1997-39 Between The Kodiak Island Borough and Sisters of Providence in Washington D/B/A Providence Health System in Alaska for Lease of the Kodiak Island Borough Mental Health Center.KODIAK ISLAND BOROUGH
RESOLUTION NO. 97 -39
Introduced by: Mayor Selby
Requested by: Mayor Selby
Drafted by: Borough Attorney
Introduced: 08/21/97
Amended: 08/21/97
Adopted: 08/21/97
A RESOLUTION BETWEEN THE KODIAK ISLAND BOROUGH AND
SISTERS OF PROVIDENCE IN WASHINGTON D /B /A PROVIDENCE
HEALTH SYSTEM IN ALASKA FOR LEASE OF THE
KODIAK ISLAND BOROUGH MENTAL HEALTH CENTER
WHEREAS, the Kodiak Island Borough (hereinafter referred to as the "Borough ") is
the owner of certain real property consisting of a health care facility, together with
improvements located thereon, and certain equipment located in and about the
premises known as the Kodiak Island Borough Mental Health Center (hereinafter
referred to as the "Center "); and
WHEREAS, the Borough, in the interests of sound fiscal management and to ensure
the continued operation of the Center in a professional and efficient manner, has
requested Providence Health System in Alaska (hereinafter referred to as
"Providence "), a Washington non - profit corporation, to lease the Center; and
WHEREAS, Providence owns and operates a number of health care facilities that are
operated in keeping with its philosophy, mission, and values; and
WHEREAS, Providence desires to lease the premises and the equipment from the
Borough subject to the terms and conditions contained in the "Lease Agreement" that
has been approved by both parties subject to approval by the assembly; and
WHEREAS, the assembly is authorized by the provisions of the Kodiak Island
Borough Code of Ordinances 18.40.020 to approve, by resolution, a negotiated lease
for a period not to exceed twenty -five (25) years to any non - profit corporation;
NOW, THEREFORE, BE IT RESOLVED BY THE ASSEMBLY OF THE KODIAK ISLAND
BOROUGH that:
Section 1: The lease of the Kodiak Island Borough Mental Health Center to the
Sisters of Providence in Washington d /b /a Providence Health System in
Alaska is hereby approved on the terms and conditions of the Lease
Agreement.
Kodiak Island Borough, Alaska Resolution No. 97 -39
Page 1 of 2
Section 2: The mayor, or his designee, is authorized to execute the Lease
Agreement and all other documents required for the completion of this
transaction.
NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE ASSEMBLY OF THE KODIAK
ISLAND BOROUGH that the Kodiak Island Borough will no longer operate a mental
health program after October 31, 1997, and the mayor is directed to notify all
impacted parties and finalize all related activities to achieve an orderly closure of this
program including the reduction in force notice to staff members as required by this
action.
ATTEST:
ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH
THIS TWENTY -FIRST DAY OF AUGUST, 1997
o nna F. Smith, CMC /AAE, Borough Clerk
KODIAK ISLAND BOROUGH
me M. Selby, Bor
L-(1 t 41/aetih
Robin Heinrichs, Presiding Officer
Kodiak Island Borough, Alaska Resolution No. 97 -39
Page 2 of 2
LEASE AGREEMENT- Page 1 3112
R lgq - 3c l
LEASE AGREEMENT
THIS AGREEMENT is made and entered into by and between the KODIAK ISLAND
BOROUGH, a municipal corporation of the State of Alaska (hereinafter referred to
as "KIB "), and SISTERS OF PROVIDENCE IN WASHINGTON d /b /a PROVIDENCE
HEALTH SYSTEM IN ALASKA, a Washington non - profit corporation (hereinafter referred
to as "Providence ").
WITNESSETH:
WHEREAS, KIB is the owner of certain real property, and certain equipment located
in and about the Premises known as Kodiak Island Mental Health Center ( "Mental Health
Center");
HER AS the Borough, in the interests of sound fiscal management and t2 ensure
the continued availability of a Mental Health Program ( "Mental Health Program ") in the
Kodiak Island Borough managed in a professional and efficient manner, has requested
Providence to lease the Premises;
WHEREAS, Providence owns and operates a number of health care facilities, that
are operated in keeping with its philosophy, mission and values; and
WHEREAS, Providence desires to lease the Premises and the Equipment from KIB,
subject to the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and each of the parties intending to be legally bound hereby, it is mutually agreed as
follows:
q t
1. AGREEMENT TO LEASE: KIB agrees to lease to Providence and
Providence agrees to take from KIB, the Premises and Equipment described herein, for
the term and upon the terms and conditions set forth in this Agreement.
2. PREMISES: The real estate which is the subject matter of this Agreement is
described as follows:
'_EASE AGREEMENT Page2ol 12
That certain office space located in various buildings located
on Lot 5A -1A, Military Reserve, U.S. Survey 2538 according to
plat 95 -04 recorded in the Kodiak Recording District, Third
Judicial District, State of Alaska and more particularly
described below.
a. Building A, Kodiak Island Borough Mental Health
Offices and Dorm Building Apartments C through G.
b. Building 5, Kodiak Island Borough Mental Health
Offices and Dorm Building Apartments H through M.
c. Building A, Kodiak Island, Borough Mental Health
Cottages.
including all buildings, appurtenances, and- improvements thereto, as well as the existing
parking areas as identified_on Exhibit A, attached (h rein referred to as "Premises ").
3. EQUIPMENT: The Equipment which is the subject matter of this Agreement
is all of the Equipment presently located in or on the Premises, in an "as is" condition, and
all Equipment to be acquired during the term of this Agreement.
4.1 TERM OF AGREEMENT: The Premises and Equipment shall be leased to
Providence by KIB for a term of approximately ten (10) years, commencing on January 2,
1998, through and including April 20, 2007, unless sooner terminated as hereinafter
provided.
4.2 Provided that Providence is not in default under this Lease Agreement,
Providence shall have the option to extend this Lease Agreement for one additional term
of ten (10) years by providing KIB with 180 days prior written notice. The extended term
shall be on the same terms and conditions of this Lease Agreement with monthly lease
payments to be established by negotiation.
4.3 At the expiration of the term of this agreement or upon the termination of this
agreement as provided for herein, Providence shall surrender possession of the Premises
and Equipment to KIB as set forth under the terms of this Agreement.
5. LEASE PAYMENT SCHEDULE. The fixed annual lease payment during the
term of this Agreement shall be Ten Dollars ($10.00) payable by Tenant on or before the
first day of each contract year in advance, at the office of KIB or at such other place
designated by KIB, without any prior demand therefor, and without any deduction or setoff
whatsoever.
6. UTILITIES: Providence shall arrenge and pay for all utilities and other
services to be furnished to the Premises, including gas, fuel oil, electricity, sewer, water,
telephone, and garbage collection. All utilities shall be prorated between the parties as of
the effective date of this Agreement.
7. USE: Providence shall use and operate the Premises for a mental health
program and for any additional health care related purposes as may be appropriate.
Providence shall operate and maintain the premises under the Alaska Statutes and in
accordance with the standards prescribed by the Alaska Department of Health and Social
Services.
8. QUIET ENJOYMENT: KIB warrants that Providence, upon paying the rent
and any other charges as provided for in this Agreement and upon performing all other
obligations herein, shall quietly have, hold and enjoy the Premises without hindrance.
LEASE AGREEMENT - Page 3 of 12
9. WARRANTY OF TITLE: KIB hereby warrants that it has good and
marketable title to the Premises.
10. CLOSING ACTIVITIES: KIB shall, at its expense, conduct an audit of the
JAN \* Ni
Mental Health Center's financial statement as of Oetobt rifi, 4997. The audit shall be
performed according to generally accepted accounting principles by an independent
certified public accountant approved by Providence.
11. CURRENT ASSETS. LIABILITIES AND GRANTS:
11.1 Providence will receive from KIB at Closing_current assets defined as
prepaids, existing and future rights under the Alaska Community Mental Health Services
Act (AS 47.30.520 to .620) and any other state or federal programs, and such other current
assets of the Mental Health Center as identified in the audit provided under sections 10.
of this agreement. KIB agrees to execute and deliver any and all documents necessary
or proper and to cooperate with Providence to accomplish the transfer of these assets.
KIB will retain and pay all Mental Health Center liabilities through October 31, 1997,
including, accounts payable and accrued liabilities identified in the audit. KIB will retain
and pay non- current payables attributable to prior years cost reports related to
governmental payers, including those resulting from the filing of the termination cost
reports of the Mental Health Center. The excess, if any, of current assets over current
liabilities shall accrue to the sole financial benefit of Providence to offset the Mental Health
Center operating losses.
11.2 Subject to this Agreement except as otherwise provided during the term of
this Agreement, KIB shall retain all liability fat notes payable and other debts, however
characterized.
LEASE AGREEMENT • Page 4 of 12
11.3 KIB agrees to pass on to Providence all revenue sharing or grant funds which
it receives from the State of Alaska for the Community Support Program or other mental
health related programs. Providence agrees that it will use all such funds for the mental
health related purposes for which they are established or provided.
12. INSURANCE: Providence shall, at its expense, maintain throughout the term
of this Agreement the following insurance.
a. Insurance against loss or damage by fire and such other risks as may
be included in the current KIB hazard insurance policy with extended coverage in an
amount not less than the replacement value of the Premises from time to time;
b. Insurance against claims for personal injury and property damage
occurring on the Premises under public liability and malpractice policies with limits of not
less than $1,000,000 per person, $3,000,000 per occurrence and $500,000 for property
damage arising out of any single occurrence.
Such insurance policies may provide for partial self- insurance under the
same terms as the policies for mental health programs owned and operated by
Providence. KIB shall be named as an additional insured party on each such policy of
insurance, and certificates thereof shall be furnished to KIB.
13. MAINTENANCE AND REPAIRS: Providence shall cause the Premises to be
maintained and repaired in accordance with all state and local codes, and keep the
Premises in a condition at all times acceptable to KIB, including but not limited to cleaning,
painting, decorating, plumbing, carpentry, grounds care and such other maintenance and
repair work as may be necessary. KIB shall provide and pay for any major maintenance
and repairs in the amount of $10,000 or more.
LEASE AGREEMENT • Page 5 of 12
14. CONDITION ON SURRENDER: Upon termination or expiration of this
Agreement, Providence shall surrender the Premises to KIB in substantially the same
condition as exists on the date hereof, except for reasonable wear and tear.
15. IMPROVEMENTS AND ALTERATIONS: Providence shall make no
alterations in, or additions or improvements to, the permanent structure of the Premises
without first obtaining the written consent of KIB. Any additions and improvements made
to the permanent structure of the Premises shall remain upon and be surrendered with
such Premises as a part thereof at the expiration of the term of this Agreement, by lapse
of time or as otherwise provided herein.
16. ADMISSION TO MENTAL HEALTH PROGRAMS: All persons in need of
mental health services shall be admitted to the Mental Health Programs without regard to
race, creed, color, national origin or financial circumstances.
17. INDEMNIFICATION: Providence hereby agrees to indemnify and hold KIB
harmless from and against any and all claims and demands for injury or death to persons
and damage to property occurring on the Premises during the term hereof, and will defend
KIB from any claim of liability on account thereof. Providence shall have no obligation for,
and KIB shall indemnify and hold Providence harmless from and against, any and all
liability with respect to any claims resulting from the negligence of KIB or its agents or
employees, or any claims arising out of acts or omissions which occurred prior to the
effective date of this Agreement.
18.1 GOVERNANCE: The over all management and control of the Mental Health
Program will rest with Providence Alaska Servile Area Board. It is anticipated that two KIB
residents will be eligible to participate as voting members on. the Providence Health
System in Alaska Community Board ( "PHSACB ").
LEASE AGREEMENT Page 6 of 12
18.2 An Advisory Board will be appointed by KIB with the approval of Providence,
and function as liaison between KIB, the Mental Health Program staff, and Providence,
and shall be responsive to the concerns of the community regarding the operation of the
Mental Health Program. Providence shall keep the Advisory Board updated with respect
to matters of Mental Health Program policy and the relationship of the Mental Health
Program to the community and the surrounding areas which it serves. Specifically, the
duties and responsibilities of the Advisory Board include the following:
a. Review any changes in Mental Health Program policy. Policies may
be suggested by Providence of the Advisory Board; but all require review by the Advisory
Board. A policy is defined as a definite course of action as pursued by administration.
b. Review any new client care services.
c. Review the operating and capital budgets prepared for the Mental
Health Program.
d. Review the rate and charge structures in the Mental Health Program.
e. Review and comment concerning the quality of care rendered to the
clients of the Mental Health Program.
f. Review any reports prepared by Providence.
Program.
g.
LEASE AGREEMENT - Page 7 of 12
Assist the Administrator in long range planning for the Mental Health
h. Assist Providence in determining and deciding all matters of policy
relating to the public relations of the Mental Health Program and the relationship of the
Mental Health Program to the community aril the surrounding area which it serves.
19. RIGHT TO ENTER PREMISES: Upon reasonable notice, Providence shall
permit KIB, its agents and employees to have access to and to enter the Premises at all
reasonable and necessary times to inspect the Premises.
20.1 DEFAULT REMEDIES: "Event of Default" means any one or more of the
following events, whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any administrative or
governmental body:
a. Failure to pay rent required by Section 6.1 or 7.1 when such rent
becomes due and payable, and continuance of such failure to pay for a period of ten (10)
days; or
b. Default in the performance, or breach of any other covenant or
warranty by Providence under this Agreement, and continuance of such default or breach
for a period of thirty (30) days after there has been given, by registered or certified mail,
to Providence by KIB a written notice specifying such default or breach and requiring it to
be remedied stating that such notice is a notice of default hereunder; or
20.2 If an Event of Default by Providence occurs and is continuing, KIB may
terminate this agreement, excluding Providence from possession of the Premises and use
its best efforts to lease the Premises to another for the account of Providence, holding
Providence liable for the difference between the rentals received and the rentals which
would have been receivable hereunder; and take whatever action at law or in equity may
LEASE AGREEMENT Page 8 of 12
appear necessary or appropriate to collect the rent then due and thereafter to become due,
or to enforce performance and observance of any obligation, agreement or covenant of
Providence under this Agreement.
21. TERMINATION: At any time either KIB or Providence may terminate this
Agreement by one year's written notice to the other party. This Agreement shall terminate
one year from the date of such notice without further action by either party and shall be of
no further force and effect other than to perform any obligation incurred but not paid prior
to the termination.
22. NOTICES: All notices, demands, or other writings in this Agreement provided
to be given, made or sent, or which may be given, made or sent, by either party hereto to
the other, shall be deemed to have been given, made or sent when made in writing and
deposited in the United States Mail, Registered or Certified Mail, postage prepaid, and
addressed as follows:
KIB: Mayor
Kodiak island Borough
710 Upper Mill Bay Rbad
Kodiak, Alaska 99615
Providence: Chief Executive
Providence Health System in Alaska
3200 Providence Drive
P.O. Box 196604
Anchorage, Alaska 99519 -96604
The address to which any notice, demand or other writing may be given or made
or sent to any party as above provided may be changed by written notice given by such
party as above provided.
23. ASSIGNMENT AND SUBLEASE: Providence may assign this Agreement
and may sublease the Premises, in whole or in part, only with the prior consent of the KIB.
Providence may not mortgage or grant a security interest in this Agreement or
leasehold interest. Nothing herein will prevent Providence from leasing space to
LEASE AGREEMENT- Page 9 d 12
psychologists or other mental health providers. No assignment for the benefit of creditors
or by operation of law shall be effective to transfer any rights to the Assignee.
24. DAMAGE OR DESTRUCTION: When all or any part of the Premises is
destroyed or damaged, the KIB may proceed promptly to replace, repair, rebuild and
restore the Premises to substantially the same condition as existed before the taking or
event causing the damage or destruction. Rent shall be abated in the event of any
destruction of, damage to, or taking all or any part of the Premises in proportion to the
square footage which is unusable by Providence.
If fifty percent (50 %) or more of the Premises are rendered untenantable by the
aforementioned causes, KIB shall have the right to be exercised by notice in writing, from
and after said occurrence, to elect not to reconstruct the Premises, and in such event this
Agreement and the tenancy hereby created shall oease as of the date of such occurrence,
the rent to be adjusted as of such date.
25. CONDEMNATION: If the Premises, or such part thereof as in the reasonable
opinion of Providence renders the remainder unusable for its purpose, shall be acquired
by eminent domain, then this Agreement shall cease and terminate as of the date that
possession is taken in such proceeding. Such termination, however, shall not be deemed
to deprive Providence of any of its rights to receive compensation by reason of such taking.
26. WAIVER OF SUBROGATION: KIB and Providence, both on their own behalf
and on behalf of all others claiming through or under either of them, hereby mutually waive
and release all claims, liabilities and causes of action against the other and the agents,
LEASE AGREEMENT - Page 10 01 12
servants, employees and invitees of each otfter, for all loss, damage to or destruction of
the Premises or any portion thereof, as well as the fixtures, equipment, supplies and other
property of either party located in, upon or about the Premises resulting from fire or other
perils covered by standard fire and extended coverage insurance, whether caused by the
negligence of any of said persons or entities or otherwise, except to the extent such waiver
would violate or otherwise abrogate the terms of such insurance coverage.
27. MISCELLANEOUS: All covenants and agreements in this Agreement by KIB
or Providence shall bind their successors and assigns, whether so expressed or not. In
case any provision in this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be affected or
impaired thereby. None of the terms, conditions, covenants or provisions of this
Agreement can be waived by either party except by appropriate written instrument. The
waiver by either party or any breach of any term, condition, covenant or provision herein
contained shall not be deemed a waiver of the same of any term. condition, covenant, or
provision herein contained or of any subsequent breach of the same or any other term,
condition, covenant or provision herein. This Agreement shall be construed in accordance
with the laws of the State of Alaska. Nothing in this Agreement, express or implied, shall
give to any person, other than the parties hereto, and their successors and assigns, any
benefit or other legal or equitable right, remedy or claim under this Agreement.
IN WITNESS WHEREOF the parties have respectively executed this Agreement the
day and year written below.
SISTERS OF PROVIDENCE IN
WASHINGTON d/b /a PROVIDENCE
ALASKA MEDICAL CENTER
By:
Title
DATE:
LEASE AGREEMENT - Page 11 of 12
KODIAK ISLAND BOROUGH
me M. Selby, Mayor
DATE: L C(7_01 Q 7
Nt
ti t
/ill %‘k..)
i fill ii �
I t d I ■1'
if 91
Nita,*
ei4;
• ••::
(I
tO
1
ti
STATE OF ALASKA
THIRD JUDICIAL DISTRICT
/MI
THIS IS TO CERTIFY that on the i day of / l 47,t- n4 1997,
before me, a Notary Public in and for the State of Alaska, duly commissioned and sworn
as such, personally appeared Jerome M. Selby, to me known to be the Mayor of the
KODIAK ISLAND BOROUGH, and known to me to be the person who executed the above
and fc;egoing instrument on behalf of the municipality, and who acknowledged to me that
he executed the same as a free act and deed of the said entity for the uses and purposes
therein stated and pursuant to the authority granted to him by the Borough Assembly.
WITNESS my hand and notarial seal the day and year first above in this Certificate
written.
ATTEST:
4702\8694.001
LEASE AGREEMENT - Page 1 of 12
STATE OF ALASKA
THIRD JUDICIAL DISTRICT
) ss.:
) ss.:
Notary Public in lid for { Ala
My Commission Expires: 07 /7/ 3t Zit
THIS IS TO CERTIFY that on the day of , 1997,
before me, a Notary Public in and for the State of Alaska, duly commissioned and sworn
as such, personally appeared , to me known to
be the of SISTERS OF PROVIDENCE IN WASHINGTON d/b /a
PROVIDENCE ALASKA MEDICAL CENTER, and known to me to be the person who
executed the above and foregoing instrument on behalf of the corporation, and who
acknowledged to me that he executed the same as a free act and deed of the said entity
for the uses and purposes therein stated and pursuant to the authority granted to him by
the Board of Directors.
WITNESS my hand and notarial seal the day and year first above in this Certificate
written.
Notary Public in and for Alaska
My Commission Expires:
AMENDMENT A
This amendment to the Lease Agreement by and between KODIAK ISLAM)
BOROUGH (KID) and the SISTERS OF PROVIDENCE IN WASHL\GTON d'b/a
PROVIDENCE HEALTH SYSTEM IN ALASKA, a Washington non -profit corporation
(hereinafter referred to as "Providence) is made is au AMAtcudtueug to the Lease
Agreement between the parties. This Amendment is hereby incorporated into that
Agreement by reference and supersedes any provisions of that Agreement that are
contrary to this Amendment Except as modified by this and other Amendments, the
Les= Agmenteut reuinius in full force and effect.
Community Mental Health Center
A.1. Providence I Iealth System in Alaska (PHSA), at its solo discretion, shall establish
a community mental health prograrn that will provide mental health and
behavioral medicine services to the community of Kodiak Island
A 2. PHSA shall operate its Kodiak Community Mental Health programs in
accordance with the PHSA rhenium ;aid values.
A.3. PHSA shall have full accountability for the operations, billing, staffing, etc. of the
Kodiak Community Mental Health programs.
A.4. No less than annually, PHSA shall prepared statement of revenue and expenses
for the Kodiak Community Mental Health programs. Any deficits related to
operating these programs shall be the responsibility of KIB, payable within 45
clays of the end of the fisoal year. KIB shall have the right to use its portion of the
net profits generated by the hospital as described in section 8.2 of this agreement
to support deficits related to the Kodiak Conimumty Mental Health programs. In
the event that there are insufficient funds generated by the hospital operations to
support the Kodiak Community Mental Health programs in any given year ICTR's
liability shall accrue against the ptuceed ng years net profits from hospital
operations. If there are insufficient funds from hospital operations to support
KIR'a liability related to the Kodiak Community Mental Health programs for two
consecutive years, KIB shall be required to reimburse PHSA in full for all deficits
outstanding within 45 days of the end of the second fiscal year.
A.5. In recognition that KIB will be accountable for financial shortfalls related to the
community mental health programs, PITS„ ; present the mental health
program operating budget to KM annually for its review and approval. At a
minimum of once per quarter, PHSA shall iepott the actual financial performance
of the mental health programs to hUB.
42-
A.6. PHSA shall maintain separate accounting :words and financial statements for the
Kodiak Community Mental Health programs and shall provide KIS with the
Kodiak Community Mental Health programs' yearend financial statements.
A.7. 1018 warrants by PHSA establishing new Kodiak Community Mental Health
programs and by entering into this agreement for KIS tu havo financial
accountability for the PHSA Kodiak Community Mental Health programs does
not bumph emy commitments or responsibilities of KIB under prior agreements,
including but not limited to financing and employment agreements. and that KIR
shall defend and hold ?NSA harmless for any claims, liabilities and expenses
arising from or in any way related to any prior agreements of KIS.
A.8. The terms of this Amendment shall continue to the extent PHSA operates
Community Mental Health programs its Kodiak. At any time either KM or PHSA
tow tetlamate this Amendment by one year's written notice tu the other party.
This Amendment shall terminate one year from the date of such notice without
further action by either party and shall be of no further force and effect other than
to perform any obligation irruwtcd but not paid prior to the termination.
SIGNATURES:
SISTERS OF PROVIDENCE IN WASHING RA
d/bia Providence Kodiak Island Medical Center
By:
Douglas A. Rnrca
Its: Chief Executive
Providence Health System in Alaska
Date:
KODIAK ISLAND BOROUGH
Sy: Z/
Jerome by
Its: Borough Mayor
Kodiak Island borough
Rata:
ATTEST:
VYrG`- a3 )..t, - eye 1
Tina Seelinger, Aching Borough Clerk