The Georgia Department of Community Health granted the extension of the hospital's certificate of need, which was to expire later this month, hospital administrator Nancy Peed announced Friday at a meeting of the hospital authority.
In May of last year, the hospital authority received state approval for construction of the new facility, which would replace the half-century old hospital in Fort Valley.
At the time, the U.S. Department of Housing and Urban Development was to fund most of the project. However, after an audit of the Peach Regional Medical Center's finances showed a loss in income, HUD regulations forced the agency to deny financial backing for the project. HUD requires a hospital to show three consecutive years of positive income, leading up to the present, before it can grant federal funding support.
The need to find an alternate funding source delayed the Peach County hospital project. In January, the hospital selected a bid from BB&T bank to provide funding.
In the request for a state extension of the deadline, Peed stated that architectural design of the project was expected to be completed in August, with bidding and contracting to be completed by October.
Department of Community Health regulations state that an extension may be granted when circumstances exist that are beyond the control of the applicant and a request is made at least 30 days before the initial expiration date of the certificate of need.
Iris McIlvaine, a public information officer in the Department of Community Health, said granting extensions is a common practice. About 50 percent of requests to her agency for an extension are approved, she said.
The extension pushes the deadline to May 30, 2009, at which time the hospital authority must submit a copy of a signed construction contract, an approval letter from the state architect and a progress report specifying the construction start date.
Also at Friday's meeting, the hospital authority agreed to submit the feasibility study for the new hospital, once completed, to BB&T and Rural America Capital Group.
Both financiers submitted financing proposals earlier this year, with BB&T winning out.
BB&T offered non-rated tax bonds with an interest rate between 5.78 percent and 5.98 percent for a term of 30 to 40 years. The option would cost the authority between $1.83 million and $1.875 million a year.
Rural America Capital Group's offer was U.S. Department of Agriculture taxable bonds with an interest rate of 5.85 percent during a term of 30 years. The arrangement would have cost the hospital between $1.58 million and $2.15 million a year.
Peed said since the selection had been made, the interest rate from BB&T had increased, making Rural America Capital Group's proposal more attractive. The authority has the option of switching financiers.
"It's driven by the interest rate," Peed said. "We have to go with the better deal."
To contact writer Natasha Smith, call 923-3109, extension 236.
