Action 12.
Regular Board of Supervisors Meeting
Facilities
- Meeting Date:
- 12/20/2011
- Title:
- Approve the lease of Hospital Facility to Community Healthcare of Douglas, Inc. for Southeast Arizona Medical Center
- Submitted By:
- Britt Hanson, County Attorney
- Department:
- County Attorney
Presentation:
No A/V Presentation
Recommendation:
Approve
Document Signatures:
BOS Signature Required
# of ORIGINALS
Submitted for Signature:
Submitted for Signature:
2
NAME
of PRESENTER:
of PRESENTER:
Mike Ortega
TITLE
of PRESENTER:
of PRESENTER:
County Administrator
Mandated Function?:
Federal or State Mandate
Source of Mandate
or Basis for Support?:
or Basis for Support?:
Docket Number (If applicable):
Agenda Item Text:
Approve the lease of Hospital Facility to Community Healthcare of Douglas, Inc. for Southeast Arizona Medical Center for a one-year period effective January 2, 2012, with automatic one-year renewals for up to a total of five years.
Background:
The facility now known as Southeast Arizona Medical Center (SEAMC) was once the County hospital. In 2003 the Board entered into a new 25 year lease of the Medical Center to Community Healthcare of Douglas, Inc., the nonprofit corporation that operates SEAMC, for $1 per year. However, that lease called for the parties to renegotiate the lease after 5 years to either a market rate or based on availability of SEAMC revenues. Every year since 2008 the County has reviewed SEAMC financial statements and determined that the lessee does not in fact realize sufficient revenues to pay a higher lease amount. It appears unlikely that this will change in the near future. To avoid having to bring this matter before the Board of Supervisors every year for formal approval, the County Administrator and the CEO of SEAMC propose to enter into a new one year lease that will automatically renew each year for up to five (5) years. The lease provides that either party, at its option, can choose not to renew for any given year by notifying the other party ninety days in advance of the anniversary date. Thus, if SEAMC experiences a turnaround that provides revenues sufficient to pay an increase lease, the lease does allow the County a mechanism to renegotiate the lease amount. But if not, it will not be necessary for the parties to unnecessarily obtain formal approval of their respective Boards for a renewed lease. The lease also modifies the insurance provisions to eliminate certain insurance reporting requirements that were not necessary to protect the County's interests and which the County had not been requiring anyway.
Department's Next Steps (if approved):
Continue to monitor the Lessee's performance.
Impact of NOT Approving/Alternatives:
The parties will continue to operate under a lease that effectively requires yearly renewal.
To BOS Staff: Document Disposition/Follow-Up:
Record the lease.