PRINCETON — In the midst of its due diligence discussions with OSF HealthCare, the Perry Memorial Hospital Board is planning to transfer ownership of Perry Plaza to the city of Princeton where an escrow account would then be created to pay for any liabilities that could arise after OSF took over Perry.
The hospital board met Monday and voted 6-1, with board member Deb Madsen casting the lone no vote, on this decision.
During discussions, Board President Linda Gustafson said a resolution was written up by the city on May 18 for the transfer of ownership, but there was no mention of an escrow account. And after recent discussions with OSF, it has been determined Perry needs to secure funds for items such as closing costs and possible liabilities tied to outstanding medicare cost reports from 2016 before making any deals with OSF.
Madsen pointed out this is “a huge area” that is being discussed right now between Perry and OSF.
“It could be critical,” Gustafson added.
"It's hard to believe it's a deal-breaker. That's just my opinion," Board member Rick Clary said.
City Council member Jerry Neumann, who is a liaison to the Perry Memorial Hospital Board, told the hospital board the city is willing to liquidate the assets of Perry Plaza once the property is deeded over for the purpose of an escrow account.
“We see an opportunity for us to move this property to being a deed in your top drawer to cash on hand in an escrow account, so should the need arise to have cash for predicaments for the hospital, it will be there ready and willing,” he said.
While some board members were OK with taking the city’s word on this, Madsen pushed she wanted mutually agreed upon terms of the escrow account between the hospital board and city council before it was approved by the hospital board.
“As a board, we’re not prudent enough if we don’t have everything in writing from Point A to Point B,” she said. “It’s just important that we have a contract that covers all the elements.”
Neumann responded saying Madsen wasn’t being trusting.
“The city said it would do this. We will do it,” he said.
Gustafson suggested the hospital board meet in a special session to ensure it had its “i’s dotted and t’s crossed” before approving the deed transfer with details on the escrow.
Board member Tony Sorcic ultimately made a motion to transfer Perry Plaza to the city subject to negotiations of details of the reserve account that would be established.
Clary seconded his motion.
Before the roll-call vote, Madsen recommended to add to the motion it would be mutually agreed upon by the board and the city as what would be done with the funds and for how long.
Sorcic said Madsen’s recommendation didn’t add anything to his motion, as “mutually agreeable” was implied in what he stated.
Based on discussions between board members on Monday, OSF has no interest in the Perry Plaza building other than its potential to create escrow funds. Steve Pratt, Perry’s strategic planning attorney, had suggested using Perry Plaza's assets for escrow funds after OSF rejected a recently proposed agreement.
Sorcic believes the city may have better luck in selling Perry Plaza than the hospital did in its 18 months it had the property on the market. He said the city would be able to put out requests for proposals on the property, which would potentially create a faster sale to make money for the escrow.
“In the last 18 months, all it’s done is cost us money,” he said. “Everybody is concerned about reserves, but think about taxes and everything we’ve spent on that building that would have been good to have if we didn’t have the building.”
If Perry is not able to come to an agreement with OSF, the monies in the escrow account would then belong to the city. If an agreement is made with OSF and those monies don’t have to be spent on liability costs, Madsen said they could be used for a future health-related project for the hospital.