City As Savior?

Catholic-run retirement community may find salvation at City Hall

Facing demolition just a month ago, the Desert Crest retirement community may be saved from razing after all.

So why aren't its octogenarian residents celebrating?
The elderly renters at Desert Crest are pinning their hopes on a buyer who proposes to keep the retirement home running. But they know it's more likely the City of Phoenix will buy the property itself and eventually close the facility.

Located on Maryland Avenue near Squaw Peak, the 40-year-old institution is home to about 100 aging but active residents. Average age is 82. Average stay is five years.

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Last August, after years of financial problems, Desert Crest's owner and operator, the Foundation for Senior Adult Living (FSAL), an agency of the Phoenix Roman Catholic diocese, placed the retirement home in bankruptcy. Saddled with Desert Crest's crushing debt, FSAL proposed to the bankruptcy court that JPI Apartment Development purchase Desert Crest, tear down the retirement home and build 396 luxury apartments on the site.

Residents cried foul, saying they were mystified that the nonprofit agency would evict them. Bishop Thomas O'Brien and the local diocese would say nothing publicly about the matter.

Nearby homeowners also objected. Constricted by the Squaw Peak Parkway, the neighborhood around Desert Crest has limited access; 396 apartments in the middle of that neighborhood could produce significant traffic problems for the bucolic community of ranch homes.

But FSAL director Guy Mikkelsen said that Desert Crest's demolition was a done deal. If JPI didn't buy the property and build apartments, another developer would do the same, he claimed.

Only weeks later, however, JPI's proposal is no longer under consideration. Instead, the City of Phoenix, swayed by a highly organized campaign by residents and neighbors of Desert Crest, has stepped in to save the day, at least for the surrounding neighborhood.

Last Wednesday, the Phoenix City Council approved an ordinance giving City Manager Frank Fairbanks the power to purchase or condemn Desert Crest, allowing the city to take possession of it.

If the city goes through with the plan, Desert Crest will remain intact and in operation for at least two years, says Fairbanks. Beyond that, the city will begin to use portions of the retirement center's land to beef up an adjacent city water-treatment plant, which purifies canal water. For as many as five more years, the city will allow residents to remain at Desert Crest, and will help those who relocate. Then, in 2005, Desert Crest will be demolished as the water-treatment plant swallows up the rest of its land.

Nearby homeowners who had opposed JPI's apartments are thrilled with the city plan, which will bring no additional traffic to the neighborhood.

Desert Crest residents, however, are not happy.
Mac McCullough, 79, recognizes that the city's proposal is an improvement over previous plans which would have kicked out residents right away. But the end result, he points out, is the same--Desert Crest will eventually be closed down. No new residents would be allowed as current renters gradually move away. "Those of us remaining here would be living in a ghost town," he says.

Residents and local homeowners had been united in their efforts to save Desert Crest. Now that coalition is falling apart.

Yet another proposal to preserve Desert Crest is amplifying differences between residents of the community and its neighbors.

Real estate appraiser and entrepreneur Jim Speros raised residents' hopes by proposing another option which would save Desert Crest indefinitely.

A board member of Guadalupe Homes, a California nonprofit which operates similar senior facilities, Speros told residents that, with help from U.S. Bankruptcy Judge Redfield Baum, Guadalupe Homes could operate Desert Crest without losing money. Baum has the power to "cram-down" Desert Crest's debt to its current value. Speros says that with a sufficiently lower debt, Desert Crest would become an attractive property for Guadalupe Homes.

Speros inspected the facility and is impressed. "It does need some improvement. But it's mostly cosmetic things and water piping. If the mortgage can be brought into line, I think we can make it work."

Speros has made no formal, written proposal to Desert Crest's owner, but if he does, he's likely to get a chilly reception.

"I think the city's proposal is the best for all parties concerned. I don't find Speros' proposal credible," says Mikkelsen, who is unhappy that Speros went directly to residents last week rather than discuss his plans with FSAL. "I think it was unfortunate that he made a presentation to the residents. From what I've heard about it, he grossly oversimplified the situation and made false impressions."

McCullough says he and his fellow residents were excited by Speros' proposal, and they hope it wins out over the city's plan to take over Desert Crest.

Fairbanks says that the city would cancel its plans for Desert Crest if Speros or another developer promised to keep the retirement community running. "My guess is that if someone is truly willing to come in and run it the way it is, we don't want to interfere with that," he says.

But Speros' plans make local homeowners nervous. Desert Crest sits atop land that has been zoned R-5, which carries the highest possible density. If the retirement community ends up failing in the future and another developer takes possession, nothing would prevent the building of even more than 400 apartments on the site.

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