The Kenai Peninsula Borough Assembly introduced an ordinance Tuesday night that would ask central peninsula voters in October to approve the sale of $49.9 million in general obligation bonds to raise the money necessary to expand and modernize the 30-year-old Central Peninsula General Hospital.
Public hearings on Ordinance 2003-17 are set for the meetings of July 7 and Aug. 5.
Language in the ordinance envisions a property tax increase within the Central Peninsula General Hospital Service Area sufficient to repay the bond debt over 20 years. That could cost the owner of a $100,000 home $121 a year. However, an amendment expected to be introduced either July 7 or Aug. 5 will indicate that at least a portion of the debt would be repaid from hospital revenues, and that a property tax increase likely would be held to just a half mill, or $50 per year on a $100,000 home.
Nevertheless, the ballot measure, if approved by voters, would pledge the borough to pay the debt even if no hospital revenues are available, meaning the assembly would set the mill rate at whatever level was necessary. Without hospital revenues, the expected annual tax would be approximately 1.21 mills, or $121 on a $100,000 home, according to Borough Finance Director Jeff Sinz.
David Gilbreath, chief executive officer and administrator of CPGH, said he fully expects the bond measure to pass.
"I'm very confident that this will be supported because it's the right thing to do for the community and the taxpayers. It's a heck of a bargain," he said.
A half-mill increase to cover the bond debt would only raise the total mill levy for the hospital to 1 mill. The current tax is .4 mills, which rises to .5 mills July 1, an increase approved with passage of the fiscal year 2004 borough budget.
"That increase of a half a mill is going to allow the community to have a hospital that's going to meet its needs for the next 25 or 30 years," Gilbreath said during an interview Tuesday.
Gilbreath also said now is the time to build because bond interest rates are the lowest in 40 years, and that costs could increase significantly due to inflation if the project is delayed.
"The community needs to get their health care somewhere, and most residents from recent polls say they want to get it in the local community," Gilbreath said.
But it isn't the polls that lead him to believe a majority of voters will say "yes" come October.
"No, it's lots of things. A lot of it is from my going out and talking to the leadership in the community and talking to people at church and other forums, just the common man and woman on the street. They want to get their health care here," he said. "They don't want their family members to travel even 140 miles to get their care."
Few members of the public attended Tuesday's assembly meeting. Among those who did was Dick Bogard of Sterling, who called the project envisioned by promoters an unnecessary "Taj Mahal."
"The $50 million for the addition to the hospital at this time, or really anytime, I think is money we do not need to spend," he said. "We all like to have good hospitals and good places to stay, but let's face it, this is a small population area. We have a road, we have airplanes, we have helicopters for the real emergencies and most people take advantage of that."
Bogard said no matter how big the hospital gets, it won't attract doctors who can earn six-figure salaries in Anchorage.
"You may have a Taj Mahal of a building, but you're not going to have the people come into it," he said. "I think we have a fabulous hospital here now. We have good medical care; we have professionals here, but everybody is limited in what they can do and building a big building is not going attract the fantastic doctors ... there's not enough patients down here."
Gary Cadd of Kenai also said the cost was too high.
"When you're living on a hamburger budget you shouldn't be eating lobster," he said.
Gilbreath said the hospital has some of the best equipment in the state and in the northwest and does attract the best doctors in the state.
The October election will come during a time when the service area is facing some stiff economic realities, including the loss of major businesses such as Big Kmart in Kenai and cuts in state revenues to municipalities. Gilbreath said he expects to spend a lot of time talking directly to voters to ensure a favorable outcome this fall, pitching not only the availability of improved services, but the economic benefit of project dollars and subsequently, increases in wages and salaries, to the local economy that the expansion project will mean.
"We are trying to get out and inform the community at any forum," he said. "Any meeting that is willing to have someone from the hospital come, I am willing to go do that. I want to educate them and answer all their questions and make sure they understand it is a wonderful bargain."
Gilbreath also said the cost of medical services and procedures here are now and will remain competitive with those in Anchorage.
"Right now, we set our charges competitively and slightly less than the market in Anchorage, because we are subsidized by the taxpayers. We build that into our charge system," he said. "An appendectomy here will probably, most certainly be a little bit less than in Anchorage, and I would say, generally perhaps 10 percent less."
When he became hospital administrator about six months ago, the hospital's charge for MRI (Magnetic Resonance Imaging) services were significantly higher than those in Anchorage, while many other charges were significantly lower, Gilbreath said.
"We adjusted those prices. We brought down the cost of MRIs to slightly below Anchorage prices so we weren't driving our patients outside our market area, and those charges that were significantly cheaper than those in Anchorage, we did bump those up, but they are competitive and slightly less than you would pay in Anchorage on an average basis."
In other business, the assembly:
Introduced Ordinance 2002-19-44, which would authorize issuance of $14.7 million in general obligation bonds for the design and construction of the new Seward Middle School. Borough voters approved the sale of the bonds during the October 2002 municipal election.
Approved resolutions authorizing the award for contracts for upgrades to the Ninilchik Pool, classroom renovations for Soldotna Middle School, for upgrade and paving of the Nikiski Emergency Escape Route and for summer and winter road maintenance in the borough's central region.
Introduced Ordinance 2002-19-43 to accept and appropriate a Denali Commission grant of $993,000 for a fire station for Kachemak Emergency Service Area. A public hearing is scheduled for July 7.
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