Powell hospital board mulls West Park tax proposal

Posted 5/27/10

McMillan asked the board to continue that tradition by supporting West Park's bid in the August primary election to pass a 1-cent sales tax to help pay for expanding and updating its emergency room facilities at the Cody hospital.

That project, …

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Powell hospital board mulls West Park tax proposal


Cooperation between Park County's two hospitals was the focus of a presentation about West Park's capital facilities tax proposal at Powell Valley Hospital on Monday.“We rely on each other,” Doug McMillan, West Park's chief executive officer, told Powell Hospital District board members. “We already support each other.”

McMillan asked the board to continue that tradition by supporting West Park's bid in the August primary election to pass a 1-cent sales tax to help pay for expanding and updating its emergency room facilities at the Cody hospital.

That project, the second of a three-phase plan developed in 2005, is estimated to cost approximately $26.2 million.

Of that, the board plans to use $12 million in reserve money and $14.2 million raised through the proposed tax if voters approve it in August.

Phase one was completed last year with the completion of the new Cathcart Medical Center to move doctors' offices out of Coe Medical Center, which adjoins the hospital.

Space for expansion at West Park is limited, McMillan said.

“The only way we can go is up.”

A third renovation phase sometime in the future would relocate and update patient rooms at the hospital.

McMillan said West Park Hospital is 40 years old. Once all three phases are complete, “this will take us (through) another 40 years,” he said.

McMillan said a capital facilities tax isn't the traditional method for funding hospital construction, but it is a viable one.

“We are trying to set a precedent, and a good one,” he said.

McMillan said the West Park Hospital Board had considered several methods of raising money to pay for the emergency room expansion. Key among them were grant applications through the State Loan and Investment Board (SLIB), seeking federal dollars, attempting to pass a general obligation bond and a capital facilities proposal.

In the end, the capital facilities tax was the only method that seemed fiscally responsible, he said. SLIB money is limited, and federal dollars are not available. Raising the money through a 1-cent tax would take an estimated 31 months and would be paid for by people throughout the county, including visitors to Yellowstone.

That would save taxpayers money over the traditional method of raising money through a general obligation bond. A general obligation bond would have to be approved by voters in the hospital district and would be paid for by a property tax mill levy within the hospital district. Because it would take longer to pay off, the interest cost would be higher.

WPH board member Melissa Fraser said the board didn't feel right about obligating today's children to paying the extra $17 million it would cost in interest over 25 years through a general obligation bond versus a capital facilities tax.

Powell Hospital Board Vice President Mark Kitchen asked what plan B would be if the capital facilities tax proposal failed in August.

“There is no plan B,” Fraser said. “We talked ourselves out of a general obligation bond because it would cost $17 million more in interest.”

After West Park representatives left the room, Powell Hospital District board members discussed the presentation and what their response should be.

Some asked if it it was possible that raising the money through a property tax on the district would cost $17 million more than raising it through a county-wide 1-cent sales tax.

“Over 25 years, you bet,” said Board President Brent Foulger. But he questioned the need to extend payments over 25 years.

Rod Barton, Powell Valley Healthcare chief executive officer, noted that Powell Hospital District has had two general obligation bond issues passed by voters in relatively recent history, and both were paid off in 10 years.

Pat McConnell, chief financial officer, said Wednesday that the $17 million, 25-year figures were from West Park's first proposal in which the board planned to ask voters to pay $40 million for the emergency room project.

Later, that proposal was downsized to $14.2 million, with the project downsized somewhat and the hospital board applying $12 million in reserves to reduce the cost.

Using the new figures, a general obligation bond could be paid off in nine and a half years with an additional interest cost of just over $4 million more than through a capital facilities tax, McConnell said.

During the presentation, McMillan said he understands that Powell Hospital District has building needs as well.

McMillan said he and West Park Board members are prepared to help the Powell Hospital District board advance a similar capital facilities tax campaign in the future to pay for needed improvements at Powell Valley Hospital.

Kitchen noted that Powell Valley Hospital District has had a facilities plan in place to address building needs, such as additional operating room space, since 2003. The new Powell Valley Clinic building was the first phase of that plan.

“My question is, why aren't we doing this together?” he said. “That's the question I keep getting asked, even from legislators in Cheyenne, is, ‘Why aren't the two hospitals working together on this?'”

McMillan said the West Park board was told it needed to move forward quickly while discussions about placing a landfill capital facilities project on the ballot still were going on.

“We were ready to go, and you weren't far enough along the line to respond,” he said.

Powell board members noted later in discussion among themselves that McMillan's first contact with Powell Valley Healthcare came after West Park approached the county about its $40 million capital facilities tax proposal.

Kitchen pressed, “Your timeline predates your January presentation to the Park County Commission. It predates going to the Cody Enterprise. For weeks and weeks, perhaps months and months, you planned this.

“I can't predict what our response could have been (had McMillan approached the Powell board in the early stages of planning), but that is what I get asked all the time.”

Kitchen noted that the Powell district shelved plans for its multi-phase building expansion and renovation plan after building the new clinic in 2008 because of the declining economy.

“Would we have been ready? We would have needed to have that philosophical discussion.”

West Park Board Member Graham Jackson said, “We need to blur the line between Powell and Cody. If we win, we all win. We need to go forward and pledge to be better at communication.

“What we're seeing now is such a great opportunity for hospitals, and it doesn't stop there. It makes it easier for everyone, especially in a sour economy.”

In discussion later, Powell hospital board members noted that, even if West Park board members were sincere in their expressions of support for a future project for Powell Valley Hospital, there is no guarantee that actually would happen.

“We know that a current board cannot obligate a future board,” Kitchen said.

The board discussed what their response should be if West Park leaders asked them for an official response.

“If they call, say we wish we had been invited to participate with them,” said Powell Board Member Deb Kleinfeldt. If this proposal fails, “maybe in the future we can consider a joint project.”