Retirees Form Legal Fund -- As Pacific Regent Plans Tower, Residents Fight Management

-- BELLEVUE

While Bellevue city officials say they're ``very close'' to approving plans to build a second tower for the exclusive Pacific Regent retirement center, some residents in the existing tower say they're disgruntled about the current management contract with the developer.

Residents, upset with rising operating costs, among other issues, have established a ``litigation fund'' and have hired the law firm Perkins Coie to represent them in negotiating a new management contract, said an officer on Pacific Regent's board of residents.

Pacific Regent, situated south of Ashwood School on 109th Avenue Northeast near Northeast Ninth Street, is owned by the Pennyfarthing Development Corp. of Vancouver, B.C., and is managed by a Pennyfarthing subsidiary, False Creek Management.

The existing building, a 17-story tower, opened in 1987. It includes a restaurant and a 54-bed nursing facility. When the second tower is complete, Pacific Regent will have about 281 units, said a Bellevue planner.

About 180 elderly residents live at the retirement center, including about 50 in the nursing facility.

Owen Clark, chairman of the resident's board, acknowledged that a litigation fund has been established, and that residents have a dispute with Pacific Regent management. However, he said, he believes a settlement can be reached by the end of the month.

``This is nothing that's going to interfere with the

construction of the second tower,'' said Clark.

The litigation fund is coming from a $750-per-suite assessment, according to a Sept. 27 memo from the Pacific Regent Condominium Association board of directors.

Most Pacific Regent residents have paid a lump sum fee (which was between $83,000 and $200,000 at the time the facility opened) for lifetime occupancy rights. In addition, they must cover operating costs at the retirement center through a monthly service fee.

The fee is one of the sore spots for residents. It's increased about 40 percent in three years to cover the rising operating costs at Pacific Regent. One couple, for example, said their monthly fee has risen from about $1,200 to nearly $1,800 in three years. An additional 15 percent increase has been requested for January, residents said.

Anthony Hepworth, president of Pennyfarthing, said he is aware of the complaints, and is trying to hold down costs, which amount to about $4.2 million a year.

However, under the current contract, residents say there is no incentive for Pennyfarthing to keep operating costs low, since it receives fees based on Pacific Regent's gross receipts. The fees, totaling 11.5 percent of the center's gross, are a 5 percent management fee and a 6.5 percent partnership fee.

Hepworth, however, disputes the residents' position.

``We do have an incentive to control costs, and it's an obvious one,'' he said. ``When people die we have to re-sell their apartment, and it would be difficult to do that if the operating (fee) is too costly.''

The nursing-care facility accounts for about 60 percent of Pacific Regent's operating budget, something all residents support with their monthly fee since they ``own'' the facility, he said.

A recommendation in the new agreement, though, would have Pennyfarthing lease the nursing care center from the residents, which means they wouldn't have to worry about running it, Hepworth said.

``The attitude of residents is, `We're retired and we don't want to be bothered by running a business.' We can understand that,'' he added.

Other points of contention include giving more authority to the residents' board, and dealing with potential disruptions during construction of the second tower.

Ken Thiem, the Bellevue planner reviewing the Pacific Regent project, said plans for the second tower were approved four years ago, although amendments to its design require new approval.

If the amendments are approved, there is a 20-day period for objecting to the decision.

Hepworth said he expects to be ready to start construction on the second tower by the middle of 1991.