New Kaiser hospital at railyard to replace Morse Avenue site

Kaiser Permanente said Wednesday its new hospital at the downtown Sacramento railyard will replace the Morse Avenue medical complex.

In formally announcing its plans to build a new hospital that will jump-start development at the historic railyard, Kaiser acknowledged what had been speculated in the community: Morse Avenue will close when the new facility opens.

Built 50 years ago, Morse would need to be rebuilt before 2030 to meet state earthquake-safety codes. Kaiser said it made more sense to start fresh at the railyard.

Kaiser added that the new hospital, to be located on 18 acres in the railyard’s northwest corner, probably won’t open for another seven to 10 years.

Officials with the health care giant gathered with Mayor Kevin Johnson, Rep. Doris Matsui and railyard developer Larry Kelley at a news conference on Railyard Boulevard, the recently constructed east-west road that runs through the 240-acre parcel.

“We know for decades this railyard has been idle,” Matsui said of the site, where Union Pacific pulled up stakes in the 1990s. “We needed this huge commitment from Kaiser as our anchor tenant.”

Johnson said the new hospital will likely cost $500 million, but Kaiser officials weren’t willing to commit to that figure. “We do not have any cost estimates at this point,” said Ron Groepper, Kaiser’s senior vice president and area manager.

Groepper said the new hospital will likely employ at least as many people as Morse Avenue, which has a payroll of about 3,000. The hospital chain hasn’t decided what to do with the Morse Avenue real estate after the medical center closes.

He and Gregory Adams, the hospital chain’s regional president, said the railyard decision culminates a lengthy search throughout the city. They said Kaiser believes the railyard site is the best strategic location for serving as many patients as possible.

“We believe it’ll be an ideal situation for the members,” Groepper said. “So many sites … would have worked.” Kaiser recently spent $40 million buying an office building on J Street, just south of the railyard, which will be turned into a medical office complex.

City officials talked to Kaiser for two years about building the hospital at the current site of Sleep Train Arena in Natomas, which the Sacramento Kings will abandon when their downtown arena opens in October 2016. Groepper said the old arena site has its virtues, but the railyard site is better.

City Councilwoman Angelique Ashby, who represents Natomas, said she was nonetheless delighted about the railyard decision by Kaiser. For the first time, her constituents will have an emergency room within five minutes of their homes, she said.

Officials with the Kings have said they’re confident they can find another use for the Sleep Train site.

Kaiser is the first commercial entity to commit to buying land in the railyard, which has gone through numerous owners and development blueprints since the railroad left. The other major potential occupant looking at the site is Sacramento Republic FC, the minor-league soccer team that would build a $125 million stadium at the northeast corner if Sacramento gains admission to Major League Soccer.

This story was originally published July 1, 2015 at 11:25 AM with the headline "New Kaiser hospital at railyard to replace Morse Avenue site."