Case study: MS hospital can't use facility as financing collateral

Everyone's considering innovative moves to finance new construction, given the sharp limits on the bond deals that used to fuel many such deals. But recently, one hospital found that it wouldn't be able to implement one strategy it had in mind.

Neshoba County General Hospital and Nursing Home in Mississippi wanted to execute a deed of trust on the property that constitutes the hospital campus as a means of getting construction financing. The hospital wants to build a new 54-bed county facility, one option for coping with the fact that its main buildings are aging quickly. That could take as much as $100 million, trustees estimate.

However, plans to finance it by pledging land didn't fly with state officials. The state's Attorney General has just released a ruling that it can't get financing that way, saying that state law allows trustees of community hospitals to borrow against equipment and assets, but not real property.

To learn more about the ruling:
- read this piece in The Neshoba Democrat

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