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Sonoma Valley Hospital board divided over South Lot

Standing in front of a two-plus acre piece of property not far from the Sonoma Valley Hospital earlier this week, Sonoma Valley Health Care District board member Bill Boerum laid out his case to Valley residents via YouTube.

“I’m speaking to you about a matter of public urgency,” says Boerum in the video, “which could affect the future of health care in the Sonoma Valley.”

With these ominous words, Boerum begins a three-minute speech questioning the actions of his fellow board members in the way they are handling the fate of the prime 2-acre piece of Sonoma real estate.

“I think the CEO and certain members of the board have been far too hasty in wanting to sell this land off,” summarized Boerum. “I think it should be retained for future potential use by the healthcare district or at least given a fair and open hearing, not behind closed doors.”

So great was his dissatisfaction over what he called a “rush to sell” that Boerum contacted the Sonoma County District Attorney’s office to look into a possible violation of the Brown Act. The DA’s office confirmed the investigation is underway.

The Sonoma Valley Health Care District has long had an option on the property, over three acres of property at MacArthur Street and Fourth Street West formerly owned by the Carinella family. Title for the property was taken by the district in August, 2016, for a sale price of $1.75 million plus associated costs. The total $2 million purchase was made on a loan from a private party, a loan that comes due in two years – August 2018.

While there has never been a clear plan for the South Lot, as it is known, ideas have been floated over the years to include a new wing for the hospital, doctors’ offices and, at one time, a Parkpoint Health Club operating in conjunction with the hospital. A public meeting was held in late October asking for public input on the use of the property, which attracted about 40 people to the basement of the hospital.

Although most of the public comment was in support of using the property for some form of housing or another, a handful of people asked to keep the property for health care services, according to news reports, and one openly urged that the hospital retain the land as a capital asset that could be worth much more than it is today. But Board chair Jane Hirsch closed the Oct. 27 meeting without any discussion, and the topic was not on the agenda either for the Nov. 3 board meeting or for Dec. 1.

Surprised, Boerum – who is serving his third term on the SVHCD board, and second as board secretary – contacted Hirsch to find out what happened to the matter, and found it was to be discussed on the Dec. 1 closed session agenda, under the broad category “Trade secrets regarding business strategy.”

“They shouldn’t be having follow-up board discussion as a closed session item – in my opinion there’s no justification for doing that,” said Boerum. “It’s not business strategy, there’s no competitive issues… and there’s no reason to do it in secret.”

So Boerum refused to take part in the Dec. 1 closed session, stating that the category under which it was discussed in close session was “too broad an umbrella,” according to the minutes of the Board of Directors meeting for that date.

Hirsch defended the use of the “strategic discussion” category, based on some of the ideas presented at the Oct. 27 public meeting, but emphasized that the public discussion would take place at the next Board of Directors meeting, scheduled for last night, Jan. 5.

But when the board came out of the closed session with a plan to issue an RFP for the land’s sale, “I went back and told them, I think you violated the Brown Act here,” said Boerum. “I have referred it to the district attorney, who is doing an investigation.”

Hirsch pointed out that since Boerum chose not to attend the close session, he could not make a judgement about its discussion.

The Brown Act, the government code that requires that public agencies must hold “open and public” meetings and that actions must not be taken in secret, does allow for closed session in a number of cases, such as employee compensation and pending litigation. Property negotiations are also covered, but only to discuss an agency’s “identified bargaining agent, price or payment terms.”

“It is my contention that the CEO and certain Board members met in a Closed Session on December 1 and made the decision to sell the land without a public hearing and detailed a plan of action/process for the sale,” he wrote the Index-Tribune. To bolster his argument, he forwarded a follow-up message from CEO Kelly Mather dated the day after the closed session, Dec. 2, outlining a series of eight steps necessary to put the land up for request for proposals (RFPs) from bidders interested in developing the property.

Caroline Fowler of the District Attorney’s office confirmed that they were looking into the Brown Act violation, based on Boerum’s complaint, but could not say how long such an investigation would take. As to whether a Brown Act complaint coming from a board member was unusual, Fowler replied, “I wouldn’t say it’s unusual, but generally most complaints come from members of the public.”

Fowler said that if it was determined a violation did occur, the agency – the Sonoma Valley Health Care District – might be forced to reopen the discussion in open session, and perhaps walk back any decision they made in the illegal meeting, if that’s what occurred.

Overall, Boerum is troubled by the apparent rush toward a sale of the property that the district took possession of only five months ago. Remembers Boerum, “We said we’d buy it, but there was never any discussion as to what purpose we would use the land for.”

Health-care related buildings could be located there, including medical office buildings or even some residences for long-term care, Boerum said. “But the point is, if you’re going to sell the land off now, you’ve lost control of it. You’re not able to architect anything that could be of help to the community.”

Mather and District CFO Ken Fowler explained in their agenda report for last night’s meeting that there was some urgency to sell the 2.83 undeveloped acreage of the property (about half an acre must be retained in district ownership for employee parking, according to City of Sonoma regulations), as it could take some time for a developer to obtain permits and zoning variances for the property. They recommend “a decision on this property should be made in the first quarter of 2017 to ensure the District has the funds to make the $2,000,000 loan repayment date in August. 2018.”

Boerum called that argument “specious,” saying two years is plenty of time to renegotiate or restructure a loan, if they want to retain the land for health-care related purposes. Instead, he thinks the decision has already been made. “I think they are trying to flip the land as soon as possible,” he said. “There’s no pressure whatsoever to pay it off any sooner… I think they want to put the money into operations, because we run an operating loss almost every month.”

In a statement to the Index-Tribune, Hirsch stated, “The board decided we needed to get more information about the options for use of this property. In order to make an informed decision, we have developed the letter requesting proposals that is in the agenda packet for the meeting tonight. No decision has been made regarding the disposition of the property.”

In a follow-up phone conversation, she repeated the point: “That decision has not been made, there were no decisions made at the closed session. This is a way to assist us to make a decision, there has not been made a decision to sell.”

Yet specifically in the wording of the proposed RFP is the statement that the district “is offering for sale up to 2.83 acres of land near downtown Sonoma and the Sonoma Valley Hospital.”

The SVHD board of directors met last night, Thursday Jan. 5, to seek approval to issue that RFP, and public comment will be taken.

UPDATE: When the item was introduced on Thursday night, Boerum asked that it be "continued" or tabled until next month's meeting because of the on-going investigation from the DA's office. He could not get any other allies on the board, and the matter moved forward.

During public comment and board discussion, however, it was decided that the RFP was too specific toward a sale and development goal, and the letter was sent back for revision to make it broader and include options for health care services, agency partnerships and other possible uses. The IT will have a more in-depth report from the meeting in our next issue. - ck

Contact Christian at christian.kallen@sonomanews.com.