Niagara Falls council to make $30 million decision on new hospital

Niagara Falls City Council has a big money decision to make at tonight’s meeting as Niagara Health is asking them to contribute $30 to $32 million towards the construction of the new South Niagara Hospital.

However, is it money that’s already in the city’s coffers – or at least will be in the near future through judicious investments?

In a report written by Tiffany Clark, the city’s Director of Finance, she points out the city “has been prudent in saving money in a South Niagara Hospital Reserve Fund to be used for the City’s Local Share Contribution with a reserve balance of over $24 million to date.”

While that falls a little short, Clark added, “City staff have invested these funds in accordance with the City’s Investment Policy with the funds guaranteed to mature at a value of $30 million total, with approximately $14 million maturing during 2027 and an additional $16 million maturing during (the first quarter of) 2028.”

The new hospital, located at the corner of Biggar Rd and Montrose Road, will sit on 50 acres of land with a 10 to 12 storey building that’s 1.2 million square feet. The total construction costs are estimated to be $1.13 billion.

The city has already made a $11 million contribution of land they purchased and donated to Niagara Health.

However, there are some negatives for the city to consider, the report says.

“While having the cash upfront allows the City and taxpayers to avoid expensive interest charges, there are some downfalls to consider. Specifically, there is an intergenerational equity impact to be considered.”

It goes on to say that since the hospital will benefit not only current taxpayers but future taxpayers over the next 50 years, “there is an argument that the cost for the Local Share Contribution should not be borne solely by the current taxpayer (by expending $30-32 million in cash upfront) but rather the cost should be spread out over a longer term (for example 25 years) so that multiple generations of taxpayers benefitting from the Hospital will have also invested in the South Niagara Hospital.”

That argument can be summed up as the push to pay it all now counts heavily on today’s taxpayers footing a large bill but is asking nothing of future generations would will also reap the benefits of the hospital. However, staff is aware that facilities are build all the time and that means cash upfront.

To that end, staff is proposing that council commit to “paying Niagara Health $30,000,000 by the date of substantial completion in order to avoid any interest charges from Niagara Health.”

However, with a nod to future generations, they are suggest a special hospital levy of 1.5 per cent be added to city budgets from now until 2048.

“The intent of the 25 year Special Capital Levy (Hospital)’ is to spread the cost of the Local Share Contribution over 25 years so that multiple generations of taxpayers contribute to the cost of an asset (the South Niagara Hospital) they will benefit from.”