Lebanon County's bond rating sinks as it tries to sell Cedar Haven Nursing Home
Standard & Poor's Rating Services has lowered the long-term rating and the underlying rating on Lebanon County by three notches, from A- to BBB-.
According to a report from the company sent to the county and dated Tuesday, the service could either raise or lower the rating in the next two years based on the county's ability to sell Cedar Haven Nursing Home.
A lower bond rating results in higher interest rates on borrowing or refinancing existing bonds.
The county's effort to sell the nursing home took another step Thursday as the county commissioners approved an agreement with Susquehanna Group Advisors of Lower Paxton Township to market the facility.
County officials announced the fee for the agreement at 1.75 percent of the sale price, with a $275,000 maximum.
The Standard & Poor's report gave a "very weak budgetary performance" and "very weak management conditions" as the reasons for the downgrade.
The report ties those reasons to the continued deficit at the county-owned nursing home and the county's obligation to fund it. That has left the county with deferred payments to its pension plan, according to the report.
County officials have said previously the county owes between $23 million and $28 million to its pension fund. The report said the yearly pension obligation has not been paid in full since 2003.
County officials in favor of the Cedar Haven sale have tied it to the pension obligation. The facility has been valued at anywhere from $15 million to $20 million, and much of the proceeds would be earmarked to pay the county's growing pension obligation.
On Thursday, Commissioner Jo Ellen Litz continued her opposition to the sale, saying she did not receive adequate answers to questions she has asked of the Susquehanna Group.
Also Thursday, the commissioners approved a contract for $8,400 with Steckbeck Engineering and Surveying Inc. to subdivide the Cedar Haven property. The subdivision is necessary for the sale, because the large parcel — about 30 acres, according to county administrator and chief clerk Jamie Wolgemuth — currently includes the county jail.
Litz also opposed the contract with Steckbeck. She offered a list of reasons for not selling the home and options for what to do should the county keep it. She said Cedar Haven's union is willing to cooperate on concessions to save money and a recent efficiency study showed other ways to save and raise money at the facility.