USDA Community Facilities Assisted Living Feasibility Study Case Study: Nonprofit Assisted Living Residence with a Special Care Unit in Punxsutawney, Pennsylvania

A 42-unit nonprofit assisted living residence licensed under 55 Pa. Code Chapter 2800, 30 assisted living units and a 12-unit special care unit for memory care, in a Jefferson County borough of 5,558 with a 49-bed community hospital and no licensed assisted living residence within 20 miles, financed with a USDA Community Facilities direct loan at the 4.500 percent poverty rate over 40 years. Total project cost of $12,031,500, debt service coverage of 1.41x at the 90 percent occupancy cap in Year 3 and 1.62x in Year 5, and a written determination of feasible, with any Community Facilities grant treated as upside rather than as a source the loan depends on.

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

MMCG concludes that the proposed 42-unit nonprofit assisted living residence in Punxsutawney, Pennsylvania is feasible under a USDA Community Facilities direct loan of $10,226,775, 85 percent of total project cost, at the 4.500 percent poverty rate tier over 40 years, with sponsor equity of $1,804,725 and a financial reserve of $1,150,000 funded at closing to carry construction-period interest and the first-year lease-up shortfall. The Project reaches 1.14x debt service coverage in its second operating year, 1.41x at the 90 percent occupancy ceiling that USDA applies to assisted living projections in Year 3, and 1.62x by Year 5. The determination holds at the intermediate and market rate tiers, at 1.39x and 1.36x respectively, so the rate tier affects the margin rather than the conclusion. No Community Facilities grant is assumed; at the 55 percent grant tier for which the borough's population and income appear to qualify, coverage would rise to 2.67x, and the study treats that outcome as upside to be pursued rather than relied on. The determination is conditioned on two items that public sources could not close: confirmation from USDA Rural Development's Pennsylvania office that the borough's median household income of $42,183 falls below 80 percent of the state nonmetropolitan median, which sets the poverty rate, and confirmation of the Pennsylvania Department of Human Services licensing path for a new Chapter 2800 assisted living residence with special care designation, including the current per-bed fee and the 90-day minimum application period.

This is an MMCG model study: a complete feasibility analysis performed on a real rural market using public data, prepared to show lenders, nonprofit sponsors and USDA Rural Development staff how MMCG underwrites a Community Facilities direct loan for assisted living. It is not a client engagement and MMCG has no relationship with any sponsor, hospital or landowner in Jefferson County. Unlike MMCG's other assisted living model studies, no marketed parcel is anchored: the borough's commercial land market is thin and the site is carried as a 6-acre allowance at $300,000 on the Route 119 or Route 36 corridor within the borough's water and sewer service area, which a client engagement would replace with a specific parcel. Figures drawn from government sources, the state licensing roster and operator websites are identified as such. 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 competitor census was built from directory sources that repackage DHS licensing data and was not confirmed against the DHS Human Services Provider Directory or the operators' own websites, and the Jefferson County population aged 75 and over was not pulled from the American Community Survey; both are disclosed limitations.

The Project will operate as a nonprofit assisted living residence licensed by the Pennsylvania Department of Human Services under 55 Pa. Code Chapter 2800 with a special care designation for its secured dementia unit, on a 6-acre site in Punxsutawney borough, Jefferson County, Pennsylvania, within the service area of Punxsutawney Area Hospital, a 49-bed community hospital at 81 Hillcrest Drive, and the Penn Highlands Punxsutawney Community Medical Building at 21911 Route 119. The physical program comprises a single-story, 36,500 SF wood-frame building with 30 assisted living apartments (18 studios of 360 SF and 12 one-bedroom units of 480 SF, each with a private bathroom as Chapter 2800 requires), a 12-unit special care unit of 320 SF studios in a secured wing with its own dining and activity room and an enclosed courtyard, a commercial kitchen, a main dining room seating 50, a wellness clinic, a salon, an activity room and chapel, administrative offices, laundry and housekeeping, 40 surface parking spaces and a covered entry; the building is air conditioned throughout and employs a licensed nurse and a dietitian, which are among the Chapter 2800 requirements that distinguish an assisted living residence from a personal care home. The residence will operate 24 hours a day with a staff of 30.5 full-time equivalents under an executive director and a registered nurse director of nursing. The sponsor is a community-based nonprofit corporation, which may be a regional senior care operator of the kind that has used Community Facilities financing in western Pennsylvania or an affiliate of the local hospital, and it will own the land and building directly and hold the license in its own name, as Community Facilities requires. The Project is positioned as the first licensed assisted living residence in a county whose senior care supply consists entirely of personal care homes licensed under Chapter 2600, at an assisted living base rent of $4,750 per month with care levels of $400 to $1,100 and an all-inclusive special care rate of $7,100 per month at opening, against personal care home starting rates of $3,660 to $4,135 in the borough and a statewide assisted living residence median of $6,480.

Marketing and Sales Strategy

The pre-opening campaign runs from the sponsor's existing relationships: the hospital's discharge planners and case managers, the Pennsylvania Mountains Care Network partners at Indiana Regional Medical Center and Armstrong County Memorial Hospital, the Area Agency on Aging, and the congregations and civic organizations of the borough and its surrounding townships. The residence is marketed as the only option in the county that lets a resident age in place with licensed nursing and a secured dementia unit rather than transferring to skilled nursing in DuBois or Indiana, which is the argument that moves a family from a $3,900 personal care home to a $5,450 assisted living residence. Referral development concentrates on the physicians at the Penn Highlands medical building, the home health agencies serving Jefferson County and the elder law practices in Punxsutawney, Brookville and DuBois. The special care unit is marketed to the families of residents in the county's personal care homes whose dementia has progressed beyond what those homes are licensed to manage. Retention runs through the care-level ladder and the special care unit, which together keep a resident in the building from independent assisted living through late-stage dementia.

Amenities

Punxsutawney is a borough of 5,558 residents in southern Jefferson County on the Route 119 and Route 36 corridors, 25 miles south of Interstate 80 at DuBois and 30 miles north of Indiana. The borough is the trade and medical center of southern Jefferson County and northern Indiana County, anchored by Punxsutawney Area Hospital, a 49-bed rural hospital that partners with Indiana Regional Medical Center and Armstrong County Memorial Hospital in the Pennsylvania Mountains Care Network, and by the $7.9 million Penn Highlands Punxsutawney Community Medical Building opened in 2022 on Route 119. The site is carried as a 6-acre allowance on one of the two corridors within the borough's municipal water and sewer service area, flat and served by utilities, at $300,000 (MMCG assumption), which a client engagement would replace with a specific parcel, its survey and its Phase I. A single-story 36,500 SF building with a secured courtyard, 40 parking spaces and a van loop fits on 4 acres, and the balance is open space.

The Project is an essential community facility under 7 CFR 5001.103(a)(1), which names assisted living facilities providing daily living and health care assistance in compliance with state licensure, and the applicant is a community-based nonprofit corporation, one of the three eligible applicant classes with public bodies and federally recognized tribes. The borough's population of 5,558 is below the 20,000 ceiling for Community Facilities. The direct loan term is carried at the program maximum of 40 years, within the useful life of the building.

The rate tier is set from the service area's median household income relative to the Pennsylvania state nonmetropolitan median. Punxsutawney's median household income of $42,183 is 54.1 percent of the statewide median of $77,971, and Jefferson County, itself nonmetropolitan, sits at $58,686; the borough is therefore almost certainly below 80 percent of the state nonmetropolitan median, which places it in the poverty rate tier at 4.500 percent for the April 1 to September 30, 2026 schedule. The state nonmetropolitan median that USDA applies was not located at the study date, and the rate schedule for the period beginning October 1, 2026 had not been posted, so the determination is conditioned on confirmation from the Pennsylvania state office and the study shows coverage at all three tiers. The borough's population exceeds the 5,000 ceiling for the 75 percent grant tier; it falls within the 12,000 ceiling for the 55 percent tier if its income is below 70 percent of the state nonmetropolitan median, which the 54.1 percent ratio to the statewide figure suggests. Grant funds are competitive and limited, and the study sizes the loan to carry the Project without them.

Community Facilities direct loans require the borrower to fund a debt service reserve over the first ten years of the loan equal to one annual installment, and the pro forma carries a short-lived reserve deposit from cash flow after debt service beginning in Year 3. Community Facilities financed the RoseCrest memory support residence in Mars, Butler County with a $3 million loan to Lutheran SeniorLife, and the $39.9 million LifeQuest assisted living and memory care project in Bucks County, and both precedents show the program's willingness to finance Pennsylvania senior care at the scale of this Project.

Pennsylvania licenses two products that the public calls assisted living. Personal care homes are licensed under 55 Pa. Code Chapter 2600, and assisted living residences under Chapter 2800, both by the Department of Human Services Office of Long-Term Living. At December 31, 2025 the state held 992 personal care home licenses with 61,424 beds at about 65 percent occupancy and 63 assisted living residence licenses with 5,407 beds at about 69 percent occupancy; 29 of the 63 assisted living residences are nonprofit. Chapter 2800 carries heavier requirements: larger units with private bathrooms, air conditioning, a licensed nurse and a dietitian, and only a Chapter 2800 licensee may use the words assisted living in its written materials. Memory care is regulated as a special care unit under 2800.231 and following, with a separate special care designation on the license, and the training burden is explicit: each direct care staff person in a special care unit must have 8 hours of initial dementia training within 30 days of hire and 8 hours annually in addition to the 16 hours of annual training required of all direct care staff, and every employee and volunteer must have 4 hours of dementia-specific training within 30 days of hire and 2 hours annually. A personal care home with a secured dementia unit under Chapter 2600 carries 6 hours of dementia training on top of 12 hours of annual training, so the Project's training cost per aide is roughly 40 percent above that of its comparables, and the labor budget carries it.

Licensing fees are a $300 application fee, a per-bed fee set at $75 in the regulation and adjusted for inflation since 2018, and a $150 special care designation fee. The Department's January 2026 guidance states that an applicant should expect the application process to take a minimum of 90 days, that a certificate of occupancy is required before licensure, and that the Department will reinspect a newly licensed residence within three months. The schedule carries 90 days from certificate of occupancy to license and first move-in, and the USDA closing and construction draw schedule carries the license as a condition of the final draw.

Pennsylvania's Medicaid program does not pay room and board in either license category. Community HealthChoices can fund services in these settings but not the residence charge, and the state supplementary payment for supplemental security income recipients, which brings a personal care home resident's combined federal and state benefit to $1,633.30 per month, is tied to the personal care home license; the state's 63 assisted living residences served 68 SSI residents in total at the end of 2025. The Project is therefore modeled at 100 percent private pay, with long-term care insurance and Veterans benefits embedded in the private census.

The primary market area is southern Jefferson County and the adjoining townships of northern Indiana County within a 20-minute drive of the borough, with a secondary draw from Brookville and DuBois for the special care unit.

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

The county's 65 and over share of 25.0 percent and the borough's 27.2 percent are among the highest in Pennsylvania, and the population is shrinking rather than growing, which is the demographic profile of a market whose demand is already present rather than arriving. The 2010 to 2014 American Community Survey counted 2,922 county residents aged 75 to 84 and 1,199 aged 85 and over; those figures are a decade old and must be replaced with the 2020 to 2024 ACS table B01001 counts before the lender relies on the demand model, and MMCG expects the current counts to be modestly higher given the age structure. The income profile is the constraint: a median household income of $42,183, a poverty rate of 20.7 percent and a median home value of $99,000 limit the private-pay depth, and the rate schedule is set accordingly.

The income qualification is set at 35 percent rather than the 50 percent used in MMCG's suburban studies, reflecting the borough's income and home equity profile. The subject's required share of qualified demand, 8 to 10 percent, is high by suburban standards and is the honest measure of the market: a 42-unit residence in a county of 43,255 is a meaningful share of the qualified base. Two facts support it. The county's existing supply is entirely personal care homes, so the subject competes for the residents those homes cannot serve, the ones who need licensed nursing or a secured dementia unit, as much as for their price-sensitive residents; and the special care unit draws from Brookville and DuBois, outside the primary market area, because no secured unit of its license class exists between them. The 90 percent occupancy cap is nonetheless the right ceiling, and the sensitivity cases show that the residence covers its debt down to about 82 percent occupancy.

MMCG identified sixteen licensed personal care homes within roughly 20 miles of the borough and no licensed assisted living residence. Capacities and rates below come from directory sources that repackage DHS licensing data; none was confirmed against the DHS Human Services Provider Directory or the operator's own website at the study date, and the Indiana borough, Marion Center and Mahaffey segments of the ring were not searched.

Competitor Number 1 Lane Avenue Personal Care Home This personal care home is located at 206 Lane Avenue, Punxsutawney, PA 15767 with a listed capacity of 42 beds. Directory sources list starting rates of $3,660 and $4,135 per month, which conflict.

Competitor Number 2 Mahoning Riverside Manor This personal care home is located at 98 Foundry Street, Punxsutawney, PA 15767 with a listed capacity of 44 beds in one source and 28 in another. Rates were not published.

Competitor Number 3 Sprankle Personal Care Home This personal care home is located at 144 Care Home Lane, Punxsutawney, PA 15767 with a listed capacity of 31 beds. Rates were not published.

Competitor Number 4 Paulauskas Country Care Personal Care Home This personal care home is located at 708 Milliron Road, Punxsutawney, PA 15767 with a listed capacity of 26 residents. A directory source lists a starting rate of $4,013 per month.

Competitor Number 5 Mahoning Street Personal Care Home This personal care home is located at 919 West Mahoning Street, Punxsutawney, PA 15767. Capacity was not listed; a directory source lists a starting rate of $3,971 per month.

Competitor Number 6 Peace's Personal Care Home 2 This personal care home is located at 13910 Route 36, Punxsutawney, PA 15767 with a listed capacity of 18. Rates were not published. The operator's Big Run home is listed with 16 secured units.

Competitor Number 7 AM/PM Personal Care Home This personal care home is located at 555 Adrian Road, Delancey, PA, 3.4 miles from the borough, with a listed capacity of 32. Rates were not published.

Competitor Number 8 Haverilla Personal Care Home This personal care home is located at 775 Stonetown Road, Rossiter, PA, 4.9 miles from the borough, with a listed capacity of 24. Rates were not published.

Competitor Number 9 Sun Valley Acres This personal care home is located at 108 Schrader Avenue, Glen Campbell, PA, 12.3 miles from the borough, with a listed capacity of 30. Rates were not published.

Competitor Number 10 Laurelbrooke Personal Care This personal care home is located at 133 Laurelbrooke Drive, Brookville, PA, 15.6 miles from the borough, with a listed capacity of 50, and is operated by Penn Highlands WRC Senior Services. Rates were not published.

Competitor Number 11 Penn Highlands Jefferson Manor This personal care home is located at 417 Route 28, Brookville, PA, 15.6 miles from the borough, with a listed capacity of 48, and is operated by Penn Highlands Healthcare, which reports 276 personal care beds systemwide. Rates were not published.

Competitor Number 12 Brookside Senior Living This personal care home is located at 49 Brookside Lane, Brookville, PA, 15.7 miles from the borough, with a listed capacity of 50. Rates were not published.

Competitor Number 13 Crystal Waters This personal care home is located at 4639 Route 119, Home, PA, 15.9 miles from the borough, with a listed capacity of 66. Rates were not published.

Directory sources also list Back to Basics Personal Care in Dayton (16 beds), Rockdale Personal Care Home in Falls Creek (18 beds) and, in DuBois, The Fountains at DuBois (34 beds), Christ the King Manor, DuBois Village and St. Michael Terrace, with Morning Glory Manor in Reynoldsville. The homes inside the borough total roughly 145 to 161 beds depending on the Mahoning Riverside conflict, all in small, older buildings, and their published starting rates of $3,660 to $4,135 per month sit at 56 to 64 percent of the state's assisted living residence median of $6,480. No assisted living residence or personal care home under construction or approved in Jefferson County was identified in public records at the study date.

The subject cannot price to the state's $6,480 assisted living residence median in a borough whose personal care homes start at $3,660 to $4,135 and whose median household income is $42,183. The opening schedule is set at a base rent of $4,750 per month for the 30 assisted living units, care levels of $400 to $1,100 averaging $700 across the census for a blended $5,450, and an all-inclusive special care rate of $7,100, a 30 percent premium over the blended assisted living figure. The assisted living rate is 32 to 49 percent above the local personal care home starting rates, which is the premium a licensed nurse, private bathrooms, air conditioning and a secured dementia unit command in a county that has none of them, and 16 percent below the state assisted living median. Rates escalate 4.5 percent per year, below the sector's 5.3 percent in-place growth, to Year 3 blended rates of $5,952 and $7,753.

The residence opens with a founders' cohort from the sponsor's referral network and stabilizes at 90 percent in Year 3, the ceiling USDA applies to assisted living projections under 7 CFR 5001.304 and the level MMCG applies to Community Facilities direct projections as a matter of practice.

Other income of $30,000 in Year 1 rising to $69,000 in Year 5 comprises community fees, guest meals and salon and ancillary charges. The lease-up is faster than MMCG's suburban base case because the residence enters a market with no licensed competitor of its class and a sponsor with an existing referral base, and the sensitivity cases test a slower one.

Location: Route 119 or Route 36 corridor, Punxsutawney, PA 15767 Size in SF (Gross): 36,500

Source: Marshall & Swift CoreLogic, MMCG

Total project cost of $286,464 per unit and $330 per square foot sits well below CBRE's July 2026 national benchmark of $388,830 per unit and $364 per square foot, reflecting single-story wood-frame construction, a rural Pennsylvania labor market and a $300,000 land allowance against the $16,000 to $36,600 per unit site cost range in that survey. Hard cost of $253 per square foot is below the $281 to $358 range for mid-level assisted living, which is consistent with the building's single story and the absence of structured parking, elevators and a second-floor life safety package. The financial reserve of $1,150,000 covers construction-period interest of about $276,000 on the direct loan over a 14-month build and the Year 1 lease-up shortfall of $826,238, a total requirement of $1,102,360.

Loan Assumptions

The 4.500 percent rate over 40 years produces a debt service constant of 5.39 percent of the loan, against 8.48 percent for a 25-year bank loan at 7.00 percent, which is the arithmetic that makes a nonprofit assisted living residence feasible in a market where a for-profit one is not. A 15 percent sponsor contribution is a conventional Community Facilities structure; the program can finance a higher share where the applicant demonstrates it cannot obtain credit elsewhere, and a lower one where a grant participates.

The Year 3 operating budget at 90 percent occupancy is built from a staffing plan of 30.5 full-time equivalents priced to the Northwestern Pennsylvania nonmetropolitan wage area, which is the BLS area that includes Jefferson County under the May 2025 definitions.

Labor is 50.4 percent of revenue, above the share at which the largest public operators run their labor, because the rate base is low and Chapter 2800 fixes a licensed nurse and a dietitian in the building regardless of census. The staffing plan carries an executive director, a registered nurse director of nursing, two licensed practical nurses, 16 resident care aides across three shifts including the special care unit, a cook and two dietary aides, two housekeepers, a maintenance technician, 1.5 activities staff, two office and marketing staff and a receptionist. Nursing assistants in the Northwestern Pennsylvania nonmetropolitan area earn a median of $18.54 per hour and home health and personal care aides a statewide median of $14.14, and the model pays aides $16.50, licensed practical nurses $27.00 and the director of nursing $78,000 with a 24 percent burden; the Pennsylvania minimum wage of $7.25 is not binding at any position. The Chapter 2800 training hours are carried as paid time in the labor line. Wages escalate 3.5 percent per year. The property tax line is carried at zero on the basis that a purely public charity's assisted living residence qualifies for exemption in Pennsylvania; the exemption is decided by the county board and may be accompanied by a payment in lieu of taxes, and the sensitivity section shows the effect of a taxed assessment.

The Year 1 shortfall of $826,238 is funded from the financial reserve. The residence covers its debt from Year 2 and builds to 1.62x by Year 5. On USDA's coverage definition for guaranteed loans, which deducts replacement capital expenditure before dividing by debt service, the Year 3 figure is the 1.41x shown, since the replacement reserve is already deducted. Cash flow after debt service of $227,924 in Year 3 funds the Community Facilities debt service reserve deposit of about $55,000 per year with margin.

At Year 3 rates, the residence's fixed operating cost is $1,915,000 and its variable cost is dietary raw food and the management fee.

The 40-year direct loan narrows the distance between the operating break-even and the debt break-even to about 19 points of occupancy, against 23 points on MMCG's bank-financed suburban model, which is the program's contribution to feasibility in a low-income market.

The residence holds coverage above 1.0x in every single-factor case except a 10 percent rate shortfall or a stabilized occupancy of 80 percent, and the combined case of lower rates and slower lease-up reduces coverage to 0.91x. Rate is the binding risk, more than occupancy: in a borough whose personal care homes start below $4,200, a 10 percent miss on the subject's rate schedule is a plausible market outcome, and the sensitivity table is the lender's measure of it. A taxed assessment, if the county board denies exemption, would add roughly $150,000 to $200,000 of annual expense at a stabilized value near $10 million and reduce Year 3 coverage to between 1.05x and 1.14x, which is why the exemption application and any payment in lieu of taxes agreement belong in the sponsor's pre-closing work. The grant case shows what the program can do where funds are available, and it is the case the sponsor should pursue without the loan depending on it.

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 Pennsylvania state nonmetropolitan median household income used by USDA; the Community Facilities direct loan rates for the period beginning October 1, 2026; the 2020 to 2024 ACS table B01001 counts for Jefferson County aged 75 to 84 and 85 and over; the DHS Human Services Provider Directory licensed capacity and legal entity for each competitor, and any rates published on the operators' own websites; the verbatim 55 Pa. Code 2800.231 staffing requirements for special care units and the current CPI-adjusted per-bed fee; the May 2025 Northwestern Pennsylvania nonmetropolitan wages for home health and personal care aides and licensed practical nurses from the BLS data tool; the award dates of the RoseCrest and LifeQuest Community Facilities loans; and any Community HealthChoices payment rate specific to assisted living residences.

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 Community Facilities and B&I, 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.