MOREHEAD CITY — The owners of Harborview Towers say they will shut down the senior housing facility by Aug. 30 and force the two-dozen residents to move out by that date.
The decision that affects only the independent living facility at 812 Shepard St. and not the adjacent rehabilitation center was announced in a July 19 letter Harborview Enterprises LLC President John “Ron” Jernigan sent to residents and their representatives. The LLC owns the towers.
Mr. Jernigan wrote in the letter that his family’s company “regrets” the decision, both for the residents who will be displaced and for the 10 or so employees whose jobs will be terminated.
Mr. Jernigan also provided on Thursday, in response to a News-Times query, a statement about the decision to close.
“Both Harborview Enterprises, LLC, and the Jernigan family, are saddened by the economic events that have created the current situation,” Mr. Jernigan wrote.
Tower residents and their families have expressed anger and concern about the decision and representatives of a number of current and former residents of Harborview Towers have filed legal actions in civil court in Beaufort against the company for breach of contract, seeking a combined total of more than $550,000 in damages.
Earlier this year, the company informed residents that due to its “significant issues” of financial nature, the facility must be sold or closed.
The announcement followed a series of meetings held with residents and their representatives between March 15 and June 8 to work out a compromise that ostensibly could have led to the sale of the property to Senior Care Properties Inc., the Charlotte-based company that in 2010 purchased from the Jernigans the adjacent Harborview Rehabilitation and Healthcare Center.
But the two companies were unsuccessful in their attempts to convince residents to accept either of two options presented to change the terms of residents’ contracts signed when they moved into the independent living facility.
Agreements in place stipulate that Harborview Enterprises must refund 80 percent of the occupancy fee paid by residents upon moving in within two years of the resident vacating the unit for any reason. But Harborview Enterprises has for some time refused to refund the deposits, according to court documents.
Several families impacted by the decision have recently contacted the News-Times regarding concerns that Harborview Towers owners, John, James, Linda Jernigan and Kay Michael, are withholding money owed to former residents and threatening residents with eviction.
Resident Clarence “Slim” Hensley is one of about 24 current residents affected by the planned closure. About 40 total current and former residents or their representatives are affected.
Mr. Hensley said earlier this week he also stands to lose $122,000 as a result. Some residents will lose more.
“They wanted us to relinquish our rights to our payback agreement and hold it until it (Harborview Towers) was sold. It’s an affront to me and a lot of people are going to get hurt,” Mr. Hensley said Tuesday.
Occupancy fees paid range from about $150,000 to $220,000, depending on the size of the unit. In addition, residents pay a monthly fee of about $1,300 for services provided.
Dan Ericksen of Morehead City moved his mother, now 99, into the facility about six years ago.
“It seemed like a pretty good deal,” Mr. Ericksen said Thursday.
Not so now, he said. She and a 102-year-old blind woman are among the residents now facing forced relocation and the loss of refunds owed them.
Mr. Ericksen said the Jernigans made no apparent efforts to market the property to other prospective buyers. He and others said the condition of the property has deteriorated due to neglect, making it less attractive to potential buyers.
Others with family members at Harborview Towers have contacted the newspaper in recent weeks with concerns about the situation but many preferred to remain anonymous.
At least five civil actions have been filed in Carteret County against Harborview Enterprises related to the unpaid refunds.
Amounts allegedly owed to residents or their representatives range from about $87,000 to more than $176,000, according to court documents.
Morehead City attorney Wesley Collins is representing four clients with complaints against the company. The actions allege damages resulting from the unpaid refunds and demand trials by jury.
Mr. Collins provided on Thursday a written statement regarding the cases.
“The allegations in the four lawsuits we have filed in Carteret County speak directly to the issues involved. As to the closure of Harborview Towers, it is unfortunate that some elder citizens of our community will be displaced. Our county is in dire need of more quality establishments for our growing elder population. At one point in time, Harborview served this important need for many of our older clients,” Mr. Collins said in the statement.
Senior Care Properties, in addition to operating the rehab center, currently provides nursing services and meals for tower residents and shares in providing utilities.
Tom Gatewood, vice president of Senior Care Properties, told the News-Times on June 27 that keeping Harborview Towers open was in his company’s best interest.
“We don’t want this facility to shut down. It’s right beside our center and we want to protect the people there,” he said.
Mr. Gatewood said his company, when it purchased the nursing center in 2010, was also interested in purchasing Harborview Towers as a package deal. But due to economy and the troubled real estate and lending markets, the company could not secure necessary financing to also purchase the towers.
The company remained interested and negotiations between Senior Care Properties and the Jernigans resumed earlier this year, said Mr. Gatewood.
Those negotiations included a plan to rehabilitate the property “to protect the current occupants” and expand the adjacent nursing center into the lower levels of the 10-story Harborview Towers building.
But the proposal to purchase and rehab the towers for expansion of the nursing center was determined after further analysis to be too costly, said Mr. Gatewood.
According to a memo signed by Mr. Gatewood, the purchase and rehab would have cost twice as much as building a new facility.
The deal would have also required relocation of residents currently living on the third, fourth and fifth floors to vacant apartments on floors 6-10. Some residents, especially those who had made improvements or added custom features to their apartments, objected to being moved to another unit.
Senior Care Properties proposed the two options the company said would make the acquisition feasible and, according to the company, protect “the financial interests, “or portion thereof, of both former and current residents.”
But residents, who were given two weeks to decide, did not agree to the proposed changes.
Option 1 would have required current and past residents or their estates to agree to wait on any deposit refunds until after their individual units are sold, with no two-year time limit.
The occupancy agreement and deed would have been modified to reflect the changes.
In return, Senior Care Properties would have continued to provide services to tower residents, including “enhanced” services, according to documents.
Under Option 2, the company would have agreed to pay 30 percent of all buyback fees past due and coming due when the deal was to close.
Under both options, ownership of all units would have transferred to Senior Care Properties Inc., including and at no cost 10 units now owned jointly by the Jernigans. Senior Care Properties would have assumed the Wells Fargo note held by the Jernigans.
Also under both options, monthly maintenance fees would have remained the same, subject to cost-of-living increases, and each occupant would have the option to subscribe to additional services.
But according to the July 19 closing notice, 25 residents selected Option 1, nine indicated that neither option was acceptable and six did not reply.
“SCP was disappointed and dismayed by the number of current, former, or representative of a former resident at Harborview Towers who chose not to vote with the majority for Option 1,” Mr. Jernigan wrote in the letter, adding that Senior Care Properties had said it would not proceed with its acquisition of the facility.
Mr. Jernigan, in his statement to the News-Times, also said his family and the company had worked for many years to make Harborview Towers “a place that is loved and cherished by its residents and their families.” But “turmoil” in the real estate market in recent years had been devastating to the operation.
“The Jernigan family has personally contributed substantial sums to the company to allow its operations to continue in hopes that the situation would improve. Unfortunately this did not occur.”
Mr. Jernigan indicated that his family’s company would continue efforts “to explore all reasonable options available.”
Contact Mark Hibbs at 252-726-7081, ext. 229; email email@example.com; or follow on Twitter @markhibbs.