Tuesday, September 20, 2011

Mayor Zimmer to City Council: Bond up to $5 million to stave off hospital closure

Office of the Mayor announces:


Below is a letter from Mayor Dawn Zimmer to City Council members regarding Hoboken University Medical Center.


Dear Council members,

The negotiations to save HUMC (“Hospital”) have reached a critical juncture. For almost two years the Hoboken Municipal Hospital Authority ("HMHA") has been working diligently to find a strategic alternative to ensure the long term viability of the Hospital and preserve this vital safety net that serves the City of Hoboken and surrounding communities. Since 2007, the Hospital’s management company, Hudson Health Care Inc.("HHI"), incurred significant unsecured debts to vendors who provide products and services. HHI failed to provide HMHA with timely and accurate information regarding the true fiscal condition of the Hospital. In order to sell the Hospital and secure the future of health care services in Hoboken, retain over 1200 jobs and relieve the City of a bond guarantee of over $51 Million dollars, the Administration is putting forward tomorrow, on an emergency basis, a bond ordinance which is designed to put the City in a position to contribute funds to make a final offer to the HHI Creditors Committee so that HMHA and HHI can proceed with the sale of the Hospital. The City's contribution, while not required under any law or legislation, is intended to contribute toward the funding necessary to save the Hospital.

The maximum amount that I believe is appropriate for the City to contribute is up to $5 million, and that is the funding authority that will be included in the ordinance to be presented tomorrow. Even if the full amount of this authorization were offered to the HHI Creditors Committee, there can be no assurance that they will accept a settlement on terms that can be achieved with this contribution. The members of the Creditors Committee, PSE&G, Sodexo, Cardinal, Metassets and the Hospital’s two unions, 1199J and JNESO, will have to decide if this contribution by the City is sufficient to approve the sale and settlement agreement or whether they would prefer to see the Hospital close. If six City Council members disagree with my assessment and believe that the City’s contribution should be for a higher amount, then the Council should pass a resolution reflecting the will of the Council

I know this is an unusual approach, but given the enormous importance of this matter to our residents and taxpayers, I believe it is my obligation to present this to the Council in this manner.

If either no bond ordinance receives six votes on first reading, or if the amount approved is ultimately not sufficient to reach an agreement then the hospital will be forced to close, most probably by the end of October.

Under separate cover a cash flow analysis will be sent to you today so that you will fully understand that the hospital simply cannot survive unless a settlement is reached and the sale is completed.

The hearing in federal court has been rescheduled for this Thursday in order to give the Council time to vote on this most urgent matter.

Thank you,

Mayor Dawn Zimmer

Talking Ed Note: MSV normally doesn't comment below releases to us by officials as a matter of policy. In this instance, we're doing so to make it clear: you want transparency, well now you got it.

This is the final chance to keep the hospital open. It will cost Hoboken taxpayers more if such a bond ordinance passes. It's public, the end and final.

The creditors will now be holding much in the balance. If they balk at a settlement no later than Thursday, the hospital can not buy any more time. It will be forced to close.

State of NJ : Hospital stays open 7 years in a sale, no deed restriction required Beth'

Objective information available from the State to the public on its State Health Planning Board website details there is no need for any contractual seven year obligation to keep the hospital open for that duration.

It already exists.

Councilwoman Beth Mason likely aware of this State requirement is consistently misleading the public there is nothing in the agreement between Holdco and the City stating a seven year agreement the hospital will be kept open.  Well that's technically correct.  It's not there because it doesn't need to be.  The State is the governing authority.

A reader closely following the developments like many others correctly notes:

The entire recommendation of the Department of Health & Senior Services to the State Health Planning Board is available on the SHPB’s website through the link for their August 4th meeting.

There are 20 requirements in the recommendation and number four states:

HUMC Hold, LLC shall operate HUMC as a general hospital, in compliance with all regulatory requirements for at least seven years.  This condition shall be imposed as a contractual condition of any subsequent sale or transfer, subject to appropriate regulatory or legal review, by HUMC Holdco, LLC within the seven year period.

The State imposed a similar requirement on the sale of Meadowlands Hospital last year.

Talking Ed Note: Earlier the Hudson Reporter noted this calling the seven year timeline keeping the hospital open a contractual obligation without referencing the actual State input.

Recent stories by NJ.com however have not noted the State's role keeping the hospital open seven years in a sale to Holdco.

Beth Mason: 'Got ya!' Back with even more hospital ruses!

Councilwoman Beth Mason smells blood in the water and she's onto the scent of her victim.  Okay it's a pick'em as in her sights are both the hospital and the mayor.  From this latest crafted release of distortions, the half-truth, and and the absolute fabrication, the most difficult decision is to decide which of the two she seeks to destroy more.

MSV doesn't do polls but with the constant stream of misinformation being pumped out by Beth Mason, citywide mind you, we may need you the reader to help us decide!

Here the propaganda is steeped with soft language out of the gate in order to move you along to her list of demands.  In Beth Mason's mind, this isn't a deal being crafted to a finish with a hovering deadlines of depleting funds to save the hospital; this is a game where you up the ante and demand x, y and z after you've moved the goalposts a few times.

One interesting claim is that the mayor "will likely ask the taxpayers to finance" bills to the creditors.  Why is that "likely?"  Did you not have time in your whole day yesterday to make a direct inquiry between massages and the nail salon?

Okay, without further adieu, here is Episode IX, Beth Mason's list of ransom demands on the Hoboken University Medical Center sale.  No, they don't have to make sense or meet any legal standard.  Remember, these are hostage demands and not just any but Beth Mason hostage demands.

Dear Friend,

           I am writing to inform you the Hoboken Municipal Hospital Authority and its creditors have postponed their court hearing again.  I understand that this is because the parties have not come to terms on a settlement agreement.  Under the current circumstances, Mayor Zimmer will likely ask the taxpayers to finance a substantial additional outlay by our City.


           While the Authority’s sale process has been secretive and flawed from the beginning, the reality is simple.  If the City does not settle with the creditors, the Mayor has said the hospital will close.

Should the taxpayers of Hoboken be asked to pay a large sum to settle this matter, the buyer must be held to its promise that our hospital remain open as an acute care facility for at least seven years.  I will not agree to a settlement that simply paves the way for more tax-abated, out-of-scale high-rise development in the core of our City. 


It is time to pull back the veil of secrecy and allow the people of Hoboken to participate in a process that is asking them to commit millions of dollars to save the hospital.  Before the Mayor and Hospital Authority spend your hard-earned money on a settlement agreement, I am calling on them to do the following:   

1.     Release the latest version of the hospital sales contract, and conduct all future Hoboken City Council hearings on a settlement in public. 

2.     Prohibit residential development of the hospital property through a deed restriction.
3.     Remove all references to PILOTS and other tax abatements from the contract.  
4.     Hold the buyer to its promise to invest $20 million for improvements.  This was touted as one of the key reasons for the buyer’s selection.  However, the contract the Authority negotiated leaves this provision entirely to the buyer’s discretion.  Without these critical capital improvements, the future success of our hospital cannot be assured. 
5.     Release all depositions given by City officials and Authority board members, and all documents produced by them in the litigation.  Hoboken residents and taxpayers must be allowed to see what role City officials and board members played in this secretive and costly process. 
From the beginning the Mayor and the Hospital Authority selected a bidder based on political allegiances rather than merit.   It is time for the Mayor and the Authority to stop playing politics with this sale and put people first. 


MSV will be back with some of the required corrections other local media won't do.  They have this non-journalistic rule or something beyond getting at the truth.  I think the golden rule is "he said, she said" and the truth doesn't get probed.

We'll make an exception for one intrepid reporter who is continuously moving the bar forward by going deeper but we don't want to embarrass Ray with that inglorious (from us) attention.

UPDATE: 9:55 am - A reliable source (not connected to the City) with knowledge on the hospital's pending sale efforts stated Beth Mason's characterization of the court hearing is inaccurate.  The Federal hearing in bankruptcy court originally scheduled for Wednesday was only pushed back one day to THURSDAY in order to allow both sides to continue work on reaching a settlement.

That sounds like progress.

Spread the word!

UPDATE 11:30 - A story now appearing on NJ.com states the negotiations are in full throttle with the closure of the hospital very much at stake.  The creditors owed $34 million are seeking an additional $10-12 million to the $5 million currently offered.

While City Hall is apparently looking to bond for part of this money to save the hospital and settle objections by creditors, Beth Mason is saying she will consider voting for a bond only if her demands are met.

The story suggests she insists on a deed restriction even though the condition of bidders to keep the hospital open for seven years as an acute care facility has already been contractually met!  Councilman Ravi Bhalla earlier called that demand "a poison pill" that would scuttle the financing for the deal AND CAUSE THE HOSPITAL TO CLOSE.

This is getting ugly.  Holdco needs to kick in some money and probably will but once again, it's the Hoboken taxpayers being asked to provide a bond for some of the costs to get the deal across the finish line.  The City earlier came to an agreement with the hospital surrendering millions owed as part of a direct settlement agreement in the hope to advance the sale.

A bond ordinance to provide any monies toward a final deal keeping the hospital open needs six votes.  The mayor's allies on the City Council are probably going to be reasonable on a bonding figure toward saving the hospital, leaving one vote necessary for any bonding toward finalizing the hospital sale.

Tim Occhipinti will do as he's told based on Mason's marching orders since he's been bought and paid long ago, but what will Council members Terry Castellano and Michael Russo do if a final figure is placed before them to save the hospital once and for all?

Will they go along with Beth Mason's poison pill?

Related: The Hudson Reporter has its story up stating the City is being asked to kick in approximately $9 million to satisfy a settlement with the creditors.  The story also says three creditors have gone ahead and filed an objection to the existing settlement terms.

UPDATE 12: 45 MSV is not sure if there is no settlement agreement by Thursday, what the bankruptcy judge will determine and if he will make a conclusive ruling that day.  A determination on the bankruptcy's creditors needs to be resolved before any sale of the hospital can be completed.

UPDATE 1:40 At least one reliable source (again not connected to City Hall) feels things are moving in the right direction on working toward a settlement.  There should be more news coming out today, not necessarily in regards to that issue.