County considers divesting 4 properties

By Jane Stebbins, Pilot staff writer November 23, 2012 10:36 pm

Four citizens braved high winds and waters to weigh in against the county’s proposal to divest four properties to the county Health and Human Services Department (HHS), which commissioners hope to spin off as a nonprofit entity by the end of the year.

It’s that timing that had citizens concerned.

The comments were taken during a special meeting required by state law to hold public hearings when a property that has been foreclosed upon is relinquished. Ultimately, the issue was tabled until the county commissioner’s Dec. 5 meeting.

The two Brookings properties – one at 517 Railroad St. and a house at 438 Pine St. in Brookings – were foreclosed upon after the homeowner failed to pay taxes; they then reverted to county ownership. The other two buildings are Hammond House and the MINDS Clubhouse in Gold Beach.

County attorney Jerry Herbage said earlier this fall that the taxing districts owed past monies and the new owners – in this case, the nonprofits – are responsible for dealing with the financial details surrounding the foreclosures. 

No special district representatives were in attendance Tuesday to address the proposed divestiture. Nor have any comments been received by HHS director Jan Kaplan.

County Commissioner-elect Susan Brown said she was concerned because the county is under obligation to the state to provide health services until the end of next June.

“Curry Coastal Hospice did the same thing, and it was years in the making,” she said of the spin-off. “They made sure the county had the least liability.”

Brown was also concerned that the county was handing over the department to an entity that hasn’t yet been authorized as a nonprofit organization by the Internal Revenue Service.

Commissioner David Itzen said he wanted to know how HHS planned to address such financial requirements as Medicare, accounts receivable and employee health insurance; and the amount of revenue the county will lose if the department is retained versus how much it’ll lose if it’s spun off.

Former County Commissioner Georgia Nowlin said the county’s “ducks were not all in a row.”

“These properties belong not just to county government, but the many special districts that receive property taxes,” she said. “We are depriving those districts – most already cash strapped – of future income from any sale of these tax foreclosed properties, in order to provide collateral for loans to this new private, nonprofit entity.”

Kaplan said no business would submit a business plan without having a line of credit in place. HHS hopes to obtain that line of credit using the properties as collateral.

Commissioners agreed that the school district in Brookings was the biggest benefactor of the taxes generated from the two properties – and would be the biggest losers if HHS were to fail. The only way special districts would see their share of past tax revenue due from those properties would be if the properties were sold.

“It would cost them more in the loss of the school health program than they’d gain in the sale of the property,” said Commissioner George Rhodes.

Nowlin also said there are many obstacles to a nonprofit organization’s success, and if it fails, the responsibility to offer state-mandated services would  fall back to the county. If the county didn’t have to funds to operate it – which it does not anticipate for the upcoming fiscal year – it would revert to the state’s authority.

Kaplan noted that the county and HHS have been talking about the issue for at least two years, and talking about the transfer of buildings since May. The January date was set as a strategy to help the county remain solvent as the county will no longer receive timber sale funds as of July 1, 2013 and to ensure a smooth transition in the ensuing months.

“The urgency is, we won’t have enough operating capital to operate this program,” he said. “January 1 is a late date to tell the state (if the state is going to take over a county’s program).”

Kaplan said the county is spending $30,000 to $35,000 each month HHS is under its control, mostly due to the high cost of retirement programs.