Home Health Business Quarterly

Assisted living update

MI law protects residents’ right to stay

In January, Michigan governor John Engler approved legislation protecting residents’ right to choose to stay in assisted living facilities as their health needs increase. The statute prohibits state regulators from ordering residents to be discharged from licensed Homes for the Aged (assisted living facilities serving over 21 people) if the resident, his or her doctor and family, and the home’s operator disagree with the need for discharge. The owner, operator, and governing body of the home also must agree to ensure that the resident receives the necessary additional services.

Before this ruling, consumers had little access to a formal appeal process and the state Department of Consumer and Industry Services, Bureau of Regulatory Services had the right to initiate a resident discharge. The legislation, in which the Assisted Living Federation of America’s state affiliate played a key role, ensures a team approach to the decision process and affirms the rights of the elderly and disabled to receive services in the residential setting of their choice. 

HUD awards assisted living grants

The U.S. Department of Housing and Urban Development (HUD) awarded almost $20 million in grants under a new program to convert senior housing to affordable assisted living. The Assisted Living Conversion Program will provide owners of HUD section 202 senior housing with a grant to modify or convert facilities for assisted living, which will help low-income seniors remain in residential settings and in their own homes for as long as possible.

"ALFA [the Assisted Living Federation of America] views this important new grant program as a next and necessary step in helping providers fulfill their promise to seniors — particularly very low-income seniors," said Gerard Holder, executive director of ALFA’s Senior Housing Council, in an announcement. 

Capital Senior Living ends merger

Capital Senior Living Corp. in Dallas, which develops and operates senior living communities nationwide, has terminated an agreement to merge with ILM II Senior Living Inc. A built-in gain tax issue disclosed in ILM II’s Form 10-K filed in January could cause a material adverse change under the merger agreement. ILM II might be liable for up to $2.7 million in penalties and interest.

"In ordinary circumstances, we would put our financing on hold and would await the resolution from the IRS of this issue," says Lawrence Cohen, Capital’s CEO. "However, awaiting the IRS resolution would certainly make completion of our financing impossible by March 31, 2001, the termination date under the merger agreement with ILM II. Thus, we believe we have no other choice than to terminate the merger agreement."

The company will continue to manage five ILM II communities under an existing agreement. 

Sunrise closes sale of 9 properties

Sunrise Assisted Living Inc. in McLean, VA, which operates 163 assisted living communities in 25 states and the United Kingdom, signed an agreement to sell nine properties for $131 million to Prudential Real Estate Investors (PREI). It also sold two properties to Aureus Group LLC for $28.1 million. Sunrise maintains long-term management contracts in both sales.

The nine properties — located in Pennsylvania, New Jersey, and Virginia with a total of 666 units and resident capacity of 798 — will be owned by Senior Housing Partners, LLP, a limited partnership formed by PREI with five major pension funds and Sunrise. The two properties in Rockville, MD, and San Mateo, CA, — with 133 units and a resident capacity of 160 — were sold to Aureus, a Dallas-based real estate company.