Talks stalled on Sherburne Commons

INDEPENDENT FILE PHOTO Sherburne Commons While the clock is ticking to find a buyer for Sherburne Commons, a letter sent by the Board of Selectmen to Servant Healthcare, the only company that has made an offer to purchase the bankrupted senior residential community, may sink the deal. And, the Finance Committee voted not to support Special Town Meeting Article 17, a "safety net" that would enable the town to take over Sherburne Commons.

Servant Healthcare of Florida has offered approximately $6 million for Sherburne Commons. Four-and-a-half million dollars would be transferred to Sovereign Bank, which holds a $29 million lien on the development; the balance of $1.5 million would go into an account for the residents, who were promised a 90 percent return on their investment if they moved, or in the event of their death.

According to Steven Cohen, attorney for Sherburne Commons, the bankrupted community has enough money to continue operating for another 45 t0 60 days.

On August 21, 2009, the Board of Selectmen sent a letter to John Ramsey, CEO of Servant Healthcare Investments, with a list of stipulations that Servant would have to agree to before the town would approve the sale of Sherburne Commons.

INDEPENDENT FILE PHOTO Anne Bradt is one of 34 Sherburne Common residents who will be affected by the STM vote on Article 17. The contents of that letter, not publicly known until last Wednesday's selectmen's meeting, do not sit well with Servant.

The Aug. 21 letter states that after reviewing the company's suggested version of an amended ground lease for Sherburne Commons, the board was "to put it mildly, dismayed at the content of that proposal."

The proposal amounted to a perpetual term, according to the selectmen. The selectmen assert that the proposal gives Servant unrestricted rights to assign the lease (to another party); and it turned the deal into a virtual conveyance by not providing "meaningful" rights by the town to terminate the lease.

The letter also stated that the board, in preparation for its possible support of zoning changes at the STM, developed a list of items "that must be adopted" in the amended ground lease as a "minimum scope of changes that must be made in order for the board to consider further negotiations."

The list seeks a finite lease term; no build out, including a skilled nursing facility, without board approval and termination rights for the town.

The selectmen further seek added language to the warrant articles to prohibit condos without board approval and provide early warning signs of impending financial crisis. Part of this added language would prohibit reduced services or price increases higher than 10 percent annually without approval from the Board of Selectmen. In addition, the selectmen would require that the lessee submit a business plan and permit the town an option to buy out its interest at a formula price.

Sovereign Bank representative Kevin Dale suggested at last week's selectmen's meeting that Sovereign Bank would fund discussions between town counsel and Servant's counsel to try and reach an amicable agreement.

The town's "safety net" idea to put Article 17 on the Sept. 21 Special Town Meeting warrant proposing a potential municipal takeover of Sherburne Commons, has also brought opposition. In this case, the criticism is coming from the Finance Committee. At its Aug. 31 meeting, the committee reviewed and supported STM Articles 10 to 16 for zoning changes that would allow a for-profit to operate Sherburne Commons on town-owned land.

The FinCom, however, almost unanimously rejected Article 17. Members cited a lack of information on how the project would be financed, the present difficulties in balancing the town's budget without adding to the burden and skepticism over the town's ability to run such a project.

"The Sherburne Commons board is willing to work with any buyer, but people need to know this is an expensive and complicated business and time is running short," said Cohen, speaking separately from the FinCom discussions. "Servant and town counsel are trying to find a solution. Sherburne Commons had operating losses in 2007 of approximately $2 million. It had operating losses in 2008 of approximately $1.3 million. After the bankruptcy Sherburne Commons essentially ended all services except food and utilities and still lost more than $970,000. It currently has a monthly rate of over $90,000 to keep the doors open for basic operations. If the deal is killed, [it] would fall in the town's lap with a $29 million lien."

Steve Perelman's mother lives at Sherburne Commons. He is a member of The Friends of Sherburne Commons working with residents and their families to find an appropriate, acceptable way to resolve the living community's problems and retain the resident's cottages and apartments. That means having voters adopt Articles 10 through 16 at the STM to allow a forprofi t to run the development.

"Servant, from what we know, could certainly run it well. We feel a for-profit option makes sense," said Perelman. "An affirmative vote on Articles 10 through 16 will enable the town to sell it to a for-profit company, it won't force it. It has been run by a nonprofit and it hasn't worked. Sherburne Commons, Inc. and Sovereign Bank think this is the best possible solution at this time and are hoping the town will negotiate a lease with Servant that is agreeable to the town and allows Servant to operate.

"I appreciate the time and work the town has been involved in since the bankruptcy. If the right nonprofit could be found we're not against that, but if a for-profit can be found it certainly will bring new revenues," Perelman continued. "The town running it doesn't seem the best option. The town doesn't have any money and the bankruptcy court has been accommodating because it has seemed like there was a possible solution. This has been going on 10 months now. The main thing is keeping this facility open. The town would still have an interest in the land.

"My mom and most of the people who live there are over 80. The angst they've been going through is not something they should be going through. There is so little time and there is so little money left to operate Sherburne Commons. Servant has met with all the residents and their families, and we believe they are the best to take over the operation. We are anxious for a solution." I