PSMC is taking a proactive step towards securing the health and safety of our community by providing an independent means to supply a constant and sustainable supply of medical oxygen…
— from an August 15 letter submitted to the Colorado Department of Local Affairs.
We’re continuing our discussion — as we move into ‘budget season’ — about the ways our local governments are spending tax revenues in Archuleta County, and how our leaders are thinking about the funds they might have available in 2024.
We’ll start today, with an innocent-looking letter approved by the Archuleta Board of County Commissioners — Ronnie Maez, Veronica Medina, and Warren Brown — at their regular Tuesday meeting, last week. The letter, addressed to Mr. Patrick Rondinelli, Southwestern Regional Manager at the Colorado Department of Local Affairs (DOLA), begins like this:
The Archuleta County Board of County Commissioners fully support the grant application submitted by the Upper San Juan Health Service District which does business under the trade name of the Pagosa Springs Medical Center (“PSMC”). PSMC operates the only hospital and the only EMS/ambulance service in Archuleta County and the nearest hospital and emergency medical services are at least an hour drive away. If awarded, the DOLA EIAF [Energy/Mineral Impact Assistance Fund] funding will allow PSMC to construct a building to house oxygen generation equipment that PSMC acquired in 2021…
You can download the one-page letter, here.
The Pagosa Springs Medical Center is operated by the Upper San Juan Health Service District, and is partially funded by local taxes. As such, its financial information is public.
“Public” does not always mean, “fully transparent”.
In the midst of the COVID crisis, PSMC — and many other hospitals, I presume — found it challenging to keep enough oxygen on hand for patients suffering from respiratory illness. Prior to the crisis, PSMC had been able to transfer serious respiratory cases to larger hospitals, but starting in 2020 and into 2021, it became more difficult to find out-of-town hospital beds, and PSMC found themselves handling more respiratory cases, and as a result, closely monitoring their oxygen supply.
Here is the hospital’s CEO, Dr. Rhonda Webb, addressing the BOCC last Tuesday:
“We do not generate our own oxygen. We rely on oxygen from Farmington.” (Farmington, NM, 1 hour 50 minutes away.)
Back in 2019, a community task force assembled by PSMC had concluded that, during an emergency, people would likely approach PSMC hoping to obtain oxygen, if — for example — roads were closed by wildfire or a weather event.
Dr. Webb:
“It became apparent to me — in November 2020, during the pandemic — when we could not transfer a patient on a ventilator anywhere, and we had to monitor our oxygen hourly to see if we had enough oxygen to keep a patient safe and healthy. So we bought the oxygen generation equipment; we’ve paid for it. It’s here in storage. Now we need a building.
“The building is very specialized; the price per square foot is tremendous. It’s only about 420 square feet, but it’s very specialized, because there’s a lot that goes into creating your own oxygen.”
Dr. Webb did not share, during her presentation, what she meant by “the price per square foot is tremendous.” Nor did the County commissioners discuss the cost when approving their letter of support. Our government officials were apparently comfortable enough with a “tremendous” cost, that it wasn’t even worth talking about.
We’re going to address the idea that “the price per square foot is tremendous” from a bit wider perspective, later.
But for now, we’ll stick to the subject of a DOLA grant for PSMC oxygen generation building.
The Energy/Mineral Impact Assistance Fund Grant (EIAF) program provides grants to political subdivisions in Colorado that are “socially and/or economically impacted by the development, processing, or energy conversion of minerals and mineral fuels.” The funds come from a state severance tax on energy and mineral production, and as a portion of Colorado’s share of royalties paid to the federal government for mining and drilling of minerals and mineral fuels on federally-owned land.
DOLA ranks Colorado counties according to the presumed impact — social and/or economic — of energy and mineral development. Neighboring La Plata County is ranked as “9” out of a possible “10”. Archuleta County is ranked as “7”. A county with no apparent energy or mineral impacts, like Crowley County, is ranked “0”.
Being a curious person, and one who had never before heard a government official describe the cost of a 450-square-foot building as “tremendous”, I reached out to PSMC to find out what, exactly, the projected cost of the building might be… and received a call from PSMC Legal Counsel Ann Bruzzese.
Ms. Bruzzese explained the meaning behind the word “tremendous”. PSMC had issued an RFP (Request for Proposals) for the construction of the oxygen generation building and had received one bid, from a Front Range contractor, which placed the cost of the building at over $900,000.
That is to say, about $2,000 per square foot. Ms. Bruzzese explained that PSMC did not accept that bid, and suspects that a local construction company — from, say, Pagosa or Durango? — might be able to do the project for closer to $1,000 per square foot. The DOLA grant application, which involves a 50% local match, is based on an (optimistic?) estimate of around $550,000.
Typical residential construction in Pagosa Springs currently comes in at $300-$400 per square foot. A simple commercial building might be closer to $200 per square foot.
The lion’s share of revenues for our numerous local government projects in Archuleta County come from local taxes. But some funding comes through state and federal grants, and many local projects would not happen without state and/or federal grants. In fact, the availability of a particular state or federal grant often determines which project a local government chooses to undertake.
Which is to say, governments will sometimes choose to do a relatively insignificant project that promises possible grant funding, rather than tackle a more impactful project that doesn’t promise any grant funding.
Here’s another excerpt from the BOCC letter to DOLA:
PSMC is taking a proactive step towards securing the health and safety of our community by providing an independent means to supply a constant and sustainable supply of medical oxygen. Currently, PSMC has oxygen delivered from vendors as far away as Farmington, NM. Depending upon oxygen deliveries in winter weather during high oxygen usage times by patients is risky. Roads and passes are regularly closed. The ability to generate onsite oxygen will ensure that patients have the oxygen they need. Additionally, in the event of a community wide emergency such as another pandemic or a wildfire, PSMC would be able to generate its own needed oxygen.
PSMC’s record of efficient management and successful implementation of previous projects gives us full confidence in their ability to complete this project.
Two questions come to my mind.
Is it possible our government officials took the wrong approach to a potential oxygen shortage?
And even more importantly, why are government construction projects so goddamn expensive?