Duped Old Shits Advised To BEWARE RETIREMENT "COMMUNITIES" -- They're Not What You're Cracked-Up To Expect!
Wanting
profit bunch of crooks to look beyond the money you plan to toss their
way.
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"You're only as secure as the retirement home"
"For some seniors, investments in carefree living are not paying off"
By David S. Hilzenrath
Saturday, October 31, 2009
IS YOUR RETIREMENT SECURE? For some people who thought they had taken
care of everything, the answer may be riding on another question: Is
your retirement community secure?
Anne Bradt, 83, said she and fellow residents thought they had bought
themselves worry-free retirements when they pu t down hundreds of
thousands of dollars -- upwards of $900,000 each -- to move into
Sherburne Commons in Nantucket, Mass. Then, a year ago, the nonprofit
company that runs the place sought bankruptcy protection. Food service
was cut to one meal a day. Activities such as dance and music
disappeared, along with the activities director and other members of
the staff. Residents could still pull a cord if they needed emergency
help in the shower, but they would have to pay extra for the lifeline,
and the person answering the call would no longer be on the premises.
Bradt's life became caught up in a complex legal proceeding, with her
entire deposit at risk.
"It's been one year of absolute hell," Bradt said. "It's taken its
toll physically and mentally."
The recession and the real estate crisis have raised new concerns for
people who paid hundreds of thousands of dollars, as much money as it
might take to buy a home, just to enter retirement communities. The
deposits typically earn seniors the privilege of moving in; they do
not confer any ownership in the real estate, and they are in addition
to monthly fees that can total thousands of dollars.
In theory, residents can reclaim the money when they move out, or
their heirs can recoup it when they die. But the model can break down
when the communities' economic assumptions prove too optimistic.
The October bankruptcy filing of another firm -- Erickson Retirement
Communities, a major developer and manager of campuses for senior
citizens -- casts a spotlight on the risks.
Erickson has been a leader in the world of "continuing care retirement
communities" -- CCRCs -- which offer independent living, assisted
living and nursing home care. In the Washington area, Erickson
communities include Riderwood in Silver Spring and Greenspring in
Springfield. People move in while they are still able to live
independently, hoping it will be their last major move. One of the
main advantages is that seniors can stay in the same community as
their health deteriorates, and couples can avoid being separated in
their declining years.
For some Erickson residents, including early occupants of the Ashby
Ponds development in Ashburn, it may not work out that way. The weak
economy prompted Erickson to halt development of several projects
before completing the assisted-living or nursing facilities.
Erickson spokesman Mel Tansill wrote that the company's problems "have
no direct effect on . . . each resident's right to a refund."
Nonetheless, the company's decline has helped illuminate pitfalls that
were inherent in its approach.
Erickson promotes its deposits as "100% Refundable," with an asterisk
that points to the fine print. Sure enough, there's a catch:
Residents are not entitled to get their money back until management
lines up a new tenant for the apartment and the new tenant posts a
deposit.
If the demand for apartments at an Erickson community is weak, the
community may have an incentive to fill units that have never been
occupied before it finds a new tenant for yours. If you have to wait
for your money, you may not have access to the funds you would need to
move somewhere else. Instead of keeping deposits in the bank, an
Erickson contract says that the community will use them -- to finance
development, make repairs or repay someone else.
As of September, almost a third of the completed units were vacant at
Ashby Ponds, where, as of August, entrance deposits ranged from
$200,000 for a one-bedroom unit to $563,000 for a two-bedroom unit,
according to regulatory and court filings.
Even before Erickson's bankruptcy, the Senate's Special Committee on
Aging had asked the Government Accountability Office to study whether
CCRCs are adequately regulated.
"In effect, seniors choosing CCRCs today could be exchanging their
assets and income for nothing more than a promise," Chairman Herb Kohl
(D-Wis.) wrote in February.
Of course, entrusting your nest egg to a retirement community isn't
the only or easiest way to lose it. Putting money in real estate or
stocks can end badly, too.
But for residents of troubled communities outside the Erickson empire,
Kohl's concerns are hardly hypothetical.
In Northwest Washington, some residents of Ingleside at Rock Creek
thought the deposits they paid years ago under "life care contracts"
limited the fees they would have to pay for the rest of their lives,
according to family members. They were upset when, under financial
stress, Ingleside introduced new "ancillary" fees in January for items
such as incontinence care, protein supplements and injections.
Ingleside's trouble was that the cost of caring for its residents was
outstripping the fees they were paying. "There was a business model
here that wasn't sustainable," said Richard Woodard, chief operating
officer of the nonprofit.
Wendy Schaetzel, who helps coordinate an Ingleside families group,
said the ancillary charges added $955 to the February fee for her 93-
year-old mother, Imogen, bringing the total for the month to $4,040.
Schaetzel said her family was willing to pay more to support
Ingleside, but she added: "It's a very significant bite for a lot of
people."
In Mount Lebanon, Pa., residents of Covenant at South Hills saw their
deposits wiped out under a September bankruptcy court ruling. The
community, which had been sponsored by the Jewish organization B'nai
B'rith International, was sold to Concordia Lutheran Ministries.
The commonly held notion that residents will be repaid out of future
deposits "is quite frankly proving to be a dangerous presumption,"
said Concordia chief executive Keith Frndak. Residents of the Mount
Lebanon community were out of luck because in bankruptcy court their
claims ranked behind those of banks and bondholders, Frndak said.
Another casualty of the bankruptcy is the community's kosher kitchen,
but the new Lutheran owner has promised to make dietary
accommodations.
In Nantucket, a for-profit company is now preparing to buy Anne
Bradt's community in a deal that could require residents to settle for
smaller refunds than they were originally promised. Bradt's daughter-
in-law, Bethesda real estate developer Diane Tipton, says people would
do better to choose retirement communities where they can rent their
unit or buy it outright -- but not put down deposits that could
effectively lock them in while leaving them as unsecured creditors.
Erickson says its restructuring plan, which includes the sale of the
business, will enable it to resume building unfinished communities "as
the economy improves." In the meantime, Erickson offers recuperation
and nursing care in residents' apartments, spokesman Mel Tansill said
by e-mail.
Asked how long people have had to wait to get their deposits back,
Tansill replied, "Specific data is not readily available."
In an interview, Erickson chief executive Bruce R. Grindrod Jr. said
he was touring Erickson properties to assure residents that Erickson's
Chapter 11 filing would not affect their lifestyles or day-to-day
services.
The deposits are not actually Erickson's responsibility, Grindrod
said. Instead, refunding residents' money is the obligation of not-for-
profit companies that take ownership of the communities after they are
developed and then pay Erickson to manage them, Grindrod said. The
nonprofit companies are not in bankruptcy.
When it announced its bankruptcy filing, Erickson said in a news
release that the not-for-profit corporations are unaffiliated with
Erickson. Tax filings, however, indicate that directors of such
nonprofits and the national umbrella group for almost all of them --
National Senior Campuses Inc. -- share an address with Erickson. If
you call the number listed on an Internal Revenue Service filing for
National Senior Campuses, don't be surprised if an automated phone
system answers: "You have reached the corporate headquarters for
Erickson Retirement Communities."
The nonprofit status of the campuses has helped them borrow large sums
using tax-exempt bonds.
Historically, there have been limits to the independence that
community nonprofits have shown from the for-profit business. Tax
filings for nonprofits in the Washington area said some of their
officers were also officers of Erickson. Only one of the community
nonprofit boards under the National Senior Campuses umbrella solicited
competing bids when Erickson's management contract was up for renewal,
and that one stayed with Erickson, NSC Chairman Ronald E. Walker said.
To assert greater control, many of the nonprofits negotiated month-to-
month contracts with Erickson as the company's financial troubles
loomed, Walker said.
Erickson communities offer the possibility of financial aid for
residents who run out of money. For example, if residents deplete
their funds, Ashby Ponds Inc. will tap their deposits and then help
them remain at the community by cutting their monthly fees -- to "the
extent that it is financially feasible," an Ashby Ponds contract says.
Indeed, an Ashby Ponds filing with the IRS cites that policy as one of
the reasons the organization qualifies for a tax exemption.
"We have never forced anyone out due to an inability to pay," Walker
said.
Financial aid comes from "benevolent care" funds that collect
charitable contributions from residents and others, Walker and
Grindrod said. Residents have been encouraged to contribute in a
variety of ways, including donating their entrance deposits and naming
the fund as beneficiary of their life insurance policies.
"None of the Benevolent Care Funds at our communities has been
exhausted; there is no concern that they will be exhausted,"
Erickson's Tansill said in a written response to questions from The
Washington Post.
The annual report for Ashby Ponds said its benevolent care fund ended
2008 with $643 -- enough for about two days of nursing care for one
person at the average Erickson rate. Contributions from residents and
other fundraising efforts did not begin until this year, the report
said.
The latest annual report for Erickson's Greenspring community in
Springfield, which has been open for a decade, said its benevolent
care fund expended $722,995 in 2008 and ended the year with a zero
balance.
Asked for clarification, the Erickson spokesman said Greenspring's
board augmented the fund by dipping into the community's cash
reserves.
[Staff researchers Eddy Palanzo and Julie Tate contributed to this
report.]
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/30/AR2009103004219.html
GLOBALIST
cozy, nostalgic places, with beautiful gardens were you can stroll and
tasty meals like grandma used to make , while someone plays a banjo in
the back ground.
This is a true story...I was in a McDonalds early one morning
getting breakfast , when the seniors are hanging out. I heard a table
full of senior females , laughing their asses off, about a nearby home
called "LOVING CARE". They were aware that a mere 'name' ain't going
to get it.
It was always the 'threat' on Golden Girls to send Mom to SHADY
PINES.
sr
other than yourself.
As Robert Reich, Sec. of Labor (D) said at Berkley , you are going to die!
"Wanting" <lilh...@yahoo.com> wrote in message
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