CHICAGO -- An Illinois agency yesterday approved construction of a new bond-financed $551 million Cook County Hospital to replace the county's crumbling public health care center.
The existing hospital comprises 13 decaying buildings, between which patients are transported even in winter for routine procedures like X-rays and blood tests. Cook County Board president Richard Phelan said that in the past three years, the county has spent more than $80 million to make capital renovations "simply to meet code and accreditation requirements."
Acknowledging the threat of deteriorating service and the expense of repairs at the existing hospital, the Illinois Health Facilities Planning Board unanimously approved the county's application for a certificate of need for the new hospital. The certificate marks the final approval needed to go ahead with the new 464-bed hospital, whose construction will be financed entirely by bonds.
In its application, the county said it will sell a series of six general obligation bond issues over six years. The bond will be repaid over a 30-year period. The first two issues will total less than $40 million apiece; each of the next three issues will total about $130 million and the final issue will total about $95 million. Phelan predicted the new hospital will open in about seven years.
Lacy Thomas, chief financial officer of the Cook County Board of Health Services, said the first bonds will not be issued until architects complete building designs, possibly as late as next year.
Staff members for the health facilities board raised some questions about the county's debt financing plan, noting it did not meet state standards. According to the staff report, the median debt per adjusted bed for state hospitals is $96,685; Cook County's projected debt per adjusted bed is about $1 million.
But Ruth Rothstein, chief of Cook County Board of Health Services, explained that the county's proposal is like nothing the health facilities board has considered before. The board typically receives proposals to renovate or add to existing buildings, not to build new hospitals from the ground up, she said.
"For Cook County Hospital, debt financing is the only viable alternative. The county has no cash or securities to use for this project," she said.
John Stroger, who will be sworn in as president of the Cook County Board next Monday, said he will take his time to evaluate the final debt financing scheme, especially in light of rising interest rates.
"We'll use all the financial resources we have. General obligation bonds are great, but we'll look at other alternatives," said Stroger, who currently chairs the County Board of Commissioners' Finance Committee. "If we have to go to general obligation bonds, we want to make sure the county's credit is as strong as possible before we issue them."
The county now enjoys an Al rating from Moody's Investors Service and A-plus ratings from Fitch Investors Service and Standard & Poor's Corp.
According to an analysis by Coopers & Lybrand last year, over a five-year period it will cost Cook County's property taxpayers $440 million less to run the new hospital than it would have cost to keep the existing building up to code.
But Stroger signaled yesterday he may support an overhaul of the county's tax scheme.
"I'm looking for other sources of revenue, maybe a graduated income tax dedicated to local government. That would be a replacement tax. The present real estate tax system is archaic, unethical, and unfair," he said.