Construction crews work on the site of the new Mills Memorial Hospital on July 9, 2021. (Ben Bogstie/Terrace Standard)

Construction crews work on the site of the new Mills Memorial Hospital on July 9, 2021. (Ben Bogstie/Terrace Standard)

Terrace property owners funding part of hospital project to benefit from low interest rate

Expected rate of 2.65 per cent is less than the rate of other hospital district borrowings

Regional property owners are getting the benefit of an attractive interest rate in a planned borrowing to finance their portion of the Mills Memorial Hospital construction project, a memo from the North West Regional Hospital District’s executive director indicates.

Through the hospital district, property owners from Houston to Haida Gwaii are taxed for major health care expenditures. In this region property owners are paying $110.2 million toward the $622.6 million project.

The hospital district has already borrowed money for the project and is now about to borrow an additional $84.1 million to fully meet its construction cost commitment before the end of 2022, said Yvonne Koerner in her memo to the hospital district’s board.

And it’ll do so by participating in a large borrowing being arranged through the Municipal Finance Authority at a locked in rate for 20 years.

“This is a unique opportunity to provide certainty to taxpayers of borrowing costs for 20 years,” Koerner wrote.

And the expected borrowing rate of 2.65 per cent is attractive because it is less than the rate of the large majority of other borrowings undertaken by the hospital district.

Koerner did say a portion of the $84 million is being borrowed before it is actually required but that it will be placed in a high interest savings account maintained by the finance authority to offset the borrowing costs.

“Through the Municipal Finance Authority, the highest high interest savings account option is currently paying .8 to .75 percent,” she said. By comparison, the hospital district’s own bank has dropped its high interest savings account rate to .59 per cent.

Typically regional hospital districts pay 40 per cent of major health care expenditures with the province covering the other 60 per cent.

But in this case, hospital district directors negotiated a 30 per cent share with a cap of $110.2 million at a time when the Mills project was to cost $447.5 million. It’s a move that has protected regional property taxpayers because the cost has now risen to $622.6 million.

The hospital district operates under a 30-year plan of borrowing and taxation commitments to cover forecasted major health care expenditure commitments.

That plan has sketched out a series of planned health care facility projects in the region, including the hospitals in Smithers, the Hazeltons and Prince Rupert.