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
~:.,