LANCASTER — The years-long process to build a new hospital to replace Antelope Valley Hospital’s aging facilities got another start, on Thursday, when the Antelope Valley Healthcare District Board of Directors approved a Letter of Intent with a firm that facilitates investment in federally designated zones targeted for economic development.
The Letter of Intent is with Portland, Oregon-based Fiat Lux Motus, a Qualified Opportunity Fund that invests in building new hospitals and clinics in under-served areas, among other projects, according to the firm’s website.
The Antelope Valley Hospital campus sits in a Qualified Opportunity Zone, an area designated by the federal government as an economically distressed community targeted for new investment, with tax benefits for the investors.
FLM is the middleman in the federal program, directing investment from private companies to projects in these zones, Antelope Valley Hospital CEO Ed Mirzabegian said, Friday.
These private funds would be used to build a state-of-the-art facility. The District would manage its development, with the assistance of the City of Lancaster, Los Angeles County and state regulators, according to the Letter of Intent.
There would be no up-front costs to the Antelope Valley Healthcare District, which governs the hospital. After 10 years, the District could purchase the physical hospital facility — not the business side, Mirzabegian said — at 70% of the appraised value at that time.
During that decade, the District does not pay any rent for the facility, just the maintenance and operating costs.
“They build us the hospital, but we have to maintain it,” he said.
The Board will need to approve a final agreement for the project by Dec. 31. With that, groundbreaking could begin as soon as March, he said.
Because much of the design work is completed, construction and outfitting the hospital is expected to take about three years.
The proposed hospital would have approximately 350 beds and be four stories, although discussions with FLM to provide a hospital that will meet needs into the future led to investigating making it larger, Mirzabegian said. That investigation is ongoing.
In the initial planning for a new hospital, the cost was estimated at $600 million to $650 million. However, as building costs have climbed, that number may be as much as $800 million, he said.
To purchase the facility in the future, the District could borrow private funds — it has the ability to borrow $500 million now, Mirzabegian said — or it could have enough reserves by then to purchase it outright.
The Board voted 3-1 to approve the letter, with directors Don Parazo absent and Michael Rives dissenting.
Rives argued that the District already has projects in the works that are not yet finished, a modular emergency room and a rehabilitation and psychiatric hospital.
“If we wait to finish one at a time, we’re going to be 200 years old,” Mirzabegian said. “We do multiple projects at the same time.”
“But neither of them are done,” Rives said.
Rives also continued to advocate to get other federal agencies — the Veterans Administration and Department of Housing and Urban Development — to fund a new hospital, despite no progress on obtaining funding through those sources.
“VA and HUD are not going to help you. This is a governmental plan,” Mirzabegian said.
He also disputed Rives’ further argument that the process is giving up the hospital to another entity.
“You’re giving up our hospital to this company,” Rives said.
The District has attempted twice before to raise the money necessary to build a new hospital through voter-approved bond measures. These measures failed, in 2018 and 2020.
With original buildings dating to 1955, the not-for-profit Antelope Valley Hospital faces constraints of physical space and a pressing need to meet current state seismic standards, for which a significant portion of the hospital could be deemed unusable if not addressed. These areas can not be retrofitted to meet today’s standards.