Pauls Valley Democrat
There still remains more than a few pieces that need to fall into place in order to breathe easy when it comes to the future of Pauls Valley General Hospital, but some of those steps seemed a little easier to take after the most recent city council meeting.
Tied into efforts to encourage local residents to support passing a half cent tax that will be on the ballot this Sept. 10 was a proposal to council members of approving a loan/line of credit in order to keep things going with the hopes the tax would be the anchor for a better future.
Putting it in perspective for local leaders was Allan Brooks, an attorney with Public Finance Law Group in Oklahoma City, who answered questions and ensured now was a better time to act than later.
“What we’re talking about is an obligation from Pauls Valley Municipal Authority,” said Brooks, noting how waiting would only mean having to pay the loan back at a higher rate as rates have been on the sharp rise with the recovering economy. “Basically we’re here tonight to approve that obligation.”
Presenting the most attractive option was Pauls Valley National Bank at a total of $3.15 million, who was given the first shot at coming up with an offer as the city had already had a similar loan for the new aquatics center through another Pauls Valley financial institution, First United Bank, said Brooks.
It would be acquired at a rate of 4.25 percent fixed for 20 years.
“It would be secured at this point by half cent of general sales tax that the city has in place,” said Brooks. “Pauls Valley National Bank put in frankly a really, really strong proposal.”
A good chunk of payments from the loan will ultimately go toward some of the existing obligations the hospital authority took on in years past.
That amount adds up to about $1.584 million through previous notes remaining at PVNB and First United.
The loan process carries other benefits like the city not having to dip too much into its other dedicated budgets as it would not be required to pay any principal payments earlier than April of next year, said Brooks.
It is seen as necessary no matter what happens with the election as it at least buys a little more time to consider options while the hospital’s potential suitor completes a due diligence examination on all of its aspects.
According to City Attorney Jay Carlton, this basically would leave the rest to go toward operating costs or improvements if needed and it could be drawn at any amount needed. However, the city has no obligation to draw the full amount of the credit as a leasing or purchase of the hospital would likely not need more community backing than the sales tax.
“The main thing is we won’t have to pay anything but interest only payments until April of next year,” said City Manager James Frizell.
“Conceivably we could collect enough sales tax in about 10 years to pay it off if we so chose to do that… Realistically you can’t pay it back until you collect enough sales tax to pay it off.”
Brooks finished the presentation with another positive in that the note is taxable and could help provide even more of a cushion until voters head to the polls.
“This is not a tax exempt obligation, the interest on this is taxable,” said Brooks “So that frankly makes the quote stronger still.”
In the end, the vote was four votes in favor and an abstention by Councilman Patrick Grimmett, who did not vote since it would be a conflict of interest as he is an employee of PVNB.