USDA denies loan for critical access hospital


PINEDALE – USDA Community Programs Director Lorraine Werner denied a $25,461,000 loan application from the Sublette County Rural Health District to build a critical access hospital at the BloomField site, a letter released by the SCRHCD on Monday stated.

Werner based her decision on the high fees associated with the critical access hospital project and the determination that the proposal was not “modest” enough for USDA rural development funding. The letter also expressed concern about the economic feasibility of the project and lack of community support.

The SCRHCD recently applied for the loan after the board of trustees approved the construction of a new critical access hospital at the BloomField Site in Pinedale at a special meeting on Aug. 29. The board voted 4-1 in favor of the project, with Trustee Wendy Boman offering the lone dissent.

Werner stated in her letter that the “fees associated with the (CAH) project” were “excessive” when compared to similar projects. As an example, Werner cited that the average cost of obtaining counsel for loans and hospital projects in the state usually averaged around $30,000, while the SCRHCD listed counsel fees of $100,000.

The loan application required an itemized estimate of project costs, including development. Werner pointed out that the SCRHCD’s loan did not include the costs to build a new road to the site in their cost estimates.

“The Town of Pinedale Attorney stated a road must be built when the site is developed,” Werner wrote, “Based on the estimate from the Town Engineer, this could cost upward of $2,000,000 which was not included in the cost estimates (for the loan).”

All loans for USDA rural development must be “modest in size, design and cost,” Werner continued. In denying the loan, Werner stated that the BloomField CAH project was not modest in size based on standards set by the USDA’s engineer and National Office Architect. While the SCRHCD managed to reduce project costs by $550,000 for the land purchase and $289,000 in construction funding, the reductions did not amount to the 10 percent claimed in the loan application, Werner said.

Werner also stated that each project must meet “economic feasibility requirements” and prove that they have funding through sources like taxation, fees or assessments to “provide for facility operation and maintenance, reasonable reserve and debt payment.” Other than an applicant contribution of $2 million, Werner wrote, “There is no evidence of other funding sources, including pledge or commitment letters from other entities.” She added that the SCRHCD’s revenue was “declining historically for the last five years” along with the population of Sublette County.

The USDA requires that each project “demonstrate exceptional community support” to get funding, Werner said in the letter. The SCRHCD failed to provide evidence of widespread community support in the form of funding and “aggressive leadership,” Werner argued. Letters from the public received by Werner’s office showed a mixture of support and opposition to the project, and she added that the USDA had received only letters of opposition from local “government entities.” Werner also raised concerns that the project did not show any form of widespread financial support.

“There is no evidence of a public request for sales/use tax to pay for the project which, if passed, would show exceptional community support,” she wrote, “There is no evidence of financial support from any formal entity in the county.”

The SCRHCD has several options to pursue if the organization decides to appeal Werner’s decision, according to a document supplied by the USDA and provided to the Examiner by SCRHCD Practice Manager Amanda Key on Monday. The SCRHCD has the right to raise questions and concerns in an informal review or to ask for mediation over disputed issues. The SCRHCD can also make a formal appeal to the USDA’s National Appeals Division.

Key told the Examiner that her office will wait for the any decision on appeals from the SCRHCD board of trustees. When contacted by the Examiner to comment on the denied loan, SCRHCD Board of Trustees Chair Scott Scherbel offered no comment.

A special meeting of the SCRHCD board of trustees has been called for Tues., Oct. 2 at 6 p.m. The meeting will be conducted at the Marbleton Town Hall.

 


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