NAHMA Leaders Talk Trends
Our members were asked to provide their insight and expertise on emerging trends for the upcoming new year in the affordable housing industry. They shared their knowledge on the topics of the impacts of the aging population, advances in construction, the advantages of technology and what they see as the biggest trends for 2019.
The questions they were asked:
- What are some of the changes or impacts you see in affordable housing as a result of the growing aging population?
- What advances in new construction materials and methods—for example, building small houses, using 3D printing, utilizing shipping containers, converting shopping malls, etc.—do you see as having a beneficial impact on affordable housing?
- What role(s) do you see advancements in technology playing in the lives of on-site property employees and residents?
- Look into your crystal ball, what will be the biggest trend in the affordable housing industry for 2019?
D E F N P S W
Dominium Inc.
Jack Sipes, partner and senior vice president
Q1: Impacts of Aging Population: I have seen a dramatic increase in Section 42 senior tax credit new construction communities. Dominium has more than 10 planned or under construction and the demand far outstrips supply. I expect to see local elected officials and developers to continue or increase these type of projects as a result.
Q4: Crystal Ball: The incredible apartment market continues into 2019 and that certainly extends to affordable housing. Incomes should increase which results in increased rents and increased development. Barring an unforeseen and significant change in interest rates, I expect another outstanding year of growth and development for affordable housing next year.
Essex Management Company LLC
J. Kenneth Pagano, SHCM, NAHP-e, president & CEO
Q1: Impacts of Aging Population: More services are needed to address issues with seniors who wish to remain independent. The proposed increase in tenant contributions will impact seniors adversely.
Q2: Advances in Construction: Unless HUD [Department of Housing and Urban Development] changes its requirements to allow for new specifications, things will drag along using old technology and amenities.
Q3: Advantages of Technology: It will improve communication and accountability of staff and ensure work is done.
Q4: Crystal Ball: The increase in tenant contribution will reduce to some extent the annual subsidy contract for each contract. The future will be more mixed-income housing to be able to provide affordable housing, but also long-term financial stability of the properties.
Federation Housing Inc.
Eric Naftulin, NAHP-e, executive director
Q1: Impacts of Aging Population: One of the challenges many senior housing operators are facing has to do with the Nursing Home Transition (NHT) initiative—where seniors who have been living in assisted living and nursing home settings are being encouraged to move back into independent living environments with needed medical and related services being brought into the independent living apartment. The concept of NHT is that it is typically less expensive for a senior to live independently with supportive services being brought into the home than it is to reside in an assisted or nursing home environment 24/7. Naturally, most seniors would prefer to live “independently” rather than in an “old age home.” Question is while it may prove to be cheaper, is it better for the individual’s quality of life?
As a developer and manager of affordable senior housing we have seen very few success stories since this initiative began, and in fact, are feeling the brunt of increased liability to the property overall, decreased resident participation in property activities and programs, and an overall decline in resident association autonomy given the frailty of a growing number of residents in the project.
We are deeply concerned that seniors who are unable to care for themselves for a variety of reasons who are left to the hands of community based visiting aides and medical service staff who may or may not show up as scheduled are more vulnerable in the event of a life safety or fire emergency because many are simply unable to independently ambulate when the property needs to be evacuated. Our properties are not staffed 24 hours and our staff is not medically trained in any way. This situation leaves so-called independent seniors in a very vulnerable situation. In fact, we have seen an increased dependency on the 911/first responder system because of NHT, and as result we have been identified as a “super-user” of the 911 system, which the city is understandably concerned about from a both a staffing/equipment and financial stand point. Moreover, the frequency of emergency pull-cord activations, fire alarm activations and related emergencies has skyrocketed both during normal business hours and beyond, which causes complacency amongst other truly independent seniors.
Lastly, our marketing efforts have been turned on their head largely because independent seniors who come to visit/tour the property prior to signing a lease can visually see the frailty of the occupants and as a result, shy away from wanting to live amongst them.
The consequences of NHT have not been completely realized as of yet but we are surely already seeing its unintended consequences.
National Church Residences
Pamela Monroe, vice president
Q1: Impacts of Aging Population: The demand for affordable senior housing is growing rapidly, but with a limited supply roughly three out of every four lower-income seniors end up on a wait list, sometimes for years before moving into an apartment.
One solution is to build more senior housing and advocate for additional funds to be made available through the HUD 202 program, but another solution may be to find new funding resources from partners in our communities.
This leads to one of the biggest changes we see at National Church Residences—more groups outside of our industry are appreciating the impact that housing can have in other areas of the community, such as mayors, business leaders, school officials, health plans and health system networks.
The shortage of such valuable housing stock also is becoming more apparent to these same groups. We believe that this will lead to finding new partners and the creative funding methods they offer. Currently, housing finance agencies allocate funds based on housing needs in a specific area, but is it possible the agencies get pressured by state administrations to award funds based on housing and health needs or housing and education needs?
As you know, access to clean, safe and affordable housing is one of the most basic and important investments we can make to improve the health of older adults. For instance, the Brookings Institution reported in March 2018 that the housing conditions for seniors are a critical factor in their mental and physical health, which in turn can impact health care costs.
For those seniors on a wait list, they face tough financial choices every day. In fact, the Urban Institute reports that seniors waiting on affordable housing lists pay about 74 percent of their income for housing compared to seniors living in affordable housing, who pay roughly 35 percent. In addition, those seniors on wait lists are also at a higher risk for declining health. This shortage of affordable housing is therefore both a social issue and a health care containment issue.
Q4: Crystal Ball: While the oldest baby boomers turn 72 this year, more than a decade younger than the typical assisted living resident, National Church Residences continues searching for innovative ways to serve older generations in the future.
The Institute on Aging reports that 65 percent of seniors receive their caregiving services from friends and family and another 30 percent combine family care with paid services. However, smaller families and the increasing tendency for relatives to live farther away will have more of an impact on the quality of life for seniors.
One trend we expect to continue in 2019 is the use of technology aimed at providing daily assistance to seniors in ways that complement human services. With lifespans increasing, seniors will need additional resources to assist with life’s daily tasks. For those living into their 80s, three out of four seniors will need some sort of assistance to live their lives well.
Some advances have already begun entering into the market. For instance, we employed a tablet-based system at Inniswood Village in Westerville, Ohio, earlier this year. Residents use the tablets to manage visitors, communicate with other residents and stay in touch with the staff. Other uses include making service requests, checking daily menus, as well as accessing emergency alerts and much more.
Many of today’s leading innovations are happening in areas that address the needs of seniors: motion sensors for monitoring gait changes, robots that improve medication compliance, watches that monitor health indicators and telemedicine programs to reach rural areas, just to name a few.
Technology changes are emerging fast, but no single solution will address the health and housing challenges facing seniors. This also means we need to be careful not to make it more difficult by adding too much technology and creating a digital divide.
In the meantime, we need to be open minded and prepared to embrace the best technologies to serve older adults, whether they live in one of our communities or in their own home. Soon, new technology solutions will be a significant part of allowing seniors to age in place with safety, dignity and respect.
Northwest Real Estate Capital Corp.
Noel Gill, NAHP-e, SHCM, CPO, executive vice president
Q1: Impacts of Aging Population: Our organization is seeing a higher demand for time to be spent assisting our aging population by our property managers. Needs may include regular visits to ensure the resident is safe, cleanliness inspections, coordination of services to allow them to remain housed, working with their family or other needs. Many residents are unable to move to assisted living, can’t get into an assisted facility with the subsidy needed to have a home or pay for a caregiver. This creates a higher need for our property manager to engage with the resident and their family to help maintain the unit and for the safety and wellbeing of the resident. We have worked to build aging-in-place programs through our resident services department, Stepping Stones. We must change our mindset and identify social or community service programs in our communities to help our residents age in place; our property managers can’t do this alone and inaction will inevitably lead to loss of tenancy and destabilization of that resident’s life. We must be part of the solution and actively engaged with our residents and community partners.
Q2: Advances in Construction: The past year has seen 3D-printed houses, roads being paved with recycled plastics and the “Recycle, Reuse and Repurpose” mindset is a growing trend. With the onset of 3D printing and the first 800-square-foot house 3D-printed in Austin, Texas, the future has met the present. Printing in concrete will be the first phase of 3D-printed structures; however concrete is destructive to quarry from the earth, and has a high carbon dioxide release, to produce and transport, making it not environmentally sustainable, but does have long life sustainability of 100 years or more. The future will see most of our structures 3D-printed using a combination of recycled materials with sustainable renewable resources such as hemp. BMW recently began working with hemp to develop new products for interior and exterior components on their cars. Utilizing a recycled plastic and hemp-based product extruded through a 3D printer will be the future of new construction. Couple the 3D printing and materials with solar shingles and a Tesla Powerpack, and you now potentially have a net negative carbon emission. This will have a substantial positive impact on affordable housing because the costs of labor and materials will be greatly diminished bringing new construction housing online faster and at a lower cost. 3D printing will reach over to the conversion of shipping containers to housing as well, being able to print the finish carpentry materials on-site and custom measured and printed to spec.
Q3: Advantages of Technology: Technology plays a key role in the future because many software companies now include residential portals. In the future, we’ll see more resident engagement in their own processes and management of their tenancy. We already utilize a fully paperless process in conventional housing that allows a resident to only interact with an employee during the move in inspection process. One software company has developed a portal that allows the resident to start their recertification process online. The online access drives down the need for a property manager to be engaged with every applicant and/or resident; this will allow them to take a more proactive role in managing their assets and focus on preventative action. For our site employees, the paperless process of working from a tablet allows them real-time access to historical information and more informed decisions. Efficiency savings in time and materials drive down costs over time.
Peabody Properties, Inc.
Doreen Donovan, SHCM, NAHP-e, vice president of administration & compliance
Q4: Crystal Ball: This was a difficult topic since most of us in the industry currently have an extremely cloudy crystal ball. At least I know mine is. It also gets convoluted with the reality of what will most likely happen versus my desire for what I think should happen.
2019 will have two major trends, HUD’s desire for more accountability for the residents in the community and how they contribute to the long-term development of their own financial success. Secondly, the desire to reduce costs for affordable housing via vacancy loss payments and an increase in the resident’s portion of rent paid.
One of the biggest trends I am seeing now is that the public housing authorities, at the request of HUD, are identifying vacancies of 120 days or more, and reducing the PBV HAP [project-based voucher housing assistance payments] contracts resulting from these vacancies, which can include those residents paying the full Section 8 contract rent. This is a difficult prospect on a property that has little or no turnover to offer the PHA an alternate unit to be covered under the contract. The owner can request later when a unit becomes vacant to increase the contract back to include that unit, but it is subject to budget authority and availability. These funds are immediately being redistributed to other locations or as a mobile voucher. The question is, “will this trend spill over into the Multifamily Project-Based Rental Assistance contracts or not?” The two divisions of HUD seldom approach the situation in the same manner, so this is unclear but a strong possibility.
There is a recognized need to address middle-income America; the Low-Income Housing Tax Credit Program at 60 percent AMI [area median income] restricts those in the middle. A focus on providing affordable housing opportunities is being evaluated and attempted for those falling through the cracks; previously the BMIR [below market interest rate] and Section 236 Programs partially addressed these income tiers, but with their sunsetting, it is no longer a viable option. The income averaging for LIHTC program is one area attempting to address this, but extremely cumbersome for those of us in the industry.
POAH Communities
Patricia Belden, president
Q1: Impacts of Aging Population: The growing aging population will add to the already unmet demand for affordable senior housing, lengthening what is already a long wait for many of our senior properties. In addition to the increase in the number of seniors as the baby boomers age, current residents are living longer and aging in place. There will be a need for enhanced services at affordable housing properties to assist these seniors as well. With increasing recognition of the need for this housing, we are hopeful that in the coming years there will be federal funding for production (fiscal year 2018 funds for new 202 production are an encouraging early sign) of senior housing.
Q2: Advances in Construction: Cost control concern is bringing positive attention to funders’ design standards—do they fit real households’ housing consumption patterns or are they outdated? In some cases, smaller units, more shared amenities, less parking, more green space—better fit how people actually live now and are less resource intensive.
We are hopeful that other technologies—modular construction, engineered lumber, etc.—can help both lower costs and result in better construction quality—and in some cases reduce long-term energy costs.
Q3: Advantages of Technology: At POAH Communities we see technology transforming the way that we do our work, and the way that our residents interact with the on-site teams. We are using paper less, and taking advantage of the use of held devices such as iPhones and tablets, as well as work on our computers in the office. We are seeing an increasing number of residents pay rent through our online portal. We have begun to transfer utility allowance reimbursements through a prepaid card system, allowing residents to access those funds without needing check cashing services.
Q4: Crystal Ball: New LIHTC developments will begin to implement income averaging, some with much more complex income mixes/rent schedules, which will be a good thing for those communities but a new challenge for operators.
The national affordability crisis will continue to intensify, bringing greater focus on the need to increase affordable supply at all income levels.
Seldin Company
Alicia Stoermer Clark, SHCM, president & CEO
Q1: Impacts of Aging Population: The primary changes/impacts we have experienced relating to the growing aging population is the positive of individuals aging in place longer due to general health and increased service components. The change from the multifamily aspect is an ever-growing waitlist on the affordable elderly properties. Individuals will reside in a unit for many years, this creates low turnover, which is a positive for the existing resident and property operations; however, it creates a backlog of individuals waiting for housing. Another significant impact that runs along the same lines, as residents are able to age in place they may require additional modifications to accommodate changing needs during their tenancy. This impacts the budgeting and capital planning of the property. Individuals often can return home sooner after an illness or surgery with some modification to the unit and so we have gained knowledge on thoughtful design features for future developments for aging populations. Building or developing units for the long-term use on the front end would be more economical, desirable to occupants and owners, and allow for less disruption during occupancy.
Q3: Advantages of Technology: Several advancements have created beneficial shifts for the property employees and residents in recent years including electronic communications (email, texting features, IM [instant messaging]). We see our property advertising and marketing moving almost exclusively to online platforms, this provides for an ease in making real-time adjustments or notification, but also creates an expectation of immediate response. Property management continues to be a customer-centered environment that largely differentiates company or property based upon level of service and response. Our multifamily management challenge is how to facilitate or supplement the technology push with a strong customer service component still integrated. Using the service expectations as the foundational element and focusing both employees and residents on the benefit of the technology, but understanding the value of the total experience is still heavily influenced by the person behind the technology platform. Streamlining the administrative elements of the leasing and operations functions so more human interaction time is spent on customer relations, not forms and documents will be a heavy focus.
Q4: Crystal Ball: Two of the biggest trends in the affordable housing industry will be talent and training. As property management has evolved, especially in the affordable arena, we have seen great changes in the job functions of office, compliance and maintenance staff. The positions are demanding and require a great deal of training and development as the complexities of the affordable housing programs have expanded. Between new regulatory guidance, layered financing and assistance, mixed-use locations and other programmatic shifts, the learning curve has grown for those just entering employment positions in property management. Combining these challenges with a need for more talent due to new construction, revitalization and adaptive reuse of locations, we have a shortage in property management for both office and maintenance staff that is not likely to go away. In order to combat the shortage, we must build internal training features within the organization and establish career paths to promote from within as often as possible. Developing training elements to welcome new employees to entry-level roles, while working to advance and promote existing employees with a strong retention strategy will be top priorities. As a secondary measure, offering consistent and transferrable operating guides to allow for, and accommodate, employee movement that results in minimal impact to the site operations. Reducing the lag, or down time, between vacant positions and replacement workers can be viewed similarly to reducing vacancy loss on property financials. The more efficient you work between the old and new, the less impact you have in overall operations and the stronger the outcome will be for the property.
Wallick Communities
Layne Hurst, SHCM, CPO, regional vice president
Q1: Impacts of Aging Population: As the senior population continues to grow, we not only have a deficit in the availability of quality affordable housing, but also have limited options for our seniors to live in when they need additional care. Wallick has begun to expand their business to build affordable assisted living that accepts residents that are low income, and pay for housing through the Medicaid waiver (the Medicaid Waiver is administered differently in each state). Outside of this option, the need for services to our independent affordable housing residents will be an increased demand in years to come. In addition, the housing stock that is out there that specializes in this demographic (PRAC) is in need of rehab and repair. Without a viable option for these properties to be rehabbed, relying on budget-based rent increases doesn’t allow for this housing to stay in the market after its 35- to 40-year contract, leaving even less housing available into the future.
Q3: Advantages of Technology: Online technology has really made collaboration and communication so much easier for associates and residents alike. We are using technology to make unit inspections more efficient and work orders for residents and associates much more easily managed.
Q4: Crystal Ball: I’m not sure if this will be a trend of 2019, but it would be great if there was a united front to determine how we can provide meaningful services to our family communities.
Wesley Living
Jim Nasso, NAHP-e, president & CEO
Q1: Impacts of Aging Population: With the influx of aging baby boomers and the strain upon the country’s health care providing meaningful supportive services in affordable housing must be addressed fully and not individually. There are many who qualify for housing but not Medicaid, and yet having these services not only provides more quality of life but will also minimize turnovers due to evictions.
Q2: Advances in Construction: While small houses or “tiny houses” are in vogue right now, I do hope communities planned in that nature are looking at their viability long term in regards to both who they serve and where they are located. Reuse and repurpose can become expensive if not properly established in volume. Some conversions are more about “feel good” projects for publicity unless located in densely populated urban settings. Alternative materials and building procedures should provide the best efficiency for the precious capital funds available.
Q3: Advantages of Technology: Continued advancement and cost-effective materials for windows, doors, insulation, water savings, etc. will have a major impact in affordable housing. Also, more wide spread use and acceptance of electronic documents, storage, signatures, etc. will less complicate the process.
Q4: Crystal Ball: In less words than in Questions 1-3 above, supportive services and energy efficiency/consumption.
WSH Management
Anthony Sandoval, NAHP-e, president & CEO
Q1: Impacts of Aging Population: One of the major impacts on affordable housing that I see as a result of the growing aging population is the need for more affordable senior housing to be built. According to recent research completed by the Employee Benefit Research Institute, “two in three retirees report Social Security is a major source of income, while only about a third of workers believe Social Security will be a major source (see below).”
Image Source: Employee Benefit Research
With the main source of income being Social Security (shown above), the challenge is how is a senior supposed to live off their income? The choice of housing, being the largest expense, poses a real dilemma for the senior on a limited income. A one-bedroom average rent for an apartment in both Los Angeles County and Orange County is approaching $1,900 per month (according to article in the Orange County Register by Jeff Collins, published on Feb. 15, 2018) while the average paid benefit for a person receiving Social Security is only $1,404 (according to Motley Fool article by Maurie Backman on Jan. 14, 2018). With this large if a variance between a person’s income and the high cost of rent, most seniors must make serious choices on how to spend their limited retirement income.
If we think we have a homeless problem now just wait until the majority of baby boomers reach retirement age and for health reasons cannot continue to be employed. It is estimated that 78 million Americans will be age 65 or older by 2035 (U.S. Census Bureau); at that point in time, people age 65 and over will outnumber people under 65. If the current housing shortage continues along with the lack of affordability, many seniors will have no other choice than to become homeless. Now is the time to really focus on providing more affordable senior housing before the crisis gets worse.
