Rent with difficulties

This came in from Helen Marshall:

I am not an accountant and have not examined the EPCH books.  But the constant reference to “rent” being paid to the UMC has puzzled me.  How can UMC charge rent for facilities that were built with yet another taxpayer-funded bond issue?  

The explanation from a friend at the Times is:  “UMC’s explanation has been published several times. They say the rent is meant to pay for upkeep, rather than taking on additional debt to pay for such things. Children’s isn’t disputing the rent as much as they’re saying they were overcharged for other services.”

So the rent is not rent.  Got that?

I hope the judge in Austin will hire at least one good CPA to untangle this mess.

* * * * * * * * * *

Then she sent this in Sunday:

In the letters section of today’s El Paso Times, we read this about the Children’s Hospital:

“Editor’s note:  The building housing Children’s Hospital is owned by University Medical Center.  The bonds to build the facility were issued by UMC, and those bonds are repaid through property taxes collected by UMC.”

So it is rent.

The real owners are the property taxpayers, who are about to get whacked.

http://www.elpasotimes.com/opinion/ci_28179173/childrens-physicians-staff-deserve-support

16 Responses to Rent with difficulties

  1. Reality Checker says:

    The Feds should look into the uses of the $120 million that was borrowed for the “construction” of Children’s Hospital. County court won’t do it. It’s now clear that foxes were guarding the hen house.

    A presentation, which appears to have been made by Valenti, stated that $71 million would be used for site improvements and construction. A 2012 post-construction article on the Healthcare Design website said the construction costs were $22 million, excluding land. Big difference.

    Approximately $23 mil was earmarked for project Administrative Fees, Professional Fees, and Owner’s Contingency. Another $20 million was earmarked for equipment. $2 mil went to loan origination fees.

    Where did all of the $120 million REALLY go? Someone should dig into the details and specific payments. Look at the checks and the parties that received the monies.

    Was part of the $120 million funneled to UMC in the form of project fees totally unrelated to the provision of medical services after CH opened. Did UMC profit from the construction project? Was UMC paid professional fees for masterminding a faulty business proforma?

    This presentation also represented that CH would make money starting in its second year of operation.

    This is the link to the presentation. See how long it takes UMC to remove it from their server.

    http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&ved=0CDQQFjAE&url=http%3A%2F%2Fwww.umcelpaso.org%2Fwebshell%2Fumcep.nsf%2F01a12c2dcd68bad0872566bf0057f2b1%2F9e8df87928539059872572d00053632e%2F%24FILE%2FChildren%2527s%2520Hospital.pps&ei=TXdoVfDGHoPmsAX02IE4&usg=AFQjCNGXRHJj7nDdmdVOABV565olK5MmHQ&sig2=gAKJa3OrTPrc7yhMD_k2_A&bvm=bv.93990622,d.b2w

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  2. Hawkeye Pierce says:

    UMC defenders and CH critics keep disregarding that it was Valenti and his team who spearheaded the Childen’s Hospital planning and feasibility studies. Valenti and UMC developed the financial proformas as indicated in UMC board meeting minutes. They took the lead on selling the CH concept and bonds to the public. His team structured the entire Children’s Hospital deal from the very start. If CH is a failure for financial reasons, Valenti bears a lot of the responsibility for the structure, the faulty assumptions, and for letting the CH debt to UMC get so far out of control.

    From the beginning, UMC saw CH as part of its own empire — under its umbrella. They set CH up as a separate entity to qualify for preferred reimbursements from the state and federal governments. One has to wonder if that structure and their intentions were less than honest and a means of gaming the system, especially when UMC was benefiting by charging CH for services provided at what some allege were egregious prices. How was that not a conflict of interest?

    I suspect that Valenti also thought that by letting things slide and letting CH run up a big bill, people would just hand him the keys to the CH kingdom. It is looking more and more like UMC bled CH to try to cover up its own financial issues. Maybe that was the idea from the very beginning. But Valenti still has his job. Many of his former low-level employees do not.

    http://www.epcounty.com/judge/epincchildrenshosp.htm

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    • Helen Marshall says:

      Bingo!!!

      Like

    • Trapper John says:

      Dr Carlos Gutierrez is a very honorable and courageous person to speak out and take responsibility as a founding board member who signed off on this contract.

      See video here
      Founding Children’s board member regrets signing contract
      http://www.kvia.com/video/founding-childrens-board-member-regrets-signing-contract/33213110

      Apparently the contracts were presented on a short time frame and the founding board members were pressured to sign under threat of months in delay to open the CH.

      On a related note it is interesting with all the speculation as to why CH board members resigned they did not include the most obvious and common occurrence in El Paso which is retaliation and threats to financial livelihood.

      Like

      • Reality Checker says:

        In all likelihood, one or more of the board members were told to resign or that they would be persona non grata in certain circles.

        Some local power brokers also place their underlings and friends on boards when it serves their interests and then have them resign when things don’t go their way or when things go to s&!t.

        It was humorous that the Times chose to quote a sociology professor rather than a businessperson to speculate and theorize about corporate board dynamics and resignations. Maybe that was the one person who gave them what they wanted so that they could spin the resignations a certain way.

        Like

    • ManintheMoon says:

      Thank you Hawkeye Pierce that you pointed out that UMC has it’s own debt issues beyond CH but we hear nothing about this fact from Vero, members of the CCC or UMC. The question must be asked why!!!!

      Like

  3. ManintheMoon says:

    The tax payers are not about to get just wacked they are about take a beating with the big tax stick until they are black and blue. Vero and million dollar man Valenti are about to beat us tax payers until we see stars. Maybe they should be charged with tax payer abuse. Watch we will be forced the cover CH and then told we have to cover more debt of UMC then the county will want another pound of flesh for their self this year.
    Yep we will be bloody and badly bruised before this tax frenzy season is over.

    Like

  4. U says:

    NO its not rent. It sits on County owned land. The CH is not part of UMC. Now that bankruptcy papers have been filed the information that has been hidden is going to come out. UMC has been using the CH to cover its own deficits. Everything should start coming out soon. V may resign soon if the bankruptcy goes forward

    Like

    • Reality Checker says:

      When it is advantageous to UMC, they say that CH is part of UMC and under UMC’s “umbrella”. When it’s not to their advantage for CH to be part of UMC, they take the opposite position. UMC wants it both ways, so that they can get the maximum financial benefit.

      The UMC Foundation claims to be the clearinghouse for donations to CH.

      http://umcfoundationelpaso.org/page_2_17_17.html

      However, someone forgot to tell the Foundation that the hospital is already open.

      http://umcfoundationelpaso.org/nav_1_1_0.html

      The UMC Foundation has, however, deactivated links to the CH website.

      I wonder if funds donated to CH through the UMC Foundation are being forwarded to CH.

      Valenti’s bio on the UMC Foundation website claims he is a member of the CH board. It has stated that for at least a year if not longer.

      http://mcamericas.org/james-valenti

      The former UMC chairperson also sat on the CH board while things were spiraling out of control.

      The truth apparently doesn’t matter.

      Like

    • question for U ! says:

      U, how much was UMC charging the children’s hospital for rent per year ?

      Like

  5. will says:

    valenti knew this coming and still took his fooking bonus. what a ccksckr. at least we now see how the rent taken my umc from the children’s could be spent as they pleased without regard for the taxpayer.

    Like

  6. Haiduc says:

    HealthCare is not free…We Taxpayers Pay for our and everybody else’s healthcare too….unless you are the EPCH’s Board 😦 Bankruptcy is the Worse Option !!!!!!!

    Like

  7. Well, I guess this finally answers the question that has been nagging me since forever. But, I still have to ask: Why, in the name of all that is Holy, should we, the taxpayers, have to pay twice for this facility?! If we are paying for the bond that built it, it just does not seem at all logical that we should keep on paying for it! As Ms. Marshall said, let’s hope they have a really good CPA to untangle the mess, but perhaps it would be better to engage the services of a good forensic accountant?

    Like

    • Reality Checker says:

      We’ll pay way more than twice. Over the past 5 years, we’ve paid more than $42 mil in interest alone for the Children’s Hospital building and equipment. That’s more than 30% of the value of the project just in interest in just five years. We’ve paid less than $6 mil in principal, so we still owe 95% of the amount borrowed.

      Even if we paid off the debt today with no early payment penalty, we would have paid nearly $160 million for the CH building and equipment alone. That doesn’t include the $10 mil per year that UMC is charging you for rent on the building that you already own. That also does not include any of the CH operating losses.

      Like

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