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Voters in the Tehachapi Valley Healthcare District went to the polls twice to approve a total of $68 million in bonds to build the new hospital that eventually cost more than $91 million and opened in November 2018. The healthcare district recently took advantage of lower interest rates to refinance the bonds and save taxpayers about $7.6 million over the next 28 years.

The Tehachapi Valley Healthcare District recently completed what is essentially a refinancing of the district’s bond debt to achieve more than $7.6 million in gross debt service savings for taxpayers over the next 28 years.

Emilio Flores of CFW Advisory Services provided a report by telephone during the Dec. 14 meeting of the district’s board of directors.

Previously the board authorized the refinancing with an aim to save district taxpayers as much money as possible over the time it will take to pay off financing previously authorized by voters to fund the construction of a replacement hospital.

The district used $68 million in funding from two bond measures to begin construction of the new Tehachapi Valley hospital. The facility was eventually completed with additional financing from Adventist Health, which now has a long-term contract to manage the facility. The hospital is still owned by the district and it continues to pay off the bonded indebtedness approved by voters. 

Based upon the assessed valuation of property, taxpayers are billed annually by Kern County to pay off the bonds. At the time the refinancing was processed, the bonded indebtedness was $53,985,000. This represented a pay-off of the Series 2013 bonds in the amount of $48,530,000 plus costs of the refinance and related expenses.

Because of the reduction in interest rate — from 4.73 percent to 2.88 percent — the amount to be paid each year will be less than it was when the bonds were issued. The board chose a plan that will spread the debt service savings uniformly over the life of the bonds. 

For a resident with an assessed value of $200,000, he said the total savings are expected to be approximately $263 over the life of the bonds. Property owners with greater assessed valuation will see greater savings.

Taxpayer savings will be realized starting in the 2022-23 tax year and continue through the 2048-49 tax year, Flores said.

Although the refinancing transaction closed on Dec. 7, the savings noted assume the board will elect to convert the bonds to tax-exempt status, an action which will require a public hearing likely to be scheduled sometime between August and October of 2023.

Also at the Dec. 14 meeting, the board continued discussion of ideas for a new building to be constructed on the site of the former Tehachapi Valley Hospital on West E Street in downtown Tehachapi. CEO Caroline Wasielewski was asked to bring a draft request for proposals for architectural services to the board’s January meeting.

The board’s regular monthly meetings have been set to begin at 10 a.m. on the third Tuesday of each month. The next meeting is expected to be held on Jan. 18. Meetings are held at the district office, 116 W. E St., Tehachapi.

Agenda information is available online at https://www.tvhd.org/.

Claudia Elliott is a freelance journalist and former editor of the Tehachapi News. She lives in Tehachapi and can be reached by email: claudia@claudiaelliott.net.

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