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Posted: Sunday, 09 March 2014 5:45AM

Onaga to Rebuild Hospital with USDA Funds

ONAGA, Kan. - Two hospital buildings from decades ago will become one up-to-date facility in Onaga, thanks partly to low-interest loans for rural development.

Community HealthCare System, which has seven clinics and two hospital campuses in rural Kansas, will break ground in May on a project to redevelop its Onaga campus. The project will involve building an expansion on the 1971 hospital building and demolishing a separate building that dates to 1957. Work is scheduled to wrap up by the end of 2015.

Onaga is one of dozens of rural Kansas communities that received about $413 million in grants and loans from the U.S. Department of Agriculture for development projects in fiscal year 2013. More than half that money went to housing programs.

Greg Unruh, president and CEO of Community HealthCare System, said the new hospital building will have more modern amenities, including private rooms, as well as a second operating room and space for more services.

“Our new hospital is really designed to be current, state-of-the-art,” he said.

Michael Bomberger, administrator for Community HealthCare System's St. Mary's hospital campus, said USDA Rural Development bought $17.59 million in bonds the community had issued to construct the new facility. USDA also loaned the health system $4.97 million toward implementing electronic health records and refinancing existing loans.

The system also will apply for an interest-free $2 million loan to equip the new building, Bomberger said.

Unruh said the USDA rates were “highly, highly competitive,” and a financial consultant advised them to accept the terms. The construction loan and the health records loan both have rates of 3.125 percent.

Patty Clark, director of USDA Rural Development in Kansas, said the agency can provide funding for projects in communities that would struggle to finance them on their own. Basic needs such as water systems, wastewater treatment and medical facilities are expensive, and very small communities may not have the resources to build them, she said.

“Those basic human needs don’t go away in a town of 200,” she said.

Rural Development gave or loaned $413,168,522 to Kansas communities in fiscal year 2013, with 57 percent going toward housing programs. Another 22 percent went to electric loans, with 4 percent for business programs and 17 percent for other community programs.

Onaga has taken advantage of multiple programs over the years, including loans for updating its water and sewer systems, improving its housing stock and reopening a grocery store that had burned down, Clark said. The recent grocery store project also involved money from the Kansas and Pottawatomie County revolving loan funds as well as a loan from a private bank backed by a guarantee from USDA.

“We mitigated each other’s risk and created a big opportunity,” she said.

Other communities have also used USDA funds for economic development projects. Examples include a feasibility study on the idea of a “food hub” in Douglas County to connect buyers with local farmers and grants to encourage tourism along the Kansas River Trail and the Flint Hills Trail, Clark said. The agency made loans to a total of 39 farms and other businesses in fiscal year 2013, saving about 400 jobs, accoting to its year-end report.

Other projects approved in the past year included an addition to the library in Blue Rapids; a new water tower and 1,100 feet of water lines in Bronson, and a water treatment plant in Leoti to remove nitrates and bring the city into compliance with the Clean Water Act. The housing programs also helped 2,136 families to move into a home in rural Kansas and about 100 others to fix up their existing residence.

Clark said USDA Rural Development also provides free technical help on design, taking bids and constructing and operating new facilities.

“There is a great deal of truth in the saying that Rural Development can build a community from the ground up,” she said. “We become a partner in the community.”

Bomberger said the health system in Onaga was glad to have that help designing and planning their project, because health systems aren’t experienced in constructing hospitals.

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03/09/2014 5:47AM
Onaga to Rebuild Hospital with USDA Funds
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