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Lockport Memorial Hospital lost between $500,000 and $550,000 on its operations in 2000, President and Chief Executive Officer Clare A. Haar said last week.

Although a formidable figure, it's a big improvement from the $4 million loss the hospital recorded in 1999.

The books for 2000 aren't closed yet, but Haar told the Common Council last week that the hospital's financial turnaround is progressing steadily.

In May 1999, the 134-bed hospital came within a few hours of filing for bankruptcy, and only an emergency infusion of federal aid prevented that.

Haar made her statements after a closed-door session with the aldermen. The Council called Haar in to complain about the hospital's $118,000 purchase of two homes adjoining its East Avenue property.

Although Haar won't say what the hospital wants to do with the property, some in City Hall believe the plan is to tear the houses down and expand the hospital's parking lot, which is often full.

Haar said, "We did not come up with $118,000 and put it down." She said the seller, Dr. James Alrutz, a retired physician, is holding a five-year mortgage on the properties.

The aldermen were annoyed because in December 1999 they gave the hospital a three-year grace period during which time it did not have to make any payments on a debt of almost $1 million the hospital still owes the city on a second mortgage taken out in 1979. They did so because the hospital was in financial peril.

"I felt you and the city taxpayers became business partners," Alderman Mark J. Dudkowski, D-3rd Ward, told Haar. "I don't believe this was done correctly."

He said at the very least, the Alrutz deal hurt the city because it took two homes off the tax rolls. Lockport Memorial is a not-for-profit entity and pays no property taxes.

It appears by the Council's action the hospital doesn't have to pay the city anything until March 2003.

She said, "We fully intend to meet those obligations as they become due."

When the extension was agreed to, the hospital had made only one of its $15,295 monthly payments since 1997.

Under the deferment plan, the city mortgage accumulates no more interest until 2005, and then only 1 percent a year. The former interest rate was 9 percent.

Starting in March 2003, the hospital's monthly payment will be $8,733. That will increase to $13,411 in March 2005 and continue for five years, at which time the debt is to be paid off.

Haar said the hospital had long been interested in the property but did not actively seek it. She said Alrutz approached the hospital with an unexpected offer to sell.

"Graciously, he approached the hospital first," Haar said. "We could not be assured it would be available a few years later. . . . (Lockport Memorial) is judicious in its expenses, but we must continue to position ourselves for the future."

Haar said the hospital did not intend to offend the Council. "The better the hospital does, the more in line we will be to meet our obligations," she said. "There may be future opportunities the hospital may have to take advantage of. Can we keep you informed? Certainly."

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