BANNER HEALTH 2019 SUMMARY LETTER.PDF

A PROFESSIONAL CORPORATION
RYLEYCARLOCK 70 One North Central Avenue, Suite 1200
SLAPPLEWHITE YEARS Phoenix, Arizona 85004-4417
P 602.440.4800 F 602.257.9582
Offices in Arizona & Colorado
www.rcalaw.com
William F. Wilder
Direct Line: 602-440-4802
Direct Fax: 602-257-6902
E-mail: wwilder@rcalaw.com
April 17, 2019
To: Board of Supervisors
Maricopa County, Arizona
Re: Not to Exceed $660,000,000 The Industrial Development Authority of the
County of Maricopa Revenue Bonds (Banner Health) Series 2019
Ladies and Gentlemen:
At the meeting of The Industrial Development Authority of the County of
Maricopa (the "Authority") on August 14, 2018, the Authority Board granted approval to the
financing for Banner Health and adopted a resolution authorizing the issuance and sale of the
bonds as described above (the "Bonds"), which will be issued in multiple series. The purpose of
this letter is to provide a summary review of the proposed transaction.
THE AUTHORITY
The Authority is an Arizona nonprofit corporation, formed with the permission of
Maricopa County and incorporated under and pursuant to the Arizona Industrial Development
Financing Act, Title 35, Chapter 5, Arizona Revised Statutes, as amended (the "Act"), and the
Authority is designated by law to be a political subdivision of the State of Arizona.
THE APPLICANT/BORROWER
The Applicant/Borrower for financing is Banner Health, an Arizona nonprofit
corporation designated as a 501(c)(3) organization under the Internal Revenue Code of 1986, as
amended (the "Code"). Banner Health, either directly or through affiliates, currently operates
hospital, medical and healthcare facilities in Maricopa, Pima and Pinal Counties, Arizona, and in
California, Colorado, Wyoming, Nebraska, Nevada and Alaska.
THE PROJECT
The proceeds of the Bonds will be loaned by the Authority to Banner Health to be used,
together with other available moneys, for the (1) acquisition of, construction, renovations and
improvements to, and furnishing and equipping of, health care facilities owned and operated by
the Borrower in Maricopa County and Pima County, Arizona, including, but not limited to (a)
construction, furnishing and equipping of a new, approximately 700,000 square-foot, a patient
care and clinical tower to be located at the Banner-University Medical Center Phoenix Campus,
and (b) construction, furnishing and equipping of a new, approximately 700,000 square-foot,
204-bed patient and clinical care tower to be located at the Banner-University Medical Center
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RYLEY CAR LOCK
Board of Supervisors &APPLEWHITE
Maricopa County, Arizona Attorneys
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
April 17, 2019
Page 2
Tucson campus; and (2) current refunding all or a portion of the outstanding Arizona Health
Facilities Authority Revenue Bonds (Banner Health), Series 2008B, Series 2008C, Series 2008H
and Series 2015D (collectively, the "Prior Bonds"), the proceeds of which were applied to
finance and refinance certain health care facilities of the Borrower located at Banner-University
Medical Center Phoenix, Banner-University Medical Center Tucson, the Banner Corporate
Center in Phoenix, Arizona, Banner Gateway Medical Center in Gilbert, Arizona, Banner
Thunderbird Medical Center in Glendale, Arizona, Banner Payson Medical Center in Payson,
Arizona, Banner Desert Medical Center in Mesa, Arizona and Banner McKee Medical Center in
Loveland, Colorado (the facilities to be financed and refinanced with the proceeds of the Bonds
are hereinafter collectively referred to as the "Projects").
NOTIFICATION TO ARIZONA ATTORNEY GENERAL
As required by the provisions of Arizona Revised Statutes, Section 35-721.F, the
Authority has notified the Arizona Attorney General of the Authority's intention to issue the
Bonds.
PUBLIC HEARING
A public hearing pursuant to Section 147(f) of the Internal Revenue Code of
1986, as amended (the "Code"), relating to the issuance of the Bonds, will be held by a
representative of the Authority April 22, 2019, and a Report of Public Hearing will be submitted
to the Clerk of the Maricopa County Board of Supervisors.
ALLOCATION FOR TAX EXEMPT FINANCING
No allocation of the Arizona "volume cap" is required for the issuance of the
Bonds as this financing is for a nonprofit 501(c)(3) entity and is a refunding of previously issued
bonds.
FINANCING PARTICIPANTS
The major participants in the financing are as follows:
Issuer: The Industrial Development Authority of the County of
Maricopa
Issuer Counsel: Ryley Carlock & Applewhite, a professional corporation
Applicant/Borrower: Banner Health
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04/17/19

RYLEYCARLOCK
Board of Supervisors &APPLEWHITE
Maricopa County, Arizona Attorneys
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
April 17, 2019
Page 3
Bond Underwriter: Morgan Stanley and Citi
Bond Counsel: Hawkins, Delafield & Wood LLP
Bond Trustee The Bank of New York Mellon Trust company
Applicant/Borrower Counsel: Lewis Roca Rothgerber & Christie LLP
Bond Underwriter Counsel: Dentons US LLP
Borrower's Financial Advisor: Kaufman Hall & Associates
Master Trustee: U.S. Bank National Association
PRINCIPAL FINANCING DOCUMENTS
Document Parties
Multiple Bond Indentures Issuer and Trustee
Multiple Loan Agreements Issuer and Borrower
Multiple Official Statements (Preliminary and Borrower and Bond Underwriter
Final)
Multiple Bond Purchase Agreements Borrower, Issuer and Bond Underwriter
PLAN OF FINANCING
The Bonds will be denominated as the "2019 Bonds" and will be issued in
multiple Series, each with different interest rates issued under and pursuant to the Bond
Indenture(s), and the proceeds received from the sale of the Bonds will be loaned to Banner
Health pursuant to the Loan Agreement(s) and applied, together with other available moneys, to
finance the Project as described above.
The Bonds will be offered for sale by the Underwriter utilizing the Official
Statements and the Bonds will be purchased by the Underwriter under and in accordance with
the terms and provisions of the Bond Purchase Agreements.
It is anticipated the Bonds will bear interest at both variable and fixed rates
dependent upon the scheduled maturity dates, will be subject to early redemption as provided for
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RYLEYCARLOCK
Board of Supervisors &A PPLEWHITE
Maricopa County, Arizona Attorneys
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
April 17, 2019
Page 4
in the Bond Indentures and will have an investment grade rating issued by one or more
recognized national rating agencies.
AUTHORITY APPROVAL
At the Authority Board meeting on August 14, 2018, the Authority Board granted
approval to the application for financing and adopted a resolution authorizing the issuance and
sale of the Bonds. A copy of the resolution adopted by the Authority Board is included with this
letter.
NO LIABILITY ON THE COUNTY OF MARICOPA
Under the provisions of A.R.S. § 35-742, the County of Maricopa shall not in
any event be liable for the payment of the principal or interest on the bonds of the
Authority or for the performance by the Authority of any of its obligations with respect to
its bonds nor shall any agreements or obligations of the Authority constitute an
indebtedness of the County of Maricopa within the meaning of any constitutional or
statutory provision whatsoever.
BOARD OF SUPERVISORS APPROVAL
The Maricopa County Board of Supervisors is requested, at its meeting on May 8,
2019, to act as required by law to adopt a resolution approving the proceedings of the Authority
for the issuance of the Bonds.
TRANSACTION CLOSING
Assuming the required approvals are received, it is anticipated that the Bonds will
be issued in June, 2019.
LEGAL COUNSEL RECOMMENDATION
As counsel to the Authority, we have reviewed drafts of the principal financing
documents, and have been advised that these documents are now in substantially final form.
Based upon our review of such and our review of the proceedings of the Authority to date
relating to the proposed issuance of the Bonds, we believe the financing documents and
proceedings are in substantial conformance with the policies and guidelines of both the Authority
and the Maricopa County Board of Supervisors and that the Resolution presented to the Board of
Supervisors is in form and substance acceptable for the Maricopa County Board of Supervisors
to adopt.
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A RESOLUTION GRANTING APPROVAL TO
THE ISSUANCE OF REVENUE BONDS OF THE
INDUSTRIAL DEVELOPMENT AUTHORITY OF THE COUNTY OF MARICOPA
IN A PRINCIPAL AMOUNT NOT TO EXCEED $660,000,000
TO FINANCE AND REFINANCE A SERIES OF PROJECTS
FOR BANNER HEALTH
AND TO REFUND CERTAIN BONDS ISSUED
FOR THE BENEFIT OF BANNER HEALTH
WHEREAS, The Industrial Development Authority of the County of Maricopa
(the "Authority") is a political subdivision and instrumentality of the State of Arizona (the
"State") empowered under the Arizona Industrial Development Authorities Act, Title 35,
Chapter 5, Arizona Revised Statutes, as amended (the "Act"), to, among other things, (a) issue
revenue bonds for the purpose of providing less expensive financing for "projects" of "healthcare
institutions" whenever the Board of Directors of the Authority finds that issuing the bonds is in
furtherance of the purposes of the Authority set forth in the Act; (b) enter into one or more loan
agreements that provide revenues sufficient to pay the principal of and premium, if any, and
interest on such revenue bonds; (c) secure such revenue bonds as provided for herein; (d) enact
this Resolution and enter into one or more indentures; and (e) execute and deliver related
documents, all as hereinafter defined, upon the terms and conditions provided herein and therein;
and
WHEREAS, Banner Health, an Arizona nonprofit corporation (the "Borrower"),
has requested that the Authority issue its Bonds (as defined below) in one or more series or
subseries from time to time, as taxable or tax-exempt debt, in an aggregate principal amount not
to exceed $660,000,000, the proceeds of which will be loaned to the Borrower to be used to
provide a plan of financing for the Borrower of the costs of (1) acquisition of, construction,
renovations and improvements to, and furnishing and equipping of, health care facilities owned
and operated by the Borrower in Maricopa County and Pima County, Arizona, including, but not
limited to (a) construction, furnishing and equipping of a new, approximately 700,000 square-
foot, 256-bed patient care and clinical tower to be located at the Banner-University Medical
Center Phoenix Campus, and (b) construction, furnishing and equipping of a new, approximately
700,000 square-foot, 204-bed patient and clinical care tower to be located at the Banner-
University Medical Center Tucson campus; and (2) current refunding all or a portion of the
outstanding Arizona Health Facilities Authority Revenue Bonds (Banner Health), Series 2008B,
Series 2008C, Series 200814 and Series 2015D (collectively, the "Prior Bonds"), the proceeds of
which were applied to finance and refinance certain health care facilities of the Borrower located
at Banner-University Medical Center Phoenix, Banner-University Medical Center Tucson, the
Banner Health Institutes formerly known as the Banner Corporate Center in Phoenix, Arizona,
Banner Gateway Medical Center in Gilbert, Arizona, Banner Thunderbird Medical Center in
Glendale, Arizona, Banner Payson Medical Center in Payson, Arizona, Banner Desert Medical
Center in Mesa, Arizona and McKee Medical Center in Loveland, Colorado (the facilities to be
financed and refinanced with the proceeds of the Bonds are hereinafter collectively referred to as
the "Projects"); and
WHEREAS, the Authority deems it necessary and advisable to proceed with the
issuance, sale and delivery of the Bonds to be issued in one or more series or subseries from time
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to time, as taxable or tax-exempt debt, in an aggregate principal amount not to exceed
$660,000,000 to be designated "The Industrial Development Authority of the County of
Maricopa Revenue Bonds (Banner Health), Series 2018," with appropriate series and subseries
designations, dated as of such date or dates as shall be approved by an officer of the Authority
(the "Bonds"); and
WHEREAS, the Bonds will be issued pursuant to the terms of one or more bond
indentures (collectively, the "Indenture") between the Authority and The Bank of New York
Mellon Trust Company, N.A., as trustee (the "Trustee"); and
WHEREAS, the Authority and the Borrower will enter into one or more loan
agreements (collectively, the "Agreement"), pursuant to which the Authority will loan the
proceeds of the Bonds to the Borrower for the purpose of financing and refinancing the Projects,
including the refunding of all or a portion of the Prior Bonds, funding a debt service reserve
fund, if any, for the Bonds, paying capitalized interest, if any, on the Bonds, and paying all or a
portion of the costs of issuance of the Bonds, including credit or liquidity enhancement fees, if
any;
WHEREAS, the Bonds will be sold pursuant to one or more bond purchase
agreements (collectively, the "Bond Purchase Contract") to Morgan Stanley & Co. LLC or to
Citigroup Global Markets Inc. or to both (each an "Underwriter" and collectively, the
"Underwriters"); and
WHEREAS, there have been presented to the Authority on this date, the
following:
1. The form of the Indenture setting forth the terms of the Bonds
(including, without limitation, the preliminary redemption provisions, which
provisions are subject to change upon the pricing and marketing of the Bonds)
and the conditions and security for the Bonds;
2. The form of the Agreement;
3. The form of the Bonds as set forth in the Indenture;
4. The form of the Bond Purchase Contract by and among the
Authority, the Borrower and the applicable Underwriter or Underwriters; and
5. The forms of the Official Statements with respect to the Bonds
(collectively, the "Official Statement").
WHEREAS, it appears that each of the above-referenced documents, which are
now before the Directors of the Authority, is in substantially final form, except for such changes
as are necessary, desirable and appropriate as hereinafter provided, including, but not limited to,
such changes as are necessary to reflect the final pricing and terms and provisions of the Bonds,
and is an appropriate instrument for the purposes intended;
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NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS
OF THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE COUNTY OF MARICOPA
THAT:
Section 1. Definitions. In addition to the words and terms elsewhere defined
in this Resolution, the capitalized words and terms used herein shall have the meaning given in
Article I of the Indenture.
Section 2. Findings and Determination. The Board of Directors of the
Authority finds that (i) the Borrower maintains its corporate headquarters in Phoenix, Arizona;
(ii) the Borrower owns and operates hospital, medical and health care facilities in different
locations both in the State and in other states; (iii) the Borrower is one of the major employers in
the State; (iv) the Borrower is one of the largest providers of hospital, medical and health care
services in the State; and (v) the Borrower typically uses tax exempt or taxable bond financing
on a system-wide rather than a project basis to finance and refinance capital expenditures to its
facilities, wherever located. The Board of Directors of the Authority further finds that the
issuance of the Bonds and the making of a loan to the Borrower for the purpose of financing and
refinancing the Projects and refunding the Prior Bonds is in furtherance of the purposes of the
Authority under the Act and will provide an economic benefit to the Borrower by enabling the
Borrower to finance and refinance capital expenditures at the Borrower's health care facilities
within and outside the State. The Board of Directors of the Authority, based upon its findings,
determines that the issuance of the Bonds and the making of a loan to the Borrower for the
purpose of financing and refinancing the Projects and refunding the Prior Bonds will provide a
benefit in the State.
Section 3. Authorization to Issue and Sell the Bonds. The Bonds in the
aggregate principal amount of not to exceed $660,000,000 are hereby authorized as revenue
bonds to be designated "The Industrial Development Authority of the County of Maricopa
Revenue Bonds (Banner Health), Series 2018," in one or more series or subseries from time to
time, as taxable or tax-exempt debt. The Bonds shall be in substantially the form set forth in the
proposed form of Indenture. The Bonds shall bear interest at such interest rates as determined in
accordance with the Indenture, but in no event shall such average annual fixed interest rates or
initial variable interest rates exceed 6% per annum; provided further that in no event shall the
interest rates on the Bonds exceed the maximum rate allowed by law. The Bonds shall mature in
such aggregate principal amounts as set forth in the Indenture but in no event later than 40 years
from the date of issuance of the Bonds. The Bonds shall be payable and subject to redemption
prior to maturity as provided in the Indenture. Each Director and the Executive Director of the
Authority are each designated as an "Authorized Officer" of the Authority and each is hereby
authorized to execute the Bonds and each is hereby authorized to deliver them. Any signature of
an Authorized Officer on the Bonds may be by facsimile. Approval of the final terms of the
Bonds by the Authority, including the various maturities thereof and the final redemption
provisions thereof, shall be evidenced conclusively by the execution and delivery of the
Indenture by an Authorized Officer.
The sale of the Bonds to the Underwriters pursuant to the terms of the Bond
Purchase Contract is and the same are in all respects hereby approved, authorized and confirmed.
The Bonds shall be sold to the applicable Underwriter or Underwriters identified in the Bond
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Purchase Contract for the purchase price(s) set forth in the Bond Purchase Contract. The
approval of such purchase price(s) shall be evidenced by the execution and delivery of the Bond
Purchase Contract by an Authorized Officer.
Section 4. Limited Obligations. The Bonds shall be special, limited
obligations of the Authority, payable solely out of (a) the revenues and receipts derived from or
with respect to the Agreement and the security therefor, (b) the proceeds of the Bonds, and
(c) the income, revenues and receipts pledged under the Indenture. Neither the Authority, the
State nor any other political subdivision of the State shall be obligated to pay the principal of the
Bonds or the interest thereon or any other costs incident thereto except from the amounts pledged
therefor. The State shall not, in any event, be liable for the payment of the principal of or interest
on the Bonds or for the performance of any pledge, mortgage, obligations or agreement of any
kind whatsoever which may be undertaken by the Authority and none of the Bonds of the
Authority or any of its agreements or obligations shall be construed to be an indebtedness of the
State within the meaning of any constitutional or statutory provisions whatsoever.
Nothing contained in this Resolution nor in any other instrument may be
considered as obligating the Authority or the State to any pecuniary liability or charge upon the
general credit of the Authority or the State. Furthermore, it is understood that no costs are to be
borne by the Authority with respect to the Projects, the refunding of the Prior Bonds or the
issuance and sale of the Bonds, and that the Borrower will promptly reimburse the Authority for
any costs or other expenses reasonably incurred by the Authority, including the fees of its legal
counsel and financial advisor, whether or not the Bonds are issued or sold.
Section 5. Ratification and Approval of Actions. All actions of the officers,
directors and agents of the Authority that are in conformity with the purpose and intent of this
Resolution and in furtherance of the issuance and sale of the Bonds as contemplated by this
Resolution, including the execution of any certificates as to identification of a qualified hedge,
shall be and are hereby ratified, confirmed and approved. Further, all actions previously taken or
to be taken by the Authority in connection with the preparation and publication of a Notice of
Public Hearing or the conducting of a public hearing on behalf of the Authority are also hereby
authorized, ratified, and confirmed and the Authority hereby approves the issuance of the Bonds
for all purposes under the Code.
Section 6. Approval and Authorization of Documents. Any Authorized
Officer of the Authority is each hereby authorized and directed to execute and deliver, for and on
behalf of the Authority, the Indenture, the Bonds, the Agreement, the Bond Purchase Contract,
and any related documents (the "Documents") in the usual form and as may be approved by
counsel to the Authority, with such changes, modifications, additions and deletions therein as
shall be approved by counsel to the Authority and as shall seem necessary, desirable or
appropriate, the execution thereof by the Authorized Officer of the Authority to constitute
conclusive evidence of such counsel's approval and such officer's approval on behalf of the
Authority of any and all changes, modifications, additions and deletions from the usual forms
thereof, and such Documents are hereby authorized to be executed and delivered by the
Authority.
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The Authority hereby approves the use of the Official Statement and, if
appropriate, a Preliminary Official Statement, in the usual form and as may be approved by
counsel to the Authority, by the Underwriters in connection with the offering and sale of the
Bonds, as shall seem necessary, desirable or appropriate, and the Authority hereby further
approves the use by the Underwriters (after review and approval by counsel to the Authority) of
any supplement or amendment to the Official Statement which is necessary so that the Official
Statement does not include any untrue statement of a material fact and does not omit to state a
material fact necessary to make the statements therein not misleading. Except for the matters
relating to the Authority and litigation with respect to the Authority, the Authority will not
confirm, and assumes no responsibility for, the accuracy, completeness or sufficiency of any of
the statements in the Official Statement,
Section 7. Authority To Execute and Deliver Additional Documents. Any
Authorized Officer of the Authority is each hereby authorized to execute and deliver for and on
behalf of the Authority, any and all additional agreements, certificates, documents and other
papers, in forms approved by counsel to the Authority, and to perform all other acts as they may
deem necessary or appropriate to implement and carry out the purposes and intent of this
Resolution or relating to the Bonds. Each Authorized Officer is hereby empowered and
authorized, upon the request of the Borrower, from time to time, to execute, on behalf of the
Authority, any amendment to the Documents approved by counsel to the Authority. Execution of
any such additional agreements, certificates or documents, or any such amendments to the
Documents, by an Authorized Officer of the Authority, shall constitute conclusive evidence of
the approval of such counsel and such Authorized Officer on behalf of the Authority, of such
agreements, certificates, documents or amendments.
Section 8. Designation of Trustee. The Bank of New York Mellon Trust
Company, N.A., is hereby approved and appointed to serve as Trustee under the Indenture. If at
any time the Trustee shall be unable or unwilling to so serve, a successor trustee, paying agent
and registrar shall be selected pursuant to the terms of the Indenture.
Section 9. Open Meeting Laws. It is found and determined that all formal
actions of the Authority and its Board of Directors concerning and relating to the adoption of this
Resolution were adopted in an open meeting and that all deliberations that resulted in those
formal actions were in meetings open to the public, in compliance with all legal requirements of
the State and the Authority.
Section 10. Irrepealability. After the Bonds are delivered by the Trustee to the
Underwriters upon receipt of payment therefor, this Resolution shall be and remain irrepealable
until the Bonds and interest thereon shall have been fully paid, canceled, and discharged.
Section 11. Severability. If any section, paragraph, clause or provision of this
Resolution is for any reason held to be invalid or unenforceable, the invalidity or
unenforceability of such section, paragraph, clause or provision will not affect any of the
remaining provisions of this Resolution.
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Section 12. Supplemental Resolutions. The Authority may, subject to the
terms and conditions of the Indenture, pass and execute resolutions supplemental to this
Resolution which shall not be inconsistent with the terms and provisions hereof.
Section 13. Limitation of Rights. With the exception of any rights herein
expressly conferred, nothing expressed or mentioned in or to be implied from this Resolution or
the Bonds is intended or shall be construed to give to any person, other than the Authority, the
Borrower, the Underwriters and the Trustee, any legal or equitable right, remedy or claim under
or with respect to this Resolution or any covenants, conditions and provisions herein contained;
this Resolution and all of the covenants, conditions and provisions hereof being intended to be
and being for the sole and exclusive benefit of the Authority, the Borrower, the Underwriters and
the Trustee as herein provided.
Section 14. Immunity of Officers. Neither the members of the governing body
of the Authority, nor any Director, officer or employee of the Authority, nor any person
executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability
or accountability by reason of the issuance thereof.
Section 15, Captions. The captions or headings in this Resolution are for
convenience only and in no way define, limit or describe the scope or intent of any provisions or
sections of this Resolution.
Section 16. Notice of A.R.S. Section 38-511 - Cancellation. Notice is hereby
given of the provisions of Arizona Revised Statutes Section 38-511, as amended. By this
reference, the provisions of said statute are incorporated herein to the extent of their applicability
to contracts of the nature of this Resolution under the law of the State.
Section 17. Effective Date. This Resolution shall be in full force and effect
immediately upon its passage and approval.
Passed and adopted this August 14, 2018.
THE INDUSTRIAL DEVELOPMENT
AUTHORITY OF THE COUNTY OF
MARICOPA
By
Name: Steven-Bales,
Title: President
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