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Hospital prepares for HUD meeting
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An Effingham County delegation will be meeting with federal officials later this month, answering questions and seeking answers as well.

Two commissioners, two hospital authority members and hospital consultants will head to the nation’s capital to meet with Department of Housing and Urban Development officials to discuss the Effingham Hospital’s expansion and modernization plans.

The hospital, which recently marked its 40th anniversary, is seeking to use HUD’s Build America bonds to update its facility.
The hospital authority already has selected contractors for its expansion, R.J. Griffin and Company and Rives Worrell Company, both from Savannah.

But commissioners, who have had questions about the expansion plans, are going to D.C. in hopes of getting some answers. Bob Brantley and Verna Phillips will represent the board of commissioners in Washington.

“I’m a little confused by it,” Brantley said. “I don’t understand why they are discussing this when they haven’t even gotten the money. I’d like to know what they expect before we get to Washington.

“It seems to me it would be helpful to have a little knowledge of what’s going on and what’s been going on,” Brantley added. “It feels like we’re in the dark.”

Selection of a construction manager is required by HUD before the loan is approved, hospital CEO Norma Jean Morgan said, so that HUD knows exactly what the construction costs will be.

“You can’t get financing until you know exactly what the project is going to cost,” she said. “It’s a requirement of the process.”

The planned $30 million project will add 50,000 square feet to the hospital. Should the hospital get approval for the HUD bonds and begin construction, the project is anticipated to be completed in 2012.

Hospital representatives and the commissioners will take part in two days of meetings Feb. 24-25 in Washington as part of the hospital’s pre-application process. The team, including attorney Rusty Ross, financial consultant Alan Richman and a bond counsel from Atlanta law firm King and Spalding, will make its presentation to HUD. That includes telling federal officials the hospital has submitted its certificate of need with the state to get its permission for the project.

They also will tell HUD where the hospital stands in its requests of the county — including the millage rate guarantee and the land needed for the expansion.

Commissioners said in November they would consider a resolution guaranteeing the hospital authority 2 mills of property tax and conveying 5 acres of land for the hospital’s expansion and modernization plans.

The hospital is in the process of finalizing the exact cost of the project.

“Hopefully, we’ll be a successful interview group,” Morgan said. “We’re trying to be as diligent as we can possibly be.”

From that meeting, the hospital will be told if it can apply for HUD financing.

“You have to be invited to this meeting. Then they tell you if you qualify to submit a formal application,” Morgan said. “We’ll be answering questions the entire year. Hopefully at the end of the day we will have, instead of a red light, a green light that says you go to the next point.”

Getting the application in before Dec. 31 could qualify the hospital to receive a stimulus-based reduction of $14 million in interest. The formal application is much more in depth and contains more information regarding project construction than the pre-application, Morgan said.

“We believe we are up to the task, and we are planning on being successful,” she said.

Having a contractor selected before submitting the application also means HUD officials get a look at a maximum guaranteed price of the project.

“They don’t want the number to slide later on,” said hospital chief financial officer Ed Brown.

Any differences in price or construction timeline would be the responsibility of the contractor and not the hospital.

“Once they’ve given that final price, it can’t change,” Morgan said. “There won’t be any overruns. That’s why we say they are at risk.”

The meeting with HUD was supposed to take place in December and was postponed to January before getting pushed to the last week of February.

“This is somewhat of a fact-finding mission for both the board of commissioners and the folks in HUD,” county commission Chairman Dusty Zeigler said, “and also give them some feedback so they can get a feel for where we might stand on the hospital taking on this project.”