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Public Letter Regarding College of the Redwoods Instructional Site

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Dear Editor,

I’m writing on behalf of the Healthcare District (SHCHD) Board to answer some questions I’ve heard about the plans to purchase College of the Redwood’s (CR’s) instructional site on Sprowl Creek Road. People have asked, given the School Board’s (SHUSD’s) recent decision, will we still be able to build our new hospital there. We’re confident the answer to that question is “yes”, and here’s why.

When the SHUSD sold the property to CR several years ago, their purchase agreement contained a provision which allowed them the option of buying it back if CR chose to sell it within the first 10 years. The price they would pay was CR’s purchase price plus what CR had invested in improvements within a specified number of years, less depreciation.

The School Board decided not to waive their option at this time, and our belief is that the majority of the board members voted as they did not to thwart the Healthcare District’s hospital plans but to help our community make the best use of this property for our long-term health and educational needs. Regrettably, no Healthcare District representatives were at the School Board meeting to answer their questions as they decided on the best course of action, so the School Board wisely decided not to take the irrevocable step of forfeiting their repurchase rights. Our Healthcare District representatives are taking steps to share information with School Board members about this important community issue.

Would it be prudent to wait until the cost of the property is reduced by scheduled depreciation? Has the Healthcare District offered to pay too much?

We’ve all heard the adage “time is money”. Hospital construction is especially expensive, and those costs generally go up by about 2% per year. The cost of the new facility is estimated in the neighborhood of $45 million, so every year of delay could mean additional costs of $900,000 or more.

Interest rates will also be a huge factor in overall costs. Right now interest rates are at a historic low, so we want to lock in an interest rate on a building loan application ASAP. This can’t happen until we’ve entered escrow on a building site. If a delay resulted in even slightly higher interest, it would raise our monthly payments by tens of thousands of dollars and our overall project cost by millions.

Where can the activities currently occurring at the CR site be housed in the future? The Healthcare District recognizes the importance of educational and cultural enrichment opportunities in overall community health, and we will do all we can to facilitate these activities, initially by allowing them to continue to rent space in the Sprowl Creek building, and eventually to move to our current Cedar Street location if any space there is not needed for healthcare needs. We see the Redwood Playhouse as a community treasure, both architecturally and culturally, and we are committed to maintaining it for the uses it currently serves and more.

There are many questions still to be answered, many planning decisions to be made, and many important choices on which we will be seeking community input in the coming months and years. All of us on the Healthcare District Board look forward to public forums and workshops beginning in early 2017 at which we can continue this conversation.

In the meantime, we welcome your questions and wish you all happy holidays!

SHCHD, Staff writer