Bankrupt Harborside retirement community's new owner asks for third round of tax breaks for Port Washington facility
A view of Harborside in Port Washington. Credit: Newsday/J. Conrad Williams Jr.
The Harborside retirement community in Port Washington, formerly called the Amsterdam at Harborside, is seeking a third round of tax breaks from Nassau County after filing for bankruptcy three times in the past 10 years, officials said.
The Harborside’s expected purchaser, Life Care Services Communities — LCS — applied to the county’s Industrial Development Agency for a sales-tax exemption of up to $252,281 on the purchase of equipment, fixtures and furnishings as part of proposed improvements to the 14-year-old buildings.
Iowa-based LCS also requested up to $740,530 off the mortgage-recording tax and an additional 20 years of property-tax savings. The latter would be on top of the more than $32 million off property taxes that the Harborside received between the mid-2000s and this year, according to state records.
In return, the officials said LCS would spend $101 million to purchase, renovate and revive the Harborside, which is located at 300 East Overlook.
The project also would add 54 jobs to the facility's workforce of 80 people over three years. Most of the new jobs would pay between $36,000 to $98,000 per year, according to the application for IDA assistance.
The IDA board voted unanimously on Wednesday to begin negotiations with LCS for more tax breaks.
Last year, LCS, the nation’s third-largest manager of retirement communities, won a bankruptcy court auction for the Harborside, promising to pay $64.5 million. However, the judge’s decision has been appealed by the representative of holders of millions of dollars of debt.
Still, LCS representatives said on Wednesday that it’s moving forward with a plan to turn around the Harborside, which has struggled with a high vacancy rate since it opened in 2010. The rate is now above 50%, according to Daniel P. Deegan, LCS’ real estate attorney.
He and others told the IDA that despite the Harborside’s financial woes, the failure rate of such Continuing Care Retirement Communities, or CCRCs, is relatively low nationwide.
“A key driver in some of the notable failures has been too much debt,” said Dan Lahey, chief financial and investment officer at LCS. “What we are doing here is different than in the past, and we’ll be able to have a much lower debt profile” once the Harborside’s bonds are paid off.
The IDA issued bonds for the Harborside’s construction in 2007 and then more bonds to help it emerge from bankruptcy twice. The bonds, both taxable and tax exempt, total about $160 million.
Less debt “can restore consumer confidence and get people willing to move in once again,” Lahey said, responding to a question from IDA board member Reginald Spinello. “After the last restructuring [of debt in 2021], the [Harborside’s] reputation in the market was damaged and they weren’t able to sell units anymore. That’s why they’re currently in their third bankruptcy.”
There’s also more competition with the 2022 opening of Fountaingate Gardens in Commack, a CCRC run by the adjacent Gurwin Jewish Nursing and Rehabilitation Center. There are four CCRCs on Long Island, along with many nursing homes and assisted living centers.
The Harborside has more than 200 residents with an average age of 90 in 329 units that offer different levels of care as they age, from independent- and assisted-living apartments to a nursing home and dementia care.
Prospective residents often sell their homes to pay the Harborside’s entrance fee, which is determined by the size of the apartment. A portion of the entrance fee is supposed to be refunded after the resident dies. Refund obligations for current residents total more than $90 million, according to the IDA application.
The Harborside has operated as a nonprofit but going forward will be a for-profit business as are other LCS-owned properties, LCS spokeswoman Traci McBee confirmed to Newsday.
“After the restructuring is complete, [the] Harborside will no longer be burdened with several millions of dollars of annual debt-service requirements … Regardless of the ownership structure, our service and commitment to residents and staff is our top priority,” she said on Thursday.
The willingness of the IDA’s seven-member board to consider a third bailout of the Harborside is in sharp contrast to its vow in July 2021 to provide no further assistance after the second bankruptcy. However, only one member of the current board also served in 2021.
“Our first concern is for the people who live there … What happens to them?” said board chairman William H. Rockensies, adding that many Harborside residents invested their life’s savings to move there.
“This is not the same situation [as in 2021],” he said in an interview on Wednesday. “This is a different company with a stellar reputation and the [financial] backing” to address the Harborside's woes.
WHAT TO KNOW
- The Harborside in Port Washington is asking for a third set of tax breaks. The facility has filed for bankruptcy three times in 10 years.
- The board of the Nassau County Industrial Development Agency agreed to negotiate a tax deal, saying it was impressed by the expected purchaser of the Harborside, Life Care Services Communities, or LCS.
- Iowa-based LCS promises to pay off the Harborside's debt, including millions of dollars in refunds owed to family members of deceased residents.
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.
