Baptist Health seeks $500 million in tax-exempt conduit bonds; South Miami authority schedules TEFRA hearing July 7

Baptist Health South asked the City of South Miami Health Facilities Authority on Tuesday to authorize up to $500 million in tax-exempt conduit bonds to finance multiple systemwide projects, and authority staff set a TEFRA public hearing and formal vote for July 7.

"These bonds aren't the responsibility of the city to pay them back," said Chris Walrath, bond counsel with Chapman and Cutler, explaining that conduit bonds are issued in the authority's name but secured and repaid by the health system. Baptist officials and the underwriter said the bonds would be backed by the system's revenues and governed by a master trust indenture and indemnification language to protect the authority if litigation or other problems arise.

Jeanette Sanchez, corporate vice president of finance at Baptist Health, said the proceeds would fund several capital priorities across the system. "We need to convert that system into the EPIC system," Sanchez said, describing a planned migration from Cerner to EPIC that she said would touch every Baptist facility, including South Miami Hospital. She also listed a new women's cancer institute, expansion at Homestead Hospital, inpatient rehabilitation capacity and more integrated outpatient centers as projects to be financed.

Basilio Panicki of Bank of America, the underwriter, described the proposed size of the issue. "This is a $500,000,000 bond issue," he said, and added that the bonds will be marketed to public investors. Authority members were told that Baptist currently has substantial outstanding debt—about $1.7 billion, according to comments during the meeting—and that detailed disclosure materials and a prospectus will be provided to the public.

Authority staff read the Health Facility Authority's statutory purpose and stressed limits on local liability. Alfredo, the staff presenter, read language from the city code saying the authority was established to "assist in the development and maintenance of health facilities" and noted that use of the tax-exempt status lets municipalities support health infrastructure "without using taxpayer funds or impacting the city's debt limits." Alfredo also said Baptist had agreed to give the Health Facility Authority $250,000 after the bonds are issued; state law dictates how that money may be designated and the authority will decide allocation at a later meeting.

Several members asked about risk and legal protections. When a member asked "what can go wrong?" counsel and presenters responded that failures are uncommon for highly rated systems but that bankruptcy risk has occurred in other health systems; they emphasized the indemnification provisions and that the authority's attorneys will review loan-agreement language. A member who identified themselves as a Baptist Health supervisor asked whether serving on the authority would create a conflict; staff advised that the member must recuse from the July 7 vote on the bond resolution.

The timeline for approvals includes a TEFRA hearing and an authority resolution on July 7, a separate hearing in Tallahassee to cover facilities outside the city, and a later City of South Miami commission action to approve the TEFRA determination for federal tax purposes. Staff reminded members that Florida's sunshine and public-records laws apply to authority business and asked that questions be routed through staff so answers are shared with the full authority.

The authority did not take a vote at Tuesday's meeting; presenters asked members to attend the July 7 meeting in person. The authority adjourned after the presenters answered members' questions and confirmed the next steps.