WHAT’S IN IT FOR US?

WHAT’S IN IT FOR US?

by Bob Buddemeier

In the summary document Transparency in Decision-making at RVM, and in the longer essay on which it is based, Mark Edy makes the case that the longer-range plans of PRS/RVM, and the processes of their implementation, are not “transparent” – that is, residents cannot look at the information provided and hope to understand what is being done, how, or why, and what the impact on the RVM community may be.

Does it matter?  Do we residents need to worry our gray and/or balding heads about the details of on- or off-site property development?

One way of asking the question is as I circulated on RVMlist: “I think the fundamental question is about what it means to live in a retirement community that happens to be operated by a corporation whose primary objective is real estate development.”

I received a number of responses (all positive in agreement and concern) – one of the most cogent was:

“You’ve hit the nail on the head. As we watch our services decline, staff members leave (fired or willingly), and many cost-cutting measures being put into place, it’s becoming clear that resident needs are being supplanted by the desire to gather resources to continue development projects. We’ve become commodities to be used as a means to an end. This isn’t what I signed up for.”

Let’s review.  Real estate development is not essential to the operation of a retirement community; many, perhaps most, are single-function businesses.  When the organization expands to multiple properties and to real estate development beyond that required to provide direct services to residents, choices arise. How are resources allocated among the various components of the two sub-businesses?  Which drives the organizational structure, staffing, and expenditures?

Mark’s observations support my opinion (and that of my correspondent quoted above) that development and management is the real business, with service to retirees a vestigial excuse and/or cash cow.  Realistically, residents cannot hope to change this – there is too much money and momentum committed.  They can, however, do more to safeguard and advance their interests.

What’s in it for me?  Freeway interchange expansion brings more traffic, which I don’t want, and has almost no possibility of creating a commercial development that improves my quality of life.  More cottages on the golf course increase the use of fixed common facilities, and demands on an already diminished support staff.  What’s in it for me?  For us?  For our successors?

A resident told me that if RVM sold the Ellendale property for $2M, it would be good for the community.  Sorry — real estate profits don’t get rolled into the operating funds that would replace the lost gardeners or wellness assistants, or buy premium food instead of restaurant supply offerings.  They pay off loans or increase liquidity to improve bond ratings, or support the next phase of development.  That doesn’t have to be the case; a business focused on retirement could use income-producing property or investments — or even loans secured by the property — to maintain a reserve fund to tide the community over financial shocks (e.g., an increase in minimum wage) and to cushion necessary changes by providing time to consult and plan for the optimum adaptation.

We can’t expect an enforceable contract, but we can demand a corporate commitment to provide direct and demonstrable benefit to the residents from the proceeds of development.  In order to get that we have to have resident officers and representatives who are willing to speak out consistently and publicly, asking “What’s in it for us?” and communicating the answers.  And those officers and representatives need the backing of an informed, concerned, and active resident population.

What’s the incentive for corporate compliance?  Well, it is recognized that the retirement business is becoming increasingly competitive (article on CCRC “endangerment”).  As one small example, two of my children have put down deposits to move into RVM.  Will it still look like an attractive option 4-6 years from now?  If the trajectory for the next 6 years is like that for the last 6, they may decide to opt for a facility where the management is actually in the retirement business.

Link  to: Transparency in Decision-making at RVM

Link to long form essay:  PRS and RVM Planning and Development Lack Transparency

Link to:  RVMlist comments