Aldermen approve tax credit for potential buyer of hospitalPublished 12:06am Wednesday, April 23, 2014
NATCHEZ — Natchez Aldermen unanimously agreed Tuesday to give a potential buyer of Natchez Regional Medical Center a tax credit to help pay the bankrupt hospital’s debt.
The city’s move was crucial to a proposed deal to sell the county-owned hospital to a private company.
Natchez Regional Board Attorney Walter Brown made the request before the city board. Brown explained that the hospital was finalizing an asset-purchase agreement and the city’s approval of the resolution would be a “quick step forward.”
While details of the proposed sale have thus far been kept from the public through confidentiality agreements, sources close to the sale process said Community Health Systems — the parent company of Natchez Community Hospital — has offered to purchase NRMC for a total of $18 million. That total reportedly includes $10 million in cash for the hospital and an additional $8 million in pre-paid property taxes.
Since the facility is located inside the Natchez city limits, any such tax agreement needs the City’s blessing. A public hospital since its inception in the 1950s, Natchez Regional has never paid property taxes. Brown said the sales price for the hospital that’s been discussed is not high enough to pay off all the creditors associated with the hospital.
“We’re asking them to prepay taxes to reach a number to do that,” Brown said. “If (the buyer) prepays, (the buyer) will get a credit. This helps the process go forward and enable us to hopefully sell this hospital to satisfy our creditors.
“The other provisions of this agreement do not involve the city, concern the city or obligate the city.”
Alderman Dan Dillard replied to Brown’s comment, saying the potential sale does in fact concern the city.
“It is obvious that the city participation in these matters is significant and important to the well being of the medical community as it exists in Natchez and Adams County,” Dillard said. “We find ourselves in very peculiar circumstances, but I just think the gravity of it all warrants our participation into these matters.”
Natchez Mayor Butch Brown told the board after the unanimous approval that the city’s involvement would help the potential sale move forward.
“Though we’re not on the mortgage so to say, we’re allowing this process to move forward with the city and county and endorsing the position of the county,” Mayor Brown said. “This deal would not even be do-able if the city did not participate. It’s hard for this board to keep agreeing to all these deals with the county — recreation, fire, hospital — and not getting cooperation in return.
“It’s frustrating to this board.”
Once the hospital reaches an asset agreement with its buyer, the county supervisors will officially adopt or reject the offer. If the supervisors ratify the offer, the hospital will be placed on the market for bid.
If no one outbids the negotiated purchase agreement at sale, the hospital automatically goes to the buyer.
The hospital board of trustees announced in February its intention to declare bankruptcy.
The hospital released its 2013 audit Monday. The audit showed the hospital lost $7.6 million during the 2013 fiscal year.
The federal bankruptcy court overseeing the hospital’s Chapter 9 filing will decide at 10 a.m. Thursday if it needs to appoint a special patient advocate for the duration of the process.
The court will hear matters in the Southern District of Mississippi Courtroom in Natchez.
Ward 3 Alderwoman Sarah Smith recused herself from the vote based on the suggestion of City Attorney Hyde Carby.