The Hoboken City Council will not “unconditionally guarantee” up to $52 million in bonds for St. Mary Hospital – recently renamed the Hoboken University Medical Center – until there is more detailed information on how the money will be spent, they decided Wednesday.
The council was upset because they weren’t given any documentation about the bonds until the day of the meeting. They said they especially wanted an itemized list of capital improvements the money will fund.
The hospital’s current owner, Bon Secours Health System, Inc., a private Catholic health care company based in Marriotsville, Md., is currently negotiating to transfer the ownership of the hospital to Hoboken. The city hopes to close on the hospital by Jan. 1, 2007.
Hoboken agreed to take over the hospital earlier this year after Bon Secours planned to pull out because the hospital had been losing money.
11-member Hospital Authority
Policy at the hospital is now being developed by the 11-member quasi-autonomous Hoboken Municipal Hospital Authority (MHA), which has already met twice. The MHA wants to embark on an ambitious capital improvement campaign in order to help the money losing hospital return to solvency.
On Wednesday, the MHA asked the City Council to guarantee $52 million in bonds. While the council is eager to support the hospital, they were clearly put off by the dearth of details.
Late delivery
The City Council members were not presented with the ordinance until the day of the meeting. Normally, all ordinances are supposed be placed on the meeting agenda the Friday before the meeting.
Councilman Peter Cammarano said that if they were approving something small, like a new handicapped parking space, then it might be OK to be given the ordinance on the day of the meeting.
“But this is $52 million. It’s [the amount of] a school board budget in one shot,” a clearly frustrated Cammarano said. “Having something like this delivered late is unacceptable.”
Hospital board a no-show
Another major problem was that there was no one from the Hospital Authority Board at the meeting to answer questions.
Councilman Ruben Ramos Jr. said it was troubling that the council was expected to vote to guarantee $52 million in bonds with no one from the board present at the meeting.
“We want them to be accountable to us,” Ramos said.
What’s it for?
According to the ordinance, the bonds will “finance, among other things, initial working capital for the Authority, the establishment of an operating reserve fund, the acquisition of real and personal property, and the construction of capital improvements.”
According to city financial consultant George Crimmins, who has worked on the city’s acquisition of the hospital, $15 million will be for “initial working capital” so that the hospital will have cash on hand the first few months of the take over.
He said that about $6 million would go towards buying the property where the St. Mary Mental Health Center and FAITH Services, an AIDS charity, are located.
Most of the rest would go towards building a new emergency room and other capital improvements, such as renovating the hospital rooms.
But the council did not find Crimmins’ informal presentation nearly enough to ease their concerns. They requested to be presented at the next council meeting with a detailed list of how the $52 million will be spent.
More issues
There were other concerns at Wednesday’s meeting.
For one, the deal to transfer the property hasn’t even been officially agreed upon. According to Crimmins, the MHA and Bon Secours are still working out some “sticking points” before a final deal can be approved.
Also, some council members were taken off guard when they discovered that they would now have to buy the Mental Health Center and the FAITH Services building next to the hospital.
Councilman Michael Russo said that before that, he had been under the impression that Bon Secours was transferring all of their property to the city.
Land value
There were also questions Wednesday night about the value of the land the hospital is located on.
In the past, the city has said that if the hospital is unsuccessful, the city could recoup its investment by selling the land.
But there have been questions lately about the value of the land. At an October meeting hosted by the Quality of Life Coalition, a local civic group, hospital president Harvey Holzberg said that the property is worth about $50 million.
But Wednesday night, Crimmins said the land is worth about $30 million.
Meeting coming up on $130M hospital budget
The MHA will be holding its next meeting this Wednesday at the hospital at 308 Willow St. at 7 p.m. It is likely that several council members will be in attendance to ask questions about the bonding. If they are answered, it is possible the bonding ordinance could be reintroduced at the Nov. 13 City Council meeting.
Also, at the forthcoming meeting on Wednesday, the MHA could vote on the hospital’s 2007 operating budget. According to information supplied by the MHA, the proposed budget for 2007 is $129,759,805.
According to the information supplied to the public, $123,092,686 of the total expenditures for the hospital is listed in a single line item titled “Manager/Contractor 501(c)(3),” which refers to the private non-for-profit agency that will be running the daily activities at the hospital.
Some members of the public have expressed concerns that the information wasn’t broken down into more detail. There will likely be a sizable crowd at Wednesday’s MHA meeting to ask questions about the 2007 hospital budget.