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Senior Housing Experiencing a Growth Spurt

May 16, 2000|KAREN ROBINSON-JACOBS

With the ranks of the country's senior citizens growing, and fast, more and more housing developers are seeing green in America's gray.

Consider: In the San Fernando Valley alone, at least eight retirement communities, with more than 1,400 individual apartments, are either proposed, ready to start construction or opening within a few weeks.

The Valley, and Los Angeles as a whole, saw its population boom after World War II, when returning vets came looking for homes. Now it's considered fertile ground for an expanding industry that includes names like Hyatt and Marriott. And more developers are expected to weigh in as demographic predictions become reality.

"L.A. in general is probably one of the most underserved markets in the U.S." said Michael Grust, president of San Diego-based Senior Resource Group, which is planning its first project in the Los Angeles area. Construction of the firm's 249-unit complex, the Village at Sherman Oaks, is expected to begin next month.

"There will be more people [developers] coming in," he said, noting that some public companies got into the business in recent years but already have dropped out. "There's a great allure to serving one of the fastest-growing segments of the population."

Grust, like other developers, thinks there's room in the Valley for the various projects on tap now, especially given that some are aimed at specific target markets. Two, of the projects, for example, are for low-income people and are backed by the city of Los Angeles and the U.S. Department of Housing and Urban Development. One proposed complex aims to provide a home for aging musicians. None is strictly a nursing home, though some would have the capacity to offer skilled nursing care.

Today's current construction list shows a sizable increase from the level of activity of just five years ago, but developers say that in the coming years, the growth in the number of seniors--and in developers seeking to serve them--will be off the chart.

"There's a kind of bubble right now in the Valley because there are a lot of people who came here in the late '40s, and they're in their retirement years now," said Stephen L. Taylor, whose Del Mar-based company, Homeplace Retirement Communities of America Inc., is planning one of the largest projects--a 386-unit retirement complex in Northridge called Villa Siena.

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"But where I think the demand is going in the next five, six, seven years is straight up. Between 2006 and 2053, those numbers [of seniors] go due north. That line just doesn't angle up, it goes straight up. So you have this huge wave that's coming."

The U.S. Census Bureau estimates the number of California residents 65 and older will be 6.42 million in 2025, nearly double the 1995 figure.

Ready to serve this expanding clientele are people like Taylor.

His project is one of the more upscale developments planned, a so-called continuing care retirement community that features one-, two- and three-bedroom apartments for the able-bodied, as well as separate assisted living units in which residents can get help with anything from bathing to taking medicine on time. The complex will also have a section offering skilled nursing care.

But the price for entry is not cheap.

Such communities--there are more than 50 in the state--often charge an upfront entrance fee that can range from a few thousand dollars to $1.6 million. That's separate from the monthly rent, which can be more than $1,000.

At Villa Siena, the entrance fee ranges from $175,000 to $400,000, depending on the size of the apartment and the services rendered. It is partially refundable and essentially buys the residents access to a retirement community where they can "age in place," with the promise that management will provide additional levels of care as needed.

Taylor recognizes that some might balk at the heft of the upfront payment but said he believes rent at his complex will be substantially less than at communities offering similar amenities that do not charge the fees.

Continuing care communities must be licensed and are tightly regulated by the state Department of Social Services to help protect residents against fraud.

Wanda James, corporate director of marketing for Southern California Presbyterian Homes, is among those who fears that as more companies get into the senior housing business, the potential for fraud will increase.

"Unfortunately, I think there is" increased potential, said James, whose nonprofit organization operates 24 senior housing communities and has a new one, Kirkwood Assisted Living Residence of Glendale, set to open at the end of June.

"How hard is it to pick on a 90-year-old woman with a trust fund? I'm hoping that as we have more and more companies coming into the business, there will be more and more safeguards" put in place by state regulators, she said.

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