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HomeMy WebLinkAboutMINUTES - 10312006 - D.1 sE._L Contra TO: BOARD OF SUPERVISORS ` �— is FROM: William Walker, M.D., Health Services Director o' d,:sro - Costa , DATE: October 31, 2006 - ti�ko e6 County SUBJECT: Hearing to consider approval of a property tax exchange agreement between the County and the West Contra Costa Healthcare District and approval of related contract documents and appropriation adjustment to support the continued provision of health care services to the community at Doctors Medical Center. SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1. ACKNOWL`DGE that Doctors Medical Center is the only hospital in West Contra Costa County serving the general public and, as such, is a critical component of the County's Emergency Medical Services system. 2. ACKNOWLEDGE that Doctors Medical Center is in Bankruptcy and will close in the next three weeks without financial assistance. 3. ACKNOWLEDGE that the County has a vested interest in protecting the health of the general population, and as such is interested in assisting in the development and implementation of a long term Recovery Plan for the hospital. 4. ACKNOWLEDGE that the District had a hearing in the Bankruptcy Court on October 26, 2006 seeking approval of the Recovery Plan based on the terms and conditions contained in the agreements identified below. The Bankruptcy Court granted approval to the Districts motion (see attachment-Bankruptcy tab). CONTINUED ON ATTACHMENT:_ NO X YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): �() ACTION OF BOARD ONO p r d L4���'�f , lC/APPR�OV�E AS RECOMMENDED OTHER VOTE OF SUPERVISOR I HEREBY CERTIFY THAT THIS IS A TRUE X UNANIMOUS (ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN 1` AND ENTERED ON THE MINUTES OF THE BOARD AYES: NOES: OF SUPERVISORS ON THE DATE SHOWN. ABSENT: ABSTAIN: ? ,�w ATTESTED cJ /, JOHN CULLEN,CLERK OFT E BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR Contact Person: Patrick Godley,957-5405 CC: Health Services Admin,50 Douglas Dr.#310-A,Mrtz ��r/ • BY: C/ ,DEPUTY Hearing to consider approval of a property tax exchange agreement between the Countyand the West Contra Costa- Healtht;are District and approval of related contract documents and appropriation adjustment tcasupport the continued provision of health care services to the community at Doctors Medical Center. October 31,2006 Page 2 5. ACKNOWLEDGE that the County duly gave notice of a public hearing pursuant to Government Code section 6061. 6. CONDUCT A PUBLIC HEARING pursuant to Revenue & Taxation Code section 99.02(e) to consider the effect of the proposed transfer of general property tax al- location to the County by West Contra Costa Healthcare District on fees, charges, assessments, taxes or other revenues. 7. ACKNOWLEDGE that the County Auditor Controller has concluded that if the property tax transfer is enacted (1) that countywide property taxes will not go above the 1% rate established by Proposition 13 and (2) that schools or other taxing agencies will not be adversely affected. 8. ADOPT a resolution authorizing an exchange of property tax revenues for support of health care services between West Contra Costa Healthcare District and Contra Costa County. 9. APPROVE AND AUTHORIZE the Health Services Director or designee to execute a tax exchange agreement between Contra Costa County and the West Contra Costa Healthcare District. llL hN- 0-i e_j*;6AA-4 Lf �Af 10. APPROVE AND AUTHORIZE the Health Services Director or designee to execute a Memorandum of Understanding between Contra Costa County and the West Contra Costa Healthcare District, which will establish a joint management board with majority representation by the County. 11 APPROVE AND AUTHORIZE the Health Services Director or designee to execute a contract with the State of California for the transfer of up to ten million dollars for the purpose of securing Federal matching funds for Doctors Medical Center. The actual timing and amount of the transfer will beat the discretion of the Health Services Director. 12. ACKNOWLEDGE that due to the crisis situation at Doctors Medical Center, the Hospital Recovery Plan was developed in an extremely short time period. 13. ACKNOWLEDGE that the County for the preparation and review of the contract documents and agreements utilized the law firm of Foley Lardner. 14. AUTHORIZE County Counsel to make any technical changes needed to the con- tracts and agreements to assure compliance with County procedures and protocol. Hearing to consider approval of a property tax exchange agreement between the County and the West Contra Costa Healthcare District and approval of related contract documents and appropriation adjustment to support the continued provision of health care services to the community at Doctors Medical Center. October 31,2006 Page 3 1 15. ACKNOWLEDGE that the actions taken today do not guarantee the long-term solvency of the hospital. 16 ACKNOWLEDGE that a viable business model has not been found to date. 17 ACKNOWLEDGE that the development of a viable business model, as stated in the Memorandum of Understanding, is a mandatory first step toward the long-term solvency of the hospital. 18 DIRECT the,Health Services Director to report back to the Board on a monthly ba- sis, or sooner as needed, on the progress of implementing the recovery plan. 19. APPROVE Appropriation Adjustment No. 5032 authorizing the Auditor-Controller to release $10,000,000 from Designation General Fund Capital Reserve and appropriate it to County-State-West Contra Costa Healthcare District Inter- Govenment Transfer (Dept 0018) to provide funds for the transfer of up to $10,000,000 for the purpose of securing Federal matching funds for Doctors Medical Center. FISCAL IMPACT: The County will transfer up to $10 million dollars of General purpose revenues to the State of California for the benefit of West Contra Costa Healthcare District ("District"). The County will receive $11.5 million of the District's reallocated property tax revenue over a period of approximately four years, commencing with the fiscal year beginning July 1, 2007. Because these capital reserve funds are not required for current operations, this action will have no negative impact on the General Fund. BACKGROUND: Contra Costa County is divided into geographic regions by a series of low-lying moun- tain ranges. The West Contra Costa region served by Doctors Medical Center is par- ticularly isolated from the Central and East County regions. The West County region is bounded to the west and north by the San Francisco Bay and its tributaries, to the east by the mountains, parkland, and watershed areas, and to the south by the communities of Albany and Berkeley in neighboring Alameda County. West Contra Costa County includes the five incorporated cities of EI Cerrito, Hercules, Pinole, Richmond, and San Pablo and a number of unincorporated communities including EI Sobrante, Kensington, North Richmond, Rodeo, Crockett, and Port Costa. The region is home to some one- quarter million persons, a large portion of whom are low income. The median household income for the City of San Pablo, where Doctors Medical Center is located, in 2000 was $27,184 — less than 45 percent of the median household income for the county as a whole. Hearing to consider approval of a property tax exchange agreement between the County and the West Contra Costa Healthcare District and approval of related contract documents and appropriation adjustment to support the continued provision of health care services to the community at Doctors Medical Center. " October 31, 2006 Page 4 Doctors Medical Center is the only hospital in West Contra Costa County serving the general public and, as such, is a critical component of the County's Emergency Medical Services system. The only other hospital in West County is a small Kaiser Foundation hospital located in the City of Richmond. The Kaiser Richmond facility is licensed for 50 inpatient beds and has 15 patient treatment areas in its emergency department. Doctors Medical Center, in contrast, is licensed for 232 inpatient beds and includes an emergency department with 24 patient treatment areas. In 2005, Doctors Medical Center received 8,215 emergency ambulance patients (22.5 patients/day) making it one of the three busiest emergency departments in the county for emergency ambulance services. Kaiser Richmond received some 3,382 emergency ambulance patients dur- ing this same period. In a 2004 study conducted for Contra Costa Health Services following announcement by Tenet Healthcare Corporation of its intent to withdraw from its operating agreement for Doctors Medical Center, The Abaris Group was asked to examine the potential im- pact of the closure or downsizing of that facility. The Abaris study concluded that clo- sure of Doctors would quickly overwhelm the Kaiser Richmond facility leading to "ex- traordinary delays in the assessment, treatment and disposition of all patients arriving at that ED." The study goes on to conclude that this situation would "lead to significant public frustration, risk to patient safety and ultimately will discourage some patients from going to the ED when they need to." Among the potential impacts of the closure of Doctors Medical Center identified by the Abaris study were the following: (1) Significant overcrowding of the emergency department at Kaiser Richmond result- ing in delays in treatment for some patients of up to 10 to 12 hours and failure for some persons to obtain needed emergency treatment. (2) Diversion of some ambulances to more distant hospital emergency departments with some risk to patients due to longer transport times. (3) Adverse impact on ambulance and fire services due to longer transport times re- sulting in longer"time-on-task"for emergency ambulance units and longer"out-of- service"times when fire personnel must accompany critically ill patients to the hospital in the ambulance. (4) Increased overcrowding in out-of-area emergency departments receiving patients from West County. (5) Insufficient intensive care unit (ICU) bed capacity in Contra Costa and adjacent counties to handle seriously ill patients, particularly during peak winter periods of influenza and respiratory illness. (Doctors Medical Center has a 29-bed ICU ca- pacity. Even with Doctors' 29 ICU beds, it is not unusual for ICU capacity coun- tywide to be fully utilized. When this situation occurs, pending ICU admissions are backed up in hospital emergency departments further exacerbating emergency department overcrowding. Hearing to consider approval of a property tax exchange agreement between the County and the West Contra Costa Healthcare District and approval of related contract documents and appropriation adjustment to support the continued provision of health care services to the community at Doctors Medical Center. October 31,2006 Page 5 (6) Severely reduced emergency resource capacity to handle a major emergency (earthquake, chemical release, terrorist event) impacting West County. CURRENT SITUATION: In response to significant losses in recent years, the Doctors Medical Center made drastic cuts in staffing and services. On October 1, 2006, the District filed a voluntary petition in the United States Bankruptcy Court for the Northern District of California un- der Chapter 9 of the United States Bankruptcy Code. The hospital will close operations during the month of November if a cash infusion is not found. In an effort to preserve needed health care services in West Contra Costa County the Health Department under Board direction has been working with the District to develop a Recovery Plan. THE RECOVERY PLAN: A structure has been developed which will utilize Intergovernmental Transfers as a method of securing enhanced Medi-Cal payments for the Hospital. The structure will require the District to allocate their ad valorem tax to the County for approximately four years. The County will advance to the State up to $10 million dollars during the 2006/07 fiscal year. The State will utilize the Intergovernmental Transfer as the non- federal share to provide up to $20 million in enhanced Medi-Cal payments to Doctors Medical Center. The hospital payments will commence in November 2006. Concur- rently the District and the County will create a joint management committee to provide oversight of the hospital. BANKRUPTCY COURT MOTION AND IMPLICATIONS: The District is presently operating Doctors Medical Center under Chapter 9 bankruptcy protection pursuant to a proceeding pending before the United States Bankruptcy Court, Northern District of California, Oakland Division. The Bankruptcy Court has jurisdiction over the District's ability to enter into the tax exchange agreement described below. The District is seeking an order from the Bankruptcy Court authorizing the District to enter into the transactions contemplated in the tax exchange agreement and other related agreements with the County. Upon receipt of the order, the District will be authorized by the Bankruptcy Court to enter into agreements with the County as de- scribed below. The Court will also order that the funds received by the District as a re- sult of County's funding will not be used by the District for payment of its pre-petition creditors, but will only be used for post-petition operations of Doctors Medical Center. This application of funds is required by the California Department of Health Services but is also beneficial to the County as well as Doctors Medical Center. Hearing to consider approval of a property tax exchange agreement between the County and the West Contra Costa Healthcare District and approval of related contract documents and appropriation adjustment to support the continued provision of health care services to the community at Doctors Medical Center. October 31,2006 Page 6 THE DOCUMENTS (SUMMARY POINTS): A. Resolution: Tax exchange agreements entered into pursuant to California Revenue and Taxation Code Section 99.02 permit the reallocation of general property taxes among taxing agencies. These agreements do not increase property taxes above the 1 percent cap imposed by Proposition 13. Prior to entering into a tax exchange agreement, both agencies are required to hold a public hearing to consider whether the agreement will result in any changes to other sources of revenue. On October 25, 2006, the District held a public hearing and adopted unanimously a resolution requesting a tax exchange agreement with County. The District has determined that (1) revenues are available for this purpose; (2) the transfer will not result in any increase in the ratio between the amount of revenues of the transferring agency that are generated by regulatory licenses, use charges, user fees, or assessments and used to finance services provided by the transferring agency; (3) the transfer will not impair the ability of the transferring agency to provide existing services; and (4) the transfer will not result in a reduction of property tax revenues to school entities. Based on the information presented, if the Board of Supervisors concurs in the deter- minations of the District and has found that no other taxing agencies will be adversely affected, the Board may by resolution agree to the exchange of property tax revenues. B. Tax Exchange Agreement: The health care district received approximately $2.9 million in general property taxes last fiscal year. Such amounts would be collected by the County during the period the tax exchange agreement remains in effect. The West Contra Costa Healthcare District Agreement For Property Tax Transfer To Contra Costa County sets forth the terms and conditions for the temporary transfer of the allocation of District ad valorem property tax revenues to County to facilitate new funding for Doctors Medical Center, and the opera- tions of the hospital under the auspices of a Joint Management Agreement between District and County. The aggregate sum of the tax revenues to be allocated to the County will total eleven million five hundred thousand dollars ($11,500,000.00). Under this Agreement, upon the fulfillment of certain conditions precedent as stated in the Agreement, the County shall transfer to the California Department of Health Services up to ten million dollars ($10,000,000) in various installments, the time and amount of which shall be determined by County, during the State fiscal year ending June 30, 2007. Thereafter, beginning July 1, 2007, the County Auditor shall allocate and transfer to the County the entirety of the general ad valorem property tax revenues which would otherwise be collected and allocated to District, as authorized by section 99.02 of the Revenue and Taxation Code, until the sum of all such allocations to the Hearing to consider approval of a property tax exchange agreement between the County and the West Contra Costa Healthcare District and approval of related contract documents and appropriation adjustment to support the continued provision of health care services to the community at Doctors Medical Center. October 31, 2006 Page 7 County equals eleven million five hundred thousand dollars ($11,500,000), or such lesser pro rata amount as County may determine is required in the event that the County does not fund the entire ten million dollars. The Agreement contains other standard terms and conditions customary in Agreements of this nature. C. Memorandum of Understanding: This document sets forth the parties' understandings regarding management of Doctors Medical Center on a going-forward basis. Both parties recognize that the short-term cash infusion being made by the County pursuant to the tax exchange agreement must be accompanied by operational changes at Doctors Medical Center in order to effect a long-term solution to performance issues at the hospital. The parties have agreed in principle, subject to approval of their respective Boards, that a new joint management board or committee will be formed to oversee day-to-day management of the hospital. The MOU provides a "road map" for the negotiation and execution of several contrac- tual agreements that will establish the joint management board and set forth the management duties and responsibilities of this board, and further provides that the con- tinuation of County funding beyond the immediate emergency needs of the District shall be subject to the satisfactory consummation of appropriate agreements on or before December 31, 2006. D. State/County Agreement Regarding Transfer of Public Funds: As a condition of the transfer of the allocation of District ad valorem property tax reve- nues to County, the County is required to provide County general funds in an amount not to exceed ten million dollars ($10,000,000.00) to the California Department of Health Services ("CDHS") as a transfer of public funds pursuant to Welfare and Institu- tions Code Section 14164. Such funds must be used solely as the non-federal share of enhanced Medi-Cal payments of up to twenty million dollars ($20,000,000.00) to Doctors Medical Center for inpatient hospital services rendered to Medi-Cal beneficiar- ies during the State fiscal year ending June 30, 2007. The enhanced Medi-Cal pay- ments are payments that are in addition to Medi-Cal payments that would otherwise be made to Doctors Medical Center. CDHS is required to seek federal financial participa- tion with respect to the enhanced Medi-Cal payments to the full extent permitted by federal law. SUMMARY: A Hospital Recovery Plan, which protects the County General Fund and provides for both an immediate cash infusion and a change in the operational structure of Doctors Hospital has been constructed. It is the view of the Health Department's management that this plan is the best option, and to our knowledge, only option that will allow the Hospital to remain in service. AUDITOR-CONTROLLER USE ONLY CONTRA COSTA COUNTY FINAL APPROVAL NEEDED BY: APPROPRIATION ADJUSTMENT 0 BOARD OF SUPERVISORS T/C 27 F-1 COUNTY ADMINISTRATOR ACCOUNT CODING BUDGET UNIT: County-State-WCCHCD IGT(0018) EXPENDITURE ORGANIZATION 3UB-ACCOUN1 EXPENDITURE ACCOUNT DESCRIPTION <DECREASE> INCREASE 0018 3580 Contribution to Other Agencies 10,000,000 00 0990 6301 Appropriations for Contingencies 10,000,000 00 0990 6301 Reserve for Contingencies 10,000,000 00 TOTALS 10,000,000 00 20,000,000 00 APPROVED EXPLANATION OF REQUEST AUDITOR-CONTROLLER: To provide funds for the transfer of up to ten million dollars for the purpose BY: DATE / of securing Federal matching funds for Doctors Medical Center. COU`,T M! TRATOR: BY. DATE �! BOARD OF SUPERVISORS: _�• YES:);, NO: NGN� 10/31/06 I Sl NATURE TITLE DATE ( APPROPRIATION APOO S BY: �.1� � / � D��3012 ADJ.JOURNAL NO. (M129 Rev 2/86) CONTRA COSTA COUNTY ESTIMATED REVENUE ADJUSTMENT T/C 24 ACCOUNT CODING BUDGET UNIT: County-State-WCCHCD IGT(0018) REVENUE ORGANIZATION ACCOUNT REVENUE ACCOUNT DESCRIPTION INCREASE <DECREASE> 0018 8981 Fund Balance Available 10,000,000 00 TOTALS1 10,000,000 00 01 00 APPROVED EXPLANATION OF REQUEST AUDITOR- ROLLER: BY: DATE'a Zc cw 61/ To provide funds for the transfer of up to ten million dollars for the purpose of securing Federal matching funds for Doctors Medical Center. COUNTY TRATOR BY: DATE BOARD OF SUPERVISORS: YES � � �`� �l NO: NOr� i WL Sr. Dpty County Admin 10/31/06 SIMATURE TITLE DATE / / REVENUE ADJ. RAOO � BY: ', j I\ DATE(G �' JOURNALNO. AUDITOR-CONTROLLER USE ONLY CONTRA COSTA COUNTY FINAL APPROVAL NEEDED BY: APPROPRIATION ADJUSTMENT X❑ BOARD OF SUPERVISORS T/C 27 F__j COUNTY ADMINISTRATOR ACCOUNT CODING BUDGET UNIT: County-State-WCCHCD IGT(0018) EXPENDITURE ORGANIZATION 3UB-ACCOUNI EXPENDITURE ACCOUNT DESCRIPTION <DECREASE> INCREASE 0018 3580 Contribution to Other Agencies 10,000,000 00 0990 6301 Appropriations for Contingencies 10,000,000 00 0990 6301 Reserve for Contingencies 10,000,000 00 TOTALS 10,000,000 00 20,000,000 00 APPROVED EXPLANATION OF REQUEST AUDITOR-CONTROLLER: To provide funds for the transfer of up to ten million dollars for the purpose BY: DATE 4of securing Federal matching funds for Doctors Medical Center. COUN:�r_ ISTRATOR: BY: DATE BOARD OF SUPERVISORS: YES; NO: 10/31/06 SIGNATURE TITLE DATE APPROPRIATION APOO C BY: ! l // 7 DATE G� . ADJ.JOURNAL NO. (M129 Rev 2/86) CONTRA COSTA COUNTY ESTIMATED REVENUE ADJUSTMENT T/C 24 ACCOUNT CODING BUDGET UNIT: County-State-WCCHCD IGT(0018) REVENUE ORGANIZATION ACCOUNT REVENUE ACCOUNT DESCRIPTION INCREASE <DECREASE> 0018 8981 Fund Balance Available 10,000,000 00 TOTALS1 10,000,000 00 0 00 APPROVED EXPLANATION OF REQUEST AUDITOR- ROLLER: BY: - DATE'S 2c. Gw To provide funds for the transfer of up to ten million dollars for the purpose of securing Federal matching funds for Doctors Medical Center. COU MISTRATOR: BY: DATE BOARD OF P YESI'T i FV V NO: S41 3 Sr.Dpty County Admin 10/31/06 SI ATURE TITLE DATE REVENUE ADJ. RAOOC73 BY: DATE JOURNAL NO. ADDENDUM TO D.1 OCTOBER 31, 2006 (Doctors Medical Center) On this day the Board of Supervisors conducted a hearing and considered approval of a property tax exchange agreement between the County and the West Contra Costa Healthcare District, and approval of related contract documents and appropriation adjustment, to support the continued provision of health care services to the community at Doctors Medical Center San Pablo/Pinole. Chair John Gioia introduced the item by describing a plan that would provide short-term funds to stabilize Doctors Medical Center; draw down additional funds and at the same time protect the County's investment. Chair Gioia stressed the County has gone into this proposal with the interest of residents of this County and to protect the General Fund and financial stability of this County. Health Services Director Dr. William Walker summarized the recommendations on the Board Order and noted this would be the only choice available to keep this hospital open beyond November 2006. He explained that under a Joint Powers Agreement, the County would hold most of the seats on a joint board with the district, and that joint board would oversee major financial decisions and a strategic plan. He noted the County is critical to the deal because health care districts, on their own, are not eligible for the matching funds and this doubled money of up to $20 million would be released in phases to the district over the next few months. Dr. Walker said the County would transfer up to $10 million this year to the state, which would match Medi-Cal money with federal funds. He explained Medi-Cal is the state's version of the federal Medicaid program, which serves low-income residents. Rick Norris, Law Offices of Archer Norris and an attorney for the Health Care District, provided assurance the County could walk away from the deal after recovering its money. He responded to several concerns raised by Supervisor Uilkema and said the District understands the allocation is irretrievable until the County recovers its $11.5m under the agreement whether Doctors Medical Center is closed or not. He said even in the worst case scenario Contra Costa County would receive all of its money back. Mr. Norris noted the Bankruptcy Judge,being thoroughly familiar with the bankruptcy proceedings and with the law supporting the tax allocation, sees no problem with the language. He said he hopes the Board does not change the agreements. Chair Gioia asked Mr. Norris to include in the Resolution or Memorandum of Understanding information about the tax allocation agreement to clarify that the County will be repaid regardless of the outcome. Dr. Walker noted the reality is the infusion of cash could not wait for developing a definitive business plan and therefore the language is as it is. He said the language in all the agreements have been developed to the extent possible by all the attorneys involved Addendum to D.1 (D.M.C.) Page 2 of 5 October 31, 2006 to protect the County from any liability. Dr. Walker noted the labor contracts remain the responsibility between the District and the labor organizations. Mr. Harris responded with responsibility there comes some degree of risk and said taking part in on a management relationship there are no guarantees someone would not try to sue. He noted this issue has to be addressed in the management agreement and the extra agreements that would be drafted in the next couple of weeks. Mr. Harris said they are aware of it and in part it depends on what the agreements say and in part it depends on how the management Board is structured. He said there are several choices for doing that and these issues would be explored when those agreements return to the Board. Supervisor Piepho said there needs to be assurance the County is well protected. Dr. Walker pointed to section 11(a) of the MOU which addresses her concerns—and quoted"nothing in this MOU or in any agreemenfor transaction contemplated herein is intended or shall be construed to make County liable for or put any of County's assets at risk for any obligations financial managerial or otherwise of District."Dr. Walker noted the cost to the General Fund has been incorporated in the repayment proposal. Supervisor DeSaulnier said there would be more risk to the County if the Board decided not to act on this today; he said the hospital would close and inevitably Kaiser and the County would assume trying to cover the health services that Doctors Hospital offers. Supervisor Glover said it was critical to ensure the County would not lose money on the venture or take on financial risks, but at the same time, it might cost the County more money in the long run if it didn't approve a bailout plan. Supervisor Piepho asked for an explanation of how the Business Plan would be developed. Dr. Walker said the Business Plan would involve working with Doctors Medical Center, Mr. Irwin Hansen, Chief Executive Officer,Doctors Medical Center, Price Waterhouse and outside financial consultation for DMC, and would look at the assumptions made so far with the revenue projection the ability to get the McKesson billing system up and going, the solidity of the agreement with the prison system, and the oversight of all this. Supervisor Uilkema asked for clarification regarding wording on the MOU on page 5. 11 (b)where it read"unless specifically specified in the Definitive Agreement the District shall not be deemed in breach" and requested the word"not"be removed. Jonathan Lindeke responded that the idea is for the Joint Powers to have oversight over the day-to-day operations but not necessarily to have the power to close the hospital_ that this section of the M.O.U. refers to those such powers that should be reserved for the District only. Addendum to D.1 (D.M.C.) Page 3 of 5 October 31, 2006 Supervisor Uilkema said the biggest issue in her mind is that the County needs to have the ability if it needs to bail and said that option needs to be there in terms of the city or the County's financial viability and financial responsibility. Dr. Walker noted there are no requirements mentioned in any paragraph that the County remain engaged or be financially responsible and repeated nothing creates any liability on the County. He said the only sole and only financial transaction contemplated by this is the assignment of the cash flow from the ad valorem tax to repay the money that is advanced to Doctors Medical Center. Supervisor Uilkema said the County needs to be reassured the Board is exercising their responsibility for fiduciary oversight. She said she does not wish anyone to leave the hearing thinking the Board has not been diligent in making sure every provision is understood and those terms are important to communicate to the public. The Chair opened the public hearing pursuant to Revenue & Taxation Code section 99.02(e) to consider the effect of the proposed transfer of general property tax allocation to the County by West Contra Costa Healthcare District on fees, charges, assessments, taxes or other revenues and the following people spoke: • Irwin Hansen, Chief Executive Officer, Doctors Medical Center, acknowledged the Board for its support and spoke in favor of the motion. He said the mission was to provide health care in the community, and said the Emergency Room is important and action being taken today gives DMC access to money, and said it is his pleasure and honor to serve in the Community; • Beverly Wallace, resident of Richmond, thanked the Board and everyone connected with negotiations and was glad DMC would stay open and continue to serve the public; • Sandra Falk, Public Employees Union, Local 1, thanked the Board and said labor unions do not want a relationship with the Board but wish to have a relationship with Doctors Medical Center. She asked the Board for a side letter of clarification instead of making any changes to the documents. Ms. Falk noted the employees who do the billing do their job well but are not sure what percentage of return they can receive on"charity cases." • Dr. Laurel Hodgson,resident of Lafayette, commended the Board and said she can't wait to have the ambulances back; • Dana Simon, Service Employees International Union, expressed his thanks for the extraordinary work of the County for saving DMC and said without DMC it would be a crisis. He said the Union has no desire to get involved with the County; Addendum to D.1 (D.M.C.) Page 4 of S October 31, 2006 • Asia Johnson Daniels, El Cerrito resident, thanked the Board and said there needs to be some oversight on how the hospital is operated administratively and stated it would not be wise to go on with without a business plan; • Tanir Ami, resident of San Pablo, thanked the Board for saving DMC but requested more clarification around the issue of how decisions would be made; • Roland Katz, Public Employees Union, Local 1, thanked the Board. He noted concerns have been raised about the effect of this decision on the solvency of the County. He asked the Board to take action on this Board Order today as it is the right thing to do; • Deborah Campbell, resident of Richmond, thanked the Board for the work it has done to keep DMC open, and agreed with Supervisor Piepho and Supervisor Uilkema's comments. She said DMC does not need money but a good Business Plan. Chair Gioia suggested staff have the Definitive Agreement completed by December 31, 2006 and said the goal should be to try to get the Management Agreement completed by the end of November. He said it is important to have informal and formal consultations between DMC and the County Health Services Department on major decisions the hospital will be making. Chair Gioia requested staff get the Joint Management Agreement in place as soon as possible. He said after a Joint Management Board is established there could also be some kind of larger advisory board that is established that may have representatives from cities and other leaders in labor. He said the timing of selection of the Joint Management Board should be established by November 2006. Supervisor Uilkema stressed certain points to be incorporated on the Board Order—(1) suggested spell check on the MOU on page 2, (2) under the Recovery Plan to include "whether the hospital is open or not the debt will be repaid", and(3) labor contracts would still be the responsibility of the Health Care District. Chair Gioia noted the contracts are the responsibility of the Healthcare District but the Joint Management Board would be providing the direction under which those contracts would be negotiated. Supervisor Uilkema said she would like to see the responsibility for the labor contracts identified in the Recovery Plan. Supervisor Uilkema noted additional changes on the Board Order(1) Under No. 9—to describe the maximum amount of$1 Om; and under(17) to clarify who is responsible for the business model. By a unanimous vote with none absent the Board of Supervisors took the following action: Addendum to D.1 (D.M.C) Page 5 of 5 October 31, 2006 CONDUCTED AND CLOSED A PUBLIC HEARING to consider the effect of the proposed transfer of general property tax allocation to the County by West Contra Costa Healthcare District on fees, charges, assessments, taxes or other revenues; ADOPTED a resolution authorizing an exchange of property tax revenues for support of health care services between West Contra Costa Healthcare District and Contra Costa County; APPROVED AND AUTHORIZED the Health Services Director or designee to execute a tax exchange agreement between Contra Costa County and the West Contra Costa Healthcare District with the limits established by the agreements up to $11.5 million; APPROVED AND AUTHORIZED the Health Services Director or designee to execute a Memorandum of Understanding between Contra Costa County and the West Contra Costa Healthcare District, which will establish a joint management board with majority representation by the County; APPROVED AND AUTHORIZED the Health Services Director or designee to execute a contract with the State of California for the transfer of up to ten million dollars for the purpose of securing Federal matching funds for Doctors Medical Center. The actual timing and amount of the transfer will be at the discretion of the Health Services Director; DIRECTED the Health Services Director to report to the Board monthly, or sooner as needed, on the progress of completing the recovery plan; APPROVED Appropriation Adjustment No. 5032 authorizing the Auditor- Controller to release $10,000,000 from Designation General Fund Capital Reserve and appropriate it to County-State-West Contra Costa Healthcare District Inter- Government Transfer(Dept 00 18) to provide funds for the transfer of up to $10,000,000 for securing Federal matching funds for Doctors Medical Center; and DIRECT the Recovery Plan does not disturb existing labor agreements, which will remain the responsibility of the District. W • D 2 C M -i n • I FRIEDMAN DUMAS & SPRINGWATER LLP ANDREA T. PORTER(S.B.NO. 095984) 2 M. ELAINE HAMMOND (S.B. NO. 197444) 150 Spear Street, Suite 1600 3 San Francisco, CA 94105 Telephone Number: (415) 834-3800 4 Facsimile Number: (415) 834-1044 5 Attorneys for the West Contra Costa Healthcare District 6 7 8 UNITED STATES BANKRUPTCY COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 OAKLAND DIVISION 11 12 WEST CONTRA COSTA Case No. 06-41774-T HEALTHCARE DISTRICT, a political 13 subdivision of the State of California, dba Chapter 9 DOCTORS MEDICAL CENTER 14 ORDER AUTHORIZING DISTRICT TO Debtor. ENTER INTO JOINT AGREEMENT WITH, 15 AND OBTAIN SECURED CREDIT FROM, THE COUNTY OF CONTRA COSTA 16 Date: October 26, 2006 17 Time: 2:00 p.m. Tax ID: 94-6003145 Place: 1300 Clay Street, Courtroom 201 18 Judge: Hon. Leslie Tchaikovsky 19 20 Upon the motion of West Contra Costa Healthcare District dba Doctors 21 Medical Center, the above-captioned Chapter 9 debtor(the "District"), for an order authorizing it to enter into a transaction (the "County Agreement")with the County of Contra 22 Costa (the "County")upon terms to be set forth in a Definitive Agreement, a Hospital 23 Management Agreement, a Tax Allocation Agreement, and/or such other and further 24 agreements or modifications of the foregoing as may be needed; proper notice of the motion 25 having been given, in accordance with this Court's order of October 23, 2006, to the County, 26 to the holders of the twenty largest unsecured claims in the Chapter 9 case, to those persons 27 having filed and served requests for notice, and to parties in interest; the Court having 28 reviewed the motion and the supporting declaration and finding that, pursuant to the County ORDER AUTHORIZING DISTRICT TO ENTER INTO JOINT AGREEMENT 100263315.DOC v 4} I Agreement, (i) the County has agreed to apply up to $10.0 million of County funds to 2 facilitate matching funds resulting in a cash infusion of up to $20.0 million from the 3 California Department of Health Services to the District, (ii) the County will further assist 4 the District by jointly participating in management oversight of Doctors Medical Center in 5 San Pablo, California (the"Hospital") upon terms to be agreed between the parties, (iii) the 6 District and the County will execute a Tax Allocation Agreement allocating, to the County, all of the District's Ad Valorem taxes from July 2007 until the aggregate amount of such Ad 7 Valorem taxes received by County totals $11.5 million or such reduced amount, if any, as 8 may be agreed by County, and(iv) the Ad Valorem taxes so allocated shall belong 9 exclusively to the County in accordance with the terms of the County Agreement; the Court 10 finding, further, that the County Agreement is essential to the continued operation of the 11 Hospital and is in the best interests of the District and the community that it serves, and cause 12 appearing, it is hereby 13 ORDERED: 14 15 1. That the District be, and hereby is, authorized to enter into the County Agreement on substantially the terms and conditions set forth herein, in its motion and on the 16 record at the hearing, and to take such further actions and enter into such other and further 17 agreements as are consistent with this order and necessary to conclude the County 18 Agreement; 19 20 2. The funds received by the District as a result of the County Agreement 21 shall be used only in the postpetition operation of the Hospital and shall not be applied to prepetition debts or obligations of District without the express written consent of the County 22 and the California Department of Health Services; and 23 24 3. This Court shall retain jurisdiction to enforce the County Agreement. 25 26 END OF ORDER 27 28 ORDER AUTHORIZING DISTRICT TO ENTER 2 INTO JOINT AGREEMENT {00263315.DOC v 4} f 1 SERVICE LIST 2 3 Creditors Holding 20 Largest Unsecured Claims 4 Impac Medical Systems, Inc. Integrated Incare Medical Group 100 West Evelyn Ave. 2101 Vale Road, Ste. 300 5 Mountain View, CA 94041 San Pablo,CA 94806 6 Angelica Textile Svcs McKesson Drug Co. Angelica Corporation One Post Street 7 424 South Woods Mill Road San Francisco,CA 94104 8 Chesterfield,Missouri 63017 Healthcare Recoveries Key Government Finance,Inc. 9 Watterson Tower 1000 South McCaslin Blvd 1930 Bishop Lane, Ste. 1500 Superior, CO 80027 10 Louisville,KY 40218 11 CMRE Financial Svcs,Inc. Healthcare Financial Solutions 3075 E. Imperial Hwy., Ste. 200 c/o Principal Financial Group 12 Brea, CA 92821 55 Shuman Boulevard, Ste. 200 13 Naperville,IL 60563 Spheris Corporation Total Renal Care Inc./Renal Treatment 14 720 Cool Springs Blvd., Ste. 200 180 West Swedesford, Ste. 300,Bld. #2 15 Franklin,TN 37067 Berwyn,PA 19312 Boston Scientific Dell Marketing LP 16 One Boston Scientific Place One Dell Way Natick,MA 01760-1537 Round Rock,TX 78682 17 Owens &Minor,Inc Healthcare Recoveries 18 9120 Lockwood Blvd. c/o Principal Financial Group Mechanicsville,VA 23116-2029 55 Shuman Boulevard, Ste. 200 19 Naperville, IL 60563 20 Angelica Textile Services World Health 1409 W.40' Street Felton E. Parrish 21 Antioch,CA 94509 King& Spalding LLP 191 Peachtree Street 22 Atlanta,GA 30303 23 24 25 26 27 28 ORDER AUTHORIZING DISTRICT TO ENTER 3 INTO JOINT AGREEMENT 100263315.DOC v 4} 1 Parties Requesting Special Notice 2 Medline Industries,Inc. Inpatient Consultants of CA,Inc. Attn: Anne Kisha c/o Julia W.Brand 3 One Medline Place Katten Muchin Rosenman,LLP Mundelein,IL 60060 2029 Century Park East, Ste. 2600 4 Los Angeles, CA 90067 5 Lori J. Polacheck,Esq. Agostini and Associates, Inc. Senior Counsel c/o James D.Wood 6 Office of the General Counsel Attorney at Law American Red Cross 3675 Mount Diablo Boulevard, Ste. 250 7 2025 E Street,NW Lafayette, CA 94549 Washington D.C. 20006 8 Agostini and Associates, Inc. Beta Healthcare Group 9 c/o William H. Curtis c/o Michael E. Busch Foley McIntosh Frey & Claytor Pyle Sims Duncan& Stevenson 10 3675 Mt. Diablo Blvd., Ste. 250 401 B Street, Ste. 1500 Lafayette, CA 94549 San Diego, CA 92101 11 R.Corey Grove, J.D., CPCU Winthrop Resources Corporation 12 Vice President, Underwriting and Client c/o Benjamin S. Seigel, Esq. Services-BETA Healthcare Group Buchalter Nemer 13 1443 Danville Blvd. A Professional Corporation Alamo, CA 94507 1000 Wilshire Boulevard, Ste. 1500 14 Los Angeles, CA 90017 15 Winthrop Resources Corporation Travel Nurse Solutions c/o Shawn M. Christianson c/o Duane M. Geck 16 Buchalter Nemer Severson&Werson A Professional Corporation One Embarcadero Center, Ste. 2600 17 333 Market Street, 25`h Floor San Francisco, CA 94111 San Francisco, CA 94105 18 Medtronic USA, Inc Medical Staffing Network, Inc 19 c/o Scott E. Blakeley c/o Marc A. Lieberman, Esq. Blakeley&Blakeley, LLP Alan J. Forsley, Esq. 20 2030 Main Street, Ste. 210 Friedman Lieberman LLP Irvine, CA 92614 1875 Century Park East. Ste. 2200 21 Los Angeles, CA 90067 22 Tenet Healthcare Minnie Loo, Esq. c/o Ivan L. Kallick Office of the U.S. Trustee 23 Manatt, Phelps &Phillips, LLP 1301 Clay Street, Suite 690N 11355 West Olympic Boulevard Oakland, CA 94612-5202 24 Los Angeles, CA 90064 25 PEU Local Ambac Assurance Corporation c/o Margot A. Rosenberg Attn: Surveillance 26 Leonard Carder, LLP Financial Guaranty Insurance 1330 Broadway, Ste. 1450 Insurance Policy No. 22771 BE 27 Oakland, CA 94612 One State Street, 17`h Floor New York,NY 10004 28 ORDER AUTHORIZING DISTRICT TO ENTER 4 INTO JOINT AGREEMENT f00263315.DOC v 4} I Indenture Trustee Pamela Allen Mr. Jay Harris * California Nurses Association 2 Cain Brothers & Company, LLC Legal Department 601 California Street, Ste. 1505 2000 Franklin Street, Ste. 300 3 San Francisco, CA 94108 Oakland, CA 94612 4 Indenture Trustee X-Press Transcription Inc. Mr. Jonathan Lewis c/o Michael D. Cooper, Esq. 5 All Points Public Funding, LLC Wendel, Rosen, Black& Dean LLP 275 Broadhollow Road 1111 Broadway, 24h Floor 6 Melville, NY 11747 Oakland, CA 94607 7 Stationary Engineers Local 39 Trust Aegis Marketing Group, Inc. Funds c/o Charles E. Morton IV 8 c/o Christian L. Raiser Puryear, Newman& Morton, PLLC Weinberg, Roger& Rosenfeld 1143 Columbia Avenue 9 1001 Marina Village Parkway, Ste. 200 Franklin,Tennessee 37064 Alameda, CA 94501-1091 10 Ad Hoc Committee of Unsecured Bingham McCutchen LLP 11 Creditors William Bates III Esq. c/o Randy R. Rogers 1900 University Avenue 12 Keith A. McDaniels Palo Alto, CA 94303-2229 Winston& Strawn, LLP 13 101 California Street, Ste. 3900 San Francisco, CA 94111 14 Bingham McCutchen LLP 15 Randy Michelson Esq. Three Embarcadero Center, 28th Floor 16 San Francisco, CA 94111 17 18 19 20 21 22 23 24 25 26 27 28 ORDER AUTHORIZING DISTRICT TO ENTER 5 INTO JOINT AGREEMENT {00263315.DOC v 4} The singular includes the plural; the masculine gender includes the feminine, "shall" is mandatory; "may" is permissive. 14. TIME. Time is of the essence of each and every provision hereof. IN WITNESS WHEREOF, the parties hereto have executed this Agreement. County of Contra Costa William B. Walker, M.D., Director Contra Costa County Department of Health Services West Contra Costa Healthcare District Beverly Wallace Chair, Board of Directors 8 SDCA 295107.1 I The Debtor and its Representatives 2 Irwin C. Hansen, CEO Rick Norris,Archer Norris Dev Mahadevan, Chapter 9 Support 2033 N. Main Street, Ste. 800 3 Deborah Smith, Interim COO Walnut Creek, Ca 94596 Peggy Lipper, Vice President Corp. Dev't 4 Doctors Medical Center 2000 Vale Road 5 San Pablo, CA 94806 6 Susan L. Uecker Uecker&Associates, Inc. 7 100 Pine Street, Suite 475 San Francisco, CA 94111 8 9 10 Other 11 Denise Wilber DeTrano General Counsel 12 California Medical Assistance Commission 770 L Street, Suite 1000 13 Sacramento, CA 95814 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER AUTHORIZING DISTRICT TO ENTER 6 INTO JOINT AGREEMENT 100263 3 15.DOC v 4) Contra Costa County Board of Supervisors Resolution No.oh(-(rf/ RESOLUTION AUTHORIZING AN EXCHANGE OF PROPERTY TAX REVENUES FOR SUPPORT OF HEALTH CARE SERVICES BETWEEN WEST CONTRA COSTA HEALTH CARE DISTRICT AND CONTRA COSTA COUNTY WHEREAS, on October 3�5S06, the Board of Supervisors of Contra Costa County(County) considered a proposal to provide West Contra Costa Healthcare District (District) with up to $10 million to support the provision of health care services to the communities served by Doctors Medical Center San Pablo within the County and receive repayment of such amount and other sums through an allocation of general property taxes; and WHEREAS, the Board of Directors of the West Contra Costa Healthcare District has determined that: (1) revenues are available for this purpose; (2) the transfer will not result in . any increase in the ratio between the amount of revenues of the transferring agency that are generated by regulatory licenses, use charges, user fees, or assessments and used to finance services provided by the transferring agency; (3) the transfer will not impair the ability of the transferring agency to provide existing services; and (4) the transfer will not result in a reduction of property tax revenues to school entities; and WHEREAS, the District has adopted a resolution requesting a tax exchange agreement with the County pursuant to section 99.02 of the Revenue and Taxation Code providing for the transfer of taxes to the County; and WHEREAS, the Board of Supervisors held a properly noticed public hearing on October_, 2006 to consider the effect of the proposal on fees, charges, assessments, taxes and other revenues; and WHEREAS,based on the information presented to the County, the Board of Supervisors concurs in the determinations of the District and has found that no other taxing agencies will be adversely affected; and WHEREAS, the Board of Supervisors finds that the expenditures to be made by the County under the proposed tax exchange agreement are necessary and desirable to meet the health and welfare needs of the population of the county through support of the District's programs, as authorized by Government Code section 26227; NOW THEREFORE BE IT RESOLVED by the Board of Supervisors of Contra Costa County that: 1. The foregoing recitals are incorporated herein by reference. 2. By this resolution, Contra Costa County agrees to the exchange of property tax revenues as described in the tax allocation agreement approved by resolution of the West Contra Costa Healthcare District, a form of which is attached hereto by reference as Exhibit A. SDCA_295070.1 ReSoIUTQK o2006 6(7 / 3. The Chief Administrative Officer of the County, or his designee, is hereby authorized and directed to execute all documents necessary to effectuate the property tax revenue allocation changes described in this resolution and the attached agreement, in a form to be approved by County Counsel, and to notify the County Auditor, forthwith, of the adoption of this resolution. The County Auditor shall also be provided with a copy of the fully executed agreement for implementation. Adopted by the following vote on this day of October, 2006: AYES: . J NOES: ] ABSENT: ABSTAIN: p f� Attest: -16-1� Clerk of the Board of Supervisors Approved as to form: County Counsel 2 SDCA_295070.1 • i RESOLUTION 860 WEST CONTRA COSTA HEALTHCARE DISTRICT APPROVAL OF THE AGREEMENT FOR PROPERTY TAX TRANSFER TO CONTRA COSTA COUNTY WHEREAS, the West Contra Costa Healthcare District and Contra Costa County desire to have an agreement for the temporary transfer of the allocation of District ad valorem property tax revenues to County to allow for new funding of the District's acute care hospital in San Pablo, California, doing business as Doctor's Medical Center, hereinafter referred to as "DMC", and the operations of DMC under the auspices of an affiliation between the District and County and corresponding management arrangement pursuant to the County affiliation, and WHEREAS, California Revenue and Taxation Code Section 99.02 authorizes District and County to modify the allocation of property tax revenues between them, provided the modification does not violate the conditions.set forth in Section 99.02 and does not affect the tax revenue allocation for any other public entity; and WHEREAS, the District and County have negotiated a Property Tax Transfer Agreement with an Effective Date of November 1, 2006, pursuant to Rev. & Tax Code Section 99.02,by which the District will modify its existing allocation of ad valorem property taxes to direct all such property tax revenues allocated after July 1, 2007, to the County until the transferred revenues equal up to eleven million, five hundred thousand dollars ($11,500,000.00), or a lesser sum representing amounts mutually determined to be ultimately necessary to transfer to Contra Costa County pursuant to the terms of the affiliation; and WHEREAS, approval of the Property Tax Transfer Agreement will secure an advance from Contra Costa County to the California Department of Health Services in an amount up to ten million dollars ($10,000,000.00), which arrangement will in turn facilitate an Intergovernmental Transfer of funds involving the State and the Federal Government under the Federal Medicaid and State Medi-Cal programs, such that the sum of up to twenty million dollars ($20,000,000.00) in various installments from the State will thereafter be.paid to the District as supplemental funding of its services to Medi-Cal patients during the State fiscal year ending June 30, 2007; and WHEREAS, prior to the presentation and approval of this Resolution and the Property Tax Transfer Agreement, the Board of Directors of the District have conducted a duly noticed public hearing on October 25, 2006, to consider the effect of the proposed transfer on fees, charges, assessments, taxes, and other District revenues. l NOW, THEREFORE BE IT RESOLVED, that the Board of Directors of the West Contra Costa Healthcare District do hereby find and determine the following: A. The property tax revenues transferred are available to further the purposes of the Property Tax Transfer Agreement; and B. The transfer will not result in any increase in the ratio between the amount of District revenues generated by District charges or fees and other revenues used to finance services provided by the District; and C. The transfer will not impair the ability of the District to provide existing services; and D. The transfer will not result in a reduction of property tax revenues to school districts or other public agencies. BE IT FURTHER RESOLVED, that the Board of Directors hereby adopts and approves the Agreement for Property Tax Transfer with Contra Costa County and directs its implementation as of its Effective Date and according to its terms and conditions. PASSED AND ADOPTED by the Board of Directors of the West Contra Costa Healthcare District on this 25th day of October, 2006, by the following vote: AYES: NO: ABSTAIN: 4u� n Chair o r of Directors Secretary, Bo 'o D rectors 80050168/508257-1 2 I r THE WEST CONTRA COSTA HEALTHCARE DISTRICT AGREEMENT FOR PROPERTY TAX TRANSFER TO CONTRA COSTA COUNTY THIS AGREEMENT entered into this day of , 2006 by and between the West Contra Costa Healthcare District,hereinafter referred to as "District" and the County of Contra Costa, hereinafter referred to as "County"; WITNESSETH: WHEREAS, Article 13A, Section 1 of the Constitution of the State of California limits ad valorem taxes on real property to one percent(1%) of full cash value; and WHEREAS, Chapter 6 of Part 0.5 of Division 1 of the Revenue and Taxation Code (Sections 95 et. seq.)provides for the allocation of property tax revenues; and WHEREAS, Revenue and Taxation Code Section 99.02 authorizes District and County to modify the allocation of property tax revenues between them, provided the modification does not violate the conditions set forth in Section 99.02 and does not affect the tax revenue allocation for any other public entity; and WHEREAS, District has held a properly noticed public hearing in accordance with Section 99.02 and determined,based upon that hearing that: (1) revenues are available for this purpose; (2) the transfer will not result in any increase in the ratio between the amount of revenues of the transferring agency that are generated by regulatory licenses, use charges, user fees, or assessments and used to finance services provided by the transferring agency; (3) the transfer will not impair the ability of the transferring agency to provide existing services; and (4) the transfer will not result in a reduction of property tax revenues to school entities; and WHEREAS, the District has adopted a resolution requesting a tax exchange agreement with the County and concurrence by the County in the foregoing finding pursuant to SDCA_295107.1 section 99.02 of the Revenue and Taxation Code providing for the transfer of taxes to the County; and WHEREAS, District and County desire to have an agreement for the temporary transfer of the allocation of District ad valorem property tax revenues to County to allow for new funding of the District's acute care hospital in San Pablo, California, doing business as Doctor's Medical Center, hereinafter referred to as "DMC", and the operations of DMC under the auspices of an affiliation between District and County. NOW, THEREFORE, in consideration of the following terms and conditions, the parties hereto agree as follows: 1. DEFINITIONS. The words and phrases in this Agreement shall have meanings as set forth below: A. "Ad valorem property taxes" shall mean the sum of the general ad valorem tax revenues allocated in regular installments to District after the Effective Date of this agreement, including such incremental increases or decreases as occur by reason of changes in the District's property tax base or changes in the District's allocations occurring by reason of law or subsequent reallocations of existing property tax revenues to the District. B. "Intergovernmental Transfer" shall mean the transfer of County general funds in an amount of up to ten million dollars ($10,000,000.00)to the California Department of Health Services pursuant to California Welfare and Institutions Code Section 14164 for use as the non-federal share of enhanced Medi-Cal payments to DMC for inpatient hospital services rendered to Medi-Cal beneficiaries during the State fiscal year ending June 30, 2007. C. "Medi-Cal contract" shall mean the contract for the provision of inpatient hospital services to Medi-Cal beneficiaries entered into between DMC and the California 2 SDCA_295107.1 Department of Health Services that is authorized pursuant to California Welfare and Institutions Code Section 14081 et seq. 2. CONTINUING PROPERTY TAX ALLOCATION. A. The County Auditor shall allocate and transfer to County the entirety of the general ad valorem property tax revenues which would otherwise be collected and allocated to District, commencing on July 1, 2007 and continuing from year to year, as authorized by section 99.02 of the Revenue and Taxation Code until the sum of all such allocations to County equals eleven million five hundred thousand($11,500,000) or such lesser pro rata amount as County may determine is required to be allocated to County should County fund less than ten million dollars pursuant to Section S.B. hereof. B. The provisions of this Agreement and the allocations of District ad valorem property taxes to County shall continue in effect subject to the fulfillment of the conditions subsequent set forth herein. 3. EFFECTIVE DATE. The Effective Date of this Agreement shall be November 1, 2006. 4. CONDITIONS PRECEDENT TO COUNTY FUNDING. County's obligation to fund as set forth in this Agreement shall be conditioned upon the occurrence of all the following matters to the satisfaction of the County: A. District represents and warrants that it shall: (i)take in each fiscal year all actions necessary, reasonable and prudent to ensure that the levy of general ad valorem property taxes, upon which the allocation described in Section 2.A. of this Agreement depends, will be fully implemented on an annual basis; and(ii) not take any actions that have the effect of impairing or reducing such levy or the above-described allocation of general ad valorem property tax revenues until all amounts due County hereunder have been allocated and transferred. 3 SDCA_295107.1 B. County shall not make any Intergovernmental Transfer pursuant to this Agreement or otherwise unless and until District demonstrates to County's satisfaction, in County's sole discretion, that District has complied with Revenue and Taxation Code Section 99.02 as required in order to permit District to enter into and perform the terms of this Agreement. C. The transactions contemplated by this Agreement shall have been approved to County's satisfaction by the United States Bankruptcy Court in a Chapter 9 proceeding pending in the Northern District of California, Oakland Division, Case No. 06- 41774-T, and in connection with such approval (i) the ad valorem property tax revenue allocated by this Agreement shall belong exclusively to the County in accordance with the terms hereof, and(ii) the Bankruptcy Court shall retain jurisdiction to enforce the terms of this Agreement. 5. CONDITIONS SUBSEQUENT. A. County shall execute an agreement with the California Department of Health Services to facilitate the Intergovernmental Transfer. B. County shall transfer to the California Department of Health Services up to ten million dollars ($10,000,000) in various installments, the time and amount of which shall be determined by County, during the State fiscal year ending June 30, 2007. C. District shall execute an amendment to its Medi-Cal contract that will provide for enhanced Medi-Cal payments of up to twenty million dollars ($20,000,000.00) in various installments from the California Department of Health Services following the Effective Date of this Agreement, for services rendered to Medi-Cal beneficiaries during the state fiscal year ending June 30, 2007. D. District shall ensure that the enhanced Medi-Cal payments described in section 5.C: above are retained by DMC to be expended on the general expenses of operations of 4 SDCA 295107.1 DMC becoming payable after the Effective Date. Such enhanced Medi-Cal payments shall not be applied by District to past due debt repayments or accounts payable generated prior to the Effective Date. 6. EXCLUSIONS. District and County recognize that District receives certain special taxes, i.e., parcel tax revenues generated from a voter approved parcel tax measure enacted in 2004 (Measure D) and that such special parcel tax revenues are not subject to this Tax Allocation Agreement. 7. JOINT REVIEW. District and County may jointly review County property tax records from time to time or as requested by District to verify accurate distribution under this Agreement. 8. GOVERNING LAW AND ATTORNEYS' FEES. This Agreement shall be construed and enforced in accordance with the laws of the State of California. Should any legal action be brought by either party because of any default under this Agreement or to enforce any provision of this Agreement, or to obtain a declaration of rights hereunder, the prevailing party shall be entitled to reasonable attorneys' fees, court costs and such other costs as may be fixed by the Court. The standard of review for determining whether a default has occurred under this Agreement shall be the standard generally applicable to contractual obligations in California. 9. NOTICES. Any notice of communication required hereunder among District and County must be in writing, and may be given either personally,by telefacsimile (with original forwarded by regular U.S. Mail) or by Federal Express or other similar courier promising overnight delivery. If personally delivered, a notice or communication shall be deemed to have been given 5 SDCA_295107.1 and received when delivered to the party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving party's facsimile machine. Such notices or communications shall be given to the parties and each of their designees at their addresses set forth below: To District (Chair, Board of Directors and Chief Executive Officer): Beverly Wallace, Chair Board of Directors and Irwin Hansen, Chief Executive Officer West Contra Costa Healthcare District C/O Doctor's Medical Center 2000 Vale Road San Pablo, CA 94806 Fax #: (510) 970-5728 To COUNTY(County Administrator; Director, Dept. Of Health Services and COO/CFO, Dept. Of Health Service) John Cullen Contra Costa County 651 Pine Street 11th Floor Martinez CA 94553 FAX#: 925-335-1098 William Walker, M.D., Director and Patrick Godley, Chief Operating Officer/Chief Financial Officer Department of Health Services 50 Douglas Dr Suite 310-A Martinez, CA 94553 FAX#: (925) 957-5401 6 SDCA_295107.1 Y . Any party hereto may at any time,by giving ten(10) days written notice to the other parties, designate any other address or facsimile number in substitution of the address or facsimile number to which such notice or communication shall be given. 10. SEVERABILITY. If any provision of this Agreement is held invalid, void, or unenforceable but the remainder of this Agreement can be enforced without failure of material consideration to any party, then this Agreement shall not be affected and it shall remain in full force and effect, unless amended by mutual consent of the parties. Notwithstanding this severability clause, Section 2, Property Tax Allocation, is material and substantial and the failure of said subsection is the failure of material consideration, causing the agreement to be void from the date that the subsection is held invalid. 11. FURTHER ASSURANCES. Each party shall execute and deliver to the other party or parties all such other further instruments and documents and take all such further actions as may be reasonably necessary to carry out this Agreement and to provide and secure to the other party or parties the full and complete enjoyment of its rights and privileges hereunder. 12. CONSTRUCTION. All parties have been represented by counsel in the preparation of this Agreement and no presumption or rule that ambiguity shall be construed against a drafting party shall apply to interpretation or enforcement hereof. Captions on sections and subsections are provided for convenience only and shall not be deemed to limit, amend, or affect the meaning of the provision to which they pertain. 13. OTHER MISCELLANEOUS TERMS. 7 SDCA_295107.1 The singular includes the plural; the masculine gender includes the feminine, "shall" is mandatory; "may" is permissive. 14. TIME. Time is of the essence of each and every provision hereof. IN WITNESS WHEREOF, the parties hereto have executed this Agreement. County of Contra Costa William B. Walker, M.D., Director Contra Costa County Department of Health Services West Contra Costa Healthcare District G� Beverly Wall e Chair, Board of Directors B0050168/510412-1 8 SDCA_295107.1 THE WEST CONTRA COSTA HEALTHCARE DISTRICT AGREEMENT FOR PROPERTY TAX TRANSFER TO CONTRA COSTA COUNTY THIS AGREEMENT entered into this315day of��o by and between the West Contra Costa Healthcare District,hereinafter referred to as "District' and the County of Contra Costa, hereinafter referred to as "County"; WITNESSETH: WHEREAS, Article 13A, Section 1 of the Constitution of the State of California limits ad valorem taxes on real property to one percent (1%) of full cash value; and WHEREAS, Chapter 6 of Part 0.5 of Division 1 of the Revenue and Taxation Code (Sections 95 et. seq.)provides for the allocation of property tax revenues; and WHEREAS, Revenue and Taxation Code Section 99.02 authorizes District and County to modify the allocation of property tax revenues between them, provided the modification does not violate the conditions set forth in Section 99.02 and does not affect the tax revenue allocation for any other public entity; and WHEREAS, District has held a properly noticed public hearing in accordance with Section 99.02 and determined,based upon that hearing that: (1) revenues are available for this purpose; (2) the transfer will not result in any increase in the ratio between the amount of revenues of the transferring agency that are generated by regulatory licenses, use charges, user fees, or assessments and used to finance services provided by the transferring agency; (3) the transfer will not impair the ability of the transferring agency to provide existing services; and (4) the transfer will not result in a reduction of property tax revenues to school entities; and WHEREAS, the District has adopted a resolution requesting a tax exchange agreement with the County and concurrence by the County in the foregoing finding pursuant to SDCA 295107.1 Any party hereto may at any time,by giving ten (10) days written notice to the other parties, designate any other address or facsimile number in substitution of the address or facsimile number to which such notice or communication shall be given. 10. SEVERABILITY. If any provision of this Agreement is held invalid, void, or unenforceable but the remainder of this Agreement can be enforced without failure of material consideration to any. party, then this Agreement shall not be affected and it shall remain in full force and effect, unless amended by mutual consent of the parties. Notwithstanding this severability clause, Section 2, Property Tax Allocation, is material and substantial and the failure of said subsection is the failure of material consideration, causing the agreement to be void from the date that the subsection is held invalid. 11. FURTHER ASSURANCES. Each party shall execute and deliver to the other party or parties all such other further instruments and documents and take all such further actions as may be reasonably necessary to carry out this Agreement and to provide and secure to the other party or parties the full and complete enjoyment of its rights and privileges hereunder. 12. CONSTRUCTION. All parties have been represented by counsel in the preparation of this Agreement and no presumption or rule that ambiguity shall be construed against a drafting party shall apply to interpretation or enforcement hereof. Captions on sections and subsections are provided for convenience only and shall not be deemed to limit, amend, or affect the meaning of the provision to which they pertain. 13. OTHER MISCELLANEOUS TERMS. 7 SDCA_295107.1 section 99.02 of the Revenue and Taxation Code providing for the transfer of taxes to the County; and WHEREAS, District and County desire to have an agreement for the temporary transfer of the allocation of District ad valorem property tax revenues to County to allow for new funding of the District's acute care hospital in San Pablo, California, doing business as Doctor's Medical Center, hereinafter referred to as"DMC", and the operations of DMC under the auspices of an affiliation between District and County. NOW, THEREFORE, in consideration of the following terms and conditions, the parties hereto agree as follows: 1. DEFINITIONS. The words and phrases in this Agreement shall have meanings as set forth below: A. "Ad valorem property taxes" shall mean the sum of the general ad valorem tax revenues allocated in regular installments to District after the Effective Date of this agreement, including such incremental increases or decreases as occur by reason of changes in the District's property tax base or changes in the District's allocations occurring by reason of law or subsequent reallocations of existing property tax revenues to the District. B. "Intergovernmental Transfer" shall mean the transfer of County general funds in an amount of ten million dollars ($10,000,000.00) to the California Department of Health Services pursuant to California Welfare and Institutions Code Section 14164 for use as the non-federal share of enhanced Medi-Cal payments to DMC for inpatient hospital services rendered to Medi-Cal beneficiaries during the State fiscal year ending June 30, 2007. C. "Medi-Cal contract" shall mean the contract for the provision of inpatient hospital services to Medi-Cal beneficiaries entered into between DMC and the California 2 SDCA 295107.1 Department of Health Services that is authorized pursuant to California Welfare and Institutions Code Section 14081 et seq. 2. CONTINUING PROPERTY TAX ALLOCATION. A. The County Auditor shall allocate and transfer to County the entirety of the general ad valorem property tax revenues which would otherwise be collected and allocated to District, commencing on July 1, 2007 and continuing from year to year, as authorized by section 99.02 of the Revenue and Taxation Code until the sum of all such allocations to County equals eleven million five hundred thousand ($11,500,000) or such lesser pro rata amount as County may determine is required to be allocated to County should County fund less than ten million dollars pursuant to Section S.B. hereof. B. The provisions of this Agreement and the allocations of District ad valorem property taxes to County shall continue in effect subject to the fulfillment of the conditions subsequent set forth herein. 3. EFFECTIVE DATE. The Effective Date of this Agreement shall be November 1, 2006. 4. CONDITIONS PRECEDENT TO COUNTY FUNDING. County's obligation to fund as set forth in this Agreement shall be conditioned upon the occurrence of all the following matters to the satisfaction of the County: A. District represents and warrants that it shall: (i) take in each fiscal year all actions necessary, reasonable and prudent to ensure that the levy of general ad valorem property taxes, upon which the allocation described in Section 2.A. of this Agreement depends, will be fully implemented on an annual basis; and (ii) not take any actions that have the effect of impairing or reducing such levy or the above-described allocation of general ad valorem property tax revenues until all amounts due County hereunder have been allocated and transferred. 3 SDCA_295107.1 B. County shall not make any Intergovernmental Transfer pursuant to this Agreement or otherwise unless and until District demonstrates to County's satisfaction, in County's sole discretion, that District has complied with Revenue and Taxation Code Section 99.02 as required in order to permit District to enter into and perform the terms of this Agreement. C. The transactions contemplated by this Agreement shall have been approved to County's satisfaction by the United States Bankruptcy Court in a Chapter 9 proceeding pending in the Northern District of California, Oakland Division, Case No. 06- 41774-T, and in connection with such approval (i) the ad valorem property tax revenue allocated by this Agreement shall belong exclusively to the County in accordance with the terms hereof, and (ii) the Bankruptcy Court shall retain jurisdiction to enforce the terms of this Agreement. 5. CONDITIONS SUBSEQUENT. A. County shall execute an agreement with the California Department of Health Services to facilitate the Intergovernmental Transfer. B. County shall transfer to the California Department of Health Services up to ten million dollars ($10,000,000) in various installments, the time and amount of which shall be determined by County, during the State fiscal year ending June 30, 2007. C. District shall execute an amendment to its Medi-Cal contract that will provide for enhanced Medi-Cal payments of up to twenty million dollars ($20,000,000.00) in various installments from the California Department of Health Services following the Effective Date of this Agreement, for services rendered to Medi-Cal beneficiaries during the state fiscal year ending June 30, 2007. D. District shall ensure that the enhanced Medi-Cal payments described in section 5.C. above are retained by DMC to be expended on the general expenses of operations of 4 SDCA 295107.1 DMC becoming payable after the Effective Date. Such enhanced Medi-Cal payments shall not be applied by District to past due debt repayments or accounts payable generated prior to the Effective Date. 6. EXCLUSIONS. District and County recognize that District receives certain special taxes, i.e., parcel tax revenues generated from a voter approved parcel tax measure enacted in 2004 (Measure D) and that such special parcel tax revenues are not subject to this Tax Allocation Agreement. 7. JOINT REVIEW. District and County may jointly review County property tax records from time to time or as requested by District to verify accurate distribution under this Agreement. 8. GOVERNING LAW AND ATTORNEYS' FEES. This Agreement shall be construed and enforced in accordance with the laws of the State of California. Should any legal action be brought by either party because of any default under this Agreement or to enforce any provision of this Agreement, or to obtain a declaration of rights hereunder, the prevailing party shall be entitled to reasonable attorneys' fees, court costs and such other costs as may be fixed by the Court. The standard of review for determining whether a default has occurred under this Agreement shall be the standard generally applicable to contractual obligations in California. 9. NOTICES. Any notice of communication required hereunder among District and County must be in writing, and may be given either personally,by telefacsimile (with original forwarded by regular U.S. Mail) or by Federal Express or other similar courier promising overnight delivery. If personally delivered, a notice or communication shall be deemed to have been given 5 SDCA 295107.1 and received when delivered to the party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving party's facsimile machine. Such notices or communications shall be given to the parties and each of their designees at their addresses set forth below: To District (Chair, Board of Directors and Chief Executive Officer): Beverly Wallace, Chair Board of Directors and Irwin Hansen, Chief Executive Officer West Contra Costa Healthcare District C/O Doctor's Medical Center 2000 Vale Road San Pablo, CA 94806 Fax #: (510) 970-5728 To COUNTY (County Administrator; Director, Dept. Of Health Services and COO/CFO, Dept. Of Health Service) John Cullen Contra Costa County 651 Pine Street 11th Floor Martinez CA 94553 FAX#: 925-335-1098 William Walker, M.D., Director and Patrick Godley, Chief Operating Officer/Chief Financial Officer Department of Health Services 50 Douglas Dr Suite 310-A Martinez, CA 94553 FAX#: (925) 957-5401 6 SDCA_295107.1 The singular includes the plural; the masculine gender includes the feminine, "shall"is mandatory; "may" is permissive. 14. TIME. Time is of the essence of each and every provision hereof. IN WITNESS WHEREOF,the parties hereto have executed this Agreement. County of Contra Costa William B. Walker, M.D., Director Contra Costa County Department of Health Services West Contra Costa Healthcare District Beverly Wal e Chair, Board of Directors 8 SDCA_295107.1 MEMORANDUM OF UNDERSTANDING REGARDING THE EXECUTION OF CERTAIN DEFINITIVE AGREEMENTS AND RELATED INSTRUMENTS BETWEEN CONTRA COSTA COUNTY AND THE WEST CONTRA COSTA HEALTHCARE DISTRICT REGARDING DOCTORS MEDICAL CENTER SAN PABLO S� This Memorandum of Understanding ("MOU") is executed this day of 2006 by and between the County of Contra Costa, a political subdivision of the State of California ("County"), and West Contra Costa Health Care District, a public health care district organized pursuant to Division 23 of the California Health & Safety Code ("District"). Recitals A. District owns and operates Doctors' Medical Center San Pablo, a duly licensed general acute care hospital located in San Pablo, California ("DMC"). B. District is presently operating DMC under Chapter 9 bankruptcy protection pursuant to a proceeding pending before the United States Bankruptcy Court, Northern District of California, Oakland Division, Case No. 06-41774-T. District is seeking ways to operate DMC within budgetary constraints while continuing to deliver comprehensive, high quality acute medical care, health and wellness services and community benefits through staff that is responsive to the diverse cultural needs of the community. C. County operates a comprehensive county health system that provides integrated health care services to residents of Contra Costa County. County has a statutory obligation under California Welfare & Institutions Code §17000 for the benefit of incompetent, poor and indigent residents of Contra Costa County who are incapacitated by age, disease, or accident and lack insurance or other health care resources. Additionally, County is authorized under California law, including without limitation Government Code §26227 and Welfare & Institutions Code §14000.2, to appropriate and expend general funds as deemed necessary by its Board of Supervisors to meet the health care needs of the population of the County and to prescribe rules authorizing county hospitals to integrate services with.other hospitals into a system of community service. D. County and District believe that county residents are best served by the preservation of DMC as a health care resource in West Contra Costa County. Accordingly, County and District shall coordinate their activities as provided herein and County shall assist District with interim financing and will participate in management oversight of DMC for the purposes of: 1) preserving DMC as a health care resource for the benefit of the public in West Contra Costa County; and 2) improving the delivery of healthcare services to indigent residents of West Contra Costa County by better integrating healthcare services now provided independently by the District and the County. E. District and County shall work jointly in the manner described in this. MOU for the benefit of the communities that both parties serve. THEREFORE the parties agree as follows: 1 SFCA 399890.1 1. Definitive Agreement. Within the time specified in this MOU, the parties shall enter into a Definitive Definitive Agreement(the "Definitive Agreement") whereby they shall create a Joint Management Board structured in a manner to be determined in the Definitive Agreement(the "Joint Board"), pursuant to the provisions of the Joint Exercise of Powers Act, California Government Code §6500, et seq. or other lawful means. The Definitive Agreement shall contain substantially the terms and provisions described in this MOU, and such others as the parties may agree and/or are required by law. a. No Separate Legal Entity. The Definitive Agreement shall create the Joint Board and shall provide the framework for the Joint Board's duties and authority. Nothing in this MOU is intended or shall be construed to require that the parties create a separate legal entity;however, the parties may determine to do so in the Definitive Agreement if they so choose. Notwithstanding the foregoing, no separate entity, if any, shall have any ownership interest in DMC or in any other assets belonging to the District or to the County. The sole purpose of the Joint Board, however constructed, shall be to exercise management oversight of DMC within the guidelines set forth in the Definitive Agreemen�iand to make recommendations to the District Board with respect thereto. b. Powers of Joint Board. If appropriate pursuant to Section 6509 of the California Government Code, the parties shall set forth in the Definitive Agreement whether the Joint Board shall exercise the powers of the County or the powers of the District. 2. Financial Commitments; Tax Allocation Agreement. Within the time specified in this MOU, provided that the District has executed the Tax Allocation Agreement described herein, the execution of which is hereby made a condition precedent to funding by County, and provided that any other conditions precedent set forth herein or otherwise agreed between the parties have been satisfied, and District is not in default of its obligations to County hereunder or under the terms of any other Agreement between the parties, if any, County shall apply up to $10 million of County funds, or so much thereof as County, in its sole discretion, after consultation with District, determines will ultimately be matched and distributed to DMC as special Medi-Cal reimbursement payments over and above all payments due to DMC through other programs and relationships existing between DMC and the California Department of Health services on behalf of the Medi-Cal program. The County's advance of up to $10 million to facilitate matching funds for enhanced Medi-Cal payments to District shall be made pursuant to a separate agreement to which District is not a party between the County and the California Department of Health Services. The County shall not advance any funds to Medi-Cal on behalf of the District unless the County shall have determined that such fuunds will be matched and paid over to DMC promptly upon payment from the County to Medi-Cal. a. The Tax Allocation Agreement shall provide that District shall, pursuant to Revenue and Taxation Code Section 99.02, allocate to County the annual ad valorem property tax revenues otherwise due and owing to District commencing with the fiscal year beginning July 1, 2007 until the aggregate sum of such tax revenues is equal to eleven million five hundred thousand dollars ($11,500,000), or such reduced amount, if any, as may be agreed by County. The precise annual tax allocations from District to County shall depend upon fluctuations,in the tax revenue from year to year; however, the parties anticipate that annual ad valorem property revenues due to District and available for allocation to the County are approximately $2.7 2 SFCA 399890.1 million. The Tax Allocation Agreement shall contain such terms, conditions and protections for County as are agreed between the parties and are otherwise customary in agreements of such type. 3. Hospital Management Agreement. The parties shall enter into a Hospital Management Agreement whereby the District shall delegate management oversight of the hospital to the Joint Board created pursuant to the Definitive Agreement. The Joint Board shall be comprised of representatives from the County and the District, with the County having the majority representation. The Joint Board shall not supplant the ultimate authority of the District Board over DMC operations; however, to the extent permissible by law the District shall delegate management oversight of day-to-day operations and of certain governance-related responsibilities of DMC to the Joint Board. The Executive Officers of DMC shall report, in the first instance, to the Joint Board, and the Joint Board shall make recommendations regarding management of DMC to the District Board. The District Board shall accept and implement the recommendations of the Management Committee within guidelines to be established in the Management Agreement, absent compelling reasons not to do so. DMC will at all times remain the property of, and subject to the ultimate authority of, the District, which shall retain responsibility for DMC. 4. Hospital Management Goals. The Joint Board shall work collaboratively to create and maintain an efficient primary care delivery system for indigent and non-indigent residents of West Contra Costa County. The Joint Board shall work toward the parties' common goal of creating and maintaining a primary health care delivery system in order to maintain the existence of emergency room and acute care services at DMC, along with secondary and tertiary services. The Joint Board shall endeavor to rationalize services between the County and the District so as to enable DMC and the community it serves to benefit from synergies between the County and the District. The Joint Board shall begin the process of addressing seismic concerns regarding DMC; provided, however, that the County shall not undertake any financial obligation in such regard or in any other regard except, if at all, as may be set forth expressly in the Hospital Management Agreement and be consistent with the terms of this MOU. Over the twelve months following execution of the Hospital management Agreement, the JointBoard, in cooperation with the District, shall use its best efforts to develop a strategic plan, including a financial plan, for the long term survival of DMC. 5. MOU Binding. This MOU is intended to be binding upon both parties during its term. 6. Timing of Agreements; County Funding Discretionary. County and District shall undertake to complete and execute the Tax Allocation Agreement not later than November 1, 2006 or such other date as the parties may agree in writing. The parties shall undertake to 1 complete and execute the Definitive Agreement and the Hospital management Agreement not �. later than December 31, 2006. Notwithstanding any other provision of this MOU or the Tax Allocation Agreement executed of even date herewith, County may withhold all or any part of the funding described in Section 2 hereof unless and until the Definitive Agreement and the Hospital management Agreement are executed within.the time specified in Section 7 below. i 3 SFCA 399890.1 7. Term of this MOU. The term of this MOU shall commence upon the date first above written and shall continue in full force and effect until the execution of the Definitive Agreement and the Hospital Administration Agreement. This MOU shall terminate and be of no further force or effect after December 31, 2006, and neither party shall thereafter have any rights or obligations to the other, unless by such date the parties have executed the Definitive Agreement, Tax Allocation Agreement and Hospital Management Agreement described herein. , . Upon execution of the Definitive Agreement, Tax Allocation Agreement and Hospital Management Agreement, this MOU shall be merged into and superseded by such Agreements and this MOU shall thereafter be of no further force or effect. 8. Termination of Agreement. In the event that the Joint Board has not completed a Strategic Plan that provides for the long term survival of DMC and addresses the goals set forth at Section 4 above, by the date on which the County has received all of the ad valorem property tax allocations set forth in the Tax Allocation Agreement and described in Section 2.a. above, then the District shall have the right to terminate the agreements with the County provided that the District shall make the County whole for all sums advanced by the County to the District prior to the termination of such agreements. Notwithstanding the foregoing, the goal of the County and the District is to form a long term working relationship creating an efficient primary health care delivery system for West Contra Costa County utilizing the resources and the skills of the District and the County. 9. Bankruptcy Court Approval. District shall seek approval of the Bankruptcy Court in order to enable District to enter into and consummate the transactions contemplated in this MOU, to the extent deemed appropriate by District and County and/or as required by law. 10. Confidentiality. As public entities, County and District each acknowledge that public disclosure is a hallmark of their discussions. Nevertheless, during the course of discussions and negotiations concerning the activities coveted by this MOU, each party may receive confidential and/or proprietary information from the other that is not subject to public disclosure and that, if disclosed, may operate to the detriment of either or both parties. Accordingly, each party agrees and represents that it will not, during the term or subsequent to the expiration of this MOU, disclose any confidential and/or proprietary information of the other party to anyone not a signatory to this MOU;provided, however, that either party may disclose confidential and/or proprietary information of the other party to its officers, executive-level employees and professional advisors for purposes of performing the terms of this MOU, so long as such disclosure does not compromise the confidential nature of such information. For purposes of this MOU,the term "confidential and/or proprietary" shall mean all information or material that (i) confers a competitive business advantage or the opportunity of obtaining such advantage, or the disclosure of which could be detrimental to the interests of the party to which the information belongs; or (ii) that is either(A) marked"Confidential,""Restricted," or "Proprietary Information" or other similar marking, (B) known by the parties to be considered confidential and/or proprietary or(C) from all the relevant circumstances, should reasonably be assumed to be confidential and/or proprietary. Neither party shall have any obligation with respect to confidential and/or proprietary information which: (i) is or becomes generally known to the public by any means other than a breach of the obligations of a receiving party; (ii)was previously known to the receiving party or lawfully received by the receiving party from a third party; (iii) is independently developed by the receiving party without reference to information 4 SFCA_399890.1 derived from the other party; or(iv) is subject to disclosure under court order or other lawful process. 11. District's Authority,No County Risk for District Obligations. Unless expressly specified to the contrary in the Definitive Agreement, nothing in this MOU or in any agreement or transaction contemplated herein is intended or shall be construed to impair or abrogate (i) District's final authority to make decisions regarding District's own assets, including without limitation DMC, or (ii) District's ownership of such assets, except.to the extent of County's right to receive ad valorem tax revenue under the Tax Allocation Agreement and/or County's security interest, if any, in District assets that may be expressly granted to County's to secure advances of funds by County as set forth herein. a. Neither the Definitive Agreement nor any other agreement or transaction contemplated herein shall alter or affect the responsibility of either party for its own debts, liabilities, claims or obligations. Notwithstanding the execution of this MOU or any other instrument contemplated herein, the debts, liabilities claims and obligations of each party shall at all times remain the debts, liabilities, claims and obligations of such party, and shall not be, or by virtue hereof become, the debts, liabilities, claims or obligations of the other party. All debts, liabilities, claims and obligations of DMC shall be and remain the debts, liabilities, claims and obligations only of District. Nothing in this MOU or in any agreement or transaction contemplated herein is intended or shall be construed to make County liable for, or put any of County's assets at risk for, any obligations, financial, managerial or otherwise, of District. b. Unless expressly specified to the contrary in the Definitive Agreement, District shall not be deemed in breach of this MOU or any agreement contemplated herein for failing to follow recommendations of the Joint Board to undertake any of the following actions: i. Sale, exchange or.other disposition of all or substantially all of the assets of DMC,whether in a single transaction or a series of related transactions; ii. Merger of DMC with another corporation, nonprofit or public entity, limited liability company, general or limited partnership or other entity;; iii. Taking of any act which would make it impossible to carry on the ordinary business of DMC; iv. Confession of a judgment against DMC or District; V. Incurrence on behalf of, or in the name of, DMC or the District any debt, liability.or contract obligation of more than a specified amount to be specified, or any expenditure by or on behalf of DMC involving a sum in excess of such amount in any given fiscal year; vi. Dissolution of DMC; 5 SFCA_399890.1 vii. Incurring debt in excess of$1,000,000 in aggregate on the credit of the District and/or incurring debt that the District Board determines the District will be unable to repay out of reasonablly projected revenues; viii. Such other matters as are agreed between the parties in the Definitive Agreement. 12. Other Matters. The agreements described above shall contain such other provisions as the parties may agree and as are typically included in agreements of such nature, such as representations &warranties, default &remedies, term &termination, dispute resolution and various standard("boilerplate")provisions. 13. Default&Remedies. Should either party be in breach of any provision hereof, which breach remains uncured for thirty(30) days following notice thereof by the nondefaulting party to the other, either party may immediately terminate this MOU and/or pursue all remedies available to it under this MOU or otherwise at law or in equity. 14. Miscellaneous Provisions. a. No Assignment. Neither party may assign any of its rights nor delegate any of its responsibilities under this MOU without the written approval of the other party. b. Governing_Law. This MOU shall be construed in accordance with and governed by the laws of the State of California. C. Notices. Any notice required or permitted hereunder shall be in writing and shall be deemed given (i) upon personal delivery; or (ii) twenty-four (24) hours following confirmed transmission by electronic facsimile or by deposit for overnight delivery with a bonded courier holding itself out to the public as providing overnight service; or(iii) forty-eight (48) hours following deposit in the United States Mail, certified or registered mail, and addressed as follows or to such other addresses as either party may provide to the other from time to time in the manner provided in this Section 8.3: If to District: If to County: West Contra Costa Contra Costa County ealthcare District C t� Attn: Attn: d. Successors and Assigns. To the extent that any provisions of this MOU are binding, they shall inure to the benefit of the parties and their respective representatives and permitted assigns. C. No Third-Party Beneficiaries. No provision of this MOU is intended to benefit any person or entity not a signatory hereto, nor shall any other person or entity have any 6 SFCA 399890.1 right or standing to seek to enforce or recover any right or remedy that may be binding hereunder. f. Public Pronouncements. Neither party shall make public statements about nonpublic matters pertaining to this MOU, any Agreements contemplated herein, or other matters related to the circumstances described herein without the approval of the other party. g. Amendments. This MOU may only be amended by an instrument in writing signed by the parties expressing an intent to amend. h. Counterparts. This MOU may be executed in multiple counterparts, each of shall be deemed an original and all of which together shall constitute one and the same instrument. WHEREFORE, the parties have executed this Memorandum of Understanding as of the date first above written. "COUNTY" CONTRA COSTA COUNTY By: C,r,.-✓f ,�ID Its: �7 "� r�`'-� � c h.— C L "DISTRICT" WEST CONTRA COSTA HEALTHCARE DISTRICT Its: 7 SFCA_399890.1 MEMORANDUM OF UNDERSTANDING REGARDING THE EXECUTION OF CERTAIN DEFINITIVE AGREEMENTS AND RELATED INSTRUMENTS BETWEEN CONTRA COSTA COUNTY AND THE WEST CONTRA COSTA HEALTHCARE DISTRICT REGARDING DOCTORS MEDICAL CENTER SAN PABLO I This Memorandum of Understanding ("MOU") is executed this_day of 2006 by and between the County of Contra Costa, a political subdivision of the State of California("County"), and West Contra Costa Health Care District, a public-health care district organized pursuant to Division 23 of the California Health& Safety Code ("District"). Recitals i A. District owns and operates Doctors' Medical Center San Pablo, a duly licensed general acute care hospital located in San Pablo, California("DMC"). B. District is presently operating DMC under Chapter 9 bankruptcy protection pursuant to a proceeding pending before the United States Bankruptcy Court, Northern District of California, Oakland Division, Case No. 06-41774-T. District is seeking ways to operate DMC within budgetary constraints while continuing to deliver comprehensive, high quality acute medical care, health and wellness services and community benefits through staff that is responsive to the diverse cultural needs of the community. C. County operates a comprehensive county health system that provides integrated health care services to residents of Contra Costa County. County has a statutory obligation under California Welfare & Institutions Code §17000 for the benefit of incompetent, poor and indigent residents of Contra Costa County who are incapacitated by age, disease, or accident and lack insurance or other health care resources. Additionally, County is authorized under California law, including without limitation Government Code §26227 and Welfare & Institutions Code §14000.2, to appropriate and expend general funds as deemed necessary by its Board of Supervisors to meet the health care needs of the population of the County and to prescribe rules authorizing county hospitals to integrate services with other hospitals into a system of community service. j D. County and District believe that county residents are best served by the preservation of DMC as a health care resource in West Contra Costa County. Accordingly, County and District shall coordinate their activities as provided herein and County shall assist District with interim financing and will participate in management oversight of DMC for the purposes of. 1) preserving DMC as a health care resource for the benefit of the public in West Contra Costa County; and 2) , improving the delivery of healthcare services to indigent residents of West Contra Costa County by better integrating healthcare services now provided independently by the District and the County. E. District and County shall work jointly in the manner described in this MOU for the benefit of the communities that both parties serve. THEREFORE the parties agree as follows: i 1 SFCA 399890.1 1. Definitive Agreement. Within the time specified in this MOU, the parties shall enter into a Definitive Definitive Agreement (the "Definitive Agreement") whereby they shall create a Joint Management Board structured in a.manner to be determined in the Definitive Agreement(the "Joint.Board"), pursuant to the provisions of the Joint Exercise of Powers Act, California Government Code §6500, et seq. or other lawful means. The Definitive Agreement I shall contain substantially the terms and provisions described.in this MOU, and such others as the parties may agree and/or are required by law. a. No Separate Legal Entity. The Definitive Agreement shall create the Joint i Board and shall provide the framework for the Joint Board's duties and authority. Nothing in this MOU is intended or shall be construed to require that the parties create a separate legal entity; however, the parties may determine to do so in the Definitive Agreement if they so choose. Notwithstanding the foregoing, no separate entity, if any, shall have any ownership interest in DMC or in any other assets belonging to the District or to the County. The sole purpose of the Joint Board, however constructed, shall be to exercise management oversight of DMC within the guidelines set forth in the Definitive Agreementand to make recommendations I to the District Board with respect thereto. I b. Powers of Joint Board. If appropriate pursuant to Section 6509 of the California Government Code, the parties shall set forth in the Definitive Agreement whether the Joint Board shall exercise the powers of the County or the powers of the District. 2. Financial Commitments; Tax Allocation Agreement. Within the time specified in this MOU, provided that the District has executed the Tax Allocation Agreement described herein, the execution of which is hereby made a condition precedent to funding by County, and provided that any other conditions precedent set forth herein or otherwise agreed between the parties have been satisfied, and District is not in default of its obligations to County hereunder or under the terms of any other Agreement between the parties, if any, County shall apply up to $10 million of County funds, or so much thereof as County, in its sole discretion, after consultation with District, determines will ultimately be matched and distributed to DMC as special Medi-Cal reimbursement payments over and above all payments due to DMC through other programs and relationships existing between DMC and the California Department of Health services on behalf of the Medi-Cal program. The County's advance of up to $10 million to facilitate matching funds for enhanced Medi-Cal payments to District shall be made pursuant to a separate agreement to which District is not a party between the County and the California Department of Health Services.. The County shall not advance any funds to Medi-Cal on behalf of the District unless the County shall have determined that such fuunds will be matched and paid over to DMC promptly upon payment from the County to Medi-Cal. a. The Tax Allocation Agreement shall provide that District shall,pursuant to Revenue and Taxation Code Section 99.02, allocate to County the annual ad valorem property tax revenues otherwise due and owing to District commencing with the fiscal year beginning July 1, 2007 until the aggregate sum of such tax revenues is equal to eleven million five hundred thousand dollars ($11,500,000), or such reduced amount, if any, as may be agreed by County. The precise annual tax allocations from District to County shall depend upon fluctuations in the tax revenue from year to year; however, the parties anticipate that annual ad valorem property revenues due to District and available for allocation to the County are approximately$2.7 2 SFCA 399890.1 � 1 million. The Tax Allocation Agreement shall contain such terms, conditions and protections for County as are agreed between the parties and are otherwise customary in agreements of such type. 3. Hospital Management Agreement. The parties shall enter into a Hospital Management Agreement whereby the District shall delegate management oversight of the hospital to the Joint Board created pursuant to the Definitive Agreement. The Joint Board shall be comprised of representatives from the County and the.District, with the County having the majority representation. The Joint Board shall not supplant the ultimate authority of the District Board over DMC operations; however, to the extent permissible by law the District shall delegate management oversight of day-to-day operations and of certain governance-related responsibilities of DMC to the Joint Board. The Executive Officers of DMC shall report, in the first instance, to the Joint Board, and the Joint Board shall make recommendations regarding management of DMC to the District Board. The District Board shall accept and implement the recommendations of the Management Committee within guidelines to be established in the Management Agreement, absent compelling reasons not to do so. DMC will at all times remain i the property of, and subject to the ultimate authority of, the District, which shall retain responsibility for DMC. 4. Hospital Management Goals. The Joint Board shall work collaboratively to create and maintain an efficient primary care delivery system for indigent and non-indigent residents of West Contra Costa County. The Joint Board shall work toward the parties' common goal of creating and maintaining a primary health care delivery system in order to maintain the existence of emergency room and acute care services at DMC, along with secondary and tertiary services. The Joint Board shall endeavor to rationalize services between the County and the District so as to enable DMC and the community it serves to benefit from synergies between the County and the District. The Joint Board shall begin the process of addressing seismic concerns regarding DMC; provided, however, that the County shall not undertake any financial obligation in such regard or in any other regard except, if at all, as may be set forth expressly in the Hospital Management Agreement and be consistent with the terms of this MOU. Over the twelve months following execution of the Hospital management Agreement, the JointBoard, in cooperation with the District, shall use its best efforts to develop a strategic plan, including a financial plan, for the i. long term survival of DMC. 5. MOU Binding. This MOU is intended to be binding upon both parties during its term. 6. Timing of Agreements-, County Funding Discretionary. County and District shall undertake to complete and execute the Tax Allocation Agreement not later than November 1, 2006 or such other date as the parties may agree in writing. 'The parties shall undertake to complete and execute the Definitive Agreement.and the Hospital management Agreement not I, later than December 31, 2006. Notwithstanding any other provision of this MOU or the Tax Allocation Agreement executed of even date herewith, County may withhold all or any part of the funding described in Section 2 hereof unless and until the Definitive Agreement and the Hospital management Agreement are executed within the time specified in Section 7 below. 1 i 3 SFCA_399890.1 1 7. Term of this MOU. The term of this MOU shall commence upon the date first above written and shall continue in full force and effect until the execution of the Definitive Agreement and the Hospital Administration Agreement. This MOU shall terminate and be of no further force or effect after December 31, 2006, and neither party shall thereafter have any rights or obligations to the other, unless by such date the parties have executed the Definitive Agreement, Tax Allocation Agreement and Hospital Management Agreement described herein. . Upon execution of the Definitive Agreement, Tax Allocation Agreement and Hospital Management Agreement, this MOU shall be merged into and superseded by such Agreements and this MOU shall thereafter be of no further force or effect. I 8. Termination of Agreement. In the event that the Joint Board has not completed a Strategic Plan that provides for the long term survival of DMC and addresses the goals set forth at Section 4 above, by the date on which the County has received all of the ad valorem property tax allocations set forth in the Tax Allocation Agreement and described in Section 2.a. above, then the District shall have the right to terminate the agreements with the County provided that the District shall make the County whole for all sums advanced by the County to the District prior to the termination of such agreements. Notwithstanding the foregoing, the goal of the County and the District is to form a long term working relationship creating an efficient primary health care delivery system for West Contra Costa County utilizing the resources and the skills of the District and the County. 9. Bankruptcy Court Approval. District shall seek approval of the Bankruptcy Court in order to enable District to enter into and consummate the transactions contemplated in this MOU, to the extent deemed appropriate by District and County and/or as required by law. 10. Confidentiality. As public entities, County and District each acknowledge that public disclosure is a hallmark of their discussions. Nevertheless, during the course of discussions and negotiations concerning the activities covered by this MOU, each party may receive confidential and/or proprietary information from the other that is not subject to public disclosure and that, if disclosed, may operate to the detriment of either or both parties. Accordingly, each party agrees and represents that it will not, during the term or subsequent to the expiration of this MOU, disclose any confidential and/or proprietary information of the other party to anyone not a signatory to this MOU; provided,.however, that either party may disclose confidential and/or proprietary information of the other party to its officers, executive-level employees and professional advisors for purposes of performing the terms of this MOU, so long as such disclosure does not compromise the confidential nature of such information. For purposes of this MOU, the term "confidential and/or proprietary" shall mean all information or material that (i) confers a competitive business advantage or the opportunity of obtaining such advantage, or the disclosure of which could be detrimental to the interests of the party to which j the information belongs; or (ii) that is either(A).marked "Confidential," "Restricted," or "Proprietary Information" or other similar marking, (B) known by the parties to be considered confidential and/or proprietary or(C) from all the relevant circumstances, should reasonably be assumed to be confidential and/or proprietary. Neither party shall have any obligation with respect to confidential and/or proprietary information which: (i) is or becomes generally known to the public by any means other than a breach of the obligations of a receiving party; (ii)was previously known to the receiving party or lawfully received by the receiving party from a third party; (iii) is independently developed by the receiving party without reference to information 4 SFCA 399890.1 derived from the other party; or(iv) is subject to disclosure under court order or other lawful process. 11. District's Authority;No County Risk for District Obligations. Unless expressly specified to the contrary in the Definitive Agreement, nothing in this.MOU or in any agreement or transaction contemplated herein is intended or shall be construed to impair or abrogate (i) District's final authority to make decisions regarding District's own assets, including without limitation DMC, or (ii).District's ownership of such assets, except to the extent of County's right to receive ad valorem tax revenue under the Tax Allocation Agreement and/or County's security interest, if any, in District assets that may be expressly granted to County's to secure advances of funds by County as set forth herein. a. Neither the Definitive Agreement nor any other agreement_or transaction contemplated herein shall alter or affect the responsibility of either party for its own debts, liabilities, claims or obligations. Notwithstanding the execution of this MOU or any other instrument contemplated herein, the debts, liabilities claims and obligations of each party shall at all times remain the debts, liabilities, claims and obligations of such party, and shall not be, or by virtue hereof become, the debts, liabilities, claims or obligations of the other party. All debts, liabilities, claims and obligations of DMC shall be and remain the debts, liabilities, claims and obligations only of District. Nothing in this MOU or in any agreement or transaction contemplated herein is intended or shall be construed to make County liable for, or put any of County'.s assets at risk for, any obligations, financial, managerial or otherwise, of District. b. Unless expressly specified to the contrary in the Definitive Agreement, District shall not be deemed in breach of this MOU or any agreement contemplated herein for failing to follow recommendations of the Joint Board to undertake any of the following actions: i. Sale, exchange or other disposition of all or substantially all of the assets of DMC, whether in a single transaction or a series of related transactions; ii. Merger of DMC with another corporation, nonprofit or public entity, limited liability company, general or limited partnership or other entity;; iii. Taking of any act which would make it impossible to carry on the ordinary business of DMC; iv. Confession of a judgment against DMC or District; V. Incurrence on behalf of, or in the name of, DMC or the District any debt, liability or contract obligation of more than a specified amount to be specified, or any expenditure by or on behalf of DMC involving a sum in excess of such amount in any given fiscal year; vi. Dissolution of DMC; 5 SFCA 399890.1 Vii. Incurring debt in excess of$1,000,000 in aggregate on the credit of the District and/or incurring debt that the District Board determines the District will be unable to repay out of reasonablly projected revenues; viii. Such other matters as are agreed between the parties in the Definitive Agreement. 12. Other Matters. The agreements described above shall contain such other provisions as the parties may agree and as are typically included in agreements of such nature, such as representations &warranties, default &remedies, term & termination, dispute resolution and various standard ("boilerplate") provisions. 13. Default &Remedies. Should either party be in breach of any provision hereof, which breach remains uncured for thirty(30) days following notice thereof by the nondefaulting party to the other, either party may immediately terminate this MOU and/or pursue all remedies available to it under this MOU or otherwise at law or in equity. 14. Miscellaneous Provisions. a. No Assignment. Neither party may assign any of its rights nor delegate any of its responsibilities under this MOU without the written approval of the other party. b. Governing Law. This MOU shall be construed in accordance with and governed by the laws of the State of California. C. Notices. Any notice required or permitted hereunder shall be in writing and shall be deemed given (i) upon personal delivery; or (ii) twenty-four (24) hours following confirmed transmission by electronic facsimile or by deposit for overnight delivery with a bonded courier holding itself out to the public as providing overnight service; or(iii) forty-eight (48) hours following deposit in the United States Mail, certified or registered mail, and addressed as follows or to such other addresses as either party may provide to the other from time to time in the mariner provided in this Section 8.3: If to District: If to County: West Contra Costa Contra Costa County Healthcare District Attn: Attn: I I d. Successors and Assign To the extent that any provisions of this MOU are binding, they shall inure to the benefit of the parties and their respective representatives and permitted assigns. e. No Third-Party Beneficiaries. No provision of this MOU is intended to benefit any person or entity not a signatory hereto, nor shall any other person or entity have any 6 SFCA 399890.1 I e right or standing to seek to enforce or recover any right or remedy that may be binding hereunder. f. Public Pronouncements. Neither party shall make public statements about nonpublic matters pertaining to this MOU, any Agreements contemplated herein, or other matters related to the circumstances described herein without the approval of the other party. g. Amendments. This MOU may only be amended by an instrument in writing signed by the parties expressing an intent to amend. h. Counterparts. This MOU may be executed in multiple counterparts, each of shall be deemed an original and all of which together shall constitute one and the same instrument. WHEREFORE, the parties have executed this Memorandum of Understanding as of the date first above written. "COUNTY" CONTRA COSTA COUNTY By: Its: "DISTRICT" WEST CONTRA COSTA HEALTHCARE DISTRICT By: P Its: Chair, Board of Directors 7 SFCA 399890.1 lJ STATE-COUNTY AGREEMENT REGARDING TRANSFER OF PUBLIC FUNDS FOR ENHANCED MEDI-CAL PAYMENTS TO DOCTORS MEDICAL CENTER SAN PABLO/PINOLE This Agreement is entered into between the California Department of Health Services ("CDHS") and the County of Contra Costa("County"), on October 31, 2006 with respect to the matters set forth below. RECITALS A. This Agreement is made pursuant to the authority of Government Code Section 6500 et seq. that establishes a procedure for the exercise of powers by the contracting parties, where those parties are within the definition of the term "public agency." B. The County of Contra Costa("County") Health Services Department operates the Contra Costa Regional Medical Center and related health centers. The County is also responsible for mental health and public health services in the County and operates the Emergency Medical Services Agency. C. The West Contra Costa Healthcare District ("District") is a public health care district organized and operated pursuant to Division 23 of the California Health and Safety Code, and is within the definition of the term "public agency." The District, which owns and operates Doctors Medical Center San Pablo/Pinole ("Doctors Medical Center"), located in West Contra Costa County, has experienced significant financial distress in recent years. Doctors Medical Center is a Medi-Cal provider and is party to a contract with CDHS for the provision of inpatient hospital services to Medi-Cal beneficiaries. Doctors Medical Center is one of only two hospitals in the isolated West Contra Costa region and is a critical component of the County's emergency medical services system. The only other hospital in the area, Kaiser Richmond, LACA 772235.3 would be quickly overwhelmed if Doctors Medical Center were to close, leading to significant risk to patient safety. Because of insufficient intensive care unit ("ICU") capacity in the County, the loss of Doctors ICU beds would have an adverse impact on hospital care throughout the County. Moreover, Doctors Medical Center is the only Medi-Cal contract hospital in that region. D. In response to significant losses in recent years, the District made drastic cuts in staffing and services. On October 1, 2006, the District filed a voluntary petition in the United.States Bankruptcy Court for the Northern District of California under Chapter 9 of the United States Bankruptcy Code. E. The County and CDHS wish to ensure continued access to hospital services at Doctors Medical Center for the community, including Medi-Cal beneficiaries, in West Contra Costa County. F. Subject to any necessary approvals by the Bankruptcy Court, and development of an agreement between the County and District regarding future management of, and financing for, Doctors Medical Center, County has agreed to fund the non-federal share of enhanced Medi-Cal payments to Doctors Medical Center. THEREFORE, the parties agree as follows: 1. Transfer of Public Funds from Contra Costa County to CDHS 1.1. The County may transfer funds in an amount not to exceed TEN MILLION DOLLARS ($10,000,000.00) to CDHS pursuant to California Welfare and Institutions Code Section 14164 for use as the non-federal share of enhanced Medi-Cal payments to Doctors Medical Center for inpatient hospital services rendered to Medi-Cal beneficiaries during the State fiscal year ending June 30, 2007. 2 LACA_772235.3 1.2. The transfers described in paragraph 1.1 shall occur between the effective date of this Agreement and June 30, 2007, in such amounts and on such dates as agreed to between the parties. 1.3. The source of the funds transferred by the County to CDHS for the enhanced Medi-Cal payments to Doctors Medical Center will be County general funds. 2. CDHS Acceptance and Use of Transferred County Funds 2.1. CDHS agrees to exercise its authority under Welfare and Institutions §14164 to accept funds transferred by the County pursuant to this Agreement, for the purpose set forth in Section 2.2 below. 2.2. The funds transferred by the County pursuant to this Agreement will be used solely as the non-federal share of enhanced Medi-Cal payments in amounts to be determined by the California Medical Assistance Commission of up to TWENTY MILLION DOLLARS ($20,000,000.00) to Doctors Medical Center for inpatient hospital services rendered to Medi-Cal beneficiaries during State funding year ending June 30, 2007. Such enhanced Medi- Cal payments will be in addition to Medi-Cal payments that would otherwise be made to Doctors Medical Center under its contract or under any other Medi-Cal regulation, policy or agreement. Payments will be made pursuant to an amendment to the Selective Provider Contracting Program contract authorized pursuant to Welfare and Institutions Code §14081 et seq. 2.3. CDHS will seek federal financial participation ("FFP") with respect to the enhanced Medi-Cal payments to Doctors Medical Center to the full extent permitted by federal law. 3 LACA_772235.3 2.4. This Agreement establishes no obligation on the part of CDHS to make any additional payment to Doctors Medical Center using State General Fund monies. 2.5. Subject to Section 2.6, CDHS will return any unexpended County funds to the County within 30 days of receipt of the funds by CDHS if any of the following occur: a. The funds are not eligible to be used as the non-federal share of the enhanced Medi-Cal payments to Doctors Medical Center. b. Any intervening event occurs that makes it impossible for CDHS to expend the funds for the purpose set forth in Section 1.1 of this Agreement. Should any of the above described circumstances occur, CDHS shall provide written notification and an explanation to the County within three (3) business days, excluding State holidays, of such occurrence. 2.6. In the event that any of the circumstances described in Section 2.5.a and 2.5.b occur, CDHS shall, at the election of the County, pay the otherwise unexpended County funds to Doctors Medical Center, even though such payments would be ineligible for FFP. The County shall notify CDHS of its election under this section in writing. The exercise of this election is subject to CDHS authority under State law to make such payments. 2.7. CDHS shall have no obligation to make enhanced Medi-Cal payments to Doctors Medical Center if insufficient County funds are transferred to fund the non-federal share of those payments. 4 LACA_772235.3 3. Amendments and Termination 3.1. No amendment or modification to this Agreement will be binding on either party unless made in writing and executed by both parties. 3.2. If the County determines it is unable to transfer the non-federal share of the enhanced Medi-Cal payments to CDHS for Doctors Medical Center, the County may terminate this Agreement immediately upon written notice to CDHS stating the effective date of termination. 4. Notices Any and all notices required, permitted or desired to be given hereunder by one party to the other will be in writing and will be delivered to the other party personally or by United States first class, certified or registered mail with postage prepaid, addressed to the other party at the address set forth below: To Contra Costa County: William Walker, M.D., Director, and Patrick Godley, Chief Operating Officer/Chief Financial Officer Department of Health Services 50 Douglas Dr Suite 310-A Martinez, CA 94553 FAX#: (925) 957-5401 With copies to: John Cullen, County Administrator Contra Costa County 651 Pine Street 11 th Floor Martinez CA 94553 FAX#: 925-335-1098 5 LACA 772235.3 To CDHS: Nancy Hutchison Medi-Cal Operations Division (MS 4504) Department of Health Services P.O. Box 997419 Sacramento, CA 95899-7419 With copies to: John Whitsett, Senior Counsel Office of Legal Services (MS 0010) Department of Health Services P.O. Box 997413 Sacramento, CA 95899-7413 5. Other Provisions 5.1. This Agreement contains the entire Agreement between the parties with respect to enhanced Medi-Cal payments to Doctors Medical Center and supersedes any previous or contemporaneous oral or written proposals, statements, discussions, negotiations, or other agreements. This Agreement does not modify or affect any other existing agreement between the parties on matters relating to the funding and administration of the Medi-Cal program unless the other agreement contains specific written language that refers to the terms in this Agreement. This Agreement will not modify the terms of any other existing agreement between the parties, nor will this Agreement modify or affect either party's obligation to comply with federal, state, or local statutes, regulations, ordinances, rules, policies, or California's Medicaid State Plan. 5.2. The waiver or failure to enforce any provision of this Agreement will not be construed as a continuing waiver or as a waiver of any other provision of this Agreement. 6 LACA_772235.3 5.3. Nothing in this Agreement is intended to confer any rights or remedies on any third party, including, without limitation, any provider(s), or groups of providers, or any right to medical services for any individual(s) or groups of individuals; accordingly, there will be no third party beneficiary of this Agreement. 5.4. Each party hereby represents that the person(s) executing this Agreement on its behalf is duly authorized to do so. IN WITNESS WHEREOF, the parties hereto have executed this Agreement, effective October 31, 2006. COUNTY OF CONTRA COSTA: / By: �A�✓ C✓ /`� Date: Its: THE STATE OF CALIFORNIA, DEPARTMENT OF HEALTH SERVICES: By: Date: Its: 7 LACA 772235.3 ., 11liza.blec 1,aratio_n NOTICE OF PUBLIC HEARING ON PRO- POSED AGREEMENT TO Declares that. EXCHANGE 'PROPERTY TAX REVENUES ; Notice is hereby 'given i The annexed advertisement has been regularly that:the.Contra Costa published in the County Board of,Supervi- sors will'hold a public hearing on October 31, 2006,at 10:00 a.m.,in the Board of Supervisor ! 9an grand 0 TIJI-v��icl e Chambers,, O'Brien Ad-; CCC"' ministration Building,651 Pine Street, Martinez, i California;' to. consider Which are and were at all times herein mentioned estab- approvalof•a property tax exchange agreement I lished as newspapers of general circulation in the City and between the WeCoraCoa County of San Francisco, State of California, as that term Healthcare District in or� i der to,support the con-: i is defined by Section 6000 of the Government Code. tinued, provision of health care services to the community at ,Doc- tors Medical Center San Pablo. The talc exchange agreement proposes �to allocate general property j taxes of the District to �the Countyfor a limited I (n me of Newspaper) peripd of time in return for an advance of funds, in an amount not to ex,,. i ceed $10 million, for the benefit of the District.. The agreement does not change property "'tax rates in-either igrisdic-, tion. I Pursuant to Revenue and : I ;Taxation Code 'section 99.02; the Board of.Su- 20 D, pervisors will consider (a the effect of then, hego- From: posed transfer on, fees, �— charges; assessments, // / taxes and other revenues TO: 'n). 20 d�0 A copy of the agreement will be on file and avail-! Both/all da s inclusive, namely, on able for public inspection in the office of the Clerk of the Board of Supervi. sors, at the-above ad- 2 6 dress. Oral,and written - --......_.... ................ ...._, presentations can made at the meeting. l (Oates of Publication) declare under penalty of perjury that the foregoing is true and correct. 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