Community Hospital could soon reopen under a long-term lease approved by the Long Beach City Council on Tuesday.
The 94-year-old East Long Beach hospital closed last year, shuttering the area’s only emergency room after it was found to be sitting on an active earthquake fault line.
City officials and community members have been working to reopen the historic facility under a new seismic retrofitting plan with operators Molina, Wu, Network. That plan is now one step closer with the city council’s unanimous approval of long-term lease agreement late Tuesday.
Mayor Robert Garcia said the decision wasn’t made lightly, but it’s the best decision for Long Beach.
“I agree there is risk, but the greater risk is to leave the hospital closed,” Garcia said.
Acting City Manager Tom Modica called the plan a “complex” and “creative” solution to reopen a critical public safety asset in Long Beach. Modica noted that hospital transfer times throughout the city increased when Community closed last year.
“It really is a community asset that affects everybody,” he said.
Modica said there are still some “unknowns,” including the results of further geotechnical studies and pending permits, but overall, he said, it’s still the “best plan to open a hospital.”
Under the agreement, the city will lease the land to Molina, Wu for $1 a year. The city will also be responsible for half of the retrofit costs of up to $50 million total, while Molina, Wu would be responsible for any additional costs.
The city would pay no more than $25 million in the deal, in installments of $1 million per year for the first five years, and up to $2 million per year for the next 10 years. The city also will pay administrative costs of up to $150,000 a year.
The city would see some risk in the deal. Under the long-term agreement, Long Beach would be responsible for reimbursing Molina, Wu, Network for the cost of its investment if for some reason the project falls through, Economic Development Director John Keisler said.
Depending on how much is invested, the city would be required to reimburse Molina, Wu the total value of the property. But in the worst-case scenario, the city could then turn around and sell the property and recoup its losses, Keisler said, adding that the sale value could be between $40 million and $90 million, depending on whether the seismic retrofit has been completed.
Council members said the risk was worth taking.
“I’m willing to take that risk to save lives and provide critical care and emergency services,” said 8th District Council member Al Austin.
Fourth District Councilman Daryl Supernaw said the risk “pales in comparison” to the risk of not having an acute care facility in the area.
John Molina, a co-founder of Molina, Wu, Network, said the process has been a true community effort.
“We didn’t get into this to make a lot of money and we didn’t get into this to make it a land transaction,” he said. “What you are doing tonight is entrusting us to manage a city asset and we take that trust very, very seriously. We will not let you down.”
The property, at a minimum, would include an acute care hospital and other health care facilities, including a medical office building and health and wellness programs.
The state recently approved a seismic compliance plan for the property and the next step is getting the staff and equipment in place for an inspection from the California Department of Public Health in the coming weeks, officials said.
The hospital can be open during the seismic retrofitting. Operators have until 2025 to complete construction under the seismic compliance plan.
(John Molina is a founding partner in Pacific6, the parent company of the Long Beach Post.)