Bexar County commissioners will be asked to move up the sale of the fourth and final tranche of debt to finance Bexar County Hospital District’s ongoing expansion project of its facilities in San Antonio.
The district, which operates as University Health System, had planned to sell $215 million of 30-year tax-free certificates of obligation in 2011.
However, the district’s chief financial officer, Peggy Deming, told trustees that the BCHA would save an estimated $20 million in interest costs if the debt is issued as taxable Build America Bonds before that federal program expires at the end of the year.
“We feel it’s really in the best interest of taxpayers to bring this forward now,” Deming told district trustees last week.
The health care system’s board approved asking county commissioners later this month to approve the 2010 bond sale.
The district also issued a request for proposals from underwriters for the debt offering.
Deming said a 1.7% drop in Bexar County tax valuations would require an increase in the hospital’s property tax levy to support the bonds.
County commissioners will be asked in September to increase the rate to $2.76 per $1,000 of assessed value from $2.66 per $1,000.
The hospital district issued $208.9 million of BABs in 2009, along with $71.6 million of certificates of obligation.
The debt program began with a tranche of $274.1 million of certificates of obligation in 2008.
The 2008 sale was the first time the hospital district had issued debt since 1963.
In 2008, Bexar County commissioners opted to finance the hospital district’s $900 million expansion effort with certificates of obligation rather asking voters to approve general obligation bonds.
The Bexar County Hospital District’s debt is rated Aa2 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-plus by Fitch Ratings.
The district’s primary service area is Bexar County, but it provides medical and hospital care to 22 other counties in central and south Texas with a population of more than two million.
