NATCHEZ — The Mississippi Development Authority is expected to address a key component of the Natchez Regional Medical Center sale structure today.

As a part of its ongoing discussions with Community Health Systems for the ultimate purchase of the county-owned hospital, NRMC’s negotiating team has asked the MDA to consider the hospital sale an economic development project and therefore eligible for Regional Economic Development Act (REDA) status.

Hospital attorney Walter Brown said the MDA board should take up the issue today.

“When they take the action, it may include a request for additional information, it may be ‘We voted to approve it,’ and it may be ‘We voted to approve it with conditions,’” Brown said.

The board will meet at 2 p.m., and does not usually issue a statement about REDA decisions until it has drafted the certificate of public convenience that goes along with it, Brown said.

The word might come formally Monday, he said.

Brown had previously said the application would be considered June 17, but the MDA board’s meeting for that date was cancelled.

If approved, the REDA status will allow the hospital sale to function as a sort of reverse bond issue. The reported negotiated price for the purchase is $18 million total, with $10 million of the total being upfront cash and $8 million a combination of pre-paid Natchez city and Adams County ad valorem taxes.

The pre-paid taxes will be applied to pay off the bonds the hospital currently owes, approximately $14.52 million.

REDA applications are typically used for projects in which bonds will be taken out to build infrastructure as part of a wider economic development project. Previous Mississippi REDA projects include Trustmark Park and Bass Pro Shop in Pearl, and Renaissance in Ridgeland.

The county supervisors and the Natchez board of aldermen have both given their blessing to the arrangement, which will still have to be approved by the state Attorney General’s office and the federal bankruptcy court overseeing the hospital’s case. The attorney general’s office issued an opinion stating the offices’ non-objection to the arrangement at the county’s request prior to the filing of the REDA application.

NRMC Board of Trustees President the Rev. Leroy White said the hospital trustees would not be attending the meeting, but they would have legal representation there should any questions arise.

“We need to get that (application) through before we get the signed asset purchase agreement,” White said. “The closer we get to this, there is always one more piece of paper we need.”

The hospital has signed a letter of intent with CHS for the purchase, but the letter of intent is not in and of itself binding. The asset purchase agreement is, however, and Brown said getting the REDA agreement approved will help move the process forward.

“We still have a couple of issues left to be resolved, and they are important issues, but in my mind they are resolvable,” he said. “We are all making our best effort, both the buyer and the seller, to resolve those issues by July 3 to be able to have a document executed within the week.”

July 3 is when the bankruptcy court will address the bid process for how the hospital will be sold. Even though CHS will have negotiated a sale price and structure, by law the hospital will still have to go to auction.

At auction, CHS will be considered the “stalking horse” bidder, and the negotiated sale process will be considered the base bid.

In the bidding process the county supervisors approved earlier this month, a qualified bidder would have to outbid CHS by at least $1 million, and every subsequent bid would have to outbid the previous bid by $100,000.

The $1 million initial overbid requirement is to cover the cost of the stalking horse. In stalking horse agreements, the stalking horse bidder has a built-in financial incentive in case they are outbid, because of the presumed risk they are taking on by being the stalking horse.

Under the adopted rules, qualified bidders will have to be able to demonstrate they can take on the business of operating a hospital and have the capital to bring the NRMC facility up to standard and potentially replace it in the long run.

Once the court approves the bidding process, the board can adopt the finalized sale resolution — assuming at that time the asset purchase agreement has been completed — and the sale process can begin with an advertisement for bids.

Once the notice advertising the sale is published, county residents have the option of filing a petition asking to take the sale to a voter referendum for approval. The petition would require 1,500 signatures to take the matter to a vote.

If a successful petition is not filed, the hospital can go to sale without further objection.

NRMC opened in 1960 as Jefferson Davis Memorial Hospital. Its $2.4 million construction was underwritten by an $800,000 local contribution and state and federal funds.

It has been financially independent since 1974 and does not receive tax support, but is backed by a 5-mill standby tax that the Mississippi Development Bank required the hospital to get in 2006 when it asked for the MDB to reissue its revenue bond.

The hospital board of trustees announced in February its intention to declare bankruptcy, citing at the time a $3 million deficit between financial assets and liabilities.

The county supervisors appoint the hospital’s trustees and have to approve any final sale of the hospital.