The county controller says the nursing home may not even need the loan now.
MERCER, Pa. -- The State Commonwealth Court has reversed a common pleas court decision on whether the county can make a loan to Woodland Place, the former county nursing home which commissioners sold in 1998 to a nonprofit corporation.
In a decision filed Wednesday, judges ruled 4-3 that the lower court was wrong in accepting the argument that the county could not lend money, only appropriate it outright to the nursing home for support of indigent elderly.
What happens now is not clear, especially since the county controller said it's possible that the nursing home may no longer even need the loan.
County Controller Thomas Amundsen, who is on the losing end of the decision, said Thursday he has to consult with attorneys to determine whether he will appeal to the Pennsylvania Supreme Court.
The question which led to the court case originated in 2004, when county Commissioners Olivia Lazor and Michele Brooks voted to extend a $1 million loan to Woodland Place, which was having financial difficulties.
Against the loan
Commissioner Brian Beader voted against the loan.
However, Amundsen refused to issue the first payment, claiming such a loan was not authorized by law. Commissioners Lazor and Brooks asked for a court order to force the controller to write the check. But a visiting judge sided with Amundsen, agreeing in a decision Nov. 16, 2004, that while commissioners had the authority to appropriate the money, they could not lend it.
But Commonwealth Court disagreed. Judge Robert Simpson, who wrote the majority opinion, said a loan is included in the legal right to make "appropriations" for purposes authorized by law. He cited a 1939 case that he said is the only prior judicial decision dealing with the issue.
In that case, the court rejected a similar argument, that the grant was constitutional but the condition of repayment was not.
Nowhere, he said, "is there any requirement that such assistance must be entirely in the nature of a gift rather than a loan or advance."
He said the purpose of the relevant section of the Constitution "was to place a limitation upon the expenditure of public money." He concluded that neither the State Constitution nor the County Code limits "power to place conditions or restrictions on such an appropriation, such as gradual repayment."
Judge Rochelle Friedman wrote the dissenting opinion, pointing out that the law allows commissioners to make "contributions" for medical care. She said contributions are defined as something given, not lent.
Brooks stated after the meeting that she has always been committed to "having this obligation repaid with restrictions."
She said she views it as her responsibility to "recover the taxpayer's money while giving the county input in the administration of the property until the loan is repaid."
She also said the decision helps to preserve 100 jobs and keep 85 senior citizens in the facility.
Lazor said the county is obligated to take care of the indigent, a reason she frequently cited in her support of the loan for the nursing home.
She pointed out Thursday that Woodland Place's current percentage of residents on Medicaid is 80 percent, compared with a 59 percent average at private nursing homes.
Aside from the question of the loan, commissioners have other financial obligations to Woodland Place.
When the county sold the nursing home, commissioners agreed to guarantee an $8.8 million bond in 2001. Lazor was the only one of the three current commissioners who was on the board at that time.
Amundsen said Thursday that the county has already made two bond repayments totaling $528,946 because Woodland Place was unable to do so. The repayment agreement provides that interest accrue at 6 percent, and the county can ask for repayment on demand. Amundsen said Woodland place has made "a few" interest payments to the county, but has paid nothing yet on the principal.
Beader said Thursday that he was unaware the decision had been filed and that commissioners will have to meet to decide their course of action. Amundsen said he has been working with Woodland Place and reviewing the issue with Mercer County Fiscal Director John Logan.