Sunday focus: Hospital deal depends on MDA approval
Published 12:01 am Sunday, June 8, 2014
NATCHEZ — The pending sale of Natchez Regional Medical Center hinges in part on the Mississippi Development Authority giving the sale a nod as an economic development project.
The county-owned hospital and health care chain Community Health Systems are in negotiation to finalize the sale, which includes a base sale price and a significant pre-payment of ad valorem taxes.
CHS has signed a letter of intent agreeing to the principle of the sale — the price and tax pre-payment — but the final, binding agreement for the process has not been inked as CHS continues its due diligence work onsite and Adams County waits for approval of the sale structure from the MDA and federal bankruptcy court.
The reported price for the hospital is $18 million in total proposed consideration, with they buyer paying $10 million in cash $8 million in Natchez city and Adams County ad valorem taxes up front.
In order to facilitate the sale structure, the Adams County Board of Supervisors applied this week to the MDA for the sale to be considered a Regional Economic Development Act (REDA) project.
“The REDA allows multiple municipalities —cities and/or counties — to jointly apply for a designation that allows them to issue revenue bonds based on the anticipated future tax revenues of an economic development project,” MDA spokesman Jeff Rent said. “The bond proceeds can be used to build or improve infrastructure needed for the project, and the taxes collected from the project are used to service the debt on the bonds.”
Traditionally, REDA applications involve new companies and a commitment from local governments to do something like build a warehouse or a new road, hospital attorney Walter Brown said.
The key difference in the NRMC application from most REDA applications is that it will be using the tax dollars to pay off existing bonds, Adams County board attorney Scott Slover said.