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Bond Refinancing to Save Washington Hospital Taxpayers $5.84 Million

General obligation bonds financing construction improvements at Washington Hospital have been refinanced to save district taxpayers $5.84 million over the remaining life of the bonds following recent action by the Washington Township Health Care District’s board of directors.

The savings are going directly to the residents of the district in the form of reduced future property tax assessments, explained Board President Michael J. Wallace.

“None of these savings will return to the Hospital’s bottom line,” Wallace added. “Our goal was to take advantage of current extremely low interest rates to reduce future taxes for our residents.

“District residents have always supported the Hospital, through the 2004 and 2012 bond measures, along with the extraordinary volunteer work and fundraising by individual residents,” Wallace said. “The residents should benefit from any savings we can achieve.”

Measure FF, approved by district voters in 2004, authorized $190 million in bonds to finance facility upgrades to meet state-mandated earthquake safety improvements by 2030.

The original bond issue in 2006 was financed at 4.48 percent, Wallace said. The new refinanced bonds carry a 2.59 percent interest rate, resulting in an annual savings of $448,000.

The bonds will be paid off by 2036 as required in the original bond measure. The taxpayer savings come from the reduced interest rate, not from extending the bonds out further than the original 30 years, Wallace added.

The bond measure funded the construction of a new, modern central utility plant, a key component of the Hospital’s long-term facilities master plan program. The existing utility plant was outdated and had reached the limits of its capacity to support the Hospital’s master plan program.

The seismically sound central utility plant, which opened in December 2011, supports all the critical functions the Hospital needs to operate 24 hours a day. This includes boilers for heating, hot water for bathing and other uses, steam generation for sterilization and autoclaving, and medical gases, such as oxygen. The plant also houses a modern, energy- and water-efficient laundry.

Other smaller projects related to the central utility plant also were financed by the 2006 bond issue.

A five-member Citizen’s Oversight Committee reviews all actions taken regarding Measure FF bonds and reports annually to the board of directors.