Editor’s note: This article has been updated to show that the proposed boundary change would include part of Ninilchik.

A proposed ordinance before the Kenai Peninsula Borough Assembly would move the hospital service area boundary south.

The move would shift part of Ninilchik from the South Kenai Peninsula Hospital Service Area to the Central Kenai Peninsula Hospital Service Area, resulting in a drop in the mill rate for Ninilchik property owners. Residents of the southern service area pay a mill rate of approximately 2.3, while central peninsula service area residents pay a rate of .01.

Assembly member Brent Johnson proposed the change, a resurrection of a similar proposal from July 2015. Because Central Peninsula Hospital in Soldotna is closer to Ninilchik than South Peninsula Hospital in Homer — a 30-minute drive versus an approximately hour drive — many Ninilchik residents use Central Peninsula Hospital for their medical services, he wrote in a memo to the assembly.

The service areas were conceived in 1969, before Central Peninsula Hospital opened. The current boundary falls at Clam Gulch Tower, north of the midpoint on the Sterling Highway. If the assembly passes the ordinance, the border would move 14.5 miles south to Barbara Drive, which is approximately 1.5 miles north of the Ninilchik River bridge.

The Barbara Drive line is a compromise from what the Ninilchik Emergency Service Board of Directors informally suggested in 2014, which was to place the border at Tim Avenue, according to the memo. Placing the border there would cost South Peninsula Hospital about $300,000.

“To avoid bisecting property parcels, a line near Barbara Drive would be complicated to describe,” Johnson wrote in the memo. “It is, however the line offered in this ordinance because it is in my opinion essential to bring some degree of fairness to property owners north of this point.”

Johnson wrote that he would prefer to merge the service areas, as Borough Mayor Mike Navarre suggested at a Healthcare Task Force meeting in October, to provide fairness to the entire borough and level out the difference in mill rates, but that would take some time and may not receive voter approval.

The ordinance will not come up for public hearing at the borough assembly until July 26, but multiple people testified to the assembly Tuesday in favor of the ordinance. Moving the line would provide them some tax relief and line up with the hospital they preferentially use, several said.

Darwin Waldsmith, who said he lives at Mile 125.5 Sterling Highway, testified that he favored the boundary being moved. In addition to others’ comments about the property tax fairness, he said Ninilchik is on the same telephone exchange as Soldotna, making calls to Homer long-distance.

“We want a boundary that reflects our needs,” Waldsmith said. “Our health, social and economic ties are with the Soldotna area.”

The only public comment objecting to the shift came from the South Kenai Peninsula Hospital Service Area Board. The board said in a written comment that because Homer “is home to a rapidly aging community,” more of the tax base is eligible for an age-based property tax exemption and removing more residents from the service area will further impact the hospital’s finances.

“The financial impacts of the proposed boundary revision are unknown but clearly the proposed boundary change would impact both the finances of (South Peninsula Hospital) and have an adverse impact on access to health care,” the board wrote in its comments.

Another complicating factor is the presence of the Ninilchik Traditional Council Community Clinic, located on Kingsley Road in Ninlchik. The clinic, which is a cooperative effort between South Peninsula Hospital and the Ninilchik Traditional Council, would remain in the South Peninsula Hospital Service Area under the proposed change, but many people in the area use it, including those north of the proposed new boundary line. South Peninsula Hospital shares a physician with the clinic and makes lab testing, imaging and physical therapy services available through the clinic.

The loss of the revenue could impact South Peninsula Hospital’s ability to provide services through the clinic, the board commented.

The board urged the assembly to wait to make a decision on the boundaries until after the borough’s Healthcare Task Force has issued its recommendations. The task force, which meets approximately once each month, got feedback from two consultants in March and plans to move toward the regional alignment model the consultants suggested. The task force is split into workgroups on a variety of health care issues, such as substance abuse and mental health and emergency services, and plans to provide recommendations on how best to address the gaps in health care on the peninsula.

The South Peninsula Hospital Service Area Board requested the borough assembly oppose the ordinance until the task force issues its recommendations.

The borough will host a public meeting about the boundary move at 6 p.m. Thursday, June 16 at the borough assembly chambers.

Reach Elizabeth Earl at elizabeth.earl@peninsulaclarion.com.