Twin Lakes Regional Medical Center looks to save more than $1.7 million over the next 15 years after it refinances bonds issued in 2009 for the recent expansion on the front of the hospital.
The Grayson County Hospital Foundation Board, Grayson County Hospital District Board, and Grayson County Public Hospital District Corporation met in a joint meeting on Thursday evening, July 17 to authorize the refinancing of the aforementioned bonds.
The 20-year, $12.5 million Build America Bonds (BABs), used for the expansion on the front of the hospital, currently have a 15-year life-span and an $11.5 million balance left on them.
TLRMC Chief Financial Officer Scott Arndell said $1.5 million will be paid on the balance, and the remaining $10 million will be issued through the refinanced bonds.
During the 2009 economic recession, BABs were issued to help stimulate the economy. Through them, the government would agree to pay 35 percent on the interest of the bonds, Arndell said.
Since that time, sequestration has led the government to renege (stop paying) its full share of the promised 35 percent. It is now paying slightly more than 32 percent, said Arndell.
The reduced government payments and currently falling interest rates have allowed for the opportunity to refinance the bonds and save money.
Refinancing the bonds will lead to net present value savings of $1.7 million over the next 15 years; however, as the market changes over those 15 years, the savings will actually be more than $1.7 million, Arndell said.
During the meeting, Bond Legal Counsel Charlie Musson, of the Rubin and Hays law firm, presented resolutions to each of the three boards in attendance to approve for the refinancing, sale, and issuance of bonds.
The Grayson County Hospital District Board, which serves as TLRMC’s taxing entity, acted first.
It was followed by the Grayson County Public Hospital District Corporation, whose members are the legal owners of TLRMC and lease the hospital to the hospital district board.
Lastly, the Grayson County Hospital Foundation Board, which serves as the actual hospital board and sub-leases TLRMC from the hospital district board, acted on its resolution.
The three boards passed motions to authorize for the issue and sale of the bonds, now dated 2014; the hospital district corporation to lease TLRMC to the hospital district board; and the hospital district board to sub-lease TLRMC to the hospital foundation board.
The refinanced bonds are general obligation, which means the hospital district board will pledge a certain amount of taxing revenue and hospital revenue to the repayment of the bonds. This also allows the hospital district board the option to raise the current tax rate from 4.2% to 10%, the fullest possible tax rate, if necessary to repay the bonds.
According to Musson, because TLRMC is owned by the county, it must undergo a competitive bidding process for the bonds.
The bonds will be sold and issued on Tuesday, July 29.
So far, local banks The Cecilian Bank, Bank of Caneyville, Bank of Clarkson, Leitchfield Deposit Bank, and Wilson and Muir Bank & Trust Co. have come together to bid for the bond financing.
In other business:
*Because the hospital district corporation meets only to discuss bond issues, it had not met since 2009; therefore, the corporation had to elect new officers.
The corporation approved the election of Scotty Cantway to the position of President; Scott Majors to the position of Vice-President; and Mike Green to the position of Secretary/Treasurer.