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Sea Island Comprehensive Health Care gets bonus from land sale proceeds
By Shelia Watson
Contributing Writer
The purchase of a parcel of land on Johns Island by Angel Oak Village LLC, a development company based in Raleigh, N.C., has helped Sea Island Comprehensive Health Care Corp. regain its footing from Chapter 11.
That alone was enough to cause the Rev. McKinley Washington, a former state lawmaker who is president and chairman of the Sea Island board, to raise his hands in praise.
But when Angel Oak Village, a joint venture between River Birch Management and Boulder Capital, later offered to help establish the Sea Island Community Endowment Fund, to which it will contribute a portion of its profits from the land development, Washington said the entire board was overwhelmed.
“This is a very special arrangement,” Washington said. “I don’t think there’s another like this. I consider (Angel Oak Village) a family-friendly business group. Not only were they able to help us get out of Chapter 11 (through the land purchase), but when they decided to give a percentage of profits from that property to Sea Island and assist in forming the foundation, that’s actually helping us ensure that the people of this area have these programs for a long time.
“They didn’t have to do it. Just purchasing the land was a tremendous blessing, but going the extra mile like this multiplies the blessing a hundredfold.”
When the Angel Oak Village principals visited, they seemed impressed with Sea Island’s wide range of services, Washington said.
“I think they did it because of the history of this organization, what it’s been able to accomplish and why,” he said.
Filling a need
Sea Island Comprehensive Health Care Corp. was organized in 1969 under the umbrella of Rural Mission Inc., a church-based agency that saw the need for health care on the rural islands.
A weekend clinic was opened on Johns Island and staffed by Dr. Eldred Heisel, a physician who flew from Ohio every weekend to provide medical services to the people, most of whom were indigent.
In 1971, the Office of Economic Opportunity gave Rural Mission federal funds to do a feasibility study of the health conditions on the islands. A health council was organized and the following year, Sea Island was granted major funding to begin the delivery of comprehensive health services.
Chartered to provide the structure for an organized community-based approach to health care, Sea Island grew over the years to include a 132-bed nursing home with 24-hour physician, dental, dietary and social services as well as recreational activities and therapy; a pharmacy; diagnostic laboratory services; a home health agency serving Charleston and Colleton counties; and an 88-unit housing project that includes a nutrition program, social and religious services, and arts and crafts.
It also provides child development centers in Hollywood, Edisto and Walterboro and medical centers in Hollywood, Walterboro and Johns Island.
A new chapter
Despite its vast array of services and all its good intentions, Sea Island fell on hard times in recent years and filed for bankruptcy. Its plan for reorganization included selling 42 acres of undeveloped land. Angel Oak Village made an offer of $3.5 million.
Keith Waring, a private financial advisor with Charlestowne Associates, served as financial advisor to Sea Island and liaison to the Angel Oak Village during the deal.
“They had some bad management in place at Sea Island, but the board realized that and had taken steps to correct it,” said Waring. “At this point (when it was in bankruptcy), they had assets in the form of close to 50 acres, but it was zoned for single-family.
“So we got with the city (of Charleston) and changed the land to a planned-use development with commercial, office and residential. It then became much more valuable from the developer’s standpoint.”
Waring said there was no need to put out bids.
“This company approached us with an offer and we presented it at a city council meeting,” he said.
The city of Charleston had made an offer on the property as well, but Angel Oak Village made some concessions to the deal and the city backed off, Waring said
“The deal started as a move to shore up the finances of the organization,” he said. “Then the principles of Angel Oak Village made several site visits and got to know what Sea Island’s mission was. When they heard about its rich history, it made sense to them to help.”
Robert DeMoura, a principal in Angel Oak Village, agreed.
“The story of Sea Island is a very compelling one, starting with the obstacles the group had to overcome just to get off the ground,” said DeMoura. “But what really spoke to us as a development group was how the employees and board of directors fought to keep the doors open during the bankruptcy reorganization.
“When Sea Island had difficulty meeting payroll, employees came to work anyway to care for their patients, with no assurance that they would be paid. When Sea Island couldn’t pay its bills, board members wrote checks to keep the organization afloat. That kind of dedication is a remarkable example, so we are privileged to attempt a modest emulation.”
Ron Jones, an attorney with Lucas and Staubes, saw the organization through its bankruptcy.
“This was unusual all around,” said Jones. “I’ve been doing bankruptcy law for a long time, and I’ve never been involved in a case where a company bought an asset and then went beyond that to give some of their profits to it.
“It’s like ‘Here’s a check for the land and we’ll make a donation, too.’ They are very generous people. They’re good businessmen and good corporate citizens.”
It was also unusual that in addition to paying in full to all its priority creditors, such as the IRS and state Department of Revenue, Sea Island paid its others creditors 78 cents on the dollar for its debts, Jones said.
“That’s unheard of for a nonprofit,” he said. “And even then, some of the creditors gave generous discounts for their claims and others simply waived the right to payment because they wanted to help the organization’s mission.”
Growing the neighborhood
Angel Oak Village will be a mixed-use development with 220 townhomes, 80,000 square feet of retail and three out-parcels.
The developer also agreed to create a conservation easement on the piece of property bordering the city park that contains the Angel Oak, which will ensure that the land can never be developed.
The 65-foot-high Angel Oak, named for the family that owned it for centuries until the city of Charleston acquired it for back taxes 15 years ago, is reputed to be more than 1,400 years old.
However, there was an initial debate over how wide the park buffer around the park should be.
“The city agreed to some planning and zoning changes for Angel Oak Village,” said Jones. “When it was doing its due diligence, the developer found a parcel near the nursing home that was full of grand oaks. They requested a change in zoning, so this will be the parcel zoned for conservation and the other will be developed. The city agreed to that request.”
Waring, who continues in his role of financial advisor to Sea Island, said the deal was a win for everyone.
“A lot of out-of-box thinking happened here to provide a positive financial solution for Sea Island,” he said. “It’s a 360-degree picture of success. It’s a win-win, from the developer’s standpoint, from the city’s standpoint and from the organization’s standpoint, which had resurrected itself financially.”
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