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January 7-January 20, 2015 — COLORADO REAL ESTATE JOURNAL — Page 9AA
Steven M. Cersonsky
Development is really juggling
many items, and tying them all
down and holding them steady until
the time is
right. At
the same
time, you must stretch your finances
to cover all of the due diligence nec-
essary to assure a successful project.
When a single facet goes haywire, it
affects the entire development. The
“ducks” that the old expression says
that you must “get in line” are:
• Site
• Competition
• Jurisdiction
• Architecture/Engineering
• Lending
• Construction
Each of these “ducks” breaks down
into their separate parts to make the
whole.
Site is made up of the conflu-
ence of neighborhoods, population,
income levels, traffic and possible
zoning. Will the seller of the site
cooperate through the initial approv-
als?
Competition is made up of proxim-
ity to good and bad facilities, new
planned communities, focus of large
companies that might come in, and
expansion of existing facilities. It is
not uncommon for planned or exist-
ing competition to try and block
approvals for your new project.
Jurisdiction controls ease of entry
for your competition, demand and
community commitment to new
development, regulations controlling
architectural, support or resistance
of local communities, willingness
to help to conform limitations so
that the project can be economically
built. Timing to get all the necessary
approvals is also extremely critical,
as if it is too long, some of the other
“ducks” can wander off.
Architectural/engineering can con-
tribute a lot to the finished product.
In our case, our architecture is pret-
ty well decided, but it still needs to
conform to local ordinances, weather
and conditions. All of this work
needs to be completed prior to final
approvals. Engineering is always
a new can of worms. Many factors
can be hidden within a site that
will only be uncovered by expensive
and extensive research and testing.
For example, on our last project we
found ideal soils for construction
with bedrock only a few feet below
the surface, but for extending water
and sewer lines this proved to be
very expensive.
The lending environment is pretty
stable at the moment, and we can
presently predict fairly well what
would be acceptable to most lend-
ing institutions. Nevertheless, when
one of the “ducks” gets out of line, it
affects all of the ducks, especially the
lender.
Currently the one major change
that is affecting our business is the
cost of labor and materials. On a
recent project, our low bidder came
in $3 million higher than an identi-
cal project we had just completed.
These increases are driven by wild
cost increases in concrete and steel,
plus some peculiar site and environ-
mental requirements. New building
techniques are helpful in defus-
ing some of these fluctuations, but
skilled contractors are needed to
implement these technologies.
Suffice it to say that because the
demand is so high for good senior
communities, there is some forgive-
ness in the numbers. The prediction
is that America will need to double
our present senior living capacity
in the not-so-distant future. While
we struggle to create the best pos-
sible environments for our senior
population, we can hear Father Time
constantly ticking closer to knock on
our own doors.
Robin Avery
Great question. The eternal
hurdles of code interpretation and
compliance, jurisdictional gray areas
and confu-
sion, and
the delays
remain.
There is
the high cost of land, and the volatil-
ity in the cost of materials and labor.
The 2008-2012 global recession
caused many retirees to lose dear
equity in their homes, which was
intended to help pay for their care as
they grew older. In this environment,
developers create the pro forma that
is sold to investors with a promised
rate of return 18 months before the
project actually starts! These are all
significant hurdles.
Keren Wilson Brown founded the
first assisted living community in
Portland, Oregon, in 1983. Assisted
living is a new product. Its growth
is projected to be phenomenal.
Currently, about 1 million Americans
reside in senior care facilities. By
2030, that number will double. The
opportunities and the obligations are
great.
Shanagolden LLC, as a longstand-
ing operator, believes the hurdle
needs to be framed epochally. We
have an historical opportunity to
positively effect change in our cul-
ture, within the seniors housing and
care industry, and also within our
neighborhoods, communities and
families.
We believe the most important
hurdle is aligning communities,
developers, investors and operators
to create communities our parents
can enjoy and thrive in, while liv-
ing out their remaining years. We
believe that what is built should
provide measurably better health
outcomes, continuously improving
consumer satisfaction, fewer regula-
tions, and higher profitability.
What is the winning aspiration?
How can we accomplish the goal?
The strategy to accomplish this must
start with a vision of excellence,
shared and believed in by all the
players. The public will embrace it.
Anne Rosen &
Mark Cytrynbaum
As a multidisciplinary developer
with assets in multifamily, retail,
office and industrial properties, the
shift to assisted living and memory
support comes with a steep learning
curve. Senior housing is primarily an
operating business, so the balance
between health care and lifestyle
impera-
tives makes
design criti-
cal.
Rose-
mark at
Mayfair
Park,
Rosemark Development Group’s
88-unit assisted living and memory
support development, attempts to
balance the need for discrete medi-
cal assets with the desire to create a
homelike environment. The design
must express the culture and val-
ues of the operator but be flexible
enough to be responsive to the
specific needs of the resident com-
munity. Every generation has had
a different cultural experience, so
understanding the expectations of
multiple generations and emerg-
ing medical and care technologies is
critical to avoid functional obsoles-
cence. Building design should not
commit to perceptions and therapies
that may be outdated in the short
run. The industry and science is
evolving very quickly and the build-
ing must be flexible to accommodate
technological, social and therapeutic
advances. We are investing signifi-
cant upfront capital that will allow
the structure to respond to future
advances while maintaining a digni-
fied and residential atmosphere.
Steven M. Cersonsky
Excel Fund
Robin Avery
Gerontologist, consultant,
developer and operator of
assisted living communities
Anne Rosen
Principal, Rosemark
Development Group
Mark Cytrynbaum
Principal, Old Vine Cos. and
Rosemark Development Group
Thanks for
the insights.
As a broker of
senior living, it
is very helpful
to understand
the nuances of
d e v e l o pme n t
and to under-
stand that just
because a site
might be enti-
tled for senior
care, there is still a long road to
travel.
Pam Pyms
Pyms Capital
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