USDA B&I Assisted Living Feasibility Study Case Study: Memory Care-Weighted Assisted Living Community in Kearney, Nebraska

A 56-unit for-profit assisted living and memory care community, 36 assisted living units and a 20-unit secured memory care wing, on a 4.05-acre parcel on W 39th Street in Kearney, a regional medical and university center of 34,782 that already holds 435 licensed assisted living beds but only two memory care endorsements. Financed with a USDA Business and Industry guaranteed loan carrying the 80 percent guarantee that applies above $5 million, with 24-hour licensed nursing to meet the constant onsite medical care condition. Total project cost of $19,472,434, debt service coverage of 1.26x at stabilization in Year 3 and 1.44x in Year 5 on the Agency's coverage definition, and a written determination of feasible, with the lender's loan at 60 percent of cost because the Kearney rate structure does not carry more.

Model study prepared by MMCG Invest | Michal Mohelsky, J.D., FMVA | October 1, 2026

MMCG concludes that the proposed 56-unit assisted living and memory care community on W 39th Street in Kearney, Nebraska is feasible under a USDA Business and Industry guaranteed loan of $11,683,460, 60 percent of total project cost, with borrower equity of $7,788,974 and a financial reserve of $2,300,000 funded at closing to carry construction-period interest and the lease-up shortfall through the second operating year. The loan exceeds $5 million, so the guarantee is 80 percent under the FY2026 OneRD notice and the lender's unguaranteed exposure is $2,336,692. The Project reaches 1.26x debt service coverage at a stabilized occupancy of 90 percent in Year 3, measured as EBITDA less replacement capital expenditure divided by annual debt service as 7 CFR Part 5001 directs, and 1.44x by Year 5. The loan is sized at 60 percent of cost rather than the 75 percent a lender might otherwise advance because Kearney's rate structure, in which five of the eight licensed assisted living facilities accept the state's Aged and Disabled waiver at $3,167 per month, does not support more debt at 1.25x; the memory care weighting, which serves the one segment of the market with only two endorsed providers, is what makes the Project feasible at all. The determination is conditioned on three items that public sources could not close: confirmation on the USDA Rural Development eligibility map that the parcel is in an eligible rural area for B&I, a City of Kearney zoning verification letter for the parcel, and confirmation from Kearney planning records and the Kearney Hub that no assisted living or memory care project has been approved or begun construction since 2023.

This is an MMCG model study: a complete feasibility analysis performed on a real, publicly marketed parcel using public data, prepared to show lenders, borrowers and USDA Rural Development staff how MMCG underwrites a Business and Industry guaranteed loan for assisted living and memory care. It is not a client engagement, MMCG has no relationship with the landowner or the listing broker, and the analysis does not represent an offer, an appraisal or a recommendation to buy the parcel. The licensed capacity, operator, license number and service designations of the eight Kearney competitors are taken from the Nebraska Department of Health and Human Services assisted living facility roster updated September 15, 2026, a primary source; their assisted living and memory care unit split, year opened and published rates were not confirmed from the operators' own websites at the study date and are a disclosed limitation. Figures labeled MMCG assumption are underwriting inputs set by MMCG from industry benchmarks, and items that could not be verified from a primary source at the study date are listed in the Conditions and Limitations section rather than estimated silently.

The Project will operate as a licensed Nebraska assisted living facility with a memory care endorsement under 175 NAC 4, on a 4.05-acre parcel on W 39th Street in the growing northwest quadrant of Kearney, Buffalo County, Nebraska, within the service area of CHI Health Good Samaritan, a 175-bed general acute hospital, and Kearney Regional Medical Center, a 118-bed hospital operated by Bryan Health. The physical program comprises a single-story, 50,000 SF wood-frame building with 36 assisted living apartments (20 studios of 400 SF and 16 one-bedroom units of 540 SF), a 20-unit secured memory care wing of 340 SF studios with its own dining and activity room, enclosed courtyard and staff station, a commercial kitchen, a main dining room seating 48, a wellness clinic with an exam room and a nurses' station staffed around the clock, a salon, a theater and activity rooms, administrative offices, laundry and housekeeping, 56 surface parking spaces and a covered porte-cochere. The community will operate 24 hours a day with a staff of 46 full-time equivalents, including an executive director, a registered nurse director of nursing, 4.2 licensed practical nurse FTE providing 24-hour licensed nursing coverage, 20 resident care aides across three shifts with a dedicated memory care team, a memory care program director, dining, housekeeping, maintenance, activities, sales and business office staff; the 24-hour nursing coverage is the operating basis on which the Project meets the B&I condition that constant medical care be provided and available onsite to residents. The borrower will hold the real estate and the business in a single for-profit operating entity, which is the structure B&I guarantees. The Project is positioned as the newest purpose-built private-pay community in Kearney and the market's third memory care provider, at an assisted living base rent of $5,450 per month with care levels of $500 to $1,500 averaging $900 and an all-inclusive memory care rate of $8,700 at opening, against a waiver rate of $3,167 that caps the effective price at five of the eight existing facilities and a Nebraska private-pay median in the range of $6,100 to $6,350.

Marketing and Sales Strategy

The pre-opening campaign opens a leasing office on 2nd Avenue twelve months before certificate of occupancy and builds a founders' list against refundable deposits, with the memory care wing marketed first because the shortage is sharpest there: Kearney CountryHouse is the only dedicated memory care operator in the city and the only other endorsement is a wing at Prairie View Gardens. Referral development concentrates on the discharge planners and case managers at Good Samaritan and Kearney Regional, the neurology and geriatric practices attached to both, the home health agencies serving Buffalo County, and the family physicians in the five-county trade area of Dawson, Phelps, Kearney, Sherman and Custer counties, whose residents use Kearney as their medical and retail center. Digital acquisition targets assisted living and memory care searches across central Nebraska, since Kearney draws from a trade area larger than the city. The assisted living units are marketed to private-pay households as a step up in building, dining and nursing coverage from the waiver-certified competitors, not as a waiver alternative, and the sales team is trained to screen for private-pay capacity at inquiry. Retention runs through the care-level ladder and the memory care wing, which together keep residents in the building as acuity rises.

Amenities

The subject is a 4.05-acre parcel on W 39th Street in Kearney, zip code 68845, marketed on LandWatch at $862,684, or about $213,000 per acre, in the city's northwest growth quadrant between 2nd Avenue and the Kearney Regional Medical Center campus. The study underwrites the asking price. Alternates in the same submarket include a 5.13-acre parcel at 4400 Imperial Avenue at $300,000 and three tracts at 17th Avenue and 56th Street of 2.34 to 6.34 acres at prices that conflict between the Century 21 Commercial and LoopNet listings, so the asking prices on those tracts would need confirmation with the broker before use. The parcel's zoning was not confirmed at the study date and the determination is conditioned on a City of Kearney zoning verification letter for an assisted living facility; Kearney's zoning code treats institutional residential uses by district and may require a conditional use permit. A single-story 50,000 SF building with a secured courtyard, 56 parking spaces and a bus loop fits on 4.05 acres at a floor area ratio of 0.28.

Kearney city had 33,790 residents in the 2020 Census and 34,782 in the July 1, 2025 estimate, below the 50,000 threshold at which a city or town ceases to be rural under 7 CFR 5001.3. Buffalo County passed 50,000 at 51,172, but the rule tests cities and their contiguous urbanized areas, not counties. The nearest city above 50,000 is Grand Island at 53,943, a separate city in Hall County 45 miles east whose urbanized area is not contiguous with Kearney's. On that analysis the parcel is B&I eligible, and the determination is conditioned on the USDA Rural Development eligibility map confirming it.

The B&I eligibility condition for senior care is specific. 7 CFR 5001.105 admits nursing homes and assisted living facilities where constant medical care is provided and available onsite to the residents. The Project's staffing plan places a licensed practical nurse in the building on every shift under a registered nurse director of nursing, with the memory care endorsement that Nebraska's roster tracks as a separate service designation, and the cost of that coverage, about $420,000 per year above a standard assisted living pattern with a nurse on call, is carried in the labor budget. The Project is a new business borrowing more than $1,000,000, so an independent feasibility study is required under 7 CFR 5001.306(a)(3)(i), and this study is prepared to Appendix A to Subpart D of Part 5001.

Under the FY2026 OneRD notice published March 9, 2026, the guarantee on a B&I loan from $5 million to $25 million is 80 percent, the initial guarantee fee is 3.0 percent of the guaranteed portion and the annual retention fee is 0.55 percent of the outstanding guaranteed balance, with a further 0.50 percent fee if the loan note guarantee is issued before construction is complete. On the $11,683,460 loan the guaranteed portion is $9,346,768, the initial fee is $280,403 and the first-year retention fee is about $51,400. The FY2027 notice had not published at the study date.

Nebraska licenses assisted living facilities through the Department of Health and Human Services under 175 NAC 4, with licenses expiring April 30 each year and separate service designations on the roster for an Alzheimer's unit, a memory care endorsement, complex nursing interventions and Aged and Disabled waiver certification; the state held 277 licensed facilities with 13,957 beds at September 15, 2026. The specific memory care endorsement standards were not pulled at the study date and are a disclosed limitation. Nebraska's certificate of need law reaches nursing home and rehabilitation beds and defines a long-term care bed to exclude residential care beds, so no certificate of need is required for assisted living or memory care, and new competitors can enter freely; the pipeline check is accordingly a condition of the determination.

Nebraska's Medicaid Aged and Disabled waiver pays assisted living facilities a standard monthly rate for a single-occupancy unit in a rural county of $3,167, of which $2,248 is the Medicaid share and $919 is the resident's room and board, effective January 1, 2026, with a multiple-occupancy rate of $2,583; rural rates rose to parity with urban rates in 2026. A bill to create a separate waiver memory care rate, estimated in its fiscal note at $172 per day, was introduced in 2025 and has not been enacted, and the waiver renewal submitted to CMS in March 2026 caps waiver services at 150 percent of the average nursing facility rate. Five of Kearney's eight licensed facilities are waiver-certified, which means that for most of the market's 435 beds the effective rate is $3,167 for a waiver resident. The Project is modeled at 100 percent private pay and the sensitivity section shows the effect of a 20 percent waiver census in the assisted living units.

The primary market area is Kearney and Buffalo County, with a secondary trade area of Kearney, Dawson, Phelps, Sherman and Custer counties whose residents use Kearney as their regional medical and retail center.

Source: U.S. Census Bureau, QuickFacts, Vintage 2025 estimates and ACS 2020 to 2024.

The county's 65 and over share of 17.9 percent is held down by the University of Nebraska at Kearney, whose fall 2025 headcount was 5,699 and fall 2026 headcount 5,477, and its median household income of $75,911 and median home value of $246,400 are the private-pay base for a memory care product priced well above the waiver rate. Kearney County to the south adds 6,790 residents and the Kearney micropolitan area totals 57,962; the Dawson, Phelps, Sherman and Custer county populations were not pulled at the study date. The city-level 65 and over share, median household income and home value, and the county's 75 and over and 85 and over counts from ACS table B01001, were not pulled and are disclosed limitations; MMCG estimates the county's 75 and over population at roughly 3,900 and its 85 and over population at roughly 1,100 from the age structure of comparable Nebraska counties (MMCG estimate), to be replaced before the lender relies on the demand model.

The assisted living market in Kearney is supplied: 435 licensed beds against an estimated private-pay qualified base of 476 means that the subject's 32 assisted living units compete for share with eight operating facilities, which is why the study prices them as a private-pay step-up and sizes the loan conservatively. The memory care market is not: two endorsed providers with roughly 60 to 70 beds between them against an estimated 233 qualified prospects, in a city that serves a five-county trade area with no other secured memory care, is the demand case for the Project's 20-unit wing and for the memory care weighting of the program.

MMCG identified eight licensed assisted living facilities in Kearney from the Nebraska DHHS roster updated September 15, 2026, and five in the surrounding communities. Licensed beds, licensee, license number and service designations are from the roster; the assisted living and memory care split, year opened and rates were not confirmed from the operators' own websites at the study date.

Competitor Number 1 Broadwell Kearney Senior Living This assisted living facility is located at 617 22nd Avenue, Kearney, NE 68845 and is licensed for 90 beds (license ALF404) to GCP II Kearney Senior Living, LLC, a for-profit licensee. The roster lists no waiver certification and no memory care designation. Rates were not published.

Competitor Number 2 Good Samaritan Society, Prairie View Gardens This assisted living facility is located at 1705 Prairie View Place, Kearney, NE 68845 and is licensed for 60 beds (license ALF137) to the Evangelical Lutheran Good Samaritan Society, a nonprofit. The roster lists Aged and Disabled waiver certification, an Alzheimer's unit, complex nursing interventions and a memory care endorsement. Rates were not published.

Competitor Number 3 Kinship Pointe Northridge This assisted living facility is located at 5410 17th Avenue, Kearney, NE 68845 and is licensed for 55 beds (license ALF458) to 5410 17th Ave NE Opco, LLC of Springfield, Missouri, a for-profit licensee; it appeared on the 2012 roster as Emeritus at Northridge Place. The roster lists waiver certification. Rates were not published.

Competitor Number 4 Brookestone Gardens This assisted living facility is located at 2615 West 11th Street, Kearney, NE 68845 and is licensed for 54 beds (license ALF381) to VSL Kearney, LLC, a for-profit licensee, colocated with an 80-bed nursing facility. The roster lists no waiver certification and no memory care designation. Rates were not published.

Competitor Number 5 Cambridge Court This assisted living facility is located at 4107 Central Avenue, Kearney, NE 68847 and is licensed for 48 beds (license ALF024) to the Bethesda Foundation. The roster lists waiver certification. Rates were not published.

Competitor Number 6 Wel-Life at Kearney This assisted living facility is located at 5616 4th Avenue, Kearney, NE 68845 and is licensed for 48 beds (license ALF188) to Kismet EAR-A, LLC, a for-profit licensee. The roster lists waiver certification. Rates were not published.

Competitor Number 7 Homestead of Kearney This assisted living facility is located at 4205 6th Avenue, Kearney, NE 68845 and is licensed for 44 beds (license ALF173) to Midwest Homestead of Kearney Operations, LLC, a for-profit licensee. The roster lists waiver certification. Rates were not published.

Competitor Number 8 Kearney CountryHouse This memory care facility is located at 5605 K Avenue, Kearney, NE 68847 and is licensed for 36 beds (license ALF467) to Kearney Countryhouse, LLC, a for-profit licensee. The roster lists an Alzheimer's unit and a memory care endorsement and no waiver certification; the change of license number since the 2012 roster suggests a change of ownership, which was not verified. Rates were not published.

Outside the city, the roster lists Seneca Sunrise in Ravenna (50 beds, waiver), Bethany Home in Minden (75 beds, waiver), Chrisoma West in Holdrege (60 beds, waiver, Alzheimer's unit), Holdrege Memorial Homes (45 beds, waiver) and Ridgeway Senior Living in Lexington (53 beds, waiver), with no licensed facility in Gibbon or Elm Creek, and Grand Island's eleven facilities total 510 beds with seven Alzheimer's units. No assisted living or memory care project approved or under construction in Kearney since 2023 was identified in the Kearney Hub or in city planning records at the study date; that absence is unverified and is a condition of the determination.

The Kearney market has two price points. For the five waiver-certified facilities, the effective rate for a waiver resident is $3,167 per month, and private-pay rates at those facilities are anchored near it. The private-pay market, led by Broadwell at 90 beds and Brookestone Gardens, sets the ceiling, and the CareScout 2025 Nebraska median for an assisted living community sits between $6,093 and $6,350 depending on the republication. The subject's opening schedule is a base rent of $5,450 with care levels of $500 to $1,500 averaging $900, for a blended assisted living revenue of $6,350 per occupied unit, at the state median, and an all-inclusive memory care rate of $8,700, a 37 percent premium over the blended assisted living figure that reflects the dedicated staffing of the secured wing and the absence of a third memory care provider in the market. Rates escalate 4.5 percent per year to Year 3 blended rates of $6,934 and $9,501. The rates of Broadwell, Prairie View Gardens and CountryHouse from their own websites are the first item a client engagement would close.

Other income of $80,000 in Year 1 rising to $170,000 in Year 5 comprises community fees, second-occupant fees, guest meals and ancillary charges. The memory care wing is expected to lease faster than the assisted living units, and the blended ramp is carried for simplicity; the sensitivity section tests assisted living at 80 percent with memory care at 90 percent.

Location: W 39th Street, Kearney, NE 68845 Size in SF (Gross): 50,000

Source: Marshall & Swift CoreLogic, MMCG

Total project cost of $347,722 per unit sits below CBRE's July 2026 national benchmark of $388,830 per unit, reflecting single-story construction in a central Nebraska labor market and a land cost of $15,405 per unit at the bottom of the $16,000 to $36,600 per unit site cost range in that survey. Hard cost of $278 per square foot sits at the low end of the $281 to $358 range for mid-level assisted living. The lender fee line carries the 3.0 percent B&I guarantee fee of $280,403 on the guaranteed portion plus the lender's origination fee. The financial reserve of $2,300,000 covers construction-period interest of about $566,000 on the loan over a 15-month build and the lease-up shortfall of $1,607,230 in Year 1 and $123,263 in Year 2, a total requirement of $2,296,000.

Loan Assumptions

The loan is sized to 60 percent of cost because that is the level at which Year 3 coverage clears 1.25x on the Agency's definition; at 75 percent of cost the loan would be $14,604,000, annual debt service $1,323,700 and Year 3 coverage 1.01x. B&I's tangible balance sheet equity requirement for a new business is 20 percent, so the structure exceeds the program minimum by a wide margin, and the equity requirement is the central finding of the study: in a market where most of the licensed supply accepts a $3,167 waiver rate, a new private-pay community carries less debt per unit than the national cost basis would suggest.

The Year 3 operating budget at 90 percent occupancy is built from the staffing plan of 46 full-time equivalents, including 24-hour licensed nursing, priced to the South Nebraska nonmetropolitan wage area that includes Buffalo County under the May 2025 BLS definitions.

Labor is 42.4 percent of revenue. The May 2025 wages for home health and personal care aides, nursing assistants, licensed practical nurses and registered nurses in the South Nebraska nonmetropolitan area were not retrieved from the BLS data tool at the study date, and the model pays resident care aides $18.00 per hour, licensed practical nurses $29.00 and the registered nurse director of nursing $82,000 with a 24 percent burden, against a Nebraska minimum wage of $15.00 in 2026 that rises 1.75 percent annually from 2027 under LB258. The 4.2 FTE of licensed practical nurse coverage required to keep a licensed nurse in the building on every shift costs about $420,000 per year including burden, and it is the line that distinguishes a B&I-eligible community from a standard one. The property tax line is carried at $300,000, about 1.6 percent of a stabilized value near $19 million, as an allowance; the Buffalo County consolidated levy for a Kearney commercial parcel was not pulled, and the City of Kearney's own rate of $0.14887 per $100 of valuation is one component of it. Wages escalate 3.5 percent per year.

The Year 1 and Year 2 shortfalls are funded from the financial reserve. The Project covers its debt from Year 3 on the Agency's definition and builds to 1.44x by Year 5 as rents escalate at 4.5 percent against expenses at 3.5 percent. The annual retention fee of 0.55 percent of the guaranteed balance, about $51,400 in Year 1 and declining, is carried within the lender's rate in this model; a lender that passes it through separately would reduce Year 3 coverage by about 0.05x.

At Year 3 rates, the community's fixed operating cost is $3,110,000 and its variable cost is dietary raw food and the management fee.

The 1.25x threshold at 89.7 percent sits just below the 90 percent stabilized forecast, which is the arithmetic behind the 60 percent loan: a higher advance moves the threshold above 90 percent and the Project cannot clear it under the USDA occupancy ceiling.

The Project holds coverage at or above 1.0x in every single-factor case except a new competitor that holds it to 80 percent occupancy, which reduces Year 3 coverage to 0.81x. Four cases sit at 1.00x to 1.05x and together describe the Kearney risk precisely: an assisted living wing that leases to 80 percent while memory care fills, a 20 percent waiver census in the assisted living units, a 5 percent rate miss, or stabilized occupancy of 85 percent, each of which the waiver-anchored market makes plausible. The memory care wing is the mitigant in the first three, because its revenue does not depend on the assisted living price point. The combined downside of lower rates and slower lease-up reduces coverage to 0.84x and defines what the lender is accepting; it recovers to about 0.98x in Year 5 on the rate escalation.

The determination of feasible is subject to the following conditions precedent:

The following items could not be verified from a primary source at the study date and are disclosed: the parcel's zoning and current listing status, and the conflicting asking prices on the 17th Avenue and 56th Street tracts; the assisted living and memory care unit split, year opened and published rates of the eight Kearney competitors from their own websites; the 175 NAC 4 memory care endorsement standards; the Kearney city 65 and over share, median household income and home value, the Buffalo County 75 to 84 and 85 and over counts from ACS table B01001, and the Dawson, Phelps, Sherman and Custer county populations; the hospital name attached to the 175-bed roster entry in zip code 68847; the May 2025 South Nebraska nonmetropolitan wages for aides, nursing assistants, licensed practical nurses and registered nurses from the BLS data tool; the CareScout 2025 Nebraska assisted living median, which conflicts between republications; and the Buffalo County consolidated levy for the parcel.

This model study applies the methodology described on MMCG's assisted living feasibility study and USDA assisted living feasibility study pages. MMCG prepares assisted living feasibility studies for USDA B&I and Community Facilities, SBA 7(a) and 504, HUD Section 232 and conventional lenders nationwide, with engagements from $4,900 and delivery in 9 to 16 business days.