Some nursing home residents will ring in 2022 with a rent increase

Dec. 30—SANTA CRUZ — COVID-19 created new costs for skilled nursing and residential care facility owners, such as the funding of regular testing for residents or protective equipment for staff. As a result, residents at many of these facilities in Santa Cruz County will absorb some of the cost with a surged annual rent increase.

For example, Ray Spencer will pay approximately 10% more to Brookdale Scotts Valley for his two-bedroom apartment that he shares with another resident beginning Jan. 1. This means that he and his roommate will need to split $700 more a month. Spencer has been told that, on average, all residents are facing an 8.5% rent increase.

While Spencer can afford the higher rate because of retirement savings, he is concerned about his peers with a fixed income who will have nowhere to turn.

"COVID has certainly hurt their business, but it's not inexpensive," Spencer said of Tennessee-based Brookdale Senior Living Solutions' offerings. "My roommate and I pay (around) $7,000 a month... They raise the price every year. Last year it was about 5%. They figure we have no alternatives."

Data Share Santa Cruz County estimates that more than 3,200 people 65 and older live below the poverty line in the region. This figure has only climbed in the last decade.

The Texas native called upon an ombudsman who will visit the facility next week to talk to the director, but he said he was unsure whether the visit would create meaningful change. After all, in the four years that he has been at Brookdale Scotts Valley, Spencer has dealt with four administrators. Each, he says, has offered up excuses of corporate direction around a worsening experience.

"Nothing ever gets done," Spencer said. "It's the same as it was four years ago except now we have no tablecloths, not enough help to take care of people ... The problem is the increase in rent when the services are going down."

Spencer said he understands that every institution has to cut back across numerous industries because of COVID-19. Restaurants he has visited recently, after all, have fewer servers and the same amount of customers to serve. What he doesn't understand, he said, is that he feels like older residents like himself are not listened to or treated respectfully.

"I was in a single apartment and it was $4,500. Hell, I could buy a house for that price," Spencer said. "The food they provide you could probably buy for $1,000 a month. Where is the rest of it going? They really have us by the short hair ... My roommate tells me I'm too outspoken, but that's the way I am. I want the world to know the way they are treating seniors."

Brookdale Senior Living Inc. Spokesperson Heather Hunter said this week that the concept of an annual rent increase is not a surprise. This year the rate of the increase is steeper, Hunter said, because the cost of labor and goods increased during the pandemic.

"We as a company absorbed millions of dollars of COVID costs until recently. We do have to start passing along some of that in the form of an increase ... We are still taking the bulk of it," Hunter said, discussing precautionary measures taken to protect residents such as the creation of COVID-19 wings when units were full at local hospitals.

Spencer, a man in his 90s, is legally blind but can see well enough to check the corporation's stock market summary regularly.

"Their stock is in bad shape, it's been going down. I find out that they're refinancing and trying to pay off a debt they borrowed, $100 million, this month," the resident said. "(The corporation) doesn't make any money on the services they render. They make money on real estate."

Spencer's allegations are verified by NASDAQ, which shows that Brookdale stock has dropped $10 per share in the last five years with a continuing decrease to finish out 2021. The company announced in a press release shared by Yahoo News that it had secured a $100 million loan. On Wednesday, shares of Brookdale Senior Living Inc. closed at $5.08 a share, down from $5.13 earlier in the day.

Hunter says the company is not in financial trouble.

"In order to not be in a situation where we might have negative things happen to the company, some of the cost needs to be (shared)," she said. "We can't keep covering everything."

More rent rises

Brookdale Senior Living Solutions is not the only company who will have to communicate to residents that rent is increasing.

Kevin Kimbrough, spokesperson for Dominican Oaks residential care facility, said the Santa Cruz home's rates will go up slightly.

"Rent increases do occur on a regular basis (usually annually) in the senior living space. Dominican Oaks, like other providers, looks at a variety of operational expenses, rate of inflation, census, etc. In late spring, when we analyzed the variables, we decided that our rate would increase 2.5% this fiscal year (July 2021 —June 2022)," he said in an email.

It isn't just corporately owned homes that will be looking to recover costs. Tryg Thorensen, owner of De Un Amor in Corralitos, said he will be increasing his rent for new residents who come in by at least 4% or 5%. This will translate to about $500 monthly.

"Without a doubt I have suffered a lot of losses this year," he said. "But I have a small facility here and I charge one flat fee per month. There are no differing levels of care ... One thing I tell residents when they move in is that their price will remain the same ... I've been in business for 27 years, periodically raising (rent)."

Others will face no increase. This, according to spokesperson Dan Kramer, includes Santa Cruz Post Acute.

With the Omicron variant, Thorensen added, senior living facility owners and administrators will need to continuously review their revenues and expenses in order to keep their doors open, their staff supported and their residents happy. He may have to go above 5% if his accountant agrees it's a good idea to provide raises to staff, who are regularly still working overtime, to make up for the tough circumstances and ongoing inflation issues.

"I have been in contact with a county nurse and it's here, it's spreading like wildfire," Thorensen said of the virus's latest strain. "The biggest problem I am worried about is staffing. It's a nationwide issue, but it's so hard to get people to work in this industry. It's about getting the right people too, not just anybody. It's got to be the kind of person that can do this work."

The Sentinel attempted to contact the remaining five skilled nursing facilities in the county recognized by its licensing agency, the California Department of Public Health, but did not receive responses. The publication also contacted all 26 residential care facilities certified by the California Department of Social Services. It heard from just Brookdale Scotts Valley and De Un Amor.

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