Thursday, July 7, 2011

Times-Pic on the HUD App Withdrawal


The University Medical Center governing board has abandoned its effort to secure federal mortgage financing to back any debt necessary to complete a new teaching hospital near downtown, and a UMC consultant said the project could be headed for further changes that he did not detail.

This is the critical part - what private investor will now touch the project?

The letter appears to confirm what some UMC leaders, state authorities and critics of the project have chattered about for months: Any borrowing necessary to complete the hospital will almost certainly have to come from the private bond market, potentially at junk bond rates. It also suggests that UMC could have to sell bonds to investors who know the project, for whatever reasons, did not win federal backing. HUD mortgage insurance, considered the gold standard of financing not-for-profit hospitals, would allow much lower rates, meaning considerably lower debt payments, because investors would be assured payment by the federal treasurer if the hospital defaulted.

All of those considerations are part of the billion-dollar question: What scope and services should a public teaching hospital provide -- and with what level of taxpayer support -- to be financially viable?

Governor Jindal and the Mayor both tried, in full defensive mode, to paper over the development at a press conference this afternoon when questioned by a reporter. It was all glittering generalities and bulling forward despite realities. And the Mayor made a special point, once again, of reminding people that, in his mind, retrofitting Charity Hospital is off the table.

Even though the ever-swirling, still uncertain facts would indicate otherwise.

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