Trumbull County commissioners weigh serving as conduit issuer for Shepherd of the Valley refinancing

Trumbull County commissioners heard a presentation on a request from Shepherd of the Valley, a nonprofit health-care provider, asking the county to again serve as a conduit issuer for tax-exempt financing to refinance an existing issue and to fund new borrowing.

Matt Stuczynski, a municipal adviser to Trumbull County, told the board that a conduit issuance places the county’s name on financing documents but does not pledge county assets or create direct debt for the county. "Serving as conduit issuer has no liability to you," Stuczynski said. "The only risk that the county have is what I'll call a headline." He added that if the nonprofit defaulted, the county could appear in news coverage because the county's name is on the offering documents, even though the county would not be obligated to pay the nonprofit’s debt.

Commissioners discussed logistical and financial details Stuczynski flagged, including the effect on the county’s eligibility for "bank-qualified" interest rates. If the county issues more than $10 million of certain types of debt in a calendar year, bank-qualification benefits can be lost; those benefits typically reduce borrowing cost by a variable amount (Stuczynski said market observations range roughly from 10 to 50 basis points). Stuczynski said Shepherd of the Valley had offered to reimburse Trumbull County for any additional interest expense the county would incur if bank-qualified status were lost.

Why it matters: commissioners considered both the practical exposure and the county’s interest in supporting a local nonprofit project. Stuczynski said counties and port authorities frequently serve as conduit issuers for nonprofit health-care projects because the nonprofit itself cannot directly issue tax-exempt bonds. Commissioners and staff noted that port authorities often handle these financings but sometimes charge higher fees; Shepherd of the Valley was reportedly shopping multiple issuer options, including port authorities and the county.

Board action and next steps: commissioners stopped short of approving service as conduit issuer at the meeting. Several commissioners asked for more information from Shepherd of the Valley and said they wanted a comparable fee schedule if the county moves forward. The board directed staff to seek additional details and to consult with the nonprofit’s counsel and potential local port authorities before returning to the board, in effect postponing a final decision.

What was not decided or known: the board did not vote to become conduit issuer at the meeting, and no ordinance, resolution number, or fee schedule was adopted. Commissioners did not adopt a fee at the meeting; staff were asked to report back with comparable fees charged by the Columbiana/Western Reserve port authority and with additional documentation from Shepherd of the Valley.