by Garth Meyer
Beach Cities Health District has taken another step toward redevelopment of its 11-acre campus in Redondo Beach, signing a March 19 letter of intent with Sunrise Senior Living, after a previous letter with another party failed to result in a deal.
The public health district sought requests for proposals last fall for half of the campus land.
Sunrise, based in Oakton, Virginia, was the second choice on a top-three list. The first was Mar Ventures/Continental Development Corp. (El Segundo).
Both proposed to tear down the former South Bay Hospital and, on its ground-level parking lot to the north, build a 217-unit assisted living building, public (green) space, a walking loop and a potential pool.
Mar Ventures/Continental would have also added a new medical office building, and a new building to house Silverado, the memory-care operation now part of the old hospital.
The plan, however, fell through in negotiations and BCHD turned to Sunrise instead.
If a ground lease is reached with them, Silverado would be given a one-year notice to vacate the campus.
Final details for the Sunrise plan have yet to be disclosed. They are scheduled to be presented to the BCHD board at the end of May.
Last November, the board authorized a letter of intent with a group of four operators, led by Mar Ventures/Continental, for their more extensive campus proposal.
“We’re thinking (the Sunrise plan) will have less impacts, with no new medical building thus less traffic, fewer vehicle trips,” said Tom Bakaly, BCHD chief executive.
Sunrise also promised more rent than Mar Ventures.
“The numbers (Mar Ventures) were proposing were not what they’d shown in the November letter,” Bakaly said. “We go t to an impasse. The complexity of the four partners involved was extending the length it was going to take to build this project, which meant more construction impacts; fewer dollars sooner. I decided then to begin negotiations with Sunrise.”
Sunrise is “a much simpler project,” Bakaly said.
It would be built in the center of the hilltop campus, away from the edges.
In years past, BCHD proposals to redevelop the land featured buildings on the perimeter.
This was before the 1960 hospital was deemed as an imminent tear-down. Earlier this decade, the idea was that the building would remain open at the center of the campus, bringing in revenue from tenants, while construction of the Healthy Living Campus could go on at the outskirts. Then the hospital would come down.
“As time stretched on, the board said ‘We need to get out of the hospital building (now),’” Bakaly said.
“So we bit the bullet, we had to reduce programs, that then allowed us to bring this development to where the community wants it, which is back to the center of the campus.”
The new project is slated to have a parking buffer around the campus’ edges, with a courtyard pool in the middle of the new assisted-living complex.
“Neighbors on Prospect Avenue will no longer be looking at the large hospital, they’ll be looking at green space,” Bakaly said.
A community space/commons would go where the former hospital is now.
The original letter of intent for Mar Ventures/Continental meant up to $9 million in rent for BCHD in the first 10 years of the deal. Sunrise proposed $7.5 million.
“(Mar Ventures’) dropped that down to $6 million and Sunrise did not change,” Bakaly said.
Mar Venture’s medical office building would have been 60 feet high. Today, the tallest structure on campus is 76 feet – the very top of the hospital.
“Mar Ventures/Continental was backing off a pool. Sunrise was more certain about a pool,” Bakaly said.
Whatever may be built will need a conditional use permit approved by the Redondo Beach city council.
BCHD has previously made these kind of ground lease agreements for 54 years with campus tenants, drawing revenue for the health district’s programs and services.
Public input
During public comments at a March 25 BCHD board meeting, Redondo Beach Planning Commissioner Sheila Lamb said, “Community space and programs are described as ‘if feasible’ which translates as ‘optional.’ Unless community benefits are clearly defined and required, they are likely to be reduced or eliminated by financial pressures.”
“What due diligence has been done about Sunrise …?” she continued, talking about potential “reputational damage” to BCHD.
Loren Shook, CEO/co-founder of Silverado gave his input.
“Not all memory care is the same… we are the go-to for the most complex cases… Removing Silverado is not replacing a building, it is removing a level of care that this community depends on.”
He opposed the current direction to choose Sunrise.
“(Patients) will not land in equivalent care. They will end up in inferior care and they will wind up in the emergency rooms,” he said.
An emergency physician then spoke, Dr. Michelle Charfen, the daughter of a Silverado resident.
“You don’t see them readmitting (patients to the hospital) from Silverado,” she said, in advising the board to go back to Continental/Mar Ventures.
Charfen’s husband, former Redondo Beach City Councilman Christian Horvath also spoke.
After complimenting Bakaly for his dedication since the effort to re-develop the campus began in earnest in 2017, Horvath surmised that the CEO was now put “in a situation that you are feeling rushed.”
“I see a lot of meticulous requests on the Continental/Mar Ventures side that are necessary to make sure this is a great project, not just a get-it-over-the-finish-line in the correct amount of time.”
“… I would implore you to got back to the table and try to re-work something before you go with Sunrise,” Horvath said.
A neighbor to the campus on Prospect Avenue spoke.
“Personally, I don’t have the feeling that you are listening to the community,” he said to Bakaly and the BCHD board.
Mark Nelson, leader of the grass-roots STOPBCHD group, which has opposed previous plans to re-develop the campus, said, “Ground lease is going to require more than bubble diagrams,” referring to general drawings shown at the meeting for the Sunrise plan. “The facts are all non-binding here.”
A representative from Mar Ventures spoke, Lionel Uhry, chief executive.
“… A lot of thoughtful negotiations in good faith,” he said. “Our proposal included a 40,000 to 50,000 square foot, brand new, state of the art medical facility with Torrance Memorial Hospital … It’s a little bit of a shame that maybe that facility won’t be able to be provided to the community,” he said.
Then Jennifer Aust spoke. She is the daughter of former Redondo Beach Fire Chief, and former city councilman Pat Aust, who is now a Silverado resident.
“I have such a sense of relief because they do love their people, they love each other,” she said, noting that Silverado is divided into four floors, based on cognitive abilities.
BCHD Boardmember Noel Lee Chun said, “See if we can work it out” with Mar Ventures.
Board President Jane Diehl said, “Silverado has been a wonderful partner.”
Bakaly noted that the final proposal with Mar Ventures/Continental had almost $3 million “flipped” in the first 10 years, adding up to $23.8 million over a 99-year lease.
“That’s a change from what you saw in November,” he said. “That’s the financial difference.”
Boardmember Diehl asked, “Is there a possibility for Mar Ventures to come back?”
“A possibility… anything is possible…” Bakaly said. “I tried for three months to make it work…”
Boardmember Dr. Martha Koo said, “It wasn’t just a financial decision. It felt like things kept changing. Some of it was money; who was sharing expenses, to ‘was there a pool or not?”
As is now planned with Sunrise, a pool would be built, open to the public through classes run by BCHD’s Center for Health and Fitness.
Boardmember Vanessa Poster asked about trees and permeable pavement.
The overall project area, whoever may develop it, represents just under half of the BCHD campus, shaping the post-hospital era of the land.
“The public input is obviously important and something we’re considering,” Bakaly said. “Our plan is (still) to return with a lease agreement with Sunrise at the May meeting.”
A ground lease means the land remains owned by the public.
Financial pictures
If Silverado, which has operated at the BCHD campus since 2007, has to leave, the $900,000 final year’s rent would be waived.
“We are proud of our partnership with Silverado over the 19 years, and will continue to collaborate closely during this transition,” Bakaly said. “Residents and their families will have a year to explore their options, and our Community Services team will be available to support residents through the process and serve as a resource for families.”
If the Mar Ventures/Continental plan had gone through, Silverado – one of the four partners on the plan – would have built a new building on the campus.
The overall aim of BCHD campus re-development is to create new lease revenue, which the district will be losing when the old hospital is torn down.
BCHD, until recently, received $1.3 million per year in net revenue from leases within the building. The number has decreased as some tenants have left and expenses rose.
BCHD took in as much as $2.5 million per year nine years ago.
The district proposed a $30 million bond in 2024, which voters denied.
Since then, BCHD regrouped.
“We’ve addressed that gap,” Bakaly said at the March 25 board meeting. “We’ve made reductions, scaled down the (re-development) project and the allcove youth health building to come is (not as high-end).”
The proposed building in the Sunrise plan (as it was for Mar Ventures) has an average lower height too – 60 feet. An Environmental Impact Report was certified in 2021 for a larger version of a “Healthy Living Campus,” at 80 feet.
“Shorter construction and less traffic,” Bakaly said of what stands to be built today.
The Floor Area Ratio would be .84, “for the whole campus, for this proposal,” he said.
As for Silverado needing to leave, “That’s a hard conversation,” the CEO said. “I’m not going to sugarcoat it… They’ve been a great partner of ours, for a generation.”
Sunrise at the BCHD campus would be completed in 2029.
The demolition of the hospital is set for fall 2027, with Sunrise to pay for it, as part of the non-binding letter of intent.
“Any day it takes longer to move Silverado out of this building is a day too long,” Bakaly said of seismic concerns. “The studies speak for themselves. Seismic experts have advised us to take the building down.”
Is it really possible that the Mar Ventures deal could come back?
“I don’t know that we would go back to Mar. We might have go to our third option, Nexcore,” Bakaly said.
Is he happy with where things are now, after the bond failed?
“In general, we’re implementing the vision for the campus… before it was to be two components… (now) we’re doing it all at once.”
In the next year, the BCHD Center for Health and Fitness is set to move to the 510 building on campus, allcove will be built (newly-funded by grant money), and the whole hospital vacated, including Silverado.
“All within a year,” Bakaly said.
“Because the bond failed, we’re not going to have as much open space, and as nice of an alcove building.”
“We are happy with where it’s wound up. We’re accomplishing 88% of what we were hoping to in the master plan, and we think that’s a success,” Bakaly said.
The master plan had more open space, a pool, and a more refined alcove building.
The difference in construction time is “shorter by at least five years,” Bakaly said.
Post-bond actions
The CEO detailed the changes to Easy Reader that were made after the bond failed, which were; shifting school contributions from BCHD funds to allcove funds; not filling some vacated employees positions, though no layoffs have occurred; and not issuing new grants.
Bakaly said that Silverado has been aware of the hospital’s planned teardown for some time.
(Silverado has other locations in the South Bay and greater Los Angeles).
BCHD will hold a half-day strategic planning meeting May 8, to include concepts and ideas for the community space for the campus to come, including indoor and outdoor space, and the pool.
Both Mar Ventures/Continental’s and Sunrise designs followed parameters shaped by previous community feedback on density, building height, open space and accessibility.
In 2021, a more extensive BCHD plan to develop the campus was tentatively agreed upon with PMB of Solana Beach.
BCHD’s Center for Health and Fitness was going to move off-campus while the hospital was torn down. The Center would later return to the campus in a new building.
The Center for Health and Fitness gym will now move from its present location in the hospital to the top floor of the adjacent 510 Prospect Avenue building.
“Sunrise Senior Living is proud to have partnered with Beach Cities Health District for more than 25 years, and we’re excited to continue building on that strong foundation,” said Philip Kroskin, Sunrise head of real estate. “Together, we share a commitment to supporting healthier, more connected communities, and we look forward to expanding through a thoughtfully designed environment that supports senior wellness and engagement.”
The Mar Ventures/Continental project would have included the assisted living building, by Merrill Gardens Senior Living (Seattle), the new Silverado building and the medical office building, likely a partnership with Torrance Memorial Hospital.
In the end, Bakaly emphasizes that, “We believe that the Sunrise plan has fewer construction impacts using existing buildings, and because we’ve made cuts, we have the building in the center (of the campus),” he said.
“Because there will be no new medical office building, the project will have less impacts in the way of traffic and parking.”
As for the hospital, that is first and foremost.
“This is a building that is now 66 years old, due to its seismic construction, we need to be out of that building,” Bakaly said. “That is of extreme importance to us.” ER
