THE $400M QUESTION
The superhospital site has been chosen, but how will we pay for it? Will Ottawa look at a tax levy, like some other cities, to help off-set the cost?
It is the $400-million (or so) question.
Now that a site has been selected for Ottawa’s new Civic hospital, how will the community pay for it?
The provincial government, of course, pays the bulk of new-hospital building costs in Ontario, but not the entire cost. Hospitals are responsible for a local share consisting of 10 per cent of construction costs as well as new equipment. Ottawa’s new Civic super hospital will cost in the $2-billionplus range.
Ten per cent of that, plus new equipment will add up to a significant amount of money to be raised locally — about $400 million, according to earlier estimates, although the hospital hasn’t come up with a final number, which could be higher.
Communities across Ontario that, like Ottawa, are building or have just built new hospitals have struggled with the same issue: how to pay the local share of a high-tech and highly expensive hospital. There are various approaches. Oakville, for example, sold Oakville Hydro’s telecom subsidiary, which, in part, helped to pay $130 million of the local share of the $2.7-billion Oakville Trafalgar Memorial Hospital. And every community looks to donors as part of its fundraising campaign. But there are limits to how much can be raised through philanthropic campaigns alone.
That’s why so many hospitals have turned to property owners to pick up some of that cost through municipal tax levies.
It is not a subject that has been publicly broached in Ottawa, where keeping property tax increases to two per cent or less has been Mayor Jim Watson’s calling card.
“It would be politically very challenging,” said Kitchissippi ward Coun. Jeff Leiper, adding that he has heard no discussion of the issue.
Ottawa has used special property tax levies sparingly and for targeted programs, including recently in Kanata North, where residents agreed to a special levy to get rid of mosquitos.
Windsor, which, like Ottawa, is in the early planning stages of a new super hospital, already has a one-per-cent property tax levy that will add about $30 a year to local property tax bills for 14 years to help pay the local share of hospital construction.
“We knew we were not going to be raising $200 million by having bake sales and car washes,” said Windsor Regional Hospital chief executive David Musyj. “You are not going to be able to raise it the old-fashioned way. You are going to require a levy.”
Niagara Region also helped to pay the local share of a new hospital in St. Catharines with tax levies. Other communities that are relying on hospital tax levies include Burlington and Brampton, where a 3.3-per-cent change in property tax bills will help to pay a $60-million share of a new hospital.
Other communities, notably Toronto, where the Humber River Hospital opened in 2015, and Oakville have avoided property tax levies.
In Ottawa, meanwhile, hospital officials say it is too soon to talk about how the money will be raised, or even exactly how much needs to be raised.
But a hospital spokesperson acknowledged, “There is no one single way to meet our local share.”
Hospital officials say they’ll be in a position to submit an estimated local share, including an estimate for equipment costs, to the Champlain LHIN and Ministry of Health and Long Term Care for consideration once the early stages of planning are complete — likely in late fall or early winter.
Meanwhile, the hospital says it’s looking at the experiences of other hospitals throughout Ontario.
Although there is no single way to raise the money, a hospital spokesperson said local fundraising would be significant.
“We will lead a fundraising campaign to inspire and motivate the citizens to help build this new campus and invest in its potential for future generations. That campaign announcement and financial objective will come in due course, following our own planning and consultations with leaders throughout the Champlain LHIN.”
Last year, before the former site of the Sir John Carling building was selected, Ottawa Hospital CEO Dr. Jack Kitts told the Ottawa Chamber of Commerce that the hospital would be launching its biggest-ever fundraising campaign to raise $400 million for the local share of the hospital.
Things have changed since then, notably the selection of a site for the hospital and the beginning of active planning.
Sources have told the Citizen that the limit for a local philanthropic campaign to raise money for the new hospital is likely closer to $100 million than $400 million — especially given all the competition for fundraising dollars in Ottawa from places such at the University of Ottawa Heart Institute, CHEO, other hospitals, universities and more.
Which would leave a sizable portion of the local share to be raised through other sources.
One possibility is through parking revenue. As part of the 50-acre site around the former Sir John Carling building where the new hospital will eventually be built, The Ottawa Hospital will be given the former National Capital Commission parking lot at Dow’s Lake. That could become a revenue-generator if, for example, the hospital built a parking structure to serve hospital visitors and staff along with people using the Dow’s Lake area.
While Windsor’s Musyj maintains that property tax levies are part of the reality of building new hospitals, local hospital officials are saying little about the issue — neither raising it nor ruling it out.
“The only equation at present is how to design and build the best possible campus for 21st-century health care in our nation’s capital,” the hospital said in a statement.
“There are many ways to raise the necessary funds as part of a local share and we will work with all potential partners on the best way forward to meet local share requirement.
“It is simply too early to speculate on all sources of funding.”