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Why Do Valley Hospital Earthquake Bonds Keep Failing With Voters?

Jun 27, 2017

On January 17th, 1994 before the sun even rose, the peace of a Los Angeles morning was broken when the ground began to quake. The 6.6 magnitude quake would soon become known as the Northridge Earthquake.

When the dust settled, 57 people were dead and tens of billions of dollars in damage occurred. Among the most important buildings crippled were 11 hospitals that were either damaged or rendered inoperable because of the quake.

That earthquake spurred the legislature to act and require every acute care hospital, regardless of their seismic risk, to be able to withstand a major earthquake. The deadline to meet the state law is 2030, which is not that far away when construction can take years. Now more than two decades after the passage of the law, many hospitals in Central California are still struggling to raise the money necessary to do expensive expansions or retrofits.

Many of the biggest hospitals in the area, Mercy Hospital in Bakersfield and Community Regional and St. Agnes in Fresno, have buildings that need improvements to withstand a major quake. However, unlike public hospitals, they do not need to seek the approval of voters to issue bond debt.

Tulare Regional Medical Center's unfinished tower
Credit Jeffrey Hess/KVPR

In the last 14 months, three public hospitals in Central California: Kaweah Delta, Tulare Regional and Kern Valley, have all sought public support for a bond for earthquake improvements and all have been soundly rejected by voters.

Gary Herbst the Chief Financial Officer of Kaweah Delta Hospital in Visalia says they have considered every option including trying to retrofit the 50-year-old section of the hospital called “Mineral King.”

“Each floor would have to be gutted. And again, they would be literally driving iron pillars through the hospital. You can almost visualize as you are pushing gurneys through the hall you are having to duck,” Herbst says.

Herbst says that kind of construction would be completely impractical.

However, building a new earthquake compliant wing to replace Mineral King would cost more than a half a billion dollars.

So the hospital went that route and asked the public to approve a $327 million bond last May to help fund construction of a new wing.

They lost with just 42% support, far short of what they needed. But the need to improve their buildings remains.

“We have to find a way to replace those beds. This community is depending on us to be here to take care of them. To provide the health care they have come to expect,” Herbst says.

Credit Jeffrey Hess/KVPR

After voters rejected the proposal so thoroughly, Herbst says they have had to return to the drawing board with no clear path forward. But the failure of the bond has not reset the deadline to meet the decades-old state law.

That is a big reason why so many hospitals are going to voters now to get this expensive and complicated work underway. Waiting, say hospital CEOs, pushes them ever closer to being shut down by the state for non-compliance.

Earlier this month, Kern Valley Hospital lost a $32 million dollar bond vote on its third attempt to secure community funding for new construction and retrofitting of the existing structures. That money would have triggered funding from the federal government to complete the work for the small rural hospital.

CEO Tim McGlew says it doesn’t matter what the reason is, the bottom line is the work has to be done or it’s curtains for his hospital, which provides critical care in the Lake Isabella area.

"I think there is also a great anti-establishment wave going through the country right now," Benny Benzeevi, Tulare Regional Medical Center

“My biggest frustration has been the fact that the [state] government never provided any funds to make this happen. There were no new reimbursement streams to allow hospitals to begin saving for this. There were no monies that were set aside. It was an unfunded mandate,” McGlew says.

Compounding the problem is the fact these hospitals have to win their vote with nearly 67% percent approval. That’s a monster climb for any issue, let alone one where they are asking people to willingly agree to tax themselves.

“School districts only have to get 55% of the vote to get a bond passed. Hospitals and everyone else have to get 67%. So this has been a pretty tall order,” McGlew says.

Credit Kern Valley Hospital Website

McGlew says factoring in the high poverty rates in the area coupled with a strong anti-tax bent and he sees little chance of the bond passing, especially since residents seem to believe the state will simply extend the deadline.

‘Don’t count on that’ says the Office of Statewide Planning and Development, or OSHPD, which oversees the hospital’s compliance.

In an email, a spokesman says there is no mechanism to extend the deadline and no provision for the state to come in and takeover. It’s fix or build a new hospital or else.

So with no state bailout likely, it’s all on the local community to come up with the money.

But Tulare Regional Medical Center CEO Benny Benzeevi says the community doesn’t seem all that inclined to see it that way.

“I think there is also a great anti-establishment wave going through the country right now. And I think that is affecting these bonds as well. It’s unfortunate because people don’t wait to get sick. So we can’t wait until the wave passes to build a hospital. We need to build a hospital now,” Benzeevi says.

Tulare Regional is the third hospital in the valley to have an earthquake proofing bond fail. Last August, they sought $55 million dollars to complete a long-stalled hospital tower. The proposal went down to a stunning defeat with 66% of voters opposed.

Benzeevi says if they can’t get a bond through their only option will be to seek a hard to acquire loan, which he says would be expensive compared to a bond.

“It is inevitable that at some point the community will have to carry some of the cost. That is why it is a community hospital. The loan would be great but that creates an undue burden for the hospital. And so, instead of using the money we would use for loan payments for more and better services, we would have to use that money from loan repayment,” Benzeevi says.

All three hospitals say they have, or are considering, turning to the legislature for special exemptions or to lower the vote threshold. But all three also admit that that is an unlikely outcome.

But in the meantime, they are watching the months and years tick by and sounding increasingly urgent alarms to a public that appears to have little interest in listening.