Medical office building’s fate in limbo until 2016

Medical office building’s fate in limbo until 2016
The Tri-City Medical Center campus will remain unoccupied until at least next year, according to hospital officials. File photo

OCEANSIDE — A three-story medical office complex that sits unoccupied on the Tri-City Medical Center campus will be that way at least until spring 2016 — or longer — hospital officials said at a recent board meeting.

During the healthcare district’s board of directors meeting, hospital CEO Tim Moran updated the board on the status of the 57,000-square-foot medical office building, which has been in limbo since 2013 amid a series of lawsuits and an eminent domain filing last year.

Moran said the two parties are not scheduled to return to court for formal negotiations until mid-2016, due to a civil court backlog.

“The building will be in this state for the foreseeable future,” Moran said.

The District in 2014 exercised its eminent-domain authority to seize the office building from the Carlsbad insurance underwriter with which it had partnered to develop it.

The building was largely completed in 2013, but has remained vacant as the result of an estranged partnership between the healthcare district and Medical Acquisition Co. (MAC), a vestige of the tenure of former Tri-City CEO Larry Anderson that has resulted in at least two lawsuits between the parties.

The hospital entered into a complex lease-leaseback arrangement with MAC back in 2009 to develop the office building on hospital property, but the deal began to unravel in 2012 when the hospital canceled the deal and agreed to pay $5 million to assume ownership of the property.

Both sides were stalemated for more than a year before both side sued each other in attempt to void the contract, which then led to the eminent domain action.

Under eminent domain, the two parties can negotiate a purchase price, or have the price determined in a jury trial if they are unable to reach a mutual agreement.

Officials with the hospital and MAC had been negotiating a purchase price since July 2014, when the district filed the eminent domain lawsuit.  The parties were at that time far off on what they believed was a fair price, with Tri-City offering $4.7 million and MAC countering with a $20 million asking price.

At the same time, the hospital sued MAC (in response to the company’s lawsuit against the district filed in April) seeking to void the development arrangement between the parties based on accusations that Anderson and board member RoseMarie Reno had illegal conflicts of interest when they pressed for the district to enter into the arrangement. Both Anderson and Reno have flatly denied the accusations.

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