To the citizens of Bridgeport,
As you all know the local hospital has changed owners, due to the fact the previous owners filed bankruptcy. I will attempt to give you more information and explain what impact this has on the city.
On March 1, 2005, the city entered into a Chapter 380 agreement with the hospital for an economic development incentive, agreeing to assist the hospital in locating, constructing and operating a non-profit medical facility in Bridgeport.
Over a year later, on Oct. 17, 2006, the city rescinded the previous 380 agreement and entered into a new agreement with the hospital. This agreement was to provide a secondary line of credit to assist the hospital if ever needed. This was required to make the hospital group sound financially and to assist in the sale of the bonds; the city was told by hospital administrators these funds would probably never be spent.
On Jan. 10, 2007, the city executed a limited guaranty with Compass Bank in the amount of $3 million as a line of credit on behalf of the hospital. However there were no checks and balances put in place in this agreement on how or when the money would be spent.
On March 3, 2009, the city was informed as guarantor to the revolving note between the hospital and Compass Bank that no funds had been withdrawn as of that date. Later that month, the city was notified by Compass Bank that the $3 million line of credit had been exhausted by the hospital.
For three months, the hospital made the interest payments on the loan. However in June 2009 they stopped making the payments and the city started making them. The interest payments were a little over $13,000 per month funded by the taxpayers of the City of Bridgeport; the city continued making the interest payments through December 2011.
On Sept. 9, 2011, Compass Bank filed suit to obtain Agreed Declaratory Judgment against the city. This judgment made the Chapter 380 agreement between the city and the hospital valid and binding, requiring the city to finance the line of credit as Revenue Bonds in December 2011.
On April 9, 2012, the city filed a lawsuit against the hospital to recoup the $3 million loan and other expenses, and obtained an agreed judgement in the amount of $3,481,506.95 plus interest. This was an acknowledgement that the hospital was responsible for the monies owed to the city, but would probably not be able to repay the debt.
The hospital was also delinquent in paying their utility bills to the city, so we worked out an agreement for them to become current on past due payments. They made weekly payments on this balance until Nov. 8, 2012, when the hospital filed for bankruptcy, leaving their balance on utilities at $154,919.12.
The note the city currently has with BBVA Compass Bank is $3,075,000 at 5.5 percent interest. This was the lowest rate we could obtain due to the financial crisis the city was still coming out of during 2011.
Our payments on the note occur twice a year: every June there is an interest payment only in the amount of $85,971.88, and in January there is a principal and interest payment of $84,562.50. This brings our total yearly payment to $170,534.38. This 20-year note matures on Dec. 28, 2031. Unfortunately, these payments now have to be a budgeted item annually for the city and its taxpayers.
Thankfully, the City of Bridgeport is currently in a sound financial position due to the hard work and cost-cutting measures taken by the current city council, mayor and staff.
Any future financial agreements between the city and other entities that would obligate the taxpayers of Bridgeport would be considered extremely cautiously and with adequate safeguards for those taxpayers.
Hindsight is always 20/20; we must now all work together to continue to make this city a great place to live, work and raise our children and grandchildren.
Keith McComis is the mayor of Bridgeport.