As Municipal Advisor to McKenize Health Sys, InnoVative Capital, LLC announces the successful execution and sale of $74.1 million, 27-month, tax-exempt hospital revenue loan anticipation notes.
SPRINGFIELD, Pa. and SANDUSKY, Mich., Oct. 22, 2025 /PRNewswire-PRWeb/ -- As Municipal Advisor to McKenzie Memorial Hospital d/b/a McKenize Health System ("McKenzie"), InnoVative Capital, LLC, announces the successful execution and sale of $74.07 million, 27-month, tax-exempt hospital revenue loan anticipation notes ("RLANs"). The proceeds of the RLANs will fund the construction of a new replacement hospital for McKenzie. The RLANs are secured by a take-out commitment from the U.S. Department of Agriculture ("USDA") to provide long-term funding through a 25-year Direct Loan at a ceiling fixed rate of 4.25%, which may decrease if market conditions contribute to lower USDA rates during the construction period.
The sale of the RLANs was made possible by the security provided through a USDA funding commitment, underwritten in concert with the state of Michigan, the national office of USDA, and supported by the State Director of Michigan and key USDA leadership in the Community Facilities Program. Of particular importance was the transactional oversight provided for the RLANs by the Michigan Finance Authority, which issued the notes. Loan proceeds will fund the construction of McKenzie's new hospital, an 18-bed, 68,000 square foot facility on a greenfield site, and the purchase of a new CT scanner. Johnson Johnson Crabtree Architects P.C., based out of Nashville, Tennessee, designed the facility, and Doster Construction, with headquarters in Birmingham, Alabama, will construct the new hospital.
Located in "the Thumb" of Michigan, the city of Sandusky is 88 miles north of Detroit. McKenzie's current facility was built in 1967 and has provided healthcare services to 39,000 people in their Primary Service Area for 58-years. The new hospital will maintain McKenzie's critical access hospital status and continue to be certified as a Level IV Trauma Center, offering a 24-hour emergency department, diagnostic outpatient services, and patient care through acute and swing bed programs.
At the groundbreaking on October 1st, Steve Barnett, President & CEO of McKenzie Health System, proudly declared to the crowd of local residents, staff, board members, and traveling dignitaries, "This day belongs to our community…we are building a hospital that keeps high-quality care close to home—today and for generations to come."
Upon issuing USDA's loan commitment and funding allocation to McKenzie, the U.S. Secretary of Agriculture, Brooke L. Robbins, released a statement, "This [project] represents a long-term investment in Michigan's Thumb, which is a crucial part of the state's agricultural economy. Providing quality, local health care is one of the cornerstones of restoring rural prosperity."
Alan P. Richman, President and CEO of InnoVative Capital, stated, "With the ongoing turbulence in the capital markets, InnoVative Capital is pleased that McKenzie has received a USDA Direct Loan commitment with a ceiling rate of 4.25%. We are hopeful that when the tax-exempt notes are refinanced with the USDA Direct Loan in approximately 27-months, McKenzie's permanent financing rate will be lower than 4.25%. This is because at any time prior to refinancing, USDA offers its borrowers the lowest quarterly published USDA Direct Loan rate during construction."
Mr. Richman added, "As McKenzie Health System is an independent rural critical access hospital, the path toward financing was long and tedious, but the leadership and board remained steadfast in their desire to increase quality and healthcare services for their community. Through the determination of everyone over the last three years [leadership, project team, finance team, and the rural development office of USDA], we developed and executed the financing of a right-sized project: a new state-of-the-art replacement hospital. This will enable McKenzie to prosper and transform lives for decades to come. InnoVative Capital looks forward to seeing McKenzie's long-term success."
The Construction Financing and USDA Direct Loan
The construction loan for the project was funded with the proceeds of $74.07 million, tax-exempt Revenue Loan Anticipation Notes ("RLANs") issued by the Michigan Finance Authority. The proceeds of the MIG-3-rated, 27-month certificates will fund construction of McKenzie's new hospital, as well as a nine-month stabilization period. Upon no later than the maturity date of the certificates, pursuant to the USDA funding commitment, a USDA 25-year Direct Loan will retire the RLANs.
About InnoVative Capital
Founded in 2000, InnoVative Capital maintains a national hospital financing and advisory practice as an SEC-approved Municipal Advisor, USDA banker, FHA mortgage lender and hospital turnaround consultant. With a specialty focus serving rural hospitals and their communities, InnoVative Capital works to plan, structure, and execute financings to modernize rural healthcare delivery through transformative capital projects.
About McKenzie Health System
McKenzie Health System is a nonprofit, nonstock corporation that owns and currently operates a 25-bed critical access hospital, four provider-based physician clinics, and local outreach specialty clinics in and around Sanilac County.
Media Contact
Alan Richman, InnoVative Capital, 1 6105432490 101, [email protected], www.innovativecapital.com
SOURCE InnoVative Capital
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