Mackinac County Commission Attorneys Advise: County, Hospital Must Agree Before Election
By Karen Gould

The Mackinac County Board of Commissioners has directed its attorneys to help them clear up ownership of Mackinac Straits Hospital property, negotiate a guarantee from the Mackinac Straits Hospital Authority that a $1.3 million hospital debt will be paid in full, and help it in the disposition of its Burdette Street hospital property. Commissioners also want to know when the Authority will transfer its assets to the new corporation, Mackinac Straits Health Systems, as it could impact lease payments to the county, and will ask for a seat on the new, private, nonprofit hospital board.

Their goal is to have all issues resolved or near resolution before the May 6 election, when voters in the City of St. Ignace, and St. Ignace, Moran, and Brevort townships will be asked to transfer all assets and liabilities from the Authority to Mackinac Straits Health Systems. The new board, in partnership with the Sault Ste. Marie Tribe of Chippewa Indians, will build a new, modern hospital near the Mackinac County Airport, using a $37 million federal financing package.

County commissioners say they embrace the proposed new hospital and worry that their efforts to protect county assets will create a cloud of confusion over the election.

During an early morning meeting Monday, March 24, Bonnie Toskey and Richard McNulty of the law firm Cohl, Stoker, Toskey, and McGlinchey of Lansing told commissioners they have conflicting information over property ownership. Mr. McNulty, who had a copy of the county's deed for the property, said language in hospital documents related to the proposed ownership transfer is written with the assumption the hospital owns the site. He also noted that attachments to the transfer agreement documents were missing. He did not know if it was an oversight to omit the documents or if the hospital authority had not finished preparing them.

"This needs to be negotiated and legally sewn up before the vote," said Mr. McNulty, referring to the transfer agreement by and between the hospital authority and Mackinac Straits Health Systems. "If it's not, there's some significant legal issues for the county, there's some significant issues for them, and there are some assumptions in this agreement that I don't think are true. This agreement kind of assumes the authority owns the property and the buildings and they don't."

The attorneys will perform a title search to clarify ownership and as soon as county ownership of the property is confirmed, commissioners want an environmental study done at the site.

Mr. McNulty's comments were based on the legal documents available to him. The Mackinac Straits Hospital Authority freely admits that the county owns the hospital real estate.

Commissioners were advised by their attorneys that signed documents are needed that explain if, how, and when the hospital is going to pay off the $1.3 million in bonds, used to finance an expansion of the hospital's Long Term Care Facility some years ago, which were sold by the county for the hospital. Mr. McNulty said the hospital authority has not addressed the $1.3 million bond obligation in the documents submitted so far to the county. Now paid by the hospital, the debt is, nevertheless, the county's obligation, but the county would be hard pressed to assume the debt once the present hospital facility is closed and the new hospital takes over. This also needs to be negotiated and resolved before the May 6 vote, he said.

The hospital also needs to acknowledge that the county owns the property and buildings, which the hospital now leases. Commissioners want to discuss any future plans the hospital might have for the buildings and find out when the hospital authority is going to be disbanded, since the timing could impact the lease agreement between the authority and the county.

Mackinac County leases the site for $1 a year to the Mackinac Straits Hospital Authority, yet once the hospital assets are transferred to the new private corporation, the county cannot legally lease the site for that amount. Legally, said Mr. McNulty, it would be considered giving away governmental assets to a private entity. The county cannot give the private corporation preferential treatment. An option, he suggested, might be for the hospital to offer additional services. The county may have to work out and interim lease agreement once the May ballot issue passes. If the hospital decides to delay the transfer after voter approval, then the hospital authority could continue operating under the old lease. Documents given to the county were not clear when the transfer would take place.

The Mackinac Straits Hospital Authority will continue to exist, even after the transfer of assets to the new board.

"Normally, there would have been extensive negotiations," said Mrs. Toskey. "It surprises us that there has not been an ongoing series of negotiations, presentations, and an effort to inform the board stepby step-by-step to assure and get the confidence of the board regarding this project, and assure that the taxpayers and the residents of the county are not only held harmless, [but] that good faith is being transacted and that taxpayers will receive significant value for the investment to date in the property."

"I'm not opposed to the hospital," said Commission Vice-chair Carl Frazier, "I think its the greatest thing that ever happened, but the way they've developed their process has not been fair to our board, because we are looking out for the county. That's what we're elected for."

The only time the hospital representatives had come to county meetings, say commissioners, was at the their request, and then they were told the hospital was none of their business.

"In good faith," said Commissioner Larry Leveille, "we should be working as a group, as a committee on both sides to resolve this for the people we serve."

Perplexed over a lack of communication from Mackinac Straits Hospital, Mr. McNulty said the hospital needs the commission's support and the county's millage.

"To be honest with you," said Mr. McNulty, "I cannot understand why they're not knocking at your doorstep, saying 'We want to talk to you, we want to discuss with you, we want to work everything out,' because they need that millage and you're the only ones who can give that to them, and there is no question about that; absolutely no question."

"As I told you at the last meeting," he said, "there is absolutely no question the millage is only transferable to the corporation based on this board's approval."

Acounty-wide 1.2 mills to subsidize general hospital operations will continue to be needed at the new hospital, said Ron Mitchell, who chairs both the Authority board and the new Health Systems board. He met with commissioners March 13.

The millage generates about $900,000 for the hospital, which the hospital board says is used to subsidize the Long Term Care Facility. The millage comes to the county and is passed on to the hospital. The millage will expire in 2009.

"The best case scenario would be similar to what happened in Ingham County," said Mrs. Toskey. "In exchange for transferring the hospital, the county received some money and indigent services for more than 20 years. Since then, the hospital has grown and continues to serve the county.

"A worse case scenario," she said, "would be if Mackinac County transfers the hospital and assets to this new corporation and they go bankrupt in a year or two. The county then would no longer have the assets and the county still would need a hospital."

Mr. McNulty cautioned commissioners, "It's not a guaranteed win. Everyone thinks it should work, and it should, but it's not a guaranteed win, because hospitals do go under."

The commission's legal council agreed to begin to seek resolution to all of the issues by contacting the authority's attorney, Roselyn Parmenter of Miller, Canfield, Paddock, and Stone in Ann Arbor. They hoped to give commissioners an update before the next regular commission meeting Thursday, March 27.

No members of the hospital authority or administration attended the commission meeting Monday morning.

The Mackinac Straits Hospital Board plans information meetings with the four units comprising the Authority in April and has scheduled a meeting with Mackinac County commissioners April 24 at 6 p.m. at the county annex.

Other meetings are as follows: Brevort Township Tuesday, April 1, at 7 p.m. at the township hall; Moran Township Wednesday, April 2, at 6 p.m. at the township hall; City of St. Ignace Monday, April 7, at 8 p.m. in the council chambers, St. Ignace Township Thursday, April 10, at 6:30 p.m. at the township hall.