Saturday, July 20, 2024

EDA Votes to Issue $50M in Bonds to WindsorMeade

The James City County Economic Development Authority passed a resolution on a 3-0-2 vote Thursday to issue up to $50 million in revenue bonds to Virginia United Methodist Homes of Williamsburg, Inc. for WindsorMeade.

On Aug. 1, 2007, the EDA issued revenue bonds to assist VUMHW in financing acquisition, construction and other costs associated with WindsorMeade. This was part of a July 1, 2007, loan agreement between the EDA and VUMHW.

WindsorMeade filed for Chapter 11 restructuring on March 1 this year, with a plan to re-emerge no later than May 31 this year. A notice was sent to the EDA on Jan. 2 explaining WindsorMeade had defaulted on loan payments. The default was agreed to as a part of the plan to restructure.

Housing at WindsorMeade comprises 181 independent living residences divided between villas and apartments, 14 assisted living apartments and 12 nursing suites. At the time the company filed for Chapter 11, 143 of the independent living homes were occupied. Since filing for Chapter 11, five additional units have been sold, said Christopher Henderson, president and CEO of Virginia United Methodist Homes Inc., at Tuesday’s James City County Board of Supervisors meeting.

On Tuesday, the board passed a resolution authorizing the EDA to issue the bonds on a 3-2 vote, with Stonehouse Supervisor Jim Kennedy and Berkeley Supervisor Mary Jones opposed.

“In 2001, I voted against this project for a multitude of reasons and one of the reasons I voted against it was the funding mechanism,” Kennedy said.

He called the bond issuance a bailout and said he was concerned about the perception county residents would have about it. He was also concerned WindsorMeade is offering a product with no assurances it will succeed.

Powhatan Supervisor Andy Bradshaw honed in on Kennedy’s comment about not voting for the project in 2001 and using that as a mechanism to decide how to vote Tuesday.

“I do think that it would be a dangerous practice for us to get into if once we vote against a project, and each time it comes to us in the future, we would do things to further guarantee its failure,” Bradshaw said.

He was also concerned about the message that would be sent to future businesses hoping to do business in the county if the board did not help WindsorMeade now.

Jones was more concerned about the way banks and lenders would look at WindsorMeade’s failure to repay the bonds it was originally issued, and that it would reflect poorly on the county.

“I certainly am sorry for the challenges you’ve been facing,” Jones said. She explained she thought it would be better if WindsorMeade sought alternate sources of funding.

The EDA resolution states the total amount of the bonds shall not exceed $50 million, the maximum interest rate per year shall not exceed 6 percent and the final maturity date shall be no more than 36 years from the date of issuance.

Lisa Williams of McGuireWoods told the EDA the bond amount needed is estimated to be about $46 million to $47 million.

James City County and the EDA are not liable in this transaction. The EDA is acting as a conduit lender, a pass-through, so the name, credit and lending authority of neither the county nor EDA would be affected.

EDA members Paul Gerhardt of Kaufman and Canoles, who also serves as general counsel and secretary of the Williamsburg Landing Board of Directors, and Steve Montgomery, president and CEO of Williamsburg Landing, abstained from voting so there could be no assumption of a conflict of interest.

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