Cost of new 17-bed Pinckneyville hospital $30,981,100
Administrator Tom Hudgins summarized Pinckneyville Community Hospital's quest for a new facility at a public meeting Thursday evening.
The idea for a new hospital began with an assessment in 2003. At that time, architects determined it would cost more to correct the problems in the current facility than to build a new one.
Currently, the drawings for a 17-bed hospital are complete and in the hands of the Illinois Department of Public Health. IDPH is reviewing the drawings to make sure everything is up to code.
The estimated cost for the 17-bed replacement hospital is $30,981,100. The hospital should have a guaranteed maximum price for the new facility shortly after bids are opened Aug. 6. A pre-bid meeting is set for July 16.
The breakdown on the financing includes $23 million in loans from USDA, a $250,000 TIF grant from the City of Pinckneyville and the remaining funding from PCH. The hospital has already spent $2.35 million on the project. PCH was asked to submit a loan application to USDA on March 28, 2013 after careful consideration of a pre-application and financial feasibility study.
The hospital is hoping to hear from USDA by mid-August. If a commitment letter is received, construction can begin in early September. It will take approximately 90 days to get the funding in place. PCH can finance the first three to four months of construction then begin borrowing.
Construction financing will be supplied by AgStar via short-term loans financed by revenue bonds at 4.5 percent interest. Once the project is complete, USDA will loan the hospital the funds to pay AgStar. PCH will then repay the USDA loan over 40 years.
If all goes as planned, the project would be complete in late 2014.
Hudgins said the maximum interest rate on the loan will be set once a letter of commitment is received from USDA. The final interest rate will be determined once the project is complete. The interest rate can go down, but cannot exceed the rate stated when the commitment letter is signed. The current interest rate is around 3.5 percent.
Hudgins said he hopes to pay interest during the construction period, but will capitalize the interest if necessary to complete the project.
John Bolinski asked for some clarification on hospital finances.
The hospital's regular board meeting is held the first Monday of each month. Income/loss figures are announced at that time. For example, the figures for May were announced at the July 8 meeting. PCH showed an operating loss for the first month of the current fiscal year, but remains in the black. The operating loss for May was $10,190. However, the net income for the month was $43,028. Net income includes revenue from sources other than operations such as interest income, grants, property tax and fees from SIR Fitness. Hudgins said the hospital performed better than expected in the previous fiscal year. The hospital intends to pay the debt service on the USDA loans using operating income. Net income could decrease if operating income is not sufficient to cover the the monthly payment.