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MCHD board nixes HUD loan for Continuum |
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June 16, 2001 By Jim Mimiaga An initial financing plan submitted for a new nursing home on the Southwest Memorial Hospital campus was nixed Wednesday because it jeopardizes taxpayer-owned land. Continuum LLC, which manages the Vista Grande Nursing Home, wants to secure a low-interest Housing and Urban Development loan to build a $6 million home on hospital land. But language in HUD’s lending package puts up the 40 acres of Montezuma County Hospital District property slated for construction as collateral in the event of default by Continuum. The potential that district land could be obtained by HUD at a value the agency would establish was unacceptable to the district board. "Their financing has nothing to do with us, or our obligations to this lease," said MCHD board chair Randy Smith. "We designated the site for construction, and we’re the landlord, but how they fund building is strictly up to them." As part of a binding lease agreement with the district, Continuum has the go-ahead to construct a new facility on the southwest corner of the hospital campus, at Continuum cost. A 50-year lease on the land that includes financial, construction and quality-of-care terms still needs to be signed with the district. Continuum will operate the facility for profit, on land leased from the district at less than market value. At the end of 50 years, the district will take ownership of the building, explained board attorney Kelly McCabe. But encumbering the taxpayer land in the unlikely event Continuum defaults was seen as too risky by the board, which said that it goes against a strong local political stance that the publicly owned hospital grounds should remain that way. "Essentially, they are asking to become partners in the financing plan, and to (potentially) sacrifice real estate for the sake of their lower interest rate was never the intent of our lease," McCabe said. Other financing options are available to Continuum, and the snag was not seen as a deal-breaker, the board said. An agreement is expected by August. Also on Wednesday, the board: • Signed a five-month lease-purchase agreement with owners of a Mancos building slated to house a pending low-cost community health clinic. The first monthly payment of $2,500 was approved. Four grants have been applied for to cover start-up, planning and renovations for the clinic. A $500,000 federal-aid package designated for such clinics could be available by September. The MCHD board worked on a finance plan to purchase the building for $240,000 and are seeking a 4-5 percent interest loan from the USDA to do so. Payments are expected to be $1,000 per month over a 40-year term. The board discussed that payments could be covered by tenant revenue collected from a local dentist, who plans to rent a portion of the building. Valley-Wide Health Services, which manages successful low-cost health clinics across the state, including in Durango, would fully operate and manage the Mancos clinic based on secure federal and state subsidies. Valley-wide will provide primary-care and dentist services, and has a policy of accepting all patients regardless of insurance-status or residency. Fees are on a sliding scale, or at no cost, depending on family or individual income levels. • Decided to transfer $600,000 of collected mill-levy revenues held at Chase Manhattan Bank in New York into the local economy. Dolores State Bank, First National, and Citizens Bank will hold $200,000 apiece for the district, yielding 4.07, 4.32 and 4.6 percent yields respectively. The district holds $1.45 million in collected tax dollars, $800,000 of which is held in reserve. • Mentioned the need for more child-care services in the area. One reason for mortgaging the clinic building was to keep options open for funding other needs, such as a child-care facility, said director Lois Rutledge. • A long sought-after surgeon needed to upgrade staffing levels at Southwest has committed to the job, reported Financial Officer George Brisson. He is expected in 90 days. The additional surgeon will ease on-call gaps that have caused Southwest to lower their trauma designation from a Level 3 to a Level 4. Because of the physician shortage and subsequent reduced ER capabilities, Southwest has on occasion been forced to divert patients, and their revenues, to nearby hospitals. |
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