1 Attachment “B”
History of Saint John’s Development Agreement
Phase One Development
The Development Agreement granted approval for construction of new hospital facilities in two phases. The Phase One Project consisted of vested rights, subject to extension, for the construction of a new 475,000 SF hospital consisting of the following components:
• Below-grade central plant
• Inpatient Center (205,000 SF and a maximum height of 75 feet) • Outpatient and Diagnostic & Treatment Center (265,000 SF and a maximum height of 58 feet) with an emergency department and North Lawn • Main Entry Plaza on Santa Monica Boulevard
Phase One Community Benefit Summary
As part of the original Development Agreement and the First Amendment, a number of substantial community benefits were negotiated for Phase One:
One-time:
• North Lawn: 41,000 SF outdoor area with landscaping and walkways. • Off-site Traffic Mitigation Improvements: one-time payment of a minimum of $332,000 in fees to the City to construct improvements. • Off-Site Public Works Improvements: one-time fee payment of $641,000 to construct sidewalks, curbs, streetlights, and street paving in the project area. • Off-Site Transit Improvements: $100,000 contribution for Memorial Park light rail station upgrades (required by First Amendment).
Ongoing:
• Child Care Program: provide a minimum of 49 full-day child care for employees and the community. 21 of these spaces must be for infant/toddler care. Also provide a range of additional requirements, including tuition subsidies. • Annual Community Benefit Program: CA State-required plan for non-profit hospitals and also required by the 1998 Development Agreement for the full 55- 2 year Agreement term. The City established the annual Community Benefit Program to ensure that if the Health Center is sold to a for-profit entity, the new owner would be required to provide the community benefit program on an annual basis for the full 55-year term.
• Santa Monica Community Access Plan: The Santa Monica Community Access Plan is a required component of the annual Community Benefit Program, per the Development Agreement. It identifies local recipient agencies, dollar value, and level of service provided to non-profits and the Santa Monica-Malibu Unified School District. The plan also documents the charitable medical and mental health services, free health education, and preventive health services provided to the local community.
Minimum $732,000 dollar value subject to a 1.5% compounded annual adjustment. During calendar year 2020, the value of health services provided was $4,150,547, not including the value of the Medi-Cal reimbursement shortfall which, when included, raises the reported total for the Santa Monica Community Access Plan to $20,108,203 for calendar year 2020. The Development Agreement required a total annual value of $1,015,697 for calendar year 2020.
• Transportation Demand Management Program and support for transit (required by First Amendment).
• Neighborhood protection measures: eleven requirements including establishing a community Ombudsperson, providing a reduced valet rate for parking 90 minutes or less, one-time payment of $30,000 for installation of a crosswalk at 21st Street/Arizona Avenue, and one-time payment of $15,000 for a pedestrian safety study (required by First Amendment).
Phase One Construction Milestones
Significant construction milestones for Phase One included completion of the in-patient suites in 2005, completion of the diagnostic and treatment center in 2009, and demolition of the south and east wings of the original hospital building in 2010. Today’s North Campus, comprised primarily of the in-patient suites, diagnostic and treatment center, and emergency department is approximately 187,000 SF smaller in size and has fewer licensed beds in comparison to the pre-1994 hospital facility:
• 1994 hospital pre-earthquake: 662,000 SF and 501 licensed hospital beds • 2013 hospital redeveloped: 475,000 SF and 265 licensed hospital beds First Amendment to Development Agreement for Phase One Parking Obligations 3 The City Council approved a first amendment to the Development Agreement in June 2011 primarily to modify the Health Center’s Phase One parking obligations. In lieu of constructing the originally-approved North Campus subterranean parking garage, the amendment requires the Health Center to provide at all times on- and off-site parking to meet the peak parking demand of its various user groups (visitors, patients, physicians, scientists, and staff). The amendment also requires the Health Center to provide at all times parking that is functionally equivalent to the previously-approved 443-space garage (i.e., owned spaces or spaces subject to specific lease terms). The amendment further requires implementation of an annual parking management plan and authorized changes to the design of the Entry Plaza that is accessed from Santa Monica Boulevard.
Following approval of the First Amendment, the new Entry Plaza on Santa Monica Boulevard was constructed, and it opened for use as the primary entrance to the Health Center in October 2013. The opening of this feature marked the completion of the Phase One Project authorized by the Development Agreement.
Providence Health Systems Southern California assumed full sponsorship of Saint John’s Health Center from the Sisters of Charity of Leavenworth in January 2014. The transfer of sponsorship was completed as Phase One construction was nearing completion. City staff worked with Providence during its due diligence review and sponsorship transition to clarify the requirements of the Development Agreement and provide a detailed overview of the key issues and community concerns that were associated with Phase One development and the First Amendment.
Second Amendment to Development Agreement and Phase Two Process The original Development Agreement authorized Phase Two vested development rights for up to 799,000 SF and associated uses. Consistent with the vested rights and procedural requirements for Phase Two in the original Development Agreement, a proposed Master Plan to guide the development of the Health Center’s South Campus was submitted by Providence in February 2015.
4 Development Review Permit applications for eight Phase Two Buildings located on both the North and South Campuses were filed in March 2015 following completion of the Phase One Project. All of these required applications were submitted and deemed complete prior to the July 9, 2015 Phase Two Vesting Deadline established by the Development Agreement. If applications were not submitted prior to the Phase Two Vesting deadline, the vested development rights for Phase Two would lapse.
In 2015, Providence also submitted a Second Amendment to the Development Agreement to allow the extension of the expiration dates for each of the eight originallysubmitted Development Review Permits for Phase Two development to allow construction in five phases, over an approximately twenty-three year period. Providence made this request because it would be unable to construct the entire Phase Two Project within the timeframes originally provided by the Development Agreement. The City’s position was that an amendment to the Development Agreement would be required to extend the Phase Two Vesting Deadline rather than delay processing the pending Development Review Permits for extended periods of time.
Providence stated that an extension of time would be necessary because it must maintain current Health Center operations, fundraise, and provide required parking through the duration of Phase Two construction. Furthermore, an extension of time would allow Providence to focus on elements identified as programmatic priorities and necessary components for orderly buildout of the Phase Two Project in the near-term, while also having assurance that longer-term future development at the Health Center can occur in response to changing community health care needs.
In April 2016, the Planning held a float-up discussion and provided comments on the proposed Master Plan concepts and request for an extension of time to develop Phase Two. In December 2016, the Council held a float-up discussion for Providence’s request to extend the timeframe to build out Phase Two and directed staff to initiate negotiations in response to Providence’s request for an extension of time. The Council also provided 5 conceptual community benefit recommendations. The Second Amendment (largely procedural in nature) was approved by the Council on March 28, 2017 and established a framework for a consideration of an extension of Phase Two vested rights subject to negotiation of a Third Amendment and the following terms:
• Replacement of the original requirement for a South Campus Master Plan with a requirement for a Master Plan for all Phase Two development proposed on both the North and South Campuses;
• Requirement for the City Council serve as the City’s decision-maker for the Phase Two Master Plan after receiving a formal recommendation from the Planning Commission; and
• Requirement that all Phase Two development be consistent with the approved Phase Two Master Plan.
When Council adopted the Second Amendment, it was understood that the City and Providence would need to negotiate in good faith a Third Amendment to the Development Agreement to establish updated community benefits and a revised vesting deadline, concurrent with environmental review and technical/substantive City review of a proposed Phase Two Master Plan. Accordingly, the Applicant’s Master Plan proposal sets forth a framework for Phase Two that is conceptually guided by the original vested rights for floor area and the range of permitted uses authorized by the original Development Agreement while adhering to the Council’s direction established by the Second Amendment and proposing substantially less vested square footage than the original authorization for Phase Two.