(March 29) To meet the immediate operational and payroll deficits at Colorado River Medical Center, the city of Needles will borrow up to $400,000 put into an escrow account by Community Health Care Partners.
The city has entered into a deal to sell the hospital to Community Health Care Partners, Inc., pursuant to arrangements being worked out for the full transfer of all of the property upon which the hospital is located to that buyer. The Bureau of Land Management, which sold the property to the city decades ago so the hospital could be developed, put a revisionary clause into the terms of that original sale so that the property must revert to the Bureau if the land is ever used for a purpose it does not deem beneficial to the public. The Bureau has not yet signed off on that land transfer to Community Health Care Partners, which is owned by Bing Lum.
Community Healthcare Partners has an agreement to purchase the hospital for $2.577 million. As part of a deal accepted by the city council on February 26, a long-term escrow process for the hospital’s purchase, an interim lease, a management agreement and a leaseback agreement was set up whereby Community Healthcare Partners put $2.2 million into an escrow account and effective March 1 Community Healthcare Partners, Inc. became interim manager of Colorado River Medical Center. According to the deal forged between the city and Community Healthcare Partners, once the Bureau of Land Management gives final approval of the transfer, Community Health Care Partners will pay the city another $377,000 to complete the purchase of the hospital and the land it sits upon in full. The second closing deadline has been set for no later than February 22, 2015.
At a special joint meeting with the Needles City Council March 12, the Needles Hospital Board of Trustees approved a revolving loan and security agreement with Community Healthcare Partners. Under that arrangement, the city will be able to tap into as much as $400,000 sitting in the escrow account to pay for current and past due hospital-related operating and payroll bills and has up to 180 days to repay the loan from accounts receivable. The hospital had unpaid bills of $989,554.73 as of early this month. Previously, to ensure that payroll was met on March 9, the city had loaned the hospital $80,000.
Lum said he was amenable to the loan being made as long as it is repaid within the 180-day time frame.
City attorney John Pinkney, who counseled against advancing money out of the escrow account, nevertheless negotiated the terms of the loan and vouched for its legality. There is a security agreement with regard to the loan, extending to the possibility that the hospital purchase is not ultimately consummated whereby the full amount of the money in escrow has to be returned to Community Health Care Partners.
Board member Lana Shaw abstained in the vote to take the loan, which was approved by all other board members. The board also designated having city manager David Brownlee and the city’s in-house accountant, Sylvia Miledi, monitor the hospital’s finances from here on out.