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Hospital Outbids Land Conservationists

Nearly eight acres of undeveloped land that could connect canyon trails and provide hikers access to South Laguna beaches is being sold to neighboring Mission Hospital just two weeks after Laguna’s City Council approved a competing bid.

The deal angered some local open-space conservationists, who anticipate hospital officials want the chaparral-covered blufftop as a trading card in when seeking future development approvals within its 1.5-acre medical campus.

Hospital officials declined to comment on the deal, but disclosed buying several nearby parcels in the last year, including a seven-acre site at 31778 Sunset Avenue, in an effort to prepare for the future needs of the hospital.

“As we shared in our long-term strategic and master facilities plans, we have many initiatives to accomplish in the next five years to ensure high-quality compassionate care is delivered for the community,” spokeswoman Kelsey Martinez said. In April, hospital officials mapped out a plan to extend the life of the medical campus another 20 years by committing to making $30 million in internal improvements. “We know the community is passionate about open space, so when the time comes, we’ll work with the city and the community to determine best use. We do not have any current plans for the land.”

Property owner Edward Domanskis, a plastic surgeon at Mission Hospital-Laguna Beach, said Tuesday that the deal is in escrow and is expected to close “within days.” He declined to disclose the sale price.

Domanskis said he waited nearly four years for Laguna Canyon Foundation and the California Coastal Conservancy to come through with their bid of $706,000.  The offer from the hospital, he said, means more money and a quicker exchange.

Even though purchase negotiations collided with the state’s budget crisis, during which some grants for nonprofit projects were frozen, the conservancy said they were ready to go. 

“The whole thing is news to us,” said Deborah Ruddock, projects specialist for the conservancy. “Our board authorized a grant of $706,000, a grant to the city of Laguna Beach to acquire the property. The grant agreements list the closing date of June 30. That’s been the plan all along.”

City and foundation officials recently informed her that the property, near the county’s Badlands Park and near to Aliso-Wood Canyon Wilderness Park, was being sold to the hospital.

“It just took a very long time with the conservancy,” said Domanskis.  “Delaying and delaying and delaying.” Citing his skepticism about the availability of state money, Domanskis added, “The state has its own problems.”

Negotiations to procure the acreage as wilderness were conducted by Derek Ostensen, the foundation’s president.  The deal experienced several delays, Ostensen conceded.  “Mr. Domanskis was clear from the beginning of our discussions that he needed to close as soon as possible and that he desired a higher offer for his property than we could provide,” Ostensen said in an emailed statement.

“More than likely, there may not be anything built there eventually,” Domanskis commented.  Hospital officials, according to spokeswoman Kelsey Martinez, are unable to discuss the price or plans for the property until the transaction is final.

Neighbors in South Laguna believe hospital administrators purchased the land as a negotiating chip and could offer an open space dedication in exchange for changes to its facilities.

“Now it becomes, ‘Oh, you really do want that land?  We’ll trade it for two more stories on the parking structure or something like that. It’s very empowering for them,” said Will Gardenswartz, who initiated a class action lawsuit against the hospital in 2009 that resulted in reducing noise emissions from boiler and cooling systems and deliveries.  

“I would estimate that the hospital intends to use the property as mitigation or as an open space dedication as part of their redevelopment plan for the hospital campus,” Ostensen corroborated in his written statement, referencing challenges of developing hillside property.

Gardenswartz sent an email to South Laguna Civic Assn. members urging them to contact the hospital, local newspapers and city council members in protest.  He said another class action lawsuit is not out of the question. 

“We will oppose it all the way,” Gardenswartz said.  “I will find an environmental angle to play there.  Make no mistake, Mission Hospital is, though they say not-for-profit, a highly ambitious organization.  They want to grow their business. They are going to make it make money and, to do that, it needs to be bigger, it needs to be re-engineered. There’s going to be big money in baby-boomers becoming geriatrics.”

The deal stirs up distrust among neighbors, many of whom expressed reservations about Mission Hospital acquiring the former South Coast Medical Center in 2009 for $35 million as well as $57.1 million in debt. Bill Rihn, president of the South Laguna Civic Assn., called a deal that disregards the time and effort put in by conservationists, city staff and elected officials “disheartening.”

“If it would have happened four years ago, it would have happened but it didn’t,” Domanskis said.

Domanskis said he has been negotiating with the hospital for two years and has worked there for 25 years.  “I was more prone to donate and sell it to them or the Conservancy, one of the two,” he said, adding that there were other interested parties.  “It was what’s called a charitable bargain sale,” he said, which also carries a tax deduction when property is sold below fair market value to a charity or nonprofit organization, such as Mission Hospital. 

Prop. 12 grant money was set aside in 2000 to acquire open space for the Laguna Coast Wilderness Park.  LCF received a total of $12.5 million from the voter-approved bond and $2.7 million remains, said Max Borella, the foundation’s executive director.  The purchase of the Domanskis property was approved June 7 by the Laguna Beach City Council contingent upon conformity with the city’s General Plan.

Domanskis said he purchased four lots totaling 7.8 acres 10 years ago for $600,000 and had plans to build a house on his hillside property, but “it didn’t work out because of the city’s restrictive codes.” Where the Domanskis property is located would require road access and an open space dedication, City Manager John Pietig confirmed

The hospital’s previous owners, Adventist Health System, once envisioned developing senior housing as a way to underwrite a mandated seismic retrofit. Pietig said Mission Hospital has submitted no plans to develop its property.

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