News from the Grossmont Healthcare District
The Grossmont Healthcare District (GHD) has announced the sale of $85.6 million in general obligation bonds, which will finance a number of capital improvement construction projects at Grossmont Hospital.
It is the first time since the hospital was built that general obligation bonds have been sold to fund improvements at the 51-year-old regional medical complex. The bond sale followed last year’s passage of Proposition “G,” a $247 million bond measure sponsored by GHD that East County voters approved by more than 77 percent, well above the two-thirds approval required.
According to Dr. John Hardebeck, GHD 2007 Board President, the recent bond sale means construction is expected to begin in a few months on adding 90 new beds to the hospital’s emergency and critical care center. Other construction projects to be paid for with bond monies will include a Health Occupations Training Center, which will feature classrooms, laboratory facilities and support spaces for the training of students in the health professions, as well as design services for subsequent phases of the overall Prop. “G” construction program, including a new multi-story Diagnostic & Treatment building. The specific list of construction projects, which are limited to buildings and other fixed assets according to the ballot measure, will closely follow the Grossmont Hospital Facilities Master Site Plan, Hardebeck said.
GHD received an “AAA” rating – the highest rating possible -- for its issuance of $85,627,075.50 in bonds, which were purchased by a number of retail and institutional investors, District officials said. The U.S. government, for instance, has a top, Triple-A rating. The District’s bonds were rated by Moody’s Investor Services, a recognized and widely utilized independent source for credit ratings on debt involving sovereign nations, corporations and municipalities.
“We are gratified that the bond sale has closed and the transaction was smooth and fairly routine,” said Hardebeck. “There was never any question about the District’s financial stability, which enhanced the attractiveness and creditworthiness of the bonds. The higher bond rating reduced our transaction costs, which means bond revenues will go farther for patient improvements at the hospital.”
Serving as bond underwriter on the transaction was Goldman Sachs, a leading global investment banking, securities and investment management firm, which also has been serving for the past several years as a consultant to the District about the bond process. Other consultants to the District for bond-related matters have included G.L. Hicks Financial, a financial firm that has served as investment banker or financial advisor on more than 200 separate taxable and tax-exempt financings, representing more than $2.5 billion, and Sidley Austin LLP, an international law firm that specializes in public finance and securities. In addition, an 11-member Independent Citizens’ Bond Oversight Committee has been reviewing the bond transaction process.
Two additional bond sales, not to exceed the maximum $247 million as allowed under the ballot measure, are tentatively scheduled for 2010 and 2012, depending on construction progress and market conditions, according to GHD.
The Grossmont Healthcare District, a public agency that supports various health-related community programs and services in San Diego's East County region, was formed in 1952 to build and operate Grossmont Hospital in La Mesa. It serves as landlord of the hospital, including ownership of the property and buildings on behalf of local taxpayers. The District is governed by a five-member board of directors, each elected to four-year terms, who represent nearly 500,000 people residing within the District's 750 square miles in San Diego's East County. Hospital In 1991, the District leased the hospital's operation to Sharp HealthCare under a 30-year lease that runs through the year 2021. For more information about GHD, visit www.grossmonthealthcare.org.
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