Orange County Treasurer-Tax Collector Chriss Street pulled the plug today on a proposed $80 million loan to Tri-City Medical Center in Oceanside. The publicly owned hospital had hired Street’s personal attorney, Phil Greer, to lobby O.C. supervisors — but not Street himself — on the deal.
In a memo to supervisors, Street said financial uncertainties, including fierce competition and local voters’ unwillingness to raise taxes, outweighed the hospital’s strengths.
An analysis prepared last week by Street’s chief investment officer, Paul Cocking, cited “recent turmoil at the board level” as one reason for turning down the hospital loan. The board ousted management in late 2008, and several of the former managers are suing.
The district’s voters turned down a bond measure to rebuild the hospital, which faces a 2030 deadline to meet state earthquake standards.
Tri-City also faces two well-funded competitors, Palomar Pomerado Health, which is completing a $900 million expansion, and Scripps Health, which is beginning a $350 million expansion, Cocking wrote.
“Community residents may like the idea of a local hospital,” Cocking wrote. “However, they seem to prefer a hospital not supported by taxes.”
Tri-City had borrowed $58.3 million in spring 2007 using “auction-rate securities,” essentially a series of 1-week loans. Auction-rate securities were popular at the time because interest rates for public agencies were low.
But just a few months later, in mid-2007, the worldwide credit crunch erupted, squeezing the auction-rate market tight. Interest on the Tri-City loan soared from the expected 3 percent to peak at 17.5 percent. Tri-City was paying $500,000 a month more in interest than it had expected.
Desperate to refinance, the hospital district turned first to San Diego County Treasurer-Tax Collector Dan McAllister. When McAllister wouldn’t bite, the district turn to Orange County.
The district hired Greer – who has represented four of the five O.C. supervisors as well as Street – to lobby the supervisors in August for $50,000. It promised him an additional $200,000 if the supervisors approved the loan by Sept. 9. That deadline came and passed with the loan request still in Street’s office.
Greer represents Street in a pending lawsuit accusing the treasurer of defrauding the bankrupt Fruehauf Trailer Corp. when he was its trustee. That lawsuit is scheduled for trial in Los Angeles in early February.
Greer and Tri-City CEO Larry Anderson did not return messages seeking comment.
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