Gov. Code, § 37612.3

Notwithstanding any other provision of law, upon a recommendation by the board of trustees and upon a finding by the city council that it will be in the best interests of the municipal hospital to provide additional diversification of facilities, the board of trustees may lease and operate the realty facilities, and business of a hospital district in California, or create a leasehold interest in its own realty, improvements, and business in favor of a hospital district, if the following apply:

(a) That the lease when taken together with any extensions of the lease shall not exceed a total of 10 years.

(b) That the lessor district or lessor city shall not finance any capital improvements through the use of the lessor district’s or lessor city’s credit.

(c) That the lessor district or lessor city shall have successfully completed any feasibility studies required by the board of directors of the district or the board of trustees or the city council of the municipal hospital as will reasonably ensure that the lessor hospital’s financial stability will not be endangered by the lease transaction.

(d) Nothing in this section shall be construed to impair or limit the authority of the California Medical Assistance Commission to contract for the provision of inpatient hospital services under the Medi-Cal program with local hospital district hospitals or municipal hospitals as sole distinct entities, even though one or more hospital districts or municipal hospitals may have entered into leasehold or joint-venture arrangements.