Recognizing that the current municipal bond market is unlikely to provide cost effective interest rates for the issuance of almost $36 million in bonds, Mountain View Hospital’s Board and Administration has begun the process of applying for the backing of the U.S. Department of Housing and Urban Development (HUD) 242 Program to finance their expansion and renovation project.
The HUD 242 Program should enhance the credit worthiness of the hospital’s bonds, making them more attractive to investors.
The project, planned over the last few years, is important to the long-term success of the hospital and to the economic infrastructure of Jefferson County. Unlike many governmental bond issues, MVH’s bonds do not impact the taxes of property holders. They are repaid from the revenue the hospital makes treating patients.
“The interest rate we must pay on the bonds has to be reasonable before we proceed,” said Janelle Orcutt, MVH board chair. “Our obligation to the community is to ensure that debt incurred now will be supportable long into the future. It is better for us to move slowly and carefully than to take the first offer and burden the organization with unmanageable debt.”
The decision to apply for HUD support will mean a delay in the project of several months.
“I anticipate that, if we are successful and receive a positive decision from HUD, we could begin construction in September or October of this year,” said Joe Smith, Interim CEO. “We are working with HDR, our design build firm, to reschedule the work given the most likely new timeline.”
This major project is a long-term strategic initiative for MVH. While the current building has undergone several renovations, there are still parts from the original construction in 1967, which, for the most part, fail to meet current hospital construction codes. The expansion plans call for demolition of the oldest portions of the hospital and a new two-story structure to be built. Building a new structure designed to meet the realities of delivering healthcare in today’s environment is more cost effective than renovating the oldest portions. Newer portions of the current building will be renovated to create a better workflow for patient care.
When complete, the entire facility will be approximately 110,000 square feet. That includes the new building of approximately 60,000 square feet, demolishing approximately 30,000 square feet of the current building and renovating the remaining approximately 50,000 square feet.