The System participates in the Section 242 Program which is a loan guarantee by the Department of Housing and Urban Development (HUD). The objective of the program is to facilitate affordable financing of hospitals for the care and treatment of persons who are acutely ill or who otherwise require medical care and related services of the kind customarily furnished by hospitals. HUD insures lenders against a loss on mortgages. The loans may be used to finance construction, modernization, equipment, or refinancing of acute care hospitals. (See Note 4 for the use of bond proceeds).
On December 8, 2004, the Louisiana Public Facilities Authority (the Authority) issued the Series 2004 Bonds, for which Baton Rouge General Medical Center (the Hospital), the mortgaged entity, is obligated. The mortgaged entity’s financial statements have been presented in the Consolidating Balance Sheets and Statements of Operations as Baton Rouge General Medical Center. Concurrently with the issuance of the bonds, the Authority entered into a loan agreement related to the bonds dated as of November 1, 2004, with Baton Rouge General Medical Center. Pursuant to this loan agreement, the Authority lent the proceeds of the Bonds to the mortgaged entity for the purpose of providing funds, together with other available funds for (a) refunding a $98.1 million capital expansion of the Bluebonnet Campus including capitalized interest during the construction period, (b) funding a debt service reserve fund, (c) retiring previously issued bonds, and (d) pay certain costs incurred in connection with the issuance of the bonds. To provide a source of repayment of such loan, the mortgage entity executed a mortgage note and mortgage. Payments on the mortgage note and the mortgage, together with other available funds, will be required to be sufficient to pay the principal of, premium, if any, and interest on the Bonds as they become due. HUD, acting by and through FHA, ensures the advances of funds secured by the mortgage pursuant to Section 242 of Title II of the National Housing Act. Proceeds from the Series 2004 Bonds were used to refund previous bond issuances that were obligations of the Hospital. Approximately, $96,894,000 of the proceeds of the bonds, together with other monies of the Hospital, was used to refund the Series 1989A Bonds, Series 1989B Bonds, Series 1992 Bonds and Series 1994 Bond, which were redeemed within ninety (90) days after the delivery of the bonds. On December 4, 2012, the Louisiana Public Facilities Authority Series 2004 Bonds were defeased and a new mortgage payable was issued. The proceeds of the mortgage payable were used for the purpose of advance refunding and defeasance of the nontaxable Series 2004 Bonds. The mortgage was attached to the 2012 mortgage payable at the defeasance of the 2004 Bonds. This mortgage payable was refinanced on September 1, 2019. On December 31, 2018, Wells Fargo Bank issued debt for which BRGMC is obligated. The proceeds of the Series 2018 Bonds were used in refunding previously issued bond series, together with providing funds for the construction of a neighborhood hospital in Ascension Parish. A mortgage reserve fund was established as a trust fund with a trustee. As of September 30, 2025, the fund had a balance of approximately $23,528,000, which is presented as a component of assets whose use is limited on the consolidated balance sheet. The related mortgages payable as of September 30th are summarized as follows (in thousands): Mortgage payable to Bank, original principal of $45,474,000 with interest rate of 4.74% per annum. Interest computed and payable monthly through April 2020. Beginning in May 2020, principal and interest payable monthly in the amount of $353,477, maturing May 1, 2035. Secured by building. Insured by HUD. Balance of $32,619 and $35,460 as of September 30, 2025 and 2024, respectively. Mortgage payable to Bank, with a principal balance of $129,158,260. Interest rate of 2.85%, principal and interest payable monthly in the amount $966,292, maturing on January 1, 2033. Secured by building. Insured by HUD. Balance of $76,259 and $85,596 at September 30, 2024 and 2023, respectively. Total of $108,878 and $121,056 at September 30, 2025 and 2024, repectively.