On Oct. 7, voters living within the Central Kenai Peninsula Hospital Service Area will be asked to fund a hospital expansion and renovation project estimated at $49.9 million.
The project would be funded by general obligation bonds repaid by both Central Peninsula General Hospital and property owners. Hospital and borough officials predict the expansion will be a tremendous gain for central peninsula residents with minimal risk.
Based on the hospital's projected revenues, the expansion project will cost taxpayers approximately .5 mills or $50 for $100,000 of assessed property value over 20 years. This is in addition to the .5 mills service area residents currently contribute to the hospital.
In the worst-case scenario, if taxpayers had to shoulder the entire burden of the expansion project, the annual tax increase would be 1.21 mills or $121 for $100,000 of assess property value.
"That's assuming the hospital makes zero dollars over the next 20 years," said hospital CEO David Gilbreath.
The project includes renovating approximately 46 percent of the existing hospital and 74,000 square feet of new construction.
New construction would in-clude a two-story addition on the north side of the existing hospital. The project will increase the current 33 multipatient rooms with 50 single-patient rooms, and double the number of operating rooms and outpatient beds for procedures requiring fewer than 24 hours of recovery.
Kenai Peninsula Borough Mayor Dale Bagley said with the borough already contributing money to the hospital from the current half-mill rate, the hospital's history of financial success and prospects for future success, he sees no significant risk to voters.
"In the worst-case scenario, we would be stuck paying the 1.21 (mills) if the hospital just went away," he said. "But I don't see how that could happen."
Bagley pointed out that in 20 years, the hospital has recorded only one negative financial report. That came when an independent audit showed a $2.4-million loss in fiscal year 2002. Even that was bolstered by borough revenue and investments to reflect a net loss of $372,115.
"I attribute that bad year to the constant change of the hospital's chief administrative officer and chief financial officer," Bagley said. "I think the hospital finally got some steady leadership."
He said the South Peninsula Hospital Service Area recently reduced its tax levy from 2 mills to 1.75 mills and suggested that adequate medical care should be worth paying for.
"If you did have to pay more, how big of a deal is that?" he asked. "If the amount we have to pay for a decent hospital here has to increase, it's certainly not out of line with another place."
Gilbreath has been disseminating information about the plan to central peninsula residents since the borough assembly unanimously voted to add the proposition to the October ballot. He said many people he has spoken with welcome the expansion, but some believe a different funding mechanism should be used.
"I think the idea of a hospital expansion is a good one, and I think it will be needed in the future," said Mike McBride of Nikiski. "But I don't think the taxpayers should pay for it. They should fund it with a revenue bond."
While a general obligation bond, which is being proposed, is secured by the taxing and borrowing power of the municipality using it, a revenue bond would be supported by the project being proposed.
McBride, who is president of AlaskaVoters.org but said he was not speaking on the organization's behalf, said the hospital should be able to afford the venture without taxpayers' help.
"The hospital is making money and has been making money," he said. "If they looked at a revenue bond, it would cost the hospital and users of the hospital. It won't cost homeowners who are already paying for some of the costs of the hospital but may not be using it."
Gilbreath said hospital revenues alone would not support the project. He has said on many occasions since June that the proposition is taking advantage of cheap financing currently available.
McBride said the current economic environment is not healthy for increased taxation, however.
"Property taxpayers are being pushed and pushed and pushed," McBride said. "With the economy being as soft as it is, I'm really uncomfortable with the borough government looking for additional taxes."
Gilbreath said the facility will attract dollars outside the hospital as more services are able to come online there.
He said the community is growing and aging, requiring more health-care services. As the staff grows to provide those services, he said more people will come into the community with their families and circulate more dollars throughout the area.
"That half a mill by taxpayers is going to be a huge investment in the community," Gilbreath said. "In 1988, we had 205 employees. Right now, we have over 400 employees."
Kenai Peninsula voters will head to the polls Oct. 7 to fill assembly, school board, city council and service area seats. Three propositions also will face borough voters. Coverage this week will focus on the issues and the people running for office:
Today: Proposition 1: Kenai Peninsula Borough Trails Service Area
Proposition 2: Hospital Capital Improvements Bonds
Monday: Soldotna City Council candidates
Proposition 3: Seward-Bear Creek Flood Service Area
Tuesday: Kenai City Council candidates
Wednesday: School board candidates
n Thursday: Assembly candidates
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