The Attention-Getting Device

Let’s begin the inquiry by examining National Church Residences’ possible motives for going forward with their plans in the face of a continuing civic firestorm.

NCR has been incredibly patient, almost nonchalant, through nearly four years of legal wrangling and public criticism. They don’t seem worried about the timetable. They have shown flexibility about the range of services (continuing care, medical facilities) offered, with their current line being that less is more. After declaring repeatedly that a $1/year land lease was necessary for the development to be viable, they now say that OU's new $40,000/year lease is no problem. However, the company has been completely consistent, even rigid, on one detail: the number of units planned for the site. When you crunch the numbers on the center, you can understand why.

Much has been made of NCR’s nonprofit status, but nonprofit companies can turn as big a profit as they like on a single investment, provided that profit balances out against some kind of loss elsewhere in their portfolio. In NCR’s case, they have large holdings in low-income HUD senior housing, and my guess is that company accountants view the Athens development as a secure, high-yield investment to hold against some of those riskier projects (like the one in Detroit that made news for falling apart in 2001¹).

In a 2005 Athens News article, NCR chief operating officer Jerry Kuyoth quoted monthly rent at the planned facility at $1,500-$2,500. He also went on record claiming that the facility would need to reach 83% occupancy before making any “surplus cash” (what any for-profit company would refer to as “profit”). ² Current plans call for around 200 residents.

Based on the above numbers, if NCR can fill their facility to its planned maximum, they stand to turn a profit of $1.02 million a year. Let me say that again for emphasis, just in case you dozed through the last sentence: 1 million dollars in profit yearly. Not gross revenue before expenses, profit. That’s enough profit to pay the entire $15mil cost of building the center in 15 years, leaving a real estate asset on NCR’s balance sheet that by then will easily be valued at 20-30 million dollars. And since an NCR spokesman has already made it clear that NCR plans to pass OU's new $40,000 land leasing cost on to its residents, that profit margin won't be affected by the higher lease.

One more point: when a nonprofit company such as NCR flourishes, one prime way they balance their books is to raise the salaries of their employees, with the lion’s share of that raise going to higher-level management. I think Kuyoth and others near his rank in NCR have a very personal financial stake in this whole game, and their claim that no one could possibly profit from the development is laughable.

Conclusion? The development is a financial plum waiting to be plucked, and NCR planners are crossing their fingers lest anything get in its way. Besides, they say they've already put up $240,000 in development costs, though nearly a quarter of those have already been covered by 23 non-refundable housing deposits of $2,500 each.³

My challenge to folks at NCR is this: "Are you willing to complete only Phase I (87 units, 1 building) of the project if it is conclusively shown that a smaller development is better for a large number of Athenians? Would you take a cut in profit margin in order to benefit the entire community?" I'm interested to hear their response.