Lancaster Pollard Obtains $55 Million for Iowa Replacement Hospital
SIOUX CENTER, IOWA. (Dec. 3, 2012) – Lancaster Pollard, a national investment banking and mortgage banking firm headquartered in Columbus, Ohio, led the team that structured the financing for a $55-million replacement facility for Sioux Center Community Hospital & Health Center Avera, in Sioux Center, Iowa. Construction began this summer and the new hospital is scheduled to open in early 2014.
Located in northwest Iowa in Sioux County, the Sioux Center Community Hospital is a 21-bed critical-access hospital (CAH) that was named one of the Top 100 Critical Access Hospitals by the National Rural Health Association in 2011. It provides comprehensive health-care services, including: a cardiac center, home health and hospice, family medicine and specialty clinics, obstetrics-gynecology care, occupational and physical therapies and emergency and urgent care.
The current hospital was built in 1951 primarily as an inpatient facility and underwent a major renovation and addition in 1983. The existing building, however, is outdated by today's standards and not large enough to accommodate the increasing demand toward outpatient services. The hospital's leadership decided to build a replacement hospital to provide needed health-care services to local residents and increase its competitive advantage in attracting patients, physicians and staff.
Sioux Center Community Hospital then acquired property in the city's east side to accommodate the new medical campus' needs and be easily accessible by the county's residents. The replacement facility will be a state-of-the-art hospital and health center that will enhance the overall patient experience and expand services in the area.
"Our current facility, built in 1951, was designed for inpatient hospital stays, but 75 percent of the care we provide is for outpatients," said Kayleen Lee, chief executive officer for Sioux Center Community Hospital & Health Center Avera. "To provide modern healthcare for the community, we intend to offer more outpatient and ambulatory services as well as specialty clinics. This new state-of-the-art facility will do just that well into the future."
The four-part financing structure included:
- A $26-million direct loan from the U.S. Department of Agriculture (USDA) Community Facilities program
- $10 million in tax-exempt bonds
- $8.5 million in donations and pledges raised from the community; $3 million was raised in cash, a local bank provided a bridge loan of $5.5 million to cover the pledges
- $10.5 million from Sioux Center Community Hospital and Health Center.
According to Quintin Harris, a vice president for Lancaster Pollard at its office in Lawrence, Kan., the successful funding strategy for the replacement hospital project resulted in a blended interest rate of 3.78 percent for 30 years. It also leveraged strong support from the people and businesses of the Sioux County community, including the local banks.
"Not only did the financing achieve an extraordinarily low cost of capital, it showcased how the Sioux Center Community Hospital gained the commitment of the USDA, the local community and investors to be able to build the planned medical campus," Harris said. "Additionally, the replacement hospital project will provide 150-200 construction jobs as well as preserve the hospital's current employee base of 468 jobs."
For more information about the Sioux Center Community Hospital financing, visit www.lancasterpollard.com/hospital-financing.aspx.
About Lancaster Pollard
Lancaster Pollard helps health care, senior living and affordable housing organizations expand and improve their services by providing financing solutions. The firm offers a full range of investment banking, mortgage banking and investment advisory services and has one of the largest groups of financial professionals dedicated to health care in the country. As a leading underwriter of bonds and mortgages, Lancaster Pollard has earned a reputation for delivering sound financial advice and the most cost-effective financing options available in the market.