Home Care In Prospect, CT

WATERBURY — The legal wrangling over the city's demands for details of Waterbury Hospital's estimated worth in a state tax appeal is coming to a culmination while a bankruptcy proceeding in a federal court in North Texas bearing directly on the hospital's future continues to play out.

A state judge is set to hear arguments May 7 in state Superior Court in Waterbury on certain city discovery requests for deposition testimony and records that owner Prospect Medical Holdings has contested in court filings.

The city is asserting in court filings that its appraiser needs the eight sets subpoenaed records in dispute to complete his appraisal of Waterbury Hospital. The city is also contending the contested topics of examination for deposition witnesses are relevant to the tax appeal.

Judge John L. Cordani recently granted the city's motion to conduct the pretrial hearing after attorneys for the city and the California-based hospital chain were unable to reach accommodations on a number of the city's discovery demands. He is scheduled to hear the tax assessment appeal on June 23.

Meanwhile, Prospect Medical Holdings is seeking a federal bankruptcy court's approval of a plan to sell Waterbury Hospital and two other Prospect-owned hospitals in Connecticut. The company filed for Chapter 11 protection on Jan. 11 amid ongoing financial difficulty, including a costly lawsuit by Yale New Haven Health seeking to back out of a $435 million deal to buy Prospect's Connecticut portfolio.

Prospect Medical Holdings purchased Waterbury Hospital and corporate parent Waterbury Health for $100 million in 2016. The company also bought Manchester Memorial Hospital and Rockville General Hospital in Vernon and their parent company Eastern Connecticut Health Network for $105 million that year.

Subsidiary Prospect Waterbury Inc. sued Waterbury in March 2023 contesting the city’s updated $171,714,900 assessment of the hospital's buildings and grounds at 64 Robbins St. following a citywide revaluation in 2022. Property taxes are based on 70% of assessed market value.

The lawsuit is claiming the 2022 tax assessment was excessive, and it is seeking an unspecified court-ordered reduction. The updated assessment was slightly more than $29.6 million higher than the previous 2021 assessment, according to city records. It represented an increase of nearly 21%.

Prospect Waterbury did not immediately respond to messages seeking comment for this report.

The bankruptcy filing put an automatic hold on litigation seeking to recover claims against Prospect Medical Holdings and any of its affiliates and subsidiaries, but the Waterbury tax appeal is proceeding because Prospect Waterbury initiated the state court action.

Prospect Waterbury has been resisting some of Waterbury’s discovery efforts to obtain information regarding the value of Waterbury Hospital’s buildings and grounds to defend the city’s tax assessment.

One of the points of contention in the pretrial discovery dispute is the city's demand to depose a corporate representative of Prospect concerning the marketing and possible sale of Waterbury Hospital to Yale New Haven Health in 2022. It is one of 15 topics of discussion that are subjects of Prospect objections.

Yale and Prospect signed a purchase agreement in October 2022 for Yale to buy the three Prospect-owned hospitals for $435 million. Yale sued to get out of the day last May shortly after state hospital regulators approved the sale late last March, and Prospect counter sued to compel Yale to complete the purchase.

The Yale lawsuit charges Prospect violated the terms of the sale due to its irresponsible financial practices, severe neglect and general mismanagement that has left the three hospitals a shell of what they were when Yale agreed to acquire them.While awaiting state approval of the transaction, Yale had asked Prospect lower the purchase price to $150 million in a Jan. 31 proposal. But Prospect only offered a $20 million reduction.

Prospect has objected to providing the city any valuations of Waterbury Hospital that supported a so-called sale-lease back agreement Prospect and Medical Properties Trust signed in 2019. The Alabama-based real estate investment trust purchased the land of the three Prospect-owned hospitals in Connecticut for $457 million and leased the real estate back to Prospect. It was part of a larger $1.6 billion financing deal that also included hospital properties in California and Pennsylvania.

MPT continues to be contractually owed $355 million from the proceeds of the planned sale of the three Prospect hospitals to Yale. But the publicly traded company stated in its annual 2024 report released Feb. 27 that the Prospect bankruptcy proceeding may negatively affect the sale and its ability to receive the full amount due from Prospect.

Prospect has additionally objected to making a witness available to discuss the use of the proceeds from loans or other vehicles designed to loan money secured by the hospital property.

Prospect has also objected to a request for testimony on the cost of fire and liability insurance on the hospital property. Its objection stated the company previously reported there is a blanket insurance policy.

Prospect has agreed to city requests to make witnesses available for depositions concerning condition of buildings on the hospital property in 2022, the costs of managing and mantaining the property, capital improvements made to the property since 2016, and operating expenses and gross revenue from 2020 through 2023.

PROSPECT — Regional School District 16 officials have proposed a $45.2 million budget, a 2.9% increase over current year's spending, which if approved would be the biggest increase in eight years.

Residents in the district, which serves students in Beacon Falls and Prospect, will vote on the budget at the annual meeting May 5 at 7 p.m. at Long River Middle School, 38 Columbia Ave. in Prospect.

Region 16 Superintendent Michael Yamin told residents at an April 9 hearing that although the proposed budget marks the largest increase in almost a decade, over the past eight years the district's budgets have gone up by about 9% collectively while the average increase for districts across the state was 24%.

"Education is financed through taxes, real estate taxes, property taxes and it's tough but if you were in another school district, you would have realized 15% more increases over the last eight years," Yamin said. "We've really been fiscally responsible but as you know, just going to the grocery store, everything you buy has doubled. It's really difficult today."

Yamin said some of areas driving the increase include salaries, health care, special education, out-of-district placement and electricity. He said the Woodland Regional High School's monthly electric bill has jumped from about $17,000 to roughly $27,000.

Region 16 Director of Business Operations Anthony DiLeone said for both towns, Education Cost Sharing funds went down slightly which has an affect on the overall school budget.

The proposed school budget is a $712,122 or 3.2% increase for Prospect and a $583,227 or a 5.3% increase for Beacon Falls, DiLeone said.

Beacon Falls Finance Manager Natasha Nau said the proposed school budget has put a large financial strain on the town as town officials are trying to keep the town budget as level as possible for taxpayers.

“The school budget has the capability to raise the tax rate by about three-fourths to a mill,” Nau said. One mill equals $1 for each $1,000 in assessed property value. The current tax rate for Beacon Falls is 29.83 mills.

Nau said the increase to the town represents 12 new students for Beacon Falls although they’ve had a steady decline in enrollment. “This the first time enrollment has had a shift in our direction,” Nau said. “Ours was decreasing while Prospect was increasing. That has shifted a little bit.”

Beacon Falls is expected to have 35% of students in the district for 2025-26 academic year which is a 0.26% increase from the current year. Prospect is expected to have 65% of the students in the next academic year, or a 0.26% decrease from the current year, DiLeone said.

“The town budget would’ve been closer to flat if it wasn’t for Region 16,” Nau said. “They’re increase is sizeable.”

The grand list for Beacon Falls has gone down 0.1% or $630,934 for a 2024 grand list of 640,142,504. Town officials are expecting a 0.63 mill increase to 30.46 mills.

Prospect Mayor Robert Chatfield said town has completed a re-evaluation which is prompting a decrease in the mill rate. The Prospect 2024 grand list went up by about $291 million to $1.22 billion.

“The grand list went up considerably,” Chatfield said. “The grand list was a shock to many people.”

The town’s current tax rate is 31.14 mills and Chatfield expects the mill rate to go down once the town budget is voted on May 1.

However, Chatfield said he hasn’t yet taken into account the Region 16 budget side to the town. Chatfield said he does think the Region 16 budget proposal is going to impact the town budget and the mill rate.

Chatfield and Beacon Falls First Selectman Gerard Smith both asked the school board at the school budget hearing to make any attempts to trim the budget. However the school board added a reading specialist at the end of the hearing which raised the budget further initially going from 2.79% to 2.97% or from an initial $1.2 million to $1.3 million increase once school officials put a reading specialist back into the budget

"We believe in developing the whole student in Region 16, academically, culturally, behaviorally. We want to expose them to something," Yamin said. "Even if we create a group or a club that only has 10 students in it, those are 10 students who are buying into something. They're not going straight home after school. They're involved. If kids are engaged, they're going to preform better."

A few parents at the hearing shared concerns about the elimination of a fifth-grade teaching position at Laurel Ledge Elementary School. Shannon Spence, who has a fourth-grader at Laurel Ledge, urged the school board to keep three fifth-grade teachers at the school.

"The impacts of COVID on the development of these children are still present and removing a teacher will only set them back rather than continue to make forward progress on the challenges they have experienced," Spence said.

The school board, however, declined to return the additional fifth-grade teaching position back into the budget.

"This budget is what we need to be successful," Yamin said. "Of course it'd be nice to say hey, we're not going to have any cuts and we're going to have all our class sizes at 15 students. That'd be great. That's not realistic."