BANNER 2025 - SUMMARY LETTER.PDF
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8687 East Via de Ventura, Suite 306 Scottsdale, Arizona 85258 www.mcida.com January 23, 2025 To: Board of Supervisors Board of Directors Maricopa County, Arizona The Industrial Development Authority of the County of Maricopa Re: Not to Exceed $400,000,000 The Industrial Development Authority of the County of Maricopa Tax-Exempt Commercial Paper Revenue Notes (Banner Health) Ladies and Gentlemen: At the meeting of the Board of Directors (the “Board”) of The Industrial Development Authority of the County of Maricopa (the “Authority”) on February 11, 2024, the Board will be asked to grant final approval and adopt a resolution authorizing the issuance and sale of the Notes described above (the “Notes”). This letter provides a summary of the proposed financing. AUTHORITY The Authority is an Arizona nonprofit corporation designated by law as a political subdivision of the State of Arizona. The Authority was formed with the permission of Maricopa County, Arizona (“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”). APPLICANT/BORROWER The Applicant/Borrower, Banner Health (the “Borrower”), is a health care institution under the Act, an Arizona nonprofit corporation and a nonprofit organization under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), headquartered in Phoenix, Arizona. Banner is the largest employer in Maricopa County, Arizona. PROJECT The Borrower will use the proceeds of the Notes to pay a portion of the costs to finance and refinance the acquisition, construction, improvement, equipping and/or operating of certain hospital, health care and related facilities that constitute “projects” (as defined in the Act). The proceeds will fund the buildout of MRI suites, a Blood and Cancer Center, various labs, and expansion of operating rooms and emergency departments (including pediatric ED expansions), among other improvements. The projects to be financed and refinanced with the proceeds of the Notes are owned and operated by the Borrower directly or through certain wholly owned affiliates. Certain of the project facilities being financed or refinanced with Note proceeds are located outside of Maricopa County: Banner Ironwood- Queen Creek, Arizona; Banner Casa Grande-Casa Grande, Arizona; Banner University Medical Center- Board of Supervisors Board of Directors January 23, 2025 Page 2 Tucson, Arizona; Banner Payson-Payson, Arizona; Banner Wyoming-Casper, Wyoming; and McKee Medical Center-Loveland, Colorado. The following are the project facilities located in Maricopa County, listed by address and respective Supervisorial districts: Facility Address Board of Supervisors District Banner Boswell 10401 W Thunderbird Blvd, Sun City 4 Banner UMC - Phoenix 1111 E McDowell Rd, Phoenix 3 Banner Desert 1400 S Dobson Rd, Mesa 1 Banner Thunderbird 5555 W Thunderbird Rd, Glendale 4 Banner Estrella 9201 W Thomas Rd, Phoenix 5 Banner Gateway 1900 N Higley Rd, Gilbert 1 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 its intention to issue the Notes. TAX EXEMPT FINANCING Pursuant to Section 147(f) of the Code, the Maricopa County Board of Supervisors must approve the issuance of the Notes after a public hearing following reasonable public notice. The Notice of Public Hearing was posted on the Authority’s website on January 23, 2025. A representative of the Authority will conduct a public hearing regarding the issuance of the Notes on January 30, 2025. On or prior to closing, the Authority will receive an opinion from Bond Counsel to the effect that interest on the Notes will be exempt from federal and State income taxes. PRINCIPAL FINANCING DOCUMENTS • Commercial Paper Note Indenture • Loan Agreement • Issuing & Paying Agent Agreement Board of Supervisors Board of Directors January 23, 2025 Page 3 FINANCING PARTICIPANTS The major financing participants, in addition to the Authority, are as follows: Applicant/Borrower: Banner Health Bond Counsel: Hawkins Delafield & Wood Borrower’s Counsel: Womble Bond Dickinson (US) LLP Financial Advisor: Kaufman, Hall & Associates CP Dealers: Barclays / Morgan Stanley CP Dealers’ Counsel: Dentons US LLP Issuing & Paying Agent: U.S. Bank Trustee: The Bank of New York Mellon Trust Company PLAN OF FINANCING The Notes will be issued as qualified 501(c)(3) bonds as defined in Section 145 of the Code for the purpose of financing and refinancing hospital and health care facilities and paying costs of issuance of the initial issuance of the Notes. The Notes will be issued from time to time under and pursuant to the terms and provisions of the Commercial Paper Note Indenture in a maximum principal amount not to exceed $400,000,000 outstanding at any time. The Authority will loan the proceeds to the Borrower pursuant to the Loan Agreement. The Notes are expected to be rated: A-1 (S&P)/ F-1+ (Fitch). A tax certificate and agreement will be executed by the Authority and Borrower to evidence various representations and agreements aimed at establishing and preserving the tax-exempt status of the Notes. FINAL APPROVAL At its meeting on February 11, 2025, the Authority Board will be asked to grant final approval and adopt a resolution authorizing the issuance and sale of the Notes and related matters. BOARD OF SUPERVISORS APPROVAL Under the provisions of A.R.S. § 35-721.B., issuance of the Notes by the Authority requires the approval of the Maricopa County Board of Supervisors. The Maricopa County Board of Supervisors is being requested, at its meeting on February 12, 2025, to act as required by law to adopt a resolution approving the issuance of the Notes under the Act and with respect to Section 147(f) of the Code. Under the provisions of the Act, specifically A.R.S. § 35-742, Maricopa County is not in any event liable for the payment of principal or interest on any bonds, notes or other obligations issued by the Authority or for the performance of any pledge, mortgage, obligation or agreement of any kind undertaken by the Authority, and none of the bonds, notes or other obligations, or any of its Board of Supervisors Board of Directors January 23, 2025 Page 4 obligations thereunder, shall be construed to constitute an indebtedness of Maricopa County within the meaning of any constitutional or statutory provision. TRANSACTION CLOSING If the required approvals from the Authority Board and the Maricopa County Board of Supervisors are received, it is currently anticipated that the initial issuance of the Notes will occur during the week of March 3rd. LEGAL COUNSEL RECOMMENDATION Prior to adoption of the approval resolution by the Authority Board, General Counsel to the Authority will have reviewed drafts of the principal financing documents and the principal financing documents will be in substantially final form, adequately meet the requirements of the Act, and will be in both form and substance acceptable for the Authority Board to act upon. The resolution of the Authority Board authorizing the issuance and sale of the Notes and related matters and the resolution of the Maricopa County Board of Supervisors approving the Notes to be issued and related matters, are in form and substance acceptable for adoption.