Investment tools support “local share” for new hospitals
Convenient hospital access is important to everyone and it is fundamental to a good quality of life and a thriving community.
But even though healthcare is a provincial responsibility, communities are expected to finance a substantial “local share” of new hospital costs. This includes 10% of construction costs, plus 100% of other costs like furnishing and equipment. This brings the local share to about 25% to 30% of overall project costs.
With some 50 hospital builds at some stage of development across Ontario, many municipalities are under pressure to raise significant funding amounts for healthcare – on top of their own municipal capital projects.
Generally, the local contribution is raised through hospital foundation campaigns, municipal governments as well as revenue from on-site hospital parking and retail. Most importantly, communities must commit to funding during the early planning stage for the hospital project to proceed to the next step.
Municipalities can fund their contributions through a tax levy, other revenues like selling municipal property, or in-kind donations. In the case of tax levies or other revenue, investing funds wisely helps meet the funding commitment when it is needed.
“Municipalities can use interest or investment income earned on their hospital reserve funds to help reduce tax impacts of the project,” said Bracebridge CAO Stephen Rettie, who also sits on the ONE Investment Joint Investment Board (ONE JIB). ONE JIB manages ONE Investment’s Prudent Investment Program.
Along with Bracebridge, Huntsville and the upper-tier District Municipality of Muskoka, are long-time investors with ONE Investment and founding members of the ONE JIB. All three are relying on long-term investments to help raise their local share for Muskoka Algonquin Healthcare, which will serve Muskoka and East Parry Sound.
Rettie notes that time is on their side, as they can invest funds for at least 10 years. This long-time horizon is well suited to ONE’s Target Date strategy, which invests funds with an asset mix and risk level that can generate reliable long-term returns. A portfolio relying on just ONE’s Legal List investment products can also generate revenue and manage impacts on local taxpayers.
Whether or not the policy of the local share for hospital projects is appropriate, it is currently the only way to move much-needed hospital projects forward. Reach out to ONE Investment to learn more about our investing tools.