Hospital Service District loses million over documents

The Meraux Foundation and the Hospital Service District Board’s irreconcilable differences over legal terminology in the donation documents prevented the Board from attaining tax credits in the neighborhood of $2-3 million. These credits would have assisted in the construction of the adjacent medical office building for the hospital, due for substantial completion in March 2012.

Board member and District B Councilman George Cavignac estimates the land for the hospital—the land donated by The Meraux Foundation—is valued at $250,000 per acre, for a total value of $2.7 million.

When the Board lost the $2-3 million in tax credits, they also lost all the savings earned by building on Meraux Foundation donated land.

“We could have bought a piece of land for what this is costing us,” Board Chairman and Parish Councilman at Large-East Wayne Landry said.

“When you look at a philanthropic donation, you give them the land and say ‘go execute’,” Landry said about the donation. But that has not been the case, as the wording over one single transaction has cost so much.

At the most recent St. Bernard Parish Hospital Service District Board meeting on April 26, Landry assured residents that $8 million already allocated to the project’s budget would be sufficient for the construction.

“We should be in good shape financially through out that construction phase,” Landry said.
In the meantime, the Board has authorized a grant writer to begin the search for funding to recoup the missing millions. However, even the search for that money has revived animosity. Much of the Board’s frustration was aimed at the Meraux Foundation, for all the limitations that have been imposed on the project.

“What this failure did, [it] cost us more than the donation itself was worth,” Cavignac concluded.

The Meraux Foundation responded to questions via a letter, dated April 27, which stated that,

“The HSD has now expanded the scope of the [hospital] project to include a Medical Office Building and proposes to enter into a series of multiple, complicated long-term transactions for which it seeks the Foundation’s ‘intervention and consent.’”

In the April 22 issue of The St. Bernard Voice, Foundation President Rita Gue had stated that The Meraux Foundation had been aware of the intent for a medical office building, “from the beginning.”

The letter continues:
“The convoluted transactions being proposed by the HSD, however, appear to violate the clear terms of the Donation, that require ownership and control of the donated property to remain in the public domain…”

The section refers to previous statements, also in the April 22 St. Bernard Voice article, made by Chairman Landry. Landry has asserted that an LLC had to be created to receive the proposed tax credits, since the Hospital Board cannot legally accept the money from those tax credits.

The letter then says, “Although the non-public entity would purportedly lease the Hospital and approximately one-third (1/3) of the Medical Office Building back to the HSD, this [non-public] entity would retain unspecified ‘substantive legal rights’ in the medical complex.”

The statement goes on to express concerns that this non-public entity could be used to by-pass safeguards in the donation documents or somehow circumvent the public and fair bidding process.

“The Foundation was in discussions with the attorneys for the HSD concerning these issues when the HSD abruptly advised The Foundation that it, The Foundation, had 48 hours to consent to the proposed transaction or the HSD was going to ‘proceed to participate in an alternate transaction,’” the letter read.

The letter did not comment on what legal advice had been given before the abrupt end to the discussion, nor did it indicate the Meraux Foundation had offered any alternative phrasing or changes to the donation documents, nor potential plans to aid the parish in earning alternative tax credits or funding for the complex.

Chairman Landry has proposed that the Board meet with their attorney in an executive session to discuss the matter at the next scheduled Hospital Service District meeting, on May 3.