Lutherwood-CODA (Community Opportunities Development Association)
2003
| Case No.
SI35
In early 2003, Reverend Doctor Dieter Kays, the CEO of Lutherwood-CODA, was by his own account “worried and spending a lot of time in prayer.” The subject of Kays’ spiritual reflection was Luther Village, the Canadian nonprofit’s bold, three-phase, 12-year, $75 million real estate project to develop a sprawling, high end, 20-acre, 750-member retirement community in downtown Waterloo. With the first two phases of the project complete, Luther Village had accumulated $4.5 million of profit from construction. Phases I and II of the Luther Village had sold out with some headaches, but fairly quickly nonetheless. At the time, Lutherwood-CODA had brought to market a new concept in elderly residential services. But Phase III, a $20 million Assisted Living Center serving individuals with daily service and care needs, would be completed in a much more competitive market. Now, there were many competitors for Assisted Living services in the region, and early indications were that demand for the new facility was lower than it had been for Phases I and II. Moreover, Lutherwood had assumed substantial debt to finance Phase III. All of the equity generated during Phases I and II had been reinvested into Phase III. Kays knew that the organization’s ability to service its obligations depended on being able to market and fill the new Assisted Living facility as quickly as possible. Could Lutherwood-CODA tolerate this new level of financial risk? Would market and economic conditions allow Phase III to execute its aggressive marketing program? Could the project would really generate sufficient funds for Lutherwood-CODA’s social programs to make all the work and stress worthwhile? Was the development and operation of Luther Village consistent with Lutherwood’s social mission?
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