DCHS to delay bond sale
IRON MOUNTAIN — Dickinson County Healthcare System will delay a planned sale of up to $32 million in revenue bonds and has received an extension on a loan payment that makes the postponement feasible, the county board chairman reported Monday.
Henry Wender said he learned from DCHS Board Chairwoman Margaret Minerick that Fifth Third Bank will allow a three-month extension on a balloon payment due March 30 on nearly $10 million in borrowing.
With financial markets in turmoil due to the coronavirus, the delay is appropriate, Wender said.
“The financing plan is still intact and we are working with all appropriate parties to insure a successful bond sale,” said Joe Rizzo, DCHS director of public relations and business development. “With the uncertainty in the market due to the COVID-19 crisis, it is in our best interest to wait for the market to stabilize before selling to avoid unnecessary interest expense for the hospital in the future years.”
Beyond market disruptions, hospitals across the state face unexpected and potentially enormous costs as they mobilize to respond to the COVID-19 pandemic, according to the Michigan Health and Hospital Association.
The Michigan Legislature on March 17 passed its first COVID-19 relief bill, which includes $50 million in funding for health care providers. This funding is dedicated to expanding the capacity and capabilities of providers to treat patients, the MHA said.
On the federal level, MHA and the American Hospital Association are pushing the federal government to provide emergency funding.
The timing of the DCHS revenue bond sale had been tied to the payment owed to Fifth Third Bank. The remainder of the borrowing was to be used to refinance about $4 million in other debts, acquire some $9 million in medical equipment, upgrade information systems at a cost of $5 million and perform other facility improvements. About $2.2 million is needed to establish a debt service reserve fund.
The hospital had submitted an application in August for a $26 million federal loan, but U.S. Department of Agriculture Rural Development officials said they wanted evidence of financial stability through 2020.