Citizens Care and Rehabilitation Center and Montevue Assisted Living

Citizens Care and Rehabilitation Center and Montevue Assisted Living on Rosemont Avenue.

Two long-term care facilities should return to full county control by September, under a settlement agreement County Executive Jan Gardner announced Wednesday.

Returning the operations and ownership of Citizens Care and Rehabilitation Center and Montevue Assisted Living to the county has been a key issue in Gardner’s first term as county executive.

The sale of the two facilities’ operations and land to Millersville-based Aurora Holdings VII was approved by the previous Board of County Commissioners in June 2013.

Aurora has owned the centers’ operation since then, but the sale of the property and buildings was never finalized.

One former commissioner who supported the sale, current Councilman Billy Shreve, said Wednesday that Aurora had no choice but to enter the settlement agreement and “succumbed to the heavy hand of government.”

Since before taking office, Gardner has said the commissioners made a bad deal.

“We’re taking what I think was a bad financial deal for the taxpayers and turning it into something better,” Gardner said Wednesday.

Under the terms of the agreement, the county will pay Aurora $7.85 million, and Aurora will continue managing the facilities for at least 18 months, guaranteeing the county $2.5 million in profits — not including their payments for management — during a transition period.

Under a continuing management agreement — one of three agreements that have been reached — Aurora will operate the facilities for 18 months, receiving a monthly management fee of 4.5 percent of the gross revenue. The agreement could be extended by 12 more months, when Aurora would receive a 5 percent management fee.

Gardner said the management agreement was reached to ensure stability for employees and residents at the facilities.

“We pledge cooperation to work with each other for the benefit of our patients and our employees,” she said.

The two other agreements are a sales agreement that returns the full interests of the operation to the county and a settlement agreement, which outlines other terms.

Some of the documents are signed by Gardner and Stanley H. Snow, president of Aurora Health Management. Other portions of the documents will be signed on the estimated closing date, Sept. 1, Gardner said.

The entire transaction will cost about half as much to the county as it would have cost to go through with the proposed sale, and the county will retain the facilities as assets, Gardner said.

In 2012, the county finished building a new 156,000-square-foot shared building for Citizens and Montevue. The construction was paid, in part, by county-issued bonds. In June 2013, the then-Board of County Commissioners voted 4-1 to sell the centers, despite organized protests against the sale.

Gardner said she believes the facilities were worth $50 million at the time. That includes $38 million for the cost of the new building, $7.5 million for the market cost of the land, and $4.5 million in accounts receivable, payments due to the facilities.

She said the deal to sell the facilities and accounts receivable to Aurora for $31.5 million undervalued the property by $18.5 million.

Gardner said the sale was structured so the county — not Aurora — would have spent $6,763,763 to pay off the remaining bonds that originally funded the facilities’ construction.

She said other costs — including a continued care agreement and property taxes that would come due once a private company operated on the county’s land — would have driven up the total cost to the county to go through with the sale to $20.9 million.

She said the total cost of the settlement is $7.85 million.

No new money will be used to implement the settlement agreement, Gardner said.

The county will pay Aurora $5.5 million under a continuing care agreement, but those payments were already in escrow, having been withheld by Gardner in 2015 and 2016 during litigation.

The county will also pay Aurora $2.35 million in future years, if Aurora meets certain requirements, including that the operations remain certified through Medicaid and that Aurora keeps the facilities at an 86 percent occupancy rate.

The written settlement agreements reflect months of negotiations between Gardner and Aurora representatives.

Gardner pledged during her 2014 campaign for county executive to return the facilities to county control.

In doing so, the county executive threatened to take back the facilities using eminent domain — government seizure and purchase of private property for public use.

Settlement documents indicate that Aurora sought the settlement as the result of continuing lawsuits.

The agreement would close all current court cases relating to the ownership of the centers.

Gardner said the county and Aurora used the help of a mediator to reach the final points in the agreement. She said she’s committed to working with Aurora in the future and a county finance employee will have an office in the Citizens and Montevue building to help with financial oversight.

“My difference of opinion has not been with Aurora. My difference of opinion has been with the former Board of County Commissioners,” Gardner said.

The former commissioners sought to sell the property, which they said had received more than $53 million in subsidies from the county’s budget between 2000 and 2013.

Shreve said he’s suspicious of the agreement’s guarantee of $2.5 million annual profit and he’s unsure that the facilities can run profitably.

To address the future operations of the facilities, Gardner also appointed an advisory board on Wednesday that will help the county determine how the county will move forward after the management agreement with Aurora expires. The advisory board includes five members who were involved with the Citizens and Montevue administration before the sale to Aurora.

The settlement documents are available online at www.frederickcountymd.gov/CitizensMontevue.

Follow Danielle E. Gaines on Twitter: @danielleegaines.

Danielle E. Gaines covers politics and government in Frederick County, splitting her time between Winchester Hall and The State House. Having grown up in Illinois, she lived in New York and California before settling in Maryland.

(45) comments

jerseygrl42

sounds like a better deal than the taxpayers got from the 4 clowns, maybe she can undo some of the other missteps of that crew of incompetency

shiftless88

That the county had to keep paying Aurora for patients that didn't exist, and that Aurora accepted those payments, tells you all you need to know about the terms of the previous deal and Aurora.

awteam2000

Thank you, Jan!!!

chesapeakecountry

I can't believe our local government has bought back this boondoggled money pit. Watch your property taxes go up up up for the next several years.

Frayou

I was not a supporter of the former Young Administation policies, but I have the same concerns knowing the previous financial problems this government run institution had. Now being controlled by the county again, I hope government leaders will be as vigilant and determine to insure it does not drift back into its budget problems. As with other government organizations, I am not optimistic. (At least on the Federal level.) Hope I am wrong on the local level with our new county government manager? We'll see?

DickD

You mean no more $100 tax gifts from Blaine? [lol]

BstD59

Just goes to show what having someone with brains and integrity leading the County can do for us. Thank you Jan!

cmagura123

Worth the wait. So glad that much of the damage from the Young BOCC is being addressed and repaired.

DickD

This is great, Jan. A campaign promise kept. We need a celebration!

KellyAlzan

Nah man. No celebration. jan supports using state money for funding a private biz venture. She's on mine and your's 'you know what list'......

MCEDDE21

She just saved us $39 MILLION! In addition, she negotiated a deal that the former owners (instead of making a profit for themselves) will guarantee an annual profit of $2.5 MILLION to the County. If you're worried about another project, that's fine. But, don't confuse the two--for your own sake.

KellyAlzan

Dick and I don't care if she saved us $100 million.

Being in support of giving the Plamandoon Brothers states money, to the tune of millions is enough for Dick and I to not support Jan

DickD

Kelly, if you are referring to me not supporting Jan, you are wrong. True, I am not happy with Jan's support of the hotel in downtown Frederick, using tax dollars, but I will give her one or two mistakes, hoping she does a good job overall and so far she has done an excellent job. And I do remain objecting to the Plamondon and Randall corporate welfare.

gregz73

This type of endeavor has been considered the proper role of government. Throughout the 19th and early 20th century state and local governments provided shelter for the needy. These were originally called "poor houses". Frederick county accepted a major gift of land in exchange for a commitment to provided for our neediest citizens.I don't view this as a "private biz venture". Bob Lewis

Nicki

You're so right, gregz73! [thumbup]

awteam2000

[thumbup]

KellyAlzan

Bob, bob, bob, Bob, Bob, the private biz venture I'm talking about is the downtown hotel...........

Charles Jenkins

Actually the land was not a "gift" - back in 1828 the county purchased from the Bruner's.

DickD

Good point, poor houses were the forerunners of welfare. Those in homes were expected to help with the work done there, like providing a large garden for food. We had one in my home County in northern New York. Even after it was no longer used as a poor house, the County kept it and used it for Social Services.

DickD

Bob, this is what Wikipedia says:
https://en.wikipedia.org/wiki/Poorhouse

Often the poorhouse was situated on the grounds of a poor farm on which able-bodied residents were required to work; such farms were common in the United States in the 19th and early 20th centuries.
Poor farms were county- or town-run residences where paupers (mainly elderly and disabled people) were supported at public expense. The farms declined in use after the Social Security Act took effect in 1935, with most disappearing completely by about 1950.

Nicki

Charles Jenkins is beating a dead horse. We have been over and over this before. In actuality, the Brunner's added a covenant establishing that the land was to be used, “For the Benefit of the Poor of said County, and to and for no other use, intent or purpose whatsoever.”
Let's not re-hash this again.

bmclearen

At this point, all I would like to know is where all of the money went in the first place? I wonder if we will get back that which was not reported!!!

FrederickFan

This is an extraordinary accomplishment. She prevented Blaine Young, Kirby Delauter, and Billy Shreve from squandering $30 million in County assets, stopped those outrageous payment put in place by them for indigent patients no longer there , kept existing patients safe, worked out a feasible transition, and established a foundation for the nursing homes to move forward without cost to the taxpayers, all of this fulfilling one of her most significant campaign promises.

Three cheers for County Executive Gardner.

Nicki

[thumbup] frederickfan!

armillary

[thumbup][thumbup][thumbup]

gregz73

I wonder when Kirby's, Billy's and Tony's heads are going to explode? This is another victory for Jan and Frederick citizens and they can't stand it. Bob Lewis

FrederickFan

[thumbup][thumbup][thumbup]

pilotguy299

Drunk Sailors -1, Bore Mongers - 0...

lol

MCEDDE21

Thank you Jan Gardner! Jan's analysis showed that Blaine's sale would have cost the taxpayers some $39M--roughly $18.5M from under-pricing the assets and another $20M in the costs associated with the sale. (These included the infamous $10.7M Continuing Care Agreement; $6.7M in paying off the mortgage; $1.5M in transaction taxes, legal fees, and realtor commissions; and $1.6M in property taxes and maintenance.)

On top of those huge savings, Aurora will guarantee the county a $2.5M annual profit on operations. We keep our property and facilities and we have millions to spend in care for the needy--just like Save Montevue said from the beginning!
Jan knows government and she knows business. That's a tough combination to beat! [beam]

stevemckay

[thumbup][thumbup][ban]

stevemckay

Oops! That was supposed to be many thumbs up, lol

MCEDDE21

Sometimes, Steve. It just seems that you're all thumbs! [thumbup][thumbup]

FrederickFan

[thumbup][beam][thumbup]

KellyAlzan

Privatizing the nursing homes isn't a bad idea. What was a bad idea was the selling price and and manner for which BaLane conducted the sale.

b1sellers

Thank you Jan for doing one of the things we elected you to do. BY, get the message yet?

vicdavy

Excellent! Here's the Big Picture! Conservatives always think that privatization is the way to go,well I say BS! Private Prisons=Bad Idea! Health Insurance Corporations=Bad Idea! Blackwater Mercenaries=Very Bad Idea! Just to name a few. Reagan started turning America over to corporations and the plague of vulture capitalism!

MCEDDE21

[thumbup]

fnfn

[thumbup]

quemzeee2

Thankyou. Thank you for all those who have no way of being recognized due to there needs and isolation. Thank you for recognizing that Private business is not always the best way to go in health care. Thank you for making Frederick County a leader in the way it treats its citizens who are in need. Thank you for the excellent standards that Citizens and Montevue held its emplyoees to. This facility was the leader in quality at a well controlled expense. Thank you

elymus43

Politicians will never learn anything, they just keep on spending other peoples money (taxes).

DickD

elymus43, you do realize that is why we elect politicians, don't you?[tongue_smile]

armillary

Just one more reason I voted for County Executive Gardner! Thank you Jan!

Nicki

Thank you, Jan!!!

threecents

First we spent a lot to build it and to operate it. Then we sold it at a loss. Then we bought it at a loss. Let this be a lesson to future politicians to pay attention to what the voters want. Just because you might think something is a good idea, you must get the voters on board with it, or it will eventually kick you and your legacy in the behind.

fnfn

The arrogant cannot listen to reason...

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