$8,320,000
Hospital Revenue and Refunding Bonds
June 1999

When First River Advisory was engaged by MCGH in February 1999, the key objective was to arrange financing for a medical office building.  Because the medical office building was well under construction and MCGH had limited financial reserves with which to continue funding its development, this task had to be accomplished within an accelerated time frame.  Further, because the medical office building could not be financed through the issuance of tax-exempt bonds, it was necessary to assemble a qualifying project from:

• capital assets which had been recently acquired and funded from MCGH's financial reserves;
• various other capital assets already scheduled to be funded and which qualified; and
• capital assets specified on MCGH's capital budget for the next three years.

Funding this project with the proceeds of tax-exempt bonds freed up MCGH's own financial reserves for application to the medical office building development.

First River Advisory solicited proposals from both investment banking firms and commercial banks, and performed a rigorous comparison between the leading proposals received from each.  Within three weeks after First River Advisory's appointment, MCGH's governing board endorsed a definitive financing plan.

MCGH is a public hospital, and, under Michigan law, authorized to issue tax-exempt bonds on its own behalf.  However, over the years, MCGH had considered converting to a private, non-profit corporation, but the advantages in doing so had never been sufficiently compelling.  Nevertheless, MCGH desired to preserve this option without having to redeem the Series 1999 Bonds.  In response, First River Advisory collaborated with Bond Counsel to devise an approach in which MCGH would issue bonds which met Internal Revenue Code standards for both public-purpose bonds and private activity bonds.