Port Washington seniors fear loss of homes and life savings as the Harborside retirement community's sale falls apart

A deal to keep open an upscale retirement community in Port Washington has fallen apart, raising the specter of 181 elderly residents having to find new homes and losing their life savings, according to officials and court documents.

The prospective buyer of the Harborside, formerly called the Amsterdam at Harborside, has terminated a $104 million sale agreement, saying it has waited more than nine months for the required approvals from state regulators and has no idea when, or if, they will be forthcoming.

But one of the regulators, the Department of Health, turned down the proposed sale because of a lack of information provided by the buyer, according to an Oct. 3 letter obtained by Newsday.

Agency spokeswoman Cadence Acquaviva said on Monday, "In keeping with its regulatory responsibility, the department protected vulnerable residents by denying an applicant who was unwilling to comply with instructions on how to bring the application in compliance with state law."  

Last year, Life Care Services Communities LLC won a federal bankruptcy-court auction for the Harborside, which has filed for Chapter 11 bankruptcy protection from its creditors three times in the past nine years.

Iowa-based LCS is the nation's third-largest operator of retirement homes. It had promised under the court-approved sale agreement to retain all 140 Harborside employees, pay off bonds held by investors and refunds owed to the families of deceased residents, and provide more than $1 million so the facility would remain open while the health department and Department of Financial Services reviewed the deal.

However, after acquiescing to extensions of the deal’s closing date, LCS backed out on Aug. 20, saying it could wait no longer.

Harborside residents, whose average age is 90, and their families are frustrated and afraid.

“There is the real possibility, even the likelihood, that we face imminent eviction and the loss of our homes, our community, our savings and our health care,” said Joyce Shapiro, chairwoman of the Harborside Residents Council.

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, which was between $527,250 and $2.2 million under one type of sales contract offered in 2021, is supposed to be refunded after the resident dies.

The Harborside has 329 units and offers different levels of care as residents age, from independent- and assisted-living apartments to a nursing home and dementia care. It is one of four “continuing care retirement communities” on Long Island.

Shapiro, the Harborside resident, said, she and her neighbors "face … [being] callously thrown out on the street without the resources to pay for decent housing and health care. Please don’t abandon us," she told a bankruptcy court judge in Central Islip last month.

Told of Shapiro's plea, Gordon Tepper, a spokesman for Gov. Kathy Hochul, said on Monday, "The state will work with the families to make sure their loved ones have a place to go. They will be given options, and we are committed to everyone getting the care that they need and deserve."

LCS officials said they are no longer interested in owning the Harborside.

"As of the start of October, we were still no closer to an approval or commitment to a path forward with the New York State Department of Health than we were when we submitted our applications [for approval of the Harborside purchase] in January," said LCS spokeswoman Traci McBee. "As a result, we can no longer continue our pursuit of the Harborside."

She added, "The Department of Health has had multiple chances to keep this community open … They have failed the residents of the Harborside, who now face an uncertain future."

All the parties agree that the transaction is complex because it involves changing the Harborside’s status from nonprofit to for-profit, a first among such retirement homes in New York.

Still, LCS executive Daniel L. Lahey accused the health department regulators of operating "a Kafkaesque bureaucracy."

The department "would rather postpone a decision indefinitely, or repeatedly suggest closure of the community, rather than take actions to protect the very same elderly citizens it is charged with protecting,” he wrote in a Sept. 23 memo to U.S. Bankruptcy Court Judge Alan S. Trust.

The health department responded in the Oct. 3 letter by listing over six pages the documents and other information that LCS had failed to provide.

Top regulator Michael Heeran, wrote that LCS' "lack of [the] required financial transparency" with the state meant that the review of its applications "is not possible" and "they will be closed."

Time and money are both running out for the Harborside.

“We have a limited liquidity runway here,” said Rachel Nanes, the facility’s attorney, referring to its finances. “[The facility] now finds itself in a very tenuous position” without additional cash from LCS to pay operating expenses.

In court, she recalled the 2016 bankruptcy and subsequent sale of Westchester Meadows, a continuing care retirement community in upstate Valhalla, which won state approval in less than 70 days.

Harborside CEO Brooke Navarre acknowledged the facility's financial straits on Monday, but said high quality care is still being provided. 

"This is very stressful for the residents," she said. "We urge all the parties to close on the sale because it's in everyone's best interest."

The judge has requested that the parties provide him with a status report on Wednesday.

By James T. Madore

james.madore@newsday.comJamesTMadore

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.