Board of Commissioners,
West Volusia Hospital Authority,
131 E. New York Ave.,
P.O. Box 509,
DeLand, FLA 32721.
As you know, Ormond is in financial straits. While the books are not open and we can not know for certain where the money might be, they have admitted suffering some operational short-falls. However, since the bonds are insured, I doubt that the bond holders are watching nervously. Even if Ormond is not able to produce cash flow to make payments, the bond holders will be made whole.
As your accountant and lawyers have assured you, the Authority is not liable for the bonds, nor can the hospital be pledged as security. As the bonds were negotiated out of the sunshine, no public purpose can attach; the faith and credit of the Authority should therefore be safe.
Into this background comes Mr. James presentation of 28-Mar-2000 and his discussion of Section 11.03 of the lease. His presentation was most interesting, in that I do not believe that we have had outside counsel examine this portion of the lease prior to his discussion.
The lease is somewhat less confusing if we have the
of terms handy:
|lessor||the West Volusia Hospital Authority|
|lessee||Memorial Hospital-West Volusia, Inc.|
|MHS||Memorial Health Systems, Inc.|
I must admit harboring a certain amount of skepticism upon hearing Mr. James presentation. I imagine that the Board did also. Having to hand a copy of the lease, including the offending §11.03(b)(ii), I have examined it and indeed find the language:
If terminated by the Lessor, Lessor will refund to MHS in cash on the date of the termination all amounts paid or actually committed to use in the Existing Facilities during the term of the Agreement (the "Advances") compunded at an annual rate of five (5%) perdent. In the event of early termination by Lessee under this Section 11.03, Lessee shall be entitled to a refund of the Advances without, however, any additional amount attributable to compounding thereof;Since it is provided in §11.03(b)(i) that the Authority shall be made the sole member of Lessee, I think that Mr. James has brought to light an interesting situation.
On 30-Sep-2000, according to the present schedule, two things happen. First, the Authority becomes the sole member (owner) of the hospital corporation. Second, the Authority may owe the hospital corporation $42 million. This fascinating result means that the Authority will owe itself a very large sum of money.
It is my hope that, if the Authority ultimately is found to owe itself that money (the debt being a probable subject of dispute), the Authority will grant itself terms so that it need not pay itself that money all at once. Perhaps we can arrange monthly payments, where we pay ourselves $50 per month for a term of years.
We may owe ourselves a lot of money. Can we trust ourselves to pay ourselves back?
CC: Al Everson / DeLand Beacon
CC: Tom Berson / Daytona News-Journal
CC: Purvette Bryant / Orlando Sentinel
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Posting of this letter is a paid political advertisement provided by Tanner Andrews, P.O. Box 1208, DeLand 32721, independent of any campaign or committee. This material is also on display at the offices of the West Volusia Hospital Authority. No candidate has approved this material.