City to work with creditors, consider land-use change to reopen SPMH

July 02, 2004
Santa Paula City Council

Several plans for reopening Santa Paula Memorial Hospital were touched upon at the June 28 meeting including the city’s proposal to sell off non-hospital use land to help settle SPMH’s spiraling debts.

By Peggy KellySanta Paula TimesSeveral plans for reopening Santa Paula Memorial Hospital were touched upon at the June 28 meeting including the city’s proposal to sell off non-hospital use land to help settle SPMH’s spiraling debts.The full City Council approved City Manager Wally Bobkiewicz’s plan to work with SPMH creditors on the plan that would remove the major obstacle – satisfying the more than 400 SPMH creditors – to reopening SPMH, closed since Dec. 19.In early May Bobkiewicz announced that the city was searching for a healthcare provider to reopen SPMH and there has been interest from a “private regional” entity interested in discussing such a deal.There have been no other takers and although he believed other plans would come to fruition, “sadly, that’s not the case.”City staff believes “there would be more [interest] if they [SPMH] were not burdened with such huge debt,” Bobkiewicz said.Any such proposal would require the cooperation of the council in rezoning portions of the 29-acre property - donated by community members for the hospital – to allow development.City staff will work with the creditors to find a healthcare provider who would be willing to operate SPMH without assuming its debts.A reorganization and development plan will be crafted to present to bankruptcy court, Bobkiewicz said.The creditors are the “First folks that need to be satisfied,” in bankruptcy court, he added, and healthcare providers contacted by city staff “bristled at taking on such a large debt,” he added.“Your staff believes the key way to open the hospital is not look only at a healthcare provider but also help facilitate the sale of the property around the hospital,” to satisfy creditors, Bobkiewicz noted.Marsha Rae, a former SPMH director and a Foundation trustee, said that the “whole function” of a recently formed ad hoc committee comprised of “civic leaders” is to a complete a property financial analysis for the SPMH board.
“We anticipate in a couple of weeks we will reach a final analysis and make a recommendation to the hospital board on the best use,” and property value based on the input of developers.The committee’s analysis has not yet determined if the sufficient funds could be raised to pay off creditors, she added, although there are a “number of opportunities” expected to be finalized in the next few weeks. From there plans would go to the creditors and then bankruptcy court, Rae noted.Creditors are “very much in favor” of Bobkiewicz’s plan, said Creditors’ Committee Chairwoman Agi Kessler. “We want to bring a hospital back to our community, many creditors outside area but are very understanding,” of the community’s needs. “We will do whatever we need to work with the city to make that happen.”The creditors’ committee also represents the city, also owed money by SPMH, said City Attorney Karl Berger.“That is why we set up the Healthcare Authority, to allow the city to move forward with potential partners,” noted Mayor Gabino Aguirre.There already is a plan, said Al Martia of Kare Healthcare, the company that last week signed an agreement with the SPMH to create a plan for reopening.“It’s a long process to reopen, it’s expensive,” and the 475 creditors want to paid, Martia noted.The SPMH board and Kare have crafted a “very intricate plan” that includes the entire property, he added.Martia asked if Kare could meet with the city: “We’re the only one that has stepped forward, we’ve invested time and money to reopen the hospital as a community asset. I think it’s premature right now to try to break all this property up because the asset is valuable to the hospital as well as to the community.”“This is something that the community has looked at and it’s a huge priority to us opening the hospital again,” said Councilman John Procter. “The key word is consider,” other land-uses for property surrounding the hospital, “it’s not an endorsement.”“It’s been terribly difficult coming to grips,” with even considering changing the land-use designation of the property donated for hospital use, said Vice Mayor Mary Ann Krause. “But, to get the hospital open and ensure,” financial viability all options must be considered.“Anything we can do to help,” including ensuring that the SPMH pensions are made whole is a top priority, noted Councilman Rick Cook.

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