The half-cent sales tax that was voted on by Madison County residents in November 2006 is here to stay until at least 2054. This is because to obtain the $22,540,000 needed to construct the hospital, Madison County pledged the half-cent sales tax to pay back a 40-year loan from the USDA for that amount. Also there have been other expenses in this process.
The collection began in October 2007 and to date the tax has collected 4,109,782.94. Some of the funds were expended for financial studies, purchase of the land and closing short-term loan.
In 2010, the County paid $1,007,573.50 out of the tax revenue to purchase the land that the hospital resides on. The hospital was audited by the Agency for Health Care Administration and had to correct certain deficiencies identified during the audit. The proceeds from this sell provided the hospital with funding needed to sustain operation.
In 2013, the County paid $1,229,391.17 from the tax to Raymond James Morgan Keegan Investment Company to close a short-term loan to construct the hospital. USDA was to be the ultimate lender for the construction of the hospital. But, USDA has a policy that it will only loan money for completed projects. Therefore, the hospital had to borrow the $22,540,000 in construction costs from Raymond James to construct the hospital and ultimately get the USDA financing.
The hospital was recently completed and the USDA closed its loan to the hospital. The proceeds of the loan from USDA were used to pay off the short-term loan to Raymond James. The loan from USDA is a 40-year loan; payments for which will begin Sept. 1, 2015. The payments on the USDA loan will be made by the County paying in the yearly proceeds of the half-cent tax and the hospital paying the remainder. For the first two years, the USDA loan payment will be to pay off just the interest, which will be $901,720. The payments after that will be to pay interest and principle. According to the USDA, the payment for 2017, 2018 and 2019 will be $1,164,121. The yearly proceeds of the half cent sales tax are approximately $530,000, so the hospital will be responsible to pay the difference to the USDA every year.