Choosing a Life Plan Community, like Clermont Park in South Denver, is one of the most important financial and lifestyle decisions active older adults make. While amenities, residences, dining, and activities are all important, it’s equally critical to evaluate a Life Plan Community’s financial stability and strength.
Many older adults invest a significant entrance fee when they move to a Life Plan Community, securing access to a continuum of care and services should they be needed in the future. That investment often represents a substantial portion of their retirement savings or home sale proceeds, making it essential to evaluate whether the organization is financially stable and well-positioned to fulfill its long-term commitments to residents. With news reports of life plan communities in other regions of the U.S. closing their doors without refunding entrance fees, it’s important for older adults to know how to evaluate the financial health of the communities they are considering.
Fortunately, assessing a community’s financial health doesn’t have to be overwhelming. Understanding the key indicators and asking thoughtful questions can help you make an informed decision with greater peace of mind.
How Can You Determine a Life Plan Community’s Financial Viability?
The vast majority of Life Plan Communities honor their contractual commitments. However, several factors can influence the timing or certainty of entrance fee repayments. Understanding these considerations can help you make a more informed decision.
Understand Occupancy Levels And Trends
One of the strongest indicators of a community’s financial health is occupancy. Communities with consistently high occupancy generally generate more predictable cash flow, making it easier to meet ongoing financial obligations and invest in the future.
Conversely, declining occupancy over an extended period can create financial pressure. While a temporary dip isn’t necessarily cause for concern, prospective residents should ask about current occupancy trends and how the community has performed over time.
Review The Community’s Financial Health
Many non-profit Life Plan Communities publish audited financial statements each year, providing prospective residents with valuable insight into the organization’s financial strength. Look for information on:
- Operating performance
- Cash reserves
- Debt levels
- Occupancy trends
- Long-term financial planning
Clermont Park is one of three communities owned and operated by Christian Living Neighborhoods (CLN), a wholly-owned subsidiary of Christian Living Communities (CLC), a mission-driven, non-profit organization that reports the financial performance of its communities through consolidated audited financial statements. Rather than evaluating Clermont Park as a standalone entity, prospective residents can review the organization’s consolidated financial report to gain insight into the overall financial strength, stability, and long-term stewardship. View the most recent Christian Living Communities Consolidated Financial Report.
If you’re unfamiliar with financial statements, don’t hesitate to ask your financial advisor or the community’s leadership to explain the highlights and what they mean for residents.
Pay Attention To Credit Ratings
Independent credit agencies, such as Fitch Ratings, evaluate the financial strength of many Life Plan Communities. These ratings validate that a Life Plan Community is in a strong and stable financial position, giving residents, families, and team members a clear measurement of the organization’s financial health.
While a lower rating doesn’t automatically indicate financial trouble, a recent downgrade may be worth discussing with community leadership. For example, a lower rating could indicate that an organization took on additional debt to remodel or redevelop a community. Ask what contributed to the change and what steps the organization is taking to strengthen its financial position.
Understand How Entrance Fee Refunds Work
Not all entrance fee contracts are structured the same. Some communities offer partially refundable plans, while others provide higher refundable options. Just as important as deciding the refund percentage is understanding when those funds are returned.
Ask questions such as:
- Under what circumstances is my entrance fee refunded?
- How long have refunds historically taken?
- Does repayment depend on my residence being reoccupied?
- What happens if occupancy slows?
Knowing these answers upfront can help you avoid unexpected surprises later.
Learn About State Oversight
State regulations governing Life Plan Communities vary considerably. Some states require communities to meet specific reserve requirements, provide detailed financial disclosures, or undergo regular regulatory reviews.
Understanding the protections available in your state can provide additional confidence as you evaluate your options. Christian Living Communities is regulated by Colorado’s Department of Financial Services, which reviews Life Plan Communities’ annual audits to confirm their compliance and that they are maintaining financial reserves as required by state statutes and regulations.
Look For Transparency From Leadership
Perhaps the most telling sign of a financially healthy organization is how openly leadership discusses its financial performance.
Communities that willingly share audited financial statements, answer difficult questions, explain their financial strategy, and discuss both opportunities and challenges typically demonstrate a strong culture of transparency and responsible stewardship. A willingness to have these conversations often reflects confidence in the organization’s long-term financial outlook.
CLC leadership visits with residents at each of the three CLN communities on a quarterly basis to review the previous quarter’s financial performance and progress to organizational goals.
Does Non-Profit or For-Profit Ownership Affect Financial Stability?
Many prospective residents wonder whether non-profit Life Plan Communities, like Clermont Park, are financially stronger than for-profit organizations. The reality is more nuanced.
There are financially successful organizations in both sectors, and there are communities that have experienced financial challenges regardless of ownership structure. Financial stability depends on sound leadership, responsible planning, strong occupancy, prudent debt management, and effective operations, not simply tax status.
That said, there are important differences in how financial resources are typically used.
Non-profit Life Plan Communities generally reinvest available operating surpluses back into the community. Those funds may support campus renovations, expanded programming, technology upgrades, staff development, resident services, and future improvements designed to enhance quality of life.
For-profit organizations, while also investing in their communities, are accountable to owners or shareholders and may distribute a portion of earnings as profits.
Neither model automatically guarantees greater financial security. Instead, prospective residents should evaluate each organization individually by reviewing its financial performance, leadership, occupancy trends, governance, strategic planning, and willingness to provide transparent financial information.
Ultimately, a well-managed community, regardless of ownership structure, is far more important than the label itself.
How Does Clermont Park Protect Entrance Fees?
As a non-profit, Clermont Park’s parent organization, Christian Living Communities (CLC), takes a conservative and fiscally responsible approach to growing our business – which has allowed us to successfully endure various economic cycles for more than five decades. We are regulated by the State of Colorado, and submit financial reports for annual audits to demonstrate compliance and that we maintain adequate financial reserves as required by Colorado’s statutes and regulations.
Our entrance fee policy fully adheres to Colorado law, and CLC has consistently exceeded our bond covenants’ requirements for days cash on hand. Since becoming a continuing care retirement community (CCRC), CLC’s conservative financial management and investment strategy has enabled CLN to timely return all applicable returnable entrance fee percentages to residents in accordance with their residency agreements.
Choose A Community Built For The Future
Financial stability is only one part of choosing the right Life Plan Community, but it’s one of the most important. Taking time to understand a community’s financial strength, entrance fee policies, occupancy trends, and organizational transparency can help you make an informed decision that supports both your lifestyle and your long-term financial security.
At Clermont Park, we believe informed decisions lead to greater confidence. As a non-profit Life Plan Community serving older adults in South Denver, we’re committed to transparency, responsible stewardship, and investing in the future of our community. We invite you to schedule a personal tour, meet our team, ask questions, and discover how Clermont Park has been helping older adults plan confidently for retirement while enjoying an engaging, low-maintenance lifestyle.
