Doctors seeking more city cushion
Published 11:23 pm Thursday, March 5, 2009
After already extending a yearlong agreement with the city of Troy, hospital owners are looking to do it again — only this time with a higher price tag.
Troy Doctors Hospital, LLC., sent a letter to the Troy City Council Thursday afternoon asking to extend an agreement to take ownership of the hospital in the event doctors can no longer afford the building.
This time though, the agreement stretches much longer than a one-year span.
"We sent a letter to the mayor and the city council requesting they extend their commitment to buy the building, which is the existing situation, from March 31 until the end of this five-year financing period we've requested from the bank," said Gil McKenzie, one of the hospital investors.
In addition to a five-year extension, though, the doctors have also asked the city to guarantee the hospital at a price $4.5 million above the original agreement.
McKenzie said since the property was appraised for $18.5 million when doctors took ownership originally, the bank requested the city agree to purchase the building for $15 million, rather than the $10.5 million already settled upon.
While the city councilmen can't take an official stance until their next meeting, Troy Mayor Jimmy Lunsford's initial reaction is one of opposition.
"My first reaction as mayor is that we will not consider increasing our guarantee from $10.5 million to $15 million," Lunsford said. "But that is not an official position at this time."
Lunsford said the request has taken city officials by surprise.
"We had not heard there was any possibility of this request coming to us," Lunsford said.
McKenzie said this backing from the city of Troy should promise a loan to continue under the ownership of he and 14 physician investors, but without it, he said there is still a chance the bank would lend the money.
"It is easier for the bank to loan the money if they know the city would be willing to buy the land and building at some point in the future, if they'd be willing to buy it on those amounts," McKenzie said.
But even McKenzie said he isn't sure whether the city would agree on those terms. "They've expressed they would be willing to agree to the extension, but I'm not sure if they'll be able to go along with the increased purchase price or not," McKenzie said. "If they don't, hopefully we'll still be able to get a loan."
McKenzie said there's no timeline on this decision that would enhance the doctors' chances of financing, but he hopes the city will decide within the next few weeks.
Lunsford said the upcoming city council meeting, which is Tuesday, will not be adequate time to make a decision, since an announcement has to be made at least seven days prior to decisions.
Lunsford is still uncertain whether the council will call a special meeting or make a decision in the March 24 council meeting.
Also Thursday, hospital owners met and elected new members to the Board of Directors, which serves as the management team of the hospital.
Only McKenzie, John Crosby and Wilton McCrae were reelected to serve. New members include: Chairman Chuck Wood, Vice Chairman KT Cole, Secretary/Treasurer Yanni Tempelis, Cheryll Dichiara and Will Smith.
McKenzie said the change came after the doctors originally appointed a board last year to meet a timeline for purchase.
"We had thought when we got our feet off the ground and when we had time, we would come back and go through the election process," McKenzie said. "This was not any attempt to replace the existing board."