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Taxpayers group threatens lawsuit to block hospital district payment

March 14, 2001|By AARON CLAVERIE, Staff Writer

CALEXICO — An Imperial Valley taxpayers group is threatening to file an injunction that would stop the Calexico Special Financing Authority from giving the Heffernan Memorial Hospital District $1.6 million dollars to pay off debts.

The hospital district wants the money to pay off debts not covered by the $9.235 million dollar bond issuance taken out in 1996. The bonds are paying off a past bankruptcy.

The Special Financing Authority, a joint powers association between the City of Calexico and the hospital district, was created in 1996 to purchase and manage those bonds.

The United Taxpayers of Imperial County and Rudolfo Moreno, the treasurer for the authority, issued a written statement Tuesday stating that giving the hospital district more than $250,000 a year would violate an agreement entered into in 1997 by the authority and Moreno.

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Moreno said he filed the 1997 agreement so the taxpayers and business owners of Calexico wouldn't be burdened with supporting a hospital that had shown little to no financial responsibility.

Calexico City Councilman and authority board member John Renison disagrees with Moreno's contention the hospital should only receive $250,000 a year.

Renison said he supports giving the hospital district the $1.6 million.

"The community is clamoring for health care and (the hospital) deserves one more chance to prove themselves," Renison said this morning.

Last week, the four-member authority board, comprised of two City Council members and two members of the hospital district voted unanimously to refinance the $9.235 million bond issuance, reducing the interest rate from 7.4 to 4.2 percent.

After refinancing the bond, authority legal counsel Jeffrey Goetz said the authority board can give the hospital district nearly $1.6 million from the first bond's early retirement and reserve funds — a move referred to as the restructuring of the debt.

This move would mean the half-cent sales tax voted on in 1992 to support indigent care in Calexico would be collected for a year longer.

As a part of the 1997 agreement between Moreno and the authority, called the tax initiative settlement agreement, the half-cent sales tax will end after the bond debt is paid off.

Minneapolis-based financial consultant Robert Swerdling said he is presently processing the bond paperwork and will have final numbers for the authority to approve in about two weeks.

Swerdling said at last week's authority meeting that giving the district $1.6 million would enable it to pay off the $450,000 it owes the Calexico Redevelopment Agency, a medical factoring company that fronted the hospital more than $1 million based on anticipated earnings and a settlement with a pharmaceutical company.

All four members of the authority endorse this debt restructuring plan because it would help the district and the city, according to authority board member and City Councilman Gilbert Grijalva.

"We wish Mr. Moreno and his group luck, but we feel the refinancing is critical to save the taxpayers $300,000 of the bond's debt and provide services (at the hospital building)," Grijalva said this morning.

Swerdling said refinancing the bond's interest rate would save taxpayers $300,000.

He added that since the new bond issuance is expected to be for nearly $9 million dollars at 3 percent less in interest a year, it would save taxpayers $300,000 they would have had to pay through the half-cent sales tax.

Hospital district officials have admitted the refinance/restructure doesn't save the taxpayer purchasing taxable goods any money. However, they have added it does in the sense that it provides much-needed medical services to the community by freeing additional moneys that would have gone toward debt service on the higher interest bond.

"Refinancing is a no-brainer," Renison said.

He also favors the restructuring plan that would extend the life of the half-cent sales tax a year longer if it means the hospital would be able to provide services.

"That half-cent sales tax was set up for indigent care," Renison said.

The half-cent sales tax was voted into effect in 1992. The intent of the tax was to pay for medical services at Calexico Hospital because the majority of those it served could not afford to pay.

However, the tax was tied up in debts after the board in 1992 took out an earlier bond to buy several million dollars worth of medical equipment, much of which didn't work or was used.

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