The woes surrounding troubled Altavita Village continue to mount as residents now fear the retirement community’s new owner will refuse to honor contracts that have provided them stable homes and healthcare, some for more than a decade.
The Riverside facility, formerly known as Air Force Village West, opened in 1993 and had been operating as a nonprofit, primarily as a home for retired military veterans. For at least a decade, the community has been roiled by debt and mismanagement. Its owners filed for bankruptcy in March.
Altavita Village is tentatively scheduled to be sold out of bankruptcy to Westmont Living, a La Jolla-based for-profit company that operates a dozen senior living communities in California and Oregon. Westmont Living emerged as the winning bidder in a June auction administered by the U.S. Bankruptcy Court Central District of California.
Some residents say the new owners plan to void the contracts they signed when they moved in, including arrangements that assured them of the needed levels of medical care and other services. Residents are considered unsecured creditors, and in court filings, Altavita Village says rejecting their claims is “sound business judgment.”
Opponents of the sale to Westmont have filed an objection, which will be heard in court Tuesday, Aug. 27. The sale is also being reviewed by the California Attorney General’s office.
Air Force Village West Inc., located near March Air Reserve Base, is the corporate owner, but it changed the community name to Altavita Village in 2015 when it started to accept non-veteran residents. It has about 300 residents living in single-family and multifamily dwellings, with large facilities for group activities and medical treatment.
But there are many vacant units and occupancy is less than half of what it once was. In the last 10 years, the owners have burned through about $50 million in cash reserves. Altavita Village owed secured creditors some $60 million. It entered into receivership 18 months ago, the result of a lawsuit brought by creditors who were not being paid.
Contracts in question
David Henry, whose parents moved to the facility in 2007, said they signed a Continuing Care Contract, paying $172,600 to provide the necessary medical care and other ongoing accommodations and services. His mother, Ruby Henry, still lives there. His father, a retired military man, died in 2016.
Now, Henry said, the deal they signed will not be covered by the new owner. His mother can either sign a new care contract or leave Altavita Village.
“People just got the rug pulled out from under them,” Henry said.
He said he brought up the matter with the state’s Department of Social Services and was disappointed when the agency took no action.
“The efforts of the board to keep the debt providers whole was to the detriment of residents who invested $100,000 to $200,000 for a contract to provide health care for the rest of their lives,” Kathy Higbee, Ruby Henry’s daughter, wrote in an email.
The residents’ sign-up payments varied, based on the housing and level of medical treatment required. As a result, the expectations from the new owners differ widely, said Sarah Chenetz, an attorney who represents many of the unsecured creditors.
In a July 26 letter to California Deputy Attorney General Wendy Horwitz, residents Frank and Beverly Drake, who signed a residency agreement in 2002, said residents who paid up-front money should be considered debtors with a claim that is as viable as their corporate counterparts. They are seeking a refund of more than $57,000.
“The debtor claims the (residents’) contracts have no monetary value,” the Drakes wrote. “That is not true and represents a gross inequity.”
The Drakes wrote they are also concerned that while the new owners of Altavita Village would make offers for new residency and care agreements, residents would have only 30 days to sign them, with leaving the facility the only other option.
“This does not provide sufficient time to find and arrange a move to a new location if the proposed situation is not acceptable,” the letter states.
In a response to residents’ concerns, Altavita Village’s bankruptcy attorneys stated in documents the objections to the sale should be overruled, and that “the debtor’s decision to reject the contracts, including the residency agreements, should be approved as an exercise of sound business judgment.”
The filing also said the decision was made in good faith and in the best interests of the debtor’s estate. The bankruptcy attorney for the facility did not return a call seeking additional comment.
Westmont did not reply to requests for comment.
Horwitz, the state’s deputy attorney general, notified residents that her office is reviewing the filings, and she held an Aug. 6 public meeting to hear residents’ concerns.
In an emailed statement, a spokesperson for Attorney General Xavier Beccera said “substantially all of the assets of Air Force Village West, dba Altavita Village,” are being reviewed. The proposed sale is being scrutinized because California’s business codes require a review of transactions by nonprofits that operate healthcare facilities. Altavita Village includes a 59-bed skilled nursing facility.
The AG’s spokesperson declined to discuss what was heard in the Aug. 6 meeting. A decision by the attorney general is expected on or about Aug. 30, according to the statement.
Tuesday’s bankruptcy court hearing on the objections is scheduled for 1:30 p.m. and will be held in Santa Ana. Interested parties can participate via video at the federal courthouse in Riverside, 3420 Twelfth Street, Video Hearing Room 126.
