Ocean City Today
https://oceancitytoday.villagesoup.com/p/1668902

County disposes of AGH grant deal

By Brian Gilliland | Jul 13, 2017

(July 14, 2017) In 1992, when ground was broken for Atlantic General Hospital, Worcester County government had already pledged $5 million to the hospital’s development in exchange for a degree of oversight as well as a lien on the property and a security interest.

That legal relationship ended last week, when the Worcester County Commissioners agreed to dissolve the agreement at the request of hospital CEO Michael Franklin.

Franklin advised the commissioners in writing that the money had since been paid back and that the restrictions attached to it were negatively affecting AGH’s ability to restructure its old debt.

The original agreement gives the county a lien and a security interest in all of the building materials, fixtures, equipment and other tangible personal property of every kind and nature whatsoever, except that of tenants, as well as any other buildings attached to the original facility or the land upon which it was built.

A security interest is a way to define debtors in case of default. An entity with a security interest gets paid back first.

“The hospital is in the midst of restructuring its outstanding indebtedness, as well as borrowing additional money to renovate some of its facilities and construct a new cancer care center,” Franklin wrote.

In the past, Franklin explained, the county didn’t pursue its rights with regard to financing, but AGH’s lender, M&T Bank, and bond issuer, Maryland Health and Higher Educational Facilities Authority, have requested the change from the hospital.

The reason, he wrote, is the same property the county has rights to is now being used to secure the refinancing and new borrowing.

The planned use for the county’s $5 million more than 25 years ago was to aid in development and pre-opening expenses, financing costs and equipment.

According to the grant agreement, almost $1.9 million was spent on development and pre-opening expenses, with more than $1 million going toward development and planning. Office overhead, financial planning, startup salaries, insurance and recruiting make up most of the costs under this heading.

Next, $390,000 was budgeted for financing costs, with fees being paid to three firms: Cohen, Rutherford, Blum and Schott; Venable, Baetjer and Howard; and Alex. Brown and sons.

Finally, almost $2.75 million was budgeted for equipment, with radiology, business systems, anesthesia, patient monitoring, phones, medical carts and laboratory supplies being the most expensive.

County Attorney Maureen Howarth said she saw no reason to deny termination of the agreement, and the commissioners agreed unanimously.

In addition to Worcester’s contribution, the state government committed $5 million, the town of Ocean City gave $2.5 million and the balance was raised through private donations.

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