Questions swirl around $3.6 billion budget for new South Niagara Hospital 

Correction: A previous version of this article mistakenly noted the size of the new South Niagara Hospital is 1.2 million square feet. The correct number is 1.3 million. The new hospital also will not contain a women and babies unit, that is located at the Marotta Family Hospital. 

For more than a decade, Niagara residents wondered when ground would finally be broken to build the new $3.6 billion South Niagara Hospital. In July of 2023, the wait finally ended.

The ceremony to mark the start of construction took place with many dignitaries in attendance, including Premier Doug Ford, MPP Wayne Gates, MPP Sam Oosterhoff, Niagara Falls Mayor Jim Diodati, Ontario Minister of Health Sylvia Jones and a number of other local officials who came together to celebrate the significant moment in the history of healthcare in Niagara. 

The new regional hospital sits on 50 acres of land at the corner of Biggar Road and Montrose Road in Niagara Falls and when it opens in 2028, will replace the aging Greater Niagara General Hospital which has been serving patients since 1958.

Construction has been underway at the site for over a year, with a live-feed camera showing numerous cranes helping to raise the structure from the snowy earth. The substantial progress on the desperately needed hospital comes despite numerous questions lingering about the cost, with one Niagara Falls councillor questioning why her local ratepayers are being asked to foot such a large portion of the bill when residents in Niagara’s other small municipalities will also use the new 12-storey, 469-bed state-of-the-art facility.

For months, The Pointer has attempted to obtain a funding breakdown for the $3.6 billion budget listed for the project in the contract awarded to EllisDon in February of 2023. Niagara Health referred questions about the budget to Infrastructure Ontario (IO). A spokesperson for Infrastructure Ontario did not provide a budget breakdown, but stated the provincial government has committed to funding 90 percent of “eligible construction costs”. Niagara Health, with assistance expected from local municipalities, is responsible for the remaining costs—known as the local share—which includes 100 percent of the price tag for medical equipment and fixtures within the new hospital.

The $3.6 billion contract award includes what IO describes as “pre-inflation payments for monthly servicing”, costs that have caused confusion about what exactly they are, how they fit into the overall budget and who is responsible for them.  

“This includes maintenance, repair and renewal for the 30-year life cycle, including systems such as heating and cool, windows, floors and roofs,” an IO spokesperson told The Pointer. If these costs go above what is estimated, EllisDon covers the difference. 

IO did not provide the cost estimate for the 30-years of maintenance stipulated in the contract. These are payments typically covered by the Ontario government. The Pointer reached out to EllisDon regarding details of the 30-year maintenance arrangement, but did not receive a response. 

Not having the ability to separate the maintenance costs—traditionally covered by the provincial government—from the construction costs, which require a local share, councillors in Niagara municipalities and residents seeking clarity on how much of their tax dollars are needed for the project, have been unable to get clear answers.

According to a previous presentation from Niagara Health, the six southern tier municipalities in Niagara Region—Niagara Falls, Welland, Wainfleet, Pelham, Port Colborne and Fort Erie—would be asked to assist with the approximately $230 million local share. They were singled out because 50 percent of Niagara Region’s population resides in these communities, NH previously explained.  

Renderings of the future South Niagara Hospital.

(EllisDon)

So far, local share requests have only been made to two of the six municipalities, Niagara Falls and Port Colborne. It’s unclear when requests will be made to the remaining four or how much NH will be seeking from them. 

The City of Niagara Falls committed, in principle, $22 million to the new hospital, a number that was increased to $30 million in December 2022 following a request from Lynn Guerriero, President and CEO of Niagara Health.

She highlighted that the new regional hospital will be 1.3 million square feet and house new centers of excellence focused on stroke treatment, kidney issues, mental health, addictions and wellness in aging.

“It is important to have firm commitments from the Region and Niagara Falls as this is the city the hospital will be located in before reaching out for local share requests from the other municipalities,” Angela Zangari, Executive Vice President, Finance, Redevelopment and Support Services, Chief Financial Officer with NH (now retired) said. Niagara Region has committed $44.5 million to the project.

Zangari said NH would be visiting the other area municipalities being asked to commit to the community fund to make official requests in the future. 

As part of the 2022 presentation, the following breakdown to cover the project’s costs was provided:

• Province of Ontario: $900 million
• Niagara Region: $44.5 million
• Niagara Falls: $30 million
• Fort Erie:  $3 million (in principle)
• Port Colborne: $0
• Welland: $0
• Pelham: $0
• Wainfleet: $0
• Niagara Health Fundraising goal $35-$45 million
• Hospital Revenue (Parking and Retail)- $80-90 million

According to NH, these figures were estimated prior to financial close of the contract, so they are likely to change. 

The total amount required for the local share was $230 million. Zangari explained the requests to the other municipalities would be based on “per capita utilization”. 

This raised questions as the Town of Fort Erie’s original commitment of $3 million—which it maintains is still the amount they are donating to the local share—is far below the per capita cost formula used by NH to come up with the $30 million requested from Niagara Falls. Fort Erie’s commitment was made prior to a formal request from NH.

Fort Erie’s population according to the 2021 Census was 33,000, compared to 94,400 for Niagara Falls. The discrepancy in the amounts the two municipalities are being asked to pay, based on population, raises questions about why Fort Erie is paying so much less, or why Niagara Falls is paying so much more, assuming both communities will rely on the new hospital as the main primary care health facility serving both. They are approximately 30 kilometres apart.

Zangari also made it clear that any shortfall to the local share would need to be made up by Niagara Health, and any shortfall could “affect patient care”.  

The $30 million dollar request to Niagara Falls for funding was referred to the 2023 budget by a vote of 7-1. Councillor Lococo was opposed.

Despite the referral, the $30 million dollar request was not included when council passed the budget in February 2023. Instead, the request returned to council on July 11, the same year, midway through an already approved budget year— and one week prior to the groundbreaking ceremony.

Councillor Wayne Thomson immediately made a motion to approve the $30 million dollars. 

“We don't have any choice,” he said. 

Speaking to the motion, Councillor Lococo said she felt the $30 million commitment would put undue strain on Niagara Falls taxpayers. 

“Everyone can agree we need a new hospital. My concern is the funding of the hospital and determining our local share and not overburdening the taxpayers,” she said.

“We are investing $32.5 million in infrastructure out there for the hospital and the future development that will come from it. That takes our portion to approximately $73.5 million.”

The amounts referenced by Councillor Lococo included the $30 million request from NH; $32.5 million for supportive local infrastructure needed for the hospital; and the $11 million the City paid for land adjacent to the site which the provincial government said was necessary for future expansion of the hospital.

“The NH has said they are looking for $40 to $50 million paid for by the combined six municipal contributions. If Niagara Falls commits $30 million and Fort Erie has pledged $3 million, that is $33 million, so that would leave only $17 million needed from Welland, Wainfleet, Port Colborne and Pelham. Do we have any pledges from them?”

Niagara Falls CAO Jason Burgess said the only other commitments he was aware of at the time were Fort Erie ($3 million) and the Region ($44.5 million). 

“I am concerned Niagara Falls residents are contributing more than their fair share,” Lococo said. “The $30 million request is too high and I am concerned about the other municipalities. What if they don’t come up with the money? Will Niagara Health be coming back to Niagara Falls for the portions the other municipalities refuse to pay? I won’t be supporting this…The other municipalities are going to have to step up.”

On top of this Niagara Falls residents have also generously contributed through numerous fundraising initiatives for the new hospital. According to Mayor Jim Diodati, the City, along with his fundraising partner Harry Oaks have raised more than $62 million. 

It is not unheard of for a municipality to refuse the dollar amount requested by a local hospital group. Recently Mississauga council declined the request by Trillium Health to pay $450 million dollars as City Hall’s part of the $1.5 billion local share Trillium was told by the provincial government it had to cover for what will be one of the largest hospitals in North America. Mayor Carolyn Parrish and other council members said the city’s taxpayers simply could not afford such a large additional burden on their property tax bill, at a time when the cost of living has created unique challenges for homeowners.

Lococo stood alone with her concern while other council members expressed their support for the motion.

“When it comes to our health care and hospital I don’t see how we can sit back and say if they, the other municipalities don’t do it, that we shouldn't do it…When it comes to our healthcare we need the best and we have not had that,” Councillor Ruth-Ann Nieuwesteeg said.

Mayor Diodati said the investment was a “no brainer”.

“It is going to bring in the newest and latest equipment and attract the brightest and best minds and it's going to lead to the best healthcare. At the end of the day we are going to have the best healthcare in the region.”

Niagara Falls has had a substantial shortage of doctors for decades and there is a shortage of nurses across the country. It remains unclear if NH will be able to attract more healthcare professionals once the hospital is ready.

The City currently has $24 million in a reserve generated through a previously approved hospital levy to help cover a portion of the $30 million cost. 

Contributions from the remaining municipalities have not yet been decided. Niagara Health has yet to make formal requests before their respective councils, though a spokesperson said those presentations are planned and discussions are ongoing. 

At the September 23 Fort Erie council meeting, two members of the Town’s healthcare services committee, Harpreet Bassi and Mary Jane Johnson, resigned. Their letter included on the agenda explained that they did not feel the committee was successful in achieving its goals and there had been little accomplished in trying to advance the set priorities.

That prompted Councillor Tom Lewis to suggest that perhaps the Town should reconsider its $3 million dollar commitment to the new South Niagara Hospital. 

That would be contrary to what Niagara Health is planning. A spokesperson told The Pointer that senior officials with NH are going to visit Fort Erie and request an increase to its contribution based on a per capita allocation.

The Pointer reached out to NH to ask what the per capita requests would be for each of the other municipalities.

“We have not made formal public requests for local share to those communities as conversations are ongoing,” Niagara Health spokesperson Erica Bajer said. “Although we are using the same per capita dollar amount used for the City of Niagara Falls request for each municipality, there are other attributes that could be part of the partnership that are discussed before a formal request occurs. Again, those conversations are ongoing.”

The Pointer reached out to the southern tier municipalities about discussions NH referred to and whether or not the hospital organization had scheduled to present funding requests to each council. 

City of Welland Communications Director Marc MacDonald said the municipality “has no comment to provide.” Welland Mayor Frank Campion did not respond to a request for comment. 

Town of Fort Erie Communications Director Kevin Beauchamp said “the information I received back is we have not yet been approached formally by NH to contribute more funding to the new hospital. Whether the Town would contribute more than the $3 million is a decision of Council.” 

On December 3, Niagara Health asked the Town of Port Colborne to contribute $6.2 million to the local share based on its per capita formula.

Port Colborne council decided not to approve the financial request until the town held public consultations on both the financial request and the offer by Niagara Health to sell the Town the existing hospital building there for $2. Niagara Health will pull out of the building once the new South Niagara Hospital is opened.

Niagara Falls council did not hold public consultations to get feedback from taxpayers about how much

of their property tax dollars should be used to fund the local share of the new hospital.

It remains unclear when requests will be made to Fort Erie, Pelham, Wainfleet or Welland. When presenting to Niagara Falls in 2022, the council was told the money had to start flowing to Niagara Health by the start of this year. 

According to the financial numbers publicly announced, the Niagara Falls community has already committed $124.5 million. 

That includes the $30 million by city council, $32.5 million for infrastructure and $62 million through fundraising. This total does not include the $11 million the City spent to purchase the additional land.

According to Bajer, the NH spokesperson, the other municipalities will be asked for contributions, but no further details were provided.

 

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