At a contentious special meeting before a packed house, directors of the Tulare Local Health Care District (TLHCD) dismissed the possibility of leasing a portion of Evolutions Plaza, home of the district’s popular gym, to the Veterans Administration. The directors also selected Tulare resident Marmie Fidler to fill the District 3 seat at the November 23 session.
Public Support for Gym Overwhelming
During the evening’s public comment period, it became immediately obvious the sizable crowd had gathered to protest any plan that could jeopardize the future of the Evolutions gym.
Tularean Paul Atlas, CEO of Morris Levin & Sons and president of Eagle Property Management, crystalized the popular sentiment of those who testified. He was among those who worked to reopen Evolutions in 2017 under the EVO Management Company.
“Under no circumstances should this building be ever leased to anybody else but the people who are in it right now and the people who are using it right now, because this community needs this facility,” he said. “It needs it as it is, not as it may be. If someone comes in to lease 25,000 square feet in this building, it would destroy this gym.”
Atlas also voiced distrust for “people who are looking to put (the VA item on the agenda again) or even talk” about the matter, a sentiment echoed later by others who addressed the topic.
“It is a ridiculous thought process to even think about putting this thing with the VA (on the agenda for discussion),” he said. “The VA has the ability to go to almost any facility they want to. They can build a facility, but they decided not to. They want to rent a facility, and they’re willing, supposedly, to put in $10 million into the remodeling of a facility, which is ludicrous. You can build a beautiful facility for $10 million.”
Why a VA Deal?
The VA discussion appeared on the special meeting agenda following a tempestuous incident at the previous TLHCD board meeting on November 17. During that meeting’s public session, board member Xavier Avila departed unexpectedly when TLHCD President Kevin Northcraft refused to call a special meeting to rehash the possibility of a lease to the VA.
Avila’s mid-meeting exit left the board without a quorum, and the remaining members were unable to conclude the agendized business. As he left, Avila said he would be unable to attend the November 23 special meeting, which was scheduled to select a new District 3 director.
In explaining why he demanded a review of the proposal by Catalyst Capital to act as a go-between for the district and the VA in arranging a lease at Evolutions Plaza, Avila attempted to paint the district as on the verge of financial collapse.
“I’ve learned to see when businesses get to a point where it slides, and the reason why I’m telling you that is we’re dealing with an issue here,” Avila said. “I got to tell you we owe $50 million–what?–over $50 million and now we’ve got $5 million in the bank.”
TLHCD Finances Solid
Others paint a far rosier picture of the district’s fiscal health.
Before Avila shut down the November 17 meeting, CPA Rick Jackson presented results of the TLHCD’s annual audit, saying the district had a “good cash position” of $5.6 million. The TLHCD holds $144 million in assets, has non-tax income of about $3 million annually, and a tax income of $4.8 million that is currently being used to pay off district-issued bonds, he said. Jackson also said “the district is looking very good financially” and that he expects it to “only get better in the future.”
Despite that reassuring report, Avila asserts Evolutions Plaza needs $1 million in maintenance, and that cost could somehow foul the district’s ongoing bankruptcy plan to satisfy its creditors.
“Evolutions is tied to the district, and we got priorities that we have to do. That hospital takes precedence over everything,” he said. “And if that hospital, if we start not being able to meet our obligations, if we’re not able to meet the bankruptcy, we’re going to get in a lot of trouble.”
According to the gym’s manager, Evolutions was profitable pre-COVID and its books are back in the black now that its doors are open again. Yet Avila forecasts doom for the facility.
“We’re going to get in a lot of trouble, and that means we won’t be able to take care of Evolutions,” he said. “This could close down if we don’t turn it around.”
Evolutions a Tulare ‘Life Source’
While the TLHCD’s directors never appeared ready to entertain a proposal to lease part of Evolutions Plaza — with the exception of Avila — their resolve to resist may have been strengthened by a series of heartfelt pleas from the public to keep the gym as is.
Evolutions, the speakers said, is its own community, with one member calling it a “life source” for sick and injured Tularians.
Veteran and Evolutions member Christopher Morrow summed up the wide-spread sentiment in his address to the board.
“I’m a combat vet, and this gym is one of the few places I can go out in public and feel safe. This is my community,” he said. “And as a vet I know that we need better facilities, but I also know that I’m not willing to hurt my community and take away from the community that has supported me for so many years to see that happen, especially when there are so many other facilities [the VA could occupy].”
Evolutions, he said, is an absolutely critical resource for the city, as well as for him on a deeply personal level.
“This means more to this community than just about anything else,” Morrow said. “On my worst days I’ve been here, and I’ve seen some of these faces before, and chatted in passing when I haven’t talked to anyone in days.”
Deal Required $14m ‘Bridge Loan’
During the presentation by Catalyst Capital, the board learned the district would be required to float a $14 million loan to finance improvements to Evolutions Plaza to suit the VA’s needs before it moved it. The loan would be repaid over the term of the VA’s 10-year lease, but the repayment period for the loan would stretch to 25 years, using Evolutions Plaza as collateral.
While the district would receive a fee for financing remodeling of Evolutions Plaza via the quarter-century-long loan, profitability of the scheme was predicated on the VA renewing its lease repeatedly.
Catalyst Capital would act as a paid broker between the district and potential lenders.
The board voted 3-1 to reject a deal with Catalyst, with Avila casting the only vote in favor.
Fidler to Serve District 3
In the other agenda item for the evening, the board voted 3-0 — with board member-turned-CEO Phil Smith recusing himself from the vote for his new boss — to place Marmie Fidler in the vacant District 3 seat. Last month, Smith’s fellow board members hired him to take over as TLHCD’s top executive.
The board chose Fidler from a pool of three candidates. Also applying for the seat in the heavily Hispanic District 3 were Tulare residents Cecilla Herera and Marie Machado.
Fidler’s appointment to the board could present a problematic financial conflict of interest for her and Avila. Fidler is co-owner of Barnes Memorials, which holds an exclusive contract for the handling of memorials for the Tulare Public Cemetery District (TPCD), where Avila is the board chairman.
Before the hospital board voted to install Fidler, Northcraft asked Avila about the relationship and its possible consequences as a potential violation of the Fair Political Practices Act.
“Some people might be concerned about that,” Northcraft said.
Avila dismissed the notion that Fidler’s contract at the TPCD — one Avila voted to approve and over which he could have future influence — would be a conflict of interest or impact future votes by him or Fidler.
“I get nothing out of this,” Avila said. “I don’t think I’m the kind of person who worries about that.”