Lawsuit aims to stop UPMC bond issue
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Although Allegheny County last month approved a controversial billion-dollar bond issue for the University of Pittsburgh Medical Center, complications have just begun.
Charging that the OK amounted to a "rubber stamp," 10 residents yesterday sued Allegheny County in an effort to derail the $1.175 billion issue, which is to be floated by the county's Hospital Development Authority.
Even if the lawsuit fails, there are no guarantees that the authority will ultimately handle the bond issue despite its vote in November to do so.
PDFUPMC has apparently decided to hedge its bets by requesting that a state authority issue the same amount of debt just in case the county runs into problems, such as a lawsuit.
The Pennsylvania Higher Educational Facilities Authority is scheduled to vote tomorrow on approving UPMC's request to float $1.175 billion in bonds in an effort to refinance its debt and cut its borrowing costs.
"It appears they're giving themselves options, I would think," said Robert Baccon, the state authority's assistant executive director. "We just become a different option, and we would appreciate them using us."
UPMC did not respond to repeated requests for comment.
If the state wins the business from UPMC, it will also earn fees that are now going to Allegheny County to fund its economic development department.
The department currently earns $135,000 a year in fees paid by UPMC on the bonds involved in the pending transaction, and refinancing the debt would bump up the yearly payment by $40,000. The department stands to lose all that revenue if UPMC takes its business elsewhere.
"They let us know," Dennis M. Davin, director of Allegheny County Economic Development, said of UPMC. "And I don't blame them.
"If they have any questions about whether there's any type of lawsuit, whether it's real or it's unfounded, I would probably do the same thing if I was them. But we're pushing forward with issuing the bonds."
First Published January 13, 2010 12:00 am
