Nearly two months after the Reutlinger Community in Danville released details of an agreement to affiliate with an outside nonprofit that manages senior residences, a group of trustees, donors and family members who strongly oppose the plan intend to file a lawsuit to stop it.
Under the terms of the 700-page agreement, approved by the Reutlinger board Sept. 10, Eskaton, a Sacramento-based corporation that owns and manages similar facilities in Northern California, will take over operations. Once the transition is complete, the Jewish senior residence will dissolve its board. A new seat will be created on Eskaton’s board of directors, to be filled by one member representing Reutlinger’s interests. The Reutlinger board has chosen its chairman, Jordan Rose, to serve the first of three consecutive three-year terms.
The home will retain its name and Jewish character.
Many of these details had already been shared with the Reutlinger staff, residents and families since the intention to affiliate was announced in March. What had not been previously disclosed — and raised alarm bells — is a clause in the agreement that permits Eskaton after five years to “relocate the principal business and operations of Reutlinger to another comparable facility located in the East Bay… provided that all of the then-residents of Reutlinger are provided comparable accommodations and services at comparable costs.”
“The commitments on the part of Eskaton are very loose,” Donald Chaiken, a Lafayette home builder and major donor to the Reutlinger Community, who opposes the agreement, told J. in an interview. “After a period of five years, Eskaton’s obligations to maintain the facility and maintain Jewish content go away. There is a serious concern… that over a period of time, Eskaton could cause Reutlinger to be sold, to change its character, to move its residents to another facility, and maintaining it as a Jewish entity could potentially go away. None of that was in [previous] discussions or presentations.”
He also chided the Reutlinger board, which negotiated the agreement behind closed doors over a 12-month period, asserting that it did not “do due diligence in a number of ways. They never got a business plan from Eskaton, never got budgets, never described how they would cover management fees. Even after the agreement was signed, they tried to keep everything secret, saying the agreement had a confidentiality clause.”
Chaiken said he will be joined by trustees, past board presidents and others in a lawsuit to delay or derail the affiliation. His attorney has written to the state attorney general’s office condemning the agreement and stating that “this letter constitutes notice to the Attorney General that [action] will be filed.”
Eskaton CEO Todd Murch told J. that the clause referring to the right to relocate the home and its residents after five years was “pretty innocent and typical” contractual language.
“You have to allow both organizations to have some flexibility,” Murch said. “Eskaton can’t make an absolute unconditional commitment that [Reutlinger] will exist in its current form for 10, 15 or 20 years. The world changes.
“In my view, with my 38 years of experience, [relocation] is unlikely. It’s very expensive to relocate a community. I can’t see a scenario where that would make a lot of sense. Certain things like this are included because you can’t predict the future. No one wants to be bound to a set of circumstances that remove all judgment and planning.”
Eskaton reported revenue of more than $200 million in its 2017-2018 financial statement. It operates more than 30 assisted-living, palliative-care, short-term rehab and skilled-nursing facilities throughout Northern California. The Reutlinger Community began 60 years ago as the Home for Jewish Parents in Oakland and moved to its 180-bed home in Danville in 1999.
With the affiliation agreement signed, the next step is for the attorney general to approve it. To gather public comment, a representative from the AG’s office held a hearing on Tuesday at the Reutlinger Community. In a three-hour meeting that at times grew tense, proponents and opponents of the affiliation addressed Deputy Attorney General Anita Velasco.
Reutlinger CEO Jay Zimmer was the first to speak, saying he was “aware of opponents [of the agreement] who have not put in the time and detail we have” and have “been spreading incomplete and misinformation.”
Having an anchor in Eskaton will go a long way to stabilize us. The time to do this is now.
He affirmed a commitment by both parties to “providing high-quality health care to seniors in a stimulating environment, with a commitment to Jewish values.” He said the facility will maintain its fund to assist low-income seniors and Holocaust survivors, keep a staff rabbi, celebrate Jewish holidays, offer kosher meals and keep mezuzahs on the doors. All of these are itemized in the text of the agreement.
“Eskaton has never once wavered in support of our values,” Zimmer added. “Having an anchor in Eskaton will go a long way to stabilize us. The time to do this is now.”
At the hearing, Rose, the Reutlinger board chair, described the increasingly challenging economic environment for single-site stand-alone facilities such as Reutlinger. The home lost $2 million in the last fiscal year, the San Francisco attorney said, and without partnering with a larger entity it would likely not survive another five years. “Affiliating sooner would provide a greater likelihood of being able to obtain favorable terms in negotiating an affiliation,” he said.
Rose also said the board is “more than satisfied that it made a reasonable and prudent financial” decision to affiliate.
Eskaton’s Murch told Velasco that his company was committed to honoring the Jewish home’s traditions, even contractually commiting to paying attorney’s fees should the designated Reutlinger board member believe there had been a breach of contract. “We felt strongly that if maintaining Jewish values and traditions was the single most important [consideration], they should have unique powers to enforce them over time,” he noted.
After several other Reutlinger staff and board members spoke in favor of the affiliation, opponents took their turn at the microphone.
Michael Simon, a member of Reutlinger’s trustee advisory board who acknowledged the rationale for an affiliation, said he was nevertheless “very disturbed by this agreement,” and that “I would sign no agreement that gives [Eskaton] the right to relocate people after five years and assume control of the facility.”
Fellow trustee and former Reutlinger board president Diane Rosenberg said that the home “belongs to the East Bay Jewish community. It does not belong to a board of directors that is self-nominated and self-installed.” She lamented “the secrecy and lack of transparency that has surrounded this agreement” and the fact that she and her colleagues were made “aware of everything after the fact.”
She appealed to the deputy attorney general to “stop this and give us an opportunity as a community to come together and come up with another solution. I am confident the East Bay Jewish community will respond.”
Rosenberg added, “An agreement that allows our loved ones to be moved away from their home? I believe this to be so un-Jewish that I can hardly bear to hear everyone talk about Jewish values.”
Chaiken, the major donor who opposes the agreement, also spoke at the hearing, claiming that Eskaton is “getting the world’s biggest bargain. They will control this facility and will over time be able to do anything they want to do. I don’t question Eskaton’s ethics, but however they negotiated this deal, they had better negotiators than we do. I ask the attorney general to do nothing by way of approving this deal until there is time to evaluate alternatives.”
Reutlinger board member Craig Judson countered, saying there had been multiple informational meetings with groups representing family members and residents, staff and other stakeholders over the past several months.
Other issues raised at the hearing included how Eskaton would fulfill its promise to spend up to $5 million in needed site repairs and renovations, why the broader Jewish community was not more closely consulted in planning the future of the Reutlinger Community, and how the board designee would be chosen in the future.
Approval of the affiliation is now in the hands of the attorney general’s office, which has 90 days to issue its decision.
People on both sides readily agreed that everyone involved cares deeply about the Reutlinger Community and wants to see it thrive. But opponents of the affiliation believe there must be an alternative to taking away control of the facility from the Jewish community that created and has sustained it.
“This facility has done so much for the Jewish community in its 60 years,” Rosenberg told J. several days before the meeting, “and to so discard its importance is just mind-boggling.”