Assembly balks at reimbursing Providence for redesigns after staff review of facility-cost spreadsheet

Kodiak Island Borough staff presented the assembly on March 26 with an archived 2020 engineering appendix and an associated spreadsheet that lists opinions of probable cost for a set of Providence hospital projects. Project manager Cody Allen told the assembly the document generally reflects plausible costs but that some Providence requests appear to expand scope beyond the lease’s ‘‘like-for-like’’ replacement language.

Allen urged caution: some requested items looked more like capacity upgrades than routine renewal, and the borough’s review found instances where Providence had redesigned projects after prior phase-gate approvals. ‘‘When you look at a project and the difference is 3,000,000 or 2,500,000, I think there’s clearly something off,’’ Allen said, urging the assembly to limit reimbursements to work that meets the lease definition for renewal and replacement.

Assembly members across the political spectrum agreed they should not reimburse Providence for redesigns that exceed prior phase-gate approvals. Several members asked that future reimbursements be capped at the dollar amounts on the Providence-provided R&R schedule unless Providence and the borough renegotiate terms or explicitly amend the lease to incorporate larger capital projects.

Assemblymember Gardner urged a conservative stance: ‘‘We should only be giving Providence exactly what repair or replacement cost would be for what we gave them in the beginning,’’ he said. Others noted the borough had previously reimbursed partial design fees and that some reimbursed work already exists in project accounting; those earlier reimbursements will be reviewed individually.

Manager Amy and staff said next steps include sharing the spreadsheet with Providence’s facilities team, inviting Providence’s project managers (including Anchorage-based contract staff) to meet with borough staff to reconcile cost baselines, and updating the R&R schedule to a more current market-year estimate. The assembly also signaled they expect Providence to assume liability for design changes made without borough approval.

The assembly did not take a formal vote but reached a working consensus: reimburse design costs where they fit previously approved phase gates, decline to fund redesigns that increase scope without prior agreement, and open negotiations with Providence on cost-sharing for larger capital projects.