Letter to the Editor
As you know, I am General Counsel to the Jack County Hospital District, doing business as Faith Community Health System (“the District”). Normally, I would not write a letter to the editor, but I am concerned about some misinformation and misunderstanding about the District’s upcoming bond election known as Proposition A. I would like to make the following statements and clarifications:
1. The proposition is not to borrow new money, but to refinance existing debt. It is similar to refinancing the debt on your home. The proposition is for the issuance of refunding bonds. Currently the District has revenue bonds. The refunding bonds would be general obligation bonds. The existing debt was legally created, is a legal obligation of the District, and has been timely and properly paid down since the construction of the new hospital facility.
2. The interest rate on the current revenue bonds is 3.56%. The current average interest rate on general obligation bonds is much less than that. That difference in interest rates is expected to give the District – and the taxpayers – an annual savings of approximately $200,000. Refinancing the debt is clearly the responsible thing to do. The District Board of Directors has unanimously voted to do this. There is nothing unusual about doing this. Other governmental routinely refinance their debt for better terms.
3. If the proposition passes, the refinancing of the debt will not result in higher property taxes. The District Board of Directors has pledged not to raise taxes from the current tax rate if the proposition passes.
4. If the proposition passes, the District can only use the bond funds for the repayment of the existing bonded indebtedness. The existing debt will be refinanced, and the monies will go into a separate interest and sinking fund account which earns interest, but by law cannot be used for maintenance and operations of the District.
5. The passage of the proposition would result in greater flexibility to the District in its operations and the ability to take advantage of governmental programs that have been very profitable to the District. The revenue from those programs has allowed the District to provide the citizens of Jack County a much greater level of health care quality and services. Without that flexibility, some of those revenue-generating opportunities may be lost.
Thank you for allowing me the opportunity to clarify some of the issues relating to the bond proposal.