University Health System President/CEO receives statewide service award
(SAN ANTONIO – August 14, 2009) When it comes to buying or selling, it is often said “timing is everything,” and for the second consecutive year, that phrase held true in a positive way for the Bexar County Hospital District, d/b/a University Health System. The hospital district was more than just successful in issuing its second round of bonds to fund a portion of its much-needed capital improvement program, it managed to save Bexar County taxpayers more than $45 million in the process. The district’s first successful issuance, last September, occurred just days before the global financial meltdown forced many other hospital districts and municipalities to postpone their projects.
Instead of losing time or money, University Health system has been able to take advantage of the current market conditions and be one of the first governmental healthcare systems in the U.S. to include a significant percent of new Build America Bonds in its financing program. Build America Bonds, part of the American Recovery and Reinvestment Act of 2009, are designed to provide governmental entities with access to needed capital with lower borrowing costs. The program, announced by the U.S. Treasury in April, allows qualified entities to issue taxable bonds with the federal government agreeing to pay 35 percent of the interest expense. The goal was to make public infrastructure projects more attractive to a broader group of investors, since the interest rate paid on taxable bonds is higher than tax-free issuances.
The $282,635,000 Bexar County Hospital District Certificates of Obligation Series 2009A and Series 2009B package includes $246,395,000 of taxable Build America Bonds and $36,240,000 million in tax-exempt bonds. The issuance was structures to provide flexibility and significant opportunities for reducing the cost of borrowing. The blended yield on both series was 4.38 percent for 30 years. Based on the tax-exempt scale provided by the underwriters, an all tax-exempt issuance would have cost an additional $45,421,771 in interest expense for University Health System and Bexar County taxpayers.
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