Hospital needs medical buildingApr 22nd, 2011 | By William Dilella | Category: News
Meraux Foundation President claims no intentions for their own structure
The April 19 St. Bernard Parish Council Meeting included a progress report on the parish’s new hospital. And as the project nears the 2012 completion date, contentions about the medical office building have been raised by The Meraux Foundation, specifically, the alterations to donation documents.
The original documents
This is not the first change proposed to the land donation documents.
Councilman At-Large East Wayne Landry said the initial donation documents between The Meraux Foundation and St. Bernard’s Hospital District included phrasing that could give The Meraux Foundation control over what services would be offered at the hospital.
The final version of the donation documents did not include this language.
“I objected vehemently to that language before we accepted that document,” said Councilman Landry, who is also on the Hospital Board. Landry said that clause was almost a “deal killer” for the donation, had that land not been the last site available.
Now the Meraux Foundation is being asked to amend the documents once more to incorporate an adjoining medical office building, said Meraux Foundation President Rita Gue.
If the wording was changed, The Hospital Board could then use tax credits to build the offices, said Landry.
However, since the facility would not be a part of the hospital facility, the donation documents must allow for a third party LLC or foundation, said Gue.
Revenue for the hospital
“The medical office building is typically a revenue producing entity for the hospital,” said Landry. “[The building is] always rented out, and the rents come in and there is no debt on it.” And since there would be no debt on the building, all of the money coming in could then be used to offset loses that a hospital incurs in various departments.
“It really doesn’t make sense for us not to do it, if we could put the money together to do it,” Landry said.
However, according to Landry, the Hospital Board that is overseeing the construction process cannot generate the tax credits that the parish plans to use to build the medical office structure. That has to come from a foundation or third party LLC. The tax credits and the revenue from the building, which would later be rented out to offset the costs incurred by the hospital, could be well into the millions of dollars according to Councilman Landry.
Landry speculated that the reason The Meraux Foundation is objecting to the alterations and amendments to the donation documents is for their own ulterior motives.
“It would not jeopardize their tax credits for donating the land,” said Landry “I believe that…one theory of why they didn’t want to cooperate with this is that maybe they thought that by [the Hospital Board] not getting the full benefit of the new market tax credits, that we would not be able to financially afford to build the medical office building, and they could come in at that point and build one,” said Landry.
If this were the case, Landry said, The Meraux Foundation could then rent out their facility to the physicians and reap the rewards.
“We need to have…a place for the doctors to practice out of in close proximity to the hospital,” Landry said.
The Meraux Foundation responds
Meraux Foundation President Gue responded to Councilman Landry’s comments in a telephone interview. Gue said that the issue is not the building, but how potential changes to the donation documents may affect The Meraux Foundation.
“[The Hospital Board] wants us to change the verbage in the donation,” said Gue. “Because that’s the way they can get extra tax credits.”
Gue said, “We [The Meraux Foundation] have to be very cautious in our donations,” since The Foundation and its dealings are closely scrutinized by the IRS.
As for the proposed medical offices, Gue said that even though the Hospital Board and The Meraux Foundation have not seen eye to eye on the alterations to documents, The Foundation has no plans for their own structure.
“That is absolutely not true. It is not true at all,” Gue said about Landry’s speculation. “We knew from the beginning that they wanted their own medical building.” Gue said. “We understand that a medical office building is necessary…we have no objection.”
“When we made the land donation…Mr. Landry, from day one, never wanted [the hospital] on our property,” said Gue. “It’s unfortunate [the Hospital Board members] are not appreciating this land.”