Hoboken has questions on hospital bonding
Council nixes vote until it can hear experts' answers

November 07, 2006 Jersey Journal

The City Council has balked at introducing an ordinance that would put Hoboken taxpayers on the hook for $52 million if St. Mary Hospital can't pay its bills once it is transferred to the city.

Council members apparently were miffed that they saw the undocumented proposal for the first time just before the start of Wednesday's council meeting.

Council members have scheduled meetings this week to quiz the bond counsel and financial officers, and the ordinance may go back for a vote at the next council meeting, officials said.

"It was not something that we could vote on the other night," Councilman Richard Del Boccio said. "Council members have a lot of questions, and this week will be dedicated to getting the answers."

In any event, the New Jersey State Local Finance Board must approve the bond before the ordinance goes back to the City Council for a vote, said George Crimmins, the Hoboken Hospital Authority's interim executive director.

The main sticking point, officials said, is whether the hospital's property will be valuable enough to secure the bond, should the hospital be unable to keep up the payments.

Crimmins said an appraisal was done in October 2005 showing that the main hospital building on Willow Avenue is worth $45.9 million. The hospital also is expecting an influx of cash - $5 million in health insurance refunds and $4 million in state aid, Crimmins said.

The bond will help pay for upgrades to the building over the next couple of years, which will in turn add to the value of the property, Crimmins said.

Improvements include updating private patient rooms, and constructing a new emergency room and a new labor and delivery room. Plans also include expanding office space, upgrading the information and technology system and installing a state-of-the-art CAT scan machine.

However, it's not clear that, if the hospital did go bankrupt, that the city would own the hospital building; Bon Secours Health System, the previous operator, may still have a stake in it.