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HomeMy WebLinkAboutcc min 1986/04/24 MINUTES OF A COUNCIL CONFERENCE OF THE CITY OF CHULA VISTA Thursday, April 24, 1986 Council Conference Room 4:00 p.m. City Hall ROLL CALL MEMBERS PRESENT: Mayor Cox; Councilmembers Malcolm, McCandliss, Moore MEMBERS ABSENT: None STAFF PRESENT: City Manager Goss, Assistant City Manager Asmus, City Attorney Harron 1. DISCUSSION ON BAY HOSPITAL MEDICAL CENTER/NME ISSUE Mayor Cox noted the meeting was called to discuss the Bay Hospital Medical Center. Mayor Cox noted the letters received from Bay Hospital concerning the appointment of two (2) Councilmembers to serve on the hospital Board and further, for the City not to take any action concerning the agreement between the National Medical Enterprises (NME) and Bay Hospital Medical Center. In answer to Councilwoman McCandliss' query, Mr. Bob Larson, Administrator for Bay Hospital, stated the two (2) Committee members would receive all the confidential reports going to the Board so the Council can be kept well-informed on all the proceedings in this matter. Councilman Malcolm questioned whether the firm of Miller & Schroeder gave Bay Medical anything in writing concerning the changes in management style, fees or regarding the bonds. Mr. Larson stated there was no direct correspondence from Miller & Schroeder; however, there is a provision in the agreement done by Arthur Young in its study of 1984 which the hospital is now implementing. Mr. Jeff Kinsell, Miller & Schroeder, testified Miller & Schroeder felt all procedures were being implemented and NME would come in and pay off the notes and take over. They were "asleep" on this proposal when NME backed out of the agreement. They are now taking another look at this entire matter and will have a report to the City Council within 2 or 3 weeks. Their first responsibility is to the investors who bought the bonds; they want them to be paid off; however, they will not jeopardize their relationship with the City. If there are tough decisions to be made they are ready to make them. Minutes - 2 - April 24, 1986 Mr. Kinsell added that in 1983, when Miller & Schroeder issued the bonds, they never anticipated they would have to pay the bonds off, that is clear in all the documents. They would anticipate refinancing (longer term financing) the terms to coordinate with a planned expansion. There is a requirement in the covenant that the hospital hire a consultant to make recommendations. If the recommendations are not made, then a financial management firm would be brought in to take over the operation of the hospital. Discussion followed regarding the underlying notes and 1977 bonds and why they did not go into default; hospital building and equipment being pledged; question of losing the reversionary interest; received no reason why NME backed out of the deals; financing for the hospital in 1983 was done pursuant to an ordinance and the City Charter with no reversionary interest; one of the items they are looking at is limiting the tax exemption and making the hospital a non-profit organization - this is being explored in order to pay off the 1983 notes; prior to August 2.0, 1986, something has to be done - if money is not in place at that time, there will be a technical default. City Attorney Harron indicated it was-his impression that the City's reversionary interest was not on the line as part of the security. Mr. Kinsell explained that in a foreclosure proceeding, if City comes in and pays off the bonds, it exercises its reversionary feature. If however, the City waives this feature, the bond holders can take the property back. Councilman Malcolm commented that the problem with Bay Medical right now existed because of prior administration or within the present administration. He felt the Council has an obligation to insure a bad or worse situation does not occur, adding the Council "was wrong" in not having at least 1 member appointed to the Board in order to report to them. It should be an independent member, not a member of the Council. He would like to see the Council get some type of say in that Board process. Bay Hospital is running as close to 100% occupancy as possible and still there are financial problems. Mayor Cox stated he does not advocate the City taking over the hospital. He would like to see come out of this situation a willingness by Bay Hospital and Community Hospital to go back to the report given to both hospitals (Hamilton's Report) and see whether or not there is some type of opportunity there. The ultimate benefit to the community would be to take away the politics involved and see what the medical needs of the community are. The best service to the South Bay is for both hospitals to come under one Owning Board this could be looked into and still have it continue as two hospitals. Minutes - 3 - April 24, 1986 Councilman Malcolm stated he is inclined to have the two Boards separate because there is some merit to having simple competition. In this instance, Bay Hospital has been "heads and shoulders" over Community Hospital regarding community services. Councilwoman McCandliss stated she hasn't read the Hamilton Report but agrees with Councilman Malcolm regarding the competition aspect. She noted the sensitivity in the industry right now since hospitals such as Mercy, Sharp and Grossmont are having major shakeups. Councilman Moore remarked that high occupancy for any facility does not mean more profit; making appointments to the hospital boards does not mean it will be a better run Board or hospital; was under the impression that if the City went along with the bonds $3 million would be rolled over or paid off. Mr. Kinsell stated he didn't remember any clause stating ~3 million would be paid off. As underwriters, they have certain obligations with the major thrust now being on Miller and Schroeder and not the City. He reiterated he will come back to the City in 2 weeks with a report and timeframe. He added that the covenants in the agreement were made as well to the City as to the Trustee. City Attorney Harron noted the City was, therefore, a beneficiary of the contract. Mr. Brett Tibbitts, Attorney, representing Bay Hospital Medical Center, stated that the City has no role or authority whatsoever up to the year 2010 on the 1983 bonds. The person in authority is the trustee who was appointed on behalf of the bond holders and note-holders. MS (Malcolm/Cox) Council be allowed to submit 2 or more names to Bay Hospital Medical Center for the selection for 2 seats on the Board. The seats would be for the vacant seats brought about through normal attrition process. Council discussion followed regarding the motion noting that Community Hospital should be included in this motion also. Councilwoman McCandliss asked that it be made a part of the motion. Councilman Malcolm agreed to add Community Hospital to the motion. The motion carried unanimously. 2. MSUC (Moore/McCandliss) to schedule a meeting for Saturday, April 26 at 8:00 a.m. for interviews of potential applicants to the City Council. (Seat #3) Minutes - 4 - April 24, 1986 3. MSUC (Cox/McCandliss) each Councilmember to submit 6 names to the City Clerk prior to 8:00 a.m. on Friday, April 25. These people to be interviewed on Saturday morning. 4. City Manager Goss submitted a memo to the City Council regarding budget sessions. Mayor Cox stated he would have the Council Secretary poll the City Council as to specific dates. 5. MAYOR'S REPORT a. Mayor Cox noted the letter received from the Bonita/Sunnyside Fire District Board. MS (Cox/McCandliss) to designate Councilwoman McCandliss and Mayor Cox to have one more meeting with the Board of the Bonita/Sunnyside Fire District. DISCUSSION OF MOTION Councilman Malcolm stated he is voting against the motion indicating everyone is very familiar with this project and he can see no need to "politically pacify that Board." The motion failed by the following vote: AYES: Cox, McCandliss NO: Malcolm, Moore ABSENT: None 6. COUNCIL COMMENTS a. Councilman Moore reported that the 75th Anniversary Committee would like to sponsor some music prior to the fireworks at the "J" Street Marina on July 4, 1986 and he is working on having adequate speakers so that everyone can hear the music. b. Councilman Moore asked that the City Council submit names for the Civic Recognition Awards. ORAL COMMUNICATIONS Mr. C. R. Campbell stated he missed the Oral Communications but would like to ask the Council whether a list of names to be submitted by the City Council for possible membership on the Board would be privy to the Closed Sessions. Councilwoman McCandliss stated this was the intent of the Council. Minutes 5 April 24, 1986 c. Councilman Malcolm declared that certain developers are raping land off the City. The City previously extended ~1.6 million of its money to this developer and then when they could not meet the timeframe, they came back to the Council and asked for another extension of time and received it. They are now again behind schedule and not meeting their extended dates. There is no punishment or loss of profit to them; however, the City has lost several thousands of dollars (interest) of its citizens' monies. MSUC (Cox/McCandliss) to schedule this item for the first Agency meeting next month. d. Councilwoman McCandliss clarified a "rumor" stating when she was appointed in 1979, the Council did not make a commitment from the candidates not to run in the following election. MSUC (Cox/McCandliss) for a Closed Session to discuss the 404 Permit and Sierra Club vs. Coastal Commission. The Council recessed to Closed Session at 5:40 p.m. The City Clerk was excused and the City Manager reported the session ended at 6:10 p.m. ADJOURNMENT AT 6:10 p.m. to the meeting scheduled for Saturday, April 26 at 8:00 a.m. ~la~s~z,~lerkM F 0787C