Are There Cheaper Alternatives To The Existing Our Island Home Plan?

To the editor: On April 13, The Advisory Committee sent the following letter to the Members of the Select Board (Peter Halle is the Chair of the Advisory Committee of Non-Voting Taxpayers):

"The Advisory Committee of Non-Voting Taxpayers (“ACNVT”) is very concerned with the current and future financial requirements that Nantucket would be saddled with if Article 11, the Requested Appropriation of over $100 million of capital funding to build a new Our Island Home (“OIH”), is passed into law. We suggest Article 11 be tabled and rethought as follows.

It is apparent that the needs of the community for rehabilitation and skilled nursing services as well as memory and long-term care will continue to grow as the elderly population on the Island increases. These needs are important and real. We do not think Article 11 is the best way to meet these needs because it is too costly. Article 11 would permit an expenditure that the Town of Nantucket will come to regret as it seeks to finance the other $1 Billion plus of capital expenditures required over the next 10 years to maintain the quality of life for those on the Island. Moreover, in addition to the $100 million of publicly financed Capital required (and other costs totalling $134 million as of this writing), it is estimated that the new OIH will generate another $62 million of annual operating losses (over the first ten years). See, https://nantucketma.portal.civ... That adds up an almost $160 million bill for taxpayers to shoulder in the next decade for this project alone.

Is this really the best we can do? As the Town has conceded over and over in other contexts, it costs the Town more to build on Nantucket than it costs a private builder due to burdensome State procurement regulations that private builders do not have to contend with. Are there are other approaches that are a better (less expensive) alternative to the Town itself owning a skilled nursing facility - just because it has a lengthy tradition of doing that? Will a new second generation “Our Island Home” with a different ownership structure bring down the price tag and make it easier for taxpayers to digest the cost - even if it continues to require some subsidy?

Other municipalities approach this task differently. Just this year, Martha’s Vinyard opened a new 70-bed facility to replace its aged and reportedly decrepit Windmere facility. It is privately owned and financed in a nonprofit 501c3 structure, built at a fraction of the cost per bed proposed for Nantucket’s new OIH and it utilizes low-interest federal loans. We must ask if all the potential ownership structures and funding options were seriously explored? We raised this question last year. Nevertheless, the voters are being presented with the same super expensive proposal that previously failed to get the required majority.

For these reasons, the ACNVT, like the CapCom and the FinCom, again advises that Article 11 is not financially prudent and supports further research and investigation into an alternative model to bring the cost down. We also note that Article 11 does not account for unknown risks, changes in Federal/State governmental Medicaid and other reimbursements, or the changing needs of the population. “ [The ACNVT Letter to the Select Board ended here.]

Since the letter was sent, the estimated price has gone up further. And the margin for error, the “contingency cost ” has been apparently reduced by more than $4 million to make the numbers come out “right."

One thing that stands out in the “Revised Project Cost & Borrowing Comparison” presented at a recent Select Board meeting is the high cost of using the Sherburne Commons campus for the New OIH. We understand Sherburne is on Town land it leases for $1 a year. An existing subsidy from the Town. But, there appears to be about $20 million of New OIH project cost the Town will shoulder if it builds on the Sherburne Campus that it might not incur if it built elsewhere.

According to the Cost & Borrowing Comparison, there is a “$6 million Sherburne Commons Site Allowance", and a $14 million Housing component that appears to be related to tearing down existing Sherburne Commons Staff housing and replacing it at a future date to accommodate construction of the New OIH on the Sherburne campus. Are there less costly alternatives to this plan that might save $20 million?

Peter E. Halle
Chair, ACNVT