Hospital to finance surgical center
AFTER SECURING a $2.56 million loan, Sonoma Valley Hospital is set to finish its new wing on schedule in October.
Confident in its ongoing capital campaign to complete the new wing at Sonoma Valley Hospital, on Thursday the Sonoma Valley Health Care District board unanimously voted to finance the remaining $2,569,624 needed to complete the project on schedule this fall. Ultimately, hospital officials expect that money will be covered via charitable donations to the $11 million capital campaign.
When the hospital first began planning the new, two-story wing, officials successfully sought a $35 million general obligation bond in 2008 – money that could only be used for construction and seismic retrofits. After refinancing old debt, there was $31 million left for construction, but an additional $11 million was ultimately needed for equipment and other purchases not covered by the bond. To bridge the gap, the hospital launched its capital campaign last fall.
To date, the campaign has raised $5.6 million, with another $4 million expected by September, thanks to a $2 million matching grant from Sonoma philanthropists Les and Judy Vadász. Due to efficient leadership from Gary Nelson and Darius Anderson (a principal owner of The Sonoma Index-Tribune), campaign officials expect to reach their goal ahead of schedule.
“I am confident we’ll reach our $11 million goal, in fact I think we’ll exceed it,” said Harmony Plenty, executive director of the Sonoma Valley Hospital Foundation who is also director of the capital campaign. “I am so heartened by the generosity of this community, we have had so many people step up to show their support.”
Armed with the information that the campaign is nearing its goal, and with the support of its Finance Committee, the district board felt confident enough to direct Chief Financial Officer Rick Reid to move forward with a $2.56 million loan, which will cover the remaining purchases needed to outfit the new wing. It puts the total project cost at $43,809,376.
“We believe we’re going to take some reasonable risks for this reward,” said Finance Committee Chair Dick Fogg, who said the “reward” includes a state of the art emergency room and surgical center “that’s ready to roll.”
Initially, hospital officials considered the possibility of not completing the second floor surgical center – which requires the lion’s share of costly equipment – until the money could be raised through donations. But because delaying completion of the new wing would increase total project costs, the hospital’s Construction Committee and Finance Committee sought ways to finish the wing without bringing financial hardship to the hospital.
After crunching the numbers, they realized that the facility could take on the new debt without adversely affecting the hospital’s bottom line. Currently, the hospital owes around $1.5 million on existing debt, which will drop to $993,657 in 2014 once a prior loan is paid off. The new $2.56 million loan would raise the hospital’s debt structure back to $1.5 million – a rate it has already proven it can pay.
“We’re not really adding to it, we’re replacing it in our debt structure. That’s why we say we can pay this debt. Our numbers are reasonable, they make sense,” Reid said, explaining that the Finance Committee was prudent in its financial projections. “We didn’t budget for any additional patient volume with the new building, even though I personally believe that will come. We’re trying to be very conservative in our estimations.” The new wing, which brings Sonoma Valley Hospital into compliance with state seismic laws, will be finished in October.
For more information about the capital campaign or to make a contribution, contact Plenty at 935-5432 or email@example.com.