BERLIN – Conduit financing will allow Atlantic General Hospital to take advantage of the Town of Berlin’s tax exempt status.
On Monday the Berlin Town Council approved a resolution authorizing the issuance and sale of up to $10 million in tax exempt bonds for Atlantic General Hospital (AGH) to fund a regional cancer center in Berlin and other projects. The proceeds will allow the hospital to refinance debt, fund improvements and aid in construction costs.
“There has been a lot of discussion at the federal level regarding eliminating the federal tax exemption on municipal bond interest,” said Laura Allen, Berlin’s town administrator. “This project is a great example of the importance of keeping that tax exemption in place. The town is able to save the hospital a significant amount of money because of it. Hopefully the federal government will see the benefit and leave that tax exemption in place.”
During Monday’s council meeting, Lindsey Rader of Funk and Bolton outlined the bond process for the council. She said AGH’s request for $10 million in conduit revenue bonds was made possible by the Maryland Economic Development Bond Revenue Act.
The bonds, which will be tax exempt, will be used by AGH to refinance the acquisition of land, fund construction and pay for various improvements, among other things. Rader assured town officials that though the town was a part of the process, it would not be responsible for the loan payments.
“Atlantic General will be obligated to make the loan payments,” Rader said. “The loan payments will not run through your hands. Really what you are doing is lending your ability to issue tax exempt debt to Atlantic General Hospital.”
She said that would be a significant benefit for the hospital.
“That’s important for them because that lowers their borrowing cost, it allows them to restructure some of their debt and meet some of the purposes of the Maryland Economic Development Bond Revenue Act,” she said, “including increasing temporary and permanent employment, sustaining employment by being able to restructure some outstanding debt and contributing to the health and welfare of the citizens of the town and the state.”
The hospital will also be covering the costs associated with the bond process.
