- Associated Press - Thursday, March 3, 2016

OMAHA, Neb. (AP) - Omaha could get a $136 million medical facility built next to the run-down veterans hospital if a public-private initiative were to be carried through, officials said.

The Department of Veterans Affairs plan would provide 157,000 square feet of new medical space, according to U.S. Rep. Brad Ashford, an Omaha Democrat who represents Nebraska’s 2nd Congressional District. The VA would provide $56 million, Ashford said, and private donors would be asked to put up the remaining $80 million.

Ashford spokesman Joe Jordan said Thursday the congressman was optimistic that Nebraska benefactors would be found.

Secretary of Veterans Affairs Robert McDonald said at a House subcommittee hearing Wednesday in Washington that his department is interested in testing the financing arrangement, which faces legal and accounting questions.

I think public-private partnerships is the way of the future for us,” McDonald said. “And we’d (like) … to prove out this model, and I think Omaha is a good place to do it.”

The Omaha hospital serves more than 160,000 veterans in the VA’s Nebraska-Western Iowa Health Care System.

A 2007 study found the hospital was plagued by problems in its electrical, heating and cooling systems. In 2011 the VA unveiled plans for a $560 million, 1 million-square-foot replacement. Congress approved $56 million to start the project planning, and the new structure tentatively was scheduled to open in 2018.

But the plans and work were delayed by funding shortages and changing VA priorities, officials have said. Last summer an analysis by Omaha-based Booz Allen Hamilton for the VA said funding for the full replacement project could be delayed until the late 2020s. The analysis pointed to a $9 billion backlog of approved projects and VA infrastructure needs that could reach $60 billion.

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