South Routt Medical Center gets line of credit, faces rush to ballot question

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— Chuck Wisecup was learning on the fly during the South Routt Medical Center’s board meeting Monday night.

The first business of the meeting was to swear in Wisecup as the board’s fifth member, and he’d hardly sat down before being elected president of the board, fulfilling the mumbled requests of the crowd of about 15 in attendance.

As much as the meeting involved Wisecup unraveling why the board does things certain ways and which staff members do what jobs, it also set the stage for the center’s next few months of activity.

Wisecup was on the advisory committee that was formed because of public concerns about South Routt Medical Center’s financial health. He’d been on the board before and was appointed to fill the empty seat during a December meeting.

The advisory committee’s earlier report had cited the center’s ongoing expansion project as a factor in its financial concerns and had suggested short- and long-term steps to right those issues.

Seeking a line of credit was among those suggestions, and the board passed a resolution to that end in December.

On Monday night, the board and members of the advisory committee discussed a letter from First National Bank of the Rockies agreeing to a six-month $200,000 line of credit, using the center’s building at 300 S. Main St. in Oak Creek as security.

The line of credit will help shore up the center’s balance sheets until tax revenue is remitted.

The terms could be extended another six months, according to advisory committee member Mary Alice Page-Allen, but if the credit was needed for a longer period than that, the bank would need legal assurances that the agreement complied with Colorado’s Taxpayer Bill of Rights.

But even a 12-month line of credit will not be enough, Page-Allen said, to fix the center’s financial situation.

The proposal, she said, is to go to the voters in May and ask them to approve a mortgage on the center’s building. The plan the committee developed used a seven-year note.

A mortgage wouldn’t increase the health district’s mill levy or patient fees, she said, but would allow the center's board more time to right the ship.

The expansion project at the center's Oak Creek location has drawn down reserves, and those must be replenished to comply with state regulations.

As the resolution to seek the line of credit was approved at a prior meeting, Wisecup, acting as president of the board, and Steve Strickler, who was elected vice president, are authorized to sign the agreement.

That leaves the board with some tight deadlines to meet if it intends to be ready for a mortgage-related ballot question in May.

Advisory committee member David Bonfiglio said that the public’s help will be needed to educate health district residents about the ballot issue.

“We need people out there in the community who know the ins and outs of what this is,” he said.

To reach Michael Schrantz, call 970-871-4206, email mschrantz@SteamboatToday.com or follow him on Twitter @MLSchrantz

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Comments

Scott Wedel 9 months, 3 weeks ago

Apparently YVHA and SRMC have completely different legal opinions on the same issue.

Yampa Yalley Housing Authority has mortgages on two different Sierra View lots. Their view is that TABOR does not force a public vote on debt. If YVHA were not to pay on the mortgages then the bank would get ownership of the lots. Their view is that TABOR clause requiring public vote approval of debt just prevents the bank from going to court seeking a ruling forcing YVHA to make the payments. That TABOR prevents a government authority from being legally required to make payments in future years.

So, SRMC can accept the $200K line of credit without a public vote. If SRMC were to fail to pay then the bank would get ownership of the asset securing the loan which is the building.

I am concerned that the public approval of SRMC debt could be a backdoor method of a tax hike. If SRMC were to later decide that they lack the money to make debt payments then a court could rule that they need more revenues and thus increase taxes.

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