Page 7 - Sonoma County Gazette 3-19
P. 7

OPINION: Vote NO on Measure A to negotiate a better deal
   By Barbara DeCarly, Jeanette Dillman, Michele McDonell, Carolyn Harris, Gary Harris
Many of you know that the Palm Drive Health Care (PDHC) District Board have approved an agreement with
American Advanced Management Group (AAMG - current operators of the hospital) that includes a lease with an option to purchase the hospital. Whether or not to approve that option is the subject of Measure A, currently before the District voters.
Those of us residing in the detached area are not eligible to vote; however, what happens is of
What the voters are being asked is to approve a Lease/Option to Purchase with AAMG for the sale price of $5.2M, $4M payable upon exercise of the option and transfer to AAMG, and a $1.2M soft note, to be forgiven in ten years if AAMG retains the property as a medical facility. So essentially, the sale price can really be viewed as $4M. (READ details if the sale/lease agreement on page 38) The $1.2M note hardly guarantees that AAMG will keep a medical facility going for at least ten years. The hospital was appraised just over a year ago at $10M, which included a land value of over $6M. This majority Board of the District made some odd calculations based on deferred maintenance and came up with the $5.2M sale price (or $4M if you really look at it), well below fair market value (FMV).
There is nothing to prevent AAMG from selling the hospital property for at least double what
Until AAMG exercises the purchase option, they are charged with $275K per year rent (well below market for a property of this size); the catch to rental is that AAMG will be credited back that rent by making improvements to the property. In other words, they’re improving the value of the District asset and deriving all the benefit of the increased value, with nothing going toward District operations. Low sale price and no rent amounts to a gift of public funds to a private, for-profit company.
significant importance to our share of the debt.
they are paying, pay the District the $1.2M, and walk with a healthy profit.
Those of us in the detached area, along with District residents, have received a flyer urging a “yes” vote on Measure A. The fact that those of us who cannot vote on Measure A received this flyer illustrates just how ill-informed the proponents are about where the eligible voters reside.
This flyer contains a myriad of misinformation:
First, “The PDHC District Board voted 5-0 to sell the hospital to AAMG to keep acute care services available in West County.” False, it was actually a 4-1 vote, with Jim Horn voting against – you may think this is a minor error, but it’s what the proponents want you to believe. Fake news, if you will!
“(1) Lower taxes: Sale proceeds will pay down bonds and reduce property taxes.” The sale proceeds will only pay off one small bond, not “bonds.” The only property tax reduction is the small ad valorem tax that will be eliminated; our parcel tax ($155 for District residents, less for detached residents) will not be eliminated or reduced. If you review your tax bill, you’ll note two separate charges for Palm Drive – it is the smaller tax, based on assessed valuation, that will be eliminated – and it will take all of the $4M sale price, with a current balance due of $3.8M, and approximately $100K in pay off fees and charges. This is the only bond/tax that is secured by the real property, and the sale will leave nothing to pay down on any other District debt.
 “The lease/sale will accomplish the following:
“(2) Relieve the District of financial liability: AAMG will assume all financial costs for the operation and maintenance of the hospital.” Relief of the District’s financial liability will not end, specifically because under the terms of the agreement the District will hold a $1.2M note as security - that is a risk and a liability. If one chooses to look at
this seller carryback as a deal-sweetener rather than a liability, understand the net result is a $4M sales price. That is less than the land value and does not consider that the hospital is currently operational with an urgent care.
“(3) Help to resolve bankruptcy: Relief of ongoing costs and reduced bond debt will assist the settlement of the District’s bankruptcy.” It may or may not help resolve the bankruptcy - the board will have to make a move forward with resolution with or without the sale of the real property (and does, in fact, have a plan before the Court). As indicated above, the only reduction will be to the ad valorum tax – all of which is going to the lone general obligation bond. There will be no extra sale proceeds leftover to reduce the remaining existing bond debt (approx. $18M), and it doesn’t mean that the creditors in bankruptcy will receive any more than under the current proposal.
 “(4) Preserve hospital services in West County: AAMG will provide high-quality Urgent Care, outpatient services, and Long Term Acute Care services for critically-ill patients.” Preserve hospital services? Once AAMG exercises the lease and option to purchase, they can do whatever they want with the property, including sale to the highest bidder, and PDHCD will have no say in those decisions. Twenty years ago, the voters approved a Measure to secure acute care (not LTAC), emergency department and other medical services. There will be no emergency department with AAMG and no short term acute care services. Unlike a real emergency department, the urgent care operates 12 hours a day, ambulances have no authority to transport patients to an urgent care, and serious medical issues will be referred to a real emergency department in nearby Santa Rosa. The District is not upholding its deal with the voters.
“(5) Continue Emergency Services: As an acute care hospital, SSH will partner with the county’s Emergency Management System to care for patients in the event of a disaster.” There will be no emergency services now or in the future, it is contrary to the LTAC status. Any hospital facility, in a disaster incident, would be operable for EMS activities, including SSH. Let’s hope it’s a long time before EMS needs to put those measures in place.
Those of us who worked hard to detach from this fiscally irresponsible District support a NO vote on Measure A. Unfortunately, we don’t have a vote and we’re counting on you to get the word out to friends still residing in the District. The proponents of the Measure are working hard on this and as seen by the mailer sent out, they will say anything, true or false, to garner support.
 The hospital should be sold, but at a fair market value and not to wholly benefit a for profit company with no ties to the community. At the very least, a NO vote will allow the District to negotiate a better deal in the future.
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