I had thought that, since Somervell County no longer budgeted for the 14.5 Million CO that Mike Ford illegally voted for, that they had actually transferred the paper debt to Somervell County Hospital District's name, making them the ones now responsible to pay that back. Not so. To be more precise, Somervell County still has the bonds, and Somervell County Hospital District is responsible to pay the money BACK to the county; if the hospital fails to pay, it could cause Somervell County to get a lowered bond rating since they hold the notes.

One of our alert readers was listening to the audio of the joint Somervell County/Somervell County Hospital District meeting from last week and heard the attorney say that the district owes the county around 14 million dollars.

AUDIO

If the county actually still has debt in their name, then they are the ones ultimately responsible for paying it. Reminds me of cosigning on a loan with your 18 year old son. You might tell your son he has to pay back that car payment, to you or to the bank, but if he doesn't, who's responsible? You.

Here are the relevant documents showing that the Certificates of Obligation remain in Somervell County's name.

Here's the agreement from 2008 with Southwest Securities

Here is the Series 2008 Certificate of Obligation Order and Exhibits

Here is the maturity schedule of payments.

So what does the Somervell County Hospital District have to do with this, since even now the CO's are not in their name but Somervell County? An Asset Transfer agreement to pay back the county

P.S. To put a fine point on this, Mike Ford, when commissioner, had no problem, even when told by Judge Maynard that they shouldn't have a vote on 14.4 million BEFORE a required IRS hearing, in pushing ahead to fund his Pet Project, the hospital. Remember that Glen Rose Medical Center was then a private hospital leasing the building and equipment FROM Somervell County for, like, 10 bucks a year, and was supposed to start paying BACK this money. Instead, GRMC gave up the ghost and put the hospital into county hands after the first attempt to foist it onto us as a hospital district failed. (One commissioner told me he thought the whole thing should have put up for a county-wide vote before putting us into this kind of indebtness). It is pretty rich for Mike Ford to whine about whether the county would get BACK the assets, etc, should the Hospital District be dissolved, when SOMERVELL COUNTY OWNS IT ANYWAY AND IT IS DUE TO HIM THAT WE DO.

Update 2/1/2016. Verified with Brian Watts, Somervell County Auditor, that the Asset Transfer Agreement from 2013 still applies.Short answer: Yes.  

From: Brian Watts]
Sent: Thursday, November 14, 2013 2:39 PM
To: 'Dxx Hxxxxx'
Subject: RE: Open Records Request- Nov 11 2013

The Bonds remain in the name of Somervell County.  Only the holders of the bonds could allow a name change, and as such, the County became a de-facto guarantor of the bonds and would be liable should the Hospital District fail to make the required debt service payments.

The County filed a “Material Event” notice with the SEC in accordance with SEC Rule 15c-2-12 informing the bond holders that the hospital district “assumes any outstanding indebtedness incurred by a county, municipality, or other governmental entity in which all or part of the district is located in providing hospital care for residents of the territory of the district before the district’s creation” which is allowed under Section 286.073(a) of the Texas Health and Safety Code.  That notice was filed with the SEC on 6/14/2013.

Probably more info than you wanted, but wanted to be complete.