HAVERHILL – After two decades, the city has paid off a significant portion of Hale Hospital’s debt and is one year away from final payment of a second major component of what was once the largest municipal debt in the history of the state.
Mayor James Fiorentini said lowering Hale’s debt payments was part of his plan to pay for a new Consentino school without raising taxes with a debt exclusion waiver expected to be passed by voters in a election.
He said that in early October, the city made the last payment of $ 1.2 million on the $ 26.4 million mortgage on the original hospital building that the city had assumed in 2001.
Around the same time next year, the city will also pay off Hale’s $ 38.5 million operating debt when it makes a final payment of $ 1.9 million.
The mayor said that after next year all that will be left of Hale’s debt will be pension and health care bond payments to former Hale employees, which in recent years have been around 7 million dollars a year.
“It’s a huge deal, both financially and symbolically,” said Fiorentini, who has had to start every city budget since taking office in 2004 with a multi-million dollar budget hole for Hale Hospital. . “We are moving forward and getting out of Massachusetts’ biggest municipal debt. “
The city built the hospital on Lincoln Avenue and opened it in 1984 as Hale Hospital. The city sold it in 2001 to Essent Health Care because it was losing huge amounts of money every year. As part of a deal to keep the hospital in Haverhill, the city had to take on a debt of around $ 85 million that it agreed to pay over 20 years.
“When the hospital was sold, many people, including many city councilors and lawmakers, said the debt would lead to the city being placed in receivership and its buyout by the state,” said Fiorentini, a city councilor at the time of sale. . “But we were financially responsible and kept the spending line on and we got there. Eventually we got our finances in order and we were able to start rebuilding the city budget, adding public services and police and increasing the school budget by millions every year.
Debt, considered Haverhill’s financial albatross for the past two decades, had four components: pension costs for retired hospital employees, health insurance costs for retired employees, the initial mortgage on the building and the debt service on the operating deficit of the old hospital when it closed. . This year’s $ 11 million bill, paid on September 1, was the 19th and largest of 20 debt payments.
Today the hospital is known as Holy Family Haverhill and is owned by Steward Health.