Monticello, NY – As part of the ongoing response to the serious fiscal crisis Sullivan County is facing, legislators on Thursday unanimously voted to set a public hearing to transfer the Care Center at Sunset Lake (the Sullivan County Adult Care Center) in Liberty to a Local Development Corporation (LDC), as a first step toward selling the nursing home and short-term rehabilitation facility.
“This was not an easy decision but a necessary one in order to ensure the Care Center continues to fulfill the valuable role it’s played in our community for three decades,” said Legislature Chairman Robert A. Doherty. “We have consistently lost millions of dollars a year on its operation, due to shrinking State and Federal funding and ever-increasing costs. Now, we’re at a point where COVID-19 has dashed any hope of increasing revenue streams for the foreseeable future, and we cannot ask taxpayers to shoulder even more of the heavy financial weight. Yet neither do we want to close it, considering the critical services and employment it provides to our community.”
For the past two years alone, the 146-bed Care Center has averaged a $3.5 million annual operating loss. In addition, the County has had to contribute $2-$2.7 million of local dollars to be able to access Federal aid. The existing accumulated deficit balloons to nearly $22 million when factoring in long-term liabilities like post-employment benefits, accrued compensation and vacation, and depreciation of the 30-year-old facility.
“My office has been working diligently to avoid closing the facility by instead selling it, with the expectation that the new owner will maintain a minimum number of beds and most, if not all, of the existing positions, along with expanding and improving the Care Center in a way that the County is simply not able to do,” County Manager Joshua Potosek explained. “This is the best and really only option to pursue. Keeping the Care Center open under County ownership would involve a significant tax hike, layoffs and/or cuts in existing services, none of which our community can afford.”
On July 14 at 8 a.m. at the Government Center in Monticello, legislators will take public comment on a proposal to transfer the Care Center to the LDC, a nonprofit corporation created by the County to handle the sale of the nursing home and the land on which it sits. A vote by the Legislature to make that transfer will be held subsequent to the public hearing.
“Under State law, an LDC has broader abilities than the County to initiate and conclude a sale that is in the best interests of the County and the Care Center, and it will be able to bond up to the amount we anticipate the Care Center will minimally sell for (in the millions of dollars, at the least),” said Potosek. “Most of that will flow directly into County coffers later this year, thus helping us avoid a potential tax hike in the next budget cycle.”
The LDC will be overseen by three members of the community, appointed by the County Manager, and they will be tasked with carrying out the bonding and finding a real estate firm to market the Care Center. They then will choose the most responsible party interested in the Care Center and initiate a sale. Selection criteria will include not just the offer price but the track record of the buyer and the quality of care they promise to provide.
“I expect this will take approximately 12 months or more, during which the Care Center will continue to be operated by the County (or a third party) via a lease with the LDC,” remarked Chairman Doherty. “Until a sale is finalized, workers will remain County employees with all their normal benefits. We hope to work out an agreement with the buyer of the Care Center to keep as many of those jobs under the new ownership as possible, along with other guarantees, including a minimum number of beds and the institution of a private union shop.
“We’re aiming to keep the Care Center open by undertaking this process, as the other option we were considering – and rejected – was outright closure.”
Comments on the proposed transfer to the LDC will be taken in person at the July 14 public hearing or can be submitted in writing no later than July 13 via email to Annmarie.martin@sullivanny.us or via mail to Clerk of the Legislature AnnMarie Martin, 100 North Street, Monticello, NY 12701.
Care Center Sale
FACT SHEET
UPDATED July 13, 2020
WHAT IS PROPOSED? The Sullivan County Adult Care Center (known as the Care Center at Sunset Lake) is proposed to (1) be transferred to the Sunset Lake Local Development Corporation (LDC) in order to (2) be sold to a private operator.
WHY IS THIS BEING PROPOSED? Sullivan County is experiencing serious fiscal challenges and has embarked upon a series of measures to reduce expenses in order to avoid significant tax increases and further layoffs beyond the nearly 80 that have already occurred. This sale is part of that effort and is also justified by the consistent and ongoing losses – upwards of $3.4 million in 2019 alone, plus a $2.7 million subsidy in lieu of Federal aid – incurred at the Care Center. In addition, the LDC is empowered by State law to issue tax-exempt bonds up to the anticipated purchase price of the facility, whose proceeds will be deposited into the County’s coffers to provide financial stability.
WHY NOW? Given the financial realities, the long-term viability of the Care Center is threatened. The County recognizes how vital these services are to our elderly population and their families and, after deliberation and reflection, legislators have determined that a sale is the best way to insure the continued operation of the facility for the families of Sullivan County and the employees of the Care Center.
BY WHAT AUTHORITY CAN THIS BE UNDERTAKEN? Section 1411(d) of the NYS Not-for-Profit Corporation Law authorizes the legislative body of a county, by resolution, to determine that certain real property of the county not required for use by the county may be sold or leased to an LDC. It also provides that the sale or lease may be on such terms as may be agreed upon by the county and the LDC, without appraisal or public bidding, except that a lease cannot exceed 99 years. A public hearing on such a transfer is required with 10 days’ notice.
WHAT IS THE PROCESS? These are the steps that are being taken:
- On July 2, 2020, the Sullivan County Legislature unanimously voted to set a public hearing prior to a separate vote to transfer the Care Center to the LDC, which will then lease it back to the County (or a third party) to operate until a sale is concluded. Care Center employees will remain County employees during this period.
- At the same July 2 meeting, the Legislature authorized the creation of the Sunset Lake LDC. Once New York State confirms the existence of the LDC, its members will begin meeting in public. Authorizing legislation lists those members as Legislature Vice Chairman Michael Brooks (chair of the Legislature’s Government Services Committee), Assistant Sullivan County Manager Michelle Huck and Jeffersonville attorney William Chellis.
- On July 14, 2020, the Sullivan County Legislature will accept oral public comment on this proposal during an 8 a.m. public hearing at the Government Center’s Hearing Room, 100 North Street, Monticello. Written comments will be accepted up until July 13, 2020 at 5 p.m. and can be emailed to Annmarie.martin@sullivanny.us or mailed to Clerk of the Legislature AnnMarie Martin, 100 North Street, Monticello, NY 12701.
- A vote to consider the transfer will be held at 8:30 a.m. on July 14, 2020 at the same location as above.
- If that vote passes by assent of at least two-thirds of the Legislature, the LDC will assume ownership of the Care Center at a future date.
- The LDC will be empowered to issue bonds up to the anticipated purchase price of the Care Center, and to also seek a real estate firm to market the facility to interested buyers. The proceeds of the bonding will be used to pay for the LDC’s expenses, though the bulk of that amount will be transferred directly to the County to address its fiscal challenges.
- A buyer will be selected by the LDC based on (in no particular order) offer price, experience with the operation of long- and short-term care facilities, demonstrated quality of care in those facilities, and plans to sustain and enhance the Care Center under its ownership, including the retention of employees and a guaranteed minimum of beds (yet to be determined).
- The LDC’s board will handle the sale of the Care Center. When ownership is transferred to the buyer, the County’s lease will end and the LDC will be dissolved, with its remaining assets handed over to the County.
WHAT ARE THE ADVANTAGES?
- The Care Center will not be closed or reduced in size.
- Existing residents will not be displaced.
- The County will receive much-needed funding at a critical time, thereby saving jobs and preserving programs.
- Taxpayers will no longer be required to subsidize the facility’s operational losses through regular increases in property taxes.
- Staff will continue to be employed by the County until operational control is transferred.
- The full range of services will continue to be provided to our community.
- The LDC will ensure the most responsible buyer is selected.
- A significant tax increase, layoffs and/or cuts in services will be avoided.
- The property on which the Care Center sits, including the adjacent Sunset Lake, will return to the tax rolls.
WHAT ASSURANCE IS THERE THAT IT WILL REMAIN A NURSING HOME?
The County Manager, County Attorney and County Legislature will work with the LDC to create a sales agreement that requires the property to be operated as an adult care facility for the duration of the buyer’s ownership. It is not legally possible to bind any owners who may purchase the property from that buyer in the future, but the County and LDC will seek firm assurances that a buyer will not “flip” the property upon completing the sale. This will be accomplished by reviewing the buyer’s history of purchasing such properties and keeping them in operation, particularly if the properties were formerly municipally owned. It is the full intent of the County to keep 146 nursing home beds in Sullivan County through this process. Closure would have been “the easy way out” but was summarily rejected by the Legislature on behalf of the citizens of the County.
WHAT ASSURANCE IS THERE THAT RESIDENTS WILL BE ABLE TO REMAIN IN THE CARE CENTER ONCE IT IS SOLD?
New York State law mandates the selected buyer acknowledge that no resident will lose his/her bed at any time against his/her wishes as a result of the transaction.
WHAT ASSURANCE IS THERE THAT SULLIVAN COUNTY RESIDENTS WILL CONTINUE TO HAVE PRIORITY, PARTICULARLY FOR MEDICAID-PAID BEDS?
The County Manager, County Attorney, County Legislature and LDC are intent on ensuring priority access to the Care Center for Sullivan County residents - before, during and after the sale. This can and will be accomplished via vetting of potential buyers and, to the extent permitted by law, an agreement with the selected purchaser to provide a minimum number of beds for in-County residents. Access for Medicaid-eligible residents will not be diminished.
WILL QUALITY OF CARE SUFFER UNDER THE NEW BUYER?
No. County leaders and the LDC will choose the most responsible purchaser through a thorough vetting process that includes review of not just the offer price but experience with the operation of long- and short-term care facilities, demonstrated quality of care in those facilities, and plans to sustain and enhance the Care Center under its ownership, including the retention of employees and a guaranteed minimum of beds.
WILL EMPLOYEES LOSE THEIR JOBS AND BENEFITS?
The County and LDC will insist on the following from the new buyer:
- Any existing employee who wishes to remain employed at the Care Center will have a fair opportunity to retain that employment under the new ownership.
- Pay must be equal to that employee’s existing pay rate (excluding benefits, as private employers’ offerings are necessarily different from public employers’ offerings).
- The desire to establish a private union shop and offer membership to any previously unionized employee.
CARE CENTER INFO AND STATISTICS
- 256 Sunset Lake Road, Liberty, NY
- County-built and operated since 1990
- 146 beds
- 199 positions, with a payroll totaling $13,632,014 in 2020 (benefits included)
- Services include a full array of medical, nursing, personal care, dietary, physical therapy, occupational therapy, speech therapy, podiatry, dental, psychiatry, pharmacy, social, spiritual, recreational and housekeeping.
- Residents and/or families are involved in decisions about care and receive services based on their individual needs.
- Expenses in 2019: $18,920,719
- Revenue in 2019: $15,409,966
- Operational Losses in 2019: $3,510,753
- County Match for Intergovernmental Transfer (Federal Aid): $2,737,812
- Total County Subsidy for 2019: $6,248,565
- Total Accumulated Deficit as of 2019: $21,750,767