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HomeMy WebLinkAboutSEPTEMBER 22,1992 1 I 0110_ ~'o :'J '1 ~~ "I J. c:c:... 34:0303 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 1 9/22/92 34:0304 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. I 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 2 9/22/92 34:0305 1 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. I 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 3 9/22/92 CANDIDATE FORBES. (Bd./Dir. Upper SVG Muni. Wtr. District) CITY HALL REHABILITATION 07.30- '0 I(c A", ;, 34:0306 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. 1 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. 1 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, 4 9/22/92 1 I 34:0307 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., 01";-0 -.30 II)S"" , 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: 5 9/22/92