Business & Real Estate

Will a new hospital in Elk Grove force these businesses to close?

When Bill Shehadeh opened his high-end liquor, wine and cigar store in the Laguna West area of Elk Grove 10 years ago, he thought he would be putting down permanent roots.

But news that a new hospital is planned on the site of the shopping center where Shehadeh operates Stonelake Vine & Spirits has left him feeling “blindsided” and uncertain of the shop’s future.

“The majority (of owners) are basically scared because we’re small businesses ... built over the years and we don’t want to lose what we have,” he said.

Last January, for-profit medical school California Northstate University purchased the shopping center where Shehadeh and about 15 others own small businesses. In December, the school announced plans to build Elk Grove’s first hospital on the site, a teaching facility with 250-beds spanning 475,000 square feet on an 11-acre site on West Taron Drive. School administrators said they hope to break ground this year and have the facility open by 2022.

Shehadeh and other business owners said they haven’t heard from the university about what will happen to the businesses currently in the center, leaving them worried.

“They haven’t approached us, which is a very unusual,” said Shehadeh. He said he has about six years left on his lease with options to renew and would like to stay.

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In submitted plans to the city, California Northstate University outlines the planned expansion area of its campus where a new teaching hospital, outpatient clinic, parking structures and dormatory, among other facilities, will be built. California Northstate University City of Elk Grove

University counsel Paul Wagstaff said the school didn’t notify its tenants because the announcement of the hospital “was so important and critical to both us and the city of Elk Grove that we thought it would be unfair to run the risk of having a leak.”

Some business owners said when the university purchased the shopping center, they were told they would be able to stay.

“We specifically asked when they bought the land,” said Razor Sharp Kutz owner Steav Jordan. “They came around and (we asked) was there truth to rumors and they assured us we were good.”

Jordan, like most owners at the shopping center, has “no desire to move.” He said the business has about a year and a half left on its lease with an option to extend.

“Four years we’ve been there and been successful,” Jordan said. “We haven’t had any month in negatives.”

CNU president and CEO Dr. Alvin Cheung said the school has “known for several years” that building a teaching hospital was a “natural progression” for both the university and the city.

“But you don’t really talk to people about your dream until it comes to a certain point of possibility,” he said.

Cheung said that when the university bought the property in January 2018, the school “didn’t really think that would be the spot” for a potential hospital — the idea of building near the campus began about five months ago, he said, with the intent to address “public safety” locally.

City representatives and representatives of California Northstate University said the facility would help Elk Grove both by growing its economy and providing access to needed medical care. Currently, Kaiser South Sacramento is the nearest nearest designated trauma center.

The medical center could create 24,000 new jobs, according to school officials, as well as more than $4 billion in regional economic output and help the city bring in nearly $113 million in taxes.

City councilman Darren Suen, whose district represents the Laguna West area, said that while “this is a great facility concept,” he hopes to find a “win-win” solution for business owners. He said he is encouraging the university to help existing businesses move into proposed retail space on the first floor of the new hospital’s parking structures.

“For the longest time in my side of town (I’d hear) ‘Why can’t we get restaurant nearby?’” Suen said. “It’s taken 10 years to get businesses into the area. … To get rid of them all, to wipe it away, would be sad.”

But for David Brown of Dreaming Dog Brewery, opened just over a year ago and with 13 years left on its lease, relocating his facility would not be an easy task. Finding another building in the area with enough electrical power for the business is “the big issue” right now, he said.

“Our business is not like your average one,” he said. It took about a year to have architects and contractors get the building up and running, as well as secure the permitting and local and state government approval.

“We’ve spent close to a million dollars and running,” Brown said.

Cheung said the university plans to meet with business owners individually in the coming days, and will host an information session in “a couple weeks” for the public to share concerns and learn more about the hospital.

He declined to say whether businesses will be bought out of their lease agreements, compensated for relocation or will be offered retail space once construction is finished. “There are many options we should work through,” he said.

“If they’re going to buy out our lease then they need to let us know to make plans. ... Otherwise all these years of building this business … we just can’t let that go to waste,” said Shehadeh. “This is our livelihood.”

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Alexandra Yoon-Hendricks covers Sacramento County and the cities and suburbs beyond the capital. She’s previously worked at The New York Times and NPR, and is a former Bee intern. She graduated from UC Berkeley, where she was the managing editor of The Daily Californian.
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