Following the 4:15 p.m. June 19 closed door Council session (with the City Manager as real property negotiator), the Council will publicly discuss a city staff recommendation to enter into an Exclusive Negotiating Agreement (ENA) with "Molina, Wu, Network, LLC (MWN)," for up to 180 days [agendizing memo text] "to allow for each party to negotiate exclusively towards the terms of a ground lease for the proposed development of the Site. The time period is requested to allow for the completion of construction plans and the resolution of the City's request to extend the State-established deadline for seismic compliance at the Site."

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The group's initial non-binding letter includes two requests not mentioned in the June 19 agendizing memo:

Consultation/facilitation regarding financing for structural changes required to move certain departments into the original hospital building and upgrading/renovating other parts of the facilities

Consultation/facilitation of the building process so as to expedite through the planning and building process.

And the City acknowledges uncertainty over whether the transition will dovetail smoothly, or not, with MemorialCare's announced exit date on July 3. City staff's agendixing memo states that until an agreement is reached with a new operator, "the City will be responsible for managing the current leases and property management including security [and] monthly costs to maintain the facility are approximately $60,000. These costs may be partially offset by lease revenue if current tenants choose to remain onsite, and assignment of those lease agreements to the City is approved."

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In quick summary responses to e-mail questions from LBREPORT.com, John Keisler, Director of the City's Economic Development Department said (re what if anything would change with the new operator) that "the eight basic services will have to be consolidated into the seismically safe building (the Heritage Building), so it would be a smaller general acute care hospital with fewer beds. The operating group is exploring a number of new non-acute health care services such as behavioral health, senior care, memory care, and other outpatient services."

So...if the scope is basically the same, how will the City address the seismic issues and a looming Sac'to deadline? Mr. Keisler indicated that the City "has engaged the architectural firm Perkins + Will to work with OSHPD [state agency] and the operator toward the development of construction plans that meet state seismic standards. Each building on the site has a different seismic rating, so the buildings will be used for uses that comply with state or local building codes."

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The agendizing memo indicates the City received five non-binding proposals. It's now recommending MWN as the next operator of the hospital with a transition process to be negotiated with MemorialCare to keep the hospital open.

The agendizing memo indicates the terms and conditions of the Exclusive Negotiating Agreement will include

Use: At a minimum, the use of the Site shall include an acute care hospital and other health care facilities, including a medical office building and other health and/or wellness-related uses, and emergency and urgent care services. Other uses may include a combination of behavioral health services, independent and assisted living, inpatient and outpatient behavioral health services, Program for All-Inclusive Care for the Elderly (PACE), medical education in conjunction with a local university, outpatient medical and surgical services, and the possibility of additional nonmedical residential services.

Length of Term: The term of the agreement shall be for an approximate period of 40 years for all properties, facilities, and equipment at the Site.

Rent: The rent shall be one dollar per year.

Staffing: The Lessee shall make a good faith effort to hire current Community Hospital Long Beach staff impacted by the change in operators who desire to remain at the Site.

Negotiating Period: Shall be for 180 days from the date of the full execution of the document. During this period, both parties shall work diligently, in conjunction with the current operator and acute care license holder (MemorialCare), to negotiate and prepare a ground lease for the development of the property. The Negotiating Period may be extended for up to two periods of 90 days each at the sole discretion of the City Manager.

Due Diligence: At its sole cost, the Lessee shall be responsible for conducting any and all tests, studies, and investigations of the property for the purpose of performing its Due Diligence.

Upon the completion of negotiations between the City and MWN, staff will return to the City Council for review and approval of the final ground lease terms and conditions.

Concurrent to the negotiating period, the City may need to take over the management and revenue collection for existing leases between MemorialCare and the tenants located at the Site. To allow the City maximum flexibility to accept assignment of the leases, as well as management of the Site during this interim period, staff is requesting approval to accept assignment of the leases and the ability to enter into any agreements necessary for the property management functions of the buildings including maintenance and collection of lease payments...

TIMING CONSIDERATIONS

City Council action is requested on June 19, 2018, to allow the MWN to immediately enter into negotiations with MemorialCare to establish a transition plan for the hospital prior to its scheduled closing of July 3, 2018, and to limit the impact to life-saving services in the service area.

FISCAL IMPACT

There is no immediate fiscal or local job impact associated with the approval of the proposed ENA. Until an agreement is reached with a new operator, the City will be responsible for managing the current leases and property management including security. It is currently estimated that monthly costs to maintain the facility are approximately $60,000. These costs may be partially offset by lease revenue if current tenants choose to remain onsite, and assignment of those lease agreements to the City is approved. The City is working with a commercial brokerage firm to manage this process. Additional financial information will be brought back to the City Council as the situation progresses and more information becomes available.

Below is the three-party LLC's initial May 7, 2018 letter of interest that got the ball rolling:

On March 5, the hospital's current operator, MemorialCare, notified the City that it will terminate its lease agreement effective July 3. 2018. The Council then authorized the City Manager to identify other potential operators [release text] "with a demonstrated ability to continue a general acute care facility, including an emergency department with basic support services, at the site" and received five non-binding proposals...and is recommending MWN as the next operator of the hospital.

The City's release also says it will "continue engaging with local and statewide stakeholders with an interest in supporting quality health care and seismic compliance at Community Hospital, including users and providers of the region's emergency medical system, potential hospital operators, and workforce groups."

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Community Hospital is currently a 158-licensed bed, general acute care and psychiatric care hospital at 1720 Termino Avenue. "To be a hospital in California means to have a duly constituted governing body with overall administrative and professional responsibility and an organized medical staff that provides 24-hour inpatient care, inclusive of eight basic services: medical, nursing, surgical, anesthesia, laboratory, radiology, pharmacy and dietary services. Community Hospital currently meets these basic requirements and provides psychiatric care services," the City's release said.

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