County schedules public meeting on SRMC bond issue

The Cheyenne County commissioners will hold a meeting in August to inform the public about Sidney Regional Medical Center’s request for the county to issue $10 million in revenue bonds on its behalf to help pay for the new hospital’s construction.

While the county agreed to hold the meeting on August 4 as part of its regular board session, the commissioners were still skeptical about some aspects of the bond issuance.

Since the hospital’s initial proposal at the board’s previous meeting, the county hired its own bond attorney at the hospital’s expense.

Because the hospital is a non-profit, the county can issue bonds on its behalf, while a trustee named by the hospital would handle the work related to the bonds. These bonds would not be issued at the expense of taxpayers, hospital officials said, but would be paid through hospital revenue. If the bonds are issued by the county, they will be tax exempt, which would benefit the hospital greatly, according to its representatives.

Hospital CEO Jason Petik explained to the commissioners why he didn’t come to them with this request earlier.

“We were going to do direct loans from banking, to cover the construction period of the note,” he said.

After these financing plans were already in place, interest rates changed. This change made bonding through a government entity the best alternative because of the savings it would afford the hospital.

“I wish we had known sooner about this particular funding opportunity, but we didn’t,” said Robert Goodwin, lawyer representing SRMC.

Commissioners Harold Winkelman and Ken McMillen both took issue with language in the public notice saying that the county would have “limited obligation” when it came to the bonds.

“We don’t want any limited obligation,” McMillen said.

Petik promised that the county would hold no liability for these bonds.

The bond holders could not count on the county for payment if the hospital were to go belly up, Goodwin said.

“You cannot look to the county or its taxpayers to come in and bail you out,” he said.

Although one of the hospital’s financial representatives had informed the commissioners that SRMC was asking for an issue of bank qualified bonds, Petik corrected this at Monday’s meeting.

The hospital is asking for an issue of $10 million in bank qualified revenue bonds from Deuel County for long term financing. It is asking for an issue of $10 million in non bank qualified revenue bonds for short term financing from Cheyenne County.

The Cheyenne County bonds will be paid off after hospital construction is complete in two years, Petik said.

“The county’s out of this after construction,” he said

A taxing entity can only issue $10 million per year in bank-qualified bonds. This concerned the county, because this would limit its ability to issue bonds for its own needs in the case of an emergency.

There is no cap on the issue of non-bank qualified revenue bonds for which SRMC is asking in Cheyenne County.

The commissioners will hold a public meeting in this matter on August 4 at 11 a.m. in the Cheyenne County district courtroom.

The hospital will have representatives present at the meeting to answer any questions from the public.

“It’ll probably resolve much of the coffee shop talk down the road, too,” McMillen said.