Editor's note: A response from the Board of Finance is posted following First Selectman Gordon Joseloff's memo.
In advance of a Board of Finance special workshop Nov. 28 on Baron’s South, First Selectman Gordon Joseloff sent the following memo to Chairman Avi Kaner and board members as well as to members of the Representative Town Meeting (RTM):
"This memo seeks to bring clarity to my administration’s position on the Baron’s South issue. Our preference was to start negotiations immediately with the Jonathan Rose Company (JR), the recommended bidder. The JR proposal addresses our needs for mixed income rental housing for seniors and provides a solid financial return over the term of the lease.
Its Net Present Value, calculated at the borrowing rate for the town, exceeds the purchase price for the entirety of Baron’s South -- all while using only a portion of the acreage. It is a balanced and responsible plan.
However, we recognized that your board seeks a greater financial return as we provide senior housing on Baron’s South. In an attempt to satisfy that demand, we went to the RTM with a proposal to rebid. The rebid would reduce the affordability minimum of the RFP to 30 percent in order to meet the 8-30(g) requirements, even before going to the P&Z for such a change.
At the RTM, there was significant support for negotiation, and against a rebid. Some of that support was specifically against changing the affordability floor. Of course, we do not know what an RTM sense of the meeting might actually yield. Above, all we want to avoid pitting one town board against another. This memo is an attempt to find common ground. We believe now the best way to do that is through an expedited rebid.
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Here are the basic points of a rebid acceptable to us. We hope your Nov. 28 meeting will conclude that they represent a reasonable compromise and endorse them so we can move ahead.
- Flexibility on number of units: range of 100-150 units
- Flexibility on affordability: 30 percent minimum affordable
- Acreage to be utilized: no more than 8 acres
- All other aspects of RFP, e.g. service coordinator, kitchen, remain the same
- Future development options should be outlined
- Unlimited number of scenarios can be demonstrated
- 30-day response time
- Review of bids to be done in executive session with BOF and RTM designees
- Agreement that the optimal bid forms basis for negotiation
- Mixed income rental housing only, not a Continuing Care Retirement Community (CCRC).
The final bullet point is critical to underscore. We will not issue a rebid that would include a CCRC. Why not? Let’s look at a likely CCRC using the Affirmative Hillspoint as a model, assuming that the basic structure of their proposal mirrors that of most other CCRCs.
- A CCRC would utilize the entire parcel, except for the Center for Senior Activities. The combined 220 units and 48 skilled nursing beds are a far more intense development. This would lead to traffic concerns and many other neighbor issues. It also would leave the town without any parcels for future development to satisfy other needs, including that of open space.
- With entrance fees of $400,000 to $870,000 and monthly fees of $3,500 to $6,000, it is difficult to qualify a buy-in model CCRC as affordable or mixed income. It is high end. A senior must have significant assets remaining after their buy-in in order to cover future living expenses.
- The rents cover more than rent alone. Essentially, they cover the future need for assisted living or skilled nursing, not doctor visits or home health aides. This model is known as “bundled services.” A CCRC occupant has no choice but to pay for these services, regardless of desire or need. They are part of the monthly fees. At the same time, CCRC occupants are paying for at least one shared meal a day, another bundled service.
- The 30 affordable units (out of 220, or a 14 percent affordability rate) have a waived entrance fee. Their rental is covered by a so-called “scholarship” managed by the town. The ground lease paid back to the town covers the scholarship, thereby diminishing the actual revenues the town receives. Management of the scholarship, if this were the model for all CCRCs to have affordable units, would place a significant burden on the Department of Human Services.
- CCRCs can be risky. Read http://aging.senate.gov/events/hr224cr.pdf, http://online.wsj.com/article/SB10001424052748703405704575015460358760530.html or http://online.wsj.com/article/SB10001424052748704499604575407290112356422.html for analysis and a link to a 2010 GAO study regarding the industry. In the event of prolonged downturns in the housing and credit markets, CCRCs are particularly risky. That risk would be borne by the seniors who have paid steep entrance fees, as well as ultimately by the town.
- Finally, philosophically, a CCRC on Baron’s South would be a big business on town property (and the pro forma financials from Affirmative Hillspoint certainly bear this out). While we are not mandating that the developer of Baron’s South be a nonprofit, it’s a far different model to have a CCRC benefiting in a huge way a handful of owners -- and using town property to do so. We cannot support it.
In sum, we hope that the Board of Finance finds the terms of a rebid outlined above agreeable. If not, the community, particularly the seniors, who have watched this unfold over the past several years will know that we have done our best to pursue this vision of mixed income rental housing on Baron’s South.
The most likely result of failure to reach agreement on this means that the Baron’s South parcel that is barren now remains barren; that the need for senior rental housing remains unfulfilled, and the financial return to the town remains as it has been since the purchase -- no financial return at all.
I look forward to your serious consideration of this proposal."
Board of Finance Chair Avi Kaner provided the following response:
"We're pleased that the Selectman's office is open to our desire to seek improvement in the Baron's South project. The Board of Finance will meet in a televised public work session on November 28 at 7 p.m. in the Town Hall auditorium. All three bidders will be in attendance to answer our questions. Our objective is to develop recommended parameters for a rebid of the Baron's South request for proposal. We hope this will result in a better project that both meets the needs of seniors and is fair to the Westport taxpayer."