By Jack Cumming
Senior Housing Forum is a place for discussion and this article calls for discussion. Air Force Village West (AFVW), dba Altavita Village, is a struggling CCRC on what was March Air Force Base in Riverside, California. The situation for AFVW presents more questions than answers. Please share your thoughts in the discussion area below.
We’ll start with an analogy. Imagine for a moment that you’re a 53-year-old senior housing executive who has just been declared “redundant”. You clear your desk into a banker’s box, find your way to your car, and drive away for the last time from where you have worked for the past 18 years.
We can imagine that the devastation was comparable for the residents of Air Force Village West (AFVW) when they learned many months ago that the CCRC that they called home was running out of cash and that the board had terminated the CEO. The CFO had already departed, leaving of his own accord. Eskaton, a highly regarded tax-exempt senior housing operator, volunteered to step in to continue services for the residents.
Thus, a saga began which continues today. Most recently, the winning bidder in a second auction process, decided not to proceed citing the risk involved. It’s instructive to treat AFVW, now dba Altavita Village, as a case study to help strengthen the senior housing industry.
First some basics. In the example of our 53-year-old, we know that the longer she is out of work, the more bills pile up and her family savings are diminished. The same is true for our CCRC. The longer expenses outrun income the deeper the financial hole from which the enterprise will have to dig out.
In the case of Altavita Village, to allow time to find a new owner, the lenders agreed to add to the debt to provide the cash needed to cover shortfalls. The longer the situation remains financially unresolved, the greater the indebtedness that will have to be either repaid or forgiven.
The board undertook an initial auction for CCRC hoping to find an owner able to set things right. After a flirtation with a buyer who was reluctant to honor the continuing care contracts, a second buyer, Pacifica Senior Living, with extensive experience in senior housing, was found.
The Money Challenge
Pacifica had run the numbers and had a plan to extricate the community from its financial straits. At that point, the lenders petitioned the state courts for receivership, and a receiver, Bellann Raile (pronounced “Riley”), was appointed to succeed the board. Ms. Raile is with a firm that generally works with lenders, though for AFVW, the court tasked her to work jointly on behalf of the lenders and the residents.
Ms. Raile told Pacifica that their offer was not acceptable, and she retained Cushman & Wakefield Commercial to conduct a second auction. It’s the winning bidder from that second auction that, after a period for due diligence, has now decided not to proceed.
For our analogy with a 53-year-old “redundant” executive, it would be as though a first round of personal networking had resulted in a job offer, which the executive turned down. The executive might then work with a search firm, receiving a job offer, only to have the offer withdrawn after the new employer made background checks. That’s the analogy to AFVW’s current predicament. It’s not a good situation.
Topics for Discussion
Is it best to take the first offer? How can one decide?
What are the alternatives now many months into the process for the unemployed executive or for the troubled CCRC?
What is the responsibility now of the regulators (for AFVW, the Continuing Care Contracts Division of the California Department of Social Services)? What should it be?
How should the Resident Council respond under these circumstances? What is the responsibility of resident associations (many AFVW residents are members of the California Continuing Care Residents Association, CALCRA)?
What is the responsibility of providers’ associations (AFVW was long a member of LeadingAge California)?
Is It Darkest Before the Dawn?
With the holiday season, we have entered the darkest time of the year. It seems dark, too, for the residents of AFVW. But the saying is that it is darkest before the dawn. Thus, the core remaining discussion question is: How can we best bring hope and support to all who are stricken -- perhaps by enduring unemployment or underemployment, others by corporate misfortunes – especially now . . . at what is for most people a happy time of warmth, love, and family?