History of Paradise Valley Estates
By Maj. Gen. John Collens, NCROC Chairman
Introduction
Robert (Bob) Steinkraus, Colonel (USMC
Retired) who was the very first Managing Editor of the Paradise
Valley Estates resident’s newspaper, ELYSIAN FIELDS,
decided that the history of how Paradise Valley Estates was
formed would be of interest to all of the present and future
residents. Bob asked Major General John Collens, (USAF Retired),
the chairman of the Northern California Retired Officers Community
(NCROC) to write a history of Paradise Valley Estates since
many of us did not know the genesis of this Paradise in which
we live. The History, as you see in the following pages, was
published in the very first four issues of the ELYSIAN FIELDS.
It is republished here as it appeared in the ELYSIAN FIELDS,
in four parts, so that this information is not lost and to
insure that the dedication of the members of the NCROC Board
in establishing Paradise Valley Estates is not forgotten.
Part 1: Getting Started | Part
2: The Search | Part 3: Show Me The Money | Part
4: Contruction Phase
Part 1: Getting Started
 In
early summer, 1991, the former chairman of the board, Air Force
Village West, Maj. Gen. (USAF Ret) Ed Nichols called me. He stated
that a 1989 survey of the retired military office population
in the Sacramento-S.F. Bay Area indicated feasibility for a continuing
care retirement community (CCRC) in Northern California. Needed
was an embryonic local board of directors, and could I help?
I was generally familiar with the Air Force Village concept in
San Antonio, but not with the details of how to arrange financing,
construction governmental interface and operation. In addition,
I did not possess the required political connections with the
likely communities where the CCRC could be located.
For a military oriented CCRC to succeed it usually requires close
proximity to an active DOD installation. Travis AFB, an unlikely
candidate for base closure, was near the geographical center
of Northern California’s retired uniformed services officer
population –Army, Navy, Marines, NOAA – The Group
to whom the CCRC would appeal. Therefore, someone on the embryonic
board should be known and have clout with the city fathers of
Fairfield and Vacaville, Travis’ neighboring towns.
My former boss and fellow retired USAF Maj. Gen. Tom Aldrich,
immediately came to mind as someone who possessed the talent
to lead our board of directors. Tom had been the commanding general
of the numbered Air Force organization that ran Travis AFB and
its’ far-flung operating bases. He also was employed as
a Vice President with Anheuser Bush and well acquainted with
all the politicians that enjoyed having this huge military operation
and brewery in their bailiwick. Tom was putting in long hours
at his civilian job and already up to his ears in tasks with
other corporate boards. He offered to help, to serve on the board,
but had to decline to be the chairman.
The Chairman of the Travis Federal Credit Union retired USAF
Lt. Gen. John Gonge, with whom Tom and I worked while on active
duty, resided in Vacaville and had the requisite connections.
He accepted our offer to Chair the embryonic board and brought
on the board the former judge advocate at Travis, retired Lt.
Col. John DeRonde who was also a retired superior court judge.
I got a civil engineer known to me, retired USAF Col. George
Tuttle who also was employed by Pacific Bell Telephone, to join
our board. None of us would be paid, not even travel expenses
to board meetings. It had to be a labor of love and dedication.
Our embryonic board was now formed with persons of independent
means who possess financial, legal and construction experience.
On July 25, 1991 Ed Nichols brought a team consisting of Haskell
Community Developers and Force Financial to Travis to brief our
5-man board on the rudiments of finding a site, financing, budgeting,
developing, constructing and operating a CCRC. If everything
would go as planned it would take 51 month from our engagement
of the Haskell/Force team to the first occupancy of what would
become Paradise Valley Estates.
All five of us flew to Southern California AF Village West to
see what a going operation looked like before we signed any agreements
to proceed and formally establish what would become a non-profit
organization, Northern California Retired Officers Community
(NCROC). John Gonge became its first chairman, Tom its Vice Chairman
and I its First Secretary.
In a later issue, we will address in Part II the saga of finding
a desirable site, adding members to the board of directors, changing
of leadership, and overcoming obstacles along the way to where
we are today.
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Part 2: The Search
 Part
1, Getting Started, covered how a group of retired officers became
interested in the continuing care retired community (CCRC) concept
and became the initial Board of Directors of NCROC, the sponsor
of Paradise Valley Estates (PVE). Incorporation of NCROC and
subsequent signing of agreements and contracts with Haskell Community
Developers, Force Financial and other entities followed as the
search for suitable land continued.
Before we were incorporated or entered into the various contracts
it was necessary to determine how the CCRC would market and operate
its services. Three specific ways were considered: (1) sell title
to the living units as is done at USAA Towers, (2) rent the units
with time limit nursing care insurance similar to Liberty Heights
near Colorado Springs, or (3) offer the guarantees for occupancy
and healthcare similar to the Air Force Villages/Fleet Landing/Army
Retired Residence models.
Anyone with the dollars can move into USAA Towers, financing
that real estate project was difficult, and funds are not available
for healthcare. Also, camaraderie with military officers cannot
be assured. Healthcare at Liberty Heights is covered by an insurance
polity with various options and duration, and monthly fees increase
dramatically. The five existing military officer CCRCs have demonstrated
success in marketing and operation, first generation of residents
do not pay for the entire project, and discounted healthcare
is assured. So, we looked to their example as the way to operate
PVE.
However, we did not wish to choose a name for the community that
denoted it being mostly the province for retired Air Force, Navy
or Army officers. Since we would be open to all seven of the
uniformed service officers, a name not associated with any one
of the services should be chosen. But, that had to wait until
the conclusion of our search for location. That would not occur
for several more years.
The embryonic board spent the first six months before incorporation
pouring over many documents before settling in with those who
would put up the seed money to market, develop, finance and construct
PVE. Haskell ventured over $2 million without recourse to our
board to conduct marketing and land surveys, obtain State of
California approval to proceed, actuarial studies, local government
reviews and permits, staffing and a myriad of other requirements.
The reader of this history can appreciate the complexity required
to produce an operating CCRC such as PVE by the following time-line:
exploration of concept – summer 1991, incorporation of
NCROC – January 1992, ground breaking – July 1996,
first residential occupancy – November 1997, and completion
of the Health Center – Spring 1998. A lot happened in between
those dates. This Part 2 will cover why we came to Fairfield
versus Vacaville and the business of the NCROC board.
The search for a suitable site that would appeal to the majority
of Northern California’s 23,000 retired military officer
population and be achievable dollar-wise required a survey of
over 15,000 for whom we had addresses. This was followed a year
later when we met with randomly selected focus groups to test
all aspects of the envisioned community. All the while we visited
eight sites within 15 miles of Travis AFB, a criterion the survey
produced.
Most of the sites were rejected for a myriad of reasons. Initially,
the PVE site was too expensive, but when the California economy
and housing market hit the skids the price dropped $3 million
and it became a contender. One property that could have been
a contender was owned by the NCROC board chairman who resigned
to allow his parcel to be considered. The land was outside city
limits, would have required a referendum that was predicted to
fail, and did not have the support of Vacaville’s government.
The other likely contender was also outside Vacaville city limits,
would require very expensive extension of infrastructure, had
option-to-buy entanglements, and would also require a referendum
for annexation.
A detailed cost analysis of the PVE site versus all other possible
locations made it the winner. In addition, a thoroughly cooperative
Fairfield city council rezoned the 68-acre parcel to accommodate
a CCRC versus single-family dwellings. Our site was already within
the city limits with infrastructure running right up to the parcel
line ready to hookup.
Vacaville’s government was equally cooperative and expended
many staff hours/days with our proposal. Ultimately it was assured
access and infrastructure versus Vacaville’s less expensive
land that made the PVE site the better and lower overall cost
choice. Those who live in Paradise Valley Estates can appreciate
the choice. PVE has a better climate and aesthetic surroundings
than the Vacaville site.
The board of directors was changing throughout this time. I replaced
the prior chairman, Lt. Gen. John Gonge. Captain Jack Biederman,
USN civil engineer, joined the board and was instrumental in
fine-tuning the construction contracts, which produced the quality
community we enjoy today. Colonel Pete Palmos, USAF “money
man”, came aboard and gave us the needed insight of a resident
in his prior retirement community.
George Tuttle moved to Nevada and was replaced by Colonel Brugge,
USA civil engineer. Bob Brugge’s health deteriorated and
he was replaced by Lt. Col. John Dallen, USA Civil engineer.
Dr. Bob Gilmore, USAF Colonel and prior commander of the David
Grant Medical Center at Travis AFB joined us briefly before moving
out-of-state.
During this time of site search lt. Col Ruby hardy, USAF medical
services, and Lt. Cmdr. Jack Orlove, USN and attorney, added
to the expertise so necessary to govern a $95 million development
like PVE. Colonel Paul Bergerot, USAF former Chief of Staff,
22nd Air Force, brought to the board financial acumen from management
of 16 Home Savings business locations and $$ millions. He chairs
our Admissions Committee that has oversight of all persons applying
to be residents.
Reluctantly, Jack Biederman, who had been our civil engineer
anchor since almost day-one, asked to leave the board after many
years of service and commuting from South Bay to our meetings.
H held him to the old WW II service of “duration plus 6
months” as long as possible. Difficult to replace? Yes.
But impossible? Everyone has a successor. Jack’s successor
is Lt. Col. Tom Kurkjian, USA civil engineer, who also replaced
John Dallen who moved out-of-state. Add to the list of unpaid,
board members Lt. Col. Ray Schoch, USAF, a local banker. We are
still looking for a “good” Marine and Jack Orlove
has a contender who may be joining the board soon.
With such a talented board of directors, the residents of PVE
are assured their investment in a lifetime of worry-free retirement
is in good hands. Three of the original board remain: Tom Aldrich,
Jack DeRonde and I.
However, it is the strength and dedication of all on the board
that keeps PVE financially sound and well served.
Join the readers of PVE history when in Part 3 I will relate
how we borrowed $95 million with little more than a non-recourse
signature and the best ever, least cost interest rate financing
for the tax-exempt bonds that made Paradise Valley Estates a
go-ahead project.
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Part 3: Show Me The
Money
 Parts
1 and 2 have taken the reader of this history from concept to
selection of the site upon which Paradise Valley Estates would
be constructed. Part 2 also introduced the past and present members
of the NCROC board of directors. We have now arrived at the next
step – financing the project and engaging the contractor.
But, before leaving “The Search” for a suitable site
we conducted an environmental noise survey. We wished to determine
whether the proximity of I-80 to PVE would produce unacceptable
noise levels. Even with the projected increase in traffic volume,
the site would be below the dB threshold established for residential
development. The land upon which PVE would be built was the perfect
place.
At this point it has been two and a half years since our board
first conceived the CCRC project. We made an offer to option
the PVE site pending successful financing for the project. The
Board had its reputation at stake, but Haskell was at risk of
losing over $2 million and having to demolish the marketing office
(a Duplex 2 home) if we could not meet the stringent requirements
to obtain financing by banks. A lot of steps were necessary to
attract the lenders and gain State of California approval. In
June 1994 the Department of Social Services announced that our
application to sell deposit subscriptions was under review pending
approval. The State is very diligent in its effort to protect
consumers from ill-conceived retirement projects. We could not
collect the requisite deposits that lenders demand in order to
finance the CCRC until that approval was granted. More of Haskell’s
money was at risk with a very expensive application fee and paying
the consultants to the State. However, no prospective resident
stood to lose a deposit. We had been collecting $1000 priority
deposit that were put into restrictive escrow. But, lenders require
that 65% of the living units must generate deposits of 20% of
the entrance fees before they will finance a CCRC project. It
is now late winter 1994 as PVE’s early Ambassadors began
putting up those 20% deposits to make the community a reality.
It would be June 1996 before we reached the required number – about
$8 million (65% of the 327 independent living units reserved
with a 20% deposit.) At that juncture we must tip our collective
hats to the first residents, the Ambassadors, whose deposits
made the project possible. For many months they did not lose
the vision of PVE becoming their home for life and left their
interest-bearing deposits in the project’s escrow account.
Looking back, thirty-six of those estimated fifty-one months
from engagement of Haskell until first occupancy have gone by
before we had a green light to proceed with marketing and construction
of the model unit. The search for a site would delay the beginning
of construction extending the timeline to 76 months from concept
to initial occupancy. It would be the fall of 1994 when we could
begin the painstaking process of attracting serious depositors,
the future residents, so we could get the financing and construct
the project.
Six separate agreements and contracts were signed by the Board
with Haskell Community Developers, Haskell Corporation - the
design and build contractor, and Force Financial who would find/arrange
the financing with lending banks. Separately there would be a
development agreement with the City of Fairfield, and an actuarial
analysis and financial feasibility study required by the State.
While marketing was proceeding, no grass was growing under the
feet of the Board nor at The Haskell Company and Force Financial
in Jacksonville. All the elements of design and costs to construct
were being developed. City Council meeting, working with the
departments of the city – all these and more consumed the
efforts of committees of the Board and Haskell employees. Negotiation
proceeded with various banks to raise the $95 million needed
to construct, pay the costs of borrowing and holding reserves
for a project with strong financial roots.
Force Financial produced a consortium of banks to lend the funds.
But then the lead “letter of credit” bank (Rabo of
the Netherlands) withdrew its participation. That required another
institution to take over the lead to hold the team together.
Dresdner Band of Germany took over that lead. Dresdner, together
with the Bank of Scotland, Banque Nationale de Paris, the Industrial
Bank of Japan, and the (U.S.) National Cooperative Bank, offered
to lend the funds subject to the marketing effort to collect
those 20% deposits on the entrance fees of 65% of the independent
living units. In essence, the banks stated, “show me the
money” -~$8 million. There were other conditions attached
to the banks agreement to lend to NCROC. The funds were to be
tied to high-rated tax-exempt bonds guaranteed by an acceptable
agency. Otherwise, the interest rate on the borrowing would be
unacceptable, increase the indebtedness of the project, and ultimately
cost is future residents.
Negotiations with the city, county and other entities produced
an agency that would lend its name to the bonds, Certificates
of Participation (COP) were issued by the California Statewide
Communities Authority in the amount of $92.3 million, non-taxable.
This financial vehicle enabled NCROC to achieve the lowest interest
raft borrowing to date for any start-up CCRC, under 6% (as of
this writing and average daily rate of 5.7%!). An additional
$1.65 million taxable loan from the banks has since been paid
off. Without these low interest bearing COP's the PVE entrance
fees and/or monthly service fees would be higher. Meanwhile,
the banks use a complex formula to determine how the financial
assets of the NCROC/PVE community may be applied to reduction
of debt after considering funds held in escrow and reserves for
debt service, among other contingencies. As of end of July 1999,
NCROC has retired over $14 million of nontaxable debt in addition
to the taxable $1.65 million. All the while, the monthly service
fee increases have been held below that of other competing CCRCs.
Facing a July 1, 1996 deadline imposed by the Industrial Bank
of Japan to produce the deposits or they would withdraw their
$25 million share of the lending, we reached the ~$8 million
goal in late June. In a flurry of financial activity, Tom Aldrich
and I met with our future creditors, attorneys, the landowner,
and Haskell in San Francisco. There in a 2-day session we obtained
the requisite $95 million, paid the land owner, settled our non-recourse
debt with both Haskell and Force, and left with sufficient funds
to begin construction.
We had a celebration at round breaking where our future residents
observed an army of bulldozers, graders and earthmovers preparing
the land for their future home. In Part 4 of this history I will
relate the successes, trials and tribulations that the construction
of PVE entailed.
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Part 4: Construction
Phase
 The
concise, first person rendering of our history has thus far taken
the reader from concept, through land search, to obtaining requisite
financing. Well before construction began, many steps were necessary
to move the project from proposal to reality. Among those steps
were: detailed soil analysis, architectural plans, city approval
of those plans, its landscaping and setback from Laurel Creek,
interior design, the source and use of funds for every aspect
projected out to the year 2015, thickness and materials required
for structures, streets and sidewalks by city code, detailed
specifications for emergency generation of electricity, alarm
and call systems – and many more requirements to meet NCROC’s
expectations and the State’s approval to proceed.
These steps followed the Board’s acceptance of Haskell
Community Developers’ (HCD) Development Plan in June 1993
and in July the Design-Build Agreement with The Haskell Company
(THC), HCD’s parent corporation. THC is one of the few
contractors in the nation that has both architectural, engineering
and construction staff. They have an impressive list of commercial
and community projects that attest to a team approach with the
architects and builders working together. In the construction
industry, this is known as “design-build.” It avoids
the pitfalls of a builder faced with beautiful to see, impossible
to build plans that ultimately increase the cost of a project.
An Interior Design Agreement with Haskell also included procurement
of furnishings at substantial savings over buying furniture,
carpets, blinds, artwork, etc., locally. The NCROC board was
presented swatches of products and selected the décor
and furnishings for the model unit, and the community and health
centers.
This package of agreements and contracts with Haskell assured
that we would not be exposed to the vagaries of dealing with
subcontractors and vendors. We were insulated from matters that
require expertise and a proven track record in order to avoid
cost overruns. Similar projects without such contracts have deleted
desired features to stay within the construction budget. One
military community deleted sidewalks and a second lavatory in
master bathrooms from its plans to stay within budget. We avoided
these contractual mistakes by choosing Haskell, versus going
it alone. After a thorough review of the desired features to
be included in construction of Paradise Valley Estates, Haskell
presented to the NCROC board its guaranteed maximum price proposal
in November 1995. Earlier artistic renderings included a gazebo
and a second tennis court. These had to drop out to stay within
budget and produce a community with essential features for all
the residents. If needed, those amenities could be considered
in future capital improvement budgets.
As mentioned earlier, construction could not proceed until the
consortium of banks provided the essential funds. But before
that go-ahead date, late June 1996, and the guaranteed maximum
(construction) price proposal the year before, lumber prices
were escalating. This required a revision in April 1996 of some
specifications in order to keep the project’s total construction
cost within budget. Change orders to the proposal were made to
use blown-in insulation versus batts, residential unit slab thickness
reduced to 8 inches, aluminum versus vinyl frame windows, and
other minor modifications to achieve the guaranteed construction
price of nearly $53 million.
Our contract with The Haskell Company included language to assure
quality in every aspect of construction. The banks also required
assurance at each phase of construction that substantial completion
of the phase was achieved before funds would be released to pay
the costs incurred. The phases involved were: site work, landscape,
homes, apartments, community center, health care center, and
recreation building. Each phase had to dovetail with the others
so that neither interfered with construction of the others.
NCROC employed the on-scene services of an engineering consultant
as its owner’s representative. With the beginning of construction
in July 1996, Cole Management and Engineering provided to the
Board quality assurance and inspection of all facets of the construction.
The banks were also represented by and architect. Agreement of
the banks’ and the Board’s representatives with the
progress of construction was needed before funds were released
to Haskell to pay for materials, labor, and obligations to the
subcontractors.
Monthly progress reports began in July 1996 and continued through
March 1998, with the completion of the Health Center, the last
phase of construction. These reports, presented by Haskell’s
onsite project director, Stephen Dent, were accompanied by a
walk through inspection of the construction for which Haskell
would seek progress payments. These monthly sessions, known as
Draw Meetings, involved banks’, Board’s and sometimes
State representatives. I and/or other member of the NCROC Executive
Committee were present and would approve the allocation of the
requested funds. The sums involved were anywhere from the low
$ millions to one “draw” that exceeded $8 million.
However, the Board’s involvement was more than once a month.
Our engineer consultant was in frequent contact, at least weekly,
with me and/or our civil engineer board members. Throughout the
construction phase, I or other Board members would visit the
site several times each month.
Although there were 74 days of substantial rainfall during construction,
notably all of January and February 1998, only the Health Center
suffered meaningful delay due to weather. Beneficial occupancy
of the living units occurred ahead of the contract obligation
date. Only the Health Center did not meet the contract acceptance
date, and this was due in part to inspection delays by various
State departments.
The exacting requirements and specifications for healthcare facilities
in California focused attention of existing health centers. That
diverted the limited staff of the State from communities under
construction to trouble-shooting the deficiencies of existing
nursing homes. Out of necessity, the Board had to hire another
consultant with specific expertise and employment experience
with the State as an inspector to oversee just the construction
of the Health Center.
From concept to beginning of construction took 60 months, with
delays in startup due almost entirely to the search for a suitable
site. Due to Haskell’s diligence, expertise, and dogged
determination to meet contractual obligations, the building phase
(Health Center excluded) took just 16 months. The Health Center
might have been completed earlier had early rains not delayed
earthwork and subsequent diversion of inspections not occurred.
All-in-all, it is remarkable that a project the size of paradise
Valley Estates could be completed from bare ground to full capability
and operate as a CCRC in less than two years. The team that made
this possible deserves recognition. They are: Haskell Community
Developers, The Haskell Company, Force Financial, a hard working
NCROC Board of Directors, and future residents who pledged their
support with substantial deposits. To all of them, this brief
history is dedicated.
Bound and unbound document from my files that attest to the fact
included herein have been turned over to Paradise Valley Estates
to be preserved for future reference.
– John W. Collens, Major General USAF Retired, NCROC Chairman.
Click
here for more information about Maj. General Collens.
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