Stern Brothers & Co. still interested in local facility


A Chicago-based investment banking firm expressed their interest in financing the $57 million proposed hospital along Christopher Road in Belen, which may include start-up costs.

A Chicago-based investment banking firm expressed their interest in financing the $57 million proposed hospital along Christopher Road in Belen, which may include start-up costs.

Belen City Councilor Jerah Cordova told the governing body Monday this was an exciting and hopeful sign the city received from Stern Brothers & Co.

"I think it's the closest we have ever gotten to having a hospital under construction because we have a commitment in writing — an interest in writing from a reputable financing firm," Cordova said.

Cordova received the email from Stern Brothers Managing Director Arlan Dohrmann, stating financing for a proposed Valencia County hospital would be available. The company came to this conclusion upon their review of the financial feasibility study, completed by Ameris Management Services, LLC.

The study found a hospital with 28 medical/surgical beds and 12 geriatric psychiatric beds, along with basic medical/surgical services, diagnostics and a 24-hour level one emergency service, would be "a financially viable endeavor."

A 90,000-square-foot hospital of this scope is estimated to cost $57 million to develop, construct and open.

"We note in our view that the Ameris study provided additional verification of the market need for a new hospital accessible to residents of Valencia County," the letter states.

Stern Brothers previously said they were interested in financing the project when Valencia Health Commons was in charge of undertaking the hospital project.

Through conversations with Dohrmann, Stern Brothers, which would act as investment banker and bond writer for a hospital revenue bond issue, indicated they are interested in financing the full $57 million price tag attached to the proposed hospital, Cordova said. This may include financing for start-up costs.

However, financing for the hospital would be dependent upon Valencia County commissioners writing a "contractual commitment" to transfer mill levy funds for operation upon substantial completion and opening of the proposed hospital to an existing nonprofit organization tasked with owning, maintaining and operating the hospital.

"Thereby providing investors certainty of sufficient funds to begin the operation of the hospital," the letter states.

Cordova said this commitment of mill levy funds is key.

Stern Brothers highlighted four points that supported their conclusion of the feasibility study, including that the hospital would be built on city-donated land with Interstate 25 access, the joint powers agreement between the city and county outlining an overall structure and terms of hospital ownership, that Valencia County voters authorized property taxes to be collected in support of hospital operations and the commitment of the mill levy funds.

The study's results are based upon the assumption county officials would release mill levy funds for operating expenses of the facility at the beginning of construction, such as start-up and operational costs.

Valencia County attorney Adren Nance told the News-Bulletin in April that the mill levy funds can only be used for operation and maintenance of an existing hospital in Valencia County.

A proposed joint powers agreement submitted by Belen to county commissioners states the mill levy funds will be transferred to the nonprofit upon receiving a certificate of substantial completion for a health care facility on the Belen site.

The organization can use the money for "operating, equipping and maintaining" the hospital, the contract states.

Stern Brothers representatives said they will be ready to move forward with financing after the establishment of the nonprofit following the joint powers agreement, according to their letter.

In the email, Dohrmann told Cordova the proposed Valencia County hospital "is the most needed hospital in the U.S."

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