Mary Washington Healthcare to issue $30 million in bonds through Fredericksburg EDA?

Mary Washington Healthcare, parent of Stafford Hospital and Mary Washington Hospital and one of the area’s largest employers, is looking to sell up to $30 million in tax-exempt revenue bonds to finance various projects at the two hospitals. That’s according to a legal ad in today’s FLS (Page C7).

Mary Washington Healthcare would use the money to pay for equipment and furnishings at Mary Washington Hospital, to build a cancer center and other capital improvements at the MWH campus, to buy land, equipment and more at Stafford Hospital and to pay the costs associated with the bond, according to the ad.

Mary Washington Healthcare is applying to do the bond issuance through the Fredericksburg Economic Development Authority. That would give the bonds municipal status, creating tax advantages for the buyer that lead to a lower interest rate for the issuer, which is responsible for paying the interest and principal on the bonds. In exchange the issuer (Mary Washington Healthcare) pays the conduit (Fredericksburg EDA) a fee. In Fredericksburg that fee is typically 1/8th of 1 percent per year (though as the Kalahari Resorts saga proved, that can sometimes be negotiated). The full fee on a $30 million bond issuance would net the EDA $37,500 per year, which it could use for economic development projects in the city. A public hearing in front of the EDA is scheduled for 8:30 a.m. Nov. 8 in Room 214 of Fredericksburg City Hall.

Fredericksburg Economic Development Manager Richard Tremblay said he hasn’t seen Mary Washington Healthcare’s application yet (it’s due in tomorrow and I’ve requested it; I’ll post it to this blog when I get it). But he said Stafford County’s EDA and Board of Supervisors would have to approve the issuance before Fredericksburg City Council does so because some of the bond proceeds would go toward work in that county. He said it’s likely that the application will request that Mary Washington Healthcare’s annual fee be split between Fredericksburg and Stafford’s EDAs at a rate that’s proportional to the amount invested in those two localities. He said he’s not aware of any request from MWH for the EDA to lower its annual fee, which is what touched off the controversy in the Kalahari negotiations (which ultimately proved to be in vain since Kalahari decided not to issue the bonds).

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