COLUMBUS, Ohio (April 5, 2004) – For parts of rural America, regular medical treatments such as chemotherapy or dialysis often require a 60-mile trip to the nearest metropolitan area. Many smaller community hospitals cannot offer these and other specialty services because they do not have the access to capital needed to upgrade their facilities and equipment.
Fortunately for the small community of La Grange, Texas, the Department of Housing and Urban Development's Sec. 242 program allowed St. Mark's Medical Center to borrow $26.05 million to build a 45-bed, 93,000 square-foot hospital to serve La Grange and the surrounding communities.
The Sec. 242 program was created in 1968 and has provided more than $9.4 billion in assistance to more than 320 hospitals around the country. Lenders say recent efforts by HUD to increase access to the program has significantly improved the quality of health care available in smaller communities.
"The HUD 242 program represents one of very few funding mechanisms available to community hospitals," said Scott Moore, president of Lancaster Pollard Mortgage Company, the firm that served as the lender and co-manager on the St. Mark's transaction. "St. Mark's Medical Center is an excellent illustration of how a community hospital utilized the 242 program to fill a critical need for health care."
The Sec. 242 program provided St. Mark's with a mortgage insurance commitment for the full project cost, which allowed the hospital to sell "AAA"-rated, tax-exempt bonds. By achieving the highest possible rating, St. Mark's and the La Grange community will save millions of dollars of interest expense over the life of the bond issue.
St. Mark's will replace an aging Fayette Memorial Hospital, which will close after the completion of the new facility. Fayette Memorial Hospital is one of approximately 6,800 facilities built under the federal government's Hill-Burton program between 1946 and 1975. Many of these facilities are in need of critical renovations and upgrades.
The new St. Mark's facility, which is scheduled to open in June 2005, will increase the community's access to specialty services such as cardiology and oncology services, as well as the latest in diagnostic equipment.
This transaction marks HUD's first Sec. 242 project closed in 2004.
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