The existing Blue Haven Village is proof Kiama Municipal Council is capable of developing a $70 million aged care centre of excellence, according to Kiama MP Gareth Ward.
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On Thursday night the Kiama Council presented to the community its latest plans for the Kiama Hospital site.
In 2013 the NSW government awarded the project an $8 million grant from the Restart NSW Illawarra Infrastructure Fund to help with the upgrade, one of 12 successful projects to share in $100 million from the lease of Port Kembla port.
The project was valued at $40 million at the time, however latest estimates put the cost of the project at $74 million.
When complete, the 3.3-hectare hospital site will contain a new 134-bed Blue Haven nursing home, 55 independent living units and 16 assisted living units.
A development application for the project, to be determined by the Southern Joint Regional Planning Panel, will be lodged by the end of August.
During the state election campaign the NSW government was criticised over the proposed relocation of the hospital's 20 inpatient beds, firstly to Port Kembla Hospital then to Shellharbour Hospital.
Mr Ward said the Kiama community had an ageing population.
More than a third of Kiama's population was over 55 (35.6 per cent), compared with the NSW average of 26.4 per cent.
"I think taking 20 beds and turning them into 134 is a wonderful investment for our community," Mr Ward said.
"The government has committed to a major upgrade of Shellharbour Hospital and will maintain outpatient services at Kiama Hospital."
Mr Ward said the 20 inpatient beds at Kiama Hospital were currently being occupied by people waiting for a nursing home bed and at any one time, on average, only two of those people were from Kiama.
The Kiama MP said he had no concerns with the project's increasing cost which the council said it would recoup in the long term.