gradually grow in year one through year six as more positions would be terminated each year, eventually resulting in total annual savings of $4,029,025 in years seven through twenty of the life of the new complex. These savings would be adjusted for inflation after year 1. B) Facility Capital Outlay Cost Savings If WSH was moved into the JHC property, the state would not have to incur additional expenses that were needed to support the existing complex. The hospital administration had a wish-list of 19 future capital outlay projects needed to completely update the current complex. The total cost of the improvements would be over $8.7 million over the next three years. They included a fire alarm upgrade, contaminated soil remediation, asbestos abatement, a HVAC upgrade, and replacement of water lines, telephone lines, sewer lines, and roads. There would be no additional capital outlay project requests beyond the third year. While the hospital administration realized that all of the projects on the list would not be approved by the state, they were optimistic that the most important ones would be funded. Based on their experiences in working with the state, the hospital administrators had learned to request significantly more funds than they really needed in order to get most of what they needed. Historically, the state had funded 60 -70 percent of the requested capital outlay projects for state-owned healthcare facilities. Table II presents the inflation-adjusted capital outlay requests for the next three years that were pending with the state. The year the project would be funded, the cost of the project in that year, and the probability that the project would be funded are presented for each project. The probability of funding was based on the administrators' past experiences in working with the state. If the new hospital were purchased from JHC, all capital outlay projects in Table II would be eliminated, resulting in significant cost savings for the state. () Inflation-Adjusted Cost Savings Insurance, utilities, maintenance, salaries, and benefits at the hospital had historically increased at the rate of inflation. The inflation rate over the past ten years was assumed to be the expected rate of inflation for the next twenty years, the useful life of the new hospital. The average annual inflation rate over the past ten years, based on the Consumer Price Index, had been 2.5%. V. Funding for New Hospital Part of the funding for the purchase of the new hospital would come from the sale of some of the existing assets currently utilized by WSH. The complex currently sat on 150 acres of land, of which 100 acres were cleared and the other 50 acres contained some of the best timber in the area. The timber would be removed and sold from the 50 acres before the 150-acre cleared land was sold. Because of local zoning laws, the 150-acre property had to be sold as a whole. The hospital property also contained two deep-water wells, a sewage treatment plant, a water tower, and an electrical system. The fixed assets had been appraised by two companies, Caroline Inc., and Jacob Appraisal Services. They valued most of the assets exactly the same, except for the cleared land and timber (see Table III). Caroline Inc. valued the cleared 150-acre land at