Mountain View Nursing Home Building Project

MOUNTAIN VIEW NURSING HOME
BUILDING PROJECT

1. Our current population of Medicaid recipients is used for all calculations and having no way of knowing what the population will be going forward, the number remains constant in all of the calculations. We know that short of a mass migration out of Carroll County, the population numbers will only increase, causing the County costs to rise;
2. Inflation/deflation will effect all options equally, so there has been no calculation for them;
3. Current operating costs and income rates have been taken from the County Budget;
4. Interest rates have been quoted by commercial lenders and the NH Bond Bank, (payment schedules attached);
5. Tax rates have been calculated from the current DRA schedule;
6. Medicaid rates and reimbursements have been obtained from the Department of Health and Human services;
7. No adjustments for paying off any other county debt have been calculated into the tax rate going forward. But as we finish paying off the Jail and other notes those reductions of debt payments will affect the County tax rate.

Option 1:
Replacing our present nursing home (40,000 sq./foot) with a similar but a more efficient model (55,000 sq./foot). Without giving any consideration to quality of life or other intangibles, the following assumptions can be made: a) the most substantial savings in operation will be in energy and maintenance; b) historically our population has been controlled by the room configuration and an average population of 97 residents will continue.

Option 1
1. 55,000 sq./foot nursing home construction costs: $15,000,000
2. Interest for 20 yr note 5%: 9,072,750
Total Cost $24,072,750
3. Medicaid capital reimbursement:
356,478 yr x 20 = - 7,129,560
20 year costs before operation $16,943,190

Operating Costs
1. Current Revenues $7,824,538
Less currents expenses -10,071,517
Current Operating Loss $ 2,246,979
2. Current plant operations are
254,746; we can assume a
20% savings - 50,950
3. Energy costs $185,000 with
20% savings - 37,000
Projected operating Losses $2,159,029
4. 20 year operating losses: 2,159,029 x 20= $43,180,580
5. Our cost over 20 years to own and operate= $60,123,770

Option 2:
Building a new nursing home to current market and design standards to optimize return on investment to the County. While we can never assume 100% occupancy, we can determine through our previous experience that we can increase our average population from 97 to 101 by having private and semi-private rooms. We can also increase our number of private paying (insured) residents and thus decrease our operating losses (although for this paper we have not adjusted our revenue to reflect this increase). The addition of a café will return revenue to the County.

Option 2
1. 85,000 sq.ft. home-construction costs $23,560,000
2. Interest for 20 years @ 5% 12,357,000
Total Cost $35,917,000
4. Medicaid capital reimbursement
548,429 x 20 years -10,968,580
20 year costs before operation $24,948,420

Operating Costs
1. Current Revenues $7,824,538
Less currents expenses -10,071,517
Current Operating Loss $ 2,246,979
2. Increased occupancy from
97 to 101 or 265 x 4 x 365 - 386,900
3. Café – rent private operator
At market rate $19/sq. ft x 1200 - 22,800
Projected operating losses $1,837,279
4. 20 year operating losses: 1,837,279 X 20 $36,745,580
5. Our cost over 20 years to own and operate= $61,694,000

COST COMPARISON
1. The 20 year cost for option 1 is: $60,123,770
2. The 20 year cost for option 2 is: $61,694,000
3. The cost difference at year 20 is: $ 1,570,230

Although option 2 requires an initial commitment of $8,560,000 more money, its increased Medicaid reimbursement and enhanced revenue options has reduced that difference to $1,570,230 by year 20. Going forward, by year 25 option 1 would have a gross cost of $70,918,915 and option 2 a cost of $70,880,395, making option 2 less expensive to build and operate.

TAX IMPACT
Tax Increase per $1000
Averaged County wide

Option 1
Yearly note payment 1,205,000 = .11/1,000
Current operating loss: 2,246,979
Projected operating loss: 2,159,029
Difference - 87,950 = -.008
Projected Tax Increase .102/1,000

Option 2
Yearly Note Payment 1,888,000 = .17/1,000
Current operating loss: 2,246979
Projected operating loss: 1,837,279
Difference - 409,700 = -.04
Projected Tax Increase = .13/1,000

CONSIDERATIONS
1. The County’s obligation to pay its portion of Medicaid will continue regardless of our actions. Our current DEAS payment is $3,709,980 which, if it were to remain constant, will be a $66,159,000 cost to the tax payers over twenty years. This amount represents .11/$1000 on our current tax bill.
2. Option 1 is premised upon a design which is similar but an improved model of what we currently operate and even though the initial cost is 36% less than Option 2, the 20 year costs are very similar.
3. Any additions to Option 1 to accommodate for the enhanced revenue possibilities of Option 2 would require spending more money and expanding the building’s footprint and reducing or eliminating any near term fiscal advantage it would have over Option 2.
4. For this example we have used a rental figure for a café in Option 2. If we were to operate the café ourselves and had gross sales of $450,000 with a 15% profit, our revenue would change from $21,600 per year to $67,500 per year. This $45,900 would translate into $918,000 over the 20 year’s life on the loan.
5. Any discussion of privatization would have to concentrate on what the commercial nursing home operator’s expectations are with regard to design and commercial viability. In order for the County to generate the most favorable deal for the tax payers, we need to have the most commercially viable facility.
6. Any consideration of closing the nursing home would have to include the fiscal impact to the County of its third largest employer reducing its workforce to that degree.

Nursing Home
Census Information as of 6/24/09

ALLENSTOWN 1
BROOKFIELD 1
CENTER CONWAY 1
CONCORD 1
CONWAY 5
DEERFIELD 1
DOVER 1
EFFINGHAM 3
FARMINGTON 1
FRANKLIN 1
FREEDOM 1
KEARSARGE 1
MEREDITH 2
MIRROR LAKE 1
MOULTONBORO 1
NEWMARKET 1
OSSIPEE 18
ROCHESTER 2
SANBORNVILLE 6
SANDWICH 1
TAMWORTH 5
TUFTONBORO 4
WAKEFIELD 3
WARNER 1
WOLFEBORO 26
MAINE
PARSONSFIELD 1
WEST NEWFIELD 1
SANFORD 1
MASSACHUSETTS
AGAWAM 1
BEVERLY 1
WOBURN 1
PENNSYLVANIA
ELKHAVEN 2

TOWN TAX RATES
$23,000,000

Towns ~ Tax Rate 2008 ~ With debt payment ~ Difference
Albany ~ 0.90 ~ $ 1.06 ~ $ 0.16
Bartlett ~ 0.91 ~ $ 1.07 ~ $ 0.16
Brookfield ~ 0.88 ~ $ 1.03 ~ $ 0.15
Chatham ~ 0.91 ~$ 1.07 ~ $ 0.16
Conway ~ 1.06 ~ $ 1.24 ~ $ 0.18
Eaton ~ 0.88 ~ $ 1.03 ~ $ 0.15
Effingham ~ 0.96 ~ $ 1.13 ~ $ 0.17
Freedom ~ 0.89 ~ $ 1.04 ~ $ 0.15
Hart's Location ~ 0.93 ~ $ 1.09 ~ $ 0.16
Jackson ~ 1.04 ~ $ 1.22 ~ $ 0.18
Madison ~ 0.94 ~ $ 1.10 ~ $ 0.16
Moultonborough ~ 0.97 ~ $ 1.14 ~ $ 0.17
Ossipee ~ 0.93 ~ $ 1.09 ~ $ 0.16
Sandwich ~ 1.01 ~ $ 1.18 ~ $ 0.17
Tamworth ~ 0.99 ~ $ 1.16 ~ $ 0.17
Tuftonboro ~ 1.00 ~ $ 1.17 ~ $ 0.17
Wakefield ~ 0.94 ~ $ 1.10 ~ $ 0.16
Wolfeboro ~ 0.94 ~ $ 1.10 ~ $ 0.16
Hale's Location ~ 1.04 ~ $ 1.22 ~ $ 0.18


5% Estimated

House Value

0.18 per thousand
150,000 ~ $27.00
200,000 ~ $36.00
300,000 ~ $54.00

0.17 per thousand
150,000 ~ $25.50
200,000 ~ $34.00
300,000 ~ $51.00

0.16 per thousand
150,000 ~ $24.00
200,000 ~ $32.00
300,000 ~ $48.00

0.15 per thousand
150,000 ~ $22.50
200,000 ~ $30.00
300,000 ~ $45.00