Agreement calls for $2.6 million in renovations
At a Nov. 16 meeting, the Nags Head Board of Commissioners unanimously approved the sale of the town’s long-term nursing home to the facility’s current operators. With the sale of the facility to Peak Realty Nags Head LLC, Peak Resources will continue to operate the nursing home through a lease with their affiliated company as owner.
The sale price on the facility is a modest $4,000, but the agreement comes with two important conditions. Peak will complete $2.6 million in renovations to the facility and it must continue to be operated as a nursing home until Oct. 1, 2051.
The sale marks a new chapter in the history of a facility—once known as Colony Ridge—that was the focus of a dispute between the town and the previous operator, Tar River Long Term Care Group. In April 2015, Nags Head declared Tar River in default of its lease for failing to make required improvements. And for a time, a “worst case scenario” — one in which patients might have to be temporarily transferred out of the facility — seemed possible.
But since entering into a lease with Peak in August 2015 to operate the facility — now called Peak Resources of the Outer Banks — the quality of care and renovation work have been “outstanding,” according to Nags Head Mayor Bob Edwards.
With $1.5 million in improvements to the facility originally agreed upon, Edwards said Peak CEO Todd Nunn and President Harold Nunn have recently told the commissioners they believe $2.6 million "or maybe more" would be needed to get the facility to "where it needs to be."
"With the additional investments," Edwards explained, "all the parties felt it would be best if we sell the nursing home to them."
Todd Nunn told the Sentinel that the company has "been working with Nags Head for a while to try to figure out a way to work this out. We're doing very expensive renovations to the facility, and we want to make sure we do them completely, so we felt we would need to own the property. And we finally came to terms on it."
Nags Head Town Attorney John Leidy said Peak submitted a bid to purchase the building and land on Oct. 7. With the commissioners "inclined to accept the bid," Leidy added, the board approved a resolution following a closed session at its Nov. 2 meeting authorizing the sale after completion of an "upset bid process."
That called for advertising Peak's bid and giving an opportunity for other bids to be submitted "that are at least as good, plus ten percent."
With the expiration of the 10-day waiting period on Nov. 16 — and no other bids received — the board approved the sale to Peak. Leidy explained that this modest sale price seemed appropriate when "factoring in the obligation to make significant and expensive repairs to the facility."
Leidy added that under a reverter clause, if operation ceases for more than 90 consecutive days, the title to the property would be transferred back to the town. "The town would get the building and land back, along with everything on them," he said, "and the town would also receive back the facility's Certificate of Need." That is the document issued by the state that authorizes the operation of the nursing home.
If, on the other hand, Peak stops operating the facility as a nursing home, but begins to operate another skilled nursing facility in Dare County, the property title would revert to the town, but the Certificate of Need would remain in Peak's possession.
“Though our first priority has always been to ensure the health, safety and welfare of those who live in, and rely on, this facility," Edwards said, "we felt strongly that in selling the building, we had to ensure that a skilled care facility such as this remain in our county.”
Todd Nunn applauded the town's determination to "have a quality nursing home operate in perpetuity." He added that, with the new improvements scheduled to be completed by mid-2017, his company is committed to "making this something we and the town, the staff and the residents are proud of."
The sale must still be approved and authorized by the North Carolina Department of Commerce. The date that the transfer of title will take effect has not yet been set.