L.A. to Consider Purchasing Shuttered Hospital : Lake View Terrace: Neighbors urge the council to buy the 15-acre site, which Phoenix House wants to acquire for use as a drug center.

The Los Angeles City Council agreed Tuesday to consider buying the shuttered Lake View Medical Center, a move that could trigger a bidding war with the Phoenix House drug rehabilitation group at a bankruptcy court hearing next month.

The Los Angeles County Board of Supervisors also will consider at its meeting next Tuesday whether to make an offer for the property. Supervisor Mike Antonovich asked county administrators Tuesday to look into uses for the property, saying it is now available for “a bargain basement price.”

At the urging of Councilman Ernani Bernardi, the City Council asked its Budget and Finance Committee to immediately explore purchasing the 15-acre Lake View Terrace site, which Phoenix House wants to use for a treatment program for up to 150 young drug users. One source of funds might be a trust fund set up to benefit communities near the Lopez Canyon Landfill in Lake View Terrace.

Phoenix House has a contract to buy the hospital property for $3.2 million from creditors. A 1989 attempt by the same group to buy the property for $7.6 million ignited a loud public outcry.

Opposition to the nonprofit drug treatment group’s plans was evident again Tuesday.

Joycelyn Furginson, a Lake View Terrace resident, and several other residents urged the city to buy the site. They warned the council that if residents of the treatment center were allowed to come and go it would “increase the potential for dangerous crimes” in the surrounding community.

Bernardi agreed and said the property’s reduced price tag makes it attractive for use as a library, police substation, senior citizen center or day-care facility.

The Phoenix House’s previous attempt to buy the property fell apart when it lost the support of former First Lady Nancy Reagan, who withdrew because of community opposition.

Since then, the defunct hospital has been rented for movie location shooting, including for “Terminator II.”

A 1989 city review found that city departments had little interest in relocating their offices to the site if it were purchased. A report also warned that it would be costly to refurbish the hospital for office use.

At a June 4 hearing, U.S. Bankruptcy Judge Kathleen T. Lax will be asked to approve the sale to Phoenix House, according to Rick Seidenwurm, an attorney for the hospital’s creditors. She also may consider other purchase plans at that time, but her decision will be guided by the advice of creditors, he said.

The two creditors are a bond fund run by the Merrill Lynch brokerage firm and a private group of investors from Minneapolis, the attorney said. The two parties bought $7.5 million in bonds in 1973 to finance the reconstruction of the hospital after the 1971 Sylmar earthquake.

One possible source of funds to buy the hospital, Bernardi told his colleagues, would be to tap into the Lopez Canyon Landfill trust fund. Bernardi made the suggestion while acknowledging the city’s current financial straits.

Lew Snow, an officer with the Lake View Terrace Homeowners Assn. and a trust fund watchdog, said he would not object to using the fund in that way.

About $29,000 of the trust fund’s $2-million kitty has been spent so far. On July 1, another $1 million is to be added to it; $1 million more will be added in each of the next two years.

However, $1.4 million already has been pledged to two projects--$700,000 to refurbish the Lake View Terrace Recreation Center and $700,000 to pay for a drug rehabilitation program in Pacoima.

David Mays, Bernardi’s chief deputy, said some homeowners may be willing to sacrifice the recreation center project if the money were applied to the hospital purchase. If the recreation center expansion plan were dropped, the trust fund would contain about $2.2 million by July 1.