WASHINGTON - The Virginia Supreme Court on Friday
But after it failed to make on a $15 million bond payment to investors in July, the status of the Glebe remains uncertain and talks between its owners and bondholders are ongoing.
Randall Robinson, president of Virginia Baptist Homes Inc., the nonprofit corporation that owns the CCRC, said he is pleased with the decision upholding the facility's local tax-exemption, adding that it should be "significant" for the holders of $55.5 million of bonds that the Roanoke Industrial Development Authority, now the Economic Development Authority, issued in December 2003 to finance the $60 million senior living community.
The Glebe was unable to make the $15 million principal payment on the bonds because its revenues were lower than anticipated. "We are still in negotiations with creditors and will continue to do that," Robinson said.
Representatives of the Glebe are talking with the bondholders and bond trustee, U.S. Bank NA in Richmond, to obtain time to try to improve the facility's financial operations, Robinson said.
The Glebe has not missed interest payments on the bonds yet. The next one is due Jan. 1, 2009, which Robinson said is secure.
The CCRC's financing plan for the bonds relies on pricey entrance fees - more than $300,000 in some cases - and other revenues to pay debt service, Robinson said. But the facility is only 70% occupied and needs to be 94% full to meet its debt service payments, Robinson said, adding that three individuals have become residents since early October.
The problems in the housing market, which have reverberated into almost every nook of the country's financial sector, is a "major factor" in hindering the Glebe's efforts to improve its occupancy rate, he said. Retirees have reserved 11 apartments and cottages with plans in place to move in as soon as they sell their houses, according to VBH.
"Our hope is that we will have a good solid agreement with [the bondholders] that will allow us to continue moving forward ... to getting the Glebe filled up," Robinson said.
In a five-to-two final opinion overturning Circuit Judge Michael Irvine's 2007 decision, high court Justice Donald W. Lemons wrote: "The trial court erred in holding that VBH and the Glebe are not exempt from taxation."
If the justices had sided with Botetourt County, where the Glebe is situated, the facility could have been liable for a backlog of tax payments totaling as much as $500,000, as well as more than $220 million of future annual tax payments, which would have further disrupted its finances.
The county's Board of Supervisors had argued that Virginia Baptist Homes' religious and benevolent tax exemption, granted by the state legislature in 1976, did not apply to the Glebe because it has not provided subsidies to any of its residents.
But VBH maintained that the exemption it has held for more than 30 years applies to all of its properties, including new ones, such as the Glebe, which Robinson said will offer reduced rates for some residents in the future after a benefit foundation is grown with donations.
"The General Assembly in designating VBH as a 'religious and benevolent organization' considered operating retirement homes for the elderly to qualify as a religious purpose," Lemons wrote for the majority of justices on the high court. "Therefore, the only question to be answered is whether the Glebe, in fact, operates a retirement community for the elderly on a nonprofit basis. There is no evidence in this record that the Glebe provides any service other than operating a retirement community for the elderly. There is no evidence of the Glebe performing any other function on the premises of the Glebe such as the operation of some unrelated commercial venture."
Meanwhile, VBH has hired a new marketing firm, CRSA, a Memphis-based company focused on development, marketing, and management of senior housing communities, to help recruit more residents at the Glebe.
"The Glebe was developed at a different time under different conditions, and it will take some time to turn it around, but we are confident that with the continued support of residents and employees we will attract more residents," said Ben Decker, director of operations for CRSA.
