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Calexico RDA moving to collect on $450,000 hospital loan

February 14, 2001|By RICHARD MONTENEGRO, Staff Writer

CALEXICO — Despite efforts by the Calexico Hospital board to refinance and restructure its multi-million dollar debt, the city Redevelopment Agency is moving forward to collect on a $450,000 loan to the district in 1997.

Calexico City Attorney Mike Rood said this morning a default judgment is expected within the next two months in a lawsuit filed by the Redevelopment Agency against the Heffernan Memorial Hospital District, which oversees the closed Calexico Hospital.

In late 1997 hospital board members and then-Administrator Randy Smith came before the Calexico City Council, seated as the Redevelopment Agency board, to ask for $450,000 to pay mounting debts and back payroll to keep the struggling hospital afloat. Within three months of the loan, the hospital closed its doors and the RDA loan went into default.

More than a year ago, the city filed a complaint in Imperial County Superior Court to collect on that debt.

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Rood said this morning the hospital district's former attorney, Joe La Costa, never responded to the complaint so the city then submitted a default petition.

After La Costa requested the RDA hold off on seeking a judgment, the agency board agreed. However, Rood said the request for a default judgment is back in action after no further contact occurred between the hospital district and the agency.

"I think the agency board has given direction for some time for this matter to be completed," Rood said. "I expect the judgment will be resolved in the next couple of months."

He added any default judgment would include the loaned amount, the interest accumulated over the last three years as well as attorneys fees the city has incurred.

In July the hospital board, in a show of good faith, paid the agency $100,000 toward the loan. However, hospital district Administrative Assistant Henry Legaspi said recently that likely paid just interest on the debt.

Legaspi said the district is attempting to refinance the interest rate of the bonds it purchased in 1992 to pay off debts at 4.5 percent rather than 7.4 percent.

He said if that occurs the district will have to pay out less money and will look to dip into a fund set aside to pay off the bonds early. Then the agency would pay off other debts, including the $450,000 loan.

The hospital district has called a special meeting at 6 tonight to discuss refinancing/restructuring efforts with district financial consultant Bob Swerdling.

"I imagine tonight the board is going to authorize Swerdling to proceed with what he has to do," Legaspi said.

He said the next step would be for the hospital board to get the refinancing plan approved by the Calexico Special Financing Authority, a joint-powers group of the city and the hospital district put together in 1992 to purchase the bonds.

Added Legaspi: "I wish (the agency board) would hold off until after this meeting is held tonight and find out what takes place."

Still, Rood said this morning efforts will continue to get a default judgment against the district.

Of the district's efforts, Rood said, "I think the default judgment will probably happen unless there is something concrete that occurs at the hospital district with regard to refinancing the debt."

Rood didn't elaborate on what the agency board would consider concrete.

At Tuesday's regularly scheduled meeting of the Redevelopment Agency, the board was set to discuss the litigation against the district in closed session but no discussion took place.

In other RDA business conducted at Tuesday's meeting, the board:

l approved awarding a bid for construction of a parking lot at the Horacio Luna Gun Club to Masters Construction of Brawley for $64,575;

l approved rescinding a decision some years ago to donate Lioness Park to the Calexico Unified School District so the land could be utilized as another city park and;

l approved to plan to expand the city's redevelopment zone without using eminent domain, a power a redevelopment agency can use to condemn or take land within its coverage area.

The agency board also convened as the City Council to address three agenda items. The council:

l approved a bid award to Granite Construction of El Centro for a comprehensive street overlay program in the amount of $374,955 in state Department of Transportation funds;

l approved the changing of street names within the Victoria Estates subdivision as recommended by the city street-naming commission and;

l approved the final recordation of a map bringing into the city limits the Victoria Estates subdivision.

Staff Writer Richard Montenegro can be reached at 337-3453.

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