A rural city in western Kansas sold $108.3 million in bonds to finance construction that will triple the size of its hospital.
The bonds, issued by the city of Colby, mature on July 1, 2026, and pay interest at 5.5%. The securities did not receive a rating. Because of that, the bonds are believed to bear interest at higher rates than comparable rated securities, according to the official statement accompanying the sale of the bonds.
The bond proceeds will fund the construction of Citizens Medical Center, a 184,000 square foot hospital and rural health-care clinic that will replace an existing hospital operated by the same parent company, Citizens Health. The new hospital will be almost triple the size of the old one, according to the bond documents.
The issuance marks an unusually large sale for such a small city. Colby has a population of 5,624 people and encompasses just 3.3 miles in the high plains of rural western Kansas.
However, the bonds do not constitute a debt of Colby. Rather, they are special obligations of the city, payable by revenue from the lease to Citizens Health and additionally secured by a loan from the U.S. Department of Agriculture (USDA).
In 2022, USDA loaned Colby $108.3 million—the same total as the bond issuance—to help Citizens Medical Center expand. The funding is part of the USDA’s Community Facilities Direct Loan and Grant Program, which provides affordable funding to “essential” community facilities in rural counties.
“USDA is committed to ensuring rural Americans have access to reliable quality health care,” USDA Rural Development Kansas State Director Christy Davis said in a press release after USDA announced the loan.
Colliers Securities LLC served as underwriter on the issuance.