By Jack Cumming
Tales of Sam Veltheim, Resident Director
Author’s Note: This is Part 3 in a fictional account of how one CCRC might have evolved with a different cultural focus. The series is unashamedly written from a resident’s perspective.
The story so far: Sam Veltheim, an experienced Executive Director (ED) elsewhere, but a resident, is unexpectedly chosen as ED of Resteasy Village. After a short time as leader, the decision is made to make residents voting members in the not-for-profit corporation. That change proved a big boost to market acceptability.
As our chapter opens, Resteasy Village has just been presented with a one-of-a-kind opportunity. There was a large 320-acre farm between the CCRC and the nearby hospital. As the city grew up around it, the farm remained as open land. The owner, Coach Koch, pronounced “Koe” in deference to his German heritage, is not only descended from the earliest settlers in the area, but he is also a local celebrity, noted for his support of the high school football team, which he coached during his teaching career.
A Generous Spirit
At 82 years old, Coach Koch wanted to contribute to the availability of services to help others who were aging like him. He approached his longtime friend, Sam Veltheim, about the possibility of Resteasy Village developing the property as an extension of its senior housing operations.
Coach Koch was willing to donate the land to Resteasy Village if the Village were willing to take on the development challenge. Sam was thrilled. He immediately shared the news with board members, to whom Sam expressed his belief that with the growth of the city, the market need was great for such an expansion.
As a first step, Sam asked for proposals from a major tax-exempt investment banking bond origination firm, a prominent industry consulting and accounting firm, and the industry’s leading CCRC development firm. They were eager to help. The investment bankers assured Sam that, with Resteasy’s strong balance sheet, there would be no difficulty in raising the needed funds.
Conventional Thinking
The developer’s architects quickly offered sketches of a standard CCRC model: a circular drive through a porte cochère, a large multistory building with wings, and a surrounding parking lot. The accountants ran numbers to show that the project was feasible, though the piling on of debt would shift Resteasy from balance sheet strength to a negative net asset position.
Sam was ready with these preliminary responses for the next board meeting. He shared some of his thinking with individual board members in advance of the meeting. Sam was reasonably sure he would get the Board’s go-ahead. In view of his generous gift, Coach Koch was invited to participate. Sam opened the meeting by having the consulting/accounting firm present a PowerPoint overview of the potential. Then he opened the floor for questions and discussion.
The local developer-builder on the board made a few comments about the architectural renderings and then noted that his firm was familiar with such projects and that the proposal was eminently doable. The financial advisor noted that the increased leverage elevated Resteasy’s financial exposure but said that he was willing to go along with the business judgment of management and the advisors.
The new resident directors held their counsel until the other directors had spoken. The nurse thought that the new construction would enable Resteasy to better meet the needs of its residents, and her input was seconded by a resident director who had also been a nurse.
Experienced Voice
One of the new resident directors, Jim Kingsley, had a substantial financial background. Before moving to Resteasy, he had been CFO of a major national stockbrokerage firm, and when a stock exchange in New York City needed a CFO, the industry had named him to be the exchange’s CFO. In short, he was a man of considerable accounting, financial, and business experience and acumen. He listened intently to the presentation and the ensuing discussion, and when his turn came to speak, he chose his words carefully.
He began by echoing the concern of the financial advisor about unduly leveraging the corporate entity. He then quietly and respectfully questioned the accounting firm’s conclusion that a negative net asset position would be of no concern. He noted that the only way to operate under those circumstances was to divert resident entrance fees from the contractual purposes for which they were contract consideration.
Astute Observation
He observed that the investment banking firm lacked much expertise beyond the tax-exempt world, and he thought it desirable for the board to consider all options before reaching such a major decision. He then offered his opinion about what he considered the nation’s premier investment banking firm, perhaps the top in the world, “Adler Hirsch and Sons,” and he suggested that Adler Hirsch be asked to make a proposal before proceeding.
Suddenly, misgivings that other directors had been harboring came to light, and there was vigorous discussion of how best to proceed. Coach Koch simply said he hoped his gift might be a game-changer, helping senior care empower people to make the most of life. Sam promised to do all he could to pursue these new angles. With that, the board meeting adjourned.
The next day, Sam, who believed in starting at the top, called Adler Hirsch and asked for the CEO’s office by name. When the CEO wasn’t available, Sam left a message, and it wasn’t ten minutes later before his phone rang with a partner from Adler Hirsch calling.
The woman from Adler Hirsch listened as Sam explained developments at Resteasy and the options that had been considered previously based on conventional not-for-profit industry advice. Her questions were quick, perceptive, and probing. Just from that short interaction, Sam found himself thinking of new possibilities which otherwise would never have occurred to him.
Collective Wisdom
With this dramatic shift from the conventional industry advisers, Sam thought it prudent to open the discussion to the community of residents at large. A meeting was scheduled for the following Wednesday. In addition to Sam, Jim Kingsley, the retired Wall Street financial expert, joined him in presenting the opportunity to the residents.
The ideas that flowed freely from the meeting and its aftermath are beyond the scope of this installment of the fantasy world of Sam Veltheim and Resteasy Village, but as Sam’s story continues, it will be evident that those residents that day, and in the weeks that followed, brought forth a vision for aging that transformed a sleepy, slow-moving enterprise into a paradigm for aging in America.
(To be Continued)
Disclaimer: In this story, and in other related tales of Resteasy Village, all names, characters, and incidents are fictitious. No identification with actual persons (living or deceased), places, buildings, businesses, or circumstances should be inferred.
This is very interesting! Looking forward to all the lessons from this story.
This a great story! I’m looking forward to learning more from its conclusion.
You have heard of Willow Valley Communities and its planned adventure into high cost, high rise building in downtown Lancaster, PA, and its negative note by Fitch, I assume?? With its non-total support (“opposition”) by some percent of current residents, I assume??