Judge rules in favor of county for creating LDC to sell nursing home

By Tom Rivers, Editor Posted 20 June 2013 at 12:00 am

Lawsuit sought to disband LDC, force public referendum

Photo by Tom Rivers – A State Supreme Court judge didn’t find fault with the Orleans County Legislature’s decision to transfer The Villages of Orleans to a Local Development Corporation that is tasked with finding a buyer.

ALBION – The Orleans County Legislature crossed an important legal hurdle when a State Supreme Court ruled the county acted legally in transferring the publicly owned nursing home to a Local Development Corporation.

A local resident Mary Bannister and nursing home employee Dawn Hazel, who has family in The Villages of Orleans, challenged the Legislature’s decision in court.

Judge James Punch issued a decision on Tuesday, supporting the county in all key aspects of the case. The decision allows the Legislature and the LDC to keep working towards a sale of the 120-bed nursing home. County officials learned of the judge’s decision at 11:45 a.m. today.

“The discussion regarding the nursing home has been a very emotional one, but the ultimate goal has always been to ensure its long-term sustainability,” said Legislature Chairman David Callard. “Now we must return to our goal for The Villages: to continue to provide a high quality of care for our residents, maintain its jobs, preserve its programs, and continue its community ties without dire financial consequences to the taxpayers.”

The lawsuit sought to disband the LDC, to vacate the transfer of nursing home property to the LDC, to compel the issue to be brought to a public vote, and to restrain the LDC from negotiating transfer of The Villages to another operating entity.

The county’s attorneys argued that Bannister and Hazel failed to establish any harm in the Legislature’s decision to create the LDC, and their allegations were “speculative claims as to future actions.” The county attorneys said the LDC ownership did not change the current operations, staffing or delivery of services.

Punch agreed, noting the employees have continued as county workers and the county continues to control the operation of the facility.

The county argued in court the decision to create the LDC and transfer ownership were “proper tools to use for cost analysis and cost containment.” Legislators worry the facility will require a $2 to $4 million annual subsidy from the county taxpayers due to rising operating costs and slowing reimbursement rates.

“I commend my colleagues in the Legislature for having the courage to make this very difficult decision.” – Legislature Chairman David Callard

“The choice here hasn’t been about privatization versus public ownership,” Callard said today after the court decision was announced. “It has been about maintaining the facility or losing it altogether. We can no longer delay the decision and hope everything will be all right. That is fiscally irresponsible and brings grave uncertainty.”

The petitioners in the lawsuit sought a public referendum on the issue, contending the county created the LDC to circumvent public discourse. But Punch sided with the county, saying it acted within its rights in the Not-for-Profit-Corporation Law.

The Legislature, in a 6-1 vote, created the LDC on Feb. 27. Callard noted it passed in a super-majority vote. Only Legislator George Bower opposed it, and he warned the deficits at the site could force the county to take up the issue. He said then he was opposed to the timing because the Legislature had said it wouldn’t sell the facility until 2014.

That may be an ambitious time frame, even with the decision to create the LDC four months ago.

The LDC – the Orleans County Health Facilities Corporation – met this afternoon.  The three-member group, headed by former Yates Town Supervisor Russ Martino, moved forward with selecting a broker to establish a value for the nursing home and identify buyers for the site.

The LDC picked a Chicago firm that specializes in selling nursing homes to help with the sale of The Villages. Marcus and Millichap’s National Senior Housing Group will receive 2.5 percent of the sale price for its services. The firm is assisting nine other New York counties in selling their nursing homes.

The firm said it will identify a buyer by the end of a year, a sale that needs to be approved by the state Department of Health. Marcus and Millichap said it would target January 2015 for the sale to be closed and the new owner in operation at The Villages.

“The actions being taken are intended to balance the interests of the residents, the employees, and the taxpayers,” Callard said. “I commend my colleagues in the Legislature for having the courage to make this very difficult decision.”