Legislature(2019 - 2020)ADAMS 519
03/12/2020 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB268 | |
| HB181 | |
| Consideration of Governor's Appointee: Lucinda Mahoney, Commissioner, Department of Revenue | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 268 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| + | HB 181 | TELECONFERENCED | |
HOUSE BILL NO. 268
"An Act relating to the Alaska Municipal Bond Bank
Authority."
9:08:16 AM
Co-Chair Foster MOVED to ADOPT proposed committee
substitute for HB 268, Work Draft 31-LS1440\U (Klein,
3/10/20)(copy on file).
Co-Chair Johnston OBJECTED for discussion.
ERIN SHINE, STAFF, REPRESENTATIVE JENNIFER JOHNSTON,
relayed that the one difference between the version that
came to the committee and the committee substitute (CS)
before members, version U, was that the previous version
eliminated the $102.5 million project limit for a single
regional health organization project. The cap was removed
completely. In the CS on page 3, lines 21-22, the section
was reinserted with an increased project limit to $250
million.
Representative Josephson asked why the cap was increased.
Co-Chair Johnson indicated the explanation would be
provided by the sponsor.
Co-Chair Johnston WITHDREW her OBJECTION.
There being NO OBJECTION, it was so ordered.
9:10:06 AM
REPRESENTATIVE BART LEBON, SPONSOR, explained that the
purpose of the bill was to expand the availability of
credit for Alaska's regional health organizations as well
as assist the University of Alaska with potential debt
refinancing opportunities. Currently, the University's
access to the Alaska Municipal Bond Bank was limited.
Representative LeBon provided a brief history of the Bond
Bank. About 5 years prior, access to the Alaska Municipal
Bond Bank by regional health organizations was established
in statute. However, at the time it was established in
statute the funding was limited to 49 percent of the cost
of a project and capped at $102 million. The goal of making
a change was to allow up to 100 percent financing through
the Alaska Municipal Bond Bank and to raise the cap from
$102 million to $250 million. It raised the ceiling on the
total funding through the Bond Bank to $500 million. The
goal of the legislation was to give Alaska's regional
health organizations and the University of Alaska an
additional tool in their toolboxes.
Representative LeBon indicated that to finance a project
currently entities were always looking for the best deal
possible whether through a private bank, participation
loans, or a bond bank. Part of determining the best deal
was determining how much could be financed through the
lender. Some lenders might go up to 95 percent and others
might be more comfortable at 75 percent. He mentioned a law
that came out in 2014 that limited regional health
organizations from borrowing more than 49 percent of a
project's cost through bond banking creating a condition
that forced the regional health organization to seek
partnerships. Sometimes partnerships could benefit an
organization. He spoke of his banking days and a number of
partnerships where there was a lead lender in a deal who
would assist in putting together partnerships to benefit
the client or customer. The legislation would give the
regional health organizations additional options.
Representative LeBon discussed repayment and collateral
risks. He explained that it was difficult to define
collateral risk in a traditional way regarding a regional
health organization. He provided an example of a
traditional collateral risk to a bank. If a home owner did
not pay back a home loan, the bank would foreclose on the
home. He opined that it was unlikely any bank would want to
foreclose on a regional health organization. The risk would
likely be cash flow and, the credit risk would be managed.
The bill allowed for multiple or single lenders and
provided the option for the Alaska Municipal Bond Bank to
be the lead lender. He indicated his staff would provide
further details.
9:15:23 AM
ANNE RITTGERS, STAFF, REPRESENTATIVE BART LEBON, explained
that there were also a few changes to lending to the
University of Alaska. It removed the project scope limiting
bond bank participation to only heating and energy
projects. It also raised the UA project participation cap
from $87.5 million to $500 million.
Representative Josephson asked if it was possible that the
borrower would have more leverage to negotiate with
partners. Representative LeBon responded in the
affirmative. Additional options helped to drive down rates
and provided other benefits.
Representative Sullivan-Leonard saw the benefits of the
legislation. She wondered if there were any projects that
Representative LeBon was aware of that had not been
established because of how the bond rating was currently.
Therefore, the legislation being presented would assist in
their endeavor.
Representative LeBon was not aware of any projects that
lacked financing opportunities. He suggested that if an
entity was forced to partner with multiple lenders, it
would also force a parody agreement from the multiple
lenders. It required a balanced playing field among
lenders. The borrower was also required to be aware of the
relationships. It was rare in partnerships that the
borrower could favor one lender over another. He continued
that a parody relationship had to be clearly defined and
respected. It was also important for all parties involved
in the transaction to have defined agreements in place. He
suggested that the more parties that were involved in a
transaction, the more complicated the parody agreement
became. He relayed an experience in which there were four
partners. The four partners had to reach a common agreement
on how the financing would take place. Once the agreement
was reached, the partners had to share the agreement with
the borrower who rejected the agreement. His point was that
the more players involved in a deal, the more complicated
the deal would likely become.
Representative Wool asked if there was any competition
between Alaska Industrial Development and Export Authority
(AIDEA) and the banking industry. Representative LeBon did
not believe the banking industry would be threatened by the
legislation. In his experience, at times a banking entity
might be brought in to do the interim financing such as
construction financing. The takeout would be AIDEA, USDA,
or the Alaska Municipal Bond Bank Authority. Some entities
would not do interim construction financing and would look
to the private banks for assistance. He had done several
projects statewide in which the bank financed the
construction of a building providing the take out. He also
understood that the Bond Bank could help with construction
financing.
9:20:20 AM
Representative Wool commented that it looked like several
millions were available. He assumed that the funds were for
something other than construction. He asked about the
6-fold increase from $87 million to $500 million and the
kinds of projects that would need a $500,000 bond bank
loan. Representative LeBon thought most of the financing
would be related to building a facility and not to
purchasing equipment. Equipment was a depreciable asset
with a short life. There were other ways to finance or
purchase equipment. The biggest benefit for the University
was that it would have another option if debt came up for
renewal, debt was recallable, or refinancing rates became
more favorable. He thought there might be opportunities for
the University to lower its debt service because of current
low interest rates.
Representative Knopp wondered if in Representative LeBon's
banking days he ever financed 100 percent of a home
purchase. He referenced the fiscal note and read from it:
In the event of a default by the University or a
regional health organization that participates in this
program the State of Alaska would be asked to provide
for that debt service, and if the State failed to act
on that request a loss of market access, impacts on
investor confidence and current credit rating would be
expected.
Representative Knopp reported that since 2006 his hospital
had taken on hundreds of millions of bond debt for
expansion purposes. Since the passage of the Affordable
Care Act the area did away with service area mill rates and
sold revenue bonds to help to pay down debt. The result was
the responsibility was taken from the borough and placed in
the hands of the facilities. He was concerned with the
state getting overburdened with debt. He wondered if it was
possible for the state to avoid having the liability of a
revenue bond issuance. He thought the institutions should
have some skin in the game.
Representative LeBon responded that the loan-to-value issue
in traditional bank loans was important. He recalled that
the bank always tried to keep a maximum 80 percent loan to
value. He responded to the representative's question about
debt service and repayment ability. The loan approval
process by a banker weighed what the project could afford
to pay back and the predictability of its revenue stream.
He wanted to invite a couple of experts to the table.
Representative Josephson asked Representative LeBon to
define "Takeout." Representative LeBon responded that a
takeout was the lender who followed the construction lender
and took out the construction loan and converted it into a
long-term mortgage.
9:25:50 AM
DEVIN MITCHELL, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL BOND
BANK AUTHORITY, DEPARTMENT OF REVENUE, introduced himself.
LUKE WELLES, SENIOR DIRECTOR OF BUSINESS DEVELOPMENT ALASKA
NATIVE TRIBAL HEALTH CONSORTIUM, introduced himself. He had
been on the board of the Alaska Municipal Bond Bank and was
currently the chair.
Mr. Mitchell responded to Representative Knopp's question
about 100 percent of a project financing and his concerns
related to loan to equity issues. He explained that the
Bond Bank was not a commercial bank, rather, it was a
public corporation of the State of Alaska. The corporation
issued bonds but did not make mortgage loans. He continued
that when the corporation looked to an organization, it did
not look at a specific asset being financed. It looked at
the cashflow-generating capabilities of the organization
and what could be pledged to secure the bonds that the Bond
Bank would be purchasing from the organization. In the case
of regional health organizations, they had some revenues
that were not pledge-able, certain federal receipts, and
other revenues that were pledge-able. The Alaska Municipal
Bond Bank Authority created a lock box situation with the
pledge-able revenues in which all the insurance payments,
the co-payments, and Medicare and Medicaid receipts that
could be pledged flowed through a trustee bank. The trustee
bank would have irrevocable control of the account and
would ensure that the funding paid debt service before
being used for other purposes of the organization.
Mr. Mitchell continued that the organizations had other
cashflow associated with the non-pledge-able revenues they
received from Indian Health Service (IHS) or from joint-
venture agreements that they could rely on to ensure their
operations would remain intact even with a diversion of
revenue. The Bond Bank would require coverage to be in
place such that the amount of revenue coming in would
exceed the debt service amount paid on the bonds issued by
the bank. In previous instances involving regional health
organizations and the Bond Bank, coverage had been robust
equal to multiple times the amount. In a normal revenue
situation, coverage might be equal to 1.5 times the amount.
He added that when the Bond Bank sold bonds it implemented
provisions to avoid a diminution of the credit pledge. The
bank conducted an additional bond test ensuring that
historical or projected revenue (based on changes in rates
and charges) would be sufficient to repay the bonds that
might be issued after those of the Bond Bank and provide
coverage on the bonds.
Co-Chair Johnston asked if there was a way to define the
capacity of the Alaska Municipal Bond Bank. Mr. Mitchell
responded that in the current instance, the Bond Bank, as a
public corporation, obtained its credit rating based on a
moral obligation pledge of the State of Alaska. The Alaska
Municipal Bond Bank Authority had existed since 1975 and
had never had to rely on a moral obligation pledge. All the
loans that had been made had been paid by the underlying
borrowers. The program was not a grant or risk program. A
speculative idea without an expectation of being paid 100
percent would not qualify for the program. In the case of
the regional health organizations and capacity, it would be
a matter of the organizations themselves. The University
was a different animal. It was like a conduit revenue bond
program unlike a traditional bond bank program which
originally started with municipalities.
9:30:53 AM
Representative Josephson asked Mr. Mitchell to describe how
the University was a different animal. Mr. Mitchell
responded that the University was a subagency of the state
which received much of its funding from the state already.
The Alaska Municipal Bond Bank Authority had participated
with the University in the past. The Bond Bank had a
statute that allowed for the interception of state funds
appropriated to one or any of the borrowers prior to
disbursement to the lender. The University, with the
payments it received from the State of Alaska, fell into a
different credit analysis category. The Bond Bank did not
have to be quite as stringent with the University as it was
with the regional health organizations. The Bond Bank only
made loans it expected to get repaid. However, the coverage
requirements for the University could possibly be reduced.
Representative LeBon indicated the University had a
representative online.
9:32:04 AM
Representative Josephson noted the University was trying to
decrease its square footage. Ten years previously, it made
sense to build the Alaska Airlines Arena in his district.
Presently, it would not make sense. He asked if the Alaska
Municipal Bond Bank Authority considered all factors.
Mr. Mitchell indicated that the University had its own
requirements to fulfill in order to issue bonds. It also
typically had to have legislative approval to do so. He
noted that the Bond Bank was not like a credit card
available for use by the University, rather it was an
option the University could exercise if it was already
planning on borrowing money. The University would look at
issuing bonds on its own based on its credit, or it would
consider using the Bond Bank, whichever option cost less.
The University's chief financial officer, Myron Dosch, had
undertaken analysis in the current interest rate
environment. It appeared the University would save money if
it refinanced its portfolio through the Bond Bank rather
than independently. He concluded that given the strong
linkage between the State of Alaska and the University, it
was not a step sideways to allow the Bond Bank to help the
University save money.
MYRON DOSCH, CHIEF FINANCIAL OFFICER, UNIVERSITY OF ALASKA,
FAIRBANKS, spoke in support of the bill. He concurred with
the comments made by Representative LeBon and Mr. Mitchell.
The bill would provide the opportunity to borrow or
refinance obligations at lower interest rates by accessing
credit through the Municipal Bond Bank Authority. He
suggested that by avoiding interest costs the University
would have more money for operations. The University had
been able to quantify its position. In the current interest
rate environment, if the University were to issue a bond
for either new money or refinancing in the amount of about
$50 million over 30 years, the interest rate would be
better by about .15 percent. The saving would be
approximately $50,000 per year or about $1.5 million over
the life of the bond. He saw the bill as a way of making
opportunities more viable.
Mr. Dosch continued that the University did not anticipate
any new construction projects in the next 2 to 3 years.
Accessing credit through the Bond Bank would provide an
opportunity that it would assess in the future. He
reiterated that the University had the authority to issue
bonds in its own name which it had done in the past. There
were other state statute provisions that limited the size
of the bonds the University could issue without seeking
legislative authority. The board made its decision based on
the University's debt capacity and the mission of any given
project. The board was very judicious about debt.
Representative Wool asked for the University's current
total debt amount. Mr. Dosch responded that the aggregate
total debt was $297 million. Currently, the annual debt
service was about $28 million.
Representative Wool noted that the bill would allow for
$500 million in debt service per project. He asked if that
limit exceeded the cost of any project the University had
undertaken in the past. Mr. Dosch responded in the
affirmative. He noted that the bill did not provide any
additional authority from the University's perspective. It
was merely an avenue for the University to access credit.
The University would remain bound by its own authority to
issue debt in its name as well as the other statute
AS.14.40.253. He explained that when there was a project
with expected annual debt service that exceeded $2.5
million, the statute required the University to seek
separate approval from the Legislature.
9:39:42 AM
Representative Carpenter asked who currently owned the
bonds related to the University. Mr. Bosch responded that
the University bonds were on the general market and sold on
the capital market. They generally had a 10-year call. He
elaborated that when the University refinanced, the
existing bond holders were paid off and new bonds were
reissued. The bonds were owned in the general market -
traded and sold in mutual funds, insurance companies, and
the like.
Representative Carpenter was curious if there were other
organizations that had access to bonding authorities other
than the University and regional health organizations. Mr.
Mitchell responded that through the program there were
other authorized borrowers who had the capability of
financing 100 percent of the University's projects. He
detailed that the projects themselves were not providing
the security or source for repayment. For example, on a
general obligation pledge of the City of Kenai or Soldotna,
the Bond Bank was not worried about the library or the
public safety building being financed. Instead, the Bond
Bank was worried about the property tax base or sales tax
base being able to provide revenue to be used to pay a
bond.
Representative Carpenter noted the significant healthcare
inflation in the state. He wondered how the cost of
inflation would impact payment risk. He also wondered how
getting a handle on inflation would impact payment risk
specifically for health care organizations. Mr. Mitchell
indicated the Bond Bank would rely on the current construct
and on experts to provide information on the expectation in
the current market. In terms of the risks moving forward,
he thought they were of legitimate concern. He deferred to
others.
9:42:51 AM
Mr. Welles responded that he would break up the question
into several questions. He reported that the healthcare
facilities being discussed were tribally owned by regional
health organizations. The joint venture projects in which
facilities were being built included all people within
their respective communities. He indicated that
reimbursement was primarily through Medicaid (State of
Alaska), Medicare (federal government), and third-party
insurance with price regulations. Tribal health was unique
in that for an individual on Medicaid who was a tribal
member of one of the 229 federally recognized tribes in the
state, their health care cost was the responsibility of the
federal government rather than the state. He noted the 100
percent Federal Medical Assistance Percentage (FMAP) when a
member received health care through a tribal health
organization.
Mr. Welles relayed that the current projects slated to
expand community health services included a $20 million
project in Kotzebue, an $87 million project in Kodiak, a
$15 million project in Seward, a $20 million project in
Cordova, and a new hospital project in Sitka estimated to
cost more than $300 million. The projects were joint
ventures with IHS providing a unique stream of revenue. He
explained that when a tribal health organization entered
into an agreement with IHS to build an infrastructure
project (hospital or clinic), the IHS entered into an
agreement with the organization to pay for staffing,
operations, and maintenance costs of the facility for 20
years upon the project's completion. The agreement was
entered into as part of compact funding tied to self-
determination. He elaborated that for the past 35 years
Alaska's tribes had looked to the federal government for
funding through Public Law 93.6.38. The law allowed for the
tribes to take the funding to form regional health
organizations.
Mr. Welles continued that the baseline funding for the
organizations came from the federal government and was
negotiated every year. The regional health organizations
were able to bill for third-party care including Medicare,
Medicaid, and third-parties. He indicated that the rates of
reimbursement for Medicaid and Medicare were cost-based
rates. A cost-based rate was an all-inclusive rate
determined by taking all of the allowable costs under
Medicare rules each year in the cost reports divided by the
number of allowable patient encounters. In turn, the cost
per encounter for in-patient services and out-patient
services could be determined. Once determined, the cost-
based rate was forwarded to the regional health
organizations addressing the issue of price inflation. The
projects would provide equal opportunity, improved access
to and quality of care, and a significant boost to
telemedicine services.
Representative Carpenter surmised that if the legislature
made the decision to bond, the public would pick up 100
percent of the debt. However, if the conditions changed,
the public would be more on the hook than it would be under
current law. He was unsure whether federal funds would
continue to flow at the same level over the next couple of
decades. He thought the situation was challenging and that
it was likely that money would dry up. If so, the state
would pick up the risk on the bonds more so with the
proposed legislation.
9:49:32 AM
Mr. Mitchell indicated the Alaska Municipal Bond Bank
Authority would address the issue through the rate covenant
concept in which pledge-able revenues would be a multiple
factor of the debt service. There would be limitations on
the ability to pledge the revenue. If the revenue
diminished in the future, a default would not occur until
the diminishment was significant. In the current instance,
there was additional comfort that the operation would
continue because of the funding packages Mr. Welles
described, even if 100 percent of the pledge-able revenues
were taken. He reiterated that the Alaska Municipal Bond
Bank Authority's process in issuing loans was conservative
and, there was a 100 percent expectation of their
repayment. The authority tried to accommodate for potential
future negative events. It was possible there might be a
scenario in which measures were not conservative enough.
However, the Bond Bank tried to incorporate any concerns in
its process.
Co-Chair Foster heard Mr. Welles mention FMAP. He asked for
an example. He noted that there was a hospital in Kotzebue
that might be able to take advantage of the program. He
asked if a long-term care facility would be a good example.
Mr. Welles responded that Tim Gilbert, the President and
CEO of the Maniilaq Association, had provided a letter of
support and information about the association's project
submitted to IHS. He relayed that although many projects
across the United States had been submitted to IHS, five of
ten of the selected projects were in Alaska. One of them
was the Maniilaq Association's project in Kotzebue. He
explained that the project would expand dental services and
other outpatient ancillary clinic services at its facility.
The Maniilaq facility was the hub for 12 surrounding
communities outside of Kotzebue. The Maniilaq Association
owned and operated the clinics in the surrounding
communities referring patients to Kotzebue when they needed
a greater care of service.
Co-Chair Foster was familiar with the long-term facility
model. He suggested that if a tribal member had to be
placed in a facility not associated with IHS or FMAP, it
was his understanding that the federal government would
only be responsible for 50 percent of the cost and the
state would be responsible for the other 50 percent.
Ideally, a tribal member would be placed in a facility that
was IHS owned where the federal government paid 100 percent
of the costs. He asked if part of the reason for the
legislation was to free the state from having to pay the 50
percent. He asked how the legislation applied to dental
services.
Mr. Welles explained that the regional health organizations
had traditionally provided dental and behavioral health
services. Whereas, specialty care and tertiary hospital
care had been provided at the Alaska Native Medical Center
in Anchorage. If a person needed to see a specialist such
as a dermatologist or a cardiologist, they would have to be
seen in Anchorage. The regional health organizations
provided local care to Alaska Natives and non-natives.
Mr. Welles addressed Co-Chair Foster's question about
dental services. He relayed that Mr. Gilbert spoke of an
organic growth and a need to expand dental services within
the Maniilaq facility. The association also wanted to be
able to offer more services closer to home keeping costs as
low as possible. He noted a large pediatric dental need in
Alaska. Enhancing facilities to handle the pediatric dental
need in the rural areas was an important goal.
Mr. Mitchell pointed out that there was an existing
provision in statute that required the Department of Health
and Social Services (DHSS) to agree that a project would
glean a financial benefit to the state and improve quality
of care. He continued that partnerships were created in
2015 to ensure both, particularly in rural Alaska.
9:56:52 AM
Representative Wool used his community-owned hospital as an
example. He wondered if it would be eligible to apply to
the Bond Bank.
Mr. Mitchell responded that the Fairbanks Hospital would
not be eligible to apply directly to the Bond Bank, as it
was a non-profit facility. He noted that the Bond Bank had
a loan with a long-term care facility in Juneau, Wildflower
Court. He elaborated that the City and Borough of Juneau
(CBJ) applied to the Bond Bank because they had a close
association with Wildflower Court it was co-located with
Bartlett Regional Hospital, a place where patients went
after surgery to convalesce, and a place to receive
end-of-life care. The facilities were on land owned by CBJ.
He noted there was an agreement in place that if Wildflower
Court were to fail, Bartlett Hospital would take over
operations of the facility. Otherwise, the organization
would be looking to issue bonds on a conduit basis through
some entity such as Alaska Industrial Development and
Export Authority (AIDEA) or the Fairbanks North Star
Borough. The borough or the city would have to be willing
to commit financially to the Bond Bank, as their credit
would be pledged. If the non-profit were to fail, the
municipality would take on the debt.
Representative LeBon asked to hear from Ms. Gayhart.
9:59:20 AM
RENEE GAYHART, DIRECTOR, DIVISION OF HEALTH CARE SERVICES,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES referenced 2 lines
on page 2. She explained that when the Bond Bank received a
project, the department took a look at it from a health and
social services perspective. The Medicaid Office and the
Office of Rate Review evaluated the project. She continued
that in many cases the project would entail a build or an
enhancement of existing services. The department considered
whether the project would divert travel as new services
were added. Some examples included increasing the number of
available dental chairs or enhancing facilities in the
outlying areas in order to perform dental crowns locally.
The department reviewed travel costs, potential revenue
generation, and the costs for additional hospital beds or
dental services.
Ms. Gayhart addressed Representative Carpenter's question
regarding inflation. The department did not set the rates
for tribal health organizations they were set in the
federal register by IHS. The department paid the set rates
and was reimbursed 100 percent. She indicated things were
more complicated with reclaiming. She noted the state
health official letter that came out in 2016. She reported
that in some cases when tribal members went to non-tribal
sites, if the requirements of the state health official
letter were met, the state would receive 100 percent
reimbursement. Additional analysis had to be completed to
assess how much Medicaid would contribute or alleviate from
the state's expenses. Expenses would include items such as
transportation or services in another region. The Medicaid
Office and the Office of Rate Review compiled the numbers
and sent them to the Commissioner's Office to be reviewed
and forwarded to the Bond Bank. The information included
what the state would contribute. She conveyed that Medicaid
was a different payer mix in every region with the Medicaid
population being a factor.
Ms. Gayhardt relayed that there was another piece that had
to be analyzed. There were several non-native Medicaid
beneficiaries that went to tribal health organizations in
the regions. They met the regular match qualifications. The
state would pay the all-inclusive IHS rate but only receive
a reimbursement rate of 50 percent. The State Medicaid
Office had a detailed analysis of the numbers before they
were sent to the Bond Bank. The department weighed in
either supporting or remaining neutral on a project.
10:02:48 AM
Representative Carpenter wondered what other avenues were
available for moving forward with projects if the bill did
not pass. Mr. Welles indicated that there were other
alternatives. Typically, the other options entailed paying
additional interest costs. He used the new hospital project
in Sitka as an example. He indicated that the entity was
large enough to get its own credit rating and issue its own
bonds. More than likely they would receive an A+ or AA
rating based on their financials having the same raking as
the Bond Bank and the ability to stand alone.
Mr. Welles continued that the Maniilaq Association might be
able to get its own credit rating and issue its own bonds,
but perhaps at a credit rating less than that of the Bond
Bank at higher interest rates. He noted that a commercial
bank was also an option. He reported that the Tanana Chiefs
Conference was one of the first entities to go through the
Bond Bank. They were able to refinance and save more than
$30 million in interest charges for the life of the
financing. He mentioned going to Fitch and Moody's to get
credit ratings and provide them with information.
Subsequently, with the follow up issuance of bonds in the
market they were found to be a good credit risk. In
September Tanana Chief Conference Received its own credit
rating (single A) and issued $126 million of bonds on their
own with a 30-year term and an interest rate of 3.4
percent. He noted several tools in the tool box.
Representative Wool brought up the hospital in Sitka for
$300 million. He noted that the current cap for a project
was $102 million. He asked if the Sitka project was
dependent on the cap being raised.
Mr. Welles replied that it would be helpful to have the cap
raised. He noted the project in Bethel associated with
Yukon-Kuskokwim Health Corporation (YKHC) was 50 percent to
the cap. He relayed that the new hospital was a joint
venture project with the U.S. Department of Agriculture
(USDA). He was aware of similar projects in Sitka and
Anchorage. He added that the larger projects could stand on
their own.
10:07:04 AM
Representative Wool asked if the cost of the Tanana Chief
Conference project was $127 million. Mr. Welles indicated
that the amount applied to multiple projects.
Representative Wool clarified that the figure reflected the
construction cost of the original project. Mr. Welles
indicated that the $127 million was the refinancing amount
of the original project which was $87 million. There were
additional projects underway next door to Fairbanks
Memorial Hospital (FMH).
Representative Knopp asked about the hospital in Sitka and
whether it changed hands. Mr. Welles responded that the
Sitka Community Hospital had been taken over by Sitka
Community Health Services (SEARHC) - the two hospitals were
becoming one.
10:08:10 AM
AT EASE
10:08:30 AM
RECONVENED
Co-Chair Johnston OPENED Public Testimony.
10:08:48 AM
Co-Chair Johnston CLOSED Public Testimony.
Co-Chair Johnston would be setting the bill aside.
HB 264 was HEARD and HELD in committee for further
consideration.
10:09:11 AM
AT EASE
10:09:32 AM
RECONVENED