Retirement apartments in financial bind

The beautiful but nearly empty Retreat at Santa Rita Springs retirement village is facing financial hard times and it is up to the mortgage holder as to whether it continues operating.

Michael J. Naifeh, the managing partner of the ownership group, said Tuesday he hopes that by Thursday the lender, Red Mortgage, will agree to placing the project in receivership. The other option is foreclosure, said Naifeh, the managing partner of a group of 10 investors who stand to lose up to $4 million either way.

Meanwhile, many of the dozen elderly residents still there are making arrangements to move after hearing of financial turmoil and seeing their beloved staff fired last Friday on two hours’ notice. “It’s a beautiful place,” said Connie Wann, whose mother, Dorothy, has lived in the Retreat since February. “The apartments are gorgeous. They didn’t spare any expense in the construction. They had the most fantastic employees. They just cared so much about the residents. They were like a little family.”

However, Wann, who lives in Colorado, said her mother heard Tuesday that residents must move out by the end of the month.

After five years of work by Naifeh and partner Eddie Leon, the facility opened for residents in February. However, sales dried up around May, in part because the long-promised beauty shop took months to open, a central kitchen was never built to serve meals to a large population, and rumors of bankruptcy swirled, officials and residents said.

Watermark Communities, a national management company, had operated the Retreat from October 2008, before it opened for residents, until it terminated its contract Friday for lack of payment and fired the employees, the Retreat’s former executive director, Debbie Engen, said. Naifeh acknowledged that he was far behind on payments.

Engen acknowledged that part of Watermark’s responsibility was to market the Retreat, and said the recession hit the business hard, but residents noted that other retirement communities in Green Valley are packed despite the recession. Naifeh said there are no beds open now in Green Valley facilities, but acknowledged that he was aware of the low population in the Retreat in recent months.

The facility is being managed on an interim basis by another management company, MEB, Naifeh said, in hopes that a receiver will be appointed to keep the business running. Naifeh and MEB District Manager Wendy Capullo said they do not know whether the facility will remain open, but said residents can stay and are getting services to which they are entitled.

On Friday around 3 p.m., residents received a letter from Watermark saying it was letting its employees go as of 5 p.m. Engen said about a dozen employees lost their jobs immediately and she is working the rest of the month from Watermark’s offices in Tucson to tie up loose ends.

Residents heartsick

The turmoil has been devastating for residents and former staff.

“It’s all very confusing, isn’t it?” said Georgia Ryder, who has lived in Green Valley on and off since 1980. “Since Friday we didn’t know anything. I cried for two days. I’m going to miss all my friends like crazy. I’ve been here (in Green Valley) 30 years.”

Ryder has found a place to live in Tucson and other residents are doing the same because they cannot take the uncertainty.

“Watermark left the food here that they bought, so we have food until Friday,” Ryder said, underscoring the worries residents have.

Engen said, “It’s hard, it really is. Between staff and residents, you get very close. It’s like a family. We brought stuff from home and did whatever we could to make a go of it with no funds.”

The spacious, well-appointed facility at 661 W. Calle Torres Blancas features apartments and casitas that can accommodate more than 200 residents. But it never had more than 12 units occupied since it opened, Engen said.

“The economy really threw that poor start-up building for a loop. There were things promised, like a beauty salon and bistro and full kitchen. The beauty salon and bistro finally opened in October. People were just waiting and waiting,” Engen said.

“Watermark cancelled its management contract. They were owed a lot of money. Watermark ended up providing financial support by deferring its fees and that burden became too great. It let the owners know on Monday they had until Friday to fix it and it didn’t happen,” Engen said.

Engen said Watermark was responsible for marketing and the recession crippled efforts to promote the facility.

Reach the reporter at pfranchine@gvnews.com or 547-9738; includes information from Regina Ford.