Plans for a proposed 60,000-square-foot, $15-million mixed-use rehab center on prime waterfront property in downtown Oak Harbor were killed this past week by concerns over the proposed manager’s financial health.

Omega Healthcare Investors, a real estate investment trust in Hunt Valley, Md., was preparing to pay $1.5 million for long-vacant acreage between Southeast Pioneer Way and Southeast Bayshore Drive.

Late last week, however, Omega suddenly withdrew from the project, said Jim Roe, president of Roe Family Facilities, Omega’s development partner.

Omega explained to Roe this week that it had withdrawn because of concerns over the financial stability of his operations.

Specifically, Omega told Roe that it was worried Medicare reimbursements to facilities that Roe operates in Skagit County are too low, jeopardizing his bottom line, Roe explained.

Roe said his Skagit County rates have been sinking for three years, resulting in a Medicare underpayment of $1.5 million since October 2014. All the while he has tried to compel Medicare to raise its rates, even enlisting the help of his U.S. senators.

So far, though, no fix has been implemented.

“Omega is worried that, if this inequity is not repaired, I may not be financially strong enough to sustain the short-term losses it may take to open a new building,” Roe said.

“This is their stated reason, and I believe them. There’s a dark cloud hanging over me.”

Omega didn’t return calls seeking comment.

While Omega is no longer interested in underwriting the planned short-stay, post acute-care rehab center in Oak Harbor, Roe said he still is.

“I’m disappointed, but I’m still committed to the idea,” he said. “I’d still like to see this happen in Oak Harbor, but without the backing of Omega.”

As to how that might happen, he said, “that’s mine to figure out. I will be talking to some interested parties. This makes me want to do the project even more.”

The rehab center, dubbed Aviator Health and Rehab, would have included retail and office space as well as 60 short-term-stay patient rooms.

Roe Family Facilities currently runs Fidalgo Care Center, Rosario Assisted Living and San Juan Rehab & Care — all in Anacortes — and Shuksan Healthcare Center in Bellingham.

“I’m sorry they decided to pull out, because of the jobs the project would have brought to Oak Harbor,” said Barbara Spohn, Oak Harbor’s economic development director.

“But the city is working on other possibilities.”

Spohn declined to elaborate on what those possibilities are.