Hospital OKs $13 mill bond issue
Tahoe Forest Hospital District board members unanimously approved the second reading of a resolution for the issuance for $13 million in revenue bonds at Tuesday’s meeting.The move would also refinance the hospital’s $9 million outstanding debt over a period of 30 years, said hospital CEO/Administrator Larry Long and Chief Financial Officer David Bottemiller.Purchasing the $13 million in revenue bonds will increase the hospitals debt to about $22 million, but will allow for substantial savings by extending the loan over a 30-year period at a much lower interest rate of five and a half percent, said Long.”It works as a safety net for future uncertainties. Ultimately it will allow us to improve our cash reserves by $13 million. This will also allow us to decrease by approximately $750,000 the amount we spend each year,” he said.”You need to look at it in a 30-year perspective. It’s actually a net savings, not a net cost.”Public comment will be accepted through next month’s board meeting on April 27, and Long encouraged people with input to attend.Money from the revenue bonds will be used in capital purchases of equipment and will allow funds from the operations budget to be used as a cash reserve for the hospital, hospital officials said at the board meeting.”The benefit is that it would allow us the take the money from operations, dollar for dollar, to build our cash reserve,” said Long.According to Bottemiller, money from the revenue bonds will be placed in a trust fund and that when the hospital purchases capital equipment or facilities, it would turn the receipts into the trustee and would be reimbursed for the cost of the equipment.”The district has a very strong balance sheet except for cash,” said Bottemiller. The district felt it was advantageous to accumulate more cash with the revenue bonds, he said.”It was win – win all the way around,” said Bottemiller.Revenue bonds are paid out of the income of the district, and are not reimbursed by means of tax like general obligation bonds.Long and Bottemiller said the district was being conservative by borrowing only half of the money it was allowed to borrow.The board also approved an ordinance which determined the district will sell the bonds by private sale in the form of a bond purchase contract.Even though the board did approve the issuance of the revenue bond, it is not bound to the decision yet.”The public can provide input into the board’s decision at the next meeting. The board can still reconsider the action that has been taken,” said Long. The next board meeting will be held on April 27 at 6 p.m.A legal advertisement pertaining to the issuance of the revenue bond is required by California law to be published within 15 days of approval. The legal ran in the Union, a Grass Valley daily newspaper, after the first reading of the bond issue, but did not run in the Sierra Sun.Long said the hospital’s legal counsel apparently misunderstood that the Union doesn’t have a big circulation in Truckee and the North Tahoe area.The board reapproved the resolution and the ordinance so they could republish the legal in the Sierra Sun and the Tahoe World.”We wanted to address the needs of the local community,” said Long. The legal is required to run for two consecutive weeks and will be republished within the next two weeks.The hospital received an “A” rating by Standard & Poor’s, which Long described a “report card for financing.”TFH was among the smallest hospitals in the country to receive a rating. Because they received such a favorable rating, the bond looks good for potential purchasers, said Long.Also discussed at Tuesday’s board meeting, was the hospital’s Year 2000 readiness update.”Tahoe Forest Hospital District is aggressively resolving Year 2000 computer problems to ensure all systems will continue to operate through year 2000. Upgrades to all critical computer and medical equipment systems are completed, under way or scheduled,” said the district in a Year 2000 readiness disclosure statement.The district estimated it would take approximately $250,000 to respond to Year 2000 issues, reported Jayne O’Flanagan, director of human resources at the hospital. It hopes to have a one-month supply of stockpiling.
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