Richmond council mulls using Chevron community benefit funds to help DMC

West Contra Costa Healthcare District

Less than a month before the Nov. 4 election, the Richmond City Council voted in favor Tuesday of using a portion of the $90 million community benefits package tied to the Chevron Richmond Refinery Modernization Project to fund Doctors Medical Center, even after multiple warnings that the money to save the financially-struggling hospital would come too little, too late.

In July, council voted 5-0 against using a portion of the $90 million to fund the San Pablo safety net hospital, which with an annual deficit of at least $18 million has reduced services and is set to shut down early next year. Mayor Gayle McLaughlin and Vice Mayor Jovanka Beckles abstained from that vote in protest.

The council had voted against setting aside funds for DMC after being told by officials with the county’s health district and Chevron that the money would not be available in time to save the hospital and also that it wouldn’t be enough.

Council instead voted to use $35 million of the $90 million to fund Richmond Promise, a program aiming to fund full college tuition for all Richmond high school graduates over 10 years, and to use about $40 million on various projects and programs to reduce greenhouse gas emissions.

Only $50 million of the $90 million can be legally redirected to fund DMC. The mayor has proposed using $15 million of those funds for DMC. Funds used for the hospital would cut into other programs, however, including the Richmond Promise college scholarship program.

None of the funds, however, can be released until the start of construction on the modernization project, which is being held up by lawsuits filed against the project by environmental groups Communities for a Better Environment (CBE) and Asia Pacific Environmental Network (APEN).

With the legal challenges, it could take two years or more before Chevron is cleared to proceed with construction, according to Chevron Richmond officials.

And after construction begins, the $90 million in funding is set to be dispersed annually over 10 years, meaning only a portion of money set aside for DMC will be available up front.

DMC, which is scheduled to close down in March, would need funds by February at the latest, Councilmember Jael Myrick said.

On Tuesday, several councilmembers called on city staff to urge environmental groups to reconsider their lawsuits.

If the legal challenges are dropped, Chevron Richmond pledged to expedite the start of construction so that the community benefit funds can be released.

“We will work with the courts to lift all impediments to construction and hope to have clearance to proceed with construction promptly,” spokesperson Melissa Ritchie said.

How much should DMC get?

Should environmentalists agree to drop their lawsuits, questions still remain over whether funds supplied from the community benefits package would be enough to maintain DMC as a full-service hospital.

According to the health district, DMC’s doom was sealed after a May parcel tax measure that would have provided the hospital $20 million annually failed to garner enough votes. District officials warned multiple times in the past that a one-time infusion of funds – even as much as $20 million – would barely keep the hospital open for another year.

Last month, a group of health experts tasked with finding solutions to DMC’s financial troubles ruled out the possibility of preserving a full-service hospital, citing a lack of possible funding sources from the county and other agencies, and said it will instead push for a scaled down version providing only urgent care.

Myrick said he was nervous about earmarking community benefits funds for DMC knowing there is no plan in place to ensure the survival of a full-service hospital.

Despite that concern, Mayor Gayle McLaughlin proposed a motion at Tuesday’s council meeting to provide $15 million from the Chevron Richmond community benefits package toward saving the hospital.

She also directed city staff to return to council Oct. 21 with a plan to expeditiously release the funds to DMC once legal challenges of the modernization project have been removed. Additionally, she asked City Manager Bill Lindsay to urge county corporations such as other refineries, along with officials from neighboring cities and the county, to identify more funding.

Lindsay warned that the Oct. 21 deadline given to his staff to solve DMC’s problems was undoable. He reminded the council that experts from multiple agencies have been unsuccessfully trying to save DMC for the last five months.

Still, the council voted in favor of the mayor’s motion, with several members hinting that they were forced to vote in favor of finding solutions for DMC with the Nov. 4 elections coming up. Myrick mentioned that a lot of the council’s discussions on DMC have been “theater.”

“We have seen a lot of demagoguery going on tonight,” Councilmember Tom Butt said. “I can tell you there are no heroes and no villains. If you want this thing to work, most of the council is going to have to work together, and Chevron is going to have to be a part of it, and probably CBE is going to have to be a part of it. It is not a divide and conquer exercise. This is an exercise in team building.”