ALLENTOWN, Pa. - The Lehigh County Board of Commissioners authorized the issuance of debt service to benefit a health care organization Wednesday night at the government center.
The approved resolution authorizes Monroe County Hospital Authority to issue bonds that would ultimately allow Lehigh Valley Health Network to sell various facilities to the Centurion Foundation, a non-profit group which specializes in executing and managing financial and operational transactions involving health care facilities.
Under the deal, LVHN will sell various buildings to Centurion, who will then lease the properties back to LVHN who will continue to operate them. LVHN will then use the money to pay other expenses, which include the upgrade, renovation, and expansion of other facilities.
The sale involves nine LVHN properties located in four different counties. Although the properties are in four counties, the deal is with the Monroe County Hospital Authority.
The deal with the county authority allows LVHN to avoid issuing direct debt in the bond market and to sell to a non-profit organization. The bonds will carry interest rates of about 5%, which LVHN will pay interest on in rent to Centurion, who in turn will then pay the debt service on the bonds. Lehigh County shares no obligation in repaying or covering the debt service, which rests with LVHN's ability to pay back the bond and the investors who are purchasing the bonds.
The measure approved by Lehigh County on Wednesday night allows debt service up to $160 million.
Three of the LVHN properties are in Lehigh County - 2024 Lehigh St. and 1628-1650 W. Chew St. in Allentown, and 1040 Chestnut St. in Emmaus.
Two properties in Northampton County - 2300-2310 Highland Ave. and 2030 Highland Ave in Bethlehem - will also be sold.
Two other properties are located in Monroe County - 600 Commerce Blvd. in Stroudsburg and 179 Independence Rd. in East Stroudsburg. The final location is in Luzerne County at 26 Station Cir. in Hazleton.
The property total is $160 million, with the 2300-2310 Highland Ave. property the most valuable at $44.5 million and the 1040 Chestnut St. property the least valuable at $4.5 million.
Earlier this month LVHN reached a formal agreement for a merger with Thomas Jefferson Health System based in Philadelphia. As part of the deal, LVHN will become the Thomas Jefferson Health System's northern division. Pending state attorney general approval, the deal is expected to close this summer.
"We are essentially supporting a bond for a non-profit," Commissioner Ron Beitler said. "...I personally am OK with this."
"I question whether this is desirable for the well-being of the community," Commissioner Jon Irons said. "...The Centurion Foundation is not based in the Lehigh Valley and this does raise some questions."
"The approval of the tax-exempt bonds will keep the space costs of LVHN lower than if the properties were owned by a property owner that was taxed," Chairman Geoff Brace said. "...That development is interesting and I'm not sure how I feel about it."
The resolution was approved unanimously.