Court forbids county loan

The court ruled the commissioners have no legal authority to make the loan.
By HAROLD GWIN
VINDICATOR SHARON BUREAU
MERCER, Pa. -- Mercer County Commissioner Olivia Lazor said the court ruling against a county plan to lend $1 million to the Woodland Place nursing home may have far-reaching ramifications, including having the county taking over the home's operation.
Visiting Judge Harold Thomson filed an opinion Monday in common pleas court saying the county commissioners can't make the Woodland Place loan.
The court determined that Woodland Place is a private entity and that the commissioners have no legal authority to lend it any money.
That carries implications for other private, nonprofit organizations that turn to the county for assistance, however, Lazor said.
The Mercer County Area Agency on Aging isn't owned or operated by the county but gets financial assistance annually.
The Penn-Northwest Development Corp. also isn't owned or run by the county, but it is asking the commissioners to borrow $5 million through a bond issue to help finance proposed county economic development efforts.
Lazor wondered whether the ruling means the county can no longer provide funds for those two groups.
Woodland Place background
Mercer County at one time owned Woodland Place but sold it in 1997 to a private entity created for the express purpose of operating the facility.
Woodland Place has undergone extensive renovations since then -- some work is still going on -- but the facility has experienced financial difficulties, losing $400,000 a year for the past five years.
The nursing home borrowed $8.8 million to consolidate its debts and to provide capital needed to finish the renovation. The county guaranteed that bond and has to pay it should Woodland Place default on the loan.
The nursing home, through its county affiliation, secured a $2 million grant for the renovations but had to tap about $600,000 of that money to pay operating expenses, said Lazor, who also is a member of the Woodland Place board.
The nursing home then came to the county asking for a $1 million loan, with about $225,000 going to make a payment on the $8.8 million bond issue and the rest to finish the renovation work.
Lazor and Commissioner Michele Brooks voted last month to make that loan, but Tom Amundsen, county controller, refused to pay it, claiming the commissioners had no authority to lend money to a private corporation.
Commissioners took Amundsen to court over the issue.
Defaulted on payment
While the case was being argued, Woodland Place, which had made one payment on that $8.8 million bond issue, defaulted on its second payment and the county had to make the $220,144 payment.
Should Woodland Place default on the entire bond and be forced to close as a result of the ruling, the county might have to resume operation of the nursing home as well as pay off the entire bond issue, which runs for 30 years, Lazor said.
"They can't just close the doors tomorrow," she said. Woodland Place has about 85 residents.
Lazor said the best-case scenario is that the county might have to pick up four bond payments to give the nursing home time to recover financially. The home could then repay that money to the county, she said.
Commissioners were expected to discuss the court ruling today, and the Woodland Place board has a meeting at 5 p.m. today.
Lazor said the board will have to come up with a plan to keep the doors open, including a way to handle its debt and work out an arrangement with its renovation contractor, which is owed about $350,000 for work completed on the latest building improvements.