by Garth Meyer
Beach Cities Health District looks to its future with a potential bond being considered, budget cuts in effect, and a looming expenditure to demolish its 157,000 square-foot old hospital.
With lease revenue shrinking from the 1960 building, the district dropped three quarters of a million dollars from its overall budget last year and began a partial hiring freeze.
At the same time, a public-private deal has been put on hold with San Diego-based developer PMB, to build a six-story assisted living building with 217 units, tear down the old South Bay Hospital and create two acres of open space.
“We thought we had a way to deal with the (old hospital) with the public-private partnership,” said Tom Bakaly, Beach Cities Health District CEO. “But the developers are saying that’s not feasible right now due to the financial markets, so we’re looking at all options, whether or not voters would support a bond.”
The projected $30 million bond would include the hospital demolition, which the district is committed to doing by 2027, regardless of who pays, because of earthquake concerns.
The cost is estimated at $750,000 per year, spread out over a 20-year loan. Teardown would take one year.
Bakaly and Dan Smith, BCHD communications director, said that if a bond does run this fall, and passes, a plan would take effect for a 30% smaller main building for the Healthy Living Campus, reducing the number of units from 217 to 150, on four floors.
The change would be made because, in the existing deal, PMB would cover the costs of demolition and creating the grassy open space.
If the district has to pay for the demolition itself, Bakaly said it would do so with cuts to BCHD services, forecasting $2 million less for the 2026-27 budget.
In 2018, the health district commissioned a study by structural engineers Youssef & Associates (Los Angeles), which concluded that the old hospital does not meet current seismic construction standards. An updated risk-assessment last year by Image Cat (Long Beach) told BCHD that it could operate the building within “acceptable risk standards” into late 2026.
Smith said the difference between a 1960 house in the beach cities and the 1960 hospital building is the type of construction; non-ductile, narrow-columned concrete.
“It didn’t fare well in the Northridge earthquake, it did not fare well in the Sylmar earthquake…” he said.
One factor with running a bond – for which the health district board would have to decide in July whether to go forward – is that, also in November, California voters weigh in on ACA1, a proposed state constitutional amendment that would make it so a bond such as the BCHD’s would only need 55% of the vote to pass, instead of a two-thirds majority.
The law would take effect immediately.
BCHD cut $776,000 from its 2023-24 budget from the previous year, making for a current budget of $14,908,000. The board, by law, adopts next year’s budget at the end of June.
The district’s funding each year comes from 32% property taxes, 29% leases (and decreasing), 18% interest and grants, 11% limited partnerships and 11% proceeds from the Center for Health and Fitness, and AdventurePlex.
In 1998, the year South Bay Hospital closed, a BCHD-commissioned seismic report estimated that, if the building remained in use as an acute care hospital, it would need as much as $39 million in improvements.
Today, the estimate would be $90 million, Bakaly said.
If a building is used as a hospital, it is required by law to be retrofitted.
“Even though it is not a hospital, we want to address the seismic issue,” Bakaly said. “Given our risk assessment, we’re saying the building needs to come down.”
The BCHD’s potential bond would break down into $8 million for the building removal, $7 million to develop the green space, $3 million for allcove building expansion (youth wellness, physical and mental health), solar panels and other environmentally-friendly features, $7 million for the parking lot and allcove site link walkway, and $5 million for planning, architecture and engineering.
The health district began a hiring freeze last year, expected to be in effect for the next 2-3 years.
“It’s not really an official hiring freeze,” Smith said. “It’s a case-by-case basis. We are looking at not filling holes as one method of saving costs.”
“It’s a soft hiring freeze, that we’re making firmer,” Bakaly said.
On Monday night, BCHD representatives held a community meeting on the potential bond, at Hermosa Beach city hall, the third of three in the beach cities.
Efforts to reach PMB and health district boardmembers for comment in this article were unsuccessful. ER
