This Old Folks' Home
Shannon Loecher spent two years searching for her dream condominium. Every development she toured had a flaw: The price was too high or the location was inconvenient or the design was too ordinary.
But in 2005, the 37-year-old sales executive finally found her ideal condo at the Crescent Trace development in northeast Minneapolis. The fledgling complex was affordably priced, located just minutes from downtown, and architecturally distinctive.
Loecher selected a second-floor corner unit and signed a purchase agreement for just over $200,000. In early 2007, following some construction delays, she finally closed on the property and moved into her new home. At the time, she was told by the developer, Dunbar Development Corporation, that 40 percent of the units in the building were already sold or reserved.
Loecher immediately set about refashioning the unit to accommodate her tastes. She ripped out the carpeting and installed wood floors. She redesigned the closets and replaced all the faucet heads. All told, Loecher estimates, she poured an additional $12,000 into the renovations.
"You're looking at all my money," Loecher says, spreading her arms to indicate the meticulously furnished space.
But while working diligently to perfect her new home, Loecher began to notice a curious trend. With the condo market plummeting, there seemed to be very few people moving into the 56-unit building.
Then one evening in November, Loecher's next-door neighbor knocked on her door. He'd heard rumors that the struggling condo development was slated to be converted into a retirement community. On a whim, he'd done a Google search of the terms "Crescent Trace" and "elderly housing." What popped up were minutes from a Minneapolis City Council committee meeting. The documents showed that the council had approved $7.2 million in tax-exempt bonds to enable Catholic Eldercare, a local nonprofit group, to purchase the Crescent Trace building and convert it into senior housing.
"I was shocked," Loecher recalls, "but I still didn't believe it could happen."
Unbeknownst to the residents, Dunbar Development Corporation had been struggling to market the building for months. Only 16 of the building's 56 units had been sold.
Meanwhile Catholic Eldercare had been looking to expand its housing services for the neighborhood's burgeoning elderly population. The local nonprofit group agreed to buy the 40 remaining units and rent them to people 55 and older.
Mary Broderick, president of Catholic Eldercare, says it was the developer's idea. "This came to us as an opportunity to do what was in our plans for responding to our needs," she says. "It just happened." (Frank Dunbar, the owner of Dunbar Development Group, did not return three calls from City Pages seeking comment.)
"I think a lot of the homeowners felt left out and treated like chopped liver," says George Jacob, who owns a fifth-floor unit. "They knew we were here. They knew they had to deal with us."
The residents feared that their condos would plummet in value once the purchase went through. "My feeling is that once Catholic Eldercare bought the 40 units, these [remaining] units become unmarketable," says Jacob, a 49-year-old real-estate sales associate. "Who do I sell to besides Catholic Eldercare?"
Meetings with both the developer and Catholic Eldercare in the ensuing weeks only heightened residents' concerns. They learned that a community meeting on the proposal had been held by the St. Anthony West Neighborhood Organization earlier that year. The Crescent Trace development is located in the adjacent Sheridan neighborhood, which is why none of the residents were notified.
The condo owners also found out that among Catholic Eldercare's board members are Ward Three City Councilwoman Diane Hofstede's husband and father-in-law. Despite this seeming conflict of interest, Hofstede had failed to recuse herself from voting through the $7.2 million in tax-exempt bonds.
Diane Hofstede professes to not remember if she voted to approve the bonds. "This is really a private decision between the purchaser and the members of the condominium," she says.
Broderick insists that Catholic Eldercare informed the residents as soon as it was feasible. "We were considering this as a purchase, and whether we would be financially able to do it," she says. "We were not in a position to be talking to them any earlier than we did."
Once it became clear that the senior housing project was a done deal, the condo owners searched for a way out. The consensus was that Catholic Eldercare should buy its units at fair market value, plus compensation for renovations made to the individual units. "All anybody wanted was to get their money back," says Loecher.
The condo owners hired an attorney, Larry Berg. What followed was two months of contentious negotiations. Last month, the talks broke down completely. The attorney representing Catholic Eldercare in the matter, James Holmes, was adamant that the charity had made its final bid for the units.
"If that is unacceptable to your clients we will proceed without them," he wrote to Berg at the time. "I'm sorry, but my client has no appetite for further negotiations."
The hardball tactics surprised many of the condo owners. "I am appalled—and I'm Catholic," says Loecher. "For any business to come in and treat us the way we were treated—it might be legal, but it's not right."
The stalemate was eventually broken when five of the condo owners agreed to the purchase prices. Catholic Eldercare then reached agreements with all but one condo owner to buy out their units at "fair market value" by 2012.
But some unit owners felt that they were left with no choice but to sign the contracts. They'd already spent almost $28,000 on legal bills and didn't want to risk further costs by filing a lawsuit.
"There are people who really agonized over it because it offered them the potential to get their money back, but no guarantee," says Loecher. "It was really difficult. People have lost a lot of sleep."
The lone holdout is Patrick Olsen. On a recent weekday afternoon, the 36-year-old with a clean-shaven head wore a Twins jersey as he opened the door to his fifth-floor corner unit, which is decorated with bobblehead dolls and other sports memorabilia. Olsen was the last person to buy a Crescent Trace unit, in April 2007. He paid $255,000 and put no money down on the condo.
"I feel like I'm getting backed into a corner and have no way out," he says.
Olsen is resigned to fight for a fair deal—even if it means living in a senior-housing development. "Sign me up for meals on wheels," he laughs. "I'm lazy. Save me a trip to Taco Bell."
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