[StBernard] St. Bernard Parish Council paves way for hospital funding

[Westley Annis]

St. Bernard Parish Council paves way for hospital funding

Published: Monday, November 29, 2010, 5:17 PM     Updated: Monday, November
29, 2010, 5:19 PM

 Benjamin Alexander-Bloch, The Times-Picayune 

With construction on the new $69 million St. Bernard Parish hospital and
medical office building scheduled to break ground next week, the St. Bernard
Parish Council on Monday paved the way to acquire a $41 million bank loan in
case federal funding is delayed.

Earlier Monday, the St. Bernard Parish Hospital Service District signed a
$33.1 million contract with Citadel Builders, based in Metairie, to begin
construction on the long-awaited public hospital in Chalmette. The medical
office building will be bid in January or February and is expected to take
nine months to complete, according to Councilman Wayne Landry.

Hurricane Katrina and the levee breaks combined to destroy the lone hospital
in St. Bernard Parish. After privately-owned Chalmette Medical Center was
demolished, the parish has been without an emergency room or full-service
hospital.

The current funding hurdle, addressed during the special council meeting on
Monday afternoon, comes because the hospital's construction budget counted
on about $10 million from a federal tax-credit program that requires the
parish to show it has about $41 million in place, Landry said. While the
parish anticipates $41 million in federal Community Development Block Grant
money, Landry said Monday that the state might not be able to release the
funds for another seven or eight months.

"This money is necessary to close the transaction," Landry said.

Parish President Craig Taffaro said he has spoken with state officials and
"is hopeful" that it may release the funds sooner, but that the bank loan is
a necessary "back-up plan."

The Parish Council approved an ordinance to allow a "bridge loan," likely
though Iberia Bank, to go ahead with construction as planned.

Landry, who also chairs the parish's Hospital Services District, said that
loan likely will cost the parish about $400,000 to $500,000 in interest. The
bank would be paid back with the CDBG money once it's available.

Earlier this month parish voters approved a 10-year, 8-mill tax to cover the
hospital's start-up operating costs, ranging from salaries to basic supplies
to recruitment of specialists. 

Revenue from the millage - an estimated $2.3 million annually - will be
bonded out to yield $16 million up front to keep the hospital afloat during
the first three years of its operation. The remainder would pay the interest
of borrowing that money up front.

After the first three years, the hospital is expected to be self-sustaining.

Pitched as a 10-year millage to run from 2010 to 2019, the parish actually
will only collect nine years because the parish's tax rolls for 2010 had
already been finalized prior to the tax passing.

Landry said the loss of $2.3 million and the possible interest from the
"bridge loan" won't be stumbling blocks to the hospital's construction. He
emphatically stated on Monday that he would have no problem making up either
loss.

"Today, for me, was a victory for the parish," he said. "It's not often you
get to do a project that is so important to the people of St. Bernard,
especially after that project has been floundering to get off the ground for
the past five years."

In addition to the $51 million through the CDBG money and tax credits, about
$17 million for construction is expected in state capital outlay money by
July 2011 and an additional $1.3 million is anticipated through a federal
Health Resources and Services Administration grant.

Landry said construction will begin Dec. 6. .

The hospital is being built on a plot of land between West Judge Perez Drive
and St. Bernard Highway that was donated by donated by the Arlene and Joseph
Meraux Foundation, the private entity created to oversee charitable spending
fueled by the Meraux fortune.

.......

Benjamin Alexander-Bloch can be reached at bbloch at timespicayune.com or
504.352.2552.

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