New hospital ‘by the numbers’

By John Rech news@theeveningtimes.com

Baptist Hospital officials presented a deal to the Crittenden County quorum court for a new hospital during the last meeting of the year. It was a just in time measure with a new one percent sales tax slated to begin collection on New Years Day. A memorandum of understanding was approved between the county and the hospital system for a brand new Baptist Memorial Hospital Crittenden County building. No site has been selected. Baptist will make the real estate purchase subject to quorum court approval and told justices West Memphis is the intended target for the new building. Executives delineated the costs for the project to a packed courtroom Dec. 18. The one percent sales tax is expected to generate $30 million. As plans begin, language in the tax needs to be redirected to authorize a new hospital building project. Verbiage to match the scope of the new building project will be on the ballot during the primary election so the county will not incur the cost of another hospital tax vote. Twice already, county voters have approved the one percent tax with 85 percent of the votes in favor sustaining a hospital in the county. Revenue from the 5-year tax will fund bonds for construction costs and other separate expenses. “To give you a snapshot, the building is itself is 50,000 square feet would cost about $16 million,” said Dick Cowart making the presentation for Baptist. “Equipment would cost $3 million. The land cost would be about $1.5-2 million with 4.4 million in working capital.” Qualified hospital construction contractors will be invited by Baptist through a request for proposal process. Construction should take 18 months from groundbreaking. Those numbers add up to $25 million with expected tax revenue of $30 million. Michael McBride of Stephen’s inc. explained the bond to the Quorum Court. He compared it to a home loan. “When you hear the word bond, just think of it as a loan that has been broken up and sold to different entities,” said McBride. “It’s no different than a home loan. You have a revenue stream and a construction need. Like a home loan you don’t want your mortgage to be exactly what your mortgage is. This sales tax is bringing in $30 million, and that is why is the bond issue isn’t for $30 million.” McBride set the basis for the bond issue and how the county would cover the bond payment. “In the last 12 months, you’ve been pretty good generating almost $6.8 million on that (one percent sales) tax. We feel this tax will grow or level off. We used 6.3, the average for the last six years, for our analysis. We need to reduce your payment to what is actually coming in, that is called coverage.” “So the additional that flows in, about $1.3 million (annually) is what can be used to make equipment purchases. That’s how we arrived at the $25 million bond. This will generate $22 million in construction funds in the five year tax time frame.”

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