ParkhouseGate: The Movie

"An emotional tour de force! I laughed. I cried. I registered to vote."

CBS3 picks up the Parkhouse story

Story below from CBS3:

By Steve Patterson

ROYERSFORD, Pa., (CBS) – Montgomery County Commissioners say they’re in finalizing plans to sell a large nursing care facility, while opponents are getting vocal on worries about privatizing care and how the company will use the land around the site.

County officials want to sell the Parkhouse, a nursing home that houses some 500 residents, employs nearly 700 people and sits on about 200 acres of land. The deal is set at $39 million from the private Maryland company: $36 million for the facility and $3 million for the land.

“The fear is that if it goes into private hands, we wont be able to guarantee it remains this pristine space,” said Upper Providence Township Supervisor Lisa Mossie. She is leading the opposition charge for the County to provide more reasoning on their decision and more assurance about what happens when the property changes hands.

“My concern is that the motivation of this sale is not so much to privatize this, as it is to fix a budget problem that Montgomery County already has…. to plug a hole,” she said. “And when that is your motivation, then I question everything about it. You have to.”

Upper Providence Resident Sharon Gehman placed her mother in the facility 13 months ago and is now worried about how care will change when the facility becomes privatized.

“We’re being assured by the commissioners and Mid Atlantic that nothing will change,” she said. “My fear is that the quality of care will change. The staff here is exceptional and you always have to worry that when something’s being privatized, something will change. These assurances don’t feel real.”

County Commissioner Josh Shapiro says a private company will only improve care, resolve debt and ease the burden on taxpayers.

It’s a very small minority that’s misconstruing the facts purposefully to try and create hay where there is none,” he said. “At the end of the day, our residents are going to be better off, employees will be protected and the community will benefit from having this back on the tax rolls.”

The finalized date is currently set for January 31st.

Just how high are the stakes on the Parkhouse sale?

In a word: HUGE.

Since the sale of Parkhouse "pervades every aspect" of the 2014 Montgomery County budget, it's worth taking a look at the single biggest budget issue that Montgomery County faces:

Logan Square Shopping Center, aka "Studio Centre," aka "Norristown Centre," aka Giant Economic Development Boondoggle.

Back in June of this year, Natalie Kostelni penned an article for the Philadelphia Business Journal chronicling the tragic history of the Norristown Studio Centre, the too-good-to-be-true project that was going to single-handedly undo years of mismanagement and economic decline in Norristown. Like the quick fix that project promised, the County Commissioners are looking for a similar quick fix to fill the $24.5 budget hole that the project created. Kostelni's article (linked here) is worth reading in its entirety, but for a sense of scale as to how dire the County's fiscal crisis is as a direct result of this project, this passage is worth quoting at length:

The county finds itself on the losing end of the deal even though it had been warned. A March 18, 2009, memo from John F. Nugent, the executive director of the Montgomery County Redevelopment Authority, questioned why the county was committing so much money toward the project and why it would enter into an arrangement in which the county would be subordinate to the primary lender. Regardless, the commissioners signed off on the agreement.

“We were told by our experts allowing the first lender to have a higher priority than the county was needed to have the deal happen,” said Joe Hoeffel, who was serving as a county commissioner at the time and fully supported Studio Centre. Hoeffel contends that in spite of the county being on the hook, the money helped keep USM Services and its jobs in Norristown.

“There are 400 jobs and a Class A office building and a parking garage,” Hoeffel said. “That’s why I call the project a successful job creator for Norristown.”

Bruce L. Castor Jr., who was a commissioner then and currently holds the same post, also backed the project.

“I liked that the tax credit would bring glitz and glamour to the northern end of Norristown,” Castor said. “That was a Rendell thing and I thought it was a good idea.”

However, Castor said he didn’t know he was signing off on a deal that put the county funds in such jeopardy. He blames Hoeffel, a political nemesis, for the situation.

Josh Shapiro, a current county commissioner, said attempts were made to renegotiate the county’s secondary position after the fact, but that was rejected by the lender.

Bleak Future

Montgomery County District Attorney Risa Vetri Ferman is also looking into the matter. This is based upon recent public disclosures about decisions and actions undertaken by the past commissioners related to the Logan Square project, she said in an email. It is also prompted by a December 2011 report issued by a Montgomery County Investigating Grand Jury that addressed the conduct of some county government officials and employees and allegations of political corruption.

In the meantime, the foreclosure process is expected to take six to nine months and has left the county reeling. It recently put forth a bond issue and its exposure on the Logan Square debacle was listed as a liability.

Also of concern is how the situation will affect the amount the county and Norristown receive from the U.S. Department of Housing and Urban Development and its Community Development Block Grants funds. Since HUD loans were part of the funds given to Studio Centre and the project is unable to generate enough money to make payments on the loan, the payments will come from future CDBG money earmarked for the county and Norristown.

Translation: This one deal could haunt Montgomery County over the long term. The county is also dealing with the reality that it may not realize any return from the money it gave the developer for Studio Centre and even recoup any of the $24.5 million.

“We will follow whatever options and legal remedies that we have,” said Uri Z. Monson, chief financial officer for Montgomery County.

"Whatever options and legal remedies" clearly includes the sale of Parkhouse and apparently only the sale of Parkhouse. With it's $39 million price tag, that neatly fills the hole created by Studio Centre with enough left over to pay down the existing $8 million in debt on Parkhouse and the $6.23 million on outstanding contracts.

Adding insult to injury is the fact that the County must pay $528,000 in annual interest payments alone on the Logan Square loans.

A $528,000 interest payment on a redevelopment project that foreclosed in May. The county-guaranteed loan for Logan Square - better known as the former Sears shopping complex at Markley Street and Johnson Highway in Norristown - will cost the county $9.4 million through 2030.

Another failed investment in Norristown, this one in a sewer project, will cost the county $110,000 in 2014, according to Monson.

Those two projects, approved under the previous administration, have also cut into the 2013 budget. The county recently made an $8,883 payment for the sewer project, and the county Redevelopment Authority made a $363,362 payment for Logan Square.

Moody's downgraded Montgomery County's bond rating in August. Another downgrade would raise the interest rate.

It's not only in the County's fiscal best interests to plug this budget hole as quickly as possible, but it would be best for all parties involved in the original transacation to make this project disappear down the memory hole as quickly as possible.

Because, where did that $59 million go?

It did not go into paving the parking lot, I can tell you that much.

As a matter of fact, other than the renovated Sears building and the parking garage, it's difficult to see where, in fact, that money went. Montco resident Walter Interrrante filmed the "before" images back in 2007:



Here is the "after" image, taken today, 11/23/13:

On October 31, 2013, the Logan Square property was sold to the developer for $8,000 dollars.

Logan Lender, a Wayne firm, bought the two parcels for a total of about $8,000 after filing a foreclosure suit in Montgomery County Court in May against Johnson & Markley Redevelopment, a New Jersey firm led by developer Charles Gallub.

The 24.5-acre property sold as two parcels, which includes where USM, a facilities maintenance company, has offices. Together, the parcels were valued at about $37 million, reflecting Logan Lender's investment.

It's worth noting that just this year, the Montgomery County Commissioners broke ground on yet another economic development project that would, as Commissioner Leslie Richards said, "change the way Norristown is perceived."

Where have we heard this before?

The project got started with $11.5 million this year. An additional $20 million contract is slated to be awarded in August 2014 and a third $20 million contract is due to be awarded in late 2015 for this project.

Am I missing something here? If it was an economic development project that dug Montgomery County's fiscal hole, then shouldn't economic development funds be used to dig them out? Surely, the County should not be "investing" in economic development projects until it cleans up the mess from the last project.

And it certainly shouldn't be using Upper Providence's open space to do it.

Look, I get that the current County Commissioners inherited a mess from the previous Board. Lord knows, they can't sit in a meeting together for five straight minutes without reminding everyone of that. The fact remains, however, that they all ran for office with a full understanding what they were getting into. And it's more than a little troubling that many of the same names that were floating around the groundbreaking of the Lafayette Street Corridor project were floating around during that fabulous Studio Centre proposal.

Montgomery County does some things very well: Parkhouse is a five-star facility that serves the County's most vulnerable aging adult population. Since 1993, Montgomery County has preserved acres and acres of open space and farmland.

The County should not trade funds earmarked for things they do well to pay for things they do very poorly.

"New signs will 'brand' Montgomery County public facilities"

Times Herald 12/3/13:

NORRISTOWN — The Montgomery County Board of Commissioners voted unanimously Tuesday to hire a company in Georgia to create signs that will be hung around public places in the county.

The commissioners approved a payment of $44,830 for the signs, which are being designed by Creative Impressions of Norcross, Ga. Forty-six signs will be placed across the county at various public places.

“I think it’s important if county tax dollars are going to sustain these sites, that people know they are walking into a Montgomery County facility,” commissioners Chairman Josh Shapiro said.

There are no final designs yet, and commissioners have seen preliminary sketches. What exactly will go on the signs is still being worked out.

Revealed here for the first time is the sign design the County Commissioners have decided upon in order to identify public spaces owned by Montgomery County:

The 46 signs will cost just under $1,000 each. Shapiro said the commissioners’ plan on having them installed by county employees which will save the county money.

Additional money can be saved by simply selling off the County places.

Most. Transparent. Administration. EVAH.

What follows is the County's response to Upper Providence Township's Right to Know request:

Dear Mr. Skypala:

Thank you for writing to the Montgomery County Open Records Office with your request for information pursuant to the Pennsylvania Right-To-Know Law (“RTKL”).

On November 21, 2013 we received your request. Please be advised that we require additional time to respond to your request, pursuant to 65 P.S. § 67.902.

This right is being asserted for the following reasons:

a. a legal review is necessary to determine whether the record(s) is a record(s) subject to access under the Act;
b. to determine if the request requires redaction of a public record(s); and
c. bona fide staffing limitations (in retrieving and reviewing the record(s) requested).

We presently estimate that a response will be available no later than, December 21, 2013.

Natasha Taylor-Smith, Esquire
Assistant County Solicitor
Montgomery County Solicitor’s Office
P. O. Box 311 Norristown, PA 19404-0311
Ph: 610-278-3033
Fax: 610-278-3069
NTaylors@Montcopa.org

Considering the State Office of Open Records has already directed Montgomery County to release this document to Janice Kearney, you'd think they'd have it pretty close at hand.

Hard hitting investigative reporting on the County budget

Oh no.

Not Montgomery County's controversial budget that uses the sale of Parkhouse and 220 acres of open space to fill a budget hole. No, this hard hitting investigative report is about ergonomic chairs purchased by BUCKS County. NBC10:



Believe it or not, this story was one of the lead stories on NBC10's morning broadcast. NBC10's intrepid reporters even went to other counties to "investigate" how much other counties spent on ergonomic chairs. Meanwhile, Montgomery County residents can't get the details of the sale that "pervades every aspect" of Montgomery County's 2014 budget.

(Also, as an aside: It's a little curious that the title of the Montco Memo post I linked here last night was changed from "Sale of Parkhouse pervades every aspect of Montco's 2014 budget" to something more innocuous and "pragmatic." Seems like controlling that spin is pretty important, hmmmm?)

And lest you think that our local reporters are incapable of filing an RTK request themselves, behold this story from yesterday's Times Herald:

WORCESTER — When the Methacton School Board meeting was opened up for public comment Tuesday night, Winnie Hayes, a former board member and president, called for the resignation of current board president Joyce Petrauskas. Hayes’ request stemmed from information that surfaced on the Internet regarding DUI charges filed against Petrauskas in February 2013 in Clearwater, Fla. The information can be found on http://mugshots.wtsp.com/profile/1538079/joyce-petrauskas. Hayes said she has sent a right to know request for the arrest record from the Clearwater Police Department. The Times Herald has also filed right to know request for the criminal complaint against Petrauskas.

We can argue about the newsworthiness of Joyce Petrauskas' alleged DUI in Florida in another conversation. But isn't the sale of Parkhouse at least AS NEWSWORTHY AS THAT?

Can some reporter SOMEWHERE start asking questions about this sale before the County jams it through?

"If you like your geriatric facility, you can keep your geriatric facility"

As an Upper Providence Township Supervisor and a resident of Montgomery County, I am troubled by the lack of transparency surrounding the sale of the County’s Parkhouse facility on Black Rock Road. The proposed sale, which the County is rushing to close before the end of the year, includes approximately 220 acres of rolling farmland in my township that has been designated as open space on County planning maps since at least 2005. It was designated as permanently protected open space in the Township’s 2006 Open Space Plan which was then incorporated into the Township’s 2010 Comprehensive Plan.

As a Township Supervisor, my concern is for the future of this property. Once this gem of open space is transferred to a for-profit entity, its preservation cannot be assured. Why hasn’t the County offered to subdivide off the geriatric facility and keep the balance of the tract preserved as open space? On

October 8, the County Commissioners heard a recommendation from the “working group” assigned to evaluate the RFP submissions for the purchase of Parkhouse. This group, made up entirely of County employees, recommended that the RFP be awarded to Mid-Atlantic Healthcare LLC. After only eight days of deliberation and no public input, the County Commissioners voted unanimously to sell Parkhouse to Mid-Atlantic for $39 million. During that meeting, the Commissioners spoke often about the happy employees they encountered during their scheduled tour of a Mid-Atlantic facility and gushed about how nice the facility smelled. At no time during the public information session on October 8 or during the regularly scheduled meeting on October 17, did anyone tasked with evaluating this transaction address the fiscal health of Mid-Atlantic Healthcare, LLC.

Mid-Atlantic Healthcare is a company currently undergoing a rapid expansion, and has, in fact, doubled in size since 2011. Excluding Parkhouse, Mid-Atlantic Healthcare currently owns fourteen facilities in Pennsylvania and Maryland, seven of which have been acquired only within the last two years. They have financed the purchase of at least $106 million for six of these seven homes.

One of the primary reasons that the Commissioners cited for selling Parkhouse was that, according to County Chief Financial Officer, Uri Monson, the facility loses $2 to $7 million per year. Mid-Atlantic’s rosy presentation on October 8 included assurances that care at Parkhouse would not be compromised, employees would retain their level of seniority and salary and the community would continue to be served by this resource. Dr. Scott Rifkin, the principal of Mid-Atlantic, claims he can save money by joining a group purchasing organization (“GPO”); however, it seems unlikely that this strategy will be enough to not only honor Mid-Atlantic’s lofty promises, but cover the losses that Parkhouse allegedly incurs annually and the debt service of $39 million for the purchase.

This raises several additional questions: Has Mid-Atlantic committed to retaining a certain percentage of Medicaid beds, or will they abandon the Medicaid patients in favor of private pay insurance to increase their revenues? Will Mid-Atlantic need to develop the balance of the property to make its numbers add up? And if it was as simple as joining a GPO to save that much money, why didn’t Montgomery County attempt to do that before selling?

On October 30, the site of the once-proposed Studio Center at Logan Square was sold at auction for a meager $8,000, leaving Montgomery County with a gaping budget hole of $24.5 million as second position lien holder on the property. There remain many unanswered questions about the uses of some $61.5 million that was poured into that site for what eventually amounted to the refurbishment of an existing office building. Since no real compelling reason has been given for the urgency of closing the sale by year end, it would be unfortunate to conclude that Parkhouse, and Montgomery County’s most vulnerable low to moderate income aging population who depend upon it, are being sacrificed simply to fill this budget hole.

There remain too many unanswered questions regarding this sale and I would urge that the County Commissioners slow down and honor their commitment to transparency by allowing for a more public vetting of Parkhouse sale before proceeding further.