Fulton to Press its Hospital Property Claim in Bankruptcy Court

Fulton city lawmakers voted Monday to ask a judge to add the city’s property claim to the A. L. Lee Memorial Hospital bankruptcy case.

The city may own the land beneath the former hospital, which is now an urgent care center operated by Oswego Health. A deed signed when the city turned the hospital over to a private non-profit in the 1970s seems to say that if the hospital ever stops being a hospital, the land reverts to the city.

The hospital shut down last year and filed for bankruptcy protection.

The deadline to file a claim with the bankruptcy court has passed. However, Mayor Ron Woodward said that a bankruptcy lawyer advised the city that a judge could allow the new claim to be added after the deadline.

“If we had known last fall (that the land may belong to the city), we’d have filed a claim,” said Woodward after the Common Council’s 5-0 vote. (Alderwoman Kim Roy was absent.)

In a closed door session with city attorney David Hawthorne, lawmakers considered other options, including asserting the city’s property right by filing an eviction notice or by suing.

“We don’t want to do that,” said Woodward, because it would send the wrong signal to Oswego Health as it attempts to embark on a $22 million dollar renovation of the former hospital to expand outpatient services there.

“If you evict the landlord, you evict the tenant,” said Woodward.

If the bankruptcy court accepts Fulton’s request, one potential problem is taken off the table. “The Council feels that, after listening to the public, that Fulton deserves something for that property,” said Woodward.

The city would be paid for the property from the proceeds of the bankruptcy, and not by Oswego Health, which has avoided the question of whether it would pay for the land if it was required to move the project forward.

However, the Council’s decision does not give Oswego Health what it wants. The non-profit’s CEO, Ann Gilpin, asked city lawmakers recently to end any claim to the land so it can move forward with its renovation.

About $17 million of the renovation will be paid for by a state grant fund set up to deal with the wave of hospital closings and cuts ordered by the Berger Commission and ratified by the Legislature. The rest will come from Oswego Health.

The health care corporation has not received the grant yet and the delays have cost it most or all of this summer’s construction season.