Nov. 14, 2012
County refinancing of Harborview building will save millions of dollars for UW Medicine
Lease payments for tenant at Patricia Bracelin Steel Building will be reduced by replacing old bonds
King County has saved UW Medicine about $1.1 million a year for the next 19 years, as a result of the successful refinancing Tuesday of the bonds for construction of the Patricia Bracelin Steel Building at Harborview Medical Center.
"The savings from lower interest rates on the refinanced bonds will translate to lower lease payments for UW Medicine, and support the long-term sustainability of health care services there," said King County Executive Dow Constantine.
"Taxpayers will save about $13 million in today's dollars from this bond sale. Low bond rates mean we save huge amounts when we refinance," said King County Councilmember Joe McDermott, who chairs the Budget and Fiscal Management Committee.
UW Medicine is the main tenant of the Patricia Bracelin Steel Building. As part of the refinancing, King County will assume ownership of the building and dissolve the non-profit entity that was created in 2002 to finance its construction.
The county received a total of ten bids to purchase the bonds. The winning bid was from Robert W. Baird and Company, a financial investment firm headquartered in Milwaukee. The county sold $41.8 million in bonds at an interest cost of about 2.4 percent. The final maturity of the bonds is in 2031.
The county's savings target for bond refinancing is typically set at 5 percent or more of the present value of the outstanding bonds. Tuesday's bond sale far exceeded this target, resulting in present value of the savings that were almost 24 percent of the outstanding bonds. This result was due to a combination of favorable market interest rates and the county's top level bond ratings.
The Patricia Bracelin Steel Building is located two blocks east of Harborview Medical Center. It is named for the former King County budget director, chief financial officer, and deputy county executive whose service to the people of King County spanned nearly 30 years. Steel died in 2002.
Harborview Medical Center is owned by the people of King County and managed and operated by the University of Washington through UW Medicine.