Oct. 1 voters in the South Kenai Peninsula Hospital Service Area consider a $38.5 million bond to fund critical improvements to our hospital. For more information on the bond and mill rates, listen to the KBBI Coffee Table discussion on Sept. 4 at kbbi.org/show/coffee-table or go to www.1forlocalhealthcare.com/. The information in this POV is from these sources.
Our population is growing. The hospital is aging. The bond will fund projects expanding the hospital’s capacity to meet the health care needs of the community:
Adding nuclear medicine to better diagnose cancer, heart disease, Parkinson’s and other illnesses and keeping patients close to home for testing;
Expanding the oncology and infusion department to improve cancer treatment and keep it close to home;
Modernizing the hospital pharmacy to comply with federal rules;
Replacing aging and outdated equipment; and
Purchasing buildings — and the land they are on — that are currently leased by the hospital to ensure long-term savings.
It’s the last point that some people are primarily concerned with — the purchase of properties (buildings with the land they are on) adjacent to the hospital. This is the primary reason some people are saying the bond should not be approved — the purchase of three buildings that the borough currently leases: the Specialty Clinic (building where COVID testing was) and the Family Care Clinic, the Infusion Clinic, and the Reconstructive Surgery Clinic.
Purchasing these buildings would cost $13 million — about a third of the bond. The buildings are already leased. I’ve heard people say we shouldn’t pay such an outrageous sum.
Guess what? “We” (it’s all of us, the taxpayers) are already paying that and more through leases for the next 25 years. The owner gets the money no matter what. But if we buy these three buildings, we are done with leasing the property for the next 25 years and we will own something of value immediately.
People have suggested that we buy new land and build new buildings. There is no land available! And, even if it were available, to build new buildings is cost prohibitive and might require commercial lending — a significantly more expensive financing option.
Purchasing the existing buildings through a bond has an interest rate of only 3.5%. The commercial lending rate is currently 10 to 12%. Building costs have gone up, especially medical buildings. The leased buildings total over 15,000 square feet and it will cost well over $15 to $17 million to purchase new property — not available near the hospital — and then build new buildings and relocate our medical clinics into those spaces.
It is much more cost effective to purchase the existing buildings than to build new ones. The landowner has agreed to sell these properties — the land with the buildings — at a price based on the present value of future lease payments over the next 25 years. Having ownership and control over these buildings, including the land, will increase the hospital’s options for facility expansion and improvements.
And yes, the purchase price is above assessed values; let’s agree that no one sells anything right now at assessed values.
This purchase must be looked at from the view of what it would cost to continue to lease the buildings. We can spend $15 to $20 million to lease them over the next 20-25 years, or we can own them today and spend $13 million.
Having a vibrant, sustainable, locally owned and operated hospital that offers modern and relevant health care is important to me. Voting Yes on Proposition 1 supports a bond to meet the current and future health care needs of the southern Kenai peninsula.
Learn more at the Town Hall on Thursday, Sept. 12 at 5 p.m. at Christian Community Church on Bartlett Street.
Long-time resident Francie Roberts has served the community in a variety of ways — including the Homer City Council, the SPARC board and the South Kenai Peninsula Hospital Service Area Board. The opinions expressed here reflect her personal views and do not represent those of the Service Area Board.
