The Nassau County Industrial Development Agency questioned the long-term viability of the Amsterdam at Harborside on Thursday, requesting assurances that the upscale retirement community won’t file for bankruptcy for a third time.
The Amsterdam, in Port Washington, is seeking the IDA’s help to raise $41 million by issuing taxable bonds. The nonprofit facility also wants to restructure $140 million in existing debt with new tax-exempt bonds and to receive an exemption on the mortgage recording tax, IDA records show.
The request comes after the Amsterdam filed for Chapter 11 bankruptcy protection from its creditors last week — and seven years after its first bankruptcy.
In 2014, the IDA assisted in the restructuring of the Amsterdam’s debt and granted additional property tax breaks on top of those awarded in 2007 before the facility opened. The tax aid was for 25 years.
“My concern is sustainability, especially since this is the second time that you’ve filed for bankruptcy,” IDA treasurer Amy Flores told representatives of the retirement community at Thursday’s IDA board meeting.
In last week’s bankruptcy filing, Amsterdam executives said most bondholders support the debt restructuring plan.
CEO James Davis blamed the financial crunch on the pandemic and the “historic financial challenges” of not being able to attract enough new residents to pay day-to-day bills and the entrance-fee refunds owed to the relatives of deceased residents.
He said the bankruptcy filing will not affect the services provided to 375 residents or lead to a reduction in the workforce, which consists of 107 employees and about 100 others who are either independent contractors or provided by staffing agencies to work in the dining room and to park automobiles.
Davis did not attend the IDA meeting, which drew the ire of agency chairman Richard Kessel. An attorney for the Amsterdam said on Friday that “personal reasons” prevented Davis from being at the meeting.
Kessel on Thursday told the retirement community’s representatives, “I’ve got some discomfort in terms of your ability to succeed going forward. So, it’s important that you show us the analysis that this [bankruptcy filing] won’t happen again. … Without those assurances, I cannot support this” debt restructuring, he said.
Responding to a question from Kessel, Richard Dennett, the Amsterdam attorney, said it has never contemplated that the IDA would decline to issue the necessary bonds.
Any resolution of the bankruptcy case must include full payment of the $20 million in entrance-fee refunds owed to the families of 33 deceased Amsterdam residents, said IDA vice chairman Lewis Warren Jr. The entrance fee is between $527,250 and $2.2 million, depending on the size of living unit.
Amsterdam executive director Brooke Navarre responded, “All the entrance-fee refund holders have to get paid 100%. There is no negotiation on that.”
She said the retirement community has developed “a long-term plan” that will be shared with the IDA.
“We also don’t want to be back here” because of a future bankruptcy, Navarre said. “It takes a toll on the community, and it takes a toll on our reputation.”
The IDA board voted unanimously to continue the discussions. But Kessel said, “We aren’t going to rush into something.”
The Amsterdam’s parent is also a nonprofit, which is affiliated with the Amsterdam Nursing Home in Manhattan.