Last week, LGBT-focused retirement community RainbowVision Santa Fe filed for Chapter 11 bankruptcy protection, citing "nonpayment of contractually-required fees" by some of the condo owners as a reason in a press release.


It also points to a recent arbitration ruling as a cause. The ruling, made on June 2, says RainbowVision Santa Fe owes condo owners compensation for breaching a contract with them.

The condo owners are in dispute with the condominium development over rising service fees. The problem, they say, is that as service fees went up over the years, their actual services went down.

"That's a cyclical thing that goes on here at RainbowVision," Jan Gayner, a resident, tells SFR. "They give you things and then they take them away."

Frank Mathew, a lawyer representing the condo owners, says bad business decisions since its 2006 opening led to this moment.

"The developer was relying on a rising real estate market and a healthy rental market," Mathew tells SFR.

After purchasing or renting out units, RainbowVision Santa Fe's residents were required to be members of a club that provided services like airport shuttle rides, dining and workout centers. But since 2006, monthly club fees have gone up by 66 percent.

At the same time, many of the services that were selling points for the community dropped, Mathew says.

"Lunch and dinner were cut from six days a week to four," Mathew tells SFR. "Gym and fitness services were completely eliminated. Van transportation (to the Albuquerque airport) was curtailed."

As this was happening, RainbowVision Santa Fe started using club fees for its overall expenses, something the condo owners were unaware of.

As a result, many of them, including Gayner, stopped paying the fees. When a group of owners filed the arbitration case, they sought damages for "overpayment of services," according to the ruling. The arbitrator eventually came in their favor, ruling that each owner is "entitled to the difference between the amount paid" and one that "best estimates the value of the services actually received."

But the filing for Chapter 11 will likely drag out the process of any payback.

Jane Steinberg, a spokeswoman for RainbowVision, wouldn't comment on the dispute other than saying that "prices do go up over time."

But Kenneth Boiarsky, an attorney who represented RainbowVision Santa Fe during the arbitration process, says the ruling isn't good for either of the parties involved. He points out that the club membership agreement must have a reasonable relationship between the fees charged and the cost of the services.

"The whole crux of the opinion is that the membership agreement is tied to services, not costs," he tells SFR. "The decision doesn't look at cost — instead it adopts a standard that has nothing to do with cost."

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