Questions remain in hospital service area boundary move

An invisible line near Clam Gulch Tower means the landowners on the north side are likely paying a few dollars in property taxes each year and those on the south side are likely paying hundreds to the borough’s two hospitals.

The common boundary line between the Central Kenai Peninsula Hospital Service Area and the South Kenai Peninsula Hospital Service Area was drawn at the northern boundary of the Ninilchik Precinct after the borough voted to establish the service areas in 1969, a few years before Soldotna’s Central Peninsula Hospital opened. At that time, of the 46 residents of Ninilchik who voted, three voted in favor of the service area, but the rest of the area’s vote overruled them, according to an April 1969 Homer News article.

However, Ninilchik is about the midpoint of the highway. Many residents go to Soldotna to use the hospital, but they are included in the South Kenai Peninsula Hospital Service Area and are therefore paying the higher mill rate associated with South Peninsula Hospital.

An ordinance before the Kenai Peninsula Borough Assembly seeks to move that line further south so those residents will be paying taxes on the hospital they use. The ordinance, sponsored by assembly representatives Brent Johnson and Dale Bagley, will be up for a final hearing before the assembly at its July 26 meeting. That meeting is the cutoff for an item to make it onto the ballot in the fall general election. Residents north of the proposed new boundary line would be able to vote on the ordinance.

Johnson and assembly representatives Wayne Ogle and Willy Dunne hosted an additional public hearing for the ordinance Thursday to give the public an additional chance to weigh in.

“It can’t really be postponed, because it has to make to the ballot, and that meeting is the last possibility for an item to make it to the ballot in October,” Johnson said at the meeting. “If the assembly passes this in some form, it will be on the ballot and people north of wherever this line is moved to will vote on it.”

About 14 people attended Thursday’s meeting, most from the Ninilchik area but some from Homer and Kasilof. The Ninilchik residents voiced support for the ordinance, saying they did not feel they should be paying taxes to a hospital they did not use.

A few Homer residents, all of whom are associated with South Peninsula Hospital, spoke against the ordinance. They raised concerns about the financial impact on the hospital, which has a smaller tax base and sometimes more financial challenges than Central Peninsula Hospital, and about the Ninilchik Community Clinic, with which South Peninsula Hospital partners.

There are several options on the table. The original ordinance moved for the boundary to be moved to Barbara Drive, which is about 14.5 miles south of the current boundary. One suggested amendment would move the line further south yet, down to Oil Well Road; another suggestion would move it all the way south of Ninilchik to Tim Avenue.

Roberta Highland, who sits on the South Kenai Peninsula Hospital Service Area Board but said she attended the meeting representing herself, said if the service area boundary is moved further south, it would likely cost the hospital hundreds of thousands of dollars. The value of oil and gas development is also not included in the financial projections, she said.

“Sometimes, (the hospital has) a little bit of difficulty, and so any kind of decrease in our money will make a difference,” Highland said.

She also said if the line is moved further south than the Ninilchik Community Clinic on Kingsley Road, South Peninsula Hospital would not be able to provide the lab, imaging and diagnostic services it currently provides at that clinic because it would be outside the service area.

Derotha Ferraro, who works for South Peninsula Hospital but said she attended the meeting as a resident of Homer, said the relationship took a long time to work out with the Ninilchik Community Clinic. Central Peninsula Hospital could pick up the services, but it would likely take time to get contracts transitioned and find physicians who want to commute, she said.

Ferraro also raised questions about the finances projected by the borough. The numbers the South Kenai Peninsula Hospital Service Area Board cited in its comment to the assembly opposing the ordinance came from Borough Mayor Mike Navarre’s office and were based on the projection that those in the new service area would switch immediately from paying a 2.3 mill levy to a .01 mill levy, she said.

However, because of the upcoming vote on $4.8 million in bonds being issued to the residents of the South Kenai Peninsula Hospital Service Area — which would be on the ballot at the same time as the service area boundary move — those who move into the new service area would still be obligated to retire the bonds, which means they would be paying an approximately 1.3 mill rate for the next approximately 8 years. Ferraro said she did not find this out until the night of the meeting.

“You all have access to information we don’t have access to,” she said. “We are just learning that sitting here … we are only as smart and can only come up with important and accurate comments based on what’s out there and what’s on the website.”

Johnson said he sent the numbers out via email to those who had indicated interest in the subject to him, and that anyone who provides him an email address can receive the same information.

He proposed a similar ordinance last year to move the common boundary further south and to include Seldovia, Nanwalek and Port Graham in the service area. That ordinance failed, in part because of the lack of public voice in the process, Johnson said. This is his last year on the assembly and he wants to see it done before he is term-limited out in the fall, he said.

“It has never been my intention to harm (South Peninsula) Hospital at all,” Johnson said. “I am trying to put a line where it is fair.”

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