More on the Certificates of Obligation in Somervell County (Glen Rose) and the GRMF Lease
More on the Certificates of Obligation in Somervell County (Glen Rose) and the GRMF Lease
27 February 2009 at 6:29:18 PM
One of the questions I've had regarding the 14.5 million dollar Certificates of Obligation that Somervell County passed last year around April 2008 was, since Somervell County owns the land, buildings and equipment, what agreement was made with Glen Rose Medical Foundation dba Glen Rose Medical Center to pay back the money? As we've said here before, the agreement for the CO was made between Somervell County and Southwest Securities and a property valuation change in the fall covered the payments to be made. That means that regardless of whether GRMF actually paid back any money, the payments by Somervell County are covered by the taxpayer. But what I didn't understand was just how and what type of agreement was made with GRMF to pay back Somervell County. As noted here in the last couple of days, GRMF went to get an earmark from Chet Edwards and one of the conditions of getting free federal money was that there be non-federal money going for the project of hospital expansion.
Anyway, today I went down to the courthouse and, with the help of fhe great clerks there, got a copy of the 3rd addendum to the lease for GRMF. As we've noted before and have posted on the site, the orignal lease was for $1.00 per year (also $1.00 per year for the nursing home.). Here's the PDF.
Notice on page 1 that the
financing of the Expansion is being provided by the County through the issuance of Certificates of Obligation..
a portion of the cost of the financing will be reiumbused by the Foundation to the County on the terms set for therein...
Nothing herein shall obligate the County to expend funds in excess of the available proceeds of the COs for the Expansion. If the cost of the Expansion exceeds the available proceeds of the COs, the Expansion will be re-designed to come within that budget unless the Foundation elects to pay the diffference to retain the original design.
When the expansion would be done, it would become part of the lease that GRMF has with Somervell County. Section 3 , on page 3, of the addendum says that the additional rent is spelled out in section 4. Section 4, in turn, points to Exhibit A, last page of the document. That would be the Additional Rent plus the one dollar they are paying under the other lease agreement. Page 4 has a lot of the conditions for the Foundation.
Now on to Exhibit A. the total amount due in Rent is 28,764,625.00
the first payment starts in FYE- 2010 and the rent payment is 750,000.00 This goes on until 2048 at which time the final payment is 264,625.00.
My question is this. If, as Gary Marks has been saying, the GRMC is losing money, how is he to make those payments to Somervell County? And if he doesn't, does Somervell County terminate the lease? Also, what type of auditnig is being done now to ensure that he is living up to the qualifying terms of the lease, such as not using any part of the CO money for stuff like skyboxes, airplanes, etc? Or heck, even as mundane items as regularly gnoshing at Rough Creek Lodge?
Wow, all this is interesting! Ihope all of this type of info is still around next year when GRMF will be seekingtaxpayer bailout again...right in time to pay the first $750K. I wonder if the unmentionable" will come up? (you know, the unspeakable option of letting a serious leasor coming in and pay fair rent to the county and actually make a go at turning a profit) So far, all I see is an apparent "club" made up of the entire Comissioners Court and GRMF. There's a lot of protection going on for each other in the club. They are not interested in primarily serving this community, rather serving each other (especially benefitting GRMF).
The lessee needs expansion of the facility and contents to increase service and revenue. The lessor agrees to loan the money (at a hefty interest rate) which is to be paid back to the lessor, who receives considerable increase in the value of its asset and inventory as a result of the expansion, as well as a significant profit. If the lessee defaults, the lessor still owns its asset with improvements which it can then re-lease to another entity, if it chose. Whether or not an alternative entity managing GRMC would be an improvement is debatable and, in my opinion, very risky.
Most healthcare systems are losing money this year and GRMC is apparently no exception. My guess is that Mr. Marks' concern about finances has something to do with the expansion and the certificate of obligation in this increasingly difficult climate. GRMC's financial operations have been good until recently, have they not?
It seems to me that the burden of risk and performance is on GRMC and that the county can't really lose financially.
I do not agree with avoter that 'these people' are not interested in serving the community.
I agree that the county can't lose financially but at least part of the reason for that is that the county raised property evaluations last year to cover the CO. According to Charley Thomas, who I heard speak at the commish meeting I went to last, those CO payments come first over anything else that involves the counties, such as salaries. I don't have any doubt that the payments are covered anyway, and because Somervell County is the entity that actually owns everything, it will be fine. However, there is an expectation that GRMF pays back what was loaned to them through the COs. And secondarily, since GRMF is a private non-profit, I believe they should open up their financials and books to prove their premises that they are either doing well financially or doing poorly, before next year when both their first payment comes due and the supposition that they will again pursue a hospital district comes up.
It's clear that GRMC must launch a public information campaign to clarify the many questions people are having and to educate our citizens about the intricacies of its relationship to the county and of health care, in general. A lot of counties here in Texas have created hospital districts and I assume this can be a good thing.
Question, Salon: how do you know property appraisals were raised, in part, to cover the CO?
Two reasons. One is that I was told by Mike Ford that Somervell County was covering the CO. Second was that I had clipped the public hearing held on the budget -hub remembered it as raising taxes but I was told by one of the county clerks that to be precise it wasn't raising taxes but raising the property valuation rate.
What I would actually like to see is a town hall meeting to discuss the hospital in general, in which GRMC/GRMF participates but does not lead it. I haven't spoken to one person who is against a hospital district per se; have to some who are against higher taxes; have to some who don't trust Gary Marks. Since Somervell County has a vested interest in making sure a hospital remains here, and owns all the assets, seems to me that a town hall meeting would be more appropriate than one led by the group that is leasing. I think more PR from them would backfire without some opening up of the books and financials, as well as details about how much procedures cost, etc,.. and even more than that, I continue to believe one of the questioners at the second town hall I attended had a very good question, which was evaluating the direction of the hospital and its needs. Because I'm with you that having a hospital is a good thing, but the way this particular hospital district election was approached, as well as the runup to it, is highly flawed.
Here's the video of what I'm talking about-you must have missed the several times I've posted a link to this in the last few weeks. When I first saw this and recorded it, I didn't realize that this was to cover the CO, my attention was drawn by the one guy who made a comment.
When I moved here in 1984, there was no Expo or golf course, no amphitheater, soccer fields or city parks, and no intermediate school. Land sold for $400 an acre and Fossil Rim was a private ranch. There was not a single development in the county. The hospital had one room for emergencies and its laboratory was two small, closet-sized rooms. There was one doctor.
One more thing on the property valuation rate which is not the market value. If your home is appraised to be worth, say, 100,000 and you are paying 3 cents per $100 of valuation, that is a different amount of tax than, say, 4 cents per $100 of valuation. You remember how the hospital district petition originally wanted, for example, to have a cap of 75 cents per $100 of property appraisal value and, because of the stink raised, it got changed on the petition to 10 cents per $100. The amount of property tax paid is separate than what your appraisal value is, and in fact, may be a good reason to want to challenge what one's home or property is worth because it would mean the difference in how much tax paid. As I have said before, the video clearly shows that the hearing was about raising the tax rate to cover the CO. Maynard says that is statute requires them to set a tax rate that will cover the budget, with addtional tax rate of .0278 to cover the bonded indebtedness of the hospital expansion (the CO). My only point about the man in the audience is that when I first recorded this, I was listening to his comments rather than paying attention to the fact that hearing was to raise rates to cover the 14.5 mill-in other words, I didn't make any connection for that at that time.
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