HomeMy WebLinkAboutResolution No. 4046 RESOLUTION NO. 4046
RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF DOWNEY, CALIFORNIA, APPROVING
ADDENDUM TO THE LEASE DATED OCTOBER 16,
1968 AND APPROVING GRANT OF REVERSIONARY
INTEREST THEREUNDER
RECITALS
WHEREAS, the citizens of the City of Downey, a munici-
pal corporation (the ' "City ") , the City and the Downey Community
Hospital Foundation (the "Hospital ") recognized the need to pro-
vide adequate hospital facilities for the citizens of the City;
and
WHEREAS, the City acquired and became the owner in fee
of that certain parcel of real property described in Exhibit A
to Exhibit 1 which is attached hereto and made a part hereof
(the "Property ") ; and
WHEREAS, the Property was acquired without cost to the
...� City from the proceeds of the sale of certain real property do-
nated to the City by the Hospital and the proceeds of certain
revenue bonds (the "Bonds "); and
WHEREAS, the City leased the Property to the Downey Com-
munity Hospital Authority ( "Authority ") pursuant to the terms
and conditions of that certain agreement entitled Downey Communi-
ty Hospital Ground Lease dated August 3, 1967 (the "Ground Lease ");
and
WHEREAS, at the request of the Hospital, the Authority
was formed pursuant to the terms and conditions of that certain
Joint Powers Agreement between the City and the County of
Los Angeles, dated May 23, 1967 ( "Joint Powers Agreement "); and
WHEREAS, the Authority, in cooperation with the City
and the Hospital, constructed certain improvements on the Property
consisting of a hospital known as The Downey Community Hospital
together with all equipment and appurtenances thereto (collec-
tively the "Hospital Facility ") and financed such construction .
by the issuance of the Bonds pursuant to the terms and conditions
set forth in that certain Resolution No. 1 adopted by the Au-
thority on_or about August 9, 1967 (the "Resolution "); and
WHEREAS, the Authority leased the Property and Hospital
Facility to the City pursuant to the terms and conditions of that
certain agreement entitled Downey Community Hospital Lease, dated
August 3, 1967 (the "Authority Lease "); and
WHEREAS, the City leased the Property and Hospital
Facility to the Hospital pursuant to the terms and conditions of
that certain agreement entitled Lease dated October 16, 1968
( "Operating Lease "); and
WHEREAS, the Hospital has, through the contribution of
various pieces of real property to the City and its regular lease
payments since September, 1969, paid the entire cost of the
Property and the Hospital Facility and there has been no cost
to the City; and
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WHEREAS, the Hospital has maintained and operated the
Property and the Hospital Facility since September, 1969 without
cost to the City; and
WHEREAS, the Hospital has expended approximately
$4,000,000 to improve the Property and the Hospital Facility in-
cluding expansion of the laboratory, emergency and radiology
facilities and the addition of a surgical center, rehabilitation
center and conference facilities; and
WHEREAS, the Hospital has, through the continuing ef-
forts of its fund- raising organization, The Memorial Trust Foun-
dation, raised more than $1,500,000 in conditional gifts and other
contributions for the proposed development of a $3,500,000 criti-
cal care wing and for other improvements to the Hospital Facility,
in order to enhance the delivery of health care to the citizens
of the City; and
WHEREAS, the future improvement of the Hospital Facili-
ties which are and will be necessary to keep pace with future re-
quirements for good health care for the citizens of the City can-
not be effected without successful fund raising efforts by the
Hospital; and
WHEREAS, successful fund - raising efforts by the Hospi-
tal cannot be accomplished without there being some assurance
to the proposed donors that the Hospital will and can continue
operation after termination of the operating lease; and
WHEREAS, the Hospital has operated and managed the
Hospital Facility such that it has attracted and retained a high -
quality medical staff, provided high - quality, state -of- the -art
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diagnostic and therapeutic medical care at low rates, including
specialized medical services, such that the citizens of the
City have had access to high- quality medical care, at low rates,
within their own community; and
WHEREAS, it is vitally important that the citizens of
the City be assured of the continued availability of such high -
quality medical care, at low rates, at the Hospital; and
WHEREAS, hospitals, including the Hospital, are ex-
periencing growing needs for capital, declining third -party
reimbursement, erosion of their equity, increase capital and
operating costs due to inflation and other factors, increased
competition from new forms of health care, and other significant
pressures; and
WHEREAS, in light of these pressures state and local
governments, in increasing numbers, are transferring ownership
and management of hospitals in order to insure that their citi-
zens continue to receive high - quality medical care, reduce the
governmental entity's potential for liability in connection with
providing such care and ease the financial burden on the govern-
mental entity to provide money for capital improvements for the
hospital and to cover possible operating losses; and
WHEREAS, in recognition of its commitment to the citi-
zens of the City the Hospital is organized for, and its assets
are irrevocably dedicated to, hospital and charitable purposes
and to the care and treatment of the sick, afflicted and aged
and to furnishing and supplying care, treatment, hospitaliza-
tion and other services to such persons; and
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WHEREAS, the City and the Hospital believe it would,
therefore, be in the best interest of the citizens of the
City and would serve a valid public purpose for the City to
agree to amend the Operating Lease so as to effect a transfer
to Hospital of all of the City's reversionary interests in the
Property and Hospital Facility;
WHEREAS, the Hospital has agreed, in consideration of
the City's transfer to the Hospital of the City's reversionary
interests in the Property and Hospital Facility, that the Hospi-
tal will expand the Hospital, continue to serve the citizens
of the City, indemnify and hold harmless the City from and
against any liability, loss, cost, damage or expense arising
out of the operation of the Hospital Facility during the re-
mainder of the term of the Operating Lease and to raise money
from the community to be used for further capital improvements
to the Hospital Facility;
NOW, THEREFORE, the City Council of the City of Downey,
California, DOES HEREBY FIND, RESOLVE, DETERMINE AND ORDER as
follows:
Section 1. That the City Council hereby expressly
finds as hereinabove set forth in the Recitals and further
that it is in the public interest, in the interest of the citi-
zens of the City, and serves a valid public purpose that the
City and the Hospital agree to amend, and the City Council here-
by approves an amendment to, the Operating Lease which provides:
(a) That the City grants, conveys and transfers to
the Hospital all of the City's reversionary interests in the
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fee title to the Property together with all Hospital Facili-
ties appurtenant thereto or contained therein; and
(b) that the City and Hospital acknowledge that such
reversionary interests of the City which are so conveyed mature
upon the payment to the holders of the Bonds of all principal
and interest, and redemption price, if any, due thereon or
the creation of a fund or account sufficient to: (i) redeem
all of the Bonds then outstanding; or (ii) pay and discharge
the outstanding Bonds upon maturity; and
(c) that the City shall, when so requested by the
Hospital, take all reasonable actions necessary and appropri-
ate to enable the Authority or the Trustee (as defined in the
Resolution) to create the fund or account described in subsec-
tion (b) of this Section 1.
Section 2. That this City Council hereby approves
the amendment to the Operating Lease entitled, "Addendum to
Lease and Grant of Reversionary Interest ", a copy of which
is attached hereto, designated as Exhibit 1, and by this
reference incorporated herein, and the Mayor and the City Clerk
are hereby directed to execute same on behalf of the City of
Downey.
ADOPTED, SIGNED AND APPROVED this 24th day of
November, 1981 , by the following vote:
Ayes: 4 Council Members: Swearingen, Quinn, Cormack,
Mackaig
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Noes: 1 _ Council Members: Jackman
Absent: 0 Council Members: None
CITY COUNCIL OF THE CITY OF DOWNEY,
a municipal corporation
w
B
/e
ayor A.744a411111
ATTEST:.
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{
City Clerk
I HEREBY CERTIFY that the foregoing Resolution was duly adopted at a
regular meeting of the City Council of the City of Downey thereof held on
the 24th day of November, 1981, by the following vote, to wit:
AYES: 4 Council Members: Swearingen, Quinn, Cormack, Mackaig
NOES: 1 Council Members: Jackman
ABSENT: 0 Council Members: None
i
2 \ 7, /.-
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CiK Clerk
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ADDENDUM TO LEASE AND
GRANT OF REVERSIONARY INTEREST
This agreement is entered into this 24th day of
November , 1981, by and between the Downey Community
Hospital Foundation ("Hospital") and the City of Downey, a
municipal corporation, ( "City ").
RECITALS
WHEREAS, the citizens of the City, the City and the
Hospital recognized the need to provide adequate hospital
facilities for the citizens of the City; and
WHEREAS, the City acquired and became the owner in fee
of that certain parcel of real property described in Exhibit A
attached hereto and made a part hereof (the "Property "); and
WHEREAS, the Property was acquired without cost to the
City from the proceeds of the sale of certain real property
donated to the City by the Hospital and the proceeds of certain
revenue bonds (the "Bonds"); and
WHEREAS, the City leased the Property to the Downey
Community Hospital Authority ( "Authority ") pursuant to the
terms and conditions of that certain agreement entitled Downey
Community Hospital Ground Lease, dated August 3, 1967 (the
"Ground Lease "); and
EXHIBIT 1
WHEREAS, at the request of the Hospital, the Authority
was formed pursuant to the terms and conditions of that certain
Joint Powers Agreement between the City and the County of
Los Angeles, dated May 23, 1967 ( "Joint Powers Agreement "); and
WHEREAS, the Authority, in cooperation with the City
and the Hospital, constructed certain improvements on the
Property consisting of a hospital known as The Downey Community
Hospital together with all equipment and appurtenances thereto
(collectively the "Hospital Facility ") and financed such con-
struction by the issuance of the Bonds pursuant to the terms
and conditions set forth in that certain Resolution No. 1
adopted by the Authority on or about August 9, 1967 (the "Resolu-
tion"); and
WHEREAS, the Authority leased the Property and Hospital
Facility to the City pursuant to the terms and conditions of
that certain agreement entitled Downey Community Hospital Lease,
dated August 3, 1967 (the "Authority Lease "); and
■• WHEREAS, the City leased the Property and Hospital
Facility to the Hospital pursuant to the terms and conditions
of that certain agreement entitled Lease dated October 16, 1968
( "Operating Lease ") ; and
WHEREAS, the Hospital has, through the contribution of
various pieces of real property to the City and its regular
lease payments since September, 1969, paid the entire cost of
the Property and the Hospital Facility and there has been no
cost to the City; and
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WHEREAS, the Hospital has maintained and operated the
Property and the Hospital Facility since September, 1969 with-
out cost to the City; and
WHEREAS, the Hospital has expended approximately
$4,000,000 to improve the Property and the Hospital Facility
including expansion of the laboratory, emergency and radiology
facilities and the addition of a surgical center, rehabilita-
tion center and conference facilities; and
WHEREAS, the Hospital has, through the continuing ef-
forts of its fund- raising organization, The Memorial Trust Foun-
dation, raised more than $1,500,000 in conditional gifts and
other contributions for the proposed development of a $3,500,000
critical care wing and for other improvements to the Hospital
Facility, in order to enhance the delivery of health care to the
citizens of the City; and
WHEREAS, the future improvement of the Hospital Facili-
ties which are and will be necessary to keep pace with future
requirements for good health care for the citizens of the City
cannot be effected without successful fund raising efforts by
the Hospital; and
WHEREAS, successful fund - raising efforts by the Hospital
cannot be accomplished without there being some assurance to
the proposed donors that the Hospital will and can continue
operation after termination of the operating lease; and
WHEREAS, the Hospital has operated and managed the
Hospital Facility such that it has attracted and retained a high -
quality medical staff, provided high - quality, state -of- the -art
-3-
■
diagnostic and therapeutic medical care at low rates, includ-
ing specialized medical services, such that the citizens of
the City have had access to high - quality medical care, at low
rates, within their own community; and
WHEREAS, it is vitally important that the citizens
of the City be assured of the continued availability of such
high - quality medical care, at low rates, at the Hospital; and
WHEREAS, hospitals, including the Hospital, are ex-
periencing growing needs for capital, declining third -party
reimbursement, erosion of their equity, increase capital and
operating costs due to inflation and other factors, increased
competition from new forms of health care, and other signifi-
cant pressures; and
WHEREAS, in light of these pressures state and local
governments, in increasing numbers, are transferring ownership
and management of hospitals in order to insure that their citi-
zens continue to receive high - quality medical care, reduce the
governmental entity's potential for liability in connection
with providing such care and ease the financial burden on the
governmental entity to provide money for capital improvements
for the hospital and to cover possible operating losses; and
WHEREAS, in recognition of its commitment to the citi-
zens of the City the Hospital is organized for, and its assets
are irrevocably dedicated to, hospital and charitable purposes
and to the care and treatment of the sick, afflicted and aged
and to furnishing and supplying care, treatment, hospitaliza-
tion and other services to such persons; and
-4-
WHEREAS, the City and the Hospital believe it would,
therefore, be in the best interest of the citizens of the City
and would serve a valid public purpose for the City to agree
to amend the Operating Lease so as to effect a transfer to
Hospital of all of the City's reversionary interests in the
Property and Hospital Facility;
NOW, THEREFORE, in consideration of the Recitals, the
mutual covenants and promises contained herein and other good
and valuable consideration, the receipt and sufficiency of
which is acknowledged, the parties agree that the Operating
Lease is amended as follows:
1. Notwithstanding any rights, privileges or in-
terests to the contrary vested in the City as may be recited
or contained in the Ground Lease, Authority Lease or Operating
Lease, the City hereby grants, conveys and transfers to the
Hospital all of the City's reversionary interests in fee title
to the Property together with all Hospital Facilities appur-
tenant thereto or contained therein. The parties acknowledge
that such reversionary interest of the City which is conveyed
hereby matures upon the payment to the holders of the Bonds
of all principal and interest, and redemption price, if any,
due thereon or the creation of a fund or account sufficient to:
(a) redeem all of the Bonds then outstanding; or (b) pay and
discharge the outstanding Bonds upon maturity.
2. The City agrees that when so requested by the
Hospital, it shall promptly take all reasonable actions neces-
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sary and appropriate to enable the Authority or the Trustee
(as defined in the Resolution) to create the fund or account
described in Paragraph 1 of this Addendum.
3. The Hospital agrees that it will commence con-
struction at the earliest possible date and diligently pursue
to completion the 18 -bed ICU -CCU. The Hospital further agrees
that it will indemnity and hold harmless the City and each of
the present and future members of the City Council from and
against any liability, loss, cost, damage or expense arising
out of or in connection with the representation of the City
on the Board of Directors of the Hospital for the duration of
the Operating Lease and thereafter. The Hospital further agrees
that it will continue its efforts to raise funds from the com-
munity to be used for further capital improvements of the Hospi-
tal Facility which will thereby minimize the cost of those im-
provements and enable the Hospital to minimize the need for
Hospital rate increases.
4. (a) It is the mutual intention of the parties
hereto and it is expressly agreed, that this Agreement and con-
veyance by the City is made subject to the following conditions
subsequent:
(i) That for a period of not less than thirty -
five (35) years, the Hospital will maintain continuously in the
City a health care facility fully accredited by the Joint Commis-
sion on Accreditation of Hospitals, or its successor organiza-
tion, for the purpose of providing health care to the citizens
of the City; and
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(ii) That during such period of years the
Hospital will not sell or otherwise dispose of all or substan-
tially all of the Property, buildings, equipment and fixtures
comprising the Hospital Facility for the purpose of financing
the construction, purchase or operation of a health care
facility located outside of the boundaries of the City as
such boundaries now exist or may exist from time to time.
(b) In the event the Hospital breaches either of
the conditions subsequent set forth in subparagraph (a) of this
Paragraph 4, and said breach continues for a period of one hun-
dred eighty (180) consecutive days after written notice from
the City setting forth such breach, and, in the case of denial
of accreditation, after any and all administrative and judicial
appeal rights have been exercised, then, in addition to any
other rights which the City may have at law or equity, the City
and its successors and assigns shall have the following rights,
which shall be cumulative:
(i) To re -enter the Property, terminate and
forfeit all the Hospital's right, title and interest thereto,
and retake possession thereof; and
(ii) To receive from the Hospital, immediately
upon demand, a duly executed and acknowledged grant deed convey-
ing to the City the fee title to the Property. In furtherance
of this right of the City, it is expressly agreed that from and
after the expiration of said one hundred and eighty (180) consecu-
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tive day period,the Hospital shall be conclusively deemed to
hold said Property and the title thereto in trust for the
City.
(c) The Hospital may not encumber the Property,
buildings, equipment and fixtures comprising the Hospital
Facility for the purpose of financing the construction, pur-
chase or operation of a health care facility located outside
of the boundaries of the City, as such boundaries now exist or
may exist from time to time except in a total amount which
shall at no time exceed sixty -six and two- thirds per cent
(66 2/3%) of the then current appraised market value of said
Property, buildings, equipment and fixtures comprising the
Hospital Facility and provided, that all such encumbrances shall
be for the purpose of supporting, enhancing or promoting the
provision of health care to citizens of the City.
5. This conveyance is subject only to covenants, con-
ditions and restrictions, utility easements, rights -of -way and
encumbrances of record, and non - delinquent real or personal
property taxes, if applicable, together with such other matters
affecting the Property or Hospital Facility approved by Hospi-
tal or caused by the Hospital.
6. Upon request of either party, the parties shall
promptly execute a memorandum of this agreement in form suita-
ble for recordation.
7. The parties agree to execute whatever additional
documents may be reasonably necessary and to take all appropri-
ate actions necessary to perfect clear title to the Property
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and Hospital Facility in Hospital and to carry out the full in-
tent of this agreement.
8. In the event of any default under this agreement,
the parties may seek any and all remedies available at law or
in equity, including, without limitation, specific performance.
9. Time is of the essence of each obligation and cove-
nant contained in this agreement.
10. In all other respects, the Operating Lease shall
remain in full force and effect and is hereby reconfirmed by
the parties.
IN WITNESS WHEREOF, the parties have executed this
agreement as of the date first above written.
CITY OF DOWNEY DOWNEY COMMUNITY HOSPITAL
a Municipal Corporation FOUNDATION e 1 ‹...ide - 7- 4 1-ide:7
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EXIiI^IT A
That portion of the F.ar.:ho Santa Germ :des in the City of Do:rncv, County of Los Anzcles, St-t-
of Cali:oriajn, dcscri; :ci ::s follo«•s: -
Be_innin_ et the intersection of the centerline of Brookshire Avenue SO feet wide, formerly
Church Street 40 feet wide as shown on Map of Tree: 9457 recorded in Book 171, P2_ :c 7 of Mars
in the o?:ce of the County Recorder of seid Cou::ty, with the centerline of N1 note_ Street 60 feet
%vide, formerly South Street. as she vn cn Map of Tract 1 296 per 'p recorded in Book 304,
Pages 29 -31 of Y..e. s is the office of the County Recorder d_.
- '� of said County; thence North 32'41'45"
En st along said centerline of Brookshire Avenue, 30.07 feet to the northwesterly prolongation of
the 'h�este :1y li of said N -,•- South °� rr
nor. _ ._.,_ line .. , i..,...t__ S ...�., thc,.�c „oLth f 1 .9 •.0 East thcrcca and alo ;,e. said
no: thenstcrly line 56.19 feet to a point of cusp with a curve concave easterly :Ind h:. ira a radius
of 15 fact and the true point of bccinninR for this description; thence northerly alone said curve
24.62 feet to a point of tangency ~vita the southeasterly line of Brookshire Avenue SO feet wide
rt 40 feet ae l d� e nt e in w c rt t 32'41'45"
lyir ,0 f, _t on c.._.i s�.._ o the above described c...._rI:.,_, thence i\o. North East alone
said southcestcrly line 713.37 feet to the southwesterly line of land described in Deed to S. Huston
recorded in 13ook 152. P: _e. 404 of Deeds in said Recorders Oacc; thence South 57=20'25" East
thereon 420.39 feet to the northwesterly lire of the southeasterly 243.41 feat of land so described
in said Dccd to Huston; thence North 31°42'45" East thereon 177.2S feet to the southerly corner
of Mornrct Street as described in Deed recorded in Book D2353, Pa_c 721 in said Recorders Office;
thence South 57`15'20" East along the proloncatior4 of the southwesterly line of said Margaret
Strcct 213.44 feet to the northwesterly Iine of Patton Road 60 feet wide lying 30 feet o n coch side of
the northwesterly line of Lot "P" of the Rancho Santa Gcrtrudcs per M•lop recorded in Book 32,
Pan 18 of ?Miscellaneous Records in said Recorders Of; lee; thence South 31 °42'45" West thereon
852.28 feet to the bccTinning of a tangent curve concave northerly and having a radius of 15.00 feet;
thence westerly thereon 22.77 feet to a point of tangency with said northeasterly line of Manatee
.Strcct; thence North 61°19'40" West thereon 616.95 feet to the point of beeinning.
The Basis of Bearings for this description taken as the centerline of Brookshire Avenue as shown .
on•County Surveyors Map Number B23S3 on file in the office of the County Surveyor of said County.
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