Sumner Regional Medical Center will receive more than $1 million in bonds from the City of Wellington to help pay for facility improvements.
On Tuesday, the Wellington City Council unanimously approved an ordinance authorizing the city to issue revenue bonds to the tune of $1.18 million to help pay for a new chiller which would help air-condition the building during the summer months.
Revenue bonds through the Public Building Commission will fund the hospital’s improvements. As with normal loans, SRMC will pay off the revenue bonds but will have the benefit of a lower interest rate and no income tax due to the nature of the bonds.
“It’s city-owned. We don’t want to lose the hospital. It is critical to our community for a number of reasons,” said City Manager Gus Collins as to why the city agreed to use the revenue bonds.
The hospital has used revenue bonds in the past to help fund the expansion needed for an MRI unit in 2007.
Should the hospital be unable to pay, the burden of the bonds will have to be paid by the City of Wellington. The Public Building Commission leases the property until the bonds are paid off, Collins said.
Since SRMC was opened 40 years ago, the same 325-ton chiller has been used to cool all of the hospital. Originally designed to run with two chillers, the hospital has been running with only one for several years and the one currently in operation is undersized for the facility, SRMC CEO and President Bob Bean said.
The original cooling tower from four decades ago is also in place and is in desperate need of replacement.
“The engineers tell me that the life span of that is 20-25 years, so they are amazed it is still operational and still running,” said Bean.
Even though the chiller was re-built five years ago, there have been numerous problems keeping the summer heat out of the hospital.
At times, the task has been almost impossible for the nearly antique piece of equipment.
“It’s a constant worry. Is this thing going to keep running throughout the day and night?” Bean said.
The president knew something had to be done when he was contemplating shutting down the hospital because the chiller had shut down and was unable to be started again.
“My hardest time as CEO was when in August of 2008 I literally was sitting on my front porch deciding on if we were going to evacuate the hospital because the chiller had shut down and it was just hot. Our staff did a great job, bought fans, and kept people cool,” said Bean.
A window air conditioner had to be brought in to keep the controls for the chiller cool enough to stay functional. Sitting on a stool, the air conditioner blew cold air onto the controls. Unseasonably cool weather also helped that season.
SRMC will now be getting a new chiller and cooling tower from Schneider Electric which is set to help save energy in the future.
Through performance contracting with Schneider, SRMC is guaranteed a savings from the new chiller.
“The projected energy savings from those changes for us is $71,778 a year and the projected maintenance savings — with newer equipment you won’t spend much time, energy and effort on maintenance — is $32,797 a year so a total projected savings for the year for us is $104,575,” said Bean.
Money saved from lower maintenance and utility bills can be re-invested back into the hospital. In this case, those saved dollars will be spent to pay back the bond.
“We are on a 15-year payout so the goal is to get those payments as close to the savings as possible so it becomes a budget neutral type of solution. So the money we were spending, we are now saving it and applying it to pay off the bonds.” said Bean.
Bean said the hospital will now be working with Schneider Electric to get the chiller in as soon as possible as warmer temperatures continue to creep up the thermastat.
Wellington, Kan. —
