Stephenson County board approves nonbinding letter of intent with Serenity Estates for Walnut Acres

The Stephenson County Board voted 10-5 Wednesday to approve a nonbinding letter of intent (LOI) that gives Serenity Estates a 30-day window of exclusive negotiation for purchase of the Stephenson County Nursing Center, commonly called Walnut Acres. The motion was made by Mrs. Baker and seconded by Mr. Whelan.

The LOI does not obligate the county to sell, State's Attorney Larson told the board; he said the only binding obligation is a short exclusivity period during which the county will not negotiate with other buyers. The LOI will return to the board only if Serenity submits a formal purchase offer for approval.

Why it matters: Walnut Acres is the county-operated long-term care facility for Stephenson County and surrounding areas. County officials said the home is operating with large unpaid bills and overdue federal filings that threaten Medicare reimbursements, while opponents of the LOI urged a countywide referendum and more time to vet buyers. Supporters said the county cannot sustain the facility long term and needs an operator with capital and clinical experience.

Board debate and public testimony centered on legal, financial and operational risks. More than a dozen residents, family members and workers testified during the public-comment period, many urging the board not to sell and to insist on a public referendum. Representative remarks included:

- “Please vote against this or postpone it so you can investigate further,” said Christopher Kluge, a Freeport resident who told the board he had concerns about terms that would transfer operations and accounts receivable to a private buyer while leaving outstanding county bills with taxpayers.

- “We’re against privatization,” Cody Dornis, an AFSCME Council 31 staff representative, told the board, citing Medicare.gov star ratings and regulatory citations at two Serenity-operated homes. “Can this community be guaranteed that profits will not come over care?”

- “If you sell Walnut Acres and it becomes private, the local Medicaid beds shrink,” said Jody Koss, a resident and longtime local advocate; she urged the board to defer the LOI vote.

Serenity Estates principals Dr. Jennifer Daugherty and John Coglini presented their company’s credentials and turnaround experience. Daugherty, who identified herself as a licensed nurse with a PhD in strategic management, said the firm specializes in distressed skilled-nursing facilities and pledged to retain staff, keep Medicare and Medicaid bed certifications, invest capital in the building and raise staff wages. Coglini, a registered nurse and licensed nursing-home administrator, described prior work with state monitors and with facilities in financially distressed situations.

Legal and financial context: Several speakers and board members cited a state statute they say requires referendum approval before selling a publicly erected county home; multiple residents urged the board to put a sale to voters. State’s Attorney Larson said he would revise and circulate a written opinion to the full board addressing the statute and the effect of a later referendum before any final sale vote. He also recommended outside counsel for sale negotiations if an offer is made.

The board also heard new federal compliance and fiscal notices. Chairman Helms read a June 9 letter from the Centers for Medicare & Medicaid Services (CMS) saying the county had not filed the facility’s cost report for the year ending Dec. 31, 2024; CMS said interim Medicare payments were suspended until an acceptable cost report is received and warned of a potential overpayment of $453,893. Helms said the facility’s administrator was working to correct the missing report.

County staff and trustees reported other fiscal figures during the nursing-home discussion: current census was 45 residents, MatrixCare’s AR cleanup project would require write-offs totaling $327,436.13, and the county’s outstanding bills related to the nursing center exceeded $1.8 million, officials said. A broker report distributed to board members in May estimated a maximum market valuation around $2 million, but the board did not have a formal appraisal or a required sales price in front of it when voting on the LOI.

What the LOI does: County and board attorneys described the LOI as largely nonbinding. Larson said the county’s only binding promise in the LOI is not to negotiate with other parties for 30 days; a separate purchase agreement, title work, appraisals, and IDPH (Illinois Department of Public Health) licensing approvals would be required before any transfer of ownership could occur. Board members discussed holding sale proceeds in escrow pending IDPH approval.

Board members split on strategy. Supporters argued the county should not continue operating a facility that is financially stressed and that a private operator with capital and clinical staff could stabilize operations. Opponents said the public had voted originally to build the county home and that a sale raises legal and equity questions that should be decided by referendum. Several members asked for a town-hall-style public session and for references and site visits to Serenity’s current properties in Morris and Lincolnshire.

Votes at a glance (select outcomes recorded at the June 18 meeting): - Letter of intent with Serenity Estates for Stephenson County Nursing Center (Walnut Acres): approved 10-5 (no votes: Bush, Hadley, Madero, Newton, Williams). Motion by Mrs. Baker; second by Mr. Whelan. The LOI grants 30 days of exclusive negotiation and is nonbinding. - Collective bargaining agreement: approval of agreement between Stephenson County Highway Department and United Auto Workers: approved unanimously. (Motion by Mr. Brandt; second Mr. Jogerst.) - Employment agreement for director of building and zoning: approved unanimously. (Motion by Mr. Frick.) - Extension of special-use permit for TPE Illinois ST 78 LLC: approved (one no). (Motion by Mr. Newton; second by Mr. Madero.) - Ordinance regulating camping on county-owned property (permitting and enforcement): approved (one no). (Motion by Mr. Jogerst; second by Mrs. Hayes.)

What comes next: If Serenity or another bidder submits a purchase offer the board approves, the transaction would include standard due diligence: title and boundary searches, an appraisal or other means to establish fair market value, and IDPH licensing review. State’s Attorney Larson said he would send a revised written opinion addressing the referendum question and legal risks before any final sale vote. Larson also said the county’s insurer and retained counsel would likely defend any lawsuit challenging a sale.

Ending note: Supporters and opponents asked the board to move cautiously. The LOI gives Serenity Estates a limited period to conduct due diligence and present a formal offer, but multiple legal, licensing and fiscal hurdles remain before any transfer of the county-operated nursing center could be completed.