Oregon

PRS Deal Approved By Manor Residents

Medford Mail Tribune | Jan. 31, 2013 2:36 p.m. | Updated: Jan. 31, 2013 10:36 p.m.

Contributed By:

GREG STILES

By GREG STILES

Mail Tribune

Rogue Valley Manor residents have overwhelmingly approved a detailed out-of-court settlement that grants them more say in how Southern Oregon’s best-known senior community is run.

The agreement hammered out between the Rogue Valley Manor Residents’ Steering Committee and Pacific Retirement Services was presented Friday with voting conducted over the weekend. The agreement, which ended the threat of a class-action suit, was endorsed, 767-21.

“The big thing is that we’ve now got control in operations that were totally out of control,” said Don White, acting chairman of the residents committee.

The settlement provides an independent Rogue Valley Manor Board with two residents as voting members, limits on PRS’ ability to remove directors from the board and a cap on PRS management fees for the next three years. Some $400,000 in monthly fees will be credited back to residents during 2013, and residents who contributed for legal representation will have up to 70 percent of their expenses reimbursed by PRS.

“PRS has agreed to a fundamental change in its relationship with RVM which will pay dividends for the current and future generations of RVM residents,” said White, former present of Hughes Aircraft and a nine-year Manor resident.

The vote ends a struggle of wills that fomented into a revolt in the community of more than 900 seniors atop Barneburg Hill.

“We believe the agreement is a fair compromise by both parties and establishes the foundation to rebuild the relationship that has led to great success for both organizations,” said Brian McLemore, PRS’ chief executive.

The dispute first arose over concerns by Manor residents that they were being charged excessive fees to cover expenses related to PRS properties beyond the Manor. Residents attempted to negotiate through the former board that was effectively dissolved last August when former Executive Director Kevin McLoughlin was fired and seven board members removed.

Subsequently, Manor residents raised hundreds of thousands of dollars in anticipation of legal fight late last summer and were set to file a class action suit just before Christmas.

“The focus was on the governance issues and creating a governance structure for now and the future so (Manor residents) will have a voice in the leadership of community,” said Shannon Armstrong of Markowitz, Herbold, Glade & Mehlhaf, a Portland law firm. “One of the key components was strengthening the executive director and making it a dual reporting role so that the executive director reports both to the Rogue Valley Manor Board and PRS. We don’t want something like what happened before — when the executive director and seven board members were unilaterally fired by PRS — to happen again in the future.”

In the agreement, community board members are protected from removal when acting in RVM’s interest in cases when it may be counter to PRS’ interest. PRS recently named Sarah Smith to the executive director role.

The vote was conducted using double envelopes, similar to Oregon’s vote by mail system, to assure secrecy. White said the votes against the agreement more than likely belong to people who wanted total separation.

“A lot of people wanted to get rid of PRS entirely and want its sole member status gone,” White said. “But that’s something we can’t get this way, and it would take court action to do that. A litigation win would result in a money judgment from a court, but not what we really want — more independence and control.”

McLemore said a nominating committee soon will convene and begin recruiting members for the reconstituted board.

“The plan is to begin this process right away so that a new board will be in place as soon as practical,” McLemore said.

Manor residents Fred Willms and Jim Stocker have been appointed to the board.

White said a critical element in the settlement is PRS’ acknowledgment of its fiduciary duty — managing and protecting the Manor’s property or money.

Capped management fees to PRS will result in projected savings to residents of between $1.3 million and $1.6 million. Future management fees for years after 2015 will be negotiated between PRS and the independent RVM board.

Two property development issues, involving RVM funds, also were part of the agreement.

Manor residents had complained that the development of nearby Centennial Golf Course had come at their expense, with preferred stock issued that is now essentially worthless. White said if PRS decides in the next 10 years that the golf course’s adjacent property is developed for residential use, PRS must pay the Manor $20 million for the preferred stock if the property regains its value. But Manor residents can opt not to sell.

The Crest Park property trade between PRS and the Manor, which led the way for a Homewood Suites hotel near the campus, also will be reconsidered. Manor residents contended that PRS had swapped land of little value it held for more valuable, and developable, property held by the Manor.

An independent appraisal will review the property value at the time of the swap.

If the value of one parcel is determined to be worth 10 percent or more than the other, the party receiving the higher value will pay the other party an amount to make the values equal.

“Many of the changes included in the agreement are those that we have been preparing to roll out at each of our affiliates for the last couple of years,” McLemore said. “Bringing residents on the local retirement community boards will now be implemented systemwide as the individual affiliates elect to make this change. We have also begun a more collaborative process with local residents and boards at each of the affiliates regarding the hiring and performance review of our on-site executive directors.”

This story originally appeared in Medford Mail Tribune.

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