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Mountainview Medical Center board reviews USDA loan conditions for $36.98 million package
Summary
Board members reviewed a USDA Letter of Conditions for a roughly $36.98 million Rural Development loan package for a new hospital, focusing on a 90-day cash-on-hand requirement, required reserves and collateral, environmental study updates, inspection and reporting obligations; a formal vote was deferred to the next regular meeting.
Bill Galt, chair of the Mountainview Medical Center Board of Directors, called a special meeting to order at 1 p.m. Sept. 30 so a U.S. Department of Agriculture representative could review a Letter of Conditions tied to a Rural Development loan package for the hospital project.
Rob Brandt, the hospital’s chief executive officer, pressed USDA on the loan’s liquidity requirement, asking whether the required "90 days cash on hand" "can that be lowered slightly or is set in stone," noting that the national average for Critical Access Hospitals is about 60 days and that a prior offer had required 75 days.
Shelby, a USDA representative, stepped the board through the 29-page Letter of Conditions and listed the principal terms and pre-closing requirements. Shelby said the RD funding offer totals $36,980,000 in loans (which does not include any separate Benefis contribution) and that "funding is contingent on receipt of $10 million," a stated upfront funding contingency.
USDA staff outlined the loan structure and several conditions the board must satisfy before construction begins: the package is broken into three loans of almost $10 million each, the construction portion is deferred for one year, and the borrower must establish a separate identifiable account holding a 10% reserve. The lender must collateralize deposited funds above FDIC limits through a DOCA agreement, and payments will be made by preauthorized electronic funds transfers.
Shelby also described requirements and timelines related to property and environmental matters: excess land must be marketed and/or sold (RD allows up to 60 months to sell tracts, with marketing to begin within 12 months after construction), and the board must provide an updated Phase 1 environmental study from Terracon for Tract 1; Phase 2 is with DEQ. USDA said the loan terms include procurement and manufacturing compliance (Build America, Buy America), a fidelity bond requirement, and that a full-time inspector will be on the construction site (with options discussed).
Reporting and oversight requirements listed by USDA included annual audit submissions after construction completion, a schedule of quarterly reports during the first year post-construction, and RD approval for any additional debt capacity. USDA staff said that after five years the borrower may be expected to refinance on the commercial market.
No public comment was offered at the special meeting. The record shows a motion to adjourn was made by Rick Seidlitz and seconded by Shane Sereday at 1:45 p.m.; USDA advised that a formal board motion to accept the Letter of Conditions would be handled at the regular meeting immediately following adjournment.
The board did not vote on the Letter of Conditions during the special meeting; the next procedural step is that the full board will consider a motion to accept the package at its regular session.
