A state law requiring governments to offer excess land to affordable housing developers has stalled plans to sell Long Beach Community Hospital to Molina, Wu, Network, LLC, the current leaseholder.
The city has owned the property since 1911, with a condition on the deed that it be used for a hospital. Long Beach signed a 45-year lease in 2019 with MWN to reopen the hospital and emergency department, which had closed in 2018. MWN, led by John Molina, finally opened the hospital in January 2021, the emergency department emergencies resuming operations in May this year.
MWN closed the hospital in November due to a lack of patients and the high cost of a renovation needed in the event of an earthquake. The lease stipulated that the city would reimburse MWN for its losses (which it estimates at $30 million) up to the value of the property, and planned to transfer the land to MWN to clear the debt.
As part of its due diligence, the city contacted the state Department of Housing and Community Development to see how the transfer would be affected by the surplus land law. This law, which originated in 1968 and was extensively amended in 2019, requires local governments to first offer excess land to affordable housing developers.
On March 1, the city received a letter from Jillian Burgos, public lands manager at HCD, saying that the continued restriction on the use of the land as a community-serving healthcare campus did not qualify for a waiver. surplus “necessary use” exemption. Land Act – the city’s first argument to circumvent this law.
“It’s typical for city staff and HCD staff to engage in discussions about compliance with the Surplus Land Act, and those discussions are ongoing,” city spokesman Kevin Lee said in a statement. an email. “City council was aware that discussions about surplus land are ongoing, but those discussions are currently at the staff level.
“The city believes the proposed project would qualify for an exemption under the Surplus Land Act,” Lee added, “which would streamline the proposed development process.”
After the hospital was closed by MWN last year, the city council approved amending the lease to allow for a “healthcare campus” rather than a hospital. MWN had announced plans for mental health and other medical services, which would be permitted under state law without the required seismic upgrade of an acute care hospital.
An active seismic fault passes under Community Hospital property, at Termino Avenue and Pacific Coast Highway, making it even more expensive to seismically retrofit current buildings – with current estimates of around $75 million. This same defect could also make a residential development problematic.
But MWN officials say they were unaware of the affordable housing problem. Spokesman Brandon Dowling said the band is reassessing the matter.
“The increased demand in our city and county for equitable and accessible behavioral health care services is clear,” Dowling said in an email. “Community hospital ownership is a sensible solution to this need, but with these important new revelations about potential regulatory hurdles, we are assessing the implications and feasibility impact for the proposed community wellness campus on the property.”
The state’s letter says that if and when the city offers the property for sale, it could detail on the official notice the requirement that the property be used for healthcare.
But that would appear to contradict the development of affordable housing, Assistant City Attorney Rich Anthony said. This is part of the ongoing discussion with state HCD staff members, he added.
“We still believe that the Community Hospital property may qualify for an exemption (to the Surplus Land Act),” Anthony said. “We are continuing these discussions.”
Ultimately, the city will comply with state law if it doesn’t get an exemption, Lee and Anthony said. If the property is sold to another developer, the money would still be used to cover MWN’s losses, according to the lease agreement.
The dismantling of the community hospital, regardless of land use, will end a long history for an east Long Beach medical institution.
The hospital opened in 1924, survived the 1933 earthquake, underwent a mid-century expansion, and then aged to the point of becoming vulnerable to earthquakes. A total of seven operators led Community.
These operators included the city’s two major medical centers – Dignity Health St. Mary’s and MemorialCare. A group of residents and doctors also banded together around the turn of the century to reopen the hospital after a closure.
Residents and the Long Beach Community Hospital Foundation fought to keep the center operating, saying lives would be lost due to longer transport times without the emergency room and acute care.
But after the hospital’s most recent closure, officials at the other two major hospitals said they had not seen a significant impact on their emergency rooms.