Guam Economic Development Authority Administrator Melanie Mendiola compared the repossession of the island's only public hospital to being at war, however unlikely that would actually take place, as she answered questions from members of the Guam Legislature about what might happen if the government were to be unable to make payments under a financing measure for a "21st century" health care center.
Mendiola said payment plans would generally be made if there is difficulty paying before legal action takes place. And while there would likely be contract language placing a lien on a new hospital facility should payment not be made, it is unlikely that situation would occur, she said.
"A worst case scenario like that, to me, is equivalent to World War - a war type situation," Mendiola said stumbling briefly as she responded to questions from Sen. Sabina Perez. "Critical infrastructure is critical infrastructure, period. ... Yes, there is difficulty, and difficulty is generally dealt with. But straight up nonpayment that would result in repossession of a hospital, to me, that would be highly unlikely."
Thursday marked the second day that lawmakers discussed Bill 121-36, which proposes a financing scheme for the construction of new facilities for the Guam Memorial Hospital Authority, Department of Public Health and Social Services, and Guam Behavioral Health and Wellness Center through a lease/lease-back arrangement.
The measure was initially considered in the July legislative session but was sent back to committee after numerous amendments were filed. Following another public hearing later that month, Bill 121 is now among the measures being discussed during this current session.
The total cost for the construction of the health care facilities was initially estimated to be about $1 billion, with a new hospital at about $800 million, inclusive of a 10% cost escalation.
To finance rental payments under the lease and lease-back, Bill 121 proposes to pledge $35 million from anticipated earned income tax credit reimbursement in fiscal year 2022, $35 million from the General Fund thereafter, federal funds and other financing options.
The fiscal 2022 budget law also created a fund to set aside $35 million in EITC reimbursements for the 21st century health care center.
Can ARP money be used?
Lawmakers voiced several concerns and inquiries during their time discussing the measure with government of Guam financial officials. The phrase "putting the cart before the horse" was used occasionally.
It is not yet known how the EITC funding will be remitted to Guam, nor has a license with the Department of Defense been finalized over the use of Eagles Field, federal property that is eyed to be the site of the health care center. Mendiola said Thursday that the license will come in October. The Department of Defense has committed to the cleanup of the site prior to the transfer, she added later.
Moreover, Department of Administration Director Edward Birn said Wednesday that local officials are still waiting on confirmation that $300 million in American Rescue Plan funding can be used to help finance the health care center, as the governor intends.
The question was posed to the the U.S. Department of the Treasury during the governor's visit to Washington, D.C., in August. Treasury officials said they would consider it and respond, according to Birn.
"And we have followed it up. The Treasury, to give them their due, has many questions after them. And this is a question which they said no one else has asked. So I'm not surprised that we haven't yet got a response," Birn said Wednesday. "There's a possibility that there might be a follow-up in early November."
Guam is also waiting for a response to a request for funding to enter a charrette with the Army Corps of Engineers for the design of the new health care center. However, Mendiola said Wednesday that the charrette can run concurrent with preliminary work and studies, and Bill 121 can be passed while the charrette is ongoing.
A charrette is a meeting in which all stakeholders in a project attempt to resolve conflicts and map solutions.
Sen. Frank Blas Jr. said Thursday that the issue isn't that lawmakers don't want to build a new hospital.
"It's, 'Are we ready to be able to do this?' And that's the concern that I have," Blas said.
When Sen. Clynton Ridgell asked what consequences there would be if the bill isn't passed now, GMHA Administrator Lillian Perez-Posadas said costs will not get any lower the longer officials wait.
"The costs will continue to rise. And so the end game is that it's an investment ... it's going to really make the health care services of the island improved and it can become a regional facility," Perez-Posadas said, adding that the new health care center will also open opportunities for research.
She said the first phase of construction can perhaps be the laboratory for Public Health, and then the hospital, and then other facilities.
Responding to the same question, Mendiola said every Legislature as far as she can remember has been talking about building a new hospital.
"It would be very nice if it can be done today. Earlier, I touched on the market conditions, it's a good time to go out to the market. But aside from that, there is pledge funding from the governor but it can't be done alone. Three-hundred million (dollars) isn't going to build a new hospital at the end of the day," Mendiola said. "So we have this access to this money today. There's a very high reliability of access to this money. There's an unprecedented amount of grant funding that's flowing into communities around the U.S. Much of which can be channeled into this project ... And I think that by taking care of this today, this is something you can utilize to leverage in your grant applications."
Committing local money will give a more solid footing when pursuing federal money for more assistance, and Mendiola said that was the biggest reason to pass the bill today versus "kicking the can down the road."
Concluding his thoughts, Ridgell said he believed finding a funding mechanism is "the horse which will pull the cart through to the end."
Lawmakers placed the bill in the reading file with the recommendation of the Committee of the Whole.