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Hubbard County grants another $1 million to Heritage Living Campus

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Heritage Living Center
Enterprise file
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Hubbard County commissioners voted to use $1 million in American Rescue Plan (ARP) funds to offset pandemic-related losses at the county-owned nursing facility.

In 2021, they allocated an additional $1 million of ARP to Heritage Living Campus.

County Administrator Jeff Cadwell reviewed Heritage’s financial position for the first and second quarter, noting its fiscal year begins Oct. 1.

Over the first six months of the current fiscal year, Heritage campus is showing an operational loss of $1,139,794.

County trial balances are showing a $886,665 loss and a total fund deficit of $1,777,538 for the first six months of the current fiscal year.

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“This is to place into context the question if and how much the board wants to allocate the balance of ARP funds,” he said.

Compared to 2019, Cadwell said the three funds – Heritage Living Center, Heritage Manor and The Cottages – are seeing operating revenue losses of $300,000 per month.

“With $300,000 per month times six months, we’re at $1.8 million. When you actually look at the numbers the loss is less because our expenses are lower because we don’t have the staff to carry the occupancy, so we’re at $1.13, but it does appear that there’s a revenue loss greater than $1 million in the first six months of operating,” he continued. “It might make sense to use ARP funds to fill that gap, because if we don’t, we’re going to end up using some other county source at some point.”

Hubbard County was allocated $4,174,375 in Coronavirus State and Local Fiscal Recovery Funds, a part of ARP. Half was awarded in May 2021, and the second half will be received this May, according to Cadwell.

Cadwell said there is $1 million in the ARP fund.

Heritage Administrator Kurt Hansen reiterated that the initial reduction in revenue was pandemic-related, due to the drop in occupancy.

“What’s happened since, as we’ve gotten into this fiscal year, people are coming back, but we just don’t have the workforce to support the levels of patients that are required to make back that revenue,” he said. “I know we’re not alone in that. Everybody’s struggling with it. Obviously, we’re more public about it because we’re a public entity.”

Hansen continued, “The only way we can dig ourselves out of this is if we can gain an appreciable amount of staff to meet our residents’ needs safely and then be able to take more residents in.”

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Unwinding New Market Tax Credits

In related business, the board approved lease amendments to effectively cancel leases put in place to secure the New Market Tax Credits for Heritage Center improvements, pending final attorney review.

Cadwell explained, “Just to clarify, back in 2014 when the county was pursuing New Market Tax Credits, there was a nonprofit structure that was created in order to qualify for and hold those new market tax credits. In December 2021, those New Market Tax Credits were unwound, meaning that $4.5 to $5 million in tax credits was forgiven and written off. What we’re doing now is dismantling the nonprofit agency and the agreements that were created for the New Market Tax Credits because they serve no purpose.”

This process put the property and title back to “being clear and in the ownership of Hubbard County,” he said.

According to Cadwell, all interests in the mortgage put in place to secure the New Market Tax Credits have been satisfied and transferred back to the county. The balance of debt for the Heritage Center improvements in 2015 are in the form of general obligation bonds held by the county that do not require any security.

In December 2021, the board hired Senior Living Investment Brokerage to assist with the sale of the facility, pending attorney review.

“The attorney review has been ongoing. One of the statutory requirements that the county has is to actually list the property for sale ourselves in the local newspaper before we can contract with a brokerage firm,” Cadwell explained.

The board authorized posting a notice listing the property for sale for the next three weeks, then executing the brokerage agreement.

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Shannon Geisen is editor of the Park Rapids Enterprise.
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