County approves $150 million in bonds for Munson | News
TRAVERSE CITY – The County of Grand Traverse Hospital’s Treasury Department will issue bonds worth up to $ 150 million to fund three Munson Healthcare projects and refinance existing bonds at a lower interest rate.
The funds from the sale of the bonds will be used to refinance $ 74 million hospital debt at a lower rate, saving approximately $ 13 million over the next 12 to 14 years, said Mary Clulo, director of treasury and taxes at Munson Healthcare.
“We now have the option to call these bonds and refinance at a much lower interest rate,” Clulo told Grand Traverse County Board members at their regular meeting on Wednesday. “You know we are currently with municipal interest rates at historic lows.”
The board of directors unanimously approved the measure.
Another $ 47 million will be spent on three projects on the Munson Medical Center campus in Traverse City. These include expanding surgical capacity, expanding the stroke intervention program and creating a combined heat and power plant.
“There are many times our (operating rooms) are full, which either results in delays in care or our surgeons working late into the evening,” said Ed Ness, President and CEO of Munson.
Munson is in the process of building a two-story extension on the north side of the hospital that will house four new operating suites and support rooms. System Director of Construction Jim Fegan said that two more suites will be renovated and there will be room for future expansion.
The project started in 2019 and the upgrades are about 70 percent complete, Fegan said. The original schedule has been revised due to the pandemic, but the project is slated to complete this year, he said.
Another project will expand the stroke intervention program, Ness said.
“This is one of the top two reasons patients need to go downstate for treatment,” said Ness. This is an area that is very important to clinical outcomes. “We want to be able to provide interventional aid here in northern Michigan.”
The third project is a natural gas cogeneration power plant, which is a small structure located next to the existing power plant in the back of the hospital.
“Given the 365, seven days a week in our clinical business, it is possible for us to have a generating facility where we can actually run this hospital for a certain period of time without being able to rely on it if something happens to our power grid Emergency power supply, ”said Ness.
With the system, there are certain areas of the hospital that just can’t run if they fail, he said.
“In the face of natural disasters and everything else, we think it’s important to have them as a backup,” said Ness. “This would enable the hospital to operate almost completely indefinitely.”
The Hospital Funding Agency Act was introduced by Michigan law in 1969 to allow nonprofit hospitals and health care providers to borrow funds for capital improvements or to refinance debt.
Grand Traverse County took its authority in 1985, and for the past 40 years Munson has used it regularly to issue debt at a tax-free rate, said Peter S. Ecklund, an attorney who represents the Grand Traverse Authority.
The county is considered a sponsor of the state facility and is not liable for debts, but grants Munson tax-free access to the market, Ecklund said.
The county bears no liability and the debt does not affect the county’s creditworthiness, said Dean Bott, the county’s finance director.
“There is absolutely no risk to the county,” said Bott.