Travis County Commissioners Court
May 10, 2005
Health Facilities Development Corporation
Now let's call to order the Travis County health facilities development corporation, one item. 1. Consider and take appropriate action on request to change the fees charged to issue bonds.
>> good afternoon, I知 harvey Davis, manager for the corporation and I知 here with cliff blunt our -- our attorney and lad patillo our financial advisor. The purpose of this agenda item is for the board to consider a -- recommendations that we have made to change the fees that the health facilities development corporation is charging, the current fees are that we have an application fee for $10,000, of which 8,000 is designated for the -- for our council and -- counsel and financial advisor, we charge a fee of 75 basis points, an annual fee of 75 basis points of the outstanding bonds and there is no closing fee. As you all well know and -- in recent years, when this corporation has issued bonds the -- the annual fee has been negotiated and so it's been a very long time since anybody's paid the annual fees as stated in the policy. So there was -- there was certainly a need to -- to review and -- and change these fees to reflect what other health facility development corporation are charging as you know a lot of -- of parties have come to the Commissioners court to -- to ask permission to sell bonds using other health facilities development corporations. Outside the county. So I have done a -- a review of what other issuers have charged around the state and the recommendation of fees that I would like you to consider would be to lower the application fee from $10,000 to 9,000, of which $7,000 would be -- would be allocated for the financial advisor and legal counsel. The idea is that we may have an application but the bond don't close. And so the -- so the $7,000 would be -- would be funds for them, for their help in the process before closing on the bonds. Then they would get the balance of their fees at the time of closing. I知 recommending that we -- that we charge, not charge a -- an annual fee and that we charge, instead charge a one-time fee at closing and that fee would be 10 basis points for the first $50 million in bonds and five basis points for the amount over $50,000. For example in that corporation issued a -- $100 million in bonds, the one time fee would be $75,000. So if another health facility corporation wanted to issue bonds for a health facility corporation project here, they would need our permission by law.
>> if it is a Texas health facilities development corporation, they would have to get not only Travis County's consent but also the city of Austin and the hospital district consent to do that. If it is -- if it's more questionable as to exactly what happens with an out of state issuer, as you know the large financing for seton because [indiscernible] issuer came in and agreed to issue the bonds for them. I think substantially lower cost if any, I can't remember what the terms were, but it was substantially lower and they took the position that they only needed the -- the federal tax approval which can come either from -- could have come from the county, the city or any elected representative whose jurisdiction includes the properties. So there -- there are a lot of potential issuers out there and whose consent they need varies depending on what jurisdiction they were in. Did that answer your question?
>> uh-huh, yes, sir.
>> the question is what happens then, because we have kind of counted on that annual fee to -- to, you know, be cash flow for this particular corporation and in fact we have recycled it into other good things. What does that do in terms of -- if we go this route, you are not really going to be able to certify any kind of dollars in terms of available moneys because it's going to depend on deals that may or may not occur.
>> it will be substantially similar to the housing finance corporation.
>> goodman: the only dollars that we have certified have been the annual fee from seton. Of course that's already ongoing. That's -- that's for a 10-year period.
>> if we did that, if we did this, would this give anybody that's already doing an annual, any kind of standing to be able to come in and to demand that they also be relieved of their annual obligations? I don't want to open the door that somebody could do that?
>> those fees are set generally in a loan agreement, some type of agreement that's entered into at the date of closing. They are bound by what's in their agreement. They would have to come before you all and try to renegotiate that loan agreement or financing agreement or whatever the agreement is that sets forth that fee. Just by y'all changing your policy guidelines will not affect what any -- anyone that already has bonds outstanding has to pay.
>> then have we done any kind of a cost benefit? If we had this kind of fee in existence say in the last couple of years, would we have -- would the corporation have been better off? Because of it? Or worse off? Well, we wouldn't have been worse off because we haven't issued any bonds in the last probably three or four years.
>> okay. Seton kind of the last one?
>> yes, they were the last one.
>> seemed to us after we discussed it, analyzed it, if anything the existing policy is going to turn away business.
>> okay.
>> it's going to turn away anybody who would want to use this. And cliff and I have had an opportunity to talk to some that have come. Or at least inquired, what seems to us -- we don't find this over on the housing side, but in the hospital side or the health care they don't like having to build that into the annual, they would rather pay a larger fee up front and capitalize it right there and go on with it.
>> okay.
>> is there anything that would keep us from placing a monetary value on our agreement to -- to concede to another corporation's issuing bonds on a project located here?
>> I think -- I don't think there's any -- I知 sorry --
>> I would certainly be happy to -- to make that tabulation and give it to the --
>> works involved in just -- first they want an appointment, want to come and explain it to you.
>> the statute does not address what the factors are that -- upon which consent could be given or not given. On so I it would probably be -- I think it would be fair game to based that on whatever the board needs to get consent. I this I there are a few jurisdictions in the state that do tend to a -- to charge a fee, one time foe or [indiscernible] -- one time fee or [indiscernible]
>> certainly not an exorbitant amount, but I would think it would be worth a reasonable fee. The other jurisdiction does receive some fee. It's just that the fee most often I guess is less than we have charged historically.
>> they range from --
>> number of years ago this corporation did charge a fee to somebody, an outside issuer.
>> I knew it was legal then. Just wondering if the law has changed.
>> does not change. The other issuers in the state, harvey obviously is duncan vasing. They range -- done a lot of canvassing. They ranged from not charging anything at all, I believe our current policies were proposal the highest. There were a lot that just charged a five or $10,000 closing fee, that's about it.
>> it's almost like a right of redemption when you have property taxes, sales at the courthouse. Someone will threaten I think I知 going to try to get my right of deremtion, you basically pay somebody to go away. It all gets settled very quickly.
>> saw want quick consent, pony up. You want quick consent, pony up.
>> whatever we do today, you want to put it in the form of a policy?
>> yes, sir.
>> actually, what I would like to do is to -- I would come back in the form of a policy and make a -- an identical recommendation for the other health corporation and the cultural -- education corporation which has never had any activity, does not have a policy. So that's the reason why this is -- this is a -- a policy was not in this agenda item.
>> the two changes on the second page on the may 10 memo are the two that we -- that you want directions on.
>> that's right. This is -- I did send two memos, so this would be on the memo that is tied to the agenda item for -- agenda item no. 1.
>> okay. Any more discussion? Move that we give directions basically to move to implement the two recommendations on the amended memo. From mr. -- mr. Davis and also that we look into the feasibility of charging a -- a modest fee. Who can consent to the issuance of funds for a project in our community by incorporation outside of Travis County.
>> second.
>> okay.
>> discussion? All in favor? That passes by unanimous vote.
>> thank you all.
>> I take it that the three of you all were in agreement on these.
>> yes, we worked on it together.
>> okay, thank you. All in favor? That passes by unanimous vote. By the way, director Davis is absent for the entirety of this meeting of the corporation and on the motion to adjourn, Commissioner director daughterty was gone.
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Last Modified:
Wednesday, May 11, 2005 8:12 AM