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Community Hospital Long Term Deal Not Done, City Staff Seeks "Interim" (Short Term) Lease As Negotiations Continue On Fiscal Impacts Of Major Terms That Could Require LB Taxpayers To Pay Privately-Owned LLC Up To $25 Million (Half Of Seismic Retrofit Costs) While LLC Runs Smaller-Than-Former Version Of Community Hospital For Its Profit On City Owned Land For $1/Year.


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(March 8, 2019, 4:55 p.m.) -- A last-minute added March 12 City Council agenda item reveals that despite multiple closed door Mayor/Council sessions, negotiations on a long-term deal to a proposal by a private for-profit firm to operate a smaller-than-former version of Community Hospital on the seismically-challenged City-owned site aren't done.

City staff seeks Council approval of a short-term "interim" lease as negotiations continue on a long term lease continue that -- as now revealed in city staff's aghendizing memo -- include major terms that could require LB taxpayers citywide to pay up to $25 million to enable MWN Community Hospital, LLC [Molina, Wu, Network] to operate a smaller-than-former version of Community Hospital for its profit on city-owned land (1720-60 Termino Ave. plus 4111 E. Wilton St.) for 45 years (plus two ten-year extensions at the LLC's discretion) for $1 per year.

City's staff's agendizing memo indicates that negotiations between the City and the LLC continue on "the fiscal impacts associated with proposed terms."

Under major terms and provisions indicated in the agendizing memo, the LLC would operate the hospital [as a profit making venture] paying half the seimsic costs but only nominal rent while LB taxpayers would pay the LLC half of seismic costs up to $25 million. City staff's memo indicates that under a long-term lease being negotiated, the LLC would operate "an acute care facility, professional office building, and other ancillary medical uses" and "make a good faith effort to provide sobering center beds, medical detox beds, recuperative care, and psychiatric beds to address community needs identified in the City's Everyone Home Task Force report, subject to appropriate licensure and regulatory approvals."

The annual sums payable by LB taxpayers to the LLC would be in arrears in installments of $1 million per year for the first 5 years, and $2 million per year for years 6-15.

The agendizing memo doesn't explain from what budgeted source(s) the annual $1 million-$2 million payments by the City to the LLC would come.

In a release, Mayor Robert Garcia stated; "We've made reopening Community Hospital a priority, and are committed to an accessible and safe emergency room in East Long Beach...I'm confident that our new partners at MWN will operate a model facility that will provide outstanding medical care and health services." 4th dist. Councilman Daryl Supernaw stated: "Community Hospital provides important services for our residents across Long Beach. I look forward to joining my colleagues next week in reviewing the proposed major terms and provisions and making a decision based on the publicís best interest."

[Scroll down for further.]






At the March 12 Council meeting, city management seeks Council approval for a short-term (interim) lease with the LLC plus a "letter of intent related to the development of a long-term replacement lease between the City and LLC" for operation of an acute care facility (details below) for approval by the City Council "once completed."

"While the City and Lessee are continuing with negotiation of terms and provisions related to the replacement lease for the Subject Property and the fiscal impacts associated with proposed terms, it is advisable to set parameters on certain terms and provisions of the transaction on which the parties have reached agreement..." The "Letter of Intent" would "establish a number of major terms and provisions" for inclusion in an eventual long-term replacement lease, including the following:

Use: The Leased Premises shall be used for the operation and maintenance of an acute care facility, professional office building, and other ancillary medical uses. The Lessee will make a good faith effort to provide sobering center beds, medical detox beds, recuperative care, and psychiatric beds to address community needs identified in the City's Everyone Home Task Force report, subject to appropriate licensure and regulatory approvals.

Lease Term: 45 years, with the option of two 10-year extensions at the discretion of the Lessee.

Rent: $1 per year.

City's Contribution to Seismic Costs: City will pay the Lessee 50 percent of the total Seismic Costs, not to exceed $25,000,000, and would be payable, in arrears, in installments of $1 million per year for the first 5 years, and $2 million per year for years 6-15, commencing from the effective date of the replacement lease.

City management's memo says "seismic costs" are "defined as all costs and expenses related to achieving timely compliance with seismic compliance laws and regulations to operate the acute care facility. Reimbursement of seismic costs would include those costs incurred and accrued from the date that the long-term replacement lease is executed by both parties."

The agendizing memo states that the interim lease will enable the LLC to "immediately begin preparing the facility for inspections that are required to reopen a Hospital at the Subject Property, while both parties finalize the terms and provisions of a long-term replacement lease. Completion of the replacement lease is expected to take up to 60 days. Staff expects to bring the replacement lease to the City Council for approval no later than May 17, 2019."

The agendizing memo notes that the hospital's current license will expire on April 28...and management says the "letter of intent will allow both parties to immediately begin work on the long-term replacement lease that is needed to secure a State legislative extension for seismic compliance."

As reported last year by LBREPORT.com, a previous legislative effort by the City (a bill carried last year by Assemblyman Patrick O'Donnell (D, LB) met resistance and failed to advance from an Assembly Committee when its chair said the City had no deal in place. Assemblyman O'Donnell recently introduced a new bill (a placeholder) with which to seek a legislative extension...which LBREPORT.com hsa been told will likely come to the same Committee with the same Assembly chair.

Developing.


March 8, 6:47 p.m.: Text added and clarified.

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