Builders Building Relationships
HDC Development, headquartered in St. Joseph, Minnesota, is about more than constructing buildings, it is about building relationships and trust, says Chief Executive Officer Travis Scott. Since 1970, the company has completed over eight thousand housing units and built or made major additions to more than 150 facilities while remaining true to its foundations of providing quality seniors’ accommodations at a time when the need for them is skyrocketing.
According to the Population Reference Bureau report, ‘Aging in the United States,’ authored by Mark Maher and published in January 2016, “baby boomers born between 1946 and 1964 will reshape America’s older population.”
In the projected demographic shift, “Americans aged 65 and over will more than double from 46 million today to over 98 million by 2060, and the 65-and-older age group’s share of the total population will rise to nearly 24 percent from 15 percent.”
The report goes on to say, “many parts of the country – especially counties in the rural Midwest – are ‘aging in place’ because disproportionate shares of young people have moved elsewhere.” Added to that is the “steep rise in the number of Americans living with Alzheimer’s disease, which could nearly triple by 2050 to 14 million, from 5 million in 2013,” and which will greatly increase the demand for memory care facilities.
Providing accommodation for this growing demographic, a result of the baby boom and the fact that people are living longer is something developers and construction companies are viewing as a lucrative market. However, moving into it may not be as easy as it seems. Facilities for independent living, assisted living, memory care and skilled nursing care all have unique considerations.
What sets HDC Development apart from other companies is that it has over forty years of experience building senior care facilities that are more like real homes than institutions. In fact, that is how the company began in 1970, by constructing quality senior care facilities while building strong relationships with the facility owners.
And those relationships have helped the company grow as many of its projects are for repeat clients. For example, in 2014 it returned to Grimes, Iowa to add a seven-unit skilled nursing addition to the ninety-four-unit independent living, assisted living and skilled nursing facility built in 2010. In 2013 it returned to Sedalia, Missouri to add thirty assisted living units to the fifty-four-unit independent housing facility constructed by the company in 2006. And in 2016, it moved into the second phase of a project in Ames, Iowa, which saw thirty-nine independent living units and garages added to the 107-unit independent, assisted living and skilled nursing facility completed in 2013. “It’s not uncommon at all to plan for a future expansion during the design phase of the initial concept,” says Scott.
That kind of repeat business speaks volumes about the quality of the relationship and the level of trust between HDC and its customers. Contractors and construction management teams do not get invited back if owners are not satisfied the first time, but in the case of HDC, they obviously are.
There is reassurance for them in knowing that HDC has some of the most experienced people in the industry. Roger Holtberg, chairman of the advisory board, has been with the company for twenty-two years, has worked in senior housing construction for thirty-one years and is a licensed nursing home administrator. James Lemke, vice chairman, has worked in the construction industry for forty-five years, twenty-nine of them with HDC. Then there is the company’s chief financial officer and senior project manager Tom Mazacek who has worked in the industry for twenty-eight years, the last thirteen with HDC. Travis Scott, chief executive officer and senior project manager, joined the team five years ago but has twenty-one years of diverse construction experience behind him.
“Our employees are our backbone,” Scott says, “and that is what continues to make us successful, is having this core A team. We have a very strong talented group of superintendents – in my opinion some of the most qualified in the industry. All of these guys have been in the industry for 20 plus years and most with HDC for at least 15 years; in fact, some of our senior guys have punched the same time clock for 26 years. I tell these guys this whenever I can and commend them for their efforts. We all lean on each other, and we all have roles to play, but you’re only as good as the person sitting beside you. I truly value our team.”
Scott says that, “we lean on our team a lot, on our construction team, our controllers, our office administration, our project managers. We all have a common focus, and that’s to focus on the relationship with our customer, on the quality and efficiency of what we’re providing, and that carries on to the subcontractor, the guy who’s actually completing the work in the field. With forty years in the business, we’ve lived and learned not to bring a team to a project that won’t be successful. If they fail, we fail. We are not interested in failure; we don’t point fingers, we find solutions. It’s the core of what we do.”
Business in Focus caught up with Scott as he was driving through the rolling hills and farm country of Iowa. He had attended a project meeting in Kansas and was heading back to his office in St. Joseph, MN. Catching up with him can be a bit of a challenge – the next day he told us he would be heading to another project meeting in Montana – but it is never a challenge for customers.
Developing and maintaining relationships with them is a top priority, hence the frequent road trips throughout the Midwest – to the Dakotas, Iowa, Kansas, Missouri, Wisconsin, and Montana. “You have to develop relationships with the customer and maintain that relationship because that’s one of the key things in this industry. As far as I’m concerned, the relationship you have with your customers and with your subcontractor supplier base is really the most important thing, and it’s built on trust.”
Although HDC is licensed to work in fourteen states, Scott says HDC prefers to do work within a radius of a ten- to twelve-hour drive. He describes that as a comfortable distance that allows staff to respond appropriately to the demands of the project. “We actively work on between five and seven projects in the construction phase and on average between four and six in the design and development phase at the same time – seems like we are always on the move. So, essentially we have a rather consistent turnover. Once we close the doors on one, we are usually ready to start another.”
‘Closing the doors,’ however, is not an entirely accurate statement. While the project is complete and the keys are turned over to the owner, the facility is still under a warranty period. “We continue to work with the owners to keep everything functional and of good quality for a period of time,” he says, which, in the case of memory care and skilled nursing facilities, includes meeting state healthcare and heightened safety and security codes and regulations.
At the same time, HDC remains mindful of the kind of experience the senior residents will have, and through a design-build program, will work with a developer, “who comes to us with a conceptual idea, and we can pair them with an architect who will help bring their concept to fruition.” As well, through its many years of experience, it can make suggestions that will improve the quality of life for the seniors living there.
“If you can give people a spot to gather, a place for a simple game of pool, a salon, a coffee area where they can sit in the morning and visit, or a place to do crafts, it helps build community. This kind of thing doesn’t have a huge cost impact on the project, but there’s a lot of personal value for the people who live there,” Scott explains.
“People with dementia have to be housed and monitored in an area for their own safety, but within it we can try to contribute something in the architectural design and put indoor gardens inside the memory care area. Little things like that make people feel as if they’re at home. There’s also what we call a ‘wander garden,’ outside the memory care areas and it will have some sidewalks where they can walk safely. It’s secured, but there will be planter boxes, grass and a patio-like feel. We’re the contractors, not the architects or developers, so it’s very much a collaborative effort, but we can come up with ideas and solutions. It’s always a partnership,” he says.
“Budgets are the driving force behind decisions and the ultimate factor in the process. We can’t build the Taj Mahal in rural Iowa because rural Iowa residents cannot afford to live there and frankly most don’t want to live there. These communities need to be moderate, affordable, and enjoyable, so there must be a balance,” explains Scott.
“Under most circumstances, we’re building moderate fit and finish type projects, because we work with developers who understand the dollars and cents side of the business; they have to make a profit to be successful, their success is our success. We don’t seek prestigious awards, but we get a huge amount of gratification from a pat on the back when we’ve completed the project and hear the owner say, ‘Great job! This project went smooth, and we’re looking forward to doing again.’ To us, that is the most prestigious award we could ever be given.”