BCC Agenda 02/13/2024 Item #16K 6 (Resolution - Request to issue revenue bonds to finance construction of the proposed NCH Heart Stroke & Vascular Institute)02/13/2024
EXECUTIVE SUMMARY
Request by the Collier County Industrial Development Authority for approval of a resolution authorizing
the Authority to issue revenue bonds to be used to finance the construction of the proposed NCH Heart,
Stroke, and Vascular Institute, the proposed NCH/HSS Orthopedic Center, and other capital projects.
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OBJECTIVE: To accomplish the necessary approvals to authorize a proposed revenue bond issue by the Collier
County Industrial Development Authority (the "Authority") to be used to finance the construction of certain
facilities at the NCH Baker Hospital campus (downtown) and the NCH North Naples Hospital campus.
CONSIDERATIONS: The Authority received an application for financing from Naples Community Hospital,
Inc., ("NCH") requesting that the Authority issue its revenue bonds the purpose of financing and refinancing,
including through reimbursement, (i) a portion of the cost of acquisition, design, construction, equipping,
furnishing, and/or expansion of the proposed Heart, Vascular, and Stroke Institute to be located on the NCH Baker
Hospital downtown campus at 350 7th Street North, Naples, Florida, (the "Downtown Campus") and further
described herein as the "NHI Project", (ii) the NCH/HSS Orthopedic Center (the "Orthopedic Center") to be located
at the NCH North Naples Hospital campus, 11190 Health Park Boulevard, Naples, Florida, and (iii) various other
capital improvements to the NCH Healthcare System facilities located at the Downtown Campus. the Orthopedic
Center and North Naples Hospital (collectively, "the Projects") (iv) the funding of capitalized interest for the
Bonds, if deemed necessary or desirable by NCH; and the payment of certain cost s of issuing the Bonds, including
but not limited to the premium for a new issue municipal bond insurance policy. A more detailed description of the
Projects is set forth below.
Background
Chapter 159, Florida Statutes, authorizes each county of the state to establish an industrial development
authority, and the Collier County IDA was created by the Board of County Commissioners in 1979. An IDA is
empowered under Chapter 159 to issue revenue bonds for a variety of projects and facilities, the developm ent of
which are deemed to foster a public purpose. Over the past 43 years, the IDA has issued bonds for private
educational facilities such as Community School and Seacrest Country Day School, manufacturing facilities such as
Gulf Coast American Blind Corporation and March Performance, Inc., retirement communities such as the
Arlington of Naples, and hospital and medical facilities such as for Naples Community Hospital as discussed here.
The Projects
The Projects for which the bonds are proposed to be issued include the following:
The NHI Project involves the construction of a 200,000 square foot five-story facility adjacent to the
existing Downtown Campus. It will contain public space, an auditorium, cardiac and vascular procedure space,
labs, operating rooms, physician and outpatient exam rooms, 54 inpatient private beds, and structured parking.
The Orthopedic Center includes the construction of a 92,000 square foot three -story facility at the North
Naples campus. It will contain an Ambulatory Surgery Center with operating rooms, physician offices and
outpatient exam rooms, physical therapy facilities, NCH Hospital surgery center with five operating rooms, 16
inpatient beds, and an imaging center.
The Projects also include other capital improvements to NCH's facilities at the Downtown Campus, the
Orthopedic Center and the NCH North Naples Hospital.
Plan of Finance
Philanthropic component. NCH has been, and continues to be, the beneficiary of substantial philanthropic support
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in the Naples and Southwest Florida community. NCH has received or reasonably expects to receive
approximately $265 million in philanthropic gifts for the Projects.
Bond Financing Component. The total cost of the Projects is approximately $375 million. The philanthro pic
effort is expected to cover $265 million leaving approximately $110 million to be covered by long term tax -exempt
financing through the issuance of revenue bonds by the IDA (the "Permanent Funding"). In addition, the timing of
receipt of existing pledges and prospective philanthropy, which is expected to occur through 2030, necessitates an
interim financing component to bridge the timing differences between the actual need for expenditures on the
Projects and the receipt of supporting gifts (the "Interim Funding") in an expected amount of approximately $65
million.
The IDA bonds will be issued in one or more series, including long-term fixed rate bonds and bonds with varying
interest rates and tender options or mandatory purchase provisions. The p roceeds of the sale of the bonds will be
loaned to NCH pursuant to loan agreements between the parties, and under the terms of a trust indenture between
the Authority and U.S. Bank Trust Company, National Association, as Trustee. The bonds will be publicl y offered,
and NCH expects to receive "investment grade" ratings from one or more of the major bond rating agencies. It is
expected that the bonds will be issued about March 31, 2024.
Authority Public Hearing/Findings and Determinations by the Authority
The Authority met on November 6, 2023, considered the application and supporting documentation, and
heard presentations from university officers and representatives. The meeting was noticed by publication in the
Naples Daily News in accordance with the regulations for such notice contained in the Internal Revenue Code,
inviting attendance, participation, and comments from members of the public. The meeting was also noticed
through a press release by the County's Public Information Office, and a notice of the meeting and the agenda were
placed on the Authority's page on the County website. No members of the public attended the meeting either in
person or remotely or submitted comments. At the conclusion of the public hearing and the presentations by NCH
the Authority determined to proceed with the financing and adopted a resolution evidencing such approval (the
“Authority Resolution”, attached as Exhibit A to the "County Resolution”). The notice published in the Naples
Daily News is attached as Exhibit A to the Authority Resolution.
As set forth in Chapter 159, Florida Statutes, in considering a bond financing application, the Authority
considers several factors as follows:
1. The project is appropriate to the needs and circumstances of the community and shall make a significant
contribution to the economic growth of the County; shall provide or preserve gainful employment; shall
preserve the environment; and shall serve a public purpose by advancing the economic prosperity, the
public health, or the general welfare of the State. With respect to NCH, the application and information
presented to the Authority shows the following:
A. NCH operates two acute-care hospitals in Collier County: a 391-bed hospital located in downtown
Naples ("NCH Baker Hospital") and a 322-bed hospital located off Immokalee Road near U.S. 41
("NCH North Naples Hospital"). The NCH System has a medical staff of over 880 physicians, and
has over 25 outpatient facilities and physician offices located throughout Southwest Florida.
B. NCH's primary service area is Collier County, and its market share, based on inpatient discharges,
averages over 60% over the past three years.
C. NCH has over 7,000 employees, (3347 full-time equivalent). It is the second largest employer in
Collier County (behind Collier County Public Schools), and accounts for 2.61% of total county
employment.
D. The NHI Project will (i) help NCH to provide better care for patients in one setting, (ii) offer the
latest in heart and stroke care so patients do not have to travel out of town for care, and (iii) help
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recruit leading heart specialists.
E. The issuance of the Bonds will advance the economic prosperity, the public health, and the general
welfare of the of the citizens of Collier County.
2. The financing agreement for the project is to be entered into with a party that is financially responsible and
fully capable and willing to fulfill its obligations under the financing agreement, including the obligations
to make payments in the amounts and at the times required; to operate, repair, and maintain at its own
expense the project; and to serve the purposes of the Act and such other responsibilities as may be imposed
under the financing agreement. The application shows that:
A. NCH is not and has not been in default on any previous tax-exempt bond obligation to the
Authority. The IDA has issued numerous previous bonds for NCH going back over 30 years, and
there have been no defaults.
B. NCH presented extensive financial data in its application. Responsible officers of NCH testified
that in view of NCH's financial condition it would be fully able to meet its obligations under the
bond financing agreements and to maintain NCH's facilities.
C. The most recent publicly offered bonds were issued in 2011 (since refunded) and had an
investment grade rating. NCH and its Financial Advisors for the 2024 Bonds expect a similar
investment grade rating. [Note: While NCH expects to receive an investment grade rating, Section
189.051 Florida Statutes requires that if bonds do not have an investment grade rating, they must
be consistent with the requirements of Section 189.051, which, in this case would mean restricting
the sale or private placement of the bonds to only accredited investors.]
3. Adequate infrastructure is available to enable responsible governmental units to cope satisfactorily with the
impact of the Projects.
A. Both hospitals are adequately served by existing infrastructure and there are no infrastructure
availability issues that adversely impact NCH's operations, nor do the Projects create any
infrastructure demand that is not accounted for and addressed.
B. The Orthopedic Center, located at NCH North Naples Hospital, is consistent with its zoning, and
no legislative zoning action is necessary. The NHI Project, located in the City of Naples, must be
rezoned. NCH's rezoning application, along with necessary companion petitions, was considered
and approved at first reading by City Council on January 18. The matter is scheduled to be heard
at second reading on February 7. If the zoning is not approved, bonds for the NHI portion of the
Projects cannot be issued until such time as zoning is received. However, NCH has informed the
Authority that there is a need to move forward with the financing for the remainder of the Projects.
Process and Procedure
Federal tax law requires two approvals for the issuance of private activity bonds. First, the Authority must
hold a public hearing, and must adopt a resolution in favor of issuing the bonds. Thi s was done at the conclusion of
the public hearing on November 6, as described above. Following this approval, the governing body of the
jurisdiction must also approve the bond issue. This does not have to be a specially advertised hearing but must be
done at a regularly noticed and held meeting of the Board. A Resolution for the Board to adopt (the "County
Resolution") is attached.
Bonds issued by the Industrial Development Authority are defined in the Internal Revenue Code as private
activity bonds. They are not County bonds and are not debt of the County but are payable solely by revenues
pledged by the financing documents between the Authority and NCH, and no other revenues of the Authority.
There is no pledge of any taxes, or a pledge of any County or other public revenues. Neither the County, the Board,
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nor any other governmental entity is liable for their payment. Further, both the Authority Resolution and the
proposed County Resolution expressly provide that approval by the Board does not abr ogate any County
regulations (or in the case of facilities located in the City, applicable City regulations) including land use
regulations.
FISCAL IMPACT: As explained above, the issuance of the bonds does not require any contribution from, or
create any payment obligation on, the Board of County Commissioners or any other County agency. On the other
hand, the continued successful operation, expansion and growth of the NCH system in Collier County has and will
continue to have a very positive fiscal impact on the County.
GROWTH MANAGEMENT IMPACT: The adoption of the attached resolution will have no adverse growth
management consequences. The existing NCH facilities were constructed in accordance with all City and County
growth management regulations, and were subject to the respective governments' LDC, the Growth Management
Plan, concurrency requirements, and the payment of impact fees where applicable.
LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney. Review of these and
similar bonds by the Governing Body is a statutory requirement and serves as a safeguard against the issuance of
inappropriate bonds, which is not the case here. The County has no liability, contingent or otherwise, with respect
to these bonds. With that noted, this item is approved as to form and legality, and requires majority vote for Board
approval. -JAK
RECOMMENDATION: That the Board of County Commissioners adopt the attached Resolution.
Prepared by:
Donald A. Pickworth, Counsel
Collier County Industrial Development Authority
ATTACHMENT(S)
1. Proposed County Resolution (PDF)
2. Exhibit A-Authority Resolution (PDF)
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COLLIER COUNTY
Board of County Commissioners
Item Number: 16.K.6
Doc ID: 27861
Item Summary: Request by the Collier County Industrial Development Authority for approval of a resolution
authorizing the Authority to issue revenue bonds to be used to finance the construction of the proposed NCH Heart,
Stroke, and Vascular Institute, the proposed NCH/HSS Orthopedic Center, and other capital projects.
Meeting Date: 02/13/2024
Prepared by:
Title: Legal Assistant – County Attorney's Office
Name: Wanda Rodriguez
01/31/2024 11:10 AM
Submitted by:
Title: County Attorney – County Attorney's Office
Name: Jeffrey A. Klatzkow
01/31/2024 11:10 AM
Approved By:
Review:
Office of Management and Budget Debra Windsor Level 3 OMB Gatekeeper Review Completed 01/31/2024 11:36 AM
County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 01/31/2024 2:34 PM
Office of Management and Budget Christopher Johnson Additional Reviewer Completed 02/02/2024 4:04 PM
County Manager's Office Amy Patterson Level 4 County Manager Review Completed 02/05/2024 10:26 AM
Board of County Commissioners Geoffrey Willig Meeting Pending 02/13/2024 9:00 AM
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