New Oakville Hospital Q & A…

Archived & Updated from 2009-2010

(Opened 2015 on-time & on-budget)

Q. How much is the Town pledge?

A. The Hospital originally asked for "up to" $230 million. In talks that followed with the Hospital and the Province, Mayor Burton reserved for the Town the rights to be “last in” and “first out” and “capped off”, and to decide the final amount of the donation after a post-construction audit of the hospital's finances. By the time of the 2010 election, he had already reduced the actual donation amount to $130 million. [PAID, July 2015.]

  • The Hospital originally said it needed to raise up to $530 million for the “local share.” That “local share” was to pay 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 Hospital said 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. The hospital officials say they expect $60 million from the Hospital Foundation’s fundraising drive, $340 million from the hospital’s own sources of revenues, and up to $130 million from the town, for a total of $530 million.

Q. Why were we asked to pledge?

A. The Hospital said it was unable in a community the size of Oakville to raise all of the $530 million Local Share on its own. 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. In Burlington and in Milton, the same requirements appeared, and each of those communities introduced a special tax levy to raise their contribution. Thanks to Mayor Burton’s vision of seeking new, non-tax revenues for the Town, Oakville did not have to impose a special tax.

  • Without the commitment from the Town for part of the Local Share, the province would have re-allocated its estimated $1.25 billion (before financing) commitment to another community that was ready and willing to contribute local funds.
  • Other towns and cities began taxing their residents to collect money for hospitals they didn’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 each voted unanimously to donate $60 million of tax money to their smaller hospital upgrade projects. Our vote was 11-2 to make our commitment even though we were never going to use property tax money. The opponents said they believed the Province should have to pay it all, even though it was shown that the Province never has done so.
  • What was at stake was not getting a new hospital at all.

Q. How likely are we to pay more?

A. No one can make us give more. Council capped our donation and also established that Town money would be "last-in" and "first-out" and “capped-off” if other funds were received or costs came in lower or higher.

  • 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, Oakville resident Mike Gallagher, 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 he had got all the trade unions to agree to a no-strike provision for the project. (And they kept their pledge).

Q. Where is the rest coming from?

A. The Oakville Hospital Foundation has committed to raising $60 million. The hospital corporation expects to be able to provide $340 million from its “own-source revenues”: parking, cafeterias, rental of space to retail outlets and similar activities. The town’s donation of up to $130 million added to the hospital’s $340 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. This one of the reasons 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 even more expansion in the future is being roughed in now to save costs later.

Q. Do single-patient rooms add costs?

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 was Oakville asked to pay so much of the cost?

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 100% of the equipment and furnishings.
  • In 1962, local residents paid 34% of the costs of another addition and 100% of the equipment.
  • In 2015, local residents will pay 10% of the costs of building a brand new hospital and 100% of the equipment and furnishings.

Q. Some 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.
  • The Province looks for willing local contributions as a way of allocating Provincial resources for new hospitals.
  • Bottom line: anyone could and some did insist on no local funding for hospitals, but they were insisting on no new, modern, safer hospital. They were also insisting on a change from more than 60 years of history.

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

A. Rob led extensive negotiations to reduce the Town’s contribution without jeopardizing provincial funding, identifying for the Hospital ways to reduce its need for money from the Town.

  • Council’s commitment of up to $130 million in 2015 is much lower than the hospital’s original request of up to $230 million.
  • 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 an initial payment on substantial completion of construction and the rest over 30 years. Other municipalities (Burlington and Milton) have volunteered to contribute their money up front, before construction. Rob felt that, since future residents will be getting a good-as-new hospital, future residents should help pay its costs. Under his plan, future residents pay, too.
  • 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 not yet concluded, so it is impossible to say now how that land will be put to use. Rob has pledged his support for an approach that would see housing that mirrors surrounding homes and a community recreation centre with support facilities for "care in place" healthcare programs to keep seniors in their homes longer.

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 to reduce pressure on property taxes.

  • The Town receives revenues as dividends from Oakville Hydro and its subsidiaries. Oakville Hydro has plans to develop several new businesses to increase dividends to the Town. These new revenues are unrelated to the distribution of electricity to residents and businesses. These increased revenues are from such things as solar power generation in locations outside of town. Thus there can be no impact on hydro electricity bills for residents and businesses.
  • Of the $105 million the Town realized from the sale in early 2010 of Blink Communications, about $40 million has been received as a special dividend and saved by the Town as a part of the donation and the other $65 million is being invested by Oakville Hydro in a new transformer station and other projects such as green energy to generate new revenues to help carry the cost of the donation to the hospital.

Q. One candidate is suggesting that the hospital could be paid for with a $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.

  • Let's do the math. We had five years in 2010 to come up with the money by 2015. To generate $130 million by 2015 with a $400 charge, you would have had to collect $400 from 65,000 new homes a year for the next five years (5 x $400 x 65,000 = $130 million). That’s impossible! When Mrs. Mulvale was mayor and letting growth run out of control, we grew by about 2,500 new homes per year. There isn’t any space left in Oakville now for 65,0000 new homes per year for each of five years!
  • Oakville won't even have its first 65,000 homes until around 2016! Mrs. Mulvale's math is just plain nutty.

  • Growth under Mrs. Mulvale as mayor hit a peak of about 2,500 homes a year. With Rob controlling growth to only what fits environmentally and economically the pace is now and in future a more moderate average of 1,500 a year. Five years of 1,500 homes a year equals 7,500 homes in those five years. And 7,500 new homes over five years times $400 per new home equals only $3 million, not even close to what's needed. The Town’s official plan is written for 25,000 new homes over the 21 years between 2010 and 2031. We won't grow like we used to, never mind as fast as Mrs. Mulvale’s “plan” would require! She failed to keep up with the growth she promoted during her 18 years as mayor. Infrastructure badly lagged population instead of even trying to keep up. We can't afford the Mulvale vision of rapid growth.
  • To have only new homes pay for the new hospital would require charging each of the total 25,000 new homes from 2010 until 2031 about $7,500 *each* just to equal the $130 million plus the interest required to borrow against that future stream of money. And we don't have legal authority to charge anything in the first place. It would not be prudent, either — if the growth did not appear in such numbers, taxpayers would be left holding the risk on the deal, and Rob opposes putting risk on taxpayers.
  • Mrs. Mulvale was assuming a change to the Development Charges Act could be put in place in time to allow such a charge. But Mrs. 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 continued as mayor but 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 have ever got it back. She had ten years of opportunity and failed.
  • The truth of the matter is that this is a large and important commitment that needs the new and creative thinking Mayor Rob Burton has brought to job. Fortunately the voters in 2010 agreed with Rob's plan and Mayor Burton won a resounding victory over Mrs. Mulvale and her bad math. The Town has the financial capacity to carry the costs of borrowing the payment that is due in 2015. Now, new, non-tax revenue streams Rob has developed (and will keep developing) will cover the costs of the Town's donation — which is how Rob made the new Hospital possible at all.

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.

— Page updated at October 2014, December 2015

Architect's rendering…

NOH

Vision for New Hospital

(click here to enlarge)

Media memories…

Mayor for hospital

If the rest of Oakville council feels as the mayor does the Town will be making a $200 million contribution to Halton Healthcare Services (HHS) to help build the new Oakville hospital. Oakville Mayor Rob Burton announced his support for the contribution at the conclusion of Monday's council meeting, which heard from 16 delegations with speakers both condemning and applauding the contribution proposal.

Oakville Beaver
April 20, 2010

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