Quick Take
Watsonville Community Hospital can now move forward after both Santa Cruz and Monterey counties certified election results showing the hospital’s $116 million bond measure passed with 68.04% of the vote. First priority is purchasing the hospital buildings and the land they sit on.
Watsonville Community Hospital was finally able to celebrate this week as both Santa Cruz and Monterey counties certified election results showing the hospital’s $116 million bond measure passed with 68.04% of the vote.
Now hospital leaders have to get to work preparing to spend that money.
The district has a long road ahead to plan for how to improve the hospital. The first priority is purchasing the hospital buildings and the land they sit on, said Tony Nuñez, chair of the Pajaro Valley Health Care District’s governing board.
Nuñez said the district expects to issue the $116 million in bonds in batches, with the first going toward that purchase. Hospital officials have said they expected to pay around $40 million for the buildings and land.
There is no timeline yet to issue the first batch of bonds, Nuñez said, but district officials project the earliest the hospital will have initial funds available will be near the end of this year or early next. The board and administrative staff are in the early phases of the bond process, which won’t officially start until after the board approves the election results at its next meeting this month.
The district has the first right of refusal to buy the hospital from its current owner, Alabama-based investment firm Medical Properties Trust. That exclusive option ends Dec. 31, 2025, so the district will have to have its financing in place before then, Nuñez said.
Beyond that, Nuñez said there are many complicated steps before the district will have the money in hand to start other projects like purchasing a new CT scanner or doubling the size of its emergency department.
“The work is being done,” he said. “It’s going to take a while to see the fruits of the labor, but work is happening and moving forward.”
The first steps will be to figure out when to issue bonds, for what amounts, and which projects to prioritize. District officials are planning to create a bond oversight committee and are starting to shape what that committee will look like — how many members it will have and how often they will meet.
The committee will oversee how the district spends the funds to ensure it’s sticking to the projects it told voters it would spend the bond money on. “The oversight committee is there to make sure that we’re not using the money on something that isn’t on one of these project lists,” Nuñez said.
Nuñez said there isn’t a timeline for getting a committee established, and he emphasized it will take some time but that things are moving forward.
“I don’t think we’re going to go two whole years and there won’t be a single shovel lifted there,” he said. “I think that you’ll see new things, you’ll see progress in various capacities over the next 24 months.”
The approval of the bond measure is a turning point for Watsonville Community Hospital, which declared bankruptcy under its previous owners in December 2021. At that point, the hospital had undergone about 20 years of for-profit ownership under 20 different CEOs, several of whom nurses and staff say failed to invest in renovations or upgrading equipment.
After a community-led campaign and help from legislators like State Sen. John Laird, the Pajaro Valley Health Care District was formed and purchased the hospital out of bankruptcy in August 2022. Since then, hospital and district leaders say they have reduced losses by about 70-80%. Still, the hospital is struggling to produce enough revenue to cover its costs due to low reimbursement rates from government insurers and low revenue from privately insured patients.
In November, the Pajaro Valley Health Care District governing board approved placing a bond measure on the ballot. The district has several major goals for the funding, including purchasing the hospital building and land to eliminate costly lease payments, upgrading aging equipment and renovating its heating, ventilating and air conditioning systems and roof. District leaders say they hope the improvements will improve the quality of care and bring in additional revenue.
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