NEWBERRY COUNTY, S.C. -- During a specially called meeting on Wednesday, Newberry County Council approved a resolution and had first reading of an ordinance that will allow Newberry County Memorial Hospital to refinance some of its existing debt.
"We are excited about this. With interest rates where they are we have an opportunity. As we have run the numbers, to have about seven percent net present value savings which is an excess of $500,000, not counting an additional $760,000 of our debt service fund, which can be rolled in to reduce our debt, so we really appreciate all of your considering this resolution for us," said Bob Hetrick, chief financial officer at NCMH.
Joe Lucas, an attorney with Pope Flynn Group who is helping the NCMH with this, said the last time the hospital came before council to borrow money was in 2008, and that the hospital has stayed out of the debt business for a while.
"As Bob states, this is a good opportunity to save some money. It is pure refinancing of existing debt, primarily the 2005 bond issue is what we are going to take out. But we have also provided that we can take out the remaining amount of the 2008 bond issue, which is not a lot of money. It is less than a million dollars, if the savings are good enough, if we are able to get a rate, and the market is sliding up a little bit right now. So we are trying to move at a fairly rapid pace," Lucas said.
The 2005 bond was for a little less than $11 million, and has a little over $7 million left. The 2008 bond was for about $2.2 million, and has less than $1 million left on it.
The reason the hospital has to appear before council to refinance the debt is because of legislation that requires the county to issue the debt, and the county is essentially on behalf of issuer. This is under the Hospital Revenue Bond Act, according to Lucas.
"This specifically provides the mechanism through which the county issues the debt, and essentially loans it to the hospital. The county, at that point, is out of it. Essentially no requirements, no liability, no use of the county's taxing power and that is why they call it special source revenue bonds," Lucas said. "The special source is the revenues of the hospital, so the hospital is on the hook, the county is not on the hook. It says it on the face of the bond. In this case, we are going to have a bank buyer."
Lucas said they have already got the bids out, and are expecting them back by April 7. He added they have received a lot of interest and follow up questions.
"This is good for the hospital and good for the Newberry County community," he said.
What was presented to council was a resolution that authorizes Chairman Henry Livingston to sign a petition to the Fiscal Accountability Authority asking them to approve these bonds on behalf of the county and on behalf of the hospital. The ordinance authorizes the issuance of the $7,500,000 aggregate principal amount of special source refunding revenue bond.
"The Fiscal Accountability staff made it clear to us we needed final county approval before May 2," Lucas said.
Councilman Bill Waldrop said it sounds like a good deal for the county.
Council approved the resolution after Councilman Scott Cain made a motion and Councilman Kirksey Koon seconded it.
Council approved first reading of the ordinance after Koon made a motion and Waldrop seconded it.
