A groundbreaking type of funding is giving a boost to the new Fridley Medical Center, where construction began this month.
Rather than going to a traditional lender, the building's owners will sell shares to private investors in the municipal bond market, just as cities and counties do for roads and construction projects. It's something that private companies normally can't do.
But under $17 million in new bonding authority it received through the federal stimulus package, Anoka County will in effect transfer some of its bonding, or borrowing, power to the companies behind the $14 million project.
The hope is that investors will be drawn to the stability and return of the tax-exempt bonds, and that the owners, Multicare Associates and the Premier Medical Partners, will be borrowing at a fixed-interest rate that's two-thirds to half what of they would pay to a bank.
To qualify for this type of funding under the federal program, a project must meet these criteria: serve an economically stressed area; create jobs and economic development; improve access to health care; have regional significance and contribute to the tax base. Multicare and its partners will be responsible for repaying the bonds on time, with interest.
The partners are not receiving money from Anoka County, the feds or any other government body. The county simply is acting as a gatekeeper to determine which projects qualify.
The County Board and the Housing and Redevelopment Authority approved the project last month. The bonds will be sold in early January.
"This just fit every bit of the criteria, right down the line," said project developer Rod Lee. "It was almost like it was written for this project."
Seeking a ripple effect
The new facility will house Multicare's professionals in family, internal, pediatric, OB/GYN, occupational health, orthopedics, surgery and nutrition services; Minnesota Oncology and Allina's Virginia Piper Cancer Institute; a pharmacy; therapy and pain services, and more.
It's estimated that the project will preserve 175 jobs in Fridley and add 50 more doctors, nurses and other medical-related jobs. In addition, it will provide work for about 125 construction workers, who will make an average of $45 an hour, plus benefits.
An additional hope is that the project will create a ripple effect, said Cevin Petersen, Anoka County Finance Division manager.
"The whole purpose is to create jobs," he said. "It's the beginning seed of the whole area. Once one thing goes in there, normally there are tagalong businesses that come along."
Multicare CEO Jeannine Schlottman said the move and expansion allows the company to bring in more physicians and expand services to clients.
"We have been here for almost 50 years, and our patients all live in this area," she said. "We have a commitment to this city, to this community, for many, many years. We need to be accessible and we need to be convenient for them."
Multicare and Premier also co-own Blaine Medical Center and Roseville Medical Center.
The Fridley building is fully leased, although developers just broke ground on the project Dec. 16. That's unusual, even in a stable economy. Schlottman said the hope is that the building, near the intersection of 5th Street and Osborne Road NE., will open by fall 2010. The old building, farther east on Osborne Road, will be demolished. Both sites are part of Allina Hospitals & Clinics' Unity Hospital, Fridley campus.
A few other companies have expressed interest in the federal program, but the county has approved no other applications yet, said Karen Skepper, Community Development manager.
"Most everyone is currently looking at projects they have on the books from last year, and determining whether traditional financing or these new resources are a better use for them," she said.
The facilities bonds must be issued by Dec. 31, 2010.
Maria Elena Baca • 612-673-4409