At their caucus on Nov. 25, the Board of Freeholders were presented with a potentially chilling choice: redo a deal $15 million deal they made in selling off nursing home operations, or face a possible lack of payment from the operators in 2006 when the final payment is due.
Under the 2002 agreement, Omni Management Company of Jersey City would purchase the geriatric part of Meadowview Hospital in Secaucus and the license for the beds in the former Pollak Hospital in Jersey City for about $10 million, and borrow from the county up to $5 million more to make improvements to the aging Meadowview Hospital.
Under a new agreement, Omni would not borrow money for the upgrade and is asking the county to permit a kind of mortgage on the facilities, extending the debt up to 15 years. Under the new agreement, Omni would make monthly payments of $40,000 until 2006, at which time they would add in 7-percent interest payments bolstering the monthly payments to $56,000. After 15 years, Omni would pay off the balance of the debt.
Representatives from Omni Management said they are not facing a financial crisis, but still want to alter the deal they struck in early 2002.
Omni, which has extensive experience in operating facilities throughout the state, including three in Hudson County - Union City, Guttenberg and Jersey City - agreed to purchase the county's ailing nursing home facilities in 2002 after Progressive Healthcare, the previous operator, went bankrupt.
County Administrator Abe Antun, who had previously recommended that the county severe its connections with the nursing home facilities, seemed to reverse himself in this regard, recommending an agreement very similar in structure to one that was given to the now-defunct Progressive Healthcare in 1995 - leaving Freeholder Bill O'Dea last week to question the wisdom of making the same mistake. While O'Dea agreed the standard of care at Meadowview seemed to be good now, he feared that the county seemed to be stumbling down the same path that might lead them into trouble later. He also said this was a fundamental change in the original agreement between the county and Omni.
The county awarded the sale to Omni based on a relatively quick payment schedule. Several other firms offered more lucrative deals, but needed more time to pay the county.
140 Park Associates offered the county $18 million, paying $2 million deposit, $6 million within 60 days, and the rest over a 42-month period. Liberty House of Jersey City was among bidders for the project, offering to lease the two facilities for 20 years and make an annual payment to the county. Hamilton Park, which sued to stop the county from giving the contract to Progressive in 1995, also submitted a bid, but refused to give the $1.5 million deposit until certain conditions were met.
O'Dea said that before the county considers a new deal for Omni, the other proposals should be reviewed to see if they would have provided the county with a better deal under the new conditions.
Why the need?
While licenses for the facilities are extremely valuable, O'Dea said Omni needed to offer something more as collateral, such as putting up some other property as a guarantee of payment.
Freeholder Al Cifelli echoed some of O'Dea's concerns, and wanted to know if the proposed new deal foreshadowed expected financial troubles in 2006.
"If you see trouble in making the payment in 2006, we should know about it now," he said. Under the new deal, the county would begin receiving monthly payments two years earlier than the original final payment was due, Antun argued, and while the final payment would be pushed off for 15 years, the county would continue to get payments during that period.
The reason for the change, Antun said, was the inability of Omni to get private financing. This is partly due to the nature of the property. The facility at the hospital is physically attached to operations still controlled by the county, so private finance companies are reluctant to lend money on an operation, said Omni owner Avery Ensenreich.