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Bond resolution approved for CBH
Taxable and non-taxable bonds to be issued
Hoisington city building at night
Hoisington city building. - photo by VERONICA COONS, Great Bend Tribune

 HOISINGTON — Monday night, the Hoisington Public Building Commission met for the second time this year to hear a revised resolution to issue revenue bonds in the amount of $15,000,000 for an extensive project to renovate Clara Barton Hospital and Healthcare facilities. 

Prior to that, the PBC met on Aug. 24 when Clara Barton CEO Jim Blackwell went over the details of the project and requested passage of the resolution that would be presented to the Hoisington City Council that night for consideration. 

Appointees to the PBC include Hoisington Mayor Dalton Popp and the entirety of the Hoisington City Council, so following the unanimous approval of the PBC resolution in August, the resulting resolutions by the city council, 06-2020 and 07-2020, were also approved unanimously by roll-call vote at the City Council meeting. 

But, a technicality in the language of the resolution was discovered, requiring changes. The new resolution was presented and approved at the PBC Monday. Then, when the regular Hoisington City Council meeting was called to order, an Internal Revenue Service-mandated Tax Equity and Fiscal Responsibility Act hearing was held. The TEFRA hearing is part of the procedures for exempt financing.  

The hearing provided the public with a “reasonable opportunity” to express their view on the issuance of the proposed revenue bonds. No public comment was presented, so the TEFRA hearing was closed, and council members proceeded to approve Ordinance 1546, authorizing the city to again proceed with PBC financing of the $15,000,000 Clara Barton Hospital project. Approval of the ordinance authorized the mayor and city manager to execute the documents to issue the bonds.

According to City Manager Jonathan Mitchell, a revenue bond is a type of municipal bond that is supported by the money a particular project is expected to generate. It does not add to the indebtedness of the city, and taxpayers are not responsible for paying it back. However, if the hospital were to default, at that point taxpayers would be responsible for paying the bond. 

The city issued revenue bonds for past projects at the Rotomix facility and the Rodeway Inn Hotel. 

The bonds have been marketed and the rates set, Mitchell said. 

“This may seem counter-intuitive, but with taxable bonds, the average rate for those was 1.5 percent. Usually, rates are lower on tax-exempt bonds, but because the term of these bonds, the taxable bonds are front-loaded,” he said. The rate on the tax-exempt bonds was set at 2.6 percent. “The reason it’s higher is the term on it is much longer.”

The taxable portion of the project is projected to be around $3,000,000. The tax-exempt portion of $12,000,000 is for new construction. 

Clara Barton Hospital Association Inc., will begin work soon on the first phases of the project, which will include the relocation of administrative offices from inside the hospital to nearby medical offices. This will allow for relocating services inside the hospital for greater efficiency and convenience for patients. In Great Bend, the landlocked Jackson Square clinic will be moved to a new location on McKinley Street where the former Montana Mike’s restaurant was located, which will allow more services to be provided. 

Resolution PBC 032020, authorizes the PBC to:

a.) Issue non-taxable revenue bonds, series 2020-A in the principal amount of $12,000,000 and taxable revenue bonds, Series 2020-B, in the amount of $3,000,000, to fund and pay the costs to construct, furnish, and equip hospital and health care facility improvement in the city to be used by Clara Barton Hospital Association, Inc.;

b.) Authorizing the execution of a first supplemental trust indenture between the PBC and Security Bank of Kansas City in Kansas City, Kan., 

c.) Authorize a lease with an option to purchase between the PBC, the City of Hoisington, and Clara Barton Hospital Association, Inc. 

d.) Authorize certain related documents and execution thereof.