Good evening, everybody.

I'm Chairman Jared Evans.

We're going to begin tonight's municipal corporations committee meeting, and we'll begin with introductions from my colleagues to my left.

Thank you, Mr.

Chairman.

Mike Dilk, District 24.

Thank you, Mr.

Chairman Josh Bain, District 21.

Thank you, Mr.

Chairman.

Michael Paul Hart, District 20.

Thank you, Mr.

Chair.

Brian Mowery, District 25.

Thank you, Mr.

Chairman, Allen, District 16.

Thank you.

Thank you, Mr.

Chair, Ron Gibson, District 8.

Thank you.

Thank you, Mr.

Chair, Alley Brown, District 10.

Thank you, everybody.

And again, I'm Chairman Jared Evans.

Tonight we will be hearing proposal number 213 from the Health and Hospital Corporation approving the issuance of general obligation, refunding bonds up to 150 million dollars by the Health and Hospital Corporation of Marion County to refund certain prior obligations of the Health and Hospital Corporation that finance a portion of the Wishard Hospital project and pay cost of issuance in connection therewith and approves and authorize other actions with respect there to and the appropriation of the proceeds thereof.

It's a time tire there.

Joe, would you all like to go ahead and begin with your proposal?

Thank you, Mr.

Chairman and members of the committee.

My name is Joe Glass.

I'm the executive director and general counsel of the Indianapolis Bond Bank.

I'm joined by James Simpson, who's the interim CFO of the Health and Hospital Corporation.

We are here to present proposal 213, which authorizes uh refunding bonds on an amount not to exceed 150 million for the series 2010 A2 Health and Hospital Bonds.

Uh there would be a maximum interest rate of 6.5%, and the final maturity uh would stay the same as the current bonds, which is uh January of 2040.

Uh so these were issued um uh for the construction of Eskenazi Hospital.

They were one of a series of four bonds uh issued in 2010 uh following uh the successful uh 20 uh 2009 voter referendum uh to approve the construction of Eskenazi Hospital.

Uh the 2010 bonds um are uh currently have um uh about 141 million dollars outstanding.

Um Health and Hospital Corporation is also uh looking to refund um lease rental bonds that were issued by the Indianapolis Marion County Building Authority.

Um there's an outstanding amount of about 328 million for those.

Um that lease was approved by the council back in 2010.

Um the refunding is not going to go before the council, but uh has been before the uh building authority board and the uh health and hospital corporation board.

So the A2 and B2 2010 bonds were uh what are known as uh build America bonds.

Uh these were uh part of the 2009 American Recovery and Reinvestment Act, which was passed uh in the wake of the financial crisis, and basically under this program um municipal issuers can issue uh taxable debt but get a subsidy from the federal government for 35 percent of the interest cost.

Um, however, since 2013, um, some of those uh subsidies have been uh sequestered, and there has been a fixed 5.7 percent reduction in place since 2021.

Uh so federal reimbursements for these BABS bonds have been delayed, um uh been delayed and subject to further sequestration um on an annual basis.

Um so a lot of municipal issuers have sought to uh refund these bonds in order to uh create more certainty for debt service going forward.

So the refunding opportunity, um, the refunding of both the the A2 and B2 2010 bonds would free up about uh 33.8 million that is currently used to fund a cash um debt service reserve.

Um they would lower uh rental payments for HHC and the amount of about 2.45 million dollars a year, and they would act they would um reduce risks and uncertainty related to the BAB subsidy.

And here you have information about these two series.

Uh the first uh geo refunding bonds is what's before you today.

Um total um with both refundings.

Um Health and Hospital Corp Corporation would save about 2.45 million dollars in annual debt service.

So we have our finance team here today.

Um obviously James is here representing HHC.

Um Barnes and Thornberg is our uh finance counsel.

Uh Crow LLP is our municipal advisor.

Stiefle is our our lead underwriter and underwriters counsel is is ice miller.

Um we have been uh this refunding has been approved by the uh health and hospital board um as well as the Marion County Building Authority.

Um obviously we're before the Muni Corps meeting tonight, and we'll be seeking full council approval at uh the next um uh August meeting, and we'll also be seeking a bond rank approval in August.

We're looking at September uh for a pricing.

And with that, I'm happy to answer any questions of the committee.

Uh thank you, Joe.

Can you uh somebody from HHC, can you explain a little bit more?

I want to make sure the public understands what's going on behind the scenes, what has led up.

Yeah, you briefly touched on it, but I'd like you guys going a little bit more detail and explanation on what's happening at the federal level and has been happening for some time that has led to us having to come to this part.

Sure.

Uh good evening.

Thank you for the ability to present committee.

Uh it's a great question.

So when these bonds were issued in 2009, the understanding was we would receive a 35% subsidy payment on these federal taxable bonds.

And we have received the majority of that, but sequestration has made those uh BAB subsidy payments less.

And so since 2013, we've seen a reduced uh BAB subsidy payment, and since or since 2013, it's been below it's 5.7% less than what we've expected.

So, what does that mean for health and hospital?

We fund approximately half a million more dollars in debt service transfers from our general fund to our debt service to pay for these bonds.

Um, and so that's one of the things with with this refunding.

We would get out from we would eliminate that potential risk of the current half a million, and could it could the percentage grow larger?

That's the unknown, and I'm going through this process would would lock us in and know what our debt service would be through the the maturity of these bonds.

Okay, thank you.

Colleagues, Madam VP.

Thank you, sir.

Um so just to make this a little simpler, because you hear refund, and for most of us a refund means something different, right?

You buy something, take it back to the store, you get money back.

Well, we're kind of talking, and I know this is not the exact thing, we're basically refinancing these at a lower interest rate so that way we end up paying less over the long term of the bond, correct?

Correct.

And we're go ahead.

Yeah, that's exactly right.

And and usually in these circumstances, we are looking to get interest rate savings, and we might realize some of that here.

Um, but the the main thrust has been you know, reducing the uncertainty related to the BAB subsidy as well as freeing up um the uh cash that is currently used to fund the debt service reserve.

So there might be some interest savings, but but those two things are the main reason that we're we're pursuing this.

Now, if something were to happen, the sequestration sequestration ends.

Would we get the back pay that we even if if we have refunded this and gone to a different bond?

Do we just it's just done, or if the government starts paying that back, do we get the money that we have paid that they were supposed to pay us?

We would not get that back.

I mean, right now it's it's in their it's in law that they will pay us a reduced rate.

Okay, so it's in the so it's not just a practice, it's in law.

Okay, correct.

Um, and then the my last question, just as somebody who's looked at buying a home, right?

So these are questions we talk about refinance, all this kind of stuff.

Does it affect what would be akin to our credit rating as a city or our HHCs as a bond?

Does it affect your bond rating?

Does it affect your credit rating or anything like that in the future if we need that?

Yeah, I don't think we wouldn't anticipate any negative impact on our credit rating by pursuing that these refundings.

Okay, thank you so much, guys.

Thank you.

Uh Counselor Bain.

Thank you, Mr.

Chairman.

And thank you, Director Glass, for the presentation and uh who's joining us tonight.

I guess if we're not realizing a savings based off of a lower interest rate, you kind of put it in layout's terms.

How are we saving money by doing this?

Because it seems like we're losing federal funding for this, so we're refinancing it, but we're not refinancing it to get a lower rate.

So one would think someone would have to backfill the lost federal funding for it.

So how are we seeing a cost savings here?

So a big part of the savings is that currently the debt service reserve is funded with cash, and so that's you know, 30 plus million dollars that's sitting in cash in a debt service reserve.

When we refund, that will change to a surety, and so that cash will be freed up for health and hospital corporation.

And so that's cash that they would eventually realize at the end of this you know 2040 term, but it's something that they can get up front now since the debt service reserve will be funded by a surety.

Okay, that makes sense.

And are we are we lengthening the term of the bond at all?

No, no, the current term is 2040, and that will stay the same with the refunding.

Okay.

Councilor Hart.

Yeah, I'm just curious.

Um, who's covering the costs of the restructuring and and where does that come from?

Or is there a cost?

I would assume there's a cost.

So the the cost will be paid through the cost of issue, and so it'll be paid through the through the um the refinancing.

Scrolled in.

Yeah, correct.

Okay.

Any other questions?

Um, anybody from the audience have any cool questions?

I apologize.

I had a sip of water, and um, I think this is what happens when you start getting older.

I suddenly have to cough up.

Um questions from anybody in the audience.

Colleagues, last opportunity for questions.

Councilor Gibson.

Yes.

Well, thank you, Mr.

Chairman.

I move that we send proposal number 213 to the full council for final adoption.

Second.

The motion has been moved and seconded.

Uh I'll take a vote.

All those in favor by saying aye.

Aye.

All those opposed, same sign.

All right.

Ayes have it.

The proposal will move to the full council with a due pass recommendation.

Uh seeing no other business before this, I was I was expecting a little bit longer here.

Um seeing no business before this committee, we are adjourned, and everybody may go home.

Thank you all.

I did the same thing at the end of the animal care control.

I was like