In an email exchange with Somervell County Commissioner Mike Ford last month, he said:
I have never (nor has the Court) loaned money to the Glen Rose Medical Foundation. We (the County) are building and own the capital assets.
Yet according to this Notice of Public Hearing on page 5 signed by Somervell County Judge Walter Maynard, it is a loan to the Glen Rose Medical Foundation. The specific wording is:
Notice is hereby given of a public hearing to be held by the Commissioners Court of Somervell County, Texas (the 'Issuer') on March 24, 2008 at 12:00 Noon, at the County-Distrcit Courtroom of the Somervell County Courthouse Annex, Glen Rose, Texas, with respect to an issue of certifications of obligation (the 'Certificates') to be issued by the Issuer in an aggregate face amount not to exceed $14,500,000 and the proceeds of which will be loaned to Glen Rose Medical Foundation, a Texas Non-Profit Corporation, to finance the construction, expansion, rehabilitation, renovation, and improvement of the Issuer's County-owned hospital, property and equipment to be located at 1021 Holden Street, Glen Rose, Somervell County, Texas (the 'Project'). The Project will be operated and managed by the Glen Rose Medical Foundation, Inc.
In fact, if it were just expanding the building the county owns they would not need public notices...but because they are LOANING money to a private entity, they HAD to have the hearings. In fact at the bottom of the notice, it says:
This notice is published and the above-described hearing is to be held in satisfaction of the requirement of 147(f) of the Internal Revenue Code of 1986, as amended, regarding the public approval prerequisite to the exemption from federal taxation of the interest on the Certificats.
If you review the Internal Revenue Code, Section 147, it states under (f):
(f) Public approval required for private activity bonds
(1) In general A private activity bond shall not be a qualified bond unless such bond satisfies the requirements of paragraph (2).
(2) Public approval requirement
(A) In general A bond shall satisfy the requirements of this paragraph if such bond is issued as a part of an issue which has been approved by—
(i) the governmental unit—
(I) which issued such bond, or (II) on behalf of which such bond was issued, and
(ii) each governmental unit having jurisdiction over the area in which any facility, with respect to which financing is to be provided from the net proceeds of such issue, is located (except that if more than 1 governmental unit within a State has jurisdiction over the entire area within such State in which such facility is located, only 1 such unit need approve such issue).
(B) Approval by a governmental unit
For purposes of subparagraph (A), an issue shall be treated as having been approved by any governmental unit if such issue is approved—
(i) by the applicable elected representative of such governmental unit after a public hearing following reasonable public notice, or (ii) by voter referendum of such governmental unit. (C) Special rules for approval of facility
If there has been public approval under subparagraph (A) of the plan for financing a facility, such approval shall constitute approval under subparagraph (A) for any issue—
(i) which is issued pursuant to such plan within 3 years after the date of the 1st issue pursuant to the approval, and (ii) all or substantially all of the proceeds of which are to be used to finance such facility or to refund previous financing under such plan. Now the County has an obligation to pay back that loan at either 20 or 25 years but the GRMF is getting a 40 year payback plan. I wonder how Somervell County Commissioner Mike Ford can still think this is not a loan.
