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Mary Washington Healthcare asks Fredericksburg EDA to lower bond issuance fee for planned $30 million offering
Reducing the standard rate to one-tenth of 1 percent would lower the annual fee on a $30 million balance from $37,500 to $30,000.
MWHC says it will use some of the borrowed money for expenditures other than the two cancer centers. Its application asks to borrow $2.5 million to buy land at Stafford Hospital. Allenbaugh declined to comment on the location of the parcel, its size or proposed use.
"We're in negotiations. We don't comment when we're negotiating," she said.
Some of the bond money also will go to replace equipment at Mary Washington Hospital. The application lists almost $12 million to be borrowed for equipment at Mary Washington.
"We're at a point where equipment through normal use needs to be replaced," she said.
MWHC is on a tight schedule to issue the bank-qualified bonds. Usually the company would be restricted to issuing just $10 million a year in what are called "BQBs." But the federal economic stimulus allows MWHC and other qualifying small issuers to raise up to $30 million in tax-exempt bonds in 2010 for qualifying projects.
The limit would go back to $10 million in 2011 unless Congress changes the law, which observers say isn't likely. MWHC therefore needs to finalize the deal by the end of the year.
Before it can do so, MWHC must hold public hearings in front of the Fredericksburg and Stafford EDAs and then get approval from City Council and Stafford's Board of Supervisors. The first public hearing is scheduled in front of the Fredericksburg EDA at 8:30 a.m. Nov. 8 in City Hall.
"We do need to close on the loan by the end of the year," Allenbaugh said. "We feel we have an appropriate amount of time to do that."
BB&T is the underwriter of the debt, according to MWHC's application. Bank-qualified bonds carry tax benefits for banks and are thus cheaper for borrowers.
Bill Freehling: 540/374-5405
Go to the Business Browser blog on fredericksburg.com to read Mary Washington Healthcare's application to the Fredericksburg EDA.