Two $8M purchase offers and a referendum: What to know ahead of DeKalb County nursing center votes

SYCAMORE – The DeKalb County Board is expected to vote Wednesday whether to move forward with a sale of the struggling DeKalb County Rehabilitation and Nursing Center, or place a referendum on the November ballot to ask voters to consider a property tax levy.

Two purchase offers topping $8 million have been made for the facility, which finds itself more than $7 million in debt. The DeKalb County government has owned the facility since 1853, though the center later became what is known as the county nursing home in 1945, meant to service the county’s residents of lower income who still needed a place to go.

A sale would need to be approved by a two-thirds majority DeKalb County Board vote.

The 169-year legacy of the facility now faces an uncertain future, as the DeKalb County Board considers a possible sale to help stem budget constraints which came to light more than a year ago. County officials have maintained the center will continue to operate as a skilled nursing center regardless of who owns it. Center employees, however, have rallied against a sale, voicing concerns about quality of care and employee benefits.

Now, the County Board faces four options: Sell the facility to one of two Illinois-based private health care management companies, place a tax levy referendum on the November ballot to allow voters to weigh in, or approve a yearslong plan to rightsize the center’s budget by 2024 by cutting staff through attrition and maintaining a resident status quo.

The County Board will meet at 7 p.m. Wednesday in the Gathertorium at the Legislative Center in Sycamore.

Board Chairman John Frieders, a Republican who represents District 12, called the nursing home’s plight “a huge letdown from professionals who should’ve known.”

DeKalb County Administrator Brian Gregory – who was hired by the county in March 2021 – said he believes the issues could have been spotted sooner. He said he believes the responsibility didn’t fall on the center’s day-to-day employees, but those in charge.

“There were plenty of opportunities when more could’ve been brought to the board’s attention to say, ‘Hey this isn’t working,’ “ Gregory said. “I wish several people that had probably authority and really, in my opinion, an obligation to raise the issue to the board and to the public as to some of the challenges that were ongoing.”

The county government has approved near-monthly financial assistance since March 2021 in order to prop up the facility’s budget. The center – which four years ago prepared for a $13 million expansion to support what officials said at the time was resident overflow – has suffered in recent years because of what county officials have alleged was years of mismanagement by a former St. Louis-based company, delinquent billing for the center’s Medicaid-supported residents, staffing levels and falling resident numbers.

In December, the County Board dissolved the operating board, an appointed body meant to observe the nursing home’s operations and report regularly to the County Board. The nursing home, while meant to operate independently, had an annual budget put together by a former management company and approved yearly by the County Board.

For the past 24 years up until Dec. 31, the nursing center was run by St. Louis-based Management Performance Associates, a firm that was under county contract. The firm, responsible for overseeing daily operations and creating the facility’s annual budget for County Board approval, declined to renew its contract in December.

“There has been a lot of criticism of us and why we didn’t know about this sooner,” said Board Vice Chairwoman Suzanne Willis, a Democrat who represents District 10. “The thing is the DCRNC was an independent entity. It had its own board and its own budget and its own management. It didn’t report regularly to us. So that’s something that maybe in retrospect we should’ve been keeping our eyes on.”

“It does now give us perspective to look at everything that we do as board members,” Ellingsworth Webb, a Democrat representing District 9, said in response.

What we know about Saba Healthcare

Saba Healthcare LLC, listed at 3531 Howard St. in Skokie, about an hour east of DeKalb north of Chicago, has offered the county $8.3 million to buy the nursing center. Evanston-based Illuminate HC LLC has offered $8.1 million. Illuminate HC operates 11 long-term care facilities out of Michigan and one out of Toledo, Ohio.

According to data released by the U.S. Centers for Medicare and Medicaid Services, Saba Healthcare-owned facilities have an average rating of 1.3 stars, records show. Star ratings for skilled nursing facilities are populated over three years’ worth of data, according to medicaire.gov, which shows ratings most recently published May 25.

According to that data, the DeKalb County Rehabilitation and Nursing Center sits at three stars, which medicare.gov reports is average. Star ratings are based on health inspections, staffing and quality measures.

Moshe Blonder, of Saba Healthcare, addressed the board Wednesday and said his company owns and operates eight skilled nursing facilities in Illinois. Blonder said her personally visits each of his company’s facilities once per week, and also works as a volunteer EMS in the Chicago area.

“It’s one thing we have in America in the world and it’s called due process,” Blonder said. “And star ratings don’t have due process.”

Blonder said he came to Illinois in 2014 from New York, and has worked his whole life in skilled nursing facilities. He said his business strategy would include his regional facilities acting as support for other facilities nearby, offering staff as needed and other resources.

“We’ve been successful in that regard in helping taking over some troubled facilities financially and turning them around,” Blonder said.

Saba Healthcare’s offer tops an initial offer made more than a month ago by $200,000, records show. An initial offer of $8.1 million was made by Evanston-based Illuminate HC for the nursing home last month, which faces a more than $7 million budget deficit.

Blonder also addressed concerns brought forward about Saba’s potential business connections to a property management company that has brought controversy to DeKalb. Evanston-based Hunter Properties, once DeKalb’s largest landlord, was at the center of years-long legal troubles with the city of DeKalb. Hunter-owned rental properties faced hundreds of DeKalb code violations. Over the past year, the city of DeKalb entered into a contract with Hunter Properties, mandating the company sell off its largest DeKalb properties

Frieders asked Blonder whether Saba does business with Hunter, after concern was raised as to Blonder’s association with an Eric Rothner, who’s listed as a manager for Hunter Properties LLC, according to state business records.

“In full transparency, I do have some financial investments, not with actual Hunter Properties,” Blonder said. “I’m not affiliated with that. I do have some financial investments tied in with one of the people from the Rothner family who happens to be related to that. But I operate completely separate.”

In response to concerns brought up related to the amount of outside agency-provided staff, Blonder said he believes a key to successful nursing center includes fewer agency employees.

“The agency comes in, the morale goes down,” Blonder said. “You cannot be successful in a nursing home with agency in the building. I’ve experienced that”

Blonder said his Saba’s facilities include unionized staff workers.

“Thank you for your commitment to not expelling union’s from your facility,” said board member Scott Campbell, a Democrat who represents District 7. “I would hope that if you were to purchase this facility, that would be something you embrace.”

Board member Dianne Leifheit, a Republican who represents District 8, asked Blonder whether he thought Saba’s $8.3 million was low for what she said was the quality of services offered by the county center.

Blonder said Saba took into consideration the county nursing center’s financial predicament in its purchase offer.

“Financials are what drive prices,” Blonder said. “A business sustaining losses like that is out of business, you’re done. ... When you’re losing so much money, it severely depletes the value even though it’s a gorgeous building.”

Board member Rukisha Crawrford, a Democrat representing District 6, asked the county to consider getting the nursing center appraised before moving forward with a sale.

Board member Jerry Osland, a Republican representing District 12, asked Blonder whether he would cut staff if Saba purchased the building.

“I think I would need to look at it, assess and see what it actually needs,” Blonder said. “Overstaffing or understaffing is not a proper thing in any business.”

A potential sale would not rule out a referendum, however, confirmed county officials. If the board decides to move forward with a sale, the referendum – if approved Wednesday – would remain on the ballot, though could be considered moot if the nursing center’s ownership changes.

Under the proposed tax levy if levied for the full 0.1%, DeKalb county taxpayers who owned a home valued at $150,000 would pay $44, documents state. Taxpayers with homes valued at $200,000 would likely pay about $60.67, or $77.33 for homes valued at $250,000. Residents with homes valued at $300,000 would be expected to pay $94 for the nursing home tax, according to county financial projections.

Halfway through its fiscal year, county staff said they expect the nursing home to fall short on its budgeted revenue by about $5.3 million in 2022.

Marcus and Millichap was hired for $10,000 in January by the DeKalb County Board as a consultant, and has marketed the facility since late April, when the board elected to begin the sale process. If the county board approves a sale, 3% of the sale revenue will go to Marcus & Millichap for commission, Gregory has said.

In an interview after the July 13 meeting, Osland said he believes the County Board should consider a Nov. 8 ballot referendum. If supported by taxpayers, a referendum would authorize the County Board to annual levy any amount – and the amount could vary per year – up to 0.1% in order to boost the nursing center’s budget.

“I think it would be fair for the taxpayers to vote on what they’re going to pay,” Osland said. “Wouldn’t you like to have a say so? So I think it’s only fair they have skin in the game also.”

This story was updated at 9:30 p.m. Wednesday, July 20, 2022 to correct an earlier version which misstated delinquent billing in regards to the DeKalb County Rehabilitation and Nursing Center. Medicaid-affiliated billing was deemed delinquent by DeKalb County officials.