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The Parkview, a retirement community that provides assisted living to seniors in Pleasanton, has been struggling financially over the last few years following the pandemic as the facility continues to draw from its budget reserves in order to cover yearly operations.
During the Aug. 20 Pleasanton City Council meeting, the dais voted to approve the withdrawal of $891,002 from the facility’s operating reserves — which is not tied to the city’s budget but is controlled by the city government — so that The Parkview could cover last year’s operating deficits, which were caused by several reasons including rising expenses and vacancy rates.
“Pre-pandemic it was not unusual for The Parkview to be 100% occupied,” Aireen Tibon, executive director of The Parkview, told the Pleasanton Weekly. “During the pandemic occupancy bottomed out in the mid-70s.”
The assisted-living community opened in January 2007 on Valley Avenue at the corner of Sunol Boulevard and consists of 105 units — 86 of those are assisted-living units and 19 are memory-care units. Most of the units are being rented at market rate with 33 of them being below-market rate with reduced rent for low-income residents.
According to the Aug. 20 council report, the city financially supported the development of the facility by providing a nearly $4 million loan in 2005. The city also entered into a 55-year ground lease agreement with the property’s owners: BLP Partnership, Inc. and Eskaton.
Per the ground lease contract, the city agreed to provide oversight of the property and its operations, which is why the city handles the facility’s withdrawals from its own operating fund. The city has no financial ties with The Parkview’s operating or reserve funds.
Amid the aftermath of the COVID-19 pandemic, the facility has been experiencing some financial hardships that have forced it to draw from its reserve fund every year to cover operating costs.
It first started in 2021, according to the staff report, when The Parkview first started experiencing increased vacancies as well as continued increased staffing and maintenance costs.
Tibon also cited COVID concerns from families who were scared to place their senior relatives in close communities such as The Parkview.
“Deficits during this time were partly driven by occupancy challenges which were exacerbated by the hesitancy of families to place loved ones in an assisted-living community because of the fear of COVID spread within a community,” she said.
That’s why the city approved requests in 2021 and 2022 to draw down from the facility’s operating reserves — $188,144 was approved in 2022 and $701,935 in 2023, according to the staff report.
Per the loan agreement between the city and The Parkview, the facility can use its reserve funds to cover the property’s operating deficit for “extraordinary operating costs”.
The Parkview has also been facing other internal issues during these past few years.
In 2021, the Department of Social Services’ Community Care Licensing Division conducted an investigation of a complaint it received regarding a staff from The Parkview allegedly making inappropriate comments to a resident about their private area.
According to the state’s investigation report, the allegation was substantiated and the facility was issued a Type B citation, which forced the facility to take corrective action by providing training for staff.
The division then gave The Parkview another Type B citation more recently, this March, for failing to order medication refills in a timely manner, which forced the facility to improve its procedures and training when it came to medication.
One of the facility’s property owners, Eskaton — which provides senior living care and services in Northern California — was named in a lawsuit in 2021 where an Eskaton employee who worked at one of its facilities in Pleasanton is alleging a laundry list of violations. The Parkview was not explicitly named, but it is the only property Eskaton operates in Pleasanton.
Those allegations range from not paying overtime and not providing breaks, to not maintaining accurate payrolls and not calculating sick leave rates properly.
Tibon said that while she could not “comment on any specific personnel or ongoing legal matters,” she said all of these complaints and allegations are not why residents are leaving and are not the cause for the facility’s financial troubles.
“In terms of satisfaction of our residents, we continually monitor feedback through regular satisfaction surveys,” she said. “Our latest survey shows over 90% of our residents and their families express high satisfaction with our services and care.”
“We take any and all allegations very seriously and investigate them thoroughly to ensure our high standards are maintained,” Tibon added. “It’s important to clarify that no ongoing trends have been observed in relation to the reasons residents may choose to leave our community. Transition decisions are often personal and varied.”
The main financial hit the facility took last year was the continued increase in vacancies, which is how it makes most of its money through the rent money from those units.
“During 2023, the average occupancy at the property was 90%, which is an average of 11 vacant market-rate units per month,” according to the staff report. “With an average rent of $8,500 per unit, the total rent loss due to vacancy in 2023 was $1,470,000.”
But despite those vacancies, staffing and maintenance costs, and rising interest expenses last year, The Parkview has been working on ways to “improve their financial and operating conditions and avoid further need to draw down reserves.”
That includes implementing a 5% rent increase on units that are turned over, improving its marketing and outreach efforts and offering concessions such as a free month without rent.
Already, the facility has seen vacancy steadily improving this year, which is a start. But as Councilmember Jack Balch pointed out during the comment portion of the consent calendar item on Aug. 20, The Parkview needs to drastically turn itself around financially to make sure it doesn’t fully deplete its reserves.
Balch said he was worried the nearly $2 million left in the reserves — which is after the recent withdrawal — is at risk of being exhausted over the next two years if the city continues to use those funds to cover operating costs.
City Manager Gerry Beaudin said the city has similar concerns.
“We want to make sure that there’s a plan that creates better success for Parkview,” Beaudin said. “The use of reserves is not sustainable.”
However, Pleasanton housing manager Steve Hernandez assured Balch during the meeting that The Parkview is on track to reduce vacancy rate so they can generate rent revenue and replenish its operating reserves.
“Based on the first five months of 2024 through May, The Parkview is projecting an annualized $785,697 operating margin for 2024,” according to the staff report. “The projected annualized total operating expenses are already below the 2024 budget level, and as The Parkview continues to see its occupancy rate nearer to 95%, this operating margin will further increase, which leaves The Parkview very optimistic that the property will not have an operating deficit in 2024.”
