State approves $52 million bond for St. Mary Hospital

Thursday, December 21, 2006 
State approves $52 million bond for St. Mary Hospital

TRENTON -- The state Local Finance Board voted unanimously today to approve Hoboken's backing of a $52 million bond to rescue St. Mary Hospital.

If the city's newly-created autonomous Municipal Hospital Authority fails to turn the the facility's fortunes around, the city taxpayers could be on the hook for $10 million after the hospital has sold off it assets, according to Mark Pfeiffer, deputy director of the state Division of Local Services.

Richard Mason, a bankruptcy and restructuring attorney who lives in the city and attended today's meeting said the hospital authority should issue the bonds without the city guarantee. He estimates that a loan not secured by the city might cost the hospital $1 million more a year in interest.

Harvey Holzberg, who will become the CEO of the management company responsible for day-to-day operations once ownership is transferred to the hospital authority after the new year, said it will take another six months to secure a loan if it is not backed by the city.

The Hoboken City Council must now vote to approve the bond measure.

A spokesman for St. Mary Hospital said Bon Secours, the current corporate parent of the hospital, would file for chapter 7 bankruptcy if the process was delayed any further.

“This is a risk worth taking,” said Mayor David Roberts. “It would be a greater risk not to have a hospital for the community of Hoboken.”

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