HomeMy WebLinkAboutSEPTEMBER 22,1992
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CITY COUNCIL PROCEEDINGS ARE TAPE RECORDED AND ON FILE IN THE OFFICE OF THE CITY.
CLERK
ROLL CALL
METHODIST
HOSPITAL
PROPOSED
CONST. AND
FINANCING
PLANS
O<:;'I~ -S""::.-
M I NUT E S
CITY COUNCIL OF THE CITY OF ARCADIA
and the
ARCADIA REDEVELOPMENT AGENCY
ADJOURNED REGULAR MEETING
SEPTEMBER 22, 1992
The City Council and the Arcadia Redevelopment Agency met in
an Adjourned Regular Meeting on Tuesday, September 22, 1992,
at 6:30 p. m. in the Conference Room of the City Hall Council
Chambers.
PRESENT:
ABSENT:
Councilmen Ciraulo, Lojeski, Margett and ~
Councilman Harbicht
MOTION by Councilman Lojeski, second by Mayor Pro tem
Ciraulo and CARRIED, to EXCUSE the absence of Councilman
Harbicht.
PRESENTATION
Mr. Fred Meyer, President of the Arcadia Methodist Hospital,
and his associates George Koutsakos, Vice-President of
Finance, and Dennis Linson. Vice-President responsible for
construction areas, were in attendance to present the
hospital's proposal for the construction of replacement
buildings at the hospital site, and the reconfiguration of
vital areas to provide maximum efficiency of hospital
services. Also the financing for the project. Mr. Meyer
explained in detail the master plan from which various aspects
of the plan had been developed by the architectural firm of
Stoner, Cheney and Patterson, known as SNP. As background,
Mr, Meyer noted that the hospital has had a partnership with
the City since 1953 when a 99-year lease for the use of City
property had been executed. The hospital has since grown from
a 138 bed facility in 1957 to 350 beds today as a regional
medical center.
The master plan, Mr. Meyer noted, addresses several aspects
such as the central campus and various buildings; access off
of Huntington Drive East and Huntington Drive West; parking;
other uses. such as the Red Cross building; the function of the
hospital buildings over time; also, how they would address
specific other things, such as medical technology and some of
the forces that they foresee over a 30 to 40 year period. Mr.
Meyer pointed out on the site plot plan the location of
various hospital departments as they are now situated on the
site and where they propose to place each of these services
in the proposed new configuration of the hospital campus.
Using a certain process SNP established a rating system for
those buildings that are expendable, to the least expendable,
within the current plant. The most expendable buildings on
the current campus were determined to be the auditorium and
educational one-story cinder block building which can be
replaced easily. The next step in the process determined the
best location for the various departments such as the
emergency room, etcetera. The process continued with the plan
including the demolition of the east wing of the present
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hospital building and a replacement of east wing functions in
Zone A of the new plan. Other issues were addressed in the
master planning process such as inpatient services versus
outpatient and the continuing trend toward outpatient surgery
and other outpatient treatments; also utilities and energy
conservation; high-tech areas and equipment; the connections
to existing buildings ... floor to floor height; labor-saving
systems and space ... Mr. Meyer noted that the hospital is
under a lot of pressure to hold down costs. The master
planning process also addressed parking and access for the
public; space for unknown needs that might develop in medical
technology were also considered. The new master plan, he
noted, reorients the present hospital campus from a very
horizontal campus of one and two story buildings. into a more
vertical and more efficient configuration: savings are
expected in utilizing vertical transportation systems and
logistical arrangement of functions. The hospital needed a
functional space plan to replace functions housed in the east
wing ... the patient bed tower in the new plan. This meant
that they would need to relocate approximately 130 beds and
some ancillary services to the new location, or about 140,000
square feet. For this functional space plan they then went
with Master Planning Associates who took about six months to
interview department directors, physicians, administration,
and everyone else that needed to be part of this process, and
determine a function plan of nursing units to go into a med-
search nursing tower, to replace ten beds of surgical ICU, and
all the ancillary services that back that up.
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Further, the new master plan locates a new lobby and central
entrance. to the north end of the proposed new building, which
will be located across from the present parking structure.
where the main driveway is to be located off of Civic Center
Place. Mr. Meyer pointed out the new lobby area; pre-
admissions; admission; the proposed triangular nursing tower,
which is to be a five-story building to accommodate 136 beds
. .. Hr. Meyer stated in part that the new plan is not an
expansion of the hospital ... it is a replacement project.
Along with this their plan is to possibly downsize the
hospital by about 30 beds since they are not using the full
350 beds for which they have been licensed.
The hospital is presently involved with the selection of an
architect .., the field has been narrowed down to three firms.
It is the estimation of these firms that the construction
costs for the project could be somewhere around $27 to
$28,000,000 or a total project cost of $34.000,000. Mr. Meyer
than asked Mr. Koutsakos to explain the $34,000,000 and how
the hospital will achieve the plan with the assistance of the
City.
Mr. Koutsakos explained the resources for funding the project.
The hospital anticipates new proceeds from a bond offering of
$14,000,000, which would be additional debt; anticipated
donations for the project of $10',000,000, and "the hospital I
would throw in its equity for $10,000,000". Mr. Koutsakos
added that although they have not formally kicked off a fund
raising campaign, they have received nearly 40% of the
$10.000,000. As background he related that the hospital
refinanced the debt of $24,115,000 in 1987. The annual debt
service on that mortgage is $2.340,000. In addition, the
hospital has had a $5,000,000 pooled loan program that they
have participated in through the State of California. It's
a seven year debt which will be finished in October, 1992.
The annual debt service cost on this has been $800,000 a year.
The new structure requires that the new debt will replace the
$24.000,000 of 1987 debt, which will stand at $22,900,000 when
they refinance in November. In addition they will net
$14,000,000 out of the project, and the additional debt will
also be enough to cover all of the closing costs and any added
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debt during the defeasance period through 1997. The debt that
was refinanced in 1987 has a first-time call date in 1997. So
there has to be enough funds in the project in order to
defease the bonds through 1997. This debt service is going
to be at about $3,080,000, he added. The 1987 bonds.
$24,000.000, were refinanced at 7.82%. They can now be
refinanced at approximately 6.3% which will significantly
lower the costs to the hospital on this debt. The $5,000,000
of pooled loan also comes to term at the end of October, 1992.
In reference to the detail materials provided to the Council,
Hr. Koutsakos further explained the five year set of
projections that they are compiling for their presentation to
Standard and Poors in San Francisco. The surplus' from
operations and non-operating revenue, donations and investment
income for 1991 of 4.8 million, adding back depreciation.
produces the total cash flow to service debt. Further
projections were explained for the years 1992 through 1996 ...
The hospital anticipates the new mortgage will require a debt
service coverage ratio of 1.1, which is what they anticipate
their mortgage bankers and Standard and Poors.to be looking
at as the most critical ratio of being able to service the
debt over the expressed period of time.
A discussion ensued of the depreciation schedule; cash flow;
bond counsel. Hr. Heyer stated in part that they had worked
with City Attorney, Hichae1 Hiller, on the 1987 bond issue
that came through the City of Arcadia, and they have the same
bond counsel at this time. The hospital's bond counsel
prepared the cover letter and resolutions. that were provided
to the Council in the packet, for Council' to take under
advisement. The initial architectural renderings were also
included in said packet, The City Attorney inquired of their
timing on the bond issue. If the financing proceeds the same
as the 1987 issue the City will need to acquire independent
counsel, at the hospital's expense, to review the material.
Lead time will be needed for this process, the City Attorney
added, Hr. Heyer stated that their major interest is to take
advantage of the current favorable interest rate of 6.3%.
which is the rate that their underwriters have used. Further,
if this could be taken under consideration now and have it
resolved before the election in November that would be the
most favorable timing they could ask of the Council. Hr.
Heyer added. for clarification. that they are talking about
revenue bonds which is separate from general obligation bonds.
In response to Councilman Hargett, the City Hanager advised
that Wthere is no impact on their bonds with respect to some
hypothetical community debt limitation. So what the hospital
does is totally relative to their financial statement on1yw.
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In conclusion, Councilman Lojeski stated. in part. that he
wished to make a political reality statement... In reference
to the hospital master plan and financing proposal, Wthis is
a type of situation where the hospital really needs the City.
The hospital and City become partners indirectly and very
directly. The City Council becomes a true partner with the
hospital and also with the boards of the hospital... whether
the foundation board or the board of trusteesW. Conversely,
the City needs the hospital,., the Council wants the finest
of medical care to be rendered out of that facility. But,
Councilman Lojeski noted. he has a lot more faith in the
presentation that has just been made this evening, and in
light of the business decision that the hospital is asking the
Council to potentially enter into with the hospital, then he
does on some of the opinions of some of the hospital board
members, who took light of the fact, became very involved
politically in something in the community, in which they did
not have all the facts. WAnd I certainly don't hope that I'm
accepting that type of a decision of a business type of
situation in relationship to what has been presented to me
tonightW ... Further, he respects the hospital boards ... but
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CANDIDATE
FORBES.
(Bd./Dir.
Upper SVG
Muni. Wtr.
District)
CITY HALL
REHABILITATION
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certainly does not respect a hospital board, which should be
holding hands with the Council, to ask for four resignations.
his in particular, and very directly.
Mr. Meyer responded that he knows what Councilman Lojeski's
reference is ... it's a member or two of the foundation board,
it had no impact on the hospital board which reviewed and
recommended these plans. and has' approved them as he presented
them to the Council.
Councilman Lojeski wished Mr. Meyer to know that this
situation would have no bearing on his decision on this
particular item ... he could promise that he and this Council
will do everything they possibly can to understand what has
been presented to them, and before Council makes a statement.
it will be a very intelligent statement Mayor Fasching
and Mayor Pro tem Ciraulo indicated their support of
Councilman Lojeski's remarks.
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The Director of Public Works introduced Frank Forbes, a former
City employee, who is a candidate at the November election for
a seat on the Board' of Directors, Upper San Gabriel Valley
Municipal Water District, Division 2, which includes the,City
of Arcadia. Mr. Forbes then briefly stated his qualifications
and plans for this post and requested Council's endorsement
as a group or as individuals.
PRESENTATION
At the request of Mayor Fasching, Planning Commissioner Bob
Daggett, had visually reviewed the City Hall facility with the
Mayor and produced a conceptual plan for the rehabilitation
of the City Hall. Mr. Daggett stated in part that at the
request of the Mayor he had prepared a preliminary floor plan
of the three City Hall buildings based on the initial cursory
tour. Background information was obtained from the Planning.
Director. Although there have been no interviews with City
personnel regarding space needs, or what areas are actually
underspaced or overspaced, and whether the departments are
properly related, a concept plan was developed. This plan was
drawn within the framework of the shell of the existing
buildings. The idea underlying this proposal is to arrive at
a dollar figure. Commissioner Daggett pointed out that the
plan is to increase the size of the main building toward the
east where the rest rooms are located. This area, in
reference to the rest rooms. are not up to code and remodeling
of any kind calls for specific improvements under the American
Disabilities Act. The existing central corridor in the main
building would remain the same. To increase potential
habitable space, the drawing reflected an e~tension of the
main building to the west flanking the er.crance to that
building. The space between the main building and the two
annex buildings could be covered with translucent material to
create an atrium or skylight to become conditioned space. and
tie the three buildings together, theoretically as one.
Commissioner Daggett commented that the exterior of the
buildings were not addressed at this point.
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The repositioned departments were each pointed out in the
conceptual plan, and the various increase or decrease in the
department floor space was noted. The costs attached to the
proposed rehabilitation depends not only on decor but also on
practical aspects such as relocating walls, communication
systems, air conditioning, etcetera. ,The wballparkw figure
for a potential building of 17,500 square feet at $50 a square
foot could be $875.000 - using a progressively larger figure
per square foot the costs would graduate upward. If this
project were to go ahead and further studies were desirable,
the Planning Commission would be available to help, as opposed
to, at that point, hiring an outside consultant. Although,
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according to Commissioner Daggett, at some point in time' this
would have to be done and a budget should be established in
advance of the retaining of a consultant.
At the suggestion of Mayor Fasching, Commissioner Daggett.
again pointed out the potential areas of use for each
department and the possible increase or decrease in space
according to need. He did not believe that it would be
economical to increase the envelope of the two annex
buildings, at least in this first conceptual plan, however,
it is probable that the function of the area in question can
be greatly enhanced with a lot more thought given to layout,
rearrangement and elimination of some double functions. This
in reference to the building now housing the Public Works
Department and Water Division.
Mayor Fasching mentioned that he requested this brief
presentation to the Council this evening so that Council and
the City Manager would have some pre-information on .the matter
before a future study session relative to the City Hall
rehabilitation and the Library expansion project.
CITY STREET
DECORATION
(Holiday
Season)
The Arcadia Business Association is no longer financially able
to put up Christmas decorations in the downtown area. As a
result. Mayor Fasching felt it would be appropriate for'the
City to have a program incorporating the main streets to mount
Christmas banners during the holiday season. This program
could be similar to the flag program, to which many residents
have indicated their appreciation. The program would involve
purchasing banners the first year and leasing the hardware for
the poles to support the banners. The lease for the clamps
and installation each year would be on a three year contract.
This company would install the clamps. mount the banners.
remove and clean them. as well as store the banners and
hardware each year for three years. The contract would cost
$11,000 a year. The Mayor said he and the Chamber of Commerce
would secure commitments from businesses in the City to
support the program for one-half of the cost, and possibly the
City could support the program for the other half, or $5,500
a year for three years.,
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A discussion ensued. Councilman Margett said he would be
supportive of this program for the City at $5,500. Councilman
Lojeski had several questions and reservations, since the idea
was new to him. Mayor Pro tem Ciraulo felt that the Chamber
and businesses should be approached before Council makes a
commitment. The City Attorney said it would have to be placed
on an agenda for consideration. The City Manager suggested
that the item could be placed on the September 29th Study
Session agenda for discussion. The Cicy Attorney also
announced that the purchasing ordinance calls for competitive
bidding unless, under certain circumstances, the Council
waives that requirement, He will provide information to the
Council on that question.
CLOSED
SESSION
The Mayor announced that the Closed Session would be held at
the conclusion of the regular meeting this evening.
ADJOURNMENT
At 7:37 p, m. the City Council ADJOURNED the Adjourned Regular
Meeting sine die.
ATTEST:
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