Tri-City Healthcare District Negotiating Bond Proposal for Construction Costs
Officials for Tri-City Healthcare District have confirmed that they plan to ask voters to approve a bond measure to fund construction projects to expand facilities and help them comply with state seismic rules, the San Diego Union-Tribune reports. Officials are in negotiations with New York-based Citigroup to sell about $400 million in bonds to fund the project at Tri-City Medical Center in Oceanside.
Citigroup was the lowest bidder in preliminary negotiations, offering to charge $1.4 million to sell $300 million in general obligation bonds and $100 million in revenue bonds. Citigroup also would refinance $75 million in existing revenue bonds.
TCHD Board of Directors President Ronald Mitchell said a board subcommittee has temporarily withdrawn any agreement to see how bidders' prices might change with different bond amounts. Hospital officials have said $400 million was a "hypothetical" number, according to the Union-Tribune.
A contract to sell the bonds and a separate contract to hire lawyers to draft special agreements for TCHD's strategic plan, are expected to be presented to the board in May. The bond measure could be on voter ballots in areas served by TCHD as early as May 2006, Mitchell said.
For the sale of bonds to proceed, voters would have to agree to a property tax increase to pay off the general obligation bonds. Hospital revenue would fund the repayment of revenue bonds.
Health care industry and finance experts "wondered if $400 million would be enough to cover building costs, which continue to increase nationwide," the Union-Tribune reports.
Gordon Johnson, director of appraisal and market analysis for HFS Consultants in Los Angeles, said, "It doesn't sound unreasonable." He added, "The thing that keeps popping up when I watch these deals is the cost of construction" (Klawonn, San Diego Union-Tribune, 3/31).