Boyle County approves first reading of up to $130 million hospital revenue bonds; public hearing scheduled

The Boyle County Fiscal Court on May 13 approved the first reading of an ordinance that would authorize up to $130,000,000 in tax-exempt hospital revenue and refunding bonds to finance renovations and improvements at Ephraim McDowell Regional Medical Center and to refinance certain outstanding debt.

The move matters because the financing will be issued as tax-exempt debt, which bond counsel said lowers borrowing costs for the hospital. Mark Franklin, bond counsel with Dinsmore & Shohl, told the court the bond structure does not count against the county's legal debt limit and that Regions Bank has agreed to purchase the debt directly. "It doesn't impact your debt capacity," Franklin said, and he added that the county will not be liable for debt service on the bonds.

Franklin and hospital officials described the basics of the proposal and the next steps. Franklin said federal tax rules require a public hearing before tax-exempt bonds are issued; the court scheduled that hearing for 8:45 a.m. at the next meeting. The court also approved the ordinance's first reading by voice vote (motion by Magistrate Gay; second by Magistrate Ellis).

Ephraim McDowell representatives described planned facility work and operational needs. Dan McCase, president of Ephraim McDowell Health, said the hospital is buying buildings, vacating older wings and renovating others to expand emergency and behavioral health capacity. "We purchased three different buildings and trying to empty out the North Tower," McCase said. "We need a new ER. We need more rooms. We need more space. We need more parking." Amanda Kinman, the hospital chief financial officer, described efforts to assemble a financing package and credited Regions for a competitive offer.

Bond counsel warned the court about one federal tax consequence: because the issue will total about $130 million in tax-exempt debt this year, the county will not qualify for the so-called "bank-qualified" designation that can sometimes yield lower interest rates on smaller issues. Franklin said that is a common result when a large tax-exempt financing is issued in a jurisdiction that otherwise might issue small amounts of tax-exempt debt.

Public comment included several residents who expressed support. Asher Garvin, who said he was born at McDowell, told the court "McDowell was my birthplace; I'm glad that we're there," and said improvements would keep more care local.

What happens next: the court will hold the public hearing at the start of its next meeting, then consider a second reading and related bond documents (the ordinance summary and sample bond indenture are on file at the courthouse). Federal tax rules require the hearing; county counsel and bond counsel said they will post the full documents for public inspection before the hearing.

Sources and context: the court's action was limited to a first reading and scheduling a hearing; no final bond sale has been completed. Franklin said the bonds will be payable from hospital revenues and that bondholders "cannot look to you to make any payments on the bonds."