HomeMy WebLinkAbout2009-04-13 09-132 ORDERCOUNCIL ACTION
Item No_ 09 132
Date: 04-13-2009
Item/Subject: ORDER, Authorizing the City Manager to Execute Fifth Amendment to Master
Transaction Agreement with Bangor Nursing and Rehabilitation Center
Responsible Department: Legal
Commentary: In 2000, the City worked with community members to transition the Bangor
Nursing Facility, a 60 -bed skilled nursing home, into an independent non-profit entity, the
Bangor Nursing & Rehabilitation Center (BNRC). At the time of the transition, the City and
BNRC entered into a Master Transaction Agreement (MTA) that identified each party's
responsibilities for the new entity. Over the ensuing years, a number of amendments have
been made to the MTA related to the repayment terms for amounts due the City.
When the City "privatized" operation of BNRC, it committed to providing up to $2.25 million in
capital support in recognition necessary facility improvements required to ensure continued
operations. A section of the MTA included a provision for BNRC to contribute back to the City if
its operations became positive. Due to technical accounting changes, however, the language
used in the MTA can now be construed in such a way that the City's capital contribution is now a
loan. This language poses a problem in the City's ability to finance the BNRC's improvements
through a tax exempt bond. In order to ensure the City's ability to finance the improvements on
a tax exempt basis while affirming the original intent that BNRC would contribute back to the
City when operations allowed, staff is recommending a fifth and primarily housekeeping
amendment to the MTA.
The proposed amendment would require BNRC to make a payment in lieu of taxes, thus
clarifying the original intent of the agreement that the City's capital contribution is not a loan.
The proposed change has been reviewed by several Board Members of BNRC who have
indicated their support for the amendment.
Department Head
Manager's Comments:
This amendment was reviewed at the Finance Committee meeting of 4/6/09.Z����t(.��
City Manager
Associated Information:
Budget Approval:
Finance Director
Legal Approval:
ty Solicitor
Introduced for
X Passage
First Reading Page _ of
Referral
39 132
k 84
Assigned to Councilor Stone April 13, 2009
�"yi�NCo.i:
CITY OF BANGOR
(TITLE.) ORDER, Authorizing the City Manager to Execute Fifth Amendment to
Master Transaction Agreement with Bangor Nursing and Rehabilitation
Center
WHEREAS, the City of Bangor and the Bangor Nursing and Rehabilitation Center
executed a Master Transaction Agreement in December 2000; and
WHEREAS, the City and BNRC desire to further amend the MTA;
NOW, THEREFORE, the parties agree to amend the MTA, as follows:
By deleting the following paragraph 9(a):
"9. MISCELLANEOUS
a. Upon the termination of the line of credit, one half of the
annual net cash flow of BNRC shall be used to repay the City the costs associated
with the $2.25 million City capital contribution described in paragraph 5, above."
And replacing it with the following:
"9. MISCELLANEOUS
a. Upon the termination of the line of credit, BNRC will make an
annual Payment in Lieu of Taxes equal to one quarter of the annual net
operating cash flow. Said annual payment shall not exceed 50% of the tax that
would be applied to the facility if it were subject to property taxation."
In all other respects the Master Transaction Agreement, as amended, shall
remain in full force and effect.
Now, Therefore, be it Ordered by the City Council of the City of Bangor THAT
the City Manager is hereby authorized and directed to execute a Fifth Amendment to
the Master Transaction Agreement with the Bangor Nursing and Rehabilitation Center.
IN CITY COUNCIL
April 13, 2009
Motion Made and Seconded
fo Passage
Ps ed
r# 09-132
O R D E R
CITY CLERK (TITLE -Authorizing the City Manager to
Execute Fifth Amendment to Master Transaction
Agreement with Bangor Nursing and Rehabilitation
Assigned to Councilor,
99 132
FIFTH AMENDMENT TO
MASTER TRANSACTION AGREEMENT
Agreement made as of the 15a' day of April, 2009 by and between the City of Bangor, a
body politic and corporate organized and existing under and by virtue of the laws of the State of
Maine, in Bangor, Penobscot County, Maine (hereinafter the "City") and the Bangor Nursing and
Rehabilitation Center, a non-profit corporation duly organized and existing under the laws of the
State of Maine with a place of business in Bangor, Penobscot County, Maine (hereinafter
`BNRC").
WHEREAS, the parties executed a Master Transaction Agreement dated December 28,
2000; which agreement has been previously amended on March 29, 2002, July 23, 2002, April 3,
2003, May 10, 2004 and April 15, 2009 (as amended, the "MTA"); and
WHEREAS, the City and BNRC desire to further amend the MTA;
NOW, THEREFORE, the parties agree to amend the MTA, as follows:
By deleting the following paragraph 9(a):
66
9. MISCELLANEOUS
a. Upon the termination of the line of credit, one half of the annual
net cash flow of BNRC shall be used to repay the City the costs associated with the $2.25
million City capital contribution described in paragraph 5, above."
And replacing it with the following:
66
9. MISCELLANEOUS
a. Upon the termination of the line of credit, BNRC will make an
annual Payment in Lieu of Taxes equal to one quarter of the annual net cash flow. Said
annual payment shall not exceed 50% of the tax that would be applied to the facility if it
were subject to property taxation."
In all other respects the Master Transaction Agreement, as amended, shall remain in full
force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
(W1352730.1) 1 -2
39 _132
IN WITNESS WHEREOF, the parties hereto have caused this Master Transaction
Agreement to be executed as of the 15th day of April, 2009.
Witness CITY OF BANGOR
By:
Edward A. Barrett
City Manager
Witness BANGOR NURSING AND
REHABILITATION CENTER
By:
Kenneth Huhn
President
STATE OF MAINE
PENOBSCOT, ss
April 2009
Then personally appeared the above-named Edward A. Barrett, City Manager for the City
of Bangor, and acknowledged the foregoing instrument to be his free act and deed in his said
capacity ad the free act and deed of the said City of Bangor.
Before me,
STATE OF MAINE
PENOBSCOT, ss
Notary Public/Attorney-at-Law
Name:
Commission_ expires:
April , 2009
Then personally appeared the above-named Kenneth Huhn, President of Bangor Nursing
and Rehabilitation Center, and acknowledged the foregoing instrument to be his free act and
deed in his said capacity ad the free act and deed of the said Bangor Nursing and Rehabilitation
Center.
Before me,
Notary Public/Attorney-at-Law
Name:
Commission expires:
1W1352730.1) 2-2