The new North Island Hospital Comox Valley. File photo/Comox Valley Record

Comox Strathcona hospital district opts to maintain tax levels

Debt repayment for two hospitals on schedule over 10-year cycle

The Comox Strathcona Regional Hospital District (CSRHD) has opted to stay the course on tax levels for the coming year.

For its latest financial plan, the board is maintaining the tax level for the two regions at $17 million, which has been the average level in recent years.

“The board had some options in front of them,” manager of financial planning Kevin Douville told the Mirror.

With the completion of the North Island Hospitals Projects, the board had considered an option to reduce the tax requisition to $15 million, which was noted in a staff report from January. However, members decided at the March 7 board meeting to keep levels the same in order to generate reserves for future projects.

“It doesn’t mean that that requisition won’t continue to be looked at and re-evaluated,” Douville said.

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The district is comprised of elected directors from the Comox Valley and Strathcona regional districts and oversees local taxation for health sector capital projects. The district typically contributes 40 per cent of the cost of capital projects for acute care facilities.

At the current $17 million requisition level, reserve contributions will average $4.5 million a year for the next 10 years and with interest should amount to approximately $61 million by the time the debt is retired.

Four years ago, according to the staff report, the district had weighed the idea of reducing the tax requisition, but in light of where the two hospital projects for the Comox Valley and Campbell River area were, the feeling at the time was that there was too much uncertainty in terms of financial commitments. Since the new hospitals opened, the financial picture has become clearer.

“We’re certainly going to be paying off the debt much sooner than we had originally anticipated,” Douville said.

With the projects mostly complete, the CSRHD is on schedule to repay its long-term debt through the provincial Municipal Financial Authority over a 10-year period, by 2028.

“We do have some final costs remaining with respect to the North Island Hospitals Project,” Douville said. “We’re in the last year of payments to Island Health in that regard.”

Last summer, the board approved this debt financing plan. The staff report also notes that the debt is locked in for the 10-year term, and while there is an option to repay it early, there is no financial benefit for the hospital district is doing so.

“We’re now into the annual debt repayment for the debt for those hospitals,” Douville said. “We’re obligated to pay the interest regardless. There’s really no advantage.”

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At this point, the hospital district is planning a strategic planning process, probably during the middle of 2019, through which it will review its mandate in light of the completion of the two major capital projects. This could mean there are still changes in the future regarding tax requisition levels.

“Obviously, every year that budget gets reviewed and brought forward,” Douville said.