Travis County Commissioners Court
Tuesday, August 3, 2010,
Item 9
Number 9 is to consider and take appropriate action on a request by central health pursuant to section 281.106 of the health and safety code for approval to issue certificates of obligation in accordance with subchapter c, chapter 271, local government code, for district purposes. Morning.
>> good morning, judge. I'm john stevens, chief financial officer with central health and i'm here with our president and ceo, trish brown. Trish young brown. And our president tom cooperwood is also here, our board president. And we also have with us in case we need him, lad pattillo, our financial advisor. This item is one that we originally brought back to the court on july 20th. So what i would like to do is briefly recap what i said on july the 20th regarding this item. As you know, we're underway with the design phase of the north central clinic now, and the board has consistently reserved the option to finance the cost of constructing this clinic. In fact, even before the board selected the current site and before funds were appropriated for construction, they passed the reimbursement resolution demonstrating their interest in financing the project, which you have included in your backup today. The key dates for this project then are in april of 2008 the board passed this reimbursement resolution expressing its intent to finance the project. September of 2008 the board approved the 18.1 million in construction that we have appropriated. And then in december of 2008 the board approved the purchase of the site at 1210 west braker lane. This is -- in terms of governmental financing, a relatively simple financing. The amount is small. And the project is relatively straightforward. The construction of the 50,000 square foot clinic facility. Market conditions for financing this now are quite good. The interest rates are relatively low. And we do enjoy the same tax base that the county does. Central health is in good financial condition, but we're also mindful that there are a number of things about health care reform that we cannot now predict. For example, we've been advised that we should expect some cut back in the amount of disproportionate share of revenue that we receive in the future. We can't quantify that now, but we do feel that it would be prudent for us to hold on to our reserves and use this as an opportunity to establish a credit rating. There are no future projects on hort rye son to finance right now that we know of, so this is our best opportunity to do this. In the future we may need to do more complicated financings, either larger ones or ones that have a more complicated pledge behind them than a simple tax pledge. For example, public-private partnership. And we would be better off doing that if we had an established credit rating. We estimate that for certificates of obligation issued at a four percent interest rate, the annual debt service would be about 1.3 million. And we are proposing to pay that first year's debt service out of central health reserves because of the timing we will not be able to include that in our tax rate for next year. Therefore if the court approves this item and our board further approves it, there would be no debt service tax for fiscal year 2011. However, beginning in 2012 and in subsequent years, there would be an annual debt service rate that we estimate would be about .14 cents. For a homeowner with a homesteaded single-family residence with a taxable value of about 219,000, this would mean an additional $3.07 in the annual tax bill. And even if we had to go up to a five percent interest rate, are the increase would be .16 cents on the tax rate and about $3.50 on the annual tax bill. If the commissioners court approves this request for central health to issue certificates of obligation, we'll request final approval from our board, and if granted we would sell the co's this autumn.
>> we've pretty much approved the northeast clinic project, but before we didn't identify what type of funding would be used.
>> that's correct.
>> and your position today is that what you have in allocated and unallocated reserve -- unallocated i guess you should save in the event there is some emergency you would be able to cover it, so would this be $18 million of 20 year debt? Is that what your calculation is based on?
>> it would not be longer than 20 year debt. If we had an opportunity to finance it on an even shorter horizon, with the same debt service payments, we would probably try to shorten it if we could, but it would be a maximum of 20 year debt, yes, sir.
>> questions or comments? Move approval.
>> second.
>> discussion? All in favor? It passes on a vote of seven to zero of those present. -- that passes on unanimous vote by those present. Commissioner davis off indict as. And number 10, commissioner davis had a question about number 10. We've done this before. It really a two-day loan in order to attract federal funds.
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Last Modified:
Tuesday, August 3, 2010, 2010 12:30 PM
