By Seth Littrell
Register News Writer
In a Tuesday afternoon work session, the Berea City Council discussed the results of a market study from Spectrum Consultants on the viability of building a retirement community in the area.
Spectrum representative Rita Lacy joined the session via a conference call and was available to answer questions.
Lacy said the report was based on a community made up of rental units, similar to an independent-living complex for ages 75 and older. With a minimum monthly fee of $2,000, the study found demand for 37 to 61 units. Similarly, the study determined that there was a demand for 22 to 30 beds for individuals needing assisted living, though the monthly rate for that would raise to $3,500.
Lacy said a typical retirement community would aim for about 200 units. However, Berea has two distinct advantages in its favor. The first is there is little to no competition for such a community in Berea. The second is that a retirement community would be able to draw alumni and retired faculty from Berea College, she said.
Some council members raised concerns about the monthly fee being too expensive, and wanted to explore other payment options such as a flat entrance fee or an equity based entry, which is the method St. Andrews Place in Richmond uses. With the equity method, the tenant fully purchases the unit. When the tenant leaves the unit, a portion of the purchase price is returned to them.
Lacy said the study can be revised to consider the market in terms of the other payment methods, but she thought a rental unit was the best option for Berea because the median income and property values in the area are lower than both the state and national average.
She explained that when a tenant purchases a unit or pays a flat entry fee, they usually sell their home to do so, and with lower property values some potential tenants could have trouble meeting the initial cost, which could be above $100,000, depending on what services the community offered.
The council requested the study be altered to view the feasibility of a community with a single entrance fee of about $80,000, more in line with median income of the area. Lacy said she would rerun the study and get back to the council with the new results at a later time.
The council can vote to have a second-phase study done with Spectrum analysts visiting Berea and the surrounding area for more in-depth studies if the initial report shows promise. Phase two would costs $12,500, but the initial $5,000 spent on the phase-one study will be credited toward the later fee, meaning the council would need to pay $7,500 for further work.
Mayor Steven Connelly told the council that United Church Homes, a non-profit organization which in 2006 planned to build a retirement community on a 150-acre site in the city but dropped the plans after the 2008 recession, recently contacted him. UCH heard about Spectrum’s study and decided to update their own study of the area to see if their plans were still viable, he said.
Connelly suggested that the council meet with UCH in the future, but no action was taken at the work session.
Seth Littrell can be reached at email@example.com or 624-6623.