Lebanon County commissioners told sale of Cedar Haven is 'most viable action'
An independent auditor examining Lebanon County's budget situation told the county's commissioners Thursday the best course of action may be to sell the Cedar Haven Nursing Home.
Mark Zettlemeyer, of Reinsel Kuntz Lesher, an accounting and consulting firm the county hired to perform an audit on the 2012 budget, told the commissioners that selling the facility is “the most viable action” the county has right now to unburden itself of its mounting pension obligation.
“Overall, it increases the net value of the county,” Zettlemeyer said about the Cedar Haven sale. “It would put the county in a better financial position.”
Lebanon County paid only $112,000 of its pension obligation in 2012, will pay $500,000 by the end of this year and has budgeted $500,000 for 2014, according to Jamie Wolgemuth, county administrator. However, it could owe nearly $28 million to the fund by the end of the year, he said. It currently owes the fund about $23 million.
The county already is trying to close a $2.6 million budget gap in the 2014 budget and is looking for creative ways to right its ship.
The most popular method floated has been the sale of the Cedar Haven Nursing Home at 590 S. Fifth Ave. in Lebanon. The county-owned and -operated nursing home has been mulling the sale of the Lebanon facility and has been bringing in interested buyers to pitch what they could do with it. Five businesses have made presentations to the commissioners so far, and Wolgemuth said two or three more are scheduled.
During those presentations the value of the facility has been pegged around $11 million and $18 million, and the county is estimating it could net about $15 million for the sale.
Zettlemeyer said Thursday the county had a few options for raising money. It could sell Cedar Haven and use the money to make pension payments, it could float a bond to make the payments, it could raise taxes or it could continue to miss payments.
“But that’s not a good course,” he said of the final option.
If it continued to miss full payments on the pension plan, it risks having its credit rating downgraded, which would result in higher interest rates should the county need to borrow money, Zettlemeyer said.
The nursing home recently has been a money-loser for the county, and it has tried to find ways to cut some of the losses. It tried to privatize the facility’s dietary workforce, but the union fought the move and won late in the summer. The county had to take the employees’ salaries and benefits back into the budget.