Management Senior Living Providers Make Progress in Creating Workforce Housing for Staff

Part of the reason for doing so was addressing the immediate need expressed by workers who couldn’t afford to live in the area, where the average rent of a one-bedroom apartment is around $2,000 per month.

“We acquired [the] hotel in order to deliver much needed housing in a rapid manner relative to ground up development projects, which often take at least four years to get approved, built and stabilized,” Morton said.

For Presbyterian Homes and Services, the need for housing was found through an employee survey, where 19% of workers expressed an interest in workforce housing if the company could provide it, according to Senior Vice President Jon Fletcher.

“If they couldn’t find affordable housing, they may be forced to relocate elsewhere, potentially impacting their ability to continue working with us,” Fletcher said. “We view that as a very high percentage of our employees, that’s upwards of 1,400 of our employees.”

To address the need, Presbyterian Homes and Services acquired an existing independent living and assisted community and converted a portion of the units for workforce housing purposes. After the acquisition in September 2023, the first employees have already moved in and more are on the way, according to Fletcher.

An immediate need

For Moorings Park, the acquisition of the Super 8 hotel turned out to be immediately beneficial.

“The property was fully leased until just recently, because about two weeks after we acquired the property, our area was directly hit by Hurricane Ian,” Morton said. “We were fortunate to be able to provide much needed housing or immediate housing for those individuals who worked at Moorings Park and other local employers who lost their homes or had their homes badly damaged during the storm.”

While renovations are still underway, Morton added there has been positive feedback from the employees that have been living there so far.

In addition to the hotel, the Moorings Park Foundation collaborates with Habitat for Humanity to provide financial assistance for employees to purchase a Habitat for Humanity home and is helping fund the conversion of an old golf course into housing that will be available for essential workers and seniors through a public/private partnership between the county and two other local foundations. The project is noted to be the first of its kind in Florida.

Through discussions with employees, Fletcher said Presbyterian Homes and Services was able to identify a need of 20 to 40 apartments in the markets of St. Paul and Bloomington, Minnesota, and Stillwater, Minnesota. With its current offerings, the communities are designed to be independent senior living communities, and through the Fair Housing Act’s age exemption, 20% of those apartments can be occupied by individuals younger than 55, allowing for 20 to be used by employees.

Despite Presbyterian Homes still being early in the process for allowing workforce housing, Fletcher said there is a known demand. When the housing opportunity was communicated to employees, he said around 40 responded and said they were interested in living there.

“We know there’s demand,” Fletcher said. “At the same time, we also know employees need to terminate or wait until their current lease is ended, wherever they’re living.”

Another community that has been offering workforce housing, at Lake Minnetonka, consistently houses 30 employees. The net promoter scores from those employees are higher than other employees and their length of stay with the company is about twice as long.

“We find that those employees end up being what we call trees for the organization in terms of their longevity. It really helps to provide them with a stable affordable housing option,” Fletcher said.

With its latest project, Presbyterian Homes and Services charges between $800 and $1,500 for rent for all residents, making it intentionally affordable. The cost was determined by charging 60% of the median area income to keep prices below market rate.

Additionally, having affordable housing readily available has allowed both companies to fill vacant positions with foreign workers, whether they are nurses from the Philippines for Presbyterian Homes and Services or seasonal staff from the hospitality industry for Moorings Park.

Based on the current successes seen through the programs, both Fletcher and Morton said there are plans to add additional workforce housing solutions to their respective companies, though it is dependent on the demand.

Navigating housing challenges

There are challenges associated with providing workforce housing. Despite being faster than developing from the ground up, zoning and permitting can slow a project down, “not in my back yard” pushback from area residents and businesses due to the stigma of affordable housing.

The hotel acquired by Moorings Park, for example, despite being acquired in September 2022, is still obtaining the necessary zoning and permits for the renovations and as such an anticipated completion date for the project can’t be determined at this time.

“It’s just the process. It’s very complicated,” Morton said.

Another challenge, particularly for providers that operate in multiple regions, is determining where to put housing for employees. According to Fletcher, identifying areas with high concentrations of employees who want to live in provided housing is the key.

“It’s probably going to be more challenging to make it work in areas where we don’t have high concentrations of employees,” he said. “The reality is that even if you do provide employee housing, there might not be a huge percentage of your employees that want to live in housing that you provide as well, there’s probably a stigma associated with that.”

Because employers are providing housing for employees, there’s also the chance of blurring the lines between personal and professional life for residents. To avoid this, Morton suggests utilizing a property manager to handle day to day tasks, alongside implementing policies to “promote fairness and transparency” in housing related matters and smooth out the relationship between employer and employee.

Another approach is having a physical separation for the work and tenant experience, as well as providing privacy for tenants, which is what Fletcher said his company has been implementing.

“In the latest building that we acquired, we are targeting to have all the employees live on a certain floor. It’s easier for them to just kind of check out and go to their own floor so they’re not always having to interact with residents if they don’t want to,” he said.

For senior living providers looking to offer workforce housing, Morton suggests bringing on a development partner. Even if the project hadn’t worked out, she said, Moorings Park would have acquired an asset and it wouldn’t have been “an economic drain.”

“Forming a joint venture with our development partner allowed us to leverage their strengths and expertise, mitigate risks and access additional resources, ultimately contributing to a more resilient and sustainable business model,” she said.

Fletcher said he encourages other senior living providers to pursue affordable housing, despite the challenges, as it benefits the greater market.

“I would just encourage folks to try. They don’t necessarily need to try to bite off 100, 200 or 500 units at a time. Just small pockets of affordable units could probably go a long way,” he said.