A $28.6 million expansion that will increase the size of the Orchard Heights assisted-living facility by almost 75 percent is getting nearly $3.8 million in tax breaks from the Erie County Industrial Development Agency.
The agency’s board Wednesday approved the tax breaks for the Hamister Group’s plan to add a new wing with 41 assisted-living units and two other buildings with 64 independent living apartments for elderly residents who expect to need assisted-living services within a year or so.
While tax breaks for market-rate senior housing has been a controversial subject for local IDAs, the Orchard Heights project was eligible for incentives because the agency considered it to be an assisted-living facility, which is allowable under the eligibility guidelines followed by all of the IDAs in Erie County.
“This is a care facility,” said Mark Hamister, the development company’s chief executive officer.
He said the expansion will help fill a strong need for assisted-living units in the Buffalo Niagara region, where occupancy at assisted-living facilities is running at about 92 percent. Hamister said Orchard Heights, which has a 3 percent vacancy rate, turns away 10 to 20 senior citizens each month.
“The shortage is especially acute in the Southtowns,” Hamister said. “We’re going to be meeting less than 20 percent of the demand that’s there” with the expansion.
Hamister said most of the residents at Orchard Heights come from a five-mile radius of the facility. “Most people want to stay near their family and friends,” he said.
The project is expected to create seven full-time and 16 part-time jobs in the next two years, with the positions paying between $21,000 and $51,000 a year, said Karen Fiala, IDA assistant treasurer.
IDA board member Michael Hoffert, who also is president of the Buffalo AFL-CIO Council, said he opposed the tax breaks because of the low pay associated with many of the jobs.
“These are not the kind of jobs we should be supporting,” said Hoffert, who was joined by board members Betty Jean Grant and Richard Lipsitz in opposing the tax breaks, which were nonetheless approved by a 13-3 margin. “They’re not living-wage jobs.”
Daniel Hamister, the developer’s senior vice president, said construction is expected to begin on the expansion next spring and take about a year to complete. The company still is finalizing its plans for the expansion, and then it must get approval from the state Health Department, he said.
The company said residents at Orchard Heights generally are from low- to middle-income families, with an annual income of $24,000. Residents pay rent that averages about $3,800 per month.
“Unlike Fox Run or Canterbury Woods, the average net worth of the residents is under $200,000,” Fiala said.
Even with the tax breaks, the project is expected to generate about $670,000 in additional tax revenues for local schools and governments during the seven years covered by the property tax incentives approved by the IDA.