The $25 million LB taxpayer cost is part of major terms negotiated (after multiple sessions closed to the public and the press) that would enable "Molina, Wu, Network LLC" (a specially formed, privately operated for-profit entity) to operate a smaller version of Community Hospital on the City-owned Termino Ave. site for at least 45 years for $1 a month rent. Under the deal, the LLC would agree to pay at least $25 million of the estimated $50 million in retrofit costs [although it's not currently clear what would happen if the LLC couldn't or wouldn't or didn't pay its share or disappeared or conveyed its interests to others.]

As previously noted by LBREPORT.com, city staff's agendizing memo (visible here) didn't mention from what budget source(s) the $25 million City-payable sum would come (payable to the LLC in arrears in installments of $1 million per year for the first 5 years, and $2 million per year for years 6-15.) Neither did any Councilmembers during March 12 Council discussion. After public testimony had ended (virtually all supportive of re-opening the hospital although one NLB taxpayer called the taxpayer portion "crony capitalism"), Mayor Garcia stated in pertinent part:

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Mayor Garcia: ...And let me add, and this is something I've talked with Councilman Supernaw about, we are obviously going to be using our General Fund dollars to maintain our commitment we're making, as the staff report notes we're making a 15 year commitment to put our portion of the retrofit dollars toward the hospital, and so as staff brings back the final lease, which I know is coming in the months ahead, as we bring back the reports from the state of California on the process and we finalize those items, I would like staff to also come back, which I know you're already looking at, providing this Council kind of the options and the way forward on how we look at filling those General Fund gaps that we know we will have. And I think it's responsible for us to have that conversation as we move forward as well. And so Councilman Supernaw, I would ask as part of our motion, that staff also brings back those reocmmendations when the lease agreement is back to the City Council.

Councilman Supernaw: OK. We'll accept that.

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City staff's agendizing memo made no mention of this. It indicated that under "major terms" of the not-yet-completed long-term lease, 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 Council's 9-0 vote, amended with the "options" to fund the resulting General Fund "revenue gap", approved entering into an "interim lease" with the LLC that the City believes will enable the LLC to renew the hospital's current license while city staff finalizes a 45+ year binding lease with the LLC. At the same time, city staff will pursue other Sacramento approvals, including a request for legislative (Assembly and state Senate voted approved) to extend the hospital's state law seismic compliance deadline. The City's request for a legislative extension last year faltered when the chair of the Assembly committee overseeing such legislation refused to advance the bill, saying the City had no plan in place.

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The March 12 Council action comes in the context of other Mayor/Council desired spending items without currently budgeted funding sources. In February 2019, the Council voted to purchase NLB property to build a homeless "campus" without serious public discussion of its annual operating and maintenance costs or how to pay them. In late 2018, a Mayor-chosen "task force" [whose members included John Molina] recommended an ongoing independent revenue source to provide homeless services and/or taxpayer-subsidized housing. And recently, city management informed the City Council's Public Safety Committee that it doesn't have structural (continuing) funding in hand -- despite June 2016 LB voter approval of the Measure A ("blank check") sales tax increase now providing City Hall with $50+ million more annually -- to restore Fire Engine 17 [or 186 citywide deployable police officers that LB taxpayers previously received.]

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A few minutes before the public Council session, Councilmembers held a closed door session with city management to discuss negotiations with a list of multiple City Hall public employee unions. City management has previously acknowledged during public budget discussions that the costs of new contracts will contribute in some publicly undiscussed amount to a currently projected FY20 deficit (spending exceeding revenue.)

Speculation on what type(s) of "options" city staff might offer the Mayor/Council include possible revival of a 2008 proposed property parcel tax sought by Mayor Foster. His attempot to do so was stymied when then-5th dist. Councilwoman Gerrie Schipske declined to provide unanimous Council approval for the ballot measure as an "emergency" (and as a result required 2/3 voter approval which the tax didn't receive...although it received over 50% of the vote.) Since then, state legislation has shifted LB's elections to a statewide election cycle and Schipske has been replaced by Councilwoman Stacy Mungo who joined unanimousl Councils in voting to put the Garcia-sought Measure A ("blank check") sales tax increase on the ballot (which failed passage in the 5th Council district) and on March 12 voiced no hesitation in seeking undescribed revenue "options" as part of the Community Hospital transacion.

Developing.

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