City hopes eventually to sell hospital facilities after sale

Though no plan has been laid out, the city of Hillsboro is hoping eventually to sell the buildings that currently house the hospital and long-term-care unit formerly known as Hills???boro Com?munity Medical Center.

?My first reaction would be that we?ll figure out a way for Salem (Hospital Inc.) to acquire the property because we really don?t want to be a landlord,? said City Administrator Larry Paine. ?We?d like to be out of that business altogether.

?We?re not good landlords?that?s not really our mission,? he added. ?It?s something that takes us off course.?

The city council approved the sale of the assets of the hospital June 18 to HMC/CAH Consolid?ated Inc., an acquisition company based in Kansas City, Mo., that intends to build a new $10 million state-of-the-art hospital adjacent to the Hillsboro Indust?rial Park within three to five years.

?Assets? include the equipment and operation of the hospital, but not the buildings, which remain the property of the Public Building Commission.

The PBC was created by the city in 1997 to be a holding entity for the operations of the hospital and long-term care unit. It is funded annually with about $70,000 from a 5-mill tax levy.

The city-appointed HCMC Board of Directors, now called Salem Home Board of Directors, will continue to serve as an advisory council for the hospital under the ownership of HMC/CAH, and will be the operational board for the long-term care unit, which was not acquired by HMC/CAH.

Though the operation of the hospital and long-term care unit carried the HCMC name, their technical ownership rested with Salem Hospital Corp., the name under which the hospital and home were incorporated in the mid-1950s.

With the sale of the hospital operation now complete, effective Aug. 31, the city will continue to lease the facilities to the renamed Hillsboro Community Hospital and to Salem Home.

Future unknown

Once the new hospital building is complete, the status of the space it will vacate at 701 S. Main is unknown at this point.

Wendell Dirks, chairman of the Salem Home board, said that issue hasn?t been seriously addressed yet by the board.

?I can envision, even if there is another tenant involved in that other end (of the building), that we might be able to use some of the space?or something like that,? he said. ?There are possibilities out there. But for the immediate future, our thinking is to run the long-term-care business as usual.?

At this point, Paine said the future of the existing facility, per se, is not a significant concern of the city.

?In another sense, it is a concern for the city because it is an integral part of the community infrastructure, and it?s one of those things we negotiated hard during this period of the hospital sale,? he added.

?Both entities have an impact on the quality of life for seniors in this community. It was important for us to pay attention to the ?what are you going to do with that?? part. It?s still working itself out. What it ends up looking like, nobody knows yet. But it will work itself out.?

Financial impact on city

The sale of the hospital assets will have an impact on the city?s financial situation in at least three ways.

First, one of the key terms of the sale has already been completed. HMC/CAH has paid off the $1.5 million in bonds that the city obligated itself to when it purchased the facilities through the PBC.

The effect of eliminating that obligation will not have a huge financial impact for the city. But it does reduce its debt load, Paine said, making the city more attractive to bond investors if the city needs that kind of financing option in the future.

A second benefit is that the hospital is now a for-profit venture, which means the owners will be paying property tax on the new facility?which, in 2011 or so, will benefit the city budget with an estimated $12,000 boost.

Also, additional tax revenue could be generated if the existing facility is sold someday to a for-profit owner and is added to the tax roll.

The third way the city could benefit down the road is if it no longer needs all of the 5-mill assessment for the PBC.

For the time being, though, the 5-mill levy will continue in case funds are needed when a potential buyer emerges.

?It?s a matter of putting some money away so that if we need to do some renovation for a new owner, or to restore it to its basic building health in order to sell it, then we have some capital to do that,? Paine said.

?Otherwise, we?ll be reaching into someone else?s (city budget) pocket to steal some money to figure out how we?re going to do this and how we?re going to that.?

If the day comes when the city can consider other options for that 5-mill levy, the list of needs is long?especially for street improvements.

Intangible impact

Paine said the sale of the hospital and the promise of a new one will have economic benefits for Hillsboro that can?t be measured in a budget.

?It creates an entity that is going to be a bragging point,? he said. ?Not everybody has a new hospital in a little town. It?s one of those things that shows off a community that?s moving ahead and investing in itself.

?People notice that. When they?re running around from place to place looking for a place to move to, they?ll say, ?A-ha, a new hospital.?

?There are intangibles beyond belief about what is going to happen with that,? he added. ?I think there will be a significant amount of medical development around there because of (the new facility).

?We also will have new doctors coming here to take care of us instead of us having to drive somewhere else. And with $4 gas, that will be a benefit for a lot of people.?

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