Tax rate to pay off hospital bonds goes up

An adjustment to the bond repayment schedule caused the property tax rate for Weiser Memorial Hospital to increase for fiscal year 2019-20.
 As a result, while many tax levies in the county went down, the hospital’s property tax levy dedicated to bond payments went up this year.
 Hospital CFO Mark Christensen said the tax increase that property owners recently noticed on their tax bills relates to refinancing of bonds in 2018, a fiscally prudent move that in the end will save taxpayers money.
 Refinancing the 2007 bonds reduced the interest rate from 6.25 percent to 2.35 percent, but it also reset the principal payment schedule.
 The hospital only collects what is needed to make the bond payment. Last year the payment went down after the refinancing for one year. This year it went back up to where it was before and that required a bump in the tax levy amount.
 Christensen sent a letter to the county explaining the “significant changes” in the levy requests for the 2007 bond. He also provided background on the bonds and prior principal payments.
 The payments have totaled about $220,000 annually since the $2.5 million bond started in 2007 with the interest decreasing as the principal has been paid down. Interest payments are made on March 15 and Sept. 15 and a principal payment is made every year on Sept. 15.
 Following the bond refinancing in March of 2018, the payment schedule was recalculated. In order to create a payment schedule that fit the hospital’s needs, the principal payment made in September 2018 was reduced to $65,000.
 The lower interest rate reduced the interest payments from about $50,000 to less than $20,000, so the need to levy bond money for FY 2019 was significantly lower.
 For fiscal year 2020, the principal payment schedule is realigned so that the hospital will be making payments of about $160,000 annually to complete the payoff.
 The bond levy needs to be increased back to an amount similar to prior years minus the benefit of lower interest payments.
 Christensen said the levy requests have been matched to the funds needed to make bond payments. The hospital has kept the balance of funds in the bond restricted fund to a minimum amount.
 The bonds will be paid off in 2027 with the final principal payment set at $190,000. The refinancing in 2018 was estimated to save taxpayers $280,000 in interest on the bonds.
 The hospital collects about $520,000 annually in property taxes, with about half of that dedicated to paying off the bonds and debt and the rest providing operational support and to defray some of the charity care and writeoffs the hospital incurs annually.
 The total amount of property tax the hospital will collect for 2019-20 is $95 for every $100,000 in taxable value.
 In 2018, the tax amount was $82 per $100,000 in taxable value.