The county should not attempt to undo the sale of Citizens-Montevue to Aurora Health Management by invoking eminent domain.
County Executive Jan Gardner asserts that the county’s contract to sell the facility to Aurora is so bad that she has decided to invoke eminent domain to take all property rights back from Aurora. I strongly disagree with the executive’s premise that this was a bad deal. The long history of operational losses (of at least $43 million over a 13-year period) is more than sufficient support for selling an operation that serves only 60 needy seniors, at an excessive cost. But here are additional reasons not to attempt to revoke the sale to Aurora.
The right to use eminent domain to acquire property does not exist to allow a governmental entity to get out of a bad contract, yet that is the main reason given by the executive. Eventually, the executive will realize this, and then she will seek a pretext to cover her actions. Then she will have problems.
The executive contends she has an absolute right to take over the Aurora lease. But one case has held that the property of a private corporation cannot be taken for the same use because no public use or necessity can be served by such a taking. That is an issue the executive must face. In Aurora’s case, the county reserved the right to pay, if it chooses, for the care of 60 select seniors. This means the county is already able to provide for this “public use,” although the county has declined to do so. Thus, the taking proposed by the executive may not qualify. And serving only 60 people hardly constitutes a public use.
The executive asserts that $800,000 is all that is needed to compensate Aurora for taking its property rights. This is laughable. That figure ignores all the elements of property rights for which the county would have to compensate Aurora — the value of the real property, the buildings on the property and the business. The appraisal used by the executive to arrive at the $800,000 figure is fatally flawed. To begin with, it is based on the erroneous premise that the court has ruled that the real property cannot be conveyed to Aurora, and that Aurora is trying to overturn such a decision. This is not true. The court has not made such a ruling. Both the county’s attorneys and Aurora’s attorneys fully expect the court to uphold the sale of the land.
In addition, “just compensation” in eminent domain cases is the amount that will compensate the property owner for the full extent of its loss. If the Citizens-Montevue facility were really worth $38 million (as the executive contends), then the county would have to compensate Aurora for $8 million, plus whatever else Aurora has paid toward the purchase, plus any other increased business value due to Aurora’s operation of the facility. By taking the position that $800,000 is all it would take to compensate Aurora, she implicitly denies her argument that the sale was a bad deal. In any event, if the executive ever should somehow succeed in taking the property by eminent domain, then she and the rest of the county will find out soon enough that the damages due to Aurora will be many times greater than the erroneous $800,000 figure.
Why does the county want to get back into the nursing home/assisted living business again? The county would have to increase the number of county employees by 200 — at a projected cost of $10 million a year. No other county in Maryland does this. The senior needs survey recommended that the county care for its needy seniors by helping them age in their homes. The executive seeks to take over the facility in order to provide assistance for only 60 needy seniors, when there are an estimated 500-plus other seniors who could use the same help. Does she propose to build another eight assisted-living facilities to meet this need? Does she propose to provide equal financial assistance to all similarly situated needy seniors? No!
Operating a nursing home and an assisted living facility requires considerable expertise. And during her 12 years as a commissioner, the executive showed that she could not run the operation profitably. The county already has the right to pick out 60 lucky seniors and provide a place for them in the assisted-living facility. No one with business sense would encourage the county to attempt to run a nursing home/assisted living business. When the Board of County Commissioners got out of this business and disconnected itself from the financial risks of such an operation, the county received a higher outlook on our bond rating.
The executive is obsessed with re-acquiring Citizens-Montevue. But if she succeeds, it will be a Pyrrhic victory; it will cost the county far more than the benefits it will bring.
The county would do well to follow the recommendations of the senior needs survey and seek ways to provide the same benefits to all similarly situated needy seniors — not just a lot of benefits to a select few.
C. Paul Smith
is a former county commissioner. He writes from Frederick.