Penticton hospital tower could ring in at $123 per household for 20 years

Artist's conception of a new patient care tower at Penticton Regional Hospital.
— image credit: Submitted photo

Paying off the local share of Penticton’s new hospital tower could cost the average household about $123 a year when the building opens, according to a set of budget projections unveiled Thursday.

The board of the Okanagan-Similkameen Regional Hospital District on Thursday began considering payment models for the project, for which it has pledged a 40 per cent share equal to $120 million.

Although the district expects to end the 2013 fiscal year with $32 million tucked away in reserves for the tower, it’s still awaiting a funding commitment from the B.C. government.

Most directors who spoke on the proposed funding models did so in favour of an arrangement that would see $60 million drawn from reserves in 2018 at the anticipated end of construction and the remaining $60 million funded by debt.

Under that model, the annual cost to the average household within the region would rise from $87 this year to $155 by 2018, which would cover the cash portion.

The district would then embark on a 20-year effort to pay off the loan and rebuild reserves. That would cost the average household $123 per year in 2019, rising to $151 by 2038.

Such an arrangement would be easiest to explain to the public, said Tom Siddon, the director for Okanagan Falls-Kaleden.

“I think we should look at this as a young couple buying a mortgage on a house,” he said. “That’s a simple model everybody knows. It flattens the burden. Anything that gets closer to $100 a year for the next 25 years is what I would recommend.”

Wes Hopkin, a Penticton city councillor and director, suggested funding 40 per cent of the cost from reserves, and agreed on the need for a longer payback period.

“I think 20 years is just too short. It should be much closer to the life cycle of the building,” Hopkin said.

Allan Patton, the director for rural Oliver, suggested paying just a third of the cost upfront.

“Let’s say we went to $40 million through reserves and then borrowed the rest, which is $80 million, that’s a 33 per cent down payment, and that’s pretty good,” he said.

Patton made a motion to adopt the model for planning purposes, but was trumped by a motion put forward by Oliver Mayor Ron Hovanes to defer discussion to the next meeting.

“Can someone please tell me the urgency of this?” Hovanes said. “To me, this is going to be non-binding to a board two terms down the road.”

Bill Newell, the district’s chief administrative officer, said afterwards he thinks a funding decision on the tower is “imminent,” since the project is being considered during the provincial budget process.

He said even though the business case for the tower is not yet completed, provincial planners have numbers they can use as placeholders in the budget.

The hospital district on Thursday also gave first reading to its 2014 budget, which includes $1.1 million to fund a 40 per cent share of Interior Health’s planned capital spending plan for the region.

Construction projects include $200,000 replacements of chillers at hospitals in Oliver and Princeton, and a $150,000 upgrade of bathing equipment at Trinity Care Centre in Penticton.

The biggest-ticket items are purchases related to the overhaul of two radiography rooms at Penticton Regional Hospital with a total cost of $1.9 million.

Smaller equipment purchases at all facilities in the region are expected to total just shy of $1 million.


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