City of Lincoln approves bond request for St. Clara’s Manor
Part 3: Lincoln aldermen vote 7-1 in favor of bond issuance for St. Clara’s Manor

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[August 18, 2016]  LINCOLN - On Monday, August 15th, the evening in Lincoln City Council Chambers began with a public hearing for the issuance of a Senior Service Industrial Bond to finance the construction of a new nursing home facility by St. Clara’s Manor.

Mayor Marty Neitzel called the hearing to order and asked for speakers. Wanda Lee Rohlfs was the only person who wished to address the council and stated she was surprised that there were not more people on hand to discuss this.

Mayor Neitzel asked Rohlfs if she would be making a comment or posing questions, clarifying that she wanted to hold the questions until the discussion for the vote, but would hear comments during the public hearing.

Rohlfs said she had both comments and questions.

Neitzel then said Rohlfs would be permitted time for questions on the agenda when the item came up for the vote.

Moving forward with comments, Rohlfs said in her research on the bond topic she had discovered some conflicts. She said to qualify under the bond rules, the bond would need to show “increased employment, increased revenue, and increased tax (revenue) for the issuer (the city of Lincoln).”

She said in conflict, a document submitted to the Health Facilities and Services Review Board, for this project said, “according to the applicant, this project seeks to continue health services NOT improve those services in terms of filling an unmet need. Unlike projects to establish beds and services, the proposed project is only a technical establishment as it is more appropriate the off-site replacement of St. Clara’s Manor. The applicant is seeking to improve the wellbeing of the existing population. As the facility currently serves the Logan County planning area, Lincoln market area, the improvement of the existing physical plant of an area provider will naturally have a consequence of improving health care delivery and nursing services.”

The document went on to say that the concerns were the aging structure currently occupied by St. Clara’s and the inability to populate the 140-bed facility. It said that the new building would be smaller, dropping from a 140-bed capacity to a 106-bed capacity.

Rohlfs said that it did not appear to her that building a smaller facility would increase revenue or employment. Rohlfs said this was in conflict with the bond application documents.

She said she would also question the need for a new facility when the current facility was only partially occupied.

When the topic came back up for discussion during the regular voting session of the council, Rohlfs returned with another question. She said that St. Clara’s had applied for a loan with Hickory Point Bank and had been denied. She also noted that the loan with that institution had been drawn out as $9.5 million in 2016 and $6.5 million in 2017, which totals less than what the Manor is now seeking in bonds from the city.

Witsman was on hand for this week’s meeting along with Clyde Reynolds, who serves as a board member at St. Clara’s Manor.

Witsman explained that the Hickory Point Bank did not deny St. Clara’s loan application. A letter of commitment had been issued by that bank that they would lend St. Clara’s the money. That letter had specified that the letter itself did not constitute the official loan approval. He added that St. Clara’s had chosen not to do business with Hickory Point Bank because it wanted to work with the local lending institution, State Bank of Lincoln.

He went on to explain that St. Clara’s in consideration for the $10 million limit for the city in bond issuance, coupled with knowing that the city needed to renew its General Obligation Bond in 2016, had dropped $100,000 from the original amount for 2016, so as not to put the city in a bad position.

For 2017 the bond with the city calls for $7.6 million as opposed to the $6.5 million listed on the Hickory Point document. Witsman said that the $100,000 dropped off of the 2016 request had been added into the 2017 request. There had also been inflationary cost increases for the project on the whole, since the issuance of the document from Hickory Point Bank, which accounted for the rest of the increase ($1 million) showing in the 2017 request.

Reynolds came forward to address the question about the 140 beds versus 106. He explained that there are some current issues with filling the 140 beds because of the way the facility is designed. He noted the history of the building, and how it had started out as a hospital. In the 1960’s when it was transitioned into a nursing home, the design called for two beds in each room. He said there are only 70 rooms in the two-story structure.

In this day and age, Reynolds said that more and more people are unwilling to share their room; they want private rooms instead. He said clients also do not want to live on the second floor of the current facility; they all want to live on the ground floor.

The new facility, he said would have more rooms, and 87 percent of those rooms would be designed for single occupancy, which would better meet the desires of the current residents as well as future residents. Reynolds said the new facility would improve the quality of life for the residents because it would be one floor only, every room would have outdoor views. Physical therapy areas would be better, and there would also be outdoor therapy areas, as well as raised-bed gardening for the more active residents. He said common areas would be improved, and places for the family to spend time with their resident would be improved. Reynolds said the new facility would be an attractive home-like atmosphere.

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He also noted that the new location would be close to St. Clara’s sister facility, Castle Manor, allowing for an easier physical transition when clients are moving from assisted living at Castle to the full-service nursing care at the Manor.

Others who had questions for Witsman and Reynolds included Rick Hoefle, who asked if the attorney could assure that the city would have no liability for the repayment of the bond? He also asked if the city’s credit rating would be impacted negatively if St. Clara’s defaulted on the bond.

Witsman said the city would have zero liability and that he couldn’t see it impacting the credit rating.

Hoefle said that Witsman had “danced around the question.” He asked for a simple yes or no answer, would the city’s credit rating be impacted?

Witsman said he was not qualified to give a simple yes or no answer because he did not work for a credit rating agency. He added that if there were to be any consequence, he felt like documentation could be sent to the credit rating firm explaining the bond and the problem would be cleared up easily.

Hoefle also wanted to know if the Manor does expect to increase staff, thus increasing local employment.

Reynolds responded to the question saying that at first, no, he didn’t believe there would be any increase in staff. However, he said with more rooms set up the way clients want them, he could see growth in occupancy in the future, and that could lead to more staff.

Steve Parrot asked if the current facility had outlived its usefulness, and was it unsafe for residents. Reynolds said that it is an aging building in need of some big ticket maintenance work and upgrades. It had been estimated that to bring the building up to snuff, the cost would exceed $4 million, and would still be a two-story building with double occupancy rooms that clients don’t want.

Hoefle asked what would become of the Fifth Street Manor when the new Manor was completed.

Reynolds said the board would like to see the building recycled into another use, but that they had also considered the fact that they might need to demolish the building and open the lot up for other development.

Welch noted that he was happy to see that the board has taken into consideration what actions it might need to take. He did not want the building left abandoned in the city to become a future eyesore and issue.

Considering that the city wants to stay within the $10 million cap on bond issuance, Welch asked if the St. Clara’s board and attorneys had an alternate plan if the city was unable to issue the full $7.6 million in 2017.

Welch noted that the city has capital improvement plans of its own, and it could come up, though he doesn’t know that it will, that the city would need to issue a bond for itself.

Witsman said that had been discussed. St. Clara’s is owned by Heritage of Care, and the corporation is prepared to seek alternative funding if the city is unable to take on the full $7.6 million in 2017. He said one alternative discussed could also be to spread the $7.6 million across two calendar years instead of one, reducing the amount of each bond to give the city more working room for its own projects.

Rohlfs asked when the new facility was slated to be complete.

The answer was that it is expected to be ready for occupancy in early 2018.

Rohlfs also wanted to know if the project would utilize local contractors. She said that other projects brought before the city had stated local contractors would be used, but that had not happened. She believed the city was obligated to assure that local people got the work.

Michelle Bauer said that was out of the hands of the city. The city cannot dictate who St. Clara’s does business with and cannot force them to hire locally.

When the motion finally came to a vote, seven aldermen - Bauer, Jeff Hoinacki, Kathy Horn, Todd Mourning, Jonie Tibbs, Parrot and Welch voted, yes, to approve the bond. Hoefle voted an emphatic “No.” The motion passed 7-1.

[Nila Smith]

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