NaCCRA Forum: Governance of CCRC/LifePlan Communit

We are moving toward a price per square foot (PPSF) pricing model (claimed to be standard for our industry) to determine annual monthly fee increases. Previously our annual monthly increases were the same for all apartment homes regardless of size. Over time this has resulted in a large gap between the monthly rates paid by newer residents as opposed to those who have been here 10-15 and more years. How do other Type C CCRCs determine annual monthly fee increases?

I didn't realize that this might be a method by which monthly fee increases are calculated, let alone guessing that this might be standard.... I am wondering if this is also happening at communities with Type A or Type B contracts.

Linda,

I am having trouble understanding how imposing the same percentage increase in monthly fee on all apartment sizes causes any gap at all between what newer residents pay vs. what long-standing residents pay.

I’m assuming the monthly fee itself varies by size of apartment, and that the problematic gap exists only between newer and “older” residents of the same size apartment.

Can you explain this in more detail?

Is there some other factor involved, such as annually setting a schedule of monthly fees just for incoming residents during the coming year which is higher than what “older” residents will be paying for the same size apartment? This is the practice in some CCRCs, including Type A, and may be referred to as “vintages”.

My community has a monthly fee based on residence size. Old and new people pay the same.

Linda Kilcrease

Resident of a CCRC

Linda K., when yearly increases are calculated for the monthly fees, are the increases the same for all residents or they are proportional with the size of the apartment?

The fee is based on residence size. Whatever the increase is in the new year, the cost is the same for new or existing residents based on residence size. That said, this is true for those under the contract that started in 2014. Prior to that, there are various plans where the monthly fee can differ based on the terms of whatever contract someone is under.

Linda Kilcrease

Resident of a CCRC

Linda K, thanks. Sorry, I still do not understand. Is the % increase proportional with the residence size?

So if for example I have a residence which is 1,000 sq ft and this year my monthly fee increases by 2%, if you have a residence which is 2,000 sq ft, does your monthly fee increase by 4% (vs. all increases being 2% for all residents)?

When one signs up at a CCRC, most contracts I have seen only state that the CCRC has the right to increase monthly fees as needed. Also monthly fees are higher for larger residences. My question has to do with the % of annual increases.

I am not sure about that.

Linda Kilcrease

Resident of a CCRC

The question asked by Linda T. puzzled me and I asked the 3 CCRCs I am investigating about it. All of them (one is a Type B, two are Type A) stated that the increases are the same for all residents and also for existing residents and new ones. So I question that the increase being proportional with the residence size is "standard" across the industry. It might become standard if CCRCs decide so, as they can do whatever they please. If they do that, then those with larger residences will be "extra" penalized, as they already pay much higher monthly fees from the start, monthly fees that keep ballooning.

I have lived at Medford Leas in Medford New Jersey. We all pay by the square foot. We just got resident increases. For the first time they are different for our courtyard apartments - they have the most vacancies but account for 44% of revenue. Our increase is 4% and the courtyard apartments are 2%. As of April 1, 2022our monthly fee (for 2 people) will be $6100.

Kay Roberts