Construction begins next month on new EMS

• Jaynes Corporation has good history with the county

Construction of a replacement county hospital in Ruidoso charged forward this week with the hiring of a contractor to build the new emergency medical services headquarters to make room for the revamped Lincoln County Medical Center, and with the adoption of an ordinance obligating the county commission to pay off a $25 million bond issue authorized by voters.

County Manager Nita Taylor said construction mobilization will begin in mid-March by Jaynes Corporation with the completion of the $2 million construction of the EMS base slated for mid-August. Jaynes has a good track record with the county, having handled the physicians’ office building, coming in under budget and ahead of schedule.

The county used the Cooperative Educational Services, a New Mexico procurement cooperative, to hire the contractor.

Commissioners during the regular meeting Tuesday also approved an agreement with architect Dekker/Perich/Sabatini to handle the design and oversee compliance with specifications on the replacement hospital. Commissioner Dallas Draper noted that the fee worked out to be 7.5 percent of the projected building cost, which he thought was “very reasonable.”

In the final hospital-related action at the meeting, commissioners approved using CES to issue a request for proposals for a general contractor to build the replacement hospital.

Robert “Bobby” George with Dekker said the RFP will be aimed at selecting a contractor based on qualifications, fees, project duration and general conditions, not a bid price. Under that system, the contractor is brought in early before a complete set of drawings is available. Only “a handful” of contractors are equipped to tackle hospital projects, he said.

“The entire budget is an open book,” George said. “The contractor competitively bids his subcontractors. It’s a very transparent process. It’s industry standard that is used on very large complex projects like this. You want the contractor on board earlier to stay in budget along the process. They interact with the subcontracting community to make sure we are on budget. Things happen. It gives us a chance to modify and hit the budget and schedule.” The approach is much better than a company trying to undercut firms and then make up the difference with numerous change orders, he said.

The replacement hospital is to be functional in December 2018, and will remain a 25-bed critical access facility with an estimated total price tag of $38.3 million.

While George said Dekker is not responsible for actual construction, the firm will conduct inspections and through a third party, check for compliance with specifications for things such as concrete and steel.

“Then who takes accountability?” Commission Chairman Preston Stone asked. “Let’s say a concrete slab doesn’t meet specs.  Who makes that call that the floor be taken up? We have to have someone’s head to chop off.”

“I tell them to tear up as a representative of the owner,” George said.

About 30 percent of the construction value lies in the electrical, plumbing and mechanical work, he said. Those subcontractors will be brought on when the systems are firmed up, he said.

Commissioner Lynn Willard asked if it is likely that any local subcontractors will be hired.

George said he was not sure of the skill sets available, but general contractors like to use local labor when they can.

“Even if they can’t get the full company, it is best for them not to have to pay for travel,” he said.

Early Thursday, an emergency meeting of the commission was called in Ruidoso to adopt an ordinance authorizing the issuance and sale of $25 million in bonds approved by county voters in the November general election for a portion of the cost of the new hospital. Financial consultant Chris Muirhead with Modrall Sperling law firm, pointed out the wording commissioners insisted be included, that while property taxes are pledged for the repayment of the bonds, the first source will be from the annual $3.2 million lease fee of the hospital from Presbyterian Healthcare Services.

The bonds mature August 1, 2036, and the first payment of $331,565 is due in the debt service fund on the day of closing on the bond sale. A payment of $1,098,388 must be deposited in the fund on June 30, to show that next year’s payment is secure and to avoid being required to impose the property tax, Erik Harrigan of RBC Capital Markets said via a telephone conference call.

The interest rate on the issue sits at 3.132 percent and the timing appears good because over the past few weeks, money has been flowing back in the demand for municipal bonds and the county was able to take advantage of that, Muirhead said. Buyers are looking for tax free income and they are willing to pay a premium. Although the county will have use of the full $25 million, the repayment will cover $23,110,000 and debt service will be $115,000 lower than anticipated late last year.

The bonds will be “callable” on March 29, 2027, in case interest rates have dropped lower or there is another reason the county might want to pay off the issue early or refinance.