U.S. Offers County $300 Million to Replace Hospital

In a bid to end the bureaucratic deadlock over rebuilding the nation’s busiest public hospital, federal officials have offered $300 million to help replace earthquake-damaged County-USC Medical Center with a new, smaller hospital, sources close to the talks said Thursday.

County, state and federal officials, after intensive negotiations in recent days, indicated they are moving toward resolution of an acrimonious dispute over how much damage occurred at the giant charity hospital in last year’s Northridge earthquake, and how much money the county should get to fix it.

Two major sections of the mammoth Boyle Heights complex--the pediatrics pavilion and psychiatric hospital--were shut down after the quake and remain closed.

While county officials want $1.3 billion in relief funds from Washington, the Federal Emergency Management Agency had tentatively approved less than $100 million. FEMA officials question whether the damage is entirely attributable to the quake, as county officials insist, or to earlier temblors or even routine wear and tear.

But on Thursday, FEMA chief James Lee Witt said he expects the wrangling to end soon and the county to get its federal funds before the quake’s second anniversary on Jan. 17.

Witt also told a group of Times reporters and editors that his agency has told the county it can use the money to build a more modern, scaled-down version of County-USC, rather than simply reconstruct the deteriorating, Depression-era complex as it was before the quake.

“We’re not telling anyone what they have to do,” said Witt. “We’ll be able to provide dollars for that building or any alternative building that they might propose. Then they would have a choice.”

County officials said they still hope to negotiate more repair funds from Washington. But they hailed Witt’s decision to allow more flexibility in the way the money is spent, saying it will accelerate efforts to downsize and reform their $2.1-billion-a-year network of hospitals and clinics so fewer patients are hospitalized and more are treated in less expensive outpatient settings. Hundreds of thousands of poor people use county medical facilities each year.

“It’s a major breakthrough,” said county Supervisor Zev Yaroslavsky, who also met Thursday with Witt. “The county and FEMA have been mired in a bureaucratic hammerlock for months and now James Lee Witt says, ‘Let’s get off that kick and see if we can break the logjam.’ ”

County Chief Administrative Officer Sally Reed said $300 million “clearly will not be enough to build the new medical center,” which she estimates will cost $1 billion.

But, she added, “On the other hand, we’re talking about some certainty. We’re talking about moving ahead at a reasonable speed. We feel that we’ve made remarkable progress in the last couple of weeks. We still have a ways to go, [but] we’re very encouraged.”

Witt said he is making available federal funds that had been earmarked for strengthening buildings undergoing post-quake repairs. Federal officials also said the county could apply for more aid from a state-administered $700-million fund to underwrite seismic improvements. But the county would have to compete against other local agencies, such as school districts seeking to upgrade classroom safety.

Officials also said they were optimistic about ending a major disagreement over how to interpret California’s stringent seismic-safety codes for purposes of granting quake relief.

The county has argued that FEMA was unwilling to pay to repair damaged structures to a level that satisfies state codes, while federal officials have charged that local officials were trying to get more money for general building enhancement.

“We’re trying to set a new formula to calculate what the money should be . . . and then provide the alternative to the recipient of those funds to use them as they think is best, not necessarily just to repair an old facility, but perhaps to build an alternative facility that meets their needs,” said Richard Andrews, director of the state Emergency Services Office.

Reed said the FEMA money could be spent toward erecting a more compact version of the 2,045-bed County-USC, which has used only about 1,000 beds since the quake. On Wednesday, a San Francisco-based consultant urged county supervisors to replace it with a 788-bed facility, rather than the 946-bed hospital they have been planning as part of a $2.2-billion proposal to upgrade medical facilities countywide.

Witt said he wants to avoid repeating bureaucratic delays that plagued reconstruction efforts after the 1989 Loma Prieta earthquake. Some projects remain unfinished because of conflicting code interpretations and years-long administrative appeals, he said.

Federal officials said the same fast-tracking of relief aid to the county could be used to help other hospitals damaged in the Northridge quake, including Cedars-Sinai and UCLA.