A New Path to Affordable Senior Living

There is a real need for affordable senior living throughout the United States— and Pathway Senior Living is looking to
fill that need throughout the Midwest.

Pathway plans, develops, finances and ac- quires senior housing throughout the Midwest.
As an owner and operator, Pathway brings a uniquely long-term perspective to its proper- ties. The company has a history of forming strong public-private partnerships with community groups, nonprofits and municipalities in order to bring high-quality affordable senior living to neighborhoods in need.

Pathway has been developing properties for more than a decade. “Our first project was the renovation of the old Joliet Catholic High School into senior living apartments,” says Robert H. Helle, Principal for Pathway. “Our typical model over the years has been afford- able senior housing. By affordable, we mean we use low-income tax credits and other types of financing that are specific to low- and moderate-income people.”

Serving the lower income seniors does not mean the company compromises on quality, however. “What sets us apart from some of the other tax credit developers out there is that we try to develop to a standard that is equivalent to market-rate projects,” says Helle.

“We tend to be, in terms of development costs, on the expensive end of the spectrum for low- income developers because we’re trying to compete with market-rate developers.”

The desire to operate as a market-rate company while providing an essential service for low and moderate-income seniors is a goal that stretches from development through operations—at each stage every effort is made to create as high quality a product as possible.

“We measure ourselves against market- rate developers and operators and use affordable housing to make our projects applicable to low-income residents,” says Helle.

In real dollars, the quality is there for residents but the cost is curbed. A market-rate senior apartment that would cost $1,100 to $1,500 per month would be just $400 to $750 at a Pathway site, dependent on income. Assisted living rates are even more dramatic. Where a market-rate project would start at $4,000 a month, Pathway rates would begin at $2,850 a month.

In addition to fulfilling a need and enjoying strong occupancy rates, Pathway has developed creative approaches to financing. “The tax credit industry has really declined in the last couple of years because the major investors in tax credits have been major banks, Fannie Mae, Freddie Mac and AIG—so we’ve got a perfect storm there,” says Helle. “Our biggest challenge today is to try and find
new investors in this market. It’s a very specialized type of investment. We’re working with a number of banks directly now, where before we would work through a syndicator—we’re taking a direct approach. That’s the biggest change we’re seeing.”

Despite those challenges, Pathway is still looking to develop two deals a year for the next several years. The company has applications for supportive living facilities in Lake County pending. Those are expected to be approved, along with two senior apartment buildings.

Pathway is also expanding via acquisition of distressed or foreclosed market-rate properties. The company is also growing through management contracts of all types of senior housing.

VICTORY CENTRE OF GALEWOOD

With experience throughout the Chicago area, Helle is always looking for new opportunities in desired neighborhoods for Pathway.

“We did a project in Roseland and while working through the zoning process we met the alderman that is the head of the zoning commission for the city,” explains Helle. “Alderman William J.P. Banks was such a nice gentlemen that I wondered what his home ward was so I could see if we could do a project there. We found out it was on the northwest side in an area we’d targeted for a long time. The Gale- wood area has a lot of seniors that fit our profile and if you can find land there you have a great opportunity—but it is very hard to find land there.”

Helle consulted with Alderman Banks and, after chasing down a few leads, found a site on a prominent corner location at Newcastle and Grand Avenue. It was a tight site, formerly the parking lot of a car dealership, making construction challenging but ultimately serving the residents well.

Victory Centre of Galewood provides 102 studio apartment units in a supportive living environment. It offers a community dining room, commercial kitchen and 24-hour staff. Generally, Pathway’s Victory Centres have a ground floor outdoor space but given the site constraints the ground floor takes up the entire property footprint. However, there is a courtyard on the second floor that goes up to the fourth floor that serves as green space for the residents and qualifies the building as a City of Chicago green roof.

The building is designed for long-term energy efficiency. “We have a lot of incentive to reduce energy costs because we’re paying the utilities and owning the building for the long term,” says Helle. “We’ve always used white roofs and in this case we utilized a green roof. Corporate-wide we’ve adopted a lot of LEED basic certification requirements, including using non-VOC paints and cleaners. It is a philosophy that is embedded in our operations as well as our development side.”

Victory Centre of Galewood opened in February 2009. “It’s a very strong market for us, without a lot of competition,” says Helle. “And while it was a struggle to get it together now that it’s there, it’s doing well. We expect that it will have a waiting list.”

Most of Pathway’s projects have a waiting list. “Because we’re serving people of an advanced age we have a fair amount of turnover, anywhere from 25 to 50 percent a year,” says Helle. “The average resident stays with us two to four years and there is a strong demand for affordable senior housing.”

VICTORY CENTRE OF SOUTH CHICAGO

South Chicago needed an affordable senior living residence. “There is a community group there, the Claretians, and they have a strong presence in the community,” says Helle. “They had a site and asked us if we would develop it with them. We worked on that deal for quite a while before the city discovered they would have to widen the street and we had to move our project.”

Luckily, the site directly across the street became available—and that site did not require widening the street. At almost four acres, it was an unusually large city site to come up for development.

Victory Centre of South Chicago opened its five-story, 112-unit supportive building in April. “We will soon be breaking ground soon on a second building on the site, which will be a senior apartment building,” says Helle.

The South Chicago site is part of an overall LEED for Neighborhood Development plan and Victory Centre is LEED certified. “I generally shy away from obtaining certification because of the added cost but we often score ourselves internally and try to make sure we’re building to a minimum of LEED certification,” says Helle.

As part of the green components, the building has a reflective rooftop. In addition to a ground floor outdoor patio, Victory Centre of South Chicago features a roof deck with views of the lake and the city skyline.