Mercer County commissioners were expected to vote this morning on an $8.7 million bond agreement that would refinance the debts of Woodland Place, the former Mercer County Living Center.

The deal would give the Coolspring Township nursing home, which the county sold to a nonprofit group in December 1997, more fiscal breathing room, Commissioner Olivia Lazor said at an agenda meeting Wednesday.

It also would turn a long-term county debt into a large chunk of up-front cash, but Mrs. Lazor said the bulk of that money would be invested for the life of the 30-year bond.

The county, with a stable bond rating, fronted the money, and the Grove City Area Hospital Authority will serve as a conduit for the funds.

Woodland Place owes the county about $3.5 million and First National Bank of Pennsylvania about $4.3 million, Mrs. Lazor said. Both would get that money up front as part of the deal.

Mrs. Lazor, who serves as the commissioners' liaison on the Woodland Place board, said at least $3.1 million of the county's up-front money would be invested, in case the nursing home can not make payments over the life of the bond. Another quarter-million dollars would be put into the county's budget to cover the $250,000 in anticipated revenue from mortgage and interest payments from the home, she added.

Of the remaining money not going to the county or bank, about $200,000 would pay for fees and services, including money to bond-selling company A.G. Edwards, based locally in Hermitage. Also, $600,000 would go toward a Woodland Place debt-service reserve fund.

The home owes the county on a $3.8 million mortgage note dating to early 1998 and the bank on a pair of loans totaling $5 million for renovations since, records indicate. Mrs. Lazor said she has lobbied Harrisburg for a grant of between $3 million and $4 million for another renovation at the home.

Under the bond agreement, the county "pledges its full faith and credit to the repayment of the bonds" by Woodland Place, according to a report by Standard & Poor's. S&P gives the county an A minus bond rating. The rating is good -- third-best of four investment-grade ratings.

County Controller Tom Amundsen said Wednesday he has concerns about the deal. Although he was glad to hear commissioners had decided to invest most of the up-front money and not use it for short-term uses, he questioned whether the move would damage the county's bond rating or hamper its ability to borrow money. He said he is concerned about the prospect of the home not being able to make payments over the long haul.

"I am concerned we could own it again in four to five years," Amundsen said.