The Maryland Board of Public Works this week sent a letter chiding Frederick County for partially privatizing its assisted living and nursing home without the state's consent.
The state is weighing in on the sale because of a $200,000 state grant for construction of Citizens Care and Rehabilitation Center and Montevue Assisted Living, facilities that the county has owned and operated in the past. The June 10 letter from the public works board stressed that the county must receive permission from state officials before transferring or disposing of the centers.
The county's recent decision to complete the first part of the sale "constitutes a disposition of the grant-funded property," according to the letter.
"You are acutely aware that the Board of Public Works has not consented to any disposition of the grant-funded property," states the letter signed by BPW executive secretary Sheila McDonald. "To repeat my conclusion in my earlier letter, the Board of Public Works clearly expects the county to adhere to its obligations under the grant agreement."
On May 1, the county handed over operations at the two facilities to a for-profit company, Aurora Holdings VII. Aurora took ownership of the finances at Citizens and Montevue, and the county staff at the centers became employees of the company.
Though the county still owns the building and the land for the facilities, county officials are leasing the property to Aurora. After legal issues involved in the sale are resolved, county officials hope to sell the land and building to the company for $30 million. An asset purchase agreement signed in May between the county and Aurora lays out the multipart sale.
Though it is unclear what power the public works board could exercise over the situation, opponents of the sale said the letter shows the county breached its grant agreement with the state.
"It's pretty clear that we've violated the rules under which we got the grant," said Commissioner David Gray, who has voted against selling the facilities. "If there's any way we can roll this thing back, I think we should do it instead of being bullheaded."
Jan Gardner, a former commissioner and Democratic candidate for county executive, said she thinks the asset purchase agreement could be "null and void" in view of the issues raised by the state's correspondence.
At least, sale opponents said, the letter could bolster their legal arguments against privatizing the centers. An updated version of a lawsuit filed by sale opponents argues that the operational transfer to Aurora in May violated a court order and the county's grant agreement with the state.
Commissioners President Blaine Young said he doesn't think the state can derail the sale and can only ask for a return of the $200,000 grant. The county has already tried to give back the funds, but the public works board declined to accept the money last year. Instead, the board, made up of the state governor, comptroller and treasurer, postponed its decision on the sale until the legal issues surrounding the transfer are resolved.
Gregory Bedward, general counsel for the public works board, declined to elaborate on the state's options for reacting to the recent changeover at Citizens and Montevue. He said the public works board is waiting for the county's response to its letter.
Though Young doesn't think the state can prevent privatization of the centers, he said he would invite the state to take the facilities off the county's hands.
"They can have it. They can take over the nursing home," Young said. "But they can't force the county to run something."
Follow Bethany Rodgers on Twitter: @BethRodgersFNP.