Hospital bond option in jeopardy

 By Debbie Teofilo
Special to the Sun

Last month the Kern Valley Healthcare District (KVHD) announced it would be considering general obligation (GO) bonds as an alternative to a parcel tax to fund its state-mandated hospital remodel. The June 20 edition of the Kern Valley Sun reported on KVHD’s scaled-down remodel plans and compared the tax rates that property owners would be assessed for both the GO bonds and parcel tax options.

On July 10, KVHD was notified that the maximum amount of tax funding that can be raised with GO bonds is $10 million less than what is needed for the remodel. Unless KVHD can cut this amount out of the construction cost, a parcel tax will remain the only option to fund the project.

When Proposition 13 was passed in 1978, the California legislature lowered property taxes by changing assessed value calculations in the state Taxation Code. However, this same change was not made in the Health and Safety Code regarding GO bonds for hospital districts, unintentionally allowing higher tax collections when using that code. This discrepancy was not discovered until last week, so KVHD thought it could fund $38 million of the remodel with GO bonds. Instead, it was learned that the maximum amount of taxes a GO bond can raise in this healthcare district is about $28 million.

If the public debt portion of the remodel remains at $38 million rather than the $28 million maximum for a GO bond, only a parcel tax can be used to raise the needed funds. Yet many residents have expressed the preference for a bond to fund the construction rather than a parcel tax. The only way to retain the option for a GO bond ballot measure is for KVHD to find a way to cut another $10 million from the remodel costs.

Using the priorities expressed by the public plus severe cost-cutting measures, KVHD is trying to create a remodel design that is $10 million less so a GO bond can remain an option and at the same time, further reduce the overall cost to taxpayers regardless of which funding option is chosen.

Regarding the financing method, CEO Tim McGlew stated, “We really took the public comments to heart, and what struck a nerve with us were seniors and residents on fixed incomes. GO bonds would lower their tax burden significantly so we wanted to make sure that bonds are still an option for the tax measure.”

The revised remodel designs will be reviewed by the state during the week of July 16 to be certain they will still meet seismic requirements and other state regulations. The following week KVHD will be able to announce if GO bonds are still an option and what the lowered tax rates will be.

KVHD has scheduled a community-wide meeting for Thursday, July 26 at the Lake Isabella Senior Center from 6:00-7:00 p.m. to share the newest plans, tax options, and final cost figures, and to hear the funding preferences of property owners.

The Board of Directors will be voting at its meeting on August 1 to authorize placement of a tax measure on the November 2018 general election ballot and to choose either a bond or parcel tax as the funding method. That meeting will be held in the Hospital Administrative Conference Room at 6:00 p.m. The public is encouraged to attend.