NEWPORT BEACH : Hospital to Get City Help on Bonds

A sharply divided City Council has decided to help Hoag Hospital issue up to $98.5 million in tax-exempt revenue bonds to refinance existing debt and fund elaborate expansion plans.

Proceeds of the bonds also will help buy equipment for the radiology therapy program, add two maternity labor delivery rooms and fund improvements on the lower campus, according to Hoag President Michael D. Stephens.

About $58.2 million will be used to pay off existing hospital debt. Almost $33 million will go toward facility expansion of the emergency care and cardiology units which will almost double the size of the hospital over the next 20 years.

At a meeting Monday night, the council voted 4 to 3 to authorize Hoag to issue the bonds.

Several residents, led by John A. Miller, urged the council to reject Hoag’s request.

Hoag “comes down here and presents a plan for their expansion to do indefinite changes over an indefinite amount of time with an indefinite amount of money and now, a few months later, asks you to back this bond issue,” Miller said. “I don’t see that Hoag is such a wonderful organization that it needs to be pampered and babied. Why should we do these things?”

City Manager Kevin J. Murphy said: “These are the city’s revenue bonds loaned to Hoag, and Hoag will repay through their revenues. The city will in no way guarantee repayment. . . . These bonds are backed by a letter of credit. . . . (The city) is never obligated to repay them in any way, shape or form.”

Murphy said Hoag’s request for the bonds has no relationship to the council’s action of three months ago, approving a comprehensive plan to expand Hoag Hospital.

A controversial provision of the bond proposal was a payment of $200,000 that Hoag agreed to make to the city for landscaping in the West Newport area surrounding the hospital.

Stephens said the city should have the $200,000 within two weeks after the bonds are sold.