MEMORANDUM

TO: Mayor Hornaday / Homer City Council

FROM: Walt Wrede

DATE: May 9, 2005

SUBJECT: Hospital Workshop

I am writing to remind you that the Council has scheduled a workshop with Mayor Bagley and members of the Borough Assembly regarding the hospital land issue on Tuesday, May 10^th, at 10AM in the Cowles Council Chamber. Attached is a packet which contains some background information that I hope will refresh your memory on the issue and the positions that have been taken by both parties so far. Following is a summary of the negotiating position taken by the parties to date:

Solutions Acceptable to the Borough:

The Borough has indicated that it finds three potential solutions acceptable. They are:

• Transfer the Deed: The City simply transfers the deed to the property to the Borough. This was the approach taken in the first draft MOU.
• Sale at Fair Market Value: The Borough is willing to purchase the property at fair market value and provide assurances on the deed to protect the City’s interests in the event that the Borough ceases to operate a full serve, public owned hospital in the service area.
• Joint Ownership of Property: The large City parcel, the two small Borough lots, and the portion of the Bartlett St. ROW (City owned) to be vacated would all be combined into one lots. There would be joint ownership of the new parcel with the City as majority owner. The lease would be terminated and we would need new restrictions on the deed or a recorded document that defines the new relationship, similar to that discussed above.

Solutions Acceptable to the City Council:

• Transfer the Borough Property to the City and Extend the Lease: Under this proposal, the Borough would transfer the deed to the two parcels it owns to the City, the City would replat all lots into one new parcel, and extend the lease for a period of time suitable to the Borough.

Discussion: Mayor Bagley appears to be very serious about pulling the plug on the hospital expansion project if this issue is not resolved. It also seems as though Borough Assembly members, including our local members, may support the Mayor’s position.

It might be useful for the Council to consider other alternatives and to think about building some flexibility into its negotiating position. I am concerned that the Borough is putting us in a position where the public might see it as being the flexible and reasonable party, not the City. I spoke with Gordon on Friday and he confirmed that if the Council was interested in a sale or joint ownership, it is possible to craft binding language in a deed, to adopt a Deed of Trust, or to record some other document that protects the City’s interests.

Remember, this is a workshop. The purpose of the workshop is to exchange ideas and proposals. No decisions can be made on the Council’s part. We could put a resolution on May 24^th Agenda if the Council wishes to take a formal position.