County board hears nursing home bonding plan
The Monroe County Board last week heard a plan for financing a new $16 million nursing home that would add about $1.1 million in annual debts service payments to the county budget for the next 20 years.
However, the new facility is expected to draw more revenue and increase efficiency, wiping out levied operational costs and lowering the overall levy contribution to the nursing home.
The county's financial advisor, Bradley Viegut of Robert W. Baird & Co., presented the financing plan, which tentatively includes a $9.5 million bond issue in March 2018 and another $6.5 million bond issue in January 2019.
Viegut said by separating the borrowing into two issues under $10 million in different years allows the bonding to be "bank qualified", resulting in a lower interest rate. It also allows for flexibility to reduce the total borrowing amount if actual project costs are lower than estimated project costs, he added.
Finally, it levels out the annual payments over the 20 year term of borrowing, putting debt payments at under $1.1 million a year.
Under Viegut's plan, the debt is set to retire in 2038 after the county has paid $5.7 million in interest.
Viegut projected interest rates of 3.29% on the $9.5 million bond, which has a 20 year term, and 2.44% for the $6.5 million bond, which would be paid off in 10 years.
Viegut said he could have the first financing awarded as early as the Jan. 24 county board meeting.
Responding to a question about a new nursing homes effect on the current nursing home's $1.4 million operational deficit, Rolling Hills Nursing Home administrator Linda Anderson said the new facility should nearly eliminate the operational deficit.
That's due to a more efficient layout and building along with a wider mix of services allowing for a better revenue stream.
However, she was carful to point out that the nearly $1.1 million annual debt service will be on the levy for the next 20 years, although it will be more than $300,000 less than what taxpayers are paying to support the current facility. Once the debt is paid off, the new facility should be at around break-even.
"I don't want people to walk out of here thinking there is no money going to the nursing home once it's built," she said. "It really is to cover the debt service, but the operational debt levy would be going away."
In the meantime, Anderson has urged an aggressive timeline on the project due to the present facility's crumbling infrastructure, which would take around $3.1 million in plumbing repairs alone and with an overall remodel estimated to cost $22.5 million.
The county's architect, Community Living Solutions (CLS) of Appleton, put the cost of a new facility built on the east side of Cty. Hwy. B and north off General Avenue at $16 million. However, that site is not yet approved by the City of Sparta, whose engineers are conducting an assessment of water lines to the area before revising an agreement to provide water to the new facility. It will have an answer to the county on Dec. 13.
The City of Tomah added a new wrinkle to the situation when City Administrator Roger Gorius said Tomah Memorial Hospital has 10 acres of land near its new hospital site it is willing to offer the county. The site already has adequate infrastructure and much of the site work has been completed, Gorius told the nursing home building advisory committee.