Last night, the Indianapolis City-County Council approved the borrowing and expenditure of $853 million for the new Wishard Hospital by a vote of 23-3. This includes $703 million in new borrowing and $150 million in cash reserves. Property taxes are pledged to support the general obligation bonds that will be issued to finance the project. There's a new twist in the financing. About $60 million in old debt of the Health & Hospital Corporation will be rolled into the new debt offering by the Marion Co. Building Authority. Yes, they're stretching out debt payment on old debt to 30 years to make the HHC's financing scheme work. And yes, this hospital project will cost more than $700 million to build, notwithstanding assurances to the contrary.
The discussion of the project, which lasted all of about 10 minutes, was a complete embarrassment to the public. Nobody on the council understood how the transaction was being financed well enough to explain it. HHC CEO Matt Gutwein, who had not been scheduled to testify, had to be called up to explain what was happening to the little boys and girls in the room. The Bond Bank is issuing the bonds on behalf of the Marion Co. Building Authority, which will own the hospital property for at least 30 years. The HHC will lease the new hospital from the building authority. Although it doesn't hold title to it, HHC will approve all construction contracts and approve payments for the construction work.
Why is the Marion Co. Building Authority borrowing the money instead of HHC asked one councilor? State law limits the debt of HHC, and this amount of borrowing would surpass the state debt limit for HHC. To skirt state law, the Marion Co. Building Authority will pretend to be the owner and borrower. To pay the bond debt service, HHC will rely on about $40 million a year it anticipates making from nursing homes it pretends to own and operate. They are actually owned and operated by American Senior Communities. In order to defraud the federal government out of hundreds of millions in Medicaid payments, the HHC conjured up this scheme which allows ASC to receive double the reimbursement rates that other nursing homes in Indiana receive. ASC kicks the extra reimbursements back to HHC, which is using the money to feed the construction cartel that has a stranglehold over Marion County government because it bought and paid for all of the key decisionmakers.
Three councilors voted against the proposal, including Robert Lutz, Mike Speedy and Ginny Cain; Libertarian Ed Coleman abstained because he is employed by one of ASC's nursing homes. All three of those councilors who voted against the resolution last night supported the referendum. Lutz repeatedly lauded the HHC and Gutwein for their work on the project and assured them he supported it. He patted Gutwein on the back for inventing a scam on the federal government through the pretend ownership of nursing homes across the state of Indiana because it allegedly saves Marion County tax dollars in the long run. Nonetheless, he was concerned about the substantial costs of the project and the rolling over of old debt into the new debt offering. Gutwein assured him he would do his best to shave at least $25 million from that amount, to which Lutz responded with an "attaboy, Matt." Nonetheless, because of those reservations, Lutz voted against the project he otherwise supported. Mike Speedy offered some vague reason for voting against it, which translated to "I'm running for state representative and I have a primary opponent who might accuse me of voting to raise property taxes." Ginny Cain dittoed Lutz' and Speedy's comments, whatever that's suppose to mean.
Some of the African-American councilors were concerned about how many contracts were going to be awarded to minorities. At least 15% says Gutwein, and that's just a floor; another 8% will go to women-owned businesses. Councilor Monroe Gray reassured his colleagues. He said he's been real close to the project from the beginning and is very pleased at the goals that are being met thus far. Apparently, contracts have already been awarded in advance of the public bidding process. No surprise there. Wouldn't it shine some light on the racket behind those minority contracts if the public were allowed to see who the people are who really own those minority businesses? That's where you will find the graft, skimming and kickbacks in these projects. In summary, there are no profiles in courage on our City-County Council on this matter. It's business as usual.
11 comments:
I really don't see this as much different from what Tim Durham is (was?) accused of doing. Shifting money from the left pocket to the right, making it seem like you have twice the money you really have, and deceiving your investors.
And for them to NOW come out and disclose that $60 Mil shuffle - well that's just despicable. They completely forgot to mention that when Gutwein was doing his dong-and-dance routine.
It's the same deal as with MSA and RCA Dome. Keep churning the debt, never paying it off.
I wish I had some say in the matter. I'd insist they pay the $60M out of their $150M piggy bank.
You hit the nail on the head downtown Indy. Marion County and Indianapolis have been operating Ponzi schemes for the past two decades. We are bankrupt; it's just that the public doesn't know it yet. That'll come in due time.
Thanks Gary for being the constant thorn in the works of that criminal machine we fight.
The legal notice tying the facts to the referendum stipulated that any bonds floated by the Building Authority must be revenue bonds. So, if no bonds are to be floated by H&H, which could float general obligation bonds secured with property taxes, then we are off the hook. The Building Authority does not have the legal authority from the referendum to float general obligation bonds for this project.
I don't have any understanding of how the Building Authority can go into debt by floating new bonds to pay off H&H's old bonds. It seems that would take a separate agreement and authorization. If that debt were secured with property taxes previously, I could see the refinancing also being so linked. But, if it was secured with any other source of repayment, I would assume they'd need to get a new referendum.
"Oh, what a tangled web we weave, when first we practice to deceive."
I see from Prop 419 that H&H is issuing all the bonds - $703 M all secured by property taxes. The revenue bond option for the Building Authority was another scam on the public.
Again, I say...is it any wonder that Republicans and conservatives are losing ALL faith in their party?
They are acting just as bad as Democrats. You can't tell the difference without a program.
Representative government? Yea, right.
Has anyone requested from the Indianapolis-Marion County Building Authority the amount of assessed valuation of Indianapolis property? Is the Marion County Building Authority in violation of the 2% debt limit?
Unfortunately, government (at all levels) can legalize its theft through laws (or disregarding thereof - who can keep track; details, details), procedures, policies and legal interpretations. Unless the slumbering populace wakes up and demands change, it will continue until it all collapses. Unfortunately, when it does collapse, we will all pay a very heavy price.
Jon, You raise a good question. I can't find a state debt limit for the building authority like I found for the HHC. I don't even see where a building authority has authority to issue general obligation bonds; the statute only talks about revenue bonds.
2,000 pg of health care that's inapplicable to Congress because it's the "compassionate" thing to do, millions in expanded school district funding because it's "for the children", using our property as collateral and somehow bilking the Federal government that WE pay for because "it's the only hospital that serves the inner city", offering medical, educational, housing and food benefits routinely to non-citizens because "we have to care about the downtrodden".....
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When does this horseshit stop? When do we return to fiscal sanity and demand hard data to justify spending tax revenue? When do we return to charity coming directly from citizenry, instead of stealing it from their tax revenue so politicians can get re-elected by handing-out "free" goodies? When do we stop voting for these clowns? When will we finally say, "No"?
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