County officials have confirmed an offer of $6 million for Hope Creek Care Center from Aperion Care, Inc., a Chicago-based nursing home chain with 34 locations in Illinois, including one in East Moline.
The county-owned nursing home at 4343 Kennedy Dr., East Moline, was listed by broker Marcus & Millichap for $19 million in September. That amount would have been enough to break even with the facility's outstanding mortgage debt of $11 million and short-term loan debt of $7.5 million.
During a Rock Island County committee of the whole meeting Wednesday night, County Administrator Jim Snider told board members he was shocked by the low offer.
"Six million hurts. No doubt it's a punch to the gut," Snider said. "I wanted to throw up; it hurts. But the reality is — that credit card debt — you can't get around it. That's $7 million that's growing, and we've got this (county office) building crumbling around us. It impairs everything we do."
Snider said three other companies made lower offers on Hope Creek: Altitude Healthcare and Cascade Legacy Healthcare both offered $5 million, and Mosaic Healthcare offered $5.5 million.
"Certainly it's an emotional decision — I get it. But the numbers don't lie," he said. "When it comes to the numbers, I'm here to tell you the truth. One of the key benefits of selling the home is reducing property taxes. In the first year, you'll see $5.5 million wiped off property taxes. The Hope Creek budget is $13 million every year."
Snider said Hope Creek costs the county an additional $2 million per year in losses, and that the nursing home is not economically viable. He expects Hope Creek's debt to be paid off in about five years. Once the debt is gone, the county will no longer have to tax residents for the statutory nursing home tax levy of $2.7 million.
"Once that's paid off, we're done," Snider said, noting the sale will "reduce the overall tax levy burden by $5.5 million, and that's every year. In 10 years, we're talking $10 million in property tax savings."
Ray Giannini, senior marketing director for Marcus & Millichap, assured board members in September that Hope Creek, built in 2009, was a state-of-the-art facility and that it was priced correctly at $19 million. Wednesday night he corrected that assessment.
"We quickly found out no one was willing to pay $19 million, but we tried," Giannini said. "We had another projected value, and that would be to cover the existing debt; $13 or $12 million divided by the bed count of 245 would still be in the range of something that could happen. Anybody could figure out the facility was losing $2 million per year.
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"As I got into marketing of the facility, I discovered things that were devastating: The use of temporary staff was alarming," he said. "The sum total of temporary help going back to 2018 was $971,000. My calculation is that it's about $1.3 million. That's paying double time for regular time salary.
"So let's just slice it in half and divide it by a 12% cap rate, which is what buyers are looking for. That's about $5.4 million of value that was just vaporized. So, $19 million minus $5 million. There came a point when I thought we wouldn't get any offers on the facility. I believe $6 million is a really good deal."
Giannini said he expects the transition to go smoothly and that all employees will likely be retained by Aperion Care. Whether they will be retained as temporary employees will be revealed in the details of the contract.
Giannini then took aim at an editorial in the Quad-City Times and Dispatch-Argus, saying public disclosure of the buyer and the price could jeopardize the sale.
"From a negotiating posture, you want to have the cards," Giannini said. "You want to have some leverage in the deal. In a county facility sale, many times this occurs. The name gets out and the purchase price gets out. But also something very devastating; the talk of closing the facility gets out. That's not helping me in terms of negotiations.
"We're defending this price right now; I don't know what options we have," Giannini said. "If this breaks down, do you have the time to go out to another buyer who is (offering) $500,000 less?"
Several board members also expressed anger with the unknown board member who leaked the information.
"Information was leaked, which I think is unconscionable, is almost bargaining against taxpayers," Drue Mielke said. "The county board member that leaked it, whose side are they on? It makes me very angry."
Board Vice Chairman Brian Vyncke said the board does not know if it was one person or multiple people talking to the media.
"But we talked about negotiations," Vyncke said. "Once the $6 million gets out, guess what? You're not going to get a dime more. It's over; there are no more negotiations. Whoever the mole is, thank you very much.
"We all know we have an ethical obligation to this board that we keep stuff behind closed doors," Vyncke said. "We weren't done negotiating, but we are now. Whoever you are, I hope you're happy with yourself."
Snider said Aperion is reviewing the deal and that Jan. 27 is the earliest a contract would be ready for board member to approve or deny. Snider said a special board meeting will likely be scheduled for that purpose at the end of January.