$9.5M Wasilla bond to fund Anchorage, Sutton clinics

WASILLA — The Wasilla City council voted this week to approve the issuance of $9.5 million in tax-exempt municipal bonds to fund non-profit health clinics, city officials said.

Under the terms of Resolution 14-40, approved by the city council Monday evening, the bonds will be issued and then immediately purchased by Wells Fargo Bank. The city will then loan that amount to the non-profit Southcentral Foundation, which already operates a primary care clinic in Sutton, as well as clinics in Anchorage and Wasilla.

The arrangement essentially creates a bank-backed loan with the city’s municipal bonds providing a cheaper rate for Southcentral than it would be able to obtain in public markets. For the issuance, the city receives a $25,000 impact fee.

The city’s credit rating isn’t at risk in the event of a default, according to supporting documents written by city officials.

“If Southcentral defaults on its loan and, in turn, there is a payment default on the bond, Wells Fargo has no recourse against the City, but must look only to Southcentral to recover its investment,” an unsigned, unaddressed supporting document reads in part.

Southcentral approach-ed Wasilla after the Muni-cipality of Anchorage and the Mat-Su Borough, two more likely entities to back the loans, each hit a federal $10 million limit on tax-exempt bond issuance for the current year. The Mat-Su Borough also has endorsed the Wasilla plan.

The city has a history with Southcentral, said finance director Troy Tankersley.

“We have a prior relationship with them in the past,” he said. “Southcentral approached us. This wasn’t something the city had gone after.”

The bulk of the money — about $6 million — will serve to refinance the association’s Fireweed Mountains Building at 4341 Tudor Centre Drive in Anchorage, which presently provides ophthalmology and dental services on an outpatient basis, foundation officials said.

The remainder, about $3.5 million, will go toward building a new facility for the foundation-operated Life House Clinic in Sutton.

The bond sale represents a cost-saving measure for the foundation, according to Lee Olson, the foundation’s vice-president of finance and chief financial officer.

City officials were receptive to the proposal, in part because the $10 million limit resets at the beginning of 2015, making October the ideal time for tapping the unused municipal bond reserve, Olson said.

“They might have been unwilling to do it earlier in the year,” he said.

The Life House Clinic, which serves as a joint venture between Southcentral and the Chickaloon Village Traditional Council, currently contains only two rooms. The proposed clinic would provide radiology, a wellness center, and other services, according to Janette Anderson Moores, a spokeswoman for the Foundation.

Contact Brian O’Connor at 352-2269 or brian.oconnor@frontiersman.com.