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Officials: Refinancing could save taxpayers

February 15, 2001

$2.4 million on Calexico hospital debt

By RICHARD MONTENEGRO, Staff Writer

CALEXICO — A plan to refinance more than $9 million in bonds paying off past debts of Calexico Hospital could save taxpayers here $2.4 million and allow the district about $100,000 a year with which to operate the closed hospital, district officials claim.

The Heffernan Memorial Hospital District Board of Trustees on Wednesday directed staff to go forward with a plan to refinance a 1996 $9.235 million bond issuance being paid off by a half-cent sales tax within the borders of the Calexico-based hospital district.

The existing interest rate on the bond issuance is 7.4 percent with an estimated payoff coming in 2006. The bonds were purchased after the district filed for bankruptcy, owing more than $10 million.

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Under a plan to be taken up by hospital district Attorney Eduardo "Eddie" Rivera and Robert Swerdling of financial consultants Piper Jaffrey of Minneapolis, the bonds would be refinanced at a rate of no more than 5 percent, extending the life of the bonds and the half-cent sales tax paying them off by one year but decreasing the overall amount of debt service by $2.4 million.

Furthermore, the district will look to dip into both a bond issuance reserve fund and early retirement fund to pay off other debts not covered by the 1996 bonds, including a $450,000 loan to the Calexico Redevelopment Agency and other debts.

Said Henry Legaspi, district administrative assistant: "The bottom line is refinancing and restructuring the debt would save the taxpayers approximately $2 million over the term of the bonds. … It's a benefit because you're reducing the total amount and it's based on what the interest is."

How extending the half-cent sales tax for one more year could save taxpayers money wasn't available this morning. What is known is it will reduce the amount of debt service paid but not the amount paid by the taxpayer.

With debt service at 7.4 percent, the estimated 2006 payoff of the bonds would be $12,824,544. At 5 percent paid off in 2007, the total is estimated to be $10,425,050.

Legaspi added getting approval to dip into the reserve and early retirement funds would allow the other debts to be paid off faster and give the district about $100,000 annually to run a clinic or some sort of medical facility in the vacant Calexico Hospital.

Hospital board Trustee Ray Falcon said, "I'm 110 percent for it. I think this is the best idea we've come up with so far.

"I believe this is the first step in the right direction of getting the hospital going," he said.

Falcon added, "The first step is refinancing. Once we do that we will have the ability to move forward and open the clinic on a full-time basis. We're already working on it and we have some leads."

Still, to refinance and restructure the district needs the approval of the Calexico Special Financing Authority, a joint powers authority between the city and the district created to purchase the bonds.

Legaspi said Rivera and Swerdling will next go before the authority to get approval.

The authority is set to meet at 6 p.m. Tuesday in Calexico City Hall. However, talk on the refinancing and restructure are not on the agenda.

District trustees David Ouzan and Rose Fernandez are scheduled to take seats on the authority board Tuesday, replacing former district trustees Amalia Katsigeanis and Cindy Aguilar.

Calexico City Council members John Renison and Gilbert Grijalva as well as city Treasurer Rudy Moreno sit on the board.

Staff Writer Richard Montenegro can be reached at 337-3453.

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