Senior housing faces challenges on multiple fronts, from current storms in Washington, D.C., including funding, adequate operational staffing, and a volatile and unpredictable environment.
With the Trump administration’s attempts to freeze funding, eliminate an as-yet untallied number of jobs, and restructure agencies at an unprecedented pace, strategic and tactical planning in senior housing become difficult
“By the time you write it, my answers will be different,” quips Steve Ervin, senior vice president and head of FHA, HUD, and Seniors Housing and Healthcare Lending at Berkadia before continuing more seriously with GlobeSt.com. “There’s not much [happening] from a legislation standpoint but there is a tremendous amount going on politically. We’re all trying to figure out what tomorrow brings.”
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Ervin says that “throughout the history of this sector” there has been regular change in the ways the federal and state governments deal with Medicare and Medicaid, which means implications for senior housing in addition to healthcare provision.
However, this has been an unusually disruptive period. For example, there have been different rumors about staff cuts at the Department of Housing and Urban Development. NPR reported plans to lay off half of the organization’s workforce. Bloomberg wrote that the Federal Housing Administration would lay off at least 40% of its workers.
“According to my sources and talking to my team, the 50% is pretty much what we’ve heard is going to happen,” Ervin says. “It’s a very fluid situation and we’re getting [information] as quickly as we can.” Among those who have been let go seem to be “a fair number of attorneys,” which is already causing problems for the industry.
“If you can’t get a hold of the lawyer, if you can’t get hold of the person reviewing the file and ensuring we actually did it correctly and the financing is appropriate for the government to back it, if there aren’t people to review that, we can’t get [lending] done,” he explains. Ervin added that some contacts at other lenders have told him they’ve been receiving out-of-office messages when they try to reach agency lawyers they have been working with.
The risk the industry faces is an inability to close deals fast enough. “Time kills deals,” Ervin says. “If you can’t get things moving, people run out of the energy to work it.”
Deals that aren’t completed create more delays in increasing the amount of senior housing that will be needed in the immediate and ongoing future for a growing older population. Ervin cites figures that within 10 years, the percentage of people in the U.S. who are older than 80 will increase by 50%.
With the uncertainty, though, Ervin has faith in the system. “Regardless of how it happens, and I’ve seen [a lot] throughout my career and the last several decades, the industry has been able to adapt for the people,” he says.
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