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HomeMy WebLinkAboutord1990-065WHATCOM COUNTY COUNCIL AGENDA BILL NO. 90 -220 ive ) ,1 UN - 0 1990 WHATCOM COUNTY COUNCIL 6/26/90 7 /10 /an Council /Intro . Finance /Council SUBJECT.' An ordinance providing for an appropriation in the Current Expense Fund, Non-Dept.- to purchase the City of Bellingham's interest in the Public Health Building. ATTACHMENTS. Ordinance. Arbitratd.r's decision. Public Hearing Needed? Yes l No l SUMMARY STATEMENT: To help resolve the issue of an equitable settlement for the capital assets held by the City of Bellingham in the. Whatcom County - Bellingham Public Health District we mutually agreed to binding arbitration. The decision has been rendered. This supplemental budget wild provide the appropriation to pay that settlement. RECOMMENDED ACTION.- Adoption. COMMITTEE ACTION (including dates): 7 -10 -90 Recommended approval COUNCIL ACTION (including dates): 7 -10 -90 Passed Related File Numbers: Ordinance or Resolution Number.' Ord 90 -65 2 4 6 8 10 12 ,I I 14 16 18 20 22 24 26 28 _�J 32 34 36 38 40 42 44 46 48 50 52 rn Hltdstas.sup INTRODUCED BY: Consent PROPOSED BY: Executive DATE: June 7, 1990 ORDINANCE NO. 90 -65 REVISION TO THE 1990 CURRENT EXPENSE FUND, NON- DEPARTMENTAL APPROPRIATION FOR HEALTH DISTRICT ASSET DIVISION WITH CITY OF BELLINGHAM WHEREAS, Whatcom County dissolved the Bellingham - Whatcom County Health District effective April 1st, 1990; and WHEREAS, the parties disputed the amount to be paid to the City for its share of the Districts assets; and WHEREAS, the parties agreed to submit to arbitration for resolution of the question; and WHEREAS, the arbitrator has determined the shares to be awarded; NOW, THEREFORE BE IT ORDAINED the Whatcom County Council hereby revises the 1990 Current Expense Fund, Non - Departmental budget plan therein as follows: RESOURCES: 00120 - 291.80.00.0000 Est. Ending Fund Balance $261,201 BUDGET PLAN REVISION(S): 00431- 562.10.51.0000 Arbitration Award $261,201 BE IT FURTHER ORDAINED that ordinance 89 -105 is hereby amended by adding $261,201 in appropriation authority to the 1990 Current. Expense Fund, Non - Departmental appropriation therein. ADOPTED this 10th day of ,]ylV , 1990. WHATCOM COUNTY COUNCIL COUNCIL ATTEST: WHATCOM COUN74_WASHINGTON �y Ramona Reeves, Council Clerk APPROVED AS TO FORM: Civil Deputy Prosecutor G. "Ha;fsey, ( ✓) Approved ( ) Denied iL. L + ` ZL . Shirley Van ianten, &jiecutive Date: ?- (tft IN ARBITRATION In Re: The Arbitration of: Whatcom County VS. City of Bellingham FINDINGS, CONCLUSIONS AND DECISION Keith D. McGof fin, the duly appointed Arbitrator in the above - noted matter, submits the following Findings and Decision. 1. FACTS Whatcom County and the City of Bellingham, in 1920 entered into an agreement to purchase land to be utilized for public health and welfare purposes. In 1947 and in 1948, the County and City agreed to form a Health District. (Agreement dated January 1, 1949). In 1979, Whatcom County formed a charter form of government and substituted Council members for county commissioners as board members of the Health District. In .1981, the County and City executed a Joint Powers Agreement. restating and formalizing the establishment of the Department of Health and providing formulas for inventorying and the establishment of shares of the parties. The Agreement further provided a financial contribution formula and provided for the Page - 1 0 division of assets upon the withdrawal of either party. In 1988 the County passed a resolution declaring its intent to withdraw from the Health District, effective March 31, 1989 and establishing a new county department. In September, 1989 the County authorized binding arbitration and in October or November, 1989 both the City and County executed an agreement authorizing binding arbitration to determine the equitable division of the assets between the parties. II. ISSUES 1. What property, both real and personal, was intended to be included within the Health District by both the County and the City? 2. What are the shares of the respective parties' ownership interest in the real and personal property assets of the District? 3. When is the valuation of the property to be considered, that is, at the time of contribution, at the time of inventory, or at the time of termination of the Joint Powers Agreement? 4. Is interest due the City of Bellingham on the amount of compensation for their monetary share in the Health District? III. FINDINGS 1. The Joint Powers Agreement entered into by and between the City of Bellingham and Whatcom County on the 7th of November, 1981 rescinded and superseded all previous agreements entered into between the City and the County and was intended to restate and formalize the establishment of the Health Department (Health Page - 2 District) See I (A).(B) of Joint Powers Agreement (Exhibit B 2 tab 5. 2. The Joint Powers Agreement became effective on the date of passage on the 7th of November, 1981 and continued in effect until the withdrawal by either of the parties (Joint Powers Agreement II - Term) 3. The Joint Powers Agreement directed that, not later than July 1, 1982, all equipment, land, and buildings utilized by the Health Department shall be inventoried by the Department staff and the respective City and County shares shall be determined, based upon the respective parties contribution toward the purchase of the respective items. (Joint Powers Agreement VII - Department Property). 4. The Joint Powers Agreement provided that should either the City or the County withdraw from the Agreement, all assets of the Department shall be divided in such a manner as to insure that the withdrawing party receive an equitable share of the assets.or their cash equivalent. (Joint Powers Agreement VII) 5. The Joint Powers Agreement by Paragraph VII, mandated an inventory of the property no later than July 1, 1982 when it stated as follows: "... The Department shall be inventoried by Department staff, ...." .6. The Department staff did inventory all equipment, land and buildings of the Department as evidenced in Exhibit B3, which Page - 3 is the 1982. inventory prepared by the Health Department and presented by the head of the Department, Dr. Jones. Said inventory was distributed to the District Board of Health on July 21, 1982. No objection was raised by either Whatcom County or the City of Bellingham on said inventory after it was presented to the Board of Health. 7. The Joint Powers Agreement provides under Article VII that the respective ownership in the 1982 inventory shall be determined based upon the respective party's contribution. The inventory of 1982, Exhibit B3, did determine the City and-County share in the inventoried property. 8. As the Joint Powers Agreement is the sole agreement providing for the distribution of the share of the parties' assets, subsequent contributions by either party, and the percentages thereof, were never adopted as amendments to the Agreement and are therefore not controlling. 9. The determination of the share of ownership by the County and the City must be based solely on the Joint Powers Agreement and upon the inventory as presented in 1982. The transfer of ownership of the real property to Whatcom County was not made as an amendment to the Joint Powers Agreement and does not change the ownership of the property 'or the shares of ownership of the parties in the property. 10. The percentage.of ownership of the County and City in the durable inventory in 1982 was twenty -five percent (25 %) for Page - 4 the City of Bellingham and seventy -five percent (75 %) for the County. The fixed assets of the District has been agreed by and between the parties to be ,$82,805.00. 11. The percentage of original costs paid by the County and City on the land, the old part of the building, and the new addition mathematically amounts to a percentage share of twenty - six percent (26 %) to the City of Bellingham and seventy -four percent (74 %) to Whatcom County. Exhibit B -3, draft for illustrative purposes only, assumed a valuation of one million dollars and distributed the respective shares between the City and the County based upon the percentage of original costs paid by each. 12. The building was appraised by G. Aranson, Jr., an MAI Appraiser. The appraisal of the property and buildings of the District was $925,000.00, as of March 31, 1989. Said appraisal was authorized and agreed to by both Whatcom County and the City of Bellingham. 13. Both Whatcom County and the City of Bellingham appointed representatives to negotiate a settlement of the issues since March 31, 1989, but have been unable to reach a satisfactory agreement. The City of Bellingham'is claiming an interest in the property in the sum of between $410,000.00 and $435,000.00, and the County's position is an offer to the City of approximately $95,000.00. Page - 5 V. CONCLUSIONS OF LAW 1. The Joint Powers Agreement entered into by and between the parties in November of 1981. rescinded and superseded all prior agreements, and has not been amended, and remains in full force and effect. The Agreement is the sole determination of the rights, liabilities and share percentages of ownership of assets of the parties in the Health District. 2. The respective shares of ownership between Whatcom County and the City of Bellingham was accomplished by the inventory prepared by the Department and filed with the Health Board in July, 1982. 3. The Joint Powers Agreement ,provides that upon the withdrawal of either the City or the County all assets of the Department shall be divided to insure the withdrawing party receives an equitable share of the assets, or their cash equivalent. In converse of that, the party remaining is entitled to receive an equitable share of the assets. The equitable share of the assets are determined by the percentage shares determined by the 1982 inventory. (Which was based upon the share percentage of contribution by each party toward the purchase of the respective items). 4. By the 1982 inventory on the fixed assets, the City of Bellingham shares percentage was determined to be 25% and Whatcom County 75 %. Page - 6 S. By the 1982 inventory for the land, building and addition, Whatcom County's share percentage and the City of Bellingham's share percentage was determined to be 26% for the City of Bellingham and 74% for Whatcom County. 6. The Joint Powers Agreement does not specifically provide that any outstanding liabilities shall be deducted from the parties's valuation. However, the dissolving of the District would not affect the tort liability of either party, as either party would be subject to the $3,000,000.00 claim by Sumas. 7. The ongoing liability for PERS retirement benefits of the Health Department remains with the continuation of the Health District and is a liability that cannot, under the Joint Powers Agreement, be deducted from the asset share of the parties. Such liabilities are subject to future contributions by participating members of the Health District, which may or may not include the City of Bellingham. S. The parties have agreed as to the valuation of the fixed assets at $82,805.00, which is the present current value of the items. The real estate appraisal of the property as of March 31, 1989, was $925,000.00. . 9. By general law, in partnerships, trusts, estates and other analogous situations, all increases in value of the corpus belongs to the corpus in absence of a statute or a contract to the contrary. The law further dictates that value should be determined as of the time of transfer and the fair value shall Page - 7 be ascertained by appraisal of current value. Therefore, the real property and improvements thereon must be valued as of the 31st of March, 1989, and the percentage share of ownership by and between Whatcom County and the City of Bellingham shall be determined as "current" value of the property. 10. As the parties have been in constant negotiation and neither party has caused a delay in the proceedings and there is a justifiable controversy between the parties, no interest on the award should be allowed. BASED UPON THE FOREGOING FINDINGS AND CONCLUSIONS, THE ARBITRATOR MAKES THE FOLLOWING DECISION: The Arbitrator does hereby award the percentage share of ownership between the parties on the fixed assets as follows: 1. Whatcom County - 75% $62,104.00 2. City of Bellingham - 25% $20,701.00 The value of the land and buildings of $925,000.00 shall be distributed by the Arbitrator,as follows: 1. City of Bellingham - 2. Whatcom County Page - 8 26% $240,500.00 74% $684,500.00 The total amount of fixed assets and building percentage ownership totals are as follows: 1. City of Bellingham - $261,201.00 2. Whatcom County - $746,604.00 DATED THIS day of , 1990. . McGoffix )krbitra Page - 9