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Tuesday, Jan 22 2013 12:00 AM

Groundbreaking for new hospital set for March

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Project Manager Stacy Pray reviews options with the Hospital Board before their decision. Photo by Ed Gordon/Tehachapi News

Anonymous donors may help with $1 million in funding

Preparations are underway for the long-awaited groundbreaking for a new Tehachapi Hospital, tentatively set for March 28.

At its Jan. 16 meeting the Board of Directors approved moving forward with an $87 million building project, awarded initial bids and considered how to deal with a funding shortall.

Previously, voters in the Tehachapi Valley Healthcare District -- which encompasses the Greater Tehachapi area -- have approved the sale of $58 million in bonds to build a new hospital ($8 million in 2004 and $50 million in 2009). However, delays in construction -- partly attributable to litigation filed in 2011 just before a ground-breaking was to be held -- resulted in costs going up so that the board was recently faced with considering options for scaling back the construction project.

But hospital officials are confidant that they can make up the difference -- through financing or other funding.

CEO Alan Burgess told the board he recently met with a couple who have offered to donate $1 million towards the construction of the facility.

"It's a viable real offer towards construction," he said. "The only thing they have ask is that we guarantee we're going to build it and that we keep their names and information anonymous."

The all-inclusive option that was approved by voters -- a 25-bed hospital with surgery, maternity and an administration building -- will cost $87,052,000, including equipment, board members were told.

Moving forward with this -- Option 1 -- was approved by the board.

Chief Financial Officer William Van Noy reviewed the potential profitability of each option for the years indicating the Option 1 would provide a projected $1.7 million in profit in in 2016, and as services ramp up in 2017 the profit would be $4.1 million, and 2018, $5.5 million.

"Even with the debt service, we're still profitable to the tune of about $2 million plus in 2018," Van Noy said. Van Noy suggested to the board that Option 1 was the most viable option as we're able to build everything , its profitable in the third year , we don't have to worry about building out any of the services at a higher rate.

The board discussed the options and determined that for licensing purposes and issues that could require returning to OSHPOD (the state licensing agency for hospitals) for additional approvals it was best to go forward with the full complete project in a single action.

While the decision to go forward the entire project will leave the district needing to find an additional $6.5 million in construction short fall funding by the end of 2015. Van Noy indicated he felt he would have no problem in finding the funds and is currently in contact with several banks regarding this funding.

Following the decision to build out the entire hospital the board approved 28 bid packages totaling $48,710,111 for construction. Eight additional bid packages will be released in the future. Work is scheduled to begin in February.

The board also reviewed four lease proposals to finance the equipment necessary to provide the expanded services that will be provided in the new hospital. All of the companies assured the board that they were qualified for the funding, around $13,000,000, and it was just a matter of determining the final needs and the timing of when the money would be needed.

Following the meeting Burgess said,"I am thrilled with the board's decision to go ahead and construct the whole facility as designed. I greatly appreciate their courage, fortitude and their trust. Perhaps now, at long last, we will be able to get started on building the hospital the taxpayers approved and that this community desperately needs. Work on the site will begin before, but we are tentatively scheduling our formal, public, groundbreaking ceremony for March 28."

In other action the board elected officers for 2013. Dr. Sam Conklin was elected as president, Dr. Gary Olsen, vice president, Dr. Kim Horowitz, secretary, Duane Moats, treasurer, and Henry Schaeffer, sergeant at arms.

The board also appointed previous board member William Steele to continue to represent the hospital on the ALPHA Board and appointed him to fill a vacancy on the New Hospital Oversight Committee that is a watchdog of the bond funds.The board also received the district's 2012 audited financials

The next regular meeting of the board is scheduled for 6 p.m. Feb. 20 at the Golden Hills Community Services District building, 21415 Reeves Street.

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