20210616-LOC-HillsideVillage

Hillside Village Keene, a sprawling retirement community on Wyman Road, as seen in February.

The nonprofit that runs Hillside Village Keene has not reimbursed a Peterborough couple more than $400,000 they claim they’re owed after moving out of the retirement community last year.

In a lawsuit filed last month, Bruce and Nancy Montgomery say the Prospect-Woodward Home failed to return their entrance fee at the sprawling Wyman Road facility, which they joined shortly after it opened in 2019.

Facing a cash crunch that Prospect-Woodward officials have said is due largely to the COVID-19 pandemic, the organization can’t return those funds until resolving its financial situation, according to a Prospect-Woodward financial adviser. The nonprofit announced earlier this year that Hillside Village needs a cash infusion to remain viable, with officials searching for someone to buy the retirement community. It is also weighing Chapter 11 bankruptcy, which would allow it to restructure its finances without closing.

Keene attorney Joseph Steinfield, who is representing the Montgomerys, requested at a May 24 hearing in Cheshire County Superior Court that the couple get reimbursed once that financial situation is resolved, he said Tuesday. (Steinfield is a columnist for The Sentinel.)

“It’s a very unfortunate predicament that they’re in, through no fault of their own,” he said of the Montgomerys.

Cheshire County Superior Court Judge David Ruoff sided with the couple Tuesday, ruling that Prospect-Woodward must return $403,200 to them once the organization stabilizes its finances, if not earlier.

The Montgomerys, who are 86 and 85, respectively, moved to Hillside Village from their longtime home in Washington, D.C. in fall 2019, after the retirement community opened earlier that year, they say in the lawsuit.

Enrollment in the facility — which offers a full continuum of health care, from rehabilitative services to 24-hour nursing care — cost $478,000, most of which covered a large entrance fee, according to a residency agreement filed in court. The Montgomerys also paid a monthly service fee of nearly $6,000.

After moving to Hillside Village, however, the couple determined that it couldn’t provide the nursing and memory care that Bruce Montgomery needs, the lawsuit states. They left their unit last spring and moved to Alstead for several months, it says. They now live at RiverMead, a retirement community in Peterborough, according to Steinfield.

They notified Hillside Village last September that they were formally terminating their residency at the facility, according to the suit. That decision should have triggered a clause in their residency agreement, they argue, which promised to refund 90 percent of their entrance fee once the next resident of the vacated unit paid their own entrance fee.

Toby Shea, a financial adviser for the senior-care consultant OnePoint Partners, which is helping Prospect-Woodward navigate its financial troubles, told Steinfield in late April that the Montgomerys’ former unit would be occupied by mid-May.

In an email filed in court with the couple’s lawsuit, however, Shea said Prospect-Woodward cannot yet reimburse them because the new residents’ entrance fee went directly into an escrow account managed by a third party. The organization isn’t entitled to that money until its “financial challenges have been resolved,” according to Shea.

“Until that time, Hillside does not have access to these funds and no payment of an entrance fee will have been made that will trigger a refund obligation,” he wrote.

OnePoint Managing Director Tom Brod declined Tuesday to comment on the Montgomerys’ case while litigation is pending.

Early in the pandemic, Prospect-Woodward suspended move-ins and site visits by potential Hillside Village residents to observe guidance from public health officials, officials told The Sentinel in February. Those measures led to lower-than-expected occupancy among the facility’s 140 independent-living units — nearly a quarter of which Brod said were vacant at the time.

Brod told The Sentinel in February that the nonprofit had not repaid approximately $60 million of the tax-exempt bonds that financed Hillside Village’s construction. That included missing a $1.8 million semi-annual bond payment at the beginning of the year.

“We don’t have the reserves that we had planned on because we didn’t get the entrance fees,” he said at the time. “And now we don’t have the ongoing revenue that we had planned on because we don’t have a high enough occupancy.”

Prospect-Woodward created the escrow account — which is managed by a Texas-based agent — to help attract new residents while it navigates its financial troubles, since anyone who puts their entrance fee in that account can request a full refund if they leave Hillside Village, court filings show.

The organization continues to search for a buyer and may still file for bankruptcy, Brod said Tuesday, adding that “we are pleased with our progress as we work through our current situation.” Prospect-Woodward officials have said that even if the organization declares bankruptcy, Hillside Village residents will remain at the facility and retain their current health care services.

Acknowledging the nonprofit’s financial challenges, Steinfield said Tuesday that he opted against seeking an immediate refund of the $403,200 his clients say they’re owed.

“It would put a lot of people, including the court, in a very difficult situation,” he said. “The Montgomerys will be patient.”

Instead, Steinfield said he asked the court to ensure that the couple will be refunded directly from the escrow account once Prospect-Woodward resolves its cash crunch. That would eliminate any chance that Hillside Village or a potential buyer may refuse to return their entrance fee after taking control of that money, he said.

“I’m trying to … close what I see as a potential gap,” he said.

Prospect-Woodward had argued against the Montgomerys’ request for injunctive relief, saying the couple cannot claim the funds in escrow because that money technically still belongs to the new residents.

Ruoff ruled, however, that those funds are essentially the new residents’ entrance fee. Acknowledging the nonprofit’s financial struggles, he said the escrow plan doesn’t relieve its obligation to the Montgomerys.

"The Montgomerys are not asking Prospect-Woodward to dole out money it does not have," he wrote. "… [Their] request will not cause Prospect-Woodward any financial harm other than to hold it to its promise."

This story has been updated with information from a Cheshire County Superior Court ruling Tuesday.

Caleb Symons can be reached at 352-1234, extension 1420, or csymons@keenesentinel.com. Follow him on Twitter @CalebSymonsKS.