Marin County District Wins Back Hospital

ALAMEDA, Calif. — The public health care district in Marin County, Calif., regains control of the county’s largest hospital today, in a shift that is likely to presage a bond offering in coming years.

The Marin Healthcare District will now operate the 235-bed Marin General Hospital, which has been operated by Sutter Health, a nonprofit hospital chain.

Control of the hospital has been a political flash point in Marin County for a quarter century.

In 1985, the district board approved a 30-year agreement to lease the hospital to a new nonprofit operator, which went on to be absorbed by the Sutter Health chain in a 1996 merger.

The hospital district’s elected board continued to exist, overseeing the lease.

The board came into conflict with Sutter Health over the organization’s plans to upgrade the general hospital in line with California earthquake-safety requirements.

That culminated in a 2006 legal settlement in which Sutter agreed to transfer hospital control to the district before the 2015 lease expiration. Today marks the end of the transition.

Along with control of the hospital, the health care district assumes responsibility for meeting California’s strict earthquake-safety code for hospitals.

Portions of the current facility date to its original 1952 construction, with the last major expansion coming during the 1980s.

Earthquake-safety requirements will lead the hospital and-or the district into the bond market in the coming years, Lee Domanico, the district’s chief executive, said in a brief telephone interview Monday.

The district expects to ask voters to approve a general obligation bond referendum.

“It’s probably going to be in late 2011 and we’re still not sure of the amount,” Domanico said. “It depends on how much private financing we can arrange before we go to the public.”

The district has also reviewed other options, according to its formal response to a critical 2009 report from the county’s civil grand jury, a group made up of volunteers charged with issuing reports and recommendations to improve local government performance and services.

“A freestanding Marin General Hospital will be an excellent credit risk, with the ability to issue tax-exempt bonds on its own, potentially without support from the district,” Larry Bedard, chairman of the district’s elected board, wrote in his formal response.

He said the hospital’s financial metrics would support an A-level credit rating.

“The cash alone that is currently being transferred out of the community by Sutter would provide enough annual debt service to support a bond issue of approximately $200 million,” Bedard said.

The district does not have any immediate need to access the public debt markets, Domanico said Monday.

In April, the district announced that it has received $60 million in financing from Union Bank, including a $30 million line of credit secured by accounts payable and an additional $30 million term loan.

The credit facilities are to be funded immediately after today’s transfer of ­control.

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