January 19, 1999

The Honorable Board of Supervisors
County of Los Angeles
383 Kenneth Hahn Hall of Administration
500 West Temple Street
Los Angeles, CA 90012

Dear Supervisors:

DIRECT SALE OF COUNTY REAL PROPERTY LOCATED AT
905 VENICE BOULEVARD, TO THE VENICE FAMILY CLINIC AND APPROVAL OF AMENDMENTS TO THE PUBLIC/PRIVATE PARTNERSHIP PROGRAM AGREEMENT AND THE HEALTHY FAMILIES PROGRAM AGREEMENT
(THIRD DISTRICT) (3 VOTES)

JOINT RECOMMENDATION WITH THE DIRECTOR OF HEALTH SERVICES THAT YOUR BOARD:

1. Approve the Purchase and Sale Agreement to sell County real property located at 905 Venice Boulevard, Venice as legally described in Exhibit A of said Agreement, and all equipment and furniture therein, to the Venice Family Clinic (VFC) for $130,000.

2. Find that the property is not needed for County purposes and that sale of the property to the VFC is in the interests of the County and the general public.

3. Find that the sale of this property is categorically exempt under Class 12 of the California Environmental Quality Act (CEQA) guidelines.

4. Instruct the Chairman to execute the deed when approved as to form by County Counsel.

5. Authorize the Chief Administrative Officer or his designee to execute the Purchase and Sale Agreement and to take such other steps as necessary to document and complete this transaction.

6. Instruct the Auditor-Controller to deposit the sale proceeds into the Asset Development Implementation Fund.

7. Approve and instruct the Director of Health Services, or his designee, to sign Public/Private Partnership Program Amendment No. 70350-6, substantially similar to Exhibit I, with the VFC, effective concurrently with the close of escrow, through June 30, 2000.

8. Approve and instruct the Director of Health Services, or his designee, to sign Healthy Families Program Amendment No. H-207198-1, substantially similar to Exhibit II, with the VFC, effective concurrently with the close of escrow, through June 30, 2000.

PURPOSE OF RECOMMENDED ACTION

The central purpose of the recommended actions is to consummate a direct sale of the County-owned Venice Health Center located at 905 Venice Boulevard, Venice, including all equipment and furniture therein, to the VFC. The subject property contains a land area of 15,428 square feet (.3542 acre) and is improved with a one-story medical clinic building of approximately 3,200 gross square feet constructed in 1961. The recommended actions also modify the County's current contractual relationship with the VFC to reflect their new ownership of the health center in the following manner:

-- Public/Private Partnership (PPP) Program Agreement No. 70350 for primary care services at a County-owned health center is amended to provide for the same services at a privately-owned health center; and

-- Healthy Families Program (HFP) Agreement No. H-207198 for primary care services is amended to delete a "co-terminus" provision which ties the term of the HFP Agreement to the PPP Agreement, thereby allowing the HFP Agreement to continue in full force and effect.

JUSTIFICATION

Since 1995, the VFC has occupied the County-owned Venice Health Center located at 905 Venice Boulevard, Venice, and has been providing health care services to people of low income and/or with no health insurance under the PPP Program. On August 12, 1997, in addition to other actions taken with regard to the health center, your Board instructed the Director of Health Services and Chief Administrative Officer to explore the feasibility of selling the health center to VFC in lieu of renewing their occupancy under the PPP Agreement which expires on June 30, 2000.

Accordingly, a fair market appraisal was commissioned from an independent appraiser, Lea and Associates, and negotiations with VFC have been undertaken resulting in the recommendations presented herein. VFC has indicated that their ownership of the health center is a requirement to qualify for additional grant funding to pay for renovation of the facility and construction of a 1,000 square foot addition at an estimated cost of $400,000.
This renovation and facility expansion will enable VFC to expand patient care by 15 percent, from the current 10,400 patient visits per year to 12,000 annual patient visits.

FISCAL IMPACT

The sales price of $130,000 is based on a discounted fair market value as determined by the independent appraiser, reflecting a deed restriction in the County's conveyance of the property to VFC which will limit the use of the property for health and health-related services. The full unrestricted fair market value is $265,000 as of October 1997.

FINANCING

This proposed sale is an all cash transaction to be paid to the County by VFC upon the close of escrow. The net proceeds from the sale will be deposited to the Asset Development Implementation Fund.

FACTS AND PROVISIONS/LEGAL REQUIREMENTS

The property is being sold in an "As Is" condition. Use of the property is restricted to the provision of health and health-related services open and available to all residents of Los Angeles County. In the event the restriction is violated, your Board, in its sole discretion, may exercise its right to have the ownership of the property revert back to the County. In such an event, the County would be obligated to reimburse VFC for the depreciated value of capital improvements and renovations, not to exceed VFC's initial capital investment of $400,000, based on a 25 year straight line depreciation. The purchase price of $130,000 is not subject to reimbursement. Should VFC, at any time, decide to sell the property, the County will receive as additional consideration 50 percent of any net profits from the sale. The restriction on use of the property for health and health-related services open and available to all residents of Los Angeles County would remain regardless of VFC's sale of the property, unless your Board determines otherwise.

The sale and transfer of this property to VFC is being made under the authority of California Government Code Section 26227. County Counsel has approved the Purchase and Sale Agreement as to form.

CONTRACTING PROCESS

The proposed sale of the subject property makes the current PPP Agreement, a part of the Five-Year Medicaid Demonstration Project, no longer applicable relative to County space, equipment, and furniture use conditions. As such, we are recommending your Board's approval of Amendment No. 70350-6 to remove these provisions (Exhibit I). In addition, we are recommending the related HFP Amendment No. H-207198-1 (Exhibit II), so that the term of the HFP Agreement is no longer linked to the term of the PPP Agreement and may continue uninterrupted through June 30, 2000. Both Exhibits I and II have been approved as to use and form by County Counsel. Neither Exhibit has been posted on the Office of Small Business' Countywide Web Site, since it is not appropriate to advertise contract amendments.

IMPACT ON CURRENT SERVICES (OR PROJECTS)

Sale of the subject property will enable VFC to obtain grant funding to make needed facilityrenovations and to construct a 1,000 square foot building addition. These capital improvements will facilitate expanding patient care by fifteen percent from the current 10,400 annual patient visits to an anticipated 12,000 patient visits per year.

NEGATIVE DECLARATION/ENVIRONMENTAL IMPACT REPORT

The sale of this property is categorically exempt under Class 12 of the CEQA guidelines.

CONCLUSION

The Executive Officer/Clerk of the Board is requested to return to the Chief Administrative Office, a copy of this Board letter stamped adopted and the original of all documents submitted for execution by the Chairman.

Respectfully submitted,

DAVID E. JANSSEN MARK FINUCANE
Chief Administrative Officer Director of Health Services

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Attachments (4)

c: County Counsel

Auditor Controller