Hospital bonds issued seven years ago are being refinanced after the move was approved by the Gage County Board of Supervisors on Wednesday.
The $31 million bond issue was not issued by the county. However, Michael Rogers, a bond attorney with GilmoreBell of Omaha, said the elected body needed to sign off on the refinancing.
“The hospital authority is the issuer of the bonds, but under our federal tax rules…an elected official or elected body must hold a public hearing prior to the issuance of bonds for the benefit of a 501(c)(3) entity,” he explained. “Since the hospital authority board is appointed by this board, and not an elected board, that’s why we’re here.”
In 2010, there were two series of bonds issued for the benefit of the hospital by the hospital authority. The first series was refunded in 2015.
Refunding the remaining bonds is expected to save the hospital $900,000 annually.
“There is significant interest savings,” Rogers said. “The average coupon on the outstanding bonds is 6.6 percent and the hospital has negotiated a 3.5 percent interest rate for the refinancing, which results in significant annual cash flow savings.”
County Board member Matt Bauman questioned if the county could be obligated if the hospital would default on the bonds, which are being financed through Great Western Bank. Rogers said the county would face no liability if that were to happen.
“It does not obligate the county in any manner in respect to the obligations,” he said. “The repayment source for these bonds will solely come from the hospital and its properties. It will not, by statute under state law, be an obligation of the tax payers of the county.”