Speaker 0: Great. Thank you very much. Thank you, Mr. Logan. And to everyone that that attended. Next up is item 27, which is the MWI lease.
Speaker 1: Report from economic development. Recommendation to execute a lease agreement with MWI and Community Hospital for the operation and potential development of city owned property. Amend the grant deed restriction and reimburse tenant up to 1 million per year for the first five years and up to 2 million per year for years. Six through 15 of the lease to assist with seismic retrofit construction costs of the hospital facility. District four.
Speaker 0: Thank you, Mr. Walker.
Speaker 10: Thank you, Mr. Mayor. Members of the city council. So we do have a presentation for you tonight. We're excited to be here tonight to present this to the council. This is a very complex land transaction that we're doing here and a lease agreement. So we do want to spend some time to walk through what we're doing here. The direction the council gave us and the challenge that was presented and the creative solution that has allowed us to get to this point. And so I do want to give us the history of community hospital. It's been an asset that has been in Long Beach for over 90 years, opening back in 1924. It is actually a designated historical landmark and that happened in 1980. And the hospital went through a significant growth period during the 1960s, the 1980s, from a very small facility into what it was until it closed. And that was 158 licensed acute care beds, including 28 what we call acute care psych beds or behavioral health, which were very critical to the community. And it had been acquired along the way by a number of different entities, but it was an under lease in operation by Memorial Care in 2011. And then we had the seismic issues that came up, and there was an identified active seismic fault line under a portion of the acute care facility that was identified in 2017, and it ultimately was closed in 2018. And so there have been impacts. Community hospital is a is a critical asset here in Long Beach that the council really charged for for us to find a way to get it back open again. I do want to underscore kind of, you know, what it had done when it was open. There were 27,000 emergency visits in 2016 that accounted for about 10% of all the visitor visits for the area. We transported there about 5000 times from our fire department in 2017. And it was what we call the most accessible receiving area or a catchment area for stations for eight, 14, 17 and 18, which essentially covers most of the east side parts south of of near the beach and in downtown. But it really is a community asset that affects everybody, because if that asset is gone, that means all the other hospitals that serve all the other areas are receiving more patients. And as predicted, we did see an increase in hospital and transport times when it closed in 2018. And rescue transport times, the time it takes to get to a hospital has been up and that's over 10% and in some cases up to 20%. And so this council gave us a challenge knowing that, a the hospital group was basically turning it back over to the city. We had some decisions to make and the council really set out some priorities, saying that the utmost priority is to really provide that lifesaving emergency medical services and acute care hospital that we wanted to minimize our transport time through advanced life, life support to the fire department that we needed to really be creative and look at creative partnerships to meet all the state regulation and minimize our costs, and that we should utilize the value of the property to help contribute, constrain the financial risk and liability. So in essence, the Council was asking us to be creative and recognizing that achieving all of this required really a different approach than a traditional real estate transaction, and that we would be willing to accept some additional risk and some additional creativity in how we would put this together in order to deliver the potential for a hospital. There are still a number of things that are unknown, and John Keiser will help walk us through that today. It is unknown about the state licensing and permitting process. There is still further geotechnical studies to do. We still have information to gather on, on detailed construction planning and total construction cost and whether or not a hospital there is financially viable for a smaller, acute care hospital. That said, we do believe that what we are presenting to you today is the best deal to open up a hospital that meets all those critical public safety needs. And it has been a good partnership with our team at NWN and we'll talk about that a little bit at the very end. So with that, I'd like to turn it over to John Keisler to walk us through, you know, kind of what's happened over the last year and a half and also to get into the deal terms before we get to the financials.
Speaker 11: Thank you, honorable mayor and members of the city council. Just a quick recap on the last two years. We came to you back in November of 2017, and that was when we first received news from Memorial Care about their their needs to move on and ultimately began our process. You originally directed the city manager to do a targeted recruitment, looking at operators and developers who would have the financial and operational capability to actually address a project like this. We did due diligence on five of those operators that had presented letters of interest and ultimately landed on one fantastic team that that had the ability, the experience to execute such a complex project. In March of this year, we came back with a scope that both parties had agreed to for an interim agreement that allowed for NWN to enter the facility and begin not only doing some additional due diligence, but preparing the facility, submitting an application for a hospital licensing, and then preparing the facility for the complex permitting process. But over the past few months, we were also able to clear a number of major hurdles relative to the permitting and licensing deadlines that are imposed by the state. So where we are now is really we've made a progress in in coming to terms on the long term agreement. And I'm going to actually read into the record a few of those terms so that we can make sure that the public understands what this lease and cost sharing agreement entails. And ultimately, talk a little bit about some of the impacts fiscally and some of the challenges that remain. As we know, this is to be used. The property is about 8.7 acres, but the property will be include an acute care hospital. That is something that you guys had set forth and ultimately include the medical office building. Other health and wellness related uses in emergency care has to be provided at the site at a minimum. Also, the operator has agreed that they will sublease a portion of the facility to our SART team, which is a critical component of our police department and other public safety services. Essentially effective October 15th today for up to 45 years. Under the initial term of the lease, there will be two tenure extensions that are optional, but that would be a total potential term of 65 years. We this will be at a dollar a year. So there will not be a lease rate because the tenant is going to be taking on significant seismic compliance. And we'll talk about that in just a moment. But the tenant has offered and we've agreed to as additional rent, some what we call profit sharing or if there are net profits in the first five years, 20% of that will be shared with the city. The city will not have any responsibility for for maintenance. We've learned over the last few months, as an example, that we spend almost $200,000 a month to maintain a facility like this when it's not operating. This is a large campus that it requires a lot of security, a lot of systems that need to be maintained, utilities and other things. They will have 100% responsibility for the entire. Campus, all buildings and grounds. The tenant will be solely responsible for seismic construction working with the state of California, as well as maintaining all of those permits over the term of the lease for the next 45 years. They will also they've agreed to split the costs of that seismic retrofit. So typically a landlord would have responsibility for major capital improvements and then provide the facility to the tenant. In this case, they're taking on those actual the work of the seismic construction and sharing the cost. 5050 The city has agreed up to a 50%, up to the $50 million estimates that are architects and consultants estimate it will require to complete the work. And we will pay our share of the seismic costs over a 15 year period on any external funding that we're able to generate. We will contribute. That could be a grant from Homeland Security or a hazard mitigation grant. Something that could offset the costs would be credited against the city's annual seismic payments after the initial 5 million of external funding secured. So that was another term that the tenant agreed to. Now, in terms of a default, so what remedies might we have as the city? Of course, because we've committed up to $25 million, we may withhold it any time for until the default is cured, a portion of those seismic payments. So that provides us with some security and hopes help to cure any defaults. But we have to remember that unless there's a if there is a fundamental default in that environment, we would still have to offset the costs of the initial capital that the tenant is going to be using to get their hospital started in operating any net losses that they incur other than bankruptcy. We'd be responsible for reimbursing them. And I'll get some more details on that in just a moment. Now this agreement does allow for voluntary termination. So, you know, this was an issue where if it becomes financially infeasible, if there's some sort of other outside incident that occurs, that would force them to terminate. They can do that, but they also could be entitled to recovery of their costs. And then the hospital capital costs, which they may be entitled to be reimbursed by the city, could include all the seismic work, maintenance, restoration costs, debt service for for the construction and any net operating losses. But it would only be costs associated with the acute care or hospital portions of the facility. And that clock would start ticking on the effective date, which is October 15th. Now, in terms of the the hospital costs that the city could claim, you know, if there were profits generated by the facility, by the operator, that would offset their their claims for reimbursement, any profit share that they paid to the city and any city lease admin costs of $250,000 a year that we might incur for oversight and management of the of the lease. We would get credit for those things and then the payment. This is an important term that we've been discussing for some time now that that was needed to offset the risk that this operator is taking on to to for such a complex project. But the city would ultimately have some responsibility to either reimburse the tenant for their net losses or net hospital costs. We could sell the property on the open market and then use proceeds from that sale to to pay those costs. Or we could sell the property directly to the tenant. An important term of this payment clause is that under no circumstance will the city owe the tenant more than the open market value of the property. So in that way, as the city manager mentioned, we are containing the ultimate or total liability with regard to reimbursement to the open market value of the property. And that was a really important condition of the city council back in March when we we entered the first letter of intent. Now, one other condition that we negotiated is that neither party can claim as part of their costs for reimbursement or credit anything before October 15th. So that's that's something that is important to the deal as well as the tenant has agreed. And this was a major council priority that they will make a good faith effort to rehire current or former community hospital Long Beach staff that were impacted by the original closure. So with that, some of the potential outcomes that we summarize in both the council letter, the staff report, if anybody wants more detail about the more technical terms that I just described, you can go to the staff report and get that additional information. But here's a just an overview of potential outcomes that may have a fiscal impact for council consideration. So of course, the big one is the seismic payment under outcome number one, we approve the lease the hospital operates, it's successful. That is our ideal situation. We would have up to $25 million over a 15 year period. Of course, after that 15 year period, we're not obligated to contribute more to the project. So it's really $25 million over the 45 year term of the lease and those administrative costs that we've identified for oversight. That could also include very specific types of expertize relative to health care accounting to review the financial reports and otherwise under outcome number two, which would involve the lease being terminated prior to the end of the 45 year lease, we still could incur a $25 million of costs after you're 15, we could have paid our full $25 million of seismic contributions and the lease could terminate after that at that time. So under outcome number two, we want to make sure that the public and the councils aware that we could have that same financial liability. And at some point after year 15, the operator could determine that it was no longer feasible to provide a hospital at the site. So that is a real concern of ours and we want to make sure that we're very transparent about that. But outcome number three would be that this lease is not approved tonight. And ultimately, we we shared with you that the council would decide on next steps for the property. It would not be acute care because this really is our only shot at getting that done under the deadlines that the state has has imposed. But we have found out. Over the past couple of months that the carrying costs of this property, given all of its security and maintenance needs, could be anywhere from 2 to 2 and a half million a year in carrying costs until we were to either sell or lease the property for other uses. Finally, as part of the fiscal impact funding sources, so how would we offset the costs of this proposed lease? The big cost, of course, is the annual seismic retrofit payment, which in the first five years will be $1 million per year in year six through 15 will be 2 million per year. And if you add that all up, that's $25 million over 15 years. Right now, staff is recommending that general fund budget reductions would pay for that $1 million a year cost in in these years, these first years or another solution would have to be identified. It has been suggested, and we put this in the staff report as well, that previous actions taken by the council to consider including this as a public safety infrastructure asset of the city, that it may be eligible for Measure A if that are valid or if that measure is extended. So that would be an example of an alternative funding solution that's not available to us now, but could be available to us in the future. The other liabilities, of course, are the ongoing operating costs that we have for administering these complex leases. I mentioned before it could be anything from very specific types of accounting expertize. It could also be management consulting in health care administration to help make sure that we're able to assist with the seismic compliance or other business operations associated with the lease. And there could be a lease termination payment now. This is an estimate estimate of 91 million based on the city's own third party appraised value of the property as if the seismic retrofit was completed. So our appraiser took a look at the property and they calculated the value of seismic retrofit that would need to occur. And if that retrofit was completed and the state was to license it as an acute care property, the estimate is that it could be worth as much as 91 million. That is the total potential exposure in the event that the net hospital losses, if the operator were to default, we would we we could be exposed up to the amount of the value of the property. So that is, again, an appraised value. If default were to occur, we would have to go to an open market sale and the market at that time would dictate what the true value is. So economic benefits. One other section, of course, property tax revenue, jobs and sales tax. These. Once a property is transferred from public to private, use those those numbers change. So we don't have assessed values for either property or sales tax, but we do see at least 250 jobs associated with the acute care facility. So timing considerations. There is a statement of urgency included in the staff report because we have deadlines with California Department of Public Health. And so we are recommending that that council takes action tonight and that will allow for approximately 2 to 3 weeks that when our operator has indicated they need to staff up and stage equipment in preparation for state inspections, which they have established with California Department of Public Health and and the operator has indicated that they need some certainty. They need to know that the council agrees to this long term agreement and cost sharing agreement before they make the massive capital investment of staffing up and preparing for state inspection. So in terms of addressing council, city council priorities, staff recommendation is ultimately that after those two years of extensive collaboration, of testing the market, of due diligence and working with various potential operators, we believe that this is. This proposed lease is the best opportunity to achieve the city council direction to reopen an acute care facility at a community hospital. And so we are recommending this proposed agreement tonight. And ultimately, in terms of next steps, what that might look like for the community is that if the agreement is executed, approved and executed by both parties, the effective date would be October 15th. Today, the hiring process would resume. State inspections would would take place either end of October, early November. And then, of course, once that hospital license is approved, it would be up to the operator to to open the doors. But that could be projected as early as they receive their their hospital license, with construction plans due to the state of California, what's called the Office of Statewide Hospital Planning and Development in June of 2020. So there would only be about 8 to 9 months for the city and NWN to work together and submit those detailed construction plans to suspend to continue seismic compliance work and continue operating the hospital. The good news is, is that our speed has given us an extension to operate until January one of 2025 because they designated our construction plans as a rebuild. And so we would be able to operate or NWN would be able to operate as they go through the seismic construction to comply with state regulations through 2025. So with that, I'm going to end the staff report and answer be happy to answer any questions that you might have about the lease.
Speaker 10: And so Mayor and City Council, that is our staff report. I do want to say it took a tremendous amount of time and effort to get here and we, you know, definitely didn't do it alone. So I want to really think the mayor and the city council for giving us this direction and giving us a challenge to really do something out of the box to get to this point. I want to thank Councilmember Supernova, who has been this is at the top of his list every single week with us and has been really focusing on this. In addition to councilmembers Price and Mongo, who the three of them together have really formed kind of the core team. Of course, our partners from NWN, you know, this is going to be run by a private entity who needed to step up and take a lot of risk on their own to do this and especially and particularly John Molina without which would not happen. We want to thank the foundation for all of their support. The California Nurses Association. And then finally, just the everyone behind me, but also in the in the audience who you don't always see for city staff, particularly John Keisler. As you can see, this is incredibly complex and the work it takes for him to really understand this and negotiate it. Rich Anthony, Oscar Orsi, Diana Tang, John GROSS and many, many, many, many others. And with that, the mayor and council, I know that was a lot, but we wanted to make sure you had an understanding of really the deal in front of you. And we are available to answer your questions.
Speaker 0: Thank you, Councilmember Supernova.
Speaker 8: Thank you and thank you. Acting city manager Tom Modica for all those. Thank. And that's where I was going to start. First to Mayor Garcia and my council colleagues for all your support and especially for the act last March of unanimously approving the interim lease agreement and the city team that Tom mentioned. Those are six key people who did all the heavy lifting on this, and four of them are right over there. But I'll mention all six in alphabetical, alphabetical order. Deputy City Attorney Rich Anthony, Director of Financial Management. John GROSS, Director of Economic Development. John Keiser Acting City Manager. Tom Modica, Deputy Director of Development Services Oscar Orsi. And also the Manager of Government Affairs who's now known as the Chief of Staff to Mayor Garcia. And that's Diana Tang. I'd also like to thank everyone for being here tonight. The stakeholders, of course, all of you. John Molina, thank you for being here tonight. I see Virgin Arbutus, the new CEO of the hospital. Thank you for for being here. And I also want to mention the CMA, the California Nurses Association. I just looked up today when our first meeting was and it was November 8th, 2017. So that's before the item came to council. And we really appreciate all their efforts and have one of their original badges here with me tonight. I think you were these for the Belmont Shore Christmas parade in 2017. So thanks for being there for the long haul. I think I'll wait for my council colleagues in the public to speak. But I just wanted to say one thing about the concept of risk. That's been talked about, and John Keiser mentioned it in his report. I don't know of any real estate transaction that occurs without an element of risk. What I will say about the risk in this deal is that whatever it ends up being, it pales in comparison to the risk our residents are at for not having it here . Thank you.
Speaker 0: Thank you, Councilmember. Councilman Price.
Speaker 6: Thank you. Councilman. Super now. Very well. Very well stated. I do. And I want to thank the council team, the city team and my council colleagues who have really provided a lot of patience as we go through this issue. This really is a city wide issue. It's a city wide asset. And although it affects the east side, primarily looking at the service area, it really extends pretty far throughout the city in terms of the patients that the hospital has serviced in the past. But I did have a couple of questions that I just wanted to get clarity on. And forgive me, Mr. Chrysler, you may have already touched upon these issues, but I just wanted to call out a few things specifically, because I know these are the follow up questions that will get at community meetings and such. So just a few, few clarifying questions I have. So on page six, you talk about the external funding. Can you share a little bit more about the grants that could be secured by the city and and how that relates to what our seismic payment obligations would be?
Speaker 11: Absolutely, Councilmember. So we have a first hour seismic cap or seismic responsibility is $25 million. If we're able to secure an outside grant and we've been we've been very active in developing what's called a benefit and cost analysis of how a hospital fits into hazard mitigation or disaster management planning so that we can go after federal grants , for instance, FEMA or the Department of Homeland Security. Those grants can be substantial. And if we're able to secure, say, a five or $10 million grant to help reopen and then seismically retrofit this asset. So it's available in a disaster. If if we were to receive $5 million, that would just go to the project. That would go to essentially reducing the overall cost of the retrofit to both parties. If we were to get more than that after that first 5 million of of external funding, maybe it's multiple grants, maybe it has to do with fundraising that's involved a capital campaign, for instance. Once we get past that first 5 million, then we would start to see our seismic cap reduced as the city. So as an example, if we were to receive two grants of $15 million, our seismic cap would be reduced from 25 to $15 million. And that would save us as a city from using either the general fund or some other funding source. So the first 5 million goes to the project, and if there are cost overages, it could it could be the case that the $50 million estimate for seismic retrofit that that that our consultants established, it could increase and it could be more. So that's why the first 5 million in external funding will just carry or cover the cost of the project overall. Anything after that would reduce our cap.
Speaker 6: Okay. So if we were to get a $15 million grant, it would in essence reduce our payments. 10 million?
Speaker 11: That's correct.
Speaker 6: Okay. And are there grants out there that are that substantial?
Speaker 11: Yes, we've actually seen as advertised. And periodically when there's unfortunately a disaster somewhere in the country, there will be a notification from the federal government about a certain amount of funding that Congress will appropriate for hazard to address the existing disaster. But then I believe it's 25% of those those grants have to go to mitigation of future emergencies. That's where we have worked with the California Office of Emergency Services at the state level to identify some of these grants. We've actually just finally completed a pretty complex benefit and cost analysis so that we would be ready to apply in the event that the next round of funding comes from Congress. So yeah, it is substantial and hospitals are really, really important assets for disaster response. So this kind of project addressing seismic issues is really looked at favorably.
Speaker 6: Okay, so I know my time is running out a little bit, so I just want to skip to a couple other questions I have and then maybe I'll circle back. You talk on page 11 about sales tax and use of the property for alternative medical. What is the alternative medical that we're envisioning that would produce sales tax revenue? What does that qualify as alternative medical?
Speaker 11: Yeah. So ultimately, that's going to be decision for the operator to decide what kinds of medical services would be eligible and practical for the site. But if there are any medical services that would also require the sale of of. You know, goods or equipment or other things. They could have a sales tax associated with them, not the services, but the complementary equipment and other sales.
Speaker 6: I see. And then lease termination payment estimated up to $91 million. Will they still cover the seismic retrofit or no? I mean, if they if they did if they terminate the lease before the retrofit is done, what happens?
Speaker 11: Yeah. So. So ultimately, if if the lease, the seismic retrofit would have to be completed over the next few years. In fact, pad the state would require the operator meet certain deadlines, which begin with June of 2020. So if they were to terminate over the next couple of years, it would be before, you know, the seismic deadline on the city would only be maybe a couple of years into the payments, a couple of million dollars. So, number one, our liability would be capped by how far along in the project that they get. Number two would be it depends on how much they've invested at that time. So had they started the construction or had they realized within just a matter of months that the cost for construction may exceed their keep their capacity? So it will completely depend upon where they are in the process. You know, the way we've structured it is that there's disincentives to stretch it out and there's disincentives to to walk away. But hopefully, both parties also have incentives to stay in the deal because of the potential benefits that completing the project entail.
Speaker 0: I think let me and let me go ahead and maybe go back around and if we pick you up a thousand repairs.
Speaker 2: Thank you. I also wanted to recognize I'm not going to list everybody but everyone that's been listed and everyone that's been a part of this. Congratulations for getting us here. I know it. We have the the big R word risk, but I think it is a risk that is worth taking whenever we put our constituents and the health care needs of our community first. I had two points. So when I'm looking at option one and option three, essentially what you're saying is it's the same cost if it was for that period of time. But we're investing in a hospital versus just sitting on property. I know it's a silly question, but I just want to hear it said one more time. Yeah.
Speaker 11: Correct. Correct. In the cost of of a property that's not activated is a liability because it's not generating revenue and it's not generating public benefit.
Speaker 2: All right. Thank you for that. I wanted to ask what the hiring process would start soon. What does that process look like?
Speaker 11: Yeah, well, fortunately, we have a Pacific Gateway already working on this and we have a representative that this is underway. So we have been over the past few months collecting names of interested potential staff for the site. And if you would like, we do have more detail about what's what's happening now and to to ramp up for the inspection.
Speaker 2: Just briefly. Yeah.
Speaker 11: Okay. I'd like to introduce Lucius martin, who is our business outreach manager for Pacific Gateway.
Speaker 9: Yes. We've been onsite involved with Community Hospital as the Workforce Development Agency for the City Pacific Gateway since May of 2018. We provided 11 rapid response sessions during that time to the existing memorial care employees. Since that time, we've provided a survey to all of those that were interested in coming back to Community Hospital under the new operator, which over 250 respondents completed the survey of the 250 respondents, I would say. Half of those are Long Beach residents. Many of those folks had to temporarily move on. But after doing this kind of work in workforce development for 15 years, I've never met another group of employees that were impacted that were so passionate about coming back to the place that they had been separated from.
Speaker 1: It's great. Thank you for.
Speaker 2: That. One last question. I know the governor signed several bills that were very exciting recently, but I understand he did not sign the one that would extend it to 90 days before somebody could close a hospital. Is that correct?
Speaker 11: That's what that's what we understand is that he declined to sign the bill sponsored by Assembly member O'Donnell.
Speaker 2: Heartbreaking. I just wanted to publicly say that that is is heartbreaking. And so in this one where it could be terminated. What's the length of time that that you guys have agreed to?
Speaker 11: Yeah. So in this case, this is this this contract. I'm not going to say supersedes it. But but the agreement between us is is 180 days. So in the agreement, if there's the notice of termination, it's far longer than the state regulation. And so we can always be more strict than than the state in that case.
Speaker 2: That's wonderful. I want to thank the parties involved in making sure that we obviously this has taken us two years to get here. But having 180 days is much better for our community, not only the workers, but the residents that live there. So congratulations on this. I'm very excited to vote yes tonight. Thank you.
Speaker 0: Thank you. And council woman mango.
Speaker 2: Thank you. A lot of great work has been done. I just wanted to once again thank the community. For two years there have nearly always been someone who supports community hospital at dozens and dozens of community events and functions. We go to a month and I know that there's a group of fifth District residents, two or three in particular, that make a habit of attending all the meetings, looking to the audience. But the light's not great, so I don't see them right now. But to be there and to be able to answer questions from your your peer community members is just so powerful. So the work that you've done has just been really, really impactful. And we thank you because I can answer those same questions at community forums over and over and over again. But to hear it from their own neighbors and while I am a neighbor, they really love the passion and commitment from each other. So thank you for that and for your continued crusaders.
Speaker 0: Thank you. We have some public comments. Let me ask Larry Goodhew, Brandi Welch, Ellen Lockridge, Jackie McCann carelessly. Please come forward if I can have everyone line up, please. On the at the podium, we have Brandi Welch and Ellen Makris, please, and Jackie McKay and carelessly in that order, Mr. Goodhue.
Speaker 9: Come on, Larry. Good you address on file. I thoroughly support this. Always have. I think it's an outstanding project and I'm wondering whether or not we could get additional funding, additional federal funding. To have an expert. In psychiatry. Start looking into the conduct and the behavior. And the criminal conduct of our mayor and the councilperson from the second district. And they're in get some federal studies. To help this city and other cities identify those. Problematic people. That has cost this city so much money. In actual dollars as far as a reputation. I think it's well worth. Examining that possibility we have without question. No question. Within three years, both of those individuals are going to be behind bars. The feds are already working on that. But we should not have had to wait that long for that. And unfortunately, unfortunately, my sense is the. Our city prosecutor is not the most aggressive person in the world. So the fact is, well, there are always going to be bad guys. We need some professionals to be able to identify those. And I think that this is a great place to start. Thank you.
Speaker 0: Thank you, Mr. Good. Next step is Brandy. Brandy.
Speaker 6: Thank you so much for allowing me to address the council this evening. My name is Brandy Balch. I'm a registered nurse at Long.
Speaker 2: Beach Memorial, and I'm a member of the Board of Directors.
Speaker 6: For California Nurses.
Speaker 2: Association. Tonight's vote is so important and we know it's been a long time coming. First, I want to thank all of the nurses, the community.
Speaker 6: Members, the elected officials, the Hospital Foundation and others who helped get us to this.
Speaker 2: Point. It took a great deal of hard work and commitment on everyone's part. I remember when I first learned in October of 2017 that memorial.
Speaker 6: Care was refusing.
Speaker 1: To do the.
Speaker 2: Necessary seismic retrofit work at the.
Speaker 6: Hospital to keep it open. The nurses knew immediately that the closure would cause.
Speaker 2: The unnecessary suffering and anguish to their patients and this community.
Speaker 6: Without the hospital, the east.
Speaker 2: Side of Long.
Speaker 6: Beach would be left without much needed emergency medical care and mental health services. But the community refused to let it happen.
Speaker 2: The nurses and the community organized.
Speaker 6: To fight against the closure. And that's because the community fought back. That memorial care transferred the license.
Speaker 2: Meaning now.
Speaker 6: That the hospital is poised to reopen.
Speaker 2: And Molina.
Speaker 6: Grew network are on the verge of taking over the hospital. It is important to note that our fight.
Speaker 2: Over.
Speaker 6: Community opened the eyes of elected officials to the need of more legislation to ensure other.
Speaker 2: California communities.
Speaker 6: Facing a hospital closure would have.
Speaker 2: Time to mobilize. Our campaign here in Long Beach prompted important.
Speaker 6: Legislation.
Speaker 2: AB 1014.
Speaker 6: That would require hospitals and health care facilities to provide 180 day notice to the public before downgrading its services and or closing a facility. Well, California lawmakers.
Speaker 2: Took notice and they.
Speaker 6: Overwhelmingly approved the measure. However, I am sad to report.
Speaker 2: That Governor Newsom.
Speaker 6: Vetoed the measure this past weekend to this much important legislation. But now I.
Speaker 2: Turn to the council members.
Speaker 6: And say, we are counting on you to do the right thing.
Speaker 2: Tonight and approve this lease so we can see the doors of Community Hospital of Long Beach Open once again. Thank you.
Speaker 0: Thank you so much. Alan McCUTCHEON.
Speaker 2: Hi. My name is Ellen Markowitz. I have a couple of things to say. First, Mr. Mayor, thank you so much for keeping this going because I know we would both rather be watching the debates right now.
Speaker 6: To all of you, this has been a lot of.
Speaker 2: Hard work and I am so forever grateful. I am a former employee of Community Hospital of Long Beach. I started working there in 1983.
Speaker 6: Lucius I would like to be a.
Speaker 2: Current employee of Long Beach Community Hospital, so just make sure I'm on your list somewhere. Okay.
Speaker 6: I really am so excited that the possibility exists for our little hospital to open up again because East Long Beach needs an emergency room.
Speaker 2: They need an.
Speaker 6: Emergency room and so does the rest of Long Beach, because so many emergency.
Speaker 2: Rooms are impacted.
Speaker 6: By all of these people that are.
Speaker 2: Now going over there and.
Speaker 6: The waits.
Speaker 2: At our two.
Speaker 6: Big hospitals. Wow.
Speaker 2: Bring a bring a bag lunch.
Speaker 6: When you when you go there, because it.
Speaker 2: Is a long wait. I just.
Speaker 6: Want to say thank you again for all the hard.
Speaker 2: Work.
Speaker 6: And I am anxious to start working again at my.
Speaker 2: Home away from home. Thank you.
Speaker 0: Thank you so much next week to please.
Speaker 2: Thank you. Good evening, Jackie McKay. And I just wanted to thank you for all the hard work you've already done. And I know it's a big ask financially to keep asking you to do this. I know it doesn't displace the human cost you about. Last April, my mother called and she wasn't feeling well. So ordinarily I would just drive her over to community because we live about a mile away. Unfortunately, she's a Kaiser patient.
Speaker 1: So I drove.
Speaker 2: Her to Kaiser Downey and she died in the parking lot. And she would have died either way, you know, not for nothing. She was older, but is a human cost is so much bigger than this financial thing. And I'm so grateful you guys are taking that all into consideration. So I must just please put me on the list. Thank you.
Speaker 9: Closely.
Speaker 12: Okay. Carelessly. Here. I agree that we need an acute care hospital, and I understand that everyone is emotionally attached to that location. But this business deal, it doesn't get you what you're looking for. I mean, I want to thank staff for being so candid. It's in your paperwork. If you look at this, it talks about the risks and what it's going to cost us. And if you look at outcome number two on that chart, that should be enough to stop everyone in their tracks. I mean, what that says is that at any time Mr. Molina can back out of this deal and that we owe him. We need to reimburse him for all of his investment, which is potentially tens of millions of dollars, and that the reimbursement amount is limited to and likely offset by the sale of the property. So what you get is probably just that you're going to lose this property eventually. And it even says on this number two, for several reasons this is a likely outcome. So that's from your charts. It's hard for me to understand that we would want to pursue this. To protect his investment, Mr. Molina wants an escape clause where he can walk away from it for any reason, and the city has to reimburse him. He can be purchased the property and repurpose it at any time, and we give him his investment back. So if he sees a better deal, whether this is a viable hospital or not, he can shut it down. That that's not a good deal. How does that get Long Beach, an acute care hospital. The the risk all seems to be on the city side. Why don't we build one somewhere else? Why don't we go find someone who knows how to build these at states? And here he doesn't make any claims to be able to run a hospital or to even know how to do this seismic retrofit. So why choose a location that is fraught with risk? The overall terms of the lease make it financially beneficial for the tenant to terminate the lease at some point, regardless of whether or not the hospital is viable. That should be enough to stop you in your tracks. We're going to eventually lose this property. That is the outcome of this deal.
Speaker 0: Thank you. Vice Premier Andrews.
Speaker 3: Thank you. Thank you, Mayor. First of all, I thank my colleague, Mr. Superdog, because the fact that we know in the east and the east side of Long Beach, we need an emergency hospital. I think if you can just take a look at it and see about the homeless crisis and the mental illness that we have, you know, the closure of the community hospital. It's led to overcrowding at the emergency rooms in St Mary's and the mama hospital. This is something that's almost a necessity that all of us should take time to look at. It shouldn't be about money. It's about human lives. And this is why I think that, you know, team has expertize and dedication to make this project work. Thank you.
Speaker 0: Thank you. Councilwoman Price.
Speaker 6: Q I'm going to get I cued up again because I spent my first 5 minutes asking questions and I didn't get to talk really about how I feel about this project. So I felt the need to queue up again. You know, I think here here's how it plays out practically for a resident in and on the east side and why this is so important for us. And I have multiple personal stories, but about three weeks ago, my mother had to call 911 and our amazing fire department went and got her and helped her. And they had to transport her to Los Alamitos Hospital because that was the closest hospital. And it was it's about six a little more than six miles away from her home, whereas community hospital would have been at least half that distance. And to me, which I just shared a few minutes ago, I've got a mother who's battling breast cancer, metastasized breast cancer, and is on multiple medications and minutes matter. And so for me, not having an acute care facility, that's just my personal story. But I'm sure there's hundreds, if not thousands of stories just like that where the option is not there for East Side residents, and that's a problem. Personally, I'm grateful that we have a partner, at least one of the partners, and all of them are wonderful. But at least one of the partners has a heart for the community such that they're willing to invest in making this 90 year. Offering for the city of Long Beach continue to exist and to ensure that the historical designation of the site as a landmark in our city continues to exist and serve the purpose for which it is known. I think it's it's really every time we want to build a new facility or we want to reinvest in a facility, some of the comments that we hear is build it somewhere else. Why don't you start from scratch and build it somewhere else? Well, I think. That's a very shortsighted argument. I say that with respect because you have to have the appropriate site and location, the financials have to work out and they have to be the location has to be in a place where it services the population that it's intended to serve. So that would mean we would need to find another site, a site of this size that's able to facilitate this type of service or offering. And that's something that we can talk all day long about, about how plentiful those opportunities are. But in reality, they are not. If such opportunities were even available, which they are not, they would be very costly for the city and for our partners to get to a position that we need them to be. I'm not saying that there's not risk involved with this deal. There absolutely is. And I'm also not saying that I'm not concerned about that risk. I absolutely am. But what I am saying is, given the import of this facility to the east side of Long Beach and to the to the city in general, it's a risk that's worth taking. And I very strongly support this item tonight. And I thank staff for educating us and taking us through the process. And on behalf I mean, I look out in the audience right now, and I have at least five of my own residents that I see sitting in the audience, several of whom live like two blocks away from me. And I see them as I walk my dog. Any one of us would be in a position where we would need emergency services. And right now our best option would be Los Alamitos Hospital, which simply does not have the capacity to take Long Beach as an additional resident or additional customer base, patient base. So thank you very much for your work, Mr. Heisler, and your team and of course, our city manager. Acting city manager for the great work that you've done. We appreciate it.
Speaker 0: Thank you. Councilman Austin.
Speaker 13: Thank you. I'll just do what I can to add to that. I want to just, again, thank our staff for the great work and the very candid staff report. I mean, we have basically all the information we need to to make a make an informed decision this evening. One also recognize and compliment my council colleagues led by Councilmember Supernova, who has been on this issue from day one. And I'm certainly here to support his efforts and the community's efforts here this evening. A lot has been said about risk here this evening. We heard that word over and over again. And it appears to me that when I weigh the risk, there are risk with any of the three options before us this evening. The staff is laid out. We went we entered into this down this road with a goal in mind to restore an acute care hospital, to meet the needs, the health care needs of the residents in East Long Beach. And provide relief for overall emergency care system in our city. A community hospital has certainly met those needs. It is situated geographically in a place that that meets the needs. And it has done so for many years. And so it's clearly an asset for our city. And for that, I'm just going to be very short and sweet. I'm willing to take the risk to save lives, to provide critical care emergency services, and restore up to 250 health care jobs in our city. I don't believe we can afford not to take this risk. And for that, I'll be supporting this item this evening.
Speaker 0: Thank you. And before we go to the vote, I just want to say a couple a couple words. The first thing I'll say is I want to just think the incredible work that's gone into getting us to this point, not just from the staff we've done, I think, a real phenomenal job under difficult circumstances. I want to thank the this council and the body for continuing to be supportive of the reopening of community, especially, of course, Councilmember Supernova. But the entire the entire council has been has been involved and active on this issue, particularly those on the east side. I want to thank the community, the foundation, the multiple members of the community that have reached out and sat down with me to kind of talk over overall about the impacts of the hospital and its closure on the city. And I certainly want to thank the medical staff, the team, the nurses. You've been phenomenal and great partners and probably our strongest advocate, certainly in the capital in Sacramento. And we're just we're proud to stand with you in this struggle. But we know that there is going to be a good outcome on the other end of it. So I want to thank you for that. And of course, I have to thank when I meet Mr. Molina, you and your partners. The truth is that we went through a process and we went through a competitive process to get us here. This was not a decision that was made lightly. It was a decision that was made through looking and putting out interest and getting getting back interest from from from different folks and seeing what was actually viable and, and who could actually put this project and this deal together. And where we ended was and this this partnership with me, when that staff has been so supportive in promoting and ensuring that it get across the finish line. So I really am grateful to Mr. Molina and the team for their commitment to not just reestablishing an important part of our community, but really a community has been a legacy and a important part of our city's history. And so I just want to thank you for also preserving that and understanding the value of not just the emergency services, but of the history and the jobs and the connection that this site has to to our city. I also want to note that there has been a lot of work that's happened behind the scenes in Sacramento to get us here. I think, obviously, we've been engaged on the day to day conversations, but I can't express enough how how appreciative we are to the different agency staff that have worked hard, in particular Assemblymember O'Donnell and his team, who have been very instrumental. And I also want to thank Diana Tang for her active work in this whole process as well. And so thank you all. And of course, I am supportive and I agree there absolutely is risk. The greater risk is to leave your hospital closed. And so with that, members, please go ahead and cast her. Mr. Molina, did you I feel like you almost jumped out of your chair. Did you want to say something? Please.
Speaker 7: I'm John Molina. I am representing M.W. and I think this hospital is very aptly named. It is the community. I want to thank the nursing staff, the physicians, the medical staff, all of the other employees maybe who aren't caregivers, but support the caregivers. Everyone who came to the numerous community meetings that were held to give their input the success of this hospital, and I have no doubt it will be successful, is going to be due to that commitment of everyone in the community to band together, to revitalize an asset that is here for everyone's benefit. We didn't get into this. To make a lot of money. We didn't get into this to make it a land transaction. It was a very difficult negotiation, but it was one that John Keisler and Rich Anthony and the teams that you've all mentioned came in with their eyes open and with a goal of making things work. The thing that strikes me in hearing folks talk, both sides talk about the critics and those that are supportive. What you are doing tonight is entrusting us. To manage a city asset. And I take that trust very, very seriously, as seriously as you folks. And it is a big obligation on our part. And we will not let you down. Thank you.
Speaker 0: Thank you so much, Mr. Molina. And with that members, please go ahead and cast your votes.
Speaker 1: Motion carries.
Speaker 0: Thank you very much. Can I get. Thank you. Thank you all. Can I get a motion in a second for the consent calendar, please? She continued, You have anything for consent? Okay. Please cast your votes.
Recommendation to authorize City Manager, or designee, to execute all documents necessary for a Lease Agreement with MWN Community Hospital, a California limited liability company, for the operation and potential development of City-owned property, located at 1720 Termino Avenue, 1760 Termino Avenue, and 4111 East Wilton Street, including the provision of an acute care hospital, for a period of 45 years, with the option of two 10-year extensions;  

Amend the grant deed restriction to allow a for-profit health care organization to operate an acute care hospital, and allow for non-acute care health services upon the occurrence of certain conditions at the Subject Property; and

Authorize City Manager to reimburse Tenant up to $1,000,000 per year on an annual basis for the first five years, and up to $2,000,000 per year on an annual basis for years 6 through 15 of the Lease, to assist with seismic retrofit construction costs of the hospital facility.  
(District 4)