Obscure Authority in Thick of Debate, Again

The ongoing conflict between UPMC and Highmark has set up shop, briefly, at the County courthouse. Not because the Council or the Executive is bringing those parties to the table, but because there is a request to use the County’s Hospital Development Authority as a conduit through which one of the parties would like to borrow more than $330 million.

The County has had a hospital development authority since 1971. What amounts to a mission statement comes from the County’s page on boards, authorities, and commissions: "The ACHDA was created and is authorized by law to acquire, hold, construct, finance, improve, maintain, operate, own and lease, as lessee or lessor, health centers (including but not limited to, personal care facilities and nursing homes), hospitals and facilities devoted to hospital purposes. Financing is provided by the Authority through the issuance of tax-exempt bonds. The rate and term of financing are negotiated. The interest income on the bonds may be exempt from federal and Commonwealth income taxes which results in a reduced rate to the borrower (emphasis added)."

Could the County and its authority deny the borrowing as a way to force a negotiation between the providers? It is doubtful. For one, a committee approved moving the issue along and the chair of that committee was quoted as saying the County has "no effective financial leverage". And two, a denial would simply mean a borrower would go to another issuing authority to get what they want. What was surprising on this second point is that it was supposedly something committee members had not known about as implied in a newspaper article (the language said "members learned").

If that means members were surprised or caught off guard that’s interesting because the County just went through a similar episode in 2009-10 when one of the providers came asking for a refinancing as it was planning to close a facility in the Mon Valley. Membership on the committee has not changed much since then. The authority, Council, and the state Higher Educational Facilities Authority all voted to approve the $1 billion bond issue. After the state authority vote an article pointed out that "The hospital system decided to seek state approval as a contingency plan in case its efforts to issue bonds through the county authority hit a snag."