Andover NJ nursing home bankruptcy leaves town with $1.4M shortfall

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TOWNSHIP OF ANDOVER — Local taxpayers are “taking it on the chin” because of the bankruptcy of the former Andover Subaigu II nursing home and the resulting default of $1.4 million on property taxes. So the township is reaching out to Governor Phil Murphy for financial assistance.

On Monday, U.S. Representative Josh Gottheimer, whose fifth congressional district includes the city, held a press conference outside the closed facility and asked Murphy to tap into funding the state has received from federal coronavirus relief. City, county and state officials were not present, but later sent statements supporting the effort to gain state support.

Mayor Tom Walsh said Tuesday that in addition to the immediate shortfall left by Andover Subacute’s tax bill, the township could face a bigger hole as a trustee in the bankruptcy case filed appeals. taxes in recent years.

“Every time we turn around, it seems like the taxpayer is taking it on the chin,” said Walsh, who noted the city has the power to take possession of property for unpaid taxes, but that’s a long process.

Once one of the largest nursing homes in the state, Andover Subacute became a notorious symbol of the COVID-19 toll at the start of the pandemic when authorities found the bodies of 17 residents piled up in a makeshift morgue on the spot. The private home at 99 Mulford Road was renamed Woodland Behavioral and Nursing Center but eventually closed. the last patients have moved in summer.

Andover was previously run by Alliance Healthcare Holdings and owners Chaim Scheinbaum and Louis Schwartz. In May, at the request of state regulators, a bankruptcy judge appointed a recipientAllen Wilen of business consulting firm EisnerAmper, to oversee its operations.

Murphy offers ‘discretionary’ help

After Monday’s press conference, Walsh said he had been in touch with Murphy’s office but did not believe the state was providing full support. The governor’s staff “said we could apply for ‘discretionary’ funds to replace the $1.4 million.”

But that offer came with some conditions that Walsh said were unacceptable and unnecessary.

“If we got that money, then the state would step in to oversee our finances,” Walsh said. “It’s like they blame us for not paying taxes. Remember, the state ran Andover Subacute for two years and then put it out of business.”

In fact, the facility was only under heightened state surveillance.

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Walsh said it was the bankruptcy trustee and attorneys handling the case who refused to pay the taxes.

“We don’t need the state to come here to manage our finances,” he said. “We just need the tax money that we lost in this case.”

As of late Friday afternoon, Murphy’s office had not responded to an email seeking comment.

In New Jersey, local municipalities are the collectors of property taxes, and state law requires them to “remunerate” both school district and county taxes. Municipalities are required to include in their annual budget a “reserve (fund) for uncollected taxes” from which to pay.

The mayor said the facility is already $700,000 behind in tax payments for the year and will likely use all of the uncollected tax fund, which started the year with $1 million. of dollars.

He said the city collects about $25 million a year in taxes. In addition to Sussex County taxes, the fund also pays for Andover’s primary and secondary school system. The city pays Newton tuition for high school students.

The financial shock could be long-lasting. Under state law and past practice, municipal budget reserve funds are based on past history and with such a large default this year, the city will likely be forced to increase this reserve fund in future years. coming.

Governor Murphy and the state government “have been fortunate to work with us for two years,” Walsh said, “Now you’re sticking with us again.”

That’s why, according to Gottheimer and other officials, the city needs a financial “buffer” until the bankruptcy is settled, property redevelopment can begin, and regular payments from the property tax are made again.

The $1.4 million in taxes Andover owes represents about 6% of all property taxes collected by the township each year, a gap that, without any other revenue, will have to be covered by other taxpayers.

At Monday’s event, Gottheimer said the owners “have stopped paying the tax bills that they owe. First, the owner here has to cover the tax revenue that he owes to the city. They have to pay their bills, no excuses. You can’t just stop paying your bills because you feel like it.”

And because the owner is “not doing the right thing,” the congressman said it was time to look to other ways to help Andover by providing “economic relief emergency stabilizer”.

State Senator Steve Oroho, in a written statement, called the facility “a problem that needed to be fixed, and the pandemic has glaringly exposed its flaws.”

Oroho, who said her statement was also on behalf of District 24 Assemblymembers Parker Space and Hal Wirths, said the home was due to be closed but was Andover’s biggest taxpayer, an aide short term is therefore necessary until another use can be found.

“New Jersey has received billions and billions in federal assistance to alleviate many issues related to the COVID-19 pandemic,” the senator said, “and the state has provided such assistance to a number of municipalities and organizations”.

Walsh said the city is looking for a new developer and that ideally the property could become housing for people “aged 55 and over. It could be a mix of condos, d ‘apartments with the kinds of facilities that people in this age group need’.

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