State regulators step in to oversee Charlotte’s Aldergate senior living facility

By Cristina Bolling

State officials have stepped in to oversee the financial operations of Aldersgate, the retirement community in east Charlotte, saying that the facility is “insolvent or in imminent danger of becoming insolvent.”

The N.C. Department of Insurance, which examines the finances of continuing care retirement homes, has been scrutinizing Aldersgate for months, as the non-profit has sought to overcome issues stemming from years of financial losses and what it has described as financial mismanagement.

On Tuesday, state officials ramped up their oversight, issuing an “order of supervision” and giving Aldersgate 150 days to address issues including:

• Paying back more than $1.8M in entrance fee refunds owed to former residents
• Paying back more than $3.2M owed to vendors
• Addressing problems outlined in a lengthy “corrective action plan” submitted by Aldersgate and approved by N.C. Department of Insurance officials.

Aldersgate, located on a 231-acre campus in east Charlotte near the intersection of Eastway and Shamrock drives, is one of Charlotte’s largest and most popular continuing care retirement communities, or CCRCs, which offer a spectrum of options such as independent living, assisted living and skilled nursing care. The N.C. Department of Insurance regulates the financial aspects of CCRCs such as Aldersgate, which typically charge large up-front payments as well as monthly fees.

As of Dec. 31, 2022, Aldersgate had 569 residents, documents show. State documents show its entrance fees range from $112,000 to $640,000, with monthly fees of between $2,500 and $6,500. Aldersgate is affiliated with the Western North Carolina Conference of the United Methodist Church. 

Aldersgate’s website says it was “voted the ‘Best Retirement Community in Charlotte’ by The Charlotte Observer in 2019, 2020 and 2021” and is “designed for retirees who want to live vibrantly with total peace of mind about the future.”

A spokesman for Aldersgate told The Ledger this week that CEO Suzanne Pugh would reply to our inquiries before publication of this article. But we didn’t hear back as of Friday morning.

In a May letter to prospective residents included in state-required disclosures, Pugh said Aldersgate remains committed to providing “a vibrant senior living experience” but that “this mission has encountered some challenges with the timely and accurate reporting of its financials.” It blamed a prior chief financial officer for errors, acknowledged problems paying vendors and issuing entrance-fee refunds and said it was working to resolve the problems. The two-page letter concluded: “We look forward to continuing to serve seniors and fulfill our mission into the future. We hope you’ll join us on that journey!”

There is nothing in the documents alleging that the care of residents has been affected by the financial challenges.

It’s uncommon for the state Department of Insurance to issue an order of supervision — this is the only instance in the past year that an order has been issued for a retirement community like Aldersgate, said Barry Smith, deputy director of communications for the N.C. Department of Insurance.

Aldersgate residents were notified Tuesday of the order of supervision, Smith told The Ledger. Aldersgate is allowed to accept new residents while under state supervision, but prospective residents must be shown a disclosure statement explaining the situation, Smith said.

Mounting troubles

Documents Aldersgate filed with the state last spring lay out a timeline of the institution’s financial troubles and show how it planned to recover. Aldersgate reported losses from operations in 2019, 2020, 2021 and 2022, and had years of losses dating back to 2014.

In June, Aldersgate filed its audited financials for 2022, which showed an $11.2M operating loss and that its liabilities exceeded its assets by $1.3M, according to state documents.
According to the documents, state insurance regulators notified Aldersgate last January that they deemed the facility to “be in imminent danger of becoming insolvent and in a hazardous financial condition.”

Among their reasons:

• There was no chief financial officer or a fully staffed and experienced accounting and billing department.
• Aldersgate wasn’t producing “timely and accurate” financial statements.
• It was behind on its payments and had delays in billing and accounts receivable.
• There was not enough money in reserves.

In ordering stepped-up supervision this week, regulators said in documents that they believe Aldersgate is “conducting its business in a manner that is financially hazardous to the public or with the persons with whom Aldersgate has contracted with to provide continuing care.”

Documents show that Aldersgate had “issues of competency and honesty within the CFO and other members of the finance department” in 2021 and 2022, and the department saw an exodus of all but one staff member in 2022. (Aldersgate hired a new chief financial officer, Cherie Grisso, last month.)

Costly canceled plans at Shalom Park

In 2019, Aldersgate announced plans to build a new senior living community on the campus of Shalom Parkin the SouthPark area called Generations at Shalom Park, but it canceled those plans last November, which resulted in a loss of $3.4M for Aldersgate, according to Aldersgate’s corrective action plan.

Last January, Pugh told The Ledger that “The [initial] financial projections, market evaluations, and other original background data sets were virtually no longer relevant and simply could no longer support the continuation of the development.”

According to the corrective action plan filed in May, financial mismanagement also happened with the Generations at Shalom Park project, because the former chief financial officer did not execute a board-approved loan from Aldersgate to Generations, and instead “paid expenses directly from Aldersgate and misrepresented the accounting.”

Plan forward — building or merging? Aldersgate’s multi-page plan for digging out includes steps ranging from implementing cost-saving measures in the facility’s dining service to training of its finance department staff and building trust with residents.

New construction may also be part of the plan. As part of the corrective action plan, Aldersgate is considering:

• Selling or leasing 14 acres of its frontage
• Building eight new cottages on existing pads on its campus
• Evaluating whether to build 35 to 45 independent living cottages on two different pieces of land on its campus.

In its plan, Aldersgate also added that it will “Evaluate sustainability as a single site, single purpose continuing care retirement community” — to which state insurance officials added in blue a request “that the Boards consider the appropriateness of an affiliation or merger with another entity.”

Cristina Bolling is managing editor of The Charlotte Ledger: [email protected]