Tulare hospital district forms tower construction committee

Reggie Ellis

Tower construction committee will evaluate status, identify funding needs, select a funding strategy and set a timeline for completion of the medical tower; deadline to apply is Dec. 11

TULARE – Tulare hospital’s never-ending story may have finally opened its final chapter.

On Nov. 25, the Tulare Local Healthcare District Board of Directors announced it had taken an important step to complete the district’s unfinished medical tower by formally adopting a process and a timeline to establish its Hospital Tower Construction Committee “made up of the experts and community representatives that can best assist us in fulfilling our obligations while looking out for the best interests of all residents in the district is absolutely necessary,” board president Kevin Northcraft said.

Once formed, this seven-member committee will be made up of a cross section of experts and community representatives who will assist the board in completing the tower in a timely and efficient manner.

Individuals interested in participating in the tower construction committee can apply now through December 11, 2020 by visiting www.tularelocalheatlhcaredistrict.org and completing the online application. Following the expiration of this application period, the Board of Directors will interview each applicant before seating members of the tower construction committee.

The renewed focus on completing the tower begin in April when the hospital board laid out four options for funding the final leg of the 15-year project. Options included seeking a combination of grant funding, financing options, negotiating for assistance from Adventist, a phased approach to construction and occupancy and the unlikely scenario of a new bond measure, either for the full amount needed or a smaller bond for a partial amount.

The hospital board issued a request for proposals in August to firms to assist in identifying its fundraising strategy to complete the tower. The district selected California based Grant Management Associates (GMA) in October to assist in the design, development, implementation and management of a capital campaign fundraising strategy for the tower construction project. GMA will work closely with the tower construction committee, board of directors and district staff to complete the tower.

“We continue to move forward and are committed to making sure the facilities are available that give us every opportunity to provide the best healthcare possible to all residents and visitors of the district,” said Kevin Northcraft, president of the Tulare Local Healthcare District Board. “It is incumbent upon us that we not only complete the tower project, but that we do so on time and on budget.”

The board of directors for the district will be asking the tower construction committee to undertake the following duties: 1) inspect tower and determine present condition; 2) review status/progress of hospital tower construction; 3) determine steps needed to complete hospital tower construction; 4) identify regulatory and legal requirements for completion; 5) determine realistic timeline for completion; 6) determine need for and identify through the RFP process potential vendors, contractors, consultants, etc. to assist with the project; 7) and ascertain all costs. The tower construction committee itself will include two members of the district’s board of directors and five additional members, including at least three with backgrounds in, public works construction, accounting, healthcare and/or hospital services.

Those qualified individuals interested in serving on the tower construction committee for the district may find more information and an application at www.tularelocalhealthcaredistrict.org.

History of delays

The tower was initially presented to voters as their attempt to expand its facilities in 2005. Phase I of the expansion promised construction of a 107,000-square foot tower south of the existing hospital building. This tower was designed to include a full basement and house an 11,000-square foot, 24-bed emergency department; a diagnostic department and associated equipment; a 16-bed obstetrics unit; four surgery suites; and 27 new private patient rooms.

Measure D, an $85 million bond, was passed by 83% of voters on Sept. 13, 2005, but 10 years later the tower was only 66% complete. The project’s failure prompted the Tulare County Grand Jury to launch a seven-month investigation into the “gross malfeasance” of taxpayer money. Titled “Tower of Shame,” the March 24, 2016 report disclosed that Tulare Regional Medical Center (TRMC) incurred 700 change orders on the project amounting to $17 million in additional costs. The district was also forced to pay $7.9 million to settle litigation with its contractor over the delamination of the concrete in the upper floors.

The grand jury also found that the board of directors “routinely circumvented” public disclosure of project expenditures including withholding information and financial data from the bond oversight committee between September 2007 and December 2015. The report added the board “failed to comprehend the issue of cost differential between the $85 million in bonds and the total cost of the project of $120 million.”

At the time, the project fell into the hands of Health Care Conglomerate Associates (HCCA), the private firm contracted for management services by the district. The hospital board trusted them implicitly with the tower’s completion, and initially, it looked as if HCCA was the answer to the district’s ailing finances and failing project.

In 2016, HCCA Chair Dr. Benny Benzeevi said the tower had come a long way since his private group of physicians, health care administrators and developers took over the project in 2014. In April 2014, HCCA hired Jack Stones to take over sole management of the tower project. Stones helped HCCA consolidate five separate construction plans for the tower and have been able to keep their building permits by using some of the profits and $3.5 million from the Tulare Hospital Foundation to keep construction going. The building was just a frame, but under HCCA had been completely enclosed, allowing interior construction to continue during one of the wettest years since the project began.

The district felt the only way to move forward was to finish the tower despite the bloating cost, and as a result HCCA led the charge to put Measure I on the 2014 ballot. The $55 million bond, projected to be enough to finish the tower, was resoundingly defeated by two-thirds of voters on Aug. 30, 2016.

On March 22, 2017 the district’s board passed a resolution authorizing HCCA to pursue a $79 million loan through the Federal Department of Housing and Urban Development’s “HUD Mortgage Insurance” program and to seek funding elsewhere to complete construction on the hospital’s medical tower.

Then, on June 20, 2017 the board authorized HCCA to seek a $22 million loan on a 3-2 vote, with Northcraft and Jamaica dissenting. The resolution stated the loan would be used for operating expenses, repayment of debt, construction on the tower and “other Hospital purposes” following the rejection of Measure I. However, once then board president Dr. Parmod Kumar was unseated in a recall election, the majority of the board shifted from those in favor of HCCA’s management to those who wanted to end the contract with Benzeevi’s firm, the $22 million loan was rescinded. On Oct. 9, 2017, the board voted to reject HCCA’s Management Services Agreement, which was approved by a judge later that month.

The move would serve the district well as the Tulare County District Attorney’s Office filed 40 felony and six misdemeanor charges against former HCCA executives including CEO Benzeevi of Visalia, CFO Alan Germany of Arizona, and counsel Bruce Greene of Los Angeles on Aug. 11 of this year.

To date the building shell of the tower is complete, as well as many of the items for the interior. Estimates for the completion of the project have ranged between $50 and $80 million, the variation of which depends largely on issues related to redesign and phasing of the tower’s occupancy. The tower is owned by and is the responsibility of the Tulare Local Health Care District.

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