AN ORDINANCE AUTHORIZING THE MAYOR TO

EXECUTE A SUBLEASE AND OPERATING AGREEMENT WITH

SOUTH PENINSULA HOSPITAL, INC. FOR

SOUTH PENINSULA HOSPITAL

WHEREAS, South Peninsula Hospital has been operated by South Peninsula Hospital, Inc., a private non-profit corporation ("SPHI") since 1970, with the present five-year Sublease and Operating Agreement scheduled to expire in August, 1998; and

WHEREAS, South Peninsula Hospital is situated on property leased by the Borough from the City of Homer under a fifty-five year lease that will expire June 30, 2024; and

WHEREAS, SPHI, the South Peninsula Hospital Service Area Board ("SAB") and the borough administration, have negotiated a new five-year Sublease and Operating Agreement with a five-year renewal option effective upon either mutual consent or inaction; and

WHEREAS, the proposed Sublease and Operating Agreement continues to allow for an operating subsidy as needed to cover losses on service area operations, subject to the appropriation and availability of funds, while requiring SPHI to use its best efforts to operate the hospital without an operating subsidy from the service area;

WHEREAS, the proposed Sublease and Operating Agreement would authorize SPHI to make capital expenditures, not on the approved annual capital budget and without further SAB approval, of up to $20,000 per item or project and not exceeding the approved annual capital budget by more than 25 percent; and

WHEREAS, in approving the proposed Sublease and Operating Agreement the assembly delegates to the SAB the authority to approve SPHI requests to lease additional property off-premises as needed for hospital purposes; and

WHEREAS, the assembly finds that entering the proposed Sublease and Operating Agreement, attached hereto as "Exhibit A" and incorporated by reference, is in the best interests of the borough and the South Peninsula Hospital Service Area; and

WHEREAS, a hearing on shortened time for this ordinance is requested so that SPHI may proceed quickly to obtain the State Certificate of Need for long-term care and move forward with the hospital expansion construction;

NOW, THEREFORE, BE IT ORDAINED BY THE ASSEMBLY OF THE KENAI PENINSULA BOROUGH:

SECTION 1. The Sublease and Operating Agreement, attached as "Exhibit A", to be entered between South Peninsula Hospital, Inc. and the Borough in conjunction with the South Peninsula Hospital Service Area Board, is approved. The mayor is authorized to execute a Sublease and Operating Agreement substantially in the form of "Exhibit A", and to take such actions as are necessary to implement its terms and conditions.

SECTION 2. That this ordinance shall take effect immediately upon its enactment.

ENACTED BY THE ASSEMBLY OF THE KENAI PENINSULA BOROUGH THIS 21^st DAY OF APRIL, 1998.

Jack Brown, Assembly President

ATTEST:

Linda S. Murphy, Borough Clerk