Hospital wants taxpayer backing for $10 million expansion project

Hospital wants taxpayer backing for $10 million expansion project

December 25, 2001

By Jim Mimiaga
Journal Staff Writer

Southwest Memorial Hospital management is again requesting that taxpayer assets be used to help back financing for needed expansions.

But this time, a public vote will likely decide the matter.

The hospital’s operations board, Southwest Health System, needs permission from the Montezuma County Hospital District board to use the campus’s net worth of $250 million as collateral for a loan.

"We’re looking for your support because borrowing against assets would be a much lower interest rate than borrowing against revenues," CEO Bob Peterson told the MCHD board this month. "The difference would be $1 million in savings."

SHS, the non-profit corporation running Southwest, plans to expand radiology and surgery departments, and upgrade infrastructure for $10 million. Both are big money makers and would pay off with increased revenues, Peterson said.

But the request got a cool response from at least three district board members. Board chair Randy Smith along with Susan Keck and Lois Rutledge denied the request unless put to a public vote.

"I would support a general obligation bond approved by the people, but I would not support a lien on our assets," Keck said.

The skepticism stems from a 1998 plan whereby SHS and MCHD tried, but failed, to push through an $11-million bond for a four-story medical office building without taxpayer approval. The plan set off a storm of controversy that led the county commission to file for a court injunction stopping the sale of the bonds shortly after SHS and MCHD approved them.

Opponents and the commissioners argued that the so-called revenue bonds were in fact general obligation bonds that would have transferred hospital assets to a Cherry Creek insurance company in case of Southwest default. They demanded a public vote.

The injunction was eventually denied, but an ensuing MCHD election replaced project supporters with opponents, who then swiftly rescinded the bond offer, and the deal was killed.

Still, years later, the suspicion and community divisiveness of that dispute still lingers.

"If we have learned anything it is that people who pay the taxes need to vote on that," remarked MCHD board Kelly McCabe.

A combination revenue bond and general obligation bond may also be an option to consider, hospital officials said.