Hospital issues $12 million in bonds

The Sonoma Valley Health Care District has sold the first tranche of its general obligation bonds. Six underwriters bid for the $12 million issue, with Citigroup Global Markets Inc. submitting the lowest true interest rate cost of 5.81 percent. The bond sale was approved by voters last November and the hospital’s board of directors voted to go ahead with the sale last week.
Bill Boerum, chairman of the hospital board, was very pleased with the results.
“We benefited from an A3 credit rating (with a positive outlook) from Moody’s Investors Service, which is quite favorable in this market,” said Boerum. “In addition, our timing was excellent, as interest rates have dropped substantially during the last six weeks. Finally, qualifying for United Health Group’s California Health Care Investment Program provided the lowest possible cost of capital for the district available in today’s market. This is an important first step in securing the hospital’s financial and physical structure.”
Bond proceeds will be available to the District on Feb. 24, upon closing and settlement of the bonds. Proceeds in the amount of $4 million will be used to retire the District’s existing revenue bonds, improving the hospital’s cash flow by over $1 million a year. The remaining proceeds will fund a master plan for facility upgrades and seismic compliance, as well as the development of detailed project specifications. In accordance with last November’s vote, the District expects to issue the remaining $23 million in authorized general obligation bonds in mid-2011, to complete the construction of these improvements.
Until spent, the bond proceeds will be invested in the Local Agency Investment Fund (LAIF), a $60 billion investment pool available exclusively to California municipalities and special districts. As funds are needed for the project, they will be transferred from LAIF to Sonoma Valley Bank for disbursement. The District recently appointed a Citizens Bond Oversight Committee to ensure that proceeds are spent as approved by the voters. Questions concerning the issuance can be directed to Jim McSweeney at 935-5018 or mcsweeneyj@svh.com.