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101 1st St NE
Box 12
Bowman, ND 58623-0012

SWHC asks city for $2.5M bond increase for project

March 27, 2015

By Bryce Martin | Pioneer Editor | bmartin@countrymedia.net

Southwest Healthcare Services is seeking all possible financial help after learning the costs of its renovation and expansion project dramatically increased.

A resolution was approved Tuesday by the City Board of Commissioners at its regular meeting that authorized the holding of a public hearing before the commission can make a decision to increase SWHC’s revenue bond by $2.5 million.

The city previously authorized $16 million in bonds for SWHC.

City Commission President Lyn James explained that the bonds have no liability to the city. “We are strictly a conduit for financing,” she said and added that the city will have no fiscal responsibility. That means the $16 million in loans for SWHC, and the additional $2.5 million if approved, would not come from the city’s budget. Instead, that money comes from a third-party.

The bonds that SWHC is using require a “conduit” for funding, which must be a local taxing entity such as the city of Bowman.

, CEO of Southwest Healthcare Services, requested that the city hold a public hearing, the legal route per North Dakota Century Code, before the additional millions in bonding could be granted.

Hansen said the Bowman health care provider has been “rounding up” sources of funds after bids for its project came back much higher than anticipated. The present estimate for the project’s construction now stands at $28.5 million.

The city is authorized by the Municipal Industrial Development Act of North Dakota’s Century Code to issue revenue bonds and to loan the proceeds to nonprofit corporations for the purpose of providing health care facilities and other revenue producing facilities.

As part of the additional bonds, SWHC will also refund the outstanding City of Bowman Health Care Facilities Revenue Bonds, which were granted in 2006, through refinancing those into the new bonding.

Hansen explained to Commissioner Chuck Whitney that SWHC will roll $2.1 million of the hospital’s debt into the financing.

In a resolution read aloud by James during the meeting, it was stated that the city was advised by representatives of SWHC that, “with the aid of municipal financing and the resulting lower cost, the interim financing of the project would be significantly more feasible.”

A unanimous vote was made by the commissioners to allow for a public hearing, which was scheduled for 5:15 p.m. April 23 at Bowman City Hall.

Hansen also requested an advance of $500,000 from the city sales tax’s allocation to SWHC to aid in the construction costs.

SWHC is putting together a bond issue, which requires an account of all funding sources that is available for the lending entities to then match.

One way they could get it to match, according to Hansen, was to have the city input $500,000 from the sales tax fund. It would then be set aside in an escrow account for SWHC to use for future capital improvements.

James told the commission that she visited with Steve Wild, city attorney for Bowman, who said the city was able to do such a thing.

It was required that Hansen report back to the commission on what those funds were used for as they are spent.

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