ILA project hits snag
Community fundraising is option
By Jane Myhra
The proposed construction of a new skilled nursing facility in Iola has hit another snag.
In order to qualify for a federal loan, Iola Living Assistance, Inc. must conform to specific conditions laid out by the U.S. Department of Agriculture.
Iola Living Assistance (ILA) Administrator Greg Loeser recently presented the conditions and options to a group of community leaders.
“The USDA is looking for a combination of things from us,” Loeser said. “They basically said some of the costs were too high. How much less are we willing to settle for in order to meet USDA requirements?”
The new requirements include not having more than $12.2 million debt, refinancing about $2 million in existing debt, having 45 days worth of operating cash on hand and agreeing to a 32-year loan.
“We had initially asked for a 36-year loan,” Loeser said.
Loeser said over the last several years, the current skilled nursing facility has been losing money due to the state’s under-financing of Medicaid. Although the losses were compensated with income from the other facilities – Butternut Ridge Apartments and Living Oaks Assisted Living – Loeser said the skilled nursing entity has lost over $2 million.
“That has complicated our situation going forward,” Loeser said.
To help lower the original construction cost of $9.5 million, a new floor plan design was presented by Terry McLaughlin, of Community Living Solutions.
The downsized plans include less square footage, no covered walkway to Living Oaks, a smaller rehabilitation area, no chapel and only one garage.
“We didn’t throw the baby out with the bath water,” McLaughlin said. “This is still a very high quality project, even though we did cut things to fit the USDA contingencies.”
Community members voiced concerns over the loss of the connecting walkway and Loeser agreed.
“It was an architectural amenity that tied the two projects together,” he said. “We need to decide how much less of a building we are willing to accept because we need to get the cost down.”
“My company will still present the full plan (to contractors),” McLaughlin said. “It is hopeful we could get the extras through competitive bidding.”
In early 2015, Loeser announced plans to build a new 50-bed nursing facility to replace the current Iola Living Assistance building. The new facility would be located west of Living Oaks Assisted Living and include a rehabilitation area.
After the new facility is built, the old ILA building will be converted to a Community Based Residential Facility (CBRF).
To help finance the expansion, ILA Inc. applied for a USDA Community Facility Loan with a 40-year fixed interest rate.
Initially, Loeser expected the new facility to be completed within two years. Now, if the USDA loan is approved, the timeframe is about five years.
“This process with USDA is like herding cats,” McLaughlin said. “The process takes two the four years and things change along the way.”
“We are at the point where we need to go with USDA’s decision or look at other alternatives,” Loeser said.
He presented three options: lower the cost, raise the money or do a combination of these things.
“To do nothing literally is not an option,” Loeser said. “Then we would eventually need to close the nursing facility.”
His preference would be for the community to raise enough money to build according to the original plans.
He noted the community raised $1 million to help finance Living Oaks. Now, in order to keep the original plans and meet the loan requirements, the community would need to raise $1.4 million.
“I am very optimistic we can raise that in this community,” Loeser said. “But, realistically, it would not be an easy job.”
He said the money is needed prior to the closing of the loan at the end of the project.
“It is something this community has to figure out how to do,” said Cliff Mishler. “We need to look in our hearts and make it happen. It has to be done.”