House Ways and Means Committee Considers Proposals to Shake Up Muniland; Sanctuary LTC, Latest Round of Build Illinois Bonds Price

The House Ways and Means Committee discussed and approved popular municipal programs like Build America Bonds and advanced refundings during a mark-up this week for a $3.5 trillion budget reconciliation bill. The bill also contained a proposal to tax e-cigarettes and increase federal taxes on manufactured cigarettes. The increase in taxes on tobacco would have a negative effect on tobacco securitizations like Golden State Tobacco Securitization Corp. and Suffolk Tobacco Asset Securitization Corp.

After almost a year in the primary market, Sanctuary LTC finally priced late last week $504 million in debt, funding its acquisition of 26 continuing care retirement communities. The market first balked at the deal last summer, but Hilltop Securities was able to fill the book when it downsized the deal from an original $553 million.

Illinois priced the second offering of a $500 million sale, upsized to $530 million following demand for this week’s $363 million offer. The negotiated sale via Ramirez & Co. and Loop Capital came in at a premium and demonstrated overall tightening in the market from a year ago, Reorg reported.

If the Illinois bond sale was good news for a well-known problem credit, so was Detroit’s biannual revenue conference that disclosed a full recovery of employment to pre-pandemic levels. The biannual conference sets the total amount of revenue available over the next four fiscal years. This year’s September conference established an estimated $1.106 billion in fiscal year 2022 revenue, up 11.2% from the February conference.

Georgia Proton Therapy Center hired Kaufman Hall for financial advisory services ahead of the first testing period of its compliance with a debt service coverage ratio. It’s the third such an engagement for the Emory Clinic affiliate after engaging with Chartis Group and BDO Consulting. For the period ending Dec. 31, 2020, Georgia Proton’s DSCR was 0.13x.

Reorg began coverage of Moldaw Family Residences, a continuing care retirement community, or CCRC, based in Palo Alto, California, with $67 million in bond debt outstanding. Bondholders waived a requirement that the CCRC retain a consultant after it failed to achieve a minimum 1.25x debt service coverage ratio for the fiscal year ending June 30, 2021.

Other distressed municipal issuers that landed on Reorg’s radar this week include the Maryland Institute College of Art, or MICA, and the Saint Louis Community Ice Center, where the NHL’s St. Louis Blues practice.

MICA missed its debt service coverage ratio for the fiscal year ended May 31. The breach for the covenant governing $83.2 million in revenue bonds triggered a consultant call-in, but not an event of default. An event of default only occurs if it fails to meet the covenant again on May 31, 2022.

Meanwhile, the Saint Louis Community Ice Center had to draw on its debt service reserve fund for the third time, according to a Sept. 15 EMMA notice. UMB Bank hired Polsinelli after ARCO Construction Co. brought a mechanic’s lien lawsuit against the trustee, among others, related to the development of the facility earlier this summer.

Finally, in bankruptcy proceedings, Midtown Campus Properties received four letters of intent in excess of $100 million to purchase the debtor’s One College Park Project. A sale hearing will likely take place around Thanksgiving after the debtor selects a stalking horse bidder, sometime in mid-October.