The bonds also provide $4.6 million to pay off the remaining debt on the Cathcart Health Center, which opened in 2009, and additional money to demolish the now-empty Coe Medical Center to make room for the expansion.
Most of the bonds have a 30-year repayment period, with the exception of those bought to pay off the Cathcart Medical Center debt, which must be paid in 25 years.
“There are provisions in the bonds to pay them off earlier if we’re in a position to and wish to,” he said.
Building Cathcart Medical Center was the Phase 1 of a three-phase building plan for the hospital, allowing physicians offices to be moved out of Coe Health Center.
The current expansion and remodel plans constitute Phase 2, which also includes shelling in space for future expansion of the intensive care unit and the medical surgical area and relocation of the hospital’s cafeteria and dining areas. Those renovations, combined with several smaller ones, will make up Phase 3, which can be completed through a series projects, McMillan said.
McMillan said the board decided to sell the bonds after a 1 cent sales tax proposal to pay for the hospital project was defeated by county voters in August.
The board could have gone to voters in the hospital’s district to request an increase in property taxes to pay for the emergency room expansion and remodel project, but “the board wasn’t comfortable with that,” McMillan said. But, because of the hospital’s strong financial position, “the board was comfortable with taking on that debt ... Taxpayers were not asked to pay for the bonds.”
The hospital received a triple-B rating from Standard and Poor’s, “about the best you can get today for a critical access hospital,” he said.
That resulted in an interest rate of 6.75 percent, which increased to 6.8 percent with fees and other costs associated with financing.
“We were very pleased,” McMillan said. “Wyoming Medical Center just issued bonds the week before. They had an A3 rating, and their interest was a little over 6.3 percent.”
Pat McConnell, chief financial officer at West Park, said he and other hospital officials also were encouraged by the fact that orders for $80 million in bonds were received — far above the $33 million needed.
“That was such a good response to our bond sale,” he said. “We’re pretty happy with that.”
McMillan said asbestos abatement in Coe Medical Center will begin this week, followed by demolition of the building.
Construction on the building project is expected to begin around May 1, and should be complete around July or August 2012, he said.
A link on West Park Hospital’s website will keep people informed about construction progress, he said.
“It’s taken a while to get here, but we’re excited to be able to get started,” he said.
West Park Board Chairwoman Melissa Fraser echoed that sentiment.
“We’re real excited about it,” she said. “It will be a nice addition to the Cody area, to have the hospital on the main corner, across from the museum. It will basically put the emergency room out there where people can find it, and add more rooms and hospital beds in the ER. It will provide good privacy, which we don’t have — all those things that have been mandated by the feds. They mandate, but they don’t tell you how to finance them.
“We were really lucky; we were in a pretty good position with our finances.”
Fraser said she wishes the specific purpose tax proposal had been approved by county voters.
“Any time you look at 25 to 30 years (for repaying the bonds) vs. 31 months (estimated to raise the money through a 1 cent sales tax), it’s too bad,” she said. “That’s the way the people wanted it.
“We looked for other ways to try to finance this thing, and this one was the only one we could come up with, and it (the expansion and renovation) was definitely needed.”
Fraser said she’s ready to look forward now for the sake of health care in the Big Horn Basin.
“This needs to be health care for all, be it the Cody hospital or the Powell hospital. All of us need to support these two hospitals. My premise on that hasn’t changed. I still believe that, more than ever, because I don’t believe hospitals are going to be able to survive unless they have the communities behind them.
“Health care needs to be a joint effort amongst the community, and that, I think is going to become even more important, especially as Obamacare goes through.”