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Mary Washington Healthcare asks Fredericksburg EDA to lower bond issuance fee for planned $30 million offering
BY BILL FREEHLING and JIM HALL
Mary Washington Healthcare wants the Fredericksburg Economic Development Authority to reduce its standard fee for the company's $30 million bond offering.
The nonprofit health care company wants to issue the bonds to finance new cancer centers at its two hospitals, Mary Washington and Stafford, and buy equipment, land and other items.
The money will be spent in Fredericksburg and Stafford, but MWHC wants to issue the bonds exclusively through the Fredericksburg EDA to avoid the higher costs that come with two separate applications. The fee charged to issue the bonds would be divided proportionately between the Stafford and city EDAs based on the money spent in each locality. About 81 percent of the costs are scheduled for the city.
The Fredericksburg EDA typically charges an annual fee of one-eighth of 1 percent of the loan balance to issue bonds for private and nonprofit companies, which benefit by getting the lower interest rate that comes from municipal debt. The borrower, in this case MWHC, is responsible for the interest and principal to investors.
In its application filed this week, MWHC asks the Fredericksburg EDA to lower its fee to one-tenth of 1 percent, which is the rate MWHC says it could get from the Virginia Small Business Financing Authority. One-tenth of 1 percent is also the standard rate of Stafford's EDA. MWHC wants to go through the local EDAs so the fee it pays stays local and could be used for economic development projects.
"We had looked at where to go to get the money," said MWHC spokeswoman Kathleen Allenbaugh. "We decided to stay in the community."
Kalahari Resorts also asked the Fredericksburg EDA to lower its annual fee earlier this year. That request divided the seven-member EDA and led to weeks of tense negotiations. Kalahari ultimately didn't issue the bonds. It remains to be seen whether this fee reduction request will have the same effect.
Joe Wilson, chairman of the Fredericksburg EDA, is on the board of the Mary Washington Hospital Foundation. Don Newlin, chairman of the Stafford EDA, is on the Mary Washington Healthcare board. Newlin and Wilson both said they won't vote on this issue because of that conflict.
Go to the Business Browser blog on fredericksburg.com to read Mary Washington Healthcare's application to the Fredericksburg EDA.