Apr. 14—WILLMAR — Health care provider CentraCare, which operates Willmar's Rice Memorial Hospital through the subsidiary Carris Health, will take over $32 million in debt connected to the hospital from the city of Willmar.
The Willmar City Council approved a resolution at the April 5 meeting authorizing the issuance and sale of conduit revenue refunding bonds for the debt refinancing, as well as amending the lease agreement between the city and CentraCare to reflect the changes.
Willmar Finance Director Steve Okins said the city and CentraCare have been discussing the refinancing of the hospital debt for several months, as the bond market had very low interest rates. In January of this year, CentraCare approached the city indicating they would be interested in refinancing, Okins said.
The debt was originally for about $50 million and funded improvements at Rice Memorial in 2012 and at the Rice Care Center in 2013.
Currently, the city is still responsible for debt. Once the refinancing is complete, CentraCare will be solely responsible for the debt and it will no longer be held against the city.
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"This will entirely be under the umbrella of the CentraCare financing group," said Jenny Boulton, the city's bonding legal counsel.
The state will need to give its permission for the refinancing prior to the closing.
"It is a fairly quick process," Boulton said.
As part of the lease agreement between CentraCare and the city, CentraCare pays the city monthly rent, which is used to pay the debt payments.
"Their base rent payment are what the debt service payments are for the two bond issues the city has outstanding," Okins said.
Once the refinancing is complete, CentraCare will no longer have to pay that base rent payment to Willmar. The city will remain the owner of Carris Health — Rice Memorial Hospital and all other aspects of the lease will remain in effect.
A public hearing about the refinancing was held prior to the council action and members of the public had the option to call into the meeting. There was no public comment and the council passed the resolution unanimously.
"This has been a complicated transaction and I thank everyone for working on it. This is something that is good for our community, good for our city and good for our hospital," said City Councilor Audrey Nelsen, who also serves on the Rice Hospital Board. "We got it done."