Wednesday, Apr. 02, 2008

Oak Valley poll says voters support tax for hospital

Building costs prompt push for 2nd special tax

OAKDALE -- To ensure local access to lifesaving emergency and acute care, would you support raising your taxes?

It's hard to say no. Even in a tight economy, nobody wants to be without a safety net.

That's why when asked a similar, more in-depth question, about 70 percent of the 400 people called for an Oak Valley Hospital-funded opinion poll said yes.

Poll results have reassured hospital officials that when Oakdale, Knights Ferry, Valley Home, Waterford and Riverbank voters receive ballots in the mail this month asking them to add to their property taxes, the hospital will get the two-thirds vote needed to pass a $27 million bond called Measure O to build a new hospital.

The three-phase, $111 million project involves building a utility plant and hospital, demolishing the old hospital and paving a parking lot where it stands. The project has been under way for four years, but Oak Valley found itself in a jam when searching for a construction company to build the hospital. Bids came back much higher than estimated, reflecting increased costs for fuel and materials.

By the time companies started bidding on the project's construction work alone, hospital officials were seeing bids higher than what they originally thought the entire project would cost. In 2003, construction firm Turner Healthcare estimated the cost at $63 million. Hospital officials later began saying they wouldn't know how much it would cost until they had signed a contract for construction, which is the project's largest expense. Acme Construction Co. of Modesto won the contract for $66.5 million.

Of the $111 million cost, hospital officials estimate $90 million will go for labor and materials.

Asked how the money has been used, hospital spokeswoman Susan Mendieta said the hospital doesn't document spending line by line and receipts are not considered public record.

When completed in 2011, the hospital would stand two stories high and have more beds, private rooms and a larger emergency care unit, and would be poised to handle the population growth expected in northern Stanislaus County, John Friel, chief executive officer of the hospital, said.

To realize these plans, Oakdale Valley pulled from savings and sold revenue bonds that the hospital must repay. It plans to raise millions of dollars and is asking property owners to kick in an additional $27 million over 30 years.

The hospital could borrow money from its management company, Catholic Health Care West, the nation's eighth largest nonprofit hospital provider, but "we don't need it," Friel said. Oak Valley found a better rate on its own, he said.

The $27 million bond before voters this year averages out to $11.35 a year per $100,000 of assessed property value. The average homeowner would pay about $25 a year.

78 percent passed 2004 bond

About 78 percent of voters passed the 2004 bond. For the past four years, property owners have been paying an average of $31.14 per $100,000 of their property's assessed value toward the hospital project. They'll continue paying that bond for 26 more years.

But it's not enough, hospital officials say. Costs have increased about 18.5 percent a year between asking for the original bond and sending hospital construction plans to the state for approval, according to construction consulting firm Davis Langdon. Costs increased an additional 12 percent while hospital officials waited for the state to approve construction plans.

Like hospital projects under way statewide, Oak Valley's was motivated by tougher state seismic requirements that legislators passed 14 years ago. The state says Oak Valley Hospital's wooden frame is an earthquake risk. So hospital officials are trying to build a facility that will comply with the standards by the 2013 general deadline. But the district recently was granted an extension until 2030.