HomeMy WebLinkAbout67-11 RESOLUTIONRESOLUTION NO. 67-11
A RESOLUTION TO DESIGNATE THE LOCATION OF WASHINGTON
REGIONAL MEDICAL CENTER AS THE NEW LOCATION OF AND THE
SUCCESSOR HOSPITAL OF THE CITY HOSPITAL, TO APPROVE AND
AUTHORIZE THE MAYOR TO EXECUTE A QUIT CLAIM DEED TO
CONVEY THE CURRENT SITE OF THE CITY HOSPITAL TO
WASHINGTON REGIONAL MEDICAL CENTER, ALL CONTINGENT
UPON THE CONCURRENT ACTION OF THE BOARD OF TRUSTEES OF
THE CITY HOSPITAL TO DESIGNATE WASHINGTON REGIONAL
MEDICAL CENTER AS THE SUCCESSOR CITY HOSPITAL AND THE
DONATION OF APPROXIMATELY 1.1 ACRES BY WASHINGTON
REGIONAL MEDICAL CENTER FOR CONSTRUCTION OF THE
ROUNDABOUT AT NORTH HILLS BOULEVARD AND FUTRALL DRIVE.
WHEREAS, Mr. S.K. Stone and Mrs. Amanda M. Stone very generously deeded to
Fayetteville a city block of land "to be by the said city, held in trust and maintained as a city
hospital," in deeds of 1906 and 1909; and
WHEREAS, the citizens of Fayetteville taxed themselves to construct the City Hospital
soon after the property was conveyed to Fayetteville in trust and this hospital has served our
citizens well for over a century; and
WHEREAS, Washington Regional Medical Center was established in Fayetteville and
has served Fayetteville citizens well as our primary, full service hospital for many decades, first
at College and North and now at its current location on North Hills Boulevard; and
WHEREAS, because of the age and condition of the facilities on the land donated in
trust by the Stones to the City, it is appropriate to designate Washington Regional Medical
Center at North Hills Boulevard as successor City Hospital which is entitled to the current City
Hospital's premises in trust "to be devoted exclusively to the establishment and maintenance of
the successor City Hospital (WRMC).
NOW, THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby designates
Washington Regional Medical Center as the successor to the Stone City Hospital at its location
on North Hills Boulevard in Fayetteville.
Section 2: That the City Council of the City of Fayetteville, Arkansas hereby approves
and authorizes Mayor Jordan to execute a Quit Claim Deed to Washington Regional Medical
Center of the property donated to the City of Fayetteville by the Stones in 1906 and 1909 to be
held by the City in trust until the location of the city hospital is changed and then "the entire
Page 2
Resolution No. 67-11
proceeds of the above described premises shall constitute a trust fund to be devoted exclusively
to the establishment and maintenance of the newly designated successor city hospital.
Section 3; That the City Council of the City of Fayetteville, Arkansas hereby expresses
its intent to rapidly appoint sufficient successor trustees to the board of trustees named in Stones'
1906 deed to establish at least a quorum so that the Board of Trustees can determine whether to
designate Washington Regional Medical Center as the successor to the Stone City Hospital at
Washington Regional's address on North Hills Boulevard in Fayetteville.
Section 4: That the City Council of the City of Fayetteville, Arkansas hereby gratefully
agrees to accept Washington Regional Medical Center's generous donation of approximately 1.1
acres of land needed for the Roundabout at the North Hills Boulevard and Futrall Drive
intersection to alleviate congestion and provide better traffic flow for Washington Regional
Medical Center's staff and patients and for other Fayetteville citizens.
PASSED and APPROVED this 19`t' day of April, 2011.
APPROVED:
go
ATTEST:
By:
n"a��
SO RA E. SMITH, City C1erk/Treasurer
,���nnirrrr�,
F'AYETTEVILLE a
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P.65
Chris Brown c�6
Submitted By
City of Fayetteville
Staff Review Form
City Council Agenda Items
or
Contracts
April 19, 2011
City Council Meeting Date
Engineering Development Services
Division Department
Action rtequirea:
A Resolution approving a counter offer by Washington Regional Medical Center for land necessary for construction
of a Roundabout at North Hills Blvd. and Futrali Drive, and authorizing the Mayor to sign any Agreements and Deeds
necessary to transfer the Citys interests in the City Hospital Property.
Cost of this request
Account Number
06035,1700
Project Number
Budgeted Item �X
$
13,412,545.00
Category 1 Project Budget
1,573,509.86
Funds Used to Date
$ 11,839,035.14
Remaining Balance
Budget Adjustment Attached
Transportation Bond Improvements
Program Category 1 Project Name
Street Improvements
Program 1 Project Category Name
2006A Sales Tax Construction
Fund Name
A- 0`k.1A. Al Previous Ordinance or Resolution #
Department D ctor Date
Original Contract Date:
Original Contract Number:
City Attorney Date
4C'4 Q Received in, City Clerk's Officp
Finance and Internal Service Director Date
4k Z . / ///� N -doll
Chief of ag Date Received in Mayor's Office z
it
Ma or D e
Comments:
•
ay e eVlle
-ARKANSAS
CITY COUNCIL AGENDA MEMO
To: Mayor and City Council
Thru: Don Marr, Chief of Staff
Jeremy Pate, Development Services Director
From: Chris Brown, City Engineer W
Date: April 1, 2010
THE CITY OF FAYETTEVILLE, ARKANSAS
DEPARTMENT CORRESPONDENCE
Council Meeting of April 19, 2011
Subject: A Resolution approving a counter offer by Washington Regional Medical Center for land necessary for
construction of a Roundabout at North Hills Blvd. and Futrall Drive.
PROPOSAL:
As part of the Transportation Bond Program, the City of Fayetteville is preparing to construct a Roundabout at the
intersection of North Hills Blvd. and Futrall Drive, to replace the existing 4 -way stop at this intersection. In order to
construct this roundabout, approximately 1.1 acres of property owned by Washington Regional Medical Center at the
corner of Futrall and North Hills must be acquired by the City as right of way. The City had an appraisal prepared to
determine the value of the right of way, and has made an offer to WRMC (based on the appraisal) in the amount of
$172,500.
WRMC has presented a counter offer whereby they will provide a deed to the City for the 1.1 acres at the roundabout site,
in return for the City's interest in the City Hospital property on South School Avenue and for the City's assistance in: 1)
terminating the lease agreement between the non-profit entity known as Fayetteville City Hospital and WRMC, 2)
transferring any licenses, permits, etc. held by Fayetteville City Hospital, and 3) any other actions required so that any
interest that the City or the non-profit entity known as Fayetteville City Hospital has in the Fayetteville City Hospital real
property, personal property, and other assets is transferred to Washington Regional Medical Center. The City Attorney's
Office has reviewed the proposal, and has provided legal advice on the steps to be taken with regard to this somewhat
complex proposal. The City Attorney has also developed the attached memo regarding the proposal.
The Street Committee reviewed the proposal at the last Committee Meeting on March 29, and voted 3-1 in favor of
moving forward with necessary steps to complete the acquisition of right of way from WRMC for the roundabout and the
transfer of property and assets of the Fayetteville City Hospital to WRMC.
RECOMMENDATION:
Staff recommends approval of a resolution that:
1) Accepts the offer of Washington Regional Medical Center to donate the right of way needed for the Roundabout
to the City, with the additional provision that WRMC will move its existing sign out of the new right of way at no
cost to the City.
2) Authorizes the Mayor to sign any Agreements and Deeds necessary to transfer the City's interests in the City
Hospital Property, provided said Agreements and Deeds meet the approval of the City Attorney.
3) Expresses the City Council's intent to appoint members to the Board of the Fayetteville City Hospital as
necessary to constitute a quorom so that the Board can take necessary actions to transfer their interests in the City
Hospital to WRMC.
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1
RESOLUTION NO.
A RESOLUTION TO DESIGNATE THE LOCATION OF WASHINGTON
REGIONAL MEDICAL CENTER AS THE NEW LOCATION OF AND TFIE
SUCCESSOR HOSPITAL OF THE CITY HOSPITAL, TO APPROVE AND
AUTHORIZE THE MAYOR TO EXECUTE A QUIT CLAIM DEED TO
CONVEY THE CURRENT SITE OF THE CITY HOSPITAL TO
WASHINGTON REGIONAL MEDICAL CENTER, ALL CONTINGENT
UPON THE CONCURRENT ACTION OF THE BOARD OF TRUSTEES OF
THE CITY HOSPITAL TO DESIGNATE WASHINGTON REGIONAL
MEDICAL CENTER AS THE SUCCESSOR CPfY HOSPITAL AND THE
DONATION OF APPROXIMATELY 1.1 ACRES BY WASHINGTON
REGIONAL MEDICAL CENTER FOR CONSTRUCTION OF THE
ROUNDABOUT AT NORTH FIILLS BOULEVARD AND FUTRALL DRIVE.
WHEREAS, Mr. S.K. Stone and Mrs. Amanda M. Stone very generously deeded to
Fayetteville a city block of land "to be by the said city, held in trust and maintained as a city
hospital," in deeds of 1906 and 1909; and
WHEREAS, the citizens of Fayetteville taxed themselves to construct the City Hospital
soon after the property was conveyed to Fayetteville in trust and this hospital has served our
citizens well for over a century; and
WHEREAS, Washington Regional Medical Center was established in Fayetteville and
has served Fayetteville citizens well as our primary, full service hospital for many decades, first
at College and North and now at its current location on North Hills Boulevard; and
WHEREAS, because of the age and condition of the facilities on the land donated in
trust by the Stones to the City, it is appropriate to designate Washington Regional Medical
Center at North Hills Boulevard as successor City Hospital which is entitled to the current City
Hospital's premises in trust "to be devoted exclusively to the establishment and maintenance of
the successor City Hospital (WRMC).
NOW, THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby designates
Washington Regional Medical Center as the successor to the Stone City Hospital at its location
on North Hills Boulevard in Fayetteville.
Section 2: That the City Council of the City of Fayetteville, Arkansas hereby approves
and authorizes Mayor Jordan to execute a Quit Claim Deed to Washington Regional Medical
Center of the property donated to the City of Fayetteville by the Stones in 1906 and 1909 to be
held by the City in trust until the location of the city hospital is changed and then "the entire
proceeds of the above described premises shall constitute a trust fund to be devoted exclusively
to the establishment and maintenance of' the newly designated successor city hospital.
Section 3: That the City Council of the City of Fayetteville, Arkansas hereby expresses
its intent to rapidly appoint sufficient successor trustees to the board of trustees named in Stones'
1906 deed to establish at least a quorum so that the Board of Trustees can determine whether to
designate Washington Regional Medical Center as the successor to the Stone City Hospital at
Washington Regional's address on North Hills Boulevard in Fayetteville.
Section 4: That the City Council of the City of Fayetteville, Arkansas hereby gratefully
agrees to accept Washington Regional Medical Center's generous donation of approximately 1.1
acres of land needed for the Roundabout at the North Hills Boulevard and Futrall Drive
intersection to alleviate congestion and provide better traffic flow for Washington Regional
Medical Center's staff and patients and for other Fayetteville citizens.
PASSED and APPROVED this 19°i day of April, 2011.
APPROVED: ATTEST:
By:
By:
LIONELD JORDAN, Mayor SONDRA E. SMITH, City Clerk/Treasurer
Weville
-AAKAN5A5�
Departmental Correspondence
TO: City Council Street Committee
FROM: Kit Williams, City Attorney
DATE: March 25, 2011
RE: City's ownership rights in City Hospital land
Kit Williams
City Atlorney
Jason B. Kelley
Assistant City nllorney
The City of Fayetteville is the legal owner of the City Hospital land,
but it only holds such land in trust. if the land is not to be used "as a city
Hospital, ... the entire proceeds of the above described premises shall
constitute a trust fund to be devoted exclusively to the establishment and
maintenance of such (new) city Hospital ...." (1909 Deed of Mr. & Mrs.
S.K. Stone to the City of Fayetteville; emphasis added.)
Mr. and Mrs. Stone very generously gave the City of Fayetteville an
entire city block upon which to build a city hospital. Their first deed in
1906 contained a strong reversionary clause that if the property "shall at
any future time be abandoned or cease to be used and maintained for
Hospital purposes, then the title to said real estate shall revert to us or our
heirs (1906 Deed, emphasis added) Their second deed in 1909
attempted to modify that reversionary clause to some extent by allowing
the future sale of the property if the city hospital had relocated, but
continued to require that all proceeds be "devoted exclusively" for the
new city hospital.
On February 2, 1962, Fayetteville City Attorney Bass Trumbo
furnished a letter to the Board of Trustees of the City Hospital to alleviate
the concerns of the Arkansas State Board of Health and the Dallas Office of
the Public Health Service in determining the advisability of granting the
City Hospital's Board of Trustees a Hill -Burton assistance grant to
construct a nursing home on the grounds of City Hospital. The
Public Health Service had already characterized the City Hospital as "a
non -acceptable hospital due to its obsolete construction" a half century ago.
Bass Trumbo wrote: "In my opinion, the conditions reserved in the
Warranty Deed of 1906 to the City of .Fayetteville, Arkansas, would not
prevent the construction of a nursing home on the property ...." I believe
this letter may have allowed the Hill -Burton grant to be awarded to the
City Board of Directors of the City Hospital for construction of the nursing
home facilities on the land. The land ownership remained legally with the
City which continued to hold the land in trust for hospital purposes only
pursuant to the requirements of the Stones' deeds.
It would be hard to dispute: that Washington Regional Medical
Center (which has always been located in Fayetteville) has long been the
true city hospital of Fayetteville. As such, the proceeds from any sale of the
current property of the City Hospital which "shall" ... be devoted
exclusively to ... such (new) city Hospital," must go to Washington
Regional, not the City of Fayetteville.
It is in Washington Regional's best interests to resolve this legal and
equitable ownership of the City Hospital land as quickly as possible. It
needs the agreement of the Fayetteville City Council to accomplish this
short of litigation. Thus, Washington Regional is willing to give the City
over an acre of land needed for the roundabout which should ease traffic
congestion for drivers seeking to go to or leave Washington Regional. This
voluntary conveyance and replacement of its sign would save our
taxpayers about $200,000.00.
I do not believe that the City of Fayetteville can ever realize any
money for its treasury from the sale of the City Hospital land.
Attempting to do so would require suing the Stone heirs, the City Hospital
Board of Directors and Washington Regional and asking that the Judge
ignore the clear wishes of the Stones who gave this property in trust to the
City of Fayetteville. I would not file such a suit unless explicitly directed to
do so by the City Council in its Resolution. I do not believe such a suit
would be successful.
On the other hand, Washington Regional could sue the City for the
land. The heirs of the Stone family and the City Hospital Board of
Directors could intervene. I am not certain how that suit would be
resolved, nor why the Fayetteville City Council would require such
litigation.
Conclusion
The City of Fayetteville has long worked cooperatively with
Washington Regional Medical Center, the City's second largest employer
and a very desirable corporate citizen of Fayetteville. Legally, WRMC is
probably entitled to the City Hospital land or any proceeds from the sale of
such property in the future. Facilitating this result now by designated
WRMC as the new replacement City .Hospital and conveying our interest
in the property to WRMC by quitclaim deed will avoid needless litigation,
probably save our taxpayers $200,000.00, and help our long established,
valued, non-profit Fayetteville hospital better serve our citizens.
(e)
WARRANTY DEED -
Know all men by these presents:- That we, S.K. Stone and Amanda M. Stone, his
wife for and in consideration of one dollar to us paid, and for the consideration and
purposes herein set forth, do hereby grant, bargain, sell and convey unto the City of
Fayetteville, in the State of Arkansas, the following real estate in the city of Fayette-
ville, in the County of Washington and State of Arkansas, to --wit:
A part of Block thirty seven (37) as designated on the plat of the original town of
Fayetteville, beginning at a point eighty (80) feet South of the Northeast corner of the
said block thirty seven (37) and running thence South one hundred and twenty eight (128)
feet, thence West one hundred and sixty (160) feet, thence South eighty (80) feet, thence
East one hundred and sixty (160) feet, thence South two hundred and sixty two (262) feet,
or to the Southeast corner of said Block thirty seven, and thence dost three hundred and
twenty five (325) feet and ten and a half (10-) inches, or to the Southwest corner of said
a
block, thence North four hundred and seventy (470) feet, or to a point due vaest of the
beginning, and thence East to the place of beginning, (subject to the use of the following
t
s
strip laid out as an allay, beginning one hundred and sixty feet West of the Northeast
corner of the said block and running thence South two hundred and eighty eight feet, thencE
Wrest fifteen feet, thence North .two hundred and eighty eight feet, and thence East fifteen
feet to the place of beginning.)
To have and to hold the said real estate, with all the improvements and appurtenances
thereto belonging, unto the said City of Fayetteville forever.
And we, hereby covenant with the City of Fayetteville that we are the lawful owners of the
said real estate, and have a lawful right to convey the same, that it is free from incumbi-
rance, and that we will warrant and defend the title against the lawful claims and demands
hof all. persons. This -conveyance is a gift to the City of Fayetteville, as a testimonial of
our affection for the people among whome we have passed our lives, and for the purpose of
enabling the city of Fayetteville, to establish and to maintain permanently a Hospital ,
which shall be knovrn as the Stone Hospital, and is made on the following express terms and
GREER ABSTRACT COMPANY
RELIABLE ABSTRAGTs SHEET No,
FAYETTEVILLE, ARKANSAS
conditions:-
First-
onditlonsi
First- If the City of Fayetteville shall fail to have a Hospital established and put in
'operation on the land hereby conveyed within four years from the date of this Conveyance the
jtitle to the said land shall revert to us or to our heirs. Sf. econd; If a Hosepital shall be
/
established on the said lands within four years after the aa.te of this conveyance and ahaLl
t any furture time be abandoned or ceased to be used and maintained for Hospital purposes
then the title to the said real estate shall revert to us or our heirs. The said Hospital
shall be under the supervision and control of a Board consisting of ,eleven members , to
be kDown as the Board of Control of the Stone Hosp� tal~ , fa
My�t..#Xi their successors_
,in office in perpetual succession, shall be appointed by the City Council of the city of
Fayetteville. The other seven shall consist of the following persons, one from the local
membership of the following religious bodies, to -wit: A.F. Wolf, of the methodist Episcopal
Uhurch,S6pth)Centra1 Church); W.B. Welch, of the Protestant Episcopal church , (St Paul's
Church);Sohn H. Harris of the Missionary Baptist,(First Baptist Church); Albert M. Byrnes,
of the Catholic 6hurch (St. Joseph's Church); P.R. Davidson, of the Christian '�hurch(First
Christian Church); E.S. McDaniel of the Presbyterian Church in the United States, (commonly
called,the Squthern Presbyterian Church). Bruce Holcomb, of the Presbyterian Church in the
United States 6f�Ataericai-)-..A�1�vscancjes that shall occur in the membership of the Board of
Control selected from the Churches named shall be filled by the Churches, respectively,so
that one member.of each offsaid :'Churches shall at all times be a member of the said board. B
if any such vacancy shall not be filled within three months by the Church in which it occurs
then it shall be filled by the City Council from the membership of such Church. And 1,
Amanda M. Stone, wife of the said S.K. Stone, for the consideration and upon the conditions
set forth in the foregoing conveyance, do hereby release and relinquish to the city of
Fayetteville Arkansas, all )fly right or possibility of dower and convey all my right of homo-.'!
stead in and to the land aforesaid. 11
Witness aur hands and seals this 8th day of September, 1906.
GREER ABSTRACT COMPANY
RELIABLE ABSTRACTS SHEET NO.
FAYETTEVILLE APKANAAA
DEED --
This Indenture made and entered into this 24th day of Fabruary 1909 b;;tvioen S.C.
Stone and his wife, Amanda. M. Stone of the City of Fayetteville, Washington County, t.rkansas
parties of the firot part and the City, of Fayetteville, Arkansas, party of the second part,
witnesseth :
WHEREAS, said parties of the first part, on the 8th day of September 1906 by their deed
of gift of that date conveyed unto said party of the second pert the following described
realestate situate in said ci, y,county and State to -wit:
A part of Block No. thirty seven (37) as designated on the plat of the original town of
Fayetteville, beginning at point eighty feet South of the "ortheast corner of said Dloc{
37 and running thence South one hundred and twenty eight feet, thence Vest one hundred and
sixty feet, thence South eighty feet thence East one hundred and sixty feet thence Squth two
hundred and sixty two feet or to the Southeast corner of said Block 37, and thence ';;est thre
hundred and twenty five feet, ten and one half inches or to the Southwest corner of said
block, thence North four hundred G.nd seventy feet or to a point due ''i -est of beginning And
thence Eust to the place of bebinning (subject to the use of the Sollowing strip laid
out as an alley; beginning 160 feet feet tiiest of the Northeast corner of said block and
running thence South 280 feet, thence -West 15 feet, thence North 280 feet, and thence I.Pr.st
15 feet to the place of beginning). as a testimonial of the affection of said grantors for
the people among whom they have passed their lives, and for the purposes of enabling said
city to establish and permanently maintain a Hospital: and,
Whereas) in the said deed of Septem-her 8th, 1906 there are certain conditions provi4ing
for a reversion of the premises, which may tend to retard the establishment end maintenance
of said Hospital.
Therefore, the said parties of the first part in consideration of the premises and of
one dollar to them paid by said party of the secand part, and for the purposes of more eff'ec
wally securing to said city and its inhabitants the benefits of such Hospital., do hereby
grant, bargain, sell and convey unto said party of second part, the lands and premises
GREER ABSTRACT COMPANY
R6LIASL.E /158TRAGT5 SHEET NO.
,r-.ve--rrc�iie a e AMWANAOS
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11's gm
above described't'o be by the said oity, Yield' In truat and mA4 tae A0 s 04 jr c
And in ease it should be determined hereafter to change the location of said Hospital, to
some other point in said city, in such case the entire porceeds of the above described
premises shall constitute a trust fund to be devoted exclusively to the establishment and
maintenance of such City Hoselpital at the point selected; and no such change of location
shall be made except by the concurrent action of the board of trustees named in said deed
September 8th, 1906. (o* their successors in trust) and the council of said city.
To have and to hold the above granted premises unto the said party of the second part
together with all and singular the appurtenances thereunto belonging.
And, Y Amanda M. Stone wife of the said S.K. Stone, for the consideration and purposes
aforesaid do hereby release and relkdquish unto said party of the second part all my right
of dower in and to said lands.
Witness our hands and seals this 24th day of February 1909.
S.K. Stone (Seal.)
State of ArkansasAmanda M. Stone. (Seal)
County of Washington
Be it remembered that on this day came before the undersigned, a
Notary Public within and for the county aforesaid, duly commissioned and acting a.y. Stone
to me well known as the grantor in the foregoing deed of conveyance and stated that he had
executed the same for the consideration and purposes therein mentioned and set forth.
And on the same day voluntarily appeared before me the said Amanda M. Stone wife of the
said S.K. Stone, to me well known, and in the absence of her said husband, acknowledged tha
she had, of her ow. free will executed said deed and signed and sealed the relinquishment o
dower in said deed for the consideration and purposes therein contained and set forth witiio
compulsion or undue influence of her said husband.
Witness my hand and seal as such Notary Public this 24th day of February 1909.
(Seal) E.B. VYall, Notary Public.
Filed for Record august 28th, 1909 5 P.M. Recorded in Volume 130 Page 127.
GREER ABSTRACT COMPANY ��
RELIABLE ABSTRACTS el�rzaT NO.
FAYETTRVII I C Ansearucec
MEMORANDUM
TO: Lioneld Jordan, Mayor, City of Fayetteville
Kit Williams, City Attorney, City of Fayetteville
FROM: Tom Olmstead, General Counsel Washington Regional Medicorp.
DATE: August 10, 2010
RE: Fayetteville City Hospital
Washington Regional Medicorp ("Washington Regional") currently operates a skilled nursing
and long-term care facility known as Fayetteville City Hospital ("FCH") located at 221 South
School Avenue in the City of Fayetteville. Washington Regional assumed the operation of FCH
in 1991 from Fayetteville City Hospital, an Arkansas nonprofit corporation, (the "Former
Nonprofit") pursuant to the teens of a certain Assignment and Lease Agreement dated July 26,
1991.
The current physical facility housing FCH is aged, with portions of the facility being nearly 100
years old, and is in need of replacement. While the quality of care rendered by Washington
Regional through FCH has not diminished, the condition of the physical plant is such that
business operations are being adversely impacted as families of patients incorrectly perceive that
the physical appearance of a facility is correlated to the quality of care rendered in that facility.
This perception exists even where a patient's physician recommends FCH and is exacerbated by
the fact that there are several new entrants within the market who have developed modern
facilities.
Washington Regional is desirous of exploring options to replace FCH but is constrained by debt
capacity issues of its affiliated organizations, existing capital projects and needs of those
affiliated organizations, and the fiscal uncertainty confronting the healthcare industry in the wake
ofrecent and forthcoming healthcare reform initiatives. Washington Regional has determined
that the viability of FCH as a going concern is dependent upon securing a replacement facility
and that the attainment of this objective is dependent upon forning a partnership with a suitable
third party to secure access to additional capital necessary to the construction of a replacement
facility.
A. The Assignment and Lease Agreement
Washington Regional acquired the FCH operation in 1991 from the Former Nonprofit pursuant
to the terms of an Assignment and Lease Agreement dated July 26, 1991 (the "Agreement"). As
a general statement, the Agreement consists of four basic elements, namely (i) a lease of the real
property upon which FCH is situate (all of Block 37 in the original plat of the City of
Fayetteville), (ii) a license to use the name "Fayetteville City Hospital", (iii) an assignment of the
Former Nonprofit's business operation, including all personal property, contractual obligations,
Lioneld Jordan, Mayor
Kit Williams, City Attorney
August 10, 2010
Page 2
and licenses and permits necessary to that business operation, and (iv) a commitment to provide
Washington Regional a quit claim deed for all other real property owned by the former nonprofit
other than the leased property.' In conjunction with the execution of the Agreement, the Former
Nonprofit transferred ownership of the leased premises by quitclaim deed to the City of
Fayetteville, Arkansas.
The Agreement has an initial term of 25 years, which commenced August 1, 1991, and affords
Washington Regional the option to renew the Agreement for two additional 25 year periods.
Therefore, the initial term of the Agreement shall expire July 31, 2016 and Washington Regional
has the option to extend the tern through July 31, 2066. Rent under the Agreement is
established at $625.00 for each 25 year lease term.
Washington Regional is obligated under the Agreement to utilize the leased premises for the
"purpose of providing health care, or for any other purpose incidental or related to or considered
by [Washington Regional] to the provision of health care." Washington Regional is precluded
from utilizing the leased premises in any manner that would result in the reversionary interest
discussed in Section B below being triggered.
Upon the expiration or termination of the Agreement, Washington Regional is obligated to return
the "leased premises and all improvements thereon to [the Former Nonprofit] together with any
related licenses to operate the hospital and nursing home ... together with the tangible personal
property received by [Washington Regional] which has not theretofore been disposed of ... in
the ordinary course of business."
The Agreement can be assigned by Washington Regional without the consent of any party or
third party so long as any such assignee promises to perform all of Washington Regional's
obligations under the Agreement. Washington Regional remains liable for performance of the
Agreement regardless of any such assignment. In addition, Washington Regional has the
unilateral right to sublease all or any portion of the leased premises.
The Reversionary Interest
The majority of the leased premises upon which ITCH was built is subject to a possibility of
reverter. The majority of the leased premises was conveyed to the City of Fayetteville by S.K.
Stone and Amanda Stone in 1906 for the purpose of constructing a hospital. The 1906 deed
contained a reversionary interest in favor of the heirs of SX and Amanda Stone. The
Washington Regional conveyed the majority of this real property, including additional parcels subsequently
purchased by Washington Regional, namely all of Block 34 in the original plat of the City of Fayetteville, to the
City of Fayetteville in 2002 for purposes of the construction of the Fayetteville Public Library.
Lioneld Jordan, Mayor
Kit Williams, City Attorney
August 10, 2010
Page 3
reversionary interest was amended by further deed executed in favor of the City of Fayetteville
by S.K Stone and Amanda Stone and filed of record on February 24, 1909, the stated purpose of
the amended deed being to revise "certain conditions providing for a reversion of the premises
which may tend to retard the establislunent and maintenance of said hospital." The possibility of
reverter set forth in the 1909 deed states that S.K Stone and Amanda Stone:
do hereby grant, bargain, sell and convey unto [the City of Fayetteville], the lands
and premises above described to be by the City, held in trust and maintained as a
city hospital. And in case it should be determined hereafter to change the location
of said hospital, to some other point in said City, in such case the entire proceeds
of the above described premises shall constitute a trust fund to be devoted
exclusively to the establishment and maintenance of such city hospital at the point
selected; and no such change of location shall be made except by the concurrent
action of the Board of Trustees named in the said deed of September 8, 1906, (or
their successors in trust), and the council of said City.2
The chain of title reflects that the City of Fayetteville held continuous ownership of the leased
premises from 1906 through November 21, 1978, at which time the City of Fayetteville
conveyed the property to the Former Nonprofit. That entity owned the property until the
conveyance mandated by the terns of the Agreement, which resulted in the property being
transferred back to the City of Fayetteville on August 6, 1991. At this point in time, therefore,
ownership of the leased property rests with the City of Fayetteville subject to the leasehold
interest of Washington Regional as established under the Agreement.
C. Proposal
Washington Regional believes it will be necessary to partner with a third party to secure the
capital required to replace FCH. Preliminary estimates indicate that at least $11 to $14 Million
Dollars will be required to replace the FCH facility. Neither Washington Regional nor its parent
or other affiliates are felt to have the debt capacity to assume such expense while simultaneously
meeting other system capital initiatives and maintaining WRMC's current bond obligations and
ratings. To position Washington Regional as an attractive partner to potential third parties and to
maximize the overall value of the current FCH enterprise for purposes of valuing the required
capital contribution required of any new FCH enterprise formed with a third party partner,
Washington Regional believes it necessary to secure ownership of the FCH license and real
' A possibility of reverter is not subject to the Rule Against Perpetuities. It is "the settled rule in Arkansas that a
possibility of reverter (retained in a conveyancel is treated as an interest retained by the grantor. We consider such an
interest as being vested at the time of its retention and therefore not subject to the Rule Against Perpetuities." Collins
v Church of God of Prophecy, 304 Ark. 37, 800 S.W.2d 418 (1990).
Lioneld Jordan, Mayor
Kit Williams, City Attorney
August 10, 2010
Page 4
property that is currently subject to the Agreement. Ownership of the license will likely be a
significant consideration for any lender seeking to collateralize any construction financing
extended to the new partnership. Furthermore, the value of the FCH enterprise, and thereby the
capital contribution required of a third party partner, would be further enhanced were
Washington Regional able to capitalize the value of the South School real estate which is subject
to the reversionary interest.
Washington Regional requests that the City/Former Nonprofit terminate the Agreement and
transfer the license and S. School real property to Washington Regional, with the S. School real
property being subject to a possibility of reverter in favor of the City and a purchase option in
favor of the City in the event Washington Regional were ever to elect to sell that real property.
The position of Washington Regional vis-a-vis potential partners and lenders would be enhanced
were Washington Regional's ownership of the nursing home license not subject to the obligation
to return the license to the Former Nonprofit upon the termination or expiration of the
Agreement. Further, the cost of securing a replacement FCH facility would be lessened were
Washington Regional able to capitalize the value of the current S. School location in conducting
capital contribution negotiations with potential third parties and financing negotiations with
potential lenders.
Washington Regional proposes that the City/Former Nonprofit transfer absolute ownership of the
nursing home license to Washington Regional and that the City quitclaim the S. School real
property to Washington Regional retaining a possibility of reverter in favor of the City and a
purchase option (e.g., right of first refusal) in favor of the City in the event Washington Regional
ever elected to sell the S. School real property. The subject proposal would permit Washington
Regional to capitalize the entire value of the FCH operation while retaining the right of the City
to ensure that any future disposition of the property comports with the possibility of reverter
contained in the 1909 deed and occurs with the formal blessing of the City and Former
Nonprofit. Furthennore, the proposal creates a mechanism whereby any such future disposition
of the real property could be handled in a manner that would permit the City and Washington
Regional to mutually benefit from the sale while honoring the terms of the possibility of reverter
set forth in the 1909 deed.
How might one envision a future sale of the S. School property inuring to the benefit of both the
City and Washington Regional while not triggering the possibility of reverter? Assume for
purposes of discussing the proposal that Washington Regional at some point in the future
determined to sell the S. School real estate. The deed necessary to effect the transfer of the S.
School real property to Washington Regional requires that the City and Former Nonprofit
approve Washington Regional's proposed use of the proceeds of any such sale in order to
Lioneld Jordan, Mayor
Kit Williams, City Attorney
August 10, 2010
Page 5
effectuate the intent of S.K. Stone and Amanda Stone as set forth in the 1909 reverter clause that
"the entire proceeds of the above described premises shall constitute a trust fund to be devoted
exclusively to the establishment and maintenance of such city hospital ... and no such change
of location shall be made except by the concurrent action of the Board of Trustees [of the Former
Nonprofit] ... and the council of said City." The possibility of reverter retained by the City in
its deed to Washington Regional ensures that the City is able to effect the intent and process
established by the 1909 grant without triggering the reversionary interest. In other words, the
City is in a position to ensure that the proceeds from any such sale are utilized in the construction
or maintenance of a future FCH replacement facility, the maintenance of the WRMC facility
(e.g., maintenance of trails, etc.), or the establishment of a trust fund that administers a health
related program operated by WRMC (e.g., County HIV Clinic, charitable care fund for City
residents, etc). Furthermore, as the City has retained a purchase option in its deed to Washington
Regional, the City is in a position to purchase the property for use by the City, the Fayetteville
Public Library, or some other agent of City government.
A strong argument can be made that any such action would fulfill the express intent of S.K. and
Amanda Stone as set forth in the reversionary clause of the 1909 deed thereby terminating the
possibility of reverter. The original 1906 deed from S.K. and Amanda Stone contained such a
restrictive reversionary clause that it was amended in 1909 in recognition that the prior clause
contained "certain conditions" that tended to "retard the establishment and maintenance of said
hospital." Among the restrictive provisions that were eliminated was the requirement that the
property be forever utilized by the City as a city hospital for a provision in the 1909 deed that
states:
And in case it should be determined hereafter to change the location of said
hospital, to some other point in said City, in such case the entire proceeds of the
above described premises shall constitute a trust fund to be devoted exclusively to
the establishment and maintenance of such city hospital at the point selected.
When the Fayetteville City Hospital was constructed in 1912 there was no other hospital located
within the City of Fayetteville. Washington Regional Medical Center was not constructed until
1950. An obvious intent of the Stone family was that there be a hospital within the City of
Fayetteville. In reforming the reversionary clause through the 1909 deed, the Stone family
further realized that there may come a time when the City/Former Nonprofit determined that the
location of the City hospital may need to change. Provided the proceeds of the sale of the S.
School property were utilized in the establishment and maintenance of a City hospital at some
other location within the City, the Stone family gave the City the option to sell the S. School
location to facilitate that determination. A strong argument can be advanced that the possibility
of reverter would terminate were the City and Former Nonprofit to utilize the proceeds in the
Lioneld Jordan, Mayor
Kit Williams, City Attorney
August 10, 2010
Page 6
construction of a replacement FCH at another location within the City of Fayetteville or direct
those proceeds to the establishment or maintenance of facilities and/or programs at the new
hospital located within the City, namely WRMC.
Washington Regional firmly believes that the replacement of the existing FCH facility on the S.
School location is dependent upon a restructuring of the current arrangement which will permit
Washington Regional to own the nursing home license and S. School property. Washington
Regional believes that the arrangement can be restructured in a manner that will benefit the long-
term interests of patients and families cared for by Washington Regional as well as the interests
of the citizens of Fayetteville who are served by the City. We look forward to meeting with each
of you regarding the proposal this Thursday afternoon.
(Page 1 of 1)
-sih • � ► �c - I
Parcel No.
QUITCLAIM DEED
BE IT KNOWN BY THESE PRESENTS:
THAT WE, the City of Fayetteville, Arkansas, a municipal corporation,
hereinafter called GRANTOR, for and in conformance with its duties pursuant to the
deeds from S.K. Stone and Amanda M. Stone to the City of Fayetteville conveying
their property, for the public advantage to the citizens and City of Fayetteville of
continuing and improved hospital and related care for Fayetteville Citizens and
economic benefit Inuring to our citizens and city, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, do hereby grant, convey
and quitclaim unto Washington Regional Medical Center, an Arkansas nonprofit
corporation, hereinafter called GRANTEE, and unto Grantee's successors and
assigns, all of our right, title and interest, In and to the following described land
situated in the County of Washington, State of Arkansas, to -wit
Block Thirty-seven (37) on the original plat of the town (now City) of
Fayetteville. Arkansas, as per plat on the file in the office of the Circuit
Clerk and Ex -Officio Recorder of Washington County, Arkansas, LESS
AND EXCEPT easements of record and street right-of-way.
2m. 67 -ll
II��IIII���II3�11%1�TI�1�N11�1L�'i
Doo Ip: 01
Kind: DUITCLAIM DEED
Recorded: 10/13/2011 at 11:46:44 AM
Fee Amt: $15.00 PaQe 1 of 1
Washington Countv. AR
Bette Stam♦oe Circ0u1t Clark
0028645
File20 11-
TO HAVE AND TO HOLD the said lands and appurtenances thereunto belonging unto the said grantee and
grantee's successors and assigns, forever.
The City of Fayetteville shall have the right of first refusal to purchase the real estate hereby conveyed. Should the
Washington Regional Medical Center elect to sell all or any portion of said real estate to a third party, the Clay of Fayetteville
shall have the right of first refusal to meet any such bona fide offer to purchase on the same terms and conditions as are set
forth in such third party's bona fide offer to purchase. Upon the Grantor's failure to meet such bond fide offer of purchase
within thirty (30) days after written notice thereof to Grantor from Grantee, Washington Regional Medical Center shall be free to
sell or convey the said real estate or any portion thereof to such third party only in accordance with the terms and conditions of
the third partys bona fide offer of sale as presented to the Grantor.
IN TESTIMONY WHEREOF, the name of the Grantor is hereto affixed by its Mayor and its seal affixed by its City Clerk
this _4L±_ day of October, 2011.
City of Fayetteville, Arkansas,
r jr,",A mu icipal co ration
= G�Y: C'c ••fAL
ayor
;FAYETftEIIILLE; y
y:Q SP�
J,SKAN•.Ja`• [SEAL]
STATE OF ARKANSAS
ss.
COUNTY OF WASHINGTON
ACKNOWLEDGMENT
BE IT REMEMBERED, that on this date, before the undersigned, a duly commissioned and acting Notary Publicwithin and forsaid County and State,
personally appeared Uorrald Jordan and Sondra Smith, to me well known as the persons who executed the foregoing document, and who stated and
acknowledged that they are the Mayor and City Clerk, respectively, of City of Fayetteville, Arkansas, a municipal corporation, and are duly authorized in
their respective capacities to execute the foregoing instrument for and in the name and behalf of said corporation, and further stated and acknowledged that
they had so signed, executed and delivered said instrument for the consideration, uses and purposes therein mentioned and set fon`+`1tt" ll B)fill, A
WITNESS my hand and seal on this �4 ay of October, 2011.
MY COMMISSION EXPIRES:
�y� ��•�� �OTARy ��•,
Notary Public y: PUB%lio
File Number: 201100028645 Page 1 of 1File Number: Number: 2011-00028645 Beg: 1