Though the U.S. Supreme Court's decision on the 2010 landmark reform law alleviated some of the uncertainty in the industry, healthcare organizations still don't know how the law will affect their balance sheets, said Doug Fenstermaker, managing director and executive vice-president of health care at Atlanta-based Warbird Consulting Partners.
Anyone building now is doing so because “they believe they absolutely need it,” and chief financial officers see an opportunity to take advantage of historically low interest rates, he said.
“They borrow now and figure how to afford it in the future,” Mr. Fenstermaker said.
Rosalind Franklin wants to issue $16.6 million in bonds to build a new 46,000-square-foot student learning center and renovate 10,000 square feet of other space at its 85-acre campus. The project will add eight new classrooms, five laboratories, office space and new foodservice facilities, according to board documents.
The private research university's enrollment had record growth of about 20 percent between 2004 and 2011, from 1,668 students to 2,026, a spokeswoman for the school said.
In fiscal 2012, Rosalind Franklin received 9,648 applications for 785 spots in its five colleges,which educate doctors, pharmacists and medical researchers.
“Space is at a premium,” the spokeswoman said. “(The project) is necessary.”
The municipal bonds would be issued by the finance authority, making the interest tax-exempt to the bondholders, who then are willing to accept a lower interest rate, which they pass along to the university.
The parent organization of non-profit Lutheran Home plans to issue $76 million in new bonds and refinance about $24 million in bonds from 2001 and 2003. The total deal, which also includes other costs and fees, is up to $120 million.
Lutheran Home intends to gut and renovate and its long-term care facility, the 126,000-square-foot Olson Pavilion. The project will decrease the number of skilled-nursing beds to 240 from 252. After construction, there will be 162 private rooms with private baths, and four additions totaling 81,000 square feet that will contain another 78 beds, as well as more space for lounges and dining areas. The home also plans to replace the building's heating and plumbing infrastructure, said Chief Financial Officer Carl Moellenkamp.
While low interest rates are appealing, Mr. Moellenkamp said the project has been in the works for five years. The market has shifted since the 1970s when the Olson Pavilion was built, and potential residents now expect private bathrooms.
“It's really reached the end of its useful life,” he said. “We are at that point we need to hit this project and position Lutheran Homes for the next 30, 40 years.”