A2 - HONOR HEALTH SUMMARY LETTER.PDF

A PROFESSIONAL CORPORATION
RYLEYCARLOCK 70 One North Central Avenue, Suite 1200
&APPLEWHITE 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
November 8, 2018
To: Board of Supervisors Board of Directors of
Maricopa County, Arizona The Industrial Development Authority
of the County of Maricopa
Re: Not to Exceed $335,000,000 The Industrial Development Authority of the
County of Maricopa Hospital Revenue Bonds (HonorHealth Project)
Series 2018A
Ladies and Gentlemen:
At the meeting of The Industrial Development Authority of the County of
Maricopa (the "Authority") on November 13, 2018, the Authority Board will be asked to grant
approval to the financing for Scottsdale Healthcare Hospitals, dba HonorHealth and to adopt 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 Scottsdale Healthcare Hospitals dba
HonorHealth, an Arizona nonprofit corporation designated as a 501(c)(3) organization under the
Internal Revenue Code of 1986, as amended (the "Code"). Scottsdale Healthcare Hospitals, dba
HonorHealth either directly or through affiliates, currently operates hospital, medical and
healthcare facilities in the greater Phoenix area.
THE PROJECT
The proceeds of the Bonds will be loaned by the Authority to Scottsdale Healthcare
Hospitals, dba HonorHealth to be used, together with other available moneys, for the acquisition,
construction, renovations and improvements to, and furnishing and equipping of, health care
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RYLEY CARLOCK
Board of Supervisors &A PPLEWHITE
Maricopa County, Arizona Attorneys
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
November 8, 2018
Page 2
facilities owned and operated by the Borrower in Maricopa County including, but not limited to
the acquisition, construction and equipping of a new hospital in North Phoenix to be known as
Sonoran Hospital and the financing, the acquisition and/or operation of health care facilities
owned and/or operated by Scottsdale Healthcare Hospitals, dba HonorHealth and located in
Maricopa County, Arizona; the refunding of bonds issued in 2008 by the Arizona Health
Facilities Authority; the funding of any necessary reserve funds; and paying costs related to the
issuance of the Bonds.
NOTIFICATION TO ARIZONA ATTORNEY GENERAL
As required by the provisions of Arizona Revised Statutes, Section 35-721.F, the
Authority will notify 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 on November 13, 2018 (ahead of the Authority Board meeting),
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: Scottsdale Healthcare Hospitals dba HonorHealth
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RYLEY CARLOCK
Board of Supervisors &APPLEWHITE
Maricopa County, Arizona Attorneys
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
November 8, 2018
Page 3
Bond Underwriter: RBC Capital Markets, LLC and Merrill Lynch, Pierce
Fenner and Smith, Incorporated
Bond Counsel: Ballard Spahr LLP
Bond Trustee U.S. Bank National Association
Applicant/Borrower Counsel: Shannon Fox Fraser, SVP and General Counsel to
HonorHealth
Bond Underwriter Counsel: Squire Patton Boggs (US) LLP
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
Multiple Supplements to Deeds of Trust and
Related Security Documents
PLAN OF FINANCING
The Bonds will be denominated as the "2018 Bonds" and will be issued in
multiple Series, i.e., Series 2018A and Series 2018B, 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.
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RYLEYCARLOCK
Board of Supervisors &APPLEWHITE
Maricopa County, Arizona Attorneys
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
November 8, 2018
Page 4
The Bonds will be offered for sale by the Underwriters utilizing the Official
Statements and the Bonds will be purchased by the Underwriters 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
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 November 13, 2018, the Board will be asked
by the Applicant/Borrower to grant approval to the application for financing and to adopt a
resolution authorizing the issuance and sale of the Bonds. A copy of the proposed form of
resolution to be adopted is included in the Board packages.
BOARD OF SUPERVISORS APPROVAL
If the Authority Board acts to grant final approval for the financing and to adopt a
resolution authorizing the issuance and sale of the Bonds, the Maricopa County Board of
Supervisors will be requested, at its meeting on November 28, 2018, to act as required by law to
adopt a resolution approving the proceedings of the Authority for the issuance of the Bonds.
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.
TRANSACTION CLOSING
Assuming the required approvals of the Authority and the Maricopa County
Board of Supervisors are received, it is anticipated that the Bonds will be issued in December,
2018.
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RYLEYCARLOCK
Board of Supervisors &APPLEWHITE
Maricopa County, Arizona Attorneys
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
November 8,2018
Page 5
LEGAL COUNSEL RECOMMENDATION
As counsel to the Authority, we have reviewed drafts of the principal financing
documents, we have been advised that these documents are now in substantially final form, and
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 the Authority and
are in both form and substance acceptable for the Authority Board to act upon and that the
Resolution presented to the Authority Board relating to authorizing the issuance and sale of the
Bonds, and related matters, is in form and substance acceptable for the Authority Board to adopt.
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