Friday, July 19, 2024

The Rockland Trust branch in Somerville’s Davis Square. The bank has loaned money to Cambridge’s Neville Center nursing home. (Image: Google)

The bank that holds an $11.4 million mortgage from the city-affiliated Neville Center nursing should forgive part of the loan, Cambridge city councillors said Monday. The order requesting Rockland Trust Co. to forgo getting repaid for a portion of its loan said it’s necessary “to allow the city to provide much-needed support” to the financially challenged nursing home.

The move follows a meeting of the council’s Health & Environment Committee on May 23 when the head of the nonprofit overseeing the nursing home asked for $2.5 million in city funds and said the facility can’t repay the loan – and could close if it can’t refinance. Later, the executive, Andrew Fuqua, chief counsel to the Cambridge Health Alliance, walked back the warning somewhat, saying there’s no “imminent” plan to close and that refinancing negotiations are continuing.

Committee members said at the meeting that they couldn’t support providing city money to pay off a loan to a for-profit bank, but did want to aid the nursing home. Committee chair Patricia Nolan said much the same at the regular Monday meeting of the full council. Nolan and councillor Sumbul Siddiqui co-sponsored the measure asking Rockland Trust “to convert part of their loans to grants” so the city could help Neville Center. The order didn’t specify how much should be forgiven by the bank.

“This is really meant to say … we want to help the nursing home. And we want to make sure that our dollars go to support the operations in the nursing home. And they’re not just used only to the benefit of a for-profit bank,” Nolan said at the council meeting.

Nolan was asked afterward what leverage the city had over the bank that would persuade Rockland Trust to forgive part of the loan. She pointed out in an email that Neville can’t make required loan payments “under its current operating model,” and if the bank “were to call the loan the nursing home would have to close and the bank would end up with nothing – there is no collateral for the loan, as far as I was told,” because the city owns the land and the buildings.

“The only way for the bank to get paid back is for [Neville Center] to stay open and provide service.  So we all have an interest in keeping the [nursing home] open – the bank so it can get paid back and the city so the [nursing home] can serve the many low-income residents it serves,” Nolan said.

Comparing facilities

Because of the government money that helped build the nursing home, 75 percent of Neville Center nursing-home residents must be supported by “public payers” such as MassHealth and Medicare. The other elder care facility on the site near Fresh Pond, Neville Place assisted living, must fill 57 of its 71 units with people whose income is no more than 80 percent of the area median income.

Neville Center and Neville Place were developed about 25 years ago on city land that formerly housed Neville Manor nursing home, another municipal nursing facility. The city, the state, the Cambridge Health Alliance and the Cambridge Housing Authority all helped build Neville Center and Neville Place. Representatives of the Alliance, housing authority, the city’s Affordable Housing Trust and the city administration sit on the board of the nonprofit organization that operates the nursing home and assisted-living facility, Neville Communities.

Rockland Trust loaned a total of $19.7 million to the nursing home and the assisted-living center in 2013 to replace what Fuqua called “an extraordinarily complicated debt structure.” The loans now total about $14 million. Both facilities suffered during the pandemic and now need new roofs and other upgrades. Fuqua said the nursing home also has been contending with rapidly rising staffing costs while state MassHealth reimbursements aren’t keeping up. According to a consultant to Neville Communities, the assisted-living center is showing a gain of $66,000 a month and the nursing home is losing $48,000 monthly.

Financial matters

Both facilities also need to refinance loans. Asked for the bank’s reaction to the City Council order, Rockland Trust spokesperson Melissa Guimond said the bank “doesn’t comment on customer relationships.”

The Affordable Housing Trust has agreed to give $5.7 million to Neville Place but cannot support the nursing home because it is not housing. Neville Center’s request for city funds was to include some money to pay down its loan. That is what city councillors objected to.

The loans are due Oct. 31. If the city wants to use its budgetary surplus, free cash, to help the nursing home, it would have to do so either this month or in October, assistant city manager for fiscal affairs Claire Brewer Spinner said.