MEMORANDUM

TO: Ron Long, Assembly President

Members, Kenai Peninsula Borough Assembly

THRU: John J. Williams, Kenai Peninsula Borough Mayor

FROM: Craig Chapman, Finance Director

DATE: April 20, 2006

SUBJECT: Ordinance 2006-22, approving the lease purchase of a CT Scanner and a Picture Archiving Communication System for the South Peninsula Hospital

South Peninsula Hospital's ("SPH") current CT scanner is in need of replacement. Normal replacement is five to seven years, and the current CT scanner is seven years old, subject to breakdowns, and is outdated. SPH is also in need of a Picture Archiving Communication System ("PACS") to manage the digital images produced by the CT scanner and other imaging equipment.

Capital financing will be required as neither SPH nor the South Peninsula Hospital Service Area has sufficient funds on hand to purchase the new CT scanner and PACS.

The attached ordinance asks the assembly to approve the lease purchase of a CT scanner and a PACS for an amount not to exceed $2,000,000. The ordinance would also authorize the purchase of the CT scanner and PACS and authorize the Mayor or his designee to enter into a capital lease agreement with the financial institution offering the lowest net present cost of financing as determined through a formal competitive selection process and provide that payment shall be subject to the appropriation and availability of funds.