Joshua Haiar/South Dakota Searchlight
A South Dakota bond authority has backed a plan to issue up to $1 billion in bonds — the largest financing package in the authority’s history — for Sanford Health to support its recent merger with Marshfield Clinic Health System of Wisconsin.
The South Dakota Health and Educational Facilities Authority voted unanimously Wednesday to authorize the bond package, allowing Sanford to refinance existing debt, pay for previously completed projects, and complete construction at hospitals and clinics in South Dakota, North Dakota, Minnesota, Wisconsin and Wyoming.
The authority is governed by a seven-member board appointed by the governor. The state created the authority in 1972 to issue tax-exempt bonds that help nonprofit hospitals and public universities borrow money at lower cost. Investors buy the bonds and earn interest as the borrower pays back the debt. The aim is to give South Dakota residents greater access to education and health care.
The tax-exempt status means those investors don’t have to pay taxes on the interest their bonds earn. That makes the bonds more attractive, in this instance helping Sanford borrow the money at a lower interest rate than they’d get from a bank.
Many of Sanford’s bond-funded projects are outside South Dakota, but the board is allowed to approve multi-state financing if part of the funding is used in-state, explained Dustin Christopherson. He is the assistant director of the authority and responded to South Dakota Searchlight’s questions via email.
Christopherson said the bond approval does not involve public tax dollars, and the state has no financial responsibility for repaying the debt. The authority does not lend the state’s credit to borrowers. Instead, it acts as a conduit, allowing Sanford to access the lower, tax-exempt interest rates.
Sanford officials plan to return to the board later with a request for up to $2.1 billion in longer-term financing that would replace the initial bonds and potentially cover more projects.