A Roanoke nonprofit health care group plans to buy and renovate the former Shenandoah Homes as part of an initiative to find affordable ways for the region’s elderly and disabled to stay out of nursing homes.

Kissito Heathcare Inc. is paying $1.25 million for the apartment building now known as Hawthorne Towers, and plans to spend $2.2 million renovating it, Chief Executive Officer Tom Clarke said this week.

The aim is to provide affordable apartments for the elderly and people with disabilities — including people who would like to move out of nursing homes if they had the right support services and could find a place that they could afford on their Social Security or disability checks, Clarke said.

At the same time, Kissito plans to introduce a new Medicaid program that provides support for people who could go to a nursing home for care, but who would rather stay in their homes or in affordable apartments, like those it plans to open at Hawthorne Towers.

Kissito is setting up a clinic and adult day center in the Valleypointe business park to anchor the new Medicaid service, which the federal Centers for Medicare and Medicaid Services calls its Program for All-Inclusive Care for the Elderly, or PACE. The aim is to provide quality care at a lower cost than nursing homes to people who are frail or disabled enough to qualify for nursing home care.

The center will have a team including a physician, full-time occupational and physical therapists and nurses. Kissito will run a transportation service for PACE participants so they can get to the center.

Kissito will operate the PACE program in the Roanoke Valley and Montgomery County, and Clarke said he hopes to open additional clinic-and-day-center operations and affordable apartments across the region.

As part of that housing effort, Kissito also is spending $460,000 to buy and renovate a house at 301 Gilmer Ave. N.W. in Roanoke that it will turn into 10 low-cost apartments for the elderly and disabled, in addition to Hawthorne Towers.

Clarke said Hawthorne needs a lot of work.

“A lot of the units are empty, so when something breaks, they’ll go and fetch a toilet or whatever it is from a vacant apartment,” he said.

He said only about 40 of Hawthorne’s 144 units are occupied. Kissito will make sure the current occupants have a place to live once renovations start, he said.

Clarke said he plans to turn some of Hawthorne’s studio apartments into units that families could use, renting them to people interested in learning how to care for the elderly.

Kissito is buying Hawthorne from a California bank that foreclosed on it in 2011. The company that had owned the building acquired it in 2004 after the U.S. Department of Housing and Urban Development took the property over, court records show. Although an out-of-state developer proposed buying and renovating the building in 2008, the sale was never completed.

The building was the site of three fires that killed nine people between 1976 and 1989, and its night manager was murdered in 2002. HUD, which provided rent subsidies for some of the apartments, took control in 2004 after finding the building failed to meet its standards for subsidized apartments.

Kissito is seeking $7.8 million in borrowing through the Roanoke Economic Development Authority to finance its initiative.

The nonprofit said it expects rents from Hawthorne and from the Gilmer Avenue house, as well as HUD funding, will be enough to cover interest and principal payments on that debt.

It said it expects to employ 50 people at the housing units and the PACE operation, with an annual payroll of $2.9 million.

Kissito operates five nursing homes in Western Virginia and one in Arizona. It also runs food programs and health care for mothers and infants in Africa. It had revenue of $54.8 million last year, including $37.5 million from its nursing care operations and $17.1 million in donations, according to its annual filing with the Internal Revenue Service.

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