Judge to Halifax: No bonds to finance hospital

Register now

Halifax Health cannot use bonds to finance the construction of its 95-bed hospital in Deltona, a Volusia County, Fla., judge ruled this week, dealing a setback to the public health system's strategy to pay for the $105 million project.

Volusia County Circuit Court Judge Christopher France said in a written order that Halifax Health did not have the authority to issue bonds for the project because it lies outside of the geographic boundaries of its taxing district.

Halifax Health filed a lawsuit earlier this year asking a judge to "validate" its plan to issue bonds worth $115 million to pay for the hospital — an option often used by government bodies to finance facility upgrades and new construction.

Although the hospital's board agreed to pay for the project by loaning itself the money in November 2017, bonds were an active piece in their long-term funding strategy.

"We are disappointed in this ruling, but it is limited to the bond issuance at this point," Halifax Health spokesman John Guthrie said. "We have many alternatives available and will proceed with the most efficient course of action."

Halifax Health CEO Jeff Feasel, when reached Thursday night, said the hospital district's plans remain unchanged.

"We're going to continue going forward with what we're doing in West Volusia," he said. "We'll look for different structures and legal entities to continue doing what we're doing."

Feasel said Halifax Health has been serving patients from West Volusia and other areas outside its taxing district for years.

"We're coming over (to West Volusia) to provide services there that we do here (in the system's Coastal Volusia facilities) -- all with the goal of reducing our dependency on taxes."

If Halifax Health appeals the ruling, state law dictates that it would go directly to the Florida Supreme Court.

The case is one of two legal disputes involving the Deltona project and the question of whether the hospital can build facilities outside the Halifax Hospital District. The hospital first opened its doors in 1928 and the taxing district was created to serve indigent patients within its boundaries, between Ormond Beach and Port Orange.

Former Ponce Inlet Mayor Nancy Epps filed a lawsuit in June challenging Halifax Health's building plans and asked a judge to determine if the move was illegal. That case is still pending in court but the issues in both cases are intertwined, an attorney for Epps argued in the bond case.

Judge France agreed. In ruling against Halifax Health, France also determined that a "plain reading" of the state law that created the district shows that the medical facilities Halifax Health can operate must be located within the district, he said.

The court's job in a bond validation case is to clarify three points, France said. The authority of a public body to issue bonds, whether the bonds are for a legal purpose and whether the bond issuance complies with the requirements of law.

Halifax Health failed to prove its case on the second point, France said. It's unclear how the precedent might affect the long-running case launched by Epps or the hospital's operations in Deltona.

"I am very pleased that the court validated my contention that Halifax Health is a state-designated taxing district with narrowly defined boundaries within which it must operate," Epps said through her attorney.

"My desire is for Halifax to spend the $115 million on enhancing needed medical services in our district and for the residents of our district. Halifax provides critical services within our district and I certainly support those efforts."

Like many of Florida's public hospitals, Halifax Health was founded during a time when access to medical treatment for the poor and mobility were scarce. But as health care grew into a trillion dollar business, so did hospitals. With operations spanning four counties, the Halifax Health system has spawned well over a dozen partnerships and businesses, including hospice and rehab centers.

Some observers say the case raises questions about the efficacy of hospital taxing districts in the state. A study commissioned in 2011 by Gov. Rick Scott concluded that many of them no longer levy taxes.

Hospital taxing districts were established before the existence of today's modern health care financing mechanism, said Dominic Calabro, president of Florida TaxWatch, who chaired Scott's commission.

"The key issues are that Halifax, to serve its public mission, its residents and its taxpayers first and foremost should only serve those residents," Calabro said.

On Halifax Health operating outside of its taxing district, Calabro added "That's like saying Florida would like to serve the needs of a growing population so it's going to expand its network of services to Georgia and Louisiana and Texas. There's no legitimate reason or purpose."

Tribune Content Agency
Hospitals and clinics Healthcare issues Healthcare-related court cases Florida