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HomeMy WebLinkAboutORD-2010-096 Approval of Health Dept Expansion - Whitted Human Service BuildingC)�JD-01040- ©% ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: December 14, 2010 Action Agenda Item No. :Z - SUBJECT: Approval of Health Department Expansion within Whitted Human Service Building and Approval of Budget Amendment #5 -B DEPARTMENT: Asset Management, Health Department and Financial Services ATTACHMENT(S): Floor Plans, PUBLIC HEARING: (YIN) No INFORMATION CONTACT: Pam Jones (919) 245 -2652 Dr. Rosemary Summer (919) 242 -2411 Clarence G. Grier (919) 245 -2453 Michael Talbert (919) 245 -2153 Jeff Thompson (919) 245 -2658 PURPOSE: To review and approve plans for the renovation of space for the Health and Dental Clinics at the Whitted Building and approve Budget Amendment #5 -B. BACKGROUND: In 2000 the County produced a space study that analyzed departmental space needs through 2020, including those of the Health Department. The Health Department requirements were confirmed in each of the 2004, 2006 and 2008 study updates. Most of the operational space requirements for County departments have been satisfied through the aggressive construction schedule carried out between 2006 and 2010. One of the largest unmet needs, however, remains in the space allocated for the delivery of human services, in particular health and dental services. Social Services' long term needs have been met through the lease of 56,000 square feet at the Hillsborough Commons Shopping Center in June 2008. The lease also included an option to purchase the 108,000 square foot building situated on 10 -acres of land on Mayo Street in Hillsborough for approximately $15 million. Upfit costs for the Health /Dental space would add several million dollars to this cost. Negotiations with the owner to bring the asking price into a more realistic range, given the state of property values over the past two years, have not been successful and do not appear will be successful in the future. The Board of Commissioners have, therefore, articulated the desire to allow the option to expire without effecting the purchase. Currently, no long term plan for health and dental clinic space exists. Over the past two years options have been discussed, including collaboration with UNC Hospitals in its development of the new hospital in Hillsborough; and with Durham Technical Community College for possible inclusion of clinic space in future facilities at the Orange Campus. While these, or other yet to 2 be discussed options may be viable in the future, it is not clear when economic circumstances would allow the County to enter into a building program this endeavor represents. To maintain the necessary level of service for health and dental services and to anticipate and respond to the projected increase in needed services future health care reform may present, staff has worked to develop interim plans that support needed services for at least the next decade. Renovation of the current clinic area and areas vacated by Social Services at the Whitted Building is proposed. In January 2010 the Board authorized the reallocation of space at the Whiffed Building for 1) the Health and Dental Clinics; and 2) for administrative space to be used by the Orange County Board of Education. According to the abstract, the renovation of the Health Clinic area was to serve three to five years pending decisions relative to the Hillsborough Commons project. The cited cost estimate was $200,000- $250,000, plus equipment. This renovation would have covered three major areas: HVAC re- zoning to serve the new use; bare essential electrical modifications to provide appropriate electrical service for the relocated equipment; and painticarpet needed to make the space presentable. This level of renovation did not invoke additional work for building code compliance. Since January 2010, two notable actions have been taken which resulted in an increased scope of work, and therefore associated cost, of renovating the Whitted space: 1.) Plans to consolidate Dental Services to the Whitted Building were approved by the Board in September 2010; and 2.) The decision to not pursue purchase of Hillsborough Commons as reiterated by the Board in various discussions, November 18, 2010 being the most recent. Upon approval of the consolidated dental services in September, the architect was asked to formulate the plans which would adequately support the expanded services using the reallocated space at Whitted. Health and Dental staff worked with the architect to prepare a plan that would serve the needs of the community for an estimated seven to ten years. The presented plan reflects those efforts. In September 2010 the County Manager reported the Orange County School Board's intent to decline use of the Whiffed Building. The Board of Education's declination of the space prompted the County to consider more seriously how to address structural issues created by substandard building practices employed in the pre- 1970's renovations. While the building is structurally sound, a structural analysis conducted during the 2000 HVAC renovation at the site revealed three areas that would benefit from reinforcement should the area be utilized for purposes other than general office use: 1.) Conference room on the first floor adjacent to the old library space; and 2.) Area previously used by the Library for the children's collection; and 3.) Second floor office areas immediately above the old library space. Although no assignment has been approved for use of the subject areas #1 and #2 above, Board members will recall that representatives of the arts community have appeared before the Board requesting use of the building. Further, on November 18, 2010, the Board authorized the Manager to continue discussions with the Town of Hillsborough regarding a possible agreement for use of the old Library space for this purpose. Should an agreement occur for this purpose, the structure beneath the two areas identified in #1 and #2 above need to be considered. 3 Based on the Board's direction that the arrangement not cost the County money, it is also assumed the costs of that work would be borne by new users. The Health Department has requested use of the second floor area, which will make additional offices available for employees now sharing offices; and for the development of rooms for patient education and general training. Reinforcement in the area cited as #3 above will resolve any structural questions that may exist in the area designated for conference /training on this floor. The structural work has been designed and is part of the pending bid package, which will be released immediately following the Board's approval of this item. The bid isolates the costs of the structural work separately so it can be awarded in partor in whole; and the cost parsed to the appropriate parties. The construction estimate for the structural work in all three areas totals $80,000. The structural work associated with the old Library space will not benefit the clinic in any way, but significant operational disruption and destruction of newly renovated space would be necessary if it were done later. Major renovation will be done to approximately 14, 814 square feet within the Whitted Building, with the remaining space receiving cosmetic work (paint/carpet). Renovation costs for the Whiffed Building are estimated at $99 /square foot of renovated area which compares favorably to the estimated $300 per square foot which can be expected for new construction of medical clinic space. Higher renovation costs per square foot can be expected at the Whitted site due in part to the age and type of construction of the building and the proposed use of the space. Renovations at Hillsborough Commons, including all sustainable design items (windows, skylights, etc) and the fagade work were completed for $67.60 per square foot. At the conclusion of this renovation project, t 38,000 Gross Square Feet (GSF) square feet estimated 17,000 GSF currently assigned. ie Health Department will have approximately available for operational use, compared to an This plan provides Health and Dental clinic space suitable for an The plan, while not "new- building" perfect, effectively uses the deliver quality clinic space in a reasonable timeframe and at structure has created a costly or insurmountable impediment technology or other work around strategies have been recomme areas via camera; personally escorting patients to clinic space). estimated seven to ten years. existing - Whiffed structure to a reasonable cost. Where to the desired usage goal, nded (e.g. monitoring waiting The revised timeline by which the project would be delivered is as follows: TASK PROPOSED BEGINNING DATE END BY DATE BOCC Action: Approval of plans for the renovation of space 12/14/10 12/14/10 Bidding phase 12/20/10 1/19/11 BOCC Action: Bid Award 2/15/11 2/15/11 Phase I Construction — Building A est. 90 day duration), Health Clinic move 2/16111 5/23/11 Phase II Construction — Building Best. 45 day duration 5/26/11 7/11/11 Dental move from Carr Mill 7/25/11 1 7/29/11 4 FINANCIAL IMPACT: Development costs for this project are estimated at $1.47 million allocated in the followina cateaories: This estimate was developed by staff, the project architect — Corley Redfoot Zack (CRZ), and CostPlus Estimators, a third party estimating firm. Medicaid Maximization Cost Settlement Funds are the proposed funding source for this project. In the mid -90s, the federal Medicaid program recognized that health departments were often expending more funds in providing care for Medicaid recipients than the reimbursement that was provided. In order to bring health departments to a more equitable "cost reimbursement" in line with that received by federally qualified health centers and by public hospitals, the federal Medicaid program authorized a supplemental payment for health departments to adjust for the cost of providing Medicaid direct services on an annual basis. The amount reimbursed is only calculated on the federal portion of Medicaid, not on the state share. Federal regulations require the funds to be allocated and spent for the programs that actually earned the funds. The settlement amount is calculated on actual expenses and therefore generally paid one year after the fiscal year in which the services were provided. The first payment made to health departments in North Carolina was in late 1997 and represented a partial payment for the federal fiscal year October 1994 through September 1995. That payment was $37,721.48. In the fall of 1998, a second payment was received that was the balance of 1994 -95 and 1995 -96. Since then the Health Department has received an annual payment in late spring that represents payment for services in a previous year. As an example, the County received notice of payment for fiscal year 2006 -2007 on June 23, 2008 ($270,203.70). Each year, the Board of Commissioners has authorized budget amendments accepting these funds into this project account. The Board of Commissioners established a Medicaid Maximization Project Ordinance in 1998 to allow for the receipt and use of these funds. The intent was to save and utilize the funds for renovation, capital building, equipment, and furnishings as needed by health and dental programs, thereby assisting the County in meeting service obligations to residents. Federal and State regulations require these funds to be budgeted and expended to further the objectives of the program that generates the funds. Allowed uses of these funds include public information and outreach, automation of administrative operations, capital improvements including equipment and furnishings, and program support services. In 2001 -2002, approximately $225,000 was used to renovate the clinical space in conjunction with the HVAC replacement at Whitted. Over the years, the Board of Commissioners has approved utilization of the funds to replace equipment on an emergency basis that has broken but was not able to be funded through the General Fund. These funds were also used to bring Health Department facilities and equipment into compliance with accreditation requirements in 2007. The Health Department has been parsimonious in the use of these funds, anticipating the need to build or renovate adequately appointed space for the future. One such anticipated use was the upfit of Hillsborough Commons, discussed in 2007 and 2008. HEALTH ESTIMATED COSTS DENTAL ESTIMATED COSTS Construction $1,016,000 $203,000 Professional Services $ 83,000 $ 15,000 Furnishings $ 45,000 $ 5,000 Equipment $ 33;000 $ 70,000 Total $1,177,000 $293,000 This estimate was developed by staff, the project architect — Corley Redfoot Zack (CRZ), and CostPlus Estimators, a third party estimating firm. Medicaid Maximization Cost Settlement Funds are the proposed funding source for this project. In the mid -90s, the federal Medicaid program recognized that health departments were often expending more funds in providing care for Medicaid recipients than the reimbursement that was provided. In order to bring health departments to a more equitable "cost reimbursement" in line with that received by federally qualified health centers and by public hospitals, the federal Medicaid program authorized a supplemental payment for health departments to adjust for the cost of providing Medicaid direct services on an annual basis. The amount reimbursed is only calculated on the federal portion of Medicaid, not on the state share. Federal regulations require the funds to be allocated and spent for the programs that actually earned the funds. The settlement amount is calculated on actual expenses and therefore generally paid one year after the fiscal year in which the services were provided. The first payment made to health departments in North Carolina was in late 1997 and represented a partial payment for the federal fiscal year October 1994 through September 1995. That payment was $37,721.48. In the fall of 1998, a second payment was received that was the balance of 1994 -95 and 1995 -96. Since then the Health Department has received an annual payment in late spring that represents payment for services in a previous year. As an example, the County received notice of payment for fiscal year 2006 -2007 on June 23, 2008 ($270,203.70). Each year, the Board of Commissioners has authorized budget amendments accepting these funds into this project account. The Board of Commissioners established a Medicaid Maximization Project Ordinance in 1998 to allow for the receipt and use of these funds. The intent was to save and utilize the funds for renovation, capital building, equipment, and furnishings as needed by health and dental programs, thereby assisting the County in meeting service obligations to residents. Federal and State regulations require these funds to be budgeted and expended to further the objectives of the program that generates the funds. Allowed uses of these funds include public information and outreach, automation of administrative operations, capital improvements including equipment and furnishings, and program support services. In 2001 -2002, approximately $225,000 was used to renovate the clinical space in conjunction with the HVAC replacement at Whitted. Over the years, the Board of Commissioners has approved utilization of the funds to replace equipment on an emergency basis that has broken but was not able to be funded through the General Fund. These funds were also used to bring Health Department facilities and equipment into compliance with accreditation requirements in 2007. The Health Department has been parsimonious in the use of these funds, anticipating the need to build or renovate adequately appointed space for the future. One such anticipated use was the upfit of Hillsborough Commons, discussed in 2007 and 2008. The Health Department has received additional Medicaid Maximization Cost Settlement funds totaling $576,068 above the amount currently budgeted. Medicaid Maximization Budget Amendment #5 -B provides for the receipt of these revenues and amends the current Medicaid Maximization Capital Project Ordinance as follows: Revenues for this project: A ppropriated for this project: FY 2010 -11 Current Budget FY 2010 -11 Amendment FY 2010 -11 Revised Medicaid Maximization funds $1,816,093 $576,068 $2,392,161 Total Project Funding $1,816,093 $576,068 $2,392,161 A ppropriated for this project: The total Medicaid Maximization budget will be $359,465 expended since the inception of the available for this and other projects in the future. $2,392,161 after the budget amendment with project. This leaves a balance of $2,032,696 The Dental Capital Equipment Project was authorized and funded by the Board in the 2010- 2011 budget deliberations at $100,000 to replace broken and aging equipment. These funds will be used for equipment as part of the facility renovations. Available Resources: Medicaid Maximization Capital Project $2,032,696 Dental Capital Equipment Capital Project 100.000 Total $2,132,696 Estimated Project Costs $1,470,000 Estimate of Medicaid Maximization Funds balance after completion $ 662,69 Adequate funding is available for the project within the Medicaid Maximization Capital Project and the Dental Equipment Capital Project which are funded in the County Capital Project Fund. RECOMMENDATION(S): The Manager recommends that the Board: 1.) Approve the scope and design of the project as presented; 2.) Authorize bids to be solicited; 3.) Approve the $576,068 Budget Amendment # 5 -B for the Medicaid Maximization Capital Project; FY 2010 -11 Current Budget FY 2010 -11 Amendment FY 2010 -11 Revised IT Equipment $5,000 $0 $5,000 Equipment $169,988 $0 $169,988 Fumishin s $50,000 1 $0 $50,000 General Renovations $1,591,105 $576,068 $2,167,173 Total Costs $1,816,093 1 $576,068 $2,392,161 The total Medicaid Maximization budget will be $359,465 expended since the inception of the available for this and other projects in the future. $2,392,161 after the budget amendment with project. This leaves a balance of $2,032,696 The Dental Capital Equipment Project was authorized and funded by the Board in the 2010- 2011 budget deliberations at $100,000 to replace broken and aging equipment. These funds will be used for equipment as part of the facility renovations. Available Resources: Medicaid Maximization Capital Project $2,032,696 Dental Capital Equipment Capital Project 100.000 Total $2,132,696 Estimated Project Costs $1,470,000 Estimate of Medicaid Maximization Funds balance after completion $ 662,69 Adequate funding is available for the project within the Medicaid Maximization Capital Project and the Dental Equipment Capital Project which are funded in the County Capital Project Fund. RECOMMENDATION(S): The Manager recommends that the Board: 1.) Approve the scope and design of the project as presented; 2.) Authorize bids to be solicited; 3.) Approve the $576,068 Budget Amendment # 5 -B for the Medicaid Maximization Capital Project; 6 4.) Approve the use of Medicaid Maximization Capital funds and Dental Capital Equipment Funds to complete this project based on the Construction estimate of $1.47 million; and 5.) 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