Palomar Pomerado Health could lose $2 million of public money if the city of Escondido doesn’t fulfill an offer to allow the health network to build a $531 million hospital in the Escondido Research and Technology Center.
The public health system’s board members voted to take a gamble on the council last week as they agreed to purchase 52 improperly zoned acres in the research park.
The board , and the public , lose the $2 million to the land’s owner, Jamie McCann of JRMC Real Estate, if the health system doesn’t meet escrow by February.
Stakes are high for the city, too.
Temporary Mayor Ed Gallo said even with the 1,700 new jobs health system officials say the hospital would bring, Escondido will lose the potential to gain at least 2,000 jobs if it is built within the 200-acre park the city designated last year for high-tech businesses.
The research and technical park sits to the south of Route 78 and to the west of Interstate 15. It is bordered by Wineridge Business Park on the east. Some council members are also concerned about lost potential for property and sales tax in the park and a loss of business for downtown merchants if the hospital there moves employees to the park.
Palomar Pomerado’s new 530-plus bed hospital is to be the flagship of the system, which serves more than 500,000 residents in inland North County. It will be the jewel of a $753 million expansion to be completed by 2012, said the system’s spokesman, Gustavo Friederichsen. The hospital would bring medical, administrative, maintenance and transportation jobs, he said.
Officials at the health system, which serves an 850-square mile area, say it needs to expand and remodel largely because of a growing, aging population and the need to meet building standards for earthquakes.
Jo Ann Case, Escondido’s economic development manager, said the purpose of the research and technology park was to diversify the sort of jobs the city offers by attracting more high-tech positions.
“A lot of residents leave the city to take jobs like those,” Case said. She said the park is intended for technology companies, which tend to prefer to locate in clusters. It is not limited to biotech startups.
The Escondido Planning Division said about 89 of the 200 acres in the park are developable. The rest pose problems because of poor drainage, sloped land or power lines. Since the hospital would locate on 52 of the 89 suitable acres, city officials say it would leave only 37 acres for high-tech companies.
The city initially estimated the whole area could have attracted 4,000 high-tech jobs, Gallo said. Now, its estimates indicate it may only be able to garner about 300 such jobs with the land that is left.
“The parcels that are left are smaller and are not going to be conducive to large companies with lots of jobs coming in,” Gallo said.
Gallo said he and others are concerned about the property and sales tax revenue potential Escondido won’t get if the hospital builds in the park. He said the city is estimating the amount of money Escondido stands to lose.
Divided over the hospital location for nearly a year, the five-person council set aside differences in recent weeks and made an informal offer to allow it to locate in the park if the health system pays more than $20 million for infrastructure costs, including roads. City officials estimated the infrastructure costs. The city has said another option for the hospital is to expand at its current site downtown, but hospital officials have said there’s not enough room.
The system’s board of directors voted last week at a special meeting to purchase the 52 acres. The cost of the land alone is $28 million, health system spokesman Andy Hoang said. But if the city doesn’t agree to change the land’s zoning, Palomar Pomerado will lose the $2 million if it doesn’t complete escrow with McCann by February. The $2 million would be paid for with money from hospital revenues, health system Chief Financial Officer Bob Hemker said.
Only one of seven board members, Linda Greer, voted not to buy the land just yet. Greer, a registered nurse, said she opposed the purchase because she wanted more information about water runoff problems on the site and a formal commitment from the city about zoning.
“Two million dollars is too big of a gamble,” Greer told her fellow board members at the Aug. 30 meeting held at Pomerado Hospital in Poway.
Board members said they staunchly believe that the money from Proposition BB, a $496 million bond measure approved by voters in November, should be used only for costs directly related to the expansion, and they voted to make a counteroffer to the council of $7 million for infrastructure. The measure was the largest local health care bond passed in state history, Hoang said.
“This idea of us picking up other city costs we’re not other city developers,” health board member Ted Kleiter said at the special meeting. “We’re there to provide hospital and health care services to the public.”
The expansion includes the new 530-plus bed hospital, expansion of Pomerado Hospital in Poway from 107 beds to more than 200, and a more than $70 million redesign of the medical center in downtown Escondido.
The downtown hospital will transition from an acute care hospital to a facility that will provide physical rehabilitation, urgent care, behavioral medicine, administrative offices and some commercial space. The health system also wants to spend $10 million to create three satellite medical centers.
The money for the expansion not covered by the proposition will be paid from revenue bonds, cash reserves and philanthropy efforts, health system officials said.
The Palomar Pomerado board also continues to consider a likely more expensive, 86-acre site at Craven Road and Discovery Street in San Marcos, though the board has said it prefers to expand in Escondido.
Gallo said he is concerned that moving some hospital employees from downtown to the research park will hurt downtown businesses. But Friederichsen said more administrative personnel would be located downtown, and that they are more likely to leave the hospital for lunch hour purchases.
“Downtown Escondido would see an influx of business,” Friederichsen said. “Management would tend to be outside more than doctors and nurses.”
Board President Marcelo Rivera said last week he wants the City Council to consider rezoning for the research and technology park site at its next possible meeting.
“Until we get this rezoning, we have nothing,” Rivera said.