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HomeMy WebLinkAbout2009-222 Waiver Letter - ACH Facilities Lease CITY OF ASHLAND October 21, 2009 Mark Marchetti, Chief Executive Officer Ashland Community Hospital 280 Maple Street Ashland, Oregon 97520 "'S UBJEG-T-:~ - ~Gity,Wai ver,of,Righlto ,Terminate,Lease,Agreement,for-F~Y~2009,Auditof-Ashland Community Hospital Dear Mr. Marchetti: 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 Healtheare Services must a working capital ratio of2 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. Based on information you have provided, the City understands that on June 30, 2009, Ashland Community Hospital's working capital ratio was 1,89 and the debt service coverage was .79, whieh are considered an Event of Default. The City understands the reasons for this financial position. At its October 20, 2009 Meeting, the Ashland City Council authorized me to send this letter stating that at June 30, 2009 and during the following year ending June 30, 2010, the City of Ashland agrees to waive . the right to exercise the options outlined in Section 16.2 of the Facilities Lease, which would include the right to terminate the lease, immediately enter the premises and exercise full authority and control over the operation of the Hospital, or dissolve the Hospital's corporation due to the breach of the working capital and debt service coverage ratio in the Hospital's fiscal year 2009. This in no way represents an agreement by the City to waive other rights in the Facilities Lease, including future violations of Paragraph ]6.1.4 andI6.1.5. Please let me know if you have questions. ~~~ City Administrator c. Richard Appicello, City Attorney Lee Tuneberg, Administrative Services/ Finance Director ADMINISTRATION DEPT. 20 East Main Street Ashland, Oregon 97520 www.ashland.or.us Tel: 541-488.0002 Fax: 541-488.5311 TTY: 800.735.2900 ~:.,