Palazzo Di Oro lender and operator said to be in "confidential" talks

ST. PETERSBURG — Palazzo Di Oro, the assisted living facility whose operator suddenly announced plans to shut it down, is mired in further controversy.

Learning that the ALF would be shuttered, the lender foreclosing on the property filed an emergency motion seeking a court-appointed receiver to keep the place open.

A hearing set for Thursday was suddenly canceled, with the lender announcing "confidential settlement negotiations" with the facility's operator.

A representative for a couple of investors in the property say they are reeling.

"We feel terrible for the residents. It was the owners' intention to keep the facility open,'' said Debra Schleining, whose firm, Turner Investment Corp., represents two of the almost two dozen investors in Palazzo Di Oro.

Meanwhile, many of the facility's 78 or so elderly residents have already moved. Others, like Mildred Frey, 94, and her husband, Robert, 90, plan to do so soon.

"We've gone through a very stressful time,'' Mildred Frey said.

"When we thought we had to, we signed on for a lovely place in Largo and now we're happy again. We don't want all this confusion and want to go on with our lives."

The fact is, while the Freys and other Palazzo Di Oro residents went about their daily lives, the facility they envisioned as a permanent home was sinking into a financial quagmire. Property taxes stopped being paid in 2008, the mortgage hadn't been paid since last spring, and in February, Senior Care Group of Tampa, which operates the facility, agreed to pay almost $1 million to settle allegations it had defrauded Medicare at two out-of-state facilities.

Closer to home, Senior Care Group proposes to partially restore the historic Belleview Biltmore Resort & Spa in Belleair and turn it into a senior facility.

Palazzo Di Oro's financial backers are devastated, Schleining said.

"It's a very, very sad reality that investors who were counting on this probably are facing the prospect of losing the $4.5 million that they have invested,'' Schleining said from her office in Omaha, Neb.

"This is part of most of these people's retirement.''

Schleining said a majority of the investors fought to save the property they own jointly, but their efforts were stymied by an immovable lender and by Senior Care Group, which made an arbitrary decision to close the facility.

"We are horrified by their actions,'' she said.

Lender OSM-LOR of Minnesota filed its emergency motion for a court-appointed receiver days after learning that Senior Care Group had notified residents that Palazzo Di Oro was closing.

At the time, OSM-LOR's lawyer Zachary J. Bancroft said the lender intended to keep the facility open during and after the foreclosure, "assuming there are residents that desire to remain in the facility.''

Court documents filed by the lender show that Palazzo Di Oro's owners have not paid the $85,500 monthly rent since May 2010 and have defaulted on a $7 million mortgage. Schleining said, however, that there's more to the story.

Palazzo Di Oro, she said, was operated by an entity of Senior Care Group, which leased the facility and held the license to run it.

"Senior Care Group guaranteed the lease, but has not stood behind the guarantee to date,'' she said.

Under an agreement with investors, Senior Care Group — whose website says it owns, manages and operates 22 properties in Florida, North Carolina, Colorado, Oklahoma, and Georgia — was supposed to pay the mortgage, taxes and insurance, as well as rent to the investors, Schleining said.

Last summer, investors got the bad news that neither the mortgage nor the property taxes were being paid. With foreclosure looming, Schleining said, the investors split into two groups — a 72 percent majority unhappy with Senior Care Group and the other "more closely aligned'' with the Tampa firm and its chairman David R. Vaughan.

"We could not evict Senior Care (from Palazzo Di Oro) without 100 percent of the investors, even after they were in default of their loan,'' Schleining said.

Neither Vaughan nor a lawyer for Senior Care Group returned calls for this article.

Schleining said she does not know what the negotiations between the lender and Senior Care Group mean for investors.

For now, one thing seems clear: Palazzo Di Oro is going out of business. Last week a legal notice appeared in the St. Petersburg Times stating that the facility will close by May 15. As of Friday, the Agency for Health Care Administration, which regulates the state's 36,000 health care facilities and requires a 90-day notification of closings, had not been told, the agency's public information officer Shelisha Coleman said. The facility could be fined for failing to do so.

Meanwhile, Palazzo Di Oro has lost many of its residents.

Rita Dudley, president of the residents' council, would have liked to have remained.

"When you get older and you're in one place, it is just like cold water in your face to have to change. It's an unknown and just scary for old people, like it is for little kids,'' said Dudley, 82.

Times researcher Caryn Baird contributed to this story. Waveney Ann Moore can be reached at wmoore@sptimes.com or (727) 892-2283.

Palazzo Di Oro lender and operator said to be in "confidential" talks 04/05/11 [Last modified: Friday, April 8, 2011 4:50pm]

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