Recommendation to authorize City Manager, or designee, to execute the First Amendment to Amended and Restated Lease No. 35432, and necessary documents, with MWN Community Hospital, LLC (Tenant), for modifications to various provisions of such Lease; and Adopt resolution finding that the Community Hospital and surrounding campus remains necessary for the City of Long Beach use as a general healthcare campus with related community-serving uses and authorizing the recordation of amended covenants so restricting use of the Subject Property. (District 3)
Q And thank you for that for that presentation and discussion. And I guess there's been a lot of work going on there. Let's go continue with the agenda. Please do item number. 12. Item 12 is a report from economic development. Recommendation to authorize city manager to execute the First Amendment to amended and restated lease with M W NW Community Hospital LLC for modification to various provisions of such lease and Adobe resolution, finding that the community, hospital and surrounding campus remains necessary for the City of Long Beach use as a general health care campus. District three. Councilman Price motion. Thank you, Mr. Mayor. Yes, I'll make the motion, but I would like a staff report on this, please. Mr. Modica? Yes. If we could have a staff presentation by economic development? Yes, certainly. Honorable Mayor and members of the City Council. Good evening. This is a lease amendment for community hospital that will address a number of issues that we are we're facing with regard to the termination of the lease and ultimately the plan for moving forward. So next slide, please. As a recap, at least 35, four, three, two. As we know, it was between the city and M.W. n four community hospital and it required an acute care hospital to be provided, including an emergency room and other health services, and that was actually restricted by the recorded deal with the county. But in that lease agreement, because it was a real challenging project for the operator as well, the tenant NWN had the right to terminate the lease if there was not an economic justification or if the project became infeasible because of requirements for construction, permitting, licensing or even just straight financial challenges. That the tenant was required under the lease to initiate seismic compliance construction by January 1st of 2022, just last month. And that is actually a part of state law. Next slide. The restaurant of the restaurant. So ultimately, the tenant abandoned the seismic compliance project in late 2021. A few months ago, when they received the final estimated construction cost, they exceeded $75 million, which was 50% higher than originally anticipated. About three years ago when we entered into this agreement, another reason was that the demand for acute care services never really materialized at levels that could sustain the operation. In fact, there there were maybe 1 to 2 patients per day admitted into the hospital for those those acute care services. So on September 27th of this past year, the Tenant NWN sent us a formal communication which we briefed you and the public on back in the fall, that they requested that the , the, um requirements under the lease to modify the current deed restriction and remove the general acute care hospital requirement was requested, as well as an amendment to the belief to allow for negotiation of a transition plan so it would still be used as a health care campus. But for non-acute services and ultimately the tenant had to surrender their general acute care hospital license effective December 31st. And we, the city, received confirmation from the California Department of Public Health that acute care was no longer licensed at the property effective January 1st. And I wanted to give you a little bit of background on the next slide of why this happened. So under state law, save the compliance. There are two laws SB 1953 and SB 90 that required acute care hospitals to meet seismic regulations by June 30th of 2019. If they didn't meet those regulations, they were required then to wind down or cease acute care services. A subsequent law was passed called AB 2190, which allowed hospitals to apply for seismic compliance extension. And Long Beach was accepted in that group of hospitals. Ultimately HK, which is the Department of Health Care access that information they gave community hospital Long Beach and nwn the tenant up to January 1st of 2025 for that extension if certain conditions were met. But one of the conditions under AB 2190, this is in Section E required that the tenant would have to submit a construction schedule , obtain their building permits from H Chi and start their construction no later than January 1st of 2022. So when the U.N. suspended its seismic compliance and notified formally the city and the state that they would no longer seek to do the construction because of the $75 million estimates that actually ruled out their compliance with their their their licensing and their seismic plan. Next slide. Another issue with regard to the hospital licensing. So as we know and when I was able to meet a number of very difficult standards to reopen the hospital, get licensed and ultimately continue to operate while they worked on their seismic plans. But when they notified both HQ, the state and the city that they would no longer pursue these plans, the city page, the California Department of Public Health Licensing and Certification Program, informed us that you're no longer able to provide acute care services. You need to find those services down. And the effective date for ending those services was made on January 1st of 2022. Next slide. So acute care is no longer allowed. That's the short of it. And we have a property with a deed restriction that says only acute care can be provided there. So this recommendation to City Council is to modify the deed restriction that would allow and to be within the current tenants for a future tenant, somebody else to be able to provide non-acute care at the site. As we discussed with with council throughout this process. We're still recommending that the deed restriction be for non-acute health care services that would benefit the community and that really address the community needs assessment for the service area. So behavioral health, recuperative care, social services, health care, educational services, government offices focused on on community health or public health housing of health care students or health care related housing, and then specialized services related to health care. So these would be the the new recorded restrictions for the property, all health care related. But we would have to remove the acute care restriction because it's no longer allowed at the site per state law. Next slide, there's a couple of other provisions that have to do with, um, the negotiations that are ongoing for the transition plan. So we would address those in these, this amendment, um, they would just accommodate the timeline for our ongoing negotiations. There could be a potential sale to the current tenant or another party that has not been decided or even is recommended at this time. But the amendments would include the extension of noticing provisions and deadlines that are also, um, required as a part of the, the agreement so that the tenant then is supplying the city right now with what are called net hospital capital costs. These are the reimbursable costs that they experienced for starting the hospital and reopening it. And then, um, we're both in the process of preparing appraisals for the city council and the public to consider. Those appraisals will establish hopefully the fair market value of the subject property or will end up, um, still going out to market. So ultimately we go through this process, but council will still have the ability to reimburse and the tenant and take this property out to fair market value as established by another buyer. So any proposed agreement, um, would have to come back to the city council and the public for final review. So I want to make sure that the council is clear that this, these amendments tonight don't change the fundamental process in the lease. Um, it really just focuses on giving us more time to complete that process and, uh, to modify the, the deed restriction language. Last lastly, please. So finally, just authorizing the city manager designee to execute the First Amendment to the amended and restated lease that will modify various provisions of the lease with regard to timeline doesn't change the overall process that we're going through comparing appraisals and, you know, reconciling or auditing net hospital capital costs. But also a resolution would be adopted. Um, finding that community, hospital and the surrounding campus remains necessary for the city as use for general health care, with community serving uses and authorizing, um, the record ation or the change of the amended covenants in the recorded deed restricting the property for those uses. So that's it. I'm happy to answer any questions, but please let me know if there's any, uh, follow up. Thank you, Mr. Kaiser. Just a couple of questions. First of all, I want to thank my my colleague, Councilman Supernova, who's really been the lead on our community hospital efforts and has done tremendous work in those efforts up to this point. He continues to be a partner, and I think we continue to to traverse this journey together. And so I'm thankful that that we're we're still working together on this and look forward to doing so. And I want to thank staff for the presentation. A couple of things. Once these latest amendments are accepted, if they were to be accepted by the Council. What is the next step? Could that could the new uses? New services launch automatically? Or would there have to be any sort of community outreach input, things of that nature? Yeah, absolutely. So I don't imagine that anything would launch automatically. We're still going through the process of negotiating the net hospital, capital cost recognition valuation and the appraisal process. And we will we'll be bringing those back to the city council in the public first before any other recommendations are made, new uses or an extension to the lease that would support those new uses. Those would have to be approved by the city council because ultimately the lease agreement itself has an expiration date. And once we finish the process that I just described, we'll be at a new decision point for the to for the public in the city council's consideration. Okay. But pending that, let's say tomorrow, they decide they're going to turn the current facility, the building, the structure that's there into a behavioral health center. I know that that wouldn't be something that they could be doing. You know, immediately they would start with community outreach. They would start with meeting with the city around the community needs assessment. And then those uses would would be proposed to to the council and the community before any action can be taken. Because remember, the lease the current lease agreement will be expiring with the conclusion of this process. Got it. Perfect. And that's exactly what I wanted to communicate. I want to make sure. First of all, let me ask you this. And I know the city attorney is probably online. Can we include a community outreach component in any future use as part of what we're doing tonight? So, you know, ultimately the recommendations for tonight, I would, I would expect that if, um, the Council would like to see a community outreach component included, it would be something that we could, we could discuss with the tenant and the operator and they could do willingly. But I don't think that the action tonight would compel them to do that. Um, we would probably bring something back, as you know, either an extension to the existing lease or a new agreement that would require that that would be something that I would envision is very much possible. Okay. And that's going to be very important, one that we do. And I've made a commitment to the community there that now falls in the third district that before any use is implemented at the location, which would include much needed. And I think we all agree and I've had the chance to meet with the operators, you know, health care in terms of substance abuse, mental health abuse, adolescent substance abuse and mental health abuse, medical detox. Those are things that we've talked about potentially this facility providing down the road. But we need to have robust community outreach and more importantly, make sure that that community outreach includes the hospital foundation. And so I want to make sure if whether we can include that tonight or not, I want to make sure that I'm on record that no no discussions should be had in terms of approvals by this council , in terms of the use of that site without those the residential community, the broader city wide community, and of course, the Community Foundation, the Hospital Community Hospital Foundation. That needs to happen in terms of when we're talking about what the future use of can be, because it has been everyone's expectation that this is going to be an acute care facility. And if that use is going to change as it needs to change, then any future use needs to only happen if we've got appropriate outreach with the stakeholders. And so I just want to make sure that that's very clear. I know that's very important to me. I can't speak for Councilman Super now, but I know that that's important for him. In the past, it's been a major priority for him. And I just want to make sure the community hears us loud and clear. This is not something that we've taken action on outside of this public setting. We're talking about it in a public forum for the first time in terms of future use. And so I want to make sure that we are all on the same page with that. That's great. And I'm taking notes as well. For for the council denied to include any of these requests as part of our discussions, and they will be included in any recommendations we bring back to city council. Great. Thank you. Thank you, Mr. Ray. All right. Thank you, Mayor Duffy, for the evening. We're going to go to the hands up system. So if there are additional comments by the members of the council, just raise your hand. Okay. Thing nine is a public comment on this item. If there are any members of the public that would like to speak on this item, please use the raise hand feature or dial star nine. Vice mayor, could we have the second? We don't have a second. Councilman Supernatural, you seconded this motion. Fantastic. Councilman Juvenile Seconded the motion. Thankfully. Baby, your time begins now. Good evening. Tiffany David. District four resident. I have a lot of questions, but I'd like. To first state my. Position. Generally. I'd like to see. The city examine possibilities. Of completing. The retrofit. Finding alternative sources for funding, and possibly at the announcement of the state surplus. State budget surplus for FY 22 to 23. Now, some of the questions, what. Are the legal. Ramifications of modifying the deed restriction being that the loan was granted for purposes specifically of an acute care hospital, being the property of the city of Long Beach for 111 years. Couldn't find any. You know. Proper reference for the instrument. Number as cited in the. Lease. Now, seismic is going to be an issue. For any operator, especially being that there are 13 buildings in the, you know, the parcel number specifically that is being addressed that was suppose to be an acute care center. Do we allow any operator. To walk away from such state requirements knowing the cost of an action to mitigate would only increase over time. Having not sought adequate emphasizing retrofits. For any necessary. Health care facilities, what other risk are there for the surrounding communities other than seismic? Again, we. Have a stark home up. Up in the air once. Again. It is one of nine search centers in Los Angeles County. When was the last operated? What are the conditions of the current sublease? And has a city sought use of. Another facility. As many. Unrelated. To the city websites still have? Community Hospital of Long Beach listed as a start center. How are we missing the opportunity to prepare for the next disaster, earthquake or any other hazard? Losing an acute care hospital. Center while we. Have. Less than I mean, we have less than five hospitals, right? I mean, let's think about it. If we need a trauma center. We should. I hope we be looking at operators who can. Scale up the needs. To to meet the needs of the community. Now. What has the burden been on. The other hospitals in the region since the trails were closed in 2018? Being that it was only open for one year, I'm sure we didn't really quite see. You know, a prevalent use. Or a specific spike in use. Right. Build it and they will come. Give them time. Right now, is the burden going to be shifted to underserved. Communities already face adverse health impacts on the West Side? If so, why? Previous estimate for seismic retrofit. You know, I see that there was a feasibility. Study done. Again. What is the ultimate cost of not. Completing seismic. On something that we're still hoping provides health care services? What are the potential costs for the city as. The landlord currently? Why just change the use. To meet. The. Needs of a lease. That I've never seen? A number a dollar a year. Thank you. That concludes public comment. Thank you. I'll just add my comments here. I'm happy to support this motion. And I think a lot of the things listed here from behavioral health, recuperative care, social services, housing, specialized services, they're all certainly things that are needed. And we just had a presentation about 50% of the chronic homelessness associated with non-economic issues, behavioral health, drug addiction. But I will say, you know, I agree with Councilman Price. Civic engagement, community support is incredibly important to the success of the project. Hmm. And so, you know, with the L.A. Bridge community, our city's first municipal shelter, the only reason it was successful was because of a deep engagement with those local neighbors. And so I think that's certainly important if we want to see that see this transition become successful. And so I'm happy to have my support here, but I certainly agree about successful community engagement. Councilman Rubinoff. You are muted, sir. There. Am I a little louder now? We can hear you now. Okay. So I just want to address a couple of points that that were brought up because the general public should know. And John Keiser, you can certainly jump in here to to correct me if I misstate this, but there's a different standard of a seismic retrofit for an acute care hospital versus the health center that's being proposed. We probably didn't make that clear, but that's you're avoiding whatever the price tag is now closer to $80 million for the retrofit versus 40 that we started off with. Also, I'm so happy to report that we've found a home for Smart and let's get that out there because I appreciate my colleagues on that bed load committee back me all the way there. This is something that I just thought was unconscionable, that this group lost their home twice. And so I'm glad it's still on the Fed led agenda because we should make sure this thing, they never lose their home again. But we were able to get them a home a couple of weeks ago, so we're all good there. So I just wanted to add how I know I was very vocal about that in the past and I didn't make that correction publicly, so I wanted to do that. And I think that said, I appreciate what Councilman Price said about the work I did, but I'm supporting her 100% now, and she's got the job, the outreach of the immediate community. But we're still doing that with the entire east side of the city. So thank you. Fantastic. Thank you. Members, let's go ahead. Have the roll call vote. Councilwoman Cindy has. Hi. Councilwoman Allen. I. Councilwoman Price. I. Councilman Sabrina. I. Councilwoman Mango. Hi. Councilwoman Sarah. I'm Councilmember Oranga. I. Councilman Austin, Vice Mayor Richardson. I. The motion is carry nine two.