Published: November 01, 2009 11:06 pm      

NIAGARA FALLS: Memorial drains outstanding water bill

Hospital pays most of $510,000 owed dating back to 2007 to avoid water shutoff

With one cash payment, Niagara Falls Memorial Medical Center has nearly wiped the slate clean on all of its debt with the Niagara Falls Water Board.

Water Board Executive Director Gerald Grose confirmed Friday the hospital has paid off $465,000 of a $510,000 bill that’s been accumulating since 2007. Hospital officials have also agreed to pay the remaining balance of $45,000 over the next 72 weeks, in addition to keeping current with its regular monthly water bills.

“We are very grateful it worked out,” Grose said. “They stopped paying their water bill for a couple of years. ... We had started looking into shutting (their water) off.”

To avoid a shutoff, hospital and Water Board officials worked out an agreement that cut in half the amount of accumulated interest and penalty fees. That allowed the debt to become more manageable for the cash-strapped hospital, said Memorial Chief Financial Officer Kristin Anderson.

“We never contested the fact that we owed the money,” Anderson said. She later added, “We are determined to make (the agreement) work. It works for us and our cash flow. We are going to be good neighbors.”

Grose and Anderson said the hospital’s average monthly water bill is $80,000 and increases to $130,000 during the summer. Grose said payments stopped in 2007 but instead of transferring the debt to the city as part of tax bill collections, which is a typical practice, the Water Board kept it at a higher interest and penalty rate.

“They were accruing a 24 percent interest rate from us,” Grose said. “If we would’ve transferred it to taxes, it would’ve been 12 percent. So we agreed to adjust their interest penalties as if it were sent to taxes.”

Grose said the Water Board was taking steps to shut off the hospital’s water if an agreement couldn’t be reached, including instructing its attorneys to contact the Niagara County Department of Health. Anderson said the hospital stopped making payments due to its financial problems over the past few years. She pointed out the hospital provides $7 million in uncompensated care per year, which greatly effects the bottom line.

This is the second time the hospital built up a half-million-dollar debt in water bills. Back in 2003, City Council members voted 3-2 to forgive $506,513 the hospital owed. The motion was made nine days prior to the official transfer of the water and sewer systems from the city to the newly created Water Board.

In response, the Water Board filed a lawsuit in State Supreme Court against the city in 2007 for the forgiven amount, arguing the city breached its contractual obligation. Grose said the case against the city is still in appeals court.

He added the $465,000 payment the hospital made last week, which is not connected to the original debt targeted in the lawsuit, will greatly help the Water Board balance its budget for the remainder of 2009.