Fiscal board approves $34.5 million Carolina bond issue for medical district expansion
By THE STAR STAFF
The Financial Oversight and Management Board has approved a proposed $34.46 million municipal debt issuance by the Municipality of Carolina to finance the construction of a new medical office building within the Carolina Medical District.
In a Nov. 6 letter to Vicky González Vega, interim executive director of the Fiscal Agency and Financial Advisory Authority (AAFAF by its initials in Spanish), the oversight board said it had completed its review of the transaction and granted approval under Section 207 of the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA).
The financing involves the issuance and sale of a $34.46 million Municipal General Obligation Note of 2026, Series B, to Oriental Bank. According to the oversight board, the proceeds will be used to develop and construct Medical Tower Building II, a four-story, 27-office medical building that will form part of the Carolina Medical District. The municipality also plans to use a portion of the proceeds, some $245,000, to cover issuance fees and closing costs.
The debt will be repaid through seven annual principal payments scheduled between July 1, 2027, and July 1, 2034, culminating in a balloon payment. The note carries a fixed interest rate of 6.15% if the transaction closes on or before Nov. 30 of this year. Should the closing occur after that date, the interest rate will shift to a variable rate equal to the seven-year U.S. Treasury note rate plus 1.90%, subject to a minimum rate of 6.15%.
Repayment of the debt will be backed by revenues generated from Carolina’s Special Additional Tax, or CAE as it is known by its acronym in Spanish.
The approval follows a Sept. 14 submission by the AAFAF requesting authorization for the transaction. In the letter, Oversight Board Executive Director Robert F. Mujica Jr. said the board appreciated AAFAF’s advance submission of the proposal and supporting documentation and looked forward to continuing its work with the entity and municipalities to advance the goals of PROMESA.
