Monday, February 06, 2006

$12.5 million tax-exempt loan for NorthBay Healthcare

NorthBay loan on agenda at Supes meeting

By Amanda Janis/Business Writer

A $12.5 million tax-exempt loan for NorthBay Healthcare is amongst the items to be discussed Tuesday at the Solano County Board of Supervisors' meeting.

The five-year loan would be extended by General Electric Capital Finance via bonds issued by the Association of Bay Area Governments and would be used to finance the purchase of equipment for the health care provider's existing facilities.

"This is a tactic of financing," explained Art DeNio, NorthBay's chief financial officer. "Because we're a non-profit, we can borrow at tax exempt rates, which in this case are going to be at approximately 4.5 percent."

Tax exempt financing, DeNio explained, is governed by federal rules requiring the use of a local authority - in this case ABAG - to coordinate county approval and ensure that proceeds are genuinely used for tax-exempt purposes.

The loan, which is expected to be approved by the supervisors, would largely finance replacement equipment at NorthBay's hospital facilities.

"There's about 60 items that we would buy," DeNio confirmed. "The largest include a replacement of a cardiac catheterization lab, an upgrade of NorthBay Healthcare Systems' telephone system, a new CT scanner at Vaca Valley Hospital, a number of replacement beds at both NorthBay and Vaca Valley and various diagnostic and surgical equipment."

Acquisitions of replacement equipment are normally financed internally, DeNio noted, but such funds are currently engaged.

"We have other internal funding needs that are higher than normal this year, especially with the expansion of our emergency room in Vaca Valley," he explained. "We're doing a lot of development work this year. As a result, we needed to go out and borrow externally in order to finance all the development we're doing."

In addition to the $10.8 million expansion of the Vacaville hospital's emergency room, NorthBay will soon build its third center for primary care, a 12,000-square-foot facility on Martin and Hilborn roads in Fairfield. It is slated to open at summer's end.

Amanda Janis can be reached at

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