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Cuyuna Range Hospital District Secured a Combination of Traditional Financing and New Markets Tax Credits to Raise $15.7M for its Construction and Rehabilitation Projects
[January 06, 2014]

Cuyuna Range Hospital District Secured a Combination of Traditional Financing and New Markets Tax Credits to Raise $15.7M for its Construction and Rehabilitation Projects

SCOTTSDALE, Ariz. --(Business Wire)--

Healthcare Community Development Group, LLC (HCDG), a certified Community Development Entity (CDE), served as the New Markets Tax Credits (NMTCs) project leader and allocation aggregator in connection with the issuance and leveraging of the $15.7M raised through traditional Series A Financing ($13.4M) and Series B NMTCs ($2.3M (News - Alert)) for Cuyuna Range Hospital District, Crosby, MN.

"Federal Government NMTCs-qualified subsidies are an attractive supplemental financing strategy allowing not-for-profit health systems, such as Cuyuna Range Hospital District, to continue meeting growth, infrastructure and community health services needs, while effectively reducing the overall amount of money they need to borrow for their projects," Jacque J. Sokolov, Chairman and CEO of HCDG, said. "These are complex transactions, however we serve our clients with an end-to-end solutions approach that includes deploying a highly-skilled project team committed to minimizing administrative and finance department disruption while working to bring funding to a successful conclusion."

"The HCDG-led Cuyuna Range Hospital District NMTCs transaction team included the law firms Paul Hastings (News - Alert) and McKenna Long & Aldridge and the accounting firm of CohnReznick," Sokolov said. "HCDG also brought SunTrust Bank into the transaction as the tax credit investor, who in turn brought Nixon Peabody into the funding process as the tax credit investor's law firm."

According to Kyle Bauer, chief financial officer of Cuyuna Range Hospital District, securing funding by using an NMTCs strategy resulted in the opportunity to borrow less money and still have the required funds needed for the project through the Federal Government's NMTCs-qualified subsidy.

<> "In addition to helping us realize the financial benefits of securing NMTCs funding, the project leaders at HCDG led us through the process with great skill and acumen. While keeping us appropriately involved and updated along the way, their approach also allowed our team to maintain focus on all aspects of managing Cuyuna's business," Bauer said.

HCDG's core services offering includes complete NMTCs evaluation and investment funding services, including:

  • Organizing and assessing funding strategies
  • Confirmation of Source (News - Alert) A funding commitments
  • Securing NMTC commitments
  • Finalizing transaction structure
  • Executing transaction agreements and deal close

About the New Market Tax Credit Program

The New Markets Tax Credits Program (NMTCs Program) was established by Congress in 2000 to spur new or increased investments into operating businesses and real estate projects located in low-income communities. These investments are expected to result in the creation of jobs and material improvement in the lives of residents of low-income communities. The NMTCs Program attracts investment capital to low-income communities by permitting individual and corporate investors to receive a tax credit against their Federal income tax return in exchange for making equity investments in specialized financial institutions called Community Development Entities (CDEs).

The credit totals 39 percent of the original investment amount and is claimed over a period of seven years (five percent for each of the first three years, and six percent for each of the remaining four years). The investment in the CDE cannot be redeemed before the end of the seven-year period.

About Cuyuna Range Hospital District

Cuyuna Range Hospital District, Crosby MN. owns and operates Cuyuna Regional Medical Center ("CRMC"), a critical access hospital located in the rural community of Crosby, Minnesota. As an acute care hospital, CRMC is a comprehensive medical center recognized throughout the region for its progressive approach to innovative healthcare comprising more than 900 physicians, medical professionals and support staff working together to provide the highest level of care and compassion. The financing strategy consisted of a direct purchase with a commercial banking entity (the "Purchaser") of the fixed-rate Series 2013A Bond. HCDG worked with investment bank Piper Jaffray toward securing the Purchaser's 15-year capital commitment. The Series 2013A Bond does not currently carry a rating. The 15-year commitment resulted in a low cost of capital based on interest rates as of the date of transaction closing.

About Healthcare Community Development Group, LLC (HCDG)

HCDG is a nationally-certified Community Development Entity (CDE) and a wholly owned subsidiary of SSB Solutions, Inc. SSB Solutions is a healthcare specialty consultancy that has served clients in 49 states in over 150 markets for the past 20 years.

HCDG is the only national CDE exclusively focused on helping healthcare organizations reduce growth investment costs using the New Markets Tax Credits program. The company is a leader in setting the pace of helping not-for-profit, community-based healthcare systems use both tax-exempt bonds and NMTCs as their funding strategies.

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