Sale of Cedar Haven nursing home delayed until December

Nov. 26--The Lebanon County commissioners have again extended the timetable for closing on the sale of Cedar Haven nursing home to Complete Healthcare Resources.

The commissioners said Wednesday that Friday's deadline on closing the $25.5 million sale has been pushed back to December 19.

The sale was originally to be finalized on Sept. 30 and the Montgomery County-based health care company was to take over as the employer of Cedar Haven's 400 workers.

When CHR did not have its financing arranged in time to meet the original closing date, the commissioners agreed to push it back a month . The company did, however, take over responsibility for the nursing home's employees on Oct. 1 as planned.

When Oct. 30 came and went and the company still did not have its financing secured, Nov. 30 became the new closing date.

Under the original sales agreement CHR paid the county a $300,000 non-refundable down payment and another $50,000 was added to that when the closing date was pushed to Nov. 30.

On Tuesday, the commissioners set new terms for the closing that will cost CHR another $1 million if they fail to meet the Dec. 19 date and $500,000 more if they don't get it done by Dec. 31. The commissioners also recently received a letter of commitment from the company's primary lender.

The hold up, said administrator Jamie Wolgemuth, has been in securing funding from secondary lenders, said administrator Jamie Wolgemuth.

"There is more than one component of financing. It is not quite as simple as going to the bank for a home mortgage," he said. "For CHR to commit that much more in deposit, I think, demonstrates they are willing to risk that and are pretty confident they will get it done in time They do seem to be getting closer and closer each day."

The latest developments have increased the confidence of all three commissioners that the sale will get done this year.

Chairwoman Jo Ellen Litz, who opposed the sale of Cedar Haven, said putting up a large non-refundable down payment was important to gain her confidence. By her calculations, it has cost the county $3 million in expenses to arrange the sale. About half that figure is from a refund the county must give to Honeywell for an energy-saving contract it signed several years ago that included electrical, heating, and cooling improvements to Cedar Haven.

"A lesser (down payment) amount was offered and I expressed my opinion that less than $1 million wouldn't cut it," Litz said. "We spent an awful lot of money, about $3 million in anticipation of the sale and that was not budgeted. They did meet our request for the $1 million and $500,000 more if it goes an extra week. That is a little more assuring than $50,000. When you put a million or a million and a half down, you are talking serious change."

Commissioner Bill Ames agreed.

"I certainly feel a lot better," he said. "I think they are at a point where there is no way to turn back. They will find that money somehow."

In addition to the substantial non-refundable down payment and the lender's commitment, Commissioner Bob Phillips was heartened by a letter received from CHR's attorneys which, he said, ended with the sentence "Under no circumstances will we settle beyond Dec. 31."

"I have a very high comfort level this will all get done by the end of they year," he said.

If for some reason the deal collapses, the county is protected by a management agreement it has with CHR that would keep the company running Cedar Haven through April, which would give the commissioners time to finalize a deal with one of the other companies that bid on the nursing home, said county administrator Jamie Wolgemuth.

Other than finalizing the sale, CHR's transition in taking over Cedar Haven has been good, with the number of filled beds filled slightly higher than when the county operated it, Wolgemuth added.

"There census is up to 315 out of 320 beds, which is really good," he said. "They made a heavy public relations effort to fill beds. Things are also going well in dietary and short-term rehab. They've done pretty well in a short time."

The sale of Cedar Haven was prompted by the escalating financial demands its operation was putting on the county. This year, the day-to-day operations of running the nursing home cost the county $1.5 million and produced twice that in pension fund obligations.

The sale of Cedar Haven has implications for the county's 2015 budget which includes a $3.9 million allocation to the county's employee pension fund. Proceeds from the sale will be used to pay the pension fund contribution. The budget also includes a $1.2 million shortfall that the commissioners are still working to close.

Both issues will be addressed Thursday when the commissioners introduce the budget, Wolgemuth said.

Money from the sale of Cedar Haven will be allocated in the budget to cover the pension contribution and the shortfall will likely be covered using reserve funds, he said.

"So long as we have an agreement of some sort in hand (with CHR) then that money is promised to the county," Wolgemuth said. "We anticipate a lot of things in revenue for every budget, including payment of real estate taxes and grants. The proceeds from the sale of an asset is just another expectation of revenue."

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