Town OKs financing for Bermuda Village sale

Published 12:36 pm Thursday, May 23, 2019

By Jim Buice

Enterprise Record

BERMUDA RUN – The town council adopted a resolution at the request of Montage Living, a nonprofit that has applied to the Public Finance Authority to issue revenue bonds to fund the acquisition of Bermuda Village. in last Tuesday night’s meeting.

Mayor Ken Rethmeier said that town itself is not issuing the bonds and has no responsibility for the payment of the principal or interest on the bonds and any costs incurred by the borrower.

The resolution states that the principal amount of revenue bonds is not to exceed $45 million for the acquisition of Bermuda Village, which opened in the early 1980s.

To qualify for tax-exempt bonds to help pay for the purchase, a board with authority over the area needs to give approval, and Montage Living officials first reached out to Davie County, which passed the request on to Bermuda Run.

At least 20 percent of the units would have to be for residents who make less than 50 percent of the median income for the area.

Ryan Lambert, one of the principals for Montage Living, said that the nonprofit is trying to do what it can to keep costs affordable – not to make it affordable housing.

“The affordability component is based off of the residents that are leasing at Bermuda Village and has no effect on people that own their own villas or condos,” Lambert said. “That’s less than 20 residents at Bermuda Village that would need to qualify for that. So really where it comes to play is not Section 8 or not people who require vouchers. It’s an income test, not an asset test. A lot of people in other senior communities that we have done this for either have money in trusts or their children are paying for it.”

Councilman Rick Cross reminded Montage Living officials about the importance of reinvesting in the community.

“Bermuda Village isn’t just a community that sits in our community,” Cross said. “It is part of our community. It’s woven into the fabric. It’s very, very important to us as a town.”

Lambert said that being a nonprofit – instead of a for-profit owner – requires reinvesting any profits back into the facility or into the mission, including providing scholarships to help residents.

“It’s almost like the YMCA, which would be a good example as it’s always thriving because of the reinvestment not only in the individual facility but being able to reinvest in the Y, or in this case, Montage Living,” Lambert said. “We have about $500,000 in capital expenditures to improve the community not only for the people who lease at Bermuda Village but also for people who own villas and condos.”

Of those who spoke during the public hearing, several asked where the money was coming from, especially with the “low-income” component of the project and the impact it could have, which was addressed by Gray Angell, the current owner of Bermuda Village.

“Please don’t allow ‘low income’ to cloud the discussion tonight. Look at number of units that will be tax-exempt,” he said, which turns out to be 20 people out of a population of over 200. “People with long-term care policies, I deal with this all the time. If somebody comes in with a long-term care policy with $1 million sitting in the bank getting 2 percent interest pay for catered living, they would qualify as low income. That’s the federal government making the rules.

“What we’re looking at is many people who utilize long-term care policies today that don’t have a significant amount of assets that we thereby get reimbursed does not count as income today. So please understand when people retire when they’re 65 and they’re suddenly 95, and they’re running into issues with long-term care and spouse issues that we do not kick them out currently and we certainly will not in the future.”

Regarding the low-income component, Lambert added: “Of the facilities that we’ve seen, it hasn’t changed the resident mix. There are already residents at the facilities that will meet that criteria. It’s not as if we’re bringing in a different population.”

One resident also asked about the property tax loss for the town with the tax-exempt status on a portion of the facility.

In the meeting, Town Manager Lee Rollins presented the recommended 2019-20 fiscal budget of just over $1.8 million, which includes current property tax revenues of about $830,000. Once the sale has been completed, Montage may request a partial tax-exemption for properties that qualify, which the town has computed to be a reduction of about $22,000.

“That would not have an impact on any services to town residents,” Rollins said.

Montage Living officials said that securing financing for the project through tax-exempt bonds is the cheapest form of capital for this type of purchase.

The transaction is expected to close within 60 days. The financing has been prepared but has not closed, pending certain approvals from the town, and is anticipated to close simultaneously with the sale. BB&T Capital Markets, the securities subsidiary of BB&T Corp., is the underwriter on the financing.