Saturday, January 14, 2012

Contra Costa regulators vote to dissolve Mt. Diablo Health Care District

By Lisa Vorderbrueggen - Contra Costa Times

MARTINEZ -- Contra Costa regulators will disband a small public health care district that lost its hospital 16 years ago and went on to spend the bulk of its $3 million in property tax proceeds on overhead, elections, legal bills and free lifetime medical benefits for several directors.

The Contra Costa Local Agency Formation Commission voted unanimously Wednesday to dissolve the Mt. Diablo Health Care District, the first such act in the state since California lawmakers adopted new rules allowing regulators to eliminate public agencies without holding an election.

The district includes about 205,000 residents in Concord, Martinez, Pleasant Hill, Clyde and Pacheco, along with portions of Walnut Creek, Clayton and Lafayette.

Advocates implored commissioners for a stay during the three-hour hearing. The district's past performance is imperfect but holds great potential, they urged. Among the speakers were high school students who participate in a local culinary program that received district grant dollars and a once-homeless man who said one of the district-funded programs helped find him shelter.

But the commissioners ultimately agreed with critics, four civil grand juries and their own consultants, who said eliminating the district will free up tens of thousands of dollars for unmet community health needs.

Shifting the program's administration to another public agency will not necessarily cost less or provide residents with comparable access to the money, added district interim executive director Daymon Doss. He was referring to the two criteria the commission must meet in order to dissolve a public agency.

And the district's attorney described what he characterized as legal uncertainty surrounding the impact of dissolution on its community benefit agreement with John Muir Health. The private nonprofit organization took over the district's Concord hospital in 1996 after the public agency ran into financial troubles.

With no hospital to manage and one part-time staffer, 83 percent of the $3 million in property tax revenues the district has received since 2000 has gone to pay for administration, legal bills, elections and the highly publicized health care benefits for a current and a former district director, according to the consultants' analysis.

"We can provide grants for worthwhile community programs without the additional costs associated with maintaining the elected health care district," said Contra Costa Supervisor Federal Glover, also a member of the commission.

The commission, which consists of local elected officials, rejected an option that would have restored the roughly $240,000 a year the district receives to the countywide property tax pool for distribution among the 143 public agencies that receive a share. Under no scenario would taxpayers pay less.

The dollar amount is small, but it adds up over the years, and if most of it were spent on community grants, it would serve a valuable role, commissioners said.

The commission must now decide to which agency to hand over the task.

"We know we want to assign a successor agency," said Lafayette Councilman and commission Chairman Don Tatzin. "But depending on which agency we select, it will require a different process. We need more information about that process before we choose."

Consultants recommend the countywide emergency medical services district. Governed by the county, the existing agency could create a zone that matches the former health care district, set up a grant-making community board and allocate the dollars each year with minimal overhead and no elections.

Concord wants it. But the health care district is larger than the city, and state law bars an agency from spending tax dollars generated outside its boundaries unless 70 percent or more of the registered voters and land area of the bigger entity are within the city's jurisdiction.

To meet the legal standard, the city is looking at filing a petition with the commission for the formation of a smaller subsidiary health care district. The new district would exclude Martinez on the grounds that its taxpayers have not paid into the district at the same rate as its neighbors.

The commission is scheduled to make its choice in March.

Once the commission completes the next step, dissolution could take six months or longer.

It is unclear whether the health care district will mount a legal battle or even if it could afford one.

It projects reserves of nearly $700,000 in its preliminary 2012 budget, but the amount roughly equals its unfunded liability for health and dental benefits for current Director Grace Ellis and former Director Ron Leone, a Concord councilman. The district banked the cash during the years it spent little or no money on community grants, and it has had no contested elections in six years.

Contact Lisa Vorderbrueggen at 925-945-4773, or at

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