Saturday, September 26, 2009

How Much Will The Wishard Bond Issue Raise Your Property Taxes?

I know Matt Gutwein and all the other proponents of the new Wishard Hospital with a financial stake in the outcome have been busy telling everyone that the Health & Hospital Corporation can borrow more than $700 million to build a new hospital and not have to raise your property taxes one dime, but the little-discussed public notices the HHC is legally required to run in the Indianapolis Star tells quite a different story.

Let's begin by setting the record straight. According to the public notice, the Marion County Building Authority and not the Health & Hospital Corporation will be issuing general obligation bonds and revenue bonds. The total bond issue is expected to be $703,400,000. Interest costs may add an additional $830 million to the project over a 30-year period. A smaller amount of Build America bonds will also be issued, although the public notice does not specify the amount. The HHC intends to lease the new hospital facility from the Building Authority over a 30-year period at an annual cost of $54.8 million. Total lease payments payable by the HHC to the Building Authority are estimated to be $1.478 billion.

The HHC currently has a certified tax levy of $3.7 million and is levying $0.0085 per $100 of assessed value for its debt service fund. After these new bonds are issued, the certified tax levy amount is expected to climb to $54.8 million based with a tax levy of $0.1494 per $100 of assessed value.

The public notice makes it abundantly clear that repayment of the bonds is secured by property taxes. If the bond referendum is approved, the HHC will have the ability to levy up to $41.73 million annually in higher property taxes, making it one of the largest property tax increases in Marion County history. Remember, once a project like this is approved, it will fall outside the protection of the property tax caps that limit the amount of property taxes local governments may collect based on a percentage of a property's assessed valuation. More importantly, none of these facts are laid out in the public referendum question that will be put to voters in the November special election. It doesn't even state expressly that the bond proceeds will be used to build a new hospital! Here's the bond referendum language. Note how misleading and uninformitive it is.

“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: 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 allow Wishard to provide specialized care, including to victims suffering from traumatic injuries or severe burns; and 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?”


Carl E Moldthan said...

FYI: This Monday (9/28) on Abdul In The Morning Show (WXNT, AM 1430), the Indianapolis Taxpayers Association will present organized opposition to Wishard Hospital & Indiana University's proposed property tax increase.

Gary R. Welsh said...

That's good to hear, Carl. Why are you shutting the rest of us out? You spent an hour on the telephone with me taking up my time and telling me there was going to be a meeting with several people to begin organizing an opposition and then you just disappeared. What gives? With all due respect, you're probably a day late and a dollar short.

Had Enough Indy? said...

AI - that's an excellent point about any new Wishard property taxes being outside the caps. It just didn't dawn on me.

H&H actually takes in more than the $3.7 Million you mention here - more like $25-30 Million for 2010. That $3.7 Million figure is the just the amount they tax us to make payments on their existing bonds that are secured with ad valorem property taxes.

According to documents provided by the Indianapolis Bond Bank Executive Director, Kevin Taylor, during the budget hearings H&H still owes $16.7M for a bond issued in 1992, and, $25.0M for a bond issued in 2005. I haven't read anything in the two public notices H&H put out that says the new bond(age) will pay off those two. So, it might be like the Hoosier Dome where the taxpayers will be paying off bonds on buildings that they simply do not own anymore, if those buildings even still exist.

One important thing remains unclear to me -- If they float bonds secured by ad valorem property taxes, are they legally required by the bond laws to actually charge for those property taxes. So, if it will cost $54M per year to pay back the bonds, do they HAVE to add $54M more in property tax levy over and above the current $25-30M levy for H&H? Or do the bond laws just say the fallback position is to increase taxes, should other sources of revenue fail to provide enough money.

Since H&H has only been profitable for a couple of years, voters should weigh how confident they are with that fact when they fill in their ballot bubble. They are guaranteeing their homes as collateral for the repayment of the bonds if the referendum passes.

Gary R. Welsh said...

Pat, You raise a good question. I would imagine the advertised levy each year would have to include enough to cover the bond debt; however, the county would not collect it unless HHC's funds are short and unable to cover it. Mechanically, I'm not certain how that is accomplished.

M Theory said...

They are definitely gunning to raise property taxes by laying the foundation to do so now.

My assessment went up another $47,000 from 2007 to 2008. They haven't raised my property tax payment yet, but they will likely to do it next year.

Everyone should start checking their property tax record for 2008 to see if their property value was raised. You might be in for a horrifying surprise: that your property drastically increased in value in spite of a down economy.