New York Hospital Refunds $5.8 Million of Tax-Exempt Bonds via FHA Program

WELLSVILLE, N.Y.  (Dec. 18, 2013) – Jones Memorial Hospital, located in Wellsville, N.Y., recently refunded $5.8 million in tax-exempt bonds with the assistance of Lancaster Pollard, a national investment banking and mortgage banking firm headquartered in Columbus, Ohio. The transaction, led by Tom Grywalski, a vice president with the firm, reduced the hospital's interest rate by more than half.

"We wanted to take advantage of the low interest rate environment to refund our HUD-insured bonds," said Tracy Gates, Jones Memorial Hospital's chief financial officer. "By reducing the interest rate, we positioned the hospital to be financially stronger in a health care environment that is uncertain, especially for community hospitals."

The nonprofit independent hospital wanted to take advantage of low interest rates and refund tax-exempt bonds insured by the U. S. Department of Housing and Urban Development (HUD) / Federal Housing Administration (FHA) Sec. 242 mortgage insurance program, originally used to fund an expansion in 1991. In addition to lowering the hospital's interest rate, the note modification transaction allowed for the release of more than $600,000 in previously restricted cash, thereby increasing the hospital's financial flexibility.

"The FHA loan modification program has faster processing times, because the existing mortgage insurance can remain intact," said Grywalski. "In other words, a borrower doesn't need to seek credit reapproval from HUD officials. Utilizing this program, Jones Memorial Hospital was able to cut its interest rate in half and improve its cash position, both essential variables when managing risk and protecting independence."

Jones Memorial Hospital, located in southwestern New York, is a 70-bed acute care facility serving all of Allegany County, as well as western Steuben County, and northern Potter County, Pennsylvania. The full-service hospital provides inpatient care, surgical services, orthopedics services, emergency care, cardiopulmonary services, medical imaging, maternity care, laboratory services, nutritional counseling, women's health services, and rehabilitation services.  The hospital also has a diabetes clinic and sleep center, along with several outpatient primary care clinics.

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.

For more information about Jones Memorial Hospital's transaction and other hospital financings, visit