By Kathleen Acuff
Next week, El Camino Hospital officials will weigh the costs of delaying work on a new acute-care facility by as much as a year or plunging ahead in the hope of escaping the legal snares that have held them back for the past 14 months.
The difference could amount to $50 million above the $480 million officials last week said the project totals. More important for quality of care for local residents, hospital directors’ choice could mean the difference between a fully code-compliant 240-bed hospital and a marginally compliant 114-bed facility.
The wear and tear on the construction project began Jan. 26, 2005, when Saratoga resident Aaron Katz, who owns condominiums in Mountain View, challenged the legality of the hospital district’s November 2003 bond election. He asserted that only owners of property in the district - regardless of where they live - should have been allowed to vote. Voters had overwhelmingly approved $148 million in general obligation bonds to help pay for a new hospital, but those bonds cannot be issued until the lawsuit is resolved.
While the case is in the Court of Appeals, time is running out for the publicly funded parts of the hospital plan. Those projects must be rebid - at higher rates - if resolution is not reached by May 10.
Meanwhile, costs have sprinted past $450 million - with contingency expenses, they already total $480 million. The total could reach $530 million if the lawsuit lumbers to a halt by the end of the year. Officials say the suit has cost the hospital $4.3 million so far. The time and expense have gone toward determining whether the suit’s initiation date was within the time limit for filing. The case has yet to be tried on its merits, and hospital officials said closure could be three years in the future.
CFO and interim CEO Marla Gularte said Thursday, “We can go to court or settle privately, and we are moving down both paths.”
She added, however, that hospital officials would prefer not to set a precedent. At any rate, she said, Katz is not interested in a settlement.
“Katz isn’t suing for damages,” Gularte said. “He wants the bonds declared illegal.”
Several members of the hospital’s construction advisory committee Thursday urged hospital administrators and directors to “get on with it” and “do everything you can to get rid of Katz.”
Facilities Director Ken King does not recommend proceeding before the general obligation bonds are issued. “We could be forced to start over anyway,” he said.
The next steps for the hospital are to resolve the lawsuit, sell the general obligation bonds and get approval from the board of directors to proceed.
King said the ideal process would begin with resolution of the Katz lawsuit by May 1, immediately after which the hospital would sell the bonds. Then the board of directors would approve a $480 million budget and construction would begin. If all that occurs this spring, the new hospital could be ready for operation by July 1, 2009, King said. The north addition and demolition of the old hospital could be completed by December 2010.
Advisory committee members Thursday described planning for the many projects for the campus renovation as methodical and thorough. Under King’s management, the parking garage was completed below budget, and the New Oak Pavilion, which houses the dialysis center and some administrative offices, came in on budget.
Hospital directors will consider their options in their 5:30 p.m. April 5 meeting in the rear of the basement cafeteria.
