Options for Otsego Manor to be explored this week

By NEWSChannel 2 Staff

COOPERSTOWN, N.Y. (WKTV) - The committee looking into selling Otsego Manor is scheduled to meet this week and vote on which plan, of three, will move forward.

The first option is to sell the manor to the highest responsible bidder, the second is to create a local law to authorize a private sale of the nursing home, which would not have to go to the highest bidder, and the third option is to create a local development corporation and transfer the assets to it.

If the third option is selected by the committee, it would require public input before going before the Otsego County Board of Representatives for a full vote.

The Board of Representatives meeting is tentatively scheduled for April 29 at the Otsego County Courthouse and the full Board of Representatives is scheduled to vote on May 1.

Numerous residents packed into the Otsego County Courthouse last month to learn about the options, concerned about a private business takeover. Officials say Otsego Manor is costing the county $176 a day for every person who lives there.

The CSEA represents about 200 workers at the facility.

If the county moves in the direction of an IDC, the union tells NEWSChannel 2 that it will take legal action.

The options put forth to the committee, in their full legal entirety is as follows:

Three procedures to consider regarding the disposition of Otsego Manor:

1. Sale using County Law section 215:

* Requires sale to the "highest responsible" bidder - generally this has been interpreted to mean the highest bidder. The term "responsible" usually refers to financial considerations
and certainty of payment. Otsego County wishes to incorporate quality of care as a consideration in choosing a buyer; it is unclear whether sale to a lower bidder who, in the County's view,
offered better quality of care, would survive a court challenge.

* Decision making requires use of the legislative process - vote by committee, full Board for many decisions. The process is slow, inflexible, and subject to change at any time by vote of the
Board. Elections may change board membership.

2. Sale using local law:

* Specific local law could be drafted to supersede the provisions of County Law section 215 to authorize a private sale and allow a purchaser other than the highest bidder.

* There are conflicting decisions of the Attorney General and Comptroller regarding whether such a law is permissible.

* As above, decision making requires use of the legislative process - vote by committee, full Board. Process is slow, inflexible and subject to change at any time by vote of the Board. Elections may change board membership.

* Difficult to describe adequately the "best buyer" in the local law because bidders are not known at this time. Less flexibility to consider all options as the language of the local law would control. Court challenges to the local law itself (see Suffolk County below) and/or to the buyer chosen as not meeting the local requirements are possible.

3. Transfer of asset to Local Development Corporation (LDC), and sale by LDC

* LDC would be formed under Not-for-Profit Corporation law for purposes including "lessening the burdens of government" and to consider the disposition of the Manor to a private entity. Manor would be transferred to the LDC and a public hearing is required prior to the transfer. County would continue to run the Manor as it is now, under a lease agreement with the LDC.

* Board/Chair would appoint members to the LDC Board (usually 3 to 9) and require LDC to conform to Open Meetings Law, FOIL and other policies, including subjecting LDC to audit by the Comptroller, which was the basis of the Comptroller's objection to the use of the LDC.

* CGR would work with the LDC Board and an advisory group as the Board chooses, regarding the RFP. Harris Beach would be counsel to LDC.

* More flexibility during the process of developing the RFP, analyzing bids, and negotiating contract with buyer in order to achieve County goals.

Other issues to consider:

* Use of options 1 or 2 make the process subject to control of the Board. Some have expressed skepticism about whether potential buyers would be wary, but with the unpredictability of the process, it seems a reasonable conclusion that potential bidders would be. It costs a potential bidder time and money to pursue a purchase and if the possibility constantly existed that the Board could change its mind, this could be a factor that a potential buyer considers before making a bid.

* If the representatives do not want to give up day to day control, then it will be a long process to the actual sale.

* Another option is closure of the facility - requires that a plan be filed with NYS Dept of Health.

* In 2013, it is estimated that subsidizing the Manor will cost the County $8 million per year or approximately $660,000 + per month according to the Treasurer and Manor administrator.

* Because of controversial nature of sale, lawsuits are inevitable no matter what process is chosen, and regardless of the merits of any given claim:

Lawsuits have been initiated in Orleans, Onondaga and Saratoga counties over the use of the LDC procedure, and rulings are expected shortly.

Ulster County used the LDC, obtained a buyer in December 2012 and now has approval in March 2013 by the Dept of Health which had no issues with the LDC structure.

Suffolk County used a local law approach and has been sued on a number of different claims. Suffolk County has not been able to achieve its sale, partly due to litigation, and has now filed a plan to close the facility with NYS Dept of Health because of mounting losses.

* Any buyer will have to be approved by the NYS Department of Health whether the Board or the LDC oversees the process.

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