Uncertainty could cause hospital cost to soar by nearly $100,000

Hospital loan interest rate could rise by as much as half-a-percentage point taking into account the repeal referendum

By Darryl Swan

The South County Spotlight, Mar 3, 2010 (1 Reader comment)

The shadow being cast by a voter initiative aimed at repealing the 2004 hospital tax is driving down the confidence of the securities firm being enlisted to finance the hospital.

And that lowered confidence translates into bigger bucks the Columbia Health District would have to shell out in hospital loan repayment.

Tary Carlson, the hospital project manager who works for Inici Group Inc. of Portland, said Monday that Wedbush Securities has indicated that the hospital loan’s interest rate could go up by as much as half-a-percentage point given the presence of the referendum initiative, called the “People’s Initiative for Justice.”

Wedbush Securities is the investment firm that has pledged financing for the project, and hospital planners have said numerous times the hospital would receive an attractive rate based on the presence of the guaranteed tax base.

But with the uncertainty of a referendum vote on the hospital tax, that’s changed.

“They would lend us money either way, it’s just it would be more expensive by half a point if we were to proceed forward with financing before the vote,” Carlson said.

The half-point increase could mean as much as $100,000 dollars additional in annual loan repayment over the course of the 30-year loan, Carlson said.

The health district board will have to consider delaying locking in the interest rate until the initiative is voted on, which is unlikely to happen until November, said Board Chair Jay Tappan.

“Clearly, the lower the interest rate, the better it is for the health district,” Tappan said. “I think it’s just another area of uncertainty.”

How the hospital is financed is a question being asked by state regulators who are assessing the Columbia River Community Hospital to determine its eligibility for a certificate of need, a requirement before the hospital could be built on the proposed Millard Road location in Warren.

The Department of Human Services a month ago responded to the health district’s latest certificate of need application with a list of 20 questions requiring answers before the application could move forward. Carlson said those answers were expected to be submitted to DHS early this week.

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