Loading...
FY2018-02 Lease Agreement between the KIB and Providence Health and Services for the Kodiak Island Medical Center Health Care Facility in the Amount of $115,356 per month.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 "HIB"), and Providence Health & Services - Washington d/b/a Providence Health & Services Alaska, a Washington non-profit corporation (hereinafter referred to as "Providence" or Providence Kodiak Island Medical Center "PKIMC"). WITNESSETH: WHEREAS, KIB is the owner of certain real property consisting of a Health Care Facility together with improvements located thereon, currently known as Providence Kodiak Island Medical Center, (hereinafter referred to as "Hospital"); WHEREAS, the KIB, in the interest of sound fiscal management and to ensure the continued operation of the Hospital in a professional and efficient manner, has had a lease agreement with Providence since April 21, 1997, for Providence to lease and operate the Hospital; WHEREAS, Providence owns and operates a number of health care facilities, that are operated in keeping with its philosophy, mission and values; WHEREAS, Providence and KIB have enjoyed a collaborative relationship during the preceding 20 years; WHEREAS, Providence has a strong track record of providing access to high quality health care services to Kodiak Island residents; WHEREAS, Providence desires to continue to lease the Premises 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: 1. AGREEMENT TO LEASE: KIB agrees to lease to Providence and Providence agrees to take from KIB, the Premises 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: A portion of Lot 2A-1, Block 1, Hospital Subdivision, according to Plat 2012-20, located in the Kodiak Recording District, Third Judicial District. State of Alaska, and as further shown on Exhibit A. excepting therefrom that 3.21 acre portion of Lot 2A-1 which is allocated to the Elder House — Long Term Care Center under KIB Contract No. FY2013-23 and excepting that portion leased to KCHC under KIB Contract No. FY2008-25. 1 Including all buildings appurtenances, and improvements thereto, (herein referred to as "Premises"). 3. EQUIPMENT: All equipment, including fixtures, furniture and medical equipment, currently within the hospital is the property of Providence, and thus not subject to lease from KIB. Providence may purchase additional equipment to be used in the maintenance or improvement of the Hospital's operations, including medical equipment defined as a depreciable capital asset with a useful life of 9 years or less by the American Hospital Association's Estimated Useful Lives of Depreciable Hospital Assets. Such additional equipment shall be Providence's property, and shall be tagged as such. Upon termination or expiration of this Agreement, KIB may purchase any items of equipment used in the Hospital and paid for by Providence. The purchase price shall be Providence's book value of the acquired equipment. Minor equipment previously expensed by Providence and equipment and furnishings purchased by Providence with no book value shall be contributed to the KIB at the termination or expiration of this Agreement. Any equipment or personal property which belongs to Providence and is not purchased by KIB may be removed by Providence after the termination or expiration of this Agreement. 4.1 TERM OF AGREEMENT. The Premises shall be leased to Providence by KIB for a term of ten (10) years, commencing on July 1, 2017, through and including June 30, 2027, unless sooner terminated as hereinafter provided. 4.2 ADDITIONAL TERM. 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, or as such terms and conditions are modified upon mutual written agreement of both parties, with monthly lease payments to be established by negotiation. 4.3 SURRENDER OF PREMISES. 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 to KIB as set forth under the terms of this Agreement. The Premises shall be surrendered in good condition, normal wear and tear excepted. All personal belongings shall be removed. A final walk-through of the Hospital Premises will be conducted by KIB to determine if the above conditions have been met before the facility is turned over by Providence. Both parties agree to collaborate to remedy items that do not meet these conditions. 5.1 RIGHT OF FIRST REFUSAL TO PURCHASE. In the event that KIB makes any portion of its interest in the Hospital or Premises available for sale, KIB hereby gives and grants to Providence a right of first refusal to purchase such interest in the Hospital or Premises ("ROFR"). Said ROFR will expire on the last day of the term of this lease agreement. Said ROFR shall include space leased from KIB by other entities. KIB shall make any proposed sale of said interest in the Hospital or Premises between KIB and a third party conditioned upon and subject to Providence's ROFR as set out herein, including but not limited to space under Lease between KIB and other entities. Providence shall have the right to accept the purchase price and 2 the terms of the intended sale to the third party as the terms and conditions of the sale between KIB and Providence. 5.21 NOTICE. Providence may exercise its right to purchase by executing an agreement within one hundred eighty (180) calendar days of notice of KIB'S intent to sell its interest in the Hospital or Premises, on terms and conditions as agreed between the parties. If there is no third party, KIB and Providence will negotiate a fair market value price to purchase the Hospital. If Providence does not exercise its right to purchase as provided for herein or enter into a purchase or other agreement with KIB within one hundred eighty (180) days of the notice by KIB to Providence, then and in that event Providence's right to purchase shall lapse and KIB may sell the Hospital or Premises or any part thereof to said third party or any other parties on substantially the same terms stated in the notice. If KIB does not sell and convey the Hospital or Premises within 180 days after expiration of the 180 day notice period, any further transaction shall be deemed a new determination by KIB to sell and convey the Hospital or Premises and the provisions of Sections 5.1 and 5.2 shall be applicable. 5.3 RIGHT OF FIRST REFUSAL TO LEASE. Notwithstanding anything to the contrary, Providence recognizes and acknowledges that KIB may lease space to other entities contingent upon available space and advance approval from Providence. In the event that KIB makes any portion of the Premises or Hospital that is currently leased to another entity, for example — Kodiak Island Health Care Foundation dba Kodiak Community Health Center, available for lease, KIB hereby gives and grants Providence a right of first refusal to lease such space in the Premises or Hospital ("ROFR"). Providence and KIB agree to negotiate a fair market value lease rate for such space in the event it becomes available for lease. If the space is intended to house a Community Health Center or similar service, the existing lease terms with the Kodiak Community Health Center will be extended to Providence. 6.1 MONTHLY LEASE PAYMENT SCHEDULE. The fixed minimum monthly lease payment during the term of this Agreement shall be ONE HUNDRED FIFTEEN THOUSAND THREE HUNDRED FIFTY-SIX DOLLARS ($115,356) payable by Providence in equal monthly installments, on or before the first day of each month in advance, at the office of KIB or at such other place designated by K113, without any prior demand therefore, and without any deduction or setoff whatsoever. Notwithstanding anything to the contrary, this amount shall be reduced by the equivalent of the square foot cost of the hospital, not to include services, ($115,356 times percent of area used) of the premises KIB is leasing to other entities, regardless of the actual amount KIB charges other entities for the leased space. Further, these payments may be amended, pursuant to Section 6.2 due to increased costs associated with Renewal and Replacement (R&R) as well as any mandates for improvements imposed by any outside regulatory agency. While these lease payments are based largely on the projected renewal and replacement costs for KIB to maintain the facility over the course of the lease, said payments also include replenishment of the Hospital Enterprise Funds and the KIB administrative costs associated with the lease and the premises. The details of these renewal and replacement costs are described in lease sections 20.1 through 20.6 as well as Exhibit B — Renewal and Replacement Schedule. 3 Calculation of Lease Payments CategoryCost .. Total R&R costs years 1 to 20 (KIB and PKIMC) $ 31,911,762 Yrs. 1 & 2 deferred R&R from pre\ious lease (KIB) $ 7,032,738 20 yr total R&R less yrs. 1 & 2 def. R&R (PKIMC) $ 24,879,024 Annual R&R costs o\,er 20 yrs. (PKIMC) $ 1,243,951 Annual replenishment of Hospital Enterprise Fund (PKIMC) $ 100,000 Annual R&R costs plus $100K per year (PKIMC) $ 1,343,951 3% annual KIB admin fee (PKIMC) $ 40,319 Total annual lease payments (PKIMC) $ 1,384,270 Total monthly lease payment (PKIMC) $ 115,356 6.2 RENEWAL AND REPLACEMENT BASE ADJUSTMENTS: A. Providence and KIB shall meet in accordance with the schedule in Exhibit C — Annual R&R Review Schedule to review: the R&R Schedule; current status of Hospital related projects managed by KIB under the terms of this agreement; current status of Hospital related projects managed by PKIMC under the terms of this agreement; the Hospital Enterprise Fund and its current budget, balance and financials, and any other pertinent topics based on current Hospital and KIB activity. This meeting will include discussions regarding changes, additions, and deletions of items on the R&R schedule; the priority of each project; and the status and availability of hospital enterprise funds and/or other funds for said projects. This will also include a review of administrative and other non -R&R costs incurred by the Hospital Enterprise Fund. B. If completed R&R projects cumulative costs vary by more than 25% within a calendar year, then Providence and the Borough will meet and discuss possible options for lease rate changes, deferral of currently planned projects, application of excess funds to deferred projects or additional capital improvement projects as discussed in section 20.5. The parties will agree as to the appropriate adjustment to the R&R schedule and/or lease rate by amending the lease by mutual written agreement. C. Any project over $50,000, and not listed on the R&R schedule, necessitated by a State or Federal facility audit that is not a deferred project may require a lease rate adjustment. The parties will agree as to available hospital enterprise funds, the appropriate lease adjustment or adjustment to the R&R schedule to accommodate the unplanned expenditure and timing of that adjustment. This will be memorialized by amending the lease by mutual written agreement. 4 6.3 REPLENISHMENT OF HOSPITAL ENTERPRISE FUND: Part of the lease payment is intended to replenish the Enterprise Fund Fund over the period of this lease. R&R costs are paid out of the Hospital Enterprise Fund. The payment, which equates to $100,000 per year, is fixed and shall not be adjusted during the course of the lease, regardless of actual R&R costs. The current cash balance of the Hospital Enterprise Fund as of June 1, 2017 is $2,023,044. Details of this balance are provided in Exhibit D — Current Cash Balance of Hospital Enterprise Fund as of June 1, 2017. KIB intends to approve the transfer of additional funds on June 15, 2017 in the amount of $2,474,938. KIB and Providence agree this lease provides sufficient funds for KIB to fund and manage currently projected R&R projects over the next twenty years. KIB will be responsible to manage funding of said projects within the current lease payments unless an adjustment is necessitated based on criteria in lease section 6.2. 6.4 ADMINISTRATIVE FEE: Part of the lease payment is an administrative fee intended to cover KIB costs related to administrating the lease. This administrative fee shall be fixed at a rate of three percent (3%) over the period of this lease. The Administrative Fee shall be based upon the sum of annual R&R costs ($1,243,951 per year) and the annual replenishment of the Hospital Enterprise Fund ($100,000 per year) which totals to $1,343,951 per year as shown in the table in Section 6.1. The administrative fee shall be 0.03 (3%) times $1,343,951 per year which equals $40,319 per year, also as shown in the table in Section 6.1. The payment amount may be adjusted if the lease and associated R&R schedules are amended to reflect higher actual R&R costs, but the percentage rate of three percent (3%) shall be fixed for the period of the lease. KIB shall use this fee to cover administrative costs associated with managing the Hospital lease and the Hospital Enterprise fund, such as Finance, Borough Management and other allocated salaries or expenses. These costs shall not exceed three percent and shall not be paid with funds intended for R&R projects. Administrative costs in excess of three percent shall be the responsibility of KIB and shall not be paid from the Hospital Enterprise Fund. Project management costs for specific R&R projects are already included in the estimates for those R&R projects and are not considered administrative costs. 7.1 HOSPITAL OPERATIONS. Providence shall be responsible for the total operations of the Hospital. Providence shall operate the Hospital under the name Providence Kodiak Island Medical Center. Except as otherwise stated herein, Providence assumes all the rights, duties, liabilities and obligations which shall arise out of its operation of the Hospital and other activities on the Premises during the term of this Agreement. Providence shall cause all expenses incurred in operation of the Hospital after the effective date of this Agreement to be paid, including, but not limited to, utilities, insurance, salaries, supplies, fees, benefits and other costs normally incurred in the operation of the Hospital. 7.2 SEPARATE ACCOUNTING. Providence shall maintain separate accounting records and financial statements for the operations of the Hospital and shall provide KIB with the Hospital's year-end financial statements. KIB recognizes that Providence may, at its discretion, change the fiscal year of the Hospital to be aligned with Providence Health System. 7.3 TRAINING. Providence may conduct medical educational training programs at the Hospital, including training of interns and residents and other medical/technical personnel, 5 in a manner consistent with applicable governmental regulations. 7.4 ACCESS TO BUSINESS RECORDS. Providence shall have access to all prior financial, business, medical and other Kodiak Island Hospital books and records, including, but not limited to, admitting register books, pricing schedules of the Kodiak Island Hospital and room services, patients' insurance records, pertinent Kodiak Island Hospital personnel records and such other books and records as are necessary to the continued operation of the Hospital. Original copies of all such books and records shall be maintained and stored in the Hospital at all times. No such books and records may be destroyed, and in no event will patient medical records be destroyed, except in accordance with federal and state laws, rules and regulations. Providence will destroy any and all records that have exceeded the relevant retention period. KIB agrees, to the extent permitted by the law, to defend and hold Providence harmless against all claims, liability and expense resulting from acts or omissions of KIB in connection with such books and records and relating to the period prior to the effective date of this Agreement. KIB shall continue to be liable for the performance of all agreements related to such books and records not so assigned to Providence. 8. UTILITIES. Providence shall arrange and pay for all utilities and other services to be furnished to the Premises, including, but not limited to, gas, fuel, oil, electricity, sewer, water, telephone, and garbage collection_ 9. TAXES. Providence shall be responsible for and shall pay before delinquency all governmental taxes, assessments charges or liens assessed during the term of this Agreement against any leasehold interest or property of any kind or income or sales of any kind related to the Premises. KIB acknowledges that Providence will be entitled to a property tax exemption for property used exclusively for non-profit hospital purposes pursuant to AS 29.45.030(a)(3), except to the extent that the leasehold Premises are used by non-exempt parties for their private business purposes as elaborated in Greater Anchorage Area Borough v. Sisters of Charity 553 P.2d 467 (Alaska 1976). Providence may contest, by appropriate proceedings, any tax assessment, charge or lien, but such contest shall not subject any part of the Premises or Equipment to forfeiture or loss. Providence and KIB agree to negotiate in good faith regarding any KIB property taxes levied or assessed on the Premises and Equipment owned by KIB and leased to Providence, or any property owned by Providence during the term of this Agreement. 10. SUPPLIES. Providence shall supply and maintain all expendable Hospital supplies as may be required in Providence's discretion for the proper operation of the Hospital. Upon termination of this Agreement, Providence will transfer ownership of all of the supplies maintained at the Hospital to KIB, provided that the value of such transferred supplies is no more than the value of the supplies transferred to Providence at the commencement of the previous lease agreement, adjusted for inflation. Upon request from KIB, Providence will provide an estimate of the current value of supplies held on the premises. 11. USE. Providence shall use and operate the Premises for a general acute care hospital and for any additional health care related purposes as may be appropriate. Providence shall provide, equip and maintain adequate facilities for the continuation of full range general C medical and surgery services as economically feasible and warranted by the local physicians' levels of ability and the reasonable needs of the community, as determined in Providence's sole discretion and in accordance with the terms and conditions as set forth in this Agreement. Contingent on Borough approval Providence may convert parts of the Premises into use for other related purposes consistent with KIB's authority to supply its inhabitants with facilities for the care of sick and injured persons. Providence shall operate and maintain a duly licensed Hospital under the Alaska Statutes and in accordance with the standards prescribed by the Alaska Department of Health and Social Services. 12. 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. 13. WARRANTY OF TITLE. KIB hereby warrants that it has good and marketable title to the Premises, subject only to the encumbrances and security interests stated in Exhibit B, attached hereto and incorporated herein. 14. PRIOR AGREEMENTS. KIB warrants that entering into this Agreement does not breach any commitments or responsibilities of KIB under prior agreements, including but not limited to financing agreements, and that KIB agrees, to the extent permitted by law, to defend and hold Providence harmless from any claims, liabilities and expenses arising from or in any way related to any prior agreements of KIB except to the extent such agreements are assumed by Providence. 15. BUILDING REGULATIONS. KIB is responsible for all costs of complying with, and correcting any violations of applicable building, fire and health code regulations, excepting those subject to lease section 6.2 C. and those which occurred based on actions taken by Providence. Providence shall otherwise keep and maintain the Premises in good condition. 16. ACCREDITATION. Providence will use its best efforts to cause the Hospital to remain accredited by The Joint Commission or another suitable, recognized accreditation agency. Providence shall send to the KIB upon any loss of accreditation a written notice that the Hospital is no longer accredited and the reasons for non -accreditation. 17. MEDICARE/MEDICAID PARTICIPATION. Both parties hereby represent and warrant that they are not and at no time have been excluded from participation in any federally funded health care program, including Medicare and Medicaid. Both parties hereby agree to immediately notify the other of any threatened, proposed, or actual exclusion from any federally funded health care program, including Medicare and Medicaid. In the event that either party is excluded from participation in any federally funded health care program during the term of this Agreement, or if at any time after the effective date of this Agreement it is determined that either party is in breach of this Section, this Agreement shall, as of the effective date of such exclusion or breach, automatically terminate. 18. DISPOSAL OF MEDICAL WASTE AND/OR GARBAGE. Providence shall at its expense, properly and timely dispose of all medical waste and/or garbage refuse according to any and all laws governing disposal of the same. 7 19.1 INSURANCE - PROVIDENCE. 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 HIB hazard insurance policy with extended coverage in an amount not less than the replacement value of the Premises from time to time. From time to time, Providence and KIB shall confer and agree on the appropriate replacement value of the Premises; 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 hospitals 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. C. Providence shall notify KIB of any changes in coverage, including termination of coverage, 30 days prior to the change. 19.2 INSURANCE — KIB. KIB shall, at its expense, maintain throughout the term of this Agreement appropriate insurance to cover all conditions, events and liabilities arising out of its actions and activities relating to the Hospital. 20.1 MAINTENANCE AND REPAIRS. Subject to the provisions herein regarding responsibility for payments and costs, Providence shall cause the Hospital to be maintained and repaired in accordance with all state and local codes, and keep the Hospital in a condition at all times reasonably 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. 20.2 MAJOR MAINTENANCE AND REPAIRS. KIB shall be responsible for all costs associated with any Major Maintenance and Repairs to the building and its components to include site improvements. Major Maintenance and Repairs are defined as an individual unscheduled maintenance project, repair and/or capital project greater than $25,000. If a project or repair is greater than or equal to $25,000, KIB shall be responsible for the full amount of the repair. Providence shall be responsible for all Minor Maintenance, as defined below, less than $24,999. If repairs exceed the $25,000 limit solely because maintenance or repairs were not accomplished by Providence in a timely manner, KIB reserves the right to perform repairs or maintenance. KIB will be reimbursed for all costs of such repairs and maintenance by Providence. It must be demonstrated, using evidence acceptable to KIB, that either (1) PKIMC has adhered to its regular preventive, routine and or custodial maintenance scheduled for the identified project request, or (2) preventive maintenance is no longer cost effective. If KIB is unable or declines to perform essential major maintenance and repairs on a timely basis, the Hospital may choose to perform the maintenance after providing written notice to the KIB manager. Essential maintenance will be considered to be items which impact the ability of the Hospital to provide safe, effective patient care on a timely basis and also items to ensure that the L'' Hospital continues to meet all relevant regulatory requirements. The Hospital will document all expenses associated with the major maintenance and repairs and will provide a project specific summary to KIB at the completion of each project. Any such major maintenance performed and paid for by the Hospital will be either reimbursed to the Hospital by KIB or reduced from the following year's lease payments paid by the Hospital to KIB. The parties will meet at the end of each calendar year to discuss the capital improvement plan (see 20.6) and agree as to the reimbursement of any such major maintenance and repair performed by the Hospital. 20.3 MINOR MAINTENANCE AND REPAIRS. Providence shall be responsible for all costs associated with any Minor Maintenance and Repairs. Minor Maintenance and Repairs are defined as: (1) an individual unscheduled repair or replacement of faulty components, materials, or products caused by factors beyond the control of maintenance personnel less than $25,000; or (2) the day to day and periodic cleaning, painting, and replacement of disposable supplies to maintain the facility in safe, clean and orderly condition as to not cause any deferred or major maintenance. 20.4 REPLACEMENT AND RENEWAL. In addition to Major Maintenance and Repairs, KIB will be responsible for all costs associated with Replacement and Renewal, through the Replacement and Renewal Reserve. Replacement and Renewal is defined as an exchange of one fixed asset for another that has the same capacity to perform the same function. In contrast to Major Maintenance and Repair, Replacement and Renewal generally involves a complete identifiable item of reinvestment (system component or individual components, for example motors, shafts, or switches). Without limiting the foregoing, KIB shall provide and pay for depreciable capital assets, mutually agreed to by KIB and Providence, including the cost of building components, land improvements, fixed equipment and building services equipment with useful lives of 10 years or more as defined by the latest edition of the American Hospital Association's Estimated Useful Lives of Depreciable Hospital Assets (Exhibit E). The KIB Engineering and Facilities Department and the Hospital's Facility Department shall create a prioritized — Replacement and Renewals List to be submitted to both KIB and Providence by the end of March of each year to become part of the annual KIB budget process. Items on the Renewals and Replacement List will be prioritized and funded by KIB subject to the annual appropriations process. 20.5 CAPITAL IMPROVEMENT PLAN. The Major Maintenance/Repairs list, and the Replacement and Renewal List, will be reviewed as outlined in Exhibit C — Annual R&R Review Schedule, updated annually in April and will be forwarded collectively, as a Capital Improvement Plan, to the Assembly for funding in the coming fiscal year. The Capital Improvement Plan will be established by KIB and the Hospital collectively. Both parties agree to work to prioritize expenditures and capital investments in the facilities based on annual review of the projects defined in Exhibit B — Renewal and Replacement Schedule. If projects completed are performed at a cost less than projected in Exhibit B, the parties will determine if other capital improvement projects may be added to the Renewal and Replacement Schedule. If projects completed exceed the cost projected in Exhibit B, the parties will determine if later projects can be deferred and/or adjusted to stay within the funds available. If changed as part of the annual review, Exhibit B will be updated and the lease will be amended by mutual written agreement. 0 20.6 CAPITAL PROJECTS. A Capital Project is defined as work performed to change the interior arrangements or other physical characteristics of an existing facility or fixed equipment so that it can be used more effectively for its current designated purpose or adapted to a new use. A Capital Project also would include any new structures built to support the current purpose or new use of the main facility. Capital Projects will not be funded through the KIB Replacement and Renewal Reserve unless agreed upon by the parties and incorporated into the Agreement by amending the lease & R&R Schedule. Notwithstanding the above, during the term of this agreement, Providence may request and fund alterations or tenant improvements to the facility upon approval from the Borough. 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. Such requests shall be made through the Borough Manager. Consideration and response to the requests shall be granted in a timely manner. The alterations and/or improvements shall be designed, constructed and maintained in accordance with the standards set forth in this lease. Any alterations 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. 21. 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. KIB shall have no right to require Providence to restore the Premises upon termination of the Lease, and waives all claims against Providence for damages, or restoration arising from or related to (a) normal and customary use of the Premises during the term of the Lease (including any extensions thereof), as well as (b) any initial or subsequent alteration to the Premises regardless of whether such alterations are performed by Providence or by KIB. By mutual agreement, Providence may abandon property in the Premises following expiration of the Lease, in which case the property will become the property of the KIB and Providence will be relieved of any liability in connection therewith. 22. CONTRIBUTIONS. In the event that contributions are made to Providence for the benefit of the Hospital, Providence may accept such contributions, it being understood, however, that Providence shall comply with the wishes of the donor insofar as they are compatible with the operation of the Hospital and that all property purchased with such contributions shall be and remain a part of the Hospital and shall revert to KIB at the expiration or termination of Lease Agreement. Should the terms or conditions of the contribution indicate that it is intended for the Hospital, Providence shall hold contributions in a Providence Alaska Foundation fund or account designated solely for the Hospital and shall utilize the funds solely for the Hospital. Should the terms or conditions of the contribution indicate that it is intended for Providence and not for the Hospital, Providence shall accept the contribution on its own behalf and utilize the funds in its sole discretion. For purposes of this paragraph the term 'contribution' shall include a gift, bequest, grant or donation of money or property. It is expressly understood that the term "contribution' does not include any money derived by, or from, taxes or other governmental funds or entities. 23. MEDICAL STAFF. Any medical physician, osteopathic physician or advanced 10 care practitioner holding an unlimited State of Alaska medical license or any appropriately licensed dentist, who is recommended for approval by the Medical Staff and approved by the governing board of Providence shall be permitted privileges to practice in the Hospital. This section does not prohibit Providence from entering into an exclusive contract with a medical staff member(s) for the benefit of the community. 24. ADMISSION TO HOSPITAL. Hospital will not exclude, deny benefits to, or otherwise discriminate against any person on the basis of race, color, religion, gender, age, national origin, sexual orientation, disability, source of payment, financial circumstances or any other factor prohibited by law or regulation. 25. 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 arising from Providence's use and/or possession of the Premises or from the conduct of its business during the term hereof, and will defend KIB from any claim of liability on account thereof. Providence shall have no obligation for, and KIB agrees, to the extent permitted by law, to 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 date when Providence assumed the lease and operation from KIB. KIB agrees, to the extent permitted by law, to indemnify and hold Providence harmless from and against any and all claims and demands for injury or death to persons and damage to property arising from KIB's acts or omissions, including any claims arising from any breach or default in the performance of any obligation on KIB's part to be performed under the provisions of this lease agreement. 26.1 ACCESS TO RECORDS. KIB and Providence further agree that Providence shall retain and make available upon request for a period of four (4) years after the furnishing of such services (operation of the Hospital) as described in this Agreement, the books, documents and records which are necessary to certify the nature and extent of the costs thereof when requested by the Secretary of Health and Human Services or the Comptroller General, or any of their duly authorized representatives. If Providence carries out any duties of this Agreement through a subcontract with a related organization, valued at $10,000 or more over a 12 -month period, the Subcontract shall also provide that the Secretary of Health and Human Services or the Comptroller General may have access to the subcontract and the subcontractor's books, documents and records necessary to verify the costs of the subcontract for a period of four (4) years after the services have been furnished. This provision relating to the above retention and production of documents is included because of possible application of Section 1861 (v)(1)(1) of the Social Security Act to this Agreement; if this Section should be found to be inapplicable, then this clause shall be deemed to be inoperative and without force and effect. 26.2 PERSONNEL RECORDS. Should this Agreement terminate for any reason, Providence agrees to provide to KIB all personnel records for those employees who are to be re - 11 employed by KIB who consent to the release of such records to KIB. 26.3. OPERATIONAL RECORDS. Except as otherwise provided herein, Providence agrees to provide KIB with the books, documents and records, including medical records, specific to the operation of the Hospital, in accordance with all federal, state and local laws, rules and regulations including, but not limited to, privacy laws. Providence will not provide records that are not specific to the Hospital. 26.4 CONFIDENTIAL INFORMATION. Providence shall comply with all laws, regulations, directives or requirements in any form related to operating and managing hospitals and long-term care facilities, including, but not limited to applicable HIPAA/HITECH privacy standards set forth in Section 45 CFR, Section 164.504 ("Privacy Rule"), and HIPAA/HITECH Security Standards set forth in Section 45 CFR 154.314 ("Security Rule"), and the requirements and guidance issued by the United States Department of Health and Human Services ("HHS") pursuant to the American Recovery and Reinvestment Act of 2009 (42 USC Section 17931(a) et seq ("ARRA"). The KIB shall not have access to individually identifiable patient health information ("PHP'), as defined by HIPAA. 27. HOSPITAL ADMINISTRATOR. All administrators for Hospital shall be selected and hired with Providence Kodiak Island Community Advisory Board consultation. Providence shall conduct annual evaluations regarding the Administrator in consultation with the Kodiak Island Community Advisory Board. The Administrator shall attend meetings of the Providence Kodiak Island Community Advisory Board, representing Providence and reporting on the condition and affairs of the Hospital. Providence agrees to provide reasonable support and assistance to the Administrator to enable the Administrator to administer the business and affairs of the Hospital in an efficient and business -like manner consistent with the needs of the community. 28. GOVERNANCE. The overall management and control of the Hospital will rest with the Providence Alaska Community Ministry Board. It is anticipated that two KIB residents will be eligible to participate as voting members on this Board. One member shall be the Hospital Chief of Staff and one member shall be the Board Chair of the Providence Kodiak Island Community Advisory Board. 29. PROVIDENCE KODIAK ISLAND COMMUNITY ADVISORY BOARD. An Advisory Board meeting the requirements of 7AAC 13.030(a) will be appointed by Providence to provide input to the hospital staff, the medical staff, and Providence Alaska Community Ministry Board about the concerns of the community regarding the operation of the Hospital and to undertake the responsibilities set out at 7 AAC 13.030(b) and (c). One KIB Assembly member shall be appointed by Providence as a full voting member of the Providence Kodiak Island Community Advisory Board, and Providence shall give KIB the opportunity for review and comment before appointments to the Board are made. Providence shall keep the Providence Kodiak Island Community Advisory Board updated with respect to matters of Hospital policy and the relationship of the Hospital to the community and surrounding areas which it serves. 30. RIGHT TO ENTER PREMISES. Upon reasonable notice, Providence shall 12 permit ICI13, its agents and employees to have access to and to enter the Premises at all reasonable and necessary times to inspect the Premises. 31. DISPUTE RESOLUTION. Subject to the exclusions set forth in subparagraph (e) below, in the event any disagreement, dispute or claim arises between or among the Parties hereto (collectively, a "Dispute") with respect to the enforcement or interpretation of any term or provision of this Agreement or any Related Agreement or with respect to whether an alleged breach hereof or thereof has or has not occurred, or with respect to any other matter related to or arising out of this Agreement or any Related Agreement, or the relationship or transactions contemplated hereby or thereby, such Dispute shall be resolved in accordance with the following procedures: (a) Meet -and -Confer. In the event of a Dispute between the Parties hereto, either Party may give written notice to the other Party setting forth the nature of such Dispute ("Dispute Notice"). The Parties shall meet and confer to discuss the Dispute in good faith within 30 days of the other Party's receipt of the Dispute Notice in an attempt to resolve the Dispute. All representatives shall meet at such dates and times as are mutually convenient to the representatives of each Party within such 30 -day period. (b) Arbitration of Disputes. Except as set forth below, any Dispute which cannot be resolved by the Parties hereto within 30 days after either Party's receipt of a Dispute Notice may be submitted at the option of either Party to binding arbitration, which arbitration shall be conducted in accordance with the following provisions: (i) Venue. The arbitration shall be conducted in Anchorage, Alaska, unless the Parties mutually determine that another venue would be more convenient for the Parties. (ii) Law. The governing law shall be the substantive law of the State of Alaska as provided in Paragraph 14.17. (iii) Selection. A single disinterested third party arbitrator shall be selected by mutual agreement of the Parties. (iv) Award. The decision of the arbitrator shall be final and binding upon the Parties hereto, and judgment upon the award may be entered in any court of competent jurisdiction in the United States. The award shall include written findings of fact, a summary of the evidence and reasons underlying the decision and conclusions of law. The arbitrator shall have the power to award equitable relief, including specific performance of the terms and conditions of this Agreement and/or injunctive relief. (v) Fees and Costs. As part of the award, the arbitrator may award reasonable and necessary costs actually incurred by the prevailing Party, as determined by the arbitrator in his or her award, including that Party's share of the arbitrators' fees, costs and expenses, as well as any administration fees. The arbitrator may also include reasonable attorneys' fees in an award of costs in accordance with Paragraph 14.3. (c) Iniunctive Relief. Nothing in this Agreement shall be interpreted 13 to limit either Party's right to pursue preliminary or provisional equitable relief pending the arbitration award, including, without limitation, specific performance or a temporary restraining order or preliminary injunctive relief, from a court of competent jurisdiction at any time. By way of example, the foregoing provisions of this Paragraph shall not be interpreted to require either Party to submit to meet -and -confer or arbitration prior to exercising such Party's right to pursue preliminary equitable relief to protect trade secrets or prevent irreparable harm. 32. DEFAULT. 'Event of Default' by Providence 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 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, with the exception of any obligations imposed under Exhibit B, 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 C. The entry of a decree or order by a court having jurisdiction in the premises adjudging Providence as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of Providence under the Federal Bankruptcy Act or any other applicable Federal or State law, or appointing a receiver, liquidator, assignee, trustee (or other similar official) of Providence or of any substantial part to its property, or ordering the winding up or liquidation of its affairs; or D. The institution by Providence of proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Federal or State law, or the consent by it to the filing of any such assignee, trustee (or other similar official) of Providence or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by Providence in furtherance of any such action. "Event of Default" by KIB 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. Default in the performance, or breach of any covenant or warranty by KIB under this Lease, 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 KIB by Providence a written notice specifying 14 such default or breach and requiring it to be remedied stating that such notice is a "notice of default" hereunder; or B. The entry of a decree or order by a court having jurisdiction in the premises adjudging KIB as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of KIB under the Federal Bankruptcy Act or any other applicable Federal or State law, or appointing a receiver, liquidator, assignee, trustee (or other similar official) of KIB or of any substantial part to its property, or ordering the winding up or liquidation of its affairs; or C. The institution by KIB of proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Federal or State law, or the consent by it to the filing of any such assignee, trustee (or other similar official) of KIB or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by KIB in furtherance of any such action. 33. CONTINUING DEFAULT. If an Event of Default by Providence occurs and is continuing, KIB may: A. Terminate this agreement, excluding Providence from possession of the Hospital and use its best efforts to lease the Hospital, to another the account of Providence, holding Providence liable for the difference between the rentals received and the rentals which would have been receivable hereunder; B. Terminate this Agreement, exclude Providence from possession of the Hospital and either operate the Hospital or contract with a responsible operator to operate the Hospital; C. With respect to any personal property, exercise any remedies available to a secured party under the Uniform Commercial Code; and/or D. Take whatever action at law or in equity may 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. If an Event of Default by KIB occurs and is continuing, Providence may: A. Terminate this Agreement; and/or B. Take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observation of any obligation, agreement or covenant of KIB under this Agreement. 34. TERMINATION. At any time either KIB or Providence may terminate this Agreement by two year's written notice to the other party. This Agreement shall terminate two years 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. However, if Providence is required to perform any duty or 15 provide any service under the terms of this agreement that is in conflict with the philosophy, mission and values of Providence Health System, Providence may terminate this Agreement upon 90 days prior written notice to KIB. Upon such termination, Providence shall surrender possession of the Hospital to KIB. On the effective date of such termination KIB shall have the option to purchase any such accounts receivable, inventory, or supplies at a value agreed to by both parties. KIB shall have option to purchase equipment pursuant to Section 3.3 of this Agreement. KIB will reimburse Providence for the unamortized portion of any building or site improvements and alterations paid for by Providence. Providence agrees to co-operate in such a way as to allow KIB to show the Hospital to a prospective tenant or accommodate the active transition needs of KIB for the actual termination. KIB agrees to cooperate in such a way as to accommodate Providence transition needs and the removal of Providence's assets. Notwithstanding any other terms and conditions of this Agreement to the contrary, in the event this Agreement is terminated prior to the expiration of its full term, then Providence shall provide an Administrator for the Hospital on a contract basis, at fair market value, for ninety days following the termination if requested by KIB. 35. TRANSFERS OF LICENSES AND PERMITS. Upon termination of this lease for any reason the parties will cooperate and jointly prepare and file all applications for transfer of licenses and permits incident to operation of the Hospital. 36. 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: Manager Kodiak Island Borough 710 Mill Bay Road Kodiak, Alaska 99615 Providence: Senior Vice President and Chief Executive Officer Providence Health & Services Alaska 3760 Piper Street, Suite 3007 Anchorage, Alaska 99508 37. ADDRESS CHANGES: 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. 38. ASSIGNMENT AND SUBLEASE: Providence may assign this Agreement and may sublease the Hospital, in whole or in part, only with the prior written consent of the KIB, but subject to each of the following conditions: A. At the time of the making of any such assignment or sublease, there shall be no event of Default under this Agreement; 16 B. Any assignee will continue to operate the Hospital as a hospital, in accordance with this Agreement; C. Any assignee of this Agreement shall expressly assume and agree to perform and comply with all the covenants and provisions of this Agreement on the part of Providence and shall be jointly and severally liable with Providence for any default in respect to any such covenant or provision; D. No assignment or sublease shall relieve Providence from primary liability for all rents and other payments due and for the performance of all other obligations required under this Agreement; E. In the case of an assignment of the Agreement or a sublease of all or substantially all of the Hospital, the assignee or sublessee shall agree to pay all rent payable by it directly to KIB, less a pro -rata share of reasonable maintenance, repair, or administrative handling costs; F. Providence shall inform the KIB Manager of any and all subleases created. KIB shall be provided promptly a duplicate original of the instrument or instruments containing such assignment or sublease. KIB will acknowledge in writing the request and approvals. All reasonable requests will be granted in a timely manner for the benefit of patient care and services. G. Nothing herein will prevent Providence from leasing space to physicians or other health care providers. Providence may enter into non-exclusive space use agreements with physicians or groups to allow for specialty clinics. Such non-exclusive space use agreements shall not require approval by KIB. H. Providence may not mortgage or grant a security interest in this Agreement or leasehold interest. Approval of all subleases assigned by Providence shall be concurrent with the terms of this Agreement. No assignment for the benefit of creditors or by operation of law shall be effective to transfer any rights to the Assignee. 39. DAMAGE OR DESTRUCTION: When all or any part of the Hospital is destroyed or damaged, the KIB may: A. Proceed promptly to replace, repair, rebuild and restore the Hospital to substantially the same condition as existed before the taking or event causing the damage or destruction. B. All buildings, improvements and equipment acquired in the repair, rebuilding, replacement or restoration of the Hospital, together with any interests in land conveyed to the KIB as necessary for such restoration, shall become a part of the Hospital and available for use and occupancy by Providence without the payment of any rents other than those provided in Section 6 and 7.1. C. Rent shall be abated in the event of any destruction of damage to, or taking all or any part of the Hospital in proportion to the square footage which is unusable by Providence. 17 D. 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 cease as of the date of such occurrence, the rent to be adjusted as of such date. 40. CONDEMNATION. If the Premises, or such part thereof as in the reasonable opinion of Providence renders the remainder unusable for its purpose or 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. 41. 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, servants, employees and invitees of each other, 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. 42. 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. The parties agree the effective date of this Amendment is April 21, 2017. 18 IN WITNESS THEREOF the parties have respectively executed this Agreement the day and year written below. PROVIDENCE HEALTH & SERVICES - WASHINGTON re497P • , 0P�i311►[4LZ By: Its: Date: 7 5� & SERVICES ALASKA PROVIDENCE HEALTH & SERVICES - WASHINGTON d/b/a PROVIDENCE KODIAK ISLAND MEDICAL CENTER By.l— Its: Date: KODIAK ISLAN'VDDBOROUGH By. rcr�}�G� vdEk]` Its: aefzoo" rl 4 -f- Date:4?-L IA EST No a . Javier, MC, Bor ugh Clerk KodiMak Island Borough 19 0 EXHIBIT A - PRENUSES Kodiak Island Borough •s-' R I and Elder House Lona Term Care Facili ^_ n ~ 1, a :5e 500N 4 .. i l Fee' Kodiak Island Borough 20 P Brough Parcel I I LB] A.c'es Eber House Lease Area 11 71 Aces EXHIBIT B — REPLACEMENT AND RENEWAL LIST This R&R exhibit is provided for reference only. The complete R&R Schedule is contained in a locked Excel file named "Hospital R&R 2017" mutual shared by both parties. U) 2 W V) } 0 LL V) J Q F" 0 F. 0 w MZ W 0 U 21 NpY�OI+I m�a IR �$Or O ron m A 11 n S 2Gm5 N �S{amfp�o'� N n P <$1Z�SISZSS$�pry25 N M N M N M N N N N N M N N N N N N N N M o C; �i q 0 m O m Na P N dm 0$ C6 8 O� O 0 0 m O00 n N NSS N N NS N N �+ � SN O 00� 8N SN O� SN 00 8N SN 00000 8N SN 8N �N�CIO GN yN� SN ch �f�O SN en-, N 9 1E d a } VY OE yap Y�� N ^1 LL /C� b^' � r�r�ii S iYpl g N b � W1� Itt I u .co tli, ,II1-1; � 21 L 10 LL M 0 E 0 U h O N M a N wilmillim »vM N m � m � C Cd v O m E m cri 0 a T N c- m r; co O O O d m N m Irl N Oi vi O C6 Ol P m fl � m n c ^ J m w n N O N N N y� T C3 N N U o � V o m vai w o Fi U wilmillim »vM N m • — P ^ d O m ay m cri 0 a u, - c- u, r; O O O d m N m Irl r. Oi vi O C6 Ol P m fl � m n v ^ m n N N N N N N N N N U Y 4' U U U U V V U �Y Y ^iY YY YY m 'c m _w to 4 O M 41 Lu a :.P Eri no 6 c yv 0 al ^ h N o 19 E E E a � HvC�3'mY r0L0�Ma, � u�- c umg >, m ro nrfj o °ec m ro B n n n c n E 0 0 r>�d`d`d`mrr 24 § § i k § ! /©� f| \7 !#§ § $~� B § 2 .. . . .... . KNKK §m h[hgK2K§hq\q §qN! f|7 11 » , ,�N� ; \f) 11 1 a skkk�� \ !] T „ �„ )}kt k ■/� 7■r$2`�k-J; `—) {E2\§\\\ £zlf22222��£!2� Io tluk ) \# ~ k 25 8011111111111111111111111111111 F F K 27 ■II�IYI9 ■II■VIIIA 27 Y tT tQQ0 uYi 2 O i n 8 s PW 29 ) { >! \ \ k | y! | \ ® 7.| & . ! 000 V b 2 - \ . 1 \)$ CAI §§ § riCAri §§K§ §§ Am Am An §§§§§§ ! . WO .■ f ! !|{{\)k�)2!»f A. : \§! ;!!! kk ,2f ouff&m]/|)t�k) 7: $#!, ,! l,�| 0. 0 !! §k� m /_ -- .2 � rk |Q ( ` f =- ! AD 29 ) R 31 NI�11� 31 yS v v d w Z d S ii i� s S NN 0 0 N N 0 0 N O O U C) U U U U yS CI S 8 ol 8 � O O N 0 � 0 O 0 � � O � CI N CI O Opp O O O O m C 0ppI N m CI � o pOp pOp m [O[pp 3 �� N 90 rl a � 0 U e 3 Y F N N g N N N N N N N N N q N N N N N N N N N N R 32 \ \ } 33 / # ; | Q \ � CtG;m / Clt; * k k!!h » §§!§ §§ 9 9!§§§§§§§E \§ ! ® §' _ B. _ r- MBO' _��! 8 }{mak..; a,£A03 �g ! 2i..,6.u!);°: !! !l�000== k !:&!!$&& 3: w m §R �§ |0_ ) y§_ � 33 / 34 35 OYIIIAII�IIIi� 35 EXHIBIT C — ANNUAL REPLACEMENT & RENEWAL REVIEW SCHEDULE a a = ' 6 f o Y Y Q G ]Z Q L d m Y Q L m Y d 6 a 6 a y d 6 L 2 'g " O Q V 1 a H '- L =�oeo q=^� A=;22 y C V1 6 y C VI 6 W 6 Y 2 N Q Q Y 2 VI 6 W w v v c 3 a 3 3 ¢ e¢ m a¢¢¢ m c m m m m m c v C Ly ty. v � _ = a � - m M c c a x Z E E Cm a = � n a C 1C W V d y y n C C 6 6 O t u N o y a o G1 a 0 Ul .2 C o aj 9 4 6 C C C $. vn E E n u d o y v v a) r u m rL GJ L 2 N d d C m - m c > > E E E L N O Q Z m C Q 36 EXHIBIT D — SUMMARY OF HOSPITAL ENTERPRISE FUND CASH BALANCE AS OF JUNE 1, 2017 Estimated FY2017 Year-end balance for the Hospital portion of the Hospital and LTC Enterprise Fund Beginning Balance 06/30/2016 Inflows: Outflows: Equity in Central Treasury 2017 Lease payments (60,000 x 12) General Fund payback Land Sale Fund payback Fund 469 6/30 principal payment Fund 469 6/30 interest payment *Fund 469 6/30 loan payoff payment 1,068,044 $ 720,000 305,000 650,000 138,017 117,583 $ 2,474,938 4,405,538 Allocated Salaries $ 34,000 Contracted Services (accounting) 2,800 **Legal Fees 18,700 Insurance & Bonding 180 Equipment Contribution $ 108,000 * subject to assembly approval of loan payoff **includes estimates for May and June legal fees 37 163,680 Estimated 06/30/17 Equity in Central $ Treasury 5,309,902 EXHIBIT E — AMERICAN HOSPITAL ASSOCIATION'S ESTIMATED USEFUL LIVES OF DEPRECIABLE HOSPITAL ASSETS (example only— most recent edition should be used for reference) tri EXHIBIT F — ENCUMBRANCES AND SECURITY INTERESTS There are no encumbrances and security interests. 39 EXHIBIT G — LETTER FROM INITIAL HOSPITAL LEASE Letter dated September 9, 1996 carried forward from that initial hospital lease agreement between Providence and K11B dated April 21, 1997. (Exhibit A in initial hospital lease agreement) 40 EXHIBIT A PROVIDENCE HEALTH SYSTEM PHILOSOPHY MISSION AND VALUES Letter from Archbishop of Anchorage Francis T. Hurley auchaiocese of anchoRace sae rwmva steal . andlootra ase 94sat3eoe 9orMaaa9e • f+n 9o7ruasast September 9, 1996 Ofrke of Ina Artnbwhop Mr. Duuglns Bruce Administrator Providence Alaslta Medlcal Center 1200 Providence Drive P.O. Boa 196604 Anchorage, AK 99519-6604 Dear Mr. Bruce, Tnv initiative of Providence Alaska Medical Center to enter into an operating agretment with small Alaskan rural communities for the purpuee of providing better health care for more people Is one that 1 applaud. It w'lhnut question is fully consistent with the commitment of the Catholic Church and the Sisters of Providence to meet the human as well as the spirituel needs of p4ople. From my own observation of with the health care available In the smaller communities of Southeentral Alaska, I know how much the people strongly desire that more medical services be more readily available to them locally. Local communities can not meet the escalating costs of medical equipment and care. The people are often prevented from traveling to medical centersin Anchoragebecause of distance and weather. In addition to that. It Is the desire of patients to be close to their famllica. friends and ministers at the time of Illness. The operating agreement baling developed by the City of Kodiak and by Providence Alaska Medical Center will allWlate these dllfiCUl[IeL The plan is, if you will allow a play on words, providential. Forging operating agreements presents some difficulties In communities where there aro many varied and at times conflicting attitudes and coavletlons about what medical practices are morally permissible. The gguldellnes utilized for Catholic health care systems are contained In the fthlral and Rel' Directives Directives for Health Services of the Catholic Bishops Z? the OniiidStntea�"I'�`�Ity-oid�fc 'hal standards for Kodlak Hospital. You nave Indicated that the City of Kodiak deems it necessary that their long standing practice of elective atarillsation be continued. As you k,nw this practice Is not within the Directives. vao ask If it wgold be within the parameters of the Catholic teaching for Providence Medical Center to tolerate the continuance of that practice within the Clry of Kodiak as Part or the agreement. 16 41 September 9, 1996 Page 1 1 take note of an important factor. Kodiak Hospital remains a community hospital. The operating lease does not change the I. The mutually accepted terms of the lease Identify the principles and practices that will Ilia* both Providence and the City of Kodiak to be faithful to their commitments. :a this context I make an observation about moral decisions. Moral doelatons are generally not made by the application of only one principle. Rather, several principles must be recognized and brought into harmony. In this instance the principle of cooperation may be brought Into play with our principles relative to life and respect for the human body. Within the principle of. cooparation'and under certain conditions and circumstances it b permissible that one may cooperate materially. In an actlon of another that is contrary to one's convictions. in myiJdynent the principle of material cooperation does apply in the situation that prevails in Kodiak. Kodiak Hospital remains a community hospital. The operating agreement with Providence Alaska Medical Cantor does not transform It Into a Catholic Hospital. Rather Kodiak Hospital rrmains a rroimunlly hosniial of. the City of Kodiak. The mutually accepted teras of agreement define the practices that will be permitted. The material cooperation fne eterilirarion In no way implies approval of the procedure by Provident.*. 6 hope that the arrangement with the City of Kodiak comes to completion. I know the community well. I was personally Involved in working out an agreoment with the administrators of the City for the establishment of Brvlher FrenNs Shelter - Kodiak. God blrs 17 42 Slncarely in Christ. • �W4 .Francis T. Hurley Archbishop of Anchorage