Possible September Start-Up Date
At the April 5th hospital board meeting, the St. John's Lutheran Hospital Board of Trustees made the decision to switch from USDA (United States Department of Agriculture) funding for the new hospital project to HUD (Housing and Urban Development) funding. The switch brings new momentum to the project.
According to Bill Patten, CEO at St. John's, the conversation was sparked by the Board's ongoing uncertainty of obtaining a loan from the USDA. "This concern is based on a combination of factors including the ongoing debate regarding our federal budget, as well as the final amount of money that USDA will ultimately have to lend."
"To refresh your memory, we were initially pursuing a HUD loan, but last spring, switched to a USDA application because of better interest rates and the possibility of receiving a large "direct" loan. A direct loan is money that we would borrow directly from the USDA; at that point in time the rate was 3.75%! Over the past few months however, the interest rates have changed and we are now at the point that both programs have very similar blended interest rates."
fter a thorough discussion of the issues, the hospital board voted to withdraw the application from the USDA and to pursue an application under the HUD 242 program - a part of the Federal Housing Authority department of the Federal Government. North Valley Hospital in Whitefish and Barrett Hospital and Healthcare in Dillon used the HUD program to build their new facilities. "Under this program the financing discussion shifts from 'if' to 'when'. The day following the board meeting I instructed our financial consultants to begin the paperwork/application process which they estimate will take 4-6 weeks to complete. HUD will then perform their review, and we will 'encourage' them to have this process completed by no later than the end of September," added Patten.
The switch from USDA to HUD will affect both the starting date and the bid process. "The board fully understood the impact this change would have both on the bids that we have received for the project (most likely the project will need to be rebid) and the projected start date (it will not be this spring). However, the board wanted to remove as much uncertainty as they could from the question of whether or not we would be able to obtain financing," said Patten. "I fully believe that this is the right decision and we will 'push' the process as quickly as we can. Once the HUD loan is approved, we hope to at least begin some of the dirt work and site prep this fall. But if we can begin in early August, a full project start is a possibility. Stay tuned for more updates on this topic."
Kathy Nelson, Chairperson of the Trustees at St. John's addresses the project delays and reinforces the Board's responsibility to assure the financial due diligence for the project is done correctly. "Delays can often raise questions, especially in a project of this magnitude, so I think it is important for the populace whom we serve to know that our ultimate goal has not changed. Do we as a Board of Trustees still believe that Libby needs a new hospital and are we still working diligently toward that end? Yes! And yes!," she stated. "Most of you are all too familiar with the constraints that the recent economic downturn has brought upon us all, and St. John's Lutheran Hospital's building project is no exception. The funding process for our project is complicated and multi-faceted, and we as a Board want to make sure we go through this process with all due diligence for you, our stakeholders, even if that means changes and delays. Thank you for your continued support of the new hospital project. We all look forward to the day when we can break ground!"
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