The Brookings City Council agreed to reduce the interest rate it charges to the Curry Health Network (CHN) for money it loaned the district to build sewer and water infrastructure for the Brookings clinic — with the caveat that the district pursues a “certificate of need” to obtain hospital and emergency room status for the facility in Brookings.
The resolution city councilors approved Monday also stipulates that the district will seek an additional $10 million for that project.
The district earlier this month agreed to put on the Nov. 5 ballot a question asking voters to approve a $10 million general obligation bond to rebuild the hospital in Gold Beach and make improvements to the Port Orford clinic. The bond would also help the district as it seeks additional federal loans to replace the aged building in Gold Beach.
The funds, CEO Andrew Bair said, would be used exclusively for those two projects; the work toward transforming the Brookings urgent care clinic is a separate endeavor, and merely obtaining the certificate of need will likely take a year and cost $75,000 to $100,000.
The city helped CHN finance $560,000 worth of System Development Charges, which are assessed to new development to compensate for its impact on the water treatment plant. The agreement is a 10-year note for which CHN is charged a 9 percent interest rate on the loan.
According to City Manager Gary Milliman, the city agreed to take on the financing as the health network was unable to secure market financing. The rate is so high because the city discourages developers from using it as a bank, instead preferring they seek funding from the private sector.
The hospital district has paid $134,173 in principal and $149,634 in interest since 2010, leaving the remaining balance at $429,780. Annual payments on the 10-year note are $85,146.
Last week, the city agreed to reduce the interest rate to 3 percent and will make that percentage rate retroactive to the date the clinic opened in 2011. The difference will be credited to the amount the district owes on the remaining principal and toward the estimated $75,000 to $100,000 cost to conduct the certificate of need for the Brookings clinic.
Councilor Kelly McClain wondered if the district wasn’t asking for “too much, too soon,” but agreed “100 percent” that the city should work with the district to obtain the certificate of need.
“They’ve got a $10 million hurdle to overcome,” McClain said of the ballot question. “There are a lot of things to be considered and huge hurdles to overcome.”
Councilor Brent Hodges noted however, that he didn’t imagine the hospital district would turn its back on a facility into which the district has invested $17 million — especially as patients from Brookings provide 60 percent of the hospital’s revenue.
“But it has to morph into a hospital,” Hodges said. “I don’t think it’ll make it as it is.”
Complications arise because of state law forbidding hospitals in rural areas to be within 25 miles of one another. But hospital officials believed earlier this summer they’d found a loophole that would allow them to split the 25-bed limit of the Gold Beach hospital into two campuses.