Saturday, September 27, 2008

Porter Starke Services - new building on hold

Due to problems in the bond market, Valparaiso based Porter Starke Services announced yesterday that it would postpone indefinitely the construction of an 8,000 mental health services building in Portage. There is no doubt the services are needed, with clients increasing this year, but the bond market has rapidly changed and caused problems for development financing.

CEO David Lomaka suggested possibly working with the county to access funds, perhaps in the form of a loan from the hospital proceeds or interest, so the building could still move forward. Any council or commission members willing to talk?

Here's the article from the Times:

Porter-Starke postpones building plans

PORTAGE | The declining U.S. economy has hit one local mental heath provider's plans to expand.

Porter-Starke Services, Inc. announced Friday that it has put on hold its plans to construct an 8,000-square-foot facility on Willowcreek Road south of U.S. 6.

Bob Franko, vice president of marketing and development, said the company was finalizing terms of a bond to finance the construction when the financial markets experienced a downturn. The changes in the market affected the terms of the bonds and has made it no longer financially feasible for Porter-Starke to meet its plans to begin construction this fall.

Franko said there still are many unanswered questions about the future of the planned facility, but there are no plans to remove services from Portage. Porter-Starke presently operates out of a rented facility at 3349 Willowcreek Road.

"We don't know what our plan B is going to be at this point, but pulling out of Portage is not an option," said Franko, adding that the board's audit and finance committees will meet to assess the situation before any decisions are made.

One option may be to turn to county officials and explore the use of the interest proceeds from last year's sale of Porter hospital, said David Lomaka, Porter-Starke president and CEO.

Lomaka said officials have already discussed using the funds for inpatient psychiatric unit and that there are several other issues that are in the need of funding sources.

"We want to talk to them about using some of the money for bricks and mortar or look at a different way of financing. Our hope is to start to brainstorm with them," Lomaka said.

Ironically, Franko said, the postponement of the expansion comes at a time when more people are in need of mental health and addition services. They, too, are facing financial hardships.

Lomaka said client numbers have grown 7 percent and will exceed 8,000 clients this year.

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