Editorial: Paying more for less

Palomar Pomerado Health board members, citing declining property values within its 850-square-mile district, last week increased the amount each property owner will pay this coming year to continuing repaying $496 million in general obligation bonds approved by voters in November 2004. The current original levy of $17.75 per $100,000 of assessed valuation will increase by $5.75, to $23.50. The bonds are to be paid off in 2044.
For the owner of a house valued at $600,000, the increase will cost an extra $35.50 in the coming tax year. Not a particularly large increase, to be sure, but still a little irritating when the cost of everything else seems to be going up as well.

PPH directors say they have no choice in the matter; that repayment projections made when the bonds were being prepared for sale simply have not held true due to the extended economic downturn. Directors promise that if things get better, and property values pull out of their slump, they will decrease the levy accordingly. For now we’ll file that under the “We’ll-Believe-It-When-We-See-It” category.

Directors also emphatically stress that the tax increase is in no way related to soaring construction costs associated with the 11-story Palomar Medical Center West being built in Escondido. When campaigning for the 2004 bond issue, known as Proposition BB, district officials said the state-of-the-art hospital would cost $531 million. It hasn’t worked out quite that way — costs are now pegged at $940 million. The state-of-the-art hospital, which will lack some of the originally designed amenities, is slated to open in two years.

Meanwhile, Proposition BB’s plans to improve Poway’s Pomerado Hospital haven’t quite worked out as originally projected. Six years ago the district said that some of the $496 million would be spent on a new tower that would increase the hospital’s bed capacity from 107 to 211 beds, add a women’s floor and outpatient center, an outpatient imaging center and outpatient surgery center. Well, the tower has yet to be built, although $42 million in bond money was spent on some promised upgrades and the design of the tower. PPH says the decision not to build the tower had nothing to do with money. Instead, it was a question of need; the population of Poway and Rancho Bernardo has not grown as had been projected, negating the urgency of having extra patient beds.

The common thread here appears to be those projections made back in 2003 and 2004, when Proposition BB was being prepared and marketed to the voters. As was the case with so many other economic forecasts then, they did not reflect the financial crisis that would hit in late-2007 and result in, among other things, falling property values and sluggish population growth rates.

Meanwhile, property owners will be paying little more for a little less than what was promised six years ago.