5.1 Hosp Rev Refunding Bond
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION
DATE
7/21/03
TIME
4:00 P.M.
AGENDA SECTION
NO:
ORIGINATING DEPARTMENT:
APPROVED FOR
AGENDA:
5
CITY ATTORNEY
ITEM
NO.
Page 1
1,1a,&1b
BY: Greg Bengtson
BY:
ITEMS:
5.1 . Public hearing on the issuance of Hospital Revenue Refunding Bonds (Salina Regional
Health Center, Inc.), Series 2003.
5.1 a. Resolution Number 03-5950 Determining the Intent of the City of Salina, Kansas, to Issue its
Hospital Revenue Refunding Bonds (Salina Regional Health Center, Inc.), Series 2003, in an
amount not to exceed $12,000,000.
5.1 b. First reading, Ordinance Number 03-10155 Authorizing the City of Salina, Kansas, to Issue its
Hospital Revenue Refunding Bonds (Salina Regional Health Center, Inc.), Series 2003, for
the Purpose of Refunding the City's Outstanding Hospital Revenue Refunding Bonds
(Asbury-Salina Regional Medical Center, Inc. Project), Series 1993; and Approving Certain
Documents and Actions in Connection with the Issuance of Said Bonds.
BACKGROUND:
In 1993 the City issued Hospital Revenue Refunding Bonds (Salina Regional Medical Center, Inc.
Project), Series 1993, in the principal amount of $17,890,000 for the purpose of refinancing the
purchase, construction, improvement, equipping, enlargement, and remodeling of the hospital
facility. Hospital revenue bonds are similar to industrial revenue bonds. Even though the City
issues the bonds, there is no taxpayer responsibility for repayment, either originally or for a refunding
issue. The bond payments are made solely from hospital revenues.
The current outstanding principal on the 1993 bond issue is $11,615,000. The current average rate
of interest on the bonds is 5.26%. Salina Regional Medical Center, Inc. ("SRHC") has filed an
application for the issuance of Hospital Revenue Refunding Bonds in an amount not to exceed
$12,000,000 (the "Bonds"). Issuance of the Bonds will enable SRHC to complete a current
refunding of the 1993 bonds, thereby benefiting from the cost savings resulting from the currently
lower market interest rates, while not extending the pay-back period under the 1993 bonds.
SRHC is a Kansas not-for-profit corporation with 501 (c)(3) charitable status under federal tax laws.
The proposed refunding bond issue will be a retail public offering and will be marketed on an
interstate basis. Underwriting of the refunding bond issue is being handled through the Wichita
offices of Gold Capital Management, Inc. UMB Bank, N.A. will continue to serve as Trustee. Bond
counsel is Gilmore & Bell, P.C. Underwriter's counsel is the Hinkle Elkouri Law Firm L.L.C. The
application for the Bonds discloses that counsel for SRHC and the City Attorney are both
shareholders in Clark, Mize, & Linville, Chartered.
For the reason that SRHC generally qualifies for exemption from property taxes in its own right,
SRHC is not requesting abatement of property taxes pursuant to the City's policy with regard to the
issuance of revenue bond financing.
The proposed resolution expresses the intent of the governing body to issue the Bonds, subject to
the conditions set forth in the resolution, and authorizes the arties and their counsel to roceed with
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION
DATE
7/21/03
TIME
4:00 P.M.
AGENDA SECTION
NO:
ORIGINATING DEPARTMENT:
APPROVED FOR
AGENDA:
5
CITY ATTORNEY
ITEM
NO.
Page 2
the remaining work necessary to complete the refunding bond issue. The proposed ordinance
authorizes the issuance of the refunding bonds in an amount not to exceed $12,000,000 and
approves the form of the bonds. The ordinance also approves the First Supplemental Bond
Indenture, the First Supplemental Lease Agreement, the Bond Purchase Agreement, the Tax
Compliance Agreement, and the Preliminary Official Statement. While a number of those
documents are available in substantially final form, by the time of second reading on the Bond
Ordinance all of those documents will be available in substantially final form (subject to insertion of
bond terms within the parameters established by the ordinance) and will have been reviewed by the
City Attorney.
1,1a,&1b
BY: Greg Bengtson
BY:
RECOMMENDATION:
Following the public hearing, adopt Resolution Number 03-5950, and approve Ordinance Number
03-10155 on first reading.