Healthcare district may ask voters to approve new hospital lease

The agenda for a special meeting of the Tehachapi Valley Healthcare District suggests that the district plans to move forward with an agreement to allow a multimillion dollar outpatient facility to be built on the grounds of Adventist Health Tehachapi Valley, subject to voter approval.

According to the agenda posted Friday, the district’s board of directors was to meet in closed session at 11 a.m. on Tuesday, Aug. 9, for real property negotiations concerning a new lease agreement with Adventist Health. The closed session was to be followed by an 11:45 a.m. open session with only one agenda item — a resolution ordering an election concerning a proposed 30-year lease with Adventist Health Systems.

The meeting took place after the deadline for this week’s edition.

No additional information was provided with the agenda, but the healthcare district board has met in closed session for the purpose of real estate negotiations a number of times since March when a representative of Adventist Health proposed building an $8 million outpatient pavilion adjacent to the hospital.

The faith-based nonprofit health system is about five years into a 30-year lease with the district to operate the hospital. As part of that deal, Adventist Health provided funds to complete construction and took over management of operations.

Because the district still owns the property, Adventist Health is required to seek board approval prior to certain activities, such as building additional facilities.

What terms Adventist Health and the district may have worked out are not yet known. However, as first proposed the addition to the hospital facility would not require any taxpayer funds.

THE PROJECT

David Butler was president of Adventist Health Tehachapi Valley at the time the proposal was made in March but his position was cut later this year as part of systemwide cutbacks made by Adventist Health.

He said additional space is needed at the hospital.

“To expand our mission and properly serve the Tehachapi community there is a dire need to expand our current 1,000-square-foot Rural Health Clinic,” he told directors at a March meeting. A Physician Needs Assessment shows a deficit of 26.7 primary care providers projected this year, highlighting the need to expand, he noted.

The 10,290-square-foot outpatient pavilion would be built on about .75 acres of land next to the existing hospital.

The facility would allow expansion of services to include primary care, dental, psychiatry and social work in addition to specialties such as general surgery, orthopedics, gastrointestinal and podiatry, Butler noted.

The goal, he said, is to make more medical services available in Tehachapi so area residents don’t have to go elsewhere for care.

The current estimate for the project is $7,993,989, he said. AHTV Foundation has already raised $2.2 million of that and Adventist Health Capital would provide the remaining $5,793,989, Butler said.

Tehachapi is a growing community with a growing need, he added.

Sharing population projections that would take the hospital’s service area to 65,227 by 2030 (from 59,421 in 2020), Butler said the growth rate is expected to be 2.76 percent higher than the national average over the next 10 years.

He added that Adventist Health would also like to see the district consider purchase of other land near the hospital to make room for more expansion in the future — and for a new 30year lease to include a “first right of refusal” to purchase the hospital.

The district’s attorney, Scott Nave, said at the March meeting that the current lease provides only that Adventist Health would have first right to purchase the hospital if the district decides to sell the facility.

BACKGROUND

The district broke ground for the new hospital in early 2013, but the project stalled when it ran out of money in 2014 and the public agency began looking for a partner to take over construction and operation.

In June 2016, voters in the district overwhelmingly approved Measure H, authorizing a lease with Adventist Health. More than 89 percent of voters were in favor of the proposal.

The hospital opened in November 2018.

Taxpayers continue to be assessed for payments the district must make to pay off $66.7 million in bonds authorized in elections in 2003 and 2009.

But in December 2021 the district completed a refinancing of its bond debt that it said will achieve more than $7.6 million in gross debt service savings for taxpayers over the next 28 years.

According to a spokesperson for Adventist Health, the organization has invested $47.6 million in the hospital, of which $37.5 million was spent to complete the hospital.