Health & Hospitals - 2nd Public Notice on the New Wishard Project

On Friday, September 25, the Health & Hospitals Corporation published two public notices in the Indianapolis Star. The first was required by law since they intend to issue bonds secured by property taxes. I mentioned that notice in my 'Um - What Happened to No Property Taxes for New Wishard Project' entry.

The second public notice may not be required by any law and may be H&H's attempt to link the price tag and the project description to the upcoming referendum. To say that the referendum question is poorly written is to be kind; rather it is decidedly propaganda without reference to any facts a discerning voter might want to consider, like price tag and project description.

I will cut and paste the 2nd notice below, so you can read it for yourself.

What I see is an English version of the shorter, first notice, with more detail that I hope the public does take the time to read. What I see as items of interest are briefly put:

1) new Wishard project is described as the acquisition of land, construction of and equipping of a medical complex (two or more buildings related to the dispensing of health care), construction of least one parking garage and/or parking lot, and construction of a power plant.

2) they will finance the project by entering into a lease with the Indianapolis-Marion County Building Authority and BOTH entities will float bonds -- why is not explained. H&H will float General Obligation Bonds secured with property taxes. IMCBA will issue Revenue Bonds secured by the lease payments to be made by H&H. No indication is made as to why both bodies would issue bonds, or indeed, why the IMCBA need be involved at all in this project.

3) the total of all bonds issued by both bodies combined will not exceed $703,040,000 in principle, not exceed 30 years in payback time, not exceed 6.16% interest, and not exceed $830,478,858 in total interest paid over the 30 years. These numbers do not include the Build America Bonds issued by the federal government, estimated elsewhere to be about $120,000,000 in total interest to be paid by those bonds. So, the total payback could be as high as $1,653,518,858. These numbers also do not include any money, such as the $150,000,000 H&H has already saved in cash for this project. There is no indication in the notice of how much of the total bonds shall be issued by H&H and how much by IMCBA.

4) the maximum annual lease to be paid by H&H to IMCBA is $54,807,604 which is estimated would cause a maximum increase in property tax rates of $0.1494 per $100 of assessed value. Not mentioned is that this amount would be outside of the property tax caps now law in Indiana.

5) the current debt plus lease obligations currently held by H&H and repaid by property taxes is $41,730,000. The total of debt plus lease obligations currently held by all taxing units in Marion County combined and repaid by property taxes is $2,160,112,176, or 5.8878% of the total assessed value of Marion County.

Not said in the notice, but easily derived is that the new Wishard project would increase the total debt plus lease obligations currently held by all taxing units in Marion County combined and repaid by property taxes by a third.

6) the notice links the bonds to the approval of the referendum on November 3, 2009.

Following is the public notice itself.

THE HEALTH AND HOSPITAL CORPORATION OF MARION COUNTY, INDIANA NOTICE OF PRELIMINARY DETERMINATION BY THE BOARD OF TRUSTEES OF THE HEALTH AND HOSPITAL CORPORATION OF MARION COUNTY, INDIANA, TO ISSUE GENERAL OBLIGATION BONDS AND TO ENTER INTO A PROPOSED LEASE OR LEASES OF FACILITIES OPERATED OR TO BE OPERATED BY THE HEALTH AND HOSPITAL CORPORATION IN CONNECTION WITH THE WISHARD HOSPITAL PROJECT

Registered voters residing within Marion County, Indiana (the “County”), hereby are given notice that the Board of Trustees (the “Board”) of The Health and Hospital Corporation of Marion County, Indiana (the “Health and Hospital Corporation”), preliminarily has determined, at its meeting held on September 22, 2009: (1) that a need exists for all or any portion of the construction and equipping of a replacement hospital and related facilities for Wishard Health Services currently located at 1001 West Tenth Street (the “Wishard Complex”), together with land acquisition and site development related thereto and all projects and activities related to any of the foregoing, including, but not limited to, all or any portion of the following: (a) acquisition of land and any improvements located thereon and any site development related thereto, (b) renovation and equipping of any such buildings, and the construction and equipping of one or more buildings which will replace the existing hospital and related facilities for the Wishard Complex and provide all or any portion of (i) inpatient services, (ii) diagnostic and treatment, (iii) clinical support, (iv) non-clinical support, (v) offices and education, and (vi) public and building functions, (c) construction and equipping of a new ambulatory care building, (d) construction and equipping of one or more related parking garages and/or surface lots, (e) construction and equipping of a central plant for all of the foregoing facilities, and (f) all projects related to any of the projects or facilities described in clauses (a) through and including (e) (clauses (a) through and including (f), collectively, the “Wishard Hospital project”); and (2) to the extent permitted by law to take all of the necessary steps to finance all or a portion of the costs of all, or as much as is possibly based on the facts and circumstances at the time, of the Wishard Hospital project by: (a) entering into a proposed lease or leases (collectively, the “Lease”) between the Indianapolis-Marion County Building Authority (the “Building Authority”), as lessor, and the Health and Hospital Corporation, as lessee, relating to all or any portion of the Wishard Hospital project operated or to be operated by the Health and Hospital Corporation; and (b) issuing one or more series of general obligation bonds of the Health and Hospital Corporation (the “General Obligation Bonds”). The Building Authority will issue one or more series of revenue bonds, as lessor, secured by and payable from the lease payments under the Lease (the “Revenue Bonds”).

Each series of the General Obligation Bonds and the Revenue Bonds (collectively, the “Bonds”) will have a maximum term of 30 years. The Bonds will be issued in an original aggregate principal amount not to exceed $703,040,000, or such greater amount in the case of the issuance of any bonds, all or any portion of which will be used to refund all or any portion of the Bonds. The proposed term of any Lease entered into in connection with the Revenue Bonds will not exceed 30 years, beginning on the date each such Lease is executed by the Health and Hospital Corporation. Based on an estimated maximum interest rate that will be paid in connection with the Bonds of 6.16% per annum, the total interest cost associated therewith will not exceed $830,478,858 (which amount is net of any funds expected to be received by or on behalf of the Health and Hospital Corporation or the Building Authority from the United States of America as a result of any series of the Bonds being issued as Build America Bonds pursuant to Section 54AA of the Internal Revenue Code of 1986, as amended (the “Code”), as Recovery Zone Economic Development Bonds pursuant to Section 1400U-2 of the Code or as any other type of tax credit bond pursuant to the Code (collectively, the “Tax Credit Bonds”)), not taking into account any funds of the Health and Hospital Corporation or the Building Authority available for capitalized interest.

Including interest costs, the maximum annual lease rental to be paid by the Health and Hospital Corporation under the Lease is $54,807,604 (which amount is net of any funds expected to be received by or on behalf of the Building Authority from the United States of America as a result of any series of the Bonds being issued as Tax Credit Bonds), and the maximum total lease rental over the term of the Lease is $1,478,711,254 (which amount is net of any funds expected to be received by or on behalf of the Building Authority from the United States of America as a result of any series of the Bonds being issued as Tax Credit Bonds), not taking into account any proceeds of the Bonds deposited in a debt service reserve fund for the Bonds. The Health and Hospital Corporation’s: (i) total debt service fund tax levy for 2007 pay 2008 (which is the most recent certified tax levy) is $3,714,897; and (ii) debt service fund tax rate for 2007 pay 2008 (which is the most recent certified tax rate) is $0.0085 per $100 of assessed value. The estimated maximum increase in the debt service fund tax levy for the Health and Hospital Corporation and the estimated maximum increase in the debt service fund tax rate for the Health and Hospital Corporation after the issuance of the Bonds are anticipated to occur in 2036 pay 2037 and will be $54,807,604 and $0.1494 per $100 of assessed value, respectively, as a result of the payment of the debt service on the General Obligation Bonds and the lease rentals under the Lease.

The net assessed value of taxable property within the County, which is coterminous with the jurisdiction of the Health and Hospital Corporation, as shown by the last, complete and final assessment for state and County taxes (which is for 2008 pay 2009), is in the amount of $36,686,229,690 (the “Net Assessed Value”). The aggregate amount of the Health and Hospital Corporation’s debt service payments on bonds and lease rental payments under leases secured by ad valorem property taxes in 2009 is $4,314,980. Such amount divided by the Net Assessed Value is equal to 0.0118%. The projected maximum aggregate amount of the Health and Hospital Corporation’s debt service payments on bonds currently outstanding, together with the General Obligation Bonds, and lease rental payments under leases currently in effect, together with the Lease, which are secured by ad valorem property taxes, is $54,807,604. Such amount divided by the Net Assessed Value is equal to 0.1494%.

The sum of the Health and Hospital Corporation’s currently outstanding long-term debt, together with any bonds secured by leases entered into by the Health and Hospital Corporation and currently in effect, all of which are secured by ad valorem property taxes, is $41,730,000. The sum of the outstanding long-term debt of all other taxing units in the County, as of September 2, 2009, together with any bonds secured by leases entered into by all other taxing units in the County and in effect as of September 2, 2009, all of which are secured by ad valorem property taxes, is estimated to be $2,118,272,176. The aggregate of such amounts is $2,160,002,176. Such amount divided by the Net Assessed Value is equal to 5.8878%.

The proposed payment of debt service on the General Obligation Bonds or lease payments under the Lease must be approved at the special election to be held in the County on November 3, 2009, on the following public question:

“Shall the Health and Hospital Corporation of Marion County, Indiana, issue bonds or enter into a lease to finance safe, efficient and functional facilities for the Wishard Hospital project:
1.to allow Wishard to provide access to care for all residents of Marion County, including people who are seniors, poor, uninsured or vulnerable regardless of their ability to pay; and

2.to allow Wishard to provide specialized care, including to victims suffering from traumatic injuries or severe burns; and

3.to allow Wishard to work with colleges and universities, including Indiana University School of Medicine, Ivy Tech Community College, and the Purdue School of Pharmacy, to teach future doctors, nurses and other healthcare professionals in Indiana?”

Dated this 25th day of September, 2009. THE HEALTH AND HOSPITAL CORPORATION OF MARION COUNTY By: Dan Sellers, Treasurer (S - 9/25/09 - 5543537) - 09/25

Prop. 303 Gets Hearing Tonight

Tonight's meeting of the City-County Council's Rules and Public Policy Committee will hold a public hearing on Proposal 303. This Proposal, authored by Councillor Coleman, would require all City or County Government contracts be posted online within 7 days of being signed.

This is a breath of sunshine in public access. With technology today, it is entirely feasible and the access is in the best public interest.

The meeting begins at 5:30 pm in room 260 of the City-County Building. The committee is Chaired by Councillor Lutz who can be reached at rlutz@indygov.org

Um - What Happened to No Property Taxes for New Wishard Project?

Matt Gutwein has been absolutely everywhere these days, selling the community on the "New Wishard Project" that is the subject of a public referendum on November 3rd. Mailings - glossy and not - as well as phone calls polling opinion. Who knows how much money H&H is spending on this blitz.

Since blogger Paul Ogden first broke the wimpy wording of the referendum question itself, others, including Advance Indiana's Gary Welsh, have questioned the use of property taxes to repay the bonds on the project. There remains the key, outstanding question, also, as to whether or not the referendum question legally binds the Health & Hospital Corporation (H&H) to any particular project for any particular sum of money. To me the wording can be boiled down to: "We do good works. Shall we continue?". When I brought that up at last Saturday's McANA meeting, Matt Gutwein said that the Board would be meeting on Tuesday (now two days ago) and the wording they adopt for the project's bonds would legally tie down the referendum question. I'll leave it to the legal scholars among us to decided if the two acts - board action on some bonds and a public referendum are legally linked in any way.

Over and over and over again Gutwein tells us how there will be no property taxes used to repay the bonds floated to pay for this project.

So, imagine my surprise when I saw the legal notice of the H&H Board's decision at it's Tuesday meeting to float bonds for the New Wishard Project. The notice is reprinted below, along with a link to the IndyStar's publication of same -- I don't know if the link will give tomorrow's public notice, so please use it today if you wish.

What I learned from the notice:
1) The bonds cannot be for any more than $703,040,000, and must be repaid within 30 years.
2) The Indianapolis-Marion County Building Authority will actually float the bonds and lease the facilities back to H&H.
3) "All or any portion" of the bonds may be repaid from "property taxes collected by the Health and Hospital Corporation on all taxable property within the geographical boundaries of Marion County, Indiana".

I have changed the typeface to bold for the property tax statement within the public notice and put it in the paragraph form found in the print version of the Star.

http://www2.indystar.com/webcat/classified/classlist?category=Public+Notices&page=12

THE HEALTH AND HOSPITAL CORPORATION OF MARION COUNTY, INDIANA NOTICE OF PRELIMINARY DECISION BY THE BOARD OF TRUSTEES OF THE HEALTH AND HOSPITAL CORPORATION OF MARION COUNTY, INDIANA, TO ISSUE GENERAL OBLIGATION BONDS AND TO ENTER INTO A PROPOSED LEASE OR LEASES OF FACILITIES OPERATED OR TO BE OPERATED BY THE HEALTH AND HOSPITAL CORPORATION IN CONNECTION WITH THE WISHARD HOSPITAL PROJECT

Notice is hereby given that on September 22, 2009, the Board of Trustees of The Health and Hospital Corporation of Marion County, Indiana (the “Health and Hospital Corporation”), did adopt a resolution making a preliminary decision: (1) that a need exists for all or any portion of the construction and equipping of a replacement hospital and related facilities for Wishard Health Services currently located at 1001 West Tenth Street (the “Wishard Complex”), together with land acquisition and site development related thereto and all projects and activities related to any of the foregoing, including, but not limited to, all or any portion of the following: (a) acquisition of land and any improvements located thereon and any site development related thereto, (b) renovation and equipping of any such buildings, and the construction and equipping of one or more buildings which will replace the existing hospital and related facilities for the Wishard Complex and provide all or any portion of (i) inpatient services, (ii) diagnostic and treatment, (iii) clinical support, (iv) non-clinical support, (v) offices and education, and (vi) public and building functions (c) construction and equipping of a new ambulatory care building, (d) construction and equipping of one or more related parking garages and/or surface lots, (e) construction and equipping of a central plant for all of the foregoing facilities, and (f) all projects related to any of the projects or facilities described in clauses (a) through and including (e) (clauses (a) through and including (f), collectively, the “Wishard Hospital project”); and (2) to the extent permitted by law, to take all of the necessary steps to finance all or a portion of the costs of all, or as much as is possibly based on the facts and circumstances at the time, of the Wishard Hospital project by: (a) entering into a proposed lease or leases (collectively, the “Lease”) between the Indianapolis-Marion County Building Authority (the “Building Authority”), as lessor, and the Health and Hospital Corporation, as lessee, relating to all or any portion of the Wishard Hospital project operated or to be operated by the Health and Hospital Corporation; and (b) issuing one or more series of general obligation bonds of the Health and Hospital Corporation (the “General Obligation Bonds”). The Building Authority will issue one or more series of revenue bonds, as lessor, secured by and payable from the lease payments under the Lease (the “Revenue Bonds”).

All or any portion of the Health and Hospital Corporation’s payments of principal of and interest on the General Obligation Bonds and/or rental payments under the Lease may be payable from ad valorem property taxes collected by the Health and Hospital Corporation on all taxable property within the geographical boundaries of Marion County, Indiana. The proposed General Obligation Bonds and Revenue Bonds (collectively, the “Bonds”) shall be issued in an original aggregate principal amount not to exceed $703,040,000. The maximum term of each series of the Bonds will be 30 years, and the Bonds will bear interest at a rate or rates estimated not to exceed 6.16% per annum. Dated this 25th day of September, 2009.THE HEALTH AND HOSPITAL CORPORATION OF MARION COUNTY By: Dan Sellers, Treasurer (S - 9/25/09, 10/2/09 - 5543528) - 09/25

We Interupt This Series ....

We interrupt this series on the Indianapolis-Marion County 2010 budget, to mention a brief event that also occurred at Monday night's City-County Council meeting.

The rezoning petition for 450 E. Market Street was 'called down' by the Council. Councillor Joanne Sanders did it on behalf of Councillor Doris Minton-McNeill, who could not attend, but within whose district the parcel lies. 'Called down' means that it was specifically pulled out of the stack of rezoning decisions of the Metropolitan Development Commission. The remainder of the stack was approved in bulk, as is usual.

If you aren't familiar with the deal that TM Miller Enterprises is trying to cut with the City, you can review an earlier entry or two, or three.

Here -- Here -- and Here

The rezoning petition is automatically scheduled to be heard by the Council at its next meeting, but usually that is delayed to give sides a month to try to craft mutually acceptable terms.

I suspect that at the October 7 hearing of the MDC, this matter will yet again be continued.

Parks Budget Cut, Layoffs Assured -- Part 4 of Series

The Parks budget, as mentioned earlier in this series, was cut - including a 10% cut in personal services. Since Mayor Greg Ballard has been in office, he has cut the personal services (salary and benefits) portion of the Parks budget by 21%. He has dropped the contribution from the general fund by $800,000 a year, leaving the Parks budget particularly sensitive to the property tax caps.

Initially, $1.4 million was decreased in the personal services proposed budget for 2010, compared to 2009. At the Parks committee review of the budget - with the standing room only crowd of employees whose livelihoods were on the bubble - the committee amended the budget to move $653,922 from the section that includes contracts over to personal services. The Parks employees will be allowed to bid on the contract, and if they win, then $653,922 of people-salaries will be able to keep their job with Indy Parks --- still, over $700,000 people-salaries will lose their jobs. If the Parks employees fail to win the contract, then a full $1,400,000 people-salaries will lose their jobs.

I mentioned at the beginning of this series that when you attend in person you sometimes catch chitchat in the hallways. That night was one time when that was true. The Parks budget had been amended, the workers had left the room, and a second Council Committee was taking its seats. I had not managed to get a copy of the amendment, so I headed for the Council office to get one. I crossed the path of Mike Huber, Director of Enterprise Development, talking with a man I believe is a union representative, but definitely a Parks employee. I was not deliberately eavesdropping, just passing by in tight quarters in a public building. What I heard was Mr. Huber saying "The Mayor really wants you to win that contract." It struck me as similar to somebody saying "We just set your house on fire, but we really want it to rain."

At the full Council meeting, At-Large Councillor Joanne Sanders proposed an amendment that would have removed $290,000 from the Council budget (slated for redistricting costs - more on that later) and transferred it to the Parks budget to at least reduce the number of employees who will find themselves in the unemployment line. That amendment failed when 13 Councillors voted for the amendment and 14 against. Those voting in favor were Plowman (R) and 12 Democrats, Bateman, Brown, Evans, Gray, Lewis, Brian Mahern, Dane Mahern, Mansfield, Moriarty-Adams, Nytes, Oliver, and Sanders. Those voting against were Coleman (L) and Republicans Cain, Cardwell, Cockrum, Day, Hunter, Lutz, Malone, McHenry, McQuillen, Pfisterer, Scales, Speedy, and Vaughn.

The 2010 Parks budget of $27,179,691, or 2.2% of the entire City-County budget of $1,222,638,083, passed by a vote of 16 to 11. Those voting for the budget were Democrats Moriarty-Adams and Nytes along with all the Republicans and those voting against the budget were Coleman (L) and the rest of the Democrats. (Councillors Minton-McNeill (D) and Smith (R)were absent all evening so cast no votes.)

The CIB Is Up - Part 3 of Series

The budget process for the Capital Improvement Board (CIB) ended up surprising me. I thought for sure the Council would put in more money than was requested.

The CIB, like the Airport Authority, Public Library, IndyGo, and Health & Hospitals, is a Municipal Corporation whose budget is not part of the City-County budget, but which does have to submit its annual budget for approval by the City-County Council.

The adopted budget for the CIB for 2010 is $145,932,200 -- $65,402,700 operating fund + $32,246,000 bond fund + $48,283,500 that passes through the CIB budget back to the State to pay off the bonds for Lucas Oil Stadium. $9,030,500 of the CIB's budget will be passed on to the Indianapolis Convention & Visitors Association to promote the Convention Center, offer discounted hotel rooms (which, as I understand it, the ICVA underwrites -- see Advance Indiana's blog entry about that issue), and promotion of Indianapolis as a tourist destination.

But, the process of getting to those numbers was more interesting than the numbers themselves. At the original committee hearing on the CIB budget, a lot of questions were asked about the perceived need for new carpeting in the existing Convention Center. There were a whole lot of questions asked and answered at the time, and this piece didn't ping my radar. There were also a whole lot of comments about how the ICVA needs more money to promote the new space. That pinged my radar, for sure.

At the end of the day, the Council moved $1.25 million from the budget category that included the new carpeting, to the budget category that includes the ICVA. So while the ICVA was enriched, no net new money was added.

The CIB budget is one of the more confusing ones to explain. That is because they had to revise the 2009 budget since it was adopted to recognize several things. The taxes that fund their operations were hit by the economy and were down, as are the profits from those operations. The tax increases and state loans increase their revenues this year, as well as in the future. There were cutbacks in expenses also made. In the end, they revise their 2009 budget, dropping it by almost $13 million. The bailout money allowed them to not spend as much of their cash reserves on the 2009 budget as had originally been planned. The budget for 2010 drops by another $3.5 million from the revised 2009 budget.

At the Council meeting where the CIB budget was finally voted on, Ben Hunter (R) joined Ed Coleman (L) and Democrats, Bateman, Brown, Evans, Gray, Lewis, Brian Mahern, Dane Mahern, and Oliver in voting nay. All remaining Councillors, 17 of them, voted yea. (Smith and Minton-McNeill were absent all night.)

The Councillors promised to work with the CIB to find ways to fund their operations, most notably by having a committee push forward to get financial support from surrounding Counties and to show a united front with next year's Legislative Session.

They also made comments that indicated to me they would also be looking at how the CIB and other downtown organizations go about doing the jobs they are doing and even consider restructuring how they interact. If I understood those comments correctly, that would be a very positive development, indeed.

Spinning the Budget -- Part 2 of Series

Unfortunately the Ballard Administration decided to spin the budget rather than lay it out in totally accurate and complete terms. They did this by emphasising some attributes of the budget and not mentioning, unless asked, about other equally important attributes. This has led to widespread media dissemination of an erroneous conclusion - that Mayor Ballard had to struggle to balance this budget and had to make some tough cuts because of cutbacks in revenue. There is also the continuing PR campaign to pretend that between $700,000 and $1.4 Million in salary cuts in the Parks budget does not mean there will be layoffs. That's just poppycock.

The revenues for 2010 are 5.5% higher than for the 2009 budget. There is an increase of $27 million from taxes alone - AFTER subtracting the loss due to the property tax caps.

If you look at expenses, the 2010 budget calls for spending 2% more than was spent in the 2009 budget. The difference between what the City-County will take in and what it spends in 2010 will be squirrelled away in the year end fund balances and not spent.

Now, that's not a bad thing, is it? So, why has the Ballard Administration gone through this exercise of spinning the budget? Could it be to hide the fact that they were not forced by the economy to cut budgets and lay off employees?

I find I am not good at reading minds, so I'll just state it outright: Mayor Ballard was not forced by the economy to cut the Parks and Telecom & Video Services Agency budgets so much that employees will be laid off. It was a choice he freely made. He could have arranged a budget that was frugal but saved all these jobs. He decided he would rather get rid of these employees.