BREAKING NEWS: MD Board of Public Works delays decision needed for sale of Citizens and Montevue

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The Maryland Board of Public Works (BPW) decided today to postpone for at least one meeting a decision that is required before Frederick County can move forward with the sale of the Citizens Care & Rehabilitation Center and the Montevue Assisted Living facility.

In June, the Frederick County Board of County Commissioners voted 4-1 to sell the facilities for $30 million to the Aurora Health Management company. But because the county accepted a $200,000 state grant put toward the construction of the new Citizens and Montevue building, which opened in the summer of 2012, the Maryland Board of Public Works must weigh in on the transaction before it can move ahead.

The Maryland Board of Public Works has three members, Maryland’s governor, treasurer and comptroller. The item was on the agenda for their July 24 meeting. Despite the fact that the state’s Department of General Services has recommended that the BPW approve the sale, the three-member board voted 2-1 to delay their decision in order to study the legal issues raised by attorney Leslie Powell, representing citizens challenging the sale of the facilities.

Governor O’Malley cast the lone vote in opposition to the delay.

Below is the relevant section (pages 65 and 66) of the Board of Public Works Meeting Agenda for the meeting today.

As soon as they are available, we’ll post links to the audio and complete transcript of the July 24th meeting.

UPDATE: July 25

Frederick News Post article
“Citizens, Montevue sale opponents take cause to court”
Thursday, July 25, 2013

AUDIO: Board of Public Works meeting on July 24, 2013
July 24 Audio Part One (32672 KB)
July 24 Audio Part Two (6868 KB)

DEPARTMENT OF GENERAL SERVICES
ACTION AGENDA

CAPITAL GRANTS AND LOANS

ITEM 35-CGL

Submission of a request by the Board of County Commissioners of Frederick County, Maryland (“Frederick County”)that the Board of Public Works approve Frederick County:

(1) Selling real property located at 1910-20 Rosemont Avenue, Frederick, known as Citizens Care & Rehabilitation Center (skilled nursing home) and Montevue (assisted living facility) to Aurora Holdings VII, LLC, an affiliate of Aurora Health Management, LLC, a Maryland company; and

(2) Retaining the sale proceedsto pay down the outstanding construction debt or to subsidize purchaser’s services on behalf of taxpayers.

PAST BPW ACTIONS

DGS Agenda Item 20-CGL[1/26/11]

BACKGROUND

The State granted Board of Trustees of the Community Foundation of Frederick County, Inc.
(“Community Foundation”) $200,000 in general-obligation bond proceeds as follows:

$200,000.00
Maryland Consolidated Capital Bond Loan of 2008 (LHI –Chapter 336, Acts of 2008),

DGS Item G135
“For the repair, reconstruction, and capital equipping of the Montevue Home, located
in Frederick.”

Although the Community Foundation operated the property, Frederick County owns the property. When a general-obligation bond grantee does not own the property to be improved with the grant funds, the BPW requires the property owner to enter into the grant agreement as a beneficiary. The BPW, Community Foundation, and Frederick County entered into a grant agreement containing the standard language that prohibits the Community Foundation or Frederick County (as beneficiary) from selling, exchanging, giving away, transferring or disposing of the real property without BPW approval.

Frederick County has since realized the financial burden on its taxpayers to subsidize the nursing home and assisted living facility is not sustainable and determined it to be in the best interest of the taxpayers to sell the property. The County solicited proposals and negotiated a $30 million sales contract with Aurora Holdings VII, LLC. The contract also provides that the County will pay Aurora $10.7 million over four years for continued care for residents. The County intends to use the balance of sale proceeds ($19.3 million) to pay down debt incurred in constructing the facilities and to subsidize services over the next four years.

The Department of General Services recommends approval of the sale of the grant-funded property and of Frederick County retaining the sale proceeds. This recommendation takes into account that the County’s purchaser, Aurora, will continue to operate the facilities as skilled nursing and assisted living homes. Retaining the sales proceeds is conditioned on the County using those proceeds to pay down the outstanding construction debt or to subsidize purchaser’s services on behalf of taxpayers.