The business plan was bulletproof.
As children born after the First and Second world wars approached retirement, the number of seniors in B.C. soared during the 1990s and 2000s. According to BCStats data, the number of people over the age of 65 has climbed 33% in the last decade and is expected to double to 1.46 million by 2036.
The writing has been on the wall for the past 20 years – a demographic tsunami that would strain the health-care and housing sectors like nothing else in modern memory.
Businessmen across the country saw an opportunity to build tens of thousands of retirement beds to house the aging population and turn a healthy profit.
That sparked a building boom.
"We had a really good boom through the 1990s in our business," recalled Peter Gaskill, a 20-year veteran of the seniors housing sector who's now president of Pacific Arbour Retirement Communities in Vancouver. "… We could build a retirement home in a farmer's field on top of a mountain and it would still fill up, so all of us in the 1990s got weaned on a business where we couldn't go wrong."
But then everything started to go wrong.
A joint Business in Vancouver and CBC investigation has revealed the building boom created a gross oversupply of pricey independent living homes throughout B.C. That, in turn, has driven up vacancy rates and forced retirement homes into receivership or onto the market while seniors remain living in them.
Meantime, the number of assisted and residential care beds has failed to keep up with the aging population, leaving hundreds of medically challenged elderly waiting months for government subsidized beds.
And a recent BC Ombudsperson report has shed light on government oversight that is fractured, poorly resourced and overly complex – contributing to the growing challenges that face average B.C. seniors and their families.
The Astoria retirement community in Port Coquitlam looked like an ideal seniors home.
According to its website, the 135-suite "mountain-style" resort boasts a string of amenities that include a private movie theatre, five-star meals, nursing care and landscaped grounds complete with a waterfall.
But for the past three years this "Whistler-inspired" resort has remained largely empty.
As of last month, when it was sold with two other Surrey retirement homes to Ontario's Leisureworld Senior Care Corp. (TSX:LW) for $120 million, its occupancy rate was only 59%.
That's far below the 95% occupancy rate, or 5% vacancy rate, that retirement homes lay out in their appraisal to get bank loans.
"If you look at a lot of the projects done recently, they're achieving far less than that and their business plan was contingent on achieving certain rental rates and a certain occupancy rate," explained Azim Jamal, president and CEO of Retirement Concepts, one of the province's largest seniors care companies.
The Astoria isn't alone.
Cedarbrooke Chateau in Mission and the Renaissance Retirement Residence in Squamish both went into receivership last year after suffering from a persistent 54% occupancy rate.
In Osoyoos, the Cactus Ridge Retirement Residence, which opened just last year, was recently put on the block for $14 million.
Sources close to the deal say the number of seniors living in Cactus Ridge at the time it went up for sale amounted to less than one-fifth of its capacity.
Its for-sale ad generated no offers.
Gaskill blames, in part, North America's major retirement companies (such as Chartwell Seniors Housing REIT (TSX:CSH.UN)) for generating too much hype about growth opportunities in the seniors business.
"We told everybody it's an unending demand," said Gaskill, who was part of the original executive team that built Chartwell and eventually took it public. "We have to build thousands of beds every year in order to get to 2026 where we have enough beds [to meet the demand]. Well, that just wasn't the case … people didn't look at the details."
He said too many developers jumped into the business without researching the actual demographics.
Most B.C. municipalities have double-digit retirement home vacancy rates, according to Canada Mortgage and Housing Corp. (CMHC) data from 2011.
The most challenged markets for private pay independent and assisted-living include Maple Ridge and Pitt Meadows, which last year had an average vacancy rate totalling 26.9%.
They are followed by:
- Abbotsford/Mission (18.1%);
- Nanaimo (18.1%);
- the Saanich Peninsula (16.4%); and
- the Thompson/Shuswap region (15.3%).
Burnaby, the Tri-Cities and White Rock/South Surrey aren't far behind with an average vacancy rate of 12%.
"In Victoria, the seniors who would move into a retirement home, that demographic is on the decline … there's fewer of them each year," said Gaskill. "The baby boomers only just hit 65. They don't move into retirement homes for another 20 years; it's easy to forget that."
He pointed out that many developers failed to research the demographics and find areas where seniors have the age, income and assets to afford an independent-living home.
Independent living is pricey – ranging between $3,000 and $8,000 a month – and most seniors aren't interested in it until they hit their eighties, and only then when they're healthy.
"It's a discretionary purchase," said Gaskill. "We create a market by creating a product that's appealing to people."
Ken McClelland moved into Pacific Arbour's Summerhill independent living home in North Vancouver with his wife seven years ago.
The former Royal Air Force pilot and auto parts businessman spent three years researching retirement homes before he settled on the Summerhill.
"I got to the point where my wife was beginning to find it difficult to look after the house, and I'd had enough of cutting lawns," said McClelland. "We wanted to move into an apartment whereby the meals were provided and we had a lot of activity."
In addition to his two-bedroom apartment that has a view of Burrard Inlet, McClelland has his own vegetable garden at the Summerhill and a small workshop for wood carving.
His wife has since died, but McClelland has no plans to move.
"My son and my daughter are such that they say, 'We don't worry about you because we know that you're well looked after.'"
But that level of care comes at a price. For McClelland it's $4,600 a month, plus additional costs if he hires a nurse to provide health-care services.
Ken Kehl, 91, decided to move into an independent living suite at Regency Sandalwood Retirement Resort five years ago after he got remarried to Gladys, 92, his second wife.
As his eyesight worsened and he could no longer read the labels on his medication, Kehl and his wife moved into an assisted living suite at the Village at Mill Creek, a "campus of care" that Baptist Housing bought in 2008 as part of a $105 million deal.
A few weeks ago, it became apparent that Gladys would need additional care, and she was placed in a residential care room in the same building.
For people like McClelland and the Kehls, a pricey private-pay suite is affordable.
But that's not the case for many seniors.
Rebecca Maurer's mother was 59 when she started experiencing strange symptoms that eventually were diagnosed as a serious and life-threatening neurological disorder.
That was 2006.
She died three years later.
The intervening period was filled with heartache as Rebecca, her sister and family fought their way through B.C.'s complex public health-care regime.
"At the beginning, what we were looking for was some kind of care in the home to keep her home as long as possible," recalled Maurer. "What we found was there simply wasn't any care available that would allow us to do that, even though keeping her at home would have been best for her, best for her family and a cheaper option."
The 28 hours of home support Maurer's family was offered wasn't "even close" to what her mother needed.
As the illness progressed, Maurer and her family sought out extended care facilities.
But there were no beds available in her community.
The first one available appeared in North Burnaby, and government regulations stipulate that the needy take what's offered or lose their place in the queue.
In addition to the 30-minute drive back and forth to visit her mom, Maurer quickly realized the home she had been placed in didn't meet her care needs.
"We knew we had a limited amount of time to spend with her, we were desperate at that point," she said. "I started calling around, I called Continuing Care begging them to move her up the ladder."
But nothing worked.
Eventually, the family decided to liquidate her mother's assets to help pay for a $7,000 per month private bed in New Westminster – but even at that price Maurer said the care wasn't top notch.
"I find myself wondering all the time, what happens to people who don't have family members advocating for them?"
She's not alone.
Many seniors lack the financial wherewithal to pay for private independent living, assisted or residential care.
According to the latest Canada Revenue Agency income data, the average annual income of B.C. seniors over the age of 75 totalled $33,024 in 2009.
Even if they used all of that money to pay for retirement living, they could only afford to pay $2,752 a month.
The Great Recession also forced many seniors to rethink their retirement plans as assets and investments lost value.
Meantime, land values, construction costs and other service costs have risen sharply in the Lower Mainland – making private care options even less affordable.
Samir Manji, chairman, president and CEO of Amica Mature Lifestyles (TSX:ACC), which owns several luxury independent living homes in B.C., recently said it has no plans to expand its business in Vancouver or Victoria.
"Land supply is extremely limited, land valuations over the last several years have gone through the roof and beyond that the construction cost market we find ourselves in makes it very difficult for us to pencil out, in an economically viable fashion, a new development in those two major markets," said Manji.
Both Gaskill and Jamal believe there are growth opportunities here for independent living, but the options are limited for assisted and residential care – which is heavily regulated and subsidized by the public sector making it difficult to compete with.
As the costs of acute and residential health care continue to rise, the government has moved to provide more services to keep seniors at home.
Meantime, residential care costs have jumped 50% in the past decade to $1.7 billion or about 10% of the total provincial health care budget, according to Ministry of Health data.
Patrick McLaughlin, executive director of Kiwanis Senior Homes in North Vancouver, noted the demand for low-cost independent living has continued to rise simply because most seniors can't afford the rates for private suites.
While private-care suites cost thousands of dollars per month, Kiwanis is able to offer rentals rates ranging between $496 and $740 per month.
"And we have a long waiting list," said McLaughlin.
In a only a few short years, the bulletproof business plan that prompted so many developers to leap into the seniors business has unravelled, leaving a host of near-vacant retirement homes and underserved seniors.
"I don't know how to say this politically correctly, but sometimes it seems people have more money than brains in the real estate game," said Jamal.
"People think if you build it they will come, but [they] won't."