Committee recommends preliminary $365 million revenue bond for Ascension hospitals; one commissioner objects

The Rutherford County Budget, Finance and Investment Committee voted Oct. 9 to recommend a preliminary revenue bond issuance not to exceed $365 million for Tennessee Ascension hospitals through the Health and Education Facilities Board, with Rutherford County designated as the issuer for multiple participating counties.

Sumner Bolling, representing the Health and Education Facilities Board, told the committee the structure is a 501(c)(3) issuance for Ascension and that designating one county as issuer for multiple counties is common practice. Bolling and the committee discussed the usual market approach that places bondholders' sole recourse against the project's pledged revenues and not against county general funds. He said offering materials and financing documents include prominent disclaimers and that purchasers buy the bonds with the understanding they cannot pursue county funds.

Commissioner Irvin pressed for additional protections in the event of a major default or securities law claims, asking what legal authorities the issuer could point to beyond disclaimers. Bolling acknowledged that the market practice is to make the offering documents clear that the county and board are not liable and said there is no separate statute that creates a guaranteed shield; he characterized these transactions as nonrecourse to the issuer outside the pledged revenues.

A motion to approve the preliminary resolution carried on a roll call vote with Commissioner Irvin recorded as voting No and a majority voting Yes.

The committee recorded no county financial liability from the action and the bond financing will proceed to market with a preliminary official statement and subsequent documents that explicitly state the limited recourse available to bondholders.