HomeMy WebLinkAbout01192015 City Council Work Session Notes - Providence & CHC (2) WORK SESSION NOTES ON x0\5'
Purposer�T W S W cM \ U\-.vJCe—
Present oe a6 ZIA ( Council Members Present:Ze l ,c,o,vz, ,J
oc, �_� ,,�a �� >crtt Si ('� ,n, r l�e.«__ D' e St, t
Called by: Zj1Rn.5/L1.4.0(3 Time (ry. 60 Pr, Date 1-\'^ at,t s
**************************************** *************
\' \tit'Vi, tsJ 1:7,l (' e. ei'SM'
Na1.1)
VA-U-0 ft, 6v G �ssu
1 SST 3Cirt1
.41-4-S. . Yr 1'1
-11M 'V Ut (J(SYLE.- (,-+1 einz. A-CO.
At.L. D eel C 2J1.1 tne,erct (94..) tJ
c'N L 1,� V N N (0 4 CJS
sveft-c)-12_,
oc�S tAA-s zs o� ta3t ( 1:7e-e-T
(,.)0 o (be VSle.oVJ'
Pc L L, PAA.1 t.) 3 V 5'c 1750 04Q SOT OMA l�z�
\:` V\C)
Atte
FAQ: Federal Interest in Real Property
What is Federal Interest?
► Federal Interest is the Federal government's share in a property, based on the Federal
funding that went towards acquiring or upgrading it. The Federal government has a
Federal Interest in Equipment, Supplies, and Real Property (land and buildings).
Property, equipment, and supplies are "tools" needed to help support and deliver the
various health care services that HRSA funds through its grant programs.
Federal Interest in Real Property
A grantee's property may be used to deliver health care services long after a grant is closed.
When the Federal Government has provided funding for a substantial improvement(property
construction or major renovations), the grantee may be required to attach a lien to the property
called a Notice of Federal Interest(NFI).
Notice of Federal Interest
The NFI protects not only the Federal Government's interest in the property, but also the
purpose for which the funds were originally awarded. An NFI is required for:
• New Construction Projects—result in an increase in usable square footage, regardless
of total project cost.
• Major Renovation Projects—total project costs greater than $500,000, excluding
moveable equipment costs.
Frequently Asked Questions
Q1: Is a Notice of Federal Interest required for e capital projects?
Al: Yes. NFI filings are required for:
• ALL construction projects.
• Each alteration/renovation project having a total (Federal and non-Federal) allowable
project cost of more than $500,000, excluding moveable equipment costs.
Q2: Does Federal interest exist if I don't file a NFI?
A2: Grantees that are not required to file a NFI must be aware that the Federal Interest still
exists irrespective of the filing of the NFI. For alteration/renovation projects less than $500,000,
the grantee shall maintain adequate documentation regarding protection of all Federal Interest.
This will include communications with a lessor related to protecting such interest during the
lease period, in accordance with the standard award terms and conditions. Such
documentation should be available for subsequent review.
Q3: Will HRSA take a subordinate position to existing mortgage holders and lenders on
potential debt financing for projects?
A3: HRSA's NFI is subordinate to all pre-existing mortgages or obligations recorded against the
property. Also, the NFI is also subordinate to any pre-existing loans and obligations identified
by the grantee in the grant application as sources of financing for the project. Future
modifications to existing mortgages and new mortgages will require HRSA review and prior
approval.
Q4: The grant award requires that the facility owner file a NFI against a facility deed.
What if the owner wants to secure additional mortgages, lease the facility to an entity
that does not provide healthcare, or sell the facility?
1
,
A4: A NFI is essentially a lien that protects HRSA's financial and public interests in the real
property being used to deliver health care services. After a NFI is filed against the property,
activities such as new mortgages, selling the facility, or leasing the facility to an entity that does
not provide healthcare, requires prior approval from the HRSA. The NFI will not affect existing
mortgages or modifications being made to the facility.
Prior approval must come in the form of a written request from the grantee to HRSA, either by
letter or by email, with the following information:
1. What is the action that the owner wants to undertake (new loan, refinancing, expansion,
sale, etc.)?
2. What is the grantee or owner requesting from HRSA (permission to secure a new loan,
transfer to another site, etc.)?
3. If applicable, details of the project financing (the combination of loans and internal
funding), or proposed sale (whether there is an identified buyer, the proposed sale
price).
4. Copy(s) of all HRSA NFIs, associated Notice(s) of Grant Award, and/or funding
information associated with the NFI. A copy of the deed, with a legal description of the
property, to which the Federal Interest is attached.
5. Appraised value of the property at the time of project completion.
6. Terms of the proposed loan, i.e., interest rate, period of loan, amortization schedule.
7. Last three years of audited Financial Statements.
Reviewing Federal Interest requests takes time and HRSA requests patience and cooperation in
the process. Providing detailed requests and supporting documentation up front will aid in
expediting reviews.
Q5: Will the value of the Federal interest change over time, especially as the useful life of
the renovation/alteration expires?
A5: Each alteration/renovation project having a total (Federal and non-Federal) allowable
project costs of more than $500,000, excluding moveable equipment costs, is required to file a
NFI.
HRSA acknowledges that the market value of ARRA supported renovations/alterations will
change over time. HRSA will work with grantees to recognize the changing market value of
improvements and other activities made by the grantee or property owner of the facility.
2
How to Record a Notice of Federal Interest (NFI)
General
1. Within the United States, except Hawaii, the NFI must be filed in the county or district office
in which the facility is located. Often this is the County Court Clerk, Probate Office or the
Register of Deeds. In the State of Hawaii, the NFI must be filed with the State Department
of Land and Natural Resources, Bureau of Conveyances.
2. Please understand that local governments may have different formatting requirements. It is
important to check with the office before filing, as it may save you an extra trip.
3. The county government will provide a copy of the recorded NFI with the county stamp, with
a date, and either receipt information, or the final reference number(book and page, file,
etc.).
NFI Document'
1. The grant number must reference to the appropriate Grant No, i.e., CXXCSXXXXX.
2. The description of the project should clearly describe the new construction project, or
alteration and renovation. The NFI does not apply to moveable equipment (though
equipment does have Federal Interest, as do alteration and renovation projects below the
NFI filing threshold).
3. The legal description should be preferably the full legal description of the property in the
deed. However, Township and Range, or Map, Block, and Lot number will be accepted. A
physical address may be included, but does not constitute a legal description in itself.
4. The restrictive language of the template may not be modified.
5. The signatory of the NFI should be the owner of the property. This indicates the owner's
consent to have a lien filed on the property.
6. The NFI must then be notarized and embossed with a notary seal.
7. The NFI must then be recorded with the county government.
1 A sample NFI is available at http://bohc.hrsa.gov/policiesrequlations/capital.
3
Example of a Correctly Filed NFI
[Page 1]
'4n
,o
STATE OF ALABAMA 22.
•�H
A COUNTY 2 v
Correct Grant No. and c 03
purpose of award. Q
NOTICE OF FEDERAL INTEREST 0-1'3
lbw
On June 25,2009,the Health Resources and Services Administration awarded Grant Number tit
I line. The grant provides funds for the construction of What y
Health Services' What Health Center,which is located on the land described below in A County,
Alabama: c
10
NI
SEE EXHIBIT"A"ATTACHED HERETO AND INCORPORATED HEREIN BY THIS REFERENCE. i`
The Notice of Award for this grant includes conditions on use of the aforementioned property and a w
provides for a continuing Federal interest in the property. Specifically,the property may not be(l)used
for any purpose inconsistent with the statute of any program regulations governing the award under which
the property was acquired;(2)mortgaged or otherwise used as collateral without the written permission of
the Associate Administrator,Office of Federal Assistance Management(OFAM),Health Resources and
Services Administration(HRSA);or(3)sold or transferred to another party without the writtenpermission
of the Associate Administrator,OFAM,HRSA,These conditions are in accordance with the statutory
provisions set forth in the American Recovery and Reinvestment Act,Title 45 CFR part 74 or 92 as
applicable,the HHS Grants Policy Statement,and other terms and conditions of award. a
r•
These grant conditions and requirements cannot be nullified or voided through a transfer of
ownership. Therefore,advance notice of any proposed change in usage or ownership must be provided to
the Associate Administrator,OFAM,IIRSA,
•T HEALTH SERVICE
Correct restrictive information
By: 5<.•
-
x r
Its ' ident and CEO
Signed by the /
property owner(in this
case,the grantee)
Recorded with the County
Records Office
4
Example of a Correctly Filed NFI
[Pages 2 and 3]
STATE OF ALABAMA
A COUNTY
On this the /%r'`` day July,2009,before me,the undersigned,a Notary Public for the State of
Alabama at Large,personally appeared before me and is known to be the person who executed this
instrument on behalf of said What Health Service,and acknowledged to me that he executed the t`w'
same as the free act and deed of said Corporation.
Witness my hand and official seal.
•
4mmtrsionExpe& ØV is
y
Recorded with
Nntari7ed the County
Records Office
EXHIBIT"A"
A parcel of land 230'x 15'beginning at the NE corner of Lot#6,Blk 4,Bloc Height,Then
W and S ROW of First Avenue,230'(S),Then S 145'.Then W 20'.Then S 22'(,$1.Then E
I 5'(S),Then N50',Then E 220',Then N with W ROW of School Street, 158'(S)to POB.
West Bloc,Alabama Book 2 Page 37.
Correct Legal
Description
N
W
4,
5
\\0 \1
SEWARD CITY COUNCIL Isto A5ej)
Special Work Session
Monday, January 19, 2015
Discussion Item — revised January 19, 2015
Topic: Space Needs, Space Planning and Grant Opportunity for Seward
Community Health Center and Providence Seward Medical Center
Presented By: Patrick Linton,Executive Director, SCHC
Joseph Fong,Administrator, Providence Seward Medical and Care Center
Summary of the Issue:
The specific purpose of this special work session of the City of Seward City Council is to discuss
current and future space needs of Seward Community Health Center(SCHC)and Providence
Seward Medical Center(PSMC),the two health care provider organizations working under
separate agreements with the City of Seward that operate their respective programs and services
at the City owned hospital facility and campus. Some of these issues have existed for some time
while others have surfaced more recently due to the start up of the new community health center
in 2014.
The introduction of a separately operated primary care clinic into a building designed for a single
operator created some duplication of services and due to the short turnaround time from
designation of award to operational status,minimal construction was undertaken to
accommodate the new staff or separation of services between the clinic and hospital. Now, 10
months into operation both the clinic and hospital have a better understanding of co-existence
within the same facility.
While the primary purpose is to discuss and educate City Council of the space needs of both
entities,the need for this work session today has been precipitated by the fact that the Health
Resources and Services Administration(HRSA) of the Federal Government will soon be
announcing a new round of grant funding for capital projects for community health centers. This
possibility has stimulated considerable conversation regarding space needs and possible
solutions,both medium term and longer term, for both organizations.
If the City, as the 330 grantee for the community health center in partnership with Seward
Community Health Center, Inc.,decides to take advantage of this funding opportunity and apply
for this grant, significant due diligence efforts and preparatory planning is required to begin now.
Although no specific recommendations or requests for action are being forwarded to the City
Council at this time,the questions and points raised from the work session will be very beneficial
in helping to inform and direct the efforts of the representatives from SCHC, PSMC and City
Administration who will be working together to take the next steps to address these issues and
potential funding opportunity.
Pagel of 10
F T
Discussion:
A. Providence Seward Medical Center:
The current building opened in 1998 to house hospital,primary care clinic services and their
supporting services. Over time, services changed, equipment and infrastructure needs changed
and healthcare standards of care changed. PSMC has done what it can to adapt over the years
but not to the extent that would provide maximum benefit to the community. The following
provides detail around the primary issues facing the hospital and some potential short and long
term options that should be considered in parallel with any clinic planning. It is important to
note that this list is not comprehensive. Formal analysis and study would be the next step to
evaluate options, as well as cost and reimbursement implications. These, could also spur
additional study and the creation of a long term healthcare master site and facility plan for
Seward which could include other providers in the community.
1. Operating issues
• Distance between facilities. Administrative and support staff, including laundry,
maintenance, central supply and housekeeping, supports both Mountain Haven
and the hospital. Travel between facilities averages 10-15 minutes each way.
The effect is cumulative and depending on the number of trips necessary, as much
as a third of these employee's daily working hours could be spent traveling
between facilities.
• External CT unit. The CT equipment is housed in an external trailer which
requires staff and patients to leave the hospital building and be exposed to the
elements to reach the trailer. The variable weather conditions from day to day
present challenges in keeping the area safe for staff and to transport patients. The
current position of the trailer crosses a utility easement which does not allow for a
permanent covered walkway to connect the hospital and trailer. The CT
equipment was replaced in 2013. The old unit was well past its useful life and
there was urgency to replace it. However, without a suitable solution to locate the
unit inside the hospital it was decided to lease a trailer to provide a temporary
home for the equipment and place it in the same location as the previous trailer
while a long term solution was explored.
• Double occupancy patient rooms. When the hospital was originally built, shared
patient rooms were the standard of care. However, over time,the standard of care
has changed and single occupancy rooms are now the norm. They provide patient
and family privacy allowing for quicker recovery and facilitate better infection
control practices for patients requiring isolation precautions. The hospital is
licensed for six beds,distributed through two (2) single occupancy and two (2)
double occupancy rooms. The single occupancy rooms are routinely used as
emergency exam rooms and the caring for patients requiring isolation precautions
has during those times reduced our capacity by restricting a double patient room
to a single patient room.
Page 2 of 10
• Lowell Canyon flood risk. The hospital is located in an area of high risk for
catastrophic flooding. In 2012 during summer storms, the Lowell Canyon
diversion became partially blocked and the hospital was notified of potential
flooding due to that blockage that would have necessitated the evacuation of the
hospital. In 1996,flooding of Lowell Canyon resulted in flood water entering the
hospital but did not necessitate evacuation. As the only hospital facility in the
area, an evacuation and relocation would have significant impact on the
community.
2. Long-Term Vision:
When considering the significance of these issues, a new facility may appear to be the
best way to incorporate and address current issues with flexibility to expand or change
with future needs. Ideally, the facility would be located closer to Mountain Haven and
include enough land to include other healthcare services, including primary care,
behavioral health, dental and possibly native health services.
• A location closer to Mountain Haven would better facilitate staffing efficiencies.
Additional infrastructure issues such as network connectivity could also be
addressed. Network connectivity at Mountain Haven is generally slower than the
hospital. Locating the facilities closer and possibly within line of sight may allow
the use of technology to eliminate the lag time in network connectivity.
�] • Moving the hospital would also put it closer to the area's population center and
l closer to the outpatient pharmacy for convenience in obtaining prescription
medications upon discharge.
A new facility would also present the opportunity to design a layout to address our
current issues as well as plan for the future.
• The CT unit would be housed within the facility
• Inpatient rooms would all be single occupancy. Two,possibly three,would be
fitted to be able to convert to negative pressure isolation rooms. Currently only
one patient room can be converted to a negative pressure isolation room.
• The number of inpatient rooms necessary in the future is difficult to predict.
These rooms are used for both inpatient and swing bed patients. The annual
average number of patient days since 2012 is 264. The total capacity for six beds
is approximately 2,190 patient days. Economic development of the railroad depot
and dry dock has the potential to increase year round and seasonal population;
however it's unclear what the direct impact will be on hospital services.
Including shelled in space for 2 additional rooms allows for future growth and
expansion or the flexibility to repurpose for other needs as they develop.
Page 3 of 10
• In addition to single patient rooms, a new facility should include dedicated
emergency exam rooms. Anecdotally, 4 exam rooms and 2 trauma bays should
support patient volumes. Designing one of those rooms to be a procedural room
would give flexibility to accommodate specially clinics such as GI(endoscopy)
and Ortho.
• Ancillary patient care services(laboratory,radiology,rehab therapies)would need
to be scaled based on projected patient volumes. In terms of specific services,the
inclusion of mammography services would bring back a service not currently
provided in house.
• A key principle in any new construction must provide space that can be flexible in
use, easy to reconfigure and allow for room internally and externally to expand.
Storage space is always in demand and new services, changes in services, and
new technology could significantly impact the provision of healthcare services
and thus the facility necessary to support it.
3. Short-Term Vision:
A new facility requires significant planning and execution not only for the actual building
but also to identify and secure the appropriate site. Projects of this scope and size could
take many years to realize. For a more immediate impact, expansion and renovation of
the existing facility,could address many of the current operational issues. Construction
on an existing facility does add complexity to a project,requiring detailed staging to
minimize disruption, and potentially additional cost if additional infrastructure is needed
to support the expansion(mechanical, electrical, structural)or bring the facility up to
current code. However the total cost for this type of project would be less than new
facility construction, extends the useful life of the existing building and could serve as a
bridge while proper discernment can occur for long term planning.
• The most pressing patient care needs would be to create single occupancy patient
rooms,house the CT equipment inside the building, and add a nurse triage area to
receive and prioritize ED patients
• Support needs include the creation of a quiet room or small chapel for family
consultations,additional equipment storage and moving the existing
administrative spaces so there is better patient and staff flow through the facility.
• Vertical expansion could move administrative and support functions upstairs and
leave the main floor for patient care. Vertical expansion could make a roof top
helipad possible, freeing ground space for additional parking or other uses.
• Horizontal expansion could occur to the east and to the north. This type of
expansion could mitigate the need to retrofit the existing facility to meet codes
and would flow with existing functions. The east could facilitate expanding the
Page 4 of 10
._
inpatient wing to accommodate single occupancy patient rooms. The clinic could
also expand to the east, increasing their space in a contiguous manner.
Expansion to the north could be used for hospital administrative functions
relocating administration and medical records and reassigning the current
hospital admin space to the clinic. After the renovations,the building would be
split so the hospital occupied an L shaped area on the north,west and south
perimeters of the building and the clinic would occupy the north and east
perimeters. Expansion in this manner however, further reduces available parking
space which already is limited.
4. Master Site and Facility Planning:
The ideas presented here represent a general summation of conversations with staff and
the issues they encounter on a daily basis, general patient volume numbers and trends.
An introductory conversation with an architectural firm was conducted to discuss general
healthcare design and construction concepts. However, a formal review to analyze
current and future trends, financial analysis of cost and potential reimbursement impact
overlaid with design proposals would present a more complete picture of potential
options.
In parallel, a detailed financial and operational plan for the hospital would need to be
conducted. The goal would be to ensure adequate operating income and reserves are
realized to weather potential volume decreases during construction disruptions.
B. Seward Community Health Center:
1. Space Needs:
As City Council and Administration members know,the new community health center
foresaw immediate space issues even before opening operationally on March 10, 2014.
Specifically, SCHC was allocated the former clinical and front desk spaces previously
operated by the Family Medicine Clinic of PSMC. Although this space has proven
sufficient for registration,billing and clinical staff, it also had to accommodate office
space and work areas for various administrative staff of SCHC. This was not previously
an issue for PSMC as their administrative staff occupied space in the administrative
office area of the hospital, where they continue to function. SCHC administrative staff
has been temporarily working from offices in the clinical area. This tight squeezing and
mixing of different uses in the clinical area has been working only because start up staff
size has been small while we recruited the three full-time permanent providers and
additional support staff who are now coming on board.
By early fall of 2014 the recruitment process was successfully completed. By March 1St
of this year, less than two months away, SCHC will have two full time family medicine
Page 5 of 10
physicians in practice along with a full time physician assistant. Clinical support staff is
also being added as we go from one provider to three providers.
Additionally, SCHC has been successful in adding over$260,000 per year to its base
federal grant by taking advantage of two supplemental grant funding opportunities
offered to CHC's in 2014. These supplemental grants, and the community program
expansions associated with them,resulted in the addition of another 3.0 FTE positions
that were not anticipated in the original grant budget. Although very beneficial to SCHC,
our patients and the community,these new positions have only compounded what was
already a very tight and unworkable space situation.
An affordable but less than optimal solution was found last fall by putting a lower cost
modular office building on a permanent foundation on the north end of the hospital
campus. This project is nearing completion,just in time for up to six administrative and
support positions to be relocated out of the hospital facility and into the modular office
building. Some storage capacity was also gained with the modular building. It is
anticipated that current administrative staff will vacate the clinical spaces they are now
using and move into the modular by early February. This will provide the space needed
for the two new physicians and their support staff who will begin arriving in late
February. This project was funded with money allocated by the City in 2014 for facility
improvements for the CHC in lieu of using$150,000 in federal funds as originally
budgeted in the New Access Point grant application.
Once the relocations into the new modular building have been completed and the new
providers and support staff brought on board, SCHC should be able to function relatively
well for a while, even if a bit disjointed and tightly constrained. But continuing space
issues and needs will still exist including:
• A very disjointed system of patient,material and staff flows in"hop scotch-like"
fashion as SCHC occupies and moves between islands of its space inside and
outside the building interspersed between PSMC islands of space.
• A limited allocation of two exam rooms per provider and support staff on days
when all three providers are doing clinic at the same time. This reduces
productivity and efficiencies. More productive would be 2.5 to 3 exam rooms per
provider. The clinic space currently includes six exam rooms; four standard
rooms and two larger rooms.
• Lack of one or more work-up rooms for medical assistants to do check-in
procedures prior to rooming the patient in the exam room to see their providers.
• The two larger exam rooms will have to be used more frequently as general exam
rooms reducing our capacity to use them for special procedures,wound care,
orthopedic care and same day/urgent care demands.
• Lack of a special procedure room for SCHC and specialty physicians to do
scoping procedures.
• Lack of storage space for clinical supplies and minor clinical equipment.
• A front desk area constrained to accommodating only three staff members when
we need space for four registration/billing staff.
Page 6 of 10
Y
• No confidential space for outreach, enrollment, billing, social service, care
coordination, case management or health education staff to meet with patients and
family members.
• Having to jam multiple providers and their support staff into smaller, open office
areas without privacy for providers to do their phone calls with patients.
• Lack of private office space to integrate behavioral health and substance abuse
counseling through appointments and"warm hand offs"between primary care
providers and behavioral health providers via collaborative contractual
relationships envisioned with SeaView Community Services.
• Lack of space to bring in outside specialists from Anchorage to conduct outreach
clinics one to two days per month such as obstetrics/gynecology, orthopedics,
pediatrics, etc.
• General lack of room anywhere to grow programs and services.
In order to more fully assess these issues and do effective program and space planning to
determine future space needs and resolve these issues, either within the current facilities
or at a new location, we would need to engage the services of one or more
design/engineering professionals. This is something being considered jointly with Mr.
Fong so that both SCHC and PSMC needs can be met in a collaborative and mutually
beneficial manner. There is considerable integration and synergistic activity now
occurring between our two organizations in very positive ways. We would not wish for
these to be lost, only enhanced.
Page 7of10
2. The Anticipated HRSA Capital Grant Funding Opportunity:
Although there is much that we do not yet know about this anticipated funding
opportunity,there is much that we do know.
• When the Affordable Care Act was passed in 2010,there was a special $11
Billion, five year trust fund set up specifically to support the expansion and
development of federally qualified health centers (FQHC's) around the country.
2015 is the fifth and final year of this program,which was approved by Congress
with the passage of the continuing resolution in December.
• Part of the resolution pertaining to this last year of the CHC trust fund program
was a line item allocating$150 million for capital grants.
• Historically in earlier rounds of capital funding, HRSA has set up the grant
program for either larger expansion capital grants of up to $5 million per award
(what we are calling the"large cap" grant program)or smaller renovation/life
safety code compliance capital grants of up to $500,000 ("small cap"grant
program).
• We do not yet know what type of program HRSA will go with,but the math is
pretty straight forward: either 30 large cap grants or 300 small cap grants. Our
best connected sources think it might be a small cap program this time around,but
no one is sure.
• These are usually highly competitive grant programs where need and the
proposed project to address the needs are ranked according to prescribed scoring
criteria.
• Federal funds can be used for real property expansion or renovation, capital
equipment acquisition(above $5,000),professional fees(I believe)and minor
equipment and one-time supplies.
• Funds cannot be used for land acquisition.
• Funds can be used to expand or improve property owned by the grantee (City of
Seward in our case)or to do lease hold improvements to real property owned by a
landlord.
• Grants will need to be awarded by September 30, 2015.
• Allowing at least three months for HRSA staff to conduct their reviews and make
the awards, applications would need to be submitted in May or June.
• Allowing 60—90 days for applicants to prepare and submit their applications
means that the program announcement could come out as early as February or as
late as April. March is our best guess.
• Projects need to be at or near"shovel ready"status with documents included in
the submission such as clear evidence of ownership of the property or ability to
secure the property to be improved; schematic drawings and specifications; site
plan; detailed equipment lists; detailed project costs (with perhaps a 10%
contingency line item at this stage of development), and; detailed project
schedules. And a compelling, competitive need and case statement.
• Projects usually have to be completed within 2 years of the award,but extensions
are not unusual.
Page 8 of 10
• We also know that whenever federal funds are used to expand,renovate or
improve real property,the federal government requires and maintains a"federal
interest"in the real property. Federal interest requirements apply to real property
that is owned by the grantee and improved using federal funds as well as property
owned by a landlord and leased to the grantee that is improved using federal
funds.
• We are still researching and learning about these federal interest requirements and
what they might mean for our situation,but here are some basic points to
consider:
o In projects of the large cap size when square footage is increased and
when renovation of existing space is funded with more than the $500,000
in federal funds, a Notice of Federal Interest must be recorded which acts
as a lien on the property.
o If an NFI is recorded, it takes a subordinate position to all other existing
mortgages or obligations recorded against the property.
o When a project does not add square footage or is funded with less than
$500,000, an NFI does not need to be recorded,but federal interest still
exists.
o For small cap projects,the grantee must still maintain good records and
documentation regarding the protection of the federal interest and make
them available for review if requested.
o The amount of federal interest will vary over time with market value of
the property.
o Although maintaining and making available upon request good records
and documentation requires effort,the real issue with federal interest often
comes when the property changes use, is sold or demolished. Because
federal interest works similarly to a lien on the property,their interest
must be compensated at the market value of the property at the time.
Alternatively,there may be a process by which federal interest can be
"swapped"or transferred to another property.
3. Initial Project Ideas:
Various project ideas have been discussed under both the large cap scenario and the small
cap scenario. None have been developed to the point of recommendation at this time,but
some common sense conclusions have already emerged. These include:
• The grant program offering SCHC the best"value"and opportunity to most
effectively resolve its space needs and issues would be a large cap program.
• SCHC remains very interested in participating in the long term idea of an
integrated healthcare campus located on a suitable site elsewhere in the City. We
assume for practical reasons that this is not a possibility in the near term,thus
expanding and/or renovating the existing hospital facility should be the current
focus of our efforts.
• There have been discussions about whether or not the current facility could be
expanded vertically to add a second level,but this would require a thorough
Page 9 of 10
structural engineering assessment according to current seismic code requirements
in order to be certain if adding a second level is possible or practical.
• More realistic in the time frame available to us would be to expand at ground
level to the east of the current facility if a large cap grant program is announced.
• If a small cap program is announced,the only viable project would be for SCHC
to occupy,renovate and otherwise improve the space currently occupied by
PSMC administrative staff and functions. This, however, would require PSMC to
relocate its administrative staff and functions to another location which would, in
turn,most likely require additional funds to be secured from the City or another
source to cover the costs of renovating or adding space in the hospital facility for
their use.
• Any expansion or renovation project of any size done at the current facility should
only be done according to a plan and program developed for the entire facility and
campus that accommodates and benefits both SCHC and PSMC and their
respective needs.
C. Closing Comments:
As noted above,no specific recommendations or requests for action by the City Council are
being made at this time. The items presented are meant to describe and discuss some of the
issues facing PSMC and SCHC. We will be pursing formal analysis around potential options
and impact. In the event that HRSA announces its capital grant funding program, additional
information can be presented to the City Council with Council already informed of the basic
issues and information. We greatly appreciate the opportunity to receive your constructive
questions, input and creative ideas to assist us as we take the next steps in this process. We hope
that Council members would encourage us to continue these efforts working closely with City
Administrative Staff,the respective leadership, governance and advisory groups within SCHC
I and PSMC-and selected professional consultants as needed over the ensuing weeks and months.
We look forward to working with you as this dialogue develops in an engaging and productive
manner that will lead to addressing the current and future space needs in service to the people of
Seward for many years to come.
Page 10 of 10