Testimony to
The Commission on Affordable Housing and Health Facility
Needs for Seniors in the 21st Century

January 14th, 2002
Miami, FL

by
Cullen T. Hayashida, Ph.D
President, Assisted Living Options Hawaii

Good afternoon members of the Commission and distinguished guests. My name is Cullen Hayashida. I am the President of Assisted Living Options Hawaii, a non-profit and a non-trade directed organization that advocates for the development of assisted living and other residential options in Hawaii. I am also the Director of Elderly Care Development with the Hawaii Health Systems Corporation, a state agency that manages approximately 1200 acute and long-term care residents in 12 public facilities in Hawaii. It is truly a privilege to have the opportunity to provide testimony regarding Hawaii's senior housing situation and the work of the Assisted Living Options Hawaii's Affordable Supportive Senior Housing Project.

First, let me provide some context to my statements by referencing the state of aging in Hawaii today. Some of these are unique while others are representative of what we are witnessing throughout the U.S. as a whole.

• Challenging Economic Times: After nearly a decade of economic decline and limited economic growth, Hawaii was hoping for improved performances in 2002 before the terrorist attacks of September 11 changed everything. Our tourism-based state is now re-projecting its tax revenues downwards and presently finds itself in a situation where many human and health services provided by state or local government authorities will not be able to match past support levels.



• Multi-ethnic Composition: Hawaii is well known for its ethnic diversity. There is no majority ethnic group since every ethnic group maintains a "minority" status. The Japanese, Caucasians, Filipino, Hawaiian, and Chinese represent the largest ethnic groups among Hawaii's seniors. Just as an example, one Honolulu senior apartment with 133 residents has a composition of 44% Japanese, 16% Chinese, 10% Caucasians and the remaining 30 percent composed of Koreans, Filipinos, Hawaiians, Portuguese, Puerto Ricans, Samoans and other groups. In addition, the non-elderly disabled are adding to the composition of each facility.



• Hawaii's Non-contiguous Counties Create Special Challenges: Unlike anywhere else in the continental U.S., Hawaii is composed of non-contiguous islands and counties. While its land mass is larger than the states of Rhode Island, Delaware and even Connecticut, Hawaii's island-based geography requires the creation of a long-term care continuum of services for each island despite the size of their respective population. Remote and sparsely populated places like the island of Molokai with merely 5,000 residents mean that only about 50 are in need of institutional or home and community-based long-term care services. The cost of flying case managers and nurses from populated counties to sparsely populated areas is one example of our unique circumstance that drives cost of caring upwards. It is not possible for residents to access services from neighboring counties easily.



• Rapidly Growing Senior Population: Today, Hawaii has slightly over 160,000 seniors over 65. It has been experiencing significant growth at two to three times the national growth rate over the past several decades. This growth rate is partly related to the fact that our life expectancy is the nation's highest. While the total number may not seem large by national comparison, the speed of aging in Hawaii in a state composed of non-contiguous counties means that our window of opportunity to build senior housing and supportive service infrastructure is very small.



• Tight Rental Housing Market: Hawaii is experiencing a period of a very tight rental housing market. Although interest rates have been very favorable for new homebuyers, Hawaii's economic situation for the past decade has resulted in lower confidence in long-term mortgage commitments. Hawaii still has not seen any significant upswing of property sales. Landlords have been more inclined to stay in the short-term rental market in order to regain lost equity or to keep their options to increase rents. The Section 8 voucher program has been especially affected with (1) the inability of low income renters to find landlords willing to accept the vouchers due to the need for lengthy paperwork and inspections and the 1-year lease requirement. Although figures are not available at this time, we suspect that only a portion of the HUD annual allocations for Section 8 vouchers are being used.



• Tight Nursing Home Bed Supply: In comparison to the national average that hovers around 54 beds per 1000 elderly, Hawaii has historically experienced a low nursing home bed supply situation with about 24 nursing home beds per 1000 elderly. This resulted in the on-going presence of waitlisted nursing home patients inappropriately taking up hospital beds. One solution to this dilemma has been the Hawaii's Medicaid waiver Residential Alternatives Community Care Program. This program uses smaller residential care and foster homes for nursing home patients as an option for long-term care institutional placements and has reduced the wait listing of nursing home patients in hospitals.



• Hawaii's Nursing Home Residents are Most Acute: As a result of the tight nursing home bed supply, Hawaii's nursing home residents according to the Center for Medicare and Medicaid Services are among the most acute in the nation. Hawaii's seniors are residing at home or in senior apartments for extended periods of time to delay nursing home placement until they are very disabled.



• Assisted Living Facility Option is Still Very New: Despite the lack of institutional long-term care services, licensed assisted living facilities are still a rarity in Hawaii. Only two facilities are licensed although there are at least 3-5 others that will be seeking licensure within the next 2 years and perhaps another 5 that wish to be considered retirement facilities for the independent seniors. A significant characteristic of all of these facilities is that they are targeting the up-scale market and are priced between $2,500 for independent living to a minimum of $3,500 for assisted living. Presently, only one developer is close to constructing an "affordable assisted living" facility that will be priced $1,000 less per month (i.e. $2,500) for the moderately disabled. In the meantime, Assisted Living Options Hawaii (ALOH) has been actively involved with the development of infrastructure and advocating for both assisted living facilities and other residential options. Issues that have stalled the construction of more projects have been affected by HUD's reluctance to actively support AL construction after Hawaii's first AL faclity defaulted and the lack of low cost land in the urban core where access to community services is more plentiful. The lack of adequate financing is due to the risk associated with the high startup construction cost and on-going operational costs, the limited size of the island-based senior market that can afford the monthly expense, the lack of large locally based investor firms and the financial liabilities attached to using state tax credits and rental housing trust funds for for-profit financing ventures. While not a factor in the development or construction phase, the fact that Medicaid does not permit a more creative application of its waiver funds without any increase in its cost also dampened enthusiasm for this new service by developers.¹



• Senior Housing Inventory: Based on a 1999 attempt to inventory Hawaii's senior housing facilities by the Hawaii State Executive Office on Aging, it is estimated that there are 71 low and moderate income senior apartment facilities and 8 retirement or assisted living type facilities in Hawaii. Collectively, they serve the needs of 6,574 residents or less than 3 percent of the elderly in the state. The 8 retirement facilities have approximately 250 units per facility and a total of about 1,753 apartments. Omitting the retirement facilities leaves just 4,721 low and moderate income senior apartment units. Basic information is available about their location, ownership, types of rental units, and rent amount. In addition, our analysis indicates that these low and moderate income senior apartments are providing very little by way of services other than having a community or meal site room. On the other hand, two of the most often community sponsored services that are used are meal deliveries and home health or personal care for low income residents.
  
  HUD funding for Section 8 housing is limited to only 30 apartment units per year for the City and County of Honolulu (i.e. island of Oahu) and 30 for the neighbor islands. In most instances, this is insufficient to cost-effectively construct even one project. Thus, HUD projects have essentially stalled. On the other hand, the use of the State's Rental Housing Trust Fund and the Federal Low-Income Housing Tax Credit programs have resulted in the construction of over 1,800 apartment units over the past 7 years. While it is very difficult to gauge whether this housing stock is sufficient, our sense is that while there are pockets of significant shortages, the situation is not as difficult as in other places of the U.S.
  
  In comparison to a decade ago when wait listing time for Section 8 rental housing was increasing each year to nearly 6 years statewide, we have seen a moderation in the waitlist due to the addition of affordable (i.e. moderately priced) senior rental apartments. Today, Section 8 low-income rentals have a 2+ year waitlist in urban Honolulu and in parts of the neighbor island while those in rural Oahu have a 6 months to 12 months waiting time. The more expensive affordable senior apartments generally have a shorter 3 to 6 months waiting time. Thus, cost and location affect demand for senior housing. Presently, the greatest demand are for the Section 8 senior apartments particularly for those that are totally dependent on SSI or Social Security as their sole source of income. Those on very limited income might be able to rent an "affordable" senior apartment if they are willing to spend a larger proportion of their monthly income on rent. Often times, however, these prospective renters are denied based on minimum income eligibility criteria.

As noted earlier, while the rest of the U.S. has seen a dramatic increase of Assisted Living facilities from the early 1990s, here in Hawaii it was just beginning to take root in 2000. In anticipation of the potential for its uncontrolled development in Hawaii while fully recognizing its potential for meeting the housing and support service needs of the frail elderly, a group of concerned health, social service and government agency professionals formed a task force to better understand assisted living's role in Hawaii. The Assisted Living Options Task Force formed in 1993 and later transformed into a non-profit association for the development of assisted living facilities and other residential options for Hawaii's seniors and disabled individuals. ALOH developed as a way of influencing the development of Assisted Living Facilities (ALF) in Hawaii by consumers and health professionals versus only developers. The word "Options" in our association's name was clearly an important part of our mission statement. ALOH was positive about the ALF philosophy of care and yet not satisfied with its high cost of services beyond the reach of most of our seniors. We saw the "options" in our association's name as a way to look for a broader array of alternatives to address the growing need for affordable housing with supportive services.

To date, ALOH has been instrumental in the following types of infrastructural activities:

  Conducted numerous conferences and public relations activities to inform consumers of this new long-term care service.
  Invited consultants to provide technical assistance to some of Hawaii's developers.
  Developed a Assisted Living Guide for Developers.
  Publishes a periodic newsletter and maintains a website that assists with referrals.
  Helped draft the state's Assisted Living Facility administrative rules.
  Facilitated the redrafting of the State's Board of Nursing's guidelines for the Nurse Practice Act to permit the delegation of nursing authority to non-nursing personnel.
  Worked with the State Legislature to omit the need for the Certificate of Need requirement for new assisted living facility constructions.
  Worked to encourage the State's Medicaid waiver program to have Assisted Living included as an optional location for one for their waiver programs and allocate slots for future applicants.
  Co-sponsored the Governor's Conference on Residential Long-term Care to address the numerous and overlapping types of residential care.

Assisted Living has developed very slowly in Hawaii. Since the concept was first introduced in the early 1990s, only 2 facilities are licensed. Only one developer is attempting to create an affordable model of assisted living at $2,500 per month and comply with all licensure requirements for assisted living. Unfortunately, that developer has yet to break ground after more than 4 years of effort. In comparison to this "affordable price", the typical base cost of assisted living in Hawaii is around $3,500 per month. High land cost and the defaulting of Hawaii's first and HUD financed facility in a very remote location on Oahu dampened the interest and enthusiasm of creditors and developers. In addition, our State's Medicaid program created a reimbursement and case management formula that further deteriorated the interest of our developers hoping to create affordable models of Assisted Living Facilities.

As a consequence, what has developed to date has been a limited number of privately financed projects targeting the upscale market. In the very early stages of this movement, ALOH rationalized its involvement with assisted living promoting affordability and the needs of Hawaii's seniors. It also believed that if overbuilding occurred, the AL companies would eventually need to repackage their products for the moderate-income local market. That has not happened.

Our senior population, in the meantime, continues to expand at about two to three times the national average. If Assisted Living Facilities are not going to fill the void for affordable supportive senior housing, what will? Early last year, ALOH decided to consider another strategy - that of encouraging the development of affordable supportive senior housing. Representatives of our organization, the HUD - Hawaii Office, our Honolulu County Elderly Affairs Division, Catholic Charities Elderly Services Housing Assistance Program, Maluhia Long-term Care Health Center, the Rural Community Assistance Corporation and the Housing and Community Development Corporation of Hawaii (a state agency) formed the Affordable Supportive Senior Housing Task Force. Two objectives were identified.

First, the Task Force planned to conduct a statewide assessment of private and publicly owned low and moderate incomes senior apartments, their residents and types of services that they receive. Part of this study has also entailed conducting Focus Groups with seniors at selected facilities throughout the state of Hawaii.

Secondly, the Task Force is organizing the state's first working summit on Affordable Supportive Senior Housing in March 2002. The March Conference will be our first opportunity to publicly share the results of our survey, discuss the issues of affordability and support services and collaboratively work on solutions. Resources available from HUD for service coordinators, for example, are not being sought except in rare instances. This meeting will be of help to air the issues involved to maximize the state's ability to use available resources to create affordable supportive senior housing.

While we have just completed the data gathering from 37 facilities representing 47 percent of Hawaii's 79 identified facilities, we have found the sample to be sufficiently representative of the total population on a number of measured criteria.² Moreover, the qualitative information from interviews with residents, focus groups and members of our task force complements the quantitative results and collectively provided the basis for this report.

Preliminary Survey Findings: Our study has spent a great deal of effort directed at collecting information from all 79 facilities in the state. Unfortunately, after more than 5 months, the questionnaire return rate was a disappointing 47 percent. Nevertheless, we are confident that the sample returned from the total universe of facilities identified was representative. The following are a few general descriptive observations from the survey.

  These apartments are about 44% smaller than the retirement facilities with only an average of 110 units per facility in comparison to an average of 250 for retirement facilities.
  The average number of individuals on facility waiting lists per facility was 194. About 50 percent indicated that the wait is between 1 to 2 years and 10 percent indicated waits over 3 years in length.
  Residents had an average length of stay of 13.7 years while the range was from 6 months to over 20 years.
  About 11 percent are indicating to their resident managers that they are having difficulty taking care of themselves or their apartments properly.
  In comparison to two years ago, 24 percent reported that their residents are having more difficulty in caring for themselves or their apartments, 54 percent said that their residents are the same and only 5.4 percent indicated that their residents conditions have improved.
  Resident assessments are not a regular part of management's responsibility for a significant number of facilities. While 13 percent reported 6 month reassessments of their residents and another 36 percent did annual assessment, 45 percent did no assessments at all.
  Most of these facilities provide some but not many supportive services. In almost all instances, services are not coordinated. The most serious unmet needs seem to be the need (1) to get outside help or getting to an outside location (2) housekeeping, (3) preparing meals.
  Most resident managers have little interest, orientation, training or knowledge regarding the supportive service needs of seniors.
  There has been little provision of technical assistance or training to assist low income senior housing projects to meet the growing need for supportive senior housing.

Beyond Affordable Supportive Senior Housing: To prepare Hawaii for the significant growth of seniors in need of affordable housing and supportive services, this study is based on the premise that there is a need to improve the ability of our low and moderate-income senior apartments to coordinate supportive services. There was also the realization that Hawaii needs to keep pace with the senior population growth by continuously expanding its affordable housing supply. Realistically, however, the inability for assisted living to play a significant role in the Hawaii senior rental housing market, the inability of the State to use its allotment of Section 8 vouchers annually and the very small annual allotment of federal funds for Section 8 housing suggest that an adequate housing stock of affordable senior housing will be difficult to achieve.

Given this scenario, our Hawaii study is attempting to identify geographic concentrations of low-income senior residences. There is a growing need to help seniors remain in their existing residences and to expand supportive services to communities with particular attention to those of limited means. To prioritize geographic locations of senior residences or Naturally Occurring Retirement Communities (NORC), we are monitoring the concentration levels of Hawaii's retiree population (65+) by census tracts and census blocks throughout the state. Based on our preliminary analysis of the geographic concentration of seniors, it is clear that the city of Honolulu is becoming the magnet for Hawaii's seniors in the 21st century. While our rural neighbor islands have traditionally been known to have a higher proportion of seniors, over the past decade, there has been a leveling of the differences between islands and the most rapid growth of seniors has been on island of Oahu and more specifically in the City of Honolulu.³ Seventy-two percent of the new seniors who retired over the last decade are residing on Oahu and primarily in the City of Honolulu.

If we cannot keep pace with the demand for affordable and supportive senior housing, efforts should be directed towards the expansion of coordinated senior services to permit the most needy to age-in-place at their existing places of residences.

The early 1990s was a time of an intense shortage for low-income senior housing. Due to the introduction of the Rental Housing Trust Fund and the Federal Low Income Housing Tax Credit Programs. Developers found it attractive to build and increase the supply of low and moderate-income senior housing in Hawaii during the 1990s. Anecdotal evidence on the reduction of wait listing time suggests that the pressure on affordable rental senior housing was moderated significantly during this period. While affordable or moderately priced senior apartments have lessened the demand, these apartments are often beyond the reach of many seniors on SSI and are excluded from becoming eligible to rent.

The low and moderate-income housing situation is still quite tenuous. Hawaii's tight rental market is driving the rental prices higher and making Section 8 vouchers less attractive to private landlords while expiring Section 8 program contracts with some private senior housing management companies could quickly reduce the supply of many low-income senior housing projects.

I would like to conclude with the following preliminary recommendations as they might relate to this national effort to promote and facilitate the development of affordable supportive senior housing.

Thank you very much for this opportunity and privilege of providing testimony today.

¹ The State's Medicaid waiver program has used its Residential Alternatives Community Care Waiver program to permit the financing of licensed assisted living facilities. Waiver funds are split with part provided to the provider for personal care (about $1000/month) and a case management agency for case management services ($500/month) for a total of about $1,500. In addition, the residential care provider also receives Supplemental Security Income (about $1000) for room and board payment for a total of about $2,000. While this amount has kept small residential care or foster homes interested, Assisted Living facilities find the amount inadequate to consider. Instead, they have asked Medicaid to pool the $1,500 of Medicaid waiver funds for personal care and case management and the remaining $1,000 from SSI for the same total of $2,500. The state Medicaid's decision is based on their interest in protecting clients with independent case management services in residential care facilities. While this makes sense in care and foster homes, assisted living facilities are able to protect their clients in multiple ways to make independent case management unnecessary.

² Chi-square tests on three indicators available indicate no statistical difference between the sample and the total population of 79 facilities for which limited data is available.

³Oahu (City and County of Honolulu) experienced a 2.46 percent increase of seniors 65 and older in comparison to significantly lower growth rates for the Kauai (0.69%), Maui ( 0.15%), Hawaii Island ( 0.99 %), Molokai ( 0.81) and Lanai ( -3.79%). According to the Year 2000 Census, there were 160,601 seniors representing 13.26% of the total population. The variance of percent elderly by islands have decreased dramatically from 1990 to 2000 with significant parity in percentage elderly by islands in 2000 except for the island of Maui with 11.21 percent.