The College of the Redwoods Board of Trustees took no action on Tuesday in response to the Southern Humboldt Community Healthcare District’s offer to buy CR’s Garberville Instructional Site for $350,000.
Instead, the governing board, gathered for its regular monthly meeting at the CR campus south of Eureka, asked some pointed questions and raised come concerns before indicating that additional discussion of the offer would take place in closed session at their July board meeting.
“They put it off for another month,” was how Healthcare District Chief Executive Officer Matt Rees summed it up a day later.
Rees was on hand for Tuesday’s meeting as was Barbara Truitt, president of the district’s governing board. Sitting alongside the trustees as he typically does during board meetings was CR President Keith Snow-Flamer, who toured the 2.9-acre property, which runs along U.S. Highway 101 just west of Garberville, with hospital officials and Humboldt County Supervisor Estelle Fennell two months ago.
In the April 29 letter in which the district tendered its purchase offer, it was made clear that the district hopes to build a new hospital behind the lone structure on the site, a former school that is now the Redwood Playhouse.
The plan is to “build a new state-of-the-art medical facility in the unused areas behind the existing building,” said the letter, signed by Truitt.
Besides allowing the community to continue to use the building for events, meetings and performances, Truitt indicated that the hospital district would be open to having CR also continue to maintain a presence.
“We propose to foster CR’s ongoing presence there by offering College of the Redwoods the right to continue using classroom space for your educational programs for $1.00 per year,” she wrote.
While CR has offered classes at the site, a number have had to be cancelled due to low enrollment. As a result, Snow-Flamer has indicated that the CR board would likely be predisposed toward accepting a purchase offer, whether from the hospital district or some other source.
“That would be my business sense, yes,” he said in an interview last month.
It quickly became apparent on Tuesday, however, that the CR board was not inclined to take any public action on the offer one way or the other — at least, not at this particular meeting.
Given that the issue at hand is a “potential real estate transaction, any conversation in open session should be exploratory [and limited to] information questions,” Trustee Bruce Emad cautioned his colleagues at the outset.
Discussion of the merit of the offer and of its terms, “needs to be talked of in closed session,” he added.
Trustee Richard Dorn raised concern about a couple of issues.
One had to do with what he said was a perception in Southern Humboldt that the sale is a done deal. “It seems to be a common opinion that we’ve sold the site or are about to. So I’m concerned about any confusion going on down there,” he remarked.
The other pertained to his understanding that the hospital district has “hired a consultant to evaluate the site. That concerns me a little bit,” he explained, suggesting that it might be a sign that the district was putting the cart before the horse.
Rees weighed in at this point, informing Dorn and the other trustees that the hiring last month of a Santa Rosa architectural firm to perform a $17,000 planning study for a new hospital facility was “not site dependent.”
“Our timeline is such that we need to gather information regardless of the site,” he said,
Referring to the district’s existing health care facility, Jerold Phelps Community Hospital, he explained: “We need to build a new building by 2030, [when] we will be out of compliance with state seismic codes.” If a new facility isn’t built, “We won’t have a hospital in Garberville.”
When asked if the district had looked at other locations, Rees made clear that the only site that has been eyeballed in any detail is the CR property.
“It has good access off the freeway,” he remarked. “That’s one of the reasons we’re looking at the site first before exploring other options.”
Referring to the fact that CR bought the property from the Southern Humboldt Unified School District for $200,000 in 2010, Trustee Carol Matthews said that if CR is going to sell the property, the school district needs to be given the first shot. “The school district has the right of first refusal to buy back the property for $200,000 plus the cost of improvements,” she asserted.
Dorn, who described himself as a Realtor, agreed. “I’d think you’d need to offer that to the school district and have them say no,” he remarked.
Rees, on Wednesday, said the district plans to go to the school board and ask for a statement or resolution “that would allow us to purchase the property without a right of refusal.”
After it bought the property from the school district, CR put $1.8 million into an extensive renovation of the Old Garberville School Site, as the Depression-era structure used to be known. The renovation was undertaken in part to put the building in line with state seismic codes.
The expense of the renovation led Trustee Barbara Rice to bring up the elephant in the room — the amount the hospital district is offering for the site.
“I have a hard time reconciling what we’ve put into it with the offer of $350,000,” she remarked.
While he didn’t say so at the meeting, Rees on Wednesday said that it wasn’t realistic for CR to expect to get that investment back through a sale.
“That’s a sunken cost,” he said. “They had to put [money into the upgrades]. It’s gone and they need not plan on recouping all of it.”
“Our offer gives them the right to utilize the rooms so that the seismic upgrades they put into the building are not lost,” he added.
Rice wondered whether CR couldn’t retain ownership and still allow the district to build a hospital. “You could possibly lease us the property on a long-term basis,” Rees said in response.
In the Wednesday interview, Rees repeated that a long-term lease might work. But since the plan is to finance the building of a new hospital through a rural development loan from the U.S. Department of Agriculture, “we’d need to get USDA rural development to accept” such an arrangement.
After fielding a few more questions, such as whether the area behind the playhouse is big enough for a hospital — Rees said the architectural planning study would answer that question — the discussion came to an end.
Trustee Tom Ross, the board president, had the final word, telling Rees and Truitt that once the board had discussed the offer in closed session, Snow-Flamer would be instructed about further discussions with the hospital district.
Rees on Wednesday didn’t betray any impatience with the way the CR board is handling the district’s purchase offer — except to say that the board “in open session could have given Keith Snow-Flamer the ability to negotiate with us.”