Cordova: Hospital won't burden taxpayers

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Statements about Belen's hospital project by a commissioner and developer aren't sitting well with some city of Belen officials.

Reading from a prepared statement at meetings last Tuesday, Darin Miller, CEO of Miller Architects, said the decision by the county commission to sign a joint powers agreement with Belen to partner on its hospital project has sent a clear message that they don't support a privately funded facility such as Miller's project in Los Lunas.

On Sept. 19, Valencia County commissioners signed a JPA with the city, obligating the mill levy, which is estimated to be $22 million by the end of its eight-year lifespan in 2014, to the development of "what appears to be a county-owned, taxpayer-supported hospital in Belen."

"They have made it impossible to immediately proceed with the facility we have outlined in this presentation," Miller said.

In an interview Thursday, Belen City Councilor Jerah Cordova said Miller's contention that the Belen project would be "publicly funded, top to bottom" was not accurate.

Cordova said the city and county have to go through the process of putting out the request for proposals and any and all providers were welcome to respond.

"It may be someone very much like Miller, or Miller itself, that will result in this being fully privately funded," Cordova said.

Both Cordova and the city's economic developer, Steve Tomita, emphasized that public funding in addition to the current mill levy was absolutely not the direction the city wanted to go with the project.

The JPA allows for potential providers to request bond funding from the city and county, but the agreement in no way obligates either entity to say "yes."

"We don't want that," said Tomita. "If there is a for-profit entity interested, they will have to provide the same services a nonprofit company would, like indigent care. That will be mandated."

Attorneys for both entities are currently working on the RFP, Cordova said. He continued, saying they will do the evaluation of the proposals and final scoring is still undecided at this point.

The JPA says that as part of the Health Care Facilities Contract RFP, offerors have to provide a financing plan for the construction and equipping of the hospital and address whether the issuance of bonds by the city or county will be "requested or required by the offeror …"

In an interview last month, Cordova said the city had a letter from Chicago-based bond company Stern Brothers explaining exactly what the company would need to finance the building of a hospital.

The councilor said he couldn't remember all the requirements, but did say one was that Stern Brothers needed a commitment of the mill levy money.

"They want to see the county is invested and the city is supportive as well, that all the players are in place and ready to go," Cordova said.

Stern Brothers has previously offered financing up to $50 million to other entities trying to build a hospital in the county.

The other point Cordova felt Miller misrepresented was the idea that the hospital project in Belen had not been given enough thought and consideration.

"We've been working on this for what, six years? Obviously this project has been well considered," Cordova said. "The site was put forth in 2010 and the feasibility study released in 2011. We began talking about the JPA around the same time.

"There are two options and one of them will be completed to the end," he said. "We are confident it will be ours."

The councilor did voice one concern about Miller's project. Cordova said that in all the presentations, the idea that the hospital was feasible was advanced, but with the caveat that the company still needed to draft its business plan.

"That's an important component. Shouldn't that already be done?" Cordova asked.

According to the JPA, the county needs to acknowledge that the Belen site is feasible either by an internal review or by hiring a professional consultant, then go through the process of issuing a request for proposal for a developer/provider for the project.

Once a developer/provider is selected, both entities must approve a contract with the company.

Commission Chairman Donald Holliday said he was very comfortable with the terms of the JPA between the county and the city.

"Except for turning over the mill levy money once there is a certificate of substantial completion, neither the residents or the county are on the hook for more money," Holliday said. "I have been assured this is not going to cost the taxpayers any more other than the existing mill levy.

"There have been rumors and propaganda otherwise. And that is all it is as far as I am aware. If anything changes in that regard, we have to take another look at that," he said. "I am going to be first one there asking questions, saying this is not what I agreed to."

During discussion before the JPA was approved, Commissioner Ron Gentry offered a "compromise" amendment to the agreement, calling for the county to equitably split the mill levy between qualified facilities.

Holliday called for a vote on Gentry's amendment to the JPA. Gentry and Commissioner Lawrence Romero voted yes, while Holliday and Commissioner Georgia Otero-Kirkham voted no. Commissioner Mary Andersen remained silent.

On the apparent 2-2 split, Holliday declared the motion defeated and called for a vote on his original motion to accept the JPA. He, Otero-Kirkham and Andersen voted in favor, while Gentry and Romero voted no.

Holliday commented that if the county split the money, it was "asking for trouble."

At Miller's presentation in Rio Communities last Tuesday, Gentry said the mill levy was intended to be a "kicker" to start up operation and maintenance of a hospital.

"It's going to generate about $22 million and that's it. We can't do it again unless we go back for a vote. And if we do, it's going to be defeated 10 to 1," Gentry said. "All this time, it's been the carrot instead of the plum; it's been used the wrong way."

He continued, saying the JPA with the city was "ill fated" and wouldn't stand legal muster in the end.

"This commission has never supported a county hospital. We have no expertise, no business doing this," Gentry said. "I think the city was very misguided to think it can throw in with county. We sign this agreement and a week later announce we're broke."

Gentry then addressed Miller directly.

"This double deal, I didn't do it, Mr. Romero didn't, but some others did. I urge you to stay the course. We will support you as a business venture but I don't support the county taxpayers having to put this together," he said.

Miller's first involvement with Valencia County was in 2006 when his firm was hired by Covenant Health Systems to master plan a new hospital for Valencia County.

Citizens approved a mill levy in 2006 to support that hospital, but over the past six years, many attempts to pursue the hospital have been thwarted by opposing forces within the community.

In January, Miller Architects took another look at the project, and in March asked the village of Los Lunas to sign a six-month agreement of confidentiality and exclusivity, while the firm undertook a pre-development study at its own cost for a privately funded hospital in Los Lunas.

In April, the village sent a letter to the commissioners requesting they defer any action on obligating the mill levy funds until Miller concluded its study and was able to show what a difference county support and the mill levy funds could make in providing needed health care in the county, Miller said.

The 110,000 square foot VCRMC project budget is estimated at $55 million with $31 million in construction, $11 million for equipment, $6 million in operating start up costs, $5 million in fees and financing costs, and $2 million in contingency for any unexpected occurances during design and construction.

The 23-acre site west of the Los Lunas Walmart between Sand Sage and Los Morros roads that the firm has a verbal agreement to purchase was due to the inclination of people to travel as quickly as possible to the largest metropolis in a medical emergency, Miller said.

It will create 500 local construction jobs, and 450 full-time hospital jobs.

The hospital budget is estimated at $40 million a year, including $14 million in salaries and benefits.

Miller calculated there are about 46,000 people within 10 miles of the site, and estimates that within a 5-mile radius the hospital would capture 70 percent of those patients.

The high quality facilities Miller develops have the luxury of not having to pursue funding, he said. Instead, they attract investors who want to be involved in these types of facilities

"So, we have two commitments to fund this facility, from two individual companies that want to fund 95 percent of it," said Miller. "And 5 percent of that funding always comes from Miller, so we always have some skin in the game, for lack of a better word."

Negotiations with an operating partner and contracts with the investors are in process with plans to break ground for construction in April or May.

A full move-in date is expected in October 2014.

A feasibility study completed this spring by Ameris Health Systems was based on a 50 bed, 100,000 square-foot hospital.

According to the study, a hospital with 28 medical/surgical beds and 12 geriatric psychiatric beds with basic medical/surgical services, diagnostic services and a 24-hour Level One emergency service will be a financially viable endeavor on the city owned 14 acres on Christopher Road.

The study projected that the 90,000 square foot facility would need about $57 million in tax exempt bond financing to complete.

Those bonds would be payable by the entity the study refers to as the "Valencia Community Hospital," with payments beginning July 2015.

According to the study, the hospital will have modern diagnostic services, all private rooms, fully equipped operating suites, special procedure rooms, an electronic medical records system and emergency services and emergency room that will provide triage and treatment rooms.

The facility would be open and operating 24 hours a day, seven days a week.


-- Email the author at jdendinger@news-bulletin.com.