{"id":1347,"date":"2011-10-25T09:41:31","date_gmt":"2011-10-25T13:41:31","guid":{"rendered":"http:\/\/www.l-a-k-e.org\/blog\/2011\/10\/sgmc-asks-lowndes-county-commission-to-guarantee-100-m-in-bonds-10-october-2011.html"},"modified":"2011-10-25T09:41:31","modified_gmt":"2011-10-25T13:41:31","slug":"sgmc-asks-lowndes-county-commission-to-guarantee-100-m-in-bonds-10-october-2011","status":"publish","type":"post","link":"http:\/\/www.l-a-k-e.org\/blog\/2011\/10\/sgmc-asks-lowndes-county-commission-to-guarantee-100-m-in-bonds-10-october-2011.html","title":{"rendered":"SGMC asks Lowndes County Commission to guarantee $100 M in bonds 10 October 2011"},"content":{"rendered":"

Commissioners asked some perceptive questions
\ntwo weeks ago at their work session,
\nas well they should, when South Georgia Medical Center
\nwas asking the county to guarantee a hundred million dollars in bonds.
\nSome questions may remain.<\/p>\n

\nRepresentatives from SGMC gave a two part presentation
\n
\n<\/a>
\nabout expansion of SGMC facilities, to include 96 new
\nprivate rooms in the Dasher Heart Center, the 5 story
\nparking deck, now under construction and due to be completed
\nin early 2012, and Life Safety and Generator Equipment updates.<\/p>\n

\nAdditionally, they spoke briefly on the acquisition of Smith Northview
\nHospital on September 1, 2011. Smith Northview operates
\nas a campus of SGMC and all Smith Northview employees are now
\nSGMC employees.<\/p>\n

\nThe second part of the presentation was about the financial<\/p>\n


\nportions
\nof each of the 4 projects. The total cost of all four projects is
\n$143,000,000 and the financed portion of that is expected to be $115,000,000.
\n$3,000,000 is set aside in SPLOST for the parking deck and 25,000,000 is
\nSGMC internally available funds.
\n(Because SGMC is a public, not-for-profit, hospital, any funds that are
\nabove the cost of providing services must be re-invested into the hospital
\nand the services it provides.)<\/p>\n

\nThere are outstanding 2002 issued bonds (about 32 million dollars)
\nthat could be refinanced in 2012. This would be at a lower rate and
\nsave 1.5 million dollars in interest payments over the remaining term
\nof the bonds if the county guarentees the bond. If the bond was re-issued
\nwithout the county guarantee, the savings would be only $380,000.<\/p>\n

\nThe maximum amount that SGMC wants to finance through
\n30 year bonds is $150 million. The refinanced existing bond would be 15 years
\nand all bonds would be callable after 10 years. The interest rate
\navailable to SGMC with their credit rating alone is 5.16% and if the
\ncounty signs the guarentee the rate would be 4.75%.
\nAn arrangement to have monthly payments to go to an account at a trustee
\nbank would ensure that the annual payments on the bonds would be met.<\/p>\n

\nIf SGMC goes alone, the total payments on the loan would be 313M. If the county
\nguarentees, the total would be 297M for a savings of $16M over the life of the
\nbond.
\nThey have no additional plans for debt in the next few years, after this
\nbond issue.<\/p>\n

\n
\n<\/a>
\nDuring the question section, Commissioner Powell wanted to have the county
\nattorney and accountant to swear that guarenteeing this bond would not
\nimpact the ability of future commissions to borrow money if needed.
\nIt was stated that this agreement is like the debt service agreement
\nthat Lowndes County has with the Valdosta Lowndes County Industrial Authority.
\nCommissioner Powell then read from the agreement,
\n
\n<\/a><\/p>\n

\nIf the trustee indenture is insufficient to pay the principle and interest
\nbecoming due of the certificates. da.du.du.da… provides the county will
\nlevy taxes up to seven mils as necessary to make the payments\n<\/p><\/blockquote>\n


\n<\/a>
\nand then asked if levying taxes was the only option and Attorney Walter Elliot
\nsaid it was not the only option,<\/p>\n

\n“nothing here in contained shall be construed as limiting the right of the county to use
\nits general funds or other monies available to the county”\n<\/p><\/blockquote>\n

Commissioner Powell was satified with the answer.<\/p>\n

\nCommissioner Raines said<\/p>\n

\n
\n<\/a>
\nessentially if something should drastically change and the bottom fell out,
\nthis hospital would be a very a lucrative prize for any large hospital …
\nI can’t imagine a scenario where we’d have to put the hospital up for sale
\nbut it would be a prize for anybody to come along.. Am I mistaken with that?
\nWe’re a regional healthcare center. It’s a huge engine for our economy.\n<\/p><\/blockquote>\n

His assertion was confirmed and SGMC officials asserted that the hospital
\nmaintains cash investment on hand in addition to the sinking fund.<\/p>\n

\nChairman Paulk spoke about the quality of the hospital, management,
\nand employees and said
\n
\n<\/a><\/p>\n

\n“As a banker this would be a very good loan. I have full confidence in them.”\n<\/p><\/blockquote>\n

\nWatching the videos back, I find the topic as interesting as I did the first time.
\nThe few questions I have are:<\/p>\n