Commissioners OK Tax-Exempt Financing Through Hospital Authority for Ongoing Mount Nittany Building Projects

Mount Nittany Medical Center will use tax-exempt financing through the Centre County Hospital Authority for two building projects following approval by the county Board of Commissioners on Tuesday.

The Hospital Authority will issue a series of notes not to exceed $150 million for Mount Nittany’s nearly completed patient tower at the medical center and a new medical office building in Bellefonte, which recently broke ground, representatives for the authority and the health system said.

“It’s the tail end of the tower, which is opening at the end of this calendar year, and repaying us back some invoices that were already issued and paid, and then the new project that we just broke ground on and had a celebration the other week in Bellefonte,” Bryan Roach, Mount Nittany Health chief financial officer, said. “Those would be primarily the two big projects.”

Tom Schrack, solicitor for the Hospital Authority, said the dollar figure is a “top-line ceiling authorization” and does not necessarily mean the full amount will be used. The financing does not use any county or state funds, and Mount Nittany will be responsible for the payments.

The arrangement, known as a commercial paper program, is a “a fairly common approach for healthcare,” Schrack said.

The Municipal Authorities Act requires the local governing body to determine that authority financing for a hospital project “will further the health, safety, and welfare of the community,” Schrack said.

“We confidently submit that it does, because it does provide a flexible, low-cost project for the health system,” Schrack said. “…The idea, of course, would be to lower costs for healthcare.”

Internal Revenue Service code also requires the governing body to issue a Certificate of Approval for tax-exempt financing.

A federally required Tax Equity and Fiscal Responsibility Act (TEFRA) hearing was held on Sept. 2, and the Hospital Authority subsequently held two public meetings to consider the project, giving approval on Sept. 25.

Schrack said he expects the authority and Mount Nittany to close the deal in mid-October.

The financing comes as Mount Nittany faces a projected $15.1 million in annual losses in Medicare reimbursements from the cancellation of its sole community hospital status, according to recent court filings. Sole community hospital status provides higher rates of Medicare reimbursements and other financial protections because they are in geographically isolated areas with limited other options.

The medical center is suing the federal government over the loss of the designation, contending that the Center for Medicare and Medicaid Services wrongly combined data to determine that Penn Highlands State College, which opened in 2024 as a campus of Penn Highlands Huntingdon, is a “like hospital” in the same geographic area.

Loss of the funds would put at risk Mount Nittany’s plans to expand services, recruit and hire new physicians and nurses, and improve facilities and equipment, Kurt Kissinger, chief strategy and system development officer, said in a sworn declaration.

Both of the projects for the new financing were in the works well before CMS revoked the designation in April.

Mount Nittany broke ground on the $350 million, 10-story patient tower in 2023 after years of planning. The health system also submitted land development plans in late 2025 for a new two-story 40,000-square foot medical office building next to its corporate office on East Bishop Street in Bellefonte.

The Board of Commissioners voted unanimously to approve the tax-exempt financing plan.

Commissioner Steve Dershem said that he would like to see future authority hearings on financing to be held at a county government facility.

“I think TEFRA hearings really are important, and they’re part of the whole conversation about what is good for the health, safety, and welfare of our citizens,” Dershem said.” And so I would really appreciate if we could be part of that conversation moving forward.

“But I am a big proponent of health care. I have always believed that more health care is better, and I think it’s great. I see the growth that Mount Whitney has experienced over my lifetime, when it started in this very building, and has grown to literally almost the four corners of this county. And it really means a lot that you folks have such a commitment to the healthcare needs of our citizens, and we applaud that and welcome whatever the next chapter leads.”