The Pineville City Council approved borrowing $500,000 to continue the operations of the Pineville Community Medical Center through the end of July during a special called meeting on Wednesday morning.
The funds were secured by using hospital’s parking lot and helicopter pad, which is owned by the city, as collateral along with a lien on the hospital’s accounts receivable from June 4 through July 30.
In addition, the $300,000 the city has already borrowed for the hospital is now covered by a super-priority lien and will be paid first when the hospital’s assets are sold in a sealed-bid auction.
“On the original money we borrowed the bankruptcy court, the trustee and the banks agreed to put that in a super-priority lien. That means that lien goes in front of the banks and everyone else,” Mayor Scott Madon said. “If it sells for $500,000 or $5 million, that will be paid first. Everybody had to agree to that.”
Madon also said a clause has been added to the terms of the sale that whoever purchases the hospital would be responsible for any expenses after July 30.
Based on the numbers from March, April and May, Madon said the hospital is projected to clear about $220,000 through the end of July, which would go toward repaying the new loan.
“We will have to work out a deal with whoever buys it to rent, lease or sell them the parking lot,” he said. “If they didn’t choose to do that my recommendation would be to put it up for sale to try and regain our money. But I feel pretty confident that whoever buys the hospital will also want the parking lot.
“I feel like we have enough safeguards to go ahead and do this. I certainly wouldn’t do this if I didn’t think we did. We’re not overflowing with money,” Madon added. “Everybody seems to misinterpret us buying police cars or blacktopping to mean we have a lot of extra money. All of that stuff comes out of different funds that are restricted in how we can use them.”
It was announced two weeks ago that Tranzon Asset Advisors was conducting a sealed-bid auction of the hospital’s assets. July 15 is the final bid date and then it goes into an online bidding process between the top three bidders.
Madon told the council that at least 24 individuals have expressed interest in purchasing the hospital or hospital properties with five solid potential bidders that are in the hospital industry.
Wednesday’s action ensures the hospital will continue operating until the sale is completed.
“I feel like we’re in this far and we can’t stop now,” Madon added. “We’re making a lot of progress and doing a lot of work on the hospital — we completely striped all of the parking lots (Tuesday) night and we continue to upgrade the facility.”
At Mondays’ regular council meeting, Madon said the hospital is seeing over 100 patients per week in the emergency room. It is costing $5,000 per day to keep the ER staffed with doctors.
“There is no doubt that we have saved lives,” he said. “We are slowly moving forward — I’ve adopted the slogan ‘PCHC Strong: One Day At A Time’ and that’s kind of what we’re living by. We are trying to survive one day at a time to get it rebuilt.”
The council also approved the first and second reading of the 2019-20 Amended Budget during their meetings this week. Because the new budget wasn’t approved before the end of June, last year’s budget was automatically carried over. The amended budget reflects minor changes that had to be made.
“As you can see we’re having to balance our budget in some ways by using the alcohol and restaurant tax to fill some gaps,” Madon told the council. “That’s one reason we’re working so diligently trying to resolve the hospital matter. They’re our largest occupational tax payer.”
It was also announced Monday that Spectrum was closing it’s Pineville office soon.
“The landlord told me that they were going to be moving out between the end of August and the end of September and that their contract was through October,” Madon said. “I wanted to make sure everybody knew that, it’s going to put another hardship on people.”
Spectrum will continue to provide service in the city of Pineville, but their closest office will be located in Middlesboro