Construction On Assisted Living Center Could Start In Early Fall
By David Howell
WATER VALLEY – Yalobusha General Hospital administrator Terry Varner made a third trip to a county meeting last month to discuss a $6 million proposal to add new services and continue renovations at the county-owned hospital and nursing home.
Varner initially approached supervisors last August about the proposal, which includes building an assisted living center, renovating portions of the hospital and nursing home, building a children’s daycare and adult daycare and refinancing almost a million and a half in existing debt.
The administrator’s main purpose in consulting with supervisors was to discuss financing options, which range from issuing general obligation (GO) bonds, issuing revenue bonds or going a blended route, which is a combination of GO and revenue bonds. In both earlier meetings, Varner stressed the hospital will make the debt payments, but supervisors have to be in agreement if GO bonds are issued, because the amount borrowed by the hospital counts against the county’s bonding capacity. The bonding capacity is based on a percentage of Yalobusha’s assessed value.
“My question for the county is, how much of your debt limit can we eat up under a GO bond?” Varner asked during a meeting last month.
“I would not be comfortable with over $2 million,” Board President Tommy Vaughn initially answered, before adding later in the meeting that the board would look at the county’s current debt and capacity, and contemplate a long-range plan that includes future needs for the county’s school districts.
“We got to keep that borrowing capacity there for the school system’s future needs,” Vaughn explained.
Varner identified another financing option, securing revenue bonds through the Mississippi Hospital Asso-ciation that would be backed by the State of Mississippi with Citizen’s Bank as the lending entity.
“Citizens Bank would come in and finance the whole thing for about .6 percent interest less than a blended bond through the county,” Varner explained. “A lot of hospitals go that route because it doesn’t count against the county’s debt limit,” he added.
The only disadvantage described by Varner is the interest rates are often higher.
“This is one of those rare times when the rates are actually lower than what I am seeing with the blended GO and revenue bond,” Varner explained.
As a county-owned hospital, Varner also told supervisors last October the hospital could receive tax credits that would help with the proposed work as part of the New Markets Tax Credit Program.
“Based on our demographics, we could be eligible for up to $1.5 million, maybe even $2 million” Varner explained.
Also speaking at that same meeting, Varner said the total monthly payment would increase from about $20,000 monthly for the current debt retirement to $35,000 per month for the $6 million debt.
A Look At The Plan
Varner reported construction could start in late summer or early fall for a 20-bed assisted living center. The estimated price tag for the assisted living center is $1.75 million, making it the most expensive part of the plan.
Varner explained that a market study had been conducted and indicated the community could support a small facility.
“After I first met with you guys, I realized there was a proposal to build a 160-bed assisted living facility unit in Lafayette County,” Varner said. “That made us back up, we hired a consultant out of Indiana that came and did a feasibility study to see if we really could support one. It still came back positive, so I presented that to my board. They said to talk to you guys,” Varner said.
He also explained the assisted living center could be located centrally in town, enabling the residents who are able to walk to Main Street businesses.
Plus, Varner explained, “There is kind-of a stigma there,” referring to placing the assisted living facility adjacent to the nursing home.
Speaking at the Jan. 22 meeting, Varner asked about the possibility of buying back the county-owned building that currently houses the health department, located directly across from the hospital complex.
The county purchased the building from the hospital in 2010 for $275,000 after a new medical complex was constructed across Main Street and Dr. Paul Odom and his staff moved to the new facility.
Varner explained that the hospital had taken over Cotten Candy Daycare, and was interested in purchasing the building and moving the daycare in the building.
“I was just going to gauge your feelings on that, if that’s a possibility,” Varner explained, adding the location was the main advantage.
“We have moved DHS so many times I have lost count,” Vaughn answered, as supervisors agreed they were satisfied with the health department location.
“We can build a daycare right beside it. That’s fine. Probably come up with a little bit better layout,” Varner said.
Last August Varner explained the daycare would be a break-even proposition, but would be a great recruiting tool for new employees and a service for existing hospital employees. Varner said the hospital employs nurses that work 12-hour shifts, sometimes making it difficult to find adequate child-care for their children.
Speaking at the same meeting, Varner estimated the cost would be $500,000 and would be large enough to serve the public as well. He indicated the price could be in the $70 per week range for each child.
The hospital is currently operating an adult daycare, a day-service that started in September, 2013, in a building on Frostland Drive. Varner told supervisors the hospital will likely build a new building for this service.
“We are currently leasing a building and we made an attempt to buy it. That’s really not going anywhere at this point, which puts us in the position to build a new one,” Varner said in the Jan. 22 meeting.
Previous estimates provided by Varner indicated this portion of the project would cost around $425,000.
Varner explained plans include adding a new nursing home dining room that would connect the original wing of the nursing home to the newer Spears Wing. The estimated price tag for this phase of the renovation is around $750,000 according to the numbers Varner presented last August.
Renovations at the actual hospital would include renovations for the hospital’s A-Wing that includes the lab at a cost of $500,000. Varner’s proposal also included work on the exterior of the hospital at an estimated cost of $600,000.
“As you know it is a 50-year old building outside. We have done a lot of work inside, but now we are at the point where we want to make the outside look better,” Varner explained. He also reported that the hospital has used existing cash flow for much of the renovations already completed.