HomeMy WebLinkAboutRes2018-0581
Sponsored by: Hunt
CITY OF SEWARD, ALASKA
RESOLUTION 2018-058
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING $1,300,000 IN FUNDING FOR HOSPITAL
BUILDING MODIFICATIONS AND PURCHASE OF REPLACEMENT CT
SCANNER AND LAB EQUIPMENT WHICH HAS REACHED THE END OF
USEFUL LIFE, AND APPROPRIATING FUNDS
WHEREAS, the City of Seward ("City") owns the local hospital and the hospital recently
experienced a catastrophic and unexpected failure of the CT scanner equipment, necessitating the
lease of replacement equipment at a cost of $23,000 per month until such time as the equipment is
replaced; and
WHEREAS, the City and the hospital have been in discussions for more than five years,
regarding the need to relocate the CT scanner into the hospital building, to eliminate the need for
placement of sensitive equipment outside of the building, and to eliminate the need for a conditional
use permit for the CT trailer located outside of the emergency room, in anticipation of the end of the
useful life of the CT scanner; and
WHEREAS, relocation of the CT equipment into the hospital building requires expensive
building modifications, which have now become urgent due to the unexpected failure of the CT
scanner, and conducting the modifications at this time will save money in the long-term through
elimination of the significant temporary costs of leasing equipment; and
WHEREAS, to achieve cost efficiencies during the building modification, it makes financial
sense to also conduct required lab modifications which are necessitated due to recent regulation
changes associated with the replacement of lab equipment that is also nearing the end of its useful
life; and
WHEREAS, funding for this action will come from the 1 % sales tax set aside to fund
hospital and long-term care facility capital needs.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA that:
Section 1. The City Manager is hereby authorized to providing funding to the hospital in the
amount of $1.3 million for hospital building modifications to accommodate the new CT scanner and
lab equipment, and to purchase a replacement CT scanner and lab equipment.
Section 2. Funding in the amount of $1.3 million is hereby appropriated from the Healthcare
Enterprise Fund undesignated fund balance account no. 19100-0000-3400 to building and capital
CITY OF SEWARD, ALASKA
RESOLUTION 2018-058
equipment accounts no. 19100-0000-8102 and 19100-0000-8103. This appropriation is expected to
result in a short-term deficit in this Fund until such time as sufficient sales tax revenues from the 1 %
sales tax set aside for Hospital and Long -Term Care Facility purposes replenishes the undesignated
reserves.
Section 3. This resolution shall take affect immediately upon its adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 9"' day
of July, 2018.
THE CITY OF SEWARD, ALASKA
lJJOJ�
David Squires, May
AYES: Seese, Horn, Towsley, McClure, Casagranda, Keil, Squires
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
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Brenda J. Ballou MMC
City Clerk
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(City Seal• •. �.�...•� ..'4
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Meeting Date:
Through:
From:
Agenda Item:
COUNCIL AGENDA STATEMENT
July 9, 2018
James Hunt, City
Kristin Erchinger, Finance Director 0&
Appropriation for Hospital Building Modifications and Replacement CT Scanner and
Lab Equipment
BACKGROUND & JUSTIFICATION:
The City and Providence have been seeking a long-term solution to relocate the CT scanner from its present
position outside of the emergency room, into the hospital building. The remedy requires modifications to the
hospital building to relocate the equipment into the building to provide for a longer anticipated useful life of
this sensitive equipment. In addition, the parties have always acknowledged the desire to avoid the need for a
conditional use permit that authorizes temporary placement of the CT scanner trailer outside of the ER, due
to the critical need of this equipment in avoiding unnecessary air transport for patients who would otherwise
be unable to obtain such scans should the equipment be unavailable in Seward.
Recently, the CT scanner experienced a catastrophic failure, resulting in the short-term lease of replacement
equipment, at a cost of $23,000 per month. The parties desire to immediately begin the process of modifying
the building and purchasing a replacement CT scanner in order to both avoid the significant costs of the
short-term lease, and also to achieve the longer -term goal of protecting this equipment. At the same time, it
makes sense to conduct other building modifications now required with respect to lab equipment which is
nearing the end of its useful life, to achieve economies of scale. The parties could not have anticipated the
failure of the equipment or the urgency of the need for these building modifications. Providence staff have
been working as quickly as possible to obtain temporary replacement equipment to ensure the community
continues to have access to CT scan technology, while seeking a longer -term solution.
The total cost of the project to modify the building, purchase a CT scanner and purchase required lab
equipment is an estimated $1,903,023, as determined by the building and facilities team of Providence. The
staff of Providence Seward was awarded a grant in the amount of $140,000 for this project and will use
$380,000 of existing capital funds, leaving a shortfall of approximately $1.3 million.
CONSISTENCY CHECKLIST:
I. Comprehensive Plan
2. Strategic Plan
3. Other
Yes No
4. Not applicable X
FISCAL NOTE:
This appropriation will result in a short-term deficit in the Healthcare Facilities Enterprise Fund cash
reserves. The parties investigated the option of external borrowing and determined that the most cost-
effective option for this project is to utilize the 1 % sales tax earmarked for hospital and long-term care
facility funding, to avoid interests costs and to avoid costly delays, since each month that the project is
delayed results in sunk costs in excess of $23,000 per month. It is expected that use of this source of funds
t%
will reduce the amount of funding available to cover other healthcare -related needs (including facility
expansion funds and any additional unbudgeted healthcare needs) until such time as reserves are replenished
which is expected to be approximately 4 years. However, this funding source is preferred to the continued
payment of $23,000 per month in lease fees which can be immediately avoided through the purchase of
replacement equipment, resulting in additional costs of $280,000 per year. The Healthcare Enterprise Fund
was previously expected to have no surplus cash available at the end of 2019, due to the shift of funding to
the Seward Mountain Haven Long -Term Care Facility Fund for future bond payments.
Finance Approval
ATTORNEY REVIEW: Yes X No N/A
RECOMMENDATION:
Council approve Resolution 2018- 058 appropriating the amount of $1.3 million in funding for hospital
building modifications and purchase of replacement CT scanner and lab equipment at Providence Seward
Medical and Care Center.
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