CIty will help Barton |

CIty will help Barton

Susan Wood

The city of South Lake Tahoe has agreed to help Barton Memorial Hospital finance nearly $13 million in consolidated debt.

The City Council voted 4-0 Tuesday to allow Barton to use the city as a conduit for a refinancing plan. Mayor Hal Cole, who serves on the hospital board, abstained.

The city will assume no fiscal responsibility for the refinancing of $10.7 million for Barton’s 1993 South Tahoe Avenue expansion and $2.3 million in new monies earmarked for capital improvements.

The hospital seeks to relocate its helipad and buy new radiology equipment.

“The city is not responsible for the bond repayment. (It’s) just a vessel,” Barton Chief Executive Officer Bill Gordon said Wednesday.

Nonprofit hospitals can use local jurisdictions – in this case city government – as conduits for financing to reduce interest costs.

Barton went through a broker that lined up two buyers – Orix Financial Services and Key Municipal Finance.

The major portion of Barton’s existing debt is guaranteed by a letter of credit with the Banque National de Paris, which expires Sept. 1, 2001. Unless Barton repays its outstanding debt prior to that date, the hospital will end up penalized at a high interest rate.

California provides a program for conduit revenue bonds for hospitals, but it requires stringent credit guidelines. Even nonprofit health care facilities with “A” ratings have reported experiencing a difficult time achieving credit enhancements.

Barton has complied with state’s operating covenants to participate in the program, but it showed a negative cash flow in calendar year 2000.

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