The fiscal impact of a modification to the District's ad valorem property tax allocation, as proposed, would be a $1 million impact to the General Fund reserves annually until the agreements are complete. The impact to the County is a two to three year extension, which is cost neutral over time due to the final proposed transfer.

In an attempt to keep Doctors Medical Center open, Contra Costa County provided $35 million in emergency funding to the hospital since 2006. In exchange, the District authorized an allocation of its ad valorem property tax revenues to the County. The hospital closed April 21, 2015. The County receives all of the ad valorem property tax, which is annually approximately $3.3 million.  
  
There currently are two agreements between the County and the District providing for the allocation of ad valorem property taxes from the District to the County. The two agreements are the Amended and Restated Second Agreement for Property Tax Transfer from the West Contra Costa Health Care District to Contra Costa County, dated July 16, 2013 (“Second Agreement”), and the Third Agreement for Property Tax Transfer From West Contra Costa Healthcare District to Contra Costa County, dated July 1, 2014 (“Third Agreement”).   
  
The total remaining ad valorem property tax revenues to be transferred to the County under the Second Agreement is $13,277,804. The total amount of ad valorem property tax revenues to be transferred to the County under the Third Agreement is $8,200,000. The property tax revenues are allocated from the District to the County at the rate of approximately $3,300,000 per fiscal year. This amount may be higher or lower depending on property values in the District’s tax rate areas. The two property tax transfer agreements operate sequentially. In other words, the parties have agreed that property tax revenues will not be allocated to the County under the Third Agreement, until after all property tax revenues have been allocated to the County under the Second Agreement.  
  
The District has requested that the County agree to forego $1,000,000 of the District’s ad valorem property tax allocation that would otherwise be allocated to the County under both the Second Agreement and under the Third Agreement for the purpose of assisting the District in winding down its affairs. The District’s annual cash spend for operations and on-going post-closure obligations exceeds the District’s current funding. DMC struggles from lack of cash. Wherever possible, DMC is holding off payment on invoices; however, annual costs to operate the District and honor owed obligations continue. The District lists its high level summary of annual costs to operate the District as:  
  

• General operating costs $475,000. Includes general office personnel and office rental, outside bookkeeping, District audit, pension audit, and COPs repayment oversight.
• Successor pension plan payments $900,000. Annual amount to fund the underfunded pension plan for past employees. This is based on last year’s actuarial estimate.
• Medical retiree medical plans $250,000. Annual payment to fund the medical retirement plan.
• Workers compensation $250,000. Claims from past employees still actively receiving workers compensation.
• Medical record storage $200,000. Annual costs to store and retrieve medical records for previous DMC patients.
• Biennial Election Costs $450,000. Cost of funding required Special District election costs.

The County will receive the entire allocation of ad valorem property taxes described in the First Agreement and the Second Agreement between the County and the West Contra Costa Healthcare District.

Speaker: Eric Zell, West Contra Costa Health Care District.