Commissioners approved a resolution for the $25 million note, which is the equivalent of co-signing a loan, during a special called meeting Thursday morning.
The resolution replaces an original one, passed in December 2012. According to the new resolution, Hutcheson owes at least $70 million.
Walker County gave its approval to the $25 million, which is essentially a short-term (two-year) bond, on Feb. 7.
The money will be used to pay off some of some of the hospital’s debt, particularly $12 million owed to Medicare. The Medicare debt carries an 11-percent interest rate, compared to a 1-percent interest rate on the bond.
Catoosa commission chairman Keith Greene said, “The debt to Medicare is the driving point (for approving this bond for Hutcheson). With its 11 percent rate, (Hutcheson) would never get ahead.”
“We need to keep in mind that this debt was incurred by a previous administration,” commissioner Jim Cutler said. “We are slowly working on turning the hospital around.”
Hutcheson also owes $10 million to vendors, according to the new resolution. The original resolution listed vendor debt at $5 million. Hutcheson will use $2 million of the $25 million to help pay down the vendor debt.
Also, about $11 million of the money, hospital officials have said, will be used to upgrade and replace outdated equipment at the hospital.
“Walker and Catoosa did what they had to do,” said Dade County commissioner Robert Goff, who attended Thursday’s Catoosa commissioner’s meeting. “We support them in their action. It’s a win-win situation.”
Hutcheson’s $70 million debt also includes $20 million to Erlanger Health Systems, which oversees and manages Hutcheson, and $28 million to Regions Bank.
In May 2011, the hospital came under management of Erlanger Health System, which loaned Hutcheson $20 million. Walker, Catoosa and Dade counties, which own Hutcheson’s property — its buildings and land — backed the loan using the property as collateral.
Walker and Catoosa counties are backing the $25 million bond anticipation note using their ability to levy taxes. Dade County is not participating in this bond.
Hospital Authority board makeup
The resolution also calls for a change in the makeup of the Hospital Authority’s board of trustees.
The board’s current makeup is 4-3-2: four representatives from Walker County, three from Catoosa County, and two from Dade County.
That makeup has been based on population, but officials are saying Walker and Catoosa’s populations have grown, while Dade’s has not.
Walker and Catoosa have approved a 4-4-1 board makeup: four representatives from Walker, four representatives from Catoosa, and one representative from Dade.
Dade County has rejected the 4-4-1 makeup and approved a 5-5-3 setup, according to Goff.
If an agreement cannot be reached, then the Georgia legislature will have to decide.
Goff and fellow Dade commissioner Ted Rumley, along with Dade County attorney Robin Roberts, attended Thursday’s commissioners’ meeting. The meeting was preceded by a closed-door session lasting more than an hour.
Catoosa commissioners voted on the resolution following the closed meeting.
The resolution also calls for changes to the trustee appointment process to make it a more streamlined, fair and equitable system.