Steep tax increases forecast to cover KGH expansion

Jason Luciw - Kelowna Capital News Published: February 23, 2010 1:00 PM

Current hospital tax increases don’t appear too bad, but it’s the ones barreling down the tracks that cause concern for the Central Okanagan Regional Hospital District. The increases are the result of all the borrowing required to fund the new ambulatory care tower and expanded emergency room now under construction at Kelowna General Hospital and the Interior Heart and Surgical Centre, which is scheduled to be constructed next. In total, the regional hospital board has approved a whopping $154.5 million loan, to be paid back over the next 20 years, to finance its share of the two projects. However, board directors heard Monday night that when it comes time to refinance all that debt in 2020, the tax increases could hit local homeowners like a freight train. This year alone, the borrowing will add an average of $6.04 cents to local property tax bills, or a 5.2 per cent tax increase. The amount is based on a home assessed at $440,000.

By 2016, interest and principal payments for the Central Okanagan’s portion of both hospital expansion projects will reach $12.2 million, however. And by then, the average Central Okanagan property owner will be forking out $163.68 cents to cover both projects, compared to $116.19 last year, before the borrowing began. It’s a tax increase of 41 per cent over the next six years. However, that may not be the end of the substantial increases if interest rates go up, according to a report given to directors Monday night. The borrowing is due to be refinanced in ten years and hospital district administrator Harold Reay warned the board that for every one per cent increase in interest rates, annual debt payments for the hospital expansion will jump $1.5 million, which equates to a further 7.7 per cent tax increase. Reay said the only saving grace might be population growth, which is forecast at three per cent per year over the next decade. The growth would spread the burden out to more taxpayers, he stated. The Central Okanagan Hospital District is borrowing $63 million to cover its share of the $270 million ambulatory care tower and expanded emergency centre. Interior Health picks up the remainder, with funding coming mostly from the provincial government. The local hospital district will borrow $91.3 million to cover its share of the $448 million heart and surgical centre. Again, Interior Health must come up with the remainder.