A $25-million hospital being built in Dawson City, Yukon, will replace the existing health centre. ((CBC))

Construction of a new hospital in Dawson City, Yukon, has officially begun, while environmental assessors called on the Yukon Hospital Corp. to address residents' concerns about the facility.

A ceremonial sod-turning took place Wednesday afternoon in Dawson City, where the $25-million new hospital will replace the existing health centre in town.

Actual ground work cannot begin on the hospital until the Yukon government approves the Yukon Environmental and Socio-Economic Assessment Board's review of the project.

In its review, released late last week, the assessment board said the new hospital could have adverse effects on Dawson City, but those effects can be dealt with if the building is properly designed.

Near historic building

For example, the board noted that the hospital will be built adjacent to one of Dawson City's most significant historic buildings: the old Yukon government building, which currently houses a museum, some offices and the local courthouse.

Shelby Jordan, who reviewed the hospital project for the assessment board, said the hospital should "definitely look right and feel right," or it could detract from the grandness of the historic building nearby.

"The government reserve area is kind of an integral part of Dawson's history and current use, and so it definitely needs to look and feel right," Jordan told CBC News on Tuesday.

Some residents in the town of 1,300 have also pointed out the hospital's proximity to Minto Park, another historic area that is also home to the Dawson City Music Festival every July.

"This project has the potential to lead to significant adverse effects for those users," Jordan said. "We are recommending some additional steps to be taken, like soundproofing."

Must deal with housing shortage

The assessment board also heard residents' concerns about a housing shortage that would only worsen when more doctors, nurses and other staff are hired to work at the hospital.

Jordan said all three levels of government — territorial, municipal and aboriginal — should share responsibility to ensure housing won't be an issue.

"Housing, or a lack of housing, has definitely been a concern within the community and it was felt that this project with the amount of workforce that will likely be introduced to the community was a concern," she said.

"We've recommended the City of Dawson, the Tr'ondek Hwech'in [First Nation] and the proponent engage in discussions to try to remedy that potential problem before it happens."

Yukon Hospital Corp. officials are planning to unveil details of the hospital's interior design work at a public meeting set for Wednesday evening.