Last week, in response to community demand, the Palm Drive Health Care District board of directors voted unanimously to dissolve the district effective July 1. At that point, the district will turn over all assets, contracts, records and debts to the county to wind up the district’s affairs.
This is great news —but it ain’t over yet…
According to three knowledgeable sources, some district board members and staff have privately proposed spending up to $500,000 of our Measure W parcel taxes before dissolution on unidentified "community health" programs. They claim that the district has a “surplus” to be spent before July 1 as they see fit. But as the petitioners for dissolution have stated repeatedly, the voters never approved spending our parcel taxes on these activities. The district was created and the parcel tax approved by voters to support a hospital with an emergency room.
Historically, community health services were never a priority for the district anyway, except when politically expedient. “Community health” programs never appeared in a District budget or financial report until 2015. Over the next three years, as citizens increasingly questioned the need for the district, the board spent about $200,000, mostly in the Russian River and Bodega Bay areas, in an attempt to stem the growing detachment movement.
After the detachments succeeded anyway, community health funding dropped last year to only 3% of the district’s operating budget. But expenditures nearly doubled this year, to more than the previous two years combined, as the dissolution movement grew and the district sought once again to justify its existence.
However, even if these expenditures were legal (they’re not), the board shouldn’t drain the district’s coffers to fund directors’ pet projects, for at least two reasons.
First, understand that Measure W requires the district to determine each year how much money is needed to carry out voter-approved purposes, then set the assessment rate at that level, but not to exceed $155. The Board has never set the assessment less than $155, except as required for the detached areas.
For the current fiscal year, the board determined last June how much money it needed—it’s called the district budget. And the annual budget for “Total Community Health Services” is only $92,000, of which at most only $23,000 remains unspent. If the district doesn’t spend the full budgeted amount in other areas, so that a “surplus” exists, that just means the district taxed us too much in the first place. It doesn’t mean that the board can sweep up what’s left from all other budgeted purposes and spend it now on unbudgeted pet projects.
Second, when the county takes over the affairs of the district on July 1, it will want to inherit a prudent reserve over and above the minimum amount required for debt service. (Remember, the county didn’t volunteer to take over Palm Drive’s affairs—it’s required to do so by law once the district dissolves, and it’s allowed to set the tax rates to cover its administrative costs without losing money itself.)
Unless it inherits a prudent reserve, the county likely will set our parcel tax assessment rate higher to cover itself. So instead of assessing around $108 per parcel (what the detached areas pay now), it may assess an extra $15-$20 per parcel or even more. And we will end up repaying that “surplus” the district spent for projects that we never envisioned or approved in the first place.
In our view, a district deep in debt has no “surplus.” As it is, my 5-month old grandson will be in high school before the district’s $20-plus million debt is paid off in 2034. If the district really has a $500,000 reserve, it could use that money to prepay part of the existing GO bonds. A prepayment of $500,000 now, for example, would save over $300,000 in interest, reducing our property taxes by over $800,000 total!
We will continue to fight so that all available money goes to paying off debt and not funding new programs that voters never approved. We urge district residents to contact the board before its next meeting on June 1 and tell the directors what you think (visit DissolveTheDistrict.com for email addresses and more info). Thank you.