BREAKING GROUND - The Foraker Group Standing Beside Alaska's Non

116 Pages·2002·3.03 MB·English

B R E A K I N G
G R O U N D :
A Comprehensive Planning Guide
for Health Center Capital Projects

BREAKING
GROUND:
A Comprehensive Planning Guide
for Health Center Capital Projects
Acknowledgements
This manual was made possible by a grant from The
Annie E. Casey Foundation. NCBDC is pleased
to be a partner in their work to build better futures
for disadvantaged children and their families.
We would like to thank Capital Link and Primary
Care Development Corporation for insights gained
from their manual Developing a Health Center:
A Guide for Health Center Staff and Boards on
Managing the Design and Construction Process
(2001) and for the use of charts and language from
this publication in Sections IV, V and VIII of this manual.
We are grateful to the following individuals and
organizations for their contributions to this manual:
Torrey Stanley Carlton, AIA San Antonio, Robert Cosby,
Non-Profit Clinic Consortium, Liz David & Zara
Marselian, La Maestra Family Clinic, Roberta
Feinberg, Linda Vista Health Center, Flora Hamilton,
Family and Medical Counseling Service, Inc.,
George Jones, Bread for the City and Zacchaeus
Free Clinic, Connie Kirk, Imperial Beach Health
Center, Judith Shaplin, Mountain Health &
Community Services, Inc.
We would also like to acknowledge the following
NCB Development Corporation staff for their
dedication and hard work: Jeff Brenner, Donna
Creedon, Lindsay Maher, David Nolan, Linda
Sorden, and Scott Sporte.
And, of course, many thanks to Marsha Krassner
of MDK Consulting Groupfor serving as the
principal author of this manual and for all the work
she does to benefit health centers nationwide.
Table of Contents
I. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 VI. Construction Phase . . . . . . . . . . . . . . . . . . . . . 43
A. Project Delivery Options
Traditional (or, “Design-Bid-Build”)................................43
II. The Development Process: An Overview . . . . . 5 Design-Build.................................................................43
Construction Management............................................45
B. Managing The Construction Process
III. Concept Phase. . . . . . . . . . . . . . . . . . . . . . . . . . 9 Selecting a General Contractor....................................51
Feasibility........................................................................9 Negotiating vs. Bidding.................................................52
Needs Assessment.......................................................10 Maintaining the Project Budget.....................................52
Business Plan...............................................................10 Payment Process During Construction..........................57
Preliminary Space Assessment.....................................11 Project Close-Out and Final Occupancy.......................58
IV. Pre-Development Phase . . . . . . . . . . . . . . . . . 13 VII. Funding the Project . . . . . . . . . . . . . . . . . . . . 61
A. The Development Team A. The Project Budget
The Owner...................................................................14 Developing the Preliminary Budget................................61
The Architect................................................................14 Contingency Planning...................................................64
The Project Manager....................................................16 Finalizing and Managing the Budget..............................64
The General Contractor................................................17 B. Financing Options
The Attorney.................................................................17 Conventional Financing.................................................66
The Real Estate Agent (Optional)..................................18 Community Development Financial Institutions..............70
Paying Your Development Team....................................22 Government Funds.......................................................70
Contracting With Your Development Team....................24 Foundations..................................................................71
B. Site Selection Tax-Exempt Bond Financing..........................................72
Selection Criteria..........................................................24 C. Fundraising
Own vs. Lease.............................................................26 Launching a Capital Campaign.....................................75
Renovation vs. New Construction.................................28 Individual Donors & Private Investors............................76
Fundraising and the Internet..........................................76
V. Development Phase . . . . . . . . . . . . . . . . . . . . . 31
A. Design Stage VIII. Planning & Scheduling . . . . . . . . . . . . . . . . . 79
Finalizing Space Assesment..........................................31
Pre-Schematic Design..................................................31
Schematic Design.........................................................32 IX. Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Design Development.....................................................32
Value Enhanced Design................................................32
Construction Documents..............................................33 X. Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Design Considerations for the Disabled........................36
B. Pre-Construction Activities
Site Acquisition & Control.............................................38
Obtaining Project Financing..........................................39
Obtaining Third Party Approvals....................................40
Furniture, Fixture and Equipment Planning....................40

Section I
Introduction
Health Centers and the Facilities
Development Process
There are over 1,000 health centers and free clinics Financing the facilities project can also be daunting.
in the U.S., operating more than 3,000 individual Predevelopment funds for critical activities such as
clinic sites. Relying on a network of 6,500 primary feasibility and needs assessments or preliminary site
care providers, many of whom volunteer their services, and architectural design work are often non-existent
these health centers offer time to nearly 11 million or difficult to access. Once these predevelopment
people annually, and face pressure from growing tasks are completed, the health center is faced with
demand to see millions more. These health center the additional challenges of critically evaluating
organizations share a mission to provide access to various funding options for construction and long-
quality primary health care for all underserved and term financing. Health centers have an acute need
vulnerable populations, regardless of ability to pay, for access to flexible capital (i.e., low rates, longer
and to eliminate disparities in health care for all racial terms, non-traditional repayment arrangements) to
and ethnic groups. match revenue and cash flow streams.
This ambitious mission places pressure on the We created this manual to help health center man-
physical sites, the facilities, where services are agers, like you, navigate the development of a
provided. The twin issues of access to facilities health center facilities project. This technical guide
development assistance and affordable, flexible offers step-by-step assistance in planning, evaluat-
capital are becoming more acute as health centers ing, and implementing virtually every aspect of a
expand. Indeed, industry experts estimate that 50 facilitiesproject. Chapters are organized according
to 65% of health centers have a critical need for to each stage of the development process, from
some type of facilities expansion project, whether early project concept and feasibility to final con-
it be replacing an outgrown facility or remodeling struction closeout and occupancy. Tables and charts
or expanding an existing facility. strategically placed throughout the manual provide
a snapshot of many of the major decision points
Many health centers were initially established in you will encounter along the way, such as selecting
space that was ill suited for efficient primary health development team members, undertaking a capital
care delivery. There are many examples of health campaign, comparing conventional loans to tax-
centers that are co-located with low-income housing exempt bond financing, and evaluating different proj-
projects, in inappropriately converted buildings, or ect delivery options. A handy glossary of terms at
in poorly designed spaces at the local public health the end of the manual will provide you with the new
department or hospital. Even though a sizable vocabulary you’ll need as you navigate the real
majority has successfully developed and moved into estate development process.
state-of-the-art buildings over the years, many health
centers still operate out of inadequate facilities. Whether you renovate your existing space or con-
struct a new building, the process is likely to be time
This manual was written for health centers faced consuming and expensive, and it will undoubtedly
with the complex task of conceptualizing and imple- involve the cooperation of multiple parties. Give
menting a facilities development project. Lacking yourself time, because the real estate development
previous development experience, managers can process takes far longer than most people expect.
easily overlook issues critical to the success of Time is essential because it allows you the luxury of
the project. For starters, managers often grossly exploring options, negotiating with major third par-
underestimate the time that must be dedicated to ties (e.g., property owners, lenders, architects),
successfully bring a facilities project to fruition. and truly developing the best possible facility within
Moreover, most health center settings rarely possess your budgetary constraints. Good luck!!
the staffing resources necessary to plan, monitor,
and complete a construction project.
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About the Annie E. Casey Foundation
For more than half a century, the Annie E. Casey current economic downturn, we expect the pressure
Foundation has worked to build better futures for on health facilities to become increasingly burden-
disadvantaged children and their families in the some. The needs will be acute for all but the largest,
United States. Its mission is to foster public policies, most resourceful health centers. Most cannot invest
improved human services, and community support the staffing resources necessary to manage the
systems that effectively meet the needs of today’s planning and monitoring of a multi-month planning
vulnerable children and families. In pursuit of this goal, construction project, nor do they have adequate
the Foundation makes grants, funds demonstration funding for pre-development costs – the elements
projects, provides services, delivers technical that most directly correlate to a successful facilities
assistance and disseminates data and analyses, all expansion project (i.e., business planning, site selec-
aimed at helping states, cities and local neighbor- tion, architecture and engineering contracts). Many
hoods do a better, more cost-effective job of sup- of the health centers with the greatest need are
porting children and families. The Foundation’s the same clinics targeted by the Annie E. Casey
investments in each of these areas are evaluated Foundation’s Making Connectionsinitiative. A partner
against clear goals and measured by results, in Making Connections, NCB Development Corp-
performance outcomes, and return on investment. oration (NCBDC) has created this manual in an effort
to provide health centers with the capacity to plan,
Making Connectionsis the centerpiece of the Annie assess, and develop a successful real estate project.
E. Casey Foundation’smulti-faceted effort to improve
the life chances of vulnerable children by helping
to strengthen their families and neighborhoods. About NCB Development Corporation
Making Connectionshas embarked on a three-year NCB Development Corporation (NCBDC) is a unique
demonstration phase in which the Foundation will non-profit organization blending development skills
workwith neighborhoods in 22 citiesto promote and resources with disciplined financial lending
programs, activities, andpolicies that contribute to expertise. It provides creative development and
strong families.The primary aim is to stimulate and financial solutions that empower underserved com-
support a local movement that engages residents, munities to address the problems that poverty cre-
civic groups, political leaders, grassroots groups, ates in America. NCBDC’s solutions are based on
public and private sector leadership, and faith- the cooperative principles of self-help, democratic
basedorganizations to help transform tough neigh- control and open participation. It provides the high-
borhoods into family-supportive environments. estlevel of professional services, employing high-
caliber staff and partnering with like-minded organi-
A major contributor to improving the lives of children zations to achieve systemic change in the delivery
and their families is providing access to quality health of goods and services to underserved communities.
care in their communities. Community-based health
centers experience such high patient demand that NCBDC targets areas that it has the power to
they struggle to provide care to everyone who seeks transform – education, affordable assisted living,
it. With so much staff energy devoted to service health care, affordable housing, and economic
delivery, it is difficult for health center employees development – providing financial and development
to find the time to plan and monitor an expansion services in all five areas. It has been providing
project. Because they rely on an ever-changing financing for community-based health care
palette of funding streams and survive on narrow providers since the mid 1980s, with commitments
operating margins, conventional financing is out of to date totaling over $120 million to support virtual-
reach for many centers. They need help to assess ly all financing needs, including working capital,
needs, evaluate alternatives, and create a sound plan equipment purchases, and real estate acquisition,
that will work well with a variety of potential funding construction, expansion and renovation.
sources. Even with this assistance, health centers
need access to flexibly structured capital to match As its client base has grown through the years to
their uneven cash flow and thin operating margins. encompass a wide variety of community-based
health care providers, including health centers,
With the recent federal initiative to double the number HMOs, managed care organizations, assisted living
of patients seen by health centers, coupled with the facilities, mental health facilities, and others,
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Bureau of Primary Health Care
NCBDC has forged strong relationships with Health centers have traditionally encountered diffi-
strategic partners to enhance access to capital and culty in obtaining financing for building and equip-
technical assistance for organizations in this indus- ment projects. Similarly, the challenge of limited
try. The following are a few specific examples of access to capital has been a major obstacle in the
partnerships that have spawned beneficial programs. development and operation of managed care net-
works and plans. While some health centers across
California Primary Care Association the country have taken advantage of successful
NCBDC has partnered with the California Primary local, state, and nationally-based financing programs,
Care Association (CPCA) and The California many other health centers have not been so fortunate.
Endowment to create a highly flexible, low-hassle
revolving loan fund to benefit California’s health To address the capital needs of health centers
centers. Loans are available to finance the purchase nationwide, the Bureau of Primary Health Care col-
of updated information systems, to meet emergency laborated with NCBDC to form a $160 million loan
working capital needs, to provide revolving lines of guarantee program for facilities development and
credit, and to finance facilities projects, needs that managed care networks and plans. This program
health centers have historically had trouble accessing provides federal guarantees on loans made by non-
through traditional sources. The fund was capitalized federal lenders for facility projects, for plan devel-
with $10 million from The California Endowment opment, and for network development.
and $1 million from NCBDC and is managed by
NCBDC staff, who worked closely with the CPCA NCBDC acts as program “lender coordinator” by
board of directors to develop underwriting criteria providing expertise and assistance to the Bureau of
that meet their specific goals, particularly, to pro- Primary Health Care and acting as a liaison
vide for a streamlined application process and between the Bureau and the lenders and health
assume a level of risk that makes funds available to centers participating in the program.
a very high percentage of California health centers.
For more information on these partnerships and
California Health Facilities Financing Authority other work NCBDC is doing throughout the coun-
The California Health Facilities Financing Authority try to develop new relationships to expand opportu-
(CHFFA), a state-sponsored lender to health facili- nities for health care providers nationwide, visit
ties operating under the auspices of the State www.ncbdc.org.
Treasurer’s office, looked to NCBDC to help them
develop a lending product to benefit that state’s
community-based health care providers that could NCB Development Corporation
accept a higher degree of lending risk than tradi- 1725 Eye Street, NW, Suite 600
tional financial institutions can offer. The result is Washington, DC 20006
the HealthCap program, a unique public-private [phone]
partnership that facilitates loans between $500,000
and $1,500,000 for health care providers’ equip- NCB Development Corporation
ment and facilities needs. Through the program, 1333 Broadway, Suite 602
small and rural health facilities that would have diffi- Oakland, CA 94612
culty obtaining traditional sources of financing are [phone]
given increased access to capital at competitive
rates and terms. This program fills a gap that falls www.ncbdc.org
between CHFFA’s two main financing products,
allowing CHFFA to address a full spectrum of The Annie E. Casey Foundation
financing needs for California’s community-based 701 St. Paul Street
health facilities with minimal state investment. In Baltimore, MD 21202
this public-private partnership the State of [phone]
California funds a guarantee pool that leverages
NCBDC’s extensive health care lending experi www.aecf.org
ence, ensuring access to capital for a larger num-
ber of nonprofit and public health care providers.
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