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<br /> . III . WORK SESSION ON THE FORMATION OF A HOSPITAL AUTHORITY <br /> Mr. Rutan declared a conflict of interest with this issue and excused himself <br /> from the discussion. <br /> Ms. Bascom indicated that her husband is a physician at Sacred Heart General <br /> Hospital but she did not feel this was a conflict of interest. Mr. Gary <br /> agreed that Ms. Bascom did not have a conflict of interest since her husband <br /> works for a nonprofit corporation in which he has no financial interest other <br /> than his employment. <br /> Warren Wong, Finance Director, gave the staff report. He distributed copies <br /> of a memorandum from Public Financial Management--the City's financial <br /> advisor--listing existing hospital authorities in Oregon and the debt issues <br /> that are currently outstanding. Mr. Wong said a petition has been submitted <br /> by five citizens to the City Council requesting that the council establish a <br /> hospital authority for Eugene. Oregon Revised Statutes (ORS) 441.535(1) <br /> obligates the council to consider the petition and to take formal action on <br /> it. <br /> Mr. Wong said ORS 441.525-595 authorizes a municipality to create a "hospital <br /> authority" to acquire, own, lease, or sell (but not to operate) hospital-type <br /> facil ities. It also allows an authority to issue debt for qualified <br /> applicants under the assumption that this will facilitate the provision of <br /> medical care to the residents of that jurisdiction. Indirectly, hospital <br /> e authorities can also assist the community in achieving certain desirable <br /> targets such as land use goals and economic diversification. <br /> Mr. Wong explained that debt issued by a hospital authority for an applicant <br /> health care provider is tax exempt and is backed solely by revenues generated <br /> by the applicant. The debt is not a legal obligation of the municipality but <br /> of the applicant. However, the perspective of the investment community and <br /> credit rating agencies may be that the City is "lending its name" to the <br /> authority.s debt. This may have ramifications for existing or future debt <br /> issues of the municipality if the authority (that is, applicant) defaults or <br /> fails to comply with the debt indenture. <br /> Mr. Wong reviewed key policy and administrative uses involved in the <br /> formation and operation of a hospital authority. (See memorandum dated <br /> September 1, 1989.) <br /> Ms. Ehrman asked why staff is recommending that the Board of Directors for <br /> the authority contain five elected officials. She thought that this was too <br /> many and that the board should contain some noncouncil members. Mr. Wong <br /> said this recommendation is intended to parallel other related organizations <br /> such as the Eugene Renewal Agency and the renewal agency for the Riverfront <br /> Research Park. He added that having councilors serve as the Board of <br /> Directors will help protect the bond rating of the City. Mr. Boles and Mr. <br /> e MINUTES--Eugene City Council September 13, 1989 Page 5 <br />