Bond Refinancing Will Save Taxpayers $2 MillionJune 8, 2021
At the monthly board meeting last week, the board approved a recommendation by the Finance Committee to refinance one of the two general obligation bonds issued by the District in 2009 and 2010. This will save District taxpayers approximately $2,000,000 over the remaining 10-year life of the bond in reduced interest and principal payments.
This is great news for Valley residents. The Finance Committee, chaired by Bill Boerum, deserves our thanks for identifying this opportunity, which reflects the responsible stewardship to which the board is committed.
Boerum said that favorable market conditions opened a window of opportunity for the District. He noted the refinancing would take up to three months to complete depending on whether the bond is sold as a public offering or through private placement.
In 2009 and 2010 the District incurred $35 million in general obligation bonds to enable the hospital to finance seismic mandates and the expansion of the west wing of the hospital. The 2009 bond was last refinanced in 2014.
Parcel Tax Update
The board approved a resolution to place on the ballot later this year a proposal for voters to continue the current parcel tax supporting the hospital. The proposal calls for renewing the existing amount of $250 per parcel and extends the term from five to 10 years. The current parcel tax expires in June 2022, and the board has tentatively decided on a November date for the vote, although this may change.
I cannot stress enough how critical the parcel tax is to the District’s ability to ensure continued local access to emergency room care, acute hospital care, and other health care services. By law, the District cannot use any tax other than a parcel tax to fund operations.
Our hospital, like most in California, is experiencing the impact of reduced
reimbursement by Federal, State and private health insurance programs, along with
reduced inpatient care created by changing regulations. These reductions are impacting our hospital more severely than many larger hospitals because approximately 73 percent of hospital services are provided to patients with Federal or State health insurance, including Medicare; and the reimbursement revenue from these programs is well below the cost of providing the services. The parcel tax is essential for SVH to maintain existing services.
CEO John Hennelly updated the board on the completion of the first phase of the Outpatient Diagnostic Center opening, which is now scheduled for late July, and will be ready to receive patients by early August. He explained the recent delay was caused by unexpected issues with the air handling system which required modifications to meet state codes. Construction issues are not unexpected when renovating an old building like the main hospital structure, which is more than 60 years old, and we are pleased that we seem to have sorted out these remaining issues.
Hennelly also reported on yet another way in which our relationship with UCSF Health is benefitting the hospital. He said that a new agreement will soon allow UCSF’s Information Technology services to take a more active role in overseeing SVH IT services. UCSF was instrumental in helping the hospital recover from the cyberattack last fall, and they have been tremendously helpful in implementing more stringent security systems within SVH.
FY 2022 Budget
Chief Financial Officer Ken Jensen presented a budget for the coming fiscal year, beginning July 1, which was approved by the Finance Committee. He said the past year was an extremely challenging time for SVH, as for all hospitals, due to Covid-related decreases in service which significantly reduced revenues. He described the new budget as a realistic one that reflects recent trends showing gradual revenue improvement.
Next Board Meeting
The next regular District Board meeting will be held on Thursday, July 1, at 6 pm. Due to precautions regarding the coronavirus, Board meetings will continue to be held via video conferencing for the near future. The public is encouraged to participate, and video conferencing details are available on the Hospital website. Public comment is always welcome.
Chair of the SVHCD Board of Directors