Committee approves financing plan for PPH expansion

By: ANDREA MOSS - Staff Writer | Thursday, July 29, 2004 11:37 PM PDT ∞

ESCONDIDO ---- A Palomar Pomerado Health committee unanimously endorsed a plan Thursday to put a $496 million bond measure on the November ballot. If approved by voters, the measure is expected to raise homeowners' property tax bills by $17.75 per $100,000 of assessed value.

The bond proceeds would be used to help pay for a $753 million expansion the hospital district's board approved last month.

Under the plan approved by the district's Finance Committee, the agency also would raise $210 million through the issuance of revenue bonds. An additional $70 million would come from cash the health system has and the proceeds of a capital campaign drive.

The committee's decision clears the way for the district's Board of Directors to vote on the plan when it meets Wednesday evening.

All seven of the board's members were present when details of the plan were unveiled Thursday. Their responses suggested the final vote will be a slam dunk.

"One of the commitments this board has always made to the community is to give them honest and straight-forward numbers ---- not fantasy numbers, but the real ones," said board member and Finance Committee Chairman Dr. Marcelo Rivera. "And this financial plan is a very conservative one."

Board member Ted Kleiter praised the plan as "a very good one" that would spread the cost of the expansion among multiple revenue sources and see the public investing in its own health system.

"It's really a shared responsibility and a shared plan," he said.

The expansion is designed to ensure the hospital district's facilities can meet state seismic requirements as well as the needs of a area whose population is expected to grow dramatically in the next 25 years.

A new medical center to be built in or near Escondido accounts for more than half the project's total cost, or $531 million.

The city's Palomar Medical Center would be downsized to a 72-bed facility, Poway's Pomerado Hospital's size would be doubled, and the health district would build four or five "community centers" that would provide outpatient services in outlying parts of the district, as part of the project.

Palomar Pomerado Health officials hope to complete the expansion within 10 years.

Aug. 6 is the deadline for submitting bond measures for the November ballot. The rapidly approaching date means Palomar Pomerado Health must finalize its plans on how it will pay for the expansion soon or postpone the bond measure.

Bob Hemker, the district's chief financial officer, said a team of financial experts that included representatives of the Citigroup banking corporation and capital financing corporation KaufmanHall considered a variety of financing possibilities before settling on the plan unveiled Thursday.

The team's primary goals were to meet the district's cash flow needs for the expansion and to alleviate the burden on taxpayers, he and others said.

The proposed bond measure would be a general obligation one that would probably be paid off over the course of 30 years. The measure's inclusion in the financing plan strengthens it because potential lenders will view it as an asset that improves the hospital district's overall financial position, according to Hemker.

Palomar Pomerado Health receives about $9 million in property tax revenue each year. The bond proceeds would be added to that figure.

The amount by which homeowners' property tax bills would go up if the bond passes is roughly equal to the cost of one cup of coffee per week, Rivera said. In an apparent reference to the future community centers, board and committee member Dr. Michael Berger said community members would probably come out ahead of the gas money they would save if they did not have drive far for medical services.

The revenue bonds would be sold to investors. The hospital district would use future income to pay them off.

Rivera said the district was careful to take a conservative approach during the financing plan's development and refrain from hiding anything from the community.

"The fact that this meeting is in public and with the press here shows that we're doing this in an honest and straightforward manner," he said. "Some might argue this is planning and should be done in a closed-door meeting. But all our numbers are out there. All of our competitors know everything we're doing."

Contact staff writer Andrea Moss at (760) 739-6654 or amoss@nctimes.com.

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