An upscale retirement community in Port Washington, stung by slow sales after the Great Recession, is renegotiating debt payments in hopes of avoiding bankruptcy, according to its top executive.
The Amsterdam at Harborside opened in 2010 as the local real estate market was still struggling following the recession, and homes were selling for far less than a few years earlier. This meant fewer retirees had the money to pay the not-for-profit's entrance fee, which ranged from $550,000 to $1.4 million during the initial selling period.
The Amsterdam now faces a cash crunch as a result, chief executive Jim Davis told the Nassau County Industrial Development Agency this week. He and others are attempting to hammer out an agreement with the 1,000 individuals and entities that own nearly $300 million in bonds used to build the continuing-care complex.
If an agreement isn't reached with all the bondholders, Davis said, the Amsterdam would soon seek protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code.
The Amsterdam's assets totaled $308 million against liabilities of $427 million in 2012, according to its most recent audit.
Earlier this week, the retirement community secured about $550,000 in property tax savings over nine years from the IDA. The help was on top of a 25-year property tax break granted by the IDA in 2007, when it also issued the bonds.
Joseph J. Kearney, the IDA's executive director, said it provided more tax relief because seniors would likely lose their life's savings if the facility shut down. He also said 173 jobs were at stake.
Davis, the Amsterdam's chief, told the IDA board, "We are optimistic about our future."
He said any bankruptcy filing would be "prepackaged," meaning the facility's finances would be restructured and it would quickly exit bankruptcy while continuing to operate.
Davis also said 332 retirees now live in the independent-living apartments and penthouses, assisted living units and nursing home, some of which have a view of Hempstead Harbor. There has been a recent increase in the number of seniors entering the facility, but he said that wasn't sufficient to overcome the recession's impact.
"We opened at a very bad time," Davis said. "Residents usually sell their home to pay the entrance fee, and many either couldn't sell or get what they needed. The fill-up [of units] didn't happen as we expected."
He predicted 199 of the 229 apartments would be filled by the end of this month. That's six years after a marketing director for the Amsterdam claimed in a published report that 90 percent of the units had been sold.
In addition to the entrance fee, seniors pay a monthly maintenance fee of several thousand dollars for amenities such as meals, a heated indoor pool and underground parking.
One credit-rating agency warned in 2007 that the housing slump on Long Island could undermine the Amsterdam. "The high-end nature of the project . . . could result in pressure on turnover should the housing market continue to erode," Fitch Ratings wrote in an investment report.
This week, Kearney, the IDA director, urged Amsterdam executives to move swiftly to resolve its financial problems: "A year out, we wouldn't look kindly on you if the debt hasn't been restructured."