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Date: |
September 1, 2026 |
07 |
Title
Approving the Issuance of Bonds by the California Public Finance Authority to Finance or Refinance the Acquisition of and Improvements at Sharp Healthcare Facilities (Districts: 1 and 4)
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Overview
The County of San Diego (“County”) has received a request from the California Public Finance Authority (“CalPFA” or “Authority”) to approve the Authority’s issuance of tax-exempt qualified 501(c)(3) bonds, as defined in Section 145 of the Internal Revenue Code of 1986 (the “Code”), for hospitals or other health facilities, in one or more series, from time to time pursuant to a plan of finance, in an aggregate principal amount not to exceed $420,000,000 (“Bonds”), for the benefit of Sharp HealthCare (the “Borrower”) and certain of its affiliates, including Sharp Memorial Hospital, Grossmont Hospital Corporation and Sharp Chula Vista Medical Center, each of which is a California nonprofit public benefit corporation and an organization described in Section 501(c)(3) of the Code. The Borrower has requested the Authority to serve as the municipal issuer of the revenue bonds to finance and/or refinance the acquisition, renovation, construction, furnishing, equipping and improvement of real property and health care facilities located and/or to be located at or near the facility campuses at the following locations in California:
• Health care facilities owned by Sharp HealthCare and leased and operated by Sharp Memorial Hospital located at 7901 and 8010 Frost Street, 2999, 3003, and 3075 Health Center Drive, and 7850 Vista Hill Avenue, San Diego (bond proceeds in an amount not to exceed $200,000,000).
• Health care facilities leased and operated by Grossmont Hospital Corporation located at 5555 Grossmont Center Drive and 8851 and 8860 Center Drive, La Mesa (bond proceeds in an amount not to exceed $200,000,000).
• Health care facilities owned and operated by Sharp Chula Vista Medical Center located at 751, 752, 754, 755, 765 and 769 Medical Center Court, Chula Vista (bond proceeds in an amount not to exceed $20,000,000).
The Authority is authorized to assist in financing for nonprofit public benefit organizations or for-profit corporations with a public benefit project wishing to issue revenue bonds, including the Borrower. In order to initiate such financing, the Borrower is asking the County, a member jurisdiction in which the projects are located to approve the Authority’s issuance of the Bonds. Although the Authority will be the issuer of the Bonds for the Borrower, the financing cannot proceed without the approval of an applicable legislative body.
On December 5, 2023 (27), the Board approved a TEFRA for Sharp Healthcare in an aggregate amount not to exceed $1,000,000,000 to be used for various projects in Districts’ 1 to 4, and refunding of prior bonds financed at various Sharp Healthcare facilities. Following the Board’s approval, in January 2024, CalPFA issued five series of tax-exempt bonds, in an aggregate principal amount of $634,245,000, for the benefit of Sharp HealthCare.
Pursuant to Section 147(f) of the Internal Revenue Code, a public hearing was held on August 6, 2026. There were no comments from the public at that hearing.
Today’s recommendations will provide the Authority with the required authorization to pursue its determination to issue the Bonds on behalf of the Borrowers for the Project.
Body
Recommendation by Chief Administrative Officer:
Adopt a Resolution entitled:
RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO APPROVING THE ISSUANCE OF CALIFORNIA PUBLIC FINANCE AUTHORITY QUALIFIED 501(C)(3) BONDS FOR THE BENEFIT OF SHARP HEALTHCARE AND CERTAIN OF ITS AFFILIATES, IN ONE OR MORE SERIES, FROM TIME TO TIME PURSUANT TO A PLAN OF FINANCE, IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $420,000,000, TO FINANCE AND/OR REFINANCE THE ACQUISITION, RENOVATION, CONSTRUCTION, FURNISHING, EQUIPPING AND IMPROVEMENT OF HEALTH CARE FACILITIES
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Equity Impact Statement
This financing will help in the preservation and expansion of facilities to provide emergency, inpatient, and ambulatory health care services to residents of the county, including access to care for uninsured, underinsured, and other patients who lack the ability to pay.
Sustainability Impact Statement
The proposed action closely aligns with the County of San Diego’s (County) Sustainability Goal #4 to protect the health and wellbeing of residents. The financing will allow Sharp Healthcare (the Borrower) to continue to provide equitable access to a full continuum of health care services for county residents. The Borrower’s Community Benefit Plan and Report addresses the following: Access to care and financial support for uninsured and underinsured community members and individuals without a medical provider; Programs and services that provide community and social support to address health equity challenges; Vaccination programs; Education, screening, and support programs for chronic health conditions and other health needs, including but not limited to heart and vascular disease, stroke, cancer, diabetes, obesity and unintentional injuries; Aging care and support programs including health education, support, and screening activities for seniors and caregivers; Safety and support programs for seniors and people with disabilities; End-of-life and advance care planning services for hospice patients and their loved ones and the community; Support for community nonprofit health and social service organizations; Education and training for community health care professionals; Student and intern supervision, education, and support; Collaboration with local schools to promote interest and provide health career pathways; Cancer patient navigation services and participation in clinical trials; Women’s and prenatal/postnatal health services, support, and education, including services for high-risk pregnancies; Behavioral health and substance use education, screening, and support for the community, including seniors and individuals experiencing homelessness; Provider education and protocol development to enhance community safety programming related to Trauma-Informed Care, human trafficking, and related topics.
For more than a decade, Borrower has sought to minimize adverse environmental impacts to the communities it serves, which aligns with the County’s Sustainability Goal #7. By reducing greenhouse gas emissions, Borrower supports its core mission to improve the health of the environment and the local population. Through education, outreach, and collaboration with community partners, Borrower’s environmental policy guides the identification and implementation of green practices within the health care system, while its All-Ways Green initiative fosters a culture of environmental responsibility throughout the organization and the San Diego community. In 2022, Borrower embarked on a comprehensive Environmental Health, Wellness, and Sustainability Plan that targets systemwide improvements to reduce Borrower’s carbon footprint, with the goal of achieving carbon neutrality by 2040, the first health care system in San Diego to commit to San Diego Community Power’s Power100 program, which provides 100% renewable and carbon-free electricity to eligible Borrower facilities. Borrower’s All Ways Green Committee spearheads the organization’s sustainability plans, which are organized around eight core elements: efficient energy, water conservation, waste minimization, preferable purchasing, transportation, food sustainability, performance measurement and improvement, and communication.
Fiscal Impact
If approved, the proposal will result in approximately $991 of unanticipated revenue to be used to reimburse the County of San Diego (County) for staff costs associated with this non-County financing. There will be no change in net General Fund costs and no additional staff years.
The Borrower will be responsible for the payment of all present and future costs in connection with the issuance of the financing related to the Project. The County will incur no obligation of indebtedness as a result of today’s actions.
Business Impact Statement
N/A
Advisory Board Statement
The Debt Advisory Committee, composed of the Chief Financial Officer, the Auditor and Controller, and the Treasurer-Tax Collector, concurs with this recommendation.
Background
California Public Finance Authority (“CalPFA”)
CalPFA is a political subdivision of the State of California established under the Joint Exercise of Powers Act for the purpose of issuing tax-exempt and taxable conduit bonds for public and private entities throughout California. CalPFA was created by Kings County and the Housing Authority of Kings County, California. CalPFA is empowered to promote economic, cultural, and community development opportunities that create temporary and permanent jobs, affordable housing, community infrastructure and improve the overall quality of life in local communities.
Sharp HealthCare (“Borrower”)
The Borrower is a California nonprofit public benefit corporation with its corporate offices in San Diego, California, and an organization described in Section 501(c)(3) of the Code. The Borrower is the sole member or sole shareholder of Sharp Memorial Hospital, Sharp Chula Vista Medical Center and Grossmont Hospital Corporation, which together constitute an integrated health care delivery system known as Sharp HealthCare. Each of Sharp Memorial Hospital, Sharp Chula Vista Medical Center and Grossmont Hospital Corporation are California nonprofit public benefit corporations and organizations described in Section 501(c)(3) of the Code. The Borrower and its affiliated entities currently own or lease and operate a variety of facilities and programs throughout San Diego County.
Sharp HealthCare comprises:
• Five acute care hospitals
• Four specialty hospitals
• Twenty-five outpatient clinics operated in conjunction with two of its three affiliated medical groups
• Six urgent care centers
• Six freestanding surgery centers
• Four philanthropic foundations
• An offshore captive insurance company
• Acute rehab, skilled nursing and subacute facilities
• Hospice, home infusion, and specialty pharmacy
• Numerous outpatient and specialty services
• A nonprofit health maintenance organization
• 2,700 physicians, representing a broad range of specialties across the system’s hospitals, clinics, and medical groups
• 22,000 employees, reflecting Sharp’s position as San Diego’s largest healthcare system, market-share leader, and largest private employer
• 1,400 dedicated volunteers enhancing care and community connection across Sharp’s hospitals and programs
Projects
The collective Sharp HealthCare facilities operated by Sharp Memorial Hospital include the 656-bed quaternary care Donald N. Sharp Memorial Community Hospital and Stephen Birch Healthcare Center at Sharp Memorial Hospital, the 206-bed Sharp Mary Birch Hospital for Women & Newborns, the 159-bed psychiatric facility Sharp Mesa Vista Hospital, the 16-bed chemical dependency recovery hospital Sharp McDonald Center, and the approximately 122,500 square foot Sharp Memorial Outpatient Pavilion. Bond proceeds will be used to fund up to $200 million of new money to support the Sharp Memorial Hospital master plan project. In October 2019, the Borrower’s Board of Directors approved the first four phases of a seven-phase campus master plan. This project will achieve three overarching objectives: 1) achieve partial compliance with Senate Bill 1953 (“SB 1953”) Structural Performance Category (“SPC”) 4D mandated seismic regulations to provide acute care clinical services, 2) expand emergency and inpatient bed capacity, and 3) address clinical obsolescence and undersized department spaces for critical clinical support services. The budgeted project cost is $327 million. The project will be funded with cash reserves, philanthropy, and issuance of the Bonds.
Sharp Grossmont Hospital was formed by Sharp HealthCare in 1991, and leases and operates a 542-bed acute care facility located in the East County region of San Diego County, including the 90-bed Sharp Grossmont Women’s Health Center, a 30-bed skilled nursing unit, a 46-bed behavioral health unit, and a 50-bed neuroscience center. Bond proceeds will be used to fund up to $200 million of new money to support the Sharp Grossmont Hospital master plan project. This project will achieve three overarching objectives: 1) achieve compliance with Senate Bill 1953 (“SB 1953”) Structural Performance Category (“SPC”) 4D mandated seismic regulations to provide acute care clinical services, 2) expand inpatient bed capacity, and 3) add 20,000 square feet of shelled floor designated for future expansion. The budgeted project cost is $420.0 million. The project will be funded with cash reserves, philanthropy, and issuance of the Bonds.
Sharp Chula Vista Medical Center operates a 349-bed acute care facility and a 100-bed skilled nursing facility in the South Bay region of San Diego County. Up to $20 million of bond proceeds will be used to fund ongoing capital projects at its facilities.
County Involvement
Section 147(f) of the Code requires that an applicable elected body, with respect to the Project, approve the issuance and delivery of the Bonds following a public hearing therefore. The Board of Supervisors of the County of San Diego (County), as an applicable elected body, is requested to approve the issuance of Bonds. The Borrower shall be responsible for the payment of all present and future costs in connection with the issuance of the Bonds.
The Authority is seeking approval of the resolution from the County pursuant to Section 147(f) of the Code for this issuance.
The Authority published a notice of public hearing in the San Diego Union Tribune on July 29, 2026, to inform members of the general public about the public hearing to be held by the Authority, pursuant to Section 147(f) of the Code. The notice listed August 6, 2026 as the public hearing date with respect to the issuance of the Bonds for the Project.
Linkage To The County Of San Diego Strategic Plan
Today’s proposed action supports the Equity: Health Strategic Initiative in the County of San Diego’s 2026-2031 Strategic Plan by supporting and allowing the issuance of revenue bonds by CalPFA for Sharp HealthCare to finance and/or refinance the acquisition, renovation, construction, furnishing, equipping and improvement of health care facilities
Respectfully submitted,
Ebony N. Shelton
Chief Administrative Officer
Attachment(s)
1. Attachment A - Resolution
2. Attachment B - Transcript of Public Hearing
3. Attachment C - Proof of Notice of Public Hearing
4. Attachment D - CalPFA Project Application for Bonds