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Credit crunch stops hospital project
Effects of the nation-wide credit crunch have at least temporarily scuttled plans to build a Whidbey General Hospital clinic on South Whidbey.
“About the time we were going to go out and secure those loans, the economy went into a tailspin and banks curtailed a lot of loan-making activities because of their own financial situations,” Trish Rose, hospital spokeswoman, said in an email to the Whidbey News-Times.
Hospital officials say that plans to build a 24,000 square foot, two-story South Whidbey Clinic near Bayview shopping center on Highway 525 are suspended indefinitely.
Joe Vessey, chief financial officer, said access to capital became increasingly difficult following the economic downturn in the financial markets last fall. Municipal and healthcare underwriting standards became more rigid and interest rates became unfavorable.
“We are evaluating the markets in order to secure a financing package with a favorable interest rate and terms,” Vessey said.
Until then, the South Whidbey Clinic project is frozen.
“We’re basically on hold. There is no funding source, but we are still trying to find one,” Rose said.
Earlier last month, hospital officials hoped for a reprieve from the federal stimulus package.
Whidbey General Hospital has invested almost $2.5 million into the project for the purchase of the property, preliminary planning, design, permits, architectural and engineering services, according to hospital officials.
Estimates place the remaining costs, including construction, at approximately $9.5 million. In the short-term, the project could create 100 to 150 local construction jobs. Over the long-term, the clinic would create 25 to 30 new healthcare and support staff jobs, contribute $700,000 in government fees and sales tax revenues and bolster the regional economy with $600,000 in medical equipment, furniture and fixture purchases.
But the stimulus package’s outcome did not favor the project, said Rose, because it “deleted funding for rural health clinic, healthcare and school new construction projects. And it appears construction in general lost out to remodeling and renovation.”
“So there is no chance for federal funding for the South Whidbey Clinic building project from federal stimulus funds,” Rose said.
Officials are holding out for funding from the state budget.
“There may be a glimmer of hope there,” Rose said. “All of the folks in Olympia are supportive of this project.” However, the state’s huge budget deficit has made it “a much tougher road,” she said.
The South Whidbey project would have offered an expanded rural health clinic, rehabilitation, laboratory, diagnostic imaging, home health, social work and urgent care services, as well as community meeting space.