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By Will Beazley, MAI, Director, Property Tax | April 22, 2020

The current challenges facing the senior housing industry and strategies for dealing with property taxes for 2020 and beyond.

The COVID-19 pandemic that has spread across this country in recent months has brought unprecedented economic and public health challenges to residents in all 50 states. The challenges range in severity from the inconvenient to the catastrophic.  Further, much remains unknown about what the next few weeks will bring, and even more unknown about the next few months and years.  We recognize that those of you in the seniors housing industry are on the frontline of the fight, providing protection and care for the most vulnerable. We at Altus Group want to express our deep appreciation to all the great people in the senior housing industry.

Our healthcare team has been connecting with clients and partners in the industry to discuss, learn, and analyze the significant challenges your industry is facing. For over 20 years, we have proudly maintained the most tenured healthcare property tax team in the country, representing more than 325 million square feet of healthcare properties in all 50 states. Our US President of Property Tax, Trey Beazley, MAI, has been published on this topic in NIC’s (National Investing Center for Seniors Housing & Care) “Senior Housing & Care Journal”.  This article, Valuation of Real Estate Within Senior Living Facilities, received Special Commendation from NIC. This experience puts us in a unique position to help and advise our seniors housing clients on issues related to ad valorem property tax matters.

As such, we thought it might be helpful to discuss potential property tax strategies and answer the most common questions senior housing owners and operators may be asking. In the grand scheme of things, we realize that property taxes pale in comparison to the importance of protecting and caring for residents.  We also understand that financial relief, in any form, is welcome, particularly at this time where budgets are being flexed. It is our job to help relieve the burden of managing property taxes so that our clients can focus on what they do best, taking care of their residents.  We are continually monitoring the impact that COVID-19 is having in the seniors housing industry, with the hopes that our efforts can play a small part in mitigating some of the stress related to the pandemic.

The Pandemic’s Impact

In a letter dated April 2, 2020 to Alex Azar, the Secretary of Health and Human Services, from Argentum and the American Seniors Housing Association (ASHA), the authors provided a third-party analysis that estimated the adverse economic impact of COVID-19 on the senior living industry.  This estimate over the next 12 months was pegged at $40 billion to $57 billion.

Current Challenges

The risks and challenges facing the industry shifted almost overnight as a result of COVID-19. Coming into 2020, the two biggest challenges facing the industry were labor shortages and oversupply of units. While these challenges will require monitoring in the future, an unprecedented increase in the unemployment rate may help alleviate the labor shortage.  Also, the delays/contraction of the development pipeline as a result of some states ordering non-essential construction to cease, supply chain disruptions, and the uncertainty about what the future holds may present a reprieve from the oversupply problem.


COVID-19 has created unprecedented challenges for the seniors housing industry. According to NIC’s Executive Survey Insights Wave 3, Week Ending April 19, 2020, “Approximately one-half to two-thirds of organizations reporting on their independent living, assisted living and memory care units in Wave 3—across their respective portfolios of properties—saw a decrease in occupancy from the prior month. This is up from roughly one-third to one-half in Wave 2. Conversely, roughly one-third to one-half saw no change or an increase in occupancy rates from the time they responded April 13-April 19, 2020 to one month prior, down from roughly one-half to two-thirds in Wave 2.[1]

Graph of occupancy changes in senior living facilities by type and time period

Declining occupancies are expected to continue in the foreseeable future as move-ins either decline or come to a complete halt, as some organizations have put a moratorium on accepting new residents. Additionally, based on information from NIC’s Executive Survey Insights Wave 3, Week Ending April 19, 2020, some senior housing communities (and skilled nursing facilities in particular) are beginning to see the pace of move-outs start to accelerate.[1] However, the majority of seniors housing communities have still not seen a material impact on the pace of move-outs.

While Occupancy Declines, Expenses Rise

In order to prioritize the health and safety of their residents and staff, senior housing operators are having to incur additional expenses. According to the previously mentioned letter from Argentum and ASHA to Alex Azar, “The cost of maintaining high quality of care and high quality of life for senior living communities has increased up to 73% for senior living communities that remain free of COVID-19 and up to 103% for COVID-19 positive senior living communities. Further, on average, labor costs have increased up to 8% for senior living communities that remain COVID-19 free and up to 18% for COVID-19 positive senior living communities.”

The increase in expenses is a result of several factors. A primary factor is additional compensation for staff and the cost of temporary labor. The staff at seniors housing properties are truly heroes as they risk their own safety and well-being to ensure the nation’s most vulnerable are provided the highest quality of care. Operators have been quick to reward their staff’s effort through pay raises, flexible work hours, overtime, offering childcare or a childcare allowance, providing meals and groceries, offering additional paid sick leave, etc. Additionally, according to Eric Vanden Hull, VP of Finance with the Good Samaritan Society, expenses related to temporary staffing are also rising dramatically, with agency rates two times higher than usual in some instances.[2]

Senior housing communities are also dealing with the added cost of personal protective equipment (PPE). This PPE is required to protect both residents and staff. The shortage of PPE has been well documented across the country, and due to the inadequate supply to satisfy the massive new demand, PPE prices have substantially increased.

Affordability, Slowing Revenue, and Rent

Other challenges brought on by COVID-19 include potential threats to affordability.  As with any economic shock, the decline in savings accumulation impacts whether residents can afford to move-in to or remain in seniors housing properties. Skyrocketing unemployment, major fluctuations in the stock market, the potential of a declining single-family home market, and the uncertainty of what the future holds can all impact affordability. Additionally, at many newer properties, ancillary revenues that make up a large portion of a highly amenitized property’s revenue stream are declining, as social distancing protocols limit resident access to most amenities. Finally, while there appears to be cooperation between seniors housing operators and landlords regarding near-term rent obligations, challenges will arise as deferrals of rent eventually come due.

Property Tax Strategies

With all these challenges facing the industry, how can an operator ensure they are being treated fairly in terms of their property taxes? Ad valorem property taxes by design (and definition) must react to the market.  For those who pay real property taxes, it’s the market value of the “sticks and bricks” that is the basis for calculating property tax liabilities.  It is critical that real estate owners obtain specialized property tax representation when market fundamentals are in turmoil. This is especially true when dealing with healthcare properties, where real property is merely one of the many elements of production within the going concern.

A qualified tax firm will also have a very strong understanding of the rules and laws of each jurisdiction. For example, in addition to any market value arguments, some other courses of action may provide taxpayer relief.  Some jurisdictions, by mandate, allow for the consideration of events that have occurred after the lien date.  For properties that have a January 1, 2020 lien date, this could be very meaningful in a tax appeal wherein the impact of the pandemic occurred following January 1. Further, many jurisdictions have now provided for deferrals of tax payments, and others are anticipated to follow suit. State and local taxes are no different from federal income taxes in that those who have mastered the rulebook will have the best outcome. Unfortunately for property taxpayers, there are hundreds of different rule books.  This is why having a firm whose experts have years of experience and offices across the country can be such a benefit.

The importance of communication during times like these cannot be understated. At Altus Group, we believe that two-way communication is not just good customer service but is critical to obtaining the best results. We maintain regular communication with our clients, in order to stay on top of any meaningful developments at their properties. During times such as these, we recommend operators keep track of all the costs incurred in response to COVID-19, including direct costs for defensive efforts, occupancy changes, rental defaults, declines of ancillary revenue, etc. Presenting hard evidence of the impact of COVID-19 on a property can increase the chances of securing meaningful property tax relief.

Stay Informed

COVID-19 has brought unprecedented economic and public health challenges across all industries. The seniors housing industry is on the frontline of the fight and continues to protect and care for the nation’s most vulnerable population. As the seniors housing industry continues to care for the elderly, they also are dealing with declining occupancies, increasing expenses, and a declining economy, amongst other challenges. With all these extremely important priorities in mind, partnering with an experienced property tax professional will ensure your property is treated fairly by its taxing jurisdiction.

Altus Group’s tax consulting and administrative staff is continually monitoring the implications for taxing jurisdictions nationwide and publishes a daily report on changes impacting taxpayer clientele.  We hope that you will refer to this ever-changing guide as a valuable reference source: State and local tax changes due to COVID-19.

[1] Peck, L. (2020, April 23). Executive Survey Insights: Wave 3, Week Ending April 19, 2020. Retrieved April 23, 2020, from

[2] Mullaney, T. (2020, April 06). Covid-19 Could Cost Senior Living Industry $57 Billion As Operating Expenses Soar. Retrieved April 7, 2020, from
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