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Home My WebLink About2009-03-09 09-109 ORDERCOUNCIL ACTION Item No. 39 109 Date: 03-09-2009 Item/Subject: ORDER, Authorizing the City Manager to Execute Fourth Amendment to Master Transaction Agreement with Bangor Nursing and Rehabilitation Center Responsible Department: Legal Commentary: Until December 31, 2000, the City operated the Bangor Nursing Facility, a 60 -bed skilled nursing home. The City -owned operation often required significant operating subsidies to cover its operations. Through the efforts of the City Council and in recognition of the need to react quickly to the constantly changing healthcare environment, the facility was transitioned to an independent non-profit entity, the Bangor Nursing & Rehabilitation Center (BNRC). Since at the time of the transition, the employees and assets of the new entity were entirely from the City, a Master Transaction Agreement (MTA) was executed that identified each party's responsibilities for the new entity. The City provided a line of credit in the amount of $400,000 that is set to expire on June 30, 2009. In addition, the agreement allowed for BNRC to repay over time the accounts receivable owed to the City as of December 31, 2000 and subsequently collected by BNRC. During this fiscal year, the facility has been able to begin to repay the amounts owed the City on accounts receivable and fully expects the full amount to be repaid prior to the master transaction agreement's required repayment dates. However, while BNRC has made significant strides in diversifying its revenue base, continued financial pressures from the Medicaid system coupled with the resurrection of the State's gross receipts tax on nursing home revenues have not allowed BNRC to perf=orm as originally predicted. As a result, the Board of BNRC has requested that the line of credit from the City be extended. This Order will authorize an amendment to the Master Transaction Agreement to extend the line of credit to June 30, 2012. Department Head Manager's Comments: City Manager Associated Information: Budget Approval: n w e Legal Approval: Introduced for X Passage First Reading Rpfprral Page _ of _. Director City Solicitor March 9, 2009 BA r Assigned to Councilor Blanchette 09 109 CITY OF BANGOR R4r0j .i" rte► (TITLE.) ORDER, Authorizing the City Manager to Execute Fourth 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, said Agreement as amended provided for a line of credit from the City of Bangor to the Bangor Nursing and Rehabilitation Center with an expiration date of June 30, 2009; and WHEREAS, the Board of Bangor Nursing and Rehabilitation Center have made great strides in diversifying its revenue stream, there continues to be financial pressure on the Medicaid system and a reinstatment of the State's gross receipts tax on nursing home revenues, resulting in the need to change the expiration date of the line of credit. 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 Fourth Amendment to the Master Transaction Agreement with the Bangor Nursing and Rehabilitation Center. A copy of the Amendment is attached hereto. IN CITY COUNCIL March 9, 2009 Motion Made and Seconded for Passage Pas d ITY CLERK ORDER (TITLE) Authorizing the City Manager to Execute Fourth Amendment to Master Transaction Agreement with Bangor Nursing and Rehabilitation Center Assigned to Councilor March 9, 2009 Assigned to Councilor Blanchette 39 109 �.�_ CITY Off' BANGOR -R4TED,fE � .��► (TITLE.) ORDER, Authorizing the City Manager to Execute Fourth 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, said Agreement as amended provided for a line of credit from the City of Bangor to the Bangor Nursing and Rehabilitation Center with an expiration date of June 30, 2009; and WHEREAS, the Board of Bangor Nursing and Rehabilitation Center have made great strides in diversifying its revenue stream, there continues to be financial pressure on the Medicaid system and a reinstatment of the State's gross receipts tax on nursing home revenues, resulting in the need to change the expiration date of the line of credit. 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 Fourth Amendment to the Master Transaction Agreement with the Bangor Nursing and Rehabilitation Center. A copy of the Amendment is attached hereto. 09 109 FOURTH AMENDMENT TO MASTER TRANSACTION AGREEMENT Agreement made this day of 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; and WHEREAS, on March 29, 2002 the parties amended the Master Transaction Agreement; and WHEREAS, on July 23, 2002 the parties amended the Master Transaction Agreement a second time; and WHEREAS, on May 10, 2004 the City Council authorized an amendment to the Master Transaction Agreement a third time; and WHEREAS, the BNRC would like to amend some of the financial provisions in the Master Transaction Agreement as previously amended. NOW THEREFORE, the parties agree to amend the Master Transaction Agreement, as amended, as follows: By deleting the following: 6. CITY LOAN/LINE OF CREDIT a. The City shall provide BNRC with a line of credit for liquidity purposes subject to the following conditions: 1. The amount of the line of credit shall not exceed $400,000. 2. The amount available under the line of credit shall not be reduced. 3. The term of the line of credit shall end on June 30, 2009. 4. Repayment of said line of credit shall be as provided for herein. 09 109 And replacing it with the following: 6. CITY LOAN/LINE OF CREDIT a. The City shall provide BNRC with a line of credit for liquidity purposes subject to the following conditions: 1. The amount of the line of credit shall not exceed $367,575. 2. The amount available under the line of credit shall not be reduced. 3. The term of the line of credit shall end on June 30, 2012. 4. Repayment of said line of credit shall be as provided for herein. In all other respects the Master Transaction Agreement, as amended, shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Master Transaction Agreement to be executed on this day of 2009. Witness Witness STATE OF MAINE PENOBSCOT, ss CITY OF BANGOR Edward A. Barrett City Manager BANGOR NURSING AND REHABILITATION CENTER President 411' 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 and 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: 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 and the free act and deed of the said Bangor Nursing and Rehabilitation Center. Before me, Notary Public/Attorney-at-Law Name: Commission expires: