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Directors consider selling Indian Valley Hospital

Alicia Knadler
Indian Valley Editor
6/17/2010


Directors of the Indian Valley Health Care District agreed Monday, June 7, to move forward with plans for a possible sale of the hospital property.

First, though, chairman Guy McNett amended the March 1 meeting minutes.

"I misspoke or there was a misunderstanding," he said of his statement about a sale of the hospital requiring a vote of taxpayers.

He amended that statement, saying if directors wanted to sell the property to an entity that would use it for another hospital, then it would have to go to a vote, according to both the district's bankruptcy attorney and a new one who specializes in healthcare district law.

McNett said the first step toward a sale is a detailed legal procedure the district would have to go through to declare the hospital as surplus property.

The district will go in substantial, new direction.

"When directors closed the hospital down in 2006, they set two goals for themselves," McNett said, "One was to open a rural health care clinic."

That has become a reality thanks to the people of Eastern Plumas Health Care District.

The second goal was to clear up the Chapter 9 bankruptcy directors filed in November 2004.

One of conditions of reorganization was that any debt created after that date had to be paid in full, currently about $600,000 or so.

The largest creditor is the California Employment Development Department, who would not negotiate the debt down enough to agree on in 2009. The total district debt in Chapter 9 bankruptcy then was about $500,000. About half, $248,000, was debt to the Employment Development Department.

Of that total, approximately $188,000 was actual debt from claims paid, the balance, about $60,000, was from penalties and interest, which increased by about $1,500 per month. The offer to the district was for a settlement of $172,000.

The settlement would have reduced total debt by almost half McNett said at the time, but it would also have taken away any financial cushion the district had for more than a year.

"Our goal here is to provide healthcare not to sit on a bunch of money," Teresa Vanzetta said at the time. "That was our goal ... to do the right thing." Getting rid of the debt will be like a breath of fresh air she said.

She motioned for directors to approve a counteroffer of $150,000, so the lump payment didn't take the whole cushion, and her motion carried. But the state did not accept the counter offer.

Currently, McNett said the only place the district has assets that can be used to pay the debt off is in property, the buildings and land they sit on.

The process is legally sophisticated enough that McNett recommended directors retain an attorney who is expert in healthcare district law, Craig Cannizzo

Cannizzo is a San Francisco partner with the California and Washington, D.C., firm Hooper, Lundy, & Bookman.

He is legal counsel for Seneca Health Care District and was also counsel for Eastern Plumas when directors there took over the hospital in Loyalton, which required a change in California law to accomplish.

After much discussion, directors agreed on an initial retainer fee of $7,500.

"As a board member, I would want to make sure that we go through the legal process with somebody who really knows what they are doing and is not just a general practitioner," McNett said before the vote.

Greenville businessman Ken Donnell asked what the hourly rate was after the retainer. After a shuffle of papers, McNett answered $465-$625 for principals, down to $265 for paralegals.

"Somehow this district has to generate a half to three quarters of a million dollars to get us out of that Chapter 9," McNett added.

In other district news, McNett took it upon himself to reply to a Texas man interested in buying the hospital's geothermal well for $3,000.

McNett said the man referred to conversations with neighbor Tamara Talent, and that he planned to use the heat for some sort of agricultural purposes.

McNett's reply was that directors were in the process of selling the property and were not interested in selling the well separately.

McNett also reported the comment period for the reuse study has been extended until June 30, due to interested parties asking for more time.

"There's a lot of places where the dots aren't connected," Donnell said as one such interested party.

Property boundaries need to be clearly marked, and there are minimal schematics available for plumbing and electrical - not the kind of detailed information he would expect to be included in such a study.

"The structural map of the facility is either not complete, or just not readable at this scale," he added.

Donnell wanted to know if directors would poll the voters in the district about what they wanted.

"Maybe we could do that if there's more than one offer," McNett said about plans to first declare the property as surplus. "Ultimately, it's up to the board to decide." He added there would be public meetings for input.

"We have due diligence to exercise as a public agency, like you do as a buyer - and sometimes those are not the same," he added.

McNett did agree on the property boundary issue, and will ask the attorney about that.

Donnell said he wants directors to get the full value out of the study, since it's public money that is funding it.

Plumas Corporation contracted to do the study, and its directors have the power to ask for amendments and additions to the report.

Those who did not have a chance to peruse a locally held copy of the study may contact the Indian Valley Chamber of Commerce at 284-6633 or stop by the Greenville Branch Library.

Those with Internet access may download a copy of the plan, tables and appendices from ftp.lwrnc.com, with plumas as the username and hospital as the password.

Barring special meetings, directors of the Indian Valley Health Care District meet the first Mondays of September, December, March and June at 5:30 p.m. in the Indian Valley Civic Center at 430 Main St. in Greenville.

For more information, leave a message at 284-7191.
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