Q. How much will the new hospital cost?

A. No one will know until Halton Healthcare Services accepts a bid next year.

• What we do know now is that the Hospital Board needs to raise up to $530 million for the “local share.” That pays for 10% of the “bricks and mortar” costs of construction (including 30 years of upgrading called “life cycle costs”) and 100% of the costs of equipment and furnishings.


• The total cost of building, updating and equipping the hospital will be 70% paid for by provincial taxpayers, 30% by the Oakville community Hospital Board's Local Share Plan of up to $530 million, with $60 million from the Hospital Foundation’s drive, $270 million from the hospital’s own source revenues, and up to $200 million from the town, beginning with up to $130 million in 2015 and the rest on an as-proven-to-be-needed or contingency basis in later years.

Q. Why are we being asked to commit funds?

A. The province would not let the hospital project proceed to the Request For Proposals stage until it was sure that enough funding for the local share would be available.

• Without the current commitment from the Town for part of the Local Share, the province would have re-allocated its nearly $1 billion commitment to another community that was ready and willing to contribute local funds.


• Other towns and cities are already taxing their residents to collect money for hospitals they don’t yet have provincial approval for in an effort to get on the list to receive a new facility. Two of these are our neighbouring communities of Milton and Burlington, who voted unanimously to do so. Our vote was 11-2.


• So what’s at stake is losing our place in line and not getting a new hospital at all.

Q. How much of the local share plan is the Town being asked to contribute?

A. This council agreed to contribute up to $130 million when the hospital is open and operating in 2015, and up to another $40 million contribution over the next 30 years toward those “life cycle costs”. The next council may consider a further donation of $30 million for 2015 if the bids next year come in higher than expected and if the hospital corporation can demonstrate it really needs the extra money.

Q. How likely are we to have to pay that extra $30 million?

A. Very unlikely.

• Bids for the last dozen or so hospitals in Ontario have come in 15% lower than expected and construction has come in on budget. That’s partly because the province is using a new financing model (known as the Alternative Financing and Procurement or AFP Model) that shifts the risk of going over budget to the private sector consortiums that compete to build the hospitals.


• During the public hearings on the hospital, the head of the International Union of Operating Engineers, which is headquartered in Oakville, announced that construction workers were so eager to have such high quality jobs close to home that they had agreed to a no-strike provision for that project.

Q. Where is the rest of the local share coming from?

A. The Oakville Hospital Foundation has committed to raising $60 million. The hospital corporation expects to be able to provide $270 million from “own source revenues”: parking, cafeterias, rental of space to retail outlets and similar activities. The town’s up to $200 million added to the hospital’s $270 million and the foundation’s $60 million equals $530 million.

Q. Why is the cost so high?

A. The cost seems high for two reasons:

• Financing for all new hospitals includes “life cycle costs” to cover maintenance and renewal. At the end of the 30-year financing period in 2045, Oakville will still have a state-of-the-art hospital, which is why a financial structure where future taxpayers help pay for the hospital they will receive makes sense.


• The hospital is being sized and planned to accommodate both an aging population (whose members have longer stays on average) and future growth. Space for future expansion is being roughed in now to save costs later.

Q. What about all those single-patient rooms I heard about? Don’t they add to the cost?

A. While about 80% of the beds will be in single-patient rooms, this is not a major cost factor. But it is an important health and safety factor.

• The best science says that the most effective way to combat the spread of deadly superbugs is by placing more patients in single-patient rooms.


• Any patient who needs a single-patient room will get one, whether or not they have private insurance to pay for it. The law is that a doctor’s order to admit a patient can’t be over-ruled by an administrator.


• Patients are not the only people at risk; hospital workers have also gotten sick and died from SARS and superbugs.


• Having a hospital that is safe to work in helps us keep and attract the most talented health care workers.

Q. Why are Oakville taxpayers being asked to pay so much of the cost of the hospital?

A. All communities that want a hospital must pay a local share but only the largest and richest communities can raise it without going to their local governments. Oakville taxpayers have always paid a portion of hospital construction. In fact, we will be paying a smaller share for the new hospital than ever before.

• In 1950, local residents paid 100% of the cost to build the original OTMH. Taxpayers paid 44% of the costs, which in today’s dollars amounted to almost $100 million. The rest of the cost was raised through donations.


• In 1955, local residents paid 83% of the costs of an addition and all of the equipment and furnishings.


• In 1962, local residents paid 34% of the costs of another addition and all the equipment.


• In 2015, local residents will pay 10% of the costs of building a brand new hospital and all of the equipment and furnishings.

Q. I still think the province should pay 100% of the cost of new hospitals. Did anyone approach provincial leaders about this?

A. Rob met with Premier Dalton McGuinty and with Opposition Leader Tim Hudak about increasing provincial support for hospital construction or allowing the Town to put a portion of the costs of the hospital on development charges, as was permitted before 1998.

• Each leader said no to both requests.


• The province is under no obligation to build a hospital in a particular community.


• It looks for willing local contributions as a way of allocating Provincial resources for new hospitals.


• Bottom line: you can insist on no local funding, but you will be insisting on no new, modern, safer hospital.

Q. Has the Town done anything to bring down the amount it has to contribute?

A. Rob led months of negotiations to reduce the Town’s contribution without jeopardizing provincial funding.

• Council’s commitment of up to $130 million in 2015 is much lower than the hospital’s original request of up to $230 million in 2015.


• Rob got the hospital corporation to agree that if the actual contracted cost of construction is less than the rough planning estimates being used to scope the project, the savings to the Local Share Plan would all be deducted from the Town’s contribution.


• Rob also got the hospital corporation to agree to phasing of town support, with the initial payment on substantial completion of construction and the life cycle cost contribution paid over 30 years. Other municipalities have volunteered to contribute their money up front. But Rob felt that, since future residents will be getting a good-as-new hospital, they should help pay its costs. Under his plan, they do.


• Rob got the hospital to agree to hand over the old hospital site in Old Oakville to the Town when it moves to its new premises.
  • Public consultation with the residents in that area has only just begun, so it is impossible to say now how that land will be put to use.
  • But Rob is suggesting that the old hospital be rented back to the province so it can be converted to a centre of excellence for senior care with both much needed long-term care beds and an ER and services to allow healthier seniors to remain in their homes.
  • The rental income would be one of several new non-tax revenue streams Rob is developing to pay for the new hospital.

Q. Rob says the Town will be able to pay for its donation to the new hospital with new non-tax revenues instead of by raising property taxes. Can you be more specific?

A. Rob’s vision is to diversify revenue sources for the Town, both to carry the cost of the donation to the hospital and to make the Town more self-sufficient and financially sustainable for the long term.

• Renting the old 440,000-square-foot hospital to the province to create a seniors’ health care centre would yield a substantial new non-tax revenue stream, which itself could carry the cost of the Town’s contribution.


• The Town receives revenues from Oakville Hydro and its subsidiaries. Hydro has plans to develop several new businesses to increase dividends to the Town. Of the $105 million the Town realized from the recent sale of Blink Communications, about $40 million is being invested by the Town to replace the dividend Blink formerly paid the Town and the other $65 million is being invested by Hydro in a new transformer station and other projects to generate new revenues to pay for the hospital.

Q. One candidate is suggesting that the hospital could be paid for with a $300-400 increase in development charges on new homes. How much would that generate for the hospital?

A. The amount that used to be collected for hospitals under development charges until Mike Harris took away that power in 1997 was $250 per home.

• To generate $130 million by 2015 with a $400 charge, you would have to collect $400 from 325,000 homes in the next five years. That’s impossible!
• Growth before this term of Council hit a peak of about 2,500 homes a year. Growth is now a more moderate 650 homes a year and planned to average 1,400 a year in future. The Town’s official plan is written for no more than 50,000 new homes by 2045.
• To have only new homes pay for the new hospital would require charging each of the 50,000 new homes from now until 2045 about $4,800 each at current rates of interest.
• Put another way, at $400 per new home, over the years until 2045 we would need to grow by 600,000 more homes. Rob believes that would destroy Oakville as we know it.
• Mrs. Mulvale assumes that a change to the Development Charges Act could be put in place in time. Ann Mulvale was mayor when Premier Mike Harris took away from municipalities the ability to put hospitals on development charges. In the ensuing ten years she was mayor and she never got it back, even with being president of the Association of Municipalities of Ontario for 3 of her last 6 years in office! There is no reason to believe she could get it back now.
• The truth of the matter is that this is a large and important commitment that needs new and creative thinking. The Town has the financial capacity to carry the costs of borrowing the $130 million payment that is due in 2015. Fortunately, new, non-tax revenue streams Rob is developing will cover those costs.

Q. Shouldn't residents from other municipalities in Halton Region contribute to the local share costs for the hospital if they are going to use it?

A. Most hospitals draw patients from beyond their local municipality. For example, Oakville residents visit hospitals in Mississauga and Toronto even though we have not contributed to the local share costs for those hospitals. However, the Oakville Hospital Foundation's capital campaign does solicit donations from hospital users living outside Oakville.