AGENDA
CITY OF WATSONVILLE
CITY COUNCIL MEETING
Working with our community to create positive impact through service with heart.
Values: Teamwork, Integrity, Honesty, Service and Respect Mayor Ari Parker, District 7
Eduardo Montesino, Mayor Pro Tempore, District 1
Vanessa Quiroz-Carter, Council Member, District 2
Lowell Hurst, Council Member, District 3
Francisco Estrada, Council Member, District 4
Rebecca J. Garcia, Council Member, District 5
Jimmy Dutra, Council Member, District 6
Rene Mendez, City Manager
Samantha W. Zutler, City Attorney
Irwin I. Ortiz, City Clerk
Location:
City Council Chambers
275 Main Street, Top Floor
Watsonville, CA 95076
Anyone addressing the City Council is asked to fill out a speaker card and leave it at the podium for recording purposes
IF YOU CHALLENGE ANY ACTION APPEARING ON THIS AGENDA IN
COURT, YOU MAY BE LIMITED TO RAISING ONLY THOSE ISSUES YOU OR
SOMEONE ELSE RAISED AT THE PUBLIC MEETING DESCRIBED ON THIS
AGENDA, OR IN WRITTEN CORRESPONDENCE DELIVERED TO THE CITY CLERK PRIOR TO, OR AT, THE PUBLIC MEETING.
Americans with Disabilities Act
The Council Chambers is an accessible facility. If you wish to attend a meeting and you will require assistance in order to attend and/or participate, please call the City Clerk's Office at least three (3) business days in advance of the meeting to make arrangements. The City of Watsonville TDD number is (831) 763-4075.
For information regarding this agenda, please call the City Clerk's Office at (831) 768- 3040
CITY OF WATSONVILLE
SPECIAL CITY COUNCIL MEETING
Location:
City Council Chambers
275 Main Street, Top Floor
Watsonville, CA 95076
Tuesday, August 16, 2022, 5:30 p.m.
Pages
FACE COVERINGS HIGHLY RECOMMENDED
1. ROLL CALL
1.a. MOTION TO EXCUSE ABSENT COUNCIL MEMBER(S) (If any)
2. NEW BUSINESS
2.a. APPROPRIATION OF REVENUE FROM THE SALE OF THE PORTER BUILDING TO FUND THE CITY’S 2050 GENERAL PLAN UPDATE &
AUTHORIZE APPROPRIATIONS & PAYMENT OF A CONTRIBUTION TO
THE PAJARO VALLEY HEALTH DISTRICT PROJECT TO PURCHASE THE
HOSPITAL
3 1) Staff Report by Assistant City Manager Vides and Pajaro Valley District Project Board Member Inda
2) City Council Clarifying & Technical Questions
3) Public Input
4) Motion
5) City Council Deliberation on Motion
6) Action on Resolution Authorizing Budget Appropriation of $1,147,630.50 in Revenue from Sale of the Porter Building & Authorizing Appropriations to Fund $800,000 for the City’s 2050 General Plan Update; & Authorizing Appropriations & Payment of a $270,000 Contribution to the Pájaro Valley Health District Project to Purchase the Watsonville Community Hospital & $77,630.50 for Costs Associated with the Sale of the Property
2.b. SHORT-TERM LOAN AGREEMENT BETWEEN THE CITY OF
WATSONVILLE & THE COUNTY OF SANTA CRUZ FOR THE PURPOSE OF
FUNDING THE PURCHASE OF WATSONVILLE COMMUNITY HOSPITAL
8 1) Staff Report by Assistant City Manager Vides and Pajaro Valley District Project Board Member Inda
2) City Council Clarifying & Technical Questions
3) Public Input
4) Motion
5) City Council Deliberation on Motion
6) Action on Resolution Approving Short-Term Loan Agreement with the County of Santa Cruz for the Purpose of Funding the Purchase of Watsonville Community Hospital
3. ADJOURNMENT
This agenda was posted in accordance with the California Brown Act. The agenda packet can be accessed on the City of Watsonville website at https://www.cityofwatsonville.org/2123/City-Council-Agendas-Minutes and available for public inspection in the City Clerk’s Office (275 Main Street, 4th Floor) during normal business hours). Any materials related to an item on this Agenda submitted to the Council after distribution of the agenda packet will be made available to the public in accordance with Government Section 54957.5.
8/12/2022 9:05:42 PM
C:\Program Files\eSCRIBE\TEMP\2154096778\2154096778,,,Report - Appropriation from Sale of Porter Building.docx Agenda Report
MEETING DATE: Tuesday, August 16, 2022
TO: City Council
FROM: ASSISTANT CITY MANAGER VIDES
SUBJECT: APPROPRIATION OF REVENUE FROM THE SALE OF THE
PORTER BUILDING AND RECOMMENDED APPROPRIATION TO
FUND THE CITY’S 2050 GENERAL PLAN UPDATE; AND
AUTHORIZE APPROPRIATIONS AND PAYMENT OF A
CONTRIBUTION TO THE PAJARO VALLEY HEALTH DISTRICT
PROJECT TO PURCHASE WATSONVILLE COMMUNITY
HOSPITAL AND COSTS ASSOCIATED WITH THE SALE OF THE
PROPERTY
STATEMENT OF ISSUES:
The City recently closed Escrow on the sale of City owned property known as the Porter Building on 280 Main Street. The revenue generated from the sale of the Porter Building needs to be appropriated by the Council and earmarked according to City policy.
RECOMMENDED ACTION:
Adopt a Resolution appropriating $1,147,630.50 revenue from the sale of the Porter Building and authorize appropriations to fund $800,000 for the City’s 2050 General Plan Update; $270,000 contribution to the Pajaro Valley Health District Project to purchase the Watsonville Community Hospital and $77,630.50 for costs associated with the sale of the property.
DISCUSSION:
Background
On June 28, 2022, the Watsonville City Council approved the disposition and development agreement (DDA) between the City of Watsonville and Pajaro Valley Arts Council for the City owned property, the Porter Building, located on 280 Main Street in Watsonville, CA. The DDA included the terms for the sale of the building for a purchase price of $1,150,000. At close of ESCROW the total amount received by the City after closing costs is $1,147,630.50.
The sale of the Porter Building is a one-time, non-reoccurring action, and the use of proceeds from this sale shall also be one-time and non-reoccurring in nature according to City financial policy adopted in March 7, 2018, (Resolution No. 36-18).
8/12/2022 9:05:42 PM
C:\Program Files\eSCRIBE\TEMP\2154096778\2154096778,,,Report - Appropriation from Sale of Porter Building.docx Therefore, staff is recommending that the proceeds from the sale of the Porter Building be used to 1) make an additional contribution to the Pajaro Valley Healthcare District for the purchase of the Watsonville Community Hospital, 2) fully cover the cost of the City of Watsonville 2050 General Plan Update; and 3) cover costs associated with the sale of the property.
Discussion
Staff recommends the Council approve the appropriation of the one-time revenue from the sale of the Porter Building as follows:
1. Contribution to the Pajaro Valley Health District Project to purchase the Watsonville Community Hospital
Watsonville Community Hospital filed for Chapter 11 bankruptcy on December 6, 2021. A notfor-profit 501(c)(3), known as Pajaro Valley Health District Project (PVHDP) was created to advocate for community-led healthcare services by forming a health care district and purchasing Watsonville Community Hospital to transition it to community ownership and governance.
The Capital requirements for the purchase and operational deficits of the hospital total $67,025,000. As of August 12, 2022, the Pajaro Valley Healthcare District Project’s efforts have raised $56,467,704 in committed and pledge funds towards this effort. This figure includes $25,000,000 from the State of California, which was approved in its FY23 budget and signed by the Governor of California, and $1,903,423 in pledge agreements.
PVHDP has received institutional gifts of support from key contributors including the County of Santa Cruz, Monterey County, the Central California Alliance for Health, the Community Health Trust of the Pájaro Valley, Kaiser Foundation Health Plan, and Blue Shield of California. The Driscoll’s Community Challenge fundraising totaled $1.75 million, which was matched by the Driscoll’s company at another $1.75 million. The City Council approved a $130,000 donation to the PVHDP on February 8, 2022. The City Council and all other donors share a vision of a community-owned hospital that is sustainable long into the future, and keeps healthcare local.
The PVHDP needs to raise an additional $5,552,296 to meet the total fundraising goal of $67,025,000 to acquire the hospital and cover operations during the turnaround. The Council had expressed interest in increasing the contribution to fund this important community asset in previous meetings and directed staff to identify additional funding that could be considered for this purpose. An additional one-time contribution of $270,000 is being recommended as the proceeds from the Porter Building are being appropriated by the Council. This additional contribution, if approved, would bring the City of Watsonville’s total contribution to $400,000.
2. Fund the City Costs to Develop the 2050 General Plan Every jurisdiction in the state of California is required to have a General Plan, which is the City's long-term framework, or "constitution" for future growth and development. The General Plan represents the community's view of its future and expresses our development goals.
8/12/2022 9:05:42 PM
C:\Program Files\eSCRIBE\TEMP\2154096778\2154096778,,,Report - Appropriation from Sale of Porter Building.docx The City is currently using the 2005 General Plan, which was adopted in 1996. The General Plan update will lay out a plan to accommodate growth through the year 2050. The plan includes a vision and plan for the provision of more housing and all City functions that relate to the well-being of our residents. It includes planning for police, fire, parks, and library services to meet the future increase in population, as well as infrastructure improvements.
These types of planning processes occur once every 20 years or more, a contribution to this type or project can be considered non-reoccurring in nature. The City has received proposals from 3 separate consultant teams to update the City's General Plan, and the cost for this effort is estimated to be just under $2 million.
In September 2021, the City Council agreed to contribute $1.1 million of American Rescue Plan Relief Act (ARPA) money toward the General Plan Update. Using the one-time proceeds of the sale of the Porter Building would help in closing the gap between what the expected cost will be and the currently available funding. Therefore, staff is recommending an appropriation of $800,000 to pay the costs of the Watsonville 2050 General Plan Update.
3. Costs Associated with the Sale of the Property
The City engaged with a number of services in order to prepare the property for sale including, surveyors, legal counsel, filings, and closing costs. We are recommending that the balance of the sale proceeds of $77,630.50 be appropriated to pay for those costs.
STRATEGIC PLAN:
The appropriation of one-time revenue from the sale of the Porter Building and its allocation to fund the purchase of the Watsonville Community Hospital and the preparation of the 2050 General Plan are consistent with all City Council Goals. 1-Housing
2-Fiscal Health
3-Infrastructure & Environment
4-Economic Development
5-Community Engagement & Well-Being
6-Public Safety
7-Efficient and High Performing Government
FINANCIAL IMPACT:
There is no ongoing financial impact to these actions. Consistent with the City’s one-time revenue policy, the recommended actions are appropriating the money received from the sale of the Porter building to one-time General Fund purposes. We are recommending appropriation into the following accounts
0150-275-5895 – other revenue $1,147,630.50
0150-280-7367 – loans and grants $270,000
0150-901-7361-XXXXXX – 2050 General Plan Updated $800,000 0150-280-7361 – other contract services $77,630.50
ATTACHMENTS AND/OR REFERENCES (If any):
None.
Reso No. ________ (CM)
C:\Program Files\eSCRIBE\TEMP\21143481171\21143481171,,,Resolution - Appropriation of Funds for Hospital .docxQ:\COUNCIL\2020\021120\PVPSA & Friends of PCS Donation 1.docx ri 8/12/2022 9:14:35 PM8/12/2022 6:13:33 PM SWZ______ RM ______ CM ______ 1 RESOLUTION NO. _______ (CM)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WATSONVILLE AUTHORIZING A BUDGET APPROPRIATION OF
$1,147,630.50 IN REVENUE FROM THE SALE OF THE PORTER
BUILDING AND AUTHORIZING APPROPRIATIONS TO FUND $800,000 FOR THE CITY’S 2050 GENERAL PLAN UPDATE; AND AUTHORIZING APPROPRIATIONS AND PAYMENT OF A $270,000 CONTRIBUTION TO THE PÁJARO VALLEY HEALTH DISTRICT PROJECT TO PURCHASE
THE WATSONVILLE COMMUNITY HOSPITAL AND $77,630.50 FOR
COSTS ASSOCIATED WITH THE SALE OF THE PROPERTY
WHEREAS, on June 28, 2022, the Watsonville City Council approved the disposition and development agreement (DDA) between the City of Watsonville and Pájaro Valley Arts Council for City owned property, the Porter Building, located on 280 Main Street in Watsonville, CA; and
WHEREAS, The City received revenue from the sale of the Porter Building in the amount of $1,147,630.50; and
WHEREAS, the sale of the Porter Building is a one-time, non-reoccurring action, and the use of proceeds from this sale shall also be one-time and non-reoccurring in nature according to City financial policy adopted in March 7, 2018, (Resolution No. 36- 18); and
WHEREAS, the City Council wishes to fund the following: 1) make an additional contribution to the Pájaro Valley Healthcare District for the purchase of the Watsonville Community Hospital, 2) towards the cost of the City of Watsonville 2050 General Plan Update; and 3) costs associated with the sale of the property.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:
2 1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that appropriating one-time revenue and expenses from the sale of the Porter Building does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.
2. The Council does hereby approve the appropriation of $1,147,630.50 revenue from the sale of the Porter Building and authorizes appropriations to fund $800,000 for the City’s 2050 General Plan Update; and authorizing appropriations and payment of a $270,000 contribution to the Pájaro Valley Health District Project to purchase the Watsonville Community Hospital and $77,630.50 for costs associated with the sale of the Porter Building.
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8/12/2022 8:38:31 PM
C:\Program Files\eSCRIBE\TEMP\20382462176\20382462176,,,WATSONVILLE COMMUNITY HOSPITAL .docx Agenda Report
MEETING DATE: Tuesday, August 16, 2022
TO: City Council
FROM: ASSISTANT CITY MANAGER VIDES
SUBJECT: SHORT-TERM LOAN AGREEMENT BETWEEN THE CITY OF
WATSONVILLE AND THE COUNTY OF SANTA CRUZ FOR THE
PURPOSE OF FUNDING THE PURCHASE OF WATSONVILLE
COMMUNITY HOSPITAL
STATEMENT OF ISSUES:
The State of California has committed to providing significant funding towards the purchase of Watsonville Community Hospital (Hospital), as reflected in separate line items for ten million dollars and fifteen million dollars (for a total of $25 million) in the 2022-2023 State Budget Bill.
Due to a drafting error in the State Budget Bill language, the wrong entity was inadvertently inserted in place of the County of Santa Cruz, which was the intended recipient of the funds (to be received on behalf of the Pajaro Valley Healthcare District).
The result of the error is that the County will not receive a portion of the funds necessary to contribute towards the purchase price of the Hospital. This will require an amendment to the original State Budget Bill language, which is forthcoming. However, the necessary correction will not be accomplished quickly enough to accommodate the August 31, 2022, closing deadline. Therefore, the County has requested a five million dollar ($5 million) loan from the City to be able to close on the purchase of the Hospital.
RECOMMENDED ACTION:
Adopt a resolution approving a five million dollar ($5 million) loan to the County of Santa Cruz, to be used exclusively for the purpose of funding the purchase price for the Watsonville Community Hospital.
DISCUSSION:
Background
Watsonville Community Hospital filed for Chapter 11 bankruptcy on December 6, 2021. In anticipation of the imminent closure of the community hospital, a not-for-profit 501(c)(3) was created to advocate for community-led healthcare services by forming a health care district
8/12/2022 8:38:31 PM
C:\Program Files\eSCRIBE\TEMP\20382462176\20382462176,,,WATSONVILLE COMMUNITY HOSPITAL .docx and purchasing Watsonville Community Hospital to transition it to community ownership and governance.
The Pajaro Valley Healthcare District Project's Board of Directors (PVHDP) includes leadership representing Santa Cruz County, the City of Watsonville, Community Health Trust of Pajaro Valley, and Salud Para La Gente.
In preparation for the February 22, 2022 auction to purchase the hospital, PVHDP finalized an Asset Sale Agreement with Watsonville Community Hospital. PVHDP was approved by the bankruptcy court as the lead bidder to purchase the hospital.
The long-term management and ownership of the hospital was conceived by the PVHDP and as part of its urgency legislation — Senate Bill 418 — was brought forward by State Senator Laird and coauthored by California State Assembly members Robert Rivas, Mark Stone, and Senator Anna Caballero. The bill was passed unanimously by the Assembly and Senate, and on Friday, February 4, 2022, Governor Gavin Newsom signed the legislation into law. With his signature, the Pajaro Valley Healthcare District was established with the purpose of bringing Watsonville Community Hospital into public ownership.
A wide variety of community benefit organizations, private donors, and public agencies have joined together to fund the purchase price of the Hospital, and the last date to close the sale, as approved by the United States Bankruptcy Court, is August 31, 2022.
The State of California has committed to providing significant funding towards the purchase of the Hospital, as reflected in separate line items for ten million dollars and fifteen million dollars (for a total of $25 million) in the 2022-2023 State Budget Bill.
Due to a drafting error in the State Budget Bill language, the wrong entity was inadvertently inserted in place of the County, which was the intended recipient of the funds (to be received on behalf of the District). The result of the error is that the County will not receive a portion of the funds necessary to contribute towards the purchase price of the Hospital. This will require an amendment to the original State Budget Bill language, which is forthcoming. However, the necessary correction will not be accomplished quickly enough to accommodate the August 31, 2022, closing deadline.
For this reason, the County is seeking a bridge loan from five organizations, $5M each – the Cities of Watsonville, Capitola and Santa Cruz, the Santa Cruz County Community Foundation and Salud Para La Gente. On Thursday August 11, 2022, the Capitola City Council approved the $5 million loan contingent upon the approval of the same by the City of Santa Cruz and Watsonville. In addition, Salud Para La Gente and the Santa Cruz Community Foundation Boards have also approved their $5 million loan.
Therefore, staff is recommending that the Watsonville City Council approve a resolution authorizing a $5 million dollars, no interest, short-term loan (not to exceed 60 days) to fund the purchase price of the Hospital. This $5 million will be pooled with money from other community
8/12/2022 8:38:31 PM
C:\Program Files\eSCRIBE\TEMP\20382462176\20382462176,,,WATSONVILLE COMMUNITY HOSPITAL .docx partners to fund the $25 million necessary to bridge the gap in funds needed to close the Hospital purchase transaction by August 31, 2022.
STRATEGIC PLAN:
This resolution is consistent with the Council Strategic Goal # 5 of Community Wellbeing as it supports the preservation of the Watsonville Community Hospital as a vital operating healthcare provider for all Watsonville residents.
FINANCIAL IMPACT:
There is no potential financial impact on the City of Watsonville for agreeing to fund this shortterm loan. The full loan amount will be repaid in full within sixty days.
The funds that will be used for this loan come from the City of Watsonville General Fund. The City has funds appropriated for large construction projects that will not be completed during this short timeframe. Therefore, the City is able to loan these funds without impacting the timeline for these construction projects.
ATTACHMENTS AND/OR REFERENCES (If any):
None.
Reso No. (CM)
Meeting Date: 011122 1
RESOLUTION NO.__________ (CM)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WATSONVILLE
APPROVING A SHORT-TERM LOAN AGREEMENT BETWEEN THE CITY OF
WATSONVILLE AND THE COUNTY OF SANTA CRUZ FOR THE PURPOSE
OF FUNDING THE PURCHASE OF WATSONVILLE COMMUNITY HOSPITAL
AND AUTHORIZING AND DIRECTING THE CITY MANAGER TO EXECUTE
SAME AND TAKE ANY ADDITIONAL ACTIONS TO EFFECTUATE THE
LOAN
WHEREAS, Senate Bill 418, the State of California created the Pájaro Valley Health Care District (“District”) for the purpose of bringing Watsonville Community Hospital (“Hospital”) into public ownership, after the current owners declared bankruptcy; and
WHEREAS, a wide variety of community benefit organizations, private donors, and public agencies have joined together to fund the purchase price of the Hospital, and the last date to close the sale, as approved by the United States Bankruptcy Court, is August 31, 2022; and
WHEREAS, the State of California has committed to providing significant funding towards the purchase of the Hospital, as reflected in separate line items for ten million dollars and fifteen million dollars (for a total of $25 million) in the 2022-2023 State Budget Bill; and
WHEREAS, due to a drafting error in the State Budget Bill language related to the State’s $25 million grant, the wrong entity was inadvertently inserted in place of the County, which was the intended recipient of the funds (to be received on behalf of the District). The result of the error is that the County will not receive the funds necessary to contribute towards the purchase price of the Hospital. This will require an amendment to the original State Budget Bill language, which is forthcoming. However, the necessary
Reso No. (CM)
Meeting Date: 011122 2
correction will not be accomplished quickly enough to accommodate the August 31, 2022, closing deadline; and
WHEREAS, the City believes that it is critical that the Hospital purchase be successfully concluded by August 31, 2022, in order to avoid additional unnecessary and exorbitant expenses that would follow a postponement, to ensure that the Hospital successfully transfers to public ownership on the bankruptcy court’s approved timeline, and to preserve the Hospital as a vital operating health care provider for the people of the City of Watsonville and the Pajaro Valley region; and
WHEREAS, the City Manager has recommended that the City provide the County with a $5 million short-term loan (not to exceed 60 days) to fund the purchase price of the Hospital. This $5 million will be pooled with money from other community partners to fund the $25 million necessary to bridge the gap in funds needed to close the Hospital purchase transaction by August 31, 2022.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:
1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that providing a short term loan to the County of Santa Cruz does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.
Reso No. (CM)
Meeting Date: 011122 3
2. The Council authorizes the City Manager to execute a short-term (not to exceed 60 days) loan agreement with the County of Santa Cruz in the amount of $5 million to assist in funding the County’s purchase of the Hospital, pending availability of the additional $20 million in funding needed to complete the purchase.
3. The City Manager is hereby authorized and directed to execute said agreement for and on behalf of the City of Watsonville with minor revisions that may be approved by the City Manager and the City Attorney, and to take any other actions necessary to effectuate the loan.
**************************************
SHORT-TERM LOAN AGREEMENT BETWEEN THE CITY OF WATSONVILLE
AND THE COUNTY OF SANTA CRUZ FOR THE PURPOSE OF FUNDING THE
PURCHASE OF WATSONVILLE COMMUNITY HOPSITAL
This Agreement, effective as of the date of the last signature below, is between THE CITY OF WATSONVILLE (“City”), a municipal entity, and the COUNTY OF SANTA CRUZ (“County”), a political subdivision of the State of California. The City and the County are sometimes referred to in this Agreement individually as a “Party” or together as the “Parties.”
RECITALS
A. In February 2022, pursuant to Senate Bill 418, the State of California created the Pajaro Valley Health Care District (“District”) for the purpose of bringing Watsonville Community Hospital (“Hospital”) into public ownership, after the current owners declared bankruptcy.
B. A wide variety of community benefit organizations, private donors, and public agencies have joined together to fund the purchase price of the Hospital, and the last date to close the sale, as approved by the United States Bankruptcy Court, is August 31, 2022.
C. The State of California has committed to providing significant funding towards the purchase of the Hospital, as reflected in separate line items for ten million dollars and fifteen million dollars (for a total of $25 million) in the 2022-2023 State Budget Bill.
D. Due to a drafting error in the State Budget Bill language related to the State’s $25 million grant, the wrong entity was inadvertently inserted in place of the County, which was the intended recipient of the funds (to be received on behalf of the District). The result of the error is that the County will not receive the funds necessary to contribute towards the purchase price of the Hospital. This will require an amendment to the original State Budget Bill language, which is forthcoming. However, the necessary correction will not be accomplished quickly enough to accommodate the August 31, 2022, closing deadline.
E. The Parties agree that it is critical that the Hospital purchase be successfully concluded by August 31, 2022, in order to avoid additional unnecessary and exorbitant expenses that would follow a postponement, to ensure that the Hospital successfully transfers to public ownership on the bankruptcy court’s approved timeline, and to preserve the Hospital as a vital operating health care provider for the people of the Pajaro Valley region, who they both serve.
F. Accordingly, the City has agreed to provide the County with a $5 million shortterm loan (not to exceed 60 days) to fund the purchase price of the Hospital. This $5 million will be pooled with money from other community partners to fund the $25 million necessary to bridge the gap in funds needed to close the Hospital purchase transaction by August 31, 2022.
NOW THEREFORE, the Parties agree as follows:
1. Loan Amount. The City will loan the County five million dollars ($5 million), to be used exclusively for purposes of funding the purchase price for the Hospital as referenced in the above Recitals.
2. Term. The term of the loan is sixty (60) days. The County will repay to the City the entire balance of the loan within sixty days of receipt of the funds from the City.
3. No Security Required. The Parties recognize that this loan is backed by the full faith and credit of the County of Santa Cruz, in its capacity as a political subdivision of the State of California, which has pledged the funds necessary to repay the loan amount. Accordingly, this is an unsecured loan.
4. Payment of Costs. The County agrees that, within thirty (30) days of receiving a request for payment from the City, it will pay the City all costs that the City incurs in providing this loan.
5. Interest. As the Parties recognize that this loan is provided on a short-term basis for the purpose of advancing the interests of the public by ensuring uninterrupted and stable health care for the regional population they both serve, no interest will be charged for this loan.
6. Waiver. The County acknowledges that the City is entering into and performing this Agreement only as an accommodation to the County, and hereby waives any claim for damages or otherwise against the City arising from or in connection with this Agreement.
7. Indemnity. To the fullest extent permitted by law, the County agrees that it will defend and indemnify the City from any claims for damages or otherwise from third parties that may result from this Agreement.
8. Choice of Law. This Agreement shall be construed in accordance with and governed by the internal laws of the State of California without regard to conflict of law provisions.
9. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.
10. Entire Agreement. This Agreement reflects the entire understanding and agreement of the Parties pertaining to it subject matter, and supersedes any prior oral or written agreements, representations, understandings or discussions between the Parties. No other understanding between the Parties shall be binding on them unless set forth in a further signed document amending this Agreement.
11. Further Assurances. Each Party shall, at the reasonable request of the other Party, execute and deliver to the other Party all further instruments, assignments, assurances and other documents, and take any actions as the other Party reasonably requests in connection with the carrying out of this Agreement.
12. No Third-Party Beneficiary Rights. The Parties do not intend to confer and this Agreement shall not be construed to confer any rights or benefits to any person, firm, group, corporation or entity other than the Parties.
13. No Waiver. No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that or any other instance. Any waiver granted by a Party must be in writing to be effective and shall apply solely to the specific instance expressly stated.
The Parties have executed this Agreement as of the date first written above.
CITY OF WATSONVILLE
By:
Its: ________________________________
Date:
COUNTY OF SANTA CRUZ
By:
Manu Koenig
Chairperson, Board of Supervisors
Date:
APPROVED AS TO FORM:
Jason M. Heath
County Counsel