STAFF REPORT
Meeting Date:
October 13, 2026
REGULAR
BUSINESS
9 SUBJECT: BUDGET APPROPRIATION FOR HOSPITAL CONSULTANTS AND
ATTORNEYS
RECOMMENDATION: It is recommended that the City Council:
1. Appropriate $500,000 from the Disaster Relief/Contingency Fund to the City Attorney’s Office Fiscal Year 2026-27 budget for legal and attendant consulting services relating to the possible closure of Mission Hospital Laguna Beach;
2. Direct the Finance Department to create a separate contract services account in the City Attorney’s Office Fiscal Year 2026-27 budget for only the $500,000 hospital-related appropriation;
3. Authorize the City Attorney to retain, negotiate, and execute agreements with outside legal counsel, healthcare advisory firms, and other consultants and experts that the City Attorney determines are necessary to advise the City regarding its legal options related to the possible closure of Mission Hospital Laguna Beach, provided that total expenditures under all such agreements do not exceed the $500,000 appropriated; and
4. Direct the City Manager and City Attorney to report to the City Council periodically on nonprivileged status updates and on aggregate expenditures.
SUMMARY OF THE MATTER
Providence has informed the City that it intends to close Mission Hospital Laguna Beach (the “Hospital”), the City’s only acute care hospital and emergency department, effective January 1, 2030. In March 2026, the City Council adopted a Hospital Action Plan and formed a Hospital Task Force to evaluate options for keeping emergency care in Laguna Beach. Assessing the City’s options on this front requires expertise that the City does not have in-house relating to, amongst other things, hospital operations and finance, hospital seismic retrofitting, emergency medical services, state healthcare regulation, and the related legal considerations.
Staff recommends that the City Council appropriate $500,000 to the City Attorney’s Office and authorize the City Attorney to retain the attorneys and consultants needed to support this work. Because this work will inform the City’s legal analysis and strategy, the City Attorney would enter into and direct these agreements in order to preserve the attorney-client privilege and attorney work product protections that apply to that analysis.
Budget Appropriation for Hospital Consultants and Attorneys October 13, 2026
DISCUSSION
Background
The Hospital has been part of the community since 1959 and is operated by Providence as a “second campus” of Mission Hospital in Mission Viejo. Providence has told the City that it intends to close the Hospital effective January 1, 2030, citing an estimated $300 million to $350 million in seismic upgrades required by State law.1 Providence has proposed replacing the Hospital with a non-acute “advanced medical care center” that would offer outpatient services but no inpatient care. Under current State law, an emergency department must operate as part of a licensed general acute care hospital, and 911 ambulances may transport patients only to licensed hospitals.2 If the Hospital closes, its emergency department (“ED”) must close with it.
The ED remains heavily used. According to Providence’s filings with the State, the ED recorded 14,827 visits in calendar year 2025, and 7,131 of those were classified at the highest complexity level; it has seen between 14,800 and 17,600 visits every year for the last decade.3 The Hospital also intakes the majority of ambulance transports made by the Laguna Beach Fire Department (“LBFD”): of the 1,811 ambulance transports made by LBFD between July 1, 2025 and August 25, 2026, 1,085 (about 60%) went to the Hospital. The average transport to the Hospital takes about five minutes. If the Hospital closes, transports to other hospitals are expected to take 17 to 35 minutes each, which would keep the City’s ambulances and fire crews out of the community for longer periods.4
Since Providence’s announcement, the City has taken the following steps:
• In March 2026, the City Council adopted a Hospital Action Plan and thereafter, on June 23, 2026, formed a 16-member Hospital Task Force, co-chaired by Councilmembers Bob Whalen and Alex Rounaghi, made up of residents with medical, healthcare administration, planning, and other relevant experience. The Hospital Task Force has met twice as a large group but additional times as smaller cohorts.
• On July 23, 2026, City representatives met with staff of the California Attorney General’s Office. In late September, 2026, Councilmembers Whalen and Rounaghi sent a follow-up letter to Attorney General (AG) Rob Bonta asking for his office’s help on several issues, including an updated Orange 1 Health & Safety Code § 130065(a) requires that by January 1, 2030, every building used for acute inpatient care must be able to stay standing and keep operating after a major earthquake; a hospital that cannot meet the standard must retrofit, replace, or demolish the building, or stop using it for acute care. Subdivision (b) of the same section allowed a hospital to request an extension of up to three years beyond the January 1, 2030 deadline, with a possible additional two years in limited circumstances. Providence, however, did not seek an extension for the Hospital. 2 See Health & Safety Code § 1250(a) [general acute care hospital license]; Health & Safety Code § 1255 [emergency services are approved as an add-on to that hospital license]; 22 C.C.R. § 70411 et seq. [basic emergency medical service].
3 Providence’s annual California’s Department of Health Care Access and Information (HCAI) for Mission Hospital Laguna Beach, CY 2012-2025.
4 Information from the Laguna Beach Fire Department, August 26, 2026.
Budget Appropriation for Hospital Consultants and Attorneys October 13, 2026
County EMS impact study, the status of donated funds, and prior AG conditions that appear to be tied to the ED (the City’s letter is Attachment 1).
• In August 2026, Providence agreed to study the feasibility of a smaller “micro-hospital” with an ED and a limited number of intensive care beds. That plan is due to the City later this month. Providence has made clear that its agreement to study a micro-hospital does not commit it to build one. • Providence and the City have also agreed to pursue legislation in 2027 that would allow a stand-alone ED at the Hospital site. Note: At the end of September, 2026, Governor Newsom vetoed AB 2282 (Alanis, 2026) that would have allowed an interim emergency department as a standalone entity near Patterson, CA in western Stanislaus County.
The City is evaluating other approaches, also, including discussion with other hospital operators, evaluating other ways to fund emergency care, and other options – including an evaluation of all legal avenues – to maintain a hospital in Laguna Beach.
Need for Specialized Legal and Technical Advice
To evaluate these options, respond to Providence’s proposals, and maintain an ongoing dialogue with the Health Facilities Unit in the Healthcare Rights and Access Section of the California AG's Office to advocate for their involvement with Providence’s proposed closure and related actions, the City needs advice from the appropriate subject matter experts. This work, which is intended to advise the City’s legal strategy, is expected to include, but may not be limited to:
• Specialized outside legal counsel to advise in areas such as healthcare regulatory law, hospital licensing and seismic compliance, and relevant land use matters. • Healthcare advisory services, including analysis of related regulatory and compliance issues associated with hospital operations and finances, a micro-hospital, alternative governance models, and existing regulatory conditions relevant to Providence.
• Other technical experts and consultants as needed.
The timeline makes it important to start this work now. The proposed closure date is a little more than three years away.
We issued a Request for Qualifications (RFQ) for services similar to the above (this RFQ closed September 14, 2026), and received only one response. The response was thoughtful and grounded by a well-qualified architectural firm, which may not be a primary driver of decision points from here. Given the increasing legal issues we’re noting, we recommend moving this task and consultancy agreements to the City Attorney’s Office, which may or may not determine to retain the lone RFQ respondent in collaboration with other firms’ expertise.
A primary reason for the assignment to the City Attorney’s Office is to protect the confidentiality of the City’s legal analysis and strategy while it evaluates options that may involve negotiation, regulatory proceedings, or litigation. The City Attorney’s Office, in consultation with the City Manager and the Ad Hoc Committee, is in the process of further identifying qualified healthcare advisory and law firms. The recommended action would authorize the City Attorney to execute agreements for these services within the Budget Appropriation for Hospital Consultants and Attorneys October 13, 2026
$500,000 appropriation. The City Attorney will coordinate this work with the City Manager and the Ad Hoc Committee.
FINANCIAL ANALYSIS
Approving the recommended action would appropriate $500,000 from the Disaster Relief/Contingency (which has $7,422,126 in it) to the City Attorney’s Office Fiscal Year 2026-27 budget for legal and attendant consulting services relating to the possible closure of Mission Hospital Laguna Beach. This would reduce the Disaster Relief/Contingency by the same amount (resulting in a Disaster Contingency of $6,922,126).
ENVIRONMENTAL ANALYSIS
The recommended action is not a “project” under the California Environmental Quality Act (CEQA) (Pub.
Res. Code § 21065). It is a government fiscal activity that does not commit the City to any specific project that may cause a significant physical impact on the environment, and it is an organizational or administrative activity that will not result in direct or indirect physical changes to the environment (CEQA Guidelines, § 15378, subd. (b)(4), (5)).
ATTACHMENTS
1. September 21, 2026 Letter to California Attorney General Rob Bonta Regarding Mission Hospital Laguna Beach’s Possible Closure
Submitted By: Megan Garibaldi Approved: David A Kiff
Megan Garibaldi, City Attorney
Dave Kiff, City Manager
Dave Kiff, City Manager