Too Many Unknowns in Gracedale Sale

County Controller Barron points out the hidden costs of selling

We now know the “final and best offers” to purchase Gracedale range from $32.5 to $37.5 million dollars.  However, many bidders and most county residents still don’t even know the details of the proposed sale.  Unfortunately, council and the administration have rushed ahead of a real debate and in spite of serious and vocalized public opposition.

Importantly, these hurriedly assembled offers made by four out of state bidders do not mean the county will actually see $32.5 to $37.5 million in profit. The sale will create several immediate expenses and obligations that will reduce that amount, including:

  • $4 million payment to CCAP for an outstanding loan
  • $2.4 million in costs allocated back to the county
  • $2 million to buyout sick and vacation time
  • $1 to 2 million in fees and other expenses
  • $300,000 in legal cost to Eckert Seamans

After more than $10 million in costs, the county will be left with between $22.5 and $27.5 million dollars. The county will also be left with various unanticipated costs and the $2.4 in allocated costs that will continue year after year, long after Gracedale is sold and is no longer generating corresponding revenue to offset these amounts.

The administration also still does not know the impact this sale will have on pension obligations. There will be over 300 new former employees eligible to collect a pension and several hundred individuals could demand their contributions back upon the sale of the home. This would threaten the stability of that fund and could cause the county to incur significant costs to stabilize the pension fund.

The sale also includes a steam plant located on the property that heats the Greystone Building and a maintenance facility. It is still unknown if these buildings will be included in the sale, but if they are not included the county will have to enter into an agreement to purchase steam to heat these buildings from the new owner.

In addition to these costs, there are a number of questions about the “value” we are getting for the sale of this property and a profitable business.

The country recently expended bond proceeds to replace the window in the Gracedale tower. To put the purchase price in perspective, recouping these past costs represents about 25% of the anticipated net proceeds of a sale.

 Notably, the high bidder and most visible suitor, Continuum Care Holdings LLC, would also be paying $3,000 less per bed than it paid for Dauphin County’s nursing home in 2007. It purchased the 404 bed Dauphin County facility for $22 million and is offering $37.5 million for our 725 bed facility, despite Gracedale’s superior condition after years of capitol improvements.

These are just the numbers and, of course, they say very little about the services and security our residents will lose and that our children will never know.

The unwillingness on the part of some members of council and the administration to permit reasonable deliberation, to demand a suitable price and to consider these hidden costs may ultimately lead directly to the tax increase they say they want to avoid.

At that point, the county will have no significant assets to pawn. At that point, we will probably all be wondering what the rush was and why we didn’t listen to the 23,000 residents that asked the administration and council to listen to them.

Stephen J. Barron, Jr.

Northampton County Controller


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