03/16/06 — Hospital will seek funding for plans

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Hospital will seek funding for plans

By Phyllis Moore
Published in News on March 16, 2006 1:58 PM

The board of directors for Wayne Memorial Hospital voted Tuesday to finance about $35 million for capital improvements through tax-exempt bonds that will also be used to pay off expenses related to the hospital's Energy Plant.

Board chairman Ken Gerrard, who heads the building and grounds committee, said last month's committee meeting focused on a review of the final scope and projected costs of the Energy Plant.

He said the group heard a presentation from Peterson Associates on miscellaneous projects that would be financed through the bond market. Among them were a heat and water reclamation system for the hospital's new laundry, replacing an air handler unit in the main tower, dealing with humidity and moisture problems in the west wing and adding a new fire pump to provide water pressure for the hospital's sprinkler system.

Estimated cost of that portion was set at $20.1 million, including a contingency of about $1.3 million, he said.

The $35 million will be financed over a 30-year term. It will also pay for such things as operational equipment and ongoing renovations, said Rebecca Craig, chief financial officer at Wayne Memorial.

Dr. Joseph McLamb, chairman of the finance committee, said that recent meetings of his committee have dealt with laying out the framework of a financial planning analysis, "where Wayne Memorial Hospital is from a credit perspective."

At Tuesday's meeting, Jason Sussman of Kaufman Hall, a Chicago financial consultant, made a presentation covering some of the options for the hospital to get the best return on borrowed funds. He said that while there may be sufficient cash reserves to pay for the $35 million in upgrades and improvements, the hospital is well positioned to obtain additional debt at good rates.

"Now is the time to get the best interest rate that we could get," said the hospital CEO and President William Paugh.

Gerrard said it will take six weeks to get bid documents prepared, with bids for the projects expected to take another six weeks.

Work on the Energy Plant will likely start in June, said McLamb. He said that meetings have already been held with engineers for some of the projects.

"It should take 18 months to complete the Energy Plant," he said. "By the end of 2007, it should be close to done."