HomeMy WebLinkAboutcc min 1986/01/23 MINUTES OF AN ADJOURNED REGULAR MEETING
OF THE CITY COUNCIL OF CHULA VISTA
Thursday, January 23, 1986 Council Conference Room
4:00 p.m. Public Services Building
MEMBERS PRESENT: Mayor Cox; Councilmembers McCandliss,
Scott, Moore, Malcolm
MEMBERS ABSENT: None
STAFF PRESENT: City Manager Goss, City Attorney Harron,
Assistant City Manager Asmus
1. REPORT ON CHULA VISTA TRANSIT (CVT) SERVICE PLAN FOR
FY 1986-87 (Director of Public Works/City
Engineer)
Transit Coordinator Bill Gustafson discussed the proposed CVT
Service Plan for FY 1986-87. The plan involves the addition of
two new CVT routes, restructuring of two routes and the purchase
of two additional 35 foot Orien buses. Mr. Gustafson submitted
fact sheets explaining that based on the current CVT ridership,
the development of East "H" Street and East "J" Street, and the
scheduled opening of the Bayfront Trolley Station in October of
1986, he is proposing the following service additions and changes
in FY 86-87: (a) the implementation of a new Route 707 in August
of 1986 and deleting Route 704a. Route 707 would operate between
the "H" Street Trolley Station and southwestern College via East
"H" Street, Terra Nova, Paseo del Rey, East "j" Street, Paseo
Ladera, Telegraph Canyon Road, Southwestern College, and Apache
Drive making that loop; (b) the proposal is to add a second bus to
Route 706 to operate in a counter clockwise direction and serve
the Bayfront Trolley Station. This existing Route 706 would
originate at the "H" Street Station and operate in a clockwise
direction and the new 706 loop would originate at the Bayfront
Trolley Station and operate in a counter clockwise direction; (c)
to restructure Route 704 to terminate at the Bayfront Trolley
Station; and (d) to extend San Diego Transit Route 32 to the
Bayfront Trolley Station.
Mr. Gustafson stated that in order to operate these
recommendations there is a need for the purchase of two additional
new buses at a total cost of approximately ~304,000.
Mr. Gustafson then presented an overview of the financial picture
of the transit operation. In FY 1985-86 the income was
$1,840,168; expenditures $1,371,939 with a balance of ~468,229 and
a carryover balance of $565,547. In FY 1986-87 the estimated
income is $2,129,000; expenditures $1,321,000, leaving a balance
of $808,000. The balance for the two fiscal years would then
total ~1,373,347.
Minutes - 2 - January 23, 1986
Council Conference
Councilman Malcolm expressed his concern with justification for
the purchase of the two new buses. Mr. Gustafson responded that
it would still be his recommendation to purchase the buses whether
or not the Bayfront Trolley Station was constructed. (Mayor Cox
left the meeting at this time.)
MSC (Malcolm/Scott) to accept the staff report and recommendations.
Councilman Moore suggested that Route 32 (which is proposed to go
to the Bayfront Station) be held i~ abeyance until a later time.
Councilman Malcolm said he would include this in his motion.
Councilman Scott accepted is as a second and the motion carried
unanimously with Mayor Cox absent.
2. REPORT SIGNAL PRIORITY LIST (Director of Public
Works/City Engineer)
City Traffic Engineer Chuck Glass explained that once a year the
Traffic Engineering Division completes a City-wide warrant study
of the 21 unsignalized intersections and the 13 signalized
intersections to determine the relative needs for new signal
installations or modifications to provide left turn phasing. As a
result of this study, a system of warrants has been developed
which are nationally accepted and which serve to identify the
installation of new traffic signals and/or left turn phasings in
order to handle traffic more efficiently and to improve traffic
safety. (Mayor Cox returned to the meeting at this time.)
In answer to Councilman Scott's query, Mr. Glass stated that the
Montgomery annexation area was generally included in the study;
however, staff will be looking more closely into that area in the
next fiscal year.
Council discussion centered on the 1-805/Bonita Road
intersections. City Engineer Lippitt noted that CalTrans has been
contacted and has agreed to pay 50% of the cost of the
installation for the signalization for the southbound ramps.
National City is being requested to pay 1/4 and Chula Vista will
pay the other 1/4.
In answer to Council's questions, Mr. Glass stated the cost of a
new signal is approximately $80,000. As to the signalization at
Melrose and "L" Street, the recommendation some time ago was to
cut down the hill as one of the options to improve the area. The
cost of cutting down this hill would be approximately ~600,000.
As to the recommendations for the 1986 intersection evaluation
list, Mr. Glass stated it would be his recommendation to go with:
(1) East "H" Street/Paseo del Rey; (2) Hilltop Drive/Quintard
Street; (3) Orange Avenue/Max Avenue and; (4) Orange Avenue/Second
Avenue.
Minutes 3 January 23, 1986
Council Conference
For the left turn phasing on the 1986 intersection evaluation
list, Mr. Glass stated it would be his recommendation to go with:
(1) Fourth Avenue/"E" Street; (2) Third Avenue/"E" Street and; (3)
Forth Avenue/"L" Street. Mr. Glass added he would recommend Fifth
Avenue/"H" Street, and Broadway/"J" Street be held in abeyance
until future plans for the shopping center area are decided upon.
MSUC (Scott/Malcolm) to accept the staff report.
MSUC (Cox/Scott) for staff to wor~ with CalTrans to expedite the
installation of the traffic signal at"H" Street/I-805.
A recess was called at 5:10 p.m., the meeting reconvened at 5:15
p.m.
3. REPORT BAY HOSPITAL PROPOSAL TO LEASE AND SELL
FACILITIES
Councilman Scott and Councilman Malcolm left the meeting at this
time noting their potential conflict of interest on this item.
Mayor Cox noted this was a continued public hearing and reopened
the public hearing at this time.
City Manager Goss referred to the great amount of material
submitted on this item. He referred to his memo to the City
Council dated January 14 in which he listed the following six (6)
recommendations:
(1) The defeasance should unequivocally assure the 'City that
there are no outstanding debts against the hospital that
could relate to City sponsorship.
(2) The City should be indemnified from any actions relating
to the proposal of Bay Hospital and/or of National
Medical Enterprises (NME).
(3) The City should not be liable, in any manner, for its
legal ownership of the facility and its lease back to
the Owning Board and sublease to NME.
(4) The City's reversionary interest should be returned to
the community through an indigent care program. The
management of the indigent care program, while under the
sponsorship of the Owning Board, should have community
input and, therefore, it is proposed that the City
appoint at least one member of a five-person overseeing
board for indigent care.
(5) The City should be reimbursed for out-of-pocket expenses
and for lost property taxes during the period of time
the hospital was off the tax rolls. The amount plus
interest is calculated at ~237,828.
Minutes - 4 - January 23, 1986
Council Conference
(6) That, in concept, free information services be provided
from the Health Information Center portion of the
non-profit corporation to the City for such activities
as support for senior programs, employee education, etc.
Additionally, City Manager Goss stated he added three (3) more
conditions as listed in his memo of January 21:
(1) A performance condition be added requiring that a
consultant be retained b~ the indigent care committee to
develop an indigent care plan satisfactory to the
committee as well as the Council.
(2) Make further changes to the bylaws of the owning board,
which would be committed to contractually providing for
new appointees to the board being drawn from a list
supplied by the City Council on a two-for-one basis,
with the board converting to a two-term limit with three
years per term, and that the position of Chief Executive
Officer on the owning board be eliminated.
(3) That a performance condition be attached that the
non-profit entity's annual budget be reviewed by the
City Council, as well as the Attorney General, and that
there be certain consequences if performance in meeting
that budget does not take place. As a parenthetical
note, during the first phase of the proposed transaction
of 90 days, the non-profit entity should supply to the
City Council a line item budget for their first year of
operation.
Mr. Goss noted that under item (2), instead of being the two years
per term, it should be three (3) years per term.
Community Development Director Paul Desrochers referred to his
written statement dated January 23 in which he listed the
following proposed transactions which involves the City's action
in regard to the proposal of Bay Hospital:
1. City passes an ordinance which will be effective in thirty
days. The ordinance would allow the City to enter into
agreements to buy, lease and sell the hospital facility.
2. City passes a resolution after the above ordinance become
effective whereby, with monies from National Medical
Enterprises (NME), bonds would be defeased and the City would
assume ownership of the hospital with an agreement to lease
the facility to Bay Hospital who would in turn sublease to
NME.
Minutes - 5 - January 23, 1986
Council Conference
3. NME would defease both the 75-77 and 83 bonds and notes
respectively, which would be in the form of a pre-paid
lease. The actual bond defeasance triggers the City
ownership in accordance with Rule 6320 of the Security
and Exchange Commission relating to the financing of
non-profit institutions with municipal sponsorships.
4. City receives ownership of the property, leases to Bay who in
turns sublets to NME. The C~ty ownership would be effective
for 90 days and its lease to Bay Hospital would be for
thirty-five years and Bay's sublease to NME would be for
thirty years. The reason for this is that the City may not
immediately sell the facility for 90 days in accordance with
federal government statutes. The length of the term of the
lease protects NME's investment that was utilized in step
number 3 to defease the bonds. At this point in time, NME
has put up approximately 15 million dollars.
5. At the end of the 90 day period, City gives up ownership of
Bay Hospital to the Bay Owning -Board. In effect, this
transaction nullifies the City's thirty-five year lease to
Bay Hospital. As part of this transaction, the City receives
the reversionary interest in the amount that is proposed by
the City at this time.
6. Bay is now owner of the land outright, operates the Owning
Board and its activities and sub-lets the operation of the
hospital in accordance with the previous agreements for a
period of thirty years.
Mr. Desrochers noted that under item 5, the sentence should read,
"As part of this transaction, the City may receive the
reversionary interest..."
Speaking in support of the proposal was Jesse Osuna, immediate
past-president and current director of the Bay Medical Center, Dr.
Salganick, 855 Country Club Drive, Chula Vista, practicing
physician at both Bay Medical and Community Hospitals and
currently serving on the Board at Bay Medical, and J. Brett
Tibbitts, attorney for the hospital from the firm of Girard,
Ellison, Christianson & West, Los Angeles.
Mr. Osuna spoke of the need to pay off the bond indebtedness of
$8.3 million; noted the changes in the Board since 1982; the
primary concern is for the good of the community; there will be no
reduction of staff or cutbacks in service when NME takes over; the
Board is proposing the two term limitation.
Minutes 6 January 23, 1986
Council Conference
Council discussion followed in which Attorney Tibbitts answered
questions pertaining to the defeasement of the bonds; the 90-day
period of time and potential liabilities to the City; the 120 page
lease document between NME and Bay Medical; the reason for the
30-year vs. the 35-year time period lease agreement; discussed the
"unknowns" in the hospital services; and NME will be responsible
for the indemnity of the bonds so therefore, the City will have no
liability.
Mr. Joe Dyson, President, Health ~are Capital, La Jolla, stated
there has been a great deal of pressure in the last two or three
years in hospital financing. This happened in San Diego when NME
came over and took over Physicians & Surgical Hospital, the same
is happening at Bay Medical; they are now in a financial crunch
and this is one way in which to solve their dilemma.
Dr. Salganick stated he has been in Chula Vista since 1965 and
noted the great deal of time spent in preparing a lease between
NME and Bay; the talks they had with other hospitals in the area
such as Alvarado and Mercy Hospital; the decision to align
themselves with a large medical group such as NME; the need to
expand the facilities at the hospital; the commitment to make sure
that the operating board of the hospital would be a majority of
community people; the check that NME could not change patients;
discussed the mix of patients and other concerns as delineated in
the lease.
Councilwoman McCandliss commented on the negotiations with NME and
questioned whether or not once NME reaches their profit margin
whether any thought has been given to enter into a profit sharing
project at that time whereby the "extra" money would go for
community services.
Mr. Dean Weiner, representing O'Melveny & Meyers, Los Angeles,
discussed with the Council: (1) what would happen if Bay defaulted
on the bonds; (2) the tax-exempt status; (3) what impact this
would have on the City and (4) the liability on the part of the
City; (5) the action would be against Bay Hospital, but
technically against the City; (6) the hospital would have to go
into bankruptcy and work it out; (7) the default, or bankruptcy,
might influence future bond issues for the City; (8) there is a
provision in the lease whereby Bay Medical will receive fair
consideration for the lease to NME.
A recess was called at 6:25 p.m. and the meeting reconvened at
6:32 p.m.
Minutes - 7 - January 23, 1986
Council Conference
Mr. Robert Larson, Administrator of Bay Hospital Medical Center
declared that if the City was not to transfer title to the
hospital for one or two years, it would affect the operation of
the hospital. The implication Of the hospital going into
bankruptcy will also have a detrimental effect on the City or
whoever comes in to operate it. It would also affect the 900+
employees of the hospital.
Mr. Harris Koenig, representing NME, Canoga Park, CA stated they
have gone through a great technical process in coming up with the
lease with Bay Medical and many of the Council's concerns are
addressed in the lease. One of the unique features with the NME
Corporation is that when they go into an agreement such as this,
they look toward creating a partnership which can be blended into
the community. They offer expertise in the following areas: (1)
the expertise of NME, (2) the expertise of the medical staff and
(3) community members who serve on the Boards and on the Advisory
Committee. As far as raising rates in the hospital, most of the
income from the hospital is from patients on Medi-care, Medi-cal,
and so forth, where the Federal Government sets the prices. Mr.
Koenig noted comparison of the rates with Alvarado Hospital and
Physicians Surgical/Medical Center noting it was extremely
difficult to compare prices because of the different services
offered by these hospitals. There are certain safeguards built
into the lease governing staff reductions - NME is not able to
reduce any services or staff without the express consent of the
owner board.
Councilwoman McCandliss questioned on a philosophical basis, if in
a given year or two NME did very well in the hospital and received
a fair return on their investment, would it be reasonable to take
a portion of that return and convert it to the non-profit side.
Mr. Koenig said he would have some business concerns with this
philosophy.
Attorney Melvis S. Spears from the firm of Irvine, Cohen & Jessop,
Beverly Hills, CA, noted that there is an on-going rent payment
to the owning board to continue charitable activities in the City.
Jackie Payne, 339 East "J" Street, Chula Vista, spoke in
opposition of the City "aiding NME in taking over the hospital."
She stated the City is being unwittingly used as an accessory.
Mrs. Payne stated the tax-exempt bonds are for non-profit
institutions; the residents of Chula Vista would much rather have
a non-profit operation taking over the hospital; questioned why
one of the other non-profit hospitals would not take over; if NME
comes in the cost of the services in the hospital will increase at
least 50% higher; staff reductions will be made and services will
go down for patient care; she was working at Southwest Hospital in
Chula Vista when NME came in and took over and she was laid off on
January 17, along with other personnel.
Minutes - 8 - January 23, 1986
Council Conference
In answer to Councilwoman McCandliss' question, Mr. Koenig noted
the difference between licensing of psychiatric institutions and
hospitals and the ratio for those institutions.
Mr. John Hamilton, Chula Vista, a retired senior citizen,
explained how most of the payments come into the hospitals based
on the (1) Medi-care or Medi-cal payments; (2) length of stay of
the patient; (3) type of surgery or need of the patient; (4)
discussed HMO Operation facilities. He summarized that this
hospital needs someone who has money up front that can take over
and pay off the indebtedness.
Community Development Director Desrochers stated staff will be
preparing an ordinance or some type of document for Tuesday
night's agenda and asked for Council's direction on this.
City Attorney Harron stated an ordinance can be brought back on
Tuesday's agenda which would be to proceed with the operation;
however, the ordinance would need a first and second reading and
it would not become effective until 30 days thereafter. During
this six week period of time the Council's questions could be
addressed and the resolution, which would be brought back at that
particular time, would have all of the concerns addressed in it.
The following were the comments and concerns addressed by the
Council:
MAYOR COX:
The question of liability (wants report from City Attorney on
this).
The for-profit vs. non-profit hospital service rates.
Higher cost may result.
The impact on Community Hospital and Paradise Hospital.
People may be encouraged to go to the other hospitals if rates are
increased at Bay Medical.
It would give the people an opportunity to "shop around" for lower
rates.
Impressed with NME operation; prefers to see Bay Medical remain a
not-for-profit hospital but this seems unrealistic.
Bay Medical has a great financial problem at this time.
All things being equal, this is a reasonable proposal.
Minutes - 9 - January 23, 1986
Council Conference
Concern with the time of the lease; feels it should be concurrent
30 years.
There is a concern against the second step after the 90-day period
of time has lapsed; selling the hospital back to Bay Medical or
anyone else for that matter.
Does not want the City in a position to have to operate the
hospital.
In favor of the two term limitation.
Has concerns over some of the community services that will be
provided and wants more information on that (training program for
nurses).
There needs to be a greater effort to make sure the composition of
the hospital board is representative of the entire community.
Would like to see some participation by the City Council as to the
composition of the Board members.
COUNCILWOMAN MCCANDLISS:
Getting the hospital on a strong footing in order to provide
quality care to the community.
Would prefer to see it remain a non-profit hospital.
Wants her recommendation of profit-sharing explored.
Cannot see a non-profit hospital in the County coming in and
taking over the debtedness of this hospital.
The facility needs improvements which will cost money.
Wants to look at the lease agreement between NME and Bay Medical.
Does not want to see any changes in the lease that would sacrifice
the quality of services to the community.
Noted the action of the City Council on the 83 bond issues and the
conditions imposed on that which were not followed through by Bay
Medical such as health screening and so forth.
Bay Medical should have taken a stronger position some time ago
and increased their rate services.
Disappointed that the Council is placed in this position at this
time.
Minutes - 10 January 23, 1986
Council Conference
COUNCILMAN MOORE:
Agreed with the concerns expressed by both the Mayor and
Councilwoman McCandliss, noting most of those were his concerns as
well.
The City's diversonary interest should be returned to the
community.
Would like to see the City CounciZ appoint at least one member to
the Indigent Care Committee.
The City should be reimbursed for the loss of property taxes for
the time the hospital was off the tax rolls in the amount of
~240,000.
MS (Moore/McCandliss) for City Manager to prepare the appropriate
documents that the City be reimbursed for out-of-pocket expenses
for the loss of property taxes for the time the hospital was off
the tax rolls (~237,828).
Under discussion of the motion, Mayor Cox noted it was the intent
of the City Manager to attempt to recoup the property taxes that
would have been paid during the last 10 years in which Bay Medical
operated as a non-profit institution. He is not sure he wants to
tag (the motion) as a condition of the lease in the event the City
does not sell its reversionary interest.
Councilman Moore stated that was his motion but he will be
withdrawing his motion at this time.
Councilwoman McCandliss agreed to withdraw the second.
MSUC (Cox/Moore) for staff to bring back an ordinance at next
Tuesday's (January 28) meeting to set in motion the mechansim to
consider the lease with Bay Hospital Medical Center.
Further concerns expressed were:
MAYOR COX:
Wants the City Manager to supply a list of the names that are on
the current owner board - wants City input on this Board.
Has no problem with the two term limitation of three years each.
He is not convinced that the Chief Executive Officer be a voting
member of the Board.
Wants the non-profit entity's budget reviewed by the Council as
part of the performance criteria for the duration of the lease.
Wants the lease to be coterminus for Bay Medical and NME - 30
years as opposed to 35.
Minutes 11 - January 23, 1986
Council Conference
In answer to Councilwoman McCandliss' question, City Attorney
Harron explained that prior to the 30 year term period, people
will come in and try to make some type of arrangement with the
City for extension of the lease or purchase of the facility.
Also, the City can go out and market the facility and see what
transpires.
MSUC (Cox/McCandliss) to continue the public hearing to the
meeting of January 28, 1986.
ADJOURNMENT AT 8:15 p.m. to the meeting of January 28, 1986.
e M. Fulasz, CMC'~ ~
City Clerk
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