Hold public hearing, adopt a resolution approving the purchase of the St. John's Retirement Village property located at 135 Woodland Avenue, Woodland, CA (APNs  005-720-028-000 and 005-720-027-000), and approve various additional actions related to the purchase of the Property, including execution of a purchase and sale agreement in substantially the form provided, adoption of a budget resolution to utilize American Rescue Plan funds for the acquisition of property in the total remaining amount of $2,500,000, and adoption of a Notice of Exemption pursuant to the California Environmental Quality Act based on CEQA Guidelines Sections 15061(b)(3), 15301, 15302, and 15322. (No general fund impact) (4/5 vote required) (Rinde/Hood)

Background
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 construction 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 agreed to, subject to approval of a final purchase and sale agreement by the Board of Supervisors, in a Letter of Intent that was executed on March 18, 2022.  The $2.9 million purchase price 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.

Alternative Proposal/Lawsuit
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 11th.

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 26th public hearing to allow time for consideration for a further proposal from Mr. Levers.  St. Johns' provided additional time for the group to submit proposals through May 3rd and the County's understanding is that, on or about May 5th, the St. John's Board communicated their rejection of this proposal. On May 6, 2022, a lawsuit was filed by a member of the St. John's board of directors, naming board members of St. John's Board and the County as defendants and pursuing both an injunction against the purchase of Property and alleging board members of St. John's had not performed their fiduciary duties with respect to their decisions around this community proposal (Turner v. St. Johns Retirement Village, et al., Yolo County Superior Court Case No. CV2022-0723) ("Lawsuit"). 

At the recommendation of County Counsel, the County Board of Supervisors directed staff to revise the purchase and sale agreement to reflect the pending litigation, adjusting timeframes for closing and including appropriate conditions to ensure resolution of litigation and any other outstanding issues to satisfaction of County.  The Board further continued the public hearing to its May 24th meeting for final consideration of a revised purchase and sale agreement and any related matters, including consideration of a budget resolution and CEQA documentation, as well as further review of a draft reuse plan. The key amendments to these documents are as follows to address risks to the County of the pending litigation: 

• Added as a condition of the County that the Lawsuit must be dismissed with prejudice prior to closing or resolved to the satisfaction of County in County’s sole and absolute discretion. 
• Reduced the good faith deposit to $20,000 (previously $50,000) to account for the delay with the Lawsuit and limit the amount the County may have to try and have refunded if the deal falls through as a result of the Lawuit; however, the total purchase remains the same: $2.9 million total, including the $400,000 advance and $20,000 good faith deposit.
• Revised the due diligence period and closing date -  In prior drafts, the due diligence was set to expire on May 2, 2022 and closing was set to occur on or about May 15, 2022.  The due diligence will now expire 15 days after the effective date of the purchase and sale agreement (on or about June 9, 2022) and the closing is set to occur within five (5) business days after the satisfaction or waiver of the conditions precedent (including the condition noted above requiring dismissal or resolution of the Lawsuit to the County's satisfaction).
• Added an outside closing date of September 30, 2022, which allows the County to terminate the agreement if the closing cannot occur by September 30th due to the Lawsuit.  The parties, however, may agree to extend that outside closing date.

Timing

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 (to the extent Dignity may seek modifications of the existing lease) and commercial kitchen on the property. 

Recommended Action
Adoption of the attached Resolution (Attachment A) approving the purchase of the Property and authorizing execution of the attached Purchase and Sale Agreement (PSA) in the form provided (Attachment B) will require payment of the remaining $2.5 million purchase price, including a good faith deposit of $20,000.  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. 

CEQA

Staff have thoroughly evaluated whether the commitment to pursue acquisition of the Property and related actions, including repair work, minor renovations, and operation of 32 units of low-income senior housing, will have any environmental impacts for purposes of the California Environmental Quality Act (CEQA). A full analysis of CEQA compliance is set forth in Attachment F. As determined therein, the acquisition and related actions comprising the "Project" for CEQA purposes are exempt pursuant to CEQA Guidelines Sections 15061(b)(3), 15301, 15302, and 15332.