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Debt-laden Monsour Medical Center attracts no bidders in tax sale

Sean Stipp | Tribune-Review
City of Jeannette Solicitor Scott Avolio attends the delinquent property tax sale of the former Monsour Medical Center in the Westmoreland County Courthouse on Monday, Sept. 9, 2013. There were no bidders.

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By Richard Gazarik
Tuesday, Sept. 10, 2013, 12:01 a.m.
 

The former Monsour Medical Center in Jeannette, burdened with millions of dollars in liens and back taxes, failed to attract a single bidder on Monday at a Westmoreland County tax sale.

Now it's up to the county and the city to figure out a way to acquire the Route 30 eyesore so the former hospital can be torn down and the property can be developed commercially.

Monsour owes more than $1.1 million in back taxes on the hospital property and more than $10,000 on four smaller parcels, according to county records.

City and county officials said they will ask the court to schedule a judicial sale, known as a free and clear sale, so they can acquire and develop the site for commercial use, which would generate property-tax revenue for the city, county and Jeannette School District.

At an upset sale, the minimum bid consists of all delinquent county, municipal and school district taxes and all Internal Revenue Service liens. All liens, judgments and mortgages become the buyer's responsibility.

At a free and clear sale, the minimum bid includes only the costs incurred by the Tax Claim Bureau. All liens and judgments filed prior to the sale date are divested upon purchase.

Out of 100 delinquent properties listed for sale in Jeannette, only one bid was submitted for a single parcel.

City attorney Scott Avolio said he didn't expect a bidding war over Monsour.

“The taxes and liens did not make it a viable piece of property for tax sale,” he said.

A number of creditors have filed judgments against the former hospital, according to county and federal court records. They include:

•IRS, which is owed nearly $7 million;

•Pension Benefit Guaranty Board, $1 million;

•Pennsylvania Department of Revenue, $1.2 million;

•Service Employees International Union, $978,000.

Among others with judgments against the hospital are the Unemployment Compensation Fund and a number of businesses.

A Monsour-related entity, Westmoreland Priority LLC, claims it is owed $35 million after the corporation purchased the hospital's debt in the early 1990s. The debt, along with overdue bond payments and interest, totals $35 million, according to court records.

Westmoreland Priority is operated by Dr. Howard Monsour; his son Michael, who was the last hospital CEO; and Dr. William Monsour Jr., who owns 6 percent of the corporation, according to bankruptcy court records.

Attorney Tim Andrews, who represents the Tax Claim Bureau, said any potential bidder for the property would be reluctant to cover the unpaid taxes and any liens.

Jason Rigone, executive director of the Westmoreland County Industrial Development Corp., said a “free and clear sale is probably the strongest candidate” to obtain the real estate, but “a decision has not been made 100 percent yet.”

“Buying the property is one thing. Cleaning up the site is a challenge in itself,” Rigone said.

A county study indicated it will cost at least $1 million to remove the large amount of asbestos in the former hospital and raze it. Officials are not sure where that money would come from.

“It's going to take financial support to make this site productive,” Rigone said.

If the free and clear sale occurs, the county would have to pay a transfer tax based on the assessed value of the property multiplied by the common-level ratio, he added.

“At the end of the day, we'd have to make a bid on this property,” he said.

The county faces the same problem the city did when officials tried to determine who is legally responsible for the deteriorated, tower-like structure, which poses a public hazard to motorists and pedestrians and has been targeted by vandals, trespassers and arsonists.

Avolio said the legal owners who are responsible for the property are either former trustees of the former Monsour Medical Foundation or the board of directors of the defunct Monsour Medical Center.

Serving notice on either entity would be difficult, he said, because most of the former directors and trustees have died or resigned before the hospital was forced to close in 2006.

“The corporations are the owners,” Avolio said. “The question is, do the final board members have any personal liability?”

Andrews said every creditor and living member of either board would have to be located and served notice of the sale.

If that can't be accomplished, the county could petition a judge to allow an alternative method, such as advertising in a newspaper or legal journal.

“The question is, who owns it? Who would accept service?” Andrews said. “They haven't had a meeting in a number of years.”

Richard Gazarik is a staff writer for Trib Total Media. He can be reached at 724-830-6292 or rgazarik@tribweb.com.

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