At their regular meeting Thursday morning, November 19, the Board of Trustees of Southwest Medical Center in Liberal considered and approved a resolution requesting the Seward County Commission take the necessary steps to seek voter approval for a general obligation bond issue to finance proposed improvements to the hospital facility. County Commissioners are anticipated to consider the request at their meeting on December 7.
The proposed bond issue requested would be in an amount not to exceed $17,000,000 and would provide the financing for construction of an addition to create a new entrance, lobby and reception area, remodel portions of the first and second floors of the hospital facility, acquire a new MRI unit, upgrade the infrastructure of the facility, and make site and other needed improvements.
A part of the total project, but not included in the bond financing, is construction of a new Medical Office Building to be attached to the Medical Center by connecting corridors. The Medical Office Building will be paid for with existing Medical Center resources, and not by incurring additional debt.
The County and Medical Center has retained the services of George K. Baum and Company for the anticipated election and bond issuance.
"General Obligation Bonds offer the most cost effective financing tool for improvements to the Southwest Medical Center," said Steve Shogren, Sr. Vice President with the firm. "These bonds offer the lowest interest rates and affiliated costs, saving the Medical Center, its patients, and the residents of Seward County in the long term. The bonds will not result in higher taxes for Seward County, as the principal and interest on the bonds will be paid by a pledge of the gross revenues of the Medical Center."
Shogren indicated that this is an opportune time for the proposed improvements and financing. The economy is presently resulting in major capital improvement projects being bid for construction at rates well below estimates of last year. Interest rates in the municipal bond market are very near 40-year low levels, making the costs of repayment of a bond more affordable than in recent decades. He estimated that the bonds could be marketed at a rate below 4.5 percent in today's market.
The pledge of hospital revenues to pay the debt service on the bonds has history and is very realistic. In reality, the Medical Center has been paying principal and interest on previously issued general obligation bonds issued by Seward County for earlier hospital improvements. Those bonds will be totally retired in four years. Shogren indicated that at today's rates, the average annual payments on the proposed new bonds will be very similar to what the Medical Center has been paying on the previously issued debt.
The resolution, approved by the Medical Center Board, requests Seward County schedule and conduct an election for March 2, 2010. Assuming County Commissioners approve the request, the Medical Center will begin an informational campaign to educate voters of their challenges, the proposed solutions and project benefits, and the financing for the bond issue.