Community Hospital could be one step closer to reopening if the Long Beach City Council on Tuesday gives the green light for a long-term lease agreement.
The city and hospital operators Molina, Wu, Network have been working to reopen the 95-year-old East Long Beach hospital since the facility shuttered last year due to seismic compliance issues, closing the area’s only emergency room.
The hospital has since reached some major milestones for reopening. Long Beach Economic Development John Keisler on Friday said the state recently approved a seismic compliance plan for the property. 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.
Community Hospital could soon be ready to reopen once it receives its state permits, he said. The hospital can be open during the seismic retrofitting. Operators have until 2025 to complete construction under the seismic compliance plan.
But first, the City Council will have to approve a long-term lease agreement, which it will consider in its regular meeting on Tuesday.
The council in March unanimously approved an interim lease agreement for the city-owned land. 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 ten years. The city also will see administrative costs of up to $150,000 a year.
Keisler said the financials are the same in the city’s long-term agreement with Molina, Wu, Network, with both parties agreeing to share some of the risks and costs.
Long Beach, he said, has agreed to take on some risk because city leaders are eager to restore emergency services in East Long Beach.
In the biggest risk to the city 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, Keisler said.
For example, if Molina, Wu invested $10 million for construction and it’s later determined that the seismic issues are too great to continue, the city would be on the hook to reimburse the company for those costs.
Depending on how much is invested, the city would be required to reimburse Molina, Wu up the total value of the property, Keisler said.
But in the worst case scenario, if Long Beach has to reimburse Molina, Wu, the city could then turn around and sell the property and recoup its losses, he added. Keisler said the sale value could be between $40 million and $90 million, depending on whether the seismic retrofit has been completed.
Under the agreement, 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 hospital also would lease part of its space to a Sexual Assault Response Team (SART), which provides medical care, emotional support and comprehensive examinations for rape victims.
Community’s former operator, MemorialCare Health System, shuttered the hospital after determining that the facility, which sits on top of a fault line, would be too costly to retrofit to meet seismic standards.
Keisler said leaders have found a way to save the facility.
“A year and a half ago we were told it was infeasible,” he said. “But we have found through working with the state and working with the operators and our architect, that this is feasible.”
Fourth District Councilman Daryl Supernaw, who has been passionate about reopening the hospital, said he’s glad to see the project moving along.
“(The vote Tuesday) is the final step the council can take and this really launches the project,” he said. “Now it’s just a matter of the operator with all assistance we can possible give them to meet all the deadlines and compliance issues.”
Brandon Dowling, a spokesman for Molina, Wu, Network, said the reopening has involved “unprecedented work between Molina, Wu Network, LLC, the City of Long Beach and our state partners.”
“While we finalize the long-term lease agreement with the city and await a site licensing inspection with the California Department of Public Health, we’re deploying equipment, staffing, infrastructure and technology to ready CHLB for its return,” he said.
(John Molina of the Molina, Wu, Network is a founding partner in Pacific6, the parent company of the Long Beach Post.)