ORGANISATIONAL STRUCTURE, BUILDING CONCEPT ANDFINANCIAL MODEL FOR SELF-ORGANISED HOUSING FOR

ELDERLY PEOPLE

Ton Damen*1, Hans Botman2

1: DEMO Consultants b.v.Delftechpark 10, 2628XH Delft, NL

E-mail: ton@demobv.nl; web: www.demobv.nl

2: Botman BeheerKapelstraat 42, 4817 NZ Breda, NL

E-mail: botmanbeheer@online.nl

Keywords: CSO, assisted living, elderly, IFD, zero-energy

Abstract The financial crisis and predicted demographic developments have resulted insubstantial cost cuts in the care sector in the Netherlands and closing down of assistedliving and nursing homes. This policy will be further implemented with an even increasingspeed and force in the years to come.

Self-sufficiency, individual responsibility and self-organising capacities are keywords inconcepts that are suggested to meet the consequences of the new policy.

This paper presents an innovative living concept for elderly people based on collectiveself-organised (CSO) housing combined with small-scale care services. The conceptcombines an organisational structure (cooperative), financial model (mixed self-investment and external mortgage) with an innovative sustainable building concept basedon industrial platform techniques and decentralized energy generation.

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1. INTRODUCTION

The elderly organizations in the Netherlands (KBO, PCOB, NOOM and NVOG) have joinedforces in an umbrella organisation, the Dutch Senior Union, which represents more than half amillion senior members, advocating the principles: independence, diversity, solidarity,quality, freedom of choice, integration and participation.

Older people are a large and important part of the Dutch society. They provide important andsubstantial contributions to society, but they are also a population that needs care andassistance due to the limitations that come with old age. The Senior Union is working on thequality of life of people in the third and fourth age to enable them a meaningful and dignifiedlife. Collective interests at national and European level in the areas of health, income,pensions, housing, welfare and mobility are the main attention fields.

The sharp cuts in health care costs and the closing of nursing homes have made elderly peopleaware that they will have to prepare for the future, be pre-active and cannot count any longeron government or family support. For current budget reasons, demographic trends andcorresponding increased demand on health care, the government is forced to stimulate self-reliance and self-organizing capacity with emphasis on the own accountability of its citizensin general and elderly people in particular.

Collective Self-Organized (CSO) initiatives to develop small-scale residential care facilitiesfor seniors are a possible and positive answer to the emerging problems.

The Dutch Senior Union has developed a national plan to build 100.000 new homes forelderly citizens in the next ten years, designed for the specific needs and demands of thisgroup [1]. An important part of the production should be realized as assisted living in theform of small-scale residential estates with care facilities.

This paper sets out the outlines of the action plan CSO for senior citizens, the underlyingbuilding concept of Thinkbuilding [2] and the further development of the technology and EU-wide. The aim of the paper is to present recent CSO-initiatives in the Netherlands that canoffer valuable input for the Proficient-project (which results are presented in a dedicatedsession of this conference) and can shine light on the relevance and rationale of the Proficientproject.

2. ORGANIZATIONAL STRUCTURE

2.1. Preferred lay-outs

Housing surveys among elderly show their preferences regarding their home and livingcircumstances. What they want in general is a patio-like design with a spacy living andattached large bedroom plus separate bathroom, all located on the ground floor, together withthe kitchen, hallway and storage room/garage. On the ground or first room most respondentswant one or two extra rooms for guests (children and/or grandchildren) and hobby.

This programme can be realized in houses ranging from 100 m2 to 140 m2 floor space. Incase of a limited budget, most of the demands can be realized (with some compromises on the

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dimensions of the individual rooms) from 70m2 floor space onwards.

A small residential care facility consists of a cluster of 15- 20 properties with a common areaof 75- 100 m2.The individual living area varies depending on the needs of potential residents.

Design considerations include living or collective housing, individual or collective garden,recreating individually or collectively. In general, the common area is flexibly organized asdining or recreation room, but can be easily transformed for temporary care.

2.2. CSO housing cooperative

A sheltered housing cooperative is founded as a consumer organization in the form of anassociation with a mixed social and business approach. The development, financing andexploitation of the residential housing are professional jobs demanding a business approach.The organisation of the care and other social facilities is the social angle. Goals as (social)welfare, sustainability and affordability are key factors in this respect. The board of thecooperative consists of volunteers from the residents. These representatives are trained in thestart-up phase by professionals and supported by an online platform with relevant freeknowledge and expertise.

The sheltered housing cooperative focuses on two goals: realizing apartments in a small residential facility; providing knowledge and expertise to understand the implications of the changing

governmental policy and to halt the rising costs.

The cooperative itself needs to be organized with business and community values in mind.Contracts have to be signed with financial institutes, local government and commercialcompanies who all require a professional approach and a sound financial structure. This alsoapplies to the acquisition of household and medical care by collective contracts along the linesof the municipal institutions and the national care legislation. More specifically it means that acare fund has to be created and embedded in the overall exploitation model of the cooperative,together with an operational structure to negotiate the collective contracts with care providers,insurers and other service providers.

The cooperative’s goals and conditions must be secured in an innovative statute. A modelstatute was developed and discussed with the tax authorities to advise on the fiscalconsequences and to get advanced approval on the creation of the Care Fund. The modelstatute was positively reviewed and is now available in the national database of the Dutch taxauthority.

2.3. Target group and financial model

The target group of owner/occupants is opted for. At a later stage the focus will also be onless well-off target groups in collaboration with existing housing associations. The premise isthat older owner occupiers are able to sell their existing, often larger house with no or limitedmortgage and are willing to invest in their new home and at the same time make a reservationfor future unexpected healthcare costs.

Based on this assumption the new funding structure is constructed. The sheltered housing

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cooperative is financing the residential care facility and rents out the homes to potentialresidents. A bank provides a cooperative mortgage of about 50% of the building investment.The remaining half is provided by the residents/tenants collectively, based on an interest rateequivalent to the mortgage interest. For them it is a secure and tangible way of investing theirsavings. This loan from the residents will not be repaid save for emergencies and in case theresident moves out.

The bank requires a business plan showing that the cooperative is profitable from day 1. Therents that are charged should make this condition possible, and should cover the financing,management and running costs. So the challenge is to meet the condition of a positiveoperational result –immediately and on the long run –and still being able to provideaffordable housing and care facilities.

2.4. Affordability and sustainability

To meet the challenge we have to reduce the building costs and look for intelligent buildingconcepts. Affordable, sustainable and high-quality housing requires the use of prefab buildingcomponents and preferably industrial building in factory circumstances. Many national,European and international studies have made this clear. As concept of proof, Thinkbuilding,a modular building system, is selected as an example to prove that the set targets ofaffordability, durability and speed are realistic and achievable. Important part of the buildingconcept is the attention for energy-efficiency. Part of the concept is power generation by usinggeothermal capacity for heating and solar energy for electricity.

3. CSO FOR RESIDENTIAL CARE FACILITIES

CSO housing spreads (shares) the risks involved in the building and exploitation process. Thesearch for a suitable location and the formation of an initiative group are crucial. Between themunicipality and local representatives of senior citizens an ongoing dialogue is needed to findsuitable options suitable for available building sites. Group formation can then be started withfocus on a specific building site. Semi-professional volunteers from elderly unions take careof communication, provide counselling and support the decision making process. Themodular building concept enables a swift preparation process with clear and coherentdecisions. A fast construction phase limits uncertainty.

Seniors benefit from a clear overview of opportunities and risks to make a balanced go-no godecision. Reliable communication about concrete projects realized, achievable residentialprograms, architecture quality, affordability and cost and cost-allocation of the additional carefacilities are crucial in this stage of individual decision making. A complete documentationwith projects and design examples, alternative housing types and corresponding informationon construction costs, required investment and financing possibilities is available, as well asinformation on collective space options for recreation, lodging, nursing and care.

Next step to be discussed is the legal structure of a sheltered housing cooperative and itsfinancing structure. For this aim, additional knowledge and expertise is available about carecontracts, in particular the assessment of required care hours and corresponding rates of localhealthcare providers. The focus is on the benefits of collective purchasing of health care and

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insurance services, and household support by long-term performance contracts.

The information package is also communicated with politics and other representingorganisations (like the local church) to acquire suitable land sites and to reach potentialcandidate residents. For the group formation a roadmap is available to guide the decisionmaking process with the support of local elderly representatives.

3.1. Process overview of CSO group formation

Professional volunteers from the Senior Union specify the programme of requirements for theavailable location conform the current urban zoning and development conditions,supplemented by the target-group specific housing requirements. An architect iscommissioned for a first sketch design. After a few weeks a sketch becomes available for thecandidate-residents presenting different housing types and land allocation options and withcorresponding construction and investment cost calculations based on the modular platformconcept. This is the basis for the potential residents to decide to step out or to stay in thedevelopment process. The duration of the whole preparation phase is about 3 months. In thenext phase the architect produces the final design, building permit documentation andapplication, and working drawings which is the basis for the final cost calculations. Thisphase also takes about 3 months including the building permit. After obtaining the buildingpermit the production starts. The houses are ready for occupation after two to three months.The whole process can be realized within one year as a result of the project-independentrelationship with the municipality, professional process steering and past experience with boththe social and technical process content.

3.2. Cost of CSO residential care facilities

The housing costs for senior residents including cost of energy need to be predictable andbelow the maximum spending power to allow affordability on the long run. Senior citizens donot have the capacity to increase their income and their capital reserves are more likely todecrease than increase in the course of years. Housing costs are therefore not allowed to raisemore than the annual inflation percentage.

Monthly required rents are calculated using a certified exploitation model for four housingtypes with variable floor space of 100 m2, 110m2, 120 m2, 130 m2, 140m2 based onconstruction costs with the modular platform technique and decentralized energy generation.

The basic principle is that the residential care cooperative will asks rents that cover all costs,e.g. mortgage interest and repayment, maintenance and asset management costs.

For example, a 120 m2 home calculated construction costs are €162,000 including allocationof shared common space, solar panels and heat pump. The land cost in this particular exampleare for a 150m2 lot €60,000, which gives a total investment of €222,000. Taking intoaccount the cost of ownership registration, financial consultancy fee, and local and nationaltax the corresponding rent is €833/month.

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Figure 1. Investment costs and monthly rent as function of the m2 floor space.

3.3. Specification of nett rent calculation

The bank grants a mortgage of €111,000. The residents provide a loan that is on average also€111,000. Some residents lend out more, some less or nothing at all, depending on the profiton the sale of their former house and their available capital. The interest rate they get in returnis equal to the mortgage interest rate (at the moment between 3 and 4% and much more thenthey get on a savings account). Repayment is not required till they leave the estate and a newresident steps in. For many residents this is a means to invest part of the intended inheritanceto their children in a safe and profitable way in terms of social and financial results.The sheltered housing cooperative calculates a gross rent based on a 6% initial yield on theinvestment. The operating result is from the first year on positive. Gross rent is €1,110 permonth. On the loan of €111,000 the tenant receives an interest of €277 (3%) per month,which results in monthly costs of €833. The savings from the decentralized energy generationis conservatively calculated at €100/month. During the exploitation period the rent willannually be raised with inflation +1%, which gives for most elderly people in the Netherlands(based on capital and pension fund payments statistics) an affordable, predictable and securesolution for their housing and care assistance needs.

4. THINKBUILDING CONCEPT

The basic idea of Think building concept is that each building property can be split into three-dimensional modules from 20 to 60 m2 of floor space. These modules are manufactured in afactory under controlled production conditions. The ready modules are in the early morningtransported to the construction site, assembled during the day and are in the afternoon waterand windproof. After the installation of the modules it will take two to three weeks to finishthe interior of the house. By varying the dimensions of the platform (the length and width ofthe modules) all required variants can be produced without compromising on efficiency,affordability and architectural values. A home can be this delivered in two months with asubstantial reduction of construction, site, interest and consultancy costs. Moreover thecooperative can receive the first rents months earlier.

The Think building concept uses the platform method known from the automotive industry.The platform is flexible in setting the size of the "chassis" by which a multitude of designs

MONTHLY RENTINVESTMENT COSTS

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become possible, without cost increase in the cost. In this way many residential housing typescan be created with decreasing instead of rising construction costs.

The three-dimensional modules are manufactured with durable and traditional materials: asteel frame for the supporting structure, concrete for the floors, wood or bricks for the externalfacade. The platform methodology enables implementation of continuous innovations wi thoutcompromising on affordability, architecture and efficiency. A long -term maintenanceplanning is available with the option to close on a performance maintenance contract.

The sheltered housing cooperative orders the modules according to building permit andconstruction drawings. The building process cannot be compared to the traditional one. Sitepreparation and foundation are the only building activities on the building site, all othercomponent fabrication and installation take place in a production hall. Each week five homescan be produced and delivered by one production hall (in its present set -up). Per day onehome can be assembled on the construction site. The complete home including finishing is fitfor rental in 2 to 4 weeks after delivery of the modules. A project of 20 homes can be realizedin three months from the day that the building permit becomes available.

Figure 2 shows the production flow of an assisted living project in Barneveld commissionedby the local housing association. At the moment the building contains 24 rooms for self -reliant seniors and 8 so-called somatic rooms. The target was to create an adaptable buildingthat in the future can be transferred to 16 individual homes. The total floor space is 2500 m2,production time of the modules was 2 month; assembly and finishing took also 2 months.Building cost turnkey was €1.000/m2 gross floor space.

Figure 2. Production, transport and assembly of modules (Project Barneveld)

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4.1. Architectural quality

Architectural quality (and hence freedom) is a great thing that we must treasure. The design ofa small residential care facility needs the skills of a professional architect to combine buildingand esthetical quality, realize energy and other sustainability targets and above all foster homewarmth and togetherness enabling the residents to choose between privacy and socialactivities. The platform method as implemented by Thinkbuilding encourages flexibility indesigning. The platform concept imposes little restrictions on the architect. The industrialproduction puts no limits on the housing typology or the minimum number of identicalhouses. Materials can be chosen freely and can vary within the same project. Architect choiceis free. The architect gets a briefing of the system and is invited to visit the production hall.

Figure 3 shows on artist impression of the residential care facility for elderly in Barneveld. Itis a pavilion set-up in a rural environment. The project was completed in November 2014.Figure 4 shows a project in Goirle. It is an example of a luxurious residential care block withindividual living areas from 120 m2 to 150 m2 nett floor space. The architect was briefed tocombine a modern external design while encouraging social activities, belonging andtogetherness in the internal lay-out.

Figure 3. Residential care facility in Barneveld, theNetherlands

Figure 4. Luxurious residential care facility inGoirle, the Netherlands

Figure 5 shows a low-cost residential care facility of 400 m2 floor area that was installed inone day and commissioned one month later. Figure 6 shows an example of a modern house,fit for elderly people with in-build care facilities and special attention paid to daylight accessand the connection with the garden.

Figure 5. Budget residential care facilityin Meersen, the Netherlands

Figure 6. Luxurious residential care facility in Goirle, theNetherlands

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4.2. Decentralized energy generation

In the near future all new building must be zero-energy. Thinkbuilding is already able to meetthe requirement of zero-energy. Excellent thermal insulation of the building envelope leads toU values as low that the energy demand of heating, hot water and electricity can be generatedby heat pump and solar panels. Materials are chosen with sustainability in mind addressingthe need of CO2-reduction and avoiding the use of scarce resources and environmentalunfriendly materials.

5. FUTURE INNOVATION AND DEVELOPMENT

The CSO living concept for elderly people, its business plan and financial model will be thesubject of a case-study in the EU-funded research project PROFICIENT, that will createbusiness opportunities for SMEs in the construction sector by exploiting the newly emergingprocess of Collective Self-Organised housing for constructing and retrofitting energy-efficientresidential districts [3]. PROFICIENT responds to the EU-wide trend of self-organisedhousing process in order to boost the quality and the scale of energy-efficient buildings. CSOreflects a raising awareness towards sustainability and the increasing self-managing capabilityof European society. Thinkbuilding will be a demonstrator in PROFICIENT.

Thinkbuilding will also be a demonstrator in the research project INSITER on quality self-inspection techniques [4]. This project within the EU Horizon2020 programme aims toeliminate the gaps in quality and energy-performance between design and realisation ofbuildings with prefabricated components.

More than 70% of all buildings in the EU nowadays are based on prefab components. Thecritical mass of energy-efficient buildings in Europe by 2020 will be achieved throughsustainable building industrialisation. Prefabricated architectural, structural, MEP and HVACcomponents nowadays are designed and manufactured according to high quality andperformance standards. However, realising the targeted performance in design is hampered bycritical shortcomings during on-site construction and refurbishment that cause a lower built-quality and sub-optimal energy-saving in the building lifecycle.

The CSO-concept for elderly citizens and Thinkbuilding will bring practical experience andknowledge to the research projects. The expected research results in the form of innovativebusiness concepts, financial models, new energy technologies and advanced software tools(on BIM, housing configurators and augmented reality) will vice-versa be made available tobe implemented in the present CSO-concept and the Thinkbuilding system. A joint interest isto develop a business plan for EU-wide implementation and commercialization.

6. CONCLUSIONS

CSO-initiatives to develop small-scale residential care facilities for seniors are a possibleand positive answer to the cuts in health care costs and the closing of nursing homes.There is a great potential of self-organizing capacity within the target group, awarenessand acceptance of own responsibilities and a substantial latent spending power.Conditions for CSO-initiatives to come into existence are collaboration between elderlyrepresentatives and local government, smart business models, involvement of

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professionals and training of volunteers from the resident target group.

To realize affordable living the building cost must be reduced by using intelligent buildingconcepts. Research in the past has clarified that affordable, sustainable and high-qualityhousing requires the use of prefab building components and industrial building in factorycircumstances. As concept of proof, the modular building system of Thinkbuilding showsthat set targets of affordability, durability and speed are realistic and achievable.

The project examples show that the building concept offers flexibility and architecturalfreedom. Nett zero energy is achievable through power generation by using geothermalcapacity for heating and solar energy for electricity.

Both business model and building system will be further improved and enriches with newknowledge and results from running EU-funded research projects. These innovations willgo hand in hand with efforts to develop an EU-wide exploitation and commercializationconcept.

REFERENCES

[1] J.J.Botman, Breda, , “Small-scale residential care facilities (in Dutch: Kleinschaligewoonzorg voorzieningen), June 2014.

[2] Thinkbuilding project and project documentation (in Dutch),http://www.thinkbuildingconcepts.nl, October 2014.

[3] R. Sebastian et al., “PROFICIENT”, research project with EU-funding from FP7 forresearch, technological development and demonstration (FP7-2012-NMP-ENV-ENERGY-ICT-EeB nr. 312219, http://www.proficient-project.eu, October 2014.

[4] R. Sebastian et al., “INSITER”, research project with EU-funding (H2020-EeB-2014-RIA nr. 636063, http://www.insiter-project.eu.