Bankruptcy Attorney To Charge $100,000

Editor’s Note: We are publishing the e-mail letter below from Attorney Michael Sweet to Modoc County Board of Supervisors Chair Dan Macsay as it appears in an attachment to the agenda for Monday’s special meeting of the board. Use the "zoom" feature under "view" on your computer to view it.

This is for the purpose of leaving little doubt as to what the board will be discussing. Of further note, Sweet informed the Modoc Independent News last Wednesday that Modoc County was “a long way from Chapter 9.”

While the amendment to the county engagement letter with McNutt Law Group requires a $100,000 additional retainer for the “preparation of "materials” for bankruptcy, it does not include fees for actual filing for bankruptcy.

Sweet did not immediately respond to a message left at his San Francisco office asking for further details.

Please check back for more developments on this story.

BULLETIN
Is Bankruptcy Imminent?

At 4:42 p.m. today (July 16) the clerk to the Modoc County Board of Supervisors sent out a notice calling for a special meeting Monday, July 19.

The board will hear recommendations from its CAO Rick Rudometkin about negotiating with the state for a $12.5 million net loan to replace funds owed the county treasury, and direct its newly-contracted attorney to prepare papers in anticipation of a bankruptcy filing.

The special meeting agenda does not include any reference to the county’s also wanting to seek short-term financing through the Pooled Money Investment Board. (See story below.)

The special meeting will be held at 9 a.m. at the Sheriff’s Annex in Alturas.

* * *

(See Bulletin above for update. BOS calls Special, not Emergency Meeting.)

BOS Expected To Make Plea To State For Help Monday 

Look for the Modoc County Board of Supervisors to call an emergency meeting for Monday, July 19.

The purpose will be to vote on a resolution formally asking the state to loan a maximum of $6 million to cover the county’s cash flow deficit this fiscal year.

The Pooled Money Investment Board (PMIA), consisting of the state’s top three financial officials, has scheduled the county’s request for a loan as an “information item” at its Wednesday, July 21, meeting in Sacramento.

The Modoc County matter was placed on the PMIA agenda by State Treasurer Bill Lockyer, who sits on the three-member PMIA board with State Controller John Chiang and Director of Finance Ana J. Matosantos.

Although it is not clear that any action will come at the Wednesday PMIA meeting, a resolution from Modoc County will make the loan request official.

Asked for details of the county’s seeking funds through what is known as “Invest in Tax and Revenue Anticipation Notes (TRAN), a spokesman for the treasurer’s office declined to comment.

“Until there is a request and agreement as to what to do about the request it is not wise to talk about it publicly,” said Tom Dresslar, treasury office communications director. “There are a variety of factors that are going to be taken into consideration in making a decision on a potential request from Modoc County and it’s not prudent to discuss them in any detail at this time.”

While its not clear if  the PMIA board will take any action at its July 21 meeting, it’s equally vague whether the PMIA board actually has to act either way on Modoc County’s request for funds.

“The fate of the request may not have to be decided by board action,” Dresslar said. “Approval or disapproval could be determined without action by the board. The request doesn’t necessarily hinge on action by the board. Action could depend on a variety of factors.”

Dresslar declined to elaborate further on who would make the decision to approve or disapprove Modoc County’s request for financial assistance from the state.

-- Ray A. March

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Devil’s Garden/Warner Mountain Districts get a New Ranger

Roman (Ray) Torres joins the Modoc National Forest as the new East Zone Ranger. Ray will oversee both the Devil’s Garden and Warner Mountain Ranger Districts starting Monday, July 19, 2010.

Ranger Torres’s most recent assignment prior to coming to the Modoc was as the Deputy District Ranger of the Happy Camp District on the Klamath National Forest.

Ray has an extensive background in natural resource management with over twenty years experience in the US Forest Service and California State Parks system where he served as both a Park Ranger and Park Supervisor, working in law enforcement, resource management, as well as managing prescribed fire programs and park administration at various locations in Central California.

Ranger Torres is married to Barbara Torres who is also a former California State Park Ranger and now serves as the Supervisory Visitor Services Information Specialist at the White Mountain RD, Inyo NF. The Torres’ have three horses and a donkey and enjoy riding, packing and camping whenever they get the chance. Both are very excited about returning to the sagebrush and pine of Northeast California and to rural horse country.

Ray says that he is “looking forward to working with the community, local government, other agencies and our Forest Service employees to address the challenges and opportunities that face the Modoc”.

Grand Opening for New VA Clinic in Susanville

The VA Sierra Nevada Health Care System opened the doors to its newest clinic, the Diamond View Outpatient Clinic in Susanville on May 3, 2010.  They are now pleased to announce that the official grand opening and ribbon cutting ceremony will be held on August 18^th at 1:00 p.m. at the clinic located at 110 Bella Way.

The VA Sierra Nevada Health Care System’s market includes 21 counties in northern Nevada and northeastern California, covering 116,000 square miles. Approximately 120,000 veterans reside in this region. The following sites support this market and comprise the Sierra Nevada Health Care System:  Ioannis A. Lougaris VA Medical Center in Reno, VA Sierra Foothills Outpatient Clinic in Auburn, California, the VA Carson Valley Outpatient Clinic in Minden, Nevada, the VA Lahontan Valley Outpatient Clinic in Fallon, Nevada, and now the Diamond View Outpatient Clinic in Susanville.

The VA Diamond View Outpatient Clinic serves Lassen, Plumas, and Modoc counties. The clinic provides non-emergent primary care, mental health, and ancillary support services during regular business hours (8:00 a.m. – 4:30 p.m.). Services not provided by the clinic (e.g. other Specialty Care, inpatient care, or specific diagnostic services) will be available at the Reno VAMC facility, other VA facilities, or locally under contract. For questions or for more information Veterans can call (530) 251-4550.

For more information on this event contact:

Alilia McNeal, VA Sierra Nevada Health Care System

alilia.mcneal2@va.gov or 775-328-1810

Who Will Fill MMC Board Opening?

With the recent resignation of Robert Radkey from the Modoc Medical Center board of directors, the question now remains as to who will be appointed to replace him.

A full MMC board consists of seven members, all chosen by the Board of Supervisors from an original list of ten applicants, leaving three names from which the board can choose if it follows protocol.

The three remaining candidates are Lau Miller, Judy Mason and Leta Bethel. Both Miller and Mason have been active in the Save Our Hospital Committee’s efforts to form a hospital district. Bethel recently retired from Bethel Propane.

Radkey Resigns From MMC Board

The newly-appointed Modoc Medical Center board of directors has registered its first casualty.

Robert Radkey, of Alturas, tendered his resignation July 12 in a letter to the Modoc County Board of Supervisors, citing hearing difficulties and political beliefs as his reasons for resigning.

Curiously, his letter was to have been read by Supervisor Shorty Crabtree at the board’s Jan. 13 meeting, but Chair Dan Macsay failed to acknowledge Crabtree's request to announce Radkey’s resignation, Crabtree told the Modoc Independent News.

“My political beliefs are exactly opposite to those of the two supervisors that were sitting in on the two meetings,” Radkey stated in his letter, referring to Macsay and Supervisor Jeff Bullock. “Nothing further needs to said along this line.”

However, he went on to say the county must double its population in order to fully support the hospital, but that it can be self-sufficient and operate without additional funding.

“The immediate need is for a manager … to stand up and dump any deadwood regardless of what department is involved and particularly office staffers that are unable or unwilling to correctly and promptly bill the agencies and the customers, and to do so on site,” Radkey stated.

The business office insurance billing was contracted to a outside consultant, Kelly Maldonado, by former CEO Walt Beck last year.

“If the bond issue fails, as is likely, the county will severely tighten its belt and MMC will not be exempt,” he said in reference to the county’s seeking $15 million in bond sales -- a fruitless effort now that it will not be getting a satisfactory credit rating. (See “No Credit Rating for County, July 14).

No Credit Rating For County
Bond Sale Goes South


Modoc County will not be getting a credit rating that will qualify it to seek $15 million in bond sales to replace money the Board of Supervisors misappropriated from the treasury.

That setback to the county’s resolving its on-going fiscal crisis and forestalling insolvency was made clear in a brief comment by newly-elected Auditor Darcy Locken at yesterday’s Board of Supervisors meeting.

“Fitch has advised the county that it won’t get a credit rating even with the audits,” Locken said during a discussion over extending the contract of David Glasser of WJ Public Finance, LLC of Albany.

Glasser has been retained by the board as a financial adviser to assist the county in finding sources of funds, including the bond sale.

This is the first time there has been any public acknowledgement by a county official as to the status of the credit rating, which is a major component in meeting the State Controller’s Office mandate that the $15 million be returned to the treasury as soon as possible.

To date the county’s official position has been that no decision on a credit rating could be made by Fitch until the much-delayed, two, state-ordered audits were completed -- which is not expected now until early August.

(See Story below on Fitch Confirms: No Credit Rating)

Locken said the county was told by Fitch sometime in June not to expect a good credit rating, which means the Board of Supervisors and its CAO Rick Rudometkin were apparently aware of Fitch’s decision but did not make it publicly known.

A message left with Dan Macsay, chair of the board, was not immediately returned.

Glasser, in an e-mail exchange on July 7 with the Modoc Independent News -- one week before Locken’s disclosure -- said he was still representing the county in trying for a bond sale.

Just what the State Controller’s Office (SCO) will do now that the county has no apparent means to secure $15 million is not clear. A media query by the Modoc Independent News has been filed seeking a statement from the SCO.

The county is also seeking financial assistance from the State Treasurer’s Office, but no information was immediately available from that source as to what impact the lack of a credit rating will have on the possibility of a short-term $4 million TRAN loan from the state.

The news that the county would apparently fail to replace the $15 million to the treasury was met with equanimity by Don Demsher of the Monday Night Group, an ad hoc citizens committee which has offered optional methods of financing for the board’s consideration.

“We’ve always advocated getting short term financing, Demsher said. “We have never advocated getting the long term bond. First of all there was no plan for paying it back if they got the money. Second, they don’t know who they owe the money to.

“I think the supervisors are going to be at the point where they are going to have to negotiate with the people they owe money to once they know who the heck they are.” Demsher said the lack of a credit rating for the county will be discussed at the next meeting of the Monday Night Group.

* * *

Fitch Confirms: No Credit Rating

Amy Doppelt, managing director of Fitch Ratings in San Francisco today (July 14) confirmed a statement made yesterday by Modoc County Auditor Darcy Locken about the demise of long-discussed bond sale.

Doppelt said that Fitch informed Modoc County in June that they would not qualify for an investment grade rating .This means that Modoc County would not be eligible for a rating to sell bonds to institutional investors to restore an estimated $15 million to the county treasury.

“Fitch does not advise municipalities, but based on preliminary information from the Modoc County audit we felt they didn’t qualify for an investment grade rating,” she told the Modoc Daily News blog.

“Modoc has not gone through the actual rating system, but based on my 30 years of experience, because they are in a deficit financial position they would only qualify for unrated municipal securities, which carry a very high interest rate,” Doppelt said, adding she had not been working directly with any Modoc County officials, but was in contact with David Glasser and Richard Arrow, whose contract as chief financial officer with the county expired June 30.

“Modoc County has more work to do,” she explained, saying the county must achieve a positive fund balance with a financial cushion before it can approach the bond market with an investment grade rating.

-- Ray A. March and Barbara March

State Announces $750,000 Loan
For Modoc Medical Center

State Treasurer Bill Lockyer today (July 13) announced Modoc Medical Center (MMC) will receive a $750,000 low-cost loan from the California Health Facilities Financing Authority (CHFFA) to help the facility meet its capital needs over the next two months.

The interest rate is three percent, the term of the loan is five years.

“This loan will ensure the Center continues to serve patients and avoids further economic hardship,” said Lockyer. “I’m glad to help MMC get back on its feet.”

MMC newly appointed Interim CEO Monica Derner told the Modoc Daily News the funds will be used first “to assure that patient care is not affected by the lack of cash, and second, “to hopefully negotiate with Medicare to pay off the debt at a reduced rate of interest.”

Derner was referring to a Medicare overpayment to MMC which was misappropriated by the county and now has to be repaid to Medicare at a high rate of interest.

Looking to the promise of $2.8 million in stimulus money for installing an electronic medical records system, Derner reiterated what she had said in an earlier interview, “There’s the potential of $2.8 million in federal stimulus funding over three years out there if we implement electronic medical records. But first we have to spend the money up front to install it,” The CHFFA loan will help make it possible for this goal to be accomplished.

To avoid financial penalty MMC must have the system up and running by the middle of 2011.

Anticipating the passage of the Modoc Medical Center hospital district in August, Derner will also set funds aside to make sure patient care remains consistent during the transition from a county facility to a hospital district.

“We have been working on the loan application for two or three weeks,” Derner said. “I have been in contact with Kevin Bassett at Senator Cox’s office.”

Derner concluded saying that this is not the first time MMC has received a CHFFA loan. “MMC participated in this program when Jim Sato was here,” she said, “I believe the loan then was for around $50,000.”

Derner, former MMC Interim CEO Bob Duncan, Treasurer Cheryl Knoch, Auditor Darcy Locken, CAO Rick Rudometkin and Supervisor Dan Macsay recently traveled to Sacramento to discuss the loan with the state treasurer.

CHFFA will provide the financing under its Healthcare Expansion Loan Program II (HELP II). The HELP II Loan program provides three percent, fixed interest loans to California’s nonprofit small and rural health facilities. The loans may be used to purchase or construct new facilities, remodel or renovate existing facilities, and purchase equipment or furnishings.

Under the program, up to $750,000 is available to small facilities with gross annual revenues of up to $30 million. Facilities in rural areas are exempt from the gross revenue limit. Since the program's inception in 1988, CHFFA has loaned more than $52 million under HELP II.

Chaired by Lockyer as State Treasurer, CHFFA provides low-cost financial assistance to public hospitals and private, nonprofit health care providers in California. Funding provided through CHFFA can be used to construct, remodel or renovate facilities, acquire land or existing facilities, purchase or lease equipment, or obtain working capital for start-up facilities, among other purposes.

CHFFA has financed a wide range of providers and programs throughout the state, from the smaller entities eligible for HELP II to large multi-hospital systems.
For more information about CHFFA or the HELP II loan program, visit www.treasurer.ca.gov/chffa.

Cox and Johnson Are Our Loss

Today the Modoc County Board of Supervisors suffered two great losses in the deaths of Senator Dave Cox and Alturas resident Don Johnson.

It was announced that Cox died today and that Johnson died over this past weekend.

The loss of these two men is too great to be counted in regards to the interests of this county and its struggle to not only replace misappropriated money to the treasury but to stave off bankruptcy as it faces the challenge of paying its employees.

Cox was a no-nonsense powerhouse in the state senate, one who gave local officials hard-to-take advice when it came to discussions on how to bail out the county with state help. He did not hold out artificial hope, but was realistic in his assessment that the county could not get a special legislative bill passed to forestall paying $15 million its treasury.

Johnson was a man who believed in the truth and he sought it at every turn during board meetings and in asking the State Controller’s Office to investigate the county for any wrong doings coming from the misappropriation. He was philosophically and morally dedicated to what is right.

We only hope there will be men and women who will come forward in the lamentable absence of Cox and Johnson.

-- Ray A. March

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Pro and Con Bankruptcy Attorneys
An Analysis

In an effort to forestall a post-mortem on yet another shallow move by the Modoc County Board of Supervisors in its fumbling mishandling of the county’s fiscal crisis and its inability to resolve the illegal taking of $15 million from the treasury and how to repay it, let’s ask some questions.

Assuming the intention of the Board of Supervisors is to hire a law firm specializing in bankruptcy, and assuming this firm will…

• evaluate the county's solvency

• recommend restructuring, and

• represent the county with the state requesting financial assistance

…let’s ask some questions of the board and ourselves as taxpayers before going any further.

Question No. 1 -- Does the county really need this kind of representation at $500 an hour?

Question No. 2 -- Is the opportunity for financial assistance from the state such a sure deal that legal representation is necessary?

Question No. 3 -- If there is no reasonable opportunity with the state, why pay to have expensive legal representation with no certainty of success?

Before the Board of Supervisors answers, assuming it will be so open as to share its plans with the public, let’s remind our elected representatives that the county can have an evaluation of its solvency position done by a financial analyst.

Remember David Glasser?

The board is already paying Glasser to be the county’s financial analyst, and quite frankly someone should ask why he hasn’t fulfilled this obligation to the county long ago.

Keep in mind, good municipal financial analysts are experts at doing this. There are plenty of good ones in Sacramento, and they could very well do a better job at this than a law firm -- and probably for a better price.

A capable chief administrative officer with credentials to back him up, should be able to give recommendations on restructuring. It doesn’t appear the law firm the board is considering hiring is an expert in municipal management, so should we expect anything more than common sense coming from them at $500 an hour?

Michael Sweet, according to his website, appears to have only 15 years of experience, but claims to have helped the City of Richmond avoid bankruptcy. Shouldn’t this be confirmed?

Nearly all of Sweet’s experience appears to be with corporate bankruptcy. Doesn’t this amount to just another expensive way for the county to do what it’s been told to do all along? And never has?

In whose interest is this proposal? Is it in the board members’personal interest, or are our supervisors acting altruistically on behalf of the taxpayers as if they know what’s best for the rest of us?

Ask questions.

-- Ray A. March

BOS To Vote on Hiring “B-Word” Attorney

After more than a year of making virtually no progress in finding $15 million to replace the funds it illegally took from the treasury, the Modoc County Board of supervisors is preparing to hire an attorney specializing in bankruptcy.

Scheduled for board discussion tomorrow, July 13, is a proposal from Chief Administrative Officer Rick Rudometkin that the supervisors engage the legal services of McNutt Law Group, a San Francisco firm specializing in insolvency and litigation services, according to its website.

Initially, according to a draft of an engagement letter, the board will be asked to retain McNutt Law Group to assist the county in obtaining financial aid from the state and also analyze the county’s solvency issues and evaluate its potential restructuring options.

If the supervisors approve Rudometkin’s proposal the board must immediately provide McNutt Law Group a $25,000 retainer and pay a rate of $495 an hour to in-house attorney Michael Sweet.

Messages left for Sweet seeking comment were not returned.

One condition of McNutt’ representing Modoc County is the firm “will only and exclusively report and take instruction from Rudometkin, Cheryl Knoch, Darcy Locken and Dan Macsay.”

Both Knoch, county treasurer, and Macsay, chair of the board, were in office during the time when an estimated $20 million was misappropriated from the treasury. The State Controller’s Office ordered the county a year ago to repay a balance estimated at $15 million to the treasury as soon as possible.

During that year, the board has made no noticeable progress in meeting the state mandate and is now withholding payments to outside vendors so it can make its July payroll to employees.

Macsay was defeated in his bid for re-election, but his term does not expire until January, 2011. Knoch was unopposed in her re-election as treasurer.

Rudometkin was appointed CAO in a board action that failed to reveal his credentials for the position. Locken, formerly Rudometkin’s assistant, was elected county auditor in June and took office July 1 when Alice Marrs, defeated incumbent auditor, resigned.

The First Amendment Coalition is pressuring the county and Rudometkin with litigation if his personnel files are not made public. To date, no files have been produced by him or the county pertaining to his qualifications to hold the CAO position.

-- Ray A. March

Modoc Says "No" to Medical Marijuana

 

On Wednesday, July 21st the Planning Commission will review a staff-recommended ordinance amendment proposing the prohibition of Medical Marijuana Dispensaries, Collectives and Cooperatives in Modoc County.  If you have any comments, questions, concerns, please contact Kim Hunter at the Planning Department and/or submit written comments by Tuesday, July 20th. 

 

A public hearing at Planning Commission meeting will begin at 9:00 a.m. in the Planning Department Conference Room.  

 

If the Planning Commission approves the proposal it then is forwarded to the Board of Supervisors for review and action. 

 

This is not an all-encompassing ordinance that addresses all of the legally complex issues presented by medicinal marijuana use.  It is however, a first step in addressing those issues and required to be in place prior to the November 26, 2010 expiration of the interim urgency ordinance placing a moratorium on dispensaries.  

DRAFT - Chapter 18.170 - DRAFT

PROHIBITION OF MEDICAL MARIJUANA
DISPENSARIES, COLLECTIVES AND COOPERATIVES

Sections:

18.170.010      Definition of a Medical Marijuana Dispensary
18.170.020      Definition of a Medical Marijuana Collective
18.170.030      Definition of a Medical Marijuana Cooperative
18.170.040    Prohibition 
18.170.050      Violations—Penalty
18.170.060    Public Nuisance

18.170.010   Definition of a Medical Marijuana Dispensary.
 “Medical Marijuana Dispensary” or “Dispensary” means any facility or location, whether fixed or mobile, where medical marijuana is made available to or distributed by or distributed to anyone including the following: a “primary caregiver”, a “qualified patient”, or a “patient with an identification card”.  All three of these terms are identified in strict accordance with California Health and Safety Code Section 11362.5 et seq. 

18.170.020   Definition of a Medical Marijuana Collective. 
“Medical Marijuana Collective” or “Collective” as referenced in Health and Safety Code Section 1362.775 shall be defined in accordance with State statutory and case law. 

18.170.030   Definition of a Medical Marijuana Cooperative. 
“Medical Marijuana Cooperative” or “Cooperative” as referenced by Health and Safety Code Sections 1362.775 shall be defined in accordance with State statutory and case law. 

18.170.040   Prohibition. 
It shall be unlawful for any person or entity to locate or operate a medical marijuana dispensary, collective or cooperative in any zoning district in the unincorporated area of Modoc County. 

18.170.050   Violations—Penalty.
The penalty for any violation of this chapter shall be a misdemeanor, punishable by a fine of five hundred dollars and/or six (6) months imprisonment.  Each and every day a violation occurs shall constitute a separate and distinct offense punishable as set forth herein.

18.170.060   Public Nuisance.
A violation of any of the provisions of this chapter shall constitute a public nuisance and be subject to abatement as provided by all applicable provisions of law including, but not limited to, California Code of Civil Procedure Sections 731, et seq.

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Even as things improve at the hospital, history has proven that a county owned rural hospital cannot survive without an additional funding source.  And this is why most rural hospitals either have gone private or formed a Healthcare District.