The Glebe, an upscale continuing care retirement community in Botetourt County, defaulted July 1 on an intermediate payment of $15 million for tax-exempt bonds sold five years ago.

The potential repercussions for the facility and its residents are not yet clear.

The Glebe, a tax-exempt organization for now, sold in December 2003 a total of about $55.5 million in nonrated, tax-exempt bonds through Roanoke County's Industrial Development Authority.

Neither the county nor its taxpayers will be affected in any way, because the bonds were not a type that required the municipality's backing, emphasized Doug Chittum, the county's director of economic development.

The Glebe is a subsidiary of Culpeper-based Virginia Baptist Homes, for which Randall Robinson is president and chief executive officer.

The Glebe has 203 residents, with 151 people in apartments and cottages, 25 in assisted living apartments and 27 in nursing care residences, according to Virginia Baptist Homes. Officials said about $60 million has been invested in the development since inception and that The Glebe employs about 170 people.

Robinson said The Glebe's occupancy rate, now at about 70 percent, has failed to meet projections of 90 percent to 95 percent, a rate required to make the intermediate payment on time.

He suggested that the current real estate crisis and a faltering economy have cut into The Glebe's potential client base.

Robinson said The Glebe is working to refinance and restructure its debt and that neither residents nor employees should be affected.

"We think the mood at The Glebe is very good," Robinson said.

But Bob Bruner, dean of the University of Virginia's Darden School of Business, said there could be fallout from the default -- consequences that ultimately could affect residents' quality of care, Glebe employees, recruitment of new residents and the potential for new investment down the road.

Bondholders "could become very active at this point" to protect their investment, he said. In similar cases, related legal action has pushed companies into Chapter 11 bankruptcy protection or even Chapter 7 liquidation, he said.

Three residents interviewed Monday varied in how much they'd learned about the default, ranging from nothing to some, and about what it might mean, if anything, to them.

Louis Hiett said he is not concerned about what he has heard to date about The Glebe's financial troubles.

"Virginia Baptist is so well-established and has other properties and has a solid track record," said Hiett, who has lived at The Glebe with his wife, Virginia, for three years.

Maybelle Payne, a native of Clifton Forge, was one of the first residents of The Glebe, which opened in Botetourt County in 2005. She said she moved to the retirement community from Kentucky after the death of her husband.

Payne said the bonds default was mentioned fleetingly by Glebe Executive Director Steve McElmurray during a recent regular meeting to which all residents are invited.

"I have not heard a word mentioned since then," she said. "I never gave it a second thought."

Robinson said he has "had several meetings with residents and key staff" at The Glebe about the bonds dilemma.

Like Hiett, Payne expressed confidence in Virginia Baptist Homes. Both said they thoroughly enjoy living at The Glebe.

"I'm very happy. I'm very content," said Payne, whose daughter, Katherine Morris, is director of marketing for The Glebe.

"We couldn't be happier," Hiett said. "It's a nice place to live."

The Glebe is a continuing care retirement community, which means it offers residents access to independent living, assisted living and a nursing facility on site as their health needs change. Residents make an initial entrance payment and then pay monthly fees.

In an e-mail Monday, Monica Hillery, Virginia Baptist Homes' vice president for marketing and public relations, provided information about payments and fees.

"The standard life care entrance fees (apartments and cottages) for a single person range as follows: one-bedroom apartment for $123,000 to a two-bedroom cottage for $324,000. Add $37,000 for double occupancy for both apartments and cottages."

For single occupancy, monthly fees range from $2,220 to $4,620, with an added $1,043 for double occupancy, Hillery reported.

Chittum said Roanoke County's Industrial Development Authority, now its Economic Development Authority, and the board of supervisors agreed to allow The Glebe to issues the bonds through the IDA as a courtesy to Virginia Baptist Homes. Such arrangements used to be common practice in the county, he said, allowing tax-exempt organizations to issue tax-exempt bonds.

Chittum said that when he first started working for Roanoke County, the government had about 20 such bonding arrangements but is now down to about seven.

Many other financing options have emerged in recent years, he said.

At the time The Glebe wanted to raise money, Botetourt County had a year in which its debt capacity "was used up," Chittum said. So, Roanoke County agreed to help out as a conduit of sorts for the bonds issuance.

"We have no stake in the transaction," he said. "We have nothing to lose and nothing to gain."

Jerry Burgess, county administrator for Botetourt County, said Monday that he could not comment about The Glebe's financial straits because of current litigation between the county and The Glebe about The Glebe's tax-exempt status.

The Glebe has appealed a lower court ruling undoing its tax-exempt status to the Virginia Supreme Court.

Burgess said he anticipates oral arguments in the case will occur before the Virginia Supreme Court "in about two months."

The Glebe could lose and be required to pay nearly $493,000 in real estate taxes and penalties dating to the facility's opening.

Annually, the facility would pay on average about $227,000 in taxes based on the current size of the facility, according to Botetourt County officials.

"I'm not sure it will be another financial blow, but it will certainly be something we have to take into consideration," Robinson said.