In late January 2022, County staff were approached by facility leaders and board members of St. John's Retirement Village, a nonprofit public benefit corporation, with an opportunity to acquire their property located at 135 Woodland Avenue in Woodland. The property has operated as a retirement community which included assisted living and memory care. The property is located in north Woodland and bounded by Woodland Avenue to the south and N. Cleveland Street to the East. The property contains the retirement village (about 9.83 developed acres) and an adjacent undeveloped parcel to the north (3.68 acres). These parcels are APN 005-720-028 and APN 005-720-027. The undeveloped parcel (APN 005-720-027) has been utilized by Pacific Gas & Electric (PG&E) via a temporary easement for parking and storage, which PG&E is interested in extending through the end of 2022 for $2,000 per month. The developed parcel contains multiple buildings as listed below:
- 2 buildings with 16 apartments each
- 13 cottages (single & triple duplexes)
- 1 building with 32 apartments
- 1 building with 14 apartments
- 15,000 sq. ft. Skilled Nursing Facility
- 1 admin building with commercial kitchen
During early interactions, St. John's leadership indicated an interest in having either the County or Dignity Health acquire the property. Dignity Health only has an interest in the Adult Day Health Center expansion on the St. John's Campus, so the County engaged in purchase negotiations with the St. John's Board. Their interest for payment in exchange for the property is to cover their existing debt and finance the wind down costs not covered by decreasing revenue. These amounts total $2.9 million and this sum is the price the County has agreed to in a Letter of Intent that was executed on March 18, 2022, which includes a $400,000 advance through an Exclusive Negotiating Agreement and secured by a Deed of Trust that were approved by the Board on April 12, 2022. The Deed of Trust was recorded and the advance was subsequently paid to St. John's on April 15, 2022.
Leading into the April 12, 2022 meeting, the Board of Supervisors received an alternative proposal (on April 11th) for use for the property from a community group led by Stan Levers. This community group was made aware of the impending closure of the St. John's property and pertinent details in a meeting between the County and its representatives on February 19, 2022. We understand this group was in communication with the Board of St. John's throughout this period and submitted earlier versions of the proposal shared with the Board of Supervisors on April 11.
In approving the advance on April 12th, the Board of Supervisors requested that the St. John's Board review this alternative proposal prior to the presentation of this item. Discussion during the April 12 item indicated that if St. John's Board had an interest in the alternative proposal, the Board of Supervisors would pause the acquisition to allow reasonable time for full consideration and due diligence. Staff understands that immediately after the April 12 Board meeting, the St. John's Board invited the community group to submit their proposal along with a business plan and financial projections. After receiving and considering this proposal, the St. John's Board submitted a letter (Attachment D) dated April 21, 2022 stating, "After thorough review of the letter and documents submitted by Mr. Levers, the St. John’s board is confident in its conclusion that the sale and transfer of ownership to the County is the right decision."
However, St. John's requested that the Board continue the April 26 public hearing to allow time for consideration for a further proposal from Mr. Levers. An update will be provided at the public hearing regarding the status of the alternative proposal. Depending on the status of St. John's consideration of the alternative proposal, the Board may provide additional direction to staff and/or to St. John's as to whether to try and facilitate additional conversations with the community group or take other steps as directed by the Board.
It should be noted however that the County's reuse plan includes time-sensitive elements. One of the key deadlines is to apply for Housing Vouchers by June 1, 2022. In addition to this application deadline, units must be move-in ready within a limited time after application submission and any significant delays will reduce the likelihood of low-income senior housing on the property in the near future. This is the most significant deadline, but delays would also limit the ability to conclude any negotiations for potential leases of the property including the Adult Day Health Center space and commercial kitchen on the property.
Adoption of the attached Resolution (Attachment A) approving the purchase of the Property and authorizing execution of the attached Purchase and Sale Agreement in substantially the form provided (Attachment B) will require payment of the remaining $2.5 million purchase price, including a good faith deposit of $50,000. It is estimated that this amount is below market value, however, the timeframe of this purchase does not allow for an appraisal to be completed before closing. The improved value of the developed property in the County Assessor’s system is $13,367,281 and the undeveloped property has an assessed value of $138,052. Although the fair market value of the property is likely to exceed the proposed $2.9 million purchase price, St. John's is willing to sell to the County at this price to allow the County to proceed with the anticipated projects on the property that will provide a public benefit, including working with Dignity Health to continue the planned Adult Day Health Center and other services to support seniors and the community, while also providing sufficient funds for St. John's to pay off the 2012 loan secured by a deed of trust on the Property and wrap-up its current operations.
The Resolution approving purchase of the Property and the PSA also authorize approval of a license agreement that will allow St. John's, at no charge, to temporarily continue using one office in the main administration building and one cottage on the Property (Units #509 and #526) until December 1, 2022, as well as two storage units on the undeveloped parcel until June 1, 2023, while St. John's winds up the business.
A budget resolution is provided in Attachment C, which would authorize the appropriation and expenditure of the remaining $2.5 million purchase price. The funding proposed is from the County's American Rescue Plan (ARP) funds related to efforts for the County to address housing and homeless needs. The St. John's facility has a strong nexus to COVID-19 as this facility has shuttered in part due to the impacts of COVID-19 and in addition the ARP allows for investments that will further invest in health and in low-income housing. This project meets both of those as it will allow the Adult Day Health Center to proceed as well as further opportunities for low income housing for CalWORKS and seniors that otherwise would not be available. The project also aligns well with the Board's framework in that it is is a one-time cost that is expected to have a transformational impact. In consideration of these factors, staff recommend that ARP be used as the funding source. While ideally this item would come back with the broader ARP close-out plan, this purchase is time sensitive. Should the Board not be supportive of using ARP funds for the purchase of this property, the Board could direct staff to return with alternative funding sources. However, this purchase would consume significant amounts of Capital Improvement Reserves and Accumulated Capital Outlay funds that will limit future projects in the County's capital improvement plan.
Notice of the County's intention to purchase the St. John's Property was given in accordance with Sections 25350 and 6063 of the California Government Code. At the April 26, 2022 meeting, the Board continued the public hearing to May 10, 2022 at 9:00 a.m. pursuant to the request from St. John's to allow time for consideration of Mr. Lever's alternative proposal.
Staff have considered whether the commitment to pursue acquisition of the Property will have any environmental impacts for purposes of the California Environmental Quality Act (CEQA) and determined that the County’s proposed purchase of the Property will not have any effect on the environment. Ownership will change if the Board approves the purchase of the Property; however, no physical changes are proposed to the Property or authorized with the proposed purchase and the County is not committing to a particular course of action or project with respect to the use of the Property as part of the purchase. Therefore, it can be seen with certainty that there is no possibility of significant environmental effects and the purchase is not a "project" subject to CEQA and is further exempt under the CEQA Guidelines Section 15061(b)(3). While the County is considering potential uses as mentioned above, the full extent of the future use, design, and operations of the Property are still in development at this point, with the exception of the Adult Day Health Center already approved for use on the Property. Potential environmental impacts, if any, and applicability of any exemptions under CEQA will be evaluated at the time the Board of Supervisors considers establishing the specific use(s) or project(s) for the Property.