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Quincy home asks borough to borrow $8 million

June 22, 2007|by JENNIFER FITCH

WAYNESBORO, Pa. - Representatives of Quincy Retirement Community and its parent corporation asked the Waynesboro Borough Council this week to borrow up to $8 million they say is needed for capital improvements and refinancing old debt.

Quincy United Methodist Home (the retirement community's name on documents in this matter) and Presbyterian Homes Inc. (PHI) are looking to borrow the money from a lender, while using the Waynesboro Borough Authority as a conduit for the loan. Using the borough authority - which owns Waynesboro's water and sewer systems - would mean the interest to the lender is tax free for the 20-year term.

The agreement would not obligate the Borough of Waynesboro or the Waynesboro Borough Authority if Quincy United Methodist Home defaulted on the bond, borough authority chairman Jon Fleagle said.

The authority, with member William Pflager absent, unanimously threw its support behind the effort May 15, according to approved minutes of that meeting.

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"Ultimately, the borough council has to give permission for the authority to do the loan," Borough Manager Lloyd Hamberger said.

Even the vote to table the matter split the council.

Charles "Chip" McCammon asked that a decision be put off until the July meeting, and Richard "Dick" George seconded the motion Wednesday evening. Both voted in favor, along with Jason Stains, while Allen Berry and Allen Porter voted "no." Craig Newcomer abstained.

Local Realtor and developer Ronnie Martin asked that the request be directed to Quincy Township, Pa., because the retirement community is not in the Borough of Waynesboro. Martin won the Republican nomination for a Ward 1 council seat in May.

The borrowers responded that they approached the Waynesboro Borough Authority because it loaned them money in 1993. Approximately $2.7 million is outstanding from that $3 million loan, said Bill Freienmuth, chairman of the Quincy board's finance committee.

The retirement community was operating with a deficit three years ago, before the merger with PHI, but it is now in the black, Freienmuth said.

Of the $14 million operating budget, about $2 million is spent annually on benevolent care for residents requiring financial assistance, he said.

The proposal before the council is to refinance $6 million of debt incurred during construction projects associated with the nursing home, cottages and Minnich Manor; finance future capital improvements; and finance the costs associated with lending, according to Freienmuth and the minutes of a public hearing held in May.

The proposal includes "a little more than $1 million they borrowed in 1974 to remodel the nursing home. ... They haven't done much (renovating) in the last four or five years," Freienmuth said.

The existing debt is at 5 percent and 7.5 percent, and he has been told they can refinance at 4.5 percent.

"Your approval of this project will sure make a lot of people happy," Freienmuth told the borough council. The 200 employees work with about 400 residents, he said.

"This vote is really a vote to support our ministry. ... We commonly ask for water authority support, so we can borrow at tax-exempt rates," said Jeff Davis, chief financial officer of PHI, which is based in Camp Hill, Pa.

The Waynesboro Borough Authority took similar action for the Waynesboro Hospital before it was part of Summit Health, officials said previously.

Davis encouraged the council to review financial statements posted at www.phihomes.org.

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