Carbon works to preserve credit rating

A bad reporting item with a $20 million loan that Carbon County took out on behalf of Blue Mountain Health System nearly three years ago could have negatively impacted the county’s credit rating, officials said.

But quick action by the county and its financial adviser helped resolve the issue before that could happen.

On Thursday, the commissioners voted to amend the agreement with Zelenkofske Axelrod LLC for financial consulting services for the year. The contract increased $10,350 to $90,850 for additional services relating to the county’s guarantee of the Carbon County Hospital Authority bond issue.

County solicitor Daniel Miscavige said that a few months ago the rating agency Standard & Poor’s notified the county of possible negative reporting items from Blue Mountain Health System at some point in the past year and as the guarantor of that loan, it could have affected Carbon County’s AA rating.

“Jeff (Weiss of Zelenkofske Axelrod, the county’s financial planner) got involved and did an excellent job getting through the very complicated system, dealing with not only Standard & Poor’s but also Blue Mountain, St. Luke’s, the merger and everything else and got it resolved,” Miscavige said. “Standard & Poor’s were satisfied and this will not impact the county in any way.”

“We were very much concerned about that because there is likely a point in time when the county will need to borrow or do a bond issue and it could have cost us a lot of money, and a lot more money than it took us to basically defend the position,” Commissioner William O’Gurek said.

Officials said that Standard & Poor’s wanted proof and an explanation as to who would be responsible for the debt that Carbon loaned on Blue Mountain Health System’s behalf in 2015.

“The answer to that is St. Luke’s,” O’Gurek said, adding that a recent report stated that St. Luke’s credit rating has increased. “The bottom line is our bond rating remains the same and St. Luke’s is doing fine and on solid ground.

“We’re glad it is behind us.”

Commissioners’ Chairman Wayne Nothstein said that the county and Weiss worked to resolve the issue for about three months.

“We were quite worried for some time,” he said.

“$10,000 may look like a lot of money on paper but it was well worth it in the end,” Commissioner Thomas J. Gerhard said.

In November 2015, Carbon County agreed to act as the guarantor for Blue Mountain Health System’s $20 million loan.

The loan was used to fully fund the hospital’s Gnaden Huetten campus’ frozen pension fund, which was underfunded by approximately $16 million.