Think About It……. October 25, 2013
The Central Peninsula General Hospital wants to be top-of-the-line Regional Hospital. Kenai Peninsula taxpayers want to have a top-of-the-line Regional Hospital and approved a $56 million General Obligation Bond Issue to prove it. The Hospital Board, the Borough Assembly and the Borough Mayor decided long ago that to make our hospital all it could be a new addition was needed. So, that was not the question facing the Borough Assembly last Tuesday night.
The controversial question was whether or not to delay the project two weeks in order inform taxpayers about the issuance of $43 million in Revenue Bonds to fund the new addition. One has to wonder just what that two week delay would accomplish.
Revenue Bonds are purchased by investors who believe that the hospital will have sufficient income to redeem those bonds with interest. Those Revenue Bonds cost Borough Taxpayers nothing. The full faith and credit of the Borough is not backing those Revenue Bonds. That means Borough Taxpayers end up with a $43 million needed addition to the hospital…and pay nothing.
In a worst case, doubtful, scenario, should the hospital in years down the road be unable to pay off those Revenue Bonds the only ones who lose money are the investors. Borough Taxpayers are completely out of the picture, pay nothing and still end up with the $43 million addition.
Again, Borough Taxpayers on a hospital default of the Revenue Bonds would have no obligation whatsoever to pay them off. The loss would be that of the investors alone.
Of course, if that happened, some bleeding hearts in the Borough might feel that Borough Taxpayers should reimburse those investors but that would have to be addressed by Borough voters at that time.
Last Tuesday the Borough Assembly was asked by numerous taxpayers to delay the funding approval for two weeks. It’s doubtful that the delay would have allowed for public awareness to be increased and even if an aggressive and expensive public relations campaign was successful…..to what purpose?
The question of whether the new hospital addition was wanted or needed had already been settled in the minds of Hospital Board, Assembly and the Mayor. Assembly approval of issuing the Revenue Bonds was expected. Hopefully, one would not think that during the two week delay, Borough Taxpayers might want to change to General Obligation Bonds. That would mean a pledge of the full faith and credit of the Borough rather than the Revenue Bonds which gets the new addition at no cost or taxpayer obligation.
Admittedly the current Borough Assembly appears to be a stubborn bunch, un-responsive to public requests, and many times set on doing their own thing, but aside from a great responsive public relations move, by the Assembly, the requested two week delay would have accomplished nothing but a big waste of time and effort.
Think About It! John C. Davis 10-25-13