Press Release


For More Information Contact the NJHCFFA
Communications Department:
609-292-8585 X142
For Release: December 29, 2006

CONTACT: Stephanie Bilovsky
PHONE: 609-292-8585
Date: December 29, 2006




(Trenton) Today, the New Jersey Health Care Facilities Financing Authority (the "Authority") closed a $15,000,000 transaction on behalf of Somerset Medical Center. The proceeds will refinance a portion of a construction loan that was incurred to finance a three-story Cancer Center and medical office building on the Medical Center's campus. The proceeds will also finance or reimburse for other costs related to the project.


This transaction is uniquely structured with an interest rate that is tied to a taxable rate barometer. More specifically, the initial rate was pre-determined to be set for ten years based on the tax-exempt equivalent of a fixed rate equal to 210 basis points over the monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of ten years. The rate will then reset at five-year intervals until maturity in 2032. The formula yielded an initial interest rate of 4.42%.


The project's funding is structured in a way that all of the Authority bonds can be tax-exempt by delegating all of the taxable areas of the project to be paid for by the Medical Center's own equity contribution. In addition to chemotherapy and radiation therapy services, the new facility will provide space for a laboratory, a pharmacy, a breast center, a salon, a gift shop, physician offices and a walkway to Somerset Medical Center. The Medical Center's equity contribution will fund those latter portions of the project that may house for-profit activities, as well as costs of issuing the bonds.


The Authority is the primary issuer of municipal bonds for New Jersey's health care organizations. Created in 1972 by an act of the Legislature to provide not-for-profit health care providers with access to low-cost capital, the Authority's statutory powers were expanded in 1998 to include financing for all health care organizations or components thereof. During its 30+-year history, the Authority has issued over $12 billion in bonds on behalf of over 140 health care organizations throughout the state.