GRAND FORKS – For the city of Grand Forks, planning for the new Altru Hospital goes back years.
“I would say for 10-plus years (we’ve been) anticipating that this hospital would be built,” Grand Forks City Administrator Todd Feland said. “The city did encourage that it would be in the best financial condition for the city to keep the hospital where it’s at on campus from an infrastructure perspective without going to a greenfield site.”
Since at least the beginning of 2016, various initiatives – ranging from infrastructure improvements to helping Altru Health System receive more economically advantageous funding – have been making their way through various city departments, staff members and city councils. The support the city has given Altru for the new hospital comes from the long, and special, partnership between Altru and the city, according to Feland.
“It’s the community’s hospital,” Feland said. “We partnered on the things that would be value-added to the community … that really helped to serve the greater general public as our community hospital.”
Feland said the partnership with Altru is comparable to the relationship between UND and the Grand Forks Air Force Base – partnerships where there’s typically both deep infrastructure and financial ties. Another example is the
Memorial Village project being undertaken at UND
where the city negotiated in moving and improving sewer infrastructure and tax exemptions for the project.
For Altru’s new hospital, some of the first infrastructure work began in 2016, with the reconstruction of Columbia Road. The renovation of the stretch between the overpass and Knight Drive added not only traffic capacity for the area but also better ways to enter the Altru campus from Columbia Road. According to a 2016 staff report, the project cost was $6.4 million.
Unlike many of the later projects, the Columbia Road project wasn’t explicitly done with the current version of the new hospital in mind. According to Feland, there had been conversations happening, but it was more done with the idea that there could be a new hospital on the horizon. When the actual planning for a new hospital began to take place, the city began doing projects that were explicitly mentioning and tied to the new hospital.
In 2018 the next major infrastructure project began. At the time, a major storm sewer force main ran right through the heart of the Altru campus along 11th Avenue South. Because that would sit right under the new hospital, Altru asked the city if the hospital could partner to move the force main. The total project cost roughly $2.1 million and Altru did help with any costs over $2 million.
Like all big projects that happen in the city, stormwater is always a concern. As part of the new hospital, Altru constructed additional stormwater ponds. This first creates additional park areas for leisure and exercise in the neighborhood but also helps the city mitigate issues with stormwater in the English Coulee watershed.
Unlike other watersheds in Grand Forks, the
coulee can be tricky for the city
to manage, according to City Engineer Al Grasser. The watershed, which covers much of the west and north sides of the city, sometimes struggles with capacity, since there are fewer places to store water when Grand Forks receives abundant rainfall.
Another major infrastructure project that will be occurring is the reconstruction of 30th Street South in 2026. Altru did ask the city to partner during the planning process of the reconstruction to further its development of a “Hospital in the Park” concept. The cost share for that project would be typically with the city taking on 80% of the costs and adjacent properties taking on 20%.
North Dakota municipalities are allowed by state law to be the conduit for revenue bonds, which Grand Forks helped Altru obtain in two installments. Projects like Altru’s new hospital aren’t typically financed in the ways a home remodeling project would be funded. Simply put: Banks don’t typically give out $500 million loans.
So what large projects – like Altru’s new hospital – can do is issue debt to investors. Mechanically it works like a loan with repayment and interest and appears similarly to a loan on Altru’s ledgers. However, unlike a traditional line of credit like a loan, a bank isn’t leveraging its own assets. Banks often feature in these agreements to verify and ensure creditworthiness and to ensure all the entities are following rules and maintaining communication. According to Altru Finance Director Derek Goebel, the revenue bond route was the best option for a variety of reasons.
“Local banks aren’t generally in a place where they’re going to issue $150 million in commercial debt,” Goebel said. “So rather than go to a mixture of different pieces, we talked with our financial advisers through ‘what’s our best course of action?’ and ultimately that’s how we landed on revenue bonds.”
Altru could go to the bond market on its own, but in North Dakota, cities can help businesses access a bond market that can have more favorable interest rates. So the two installments, $400 million in 2021 and $150 million in 2023, helped Altru get better interest rates on the bonds and finance the project. The city has no liability for the debt and it’s secured by Altru’s revenue.
While bond issuance is just a matter of normal business, Goebel said nothing comes close to this project’s investment for Altru.
“This is by far the most significant investment we’ve ever made,” Goebel said. “Without question, between our hospital replacement and some of (the other related) projects, we already have a billion dollars of investment into infrastructure and clinical equipment. We haven’t even come close to anything like that previously.”
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