By Pepper Parr
July 8, 2015
BURLINGTON, ON
The Joseph Brant Hospital tag team paid a courtesy call on Council earlier this week and chit chatted about how things were coming along on the construction site; updated council on where things were with the community portion of the $120 million we have to come up with to get that refurbished hospital, large parts of which will be brand spanking new, top the point where people can use the place.
Annissa Hilborn and Eric Vandewall, she of the Hospital Foundation and he of the hospital itself, also left the city with a document that set out when and how much of the $60 million city taxpayers have been putting into a reserve fund for that rainy day when the hospital comes looking for a cheque.
The purpose of the meeting was to approve the amendments to the City’s Contribution Milestones and authorize the Mayor and Clerk to execute the amending agreement.
Most recent rendering of the Joseph Brant Hospital showing the bridge from the garage.
In July of 2012, Council approved a Contribution Agreement that had the city contributing $60 million towards the purchase of eligible equipment costs.
At the time there was a bit of a squabble on how the city was going to give money to the hospital. They, the hospital, wanted the city to pay for building the parking garage which Councillor Taylor objected to – unless the city was going to get the parking revenue. That idea didn’t fly.
They eventually settled on the city agreeing to pick up the tab for up to $60 million in equipment costs.
The initial cash flow from the hospital represented the their preliminary estimate of the equipment needs and cash flow requirements over the life of the JBH Redevelopment Project prior to the award of the construction Contract to Ellis Don Infrastructure JBH Inc.
The revised schedule is now reflective of the equipment purchases required to align with the construction schedule of Ellis Don Infrastructure JBH Inc. which includes the opening of the new tower in 2017. The equipment requirements for the hospital fiscal years 2015/16 have decreased by $10.1 million. In 2016/17, the equipment requirements have increased by $22 million from the original contribution agreement. These changes are consistent with the construction project schedule and the requirement to acquire furniture, fixtures and equipment and install the same prior to the opening of the new tower in 2017.
The new tower will include a new Emergency department, three medical/surgical floors, a new ICU, new OR’s and day surgery and ambulatory care including a new Ophthalmology Clinic.
The comparison of the Revised Contribution Milestones is provided below:
2016 is going to be a crunch year – the hospital wants a lot of the money then – and we don’t have it – so we borrow – hoping that interest rates remain low.
The change in the cash flow advances the amount of debt required, but given the current favourable interest rates, the revised cash flow reduces the total levy and the length of time for the dedicated hospital levy from $62.1 million (19 years) to $59.5 million over 17 years.
The original cash flow is set out below
The revised cash flow means the city doesn’t have to borrow quite as much as it would have under the original flow.
The Contribution Agreement requires that JBH provide a Milestone Notice to the city at least three months in advance of each contribution date. This is critical in 2016 as this is the largest payment requiring a significant amount of debentures through the Region of Halton.
Each notice must contain:
• A statement confirming the application of all installments previously provided by the city to eligible costs
• A statement confirming the amount contributed by the Foundation to Local Share Plan Costs at that time (the agreement stipulates that the cumulative city contribution is not to exceed the amount contributed by the Foundation)
• A statement confirming the application of any unused funds from any prior city installment together with interest earned
• Any unused funds together with interest earned shall be used on account of the next city installment.
The city’s $60 million contribution is made up of cash payments totaling $24.1 M and debentures of $35.9 M. Debt repayment (principal and interest) amounts to $41.52 M (10 year debt at 1.951% for the 2015 issue and an assumed 3% for the 2016 debt issue). All cash and debt repayment is funded by the dedicated tax levy for the hospital.
It’s great to read Burlington tax payers will save $2.6 M.
Interesting to note 2018 is an election year in Burlington.
The same year the hospital levy and in turn the city budget would have been reduced by $1.3 M.
I guess it will easier to keep any tax increase lower during an election year when you start with a budget that is $1.3 M higher.