Company pinpoints Cottage Grove for care center.

Byline: Development Report by The Register-Guard

RISING SUNWEST: After nearly two years of planning, Salem-based developer Sunwest Management Inc. is moving ahead with building a 62-unit assisted-living center and a 24-unit Alzheimer's care center in Cottage Grove.

The $7 million project will go near the hospital PeaceHealth is building on the east side of Cottage Grove's main Interstate 5 interchange.

The center will be managed by Sunwest, a private firm that runs about 100 retirement homes, assisted-living centers and other similar projects nationwide. The development will be owned by a private investment group assembled by Sunwest, said Michael Deines, Sunwest's development director.

Deines said there's a shortage of assisted-living and Alzheimer's units in the Cottage Grove area, forcing South Lane County families to move their elderly parents to care centers in the Eugene-Springfield area.

But Carmen Dake, owner of Cottage Grove's only assisted living center - Magnolia Gardens - said she's surprised that Sunwest is proceeding.

Demand isn't that strong, Dake said. "I don't have that big a waiting list," she said. "I think they (Sunwest) will be pretty slow filling up."

Magnolia has 51 assisted-living units and three independent-living units. The business is adding a 10-unit, $600,000 Alzheimer's care building, to be completed in March, Dake said.

Magnolia Gardens, on three acres, opened seven years ago. Dake said she plans eventually to add a 15-unit Alzheimer's building and two more duplexes for independent living. The city has already approved a master-plan with those elements, she said.

"I don't see how there will be enough demand" for both Magnolia and Sunwest, Dake said.

Deines said there's room for both projects.

"We've been high on Cottage Grove for a long time," he said.

"People in outlying areas are being forced to go to Eugene" to get assisted living units, he said.

Clients for the new Sunwest project will typically be elderly parents of Cottage Grove area residents, Deines said. As these parents age, they need more care and they want to stay near their families, he said.

The Cottage Grove area now has no units for Alzheimer's patients, he noted. "Dementia patients have to go to Eugene now," he said.

The Sunwest complex - a two-story building of assisted-living units and a one-story building with the Alzheimer's units - will have about 40 full-time-equivalent workers, Deines said.

Sunwest has submitted plans to the city Planning Commission and hopes to break ground this summer, Deines said. Construction should take about 10 months.

Sunwest is buying the land - 4.83 acres on Village Drive, next to the Cottage Theater building - from Cottage Grove businessman and philanthropist Casey Woodard.

The parties are negotiating a price, Woodard said.

PeaceHealth last year bought from Woodard 6.7 acres for $1.2 million - that's about $179,000 an acre - across Village Drive from the Sunwest site. PeaceHealth is putting its hospital on that land.

Woodard has been instrumental in bringing both the hospital and Sunwest project to the I-5 interchange area.

The city in 1989 designated much of the vacant land at the I-5 interchange for commercial-tourist use, said Howard Schesser, Cottage Grove's community development director.

The land sat idle for several years, until retailing giant Wal-Mart in 1993 proposed building a store there. Wal-Mart backers proposed rewriting the land-use rules to allow retail stores in the commercial-tourist zone. Supporters and opponents fought for several years before the proponents won the land-use changes. Wal-Mart opened off Row River Road in 1996.

Woodard in 2001 persuaded the city to further amend the land-use rules for the commercial-tourist area to allow hospitals and assisted-living centers. That proposal faced no opposition.

But assisted-living centers have encountered controversy on another front.

The state Legislature in 2001 imposed a moratorium on new assisted-living centers, but Sunwest submitted preliminary plans for the Cottage Grove facility just before the moratorium took effect.

The state imposed the moratorium because assisted-living centers were becoming a drain on the state's Medicaid budget. The federal government had granted Oregon special permission to use federal Medicaid money to help pay the costs of elderly people in assisted-living centers.

That helped spark a boom in development of assisted-living centers in Oregon, as developers figured the state would automatically pay the costs of at least some of the occupants.

Oregon now has 185 assisted living centers totalling 12,200 units, and 227 residential care facilities - a type of center built to lesser standards -with 8,300 units, said Dennetta Taber, assisted-living coordinator for the state Department of Human Services.

The state hoped a moratorium would "keep down the proliferation" of assisted-living centers, Taber said. But the Legislature gave developers ample time to submit plans before the cutoff, she said. So developers swamped the agency with plans, she said. Even now, 18 months after the moratorium took effect, plans for 81 assisted-living centers and 71 residential care facilities that were submitted before the moratorium date are still on file with the state, Taber said.

"Everybody heard the moratorium was going in, and everybody threw in plans," said Dake.

The pace of assisted-living center construction has finally begun to slacken, Taber said, as the economy has slowed and the glut of existing centers has deterred developers from embarking on new projects.

Sunwest's Deines said he figures the Cottage Grove project will succeed in part because it's right next to I-5 and the new Cottage Grove hospital, which is due to open later this year.

"It's a very desirable location," he said.

By business editor Christian Wihtol. Development Report runs Tuesdays.