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Not So Fast…Carmi City Attorney Clarifies “Relief” to Phoenix

It’s official.  Phoenix Rehabilitation and Nursing is no more.  While the ink was still wet on the transfer forms, WROY/WRUL News took the opportunity to check in with Carmi City Attorney Greg Stewart to learn more about the wording of the council’s minutes and the release of “a certain area” of the hospital property.

After speaking with Stewart, what we’ve learned is that Phoenix has NOT been relieved of its mortgage and still owes the $400,000.  Stewart also says Carmi isn’t writing off the now $104,398.91 owed in past due utilities for the Nursing and Rehabilitation Center.  There’s certainly a good chance the city won’t ever reclaim it, but Stewart says they’re definitely not just writing it off.

Seeing maps with aerial footage of the property helps to better understand what Stewart says the city needed to do in order to facilitate the sale.

Phoenix Sale - Land Map Explanation
The different tracts are labeled. The pieces highlighted in yellow were part of Tract 1 (The hospital) which the mortgage from the City was for. The sale of Phoenix was contingent on getting those sections out from under the mortgage.

What we have with the hospital property is 3 tracts of land.  The hospital itself and it includes a section of the east wing of the nursing and rehab center, plus you have the remainder and bulk of what was Phoenix Rehab and Nursing with the paved portion of parking.  Finally, there’s the soccer fields and the gravel parking area.

The City of Carmi mortgaged the hospital property or what we’ll call Tract 1.  The Nursing and Rehab property (what we’ll refer to as Tract 2) and the Soccer Fields (Tract 3) were simply attachments to the original mortgage.  Phoenix would subsequently mortgage the nursing and rehab property (Tract 2) to a combination of 4 banks and the CDC.  Within the last 3 weeks, those banks and the CDC did in fact relieve and walk away from the mortgage they held on Phoenix Rehab and Nursing according to Stewart and to the amount of somewhere between $200,000 to $300,000.  They did so in order to help facilitate the sale.

The problem for the city and Phoenix came in when the Foundation found a buyer for the Nursing and Rehab facility.  A portion of the facility was within the hospital property (Tract 1) as well as an area of parking and a few small buildings they needed and utilized for storage.  Therefore, it became necessary for the city to make a partial release of the property to facilitate the sale.

Stewart and Pollard maintain they’re holding Phoenix accountable for the entirety of the amount owed, but in return for redrawing the lines to sell the nursing and rehab facility, Stewart said he wanted the soccer fields (Tract 3) back which Phoenix had little choice but to agree to.  The $100,000+ in utilities owed by Phoenix isn’t being relieved either.  Rather, that debt will stay with Phoenix, allowing the new buyers to start at a zero balance on their utilities.

The sale of Phoenix Rehab and Nursing officially went through on Monday to an LLC formed on November 2nd and made up of Metz Holdings, Boruch Sheps, Chaim Millman and Avraham Erbilch, all of New York at a price of $200,000.  Those dollars won’t go to the Phoenix Foundation however.  That entire price along with additional monies will be sent to the government in their effort to recover more than a quarter of a million dollars in unemployment taxes that were collected by Phoenix under the administration of Lil Fortner, but without premiums paid dating back to 2009.

The new Carmi Manor Rehabilitation and Nursing Center allows the approximately 33 residents and 50 employees a fresh start as well and that was important to the city according to Stewart.  He says if the city hadn’t made this work, it’s entirely possible, those residents would’ve had to be moved, maybe out of the city or county and the employees would’ve lost their jobs.

The Phoenix Foundation does still exist, but they have no income or potential for income with the sale of their Rehab and Nursing operation.  The community is still out in excess of $300,000 in contributions, donations and pledges.  In fact, that number may be much higher, but the records or lack of records will most likely never allow us to know exactly how much Carmi generously gave with nothing to show for it.

It now seems likely the City will eventually foreclose on the Foundation.  If that happens, the city is in a better position to attempt to sell the hospital property (Tract 1) with an operating business located right next door instead of an empty facility.

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