(Editor's Note: The following was addressed to the mayor and is printed here by request of its authors.)

With the aid of hindsight, it is easy to conclude that the planned senior housing development at St. Paul's was and is a foolish mistake. The developer chosen by the village, CareMatrix, is in dire financial straits. In the last 11 months, the company's stock has tumbled from more than $30 a share to about $3 a share. According to one of the company's own press releases, its development plans have floundered due to a "lack of attractive financing." The company has also suffered from slower than expected fill-ups in a number of new facilities, and it recently reported a net loss of more than $1.2 million for the third quarter of 1999.

Although CareMatrix still professes an interest in completing the planned development, it has not secured financing for the St. Paul's project to date. In sworn testimony taken on Oct. 7, a CareMatrix vice president acknowledged that his company has neither a written nor oral commitment for financing the proposed development. He further admitted that "it's difficult to secure financing for senior housing at this point" and revealed that the company had elected not to proceed with several projects after lending institutions had imposed a large equity requirement that the company wouldn't or couldn't satisfy.

In addition to these financial difficulties, CareMatrix faces some important legal problems. During the last two weeks, at least 10 class-action lawsuits have been filed by stockholders against the company, alleging multiple violations of federal securities laws. In one such lawsuit, officers and directors are accused of having "issued a series of materially false and misleading statements concerning the company's business, financial condition, earnings and prospects" in order to artificially inflate the price of company stock. Another lawsuit alleges that officers and directors inflated the assets, revenues and earnings of the company in order to "secure collateralized financing."

Several CareMatrix projects on Long Island are also embroiled in litigation. In both Great Neck and Glen Cove, the owners of assisted living facilities operated by CareMatrix are seeking to terminate long term management agreements with the company. The lawsuit by the owners alleges that CareMatrix has carried out its duties and responsibilities as manager of the residences in a grossly negligent, fraudulent and intentionally unlawful manner." Legal papers filed by the owners include detailed, sworn allegations of wrongdoing, including the alleged conversion of several hundred thousand dollars from operating accounts, a "shocking" failure to follow basic safety procedures, the co-mingling of residents' security deposits with operating funds, massive cost overruns, and miserable failures with respect to food quality, sanitation, and the training of personnel. Based upon these allegations, the owners are seeking millions of dollars in damages on grounds of breach of contract, fraud, conversion, breach of fiduciary duty.

In the face of these circumstances, the time is ripe for a re-evaluation of the village's options. If, as we believe, the CareMatrix plan is doomed to failure, the village should take a fresh look at whether a senior housing development would represent the best community use of the main building and the acres of green space immediately around it. The committee for Public Trust at St. Paul's stands ready to work with the village for the development of a fiscally responsible, alternative plan. We can and should save the beautiful historic main building from partial destruction and desecration by private developers. We can and should prevent the construction of a massive Wyndham-like structure at the rear of the main building. We can and should preserve all the existing green space at St. Paul's, rather than giving acres of land away along with the main building.

These goals can be readily accomplished without massive expenditure of taxpayer dollars. We have been told by knowledgeable federal officials that historic preservation funds are an available resource if only the village would apply for them. Moreover, as the village knows from its own consultant's report, the main building is structurally sound. There is no reason why it cannot be preserved by the village in the short run, and restored for an appropriate public use sometime in the future. At a very minimum, residents and village officials should take this opportunity to rethink whether giving this village treasure to a private developer is truly the only option.

The Committee For Public Trust

at St. Paul's

Michael A. Ciaffa

Attorney

(Editor's Note: Ciaffa is the attorney for the plaintiffs in Kenney et al vs. Garden City.)