LAFCO sets zero sphere of influence for Palo Verde Healthcare District amid bankruptcy proceedings

Chair Vargas and the Riverside Local Agency Formation Commission on Dec. 4 approved staffrecommendations to set the Palo Verde Healthcare District's sphere of influence (SOI) to zero, a step the executive officer described as preparatory to possible dissolution while bankruptcy proceedings continue.

Gary Thompson, the commission's executive officer, told the commission that at the previous meeting staff had been directed to begin steps toward dissolution and that setting the SOI to zero is one of those steps. "If we go to a 0 sphere, we're basically saying that's just a step towards dissolving the district, but it can be changed if for some reason the district is able to continue on after the bankruptcy proceedings are done," Thompson said, adding that the district will continue to operate under the bankruptcy court system and that the SOI action does not alter that operating status.

Two members of the public spoke during the hearing. Michael Rose, who identified himself as providing an update on the district's financial position, said the district had taken steps to stabilize finances, achieved a "19% reduction in the open AR balance over the last few months," and was awaiting bankruptcy-court approval of eligibility. "The district has found a way to fund the IGT program, which is critical to our financial sustainability through the end of the fiscal year," Rose said. Amy Quinn McDuffie, speaking on behalf of Supervisor V. Manuel Perez, said the county has been engaged in discussions with the district, Riverside University Health System and city officials. "If he were here today, he would vote in favor of this item," McDuffie said.

After public comment, Commissioner Sanchez moved to approve the staff recommendation to set the SOI to zero; Commissioner Areola seconded. The commission adopted the staff report and related resolution by unanimous roll-call vote.

The action is procedural: staff said the SOI change facilitates later dissolution steps but does not itself dissolve the district, and that an intent-to-dissolve letter may be postponed until the determinations required for that step are complete. The commission noted that the SOI setting can be reversed if the bankruptcy is discharged and the district demonstrates an ability to continue operations.

Next steps: the staff report and resolution were adopted; the transcript records no additional binding direction to dissolve the district at this meeting. Further actions tied to dissolution will depend on the outcomes in the bankruptcy court and subsequent determinations by the commission.