Officials yesterday finalized details of a roughly $33 million buyout of the troubled Bayonne Medical Center, a deal that will reimburse the city of Bayonne for its $6 million investment to help the center remain open.
Judge Morris Stern late Tuesday agreed to grant Urban Suburban Associates ownership of BMC with officials signing off on the final agreements yesterday. With its $2.5 million up-front payment to the city and $22.5 million of ready cash, Urban Suburban beat out IJKG LLC, a consortium also called the Sleep Center, for ownership of the facility.
In contrast, IJKG offered $250,000 up front and showed $5 million of cash on hand, according to city councilman Anthony Chiappone. In addition, Urban Suburban, unlike IJKG, agreed to pay Bayonne $6 million for debt the city will issue to keep BMC running until the new owner takes over hospital operations and also reimburse the New Jersey Health Care Facilities Authority for its $2.5 million loan to the center.
Chiappone declined to place a price on the deal. The Jersey Journal reported that Urban Suburban will pay $33 million for the hospital.
“This is the best-case scenario for us, that we’re able to find a buyer for the hospital, keep the hospital running, and as a bonus we get the money back that we laid out for the bonds to get it to this point because it would have closed,” Chiappone said. “Had we not done the bonds, the hospital would have closed about two or three weeks ago.”
City officials have been working to keep an acute-care facility in Bayonne since BMC filed bankruptcy in U.S. Bankruptcy Court in Newark in April. BMC, a 278-bed, acute-care facility, is the city’s largest private employer and generates roughly $270 million annually within Bayonne’s overall economy, Chiappone said.
In a separate issue, city administrators are considering issuing $2.8 million of debt to help pay property tax appeals. By selling bonds to help cover the tax appeals, the city will pay off the expenses over time, according to Joe Ryan, spokesman for Mayor Terrence Malloy. Bayonne’s tax appeals increased by 10% over last year’s appeals due to more petitions filed by commercial and industrial properties.
Chiappone said he prefers that the city look towards other revenue streams to address the property tax appeals, in particular the up-front payments the city may receive through the Bayonne Local Redevelopment Authority on the city’s Peninsula project, a 150-acre Maritime District waterfront site. Officials are reviewing port development proposals for the site, ranging from $50 million to more than $75 million.
“I’m hoping that we don’t have to go the route of bonds to pay for the tax appeals because that just adds to our future debt,” Chiappone said. “If anything, I’d like to find ways to pay down the bonded debt as opposed to recurring more bonded debt.”
Council members will take up the $2.8 million proposed borrowing at its next meeting on Nov. 28, unless Malloy calls for an emergency meeting on the issue before then.
