OBH issues bonds for voter-approved facilities upgrades

Published 3:17 pm Friday, April 19, 2024

ILWACO — The Ocean Beach Hospital announced last week it has issued bonds that were overwhelmingly approved by south Pacific County voters last August to fund a spate of projects aimed at upgrading — and expanding — the hospital’s facilities.

In an April 17 news release, OBH said it had recently issued unlimited tax general obligation bonds in order to finance a variety of capital facilities projects that the public hospital district identified last year to rally support for the passage of its $10 million bond proposal. Work that the funds are expected to cover include the renovation and expansion of OBH’s Ilwaco clinic, as well as the development and construction of an urgent care clinic to be housed at that expanded facility.

Other improvements being eyed by OBH include the renovation and expansion of the hospital itself, expanding the Ocean Beach Wellness and Rehabilitation Center, adding a procedure room at the clinic in Ocean Park to provide gynecological exams and pap smears, purchasing additional space for health care purposes, renovating and expanding the district’s Archive Room, acquiring medical equipment, constructing new parking, upgrading diesel supply tanks, and acquiring electric or hybrid vehicles for in-home and remote health care services.

The hospital district first ran the bond for the aforementioned projects a year ago this month, but the measure came just a few votes short of clearing the 60% supermajority threshold that is required for bonds to pass in Washington. The second time proved to be the charm when OBH ran the bond again a few months later, with support for the measure exceeding 70%.

Lower levy rateAs part of the process for financing the bond, OBH officials also announced last week that the hospital received what they called a “better-than-anticipated” rating from Moody’s Investor Services, a national rating agency, following a presentation from the hospital.

Moody’s A1 rating, which denotes that the bond is upper-medium grade and subject to low credit risk, is a “great accomplishment” for the hospital and its taxpayers, stated then-OBH CEO Scot Attridge, adding that this better rating lowers the interest cost and in turn lowers the bond levy rate on local property owners.

Financed over 21 years, the bonds were priced on March 5 by underwriter D.A. Davidson & Co., a Montana-based investment bank, with the all-in net borrowing cost coming in at 4.58%. OBH said the levy rate for the bond now comes in at an estimated $0.13 per $1,000 of assessed value from 2025-44 — a drop of 4 cents per $1,000 from what OBH had initially projected.

For a home assessed at $400,000, the lower levy rate will result in savings of $16 per year and $320 over the life of the levy.

Attridge said the rating that OBH received is based on a number of factors, and that they emphasized several credit strengths during the rating presentation to Moody’s — including the strong support for the bond measure and previous operating levies from voters.

OBH, he said, also pointed to the strength of the local economy and growth in the assessed value of the hospital’s properties, provided financial management practices and detailed financial information over the past half-dozen years, and “our experienced management team in operating our public hospital district in an efficient manner.

“This is a savings to the taxpayers of south Pacific County,” said Attridge, adding that the lower bond levy rate “is the result of the bond rating of A1, lower bond market interest rates at the time of the bond pricing, and growth in the assessed value of Ocean Beach Hospital and Medical Clinics.”

Next stepsWith the rating and levy rate in place and the bonds issued, OBH executives are now moving ahead to pursue bids and refining cost estimates for the identified capital projects.

“Now that we have the funds, we are working to get the architect and builder to give us current costs so we can decide how far down a list of projects we can go,” said Nancy Gorshe, chair of the OBH Board of Commissioners.

When that information is in hand, Gorshe said OBH’s executive team will work with the hospital board to determine the list of improvements that can be funded, as well as a development timeline for each of the selected projects.