Hospital Board to revise RFP for land sale

At the 1/5/16 Hospital Board of Director’s meeting, Board member Bill Boerum made a motion to table the Request For Proposal (RFP) agenda item seven. Agenda item seven states: “Discussion and approval of letter requesting proposals to develop the South Lot.”

A Sun staff report  yesterday gave some background, and has a link to a video of Boerum’s points.

A previous public meeting had been held on 10/27/16, by the hospital board regarding possible future uses of the South Lot. At that time, hospital CEO Kelly Mather mentioned that the hospital would like to move quickly with South Lot land use decisions. At this meeting there were three different groups of public opinion on the best use of the land: affordable housing, market rate housing, and future hospital facility uses.

Bill Boerum objected to the rest of the board having had a closed door meeting about the possible South Lot RFP. He saw this as a possible violation of the Brown Act, noting that he had sent a letter of complaint to the District Attorney, and while this process question was being resolved, he moved that the item be tabled.

Boerum felt that there had not been adequate opportunity for the Board to discuss the issues in public, i.e. vet the public comments from the 10/27/16 meeting, that the Board acted hastily, and that now it appeared the Board was going to vote to approve putting out an RFP to sell the land.

Boeum made clear the difference between his own preferred options (hold the land for future hospital facility uses), and what he was advocating in terms of a more of an open process.

Board Vice Chair Peter Hohorst, and CEO Kelly Mather mentioned that the issues would be discussed in public at the 1/5/ meeting. Yes, the letter for an RFP had been written, but Board Chair Jane Hirsch said other options are still on the table. An RFP by interested development entities could include any number of options.

Hirsch said the closed session was not nefarious, and had to do with privately handling potential competition and conflicts of interest from developers. Hirsch said the Board did, in the closed session, discuss topics raised at the 10/27/16 community meeting. However, Boerum noted that the 1/5/16 agenda did not notice a public discussion on such issues, but rather to sell and develop the land.

Boerum asked that there be public comment on whether or not to table the item. In spite of the obvious conflict of opinion, throughout the evening’s process on the South Lot, the Board conducted itself professionally and with proper decorum; nobody lost their cool.

In public comment, Norman Gilroy, who shares with Boerum the opinion of wanting to hold the South lot for future hospital facility uses, asked the Board to err on the side of getting this South Lot process correctly done. Ed Clay said it was a mistake to sell an asset for a one-time gain. The South Lot would be better to hold onto for the future, said Clay. Another member of the public called for more discussion, and noted that the “hospital, is trying to raise money.”

During public comment on the tabling motion, Chair Hirsch reiterated that multiple options were still on the table, “selling is only one option to be considered.”

In further public comment, local school board trustee John Kelly, as a private citizen, advocated for non-profit development of the South Lot. Kelly said, “Speaking individually and not in my capacity as a school board trustee, the parcel is uniquely located in walking distance of two elementary schools, a middle school, our high school, and our continuation high school, as well as supermarkets and the Plaza. The parcel is nearly identical in size to the Casa Del Maestro in Santa Clara, a nonprofit that partners with local schools to provide reasonably priced high quality housing to staff and teachers of their district. Should the health care district wish to partner or transact with another public agency, the RFP can potentially pit the custodians of the public trust against private developers who, due to their for-profit status, are empowered to bid in excess of what would constitute fair compensation, potentially impeding intergovernmental cooperation. Profit is always a legitimate objective for our real estate developers, but the specific geographical location of this parcel presents an opportunity to advance the public interest. Such conversations might best be conducted between the governmental agencies, rather than putting those responsible for shepherding resources dedicated to the common good in a position of bidding against private developers.”

The Board then voted 4 to 1 against tabling agenda item seven.

In further discussion, Board member Hohorst gave a short history of the South Lot’s acquisition by the hospital, and how he, with others, had been able to negotiate down the cost of repaying the loan. Hohorst gave examples of assets (a garage full of personal items) that might be sold cheaply, sold to the highest bidder, sold to charity or held; basically saying that the South Lot is a hospital asset and there are various ways of managing and/or selling it.

Board member Joshua Rymer noted that the land is not equity that the hospital has to cash in. Rymer said that through the South Lot loan deal, the hospital basically got the parking lot, and will break even if they sell the rest now. CEO Mather said the hospital would have to save and pay $100,000 a month until 2018, to pay off the South Lot loan. The implication here is that selling the South Lot is not necessarily to get a big payday, but to get out from under the short-term crunch of high loan payments.

The RFP letter on agenda item seven, said pro-sale Board members, was to give developers, or anyone else who wants to submit a proposal, a chance to show what they would do. Without a “for sale” sign, you don’t solicit serious interest, said Hohorst.

The suggestion was made by Chair Hirsch, to change the RFP letter to specifically include land uses suggested by hospital stakeholders and members of the public, i.e. non-profit development, affordable housing and future hospital facility uses. This seemed to be well-received by Bill Boerum.

In final public comment, Norman Gilroy mentioned holding onto to some portion of the South Lot, to reserve for future hospital uses; and that this future outcome should go in an RFP. Gilroy also composed a six-page series of questions and comments concerning the disposal of the South Lot for the Board, and that will become part of the 1/5/16 board meeting minutes.

Marilyn Goode wrote a letter in support of the Boerum/Gilroy position.

John Kelly reiterated his original comment, noting the difficulty of school district personnel being able to afford living in Sonoma, and said he hoped the Board would work on an intergovernmental project that could serve local school district personnel. Fred Allebach said he hoped that if land was to be sold for residential uses, that this use be for community needs such as senior housing, affordable housing, and hospital and school district personnel. Alternately, said Allebach, the land could be divided into the three uses proposed in the 10/17/16 public meeting.

CEO Kelly Mather said developers would probably offer between $3 and 4 million for the 2.8 acre property.

At the end of Board discussion and final public comment, a unanimous vote was made to send the RFP letter back to staff for revision to reflect the comments made at the 1/5/ meeting.

In a parking lot discussion afterwards, there was the sense of inevitability among members of the public that market rate housing would prevail; once the hospital saw a $4 million-dollar offer, they would take it. Money would win out in the end, and the likely high density market rate housing would be the worst possible outcome for the community, but maybe the best financially for the hospital.

The primary issue here is the disposal of the South Lot land: to sell, to save, go to community needs, or go to market rate and the highest bidder? Available Sonoma land is shrinking by the day, and all community interests and civic stakeholders advocate their priorities during land disposal issues. Also at stake with the South Lot is an apparent conflict between short-term cash flow issues versus long-term fiscal plans. Community housing needs seem to be set aside as a moral question above and beyond the hospital board’s charge, but community members feel such housing is nevertheless relevant. All parties appear to believe they have the hospital’s best interests in mind.

Before the 1/5/16 board meeting, the contingent wanting to save the South Lot land for future hospital facility uses appeared to have been outmaneuvered by a board majority, and staff, intent on selling the Lot quickly.

However, the board majority now seems open to modifications, and Chair Hirsch’s offer to redo the RFP letter appeared to be an effective way soothe the conflict over how to move forward with the process of what to do with the South Lot.