Published in the Iola Register on Feb. 5, 2013.

CCHC presents hospital proposal in public meeting

JAMESTOWN — A proposal by the Cloud County Health Center to construct a new hospital, partially funded by a three-quarter cent county sales tax, was presented to a  small group of people attending the first of several public meetings Monday night at the Jamestown Community Center.
Cloud County voters will decide in a special election on Feb. 26 whether or not to approve the sales tax proposal that would help fund $26,825,000 in construction costs for the new 70,000-square foot critical access hospital to be located next to the Concordia Airport.
If the sales tax is passed, the Cloud County Public Building Commission would issue $26,825,000 in revenue bonds to acquire the site and construct the new hospital.
The facility would be leased, through the county, to Cloud County Health Center (CCHC).
“What we are asking the public to do is a three-quarter-cent sales tax over the next 23 years. This is a special purpose, limited term sales tax,” Phil Gilliland, a member of the CCHC board of trustees, told those in attendance Monday night.
Gilliland said that the revenue generated from the sales tax increase could be used only to pay off the bonds.
The sales tax revenues would be used to cover approximately half of the bond payments. The remainder would come from the CCHC contribution/Medicare reimbursement.
Gilliland, following a presentation on the plans for the new facility, answered questions.
Gilliland was asked what years were used in estimating the sales tax revenue. He said that it was based on a 10-year period from 2002-2012.
The least amount of tax collections during that period was in 2003 at $1,040,462. The highest was in 2008, $1,383,525 during the construction of the wind energy farm.
Projected tax collections for 2012 is $1,316,906.
Piper Jaffray, which would manage the sale of the bonds, assumes a 1 percent growth in total sales. The average over the past 10 years has been 2.32 percent.
“If sales tax revenues go up more than projected, that money can only be used to prepay the bonds,” Gilliland said.
Dave Clemons told Gilliland that many of the area hospitals are concerned about Medicare and Medicaid payments, and that he would not like to personally pay for a new hospital.”The best chance we have of keeping it off of the tax rolls is using the sales tax,” Gilliland said.
Larry LeDuc told Gilliland that he has seen a cost of $29,825,000 in the paper, and asked about the difference in the two numbers.
Gilliland said that the $29,825,000 was with some add-ons if the money could be raised through other avenues, such as private donations or grants.
“The only way we would do this is if we raised enough money,” Gilliland said.
Approximately $800,000 has been raised through private donations.
The $26,825,000 plan calls for 21 beds. If money was available, an additional four beds could be added.
“It could allow us to do some things with the College,” Gilliland said.
Increasing the size of the dialysis room and adding an MRI are other possible additions.
“There will never be more than $26,825,000 in bonds.
LeDuc said the biggest concern he has heard about the project is the possible increase in property taxes if CCHC can’t make the bond payments.
“I am 95 percent confident of keeping it off the tax rolls,” Gilliland said.
Gilliland said there would be a cushion built in for bond payments. So if tax collections were lower than projected those funds could be used to make the payments.
“There should be at least a $500,000 cushion at all times,” Gilliland said, “If we can’t make payments, there will be options.”
Gilliland was asked about what would happen to the existing hospital building. He said that there have been some preliminary discussions with investors to repurpose the building, and that if a buyer could not be found, that it should come down.
The building sits on 10.3 acres of land.
A question was raised on the cost of a turning lane off of U.S. Highway 81 to the new facility.
Gilliland said that the $1 million cost was included in the bond.
Asked about the cost of equipment for the new facility, Gilliland said that there was $1.7 million included in the bond to cover those costs.
Gilliland was asked where the air ambulances that CCHC uses are based out of. He said that Life Star out of Junction City is used and that there have been conversations with the company about placing a fixed wing aircraft and a helicopter at the new facility.
Prior to answering questions, Gilliland gave a presentation on the existing facility and the plans for the new one.
The first hospital in Concordia was established in 1903 by the Sisters of St. Joseph.
The current four-story facility was built in 1951 by Sisters of St. Joseph through a capital campaign.
Ownership of the hospital was transferred to CSJ Health System, Wichita, in 1985 and then to Salina Regional Health Center in 1995.
CCHC became a critical access hospital in 2002.
In 2003 the hospital became a stand-alone nonprofit facility.
As of Sept. 11, 2011, the hospital has no long term debt except for equipment.
The current facility has 92,000-square feet of space, and the new facility would be 70,000.
“You lose 20,000-square feet of ineffective space,” Gilliland said.
Gilliland said that the current building has concrete pillars about every 10 feet, which makes remodeling difficult.
CCHC could be looking at nearly $6 million in lifesaving improvements that need to be made to the building such as sprinklers, fire escapes and wiring.
“We can go borrow money for the old building or build a new one,” Gilliland said.
Hospitals in surrounding communities rely on property tax revenues. In 2009, the hospital in Jewell County received 12 mills. Republic County is 4 mills, Clay 5.99 mills, Ottawa 4.968 mills and Mitchell 1.98 mills.
“That is what we are hoping to avoid. That is the goal,” Gilliland said.
Gilliland said that the construction of a new modern facility could increase business, but there is not a projection for growth in the project.
Should the project be approved, CCHC would make a $500,000 lease payment to the city of Concordia.
The City could then use those funds as a matching portion of a grant through the Federal Aviation Administration for $5,000,000 in improvements to the airport. That would include the construction of a new, longer runway that bigger aircraft could land on.
CCHC has already had discussions with doctors who may be interested in flying into Concordia to provide services if the facility is built at the Airport.
A new facility could also make it easier to recruit and retain new doctors.
The second public meeting was at noon today.
There will be meetings on Feb. 12 at the Wesleyan Church in Concordia at 7 p.m. and at the City Building in Miltonvale, also at 7 p.m.