Tenor Health asks Luzerne County to serve as conduit for tax-exempt bonds to buy Wilkes-Barre General; council presses tax and oversight questions

Tenor Health Foundation representatives told Luzerne County Council they intend to buy Wilkes-Barre General Hospital and asked the hospital authority and county to serve as a conduit for tax-exempt municipal bonds to finance the purchase.

At a work-session presentation, Radha Savatallah, Tenor’s chief executive, said Tenor treats acquired hospitals as community assets and would create a community board, recruit clinicians and reinvest in equipment and operations. "We will hire substantially all of the employees that are in good standing at the time of the closing, and we are aiming to close the transaction here in December," Tenor’s team said during the presentation.

Cain Brothers, the authority’s financial adviser, said it has identified a lender (Rosemar Asset Management) prepared to acquire both tax-exempt and taxable series of bonds if the council and authority complete approvals and supporting documentation. Bart Plank of Cain Brothers said the financing team aims to close the Wilkes-Barre portion of the multi-hospital transaction by early December.

Why it matters: The proposed acquisition converts for-profit hospital assets to a nonprofit model, which could reduce or eliminate property tax payments on those facilities and change the county’s revenue base. Council members repeatedly asked for precise tax figures and what Tenor would pay post-closing.

Key questions and Tenor’s responses - Tax revenue: Councilor Thornton asked for the total current property-tax receipts on the hospital campus and what would remain if Tenor, a nonprofit, acquires the facilities. Tenor said it did not have county-specific property-tax numbers at the meeting but cited a city estimate of approximately $750,000 in tax payments to the city; County management agreed to provide precise county tax and payroll numbers at a future meeting. - Liability and indemnity: County counsel and Tenor confirmed the county and hospital authority would act only as a conduit for the bond financing and that the authority’s resolution includes indemnification. "These aren't our bonds — we're just a conduit that they're utilizing to go through," the authority’s counsel said, adding the authority would require indemnity language and that county liability would be avoided. - Separation of finances: Cain Brothers and Tenor said the financing for Wilkes-Barre would be ring-fenced; revenues and mortgage collateral tied to the Wilkes-Barre entity would secure those bonds. Representatives emphasized that under the proposed structure the Wilkes-Barre financing and collateral are separate from the Scranton-area hospitals in the acquisition package.

Council next steps and caveats Council asked county staff to return with the exact current property-tax receipts for the hospital campus (county portion and payroll taxes), an estimate of revenue loss if the hospital becomes tax-exempt, and options Tenor might propose for mitigating fiscal impact (for example pilot community-service agreements or other payments in lieu of taxes). County counsel and the hospital authority said future TEFRA and authority resolutions will be posted and will include detailed indemnities and representations the authority requires before approving conduit financing.

What’s next: The hospital authority's formal resolution and any future council review are planned for a subsequent meeting; Council members said they will review the authority’s TEFRA minutes, the county’s revenue impact analysis, and the bond documents before deciding whether to take further action.