At the CEO Forum on August 17, Ed Plasha (CFO) and Seth Beaver (in charge of capital projects) introduced residents to one possible design for the much-anticipated expansion of the healthcare wing of Kendal Center. The design was the result of meetings and discussions with the committees and staff responsible for healthcare. It had already been shared with a 22-member, 4-campus group that Ed called the “expanded KCC Resident Finance Communication Committee” (I’ll just call it the KRFCC), and with the KCC Board.
I was one of the KRFCC members. We got an early look at the plans in July. We were told we could discuss the plans with other residents (and many of us did) but not to share the design itself until it could be presented to the residents as a group. That happened at the August 17 presentation, so I am including the plan here. It is also posted in the hall in the Center, just around the corner from the bank.
Ed and Seth shared the task of narrating the August 17 presentation. Ed focused on the financial issues, and Seth on the outlines of the design and the reasons behind it. The Forum was recorded, and the Youtube link is here. The part about the healthcare expansion begins about 31 minutes into the recording.
Ed emphasized the issues around funding the construction work, given the current economic climate. He outlined the specific problem with the healthcare expansion: the construction bids, which were expected to be around $31 million came in at almost $37 million (due to supply-chain issues, other cost increases, and the uncertainty around inflation). The plan had been to use $25 million from our reserves plus $5 million from philanthropic funds. With the increased cost, where would the additional $7 million come from?
Loans or bonds would be a possibility, but there would be an additional annual interest cost, which Ed would like to avoid. Ed does not want to draw additional money from our reserves (which are around $120 million). Doing so would reduce the investment income we receive, leading to an increase in resident fees.
The solution that he and Seth described would be to extend the upper level of the health center sufficiently to move all health-care residents (personal care as well as skilled nursing) to the upper level. In the lower level of the expanded area, independent-living (IL) apartments could be built. The entrance fees from these would provide some of the funding for the expansion. This plan would put all of healthcare on one level (a strong staff preference) as well as helping with the funding problem.
The architects provided a possible layout with as many as 18 additional IL apartments on the lower level, but the number will likely be lower. (Having IL apartments in the Center is not a new concept: there are currently three of them, adjacent to lower Cumberland.)
During Q&A, Ed suggested that we should be thinking in terms of about 15 new apartments, housing 25 or so new residents. Ed did not get into the specifics of how much of the money needed for the expansion would come from the entrance fees for these apartments. That will be covered at a future meeting.
The details of the healthcare aspect of the expansion will be addressed in a future meeting for residents, to be conducted by Sarah Matas and the healthcare staff.
Implications for the resident population. Both Ed and Seth acknowledged that Kendal’s current population is the highest it has ever been. (Ed did not have the numbers on hand at the Forum, but the total was officially 408, as of last April’s state-mandated disclosure statement; of that number, I would estimate 325 are IL.) With the proposed apartments, we would end up expanding our population, at least for the time being. Seth emphasized that our population would “ebb and flow” over the years. Ed said that the issues around resident population would be discussed in upcoming meetings, initially with the KRFCC, and then with the whole resident community.
Ed is confident that the healthcare facilities, the dining room, the auditorium, and the other facilities could accommodate the increase.
This Forum was the first public mention of the possibility of additional IL units in the healthcare extension. Additional community discussions of the expansion plan and the issues it presents are to take place. Ed hopes that decisions on construction of the healthcare expansion can be made by the end of this year.
As Seth emphasized several times, there needs to be a general discussion about the size of our resident population. As one of the bullet points on a slide put it, “Future meetings will have an in-depth discussion on the appropriate size of the community.”
At the end of the presentation, Seth listed 10 advantages to the plan as presented:
- Existing residents living in the occupied IL apartments near Lower Cumberland would remain.
- Residents living in any new apartment would not have to go outside to go to the community center, health center, or wellness center.
- Residents who may have a partner in the health center, or who may wish to downsize, may find it advantageous to move to an apartment physically connected to the community and health center.
- This building would eliminate the prior plans of apartment construction across the road at the dog park.
- The view from the health center out toward Harlan Glen is preserved.
- This would be a new product offering (that we have little of) similar to competitors like White Horse Village, Maris Grove, Jenner’s Pond, Cokesbury Village, and more.
- There will be a more natural integration of independent living with the health center with more engagement.
- It’s economical to build independent living homes within the health center on a cost per unit basis.
- The dog park would be able to stay in that general area.
- The two large maple trees around the dog park could be preserved.
For now, Seth and Ed emphasized, no decisions about the expansion have been made, including the decision on whether to add IL apartments.