Developers face housing crisis for seniors
Reflecting on the projects, Robert Buente, president and CEO of 1010 Development, called them “great success”, adding that each had been “hired within hours”.
âWe got interested in the market because people are getting older,â Buente said. âIt’s an area of ââgrowth.
The company then developed other affordable housing projects, including Casa Carmen in Pico-Union, also aimed at the elderly. Most of the funding for Villa Flores came from a program of the Department of Housing and Urban Development, and the funds to build Casa Carmen came from several sources, including city, state and tax credits.
The demand for senior housing has not diminished in the decades since the association of the church and the developer. But funding has become more difficult, and this problem has only exacerbated the gap between the number of units available and the number needed.
Buente said the pursuit of money has become such a hindrance that his company is no longer looking to build projects that are all for seniors.
âWe can’t do them anymore. â¦ Most of the money now goes to permanent supportive housing and homelessness, âhe said.
Instead, 1010 Development plans to place some senior units in affordable projects. This means that developers like 1010 Development are fixing the problem rather than fixing it in bulk.
An “overwhelming” request
Nationally, the number of people 85 and over is expected to increase 177% by 2050, according to CBRE Group Inc. Meanwhile, only 8.2% of people over 75 live in residences for seniors in Los Angeles and Orange counties, up from 11.5%. nationally, said Bryan Lewitt, managing director of Jones Lang LaSalle Inc., who “suggests that supply in the region is low.”
Lewitt said an additional 2,400 senior housing units are under construction in Los Angeles and Orange counties. These units are expected to ship next year, and a small portion of them will be affordable along with the rest at market rates.
Affordable units cannot go live early enough.
Jordan Pynes, chairman of Brentwood-based affordable housing developer Thomas Safran & Associates, said his company’s senior complexes, which typically have around 100 units, attract 2,000 to 3,000 applications when opened.
âThe demand is completely overwhelming right now,â Pynes said.
The problem is not as serious for the elderly who can afford the average cost of a senior unit.
âWe have a really strong housing market here,â Lewitt said. âSeniors can afford to move into these expensive facilities,â when they sell their current home.
Lewitt said senior housing rents average $ 5,213 in Los Angeles and Orange counties, and there aren’t a ton of affordable, limited-income units.
But in LA County, higher incomes disproportionately spend less on housing. According to the nonprofit California Housing Partnership, three in four senior renter households who earn less than 15% of the region’s median income spend more than half of their income on housing. For high incomes, the share is less than 3%.
âJust like you have an affordability crisis in multi-family housing, you are facing an availability crisis in senior housing,â said Steve Ervin, senior citizen housing and healthcare business unit at Berkadia. Proprietary Holding.
Berkadia recently expanded with the arrival of Simona Wilson in Los Angeles, who was hired as a director to develop Berkadia’s senior housing division on the West Coast.
âSeniors housing is a strong market. â¦ We believe that our senior housing team has the opportunity to grow and have more impact in the market, âsaid Ervin.
Ervin, who has been involved in financing senior housing for about 35 years, said there are “many levels of complexity” when it comes to financing.
Part of this complexity comes from how rents and on-site services are funded, and part of how properties are appraised to assess their price and real estate value.
It can be difficult to set rental rates in advance because Section 8 vouchers, which are commonly used in the affordable housing sector, do not work âas wellâ with senior housing communities. which tend to be responsible for on-site staff as well as services and amenities.
âThere is that component of care that comes with it. The rules are a bit hazy in this regard, âErvin said.
Regarding subscription, Ervin said there are not the same subscription and programming standards as in other multi-family homes to promote affordability.
HUD and other organizations, he said, are looking to be big players in funding senior housing.
For decades, HUD has been heavily involved in directly funding the production of affordable housing for seniors in LA County, but the sources of funding have changed, resulting in a decline in creation and preservation. affordable housing, according to California Housing Partnership.
In 2020, the association estimated that more than 4,800 of LA County’s 43,000 subsidized affordable housing units for seniors are at risk of converting at market rates over the next 10 years.
Anand Kannan, president of Irvine-based Community Preservation Partners, which has a strong Los Angeles presence, said his company is focused on preserving existing affordable communities.
Kannan said there are plenty of aging properties for the elderly in desperate need of modernization.
âOur guideline and mission is looking at older properties, and there were many that were built in the 50’s, 60’s and 70’s that were senior buildings and programs with HUD, and those buildings are over 50 years old. years, “Kannan mentioned.
The company is looking for properties where it can update units and improve the services offered – and preserve and extend accessibility clauses linked to financing terms that keep rents low.
His recent projects include the $ 15 million acquisition and renovation of Kernwood Terrace Apartments, a 51-unit seniors’ complex in eastern LA.
Last year, in partnership with Jonathan Rose Cos., It acquired Golden West Tower Apartments, a 180 unit senior housing community in Torrance. Buyers spent over $ 10 million to improve the property.
Meanwhile, East Hollywood-based Path is doing a lot of affordable housing development for residents who have experienced homelessness before.
In Los Angeles, it has five projects with support units for the elderly: one is entirely for the elderly and the others have units for the elderly as a percentage of the units.
Joel Roberts, chief executive of Path, said location and funding dictated the number of units for seniors.
âIt’s not a simple process,â he said. âYou have to get the neighborhood to accept that they are willing to have a building for people who were previously homeless in their neighborhood and then get funding. “
Many of Path’s projects currently underway – seven under construction and nine in the planning stages – will have senior units.
He warned that a growing percentage of the homeless population were seniors, up 20% in 2020.
âIt’s a really big increase, and that was before Covid, so we’re very, very worried that with the pandemic that number will increase even more,â Roberts said.
âWe certainly see that there will be an increase in the number of homeless seniors over the next two years, and we believe it is essential that they be given priority in affordable and supportive housing.
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