualified builders in a bid process Further analysis is required to determine financial feasibility. First, a look at possible financing scenarios using conventional bank financing with a long term mortgage.

ALTERNATIVE FACILITY SIZE for MOORCROFT PROJECT -------------------------------- CONSTRUCTION --------------------------------

ESTIMATED Project Type Assisted Living Assisted Living Project Size 15 Units 12 Units Sq Footage 12,900 10,320 Sq Foot/Unit 860 860

Per Sq Ft $ 160.00 $ 160.00 Per Unit Cost $ 137,600 $ 152,000

Total Hard Costs for Project $2,064,000 $1,651,200 ------------------------- ADDITIONAL PROJECT COSTS ----------------------

Contingency (10%) $ 206,400 $ 165,100 A & E Fees (7.5%) $ 154,800 $ 123,800 FF&E (2.5%) $ 51,600 $ 41,300 Owner Admin (3.0%) $ 61,900 $ 49,500

Total Other Costs for Project $ 474,700 $ 379,700 TOTAL BUILDING $2,538,700 $2,030,900

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Capital Financing Scenarios CONVENTIONAL BANK FINANCING Assuming conventional financing using owner cash equity and bank loans at various costs of capital ……

18 UNIT FACILITY @ $3,045,000

TOTAL COST

OWNER EQUITY

AMOUNT

FINANCED

30 YR DEBT SERVICE - VARIOUS INTEREST RATES

5% 6% 7%

$3,045,000 20% $609,000 $2,436,000 $13,076/mo $14,605/mo $16,207/mo $3,045,000 25% $761,000 $2,284,000 $12,261/mo $13,694/mo $15,196/mo $3,045,000 30% $924,000 $2,121,000 $11,386/mo $12,716/mo $14,111/mo

CONSULTANT – USING CONVENTIONAL AMORTIZATION SCHEDULES AND ASSUMED INTEREST RATES

15 UNIT FACILITY @ $2,538,700

TOTAL COST

OWNER EQUITY

AMOUNT

FINANCED


5% 6% 7%


CONSULTANT – USING CONVENTIONAL AMORTIZATION SCHEDULES AND ASSUMED INTEREST RATES 12 UNIT FACILITY @ $2,030,900

TOTAL COST

OWNER EQUITY

AMOUNT

FINANCED


5% 6% 7%


CONSULTANT – USING CONVENTIONAL AMORTIZATION SCHEDULES AND ASSUMED INTEREST RATES These debt service scenarios pose additional questions for a developer and owner of a facility. Two key questions …..

1. The amount of cash required for equity – can Moorcroft support this?

2. Can the managing operator afford to pay enough rent to cover Moorcroft’s debt service?

Trying to answer these key questions requires an examination of funding sources that might be available to support this project.


SOURCES OF CAPITAL The illustration below shows the sources that are commonly used for funding housing projects in Wyoming. Other than conventional bank lending all require that the project result in affordable housing for low to moderate income households and individuals.

FEDERAL HOME

LOAN BANK SEATTLE DISTRICT

US DEPARTMENT OF AGRICULTURE

RURAL DEVELOPMENT USDA

WYOMING COMMUNITY DEVELOPMENT

AUTHORITY WCDA

WYOMING BUSINESS COUNCIL

WBC

MOORCROFT ECONOMIC DEVELOPMENT BOARD

TOWN OF MOORCROFT

COMMUNITY SUPPORT

& PRIVATE FUNDING

BANK LENDING

CONVENTIONAL &

LOAN GUARANTEES

MOORCROFT SENIOR HOUSING PROJECT

US DEPARTMENT OF HOUSING & URBAN

DEVELOPMENT


Funding Essentials A key element in any capital funding scenario is the presence of strong community support. This support takes the form of willingness of the local governmental units to endorse projects along with grass roots enthusiasm from the residents of the community and surrounding market area. • Local governmental support indicated by seeking and sponsoring grants as

well as willingness to develop infrastructure, waive certain fees and taxation on improvements related to the project, etc..

• Grass roots support through letter writing, testimony at funding hearings,

donations in time, effort and cash for the tasks of organizing the development and operational effort.

• In kind donations of land, labor and materials as well as seed capital to be

used as matching funds for equity that may be required by federal programs, partner banks and lending institutions.

• Strong volunteer leadership in a sponsoring organization within the

community.

• Existence of a qualified 501c3 tax exempt organization to own and manage the facility, either directly or through an operator lease arrangement for the building.

• If the later is selected, a contracted management relationship with a viable

business entity with a plan for sound operations showing ability to sustain operations and service appropriate facility lease costs over a long period of time.

Local Banks Many of the federal programs require the sponsor/owner to make a genuine effort to involve their local banking institutions to be involved in the financing of a project prior to seeking program funding from HUD or USDA. Many projects do include local conventional lending in their project funding mix. Banks will partner with other lenders in some cases. Banks may have a requirement to participate in local community based projects as a part of their regulatory agreements. They do so through their Community Investment Program (CIP). CIP loans can subsidize interest rates on loans through member banks for affordable rental housing for families with incomes of no more that 115 percent of area median income levels. Contacting local banks and discussing the project with them is a first step in the process.


Fundamental Requirements – Federal Programs With the exception of state funds managed by the Wyoming Business Council all of the funding resources considered in this Phase come from a non-profit membership banking organization and from two federal agencies …. • Federal Home Loan Bank – Seattle District • U.S. Department of Housing and Urban Development (HUD) • USDA Rural Development Housing & Community Facilities Program (HCFP) Any application submitted to these federal programs and/or state managed federal programs must meet at least one of three criteria identified in statute as “National Objectives”. • Be of benefit to low and moderate income families. • Aid in the prevention or elimination of slums or blighted areas. • Be an activity designed to meet community development needs having a

particular urgency.

For the purpose of this study, the first, third and fourth objectives are deemed relevant. Activities considered benefiting low to moderate income persons are divided into four categories:

(1) housing activities (2) limited clientele (3) area benefit activities (4) job creation and retention

HUD Income Definitions Extremely Low Income 30% of area median income adjusted for family size Very Low Income 50% of area median income adjusted for family size Low Income 80% of area median income adjusted for family size Definition of “Affordable” Housing Federal assistance programs identify “affordability” by rental expenses that do not exceed 30 percent of a tenant’s income, as adjusted for family size.


Participating lenders consider a property to be affordable when the majority of the rental units are occupied by low to moderate income households or when the property qualifies for federal assistance with loan rates. Some federal housing programs allow mixed income occupancy of affordable and market rate units as long as a minimum percentage of the occupancy meets a designated percentage of area median income. U.S. Department of Housing and Urban Development (HUD) The state office for all HUD programs is located in Casper. This office is a part of the Denver Region for HUD. The Moorcroft project will be considered “multifamily”. For multifamily housing projects the contact point will be the Denver Multifamily HUD office. The primary program that is designed for support of assisted living and nursing home development is the HUD Section 232 mortgage insurance program. Under this section HUD will provide FHA mortgage insurance to HUD approved multifamily program (MAP) lenders. Rates will be set by the lender, fixed for up to 40 years. Borrowing can be for up to 95% of the total value of the facility, dependent on the ability of the owner to service the debt. The borrower will work with an approved lender bank in the region and negotiate their most favorable package based on federal grantees for the loan. Eligible borrowers would include private non-profit organizations. Wyoming Community Development Authority (WCDA) WCDA was created by state statute to act as an independent corporation for the management and administration of federal funding for housing programs within the state. HOME Investment Partnerships Program (HOME) HOME programs provide funds to governmental units to facilitate program strategies for affordable housing for low and very low income persons by covering some hard and soft costs for rental housing production. The general purpose of HOME funding includes: • Expansion of the supply of decent and affordable housing, particularly

rental housing for low and very low income persons. • Expansion may come as the result of new construction of a multi-family

project.


• Strengthening the abilities of …… local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing.

• Extending and strengthening partnerships among all levels of government

and the private sector, including ….. non profit organizations, in the production of affordable housing.

HOME funded programs require locally generated matching funds to be provided for any allocated project. HOME funds are allocated to local governments, Community Housing Development Organizations (CHDOs), public housing authorities, non-profit organizations, and for-profit developers of low income housing. HOME funds cannot be used to benefit property owners. HOME funds can be used for new construction of qualifying new construction. HOME assisted rental housing requires low and very low income tenants with preference for a majority of very low income tenants. An important element of the HOME Program is that properties supported by HOME funding cannot require tenants to accept services and personal assistance as a perquisite for living in the facility. An additional requirement is….. levels of rent are strictly controlled. • 100% of all units in HOME programs must have rents that are at or below

published LOW HOME RENT. • Monthly rent and utility allowances must be recalculated annually by the

owner and approved by WCDA. • Rent (HOME RENTS) and income qualified occupancy must be maintained

for period of 20 years for new construction Low Income Housing Tax Credits WCDA provides a conduit for tax exempt financing also. These programs are rather complex and require partnerships with organizations who “syndicate” tax credits granted through WCDA/IRS programs. These credits are sold to investors for cash which is distributed to the non-profit applicant.


Community Development Block Grants Each year WCDA receives funding from HUD to be used as grants to municipalities or other sponsors for the development of projects which are beneficial to the community and its populations. Benefits to low income persons are mandatory for receipt of these funds. USDA Rural Development Housing & Community Facilities Program (HCFP) HCFP administers direct loans, loan guarantees and grants to increase the supply of affordable housing and support innovative projects for housing in rural areas. HCFP programs are available to eligible applicants in rural towns with no more than 20,000 persons in population. Section 538 Rural Rental Housing Guarantee Loans This program provided loan guarantees on conventional bank loans to the borrower. Banks must be registered as 538 program certified and will negotiate the loan directly with the borrower. USDA may subsidize these loans with credit buy downs on best rates offered by the lender at the time of negotiation. Guaranteed loans can be provided for construction of rental multifamily housing development.

• Sponsors can be local governments and/or non-profit organizations

• Eligible lenders are those currently approved by Federal Home Loan

Mortgage Corporation, Federal Home Loan Bank members and HUD recognized lenders.

• Loans terms are 40 years at fixed rates as negotiated between lender and

borrower. This program is available to • Public or private nonprofit organizations for building rental units for low

and moderate income residents in rural areas. • Terms on these loans is tied to cost of money for the government and

maximum term of 30 years.

• Rural Rental Housing loans are direct, competitive mortgage loans made available to eligible sponsors for affordable multifamily rental housing as a part of HCFP.


Community Facilities Program

Loans can be made or guaranteed for development of essential community facilities in rural areas and towns up to 20,000 population Available to public entities and non profit sponsors who can demonstrate that they are unable to finance project or obtain commercial credit at reasonable rates and terms. Priority is given to communities with populations of 5,000 or less Priority is given for communities where area median income is 60% or less of the state’s non-metropolitan median income.

Repayment must be based on tax assessments and/or operating revenues.

May be used for ….. construction that is considered a public improvement: to include community center, food preparation center, wellness and health, etc..

Direct and guaranteed loans may be mixed to accomplish the project. Wyoming Business Council (WBC) For the purposes of this project the WBC provides two programs that may be applicable to the funding of the senior housing and services center development. First it must be understood that WBC does not fund housing projects directly, they instead channel HUD housing development CDBG funds through WCDA. WBC does provide funding opportunities through …. State monies for Business Ready Projects and Business Committed Projects to be used by local governments and/or public bodies such as joint powers boards for infrastructure and/or building construction that supports economic development within the community. • Grant limit is $1,500,000 and Community Development Block Grant Program provides funding for site and infrastructure as well as community facilities construction meeting identified public benefit needs of the community. • Grant limit is $300,000


These projects must: • Meet the National Objectives as stipulated by HUD. Projects are deemed to

meet low to moderate income objectives if 51% of the benefited persons are low to moderate income persons.

• Illustrate a serious need and/or urgency for the project. • Be conducted as a part of a demonstrated integrated, problem solving effort

within the community. Federal Home Loan Bank – Affordable Housing Program This regional bank may provide funding assistance in partnership with its member banks who serve the Moorcroft region. They do not normally work directly with the borrower, asking first that the borrower present its project to the member bank. FHLB will then assist the member bank if their decision is to participate in a project. They require a qualified project sponsor such as the Town of Moorcroft or a non-profit entity who is deemed qualified to develop, construct and operate the facility. Rural projects require that the project be located in an area with less than 25,000 persons or in an area designated by USDA as “rural”. The project must serve low income persons as identified above. Member banks can obtain support from FHLB to help the project become feasible and affordable to the low income populations. The separation of housing and services (see WCDA HOME discussion) is required. The key element for this funding resource is establishment of a working relationship with a FHLB member bank that serves the Moorcroft region.

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Operation and Management of an Assisted Living Facility THIRD PARTY OPERATOR The second key question …. can the operator of the facility pay sufficient “rent” to lease the building at a rate that will cover the owner’s debt and reserves monthly costs? Assisted Living Programs A typical program provides housing and services generally as describe here. It is understood that individual operators may have other programmatic systems but the intent of the program should be similar. Residents will be able to receive personal services that are based on their need for assistance. Entry level tenants will be expected to require minimum levels of services, advancing in requirements as they age or become more dependent. Meal service will be included for all residents. The array of provided services is as follows.

Assistance: Entry level plus four additional levels of personal service available

Entry Level ----- $900/mo • rent and utilities • three meals per day • general maintenance, annualized cleaning, grounds and landscape service • scheduled transportation • mail delivery/pick-up • emergency call system • scheduled social activities In addition to the above, the following levels receive person services with ADLs, nursing overview and routine and timely assessment as required by licensure. Level One ---- $1,900/mo • weekly homemaker assistance • bed and bath linen laundry assistance • personal items laundry assistance • wellness monitoring • reminders for scheduling and arranging medical services • assistance with personal activities related to instrumental activities • companionship through social and activity programs • unscheduled needs

Level Two ----- $2,300/mo • includes all of Level One plus • reminders for self medications • occasional confusion management • special menu management


Level Three ---- $2,900/mo • includes all of Level Two plus • occasional partial assistance with personal grooming • occasional partial assistance with ambulating • occasional partial assistance with dining • medications assistance

Level Four ----- $3,400/mo • includes all of Level Three • personal services may become daily • daily confusion management • partial assistance with incidental incontinence • occasional transferring An Operating Model This organization chart illustrates the operating model that is generally found in small assisted living facilities that rely on “cross trained” staffing. Staff is expected to perform duties as needed to care for residents according to their assessed need for assistance.

FOOD & NUTRITION

PERSONAL SERVICES

NURSE - CLINICAL SERVICES

HOUSEKEEPING

FACILITY & PLANT

DIRECTOR OFFICE ADMIN

MANAGEMENT COMPANY

Staffing levels are directly related to the acuity of the residents living in the facility at any given time. It is probable that staffing levels will increase and decrease as the facility resident mix changes over time. Revenues will also vary as the resident mix changes. A strong mix of higher acuity residents will result in increased revenues but, at the same time will increase expenses.


SUMMARY FINANCIAL MODEL FOR OPERATING FACILITY OF VARIOUS SIZES At 95% occupancy stabilized after start-up and serving 50% low to moderate income residents.

18 UNIT 15 UNIT 12 UNIT Revenue % of REV ANNUAL MONTHLY ANNUAL MONTHLY ANNUAL MONTHLY Rental $143,600 $11,970 $131,775 $10,980 $105,412 $ 8,780 Services $388,360 $32,360 $334,270 $27,860 $256,248 $21,350 Total Revenues 100.0% $531,960 $44,330 $466,030 $38,840 $361,360 $30,110 Operating Expenses 78.0% $412,500 $34,370 $364,990 $30,420 $293,700 $24,480 Net Income 22.0% $119,460 $ 9,960 $101,070 $ 8,420 $ 67.960 $ 5.660

Lease Expenses 16.0% $85,000 $ 7,080 $ 70,800 $ 5,900 $ 44,400 $ 3,700 Cash Reserves 1.5% $ 7,800 $ 650 $ 6,850 $ 570 $ 5,320 $ 440 Management Fees 5.0% $25,600 $ 2,100 $ 23,300 $ 1,940 $ 18,080 $ 1,510 Consultant – Typical Operating Programs in Region Under this operating model the project should generate full and part time jobs for skilled and paraprofessional positions equivalent to the following Full Time Equivalent staff. Wage rates are estimated in keeping with current pay scales found in these facilities in the region. Jobs Created

POSITION AVERAGE PAY RATE 18 UNIT FTEs 15 UNIT FTEs 12 UNIT FTEs Director $25.00 1.27 1.27 1.02

Personal Service $13.00 2.24 1.79 1.43 Food and Dining $11.00 1.78 1.61 1.25 Other Services $10.00 0.61 0.61 0.61 House & Maint $ 9.00 1.07 0.97 0.97

TOTAL FTEs 6.97 6.25 5.28

With moderate benefits included, the project should generate payrolls of $185,000 per year for the 12 unit facility and up to $250,000 per year for the 18 unit facility. FINANCIAL OPERATIONS & FINANCING FEASIBILITY OF A LEASED FACILITY

TOTAL PROJECT COST

MAX LEASE PAYMENT

1. MAX DEBT SUPPORTED

2. PROJECT FUNDING GAP

18 UNIT $3,045,000 $ 85,000 $1,075,000 $1,970,000

15 UNIT $2,538,700 $ 70,800 $ 887,000 $1,651,700

12 UNIT $2,030,900 $ 44,400 $ 557,000 $1,473,900

1. Assumption on debt: 6% interest at 30 year amortization 2. Funding Gap made up by equity invested plus housing grants, donations, gifts, incremental tax levies

planning for the elderly…now and

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