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Commissioners, hospital board disagree over land proceeds

Wednesday, May 21, 2003

It was not a meeting of the minds.

Clay County Commissioners and the former board of Clay County Hospital had a special meeting Tuesday to discuss how proceeds will be spent from the sale of 240 acres of Owen County land donated to the former hospital board.

Lewis Shafer willed the property to Clay County Hospital in 1973. It was 1977 before the hospital received the deed because family members contested the will. After all the coal was mined from the land and debts cleared from the hospital, the board decided it was time to sell the land and distribute the money for improved health services in Clay County.

James Deal, board attorney, commissioned an auctioneer to sell the property. Three buyers agreed to purchase the land.

Deal had requested commissioners sign deeds at their last regular meeting to allow buyers to purchase the land. The procedure was planned according to Indiana statute. Commissioners put off signing the deeds because they wanted to retain control over the proceeds.

Deal made overtures to the hospital board about charitable donations.

The board considered donating proceeds to the Clay County Community Foundation because the money would be endowed and perpetual funds would be available for future generations.

Deal invited Beth Tevlin, director of the Wabash Valley Community Foundation, to answer questions about endowment funds and restrictions to health services.

Commissioner Daryl Andrews was in favor of placing proceeds in CCCF for use of volunteer fire department training and equipment. Commissioner President David Parr said he thought the individual fire departments should receive the money. Commissioner Buddy Knox said the buyers needed to be satisfied with the deed signing or there would be no money to distribute.

Hospital board members present didn't have a problem with money going to CCCF or firefighters. But they did have a problem with commissioners assuming control over how to distribute proceeds.

"It doesn't do any good for us to bring our individual wish lists as to what we'd like to do with the money until we decide who has authority to determine how proceeds will be spent," Deal said.

He checked state statutes and in his opinion, the board has control. He also contacted the State Board of Accounts that said the money could either be placed into a separate fund or into an escrow account until a decision could be made.

Eric Somheil, attorney for the commissioners, did not have an opinion and requested time to investigate.

County Auditor Joe Dierdorf also contacted the State Board of Accounts and was told the money should be placed in the county's general fund for distribution through the county council.

Deal argued that the Owen County land was never on Clay County's books as an asset.

"I think we have a misunderstanding as to what this meeting was to be about," Andrews said. "The commissioners thought we were here to agree on possible distribution and the hospital board is here to discuss who has jurisdiction. I think the money ought to be put into a joint escrow account until we can make a determination. It's going to have to be a joint decision. Just because we agreed to the sell doesn't mean we have to accept it by signing the deeds."

Hospital board member Dr. Alan Hughes said, "I think by putting it in a joint account, we're assuming there's a joint decision. When commissioners appointed the hospital board, didn't they put trust in them to make good decisions?"

Deal asked commissioners what gave them the right to spend the board's money. He said the ultimate question is who has legal control of the funds.

"Sometimes in the legal system there are differing opinions and the same is true with the State Board of Accounts. I'm not sure how long it will take for me to form an opinion. But I do agree with Jim (Deal) that we don't want to rush through a decision tonight and I suggest we put the money into an escrow account until we do," Somheil said.

A motion was passed by Commissioners Andrews and Parr, with Knox voting no, to sign the deeds and put the money into a joint account. Mark Barnhart, hospital board member, moved to accept the commissioners suggestion, but that failed for lack of a second from either Hughes or Dr. Lois Moss. J.D. Burk wasn't present at the meeting.

Les Harding, county council president, said, "I'm sadly disappointed that greed and pride have played such a big role in this meeting tonight."

Parr asked if anyone could see any alternatives.

Somheil suggested, with mutual agreement of legal council over control over the funds, that the council would revert full and complete control of the joint account to the hospital board. After further discussion, his suggestion was refined. It was unanimously agreed that money will be put into a hospital board interest-bearing escrow account with funds not to be withdrawn until both parties reach an agreement over control or a declaratory judgment is made.

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