City commissioners discuss $38 million hospital project
During the Monday, June 13, Sabetha City Commission meeting, the commissioners discussed at length the $38 million hospital project, which has been approved by the Sabetha Hospital board.
Dr. James Longabaugh, on behalf of the hospital board, was present during the meeting to present about the project and ask for the city’s support and approval of the project. If the city voted to approve the project, the city would need to relocate the city shop, city equipment and gas station, which is located south of the hospital and just north of the residential area.
Also present for the meeting were Mayor Cody Bletscher, Commissioners Norm Schmitt, Nick Aberle, Maridel Wittmer and Julie Burenheide, City Administrator Doug Allen, City Clerk Steve Compo, and City Attorney Martin Mishler. Guests present were Dr. Longabaugh, Austin Wasinger, Michael Bachelor, Garrett Colglazier, Shawn Weldin, Jason Enneking, Brian Voos and Mark Schurter.
Dr. Longabaugh gave an overview of the $38 million project, which will utilize the current 2003 structure, in addition to building a brand new stand-alone facility, just south of the current facility. The 1910 structure would be removed, as it has become inefficient. The need for the new facility is because according to Dr. Longabaugh, Sabetha Community Hospital has outgrown their current facilities.
“We have outgrown our current facilities, which is a great problem to have,” Dr. Longabaugh said. “We have outgrown our space at the clinic and in many areas at the hospital. Our surgical changing rooms are now where the chapel used to be. It is a changing room that is co-boarded by both males and females. We make due and we do the best we can, but we know long term we need to do something different.”
Dr. Longabaugh said they also have plans for adding additional services and staff over the next few years.
“We are very confident that those will come to fruition with the framework and plans in place to make those happen,” he said. “Now, we need the facilities to make that happen.
According to Dr. Longabaugh, when the architect drew up the plans for the proposed new hospital, they planned for future expansion. However, with the current plans, the hospital board plans to utilize the current 2003 structure for mental health facilities, as well as daycare for hospital employees. The new building would then house administration, physical therapy, an outpatient clinic, laboratory and radiology, surgery, emergency room, obstetrics, acute care, dietary and more.
Dr. Longabaugh also mentioned that while the proposed free-standing structure has a price tag of $38 million, if the hospital board had chosen to pursue expanding the 2003 structure, it would have had a price tag of $30 million, and would take approximately three years to complete. By pursuing the free-standing structure, the hospital board hopes to have the project completed in 18 months, with the hopes of starting in the spring of 2023.
In addition to the free-standing structure, a campus connector would be built to connect the Health and Wellness Center, the 2003 structure and the new structure.
“The hospital currently uses the wellness center for physical therapy services,” Dr. Longabaugh said. “We have people that go back and forth. We believe that would serve some additional capacity for repurposing the 2003 structure as well. If people can go back and forth out of the weather between those facilities, it certainly opens up even more possibilities for that 2003 structure above what we have already talked about if it is enclosed. So, that is what the architect has envisioned in connecting those structures.”
As for financing for the multi-million dollar project, Dr. Longabaugh said, the hospital board hopes to get a USDA backed loan for $30 million and hopefully secure $8 million in donations from citizens. He emphasized that this project will not be funded by taxpayer money. Dr. Longabaugh said the hospital plans to pay for the project out of their operations budget.
“The companies that do these financial analyses believe that we can certainly service that debt,” Dr. Longabaugh said.
Then, Dr. Longabaugh asked for the City’s support of the project, which would include the City relocating the city shop, gas station and equipment, as well as giving the City’s approval of the project for the USDA loan application.
The commissioners asked questions regarding the USDA backed loans, and Dr. Longabaugh said USDA is “flexible” with their loan terms.
“One of the nice things about USDA is they are very flexible with their terms,” Dr. Longabaugh said. “That is why they are by far utilized the most out of any other healthcare lender for small hospitals.”
Burenheide expressed that the only problem with the project is the location.
“It puts the city in a bind, as far as financially and up and moving our whole shop,” she said. “Building a shop, finding the land for a shop. I know the hospital is not going to be on the taxpayers, but it kind of is going to be, because it is going to be their [taxpayers] money that we’re going to have to find everything we possibly have. So, it kind of is on our citizens of Sabetha. I’m not saying I don’t want a new hospital, at all. I’m just saying we’re talking a lot of money to move our whole area, and it is taxpayer money.”
Aberle questioned how the revenue bonds would look going through the city books, since Sabetha is not the backer of the USDA loans, and the current general obligation bonds that are used for the 2003 structure are paid by the city through previous agreements.
“It’s not that the number shows up on the city books, but it’s a line item that will appear and be backed up by extensive documentation to show where it all comes from and how it’s done,” Mishler said.
Bletscher asked Allen if they had looked into the possibility of moving the city shop and equipment.
“We have looked and made some thoughts, but we haven’t approached anybody or made any decisions until it came through here,” Allen said. “So, if that happens we will start probably tomorrow. Start looking for options that we can do.”
Allen estimated that the city would need approximately two to three acres to build a new shop.
“One of the problems here is it is more than just a shop,” Aberle said. “It is more than just a fuel station. It is where we park all of our snow plows, it is where we get them ready so they can go out and clear the streets of the snow, ice or branches.”
Aberle continued saying that if the hospital wanted to use property of any other business, they would have to pay for it.
“If you wanted the [Sabetha] Manor, the [Sabetha] Manor wouldn’t donate their land,” Aberle said. “They would go out and have to spend $500,000 for a shop. That would be a bare bones shop. That wouldn’t replace what they use that for.”
Aberle said the electrical infrastructure is another concern.
“The other part is the electrical infrastructure of that area,” Aberle said. “We could say, ‘yeah, we will give that,’ but by the time it’s all done, the City is going to have to pay. I think if they totally replace that and go on the free market to do so, and reroute the electricity in that area for the west loop, which is underground because of the helipad, not to mention if that loop can handle a $38 million hospital on it. The city is going to have to eat that too. That could be upwards of $750,000 for the city to shell out of taxpayer money and we already know we don’t get that much money. How do the five of us balance that with the 2,500 people that voted for us and told us to do what they want for a private business, which does benefit the city.”
“I do want to add one thing,” Schmitt said. “I appreciate your comments, but if we were private, we couldn’t get this loan. I appreciate you saying that, but that’s not factual.”
“There’s lots of nonprofits that are not tax-wise private businesses but they are in fact private entities,” Aberle said.
“Otherwise, the way to approach this would be to challenge USDA,” Schmitt said.
“No, thanks,” Aberle said.
“I am saying what is factual,” Schmitt said.
“It is a private entity,” Aberle said.
“We are a 501c3 as most critical access hospitals are in the state of Kansas,” Dr. Longabaugh said. “Nothing insidious by that set up. Nothing criminal. We’re not trying to pull the wool over everybody’s eyes. We’re not a shell corporation. The money we generate here, at least the vast majority of it, stays in Sabetha, and supports our $700,000 per month payroll.”
“As far as the electrical upgrades, I know we have done that for manufacturing facilities at no cost because of the revenue,” Schmitt said.
“We have in the past, but we did not for Wenger’s,” Aberle said. “We did not for the AC Home.”
“But my point is, we did do it for Schenck or Mac at the time,” Schmitt said. “We have done it for others. So, to say that others have not benefited from it, they have.”
“I did not say that others hadn’t benefited from it,” Aberle said.
“I know you didn’t, but you alluded to that. It’s just like I heard, I didn’t look at the definition of ‘huge.’ You [Burenheide] said this is going to cost a ‘huge’ amount,” Schmitt said.
“I don’t know what it is going to cost,” Burenheide said. “That would be great if I had a spreadsheet to tell me before we made big decisions.”
“But you made a comment that it’s huge. What’s huge? Tell me what that is,” Schmitt said.
“What is huge?” Wittmer said.
“I would like a spreadsheet to say what is the money going out the door,” Burenheide said.
“Let’s ask for that, instead of saying ‘huge,’” Schmitt said.
Allen said he had a rough number on a building and the rough estimate was $750,000.
“There are other options we’re going to explore if we choose to go this direction then we will,” Allen said.
“I think based on demographics. This hospital would be a great tool for our community, to get more and more families to come back and raise kids,” Bletscher said. “For me, I think it is worth looking into a few different options regarding what the city will be on the hook for if we agree to do this thing for the hospital expansion. What those options look like. We could look at fundraising opportunities through the Greater Sabetha Community Foundation to maybe alleviate some of the cost as well.”
“For the city? The City can’t do that,” Burenheide said.
“My point is, there is a cost associated with it, and at $38 million, what’s another $750,000?” Aberle said.
“I think if that is what the commission wants to do, then we will go back to the board and say the City would like us to put $750,000 back into their coffers,” Schmitt said.
“It’s not into their coffers, it’s making it whole,” Aberle said.
“Okay. Into the budget. Into the spending power. My gosh. Let’s go through semantics all night long,” Schmitt said.
“I think we’re at a road right now where we need to kind of have a good financial report of what it is going to cost us for a building,” Burenheide said. “I would love to say ‘yeah, let’s go ahead and do this,’ but we have no idea where we’re going. I think we need to know where we’re going.”
Wittmer said whatever the City can do to support the hospital is the “best” thing to do.
“At my age, there are a lot of folks where the medical world becomes very important,” Wittmer said. “I have friends that maybe have a walk-in clinic in their little town that is open maybe Tuesdays and Thursdays. Well, it maybe is going to cost us some.”
“What’s some?” Burenheide said.
“But again, if we want to grow and attract the young people to Sabetha. So maybe we have to spend some money, but we spend money on other things,” Wittmer said.
Schmitt agreed it is an important part of the community.
“I think we all agree it’s important to the community, but we just don’t really have a plan for the City for where we’re going and what we’re doing. They have a plan. It’s all drawn out and ready to go and we don’t have a plan. That is just fact,” Burenheide said.
Then, Burenheide made a motion to allow Allen to try to come up with a plan of where to move the building and table the discussion. The motion passed unanimously.
Also at the meeting:
The commissioners approved the minutes from the May 23 meeting.
The commission approved a fire department application for Levi Hitchcock.
The next meeting will be held at 6 p.m. Monday, June 27, at City Hall.