Less than a decade ago, St. John’s on the Lake constructed a new 21-story tower on its urban campus just north of downtown Milwaukee, Wisconsin. Now, the nonprofit continuing care retirement community (CCRC) is about ready to start construction on another tower, this one to be even taller at 22 stories.

The project is part of a trend of high-rise Senior Living Buildings going up in large and mid-size cities around the country. New York City; Washington, D.C.; Fort Lauderdale, Florida; and Tempe, Arizona are among the metro areas where senior living buildings will be altering the skylines.

Demand for urban senior living is on the upswing, and St. John’s on the Lake has experienced this firsthand. Its 21-story South Tower opened in 2011 and was full by 2012; the CCRC’s waitlist has grown consistently since then, President and CEO Renee Anderson told Senior Housing News.

St. John’s on the Lake decided to undertake the current building project to meet this demand and also to update its health care offering. Its skilled nursing wing dates back to 1979, and despite renovations over the years, still had too much of an institutional feel, Anderson said. After the new tower is built, the current three-story health care wing will be torn down.

The new addition will include 50 skilled nursing residences, 24 units designated for assisted living under Wisconsin’s community-based residential facility (CBRF) license, 16 “catered living” apartments similar to assisted living, and 79 independent living apartments that will be licensed so that staff can provide services as needed to support aging in place. Construction is slated to begin this spring, with a spring 2020 opening anticipated.

St. John’s on the Lake is working with Piper Jaffray to finance the project, which has a budget of about $120 million. It will be financed largely through tax-exempt bonds, as well as a short-term bank loan to be paid off by resident entrance fees. The average entrance fee for the proposed expansion is around $660,000 with a monthly fee of $4,437, compared to an entrance fee of about $431,000 and monthly fee of about $3,500 for existing units. About 85% of the units in the new tower are already on deposit and under contract, Anderson said.

The community is riding some of the economic tailwinds that the CCRC sector as a whole is enjoying at the moment, and that is helping make the new addition possible, she said. However, she also points to the community’s long-standing financial management strategies—it’s a topic she’s well-versed in, having been St. John’s director of finance for 11 years prior to stepping into her current role six years ago. Fitch Ratings gives St. John’s on the Lake a BBB+ rating.

One strategy is to have routine increases in monthly maintenance fees of about 3%, and communicating with the residents that this is crucial to supporting the financial health of the CCRC. It gives the business a reliable source of revenue and gives the residents predictability, rather than sudden sharp increases in fees as expenses go up.

The steady improvements in the campus are also part of St. John’s approach, which is that it’s wise to invest in physical plant updates.

“If an organization feels strapped or struggling, [physical plant improvement] often goes by the wayside, but I think it’s the last thing that should go, because it will impact your occupancy, and revenue slide is a lot harder to turn around than getting expenses under control,” she said.

Overcoming design obstacles

The design of the new addition will be upscale residential in feel, and it will feature some notable innovations in the skilled nursing units. By working with an environmental gerontologist, the design team—including architecture firms Eppstein Uhen and Blitch Knevel—created a novel bathroom layout.

“We’ve designed a trapezoidal shower, with controls in a different place, without a fixed bench, that enables a resident—whether they’re independent or sit or stand or need some assistance or full assistance—to function in that space safely, and shift to a dignified experience instead of one in which not only is the resident wet, but the caregiver is wet and the room is wet,” Anderson said.

In addition, the toilet has been shifted to facilitate transfers.

Getting approval for the new bathroom layout was challenging. After the Wisconsin Department of Health rejected six variances that St. John’s filed, the CCRC went to the Department of Safety and Professional Services, which is the ultimate arbiter of the building code.

“We were granted a hearing, and we provided copious documentation, numerous videos, we built a full-scale mockup of the bathroom in our garage so that the inspectors could come and see it and touch it and ask questions and watch a resident work in the space, so that they would understand it, and ultimately we prevailed,” Anderson said.

Going to these lengths is part of the DNA of St. John’s and is in keeping with her own personal mission, Anderson said.

“We’re very fortunate to serve the market we serve that gives us margins that look different than most organizations like us, and so I feel an obligation to be a leader in that regard,” she said.

But the determination also stems from a commitment that St. John’s on the Lake made two decades ago. As Anderson explained:

“Twenty years ago we sat down with employees and asked, ‘Would you want to live here as an older adult?’ They said no. We said, that’s not okay.”

Written by Tim Mullaney

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