A number of factors have contributed to the lack of affordable assisted living in Wisconsin. These include:

Service Reimbursement Issues

• Limited Capacity in the Statewide Medicaid Waiver Programs. Even though Wisconsin's Medicaid Home and Community Based Services Waivers can be used to pay for assisted living services, people who enter an assisted living facility on a private pay basis may find that public funding is not available when they need it. Most counties have waiting lists for Waiver services. According to a statewide survey of residential care apartment complexes (RCACs) conducted in January 2000, 12% of Wisconsin's RCAC residents "spent most of their funds and moved elsewhere to receive Medicaid assistance" in 1999.
  
  
• Family Care is Available in Five Pilot Counties. When fully implemented, Wisconsin's Family Care initiative will eliminate waiting lists and give long term care clients equal access to a whole array of care settings, including nursing homes, assisted living and home care. Currently a pilot program, Family Care is available in five of Wisconsin's 72 counties: Fond du Lac, La Crosse, Milwaukee, Portage, and Richland.
  
  
• RCACs are costly compared to Medicaid Waiver resources. Wisconsin's Medicaid Waivers can pay up to 85% of the average statewide cost of nursing home care ($68.58/day or $2,086/month) for RCAC services. But the county agencies that administer the Waiver programs do not have that much to spend. Counties are required to keep the average cost per Waiver client within an average per diem amount, currently $40.78/day or $1,240 per month. When a county pays a higher rate for a client in an assisted living facility, it has less available for its other Waiver participants.

Housing Finance Issues

• Challenges of Dealing with A New Industry
  
  
• Assisted Living is a new industry to the Wisconsin Housing and Economic Development Authority (WHEDA). It brings a new very important component: underwriting not only real estate but also a business. WHEDA must work with a different set of customers and link developers who understand its products with those who can operate a successful service business.
  
  
• Most current assisted living owners and operators are not experienced in using low income housing tax credits, and few investors in tax credits have experience in assisted living. The low income housing tax credit program, which WHEDA administers, can raise up to 50% of the equity for a development, and reduces the debt required, thus allowing lower rents.
  
  
• It is more difficult to sell loans for assisted living facilities on the secondary market. While WHEDA has developed resources (WI Affordable Housing LLC and being a Special Affordable Housing lender for Fannie Mae) to sell loans that it originates and use the low income housing tax credit, these resources have not indicated a high interest in purchasing assisted living developments loans.
  
  
• Insufficient Housing Funds
  
  
• Low-income housing tax credits are a finite resource. In year 2001 there were requests for $13 million in 9% tax credits and only $8 million was available.
  
  
• HUD Section 8 rent assistance vouchers are in short supply. While Section 8 can be used in assisted living facilities, most Section 8 vouchers are reserved for families because subsidized housing projects are less available for families than for older people.
  
  
  
• Incompatibility of Service Funding Programs Housing Finance Tools
  
  
• Housing and service funding have not been coordinated. In some cases, service funds are available but the housing costs are more than the individual can afford. In others, tenants have access to housing subsidies but cannot get help paying for service costs.
  
  
• While most housing finance sources require a long-term commitment, sometimes up to 30 years, funding for Medicaid Waiver services is attached to individuals and is not guaranteed to a facility.
  
  
• Both the low income housing tax credit and Medicaid waiver programs require that charges for rent and services be clearly identified. Requirements for how this should be done are confusing and inconsistent.

Regulatory Issues

• Confusion among types of assisted living

Wisconsin has three regulatory categories for residential care: residential care apartment complex (RCAC), community based residential facility (CBRF) and adult family home. These are subject to different regulatory requirements, different levels of state oversight, and different remedies in the event a problem occurs. This can be confusing to consumers and potential providers alike. Understanding the differences is important to owners/operators in deciding on the appropriate licensing category and to consumers selecting a facility placement.

• Threshold for Triggering Regulatory Requirements

Facilities can provide meals, housekeeping and other hospitality services without having to be licensed or registered as a residential care facility. When the facility takes responsibility for arranging or providing care services, it must meet the requirements of the appropriate regulatory code. Some providers would like to be able to provide services such as case management or scheduled care without having to meet other regulatory requirements.

Issues Identified by Potential Affordable Assisted Living Developers and Operators

There is strong interest in developing affordable assisted living, both by converting existing facilities and through new construction. Some of the challenges identified in preliminary discussions with potential affordable assisted living demonstration sponsors include:

• Issues for Developers
  
  
• Public housing authorities and other organizations in rural and small communities are too small to have either the staff time or technical expertise to develop assisted living facilities.
  
  
• There is a need for information about the size and type of facilities which small rural communities can support and about what people can afford to pay in these areas.
  
  
• There is a need for mixed income projects. An owner cannot be entirely dependent on low-income tenants. Private pay tenants are essential to make the numbers work.
  
  
• Much of the existing housing stock is neither accessible nor "user friendly" to people with long-term care needs. Substantial remodeling, including addition of dining and common areas, will be needed in order to convert low income housing to assisted living.
  
  
• Relocation costs are a problem, especially in conversions of existing buildings.
  
  
• Cost of construction and/or conversion can be prohibitive.
  
  
• There is a gap between what people in rural areas can afford to pay and what it costs to develop assisted living
  
  
• Adding services to existing housing means the facility must be comply with state regulations.
  
  
• Each county social or human service departments administer the Medicaid Waiver program. While policies are generally the same across the state, implementation procedures vary and some policies are locally determined. Owners must deal with separate entities if operating in more than one county.
  
  
• Issues For Operators
  
  
• There is a need for more reliable access to public funding for services. Residents often have to move from the facility when they run out of funds.
  
  
• People with physical needs and/or dementia need 24-hour supervision. Medicaid will not pay for this; it only covers services provided directly to the individual.
  
  
• Many tenants need meals, housekeeping/laundry and transportation, even if they do not have medical care needs. There is no funding source available to pay for these services.
  
  
• Staffing is difficult and turnover is high. This was the greatest concern identified by current assisted living providers in the Year 2000 RCAC Survey Report.
  
  
• Every program and provider type does its own case management. This can be a problem when services are brought in from different outside providers.
  
  
• Small projects don't generate enough income to support well-qualified project management staff.
  
  
• Maintaining occupancy is a problem in older subsidized housing developments. Adding a service component could help reduce turnover and attract new tenants.

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