At its July 19 meeting, District council approved a recommendation from its finance and corporate services committee to include $354,000 in incremental funding to the Muskoka hospital local share reserve in 2022 to be considered during budget deliberations.
In 2021, District council approved the creation of the reserve and an annual contribution of $600,000 to the fund through taxation.
It also maintained another reserve called the Hospital Financing Reserve Fund for approved hospital capital projects which contained a balance of $898,600 at the end of 2020. The latter does not include ongoing contributions to the fund, according to a report compiled for the finance and corporate services committee by District CAO Julie Stevens.
“The current estimates for the redevelopment of sites in both Bracebridge and Huntsville are $560.9 million in total with the local share estimated at $129.2 million, which is approximately 23% of the total project cost. This local share, or community amount, is made up of 10% of the capital build, as required by the Ministry of Health, plus an additional 13% for other non-funded capital requirements such as furnishings and equipment, as well as, costs related to parking or coffee shops that are revenue producing,” she noted.
She indicated that Muskoka Algonquin Healthcare (MAHC) has identified about $53 million in assets that can be transferred to the new hospital sites in Bracebridge and Huntsville, and both of the hospital foundations have committed to contributing $20 million towards the new hospitals. That leaves the remaining portion of the local share required at about $74 million.
Attempts to lobby the Ministry of Health to change the funding model to cap or limit the amount required from local municipalities for acute care hospitals in Ontario has not been successful. Municipal leaders have argued that smaller municipalities “do not have the same capacity to raise funds through donations or the tax levy due to the smaller population and smaller commercial and industrial base,” reads Stevens’ report, which notes that during the 2020 Association of Municipalities of Ontario conference District councillors advocated for the change.
“The Province indicated that all redevelopments moving through the approval process have contributions from municipalities. The proportion of municipal contributions was not disclosed,” she added.
Stevens indicated that a local working group comprised of MAHC board representatives and staff, the hospital foundations, and staff and elected councillors from the Muskoka and East Parry Sound area met in March 2021. The Local Share Working Group was created to come up with an equitable and achievable approach to raising the funds for the local share.
So far, the Town of Bracebridge has committed $115,000 and the District of Muskoka has committed $600,000 to the local share of the hospital reconstruction projects in their 2021 budget deliberations. The Town of Bracebridge is also considering a renewal of its commitment to purchase land to donate to MAHC for a new hospital site in that community.
“Staff is not aware of any additional commitments to the local share at this time,” added Stevens in her report.
She noted that staff had undertaken a preliminary analysis of the contributions required if District council were to finance the local share. One option calls for a $10 million contribution by the lower-tier municipalities with the District contributing $64 million, while the other option assumes the District’s local share would be the entire $74 million.
The analysis also assumes the project will take 15 years to bring to fruition in the year 2036. In order to arrive at the required local contribution, the District would need to continue contributing $600,000 yearly to the Muskoka Hospital Local Share Reserve Fund and increase its contribution beginning in 2022 for the next 15 years with an anticipated investment return rate of four per cent.
Stevens provided a chart of two different scenarios, one without the lower-tier municipal share and the other assuming the District would fund the entire $74 million required:
She said given that the District’s reserve funds totalled $155.5 million at the end of 2020, “Staff is concerned that this level of financing for the hospitals will negatively impact the ability for the District to manage its own infrastructure needs. However, the importance of maintaining the hospitals for the economic vitality of the District has been strongly reflected in the community consultations. In addition, given the Province’s feedback that municipal contributions to the local share are expected, it is prudent to consider the level of commitment proactively.”
Again, council agreed to include additional funding for the Muskoka Hospital Local Share reserve fund of $354,000 as part of its 2022 budget consideration.