SAN FRANCISCO -The Marin Healthcare District of Marin County, Calif, plans to sell $170 million of investment-grade bonds next week to finance earthquake readiness measures and medical improvements at a 63 year-old hospital.
The general obligation bonds, rated Aa2 by Moody’s Investors Service, are expected to price Oct. 26, according to an investor presentation. The bonds will be sold in two series, with $157.4 million of the securities sold as tax-exempt and $12.6 million being federally taxable. Morgan Stanley is senior underwriter on the deal, and Stifel, Nicolaus & Co. is co-manager. San Diego-based Hammond Hanlon Camp is financial advisor to the district, and Orrick, Herrington & Sutcliffe is bond counsel.
The public authorized the bonds in a 2013 election. Measure F, which passed with more than 68% support, authorized the district to issue up to $394 million of GO bonds to build a four-story hospital building and parking facilities. The 2015 financing is the first utilization of that GO authority, district CFO James McManus said in the presentation. The district owns Marin General Hospital, a 235 bed facility built in 1952 about 15 miles north of San Francisco in Greenbrae, Calif. The district also operates nine clinics throughout the county.
Securing the bonds are property taxes levied and secured by the county. McManus said the district has a “substantial tax base” with an assessed valuation of about $55 billion as of the 2015-2016 tax year. Marin County, which had a population of 261,000 in 2014 according to the U.S. Census Bureau’s estimate last year, with income levels above and poverty rates below the California averages. The county’s 3.7% unemployment rate is the second-lowest in the state. The healthcare district is the second-largest employer in Marin County. The property tax revenues are not available to pay any other district obligations, McManus said.
The assessed valuation of taxable property in the district has been growing more strongly in the last three years after stagnating during the recession. The AV grew 3.9% in 2013-2014, 6% in 2014-2015, and 7.1% in 2015-2016, according to data provided in the investor presentation. The largest local taxpayer is Star Wars director George Lucas’ Skywalker Properties, which has a 2015-2015 AV of about $234 million. However, Skywalker represents only 0.43% of the total AV in a diversified tax base that McManus said helps to limit the district’s exposure to any single taxpayer or industry.
The transaction has an expected closing date of Nov. 10.
