South Kachemak Bay may have to pay taxes to South Peninsula Hospital

Editor’s note: This article has been corrected to show that if the properties south of Kachemak Bay are included into the South Kenai Peninsula Hospital Service Area, they would be subject to a mill rate of 1.13.

The boundary lines on the service areas for both the borough’s hospitals may change in the fall.

The Kenai Peninsula Borough Assembly approved a change to an ordinance it has been considering since April to move the common boundary between the South Kenai Peninsula Hospital Service Area and the Central Kenai Peninsula Hospital Service area to the south. The change would add another section allowing South Peninsula Hospital area voters to decide whether the southern border of their service area should also be moved south to include the land on the south side of Kachemak Bay.

Assembly member Dale Bagley, the original sponsor of the ordinance, introduced a substitute to include the southern border expansion. The amendment comes after concerns from the South Peninsula Hospital administration and Homer residents about the move’s negative impact on the hospital’s finances.

The properties south of Kachemak Bay were originally excluded when South Peninsula Hospital’s service area was established because there was a hospital in Seldovia then, Bagley wrote in his memo.

“Since then the hospital in Seldovia has closed and it is probably safe to say that most of the residents of that area use South Peninsula Hospital for hospital purposes,” he wrote. “At a minimum they benefit from the available of its services. It is only fair to include these additional properties across Kachemak Bay in the Service Area.”

Seldovia would be excluded, though, because it would require separate approval from the city residents. In the past, the residents have opposed it, Bagley wrote.

Since Bagley first proposed the ordinance in April, Homer residents and South Peninsula Hospital administrators have turned out by the dozens to oppose the move, saying it would jeopardize the financial stability of the hospital. The South Kenai Peninsula Hospital Service Area Board passed a resolution opposing the previous version of the ordinance.

At its June 14 meeting, the service area board passed a resolution supporting the current version, noting concerns about the aging population of the borough making more properties eligible for the borough’s senior property tax exemption and that residents south of Kachemak Bay do use South Peninsula Hospital.

The borough finance department wrote in a fiscal impact statement that the residents south of Kachemak Bay would pay 1.13 mills to the service area as opposed to the 2.3 that residents on the north side pay because they would not be taking on the bond indebtedness that the voters previously approved.

If the assembly approves the ordinance, voters in the Central Peninsula Hospital service area will vote on whether to move the current boundary line south to Barbara Drive, about 15 miles south of its current location. South Peninsula Hospital service area voters would vote on whether to move the line south across Kachemak Bay. The votes are independent and one could fail while the other is moved, having different revenue impacts.

If both are approved, the total property tax revenue to South Peninsula Hospital would be roughly the same, about $3,000 more than the current boundary, according to the fiscal impact statement.

Because the ordinance had substantially changed, the borough voted to postpone the discussion to provide time for a public meeting in Homer.

Reach Elizabeth Earl at eearl@peninsulaclarion.com.

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