Tucson - University Medical Center plans $75 million bond issue

By Stephanie Innes
ARIZONA DAILY STAR 4/30/09

University Medical Center will ask the Arizona Board of Regents today to authorize $75 million in financing to help pay for capital projects, including its new children’s medical cen­ter.

The state will not be re­quired to pay any money. The non-profit hospital needs the regents’ approval to do any tax-exempt borrowing, said UMC’s chief financial officer, Kevin Burns.

Burns said the amount of fi­nancing could wind up being less than $75 million.

The money is needed to fin­ish the Diamond Children’s Medical Center, he said, and for other projects, including extra parking for the hospital’s patients and its 3,600 employ­ees.

Burns said UMC “wrestled quite a bit” over borrowing money in a slumping economy. “We’d been planning to go for more than $100 million in bonds, and had the economy moved along more robustly, we would have gone ahead,” he said. “But we’ve already com­mitted to the children’s hospi­tal. Regardless of the economy — even more so with the chal­lenging times — we want to make sure children have access to the best care.”

UMC has an annual operat­ing budget of $510 million, and its finances have tightened re­cently.
UMC’s capital projects

• Diamond Children’s Med­ical Center — The top three floors in a six-story tower on the UMC campus dedicated to children. Among the planned additions are a dedicated chil­dren’s emergency department, a new pediatric cancer and bone marrow unit, extended­stay intensive care for long­term patients, and a children’s classroom. Future plans call for a children’s operating room.

The center is slated to open in 2010. The total cost is esti­mated at $50 million to $55 million, with an estimated $35 million set to come from the bonds it plans to sell. Develop­er Don Diamond already has pledged $15 million.

• Arizona Hematology On­cology — The oncology prac­tice, at 1892W. Orange Grove Road, joined forces with UMC in 2007 to expand cancer care to the Northwest Side, Marana and Oro Valley. The bond money includes $5.2 million to reimburse UMC for acquiring the practice.

• Catalina off-site parking garage — UMC bought the Catalina Theater at East Grant Road and North Campbell Av­enue for $3 million, primarily for its 200-space garage. There are plans to use the theater for teaching or offices. UMC plans to pay back the purchase price with bond money.

• Hospital parking garage — Plans for a 1,000-space park­ing garage on the UMC campus were put on hold when the economy took a downturn. But about $1.9 million of the bond money is slated to go for the garage’s infrastructure, archi­tect renderings and other plans.

• Buying property next to the north campus of the Ari­zona Cancer Center for future expansion — an estimated $800,000.

• Other improvements and bond reserves — $27 million issuance costs.

“We’d been planning to go for more than $100 million in bonds, and had the economy moved along more robustly, we would have gone ahead.”
Kevin Burns, UMC’s chief financial officer


Contact medical reporter Stephanie Innes at 573-4134 or sinnes@azstarnet.com.