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Lindley Estes is a business writer for The Free Lance-Star and Fredericksburg.com. This blog is on Fredericksburg-area business. Send an e-mail to Lindley Estes.
Mary Washington Healthcare asking for lower EDA fee
Mary Washington Healthcare is asking for a reduction in the standard fee that the Fredericksburg Economic Development Authority charges to issue tax-exempt bonds, according to the application MWHC filed this afternoon with the city.
As we reported in today’s FLS, MWHC wants to issue $30 million in bank-qualified bonds to fund new cancer centers at its two hospitals, Mary Washington and Stafford, as well as buy equipment and other items. MWHC wants to issue the bonds through the Fredericksburg EDA so the bonds get municipal status (which leads to a lower interest rate).
The Fredericksburg EDA typically charges 1/8th of 1 percent of the outstanding bond balance to be the bond conduit, but MWHC is asking for a reduction to 1/10th of 1 percent or less. In its application MWHC says it could get that lower rate if it issued the bonds through the Virginia Small Business Financing Authority, but it prefers to keep the fee local so it could be used for economic development in the area. Reducing the rate to 1/10th of 1 percent would lower the annual fee on a $30 million balance from $37,500 to $30,000. The fee would be split on a proportionate basis between Stafford and Fredericksburg based on the amount of money spent in each. According to MWHC’s application, about 81 percent of the $30 million would be spent in Fredericksburg and the rest in Stafford.
Kalahari Resorts asked the Fredericksburg EDA for a similar reduction of its bond fee earlier this year, and that led to weeks of controversy and negotiations that ultimately were in vain after Kalahari decided not to issue the bonds. It remains to be seen whether this latest request will produce the same controversial result. A public hearing is scheduled in front of the Fredericksburg EDA on Nov. 8.
One interesting thing to watch for is whether Fredericksburg EDA Chairman Joe Wilson will participate in the discussion and vote. Wilson is on the board of the Mary Washington Hospital Foundation.
In order to issue the $30 million in bank-qualified bonds, it would appear that MWHC needs to get the deal done by the end of this year. Otherwise the limit would be $10 million. Click here for the explanation why.
Because public hearings need to be held before the Stafford and Fredericksburg EDAs and Board of Supervisors/City Council, MWHC is on a tight schedule to get the bonds issued. Here is the schedule laid out in the bond memorandum:
- November 8: Public Hearing held by the Fredericksburg EDA; adoption of Inducement Resolution by the Fredericksburg EDA
- November 12: Public Hearing held by the Stafford EDA; resolution of recommendation adopted by the Stafford EDA
- November 30: Approving and concurring resolution adopted by the Board of Supervisors of the County of Stafford
- December 13: Final approving resolution of the Fredericksburg EDA (assuming a financial institution to purchase the Bond has been identified and its terms and conditions are satisfactory)
- December 14: Approving resolution of the City Council of the City of Fredericksburg
BB&T is the underwriter of the bonds, according to MWHC’s application.