The Watsonville Community Hospital with a blue sky and a flag pole in front with the U.S. and California state flags.

Measure N would allow Pajaro Valley Health Care District to issue $116 million in bonds to buy and improve Watsonville Community Hospital. (Pajaro Valley Health Care District)

Unofficial results as of 4:05 p.m. Friday, March 22

Measure N – Pajaro Valley Health Care District Bond – 2/3 to pass

  • Yes 9,891 (68.51%)
  • No 4,546 (31.49%)

WATSONVILLE >> Measure N, a bond measure to benefit the Pajaro Valley Health Care District, was approved by voters with more than 68% of the vote, according to unofficial results March 22. It needs at least 66.67% of the vote to be approved.

There were about 125 ballots left to process countywide on March 22, according to the Santa Cruz County Clerk’s Office. Yes on Measure N held an insurmountable lead. Official election results are anticipated in early April.

Measure N would allow Pajaro Valley Health Care District to issue $116 million in bonds. If approved, property owners in the district would pay $24 per $100,000 of property value annually for 30 years, or until the bonds are paid off. The district’s boundaries are similar to Pajaro Valley Unified School District and include parts of Monterey County.

The primary use of the bond money is to buy and improve Watsonville Community Hospital. The district owns the hospital’s operations, but the buildings and land are owned by Alambama-based Medical Properties Trust. The trust charges Pajaro Valley Health Care District about $3 million in rent each year.

In addition to purchasing the property, the money from the bonds would be used for upgrades to the hospital, such as:

  • Building improvements, including a new roof and upgraded plumbing, heating, ventilation and air conditioning.
  • Doubling the size of the 12-bed emergency department, which had 33,000 patient visits in 2023.
  • More medical equipment, including X-rays, MRI and CT scanners.

The money raised from the bonds can only be spent on the hospital’s facilities, not on salaries or other expenses, according to the measure. An independent committee appointed by the Pajaro Valley Health Care District Board would oversee expenditures.

Medical Properties Trust has agreed to sell the property to the district for $40 million, but could seek other buyers if the district can’t come up with the money by December 2025. To have time to collect money from the property tax, issue bonds, and buy the property, voters would need to approve the measure this March.

If voters reject Measure N, “we effectively run out of time” to have an exclusive right to buy the property, said Marcus Pimentel, a member of the campaign committee for Measure N. Pimentel spoke as a campaign committee member. He is also a member of the Pajaro Valley Health Care District Board.

The district has the “right of first refusal” on the property, meaning the owners must offer to sell it to the district before they seek a different buyer. That right expires in December 2025, Pimentel said.

A sign for Measure N is posted at Watsonville Public House on Tuesday night. (Fidel M. Soto — Santa Cruz Local)

Supporters of Measure N gather at Watsonville Public House on election night. Tony Nunez, center, says he feels “cautiously optimistic” about the early results. Nunez serves on the Yes on Measure N committee and the Pajaro Valley Health Care District Board. (Fidel M. Soto — Santa Cruz Local)

Background on Watsonville hospital

In 2021, Watsonville Community Hospital faced closure after its private owners filed for bankruptcy. 

To keep the hospital operational, state lawmakers created the Pajaro Valley Health Care District in 2022. Health care districts are a form of local government that operate independently of city or county governments.

The state, Monterey and Santa Cruz counties and other donors gave the district $65 million to buy the hospital’s operations and begin running it as a nonprofit. The hospital’s buildings and land were sold to Alabama-based Medical Properties Trust, which now charges the district $3 million in annual rent.

After buying the hospital out of bankruptcy, the Health Care District ended 2022 with a $30 million deficit. In 2023, it was buoyed by a $8.3 million zero-interest state loan, and ended the year with a $7 million deficit. The projected budget for 2024 is “almost break-even,” said hospital spokesperson Nancy Gere. 

“It really is quite a feat to have done that and not had any layoffs,” Gere said during the Measure N campaign. “We really feel like we’re on the right direction.”

If Measure N is not adopted by voters the hospital would not face immediate closure, Gere said. But the path to long-term stability would be “much more difficult,” she said.

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Nik is a copy editor and fact checker for Santa Cruz Local.