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Home My WebLink AboutMINUTES - 06141994 - 1.73 1.73 To: BOARD OF SUPERVISORS Contra FROM: ` Costa Victor J. Westman, County Counsel : _ County DATE: June 8, 19 9 4 SUBJECT: Waiver of Conflict of Interest: Orrick, Herrington & Sutcliffe With .Regard to Los Medanos Hospital SPECIFIC REQUEST(S)OR RECOMMENDATION(S)A BACKGROUND AND JUSTIFICATION I . RECOMMENDED ACTION: Authorize County Counsel to sign letter of May 23, 1994 waiving the. disclosed conflict. of interest so that counsel from the law firm of Orrick, Herrington & Sutcliffe may provide legal advice and representation to Contra Costa County with regard to Los Medanos Hospital . II . FISCAL IMPACT: None. III . REASONS FOR RECOMMENDED ACTION/BACKGROUND: The law firm of Orrick, Herrington & Sutcliffe is serving as bond counsel for transactions in which bonds will be issued by the California Health Facilities Financing Authority and insured by the California Office of Statewide Health Planning and Development. In addition, Orrick, Herrington & Sutcliffe represent the State of California on a variety of capital finance issues . Orrick, Herrington & Sutcliffe has been asked to provide legal advice and guidance to the County in connection with the recent bankruptcy of the Los Medanos Health Care Corporation. The County is considering the acquisition of some or all of the assets of the bankruptcy debtor and/or related entities through the bankruptcy proceeding or otherwise. . The California Office of Statewide Health Planning and Development is a creditor in the bankruptcy. Further, in negotiating the terms of a possible acquistion' of Los Medanos Hospital or other holdings, it is possible that the County, through the Orrick law firm, may negotiate with the California Office of Statewide Health Planning and Development and/or the California Health Facilities Financing .Authority. It is for these reasons that Orrick, Herrington & Sutcliffe is seeking a waiver of any actual or potential conflict of interes , except in the event CONTINUED ON ATTACHMENT. X YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE ACTION OF BOARD ON APPROVED AS RECOMMENDED X OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS(ABSENT— _ � AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. Orig: Vickie Dawes, Deputy County Counsel CC: County Administrator ATTESTED ' "«' l 19 9 County Counsel PHIL BATC LOR.CLERKOFTHEBOARDOF Health Services Department SUPERVIS SANDCOUNTYADMINISTRATOR M382 110/88) BY DEPUTY that litigation arises from the Los Medanos matter, in which case Orrick and the State have agreed that Orrick, Herrington & Sutcliffe shall not represent the State in any such litigation. The County Counsel has no objection to waiving the conflict of interest as requested by Orrick, Herrington, & Sutcliffe in their letter of May 23, 1994 . orrick.ct )- 73 MRRICK, HERRINGTON & SUTCLIFFE May 23, 1994 Direct Dial (415) 773-5336 Mr. Victor J. Westman County Counsel County of Contra Costa County Administrator's Office 651 Pine St. , 11th Floor Martinez, CA 94553-0063 Re: Waiver of Conflict of Interest Dear Vic: As we have advised your, our. firm is currently serving as bond counsel for transactions in which bonds will be issued by the California Health Facilities Financing Authority ("CHFFA") and which may be insured by the California Office of Statewide Health Planning and Development ("OSHPD") pursuant to the California Health Facility Construction Loan Insurance Law. In addition, we also represent on an ongoing basis the State of California (the "State") in general on a variety of capital finance matters. I understand that the office of the State of California Attorney General is .counsel to CHFFA and OSHPD and, in particular, is representing OSHPD in a pending bankruptcy case (In re Los Medanos Health Care Corporation, United States Bankruptcy Court for the Northern District of California, Case No. 94-42864J) . As you know, we have been asked to represent the County of Contra Costa (the "County") in connection with the Los Medanos case. We have been advised that OSHPD is a creditor in Los Medanos and that. the County, with our assistance, may consider purchasing. all or some of the assets of the debtor or related entities (the "Debtor.") through the bankruptcy proceeding or otherwise. In this connection, an important element in the County's possible purchase may be the terms and conditions of two outstanding bond issues, the first a 1977 bond issue on behalf of the Los Medanos Community Hospital District • (the "District") and the second a 1990 bond issue of CHFFA for the Debtor which was insured by OSHPD. Thus, although we expect much of our time as counsel to the County may be spent in negotiating with the Debtor concerning the terms of the possible purchase of its assets, it Old Federal Reserve Bank Building - 400 Sansome Street - San Francisco,California 94111-3143 Telephone 415 392 1122 - Facsimile 415 773 5759 Los Angeles 213 629 2020 - New York 212 326 8800 - Sacramento 916 447 9200 - Washington,D.C. 202 626 8660 S172-31243.1 QRRICK,HERRINGTON & SUTCLIFFE Mr. Victor J. Westman May 23, 1994 Page 2 also likely that we will negotiate these terms with OSHPD and, perhaps, CHFFA. In addition, we may provide the County with interpretations of various terms and conditions of the bond issues. Accordingly, our representation of the County could include negotiations with, or otherwise affecting, OSHPD and CHFFA. As we have discussed previously, our firm regularly performs legal services for many public and private entities in connection with a wide variety of matters. Many of these clients may have some direct or indirect relationship with the State of California or the County of Contra Costa as, for example, insurers, suppliers, lenders, landowners, bondholders or taxpayers. As we have also discussed previously, Orrick has performed special bond counsel services in connection with bonds issued by many other governmental entities, including states, .counties (such as the County and the Los Medanos Community Hospital District) , municipalities, special districts, hospital districts (such as the District) and other political subdivisions; departments and agencies. From time to time, Orrick has also represented banks (including the banks serving as trustees for the 1977 bonds and the 1990 bonds) , investment banks and other financial institutions with which the State, OSHPD and CHFFA and the County may have or have had dealings. Orrick is now performing these services and expects to be asked to perform such services in the future similar to those mentioned above. Based on my discussions with County officials, I understand that the County does not object to these relationships or our performing such services as described above, now or in the future. However, the County does not consent to Orrick representing the State or any of its departments or agencies in any litigation against the County that might arise from the Los Medanos matter. Orrick and the State have agreed that Orrick shall not represent the State in any such litigation. Therefore, I understand that to the extent there might appear to be or is any conflict, either actually or potentially, the County waives any such conflict, except as to any litigation described in the immediately preceding paragraph. SF2-31243.1 t QRRICK,HERRINGTON &SUTCLIFFE Mr. Victor J. Westman May 23, 1994 Page 3 If my understanding is correct, kindly confirm the waiver by signing the enclosed copy of this letter and returning it to me. I -further understand that this waiver is given on the condition that we will also obtain a waiver from the CHFFA and OSHPD. Very truly yours 6 $07U-44 Thomas R. Shearer, Jr. Accepted and agreed to: COUNTY OF CONTRA COSTA, CALIFORNIA By Victor J. Westman County Counsel SF2-31743.1