Petition drive seeks voter approval requirement for UMC’s $345 million bond issue

A group of El Pasoans has begun a petition drive to force University Medical Center to allow voters to decide whether the county-owned hospital can issue $345 million in bonds.

The LIBRE Initiative, a national conservative advocacy organization with ties to the Koch brothers funding network, has begun collecting petition signatures, said Karla Sierra, the group’s grassroots advocacy director in El Paso.

“This petition is about a lack of transparency and allowing El Pasoans the opportunity for their voices to be heard in how they are taxed,” Sierra said. “The crux of the issue is that El Pasoans should decide how their hard-earned money is spent and we were excluded from that conversation.”

UMC spokesman Ryan Mielke said the hospital is having meetings throughout the community to explain the bond projects and the tax impact. UMC also has set up a website with information in English and Spanish on the bond issue.

“Our priority is to ensure that our community has an opportunity to get the facts about our proposal and significant benefits it will bring to our community. Our goal is to ensure we have the capacity to address our community's current health care needs,” Mielke said.

State law allows voters to petition for an election on the sale of certificates of obligation before they are issued. The petition would need to be signed by 5% of registered voters, or just over 25,000 in El Paso County, before Sept. 12.

Sierra said they’ve gathered about 1,000 signatures as of Friday, using a mix of paid part-time staff and volunteers. 

The El Paso Apartment Association is supporting the effort, association executive Scott Lynch said. 

UMC is asking El Paso County Commissioners Court to approve $345 million in certificates of obligation, a form of debt that doesn’t require voter approval. Commissioners Court voted 3-2 in June to start the process for issuing the debt, with a final vote scheduled for Sept. 12.

The bond issue would expand UMC’s intensive care unit, build nine additional operating rooms, add a new Central El Paso clinic, build out the eighth floor of El Paso Children’s Hospital with 26 additional beds, and create a new cancer treatment center. 

In its presentation to Commissioners Court, UMC officials said the repayment of the bond issue would add about 5.7 cents per $100 of property valuation to the hospital’s tax rate between 2023 and 2033. From 2034 to 2045, that increase would drop to 2.9 cents per $100 of valuation. The hospital’s current tax rate is 25.8 cents per $100 of valuation. 

For the average home in El Paso County, which currently has a taxable value of about $168,000, the rate increase would add about $96 to the hospital property tax bill in the first year.

UMC officials have said issuing certificates of obligation, which don’t require voter approval, would be cheaper for taxpayers than waiting for a vote of the public. That’s because voter-approved bonds would be sold later and interest rates are rising.

Commissioners David Stout and Iliana Holguin, who are both Democrats, say UMC has made a strong case that El Paso needs additional medical services. But they say such a large bond issue should be decided by voters, not by Commissioners Court. 

“I think ultimately this is one of those issues that is so important that really the community does deserve to have a direct say in it,” Holguin said in an interview with El Paso Matters. “We're talking about a significant impact to taxpayers in a time where we're barely coming out of a global pandemic, there's debate about whether or not we're getting ready to go into a recession.”

The issues of voter approval and transparency have come up repeatedly at informational forums that the Commissioners Court asked UMC to hold, Holguin and Stout said. 

That was the case on Thursday at a community forum organized by County Commissioner Carlos Leon, who asked UMC to make a presentation to East El Paso residents. Leon, along with fellow Democrats County Judge Ricardo Samaniego and Commissioner Carl Robinson, voted in June to begin the process to possibly issue certificates of obligation without voter approval.

“Why not put the bond issue up for a vote?” Eastside resident Ernesto Aguirre said. “I support the need, but the right thing to do is to let the taxpayers decide it. Don’t just ram it down our throats.”

UMC Chief Executive Officer Jacob Cintron told Aguirre that the decision whether voter approval should be sought for the bonds rests with the Commissioners Court.

“At the end of the day we can only provide what our needs are,” Cintron said. “It will be up to the commissioners.”

Stout said UMC has given different answers on the cost difference between issuing certificates of obligation, and general obligation bonds, which do require such a vote.

“First they came out and said, oh, it's going to be $100 million. … And so then they came back and said, oh, no, it's actually going to be somewhere around $37 (million) to $40 million difference. And that was the last number I heard until I saw them give a presentation at a community meeting that I set up, and they were saying we're close to $60 million. So I want to see that information,” Stout said in an interview.

El Paso Matters asked UMC on July 8 to provide information on how it arrived at the cost estimates for the two approaches to issuing bonds. UMC has declined to release the information because Hilltop Securities, the Dallas-based consultant that created the estimates, said its methodology for the estimates is a trade secret and protected from disclosure under the Texas Public Information Act.

UMC and Hilltop Securities have asked the Texas Attorney General’s Office for a legal opinion on whether the hospital can withhold a variety of financial modeling information sought by El Paso Matters.

UMC spokesman Mielke said projections are that waiting for voter approval and then issuing bonds in July 2023 would add $62 million to the total costs of the project, compared to issuing certificates of obligation with Commissioners Court approval this fall.

El Paso Matters editor Ramon Bracamontes contributed to this story.

This article first appeared on El Paso Matters and is republished here under a Creative Commons license.