8.7 Hospital Bond Issue
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION
DATE
02/13/06
TIME
4:00 P.M.
AGENDA SECTION
NO:
8
ORIGINATING DEPARTMENT:
APPROVED FOR
AGENDA:
ITEM
NO.
Page 1
CITY A TIORNEY
7a & 7b
BY: Greg Bengtson
BY:
ITEMS:
B.7a. Resolution Number 06-6247 Determining the Intent of the City of Salina, Kansas, to Issue its
Hospital Refunding and Improvement Revenue Bonds (Salina Regional Health Center, Inc.),
Series 2006, in an amount not to exceed $70,000,000.
B.7b. First reading Ordinance Number 06-10321 Authorizing the City of Salina, Kansas, to Issue its
Hospital Refunding and Improvement Revenue Bonds (Salina Regional Health Center, Inc.),
Series 2006, for the Purpose of Refunding the City's Outstanding Hospital Revenue
Refunding Bonds (Salina Regional Health Center, Inc.), Series 1999; and providing funds for
acquiring, construction, installing, equipping and furnishing certain hospital facilities of Salina
Regional Health Center, Inc.; and approving Certain Documents and Actions in Connection
with the Issuance of Said Bonds.
BACKGROUND:
In 1999 the City issued its Hospital Revenue Bonds (Salina Regional Health Center, Inc.), Series
1999, in the principal amount of $25,230,000 for the purpose of financing the acquisition,
construction, installation, equipping, and refurnishing of certain hospital facilities. 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 1999 bond issue is $22,725,000. Salina Regional Health
Center, Inc. ("SRHC") has filed an application for the issuance of Hospital Refunding and
Improvement Revenue Bonds in an amount not to exceed $70,000,000 (the "Bonds"). Issuance of
the Bonds will enable SRHC to complete a current refunding of the 1999 bonds, construct and equip
a multi-story patient tower, and remodel its current facilities.
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. UMB Bank, N.A. will continue to serve as Trustee. Bond counsel is Gilmore & Bell,
P.C.. Piper Jaffray Inc. will underwrite the bond issue. Underwriter's counsel is the Hinkle Elkouri
Law Firm L.L.C.
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 parties and their counsel to proceed with
the remaining work necessary to complete the bond issue. The proposed ordinance authorizes the
issuance of the bonds in an amount not to exceed $70,000,000 and approves the form of the bonds.
The ordinance also a roves the Second Su lemental Bond Indenture, the Second Su lemental
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION
DATE
02/13/06
TIME
4:00 P.M.
AGENDA SECTION ORIGINATING DEPARTMENT: APPROVED FOR
NO: 8 AGENDA:
CITY ATTORNEY
ITEM
NO. 7a & 7b BY: Greg Bengtson BY:
Page 2
Lease Agreement, the Bond Purchase Agreement, the Tax Compliance Agreement, Escrow Trust
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.
RECOMMENDATION:
Adopt Resolution Number 06-6247 and approve Ordinance Number 06-10321 on first reading.