Richmond floats plan to give DMC $15 million from Chevron project
on October 23, 2014
A unanimous vote from the Richmond City Council provided a $19 million promise to fund Doctors Medical Center over the next three years.
The principle plan that the council members voted on was the $15 million allocated through the Chevron Environmental & Community Investment Agreement (ECIA), a $90 million package contingent upon the company’s $1 billion modernization of its Richmond refinery.
Beyond the $15 million contribution in three annual installments the council also approved an urgent $4 million cash infusion, which is necessary to keep DMC alive through Dec. 15. DMC physician Otis Rounds stressed in his address to the council that the $4 million infusion was essential to any plan to save the hospital and would need to be in place within 35 days.
The additional $4 million will ride on the next Tax and Revenue Anticipation Note (TRAN), which cities routinely issue to fund cash flow deficits and may be the only secure source of funding coming from the city.
The committed $15 million, which will not be immediately available, is part of a larger package that combines four other revenue streams that could collectively stitch together $18 million dollars a year, matching DMC’s running deficit.
In order for the money to be received by DMC, the following criteria must be met over the next three years by all partners.
- Contra Costa County must vote to forgive $2.9 million of debt a year
- Richmond will provide $5 million annually from the ECIA with Chevron
- DMC must find $800,000 in its own savings and revenues
- Nearby hospitals, including John Muir and Kaiser, must contribute $4.2 million annually
- Voters must pass a new parcel tax that will generate about $5 million a year, similar to the larger parcel tax that failed to get a 2/3 majority by voters in August
Councilmember Jael Myrick cautioned that even if all the pieces came together, the entire three-year proposal is contingent on the outcome of the Communities for a Better Environment (CBE) lawsuit against Chevron, which could block the modernization.
The refinery in Richmond is leveraging its ECIA with the city over its impending litigation with local groups who have filed suit against the oil company over environmental issues.
Chevron, for its part, said its support is dependent upon support for its modernization plan. “The availability of the existing funding from the investment agreement is linked to our ability to implement the modernization project,” said Heather Kulp a representative of Chevron. “CBE and the Asian Pacific Environmental Network continue to stand in the way of the modernization project and the $90 investment in the community.”
The Richmond City Council has called for other local potential investors to step in and help support the hospital, which is used by residents from many cities in the county.
Richmond is not contributing the money from its own general funds, but rather is depending on monies from Chevron’s investment agreement.
Helping cover DMC’s future bills are the graduating high school students in Richmond who will be losing $10.5 million in scholarships originally promised to them through the ECIA. Also sharing the sacrifice in the “pro rata” cuts across the board will be job training programs, public safety funding, grants, and free Internet for low-income residents, according to the proposal put forth by Richmond City Manager Bill Lindsay.
The mechanism that has kept DMC in service are month-to-month emergency plans that do not provide a sustainable future for the hospital. About 90 percent of the hospital’s patients use the federally-reimbursed Medicare and Medi-Cal, or are uninsured, according to Contra Costa County Supervisor John Gioia.
When Gov. Jerry Brown issued his signing statement after he approved SB 883, which allocated a $3 million investment in the hospital, he called SB 883 “a onetime appropriation.” He warned that “DMC must find a sustainable operating model for the future and do so with existing revenue sources.”
Along with Chevron’s ECIA, the city of Richmond and the hospitals, other partners in the three-year plan must now step up, including voters who must cast ballots to tax themselves to continue funding DMC.
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