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Tri-Lakes Hospital

Hospital tax relief may not be legal

By John Howell

About 40 employees of Tri-Lakes Medical Center attended Tuesday’s meeting of Batesville’s mayor and aldermen in support of a request by hospital management that the city take no further action in federal bankruptcy court to collect past due ad valorem taxes.

The request from Healthcare Management Partners Managing Director Michael Morgan and Tri-Lakes Director of Administrative Services Vince Brummett was prefaced by a statement from Mayor Jerry Autrey warning that the city officials “can’t do much (in open session) because the matter is in litigation.”

Panola County Chancery Clerk and Tax Assessor/Collector David Garner have filed claims in bankruptcy court seeking recovery of about $1.9 million in ad valorem taxes due the city and county. UPS Capital Credit, the senior lender in the hospital bankruptcy, has filed an objection to the claims, citing state law that exempts non-profit hospitals from ad valorem taxes. The matter is set for hearing in bankruptcy court on August 27.

City officials postponed discussion of the past due taxes until an hour-long executive session at the end meeting during which an internal personnel matter involving a city employee was also discussed.

Assistant city attorney Colmon Mitchell said, prior to the executive session, that he thought that city officials could not forgive ad valorem taxes once they have been levied.

Morgan, who was named Chief Restructuring Officer at Tri-Lakes by the bankruptcy court, described the pending sale of hospital assets under bankruptcy section 363. The buyer will either be the stalking horse bidder, Alliance Health Partners, or another buyer who submits a higher bid. The $14 million bid by Alliance includes assumption of $11 million in debt to UPS Capital Credit.

“We need at least $3 to $3.5 milion over and above … just to be able to get out of bankruptcy. That does not include $1.9 million in property taxes,” Morgan said. “I think that all these people came down to make sure the hospital remains a viable entity.

Brummett detailed the hospital’s economic impact on the community: $14 million annual payroll spread among 400 employees (“The average wage is probably one of the highest in the county, $18 an hour,” Brummett said.); $1 million spent annually with local vendors and $10 million in charity care provided to indigent patients.

Morgan said that Alliance Health Partners includes “10 syndicate physicians (who practice) here in town and work in the hospital.” The CRO said that the hospital has added a new surgeon and new obstetrician.

“We have other specialists who have expressed interest in coming in and being part of this beautiful facility you have,” Morgan added.

“What we’re asking is for the city and county not to object to the motion that the senior lenders have before the bankruptcy court,” Morgan said to the mayor and aldermen.

“I’m concerned that the city is not legally able to do that,” Mitchell replied in an interview Thursday. “I don’t think the city has that option legally.”