Could Laurel Crest sale cut Cambria taxes?

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September 7, 2009

By SANDRA K. REABUCK The Tribune-Democrat Mon Sep 07, 2009, 10:48 AM EDT

EBENSBURG — Cambria County commissioners are not yet saying whether the sale of Laurel Crest, the county’s nursing home, will bring a reduction in county taxes.

But the sale does mean that county taxpayers will not have to pay for the nursing home’s loss this year, which is expected to be at least $3 million, President Commissioner P.J. Stevens said.

“One wild card is the losses we’ll have to cover in 2009, and that will determine how we are able to distribute any discretionary revenue,” he said.

“I don’t know if it means lowering taxes immediately, but the taxpayers will not have to bear the brunt of funding Laurel Crest losses for 2009.”

Also contributing to the uncertain fiscal picture is what cuts will be made in state funding to counties when a state budget finally is enacted, he said.

Agreeing it’s “too early” in the budget planning for next year say whether taxes would go down, Commissioner Bill Harris added, “If it is not sold, I can tell you it would negatively impact the taxes.”

The question about a tax cut was raised after Northumberland County commissioners said that last week’s $16.5 million sale of that county’s 271-bed nursing home will result in a tax cut.

The Cambria commissioners, along with adviser Marcus & Millichap, a Chicago-based commercial real estate firm, are negotiating with two potential buyers for Laurel Crest.

Originally, Cambria received proposals from 11 potential buyers, but the field was whittled to two. The commissioners have refused to say what the minimum sale price is for Laurel Crest, but they have said that a potential sale for $6.3 million seven years ago was too low.

They hope to close a deal within weeks so that the new owner can take over operations on Jan. 1.

Although Laurel Crest is licensed for 370 beds, the number of residents has dipped below that for more than a year. Its census last week stood at 225.

Northumberland's Mountain View Manor, a skilled nursing care facility, was purchased by Complete HealthCare Resources, which has operated the home for 14 years. Its census stood at 186 at the time of the sale. Under terms of the sale, Complete Healthcare – which was not a bidder for Laurel Crest – will reserve 65 percent of the beds for Medicaid patients while honoring the current union contract, according to published reports.

The sale is a lease-purchase agreement, with Northumberland to receive $1.5 million a year for the next 11 years.

Stevens said that Cambria’s sale will be an outright purchase by the bidder.

Cambria currently uses 5.3 mills of property tax revenues to pay off debts, said Mike Gelles, the county’s chief clerk and finance director. The county’s total tax levy is 26.9 mills.

Gelles said that the debt payments now include two for Laurel Crest:

• $1.26 million a year on the $6 million that was borrowed last year with permission from the county court. The loan was necessary because the county’s general fund was depleted in paying bills for the financially troubled Laurel Crest.

• $328,706 this year on paying off the $11.3 million in financing that used Laurel Crest as collateral in 2003. The money was used to pay for prior operating losses.

That financing, through the Upper Yoder Township Municipal Authority, will not be paid off until June 2028.

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