Lee County hospital bonds: What the $200 million plan means for taxpayers

A public hearing at 3:30 p.m. today covers up to $200 million in bonds for a proposed Lee County hospital. Contracts obtained by The Albany Herald spell out the county’s role in the financing, including an estimated $1.8 million in annual payments.

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LEESBURG — Lee County has agreed to pay an estimated $1.8 million a year toward debt on a proposed acute-care hospital off Grand Island Drive, according to contracts obtained by The Albany Herald.

The public notice for that hearing says the bonds “would not constitute a debt or obligation” of Lee County or the state of Georgia.

That statement is technically accurate. But contracts provided by the county to The Albany Herald show Lee County has separately committed to a series of payments and other project costs, including an estimated $1.8 million annually toward one portion of the debt.

Here is what the documents say, what county officials have said, and what is still unknown going into the hearing.

What the Lee County hospital project would include

A new acute-care hospital on a 51.966-acre tract in the Grand Island area of Lee County.

The Hospital Authority of Lee County would issue the bonds but would not own or operate the hospital. MCLCG Inc., a Georgia nonprofit corporation, would own the land and facilities, while Peoples Health System LLC would manage day-to-day operations under a separate agreement.

The 2024 contract states this plainly: “The Hospital Authority will not have any responsibilities regarding the ownership or operation of the Hospital Project.”

Why ‘not a debt of Lee County and ‘backed by the county’ are both true

The financing comes in two pieces.

A 2024 intergovernmental contract among the county, the Development Authority of Lee County and the Hospital Authority describes an initial series of bonds — $128 million at the time — with debt service “payable solely from the revenues of the Hospital Project.”

It then describes a second series, $30 million, “which will be payable from payments made by Lee County.”

For that second piece, the contract says the county “will agree to pay the Hospital Authority amounts sufficient to enable the Hospital Authority to pay the debt service” under a separate agreement the contract calls the Bond Intergovernmental Contract.

So the bonds themselves are not county debt. The county’s promise to make payments on part of them is a county obligation, created by contract.

The contract puts a number on it: “The annual debt service payment on the Contract Backed Bonds is estimated to be 1.8 million annually.”

The document does not say how many years those payments would run.

Lee County Commissioner Billy Mathis has said roughly $170 million of the financing is expected to be insured by the federal government and carry no recourse, with about $30 million backed by the county. He said hospital revenues are intended to cover the county’s share and that $30 million is the county’s maximum exposure.

What the contract says about getting the money back

The county’s repayment is conditional, and it comes after the fact.

The contract says Lee County “may be reimbursed for all or a portion of the Contract Payments if the company has met certain financial tests (e.g., a rate covenant and a days’ cash-on-hand covenant) and the company has fully funded a working capital reserve, debt service reserve, and repair and replacement fund.”

In plain terms: the county pays, and is reimbursed only if the hospital meets financial benchmarks and fills three separate reserve accounts first.

Other county costs in the contract

The $30 million is not the only commitment the county made in 2024.

Upfront costs of $3 million to $4 million. The contract assigns these to Lee County, covering planning, design and financing expenses including architectural and engineering work. The county may be paid back from bond proceeds — but only if the bonds are issued, and only “with the consent of the owners of the bonds.”

Roads and utilities. “Separate and apart from the upfront costs, the county will pay the costs of installing utility lines to the real property and the costs of construction of public roads to provide access to and egress from the real property.” The contract sets no cap on that amount and provides no reimbursement for it.

Land transfer costs. The Development Authority currently owns the property, which it received by deed from the Lee County Parks and Recreation Authority in June 2020. Under the contract, it must convey that land to MCLCG Inc. within 10 days of a request from the company, free and clear of liens, with Lee County paying the costs of the conveyance. The contract does not state a purchase price.

Two costs the county does not carry: the project’s feasibility study and its Certificate of Need application or exemption. The contract assigns both to the manager, Peoples Health System.

What changed between 2024 and now

The 2024 contract anticipated $128 million plus $30 million — $158 million total. Today’s notice authorizes up to $200 million.

The county-backed share stayed at $30 million. The revenue-backed share grew by roughly $42 million. Federal mortgage insurance, which Mathis has described as covering about $170 million, does not appear anywhere in the 2024 contract.

The Sept. 8 vote

County commissioners amended the 2024 contract on Sept. 8. County Attorney Jimmy Skipper told the board the change was limited.

“The purpose of this amendment to that initial IGA is to simply change the proposed hospital location to the new location that is now being proposed,” Skipper said. “It’s a 51-acre tract out in Grand Island. That’s all it does.”

The amendment does only replace the property description. It states that every other provision of the 2024 contract “shall and do hereby remain in full force and effect.”

The site itself grew. The original contract described three parcels totaling about 29 acres. The replacement describes a single 51.966-acre tract.

What is still unknown

The Bond Intergovernmental Contract. This is the document that would actually bind Lee County to the payments. It was not among the records the county produced. 

The repayment order. Neither the notice nor the 2024 contract explains where the county’s payments fall relative to operating expenses, reserves and the revenue-backed bonds.

What secures the county’s payments. No document produced so far identifies which county revenue would be used if hospital income falls short.

Total cost to the county. With an estimated $1.8 million a year for an unstated number of years, $3 million to $4 million upfront, and uncapped road and utility work, the county’s full exposure cannot be calculated from the records released to date.

How to take part

The hearing is at 3:30 p.m. Tuesday at the Lee County Governmental Building, 102 Starksville Ave. N. in Leesburg. Residents may comment on the plan of finance, the issuance of the bonds, and the location and nature of the hospital facilities.

Questions residents may want answered: What county revenue stands behind the $1.8 million annual payment, and for how many years? What does MCLCG Inc. pay for the county land? What do the roads and utilities cost? And what happens to the $3 million to $4 million the county has already committed if the bonds are never issued?