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$38.5 million bond for South Peninsula Hospital going on the ballot this fall

Heath Smith testifying on a $38.5 million dollar bond for South Peninsula Hospital during a Kenai Peninsula Assembly meeting on June 18, 2024.
Ashlyn O'Hara
Heath Smith testifying on a $38.5 million dollar bond for South Peninsula Hospital during a Kenai Peninsula Assembly meeting on June 18, 2024.

The Kenai Peninsula Borough Assembly approved a hospital bond last Tuesday that will go on the ballot this October.

The over $38.5 million bond will go towards buying three properties for the hospital, as well as completing maintenance and expanding services.

The bond is long-term debt that would be paid back through a property tax for people living in the South Peninsula Hospital Service Area. This includes the part of the Kenai Peninsula south of Ninilchik and extends into Kamishak Bay, excluding the City of Seldovia. The property tax would be levied at a 0.67 mill rate. This means every $100,000 of assessed property value would be taxed at $67. This would keep the current service area mill rate around where it is now, since the rate is expected to drop in the next couple years.

Former Homer City Council member and borough resident Heath Smith said he’s worried about continually taxing people to buy new properties on top of needing to do maintenance on current facilities.

“Say 15 years from now, we need to bond again to take care of deferred maintenance on these new facilities we just bought,” he said, “I mean, when does that cycle ever end? And that's a concern of mine. Because I've not only paid for that building once. But how many more times am I going to have to pay for the one that stands through these deferred maintenance bonds?”

Borough Mayor Peter Micciche said Central Peninsula Hospital was in a similar position to South Peninsula Hospital until it expanded its services to where it can run without taxing people in its service area.

“Sometimes it takes investment to get to the point of where like CPH eventually sort of forgave the taxpayers of their mill rate, because they made the right moves, became adequately profitable to pay the bond off themselves,” Micciche said, “and we all enjoy a pretty amazing level of medical care in a pretty small community.”

While many assembly members voiced their support for the bond, Assembly member Cindy Ecklund brought up a written comment from borough resident Wayne Aderhold. In it, he questioned if using a property tax to pay for the bond would be fair for younger people, as seniors 65 and older generally use hospital services more and have lower property taxes.

If they qualify, seniors can have up to $350,000 of the assessed property value of their homes exempted from borough taxes. All resident homeowners who qualify also have a $50,000 exemption.

Ecklund said paying back the bond in the form of a fee would be more fair.

“If we don't have a separate service area fee for the hospital, but it's just part of the property tax, then all of those seniors aren't paying as much as the younger residents,” she said.

Micciche says that seniors pay their share for receiving services through hospital fees already, and that bonds are intended to ensure future users of the hospital are paying for the projects as well.

“Bonding is making sure that the people 20 years from now that are using that service are helping to pay for it,” he said, “so you might be able to have the same debt burden over time, but still have that fairness of who's paying the bill for that asset improvement, who's making those services available.”

The bond proposal will go on the ballot this October.

Disclaimer: Wayne Aderhold is a KBBI board member, but does not oversee KBBI’s newsroom.

Jamie Diep is a reporter/host for KBBI from Portland, Oregon. They joined KBBI right after getting a degree in music and Anthropology from the University of Oregon. They’ve built a strong passion for public radio through their work with OPB in Portland and the Here I Stand Project in Taipei, Taiwan.Jamie covers everything related to Homer and the Kenai Peninsula, and they’re particularly interested in education and environmental reporting. You can reach them at to send story ideas.
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