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Book closed on hospital bond balance
Pawnee County residents to see $4M in bond interest savings
Pawnee Valley Community Hospital
The Pawnee County Commissioners closed the book on a $13 million revenue bond balance on Pawnee Valley Community Hospital on Monday. Payments were made by the Commissioners from the county's 6-mill and 1% health sales tax accounts and PVCH from operations revenues in a roughly 50-50 split. The bond schedule becomes final on Feb. 15. - photo by Michael Gilmore

LARNED — Bonds on the Pawnee Valley Community Hospital are being paid off 15 years ahead of schedule.

On Monday, the first-floor meeting room of the Pawnee County Courthouse was specially outfitted to accommodate officials joining the principals involved in an early retirement observance regarding the construction and equipage of the hospital.

The old St. Joseph Memorial Hospital building was already coming down in December 2011 when the first round of revenue bonds for a new facility’s construction were offered for sale by the Pawnee County Building Commission. The bank-certified bonds would total $19.6 million for the 52,000-square-foot facility, with a maturity date of 2036.

Or so everyone thought.

“I think that we’re very fortunate to be in this position,” remarked John Haas, who served on the Pawnee County Board of County Commissioners during the time the new hospital was being constructed in 2012. “To me, this is an exciting time.”

Haas, who now serves on the Pawnee Valley Community Hospital Board of Trustees, was among the officials gathered Monday that included the current commissioners, representatives of the Pawnee County PBC, PVCH administration and administration of HaysMed. Together, they marked the end of the bond issue, retiring the $13 million remaining balance 15 years early in a roughly 50-50 split between the county and hospital funding accounts.

“This is an exciting time for me, because I remember the day I signed a $19 million note thinking, ‘My God, will we ever get it paid off?’” Haas noted. “Knowing, as we did at that time, that we needed to have the facility.

“It was a necessary thing.”

Current County Commission Chairman Deborah Lewis presided over the gathering that witnessed the early bond retirement, which results in an interest savings of $4,630,097.50 as calculated buy BOK Financial’s bond schedule figured to the retirement date of Feb. 15, 2022. “We (the current commissioners) didn’t anticipate being able to pay it off this early, either,” noted Lewis. “It’s because the hospital and HaysMed have worked so very hard to make it happen. But what is really exciting to me is the amount of money it’s going to save the people in Pawnee County.” 

In attendance

Those attending the meeting in person included: Pawnee County Commissioners Bob Rein, Philip Hammeke and Deborah Lewis; Stacey Rein, Pawnee County Clerk, and Sabrina Quinn, Deputy Clerk; Melanie Urban, PVCH Administrator; Dick King, Public Building Commission; John Haas, PVCH Board of Trustees; and Douglas McNett, Pawnee County Attorney. Via Zoom were: Tom Giessel, Public Building Commission; Andy Beck, HaysMed comptroller; Edward Herrman, HaysMed president and CEO; George Harms, HaysMed CFO; Joannah Applequist, HaysMed chief medical officer; and Mitch Walter, Gilmore & Bell, attorneys.

Making it happen

Before the bonds could be officially retired, much of the discussion between those present and those online centered on the original affiliation agreement designating HaysMed as managing partner of the county-owned hospital facility and its clinic environs. Because the actual acknowledgement of receipt of the fund balance by BOK Financial would signify both the end of the bonding and the termination of the PVC’s role in ownership of the facility, documents were searched to find any legal impediments to the commissioners’ desire for retirement.

The original affiliation agreement, which was in itself a ground-breaking document at its execution in March of 2010, has evolved over time to include not only the main hospital’s construction and equipage, but also the inclusion of Pawnee Valley Medical Association clinic, which existed on the grounds at 903 Carroll St. in Larned prior to the demolition of St. Joseph and the PVCH construction. The document that sets forth the parameters of the relationship between PVCH and HaysMed has also served as a model for other such agreements in the state, such as the relationship Salina Regional Health Center has had with Lindsborg since 2012, and its most recent agreement that went into effect on Jan. 1 with Memorial Health Center in Abilene.

It was decided that the new agreement would consist of the original document with an amendment generated prior to the intended closure date of Feb. 15. Brooke Bennett Aziere, of Foulston Siefkin LLP in Wichita that was involved in the original document’s creation, would generate the agreement amendment that would satisfy all parties involved. The PBC would then sign documents transferring the deed to the county on Feb. 14, the day prior to the intended closure date.

Signing off

The meeting concluded with the motions authorizing payment to be wired transferred to BOK Financial at the end of the day.

Commissoner Bob Rein moved, and Commissioner Philip Hammeke seconded, to approve the following expenditures for the BOK Financial invoice in reference to the Pawnee County Public Building Commission hospital revenue bonds series 2011 payment due of $6,579,935.83. The funds would be taken as $3 million from the county’s 6-mill health account, with the balance of $3,579,935.83 out of the 1% health sales tax account. Remaining balances would be $1,374,323.95 in the 6-mill account, with $2,616,578.24 in the health 1% account.

The motion passed unanimously.

“As I say yes, I say it with great happiness that we’re able to do this,” Commissioner Lewis noted.

Rein also moved, and Hammeke seconded, to approve a request from Pawnee Valley Community Hospital to pay off their amount of $6,690,000 from their funds against the BOK Financial invoice for Pawnee County Public Building Commission hospital revenue bonds series 2012.

The motion also passed unanimously.

“Motion carried,” Lewis noted. “The rest is left up to the attorneys.”