Billion with a ‘B’; Allegheny Health Network asks counties to adopt bond resolution
Changes in the U.S. tax code approved by the Senate last week prompted two authorities to seek bond-related resolutions this week from the Washington County commissioners.
The mere mention of a billion-dollar bond issue led to a discussion about the staggering figure, with one official wondering if perhaps a typographical error or a too-heavy hand on a keyboard resulted in a figure that included nine zeroes.
Yes, it was actually $1 billion, and although the entity seeking advance refunding of tax-exempt bonds was the Allegheny County Hospital Development Authority, the local tie-in is Canonsburg Hospital.
The agenda items cropped up because the Tax Cuts and Jobs Act approved by the Senate would repeal the authority to issue advance refunding bonds after Dec. 31.
“If the law passes as expected, the bill would mark a significant change for nonprofit hospitals that use tax-exempt bonds to finance much-needed capital projects and could affect hospitals’ ability to invest in new technologies and make required upgrades,” Dan Laurent, vice president for communications at Allegheny Health Network, said in an email.
Laurent said AHN would used the bond issuance to “refinance and consolidate” the network’s old debt and to fund “capital investment projects” that have already been announced.
“The bond issuance is not related to any planned new capital investments in Washington County, nor does it impact AHN’s overall financial outlook or development plans,” Laurent said.
Versions of the tax bill in the House and Senate must be reconciled before the legislation arrives on the desk of President Donald Trump, who has pledged to sign it.
“Both the House and the Senate bills would prohibit advance refundings,” said Jim Webster, solicitor for the Washington County Industrial Development Authority, which brought a similar matter – but for “only” $65 million – to the commissioners.
The same resolution dealing with the hospitals also will go before Allegheny County Executive Rich Fitzgerald.
Washington County commissioners also approved the $65 million refunding resolution at the request of Washington & Jefferson College through the WCIDA.
The law on advance refunding of bonds has been in place since the 1986 tax code overhaul.
Washington County Solicitor J. Lynn DeHaven said the commissioners’ vote did not entail liability for the county.
Webster said bond matters come before the governing body in which a project is located.
“They’re being done now because they can’t be done in 2018,” Webster explained before the three-member board of commissioners voted in favor of both the hospital development and industrial development authorities’ resolutions.
Webster speculated the billion-dollar figure could eventually be scaled back.
“You’re limited by what they approve here,” Webster said.
The college is refunding its 2010 bonds dealing with approximately $50 million worth of capital improvements to the library, science center and residence halls over the last two decades, Webster said.