Senior Lifestyle Corporation recently completed its first affordable assisted living community in Chicago Heights and is moving forward on other projects in its $158 million pipeline, many of which are heavily utilizing tax-exempt bond financing.
Prairie Green in Chicago Heights is a 144-unit, $23.3 million supportive living facility that received $18.5 million in tax-exempt bond financing from the Illinois Housing Development Authority. Chicago Heights donated the land to Senior Lifestyle for $1 after the site stood vacant for more than a decade, previously home to a failed Holiday Inn.
Illinois’s Supportive Living Facility program allows Medicaid-eligible residents to use state assistance to pay for their care. Although the program has been in existence for around 12 years, Senior Lifestyle’s vice president of development and acquisitions, Bob Gawronski, said it has taken a while for his company to take the plunge into affordable assisted living.
“We stood on the sidelines [until we] figured out what worked and what didn’t work,” Gawronski told SHN. “Once we realized how [the model] could be operated effectively, we jumped in to do a couple.”
Only about 2,000 units of Senior Lifestyle’s approximately 11,000-unit portfolio are affordable senior housing, but that number will grow as the Chicago-based company prepares to break ground in the next couple weeks on its next project, a second supportive living center that will be located in Blue Island, Ill.
The cost of the 120-unit Blue Island development is an estimated $23.4 million, some of which will be raised through the sale of non-rated tax-exempt bonds.
For both the Blue Island and Chicago Heights projects, says Gawronski, the tax-exempt nature of the bonds allows Senior Lifestyle’s equity investors to qualify for Low-Income Housing Tax Credits.
Senior Lifestyle also is working on an 89-unit, tax-credit financed independent living building called Senior Suites of Midway Village. The affordable senior community, which will cost approximately $18.1 million to build, is rounding out an existing campus that includes market rate independent and assisted living along with for-sale senior condos.
In Norwood Park, Senior Lifestyle is getting ready to start work on another Senior Suites community, an adaptive reuse of a 100-year-old monastery which became vacant around a year ago.
The plan is to convert the building into 84 units of affordable independent living in an approximately $23.9 million project that will utilize historical tax credits, Low Income Housing Tax Credits, a privately funded first mortgage from BMO Harris Bank, a City of Chicago Home Loan, and grants from the Department of Commerce and Economic Opportunity and the Federal Home Loan Bank.
The multiple layers of financing used for that project will also be seen in a Bellwood, Ill. development. Funding for the 89-unit, $18 million independent living community will come from tax credits, Federal Home Loan Bank and Department of Commerce grants, and Section 8 assistance once it’s open.
Senior Lifestyle has already broken ground on a market rate assisted living and memory care community in Northbrook, Ill. called North Shore Place, which will have 156 units and cost about $51 million to develop.
It’s being built to look and feel like an independent living community, according to Gawronski, but all the units will be licensed for assisted living. The community will have one and two-bedroom apartments in addition to studios, he says, where traditionally assisted living units were almost exclusively studios.
“We’ve just expanded our development department to pursue very aggressively additional market rate opportunities in assisted living and memory care,” Gawronski says, adding that it took about six years to secure financing and finalize the North Shore project. “The one thing that became apparent during the recession is that assisted living and memory care are need-driven a lot more so than independent living.”
The company may also do more affordable housing development, but it’s very competitive, he says, and some of the projects have been in the works for two to four years.
“Generally speaking, when you apply for tax credits, anywhere from 40 to 80 developers are applying for [the same] funding assistance, and the state might have enough credits to award 10-12 deals a year,” he says. “It’s quite an accomplishment to be successful [with affordable senior housing projects].
As for the affordable assisted living entry, Gawronski says his company’s entrance into the space was very intentional.
“That’s something we’re consciously doing,” he says. “The state’s supportive living program is wonderful, it just took us a while to get comfortable with it. It’s filling a void in our portfolio; we’ve always done affordable independent living, but now this bridges the gap into assisted living.”
Written by Alyssa Gerace
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