HomeMy WebLinkAboutAgenda Statement 1986/02/04 Item 13 COUNCIL AGENDA STATEMENT
Item 13
Meeting Date --1
/
ITEM TITLE: Ordinance c-/3 7 Establishing the power and procedures
whereby revenue bonds may be defeased and City may sell or
lease a health facility SECOND READING AND ADOPTION
SUBMITTED BY: Community Development Director 5ths Vote: Yes No )
REVIEWED BY: City Manage
The ordinance empowers the City to act in relationship to a series of
transactions affecting Bay Hospital . The ordinance does not bind, commit the
City, and is not effective until 30 days after the second reading.
Nevertheless, the passage of the ordinance is a signal that the City will be
involved; thus, the conditions relevant to the proposed transactions should be
understood and made clear at this time.
RECOMMENDATION: Receive testimony, place ordinance on its first reading.
BOARDS/COMMISSIONS RECOMMENDATION: Not applicable.
DISCUSSION:
The subject ordinance has been reviewed by the City Attorney and Special
Counsel Jones Hall Hill & White. Their letter is attached as Exhibit A. The
ordinance (Section 2) declares that it is necessary and a public purpose to
provide assistance to Bay Hospital so as to avoid default on their outstanding
debts. Section 3 provides for the City to borrow funds to defease the bonds
and pay off the notes. The ordinance further allows the City to exercise its
option to purchase and lease the hospital . These actions of defeasance,
purchase, and lease will be subject of resolutions put forth before the City
Council after the effective date of the ordinance.
The conditions placed upon the leasing and possible sale of the facility after
City ownership have been subject to public discussion at Council meetings on
January 14, 21 , and 23. The conditions that have been discussed by the
Council and that are being considered are:
1 . The City will have no financial liability as a result of the subject
transaction.
2. The City will be indemnified for any action relating to the proposal .
3. If the hospital is sold back to Bay (after City ownership) , the City' s
reversionary interest is calculated to be $1 .5 million +.
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Page 2, Item 13
Meeting Date 6
a. In any case, Bay Hospital upon execution of the sale and lease and
sublease shall pay the City $237,828 which is calculated to be the
value of lost property tax during the 10-year period of the
hospital 's nonprofit status.
b. The reversionary interest shall come back to City residents as part
of an indigent care program administered by the owning board. During
the first 10 years of this program, approximately $1 .5 million is
budgeted.
c. Bay Hospital will reimburse the City for the services of Mr. Dyson,
the City s hospital consultant, and for any costs associated with
outside legal counsel .
d. The non-profit corporation' s operation of a health information
service shall provide, in concept, services to the City for such
activities as senior programs and employee education without cost.
4. During the period that the City retains ownership of the hospital , there
would be changes in the owning board structure. In any case, board
membership will be limited to two three-year terms as already provided in
the amended by-laws.
5. The City shall receive the annual reports submitted to the Attorney
General of the State of California for the non-profit charitable trust as
mandated by the creation of the owning board. Furthermore, the City shall
receive the annual budget each year of the owning board to review and
comment upon.
6. The term of the Bay Hospital lease from the City and the sublease to NME
shall be coterminus; that is, 30 years each.
7. NME's community service program should be subject to review by the City
and, in concept, additional services should be provided in relation to the
margin of profit.
As discussed by the City Council at the workshop of January 23, the City will
explore the possibility of retaining ownership of the facility rather than
lease
sale after the mandatory 90-day waiting period. In addition,
between Bay Hospital and NME should insure that the present service levels of
the hospital are maintained.
FISCAL IMPACT: It is proposed
the amount received lost property
tax be used f o r general public benefit through the City' s Capital Improvement
Program.
WPC 2067H
JONE S HALL HILL & WHITE,
A PROFESSIONAL LAW CORPORATION
ATTORNEYS AT LAW
FOUR EMBARCADERO CENTER
KENNETH I.JONES SUITE 1950
ANDREW C.HALL,JR. SAN FRANCISCO 94111
SHARON STANTON WHITE
CHARLES F.ADAMS (415)391-5780
STEPHEN R.CASALEGGIO
WILLIAM H.MADISON AUTOMATIC TELECOPI ER
PHILIP NELSON LEE (415)391-5784
EDSELL M.EADY,JR.
PAUL J.THIMMIG ROBERT J.HILL
BRIAN D.QUINT OF COUNSEL
JORGENL.NIELSEN January 23, 1986
TRACY E.CONN ER
JOHN PAUL THOMAS
RECEIVED
fd .
Mr. Paul G. Desrochers ®8��
Community Development Director C3Cill1lllC4Ety Development City of Chula Vista
Community Development Department
276 Fourth Avenue
Chula Vista, California 92010
Re: Chula Vista Bay Hos•ital and Medical Center Bond Defeasance
Dear Paul :
In furtherance of our recent telephone forth conversation,i n the l ett letter dated November
that we have reviewed the proposal the captioned and
11, 1985 from the law onclus on�(MsetenforthMyens such letter. We find no
difficulties with the plan of defeasance and, at your request,
difficulties with the proposed p
would be pleased to act as special counsel to the City with respect to the
defeasance transaction.
When we may be of further assistance please do not hesitate to contact
either Chick Adams or myself. Very truly yours,
Sharon Stanton White
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