Community Hospital Lease Approved

Community Hospital Long Beach will once again serve patients.

The Long Beach City Council unanimously approved a complex, final lease agreement with hospital operator Molina Wu Network (MWN) Oct. 15.

The city owns the medical property at Termino Avenue and Pacific Coast Highway and will lease it to MWN.

The deal will bring back the city’s only emergency room on the eastside.

According to the major terms and conditions outlined by John Keisler, Long Beach director of economic and property development:

The property will include an acute care hospital and other health care facilities, including a medical office building and other health/wellness-related uses as well as emergency and urgent care services. The tenant will sublease a portion of the facility to the Sexual Abuse Response Team (SART).

The length of the term will be effective Oct. 15 for up to 45 years plus two optional 10-year extensions (upon hospital opening) for a total potential term of up to 65 years.

The tenant will pay the city $1 per year plus additional rent of 20 percent of the hospital’s net profits for first five years.

The city shall have no responsibility to perform the improvement, repair or maintenance of the property.

The tenant is solely responsible for all seismic construction and will maintain required state permits to operate an acute care facility.

The city will reimburse the tenant for 50 percent of seismic costs, not to exceed $25 million in annual payments over a 15-year period.

In external funding, grants secured by the city shall count as 50 percent credit against seismic work annual payments, except the initial $5 million of external funding.

The city may withhold seismic payments on a dollar for dollar basis for any default until it is cured; and/or terminate lease for fundamental default but the tenant is entitled reimbursement of net hospital capital costs for default other than bankruptcy.

If the tenant determines it is not economically feasible to operate the hospital, the tenant may voluntarily terminate lease and be entitled to recovery of costs.

Hospital capital costs: All costs incurred for opening operating hospital including: [a] all seismic work, [b] maintenance, [c] restoration costs, [d] taxes, [e] debt service, and [f] net losses; but excluding costs for non-hospital portions of the property; effective Oct. 15.

Net hospital capital costs: Includes hospital capital costs minus net profits, profit-share paid to city, and city lease administration costs up to $150,000 per year.

Net hospital capital cost payment: The city reserves the right to either reimburse tenant for net hospital costs, sell property on open market, or sell property directly to tenant. Under no circumstance shall the city owe tenant more than the open market sale value of the property.

No recovery of costs before the effective date: neither party can include costs prior to Oct. 15.

Regarding staffing, tenant shall make a good faith effort to hire current Community Hospital Long Beach staff impacted by the change in operators.

Fourth District Councilman Daryl Supernaw provided the final lease agreement in his weekly emailed newsletter.

“We’ve got a deal!” he wrote in the newsletter.

“Tuesday’s vote was the final decision by city council in making the reopening of Community Hospital a reality. Moving forward, city staff will closely monitor all activities associated with state licensing. Thanks to all who supported us in this effort and demonstrated incredible patience throughout the process.”

First opened in 1924 and designated a historical landmark in 1980, Community Hospital expanded significantly from 1960 to 1980, explained Acting City Manager Tom Modica. It provided 158 licensed acute care beds, including 28 acute psychiatric beds.

The hospital was acquired by MemorialCare in 2011 but an active seismic fault was discovered under part of the hospital in 2017. It would cost a lot of money to retrofit the hospital to meet the state’s new seismic requirements. MemorialCare terminated its lease and Community closed in July 2018.

Modica said after the hospital closed, the rescue transport time, or the time it took to get to other hospitals, went up ten percent and in some cases up to 20 percent. Hospitals in surrounding areas received more patients as a result of the closing.

“It’s our intention to move as expeditiously as possible to reopen CHLB, but it’s difficult to put a firm date on the opening until the state inspection is completed and staff are onboarded,” Brandon Dowling, spokesman for MWN said through email Oct. 21. “We should know more towards the end of the month, and will keep you updated.”

kirt@beachcomber.news