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HomeMy WebLinkAboutMINUTES - 04161985 - 2.3 THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA Adopted this Order on April 16, 1985, by the following vote: AYES: Supervisors Powers, Schroder, McPeak, Torlakson, Fanden NOES: None ABSENT: None ATSTAIN: None SUBJECT: Reports on the Mt. Diablo Hospital District In response to the request of the Board on April 9, 1985, the Board of Supervisors considered the draft letter(prepared by the County Administrator) to Members of the Board of Directors of the Mt. Diablo Community Hospital District relative to their recent decision to transfer the assets of the District to a nonprofit corporation. Also at this time, the Board of Supervisors considered the report of County Counsel commenting on matters relating to the status of the Mt. Diablo Hospital Authority. Following its discussion on this matter, there was consensus among Board Members to include the Cities of Concord and Pleasant Hill in the letter of the Mt. Diablo Hospital District. THEREFORE, IT IS BY THE BOARD ORDERED that the draft letter presented by the County Administrator is APPROVED. IT IS FURTHER ORDERED that the County Administrator is AUTHORIZED to seek similar approval from the Concord and Pleasant Hill City Councils, and if such approval is received, to authorize the Chairwoman in conjunction with the Mayors of the Cities of Concord and Pleasant Hill to send the letter to the Mt. Diablo Hospital District Board of Directors. IT IS ORDERED that receipt of the report from County Counsel is ACKNOWLEDGED. hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: _ j'� '.G,./ 9k6— PHI BATCHELOR,CHELOR,Clerk of the Board of Supervisors and County Administrator By ,Deputy cc: County Administrator i OFFICE OF COUNTY ADMINISTRATOR CONTRA COSTA COUNTY Nancy C. Fanden Administration Building Tam Powers Martinez, California To: Robert I . Schroder Date: April 11, 1985 Sunne W. McPeak Tom Torlakson From: Phil Batchelor 9' Subject: Letter to Mt. Diablo County Administrator Community Hospital District Board of Directors On April 9, 1985, you directed that I prepare a draft letter for the Board' s consideration which would request that the Mt. Diablo Hospital District Board of Directors meet in a joint public session with the Board of Supervisors and the City Councils of the cities of Concord and Pleasant Hill. Attached is a draft for the Board's consideration. I have furnished copies of the draft letter to the Concord and Pleasant Hill City Managers to discuss with their Mayors. If the Board approves this letter on April 16 , I will then forward it formally to the City Councils for their consideration. PJB:clg Attachment i DRAFT April 11 , 1985 Roger Lang, M.D. , Chairman and Members of the Board of Directors Mt. Diablo Community Hospital District Bacon and East Streets Concord, California 94520 Dear Dr. Lang and Board Members: We have read about your recent decision to transfer the assets of the District to a nonprofit corporation. We were surprised to hear about your decision since we had not known it was under active consideration. . As elected officials who share with you responsibility for the health and welfare of the residents of our respective jurisdictions we have naturally received a variety of questions from our constituents. A number of people are confused about exactly what was done and why it was done. Other individuals have raised questions about the legality of your decision. The Board of Supervisors, as a major provider of health care in the -2- County, is naturally interested in what impact your decision may have on the County. All of us are interested in what impact this- change will have on the residents of the District. We are certain that you join us in wanting to allay the fears of the public, and to assure our mutual constituents that this change in the organization of Mt. Diablo Hospital will not negatively impact medical care to the residents of the District. We, therefore, request that your Board of Directors consider meeting with the Board of Supervisors and the City Councils of the cities of Concord and Pleasant Hill in a joint, public session. We believe such a forum can provide an opportunity to hear the concerns of the public and give us all an opportunity to respond to them. In this way, we can all become better informed and the public will have a more accurate picture of what they can expect in the way of medical care in the future. .. We would appreciate your prompt consideration of this request, which we sincerely believe to be in the best interests of all of the residents of the District whom you and we were elected to serve. Please reply to Phil Batchelor, County Administrator, 651 Pine Street, Martinez, CA 94553 . If you are willing to join us in such a forum, Mr. Batchelor's office can arrange a mutually r -3- agreeable time and place. Very truly yours, NANCY C. FAHDEN STEVE WEIR Chairwoman, Mayor, Board of Supervisors City of Concord LOU WELDON Mayor, City of Pleasant Hill r COUNTY COUNSEL'S OFFICE CONTRA COSTA COUNTY MARTINEZ, CALIFORNIA Date: Apr i 1 `12, 1985 To: . Board of Supervisors From: tor J . Westman, County Counse By Sharon L:' Anderson, Deputy Coun Counsel Re: Mt . . Diabl-.o Hosp'i'ta=l D�istri'et/Joint Powers Authority SUMMARY The Board on April 9, 1985 , asked this office to express its Griew as- tor w_ Nether the Mt . Diablo Hospital District , by virtue of its recent '.tra'nsfer 'o-f assets to a 'nonprofit corporation, may have violated the :--Verm§ .of -the "1-972* Joint- Exercise o'f Powers Agreement between th-e County of Contra Costa and the Mt . Diablo Hospital District , which -creat.ed the Mt . Diablo Hospital .Authority (aka Joint Powers Authority or JPA). It is our opinion that the Joint Powers . Agreemen•t does not appear to have been violated. This memorandum generally discusses the steps which have been taken by the , Hospital District to date, and explains our conclusion that there does not appear to have been any breach of the Joint Powers Agreement . This discussion is limited to the relationship between 'the district and the JPA and does not comment on the legal effect of the transfer of, the District 's assets to a private, nonprofit corporation. .FACTS " On March 19 , .1985 , a report regarding the reorganization of the Mt . Di-ablo Hospital District was presented to the District ' s Board of Directors . The report discussed, a number of alternative reorganization p`Ta"ns , determined that a transfer of all of the District 's assets to a non-profit corporation was t"he most advan- tageous , - and made the- following recommendations .- , (a). That the District ' s Board of Directors take• action '.t,o approve the advance payment of the bonds issued by the JPA. [Bonds in the amount of $8 ,900 ,000 ' were issued in 1972 and additional bonds in the amount of $1, 650,000 were issued in 1975 . The total amount has been , reduced to approximately $8-,975 ,0001 . The Board would authorize funds to , be placed ,,in' a `trustee account until the first date 'on which 'the trustee could call them due' and pay them off in their. entirety. The Board- would - then authorize the termination of ,the leases between the .District , and. the JPA 1 and the JPA would be dissolved . The purpose of this action would be to simplify the transfer . of assets to the non-profit cor- poration. (b) That the Board take action approving the . transfer of assets to and assumption of liabil - ities by a nonprofit public benefit corporation. (c) That the District acquire an existing community-based nonprofit public benefit cor- poration and transfer its assets and liabil - ities to this corporation. It was recommended that an existing nonprofit corporation be acquired from another hospital organization because it would take from 6 to 9 months to obtain a tax exemption from the IRS for a newly-formed corporation. (d) That the Board nominate individuals to serve on the Board of Directors of the non- profit Corporation. (e) That the Board authorize the dissolution of the District . This would be done on the assumption that once the assets and liabili - ties have been transferred, the District has no further reason for existence . Tf we have been correctly informed, following the presentation of this report on March 19th, the District ' s Board of Directors adopted a resolution approving the transfer of assets to a nonpro- fit corporation and authorizing the Board to acquire a nonprofit public benefit corporation and recommend individuals to serve on the board of directors of said corporation. The Board also approved the advance refunding of the JPA bonds , authorized the dissolution of the JPA and further authorized and directed the dissolution of the District upon the conclusion of the advance_ refunding and transfer of assets to the nonprofit corporation. News reports indicate that pursuant to the foregoing resolu- tion, the Board nominated 4 of the 5 current District directors and hospital Administrator Riley Green to the board of the new corporation. News reports also state that on April 9, 1985 the District ' s assets were officially transferred to the private nonprofit cor- poration and the JPA was disbanded. From this , we have assumed that the funds necessary for the refunding of the bonds have been placed into a trustee ( escrow) account , awaiting the first date on which the trustee may call them due and pay them off in their entirety. -2- j DISCUSSION I . DISTRICT' S RIGHTS & DUTIES UNDER THE JPA ----- ---------------------------------- The Hospital District ' s rights and duties with regard to the JPA are delineated by two documents : (1 ) The Joint Exercise of Powers .agreement , dated March 7 , 1972 ; and ( 2 ) the Resolution of the Mt . Diablo Hospital Authority authorizing the issuance of $8 ,900 , 000 revenue bonds dated November 15 , 1972 . A. Joint Exercise of Powers A reement The Joint Exercise of Powers ( JPA ) Agreement created a complex relationship between the District and the Authority. Pursuant thereto, the Hospital District leased the site and then the current hospital facility to the JPA . The Authority constructed major improvements and subleased the expanded hospital and site back to the District . Despite this complicated arrange- ment , however , the control of the land and facility has always remained with the District . Section 12 of the JPA Agreement gives the District the rela- tively unlimited right to "sublease any sublease from Authority to any persons , firms , corporations , associations or groups of any kind, public or private, as District may desire in its sole discretion. . . . " Section 6 provides , in pertinent part , that : "Upon termination of this Agreement , all prop- erty of Authority shall become the property of and be owned by the District , provided that any surplus money on hand shall be returned to the parties to this Agreement in proportion to the contribution made by each. " The authorization for the advance refunding of the bonds is found in section 2 of the Agreement , which also sets forth the conditions under which the Agreement , and thus the Authority, will terminate : "This Agreement shall become effective as of the date hereof and shall continue in full force and effect for a period of fifty years from the date hereof or until all revenue bonds herein provided for and issued pursuant hereto and the interest thereon shall have been paid in full or adequate provision for said payment shall have been made as set forth in the proceedings for issuance thereof , whichever. date is earlier . . . . " In other words , the Joint Exercise of Power Agreement , which was approved by the County, both affirms the control of the hospi - tal by the District alone and authorizes the advance refunding of -3- I the bonds . Based on the above-noted facts , it doesn ' t appear that the District has taken action which violates this Agreement . B. Resolution Authorizin Issuance of Bonds The Resolution authorizing the issuance of the reve- nue bonds also provides for their redemption prior to maturity. Section 2 . 03 thereof , incorporates the form of the bond . Assuming the bonds were issued in accordance with this form, each bond con- tains on its face the following provision : " . . .bonds maturing on or prior to November 1 , 1985 , are not subject to call or redemption prior to maturity. Bonds maturing on or after November 1 , 1986 , may be called prior to maturity, at the option of the Authority , as a whole , or in part in inverse order of maturity and by lot with a single maturity, and redeemed from funds derived by the Authority from any source , on November 1 , 1985 , or on any interest payment date thereafter . . . . " Pursuant to this provision, the funds placed into the escrow account on April 9, 1985 , may be used to repay the bonds on or after November 1 , 1985 . A question may arise as to whether this provision prevents the dissolution of the JPA until the actual repayment of the bonds may take place , on or after November 1 , 1985 . In our opinion, it would not appear to do so. The Joint Exercise, of Powers Agreement authorizes termination of the Agreement creating the Authority either at the time that the principal and interest are paid in full or at the time "adequate provision for said payment shall have been made . . . . " Section 4. 05 of the Resolution provides for the establishment of a redemption fund prior to the notice of redemption. The escrow account established on April 99 1985 seems to be such a fund, assuming sufficient funds were deposited in it . Consequently, it appears that the Agreement , and thus the Authority, may be terminated immediately upon the placement of the repayment funds into said account . SLA/jh cc : Phil Batchelor , County Administrator -4-