HomeMy WebLinkAboutRes2003-045
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CITY OF SEWARD, ALASKA
RESOLUTION 2003-045
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO ESTABLISH THE
HOSPITAL ENTERPRISE FUND AND APPROPRIATE A LOAN IN THE
AMOUNT OF $500,000 FOR THE PURPOSES OF ESTABLISHING CASH
FLOW FOR OPERATIONS
WHEREAS, the Seward City Council approved Resolution 2003-23 on March 10, 2003,
establishing co-location of the acute care hospital and the long-term care facilities; and
WHEREAS, the co-located entity will begin operations on May 1, 2003 and will need
cash for the purpose of funding operations until such time as the facility has established a
positive cash flow to fund ongoing operations; and
WHEREAS, per Section 12 "Working Capital and Cash Flow" ofthe Management and
Operating Agreement which became effective on April 9, 2003, Providence Alaska Health
System has agreed to cover the monthly cash flow in the first six months, so long as the City
reconciles the cash account each month and transfers an amount sufficient to bring the account
current; and
WHEREAS, according to the Pro Forma financial statements for the co-located entity,
the facility is expected to generate a positive cash flow based on the higher medicaid
reimbursement rates resulting from co-location, as well as from cost efficiencies and economies
of scale derived from co-location; and
WHEREAS, the administration will utilize $300,852.46 in previously appropriated but
unspent funds related to the hospital operations to fund the initial cash flow loan, in addition to
$199,147.54 in General Fund reserves, where the $300,852.46 is comprised of two items: 1)
$250,000 appropriated by Council in Resolution 2002-42 as part ofthe Hospital Loss Protection
Account, intended to cover potential hospital losses incurred in 2002, which never materialized;
and 2) and $50,852.46 in sales tax proceeds remaining from the close-out of Seward General
Hospital in 1996, intended to cover potential tail insurance claims after 1996, which never
materialized; and
WHEREAS, the loan is expected to be repaid by the hospital facility within one year of
complete draw-down, at an interest rate equal to the average annualized rate established by the
three month U.S. Treasury Bill during the duration of the loan.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF SEWARD, ALASKA, that:
CITY OF SEWARD, ALASKA
RESOLUTION 2003-045
Section 1. The City Manager is authorized to establish the Hospital Enterprise Fund.
Section 2. The amount of $500,000 is appropriated as a loan to the hospital facility, to be
drawn-down monthly on the basis of actual cash flow, and repaid by the hospital within one year
of complete draw-down, at an interest rate equal to the average annualized rate established by the
three month U.S. Treasury Bill during the duration of the loan.
Section 3. This resolution shall take effect immediately upon its adoption.
PASSED AND APPROVED by the City Council ofthe City of Seward, Alaska, this 28th
day of April, 2003.
THE CITY OF SEWARD ALASKA
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AYES:
NOES:
ABSENT:
ABSTAIN:
Valdatta, Branson, Amberg, Orr, Dunham, Clark
None
None
Shafer
ATTEST:
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Jean J,lewis
City Clerk ""uu""
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