WILLMAR -- The Willmar City Council has given preliminary approval to issue $8 million in nursing home revenue bonds to finance a nearly 30,000-square-foot adult day services center and wellness and therapy center for Bethesda Health and Housing.
The city will act as a conduit to issue the tax-exempt revenue bonds under a state law that allows a governmental unit to issue municipal securities to finance a project by a third party, either a for-profit entity engaged in private enterprise or a nonprofit corporation.
The security for this type of financing, called conduit financing, is customarily the credit of the borrower or pledged revenues from the project financed, rather than the credit of the city.
Such securities do not constitute general obligations of the governmental unit because the borrower is liable for generating the pledged revenue.
The council this week held a public hearing on Bethesda's revenue bond request before voting to approve the financing.
Michelle Haefner, Bethesda chief operating officer, told the council the two-story project at the Bethesda campus will add a warm water therapeutic pool and space for exercise and physical, occupational and speech therapy areas and spa area, increased space for the adult day program and space for the home care offices.
Haefner said the project will benefit current tenants and residents, and will be open Willmar's senior community.
Council member Denis Anderson said the city was unable to accommodate Bethesda's request last year, but was able to this year.
"You run a fine organization and I'm really pleased that we're going to be able to get this going for you,'' Anderson said.
Council member Rick Fagerlie asked if Bethesda has talked with Rice Hospital about pool therapy. He said Rice is currently using the pool at the MinnWest Technology Campus.
"It would be great if you can work something out with them,'' he said.
Council member Jim Dokken praised the project and said the therapeutic pool is needed.
"There 40 or 50 folks that, if that pool was not available, their quality of life would be dramatically affected by not having that,'' Dokken said. "I don't know how long MinnWest will be able to extend the opportunity to use that pool.''
Council member Steve Ahmann asked why Bethesda was making its request.
Mark Beese, vice president of Northland Securities of Minneapolis, the bond underwriter, said Bethesda will pay a lower interest rate if the city issues the tax-exempt bonds. He said Bethesda will save almost $90,000 a year.
Mayor Les Heitke asked Haefner if Bethesda is financially strong enough to pay for the project.
Haefner said Bethesda operates related businesses and will be able to accommodate more people with new adult day services space.
"We worked with our auditors and we have a budget and financial forecast for this project,'' she said. "We feel very comfortable with the numbers that we have that we'll be able to support it. We can see by the estimates for the growing aging population and with our planning and feel this project is worth doing and we can certainly support it in Willmar and there's a need for it,'' she said.
Heitke said the city wants Bethesda to be successful.
"You have a very strong history and reputation in this community and we wish you the very best,'' he said.