HomeMy WebLinkAbout2013-137 Letter - ACH Waiver to Terminate Lease
CITY OF
ASHLAND
June 19, 2013
Marvin Haas, Interim Chief Executive Officer
Ashland Community Hospital
280 Maple Street
Ashland, Oregon 97520
SUBJECT: City Waiver of Right to Terminate Lease Agreement for FY 2012 Audit of Ashland
Community Hospital
Dear Mr. Haas:
In 1996, the City of Ashland and Ashland Community Healthcare Services signed an agreement for the
Lease of the Ashland Community Hospital. The agreement includes several provisions related to default
and termination of the agreement. Paragraph 16.1.4 of this agreement states that Ashland Community
Healthcare Services must have a working capital ratio of 2 to 1, and 16.1.5 of this agreement states that
Ashland Community Healthcare Services must also maintain a debt service coverage ratio of at least
1.25 to 1.
Section 16.2 of the lease allows the City to terminate the agreement if the debt service and working
capital ratios described above are not maintained. On September 4, 2012, the City Council agreed to
waive its rights as outlined in section 16.2 of the lease agreement through June 30, 2013. Given the
hospital's pending affiliation with Asante, the City Council has agreed to extend the waiver of its rights
under Section 16.2 until June 30, 2014 or the closing date of the affiliation agreement between the City
of Ashland, Asante, Ashland Community Hospital and the Ashland Community Hospital Foundation,
dated June 5, 2013, whichever comes soonest.
Please let me know if you have questions.
Sincerely,
Dave Kanner
City Administrator
C. David Lohman, City Attorney
Lee Tuneberg, Administrative Services/ Finance Director
ADMINISTRATION DEPT. Tel: 541-088-6002
20 East Main Street Fax: 541-488-5311
Ashland, Oregon 97520 TTY: 800-735-2900
wmashland.or.us