CPGH expansion bid hits snag

Posted: Wednesday, June 11, 2003

Central Peninsula General Hospital's bid for expansion faced its first obstacle Monday evening.

The hospital's service area board, the governing body of elected community members who sign off on the actions CPGH management takes for the borough-owned facility, was scheduled to vote Monday evening to recommend the expansion measure to the Kenai Peninsula Borough Assembly. Different language in the original measure and the one voters could see, however, gave the board reason for pause.

Last month, the CPGH Inc. board -- the governing body for the nonprofit organization that runs the hospital -- approved a resolution that would eventually ask taxpayers to vote for a bond referendum this fall to fund a $49.9 million hospital expansion project.

But service area board members identified conflicts between the wording of the original measure regarding the tax levy the bond would create and the semantics of the ordinance to be introduced to the borough assembly next week.

Based upon estimates from both borough and hospital officials, the wording from the initial resolution called for a mill rate hike of "approximately 0.5" over a 20-year term. The borough ordinance, as currently written, reflects a much different figure, however.

The exact phrasing of the ordinance says voter approval will authorize "an annual tax of approximately $121," based on $100,000 of assessed real and personal property value. This would be represented by about a 1.22 mill increase to a hospital service area mill levy already scheduled to increase to 0.5 in July.

CPGH Inc. board president Diana Zirul said the ordinance to go before the assembly was written assuming the hospital would not be able to contribute to repaying the bond debt. She said based on hospital earnings projections from increased patient services, however, CPGH Inc. would be able to tow some of the financial responsibility.

"The ballot initiative will go out as 1.22 mills as a worst-case scenario," she said. "But we're not anticipating more than 0.5 mill because we're anticipating growth."

Service area board member Kathy Phillips said she supported the bond initiative but said the mill levy wording was not being forthright to voters.

"If I'm looking at this as a voter, I'm thinking, 'that's not even close to $50 (the equivalent of 0.5 mills)," she said. "It's our responsibility to taxpayers, and I'm not comfortable with (recommending) this without the worst-case scenario written in."

Hospital CEO David Gilbreath referred the service area board to a copy of the South Peninsula Hospital bond referendum that will go to a special ballot session this summer, saying the wording is standard, regardless of how much the hospital intends to contribute to repayment.

"Jeff (Sinz, borough finance director) said this is boiler plate language," Gilbreath said. "And Homer's not asking the voters to repay the bond."

The service area board elected unanimously to table a decision on recommendation until they could receive written clarification from both the borough finance office and from the CPGH Inc. board.

"I'm looking at this as a voter, and they tell me my taxes are going to increase to approximately $121?" asked service area board member Adel Clark. "It could be $150, or it could be $101."

During public comment, Kenai resident Glenn Schrader expressed how he felt the current letter of the measure would fare at the polls.

"If the ordinance went out as it is, it's definitely going to fail," he said.

Sinz said the borough had a statutory requirement to inform voters of the full potential of the tax impact, not of what tax levy is anticipated.

"The rules surrounding general obligation bonds say you can't present your forecasted tax levy," he said.

The ordinance will be introduced to the borough assembly Tuesday before going through two mandatory public hearings to meet the Aug. 19 deadline for balloting. But Gilbreath said it would help to have the service area board's written approval.

"We wanted to be able to have it on paper that it's supported by the service area board," he said.

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