RESOLUTION NO. RS2002-1117

RESOLUTON NO. RS2002-1117

A resolution authorizing the Department of Law to compromise and settle the dispute between HCA Inc. and The Metropolitan Government of Nashville and Davidson County and The Health and Educational Facilities Board of the Metropolitan Government of Nashville and Davidson County regarding the amount of payment in lieu of ad valorem taxes owed by HCA Inc. for tax year 2000, in the amount of $ 7,154.10.

Whereas, the Metropolitan Council adopted Resolution No. R95-1484 on January 17, 1995, authorizing The Health and Educational Facilities Board of the Metropolitan Government of Nashville and Davidson County (“the Board”) to purchase certain properties (the “Nashville Memorial Hospital campus”) from HCA Inc., formerly known as Columbia/ HCA Healthcare Corporation (“HCA”), and certain affiliates of HCA, to lease those properties back to HCA or such affiliates, and to enter into an agreement with HCA and such affiliates for payments in lieu of ad valorem taxes with respect to such properties; and

Whereas, the Board entered into an agreement on December 31, 1995, with HTI Memorial Hospital Corporation (“HTI”), a Tennessee corporation and a subsidiary of HCA (the “Memorial Hospital PILOT Agreement”), that provided that HTI would make payments in lieu of taxes to the Metropolitan Government with respect to the Nashville Memorial Hospital campus through the year 2008; and

Whereas, HCA constructed a new hospital (“Skyline Medical Center”) to replace Nashville Memorial Hospital; and

Whereas, the Metropolitan Council adopted Substitute Resolution No. SR97-893 on November 18, 1997, authorizing the Board to enter into the appropriate agreements with HCA, HTI and/or other affiliates of HCA, including payment in lieu of tax agreements with respect to Skyline Medical Center and any amendments to the Memorial Hospital PILOT Agreement, to permit Skyline Medical Center to replace Nashville Memorial Hospital under a payment in lieu of taxes agreement; and

Whereas, the Board entered into an agreement with HTI on May 23, 2000 (the “Skyline PILOT Agreement”), which provided that HTI would make payments in lieu of taxes with respect to the Skyline Medical Center to the Metropolitan Government through the year 2008; and

Whereas, pursuant to Substitute Resolution No. SR97-893 and the Skyline PILOT Agreement, the amount of payment in lieu of tax that HTI is required to make regarding Skyline Medical Center with respect to the year in which the certificate of occupancy is issued for Skyline Medical Center shall be determined by prorating the payment calculations described in Substitute Resolution No. SR97-893 and the Skyline PILOT Agreement for the portions of such year before and after the issuance of the certificate of occupancy; and

Whereas, the certificate of need for operation of the hospital was transferred to Skyline Medical Center from Nashville Memorial Hospital on September 23, 2000, and the certificate of occupancy was issued to Skyline Medical Center on September 23, 2000; and

Whereas, pursuant to Substitute Resolution No. SR97-893, the Board and HTI entered into a First Amendment to PILOT Agreement on May 23, 2000 (the “Memorial First Amendment”), pursuant to which the parties amended the Memorial Hospital PILOT Agreement (the Memorial Hospital PILOT Agreement, as so amended, the “Memorial PILOT Agreement”); and

Whereas, pursuant to Resolution No. R95-1484, Substitute Resolution No. SR97-893 and the Memorial PILOT Agreement, the amount of payment in lieu of taxes that HTI is required to make regarding Memorial Hospital with respect to the year in which the certificate of occupancy is issued for Skyline Medical Center shall be determined by prorating the payment calculations described in Resolution No. R95-1484, Substitute Resolution No. SR97-893 and the Memorial PILOT Agreement for the portion of such year before and after the issuance of the certificate of occupancy; and

Whereas, HCA, HTI, and the Metropolitan Government and the Board are in agreement regarding the valuation of Skyline Medical Center as of the relevant dates and the amount of the payment in lieu of taxes to be made with respect to Skyline Medical Center for tax year 2000; and

Whereas, with respect to tax year 2000, neither the value of Skyline Medical Center nor the amount of payment in lieu of taxes regarding Skyline Medical Center is in dispute; and

Whereas, with respect to tax year 2000, the value of Nashville Memorial Hospital, as of September 23, 2000, and the amount of payment in lieu of taxes for Nashville Memorial Hospital are in dispute; and

Whereas, the Metropolitan Government has a claim against HTI for underpaid payments in lieu of taxes with respect to tax year 2000 regarding Nashville Memorial Hospital; and

Whereas, HTI may have certain defenses to a claim for underpaid payments in lieu of taxes with respect to tax year 2000, regarding Nashville Memorial Hospital against the Board and/or the Metropolitan Government, including, but not limited to, the defense of estoppel; and

Whereas, litigation regarding the disputed value of Nashville Memorial Hospital for purposes of payments in lieu of taxes for tax year 2000, is possible and would be costly and time-consuming; and

Whereas, negotiations among the parties to resolve these disputes are ongoing; and

Whereas, the intention of the parties, as set out in the Memorial Hospital PILOT Agreement and the Skyline PILOT Agreement, are equitable; and

Whereas, the Metropolitan Council desires to settle and compromise these claims by authorizing the Metropolitan Government to accept payment from HTI of an additional amount equal to Seven Thousand, One Hundred Fifty-Four Dollars and Ten Cents ($7,154.10), which amount has been agreed upon among all parties; and

Whereas, the amount that HTI agrees to pay the Metropolitan Government includes any remaining real property taxes that HTI owes with respect to Skyline Medical Center for the portion of tax year 2000 that HTI owned the Skyline Medical Center property.

Now, therefore, be it resolved by the Council of The Metropolitan Government of Nashville and Davidson County:

Section 1. That the Department of Law is authorized to compromise and settle the payment in lieu of taxes dispute between HCA, HTI and the Metropolitan Government of Nashville and Davidson County and the Health and Educational Facilities Board of the Metropolitan Government with respect to tax year 2000, for the Nashville Memorial Hospital property, by accepting payment from HTI in the amount of Seven Thousand, One Hundred Fifty-Four Dollars and Ten Cents ($7,154.10).

Section 2. That this resolution shall take effect from and after this adoption, the welfare of The Metropolitan Government of Nashville and Davidson County requiring it.

LEGISLATIVE HISTORY
Referred to:	Budget & Finance Committee
Introduced:	August 6, 2002
Adopted:	August 6, 2002
Approved:	August 8, 2002
By: