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BCHD's allcove Created a $150M Risk for Taxpayers

To Whom It May Concern and Submitted in the Interest of Protection of District Taxpayers:

District Taxpayer Indebtedness Risk of allcove Beach Cities is nearly $150M

BCHD has indebted District Taxpayers to nearly $150M in allcove Beach Cities liability. BCHD is obligated to operate allcove Beach Cities services and building for at least 30 years following initial operations of the allcove building. This is based on BCHD's acceptance of partial construction funding for the allcove Beach Cities building that requires a 30 year building and land restriction and obligation to operate the mental health building and services. These were terms of the grant application.

At present, we calculate the potential District Taxpayer obligation across 30 years to be:

BCHD Proposed Bond Obligation committed to allcove:   $ 10.0M

BCHD Estimated Bond Obligation Debt Service @5%:      $ 15.0M

BCHD 30-YR Building Shell Operations Obligation:          $   9.9M

BCHD 30_YR allcove Services Obligation:                        $104.0M

BCHD Land Rent donation of the allcove Taxpayer Site:    $  9.7M

                                      TAXPAYER LIABILITY & COST  $148.6M

BCHD has a 30-Year allcove Obligation yet NO Secure Funding for allcove Beach Cities past June 2026

While BCHD intends to be successful with grant funding, BCHDs current grant funding expires in June 2026 before the building and 30 year operating guarantee by BCHD even begins.  That leaves District Taxpayers with an immense potential debt.  As a reminder, the Daily Breeze has elegantly published an article about the financial distress, layoffs, and ultimate license termination of the public South Bay Hospital in 1984.  District financial failure has already occurred once and from a Taxpayer liability perspective, must be assumed in computation of risk.

District Residents Represent only 9% of allcove Beach Cities Service Area - Yet They Bear 100% Financial Risk

BCHDs Board actions are particularly disturbing because 91% of the 1.4M population LA County SPA8 service area of allcove Beach Cities is comprised of Non-Residents of the District. Therefore, this indebtedness risk is a 100% obligation for Taxpayers while they represent only 9% of the allcove service area. District Taxpayers are only 9% of the allcove Beach Cities service area population, and therefore face a cost risk of over 10-to-1. 

The District was Established for Residents who Reside Within the District

That level of obligation for a District Taxpayers is highly inappropriate for a District founded and funded by voters who reside within the District.  Furthermore, the most contemporaneous statement of voter intent for the District comes from the 1957 pleading by the District with the Superior Court for land condemnation. The District tells the Court that it requires the land for the hospital for the "residents who reside" within the District.  Not for non-residents, and certainly not for the totality of SPA8's 1.4M population.

allcove Beach Cities Indebtedness Exceeds District Total Asset Value

Without considering the potential for significant economy-wide cost escalation as we have recently witnessed, the $148.6M Taxpayer obligation of allcove Beach Cities significantly exceeds the asset value of the District which is $55.8M per the last District financial audit.  That makes the debt of allcove Beach Cities nearly 300% of the asset value of the District, and surely worthy of a public vote.

BCHD Board and Executive Management Failed to Conduct Appropriate Due Diligence of the allcove Beach Cities cost to Taxpayers 

Unbelievably, when BCHD was presented with a Public Records Act request for their 30 year analysis of allcove costs, the District response was "no records."  It is inconceivable that an organization of any kind would take on a 30-year obligation without first computing the exposure and PV of the obligation. BCHD clearly states that it did not compute such an obligation.

Should allcove Beach Cities, a 91% Non-Resident Building and Service, Required a Public Vote for $150M in Cost Risk?

Surely had BCHD Board and Executive Management undertaken an obligation that was fully funded this would not be an issue. And surely had BCHD been providing equal measures of costs and benefits to District Residents, this would merely be another program. However, allcove Beach Cities is effectively a speculative pseudo-business where District Taxpayers fund 100% of the risk, represent a small 9% share of the Service Area, and rely on the goodwill of donors and grant-makers to cover the costs. BCHD committed to this 30-year obligation without analysis of the cost or of the need for a public approval.

It is now time for a review BCHD's actions in an attempt to protect District Taxpayers from potential catastrophic financial losses, bankruptcy, and Court-ordered tax assessments for 30 years to cover the debt that BCHD Board and Executive Management has obligated those Taxpayers to pay.

District Taxpayers deserve a full review of how they were saddled with nearly $150M in obligations.

Supporting Analysis Below

BCHD Records Response - No 30 Yr Analysis

SPA8 Population Analysis - 9% District

BCHD Bond Proceeds Spending Plan - $10M allcove


$10M * 30YRS* 5% = $15M 

30 Year Building Operation Cost - $9.9M

30 Year allcove Beach Cities Operating Cost - $104M

30 Year Land Rent Donation Market Value for 0.5AC Flagler & Beryl Lot - $9.6M

30 Year Obligation Language

Current allcove Funding Termination of June 2026


-- ( is a Neighborhood Quality-of-Life Community concerned about the quality-of-life, health, and economic damages that BCHDs 110-foot above the street, 800,000 sqft commercial development will inflict for the next 50-100 years. Our neighborhoods have been burdened since 1960 by the failed South Bay Hospital project and have not received the benefit of the voter-approved acute care public hospital since 1984.Yet we still suffer 100% of the damages and we will suffer 100% of the damages of BCHDs proposal.

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