Commentary by John Accetturo
The Barrington retirement community in Carmel recently filed for bankruptcy. Barrington defaulted on $93 million in bonds that were sold by the City of Carmel on its behalf so the bonds would be tax exempt.
Public comments at a City Council meeting indicated there were too many of these types of retirement communities within a 10-mile radius to make the project profitable. The Carmel City Council approved the sale of these bonds on Jan. 12, 2012, despite the comments.
In return, the City was supposed to get $350,000 a year from Barrington in perpetuity. The deal was so lauded by the city council and mayor as a win-win that Current in Carmel reported a city councilor saying it was a “no brainer” decision.
The residents of Barrington are now out $52 million in entrance fees that they have virtually no chance of recovering. These fees are unsecured payments, and according to bankruptcy law don’t have priority. Barrington liabilities and operating cost have grown, and liabilities exceeded assets by $55 million at filing. The situation is bleak because as people leave, fixed costs will drive Barrington further into demise.
Barrington would not have happened without its ability to originally float $119 million in tax exempt bonds. I feel that the city council’s vote approving these bonds has ended up hurting a lot of people. The city’s backing also gave the future residents a false sense of security. Most of the hurt people are Carmel residents who bought into Barrington.
Blind approval by the rubber-stamping council hurts people. I wonder if the councilors really care? We do!
John Accetturo is a former member of the Carmel City Council and Carmel Redevelopment Commission