DATE: June 14, 2016
TO: Mayor and Council
FROM: City Manager
SUBJECT
Request for Approval to Petition LAFCo for the Dissolution of the Eden Township Healthcare District
RECOMMENDATION
That Council approves the attached Resolution authorizing the City Manager to make application to the Local Agency Formation Commission (LAFCo) asking the Commission to consider the question of the possible dissolution of the Eden Township Healthcare District
SUMMARY
The Eden Township Healthcare District (ETHD) was formed by the voters in 1948 under the State's Local Healthcare District Act. Their purpose was to build and operate Eden Hospital in Castro Valley: the hospital opened its doors for the first time in 1954. The District owned and operated the hospital until 1986, when it acquired Laurel Grove Hospital and the two hospitals were integrated to create Eden Medical Center (EMC). ETHD no longer operates any hospital or other direct-service facility. It has not levied taxes since 1977. Their only source of revenue is from lease/rental income from owned office buildings. Their offices are located at 20400 Lake Chabot Road, Suite 104 in Castro Valley.
In 1998, ETHD transferred substantially all of the net operating assets and operations of Eden Hospital to Sutter Health, a California nonprofit corporation. The relationship did not progress well and resulted in a lawsuit by EMC against Sutter, which they eventually lost resulting in a $19,673,353 judgement against EMC, including damages claim, court costs, fees, and pre-judgement interest.
In recent years, ETHD has made some annual grants to non-profit agencies in the District involved in or supporting healthcare, including hospitals. The grants were funded by revenue from lease/rent income from office buildings owned by the District. A question has arisen by jurisdictions within the ETHD as to whether or not the District continued to have a viable purpose as a Special District, with a separate administration ...
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