A Providence St. Joseph Health hospital in Los Angeles that last year got an extension on earthquake safety mandates from the state legislature received a key approval from a city council committee for a $542 million expansion.

California Gov. Jerry Brown signed Assembly Bill 908 last year extending the 2020 seismic retrofitting deadline to 2022 for Providence Tarzana, allowing for construction of a new patient wing rather than extensive retrofitting of the existing tower.

The City Council Planning and Land Use Management Committee Tuesday approved construction on the new wing, which will have a new and expanded emergency department, private patient rooms, and a new pediatric intensive care unit. If the full City Council approves the project, it is expected to break ground this year and be completed in 2022.

Los Angeles City Council Member Mitchell Englander.
“Far too often, we hear about hospitals closing or that are not able to keep up with maintenance, let alone expanding,” Councilman Mitchell Englander said. Councilman Mitch Englander's office

Dale Surowitz, chief executive of the hospital, told the committee that the goal is to provide modern healthcare facilities and high quality care both now and into the future.

“For over four decades, we have provided the San Fernando Valley with excellent, compassionate and high quality care, but we are challenged by our current facilities,” Surowitz said. “That tower needs to be replaced.”

The project uses cutting edge technology for an upgrade and modernization that Providence desperately needs, said Councilman Bob Blumenfeld.

“This hospital is critical to the health and safety of our community,” Blumenfeld said.

The Renton, Wash.-based health system was scheduled Dec. 7 to ask for $335 million in bond financing from conduit issuer California Health Facilities Finance Authority for projects at its Southern California hospitals, but had the item removed from the agenda.

The item had been moved forward into December with the looming threat to private activity bonds from the federal tax bill that failed to materialize. A week later, news broke that Providence was in talks to merge with Missouri-based Ascension Health. Nothing further has come out related to the merger.

Providence has not rescheduled the CHFFA hearing.

In January it issued $350 million of Series 2018A taxable bonds and $140 million of Series 2018B refunding revenue bonds through the Washington Health Care Facilities Authority. Roughly $58 million of the taxable issuance was for new money to support projects in Washington, according to bond documents.

The hospital system has $23 billion in revenues and 111,000 employees operating in seven states. It holds AA-minus ratings with a stable outlook from Fitch Ratings and S&P Global and an Aa3 rating with a negative outlook from Moody’s Investors Service on $6 billion in outstanding debt.

Councilman Mitchell Englander called the Tarzana project long overdue.

“Far too often, we hear about hospitals closing or that are not able to keep up with maintenance, let alone expanding,” Englander said. “Providence has been extraordinary partners with the City of Los Angeles.

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