This article was updated on June 16, 2022 at 16:41E to add UMC Board of Managers Agenda. See below.
On Tuesday, the University Medical Center of the El Paso Board of Managers held a board meeting. Among the items for discussion were the issuance of certificates of obligation. Texas law gives public entities two options to issue public debt. The first is to seek voter approval. The second are certificates of obligation (COs) that bypass the taxpayers’ approval. COs are paid for by property taxes.
To issue certificates of obligation, the hospital district (UMC), through the county commissioners, must post the request twice for the debt in the local newspaper. The first notice must be 30 days before the commissioners are to vote on the item with the second notice one week after the commissioners approve the public notification. The county commissioners can vote on issuing the public debt without the approval of the voters.
At the UMC Board of Manager’s meeting on Tuesday, the board voted unanimously to ask county commissioners to post the required notification to issue $400 million in certificates of obligation. The COs are expected to be used for new construction for the UMC’s building, the El Paso Children’s Hospital, new technology and medical equipment acquisitions.
According to the presentation made to the UMC board, the impact on El Paso’s homeowners on a $100 thousand home is $55.40 annually. However, the average home value in El Paso is about $208 thousand, making the impact on El Paso’s homeowners for the proposed COs over $110 annually, or almost $10 a month.
The current members of UMC’s Board of Managers are Henry Gallardo, Joy Martinez, Kristina Mena, Anna Perez, Carlos Martinez and former mayoral candidate Veronica Carbajal. On Tuesday, all the board managers, including Carbajal, voted in favor of the resolution to ask the county commissioners to post the notice. During her mayoral candidacy in 2020, Carbajal stated that “Our high property taxes, for instance, impede people from earning equity when they sell their home or inheriting wealth when they pass away.” Carbajal added that “even if home prices are affordable, property taxes in El Paso are not,” adding that “homeowners carry most of the tax burden.”
According to the presentation to the UMC board of managers, officials at UMC have “spoken to the individual county commissioners” and answered their “questions individually.” County commissioners are scheduled to vote on the measure in tomorrow’s meeting starting the 45-day clock on issuing the public debt.
In tomorrow’s special county commissioners meeting, the second of eleven regular agenda items for the commissioners to discuss is UMC’s request to issue the certificates of obligation. Item five of the agenda does not include any backup material, nor does it list the amount of the proposed public debt.
UMC officials told the board of managers that they plan to limit the opposition to the issuance of the public debt by holding meetings “with groups like the chambers to explain why the debt is needed.” UMC also insinuated that they have the support of the county commissioners.
Of the current county commissioners, Carl Robinson, who lost his reelection campaign last month, ran on a platform of not voting for tax increases during his time in office. David Stout was reelected in the last election. It is unclear how they and commissioners Carlos Leon, Iliana Holguin and county judge Ricardo Samaniego will vote on the measure tomorrow. El Paso News submitted requests for comments from them and will report on their responses.
Lack Of Transparency
When El Paso News was made aware of the agenda item seeking authorization from the county commissioners for the certificates of obligation, we looked for the minutes of the board’s last meetings to understand the need for additional taxpayer funds. The public hospital’s website lists the agenda items for its meetings but does not publish the meeting minutes for any of its past meetings.
Although UMC provides a website page with videos of its last meetings, the last meeting that is available is from the March 10, 2020, board meeting. It has been over a year since UMC has posted its board meetings online although the UMC board has held at least 38 meetings since then. The board agenda also lacks clarity on the agenda items that the board discusses at its meetings.
In the case of Tuesday’s Board of Managers meeting, the item seeking approval from the board to seek the certificates of obligations does not mention the amount of taxpayer funds nor the purpose for the funds. The item just states that the UMC board will “discuss and take appropriate action” on asking the county commissioners to approve the publication of the hospital’s intent to issue the tax debt.
El Paso Voters
Although the county commissioners are allowed to issue the public debt without the approval of the voters, El Paso voters can demand a say on the public debt through a petition. If 5% of El Paso’s registered voters submitted a petition, the county commissioners would be forced to add the measure for voter approval. Five percent of registered voters in El Paso County is about 25,000 signatures.
According to latest available information, El Paso County has about $174 million of outstanding public debt, including interest. Of that amount, about $110 million are certificates of obligation. That amount does not include UMC’s public debt. According to figures from the Texas Bond Review Board, UMC has $521,973,663 in total public debt outstanding. Of that amount, $242,027,113 is public debt issued without voter approval in the form of certificates of obligation.
In 2013, UMC issued $152 million in certificates of obligation to fund primary care clinics. Two county commissioners, Sergio Lewis and Dan Haggerty voted against the COs. Commissioners Vince Perez and Carlos Leon, along with then-county judge Veronica Escobar voted to issue the public debt. Arguing in favor of the 2013 public debt, UMC officials argued that the tax impact on the El Paso taxpayers was $20 on a $100,000 home.
The Texas average tax rate is 1.83% according to public records. The El Paso tax rate is 2.22%. Only Fort Bend is higher at 2.23%. The El Paso county’s property tax rate is higher than that of Harris County (2.09%) and Tarrant County (2.16%).
El Paso government officials rely on certificates of obligation to bypass the taxpayers who pay the debt. El Paso homeowners pay the debt on over $500 million in certificates of obligation making El Pasoans the largest non-voter approved debt holders in Texas by about $70 million.
UMC’s proposed $400 million, if approved, will double the county taxpayer’s CO debt. El Paso News will continue to monitor this developing story and report as more information becomes available.
Martín Paredes became a partner of Politico Campaigns, a political campaign management firm, in June 2022. The views and opinion expressed in our publication are those of Paredes and do not necessarily represent the views of the firm or its other partners. El Paso News is funded primarily by Paredes, in part by donations from readers and online advertisement. Politico Campaigns plays no role in our reporting. El Paso News has an open editorial policy encouraging any author to submit any article from any point of view for consideration to be published on El Paso News.
Big difference between asking for a certificate of obligation and a line of credit. Let’s get the facts right.
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