DALLAS – A Texas hospital district defaulted on $14 million of debt after a dispute over the value of a nearby nuclear power plant sharply reduced property tax revenue in Somervell County.
The Somervell County Hospital District missed its interest payment of $308,631 due Aug. 15, according to a notice filed on the Municipal Securities Rulemaking Board's EMMA Web site.
"Regions Bank, as Paying Agent, will submit payment to the holders upon receipt of funds from Somervell County," according to the
The hospital district, which issued certificates of obligation in 2008 to build the Glen Rose Medical Center, is one of the most vulnerable tax-supported entities in the county 54 miles south of Fort Worth.
The county has been battling Energy Future Holdings and its subsidiary Luminant Energy over the value of the Comanche Peak nuclear power plant in Glen Rose. EFH is expected to emerge from the nation's largest bankruptcy this year.
The hospital district was also late on its Feb. 15 debt payment due to the property tax dispute.
"The District did not make the interest payment because Energy Futures Holding (Luminant nuclear plant) only paid one half of their budgeted tax payment on January 31," according to the notice from the hospital district.
According to the notice, the district paid $315,000 principal a day late on Feb. 16 using revenue from Glen Rose Medical Center. The $314,931 interest payment came a week late on Feb. 22, the notice said.
EFH is appealing a March ruling on the value of Comanche Peak, which the company claims has fallen to $450 million, about one-sixth of the $2.36 billion value assessed by the county appraisal district in 2014.
While the dispute remains unsettled in the courts, by state law Luminant only has to pay property taxes on its $450 million valuation of Comanche Peak. Because the nuclear plant accounts for 80% of the community's property taxes, the revenue reduction is putting significant financial strain on Somervell County's government, school district and the community hospital.
The hospital district lost $2.4 million in revenue in 2015 and does not have the cash reserves to weather the Luminant dispute. As a result, the hospital cut staff by 7%, froze raises, eliminated its retirement match and increased employees' share of health benefits.
Luminant's appeal will probably not be resolved until late 2017. Luminant claims Comanche Peak is worth $261 million as of 2016, but the district's appraisal came in at $1.8 billion, according to news reports.
