One of Oneida County’s economic-development agencies agreed Friday to issuing tax-exempt bonds on behalf of the Mohawk Valley Health System to raise about half the money to pay for its planned consolidated hospital in downtown Utica.
The board of the Oneida County Local Development Corporation voted without dissent to a resolution authorizing a bond issue of up to $300 million, which will help MVHS save money by financing through tax-exempt municipal bonds.
“If you’re the buyer of the bonds and you have a choice between and tax-exempt bond and taxable, if you take the tax exempt one you’re going to accept a lower interest rate because you’re factoring in the after-tax benefits,” said MVHS chief financial officer Lou Aiello. “We benefit from the lower interest rate by using the LDC as the issuer in tax exempt versus a taxable bond.”
After obtaining a rating and marketing the bonds, funds from selling them will be held by a trustee who will pay expenses during construction. In addition, MVHS is receiving $300 million in state funds toward the project.
“This financing with the state money is all the financing,” Aiello said.
LDC board members, who also function as the board of the county Industrial Development Agency, added language to the resolution saying they believe a new, consolidated hospital will help recruit employers to the area because health facilities and care in general is important in retaining and keeping workers.
Under questioning from board members, Aiello said MVHS finds recruiting specialists a challenge in part because of having to work between two hospitals, St. Elizabeth and Faxton-St. Luke, even if they’re relatively close to one another in Utica.
“It’s not very attractive for specialists, general surgeons … trauma surgeons and such to have to cover two ERs a mile and a quarter apart from each other,” Aiello said. “We do believe that one physical campus will help us with that recruitment process. But it’s still a challenge to recruit to this area. The competition for specialists is enormous, and even for primary care physicians is just tremendous.”
MVHS now has about 50 nurses who come from outside the area to work on a short-term basis, he added.
MVHS will pay a fee of $400,000 to the LDC for the bond issue.
The authorizing resolution also was amended to make it conditioned on receiving all necessary local government approvals. Among those still needed is a height variance from Utica city zoning rules, though Aiello assured the LDC board Friday that is not expected to be a problem.
MVHS plans a new hospital of 672,000 square feet, with 373 beds in a nine-story building near the Adirondack Bank auditorium in downtown Utica, and anticipates occupying it in February 2023.